principle of marketing
DESCRIPTION
TRANSCRIPT
PRODUCT: A tangible item, a service, an idea, a concept, a person.
DEVELOPMENT OF MARKETING - A HISTORICAL PERSPECTIVE
Production Era – 1850s to 1920s
Sales Era – 1930s to 1950s
Marketing Era – 196s & 1970s
Societal Marketing Era – 1970s to 1990s
The Future---?
MARKETING INTRODUCTION
The exchange of something to satisfy an un-fulfilled need.
CONDITIONS OF EXCHANGETwo or more persons/organizations must be
involved
There must be some unfulfilled need
The parties must be voluntarily involved
Each party must bring in something of value
There must be communication between the
parties involved.
CONCEPT OF UTILITY CREATION
Form Utility---- the physical or chemical form of a product that makes it of value , e.g., conversion of lumber into furniture.
Place Utility ---- ready access makes the product of value e.g., film on video.
Time Utility ---- timeliness creates utility e.g,. Life saving drug.
Information Utility --- knowledge of existence of a product.
Image Utility ---- emotional or psychological value attached to a product
Possession Utility --- occurs when the ownership exchange takes place.
The ability of a product to satisfy an un-fulfilled need
THE INTANGIBILITY & TANGIBILITY CONTINUUM
Babysitting
Education
Legal services
Air travel
Fast foods
Cosmetics
Soft drinks
Clothing
sugar
TANGIBLE ELEMENT
S
INTANGIBLE ELEMENTS
THE MARKETING CONCEPT
1. NATURE & RATIONALE
All an organization’s activities should be customer oriented.
All marketing activities should be coordinated
The above 2 activities are essential to achieving economic benefits for the organization
2. RELATIONSHIP MARKETING
Increasingly, customers are asking organizations to built a long term relationship which goes beyond short term benefits.
3. CUSTOMIZATION
This is a change from mass production / marketing concept of multi-skilling & economics of scope
4. ETHICAL MARKETING
Becoming an important issue with increasing education / awareness of customers and growing legislature.
MARKETING MIX
Traditionally, Marketing Mix refers to a product or service, its distribution, promotion and pricing strategies. These four elements must satisfy the needs of the target markets and simultaneously, achieve organizational objectives. Marketing Mix includes.
PRODUCT:
Managing existing products, adding new ones and droping the failed ones. Strategies must also be formulated regarding branding, packing and other product features such as warranties, etc.
PRICE:
Price flexibility, related items in a product line, terms of sale, allowing discounts.
PLACE (DISTRIBUTION):
Related to channel members, type of distribution, extensive, intensive,selective.
PROMOTION:
Coordination of individual methods of promotion such as advertising, personal selling and sales promotion. Promotional strategies should be adjusted according to the product life cycle
OPPORTUNITY WINDOW
REFERS TO THE TIME AVAILABLE FOR THE PIONEERING COMPANY IN THE BUSINESS TO MAXIMIZE PROFITS BEFORE A SECOND ENTRANT BECOMES A COMPETITOR
EXAMPLE TCS IN PAKISTAN GILLETTE ROOH E AFZA
STRATEGIC MARKETING PLANNING
POSITIONINGRefers to a product’s image in the minds of its
customers, in relation to directly competitive products as well as other products marketed by the same company.
DIFFERENTIALS ADVANTAGERefers to any feature of an organization or a
brand perceived by customer to be desirable and different from those of the competition.
SELECTION OF TARGET MARKETSRefers to a group of people/organizations at
which a firm directs a marketing strategy.
MEASUREMENT OF MARKET DEMAND
Enables the company to forecast its sales for a certain period of time.
