Marketing Management- Sem I

Marketing Management

E-MBA @ MET
(e-empowered)

Prof. Rajkamal Pandey (RKP)

Prof. RKP MET Institute of Management- eMBA
 Marketing Management- Sem I

Core Content

• Module 1 : Marketing Fundamentals

• Module 2 : Market Offerings

• Module 3 : Marketing Insights

• Module 4 : Marketing Strategies

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Module 1 – Marketing Fundamentals

• 1.a : Core Concepts
• 1.b : Marketing
• 1.c : Importance of Marketing
• 1.d : Evolution of Marketing
• 1.e : Selling v/s Marketing

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

The aim of marketing should be to

understand and satisfy the consumer’s actual
need to optimum

- Kishore Biyani

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Product Consumer

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Core Concepts
Needs, Wants and Demand*
• Needs are the basic human requirements. People need air, food, water, clothing
and Shelter to survive. People also have strong needs for recreation, education and
entertainment.
• These needs become Wants when they are directed to specific objects that might
satisfy the need.
• Demands are wants for specific products backed by an ability to pay.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Core Concepts
Product and Consumer
• Product : Any offering which possess an ability to fulfill the basic need of an
individual.

• Consumer : Any individual who has propensity to consume and willingness to pay.

Market

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Core Concepts
Market
• Traditionally, a “market” was a physical place where buyers and sellers gathered
to buy and sell goods.
• The concept of a market is any structure that allows buyers and sellers to exchange
any type of goods, services and information.

• A market consists of customers, suppliers, and channels of distribution, and

mechanisms for establishing prices and effecting transactions. For example, the
softdrink market comprises the manufacturers, bottlers, distributors, retailers,
restaurants, and consumers

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Core Concepts
Key Markets
• Consumer Markets : Companies selling mass consumer goods and services such as
soft drinks, cosmetics, air travel and shoes spend a great deal of time trying to
establish a superior image. Much of a company’s strength depends on developing a
superior product and packaging, distribution and communications and after sales
services
• Business Markets : The practice of companies, including commercial businesses,
governments and institutions, facilitating the sale of their products or services to
other companies or organizations that in turn resell them, use them as components
in products or services they offer, or use them to support their operations.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Core Concepts
Key Markets
• Global Markets : Companies selling goods and services in the global marekt place
face additional decisions and challenges. They must decide which countries to
enter, how to enter, how to price and how to adapt their communications.
• Marketplaces and Marketspaces

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Core Concepts
Marketers
• A marketer is someone who seeks a response – attention, a purchase, a vote –
from another party, called the prospect.
• Marketer are indeed skilled at stimulating demand for their company’s products.
• Marketer’s are responsible for demand management.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Core Concepts
What is Marketed ?

Persons, Places,
Goods, Services, Properties
Events,
Experience

Organizations,
Information, Idea

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Marketing
• Managers sometime think of marketing as “the art of selling products”
• However, Selling is not the most important part of marketing ! Selling is only the tip
of the marketing iceberg
• AMA defines : “ Marketing is an organizational function and a set of process for
creating, communicating and delivering value to customers and for managing
customer relationships in ways that benefit the organization and it’s
stakeholders”

• Marketing is all about identifying and meeting human and social* needs profitably
• Social Needs : delivering a higher standard of living
• Breakthrough Marketing : TATA ACE

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Marketing

Marketing Management : The art and science of

choosing target market* and getting, keeping

and growing customers through creating, delivering

and communicating superior customer value

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Importance of Marketing
• Financial success often depends on marketing ability. Finance, operations,

accounting and other business functions will not really matter if there isn’t

sufficient demand for products and services so the company can make profit

• Many companies have created a Chief Marketing Officer ( CMO ), to put marketing

on a more equal footing with other C-level executives, such as CEO and CFO

• Marketing also helps in building brands, a loyal customer base , intangible assets

that make up a large percentage of the value of a firm

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Importance of Marketing
Manufacturer / Producer :-
• The Marketing helps to build loyalty for the product among the customers. Brand loyal customers
are a source of repeat sales.
• A Marketing enables a company to build a reputation for its products and creates an image in the
public mind.
• It facilitates the introduction to new products in the market.
• Marketing is necessary for boosting sales and creating a demand for the product among the
customers in a selective manner.
• A Marketing distinguishes and differentiates a product from the goods of competing companies.
• Marketing assists in the maintenance of a proper control over the price, quality and other
features of the product. 

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Importance of Marketing
Consumer / Customer :-
• Marketing distinguish and differentiate the goods of different manufacturers and this fact
enables the consumers to choose their products effectively
• The marketed goods assure a certain quality and standard, which is an consistently
maintained by the producer.
• Certain marketed goods acquire a great popularity. The customer buying these goods derives
the immense satisfaction of prestige and status.
• For the customer, shopping becomes easy and pleasurable, especially if he has developed
brand-loyalty

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Importance of Marketing
• Maruti – Small Size, affordable four wheeler

• Philips – World wide leader in Durables

• McDonalds – Market Leader in Fast food organized chain of outlets

• Nirma – Leading Washing powder

• Nike – Best Shoe wear

• Apple – iPod : Music Player

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Evolution of Marketing
• This topic basically describes what has been Company’s ( Marketer’s ) orientation

towards Marketplace

• So, lets review the evolution of earlier marketing ideas

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Evolution of Marketing

BAJAJ

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Evolution of Marketing
Production Concept
• It holds that consumer will prefer products that are widely available and
inexpensive. They concentrate on achieving high production efficiency, low costs
and mass distribution.

