BASICS OF MARKETING

INTRODUCTION

 Is not just advertising/publicity

 Marketing is a process that embraces all the
activities from, what to produce to after sales
 Regardless of your career interests, marketing
knowledge always comes in handy
DEFINITIONS

 Marketing is an organisational function and a set

of processes for creating, communicating, and
delivering value to customers and for managing
customer relationships in ways that benefit the
organisation and its stake holders- The American
Marketing Association
 Marketing is a societal process by which
individuals and groups obtain what they need
and want through creating, offering, and freely
exchanging products and services of value with
others- Philip Kotler
MARKETING DEFINITIONS:
TWO PERSPECTIVES

Micro Marketing Macro marketing

The performance of
activities that seek to A social process that
accomplish an directs an economy’s flow
organization’s objectives of goods and services to
by anticipating customer effectively match supply
needs and directing the and demand and to meet
flow of need-satisfying society’s objectives.
goods and services.
ROLE OF MARKETING
 Marketing co-exists in companies as an equal partner
with other functional areas like Operations and
Finance or Accounting
 In many organisations, Marketing personnel are the
‘natural’ future leaders (P&G, other consumer goods
marketers)
 Some companies are naturally attuned to having
Finance Experts (most banks, investment companies)
 Discussion: Is Marketing less important in such companies?
‘More than half the polled executives at 250 corporations ranked
Marketing as the most important element of strategy’ - Yankelovitch,
Skelly and White Survey, 1995
‘The fastest way up the corporate ladder is through the Marketing
Department’ - Economist Survey, 1997
CORE MARKETING CONCEPTS…
1. Needs, Wants, and Demands
2. Products and Services (Market Offerings)
3. Value and Satisfaction
4. Exchange and Transactions
5. Markets
COMPANY ORIENTATION TOWARDS
MARKET PLACE
The ‘business philosophy’ has evolved, so
has the role of marketing…customer
satisfaction is now at the core of most
successful corporations
 Marketing has been evolving since before the
Industrial Revolution (IR)
 There are five stages, or major shifts, in
marketing philosophy (next slide)
 This evolution has been from selling surplus
goods produced by cottage industries to the
current customer-centric view of producing,
marketing and selling goods and services
 Production Era
 Product Era

 Selling Era

 Marketing Era

 Societal Marketing Era

PRODUCTION CONCEPT
 Used to expand the market
 Widely available and inexpensive products

 Mass distribution

 High production efficiency

 Low costs

This concept holds that consumers will prefer

products that are widely available and inexpensive
THE PRODUCT CONCEPT
 Quality features
 Better performance

 Improvements over time

 Innovation

 “Better-mousetrap” fallacy

 Proper pricing

 Proper distribution

This concept holds that consumers will prefer

products that offer the most quality, performance,
or innovative features.
 THE SELLING CONCEPT
 Consumers if left alone wouldn't buy enough
products from businesses.
CUSTOMER IS KING!!
The Societal Marketing Concept
MARKETING ENVIRONMENT
CONCEPT
 Forces inside and outside the firm that affect the
operation and decision making of marketing and
related functional areas of the business.
INTERNAL ENVIRONMENT
 Four P’s and Others

•Man
•Product •Machine
•Price •Money
•Place •Material
•Promotion •Management
EXTERNAL ENVIRONMENT
 Micro/ Task Operating Environment – Factors that are
immediately involved in producing, distributing and promoting
offering (relatively controllable)
 Macro/Broad Environment – Factors on which organization has
little or no control at all
Micro
Macro
Environment
Environment

• Suppliers • Demographic
• Customers • Economic
• Intermediaries • Political
• Competitors • Legal
• Public • Technological
• Socio-cultural
• Natural
• Global
 Demographic- Population age, size, education, employment,
income etc.
 Economic- Business cycles, inflation, price level, income
distribution in a country, purchasing power, policies etc.
 Political- orientation, favourable/unfavourable, stability
 Legal- laws to protect companies, customers and society:
Companies act, Consumer Protection act, Factories act,
Competition act etc.
 Technological- accelerating pace of change, opportunities
for innovation
 Socio-cultural- tastes and preferences, values, attitudes,
aspirations
 Natural- shortage of raw materials, increased energy costs,
anti pollution issues, government approach
 Global- international policies, regulations, trade relations,
recession, depression etc.
MARKETING ENVIRONMENT SCANNING
 The process of gathering, filtering and analyzing
information relating to the marketing
environment.
 Involved in the process are the task of monitoring
the changes taking place in the environment and
forecasting the future position in respect of each
of the factors.
 The analysis spots the opportunities and threats
in the environment, and pinpoints the ones that
are specifically relevant to the firm
 Marketing Information System: people, equipment,
and procedures to gather, sort, analyze, evaluate, and
distribute needed timely and accurate information to
marketing decision makers
 Developed from internal company records (results
data), marketing intelligence (happenings data)
activities, and marketing research
- order to payment cycle, sales information systems,
databases, data warehousing and data mining
- marketing intelligence system is a set of procedures,
and sources managers use to obtain information
about everyday developments in the marketing
environment (books, news papers, trade publications,
customers, suppliers, distributors, other company
managers)
 Steps to improve marketing intelligence of a
company:
 Train and motivate the sales force to stop and
report new developments
 Motivate distributors, retailers, and other
intermediaries
 Network externally

 Set up a customer advisory panel

 Take advantage of government data sources

 Purchase information from outside

 Use online customer feedbacks

POPULAR TECHNIQUES OF SCANNING
SWOT: EXAMPLE
PEST/PESTLE ANALYSIS: EXAMPLE PHARMA
PORTER’S FIVE FORCES: EXAMPLE
MARKETING RESEARCH
 The systematic design, collection, analysis and
reporting of data and findings relevant to a
specific marketing situation facing the company.
 Defining what to be researched and why it should
be?
 Research plan- data sources, research
approaches, research instruments, sampling
plan, contact methods
 Data collection