Organizations internal environment
Controllable factors
Financial resources
Expansion/Retrenchment
Size of operations
Strength of the company
Lease/ buy options
Advertising
Securities for taking long/short-term loans
Production facilities
Production facilities to meet specifications
Operation on optimum capacity
Accepting external jobs
EXTERNAL MACRO ENVIRONMENT
NON – CONTROLLABLE
• DEMOGRAPHICS
Ratio of urban to rural population
High populating growth rate
Demographic shifts
Aging of population
Ration of minorities
• ECONOMIC CONDITIONS
business cycles marked by recessions & booms
Gross domestic product (GDP)
Real Income
Purchase Power Perity (PPP)
Inflation
Interest Rates
POLITICAL & LEGAL FORCES• Monetary & Fiscal Policies• Social legislation & Regulations• Government Relationship with Industries• Legislation special related to marketing
TECHNOLOGY• Invent of computer / internet• E B I Z (E-Commerce)• Change in lifecycle because of technology
advancements• Change in business pattern
LOCATION
• Prime location leads to reduced operating costs
RESEARCH & DEVELOPMENT
• Customer satisfaction from existing products
• product innovation
• keeping and edge over the competitor
HUMAN RESOURCES
• Employing Experts
• A Manager Concept (Multi–Tasking)
• An asset rather than a liability
COMPANY IMAGE
• Perception of the Consumer
• Providing meaningful benefit to the Customer
COORDINATION AMONG INTERNAL FACTORS
• Coordination for the conduction of 4/5 Ps
EXTERNAL MICROENVIRONMENT PARTIALLY CONTROLLABLE
THE MARKET
A place where buyers and sellers meet, goods & services are offered for sale, and transfers of ownership occur.
OR
People or organizations with need to satisfy, money to spend, and willingness to spend money.
FACTORS TO BE CONSIDERED
• People /Organizations with needs
• Purchasing Power
• Buying Behavior
THE SUPPLIER
No firm can sell a product without being able to make or buy it.
MARKET FORCES
• THE CUSTOMER
Who, what do they buy, how do they buy, when do they buy.
• industry behavior
Structure, CR, attitudes of intermediaries, motivation
• COMPETITORS
Company’s positioning relative to competitors, nature of competition (monopoly vs. oligopoly vs. pure competitions)
• GOVERNMENTS & REGULATORY AUTHORITIES
Control over marketing activities & competitors activities.
Psychological factors: motivation, perception, attidtud4es, personality and concept of self.
Situational factors: time dimensions: when do customers buy?
Physical & Social Dimensions: where do they buy?
Terms of Purchase: how do they buy?
Moods: Conditions in which thy buy
SOCIAL GROUP
SOCIAL
CLASSESCHARACTERISTICS
A Businessmen owning large properties or senior managers working with MNCs, large landowners.
B Smaller businessmen, middle level executives, small and medium size land holding farmers.
C1 White collar workers, e.g., school / College teacher, doctors, engineers.
C2 Blue collar workers, e.g., auto mechanics
D Un-skilled or semi-skilled blue collar workers, e.g., landless farmers, nomads, etc.
E Partially employed, old / retired people with limited income, unemployed
FAMILY LIFE CYCLE
STAGE IN LIFE CYCLE
CHARACTERISTICS
SINGLE Young, single, male / female living alone. Generally student / young professional. Emphasis on convenience products, dine-outs small packs.
MARRIED WITH NO CHILDREN
Younger, mid 20s-early 30s, emphasis on dine-out / entertainment. Dowry makes life easier.
MARRIED WITH YUONG CHILDERN
Emphasis on children products, e.g., baby food medicine, clothing. Later, children’s education.
MARRIED WITH GRWON UP CHILDREN
Emphasis on children’s professional education,savings for building a house. Children’s marriage
OLD COUPLE Emphasis on medical care, security
SINGLE SURVIVOR One member family continuous emphasis on health and security.
MULTIPLE ROLES IN BUYING
USERS
INFLUENCER
DECISION MAKER
GATE KEEPER
BUYER
CONSUMER MARKETS & BUYING BEHAVIOR
Critical variables include:
Geographic distributionUrban/ruralConcentration of population by geographic
areas, etc….
demographicsAge distributionGenderFamily life-cycleEducationIncomeEthnic groups
Social influencesCultures ad Sub-CulturesReligionSocial ClassReference groupsRole & influence of family
Psychological FactorsMotivationPerceptionAttitudesPersonality Concept of Self
BUSINESS MARKETS & BUYING BEHAVIOUR
BUSINESS MARKETS EXIST: To produce other goods / services To resell to other users or consumers To conduct Organizational Operations
COMPONENTS OF THE BUSINESS MARKETS
Agricultural Market Reseller Market Government Market Services Market Non-Business Market International Market
CHARACTERISTICS OF THE BUSINESS MARKET DEMAND
Derived demand Inelastic Demand Demand widely fluctuates Buyers are well informed
BUYING SITUATION New Task Buying Straight Re-buy Modified Re-buy
MULTIPLE ROLES IN BUYING
User Influencer Decision Maker Gate-keeper Buyers
BUYING PATTERN OF BUSINESS USERS
Direct Purchase Nature of Relationship Frequency of Purchase Size of Order Length of Negotiation Period Reciprocity Arrangements Service Expectations Dependability of Supplies leasing
“EVERY HUMAN IN THIS WORLD HAS THE
RIGHT TO BELIEVE THAT BECAUSE OF
HIM/HER WAS THE WORLD CREATED.”
