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Marketing and Its Applications Marketing planning and Organisation Understanding Consumers Product Management Pricing an Promotion Strategy Distribution and Public Policy
Marketing is the performance of business activities that directs the flow of goods and services from producer to consumer or user
PRODUCER
Product
CONSUMER Need
Marketing activities
Product C
Promotion
Price
Place
Needed to create and retain a satisfied customers Strategies STDP Strategies Marketing Mix Strategies
Segmentation
Aggregating process A cluster of people with similar needs. A Homogeneous group of customer who will respond to a marketing mix in a similar way.
Targeting
Once the market segment is defined, it has to decide how many and which one to target.
Differentiation
Positioning
Product-Mix Width and Product-Line Length for PepsiCo India Product-Mix Width Beverages Pepsi Mountain Dew Aquafina Mirinda 7-Up Dukes Soda Dukes Mangola Slice Juice Tropicana Orange Nature Sweet Apple Grape Pineapple Tomato Mixed Fruit Snacks Lays Cheetos Lehar Numkeens Nutyumz Kurkure
Product-line Length
Expansion of product mix Contraction of product mix Altering existing products Positioning the product
Is concerned with all the decisions involved in the getting right product to the target markets place.
Distribution Channels
any series of firms that participate in the flow of products from producer to its final consumers.
Manufactures or producer Raymond's Toyota Wholesaler
Retailer
Retailer
Retailer
Consumer
Push Strategy
Pull Strategy Factors
Marketing and planned economic growth How to view the marketing effort Significance of macro and micro marketing General role of marketing
Stimulates potential aggregate demand and thus enlarge the size of the market It helps in the discover of entrepreneurial talent
Marketing in agriculture, basic industries, mining and plantation Intermediate industrial goods Semi-industrial products Export trade & services like tourism and banking
The services sector has been growing at a rate of 8% per annum in recent years More than half of our GDP is accounted for from the services sector This sector dominates with the best jobs, best talent and best incomes
-Theodore Levitt-
It is the part of the product or the full product for which the customer is willing to see value and pay for it.
Economic well being increases the demand of services Changing lifestyle Complexity of the product
Intangibility Perishability
Inseparability
Variability Client
Hard
Dramatization Hard
Services
If
Outlet
accessibility can limit the area covered by the service. is important: Image affects the perception of the service.
Image
Service
quality tends to vary considerably. from your hair dresser vs. Javed
Haircut
Habib
Relationships
Potential
It
is not taken to the service, we merely experience it. e.g. Services of a doctor, lawyer, teacher, mechanic, etc..
Physical goods tangible homogeneous Production and distribution are separated from consumption
Services intangible heterogeneous Production, distribution and consumption are simultaneous processes
A thing
Core value processed in factory Customers do not participate in the production process Can be kept in stock Transfer of ownership
An activity or process
Core value produced in the buyerseller interaction Customers participate in production Cannot be kept in stock No transfer of ownership
Quality, features, style, brand name, packaging, sizes, services, warranties, returns
Target customers, cost, competition, the law, social responsibility
Promotional activities
Channels of distribution
Current Marketing Situation Identification of Problems and Opportunities Defining Objectives Designing the Marketing Strategy Developing the marketing programme
The Relationship between Marketing Mix and Marketing Strategy The concept of Optimum Marketing Mix
New product development and marketing mix Product life cycle and marketing mix Role of Advertising in marketing mix Role of price in marketing mix
In respect of the network of institutions like wholesalers and brokers dealing in a product To refer to the nature of demand for the product, as when we speak of the market for soap
Market Segmentation versus product development Benefits and doubts about segmentation What is grouped in forming segments
What, how, where, when, why, who
Geographic
Region, City or Metro Size, Density, Climate
Demographic
Age, Gender, Family size and Life cycle, Race, Occupation, or Income ...
Psychographic
Lifestyle or Personality
Behavioral
Occasions, Benefits, Uses, or Attitudes
Personal Characteristics
Demographics
Situational Factors
Operating Characteristics
Purchasing Approaches
Methods that companies use Logical division Perceptual mapping technique Considerations in using perceptual maps
General factors
Company trust Size & growth potential Investment needed Profitability Risk Competition
Simple sales department Sales department with some marketing function Separate marketing department Integrated marketing department Marketing oriented organisation
Statement of objective and goals of the firm Nature of the product/Line of activity Areas of operation Nature of Industry Computerisation & up-gradation of information system External environment & Government intervention.
