NANDA KISHORE SETHURAMANITM SEPTEMBER 2012

Introduction to Marketing

Agenda

What is Marketing Marketing Defined Core Concepts Marketing Process Marketing Philosophies Towards new marketing assumptions Functions of Marketing The Four 4 Ps The

Marketing Variables Market Segmenting

Identify sub-markets within market Decide which one(s) to pursue (target) Design marketing mix(es) to be attractive to targeted segment's Demographics - age, race, sex, income, education Geographic - country, state, urban/rural, climate Psychographics -attitudes, values, beliefs, personality traits Behavioral - benefits, usage. Market consists of people with both the desire and ability to buy

Marketing… Defined?!?!?!?!

What is Marketing?

Social definition – A societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others

Management definition – It is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals.

Marketing is an art and science

Function of Marketing

Marketing is meeting the needs of both the marketer and the customer Profitably.

The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself

Core Concepts & Marketing Philosophies

Core Concepts

NeedsWantsDemandExchangeTransaction

Needs and Wants

Needs are basic human requirements. Real needs Stated needs Unstated needs (assumptions) Delight needs Secret needs

Wants are needs directed to specific objects/services that might satisfy the need.

Hierarchy of Needs

Demand

Want for a specific product backed by an ability to pay.

Marketers should try to shape the wants. Many customers don't know what they want when the product, concept or service is new.

So companies help the customers to learn what they want.

Exchange

Get something (product /service) by offering something in return. Eg. kind (barter) or money (value )

Exchange is a value creating process because it leaves both parties better off (win – win situation)

Transaction

A transaction is an exchange between two things of value on agreed conditions and a time and place of agreement.

To make successful transaction a marketer should understand what each party expects from transaction.

What all gets Marketed today?

GoodsServices EventsExperiencesPersonsPlacesPropertiesOrganizationsInformationIdeas

Concepts

Production conceptProduct ConceptSelling ConceptMarketing ConceptHolistic Marketing ConceptSocietal marketing Concept

Production concept

Consumers will prefer products that are widely available and inexpensive.

Managers of production oriented businesses concentrate on achieving high production efficiency, low costs, mass distribution.

Selling Concept

It stems from the belief that consumers if left alone, will ordinarily not buy enough of the organization’s products. The organization must therefore, undertake and aggressive selling and promotion effort.

The aim is to sell what companies make rather that what the market wants.

Marketing Concept

Everything is from the customer’s end.Customer-centered, sense and response

philosophy.The job is to find right products for your

customers.The key to achieve organizational goals

consists of the company being more effective than competitors in creating, delivering and communicating superior customer value to its chosen target markers.

Holistic Marketing Concept

Based on development, design and implementation of marketing programs, processes and activities Relationship Marketing - Building long term mutually

satisfying relations with customers, suppliers, distributors in order to retain their long term preference and business.

Integrated Marketing - The tools that an organization employs to pursue its marketing objectives in the target market Product, Price, Place, Promotion 4 C’s – Customer solution, Cost, Convenience,

Communication

Holistic Marketing Concept

Internal Marketing Marketing Department Senior Management Other departments

Socially Responsible Marketing Cause and effect if marketing clearly extend beyond the

company and the customers. Ethics Environment Legal Community

Societal marketing Concept

Organization’s tasks is to determine the needs, wants and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well being.

Marketing Concept versus Selling Concept

Starting Point Focus Means Ends

Factory ProductSell and

Promote itProfits through

sales volume

The Selling Concept

MarketCustomer

needsIntegratedmarketing

Profits fromsatisfied customers

The Marketing Concept

“A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”

Marketing Defined

Marketing is the activity, set of instructions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

OLD view of marketing:

Making a sale—“telling and

selling”

NEW view of marketing:

Satisfying customer needs

Why is Marketing Important?

Sellers’ markets

Buyers’ markets

Shifting Business Paradigm

Marketing Process

Marketing and Customer Value

Value and Satisfaction Value = Benefits/Costs Benefits = Functional Benefits + Emotional benefits Costs = Monetary costs + Time + Energy + Psychic

costs

Value Creation and Delivery sequence

Before actually coming out with the product, the marketer must do: Customer segmentation Market selection focus Value positioning

How is it done?

Providing the value Product development Service development Pricing Distribution

Communicating the value Sales force Sales promotion Advertising

Value Chain

Understanding the value chain helps in creating better customer value

The primary activities Procurement of raw materials (inbound logistics) Converting them into final products (operations) Shipping out final products (outbound logistics) Marketing them (marketing and sales) Provide services

Value Chain (Contd)

Support activities Procurement Technology development Human resource management Firm infrastructure

Value exploration How can a company identify new value opportunities?

Value creation How can a company differently create more promising new

value offerings?Value delivery

How can a company use its capabilities and infrastructure to deliver the new value offerings more efficiently?

Strategic Planning

A game plan for achieving company’s long term objectives. Key areas Managing company’s business as an investment

portfolio Assessing each business that market. Establishing a strategy.

Planning, Implementation and Control

Planning Corporate planning Division planning Business planning Product planning

Implementing Organizing Implementing

Control Measuring results Diagnosing results Taking corrective

actions

Marketing Plan

It summarizes what the marketer has learnt about the marketplace and indicates how the firm plans to reach its marketing objectives.

