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Marketing may be defined as an economic process by which goods and services are exchanged and the values is determined in terms of money prices. The American Marketing Association has defined Marketing As the performance of business activities that direct the flow of goods and services through producers to consumers or users. Marketing is the business process by which products are match with the markets and through which transfers of ownership are effected.
Marketing is a social and managerial process whereby individuals and groups obtain what they need and want through creating and exchanging products and value with others.
Marketing concepts
The Marketing concepts may be defined as a management orientation that holds that the key task of the organization is to determine the needs, wants, and values of a Targeted market and to adapt the organization to delivering the desired satisfactions more effectively and efficiently than its competitors. Marketing concept is a philosophy, an attitude, or a course of business thinking. It holds that satisfaction of the wants of the consumer is the economic and social justification of a companys existence. Marketing concepts is based upon three fundamental beliefs. 1.All companys planning , policies, and operations should be customers oriented. 2.Profitable sales volume should be the goal of the Company. 3.All Marketing activities should be organizationally integrated and co ordinated.
Markets
Level of income
Company (markete r) Manufactu rer Exporter Marketing intermediar ies (Wholesellers , Retailers ) Rivals
End users
Environment
Marketing Managements
Marketing Management as the art and science of choosing target markets and building profitable relationship with them. This involves getting , keeping, and Growing customers through creating, delivering and communicating superior customer value. Marketing Management deals with planning, organizing, directing and controlling the Activities related to the marketing of goods and services to satisfy the customers needs.
Marketing functions
Functions of exchange
Functions of Miscellaneous Physical treatment Functions Standardization, 1. grading, & branding. Packaging Storing 2. Transportation 3. 4. Promotion (advertise ment, publicity). Pricing Financing Risk-taking
Means
Ends
Market
Customer needs
Marketing Mix
Marketing Mix is the term used to describe the combination of the four inputs which Constitute the core of a companys marketing system, the Product, Price- structure, promotional activities and the distribution system. Every business firm has to determine its Marketing Mix for the satisfaction of needs of the customers. Marketing Mix represents a blending of decisions in four areas1.Product 2.Price 3.Place 4.Promotion These four elements of Marketing mix are inter-related in such a way that decisions taken in one area usually affect actions in others. It is a dynamic state of affairs of the marketing system of a business firm. It concentrates on how to satisfy the needs of the customers, If the needs of the consumers change, the Marketing Mix will also be changed.
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Product :In the production of a product (or service) the marketing manager should reckon the fact that his product indeed satisfies a need of the society. Product component of Marketing Mix involves planning , developing, and producing the right type of products and services to be marketed by the business firm. It should also emphasis on its proper Branding, packing, colors, and other features. In other words production planning and development involves decision about . 1.Quality of the product 2.Size of the product 3.Design of the product 4.Volume of the production 5.Product range 6.Branding 7.Packaging 8.Warranties and after sale services 9.Product testing etc.
Price:Another important component of Marketing Mix is the pricing of the product . A marketing manager has to do a lot of exercise to determine the price, he decide the price in such a way that the firm is able to sell its products successfully. Pricing also involves establishing policies regarding credit and Discount. Below are other variables which considered while pricing a product ( or Service) 1.Demand for the product. 2.Actual cost of the product 3.Potential competition 4.Government rules and regulations. Pricing decisions and policies have direct influence on the sales volume and the profit of the firm. Therefore right price can be determined through pricing research and by adopting test marketing techniques.
Promotion:Promotion deals with informing and persuading the consumer regarding the firms product It involves decisions about advertising , procedure of giving free articles for purchase of the particular commodities, conducting contest, role of personal selling by the salesman, and other sales techniques. Advertising is a tool marketing manager uses to communicate a message to consumers through newspaper, magazines, televisions etc. Personal selling is another means of communicating to the consumer , and consist of direct person to person interaction between salesman and consumer.
Physical distribution:This aspect of Marketing Mix includes decisions about wholesale and retail channels of distribution and the place at which the products should be displayed and made available to the consumers. It is managements responsibility and to select and manage trade channels through which the product will reach the right customer at the right time and to develop a physical distribution system for handling and transporting the products through these channels.
Marketing philosophies:As marketing management carrying out task to build profitable relationship with target consumers, what philosophy should guide these marketing efforts ? There are five alternative concepts under which organizations conduct their marketing activities. 1. The production 2. The product 3. The selling 4. The marketing
5.The social marketing The production concepts:The production concept holds that consumers will favor products that are available and highly affordable. Thus the management should focus on improving production and distribution efficiency . It is useful philosophy in two type of situations. (a) when the demand of the product is higher than its supply. (b) when the products cost is too higher and improved productivity is needed to bring it down. (Henry Ford )
The product concept:The product concept holds that consumer will favor products that offer the most in quality , performance and features that the organization should therefore devote its energy to make continuous product improvements.
Selling concepts:The selling concepts which hold that consumers will not buy enough of the firms product unless it undertakes a large scale selling and promotion efforts. Most firms practice the selling concept when they face over capacity , their aim is to sell what they make rather than make what market wants. This concept is typically practiced with unsought goods and services like insurance etc. The social Marketing concepts :The social marketing concepts holds that the organization should determine the needs , wants, and interest of the target market and deliver the desired satisfaction more effectively and
Market segmentation
As a business firm can not appeal to all the buyers in the market, as buyers are too numerous , too widely scattered , and too varied in their buying and practices. Moreover , the companies themselves vary widely in their abilities to serve different segment of the market , rather try to compete in an entire market, sometimes against superior competitors , each company must identify the parts of the market that it can serve best and most profitably.