 Analysing data

 Present findings

 Decision to use the results, reject, or order

further research (Marketing Decision Support
System- data, systems, tools and techniques with
supporting software and hardware)
UNDERSTANDING THE CONSUMER MARKETS
 Factors Affecting Consumer Behaviour
 The Buying Decision Process

 Buyer Involvement
CONSUMER BEHAVIOUR
 Consumer behaviour is the study of how
consumers select, buy, use, and dispose of goods,
services, ideas, or experiences to satisfy their
needs and wants.
 CONSUMER BUYING PROCESS

Problem
recognition

Information
search

Evaluation of
alternatives

Purchase
decision

Post purchase
behaviour
INFORMATION SEARCH
• Sources, Successive sets involved in decision making

Total
Set Aware-
ness Consid-
Set eration
Set Choice
Set Decision
STEPS BETWEEN EVALUATION OF
ALTERNATIVES AND A PURCHASE DECISION

Evaluation
of
alternatives

Attitude
of others

Purchase Purchase
intention decision

Unanticipated
situational
factors
 FOUR TYPES OF BUYING BEHAVIOR

High Low
Involvement Involvement
Complex Variety-
Significant Buying Seeking
differences Behavior(CARS) Behavior (COOKIES)
between
brands
Few Dissonance- Habitual
differences Reducing Buying Buying
between Behavior(FURNITURE) Behavior (SALT)
brands
ANALYZING BUSINESS MARKETS

Concept: All the organizations that buy goods and

services to use in the production of other products
and services that are sold, rented, or supplied to
others are studied under this head.

Organisational Buying: 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.
CHARACTERISTICS OF BUSINESS MARKETS

•Fewer, large buyers

•Close supplier-customer relationship
•Professional purchasing
•Several buying influences
•Multiple sales calls
•Derived demand
•Inelastic demand
•Fluctuating demand
•Geographically concentrated buyers
•Direct purchasing
BUYING SITUATIONS

Straight Rebuy
Modified Rebuy
New Task

SYSTEMS BUYING

Preferring a total solution to a problem from one

seller (turnkey)
PARTICIPANTS IN THE BUSINESS BUYING
PROCESS: THE BUYING CENTER

Users

Initiators Influencers

Gatekeepers

Buyers Deciders

Approvers
THE PURCHASING/PROCUREMENT PROCESS

TYPES OF PURCHASING PROCESSES

•Routine products( low cost and no risk- office
supplies)
•Leverage products(high value and no risk-engine
pistons)
•Strategic products(high value and high risk-
mainframe computers)
•Bottleneck products(low value and some risk-
spare parts)
STAGES IN THE BUSINESS BUYING PROCESS

Problem Recognition
Need Recognition
General Need Description
and Product Specification
Information
Search &
Evaluation Supplier Search

Proposal Solicitation

Supplier Selection
Purchase
Order Routine Specification
Post Purchase
Performance Review
IDENTIFYING MARKET SEGMENTS AND TARGETS

 Markets are not homogenous

 Company needs to identify which market segments
it can serve effectively
 Marketers sometimes overlook some potentially
more lucrative segments
 Mass Marketing
 LEVELS OF MARKET SEGMENTATION
Segment Marketing: A group of customers who share a similar set of
needs and wants. Markets can be carved by identifying preference
segments

(a) Homogeneous (b) Diffused (c) Clustered

preferences preferences preferences

Creaminess
Creaminess

Creaminess

Sweetness Sweetness Sweetness

Niche Marketing: Niche a more narrowly defined customer group
seeking a distinctive mix of benefits

Local Marketing/Grassroots Marketing: Marketing activities

concentrate on getting as close and personally relevant to
individuals customers as possible

Customerisation: Ultimate level of segmentation leads to

“segments of one,” customised marketing or “one-to-one marketing”
SEGMENTING CONSUMER MARKETS

Geographic
Demographic
Region, City or Metro Age, Gender,
Size, Density, Climate
Family size and Life cycle,
Race, Occupation, Income
...

Psychographic
Behavioral
Lifestyle or Personality Occasions, Benefits,
User status, or Attitudes,
Usage rate, Readiness,
Loyalty
BASES FOR SEGMENTING BUSINESS
MARKETS
 Demographic- industry, company size, location
 Operating Variables- technology, user/non user,
customer capabilities
 Purchasing Approaches- purchasing function
organisation, power structure, nature of existing
relationships, general purchase policies,
purchasing criteria
 Situational Factors- urgency, specific application,
size of order
 Personal Characteristics-buyer seller similarity,
attitude towards risk, loyalty
TARGETING

 Once the firm identifies segment bases, it has to decide

which ones to target
 A firm develops consumer profiles after establishing
bases of segmentation. These profiles identify potential
market segments by aggregating consumers with similar
characteristics and needs, and separating them from
consumers with different characteristics and needs
 Selecting the target market

 Requirements for successful segmentation

TARGET MARKET
A group of people or organizations for
which an organization designs,
implements, and maintains a marketing
mix intended to meet the needs of that
group, resulting in mutually satisfying
exchanges.
EFFECTIVE SEGMENTATION
• Size, purchasing power,
Measurable profiles of segments can
be measured.

Substantial • Segments must be large or

profitable enough to serve.

• Segments can be
Accessible effectively reached and
served.

•Segments must respond

Differential differently to different marketing
mix elements & actions.

