Marketing
A Philosophy
An Attitude
A Perspective
A Management Orientation
A Set of Activities
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The Purpose of Marketing
• To understand the Needs & Wants of Customers
• To create customer value through satisfaction and loyalty
• To operate more effectively and efficiently than competitors
• To increase the value of the organization
2
Core Marketing ConceptsCore Marketing Concepts
Products, Services,
Experiences
Value and satisfaction
Needs, wants,and demands
Exchange, transactions,and relationships
Markets
CoreMarketingConcepts
CoreMarketingConcepts
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Marketing Management Process
Marketing Management Process
• Stage 1: Identifying marketing opportunities or problems.– Understand major environmental forces that create both
opportunities and threats.• Stage 2: Market Segmentation, targeting, and positioning.
– : Identify the most promising segment (s) and consider how to satisfy the customers that have homogeneous needs within each segment.
• Stage 3: Understanding the customers.– Design a new product by understanding potential customers’ needs
and purchasing patterns. • Stage 4: Developing a marketing mix.
– Design a competitive marketing strategy by blending product, price, promotion, and place strategies.
• Stage 5: Managing the marketing efforts.– Measure and evaluate the performances of current marketing
strategy.4
Evolution of Business Models and the role of Marketing
MarketingProduct varietySellingProduction
As business philosophy has evolved, so As business philosophy has evolved, so has the role of marketing…customer has the role of marketing…customer
satisfaction is now at the coresatisfaction is now at the core
As business philosophy has evolved, so As business philosophy has evolved, so has the role of marketing…customer has the role of marketing…customer
satisfaction is now at the coresatisfaction is now at the core
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Product Orientation vs. Market Orientation
Company Product Market
Indian Railways We run rail services
We are a people-and-goods mover
Xerox We make copying equipment
We improve office productivity
Standard Oil We sell gasoline We supply energy
Columbia Pictures We make movies We entertain people
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The Marketing Concept itself has evolved from..
1) Catering to the customer1) Catering to the customer1) Catering to the customer1) Catering to the customer
2) Anticipating the customer2) Anticipating the customer2) Anticipating the customer2) Anticipating the customer
3) Fulfilling the customer3) Fulfilling the customer3) Fulfilling the customer3) Fulfilling the customer
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Old vs New marketingChallenges for Marketing in 21st
centurySpeed ?….Outrun….?
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Some New-Age Marketing Trends
• Relationship Marketing
• Database Marketing
• Network Marketing
• Permission or Interruption marketing
• Viral Marketing
• Ambush Marketing
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So…Marketing is managing..
Connecting withConnecting withCustomersCustomers
TechnologyRelationships
Glo
bal A
llian
ces
Diverse Demands
Ethics
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Fundamental Goals of MarketingFundamental Goals of Marketing• Goal 1: Attracting Customers:
– Attract new customers by promising superior value and create transactions with them.
– known as the leaky bucket approach.• Goal 2: Retaining and Growing Customers:
– Satisfied customers are more likely to be loyal customers, and loyal customers are more likely to give the company a larger share of their business in the long run.
– Retention strategy: Retain current customers for maintaining profitable long-term relationships with them by delivering superior value and customer satisfaction.
Has this
changed ?
??
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What is marketing all about?
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Stakeholder Management- beyond marketing
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What is sustainability?
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Why is it important to achieve both satisfaction and loyalty?
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Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations.
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Satisfaction & Loyalty
Outcomes:– Sales to increase revenues– Less price sensitivity– Lower organization’s costs
Satisfaction:Feelings from experience
Loyalty:Choice of brand
over others
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Value and Satisfaction:Value and Satisfaction:
– Customers choose a product that provides the maximum perceived value among many marketing offers.• Customer perceived value = total benefits – total
costs.• Total benefits: product features, services,
information, and experiential values.• Total costs: monetary, time, and psychological costs.
