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Principle of Marketing

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Principle of Marketing

  1. 1. PRODUCT: A tangible item, a service, an idea, a concept, a person. DEVELOPMENT OF MARKETING - A HISTORICAL PERSPECTIVE  Production Era – 1850s to 1920s  Sales Era – 1930s to 1950s  Marketing Era – 196s & 1970s  Societal Marketing Era – 1970s to 1990s  The Future---?
  2. 2. MARKETING INTRODUCTION The exchange of something to satisfy an un-fulfilled need. CONDITIONS OF EXCHANGE Two or more persons/organizations must be involved There must be some unfulfilled need The parties must be voluntarily involved Each party must bring in something of value There must be communication between the parties involved.
  3. 3. CONCEPT OF UTILITY CREATION  Form Utility---- the physical or chemical form of a product that makes it of value , e.g., conversion of lumber into furniture.  Place Utility ---- ready access makes the product of value e.g., film on video.  Time Utility ---- timeliness creates utility e.g,. Life saving drug.  Information Utility --- knowledge of existence of a product.  Image Utility ---- emotional or psychological value attached to a product  Possession Utility --- occurs when the ownership exchange takes place. The ability of a product to satisfy an un-fulfilled need
  4. 4. THE INTANGIBILITY & TANGIBILITY CONTINUUM Babysitting Education Legal services Air travel Fast foods Cosmetics Soft drinks Clothing sugar TANGIBLE ELEMENTS INTANGIBLE ELEMENTS
  5. 5. THE MARKETING CONCEPT 1. NATURE & RATIONALE  All an organization’s activities should be customer oriented.  All marketing activities should be coordinated  The above 2 activities are essential to achieving economic benefits for the organization 2. RELATIONSHIP MARKETING Increasingly, customers are asking organizations to built a long term relationship which goes beyond short term benefits. 3. CUSTOMIZATION This is a change from mass production / marketing concept of multi-skilling & economics of scope 4. ETHICAL MARKETING Becoming an important issue with increasing education / awareness of customers and growing legislature.
  6. 6. MARKETING MIX Traditionally, Marketing Mix refers to a product or service, its distribution, promotion and pricing strategies. These four elements must satisfy the needs of the target markets and simultaneously, achieve organizational objectives. Marketing Mix includes. PRODUCT: Managing existing products, adding new ones and droping the failed ones. Strategies must also be formulated regarding branding, packing and other product features such as warranties, etc. PRICE: Price flexibility, related items in a product line, terms of sale, allowing discounts. PLACE (DISTRIBUTION): Related to channel members, type of distribution, extensive, intensive,selective. PROMOTION: Coordination of individual methods of promotion such as advertising, personal selling and sales promotion. Promotional strategies should be adjusted according to the product life cycle
  7. 7. OPPORTUNITY WINDOW  REFERS TO THE TIME AVAILABLE FOR THE PIONEERING COMPANY IN THE BUSINESS TO MAXIMIZE PROFITS BEFORE A SECOND ENTRANT BECOMES A COMPETITOR  EXAMPLE TCS IN PAKISTAN  GILLETTE  ROOH E AFZA
  8. 8. STRATEGIC MARKETING PLANNING  POSITIONING Refers to a product’s image in the minds of its customers, in relation to directly competitive products as well as other products marketed by the same company.  DIFFERENTIALS ADVANTAGE Refers to any feature of an organization or a brand perceived by customer to be desirable and different from those of the competition.  SELECTION OF TARGET MARKETS Refers to a group of people/organizations at which a firm directs a marketing strategy.  MEASUREMENT OF MARKET DEMAND Enables the company to forecast its sales for a certain period of time.
