MARKETING MANGEMENTBBA-205# Understanding the Marketplace and customer needs.As a first step, marketers need to understand customer needs and wants and the marketplace within which they operate. There are five core customer and marketplace concepts:1. Needs, wants and demands.2. Market offerings: Products, Service and experience3. Customer value and satisfaction4. Exchange and relationships5. Markets

1. Customer Needs Wants and Demands:Needs, Wants and Demand represents the language of marketing. They come under the core concept of marketing. They plays important role in marketing management. Because, by the help of these factors the marketing manager solves the problems related to marketing appeared in Business organization.

Needs: Need is a situation where a person felt deprivation of certain kind of Satisfaction. Needs exist in the individual. They describe basic human requirements. They indicate a state of felt deprivation. Marketing does not create needs. They exist in the individuals automatically with the follow of time. Different people have different needs some of them are as follows:

Physical needs: This types of need is related to food, clothing, warmth ,and shelter. Safety needs: Under this need, people want protection from physical harm and economic threat. Social needs: Under this need, they want love, friendship and belongingness.

Self Esteem needs: They want knowledge, achievement and creativity. And Self actualization Needs.Wants: When need becomes specific it becomes want.Wants are the form, human needs takes as they are shaped by culture and individual personality. Wants are unlimited. Wants are shaped by ones society and are described in the terms of objects that will satisfy needs.Demand: They are wants for specific products. Wants backed by money and willingness to spend the money become demand.

2. Marketing Offering Products, Services and Experience:

Product: according to Philips Kotler, a product is anything that can be offered to a market for attention, acquisition, use or consumption. It includes physical objects, services, personalities, place, organization and ideas.Service: are activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything but experiences.3. Customer Value and SatisfactionCustomers usually face a broad array of product and services that might satisfy a given need. Customers form expectations about the value and satisfaction that various market offerings will deliver and buy accordingly. Satisfied customers buy again and tell other about their good experiences. Dissatisfied customers often switch to competitors and spread negative word of mouth about product.4. Exchanges and Relationships :Exchange is the act of obtaining a desired object from someone by offering something in return. The marketer tries to bring about a response to some market offering.Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences involving a product, service, idea, or other object. Marketers want to build strong relationships by consistently delivering superior customer value.

5. Markets:The concept of exchange and relationships lead to the concept of a market. A market is the set of actual and potential buyers of a product. These buyers share a particular need or want that can be satisfied through exchange relationships

IMPORTANCE OF MARKETINGMarketing is a very important aspect in business since it contributes greatly to the success of the organization. Production and distribution depend largely on marketing. Many people think that sales and marketing are basically the same. These two concepts are different in many aspects. Marketing covers advertising, promotions, public relations, and sales. It is the process of introducing and promoting the product or service into the market and encourages sales from the buying public. Sales refer to the act of buying or the actual transaction of customers purchasing the product or service.Since the goal of marketing is to make the product or service widely known and recognized to the market, marketers must be creative in their marketing activities. In this competitive nature of many businesses, getting the product noticed is not that easy.Strategically, the business must be centered on the customers more than the products. Although good and quality products are also essential, the buying public still has their personal preferences. Marketing Promotes Product Awareness to the Public Reorganization of product or service by the market is the primary goal of marketing. No business possibly ever thought of just letting the people find out about the business themselves, unless you have already established a reputation in the industry. But For a start-out company, the only means to be made known is to advertise and promote. Your business may be spending on the advertising and promotional programs but the important thing is that product and company information is disseminated to the buying public.Various types of marketing approaches can be utilized by an organization. All forms of marketing promote product awareness to the market at large. Offline and online marketing make it possible for the people to be educated with the various products and services that they can take advantage of.A company must invest in marketing so as not to miss the opportunity of being discovered. If expense is to be considered, there are cost-effective marketing techniques a company can embark on such as pay-per-click ads and blogging.Marketing Helps Boost Product Sales Apart from public awareness about a companys products and services, marketing helps boost sales and revenue growth. Whatever business is selling, it will generate sales once the public learns about product through TV advertisements, radio commercials, newspaper ads, online ads, and other forms of marketing. The more people hear and see more of advertisements, the more they will be interested to buy.If company aims to increase the sales percentage and double the production, the marketing department must be able to come up with effective and strategic marketing plans.

Marketing Builds Company Reputation In order to conquer the general market, marketers aim to create a brand name recognition or product recall. This is a technique for the consumers to easily associate the brand name with the images, logo, or caption that they hear and see in the advertisements.For example, McDonalds is known for its arch design which attracts people and identifies the image as McDonalds. For some companies, building a reputation to the public may take time but there are those who easily attract the people. With an established name in the industry, a business continues to grow and expand because more and more customers will purchase the products or take advantage of the services from a reputable company.Marketing plays a very essential role in the success of a company. It educates people on the latest market trends, helps boost a companys sales and profit, and develops company reputation. But marketers must be creative and wise enough to promote their products with the proper marketing tactics. Although marketing is important, if it is not conducted and researched well, the company might just be wasting on expenses and time on a failed marketing approach.

The Marketing Management PhilosophiesMarketing management can be described as carrying out the tasks that achieve desired exchanges, between the corporation, and its customers.There are a number a different philosophies that guide a marketing effort. Production Concept :According to Philips Kotler, this concept holds that consumers will favour those products that are widely available and low in cost.He also emphasis on two counts:1. This concept is related to uninterrupted product availability.2. the low price at which the product is made available to the ultimate consumers.These are based on the assumption that the consumers are primarily interested in getting quality products.In Production concept: Demand for a product is greater than supply. To increase profit, focus on production efficiencies knowing all output can be sold. Also useful concept when increasing production raises economies of scale etc. to reduce price.

The production concept is still a useful philosophy in some situations. For example, computer maker Lenovo dominates the highly competitive, price-sensitive Chinese PC market through low labour costs, higher production efficiency and mass production. Product Concept:The Product concept holds that consumers will favour those products that offer the most :Quality and FeaturesPerformanceManagers focus their energy on making goods products and improving them over time.The consumers do admire well made products. Quality and performance of the product make them willing to pay even more that what actually they are willing to pay in normal conditions. Product oriented companies often design their products with little or no consumer input they trust their engineers can design exceptional products The product concept may leads to marketing myopia as it unduly concentrates on the product rather than need.

Selling Concept

The selling concept holds that consumers, if left alone, will ordinarily not buy enough of the organisations products. The organization must, therefore, undertake an aggressive selling selling promotional effort.The product does not sell itself. The consumer has to be educated and convinced that it is this and this product only which will satisfy his need.Thus, says Philips Kotler, selling to be effective, must be preceded by several marketing activities such as needs assessment, marketing research, product development, pricing and distribution. if the market does a good job of identifying consumer needs, developing appropriate products, and pricing, distributing and promoting them effectively, these products will sell very easily.

In Selling Concept: Demand for a product is equal to supply. Emphasis is needed to sell the product to increase profits. Focus on advertising. . Dominant era: 1920's to Mid 1930's WWII to early 1950's

Marketing Concept Philip Kotler says, The marketing concept holds that the key to achieving organizational goals consists in determining the needs, needs, and interests of target markets and to delivering the desired satisfactions more effectively and efficiently than competitors.Supply for a product is greater than demand, creating intense competition among suppliers. Company first determines what the consumer wants, then produces what the consumer wants, and then sells the consumer what it wants. Dominant era: 1930's to WWII 1950's to present.

The Societal Marketing Concept:According to the Philips Kotler, the societal marketing concept holds that the organizations tasks is to determine the needs, wants and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors.This concept holds that marketing strategy should deliver value to customers in way that maintains or improves both the customers and society well being.

