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Marketing (full)2010 437-

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Marketing (full)2010 437-

  1. 1. Marketing Orientation
  2. 2. COMPANY ORIENTATION TOWARDS MARKETPLACE1. PRODUCTION - EASY AVAILABILITY AND LOW COST2. PRODUCT - SUPERIOR PRODUCTS, INNOVATIVE FEATURES3. SELLING - AGGRESSIVE SELLING & PROMOTION4. MARKETING / CUSTOMER - FOCUS ON CUSTOMER5. SOCIETAL MARKETING - CUSTOMER & SOCIETY
  3. 3. HOLISTIC MARKETING DIMENSIONS Product & Senior Services OtherMarketing Communications Channels Management DepartmentsDepartment Internal Integrated Marketing Marketing Holistic Marketing Socially Integrated Responsible Marketing Marketing Ethics Environment Customers Channel Partners Community Legal 3
  4. 4. SELLING V/S MARKETING SELLING MARKETINGSTARTING POINT PRODUCT CUSTOMER NEEDSMEANS AGGRESSIVE SUPERFLUOUS SELLING & SELLING PROMOTION PROFITABILITY PROFITS THRU THROUGHENDS SALES VOLUME CUSTOMER SATISFACTION
  5. 5. PILLARS OF MARKETING / CUSTOMER ORIENTATION1. CLEAR DEFINITION OF TARGET MARKET (DEMOGRAPHICS, PSYCHOGRAPHICS, MEDIAGRAPHICS, GEOGRAPHICS)2. PERFECT UNDERSTANDING OF CUSTOMER NEEDS3. INTEGRATE / COORDINATE ALL ACTIVITIES (INTER & INTRA DEPT)4. PROFITABILITY THROUGH CUSTOMER SATISFACTION
  6. 6. THUS CUSTOMER ORIENTATION MEANS1. OBSESSED WITH CUSTOMER & AWARE OF COMPETITOR2. MONITOR UNFULFILLED NEEDS CONTINUOUSLY THROUGH RESEARCH.3. FUTURISTIC - MARKETING EXPENDITURE AN INVESTMENT4. MARKETING CULTURE - CUSTOMER OVERRIDES ORGANISATIONAL INTERESTS5. SPEED IN RESPONSE TO CUSTOMER’S PROBLEMS6. CONSISTENCY IN DELIVERY OF VALUES, SATISFACTION7. CUSTOMER RETENTION STRATEGIES8. MASS CUSTOMIZATION9. INTERACTIVE AND CUSTOMER FRIENDLY DELIVERY SYSTEMS10. LOOKING AT CONSUMPTION SYSTEM RATHER THAN PRODUCT FOR AUGMENTATION11. ALL DEPARTMENTS THINK CUSTOMER12. CUSTOMER SATISFACTION - GOAL & MARKETING TOOL
  7. 7. WHAT IS MARKETINGALL ACTIVITIES DESIGNED TO GENERATE AND FACILITATEEXCHANGE OF PRODUCTS AND VALUES INTENDED TO SATISFYHUMAN NEEDS AND WANTS.MARKETING MANAGEMENT IS THE PROCESS OF PLANNING ANDEXECUTING THE CONCEPTION, PRICING, PROMOTION, ANDDISTRIBUTION OF IDEAS, GOODS, AND SERVICES TO CREATEEXCHANGE THAT SATISFY INDIVIDUAL AND ORGANIZATIONALGOALS.
  8. 8. MARKETER’S TASKDEMAND MANAGEMENT (Level, Timing & Composition) STATES OF DEMANDNEGATIVE - Redesign MixNO DEMAND – Connect Benefits to NeedLATENT – MeasureFALLING – Creative RemarketingIRREGULAR - Use Synchro MarketingFULL – MaintainOVERFULL – Use Selective DemarketingUNWHOLESOME – Use Laws, Fear, Price Hike, Reduced Availability
  9. 9. CORE CONCEPTS OF MARKETINGNEEDS – Deprivation of basic satisfactionWANTS –specific satisfiers of needDEMAND-wants backed by ability and willingness to buyPRODUCTS- anything( Physical good, service,person, idea0 that cansatisfy a need or wantUTILITY & VALUE &-SATISFACTIONEXCHANGE-A value creating processTRANSACTION-Trade of values between partiesRELATIONSHIPS-relationship marketing V/s transaction marketingMARKETS-all potential customers
  10. 10. MARKETINGPRODUCTSSERVICESPERSONSPLACESACTIVITIESIDEAS
  11. 11. The Four P Components of the Marketing Mix Marketing Mix Product Target market Place Product variety Channels Quality Coverage Design Assortments Features LocationsBrand name Inventory Packaging Price Promotion Transport Sizes List Price Sales promotion Services Discounts AdvertisingWarranties Allowances Sales force Returns Payment period Public relations Credit terms Direct marketing 11
  12. 12. MARKETING MIX - 7 PSPRODUCTPRICEPLACEPROMOTIONPEOPLEPACE (PROCESS)PROOF OF PERFORMANCECHOICE OF MARKETING MIX DEPENDS ON TARGET MARKET & POSITIONING
  13. 13. Expanded Marketing Mix For Product/ServiceProduct Place Promotion PricePhysical good features Channel type - Promotion blend FlexibilityQuality level coverage - Salespeople Price levelServices Intermediaries Number CreditTermsPackaging Outlet locations Selection Differentiationsizes Training Payment periodWarranties Transportation Incentives Discounts Storage - Advertising AllowanceBranding Targetsvariety Media typesDesign ,style Types of ads Copy thrust - Sales promotion - Publicity -direct mktg 13
  14. 14. People Physical evidence Process- Employees Facility design - Flow of activities Recruiting Equipment Standardized Training Signage Customized Motivation Employees dress - Number of steps Rewards - Other tangibles Simple Teamwork Reports Complex- Customers Business cards - Customer involvement Education Statements Training Guarantees 14
  15. 15. RESPONSIVE V/S CREATIVE MARKETER1. STATED NEED - PRODUCT DEMANDED E.g. INEXPENSIVE CAR2. REAL NEED - FUNCTIONAL BENEFIT DESIRED E.g. LOW MAINTENANCE COST3. UNSTATED NEED - EXPECTATION FROM COMPANY E.g. DEALER SERVICE4. DELIGHT NEED-Eg COMPLIMENTARY GIFT5. SECRET NEED - EMOTIONAL BENEFIT - E.g. SEEN BY OTHERS AS VALUE ORIENTED BUYER
  16. 16. CUSTOMER SATISFACTION V/S DELIGHTPERCEIVED PERFORMANCE = EXPECTATIONS OK / SATISFIEDPERCEIVED PERFORMANCE < EXPECTATIONS DISSATISFIED/ UNHAPPYPERCEIVED PERFORMANCE > EXPECTATIONS DELIGHTEDDELIGHTED CUSTOMERS HAVE EMOTIONAL AFFINITY WITH BRAND & HENCELOYALTY.EXPECTATIONS BASED ON PAST BUYING EXPERIENCE, ADVERTISEMENTS,FRIENDS, COMPETITORS EXPECTATIONS, PRICE, BENCHMARKING.EXPECTATIONS DIFFER BASED ON PRODUCT, CUSTOMER.
  17. 17. Tools to track customer satisfaction• Complaint and suggestion systems• Customer satisfaction surveys• Ghost shopping• lost customer analysis• Cautions to be exercised in C.S. surveys• Definition in detail• Manipulation by customers and managers 17
  18. 18. The Customer-Development ProcessSuspects DisqualifiedProspects Prospects First-timecustomers Repeatcustomers Clients Inactive of Ex-customers MembersAdvocates Partners 18
  19. 19. DEFINING CUSTOMER VALUEEXCELLENT PRODUCT IS OF NO USE IF IT FAILS TO MEET CUSTOMERNEEDS. A COMPANY SHOULD BE SKILLED IN MARKET ENGINEERINGNOT JUST PRODUCT ENGINEERING.
  20. 20. CUSTOMER DELIVERED VALUECUSTOMER DELIVERED VALUE is the difference betweentotal customer value and total customer cost. TOTALCUSTOMER VALUE is the bundle of benefits customers expectfrom a given product or service. TOTAL CUSTOMER COST isthe bundle of costs customers expect to incur in evaluating,obtaining, and using the product or service.
