About Marketing….• A Professor at one of the IIMs (INDIA) was explaining marketing concepts to the Students:- – 1. You see a gorgeous girl at a party. You go up to her and say: "I am very rich. Marry me!" - Thats Direct Marketing – 2. Youre at a party with a bunch of friends and see a gorgeous girl. One of your friends goes up to her and pointing at you says: "Hes very rich. Marry him." - Thats Advertising – 3. You see a gorgeous girl at a party. You go up to her and get her telephone number. The next day, you call and say: "Hi, Im very rich. Marry me." - Thats Telemarketing
– 4. Youre at a party and see gorgeous girl. You get up and straighten your tie, you walk up to her and pour her a drink, you open the door (of the car) for her, pick up her bag after she drops it, offer her ride and then say: "By the way, Im rich. Will you marry me?" - Thats Public Relations– 5. Youre at a party and see a gorgeous girl. She walks up to you and says: "You are very rich! Can you marry me?" - Thats Brand Recognition– 6. You see a gorgeous girl at a party. You go up to her and say: "I am very rich. Marry me!" She gives you a nice hard slap on your face. - Thats Customer Feedback– 7. You see a gorgeous girl at a party. You go up to her and say: "I am very rich. Marry me!" And she introduces you to her husband. - Thats demand and supply gap
– 8. You see a gorgeous girl at a party. You go up to her and before you say anything, another person comes and tells her: "Im rich. Will you marry me?" and she goes with him - Thats competition eating into your market share– 9. You see a gorgeous girl at a party. You go up to her and before you say: "Im rich, Marry me!" your wife arrives. - Thats restriction for entering new markets
Marketing is for Everybody• TO SHOW THAT MARKETING IS ESSENTIAL• PROVIDE AN UNDERSTANDING OF THE BASIC MARKETING CONCEPTS
The Nature of Marketing• What is the Purpose of Marketing? 1.Satisfaction: • Functional Satisfaction • Psychological Satisfaction • The Utility concept 2. Consumer Problems 3.Providing Benefit Bundles 4..Offering a Total Consumption System
Simple Marketing System Communication Goods/services Industry Market(a collection (a collection of sellers) Money of Buyers) Information
The Nature of Marketing• What is the Purpose of Marketing? Satisfaction • Increments of Satisfaction • Facilitating Exchanges –Conditions for Exchange•Systems of Exchanges
Evolving Views of Marketing’s Role Production Marketing Customer The customer as the controlling function and marketing as the integrative function
Traditional Organization Chart Top Management Middle Management Front-line people Customers
Customer-Oriented Organization Chart Customers Front-line people Middle management Top manage- ment
Core Concepts of MarketingTarget Markets & Segmentation Needs, Wants, and Demands Product or Offering Value and Satisfaction Exchange and Transactions Relationships and Networks Marketing Channels Supply Chain Competition Marketing Environment
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 of service?• Why should customers buy from us?
The marketing concept• choosing and targeting appropriate customers• positioning your offering• interacting with those customers• controlling the marketing effort• continuity of performance
The changing Indian consumer The media explosion. Increase in disposable income. The rise of the great Indian middle class Increase in the number of earning young people Change in expenditure patterns Increase in the number of working women 38
Model of Consumer BehaviorMarketing Buyer’s Black Box Buyer’s ResponsesMixStimuli ? ? Psychological •Memory •Perception • Motivation • Product • Personality • Price Demographics • What is purchased? • Promotions • When, Timing? • Advertising • How much? Environmental •Place • Family • For what use? •Culture
Examples of Buying Motives: Psychological or Functional?• A senior wants to impress his date at the prom . His primary motive is …? Psychological
Examples of Buying Motives: Psychological or Functional?• A girl wants to remember her grandmother on her birthday. Her primary motive is…? Psychological
Examples of Buying Motives: Psychological or Functional?• A homemaker needs a new washing machine and has had good experiences with Sears. Her primary motive is …? Functional
Examples of Buying Motives: Psychological or Functional?• A teacher wants to buy a practical car to be used for family transportation. Her/His primary motive is …? Functional
Examples of Buying Motives: Psychological or Functional?• A career woman always buys Liz Claiborne clothes. Her primary motive is…? Psychological
Examples of Buying Motives: Psychological or Functional?• An overweight 40 year old man wants to loose weight so that he can reduce his blood pressure. His primary motive is…? Functional
Examples of Buying Motives: Psychological or Functional?• A homeowner needs to mow their lawn. Their primary motive is…? Functional
Consumer Buying Behavior Competency Functional Psychological Motive Motive The price is 40 cents off the regular price. It never needs ironing. Diamonds are forever. Serving you since 1971. Ninety-day warranty.
