Introduction to Marketing Session 1

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Slides of my session at ITM, Mumbai. Introduction to Marketing. Session 1. Includes:
What is Marketing
 Marketing Defined
 Core Concepts
 Marketing Process
 Marketing Philosophies
 Towards new marketing assumptions
 Functions of Marketing
 The Four 4 Ps The Marketing Variables
Market Segmenting
 Identify sub-markets within market
 Decide which one(s) to pursue (target)
 Design marketing mix(es) to be attractive to targeted segment's
 Demographics - age, race, sex, income, education
 Geographic - country, state, urban/rural, climate
 Psychographics -attitudes, values, beliefs, personality traits
 Behavioral - benefits, usage.
 Market consists of people with both the desire and ability to buy

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  • Finance, operations accounting , production and other functions will not really matter if there is no sufficient demand for the products and services. What marketing isn’t Presentation & image - “spin” Glossy brochures & expensive advertising Persuasive selling methods Excessive/wasteful packaging
  • Eden in Chennai. Madras Café in Mumbai Matunga. Waiting period for Toyota Fortuner is 8 months
  • Need – Roti, Kapda, Makaan Wants – Beyond these. Maslow’s need Hierarchy
  • Roti Kapda Makaan Shelter – Removal from danger Love, affection, intimacy, being a part of groups Self Esteem & esteem from others Achieving individual potential
  • What is the best drink for a party? What is the best thing to do to share a good news? How heavy are you? What should you do about it?
  • You can have any colour you want as long as it is black Until 1950s
  • 1950s to 60s
  • Marketing orientation Customer needs are focus of firm “ Find a need and fill it” Flexible production/distribution methods Organisational philosophy Profitability rather than sales volume 1970s onwards
  • Building long term relationships between suppliers & customers Ensuring that interaction is a pleasurable experience Customer service and attention focused Loyalty cards 1980s onwards
  • Ethics driven Considers needs of society as a whole Government pressure Pressure groups 1990s onwards
  • Offer should contain value for the product.
  • Look to the future Make well informed decisions Marketing myopia Organisation describes itself in PRODUCT rather MARKET terms Making slide rules? Creating a competitive edge
  • Anything that’s done must be first planned. Implementation & Control then go hand in hand. Bridge in Spain between 2 valleys took 14 years to build. Actual build time was just 3 years. Almost 11 years were spent only on the planning!
  • Mature Market - 14% of the Canadian population often referred to as the WWII cohort
  • McDonalds Maharaja Mac in India. No Beef in India. No pork in Pakistan.
  • Dell offers its website in different languages for different segments of customers across the globe!
  • Effective Segmentation This CTR relates to the material on pp. 215. Requirements for Effective Segmentation Measurability . This refers to the degree to which the size and purchasing power of the segments can be measured. The accuracy and availability of measures of market potential are important. Accessibility. This refers to the degree to which a market segment can be reached and served. Identifying a segment is useless if the marketer has limited access to the customer. Substantiality. This refers to the degree to which the segments are large or profitable enough to service. Actionability . This is the degree to which an effective marketing program can be designed for attracting and serving segments. Company resource limitations figure prominently in actionability issues.
  • Introduction to Marketing Session 1

    1. 1. Introduction to Marketing NANDA KISHORE SETHURAMAN ITM SEPTEMBER 2012
    2. 2. Agenda What is Marketing  Marketing Defined  Core Concepts  Marketing Process  Marketing Philosophies  Towards new marketing assumptions  Functions of Marketing  The Four 4 Ps The Marketing Variables Market Segmenting  Identify sub-markets within market  Decide which one(s) to pursue (target)  Design marketing mix(es) to be attractive to targeted segments  Demographics - age, race, sex, income, education  Geographic - country, state, urban/rural, climate  Psychographics -attitudes, values, beliefs, personality traits  Behavioral - benefits, usage.  Market consists of people with both the desire and ability to buy
    3. 3. Marketing… Defined?!?!?!?!
    4. 4. What is Marketing?Social definition – A societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with othersManagement definition – It is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals. Marketing is an art and science
    5. 5. Function of MarketingMarketing is meeting the needs of both the marketer and the customer Profitably.The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself
    6. 6. Core Concepts & Marketing Philosophies
    7. 7. Core ConceptsNeedsWantsDemandExchangeTransaction
    8. 8. Needs and WantsNeeds are basic human requirements.  Real needs  Stated needs  Unstated needs (assumptions)  Delight needs  Secret needsWants are needs directed to specific objects/services that might satisfy the need.
    9. 9. Hierarchy of Needs
    10. 10. DemandWant for a specific product backed by an ability to pay.Marketers should try to shape the wants. Many customers dont know what they want when the product, concept or service is new.So companies help the customers to learn what they want.
    11. 11. ExchangeGet something (product /service) by offering something in return.  Eg. kind (barter) or money (value )Exchange is a value creating process because it leaves both parties better off  (win – win situation)
    12. 12. TransactionA transaction is an exchange between two things of value on agreed conditions and a time and place of agreement.To make successful transaction a marketer should understand what each party expects from transaction.
