Marketing Management

Module 1 Marketing is 'The management process responsible for identifying, anticipating and satisfying customer requirements profitably.' Marketing Management philosophies http://mba-lectures.com/marketing/principles-of-marketing/641/five-marketingmanagement-philosophies.html One more concept is Societal Marketing is basically a marketing concept that is of the view that a company must make good marketing decisions after considering consumer wants, the requirements of the company and most of all the long term interests of the society. Societal Marketing is actually an offshoot of the concept of Corporate Social Responsibility and sustainable development. This concept urges companies to do more than having an exchange relationship with customers, to go beyond delivering products and work for the benefit of the consumers and the society. The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often conflicting criteria of company profits, consumer want satisfaction, and public interest. Yet a number of companies have achieved notable sales and profit gains by adopting and practicing the societal marketing concept. Some companies practice a form of the societal marketing concept called cause related marketing. Example - Body Shop: Body Shop is a cosmetic company found by Anita Roddick. The company uses only vegetable based materials for its products. It is also against Animal testing, supports community trade, activate Self Esteem, Defend Human Rights, and overall protection of the planet. Thus it is completely following the concept of Societal Marketing.

Relationship marketing: Textbook Page 22 Marketing and core concepts of marketing Page 6 and 14 Marketing mix - http://www.quickmba.com/marketing/mix/ Marketing myopia Marketing myopia is an advertising strategy that does not focus on the needs and wants of consumers, but the desires of a company to sell specific goods or services in the economic market. Classic economic theory attempts to explain that consumers will tell companies the type of goods and services desired through the economic behavior demonstrated by individual consumers. Companies can benefit from this behavior by actively researching how consumers are spending their money and what goods are services are currently popular in the economic market. Marketing myopia can distort the companys view when managers focus more on what the company can produce rather then what consumers are willing to buy. A classic example of marketing myopia is seen by Ford Motor Companys development of the Edsel. The Ford Edsel was a late 1950s model passenger car built under the strategy that it was going to revolutionize the automotive industry. The car was designed with the intent of being a large, stylish vehicle that would meet the driving needs for thousands of U.S. consumers and families. Although the Edsel was released with much fanfare and publicity from marketing agencies and media outlets, it was an almost immediate failure in the consumer market. While reviews at the time cited the vehicles poor workmanship and styling, business experts have attributed the failure to marketing myopia and a failure to understand consumer desires. The name Edsel is now a business term synonymous with business or marketing failure. According to the marketing myopia theory, to cater a market a company not only needs to be technically sound and product oriented but it also needs to be customer oriented. It needs to know what are the needs of the customer and what further innovations can the company bring to maintain customer interest or how it can adapt to the changing business market.

The 5 Cs and Strategic Marketing Basics Once you know the marketing mix, goals, and targets of your marketing effort, the next step is to develop the marketing strategy. A good guideline to make the right decisions, while constructing a marketing plan and strategy, are the 5 Cs: 1. Customer Determine what needs from which clients youre trying to satisfy. A few areas to research would be the market segments, benefits the customer wants, if the value of the benefits outweigh the costs, frequency of purchases, quantity of purchases, retail channel, and needs based on trends over time. 2. Company Determine if your company can meet those customer needs. For example, does your company have the right product line and/or technical expertise? A good tool to help determine your companys strengths and weaknesses is SWOT analysis. This stands for Strengths such as innovative products, expertise, great processes and procedures, Weaknesses such as the lack of knowledgeable technical support or poor product quality, Opportunities such as a new international market or a market led by a weak competitor, and Threats such as a new competitor or price war. This is a very good tool to analyze the internal strengths and weaknesses, and the external opportunities and threats.

3. Competition Determine who competes with your company in meeting the customers needs. Is it an active competitor or a potential threat? What are their products exactly? What are their strengths and weaknesses? 4. Collaborators Determine if there is any outside source that can help the company such as distributors, suppliers, etc. 5. Context Determine if there are any limitations due to Political issues such as legal problems, trade regulations, taxation, and labor laws, Economic concerns such as growth rate, labor costs, and business cycle stage, Social impacts such as demographics, education, and culture, and Technological developments such as the impact on cost structures. This is also known as PEST analysis. These forces can be dramatic and difficult to predict.

Module 2
Marketing process- http://www.netmba.com/marketing/process/ Marketing plan A marketing plan is a business document written for the purpose of describing the current market position of a business and its marketing strategy for the period covered by the marketing plan. Marketing plans usually have a life of from one to five years. y Purpose of a Marketing Plan - The purpose of creating a marketing plan is to clearly show what steps will be undertaken to achieve the business' marketing objectives. While some small business owners include their marketing plan as part of their overall business plan, if a business owner follows the recommended SBA format, parts of the marketing plan will be included in the various areas of the business plan. As an alternative, the marketing plan may be attached in its entirety as an appendix to a business plan. What's in a Marketing Plan? A typical small business marketing plan might include a description of its competitors, the demand for the product or service, and the strengths and weaknesses from a market standpoint of both the business and its competitors.Other elements usually contained in a marketing plan include: Description of the product or service, including special features

Marketing budget, including the advertising and promotional plan Description of the business location, including advantages and disadvantages for marketing Pricing strategy Market segmentation (specializing in specific niche markets or, if mass marketing, how marketing strategy might differ between different segments, such as age groups).
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Marketing planning - setting marketing objectives

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Introduction Objectives set out what the business is trying to achieve. Objectives can be set at two levels: (1) Corporate level These are objectives that concern the business or organisation as a whole Examples of corporate objectives might include: We aim for a return on investment of at least 15% We aim to achieve an operating profit of over 10 million on sales of at least 100 million We aim to increase earnings per share by at least 10% every year for the foreseeable future (2) Functional level e Examples of functional marketing objectives might include: We aim to build customer database of at least 250,000 households within the next 12 months We aim to achieve a market share of 10% We aim to achieve 75% customer awareness of our brand in our target markets Both corporate and functional objectives need to conform to the commonly used SMART criteria. The SMART criteria (an important concept which you should try to remember and apply in exams) are summarised below: Specific - the objective should state exactly what is to be achieved.

Measurable - an objective should be capable of measurement so that it is possible to determine whether (or how far) it has been achieved Achievable - the objective should be realistic given the circumstances in which it is set and the resources available to the business. Relevant - objectives should be relevant to the people responsible for achieving them Time Bound - objectives should be set with a time-frame in mind. These deadlines also need to be realistic.

M a r k e t i n g p l a n n i n g m i s s i o n - A mission describes the organisations basic function in society, in terms of the products and services it produces for its customers. A clear business mission should have each of the following elements: (diagram refer to word) Taking each element of the above diagram in turn, what should a good mission contain? (1) A Purpose -Why does the business exist? Is it to create wealth for shareholders? Does it exist to satisfy the needs of all stakeholders (including employees, and society at large?) (2) A Strategy and Strategic Scope - A mission statement provides the commercial logic for the business and so defines two things: - The products or services it offers (and therefore its competitive position) - The competences through which it tries to succeed and its method of competing A business strategic scope defines the boundaries of its operations. These are set by management.For example, these boundaries may be set in terms of geography, market, business method, product etc. The decisions management make about strategic scope define the nature of the business. (3) Policies and Standards of Behavior - A mission needs to be translated into everyday actions. For example, if the business mission includes delivering outstanding customer service, then policies and standards should be created and monitored that test delivery.

These might include monitoring the speed with which telephone calls are answered in the sales call centre, the number of complaints received from customers, or the extent of positive customer feedback via questionnaires. (4) Values and Culture -The values of a business are the basic, often un-stated, beliefs of the people who work in the business. These would include: Business principles (e.g. social policy, commitments to customers) Loyalty and commitment (e.g. are employees inspired to sacrifice their personal goals for the good of the business as a whole? And does the business demonstrate a high level of commitment and loyalty to its staff?) Guidance on expected behavior a strong sense of mission helps create a work environment where there is a common purpose What role does the mission statement play in marketing planning? In practice, a strong mission statement can help in three main ways: It provides an outline of how the marketing plan should seek to fulfill the mission It provides a means of evaluating and screening the marketing plan; are marketing decisions consistent with the mission? It provides an incentive to implement the marketing plan SBU STRATEGIC BUSINESS UNIT Strategic business units are self contained divisions formed within an organization for dealing with specific business concerns. These units pull together the diverse parts of the concerned organization while cutting across the geographical and diverse lines for serving a specific market in a more efficient manner. These strategic business units are also referred to as independent business units or strategic planning units. The main philosophical concept behind the formation of strategic business units is to serve a clear and defined market segment along with a clear and defined strategy. These business units have to contain all the needs and corporate capabilities of the respective organization. The entire portfolio of the concerned business has to be managed by allocation of managerial and capital resources for serving the overall interest of the entire organization. This helps in developing a balance in the earnings, sales and the assets at a level which is controlled and acceptable for taking the right amount of risks.

