gist marketing

8/12/2019 Gist Marketing

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Marketing:

Marketing makes the demand curve less sensitive to price variations.

Marketing is the science of transactions.

It is the set of activities and process to create value to consumers and to communicate, deliver,

capture ..

Marketing involves the following aspects.

It is all about satisfying consumer needs and wants. It deals with transactions or it entails exchanges. It helps to create value to consumers. It involves decisions regarding 4P- Product, Price, Promotion and Place.

o Product fulfils the needs of consumers, it creates value.o Price captures the demand.o Place is all delivering the product.o Promotion is all about communication and educating consumers.

Marketing can be performed by organizations or by individuals. It could be B2B, B2C or C2C.Supply chain is set of approaches and techniques that firms employ to efficiently integrate suppliers,

manufactures , distributors, warehouses , stores and other partners such as transport companies

into a seamless chain in which goods are produced at right time, in right quantity and delivered at

right place, minimizing system wide costs and satisfying consumer needs.

People stick to a brand to reduce uncertainty.

All marketing activities are aimed at reduction of transaction cost and uncertainty.

4 Eras:

Production Era, Sales Era, Marketing Era and Value based Marketing.

Value based marketing involves the following 3 aspects

o Sharing market information across organization.o Providing best cost benefit proposition- reduce cost or provide more benefits.o Relational orientationmaintaining a long term relationship with consumer, distributors,

suppliers and not just one transaction relationship.

Marketing is important because

o It creates employment.o It provides consumers with necessary information.o It integrates the organization by working with R&D, Operations, Suppliers, Distributors etc.o It helps firms to increase global presence.o It has a tinge of social cause.


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Market driven

1. Collect the customer information and permeate it to all functions of the organization. Knowwho is the important customer, whom to target, from where to collect information.Summary of reports helps managers to take a quick look. Visit costumers place to

understand the usage of products better. Visit fairs to know competitors products.

2. Integrated tactical and strategic decision making among various departments oforganization. There should be regular discussion btw R&D, operations, sales , finance to take

collaborative decisions.

3. Collaborative execution with commitment.3 Cs for being market driven,Coordination and Commitment are 3 prime factors to be

customer driven.

Marketing Myopia:

A brilliant paper by Theodore Levitt, the paper speaks about how companies fail to focus on

consumer needs. The author explains with examples on how companies failed without

predicting on what is going come in future. The companies failed to recognize the

substitutes. Companies sticking to just few of products and expecting the products to sell big

is incorrect. Instead they should look for what the consumers need, and how the companys

expertise could be utilized to fulfil consumers need. Only reducing prices and mass

production will not help doing these along with response to consumer preferences will make

sure companies survive. Companies must be adaptable, agile and ready for change.

Few take away:

If thinking is the intellectual response to a problem then the absence of problem leads to

absence of thinking. One should not stop thinking and being agile after moving to comfort

zone.

Companies start with products and then build marketing plans to suit the product, this is

incorrect. It should be other way aroundmarketing should provide the inputs to build a

good product.

Sticking to just one product and its optimization does not work out forever. One needs tokeep looking on how to grow the business organically, on how new needs to consumer could

be met with the existing expertise in the company.

One should not try to save his/her pride when he is about to lose his shirt.

Marketing Strategy:

Begins with 5C analysisCustomer, Competitor, Capability, Context, andCollaboration.

o Customer needs and wants.


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o Who are my competitors and what is the competitor doing , what is hispricing , offerings etc.

o What is my own capability and skills?o What is the macro economic, cultural and technological context?o How to collaborate with suppliers, distributors and other partners.

Market Segmentation, Target market selection and Product Positioning are 3 prime activities to be

done before one starts deciding on marketing decision variables.

Dividing customers based on various criteria is called segmentation.

Segmentation could be done based on - Demographic factors, geographic factors or life style factors.

From the available segments a company should target the market that

Whos requirement could be filled by the company. Company can make profit. The segment service is in line with goals of the company. The probability to beat customers is high.

The process of creating an impression in the minds of target customers is called positioning.

Segmentation, target market selection and positioning are most important aspects, once these 3 are

decided one can go about deciding 4P around these 3 factors.

My Perspective: -

1. For B2B marketing one important consideration iscan customer produce the product onhis own , is he doing it now or is he planning to do in future ? Eg Server Industry and IT

Services industry.

2. One should also consider the probable substitutes that can come in next few years beforedeveloping high Tech expensive products.

