Вы находитесь на странице: 1из 241

Marketing Orientation

COMPANY ORIENTATION TOWARDS MARKETPLACE

1. PRODUCTION - EASY AVAILABILITY AND LOW COST


2. PRODUCT - SUPERIOR PRODUCTS, INNOVATIVE FEATURES
3. SELLING - AGGRESSIVE SELLING & PROMOTION
4. MARKETING / CUSTOMER - FOCUS ON CUSTOMER
5. SOCIETAL MARKETING - CUSTOMER & SOCIETY

HOLISTIC MARKETING DIMENSIONS


Marketing
Department

Senior

Other

Management

Departments

Product &
Services

Communications

Channels

Integrated
Marketing

Internal
Marketing

Holistic
Marketing
Socially
Responsible
Marketing

Ethics Environment
Legal

Relationship
Marketing

Community

Customers

Channel Partners

SELLING V/S MARKETING

SELLING
STARTING
POINT
MEANS

ENDS

MARKETING

PRODUCT

CUSTOMER NEEDS

AGGRESSIVE
SELLING &
PROMOTION

SUPERFLUOUS
SELLING

PROFITS THRU
SALES VOLUME

PROFITABILITY
THROUGH
CUSTOMER
SATISFACTION

PILLARS OF MARKETING / CUSTOMER ORIENTATION

1. CLEAR DEFINITION OF TARGET MARKET (DEMOGRAPHICS,


PSYCHOGRAPHICS, MEDIAGRAPHICS, GEOGRAPHICS)
2. PERFECT UNDERSTANDING OF CUSTOMER NEEDS
3. INTEGRATE / COORDINATE ALL ACTIVITIES (INTER & INTRA DEPT)
4. PROFITABILITY THROUGH CUSTOMER SATISFACTION

THUS CUSTOMER ORIENTATION MEANS


1. OBSESSED WITH CUSTOMER & AWARE OF COMPETITOR
2. MONITOR UNFULFILLED NEEDS CONTINUOUSLY THROUGH
RESEARCH.
3. FUTURISTIC - MARKETING EXPENDITURE AN INVESTMENT
4. MARKETING CULTURE - CUSTOMER OVERRIDES
ORGANISATIONAL INTERESTS
5. SPEED IN RESPONSE TO CUSTOMERS PROBLEMS
6. CONSISTENCY IN DELIVERY OF VALUES, SATISFACTION
7. CUSTOMER RETENTION STRATEGIES
8. MASS CUSTOMIZATION
9. INTERACTIVE AND CUSTOMER FRIENDLY DELIVERY SYSTEMS
10. LOOKING AT CONSUMPTION SYSTEM RATHER THAN PRODUCT
FOR AUGMENTATION
11. ALL DEPARTMENTS THINK CUSTOMER
12. CUSTOMER SATISFACTION - GOAL & MARKETING TOOL
13.GLOCALISATION

WHAT IS MARKETING

ALL ACTIVITIES DESIGNED TO GENERATE AND FACILITATE


EXCHANGE OF PRODUCTS AND VALUES INTENDED TO SATISFY
HUMAN NEEDS AND WANTS.
MARKETING MANAGEMENT IS THE PROCESS OF PLANNING AND
EXECUTING THE CONCEPTION, PRICING, PROMOTION, AND
DISTRIBUTION OF IDEAS, GOODS, AND SERVICES TO CREATE
EXCHANGE THAT SATISFY INDIVIDUAL AND ORGANIZATIONAL
GOALS.

MARKETERS TASK

DEMAND MANAGEMENT (Level, Timing & Composition)


STATES OF DEMAND
NEGATIVE - Redesign Mix
NO DEMAND Connect Benefits to Need
LATENT Measure
FALLING Creative Remarketing
IRREGULAR - Use Synchro Marketing
FULL Maintain
OVERFULL Use Selective Demarketing
UNWHOLESOME Use Laws, Fear, Price Hike, Reduced
Availability

CORE CONCEPTS OF MARKETING

NEEDS Deprivation of basic satisfaction


WANTS specific satisfiers of need
DEMAND-wants backed by ability and willingness to buy
PRODUCTS- anything( Physical good, service,person,
idea0 that can satisfy a need or want
UTILITY & VALUE &-SATISFACTION
EXCHANGE-A value creating process
TRANSACTION-Trade of values between parties
RELATIONSHIPS-relationship marketing V/s transaction
marketing
MARKETS-all potential customers

MARKETING

PRODUCTS
SERVICES
PERSONS
PLACES
ACTIVITIES
IDEAS

The Four P Components of the Marketing Mix


Marketing Mix

Product
Product variety
Quality
Design
Features
Brand name
Packaging
Sizes
Services
Warranties
Returns

Target market

Price
List Price
Discounts
Allowances
Payment period
Credit terms

Promotion
Sales promotion
Advertising
Sales force
Public relations
Direct marketing

Place
Channels
Coverage
Assortments(mixture)
Locations
Inventory
Transport

11

MARKETING MIX - 7 PS

PRODUCT
PRICE
PLACE
PROMOTION
PEOPLE
PACE (PROCESS)
PROOF OF PERFORMANCE
CHOICE OF MARKETING MIX DEPENDS ON TARGET MARKET &
POSITIONING

Expanded Marketing Mix For


Product/Service
Product

Place

Promotion

Price

Physical good features


Channel type
- Promotion blend Flexibility
Quality level
coverage
- Salespeople Price level
Services
Intermediaries
Number
CreditTerms
Packaging
Outlet locations
Selection
Differentiation
sizes
Training
Payment period
Warranties
Transportation
Incentives Discounts
Storage
- Advertising Allowance
Branding
Targets
variety
Media types
Design ,style
Types of ads
Copy thrust
- Sales promotion
- Publicity
-direct mktg

13

People

Physical evidence

Process

- Employees
Recruiting
Training
Motivation
Rewards
Teamwork
- Customers
Education
Training

Facility design
- Flow of activities
Equipment
Standardized
Signage
Customized
Employees dress
- Number of steps
- Other tangibles
Simple
Reports
Complex
Business cards
- Customer involvement
Statements
Guarantees

14

RESPONSIVE V/S CREATIVE MARKETER

1. STATED NEED - PRODUCT DEMANDED E.g. INEXPENSIVE CAR


2. REAL NEED - FUNCTIONAL BENEFIT DESIRED E.g. LOW
MAINTENANCE COST
3. UNSTATED NEED - EXPECTATION FROM COMPANY E.g. DEALER
SERVICE
4. DELIGHT NEED-Eg COMPLIMENTARY GIFT
5. SECRET NEED - EMOTIONAL BENEFIT - E.g. SEEN BY OTHERS AS
VALUE ORIENTED BUYER

CUSTOMER SATISFACTION V/S DELIGHT


PERCEIVED PERFORMANCE

= EXPECTATIONS

OK / SATISFIED

PERCEIVED PERFORMANCE
UNHAPPY

< EXPECTATIONS

DISSATISFIED/

PERCEIVED PERFORMANCE

> EXPECTATIONS

DELIGHTED

DELIGHTED CUSTOMERS HAVE EMOTIONAL AFFINITY WITH BRAND &


HENCE LOYALTY.
EXPECTATIONS BASED ON PAST BUYING EXPERIENCE, ADVERTISEMENTS,
FRIENDS, COMPETITORS EXPECTATIONS, PRICE, BENCHMARKING.
EXPECTATIONS DIFFER BASED ON PRODUCT, CUSTOMER.

Tools to track customer


satisfaction

Complaint and suggestion systems


Customer satisfaction surveys
Ghost shopping
lost customer analysis

Cautions to be exercised in C.S. surveys


Definition in detail
Manipulation by customers and managers
17

The Customer-Development Process


Suspects

Prospects

Disqualified
Prospects

First-time
customers
Repeat
customers

Clients

Members

Inactive of
Ex-customers

Advocates

Partners

18

DEFINING CUSTOMER VALUE

EXCELLENT PRODUCT IS OF NO USE IF IT FAILS TO MEET CUSTOMER


NEEDS. A COMPANY SHOULD BE SKILLED IN MARKET ENGINEERING
NOT JUST PRODUCT ENGINEERING.

CUSTOMER DELIVERED VALUE

CUSTOMER DELIVERED VALUE is the difference


between total customer value and total customer
cost. TOTAL CUSTOMER VALUE is the bundle of
benefits customers expect from a given product or
service. TOTAL CUSTOMER COST is the bundle of
costs customers expect to incur in evaluating,
obtaining, and using the product or service.

CUSTOMER DELIVERED VALUE


PRODUCT
SERVICE
PERSONNEL

TOTAL CUSTOMER
VALUE

IMAGE
CUSTOMER
DELIVERED VALUE
MONETARY VALUE
TIME COST
ENERGY COST
PSYCHIC COST

TOTAL CUSTOMER
COST

DELIVERING CUSTOMER VALUE

1. MICHAEL PORTERS GENERIC VALUE CHAIN


2. BENCHMARK AGAINST COMPETITION
3. VALUE CHAIN OF SUPPLIERS, DISTRIBUTORS, CUSTOMERS TO
CREATE SUPERIOR VALUE-DELIVERY NETWORK

GENERIC VALUE CHAIN

PRIMARY ACTIVITIES
Inbound Logistics
Operations
Outbound Logistics
Marketing and Sales
Service
SUPPORT ACTIVITIES
Procurement
Technology development
Human resource Management
Firm Infrastructure

23

CORE BUSINESS PROCESS

1. NEW PRODUCT REALIZATION PROCESS


2. INVENTORY MANAGEMENT PROCESS
3. ORDER TO REMITTANCE PROCESS
4

CUSTOMER SERVICE PROCESS

MARKET SENSING PROCESS

CUSTOMER ACQUISITION PROCESS

CUSTOMER RELATIONSHIP MANAGEMENT PROCESS

CUSTOMER VALUE BUILDING APPROACHES - BERRY


& PARASHURAMAN

1. ADDING FINANCIAL BENEFITS-FREQUENCY MARKETING


PROGRAMS AND CLUBS
2. ADDING SOCIAL BENEFITS-INDIUALIZING AND
PERSONALIZING RELATIONSHIPS
3. ADDING STRUCTURAL TIES-SUPPLY CUSTOMERS WITH
SPECIAL EQUIPMENT OR COMPUTER LINKAGESTHAT HELP
CUSTOMERS MANAGE THEIR ORDERS,PAYROLL, INVENTORY
ETC

CUSTOMER RELATIONSHIP BUILDING

BASIC MARKETING Simply Sell


REACTIVE MARKETING Sell & encourage customer
to call if any Questions, comments or complaints.
ACCOUNTABLE MARKETING Salesman phones after
sale
PROACTIVE MARKETING Salesperson contacts from
time to time with suggestions about improved product
uses or new products
PARTNERSHIP MARKETING Company works
continuously with customer to discover ways to effect
customer savings or help customer perform better.

