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NMIMS, 2007-08                                                                (Concepts & Environment)


Marketing Concept...
NMIMS, 2007-08                                                              (Concepts & Environment)


   •   Mgmt process...
NMIMS, 2007-08                                                            (Concepts & Environment)


Production- PSUs
Prod...
NMIMS, 2007-08                                                            (Concepts & Environment)


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NMIMS, 2007-08                                                              (Concepts & Environment)


    •   Environment...
NMIMS, 2007-08                                                               (Concepts & Environment)


    •   Effective ...
NMIMS, 2007-08                                                              (Concepts & Environment)


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NMIMS, 2007-08                                                              (Concepts & Environment)



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Mrktng Concepts

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Mrktng Concepts

  1. 1. NMIMS, 2007-08 (Concepts & Environment) Marketing Concepts Needs, Wants, Demands Needs Wants Demands What Deprivation of Specific satisfiers of deeper needs Specific Wants for products basic, satisfaction Wants are many Wants + purchasing power Existing, few Ability & willingness Influencers Natural, not Shaped by Social-family, friends, Shaped by status, Aspirations created Peers or Institutional-Promotion Instances Food, clothing, Needs food-Wants Mcdonalds Needs Car/TV, Wants Luxury belonging Needs clothes-Wants Allen Solly Sedan/flat, As willing + able, Demand Benz/Plasma TV Marketers Existing, minimum Influence wants, Affordable&available Influence demand by making influence, House Bank loan, EMls product attractive/aspirational, 3 Bed Room Status Duplex / Bungalow Product-Offered to satisfy needs / wants Product-tangible eg Books ; Service-Intangible eg Banking, Finance, Hospitality Products also deliver services eg car-product & transportation-service, Mobile Focus on products sans service risky eg TV, Fridge, AC without back-up Service Team-Risky Brand-An identifying symbol/words/mark distinguishing a product/company from its competitors. Branding is an essential part marketing. Brand = (Functional + Economic + Emotonal) Value Propositions. Nokia-Functional, Amul- Economic, Saffola- Emotional Value Proposition- Bundle of benefits the product provides to fulfill customer needs and wants Market (mercor-to buy Latin) Potential + Existing customers sharing a common need/want, able & willing to engange/enter in exchange to satisfy their needs/wants Eg Pharma Market=Doctors + Hospital + Trade Economics-Buyers+ Sellers= Market, Marketers – Sellers is industry, Buyers is Market Value (valere – latin – worth)- Consumer’s estimate of the utility/capacity of a product/brand to satisfy their needs. Fair return. Price is what you pay, value is what you get- Warren Buffet Mobiles- convergence Customer-One who buys goods or services- Mother Consumer-One who consumes, but may or may not have purchased- Kid Client-A customer/consumer/ party who pays for professional services- Lawyer, Hotel, Consultancy Prosumer: Producing consumers, active, regular and influencing consumers who also initiate feedback Customer satisfaction: Core- Quality, service, value; Desire (Within an arms length of desire- coke), customer delight (kingfisher airline), delivery (blue dart), service (icici bank, taj) Marketing Marketer  Mix + Strategy  Brand  Value  Customer • Mission: Create a difference between company’s & competitors offering on a/an attribute/s important to customers, to provide value, Scope. • Identifying, creating, managing demand to provide value to a customer for a profit – Kotler
