principles of marketing unit-i
TRANSCRIPT
PRINCIPLES OF MARKETING
UNIT-I
PREPARED BY
Dr.L.SHANTHI
Assistant Professor,
Department of Business Administration
Government Arts College(Autonomous)
Coimbatore-641018
REFERENCE BOOKS:
1. Marketing Management- Dr.Radha
2. Marketing Management Global Perspectives- Ramaswamy & Namakumari
3. https://www.yourarticlelibrary.com/marketing/approaches-to-the-study-of-marketing-4-
approaches/
4. https://www.enotesmba.com/2013/03/mba-notes-marketing-planning-process.html
INTRODUCTION
Marketing plays a major role in our daily lives. Each day is filled with consuming
products made available by marketers. We pay for marketing each time we buy a product.
Marketing is responsible for satisfying customers, which in turn increases our standard of living
and quality of life.
The word ‘Market’ is derived from the Latin word ‘Marcatus’ meaning merchandise,
wares, traffic, trade or a place where business is conducted. The common usage of market means
a place where goods are bought or sold. In its strict meaning market does not necessarily mean a
place of exchange. Market has been defined by different authorities in the following ways:
”Market includes both place and region in which buyers and sellers are in free competition
with one another.”-Pyle.
DEFINITION OF MARKETING:
According to Philip Kotler: “Marketing is a social and managerial process by which
individuals and groups obtain what they need and want through creating, offering and
exchanging products of value with others.
American Marketing Association :”Marketing is concerned with the people and activities
involved in the flow of goods and services from the producer to the consumer”.
Hugey & Mitchell: ”Marketing includes all activities involved in the creation of place,
time & possession utilities.
EVOLUTION OF MARKETING CONCEPT:-
(1) The Production Concept: It was the oldest one. The Production Concept holds that
consumers will prefer products that are widely available and inexpensive. Managers of
production oriented business concentrate on achieving high production efficiency, low costs, and
mass production. They assume that consumers are primarily interested in product availability and
low prices.
(2) The Product Concept: this stage it was believed that if the product is of good
quality and priced reasonably, nothing would prevent the producer from achieving
satisfactory sales and profit. It appears that producers, instead of being concerned with
the consumer preferences, concentrated on the mass production of goods for the purpose
of profit. They cared little about the customers.
(3)The Selling Concept: This stage witnessed major changes in all the spheres of
economic life. Thus drastic changes were reflected in the buying patterns and behavior of
consumers. There were also improvements in the growth of transport and
communications. All these changes compelled the producers to have an organized
marketing procedure. The selling activity becomes the dominant factor, without any
efforts for the satisfaction of the consumer needs.
(4)The Marketing Concept: As the consumers demand and the production capacity of
the manufacturers came in to an equilibrium, the producers were forced to rethink over
the philosophy of marketing. Customer’s importance was realized but only as a means of
disposing of goods produced. The marketing concept rests on four pillars: (i) target
market , (ii) customer needs, (iii)integrated marketing , and (iv) profitability
(5) The Societal Marketing Concept:-The Societal Marketing Concept holds that the
organization’s task is to determine the needs, wants and interests of target markets and to
deliver the desired satisfactions more effectively and efficiently than competitors in a
way that preserves or enhances the consumer’s and the society’s well being.
FACTORS RESPONSIBLE FOR THE ADOPTION OF MODERN MARKETING
CONCEPT: -
1. Growth of Marketing Channels: In olden days, the manufacturers have direct
contact with the consumers. But now various kinds of middlemen have come into
being. This has created many problems related to the management of distribution
channels.
2. Growth of population: The rapid growth in population especially during the last
two decades has opened a wide field in the marketing. The increase in population
not only brought an increase in demand but also created variety in tastes and
preferences. The producers have to meet the various types of demands of the
consumers.
3. Growth in the number of households: Joint family system has become
unpopular today but the small family concept has widely prevalent. Most of the
joint families are divided into a number of small families due to various reasons.
This division of joint families and the increase in the number of small families has
thrown new challenges before the marketing executives.