Product Concept
• It holds that consumer favor products that offer the most quality, performance, or
innovative features. They concentrate on making superior products and improving
them over time

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Evolution of Marketing
Selling Concept
• It holds that consumers, if left alone, won’t buy enough of the organization’s
products. The organization must, therefore, undertake an aggressive selling and
promotional effort.

Marketing Concept
• Instead of a product centric, “Make and sell” philosophy, business shifted to a
customer centric, “Sense and respond” philosophy
• The job is not to find right customers for your prodcut,but to find the right prodcut
for your customer

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Selling v/s Marketing Concept

Selling Marketing
• Emphasis is on the product • Emphasis is on customers’ wants.
• Company first makes the product and then • Company first determines customers’ wants
figures out how to sell it. and then figures out how to make and
deliver a product to satisfy those wants.
• Management is sales-volume-oriented. • Management is profit-oriented.
• Planning is short-run-oriented, in terms of • Planning is long-run-oriented, in terms of
today’s products and markets. new products, tomorrow’s markets, and
• future growth.
Stresses needs of seller.
• • Stresses wants of buyers.
Aims at selling more volumes.
• Builds profitable relationships.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

How Should a Business be Defined?

Company Product-Oriented Answer Market-Oriented Answer

Kodak We make cameras and films We help preserve beautiful

memories

Lakme We make cosmetics ?

Voltas AC We make ACs ?

Xerox We make photocopying machines ?

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Orientation Towards Market Place

Focus: Sell what it’s easy
Production-orientation
to produce

Focus: Emphasizes only on

Product-orientation
Product

Sales Focus : Push products to

Orientation beat competition

Marketing Focus : Long-run customer

Orientation satisfaction

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Project
Details :

Total Marks : 20 M
Allocation : Content : 12 M ( 6 M each for Hardcopy & PPT)
Commn / Cordn : 7 M
Attire : 1 M

Time Limit : 20 mins per Group

•Team needs to divide themselves into 2 subgroup : Presentation

Group / Q&A Group, consisting of equal number of students

•Logical & Valid Questions from students will be appreciated

•Marks : Weighted Average of individual scores

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Project Amul
 Parle – G  Big Bazzar

 Mahindra & Mahindra  ICICI Bank Videocon

 Cadbury’s  ITC e Choupal  Percept Pictures

 Bisleri  GTL  Paramount Airways

 Pepsi  Suzlon  Ebay

 Britannia  Project Shakti  Eureka Forbes

 Asian Paints  Marico  Ceat Tyres

 Godrej  LG  Birla Power

 Bajaj  Coke  Dabur

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Module 2 – Market Offerings

• 2.a :Types of Marketing
• 2.b : Levels of Marketing
• 2.c : Activities of Marketing - Marketing Mix
• 2.d :STP
• 2.e : Product Life Cycle ( PLC)

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Types of Marketing

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Relationship Marketing
• A key goal of marketing is to develop deep, enduring relationships with people and
organizations that could directly or indirectly affect the success of the firm’s
marketing activities
• Relationship Marketing aims to build mutually satisfying long term relationships
with key constituents in order to earn and retain their business

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Relationship Marketing
• Marketers must respect the need to create prosperity among all these constituents
and develop policies and strategies to balance the returns to all key stakeholders

• To develop strong relationships with these constituents requires an understanding

of their capabilities and resources, as well as their needs, goals and desires

• The ultimate outcome of Relationship marketing is a unique company asset called

a Marketing Network. A Marketing network consists of the company and it’s
supporting stakeholders with whom it has built mutually profitable business
relationships

• The operating principle is simple : build an effective network of relationships with

key stakeholders, and profit will follow.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Integrated Marketing
• The Marketer’s task is to devise marketing activities and assemble fully integrated
marketing programs to create, communicate and deliver value to consumers

• Two theme of integrated marketing are (i) many different marketing activities
communicate and deliver value (ii) when coordinated, marketing activities
maximize their joint effects

• In other words, marketers should design and implement any one marketing activity
with all other activities in mind.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Performance Marketing
• Top management is going beyond sales revenue to examine the marketing
scorecard and interpret what is happening to market share, customer base,
customer satisfaction, product quality and other measures.

• Performance Marketing is about understanding the returns to the business form

various marketing activities

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Internal Marketing
• Internal marketing is the task of hiring, training and motivating able employees
who want to serve customer well. It ensures that everyone in the organization
embraces appropriate marketing principles, especially senior management.

• Internal marketing must take place on two levels :

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Holistic Marketing

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Holistic Marketing
• The Holistic marketing is based on the development, design and implementation of
marketing programs, processes and activities that recognizes their breadth and
interdependencies.

• Holistic marketing is thus an approach that attempts to recognize and reconcile

the scope and complexities of marketing activities

• Ex : Nike : Breakthrough Marketing

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Levels of Marketing

Partnership

Proactive

Accountable
Value Involvement
Reactive

Basic

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Levels of Marketing
 Basic Marketing : Simply sells the product

 Reactive Marketing : Sells the product, encourages customer to call if he /she has
questions.

 Accountable Marketing : Calls the customer after sale to ensure satisfaction and
seek comments

 Proactive Marketing : Contacts customer from time to time about improved

product use or new products

 Partnership Marketing : Works with customer continuously to help improve their

performance

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Levels of Marketing
 Basic marketing - Wholesalers , local grocers

 Reactive marketing - Retailers, departmental stores

 Accountable marketing – Private Hospitals, Therapy centres

 Proactive marketing – Gymnasiums and Health clubs, Banks

 Partnership marketing – Advertising agencies, Consulting firms

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Levels of Marketing

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Activities of Marketing
• Marketing activities broadly covers the core action points of Marketing as a stream

• Marketing activities come in all forms. McCarthy classified these activities as

marketing-mix tools of four broad kinds, which he called the four P’s of marketing :
Product, Price, Place and Promotion.

