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Marketing Management

1st unit
Introduction Definition, Scope and core concepts of marketing. Company orientation towards the market place.

Emerging trends in indian marketing environment

Definitions of marketing
Mainly focus on what it means to the orgn 1. The chartered Institute of marketing define marketing as management process responsible for identifying, anticipating and satisfying customer requirements profitably 2. P.Tailor defines marketing is not about providing products or services it is essentialy about providing changing benefits to the changing needs and demans of the customer 3. Philip Kotler satisfying needs and wants through an exchange process
Therefore marketing consists of strategies and tactis used to identify,create and maintain satisfying relationship with the customers that result in value.

In

an era of seamless market ,the customer today has wider choice. they are not stick on to only locally available brands .
Customers

are given different modes to buy goods (tele shopping, internet, advt in the news paper.
Marketers

are using every weapon to gain and retain the customers and their brand name in the market. e.g KBS in star plus. The news programme moved to star world. influenced the Indian families to watch the 1 hour programme.rival to this Zee TV started programme cash prize10 times more than KBS but failed. A market is defined as any place where the seekers of a particular good or service can meet with the buyer, where there is a potential for a transaction to take place.

Marketing as a concept concept is a customer orientation, customer is the king of market ( said by mahatma Gandhi). The organization have to bring the goods to the market to satify their needs without any obligation. The marketing concept involves: (and the best marketing concept 1. customer orientation 2. competition orientation 3. the ability to respond to the environmental changes(chnages in consumer needs, environment, govt policy,
technology. E.g Sony and Microsoft investing in futuristic technology

Marketing (company) orientation towards the market it involves six dimensional approach 1. consumer orientation

2. an integrated approach to exploiting market: integrate all marketing mix, e.g is maggi noodles found success, whereas the Lipton with the same product failed. Marketing orientation requires preoccupation with the quality. e.g P&G,Godrej.J&J,Asian paints,Crompton and grieves have passion for premium quality. 3.futerestic approach: money spent is not an expenditure but investment for long term.

4. Highly developed marketing systems: they are market information system like customer feedback, complaint managements, customer relationship management (CRM). Helps enhancing their effectiveness. 5. Marketing culture in the organization: the strucure of orgn from top to bottom aimed at market orientation. E.g hospitality industries Windsor and Manner promised to pay penalty Incase customer not satisfied. 6. Speed in responding customers problems: fast relief and toll free communication. Eg LG, ONIDA,ICICI,JDFC etc.

Marketing and selling orientation Selling is sales promotion with the intention to close the sales to increase the profit of the orgn Marketing is integration of all marketing plan concentrating on customer and selling to maximize the profit. e.g. of Ambassadors and premier Padmini with Maruti Suzuki in 1984 succeeded in customer satisfaction by increasing the efficiency of the customer. Successful marketers think about tomorrow and not just today.

Difference between marketing and selling


Marketing
focuses

selling

on customers needs sellers needs Begins before production after production Continues after sale comes to an end with sale Broader meaning narrow meaning Profit through customer satisfaction through sales Let the seller be aware buyer aware Long term prospective short term prospective Customer first then product product then customer

The essence of modern marketing 1. Define the market area: find the right destination of the business and plan the marketing strategies. three types of major markets are: Consumer market, the industrial market, the service market and the fast growing market( both domestic and industries products) 2. Research consumer needs and wants: differentiate between the consumer needs and wants, Eg. A child want a coke and need milk a child want food and need food. Which to produce more and which in limited quantity.

3. Developing and redeveloping the product or service: refine and innovate the products where there is no end for choice or supply for the demand by the consumer.
4. Selecting Training, Motivating and controlling manpower: best person for the right job with the above qualities to promote the product and organization. e.g service, business, education, hospitality etc. 5. Developing sales approach and advertising support: these are wheels of marketing. The marketing is successful only when these wheels are moved or taken into action.

Marketing management ; is a importrant functional area of business management where planning, organizing, directing, coordinating, motivating and controlling the marketing activities under customer oriented marketing activities

Customer satisfaction, value and retention.

Creating value for customers is critical to every companys success especially during times of austerity. In the old economy, the focus of most companies was internal with respect to their customersmeaning they would view customers based on what they had to sell. In the new economy, the focus of companies is more external and is based on identifying customers needs and what they will buy. Focusing on what customers need is key to growing top-line revenues, reducing operating expenses and growing the bottom line.

Customers buy value, therefore it follows that improving the customer experience will increase customer loyalty or retention. The Value of Retaining a Customer In Frederick Reichhelds book The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value, his analysis showed that the cost of acquiring new customers was five times the cost of servicing existing ones.

Customers buy value therefore it follows that improving the customer experience will increase customer loyalty or retention. Customer satisfaction and customer value are distinctly different (although related)

Measures of satisfaction indicate how customers feel about products and services, while measures of customer value are indicates of how customers will act.

