mba09 mm 2
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Module 2
MBA 09
Purpose of Marketing Environment Analysis
To know where the environment is heading
To find out the opportunities and threatsTo assess the scope of opportunities
and short list those that can favorably impact the business.
To project how the environment will be at a future point of time
To help secure the right fit between the environment and the business unit
Marketing Environment Analysis
Is the process of gathering, filtering and analysing information relating to the marketing environment.
Factors to be covered under Environmental Analysis
Macro Environment
Demographic Environment
Socio-Cultural Environment
Economic Environment Political Environment Natural Environment Technological
Environment Legal Environment Government Policies
Micro environment The Market/Demand The Consumer The Industry The Competition Government Policies Supplier – Related
Factors
Mega/Macro EnvironmentDemographic EnvironmentSocio-Cultural EnvironmentEconomic EnvironmentPolitical EnvironmentNatural EnvironmentTechnological EnvironmentLegal EnvironmentGovernment Policies
Demographic Environment
Factors relating to Population Size Growth Rate Age Distribution Religious Composition Literacy Levels House hold pattern Regional characteristics
Socio-Cultural Environment
Culture (religion, language, education etc)Social Class (income, occupation, lifestyle,
behavior)Changing position of women
Economic Environment
General Economic Conditions Rate of Growth of Economy Credit Availability and Interest Rates Inflation Rate Behaviour of Capital Markets Foreign Exchange Reserves Exchange Rates Tax Rates Prices of Essential Commodities Energy ( cost, availability etc) Labour ( cost, skill, availability etc)
Political Environment
Form of GovernmentPolitical StabilitySocial and Religious OrganisationsMedia and Pressure Group
Natural Environment
Natural ResourcesEcologyClimateRecent Trends in Natural
EnvironmentShortage of Raw MaterialsIncreased Energy CostsAnti- Pollution PressuresChanging Role of Government
Options Available in TechnologyGovernments Approach in respect of
TechnologyTechnology Selection
Technological Environment
Legal Environment/Business Legislation
Corporate AffairsConsumer ProtectionEmployee ProtectionSectoral Protection Corporate ProtectionProtection of society as a whole against
unbridled business behaviourRegulations on products, prices and
distribution
Environmental Factors Specific to the Business Concerned (micro)
The Market/DemandThe ConsumerThe IndustryThe CompetitionGovernment PoliciesSupplier – Related Factors
The Market/Demand
Nature of the demandSize of the demand, present and potentialChanges taking place in consumption
pattern and buying habitsInvasion of substitute productsChanges taking place in consumption
pattern/buying habits
The Consumer
Preferences/Priorities Location and Number Purchasing Power Buying Behaviour Personality Traits Lifestyles and Needs Brand Loyalty Reactions to Competing Products
The Industry
Knowledge About IndustryCompetitive Advantage Building
Government Policies
Subsidising selected firms and IndustriesBan fresh entry in selected IndustriesGovernment can be producers, thus acting
as competitors
Supplier – Related Factors
Bargaining Power in the IndustryTrade-off between integrated and
outsourcingSuppliers becoming Competitors
Environmental scanning has to be a Continuous Affair
Marketing research
American marketing association defines marketing research as “ the systematic gathering, recording and analyzing of data about the problems relating to marketing of goods and services”
Market research
It is the process of collecting and analyzing data relating to demand for a good or service in a specific market
Marketing Research provides information about customers and markets, and their reactions to various products, prices, distribution and promotion strategies
Scope of marketing research
Consumer research Product research including product planning
and development Study of the market Sales research- methods, performance,
establishing territories and quotas Pricing- expectations, actions and reactions,
policies and strategies Distribution research-
channels,intermediaries,inventory level, handling and transportation
Motivation research- why people buy or do not buy a product
Advertising research- ad messages, selection of the right media, evaluation
Policy research-finance, production and HR activities
Marketing Research Process
Formulating/ identification of the problem
Planning the research techniqueCollection of dataAnalyzing the dataInterpreting the dataPreparing and presenting the reportFollow up study
Research Plan Research design is broadly classified into
Exploratory research, Descriptive research and Casual research
Research instruments used are a) Questionaires b) Mechanical instruments such as galvanometer
(for response assessment such as emotions, interest in an advertisement), tachistoscope (message is flashed one hundredth of a second several times and subject behaviour is observed)
c) Sampling
Data Collection Techniques
Internal data through financial accounting records, sales records, reports from salesman etc
External sources are of 2 types a) Primary data collection – Mail
interviews, Telephonic interviews, Personal interviews, Observation
b) Secondary data collection
Barriers to the use of Marketing Research
All problems cannot be researched. A narrow conception of the research Uneven caliber of researchers (view it as a
clerical job) Poor framing of the problem Late and occasionally erroneous findings Only a tool to improve the decision making
process Personality and Presentational differences Cannot predict the future
