Understanding  Marketing
Definition <ul><li>The process by which companies create value for customers and build strong customer relationships in or...
<ul><li>Marketing is managing profitable customer relationships. </li></ul>
<ul><li>‘ Always low on prices. Always!’ </li></ul><ul><li>‘ Make a dream come true today’ </li></ul><ul><li>‘ be direct’ ...
Peter Drucker <ul><li>Goal of all organizations is to  gain and retain customers </li></ul><ul><li>Innovation and marketin...
What Can Be Marketed? <ul><li>Goods </li></ul><ul><li>Services </li></ul><ul><li>Experiences </li></ul><ul><li>Events </li...
<ul><li>Identifying customer needs </li></ul><ul><li>Designing goods and services that meet those needs </li></ul><ul><li>...
<ul><li>Making the goods or services available at times and places that meet customers’ needs </li></ul><ul><li>Pricing go...
Marketing is.... <ul><li>getting the right  products  to the right  people  at the right  price  and at the right  place a...
<ul><li>More simply:  </li></ul><ul><li>Marketing is the delivery of customer satisfaction at a profit . </li></ul>
Marketing Strategy and the Marketing Mix <ul><li>Guided by marketing strategy, the company designs an integrated marketing...
Customer Driven  Marketing Strategy <ul><li>Market segmentation: dividing a market into distinct groups of buyers who have...
<ul><li>Market Targeting: The process of evaluating each market segment’s attractiveness and selecting one or more segment...
Niche Marketing <ul><li>When a company decides to serve only one or few special segments or “market niches”, it is involve...
Market Differentiation & Positioning <ul><li>Actually differentiating the market offering to create superior customer valu...
Integrated Marketing Mix <ul><li>The set of controllable tactical marketing tools – product, price, place and promotion – ...
Managing the Marketing Effort <ul><li>Marketing management functions: analysis, planning, implementation, and control. </l...
What is a product? <ul><li>Anything that can be offered to a market for attention, acquisition, use, or consumption that m...
Levels of Product and Services <ul><li>3 levels: each level adds to customer value </li></ul><ul><li>The core benefit. E.g...
Product and Service Classification <ul><li>Consumer Product: product bought by final consumer for personal consumption </l...
<ul><li>Specialty product: consumer product with unique characteristics or brand identification for which a significant gr...
Industrial Product <ul><li>Product bought by individuals and organizations for further processing or for use in conducting...
Product and Service Decision <ul><li>Individual product decisions </li></ul><ul><li>Product line decisions </li></ul><ul><...
Individual Product Decisions <ul><li>Product attributes: benefits that a product will offer. </li></ul><ul><li>Quality: “f...
<ul><li>Product features: are a competitive tool for differentiating the company’s product from competitors’ product.  </l...
Branding <ul><li>Brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or s...
Packaging <ul><li>Involves designing and producing the container or wrapper for a product. </li></ul><ul><li>Cluttered she...
Labeling <ul><li>Labels: tags attached to products. Identifies the product or brand, Frooti stamped on orange, zenith etc....
Product Line Decisions <ul><li>Product line: a group of products that are closely related because they function in a simil...
Marriot Example <ul><li>Renaissance Hotels & Resorts: top executives </li></ul><ul><li>Marriot: upper and middle managers ...
Product Mix Decisions <ul><li>The set of all product lines and items that a particular seller offers for sale. </li></ul><...
<ul><li>Depth: the number of versions offered of each product in the line. Colgate toothpastes 11 varieties: Colgate Total...
Branding Strategy <ul><li>Major asset of a company. </li></ul><ul><li>Are more than names and symbols. They represent cons...
<ul><li>Powerful brand has high brand equity. </li></ul><ul><li>The positive differential effect that knowing the brand na...
Branding Strategies <ul><li>Brand positioning:  </li></ul><ul><li>Position product in target customers’ mind </li></ul><ul...
<ul><li>Brand name selection: </li></ul><ul><li>Good name can add to product success </li></ul><ul><li>Should relate to pr...
Brand Sponsorship <ul><li>A product may be launched as: </li></ul><ul><li>Manufacturer’s brand </li></ul><ul><li>Private b...
Brand Development <ul><li>Line extensions: Extending an existing brand name to new forms, colors, sizes, ingredients, or f...
Brand Extensions <ul><li>Extending an existing brand name to a new product category </li></ul><ul><li>Kimberly – Clark – H...