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Determinants of Customer Delivered Value
Image valueImage value
Personnel valuePersonnel value
Services valueServices value
Product valueProduct value
Totalcustomer
value
Totalcustomer
value
Monetary costMonetary cost
Time costTime cost
Energy costEnergy cost
Psychic costPsychic cost
Totalcustomer
cost
Totalcustomer
cost
Customerdelivered
value
Customerdelivered
value
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Customers
Front-line people
Middle Management
TopManagement
Traditional Organization Chart
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Customer-Oriented Organization Chart
Customers
Front-line people
Middle management
Topmanage-
ment
Customers Cus
tom
ers
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Inactive orex-customers
Customer Development
PartnersAdvocatesClientsRepeatcustomers
First-timecustomers
Suspects
Prospects
Disqualifiedprospects
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Marketing Strategy
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Marg
in
Marg
inThe Generic Value Chain
Primary Activities
Su
pp
ort
Acti
viti
es
Procurement
Serv-ice
Technology Development
Human resource management
Firm infrastructure
InboundLogistics
Opera-tions
Out-bound
Logistics
Market-ingand
sales
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Market-Oriented Strategic Planning
Objectives
Skills
Resources
Opportunities
Profitand
Growth
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Growth Strategies: Ansoff’s Product/Market Expansion Grid
4. Diversification2. Marketdevelopment
Newmarkets
1. Marketpenetration
Existingmarkets
Existingproducts
3. Productdevelopment
Newproducts
Marketing Environment
What is ?
How to analyze? For what?
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Actors in the Microenvironment
The Company’s Macroenvironment
Economic Factors
• Inflation
• Employment
• Disposable income
• Business cycles
• Energy availability and cost
• Others?
Technological Factors
• New discoveries and innovations• Speed of technology transfer• Rates of obsolescence• Internet; Mobile ; Cloud and
Information processing technology– Platforms and Portability– Copy/Clone
Political/legal Factors
• Monopolies legislation
• Environmental protection laws
• Taxation policy
• Employment laws
• Government policy
• Legislation
• Others?
Political Environment
Includes Laws, Government Agencies, and Pressure Groups that Influence or Limit Various Organizations and Individuals In a Given Society.
Increasing Legislation
Changing GovernmentAgency Enforcement
Increased Emphasis on Ethics& Socially Responsible Actions
Sociocultural factors
• Demographics
• Distribution of income
• Social mobility
• Lifestyle changes
• Consumerism
• Levels of education
The Cultural EnvironmentThe Cultural Environmentinstitutions and other forces that affect a society’s basic values,
perceptions, preferences, and behaviors.
• Core beliefs are persistent– Passed from parents
to children; reinforced by society
– Shape attitudes and behavior
• Secondary cultural values change and shift more easily
• Society’s cultural values are expressed through people’s views of:– Themselves– Others– Organizations– Society– Nature– The Universe
The Marketing Environment and Competitor Analysis
• Five forces analysis
• SWOT analysis
Threat ofsubstitutes
Potentialentrants
Threat ofentrants
Suppliers
Bargaining power
Substitutes
Buyers
Bargaining power
COMPETITIVE RIVALRY
Porter’s Five forces analysis
Five Forces Analysis: Key Questions and Implications
• What are the key forces at work in the competitive environment?
• Are there underlying forces driving competitive forces?
• Will competitive forces change?• What are the strengths and weaknesses of
competitors in relation to the competitive forces?• Can competitive strategy influence competitive forces
(eg by building barriers to entry or reducing competitive rivalry)?
Responding to the Marketing Environment
• Reactive: Passive Acceptance and Adaptation; Avoidance
• Proactive: Environmental Management and New Product Development
Customer/Product Profitability Analysis
Consumer Behaviour
An Introduction
What is Consumer Behaviour?
Those activities directly involved in obtaining , consuming and
disposing of products and services, including the decision
processes that precede and follow these actions
Consumer Characteristics… Take-Away
• CB is influenced by consumer characteristics– Individual chars (Personality, Lifestyle)– Environment (Reference Groups, Culture)
• Important to take these variables into account in your marketing plan – introvert/extrovert:
• Also important to keep track of trends…– E.g., lifestyle trends (McDonald’s)
• Culture: Important because of global marketing– Localization vs. Standardization??– Flexible Globalization is often the solution (McDonald’s)
Perspectives of CB
Logical Positivism1. Understanding and predicting consumer
behaviour 2. Cause and effect relationships that
govern persuasion and/or educationPost Modern – to understand consumption
behaviour without any attempt to influence it
7 O FRAMEWORK eg purchase of soap
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Firm’s Marketing Efforts1. Product2. Promotion3. Price4. Channels of distribution
Sociocultural Environment1. Family2. Informal sources3. Other noncommercial
sources4. Social class5. Subculture and culture
Output
Process
Input
Ext
ern
al I
nfl
uen
ceC
onsu
mer
Dec
isio
n M
akin
gP
ost-
Dec
isio
n
Beh
avio
r
Post purchase Evaluation
Purchase1. Trial2. Repeat purchase
Need Recognition
Prepurchase Search
Evaluation of Alternatives
Psychological Field1. Motivation2. Perception3. Learning4. Personality5. Attitudes
Experience
A Model of Consumer Decision Making
Decision Issues
• Types of decisions– Routinized response (e.g.,
gas, sodas)– Limited problem solving
(e.g., car service, fast food)– Extended problem solving
(e.g., new car, computer, medical procedures)
• Type of evaluation:– Compensatory: Decision
based on overall value of alternatives (good attribute can outweigh bad ones)
– Non-compensatory: Absolutely must meet at least one important criterion (e.g., car must have automatic transmission)
Potential Family Life Cycle Stages
YOUNGSINGLE
BLENDED
SINGLE PARENT
FULL NEST I/II/III
EMPTY NESTI/II
OLDERSINGLE
YOUNGCOUPLE
Household Decision Making
• Roles/influence– Information
gatherers/holders– Influencers– Decision makers– Purchasers– Users
Adoption Process
1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Decision
6. Confirmation
Organizational Buyers
• Types– Industrial– Reseller– Government and non-
profit organizations
• Characteristics– Greater involvement– Bureaucracy– Long term
relationships
Organizational decision making v/s Consumer decision making
• Purchase decisions made by companies frequently involve many people
• Organizational and industrial products are often bought according to precise, technical specifications that require a lot of knowledge about the product category.