The Context of Marketing Decisions Definition of Marketing Research Purpose of Marketing Research Scope of Marketing Research Marketing Research Procedure
Problem Definition Research design Field Work Data Analysis Report presentation and implementation
Determination of market potential Determination of market share Sales forecasting Design of market segmentation studies Target market Distribution channel studies Determination of market characteristics Determination of competitive information
Evaluation of new product ideas Testing for new product acceptance Evaluating the need for change in product information Testing package design Testing of product positioning
Product Research
Studies of business trends Pricing studies Diversification studies Product mix studies Plant & warehouse location studies
Advertising Research
Audience Measurement Determining the most cost effective media plan Copy Testing Determining advertising effectiveness Consumer behaviour research
Importance of consumer behaviour for marketers Types of consumers Buyers v/s Users
Postdecision Behavior
Output Purchase 1. Trial 2. Repeat purchase
Postpurchase Evaluation
others
learning
perception
family personality
Postpurchase behaviour
subculture motivation
What to buy How much to buy Where to buy When to buy How to buy
Horward-Seth Model
Engel-Kollat-Bloackwell Model
Information processing Central control unit Decision process Environmental influences Influencers Gatekeepers Deciders Preparers Buyers users
Demographic Characteristics Income and consumption characteristics Characteristics of organisational consumers Geographic characteristics Market potential Socio cultural characteristics
Anything that can be offered to a market to satisfy a want or need Physical goods Services Experiences Events Persons Places Properties Organizations Information Ideas
Marketer has to turn core benefit into basic product Bank accounts like savings account, current account
Encompasses all possible augmentation and transformations The the fundamental service or product might undergo in future product the customer is buying Anywhere banking, ATM sharing, CRM In a priority bank thebanking, customer is looking for portfolio management security of his money
A product that exceeds customer expectations A set of attributes and conditions the buyers A bank can offer facilities like ATM/Debit expect when they buy the product cards, Telebanking, Internet Banking and The bank customer would expect a cheque book, also other financial services locker and other deposit products like FD, RD
Product-Mix Width and Product-Line Length for PepsiCo India Product-Mix Width Beverages Pepsi Mountain Dew Aquafina Mirinda 7-Up Dukes Soda Dukes Mangola Slice Juice Tropicana Orange Nature Sweet Apple Grape Pineapple Tomato Mixed Fruit Snacks Lays Cheetos Lehar Numkeens Nutyumz Kurkure
Product-line Length
Case Study
The Times Group
Net
Entertainment
Retail
GROUP SITES
1. Line Stretching
a. Down market Stretch b. Up market Stretch c. Two way stretch
2. Line Filling
Just-noticeable difference
Strategy
Introduction
Growth
Maturity
Decline
1. Objective 2. Focus 3.Customer Targets 4.Competitor 5.Differentiated Advantage Marketing MIX 1. Product
Maximize Share New Segments Early Adopters Growing Number Brand Image Growth Extension & Enhancement Lower High Brand Performance Intensive
Many Price & Service Maturity Differentiation & Variety Lower Falling Loyalty Intensive
Stages in new product development Ideas generation Screening of ideas Concept testing Product designing and evaluation Product testing Product launching
Definition: A brand is a name, Term, Sign, Symbol, Brand or combination of them intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.
-American Marketing Association
Trademarks legal right to the exclusive use of that name or mark
Branding to be or not to be.. Whether Produce Manufacturer Brands or Distributor / Private Brands
Functions of packaging
Price
Three variables that determine profit: Sales Volume
Seller
Customer
Price
Demand
Competition
Price
Higher Higher Premium Strategy (Mercedes,Evian) Overcharging Strategy (Cielo) Lower Good-Value Strategy (Amul) Economy Strategy (Akai,OK)
Lower
Quality
Survival Low Prices to Cover Variable Costs and Some Fixed Costs to Stay in Business. Current Profit Maximization Choose the Price that Produces the Maximum Current Profit, Etc.
Market Share Leadership Low as Possible Prices to Become the Market Share Leader.
Product Quality Leadership High Prices to Cover Higher Performance Quality and R & D. Market Skimming Initially setting up High Prices to Skim the market
Survival
(Mobile Operators)
Product-quality leadership
(Maruti)
Fixed Costs (Overhead) Costs that dont vary with sales or production levels. Executive Salaries Rent
Variable Costs
Total Costs
Sum of the Fixed and Variable Costs for a Given Level of Production
Markup Pricing Target Return Pricing Perceived Value Pricing Value Pricing Going-Rate Pricing
Sealed-Bid Pricing
Markup price =
Target return pricing (target ROI) = Unit cost + desired return X invested capital Unit sales Break even volume = fixed cost Price variable cost
Value-based Pricing
Pricing strategy reflects the beliefs and attitudes of the customer. Perceived price/quality relationship. Price is based on an understanding of the value of the product as perceived by the customer.