  2. 2. NMIMS, 2007-08 (Concepts & Environment) • Mgmt process that identifies, anticipates, satisfies customer requirements profitability – CIM • The right product, in the right place, at the right time, at the right price – Adcock • Marshalling organizational resources to meet changing needs of the customer – Palmer • Marketing is far too important to leave to the marketing department”, David Packard (HP) 1950 • Concept- Satisfaction of the Customer & their needs, focus of business activities. IBM • Philosophy- Owned by everyone from within the organization • Marketing is not only much broader than selling, but not a specialized activity at all. Marketing encompasses the entire business. The whole business seen from the point of view of the customer. Concern & responsibility for marketing must therefore permeate all areas of the enterprise. A business has only 2 basic functions that produce result, marketing and innovation, the rest are all costs – Peter Drucker • “if marketing is seminally about anything, it is about .. differentiating what you do and how you operate. All else id=s derivative of that and only that. “Theodore Levitt 1986” • Holistic marketing: From product to customer focus, from selling products to satisfying customers, visualizing broader ways to serve customers and assess how all departments affect customers satisfaction- delivery, service, performance • Reserve marketing: Customer initiatives help design products marketing mix – PCs, Travel • Experiential marketing: Customer experience/ simulate product before buying foods, CDs Planning Process of anticipating future events & conditions to determine the best way to achieve organizational objectives • Marketing planning- Implementing planning activities to achieve marketing objectives • Strategic planning- Adopting courses of action to achieve organizational objectives • Tactical planning- Planning that guides the implementation of activities in the strategic plan Management (Manus – Hand Latin) – Optimal utilization of resources to achieve objectives eg Electricity • Management is doing things right, leadership is doing right things – Peter Drucker • Manager-Responsible for application & performance of knowledge- Peter Drucker • Marketing Management- Demand management Dimensional Differentiation of Selling VS Marketing Dimension Selling Marketing 1 Concept Integral part of Marketing Broader concept, Includes Selling, Brand, MR, Distribution, Promotion, Strategy, etc 2 Objective Transaction Exchange, Customer & Demand management 3 Target Buyer Needs/wants of the Customer 4 Focus Product Brand/Service 5 USP Price Value 6 Strategy Sales force & Promotion Marketing Mix 7 Period Short term Long term 8 Controls Sales, delivery, collection Customer Satisfaction, Market Share 9 Skills Selling, Communication Analytical 10 Orientation People Team 11 Begins When you have a product Much before and long after a produst Organizational Orientation
  3. 3. NMIMS, 2007-08 (Concepts & Environment) Production- PSUs Product- Infosys Selling- Sansui Marketing- Hutch Finance- SBI Service- ICICI Marketing Environment M8 +C5 + PESTND (Case – Mobile Industry) Surrounds & impacts the organization, 3 key perspectives- Macro, Micro and Internal environments. Environment Internal Micro Macro • Internal Envt-M8- 8 M’s 6C’s PESTND Important for Men Components Political managing change Material Corporate Economic • Internal Envt-C5- Money Channel Socio-cultural Influences organization Minutes Communication Technological directly, Relationship Markets Customer Natural between firms & driving Machines Competition Demographic forces Methods Direct impact Out of direct control • Macro Envt-PESTND Mind Influencing factors, but Change management out of direct control, environmental change PEST ND Political Factors • Huge, influence policy & regulations and spending power of customers • Government- VAT, WTO-GATT, Taxation, Reservations Economic Factors • Economy – Sensex, Forex, Interest rates, Inflation, Employment level, Per Capita, GDP, Sociocultural Factors • Ethnicity, local factors and issues, environmental issues- Bandra- Worli Sealink • Attitudes to foreign products and services- KFC Bangalore, Language impact • Cultural and religious factors- Mcdonalds French fries controversy, Nivea in Latin America Technological Factors • Technology- New, accessible, better, cheaper, innovation, investment intensive- ATM, Net Natural Factors • Raw material availability, Pollution, Environment, Monsoon - Pharmaceuticals Demographics • Age profile, Geriatrics, Life expectancy, Mortality, Geography, Consumption, Psychographics Analyzing the Environment