By Eleanor Roosevelt
DIMENSIONS OF SEGMENTATION GEOGRAPHIC SEGMENTATION
DEMOGRAPHIC SEGMENTATION
AGE
YOUNGSTERS
TEEANGERS
MIDDLEDAGED
SENIORS
PSYCHOGRAPHIC SEGMENTATION
PERSONALITY CHARACTERS
LIFE STYLE
VALUES
BEHAVIORAL SEGMENTATION
BENEFITS DESIRED
USAGE RATE
SINGLE SEGMENT VS MULTIPLE SEGMENT STRATEGIES
SINGLE SEGMENT STRATEGIES
Enable the seller to penetrate the market
in depth and to acquire a reputation as
specialist in a limited market.
Risk associated is, the firm has all eggs
in one basket.
MULTIPLE-SEGMENT STRATEGY
Two or more groups of buyers are
identified. Different marketing mix is
developed to attract each segment.
Segmentation with no change in product,
separate promotional appeals each
tailored to a given segment are devised.
SEGMENTS SHOULD BE:
Identifiable
Measurable
Accessible
Economically viable
SEGMENTATION PROCESS
ON THE BASIS OF PRIOR
experience and judgment
BASED ON STRUCTURED
analyses supported by some marketing
research.
POSITIONING THE PRODUCTS
The ability of the organization to attract attention of the prospective customer towards the product and to differentiate it in a favorable way from competitors is called positioning. This effort basically aims at developing the image of a product in such a way that the targeted clientele gets quickly attracted.
POSITIONING IN RELATION TO COMPETITOR
FLANK ATTACK OR HEAD-TO-HEAD POSITIONING
Positioning the product directly against the competitor is called a Flank Attack. This strategy is suitable for a firm that already has a consolidated differential advantage or not be adopted when a competitor has a stronger market position.
e.g., Launch of newspaper Aaj Ki Awaz
Seven Star Cigarettes
Delta Airlines
POSITIONING IN RELATION TO A
PRODUCT CLASS OR ATTRIBUTE An organization’s positioning strategy may entail association or distancing it from a product class or attribute.
Examples
Made in Japan
Environmentally friendly
Recyclable Packing
Green Peace
POSITIONING BY PRICE AND QUALITY
This type of positioning strategy defines the price & quality relationship and advocates that the higher price signifies a higher quality.
Examples:
A Rolls Royce car
The diamond called Kohinoor
Statues of Buddah
The painting called Mona Lisa
Local Market Examples
Foreign franchises offering edibles
Food offered in five star hotels
At the speed of 60 miles an hour, the only sound you hear is the tickling of a clock.
Hamaisha saath nibhana tou, sooti hay mairi ladli
Hamaisha saath nibhana too, parhti hai mairi ladli
Hamaisha saath nibhana too, rukhsat hoi meri ladli
Apnay saath bhi lai thi baiti ko bhi yayhi doongi
Gold Leaf, for the taste alone
Red & White - the taste of adventure
Berger Robbiolac All Rounder
Wills Kings – Paradigm Shift
Low hassle in getting rid of packaging
Environmentally friendly product
MARKET SEGMENTATION
Market segments are groups of customers
having similar needs / wants and preferences.
It enables the organization to more closely
match its marketing mix with the customers
needs or demands.
OPPORTUNITIES
Can we enter new markets? Can we expand our product line? Are competitors weak or complacent? Will our markets grow?
THREATS
Are we likely to get new competitors? Will other products be substituted for ours? Will new government policies impede our
business? Are we vulnerable to economic downturns? Will buyer’s tastes and preferences change? Will demographic shifts hurt us?
