Marketing Unit 1 Update

8/6/2019 Marketing Unit 1 Update

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Meha JoshiAssistant Professor,

Delhi School of Professional Studies andResearch


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Marketing is creating and delivering standardof living -Paul Mazur

Marketing is the management process thatidentifies, anticipates and satisfies customerrequirements profitably

--The Chartered Institute of Marketing


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Marketing is a social and managerial processby which individuals and groups obtain whatthey want and need through creating,

offering and exchanging products of valuewith others

Kotler 1991


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W ho are our existing / potential customers?W hat are their current / future needs?How can we satisfy these needs?

Can we offer a product/ service that the customerwould value?Can we communicate with our customers?Can we deliver a competitive product of service?

Why should customers buy from us?


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Concepts in

Marketing


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States that Consumers will favor those products that are widely available and low in cost

P roduce as much as possible Distribute widely Ex am ple, Henry Fords early cars


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He is credited with " Fordism ", that is, massproduction of inexpensive goods coupled withhigh wages for workers. Ford had a global vision,

with consumerism as the key to peace. Hisintense commitment to systematically loweringcosts resulted in many technical and businessinnovations, including a franchise system

However, there were problems here, whichwere?

N o focus on quality and features, just priceand availability

T his gave way to the P roduct Conce pt


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Consumers will favour that product that offers thebest quality/ performance and most features

Hence, what do you do? Make the best possible product

Do R&D, come out with new features, im prove, im proveand im prove

W hat are the problems here?

Product Concept Myopia T heodore Levitt called it Marketing Myo pia Focus on the product, rather than on the customer

T he rise of budget airlines, even in Asia Bajaj missed the motorcycle revolution


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Determine Consumer N eeds/Wants and fillthem better than anyone else, at a profit

T he Consumer is thus the starting point

Marketing starts with consumer needs Hence, marketers have to be consumer

focused always, consumer obsessed, in fact

Who is the market leader in consumer electronics today here in this country?


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Y ou need to care about society as well

Societal Marketing: Fill consumer needs, at the sametime, harm him/her & society as little as possible

T hus, Mc Donalds faces lawsuitsCenter for Science in the Public Interest (CSPI) servedMcDonald's with a notice of its intent to sue if the fast foodgiant continues to use toys to promote Happy Meals. (An"intent to sue" letter is a prerequisite to filing a lawsuit insome states.) The basis for the potential case is that usingtoys to market to small children is unfair and deceptiveunder the consumer protection laws in a number of states.According to CSPI's letter , McDonald's toy promotionsviolate the laws of California, Massachusetts, New Jersey,Texas, and the District of Columbia.


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The letter more specifically spells out the legal basisfor the case:

McDonalds practices are predatory and wrong. They arealso illegal, because marketing to kids under eight is

(1) inherently deceptive, because young kids are notdevelopmentally advanced enough to understand thepersuasive intent of marketing; and

(2) unfair to parents, because marketing to children

undermines parental authority and interferes with theirability to raise healthy children.


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Parents say

McDonald's makes my job as a parent more

difficult. They market cheap toys that appeal tokids and it works. My kids always want to go toMcDonald's because of the toys. I try my best toeducate my kids about healthy eating but it'shard when I am competing against the allure of anew Shrek toy.

T hus, currently, the last two conce pts hold away


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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


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Marketing

Environment


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SW OT analysis

PEST analysisFive forces

analysis


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Strengths (internal)Weaknesses (internal)Opportunities (external)Threats (external)


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Internal Environmental factors T he set of factors inside the marketers value chain T hat can influence marketing success

Employees Hire good peo ple E m power them kee p them ha pp y otherwise how can they kee p your

customers ha pp y ? S tockholders

How can they influence you ? Mergers and acquisitions require su

pport

Institutional investors can buy and sell huge volumes shareholder value


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Partners McDonalds franchisees Resellers and Distributors

Suppliers crucial when there are lots of parts car industry JI T Few su pp liers only (following Ja panese)

Customers

Consumer Movement T hus, the im portance of relationshi p marketing particularly, when times are hard


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Political factorsEconomic factorsSocio-cultural factorsTechnological factors


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Monopolies legislationEnvironmental protection lawsTaxation policyGovernment policyLegislation


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InflationEmployment

Disposable incomeBusiness cyclesEnergy availability and costOthers?