• Effective programs can be

Actionable made to attract and
serve the segments.
 FIVE PATTERNS OF TARGET
MARKET SELECTION
Single-segment Selective Product
concentration specialization specialization
1 M
MM1 M22 M3
M3 M1 M2 M3 M1 M2 M3
P1 P1 P1
P1
P2 P2 P2
P2
P3 P3 P3
P3

Market Full market

specialization coverage
M1 M2 M3 M1 M2 M3
P1 P1
P2 P2
P3 P3
 ADDITIONAL SEGMENTATION
CONSIDERATIONS

 Segment-by-Segment Invasion Plans

 Updating Segmentation Schemes

 Ethical Choice of Market Targets

 SEGMENT-BY-SEGMENT INVASION PLAN
Customer Groups
Airlines Railroads Goods Transport
Product Varieties

Large
computers

Mid-size
computers

Personal
computers

Company A Company B Company C

POSITIONING

Positioning is the act of designing the

company’s offering and image to occupy a
distinctive place in the target market’s mind.
The place a product occupies in consumers
mind relative to competing products
•Develop positioning for target segments
•Develop a marketing mix for each segment
FEW RELATED CONCEPTS

= Competitive frame of reference (category

membership)
= Points of parity
= Points of difference
DIFFERENTIATION STRATEGIES

-Product (form, features,

performance etc.)
-Personnel (better trained people)
-Channel (design their distribution
channel’s coverage, expertise,
performance)
-Image (the way the public
perceives the company or its
products)
 PRODUCT LIFE CYCLE
Sales & Profits

Introduction Growth Maturity Decline

Time
 FOUR INTRODUCTORY MARKETING
STRATEGIES

Promotion
High Low

Rapid- Slow-
High skimming skimming
strategy strategy
Price
Rapid- Slow-
Low penetration penetration
strategy strategy
MARKETING STRATEGIES: GROWTH STAGE
 Improve product quality and add new product
features and styling
 Add new models and flanker products

 Enter new market segments

 Increase distribution coverage (new channels)

 Product awareness to product preference adds

 Lower prices to attract next layer of price-

sensitive buyers
STRATEGIES FOR THE MATURITY STAGE
 Market Modification (no of brand users, usage
rate)
 Product Modification (quality, feature, style
improvement)
 Marketing-Mix Modification (Prices,
Distribution, Advertising, Sales Promotion,
Personal Selling and Services)
STRATEGIES FOR THE DECLINE STAGE
 Increase investment to strengthen competitive
position
 Selective niches (and dropping unprofitable
customer groups)
 Harvesting (gradually reducing various costs
without letting consumers know)
 Divesting
FOUR P’S OF MARKETING
 Product
Product is anything that can be offered to
market that might satisfy a need or a want.

 Product that can be marketed include –

- Physical goods. - Services.
- Persons. - Places.
- Organizations. - Ideas.
 FIVE LEVELS OF PRODUCT
(Customer Value Hierarchy)
 Core benefit – fundamental service or benefit that the customer is
really buying.
 Generic product – basic version of the product.
 Expected product – a set of attributes & conditions that buyers
normally expect & agree to.
 Augmented product – additional services & benefits that
distinguish the company offer from competitors.
 Packaging – services – advertising – customer advice –
financing – delivery arrangement – warehousing & other
things that people value.
 Potential product – possible evolution.
PRODUCT CLASSIFICATION
 Durability & Tangibility: Nondurable, Durable &
Services
 Consumer Goods Classification: Convenience
( staples, impulse, emergency), Shopping goods,
Specialty, Unsought
 Industrial Goods Classification: Materials &
Parts, Capital items, Supplies and Business
Services
PRODUCT DIFFERENTIATION

Confor-
Fea- Perfor-
Form Quality mance
tures mance
Quality

Dura- Relia- Repair-

Style Design
bility bility ability
PRODUCT MIX
 A product mix (portfolio/assortment) is a set of all the
products and items that a particular seller offers for
the sale to buyers.
 A product line is a number of products grouped
together based on similar characteristics
 Product Line Length refers to the number of different
items in a product line.
 Width/Breadth: It indicates the total number of
product lines a company carries.
 Depth: It refers to the number of varieties in forms of
sizes, colors, and models offered within each product
line.
 Consistency: It refers to degree to which different
product lines are related in one or other ways.
(production requirements, uses of products,
distribution channels, or some other ways)
PRODUCT LINE
 Line stretching when a company lengthens its
product line beyond its current range
 Down market stretch is introducing a lower
priced product
 Up market stretch is introducing an upper priced
product
 Two way stretch is stretching the line in both
sides
 Line filling is increasing length by adding more
items within the present range
 Line modernisation, featuring and pruning
PRODUCT MIX
NEW PRODUCT DEVELOPMENT

Marketing
Strategy Business
Development Analysis

Concept Product
Development Development
and Testing

Idea Market
Screening Testing

Idea
Generation Commercialization
IDEA GENERATION & SCREENING

-Interaction with others

Creativity techniques (attribute listing, forced
relationships, morphological analysis, reverse
assumption, new contexts, mind-mapping)

-Go & Drop Errors (idea manager and idea

committee: criteria like meeting needs,
superior value, required capital and know
how, sales etc.)
CONCEPT DEVELOPMENT & TESTING

1. Develop Product Ideas into

Alternative Product Concepts

2. Concept Testing - Test the Product

Concepts with Groups of Target Customers
(communicability, need level, gap level,
perceived value, purchase intention)

3. Choose the Best One

MARKETING STRATEGY

1. Target market’s size, structure and

behaviour, the planned product positioning,
and the sales, market share and profit goals
sought in the initial years