  4. 4. NMIMS, 2007-08 (Concepts & Environment) 5 Forces Analysis 5 Forces Analysis (Porter) • Analyses forces driving industry competition, intensity of competition- Indian Hotels not Tatas • Collective strength determines profit potential, identifies areas where company can defend • 5 Key areas- threat of entry & substitutes, power of buyers & suppliers, competitive rivalry The threat of entry • Economies of scale- Production, coverage, distribution- Reliance Polyester • Entry/Exit Barriers- FDI, Retail • Access to distribution channels- Shelf space • Cost advantages- Bazee- Ebay • Product Differentiation- Baby products- J&J • Government policy- Insurance Sector NB: Gambar lihat di situs aslinya Will competitors retaliate? Price cuts, promotional onslaught, technology – Mobiles The power of buyers Monopoly, Oligopoly, Cartelling- Tyre, Vitamin manufacturers The power of suppliers • Switching costs high – technology, distribution – Tata GSM • Power Brand- Amul, Integration- Tata Tea- Barista • Fragmentation, consolidation, integration The threat of substitutes • Disruptive innovations- Mobiles- convergence affects 32 industries • Need substitution- Better toothpaste reduces need for dentist, Diagnostics can avoid diseases • Generic substitution- Stop smoking cigarettes, Gutka ban • Technology- Blue tooth, Java Competitive Rivalry • High, where entry is likely/threat of substitute products/suppliers/buyers control the market FMCG, Pharma, IT • Pre-emptive eg leader drops price/intensifies promotion to scuttle new competitor entry Effective 5-Force Analysis • Structural analysis and competitive strategy for defending/increasing market share • Strategic moves to influence balance of force • Anticipating and exploiting change to emerge stronger PEST Analysis (Porter)
  5. 5. NMIMS, 2007-08 (Concepts & Environment) • Environmental analysis preceding the marketing process • Should be continuous & feed all aspect of planning SWOT Analysis (Case) • Tool for auditing organization and environment • 1st Stage of planning, helps marketers focus on key issues • Identify key issues & objectives, use with other audit & analysis tools, like PEST / 5-Forces • Strength & weaknesses- internal factors, Opportunities & threats-external • Strengths- Specialty, economies, reputation, innovation, service, tech, location, quality • Weaknesses- lack of strengths • Opportunities- Competition, innovation, technology, regulatory Successful SWOT analysis guidelines • Short, simple and fair analyses especially about strengths & weaknesses of your organization • Anticipation of PEST factors in the industry, Avoid grey areas • Competitive analysis through benchmarking, popular tool, quick & easy to learn Disadvantages • Can be very subjective, Not very reliable, Bias steps in • Two people rarely come-up with the same final version of SWOT • Use only as a guide Marketing Mix (Neil H. Borden) • Marketing ‘tactics’ or tools or ‘4Ps’ (McCarthy) • Other Ps- Pace, People, Policy, Process, Packaging, etc • Car-Mix of Engine, Mileage, Looks, Price, Features, Quality, EMI options • Mix element vary leading to different strategies, perception & value proporsitions Product Price Brand, features, design, quality, range Strategies, Warranty, AMC, service, size, Credit, packing, performance Costs Promotion Place Sales promotion, Personal Selling, Advertising, Channels, location, coverage, Sponsorship, Multi-level Marketing, Direct Transportation, inventory, width, Marketing, Trade fair & Expositions Spread, reach, shippers Promotion • Marketing communication • Objectives- Sales, attract/retain/covert, trial, awareness, remind, reassure • Retention Levels- reading 10%, listening 20%, Audio-visual 70%; Sight, Sound, Motion effective. Integrate individuals promotion mix components for effective communication Promo Tools / Mix (SPPASM DT) Sales Personal Public Advertisin Sponsorship MLM Direct Trade Fair Promotion Selling Relations g Expo Contests Presentations Inserts Advts Events Residual Database Demos Coupons Samples Press kit Hoardings Period Income Mailers Brochures Low Demo Seminars Banners Theme Network CRM Teach- finance Commission info Personal Selling- (Car, Insurance)