  9. 9. Organizations internal environment Controllable factors Financial resources Expansion/Retrenchment Size of operations Strength of the company Lease/ buy options Advertising Securities for taking long/short-term loans Production facilities Production facilities to meet specifications Operation on optimum capacity Accepting external jobs
  10. 10. EXTERNAL MACRO ENVIRONMENT NON – CONTROLLABLE • DEMOGRAPHICS  Ratio of urban to rural population  High populating growth rate  Demographic shifts  Aging of population  Ration of minorities • ECONOMIC CONDITIONS  business cycles marked by recessions & booms  Gross domestic product (GDP)  Real Income  Purchase Power Perity (PPP)  Inflation  Interest Rates
  11. 11. POLITICAL & LEGAL FORCES • Monetary & Fiscal Policies • Social legislation & Regulations • Government Relationship with Industries • Legislation special related to marketing TECHNOLOGY • Invent of computer / internet • E B I Z (E-Commerce) • Change in lifecycle because of technology advancements • Change in business pattern
  12. 12. LOCATION • Prime location leads to reduced operating costs RESEARCH & DEVELOPMENT • Customer satisfaction from existing products • product innovation • keeping and edge over the competitor HUMAN RESOURCES • Employing Experts • A Manager Concept (Multi–Tasking) • An asset rather than a liability COMPANY IMAGE • Perception of the Consumer • Providing meaningful benefit to the Customer COORDINATION AMONG INTERNAL FACTORS •Coordination for the conduction of 4/5 Ps
  13. 13. EXTERNAL MICROENVIRONMENT PARTIALLY CONTROLLABLE THE MARKET A place where buyers and sellers meet, goods & services are offered for sale, and transfers of ownership occur. OR People or organizations with need to satisfy, money to spend, and willingness to spend money. FACTORS TO BE CONSIDERED • People /Organizations with needs • Purchasing Power • Buying Behavior THE SUPPLIER No firm can sell a product without being able to make or buy it.
  14. 14. MARKET FORCES • THE CUSTOMER Who, what do they buy, how do they buy, when do they buy. • industry behavior Structure, CR, attitudes of intermediaries, motivation • COMPETITORS Company’s positioning relative to competitors, nature of competition (monopoly vs. oligopoly vs. pure competitions) • GOVERNMENTS & REGULATORY AUTHORITIES Control over marketing activities & competitors activities.
  15. 15. Psychological factors: motivation, perception, attidtud4es, personality and concept of self. Situational factors: time dimensions: when do customers buy? Physical & Social Dimensions: where do they buy? Terms of Purchase: how do they buy? Moods: Conditions in which thy buy
  16. 16. SOCIAL GROUP SOCIAL CLASSES CHARACTERISTICS A Businessmen owning large properties or senior managers working with MNCs, large landowners. B Smaller businessmen, middle level executives, small and medium size land holding farmers. C1 White collar workers, e.g., school / College teacher, doctors, engineers. C2 Blue collar workers, e.g., auto mechanics D Un-skilled or semi-skilled blue collar workers, e.g., landless farmers, nomads, etc. E Partially employed, old / retired people with limited income, unemployed
  17. 17. FAMILY LIFE CYCLE STAGE IN LIFE CYCLE CHARACTERISTICS SINGLE Young, single, male / female living alone. Generally student / young professional. Emphasis on convenience products, dine-outs small packs. MARRIED WITH NO CHILDREN Younger, mid 20s-early 30s, emphasis on dine- out / entertainment. Dowry makes life easier. MARRIED WITH YUONG CHILDERN Emphasis on children products, e.g., baby food medicine, clothing. Later, children’s education. MARRIED WITH GRWON UP CHILDREN Emphasis on children’s professional education,savings for building a house. Children’s marriage OLD COUPLE Emphasis on medical care, security SINGLE SURVIVOR One member family
  18. 18. MULTIPLE ROLES IN BUYING  USERS  INFLUENCER  DECISION MAKER  GATE KEEPER  BUYER
  19. 19. CONSUMER MARKETS & BUYING BEHAVIOR Critical variables include: Geographic distribution Urban/rural Concentration of population by geographic areas, etc…. demographics Age distribution Gender Family life-cycle Education Income Ethnic groups Social influences Cultures ad Sub-Cultures Religion Social Class Reference groups Role & influence of family Psychological Factors Motivation Perception Attitudes Personality Concept of Self