Executives hesitant to use MR practicesBased on sampling and hence lacks
accuracyTime consumingLack of professionals
Marketing information system is a process which helps marketers manage their marketing efforts, effectively and efficiently. It helps in planning, analyzing and presenting the information necessary for marketing decisions
Importance of marketing information system Anticipation of consumer demand (changing
styles) Economic indicators Dynamic competitive environment Development of science and technology Growing complexity of marketing Consumerism and increasing grievances
Components of MkISInternal marketing information ( Data
available within the firm)Marketing intelligence system( data
available in the external environment)Marketing research system(special studies
relating to a particular problem)
Types Of Markets
Consumer MarketsConsumer markets are the markets for products and services bought by individuals for their own or family use. Goods bought in consumer markets can be categorized in several ways:
Convenience goods--Fast-moving consumer goods (“FMCG's”)– These are high volume, low unit value, fast repurchase– Examples include: Ready meals; Baked Beans, biscuits, Newspapers
Specialty goods Special / unique features Buyers make special efforts to buy them Buy from specialist retailers Reluctant to buy substitutes E.g., ray ban sunglasses, Rolex watch, Tata
sumo Nikon camera etc
Shopping goods Buy after comparing the suitability, quality, price
etc of different brands E.g., clothing, furniture, shoes, utensils etc
Emergency Goods- To fulfill an urgent need May be a convenience good or a shopping
good
It can also be classified as: Consumer durables – These have low volume but high unit value. Consumer
durables are often further divided into:– White goods (e.g. fridge-freezers; cookers; dishwashers; microwaves)– Brown goods (e.g. DVD players; games consoles; personal computers)- orange goods( goods which change at a moderate rate- clothing)- red goods-( American expression of fast moving consumer goods like food)- yellow goods( American expression of consumer goods that are purchased infrequently, yellow =brown + white, e.g. oven, refrigerator, TV, CD player)
Soft goods – Soft goods are similar to consumer durables, except that they wear out more quickly and therefore have a shorter replacement cycle– Examples include clothes, shoes
Services (e.g. hairdressing, dentists, childcare_)
Industrial goods meant for use in production / business/
institutional purposes Not directly used by the consumers Classified as
Production facilities and equipments, production materials, production supplies and management materials
• Selling finished goods– Examples include office furniture, computer systems
• Selling raw materials or components– Examples include steel, coal, gas, timber
• Selling services to businesses– Examples include waste disposal, security, accounting & legal services
Consumer behaviour
“Consumer behaviour is a process whereby individuals decide what, when, how and from whom to purchase goods and services”
- Walters and Paul CB decides how consumers make purchase
decisions and how they use the products they buy
Important for framing production policies, price policies, distribution policies and also in designing the sales promotion programmes.
Need and importance of CB
enables marketer to design appropriate strategies for marketing
plan and develop productsframing pricing policiesto know buying motivedeciding on appropriate channelsbuying decision and consumption
BUYING MOTIVE
is a strong feeling , instinct, desire or an emotion that make the buyer to buy the product
Are influences or considerations which provide the impulse to buy, induce action or determine choice in the purchase of goods and services
Types of buying motives
Product motive( hunger thirst ,sleep etc) Patronage motive( price, location, quality, variety,
service, personality of the owner or the salesman) Emotional motive (status, personal comfort, pride) Rational motive (logical thinking- price, durability,
efficiency, convenience, monetary gain etc) Inherent motive (for satisfaction he makes best efforts) Learned motive ( acquired or learned from environment
and education- religious belief, fear , security )
Consumer buying process
Recognition of a needIdentification of alternativesEvaluation of alternativesPurchase decisionPost purchase behaviour
Organizational Buying Process Problem recognition
Determine product dimensions and quantity
Precise description of product characteristics
Search and qualification of potential sources
Acquisition and analysis of proposals
Evaluation of proposals and supplier selection
Selection of an order routine
Performance feedback and evaluation
Specific marketing considerations in the industrial facilities business :
Long decision taking processHigh riskComplex buying centerThe specific competitive situation
Demand Forecasting
Market demand may mean different things to different marketers, but the marketer needs to have a clear idea what it means to his company and estimate it accordingly
Concept of Market Demand for Marketing
Market demand for a product under a specified marketing activity is the sales volume of the product in the target market for a specified time period in a particular region
Steps Market potential Companies Demand Sales quota and Sales Budget Current Demand estimation
Future Demand Estimationa) Composite sales force opinion
(company asks its sales force to estimate sales patterns in the near future depending upon their experience)
b) Survey of buyer intentionsc) Expert opinion
Market Demand – The total volume that would be bought by a defined customer group in a defined geographical area in a defined marketing environment under a defined marketing program.
