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Introduction to MarketingIntroduction to MarketingChapter 1Chapter 1

Conceptual BackgroundConceptual Background --Marketing is as old as human civilization. ManyMarketing is as old as human civilization. Many

people see marketing only as advertisement or sellingpeople see marketing only as advertisement or selling

--Marketing encompasses manufacturing companies,Marketing encompasses manufacturing companies,wholesalers, retailers but also covers all kinds ofwholesalers, retailers but also covers all kinds of

individuals, organizations, lawyers, accountants &individuals, organizations, lawyers, accountants &doctors. They use marketing to manage the demanddoctors. They use marketing to manage the demandfor their services.for their services.

--Even politicians in our country use marketingEven politicians in our country use marketingstrategy to get votes.strategy to get votes.

Example.Example. Smt.SoniaSmt.Sonia Gandhi, Chairperson ofGandhi, Chairperson ofNational Advisory Council & President of CongressNational Advisory Council & President of Congressparty effectively evolved marketing strategy to garnerparty effectively evolved marketing strategy to garnervotes in the last general election. She was acclaimedvotes in the last general election. She was acclaimedfor her acumen in marketing skills.for her acumen in marketing skills.

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MarketMarket

It is a place where buyers and sellersIt is a place where buyers and sellersmeet, goods and services are offeredmeet, goods and services are offered

for sales and title to goods isfor sales and title to goods istransferred.transferred.

Who is a CONSUMER?Who is a CONSUMER?

Who is a COUSTOMER?Who is a COUSTOMER?

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TypesTypes

On geographic or area basisOn geographic or area basis 1. Local market1. Local market 2.National market2.National market 3.International market or world market3.International market or world marketOn economic basisOn economic basis-- 1. Perfect market1. Perfect market 2.Imperfect market2.Imperfect marketOn the basis of timeOn the basis of time 1

. Very short period market1. Very short period market 2.Short period market2.Short period market

3.Long period market3.Long period marketOn the basis of businessOn the basis of business 1

. Wholesale market1. Wholesale market

2.Retail market2.Retail market

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On economic basisOn economic basis--1. Perfect market1. Perfect market2.Imperfect market2.Imperfect market

On the basis of timeOn the basis of time--1. Very short period market1. Very short period market2.Short period market2.Short period market3.Long period market3.Long period market

On the basis of businessOn the basis of business--1. Wholesale market1. Wholesale market2.Retail market2.Retail market

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On the basis of importanceOn the basis of importance

1.Primary market1.Primary market--AgriculturalAgriculturalproducts are sold and purchased, it isproducts are sold and purchased, it isfound in villages. The producers &found in villages. The producers &traders generally buy the products.traders generally buy the products.

2.Secondary market2.Secondary market--SemiSemi--processedprocessedsemi manufactured goods aresemi manufactured goods aregenerally sold & purchased.generally sold & purchased.

3.Terminal market3.Terminal market--It is a marketIt is a marketwhere final product is sold to ultimatewhere final product is sold to ultimateconsumersconsumers

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MarketingMarketing

MARKETINGMARKETING PHILIP KOTLERPHILIP KOTLERMarketing is analysis, organizing, planning &Marketing is analysis, organizing, planning &

controlling of the firms customercontrolling of the firms customer--resources,resources,polices, activities with a view to satisfying thepolices, activities with a view to satisfying the

needs & wants of chosen customer groups at aneeds & wants of chosen customer groups at aprofitprofit American marketing AssociationAmerican marketing Association--Marketing is theMarketing is the

performance of business activities that direct theperformance of business activities that direct theflow of goods and servicesflow of goods and services

Also marketing is a creation & delivery ofAlso marketing is a creation & delivery ofstandard of living of a particular individual.standard of living of a particular individual.

Marketing ManagementMarketing ManagementMM is the activity of planning & executing theMM is the activity of planning & executing theconception, pricing, promotion & distribution ofconception, pricing, promotion & distribution ofideas, goods & services to create exchanges thatideas, goods & services to create exchanges that

satisfy individual & organizational goals.satisfy individual & organizational goals.

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Nature o MarketingNature o Marketing1.1. Marketing Is both consumer oriented andMarketing Is both consumer oriented and

competitors orientedcompetitors oriented

2.2. It starts with consumers and ends atIt starts with consumers and ends atconsumers by satisfying their needsconsumers by satisfying their needs

3.3. Marketing is the most important function ofMarketing is the most important function ofmanagementmanagement

4.4. The long term objective ofmarketing is profitThe long term objective ofmarketing is profit

maximization through customer satisfactionmaximization through customer satisfaction

5.5. Marketing is an integrated process which isMarketing is an integrated process which isbased on strategies and modelsbased on strategies and models

6.6. Marketing must deliver goods and services inMarketing must deliver goods and services inexchan e ofmone .exchan e ofmone .

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Scope ofMarketingScope ofMarketing

1.It creates employment opportunities1.It creates employment opportunitiesbecause sales & Marketing is a peoplebecause sales & Marketing is a peopleoriented activityoriented activity

2.It increases the standard of living of the2.It increases the standard of living of the

peoplepeople 3.it increases the per capita & national3.it increases the per capita & national

incomeincome

4.It satisfies the needs of the people by4.It satisfies the needs of the people by

providing the goods to the customersproviding the goods to the customers 5.It improves transport & communication5.It improves transport & communication

6.It establishes a better relationship6.It establishes a better relationshipbetween the buyer & the sellerbetween the buyer & the seller

7.It7.It achieves economic stabilityachieves economic stability

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8.It makes goods available to all8.It makes goods available to allgeographic locationsgeographic locations

9.It increases revenue to the government9.It increases revenue to the government

10.It helps in creation of utilization10.It helps in creation of utilization

11.It helps the manufacturer to decide11.It helps the manufacturer to decide

what to produce, when to produce & howwhat to produce, when to produce & howto sell a product or serviceto sell a product or service