Consumer Buying Behavior Competency Functional Psychological Motive Motive Running shoe with built-in arch. It’s all the rage— colored action wear and style. Wheaties—the breakfast of champions! Steel-belted radial tires warranted for 40,000 miles A watch—a gift she will treasure always.
What is Marketing ?We use the word Marketing to describe such things as• analyzing the needs of the people• trying to guess what types of products they want• estimate how much they will buy• predict when they want to buy• determine where they go to buy the stuff
What is Marketing ?…. And,• figure out the best price to sell it at - and can you still make a profit selling it at that price• decide on promotional things to create awareness about the product• look at the competition to see what they are doing with pricing, features etc.
Marketing is concerned with anticipating consumer demand and directing flow of goods from producers to consumers.Marketing has to do with matching producers‟ outputs to consumers‟ inputs [ needs & wants ].Serving the needs of customers is what business should be all about … Marketing is the business function that interprets customer needs to the rest of the organization.Marketing should begin with the customer needs - NOT with the production process. Mkt. should anticipate needs.
Marketing - the formal definition Process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individuals and organizational objectives.
Why should we know about Mkt.?• Also, Cause,,,,,,,,,,,,,,,,,, marketing people in a company bring in the money - so their jobs are important, so they get paid a lot.• If you get involved in the marketing side, you are being involved in the INCOME side of the company and your job is very critical (ie. - hard to ever fire you or lay you off)
The Importance of Marketing• Why study Marketing - „cause you can get a JOB in Marketing !!• Canada is a very multi-cultural country• We can buy products from all over the world• Selling new products to Canadians requires new marketing approaches - THEREFORE there will be many new job opportunities
The Importance of Marketing• Marketing is a core business discipline• The study of marketing is important to the basics of running a business, big or small• When you buy a product - the cost of marketing amounts to 40 ~ 60% of the total eg. If we buy shoes for Rs.800, Rs.400 of that 800 has been spent on marketing (including advertising, market research, development etc.)
The Importance of MarketingGetting a JOB in Marketing !!• Personal selling• Advertising• Package Design• Transportation• Storage• Marketing Research• Product Development• Wholesaling• Retailing
The Importance of MarketingImportance to Companies• When you work in the marketing department of a company you are part of LINE personnel• LINE personnel are always more critical than STAFF personnel because LINE personnel “bring in the money” - therefore your job is revenue earning, not revenue spending
Why should we know about Mkt.?• You can get to be C.E.O. and Chairman of the Board• “Marketing is often the route to the top”• Almost always the C.E.O. comes from the V.P. Marketing, not V.P. Human Resources or V.P. Government Relations
The Importance of MarketingGetting a JOB in Marketing !!In addition, many people working with NPO‟s also do marketing• Promoting political parties• Cultural groups• Religious organizations• Civic organizations eg. Kiwanas, Shriners• Charitable organizations eg. Red Cross, Salvation Army
Marketing• Marketing is something companies do, and it is also a characteristic of our society• “It is both a set of activities performed by organizations, and a social process”
Micro - marketing for a companyMacro - the whole economy
Micro - marketing for a company, thingsyou do to accomplish the organizationsobjectives (companies and NPO’s)Macro - the whole economy and its flow ofgoods and services from producers toconsumers
Micro - Its not just selling stuff, but alsolooking at what the customers wantMacro - Looking at how everybody in thecountry can have access to things they need.Government has to make sure everybodyhas fair access.
Micro-Macro Dilemma• Government has to step in cause not everything would be produced fairly by companies - so regulation needed• Ex .1: It would be cheaper to make cars without airbags and seatbelts - but Govt. insists they must – so, it has to be done.