2. Planned price, distribution strategy and

marketing budget for the first year

3. Long run sales and profit goals over time

BUSINESS ANALYSIS

1. Estimating total sales

2. Estimating costs (manufacturing, R&D,
marketing) and profits (Break even; Risk
analysis)
PRODUCT DEVELOPMENT

1. Physical prototypes
2. Customer tests (within the firm (alpha
testing) and beta testing with customers)
CONSUMER-GOODS MARKET TESTING

Simulated Controlled
Test Market Test Market
A few stores (few geographical
Test in a simulated locations)
that have
shopping environment agreed to carry new
to a sample of products for a fee.
consumers.
Sales- Standard
Wave
Research Test Market
Test offering trail to
a sample of
Full marketing campaign
consumers in in a small number of
successive representative cities.
Periods (at slightly
reduced prices).
COMMERCIALIZATION

Whom

How
When Product
(first, parallel, late) Price
Place
Promotion

Where
PACKAGING & LABELING
Packaging embraces all the activities of designing and
producing the container for a product (physical
appearance)
Packaging includes three levels:
•The primary package
•The secondary package
•The shipping/tetra package
Many factors have influenced the increased use of
packaging (self-service, company image, innovation
opportunity).
Consumers notice (identify) products because of
their package (marketing)
Convenience and Information giver (how to use,
transport, recycle, or dispose the package or
product)
Physical Protection (transportation and handling)
Assist in usage
Developing an effective package:
•Determine the packaging concept
•Determine key package elements
•Testing:
Engineering tests
Visual tests
Dealer tests
Consumer tests
Label is a carrier of information about the product, to aid the
purchase decision or help improve the experience of using the
product. It can include:

•Care and use of the product

•Recipes or suggestions
•Ingredients or nutritional information
•Product guarantees
•Manufacturer name and address
•Weight statements
•Date of manufacture and expiry
•Warnings
•Recycle information
•Symbols can be used trademarks etc
Labeling functions:
•Identifies the product or brand
•May identify product grade
•May describe the product
•May promote the product
•Information provider (manufacturer, date of
manufacturing and expiry, ingredients, how to use and
handling)
Legal restrictions impact packaging for many products.
BRANDING DECISIONS

Brand:
“A name, term, sign, symbol, or design, or a
combination of these, intended to identify the goods
or services of one seller or group of sellers and to
differentiate them from the competition.” – AMA
Brands are a means of differentiating a company’s products and
services from those of its competitors.
“If Coca-Cola were to lose all of its production-related assets
in a disaster, the company would survive. By contrast, if all
consumers were to have a sudden lapse of memory and forget
everything related to Coca-Cola the company would go out of
business” – Coca Cola Company

“…it is not factories that make profits, but relationships with

customers, and it is company and brand names which secure
those relationships” – Mc Donald’s
BENEFITS FOR THE SELLER

 Seller’s brand name and trademark provide legal

protection of unique product features.
 Branding gives the seller the opportunity to

attract a loyal and profitable set of customers.

 Branding helps the seller segment markets.

 Strong brands help build corporate image,

making it easier to launch new brands and gain
acceptance by distributors and consumers.
BENEFITS FOR THE BUYER

 Help buyers identify the product that they

like/dislike.
 Identify marketer
 Helps reduce the time needed for purchase.
 Helps buyers evaluate quality of products especially
if unable to judge a products characteristics.
 Helps reduce buyers perceived risk of purchase.
 Buyer may derive a psychological reward from
owning the brand, Rolex or Mercedes.
VARIOUS TERMS
“Brand equity” refers to the value of a brand. Brand equity
is based on the extent to which the brand has high loyalty,
name awareness, perceived quality and strong product
associations. Brand equity is an intangible asset that has
psychological and financial value to the firm.

“Brand image” refers to the set of beliefs that customers

hold about a particular brand. These are important to
develop well since a negative brand image can be very
difficult to shake off.

Brand Reinforcement, Brand Revitalisation, Brand Crisis

BRANDING STRATEGY

“Brand extension” refers to the use of a successful brand name to

launch a new product in a new market.

Sub Brand, Parent Brand, Family Brand, Multi Brands (P&G,

Unilever)

Brand Mix, Line Extension, Category Extension

BRANDING DECISION

Individual Using different brand names for different

Brand products (P&G: Pantene, Vicks, Tide)

Family Marketing several different

products under the same
Brand brand name (Tata: Salt, Tea, Automobiles).
MANUFACTURER’S V/S PRIVATE BRANDS

Manufacturers’ The brand name of a manufacturer.

Brand

Private A brand name owned by a wholesaler or a

retailer. Also known as a private label or
Brand store brand.
 Key Issues  Advantages of
branding:
 To brand or not  Trademark protection
 Brand sponsor
 Aids in segmentation
 Brand name
 Enhances corporate image
 Brand strategy

 Brand repositioning  Branded goods are desired

by retailers and
distributors
  Options include:
Key Issues
 Manufacturer
(national) brand
 To brand or not
 Distributor (reseller,
 Brand sponsor
store, house, private
 Brand name brand)
 Brand strategy  Licensing the
 Brand repositioning brand name
 Co branding (HP
with Intel; Amazon
with Axis bank)
 Key Issues  Strong brand names:
 Suggest benefits
 Suggest product qualities
 To brand or not
 Are easy to say, recognize,
 Brand sponsor and remember
 Brand name  Are distinctive
 Brand strategy
 Should not carry poor
meanings in other languages
 Brand repositioning
 Key Issues  Individual/Family
 Brand extensions
 To brand or not • Sub brand, Parent brand
 Brand sponsor  Co-branding
 Brand name