Companies should balance three considerations in setting their marketing strategies: company profits, consumer wants and society interests.Society (welfare)

Company (Profit) Consumer(Satisfaction)Example: Johnson & Johnson does this well. Its concern for societal interests is summarized in a company document called Our Credo which stress honesty, integrity, and putting people before profits.

MARKET

The term market originates from Latin noun Marcatus which mean a place where business is conducted.Market is generally known as the place or geographical area where buyers and sellers meet and enter into transactions involving transfer of ownership of goods, services, securities etc.According to Philips Kotler, A market consists of all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want.

In a market, buyers and sellers are connected by 4 flows

BUYERSSELLERS 1) Goods & Services 2) Communication to the marketIn turn, Seller receives

SELLERSBUYERS3)Money 4)Information

MARKETINGThe term Marketing ha been derived from the word market. Marketing is the basic reason for the existence of a business organization. It is a powerful mechanism which alone can satisfy the needs & wants of consumers at the place and they desire.According to Kotler, Marketing is a social and managerial process by which individuals and groups obtain what they need and want through

Creating, Offering & Exchanging Products of value with others.

Marketing helps in having a good range of products in constant demand and suggests to the management the scope for improving and developing new products to satisfy the changing customer needs. Customers is the king of the market. Customers decide what products suit their needs. Therefore, we can say marketing satisfies our needs providing :

Form Utility Time Utility

Person UtilityExchange UtilityPlace Utility1. FORM UTILITY

Finished GoodsRaw Materials Converting into Understanding customers requirement

2. PERSON UTILITY

CustomersMarketer Establishing contacts Understanding customers requirement3. EXCHANGE UTILITY

BuyersSellerTransfer goods to as per the requirements of customers

4. PLACE UTILITY Physical distribution and logistics

SellerSeller as per convenience of customers

5. TIME UTILITY

WarehousingCustomers making available goods when needed creating time utilityas per the requirements of customers

Marketing MixMarketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. McCarthy classified these tools into four broad groups that he called the four Ps of marketing: product, price, place, and promotion.

Marketing Mix

PlaceChannelsCoverageAssortmentsLocationsInventoryTransportProductProduct varietyQualityDesignFeaturesBrand namePackagingSizesServicesWarrantiesReturns

PromotionSales promotionAdvertisingSales forcePublic relationsDirect marketing

PriceList PriceDiscountsAllowancesPayment PeriodCredit Terms

ManagementManagement is the organization and coordination of the activities of an enterprise in accordance with certain policies and in achievement of defined objectives.Management is often included as a factor of production along with machines, materials, and money.

Marketing Management:Marketing management is the process of planning and executing the conception, pricing, promotion, and distribution of ideas goods , services to create exchanges that satisfy individual and organizational goals.MM is the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value.

NATURE OF MARKETING1. Marketing is Consumer-oriented: A business exist to satisfy human needs. Therefore, business must find out what the customers want and then produce goods according to the needs of the consumers. Only such products should be produced which best satisfy consumer needs and at the profit to the maker.

2. Marketing Starts and ends with the consumer: Marketing is concerned only with the flow of goods and services from the producer to the consumer. Under consumer-oriented marketing its is essential to know what the customers really want and this is only possible if we collect information from consumers.

3. Modern Marketing Precedes and succeeds Production.Today, all the organization s accept that the marketing activities must start far ahead of production. It is not enough if the activities are begun after the product is ready. Marketing would have authority over product innovation and planning, production scheduling as well as over the sale. In companies operating under the marketing concept entire marketing is designed to serve consumer needs.

4. Modern Marketing is the guiding element of the business:Marketing has become a pervasive force capable of guiding and even controlling production. In fact, it is the market potential and not production resources that guide a business today. This involves the integration of a number of activities from the conception of a product idea to its profitable selling and ultimate consumption.

5. Marketing is a Science as well as Art:Marketing is an art in the sense that a considerable body of rules or principles on buying, selling, financing, standardization, market information etc. have been put into practice to achieve success in the economic life of man.

But later development have changed the art base of marketing into a science base. Many aspects of marketing are becoming increasingly technical. This has created the need for complex tools of measurement and experimentation. Hence, it is not wrong to say marketing is science-based.

6. Marketing is a System:Marketing is a System consisting of several interdependent and interacting sub-systems. It obtain the inputs from the environment (Supra system), transforms these inputs and supplies the output (customer satisfaction, profits etc )

7. Exchange process is the Essence of MarketingExchange implies transactions between buyers and seller. The seller hands over a product or service to the buyer who in turns give money.there is exchange of information etween buyers and sellers.

8. Marketing is Goal-oriented:The ultimate aim of marketing is to generate profits through the satisfaction of human wants. The following aims are sought to be achieved by studying marketing:1. To provide guiding policies regarding marketing procedures and their implementation.2. To study marketing problems according to circumstances and to suggest solutions.3. To analyse the shortcomings in the exiting pattern of marketing.4. To enable managers to assess and decide a particular course of action.5. To develop an intelligent appreciation of modern marketing practices.

9. Marketing is a Process:It is a dynamic process because it keeps on adjusting to the changes in the environment of business. Marketing is also a social process in the sense that it is concerned with human needs. Marketing is a managerial process as it involves the functions of planning and control

SCOPE OF MARKETINGThe scope of marketing is very wide. It may be analyzed in the term of marketing performance through various functions. These functions are to be performed on the basis of various utilities.1. A) Functions of ExchangeBuying Function2. Assembling Function3. Selling Function

MARKETING FUNCTIONS

B) Functions of Physical Dustribution1. Transportation2. Inventory Management3. Warehousing4. Material Handling

C) Functions of Facilities1. Financing2. Risk Taking3. Standardisation4. After Sales Service

A) Functions of exchange:

Buying Function: A manufacturer is required to buy raw materials for production purposes. Similarly, a wholesaler has to buy goods from manufacturer for the purposes of sales to retailers. Aretailer has to sell the goods to consumers. Thus functions of buying have to be performed at various levels.

Assembly Function: Assembling is different and separate from buying. Buying involves transfer of ownership of the goods from seller to the buyer; whereas in assembling, goods are purchased from various sources and assembled at one place to suit the requirement of the buyer.

Selling Function: Selling involves transfer of ownership from seller to the buyer. Selling function is vital to the success of any firm. Its importance has been continuously increasing in all organizations due to the emergence of severe competition. Producing goods is easy but it is very difficult to sell them.

B) Functions of Physical Distribution:

Transportation: it is the function of transformation to carry commodities from where utility is relatively low to places where it is higher.

It includes decision to be taken on

Modes of transport

Claims etc Serviceselection Freight consolidationProcessing, vehicle scheduling

VECHILE SCHEDULINGVehicle Scheduling is part of the component Transportation Planning. It enables the transportation planner to optimally use available capacities of trucks, trains, ships, and airplanes with the goals of more efficiently planning loading capacities and lowering costs, since most customers nowadays depend completely on external transportation companies for optimum transportation (which means deliveries that are on time and cost saving).

PROCESSINGThe aim of transportation processing is to complete the formalities involved in getting a shipment ready for dispatching to the customer. Tasks in transportation processing include weighing the shipments, loading, and goods issue posting as well as recording information on the means of transport such the drivers details, the weight of the truck, and the time it arrive premises.

Inventory Management :

It includes

Short term sales forecasting JIT or push or pull strategies Product mix at stocking points Number, Size & location of stocking points

Warehousing:

Warehousing help in having a central place for keeping goods from where the distribution could be made easily and according to needs. Ultimately, it tends to adjust the supply to demand so as to equalize them in the interest of the manufacturers, middlemen and consumers. It includes

Space determination Stock layout and design Stock placements

Material Handling: It includes

Equipment Selection Equipment replacement Order picking procedure Stock storage & retrieval

C) Functions of Facilities:1. FinancingArrangement of finance has become an increasingly important function. Therefore, a marketer can plan for various kinds of finance: short term finance, Medium term finance and Long term finance. There are various sources of finance for example, commercial banks, co-operative banks, credit societies, government agencies etc.