Marketing Mix (Decision) Variables: Product, Place, Promotion and Price

Product:

Product along with the pre sales support, after sales support, place of delivery, product brand, and

other factors make the integrated product or augmented product.

A Company needs to decide on product lines breadth, length and depth.

Breadth is the number of different products in the same category such as notebook, netbook, PC.

Length is the number of products in a variety of product, e.g. variants of laptop differing in prize and

features.

Depth is the variation in colour, minor changes within a single product.

One needs to make decision on introducing a product in a existing line , deprecating a product from

the line, or introduction of a new line altogether.


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New Product Management:

Opportunity Identification: Find out new requirements of consumers, check if company hasthe capability to serve the requirements, verify on financial benefits.

Design and Test: Design the product see if it as per consumers needs through simulation ortest marketing.

Production Introduction: If test and design are successful then decide on geographies tointroduce and the price etc

Life cycle management of product: See what new requirements come up, how technology ischanging, what competitors are doing and enhance the product.

Place (Marketing Channels)

A channel is set of mechanisms or network through which an organization keeps in touch with

consumer to understand their requirements and deliver goods.

Two major decision in channels are :

Channel design and channel management.

Channel Design:

Channel design involves decision on breadth of channel and length of channel. Breadth refers to spread of the channel and length refers the number of intermediaries. Irrespective of the length of the channel all of the consumers requirement should be met. An organization needs to decide if it would go for direct selling or indirect selling or mix of

both. The above decision needs is as per the product.

Channel Management:

Channel Conflict resolution. Communicate with partners in channel.

Promotion:

Decisions on Advertising, Promotions, Personal Selling and Public relations.

6M needs to be considered for a company before promotion.

Market, Mission, Message, Media, Money and Measurements. 6M help to decide on how togo about promotions.

Non Personal Vehicles: Advertising, Promotions and Public Relations.

Push Strategy : Push the products to consumers thro retailers thro advertising.

Pull Strategy: Develop such an insistence in consumer that he pulls the product from distributor.


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Market Planning and Market Strategy:

In simple words strategy is the process of mapping ones resources with available opportunities.

Marketing strategy identifies STP, marketing mix and a way to have sustainable advantage.

A company is said to have sustainable advantage when it has created walls around its customers

which are not easy to be pulled down. Competitive advantage cannot be built using just price or any

other methodology which can be copied easily.

There are 4 ways to deliver value to customers

Service Excellence: Outstanding customer service, customer retention and relationship withcustomer.

Operational excellence: Optimized operations, supply chain, good network with suppliers,distributors.

Product excellence: Excellent perceived value for the product, great brand value and clearpositioning.

Location excellence: Availability of the product, location of shop, its ambience etc.Marketing Plan

Executive Summary Situation Analysis

o Sales Analysiso Competitor Analysiso Customer Analysiso Attractiveness of the Market

History and Trends Planning Assumptions Marketing Strategy

o Problems , Growth Opportunities, Objectiveso How to Reach Objectives (STP),o What to do exactly (4P), Marketing Programs

Financial Return and Estimations Monitor and Control Risk and Contingency Plans

Market plan providesa blue print of what company wants to do , what are its mission , its strength

and weakness, strategy for 4P and strategy for control.

Marketing plan has 4 stages:

Defining the mission. SWOT analysis. Implementation

o STP identification.o 4P Strategy.


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ControlMission crisply conveys the companys objective and it clarifies what products company sells and

what are its unique points. This needs to be very clear before any further decisions are taken.

SWOT analysis demarcates the strengths and weakness of an organization and opportunities andthreats inherent in the market. A company will have internal and external strengths, internal and

external weakness. Threats and opportunities exist for every company and this needs to understand

to overcome threats and harness opportunities.

STP (Segmentation, Target and Positioning):

Segmentation is the process of dividing market into unique groups of customers with unique needs

and wants.

Targeting is the process of selecting the segments which yields benefits to company and where

company can deliver value and have substantial advantage.

Positioning is the process of conveying the value proposition, benefits of a product to the customer.

Positioning clearly differentiates the product from its competitors; it makes the customer

understand it.

Market Mix and Resource allocation:

Product is bundle of benefits, it creates value to customer. It should meet customersneeds and

wants. Most important point is consumers should consider the product value for money.

Price is the rate at which company wants to sell the product. This captures the market. Pricing canbe of 3 major types

Cost based pricingProfit as percentage of cost price. Competitor Pricing - Price based on competitors price. Value based pricingpricing based on perceived value.

Pricing is very tricky because if priced high product will not sell and if priced very low profits do not

happen.