 Brand strategy

 Brand repositioning
 Key Issues  Audit a brand’s strengths
and weaknesses.
 To brand or not  Changes in preferences
or the presence of a new
 Brand sponsor
competitor may indicate
 Brand name a need for brand
 Brand strategy repositioning.
 Brand repositioning
PRICING DECISIONS

The only element of marketing

mix that produces revenue
 Setting Pricing Policy
1. Selecting the pricing
objective

2. Determining demand

3. Estimating costs

4. Analyzing competitors’
costs, prices, and offers

5. Selecting a pricing
method

6. Selecting final price

•SELECTING PRICE OBJECTIVES
Survival
Maximum current profit
Maximum market share
Maximum market skimming
Product-Quality leadership
Others

•DETERMINING DEMAND
Demand curves
Elasticity of Demand
 Types of Costs
Fixed Costs Variable Costs
(Overhead)
Costs that don’t Costs that do vary
vary with sales or directly with the
production levels. level of production.

Executive Salaries Raw materials

Rent

Total Costs
Sum of the Fixed and Variable Costs for a Given
Level of Production
•PRICING METHODS

Cost plus Pricing

Markup Pricing (on selling price)
Target-Return Pricing (Total costs + (Desired %
ROI investment)/ Total (estimated) sales in units)
Break even Pricing
Perceived value Pricing
Going-Rate Pricing (competitors)
Auction-Type Pricing
•ADAPTING THE PRICE

Geographical Pricing
Price Discounts and Allowances
Promotional Pricing
Loss Leader
Special Event
Cash Rebates
Psychological Discounting

$2.19 $1.99
DISCRIMINATORY PRICING

Customer Segment

Product-form

Location

Time
CHANNELS OF DISTRIBUTION

Marketing channels or intermediaries/trade

channels/distribution channels are sets of
interdependent organisations involved in the
process of making a product or service available for
use or consumption.

Merchants: Wholesalers, Retailers

Agents: Manufacturer’s representative, brokers
Facilitators: Transportation Companies,
Warehouses, Banks
 DISTRIBUTION FUNCTIONS
(time, place, possession gaps)

Communication

Transfer Information

Payments Negotiation

Physical
Distribution Ordering

Risk Taking Financing

 LEVELS OF DISTRIBUTION

0-level channel
Manufacturer Consumer

1-level channel
Manufacturer Retailer  Consumer

2-level channel
Mfg  Wholesaler Retailer  Consumer
3-level channel
Mfg  Wholesaler  Jobber  Retailer  Consumer
 INDUSTRIAL MARKETING CHANNELS
Manufacturer

Consumer
Industrial
distributors

Manufacturer’s
representative

Manufacturer’s
sales branch
Channel Management Decisions

Selecting

FEEDBACK
Training

Motivating

Evaluating
 Related Terms
•Exclusive distribution
•Selective distribution
•Intensive distribution
•Vertical marketing systems
•Horizontal marketing systems
PROMOTION DECISIONS (MARCOM)

The process by which the marketer

develops and presents an appropriate set
of communications stimuli to a target
audience with an intention of eliciting a
desired set of responses

In order to inform, persuade and remind

targeted customers, marketers rely on one
or more of the elements of the
communication mix
USAGE OF MASS COMMUNICATION TOOLS

Advertising
Sales Promotion
Personal Selling
Publicity
Public Relations
Direct Marketing
Word of Mouth
ADVERTISING

•Any paid form of non-personal presentation and

promotion of ideas, goods, or services by an
identified sponsor.
•Decision on the five Ms: Mission, Money,
Message, Media, Measurement
 MANAGING ADVERTSING PROGRAM

Objectives Setting
Informative, Persuasive, Reminder, Reinforcement

Budget Decisions
PLC, Market Share, Competition, Frequency, Substitutability

Message Decisions Media Decisions

Generation, Selection, Social Responsibility Reach, Frequency, Impact, Media Types, Timing

Campaign Evaluation
MARCOM impact
(copy testing: consumer feedback/ad portfolio/
laboratory physiological tests ), Sales Impact
SALES PROMOTION

 A collection of incentive tools, designed to

stimulate quicker or greater purchase of
particular products or services by consumers
 Encourages product trial and purchase by adding
value to the product
 Use has grown dramatically over the last years at
the expense of traditional advertising
 Consumer Promotion
Consumer-Promotion Consumer-Promotion Tools
Objectives
Point-of-Purchase
Samples Displays
Entice Consumers to
Try a New Product Coupons Free Trials
Patronage
Lure Customers Away Rewards
From Competitors’ Products Cash Refunds
Hold & Reward Loyal Contests
Price Packs
Customers (toothbrush &
toothpaste) Sweepstakes
Consumer Relationship
Building Product
Games
Warranties
 TRADE PROMOTIONS
(AND SALES FORCE PROMOTION)

Promotion Tools
Objectives

Persuade Retailers or Price-Offs Displays

Wholesalers to Carry a Brand
Allowances
Give a Brand Shelf Space Push Money
Promote a Brand in Buy-Back
Advertising Guarantees Contests
Push a Brand to Consumers Free Goods
Specialty
Increase sales results Discounts Advertising
Items
BUSINESS-TO-BUSINESS PROMOTION

Business-Promotion
Objectives
Business-Promotion Tools

Generate Business Leads

Conventions
Stimulate Purchases
Trade Shows
Reward Customers

Motivate Salespeople Sales Contests

PERSONAL SELLING

Paid personal communication that informs customers and

persuades them to buy products
 Most adjustable to customer information needs

 Most precise (targeted) form of promotion methods

 Expensive element of promotion mix

PROCESS OF PERSONAL SELLING

Gaining Attention, Holding

Interest, Arousing Desire,
Obtaining Action (AIDA)
PUBLICITY
PUBLIC RELATIONS VS PUBLICITY