4. Growth of Disposable income: With an increase in personal income and
education, people now-a-days want to spend more for procuring more comforts,
satisfaction and variety in consumption. This sophistication of consumers demand
has given new ideas in the marketing concept.
5. Development of Science and Technology: Science and technology are making
progress more fastly. The development in these fields made the consumers
demand more sophisticated, and changes in the traditional line of thinking have
become inevitable.
6. Development of mass Communication Media: Mass communication media like
Radio, Television, etc., have become increasingly popular today. This growth has
enlightened the minds of the public and broadened their mental outlook. The
continuous advertisements in Radio, etc., made them well informed and created
more demand besides making the business field more competitive.
WHAT IS SOCIETAL MARKETING?
Societal Marketing emphasizes on social responsibilities and suggests that to sustain
long-term success, the company should develop a marketing strategy to provide value to the
customers to maintain and improve both the customers and society’s well being better than the
competitors. This concept is also termed as “the Human concept,” “The intelligent consumption
concept,” and the “Ecological imperative concept.”
T Philip Kotler defines it as “the societal marketing concept holds that the organization’s
task is to determine the needs, wants, and interests of target markets and to deliver the desired
satisfactions more effectively and efficiently than competitors in a way that preserves or
enhances the consumer’s and the society’s well-being.”.
The societal marketing concept is one of the 5 marketing concepts.
OBJECTIVES OF SOCIETAL MARKETING CONCEPT
• To maintain a long-term relationship with customers.
• To create a better image in the society for the company than its competitors.
• To carry out its social responsibilities.
• Developing community awareness towards its brands.
• To carry out its social responsibilities.
• To increase the consumer base and market share.
SOCIETAL MARKETING CONCEPT ADVANTAGES AND BENEFITS
• It helps to build a better image for the company.
• It gives a competitive advantage over the competitors.
• Useful in customer retention and long-term relationships.
• Increases sales and market share.
• Facilitate expansion and growth in the long term.
• Products and company policies should prioritize social welfare and society in general.
• Economic resources are properly used.
• Societal marketing raises the living standard of people in society.
• It ensures economic planning more significant and more fruitful to society.
IMPORTANCE OF SOCIETAL MARKETING CONCEPT
• Societal Marketing is very important to society, the environment, and businesses. This
concept was developed to tackle the consumerism and profit only the motive of business.
• The societal marketing concept helps to maximize profits for the organization and creates
a long-term relationship with customers.
• It encourages developing products that benefit society in the long run and satisfies
consumers.
APPROACHES TO STUDY OF MARKETING:
The study of marketing has been approached in more than one way. To some it has meant
to sell something at a shop or market place; to some it has meant the study of individual product
and its movement in the market; to some it has meant the study of persons-wholesalers, retailers,
agents etc., who move the products and to some it has meant the study of behaviour of
commodity movement and the way the persons involved to move them. The approach to the
study of marketing has passed through several stages before reaching the present stage. There is
a process of evolution in the development of these approaches.
To facilitate the study, these different approaches may be broadly classified as follows:
1. Product or Commodity Approach:
Under the commodity approach the focus is placed on the product or it is an approach on the
marketing on commodity wise basis. In other words, the study relates to the flow of a certain
commodity and its movement from the original producer right up to the ultimate customer. The
subject-matter, under this study, is commodity. The system claims that it is simple and gives
good result over the marketing of each product; description study is possible. But at the same
time this approach is time-consuming and repetitive process which is a drawback.
2. Institutional Approach:
In the institutional approach, the focus is on the study of institutions- middlemen, wholesalers,
retailers, importers, exporters, agencies, warehousing etc., engaged in the marketing during the
movement of goods. The approach is also known as middlemen approach. Here, emphasis is
given to understand and analyses the functions of institutions, who are discharging their
marketing functions.
3. Functional Approach:
The functional approach gives importance on the various functions of marketing. In other words,
one concentrates attention on the specialized services or functions performed by marketers. In
this approach, marketing splits into many functions-buying, selling, pricing, standardization,
storage, transportation, advertising, packing etc. This may be studied one after another. Here
each function is studied in detail in order to understand it and analyses the nature, need and
importance of each function.
