This document provides an overview of marketing concepts including: - Definitions of marketing from 1985 and 2015 that emphasize creating value for customers. - The marketing environment and how companies must understand trends. - Different orientations companies can take such as production, selling, and marketing concepts. - The marketing mix of product, price, place, and promotion and how companies use these tools. - Segmentation, targeting, and positioning to develop marketing strategies.

1. Marketing Management
Unit 1 – UNDERSTANDING MKTG PROCESS & ENVIRONMENT

2.  Co-branding
Boots Piramal and Saregama produced a music album
“Strepsils Pure Voices”
Airtel Money in assn with ICICI and Visa
 Co-opetition – Cooperation and Competition
HT advertised in ToI when it entered Mumbai
HT made its printing facilities available to ToI
Wockhardt & Ranbaxy came together to take on American
market
 Teaser Advertisements

3. Marketing - Definition (Then and Now)
Marketing is the process of planning and executing
conception, pricing, promotion and distribution of
goods, ideas and services to create exchanges that
satisfy individual and organizational goals - 1985
Marketing is an organizational function and a set of
processes for creating, communicating and
delivering value to customers and for managing
customer relationships in ways that benefit the
organization and its stakeholders - 2015

4. Company Orientation
 Production concept : Demand > Supply – High production
efficiency, low cost & mass distribution
 Product concept – concentrates on quality and performance
of the products – feature oriented Marketing Myopia –
Theodore Levitt
 Selling concept – aggressive selling & promotion – sell what
they make rather make what they can sell – bad word of
mouth reaches 11 persons
 Marketing concept – determine the need/want and deliver
the desired satisfaction
Surf/Ariel’s effort to understand the needs
Henkel SPIC’s Pril dishwash bar
Dream Machine 2020 by Electrolux Kelvinator

5.  Customer concept – Customerisation – booming
 Societal marketing concept–preserving/enhancing the
consumers’ & society’s well being
MTR soups – “NO MSG” (Monosodium Glutamate –
flavour
enhancer)
Cause Related Marketing results in (provided handled
properly !)
 Corporate reputation
 Brand awareness
 Customer loyalty
 Increase in sales
 Increase press coverage

6.  Product – Product line range, design, color, package,
brand name, service function, warranty
 Price – Price structure, payment terms, cost
 Place - Distribution mix – Physical distribution, supplies,
inventory, storage, transportation, warehousing, channels,
retailers, distributors, wholesalers, export & import
 Promotion - Communications mix – Advertising, PoPs,
field sales force, telemarketing, PR, direct mail, SP,
research, Electronic interaction
“Customers don’t buy products ; they seek
to
acquire benefits”
Marketing mix

7. The complexity of Marketing
 Multiple decision makers in a family
 Multiple factors involved in buying decision
Consumer behavior – BLACKBOX??
 Interaction modes
 Time frame – Past experiences with the orgn,
Exposure to advertising, experience with product
usage
 Global factors

8. Marketing Environment
- to know where the environment is heading
- what trends are emerging therein
- to understand the opportunities & threats hidden
- what should be the Co’s response to the changes
- monitoring the present & forecasting the future
Macro environment factors
 Demographic environment
- Population size, growth rate, age distribution, religious
composition, literacy level, life expectancy, composition of
workforce, household patterns, regional characteristics...

9.  Socio-cultural environment
- Culture, traditions, beliefs, values and lifestyle
- Social class – determined by income, occupation
and location of residence
E.g : Changing position of women in India
Housewife  Home maker  working
professional  CEO of the organization
Emergence of HNIs in India
 Economic environment
- current income, savings, debt and credit
availability – eg. Effect of cut in CRR on liquidity
 Political environment
- form of the govt, stability of the govt, political consensus
on reforms...

10.  Natural environment
- Natural resources – raw materials, energy etc..
- Ecology – environmental regulations, activists..
- Climate
 Technological environment - options available, Govt’s
approach and technology selection
 Legal environment
- Corporate affairs–regulations for MLM companies
- Consumer protection, employee protection, sectoral
protection(reserved for SSIs, anti-dumping duty), corporate
protection(MRTP Act), regulations on products, price,
protecting national firms

11. Levels of Product
 Core benefit – Cleansing the body
 Basic Product – Toilet soap
 Expected product – a set of attributes the buyers normally
expect – rich lather, fragrance, life...
 Augmented product – meeting customers’ desires beyond
expectations - lasting fragrance, VFM...
 Potential product – possible evolution- liquid, drops,
sanitizers...
Product hierarchy
 Need family – core need – to look better, Mobility
 Product family – all prod classes that can satisfy a core need
with reasonable effectiveness – toiletries, surface/air transport

