shaggy bom notes

BASICS OF MARKETING

SAGAR PRADEEP SONAWANE

What is Marketing?

Selling ?

Advertising?

Promotions?

Marketing is managing profitable customer relations

Marketing defined by AMA

The new definition reads:“Marketing is the activity, set of institutions and processes for creating, communicating,delivering, and exchanging offerings that have value for customers, clients, partners, andsociety at large.”

The previous definition stated:“Marketing is an organizational function and a set of processes for creating, communicating,and delivering value to customers and for managing customer relationships in ways thatbenefit the organization and its stakeholders.”

MARKETING DEFINED…….

The process by which companies create value for customers and build strong relationship in order to capture value in return. – P. KOTLER.

“ The aim of marketing is to make selling unnecessary” - PETER DRUCKER

SCOPE

WHAT IS MARKETED ????????

WHAT IS MARKETED? GOODS

TV, Bike, Car

SERVICES Airlines, Hotels, doctors, lawyers

EXPERIENCES

Amusement parks, Water park, theme restaurants

EVENTSOlympics, company anniversaries, major trade shows, sports event and artistic performances, world cup

PERSONSCelebrity marketing has become a major business. Eg artists, musicians, politicians etc

WHAT IS MARKETED?

PLACESKerala –Gods own country, Incredible India, Silicon Valley – Bangalore, Pune - …..

PROPERTIESProperties are intangible right of ownership of either real property (real estate) or financial property (stocks and bonds)

ORGANIZATIONSOrganizations actively work to build a strong, favorable image in the mind of their publics eg TATA,

INFORMATIONSInformation can be produced and marketed as a product. Eg – Siemens Mediacal Systems –

IDEASEvery market offering includes a basic idea at its core eg Encouraging family planning , Discouraging smoking, JAGO – RE – Tata Tea, etc

MARKETING PROCESS

UNDERSTAND THE MARKETPLACE &

CUSTOMER NEEDS & WANTS

DESIGN A CUSTOMER –

DRIVEN MARKETING STRATEGY

CONSTRUCT AN INTEGRATED

MARKETING PROGRAM THAT DELIVERS

SUPERIOR VALUE

BUILD PROFITABLE RELATIONSHIP AND CREATE CUSTOEMR

DELIGHT

CAPTURE VALUE FROM CUSTOMERS TO PROFITS AND CUSTOMER EQUITY

1. UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS

CORE CONCEPTS OF MARKETINGCUSTOMER NEEDS, WANTS & DEMAND :NEEDS – States of felt deprivationEg. a. Physical needs – food, clothing,

shelter, warmth safety. b. Social needs – for belonging & affection c. Individual needs – for knowledge & self

expression


CORE CONCEPTS OF MARKETINGNEEDS – 1. Stated Needs: The customer wants an inexpensive car2. Real Needs : The customer wants a car whose

operating cost, not its initial price is low.3. Unstated Needs: The customer expects good service

from the dealer4. Delight needs : The customer would like the dealer to

include an onboard navigation system.5. Secret Needs : The customer wants friends to see him

as a savvy consumers


CORE CONCEPTS OF MARKETINGNEEDS – Responding to stated needs –

shortchange the customer.

Eg. Nokia, Apple Companies must help customers learn

what they want.


CORE CONCEPTS OF MARKETINGWANTS : The form of human needs take

as shaped by culture and individual personality.

Eg. Needs food but wants …..DEMAND : Human wants that are backed

by buying power ( Ability to pay) & willingness to buy.


CORE CONCEPTS OF MARKETING

VALUE PROPOSITION : A SET OF BENEFITS THAT COMPANY OFFERS TO SATISFY CUSTOMER NEEDS

MARKET OFFERINGS : The intangible value proposition is made physical by an offering. Market offering is some combination of product, services, information or experience offered to market to satisfy a need or want.

