Complete Marketing

Marketing Management
Prof.Srini.R.Srinivasan
KJSIMSR
prof.Srini.R.Srinivasan-KJSIMSR 1
Flow of the Presentation
• Introduction to Marketing Planning
• Marketing Planning
• MKIS and MR
• The Marketing Environment & Competitor Analysis
• Buyer Behaviour
• Strategic Development
• Product Decisions
• Pricing Decisions
• Channel & Distribution Tactics
• Promotion Decisions
• Implementation
• Segmentation
• Targeting
• Positioning
Environmental Audit Portfolio Analysis Segmentation
Targeting
Marketing Mix Marketing Plans Positioning
Ansoff's Matrix Segmentation

Marketing Environmen
t Marketing and the Marketing Concept Objectives
Boston Matrix Targeting
PEST Analysis Consumer Buyer Behaviour Strategies
Bowman's Strategy Clock Positioning
SWOT Analysis Marketing Mix Marketing Plans
Porter's Generic Strategies
Five Forces Analysis Promotion Control
Product Internal Marketing
Price
Place/Channel
Introduction to
Marketing
Planning
Definitions of marketing
‘Marketing is the management process that
identifies, anticipates and satisfies customer
requirements profitably’
The Chartered Institute of Marketing
‘The right product, in the right
place, at the right time, and at the
right price’
Adcock et al
‘Marketing is the human activity
directed at satisfying human needs
and wants through an exchange
process’
Kotler 1980
‘Marketing is a social and
managerial process by which
individuals and groups obtain
what they want and need through
creating, offering and exchanging
products of value with others’
Kotler 1991
Implications of marketing
• Who are our existing / potential customers?
• What are their current / future needs?
• How can we satisfy these needs?
• Can we offer a product/ service that the customer
would value?
• Can we communicate with our customers?
• Can we deliver a competitive product of service?
• Why should customers buy from us?
The marketing concept
• choosing and targeting appropriate
customers
• positioning your offering
• interacting with those customers
• controlling the marketing effort
• continuity of performance
Successful marketing requires:
• Profitable
• Offensive (rather than defensive)
• Integrated
• Strategic (is future orientated)
• Effective (gets results) Hugh Davidson 1972
Stage One - Situation Analysis
• Marketing environment
• Laws and regulations
• Politics
• The current state of technology
• Economic conditions
• Sociocultural aspects
• Demand trends
• Media availability
• Stakeholder interests
• Marketing plans and campaigns of competitors
• Internal factors such as your own experience and resource availability
• Also see tools for internal/external audit:
• SWOT
• PEST
• Porter's Five Forces
• Marketing Environment
Stage Two - Set marketing SMART Objectives
• Specific - Be precise about what you are going to achieve

• Measurable - Quantify you objectives
• Achievable - Are you attempting too much?
• Realistic - Do you have the resource to make the objective happen
(men, money, machines, materials, minutes)?
• Timed - State when you will achieve the objective (within a month? By
February 2010?)
If you don't make your objective SMART, it will be too vague and will not
be realized. Remember that the rest of the plan hinges on the objective.
If it is not correct, the plan will fail.
Stage Three - Describe your target market.
• Which segment? How will we target the segment? How

should we position within the segment?
• Why this segment and not a different one? (This will focus
the mind).
• Define the segment in terms of demographics and lifestyle.
Show how you intend to 'position' your product or service
within that segment. Use other tools to assist in strategic
marketing decisions such as Boston Matrix ,
Ansoff's Matrix , Bowmans Strategy Clock,
Porter's Competitive Strategies, etc.
Stage Four - Marketing Tactics
• Convert the strategy into the marketing mix (also known as the 4Ps). These are
your marketing tactics.
• Price Will you cost plus, skim, match the competition or penetrate the market?
• Place Will you market direct, use agents or distributors, etc?
• Product Sold individually, as part of a bundle, in bulk, etc?
• Promotion Which media will you use? e.g sponsorship, radio advertising, sales
force, point-of-sale, etc? Think of the mix elements as the ingredients of a 'cake
mix'. You have eggs, milk, butter, and flour. However, if you alter the amount of
each ingredient, you will influence the type of cake that you finish with.
Stage Five - Control
• Remember that there is no planning without control. Control is vital.
• Start-up costs
• Monthly budgets
• Sales figure
• Market share data
• Consider the cycle of control
• Finally, write a short summary (or synopsis) which is placed at the
front of the plan. This will help others to get acquainted with the plan
without having to spend time reading it all. Place all supporting
information into an appendix at the back of the plan.
Marketing management process
• Analysis/Audit - where are we now?
• Objectives - where do we want to be?
• Strategies - which way is best?
• Tactics - how do we get there?
• (Implementation - Getting there!)
• Control - Ensuring arrival
Why is marketing planning
necessary?
• Systematic futuristic thinking by
management
• better co-ordination of a company’s efforts
• development of performance standards for
control
• sharpening of objectives and policies
• better prepare for sudden developments
Definitions of marketing
‘Marketing is the management process that
identifies, anticipates and satisfies customer
requirements profitably’
The Chartered Institute of Marketing
‘The right product, in the right
place, at the right time, and at the
right price’
Adcock et al
‘Marketing is the human activity
directed at satisfying human needs
and wants through an exchange
process’
Kotler 1980
‘Marketing is a social and
managerial process by which
individuals and groups obtain
what they want and need through
creating, offering and exchanging
products of value with others’
Kotler 1991
Marketing
Planning
Implications of marketing
• Who are our existing / potential customers?
• What are their current / future needs?
• How can we satisfy these needs?
• Can we offer a product/ service that the customer
would value?
• Can we communicate with our customers?
• Can we deliver a competitive product of service?
• Why should customers buy from us?
The marketing concept
• choosing and targeting appropriate
customers
• positioning your offering
• interacting with those customers
• controlling the marketing effort
• continuity of performance
Successful marketing requires:
• Profitable
• Offensive (rather than defensive)
• Integrated
• Strategic (is future orientated)
• Effective (gets results) Hugh Davidson 1972
Stage One - Situation Analysis
• Marketing environment
• Laws and regulations
• Politics
• The current state of technology
• Economic conditions
• Sociocultural aspects
• Demand trends
• Media availability
• Stakeholder interests
• Marketing plans and campaigns of competitors
• Internal factors such as your own experience and resource availability
• Also see tools for internal/external audit:
• SWOT
• PEST
• Porter's Five Forces
• Marketing Environment
Stage Two - Set marketing SMART objectives
• Specific - Be precise about what you are going to achieve