2. Risk Taking :There are innumerable risks in the process of marketing of goods and services. Risks arise due to unforeseen circumstances. Risks can be insured also. For example, the risk due to fire and accidents may be covered by insurance. But the risks due to changes in government policies, risks due to increased competition, technological risks and business cycle risks cannot be insured.

3. Standardization: Buyers and sellers always prefer to have standardized goods and services. This will relieve buyers from examining the product and wasting time. That is why standardization has now been accepted as a convenient and ethical basis of marketing.4. After sales service:

The importance of after sales service facilitates as a marketing tool cannot be ignored. Hence arrangement of after sales service has become an increasingly important function. Therefore, a marketer has to plan for after sales service.For example: Repairs, replacements, maintenance etc.

5. Marketing Information: Modern marketing requires a lot of information accurately, adequately and promptly. This information becomes the basis of many decision in marketing. Marketing information makes a seller know when to sell, at what price to sell, who are the competitors etc. marketing information and its proper analysis has led to marketing research.

# MARKETING MIX:The idea of the mix of marketing functions was conceived by Prof. Neil H. Borden of the Harvard Business School.According to him, the marketing mix refers to the combination, the designing and integration of the elements of marketing into a programme or mix which on the basis on an appraisal of the market forces, will best achieve the objectives of an enterprise at a given timeMarketing mix represents the total marketing programme of a firm. It involves decisions regard to product, price, place and promotion.4 Ps may described as 4Cs:

____4Ps 4Cs_______________ Product Customer SolutionPrice Customer costPlace Convenience_____Promotion Communication______Marketing mix serves as the linkage between a business firm and its customers.Marketing mix is a dynamic concept as it keeps on changing with changes in market conditions and the environment.

Elements of Marketing mix:1. Product: A product is any good or service that consumers want. It is a bundle of utilities or a cluster of tangible and intangible attributes. Product components of marketing involves planning, developing and producing the right type of product and services. It deals with dimensions of product line, durability and other qualities.

Product mix requires decisions with regard to :a. size and weight of the productb. quality of the productc. design of the productd. volume of outpute. brand namef. packagingg. product rangeh. product testingi. Warranties and after sales services etc.

2. Price : Pricing decisions and policies have a direct influence on sales volume and profits of business. A lot of exercise and innovation is required to determine the price that will enable the firm to sell its products successfully. Demand, cost, competition, government regulation etc. are the vital factors that must be taken into consideration in the determination of price.Price mix involves decision regarding base price, discounts, allowances, freight payment etc.

Price Component Mix:

Basic PricePrice ReductionsPrice Alternation Credit Terms

3. Place: This element involves choice of the place where products are to be displayed and made available to the customers. It is concerned with decisions relating to the wholesale and retail outlets or channels of distribution. The objective of selecting and managing trade channels is to provide the products to the right customer at the right time at right place on continuous basis. In deciding where and through whom to sell, management should consider where goods through whom to sell, management should consider where the customers wants the goods to be available.Tata partners with a large body of the independently owned dealerships that sell the company many different models. Tata selects dealers carefully and support them strongly the dealers keeps an inventory of Tata automobiles, demonstrate them to potential buyers, negotiate prices, close sales and service the cars after the sale.

PlaceComponent Mix:

Channel Network Transport Housing Storage facilities Inventory Control

4. Promotion: Promotion is concerned with bringing products to the knowledge of customers and persuading them to buy. Promotion Mix involves decision with respect to advertising, personal selling and sales promotion.Promotion means activities that communicate the merits of the product and persuade target customers to buy it. Tata Motors spends a huge amount each year on advertising to tell consumers about the company and its many products.

Promotion Component Mix:

AdvertisingPublic relation Personal Transactions Special Promotion

Marketing EnvironmentMarketing activities are influenced by several factors inside and outside a business firm. These factors or forces influencing marketing decision making are collectively called marketing environment.According to Philips Kotler, marketing environment refers to external factors and forces that affect the companys ability to develop and maintain successful transactions and relationships with its target customers. Economical Env.

Physical Env.Political Env

SuppliersIntermediariesPublicCompetitorsCustomersFIRM

TechnologicalEnv. Cultural Env

Demographic Env

A companys marketing environment consist of the actors and the forces outside marketing that affect marketing managements ability to build and maintain successful relationships with target consumers. Like, Xerox, Companies constantly watch and adapt to the changing environment.

Every manager in an organization needs to observe the outside environment, marketers have two methods

Marketing Research Marketing IntelligenceMarketer also spend time with their customers and competitor environments to carefully studying the environment. The marketing environment may be broadly divided into two parts:

Micro environment Macro environment

Microenvironment consists of the actors close to the company that affect its ability to serve its customers- the company, suppliers, marketing intermediaries, customer markets, competitors and publics. These actors can be controlled by the company with its own action, hence are also called Controllable Factors.

Macroenvironment consists of larger societal forces that affects the microenvironment demographics, economic, natural, technological, political and cultural forces which cannot be controlled by the company with its own actions, atleast in the short run. So these are also called Uncontrollable factors.

MICROENVIRONMENT

Marketing success will require building relationships with other company departments, suppliers, marketing intermediaries, customers, competitors and various publics which combine to make up the companys value delivery network.It implies the factors and forces in the immediate environment which affect the companys ability to serve its market.