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DemographicsDistribution of incomeSocial mobilityLifestyle changesConsumerismLevels of education

Others?


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New discoveries andinnovations

Speed of technology transferRates of obsolescenceInternetInformation technologyOthers?


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Source: Adapted from M. E. Porter,Competitive Strategy, Free Press,1980, p. 4.

Threat ofThreat ofsubstitutessubstitutes

Potentialentrants

Threat ofThreat ofentrantsentrants

Suppliers

BargainingBargainingpowerpower

Substitutes

Buyers

BargainingBargainingpowerpower

O P TITIVERIVALRY

Five forces analysis


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Five Forces Analysis: Key

Questions and ImplicationsWhat are the key forces at work in the competitiveenvironment?Are there underlying forces driving competitiveforces?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 reducingcompetitive rivalry )?


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Selling starts with theseller & is preoccupiedall the time with the

needs of the seller.Seller is the centre ofthe business universe.Emphasize on saleable

surplus available withthe corporation

Marketing starts withthe buyer & focusesconstantly on the

needs of the buyers.Buyers is the centre ofthe business universe.Emphasizes on

identification of amarket opportunity.

Selling V/s Marketing


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Seeks to quicklyconvert product

into cash.View business as agood producingprocess.Cost determines theprice.Traditional concept.

Customer is the lastlink.

Seeks to convertcustomer needsinto products.View business as acustomer satisfyingprocess.Consumerdetermines price.Modern concept.

Customer is the firstlink.


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The Marketing Mix


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The Marketing Mix

The tools available to a business to gain the

reaction it is seeking from its target market inrelation to its marketing objectives7Ps Price, Product, Promotion, Place, People,Process, Physical Environment

Traditional 4Ps extended to encompass growth ofservice industry


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Price


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Price

Pricing StrategyImportance of:

-knowing the market-elasticity-keeping an eye

on rivals

Pricing StrategyImportance of:

-knowing the market-elasticity-keeping an eyeon rivals


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Product


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ProductMethods used to

improve/differentiatethe product and increase sales ortarget sales more effectively to gaina competitive advantage e.g.

-Extension strategies-Specialised versions-New editions-Improvements real orotherwise!-Changed packaging-Technology, etc.


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Promotion


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Promotion

Strategiesto make the consumer aware of

the existence of a productor serviceNOT just advertising


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Place


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Place

The means by which products and services is got from producer toconsumer and where they can be accessed by the consumer

-The more places to buy the product and the easier it is made tobuy it, the better for the business (and the consumer?)


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People


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Process


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Process

How do people consume services?W hat processes do they have to go

through to acquire the services?W here do they find the availability

of the service?-Contact-Reminders-Registration-Subscription

-Form filling-Degree of technology


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Marketing Mix

Marketing objectivesType of productTarget marketMarket structureRivals behaviour

Global issues culture/religion, etc.Marketing positionProduct portfolio

-Product lifecycle-Boston Matrix


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Characteristicsagegender geographic locationincomespending patternscultural backgrounddemographicsmarital statuseducationlanguagemobility


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With a large countryMany different types of people

- It is too difficult to create a product that will satisfyeverybody, that is why we focus on a segment of the total market

B i f M k S i


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Basis for Market Segmentation


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G eographic

De ographic

Age, gender,fa ily size and

life cycle, orinco e

sychographicS ocial class, lifestyle,

or personality

Behavioralccasions, benefits,

uses, or responses

Nations, states,regions or cities


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1 Segment marketingEg. A car company may think that it willtarget low income group people

2 Niche marketing: Example: The cigarettemanufacturer may have 2 niches ie:one whocomprising of people who dont care andother is the one who want to stop smoking


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1. Homogeneous preferences2. Diffused preferences3. Clustered preferences


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The process of evaluating segments and focusingmarketing efforts on a country, region, or groupof people that has significant potential torespond


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W ho buys our product?W ho does not buy it?W hat need or function does it serve?W hat are customers buying to satisfy the need forwhich our product is targeted?W hat price are they paying?W hen is the product purchased?W here is it purchased?W hy is it purchased?