LEVELS OF RELATIONSHIP MARKETING


HIGH
MARGIN

MEDIUM
MARGIN

LOW
MARGIN

Many
customers/
distributors

Accounta
ble

Reactive

Basic or
reactive

Medium
number of
customers/
distributors
Few customers
/ distributors

Proactive

Accounta
ble

Reactive

Partnershi
p

Proactive

Accounta
ble

LIFE TIME VALUE OF CUSTOMER

1. Lost customer revenue


2. Lost opportunity revenue
3. Customer replacement costs

COST OF ACQUISITION

1. COST OF AVERAGE SALES CALL

(SALARY, COMMISSION, BENEFITS,


CALLS

TOTAL COST
TOTAL SALES

EXPENSES)
2. AVERAGE NUMBER OF SALES CALLS
CALLS
TO CONVERT AVERAGE PROSPECT
NEW

TOTAL SALES
TOTAL NO. OF

TO CUSTOMER
CUSTOMERS
3. COST OF ATTRACTING NEW CUSTOMER = 2 X 1

Service Encounters or Moments of Truth


Service encounters are the building blocks of service quality &
satisfaction

- Every experience with product, service or person which


allows customer to judge/ form impressions about the
quality
of service is a moment of truth.
- It takes 10 good moments of truth to wipe one bad moment
of
truth.
- Disney Corporation 74 service encounters in amusement
park. Marriott Hotels - 4 of the top 5 factors come into play
in
first 10 minutes of guests stay.
Types of service encounters- remote, phone, face to face.
- In remote - tangible evidence & technical quality important.
- In phone- process quality
- In face to face - customer also play role.
30

CUSTOMER / PRODUCT
PROFITABILITY ANALYSIS

Produc
ts

P1

C1
C3
+

P2

P3
P4

Custome
rs
C2
+

Highly profitable
product
Profitable product

+
Highprofit
custome
r

Mixedbag
custom
er

Losing product

Mixed bag product

Losing
custome
r

31

Sample Marketing Metrics

I. External
Awareness

II. Internal
Awareness of goals

Market share (volume or value)

Commitment to goals

Relative price (market share value/volume)

Active innovation support

Number of complaints (level of dissatisfaction)

Resource adequacy

Customer satisfaction

Staffing/skill levels

Distribution/availability

Desire to learn

Total number of customers

Willingness to change

Perceived quality/esteem

Freedom to fail

Loyalty/retention

Autonomy

Relative perceived quality

Relative employee satisfaction

32

Sample Customer-Performance Scorecard Measures

Percentage of new customers to average number of customers.


Percentage of lost customers to average number of customers.

Percentage of win-back customers to average number of customers.


Percentage of customers falling into very dissatisfied, dissatisfied, neutral, satisfied,
and very satisfied categories.
Percentage of customers who say they would repurchase the product.
Percentage of customers who say they would recommend the product to others.
Percentage of target market customers who have brand awareness or recall.
Percentage of customers who say that the companys product is the most preferred in
its category.
Percentage of customers who correctly identify the brands intended positioning and
differentiation.
Average perception of companys product quality relative to chief competitor.
Average perception of companys service quality relative to chief competitor.

33

STRATEGIC PLANNING

STRATEGIC PLANNING

MARKET-ORIENTED STRATEGIC PLANNING - is the


managerial process of developing and maintaining a viable fit
between the organizaitons objectives, skills, and resources
and its changing market opportunities. The aim of strategic
planning is to shape and reshape the companys business and
products so that they yield target profits and growth.
Thus strategic planning is concerned with
1.

Treating business as an investment portfolio.

2.

Building game plan for each business based on industry


position opportunity, resources, mission, objectives.

3.

Future potential and not just current potential.

SEE APPENDIX 18 (THE STRATEGIC


PLANNING, IMPLEMENTATION, AND
CONTROL PROCESS)
Planning

Implementing

Corporate planning

Organizing
Division planning
Business planning
Product planning

Controlling
Measuring Results
Diagnosing results

Implementing
Taking corrective
action

CORPORATE & DIVISION STRATEGIC PLANNING

DEFINING THE CORPORATE MISSION


ESTABLISHING STRATEGIC BUSINESS UNITS (SBUS)
ASSIGNING RESOURCES TO EACH SBU
PLANNING NEW BUSINESSES

DEFINING THE CORPORATE MISSION

Shaped by History, current preferences of owners and


management, market environment, resources, distinctive
competences.
Provides sense of purpose, direction, and opportunity.
Good mission statements, limited number of goals and
values and major competitive scopes.
Provides direction for 10 12 years.

ESTABLISH STRATEGIC BUSINESS UNITS AND ASSIGN


RESOURCES

Assigning resources by evaluating by using analytical tools for


classifying its
businesses by profit potential.
1. Boston Consulting Group Model
2. General Electric Model

4X

Relative Market Share

0.1X

Dogs

0.2 X

Cash Cow

0.5 X
0.4X
0.3 X

Question Marks

1X

8%
6%
4%
2%

Stars

2X
1.5 X

20%
18%
16%
14%
12%
10%

10 X

Market Growth Rate

Boston Consulting Group Model

40

BCGs GROWTH SHARE MATRIX

1.

An unbalanced portfolio would have too many dogs or question


marks and/or too few stars and cash cows.

2. BUILD for stars


HOLD - strong cash cows
HARVEST weak cash cows, question marks, dogs.
DIVEST dogs, question marks.
3. SBUs - change their position in the growth-share matrix.

GENERAL ELECTRIC MODEL

Each business is rated in terms of two major dimensions, market


attractiveness and business strength.
1. MARKET ATTRACTIVENESS Overall market size,,mkt growth
rate,profit margin,competitive intensity,inflationary
vulnerability.,technological requiremnets,environmental
impact..
2. STRENGTH OF SBU / FIRM = Market share,share
growth,product quality,brand reputation,distribution
network,promotion effectiveness,production
capacity,productive effeciency,R&D performance,managerial
personnel,
Each of these factors is assigned weights and business is measured
of 5 point scale.

5.00

Strong

Medium

Weak

High

Hydraulic Joints
pumps

Aerospace
fittings

Mediu
m

3.67 Clutch
es

Fuel
Pumps

Flexible
2.33

diaphragms

Low

MARK
ET AT
TRAC
TIVE
NESS

(a) Classification
BUSINESS STRENGTH

1.00
5.00

Relief
values
3.67

2.33

1.00

43

High

Mediu
m

Low

ATTR
ACTI
VENE
SS

(B)
Strategies

BUSINESS

STRENGTH

BUILD SELECTIVELY
INVEST TO BUILD
Specialize around limited
PROTECT POSITION
Challenge for
strength.
leadership.

Invest to grow at maximum


Build selectively on Seek ways to overcome
weaknesses.
digestible rate.
strengths.

Concentrate effort on
Reinforce vulnerable Withdraw if indications o
sustainable growth are
maintaining strength.
areas
lacking.

SELECTIVITY /
BUILD SELECTIVELY
LIMITED EXPANSION
Invest heavily in most MANAG FOR EARNING
OR HARVEST
Protect existing program.
attractive segments.
Look for ways to expand
Concentrate investments
Build up ability to counter
without high risk;otherwise
in segments where
competition.
minimize investment and
Emphasize productivity profitability is good and
rationalize operations.
by raising productivity. risks are relatively low.

PROTECT AND REFOCUS MANAGE FOR EARNINGS DIVEST


Protect position in most
Manage for current earnings.
Sell at time that will
Concentrate on attractive profitable segments. maximize cash value.
Upgrade product line. Cut fixed costs and avoid
segments.
Minimize investment. investment meanwhile.
Defend strength.
Mediu
Strong
Weak
m
44

CORPORATE NEW BUSINESS PLAN

When gap between future desired sales and projected


sales, then three options.
1. INTENSIVE GROWTH current business
2. INTEGRATIVE GROWTH build or acquire businesses
related to the companys current businesses.
3. DIVERSIFICATION GROWTH opportunities in
unrelated business.

GROWTH STRATEGIES

INTENSIVE GROWTH (Ansoffs Product / Market Expansion


Grid )
INTEGRATIVE GROWTH Backward, Forward, Horizontal
DIVERSIFICATION GROWTH Concentric (Same technology /
Marketing synergy), Horizontal (Appeals to current customers),
Conglomerate (No relationship to the companys current
technology, products, or markets).

Current Product

Current
Markets

New
Markets

New Product

3. Product1. Market- penetration


development
strategy
strategy

2.

Market(Diversification
development
Strategy)
strategy

47

THE BUSINESS STRATEGIC PLANNING PROCESS

1.

BUSINESS MISSION

2.

SWOT ANALYSIS

3.

GOAL FORMULATION

4.

STRATEGY FORMULATION

5.

PROGRAM FORMULATION

6.

IMPLEMENTATION

7.

FEEDBACK AND CONTROL

OPPORTUNITY AND THREAT

A MARKETING OPPORTUNITY - is an area of buyer need in


which a company can perform profitably.
OPPORTUNITIES - can be classified according to their
attractiveness and their success probability.

AN ENVIRONMENTAL THREAT - is a challenge posed by an


unfavorable trend or development that would lead, in the
absence of defensive marketing action, to deterioration in
sales or profit.
Threats should be classified according to their seriousness
and probability of occurrence.

CHECKLIST FOR STRENGTHS /


WEAKNESSES ANALYSIS
Importance of factor(High ,Medium , Low) and
performance rating (Major/minor
strengh,Neutral,,Major/Minor weakness)on
dimensions in
Marketing Company
reputation,marketshare,product/service
quality,pricing/distribution/advtg/salesforce/innovat
ion effectiveness,geog coverage
Finance-cost/availability of capital,cash
folw/,financial stability
Manufacturiing-facilities,economies of
scale,capacity,mfg skill ,dedicated workforce

50

GOAL FORMULATION

OBJECTIVES MUST BE HIERARCHICAL


QUANTITATIVE
REALISTIC
CONSISTENT

STRATEGY FORMULATION

MICHAEL PORTERS THREE GENERIC STRATEGIES


OVERALL COST LEADERSHIP firms should be good at
engineering, purchasing, manufacturing and distribution.
DIFFERENTIATION on key customer benefit area e.g. services,
quality, style, technology.
FOCUS on narrow market segment and pursue either cost
leadership or differentiation.
CLEAR STRATEGY IMPORTANT - Dont be middle of the
roaders
Firms pursuing same strategy in same to market constitute
strategic group.

STRATEGIC ALTERNATIVES

Long -term
profits

Growth in
sales or market
share

Market
Development

Market
Penetration

New
segments

Existing
Customers

Convert
nonusers

Competitors
customers

New product
developments

Efficiency,
short-run profits

Decrease
inputs

Increase
outputs

Reduce
costs

Increase
price

Improve
asset
utilization

Improve
sales mix
53

PROGRAM FORMULATION AND IMPLEMENTATION,


FEEDBACK & CONTROL

PROGRAM FORMULATION - Develop programs in line with


strategy
e.g. Technology
leadership strengths R&D, gather technological intelligence,
develop leading edge products, train technical sales force, develops
ads to communicate technology leadership.
IMPLEMENTATION The McKinsey 7-S Framework(Hardwarestrategy,structure,systems and Software-Style, Staff, Skills, Shared
Values)
FEEDBACK & CONTROL - Need to review and revise
implementation, programs, strategies, or even objectives.

MARKETING PROCESS

Involves
1.

Analysing Marketing Opportunities

2.

Developing marketing strategies (Differentiating and


positioning)

3.

Developing marketing programs (Marketing mix)

4.

Managing marketing effort through


- Annual plan control (Achievement of sales, profits and
other goods).
- Profitability control (Analysis of profitability of products,
customers, trade channels and order sizes, Marketing
profitability analysis and marketing efficiency studies).
- Strategic control (Appropriateness of companies
marketing strategy to market conclusions through marketers
audit).

A GOOD MARKETING STRATEGY

CO-ORDINATES FUNCTIONAL AREAS OF ORGANISATION


ALLOCATES RESOURCES EFFICIENTLY
HELPS PRODUCT ATTAIN MARKET POSITION
COMPETITIVE

OBJECTIVES OF MARKETING PLAN

TO,
1.