  6. 6. NMIMS, 2007-08 (Concepts & Environment) • Effective but expensive way to manage personal customer relationships (Medical Representative) Sales Promotion- (Akai/Aiwa/Sansui) • Incentive to buy, ensure trial, D2C through trade BOGOF, Coupons, Discounts, Contests, Trial Public Relation (PR)- (Political parties/top companies/IPO) • Subtle inserts used in image building, firefighting- impact if managed well, economical, if long- term Direct (Credit card/insurance company mailers) • Targeted communication- update database, response monitoring, multiple use 2% response • Mailers of contests, EMI options, transfer of credit, mail order catalogues, CRM Trade Fairs and Exhibitions (Print/Auto/Pharma/IT Expo) • Trade, product display / demonstration/awareness/trial, recent decline due to internet Advertising • ‘Paid for’ communication, difficult to measure Ad impact (Amul bylines excellent, sales impact). Helps develop attitudes/create awareness/communicate message, elicit response • Type of Ads- FRESHEN- Fear, Rational, Emotional, Social, Humour, Ethical, Negative • Media- Print- Newspaper/magazine/journals (local, national, trade, specialty)/ pamphlets Electronic- TV/ radio Virtual- Internet, Mobiles Outdoor- Hoarding/Banners/kiosks/transport ( bus, train, taxi, vans) Captive- Theatres, train compartments, Cable TV Sponsorship (Femina-Miss India) • Organization pays to associate with an event/cause- Sahara- Indian Cricket/Hokey/Olympics • Event attributes then associate with sponsor- Pepsi- Youth, Sahara- Patriotism Multi-Level Marketing (HerbalLife, Amway) • Networking, Residual Income, Flexi-timings, Initiators earn maximum, financial schemes- suspect Promotional Spend Methods- (Half my Ad- spend is wasted, but which hall? John Wanamaker) • Affordable- Amount decided on supposed affordability, ignores promo needs • % of sales- Anticipated sales, not guided by opportunities, promo- spend varies, % basis arbitrary • Competitive parity- Share of voice, Assumes competitive spend- collective industry wisdom- debatable, Own opportunities/strength/reputation not considered- IIPM highest print spender • Objective & Task Method- Define objective/tasks, allocate promo-spend, difficult to implement Full VS Push: Push – Sales Force + Trade Promotion, Pull – Advertising + Customer Promotion Strategies differ across industry players, traditionally HLL – Push and P&G – Pull strategy worldwide Promotion Mix Strategy – ICICI Place (distribution/channel/intermediary) • Set of institutions performing activities to move product from production to consumption- Bucklin • Functions- Order Processing, Warehousing, Inventory, Transportation, Collections • Ensures- Availability, Visibility (Dikhta hai voh bikhta hai), Movement, CRM, Feedback • Width- Trade coverage, Reach- Customer coverage, Depth- Brand coverage • Growing impact of convergence- internet, mobile, retail, revolution 1-Level 2-Level 3-Level 4-Level 5-Level Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer C&F C&F