  20. 20. BUSINESS MARKETS & BUYING BEHAVIOUR BUSINESS MARKETS EXIST:  To produce other goods / services  To resell to other users or consumers  To conduct Organizational Operations COMPONENTS OF THE BUSINESS MARKETS  Agricultural Market  Reseller Market  Government Market  Services Market  Non-Business Market  International Market CHARACTERISTICS OF THE BUSINESS MARKET DEMAND  Derived demand  Inelastic Demand  Demand widely fluctuates  Buyers are well informed BUYING SITUATION  New Task Buying  Straight Re-buy  Modified Re-buy
  21. 21. MULTIPLE ROLES IN BUYING  User  Influencer  Decision Maker  Gate-keeper  Buyers BUYING PATTERN OF BUSINESS USERS  Direct Purchase  Nature of Relationship  Frequency of Purchase  Size of Order  Length of Negotiation Period  Reciprocity Arrangements  Service Expectations  Dependability of Supplies  leasing
  22. 22. “EVERY HUMAN IN THIS WORLD HAS THE RIGHT TO BELIEVE THAT BECAUSE OF HIM/HER WAS THE WORLD CREATED.” By Eleanor Roosevelt
  23. 23. DIMENSIONS OF SEGMENTATION  GEOGRAPHIC SEGMENTATION  DEMOGRAPHIC SEGMENTATION  AGE  YOUNGSTERS  TEEANGERS  MIDDLEDAGED  SENIORS
  24. 24.  PSYCHOGRAPHIC SEGMENTATION  PERSONALITY CHARACTERS  LIFE STYLE  VALUES BEHAVIORAL SEGMENTATION  BENEFITS DESIRED  USAGE RATE
  25. 25. SINGLE SEGMENT VS MULTIPLE SEGMENT STRATEGIES SINGLE SEGMENT STRATEGIES Enable the seller to penetrate the market in depth and to acquire a reputation as specialist in a limited market. Risk associated is, the firm has all eggs in one basket.
  26. 26. MULTIPLE-SEGMENT STRATEGY Two or more groups of buyers are identified. Different marketing mix is developed to attract each segment. Segmentation with no change in product, separate promotional appeals each tailored to a given segment are devised.
  27. 27. SEGMENTS SHOULD BE:  Identifiable  Measurable  Accessible  Economically viable
  28. 28. SEGMENTATION PROCESS  ON THE BASIS OF PRIOR experience and judgment  BASED ON STRUCTURED analyses supported by some marketing research.
  29. 29. POSITIONING THE PRODUCTS The ability of the organization to attract attention of the prospective customer towards the product and to differentiate it in a favorable way from competitors is called positioning. This effort basically aims at developing the image of a product in such a way that the targeted clientele gets quickly attracted.
  30. 30. POSITIONING IN RELATION TO COMPETITOR FLANK ATTACK OR HEAD-TO-HEAD POSITIONING Positioning the product directly against the competitor is called a Flank Attack. This strategy is suitable for a firm that already has a consolidated differential advantage or not be adopted when a competitor has a stronger market position.  e.g., Launch of newspaper Aaj Ki Awaz  Seven Star Cigarettes  Delta Airlines
  31. 31. POSITIONING IN RELATION TO A PRODUCT CLASS OR ATTRIBUTE An organization’s positioning strategy may entail association or distancing it from a product class or attribute. Examples  Made in Japan  Environmentally friendly  Recyclable Packing  Green Peace
  32. 32. POSITIONING BY PRICE AND QUALITY This type of positioning strategy defines the price & quality relationship and advocates that the higher price signifies a higher quality. Examples:  A Rolls Royce car  The diamond called Kohinoor  Statues of Buddah  The painting called Mona Lisa Local Market Examples  Foreign franchises offering edibles  Food offered in five star hotels
  33. 33.  At the speed of 60 miles an hour, the only sound you hear is the tickling of a clock.  Hamaisha saath nibhana tou, sooti hay mairi ladli  Hamaisha saath nibhana too, parhti hai mairi ladli  Hamaisha saath nibhana too, rukhsat hoi meri ladli  Apnay saath bhi lai thi baiti ko bhi yayhi doongi  Gold Leaf, for the taste alone  Red & White - the taste of adventure  Berger Robbiolac All Rounder  Wills Kings – Paradigm Shift  Low hassle in getting rid of packaging  Environmentally friendly product
  34. 34. MARKET SEGMENTATION Market segments are groups of customers having similar needs / wants and preferences. It enables the organization to more closely match its marketing mix with the customers needs or demands.
  35. 35. OPPORTUNITIES  Can we enter new markets?  Can we expand our product line?  Are competitors weak or complacent?  Will our markets grow? THREATS  Are we likely to get new competitors?  Will other products be substituted for ours?  Will new government policies impede our business?  Are we vulnerable to economic downturns?  Will buyer’s tastes and preferences change?  Will demographic shifts hurt us?