Define current situation facing the product (and how we


got there)

2.

Define problems and Opportunities

3.

Establish objectives

4.

Define strategies and programs necessary to achieve


objectives

5.

Pinpoint responsibility to achieve

6.

Encourage careful and disciplined thinking

7.

Establish customer-competitor orientation

CONTENTS OF A MARKETING PLAN


I.

Executive summary and table of


contents

Presents a brief over of the proposed plan

II.

Current marketing situation

Presents relevant background data on the


market, product, competition, distribution, and
macro-environment.

III.

Opportunity and issue analysis

Identifies the main opportunities/threats,


strengths/weaknesses, and issues facing the
product line.

IV.

Objectives

Defines the plans financial and marketing goals


in terms of sales volume, market share, and
profit

V.

Marketing strategy

Presents the broad marketing approach that will


be used to achieve the plans objectives.

VI.

Action programs

Presents the special marketing programs


designed to achieve the business objectives.

VII.

Projected profit-and-loss statement

Forecasts the plans expected financial


outcomes.

VIII.

Controls

Indicates how the plan will be monitored

FREQUENT MISTAKES IN PLANNING PROCESS

1.

Speed of planning

2.

Amount of data collections

3.

Who does the planning

4.

Structure

5.

Length of plan

6.

Frequency of planning

7.

Number of courses of action considered

8.

Who sees the plan

9.

Insufficient senior management leadership

10. Tying compensation to efforts

MARKETING ENVIRONMENT

MARKETING ENVIRONMENT ANALYSIS

OUTSIDE - IN VIEW TO TRACK TRENDS, OPPORTUNITIES &


THREATS
FOLLOWED BY MARKET RESEARCH TO DETERMINE AN
OPPORTUNITYS PROFIT POTENTIAL.
OPPORTUNITIES CAN BE CLASSIFIED ON ATTRACTIVENESS &
SUCCESS PROBABILITY (COMPETITIVE ADVANTAGE).
THREATS ARE CLASSIFIED ON BASIS OF SERIOUSNESS &
PROBABILITY OF OCCURRENCE.

CHECKLIST FOR STRENGTHS /


WEAKNESSES ANALYSIS
Importance of factor and performance rating on
dimensions in
Marketing Company
reputation,marketshare,product/service
quality,pricing/distribution/advtg/salesforce/innovat
ion effectiveness,geog coverage
Finance-cost/availability of capital,cash
flow/,financial stability
Manufacturing-facilities,economies of
scale,capacity,mfg skill ,dedicated workforce
Organization-visionary leadership,dedicated

MARKETING ENVIRONMENT
I.

MAJOR FACTORS - (MACROENVIRONMENT)

A) DEMOGRAPHIC - (BREAKUP & CHANGES IN AGE, INCOME, SEX,


EDUCATION, URBAN-RURAL, LIFE EXPECTANCY, OCCUPATION,
PERSONS PER HOUSEHOLD).
B) SOCIO / CULTURAL - (FAMILY STRUCTURE, DECISION-MAKING,
PESTERPOWER VALUES LIFESTYLES).
C) TECHNO LOGICAL - (CREATIVE DESTRUCTION, IMPACT ON
PRODUCT, PACKAGING, ADVERTISING).
D) POLITICAL / LEGAL - (LAWS TO PREVENT UNFAIR COMPETITION,
CONSUMERS & SOCIETY).
E) ECONOMIC - (PER CAPITA INCOME, CREDIT AVAILABILITY,
SAVINGS, STAGE OF BUS CYCLE).
F) PHYSICAL - (GOVTAL INTERVENTION, NEW OPPORTUNITIES).

MARKETING ENVIRONMENT

II.

ACTORS - (MICROENVIRONMENT)

A) COMPANY
B) SUPPLIERS
C) MARKETING INTERMEDIARIES
D) CUSTOMERS
E) COMPETITORS
F) PUBLIC - ASCI, CONSUMER ACTION GROUP

CONSUMER BEHAVIOUR

7 Os

FRAMEWORK

WHO BUYS - OCCUPANT

WHAT DOES HE BUY - OBJECT


WHY DOES HE BUY - OBJECTIVE
WHEN DOES HE BUY - OCCASION
WHERE DOES HE BUY - OUTLET
HOW DOES HE BUY - OPERATIONS
WHO ARE INVOLVED - ORGANISATION

MODEL OF BUYER BEHAVIOUR

Marketing stimuli

Other stimuli

Product
Economic
Price
Technological
Place
Political
Promotion
Cultural

Buyers
Buyers
characteristics
Decision
Process
Cultural
Social
Personal
Psychological

Buyers decisions
Product choice
Brand choice
Dealer choice
Purchase timing
Purchase amount

Buying roles
Buying types
Buying Stages

Factors influencing behavior

CULTURAL

SOCIAL
REFERENCE

CULTURE

GROUP
FAMILY

SUBCULTURE
SOCIAL CLASS

ROLES AND
STATUSES

PERSONAL
AGE AND LIFE
CYCLE STAGE
OCCUPATION

PSYCHOLOGICAL
MOTIVATION
PERCEPTION

ECONOMIC
CIRCUMSTANCES LEARNING
LIFESTYLE
BELIEFS AND
PERSONALITY
ATTITUDES
AND SELFCONCEPT

BUYER

BUYING ROLES

INITIATOR

INFLUENCER
DECIDER
PURCHASER
USER

BUYING BEHAVIOUR TYPES

High
Involvement
Difference
between
brands
perceived

COMPLEX

VARIETY
SEEKING

DISSONANCE
Difference
between
brands not
perceived

Low
Involvement

WB
A

HABITUAL

REDUCING
B
P
A

New B

WB
A

STAGES OF BUYING DECISION PROCESS

PROBLEM RECOGNITION

INFORMATION SEARCH Criteria, Alternatives


EVALUATION OF ALTERNATIVES
PURCHASE DECISION
POSTPURCHASE BEHAVIOUR

INFORMATION SEARCH SOURCES

PERSONAL SOURCES

COMMERCIAL SOURCES
PUBLIC SOURCES
EXPERIENTIAL SOURCES

SUCCESSIVE SETS INVOLVED IN CONSUMER DECISION


MAKING

TOTAL SET
AWARENESS SET
CONSIDERATION SET
CHOICE SET
PURCHASE DECISION
POST-PURCHASE BEHAVIOUR

Profiling the Customer Buying Decision


Process

1)
Introspective method Marketers
think how
they would act if they
were consumers
2)
Retrospective
method

Ask
consumers who have bought to recall the
event
3)
Prospective method Ask prospective
consumers who plan to buy to think
aloud.
4)
Prescriptive method Ask consumers
ideal way.
74

ALTERNATIVE EVALUATIVE TECHNIQUES

COMPENSATORY MODEL
EXPECTANCY VALUE MODEL
IDEAL BRAND MODEL
NON-COMPENSATORY MODEL
CONJUNCTIVE MODEL
DISJUNCTIVE MODEL
LEXI COGRAPHIC MODEL

EXPECTANCY VALUE MODEL OF CONSUMER


CHOICE
ATTRIBUTES

CAR

ENGINE
EXTERIORSPRICE MILEAGE
CAPACITY
WTS.

0.4

FORD ESCORT

0.2

10

0.3

OPEL ASTRA

7.4

HONDA CITY

10

7.7

CIELO

4.8

0.1

8.2

PERCEIVED
VALUES

STRATEGIES FOR MARKETERS

MODIFY THE BRAND REAL REPOSITIONING

ALTER BELIEFS ABOUT THE BRAND PSYCHOLOGICAL


REPOSITIONING
ALTER BELIEFS ABOUT COMPETITORS BRAND COMPETITIVE
DEPOSITIONING
ALTER IMPORTANCE WEIGHTS
CALL ATTENTION TO NEGLECTED ATTRIBUTES
SHIFT BUYERS IDEALS

PERCEIVED RISK

FINANCIAL

PHYSICAL
SOCIAL
PERSONAL

COMPETITION

79

PORTERS MODEL

Threat of new entrants


Intensity of Competitive rivalry
Bargaining power of buyers
Bargaining power of suppliers
Threat of substitutes
80

Five Forces Determining Segment Structural Attractiveness

Potential entrants
(Threat of
mobility)

Suppliers
(Supplier
power)

Industry
competitors
(Segment rivalry)

Buyers
(Buyer
power)

Substitutes
(Threat of
substitutes)

81

Identifying Competition

A. Industry Concept of Competition Group


of firms that offer a class of products that
are close substitutes classified on basis
of
I. Number of sellers & degree of
differentiation
a) Pure monopoly
b) Oligopoly Pure oligopoly (oil, steel) &
differentiated
oligopoly
(auto,
computers)
c) Monopolistic competition restaurants
d) Pure competition stock market
82

Identifying Competition

Contd of Slide .

III. Cost structure shapes strategic


conduct e.g. steelmaking involves
heavy manufacturing & raw
material costs
IV. Degree of vertical integration
V. Degree of globalization some
industries are highly local
(babycare) others are global (e.g.
oil, cameras)
B. Market Concept of competition
Brand/Form/Category/Desire
83

COMPETITION
WHAT DO YOU NEED TO KNOW
WHO ARE OUR COMPETITORS - IDENTIFY &
SELECT
WHAT ARE THEIR OBJECTIVES
WHAT ARE THEIR STRATEGIES
WHAT ARE THEIR STRENGTHS &
WEAKNESSES
WHAT ARE THEIR REACTION PATTERNS

84

IDENTIFYING COMPETITION
CORRECT DEFINITION IMPORTANT TO
MARKET PLANNING & STRATEGY
KEY QUESTION IS DEGREE EXTENT
BALANCE BETWEEN TOO MANY & TOO FEW
NOT EASY AS EMERGING COMPETITION
WRONG DEFINITION LEADS TO
a) MARKETING MYOPIA
b) AMBIGUITY IN MARKET RELATED
STATISTICS

85

IDENTIFYING COMPETITORS
I. INDUSTRY CONCEPT OF COMPETITION II. MARKET CONCEPT OF COMPETITION

86

INDUSTRY CONCEPT OF
COMPETITION
1)Number of sellers and degree of differentiation
a)Pure Monopoly
b)Oligopoly- a small no. of large firms Pure eg
oil,steel Or Differentiated
automobiles,refrigerators
c)Monopolistic competitionMany competitors and
differentiated eg restaurants,beauty parlors
d)Pure competition eg stock market
2)Entry,Mobility,exit barriers
3)Cost structure
4)Degrree of vertical integration
5)Degree of Globalisation
87

Market concept of
competition
Stimulates long run strategic market
planning
Key to identify is mapping
product/market grid
Opens eyes to broader set of actual
& potential competitors
a) Brand
b) Product form competition
c) Category / Generic / Industry
Competition
d) Desire / Budget
88

COMPETITIVE LEVEL & TASKS


Competitive
Level
Brand
(inward
oriented)
Product Form
(inward)
Generic /
Category

Product Managers task


Convince customers brand
is better than others in
product form
Convince product form is
best in the category
Convince product
category is best to satisfy
need

(Outward)
Desire /
Budget

Convince Generic need /


benefit is best way to
spend discretionary
income
89

METHODS FOR DETERMINING COMPETITORS


I. PREDETERMINED CATEGORIES - ORG
II. MANAGERIAL JUDGEMENT
III. CUSTOMER BASED MEASURES
a) PURCHASE DATA FOR BRAND SWITCHING MATRIX
b) CROSS ELASTICITY OF DD
c) CONSUMER JUDGEMENTS
c.1. JUDGED OVERALL SIMILARITY
c.2. SIMILARITY OF CONSIDERATION SET
c.3. PRODUCT DELETION SET
c.4. SUBSTITUTION IN USE
90