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VALUE VALUE

Value = Benefit / CostBenefit = Functional Benefit + Emotional

BenefitCost = Monetary Cost + Time Cost +

Energy Cost + Psychic Cost

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CUSTOMER SATISFACTION & CUSTOMER DELIGHT CUSTOMER SATISFACTION & CUSTOMER DELIGHT

Customer Delight:

Product Performance > Expectations

Customer Satisfaction:

Product Performance = Expectations

Customer Dissatisfaction:

Product Performance < Expectations



PRODUCT-Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need.

It includes physical objectives, services, persons, places, organizations, ideas etc.



EXCHANGE : The act of obtaining a desired object from someone by offering something in return.

TRANSACTION : Transaction is a trade between two parties that involves at least two things of value, agreed-upon conditions, time of agreement and a place of agreement.



MARKET : Traditionally market was place where buyers and sellers gathered to buy or sell goods.

P. Kotler: Defines market as the set of all actual and potential buyer of a product or service


Markets:

Manufacturer Markets

Government Markets

Consumer Markets

Intermediary Markets

Resource Markets

Resources

Money

Resources

Money

Money

Goods and services

Money

Goods and services

Service, Money

Service, Money

Taxes, goods

Taxes, goods

Service, Money

Taxes, goods

Taxes

goods


Market places, Market spaces & Metamarkets:

Market place : The marketplace is physical. E.g. – store you shop in.

Market space : Marketspace is digital, as when you shop on Internet.

Metamarkets : Metamarket describes cluster of complementary products and services

that are closely related in the minds of consumer, but spread across diverse set of industries. E.g. Automobile Metamarket.

1.UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS

A Modern Marketing System :

Suppliers

Company

Channel

Members

Consumers

Competitors

2. DESIGNING A CUSTOMER DRIVEN MARKETING STRATEGY

1. Who it will serve?2. How it will serve?Eg TATA Nano – Is this a right decision?

STRATEGY :

SegmentationTargeting DifferentiationPositioning


Marketing Orientations (Philosophies):

The Production Concept The Product Concept The Selling Concept The Marketing Concept The Societal Marketing Concept



The Production Concept :“The idea that consumers will favor products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency”.

E.g. Lenovo – Dominates Chinese PC Market



The Product Concept :“The idea that consumers will favor products that offer the most quality, performance and features and that the organization should therefore devote its energy to making continuous product improvements”.

Note: Product concept can lead to Myopia.



The Selling Concept :“The idea that consumers will not buy enough of the firm’s products unless it undertakes a large – scale selling & promotion effort”.

E.g. Insurance



The Marketing Concept :“The Marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors do”.


SELLING CONCEPT MARKETING CONCEPT

Starting Point – Factory Focus – Existing

Products Means – Selling &

Promoting Ends – Profits through

sales volumes

Starting Point – Market Focus – Customer Needs Means – Integrated

Marketing Ends – Profits through

Customer satisfaction



The Societal Marketing Concept :“The idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long – run interests and society’s long – run interests

E.g. Bottled water industry


Product Concept leads to …….

Marketing Myopia :

Myopia : Short Sightedness.Ted Levitt – HBR 1960Eg. American Rail , Bajaj Auto

Definition: The mistake of paying more attention to specific products a company offers than to the benefits & experiences produced by these product.

3. PREPARING AN INTEGRATED MARKETING PLAN & PROGRAM

Company’s marketing strategies outlines Which customers to serve How it will create value for these

customers

3. PREPARING AN INTEGRATED MARKETING PLAN & PROGRAM

Need satisfying market offering – PRODUCT Amount to be charged for the offering -

PRICE Making the offering available to the

customers – PLACE Communicate Offering & persuade them

of its merits – PROMOTION 4Ps OF Marketing - Marketing Mix – TOOLS

MARKETING MIX

4. BUILDING CUSTOMER RELATIONSHIPS

Customer Relationship Management: The overall process of building & maintaining profitable customer relationship by delivering superior customer value & satisfaction.

a. Customer relationship levels & tools: E.g. HUL, Harley Owners Group HOG

(Magazines, touring handbook, roadside assistance, insurance, fly & ride program)


b. Relating with more carefully selected

customers E.g.. Best Buy – Customer-centricity

strategy, Angels & Demons.

c. Relating more deeply & Interactively. E.g.. Social networking , Online communities, Pantene.


d. Partner Relationship Management:- Partners Inside the Company E.g.. P & G – Customer development

teams

Marketing Partners Outside the Firm Suppliers, Distributors, Dealer,

Retailers.