4. Management Approach:
This approach is the latest and scientific. It concentrates upon the activities or marketing
functions and focuses on the role of decision-making at the level of firm. This approach is
mainly concerned with how managers handle specific problems and situations. It aims through
evaluation of current market practices to achieve specific marketing objectives.
Generally there are two factors-controllable and uncontrollable, which are more concerned with
the decision-making. Controllable include price adjustment, advertisement etc. Uncontrollable-
economical, sociological, psychological, political etc. are the basic causes for market changes.
And these changes cannot be controlled by any firm.
5. System Approach:
The system approach can be defined as “a set of objects together with the relationships among
them and their attributes.” Systems focus on interrelations and interconnections among the
functions of marketing. The system examines marketing connections (linkage) inside as well as
outside the firm. Inside the firm there is a co-ordination of business activities-engineering,
production, marketing, price etc.
On the basis of feedback information proper control is exercised to modify or alter in the
producing process, so that the desired output can be produced. Here, the aim is to secure profit
through customer-satisfaction. Markets can be understood only through the study of marketing
information. For instance, business is composed of many functions, which are composed of sub
functions. Each function or sub-function is independent, but interrelated and enables the other to
achieve marketing objectives.
6. Societal Approach:
This approach has been originated recently. The marketing process is regarded as a means by
which society meets its own consumption needs. This system gives no importance as to how the
business meets the consumer’s needs. Therefore, attention is paid to ecological factors
(sociological, cultural, legal etc.) and marketing decisions and their impact on the society’s well-
being.
7. Legal Approach:
This approach emphasizes only one aspect i.e., transfer of ownership to buyer: It explains the
regulatory aspect of marketing. In India, the marketing activities are largely controlled by Sales
of Goods Act, Carrier Act etc. The study is concentrated only on legal aspects, leaving other
important aspects. This does not give an idea of marketing.
8. Economic Approach:
This approach deals with only the problems of supply, demand and price. These are important
from the economic point of view, but fail to give a clear idea of marketing.
MARKET SEGMENTATION
DEFINITION:
“Market segmentation consists of taking the total, heterogeneous market for a product
and dividing it into several sub−markets or segments each of which tends to be
homogeneous in all significant aspects” −William J. Stanton
Market segments are grouping of consumers according to such characteristics as income,
age, degree of administration, race, or either classification, geographic location or
education”.−Cundiff & Still
NEED / BENEFITS OF MARKET SEGMENTATION:
1. To fix up target market: It helps the marketing people to distinguish one customer
group from another within a given market and thereby enables them to decide which
segment of the market should form their target market.
2. To develop market plan: specific needs of the buyer in the target market can be
identified exactly. So the marketing people can develop their plans on predictable
and reliable base.
3. To develop suitable marketing offers: when the needs and characters of the customer
group have been brought into clear focus marketing offers that are most suitable to
the particular customer group can be developed easily. The specialization that is
required in the product mix, distribution mix, the promotion mix and the pricing
policy to suit the particular customer group can be easily achieved.
4. To decide on marketing strategies: Through segmentation the marketing people can
continuously look for the differences among the customer group and decides on
appropriate strategies.
4. To find out their future markets: Segmentation help the marketing people to spot the
relatively less satisfied segments and a successive business by satisfying them. The
firm can anticipate the future wants of customers and plan their future markets.
1. Demographic variables or Socio – economic variables.
Bases for consumer market segmentation
1. Demographic 2. Geographic 3. Psychographic 4. Behaviour
1. Age
2. Sex
3. Family size
4. Family life cycle
5. Income
6. Occupation
7. Education
8. Religion
9. Race
10. Nationality
1. Regions
2. Villages
3. Cities
4. Density
5. Climate
1. Social Class
2. Life style
3. Personality
1. Occasions
2. Benefits
3. User status
4. Usage rate
5. Loyalty status
6. Readiness stage
7. Attitude towards
product.
Demographic variables are the most popular bases for segmenting consumer markets.