Place is the location at which the product is sold, the convenience offered, internet facility , online

buying etc The delivery should be valuable to the consumer.

Promotion is communicating the value proposition of product to customers, it is about making

customers know about the product, its features, providing consumers hands on experience ,

marketing management.

Market Research:

There are basically 5 steps in market research.

Identify Objectives of Market Research Design the research methodology


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Collect the Data Analyse the Data Represent the results

The objectives and problem to be root caused should be as clear as possible for market research.

The Research could be based on primary data or secondary data.

It could be exploratory research or conclusive research.

Primary Data is

Accurate Expensive Time Consuming Expertise Intensive

Secondary Data

Less Expensive Quickly Available Might not be always relevant Less Expertise required

Collection of Data:

Exploratory or Conclusive methodExploratory:

For initial research Group Interview , In Depth Interview , Observation More of Qualitative

Conclusive:

Survey based - Questionnaire based

Experiment Based Scan Data Based Panel based

Primary Data and Secondary Data

Primary Data is collected by the researcher, it is more relevant and mostly more precise, more

expensive.

Secondary Data is collected from journals, other market research publications; this data is cheaper

but may not be precise and relevant. Secondary data can also be from internal sources.

Experimental Data and Non Experimental Data :


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Data collected after making some changes in the marketing variables is experimental where as if no

changes are made and the data is collected then it is non-experimental data.

Treatment: Is the process of making changes in the marketing variables such as price or promotion.

Experimental is further divided as filed and laboratory experiments.

Quantitative and Qualitative Data:

Quantitative data is number based whereas qualitative is more of interpretation based.

Qualitative data lack numerical measurement and statistical analysis. For example as discussion

with a customer or group of customers.

Quantitative Method of Research follows the below steps

Problem Statement Identification Questionnaire Design Sampling Collection of Data Analysis and Representation of data.

In market research understanding problem statement and proper research design is most

important.

Market Performance Measure:

Target Size = Total Population * Market Choice

Available Size= Target Size * Reach Rate

No of Customers = Available size * Yield Rate.

Total Revenue = No Of Customers * Avg No of Transactions * Average $ per Transaction (transaction

size)

Total Revenue could be varied by varying Market Choice, Reach Rate , Yield Rate , No of

Transactions , Transaction Size.

No of Units Required = (Total Profit Target + Fixed Cost) / Per Unit Contribution

Per Unit Contribution = Per Unit Selling PriceVariable cost per unit

One needs to be very careful about fixed such as retail space, inventory and employee cost.

If price of the product per unit is raised no of units needed to reach same profit target is less.

If one is able to compute total profit then ROI = Profit / Total Investment.

Please be careful about sales revenue going up because of inflation.


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One needs to choose performance measures very carefully, 2-3 variables should be selected , data

for the measures should be precise .

There are general financial measures (Sales Growth, Quick Ration , Current Asset Ratio , ROI, RON ,

Working Capital EPS, DPS ) which give a fair idea about business.

But a marketing manager needs to use other ratios such as below for his decision making

External Market Ratio (Market Share, Consumer Perception , Non Customer Perception ,Reach Rate , Yield Rate )

Space to Profit Ratios Employees to Profit Ration Marketing Expense to Profit Ratio

Price Benefit Analysis:

There is a principal benefit in every product, finding it out is very important.

The principal benefit may be one individual benefit or set of benefits.

This benefit is the prime differentiator and the factor on which premium price can be charged.

A graph of Price V/S benefit is plotted as competitive positioning of every vendor with respect to

others can be measured.

There are secondary benefits that can have impact on price and sales but prime benefit is most

critical.

One needs to keep watching for primary benefit , as it can change in span of time and once it

changes the provider should change his priority or else the product will lose competitiveness.

One can use price benefit analysis to track competitors and decide strategy.

Product Management

Type of Competition:

Product Competition Product Category Competition Generic Competition / Form Competition Budget Competition

Category Attractiveness is measured by

Aggregate Factorso Market Sizeo Market Growtho Product Life Cycleo

Cyclicityo Seasonality


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o Profit Rangeo Profit Variation

Category Factorso Threat of Entryo Threat of Substituteso Threat of Customerso Threat of Supplierso Rivalryo Complementors

PESTLE Factorso Politicalo Environmentalo Socialo Technologicalo Legalo Economic

Competitor Analysis

Who is my competitor Primary and Secondary Data to know about competitors , their strategy How is my competitor differentiating What are my competitorsR&D, Production , Marketing , Financial , HR strengths What would be my competitors next step

