Assignment #1

Subject: Services Marketing

Assignment Topic:

“Basic Marketing Concepts and Definitions”

Submitted to: Prof. Sajida Nisar

Submitted by: Nada Zain [27]

MBA morning

2nd Semester

Date: May 30, 2012 – Thursday

Institute of Business Administration

Punjab University, Lahore

MarketingThe action or business of promoting and selling products or services.

“Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” - AMA

SegmentationDividing a market into distinct group of buyers who have distinct needs, characteristics or behavior and who might require separate products or marketing programs.

TargetingThe process of evaluating each market segment’s attractiveness and selecting one or more segments to enter or serve. In evaluating different market segments, a firm must look at three factors:

1. Segment size and growth,2. Segment structural attractiveness, and3. Company objectives and resources.

PositioningArranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

The differentiation and positioning task consists of three steps:

1. Identifying a set of differentiating competitive advantages upon which to build a position,2. Choosing the right competitive advantages, and3. Selecting an overall positioning strategy.

Customer Driven Market StrategyIn designing a customer-driven marketing strategy, you will probably want to direct your efforts toward a small specialized public or "niche." Niche marketing can provide a start-up with an opportunity to launch a business successfully even in today's crowded arena, according to marketing experts Dr. Afarin Bellisario and Peter Geisheker. For example, the successful Swiss company Laurastar has targeted people who want to press clothes at home to professional-level quality, selling them a high-end home pressing system.

1. Figure Out Who Your Customers Are2. Get to Know Your Customers Well3. Figure Out How to Reach Your Customers4. Focus Your Efforts and Promotions

BrandA name, term, sign, symbol, or design, or a combination of these that identifies the products or services of one seller or group of sellers and differentiates them from those of competitiors.

Brand Management The process by which marketers attempt to optimize the ‘Marketing mix’ for a specific

brand. The process of nurturing and marketing brands so that their value to the business increases. Brand management is the application of marketing techniques to a specific product, product

line, or brand. The discipline of brand management was started at Procter & Gamble as a result of a famous

memo[1] by Neil H. McElroy.

Brand EquityThe positive differential effect that knowing the brand’s name has on customer response to the product or service.

Customer EquityThe total combined lifetime values of all the company’s customers.

Marketing MixThe set of controllable tactical marketing tools- product, price, place and promotion- that the firm blends to produce the response it wants in the target market.

Services Marketing MixThe service marketing mix comprises off the 7’p’s. These include:

Product Price Place Promotion

People Process Physical evidence

To certain extent managing services are more complicated then managing products, products can be standardized, to standardize a service is far more difficult as there are more input factors i.e. people, physical evidence, process to manage then with a product. The Characteristics of a service that are:(1) Lack of ownership (2) Intangibility (3) Inseparability(4) Perishability (5) Heterogeneity.

Product LineA product line is "a group of products that are closely related, either because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges”.

Product MixThe number of different product lines sold by a company is referred to as width of product mix. The total number of products sold in all lines is referred to as length of product mix. If a line of products is sold with the same brand name, this is referred to as family branding.

Promotion MixThe specific blend of advertising, sales promotion, public relations, personal selling and direct marketing tools that the company uses to persuasively communicate customer value and build customer relationship.

BCG MatrixThe BCG matrix (aka B-Box, Boston Consulting Group analysis, portfolio diagram) is a chart that had been created by Bruce Henderson for the Boston Consulting Group in 1968 to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis, Below, a short description of each quadrant in the matrix is presented

StarsA star is a product or a business unit that has a high market share in a growing market. This product or business unit normally requires a lot of funding to maintain its market share, and profits may thus not be very high. Companies should however normally seek to maintain a high rate of investment in this product or business unit, because this will turn the star into a cash cow, if the market share is kept during the consolidation of the market.