• Marketers make marketing-mix decisions for influencing their trade channels as

well as their final consumers. Once they understand these groups, marketers make
or customize an offering or solution, inform consumers, set a price that offers real
value and choose places where the offering will be accessible.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Marketing Mix
Product Price

• Product Strategy
• Cost Recovery
• Product Classification
• Penetration Pricing
• Product differentiation
• Skimming Pricing
Marketing
Target
Mix
Market
Place Promotion

• Distribution channel • Mass Communication

• Direct Sales • Brand Management
• Supply Chain / Logistics • Corporate Identity

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Marketing Mix
Marketing Mix
Product variety
Quality Channels
Design Coverage
Features Assortments
Product Place Locations
Brand name
Packaging Inventory
Sizes Transport
Services
Warranties
Returns Target Market

Price Promotion
List price Sales
Discounts promotion
Allowances Advertising
Payment period Salesforce
Credit terms Public relations
Direct marketing

Prof. RKP 45of Management- eMBA

MET Institute
 Marketing Management- Sem I

Setting Product Strategy

 A product is anything that can be offered to a market ( consumer ) to satisfy a need or
want

Value

Features Quality

Components of market offering

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Setting Product Strategy

The Customer value hierarchy

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Setting Product Strategy

 Core Benefit : Service or benefit the customer is really buying
• E.g : Hotel : rest & sleep

 Basic Product : Add value to the core benefit

• E.g : Adding bed, bathroom, towels, desk, dresser, etc….

 Expected Product : A set of attributes & conditions buyers normally expects when
they make any purchase
• E.g: Cleans clean bed, fresh towels, working lamps, etc…

 Augmented Product : Benefits which exceeds customer expectations

 Potential Product : All the possible augmentations & transformations the product
or offering might undergo in the future

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 Marketing Management- Sem I

Product
Classification

Tangibility & Usage

Durability

• Non Durable Industrial

•Durable Consumer
•Service

Convenience Shopping Specialty Unsought

•Staple •Homogeneous
• Impulse • Heterogeneous
•Emergency

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Product Classification
Marketers have traditionally classified products on the basis of durability, tangibilty
and use ( consumer or industrial )

Durabiity and Tangibilty

• Non Durable goods ( FMCG ) : Goods consumed in one or few uses

• Durable goods : Normally survives many uses
• Services : Intangible, Inseparable, variable and perishable products

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 Marketing Management- Sem I

Product Classification
Consumer Goods Classification

Convenience Goods : The consumer usually purchases frequently, immediately and

with a minimum effort. ( Soft drinks, soaps & newspaper)
Convenience Goods can be further divided into
• Staple Goods : Consumer purchase on regular basis ( Toothpaste, Shampoos )
• Impulse Goods : Purchased without any planning ( chocolates, chips )
• Emergency Goods : Purchased when a need is urgent ( Umbrella, Shawls )

Shopping Goods : Are goods that the consumer characteristically compares on such
bases as suitability, quality, price and style. ( Furniture, Clothing, Car )
• Homogeneous Goods : Similar in quality but different enough in price
• Heterogeneous Goods : Differ in product features and services that may be more
important than price

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Product Classification
Specialty Goods : Have unique characteristics or brand identification for which
sufficient number of buyers are willing to make a special purchasing effort

Unsought Goods : are those the consumers does not know about or does not
normally think of buying.

Industrial Goods : Can be classified in terms of their relative cost and how they enter
the production process : material and parts, capital items, and supplies and business
services

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Pricing Strategy
Price :
• Price is simply the amount of money that consumers are willing to pay for a
offerings. Price is the only element of the marketing mix that produces revenue.
• Price comes in various forms and performs many functions. Rent, fares, fees, rates,
cost, retainer, wages and commission all may in some way be the price you pay for
some good or service.
• Traditionally, price has been the major determinant of a buyer’s choice. And this is
still the case with large segments of buyers across the globe. Although non price
factors have become quite important in the last few decades, price still remains an
important factor in determining sales & profitability.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Pricing Strategy
Selecting the pricing objective
• The company first decides where it wants to position it’s market offering. The
clearer a firm’s objectives, the easier is to set the price.
• Five major objectives are :

- Survival

- Maximum Current Profit

- Maximum Market Share

- Maximum Market Skimming

- Product Quality Leadership

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Pricing Objective
Survival
• Companies pursue survival as their major objective if they plagued with over capacity,
intense competition or changing consumer wants. As long as prices cover variable
costs and some fixed cost, the company stays in business. Survival is a short run
objective; in the long run, the firm must learn how to add value or face extinction.
• Eg : Chik Shampoo, Vicco, Kinetic and Godrej

Maximum Current Profit

• Many companies try to set a price that will maximize current profits. They estimate
the demand and cost and choose the price that produces maximum current profit.
This strategy assumes that the firm has the knowledge of it’s demand and cost
functions; in reality, these are difficult to estimate. In emphasizing current
performance, the company may sacrifice long run performance by ignoring the effects
of other marketing –mix variables and competitor’s reaction.
• Eg : Onida, GM motors, Dabur

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Pricing Objective
Maximum Market Share
• They believe that higher sales volume will lead to lower unit costs and higher long run
profit. They set the lowest price, assuming the market is price sensitive.
• This strategy is also called as Market Penetration Strategy
• Eg : Nirma, Reliance

Maximum Market Skimming

• Companies which favors setting high prices follows market skimming strategy. This
strategy can be fatal, however, if a worthy competitor decides to price low.
• Eg : Nokia, Sony.