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Single segment concentration:p1 to m1Selective specialisation:P1 TO M1, P2 YO M3OR ANY OTHER COMBINATION

Product specialisation:p1 to M1, M2, M3Market specialisation:ALL P to 1 MFull coverage


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Locating a brand in consumers minds overand against competitors in terms ofattributes and benefits that the brand does

and does not offerAttribute or BenefitQuality and PriceUse or User

Competition


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Global co nsumer culture positioningIdentifies the brand as a symbol of a particularglobal culture or segmentG

lobal teens, cosmopolitan (common to thewhole world) elites, globe-trotters (To traveloften and widely , especially forsightseeing)


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Foreign consumer culture positioningAssociates the brands users, use occasions, orproduct origins with a foreign country or culture

Local consumer culture positioningAssociates the brand with local cultural milieu


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This advt. by Max NY motivated parents to dream Big for their children & protect them by MAX NY Children PlanInsurance.


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The TATA TEA JAGOO RE Campaign was meant to change thelackadaisical attitude of people towards voting & elections and

awaken them to use consciously their right to vote.


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Launched in 1998, Parent Co TITANPioneers in the youth watches segment

Initially targeted age group of 22-32 (Early Job

seekers)Started with commercials :

cool watches from TITAN

Initial years, marketing strategies showed positivegrowth in sales.However by 2002-2003 the growth was stagnant,since its marketing strategies were unable to appealits target audience.


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THE MOVE ON COMMERCIAL FROM FASTRACK


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In this scheme, firms are classified based ontheir market share or dominance of anindustry. Typically there are four types of

market dominance strategies:LeaderChallengerFollowerNicher


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strategy on the dimensions of strategic scopeand strategic strength. Strategic scope refersto the market penetration while strategicstrength refers to the firms sustainablecompetitive advantage. The generic strategyframework (porter 1984) comprises twoalternatives each with two alternativescopes. These are Differentiation and low-cost leadershi p each with a dimension ofFocus -broad or narrow.

Product differentiationCost leadershipFocus


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- This deals with the firm's rate of the newproduct development and business modelinnovation It asks whether the company is on

the cutting edge of technology and businessinnovation. There are three types:PioneersClose followersLate followers


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- In this scheme we ask the question, Howshould the firm grow?. There are a numberof different ways of answering that question,but the most common gives four answers:

Horizontal integrationVertical integrationDiversification


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Price

PromotionProduct

Place


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Goods People

Services Places

Ideas Organizations

Anything received in an exchange to satisfy a need or want

SIU


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A good, a service, or an idea received in an exchangeIt can be tangible (a good) or intangible (a service or

an idea) or a combination of both.It can include functional, social, and psychologicalutilities or benefits.


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Installations-- Facilities and non-portable major equipmentAccessory Equipment-- used in production or office activitiesRaw Materials-- Basic natural materialsComponent Parts-- become part of a productProcess Materials-- not readily identifiable when used directly in theproduction of other products (e.g. screws, knobs, handles)

MRO Supplies-- Maintenance, repair, and operating items that facilitateproduction and do not become part of the finished product

Business Services-- intangible products many organizations use inoperations (e.g. cleaning, legal, consulting, and repair services)


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A P roduct Item is a specific version of a product (e.g. Gillette Trac IIrazor)

A P roduct Line is a group of closely related product items viewed as aunit because of marketing, technical, or end-use considerations (e.g.all blades & razors)

P roduct Mi x is the total set of products a firm offers for sale tocustomers (e.g. everything Gillette sells)

Product mix dimensions:Width --the number of product lines in the mixDe pth --average number of product items in each product line


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F IG URE 10.1Source: Reprinted by permission of Proctor & Gamble.