• Impulse buying is rare because buyers are professionals, their decisions are based on past experience and a careful weighing of alternatives.
• Decisions often are risky, especially in the sense that a buyer´s career may be riding on his demonstration of good judgment.
• The business-to-business marketing often involves more of an emphasis on personal selling than on advertising or other forms of promotion.
MODELS OF ORGANIZATIONAL BUYING BEHAVIOR
To gain a simplified view to organizational buying behaviour for a practical use, there are several models to handle the complex environment. The following introduces four major groups first conceptualized by Rowland T. Moriarty :
• Task oriented model
• Non task oriented model
• Decision process model
• Complex model
three types of buying decisions:
• Straight rebuy- Purchasing department reorders on a regular basis. The buyer chooses from suppliers on an approved list. The suppliers make an effort to maintain product and service quality and propose “automatic reordering systems”. The “out-suppliers” attempt to offer something new or exploit dissatisfaction with existing supplier.
• Modified rebuy- The buyer wants to modify product specifications, prices, delivery requirements and other terms. This involves additional decision participants on both sides. The “in-suppliers” become nervous and “out-suppliers” try to offer a better deal.
• New task- The purchaser buys a product or service for the first time.
MARKET SEGMENTATION
• CONCEPT AND DEFINITION
The concept of market segment is based on the fact that the market of commodities are not homogeneous but they are heterogeneous. Market represent a group of customer having common characteristics but two customer are never common in their nature, habits, hobbies income and purchasing techniques.
• According to Philip kotler , “ Market segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers, where any group can conceivably be selected as a target market to be met with distinct marketing mix.”
• Market Segmentation is a method of “dividing a market (Large) into smaller groupings of consumers or organisations in which each segment has a common characteristic such as needs or behaviour.”
DEFINITIONS
• MARKET SEGMENTATION: Customer oriented -- identifies customer subgroups of the market as they currently exist.
• PRODUCT DIFFERENTIATION: Product oriented -- identifies subgroups of competing products.
RULE OF MARKET SEGMENTATION
• Maximize homogeneity within market segments
• Maximize heterogeneity between market segments
Why you need customer segments
• Customers are usually very different
• College students, senior citizens, families with children, empty nesters…
• The same message to all may not work so well.
• Solution: create segments, and design a program for each segment.
A valid segment strategy involves:
• Communications to the segment (direct mail, email, on-location personal attention)
• Rewards designed to modify behavior• Controls to measure the success of the strategy• A budget for implementation of the strategy• Specific goals and metrics for engagement: for
behavior modification• An organization that accepts responsibility for
the segment
LEVELS OF MARKET SEGMENTATION
1. SEGMENT MARKETING Consists of a group of customers who share a similar set of needs and wants.
Identifiable Group with in a Market with Similar
• Wants• Purchasing Power• Geographical Location• Buying Attitudes
FLEXIBLE MARKET OFFERING
• Even in segments 100 % needs are not same – consists of two parts
1.Naked Solution :- products and services that all members of the segment values.
2.Discretionary options :- that some segment members value. Each option might carry an additional charge.
Example: Automobile industry – basic model is same but for A.C , power steering, power window buyer
has to pay extra price. Delta Airlines offers all economy
passengers a seat and soft drinks. It charges economy passengers extra for alcoholic beverages.