Multi Brands New Brands <ul><li>Additional Brands in the same category </li></ul><ul><li>P& G: different features for diff...
Product Life Cycle <ul><li>Product launch – happy life </li></ul><ul><li>Cover costs </li></ul><ul><li>Earn profits </li><...
PLC – S Curve
Introduction Stage <ul><li>Product launch </li></ul><ul><li>Takes time </li></ul><ul><li>Slow growth </li></ul><ul><li>Neg...
Growth Stage <ul><li>Product, if satisfies market, enters growth stage </li></ul><ul><li>Sales climb quickly </li></ul><ul...
Maturity <ul><li>At some point sale slows down, product enters maturity stage </li></ul><ul><li>Lasts longer </li></ul><ul...
Maturity <ul><li>Product manager should modify market, product and marketing mix </li></ul><ul><li>Market: increase consum...
Decline Stage <ul><li>Eventually dip </li></ul><ul><li>Oat meal, VHS tapes, VCR, Tape recorders </li></ul><ul><li>Reasons:...
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Understanding marketing

  1. 1. Understanding Marketing
  2. 2. Definition <ul><li>The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. </li></ul>
  3. 3. <ul><li>Marketing is managing profitable customer relationships. </li></ul>
  4. 4. <ul><li>‘ Always low on prices. Always!’ </li></ul><ul><li>‘ Make a dream come true today’ </li></ul><ul><li>‘ be direct’ </li></ul><ul><li>‘ think out of a bun’ </li></ul><ul><li>‘ finger lickin good’ </li></ul><ul><li>Companies know if they take care of their customers, market share and profits will follow. </li></ul>
  5. 5. Peter Drucker <ul><li>Goal of all organizations is to gain and retain customers </li></ul><ul><li>Innovation and marketing are the only two ways to achieve the goal </li></ul><ul><li>“ The rest only adds cost ” </li></ul>
  6. 6. What Can Be Marketed? <ul><li>Goods </li></ul><ul><li>Services </li></ul><ul><li>Experiences </li></ul><ul><li>Events </li></ul><ul><li>Persons </li></ul><ul><li>Places </li></ul><ul><li>Properties </li></ul><ul><li>Organizations </li></ul><ul><li>Information </li></ul><ul><li>Ideas </li></ul>
  7. 7. <ul><li>Identifying customer needs </li></ul><ul><li>Designing goods and services that meet those needs </li></ul><ul><li>Communicating information about those goods and services to prospective buyers </li></ul>
  8. 8. <ul><li>Making the goods or services available at times and places that meet customers’ needs </li></ul><ul><li>Pricing goods and services to reflect costs, competition, and customers’ ability to buy </li></ul><ul><li>Providing for the necessary service and follow-up to ensure customer satisfaction after the purchase </li></ul>
  9. 9. Marketing is.... <ul><li>getting the right products to the right people at the right price and at the right place and time with the right promotion </li></ul>
  10. 10. <ul><li>More simply: </li></ul><ul><li>Marketing is the delivery of customer satisfaction at a profit . </li></ul>
  11. 11. Marketing Strategy and the Marketing Mix <ul><li>Guided by marketing strategy, the company designs an integrated marketing mix made up of factors under its control – product, price, place, and promotion. To find the best marketing strategy and mix, the company engages in marketing analysis, planning, implementation, and control. Through these activities, the company watches and adapts to the actors and forces in the marketing environment. </li></ul>
  12. 12. Customer Driven Marketing Strategy <ul><li>Market segmentation: dividing a market into distinct groups of buyers who have distinct needs, characteristics, or behavior and who might require separate products or marketing programs (geographic, demographic, psychographic, and behavioral factors) </li></ul><ul><li>Market segment: a group of consumers who respond in a similar way to a given set of marketing efforts. Expensive car buyers. Cost sensitive buyers. </li></ul>
  13. 13. <ul><li>Market Targeting: The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. </li></ul><ul><li>A company should target segments in which it can profitably generate the greatest customer value and sustain it over time. </li></ul>
  14. 14. Niche Marketing <ul><li>When a company decides to serve only one or few special segments or “market niches”, it is involved in niche marketing. </li></ul><ul><li>Such “nichers” specialize in serving customer segments that major competitors overlook or ignore. </li></ul><ul><li>Ferrari – 1500 cars in US. </li></ul><ul><li>Ferrari Superamerica $287,020 </li></ul><ul><li>Ferrari FXX super sports car $ 2 million </li></ul><ul><li>Jones Soda </li></ul>