5. CAPTURING VALUE FROM CUSTOMERS

Creating Customer Loyalty E.g. Shoppers Stop – Reward Points

Customer lifetime value:The value of entire stream of purchases that the customer would make over a lifetime of patronage.

Customer Equity Increasing share of customer

MARKETING PROCESS

UNDERSTAND THE MARKETPLACE &

CUSTOMER NEEDS & WANTS

DESIGN A CUSTOMER –

DRIVEN MARKETING STRATEGY

CONSTRUCT AN INTEGRATED

MARKETING PROGRAM THAT DELIVERS

SUPERIOR VALUE

BUILD PROFITABLE RELATIONSHIP AND CREATE CUSTOEMR

DELIGHT

CAPTURE VALUE FROM CUSTOMERS TO PROFITS AND CUSTOMER EQUITY

GOODS SERVICES CONTINUUM

WE DISCUSSED….

Scope & importance Core concepts Marketing process Philosophies / orientations

CAN ANYONE DEFINE MARKETING?

DEFINITION OF MARKETING

THE PROCESS BY WHICH COMPANIES CREATE VALUE FOR CUSTOMERS AND BUILD STRONG RELATIONSHIPS IN ORDER TO CAPTURE VALUE FROM CUSTOMERS IN RETURN .

– P. KOTLER.

TO CREATE VALUE ..

Value for whom? ……………………………for CUSTOMERS.

Who is customer?

“A customer is the most important person ever in this office …..in person or by mail.”

WHO IS CUSTOMER?

A customer is not dependant on us ….we are dependant on him

We are not doing favor by serving him……………………………………….he is doing favor by giving us the opportunity to do so.

WHO IS CUSTOMER?

A customer is not interruption of our work………………………………………............................. he is purpose of it.

………….So it is must for any & every organization to understand customer first (The purpose of organization)

Importance of studying consumer behaviour.

Buying process Factors influencing consumer buyer

behaviour.

Why we should Study Consumer Behaviour ?

IMPORTANCE

To know –

Why customers buy ?

Motives

fear vanity pridepossession love & affection convenience

health & physical well being

IMPORTANCE

To know –

What buys?when buys?Where buys?How buys?

IMPORTANCE

Why to know these things?

To design Strategy & Marketing Plan Related to Product (What) Related to Place (where) Related to Frequency (when) Related to price / promotions (How) Overall marketing Efforts.

CONSUMER BEHAVIOUR

Definition :

“Consumer behaviour is the study of when, why, how, and where people do or do not buy a product.”

FACTORS/ CHARACTERISTICS INFLUENCING BUYER BEHAVIOUR

What are the factors that can influence buyer behaviour ????


1. Buyer’s Characteristicsa. Cultural Factors - Culture, Subculture, social

classb. Social Factors – Social groups, Ref. groups,

opinion leader, family, roles & statusc. Personal Factors – Age, Life cycle stage,

education, occupation, Economic situation, life style, personality, self concept

d. Psychological Factors - Motivation, perception, learning, belief & attitude


2. Product Characteristicsa. Attributes / featureb. Qualityc. Availabilityd. Price e. Packagingf. Promotionsg. Brand


3. Seller’s Characteristics

a. Repute & Reliability of Producerb. Repute & Reliability of Authorized stockiest


4. Situational Characteristics:

a. Festive Seasonb. Marriagec. Religious occasionsd. Seasonal Productse. Scarcity in Product ( Artificial demand)

1. Buyer’s Characteristics:Cultural - Culture, Subculture, social classSocial – Ref. groups, family, roles & statusPersonal – Age, Life cycle stage, education, occupation, Economic situation, personality, life style, self conceptPsychological- Motivation, perception, learning, belief & attitude

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Factors/ Characteristics

influencing buyer behaviour

BUYER DECISION PROCESS

5 STEP BUYER DECISION PROCESS (CONSUMER BUYING)

1. NEED RECOGNITION

2. INFORMATION SEARCH

3. EVALUATION OF ALTERNATIVES

4. PURCHASE DECISION

5. POST PURCHASE BEHAVIOUR

BUSINESS BUYING PROCESS

The decision process by which business buyers determine which products and services their organization need to purchase, and then find, evaluate and choose among alternative suppliers and brands.