BRAND SWITCHING MATRIX


TIME (++1)

TIME
t

.6

.2

.2

.2

.3

.4

.1

.2

.3

.5

.1

.1

.5

.3

.1

.4

.5

91

FIGURE 3.13: METHODS VERSUS COMPETITION


LEVELS AND INFORMATION REQUIRED

Approa
ch

Level of
Typical Data
Competition
Sources
BrandProdu Gener Budg Primar Second
ct
ic
et
y
ary
Form

Existing definitions
X

Technology substitution

Managerial judgment
X
X

Customer behavior based:


Brand switching
X
Interpurchase times
X
Cross-elasticities

X
X
X

X
X
X

92

FIGURE 3.13: METHODS VERSUS COMPETITION


LEVELS AND INFORMATION REQUIRED

Approa
ch

Level of
Typical Data
Competition
Sources
BrandProdu Gener Budg Primar Second
ct
ic
et
y
ary
Form

Customer evaluation based:


Overall similarity
X

Product deletion
X

Substitution in use
X

Similarity of consideration

sets

Note: An X indicates that either the method is useful for

93

IDENTIFYING COMPETITORS
STRATEGIES
A group of firms following same
strategy in given target market is
called a strategic group.
Dimensions include level of
technological
sophistication,geographicalscope,
manufacturing methods,marketing
strategies etc
94

ASSESSING COMPETITORS
CURRENT STRATEGY

1. TARGET MARKET
2. CORE MARKETING STRATEGY
a) POSITIONING
b) DIFFERENTIAL ADVANTAGE
3. MARKETING MIX

95

ASSESSING COMPETITORS
CURRENT OBJECTIVES
growth v/s hold v/s harvest v/s divest.
Short term v/s long term profits, satisfycing v/s
maximizing profits, cash flow,,market
sharegrowth,,technological/,service /cost
leadership
objectives shaped by size, history,
management perspective, financial situation,
place in larger organisation
objectives can be assessed
a) from strategy
b) geographical home of parent

96

ASSESSING COMPETITORS
STRENGTHS & WEAKNESSES
1. THROUGH
- SECONDARY DATA
- PERSONAL EXPERIENCE
- PRIMARY SOURCES (CUSTOMERS, SUPPLIERS, DEALERS)
2. ANALYSIS SHOULD BE FOR BOTH CORPORATE & BRAND
LEVELS
3. ANY INVALID ASSUMPTIONS THAT COMPETITOR IS
MAKING
4. SHARE OF MARKET, MIND, HEART
5. SATISFACTION / DISSATISFACTION AREA
6. COMPARISION VIS-A-VIS OUR BRAND
97

ESTIMATING COMPETITORS
REACTION PATTERNS

DEPENDS ON
a) IMPORTANCE OF BUSINESS OR PRODUCT
b) HOW COMMITTED IS THE COMPETITOR
(PHILOSOPHY, MIND-SET)
c) AGGRESSIVENESS OF MANAGERS

98

ESTIMATING COMPETITORS
REACTION PATTERNS

TYPES OF COMPETITORS
LAID BACK
SELECTIVE
TIGER
STOCHASTIC

99

DESIGNING COMPETITOR
INTELLIGENCE SYSTEM

1. COSTLY SIGNALS
2. CHEAP TALK SIGNALS
PRODUCT MANAGER MUST COLLECT BOTH TYPES
OF INFORMATION BUT BE WARY OF (2)

100

SOURCES OF INFORMATION OF
COMPETITORS

I.

SECONDARY

II. PRIMARY
III. OTHERS
IV. UNETHICAL

101

SELECTING COMPETITION
1. LEVEL
2. SELECTING COMPETITOR FOCUS
CHOOSING WHO TO COMPETE HAS IMPLICATIONS
ON PERFORMING STDS (MARKET SHARE) &
COMPETITIVE STRATEGY
DEPENDS ON
a) TIME HORIZON
b) STAGE OF PLC
c) RATE OF CHANGE OF TECHNOLOGY
102

SELECTING COMPETITORS TO ATTACK &


AVOID

1. STRONG V/S WEAK COMPETITORS


2. CLOSE V/S DISTANT
3. GOOD V/S BAD

103

BALANCING CUSTOMER & COMPETITOR


ORIENTATION

104

COMPETITIVE POSITIONS
DOMINANT-Controls behavior of other
competitors ,wide choice of strategic options
STRONG-can take independent actions and
maintain its long term position
FAVOURABLE-exploitable strength and above
average opportunity to improve position
TENABLE-exists at sufferance of dominant
company and has lesser than average
opportunity to improve position
WEAK-poor performance.must change or exit
NON-VIABLE-poor performance and no
opportunity for improvement
105

MARKET LEADER STRATEGIES

I.
II.

EXPANDING TOTAL MARKET


DEFENDING MARKET SHARE

III EXPANDING MARKET SHARE

106

Market- Leader Strategies


Expanding Total Market
NEW USERS :
Non-users or competitors users (Market
penetration)
Different segments (New Market Strategy)
Geographical segments (Geographical
Expansion Strategy)
NEW USES :For example Vaseline as
lubricant. Skin ointment, healing agent, hair
dressing.
107

MARKET LEADER DEFENSIVE


STRATEGIES
Through continuous innovation, increasing
competitive effectiveness and value to
customers.
a) POSITION DEFENSE not enough today. e.g.
Coke has also diversified.
b) FLANK DEFENSE Erect outposts to protect a
weak front or serve as an invasion base for
counter attacking. E.g. Asian Paints Tractors.
c) PREEMPTIVE DEFENSE Launch attack
before enemy starts offense across market with
many models.
108

Market Leader Defensive


Strategies
d) COUNTER OFFENSIVE DEFENSE e.g. HLL
reaction to Tide.
e) MOBILE DEFENSE Stretch Domain over new
territories through market broadening i.e.
shifting focus from current product to generic
need E.g. Bank to insurance, Mutual Funds etc.
Aquafina & Kinley
f) CONTRACTION DEFENCE- Recognising that there
is no sense to spread too thin. (Strategic
withdrawal)
109

EXPANDING MARKET SHARE


Increased market share above 40%
earns ROI of 38.5%,more than 3
times that of those firms with shares
under 10%

But important to consider 3 factors


Provoking monopolist action
Economic costholdout customers
Wrong marketing mix
110

MARKET CHALLENGER STRATEGIES

Firms that occupy 2nd,3rd or lower


ranks are called runner ups.
These firms can either attack
leader and make aggressive bid
for further market share( market
challenger ) or play ball and not
rock boat ( market follower)
111

Market challenger strategies

1. Can attack Market leader- high


risk-high payoff.Makes good
sense if false leader
2. Can attack firms of own size
that are not doing well or are
under financed.
3. Small and regional firms

112

MARKET CHALLENGER STRATEGIES

FRONTAL ATTACK-attacking opponents


strength rather than weakness.Matching
opponent on product,advertising,price with 3:1
advantage otherwise cant succeed
MODIFIED FRONTAL ATTACK-Match leaders offer
on all and beat on price
FLANK ATTACK-Blind spots. Flank attack can
be geog or segmental eg Nirma. Much more
likely to succeed than frontal attack

113

MARKET CHALLENGER STRATEGIES

ENCIRCLEMENT ATTACK-Comprehensive Blitz


attack on front,sides rear.Offer everything
opponent offers and more
BYPASS ATTACK-is an indirect assault
strategy.like diversifying into unrelated
products,new geographical markets and
leapfrogging into new technology
GUERRILLA ATTACK-waging small intermittent
attacks. Harass , Demoralise eg price cuts,
promotional blitz,legal action

114

MARKET FOLLOWER STRATEGIES

Company prefers to follow than to


challenge.
1. COUNTERFEITER
2. CLONER-The cloner emulates the leaders
products,distribution, advertising etc Sudar dust
3. IMITATOR-copies some things of leader but
maintains differentiation on packaging,
advertising, pricing etc
4. ADAPTER adapts or improves leaders
product. Can become future challenger E.g.
Japanese firms
115

MARKET NICHER STRATEGIES

SPECIALIZATION- Customer, geographic


product line,
MULTIPLE NICHING BETTER THAN SINGLE
NICHING

116

MARKETING ROLES NICHE SPECIALIST ROLES

The key idea in successful nichemanship is specialization. Here are some possible niche
roles:

End user specialist:

Vertical-level specialist:

Customer-size specialist:

Specific-customer specialist:

Geographic specialist:

Product or product line specialist:

Product - feature specialist:

Job shop specialist:

Quality price specialist:

Service specialist:

Channel specialist:
117

Marketing Information
System

118

Marketing Information
System
Helps develop &manage information
necessary to conduct marketing
activities.

MARKETING
INFORMATION

MARKETING
ENVIRONMEN
T

MARKETING
INFORMATION SYSTEMS
INTERNAL
REPORTS
SYSTEM

MARKETING
RESEARCH
SYSTEM

Macro
environment

Competition

MARKETING
MANAGERS
Analysis

Planning

Implementatio
n

Target
market
Marketing
channels

MARKETING
INFORMATIO
N

MARKETING
INTELLIGENCE
SYSTEM

ANALYTICAL
MARKETING
SYSTEM

Public
MARKETING DECISIONS &
COMMUNICATIONS

Control

Marketing Information
System
Internal Records System (result data) -

Order to payment cycle (invoices, bills), sales


reporting system (sales reports, call reports).
Marketing intelligence
system(happening data)*
Newspapers, trade publications, talking to
customers, suppliers, distributors, trade show,
analyzing products & ads. talking to
competitors, employees, syndicated reports
(ORG).
*Need to train sales representatives &
motivate distributors & retailers.
Marketing research - formal study of specific
problem / situation.
Marketing decision support systems Statistical tools, models & optimization
routines.

SCOPE OF MARKETING RESEARCH


1. NEW PRODUCTS - Concept testing,Brand name
generation,& testing,Product testing,packaging tests, Testmarketing, Market feasibility.
2. PRODUCT RESEARCH - Competitive - product studies,
3. SALES & MARKET - Market potential, Market
characteristics, Market share analysis, Sales analysis,
Distribution channel studies.
4. PROMOTION - Copy research, Media research, Ad
effectiveness, sales promotion effectiveness.,public image
studies, sales force effectiveness
5. BUSINESS & CORPORATE RESEARCH - Business trend
studies,, International scope studies, Internal employees
studies, Operations research, Location studies etc.
6. CORPORATE RESPONSIBILITY - Ecological studies, Values
7. PRICING-Competitive pricing analysis,price elasticity
8. BUYING BEHAVIOUR-Brand preference, attitude,product

THE RESEARCH PROCESS


I.

DEFINE THE PROBLEM - not too broad or narrow, watch for symptoms.