• Measurable - Quantify you objectives
• Achievable - Are you attempting too much?
• Realistic - Do you have the resource to make the objective happen
(men, money, machines, materials, minutes)?
• Timed - State when you will achieve the objective (within a month? By
February 2010?)
If you don't make your objective SMART, it will be too vague and will not
be realized. Remember that the rest of the plan hinges on the objective.
If it is not correct, the plan will fail.
Stage Three - Describe your target market.
• Which segment? How will we target the segment? How

should we position within the segment?
• Why this segment and not a different one? (This will focus
the mind).
• Define the segment in terms of demographics and lifestyle.
Show how you intend to 'position' your product or service
within that segment. Use other tools to assist in strategic
marketing decisions such as Boston Matrix ,
Ansoff's Matrix , Bowmans Strategy Clock,
Porter's Competitive Strategies, etc.
Stage Four - Marketing Tactics
• Convert the strategy into the marketing mix (also known as the 4Ps). These are
your marketing tactics.
• Price Will you cost plus, skim, match the competition or penetrate the market?
• Place Will you market direct, use agents or distributors, etc?
• Product Sold individually, as part of a bundle, in bulk, etc?
• Promotion Which media will you use? e.g sponsorship, radio advertising, sales
force, point-of-sale, etc? Think of the mix elements as the ingredients of a 'cake
mix'. You have eggs, milk, butter, and flour. However, if you alter the amount of
each ingredient, you will influence the type of cake that you finish with.
Stage Five - Control
• Remember that there is no planning without control. Control is vital.
• Start-up costs
• Monthly budgets
• Sales figure
• Market share data
• Consider the cycle of control
• Finally, write a short summary (or synopsis) which is placed at the
front of the plan. This will help others to get acquainted with the plan
without having to spend time reading it all. Place all supporting
information into an appendix at the back of the plan.
Marketing management process
• Analysis/Audit - where are we now?
• Objectives - where do we want to be?
• Strategies - which way is best?
• Tactics - how do we get there?
• (Implementation - Getting there!)
• Control - Ensuring arrival
Why is marketing planning
necessary?
• Systematic futuristic thinking by
management
• better co-ordination of a company’s efforts
• development of performance standards for
control
• sharpening of objectives and policies
• better prepare for sudden developments
MKIS & MR
Marketing Information Systems
• Marketing Research
• What is Marketing Research?
• Process
• Terminology
• Techniques
• MKIS - Marketing Information Systems
• What is MKIS
• Components of an electronic MKIS
Marketing Research
‘the systematic gathering, recording and

analysing of data about problems relating to
the marketing of goods and services’
American Marketing Association
The most basic marketing question is:
“What do our customers or potential customers really value?”
A well researched and considered answer to that question provides

The foundation for the rest of the marketing program: segmentation &
Targetting, new product development, product management, brand
Management, channel management, mktg. Communications and even
The structures of the mktg organisation.
Market Research Vs. Marketing Research
Market research and marketing research are often confused.

'Market' research is simply research into a specific market.
It is a very narrow concept. 'Marketing' research is much
broader. It not only includes 'market' research, but also
areas such as research into new products, or modes of
distribution such as via the Internet. Here are a couple of
definitions:
The Marketing Research Process
Set objectives
Define research Problem
Assess the value of the research
Construct a research proposal
Specify data collection method
Specify techniques of measurement
Select the sample
Data collection
Analysis of results
Present in a final report
Terminology of Marketing
Research
• Primary data - collected firsthand
• Secondary data - already exists, desk
research
• Quantitative research - statistical basis
• Qualitative research - subjective and
personal
• sampling - studying part of a ‘population’ to
learn about the whole
Marketing Research Techniques
• Interviews
• face-to-face
• telephone
• postal questionnaire
• Mystery Shopping
• Attitude measurement
• cognitive component (know/believe about an act/object)
• affective component (feel about an act/object)
• conative component (behave towards an object or act)
• Likert scale
• strongly agree
• agree
• neither agree nor disagree
• disagree
• strongly disagree
• Semantic differential scales - differences
between words e.g. practical v impractical
• Projective techniques
• sentence completion
• psychodrama (yourself as a product)
• friendly martian (what someone else might do)
• Group discussion and focus group
• Product Tests
• Use of Internet
• Postal research questionnaires
• Diary panels - sources of continuous data
• In-home scanning - hand-held light pen to scan
barcodes
• Telephone research
• Observation
• home audit
• direct observation
• In-store testing
Secondary Research
Secondary (or desk) research uses data that has

been collected for other objectives than your own
i.e. it already exists. There are a number of such
sources available to the marketer, and the
following list is by no means conclusive:
• Trade associations
National and local press Industry magazines
National/ international governments
Web sites
Informal contacts
Trade directories
Published company accounts
Business libraries
Professional institutes and organisations
Omnibus surveys
Previously gathered marketing research
Census data
Public records
What is MKIS?
‘MKIS (MIS) is a set of procedures and
methods for the regular, planned collection,
analysis and presentation of information for
use in marketing decisions’
American Marketing Association
The components of a
computerised MKIS
Data Bank
Statistical Display Marketing