1. PROBLEM RECOGNITION :The first step of business buying process in which someone in the company recognizes a problem or need that can be met by acquiring a good or a service.


2. GENERAL NEED DESCRIPTION :The stage in the business buying process in which the company describes the general characteristics and quantity of a needed item.


3. PRODUCT SPECIFICATION :The stage of the business buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item.


4. SUPPLIER SEARCH :The stage of business buying process in which the buyer tries to fine the best vendors.


5. PROPOSAL SOLICITATION:The stage of business buying process in which the buyer invites qualified supplier to submit proposal.


6. SUPPLIER SELECTION:The stage of business buying process in which the buyer reviews proposal and select a supplier or suppliers.


7. ORDER-ROUTINE SPECIFICATION:The stage of business buying process in which the buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties.


8. PERFORMANCE REVIEW:The stage of business buying process in which the buyer assesses the performance of the supplier and decides to continue, modify or drop the arrangement.


Stages of Business Buying Process

1. Problem Recognition 5. Proposal Solicitation

2. General need description

6. Supplier Selection

3. Product Specification 7. Order- routine specification

4. Supplier Search 8. Performance Review.

CONSUMER MARKET & ORGANIZATIONAL MARKET BUYING BEHAVIOUR

Parameter

Organizational Market – Consumer Behaviour

Consumer Market – Domestic buyer Behaviour

Type Micro ( Concerned @ function)

Macro ( Concerned @ function, style, use, fashion etc.

Role of packaging

Protection Promotion

Price Negotiation

More concerned Less concerned

Method of Buying

Direct buying Through channels

Method of Buying

Rational Buying (Head) Emotional Buying (Heart)

People Involved

More Less

CONSUMER MARKET & ORGANIZATIONAL MARKET

Parameter Organizational Market – Consumer Behaviour

Consumer Market – Domestic buyer Behaviour

Influence Public Relations Advertisement

Proposal Proposal solicitation & Qualifying suppliers

Less bothered to invite proposals

Impulse buying

Absent Present

No of Buyers

Limited Unlimited

Time Spends more time, High Price

Spends less time, low price

Nature of market

Concentrated Scattered

E.G. Raw Material, Parts, Accessories

Convenience goods, soap, furniture

BUYING DECISION BEHAVIOUR

TYPES OF BUYING DECISION BEHAVIOUR

INVOLVEM ENT HIGH

INVOLVEMENT LOW

DIFFERENCES BETWEEN BRANDS - SIGNIFICANT

COMPLEX BUYING BEHAVIOUR

VARIETY SEEKING BUYING BEHAVIOUR

DIFFERENCE S BETWEEN BRANDS - FEW

DISSONANCE REDUCING BUYING BEHAVIOUR

HABITUAL BUYING BEHAVIOUR

PARTICIPANTS IN CONSUMER BUYING

PARTICIPANTS IN CONSUMER BUYING

1. Initiator :The person who determines that some need or

want is to be met)

2. Influencer : The person/persons who intentionally or unintentionally influence the decision to buy 3. Buyer :The person who actually makes a purchase

4. User :The person/persons who actually use/consume the product

PARTICIPANTS IN BUSINESS BUYING

Buying center All the individuals and units that play a role in the purchase decision-making process.

PARTICIPANTS IN INDUSTRIAL (BUSINESS) BUYING

1. Users : Actual Users (front line operators/ Labour)

2 Influencers : who affect buying decision (Design Dept. provides specifications,3. Deciders: who have formal /informal power to select or approve4. Buyers : who make an actual purchase (formal authority, purchase dept.5. Gatekeepers : who control the flow of information (security, personal secretary,recp.)