Product-Quality Leadership
• Many brands strive to be affordable luxuries – product or services characterized by high
level of perceived quality, taste and status with a price just high enough not to be out of
conusmer’s reach. Eg : Merc, Barista.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Four Introductory Pricing Strategies

Promotion
High Low
Rapid- Slow-skimming
High skimming strategy
strategy
Price
Rapid Slow
Low penetration penetration
strategy strategy

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Other Pricing Strategies

Consumer Psychology and Pricing
• Reference Pricing : When examining products, consumers often employ reference
prices, comparing an observed price to an reference price they remember.

• Price-Quality Inference :Many consumers use price as an indicator of quality.

Image pricing is especially effective with ego- sensitive products.

• Price Cues : “Sale” signs next to price have been shown to spur demand. Many
sellers believe that prices should end in an odd number.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Other Pricing Strategies

Value Pricing :
• Value pricing is not a matter of simply setting lower prices; it is a matter of
reengineering the company’s operation to become a low –cost producer / provider
without sacrificing quality, to attract a large number of value –conscious customers.
• EDLP : EDLP takes place at retail level. A retailer holds to an EDLP pricing policy
charges a constant low price with little or no price promotions and special sales
Going Rate Pricing
• The firm bases its price largely on competitor’s prices, charging the same, more or
less than major competitor.
• The strategy is also known as “ Follow the leader” policy
• Eg : Cocoraj, ITC – Sunfeast, Bingo, She Comfort
Auction Type Pricing
• Customer Choose their Price
• IS growing popular, especially with the growth of the internet.

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 Marketing Management- Sem I

PLACE
Chain of intermediaries, each passing the product down the chain to the next
organization, before it finally reaches the consumer or end-user. This process is known
as the 'distribution chain' or the ‘marketing channel.' Each of the elements in these
chains will have their own specific needs, which the producer must take into account,
along with those of the all-important end-user

In managing it’s intermediaries, the firm must decide how much effort to devote to
push verus pull marketing.

A push strategy uses the manufacture’s sales force , trade promotion or other means
to induce intermediaries to carry, promote and sell the product to end users.
Push Strategy is appropriate where there is low brand loyalty in a category, brand
choice is made in the store, the product is an impulse item.

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 Marketing Management- Sem I

PLACE
In a Pull strategy the manufacturer uses advertising, sales promotion and other forms
of communication to persuade the consumers to demand the product from
intermediaries, thus inducing the intermediaries to order it.

Pull Strategy is appropriate when there is high brand loyalty and moderate- high
involvement in the category, when consumers are able to perceive differences
between brands, and when they choose the brand before they go to store.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

PLACE
A Marketing Channel performs the work of moving goods from producers to
consumers. It overcomes the time, place and possession gaps that separate goods and
services from those who need or want them

Channel Level

The Producer and the final consumer are the part of every channel. We will
understand the number of intermediaries required to determine the length of the
channel

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I
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Prof. RKP MET Institute of Management- eMBA
 Marketing Management- Sem I

PLACE
Number of Intermediaries

Companies must decide on the number of intermediaries to suit at each level. Three

strategies are available :

• Exclusive Distribution
• Selective Distribution
• Intensive Distribution

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 Marketing Management- Sem I

PLACE
Exclusive Distribution :
• Means severely limiting the number of intermediaries. It’s appropriate when the
producer wants to maintain control over the service level and outputs offered by
the resellers. Eg : Rolls Royce, Reid & Taylor, Gucci.

Selective Distribution
• Relies on more than a few but less than all of the intermediaries willing to carry a
particular product. It makes sense for established companies and for new
companies seeking distributors. Eg : Raymond

Intensive Distribution
• The Manufacturer places the goods and services in as many as outlets as possible
to reach to masses.

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 Marketing Management- Sem I

PLACE
Channels of distribution operate by one of two methods, conventional distribution or

a vertical marketing system.

In the conventional distribution channel, there can be one or more independent

product manufacturers, wholesalers, and retailers in a channel.

The vertical marketing system requires that producers, wholesalers, and retailers to

work together to avoid channel conflicts.

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 Marketing Management- Sem I

PROMOTION
Marketing communications are the means by which firms attempt to inform, persuade

and remind consumers- directly or indirectly- about the products and brands they sell.

In a sense, MC represents the “voice” of the company and its brands and are a means

by which it can establish a dialogue and build relationships with consumers

Functions of MC : Enhance sales, Build Brand equity, Spread awareness, Product

launch, reminder tool… !

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

PROMOTION

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

PROMOTION
Advertising
• Any paid form of nonpersonal communication and presentation of ideas, goods & services
by an identified sponsors

Sales Promotion
• A variety of short term incentives to encourage trial or purchase of a product or services

Events & Experience

• Company sponsored activities & programs designed to create daily or special brand related
interactions

Public Relations
• A variety of programs designed to promote or protect company’s image or it’s individual
products

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 Marketing Management- Sem I

PROMOTION
Direct & Interactive Marketing
• Use of mail, telephone, fax or Internet to communicate directly with specific
customers and prospects
• Online activities & programs designed to engage customers or prospects and
directly or indirectly raise awareness, improve image.
Eg : Sunsilk, Gangofgirls, AXE online games.

Word of Mouth
• People to people oral, written or electronic communication that relate to the
merits or experience of purchasing or using products or services.

