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DEFINITIONS OF MARKETING:
Marketing is a human activity directed at
satisfying needs & wants through exchange processes (Al Ries & Jack Trout) Process by which Individuals & Groups obtain what they Need and Want through Creating, Offering and Exchanging products (Philip Kotler) Solving customer problems profitably.
Market
Market
People or Organizations
Needs to Satisfy
Market
Money to Spend Willingness to Spend
Production
Profit driver --Production methods
specializes in producing as much as possible of a given product or service. Signifies a firm exploiting economies of scale These methods may be deployed when a high demand for a product or service exists A certainty that consumer tastes will not rapidly alter
Product
Profit driver --Quality of the product
concerned with the quality of its own product. As long as its product was of a high standard, people would buy and consume the product.
Selling
Profit driver --Selling methods
1960s A firm using a sales orientation focuses primarily on the selling/promotion of a particular product, and not determining new consumer desires as such. Simply selling an already existing product, and using promotion techniques to attain the highest sales possible. Firm sells a product that is in high demand, with little or no concern about changes in consumer
Customer Orientation
A firm in the market economy survives by
producing goods that people are willing and able to buy. Consumer demand is vital for a firm's future viability Many companies today have a customer focus (or market orientation). This implies that the company focuses its activities and products on consumer demands. No strategy is pursued until it passes the test of consumer research.
PORTERS 5 Forces.
A. Threat of Substitutes
The price that consumers are willing to pay for a product or service depends in part on the availability of substitute products Characterized by
Relative price of substitute Relative quality of substitute Switching costs to buyers
PORTERS 5 Forces.
B. Threat of New Entrants 5 major sources of barrier to entry
Economies of Scale Product differentiation Capital requirement Access to distribution channels Government & legal barriers
PORTERS 5 Forces.
C. Rivalry among existing firms
Number & balance of competitors Degree of difference between products Growth rate of an industry Level of fixed costs
PORTERS 5 Forces.
D. Bargaining power of Suppliers
Suppliers can suppress industry profitability by raising prices & reducing the quality of components which they supply Supplier concentration Threat of forward integration
PORTERS 5 Forces.
E. Bargaining power of buyers
Buyer group concentration Buyers costs Degree of standardization of suppliers products Threat of backward integration
Education Design Services Investment Banking and Securities Dealing Management Consulting Services Satellite Telecommunicationstelecom Telemarketing Bureaus Entertainment-Media Tourism
Airlines-Transportation Weight Reducing Centers-Beauty and Health care Advertising Legal services
Tangibility Spectrum
A pure tangible product (includes commodities
like toothpaste, rice, cereals etc., where no service accompanies the product)
A tangible good with accompanying services
(consumer durables like television, refrigerators which have installation & after sales services)
Tangibility Spectrum
A major service accompanying minor goods &
babysitting)
Characteristics of Services
Intangibility
Intangibility of Services
A pure service cannot be seen, touched , tasted
or smelt but can be only experienced by customers A pure service cannot be examined before purchase Features for verification of quality cannot be measured
Level of tangibility present derives from 3
principle sources: 1. Tangible goods included in service (food) 2. Physical environment (hotel)
Intangibility of Services
Physical Evidence- to tangibalize the intangible (e.g.: dcor of the bank, ambience of the restaurant, infrastructure in a college)
Citibank. N.A
Characteristics of Services
Inseparability of
Inseparability
In production of goods, economy of scales &
proper quality control checks take place Production & consumption are said to be separable
For services, producer & consumers must
interact in order to realize the benefits of a service Production & consumption of services is hand-in-hand
Inseparability
Service is measured by analyzing technical
competency of the service provider Interpersonal skills of the people involved (E.g.: 1. A slight misbehavior of hotel receptionist may turnoff the customer forever. The same is not true in goods purchases 2.The marketing class in b-school is cancelled due to non arrival of faculty although the students were present in full strength 3. During surgery both doctors & patient should be present)
Characteristics of Services
Perishability
Perishability
Services cannot be stored or inventoried
value An empty seat in movie theatre & an aero plane is an opportunity lost forever Empty seats for B-school session is a lost opportunity
Perishability
No constant pattern of demand throughout
Perishability
During exceptionally high or low demands service
organizations can have severe difficulties Hence, service quality deteriorate during peak hours Some measures to counter perish ability (Movie theatres-matinee shows & shows before 12pm have cheaper tickets) (Discounts on resorts/hotels on week days) (Happy hours in a restaurant & bar)
Characteristics of Services
Heterogeneity/Variability
Heterogeneity/Variability
The extent to which production standards vary
cannot be duplicated 2 service reps will always give different levels of service Also, the customer might get a different quality of service of two different branches of the same bank Variability can be reduced by building strong brands Computerized voice systems & automating banking services are some typical examples to
Heterogeneity/Variability Examples
The students of a B-school could have a certain
subject taught by 3 different faculties, & each delivery would be vastly different
A theatre actor in a play would give different
Characteristics of Services
Lack of Ownership
Lack of Ownership
When goods are brought ownership is transferred
from seller to buyer When a service is performed, no ownership is transferred from seller to the buyer The buyer merely buys a right to a service process
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