Publicity is just one aspect of PR

Concerned with company’s presence in the media.
Forms include news stories, articles, and event
information
Creates public attention and awareness around a brand
Motive is solely to gain attention
PR motive is to accomplish an organisation’s stated
goal by sending strategic messages to appropriate
audience in order to impact their knowledge, behaviours
or attitudes.
Building relationship and managing image is the prime
objective
In PR, publicity is viewed as a way to gain client-media
coverage in a cost-efficient manner.
PUBLIC RELATIONS

Web Site
Public News
Service
Activities

Speeches
Corporate
Identity
Materials

Special
Audiovisual Events
Materials Written
Materials
DIRECT MARKETING

When businesses address customers through a

multitude of channels including physical mail, e-mail,
telemarketing, SMS, and in person.
Easily track able
Examples: call this toll free number, links to
subscribe
WORD OF MOUTH (MARKETING)

Actively influenced by organisations seeding a

message in a network, rewarding regular
consumers to engage in WOM, employing WOM
agents.
WHY STUDY SERVICE MARKETING?
 Service sector contribution to GDP
 Service sector industries: construction, trade, hotels,
transport, restaurant, communication and storage,
social and personal services, community, insurance,
financing, business services, and real estate.
 Services marketing concepts and strategies developed
in response to the tremendous growth of service
industries
 Most of the new employment provided by services
 Strongest growth area for marketing
 Deregulation & Service Marketing
SERVICES

 Services include all economic activities whose

output is not a physical product or
construction, is generally consumed at the
time it is produced, and provides added value
in forms (such as convenience, amusement,
timeliness, comfort, or health) that are
essentially intangible.
DIFFERENCE BETWEEN GOODS &
SERVICES

GOODS SERVICES
Tangible Intangible
Standardised Heterogeneous
Production separate from Simultaneous production
consumption and consumption(Inseparable)
Non-perishable Perishable
Right of ownership No ownership
SERVICE MARKETING MIX
 Product
 Price

 Place

 Promotion

 People

 Physical Evidence

 Process

* Refer to: The Expanded Marketing Mix of Services

Source: Bernard H. Booms and Mary Jo Bitner
PEOPLE

 People represent the business

 The image they present can be important
 First contact often human – what is the lasting
image they provide to the customer?
 Extent of training and knowledge
of the product/service concerned
 Mission statement – how relevant?
 Do staff represent the desired culture
of the business?
PROCESS

 How do people consume services?

 What processes do they have to go
through to acquire the services?
 Where do they find the availability
of the service?
 Contact
 Reminders
 Registration
 Subscription
 Form filling
 Degree of technology
PHYSICAL EVIDENCE
 Theambience, mood or physical
presentation of the environment
 Smart/shabby?
 Trendy/retro/modern/old fashioned?
 Light/dark/bright/subdued?
 Romantic/chic/loud?
 Clean/dirty/unkempt/neat?
 Music?
 Smell?
CONSUMERS BEHAVIOR IN SERVICE
ENCOUNTER
 THE THREE STAGE MODEL

• Awareness of needs
Pre • Search of Information
Purchase • Evaluation of alternatives

Service • The moment of truth

Encounter • High Contact/Low Contact

• Evaluation of service
Post performance
Purchase • Future intentions
 • Unconscious mind, physical conditions,
external sources are triggers of need.
• Customers seek solutions to aroused needs
• Evoked set derived from past experiences

Pre and external sources

• Alternatives evaluated

Purchase • Understanding customer’s service

expectations
• Uncertainty about outcomes increases
perceived risks
• What risk reduction strategies can be used
by customers and service supplier
COMPONENTS OF CUSTOMER SERVICE
EXPECTATIONS (CSE)

 Desired Service Level: Wished-for level of service

quality that customer believes can and should be
delivered
 Adequate Service Level: accept without being
dissatisfied (minimum acceptable level)
 Predicted Service Level: Service level that
customer believes firm will actually deliver
 Zone of Tolerance: Range within which customers
are willing to accept variations in service
delivery/acceptable range of variations in service
delivery
(very difficult to be consistent at all service
points)
PERCEIVED RISKS
 Functional—unsatisfactory performance outcomes
 Financial—monetary loss, unexpected extra costs

 Temporal—wasted time, delays leading to problems

 Physical—personal injury, damage to possessions

 Psychological—fears and negative emotions

 Social—how others may think and react

 Sensory—unwanted impact on any of five senses

HOW MIGHT CONSUMERS HANDLE
PERCEIVED RISK?
 Seeking information
 Relying on good reputation
 Guarantees and warrantees
 Visiting service facilities
 Examining tangible cues
 Compare service offerings
RISK REDUCTION STRATEGIES BY SERVICE
SUPPLIERS
 Offering performance warranties
 Money back guarantees