Demographic variables include age, sex, income, education, religion, race, family level,
occupation, etc.
2. Geographic variables.
It includes the variables such as areas, climate, density, etc. on the basis of climate,
market can be segmented into hilly areas, plain areas, and etc. marketing strategies are to
be prepared by considering the characteristics of each and every market.
3. Psychographic variables.
It includes social class of people like lower class, middle class, upper class, etc.
They are not the same in all the consumers. Hence based on psychographic variables,
buyers can be divided into various groups and accordingly goods are to be produced and
distributed. For instance, based on life styles of consumers cigarette company develops
brands for casual smoker, etc.
4. Behavioural variables.
In behavioural segmentation, consumers can be divided into group the basis of their
attitude use knowledge and expectation from the product i.e., the benefit they expect from
the product, usage rate, rate, usage habits, etc.
1. Type of Business Activity
Based on the type of activity, it can be classified into so many segments. According to the
standard industrial classification system, which is practically used by the Government agencies,
the business activities can be classified into ten decisions. They are:
1. Agriculture, Forestry and Fisheries.
2. Construction.
3. Finance, Insurance and Real Estate.
4. Mining
5. Manufacturing
6. Distribution channel- Wholesale and retail trade.
7. Transportation and communication.
8. Services
9. Government, and
10. All others.
Bases for the Segmentation of industrial markets
Type of business
activity
Geographical
location of the
user
Usual purchasing
procedure
Size of the user
2. Geographical Location of the User
The way of conducting various industrial marketing activities in various areas differs due to
factors like variations in climate, topography, etc.
3. Usual purchasing procedure
Generally, industrial users are more systematic buyers when compared to ultimate
consumers. For example, if a concern purchases a major installation, it requires technical
investigations and the approval of top-level management committee in the concern. But if a
concern purchases an ordinary item like postage, it will not require much investigation and
approval, and it is a tontine requirement of an ordinary nature.
4 .Size of the user:
The size of an industrial purchase may vary because industrial users may vary from the
small machine shop to industrial giants. Generally, manufactures prefer to sell goods in large
quantities than in small and so they fixes lower price for the bulk purchases and vice versa.
MARKETING MIX:
The idea of marketing mix was first conceived by Prof. Neil H. Borden of the Harward Business
School.
"Marketing mix refers to the apportionment of effort, the combination, the designing and the
integration of the elements of marketing into a programme or mix which on the basis of an
appraisal of the market force will best achieve the objectives of an enterprise at a given time."
Professor Neil H. Borden
"Marketing mix is the set of controllable marketing variables that the firm blends to produce the
response it wants in the target market." -Philip Kotler
"Marketing mix is the term that is used to describe the combination of the four inputs that
constitute the core of an organisation's marketing system. These four elements are the product
offerings, the price structure, the promotional activities and the distribution system. The four
ingredients in the marketing mix are interrelated." –William Stanton
Elements of Marketing Mix:
From the definition it is clearly known that the following are the components of
marketing mix: 1.Product, 2.Pricing, 3.Physial Distribution or Place, 4.Promotion. These are
popularly denoted as marketing decision variables. These are popularly known as Four “Ps”.
1. Product: The management should first decide the product, which the firm should produce. It
should produce only those products, which can be marketed. It may offer a single product or
several products. The management should also revise the product design, make improvements in
the product frequently so as to suit the changing tastes and preferences of the customers.
Decisions related to branding and packing also come under this head.
2. Price: Price is another powerful element in the marketing mix and vitally affects the volume
of sales. The firm should take decisions with regard to the basis for fixing its price and profit
margin. It should also frame policies for allowing trade and other discount allowances.
3. Promotion: The business enterprise should inform the customers about its products and
persuade them to buy. Advertising, personal selling and other sales promotional activities are the
various promotional activities. All these activities increase the volume of sales by expanding as
well as retaining the market share for the product.
4.Physical Distribution or Place: Marketing channel policy is another integral part of the
marketing mix. The management should select the channels through which the product should
reach the target market at the right time. Other aspects such as physical handling, transporting
and their financial considerations should be taken into account.