Cash CowsA cash cow is a product or a business unit with a high market share in a mature market. Because the market is mature and market conditions are more stable, there is less need for heavy investments such as marketing, R&D etc. Companies should therefore try to exploit their cash cows to the maximum, because these normally serve as cash suppliers and as the financial fundament of the company.

Question MarksA question mark is a product or a business unit in a growing market, but without a high market share. Question marks normally do not generate a lot of cash due to low profit margins and low market shares. Companies may choose to invest heavily in creating a greater market share, and thus strengthen cash flow. Otherwise, companies could seek to sell or divest the question marks, so that they will not drain the company's resources. If market share is not increased, question marks will potentially only absorb great amounts of funds, and lastly become dogs when growth stops.

DogsDogs are products or business units with a low share in static markets. Therefore, dogs are the worst products or business units imaginable. Companies should therefore avoid having too many dogs in their portfolio, and perhaps try to liquidate these dogs if they are not contributing with any positive cash flows.

Product life-cycle management (or PLCM) is the succession of strategies used by business management as a product goes through its life-cycle. The conditions in which a product is sold (advertising, saturation) change over time and must be managed as it moves through its succession of stages.

Product life-cycle (PLC) Like human beings, products also have an arc. From birth to death, human beings pass through various stages e.g. birth, growth, maturity, decline and death. A similar life-cycle is seen in the case of products. The product life cycle goes through multiple phases, involves many professional disciplines, and requires many skills, tools and processes. Product life cycle (PLC) has to do with the life of a product in the market with respect to business/commercial costs and sales measures. To say that a product has a life cycle is to assert three things:

1. Products have a limited life,

2. Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller,

3. Products require different marketing, financing, manufacturing, purchasing, and human resource strategies in each life cycle stage.

The four main stages of a product's life cycle and the accompanying characteristics are:

Stage Characteristics

1. Market introduction stage

costs are very high slow sales volumes to start little or no competition demand has to be created customers have to be prompted to try the product makes no money at this stage

2. Growth stage

costs reduced due to economies of scale sales volume increases significantly profitability begins to rise public awareness increases competition begins to increase with a few new players in establishing

market increased competition leads to price decreases

3. Maturity stage

costs are lowered as a result of production volumes increasing and experience curve effects

sales volume peaks and market saturation is reached increase in competitors entering the market prices tend to drop due to the proliferation of competing products brand differentiation and feature diversification is emphasized to

maintain or increase market share Industrial profits go down

4. Saturation and decline stage

costs become counter-optimal sales volume decline prices, profitability diminish profit becomes more a challenge of production/distribution

efficiency than increased sales

Growth Strategies Diversification is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry that the business is already in. At the corporate level, it is generally very interesting entering a promising business outside of the scope of the existing business unit.

Diversification is part of the four main growth strategies defined by the Product/Market Ansoff matrix:

Ansoff pointed out that a diversification strategy stands apart from the other three strategies. The first three strategies are usually pursued with the same technical, financial, and merchandising resources used for the original product line, whereas diversification usually requires a company to acquire new skills, new techniques and new facilities.

Market penetration occurs when a company enters/penetrates a market in which current products already exist. The best way to achieve this is by gaining competitors' customers (part of their market share). Other ways include attracting non-users of your product or convincing current clients to use more of your product/service (by advertising etc.).

Product Development is term used to describe the complete process of bringing a new product to market. A product is a set of benefits offered for exchange and can be tangible (that is, something physical you can touch) or intangible (like a service, experience, or belief).

A market development strategy targets non-buying customers in currently targeted segments. It also targets new customers in new segments.

(existing markets, new products): McDonalds is always within the fast-food industry, but frequently markets new burgers.

Market development strategy entails expanding the potential market through new users or new uses. New users can be defined as: new geographic segments, new demographic segments, new institutional segments or new psychographic segments. Another way is to expand sales through new uses for the product.

(new markets, existing products): Lucozade was first marketed for sick children and then rebranded to target athletes.