Micro-Macro Dilemma• Government has to step in cause not everything would be produced fairly by companies - so regulation needed• Ex. 2: It would be cheaper to make beer cans from raw material cause the price of mineral ore is low - but the Govt. insists a certain % must be recycled to reduce waste and pollution
The Marketing FunctionsBuyingTransportingStoringGradingFinancingRisk TakingInformation CollectionResearch….
WHO does the marketing functions ?From a Macro-point of view• Centrally planned economy (communism) - its done mostly by the government• Market-direct economy (capitalism) - its done by various companies, middlemen, brokers etc.
Innovation is encouraged by a market-directed economy(capitalism) because people who come up with new ideas are free totry and market them and make a fortune. In a communist country,government has strict controls on the “means of production” sothere is a limit to what people can manufacture.In a capitalist economy, people are always trying think of new waysto satisfy un-met needs, and, this encourage new thinking
Advocacy Advertising• You are not trying to sell a product, you are trying to get people to believe in something, or behave in a certain way eg. - Don’t drink and drive - Canadian Cancer Society - recycle - use the TTC, save gas
One of the big complaints about marketing is that ppl actunethical in order to make a sale.Sometimes it is easy to forget that morals are based on yourown cultural standards and in different cultures, people havedifferent opinions about what is ethical.Eg. Bribery is perfectly acceptable in some parts of Asiaand Latin America, but unacceptable in USA and Canada
Marketing Concept - Social Responsibility- “improve positive effects on Society and reduce negative effects…”- environmental problems- social responsibility conflicts with profit objective (raises ?, is mktg concept desirable)
Marketing Concept - Social Responsibility-? Of social responsibility cutting into profits- some companies have been very successful at dealing with this eg. BODY SHOP- they realize it is a way to endear themselves to trendy customers
Marketing Concept - Social Responsibility-? What if it cuts into profitsAnswer - increasing quality may cost more in production, but you may make this money back in increased sales which come about as the customers realize you have a very good quality product - this will reduce the advertising costs and customer service/warranty costs and ensure customer satisfaction re: brand loyalty
Company Orientations Towards the MarketplaceOrientation Description Relative Time Basic Managerial Span ObjectiveProduction Transition from Home Industrial Profit Maximization via Manufacturing to Factories Revolution Economies of ScaleProduct & Focus on Product Development, Profit MaximizationFinancial Performance and Features and Through Superior the Growth of Large Scale Product Performance Industrial Empires Sales Transition from Scarcity of Profit Maximization via Goods to Scarcity of Markets; Demand Generation Market Saturation with BasicsMarketing Transition from Internal 1990s Profit Maximization via (Organization) to External Matching of Products to (Customer) Basis for Guiding Customer Wants Marketing Decisions
The Marketing Concept A Customer Orientation Backed By Integrated Marketing Aimed at Generating CustomerSatisfaction and Repurchase As The Key To Satisfying the Organizations Goals
The Marketing Concept (Contd..) Focus Means EndSales Concept Products Selling & Profits Through Promotion Sales Volume Marketing Customer Needs Integrated Profits Through Concept Marketing Customer Satisfaction
Stages in Consumer Decision Process Word-of- Mouth Awareness Advertising Interest Channel Decision Product / Service Action Price Satisfaction
Cost of Losing and Attracting Customers• Cost of attracting a new customer can be upto 5 times the cost of keeping a current one happy• Cost of Offensive Marketing > Cost of Defensive Marketing• Some companies have increased profits from 25% to 85% by reducing defections by 5%
Developing An Effective Marketing Plan• Conduct A Marketing Review• Build A Marketing Strategy• Implement Strategy Via Marketing Mix• Evaluate The Success Of The Marketing Plan
Conduct A Marketing Review (3-C Analysis)A. Analysis of B. Assessment of C. Analysis ofCUSTOMER COMPANY COMPETITORSTrends, Needs, Capabilities and Current Position, Perceptions, Current Marketing Capabilities, Behavior Position Actions Opportunity Identification
Build A Marketing Strategy Generic Strategies For DIFFERENTIAL Selection of ADVANTAGE TARGET MARKET* Product Differentiation and Development of a * Cost Leadership POSITIONING * Special Market Focus STATEMENT
Implementation: The Marketing Mix (Four P’s) • Product • Price • Place • Promotion
Marketing System Long Term Factors Technological Short Term Controllable FactorsEconomic Product Legal Place Price Promotion Socio / Cultural
Recasting the 3C - 4P Framework in Value Terms Creating Value • Product • Customer Capturing • Price • Company Value • Place • Competitor Communicating • Promotion Value
• The most important aspect of any company’s Marketing concept is identifying its SWOT Analysis.• What is SWOT analysis?