  15. 15. Market Differentiation & Positioning <ul><li>Actually differentiating the market offering to create superior customer value. </li></ul><ul><li>Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. </li></ul><ul><li>BMW: “the ultimate driving machine” </li></ul><ul><li>Ford: “built for the road ahead” </li></ul><ul><li>Mastercard: “priceless experience” </li></ul><ul><li>Charging low prices than competitors do or by offering more benefits to justify higher prices. If a company promises greater value, it must deliver greater value. </li></ul>
  16. 16. Integrated Marketing Mix <ul><li>The 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. </li></ul><ul><li>Product: goods n services </li></ul><ul><li>Price: amount of money consumers have to pay to obtain the product </li></ul><ul><li>Place: includes activities to make the product available to target consumers. </li></ul><ul><li>Promotion: includes activities that communicate the merits of the product and persuade target customers to buy it. </li></ul>
  17. 17. Managing the Marketing Effort <ul><li>Marketing management functions: analysis, planning, implementation, and control. </li></ul><ul><li>Analysis: The company must analyze its markets and marketing environment to find attractive opportunities and identify environmental threats. </li></ul><ul><li>Planning: Involves deciding on marketing strategies that will help the company attain its overall objective. </li></ul><ul><li>Implementation: addresses who, where, when and how actions </li></ul><ul><li>“ Doing the right thing” “Doing things right” </li></ul>
  18. 18. What is a product? <ul><li>Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. </li></ul><ul><li>Include physical objects, services, events, persons, places, organizations, ideas, or mixes of these entities. iPod, Camry, BigMac. Doctor’s advice, vacation service, financial services. </li></ul><ul><li>Service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. </li></ul>
  19. 19. Levels of Product and Services <ul><li>3 levels: each level adds to customer value </li></ul><ul><li>The core benefit. E.g. Blackberry </li></ul><ul><li>Actual product: features, design, quality level, a brand image, and packaging. E.g. Blackberry: actual product, its name, parts, styling, features, and packaging. </li></ul><ul><li>Augmented product. Offer consumer services and benefits. (warranty, instructions, quick repair and maintenance when needed) </li></ul>
  20. 20. Product and Service Classification <ul><li>Consumer Product: product bought by final consumer for personal consumption </li></ul><ul><li>Include: </li></ul><ul><li>Convenience product: that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort: soap, candy, newspaper, fastfood. </li></ul><ul><li>Shopping product: that the customer usually buy carefully on suitability, quality, price, and style: furniture, clothing, appliances, hotel, travel service. </li></ul>
  21. 21. <ul><li>Specialty product: consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort: Ferrari FXX, Boss, BB, Disney. </li></ul><ul><li>Unsought product: consumer product that the consumer either does not know about or knows about but does not normally think of buying: life insurance, blood donations, living funeral service. </li></ul>
  22. 22. Industrial Product <ul><li>Product bought by individuals and organizations for further processing or for use in conducting a business. </li></ul><ul><li>Materials and parts (wheat, cotton, livestock, crude petroleum) (iron, cement, wires, tires, motors) </li></ul><ul><li>Capital items (buildings, generators, trucks etc) </li></ul><ul><li>Supplies and services (lubricants, coal, paper, pencils, paints, brooms, conservancy items </li></ul>
  23. 23. Product and Service Decision <ul><li>Individual product decisions </li></ul><ul><li>Product line decisions </li></ul><ul><li>Product mix decisions. </li></ul>
  24. 24. Individual Product Decisions <ul><li>Product attributes: benefits that a product will offer. </li></ul><ul><li>Quality: “freedom from defects” “characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs” </li></ul><ul><li>Siemens defines quality this way: “Quality is when our customers come back and our products don’t” </li></ul><ul><li>Two dimensions: performance quality – Rolls Royce, Rolex, Marriot Renaissance. Conformance quality – consistence in delivering a target level of performance: Chevrolet </li></ul>