BUSINESS BUYING SITUATIONS

Straight Rebuy : A business buying situation in which the buyer routinely reorders something without any modifications.


Modified Rebuy : A business buying situation in which the buyer wants to modify product specifications, prices, terms or suppliers


New Task : A business buying situation in which the buyer purchases a product or service for the first time.

3. THE MARKETINGENVIRONMENT

MARKETING ENVIRONMENT

Marketing Environment The actors and forces that affect a firm’s ability to build and maintain successful relationships with target customers.

Marketing environment:

Microenvironment Macroenvironment

MICROENVIRONMENT:

The actors close to the company that affect its ability to serve its customers.

Controllable factors.

COMPANY’S MICROENVIRONMENT

Company Suppliers Customer

Markets

Competitors Public Marketing

Intermediaries

MICROENVIRONMENT

MICROENVIRONMENTThe Company : Departments within the

company impact marketing planning.

Suppliers : Suppliers help create and deliver customer value.

Treat suppliers as partners.

Intermediaries: Marketing intermediaries help sell, promote, and distribute goods.Intermediaries take many forms.

MICROENVIRONMENTCustomer : Organization Can serve any

customer Customers are nothing but markets Consumer market, business market, government

market, reseller and international markets.

Competition: Successful companies provide better customer value than the competition. Size and industry position help to determine the

appropriate competitive strategy.

Public: Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objective

Financial - Gain access to business funds Media - Maintain positive publicity Government - Must comply with

regulations Citizen action – Consumer organizations

and minority groups Local - Generate good community

relations General - Gain acceptance by general

public Internal- Positive staff attitude/

motivation.

Customers: The firm can operate in any one or all

five types of customer markets: 1. Consumer markets2. Business markets3. Reseller markets4. Government markets5. International markets

THE MACROENVIRONMENT

THE MACROENVIRONMENT:

The larger societal forces that affect the microenvironment.

Uncontrollable factors.

COMPANY’S MACROENVIRONMENT


Demographic

Economic Natural

(Environmental)

Technological

Political Socio-

Cultural

Macroenvironmental Forces


Demographic Environment :

Demography is the study of human population in terms of size, density, location, age, gender, race, occupation and other statistics.

DEMOGRAPHIC ENVIRONMENT :

KEY DEMOGRAPHIC CHANGES

Increasing Population A growing middle class Growth in the rural population A changing family system from joint to

nuclear The changing role of women A better educated, more white-collard,

more professional population Increasing diversity ( Japan & US)

.

DEMOGRAPHIC ENVIRONMENT :

Population classification:1. Deprived households (<90K)

e.g. Unskilled workers, 2. Aspirers (90K-200K)

e.g. small farmers, low skilled workers3. Seekers(2 – 5 LPA)

e.g. White collar, employed young postgraduates, medium scale traders.

4. Strivers ( 5-10 LPA)e.g. CAs, MBAs, Senior gov. officials, rich farmers

5. Global Indians ( More than 10 LPA)e.g. Large b’ness owners, topmost professionals, film actors, big farmers, graduates from leading educational institutes

MGI ( Mckinsey Global Institute) defines middle class as a combination of seekers and strivers ( 2-10 LPA)

THE ECONOMIC ENVIRONMENT :

Factors that affect consumer buying power and spending pattern

THE ECONOMIC ENVIRONMENT

Affects consumer purchasing power and spending patterns.

Two types of national economies: subsistence vs. industrial.

In between are developing economies

Indian consumers now spend carefully and desire greater value.

THE ECONOMIC ENVIRONMENT

Key Economic Trends Indian income distribution.

Upper class, middle class, working class and the underclass.

As Per MGI report, middle class is rising and is expected to be 41 % of the population by 2025

Consumer spending patterns are changing.

Global Financial crisis

THE NATURAL ENVIRONMENT

The natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.