    13. 13. What all gets Marketed today? Goods Services Events Experiences Persons Places Properties Organizations Information Ideas
    14. 14. ConceptsProduction conceptProduct ConceptSelling ConceptMarketing ConceptHolistic Marketing ConceptSocietal marketing Concept
    15. 15. Production conceptConsumers will prefer products that are widely available and inexpensive.Managers of production oriented businesses concentrate on achieving high production efficiency, low costs, mass distribution.
    16. 16. Selling ConceptIt stems from the belief that consumers if left alone, will ordinarily not buy enough of the organization’s products. The organization must therefore, undertake and aggressive selling and promotion effort.The aim is to sell what companies make rather that what the market wants.
    17. 17. Marketing ConceptEverything is from the customer’s end.Customer-centered, sense and response philosophy.The job is to find right products for your customers.The key to achieve organizational goals consists of the company being more effective than competitors in creating, delivering and communicating superior customer value to its chosen target markers.
    18. 18. Holistic Marketing ConceptBased on development, design and implementation of marketing programs, processes and activities  Relationship Marketing - Building long term mutually satisfying relations with customers, suppliers, distributors in order to retain their long term preference and business.  Integrated Marketing - The tools that an organization employs to pursue its marketing objectives in the target market  Product, Price, Place, Promotion  4 C’s – Customer solution, Cost, Convenience, Communication
    19. 19. Holistic Marketing Concept Internal Marketing  Marketing Department  Senior Management  Other departments Socially Responsible Marketing  Cause and effect if marketing clearly extend beyond the company and the customers.  Ethics  Environment  Legal  Community
    20. 20. Societal marketing ConceptOrganization’s tasks 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.
    21. 21. Marketing Concept versus Selling ConceptStarting Point Focus Means Ends The Marketing Concept Customer Integrated Profits from Market needs marketing satisfied customers The Selling Concept Sell and Profits through Factory Product Promote it sales volume
    22. 22.  “A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”
    23. 23. Marketing DefinedMarketing is the activity, set of instructions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. OLD view of NEW view of marketing: marketing: Making a sale Satisfying —“telling and customer needs selling”
    24. 24. Why is Marketing Important?Shifting Business Paradigm Buyers’ marketsSellers’markets
    25. 25. Marketing Process
    26. 26. Marketing and Customer ValueValue and Satisfaction  Value = Benefits/Costs  Benefits = Functional Benefits + Emotional benefits  Costs = Monetary costs + Time + Energy + Psychic costs
    27. 27. Value Creation and Delivery sequenceBefore actually coming out with the product, the marketer must do:  Customer segmentation  Market selection focus  Value positioning
    28. 28. How is it done?Providing the value  Product development  Service development  Pricing  DistributionCommunicating the value  Sales force  Sales promotion  Advertising
    29. 29. Value ChainUnderstanding the value chain helps in creating better customer valueThe primary activities  Procurement of raw materials (inbound logistics)  Converting them into final products (operations)  Shipping out final products (outbound logistics)  Marketing them (marketing and sales)  Provide services
    30. 30. Value Chain (Contd)Support activities  Procurement  Technology development  Human resource management  Firm infrastructureValue exploration  How can a company identify new value opportunities?Value creation  How can a company differently create more promising new value offerings?Value delivery  How can a company use its capabilities and infrastructure to deliver the new value offerings more efficiently?
    31. 31. Strategic PlanningA game plan for achieving company’s long term objectives.  Key areas  Managing company’s business as an investment portfolio  Assessing each business that market.  Establishing a strategy.
    32. 32. Planning, Implementation and ControlPlanning Implementing  Corporate planning  Organizing  Division planning  Implementing  Business planning Control  Product planning  Measuring results  Diagnosing results  Taking corrective actions
    33. 33. Marketing PlanIt summarizes what the marketer has learnt about the marketplace and indicates how the firm plans to reach its marketing objectives.It contains guidelines for marketing programs and financial allocations over the planning period.
    34. 34. Marketing PlanA marketing plan is the central instrument for direction and coordination the marketing efforts.The strategic marketing plan lays out the target markets and the value proposition that will be offered based on an analysis of the best market opportunities.The tactical marketing plan specifies the marketing tactics including product features, promotion, merchandising ,pricing ,sales channels and service.
    35. 35. Objectives of the marketing planActs as a roadmapAssist in management control and monitoring the implementation strategyInforms new participants in the plan of their role and functionTo obtain resources for implementationTo stimulate thinking and make better use of resources.
    36. 36. Contents of a Marketing PlanSummary of main goalsSituation analysisMarketing strategyFinancial projections  Sales forecast an expense forecast and break even analysis.Implementation controls  Review of each period’s results, steps to be taken in response to specific environmental developments such as price wars.
    37. 37. Implications of MarketingWho are our existing/potential customers?What are their current/future needs?How can we satisfy these needs/Can we offer a product/service that the customer would value?Can we communicate with our customers?Can we deliver a competitive product or service?Why should customers buy from us?