Market segmentation :-
Dividing a market into smaller groups of buyers with distinct needs , characteristics , or behavior who might require separate products or marketing mix. The company identifies different ways to segment the market and develop profiles of the resulting marketing segments.
Target Marketing :-
The process of evaluating each market segments attractiveness and selecting one or more of the market segments to enter.
Market positioning :-
Target Marketing
3.Develop measure of segment attractiveness . 4. Select target segments .
Market Positioning
5.
Develop positioning for target segments. 6. Develop a marketing mix for each segment.
Geographic segmentation :Dividing a market into different geographical units such as nations, states , regions, cities, or neighborhoods. A company may decide to operate in one or a few geographical areas, or to operate in all the areas but pay attention to geographical differences in need and want.
Demographic segmentation :Dividing the market into groups based on demographic variables such as 1. Age, ...under 6, 6-11, 12-19, 20-34, etc. 2.Gender, .............Male , Female. 3.Family size.1-2, 3-4, 5+ 4.Family life cycle .young, single, young married, no child, married with child.
7. Education :- primary , secondary, sr. secondary, collage. 8. Religion :- ...catholic, protestant, Hindu, Muslim , Buddhist. 9. Generation:-.Gen x, gen y . 10. NationalityAmerica, UK, Europe, Japan, Australia.
Psychographic segmentation:Dividing a market into different groups based on social class, Lifestyle, or personality characteristics. People in the same demographic group can have very different psychographic make-up. 1.Social class:-- lower-lower, lower-middle, middle-upper, lower upper, upper -Upper. 2.Lifestyle:------ Achievers, strivers, strugglers. 3.Personality:--- compulsive, ambitious.
Behavioral segmentation:Dividing a market into groups based on consumer knowledge, attitude, use, or response to A product. 1.Occasions ;---------Regular, special occasion. 2.User status:---------non-user, ex-user, potential user, regular user. 3.User rates:-----------light user, medium user, heavy user. 4.Loyalty status:------none, medium, strong, absolute. 5.Attitude towards product:- enthusiastic, positive, indifferent, negative.
Inter-market segmentation :Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries. For example , Mercedes-Benz target the worlds well to do, MTV targets the teenagers. Coke, Pepsi, UCB , Nike, Adidas are the few companies that actively target world teens.
Target Marketing
Market segmentation reveals the firms market segment opportunities. Now firm has to evaluate the various segments and decide how many and which ones to target. Evaluating marketing segments- in evaluating different marketing segments, a firm must look at three factors. 1.Segment size and growth. 2.Segment structural attractiveness. 3.Companys objectives and resources.
Segment size and growth :The company must first collect and analyze data on current segment sale , growth rates, and expected Profitability for various segments. It will be interesting in segment that have the right size and growth characteristics.
Segment structural attractiveness :The company also needs to examine major structural factors that affect long run segment attractiveness. For example a segment is less attractive if it is already contain many strong and aggressive competitors. ( Rivals ). Existence of actual or potential
Companys objective and resources:Even if a segment has the right size and growth and structurally attractive , the company Must consider its own objectives and resources in relation to that segment.
Selecting target market segments:After evaluating different market segments , the company must now decide which and how many segments it will target. A Target market consist of a set of buyers who share common needs or characteristics that company decide to serve. Micro Undifferentia Differentiate Concentrated marketing ted marketing strategies d Target ( niche ) ( Local or (Mass ( segmented marketing individual Marketing) market) marketing) Targeting broadly Targeting narrowly
Undifferentiated (Mass ) marketing:A market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. This mass marketing strategy focuses on what is common in the needs of the consumers rather than on what is different. Company design a product and a marketing program that will appeal to the large number of buyers. It relies on mass distribution and mass advertising.
Differentiated marketing:A market coverage strategy in which a firm decide to target several market segments and design separate offers for each. For example Nike offers athletic shoes for a dozen or more different sports , from running, fencing, golf, bicycling to baseball. And American express offers not only its traditional green cards but also gold cards, corporate cards, or even a black card called the centurion.
Concentrated ( niche) marketing :A marketing- coverage strategy in which a firm goes after a large share of one or a few segments or niches. A niche marketing is especially appealing when company resources are limited. For example tetra sells 80% of the worlds tropical fish food, and steiner optical captures 80%
In niche marketing segments are fairly large and normally attracts several competitors, niches are smaller and may attract only one or few competitors, company achieves a strong position because of its greater knowledge of consumer needs in the niches it serves and the special reputation it acquires. Concentrated marketing can be highly profitable . It involves higher than normal risk . Companies that rely on one or few segments for all their business if that segments tuned sour.
Micro marketing :The practice of tailoring products and marketing programs to the needs and wants of the specific individuals and local consumer groups ---------include local marketing and individual marketing.
Choosing a positioning strategy:The positioning consist three steps:1.Identifying a set of possible competitive advantages upon which to build a position. 2.Choosing the right competitive advantages. 3.Selecting an overall positioning strategy. Competitive advantages:An advantage over competitors gained by offering consumer greater value, either through lower prices or by providing more benefits that justify higher prices. Thus positioning begins with actually differentiating the company s marketing offer so that it will give more value that competitors offers do. Companies can differentiate their products on such attributes as consistency, durability, reliability, or reparability. Product differentiation with its services differentiation i.e. speedy, convenient, or careful delivery, customer training, consulting services, advising services etc.
1. How many differences to promote ? One or two or more. 2. Which differences to promote ? The company must carefully select the ways in which it will distinguish itself from competitors. Important :- the differences delivers a highly valued benefit to target buyers. Distinctive:- competitors do not offer the difference, or the company can offer it in a more distinctive way. Superior: - the difference is superior to other ways that consumer might obtain the same benefit . Communicable :- the difference is communicable and visible to the buyers. Preemptive:- competitors cannot easily copy the difference.