  21. 21. CUSTOMER DELIVERED VALUEPRODUCTSERVICE TOTAL CUSTOMERPERSONNEL VALUEIMAGE CUSTOMER DELIVERED VALUEMONETARY VALUETIME COST TOTAL CUSTOMER COSTENERGY COSTPSYCHIC COST
  22. 22. DELIVERING CUSTOMER VALUE1. MICHAEL PORTER’S GENERIC VALUE CHAIN2. BENCHMARK AGAINST COMPETITION3. VALUE CHAIN OF SUPPLIERS, DISTRIBUTORS, CUSTOMERS TO CREATE SUPERIOR VALUE-DELIVERY NETWORK
  23. 23. GENERIC VALUE CHAIN• PRIMARY ACTIVITIES• Inbound Logistics• Operations• Outbound Logistics• Marketing and Sales• Service• SUPPORT ACTIVITIES• Procurement• Technology development• Human resource Management• Firm Infrastructure 23
  24. 24. CORE BUSINESS PROCESS1. NEW PRODUCT REALIZATION PROCESS2. INVENTORY MANAGEMENT PROCESS3. ORDER TO REMITTANCE PROCESS4 CUSTOMER SERVICE PROCESS5 MARKET SENSING PROCESS6 CUSTOMER ACQUISITION PROCESS7 CUSTOMER RELATIONSHIP MANAGEMENT PROCESS
  25. 25. CUSTOMER VALUE BUILDING APPROACHES - BERRY & PARASHURAMAN1. ADDING FINANCIAL BENEFITS-FREQUENCY MARKETING PROGRAMS AND CLUBS2. ADDING SOCIAL BENEFITS-INDIUALIZING AND PERSONALIZING RELATIONSHIPS3. ADDING STRUCTURAL TIES-SUPPLY CUSTOMERS WITH SPECIAL EQUIPMENT OR COMPUTER LINKAGESTHAT HELP CUSTOMERS MANAGE THEIR ORDERS,PAYROLL, INVENTORY ETC
  26. 26. CUSTOMER RELATIONSHIP BUILDINGBASIC MARKETING – Simply SellREACTIVE MARKETING – Sell & encourage customer to call ifany Questions, comments or complaints.ACCOUNTABLE MARKETING – Salesman phones after salePROACTIVE MARKETING – Salesperson contacts from time totime with suggestions about improved product uses or new productsPARTNERSHIP MARKETING – Company works continuouslywith customer to discover ways to effect customer savings or helpcustomer perform better.
  27. 27. LEVELS OF RELATIONSHIP MARKETING HIGH MEDIUM LOW MARGIN MARGIN MARGINMany customers/ Accountable Reactive Basic ordistributors reactiveMedium number Proactive Accountable Reactiveof customers/distributorsFew customers / Partnership Proactive Accountabledistributors
  28. 28. LIFE TIME VALUE OF CUSTOMER1. Lost customer revenue2. Lost opportunity revenue3. Customer replacement costs
  29. 29. COST OF ACQUISITION1. COST OF AVERAGE SALES CALL = TOTAL COST (SALARY, COMMISSION, BENEFITS, TOTAL SALES CALLS EXPENSES)2. AVERAGE NUMBER OF SALES CALLS = TOTAL SALES CALLS TO CONVERT AVERAGE PROSPECT TOTAL NO. OF NEW TO CUSTOMER CUSTOMERS3. COST OF ATTRACTING NEW CUSTOMER = 2 X 1
  30. 30. Service Encounters or Moments of TruthService encounters are the building blocks of service quality & satisfaction- Every experience with product, service or person which allows customer to judge/ form impressions about the quality of service is a moment of truth.- It takes 10 good moments of truth to wipe one bad moment of truth.- Disney Corporation 74 service encounters in amusement park. Marriott Hotels - 4 of the top 5 factors come into play in first 10 minutes of guest’s stay.• Types of service encounters- remote, phone, face to face.- In remote - tangible evidence & technical quality important.- In phone- process quality- In face to face - customer also play role. 30
  31. 31. CUSTOMER / PRODUCT PROFITABILITY ANALYSIS Customers C1 C2 C3 P1 + + + Highly profitable product Profitable product P2 +Products P3 - - Losing product P4 + - Mixed bag product High-profit Mixed-bag Losing customer customer customer 31
  32. 32. Sample Marketing MetricsI. External II. InternalAwareness Awareness of goalsMarket share (volume or value) Commitment to goalsRelative price (market share value/volume) Active innovation supportNumber of complaints (level of dissatisfaction) Resource adequacyCustomer satisfaction Staffing/skill levelsDistribution/availability Desire to learnTotal number of customers Willingness to changePerceived quality/esteem Freedom to failLoyalty/retention AutonomyRelative perceived quality Relative employee satisfaction 32
  33. 33. Sample Customer-Performance Scorecard Measures•Percentage of new customers to average number of customers.• Percentage of lost customers to average number of customers.•Percentage of win-back customers to average number of customers.•Percentage of customers falling into very dissatisfied, dissatisfied, neutral, satisfied,and very satisfied categories.•Percentage of customers who say they would repurchase the product.•Percentage of customers who say they would recommend the product to others.•Percentage of target market customers who have brand awareness or recall.•Percentage of customers who say that the company’s product is the most preferred inits category.•Percentage of customers who correctly identify the brand’s intended positioning anddifferentiation.•Average perception of company’s product quality relative to chief competitor.•Average perception of company’s service quality relative to chief competitor. 33
  34. 34. STRATEGIC PLANNING
  35. 35. STRATEGIC PLANNING MARKET-ORIENTED STRATEGIC PLANNING - is the managerial process of developing and maintaining a viable fit between the organizaiton’s objectives, skills, and resources and its changing market opportunities. The aim of strategic planning is to shape and reshape the company’s business and products so that they yield target profits and growth.Thus strategic planning is concerned with4. Treating business as an investment portfolio.5. Building game plan for each business – based on industry position opportunity, resources, mission, objectives.6. Future potential and not just current potential.
  36. 36. SEE APPENDIX – 18 (THE STRATEGICPLANNING, IMPLEMENTATION, AND CONTROL PROCESS) Planning Implementing Controlling Corporate planning Measuring Results Organizing Division planning Diagnosing results Business planning Implementing Taking corrective action Product planning
  37. 37. CORPORATE & DIVISION STRATEGIC PLANNING• DEFINING THE CORPORATE MISSION• ESTABLISHING STRATEGIC BUSINESS UNITS (SBUS)• ASSIGNING RESOURCES TO EACH SBU• PLANNING NEW BUSINESSES
  38. 38. DEFINING THE CORPORATE MISSION• Shaped by History, current preferences of owners and management, marketenvironment, resources, distinctive competences.• Provides sense of purpose, direction, and opportunity.• Good mission statements, limited number of goals and values and majorcompetitive scopes.• Provides direction for 10 – 12 years.
  39. 39. ESTABLISH STRATEGIC BUSINESS UNITS AND ASSIGN RESOURCES Assigning resources by evaluating by using analytical tools for classifying itsbusinesses by profit potential.1. Boston Consulting Group Model2. General Electric Model
  40. 40. Boston Consulting Group Model 20% 18%Market Growth Rate 16% Stars Question Marks 14% 12% 10% 8% 6% Cash Cow Dogs 4% 2% 0 0.2 X 0.3 X 0.5 X 0.1X 0.4X 10 X 1.5 X 1X 2X 4X 40 Relative Market Share
  41. 41. BCG’s GROWTH SHARE MATRIX• An unbalanced portfolio would have too many dogs or question marks and/or too few stars and cash cows.• BUILD – for stars HOLD - strong cash cows HARVEST – weak cash cows, question marks, dogs. DIVEST – dogs, question marks.• SBUs - change their position in the growth-share matrix.
  42. 42. GENERAL ELECTRIC MODELEach business is rated in terms of two major dimensions, market attractiveness and business strength.• MARKET ATTRACTIVENESS – Overall market size,,mkt growth rate,profit margin,competitive intensity,inflationary vulnerability.,technological requiremnets,environmental impact..• STRENGTH OF SBU / FIRM = Market share,share growth,product quality,brand reputation,distribution network,promotion effectiveness,production capacity,productive effeciency,R&D performance,managerial personnel,Each of these factors is assigned weights and business is measured of 5 point scale.
  43. 43. (a) Classification BUSINESS STRENGTH Strong Medium Weak 5.00 Hydraulic Joints Aerospace pumps fittings 3.67 Clutches Fuel Flexible Pumps 2.33 diaphragms Relief values 1.00 5.00 43 3.67 2.33 1.00
  44. 44. (B) Strategies BUSINESS STRENGTH BUILD SELECTIVELY INVEST TO BUILDPROTECT POSITION • Specialize around limited • Challenge for strength. leadership.• Invest to grow at maximum • Seek ways to overcome • Build selectively on digestible rate. weaknesses. strengths.• Concentrate effort on • Withdraw if indications of • Reinforce vulnerablemaintaining strength. sustainable growth are areas lacking.BUILD SELECTIVELY SELECTIVITY / LIMITED EXPANSION• Invest heavily in most MANAG FOR EARNINGattractive segments. • Protect existing program. OR HARVEST• Build up ability to counter •Concentrate investments •Look for ways to expand in segments where without high risk;otherwise, competition.• Emphasize productivity profitability is good and minimize investment and risks are relatively low. rationalize operations. by raising productivity.PROTECT AND REFOCUS MANAGE FOR EARNINGS DIVEST•Manage for current earnings. •Protect position in most • Sell at time that will• Concentrate on attractive profitable segments. maximize cash value. segments. •Upgrade product line. •Cut fixed costs and avoid• Defend strength. • Minimize investment. investment meanwhile. Strong Medium Weak 44
  45. 45. CORPORATE NEW BUSINESS PLAN When gap between future desired sales and projected sales, then three options.• INTENSIVE GROWTH – current business• INTEGRATIVE GROWTH – build or acquire businesses related to the company’s current businesses.• DIVERSIFICATION GROWTH – opportunities in unrelated business.