 Preview of services through brochures, websites,

and videos
 Encouraging visits to service facilities

 Instituting visible safety procedures

 Training staff members

 Providing 24/7 customer service

 Delivering automated messages

 Online information about order delivery

FACTORS AFFECTING DECISION
MAKING
SERVICE DELIVERY: CUSTOMER ROLE
 Customers play a very vital role in successful delivery
of service as customers are often present in the place
where service is produced/delivered
 Customers in focus can themselves can influence
whether the delivered service is as per defined
specifications.
 Other customers who are present in the ‘Servicescape’
can also influence the service positively or
negatively.
 Other customer’s influence on perceptions of Service
Quality and effect on customer satisfaction.
 The level of participation of customers varies
from Service to Service.
 In “High level of participation.” Eg. B to B
projects like providing software solutions &
consultancies.
 In entertainment service very “Low level of
participation” is required. Service provider
provides the service & only the customer’s
presence is required to avail the service
 The servuction system: visible front stage and
invisible backstage (service operations and
service delivery)
SERVICE ENCOUNTER SUCCESS FACTORS
POST SERVICE STAGE
 Evaluation: expectations vs reality (Positive
Disconfirmation, Confirmation, Negative
Disconfimation)
 Future intentions (Satisfied/Not
Satisfied/Unsatisfied/Dissatisfied)
CUSTOMER DELIGHT: GOING BEYOND
SATISFACTION
 Research shows that delight is a function of three
components:
Unexpectedly high levels of performance
Arousal (e.g., surprise, excitement)
Positive affect (e.g., pleasure, joy, or happiness)

Is it possible for customers to be delighted by

very mundane services?
Strategic links exist between customer
satisfaction and corporate performance.
Getting feedback during service delivery help to
boost customer loyalty
SERVICE SEGMENTATION, TARGETING &
POSITIONING

 Service marketing recognizes that different group

of customers have different needs and might also
desire different core benefits from the same
service. Three stages are involved here:
 Market Segmentation: identifying similar groups
of customers (dividing the market into distinct
groups)
 Market Targeting: deciding which groups to aim
for
 Market Positioning: creating a concept to appeal
to the target market
 SEGMENTATION
(A COMPANY CANNOT BE ALL THINGS TO ALL PEOPLE)
DEFINING THE MARKET: COMPANY FOCUS
POSITIONING STRATEGIES
 Attribute positioning: oldest bank
 Benefit positioning: ATM
 Use/Application positioning: SBI Loan for
education
 User positioning: Tourists who are in a need of
Peace of Soul
 Competitor positioning: against a competitor
service firm
 Category positioning: Leader of a particular
category, Xerox
 Quality/Price positioning: High Price High
Standard, Taj Group of Hotels
PERCEPTUAL MAPS
 Positioning maps that help managers identify the
most critical attributes of their own and
competing services.
 Researchers first identify attributes that are
important to customers then measure how the
firm and its competitors are performing on each
attribute.
 The service aim searches for areas where services
are not available for some combination of
features, this is a business opportunity for them.
FUEL
EFFICIENCY
COMFORT
SERVICES DIFFERENTIATION

Ordering Customer
Installation
Ease Consulting

Miscellaneous
Services
Customer Maintenance
Delivery
Training & Repair
HOLISTIC MARKETING FOR SERVICES

Company

Internal External
Marketing Marketing

Employees Interactive Customers

Marketing
MANAGING SERVICE QUALITY
 Customer Expectations
 The Parasuraman, Zeithamal & Berry Model
1. Gap between consumer expectation and
management perception
2. Gap between management perception and
service-quality specification
3. Gap between service-quality specifications and
service delivery
4. Gap between service delivery and external
communications
5. Gap between perceived service and expected
service
 THE SERVQUAL MODEL: EXPLAINED
 Gap 1 –customer expectation and management
perception. e.g. : Patients may expect nurse
responsiveness while hospital may think that patients
want better food
 Gap 2-management perception and service quality
specification. e.g. : Management may perceive correctly
but unable to define how ‘fast’ should the nurses
attend to the patients
 Gap 3 – service quality specifications and service
delivery. e.g. : poorly trained , poorly motivated service
professionals , conflicting standards.
 Gap 4 – service delivery – external marketing
communications. e.g. : brochure shows a beautiful
room but patient arrives and finds a cheap shabby
room.
 Gap 5 – expected and perceived service. e.g. : customer
misperceives the service quality. Doctor may visit
frequently to show care but the patient may interpret
that something is wrong
 Determinants of Service Quality (Based on Gap
Model)
1. Reliability

2. Responsiveness

3. Assurance

4. Empathy

5. Tangibles

 21 item SERVQUAL Scale

 Zone of Tolerance
MANAGING SERVICE BRANDS
 Differentiating services
 Primary service package (low interest rates)
 Secondary service package (credit card, auto loans)

 Developing brand strategies for services

 Choosing brand elements (logo, symbol, slogans)
 Establishing image dimensions (expertise,
trustworthiness, likeability for employees)
 Devising brand strategy (brand portfolios- business
class and economy seats)
 Pre sale and Post sale services (Installation,
Machine Downtime/Complaints)
 The core service is the core set of benefits and
solutions delivered to customer. It should deliver
the consequences expected by the customer
justifying the associated real or nominal charges
(a hotel provides stay)
 Supplementary services (surrounding core) either
facilitate the use of the core service or enhance it
and also provide competitive advantage (payment
options, consultation, safe keeping)
 An elemental part of service strategy is to
determine the bundle of core and supplementary
services that constitutes a viable, competitive,
and compliant product in a target market.
DISTRIBUTION OF SERVICES
 The basic objective is to make services available
at the right time and at the right place and
accessible to consumers with ease and
convenience
 In a services context, we often don’t move
physical products
 Experiences, performances, and solutions are not
being physically shipped and stored
 More and more informational service
transactions are conducted through electronic
and not physical channels
THE FLOW MODEL OF DISTRIBUTION OF
SERVICES

 The three interrelated elements of distribution

are:
Information and Promotion flow: To get
customer interested in buying the service
Negotiation flow: To sell the right to use a
service
Product flow: To develop a network of local
sites
DISTRIBUTION OPTIONS FOR SERVICE
TRANSACTIONS