The strategic business unit (SBU) is created with the application of set criteria which consist of the competitors, price models, customer groups and the overall experience of the company. It is also sometimes seen that a number of different verticals present in the same organization having similar competitors and target customers are amalgamated to form a single SBU. This helps in strategically planning the overall business of the organization. This is also true for the company which has different product ranges and some of them have similar capabilities in terms of research and development, marketing and manufacturing. Such products can also be amalgamated to form a single unit. The main notion which rests behind the concept of strategic business units is to gain a competitive advantage in the populated marketplace. This can be done because the SBU helps in segmenting the activities of the company in a strategic manner and the resources are thus allocated competitively Porters generic strategies http://www.quickmba.com/strategy/generic.shtml

Strategic planning is a management tool, period. As with any management tool, it is used for one purpose only: to help an organization do a better job - to focus its energy, to ensure that members of the organization are working toward the same goals, to assess and adjust the organization's direction in response to a changing environment. In short, strategic planning is a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it, with a focus on the future. (Adapted from Bryson's Strategic Planning in Public and Nonprofit Organizations). Marketing management is the process of setting marketing goals for an organization (considering internal resources and market opportunities), the planning and execution of activities to meet these goals, and measuring progress toward their achievement.

Strategic management is the process of specifying an organization's objectives, developing policies and plans to achieve these objectives, and allocating resources to implement the policies and plans to achieve the organization's objectives. It is the highest level of managerial activity, usually performed by an organization's Chief Executive Officer (CEO) and executive team. Strategic management provides overall direction to the enterprise. Strategic management is a combination of strategy formulation and strategy implementation. "Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to satisfy customers." Marketing management is a business discipline focused on the practical application of marketing techniques and the management of a firm's marketing resources and activities. Marketing managers are often responsible for influencing the level, timing, and composition of customer demand in a manner that will achieve the company's objectives Strategic marketing planning Developing the Strategic Marketing Plan The strategic marketing plan process typically has three stages: 1. Segment the market  Geographic  Demographic  Psychographic  Behavior 2. Profile the market segments  Revenue potential  Market share potential  Profitability potential 3. Develop a market segment marketing strategy  Market leader or product line extension

 

Mass marketing or targeted marketing Direct or indirect sales

After analyzing market segments, customer interests, and the purchase process, it's time to create the strategic marketing plan. The strategic marketing plan document usually includes:


Situational Analysis - Where is the company now? a. Market Characteristics b. Key Success Factors c. Competition and Product Comparisons d. Technology Considerations e. Legal Environment f. Social Environment g. Problems and Opportunities Marketing Objectives - Where does management want the company to go? a. Product Profile b. Target Market c. Target Volume in Dollars and/or Units Marketing Strategies - What should the company do to achieve its objectives? a. Product Strategy b. Pricing Strategy c. Promotion Strategy d. Distribution Strategy e. Marketing Strategy Projection

How to Use a Strategic Marketing Plan Once a company's executive team has approved the strategic marketing plan it's time to take the next step -- create the tactical marketing programs and projects needed to implement the plan. These tactical programs usually include:
   

Product Development Plan Marketing Communications Plan Sales Development Plan Customer Service Plan

Benefiting from a Strategic Marketing Plan The top-down process of developing a strategic marketing plan helps insure that all tactical marketing programs support the company's goals and objectives, as well as convey a consistent message to customers. This approach improves company efficiency in all areas, which helps improve revenue and market share growth, and minimizes expenses -- all of which lead to higher profitability.

Module 3
A marketing information system (MIS) is a set of procedures and methods designed to generate, analyze, disseminate, and store anticipated marketing decision information on a regular, continuous basis. An information system can be used operationally, managerially, and strategically for several aspects of marketing. A marketing information system can be used operationally, managerially, and strategically for several aspects of marketing. We all know that no marketing activity can be carried out in isolation, know when we say it doesnt work in isolation that means there are various forces could be external or internal, controllable or uncontrollable which are working on it. Thus to know which forces are acting on it and its impact the marketer needs to gathering the data through its own resources which in terms of marketing we can say he is trying to gather the market information or form a marketing information system. This collection of information is a continuous process that gathers data from a variety of sources synthesizes it and sends it to those responsible for meeting the market places needs. The effectiveness of marketing decision is proved if it has a strong information system offering the firm a Competitive advantage. Marketing Information should not be approached in an infrequent manner. If research is done this way, a firm could face these risks: 1. Opportunities may be missed. 2. There may be a lack of awareness of environmental changes and competitors actions. 3. Data collection may be difficult to analyze over several time periods. 4. Marketing plans and decisions may not be properly reviewed. 5. Data collection may be disjointed. 6. Previous studies may not be stored in an easy to use format.

7. Time lags may result if a new study is required. 8. Actions may be reactionary rather than anticipatory. The total information needs of the marketing department can be specified and satisfied via a marketing intelligence network, which contains three components. 1. Continuous monitoring is the procedure by which the changing environment is regularly viewed. 2. Marketing research is used to obtain information on particular marketing issues. 3. Data warehousing involves the retention of all types of relevant company records, as well as the information collected through continuous monitoring and marketing research that is kept by the organization. Depending on a firms resources and the complexity of its needs, a marketing intelligence network may or may not be fully computerized. The ingredients for a good MIS are consistency, completeness, and orderliness. Marketing plans should be implemented on the basis of information obtained from the intelligence network. An Marketing Information System offers many advantages: 1. Organized data collection. 2. A broad perspective. 3. The storage of important data. 4. An avoidance of crises. 5. Coordinated marketing plans. 6. Speed in obtaining sufficient information to make decisions. 7. Data amassed and kept over several time periods. 8. The ability to do a cost-benefit analysis. The disadvantages of a Marketing information system are high initial time and labor costs and the complexity of setting up an information system. Marketers often complain that they lack enough marketing information or the right kind, or have too much of the wrong kind. The solution is an effective marketing information system. The information needed by marketing managers comes from three main sources: 1) Internal company information E.g. sales, orders, customer profiles, stocks, customer service reports etc 2) Marketing intelligence This can be information gathered from many sources, including suppliers, customers, and distributors. Marketing intelligence is a catchall term to include all the everyday information about developments in the market that helps a business prepare and adjust its marketing plans. It is possible to buy intelligence information from outside suppliers (e.g. IDC, ORG, MARG) who set up

data gathering systems to support commercial intelligence products that can be profitably sold to all players in a market. (3) Market research Management cannot always wait for information to arrive in bits and pieces from internal sources. Also, sources of market intelligence cannot always be relied upon to provide relevant or up-to-date information (particularly for smaller or niche market segments). In such circumstances, businesses often need to undertake specific studies to support their marketing strategy this is market research. Marketing research

According to American Marketing Association, Marketing Research is the function that links the consumer, customer and public to the marketer through information-information used to identify and define marketing opportunities and problems, generate, refine and evaluate marketing actions monitor marketing performance; and improve understanding of marketing as a process. Marketing Research is systematic problem analysis, model building and fact finding for the purpose of important decision making and control in the marketing of goods and services.

Marketing Research is a well-planned, systematic process which implies that it needs planning at al the stages. It uses scientific method. It is an objective process as it attempts to provide accurate authentic information. Marketing Research is sometimes defined as the application of scientific method in the solution of marketing problems. Marketing Research plays a very significant role in identifying the needs of customers and meeting them in best possible way. The main task of Marketing Research is systematic gathering and analysis of information. Before we proceed further, it is essential to clarify the relationship and difference between Marketing Research and Marketing Information System (MIS). Whatever information are generated by Marketing Research from internal sources, external sources, marketing intelligence agencies-consist the part of MIS. MIS is a set of formalized procedures for generating, analyzing, storing and distributing information to marketing decision makers on an ongoing basis.