Customers buy value therefore it follows that improving the customer experience will increase customer loyalty or retention. Customer satisfaction and customer value are distinctly different (although related)

Measures of satisfaction indicate how customers feel about products and services, while measures of customer value are indicates of how customers will act.

Customers are value maximizers, within the bounds of search, cost and limited knoweldge, mobility and income. They form an expectation of value and act on it. whether or not the offer lives up to the value effects both satisfaction and repurchase probability. Customer perceived value; is the difference between the respective customers evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Total customer value is the percieved monetary value of the bundle of economic, social, functional and psychological benefits customers

Expect from a given market offer. Total customer cost is the bundle of costs customer expect to incur in evaluating, obtaining, using and disposing of the given market offering.
Example: caterpillar tractor vs Komatsu A buyer would like to buy the tractor for rewsedential construction. Wants buy either caterpillar or komatsu. He looks out for the reliability, durability, performance and its resale value How can the slaesperson convince this buyer to purchase caterpillar

Caterpillar can succeed in selling to this buyer .


Caterpillar can improve its offer in three ways. 1. Increase in total customer value by improving product, services, personnel and image benefit. 2. It can reduce buyers non monetary cost by reducing the time, energy and psychic cost. 3. it can reduce the products monitory cost. suppose the buyer demand for the tractor is 2lakh The cost of producing the tractor is 1,50,000. Caterpillars offer generates 50000 over the companys cost. Caterpillar need to charge a price between 150000-2lakh. If it charges 150000 it is a loss. Above 2lakh out of market price. If it charges 190000. 10000 is the customer perceived value

40000 profit to the company.


Retaining the customer from komatsu; The salespersons can give( convince) the assured guarantee warrantee and brand image, service of caterpillar and the komatsu. After the sale . comparison of price and total customer value and cost from both the companies. Eg of Saturn car division of general Motors. Retaining its 40000 customers through empolyee satisfaction by paying high salary and its customer loyalty and retention of 60% customers compared to others 40% in the market.

Making CVM Work Data - use whats available; dont overdo it Simple segmentation Know valuable customers Leverage value knowledge Match channels to segment preferences Do sale reps follow value targeting? Does service maintain customer relationships

Marketing Information System The need for real time marketing information greater than the past Is necessary. The shifts are dramatic from local to national buyer behaviour, price, preferences of goods etc. To predict buyer behaviour marketer should turn to marketing research. Firms should organize and distribute a continuous flow of information system to its marketing managers and to the outsiders.

MIS consists of people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers.

Marketing Information System

For marketers research is used not only for learning but also for right decisions - such as introduction of new products replacing the old, entering new market for dift customers. Characteristics of MIS 1. it is a continuous process 2. It is a preventive and curative process in the marketing. 3. Allows best integration between various mangers 4. Provides updated and accurate infn to the management.

Components of marketing information system 1. Internal marketing information: The datas available within the orgn of various depts like price product, inventory machineries, labors etc. with the previous data and time talent and good decisions. Ready to meet customer demands in time Coordination of various resources at the end of The day.

The order to payment cycle is the core source for

MIS which passes sales infn from dealerscustomers- sales representatives- firm-outsiders for the requirement of goods and changes in the goods acdg to the customers. Eg. Reliance fresh, big bazar, more etc start their business early morning with supply of goods. Database system necessary to combine various data and to be ready for the next sales customers problems, interests, preferred goods and give them surprise offer through mail. Data helps the decision makers to increase the sales

2. Marketing Intelligence System: It is a external information of marketing environment provided to mktg executives or collected about developments in the market Eg. Census data, market news, trade papers magazines etc. company can take several steps to improve its quality; Train and motivate the sales force to gather infn from external source and to send it to the right person. Motivate the distributors to pass infn to and from the customers.

Firm can gather infn from outsiders. Establish own internal staff to collect infn from internet and customer advisory panel. Eg. Marriot in its website offered various options and feedback from the customers of their suggestions and feelings for marriot. 3. Marketing research sytem: it is the function that links consumer, customer and public to the marketer through information in identifying marketing opportunities and problems, evaluate marketing actions American marketing

association.

marketing research is a systematic design, collection, analysis and reporting of data-philip k

Marketing Information System

Elements /features of marketing research: 1. Intensive study or systematic study 2. Scientific approach 3. Decision tool for management
1.

Intensive study: there is a definite purpose


the process are:

Defining the problem Determining the sources of information Collection of information Interpretation of data Preperation of research report

Marketing Information System 2. Scintific approach: collect relevant, correct and quality information which is lawful, clear reliable and communicable. State the objective of study, investigating problems, findings and assumptions and conclusions. 3. Decision tool to management: out of the problem. Data, assumptions and findings the management should come to the quality and right decision making conclusion and find best alternative. the objective of marketing research: 1. To know the buyer 2. To measure the result of promotional effort

3. 4. 5. 6.