  46. 46. GROWTH STRATEGIESINTENSIVE GROWTH – (Ansoff’s Product / Market Expansion Grid )INTEGRATIVE GROWTH – Backward, Forward, HorizontalDIVERSIFICATION GROWTH – Concentric (Same technology /Marketing synergy), Horizontal (Appeals to current customers), Conglomerate(No relationship to the company’s current technology, products, or markets).
  47. 47. Current Product New ProductCurrent 3. Product- 1. Market- penetrationMarkets development strategy strategy New 2. Market- (DiversificationMarkets development Strategy) strategy 47
  48. 48. THE BUSINESS STRATEGIC PLANNING PROCESS1. BUSINESS MISSION2. SWOT ANALYSIS3. GOAL FORMULATION4. STRATEGY FORMULATION5. PROGRAM FORMULATION6. IMPLEMENTATION7. FEEDBACK AND CONTROL
  49. 49. OPPORTUNITY AND THREAT• A MARKETING OPPORTUNITY - is an area of buyer need in which a company can perform profitably. OPPORTUNITIES - can be classified according to their attractiveness and their success probability.• AN ENVIRONMENTAL THREAT - is a challenge posed by an unfavorable trend or development that would lead, in the absence of defensive marketing action, to deterioration in sales or profit. Threats should be classified according to their seriousness and probability of occurrence.
  50. 50. CHECKLIST FOR STRENGTHS / WEAKNESSES ANALYSISImportance of factor(High ,Medium , Low) and performancerating (Major/minor strengh,Neutral,,Major/Minor weakness)on dimensions inMarketing –Company reputation,marketshare,product/servicequality,pricing/distribution/advtg/salesforce/innovationeffectiveness,geog coverageFinance-cost/availability of capital,cash folw/,financial stabilityManufacturiing-facilities,economies of scale,capacity,mfgskill ,dedicated workforceOrganization-visionary leadership,dedicated 50employees,entrepreneurial orientation,flexible/responsive
  51. 51. GOAL FORMULATION• OBJECTIVES MUST BE HIERARCHICAL• QUANTITATIVE• REALISTIC• CONSISTENT
  52. 52. STRATEGY FORMULATIONMICHAEL PORTER’S THREE GENERIC STRATEGIES• OVERALL COST LEADERSHIP – firms should be good at engineering,purchasing, manufacturing and distribution.• DIFFERENTIATION – on key customer benefit area e.g. services, quality, style,technology.• FOCUS – on narrow market segment and pursue either cost leadership ordifferentiation.• “CLEAR STRATEGY IMPORTANT” - “Don’t be middle of the roaders”• Firms pursuing same strategy in same to market constitute strategic group.
  53. 53. STRATEGIC ALTERNATIVES Long -term profits Growth in sales or market Efficiency, share short-run profits Market MarketDevelopment Penetration Increase Decrease inputs outputs New Existing segments Customers Reduce Increase costs price Convert Competitors’ nonusers customers Improve Improve asset 53 New product sales mix developments utilization
  54. 54. PROGRAM FORMULATION AND IMPLEMENTATION, FEEDBACK & CONTROLPROGRAM FORMULATION - Develop programs in line with strategy e.g. Technology leadership – strengths – R&D,gather technological intelligence, develop leading edge products, train technicalsales force, develops ads to communicate technology leadership.IMPLEMENTATION – The McKinsey 7-S Framework(Hardware-strategy,structure,systems and Software-Style, Staff, Skills, Shared Values)FEEDBACK & CONTROL - Need to review and revise implementation,programs, strategies, or even objectives.
  55. 55. MARKETING PROCESSInvolves2. Analysing Marketing Opportunities3. Developing marketing strategies (Differentiating and positioning)4. Developing marketing programs (Marketing mix)5. Managing marketing effort through - Annual plan control (Achievement of sales, profits and other goods). - Profitability control (Analysis of profitability of products, customers, trade channels and order sizes, Marketing profitability analysis and marketing efficiency studies). - Strategic control (Appropriateness of companies marketing strategy to market conclusions through marketers audit).
  56. 56. A GOOD MARKETING STRATEGY• CO-ORDINATES FUNCTIONAL AREAS OF ORGANISATION• ALLOCATES RESOURCES EFFICIENTLY• HELPS PRODUCT ATTAIN MARKET POSITION• COMPETITIVE
  57. 57. OBJECTIVES OF MARKETING PLANTO,2. Define current situation facing the product (and how we got there)3. Define problems and Opportunities4. Establish objectives5. Define strategies and programs necessary to achieve objectives6. Pinpoint responsibility to achieve7. Encourage careful and disciplined thinking8. Establish customer-competitor orientation
  58. 58. CONTENTS OF A MARKETING PLANI. Executive summary and table of Presents a brief over of the proposed plan contentsII. Current marketing situation Presents relevant background data on the market, product, competition, distribution, and macro-environment.III. Opportunity and issue analysis Identifies the main opportunities/threats, strengths/weaknesses, and issues facing the product line.IV. Objectives Defines the plan’s financial and marketing goals in terms of sales volume, market share, and profitV. Marketing strategy Presents the broad marketing approach that will be used to achieve the plan’s objectives.VI. Action programs Presents the special marketing programs designed to achieve the business objectives.VII. Projected profit-and-loss statement Forecasts the plan’s expected financial outcomes.VIII. Controls Indicates how the plan will be monitored
  59. 59. FREQUENT MISTAKES IN PLANNING PROCESS1. Speed of planning2. Amount of data collections3. Who does the planning4. Structure5. Length of plan6. Frequency of planning7. Number of courses of action considered8. Who sees the plan9. Insufficient senior management leadership10. Tying compensation to efforts
  60. 60. MARKETING ENVIRONMENT
  61. 61. MARKETING ENVIRONMENT ANALYSISOUTSIDE - IN VIEW TO TRACK TRENDS, OPPORTUNITIES &THREATSFOLLOWED BY MARKET RESEARCH TO DETERMINE ANOPPORTUNITY’S PROFIT POTENTIAL.OPPORTUNITIES CAN BE CLASSIFIED ON ATTRACTIVENESS &SUCCESS PROBABILITY (COMPETITIVE ADVANTAGE).THREATS ARE CLASSIFIED ON BASIS OF SERIOUSNESS &PROBABILITY OF OCCURRENCE.
  62. 62. CHECKLIST FOR STRENGTHS / WEAKNESSES ANALYSISImportance of factor and performance rating on dimensions inMarketing –Company reputation,marketshare,product/servicequality,pricing/distribution/advtg/salesforce/innovationeffectiveness,geog coverageFinance-cost/availability of capital,cash flow/,financial stabilityManufacturing-facilities,economies of scale,capacity,mfgskill ,dedicated workforceOrganization-visionary leadership,dedicatedemployees,entrepreneurial orientation,flexible/responsive
  63. 63. MARKETING ENVIRONMENTI. MAJOR FACTORS - (MACROENVIRONMENT)A) DEMOGRAPHIC - (BREAKUP & CHANGES IN AGE, INCOME, SEX, EDUCATION, URBAN-RURAL, LIFE EXPECTANCY, OCCUPATION, PERSONS PER HOUSEHOLD).B) SOCIO / CULTURAL - (FAMILY STRUCTURE, DECISION-MAKING, PESTERPOWER VALUES LIFESTYLES).C) TECHNO LOGICAL - (CREATIVE DESTRUCTION, IMPACT ON PRODUCT, PACKAGING, ADVERTISING).D) POLITICAL / LEGAL - (LAWS TO PREVENT UNFAIR COMPETITION, CONSUMERS & SOCIETY).E) ECONOMIC - (PER CAPITA INCOME, CREDIT AVAILABILITY, SAVINGS, STAGE OF BUS CYCLE).F) PHYSICAL - (GOVTAL INTERVENTION, NEW OPPORTUNITIES).