  36. 36. QUESTION CHECKLIST FOR SWOT ANALYSES STRENGTHS  Do we have a distinct competitive advantage?  Do we have adequate financial resources?  Can we do something better than our competitors.?  Do buyers think well of us?  Are we known at the market leader?  Do we have proprietary technologies.?  Can we produce and market at lower costs?  Does our management team have a good track record? WEAKNESSES  Do we lack a clear strategic direction?  I sour competitive position deteriorating?  Are our profitability obsolete?  Is our profitability lower than it should be?  Do we lack management depth and talent?  Are we missing any key skills?  Do we have internal operating problems?  Are we short of cash to fund current and future business efforts?  Do we have a weak image in the market?
  37. 37. GENERIC NAMES WHICH WERE EARLIER BRAND NAMES  ASPIRIN  ESCALATOR  KEROSENE  ZIPPER  THERMOS
  38. 38. STAGES IN ADOPTION PROCESS AWARENESS INTEREST EVALUATION ADOPTION CONFIRMATION ADVOCACY
  39. 39. VALUATION OF BRANDS BRAND ORGANIZATION VALUE IN $ BILLION Marlboro Philip 31.2 Coca Cola Coca Cola 24.4 Budweiser Anheuser Busch 10.2 Pepsi Cola Pepsico 9.6 Nescafe Nestle 8.5 Winston Nabisco 6.1 Pampers P & G 6.1 Camel Nabisco 4.4 Johnnie Guinness 2.6 Barbie Dolls Mattel 2.2 Smirnoff Vodka Grand Metropolitan 2.2 Kraft Philip Morris 2.2 So
  40. 40. BRAND AWARENESS The ability of potential buyers to recognize or recall a brand as a member of a certain product category. Linkages between product class and brand are involved.
  41. 41. DRIVE FOR BRAND AWARENESS  HIGH INVESTMENT ON TV Average 10% of sales turnover in case of leading brands.  PROMOTION AGAINST TARGET MARKETS Pepsi – Youth Gold Leaf – The older man
  42. 42. CONSTRUCTION OF A BRAND NAME NAME, SYMBOLS, SLOGANS NAME  Easy to learn increases recall rate  Different / unusual  Interesting – rhyme, humor  Creates a mental picture  Precise – less number of words used  Emotional – disseminating joy, obsession, passion.
  43. 43. METHODS FOR THE COLLECTION OF DATA SURVEY METHOD  Personal Interviews  Focus Group Discussions  Telephonic Survey OBSERVATION EXPERIMENTAL METHOD
  44. 44. Trends in Retailing – Experiences from Developed Countries MAJOR STRATEGIES BEING EMPLOYED BY RETAILERS SHORT-TERM  loyalty cards  Use of customer data-base  Sharing of EPOS data for inventory management, segmentation, response time,etc  efficient Customer response (ECR) LONG TERM  Increasing shopping experience – catering for young mothers, better layout, more extensive range.  Additional facilities – banking, direct marketing etc.
  45. 45. DETERMINING INTENSITY OF DISTRIBUTION  INTENSIVE – Distribution through every reasonable outlet.  SELECTIVE – Distribution through multiple but not all outlets.  EXCLUSIVE – Distribution through limited / restricted outlets. LEGAL ISSUES IN DISTRIBUTION  EXCLUSIVE DEALERSHIP – Prohibits dealer from carrying products of competitors.  TYING CONTRACTS – Supplier sells to middleman on condition that a less demanded product is also bought.  REFUSAL TO DEAL – Manufacturer refuses to deal with certain independent middlemen.  EXCLUSIVE TERRITORY POLICY – When producer demarks territory and sales can only be made in the particular territory.