1. The Company:In designing marketing plans, marketing management takes other groups in company into account groups such as top management, finance, research and development, purchasing, operations and accounting. All of these interrelated groups form internal environment. Top management sets the company mission, policies and strategies marketing managers make decisions within the strategies and plans made by top management. Marketing managers must work closely with other company departments. Other departments have an impact on the marketing departments plans and actions.2. Suppliers:Suppliers provide resources that are needed by the company. The company necessarily should go for developing specifications, searching the potential suppliers, identifying and analyzing the suppliers and chose those suppliers who offer best mix of quality, delivery reliability, credits, and warranties at low costs.Marketing managers must watch supply availability and costs. Supply shortages or delays, labor strikes, and other events can cost sales in the short run and damage customer satisfaction in the long run. Rising supply costs may force price may force price increase that can harm the companys sales volume.Today, most of the marketers treat their suppliers as partners in creating and delivering customer value. For example, Home Depot a leading retailer in Unites states works closely with its army of almost 1200 suppliers.3. Market Intermediaries:These are either business houses or individuals who come to the company for promoting, selling and distributing the goods to the ultimate consumers.They include resellers, physical distribution firms, marketing service agencies and financial intermediaries. a. Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers who buy and resell merchandise. Traditionally, it has not been very difficult for companies to select partner with resellers, partly because of their strong brand franchise and partly because of the fragmented and small size of most sellers in the Indian subcontinent. However the future is going to be very different. In India, manufacturer now face reseller organizations such Big Bazaar, Pantaloon, Shoppers Stop. b. Physical Distribution Firms help the company to stock and move goods from their points of origin to their destinations.c. Marketing Service Agencies are the marketing research firms, advertising agencies, media firms and marketing consulting firms that help the company target and promote its products to the right markets.d. Financial Intermediaries include banks, insurance companies and other businesses that help finance transactions ot insure against risks associated with buying and selling of goods.Todays, marketers recognize the importance of working with their intermediaries as partners rather than simply as channels through which they sell their product. For Example when Coco Cola signs on as the exclusive beverage provider for a fast food chain, such Mc Donalds or Subway, it provide much more than just soft drinks.4. Customers:Customers are the most important actors in the companys microenvironment.The target market of the company is usually of the following types:Consumer Market : i.e individuals and households.Industrial market : i.e. organizations buying for producing(manufacturing) other products and services for the purpose of either earning profits or fulfilling other objectives or bothReseller market: organizations buying goods and services with a view to sell them to others for a profit. These may be selling wholesalers and retailers.Government and the other non-profit market: i.e those buying for goods and services in order to produce public services.. they transfer these goods and services to those who need them for consumption in most of the cases.International market: individuals and organizations of nations other than homeland who buy for either consumption or for industrial use or for both.5. Competitors:No company stands alone in serving and satisfying the needs of a customer market. The marketing concept states that to be successful, a company must provide greater customer value and satisfaction than its competitors do. It is impossible for an organization to develop strong competitive positioning strategies without a good understanding of its competitors and the strengths and weaknesses of the competitors. No single competitive marketing strategy is best for all companies. Each firm should consider its own size and industry position compared to those of its competitors. Large firms with dominant positions in an industry can use certain strategies that smaller firms cannot afford. And small firms can develop strategies that give them better rates of return than large firms enjoyThree levels of competition exist. :1. Direct competitors are firms competing for the same customers with the similar products (ex. grocery stores). 2. Competition exists between products that can be substituted for one another (ex. margarine for butter). 3. Competition exists among all organizations that compete for the consumer's purchasing power (ex. entertainment).6. PublicA public is defined as any group that has an actual or potential interest in or impact on a companys ability to achieve its objectives.To build goodwill and to seek favorable response, it is very much necessary to satisfy the public as well. There are seven types of Public:Financial Publics: this group influences the companys ability to obtain funds. Banks, Investment houses and stockholders are the major financial publics.Media Publics: This group carries news, features and editorial opinion. It include newspapers, magazine and radio and television stations.Government Publics: Management must take government developments into account. Marketers must often consult the companys lawyers on issue of product safety, truth in advertisement and other matters. For example, mobilink, advertisements promoting tourism in Pakistan recognizes the importance of government and general publicLocal Publics: This group includes neighborhood and residents and community organizations.General Public: a company needs to be concerned about the general publics attitude towards its products and activities.Internal Publics: This group includes workers, managers, volunteers and Board of Directors. Large companies use newsletters and other means to inform and motivate their internal publics. When employ feels good about company, they spread positive attitude over to external Publics.Macro Environment:It consists of broader forces that not only affect the company but also other factors in the Micro- Environment. The components of macro-environment are:1. Political Factors: A firm has to operate within the present political system and legal framework. Political factor affect economic policy of the country. Political factors include political philosophy, political stability, party system etc.2. Economic factors: It consists of economic forces that affect companys cost, revenues, and profits on one hand and customers purchasing powers and willingness to spend on the other hand. It includes economic growth rate, interest rates, inflation rate, stock market , commodity exchange , fiscal policy, monetary policy , exim policy, industrial and agricultural policy etc.3. Socio-cultural factors: Social and cultural factors affects consumers tastes and preferences. People buy or favour those products which suit or complement with their social and cultural norms, values, traditions and habits. It includes cultural norms, values, beliefs, rituals, castes, customs, traditions, superstition, family, opinion leader, reference groups, religion etc.4. Technological Factors: Technological factors affect the firms production process, product quality, cost effectiveness, and hence, competitive ability.Every new technology is a force of creative destruction. New technology compel old one to exit.Technological factors includes suitability and availability of technology, pace of technological change, opportunities for innovation, technological transfer etc.5. Legal Factors: Marketing decisions are strongly affected by laws pertaining to competition, price-setting, distribution arrangement, advertising etc. It is necessary for a marketer to understand the legal environment of the country and the jurisdiction of its courts. It includes laws related to industry, contract, labour, consumer etc.6. Ecological Factors: These factors primarily concern with natural environment. They are closely related with protection of ecological environment and pollutions air, water, noise, and soil pollutions. It includes availability and use of natural resources, pollution and pollution measures, contemporary legal provisions, world wide effort to protect the environment etc.7. International environmental factors: In Todays business environment every marketer is trying to cover the global market and therefore this factor is playing an important role in the era of liberalization, privatization, and globalization. International environment variables includes international agencies like WTO, World Bank, MNCs, Exim policy of different nations, international agreements etc.

MARKET SEGMENTATIONMarket segmentation is dividing a market into distinct groups, with distinct needs , characterstics, or behavior who might require separate products or marketing mixes.In other words, it is the process of taking total heterogeneous market for a pro9duct and dividing it into several sub-markets or segments ,each of which tend to be homogeneous in all significant aspects.Companies today recognize that they cannot appeal to all buyers in the marketplace or atleast not to all buyers in the same way. Buyers are also widely scattered and too varied in their needs and buying practices.Like, P&G a company must identify the parts of the market that it serve best and most profitably. It must design customer-driven marketing strategies that build the right relationships with right customers.4 major steps in Customer driven marketing strategy:In the first two steps, the company select the customers that it will serve. Market segmentation involves dividing a market into smaller gr oups of buyers with different needs, characteristics or behaviors that might require separate marketing mix or strategies.

Decide on value propositionkMarket targeting consists of evaluating each market segments attractiveness and selecting one or more markets segments to enter.

Create value for targeted customersDifferentiation: differentiate the market offering to create superior customer valueSegmentation: Divide the total market into smaller segments

Positioning: Position the market offering in minds of target customersTargeting: Select the segment or segments to enter

In the final two steps, the company decides on a value proposition-on how it will create value for target customers. Differentiation involves actually differentiating the firms market offering to create value for target customers. Positioning consists of arranging for a market offering to occupy a clear, distinctive and desirable place relative to competing products in the minds of target customers.

LEVELS OF MARKETING:1. Undifferentiated Marketing ( or Mass Marketing)A companys attempt to appeal to the whole market with a single basic marketing strategy intended to have a mass appeal. In this, a firm might decide to ignore market segment differences and target the whole market with one offer. This strategy focuses on what is common in the needs of consumers rather than on what is different. Company design a product and marketing program that will appeal to the largest number of buyers. Single Marketing Mix One mass market2. Differentiated Marketing (or Segmented Marketing)A companys attempt to appeal to two or more well defined market segments with a marketing strategy tailored to each segments.Marketing mix 1 Market Segment 1Marketing mix 2Market Segment 2Marketing mix 3Market Segment 3Marketing mix 4Market Segment 4In this strategy, a firm decides to target several market segments and designs separate offers for each. General Motors tries to produce a car for every purse, purpose and personality. HUL markets eight variants of soaps (personal wash category)P&G markets six different laundry detergents brands, which compete with each other on supermarket shelves.By offering product and marketing variations to segments, companies hope for higher sales and stronger position within each market segment. But differentiated marketing also increases the costs of doing business. A firm usually find it more expensive to develop and produce say, 10 units of 10 different products than 100 units of one product. Developing separate marketing plans for separate segments requires extra marketing research, forecasting, sales analysis, promotion planning, and channel management.

3. Niche MarketingA niche is a more narrowly defined customer group seeking a distinctive mix of benefits.The company attempt to appeal to one well-defined market segment with one tailor made marketing strategy.In this strategy, instead of going after a small share of a large market, the firm goes after large share of one or a few smaller segments or niches.