MKIS
Bank unit Manager
Model
Bank
The components of a
computerised MKIS
• Data bank - raw data e.g historical sales
data, secondary data
• Statistical bank - programmes to carry-out
sales forecasts, spending projections
• A model bank - stores marketing models e.g
Ansoff’s matrix, Boston Matrix
• Display unit - VDU and keyboard
The Marketing Environment &
Competitor Analysis
The Marketing Environment and Competitor
Analysis
• SWOT analysis
• PEST analysis
• Five forces analysis
SWOT analysis
• Strengths (internal)
• Weaknesses (internal)
• Opportunities (external)
• Threats (external)
INTERNAL
PAST FOCUS
EXTERNAL
FUTURE ORIENTED
PEST analysis
• Political factors
• Economic factors
• Socio-cultural factors
• Technological factors
The Model
Political/legal
• Monopolies legislation
• Environmental protection laws
• Taxation policy
• Employment laws
• Government policy
• Legislation
• Others?
Economic Factors
• Interest Rates
• Inflation
• Employment
• Disposable income
• Business cycles
• Energy availability and cost
• Others?
Sociocultural factors
• Religion
• Demographics
• Distribution of income
• Social mobility
• Lifestyle changes
• Consumerism
• Levels of education
• Others?
Technological
• New discoveries and innovations
• Speed of technology transfer
• Rates of obsolescence
• Internet
• Information technology
• Others?
Five forces analysis
Potential
entrants As Suggested by
Andrew Grove
Threat of Ex-CEO Intel Corporation
entrants Complementors
“Only The Paranoid Survive”
Suppliers COMPETITIVE Buyers

RIVALRY
Bargaining Bargaining
power power
Threat of
substitutes
Substitutes
Source: Adapted from M. E. Porter,
Competitive Strategy, Free Press,
1980, p. 4.
Five Forces Analysis: Key
Questions and Implications
• What are the key forces at work in the competitive
environment?
• Are there underlying forces driving competitive
forces?
• Will competitive forces change?
• What are the strengths and weaknesses of
competitors in relation to the competitive forces?
• Can competitive strategy influence competitive forces
(eg by building barriers to entry or reducing
competitive rivalry)?
The MODEL
Volume Vs. Margin Analysis
High Normal Profits Superprofits

Margins
Low Subnormal Profits Normal Profits
Low High
Volume
The threat of entry.
• Economies of scale e.g. the benefits associated with bulk purchasing.
• The high cost of entry e.g. how much will it cost for the latest technology?
• Ease of access to distribution channels e.g. Do our competitors have the
distribution channels sewn up?
• Cost advantages not related to the size of the company e.g. personal
contacts or knowledge that larger companies do not own or learning curve
effects.
• Will competitors retaliate?
• Government action e.g. will new laws be introduced that will weaken our
competitive position?
• How important is differentiation? e.g. The Champagne brand cannot be
copied. This desensitises the influence of the environment.
The power of buyers
• This is high where there a few, large players in a market e.g.

the large grocery chains.
• If there are a large number of undifferentiated, small
suppliers e.g. small farming businesses supplying the large
grocery chains.
• The cost of switching between suppliers is low e.g. from one
fleet supplier of trucks to another.
The power of suppliers
• The power of suppliers tends to be a reversal of the power of
buyers.
• Where the switching costs are high e.g. Switching from one
software supplier to another.
• Power is high where the brand is powerful e.g. Cadillac, Pizza
Hut, Microsoft.
• There is a possibility of the supplier integrating forward e.g.
Brewers buying bars.
• Customers are fragmented (not in clusters) so that they have
little bargaining power e.g. Gas/Petrol stations in remote places.
The threat of substitutes
• Where there is product-for-product substitution
e.g. email for fax Where there is substitution of
need e.g. better toothpaste reduces the need for
dentists.
• Where there is generic substitution (competing for
the currency in your pocket) e.g. Video suppliers
compete with travel companies.
• We could always do without e.g. cigarettes.
Competitive Rivalry
• This is most likely to be high where entry is

likely; there is the threat of substitute products,
and suppliers and buyers in the market attempt to
control. This is why it is always seen in the center
of the diagram.
Consumer Behaviour
Descriptive Model prof.Srini.R.Srinivasan-KJSIMSR 69
Buyer Behaviour
• Dominant Family Purchase - Cozenza 1985
• Demographic Factors
• The Consumer Buying Process
• Maslow’s hierarchy of needs
• UK socioeconomic classification scheme
• Types of buyer behaviour
• The Buying Decision Process
• Organisational Buyer Behaviour
Dominant Family Purchase - Cozenza 1985
PRODUCT DOMINANT TYPICAL

DECISION DECISION
MAKER
Women’s casual Wife Price, style
clothing
Vacations Syncratic (both) Whether to go, where
Men’s casual clothing Husband Type, price, style
Life insurance Husband Company, coverage
Homeowner’s Husband Company, coverage

insurance
Household appliances Wife Style, brand, price
Demographic Factors
• Age
• Stage in family life cycle
• Occupation
• Economic circumstances
• Lifestyle
• social influence variables
• family background
• reference groups
• roles and status
The Consumer Buying Process
Marketing Inputs
Purchase Decisions
Product
Product Choice
Price
Promotion
Consumer Location Choice
Brand Choice
Place Other Choices
Psychological Inputs
Culture
Attitude
Learning
Perception
Based on Cohen (1991)
Maslow’s Hierarchy of Needs
Self
Actualisation
Esteem
Social
Safety
Physiological
UK socioeconomic classification scheme
Class name Social status Occupation of head of % of
household population
A Upper middle Higher managerial, 3
administrative or professional
B Middle Intermediate managerial, 14
administrative or professional
C1 Lower middle Supervisors or clerical, junior
managerial, administrative or 27
professional
C2 Skilled working Skilled manual workers 25
D Working Semiskilled and unskilled 19