SWOT Analysis - Examples• Example 1 - Wal-Mart SWOT Analysis. Strengths - Wal- Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store. Weaknesses - Wal-Mart is the Worlds largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control. Opportunities - To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. Threats - Being number one means that you are the target of competition, locally and globally.
• Example 2 - Starbucks SWOT Analysis. Strengths - Starbucks Corporation is a very profitable organization, earning in excess of $600 million in 2004.Weaknesses - Starbucks has a reputation for new product development and creativity. Opportunities - New products and services that can be retailed in their cafes, such as Fair Trade products. Threats - Starbucks is exposed to rises in the cost of coffee and dairy products.
• Example 3 - Nike SWOT Analysis. Strengths - Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying that Business is war without bullets. Weaknesses - The organization does have a diversified range of sports products. Opportunities - Product development offers Nike many opportunities. Threats - Nike is exposed to the international nature of trade.
• Example 4 - Indian Premier League (IPL) SWOT Analysis. Where will you find the Mumbai Indians, the Royal Challengers, the Deccan Chargers, the Channai Super Kings, the Delhi Daredevils, the Kings XI Punjab, the Kolkata Knight Riders and the Rajesthan Royals? In the Indian Premier League (IPL) - the most exciting sports franchise that the World has seen in recent years, with seemingly endless marketing opportunities (and strengths, weaknesses and threats of course!).
• Example 5 - Bharti Airtel SWOT Analysis. Weaknesses - An often cited original weakness is that when the business was started by Sunil Bharti Mittal over 15 years ago, the business has little knowledge and experience of how a cellular telephone system actually worked. So the start-up business had to outsource to industry experts in the field.
Replaying the Game• P&G: “We sell coffee” vs. “We sell canned coffee of moderate quality in groceries”• The brand we have built to sell mid-tier coffee will not cater to gourmet coffee position as its made of Robusta rather than Arabica beans. So we need to launch a new brand that preempts the quality position. We may need a new design (DSD), but we’ve done radical stuff before!• Most restaurants, food chains and institutions sell Coke or Pepsi (branded) but unbranded coffee. Once our gourmet brand is established in grocery stores, we may be able to move into the institutional market (after all, we sell to Wal-Mart!)• Whole bean provider: Could have built a brand by opening a café division. Took 7 years for Brothers to catch on. By opening the café format, regional whole bean providers could have built brand loyalty. Especially as they do not have P&G’s deep pockets. If the regional whole bean provider launched in 1991, could have built a national brand. By 1994, it was too late.• Starbucks: May have missed an opportunity by not aggressively expanding via franchising. Region by region rollout gave competitors / imitators time to preempt in certain markets. This way it would have “conquered” the retail business and could have focused more fully on institutional and grocery markets.
Caselet-1• While entering a developing country like India, MNCs should consider the factors to which consumers in India are sensitive. One such factor is price. Indian consumers are price sensitive. They always looks for value of money. This explains the success of Nirma washing powder which forced HLL to come out with a low prices detergent Wheel. Also the success of a product depends on the tastes and preferences of customers. Once McDonald’s customized its products according to the tastes and preferences of the Indian customers, it found acceptability in the market. Thus, before entering the Indian market, MNCs should do a proper study of the customers’ tastes and preferences , and this is particularly applicable to food products, because in India, food habits differ from region to region.
Caselet-2• During recession, most companies resort to downsizing and cutting costs related to advertising. But advertisement plays a crucial role in creating demand for goods. So it is not advisable to reduce costs related to advertising, rather expenditure on advertisements should increase during a recession. At this time, they build up their brands. If they do so, the companies will be in a competitive position once the recession is over and demand for goods picks up. Brand – building always involves spending on advertisements, packaging etc. Advertising during recession is also advisable because it reminds consumers about the product, and prevents the product from getting erased from consumers’ mind.