What is marketing?

Marketing is an act of creating awareness, generating preference and making a sale.

Marketing Awareness, preference and sales

4P’s -4C’s

4P’s – product, price place, promotion

4C’s – Customer Solution, Cost, Convenience, Communication

5C’s in Marketing
Customer needs, Company Skills, Competition, Collaboration, Context

CC DV TP – Value creation
Create value, Communicate value, Communicate Value & Deliver Value to a Target customer at a Profit

Marketing response model

Marketing Action
(Input) Competitive Observed Market
Actions (Output)

Product Design
1 Market 4 Awareness Level
Price
Advertising Response Preference Level
Selling Effort Model Sales Level

Environmental
Conditions

Control Adaptation Evaluation

Objectives

6 5
What is Customer value?

Value = benefit – price

Benefit = Functional benefit, psychological benefit and Economic benefit
Price = Monetary price, Perceived risk and inconvenience

How do you assess market?

Customer analysis
- Customer Value,
-RFM,
-Customer Lifetime Value

Competition Analysis –
1. BCG matrix, - Market growth & Market share- stars, question marks, Dogs, Cash cows
2. Product life cycle- Introduction, growth, maturity, Decline
3. Diffusion of innovation –Innovators 2.5%, adopters (13.5%),Early majority(34%),Late
Majority(34%) and Laggards(16%).
4. Ansoff Matrix – old market, new market, old product, new product- market
penetration/product development/market development/Diversification
5. GE portfolio matrix-
Business strength fit with strategic focus of company, technical feasibility, resource
requirements, Ability to protect intellectual property, Organizational and Channel
support
Industry dimension- Size of potential market, growth rate of potential market,
Attractiveness of market (competitive superiority, profitability), Regulatory compliance
6. Porter five forces model
7. Hambrick & fredrickson model ( porters Diamond)
Marketing Environment- Political, Economic, Social, Technological, Legal and Environmental

Identifying Market Segment & Selecting Target Market

Segmentation
Bases of Segmentation-
Demographic, Geographic, Psychographic & Behavioural Variables

Demographic Variable
i) age
-Infants, Kids 3-5, 8-12 Teenagers, Adults (Example: Clothes, Toys)
ii) gender
-Men, Women
(Example: Clothes, Cosmetics)
iii) income
- >50000, 50000-1 lac, 1-2 lac, 2-5lac, <5 lakh
(Example: Cars)
iv) education
-High School, Intermediate, Graduation, Post-graduation
v) occupation
- Blue collared, White collared; Business, Professional
(Example: Airline tickets: Business, Economy class)
vi) family size
- Single, Couple, Couple and 2 kids, < 4, < 6
(Example: Large and small packaging: Foods)
vii) family life cycle
- Single, Married, Full Nest I, Full Nest II, Empty Nest I, Empty Nest II, Solitary
( Example: Large and small packaging: Foods; Insurance)
viii) generation
- Generation X (born between 1965-76), Generation Y (born between 1983-2003) (Example: Music and
Film Cds and DVDs)
ix) Social class
-Upper class, Middle class, Lower class (Example: Cars, Hotels)
x) religion
- Hindus, Muslims, Christians, Sikhs ( Example :foods: Halal)
xi) nationality
- Indians, Nepalese, Sri Lankans, Pakistanis
xii) culture
- North Indian, South Indian
xiii) sub-culture
- Tamilian, Keralite, Carnatic, Telugu (Example: Food by Sagar ratna)

Geographic Variable
Identifying segments on the basis of geographical or territorial units
Bases
Example
i) Location / Country
Local/Domestic or International
(Example: All MNCs)
ii) Region
North, West, South, East
iii) State
Sates within country
(Example: National Cooperative development Council: NCDC: All State Cooperatives: Parag: UP, Sanchi:
MP, Verka: Punjab)
iv) City/Metro density of population
Urban Semi-urban, Rural
(Example: Hospitals in Cities, Polyclinics and dispensaries in Villages: Apollo Hospital and Pharmacies
v) Climate
Hot, Cold, Humid, Rainy
(Example: Clothes: Woolen garments)
vi) Terrain
Hilly, Plain, Rocky
(Example: Two wheelers and Motorbikes)