While Marketing Research is done with a specific purpose in mind with information being generated when it is conducted, MIS information is generated continuously. MIS is continuous entity while Marketing Research is a ad-hoc system. While in Marketing Research information is for specific purpose, so it is not rigid; in MIS information is more rigid and structured. Marketing Research is essential for strategic market planning and decision making. It helps a firm in identifying what are the market opportunities and constraints, in developing and implementing market strategies, and in evaluating the effectiveness of marketing plans. Marketing Research is a growing and widely used business activity as the sellers need to know more about their final consumers but are generally widely separated from those consumers. Marketing Research is a necessary link between marketing decision makers and the markets in which they operate. Marketing Research includes various important principles for generating information which is useful to managers. These principles relate to the timeliness and importance of data, the significance of defining objectives cautiously and clearly, and the need to avoid conducting research to support decisions already made. Module 4 Consumer adoption process Textbook Page 578 Or The theory of innovation diffusion and consumer adoption helps marketers identify early adopters. An innovation is any good, service, or idea that is perceived by someone as new. The idea may have a long History, but it is an innovation to the person who sees it as new. Innovations take time to spread through the social system. The Innovation diffusion process is defined as the spread of a new idea from its source of invention or creation to its ultimate users or adopters. The consumer adoption process is the

mental process through which an individual passes from first hearing about an innovation to final adoption. Adopters of new products have been observed to move through five stages: 1. Awareness = The consumer becomes aware of the innovation but lacks information about it. 2. Interest = The consumer is stimulated to seek information about the innovation. 3. Evaluation = The consumer considers whether to try the innovation 4. Trial = The consumer tries the innovation to improve his or her estimate of its value. 5. Adoption =The consumer decides to make full and regular use of the innovation. A persons level of innovativeness is the degree to which an individual is relatively earlier in adopting new ideas than the other members of his social system. In each product area, there are pioneers and early adopters. Some people are the first to adopt new clothing fashions or new appliances; some doctors are the first to prescribe new medicines; and some farmers are the first to adopt new farming methods. People can be classified into the adopter categories. After a slow start and increasing number of people adopt the innovation, the number reaches a peak, and then it diminishes as fewer non-adopters remain. The five adopter groups differ in their value orientations and their motives for adopting or resisting the new product. y Innovators are technology enthusiasts; they are venturesome and enjoy tinkering with new product and mastering their intricacies. In return for low process, they are happy to conduct alpha and beta testing and report on early weakness. y Early adopters are opinion leaders who carefully search for new technologies that might give them a dramatic competitive advantage. They are lesser price sensitive and willing to adopt the product if given personalized solutions and good service support. y Early majority are deliberate pragmatists who adopt the new technology when its benefits are proven and a lot of adoption has already taken place. They make up the mainstream market. y Late majority are skeptical conservatives who are risk adverse, technology shy, and price sensitive. Laggards are tradition bound and resist the innovation until they find that the status quo is no longer defensible

Levels of Consumer Decision Making

There are three levels of consumer decision making

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Extensive problem solving - When consumers have no established criteria for evaluating a product category or specific brands in that category or have not narrowed the number of brands they will consider to a small, manageable subset, their decision-making efforts can be classified as extensive problem solving. Here, the consumer needs a great deal of information to establish a set of criteria on which to judge specific brands and a correspondingly large amount of information concerning each of the brands to be considered.

Limited problem solving - Here, the consumers have already established the basic criteria for evaluating the product category and the various brands in the category. They have not fully established preferences concerning a select group of brands. The search for additional information is more like fine-tuning; they must gather additional brand information to discriminate among the various brands.

Routinized response behavior - Here, consumers have experience with the product category and a well-established set of criteria with which to evaluate the brands they are considering. In some situations, they may search for a small amount of additional information; in others, they simply review what they already know. In extensive problem solving customer seek for more information to make a choice, whereas in routinized response behavior customers need only little additional information.

Consumer decision making process

Textbook Page 159 to 165

Consumer decision rules These are generally referred to as information processing strategies. These are procedures that help consumers to evaluate various options and reduce the risk of making complex decisions by providing the guidelines. Decision rules have been broadly classified into two categories:

1. Compensatory Decision Rules Consumers evaluate brand or model interms of each attribute and computes a weighted score for each brand. The computed score reflects the brands relative merit as a potential purchase choice. The assumption is that consumer will select the brand that scores highest among alternative brands. The unique feature of this rule is that it balances the positive evaluation of a brand on one attribute to balance out a negative evaluation on some other attribute. For example, positive attribute

like high fuel efficiency is balanced with the negative evaluation of high maintenance cost. 2. Noncompensatory Decision Rules : In contrast to the above rule non compensatory rules do not allow consumers to balance positive evaluation of a brand on one attribute against negative evaluation on some other attribute. There are three types of noncompensatory rules.
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Conjunctive Decision Rule - In conjunctive decision rule the consumer establishes a different, minimally acceptable level as a cut off point for each attribute. In this the option is eliminated for further consideration if a specific brand or model falls below the cutoff point on any attribute. Disjunctive Rule - It is the mirror image of conjunctive rule. Here the consumer establishes a separate minimally acceptable cut off level for each attribute. In this case if an option meets or exceeds the cut off establishes for any one attribute it is accepted. Lexicographic Decision Rule - In this rule the consumer initially ranks the attributes in terms of perceived relevance or importance. Later he compares different alternatives in terms of the single attribute that is considered most important. On this top ranked alternative, regardless of the score on any other attribute, if one option scores sufficiently high it is selected and the process ends

Factors affecting consumer decision process

Consumer behavior refers to the selection, purchase and consumption of goods and services for the satisfaction of their wants. There are different processes involved in the consumer behavior. Initially the consumer tries to find what commodities he would like to consume, then he selects only those commodities that promise greater

utility. After selecting the commodities, the consumer makes an estimate of the available money which he can spend. Lastly, the consumer analyzes the prevailing prices of commodities and takes the decision about the commodities he should consume. Meanwhile, there are various other factors influencing the purchases of consumer such as social, cultural, personal and psychological. The explanation of these factors is given below. 1. Cultural Factors Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture, and social class.
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Culture - Basically, culture is the part of every society and is the important cause of person wants and behavior. The influence of culture on buying behavior varies from country to country therefore marketers have to be very careful in analyzing the culture of different groups, regions or even countries. Subculture - Each culture contains different subcultures such as religions, nationalities, geographic regions, racial groups etc. Marketers can use these groups by segmenting the market into various small portions. For example marketers can design products according to the needs of a particular geographic group. Social Class - Every society possesses some form of social class which is important to the marketers because the buying behavior of people in a given social class is similar. In this way marketing activities could be tailored according to different social classes. Here we should note that social class is not only determined by income but there are various other factors as well such as: wealth, education, occupation etc.

2. Social Factors Social factors also impact the buying behavior of consumers. The important social factors are: reference groups, family, role and status.

Reference Groups - Reference groups have potential in forming a person attitude or behavior. The impact of reference groups varies across products and brands. For example if the product is visible such as dress, shoes, car etc then the influence of reference groups will be high. Reference groups also include opinion leader (a person who influences other because of his special skill, knowledge or other characteristics). Family - Buyer behavior is strongly influenced by the member of a family. Therefore marketers are trying to find the roles and influence of the husband, wife and children. If the buying decision of a particular product is influenced by wife then the marketers will try to target the women in their advertisement. Here we should note that buying roles change with change in consumer lifestyles. Roles and Status - Each person possesses different roles and status in the society depending upon the groups, clubs, family, organization etc. to which he belongs. For example a woman is working in an organization as finance manager. Now she is playing two roles, one of finance manager and other of mother. Therefore her buying decisions will be influenced by her role and status.

3. Personal Factors Personal factors can also affect the consumer behavior. Some of the important personal factors that influence the buying behavior are: lifestyle, economic situation, occupation, age, personality and self concept.
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Age - Age and life-cycle have potential impact on the consumer buying behavior. It is obvious that the consumers change the purchase of goods and services with the passage of time. Family life-cycle consists of different stages such young singles, married couples, unmarried couples etc which help marketers to develop appropriate products for each stage. Occupation - The occupation of a person has significant impact on his buying behavior. For example a marketing manager of an organization will try to purchase business suits, whereas a low level worker in the same organization will purchase rugged work clothes.

Economic Situation - Consumer economic situation has great influence on his buying behavior. If the income and savings of a customer is high then he will purchase more expensive products. On the other hand, a person with low income and savings will purchase inexpensive products. Lifestyle - Lifestyle of customers is another import factor affecting the consumer buying behavior. Lifestyle refers to the way a person lives in a society and is expressed by the things in his/her surroundings. It is determined by customer interests, opinions, activities etc and shapes his whole pattern of acting and interacting in the world. Personality - Personality changes from person to person, time to time and place to place. Therefore it can greatly influence the buying behavior of customers. Actually, Personality is not what one wears; rather it is the totality of behavior of a man in different circumstances. It has different characteristics such as: dominance, aggressiveness, self-confidence etc which can be useful to determine the consumer behavior for particular product or service.