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Products value or features did not match customerneedsIneffective/inconsistent branding that fails to conveythe right message or image to customersTechnical or design problemsPoor market timingOverestimation of market size

Ineffective promotionInsufficient distribution


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Products are almost always combinations of thetangible and intangible. The entire package issometimes referred to as the augmentedproduct.The mix of tangibles and intangibles in theaugmented product varies from one product orservice to another.


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Product is a key element in the marketoffering. Marketing mix planning beginswith formulating an offering to meet targetcustomers needs or wants.

he customer will judge the offering bythree basic elements : product featuresand quality, services mix and quality, andprice appropriateness.


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In planning its market offering, themarketer needs to think through fivelevels of the product.

Each level adds more customer value, andthe five constitute a customer valuehierarchy.

( Contd. )


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(1)Core Product / Core Benefit : The fundamentalservice or benefit that the customer is reallybuying.

(2) Basic Product : At the same level, the marketerhas to turn the core benefit into a basic product.

(3) Expected Product : A set of attributes andconditions buyers normally expect when theypurchase this product.


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(4) Augmented Product : he marketerprepares an augmented product thatexceeds customer expectations.

odays competition essentially takes placeat the product-augmentation level. ( Inless developed countries, competitiontakes place mostly at the expected productlevel ). ( Contd...


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( Augmented Product )According to Levitt : he new competitionis not between what companies produce in

their factories, but between what they addto their factory output in the form of packaging, services, advertising, customeradvice, financing, delivery arrangements,warehousing, and other things that peoplevalue.


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Some things should be noted about product-augmentation strategy :F irst, each augmentation adds cost. he

marketer has to ask whether customerswill pay enough to cover the extra cost.Second, augmented benefits soon becomeexpected benefits. F or gaining competitive

advantage one will have to search for stillother features and benefits.( odays wow ,tomorrows norm)


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( product-augmentation strategy )hird, as companies raise the price of their

augmented product, some competitors can

offer a

S

tripped-down version at amuch lower price. hus alongside thegrowth of fine products we see theemergence of lower-cost products for theclients who simply want the basic product.


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(5) Potential Product : encompasses all thepossible augmentations and transformationsthe product might undergo in the future.Companies search for new ways to satisfycustomers and distinguish their offer.( Successful Companies add benefits to their offering that not only satisfy customers butalso surprise and delight them. ) The best

way to hold customers is to constantly figureout how to give them more for less.


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T he challenge before the product marketersis to create relevant and distinctiveproduct differentiation. T he productdifferentiation may be based on :

Physical ifferences ( eg., features,performance, durability, reliability, design,style, packaging )Availability ifferences ( eg., available

from stores or orderable by phone, mail,fax, internet )


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Service ifferences ( eg., delivery,installation, training, consulting,maintenance, repair )

Price ifferences ( eg., very high price,medium price, low price, very low price )Image ifferences ( eg., symbols,atmosphere, events, media )


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Any successful differentiation will tend todraw imitators. T he innovator faces threechoices :Lower the price to protect market share

and accept lower profits.Maintain the price and lose some marketshare and profits.F ind a new basis to differentiate theproduct and maintain current price.


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O N T H E BASIS OF PR OD UCT CH ARACT ER IS T ICS :DURABILITY ,TANG IBILITY AND USE (consumer orindustrial )(1) N O N-DURABLE(2) DURABLE(3) SERVICES

( CO NTD . )


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T hese are tangible goods normallyconsumed in one or few uses. Becausethese goods are consumed quickly andpurchased frequently, the appropriatestrategy is to make them available at manylocations, charge only a small mark upand advertise heavily to induce trial andbuild preference.


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T hese are tangible goods that normallysurvive many uses. Normally require morepersonal selling and service, command ahigher margin, and require more sellerguarantees.


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T hese are intangible,inseperable,variable and

perishable products.Normally require more quality control,

superior credibility, and adaptability.