Concern for the natural environment has grown steadily, increasing the importance of these trends: Shortage of raw materials Increased pollution Increased governmental intervention


Shortage of raw materials :-By 2030, more that one in three of the world’s human being will not have enough of water to drink.-Renewable resources such as forests and food also have to be used wisely.- Non renewable resources, such as oil, coal, minerals, pose a serious problem-Firms using scares resources face large cost increase


Increased pollution :-Industry will almost always damage the quality of the natural environment

-Disposal of chemical and nuclear wastes-Dangerous mercury levels in the ocean-The quantity of chemical pollutants in the soil and food supply-The littering of the environment with nonbiodegradable bottles, plastics, and other packaging materials.


Increased government interventions:-In natural resource management, the govt. of different countries vary in their concern and efforts to promote a clean environment.

e.g. German Govt., vigorously pursue environmental quality, many poor nations, do little about pollution, may be b’coz of lack of funds, political will.

-Govt’s pressure on industries by legislation

TECHNOLOGICAL ENVIRONMENT

Forces that create new technologies, create new products and market opportunities


The technological environment is the most dramatic force, shaping our destiny.

New technologies create new markets and opportunities, however every new technology replaces an old technology.


e.g. Robotic surgery, miniaturized electronics, laptop, computer and the internet, nuclear missiles, chemical weapons, automobile, television, credit cards, RFID, etc

THE POLITICAL & SOCIAL ENVIRONMENT

Includes laws, governmental agencies, and pressure groups that impact organizations and individuals. Key trends include:

Increased legislation to protect businesses as well as consumers.

Increased emphasis on ethical behavior and social responsibility.

Increase in Business Legislation – Business legislation has four main

purposes : to protect companies from unfair

competition, to protect consumers from unfair business

practices, to protect the interests of society from

uncontrolled business behaviour, and to charge businesses with the social costs

created by their products or production processes.

Growth of special interest groups –

Consumerist movement – an organized movement by the citizens and govt. to strengthen the rights and powers of buyers in relation to sellers.

In order to protect the interest of consumers, govt. of India has passed legislation under the Consumer Protection Act 1986.

Six rights of consumers are recognized – 1. Safety – The right to be protected against

the marketing of goods and services that are hazardous to life and property.

2. Information – Protection against unfair trade practices, and the right to be informed about the quality, quantity, purity, standard and price.

3. Choice – The right to choose a variety of products and services at competitive prices.

4.Representation – The right to be heard and be assured that the consumer’s interests are received due considerations at appropriate forums.

5.Redressal – The right to seek redressal against unfair and restrictive trade practices and exploitation of consumers.

6.Consumer Education – Right to consumer education.The legislation ensures establishment of consumer dispute redressal forums such as District Forums prescribes specific processes to address consumer complaints with speed and in an inexpensive manner.

CULTURAL ENVIRONMENT

CULTURE :

The set of basic values, perceptions, wants and behaviours learned by a member of society from family and other important institutions.


BASIC VALUES : A child normally learns or is exposed to following values;

Achievement & success Activity & involvement Efficiency & practicality Progress, hard work, material comfort

Respect for elders, youthfulness etc


Is composed of institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors.

Culture can influence decision making.

Core beliefs are persistent; secondary cultural values change and shift more easily.

The cultural values of a society are expressed through people’s views.

Fad- unpredictable, short-lived, and

without social, economic and political significance.

Trend- Is a direction or sequence of events

that has some momentum and durability.

Trends are more predictable and durable than fads.

Megatrends- Large social, economic, political,

and technological changes that are slow to form and once in place, they influence us for some-time between 7 to 10 yrs, or longer.

RESPONDING TO THE MARKETING ENVIRONMENT

Reactive: Passive Acceptance and Adaptation .

Proactive: Environmental Management

UNIVERSITY QUESTIONS What do you mean by Marketing Environment? Discuss the various types of

marketing environmental forces influencing marketing decisions.- May 07

‘Marketing managers have to constantly take and revise their marketing decisions considering the changes in the internal and external marketing environmental forces. ‘ Comment. Explain various types of environmental forces and factors influencing marketing decisions. – Dec07

What is meant by the terms – Macro environment & Micro environment? Explain the term PEST analysis in the context of macro environment.