All the ”Four Ps” are the strong weapons of the management and with them the firm can
fight out its rivals in the market for a larger share of the sales and built up greater good will. The
effectiveness of the marketing effort mainly depends upon the decisions made in each of “p”
areas and all the four “Ps” should be directed towards the consumer so as to ascertain the needs,
requirements, tastes, preferences and expectations.
7Ps’ OF SERVICE MARKETING
The first four elements in the services marketing mix are the same as those in the traditional
marketing mix. However, given the unique nature of services, the implications of these are
slightly different in case of services.
1. Product: In case of services, the product' is intangible, heterogeneous and perishable.
Moreover, its production and consumption are inseparable. Hence, there is a scope
for customising the offering as per customer requirements. However, too much
customisation would compromise the standard delivery of the service and adversely
affect its quality. Hence, particular care has to be taken in designing the service
offering.
2. Pricing: Pricing of services is tougher than pricing of goods. While the latter can be
priced easily by taking into account the raw material costs; in case of services, attendant
costs such as labour and overhead costs - also need to be factored in. Thus, a restaurant
not only has to charge for the cost of the food served but also has to calculate a price for
the ambience provided. The final price for the service is then arrived at by including a
mark up for an adequate profit margin.
3. Place: Since service delivery is concurrent with its production and cannot be
stored or transported, the location of the service product assumes importance.
Service providers have to give special thought to where the service would be
provided. Thus, a fine dine restaurant is better located in a busy, upscale market
as against on the outskirts of a city. Similarly, a holiday resort is better situated in
the countryside away from the rush and noise of a city.
4. Promotion: Since a service offering can be easily replicated, promotion becomes
crucial in differentiating a service offering in the mind of the consumer. Thus,
service providers, offering identical services such as airlines or banks and
insurance companies, invest heavily in advertising their services. This is crucial in
attracting customers in a segment where the services providers have nearly
identical offerings.
Let us know look at the three new elements of the services marketing mix -people, process
and physical evidence - which are unique to the marketing of services.
5. People: People are a defining factor in a service delivery process, since a service
is inseparable from the person providing it. Thus, a restaurant is known as much
for its food as for the service provided by its staff. The same is true of banks and
department stores. Consequently, customer service training for staff has become a
top priority for many service organisations today.
6. Process: The process of service delivery is crucial since it ensures that the same
standard of service is repeatedly delivered to the customers. Therefore, most
companies have a service blueprint which provides the details of the service
delivery process, often going down to even defining the service script and the
greeting phrases to be used by the service staff.
7. Physical Evidence: Since services are intangible in nature, most service
providers strive to incorporate certain tangible elements into their offering to
enhance customer experience. Thus, there are hair salons that have well designed
waiting areas. Similarly, restaurants invest heavily in their interior design and
decorations to offer a tangible and unique experience to their guests.
MARKETING ENVIRONMENT
▪ Marketing activities are influenced by several factors inside and outside a
business firm. These factors or forces influencing marketing decision making are
collectively called Marketing environment.
▪ It comprises all those forces which have an impact on market and marketing
efforts of the enterprises
▪ According to Philip Kotler, marketing environment refers to “external
factors and forces that affect the company’s ability to develop and maintain
successful transactions and relationships with its target customers”
VARIOUS ENVIRONMENTAL FACTORS AFFECTING THE MARKETING FUNCTIONS.
▪ The marketing environment consists of a
▪ Microenvironment and
▪ Macro environments.
The microenvironment implies the factors and forces in the immediate
environment which affect the company’s ability to serve its market.
The factors are suppliers, Intermediaries, customer, competitors, and publics.
The macro environments consist of the larger social forces that affect the whole
microenvironment- demographic, economic, natural, technological, political-
legal, and socio-cultural forces.
MICROENVIRONMENTS
Marketing management’s job is to create attractive offers for target markets.