Single marketing mix Market segment 1 Market segment 2 Market segment 3 Market segment 4(And so on are recognized but not targeted)Through concentrated marketing, the firm achieves a strong market position because of its greater knowledge of consumer needs in the niches it serves and the special reputation it acquires. It can market more effectively by fine tuning its products, prices and programs to the needs of carefully defined segments. It can also market more efficiently, targeting its products or services, channels and communications programs toward only consumers that it can serve best and most profitably.Niches are smaller segment that may attract only one or few competitors. For example, Nirma started as nicher, selling only low- priced detergent to rural and semi-urban consumers. Today, it is one of the biggest detergent brands in India.Today, the low cost of setting up shop on the internet makes it even more profitable to serve seemingly tiny niches. Small businesses, in particular, are realizing niches from serving small niches on the web.For example, Zappos began selling shoes online-only shoes and only online.Concentrated marketing can be highly profitable. At the same time, it involves higher then normal risks. Companies that rely on one or a few segments for all of their business will suffer greatly if the segment turns sour. Or larger competitors may decide to enter the same segment with greater resources. For these reasons, many companies prefer to diversify in several market segments.Differentiated and concentrated marketer tailor their offers and marketing programs to meet the needs of various market segments and niches. At the same time, they do not customize their offers to each individual customer.4. Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. It includes: a. Local Marketingb. Individual MarketingLocal Marketing: involves tailoring brands and promotions to the needs and wants of local customer groups cities, neighborhoods and even specific stores. For example, Wal-Mart customize its merchandise store by store to meets the needs of local shoppers. Wal-Mart store designers create each new stores format according to neighborhood characteristics-stores near office parks, featuring ready-made meals for busy workers.Individual MarketingIndividual Marketing tailoring products and marketing programs to the needs and preferences of individual customers. Individual marketing has also labeled one to one marketing, mass customization, and markets of one marketing.Mass customization is the process through which firms interact one to one with masses of customers to design products and services tailor made too individual needs.Dell creates custom-configured computers.Hockey stick maker Branches Hockey lets customers choose from more than two dozen options including stick length, blade patterns and blade curve and turns out a customized stick in five days.

Bases of Market Segmentation1. Geographic Segmentation:A marketer divides the target market into different geographical units such as nations, states and regions. A company may decide to operate in one or a few geographical area, or to operate in all area but pay attention to geographical differences in needs and wants . For example Citibank offers different mixes of branch banking services depending on neighborhood demographics areasA particular brand can be popular only in North India then North Indian market can be divided on the bases of zones, villages, cities, climate etc.For example, Amul was initially marketed in Gujarat.On a global scale, video game companies create different versions of their games depending on the world region in which the game is sold.2. Demographic Segmentation: Demographic segmentation divides the market into groups based on variables, such as age, gender, family life cycle, income, occupation, education, religion and nationality. Demographic factors are the most popular baes for segmenting customer groups, customer needs, wants and usage rates often very close with demographic variables.

a. Age and Life Cycle stage: consumer needs and wants change with age. Some companies use age and Life-cycle segmentation, offering different products or using different marketing approaches for different age and life cycle groups. For examples, HDFC Standard Life Insurance has launched pension plans retired people so that they do not have to depend on any one for their financial needs.b. Life- Stage: Persons in the same part of the life-cycle may differ in their life stage. Life stages defines a persons major concern, such as getting married, deciding to buy a home, sending the child to school, marrying off their children , planning for retirement and so on.c. Gender: This segmentation has been used in clothing, cosmetics and magazines. For example, Barbie a chain of retail stores in India offers clothing only for girlsMore recently, many mostly womens cosmetics makers have begun marketings mens lines. Nivea markets nivea for Men. A neglected gender segment can offer new opportunities in markets ranging from motorcycles to guitars.d. Income: The marketer of products and services such as automobiles, clothing, cosmetics, financial services, and travel have long used income segmentation. Many company target customer with luxury goods and convenience services. For example, for a price, luxury hotels provide amenities to attract specific groups affluent travelers, such as families, expectant moms, and even pet owners.However, not all companies that use income segmentation target the affluent. For example, many retailers, such as, Big Bazaar with its tagline Isse sasta aur kahan successfully target low and middle-income groups.e. Generation: Each generation is profoundly influenced by the times in which it grows up- the music, movies, politics, and defining events of that period. Members of the same generation share the same major cultural, political and economic experiences and have similar outlooks and values. The younger generation plays significant roles, not only as consumers but also as influencers and initiators.f. Social Class: It is relatively permanent and ordered division in a society whose members share similar values, interests and behviours.3. Behavioral segmentation:Behavioral segmentation divides buyers into groups based on their knowledge., attitudes, uses, or response to a product. Many marketer believe that bahaviour variables are the best starting point for building market segments.a. Occasions: Buyers can be grouped according to the occasions when they get the idea to buy, actually make their purchase or use the purchased item. Occasion segmentation can help firms build up product usage. Example: Coco-Cola promotes its brands as a family drink on occasions like diwali, Christmas and family outings. Some occasions like Valentine Days were originally promoted partly to increase the sale of candy, flowers, cards and other gifts. Occasions Regular occasion Seasonal Special ooccas Holiday b. Benefits Sought: A powerful segmentation is to group buyers according to the different benefits that they seek from the product. Benefit segmentation requires finding the major benefits people look for in the product class, the kinds of the people who look for each benefits, and the major brands that deliver each benefit.For example, Fit and Polish consumers seek a balance between function and style- they exercise for results but want to look good doing it. Serious sports competitors exercise heavily and live in and love their activewear- they seek performance and function.Thus, each segment seeks a different mix of benefits. Benefits Convenience SpeedQuality Service Economyc. User status: markets can be segmented into nonusers, ex-users, potential users, first time users, and regular users of a product. Marketers want to reinforce and retain regular users, attract targeted nonusers and reinvigorate relationships with ex-users.In India, parents of the bride invest heavily ingifts for their daughter to facilitate the establishment of a new home for the younf couple. Masters reminds parents thet their long-lasring foam mattress and pillows will be the ideal gift foe a long and happy life for their daughter. Through the use of jingles like Meri nanhi pari..Naey Ghar chali, master attracts young couples-to-be and their parents through its highly emotional message.Uesr Status Regular user Nonuser Ex-user Potential user d. Usage Rate: markets can be segmented into light, medium, and heavy product users. Heavy users are often a small percentage of the market but account for a high percentage of the consumption. For example, Burger King targets what it call Super Fans, (age 18 to 34). They eat at Burger King on average of 16 times a month. Usage Rate Light user Medium user Heavy usere. Buyer Readiness Stage: Some people are unaware of the product , some are aware, some are informed, some are interested, some desire the product and some intended to buy. The relative number of consumers at different stages makes a big difference in designing the marketing program.f. Loyalty Status: A market can also be segmented by consumer loyalty. Consumers can be loyal to brands(Colgate), stores(Big bazaar/ Shoppers Stop), Companies (Toyota). Buyers can be divided into groups according to their degree of loyalty. i. Hard core loyals : Consumers who buy only one brand all the time.ii. Split loyal : Consumers who are loyal to two or three brands.iii. Shifting Loyals : Consumers who shift loyalty from one brand to another.iv. Switchers : Consumers who show no loyalty to any brands.g. Attitude: A consumer can have five attitudes about products i.e. enthusiastic, positive, indifferent, negative and hostile.

4. Psychographic Segmentation: It involves developing sub group identification on the basis of psychological characteristics. For example, perceptions, attitude, opinions, interests or a combination of these.Psychographic segmentation divides buyers into different groups based on social class, lifestyle or personality characteristics. People in the same demographic group can have very different psychographic makeup.________________________________________________________________Social Class: Lower lowers, upper lowers, working class, middle class, upper, uppersLifestyle: Achievers, Strivers, SurvivorsPersonality: Compulsive, gregarious, authoritarian, ambitious __________________________________________________________________

ADVANTAGES OF MARKET SEGMENTATION1. Understand potential customers.2. Pay proper attention to particular areas.3. Formulate marketing programmes.4. Select channels of distribution.5. Understand competition.6. Use marketing resource efficiency.7. Advertise the products and launch sales promotion programmes.