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O N T H E BASIS OF CUSTO MER S H O PP ING H ABIT S :

(1) C O NVENIENCE G OOD S

(2) S H O PP ING G OOD S(3) SPECIALITY G OOD S

(4) UN S O UGH T G OOD S


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are goods that the customer usuallypurchases frequently, immediately, andwith a minimum of efforts.

(A)S

taples: Consumers purchase on aregular basis.(B) Impulse G oods: are purchased withoutany planning or search efforts.

(C) Emergency G oods: are purchased whena need is urgent.


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are goods that the customer , in theprocess of selection and purchase,characteristically compares on such basisas suitability, quality, price and style.(A) H omogeneous Shopping G oods: aresimilar in quality but different enough inprice to justify shopping comparisons.(B) H eterogeneous Shopping G oods: differin product features and services that maybe more important than price.


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are goods with unique characteristics orbrand identification for which buyer iswilling to make a special purchasing effort.


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are goods the consumer does not knowabout or does not normally think of buying.T hese goods require advertising andpersonal selling support.


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Calls for coordinated decisions on :

(1) Product Mix

(2) Product Line(3) Individual Product

(4) Service Product


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T he width of companys (say H ULs)product mix refers to how many differentproduct lines the company carries, such asbathing soap, detergents, shampoos,toothpaste, food products.


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T he length of a companys product mixrefers to the total number of items in itsproduct mix. T hus in each of the productline H UL has a number of product items.Eg., in the product line of bathing soaps,H UL has several product items like Lux,Liril, Lifebuoy, Pears.


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T he depth of a companys product mixrefers to how many variants are offered of each product in the line. T hus if close uptoothpaste comes in three formulationsand in three sizes, Close up has a depth of nine (3x3). T he average depth of H ULproduct mix can be calculated by averagingthe number of variants within the brandgroups.


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T he Consistency of the product mix refersto how closely related the various productlines are in end-use, productionrequirements, distribution channels, orsome other way. H ULs product lines areconsistent in so far as they are consumergoods that go through the same distributionchannels.


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Product development - sales are zero,investment costs are highIntroduction - profits do not exist, heavy

expense of product introductionGrowth - rapid market acceptance andincreasing profitsMaturity - slowdown in sales growth.Profits level-off. Increase outlay tocompete


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Decline - sales fall-off and profits drop


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Introduction Stage:Skimming strategy :High PricePenetration: High Promotion

Growth Stage:It improves product qualityand ads new features tothe product

It adds new modelsIt increases distribution coverage

Shift from product awareness advertising toproduct preference advertisingLowers down the price to attract price sensitive

buyers


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Maturity Stage:

Market modification:1. Converting non users

into users2.Entering new market segments3. W inning competitors customers

Product modification1. Quality improvement and2. Feature improvements


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Marketing mix modification:1.Price2.Distribution

3.Advertising4.Sales promotion5.Personal Selling6.Services


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Decline Stage1.Increasing the firms investment todominate the market or to strengthen itscompetitive position2.Decreasing the firms investment levelselectively by dropping unprofitablecustomer groups

3. Harvesting the investment to recover cashquickly4. Divesting the business quickly by disposingoff its assets as advantageously as possible


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D efinition: T he factor or consideration presented by a seller as the reason that one product or service isdifferent from and better than that of the competition


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The Unique Selling Proposition (also Unique Selling

Point ) is a marketing concept that was first proposed asa theory to explain a pattern among successfuladvertising campaigns of the early 1940s. It states thatsuch campaigns made unique propositions to thecustomer and that this convinced them to switch brands.The term was invented by Rosser Reeves of Ted Bates &Company. Today the term is used in other fields or justcasually to refer to any aspect of an object thatdifferentiates it from similar objects .


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Head & Shoulders : "You get rid of dandruff"Olay : "You get younger-looking skin"Some unique propositions that were pioneerswhen they were introduced:

Domino's Pizza : "You get fresh, hot pizzadelivered to your door in 30 minutes or less --or it's free."FedEx : "W hen your package absolutely,positively has to get there overnight"M&M's: "The milk chocolate melts in yourmouth, not in your hand"Wonder Bread : " Wonder Bread Helps Build

Marketing Unit 1 Update

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