Selecting an overall positioning strategy:Consumers typically choose products and services that give them the greatest value. Thus marketers want to position their brand on the key benefits that they offer relative to competing brands. The full positioning of a brand is called the brands value proposition---- the full mix of benefits upon which the brand is positioned.
It is the answer to the consumer question why should I buy your brand ?
Developing a positioning statement:A statement that summarizes company or brand positioning --it takes this form: To ( target segment and need ) our ( brand) is (concept) that ( point of difference)
Perceptual Mapping
Marketing research technique in which consumers views about a product are traced or plotted (mapped) on a chart. Respondents are asked questions about their experience with the product in terms of Its performance packaging, price, size, etc. Theses qualitative answers are transferred to a chart (called a perceptual map) using a suitable scale and the results are employed in improving the product or in developing a new one. A perceptual map is a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands relative to its own and then take marketing actions. HOW A Perceptual map is created ? Choose a product or service and identify three companies who manufacture it. For example, you might choose peanut butter as the product you will study. Then identify three peanut butter manufacturers. Next create two questions about how the peanut butter product is positioned compared to its competitors, the other two brands of peanut butter. Ask six people your questions and plot their answers on your perceptual map. Analyze your results, draw conclusions (such as, do you think the product or service is competing head-on or is avoiding competition?), and if needed, make recommendations about the positioning of your chosen product.
When plotting a perceptual map two dimensions are commonly used. Below is a very basic perceptual map. If we plot the UK chocolate market we can identify those brands which are high price and high quality. Belgium chocolates are plotted as high quality and high price, and Twix is plotted one low quality low price brand. Once completed the perceptual map could help identify where an organization could launch a new brand perhaps at the medium price and quality range. We must remember that perceptual maps are plotted on the basis of some ones perception and what maybe a quality product to one person, may not be perceived as quality to another.
Product
A product may be defined as anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Products includes more than just tangible goods. Broadly defined, products include physical objects, services , events, persons places, ideas, organizations, or mix of these entities. A service may be defined as any activity or benefit that one party can offer to another party that is essentially intangible and does not result in the ownership of anything. A product has three dimensions or layer, which must be distinguished. 1.Core product ( Benefit ) 2.Formal product ( Actual product) 3.Augmented product.
Core benefit ( product):It is the fundamental dimension of a product as it represents bundle of benefits to its prospective customers ( buyers) .The core product answer the question : what is the buyer buying ?? For example a women buying a lipstick, is buying hope and not a
A person buying a washing machine is buying comfort and not a mere collection of drum, heater, and nuts and bolts for his own sake. The basic job of a marketer is to sell the core benefits. Actual products - it is the larger packaging of a core product . It is what the target market recognizes as the tangible offer (product) . A product is a physical object have the following attributes: Features Style or Design Level of quality A brand name Packaging
Augmented products:It is a broader conception of the product . It represents the totality of the benefits that a consumer may receive or experience in getting the actual product . The augmented product of a TV distributor is not only the TV .. But also the whole set of accompanying services like instructions, free home delivery, free installations, warranty, and service and maintenance. This dimension of the product is very important for a firm operating in a competitive market. The firm that
Augmented product
Actual products
Core benefits
Quality level warranty Packaging Design installation
Three level of
Product mix
A product mix consists of all the product lines and items that a particular seller offer for sale . A companys product mix has four important dimensions . 1.Width 2.Length 3.Depth 4.Consistency Product mix width:It refers to the number of different product lines the company carries. P & G market a fairly wide range of the product mix consisting of 250 brands organized into many product lines. These lines includes homecare, baby care, beauty care, health care, and food and beverages products. Product mix length:It refers to the total no of items, one company carries within its product lines. P & G typically carries many brands within each line. For example it sales six laundry detergents, six hand soaps, five shampoos etc. Product line depth:It refers to the number of versions offered of each product in the line. For example Hindustan unilever Ltd is offering bath soaps
Consistency of the product mix:It refers to how closely related the various products lines are in end use, production requirement, distribution channels, or some other way. P & G s product lines are consistent insofar as they are consumer products that go through the same distribution channels. Lines are less consistent insofar as they perform different functions for the buyer.
Products offered by hindustan unilever Ltd. The company has a distribution channel of 6.3 million outlets and owns 35 major Indian brands.[3] Some of its brands include 1.Kwality Wall'sice cream, 2.Knorrsoups & meal makers, 3.Lifebuoy,Lux, Breeze,Liril, Rexona, amamand Moti soaps, 4.Pureitwater purifier, 5.Liptontea,Brooke bond tea,Brucoffee, 6.PepsodentandClose Up toothpaste and brushes, and 7.Surf,RinandWheel laundry detergents, 8.Kissansquashes and jams, 9.Annapurna salt and atta, 1.Pond'stalcs and creams,Vaselinelotions,Fair and Lovelycreams,Lakmbeauty products, 1.Clinic Plus, Clinic All Clear,SunsilkandDoveshampoos,Vim dish wash, Ala bleach, 2.Domex disinfectant,Rexona 3.Modern Bread, and 4.Axedeosprays.