12.It enables the firm to meet the12.It enables the firm to meet thedemands of various classed of consumersdemands of various classed of consumersthereby increase the salesthereby increase the sales

13.It enables to increase the profit13.It enables to increase the profit

14.it helps the top management to14.it helps the top management tomanage innovations & changesmanage innovations & changes

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Importance ofMarketingImportance ofMarketing

(A)Importance ofmarketing to society(A)Importance ofmarketing to society 1.Delivery of standard of living1.Delivery of standard of living 2.Provides Employment2.Provides Employment 3.Decresers in distribution cost3.Decresers in distribution cost 4.Increase in national income4.Increase in national income

(B)Importance ofmarketing to the Firm(B)Importance ofmarketing to the Firm 1.Helpful in business planning & decision1.Helpful in business planning & decision--makingmaking

2.Helpful in increasing profits2.Helpful in increasing profits 3.Helpful in communication between firm &3.Helpful in communication between firm &

societysociety

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(C) Importance of marketing in(C) Importance of marketing inUnderdeveloped or developedUnderdeveloped or developedeconomyeconomy

(D)Importance of marketing in(D)Importance of marketing indeveloped Economydeveloped Economy

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Functions ofMarketingFunctions ofMarketing

1. MERCHANDISING FUNCTIONS1. MERCHANDISING FUNCTIONS

*Buying*Buying*Assembling*Assembling*Selling*Selling

2. PHYSICAL DISTRIBUTION2. PHYSICAL DISTRIBUTIONFunctionFunction*Transportation*Transportation*Storage & warehousing*Storage & warehousing

3. FACILITING FUNCTION3. FACILITING FUNCTION*Financing*Financing*Risk*Risk--BearingBearing*Standardization*Standardization*Pricing*Pricing*Branding*Branding

*Advertising*Advertising*Salesmanship*Salesmanship*Sales promotion*Sales promotion*Packing*Packing*market information*market information*Marketing Research*Marketing Research*Marketing Intelligence*Marketing Intelligence

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AREA OF STUDY IN MARKETINGAREA OF STUDY IN MARKETING

MANAGEMEMENTMANAGEMEMENT

1.1. Marketing researchMarketing research

2.2. Advertising , sales promotion andAdvertising , sales promotion andpublicitypublicity

3.3. Sales and distribution managementSales and distribution management4.4. International marketingInternational marketing

5.5. Industrial marketingIndustrial marketing

6.6. Consumer behaviorConsumer behavior7.7. Marketing of servicesMarketing of services

8.8. Rural marketingRural marketing

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Difference between Traditional & ModernDifference between Traditional & Modern

concept of Marketingconcept of Marketing

TraditionalTraditional ModernModern1.Sellers focus is on1.Sellers focus is onproduct onlyproduct only

1.Sellers focus is1.Sellers focus ison customerson customersneeds & wantsneeds & wants

2.The manufacturer2.The manufacturerfirst manufactures thefirst manufactures thegoods latter chalks outgoods latter chalks outhow to dispose them offhow to dispose them off

2.The2.Themanufacturesmanufacturesbefore handbefore handassesses the needsassesses the needs& wants of the& wants of thecustomers, gatherscustomers, gathersthe data & makesthe data & makesthe productthe product

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3.Short term3.Short termorientedoriented

3.Long term3.Long termorientedoriented

4.Profit oriented4.Profit oriented 4. Customer4. Customersatisfaction &satisfaction &delight orienteddelight oriented

5.Aims of5.Aims ofaggressive sellingaggressive selling

5. Aims at5. Aims atestablishing CRMestablishing CRM

6. Low promotional6. Low promotionalactivitiesactivities

HighHigh

7.Disintegrated7.Disintegratedmarketingmarketing

7.Integrated7.Integratedmarketingmarketing

8. No scope for8. No scope for

professionalismprofessionalism

8. Ample scope for8. Ample scope for

professionalprofessional

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Principles of Marketing ManagementPrinciples of Marketing Management 1.SoundPlanning1.Sound PlanningIt is essential to achieve 3 importantIt is essential to achieve 3 importantgoals: Growth of the organization,goals: Growth of the organization,Improve the sales volume, Increase in netImprove the sales volume, Increase in netprofitprofit

2.Effective Organization2.Effective OrganizationOrganize its division on the basis ofOrganize its division on the basis ofmodern principles; understand the dutiesmodern principles; understand the duties& functions of the responsible task& functions of the responsible task

3.Proper Directions3.Proper DirectionsThe necessary directions issued by theThe necessary directions issued by themanagement to his subordinate &management to his subordinate &coordinate all the activities under differentcoordinate all the activities under different

departmentsdepartments

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4.Decision making4.Decision makingTo achieve the overall goals of the managementTo achieve the overall goals of the management

5.Sales promotions5.Sales promotionsThe ultimate objective is to maximize salesThe ultimate objective is to maximize salesvolume so the marketing executive shouldvolume so the marketing executive shouldmake all possible efforts to promote the sales ofmake all possible efforts to promote the sales ofthe companythe company

6.Motivation6.MotivationThe successful executive is to be judged by hisThe successful executive is to be judged by hisability to motive the staff under him toability to motive the staff under him tomaximize its efforts to achieve the target ofmaximize its efforts to achieve the target of

firmfirm

7.Research & Development7.Research & DevelopmentChange in the taste, preferences of theChange in the taste, preferences of theconsumer takes place all the time. Theconsumer takes place all the time. The

marketing manager has to study & carry onmarketing manager has to study & carry onresearch in ro er mannerresearch in ro er manner

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Distinguish between marketing andDistinguish between marketing and

sellingselling

MarketingMarketing SellingSelling

1. Marketing focuses1. Marketing focuseson customer needson customer needs

1.Selling focuses on1.Selling focuses onthe needs of the sellerthe needs of the seller