It contains guidelines for marketing programs and financial allocations over the planning period.

Marketing Plan

A marketing plan is the central instrument for direction and coordination the marketing efforts.

The strategic marketing plan lays out the target markets and the value proposition that will be offered based on an analysis of the best market opportunities.

The tactical marketing plan specifies the marketing tactics including product features, promotion, merchandising ,pricing ,sales channels and service.

Objectives of the marketing plan

Acts as a roadmapAssist in management control and monitoring

the implementation strategyInforms new participants in the plan of their

role and functionTo obtain resources for implementationTo stimulate thinking and make better use of

resources.

Contents of a Marketing Plan

Summary of main goalsSituation analysisMarketing strategyFinancial projections

Sales forecast an expense forecast and break even analysis.

Implementation controls Review of each period’s results, steps to be taken in

response to specific environmental developments such as price wars.

Implications of Marketing

Who are our existing/potential customers?What are their current/future needs?How can we satisfy these needs/Can we offer a product/service that the

customer would value?Can we communicate with our customers?Can we deliver a competitive product or

service?Why should customers buy from us?

Marketing Variables(Marketing Mix)

The Marketing Mix

The Marketing Mix

The tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives

7Ps – Price, Product, Promotion, Place, People, Process, Physical Environment

Traditional 4Ps extended to encompass growth of service industry

Product

Product

Methods used to improve/differentiate the product and increase sales or target sales more effectively to gain a competitive advantage e.g. Extension strategies Specialised versions New editions Improvements – real or

otherwise! Changed packaging Technology, etc.

Price

Price

Pricing StrategyImportance of:

knowing the market elasticity

keeping an eye on rivals

Place

Place

The means by which products and services get from producer to consumer and where they can be accessed by the consumer The more places to buy the product and the easier it is

made to buy it, the better for the business (and the consumer?)

Promotion

Promotion

Strategies to make the consumer aware of the existence of a product or service

NOT just advertising

People

People

People represent the business The image they present can be important First contact often human – what is the lasting image

they provide to the customer? Extent of training and knowledge

of the product/service concerned Mission statement – how relevant? Do staff represent the desired culture

of the business?

Process

Process

How do people consume services?What processes do they have to go through to

acquire the services?Where do they find the availability

of the service? Contact Reminders Registration Subscription Form filling Degree of technology

Physical Environment

Physical Environment

The ambience, mood or physical presentation of the environment Smart/shabby? Trendy/retro/modern/old fashioned? Light/dark/bright/subdued? Romantic/chic/loud? Clean/dirty/unkempt/neat? Music? Smell?

The Marketing Mix

Blend of the mix depends upon:Marketing objectivesType of productTarget marketMarket structureRivals’ behaviourGlobal issues – culture/religion, etc.Marketing positionProduct portfolio

Product lifecycle Boston Matrix

The Marketing Mix

Blend of the mix depends upon:Marketing objectivesType of productTarget marketMarket structureRivals’ behaviourGlobal issues – culture/religion, etc.Marketing positionProduct portfolio

Product lifecycle Boston Matrix

Factors Influencing Company Marketing Strategy

Market Segmenting

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Segmentation, Targeting, Positioning

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Learning Goals

1. Learn the three steps of target marketing, market segmentation, target marketing, and market positioning

2. Understand the major bases for segmenting consumer and business marketing strategy

3. Know how companies identify attractive market segments and choose target marketing strategy

4. Realize how companies position their products for maximum competitive advantage in the marketplace

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• Sells multiple brands within the same product category for a variety of products

• Brands feature a different mix of benefits and appeal to different segments

• Has also identified different niches within certain segments

• Product modifications are useful: Tide offers seven different product formulations to serve different niches’ needs

Case Study - Procter & Gamble

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Market Segmentation Identify bases for segmenting the market Develop segment profiles

Target Marketing Develop measure of segment attractiveness Select target segments

Market Positioning Develop positioning for target segments Develop a marketing mix for each segment

Steps in market segmentation, targeting and positioning

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Segmentation

In other words…

A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. it is distinct from other segments

(heterogeneity across segments) it is homogeneous within the segment

(exhibits common attributes) it responds similarly to a market

stimuli it can be reached by a market

intervention

Increase marketing efficiency by focusing marketing efforts to a particular group

Maximize scarce marketing resources

Find a market with limited competition

Select the most profitable segment

Purpose

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Linking Market Need to a Marketing Program

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Segmentation Bases

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Geographic Segmentation

BlankBlank73

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Demographic Segmentation

1945 1965 1976 1994

Baby Boomers

Generation X

Generation Y

Mature Market

Demographics - Marketing across Generations

Mature MarketMature Market

Generation XGeneration X

Generation YGeneration Y

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Behavioral Segmentation

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Psychographic Segmentation

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Segmenting International Markets

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Dell, across the globe

Requirements for Effective Segmentation

• Size, purchasing power, profiles of segments can be measured.

• Segments must be effectively reached and served.

• Segments must be large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

ActionableActionable

• Segments must respond differently to different marketing mix elements & actions.

• Must be able to attract and serve the segments.

Market Segmentation Process

1. Determine the characteristics of segments in the target market & separate these segments in the market based on these characteristics.

2. Verify the market segments size if adequate enough to support the organization's product.

3. Develop a marketing strategy to target this market.

End of Day 1