Product classification
Product and services can be classified in to two categories : (a)Consumer products (b)Industrial products. Consumer products:- consumer product and services bought by final consumers for personal consumption. These products include convenience products, shopping products, specialty products and unsought products. (a)Convenience products:- these are the items which the consumer buy frequently, immediately and with minimum shopping efforts. Cold drink, cigarettes, magazines and newspaper, drugs and most grocery items are the examples of these products . These products are nondurable and used and consumed rapidly. (b)Shopping products:- these products include items which the consumer select and buy after making comparison on such criteria such as suitability, quality, price and style. Furniture items, dress, shoes, TV , refrigerator , and other home appliances are the example of shopping goods. These goods are durable and is used up slowly. The consumer has to compare different stores offerings and devote considerable time and efforts to take the buying decision. (c)Speciality products:- consumer products with unique features or brand identification for which a significant group of buyers is willing to
(d) Unsought products:consumer products that the consumer either does not know about or knows about but does not normally think of buying. For example blood donation to Red cross, Life insurance. By their very nature , unsought products require a lot of advertising, and other marketing efforts.
Industrial products:-
are those meant for use in making other products or for rendering a service in the operation of business firm. These can be further classified on the basis of use into five categories. Raw material : Fiber for making yarn, etc. Fabricated material and parts: yarn for knitting / weaving etc. Installations : Heavy machinery , diesel engine, trucks etc for industrial use. Accessories equipment : Buttons, zipper, labels, laces, etc. Operating supply: these are the convenience goods for industrial products, oil, pen, pencil, paper, pins, fuel. etc
Profits
Introduction
Growth
Maturity
Decline
TIME
1. Introduction stage:The first stage of PLC is the introduction, under which competition is slight or non-existent , price are relatively higher, market are limited and rapid improvements are being made in its technology . The growth in sales volume is at lower rate because of lack of knowledge on the part of consumers and delays in making the product available to the consumer. During this stage higher expenditure are to be incurred on advertising and other promotional techniques. Price are higher during this stage because of small scale of production, technology problems, and heavy promotional expenditure. 2. Growth stage :- as the product grows in popularity, it moves into second phase of its life cycle i.e. growth stage in which demand expands rapidly, price fall, competition increases, and distribution is greatly broadened. The management focuses its attention on improving the market share by deeper penetration into the existing market or entry into the new markets. The promotional expenses remain high although they tend to fall as a ratio to sales volumes. It will increase the profit . 3. Maturity stage:- the product enters into maturity stage as competition intensifies further and market grows saturated. Profits come down because of stiff competition , and marketing expenditure rise. The price are decreased because of competition and technology. This stage may last for long period as in the case of many products
4. Decline stage:The stage is featured by either the products gradual displacement by some new products or evolving change in consumer buying behavior, the sales fall down sharply and the expenditure on promotion has to be cut down drastically . Many firm abandon the product in order to put their resources to better use. The demand of the people change and other innovations come to the market to take place of the abandoned products.
Basic, Fashion, and Fad Products Apparel and other consumer products can be classified by the length of their life cycles.Basic productssuch as Tshirts and blue jeans are sold for years with few style changes. Businesses selling basic products can count on a long product life cycle with the same customers buying multiple units of the same product at once or over time. .
Fashion product life cycles last a shorter time than basic product life cycles. By definition, fashion is a style of the time. A large number of people adopt a style at a particular time. When it is no longer adopted by many, a fashion product life cycle ends. Fashion products have a steep decline once they reach their highest sales. The fad has the shortest life cycle. It is typically a style that is adopted by a particular sub-culture or younger demographic group for a short period of time. The overall sales of basic products are the highest of the three types of products, and their life cycles are generally the longest. Apparel products often have a fashion dimension, even if it is just color. As fashion features increase in a product, the life cycle will decrease. Therefore, if you are designing a fashion product, you will want to have multiple products in line for introduction as each fashionfour styles cycle For example, with a sweater line, a business may have product's that runs its course. have classic styling and colors and are always in the line. Four additional Some firms build their lines to include basic, fashion, and fad products in styles may be modified every two years to include silhouette, length, ordercollar changes based on the current fashion. One or two short-cycle and to maximize sales. fashion or fad styles based on breaking trends may be introduced once or twice a year. Styles that a popular celebrity or sports hero is wearing are examples of fashion and fad styles.
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Market size Product price Development time & costs Manufacturing costs Rate of return
1. 1.
2. Concept Testing --Test the 2. Concept Testing Test the Product Concepts with Groups Product Concepts with Groups of Target Customers of Target Customers
Part Three -- Long-Term: Part Three Long-Term: Sales & Profit Goals Sales & Profit Goals Marketing Mix Strategy Marketing Mix Strategy
Business Analysis Business Analysis Review of Product Sales, Costs, Review of Product Sales, Costs, and Profits Projections to See if and Profits Projections to See if They Meet Company Objectives They Meet Company Objectives
Standard Standard Test Market Test Market Full marketing campaign Full marketing campaign in a small number of in a small number of representative cities. representative cities.
Controlled Controlled Test Market Test Market A few stores that have A few stores that have agreed to carry new agreed to carry new products for a fee. products for a fee.
Price
Price :- The amount of money charged for a product or service, or the sum of values that consumers exchange for the benefits of having or using the product or service. Dynamic price:- charging different prices depending on individual customers and situations. Objectives:- as an element of marketing mix , price strategy should be directed the accomplishment of specific marketing objectives which lead to overall organizational objectives The followings are the important objectives of pricing :1.To achieve target rate of return on investment or on net sale. 2.To achieve price stabilization. 3.To meet or prevent competition 4.To maintain or improve share of the market
1. To achieve target rate of return on investment or on net sale :This is an important goal of pricing policy of many firms. A firm following this goal tries to build a price structure to provide sufficient return on capital employed . Generally , an estimate is made of return expected over the long run, and the prices are fixed to achieve the expected rate of return. This leads to cost plus pricing . 2. To achieve price stabilization :Many firms have the objectives of price stabilization in the long- run. The objective is often found in industries that have a price leader. In oligopolistic situation where there are only a few sellers in the market, and each seller will try to maintain stability in his pricing . In such a situation , one seller acts as the price leader and other follows him. Thus a relationship exists between the leaders price and those charged by other firms. 3. To meet or prevent competition :Some firms adopt the pricing policy to meet or prevent competition. They are ready to fix their prices to meet competition in the market . Sometimes they are prepared to follow below cost pricing in order to fight competition. They charge less price than the cost because they feel that it will prevent the new firms to enter the market. This practice is not publicly admitted by the firms even
4.