However, marketing managers cannot simply focus on the target markets needs. Their
success also will be affected by actors in the company’s microenvironment – other
company departments, suppliers, marketing intermediaries, customers, com0petitors, and
various publics as follows:
The company:
In designing marketing plans marketing management takes other company groups
into account – groups such as top management, finance, research and
development(R&D), purchasing, manufacturing, and accounting as follows:
➢ Top management sets the company‘s mission, objectives, broad strategies, and
policies. Marketing managers must make decisions within the plans made by top
management, and marketing plans must be approved by top management before
they can be implemented.
➢ Marketing managers also must work closely with other departments.
➢ Finance is concerned with finding and using funds to carry out the marketing
plans.
➢ The R&D department focuses on the problems of designing safe and attractive
products.
➢ Purchasing worry about getting suppliers and materials, where as manufacturing
is responsible for producing the desire quality and quantity of product.
Therefore, all of these departments have an impact on the marketing department’s
plans and actions.
Marketing intermediaries:
Marketing intermediaries are firms that help the company to promote, sell, and
distribute its goods to final buyers. They include,
➢ Middlemen-middlemen are distribution channel firms that help the company
to find customers or make sales to them.
➢ Physical distribution firms- it help the company to stock and move goods from
their points of origin to their destination.
➢ Marketing service agencies- they are the marketing research firms, advertising
agencies, media firms, and consulting firms that help the company to find target
market and promote its products to the right markets.
Customers:
The company must study its customer markets closely. The following figure
shows the five types of customer markets:
➢ Consumer markets- consist of individuals and households that buy goods and
services for personal consumptions.
➢ Business markets- buy goods and services for further processing or for use in
their production process.
➢ Reseller markets- buy goods and services to resell at a profit.
➢ Government markets- are made up of government agencies that buy goods and
services in order to produce public services or transfer the goods and services to others
who need them.
➢ International markets- consist of buyers in other countries, including consumers,
producers, resellers and governments.
Competitors:
The marketing concept states that if the company wants to be successful it must
satisfy the needs and wants of consumers.
The marketing manager has no or very little control over the activities of
competitors. He has to anticipate the activities of the competitors and should try to
act accordingly. This is because, competitors influence the choice of the company
to a greater extent as to the marketing strategies relating to selection of target
markets, suppliers, channels of distribution, etc.
Publics:
A public is any group that has an actual or potential interest in an organizations
ability to achieve its objectives.
MACROENVIRONMENT
The following figure shows the six major forces in the company’s macro
environment:
1.DEMOGRAPHIC ENVIRONMENT:
The term demography refers to the statically study of human population and its
distribution. Further, geographical distribution of population, density of
population, urban and rural population, characteristics, age distribution, sex
distribution, racial, caste, ethnic, religions and class distribution all will be useful
in making suitable marketing strategies for target consumers and a good market
share. Demographic data helps in preparing marketing plans, household
Company
Demographic forces
Economic
forces
Socio-Cultural
forces
Natural
forces
Political / Legal
Forces
Technological forces
marketing plans, age etc it includes, Worldwide population growth: The explosive
world population
2.ECONOMIC ENVIRONMENT:
People alone do not constitute market. They must have surplus income to
purchase goods. Markets require both purchasing power as well as people. The
economic environment includes the factors, which affect the purchasing power
and spending pattern of consumer. Hence, marketers should know well about
major trends in income and change in consumer spending patterns. Consumer’s
saving habit and debt pattern, and the consumers’ expenditure will change in the
income level influence consumer buying behaviour.
3.SOCIO-CULTURAL ENVIRONMENT:
Socio-cultural environment plays a major role in deciding the wants and needs of
the people, because their life-style patterns depends mainly on these forces.
Socio-cultural forces having the major implications on the marketing activities as
follows:
(i). Personal life styles and social values of individuals:
Personal life styles and social values of individual are the set of forces that have
significant marketing implications.
Examples of such changes are:
➢ From cash purchase to purchase on credit basis.
➢ From natural to artificial.
➢ From substandard goods to quality goods.
➢ From a husband dominated family to equality in husband-wife roles.
(ii). Social problems:
The second set of social forces encompasses broader, non-personal social
problems.
These forces have concern about:
➢ Environment pollution.