II. RESEARCH OBJECTIVES - measurable and specific (except exploratory)


III. RESEARCH DESIGN APPROACHES
A) EXPLORATORY
B) DESCRIPTIVE

CONCLUSIVE

C) CAUSAL
IV. DEVELOP RESEARCH PLAN
A) DATA SOURCES
PRIMARY

B) SAMPLING PLAN

SECONDARY

CENSUS

SAMPLE

SAMPLE UNIT
SAMPLING FRAME
SAMPLE SIZE
SAMPLING
PROCEDURE
A) PROBABILITY
B) NONPROBABILITY

THE RESEARCH PROCESS

E) CONTACT METHODS -MAIL,TELEPHONE,PERSONAL(ARRANGED,INTERCEPT)


COLLECT INFORMATION-Problems of not at
home,non co-operation,biased,dishonest
answers or fudging
vi) DATA ANALYSIS
vii) REPORT & PRESENTATION

Sampling procedures
A) PROBABILITY SAMPLING :
1. Simple Random Sampling : random selection through
lottery without replacement.
Unrestricted random sampling is with replacement.
2. Systematic Sampling : involved a system of selecting
every nth item in sampling frame after 1st name / unit
is selected at random.
3. Random Route sampling: used for sampling
households, shops etc. An address is selected at
random & every nth address is selected therefrom.
4. Stratified Random Sampling: Population is divided
into mutually exclusive groups & within each group,
units are selected through random methods.
5. Cluster (Area) sampling: The area to be surveyed is
broken into smaller areas. A few of these areas are then
selected by random methods. Every unit or some units
randomly selected may be interviewed in these selected
areas.

SAMPLING PROCEDURES
B) NON - PROBABILITY SAMPLING used when
a) Probability sampling not feasible because
population not known or no suitable sampling
frame.
b)Random sampling too costly & time consuming.
c) When information is exploratory in nature.

SAMPLING PROCEDURES
B) Non probability sample:
1. Convenience sample: The researcher selects
the easiest population members from which to
obtain information.
2 Judgement sample: The researcher uses his/
her judgement to select population members who
are good prospects for accurate information.
3. Quota sample: The researcher decides on
prescribed no. of people in each category (age,
gender, income) & then finds & interviews.

Contact Methods
Contact Methods

TELEPHONE
- Quick
- Interview
should be short.
- Cannot be
personal.
- Not strictly
representative.
- Screening of
calls.

MAIL
Poor
response rate
-

- No chance of
clarification

PERSONAL

- Most versatile
- Non- verbal cues
-Costly
- Bias
- Cold calls
to prevent mall intercept
interviews.

QUESTIONNAIRE

Open - ended

Close - ended

(Useful in
exploratory
research)

(Easy to interpret
and tabulate)

1. Completely unstructured

1. Dichotomous (2 choice)

2. Word association

2. Multiple choice (3 or more)

3. Sentence completion
4. Story completion

3. Likert scale 5 point scale of


agree-disagree

5. Picture completion

4. Semantic Differential

6.

5. Importance Scale

Thematic apperception test


(TAT)

6.

Monadic Rating

7.

Intention to buy scale

QUESTIONNAIRE

Most common instrument must be carefully developed, tested


and debugged before they are administered on a large scale.
Each question should contribute to research objectives.
Logical sequence
Wording / Styling Simple, direct, and unbiased.
Not too long. Lead question should be interesting.
Sensitive questions at the end and give range.

A QUESTIONABLE QUESTIONNAIRE

1. What is your total income to the nearest dollar.


2. Are you an occasional or frequent flyer.
3. Do you like this restaurant?
4. How many ads did you see on TV last week?
5. What are the most salient factors in buying a car ?
6. Do you think it is right for the government to ban common
salt and deprive a lot of people of jobs ?

Characteristics of good Marketing Research

Scientific method
Creativity
Multiple methods
Value & cost of information
Look at background - Classic failure of coke. Dont
look at problem in isolation.
Dont give in to temptations of giving
management what they want to hear.

Emerging Trends in Marketing

133

Emerging Trends in Marketing

Markets
1. Cause related marketing - Social cause, (P & G) ecological cause (Orchid Hotels).
2. Ambush Marketing (Coke 1996 world cup official sponsor, Reebok Atlanta
Olympics 1996).
3. Viral Marketing - hotmail
4. Mousetrapping - (on internet)
5. Guerilla marketing - (unconventional & creative attention grabbing techniques).
E.g. Burger king used McDonalds Ronald.
6. Buzz marketing - By revealing only partial information. (JJKN).
7. Glocalization - McDonalds, Coca-Cola, L & G Sampoorna, Nokia 1100.
8. Permission marketing (Seth Godin)
9. Experience Marketing - Sonys CD stores,Parryware experiencentres, Shoppers
Stop
10.
Collaborative Marketing - design (DC car ) Pricing (Zodiac grill) segmentation
(Dell) Co creation of products- eg starbucks asking customers to create a coffee
and acknowledging customers contribution

11.Lifestyle marketing - adopt promotional activity to customers lifestyle. E.g.


Cellphones.
12.Ethical marketing - Pfizer, J & J Tylenol
13.Use of social media in mktg and emarketing and ecommerce
14.Rise of consumerism-seller beware
15.Strategic alliances in product,branding,distribution,advertising,sales promotionetc

Customer Management :
1. Relationship management - Jet airways flying returns,Shoppers stop First
Citizens Club.
2. Affinity group & online communities.
. Product & Branding :
1. Mass customization - e.g. Scorpio, Asian Paints, Dell.
2. Umbrella Branding
. Pricing :
1. Target pricing
2. Announcing price upfront
.
1.
2.
3.

Packaging :
Sachet marketing
Packaging innovations
New inforamtion necessary on packages eg dot to indicate
veg/nonveg,expiry date

. Distribution :
1. Non- traditional methods - Multilevel (Avon , Oriflame ),Party plan
(Tupperware)
2. Organised retail and power shift from manufacturer to retailer

Advertising, Media, sales promotion:


1. In film advertising - Baghban, Castaway (Fedex)
2. Surrogate advertising.
3. Comparative advertising.
4. Use of new, unconventional media, below the
line
media. (e.g.. Surf Vans).
5. Increase in sales promotion.
6. Using colours & sensory methods - e.g. Blue
(Cool),
Red (Hot).

SEGMENTATION, TARGETING & POSITIONING

Levels of Market Segmentation

1)
2)
3)
4)

Segment Marketing
Niche Marketing
Local Marketing
Customerization or segments of one
or customized marketing or one to
one marketing.

138

Steps in the Segmentation Process


Description
1.

Need-Based Segmentation

Group customers into segments based on similar needs

and benefits sought by customer in solving a particular


consumption problem.
2.

Segment Identification
For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the
segment distinct
and identifiable (actionable).

3.

Segment Attractiveness
Using predetermined segment attractiveness criteria
(such as market growth, competitive intensity, and market
access), determine the overall attractiveness of each
segment.

4.

Segment Profitability

5.

Segment Positioning
For each segment, create a value proposition and
product-price positioning strategy based on that
segments unique
customer needs and characteristics.

6.

Segment Acid Test


Create segment storyboards to test the attractiveness of
each segments positioning strategy.

7.

Marketing-Mix Strategy
Expand segment positioning strategy to include all
aspects of the marketing mix: product, price, promotion
place.

Determine segment profitability.

and
139

REQUIREMENTS FOR EFFECTIVE MARKET


SEGMENTATION

RELEVANT
MEASURABLE
SUBSTANTIAL
ACCESSIBLE
ACTIONABLE

STEPS IN SEGMENTATION

1. IDENTIFY BASES OF SEGMENTATION


2. PROFILING

BASIS FOR SEGMENTING CONSUMER MARKETS


I. CONSUMER CHARACTERISTICS
1. GEOGRAPHIC (REGION, URBAN-RURAL)
2. DEMOGRAPHIC (AGE, SEX, OCCUPATION, INCOME, EDUCATION,
FAMILY LIFE CYCLE, FAMILY SIZE).
3. PSYCHOGRAPHICS (SOCIAL CLASS, LIFESTYLE, PERSONALITY)
II. CONSUMER RESPONSES
1. BENEFITS SOUGHT
2. OCCASIONS
3. USAGE RATE (HEAVY, MEDIUM, LIGHT)
4. USER STATUS (EX, CURRENT, NON, POTENTIAL, REGULAR, 1ST TIME)
5. LOYALTY STATUS (HARDCORE, SOFT CORE, SHIFTING, SWITCHERS)
6. BUYER READINESS (UNAWARE, AWARE, INFORMED, INTERESTED)
7. ATTITUDE TO PRODUCT (ENTHUSIASTIC, POSITIVE, INDIFFERENT,
NEGATIVE, HOSTILE).

MAJOR SEGMENTATION VARIABLES FOR BUSINESS


MARKETS

MOGRAPHIC

ndustry : which industries should we serve?


Company size: What size companies should we serve?
Location: Which geographical areas should we serve ?

ERATING VARIABLES

echnology : What customer technologies should we focus on?


User / customer status: Should we serve heavy users, medium users, light users, or nonuse
Customer capabilities: Should we serve customers needing many or few services?

RCHASING APPROACHES

Purchasing -function organization : Should we serve companies with highly centralized


or decentralized purchasing organizations?
Power structure: Should we serve companies that are engineering dominated,
financially dominated, and so forth?
Nature of existing relationships: Should we serve companies with which we have strong
elationships or simply go after the most desirable companies?
General purchase policies: Should we serve companies that prefer leasing?
Service contracts? Systems purchases? Sealed bidding?
Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?

MAJOR SEGMENTATION VARIABLES FOR BUSINESS


MARKETS
SITUATIONAL FACTORS
12. Urgency: Should we serve companies that need quick and
sudden delivery or service?
13. Specific application: Should we focus on certain applications of
our product rather than all applications?
14. Size of order: Should we focus on large or small orders?

PERSONAL CHARACTERISTICS
15. Buyer-seller similarity: Should we serve companies whose
people and values are similar to ours?
16. Attitudes toward risk: Should we serve risk- taking or riskavoiding customers?
17. Loyalty: Should we serve companies that show high loyalty to
their suppliers?

STEPS IN MARKET TARGETING

1. DEVELOP MEASURE OF SEGMENT ATTRACTIVENESS AND


EVALUATE.
2. SELECT TARGET SEGMENTS.

BASIS FOR EVALUATION & SELECTION OF TARGET


SEGMENTS

1. SIZE
2. GROWTH
3. STRUCTURAL ATTRACTIVENESS (PORTERS MODEL)
4. OBJECTIVES & RESOURCES
5. ECONOMIES OF SCOPE

PATTERNS OF TARGET MARKET SELECTION

1. SINGLE SEGMENT CONCENTRATION


2. MARKET SPECIALISATION
3. PRODUCT SPECIALISATION
4. SELECTIVE SPECIALISATION
5. FULL MARKET COVERAGE

ALTERNATIVE TARGETING STRATEGIES

COS MARKETING MIX

WHOLE MARKET

UNDIFFERENTIATED MARKETING

MARKETING MIX 1

SEGMENT 1

SEGMENT 2

SEGMENT 3

DIFFERENTIATED MARKETING

SEGMENT 1
MARKETING MIX

SEGMENT 2
SEGMENT 3

CONCENTRATED MARKETS

Additional Considerations

1)
Segment by segment invasion plans
mega
marketing to counter blocked
markets
2)
Updating segmentation schemes
market
partitioning
3)
Ethical choice of Target markets
4)
Counter segmentation.

149

DIFFERENTIATION & POSITIONING

DIFFERENTIATION IS THE ACT OF DESIGNING A SET OF


MEANING DIFFERENCES TO DISTINGUISH THE COMPANYS
OFFERS FROM COMPETITORS OFFERS.
POSITIONING IS THE ACT OF DESIGNING COMPANYS OFFER
AND IMAGE SO THAT IT OCCUPIES A DISTINCT AND VALUED
PLACE IN THE TARGET CUSTOMERS MIND.