Psychographic Variable
Example
i) Needs and motivation
Benefits sought:
Basic functional, Safety/security, Affection/Social need,Esteem/Status/ Sense of Self –worth
(Example: Flats versus Posh villas and Penthouses)
ii) Perception
Low risk, Moderate risk, High risk
(Example: Innovators vs. laggards)
Price oriented, Quality & value oriented
(Example: Videocon TV vs. Sony)
Aware or Unaware.
iii) Personality
Innovative (High/Low);
(Example: Innovators vs late adoptersvs laggards)
Dogmatic (High/Low); Need for Cognition (High/Low)
Extrovert/Introvert (Inner-directed, Other-directed)
Ethnocentrism (High/Low);
(Example: Loyal to “Made in India” products)
Novelty seeker (Exploratory, Vicarious, Deals and Bargains)
(Example: people who buy from Sales and Discounts)
iv) Attitude
Positive, Negative;
Loyal to one or many products
v) Involvement
Highly involved customers, Low involved customers;
Brand loyalists, Information seekers, Routine brand buyers and, Brand switchers
AIO
vi) Lifestyle:
Work, Hobbies, Vacation, Shopping, Entertainment, Sports (Activity: A)

Activities:
Job, Home, Family, Fashion, Food and culinary, Recreation (Interests: I)
Interests:
Social, Political, Economy and business, Environment (Opinion: O)
Opinions:
Examples: TV Channels (Star News, Star TV, Star Sports, Star Movies)
Magazines (India Today Group: India Today, Business Today, Men’s Health, Woman, and Cosmopolitan)

Behavioral Variables
i Consumer awareness
Unaware, Aware, Informed, Interested, Desiring/enthusiastic
ii) Benefits sought/uses/ needs/ motivation
Basic functional, Safety/security, Affection/Social need, Esteem/Status/ Sense of Self –worth
(Example: Cakes and pastries: Normal ones for snackers and Sugar free, for calorie conscious and
diabetics;
Toothpaste: Forhans for Gums; Peposodent: Fight tooth decay; Close up: Prevent bad breath)
iii) Buying occasions/
Morning, Night
Purchase situations
(Example: now 24 hours)
Weekday, Weekend
(Example: Movies released on weekends)
Occasions, Seasons
(Examples: Greeting Cards: all occasions)
Leisure, Urgency
(Example: Mail post versus Courier Service)
iv) Buying/usage frequency
Routine, Frequent, Seldom OR Routine, Emergency
(Example: Calcium Tablet versus Band Aid )
v) Buying readiness stage
Unaware, Aware, Informed, Interested, Desiring, Intending, Demanding, Buying
vi) Loyalty status
Non-users, First time user, Regulars, Ex-users OR
Hard-core loyals, Split loyals, Shifting loyals, Switchers
vii) Usage rate
Heavy half; Light half OR Heavy, Medium, Light, Non-users
(Example: Joint family and nuclear family: Consumption of cooking oil)
viii) Shopping orientation
Economic, Convenience and leisure, Status
(Example: Economic: Deal prone and bargains: Small shops;
Convenience and leisure: Departmental stores
Status: Malls and Brands
Targeting
-Demographic sorting
-RFM (Recency, Frequency, Monetary) Modeling
-Customer Choice modeling

Positioning
-attributes
-price/quality
-competition
-Application
-Product User
-Product Class

Perceptual mapping, preference mapping, joint space maps

What is Demand Forecasting?

Potential market, available market, qualified available market, served or target market, penetrated
market.
Forecasting methods-

Forecasting
methods

Causal
Causal Analyses
Analyses
-Regression analysis
-Econometric models
Time
Time series
-Input –output
Judgemental
Judgemental -Naïve methods
Market
Market & survey methods
-Sales force composite -Moving averages
Analysis
Analysis -Multivariate
-Jury of executive -Exponential
-Buyer intentions Autoregressive
opinion smoothing
-Product tests Moving Average
-Delphi methods -Box Jenkins method
-Chain ratio method -Neural networks
-Scenarion analysis -Decompositional
methods
Judgemental Forecasting: There are many cases where judgmental forecasting is the only option, such as
when there is a complete lack of historical data, or when a new product is being launched, or when a
new competitor enters the market, or during completely new and unique market conditions.

Sales Force Composite. It is a forecasting method used to forecast the sales by adding up individual sales
agents forecasts for sales in their respective sales territories. It is a bottom-up approach which
companies use to forecast more accurately.

Jury of Executive opinion: A method of forecasting using a composite forecast prepared by a number of
individual experts. The experts form their own opinions initially from the data given, and revise their
opinions according to the others' opinions. Finally, the individuals' final opinions are combined.

Delphi Method:
The Delphi method is a forecasting method based on the results of questionnaires sent to a panel of
experts. Several rounds of questionnaires are sent out, and the anonymous responses are aggregated
and shared with the group after each round.