4. Psychological Factors There are four important psychological factors affecting the consumer buying behavior. These are: perception, motivation, learning, beliefs and attitudes.
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Motivation - The level of motivation also affects the buying behavior of customers. Every person has different needs such as physiological needs, biological needs, social needs etc. The nature of the needs is that, some of them are most pressing while others are least pressing. Therefore a need becomes a motive when it is more pressing to direct the person to seek satisfaction. Perception - Selecting, organizing and interpreting information in a way to produce a meaningful experience of the world is called perception. There are three different perceptual processes which are selective attention, selective distortion and selective retention. In case of selective attention, marketers try to attract the customer attention. Whereas, in case of selective distortion, customers try to interpret the information in a way that will support what the

customers already believe. Similarly, in case of selective retention, marketers try to retain information that supports their beliefs. Beliefs and Attitudes - Customer possesses specific belief and attitude towards various products. Since such beliefs and attitudes make up brand image and affect consumer buying behavior therefore marketers are interested in them. Marketers can change the beliefs and attitudes of customers by launching special campaigns in this regard.

Types of consumer behavior Four types of consumer buying behavior outline product purchase decisions. Impulse Purchases When a consumer stands at the checkout and notices lip moisturizer, magazines and gum, and adds one of the items to his cart of groceries, it's often referred to as an impulse purchase. The consumer makes a purchase with little to no thought or planning involved. In most instances this happens with low-priced items.
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Routine Purchases There are items consumers are used to purchasing every day, once a week or monthly. These can range from a morning cup of coffee from a nearby convenience store, to milk, eggs and cheese from the supermarket. Customers spend very little time deciding whether or not to purchase these items and don't typically need to read reviews or consult with friends for their opinions before they make routine purchases.
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Limited Decision Making When customers engage in purchases that require limited decision making, they may seek advice or a suggestion from a friend. For example, if a young professional is preparing for an interview and wants to get her hair colored the week before, she might solicit advice from friends to find out which salon does good hair coloring work. As she shops for a suit for the interview, she might also ask for suggestions on which store to go to and which brand of suit is the best. The consumer may research a few options, but the search is not as thorough, or as time consuming, as with a higher priced item.
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Extensive Decision Making

Purchases for high priced electronics, such as a television, computer or camera, or major purchases such as a home or car require consumers to use extensive decision making. Consumers spend substantial amounts of time researching a high number of potential options before they buy. They speak with trusted friends, family, colleagues and sales professionals, and read reviews and ratings online and in consumer magazines. The decision making process lasts longer, as the consumer is investing a substantial amount of money Classification of b2b markets

1) Producer market - The producers buy the products from the suppliers (raw material) not for direct sales to the customers but for processing them and converting them into finished goods. These finished goods are then sold to the customers for their use. The producer market revolves around personal service and

selling, profit considerations, reliability, and customization to meet the needs of individual customers. Buyers in the producer market tend to make informed choices. The purchase decision is usually made by several persons with varying points of focus

2) Original equipment manufacturer (OEM) makes equipment or components that are then marketed by its client, another manufacturer or a reseller, usually under that reseller's own name. An OEM may make complete devices or just certain components, either of which can then be configured by the reseller. An example of this relationship would be a large automobile manufacturer that uses an OEM's components in the production of the cars it makes and sells. 3) End user - This type of producers are users who buy the products which will facilitate their production process though they are not part of the end product. E.g. Industrial tools , Lathe machines Or Computers in data processing. 4) Resellers Market- Resellers are those marketers who do not purchase products for converting them into finished products or for personal use, but for selling them to other customers for a monetary gain. Wholesalers, jobbers, retailers are part of the resellers market. 5) Government Market - Govt. agencies are the largest buyers of the goods and services. The procedures adopted by different Gov. Dept. are similar. The purchasing is generally done by the tender processes, Defense purchases, railways purchases etc.

6) An institutional market is a consumer market composed of large buyers who tend to purchase in volume quantities. Several different types of organizations may be involved in a given

institutional market, including educational institutions, businesses, and non-profit organizations. In most instances, the purchases are made in order to allow the organization to in turn provide services and goods to the individuals they serve. Colleges and universities also are consumers in an institutional market. Purchases such as textbooks, computers, seating for classrooms, and various teaching aids are just a few of the items that buyers of this type will purchase on an ongoing basis. As with other larger buyers, universities often purchase in bulk as a way of obtaining a discount and thus stretching the institutional budget a little further.

Module 5: Segmentation, Targeting and Positioning Market segmentation Diagram Page 6 Market segmentation is a strategy that involves dividing a larger market into subsets of consumers who have common needs and applications for the goods and services offered in the market. These subgroups of consumers can be identified by a number of different demographics, depending on the purposes behind identifying the groups. Marketing campaigns are often designed and implemented based on this type of customer segmentation. The purpose of market segmentation is to leverage scarce resources; in other words, to ensure that the elements of the marketing mix, price, distribution, products and promotion, are designed to meet particular needs of different customer groups. Since companies have nite resources it is not possible to produce all possible products for all the people, all of the time. The best that can be aimed for is to provide selected offerings for selected groups of people, most of the time. This process allows organizations to focus on speci c customers needs, in the most efficient and effective way One of the main reasons for engaging in market segmentation is to help the company understand the needs of the customer base. Often the task of segregating

consumers by specific criteria will help the company identify other applications for their products that may or may not have been self evident before. Basis for segmentation Notebook Text book Page 206. Criteria for effective market segmentation

A decision to use a market segmentation strategy should rest on consideration of four important criteria that affect its profitability. In order for segmentation to be viable; the market must be (1) identifiable and measurable (2) accessible, (3) substantial and (4) responsive. Identifiable and measurable: Segments must be identifiable so that the marketer can determine which consumers belong to a segment and which do not. However, there may be a problem with the segments measurability (that is, the amount of information available on specific buyer characteristics) because numerous variables (e.g. psychological factors) are difficult, if not impossible, to measure at the present time. For example, if the marketer discovered that consumers who perspire profusely favored a particular brand, very little could be done with this information since such a group would be difficult to measure and identify for segmentation purposes. Accessible: This criterion refers to the ease of effectively and economically reaching chosen segments with marketing efforts. Some desired segments may be inaccessible because of legal reasons; for example, liquor manufacturers are unable to market directly to young teenagers, In fact, there is a vigorous debate dealing with the constitutionality of segmenting and targeting certain groups. Cigarette companies that aimed recent new brands at 18 24 year old black women with a high school education or less have been criticized, and legislation to protect these targeted groups from such advertising has been proposed. The Association of National Advertisers defends the practice and claims such proposals amount to censorship and a violation of First Amendment rights. It is more likely, however, that segments may be inaccessible because the marketer is unable to reach them at a reasonable cost and with minimum waste via existing promotional media and retail outlets.

Substantial: This collection refers to the degree to which a chosen segment is large enough to support profitably a separate marketing program. As was noted preciously a strategy of market segmentation is costly. Thus, one must carefully consider not only the number of customers available in a segment but also the amount of their purchasing power. Responsive: There is little to justify the development of a separate and unique marketing program for a target segment unless it responds uniquely to these efforts. Therefore, the problem is to identify market segments that will respond favorably to marketing programs designed specifically for them. If the four criteria above are fulfilled segmentation will be an attractive marketing strategy.

Market segmentation strategies: a) Concentration strategy A firm directs all or most of its resources to a single market (for single product or single technology). In this strategy a company chooses to pursue a large share of one or few submarkets rather than chasing a small share of a large market. The risk in this strategy arises when the demand in the submarket suddenly drops or if a strong competitor enters the submarket. b) - Differentiated strategy: This is also referred to multi-segment or selective specialization plan. In this way, more than one target market is offered the product and service. The product may be the same or it might be different. But the branding, advertising campaign and even promotional message will be different for each target customer group. For example, a Company like Toyota that sells different models of Camry to different set of customers. The designs are different, but the spare parts are all the same. c) - Undifferentiated Marketing strategy: This plan entails providing the whole broad market with a single product or service. The marketer will attempt to appeal to the whole Total Available Market with just one single product or he might provide mass marketing mixes to a single market division. The only advantage of this type of strategy is that it lowers the cost of production and

development of the product. This approach was used in the olden days where people do not have much choice of selecting. Nowadays, the strategy seems to be rather unreasonable. d) - There is also customized or micro-marketing strategies whereby the marketer focuses a particular product to different market groups or serving a particular group and offers that group an array of different products. The first type of plan is called product specialization strategy while the later is market specialization. This plan requires marketer to have advanced and extensive technical capabilities to reach his targeted customers. The Internet is notable for providing enhancement for this target marketing strategy. Many marketers now learn to utilize the Internet micro-marketing scheme to promote their products.