workers
E Those at lowest levels of Pensioners, widows, casual or 12
subsistence lower-grade workers
Types of buyer behaviour
• Complex buyer behaviour e.g. Intel
Pentium Processor
• Dissonance-reducing behaviour (brand
reduces after-sales discomfort)
• Habitual buying behaviour e.g. salt - little
difference
• variety seeking behaviour - significant
brand differences e.g soap powder
The Buying Decision Process
• recognition of the need e.g a new
PC
• choice of involvement level (time
and effort justified) e.g. two week
ends
• identification of alternatives e.g.
Dell, PC World
• evaluation of alternatives I.e. price,
customer service, software support,
printer/scanner package
• decision - choice made e.g Epsom
• action e.g buy Epsom model from
Comet
• post-purchase behaviour I.e. use,
breakdowns, etc
Consumer Spending Vs Age
Organisational Buyer Behaviour
‘The decision-making process by which
formal organisations establish the need for
purchased products and services, and
identify, evaluate, and choose among
alternative brands and suppliers’
Kotler and Armstrong 1989
Characteristics of organisational
buyer behaviour
• Organisation purpose - Goodyear Tyres
• Derived demand - follows cars and lorries
• Concentrated purchasing - stockholdings of rubber
• Direct dealings - large purchaser of basic rubber -
no intermediaries
• Specialist activities - learns about the product
• Multiple purchase influences - DMU - Decision
making unit
Strategic
Development
Strategic Development
• Product Life Cycle (Revisited in ‘Product’)
• Bowman’s Competitive Strategy Options
• New Product Development (NPD)
Initial Customer Segments
PLC Characteristics
Five stages of the PLC
• Product development - sales are zero, investment
costs are high
• Introduction - profits do not exist, heavy expense
of product introduction
• Growth - rapid market acceptance and increasing
profits
• Maturity - slowdown in sales growth. Profits
level-off. Increase outlay to compete
• Decline - sales fall-off and profits drop
• Descriptive Model
Demand Life Cycle
ed
Sales
Ne
T2
T1
Time
Sales
eed
N Product-Form
P3 Life Cycles
P2
P1
Time
Product Has Life Cycle….
• Limited life
• Pass through distinct stages
• Profits rise/fall with stages
• Each stage requires different marketing resource
strategies*
---------
Also financial, manufacturing, purchasing and human
resource.
Product Life Cycle Stages
Introduction: Slow sales, profits nil
Growth: Market acceptance, profits improve
Maturity: Sales Slowdown, Profits stabilize or decline
Decline: Sales/ profits show downward drift

Sales & Profits
Product Life Cycle
Sales
($$$)
Profit
Time
Other Shapes of the PLC
Sales Volume
Growth-slump-maturity
Sales Volume
Time
Cycle-recycle pattern
Time
Other Shapes of the PLC
Sales Volume
Scalloped Pattern
Time
Style, Fashion & Fad Life Cycles
Sales Volume
Style
Sales Volume
Time
Fashion
Time
Style, Fashion & Fad Life Cycles
Sales Volume
Fad
Time
Marketing Strategies Throughout The PLC
Introduction
Marketing Pioneers
• Advantages
• Risks
Growth
Sustaining Sales
• Improve Quality/Add features
• New models/Flanker Brands
• Lower prices to attract next layer of $$$ sensitive buyers
Marketing Strategies Throughout The PLC
Maturity Stage
Market Modification
Volume = # brand users x usage rate
# of brand users
• Convert non-users
• Enter new market segments
• Win competitors’ customers
Volume
• More frequent use
• More usage per occasion
• New & more varied uses
Marketing Strategies Throughout
The PLC
Maturity
Product Modification
• Quality & Feature Improvement
Marketing Mix Modification
Prices, Distribution, Advertising
Sales Promotion, Personal Selling, Services
Decline
• Increase Firm’s Investment, Maintain
• Decrease investment selectively
• Harvest
• Divest
PLC exercise
• The Ford Escort
• The Mini Cooper
• The Internet Phone
• Cadbury’s Fuse
• The Boeing 747
• The Millennium Dome
• KIT KAT
Family Life Cycle
Bowman’s Strategy Clock
Source: Based on the work of Cliff Bowman. See C.Bowman and D.Faulkner.
Competitive and Corporate Strategy, Irwin, 1996.
The Strategy Clock: Bowman’s Competitive Strategy Options
•1 Low price/low added value Likely to be segment specific
•2 Low price Risk of price war and low

• margins/need to be cost leader
•3 Hybrid Low cost base and reinvestment in

• low price and differentiation
•4 Differentiation
• (a) Without price premium Perceived added value by user,
• yielding market share benefits
• (b) With price premium Perceived added value sufficient to
• bear price premium
• 5 Focused differentiation Perceived added value to a
particular segment, warranting
price premium
• 6 Increased price/standard
Higher margins if competitors
do not value follow/risk of
losing market share
• 7 Increased price/low value

Only feasible in monopoly
situation
• 8 Low value/standard price

Loss of market share
Generic Strategies
Industry Generic Strategies
Cost
Generic
Force
Strategies And Five
Leadership
Ability to cut price in
Differentiation
Focusing develops
Focus
Entry Forces
retaliation
discourages potential Model
Customer loyalty can
discourage potential
core competencies
that can act as an
Barriers entrants. entrants. entry barrier.
Ability to offer lower Large buyers have Large buyers have
Buyer price to powerful less power to less power to
Power buyers. negotiate because of negotiate because of
Better able to pass on Suppliers have power
supplier price because of low
Supplier Better insulated from increases to volumes, but a
Power powerful suppliers. customers.
Customer's become differentiation-
Threat of attached to Specialized products
Can use low price to differentiating & core competency
defend against attributes, reducing protect against
Substitutes substitutes. threat of substitutes. substitutes.
Rivals cannot meet
Brand loyalty to keep differentiation-
Better ableprof.Srini.R.Srinivasan-KJSIMSR
to customers from focused customer
106
Rivalry compete on price. rivals. needs.
1. Cost Leadership
• The low cost leader in any market gains competitive
advantage from being able to many to produce at the lowest
cost. Factories are built and maintained, labor is recruited and
trained to deliver the lowest possible costs of production. ‘cost
advantage’ is the focus. Costs are shaved off every element of
the value chain. Products tend to be ‘no frills.’ However, low
cost does not always lead to low price. Producers could price
at competitive parity, exploiting the benefits of a bigger
margin than competitors. Some organization, such as Toyota,
are very good not only at producing high quality autos at a
low price, but have the brand and marketing skills to use a
premium pricing policy.
2. Differentiation
• Differentiated goods and services satisfy the needs of
customers through a sustainable competitive advantage. This
allows companies to desensitize prices and focus on value that
generates a comparatively higher price and a better margin. The
benefits of differentiation require producers to segment markets
in order to target goods and services at specific segments,
generating a higher than average price. For example, British
Airways differentiates its service. The differentiating
organization will incur additional costs in creating their
competitive advantage. These costs must be offset by the
increase in revenue generated by sales. Costs must be
recovered. There is also the chance that any differentiation
could be copied by competitors. Therefore there is always an
incentive to innovated and continuously improve.
3. Focus or Niche strategy
• The focus strategy is also known as a ‘niche’ strategy.
Where an organization can afford neither a wide scope cost
leadership nor a wide scope differentiation strategy, a niche
strategy could be more suitable. Here an organization
focuses effort and resources on a narrow, defined segment
of a market. Competitive advantage is generated
specifically for the niche. A niche strategy is often used by
smaller firms. A company could use either a cost focus or a
differentiation focus. With a cost focus a firm aims at being
the lowest cost producer in that niche or segment. With a
differentiation focus a firm creates competitive advantage
through differentiation within the niche or segment. There
are potentially problems with the niche approach. Small,
specialist niches could disappear in the long term. Cost
focus is unachievable with an industry depending upon
economies of scale e.g. telecommunications.
The danger of being ‘stuck in
the middle.’
• Make sure that you select one generic strategy. It is