2.Customer enjoys2.Customer enjoyssupreme importancesupreme importance

2.Product enjoys2.Product enjoyssupreme importancesupreme importance

3.Integrated3.Integrated

approach to achieveapproach to achievelong term goalslong term goals

3.Fragmented3.Fragmented

approach to achieveapproach to achieveimmediate goalsimmediate goals

4.Converting4.Convertingcustomers needs intocustomers needs into

productsproducts

4.Converting customer4.Converting customerneeds into profitsneeds into profits

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5.Cavet Vendor5.Cavet Vendor(Let the seller(Let the seller

beware)beware)

5.Cavet Emptor5.Cavet Emptor(Let the buyer(Let the buyer

beware)beware)

6. Profits6. Profits

throughthroughcustomercustomersatisfactionsatisfaction

6.Profits6.Profits

through salesthrough salesvolumevolume

Example: if a boy meets a girl and says, You are themost wonderful girl I have ever met, it ismarketing. If however that he is very handsome andsmart so the girl really ought to like himtremendously, it is selling

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New concepts of marketingNew concepts of marketing

1.Relationship marketing1.Relationship marketing--------it is to create customers & retain them.it is to create customers & retain them.

------it is the process ofbuilding long termit is the process ofbuilding long term

trusting. Wintrusting. Win--Win relationship withWin relationship withcustomers, distributors, dealers and suppliers.customers, distributors, dealers and suppliers.

------it promises and delivers high quality efficientit promises and delivers high quality efficient

services &fair prices to the other party overservices &fair prices to the other party overtime.It accomplished by strengthening thetime.It accomplished by strengthening theeconomic, technical and social ties betweeneconomic, technical and social ties betweenmembers of the two organizations or betweenmembers of the two organizations or betweenthe markets & the individual customer.the markets & the individual customer.

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2.Mass marketing2.Mass marketing

------it is the greatest innovation of the 12it is the greatest innovation of the 12THTH

century.Mass marketing techniques werecentury.Mass marketing techniques were

invented to sell the mass produced goods wheninvented to sell the mass produced goods whenthe industrial revolution took off.Massthe industrial revolution took off.Massproduced uniform quality products, offered toproduced uniform quality products, offered tolarge number ofbuyers, allowed companies tolarge number ofbuyers, allowed companies to

reap economics ofscale.reap economics ofscale.

Producer

Marketer

Tools of massMarketing

---mass advertising---mass promotion----massdistribution

--Large--Group ofcustomers

Flow chart ofMASSMARKETING

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3. Niche marketing3. Niche marketing

------Success in marketing requiresspecific tactics.Success in marketing requiresspecific tactics.Niche marketing is a technique where marketerNiche marketing is a technique where marketer

plays a specialist role in particular segment.plays a specialist role in particular segment.There are several examples ofniche marketing.There are several examples ofniche marketing.

Quality specialistQuality specialist: the marketer operates at the: the marketer operates at thelow or high quality of the product.Example,low or high quality of the product.Example,HEWLETTHEWLETT--PACKARD specializes in the highPACKARD specializes in the high--quality, highquality, high--priced & the handpriced & the hand--held calculatorheld calculatormarket.market.

Service specialistService specialist: The marketer can offer the: The marketer can offer theservices which are not available from other firms.services which are not available from other firms.

CoCo--operative bank can provide type of loans.operative bank can provide type of loans. Product line specialistProduct line specialist: the marketer produces: the marketer produces

only one product line or product.Example, in theonly one product line or product.Example, in thelaboratory equipment industry, there are firmslaboratory equipment industry, there are firms

that produce only microscopesthat produce only microscopes

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4. Strategic marketing4. Strategic marketing

----it is a decisionit is a decision--making process that involves themaking process that involves theanalysis of internal capabilities environments ofanalysis of internal capabilities environments of

a firm in order to efficiently & effectively usea firm in order to efficiently & effectively usemarketing resources to achieve organizationalmarketing resources to achieve organizationalobjectives.In strategic marketing variousobjectives.In strategic marketing variousmodels &strategies are used fro decisionmodels &strategies are used fro decision--makingmaking

Step 1Step 1: Strategic & marketing analysis: Strategic & marketing analysis

SWOT analysisSWOT analysis

Productivity analysisProductivity analysis

Competitor analysisCompetitor analysis

Customer analysisCustomer analysis

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Step 2:Step 2: Marketing strategy formulationMarketing strategy formulation

Environmental analysisEnvironmental analysis

Segmentation targetingSegmentation targeting

Internal

External

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Step 3:Step 3: Marketing strategic choiceMarketing strategic choice

Product strategiesProduct strategies

Pricing strategiesPricing strategies Distribution strategiesDistribution strategies

Promotional strategiesPromotional strategies

Step 4:Step 4: Marketing strategies evaluationMarketing strategies evaluation

Modeling approachesModeling approaches

Management controlsManagement controls Revising strategiesRevising strategies

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Approaches to studyof marketing &Approaches to studyof marketing &

economic developmenteconomic development

1.Product/ Commodity approach1.Product/ Commodity approach

2.Institutional approach2.Institutional approach

3. Functional approach3. Functional approach 4.Management approach/ Decision4.Management approach/ Decision

Making approach/ManagerialMaking approach/Managerial

approachapproach 5. Legal approach &Societal5. Legal approach &Societal

approachapproach

6.Systems6.Systems approachapproach

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Chapter2Chapter2

Marketing EnvironmentMarketing Environment

RefersRefers to the external factors &to the external factors &forces that effect the companysforces that effect the companysability to develop & maintainability to develop & maintain

successful & relationships with itssuccessful & relationships with itstarget customerstarget customers

EnvironmentEnvironmentmay be grouped maymay be grouped may

into 2 typesinto 2 types Micro EnvironmentMicro Environment

Macro EnvironmentMacro Environment

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Micro EnvironmentMicro Environment*Organizational Internal Environment*Organizational Internal Environment*Suppliers*Suppliers

*Market Intermediaries*Market Intermediaries*Customer*Customer*Competitors*Competitors*Company resources*Company resources*Management Philosophy*Management Philosophy