Market Segments can be defined in many different ways. One way to carve up a market is to identify Preference segments
Suppose ice cream buyers are asked how much they value sweetness and creaminess as two product attributes. Three different patterns can emerge.
Homogeneous preference : – where all the consumer have roughly the same preferences.– We would predict that existing brand would be similar and
cluster around the middle of the scale in both sweetness and creaminess.
Diffused preference :– consumers vary greatly in their preferences
Clustered preference :
creaminess
sweetness
Homogeneous Preference -no natural segments -all buyers have same preference
creaminess
sweetness
Diffused Preference -no pattern (…or poor research) -take center position
creaminess
sweetness
Clustered Preference -natural segments -increases as number of competitors increases
2. NICHE MARKETING Group of customers seeking a distinctive mix of benefits who are
ready to pay extra premium. Niche = segment sub – segments
Eg. Washing detergents hard & gentle washes . Surf excel for tough stains ( hard on clothes) & Ezee from Godrej for delicate clothes.
--- Astha , Sanskar , Q TV – focus on religion & spiritualism. DISTINCT NEEDS PAY PREMIUM SPECIALIZATION LESS COMPETITION POTENTIAL
3. LOCAL MARKETING
• Marketing programs tailored to the needs & wants of local customer groups in trading areas, neighborhoods , etc.
• this trend is called grass roots marketing.
Ex. – Spiderman 3 was released in 5 different language in India including bhojpuri.
ChitlePune sarees
Kashmiri silk
4. INDIVIDUAL MARKETING
• Ultimate segmentation – segments of 1 or customized marketing or one to one marketing.
• Customerization – empower the consumers to design the product or service offering of their choice.
• Ex. Paint companies have started doing this- Asian Paint , Nerolac , Berger Paints
• Arvind mills launched Ruff’n Tuff Jeans, branded ready – to – stitch
GEOGRAPHIC SEGMENTATION
Divide the market into different group based on :• Region – South India , North , Western Region, East• City – metro cities, cities with population more than 1
million• World• Density• Climate• States
Ex.- Mcdonalds globally, sell burgers aimed at local markets, for example, burgers are made from lamb in India rather then beef because of religious issues. In Mexico more chilli sauce is added and so on.
DEMOGRAPHIC SEGMENTATION
Segment Strategy
An ideal segment…• Has definable characteristics in terms of behavior
and demographics: for example, Retired Couples• Is large enough in terms of potential sales to justify
a custom marketing strategy with appropriate rewards and budget
• Has members who can be motivated by cost effective rewards to modify their behavior in ways that are profitable for your company
• Makes efficient use of available data to support segment definition and marketing efforts
• Can be measured in performance, with control groups
• Justifies an organization devoted to it: can be a single person, or part of a person’s time, but there should be someone who “owns” each segment.
Segment action plan:
• A roadmap showing what will happen when. “Send each policyholder a birthday card and a policy review 45 days before their policy renewal date.”
• A budget for the infrastructure and for the segment marketing plans
• An organization chart that shows who is responsible for each segment
• Specific goals to be achieved with milestones for measurement of success
BASES FOR SEGMENTINGMARKETS
CONSUMER:• Geographic• Demographic (age, income,
marital, occupation, ethnicity, etc.
• Psychographic (AIO, lifestyles)
• Behavioral (occasions, user status, usage rate, loyalty status, hierarchy of needs)
• Benefits
BUSINESS TO BUSINESS:• Demographic (industry,
size, location)• Customer Variables
(technology, user/nonuser, loyalty status)
• Purchasing(centralized/decentralized, functional orientation, contracts vs. bids vs. lease)
• Situational (urgency, order size, product application)
PSYCHOGRAPHIC SEGMENTATION
BEHAVIOURAL SEGMENTATION
OCCASIONS - Archies and Hallmark cards, Monaco at tea time.
BENEFITS – Shampoo for hair conditioning, cleaning , hair fall defence dandruff control
USER STATUS- light – medium – heavy user
LOYALTY STATUS- hardcore loyal , split loyal- loyal to 2-3 brand ,shifting loyal, switcher
PSYCHOGRAPHIC SEGMENTATION
• Actualizers (taste, finer things)• Fulfilleds (functionability, value, durability)• Believers (established products/brands)• Achievers (visibility to peers)• Strivers (emulation)• Experiencers (experiential consumption)• Makers (basic practical possessions)• Strugglers (urgent basic needs)