QUESTION CHECKLIST FOR SWOT ANALYSES
STRENGTHS
Do we have a distinct competitive advantage? Do we have adequate financial resources? Can we do something better than our
competitors.? Do buyers think well of us? Are we known at the market leader? Do we have proprietary technologies.? Can we produce and market at lower costs? Does our management team have a good track
record?
WEAKNESSES
Do we lack a clear strategic direction? I sour competitive position deteriorating? Are our profitability obsolete? Is our profitability lower than it should be? Do we lack management depth and talent? Are we missing any key skills? Do we have internal operating problems? Are we short of cash to fund current and
future business efforts? Do we have a weak image in the market?
GENERIC NAMES WHICH WERE EARLIER BRAND NAMES
ASPIRIN
ESCALATOR
KEROSENE
ZIPPER
THERMOS
STAGES IN ADOPTION PROCESS
AWARENESS
INTEREST
EVALUATION
ADOPTION
CONFIRMATION
ADVOCACY
VALUATION OF BRANDS
BRAND ORGANIZATION
VALUE IN $ BILLION
Marlboro Philip 31.2
Coca Cola Coca Cola 24.4
Budweiser Anheuser Busch
10.2
Pepsi Cola Pepsico 9.6
Nescafe Nestle 8.5
Winston Nabisco 6.1
Pampers P & G 6.1
Camel Nabisco 4.4
Johnnie Guinness 2.6
Barbie Dolls
Mattel 2.2
Smirnoff Vodka
Grand Metropolitan
2.2
Kraft Cheese
Philip Morris 2.2
Source: Financial World 1992
BRAND AWARENESS
The ability of potential buyers to
recognize or recall a brand as a member
of a certain product category. Linkages
between product class and brand are
involved.
DRIVE FOR BRAND AWARENESS
HIGH INVESTMENT ON TV
Average 10% of sales turnover in case of leading brands.
PROMOTION AGAINST TARGET MARKETS
Pepsi – YouthGold Leaf – The older man
CONSTRUCTION OF A BRAND NAME
NAME, SYMBOLS, SLOGANS NAME
Easy to learn increases recall rate
Different / unusual Interesting – rhyme, humor Creates a mental picture Precise – less number of words used Emotional – disseminating joy,
obsession, passion.
METHODS FOR THE COLLECTION OF DATA
SURVEY METHOD
Personal Interviews Focus Group Discussions Telephonic Survey
OBSERVATION
EXPERIMENTAL METHOD
Trends in Retailing – Experiences from Developed Countries
MAJOR STRATEGIES BEING EMPLOYED BY RETAILERS
SHORT-TERM
loyalty cards Use of customer data-base Sharing of EPOS data for inventory
management, segmentation, response time,etc
efficient Customer response (ECR)
LONG TERM
Increasing shopping experience – catering for young mothers, better layout, more extensive range.
Additional facilities – banking, direct marketing etc.
DETERMINING INTENSITY OF DISTRIBUTION
INTENSIVE – Distribution through every reasonable outlet.
SELECTIVE – Distribution through multiple but not all outlets.
EXCLUSIVE – Distribution through limited / restricted outlets.
LEGAL ISSUES IN DISTRIBUTION
EXCLUSIVE DEALERSHIP – Prohibits dealer from carrying products of competitors.
TYING CONTRACTS – Supplier sells to middleman on condition that a less demanded product is also bought.
REFUSAL TO DEAL – Manufacturer refuses to deal with certain independent middlemen.
EXCLUSIVE TERRITORY POLICY – When producer demarks territory and sales can only be made in the particular territory.
MARKETING RESEARCH
WHY MARKET RESEARCH?
COMPETITIVE PRESSURE
As more and more companies enter in a particular market, there is always need to maintain differential advantage or a unique selling proposition (USP)
EXPENDING MARKETS
because of globalization, companies enter new markets and there is need to know about these new markets, so as to formulate appropriate marketing mix for a environment.
COST OF MISTAKES
Experimentation in market is no longer possible because it can be fatal for the organization, e.g., cost of introducing a new drug is approximately US $500 million and takes around 10-12 years.
GROWING CUSTOMER EXPECTATIONS
Customer now expect more benefits for less money. It is only through research that we, as marketers, can find out what they expect and try to provide to them economically.