Company Demand – Company’s estimated share of market demand at alternative levels of company marketing effort in a given time period.
Sales Quota – Sales goal set for a product line, company division, or sales representative.
Sales Budget – a conservative estimate of the expected volume of sales and is used primarily for making current purchasing, production and cash flow decisions.
Estimating Current Demand
Total Market Potential = Potential number of buyers x Average quantity purchased by a buyer x The Price
Area Market Potential – There are primarily two methods
a) Market – Build up method – requires identifying all the potential buyers in each market and estimating their potential purchases
b) Multiple factor Index method – Estimating market potential either by using existing market indices or by developing their own market indices
Eg: Potential of a “Book publishing company” depends on Population, number of teachers in the market etc.
Industry Sales and Market shares
Estimating Future Demand
Survey of Buyers intentions Composite of Sales force opinions Expert opinion Past sales analysis Market- Test method
Heart of Modern Strategic Marketing
SegmentingTargetingPositioning
MARKET SEGMENTATION
A Market segment consists of a group of customers who share a similar set of needs and wants
Basic Market Preference PatternsHomogeneousDiffusedClustered
“Market segmentation is the subdividing of market into homogeneous Sub section of customers , where any sub section can conceivably be selected as a target market to be reached with a distinct marketing mix” – Philip Kotler
Purpose of segmentation
Helps company to exploit its market better by selecting niches (suitable segments).
Helps in focussing strategies more sharply on target groups.
Allocation of marketing budget.Builds customer loyalty.
Effective Segmentation CriteriaMeasurableSubstantial (large enough to serve)AccessibleDifferentiableResponsiveness (effective programs
for attracting and serving the segments)
Patterns of segmentation
Undifferentiated marketing ( soft drink)Differentiated marketing( FMCG)Concentrated marketing (trying to
monopolise himself- railways)Customized marketing( interior designing,)
Bases for segmentation
Demographic segmentationGeographic segmentationBehavioral segmentationPsychographic segmentation
Demographic Age and Life-cycle stage (Johnson baby
soap for infants and children) Gender Income Occupation Religion Purchasing power
Geographic segmentation Area Climate Population density
Behavioural Segmentation Decision Roles- People are different and they
all pursue different roles like initiator, influencer, Decider, Buyer and User (useful for designing communication strategy)
Behavioural Variables- Occasions, Benefits, User status, Usage rate, Buyer- readiness stage, Loyalty Status (Hard core loyals, Split loyals, Shifting loyals, Attitude)
PsychographicLifestylesSocial class personality
Bases for Segmenting Business Markets Geography Benefits sought Usage rateBusiness Buyers have to orient their tastes as
below - First time prospects - Novice - Sophisticates
Costs involved
Management costProduction costProduct costInventory costPromotion cost
Niche Marketing – Niche is a more narrowly defined customer group seeking a distinctive mix of benefits.
Local Marketing – It is a growing trend called as Grass roots Marketing. Marketing activities are pursued for getting on close and personally relevant to individual customers as possible
Customerisation- It combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice.
TARGET MARKETING
Target marketing strategies
Undifferentiated targeting strategyDifferentiated targeting strategyConcentrated targeting strategyCustomized targeting strategy
Factors affecting targeting
Objectives of the companyResourcesProfitabilitycompetition
PRODUCT POSITIONING
“positioning is the act of designing the company’s offer and image so that it occupies a distinct and a valued place in the target consumers minds “
– PHILIP KOTLERsteps in product positioning Identifying potential competitive advantages Choosing the appropriate advantages Communicating those advantages
Techniques of positioning
Positioning by corporate identity (tata, Sony, godrej)
Positioning by brand endorsement (lux, surf , titan, dettol)
By product attributes or benefits (pepsodent germ killer and gum protection
By use, occasion and time (Vicks for cold, burnol for burns, dettol antiseptic)
By price and quality (Nirma detergent powder) By product category( dove – creamy moisturiser,
7up- alternative to cola) By product user( particularly for class of
customers- horlicks junior, malt, nutrition drink) By competitor(well established image of the
competitor – Avis-’ we serve better because we r no.2’)
Thank you