➢ Safety in products and occupations.
➢ Conservation of scare resources.
➢ Maintaining ethical and socially responsible position in marketing.
(iii). Consumerism:
Consumerism is considered as the third aspect of social environment. It was
started in mid-1960 as an outcome of the unrealized expectations and perceived
injustices faced by the consumers in the market place. As the movement was
found to be genuine, it attracted the attention of Government regulatory agencies
and now much legislation has been passed to protect the innocent consumers,
(eg). Standards of weights and Measures Act, Consumers Protection Act, etc.
4.POLITICAL AND LEGAL ENVIRONMENT:
Generally, speaking, every company’s conduct is influenced greatly by the
political-legal environment forces. The history of business legislation during the
past 100 years has been characterized by three legislative philosophies.
i) To prevent monopoly
ii) To protect the individual consumers
iii) To protect the society
5.TECHNOLOGICAL ENVIRONMENT:
Technological has a tremendous impact on our lives. Technological changes are
faster in the last twenty-five years. We do not know VCR, VCP, satellite
communication system, washing machine, personal computers, fax machines,
calculators, etc two decades ago. Besides, Audio cum Vedio CDs, E mail, E
commerce, Internet, etc., are the latest additions.
Major technological changes carry certain market impact such as,
▪ Starting of entirely new industries like computers.
▪ Altering or abolishing existing industries-cable TVs affect the
movie industries.
▪ Stimulating the markets for other products, which are not related to
the new technology.
DEFINITION OF MARKETING PLANNING
"Marketing Planning is the process of developing marketing plan incorporating overall
marketing objectives, strategies, and programs of actions designed to achieve these objectives."
Marketing Planning involves setting objectives and targets, and communicating these targets to
people responsible to achieve them. It also involves careful examination of all strategic issues,
including the business environment, the market itself, the corporate mission statement,
competitors, and organisational capabilities.
MARKETING PLANNING PROCESS
Marketing planning process is a series of stages that are usually followed in a sequence.
Organisations can adapt their marketing plan to suit the circumstances and their requirements.
Marketing planning process involves both the development of objectives and specifications for
how to achieve the objectives. Following are the steps involved in a marketing plan.
1) Mission
Mission is the reason for which an organisation exists. Mission statement is a straightforward
statement that shows why an organisation is in business, provides basic guidelines for further
planning, and establishes broad parameters for the future. Many of the useful mission statements
motivates staff and customers.
2) Corporate Objectives
Objectives are the set of goals to be achieved within a specified period of time. Corporate
objectives are most important goals the organisation as a whole wishes to achieve within a
specified period of time, say one or five years. All the departments of an organisation including
marketing department works in harmony to achieve the corporate objectives of the organisation.
3) Marketing Audit
Marketing audit helps in analysing and evaluating the marketing strategies, activities,
problems, goals, and results. Marketing audit is done to check all the aspects of business directly
related to marketing department.
4) SWOT Analysis
The information gathered through the marketing audit process is used in development of SWOT
Analysis. It is a look at organisation's marketing efforts, and its strengths, weaknesses,
opportunities, and threats related to marketing functions.
o Strengths and Weaknesses are factors inside the organisation that can be controlled by
the organisation. USP of a product can be the example of strength, whereas lack of
innovation can be the example of weakness.
o Opportunities and Threats are factors outside the organisation which are beyond the
direct control of an organisation. Festive season can be an example of opportunity to
make maximum sales, whereas increasing FDI in a nation can be the example of threat to
domestic players of that nation.
5) Marketing Assumptions
A good marketing plan is based on deep customer understanding and knowledge, but it is not
possible to know everything about the customer, so lot of different things are assumed about
customer.
6) Marketing Objectives and Strategies
After identification of opportunities and challenges, the next step is to develop marketing
objectives that indicate the end state to achieve. Marketing objective reflects what an
organisation can accomplish through marketing in the coming years. Objective identify the end
point to achieve. Marketing strategies are formed to achieve the marketing objectives. Marketing
strategies are formed to determine how to achieve those end points. Strategies are broad
statements of activities to be performed to achieve those end points.