*Public*Public

Macro EnvironmentMacro Environment*Demographic forces*Demographic forces

*Economic forces*Economic forces*Global environment*Global environment*Physical forces*Physical forces*Technological factors*Technological factors*Political & legal forces*Political & legal forces

*Social & cultural forces*Social & cultural forces

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Micro EnvironmentMicro Environment

*Organizational Internal Environment*Organizational Internal Environment

It consist of various factors such as financialIt consist of various factors such as financial& non& non--financial factors, production &financial factors, production &human resource, promotion strategies,human resource, promotion strategies,R&D, sales departmentR&D, sales department

*Suppliers*SuppliersIt consist bargaining power to theIt consist bargaining power to the

organization, material, labororganization, material, labor

*Market Intermediaries*Market Intermediaries

The intermediaries are middlemenThe intermediaries are middlemen(wholesalers, retailers, agents)(wholesalers, retailers, agents)distributing agencies, market servicedistributing agencies, market service

agencies & financial institutionsagencies & financial institutions

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*Customers*CustomersThere are 5 kinds ofultimate customers:There are 5 kinds ofultimate customers:

consumers,Industrial consumers,Resells,consumers,Industrial consumers,Resells,Government & other NonGovernment & other Non--Profit customersProfit customers

International customersInternational customers

*Competitors*CompetitorsAre those who sell the goods &services of the same &Are those who sell the goods &services of the same &

similar description in the same marketsimilar description in the same market

*Company resources*Company resourcesIt deals with mix ofresources namely people,financesIt deals with mix ofresources namely people,finances

&facilities, quality ofcompany management &skills&facilities, quality ofcompany management &skillsof its marketingof its marketing

*Management Philosophy*Management Philosophy

Policies & procedures, growth maximization ofcashPolicies & procedures, growth maximization ofcashflowflow from current business, high dividends &from current business, high dividends &investmentinvestment

*Public*PublicIt is the duty of the company to satisfy the people atIt is the duty of the company to satisfy the people at

large along with its competitors & the consumerslarge along with its competitors & the consumers

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Macro EnvironmentMacro Environment

*Demographic forces*Demographic forcesIt deals with the size & growth rate of population inIt deals with the size & growth rate of population in

different cities, region & nations, age distribution &different cities, region & nations, age distribution &ethnic mix, educational levels, household patterns,ethnic mix, educational levels, household patterns,regional characteristics etcregional characteristics etc

*Economic forces*Economic forces--Trends in gross national product & real incomeTrends in gross national product & real income

growthgrowth--Pattern of income distributionPattern of income distribution--Major economic variables i.e., cost of living, interestMajor economic variables i.e., cost of living, interestrates, repayment terms, disposable income taxrates, repayment terms, disposable income tax

--Government & legal restrictions, geographical incomeGovernment & legal restrictions, geographical incomedistributiondistribution

*Global environment*Global environmentIt helps to explore overseas market in a big way.ItIt helps to explore overseas market in a big way.It

is the global environment that helps in integrationis the global environment that helps in integrationwith the world economywith the world economy

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*Physical forces*Physical forces

These are renewal & nonThese are renewal & non--renewal resourcesrenewal resourceswhere the marketersshould be aware of thewhere the marketersshould be aware of thethreats & opportunities that is associatedthreats & opportunities that is associatedwith the natural environmentwith the natural environment

*Technological factors*Technological factors

As an opportunity technology is a source ofAs an opportunity technology is a source ofnew & improved product.As a threatnew & improved product.As a threat

technological development by competitorstechnological development by competitorsmay result in loss ofmarkets.may result in loss ofmarkets.

*Political & legal forces*Political & legal forces

--To prevent monopoly & restrictive tradeTo prevent monopoly & restrictive tradepractices & promote competitionpractices & promote competition

--To protect consumersTo protect consumers--To protect the societyTo protect the society

*Social & cultural forces*Social & cultural forces

To maintain the stability ofeconomicTo maintain the stability ofeconomic

growthgrowth

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MARKETING MIXMARKETING MIX

Marketing mixMarketing mix------represents the total marketing programrepresents the total marketing program

ofa firm.It involves decisions withofa firm.It involves decisions with

regard to PRODUCT,PRICE,regard to PRODUCT,PRICE,PROMOTION, and PLACE.These fourPROMOTION, and PLACE.These fourelements differ from firm to firm.Itelements differ from firm to firm.Itserves as the linkage between aserves as the linkage between abusinessfirm & its customers.It is abusinessfirm & its customers.It is a

dynamic concept keeps on changingdynamic concept keeps on changingwith changes in market conditions &with changes in market conditions &the environment.the environment.

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The concept marketing mix is useful inThe concept marketing mix is useful in

designing a market strategy to meetdesigning a market strategy to meetthethe uncontrollable are also called asuncontrollable are also called asexternal factors or market forcesexternal factors or market forcesthey are:they are:

Consumers buying behaviorConsumers buying behaviorTraders behaviorTraders behaviorCompetitors behaviorCompetitors behaviorGovernment behaviorGovernment behavior

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4 Ps.PRODUCT4 Ps.PRODUCT

**PRICEPRICE* PROMOTION* PROMOTION* PLACE* PLACE

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DefinitionsDefinitions

According to STANTON MarketingAccording to STANTON Marketingmix is the term used to describe themix is the term used to describe thecombination offour inputs whichcombination offour inputs whichconstitute the core ofcompanysconstitute the core ofcompanysmarketing system i.e., product, price,marketing system i.e., product, price,

promotion, placepromotion, place

According to PHILPKOTLERAccording to PHILPKOTLERMarketing mix as the set ofMarketing mix as the set of

controllable variables that the firmcontrollable variables that the firmcan use to influence the buyerscan use to influence the buyersresponseresponse