To maintain or improve share of the market :This pricing objective is followed by the firm operating in the expanding markets. When the market has a potential for growth, market share is a better indicator of a firms effectiveness than the target return on investment. A firm might be earning a reasonable rate of return but its market share may be decreasing. Therefore a worthwhile pricing objective in times of increasing market share should be to maintain or to improve share of the market.
5. Maximize profit:There are many firms which do not care for social responsibilities, and follow the pricing policy to maximize their profits.
Factors affecting price decisions:Internal factors 1. Marketing objectives 2. Marketing mix strategy 3. Cost 4. Organizational considerations
Pricing Decisions
External factors 1.Nature of the market and demand 2.Competition 3.Other environmental factors (economy, reseller, govt.)
Pricing policies
The major pricing policies which are followed by the business firms are as :1.Competitive pricing 2.Skimming the cream pricing 3.Penetration pricing 4.Keep out pricing 5.Price lining 6.Psychological pricing 7.Captive product pricing 8.By products pricing 9.Product bundle pricing 10.Follow the leader pricing 11.Discrimination pricing Competitive pricing :This method is mostly used when the market is highly competitive and the product is not differentiated significantly from the competitive products. This resembles the perfect competition under which prices are determined by the forces of demand and supply. Product is homogeneous ( no differentiations) buyers and sellers are well informed about market price and market conditions, and the seller has no control over the market price. In this situation every firm will follow the price which is in tune with the market conditions. Prices of cold
Skimming the cream pricing :under this pricing policy ,higher prices are charged during the initial stage of the introduction of a new product. The manufacturer fixes higher price of his product in order to recover his initial investment quickly. This policy has been quite successful in many cases due to : 1. Demand is more inelastic with respect to price in the early stage of its introduction. 2. Introducing a new product with a high price is an efficient device for dividing the market into segments that differ in price elasticity of demand. the initial higher price serves to skim the cream of market that is relatively insensitive to price. Price may be reduced subsequently to attract successively more elastic segments of the market. 3. A manufacturer may charge the higher prices in order to restrict the demand to the level which he can meet easily. He may use the strategy to avoid the loss resulting from competition when the entry to that line is quite easy. Penetration pricing:under this pricing policy, prices are fixed below the competitive level to obtain a larger share of the market and to develop popularity of the brand. Unlike skimming price policy , it facilitates higher volume of
Keep out pricing :As the name suggest , it is a pre emptive pricing policy, which aim at discouraging the other firms in the market to offer substitutes. Keep out price should be followed for only one product of a firm. It is very risky venture, particularly , when the product is offered in the market at a price which is less than the actual cost of the production and distribution. This policy can be followed by big firms with huge resources at their command. But once the lower price is fixed , it may not be possible to increase it again as the new firms might introduce the new substitutes in the market.
Price lining:This policy is used by the retailers, the retailers usually offer a good, better, and best assortment of merchandise at different price levels. For example , a retailers of T-Shirts may sell T-shirts at three prices: Rs.100, Rs125, Rs150 the first price stands for the economy choice, the second for medium quality choice and the third for super fine quality.
Psychological pricing:Under this policy, prices are fixed in such a way that they have some kind of psychological influence on the buyers, customary pricing and price lining are the example of psychological pricing , another example of the psychological pricing are the setting odd amount such as Rs 99.95 , RS 999 ETC.
Captive product pricing:Setting a price for the product that must be used along with a main product . Such as blades for razor and film for a camera. Producers of the main product s ( Razor, camera, video games, printers etc. ) often price them low and set high marks ups on the supplies. Thus Gillete sells low priced razors but makes money on the replacement cartridges.
By product pricing:Aby-productis a secondary or incidental product deriving from amanufacturing process, achemical reaction or a biochemical pathway, and is not the primary product or service being produced. A by-product can be useful andmarketable or it can be consideredwaste. Setting a price for by products in order to make the main products price more competitive. Product bundle pricing:Combining several products and offering the bundle at a lower pricing. Follow the leader pricing:in oligopolistic competition where there are a small number
Discrimination pricing:some business firms follow the policy of charging different prices from different customers according to their ability to pay. This is also called segment pricing, market is segmented on the basis of various variable, such as geographic, demographic, psychographic, etc.
Channels distribution
Channel of distribution is a path traced in the direct or indirect transfer of ownership to a product as it moves from the a producer to ultimate consumers or industrial user. Marketing channels are the distribution net work through which producers products flows to market. A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption. Marketing channels : Intermediaries 1. Zero stage: 2. One stage : 3. Two stage: 4. Three stage: Produce r Produce r Produce r Produce r Retail er Wholes aler Wholes aler Retail er Jobbe r Retail er Consumer Consumer Consum er Consum er
Channel Levels
Channels level:- A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer. The channel of distributions can be divided into the following categories: 1. Manufacturer and consumer 2. Manufacturer, retailer and consumer 3. Manufacturer wholesaler Retailer and consumer 4. Manufacturer, Agent, retailer and consumer 5. Manufacturer , Agent, wholesaler, retailer, consumer.