Developing a Positioning Strategy

Involves:
1) Defining the Target Market
2) Competitive frame of reference
3) Points of Parity & Points of
Difference

151

Choosing POPs & PODs


POP are driven by needs of category membership (to create
category POPs) & need to negate competitors PODs ( to create
competitive POPs).
Consumer desirability criteria for PODs.
1) Relevance e.g. tallest hotel (irrelevant)
2) Distinctive
3) Believable & credible

152

Choosing POPs & PODs Contd. Of

slide

Deliverability criteria

1) Feasibility in terms of resources,image of


company
2) Communicability Verifiable evidence or proof
points need to be created e.g. zpto
3) Sustainability enduring
Marketers must decide at which level (s) to
anchor brands PODs At lowest level are brand
attributes, then brand benefits & at top are
brand values.
153

EFFECTIVE POSITIONING REQUIRES

1. DETERMINING IMPORTANT DIMENSIONS


2. ASSESSING IDEAL POSITIONS
3. ASSESSING CURRENT POSITION OCCUPIED BY COMPETITORS

STEPS IN POSITIONING

1. DEVELOP ALTERNATIVE POSITIONING CONCEPTS


2. SELECT POSITIONING STRATEGY
3. SIGNAL THROUGH MARKETING MIX

Positioning Strategy
1.
2.
3.
4.
5.
6.
7.
8.

ATTRIBUTE for e.g. clinic with zpto


BENEFIT
USE/ APPLICATION
USER
COMPETITOR
LEADERSHIP quality , technology, service
PRODUCT CATEGORY DISASSOCIATION
EXCLUSIVE CLUB

156

POSITIONING STRATEGY TO BE AVOIDED

1. UNDERPOSITIONING - VAGUE IDEA


2. OVERPOSITIONING - TOO NARROW AN IMAGE
3. CONFUSED POSITIONING
4. DOUBTFUL POSITIONING

PRODUCT REPOSITIONING

1. CHANGING TARGET CONSUMER PROFILE


2. COMPETITOR TOO CLOSE
3. INCREASE MARKET - E.g. CADBURY
4. COMMUNICATE TECHNOLOGICAL ADVANCEMENT /
UPGRADATION IN THE PRODUCT - E.g. SURF.
5. CHANGING CUSTOMER NEED.

158

DIFFERENTIATION VARIABLES
PRODUCT

SERVICES

PERSONNELCHANNEL

IMAGE

Features
Ordering ease
Competence Coverage
Symbol
Performance Delivery
Courtesy
Expertise
Written and
ConformanceInstallation Credibility
Performance audiovisual
Durability
Customer training
Reliability
media
Reliability
Customer consulting Responsiveness
Atmosphere
Reparability Maintenance and communication
Events
Style
repair
Design
Miscellaneous

MEASURING CUSTOMER EFFECTIVENESS VALUE METHOD FOR COMPETITIVE ADVANTAGE SELECTION


FEATURE

COMPANY COST
(1)

Rear window defrosting


$100
Cruise control
600
Automatic transmission
800

CUSTOMER VALUE
EFFECTIVENESS
(2)

$200
600
2400

CUSTOMER
(3 = 2/ 1)

2
1
3

160

Methods for competitive - Advantage selection


4
2
3
1
Importanc
Competitive CompanCompetitor
Standing e of
Advantages y
Improving
Standin
Standing
g
(H-M-L)*

Technology
Cost
6
Quality
Service

8
8
8
4

5
Affordabili
ty
and speed
(H-M-L)

6
Competitor
s
Ability to
Improve
standing
(H-M-L)

7
Recomme
nded
Action

8 L
L
M Hold
H
M
M Monitor
6 L
L
L Monitor
3 H
H
L Invest

* H = High; M = Medium; L= Low

161

PRODUCT & BRANDING

5 LEVELS OF PRODUCT

1. CORE BENEFIT
2. BASIC PRODUCT - FEATURES, BENEFITS, DESIGN & STYLE,
PACKAGING, BRAND NAME.
3. EXPECTED PRODUCT - CREATES NO PREFERENCE
4. AUGMENTED PRODUCT - TOTAL CONSUMPTION SYSTEM
5. POTENTIAL PRODUCT
THE 5 LEVELS CONSTITUTE CUSTOMER VALUE HIERARCHY
WITH EACH LEVEL ADDING MORE CUSTOMER VALUE.

CLASSIFICATION OF PRODUCTS-CONSUMER
GOODS
DURABILITY & TANGIBILITY
1. NON-DURABLE GOODS tangible, consumed in few
uses. Many locations, small mark up, heavy
advertising.
2. DURABLE GOODS personal selling, guarantees,
higher margin.
3. SERVICES intangible, variable, credibility of supplier
very important.
SHOPPING HABITS
4. CONVENIENCE GOODS staples, impulse & emergency
goods
5. SHOPPING GOODS comparison shopping
.Homogenous & heterogenous strategies differ.
6. SPECIALITY GOODS goods with unique characteristics
and or brand identification.Location should be
advertised.

Classification Of Products

Medica
l diagn
os i s

Aut
o re
pai
r

Difficult to
evaluate

Root
cana
l

al se
r
Leg

ir
n repa
Televis
io

Child car
e

Haicuts

High in experience qualities


High in search qualities

vice
s

Most services

Vacat
ion

als
rant m
e
Resta
u

Auto
mo

Hous
es

re
Furn
it u

Jewelry

{
{

oth
ing

Easy
to
evalua
te

biles

Most
goods

High in credence qualities

The Product Hierarchy

1) Need family thirst


2) Product family All product
classes that serve a core need with
reasonable effectiveness Nonalcoholic
beverages,
alcoholic
beverages
3) Product class A group of
products within a product family
having certain functional coherence
e.g. Aerated soft drinks
166

The Product Hierarchy Contd of Slide


.

4) Product line A group of products


within a product class that are
closely
related because they
perform a similar function, are sold
to same customer groups, are
marketed through same outlets or
channels or fall within price ranges.
Soft drink
5) Product type share same form.
Cola drink.
6) Item (SKU or variant) Coke 300
ml.

167

Product systems & Mixes

A product system is a group of diverse but


related items that function in a compatible
manner.
A product mix (product assortment is set
of all products & items a particular seller
offers for sale.
A product mix has width, length, depth &
consistency.

168

BRAND

A BRAND IS ESSENTIALLY A SELLERS PROMISE TO


CONSISTENTLY DELIVER A SPECIFIC SET OF FEATURES,
BENEFITS AND SERVICES TO BUYERS.A BRAND IS ABOUT
INTANGIBLE AND TANGIBLE ASSOCIATIONS

Brand

A brand is a product or service that is


differentiated
on
dimensions

functional, rational, tangible (brand


performance)
and/or
symbolic,
emotional, intangible (what brand
represents).

170

BRANDING DECISIONS

1.

BRAND OR NOT Advantages of branding easy


processing, legal protection, brand loyalty, segmentation
,corporate image. Also distributors and consumer s prefer
brands.

2. SPONSOR Manufacturer / Distributor / Licensed


3. BRAND NAME Individual / Blanket / Separate family / Co.
+ Individual.
Company names legitimizes and individual name
individualizes
4. BRANDING STRATEGY Line extensions (success rate
higher), Brand extensions (risk of brand dilution test
association), Multi-brands, New brands, Co brands (also
called dual branding).
5. REPOSITIONING shifting customer preferences or
competitor too close.

Devising a Branding Strategy


4 General Strategies:
1)
2)
3)
4)

Individual names or house of brands


Blanket family names or branded house
Separate family names
Corporate name + individual product name.

172

Devising a Branding Strategy Contd of Slide .

- Brand extension line extensions &


category extensions
- Parent brand & sub brand
- Brand line consists of all products
original as well as line and category
extensions sold under a particular brand.
- Brand mix (or brand assortment) is the
set of all brand lines that a particular seller
makes available to buyers.
- Licensed brands, co-branding, ingredient
branding.
173

ESSENTIALS OF A GOOD BRAND NAME

1.

Easy to pronounce, spell and remember.

2.

Suggest about benefits, quality, use or action.

3.

Unique, distinctive.

4.

Versatile can be added to new products / global reach.

5.

Registered and protected.

BRAND NAME TESTS

A. ASSOCIATION TEST
B. LEARNING TESTS (PRONOUNCABILITY)
C. MEMORY
D. PREFERENCE
E. GLOBAL REACH

PACKAGING TESTS

1. ENGINEERING
2. VISUAL
3. DEALER & CONSUMER TESTS

BRAND - MEANING

1. ATTRIBUTES
2. BENEFITS - FUNCTIONAL & EMOTIONAL
3. VALUE
4. CULTURE
5. PERSONALITY
6. USER
DEEP V/S SHALLOW BRAND

BRAND ASSOCIATIONS
Product attributes
Intangibles
Country/geographic area
Customer benefits

Competitors

Brand-name
and symbol

Product class

Lifestyle/personality Celebrity/person

Relative price

Use/application

User/customer

HOW VALUES AFFECT BRAND CHOICE


FUNCTIONAL
VALUE

CONDITIONAL
VALUE

SOCIAL
VALUE

BRAND CHOICE

EMOTIONAL
VALUE

EPISTEMIC
VALUE

BRAND EQUITY (DAVID AAKER)

1. BRAND AWARENESS
2. PERCEIVED BRAND QUALITY AND FUNCTIONALITY
3. POSITIVE BRAND MENTAL & EMOTIONAL ASSOCIATIONS
4. BRAND LOYALTY
5. OTHER ASSETS - PATENTS, TRADEMARKS ,CHANNEL
RELATIONSHIPS

ATTITUDE TOWARDS BRAND

1. CUSTOMER WILL CHANGE BRAND FOR PRICE REASONS


2. CUSTOMER IS SATISFIED - NO REASON TO CHANGE
3. CUSTOMER IS SATISFIED & WOULD INCUR COSTS BY
CHANGING BRAND
4. CUSTOMER VALUES THE BRAND AND SEES IT AS A FRIEND
5.

CUSTOMER IS DEVOTED TO BRAND.

BRAND EQUITY IS RELATED TO 3, 4, 5.

IMPORTANCE OF PROPER PACKAGING

1.

PROTECTION

2.

ADVERTISING VALUE

3.

CONVENIENCE TO CONSUMERS

4.

BENEFIT TO RETAILERS

5.

AFTER-USE VALUE

6.

IDENTIFICATION

7.

INFORMATION

181

FACTORS TO BE CONSIDERED FOR PACKAGE


DESIGNING
1.

LANGUAGE

2.

COLOUR

3.

SIZE

4.

CLIMATE

5.

NATURE OF THE PRODUCT

6.

LENGTH OF DISTRIBUTION CHANNEL

7.

ACCEPTED NORMS

8.

METHOD OF TRANSPORT USED

9.

TRENDS IN PACKAGING

10. COST-BENEFIT ANALYSIS

182

PACKAGING

1.

PRIMARY

2.

SECONDARY

3.

SHIPPING

DECISIONS
4.

The first task is to establish packaging concept. What


packaging should be or do. e.g. protection, novel
dispensing method, visibility.

5.

Decision on packing elements

6.

Tests engineering tests, visual tests, dealer tests and


consumer tests.

7.

Labeling identify, describe and promote.