  64. 64. MARKETING ENVIRONMENTII. ACTORS - (MICROENVIRONMENT)A) COMPANYB) SUPPLIERSC) MARKETING INTERMEDIARIESD) CUSTOMERSE) COMPETITORSF) PUBLIC - ASCI, CONSUMER ACTION GROUP
  65. 65. A Socioeconomic Classification (SEC) Matrix – India (Urban)Occupation Education School School SSC/HSC Graduate/ Graduate/ up to 5-9 Non- Postgraduate Postgraduate Illiterate 4 Years Years SSC/HSC Graduate (General) (Professional)Unskilled workers E2 E2 E1 D D D DSkilled workers E2 E1 D C C B2 B2Petty traders E2 D D C C B2 B2Shop owners D D C B2 B1 A2 A2Businessmen/Industrialists withnumber ofemployees:*None D C B2 B1 A2 A2 A1*1-10 C B2 B2 B1 A2 A1 A1*10 + B1 B1 A2 A2 A1 A1 A1Self-employed/ D D D B2 B1 A2 A1ProfessionalsClerical/ D D D C B2 B1 B1SalesmenSupervisory D D C C B2 B1 A2levelOfficers/ C C C B2 B1 A2 A2Executives-JuniorOfficers/ B1 B1 B1 B1 A2 A1 A1Executives – 65Middle/Senior
  66. 66. B Socioeconomic Classification (SEC) – India (Rural) Education Type of House Pucca Semi-Pucca Kuccha K u Illiterate R R4A R4A c R4BBelow SSC 4 v R3A R3B R4A ASSC/HSC R2 R3A R3B Some college, R1 R2 Not Graduate R3BGraduate/Postgraduate R1 R2 R3A(General)General/Postgraduate R1 R2 R3A(Professional) 66
  67. 67. Socioeconomic Distribution of Class-Wise Households Socioeconomic class % of Households Urban 1.0 A1 1.8 A2 2.5 B1 2.4 B2 6.1 C 6.6 D 3.0 E1 5.0 E2 28.4 Social(Urban) Rural 2.6 R1 8.0 R2 26.7 R3 34.3 R4 71.6 Subtotal (Rural) 100 Total (Urban + Rural)**(** Estimated number of households (in thousands) = 198,457 67(Source: Adapted from The Marketing White book, 2005, pp. 54 [Based on IRS 2003 – 2004]
  68. 68. Estimated Number of Indian Households by Income Groups 1999-2000 Households (millions) Income Groups (Annual Household IncomeRupees at 1999 – 2000 prices) Urban Rural Total Up to 40,000 8.2 56.0 64.2 (low) (16.0) (44.7) (36.3) 40,001 -80,000 16.7 43.7 60.4 (lower middle) (32.5) (34.8) (34.2) 80,000-1,20,000 11.8 15.5 27.3 (middle) (23.0) (12.3) (15.5) 1,20,000 – 1,60,000 6.9 5.6 12.5 (upper middle) (13.5) (4.5) (7.1) Above 1,60,000 7.7 4.5 12.2 (high) (15.0) (3.7) (6.9) Total 51.3 125.3 176.6 (100) (100) (100) 68
  69. 69. Projected Age Distribution of Population Year-wise Population (million)Age Group 2001 2006 2011 2016 0-4 366 362 355 343 (35.6) (32.5) (29.7) (27.1) 15-59 598 673 747 811 (58.2) (60.4) (62.5) (64.0) 60+ 65 78 94 113 (6.3) (7.0) (7.9) (8.9) Total 1,027 1,114 1,194 1,268 (100) (100) (100) (100) 69
  70. 70. TYPES OF COMPETITION1. BRAND COMPETITOR - PEPSI / COKE2. FORM COMPETITOR - COLA / LIME / ORANGE3. GENERIC / CATEGORY - SOFT DRINKS / CONCENTRATES / SYRUPS4. DESIRE / BUDGET - SPENDS ON DRINK / FOOD
  71. 71. COMPETITION - WHAT DO YOU NEED TO KNOW1. WHAT ARE THEIR CURRENT / FUTURE OBJECTIVES - GROW, HOLD, HARVEST, DIVEST.2. WHAT ARE THEIR CURRENT / FUTURE STRATEGY.3. WHAT ARE THEIR STRENGTHS / WEAKNESS4. WHAT ARE THE REACTION PATTERNS HOW STRONG THEY ARE
  72. 72. ASSESSING COMPETITIORS STRENGTHS / WEAKNESS1. BOTH CORPORATE & BRAND LEVEL2. ANY INVALID ASSUMPTIONS3. SHARE OF MARKET, MIND, HEART4. SATISFACTION / DISSATISFACTION AREA
  73. 73. CONSUMER BEHAVIOUR
  74. 74. 7 O’s FRAMEWORK• WHO BUYS - OCCUPANT• WHAT DOES HE BUY - OBJECT• WHY DOES HE BUY - OBJECTIVE• WHEN DOES HE BUY - OCCASION• WHERE DOES HE BUY - OUTLET• HOW DOES HE BUY - OPERATIONS• WHO ARE INVOLVED - ORGANISATION
  75. 75. MODEL OF BUYER BEHAVIOUR Buyer’s Buyer’s characteristics DecisionMarketing stimuli Other stimuli ProcessProduct EconomicPrice Technological Cultural Buying rolesPlace Political Social Buying typesPromotion Cultural Personal Buying Stages Psychological Buyer’s decisions Product choice Brand choice Dealer choice Purchase timing Purchase amount
  76. 76. Factors influencing behavior PERSONALCULTURALSOCIAL •AGE AND LIFE CYCLE STAGE PSYCHOLOGICAL • MOTIVATION • OCCUPATION • REFERENCE •PERCEPTION GROUP •ECONOMIC BUYER• CULTURE CIRCUMSTANCES •LEARNING • FAMILY • LIFESTYLE• SUBCULTURE •BELIEFS AND •ROLES AND •PERSONALITY ATTITUDES STATUSES AND SELF-• SOCIAL CLASS CONCEPT
  77. 77. BUYING ROLES• INITIATOR• INFLUENCER• DECIDER• PURCHASER• USER
  78. 78. BUYING BEHAVIOUR TYPES High Involvement Low InvolvementDifference COMPLEX VARIETYbetween brands SEEKINGperceived B A P WB P A DISSONANCE HABITUALDifference REDUCINGbetween brandsnot perceived B P New B A WB P A
  79. 79. STAGES OF BUYING DECISION PROCESS• PROBLEM RECOGNITION• INFORMATION SEARCH – Criteria, Alternatives• EVALUATION OF ALTERNATIVES• PURCHASE DECISION• POSTPURCHASE BEHAVIOUR
  80. 80. INFORMATION SEARCH SOURCES• PERSONAL SOURCES• COMMERCIAL SOURCES• PUBLIC SOURCES• EXPERIENTIAL SOURCES
  81. 81. SUCCESSIVE SETS INVOLVED IN CONSUMER DECISION MAKING TOTAL SET AWARENESS SET CONSIDERATION SET CHOICE SET PURCHASE DECISION POST-PURCHASE BEHAVIOUR
  82. 82. Profiling the Customer Buying Decision Process1) Introspective method – Marketers think how they would act if they were consumers2) Retrospective method – Ask consumers who have bought to recall the event3) Prospective method – Ask prospective consumers who plan to buy to think aloud.4) Prescriptive method – Ask consumers ideal way. 82
  83. 83. ALTERNATIVE EVALUATIVE TECHNIQUESCOMPENSATORY MODEL• EXPECTANCY VALUE MODEL• IDEAL BRAND MODELNON-COMPENSATORY MODEL• CONJUNCTIVE MODEL• DISJUNCTIVE MODEL• LEXI COGRAPHIC MODEL
  84. 84. EXPECTANCY VALUE MODEL OF CONSUMER CHOICE CAR ATTRIBUTES ENGINE EXTERIORS PRICE MILEAGE PERCEIVED CAPACITY VALUES WTS. 0.4 0.2 0.3 0.1FORD ESCORT 10 8 6 8 8.2OPEL ASTRA 8 9 6 6 7.4HONDA CITY 6 10 8 9 7.7CIELO 4 6 5 5 4.8
  85. 85. STRATEGIES FOR MARKETERS• MODIFY THE BRAND – REAL REPOSITIONING• ALTER BELIEFS ABOUT THE BRAND – PSYCHOLOGICALREPOSITIONING• ALTER BELIEFS ABOUT COMPETITOR’S BRAND – COMPETITIVEDEPOSITIONING• ALTER IMPORTANCE WEIGHTS• CALL ATTENTION TO NEGLECTED ATTRIBUTES• SHIFT BUYER’S IDEALS
  86. 86. PERCEIVED RISK• FINANCIAL• PHYSICAL• SOCIAL• PERSONAL
  87. 87. Organizational Buying Behavior 87
  88. 88. Organizational buying behaviour• Organizational Buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify , evaluate, and choose among alternative brands and suppliers.Organizations could be corporate, manufacturing firms,Service firms,Institutional & Government markets.
  89. 89. Business Market V/S Consumer Market1. Fewer buyers2. Larger buyers3. Close supplier-customer relationship - Customization4. Geographically oriented buyers5. Derived demand -business marketer must closely monitor buying patterns of ultimate consumers.6. Inelastic demand - in short run as producer cannot make quick changes in production methods, also small percentage of items total cost.7. Fluctuating demand - given 10% increase in consumer demand can cause 200% increase in business demand.8. Professional purchasing - Policies, constraints, requirements.9. Several buying influences - buying committees10. Direct purchasing11. Leasing - e.g. Heavy construction equipment, computers, etc.12. Reciprocity - Chemical manufacturer & Paper manufacturer
  90. 90. Buying Situations1. Straight rebuy - recorder on routine basis automatic recording system from approved list of suppliers. Insuppliers & outsuppliers strategy.2. Modified rebuy - modifying in product specifications. Prices, delivery requirements or other terms.3. New task - Buying for first time * Greater cost or risk, more the decision participants & greater the information gathering. * Missionary sales force used by marketer * Mass media in awareness stage, stage sales people in interest stage & technical sources in evaluation stage.