Wholesaler
Retailer
Consumer
Retailer
consumer
Wholesaler
Producer
Retailers
Consumer segment 2
Distributors
Dealers
Business segment 1
Sales forces
Business segment 2
Product considerations :1. 2. 3. 4. Unit value of the product number of product lines Bulk and weight Perishability ( nature of the product)
Company consideration:-
1. Volume of production 2. Financial resources 3. Desire for controls of channels Middlemen considerations:1.Availability of desired middlemen 2.Financial ability 3.Sale potential 4.Competition and legal constraints.
Promotion
Promotion is defined as the coordination of all seller-initiated efforts to set up channels of information and persuasion to sell goods and services or promote an idea. Promotion is best viewed as the communication function of marketing.
Purpose of Promotion:1.To spread information 2.To stimulate demand 3.To differentiate the product 4.To highlight the utility of the product 5.To stabilize sales
Promotion Mix
(1) Advertising:Any paid form of non-personal communication of ideas or products in the "prime media": i.e. television, newspapers, magazines, billboard posters, radio, cinema etc. Advertising is intended to persuade and to inform. The two basic aspects of advertising are the message (what you want your communication to say) and the medium (how you get your message across) Advertising can have a number of objectives, these usually are a.To promote b.To remind c.To support d.To compete e.To persuade (2) Personal Selling:Oral communication with potential buyers of a product with the intention of making a sale. The personal selling may focus initially on developing a relationship with the potential buyer, but will always ultimately end with an attempt to "close the sale".
3) Sales Promotion:Sales promotion includes those activities , other than personal selling , Advertising , and publicity that stimulate consumer purchasing and dealer effectiveness such as display, shows and expositions , demonstrations and various non-recurrent selling efforts not in the ordinary routine It also include the distribution of free samples, premium on sale, sales and dealer incentives , contesting fair and exhibitions etc. Objectives of sales promotion techniques:1.Introduction of new product 2.Winning of new customers 3.Increasing sales during slack season 4.Increasing the public image of the brand or company. (4) Public Relation ( P R):Public relation activities strive for creating a good image of the company in the eyes of the customers and society . These activities are not aimed at immediate demand creation. It is very common that big companies convey their greeting and thanks to the people through newspapers and other published media.
Sponsorship ( Public relations) :Sponsorship is about providing money to an event, in turn the product or company is acknowledged for doing so. For example the Bejing Olympics in 2008 will partly be sponsored by Panasonic. Sponsorship helps the company improve its image and public relations within the market and usually the company attempts to sponsor a person or event that mirrors the image they are trying to aim for. Nike for example have successfully sponsored the golfer Tiger Woods for many years. 6. Viral Marketing:Viral marketing occurs when consumers pass on or recommend your product/company/website to others. This could be via email, or bulletin boards or word of mouth. There have been many well known online viral marketing campaigns
Advertising
Personal Selling
Highly interactive - lots of Costly - employing a sales communication between the buyer force has many hidden costs in and seller addition to wages Excellent for communicating complex / detailed product information and features Relationships can be built up important if closing the sale make Not suitable if there are thousands of important buyers
Sales Promotion
Can stimulate quick increases in sales by targeting promotional incentives on particular products. Good short term tactical tool
If used over the long-term, customers may get used to the effect. Too much promotion may damage the brand image
Public Relations Often seen as more "credible" - since Risk of losing control - cannot the message seems to be coming always control what other people from a third party (e.g. magazine, write or say about your product newspaper) Cheap way of reaching many customers - if the publicity is achieved through the right media
Marketing Environment A marketing environment consist of actors and forces outside marketing that affect Marketing Managements ability to build and maintain successful relationships with target customers. There are two types marketing environments: 1.Micro environment 2.Macro environment Micro environment :The actors close to the company that affect its ability to serve its customersthe company, suppliers, marketing intermediaries, customer markets, competitors, and public. Macro environment:The larger societal forces that affect the micro-environment- Demographic , economic, natural , technological, political and cultural forces.
MARKET SHARE
Market share :MS is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms.
RMS = Business unit sales this year Leading rival sales this year The higher your market share, the higher proportion of the market you control.
MGR =
Individual sales - individual sales this year last year Individual sales last year
Markets experiencing high growth are ones where the total market share available is expanding, and theres plenty of opportunity for everyone to make money.
STARS
High growth, High market share
Stars are leaders in business. They also require heavy investment, to maintain its large market share. It leads to large amount of cash consumption and cash generation. Attempts should be made to hold the market share otherwise the star will become a CASH COW.
CASH COWS
Low growth , High market share
They are foundation of the company and often the stars of yesterday. They generate more cash than required. They extract the profits by investing as little cash as possible They are located in an industry that is mature, not growing or declining
DOGS
Low growth, Low market share
Dogs are the cash traps. Dogs do not have potential to bring in much cash. Number of dogs in the company should be minimized. Business is situated at a declining stage.
Strategic business unit ( SBU):A unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses.
It helps you to quickly and simply screen the opportunities open to you, and helps you think about how you can make the most of them. It is used to identify how corporate cash resources can best be used to maximize a companys future growth and profitability.