- May 08 Discuss various types of macro & micro environmental forces influencing

marketing decisions. What do you mean by marketing environment. Discuss various types of

marketing environment. Focus in few things marketing decisions. Give suitable illustration for Indian marketing world.

Marketing Managers have to constantly take and revise their marketing decisions considering the changes in macro environmental forces” comment. Explain various types of environmental forces and factors influencing marketing decision. Dec09

Short Notes : STEP Analysis.

WE DISCUSSED………

1. Introduction to marketing2. Consumer Behaviour3. Marketing Environment

If we check marketing process…Step1.Understanding Needs, want, market.Step2.Designing customer driven

marketing strategy.

OBJECTIVES

1. Understand major steps in designing a customer driven marketing strategy.

2. Discuss the major bases for segmenting consumer markets & business markets

3. Understand how companies identify attractive market segments and choose a market targeting

4. Discuss how companies differentiate and position their products for competitive advantage in the marketplace.

CUSTOMER DRIVEN MARKETING STRATEGY

Who it will serve? How it will serve?

…..Select customers to serve…..Decide on a value proposition

WHAT IS MARKET SEGMENTATION?

-Market segmentation is sub-dividing of a market in to

homogeneous sub-sects of customers where any sub-sect may

conceivably be selected as a market target to be reached with a

distinct marketing mix. - P. Kotler

- Market Segmentation consists of taking the total

heterogeneous market for a product and dividing it in to

several submarkets or segments, each of which tend to be

homogeneous in all respects. - William Stanton.

WHY MARKET SEGMENTATION?

To locate market opportunities To find varying & specific needs of different

customers To set selling objectives To prepare marketing plans, actions. To identify new profitable segments To deal with competition To analyze, assess & interpret the motivation,

belief & attitude, behaviour & habits of each indefinite sub-group in market.

HOW TO DO SEGMENTATION?

MAJOR SEGMENTATION VARIABLES / BASES

Geographic Segmentation

Demographic Segmentation

Psychographic Segmentation

Behavioral Segmentation

GEOGRAPHIC SEGMENTATION

Dividing the market into different geographic units

Nations States Regions Density Cities Climate

GEOGRAPHIC SEGMENTATION

DEMOGRAPHIC SEGMENTATION

Dividing the market into groups based on demographic variables Age Gender (Clothing, cosmetics etc) Family size Family life cycle Income ( Automobile) Occupation Education

PSYCHOGRAPHIC SEGMENTATIONDividing buyers into different groups

based on

social class lifestyle personality traits/characteristics

Religion

Value &

Lifestyle

Product/

Brand Choice

s

BEHAVIOUR SEGMENTATION Buyers are divided into groups based on their

knowledge of, attitude towards, and use or response to a product

Types Occasion segmentation- Regular, Special,

holiday Benefits sought- Quality, service, economy,

convenience User status- Nonuser, potential, first time,

regular Usage rate- light, medium, heavy Loyalty status – None, medium, strong,

absolute Buyer readiness stage – Unaware, aware,

informed, desirous, intending to buy.

CRITERIA FOR GOOD SEGMENTATION

EACH MARKET SEGMENT SHOULD BE…

Measurable

Accessible

Actionable

Substantial

Differentiable

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

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

ActionableActionable

• Effective programs can be designed to attract and serve the segments.

REQUIREMENTS FOR EFFECTIVE SEGMENTATION

DifferentiableDifferentiable• Each segment should be different

TARGETING

Target Market:A set of buyers sharing common needs or characteristics that the company decides to serve.

Targeting: The process of evaluating each market segments attractiveness & selecting one / more segments to enter.

MARKET TARGETING

Evaluating Market Segments

Selecting Market Segments

Choosing a Market-Coverage Strategy

EVALUATING MARKET SEGMENTS

Segment Size and Growth

Segment Structural Attractiveness

Company Objectives and

Resources

SELECTING TARGET MARKET SEGMENT/S

Undifferentiated Marketing

Differentiated Marketing

Concentrated (Niche)Marketing

Micromarketing- Local Marketing & Individual Marketing


Undifferentiated (Mass) Marketing:

“A market – coverage strategy in which firm decides to ignore market segment differences and go after the whole market with one offer.”