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ViewsViews

From theFrom the

sellers viewsellers view4Ps4Ps

From the buyers viewFrom the buyers view

4Cs4Cs

ProductProduct Customer satisfaction &Customer satisfaction &delightdelight

PricePrice Cost to the customerCost to the customer

PromotionPromotion CommunicationCommunication

PlacePlace ConvenienceConvenience

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1.PRODUCT1.PRODUCT

--A product is any goods/service thatA product is any goods/service thatconsumers wantconsumers want

--Product component ofmarketing mixProduct component ofmarketing mix

involves planning, developing & producinginvolves planning, developing & producingthe right type ofproducts/servicesthe right type ofproducts/services

--It deals with dimension ofproduct line,It deals with dimension ofproduct line,

durability & other qualitiesdurability & other qualities

--The product policy of the firm also dealsThe product policy of the firm also dealswith proper branding, right packaging,with proper branding, right packaging,

appropriate color & after product featuresappropriate color & after product features

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Product mix requires the decisionsProduct mix requires the decisionswith regard to:with regard to:

Size & weight of the productSize & weight of the product

Quality of the productQuality of the product

Design of the productDesign of the product

Volume ofoutputVolume ofoutput

Brand nameBrand name

PackagingPackaging

Product rangeProduct range

Product TestingProduct Testing

WarrantiesWarranties

After salesserviceAfter salesservice

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Example:Example:

Hindustan lever Limited (HLL)Hindustan lever Limited (HLL)

product consists of toilet andproduct consists of toilet anddetergent soaps, shampoos, facedetergent soaps, shampoos, facecream and other health carecream and other health careproducts. The company offers a hugeproducts. The company offers a huge

variety of toiletries and health carevariety of toiletries and health careproducts for different target marketproducts for different target marketat different target market at differentat different target market at different

prices hereby it ensures consumerprices hereby it ensures consumersatisfaction.satisfaction.

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2.Price2.Price

--Price is an important factor affecting thePrice is an important factor affecting thesuccess offirm.success offirm.

--Pricing decisions & policies have directPricing decisions & policies have directinfluence on sales volume & profits ofinfluence on sales volume & profits ofbusiness.business.

--This is an important element inThis is an important element inmarketing mix, right pricing can bemarketing mix, right pricing can bedetermined through pricing research &determined through pricing research &

testing.testing.

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--Marketing demand, cost, competition,Marketing demand, cost, competition,government regulations are the vitalgovernment regulations are the vital

factors that must be taken intofactors that must be taken intoconsideration in the determination ofconsideration in the determination ofprice mixprice mix

Price mix involves:Price mix involves:

Base priceBase price

DiscountsDiscounts

AllowancesAllowances

Freight paymentsFreight payments

CreditCredit

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Example:Example:

Bajaj two wheelers punch liveBajaj two wheelers punch liveembarks on this saying valueembarks on this saying valuefor your money. Eventually thefor your money. Eventually the

price determined must boost upprice determined must boost upthe sales.the sales.

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3.Promotion3.Promotion

----This is considered with bringing products toThis is considered with bringing products tothe knowledge ofcustomers & persuading themthe knowledge ofcustomers & persuading themto buyto buy

----It is the function informing & influencing theIt is the function informing & influencing the

customer

scu

stomer

s

Promotion mix involves:Promotion mix involves: AdvertisingAdvertising Personal sellingPersonal selling

Sales promotionSales promotion Public relationsPublic relations PublicityPublicity Direct responsesDirect responses

While de isin a omotional miWhile de isin a omotional mi

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While devising a promotional mixWhile devising a promotional mix

Nature ofproductNature ofproductTypes ofcustomersTypes ofcustomersPromotion budgetPromotion budget

Stage ofdemandStage ofdemandThe environment in which itThe environment in which itis receivedis received

The medium used to transitsThe medium used to transitsthe messagethe message

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4.Place/Distribution4.Place/Distribution

--It is considered with the decisions relating to theIt is considered with the decisions relating to thewholesalers & retail outlets or channel ofwholesalers & retail outlets or channel ofdistributiondistribution

--The objective ofselecting & managing tradeThe objective ofselecting & managing trade

channels is to provide the products to rightchannels is to provide the products to rightcustomer at right time & place on a continuingcustomer at right time & place on a continuingbasisbasis

--A manufacturer may distribute his goodsA manufacturer may distribute his goodsthrough his own outlets or he may employeethrough his own outlets or he may employeewholesalers & retailersfor this purposewholesalers & retailersfor this purpose

--In determination ofdistribution mix a firm has toIn determination ofdistribution mix a firm has tomake decisions with regard to the mode ofmake decisions with regard to the mode oftransportation ofgoods to middlemen, use oftransportation ofgoods to middlemen, use of

company vehicles or bothcompany vehicles or both

ll

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Examples :Examples :

The company plans to use both One & ZeroThe company plans to use both One & Zerolevel channels ofdistribution.Thelevel channels ofdistribution.Thecompany launched LANCER in the fourcompany launched LANCER in the fourmetropolitan cities, viz., Delhi,Mumbai,metropolitan cities, viz., Delhi,Mumbai,Kolkata & Chennai, besides Cochin also.Kolkata & Chennai, besides Cochin also.

The total number ofdealers will beThe total number ofdealers will beprovided training & help under theprovided training & help under thecorporate identity programme.corporate identity programme.

The present widespread dealer network ofThe present widespread dealer network ofthe Hindustan Motors will handle sales,the Hindustan Motors will handle sales,service &spare parts activities.service &spare parts activities.

