Chapter 1 Defining Marketing for the 21st Century

Marketing is a significant aspect of any business in todays highly competitive milieu. In the past decades, an organizations competitive advantage was derived from product features, distribution channels, or manufacturing efficiencies. No more. The ability for a company to understand customer needs, and align their organization to those needs with a clear execution plan to connect to the customer at multiple levels is the only path to success today. Companies that do not understand the value of marketing have their days numbered. Some of the benefits of good marketing are It promotes the company, increases its visibility and exposure and lets people know about the companys products and services Differentiates Products/Services of the company by positioning it in a unique way Helps the company to acquire new business and retain old customers Generates income for the company and helps build networks with other professionals-to further enhance company growth. The American Marketing Association defines marketing as an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. According to Kotler, Marketing management is the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior value. Peter Drucker opines that the aim of marketing is to make selling superfluous. Exchange, a key concept in marketing is the process of obtaining a desired product from someone by offering something in return. When an agreement is reached in an exchange a transaction takes place. The key conditions for and exchange potential to exist are: There must be atleast two parties Each party must have something of value for the other party Each party must be capable of communication and delivery They should be free to accept or reject the offer Each party should believe that it is appropriate to deal with the other party Marketing people are involved in marketing 10 different types of entities namely goods, services, experiences, events, persons, places properties, organizations, information and ideas. A marketer is someone who seeks a response from another party who is called the prospect. Marketers also seed to influence the level, timing and composition of demand to meet the organizations objectives. There can be eight possible demand states namely negative demand, nonexistent demand, latent demand, declining demand, irregular demand, full demand, overfull demand and unwholesome demand. Markets can be classified as consumer, business, global and non profit markets.

Markets and businesses are changing today due to changing technology, globalization, deregulation, privatization, customer empowerment, customization, competition and industry convergence. This has posed increased challenges and benefits to marketers and customers. Today we have marketplace (which is physical as when you shop in a store) existing along with marketspace (which is digital as when you shop on the internet) The different concepts based on which the marketing philosophies are based are Production concept the focus is on achieving high production efficiency, low costs and distribution so that the products are inexpensive and widely available to the customers Product concept the focus is on the product quality, performance and innovative features Selling concept the focus is on aggressive selling and promotion in order to sell more and make profit Marketing concept the focus is on being more effective than the competitor in creating, delivering and communicating value to the customer in chosen target markets Holistic marketing concept- The holistic concept adopts a broad integrated perspective to marketing and its components are relationship marketing, integrated marketing, internal marketing and social responsibility marketing. The core concept marketing management is concerned with identifying needs, wants and demands, identifying target markets and segments, and positioning the product, scanning the environment, analyzing the consumer/business markets, dealing with competitors, designing and maintaining the marketing mix, managing the channels of distributions and managing integrated marketing communications. The set of tasks for successful marketing management includes developing marketing strategies and plans, connecting with customers, building strong brands, shaping the market offering, creating delivering and communicating superior value to customers, capturing marketing insights and performance and creating successful long term growth. Financial success depends on marketing ability. Therefore good marketing has become a vital ingredient for business success.

Chapter 2 Developing Marketing Strategies and Plans

The value chain, which is a tool for creating increased customer value, aims at identifying specific activities that create value and cost in a business. The process includes value exploration, value creation, and value delivery. Companies must manage the businesses in the areas of their core competencies as they can derive competitive advantage from doing so. The characteristics of core competency are It is a source of competitive advantage as it makes a significant contribution to perceived customer benefits It has applications in a wide variety of markets It is difficult for competitors to imitate Holistic marketing aims at integrating the following activities in order to build mutually satisfying relationships among stakeholders: Value exploration Identifying new value opportunities Value creation efficiently creating promising value offerings Value delivery using capabilities and infrastructure to deliver new offerings Creating, providing and communicating value requires various marketing activities, which need to be coordinated through strategic planning. The marketing plan is an instrument for directing and coordinating the marketing efforts. Strategic planning is undertaken at the corporate level, division level, business unit level and the product level. The following activities are undertaken at the corporate level: Defining the corporate mission Establishing the strategic business unit Assigning resources to each SBU Assessing growth opportunities The various growth opportunities available to organizations are Intensive growth ( grow within current business)- This could be of the following types Market penetration strategy increase market share in the current markets with current products Market development strategy develop new markets for current products Product development strategy develop new products for current markets Diversification strategy develop new products for new markets Integrative growth ( build or acquire businesses related to current business)- this could be of the following types Backward integration acquire one or more of its suppliers Forward integration enter into distribution either wholesale or retail Horizontal integration acquire competitors