Personal Selling
• Face to face interaction with one or more prospective purchasers for the purpose
of spreading awareness

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 Marketing Management- Sem I

STP
Market Segmentation
A market segment consists of a group of customers who share a similar set of needs
and wants. Rather than creating the segments, the marketer’s task is to identify them
and decide which one(s) to target.
Bases for Segmenting consumers markets

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 Marketing Management- Sem I

STP
Market Targetting
Once the firm has identified its market segment opportunities, it must decide how
many and which ones to target.

To do this effectively, they must examine three general factors :-

• segment attractiveness (i.e., the impact of competitors)
• segment size and growth
• company objectives and resources.

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 Marketing Management- Sem I

STP
Market Positioning
Positioning is the act of designing the company’s offering and image to occupy a
distinctive place in a minds of the target market.

The goal is to locate the brand in the minds of consumers to maximize the potential
benefit to the firm.

The result of positioning is the successful creation of a customer focused value

Proposition, a cogent reason why the target market should buy the product.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Magazine - FORBES
STP

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 Marketing Management- Sem I

STP
Brand Target Consumers Benefits Value Proposition
Scorpio, SUV Lifestyle oriented Ruggedness, luxury A vehicle that provides the
consumers and comfort luxury and comfort of a car
and the adventure and
thrill of SUV
Indica Small car Spaciousness A spacious small car
consumers who without extra costs
want a more
spacrious vehicle
Domino’s Pizza Convenience Fast Delivery and A good, hot pizza delivered
minded pizza good quality to your door within 30
lovers mins of ordering

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

STP
Niche Marketing
A Niche is a more narrowly defined customer group seeking a distinctive mix of
benefits. Marketers usually identify niches by dividing a segment in sub segments.

Eg : Krack Cream. Ezee, ALL – Pantaloon.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Product Life Cycle ( PLC)

A company’s positioning and differentiation strategy must change as the product,
market and competitors change with times.

A transition which occurs in product right from inception to obsolescence effecting the
other elements of marketing mix to adapt as per the current market condition, is
called as PLC

To say, product has a life cycle is to assert four stages :

• Introduction : A period of slow sales as the product is new introduced
• Growth : A period of rapid acceptance and substantial Profit improvement
• Maturity : A slowdown in sales growth. Profits Stabilizes. Increase competition
• Decline : Market Saturation. Sales shows a downward drift and profits erode

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Product Life Cycle

Decline

Maturity
Sales
Sales & Profit
Profit Growth

Introduction

Time

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 Marketing Management- Sem I

PLC
Characteristics Introduction Growth Maturity Decline
Marketing Product Maximize Maximize Profit Reduce
Objectives Awareness market share expenditure
Products Offer a basic Offer product Diversify Phase out weak
product extensions, brands products
services and
warranty
Price Survival / cost Penetrate / Going rate Cut price
plus /Skimming Value Pricing Price
Distribution Selective Intensive More Intensive Go selective –
Distribution Distribution Distribution Phase out
unprofitable
outlets
Sales Heavy Reduce to take Increase to Reduce to
Promotion Promotion to advantage of encourage minimal
entice trial demand brand usage

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 Marketing Management- Sem I

PLC
Characteristics Introduction Growth Maturity Decline
Sales Low / Rising Sales Peak Sales Declining
Moderate
Costs High Cost per Average Cost Low Cost Low Cost
costumer
Profit Negative Break Even High Profits Declining
Customers Less Many Mass Less
Competitors Few Growing Stable Declining
numbers

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Module 3 – Marketing Insights

• 3.a:Scanning Environment
• 3.b:Consumer Behavior
• 3.c: Market Research
• 3.d:Customer Value
• 3.e:Marketing Intelligence System

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 Marketing Management- Sem I

Market Environment
The market environment is a term that refers to all of the external and internal forces
affecting the marketing management’s ability to build and maintain successful
relationships with all stakeholders

Essentially, it becomes very critical for a company to understand various environment

and react accordingly before launch of any product / services in that particular region.

Broadly Market environment can be classified as :

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Market Environment

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Market Environment
Marketer’s need to analyze and find many opportunities by identifying the following
factors affecting Macro Environment.
• FAD : A fad is an unpredictable ,short-lived and without social, economic and
political significance.
Eg : Sari, the new fashion fad in India

• Trend : A trend is a direction or sequence of events that has some momentum and
durability. A trend reveals the shape of the future and provides many opportunities.
Eg : LCC Airlines ( Low carrier cost ) , Health care solutions, Touch Screen Phones

• Megatrends : have been described as “large social, economic, political and

technological changes that are slow to form and once in place, they influence us for
some time – between 7 – 10 years or longer
Eg : IT revolution – BPO, Real Estate, Education, Retail , Telecom

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Market Environment
MACRO ENVIRONMENT

Political Environment :
• The political stability determines the economy stability of the nation
• Determines the FDI flow in the respective sectors
• Redefine the polices and industrial laws applicable to existing companies
• Boost the economy by giving relief on Corporate Tax and making of SEZ

Economic Environment
• Per Capita Income
• Disposable Income
• GDP Growth
• High Consumption
• Mixed Economy

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 Marketing Management- Sem I

Market Environment
Social – Culture Environment
• Social Hierarchy
• Traditions & social Norms
• Customs & Belief

Technological Environment
• Research & Development
• Information Technology
• Green / White revolution

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 Marketing Management- Sem I

Market Environment
Demographic Environment
• Age : 60 % of population below age of 30 years
• Population : Reverse Migration
• Occupation : Service
• Income : 30 % of high affluent population across world resides in India

Legal Environment
• Company’s Act
• Income Tax Act
• Partnership Act

Natural Environment
• Availability of resources( High fertile Land, Tea Gardens, Coal Mines, White stone – Marbles /
Granites, Minerals & ore )
• Crops & Commodities
• Natural habitat

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Consumer Behavior
Consumer behavior is the study of how individuals, groups and organizations select,
buy, use and dispose of goods, services, ideas and experiences to satisfy their needs
and wants

Consumer behavior is influenced by :

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Consumer Behavior
Cultural Factors
• Culture is the fundamental determinant of a person’s wants and behavior. The
growing child acquires a set of values, perceptions, preferences and behaviors
through his or her family and other key institutions.