7) Forecast the Expected Results
Marketing managers have to forecast the expected results. They have to project the future
numbers, characteristics, and trends in the target market. Without proper forecasting, the
marketing plan could have unrealistic goals or fall short on what is promised to deliver.
8) Create Alternative Plan
A alternate marketing plan is created and kept ready to be implement at the place of primary
marketing plan if the whole or some part of the primary marketing plan is dropped.
9) Marketing Budget
The marketing budget is the process of documenting the expected costs of the proposed
marketing plan. One common method to allocate marketing budgeting is based on a percentage
of revenue. Other methods are - comparative, all you can afford, and task method.
10) Implementation and Evaluation
At this stage the marketing team is ready to actually start putting their plans into action. This
may involve spending money on advertising, launching new products, interacting with potential
new customers, opening new retail outlets etc.
The marketing planning process is required to be evaluated and updated regular. Regular
evaluation of marketing efforts helps in achieving marketing goals.
o
DIFFERENT MARKETING STRATEGIES
Strategies based on the firm’s share in target market:
Based on the role they play in the target market, firms can be classified into four viz,
1. Market leader
2. Market challenger
3. Market follower
4. Market nichers.
This can be explained with the help of the following chart.
40%
Market leader
30%
Market challenger
20%
Market follower
10%
Market nichers
1.Market leader Strategies:
Most of the industries have one firm as the market leader. This firm has the largest share
in the market of the relevant product. In the above chart, the share of the leader firm is 40%
which is the highest of all the other firms. Usually, such a firm leads the other firms in prices
changes, product introductions, distribution coverage and promotional severity. Its dominance is
acknowledged by the other firms. Some of the examples for market leaders are Kodak for
photography, Procter & gamble for consumer-packaged goods, coco-cola for soft drinks, etc.
Product innovation may come along and affect the market leader. The leader might spend
conservatively, expecting hard times. In order to retain its current position in the market, it has to
take necessary action for the following.
1. Expansion of the total market demand.
2. Protection of its current market share.
3. Increase of its market share further.
II. Market Challenger Strategy:
Market challenger is a firm that aggressively tries to expand its market by attacking leaders.
They are:
• Price- Discount strategy: Offering a goods to the public at a price less than the prevailing
market price is called price-discount strategy.
• Cheaper goods strategy: It is offering an average or low-quality product at a much lowr
price. It is suitable for price sensitive consumers.
• Prestige goods strategy: It is a strategy of launching a higher quality product at a higher
price than the market leader.
• Product innovation strategy: the challenger might pursue product innovation to attack the
leader’s market position. The public often gains most from challenger strategies oriented
toward product innovation.
• Product Proliferation strategy: The challenger can attack the leader launching a large
product variety, thus giving buyers more choice.
• Improved service strategy: The challenger might try to offer new or better services to
customers.
• Distribution innovation strategy: A challenger might discover or develop a new channel
of distribution.
• Manufacturing-cost -reduction strategy: The challenger might pursue lower
manufacturing costs than its competitors through more efficient purchasing, lower labour
costs, and more modern production equipment. The company can use this lower costs to
price more aggressively to gain market share.
• Intensive Advertising promotion: Some challenger attacks the leader by increasing their
expenditure on advertising and promotion.
III. Market – Follower Strategy:
Market follower is nothing but a strategy of product imitation. After a new product has been
developed and introduced successfully in to the market, another firm can come along, copy or
improve the new product and launch it. Such a firm is called as market follower. They are:
• Cloner: The cloner imitates with enthusiasm the leader’s products, distribution,
advertising, and so on. He doesn’t originate anything but lives on the market leader’s
investments.
• Imitator: The imitator copies things from the leader but maintains differentiation in terms
of packaging, advertising, pricing, and so on.
• Adopter: The adopter takes the leader’s products and adapts and often improves them.
The adopter grows in to the future challenger.
IV. Market – Nicher Strategies:
A market nicher is a small firm that choose to operate in some specialized part of the market
that is unlikely to attract large firms.