Scenario analysis is a process of analyzing possible future events by considering alternative possible
outcomes (sometimes called "alternative worlds"). Thus, scenario analysis, which is one of the main
forms of projection, does not try to show one exact picture of the future.

Market & Survey Analysis:

Market-research techniques encompass both qualitative techniques such as focus groups, in-depth
interviews, and ethnography, as well as quantitative techniques such as customer surveys, and analysis
of secondary data.

Buyer Intention Forecast. a method of predicting future demand for a product by asking potential buyers
for their likely requirements.

Product Tests: A second method of forecasting new product success is the test market. The new product
is developed and introduced into one or more test markets. Actual store sales and market shares are
tracked via Nielsen or IRI, or data from retailers in some instances.

Chain Ratio Method: a method of calculating total market demand for a product in which a base number,
such as the total population of a country, is multiplied by several percentages, such as the number in the
population above and below certain ages, the number in the population with an interest in motor sport,
the number in the population .

Time Series Analysis:

Time series analysis comprises methods for analyzing time series data in order to extract meaningful
statistics and other characteristics of the data. Time seriesforecasting is the use of a model to predict
future values based on previously observed values.

Naive forecasting. Estimating technique in which the last period's actuals are used as this period's
forecast, without adjusting them or attempting to establish causal factors. It is used only for comparison
with the forecasts generated by the better (sophisticated) techniques.
Moving averages forecasting method:
Different techniques can be used, both qualitative and quantitative, and provide differing sets of data to
managers as they forecast demand, especially in sales volume. The moving average and exponential
smoothing techniques are both fair examples of methods to use to help forecast demand.

Simple exponential smoothing. The simplest of the exponentially smoothing methods is naturally called
“simple exponential smoothing” (SES). (In some books, it is called “single exponential smoothing”.) This
method is suitable for forecasting data with no trend or seasonal pattern.

Introduction to the Box-Jenkins Method for Time Series Forecasting. The Autoregressive Integrated
Moving Average Model, or ARIMA for short is a standard statistical model for time series forecast and
analysis.

Decomposition is a forecasting technique that separates or decomposes historical data into different
components and uses them to create a forecast that is more accurate than a simple trend line.

Causal Analyses:
Causal analysis is to find causes that you can treat rather than treating symptoms (which, as all doctors
know, seldom affects a lasting cure). A root cause is the basic reason why something happens and can be
quite distant from the original effect.

Regression Analysis
In statistical modeling, regression analysis is a set of statistical processes for estimating the relationships
among variables

Econometric models are statistical models used in econometrics. An econometric model specifies the
statistical relationship that is believed to hold between the various economic quantities pertaining to a
particular economic phenomenon under study.

Input-output analysis ("I-O") is a form of economic analysis based on the interdependencies between
economic sectors. This method is most commonly used for estimating the impacts of positive or negative
economic shocks and analyzing the ripple effects throughout an economy.

Multivariate autoregressive moving averages: Autoregressive–moving-average models can be

generalized in other ways. ... Note that the ARMA model is a univariate model. Extensions for the
multivariate case are the Vector Autoregression (VAR) and Vector Autoregression Moving-Average
(VARMA).

Neural networks : Interest in using artificial neural networks (ANNs) for forecasting has led to a
tremendous surge in research activities inthe past decade. While ANNs provide a great deal of promise,
they also embody much uncertainty. Researchers to date are still not certain about the effect of key
factors on forecasting performance of ANNs

Product Life Cycle

Ansoff matrix- new to world /new to company
The Bass model
Assessor Model
Trial & repeat model

What are pricing Strategy & Decisions do you adopt in market place?

Pricing Strategies

1. Differential Pricing- Second market discounting, Periodic discounts, Random Discounts

2. Competitive Pricing- penetration pricing, Experience curve pricing, Price signaling, Geographic
pricing.
3. Product line pricing- Price bundling, premium pricing, Complementary pricing.

Pricing Decisions

Profit= (unit price-unit cost)* quantity sold

Classical Economic approach

Elasticity of quantity demanded to price

Fraction change in demand

= ________________________ = (Q1-Q0/Q0)/ (P1-P0/P0)

Fraction change in price

-Cost oriented pricing – PLC – optimum price and profit

-Demand oriented pricing- Gabor Granger Method (1964)
-Competition oriented pricing- Psychological Pricing using the Van Westendorp Method (1976)
- Price discrimination
- Pricing product lines