Main Purpose of Segmentation - Facilitates consumer-oriented marketing: Market segmentation facilitates formation of marketing-mix which is more specific and useful for achieving marketing objectives. Segment-wise approach is better and effective as compared to integrated approach for the whole market. - Facilitates introduction of suitable marketing mix: Market segmentation enables a producer to understand the needs of consumers, their behavior and expectations as information is collected segment-wise in an accurate manner. Such information is purposefully usable. Decisions regarding Four Ps based on such information are always effective and beneficial to consumers and the producers. - Facilitates introduction of effective product strategy: Due to market segmentation, product development is compatible with consumer needs as there is effective crystallisation of the specific needs of the buyers in the target market. Market segmentation facilitates the matching of products with consumer needs. This gives satisfaction to consumers and higher sales and profit to the marketing firm. - Facilitates the selection of promising markets: Market segmentation facilitates the identification of those sub-markets which can be served best with limited

resources by the firm. A firm can concentrate efforts on most productive/ profitable segments of the total market due to segmentation technique. Thus market segmentation facilitates the selection of the most suitable market. Facilitates exploitation of better marketing opportunities: Market segmentation helps to identify promising market opportunities. It helps the marketing man to distinguish one customer group from another within a given market. This enables him to decide his target market. It also enables the marketer to utilise the available marketing resources effectively as the exact target group is identified at the initial stage only. Facilitates selection of proper marketing programme- Market segmentation helps the marketing man to develop his marketing mix programme on a reliable base as adequate information about the needs of consumers in the target market is available. The buyers are introduced to marketing programme which is as per their needs and expectations. Provides proper direction to marketing efforts: Market segmentation is rightly described as the strategy of "dividing the markets in order to conquer them". Due to segmentation, a firm can avoid the markets which are unprofitable and irrelevant for its marketing purpose and concentrate on certain promising segments only. Thus due to market segmentation, marketing efforts are given one clear direction for achieving marketing objectives. Facilitates effective advertising: Advertising media can be more effectively used because only the media that reach the segments can be employed. It makes advertising result oriented. Provides special benefits to small firms: Market segmentation offers special benefits to small firms. The resources available with them are limited as they are comparatively new in the market. Such firms can select only suitable market segment and concentrate all efforts within that segment t only for better marketing performance. Such firms can compete even with large firms by offering personal services to customers within the segment selected. Facilitates optimum use of resources: Market segmentation facilitates efficient use of available resources. It enables a marketing firm to use its marketing resources in the most efficient manner in the selected target market. The

marketing firm selects the most promising market segment and concentrates all attention on that segment only. This offers best results to the firm in terms of sale, profit and consumer support as compared to the results available from spending such resources on the total market. Market Segmentation Process Stage I: Identify Segmentation Process Marketers follow two methods to determine the bases on which to identify markets: -Segments are predefined by managers based on their observation of the behavioral and demographic characteristics of likely users -Segments are defined by asking customers which attributes are important and then clustering the responses Stage II: Develop Relevant Profile Next, marketers seek further understanding of the consumer in each promising segment Must develop a profile of the typical consumer and each segment Helps to accurately match consumer needs with the firms marketing offers Stage III: Forecast Market Potential Market segmentation and market opportunity analysis combine to produce a forecast of market potential within each segment Defines a preliminary go or no-go decision since the sales potential in each segment must justify resources devoted to further analysis Stage IV: Forecast Market Share The next step is to forecast the firms probable market share

 Competitors positions in targeted segments must be analyzed A specific marketing strategy must be designed to serve the targeted segments The firm determines the expected level of resources it must commit to tap the potential demand in each segment Stage V: Select Specific Segment The preceding information, analysis, and forecasts allow management to assess the potential for achieving company goals and to justify committing resources in developing one or more segments Marketers also weigh more than monetary costs and benefits at this stage Levels of Market Segmentation MASS MARKETING. In mass marketing, the seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers. Henry Ford epitomized this marketing strategy when he offered the Model-T Ford to all buyers; they could have the car "in any color as long as it is black." Coca-Cola also practiced mass marketing for many years when it sold only one size Coke in a 6.5ounce bottle. The traditional argument for mass marketing is that it creates the largest potential market, which leads to the lowest costs, which in turn can translate into either lower prices or higher margins. However, many critics point to the increasing splintering of the market, which makes mass marketing more difficult. According to Regis McKenna: [Consumer]. . . have more ways to shop: at giant malls, specialty shops, and superstores; through mail-order catalogs, home shopping networks, and virtual stores on the Internet. And they are bombarded with messages pitched through a growing number of channels: broadcast and narrow-cast television, radio, on-line computer

networks, the Internet, telephone services such as fax and telemarketing, and niche magazines and other print media. The proliferation of advertising media and distribution channels is making it difficult to practice "one size fits all" marketing. No wonder some have claimed that mass marketing is dying. Not surprisingly, many companies are retreating from mass marketing and turning to micromarketing at one of four levels. SEGMENT MARKETING. A market segment consists of a large identifiable group within a market. A company that practices segment marketing recognizes that buyers differ in their wants, purchasing power, geographical locations, buying attitudes, and buying habits. At the same time, though, the company is not willing to customize its offer/communication bundle to each individual customer. The company instead tries to isolate some broad segments that make up a market. For example, an auto company may identify four broad segments: car buyers seeking basic transportation, those seeking high performance, those seeking luxury, and those seeking safety. Thus segmentation is a midpoint between mass marketing and individual marketing. The consumers belonging to a segment are assumed to be quite similar in their wants and needs. Yet they are not identical. Some segment members will want additional features and benefits not included in the offer, while others would gladly give up something that they don't want very much. For example, Ritz-Carlton Hotels target affluent guests and provide many amenities and a lower price. Thus segment marketing is not as precise as individual marketing but is much more precise than mass marketing. Segment marketing offers several benefits over mass marketing. The company can create a more fine-tuned product/service offer and price it appropriately for the target audience. The choice of distribution channels and communications channels becomes much easier. And the company may face fewer competitors if fewer competitors are focusing on this market segment. NICHE MARKETING. Market segments are normally large identifiable groups within a marketfor example, nonsmokers, occasional smokers, regular smokers, and heavy smokers. A niche is a more narrowly defined group, typically a small

market whose needs are not being well served. Marketers usually identify niches by dividing a segment into subsegments or by defining a group with a distinctive set of traits who may seek a special combination of benefits. For example, the sema, and heavy smokers with emphysema who are overweight. While segments are fairly large and thus normally attract several competitors, niches are fairly small and normally attract only one or a few competitors. Niches typically attract smaller companies. Larger companies, such as IBM, whose lose pieces of their market to nichers; Dalgic labeled this confrontation as "guerrillas against gorillas." As a defense, some larger companies have turned to niche marketing, which has required more decentralization and some changes in the way they do business. For example, Johnson & Johnson consists of 170 affiliates (business units), most of which pursue niche markets. Niche marketers presumably understand their niches' needs so well that their customers willingly pay a price premium. For example, Ferrari gets a high price for its cars because its loyal buyers feel that no other automobile comes close to offering the product-service-membership benefit bundle that Ferrari does. An attractive niche is characterized as follows: The customers in the niche have a distinct and complete set of needs; they will pay a premium to the firm best satisfying their needs; the "nicher" has the required skills to serve the niche in a superior fashion; the nicher gains certain economies through specialization; the niche is not likely to attract other competitor or the nicher can depend on itself; and the niche has sufficient size, profit, and growth potential. An advertising agency executive wrote: "There will be no market for products that everybody likes a little, only for products that somebody likes a lot." A chemical company executive predicted that chemical companies that succeed in the future will be those that can identify niches and specialize their chemicals to serve each niche's needs. According to Linneman and Stanton, niche-pickers will find riches in niches and companies will have to niche or be niched. Blattberg and Deighton claim that "niches too small to be served profitably today will become viable as marketing efficiency improves." In many markets today, niches are the norm.