argued that if you select one or more approaches, and
then fail to achieve them, that your organization gets
stuck in the middle without a competitive advantage.
New- Product Development
Process
• New product strategy
• Idea generation
• Idea screening
• Concept development and testing
• Marketing strategy
• Business analysis
• Product development
• Test Marketing
• Commercialisation
Product
Decisions
Products Decisions
• Product and Service Classification
System
• The Product Life Cycle
• Introduction to product matrices
• Boston Matrix (Growth/Share)
• Ansoff’s Matrix (Product Market)
Product and Service
Classification System
• Convenience goods - little effort, relatively
inexpensive
• Shopping goods - e.g ‘white goods’, DIY
equipment, more expensive, infrequent
• Speciality goods - extensive search e.g
Jewellery, gourmet food
• Unsought goods - e.g. double glazing,
• Industrial goods
• Installations - ‘speciality’ goods of
industrial markets - plant and machinery
• Accessories - maintenance and office
equipment
• Raw materials
• components
• Business to business e.g. consultants,
accountants
The Product Life Cycle
The Boston Matrix (Growth/Share Matrix)
Market Share
The Boston Matrix - Chocolate Bars
Market Share
High Maverick
FUSE Miniature Heroes
Market
Growth
KIT KAT TOPIC
Low MARS BAR BOUNTY
High Low
Ansoff’s Matrix (Product/Market Matrix)
Existing Markets New Markets

Products
Market Market Development

Existing
Penetration
New Products
Product Development Diversification
Ansoff’s Matrix (Product/Market Matrix)
Existing Markets New Markets

New Products Existing Products
E.g. Realignments E.g. Geographical

of the marketing expansion
mix
Same outlets and Diversification -

sales strategy related or unrelated
- new product
Market Penetration
• Here we market our existing products to our
existing customers. This means increasing
our revenue by, for example, promoting the
product, repositioning the brand, and so on.
However, the product is not altered and we
do not seek any new customers.
Risk Vs Control Graph of International
Market Penetration Strategies
MANUFACTURING
Control
Own Subsidiary
JOINT VENTURES
Acquisition
Strategic Alliances
Assembly
DIRECT EXPORTING
Distributors
Agents
Direct Marketing
Franchising
Mgmt. Controls
INDIRECT EXPORTING
Piggybacking
Trading Cos
Export Mgmt Cos
Domestic Purchasing
Risk
Market Development
• Here we market our existing product range in
a new market. This means that the product
remains the same, but it is marketed to a new
audience. Exporting the product, or
marketing it in a new region, are examples of
market development.
Product Development
• This is a new product to be marketed to our

existing customers. Here we develop and innovate
new product offerings to replace existing ones.
Such products are then marketed to our existing
customers. This often happens with the auto
markets where existing models are updated or
replaced and then marketed to existing customers.
Diversification
• This is where we market completely new products to new
customers. There are two types of diversification, namely
related and unrelated diversification. Related diversification
means that we remain in a market or industry with which
we are familiar. For example, a soup manufacturer
diversifies into cake manufacture (i.e. the food industry).
Unrelated diversification is where we have no previous
industry nor market experience. For example a soup
manufacturer invests in the rail business.
Products Decisions
• Product and Service Classification
System?
• The Product Life Cycle stages?
• Growth/Share?
• Product Market?
Pricing
Decisions
Pricing Decisions
• Pricing strategies
• Pricing exercise
• Ten ways to ‘increase’ prices
without increasing price -
Winkler
Quality
Low High
Economy Penetration
Strategy e.g. Telewest
Low e.g. Tesco
spaghetti
cable phones
Price
Skimming Premium
High e.g. New film or e.g. BA first
album class
Pricing strategies
• Premium pricing
• Uses a high price, but gives a good product/service
exchange e.g. Concorde, The Ritz Hotel
• Penetration pricing
• offers low price to gain market share - then
increases price
• e.g. France Telecom - to attract new corporate
clients (or Telewest cable)
• Economy pricing
• placed at ‘no frills’, low price
• e.g. Soups, spaghetti, beans - ‘economy’ brands
• Price skimming
• where prices are high - usually during introduction
• e.g new albums or films on release
• ultimately prices will reduce to the ‘parity’
• Psychological pricing
• to get a customer to respond on an emotional, rather than
rational basis
• .e.g 99p not £1.01 ‘price point perspective
• Product line pricing
• rationale of a product range
• e.g. MARS 32p, Four-pack 99p, Bite-size £1.29
• Pricing variations
• ‘off-peak’ pricing, early booking discounts,etc
• e.g Grundig offers a ‘cash back’ incentive for expensive goods
• Optional product-pricing
• e.g. optional extras - BMW famously under-
equipped
• Captive product pricing
• products that complement others
• e.g Gillette razors (low price) and blades (high
price)
• Product-bundle pricing
• sellers combine several products at the same price
• e.g software, books, CDs.
• Promotional pricing
• BOGOF e.g. toothpaste, soups, etc
• Geographical pricing
• different prices for customers in different parts of
the world
• e.g.Include shipping costs, or place on PLC
• Value pricing
• usually during difficult economic conditions
• e.g. Value menus at McDonalds
In deciding which pricing strategy to use must consider the