  91. 91. Participants in Business Buying Process• Straight rebuy & modified rebuy situations- purchasing agent important.• New buy- engineering or other departments.• Purchasing agent dominate in selecting suppliers.
  92. 92. Buying roles in Buying centre1. Initiators - Users or others.2. Users - Users may initiate & help define product requirements.3. Influencers - help define specifications & provide information for evaluating alternatives technical personnel.4. Decider - decide on product requirements & suppliers.5. Approver - authorize actions of decider buyer.6. Buyer - formal authority to select suppliers, negotiate.7. Gatekeeper - Prevent sellers or info reaching buying center. e.g. - purchasing agents, telephone, operators, receptionists.
  93. 93. Major influences on Industrial Buying Behaviour • Business buyers responds both to economic & personal factors. Personal (treatment etc)when similarity in supplier offers.ENVIRONMENTALLevel of demand ORGANIZATIONAL INTERPERSONAL•Economic outlook INDIVIDUAL •Objectives •Interest•Interest rate•Rate of technological •Age •Policies change •Authority •Income•Political and •Procedures • Education BUSINESS regulatory •Status • Job position BUYER developments •Organizational •Personality•competitive Structures •Empathy •Risk attitudes developments •Culture •Systems•Social responsibility •Persuasiveness concerns
  94. 94. Trends in Organizational Buying1. Purchase department upgrading2. Centralized purchasing - in multidivisional companies3. Decentralized purchasing for small ticket items.4. Long-term contracts5. Purchasing performance evaluation & rewards hence pressure put on suppliers.6. Just- in-time7. Single sourcing & early supplier involvement.
  95. 95. Purchasing / Procurement Process (Buy Phases)1. Problem recognition - as a result of internal or external stimuli2. General need description - items general characteristics, attributes & quantity.3. Product specification- Technical specifications.4. Supplier search - buyer can examine trade directories, computer search, trade shows, advertisements, recommendations of others.5. Proposal solicitation - Buyer invites qualified suppliers to submit proposal, make presentations.6. Supplier selection - based on important factors e.g. product reliability, technical service, price, supplier flexibility, reputation.7. Routine order specification - Trend especially in MRO items is blanket contract/ stockless purchase plan.8. Performance review
  96. 96. Buying stages in buying classes BUYCLASSES NEW TASK MODIFIED STRAIGHT REBUY REBUY 1. Problem recognition Yes Maybe No 2. General need description Yes Maybe No 3. Product specification Yes Yes Yes 4. Supplier search Yes Maybe NoBUYPHASES 5. Proposal solicitation Yes Maybe No 6. Supplier selection Yes Maybe No 7. Order-routine specification Yes Maybe No 8. Performance review Yes Yes Yes
  97. 97. Vendor analysisAn example of vendor Analysis Rating scaleATTRIBUTES IMPORTANCE (1) (2) (3) (4) WEIGHTS POOR FAIR GOOD EXCELLENTPrice .30 XSupplier reputation .20 XProduct reliability .30 XService reliability .10 XSupplier flexibility .10 X Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5
  98. 98. COMPETITION 98
  99. 99. PORTER’S MODELThreat of new entrantsIntensity of Competitive rivalryBargaining power of buyersBargaining power of suppliersThreat of substitutes 99
  100. 100. Five Forces Determining Segment Structural Attractiveness Potential entrants (Threat of mobility) Industry Buyers Suppliers (Buyer competitors (Supplier power) (Segment rivalry) power) Substitutes (Threat of substitutes) 100
  101. 101. Identifying Competition• Industry Concept of Competition – Group of firms that offer a class of products that are close substitutes classified on basis ofI. Number of sellers & degree of differentiationc) Pure monopolyd) Oligopoly – Pure oligopoly (oil, steel) & differentiated oligopoly (auto, computers)e) Monopolistic competition – restaurantsf) Pure competition – stock marketII. Entry, mobility & exit barriers. 101
  102. 102. Identifying Competition Contd of Slide ….III. Cost structure – shapes strategic conduct e.g. steelmaking involves heavy manufacturing & raw material costsII. Degree of vertical integrationIII. Degree of globalization – some industries are highly local (babycare) others are global (e.g. oil, cameras)B. Market Concept of competition – Brand/Form/Category/Desire 102
  103. 103. COMPETITION WHAT DO YOU NEED TO KNOW• WHO ARE OUR COMPETITORS - IDENTIFY &SELECT• WHAT ARE THEIR OBJECTIVES• WHAT ARE THEIR STRATEGIES• WHAT ARE THEIR STRENGTHS & WEAKNESSES• WHAT ARE THEIR REACTION PATTERNS 103
  104. 104. IDENTIFYING COMPETITION• CORRECT DEFINITION IMPORTANT TO MARKETPLANNING & STRATEGY• KEY QUESTION IS DEGREE EXTENT• BALANCE BETWEEN TOO MANY & TOO FEW• NOT EASY AS EMERGING COMPETITION• WRONG DEFINITION LEADS TOa) MARKETING MYOPIAb) AMBIGUITY IN MARKET RELATED STATISTICS 104
  105. 105. IDENTIFYING COMPETITORSI. INDUSTRY CONCEPT OF COMPETITION -II. MARKET CONCEPT OF COMPETITION 105
  106. 106. INDUSTRY CONCEPT OF COMPETITION• 1)Number of sellers and degree of differentiationa)Pure Monopolyb)Oligopoly- a small no. of large firms Pure eg oil,steel Or Differentiated automobiles,refrigeratorsc)Monopolistic competition—Many competitors and differentiated eg restaurants,beauty parlorsd)Pure competition eg stock market2)Entry,Mobility,exit barriers3)Cost structure4)Degrree of vertical integration5)Degree of Globalisation 106
  107. 107. Market concept of competition• Stimulates long run strategic market planning• Key to identify is mapping product/market grid• Opens eyes to broader set of actual & potential competitors• a) Brand• b) Product form competition• c) Category / Generic / Industry Competition• d) Desire / Budget 107
  108. 108. COMPETITIVE LEVEL & TASKSCompetitive Level Product Manager’s taskBrand Convince customers brand is better than others in product form(inward oriented) Convince product form is best inProduct Form the category(inward) Convince product category is bestGeneric / Category to satisfy need(Outward) Convince Generic need / benefit isDesire / Budget best way to spend discretionary income 108
  109. 109. METHODS FOR DETERMINING COMPETITORSI. PREDETERMINED CATEGORIES - ORGII. MANAGERIAL JUDGEMENTIII. CUSTOMER BASED MEASURESa) PURCHASE DATA FOR BRAND SWITCHING MATRIXb) CROSS ELASTICITY OF DDc) CONSUMER JUDGEMENTSc.1. JUDGED OVERALL SIMILARITYc.2. SIMILARITY OF CONSIDERATION SETc.3. PRODUCT DELETION SET 109c.4. SUBSTITUTION IN USE
  110. 110. BRAND SWITCHING MATRIX TIME (++1) A B C D E A .6 .2 .2 0 0 B .2 .3 .4 .1 0TIME C .2 .3 .5 0 0 t D 0 .1 .1 .5 .3 E .1 0 0 .4 .5 110
  111. 111. FIGURE 3.13: METHODS VERSUS COMPETITION LEVELS AND INFORMATION REQUIRED Level of Competition Typical Data Sources Approach Brand Product Generic Budget Primary Secondary FormExisting definitions X X XTechnology substitution X X X XManagerial judgment X X X XCustomer behavior based: Brand switching X X X Interpurchase times X X X Cross-elasticities X X X X 111
  112. 112. FIGURE 3.13: METHODS VERSUS COMPETITION LEVELS AND INFORMATION REQUIRED Level of Competition Typical Data Sources Approach Brand Product Generic Budget Primary Secondary FormCustomer evaluation based: Overall similarity X X X X Similarity of consideration X X X X X sets Product deletion X X X X Substitution in use X X X XNote: An X indicates that either the method is useful for determining competition atthat level or it employs data of a certain type. 112
  113. 113. IDENTIFYING COMPETITORS STRATEGIES• A group of firms following same strategy in given target market is called a strategic group.• Dimensions include level of technological sophistication,geographicalscope, manufacturing methods,marketing strategies etc 113
  114. 114. ASSESSING COMPETITOR’S CURRENT STRATEGY1. TARGET MARKET2. CORE MARKETING STRATEGYa) POSITIONINGb) DIFFERENTIAL ADVANTAGE3. MARKETING MIX 114