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Market SegmentationMarket Segmentation

----Means dividing a market into distinct groups ofMeans dividing a market into distinct groups ofbuyers who might require separate products orbuyers who might require separate products ormarket mixesmarket mixes

----The concept ofmarket is based on the fact thatThe concept ofmarket is based on the fact thatthe markets ofcommodities are not homogenousthe markets ofcommodities are not homogenousbut they are heterogeneousbut they are heterogeneous

Market represents ofgroup ofcustomers havingMarket represents ofgroup ofcustomers havingcommon characteristics but two customers arecommon characteristics but two customers arenever common in their nature, taste, habits,never common in their nature, taste, habits,hobbies, income & purchasing styleshobbies, income & purchasing styles

Their exist a lot of difference inTheir exist a lot of difference in

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----Their exist a lot ofdifference inTheir exist a lot ofdifference intheir buying behavior & buyingtheir buying behavior & buyingdecisionsdecisions

----On the basis of theseOn the basis of thesecharacteristics customers havingcharacteristics customers havingsimilar qualities are grouped insimilar qualities are grouped in

segmentssegments

The characteristics ofcustomers ofThe characteristics ofcustomers ofone segment differ with those ofone segment differ with those of

other segments.In this way marketother segments.In this way marketsegmentation refers to varioussegmentation refers to varioussegments of the market based on thesegments of the market based on thecommon characteristics of thecommon characteristics of the

customerscustomers

D fi itiD fi iti

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DefinitionsDefinitions

Whenever a market for a productWhenever a market for a productor service consists of two or moreor service consists of two or morebuyers, the market is capable ofbuyers, the market is capable of

being segmented, that is dividedbeing segmented, that is dividedinto meaningful buyer groups. Theinto meaningful buyer groups. Thepurpose of segmentation ispurpose of segmentation isdetermine differences amongdetermine differences among

buyers which may bebuyers which may beconsequential in choosing awayconsequential in choosing awaythem or marketing to themthem or marketing to them--PhilipPhilipKotlerKotler

Flow chart of segmentationFlow chart of segmentation

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Flow chart of segmentationFlow chart of segmentation

processprocess

Analyze the needs ofcustomersAnalyze the needs ofcustomersAnalyze the characteristics ofAnalyze the characteristics of

consumersconsumers

Disaggregate the consumers intoDisaggregate the consumers intosuitable segmentssuitable segments

Formulate different marketingFormulate different marketing

mix for different segmentsmix for different segmentsFeedback ofvarioussegmentsFeedback ofvarioussegments

Select the higher potentialSelect the higher potentialsegmentssegments

Criteria for market segmentationCriteria for market segmentation

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Criteria for market segmentationCriteria for market segmentation

Bases for ConsumerBases for Consumer

productproduct

Bases for IndustrialBases for Industrial

productproduct1.Income of the1.Income of theconsumerconsumer

2.Age of the2.Age of the

consumerconsumer3.Sex of the consumer3.Sex of the consumer

4.Geogrphical market4.Geogrphical market

SegmentationSegmentation

5.Educational5.Educationalattainment of theattainment of theconsumerconsumer

6.Religion of the6.Religion of theconsumerconsumer

1.Kinds ofbusiness1.Kinds ofbusiness

2.Usual purchasing2.Usual purchasingprocedureprocedure

3.Geogrphical3.Geogrphicalmarketsmarketssegmentationsegmentation

B fit f k tB fit f k t

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Benefits of marketBenefits of market

segmentationsegmentation

1.1. Understand potential customersUnderstand potential customers

2.2. Pay proper attention to particular areasPay proper attention to particular areas

3.

3.

Formulate marketing programFormulate marketing program4.4. Select channels ofdistributionSelect channels ofdistribution

5.5. Understand competitionUnderstand competition

6.6. Use marketing resources efficientlyUse marketing resources efficiently

7.7. Adverts the products & launch salesAdverts the products & launch salespromotion programpromotion program

8.8. Design marketing mixDesign marketing mix--product , price,product , price,

promotion & placepromotion & place

B f M k tB f M k t

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Bases for MarketBases for MarketSegmentationSegmentation

CUSTOMER BADEDCUSTOMER BADEDSEGEMENTATIONSEGEMENTATION

PRODUCT RELTEDPRODUCT RELTEDSEGMENTATIONSEGMENTATION

COMPETETION RELATEDCOMPETETION RELATEDSEGMENTATIONSEGMENTATION

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CUSTOMER BASED SEGEMENTATIONCUSTOMER BASED SEGEMENTATION

It isfurther classified asfollowsIt isfurther classified asfollows

--------Geographic location ofcustomersGeographic location ofcustomers--------Demographic characteristicsDemographic characteristics

*Age*Age

*Income*Income*Sex*Sex*Occupation*Occupation*Education*Education

*Marital status*Marital status*Family size &Structure*Family size &Structure

--------Psychographic variablesPsychographic variables

--------Buyer ReadinessBuyer Readiness

*G hi L ti*G hi L ti

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*Geographic Location*Geographic Location

ofcustomersofcustomers

--The starting point ofall market segmentation isThe starting point ofall market segmentation isthe geographic location ofcustomers.It helps thethe geographic location ofcustomers.It helps thefirm in planning the marketing offerfirm in planning the marketing offer

--The common method is to classify according toThe common method is to classify according torural & urban, metro or nonrural & urban, metro or non--metro marketsmetro markets

--There are also other classification like district &There are also other classification like district &

block marketsblock markets

--We all know the perception ofrural market isWe all know the perception ofrural market isquite different from the urban market, thequite different from the urban market, theproduct, price, promotion & place were designedproduct, price, promotion & place were designed

to meet those marketsto meet those markets

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--But with the development ofBut with the development oftechnology & advent ofvarioustechnology & advent ofvarious

modes ofcommunication like TV, themodes ofcommunication like TV, thecustomers in the rural areas arecustomers in the rural areas aremuch exposed & aware of the marketmuch exposed & aware of the market

& today the customers in the rural& today the customers in the ruralarea buys the same branded productarea buys the same branded productwhich are purchased by urbanwhich are purchased by urbancustomer.customer.

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Example:Example:A particular brand may be dividedA particular brand may be divided

on the basis of zones, villages,on the basis of zones, villages,cities, climate etc. a classiccities, climate etc. a classicexample of geographicexample of geographic

segmentation is segmentation is AmulAmulwhichwhichwas initially marketed only inwas initially marketed only in

GujaratGujarat

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ExampleExample

Brooke Bond TEA is nationally soldBrooke Bond TEA is nationally soldbut is flavored regionally.but is flavored regionally.