LIMITATIONS: BCG MATRIX uses only two dimensions, Relative market share and market Growth rate. Problems of getting data on market share and market growth. High market share does not mean profits all the time. Business with low market share can be profitable too.
scorpio
balero
Low
9. Segmentation 10. Distribution structure 11. Technology development. Typical (internal) factors that affects Competitive strength of a SBU. 1.Relative brand strength 2.Market share 3.Market share growth 4.Customer Loyalty 5.Quality 6.Relative cost position ( cost structure compared to rivals ) 7.Relative profit margin ( as compared to competitors) 8.Distribution strength and production capacity
Low
High
Business Strengths
Medium
Low
Industry Attractiveness
Competitive Position
Market
Attractiveness
Strong
Maintain Leadership Invest to Grow
Concentrate on Maintaining Strength
Medium
Challenge Leader
Invest to Build Selectively Reinforce Strengths
Weak
Overcome Weakness, Find Niche or Quit
Build Selectively
High Medium
Low
Generate Cash
Manage for current earnings Concentrate on attractive Segments Defend Strengths
Harvest
Minimize Investment Protect positions in most profitable segments
Divest
Sell at time that will maximize cash value Cut fixed costs and avoid investment
Brand
Brand is a name, sign, symbol, slogan or anything that is used to identify and distinguish a specific product, service, or business. An identifying symbol, words, or mark that distinguishes a product or company from its competitors. Usually brands are registered (trademarked) with a regulatory authority and so cannot be used freely by other parties. For many products and companies, branding is an essential part of marketing. Brand Equity:Brand equity is the positive differential effect that knowing the brand name has on customers response to the product or service. A measure of a brands equity is the extent to which the customer are willing to pay more for the brand . A brand with strong brand equity is a very valuable asset . Brand valuation is the process of estimating the total financial value of a brand.
Brand valuation of some reputed companies: 1.Coca cola -----------------$ 69 bn. 2.Microsoft -----------------$ 65 bn. 3.IBM -----------------$ 53 bn. 4.GE ------------------$ 50 bn. 5.Nokia -------------------$ 48 bn. 6.Disney --------------------$ 45 bn. 7.Mc Donalds ----------------$ 40 bn. (Based on a study)
Brand Positioning
Brand positioning refers to target consumers reason to buy your brand in preference to others. It is ensures that all brand activity has a common aim; is guided, directed and delivered by the brands benefits/reasons to buy; and it focuses at all points of contact with the consumer. Brand positioning must make sure that:
1.Is it unique/distinctive vs. competitors ? 2.Is it significant and encouraging to the niche market ? 3.Is it appropriate to all major geographic markets and businesses ? 4.Is the proposition validated with unique, appropriate and original products ? 5.Is it sustainable - can it be delivered constantly across all points of contact with the consumer ? 6.Is it helpful for organization to achieve its financial goals ? 7.Is it able to support and boost up the organization ?
Global Brand:A global brand is one which is perceived to reflect the same set of values around the world . Global brands transcend their origins and creates strong, enduring relationships with consumers across countries and cultures. Global Brands are brands which sold to international markets. Examples of Global Brands include Coca-Cola, McDonald's, Marlboro, Levi's etc.. These brands are used to sell the same product across multiple markets, and could be considered successful to the extent that the associated products are easily recognizable by the diverse set of consumers.
Co Branding:The practice of using the established brand names of two different companies on the same product. For example Ford and Eddie Bauer co branded a sports utility vehicle ---the ford explorer, Eddie Bauer edition. Mattel teamed with coca-cola to market soda fountain sweetheart barbie.
Brand Extension
Brand extension is a marketing strategy in which a firm that markets a product with a well-developed image uses the same brand name but in a different product category. Product extensions, on the other hand, are versions of the same parent product that serve a segment of the target market and increase the variety of an offering. An example of a product extension is Coke vs. Diet Coke. Using an existing brand name to promote a product in a different category is called brand extension. For Example : PONDS----Cold cream, shampoo, toilet soap, tooth paste, moisturizing lotion, talc and face wash. LG---------TV, Refrigerators, computer monitor, washing machine, microwave , mobile phone, air conditioners. Park avenue -----Shaving cream, Shirts , Jeans, Belt, Perfumes , Soaps, Razar.
Brand Develpoment
A company has four choices when it comes to developing brands. It can introduce line extension , Brand extensions, multi brands or new brands.
Line extension
New
Multi Brands
New Brands
Line Extension:Using a successful brand name to introduce additional items in a given product category under the same brand name , such as new flavors ,colors, forms, added ingredients, or packaging sizes. Brand extension:using a successful brand name to launch a new or modified product in a new category. Multi brands:Companies often introduce additional brands in the same categories. Like Procter and gamble introduced to detergent brands TIDE , ARIEL. New Brand:A company may create a new brand name when it enters a new product category for which none of the companys current brand name is appropriate. For example Honda created the lexus brand to differentiate its luxury car from established HONDA line.
Marketing Research
Marketing research is a systematic and objective study of problem pertaining to the marketing of goods and services . It is not restricted to any particular area of marketing but is applicable to all its phases and aspects. The traditional definition of marketing research by American marketing association ( AMA) the systematic gathering , recording and analyzing of data about problems relating to the marketing of goods and services. Also defined as the function which links the consumer , customer and public to the marketer through information used to identify and define marketing opportunities and problems. It involve the use of surveys, test and statistical studies to analyze consumer trend and to forecast the size and location of the market for specific product and services.
Marketing research procedure:( 1) Identification of area or kind of research. Research on product ( needs and demands of the customer for development of product) Research on market ( Size, character of market, economic factors operating on market.) Research on promotional activities. Research on marketing policies ( pricing, distribution channel, credit etc.) (2) Collecting necessary information Primary data : primary or first hand data refer to the data collected by the investigations through observations , interview,, questionnaire and field survey. The information may be directly collected from the customer, dealers salesman etc. . Secondary data includes facts and figures which are already collected by other individuals and institutions. The source of secondary data includes publications of the government , private institutions like trade associations, chamber of commerce, financial institutions like IMF, W.B. ETC. (3) Analyzing information The information collected by the marketing research department is compiled and tabulated for the purpose of analysis of the problem. The data are studied minutely to discover the fundamental issues and answers to them. Analysis of data is the process of determining what the data mean. The generalizations derived from the analysis of data are helpful in taking the right course of action.