Social Factors
• Social factors such as reference group, social role and statuses affect our buying
behavior.

Personal Factors
• A buyers decision are also influenced by personal characteristics. These include
the buyer’s age, occupation and economic characteristics, personality, lifestyle and
values

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Buying Decision Process

Awareness Consideration Choice Set Decision Satisfaction

Set Set

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 Marketing Management- Sem I

Market Research
• Good marketers want insights to help them interpret past performance as well as
plan future activities. They need timely, accurate and actionable information about
consumers, competition and their brands.

• They also need to make the best possible tactical decisions in the short run and
strategic decisions in the long run.

• Discovering a consumer insights and understanding its marketing implications can

often lead to a successful product launch or spur the growth of a brand.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Market Research
We define Market Research as the systematic design, collection, analysis and
reporting of data & findings relevant to a specific marketing situation facing the
company.

Types of Finding :

• Market Research (Pre Launch )

• Marketing Research ( Post- Launch)
• Consumer Research ( Potential / Satisfaction Index)
• Syndicated Research
• Specialty Research

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Market Research
Research Process

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Market Research
Data Source
• Primary
• Secondary

Research Approach
• Observational Research
• Focus Group
• Survey
• Interview : Telephonic, Personal & Online

Research Instrument
• Questionnaires – Closed End Questions / Open End Questions
• Qualitative
• Quantitative

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Customer value

Biggest competitor to your business

CUSTOMER

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 Marketing Management- Sem I

MODERN APPROACH
Top
Manage
ment

Middle
management
C C
u u
s s
t t
o Frontline People o
m m
e e
r r
s s
Customers

TRADITIONAL APPROACH

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Marketing Intelligence System

Developing and implementing marketing plans requires a number of decisions.

Making those decisions is both an art and science.

To provide insight into and inspiration for marketing decision making, companies must

possess comprehensive, up to date information about macro trends, as well as about

the micro effects particular to their business.

Holistic marketers recognizes that the marketing environment is constantly presenting

new opportunities and threats, and they understand the importance if continuously

monitoring and adapting to that environment

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Marketing Intelligence System

• Every firm must organize and distribute a continuous flow of information to its marketing
managers. MIS, consists of people, equipment and procedures to gather, sort, analyze,
evaluate and distribute needed, timely and accurate information to marketing decision
makers

• A MIS is a set of procedures and sources managers use to obtain everyday information
about the developments in the marketing environment.

• Marketing managers collect marketing intelligence by reading books, newspaper and

trade publications; talking to customers, suppliers and distributors, monitoring social
media on the internet and meeting with other company managers.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Module 4 : Marketing Strategies

• 4.a: Porter’s Generic Strategy
• 4.b: Generic Value Chain
• 4.c: Value Delivery Process
• 4.d: SBU’s – BCG Matrix
• 4.e: Ansoff Matrix
• 4.f: Porter’s Five force – Competitive Strategy

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 Marketing Management- Sem I

To gain Competitive Advantage*,

Build Customer Satisfaction, Value,
and Retention

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 Marketing Management- Sem I

Competitive Advantage
An advantage that a firm has over its competitors, allowing it to generate greater sales
or margins and/or retain more customers than its competition. There can be many
types of competitive advantages including the firm's cost structure, product offerings,
distribution network and customer support. Competitive advantages give a company
an edge over its rivals and an ability to generate greater value for the firm and its
shareholders.

There are two main types of competitive advantages: comparative advantage and
differential advantage. Comparative advantage, or cost advantage, is a firm's ability to
produce a good or service at a lower cost than its competitors, which gives the firm
the ability to sell its goods or services at a lower price than its competition or to
Generate a larger margin on sales. A differential advantage is created when a firm's
products or services differ from its competitors and are seen as better than a
competitor‘s products by customers.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Porter’s Generic Strategy

Many of the numerous strategies pursued by businesses can be loosely grouped under

three main categories—cost leadership, differentiation, and focus. Porter termed these

categories "generic strategies," and claimed that most companies use variations of

them, either singly or in combination, to create a defensible position in their industry.

On the other hand, companies that fail to target their efforts toward any of the generic

strategies leads to low profitability and a lack of competitiveness.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Porter’s Generic Strategy

Lower Cost Differentiation

Broad Target Cost Leadership Differentiation

( Wal-Mart) ( Nike)

Narrow Target
Cost Focus Differentiation Focus
( Medimix / Chik ) (Paramount Airways)

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 Marketing Management- Sem I

Porter’s Generic Strategy

Cost Leadership: In a company pursuing a low-cost strategy, every activity of the

organization must be examined with respect to cost. For example, favorable access to

raw materials must be arranged, products must be designed for ease of manufacturing,

and production must take advantage of economies of scale. In addition, a low-cost

strategy requires a company to implement tight controls across its operations, and

minimize spending on advertising and customer service. Implemented successfully in a

price-sensitive market, however, a low-cost strategy can lead to strong market share and

profit margins.

Eg : Walmart, Tata Automobiles, ITC – Expressions.