  25. 25. <ul><li>Product features: are a competitive tool for differentiating the company’s product from competitors’ product. </li></ul><ul><li>Product style and design: style is appearance of product. Design contributes to a product’s usefulness as well as its looks. “Swiffer Carpetflick”U Shaped lock by Kryptonite. </li></ul>
  26. 26. Branding <ul><li>Brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service. </li></ul><ul><li>212 Men, Swatch etc </li></ul><ul><li>Hardly anything goes unbranded </li></ul><ul><li>Branding helps consumer identify products that might benefit them. Say something about quality and consistency. </li></ul><ul><li>Building and managing brands are the marketer’s most important tasks. </li></ul>
  27. 27. Packaging <ul><li>Involves designing and producing the container or wrapper for a product. </li></ul><ul><li>Cluttered shelves, attracting attention, describing the product, to making the sale. </li></ul><ul><li>300 items per minute. 60 % of all purchases are made on impulse. </li></ul><ul><li>Poorly designed packages can cost companies. </li></ul><ul><li>Heinz bottle design. </li></ul><ul><li>Chip Ahoy by Kraft Foods </li></ul><ul><li>Juice packs </li></ul><ul><li>Product safety </li></ul><ul><li>Environmental concerns </li></ul>
  28. 28. Labeling <ul><li>Labels: tags attached to products. Identifies the product or brand, Frooti stamped on orange, zenith etc. </li></ul><ul><li>Who made it, where it was made, when it was made, its contents, how it is to be used, how to use it safely. </li></ul>
  29. 29. Product Line Decisions <ul><li>Product line: a group of products that are closely related 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 range. E.g. Nike, Nestle </li></ul><ul><li>Product line-length: the number of items in the product line. BMW 3 series, 5, 7 series. </li></ul><ul><li>Downward: DaimlerChrysler Mercedes C-Class. Toyota, Nissan, Honda luxury cars. </li></ul>
  30. 30. Marriot Example <ul><li>Renaissance Hotels & Resorts: top executives </li></ul><ul><li>Marriot: upper and middle managers </li></ul><ul><li>Courtyard: salespeople & road warriors </li></ul><ul><li>Fairfield: vacationers and business travelers on tight budgets. </li></ul><ul><li>ExecuStay: temporary housing for 30 days </li></ul><ul><li>Residence Inn: for people who travel for a living </li></ul>
  31. 31. Product Mix Decisions <ul><li>The set of all product lines and items that a particular seller offers for sale. </li></ul><ul><li>Colgate: oral care, personal care, home care, and pet nutrition. </li></ul><ul><li>Four dimensions: width, length, depth, and consistency. </li></ul><ul><li>Width: number of different product lines. </li></ul><ul><li>Length: the total number of items the company carries within its product line. 3 M markets 60,000 products, Wal Mart stocks 100 -12000 items, GE manufactures 250,000 items. </li></ul>
  32. 32. <ul><li>Depth: the number of versions offered of each product in the line. Colgate toothpastes 11 varieties: Colgate Total, Colgate Tartar Control, Colgate 2 in 1, Colgate Cavity Protection, Colgate Sensitive, Colgate Fresh Confidence, Colgate Max Fresh, Colgate Simply White, Colgate Sparkling White, Colgate Kids Toothpaste, Colgate Baking Soda. </li></ul><ul><li>Consistency: refers to how closely related the various product lines are in end use, production requirements, distribution channels. </li></ul>
  33. 33. Branding Strategy <ul><li>Major asset of a company. </li></ul><ul><li>Are more than names and symbols. They represent consumers’ perceptions and feeling about a product and its performance. Brands exist in the minds of consumers. </li></ul><ul><li>Real power: to capture consumer preference and loyalty. </li></ul><ul><li>Coca-Cola, Tide, Nike, Harley-Davidson, Disney forge deep connections with customers. </li></ul>
  34. 34. <ul><li>Powerful brand has high brand equity. </li></ul><ul><li>The positive differential effect that knowing the brand name has on customer response to the product or service. </li></ul><ul><li>To what extent people are willing to pay more for the brand. </li></ul><ul><li>A brand with strong brand equity is a very valuable asset. Brand valuation is the process of estimating the total financial value of a brand. Coca-Cola $67 billion, Microsoft $ 57 billion, IBM $ 56 billion. </li></ul><ul><li>Brand can: provide competitive advantage. Brand awareness and loyalty. Bargaining with resellers. Brand extensions launch. Protection against fierce price competition. Profitable customer relationship. </li></ul>