  115. 115. ASSESSING COMPETITOR’S CURRENT OBJECTIVES• growth v/s hold v/s harvest v/s divest.•Short term v/s long term profits, satisfycing v/s maximizingprofits, cash flow,,market sharegrowth,,technological/,service/cost leadership• objectives shaped by size, history, management perspective,financial situation, place in larger organisation• objectives can be assesseda) from strategyb) geographical home of parent 115c) ownership of firm - private / public/ government
  116. 116. ASSESSING COMPETITOR’S STRENGTHS & WEAKNESSES1. THROUGH- SECONDARY DATA- PERSONAL EXPERIENCE- PRIMARY SOURCES (CUSTOMERS, SUPPLIERS, DEALERS)2. ANALYSIS SHOULD BE FOR BOTH CORPORATE & BRANDLEVELS3. ANY INVALID ASSUMPTIONS THAT COMPETITOR ISMAKING4. SHARE OF MARKET, MIND, HEART5. SATISFACTION / DISSATISFACTION AREA6. COMPARISION VIS-A-VIS OUR BRAND 116
  117. 117. ESTIMATING COMPETITOR’S REACTION PATTERNSDEPENDS ONa) IMPORTANCE OF BUSINESS OR PRODUCTb) HOW COMMITTED IS THE COMPETITOR(PHILOSOPHY, MIND-SET)c) AGGRESSIVENESS OF MANAGERS 117
  118. 118. ESTIMATING COMPETITOR’S REACTION PATTERNSTYPES OF COMPETITORS• LAID BACK• SELECTIVE• TIGER• STOCHASTIC 118
  119. 119. DESIGNING COMPETITOR INTELLIGENCE SYSTEM1. COSTLY SIGNALS2. CHEAP TALK SIGNALSPRODUCT MANAGER MUST COLLECT BOTH TYPESOF INFORMATION BUT BE WARY OF (2) 119
  120. 120. SOURCES OF INFORMATION OF COMPETITORSI. SECONDARYII. PRIMARYIII. OTHERSIV. UNETHICAL 120
  121. 121. SELECTING COMPETITION1. LEVEL2. SELECTING COMPETITOR FOCUSCHOOSING WHO TO COMPETE HAS IMPLICATIONSON PERFORMING STDS (MARKET SHARE) &COMPETITIVE STRATEGYDEPENDS ONa) TIME HORIZONb) STAGE OF PLCc) RATE OF CHANGE OF TECHNOLOGY 121
  122. 122. SELECTING COMPETITORS TO ATTACK & AVOID1. STRONG V/S WEAK COMPETITORS2. CLOSE V/S DISTANT3. GOOD V/S BAD 122
  123. 123. BALANCING CUSTOMER & COMPETITOR ORIENTATION 123
  124. 124. COMPETITIVE POSITIONS• DOMINANT-Controls behavior of other competitors ,widechoice of strategic options• STRONG-can take independent actions and maintain itslong term position• FAVOURABLE-exploitable strength and above averageopportunity to improve position• TENABLE-exists at sufferance of dominant company andhas lesser than average opportunity to improve position• WEAK-poor performance.must change or exit• NON-VIABLE-poor performance and no opportunity forimprovement 124
  125. 125. MARKET LEADER STRATEGIESI. EXPANDING TOTAL MARKETII. DEFENDING MARKET SHAREIII EXPANDING MARKET SHARE 125
  126. 126. Market- Leader Strategies Expanding Total MarketNEW USERS :Non-users or competitors users (Market penetration)Different segments (New Market Strategy)Geographical segments (Geographical ExpansionStrategy)NEW USES :For example Vaseline as lubricant. Skinointment, healing agent, hair dressing.MORE USAGE :Shampoo 126
  127. 127. MARKET LEADER DEFENSIVE STRATEGIESThrough continuous innovation, increasing competitiveeffectiveness and value to customers. a) POSITION DEFENSE – not enough today. e.g. Coke has also diversified. b) FLANK DEFENSE – Erect outposts to protect a weak front or serve as an invasion base for counter attacking. E.g. Asian Paints Tractors. c) PREEMPTIVE DEFENSE – Launch attack before enemy starts offense across market with many models. 127
  128. 128. Market Leader Defensive Strategiesd) COUNTER OFFENSIVE DEFENSE – e.g. HLL reaction to Tide.b) MOBILE DEFENSE – Stretch Domain over new territories through market broadening i.e. shifting focus from current product to generic need E.g. Bank to insurance, Mutual Funds etc. Aquafina & Kinleyc) CONTRACTION DEFENCE- Recognising that there is no sense to spread too thin. (Strategic withdrawal) 128
  129. 129. EXPANDING MARKET SHARE• Increased market share above 40% earns ROI of 38.5%,more than 3 times that of those firms with shares under 10%• But important to consider 3 factors• Provoking monopolist action• Economic cost—holdout customers• Wrong marketing mix 129
  130. 130. MARKET CHALLENGER STRATEGIESFirms that occupy 2nd,3rd or lower ranksare called runner ups. These firms caneither attack leader and make aggressivebid for further market share( marketchallenger ) or play ball and not rockboat ( market follower) 130
  131. 131. Market challenger strategies1. Can attack Market leader- high risk-high payoff.Makes good sense if false leader2. Can attack firms of own size that are not doing well or are under financed.3. Small and regional firms 131
  132. 132. MARKET CHALLENGER STRATEGIES• FRONTAL ATTACK-attacking opponent’s strength ratherthan weakness.Matching opponent onproduct,advertising,price with 3:1 advantage otherwise cantsucceed•MODIFIED FRONTAL ATTACK-Match leader’s offer onall and beat on price• FLANK ATTACK-Blind spots. Flank attack can be geogor segmental eg Nirma. Much more likely to succeed thanfrontal attack 132•
  133. 133. MARKET CHALLENGER STRATEGIES•ENCIRCLEMENT ATTACK-Comprehensive Blitz attackon front,sides rear.Offer everything opponent offers andmore• BYPASS ATTACK-is an indirect assault strategy.likediversifying into unrelated products,new geographicalmarkets and leapfrogging into new technology• GUERRILLA ATTACK-waging small intermittentattacks. Harass , Demoralise eg price cuts, promotionalblitz,legal action 133
  134. 134. MARKET FOLLOWER STRATEGIESCompany prefers to follow than to challenge. 1. COUNTERFEITER 2. CLONER-The cloner emulates the leader’s products,distribution, advertising etc Sudar dust 3. IMITATOR-copies some things of leader but maintains differentiation on packaging, advertising, pricing etc 4. ADAPTER –adapts or improves leader’s product. Can become future challenger E.g. Japanese firms 134
  135. 135. MARKET NICHER STRATEGIES• SPECIALIZATION- Customer, geographic product line,• MULTIPLE NICHING BETTER THAN SINGLE NICHING 135
  136. 136. MARKETING ROLES NICHE SPECIALIST ROLES The key idea in successful nichemanship is specialization. Here are some possible niche roles: End – user specialist: Vertical-level specialist: Customer-size specialist: Specific-customer specialist: Geographic specialist: Product or product – line specialist: Product - feature specialist: Job – shop specialist: Quality – price specialist: Service specialist: Channel specialist: 136
  137. 137. SEGMENTATION, TARGETING & POSITIONING
  138. 138. Levels of Market Segmentation1) Segment Marketing2) Niche Marketing3) Local Marketing4) Customerization or segments of one or customized marketing or one to one marketing. 138
  139. 139. Steps in the Segmentation Process Description1. Need-Based Segmentation Group customers into segments based on similar needs and benefits sought by customer in solving a particular consumption problem.3. Segment Identification For each needs-based segment, determine which demo- graphics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable).4. Segment Attractiveness Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment.5. Segment Profitability Determine segment profitability.6. Segment Positioning For each segment, create a “value proposition” and product-price positioning strategy based on that segment’s unique customer needs and characteristics.7. Segment “Acid Test” Create “segment storyboards” to test the attractiveness of each segment’s positioning strategy.8. Marketing-Mix Strategy Expand segment positioning strategy to include all 139 aspects of the marketing mix: product, price, promotion and place.
  140. 140. REQUIREMENTS FOR EFFECTIVE MARKET SEGMENTATION• RELEVANT• MEASURABLE• SUBSTANTIAL• ACCESSIBLE• ACTIONABLE
  141. 141. STEPS IN SEGMENTATION1. IDENTIFY BASES OF SEGMENTATION2. PROFILING
  142. 142. BASIS FOR SEGMENTING CONSUMER MARKETSI. CONSUMER CHARACTERISTICS1. GEOGRAPHIC (REGION, URBAN-RURAL)2. DEMOGRAPHIC (AGE, SEX, OCCUPATION, INCOME, EDUCATION, FAMILY LIFE CYCLE, FAMILY SIZE).3. PSYCHOGRAPHICS (SOCIAL CLASS, LIFESTYLE, PERSONALITY)II. CONSUMER RESPONSES1. BENEFITS SOUGHT2. OCCASIONS3. USAGE RATE (HEAVY, MEDIUM, LIGHT)4. USER STATUS (EX, CURRENT, NON, POTENTIAL, REGULAR, 1ST TIME)5. LOYALTY STATUS (HARDCORE, SOFT CORE, SHIFTING, SWITCHERS)6. BUYER READINESS (UNAWARE, AWARE, INFORMED, INTERESTED)7. ATTITUDE TO PRODUCT (ENTHUSIASTIC, POSITIVE, INDIFFERENT, NEGATIVE, HOSTILE).