LOCAL MARKETING - Target marketing is increasingly taking on the character of regional and local marketing, with marketing programs being tailored to the needs and wants of local customer groups (trading areas, neighborhoods, even individual stores). Thus Citibank provides different mixes of banking services in its branches depending on the bank's neighborhood demographics. And Kraft helps supermarket chains identify the cheese assortment and shelf positioning that will optimize cheese sales in low-income, middle-income, and high-income stores, and in different ethnic communities. Those in favor of localizing a company's marketing point to the pronounced regional differences in communities' demographics and lifestyles. They see national advertising as wasteful because it fails to address local target groups. They also see powerful local and regional retailers who are demanding more fine-tuned product assortments for their neighborhoods. Those against local marketing argue that it drives up manufacturing and marketing costs by reducing economies of scale. Logistical problems become magnified when companies try to meet different regional and local markets' requirements. And a brand's overall image might be diluted if the product and message differ in different localities. INDIVIDUAL MARKETING. The ultimate level of segmentation leads to "segments of one," "customized marketing," or "one-to-one marketing." The prevalence of mass marketing has obscured the fact that for centuries consumers were served as individuals: The clothier tailor-made the suit, the cobbler designed shoes for the individual, and so on. And much business-to-business marketing today is customized, in that a manufacturer will customize the offer, logistics, and financial terms for each major account. It is the new technologiesspecifically computers, databases, robotic production, and instant communication media such as e-mail and faxthat are permitting companies to consider a return to customized marketing, or what is called "mass customization." Mass customization is the ability to prepare on a mass basis individually designed products and communications to meet each customer's requirement

Targeting Also known as a target audience or a targeted market, a target market is a specific group of consumers that a business wishes to attract and sell its line of goods or services to. A target market may be defined in terms of age, gender, sexual orientation, economic class, ethnicity, religion, or location. This process of socio-economic grouping allows businesses to create profiles of the typical customer who is likely to purchase products from the company, which in turn provides the basis for the creation of marketing and sales initiatives that allow the business to build a clientele within that customer demographic The identification of a target market is very important to the long-term operation of a business. Without a clear understanding of who is likely to be interested in the products offered by the company, it is very difficult to proactively take steps to connect with potential customers. By defining the basic characteristics of a given target audience, and then identifying the ways that the company can meet their needs and wants, the process of building a base becomes much easier. Strategies for Reaching Target Markets y Undifferentiated marketing strategy An undifferentiated strategy exists when the supplier offers the same or undifferentiated product to all persons or organizations believed to have a demand for a product of that type. Three sets of circumstances suggest themselves as being suited to an undifferentiated strategy: (a) the introduction of an INNOVATION; (b) the mature/ decay stage of the PRODUCT LIFE CYCLE; (c) commodity marketing where the conditions most closely approximate the economist's model of PERFECT COMPETITION. When introducing a new product into the marketplace, especially a radically different product, several factors may predicate an undifferentiated strategy. For example it is widely recognized that much of the risk attendant upon a new product launch is uncertainty as to the scope and nature of demand, which may result in a perceptual mismatch between supplier and potential user. Inertia and commitment to the known and safe product or process make it very difficult to forecast just what interpretation prospective users will make of the benefits offered by

the innovation. Under such circumstances, a broad approach may be preferable to an attempt to pre-identify receptive customers as a basis for MARKET SEGMENTATION and the development of either differentiated or concentrated strategies. Similarly, by the time that the product is moving into its decline it is safe to assume that the users/consumers are strongly committed to the product and so there is little need for special marketing effort. In the third case, the essential homogeneity of the commodity militates against either a differentiated or concentrated strategy. y Differentiated Marketing Differentiated marketing combines the best attributes of undifferentiated marketing and concentrated marketing. It appeals to two or more distinct market segments, with a different marketing plan for each. Typically differentiated marketing creates more total sales than undifferentiated marketing, but it also increases the costs of doing business. Differentiated Marketing also called as multisegment marketing is wherein a company attempts to appeal to two or more clearly defined market segments with a specific product and unique marketing strategy tailored to each separate segment. Firms such as Maruti-Suzuki use differentiated marketing to attract all segments. Others, such as Hyundai, and Microsoft appeal to two or more segments, but not all segments. y Concentrated Marketing Concentrated marketing is a marketing approach that is aimed at connecting with and selling products to a specific consumer group. This strategy calls for taking steps to identify the target market that is highly likely to be attracted to the products, and developing a plan that is unique to reaching that group of consumers. The process also normally includes planning the delivery of products in a manner that is likely to generate repeat business from those consumers. In many cases, concentrated marketing is an ideal approach for smaller businesses with limited resources, since it does not rely on the creation and use of mass marketing, production, or distribution to reach a wide range of potential consumers. The concept of concentrated marketing is the opposite of what is known as undifferentiated marketing strategies. With an undifferentiated approach, the idea is to capture as much of the market as

possible by creating a broad campaign that appeals to consumers of all ages, genders, economic backgrounds and geographical locations. By contrast, a concentrated marketing seeks to identify the niche market or markets where there is likely to be a high demand for the products produced. In order to reach those niche markets, the producer will create a plan that involves only those forms of media that are regularly used to reach consumers in those niche markets, rather than going with a broader campaign approach. For example, a company that markets farming implements will make use of advertising in print media aimed at farmers, rather than creating ads that are found in magazines with a broader reader base. While a concentrated marketing approach can help a business make the most of a small advertising budget, there are some potential drawbacks with this type of marketing. First, a concentrated effort requires a highly developed marketing plan, since it is targeted to a specific audience. This means a great deal of research into the wants, needs, and buying habits of that group of consumers, a task that can be somewhat costly on the front end. In addition, this type of focused or targeted marketing means that other consumer groups are not targeted and thus are not likely to be reached. In the event that the company is unable to capture an appreciable share of the targeted group of consumers, there may not be the luxury of more time to cultivate a client base with a different consumer group.

y Micro marketing There is also customized or micro-marketing strategies whereby the marketer focuses a particular product to different market groups or serving a particular group and offers that group an array of different products. The first type of plan is called product specialization strategy while the later is market specialization. This plan requires marketer to have advanced and extensive technical capabilities to reach his targeted customers. The Internet is notable for providing enhancement for this target marketing strategy. Many marketers now learn to utilize the Internet micro-marketing scheme to promote their products. Positioning Positioning is defined as the act of designing the companys offering and image to occupy a distinctive place in the target markets mind.

For Example What brand occurs in your mind when I say walkman? I guess Sony. Similarly what do you think of when I say photocopies? I think Xerox or Cannon. Thus these brands have positioned themselves in the mind of their customer such that whenever the generic product is mentioned immediately these brands come into our mind. Now if I ask most innovative company I guess you will name APPLE : I agree with you. Thus Positioning can be defined with the following core points Positioning requires a holistic approach and is one of the most useful tools for marketers. Positioning is almost completely about perception. How the customer perceives your product or brand is what positioning is all about. Thus the best mass marketers like to use marketing tactics which touch the whole market (Example Vodafone Zoozoos). Perceptual mapping is generally used to determine the Positioning of a product in the target market. Positioning can make or break a brand. A rightly perceived product / company gets lots of returns from the market as compared to a wrongly perceived company. Example Airtel vs Reliance telecom. Communication is of ultimate importance in positioning. The right communication can go a long way in determining the perception of a product / brand. Finally, Attributes tangible or intangible (in case of services) are necessary to be involved in the product which increases the positioning of the product in the customers mind. Positioning strategies Positioning is the very crux of marketing strategy and proper positioning is the right potion for successful marketing management. Product positioning is a crucial decision that a marketer needs to implement to establish a distinctive and strong image of its product/brand as against its competitors, in the mind of the target consumer. Very often, a product fails because of wrong positioning. 1) Product Features and Benefits Positioning Strategy: A consumer buys a product when he/she perceives some promised benefit that would satisfy the need and that the offer is better or enticing as against other competing brands. This positioning strategy is implemented by differentiating the brand from its competitors on the basis of its features and benefits offered. This is known as Unique Selling Proposition or USP

2) Competitive Positioning Strategy: This is a very effective offensive strategy where the marketer seeks to persuade the consumer that his product/brand is superior or at par with an established competitor. 3) Product Category Positioning Strategy: This strategy is used when an existing product category is too congested and the new brand is positioned as belonging to another product category. 4) User Positioning Strategy: Products can be positioned according to their user bases. For instance, beer marketers often position their products as light and strong beers. Again Kellogg's has cornflakes for cereal users, weight- watchers and kids. This is a smart way of doing niche marketing 5) Attribute positioning In this case the firm uses one or more product attributes or features as the basis for positioning its product

Purpose of positioning. 1. Product and Service A product is anything that can be offered to a market to satisfy a want or need. Generally speaking, a product is held out as a tangible thing while service is regarded as intangible. Options open to an organization for the purpose of positioning a product would entail tinkering with specific elements of the product such as features, performance, conformance, durability, reparability, style and design. For a service, the synonyms are ordering ease, delivery, installation, customer training etc. 2. Personnel The body of persons employed by an organization to carry out its various functions is central in maintaining a favorable position for the company. The essential attributes that qualifies for positioning in this regard include competence, courtesy, credibility, reliability, responsiveness and communication.