Educational Institutes,
Theaters, Beauty Care
Centers, Health Care
Centers

Postal,
Security,
House Painting

Telecom,
Credit Card,
Broadcasting
SERVICE LOCATION
 A service location is an important value for both
the company and the customers.
 Based on target market, degree of interaction
required and the required accessibility
 Substantial investments required and thus a
major decision
 Cost, productivity and access to labour are
important factors
FACTORS TO BE CONSIDERED
 Proximity: to the target market
 Image: should match the corporate image

 Convenience: transport, safety and security

 Accessibility to other services: water, electricity

 Competitive Advantage: aids in competitive

advantage
SERVICE PROVIDERS
 Service providers should be such that they are
able to manage service outlets efficiently and
provide quality services to customers
 Can be direct distribution or private channels or
both
 In case of middlemen, there are two marketers:
Service Originator/ Principal and
Distributor/Deliverer
 Three types of channels used-Franchisees;
Agents & Brokers; Electronic Channels
FRANCHISING
 Franchisor provides training, equipment, and support
marketing activities.
 Franchisees invest time and finance, and follow copy
and media guidelines of franchisor.
 Benefits
 Business expansion & revenue gains
 Knowledge of local markets
 Sharing financial risk & less investment burden
 Problems
 Loss of control over delivery system and how customers experience
actual service
 Effective quality control is difficult
 Quality inconsistency may affect company image
 Control over customer relationship by franchisee
 Maintaining & motivating franchisee
 Conflict between franchisees may arise especially as they gain
experience
AGENTS AND BROKERS
 Agents can negotiate on behalf of the service
principal
 Brokers bring together buyer and seller and
assist in negotiation.
 Benefits
 Low selling & distribution cost
 Specialized skills & knowledge
 Wider representation in the market
 Knowledge of local market
 Customer choice(known intermediary)
ELECTRONIC CHANNELS
 Online shopping market can have pure players (no upfront
store presence) & multi channel players(bricks and clicks-
conventional stores plus online channel)
 Do not require human to human interaction
 Television, Telephone, Internet
 Benefits
 Quality control
 Low cost
 Customer convenience
 Wide distribution
 Customer choice
 Problems
 No control on economic environment (connectivity, content surfing etc)
 Inability to customize
 Customer involvement
SERVICE RELATIONSHIP MARKETING
 From the focus on a single transaction profit to the
focus on long-term relationship with customers
 Over the years the consumer focus witnessed a major
shift from functional characteristics of the product to
additional benefits and especially positive
experience and feelings; thus service firms have
changed their focus from merely a single transaction
profit, to the long-term relationship with customers
 This concept assumes that the consumer prefers to
have an ongoing relationship with one organisation
rather than switching organisations
 Also on the fact that retention is cheaper than
acquiring new customers, the marketers of today
offers prime importance in the strategy of acquiring-
satisfying-maintaining customers
 As originally defined relationship marketing is about
establishing, maintaining, enhancing, and commercialising
customer relationships through promise fulfillment
(Gronroos, 1990)
 Maximising the customer lifetime value is a fundamental
goal and principle of relationship marketing
 Customer Life Time Value (CLTV): The future flow of
revenues/or net profit expected of every customer for
defined time period.
CHRISTOPHER RELATIONSHIP MARKETING
LOYALTY LADDER
 BENEFITS OF RELATIONSHIP MARKETING
BENEFITS FOR CUSTOMERS
• Receipt of Greater Value
• Confidence Benefits:
• trust
• confidence in provider
• reduced anxiety
• Social Benefits:
• familiarity
• social support
• personal relationships
• Special Treatment Benefits:
• special deals
• price breaks
BENEFITS FOR FIRMS
 Economic Benefits:
increased revenues

 reduced marketing and
administrative costs
 regular revenue stream
 Customer Behavior Benefits:
 strong word-of-mouth endorsements
 mentors to other customers
 Human Resource Management
Benefits:
easier jobs for employees

 employee retention
RELATIONSHIP DEVELOPMENT MODEL
STRATEGIES FOR BUILDING
RELATIONSHIPS

 Core Service Provision:

 service foundations built upon delivery of excellent
service:
 satisfaction, perceived service quality, perceived value
 Switching Barriers:
 customer inertia
 switching costs:
 set up costs, search costs, learning costs, contractual costs
 Relationship Bonds:
 financial bonds
 social bonds
 customization bonds
 structural bonds
THE SIX MARKETS MODEL-
PAYNE, ADRIAN, DAVID BALLANTYNE, AND MARTIN
CHRISTOPHER (2005)
CONTD…
(1) “Customer markets” include existing and prospective
customers as well as intermediaries like retailers,
wholesalers;
(2) “Referral markets” include two main categories –
existing customers who recommend their suppliers to
others, and referral sources, or “multipliers”, such as an
accounting firm who may refer work to a law firm;
(3) “Influencer markets” include financial analysts,
shareholders, the business press, the government, and
consumer groups;
(4) “Employee markets” concerns with attracting the right
employees to the organization;
(5) “Supplier markets” include traditional suppliers as well
as organizations with which the firms has some form of
strategic alliance; and
(6) “Internal markets” (the organization including internal
departments and staff (Christopher et al., 1991).
INDIAN SERVICE INDUSTRY
 Reasons for growth in service industry
 Liberalisation
 Economic affluence
 Cultural changes and various industries
 Changing role of women
 IT Revolution
 Development of markets
 Corporate philosophy
 Export potential
KEY SERVICE BUSINESSES IN INDIA
 Insurance
 Transport

 Telecommunication

 Software

 Electricity

 Postal services

 Tourism

 Banking

 Health care

 Education
Thank you..