UNDIFFERENTIATED MARKETING

Single product addressing all segments with a single marketing program.

Mass production is possible giving scale economies

Pushes price downwards enabling to attract price sensitive segments


Differentiated (Segmented) Marketing:

“A market – coverage strategy in which firm decides to target several market segments and designs separate offers for each.”

DIFFERENTIATED MARKETING

A separate market offering for every segment

Marketing programs for every segment could be different

Pushes up costs at various levels, call for sufficient volumes for viability

Generates inter-segment rivalry


Concentrated (Niche) Marketing:

“A market – coverage strategy in which firm goes after a large share of one or few segments or niches. ”

NICHE MARKETING

What is an attractive niche ? A distinct set of needs A premium can be charged Not likely to attract competition Gains certain economies through

specialization Sufficient size, profit and growth

potential

SELECTING TARGET MARKET SEGMENTS

Micromarketing (local or individual marketing):

“The practice of tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups-includes local marketing and individual marketing”.

SELECTING TARGET MARKET SEGMENTS

Local Marketing :“Tailoring brands & promotions to the needs and wants of local customer groups – cities, neighborhoods and even specific stores”.

Individual Marketing :“Tailoring marketing programs to the needs & preferences of individual customers – also labeled one-to-one marketing”.

LOCAL MARKETING

When the marketing mix is altered to suit the local conditions

eg. Giving a higher/ lower discount than what’s prevailing in the rest of the markets

or implementing a different promotion scheme

INDIVIDUAL MARKETING

When the firm deals with each customer on a one – to – one basis

When products are customized for the customer

CHOOSING A MARKET – COVERAGE STRATEGY

Company resources

Product Variability

Market Variability

Competitors’ strategies

TARGET MARKET SELECTION :

DIFFERENTIATION & POSITIONING

Differentiation:Actually differentiating company's product from competitor’s product.

Positioning:The process of acquiring clear, distinct & favorable space in the minds of customers for company’s product relative to competing products.

PRODUCT DIFFERENTIATION Physical Attribute Differentiation

Service Differentiation

Personnel Differentiation

Location Differentiation

Image Differentiation

POSITIONING STRATEGIES

Positioning by attributes / features / specifications

Positioning by Price & quality Positioning by function / use /

application Positioning by product class Positioning by user Positioning by competitor

CHOOSING AND IMPLEMENTING A POSITIONING STRATEGY

1. Identifying a set of possible competitive advantages upon which to build a position

2. Selecting the right competitive advantages

3. Effectively communicating and delivering the chosen position to a carefully selected target market

SELECTING THE RIGHT COMPETITIVE ADVANTAGES Competitive Advantage:

An advantage over competitors gained by offering greater customer value, either through lower price or by providing more benefits that justify higher price

Avoid: Under positioning Over positioning Confused positioning

SELECTING THE RIGHT COMPETITIVE ADVANTAGES

How many differences to promote? Which differences to promote?

Brand differences should meet the following criteria prior to marketing: Important Distinctive Superior Communicable Preemptive Affordable Profitable

SELECTING AN OVERALL POSITIONING STRATEGY

PRICE

BENEFITS

Possible value Propositions

MORE THE SAME LESS

MORE MORE FOR MOREApple iPhone

MORE FOR THE SAME

Lexus- Toyota

MORE FOR LESS

Tata- Indica

THE SAME

THE SAME FOR LESS

Wal-Mart, Big Bazaar

LESS LESS FOR MUCH LESSMaruti 800, Nano,IndiGo

Airlines

UNIQUE SELLING PROPOSITION (USP)

Unique selling proposition is a set of features that would distinguish a product from its competitors in the market and thus create its identity.

USP by-Form, - Durability

-Feature, - Reliability-Performance - Reparability-Conformance -

shaggy bom notes

Documents

real needs

delight needs

individual needs

needs states

social needs

secret needs

unstated needs

marketing process