MARKET TARGETING:Market TargetingTarget market consists of a set of buyers who share common needs or characteristics that the company decides to serve.

Evaluating Market SegmentsIn evaluating different market segments, a firm must look at three factors:a. Segment size and growthb. Segment structural attractivenessc. Company objectives and resourcesThe company must collect and analyze data on current segment sales, growth rates, and expected profitability for various segments.The companies also need to examine major structural factors that affect long-run segment attractiveness. For example, a segment is less attractive if it already contains many strong and aggressive competitors. The existence of many actual and potential substitute products may limit prices and the profits may limit prices and the profits that can be earned in a segment. The relative power of buyers also affects segments attractiveness.Finally a segment may be less attractive if it contains powerful suppliers who can control prices or reduce the quality or quantity of ordered goods and services. Even if the segment has the right size and growth and is structurally attractive, the company must consider its own objectives and resources. Company may lack the skills and resources needed to succeed in an attractive segment.

Undifferentiated(Mass) Marketing.Differentiated (Segmented) Marketing.Concentrated Marketing (Niche)Micromarketing(local or individual)Targeting BroadlyTargeting Narrowly

After anlaysing different segments, the firm must select one or many segments to serve. The firm can select one or more patterns from the following patterns: 1. Single Segment concentration M1 M2 M3

P1 P2 P3For example, Woodland Shoes, Cellular Phones2. Selective Specialization M1 M2 M3

P1P2P3 For example, DENTA cream tooth powder (Dabur)

3. Product Specialization M1 M2 M3

P1P2P3 For example, Mahindra and Mahindra jeeps, Bajaj Auto4. Market Specialization M1 M2 M3

P1P2P3 For example, Sultan Chand & sons (Books covering all type of student needs, school, colleges and institutes).5. Full Market Coverage M1 M2 M3

P1 P2 P3

For example, Pepsi, Titan, Bata

Choosing a Targeting StrategyCompanies need to consider many factors which choosing market targeting strategy.Which strategy is best depends on company resources. When the firms resources are limited, concentrated marketing makes the most sense. The best strategy depends on the degree of product variability. Undifferentiated marketing is more suited for uniform products such as grapefruit or steel. Products that can vary in design, such as cameras and automobiles are more suited to differentiation or concentration. The product life cycle stage also must be considered. When a firm introduces a new product, it may make the most sense. In the maturity stage of life cycle, differentiated marketing begins to make more sense.Another factor is market variability. If most buyers have the same tastes, buy the same tastes, buy the same amounts, and react the same way to marketing efforts, undifferentiated marketing is appropriate. Finally, competitors marketing strategies are important. When competitors use differentiated or concentrated marketing, undifferentiated marketing can be suicidal. When competitors use undifferentiated marketing, a firm can gain an advantage by using differentiated or concentrated marketing, focusing on the needs of buyers in specific segments.PositioningPositioning consists of arranging for a market offering to occupy a clear, distinctive and desirable place relative to competing products in the minds of target customers.Why Positioning?Objectives of Positioning:1. To create a distinctive place of a product or service in the minds of potential customers.2. To convey attractiveness of the product or the service to the target market.3. Place an intangible service within a more tangible frame of reference.4. Help influence both service development and redesign of existing service.5. Follow consideration of the competitors possible moves and responses so that appropriate action can be taken as.6. To give the target markets the reason of buying your services and then design the whole strategy.7. To provide guidelines for the development of marketing mix with each element being consistent with the positioning.Positioning Analysis seeks answers to the following questions:1. What is the current position of the product or service in the mind of the target customer?2. What position does the firm want to own i.e., looking for positions or holes in the market place?3. How can it be done (select the appropriate approach that will work for the target market)?

Qualities of a successful positioning:Creation of a successful position comes from two sources i.e. physical product differentiation and brand communication.The following are the qualities that help to make a successful position:-1. Relevance: Often brand managers identify and position the brand on an attribute, which is different but is relevant for customers.2. Distinctiveness: Customers have few needs that are unfulfilled and the customers have many choices to fill the needs they have. If brands position lacks distinctiveness, it will be forced to compete on the basis of price and promotion only.3. Coherence: There is a need to integrate all forms of communication to bring coherence to the brands position.4. Commitment: Once a position is adopted, it takes commitment to stay committed to the position in the face of competitors threat to ensure the long-term position of the brand in the market.5. Durability: The brands position built over a period of time in consumers mind. 6. Clarity: A brands position should have clarity so that it will be easy to communicate and quick to comprehend.7. Courage: Adopting a strong position requires clarity of vision and courage for the brand manager.POSITIONING PROCESSVarious Steps of developing affective positioning:1. Market Positioning2. Psychological Positioninga. Objective positioningb. Subjective positioning\3. Positioning approachesThe positioning process should be dynamic and it must keep pace with the changes in the marketing environment in including changing needs of the customer and changing tactics of the competitors.STEP 1: Market PositioningIt is defined as the process of identifying and selecting markets or segments, that represents business potential, to determine the criteria for competitive success.This must be based on the following factors:1. Thorough knowledge of needs, wants and perceptions of the target market, and2. Benefits offered by the service offered.The service provider may have a wish image but as a matter of the fact no image exists if the customers do not perceive the image of the offering.The evaluation of the image of the offering perceived by the customer can be used to identify the crucial elements, which comprise the benefits.STEP 2: Psychological Positioning:This step involves the use of communication to convey, the firms or its offerings identity and image to the target market. It convert the needs into images and positions the offering in the customers mind. Psychological positioning enables marketers to create a unique product image with the objective of creating interest and attracting customers.For example, two tourist attractions which are dissimilar may be perceived as the same by a consumer and two similar tourist attractions may be perceived as different. Marketer make an attempt to control the positioning and do not allow it to let it happen.2 kinds of Psychological Positioning:1. Objective positioning2. Subjective positioningObjective Positioning. The OP relates to the objective attributes of the physical product. It is concerned with creation of an image of service offering that reflects physical features and functional features. Usually Psychological positioning is concerned with what actually is, what exists. e.g Mussorie is mountain.OP is usually used in the Tourism industry. An attraction or destination which has a unique features, that feature can be used to objectively position the attraction or destination to create an image and to differentiate it from the competition.Degree of Objective positioning depends upon the uniqueness of features. If the features of an attraction are not unique the objective position will be of lesser degree.For example, Many tourist attractions which are promoted with pictures of beaches or mountains fail to create a distinct image or successfully differentiate the offering.Subjective PositioningSP relates to the subjective attributes of the service offering. It is the (mental perceptions) image and other attributes perceived by the tourist and not the physical aspect of the offering. For example, For a tourist perceptions about Taj and resulting image may not necessarily reflect the true state of the Tajs physical characteristics. They may simply exists in tourists mind and not all the tourists images agree with a particular perception or image.STEP 3: Positioning ApproachesThere are several approaches to positioning of product and service offerings. Service marketers may select an appropriate approach from the following positioning approaches based on the information collected during market positioning and psychological positioning. Psychological positioning creates as image but positioning approach completes the picture , using visuals and words, reinforce what the offering does best and what benefits are offered by it.1. Positioning by attributes, features or customer benefits:In this marketer place emphasis on the benefits of the particular featuror attributes of the offering.2. Positioning by Price ValueValue for money can be utilized for positioning the offering effectively. In the international environment price is normally not used for positioning as the customer may not identify lower price with lower quality. Price value can e exemplified by Malaysia tourisms positioning statement says Malaysia gives more natural value i.e it is projecting not only more value for your money but added benefit of its natural attractions.3. Positioning by use of application:Service offering is positioned on the basis of the reason for its use.For example, Hotel Inter-Continental, New Delhi positions itself to the meeting market with meeting place and promises one stop meeting solutions, consistent standards, attention to detail and personalized service.4. Positioning according to users or class of usersThis relates to consumer segments using a service offeringAirlines target the executive class, the frequent fliers and the tourists.For example, The Ashok group position itself to corporate world with Conference venues can help write corporate history and promises attention to the minutest detail.5. Position with respect to product classThe positioning could be based on functional benefits as well as symbolic and emotional benefits. This technique is generally used to associate an offering with experiences that are unique.For example, Thailand Tourism positions as holding a convention in Thailand is :Smooth as silk where sky is the limit.6. Positioning against competitionThis approach is used to meet the competition HEAD ON to bring out differences between destinations. The international player avoid this approach because it may involve negative statements about other country or regions. but it is regularly employed in product and services marketingFor example, Visa cards compete with American Express by examples of places in the world that do not accept American Express cards only Visa cards are accepted.7. Positioning by endorsementIt involves use of celebrities or other product successes. Rebok has used Rahul Dravid for their products.8. Positioning by quality dimensionsRATER(Reliability, Assurance, Tangibility, Empathy and Responsiveness is usually used for positioning the services. Firms choose one or combination of more tan one quality dimensions to position their offering.a. Reliabily: it refers to ability to perform the service dependably and accurately. First Flight Couriers Ltd may use Any time Any where First be using reliability dimensions.Telecom services, airlines services, banking services cannot stay in game without reliability.b. Assurance: Assurance is knowledge, courtesy of employees and their ability to convey trust and confidence. The insurance health care and banking usually use this dimension for positioning.For example: PNB positions itself by conveying trust and confidence by . The name you can Bank uponc. Tangibility: It relates to physical facilities, equipment, personnel and communication materials. Tangibility is used by hotels, restaurants, tourism and retailers. As the tangibles of service are highly visible elements, they must be designed such that they are consistent with positioning approach.For example, Sahara Airlines has always placed tremendous importance on customer satisfaction and they have been positioning themselves as High on achievement by showing the awards won by them in their advertisements.d. Responsiveness: It relates to willingness o help customers provide prompt service. At Hotel Radisson every question asked is answered by Yes I Can! Be it midday or midnight people at Radisson are trained to respond to the customer needs promptly. Through Responsiveness, they build the repeat business.9. Positioning by Physical Evidence: Someone who purchases a service may go away empted handed but does not go empty headed. They have memories, and it is the jpb of the service provider to make these memories stay as possible. The service organizations use physical evidence like advertisements, brochures, visiting cards etc. to solidify the image of the organization or its offering in the customers mind. The quality of paper, graphics, colour schemes of a brochure, building aesthetics, exteriors all are significant in positioning10. . Positioning by Process: it is defined in term of two variables:a. Complexityb. DivergenceComplexity relates to number of steps involved in service delivery.Divergence relates to latitude or variability f those steps. These two variables play important role in positioning or repositioning of the services.For example:1. An electrician who provides repair services are low in complexity and high in divergence because each time he repairs, his performance is varying.2. The car washing service process is low in complexity as well as divergence because number of steps involved are not too many and also there is hardly any variability in performance.