  35. 35. Branding Strategies <ul><li>Brand positioning: </li></ul><ul><li>Position product in target customers’ mind </li></ul><ul><li>Product Attributes </li></ul><ul><li>Desirable benefits – Volvo, FedEx, Lexus, Nike </li></ul><ul><li>Strong beliefs and values – strong brands engage customers on a deep, emotional level (empower socially) </li></ul>
  36. 36. <ul><li>Brand name selection: </li></ul><ul><li>Good name can add to product success </li></ul><ul><li>Should relate to product benefits and qualities – Lexus, Jaguar, Swift, Off!, Knorr, Haleeb, MilkPack </li></ul><ul><li>Easy to pronounce: IBM, AT & T, Voda fone, KFC, Burger King </li></ul><ul><li>Distinct, Z-4, GTR, Oracle </li></ul><ul><li>Brand name identified with product category: Xerox, Kleenex, Scotch Tape, Formica, Fiberglass </li></ul>
  37. 37. Brand Sponsorship <ul><li>A product may be launched as: </li></ul><ul><li>Manufacturer’s brand </li></ul><ul><li>Private brand </li></ul><ul><li>Licensed brand </li></ul><ul><li>Co-brand </li></ul>
  38. 38. Brand Development <ul><li>Line extensions: Extending an existing brand name to new forms, colors, sizes, ingredients, or flavor of an existing product: Nestle Pure Life </li></ul><ul><li>Coke: Diet Coke, Diet Coke with Splenda, Coca Cola Zero </li></ul><ul><li>Diet Cherry Coke, Diet Coke with Lemon, Diet Coke with Lime, Diet Coke Black Cherry Vanilla, Caffeine Free Diet Coke – Coca Cola C – 2. </li></ul>
  39. 39. Brand Extensions <ul><li>Extending an existing brand name to a new product category </li></ul><ul><li>Kimberly – Clark – Huggies Brand: Shampoos, Lotions, Baby Wash </li></ul><ul><li>Brinks – Brinks Home Security System </li></ul>
  40. 40. Multi Brands New Brands <ul><li>Additional Brands in the same category </li></ul><ul><li>P& G: different features for different buyers </li></ul><ul><li>Existing wane – new brands needed </li></ul><ul><li>Matsushita – Panasonic, Technics, JVC, Quasar </li></ul>
  41. 41. Product Life Cycle <ul><li>Product launch – happy life </li></ul><ul><li>Cover costs </li></ul><ul><li>Earn profits </li></ul><ul><li>Length not know in advance </li></ul><ul><li>Coca-Cola, Gillette, Budweiser, American Express, Wells-Fargo, and Tabasco </li></ul>
  42. 42. PLC – S Curve
  43. 43. Introduction Stage <ul><li>Product launch </li></ul><ul><li>Takes time </li></ul><ul><li>Slow growth </li></ul><ul><li>Negative profits </li></ul><ul><li>High promotion and distribution cost </li></ul>
  44. 44. Growth Stage <ul><li>Product, if satisfies market, enters growth stage </li></ul><ul><li>Sales climb quickly </li></ul><ul><li>Early adopters continue, new join through favorable word of mouth </li></ul><ul><li>New competitors enter market </li></ul><ul><li>Competition – increase in sale points </li></ul><ul><li>Spread of sales, unit cost reduces </li></ul><ul><li>Sustain rapid growth </li></ul><ul><li>New market segments </li></ul><ul><li>Prices may be lowered to attract more customers (iPod) </li></ul>
  45. 45. Maturity <ul><li>At some point sale slows down, product enters maturity stage </li></ul><ul><li>Lasts longer </li></ul><ul><li>Marketing management most of the time deals with mature products </li></ul><ul><li>More producers selling the same product </li></ul><ul><li>Greater competition </li></ul><ul><li>Prices down, increase in sales promotion </li></ul><ul><li>Drop in profit </li></ul><ul><li>Well established competitors stay </li></ul>
  46. 46. Maturity <ul><li>Product manager should modify market, product and marketing mix </li></ul><ul><li>Market: increase consumption of product, new users, present users </li></ul><ul><li>Product: quality, features, style (milk pak, Honda City) </li></ul><ul><li>Four Ps </li></ul>
  47. 47. Decline Stage <ul><li>Eventually dip </li></ul><ul><li>Oat meal, VHS tapes, VCR, Tape recorders </li></ul><ul><li>Reasons: technology, consumer tastes, increased competition, profits decline, withdrawal from market </li></ul><ul><li>Furthermore: </li></ul><ul><li>Weak product costly to firm </li></ul><ul><li>Management time </li></ul><ul><li>Price adjustments </li></ul><ul><li>Advertising/sales efforts </li></ul><ul><li>Reputation of other co products affected </li></ul><ul><li>Old Spice/ co can sell brands </li></ul>
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