COMMITTED BUYER
LIKES THE BRANDConsider it a friendSATISFIED BUYER
Has switching costs
SATISFIED / HABITUAL BUYERNo reason for change
SWITCHER / PRICE SENSITIVEIndifferent – no brand loyalty
THE LOYALTY PYRAMID
Business markets & buying behavior
Business Markets exist.
To produce other goods/servicesTo resell to other users or consumersTo conduct organizational operations
Components of the Business Markets
Agricultural MarketReseller MarketGovernment MarketsServices MarketNon-Business MarketInternational Market
Characteristics of the Business Market Demand
Derived DemandInelastic DemandDemand Widely FluctuatesBuyers are Well Informed
Buying situationsNew task buyingStraight Re-buyModified Re-buy
Multiple Roles in Buying
User
Influencer
Decision Maker
Gate-Keeper
Buyers
Buying Pattern of Business Users
Direct Purchase
Nature of Relationship
Frequency of Purchase
Size of Order
Length of Negotiation Period
Reciprocity Arrangements
Service Expectations
Dependability of Supplies
Leasing
Competition
Brand competition
Substitute Products
General competition
Social & cultural forces
Change in consumption patter
Difference in lifestyle
Two income families
Changing gender roles
Conspicuous consumption
A premium on time
Health & environmental issues
Multiple roles in buying
User
Influencer
Decision Maker
Gate Keeper
Buyer
QUESTION CHECK FOR SOWT
STRENGTHS
• Do we have a distinct competitive advantages?
• Do we have adequate financial resources?
• Can we do something better than our competitors?
• Do buyers think well of us?
• Are we known at the market leader?
• Do we have proprietary technologies?
• Can we produce and market at lower costs?
• does our management team have a good track record?
WEAKNESS
• Do we lack a clear strategic direction?
• I sour competitive position deteriorating?
• Are our facilities obsolete?
• Do we lack management depth and talent?
• Are we missing any key skills?
• Do we have internal operating problems.?
• Are we have short of cash to fund current and future business efforts?
• Do we have a weak image in the market?
SINGLE SEGMENT VS MULTIPLE SEGMENT STRATEGIES
SINGLE SEGMENT STRATEGIES
Enable the seller to penetrates the market in depth and to acquire a reputation as specialist in a limited market. Risk associated is, the firm has all eggs in one basket.
MULTIPLE – SEGMENT STRATEGY
Two or more groups of buyers are identified. Different marketing mix is developed to attract each segment. Segmentation with no change in product, separate promotional appeals, each tailored to a given segment are devised.
MARKET RESEARCH
Why Market Research?
COMPETITIVE PRESSURE
As more and more companies enter in a particular market, there is always need to maintain a differential advantage or a Unique Selling Proposition (USP)
EXPANDING MARKETS
Because of globalization, companies enter new markets and there is need to know about these new markets, so as to formulate appropriate market6ing mix for a new environment.
COST OF MISTAKES
Experimentation in market is no longer possible because it can e fatal for the organization, e.g. cost of introducing a new drug is approximately US $ 500 million and takes around 10-12 years.
GROWING CUSTOMER EXPECTATIONS
Customers now expect more benefit for less money. It is only through research that we, as marketers, can find out what they expect and try to provide to them economically.
A BRAND
A Name
Symbol
Sign
Mark
Color
Or the combination of above
REASONS FOR BRANDING FOR CONSUMER
Ensure recognition
Ensure repeat purchase
Ensure Quality
REASONS FOR BRANDING FOR BRAND OWNERS
Offers Premium on Price
Can be Sold
Can be Promoted
BRANDING STRATEGIES
CORPORATE BRANDING STRATEGY
Suggest that every product is promoted by a different brand name e.g. Lux, Surf Excel, Lifebuoy, Dalda, Lirl etc.
FAMILY BRANDING STRATEGY
Suggest that all products of one company be promoted by the same name, e.g. HP, Sony, Panasonic, LG etc.
PRODUCT NAME COMBINED WITH FAMILY NAME
Suggest that a company may use that strength the of the company name with the name of the product e.g. Toyota Corolla, Service Don Carlos, City Bank Visa etc.
BRAND REORGANIZATION
Refers to the ability of the customer to the reorganization to brand
THE RECALLABLE PYRAMID
Top of the mind Recall
RecallRecognitionAwareness
UName
BRAND EQUITY
Term refers to a combination of recognition loyally and Awareness.