Value-Based Pricing
Cost-Based Pricing Value-Based Pricing
START
Pricing Methods
Going-Rate
Company Sets Prices Based On What Competitors Are Charging.
Sealed-Bid
Company Sets Prices Based On What They Think Competitors Will Charge.
Psychological pricing
Reference Price
The final price must be take in to account the brands quality and advertising relative to competition
Cash Discount Quantity Discount Functional Discount Seasonal Discount Trade-In Allowance Promotional Allowance
Reducing Prices to Reward Customer Responses such as Paying Early or Promoting the Product.
Captive-Product Pricing
Pricing Products That Must Be Used Along With The Main Product e.g. Printer cartridges
By-Product Pricing
Pricing Low-Value By-Products To Get Rid of Them e.g. Sugarcane
Product-Bundle Pricing
Bundles Of Products Sold Together at a Reduced Price e.g. Gillete razor blades & foam
The company needs to benchmark its costs against its competitorscost to learn whether it is operating at a cost advantage or disadvantage. The company also needs to learn the price and quality of competitors offers
No
Yes
Will Lower Price Negatively Affect Our Market Share & Profits?
No
Reduce Price
Yes
No
Yes
Sender
Encoding
Message Media
Decoding
Receiver
Noise
Feedback
Response
Sales Promotion
Advertising
Marketing Communication
Public Relations
Direct Marketing
Personal Selling
Direct Marketing
Sales Promotion
Advertising
A paid nonpersonal communication about an organization and its products transmitted to a target audience through mass media
Mass Media
Consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade
Promotional tool Identify, establish, and maintain beneficial relationships between a company and its stakeholders
Benefits
Corporate visibility Image Building Product Information
Advantages
Disadvantages
Direct Communications with Carefully Targeted Individual Consumers to Obtain an Immediate Response
Face-to-Face Selling Direct-Mail Marketing
Online Marketing
Kiosk Marketing
Catalog Marketing
Direct-Response TV Marketing
Telemarketing
Push Policy
Promoting a product only to the next institution down the marketing channel Promoting a product directly to consumers to develop stronger consumer demand that pulls products through the marketing channel
Pull Policy
Type of product
Target Audience Determinants Company Policy Budget Stage in the PLC Nature of market
After Determining Its Objectives, the Marketer Must Set the Communications Budget for Each Product and Market. Affordable Percentage of Sales
Objective-and-Task
Competitive-Parity
How advertising works? Types of advertising Role of advertising Advertising expenditure Advertising management Setting advertising objective Developing advtg. Copy and message Selecting and scheduling media Measuring advertising effectiveness Coordinating with ad agency Publicity
Use of publicity Measuring effectiveness of publicity
Merchandise deliveries Inside order-taker Outside order-taker Missionary salesperson Sales engineer Tangible product seller Intangible product seller
Preparation Prospecting Preapproach Approach Sales presentation Handling objectives Closing the sale Post-sale follow-up
Sales promotion consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker and or greater purchase of particular products/services by consumers or trade -Kotler
Non personal promotional effort that are designed to have immediate impact on sales Employed for a pre-determined limited period to increase consumer demand or stimulate market demand
Sales promotion offers an incentive to buy Encompasses everything that is outside of advertising, PR and DM Uses advertising, PR and DM to deliver the sales promotion Can be planned to increase sales over a long period and not necessarily about immediate results (privilege / mileage points)
Results ! - immediate / quick boost to sales Results over finite period of time - v/s advertising or PR Results are measurable Easy and inexpensive to implement Costs & efficiency of mass media / advertising has risen considerably
Product managers face pressure to increase sales Companies face more competition Consumers have become more deal oriented
Awareness Advt / PR Information gathering Pre purchase evaluation Per Sell Decision SP PURCHASE Post purchase evaluation
Lowers price - use of coupons, discounts Add value - value packs, extra free
It alters the price / value relationship that the product offers the buyer
Everybody loves freebies Consumers have a reason to purchase the product NOW Justifies post purchase evaluation
Sales promotions help shape buying patterns - Annual sales Attract new audiences - trials for new products Increase sales - freebies, buy 1 get 1 free Increases profits Helps move stock / liquidate inventory Increases awareness - reach new buyers
Encourages the consumer to buy more than usual on a single shopping visit Reminder of product, especially when a new product / competitor is about to launch Improving TOM recall of the brand if promo is advertised in mass media Demoralise newly launched brands
Can seem like last minute panic measures and that can signal failure Can give an impression of hard sell Greed for sales - promos are often not related to the strategic elements of the brands mktg. mix Often viewed as simple reactionary techniques to increase sales and profits Dilutes brand value - discount brands
Price deals Discounts Price pack deals Samples Rebates Sweepstakes/contest s Frequency rewards Demos POP
Trade allowances Dealer loader Trade contests POP Displays Training programs Push money / Spiffs Exhibitions
All India promo Aggressive use of mass media Consumer gets an assured gift on purchase of any Samsung product 100 cr worth of prizes on offer Sms 16 digit pin and the gift u get wl b smsd 2 u.