183

Pricing methods
Cost based
Customer based
Competitor based

Selecting the Pricing Method


Markup pricing
Target return pricing
Perceived value pricing
Value pricing
Going rate pricing
Sealed bid pricing

Pricing strategies at entry


Skimming
Penetration

Some pricing terminology


Target costing(pricing)- due to
psychological price barrier
Psychological pricing(odd
..
end,psychological discounting)
Loss leader pricing
Referencing pricing - fair price, price
bandwidth

DISTRIBUTION

A COMPANY LAUNCHING A PRODUCT NEEDS


1. SALES CHANNEL (TALKING ABOUT PRODUCT)
2. DELIVERY CHANNEL (HOME DELIVERY, INSTALLATION)
3. SERVICE CHANNEL
THE 3 NEED NOT BE SAME.

Marketing Channels & Value


Networks

Marketing channel/trade channel/distribution channel are


set of intermediaries involved in process of making product
or service available for use or consumption.
Merchants (wholesalers, retailers)
Agents
(Brokers,
sales
agents,
manufacturers
representatives)
Facilitators
(transportation
companies,
independent
warehouses, banks, insurance companies)
In Managing its intermediaries, a firm must decide how
much effort to devote to push vs. pull strategies.

189

CHANNEL LEVELS

EACH INTERMEDIARY WHO BRINGS PRODUCT AND ITS TITLE


CLOSER TO BUYER CONSITUTES CHANNEL LEVEL.
ZERO CHANNEL(Direct marketing channel)

- Door to door

,home parties, mail order, telemarketing, TV


selling,,internet selling manufacturer stores.
ONE LEVEL
TWO LEVEL
THREE LEVEL

Intermediaries
No. of Intermediaries
Intensive,selective exclusive
Types of intermediaries eg for
cellphones

INTRODUCTION TO INTEGRATED
MARKETING COMMUNICATIONS

by AAAA
a concept of marketing
communications planning that recognizes
the added value of a comprehensive plan
that evaluates the strategic roles of a
variety of communications disciplines-for
example, general advertising, direct
response, sales promotion and public
relations-and combines these disciplines
to provide clarity, consistency, and
maximum communications impact
through the seamless integration of
discrete messages

Thus IMC can help us


deliver
Different media for same message:
Consistency over time: Lux
Different message over different
audience: Fair & Lovely- Urban Vs
Rural areas
Same message in different
languages: Coke

MARKETING COMMUNICATIONS MIX

ALSO CALLED PROMOTION MIX CONSISTS OF


1. ADVERTISING
2. SALES PROMOTION
3. PUBLIC RELATIONS AND PUBLICITY
4. PERSONAL SELLING
5. DIRECT MARKETING
6. MERCHANDISING
7. EVENT SPONSORSHIP
8. PRODUCT DESIGN
9. ONLINE ADVERTISING
10. WORD OF MOUTH RECOMMENDATION

COMMON COMMUNICATION PLATFORMS


ADVERTISING

SALES
PROMOTION

Print and
broadcast ads
Packagingouter
Packaging inserts
Motion pictures
Brochures &
booklets
Posters and
leaflets
Directories
Reprints of ads
Billboards
Display signs
Point-of-purchase
displays
Audio-visual
material
Symbols and
logos
Videotapes

Contests,
games,
sweepstakes,
lotteries
Premiums and
gifts
Sampling
Fairs & trade
shows
Exhibits
Demonstrations
Coupons
Rebates
Low-interest
financing
Entertainment
Trade-in
allowances
Continuity
programs
Tie-ins

PUBLIC
RELATION
S
Press kits
Speeches
Seminars
Annual
reports
Charitable
donations
Sponsorshi
ps
Publications
Community
relations
Lobbying
Identity
media
Company
magazine
Events

PERSONAL
SELLING

DIRECT
MARKETING

Sales
presentations
Sales
meetings
Incentive
programs
Samples
Fairs and
trade shows

Catalogs
Mailings
Telemarketin
g
Electronic
shopping
TV shopping
Fax mail
E-mail
Voice mail

PROMOTIONAL TOOLS
UNDERSTANDING UNIQUE CHARACTERISTICS AND COSTS OF
EACH
1. ADVERTISING Strategic and long term, most economical
form of consumer contact, transforms products into brands.
Persuasive, expressive public
presentation hence perceived as legitimate but impersonal .
2. SALES PROMOTION Short term, tactical
Creates quick response but not effective in building
long-run brand preference.
3. PUBLIC RELATIONS & PUBLICITY High credibility,
dramatization, catch buyers off guard.
4. PERSONAL SELLING Useful in later stages but long-term
cost commitment.
5. DIRECT MARKETING Customized, interactive, secrecy.
6. MERCHANDISING or Point of Purchase activity for traffic
building in outlets especially self-service outlets

PROMOTIONAL TOOLS

7. EVENT SPONSORSHIP should be relevant target


audience,involving.
8. PRODUCT DESIGN and packaging and brand name acts as
silent salesmen.
9. ONLINE ADVERTISING internet users few, but interactive.
10. WORD OF MOUTH recommendations need to be
stimulated through proper identification of opinion leaders

PRODUCT LIFE CYCLE

199

PLC PHASES

1. INTRODUCTION
2. GROWTH
3. MATURITY
4. DECLINE

200

PRODUCT LIFE CYCLE


THE LAUNCH PHASE
DEFINING THE POSITIONING;
ACHIEVING WHOLESALE DISTRIBUTION;
ACHIEVING RETAIL DISTRIBUTION;
AROUSING CONSUMER AWARENESS;
ATTRACTING CONSUMER TRIAL;
CONVERTING CONSUMERS TO THE PRODUCT;
AND
ACHIEVING BUYING CONTINUITY
201

FOUR INTRODUCTORY MARKETING


STRATEGIES
Promotion

Pric
e

Hig
h

Low

Hig
h
Rapidskimming
strategy

Slowskimming
strategy

Rapidpenetratio
n strategy

Slowpenetratio
n strategy

Low

202

PRODUCT LIFE CYCLE


THE GROWTH PHASE
INCREASING THE USER BASE;
EXPANDING DISTRIBUTION;
EXPANDING SHELF FACINGS;
INCREASING PURCHASE FREQUENCY;
SHIFT FROM PRODUCT AWARENESS
ADVERTISING TO BRAND PREFERENCE
ADVERTISING;
LOWER PRICES TO ATTRACT NEW LAYER OF
PRICE SENSITIVE BUYERS
ENSURING ADEQUATE INVENTORIES AT
WHOLESALE AND RETAIL LEVELS; AND

203

MATURITY PHASE

1. GROWTH MATURITY - SALES GROWTH RATE


DECLINE, LAGGARDS
2. STABLE MATURITY - SALES FLATTEN; SALES
GOVERNED BY POPULATION GROWTH &
REPLACEMENT DEMAND
3. DECAYING MATURITY - ABSOLUTE LEVEL OF
SALES STARTS TO DECLINE, CUSTOMERS
SWITCHING TO OTHER PRODUCTS

204

PRODUCT LIFE CYCLE

THE MATURITY PHASE


RETAINING CURRENT USERS;
ATTRACTING NEW USERS;
RETAINING DISTRIBUTION;
OPTIMISING PRODUCT LINE AND PACKAGING;
AND
OPTIMISING PRODUCT COSTS

205

MATURITY PHASE
1. MARKET MODIFICATION
VOLUME = NO. OF BRAND USERS X USAGE PER USER
a) INCREASING USERS
CONVERT NON-USERS
ENTER NEW MARKET SEGMENTS
SNATCH COMPETITORS CUSTOMERS
b) INCREASING USAGE
MORE FREQUENT USE
MORE USAGE PER OCCASION
NEW AND MORE VARIED USES
2. PRODUCT MODIFICATION
3. MARKETING MIX MODIFICATION
206

PRODUCT LIFE CYCLE

REJUVENATION
DEVELOP AND QUALIFY MAJOR PRODUCT
IMPROVEMENT;
REPOSITION PRODUCT VIA ADVERTISING;
ACHIEVE NEW DISTRIBUTION OUTLETS;
ACHIEVE CONSUMER TRIAL AND CONVICTION;
AND
ATTRACT NEW USERS AND NEW USES.

207

PRODUCT LIFE CYCLE

DECLINE PHASE
RETARDING ATTRITION IN USER BASE;
ATTRACTING BARGAIN BUYERS;
RESTRICTING PRODUCT LINE;
REDUCING PRODUCT COSTS;
RETARDING DISTRIBUTION LOSSES;
MAXIMISING IMMEDIATE PROFITS

208

PRODUCT LIFE CYCLE


THE NEW PRODUCT / ESTABLISHED PRODUCT
DISTINCTION
FOR THE NEW PRODUCT:

ASCERTAIN THAT YOU REALLY HAVE A VIABLE PRODUCT


BEFORE YOU START MARKETING IT;
CONCENTRATE EFFORTS ON DEVELOPING EFFECTIVE
POSITIONING AND ADVERTISING THAT REFLECTS THAT
POSITIONING OPTIMALLY;
WITH THE TRADE, AIM AT DISTRIBUTION BEFORE ANYTHING
ELSE;
CLEARLY ESTABLISH THE PRICE LEVEL THAT YOU WANT.

209

PRODUCT LIFE CYCLE


THE NEW PRODUCT / ESTABLISHED PRODUCT
DISTINCTION
FOR THE ESTABLISHED PRODUCT:

DO NOT WANTONLY CHANGE POSITIONING OR ADVERTISING


UNLESS YOU HAVE REAL EVIDENCE THAT THEY ARE
FUNDAMENTALLY WRONG;
ENSURE YOUR PRODUCT HAS SUFFICIENT SUPERIORITY TO
THE COMPETITION TO MAKE IT VIABLE IN THE MARKET;
CONCENTRATE AS A FIRST PRIORITY ON HOLDING THE
VOLUME YOU HAVE INHERITED AND THE USER BASE THAT HAS
BEEN BUILT UP;
SEEK TO FIND EXPANSION POSSIBILITIES FOR NEW VOLUME NEW USERS, NEW TRADE OUTLETS, VOLUME PACKS AND
PROMOTIONS;
UNDERSTAND AND RESPECT THE PRODUCTS AND THE
BRANDS HERITAGE.

210

PRODUCT LIFE CYCLE STRATEGIES


(SEE APPENDIX NO.6)

S
a
l
e
s

Introductio
n

Growth

Maturi
ty

Declin
e

Time

211

PRODUCT LIFE CYCLE STRATEGIES

Characteristics
Sales
sales

Costs
Profits

Low sales

Rapidly rising
sales

High cost
per
customer

Average cost per


customer

Negative

Rising profits

Customers Innovators
Competitor
Few
s

Early adopters
Growing number

Marketing Objectives

Peak sales Declining

Low cost per


customer
High profits

Low cost per


customer

Declining profits

Middle majority Laggards


Stable number
beginning to
decline

Declining number

Reduce
Create product
Maximize market
Maximize profit while
awareness and trial share
defending market share expenditure
212
and

Strategies

Product

Price

Offer product
Diversify brands
extensions, service, and models
Offer a basic product
warranty
Price to penetrate
Charge cost-plus
market

Build selective
Distributi
Distribution
on

Build intensive
distribution

Price to match or
Best competitors

Build more
intensive
Distribution

Build product
Build awareness and
awareness among
interest in the mass Stress brand
Advertisi
early adopters and
differences and
Market
ng
dealers
Benefits

Sales
Promotio

Reduce to take
Use heavy sales
advantage of heavy
promotion to entice
consumer demand Increase to
trial
encourage
Brand switching

Phase out
weak
items
Cut price

Go selective:
Phase out
unprofitable
Outlets
Reduce to
level
Needed to
retain
Reduce
to
Hard-core
minimal
loyals
level
213

Innovators

2.5%

Early
Early
Adopters Majori
13.5%
ty
34%

Late
Majority
34%

Laggards
16%

Percentage of Adopters by Category Sequence


214

Adopter Categories
ADOPTER
DESCRIPTIONRELATIVE PERCENTAGE
CATEGORY POPULATION WITHIN THE
THAT EVENTUALLY
ADOPTS
Innovators
Venturesome - very eager to try new Ideas
acceptable if risk is daring; more 2.5%
cosmopolite social relationships;
communicates with other innovators.
Early Adopters
Respect - more integrated into the local
social system; the persons to check with 13.5%
before adopting a new idea; category contains
greatest number of opinion leaders; are role
models.
Early Majority deliberate - adopt new ideas just prior to the
average time; seldom hold leadership positions;
34.0
deliberate for some time before adopting.
Late Majority Skeptical- adopt new ideas just after the average
time; adopting may be both an economic necessity 34.0
and a reaction to peer pressures;innovations
approached cautiously.
Laggards
Traditional - the last people to adopt an innovation;
most localite in outlook; oriented to the past; 16.0
suspicious of the new.