Elasticity of demand for the product
Ten ways to ‘increase’ prices
without increasing price - Winkler
• Revise the discount structure
• Change the minimum order size
• Charge for delivery and special services
• Invoice for repairs on serviced equipment
• Charge for engineering, installation
• Charge for overtime on rushed orders
• Collect interest on overdue accounts
• Produce less of the lower margin models in
the line
• Write penalty clauses into contracts
• Change the physical characteristics of the
product
Channel &
Distribution
Tactics
Channel and Distribution Tactics
• Bucklin’s definition of distribution
• Today’s system of exchange
• Channel intermediaries
• Six basic channel decisions
• Selection consideration
• Potential Influence Strategies - Frazier and Sheth
(1989)
• Frequencies of use of influence strategies - Frazier
and Summers (1984)
A channel of distribution
comprises a set of institutions
which perform all of the
activities utilised to move a
product and its title from
production to consumption
Bucklin - Theory of Distribution Channel Structure (1966)
Today’s system of exchange
Promotion
Contact
Negotiation
Transporting and storing

Producers
Users
Financing
Packaging
Money
Goods
Channel intermediaries -
Wholesalers
• Break down ‘bulk’
• buys from producers and sell small quantities to retailers
• Provides storage facilities
• reduces contact cost between producer and consumer
• Wholesaler takes some of the marketing responsibility
e.g sales force, promotions
Channel intermediaries - Agents
• Mainly used in international markets
• Commission agent - does not take title of
the goods. Secures orders.
• Stockist agent - hold ‘consignment’ stock
• Control is difficult due to cultural
differences
• Training, motivation, etc are expensive
Channel intermediaries - Retailer
• Much stronger personal relationship with the
consumer
• Hold a variety of products
• Offer consumers credit
• Promote and merchandise products
• Price the final product
• Build retailer ‘brand’ in the high street
Channel intermediaries - Internet
• Sell to a geographically disperse market
• Able to target and focus on specific segments
• Relatively low set-up costs
• Use of e-commerce technology (for payment,
shopping software, etc)
• Paradigm shift in commerce and consumption
Six basic channel decisions
• Direct or indirect channels
• Single or multiple channels
• Length of channel
• Types of intermediaries
• Number of intermediaries at each level
• Which intermediaries? Avoid intrachannel
conflict
Selection consideration
• Market segment - must know the specific segment and
target customer
• Changes during plc - different channels are exploited at
various stages of plc
• Producer-distributor fit - their policies, strategies and image
• Qualification assessment - experience and track record
must be established
• Distributor training and support
• The width and depth of distribution networks will also
decide other strategies like:
– How much of branding
– How large a production facility to employ
– Where to set up the production facility so as to be able to supply to
my target market
Potential Influence Strategies-
Frazier and Sheth (1989)
• Indirect influence strategies - information is
merely exchanged with channel member
personnel
• Direct unmediated strategies -
consequences of a poor response from the
market are stressed
• Reward and punishment strategies - given
to channel members and their firms
• Direct unweighted strategy or request -
producer’s wishes are communicated . No
consequences are applied or mentioned
• Direct mediated strategies - specific action
is requested and consequences of rejection
are stressed
– e.g.1 control of retail pricing
– e.g.2 minimum order size
– e.g.3 salesperson training
– e.g.4 physical layout of store
– e.g. 5 territorial and customer restrictions
Frequencies of use of Influence Strategies
M ean M ost Tied for Never

use frequently most used
used frequently
used
Information 49% 62% 6% 8%
exchange
Requests 27 13 7 11
Recommend 19 8 7 23
ations
Promises 15 4 9 37
Threats 10 1 5 53
Legalistic 6 0 3 59
pleas
Frazier and Summers (1984)
Promotion
Decisions
Promotions Decisions
• Elements in the communication process
• Promotions mix
• The promotions message
• Executions style
• Media choice?
• Promotional objectives
Elements in the Communication Process
Sender Encoding Message Decoding Receiver

Media
Noise
Feedback Response
• Sender - party sending the message
• Encoding - message in symbolic form
• Message - word, pictures and symbols
that the sender transmits
• Media - the communication channel
e.g radio
• Decoding - receiver assigns meaning to
symbols encoded by the sender
• Response - reaction of the receiver after
being exposed to the to the message
• Feedback - the part of the receiver’s
response after being communicated to the
sender
• Noise - unplanned static or distortion during
the communication process e.g. competitor
action (Creature Comforts?)
Promotions Mix
• Personal selling
CRM Asks to avoid
• Telemarketing traditional mass media
• Direct mail Which are only one way and
• Trade fairs and exhibitions Adopt dialogue media like:
• Commercial television •Telemarketing
• Newspapers and magazines •Personalised emails
• Radio •direct mail,
• Cinema •direct sales
• Point of sale displays
• Packaging
The Promotional Message
Grab ATTENTION
Excite INTEREST
Create DESIRE
Prompt ACTION
AIDA
Execution styles
• Slice of life e.g. OXO
• Lifestyle e.g. After Eight mints
• Fantasy e.g .Turkish Delight
• Mood or image e.g. Timotei shampoo
• Musical e.g .Gap
• Personality symbol e.g. Richard Branson
• Technical expertise e.g.Vorsprung durch
Technik - Audi
• Scientific evidence e.g. Whiskers
• Testimonial evidence e.g. Ian Botham
Media choice?
• Marketing objectives
• Definition of problem e.g falling awareness
• Evaluation of different tools
• choice of optimum mix of promotional
methods
• Integration into overall marketing
communication programme
Exercise - What beliefs and expectations do you have
about the following brands? How far are these due to
promotion as opposed to personal experience?
• Fairy liquid
• Persil washing powder
• Midland Bank
• Virgin Radio
• Nissan
• Tesco
Promotional objectives
• To support sales increases
• To encourage trial
• To create awareness
• To inform about a feature or benefit
• To remind
• To reassure
• To create an image
• To modify attitudes
Implementation
Implementation
• The implementation process
• An action checklist
• Total quality and marketing
• Managing the organisation/stakeholder interface
• Activities to establish and build customer
relationships
• Relationship marketing
• McKinsey 7-S framework
The Marketing Implementation Process
Marketing
Strategy
Tactical
Decisions
Internal Implementing the