Consumer promotion scheme Packaged as a coconut which cons picks on purchase of a Samsung product Breaking the coconut reveals a chance to win a gift Strong consumer acceptance helped co to achieve a growth of 35% in sales over last year - same period
Tata Motors celebrated 50 years Offer to test drive any Tata car - fill a form - and lucky winners could win Prize Indica V2 Petrol Buzz / Hype / Awareness Mass media - TV / Press / DM Helped build / gather data base
Set
sales promotion and merchandising objectives. What is your target audience? Establish a tentative sales promotion and merchandising budget. Select sales promotion and merchandising techniques.
media for distributing promotions. Decide on timing of sales promotions and merchandising. Pretest sales promotions and merchandising. Prepare final sales promotion and merchandising plan and budget. Measure and evaluate sales promotion and merchandising success.
Creativity
Attn grabbing visuals
Be clear
What is a sales forecast? How to prepare a sales forecast? Product sales determinants
Consumer non-durable goods Consumer durable goods Industrial goods Breakdown approach Market build-up approach
Methods of forecasting
Status of forecasting method usage The evaluation of forecasts Computerised sales forecasting Relating the sales forecast to the sales budget an profit planning
Executive Judgement Surveys Time series analysis Corelation and regression methods Market tests Combining forecast and using judgement
Merchant Middlemen
Functions performed by retailers Services rendered by the retailers Effective coordination between wholesaler and retailers Types of retailers
Department stores Co-operative stores Multiple shops or chain stores
The type of product Nature and extent of the marker Existing channels for comparable products Buying habits of consumers Cost involved in distribution
Location of manufacturing facilities Location of warehouses Mode and method of transportation Inventory decisions Using external distribution agency
Selling and sales management Recruitment and selection of salesmen Training of sales personnel Motivating the sales personnel Controlling the sales personnel
Regulatory role of the government Role of government in marketing in developing economy Government control and marketing decision making process Impact of government control on product decision Impact of government control on pricing decision Impact of government control on promotion decision Impact of government control on channel and distribution decision
Customer profiling, segmentation and targeting Product planning Branding Pricing decision Advertising and sales promotion Distribution Marketing research
Create Awareness. Generate Interest. Disseminate Information. Create an Image. Create a Strong Brand.
Relatively Inexpensive. Wide reach. Allows research, purchase of products and services on convenience. Quick Response.
One-to-one vs. one-to-many approach Demographics targeting vs. behavioral targeting. Measurability . Response and immediate results.
Dependant on technology. Rigid mindset. Virtual aspect. Security Concern. Maintenance Cost. Global competition.
Your specialist marketing expertise. A new, innovative product or service. Location of your business. Quality processes and procedures. Any other aspect of your business that adds value to your product or service.
Lack of marketing expertise. Undifferentiated products or services. Location of your business. Poor quality goods or services. Damaged reputation.
A developing market such as the Internet. Mergers, joint ventures or strategic alliances. Moving into new market segments that offer improved profits. A new international market. A market vacated by an ineffective competitor
A new competitor in your home market. Price wars with competitors. A competitor has a new, innovative product or service. Competitors have superior access to channels of distribution. Taxation is introduced on your product or service.
Tax Breaks. Low Start up Costs. Low Operating Costs. High Profit Margin. Market for little or no money. You do not need your own Product. Time Freedom. Open 24 Hours in every country.
Make sure that your product is something that is useful to your intended customers. Make sure that the product does what it says. Ensure Quality. Packaging. Brand Consistency. Good After Sales Service.
Placement on Major Search Engines. Placement of vertical search engines/ guides and local search. Placement through affiliates.
through display advertising. though search marketing. through socal media. through Public Relations.
Search engine marketing. Display Marketing E-mail Marketing, Affiliate Marketing Interactive Marketing Blog Marketing. Viral Marketing
Geographic Demographic (Age, Income, Gender, Education, Ethnicity) Psycographic (Activities, Interests, Opinions, Personality, Values.) Behaviour (Benefits sort, Usage level, Brand Loyalty, User Status.)
Four different approaches 1) Mass Marketing. 2) Multi segment Marketing. 3) Niche Marketing. 4) Micro Marketing.