Segmentation of this kind is alsoSegmentation of this kind is alsouseful when the taste &useful when the taste &preferences have thepreferences have thegeographical influence like northgeographical influence like north

Indians prefer lighter than SouthIndians prefer lighter than SouthIndians who prefer stringerIndians who prefer stringercoffee or tea.coffee or tea.

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*Demographic*Demographic

CharacteristicsCharacteristics

1. AGE1. AGE

------In the market the producer should for what age groupIn the market the producer should for what age grouphis product could be most suited so that he can planhis product could be most suited so that he can planhis pricing policy, advertisement policy, marketinghis pricing policy, advertisement policy, marketingpolicy & strategy accordinglypolicy & strategy accordingly

Example:Example: Cloth market or Garment market may beCloth market or Garment market may be

segmented on the basis of age:segmented on the basis of age: Children b/w the age group of 3Children b/w the age group of 3--13yrs13yrs

Children b/w the age group of13Children b/w the age group of13--15yrs15yrs

Teenagers b/w the age group of16Teenagers b/w the age group of16--20yrs20yrs

Adults b/w the age group of 21Adults b/w the age group of 21--30yrs30yrs

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2. INCOME2. INCOME----The manufacturer should also bear in mind whileThe manufacturer should also bear in mind while

preparing his marketing policy because of thepreparing his marketing policy because of thedifference in the income groupsdifference in the income groups

Example:Example: People in high income group preferPeople in high income group preferquality ofgoods, design,fashion, orientedquality ofgoods, design,fashion, orientedproducts hence they can be motivated on theseproducts hence they can be motivated on thesefactors.People in low income group attractfactors.People in low income group attracttowards low productstowards low products

3. SEX3. SEX----Market is divided on the basis ofsex i.e., male &Market is divided on the basis ofsex i.e., male &female.Some products are exclusively producedfemale.Some products are exclusively producedfor women while some others are for men.for women while some others are for men.Example: Lipstick is meant for women & on theExample: Lipstick is meant for women & on theother hand shaving cream is only meant for men.other hand shaving cream is only meant for men.

4 OCCUPATION4 OCCUPATION

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4. OCCUPATION4. OCCUPATION

----It is an important variable in segmenting theIt is an important variable in segmenting themarket because an individuals employmentmarket because an individuals employment

does definitely affect the consumption differentdoes definitely affect the consumption differentcategories of segments can be identified likecategories of segments can be identified likedoctors, consultants, entrepreneurs etcdoctors, consultants, entrepreneurs etc

5. EDUCATION5. EDUCATION----Education of consumer also affects the preference &Education of consumer also affects the preference &

tastetaste

----The choice of literate person would differ from that ofThe choice of literate person would differ from that ofan illiterate, as a literate would be having a lotan illiterate, as a literate would be having a lotexposure to the outside worlds but an illiterate lack theexposure to the outside worlds but an illiterate lack theability to understandability to understand

----Based on the education the Indian market can beBased on the education the Indian market can besegmented as illiterates, literatessegmented as illiterates, literates--high school, college &high school, college &university educationuniversity education

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6. MARITAL STATUS6. MARITAL STATUS

The behavioral of single & marriedThe behavioral of single & married

people differs. Married people arepeople differs. Married people aremore conservative than unmarriedmore conservative than unmarriedpeoplepeople

7. FAMILY SIZE & STRUCTURE7. FAMILY SIZE & STRUCTURE

--Example:Example: Refrigerators & cookersRefrigerators & cookers

are produced in different sizes to suitare produced in different sizes to suitthe needs of families of differentthe needs of families of differentsizessizes

*Psychographic Variables*Psychographic Variables

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Psychographic VariablesPsychographic Variables----No two consumer act in the same mannerNo two consumer act in the same manner

though they may be ofsame age,from thethough they may be ofsame age,from the

same profession,same education & havesame profession,same education & havesame income.same income.

----Some customers are very crazy for novelSome customers are very crazy for novel

design or products ofnew fashion thatdesign or products ofnew fashion thatmay increase their prestige in the society.may increase their prestige in the society.

----The motto ofsome other customers isThe motto ofsome other customers is

simple living & high thinking & they neversimple living & high thinking & they neveraspire for showyaspire for showy itemsitems

Example:Example: Congress workers wearCongress workers wear khadikhadiirrespective of their incomeirrespective of their income--level or sociallevel or social

status.status.

*B R di*B R di

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*Buyer Readiness*Buyer Readiness

----There are different stages ofThere are different stages of

buyer readiness; people may bebuyer readiness; people may beunaware, people who are awareunaware, people who are awarebut not interested & people whobut not interested & people whoare interested & desire to buyare interested & desire to buy

ExampleExample

Buyer ofwatchers may seekBuyer ofwatchers may seekbenefits like price, durability,benefits like price, durability,quality,symbols etc.quality,symbols etc.

PRODUCT RELTED SEGMENTATIONPRODUCT RELTED SEGMENTATION

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PRODUCT RELTED SEGMENTATIONPRODUCT RELTED SEGMENTATION

----Different customers use the same productDifferent customers use the same productin different situationsin different situations

----A market makes the product versatile soA market makes the product versatile sothat it can be used in different situations.that it can be used in different situations.Thus depending on the use situation aThus depending on the use situation aproduct or a brand may be selected by theproduct or a brand may be selected by the

customerscustomers COMPETETION RELATED SEGMENTATIONCOMPETETION RELATED SEGMENTATION

----The success in marketing depends on theThe success in marketing depends on thenumber of loyal customersnumber of loyal customers

----Customers loyalty therefore is anCustomers loyalty therefore is animportant factor to determine theimportant factor to determine thecompetitive position of the firmcompetitive position of the firm..