Customer Analysis

Who is customersegmentationcluster segmentation What does he buy Why does he buy - what are his pain points What is the perceived value Where does he buy When does he buy

Product/Marketing Strategy:

ObjectiveMarket Share Growth/Profits Growth

Market ShareMarket Development, Penetration, New Product Development (Skimming /Penetration)

Profit GrowthDecrease Cost, Increase Profit Margin, Decrease DiscountsAlternative Options for objectives

Core Strategy

Customer Targets Competitor Target


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/Position / Differentiation / Core Value Proposition Cost / Price Position Product Differentiation

Description of Product Mix

Description Functional Programs

New Product Development

Idea Generation Concept Generation Concept Testing Product Development Product Testing Market Testing Go No Go Decision

New Products

New Products can be new to world products , they can be new products in existing product line , They can be existing products with new features they also could be change is intangible associated with products

For all new products one needs to see how it impacts existing customers (loyal), occasional

customers and non-customers

Three Steps to test new products

Concept Testing Product Testing Market Testing

To compute value for new to world products one could utilize existing similar products and see how

the new to world benefits customer as compared to similar products.

Brand Equity

Brand value is the amount by which the actual value of the product differs, it is the plus or minus of

actual value of the product. IT basically adds or subtracts value to the companys products.

The Brand Equity is made up of

Brand Loyalty Brand Awareness Brand Quality Perception Brand Association


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Pricing

Pricing should be done consideringCompetitors, Perceived Value of Product, Category

Attractiveness, Customer and Marketing Strategy.

Price should be in sync with other components of marketing plan.

Price also depends on stage of product in its life cycle.

The value of a product can be computed considering substitute products, competitorsproduct, and

products brand value.

The market share of a product depends on the price of the product and perceived value of the

product. One can reduce price or increase perceived value to increase the market share .

Reduction of price may not always be a best option; reduction of price leads to more that

proportionate decrease in profits.

Pricing could be done considering historical pricing , competitors cost , own cost .

Price of products depends on

Threat of new entrants Power of buyers/suppliers Rivalry Substitutes Stage of product life cycle Reference prices perceived by consumers

Pricing Tactics

Product Bundling: Bundled products sold at higher or lower rates. Product Line pricing: Pricing diff product with slight difference for every product in product

line

Value Pricing: Price such that the value provided by the product Is lower than the price, it isnot lowest price, it is about making consumers feel they are buying best products at

reasonable price.

Differential Pricing : Price Discrimination Price to Skim Price to penetrate

Advertisement / Promotions

There are different channels through which Marketing Communication takes place

Advertisements, Promotions , Public Relations and Direct Mailing. It should be integrated marketing

communication.

Mostly Advertisements and promotions require product managers involvement.


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Advertisements are the tools to create awareness, generate interest, increase trail rate , increase

brand value . Advertisements increase brand value, advertisements can be considered as long term

investments.

B2B and B2C choose different media for advertisements.

Product manager needs to get involved in planning of budget for advertisements and its objective ,

the actual design is done by ad agency .

Ad budget can be decided as percentage of sales or based on competitorsadvertisements or based

on total cost allowance

The ad should be able to increase the recall value, awareness, trial rates, repurchase rates

Promotions to convert the prospective customer to actual customer, it is not to create awareness, it

is for conversion.

Promotions budget are generally higher as compared to Ad, but this might not be a good idea.

Promotions do not create long term impacts, they are always short term.

Promotions can be of 3 typesCustomer Promotions, Trade Promotions and channel promotions

Lot of promotion budget goes into maintaining of coupons and its management

There should be sound balance between advertisements and promotions

Control Measures

Sales Analysis:

Get into details of sales of each region, different customers segments, and different products and

see which is profitable, which has more growth prospectus, which needs to be dropped, a detailed

analysis based on sales data.

Financial Reports Analysis:

Variance Analysis:

Basically compute the variance of actuals versus planned. Variance of sales, impact ofadvertisements, impact of marketing efforts, segment analysis, etc

Marketing Ratio Analysis

Pre Sales:

Liaison between Sales and delivery team, need to have technical and business skills.

Mostly involved till closure of sales.

Most imp job of pre sales isRFI and RFP.


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Needs to collaborate with Business Specialists (BA) , Project Managers , Technical Architects and

sales people.

Finally present the RFP, solution to the customer.

Basically understand the problem of customer , get clarity wherever required , setup clear tasksallocations with architects , project managers and domain specialists , work with all of them to get

RFI and RFP.

gist marketing

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