  7. 7. NMIMS, 2007-08 (Concepts & Environment) Stockiest Stockiest Retailer Retailer Retailer Consumer Consumer Consumer Consumer Consumer Industrial, IT IT Hardware Retail/Malls Garments Pharma/FMCG Channel Intermediaries • Distributor (C&F)- Bulk to smaller packs, handle major area, supply to stockists • Wholesalers (Stockists)- Resell to retailers, storage, coverage essential • Others- Commission agents, co-operative (farmers), Indentors (Imports), agents (magazine) • Retailers- Strong customer influence, consumption/purchase pattern insight, service • Specialty (Sport), Supermarket (Big Bazar) Convenience (Kirana), Factory Outlets, Warehouse, Direct sellers (Encyclopedia)- D2D, Vending Machine (Tea, Coffee), co-operative (Apna Bazar, Grahak Peths, Societies), Chain stores (Monginis) • Internet (Service)- Channel margins and inventory costs major saving- can be passed, hence economical, death of distance, geographically disperse market, niche products reach wider audience, low entry barriers, display variety & functionality, interactive, Payment Risky, gaining popularity, delivery costly- Books, CDs, medicine, travel, tourism • 3rd Party Logistic (AirFreight, GATI)- tremendous scope Channel Decisions • Direct or indirect channels/single or multiple channels • Length of channel • Types of intermediaries/Number of intermediaries at each level • Which intermediaries? Avoid intrachannel conflict- Nike The Retail Revolution Case Price • Fit between crucial financial component-cost & marketing component-value • Center-stage in marketing wars, inter-firm rivalry-Mobile Industry • Product differentiation blunted- Surf-Ariel, Mature product/Markets- TVs • Economic Value Proposition- Titan- High priced brands inspite of local & grey market competition • Objective- Profits/ROI, competitive position, demand, costs, survival, product, Portfolio, Entry Pricing Methods • By cost- Cost Plus and Break Even • By competition- Going rate, competitive pricing, cartelling- Tyre industry, sealed bids (tenders) • Customer Oriented- Perceived Value (Lifestyles), Auctions (Bazee), Value-Buffett, McDonalds Pricing Strategies • Penetration- HQLP- NPL, Entry, Attract, Ensure trial- Amul • Premium- HQHP- Sustainable advantage- Bose Speakers, Benz • Economy- Functionally & Value-, Nirma, Supermarket- own brand • Skimming- LQHP- Significant advantage, unsustainable- Reliance Mobile • Rip-Off- Medium quality, very high price- Pricey Hotels/ Restaurant • 1,5,9- coexist in same market till buyers insist on quality, price, value • 2,3,6- ways to attack 1,5,9 as 2 = HQMP, 3 = HQLP, 6 = MQLP • 4,7,8 overpricing wrt quality- customers feel ‘taken’, bad oral publicity, avoid Exercise- Gives examples of Price each pricing strategy High Medium Low Quality High 1- Premium 2- High Value 3- Penetration (Quality is only Medium 4- Over-charging 5- Medium Value 6- Good Value indicative) Low 7- RipOff/Skimming 8- False Economy 9- Economy
  8. 8. NMIMS, 2007-08 (Concepts & Environment) Other Pricing Strategies • Psychological- Bata, Mobile Airtime Tariffs • Geographical- Medicine/Electronics across countries or Urban/Rural- Electronics • Promotional- Extensive usage, if successful-copied, if unsuccessful-financial drain • Loss leader- Factory outlets • Special Discount/Rebates- BOGOF, % Off, Sale • Financing- EMIs, Low interest rates • Warranties/AMCs- Extended warranties, TVs-Onida 4 year warranty, Free AMC • Psychological Discounting- Prices slashed 399 to 199, Baazee • Old for New- New for Old discounts- Exchange offers- Van Heusen, TVs • Price Point- Cadburys- Re1- Éclair, Rs2-Chocky, Rs5-5star, Rs50-Heroes, RS100-(Heroes) • Value- Superstores- Big Bazaar Discriminatory- Same brand/ service, 2 price • Customer segment- Student discount • Product form- Ketchup- 100gm-20, 250gm-45, 500gm-75 • Image- Hotels- Taj Palaces (Premium), Resorts (Lifestyle), Hotels (Business), Indione (Budget) • Location- Theatres- Stall-50, Balcony-75, Dress Circle-100, Stadium- Pavilion, Stands • Time- Seasonal- Cheaper/costlier during season, Happy Hours, Bakeries-25% off after 8pm Product Mix- Profitable brands take care of others in the portfolio • Product line- full range in all segments- Maruti Cars 2 Lacs at every 25000 intervals • Optional feature pricing- Ford Ikon-Insurance+Deck+Central Lock+Auto Cop Free • Captive product- Cameras/Razors cheaper but consumables – Film / Blades costly • 2-Part- Esselworld-admision + rides, Airtime + SMS/VMS/STD • By-Product- Lubricants with petrol • Product bundling- Season tickets, Time share

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