    38. 38. Marketing Variables (Marketing Mix)
    39. 39. The Marketing Mix
    40. 40. The Marketing MixThe tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives7Ps – Price, Product, Promotion, Place, People, Process, Physical EnvironmentTraditional 4Ps extended to encompass growth of service industry
    41. 41. Product
    42. 42. Product Methods used to improve/differentiate the product and increase sales or target sales more effectively to gain a competitive advantage e.g.  Extension strategies  Specialised versions  New editions  Improvements – real or otherwise!  Changed packaging  Technology, etc.
    43. 43. Price
    44. 44. PricePricing StrategyImportance of:  knowing the market elasticity  keeping an eye on rivals
    45. 45. Place
    46. 46. PlaceThe means by which products and services get from producer to consumer and where they can be accessed by the consumer  The more places to buy the product and the easier it is made to buy it, the better for the business (and the consumer?)
    47. 47. Promotion
    48. 48. PromotionStrategies to make the consumer aware of the existence of a product or serviceNOT just advertising
    49. 49. People
    50. 50. PeoplePeople represent the business  The image they present can be important  First contact often human – what is the lasting image they provide to the customer?  Extent of training and knowledge of the product/service concerned  Mission statement – how relevant?  Do staff represent the desired culture of the business?
    51. 51. Process
    52. 52. ProcessHow do people consume services?What processes do they have to go through to acquire the services?Where do they find the availability of the service?  Contact  Reminders  Registration  Subscription  Form filling  Degree of technology
    53. 53. Physical Environment
    54. 54. Physical EnvironmentThe ambience, mood or physical presentation of the environment  Smart/shabby?  Trendy/retro/modern/old fashioned?  Light/dark/bright/subdued?  Romantic/chic/loud?  Clean/dirty/unkempt/neat?  Music?  Smell?
    55. 55. The Marketing MixBlend of the mix depends upon:Marketing objectivesType of productTarget marketMarket structureRivals’ behaviourGlobal issues – culture/religion, etc.Marketing positionProduct portfolio  Product lifecycle  Boston Matrix
    56. 56. The Marketing Mix Blend of the mix depends upon: Marketing objectives Type of product Target market Market structure Rivals’ behaviour Global issues – culture/religion, etc. Marketing position Product portfolio  Product lifecycle  Boston Matrix
    57. 57. Factors Influencing Company Marketing Strategy
    58. 58. Market Segmenting
    59. 59. Segmentation, Targeting, Positioning 62
    60. 60. Learning Goals1. Learn the three steps of target marketing, market segmentation, target marketing, and market positioning2. Understand the major bases for segmenting consumer and business marketing strategy3. Know how companies identify attractive market segments and choose target marketing strategy4. Realize how companies position their products for maximum competitive advantage in the marketplace7 - 63
    61. 61. Case Study - Procter & Gamble • Sells multiple brands • Has also identified within the same product different niches within category for a variety of certain segments products • Product modifications are useful: Tide offers • Brands feature a seven different product different mix of benefits formulations to serve and appeal to different different niches’ needs segments7 - 64
    62. 62. Steps in market segmentation, targeting and positioningMarket Segmentation Identify bases for segmenting the market   Develop segment profilesTarget Marketing Develop measure of segment attractiveness   Select target segmentsMarket Positioning  Develop positioning for target segments  Develop a marketing mix for each segment7 - 65
    63. 63. Segmentation 66
    64. 64. In other words…A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.  it is distinct from other segments (heterogeneity across segments)  it is homogeneous within the segment (exhibits common attributes)  it responds similarly to a market stimuli  it can be reached by a market intervention
    65. 65. PurposeIncrease marketing efficiency by focusing marketing efforts to a particular groupMaximize scarce marketing resourcesFind a market with limited competitionSelect the most profitable segment
    66. 66. 69
    67. 67. Linking Market Need to a Marketing Program 70
    68. 68. Segmentation Bases 71
    69. 69. Geographic Segmentation 72
    70. 70. Blank 73
    71. 71. Demographic Segmentation 74
    72. 72. Demographics - Marketing across Generations Mature Baby Generation Generation Market Boomers X Y 1945 1965 1976 1994
    73. 73. Mature Market
    74. 74. Generation X
    75. 75. Generation Y
    76. 76. Behavioral Segmentation 80
    77. 77. Psychographic Segmentation 81
    78. 78. 82
    79. 79. Segmenting International Markets 83
    80. 80. Dell, across the globe 84
    81. 81. Requirements for Effective Segmentation Measurable Measurable • Size, purchasing power, profiles of segments can be measured. Accessible Accessible • Segments must be effectively reached and served. Substantial Substantial • Segments must be large or profitable enough to serve. Differential Differential • Segments must respond differently to different marketing mix elements & actions. Actionable Actionable • Must be able to attract and serve the segments.
    82. 82. Market Segmentation Process1. Determine the characteristics of segments in the target market & separate these segments in the market based on these characteristics.2. Verify the market segments size if adequate enough to support the organizations product.3. Develop a marketing strategy to target this market.
    83. 83. End of Day 1

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