  143. 143. MAJOR SEGMENTATION VARIABLES FOR BUSINESS MARKETSDEMOGRAPHIC1. Industry : which industries should we serve?2. Company size: What size companies should we serve?3. Location: Which geographical areas should we serve ?OPERATING VARIABLES4.Technology : What customer technologies should we focus on?5. User / customer status: Should we serve heavy users, medium users, light users, or nonusers?6. Customer capabilities: Should we serve customers needing many or few services?PURCHASING APPROACHES7. Purchasing -function organization : Should we serve companies with highly centralized or decentralized purchasing organizations?8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so forth?9. Nature of existing relationships: Should we serve companies with which we have strong relationships or simply go after the most desirable companies?10. General purchase policies: Should we serve companies that prefer leasing? Service contracts? Systems purchases? Sealed bidding?11. Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?
  144. 144. MAJOR SEGMENTATION VARIABLES FOR BUSINESS MARKETSSITUATIONAL FACTORS12. Urgency: Should we serve companies that need quick and sudden delivery or service?13. Specific application: Should we focus on certain applications of our product rather than all applications?14. Size of order: Should we focus on large or small orders?PERSONAL CHARACTERISTICS15. Buyer-seller similarity: Should we serve companies whose people and values are similar to ours?16. Attitudes toward risk: Should we serve risk- taking or risk-avoiding customers?17. Loyalty: Should we serve companies that show high loyalty to their suppliers?
  145. 145. STEPS IN MARKET TARGETING1. DEVELOP MEASURE OF SEGMENT ATTRACTIVENESS AND EVALUATE.2. SELECT TARGET SEGMENTS.
  146. 146. BASIS FOR EVALUATION & SELECTION OF TARGET SEGMENTS1. SIZE2. GROWTH3. STRUCTURAL ATTRACTIVENESS (PORTER’S MODEL)4. OBJECTIVES & RESOURCES5. ECONOMIES OF SCOPE
  147. 147. PATTERNS OF TARGET MARKET SELECTION1. SINGLE SEGMENT CONCENTRATION2. MARKET SPECIALISATION3. PRODUCT SPECIALISATION4. SELECTIVE SPECIALISATION5. FULL MARKET COVERAGE
  148. 148. ALTERNATIVE TARGETING STRATEGIESCO’S MARKETING MIX WHOLE MARKET UNDIFFERENTIATED MARKETING MARKETING MIX 1 SEGMENT 1 M M 2 SEGMENT 2 M M 3 SEGMENT 3 DIFFERENTIATED MARKETING SEGMENT 1MARKETING MIX SEGMENT 2 SEGMENT 3 CONCENTRATED MARKETS
  149. 149. Additional Considerations1) Segment by segment invasion plans – mega marketing to counter blocked markets2) Updating segmentation schemes – market partitioning3) Ethical choice of Target markets4) Counter segmentation. 149
  150. 150. DIFFERENTIATION & POSITIONINGDIFFERENTIATION IS THE ACT OF DESIGNING A SET OF MEANINGDIFFERENCES TO DISTINGUISH THE COMPANY’S OFFERS FROMCOMPETITOR’S OFFERS.POSITIONING IS THE ACT OF DESIGNING COMPANY’S OFFER ANDIMAGE SO THAT IT OCCUPIES A DISTINCT AND VALUED PLACE INTHE TARGET CUSTOMER’S MIND.
  151. 151. Developing a Positioning StrategyInvolves:2) Defining the Target Market4) Competitive frame of reference6) Points of Parity & Points of Difference 151
  152. 152. Choosing POPs & PODsPOP are driven by needs of category membership (to create category POPs) & needto negate competitors PODs ( to create competitive POPs).Consumer desirability criteria for PODs.1) Relevance – e.g. tallest hotel (irrelevant)2) Distinctive3) Believable & credible 152
  153. 153. Choosing POPs & PODs Contd. Of slide …Deliverability criteria3) Feasibility – in terms of resources,image of company5) Communicability – Verifiable evidence or proof points need to be created e.g. zpto7) Sustainability – enduring Marketers must decide at which level (s) to anchor brand’s PODs – At lowest level are brand attributes, then brand benefits & at top are brand values. 153
  154. 154. EFFECTIVE POSITIONING REQUIRES1. DETERMINING IMPORTANT DIMENSIONS2. ASSESSING IDEAL POSITIONS3. ASSESSING CURRENT POSITION OCCUPIED BY COMPETITORS
  155. 155. STEPS IN POSITIONING1. DEVELOP ALTERNATIVE POSITIONING CONCEPTS2. SELECT POSITIONING STRATEGY3. SIGNAL THROUGH MARKETING MIX
  156. 156. Positioning Strategy1. ATTRIBUTE – for e.g. clinic with zpto2. BENEFIT –3. USE/ APPLICATION4. USER5. COMPETITOR6. LEADERSHIP – quality , technology, service7. PRODUCT CATEGORY DISASSOCIATION8. EXCLUSIVE CLUB 156
  157. 157. POSITIONING STRATEGY TO BE AVOIDED1. UNDERPOSITIONING - VAGUE IDEA2. OVERPOSITIONING - TOO NARROW AN IMAGE3. CONFUSED POSITIONING4. DOUBTFUL POSITIONING
  158. 158. PRODUCT REPOSITIONING1. CHANGING TARGET CONSUMER PROFILE2. COMPETITOR TOO CLOSE3. INCREASE MARKET - E.g. CADBURY4. COMMUNICATE TECHNOLOGICAL ADVANCEMENT / UPGRADATION IN THE PRODUCT - E.g. SURF.5. CHANGING CUSTOMER NEED. 158
  159. 159. DIFFERENTIATION VARIABLESPRODUCT SERVICES PERSONNEL CHANNEL IMAGEFeatures Ordering ease Competence Coverage SymbolPerformance Delivery Courtesy Expertise Written andConformance Installation Credibility Performance audiovisualDurability Customer training Reliability mediaReliability Customer consulting Responsiveness AtmosphereReparability Maintenance and communication EventsStyle repairDesign Miscellaneous
  160. 160. MEASURING CUSTOMER EFFECTIVENESS VALUE - METHOD FOR COMPETITIVE ADVANTAGE SELECTIONFEATURE COMPANY COST CUSTOMER VALUE CUSTOMER EFFECTIVENESS (1) (2) (3 = 2/ 1)Rear window defrosting $100 $200 2Cruise control 600 600 1Automatic transmission 800 2400 3 160
  161. 161. Methods for competitive - Advantage selection 2 3 4 5 6 7 1Competitive Company Competitor Importance Affordability Competitor’s Recommend Standing Standing of and speed Ability to edAdvantages Improving (H-M-L) Improve Action Standing standing (H-M-L)* (H-M-L)Technology 8 8 L L M HoldCost 6 8 H M M MonitorQuality 8 6 L L LMonitorService 4 3 H H LInvest* H = High; M = Medium; L= Low 161
  162. 162. PRODUCT & BRANDING
  163. 163. 5 LEVELS OF PRODUCT1. CORE BENEFIT2. BASIC PRODUCT - FEATURES, BENEFITS, DESIGN & STYLE,PACKAGING, BRAND NAME.3. EXPECTED PRODUCT - CREATES NO PREFERENCE4. AUGMENTED PRODUCT - TOTAL CONSUMPTION SYSTEM5. POTENTIAL PRODUCTTHE 5 LEVELS CONSTITUTE CUSTOMER VALUE HIERARCHY WITHEACH LEVEL ADDING MORE CUSTOMER VALUE.
  164. 164. CLASSIFICATION OF PRODUCTS-CONSUMER GOODSDURABILITY & TANGIBILITY2. NON-DURABLE GOODS – tangible, consumed in few uses. Many locations, small mark up, heavy advertising.3. DURABLE GOODS – personal selling, guarantees, higher margin.4. SERVICES – intangible, variable, credibility of supplier very important.SHOPPING HABITS6. CONVENIENCE GOODS – staples, impulse & emergency goods7. SHOPPING GOODS – comparison shopping .Homogenous & heterogenous strategies differ.8. SPECIALITY GOODS – goods with unique characteristics and or brand identification.Location should be advertised.9. UNSOUGHT GOODS – advertising and personal selling.