Prof. RKP MET Institute of Management- eMBA
 Marketing Management- Sem I

Porter’s Generic Strategy

Differentiation: Companies that pursue a strategy of differentiation try to create a

product or service that is considered unique within their industry. They may attempt to

differentiate themselves on the basis of product design or features, brand image,

technology, customer service, distribution, or several of these elements. The idea

behind a differentiation strategy is to attract customers with a unique offering that

meets their needs better than the competition, and for which they will be willing to pay

a premium price. This strategy is intended to create brand loyalty among customers

and thus provide solid profit margins for the company.

Eg : Harley Davidson, Apple Computers, Nike Athletic Shoes…

Prof. RKP MET Institute of Management- eMBA
 Marketing Management- Sem I

Porter’s Generic Strategy

Focus :Companies undertaking a focus strategy direct their full attention toward

serving a particular market, whether it is a specific customer group, product

segment, or geographic region. The idea behind the focus strategy is to serve that

particular market ( consumers ) more effectively than competitors on the basis of

product differentiation, low cost, or both. Since focusing on a small segment of the

overall market limits the market share a company can command, it must be able to

make up for the lost sales volume with increased profitability.

Eg :Medimix, Chik

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

The Generic Value Chain

To analyze the specific activities through which firms can create a competitive

advantage, it is useful to model the firm as a chain of value-creating activities.

Michael Porter identified a set of interrelated generic activities common to a wide

range of firms. The resulting model is known as the value chain

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

The Generic Value Chain

Eg : Mahindra & Mahindra, Asian Paints, Cadbury’s….

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Value Delivery Process

Marketing involves satisfying consumers’ needs & wants. The task of any business is to

deliver customer value at a profit. In a competitive economy with increasingly rational

buyers faced with abundant choices, a company can win only by fine –tuning the value

delivery process & choosing, providing & communicating superior value.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Value Delivery Process

Traditional Process
Make the Product Sell the Product

Design Procure Make Price Sell Advertise Distribute Service

Eg : Bata

The traditional view of marketing is that the firm makes something & then sells it.
The marketing takes place in the second half of the process. The company knows
what to make and the market will buy enough units to produce profits.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Value Delivery Process

Value Creation Process
Choose the Value Provide the Value Communicate the Value
Customer Market Positioning Product Pricing Distribution Sales Force Promotion Advertising

Strategic Tactical
Marketing Marketing
Eg: Nike

Instead of emphasizing on making & selling, these companies see themselves as part of a
value delivery process.

The design & deliver offering for well defined target markets. The belief is at the core of
the view of business processes, which places marketing at the beginning of planning.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Strategic Business Units

Strategic Business Unit or SBU is understood as a business unit within the overall
corporate identity which is distinguishable from other business because it serves a
defined external market where management can conduct strategic planning in
relation to products and markets.

A strategic business unit is a significant organization segment that is analyzed to

develop organizational strategy aimed at generating future business or revenue.

Exactly what constitutes an SBU varies from organization to organization. In larger

organizations, an SBU could be a company division, a single product, or a complete
product line. In smaller organizations, it might be the entire company.1 Although
SBUs vary drastically in form, they have some common characteristics.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Strategic Business Units

Characteristics of Strategic Business Units (SBUs)
1.It is a single business or collection of related businesses
2.It has its own competitors
3.It has a executive who is accountable for its operation
4.It is an area that can be independently planned for within the
organization
SBU is a business unit having a clear & distinct set of customers and competitors. A
division can be independently planned for within the organization and has profit
and loss responsibility

Resource Allocation :
Depending upon two factors :

Competitive Position
Industry Maturity

GE : Technology Infrastructure, Energy Infrastructure, GE Capital, NBC

universal & Consumer & Industrial
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 Marketing Management- Sem I

Strategic Business Units

 BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE
HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970’s

 According to this technique, businesses or products are classified as low or high

performers depending upon their market growth rate and relative market share

Relative Market Share and

Market Growth
 To understand the Boston Matrix you need to understand how market share and
market growth interrelate.

  

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 Marketing Management- Sem I

Strategic Business Units

Market Share
• Market share is the percentage of the total market that is being serviced
by your company, measured either in revenue terms or unit volume
terms.

Relative Market Share

 RMS = Business unit sales this year

Leading rival sales this year

• The higher your market share, the higher proportion of the market you
control.

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 Marketing Management- Sem I

Strategic Business Units

Market Growth Rate
• Market growth is used as a measure of a market’s attractiveness.

• MGR = Individual sales - individual sales

this year last year

Individual sales last year

• Markets experiencing high growth are ones where the total market
share available is expanding, and there’s plenty of opportunity for
everyone to make money.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Strategic Business Units

The BCG Growth Share Matrix

 It is a portfolio planning model which is based on the observation that a
company’s business units can be classified in to four categories:

• Stars
• Question marks
• Cash cows
• Dogs

 It is based on the combination of market growth and market share relative to the
next best competitor.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Strategic Business Units

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Strategic Business Units

STARS
High growth, High market share
• Stars are leaders in business.
• They also require heavy investment, to maintain its large market share.
• It leads to large amount of cash consumption and cash generation.
• Attempts should be made to hold the market share otherwise the star
will become a CASH COW.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Strategic Business Units

CASH COWS
Low growth , High market share
• They are foundation of the company and often the stars of yesterday.
• They generate more cash than required.
• They extract the profits by investing as little cash as possible
• They are located in an industry that is mature, not growing or declining.

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 Marketing Management- Sem I

Strategic Business Units

DOGS
Low growth, Low market share
• Dogs are the cash traps.
• Dogs do not have potential to bring in much cash.
• Number of dogs in the company should be minimized.
• Business is situated at a declining stage.