( 4).
Marketing recommendations-
Conclusion are drawn after the analysis of the data and recommendations are made to the management for taking steps in various areas of marketing. The findings and recommendations should take the form of a report and they should be presented separately in the report. The report should be written in unambiguous language so that it may be understood properly.
Objectives of Marketing research:(a)To know about the persons who buy the firms products. No. Of person who buy ? the frequency of their buying Source of their buying Social and regional location of the customer.
(b) To find out the impact of promotional efforts. To know the customer response to new product. Opinion of the customers about new product. Helps in knowing the desired improvement in quality, design , size, packaging distribution methods etc. (D) To forecast sales. Helps in forecasting sales, and market planning, researchers makes sales forecast on the basis of response from the customers and distribution media. (E) To study the Goodwill of the firm in comparison with the competing firms. Moves of the rivals, new products and substitutes entering the market and their impact over the firms products.
Primary
Secondary
Survey Data
Experimental Data
Primary Data:The primary data refer to the first hand data original data collected by the investigator through interview , mail survey, field survey, or any other survey . It is collected for specific objective. It is not a published source of data , but has to be collected by the researcher. The sources of primary data include Salesman Dealer Consumer
Secondary data:secondary data consist of data which have already been collected by some other persons and have passed through the statistical machines at least once. Secondary data are usually in the shape of finished products as it has already been treated statistically. The significance of secondary data lies in the fact it is available at a very low cost. It can be collected within a short period of time. The source of secondary data Press Publication of trade associations Government publications Publication of private individuals companies, and research institutions Publication of RBI, and other financial institutions Foreign governments and international agencies.
Survey data:A survey is a detail enquiry and examination in order to collect information from the respondents . A survey can be conducted either of the entire universe or part of it. When the all units of information connected with the problem are taken into account it is known as census enquiry or survey data.
Experimental data:Experimentation is the process of noting reaction of a phenomenon under controlled condition. It refers to the act of doing something to test a theory. An experiment is conducted and observations are recorded. Such observations are properly classified tabulated and analyzed with a view to use them for preparing the report.
Observation data:Observation is the process of recognizing and noting facts or occurrences. Under this the researcher arranges to observe the behavior of the consumer rather than asking them to describe the various aspects of their behavior . The observer takes notes of things as they happen and does not ask any question from the people observed by him.
Consumer Behavior
Consumer behavior is The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society." Consumer behavior is the study of when, why, how, and where people do or do not buy products or services . It blends elements from psychology , sociology , social anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioral variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.
1. PROBLEM RECOGNITION
Difference between the desired state and the actual condition.
Example: By seeing a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes. Hunger stimulates your need to eat.
2. INFORMATION SEARCH
Internal Search: --- Memory External Search: --- Friends and Relatives A successful information search leaves a buyer with possible alternatives. Example: Hungry, want to go out and eat, evoked set is Chinese food Indian food Burger king
Evaluation of Quality, Price, & Features Evaluation of Quality, Price, & Features
Degree of Importance Degree of Importance
Which attributes matter most to me? Which attributes matter most to me?
Brand Beliefs Brand Beliefs
What do you believe about each available brand? What do you believe about each available brand? Based on what Im looking for, how satisfied Based on what Im looking for, how satisfied would IIbe with each product? would be with each product? Choosing a product (and brand) based on one Choosing a product (and brand) based on one or more attributes. or more attributes.
Evaluation Procedures Evaluation Procedures Total Product Satisfaction Total Product Satisfaction
Attitudes of others
Consumers Expectations of Consumers Expectations of Products Performance Products Performance Products Perceived Performance
Psychological Psychological
Motivation Motivation
Psychological Factors
Perception Perception
Learning Learning
Social
Groups Groups Membership Membership Reference Reference Family Family Husband, wife, kids Husband, wife, kids Influencer, buyer, user Influencer, buyer, user
Culture
Most basic cause of a person's wants and behavior. Most basic cause of a person's wants and behavior. Values Values Perceptions Perceptions
Subculture Subculture Groups of people with shared value Groups of people with shared value systems based on common life systems based on common life experiences. experiences.
Social Class Social Class People within a social class People within a social class tend to exhibit similar buying tend to exhibit similar buying behavior. behavior. Occupation Occupation Income Income Education Education Wealth Wealth
Marketing Mix
Product Price Place Promotion
Buyers Decision Product Choice Brand Choice Dealer Choice Purchase Timing Purchase Amount
High Involvement Significant differences between brands Few differences between brands Complex Buying Behavior DissonanceReducing Buying Behavior
1.
Buying low involvement, frequently purchased, low cost items. Examples : Soft drinks, snack foods, milk etc.
Buying product occasionally. That is when you need to obtain information about unfamiliar brand in a familiar product category. Example: Clothes--know product class but not the brand.
4. IMPULSE BUYING
No conscious planning. The purchase of the same product does not always elicit the same Buying Behavior. Product can shift from one category to the next. For example: Going out for dinner for one person may be extensive decision making (for someone that does not go out often at all), but limited decision making for someone else. The reason for the dinner, whether it is an anniversary celebration, or a meal with a couple of friends will also determine the extent of the decision making.