  165. 165. Classification Of Products Most goods Most services Difficult toEasy to evaluateevaluate {{ {{{ High in experience qualities High in credence qualities High in search qualities
  166. 166. The Product Hierarchy• Need family – thirst• Product family – All product classes that serve a core need with reasonable effectiveness – Non-alcoholic beverages, alcoholic beverages• Product class – A group of products within a product family having certain functional coherence e.g. Aerated soft drinks 166
  167. 167. The Product Hierarchy Contd of Slide ….1) Product line – A group of products within a product class that are closely related because they perform a similar function, are sold to same customer groups, are marketed through same outlets or channels or fall within price ranges. Soft drink2) Product type – share same form. Cola drink.3) Item – (SKU or variant) Coke 300 ml. 167
  168. 168. Product systems & MixesA product system is a group of diverse but relateditems that function in a compatible manner.A product mix (product assortment is set of allproducts & items a particular seller offers for sale.A product mix has width, length, depth &consistency. 168
  169. 169. PRODUCT LINE DECISIONS1. PRODUCT LINE ANALYSISA. PRODUCT LINE SALES & PROFITSB. PRODUCT LINE MARKET PROFILE - PRODUCT MAPPINGC. PRODUCT LINE LENGTH - UPWARD / DOWNWARD / TWO WAY STRETCHD. LINE MODERNIZATIONE. LINE FEATURINGF. LINE PRUNING
  170. 170. BRANDA BRAND IS ESSENTIALLY A SELLER’S PROMISE TOCONSISTENTLY DELIVER A SPECIFIC SET OF FEATURES, BENEFITSAND SERVICES TO BUYERS.A BRAND IS ABOUT INTANGIBLE ANDTANGIBLE ASSOCIATIONS
  171. 171. BrandA brand is a product or service that isdifferentiated on dimensions – functional,rational, tangible (brand performance) and/orsymbolic, emotional, intangible (what brandrepresents). 171
  172. 172. BRANDING DECISIONS1. BRAND OR NOT – Advantages of branding – easy processing, legal protection, brand loyalty, segmentation ,corporate image. Also distributors and consumer s prefer brands.• SPONSOR – Manufacturer / Distributor / Licensed• BRAND NAME – Individual / Blanket / Separate family / Co. + Individual. Company names legitimizes and individual name individualizes• BRANDING STRATEGY – Line extensions (success rate higher), Brand extensions (risk of brand dilution test association), Multi-brands, New brands, Co brands (also called dual branding).• REPOSITIONING – shifting customer preferences or competitor too close.
  173. 173. Devising a Branding Strategy4 General Strategies:3) Individual names or house of brands4) Blanket family names or branded house5) Separate family names6) Corporate name + individual product name. 173
  174. 174. Devising a Branding Strategy Contd of Slide ….- Brand extension – line extensions & category extensions- Parent brand & sub brand- Brand line consists of all products – original as well as line and category extensions – sold under a particular brand.- Brand mix (or brand assortment) is the set of all brand lines that a particular seller makes available to buyers.- Licensed brands, co-branding, ingredient branding. 174
  175. 175. ESSENTIALS OF A GOOD BRAND NAME1. Easy to pronounce, spell and remember.2. Suggest about benefits, quality, use or action.3. Unique, distinctive.4. Versatile – can be added to new products / global reach.5. Registered and protected.
  176. 176. BRAND NAME TESTSA. ASSOCIATION TESTB. LEARNING TESTS (PRONOUNCABILITY)C. MEMORYD. PREFERENCEE. GLOBAL REACH PACKAGING TESTS1. ENGINEERING2. VISUAL3. DEALER & CONSUMER TESTS
  177. 177. BRAND - MEANING1. ATTRIBUTES2. BENEFITS - FUNCTIONAL & EMOTIONAL3. VALUE4. CULTURE5. PERSONALITY6. USER DEEP V/S SHALLOW BRAND
  178. 178. BRAND ASSOCIATIONS Product attributes Intangibles Country/geographic area Customer benefits Competitors Brand-name Relative price and symbol Product class Use/application Lifestyle/personality Celebrity/person User/customer
  179. 179. HOW VALUES AFFECT BRAND CHOICEFUNCTIONAL CONDITIONAL SOCIALVALUE VALUE VALUE BRAND CHOICE EMOTIONAL EPISTEMIC VALUE VALUE
  180. 180. BRAND EQUITY (DAVID AAKER)1. BRAND AWARENESS2. PERCEIVED BRAND QUALITY AND FUNCTIONALITY3. POSITIVE BRAND MENTAL & EMOTIONAL ASSOCIATIONS4. BRAND LOYALTY5. OTHER ASSETS - PATENTS, TRADEMARKS ,CHANNEL RELATIONSHIPS
  181. 181. ATTITUDE TOWARDS BRAND1. CUSTOMER WILL CHANGE BRAND FOR PRICE REASONS2. CUSTOMER IS SATISFIED - NO REASON TO CHANGE3. CUSTOMER IS SATISFIED & WOULD INCUR COSTS BY CHANGING BRAND4. CUSTOMER VALUES THE BRAND AND SEES IT AS A FRIEND5. CUSTOMER IS DEVOTED TO BRAND.BRAND EQUITY IS RELATED TO 3, 4, 5.
  182. 182. IMPORTANCE OF PROPER PACKAGING1. PROTECTION2. ADVERTISING VALUE3. CONVENIENCE TO CONSUMERS4. BENEFIT TO RETAILERS5. AFTER-USE VALUE6. IDENTIFICATION7. INFORMATION 182
  183. 183. FACTORS TO BE CONSIDERED FOR PACKAGE DESIGNING1. LANGUAGE2. COLOUR3. SIZE4. CLIMATE5. NATURE OF THE PRODUCT6. LENGTH OF DISTRIBUTION CHANNEL7. ACCEPTED NORMS8. METHOD OF TRANSPORT USED9. TRENDS IN PACKAGING10. COST-BENEFIT ANALYSIS 183
  184. 184. PACKAGING1. PRIMARY2. SECONDARY3. SHIPPINGDECISIONS6. The first task is to establish packaging concept. What packaging should be or do. e.g. protection, novel dispensing method, visibility.7. Decision on packing elements8. Tests – engineering tests, visual tests, dealer tests and consumer tests.9. Labeling – identify, describe and promote. 184
  185. 185. Introduction to Services 185
  186. 186. Services Characteristics V/s GoodsGoods Services Resulting implicationsTangible Intangible - Services cannot be inventoried. - Patented. - Readily displayed or communicated. - Pricing is difficult.Standardized Heterogeneous - Service delivery and customer satisfaction depend on employee actions. - Service quality depends on uncontrollable factorsProduction Simultaneous production - Customers & employees affect the serviceseparate from and consumption outcome.consumptionNonperishable Perishable - Difficult to synchronize supply and demand with services. - Services cannot be returned or resold. 186
  187. 187. The services triangle and technology CompanyInternal Marketing External Marketing Enabling promises Making promises Technology Providers Customers Interactive Marketing 187 Keeping promises
  188. 188. Expanded Marketing Mix For ServicesProduct Place Promotion PricePhysical good features Channel type - Promotion blend FlexibilityQuality level Exposure - Salespeople Price levelAccessories Intermediaries Number TermsPackaging Outlet locations Selection Differentiation TrainingWarranties Transportation Incentives DiscountsProduct lines Storage - Advertising AllowanceBranding Managing channels Targets Media types Types of ads Copy thrust - Sales promotion - Publicity 188
  189. 189. People Physical evidence Process- Employees Facility design - Flow of activities Recruiting Equipment Standardized Training Signage Customized Motivation Employees dress - Number of steps Rewards - Other tangibles Simple Teamwork Reports Complex- Customers Business cards - Customer involvement Education Statements Training Guarantees 189
  190. 190. Consumer Behaviour in Services 190
  191. 191. Continuum of evaluation for different types of products Most goods Most services Difficult toEasy to evaluateevaluate High in search qualities High in experience qualities High in credence qualities
  192. 192. Consumer decision making and evaluation of services Information Search Evaluation of Alternatives • Use of personal sources • Evoked set smaller • Perceived risk high Culture • Language • Values and customs • Material culture * Aesthetics Purchase and Consumption Postpurchase Evaluation • Attribution of dissatisfaction to • Emotion & mood self & less complaints • Service provision as drama • Service roles and expected scripts • Innovation diffusion slow • Compatibility of customers • Brand loyalty high due to more search costs 192
  193. 193. Gaps Model of Service Quality 193
  194. 194. Gaps Model of Service Quality Customer Expected Service Customer Gap Perceived Service Service Delivery ExternalCompany Communications Gap 3 Gap 4 to customersGap 1 Customer-driven service designs and standards Gap 2 Company perceptions of consumer expectations 194
  195. 195. The provider gaps are the underlying causes behind thecustomer gap:Gap 1 -- Not knowing what customers expect.Gap 2 -- Not selecting the right service designs and standards.Gap 3 -- Not delivering to service standards.Gap 4 -- Not matching performance to promises. 195
  196. 196. Customer Expectations of Service 196
  197. 197. Customer Expectations of Service - The Zone of Tolerance Desired Service Expectations Zone of Tolerance Adequate Service Expectations 197
  198. 198. 1. Desired service which reflects what customers want.• Adequate service what customers are willing to accept;• Predicted service what customers believe they are likely to get. 198

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