215

Forecasting & Demand Measurement

Demand can be measured at 6 product levels (item, form,


line, company sales, industry sales, all sales), 5 space
levels (customer, territory, region, country, global) & 3
time levels (short-term, medium & long-term).

216

Market can be defined as.

a) Potential market = interest in a market offer.


b) Available market = interest + income + access.
c) Qualified available market = interest + income + access +
qualifications (beer
21 yrs.)
d) Target market = part of qualified available market that company
decides to pursue.
e) Penetrated market
These definitions are a useful tool for market planning.

217

Market Demand

Market demand for a product is the total volume that


would be bought by a defined customer group in a defined
geographical area in a defined time period in a defined
marketing environment. (e.g. recession V/s prosperity)
under a defined marketing program. Hence, market
demand is a function.

Market minimum (base sales) & market potential


(upper limit).

218

Market sensitivity of demand (expansible market V/s


non-expansible market)

Organizations selling in non-expansible market must accept


the market size (level of primary demand for product
class) & direct effort to winning larger market share
(selective demand).

Market penetration index (current level of market


demand vis--vis potential demand level) & companys
share penetration index (current market share vis--vis
potential market share).
Market forecast is market demand corresponding to one
level of industry marketing expenditure.

219

Company Demand
Company demand is companys estimated share of market
demand at
alternative levels of company marketing effort in a given time
period. This
depends on size & effectiveness of marketing expenditure
relative to
competitors.
Company sales forecast is expected level of company sales
based on chosen
marketing plan and an assumed marketing environment.

220

Sales quota is sales goal set for a product line, company


division or sales representative. Sales quota higher than
sales forecast.

Sales budget is conservative estimate used for current


purchasing, production & cash flow decisions.

Company sales potential is maximum company demand


as company marketing effort increases relative to
competition.
This will always be less than market potential.

221

Estimating Current Demand


1)

Total Market Potential

a)

Total Market Potential = Potential No. of Buyers X


Average Quality purchased by a buyer X Price

b)

Chain Method Potential for sweetened milk for


urban adults = Urban population above 18 years X
Personal discretionary income (urban) per capita X
Average percentage of discretionary income spent on
food X Average percentage of amount spent on food that
is spent on beverages X Average percentage of amount
spent on beverages that is spent on dairy beverages X
Expected percentage of amount spent on dairy
beverages that will be spent on sweetened milk.
222

2)

Market Buildup Method Identify all potential buyers


in each market & estimating their potential purchases
(based on some norm e.g. lathes per hundred employees
or per Rs. 1 million sales).

3)

a)

Multiple-factor Index Method can use existing


market indices or develop own market indices based on
assumptions.
RK Swamy BBDO Guide for urban markets uses 18
variables.
MICA Rural Market Ratings for rural markets uses 6
variables.

b)

Developing own market indices.

223

MULTIPLE FACTOR BUYING POWER


INDEX
Step 1.
Specific customer profile in terms of factors. E.g.
Demographic > 30 years
Economic MHI > 20,000
Step 2.
For each market, calculate percentage of each factor
V/s total
e.g. Demographic % = Markets men > 30 years
All India men> 30 years
Step 3.
Determine importance weight of each factor
Demographic = 40%
Economic
= 60%
Step 4.
BPI of a market = 0.4 X Demographic % + 0.6 X 224

CATEGORY DEVELOPMENT INDEX

NATIONAL

BPI

ESTIMATED
SALES
(BASED ON ACTUAL
SALES
BPI)

100

2,00,000

2,00,000

CDI
-

MUMBAI
14

28,000

56,000

200

14,000

42,000

300

10,000

10,000

100

2,000

1,000

BANGALORE
DELHI
CALCUTTA
50
225

BRAND DEVELOPMENT INDEX


SAY FIRM A HAS A MARKET SHARE OF 15% = 30,000

BPI
NATIONAL

100

ESTIMATED
SALES
(BASED ON ACTUAL
SALES
BPI)
60,000
30,000

MUMBAI

BDI
-

14

4,200

8,400

200

2,100

4,200

200

1,500

2,250

150

300

300

100

BANGALORE
DELHI
CALCUTTA

226

Estimating Future Demand


1)

Time series

2)

Econometric Models of forecasting involving 3 stages


macroeconomic forecast, industry forecast, company
sales forecast.

3)

For business buyers-- buyer-intention surveys.

227

All forecasts are based on


a)

What people say survey of buyers opinions or those


close to them.

b)

What people do test market.

c)

What people have done analysing records of past


buying behaviour or using time-series analysis or
statistical demand analysis.

228

Methods
1)

Surveys of buyers intentions eg. Consumer durables,


industrial products. Buyers should have clear intentions, will be
implementing them, willing to disclose.

2)

Composite of sales force opinion need to take with pinch of


salt as pessimistic or optimistic. Also tend to be unaware of larger
economic developments. May deliberately underestimate, or have
no time.
To encourage better estimating ,share records of past forecasts with
actual sales & also description of company assumptions on business
outlook, competitor behaviour & market plans. Benefits are that
sales force best single group, greater confidence & incentive to
achieve (as self driven) & the grass roots forecast provides detailed
estimates broken down by product, territory, customer & sales rep.

3)

Expert Opinion Dealers, Distributors, suppliers, marketing


consultants, Trade associations.
Group discussion method or pooling of individual estimates or
Delphi method.
229

4)

Past-sales analysis

a)

Time Series break down past sales into trend, cycle, seasonal
& erratic & project into future.

b)

Exponential smoothing consists of projecting the next


periods sales by combining an average of past sales and the
most recent sales, giving more weight to the latter.

c)

Statistical demand analysis consists of measuring the impact


level of each of a set of causal factors (e.g., income, marketing
expenditures, price) on the sales level.

d)

Econometric analysis consists of building sets of equations that


describe a system, and proceeding to fit the parameters
statistically.

5)

Market test method- especially desirable in forecasting new


product sales or established product sales in new distribution
channel or territory.
230

Organizational Buying
Behavior

231

Organizational buying
behaviour

anizational Buying is the decision-making process by which


mal organizations establish the need for purchased products
ices and identify , evaluate, and choose among alternative
suppliers.
nizations could be corporate, manufacturing firms,Service fir
tutional & Government markets.

1.
2.
3.
4.
5.

Business Market V/S Consumer


Market

Fewer buyers
Larger buyers
Close supplier-customer relationship - Customization
Geographically oriented buyers
Derived demand -business marketer must closely monitor
buying patterns of ultimate consumers.
6. Inelastic demand - in short run as producer cannot make quick
changes in production methods, also small percentage of
items total cost.
7. Fluctuating demand - given 10% increase in consumer
demand can cause 200% increase in business demand.
8. Professional purchasing - Policies, constraints, requirements.
9. Several buying influences - buying committees
10. Direct purchasing
11. Leasing - e.g. Heavy construction equipment, computers, etc.
12. Reciprocity - Chemical manufacturer & Paper manufacturer

Buying Situations
1.

Straight rebuy - recorder on routine basis


automatic recording system from approved list of
suppliers. Insuppliers & outsuppliers strategy.

2.

Modified rebuy - modifying in product


specifications. Prices, delivery requirements or other
terms.

3.

New task - Buying for first time


* Greater cost or risk, more the decision participants
& greater
the information gathering.
* Missionary sales force used by marketer
* Mass media in awareness stage, stage sales
people in interest
stage & technical sources in
evaluation stage.

Participants in Business Buying


Process
Straight rebuy & modified rebuy situationspurchasing agent important.
New buy- engineering or other departments.
Purchasing agent dominate in selecting
suppliers.

Buying roles in Buying


centre

1. Initiators - Users or others.


2. Users - Users may initiate & help define
product requirements.
3. Influencers - help define specifications &
provide information for evaluating alternatives
technical personnel.
4. Decider - decide on product requirements &
suppliers.
5. Approver - authorize actions of decider buyer.
6. Buyer - formal authority to select suppliers,
negotiate.
7. Gatekeeper - Prevent sellers or info reaching
buying center. e.g. - purchasing agents,
telephone, operators, receptionists.

Major influences on Industrial


Buying Behaviour
Business buyers responds both to economic &
personal factors. Personal (treatment etc)when
similarity in supplier offers.
ENVIRONMENTAL
ORGANIZATIONAL
Level of demand
Economic outlook
Objectives
Interest rate
Rate of technologicalPolicies
change
Political and
Procedures
regulatory
Organizational
developments
Structures
competitive
developments
Systems
Social responsibility
concerns

INTERPERSONAL

Interest
Authority
Status
Empathy
Persuasiveness

INDIVIDUAL
Age
Income
Education
BUSINESS
Job position
BUYER
Personality
Risk attitudes
Culture

Trends in Organizational
Buying

1. Purchase department upgrading


2. Centralized purchasing - in multidivisional
companies
3. Decentralized purchasing for small ticket
items.
4. Long-term contracts
5. Purchasing performance evaluation & rewards
hence pressure put on suppliers.
6. Just- in-time
7. Single sourcing & early supplier involvement.

Purchasing / Procurement
Process
(Buy Phases)
1.
2.

Problem recognition - as a result of internal or external stimuli


General need description - items general characteristics,
attributes & quantity.

3.
4.

Product specification- Technical specifications.


Supplier search - buyer can examine trade directories, computer
search, trade shows, advertisements, recommendations of others.

5.

Proposal solicitation - Buyer invites qualified suppliers to


submit proposal, make presentations.

6.

Supplier selection - based on important factors e.g. product


reliability, technical service, price, supplier flexibility, reputation.

7.

Routine order specification - Trend especially in MRO


items is blanket contract/ stockless purchase plan.

8.

Performance review

Buying stages in buying classes


BUYCLASSES
NEW TASK MODIFIED STRAIGHT
REBUY REBUY
1.
Problem recognition
Yes Maybe No
2. General need description Yes
Maybe No
specification
YesYes Yes
4. Supplier search
Yes Maybe No
BUYPHASES
5. Proposal solicitation Yes
Maybe
No
6. Supplier selection Yes
Maybe No
7. Order-routine specification
Yes
Maybe No
8. Performance review
Yes
YesYes

3. Product

Vendor analysis
An example of vendor Analysis
Rating scale
ATTRIBUTES IMPORTANCE (1) (2) (3) (4)
WEIGHTS
POOR
FAIRGOOD

Price
.30
Supplier reputation
.20
Product reliability .30
Service reliability .10
Supplier flexibility .10

EXCELLENT

X
X
X
X
X

Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5