Product ClassificationA. Durability and Tangibility Classificationa. Non durable goods: Non Durable goods are tangible goods normally consumed in or few days. Example: soap, salt and biscuits.b. Durable Goods: are Tangible goods that can normally be used for many years. For example, color TV, refrigerator, washing machines and vacuum cleaners.c. Services are intangibles, inseparable, variable and perishable productsFor example: airlines and banking services.

B. Consumer good classificationConsumer products are products and services bought by final consumers for personal consumption. Marketers usually classify these products and services further based on how consumers go about buying them.

Consumer products include continence products, shopping products, specialty prod. And unsought products.

These products differ in the ways consumers buy them.

a. Convenience Products: are consumer products and services that consumers usually buy frequently, as soon as they feel the need for them, they require minimum or no planning before the purchase. Example: detergent, soft drinks, cigrattes, cholocates magazines , fast food etc.Convenience goods can be further classified into three categories:1. Staple goods: Consumer [purchase on regular basis2. Impulse goods: Consumer purchase without any planning or search effort3. Emergency goods: Consumer purchases on urgent need.b. Shopping products: are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price, and style. When buying shopping products and services, consumer spend much time and efforts in gathering information and making comparisons. These are goods that the consumers in the process of selection and purchase characteristically compares on such bases as suitability and quality Examples include furniture, clothing, used cars, jewelry and hotel and air lines. Shopping products marketers usually distribute their products through fewer outlets that are known for the quality of their merchandize and provide deeper sales support to help customers in their comparison efforts. Shopping goods are of two types:Homogeneous goods, these are similar in quality but different enough in price to justify shopping comparison.Heterogeneous goods, these are differ in product feature and services that may be more important than price.

c. Specialty Products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. They are more expensive than convenience products and are not purchased frequently. Examples include specific brands of cars, high priced photographic equipment, designer clothes, and household appliances like TV, refrigerator and washing machines and services of medical or legal specialists. Eg: A Mercedes is a specialty product.Buyers do not compare specialty product. They invest only the time needed to reach dealers carrying the wanted products. However, they spend a lot of time in planning the purchase deciding on the brand and arranging for the money to buy the product.Eg carsd. Unsought products are consumer products that the consumer either does not know or knows about but does not normally think of buying.Eg Life insurance, donation for charity and blood donations to hospitals. By their very nature, unsought products require a lot of advertising, personal selling and other marketing efforts.C. Industrial products:A IP are those purchased for further processing or for use in conducting a business. Thus distinction between a consumer product and IP is based on the purpose for which the product is brought.Three groups of IP and services include1. Materials and parts2. Capital item3. Suppliers and servicesMaterial and parts include raw materials and manufactured materials and parts. Raw mat consists of farm products (wheat, cotton, fruits, vegetables) and natural products (fish, crude, petroleum, ore)Manufactured materials and parts consists of components materials(iron, cement, wires) and component parts ( small motors, tires, castings)Capital parts are long lasting goods that facilitates developing or managing the finished product. They include two groups: installation and equipmentsInstallation consists of major purchases suh a s builidings( factories , offices) and fixed equipment includes portable factory equipment and tools (hand tool, lift trucks) and office equipment (computers. Fax machines , desks) they have a shorter life than installations and simply aid in the production processSuppliers and services:Su[pplierss include operating supplies(lubricants, coal, paper, pensils a). and repair and maintenance items(paints, nails, ))Suppliers are the convenience products of the industrial field because they are usually purchased with a min. of efforts or comparision. Bus. Services include maintenance and repair services ()windows cleaning, computer repair) and bus. Advisory services(legal, mgmt consulting, advertising)) such services are usually supplied under contract.These are short listing goods and services that facilitate developing or managing the finifhes product.

Product Levels

In planning its market offering, the market offering, the marketer needs to think through five levels of the product. Each level adds more customer value and the five constitute a customer value hierarchy. I Level - Core BenefitThe most fundamental level is Core Benefit: the fundamental service or benefits that the customer is really buying. A hotel guest buying rest and sleep, the purchaser of drill is buying holes. Marketer must see themselves as benefit providers.

Potential ProductAugmented ProductExpected ProductBasic Product Core Benefit

II Level - Basic ProductAt the second level, the marketer has to turn the core benefit into basic product. Thus a hotel room include a bed, bathroom, towel, dresser etc.

III Level - Expected ProductAt this level, the marketer prepares an expected product, a set of attributes and conditions buyer normally expect when they purchase this product. Hotel guests expect a clean bed, fresh towel, working lamps, and a relative degree of quiet. Because most hotels can meet this minimum expectation, the traveler normally will settle for whichever hotel is most convenience or least expensive.