External Factors
Factors Marketing Mix
Monitoring
Results
Adaptation of
strategy/tactics Berman and Evans 1985
Implementation problems
• Internal problems e.g change of
management
• External problems e.g. changing
competition
• Poor planning e.g. Hoover’s flight tickets
• Poor intelligence e.g. 1985 Coca-Cola
• Poor execution
Implementing a programme -
an action checklist
• Agree the implementation strategy
• Agree a timeframe
• Draw up detailed implementation plans
• Set up a team of stakeholders
• Establish good project management
• Personalise the case for change
• Ensure participation
• Create a sense of purpose and urgency to
tackle real problems which have prevented
progress in the past
• motivate
• be prepared for conflict
• Be willing to negotiate
• Anticipate stress
• Build skills
• Build in the capacity for learning
• Monitor and evaluate
Total Quality and Marketing
• Quality is what customers say it is.
• Juran and TQM
• zero defects
• right first time
• continuous improvement
• Statistical process control (SPC)
• New relationships with suppliers (JIT)
• Quality Assurance e.g BS EN ISO 9000
Managing the
organisation/stakeholder interface
• External and internal relationships
• Accountability of managers
• Marketer projects an image and style
• Ethical responsibilities towards consumers
• Social responsibility
• dangerous products e.g. cigarettes
• dishonest marketing and promotion
• the abuse of power
• the availability of information
Activities to establish and build
customer relationships
• Need for long term relationships
• UACCA - ‘expensive’ in promotional terms
• Build sales to existing customers
• Improving service quality
• Auditing the fulfilment of customer needs
• Cause a cultural change to a marketing
orientation - Marketing Myopia Levitt
(1960)
Relationship marketing
• The consistent application of up-to-date knowledge of
individual customers to product and service design . . . . In
order to develop a continuous and long-term relationship’
Cram
• Not mass marketing. Aimed at individual.
• Customer retention not attraction
• Long term, ongoing relationships
• Regular customer contact
• Spirit of trust
Mckinsey 7-S framework
• Strategy
• Structure
• Systems
• Share values
• Style
• Skills
• Staff
Segmentation,
Targeting,
Positioning
Segmentation
Product Market Segmentation
M1 M2 M3 M4
P4
P3
P2
P1
HALLS – (Institutions)
WALLS – (Government)
MALLS – (Retail)
INDIVIDUALS
Example
Types of Targetting
M1 M2 M3 M4 M1 M2 M3 M4 M1 M2 M3 M4
P4 P4 P4
P3 P3 P3
P2 P2 P2
P1 P1 P1
Full Market Coverage Product Specialisation Market Specialisation
M1 M2 M3 M4 M1 M2 M3 M4 M1 M2 M3 M4
P4 P4 P4
P3 P3 P3
P2 P2 P2
P1 P1 P1
Niche Marketing Multiple Niches

Definition
• Segmentation is essentially the identification of
subsets of buyers within a market who share
similar needs and who demonstrate similar buyer
behavior. The world is made up from billions of
buyers with their own sets of needs and behavior.
Segmentation aims to match groups of purchasers
with the same set of needs and buyer behavior.
Such a group is known as a 'segment'.
Characteristics of a “Good”
Segment
• Is the segment viable? Can we make a profit from it?
A minimum Level of sales value
• Must have a Minimum volume for me to set up a
minimum volume of production.
• Is the segment accessible? How easy is it for us to
get into the segment?
• Is the segment measurable? Can we obtain realistic
data to consider its potential
• The segment must be Homogeneous from within
and Heterogeneous with other segments
Basis for Segmentation
• by Geography - such as where in the world was
the product bought
• by Psychographics - such as lifestyle or beliefs
• by Socio-cultural factors - such as class
• by Demography - such as age, sex, and so on.
attitudes held
benefits sought
Targeting
• After the market has been separated into its
segments, the marketer will select a segment or
series of segments and 'target' it/them. Resources
and effort will be targeted at the segment. Its like
looking at a dart board or a shooting target. You
see that it has areas with different scores - these
are your segments. Aiming the dart or the bullet
at a specific scoring area is 'targeting'
POSITIONING
Positioning
Positioning is the development of a service

and a marketing mix to occupy a specific
place in the minds of customers within
target markets.
Positioning
• Positioning is all about 'perception'. As

perception differs from person to person, so
do the results of the positioning map e.g
what you perceive as quality, value for
money, etc, is different to my perception.
However, there will be similarities.
Reasons for Increased Importance of
Positioning
1. Perceptual processes of customers

They screen out most information
2. Greater competition
More organizations competing for share
of mind
3. Growing volume of commercial
messages
Advertising and promotion clutter
Steps Required for Effective
Positioning (the five Ds)
 Documenting
 Deciding
 Differentiating
 Designing
 Delivering
The 5 Ds of Positioning
 Documenting  Differentiation
What benefits are the Which competitors do
most important to your you want to appear
current and potential different from, and
customers? what are the factors
that you will use to
 Deciding make your organization
What image do you different from them?
want your current and
potential customers to
have of your
organization?
The 5 Ds of Positioning
 Designing
How will you
develop and
communicate these
differences?  Delivering
How will you make
good on what you’ve
promised, and how do
you make sure that
you have “delivered?”
Positioning Approaches:
Six Major Alternatives
 Specific product features