Diversification ( add businesses that are unrelated to current business) Types are Concentric Diversification seek now products which have synergy with existing product lines Horizontal diversification develop new but unrelated to current products for existing customers Conglomerate diversification seek new opportunities which have no relation with current technology, product or market Business units strategic planning entails the following: Defining the business mission SWOT analysis to identify the internal strengths and weaknesses and external opportunities and threats Formulation of goals Formulation of strategy Program formulation and implementation Feed back and control Strategy is a game plan for achieving the goals and every company must design a strategy for achieving its goals. According to Michael Porter there are three generic strategies which can be adopted by organizations. They are overall cost leadership, differentiation and focus. Once the plans have been set at the various levels a marketing plan is prepared for individual products, lines, brands, channels or customer groups. This is a written document that summarizes what the marketer has learned about the marketplace and how the marketer intends reaching his objectives. It should contain the following: Executive summary and table of contents Situation analysis Marketing strategy Financial projections Implementation controls The key to successful marketing is developing creative marketing strategies and plans that can guide marketing activities.

Chapter 3 Gathering Information and Scanning the Environment

In order to take marketing decisions and implement marketing plans marketers need to constantly monitor the external environment, which poses significant opportunities and threats to the organizations. To possess comprehensive information a marketer should have a detailed Marketing Information System (MIS). A MIS consists of people, equipment, and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers. MIS is developed from internal company records, marketing intelligence activities and marketing research. Internal records system supplies results data and comprises of the order-to-payment cycle and sales information system. Marketing Intelligence System is a set of procedures and source marketers use to obtain everyday information about developments in the marketing environment. To improve the quality of its marketing intelligence a company can take the following steps: Train and motivate its sales force to sport and report new development Motivate distributors, retailers and other intermediaries to pass along important information Network externally Set up a customer advisory panel Get information from government data sources Purchase information from outside suppliers like syndicated research data Use online customer feedback For any marketing program to be successful it has to satisfy unmet needs and wants and for this purpose the marketer has to make a clear distinction between fads, trend and megatrends so that the program is in line with the trends and megatrends. All organizations operate in the macroenvironment, the forces of which are uncontrollable. The main macroenvironment factors and its components are : Demographic Environment a) Worldwide Population Growth b) Population Age Mix c) Literacy Levels Economic Environment a) Income Distribution b) Levels of savings, debt and credit availability Socio-Cultural Environment Understand need of different subcultures in a society Market products that correspond to societys core and secondary values Natural Environment a) Raw material shortages b) Increased energy cost and pollution levels c) Governments role in environmental protection Technological Environment a) Pace of technological change b) Government regulations regarding technology c) Innovation & R&D Political-Legal Environment a) Business legislations b) Protection of interest of special groups The marketing environment must be continuously monitored and adapted to in order to make use of the opportunities and to overcome the threats presented by it.

Chapter 4 Conducting Marketing Research And Forecasting Demand

Timely and accurate information is necessary to evaluate past performance and plan future activities. According to Kotler, Marketing Research is the systematic design, collection, analysis and reporting of data and findings relevant to a specific marketing situation facing the company. Companies can do their own market research or have specialist firms doing it for them. The research process consists of the following steps a) Defining the problem and research objectives b) Developing the research plan c) Collecting the information d) Analysis of the information e) Presentation of findings f) Decision-making based on the information provided In order to develop a good research plan decision regarding the following have to be taken: Data Sources Primary, Secondary or both Research Approach Observational research, focus group research, survey research, behavioral data or experimental research Research Instruments Questionnaire or Mechanical devices Sampling Plan Sampling unit, size and procedure Contact Methods Mail questionnaire, telephone interview, personal interview or online interview To check the marketing plan performance the following tools can be used: Sales analysis, market share analysis, marketing expense to sales analysis, financial analysis. For in-depth analysis and control profitability analysis can be done which measures the profitability of the products, territories, customer groups, segments, trade channels and order sizes. This involves identifying the functional expenses, assigning them to marketing entities and preparing P&L statements for each marketing entity. Demand can be classified as market demand and company demand. Market demand for a product is the total volume that would be brought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. Company demand is the companys estimated share of market demand at alternatives levels of company marketing effort in a given time period. Practical methods for estimating current market demand include estimating the total market potential, area market potential and total industry sales and market shares. To estimate future demand survey of buyers intention, composite of sales force opinions, expert opinion, past sales analysis and market testing is done. Mathematical models and statistical techniques play an important role in demand and sales forecasting. Marketers need to develop specific knowledge about their markets. They should have access to information that would help them interpret pat performance and plan future activities. Good Marketing Research provides marketers with timely and accurate information regarding consumer, competitors and brands based on which they can take strategic decisions.