3. Channel The interdependence of business entities lend credence to the importance of distribution channels. The route by which an organization makes available its product or service to the consumers will mark it out from the pack. The crucial factors for positioning in this regard are coverage, expertise and performance. 4. Image Positioning of the image of the organization will entail the alignment of symbols, written and audiovisual media, atmosphere and events with the value proposition of the organization. These elements must be in total sync with the kind of image that the company intends to project to its customers. In developing a positioning strategy, one of the best approaches is to employ a systemic process of identifying varying opportunities existing in the market for the company, evaluate the competitive environment and then decide on planned activities aimed at conferring advantage on the organization. The following steps are instructive in strategy formulation for the organization: y Current Position The starting point for the organization would be the perceptions that existing and prospective customers have about your product, service, or company. This calls for objective analysis, not wishful thinking. Existing perceptions are important because you cannot change minds easily. For a start-up organization, there are no perceptions to overcome. In this case, what is more important is the perception of your potential customer about the competition. For the existing company however, there is need to research into what both existing and prospective customers view as the key product or service attributes in your category so as to learn their general product or service perceptions about you and the competition. Such an effort would provide the clue as to how the company compare to its competition on key product and service attributes.

y Desired Position In presenting a positioning idea, the company should be guided by some important criteria capable of differentiating the offering of the organization from the competition. It is imperative that the difference be important, distinctive, superior, communicable, preemptive, affordable and profitable. It could even be an idea that the company already has but which is now presented in a stronger way. It is important for the company to articulate why the new position is worthwhile. If the new position offers increased market share, an explanation has to be provided. For example, it may be that the new position being touted is more appealing to a larger or faster-growing market segment. Claiming an idea often requires support. The company has to decide on viable sources of support to whip up in order to make the positioning credible. Some typical sources of support include sales leadership, growth leadership, third-party reviews and customer preference. Pitfalls in Positioning There are four main errors that all organizations should watch out for in communicating its positioning to the market. 1) Under positioning: This is a situation where the avowed position of the company creates a vague idea in the mind of the public. Laying claim to what is assumed as a standard feature of a product exemplifies this situation as the consumers may not see anything special in such a position. Ex: Volvos positioned as drive safely. 2) Over positioning: When customers have the impression that the product or service being offered by a company is only available to a restricted class of consumers, there exists a narrow image of the offering in the minds of the public. This problem could create a wedge between the company and its customers. Ex: Tanishq it suits all budgets.

3) Confused Positioning: Claim to numerous areas of difference in the companys offering or frequent change of the companys positioning may create a confused image in the minds of customers. Ex: Maggie soup noodles. 4) Doubtful Positioning: This error occurs when consumers find it hard to believe the positioning claim of the products features, price or even the caliber of the company itself. For example, a company might claim to be a high profile company while failing to do those things naturally expected of high profile companies either in terms of its location or designing and pricing of its products. In trying to solve the positioning problem, the organization naturally realizes the need to blend the legendary 4 Ps popularly known as the marketing-mix. This process of marketingmix i.e. Product, price, place and promotion is very crucial as a fore-thought before any organization could adopt a positioning strategy. The 3cs of successful positioning The Channel: a great source of information about all three Cs The channel is how your product reaches the customer, whether you sell directly or through VARs. It will be the first topic of the 3C's series, because your channel is or should be - one of your best sources of information about the other two Cs, your customers and your competition. It's your first avenue of interaction with what you hope will become your customer. And it's the battleground for the ongoing war with your competitors. So, it's vital that your channel partner is your ally with shared goals and a trusting relationship. Unfortunately, this is rarely the case, even at B2B software companies that sell direct. I'll suggest ways you can overcome this problem in the column about the channel. From the channel, you learn what gets your customers excited about your product (it may surprise you), and what they feel is missing. You learn why you win and lose and against whom. All these factors contribute to help you converge on the ideal positioning statement for your product. Learn what's really happening in the channel, and you gain insights into the details of purchase processes, demographics, psychographics, sales strategies, and customer concerns.

The channel can also provide valuable feedback on the viability of your marketing message. Ongoing communication with your channel will improve the relationship and, as a result, the flow of honest information and insights vital for your product positioning strategies. Know your customer ... at least as well as you know your own products You can't successfully position your product unless you know the answer to this basic question: "What is my target customer's most pressing problem?" Notice that this question asks about THE problem, not problems. Although it may be tempting to think of your product as a Swiss Army Knife, don't, because it's doomed to fail. Your prospects are overwhelmed by communication in today's fast-paced, high-tech world. They get so many marketing messages - somewhere between 5,000 and 10,000 per day - that they have become experts at filtering them out. You can get through the filter, but only with a benefit statement that addresses the primary concern that keeps your prospect awake at 2 am. Your target buyers will listen to your message when you demonstrate an understanding of their problem, and clearly communicate the benefit your product offers to solve the problem. Besides customer concerns, other psychographics such as industry and technology trends can affect your message strategy. A good grasp of demographics is critical to successful positioning. But some companies feel they have to sell to everyone, and often fail to communicate effectively with the ultimate decision maker. It may surprise you that it's relatively easy to adapt a good positioning statement to different target audiences, if you really need to communicate to more than one buyer. Know the competition, intimately Differentiation is critical to successful positioning of your product. In the marketing classic, "Positioning - The Battle for your Mind," authors Al Ries and Jack Trout say that knowledge of your competitor's positioning is just as important as knowing your

own. Ries and Trout lament the fact that "too many companies embark on marketing and advertising as if the competitor's position did not exist. They advertise their products in a vacuum and are disappointed when their messages fail to get through." You can often discover how a competitor is positioned by analyzing its print advertisements and Web site. A positioning statement, idea or theme frequently appears in the first paragraph of an advertisement or on the home page of the Web site. It's a good idea to become familiar with the competitor's messages in other marketing communication, such as direct marketing pieces, brochures, press announcements and trade show materials. See if there's consistency and continuity. You can gain a competitive advantage just by recognizing the realities of your competitors. Differentiation Product differentiation is a specific kind of business and marketing strategy. It focuses on a target market in which competitors already offer similar products or services. A company that uses product differentiation tries to create the perception among certain target customers that the companys version of this product or service is some how different and thus has added value that is not available from competitors. Product differentiation is extremely important to running any kind of business. This is due to economic principals that have been demonstrated time and time again in nearly every market place. If the public perceives no difference between two competing products, then the only possible means of competition is through pricing. In a situation such as this, products are viewed by customers as very easy substitutes for one another. If one product is more expensive than the other, the customer will simply purchase the cheaper product. She does this because she views no difference between them.

To compete, the company with the higher price will lower its price to the same level as the competition. Eventually, another company may ignore the standard price in the market and offer the same product at an even lower price. The other competitors have no choice but to lower their prices as well. They have to or they will lose their business. Eventually, this leads to a situation in which the prices are lowered to the point where no business in the market can make a profit off of that product. Situations such as these present themselves in markets where products are relatively similar. For example, people generally dont consider one brand of peas inherently superior to another. Due to this fact, they are likely to just purchase the cheapest brand. Entering into a business such of this doesnt seem like a lucrative proposition. Gaining market share and producing a sizable profit will be very difficult. The answer to this problem based on economic principals is to make your product seem different from the competition. If the customers do perceive a difference, one product is less likely to be a perfect substitute for another. The ways a product can be differentiated from the competition are numerous. However, actual physical alteration of the product is not always necessary. For example, with the previous pea example, there seems to be little space for altering the actual product. A pea will generally be the same no matter where or how its harvested. However, today, many consumers are highly conscious of the environment. They may, for example, be against the use of chemical pesticides and fertilizers in farming due to the effect that those chemicals can have on animals, plants, and human beings. These consumers tend to prefer purchasing what is known as organic vegetables that are harvested without the use of these synthetic chemicals. If a grocer offers peas that are labeled as having been organically grown, product differentiation from peas that do not carry this label has been achieved. One may be hard pressed to find a difference by simply comparing the appearance of an organic