Marketing Information System Know consumers response Know market cost Master the external forces Design and implement marketing control

Scope of marketing research 1.Consumer research: deals with consumer and their problems and the solutions. 2. Product research: evaluating the product , modification, diversification , product innovation and performance. 3. Market research: study the structure of marketmarket size, consumer capacity, government

4.
5. 6. 7.

8. 9.

Marketing Information System Sales research: methods of sales, territories and employee compensation. Pricing research: study different market, customer, cost of mfg etc. Distribution research: requirement of channels of distributions. Motivational research: identification of consumers motives, attitudes, emotions etc ( LIC, SBI, Kellogs, Bajaj Alliance etc ) Advertising research: effective and suitable Policy research: blend the policies of various departments for the market success.

Market segmentation

Understand the msrket segmentation Know the meaning of target marketing Understand how the companies position their product in the market Understand the meaning of product differentiation Measning of market segmentation: It is the identification of portions of the market that are different from one another. ( to satisfy the needs of its potential customers. Levels of segmentation: 1. segmenting the market

Mass marketing where all the products are placed for all kinds of buyers Differentiate between sector and segment

Market segmentation

the marketer does not create the segments , but to identify the segments which offers benefits over segments.

The definitions market segmentations acdg to Philip kotler It is sub dividing of market into homogeneous subsections of customers. Where any sections may be conceivably be selected as a market target to be reached with a distinct marketing mix.

Market segmentation

Patterns of market segmentations: Homogeneous preference where the consumers almost has the same preferences (Pillsbury atta could gain more profit by segmentation research)
Diffused preferences where the consumers preferences are scattered and vary throughout. Clustered preferences where distinct preferences exist as a sector in the segment. Egs: Barbie could reach the market segments by customizing the product according to customer needs in 1998( names,design, hair color)

Market segmentation Levis jeans for women made customized jeans to fit women of different waists 1994. In eye glasses Paris Miki a Japanese company first used various designs in eye glasses. 2. Niche marketing: niche is more narowly defined group seeking a distinctive group of benefits. Marketer identifies niches dividing a segment into sub segments.

Eg; segment of people who only travel through air again subdivided into teenagers who only travel in executive class.
The characteristics are- customers have distinct set of needs who will pay premium to the firm that best satisfies their needs

3. Local marketing: local marketing are tailor to the needs and wants of the local customers. The companies favourising the local markets deny the national advertisements which fails to address the local needs. 4. Individual customer market: the level of segmentation leads to segments of one customized market or one to one market as the individual preference changes from. Companies are now going for mass customization of products on a mass basis.

Mass customization comes of age.

Choice board- is a online customization of products of customer choice. (helps also in International business and MNC ) It helps and facilitate customers to go for further improvement and buy the product Helps the marketer to retain the customers Provide real time market research. Reduce the cost of production and unwanted goods. They have more market share and faithful customers.

Market segmentation

Effective market segmentation requires:

Characteristics within each segment should be homogeneous Measurable: the size, purchasing power Accessible effectively reachable and targetable differentiable- where the customers can respond differently. Segment should be mutually exclusive Must be measurable and identifiable.

Market segmentation

Basis for segmentation in consumer market:


1. Geographic segmentation: nations, state, regions, cities- product varies acdg to these segments. 2. Demographic segmentation: divided into groups such as age, family, family size, family life cycle, gender, income, education, religion etc.- this is required to estimate the size of the market and the media that should be used.

Eg: ivillage.com in Europe an online women network reaped the benefits of gender segmentation after initially seeking a broader market. Began to focus on the pregnant women (food such as health drink, soups) They exchanged the advice and suggestions. Attracted the largest audience.

It evolved into the leading womens online site in Europe.


BOA in US started different types of investment for different age and gender and classes providing them benefits. ICICI prudential, HDFC

Market segmentation

3. Psychographic segmentation: varies on the basis of lifestyles- it is a behavioral concept ( may or may not work) personality or values- personality of individual connected with the brand or product. 4. Behavioral segmentation: on the basis of knowledge, attitude, use, response towards the product, status and loyalty etc. The marketer can give the right knowledge about the product to these kinds of customers to promote the product.

Market segmentation

Basis for segmentation in industrial markets


Industrial customers fewer in number and purchase larger quantities, decisions are taken by more persons. Have more knowledge about the product. the characteristics for segmentation are: 1. Location: distance from the vendor to the industries depends on the availibility and legal restrictions. 2.Company type: business customers can be classified according to Company size industry

Market segmentation

Decision making unit Purchase criteria 3. Behavioral characteristics: Usage rate Buying status: potentiality, regularity, payment in time. Purchase procedure: negotiation, packing conditions, standards, acceptability and other conditions - offer, discounts, offers etc.

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