Chapter 5 Creating Customer Value, Satisfaction, And Loyalty

Customers today are well informed and seek value maximization in the choices they make. Customer perceived value is the difference between the prospective customers evaluation of all the benefits and costs of the offerings and its alternatives. Customer lifetime value describes the net present value of the stream of future profits expected over the customers lifetime purchases. Its objective is to maximize long term customer profitability. The aim of customer relationship management is to produce high customer equity. CRM is the process of managing detailed information about individual customers and managing all customer contact points to maximize their loyalty. In order to attract and retain customers the marketer not only has to satisfy the customers but delight them. To form strong bonds with customers the following retention building approaches can be adopted Adding financial benefits Adding social benefits Adding structural ties To know the customer the company must collect information and store it in a customer database and also do database marketing which is the process of building maintaining and using customer databases and other databases.

Chapter 6 Analyzing Consumer Markets

In order to serve consumers more effectively marketers must have information regarding the factors that affect consumer behavior. The main factors that affect consumer behavior are: Cultural factors: Culture sub culture social class Social factors: Reference groups membership group, aspirational group, dissociative group Family family of orientation and family of procreation roles and statuses Personal factors: Occupation and economic circumstances personality and self-concept lifestyle and values The psychological factors that affect consumer behavior are: Motivation Perception Learning Memory The five-stage model of the buying decision process is as follows: Problem recognition Information search Evaluation of alternatives Purchase decision] Post purchase behavior The level of consumer involvement and decision heuristics and biases also influence the buying decision process. Heuristics are rules of thumb or mental shortcuts in decision process. The marketer has to understand the influence of each of the factors and the role of various people in the buying process to design and target marketing campaigns and offers to the selected segment.

Chapter 7 Analyzing Business Markets

Organizational buying is the decision making by which formal organizations establish the need for purchased products and services and identify, evaluate and choose among alternative brands and suppliers. Business markets include all organizations that buy goods and services for production of other goods and services, which are then sold, rented or supplied to others. The features that differentiate business markets from consumer markets are as follows: Fewer larger buyers Close supplier customer relationship Professional purchasing Several buying influences Multiple sales calls Derived demand Inelastic demand Fluctuating demand Geographically concentrated buyers Direct purchasing The following factors influence the decisions of the organizational buyer: Buying situation Straight rebuy, Modified rebuy, New task Buying center Initiators, Users, Influencers, Deciders, Approvers, Buyers and Gatekeepers The different types of products that could be purchased by an organization are Routine products leverage products Strategic products Bottleneck products The purchase process will vary for each of these products. There are eight stages in the buying process and they are called buyphases. They are 1. Problem recognition 2. General need description 3. Product specification 4. Supplier search 5. Proposal solicitation 6. Supplier selection 7. Order-routine specification 8. Performance review The institutional markets comprises of schools, college and university hostels, hospital and nursing homes. They are characterized by special needs and characteristics. Government organizations are major buyers; they usually invite bids, prefer domestic suppliers and require considerable paper work. Proper guidelines have to be followed while selling to government agencies.

Chapter 8 Identifying Market Segments and Targets

To compete more effectively companies are now adopting target marketing, which involves market segmentation, market targeting and market positioning. The four levels at which markets can be targeted are segments, niches, local areas and individuals. Segmenting the market is done by identifying group of customers, who share a similar set of needs and wants. A more narrowly defined group is called a. Local marketing reflects grassroots marketing, where marketing activities are aimed towards trading areas, neighborhood and individual stores. The last level of segmentation is segments of one or customized marketing. The major segmentation variables for consumer markets can be classified as follows: Geographic segmentation- Region, city, rural and semi-urban areas Demographic segmentation- age and life cycle stage, life stage, gender, income, generation and social class Psychographic Segmentation Life style and personality Behavioral Segmentation Occasions, benefits, user status, user rate, loyalty status, readiness stage and attitude towards product. The major segmentation variables for business markets are Demographic Industry, company, location Operating variables technology, user/ non user, customer capabilities Purchasing approaches Situational factors Personal characteristics For any segmenting criteria to be effective, they must be measurable, substantial, accessible, differentiable and actionable. After evaluating the market segments based on their overall attractiveness and the companys objectives and resources the company can consider the following patterns of target market selection: Single segment concentration Selective specialization Product specialization Market specialization Full market coverage Managing multiple segments A company cannot serve large, broad or diverse markets. It has to carefully identify the market segments it can serve effectively in order to focus its marketing efforts and achieve its goals.