pea to a non-organic grown pea. However, since the consumer perceives a difference between the peas due to this organic label, the non-organically grown peas cannot be a substitute. In this situation, the shopper who must have organically grown vegetables is much more likely to pay a premium for those organic peas. Thus, through this product differentiation, the businesses that grow and sell these peas have escaped a situation in which they would only be competing in the market on the basis of price alone. Making a sizable profit in a crowded market place is once again possible. Products can be differentiated through many different ways. This differentiation may for example take the form of different packaging. For example, certain beer drinkers may be receptive to a different can design with a wider mouth. It can also take the form of marketing. For example, a cell phone company may offer the same services to all age groups. However, it may target certain kinds of cell phones to teenagers and others to senior citizens. The possibilities are nearly limitless. As long as a business can come up with a creative way to differentiate its product or service, gaining a competitive advantage is possible. When Colgate Total was launched, it aimed at addressing the gap between gel- and white toothpastes. The combination of fresh breath as well as complete cleaning made Total a great success. Google launched Gmail to cater to the demand of Internet users who wanted to use their email and IM platform through a single window. The market today is in such stage that most of the core needs in almost every facet of human life have been identified. Companies are trying to create USPs (Unique Selling proposition) through a lot of innovation and ideas. Each company wants to outdo others by experimenting with quality, packaging, positioning or services. NDTV supplemented quality news, with a set of best news editors and journalist delivering the core product at its best - news. Anchor switches differentiated itself through better quality in the unorganized market while Cadbury concentrated on the positioning, changing the view of the Indians - replacing sweets with the chocolates and ran a tagline kuch mitha ho jaye. The fundamental messages

that these examples send is pretty clear differentiate and innovate to survive and sell But its important to ensure that product differentiation stays meaningful and does not become simply a fad. Imagine if Domex comes out with a new flavor with some cleaning agent. It wont create a product steer and increase sales over night, but a different value added product like Bang would surely do. When Coke was replaced with New Coke, sales went down horribly, setting one of the most disastrous examples of differentiation ever. Pepsi met with the same tragedy when it launched Blue Pepsi in India. It is equally important to understand the trend and know the feelings of the customers. The ultimate distinction would be the utility and the value that consumers take away from the product. Some of the benefits obtained by entrepreneurs and traders of the product differentiation strategy: The product is easy to recognize Basically everything that is unique and different, it will provide a special attraction for consumers. So they are easier to recognize and recall these products than other products that have been common in the market. The product is more superior than other products If other products are considered standards by consumers, by creating differentiation, then your product will look more superior than others in the market. It is certainly very profitable for the marketers. With a superior product, youll easily build consumer loyalty. High product prices. A product that has a special uniqueness, consumers will usually hunted at any price. Limited edition products have higher prices than the regular products and many consumers willing to pay the product. Service differentiation How do you differentiate your services from that of the competition? Its easier in products where the variables are tangibles but pretty different in case of services. When the physical product cannot be differentiated easily, the key to competitive

success may lie in adding valued services and improving their quality. This is the outlook of service differentiation. The main factors which can be used for service differentiation are: 1. Ordering ease: Refers to how easy it is for you to place an order with the company. Baxter Healthcare has eased the ordering process by supplying hospitals with computer through which they send orders directly to Baxter; consumers can now order and receive groceries without going to the supermarket through webbased service such as peapod and net grocer. Thus these services have differentiated themselves through ease of ordering. 2. Delivery: It is related to how well the product or service is delivered to the customer, covering speed, accuracy and customer care. Deluxe check printer, inc., has built an impressive reputation for shipping out its checks one day after receiving an order- without being late once in 18 years. 3. Installation: refers to the work done to make a product operational in its planned location. Buyers of heavy equipment expect good installation service. Differentiation by installation is particularly important for companies that offer complex products such as computers. 4. Customer training: refers to how the customers employees are trained to use the vendors equipment properly and efficiently. General Electric not only sells installs expensive X-rays equipment in hospitals, but also gives extensive training to users of this equipment. 5. Customer consulting refers to data, information system and advising services that the seller offers to buyers. For example, the Rite aid drugstore chains communications program, called the Vitamin Institute, provide customers with research so they can make more educated judgments and fell comfortable asking for help. On the Web, Rite Aid has teamed with drugstore.com to offer even more health-related information. 6. Maintenance and repair: describes the service program for helping customers keep purchasing products in good working order, an important consideration for many products.

These are 6 steps to achieve service differentiation. Each of these steps can be seen implemented in leading service chains / companies. People differentiation

People Differentiation may be putting better, more qualified people in contact with the customer than your competitors. If all your competitors do a feature benefit sell, maybe you can differentiate your company by using a consultive approach to selling. Offering better customer service, service after the sale, or making fewer mistakes than your competition can generate repeat business. It has been said that you "get the business on quality and price, you keep the business on service." Perhaps it's simply being more friendly in customer contacts. Doing business with nice people is a segmenting dimension for some customers. Meaningful differentiation Many business leaders want to create something new, but dont know how to come up with and develop differentiators that their market will embrace. Thats what this is about explaining the necessary elements of successful differentiation; identifying the best differentiating strategies for your type of business; explaining a specific brainstorming technique thats been the source of great ideas for decades; showing how your customers can help; and marketing. This isnt about outwitting your competition. In fact, this isnt about your competition at all. Its about coming up with an idea that is so great it will make everyone and everything else in your market irrelevant.

The Three Essential Elements of Successful Differentiation Just because something is different, that doesnt mean its significant. Further, in order for different to be good in the eye of the consumer, the difference must be both significant and provable. Even further - in order for different to be good for your business it must be sustainable.

So these are the three pillars of successful differentiation: Significance Provability Sustainability Differentiation, p. 2 Significance There are a staggering number of new products and services hitting the market every year that no one cares about. The vast majority of these are spawned by large companies that can afford exhaustive market research so its not surprising that surveys and focus groups dont always work. Why? Because they dont take place under real market conditions. Most people dont know what theyll want in the future; they only know what they want when they see it. Henry Ford said, If I had asked my customers what they wanted, theyd have asked for a faster horse. Because of this, Im not a big fan of exhaustive market research mostly because its both expensive and unreliable. The much better strategy is to invest as little money as possible in the design and creation of the new product or service, strategically publicize your new offering, and do a full market test run for a limited time. This means creating the product or service using the best in-house intellectual and intuitive capital you have, letting the world know what youve created, and stepping boldly into the marketplace. Provability If you want consumers to buy in, whatever claim you make about your new product or service needs to be easily verifiable. That means you need to use words to describe the claim that are succinct. Beautiful, enormous, and even industrys finest are impossible for consumers to verify which means, those words are essentially meaningless. I know what youre thinking: Even if I do make a claim that people can verify, how many people are actually going to do it? It doesnt matter. We all have built-in lie detectors. We know the difference between a provable and nonprovable claim.

For example, a home development that offers beautiful homes in a lovely setting with the most square feet for the money in the metro area is like every other development in the eyes of the consumer. However, one that offers Prairie-style architecture, lakeside lots, and 3,500 square feet for $425,000 is another matter. The consumer knows that (the builder knows) all he has to do is drive by the development to verify the first two things, and as far as the third thing goes well, we all know every state has an attorney general. Make your differentiating claim specific and provable. Sustainability No matter how much consumers love your new product or service, if you cant make a profit on it, you cant keep producing it. Be very sure, before you roll anything out, that this is something that will benefit your company in the long term. Dont count on raising the price or reducing production costs once its successful. You should be producing your new offering as efficiently as possible and offering it for the best price as soon as it hits the market. Again, I know what youre thinking: Arent some people willing to pay more for a product just because its new? Yes, but that applies to a select group of high-end products marketed to a defined group of consumers with disposable income. It probably doesnt apply to what youre selling.
Positioning strategies Positioning is the very crux of marketing strategy and proper positioning is the right potion for successful marketing management. Product positioning is a crucial decision that a marketer needs to implement to establish a distinctive and strong image of its product/brand as against its competitors, in the mind of the target consumer. Very often, a product fails because of wrong positioning. 1) Product Features and Benefits Positioning Strategy: A consumer buys a product when he/she perceives some promised benefit that would satisfy the need and that the offer is better or enticing as against other competing brands. This positioning strategy is implemented by differentiating the brand from its competitors on the basis of its features and benefits offered. This is known as Unique Selling Proposition or USP 2) Competitive Positioning Strategy: This is a very effective offensive strategy where the marketer seeks to persuade the consumer that his product/brand is superior or at par with an established competitor.

3) Product Category Positioning Strategy: This strategy is used when an existing product category is too congested and the new brand is positioned as belonging to another product category. 4) User Positioning Strategy: Products can be positioned according to their user bases. For instance, beer marketers often position their products as light and strong beers. Again Kellogg's has cornflakes for cereal users, weight- watchers and kids. This is a smart way of doing niche marketing 5) Attribute positioning In this case the firm uses one or more product attributes or features as the basis for positioning its product