On the basis ofbrand loyalty the marketOn the basis ofbrand loyalty the market

could be classified as:could be classified as:

*Hard core loyal*Hard core loyal

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yy

*Soft*Soft--core loyalcore loyal

*Switchers*Switchers

1.Hard core loyal

1.Hard core loyalAre those customers who buy the same brand likeAre those customers who buy the same brand like

newspapers readers, tea drinkers etcnewspapers readers, tea drinkers etc

2.Soft2.Soft--core loyalcore loyal

Are those customers who are loyal to two or threeAre those customers who are loyal to two or threegroup ofbrands in a product group,Example:group ofbrands in a product group,Example:Housewife buying toilet soap (Housewife buying toilet soap (luxlux,, cintholcinthol,Pears),Pears)

3.Switchers3.SwitchersAre those customers who never stick to a brand,Are those customers who never stick to a brand,customers keep switching from brand to brand &customers keep switching from brand to brand &from the existing to the competitive brand.from the existing to the competitive brand.

Marketing StrategyMarketing Strategy

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Marketing StrategyMarketing Strategy--It is a strategy ofa company policy to maintain itsIt is a strategy ofa company policy to maintain its

competitive position in the market.competitive position in the market.

--management givesstrategies to balance for eachmanagement givesstrategies to balance for eachcontrollable with uncontrollable &so shapes thecontrollable with uncontrollable &so shapes themarket needs & wants &fulfills the companysmarket needs & wants &fulfills the companysgoalsgoals

For this the marketer unites product market, distribution,For this the marketer unites product market, distribution,

promotion & pricing strategies into a single overallpromotion & pricing strategies into a single overallMARKETINGSTRATERGYMARKETINGSTRATERGY

Factors affecting overall marketing strategyFactors affecting overall marketing strategy1. Competitors counter moves1. Competitors counter moves

Differs with various marketing inputs & manufacturerDiffers with various marketing inputs & manufacturermust make fair estimation ofcompetitors marketingmust make fair estimation ofcompetitors marketingstrategystrategy

2.Synergistic potential2.Synergistic potentialMarketing inputs are capable ofbringing reinforcing orMarketing inputs are capable ofbringing reinforcing or

having synergistic potential & marketer should considerhaving synergistic potential & marketer should considertowards optimum overall marketing strategytowards optimum overall marketing strategy

3 Substitutability3 Substitutability

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3. Substitutability3. SubstitutabilityThe selection of marketing inputs is alsoThe selection of marketing inputs is alsoaffected by the degree of substitutability so itaffected by the degree of substitutability so it

is important which one type of input can beis important which one type of input can besubstituted for another typesubstituted for another type

4. Diversity in productivity levels of4. Diversity in productivity levels ofvarious marketing inputsvarious marketing inputsThe marketer should recognize that all inputsThe marketer should recognize that all inputshave equal productivityhave equal productivity

5. Elasticity of marketing Inputs5. Elasticity of marketing Inputs

Example: A manufacturer determine differentExample: A manufacturer determine differentprices for different customers or for differentprices for different customers or for differentareas only on the basis of varying elasticity ofareas only on the basis of varying elasticity ofdemanddemand

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Market Target StrategiesMarket Target Strategies

1. Single segment1. Single segmentconcentrationconcentration

2. Selection specialization2. Selection specialization3. Product specialization3. Product specialization

4. Market specialization4. Market specialization

5. Full market coverage5. Full market coverage

PositioningPositioning

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PositioningPositioning Refers to a brands objective (functional)Refers to a brands objective (functional)

attributes in relation to other brands.It is aattributes in relation to other brands.It is acharacteristic of the physical product & itscharacteristic of the physical product & itsfunctional features.functional features.

OROR It is the art ofselecting out ofa number ofIt is the art ofselecting out ofa number of

unique selling propositions, the one which willunique selling propositions, the one which willget you maximum sales.get you maximum sales.

Three methods to adopt a product in theThree methods to adopt a product in the

market aremarket are Market AggregationMarket Aggregation

Market segmentationMarket segmentation

Product differentiationProduct differentiation

Three types of marketing strategiesThree types of marketing strategies

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Three types of marketing strategiesThree types of marketing strategies1. Undifferentiated or Market aggregation1. Undifferentiated or Market aggregationstrategystrategy

It is a same marketing strategy created by theIt is a same marketing strategy created by themarketing mix for all markets. The firm considers themarketing mix for all markets. The firm considers thetarget market as one & same. It requires extensivetarget market as one & same. It requires extensivedistribution in the maximum number of retail outletsdistribution in the maximum number of retail outletslike Revlon, Pepsi & Sonylike Revlon, Pepsi & Sony

2.Market segmentation or differentiation or2.Market segmentation or differentiation orDifferentiated marketing strategyDifferentiated marketing strategy

It involve multiple mix offerings like Unilever, proctorIt involve multiple mix offerings like Unilever, proctor& Gamble& Gamble

3. Concentrated marketing strategy3. Concentrated marketing strategy

It involves a marketing mix of one product, oneIt involves a marketing mix of one product, onesegment principle. This strategy can be used by smallsegment principle. This strategy can be used by smallcompaniescompanies

Market StrategiesMarket Strategies

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Market StrategiesMarket StrategiesFactorsFactors UndifferenUndifferen

tiatedtiatedDiffereDifferentiatedntiated

ConcentratedConcentrated

Use ofUse ofmktg Mixmktg Mix

OneOne MultiMulti All efforts & allAll efforts & allmixmix

Takecare ofTakecare of

customercustomerdifferencesdifferences

IgnoresIgnores TakesTakes

carecare

Takes careTakes care

very muchvery much

TechnicallyTechnicallycalledcalled

MassMassmktgmktg

NicheNiche

MKtgMKtg

SophisticatedSophisticated

Caters toCaters to AllAllsegmentssegments

1segem1segementent

1 or few1 or fewsegmentssegments

ExamplesExamples FoodFood SplSpl Gold items forGold items for