 Benefits, problem solution, or
needs
 Specific usage occasions
 User category
 Against another “product”
 “Product class” dissociation
Positioning Map
Things to think about.
• Ensuring that all the levels of your distribution channels project the
same “face” to your customer
• Guerilla marketing
MARKETING M
What is a Model
A model is simply a representation. A map, which represents the countryside, is a model, and so is a
graph which represents a company's sales over time. In this sense, all our perceptions of reality are
"models" since they are only perceptions and not reality itself. Our language is a model, since words
are only representations of objects or ideas. Similarly, our numbering system is a model by which
quantities of objects or ideas can be represented. These are trivial, but real, distinctions between
models and reality.
Models characterize either what currently exists in fact, or what might exist in the future. Marketing
models might depict such operations as an existing product distribution system; a consumer's value
structure, consumer preference modeling for product choices, or the effects of advertising on
consumer awareness, knowledge, attitudes, or intention to purchase.
The purpose of a model is typically to provide the manager with a guide for evaluating the effect of a
set of input variables. For example, a design engineer for General Motors might model the
aerodynamics of a different body design features to determine their impact on airflow and fuel
economy. Or a civil or hydraulics engineer designing a dam to hold back a reservoir 200 feet deep
might use a model to determine the concrete density and materials necessary to withstand the water
pressure at each depth level.
Model builders in the applied or physical sciences often use readily measurable and quantifiable input
data. But marketing model builders typically often have only very loose and imprecise inputs. These
inputs are often estimates of such unknowns as new product demand, advertising effectiveness,
advertising efficiency, optimal sales force allocation, results of a product positioning option, or
estimates of pricing strategy. prof.Srini.R.Srinivasan-KJSIMSR 192
Characteristics of a good Model
• 1. The model must be simple to use and understand,
• 2. It must be robust -- its results must not vary wildly
with small changes to the input data,
• 3. It must be easy to communicate with,
• 4. It must be easy to control,
• 5. It must be adaptable to other products or situations,
and
• 6. It must be complete on important details.
Model builders should measure the quality of their models against the criteria of validity
and utility. Validity refers to the accuracy of the model in describing and predicting
reality. A sales forecasting model which does not forecast sales with reasonable
accuracy is probably worse than no sales forecasting model at all.
Advantages of Modelling
• In spite of the complexities of model building, models offer significant benefits. Perhaps most
important is the sensitization process they help develop. Managers must gather and enter the
input data, then evaluate the model's outputs. They re-evaluate the input data, modify it, and
watch the effect on the model's outputs. By using models in this way, managers become
sensitized to recognize and evaluate the elements that are important to making an appropriate
decision.
• Modeling activities also force both the manager and the researcher to be critical (and
parsimonious) in evaluating the impact of variables that could explain the process. They begin
to question assumptions about supposedly influential variables, and begin to discover
important new variables.
• Finally, the manager is forced, as part of the variable selection process, to consider the
relationships between variables. He or she begins to be aware of interactions between them,
and they may begin to recognize that a symbiotic, synergistic, relationship exists between
many marketing activities and effects.
Types of Models
• Descriptive
eg: Revenue = Price - Costs
• Prescriptive
• Normative
Normative (or, control) models are the most difficult models to construct since these models not only describe and predict, but
provide direction about the proper course of action.
• Iconic
(which means "image") models are like reality in the sense that they look like reality.
Photographs, maps, architectural miniatures, and rough layouts of advertisements are all
iconic models.
• Symbolic
symbolic models do not look like reality, but emulate reality in other ways. They include either (a)
verbal, (b) schematic, or (c) mathematical forms that describe a specific
process
DEVELOPING MARKETING MODELS
Marketing models, like all management science models, are

developed through either inductive or deductive
logic which leads to generalization about market
behavior. From these generalizations, sets of premises
or theories are developed. These lead to sets of
relationships which constitute marketing models.
CUSTOMER
RELATIONSHIP
MANAGEMENT
CRM
Basic Model of CRM
1. a database of customer activity, analyses of the database,
2. given the analyses, decisions about which customers to
target,
3. tools for targeting the customers,
4. how to build relationships with the targeted customers,
5. privacy issues, and
6. metrics for measuring the success of the CRM program.
7. Creating a Customer Database
Information needs for the database
• Transactions-complete purchase history with details (price
paid, SKU, delivery date).
• Customer Contacts-Touchpoints used by the customer
• Descriptive Information-for segmentation and other data

analysis purposes.
• Response to Marketing Stimuli-whether or not the customer

responded to a direct marketing initiative, a sales contact, or
any other direct contact.
• The data should also be represented
over time
•FMCG •Banks,
FREQUENCY OF INTERACTION •Retail
HIGH
Easy to develop
(with customers)
database
LOW
Hardest to develop
database
INDIRECT DIRECT
(through channel
Intermediaries)
NATURE OF INTERACTION
Limitations
• FMCG:
– Lack of systematic information
– Millions of customers
– Use of indirect means (intermediaries)
• Challenge is to create opportunities for customer
interaction

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Marketing Management

Ansoff's Matrix Segmentation

Product Internal Marketing

The Chartered Institute of Marketing

• Specific - Be precise about what you are going to achieve

• Which segment? How will we target the segment? How

The Chartered Institute of Marketing

• Specific - Be precise about what you are going to achieve

• Which segment? How will we target the segment? How

‘the systematic gathering, recording and

American Marketing Association

A well researched and considered answer to that question provides

Market research and marketing research are often confused.

Secondary (or desk) research uses data that has

American Marketing Association

Statistical Display Marketing

Suppliers COMPETITIVE Buyers

High Normal Profits Superprofits

Low Subnormal Profits Normal Profits

• This is high where there a few, large players in a market e.g.

• This is most likely to be high where entry is

PRODUCT DOMINANT TYPICAL

Men’s casual clothing Husband Type, price, style

Life insurance Husband Company, coverage

Homeowner’s Husband Company, coverage

Based on Cohen (1991)

D Working Semiskilled and unskilled 19

Kotler and Armstrong 1989

Introduction: Slow sales, profits nil

Growth: Market acceptance, profits improve

Maturity: Sales Slowdown, Profits stabilize or decline

Decline: Sales/ profits show downward drift

•1 Low price/low added value Likely to be segment specific

•2 Low price Risk of price war and low

•3 Hybrid Low cost base and reinvestment in

• 7 Increased price/low value

• 8 Low value/standard price

• Make sure that you select one generic strategy. It is

Existing Markets New Markets

Market Market Development

Product Development Diversification

Existing Markets New Markets

E.g. Realignments E.g. Geographical

Same outlets and Diversification -

• This is a new product to be marketed to our

In deciding which pricing strategy to use must consider the

Bucklin - Theory of Distribution Channel Structure (1966)

Transporting and storing

M ean M ost Tied for Never

Sender Encoding Message Decoding Receiver

Internal Implementing the

Full Market Coverage Product Specialisation Market Specialisation

Niche Marketing Multiple Niches

Positioning is the development of a service

• Positioning is all about 'perception'. As

1. Perceptual processes of customers

 Specific product features

Marketing models, like all management science models, are

• Customer Contacts-Touchpoints used by the customer

• Descriptive Information-for segmentation and other data

• Response to Marketing Stimuli-whether or not the customer

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