  46. 46. MARKETING RESEARCH WHY MARKET RESEARCH? COMPETITIVE PRESSURE As more and more companies enter in a particular market, there is always need to maintain differential advantage or a unique selling proposition (USP) EXPENDING MARKETS because of globalization, companies enter new markets and there is need to know about these new markets, so as to formulate appropriate marketing mix for a environment. COST OF MISTAKES Experimentation in market is no longer possible because it can be fatal for the organization, e.g., cost of introducing a new drug is approximately US $500 million and takes around 10-12 years. GROWING CUSTOMER EXPECTATIONS Customer now expect more benefits for less money. It is only through research that we, as marketers, can find out what they expect and try
  47. 47. COMMITTED BUYER LIKES THE BRAND Consider it a friend SATISFIED BUYER Has switching costs SATISFIED / HABITUAL BUYER No reason for change SWITCHER / PRICE SENSITIVE Indifferent – no brand loyalty THE LOYALTY PYRAMID
  48. 48. Business markets & buying behavior Business Markets exist. To produce other goods/services To resell to other users or consumers To conduct organizational operations Components of the Business Markets Agricultural Market Reseller Market Government Markets Services Market Non-Business Market International Market Characteristics of the Business Market Demand Derived Demand Inelastic Demand Demand Widely Fluctuates Buyers are Well Informed Buying situations New task buying Straight Re-buy Modified Re-buy
  49. 49. Multiple Roles in Buying User Influencer Decision Maker Gate-Keeper Buyers Buying Pattern of Business Users Direct Purchase Nature of Relationship Frequency of Purchase Size of Order Length of Negotiation Period Reciprocity Arrangements Service Expectations Dependability of Supplies Leasing
  50. 50. Competition Brand competition Substitute Products General competition Social & cultural forces Change in consumption patter Difference in lifestyle Two income families Changing gender roles Conspicuous consumption A premium on time Health & environmental issues
  51. 51. Multiple roles in buying User Influencer Decision Maker Gate Keeper Buyer
  52. 52. QUESTION CHECK FOR SOWT STRENGTHS • Do we have a distinct competitive advantages? • Do we have adequate financial resources? • Can we do something better than our competitors? • Do buyers think well of us? • Are we known at the market leader? • Do we have proprietary technologies? •Can we produce and market at lower costs? • does our management team have a good track record? WEAKNESS • Do we lack a clear strategic direction? • I sour competitive position deteriorating? • Are our facilities obsolete? • Do we lack management depth and talent? • Are we missing any key skills? • Do we have internal operating problems.? • Are we have short of cash to fund current and future business efforts? • Do we have a weak image in the market?
  53. 53. SINGLE SEGMENT VS MULTIPLE SEGMENT STRATEGIES SINGLE SEGMENT STRATEGIES Enable the seller to penetrates the market in depth and to acquire a reputation as specialist in a limited market. Risk associated is, the firm has all eggs in one basket.
  54. 54. MULTIPLE – SEGMENT STRATEGY Two or more groups of buyers are identified. Different marketing mix is developed to attract each segment. Segmentation with no change in product, separate promotional appeals, each tailored to a given segment are devised.
  55. 55. MARKET RESEARCH Why Market Research? COMPETITIVE PRESSURE As more and more companies enter in a particular market, there is always need to maintain a differential advantage or a Unique Selling Proposition (USP) EXPANDING MARKETS Because of globalization, companies enter new markets and there is need to know about these new markets, so as to formulate appropriate market6ing mix for a new environment. COST OF MISTAKES Experimentation in market is no longer possible because it can e fatal for the organization, e.g. cost of introducing a new drug is approximately US $ 500 million and takes around 10-12 years. GROWING CUSTOMER EXPECTATIONS Customers now expect more benefit for less money. It is only through research that we, as marketers, can find out what they expect and try to provide to them economically.
  56. 56. A BRAND  A Name  Symbol  Sign  Mark  Color  Or the combination of above
  57. 57. REASONS FOR BRANDING FOR CONSUMER  Ensure recognition  Ensure repeat purchase  Ensure Quality
  58. 58. REASONS FOR BRANDING FOR BRAND OWNERS  Offers Premium on Price  Can be Sold  Can be Promoted
  59. 59. BRANDING STRATEGIES CORPORATE BRANDING STRATEGY Suggest that every product is promoted by a different brand name e.g. Lux, Surf Excel, Lifebuoy, Dalda, Lirl etc.
  60. 60. FAMILY BRANDING STRATEGY Suggest that all products of one company be promoted by the same name, e.g. HP, Sony, Panasonic, LG etc.
  61. 61. PRODUCT NAME COMBINED WITH FAMILY NAME Suggest that a company may use that strength the of the company name with the name of the product e.g. Toyota Corolla, Service Don Carlos, City Bank Visa etc.
  62. 62. BRAND REORGANIZATION Refers to the ability of the customer to the reorganization to brand
  63. 63. THE RECALLABLE PYRAMID Top of the mind Recall Recall Recognition Awareness UName
  64. 64. BRAND EQUITY Term refers to a combination of recognition loyally and Awareness.

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