IV Level - Augmented ProductAt the fourth level, the marketer prepares an augmented product that exceeds customer expectations. A hotel include a remote control Television set, fresh flowers. Rapid check in, fine dining and room service. Today competition essentially takes place at the product augmentation level. In less developed countries, competition takes place mostly at the expected product level. Product augmentation leads the marketer to look at the users total consumption system: the way the user performs the tasks of getting, using, fixing and disposing of the product. Some things should be noted about product augmentation strategy:1. Each augmentation adds cost. The marketer has to ask whether customers will pay enough to cover the extra cost.2. Augmented benefits soon become expected benefits, this means that competitors will have to search for still other features and benefits.

V Level - Potential ProductAt this level, all the possible augmentations and transformations the product might undergo in the future. Here is where companies search for new ways to satisfy customers represent an innovative transformation of the traditional hotel product.Successful companies add benefits to their offering that not only satisfy customers but also surprise and delight them. Delighting is a matter of exceeding expectations. PRODUCT MIX

Customers decision to buy a product is potentially influenced by:

1. Range2. Style3. Presentation of the product

And all manufacturing and service organizations offer a variety of different products and services. Marketers policy decisions may be approached from the following possible levels:

1. Product item2. Product Line3. Product Mix

Product item is a specific model, brand or size of product a company sells.

Product Line is a groupof products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed througyh the same typwes of outlets, or fall within a given price ranges. For example, Nike produce s several lines of athletic shoes and apparel.andMarriott offers several lines of Hotels.

The major product line decision involves product line length the number of items in the product line.Product line length is influenced by company objectives and resources. For example, one objective might be to allow for upselling. Thus, BMW wants to move customers up from 3-series models to 5- and 7- series models.

Another objective might be to allow cress-selling. Hewelett-Packard sells printers as well as cartridges.

Product Mix: Product mix consists of all the different product lines a company offers.A company product mix has a certain width, length, depth and consistency.

For Example: P&G

________________________PRODUCT MIX WIDTH______________________________

Detergents ToothPaste Bar Soap Disposal Diapers

Ivory stone 1930 Gleem (1952) Ivory (1879) Pampers (1961)Tide(1946) Crest (1955) Kirks (1885) Luvs (1976) Cheer(1950) Lava (1893) PRODUCT Dash(1954) Camay (1926) LINE Oxydol(1954) Zest (1952)LENGTH Bold(1965) Safeguard (1963) Gain(1966) Coast (1974) Era (1972) Oil of Olay(1993)

1. Width of Product Mix: refers to how many different product lines the company carries. Table above shows product mix width of 4 lines. In fact, P&G produces many additional lines.The product width could be narrow and wide. As an example Project Management Institute of India only offers course on Project management whereas IIT, New Delhi offers courses on engineering, management, Research and pure sciences. Firs choose of offer wide or narrow product or services lines on the basis of organizational objectives and capabilities and market expectations.

2. Depth of Product Mix: average Number of products items within each products lines. In other words, the depth is measured by assortment of sizes, colours, models, prices, and quality offered within each product line. For example, if crest comes in three sizes and two formulations (regular and mint)crest has depth of six. The average depth of P&G product mix can be calculated by averaging the number of products within brand group.

3. Length of product mix refers to the total number of items in the mix. In above table it is 20. Average length of a line is 5. Which is total length by the number of lines.

4. Consistency of the product mix is the relationship amongst product line in terms of their sharing the end use, distribution outlets, consumer group(s) and price range. Generally a consistent mix is easily manageable compared to inconsistent one.In consistent mix environment the firms concentrate on marketing and service delivery expertise, create a string image and generate solid interpersonal relationships. Excessive consistency in product mix may lead to limited product or service product assortments.

P&G product lines are consistent insofar as they are consumer goods that go through the same distribution channels. The lines are less consistent insofar as they perform different functions for the buyers.

PRODUCT INNOVATIONA product or a service which is profitable today cannot be tomorrow or at some future time. It is either replaced by another one or it degenerates into profits less price competition. The underlying reason is that the market is highly dynamic. Therefore, a management places emphasis on product innovation and in modern times the watch word for management has been innovate or die.

It is necessary due to following factors:1. Market Changes:The market is dynamic and therefore existing products and product lines proveinadequate for meeting buyer demand. Sophisticated buyers buy products tailored to their individual needs rather than the total markets generalized needs. Market changes have been rendered possible with the development and growth of new media of communication the ease of reaching this media and the changes in fashion therefore, to avoid their products going out of markets, the manufacturer emphasis on product innovation.2. Changes in Technology:It has not widened the existing markets existence, through the creation of entirely new products. For example, not only the market for portable radio has extensively widened but that for record players as TV has also become feasible. Large amount of money is. Therefore being spent in technical research so that product innovation become must.3. Profit less Price competition:Normally, the competitive forces in the modern system do not permit the continuance for a long time of a firm if it does not produce new products or make improvements in the existing products. The experience shows that markets for mature or dying products are highly competitive. Therefore, not only to escape profit less price competition, but also for satisfying customer expectation, manufacturer engage in continuum product innovation.4. Consumer Preference:With the passage of time, the existing product may not be liked at all by the buyers, which means that they become obsolete. This has been the result with the horse driven Tanga have been replaced by cars and bikes. The greater the variety of products placed by a firm, the smaller is the chance of going that product out of the market. 5. Other factors:a. A company may develop new products to utilize the basic materials it is already making or to utilize waste or scrap from present production.b. A co. may add new products to even out sales fluctuation resulting from seasonal or cyclical factors, c. It may seek new products to counteract the highly erratic buying behavior of certain customers. Such as government buyers.

DIFFUSION OF INNOVATIONSDiffusion of Innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures.In 1962 Everett Rogers, a professor of rural sociology published Diffusion of Innovations. In the book, Rogers synthesized research from over 508 diffusion studies and produced a theory for the adoption of innovations among individuals and organizations.The book proposed 4 main elements that influence the spread of a new idea: the innovation, communication channels, time, and a social system. That is, diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system.ElementDefinition

InnovationRogers defines an innovation as "an idea, practice, or object that is perceived as new by an individual or other unit of adoption"

Communication channelsA communication channel is "the means by which messages get from one individual to another"

Time"The innovation-decision period is the length of time required to pass through the innovation-decision process". "Rate of adoption is the relative speed with which an innovation is adopted by members of a social system".

Social system"A social system is defined as a set of interrelated units that are engaged in joint problem solving to accomplish a common goal".

The Adoption Process: The adoption process as the mental process through whch an individual passes from first hearing about an innovation to final adoption.Stages of Adoption:

AwarenessInterest EvaluationTrialAdoption

The five stages are:1. Awareness: At this stage the individual is exposed to the innovation but lacks complete information about the product.2. Interest: At this stage the individual becomes interested in the new idea an seeks additional information about the product.3. Evaluation: At the evaluation stage the individual mentally applies the innovation to his present and anticipated future situation , and then decides whether or not to try it.4. Trial: The individual makes full use of the innovation.5. Adoption: At this stage the individual decides to continue the full use of the innovation. Rogers defines an adopter category as a classification of individuals within a social system on the basis of innovativeness. In the book Diffusion of Innovations, Rogers suggests a total of five categories of adopters in order to standardize the usage of adopter categories in diffusion research. The adoption of an innovation follows an S curve when plotted over a length of time. The categories of adopters are: innovators, early adopters, early majority, late majority, and laggards

Innovators:Innovators are the first individuals to adopt an innovation. The first 2.5% of adopters are called "Innovators. Innovators are willing to take risks, youngest in age, have the highest social class, have great financial lucidity, very social and have closest contact to scientific sources and interaction with other innovators. Risk tolerance has them adopting technologies which may ultimately fail. Financial resources help absorb these failures. They are willing to tolerate initial problems that may accompany new products or services and are willing to make sh