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 Marketing Management- Sem I

Strategic Business Units

QUESTION MARKS
High growth , Low market share
• Most businesses start of as question marks.
• They will absorb great amounts of cash if the market share remains
unchanged, (low).
• Why question marks?
• Question marks have potential to become star and eventually cash cow
but can also become a dog.
• Investments should be high for question marks.

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 Marketing Management- Sem I

Strategic Business Units

Why BCG Matrix ?
To assess :
• Profiles of products/businesses
• The cash demands of products
• The development cycles of products
• Resource allocation and divestment decisions

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 Marketing Management- Sem I

Strategic Business Units

Main Steps Of BCG Matrix
• Identifying and dividing a company into SBU.
• Assessing and comparing the prospects of each SBU according to two
criteria :
1. SBU’S relative market share.
2. Growth rate OF SBU’S industry.
• Classifying the SBU’S on the basis of BCG matrix.
• Developing strategic objectives for each SBU.

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 Marketing Management- Sem I

Strategic Business Units

Benefits
• BCG MATRIX is simple and easy to understand.
• It helps you to quickly and simply screen the opportunities open to
you, and helps you think about how you can make the most of them.
• It is used to identify how corporate cash resources can best be used to
maximize a company’s future growth and profitability.

Limitations
• BCG MATRIX uses only two dimensions, Relative market share and
market growth rate.
• Problems of getting data on market share and market growth.
• High market share does not mean profits all the time.
• Business with low market share can be profitable too.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Strategic Business Units

BCG - ITC
Stars ?
•Hotels •FMCG- Others
•Paperboards/
Packaging.
•Agri business.
Cows Dogs
•FMCG-Cigarettes • Maybe ITC Infotech.

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 Marketing Management- Sem I

Strategic Business Units

CONCLUSION

Though BCG MATRIX has its limitations it is one of the most FAMOUS AND
SIMPLE portfolio planning matrix ,used by large companies having multi-products.

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 Marketing Management- Sem I

Assessing Growth opportunities

Ansoff Matrix :

To portray alternative corporate growth strategies, Igor Ansoff presented a matrix that
focused on the firm's present and potential products and markets (customers). By
considering ways to grow via existing products and new products, and in existing
markets and new markets, there are four possible product-market combinations

Existing product New product

Product
Existing market Market Penetration
Development

New market Market

Diversification
Development

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 Marketing Management- Sem I

Assessing Growth opportunities

Market Penetration - the firm seeks to achieve growth with existing products in their
current market segments, aiming to increase its market share.

The market penetration strategy is the least risky since it leverages many of the firm's
existing resources and capabilities. In a growing market, simply maintaining market
share will result in growth, and there may exist opportunities to increase market
share if competitors reach capacity limits. However, market penetration has limits,
and once the market approaches saturation another strategy must be pursued if the
firm is to continue to grow.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Assessing Growth opportunities

Market Development - the firm seeks growth by targeting its existing products to new
market segments.

Market development options include the pursuit of additional market segments or

geographical regions. The development of new markets for the product may be a
good strategy if the firm's core competencies are related more to the specific product
than to its experience with a specific market segment. Because the firm is expanding
into a new market, a market development strategy typically has more risk than a
market penetration strategy.

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 Marketing Management- Sem I

Assessing Growth opportunities

Product Development - the firms develops new products targeted to its existing
market segments.

A product development strategy may be appropriate if the firm's strengths are

related to its specific customers rather than to the specific product itself. In this
situation, it can leverage its strengths by developing a new product targeted to its
existing customers. Similar to the case of new market development, new product
development carries more risk than simply attempting to increase market share.

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Assessing Growth opportunities

Diversification - the firm grows by diversifying into new businesses by developing
new products for new markets.

Diversification is the most risky of the four growth strategies since it requires both
product and market development and may be outside the core competencies of the
firm. In fact, this quadrant of the matrix has been referred to by some as the
"suicide cell". However, diversification may be a reasonable choice if the high risk
is compensated by the chance of a high rate of return. Other advantages of
diversification include the potential to gain a foothold in an attractive industry and
the reduction of overall business portfolio risk.
 

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 Marketing Management- Sem I

Porter’s Five Forces Analysis

Porter’s five forces competitive analysis determine
the competitive intensity and therefore
attractiveness of a market.

Attractiveness in this context refers to the

overall industry profitability. An "unattractive“
industry is one where the combination of forces
acts to drive down overall profitability
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 Marketing Management- Sem I

Porter’s Five Forces Analysis

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 Marketing Management- Sem I

Porter’s Five Forces Analysis

Threat of Industry Rivalry
• A segment is unattractive if it already contains numerous, strong or aggressive
competitors
Threat of new entrants
• The most attractive segment is one in which entry barriers are high and exit
barriers are low.
• Entry and Exit barriers are high, profit potential is high, but firms face more risk
because poorer performing firms easily stay in and fight it out
• When both entry and exit barriers are low, firms easily enters and leave the
industry and the returns are stable and low
• The worst case is when entry barriers are low and exit barriers are high.
Threat of Substitutes
• A segment is unattractive when there are actual or potential substitutes for the
product / services

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 Marketing Management- Sem I

Porter’s Five Forces Analysis

Threat of Buyers
• A segment is unattractive if buyers possess strong or growing bargaining power.

Threat of suppliers
• A segment is unattractive if the company’s suppliers are able to raise prices or
reduce quantity supplied

Prof. RKP MET Institute of Management- eMBA

 Marketing Management- Sem I

Prof. RKP MET Institute of Management- eMBA