12.  Product class – group of product within the product family
recognized as having a certain functional coherence –
cosmetics, vehicles
 Product line – products within a prod class that are closely
related bec – they perform similar function
targeted at the same customer groups and
marketed through same marketing channels
within the same price range
Lipstick, 2 wheelers/4 wheelers
 Product type – several possible forms of the product
tube lipstick, 150cc bikes
 Brand – Revlon, Yamaha
 Item – SKU – distinguishable by size, price and appearance

13. Product classification
Durability & Tangibility-non durables/durables & services
Consumer goods – based on the shopping habits
Convenience – frequent, immediate & min efforts
staples – purchased on a regular basis
Impulse goods – due to external stimulus
Emergency goods – umbrellas, raincoats, vaseline
Shopping goods-comparing suitability, price, quality and style –
furniture, clothing, home appliances
homogeneous goods-similar in quality, diff in price
heterogeneous – differ in prodt features & services
Specialty goods – unique characteristics or brand identification,
no comparison – Benz, CD shirts

14. Unsought goods – unaware/don’t think of buying-life
insurance, books & journals...
Industrial goods – Refer Philip Kotler
Product Mix – set of product lines and items
Det Powders Det bar paste brush soap
Surf Rin Close-up Pepsodent Lux
Rin Wheel Pepsodent Hamam
Wheel Sunlight Mentodent G Rexona
Sunlight 501 Lifebuoy
Width – how many prod lines the Co. carries – 5 lines
Length – total no. of items in the mix – 16
Average length – 16/5 = 3
Depth - how many variants are offered –
eg., 2 formulations * 3 sizes = 6 (SKU)

15. Product Line Length
 Line stretching – upward, downward & both ways
 Line filling – adding more items with present range
JND– just noticeable difference
Fill the gaps approach
 Line modernization – advanced version of the product
 Line pruning

16. Brand decisions
Brand can convey – attributes, benefits, values, culture,
personality and the kind of user
Brand awareness, brand acceptability, brand preference and
brand loyalty
 High brand equity provides competitive advantage
- reduced marketing cost bcoz of awareness, loyalty
- Trade leverage with dealers and retailers
- Premium price because of perceived quality
- Brand extensions because of credibility
- Defense against fierce price competition
“Well managed brands are not subjected to BLC”

17. Branding Decision – to brand or not to brand
Sellers advantages
Brand sponsor decision
Manufacturers’ brands
Distributors’ brands – private labeling
Licensed brand name
Brand name decision
Individual brand name – Co’s reputation not at stake

18. Blanket family name or company trade name
combined with product names – TATA, J&J, Dabur,
Godrej, Britannia...
Separate family name for all products
Name of the person/place
British Airways, Amex, KFC, McDonalds, Indian Airlines...
Quality – Duracell, Aquaguard, Kwality, Compaq, Hommade,
Homelite, Pureit, Persona, Nature’s Basket...
Lifestyle – Royal Challenge, Aristocrat, Esteem, Safari, VIP...
Artificial name – Kodak, Konica...

19. Desirable qualities for a brand name
• Suggest something about product benefits
• Suggest product qualities
• Easy to pronounce/recognize/remember
• Should be distinctive
• Shouldn't carry poor meanings in other countries and
languages

20. Marketing Management
MARKETING MIX, STP and DISTRIBUTION

21. Environmental factors specific to the business
 Demand
- nature, size (present & potential), changes, invasion
of substitutes, changes in buying behavior.
 The consumer
- tastes and preferences – fluctuating
 Industry and competition
- specific to a firm – to develop marketing strategy
 Government policies
- specific to the industry and business – e.g : LPG
 Supplier related factors
- make or buy decision (integrating or outsourcing)
Environmental analysis has to be a continuous affair

22. CORPORATE NEW BUSINESS PLAN
 Intensive Growth – achieving growth within the
Company’s current businesses
Ansoff’s product market expansion grid
Current market
New market
Current product New product
Market
penetration
Product
development
Market
development
Diversification

23. 1. Market penetration
Increasing the market share of its current products in their
current
markets
- increasing the frequency of purchase
- targeting the competitors’ customers
- targeting the non-users
2. Market development
Identifying the potential user groups – LPG in rural markets,
HP’s entry
into white box market
- mass merchandising / increasing distribution channel
3. Product development
New product development with additional features

24. Vertical Integration – both forward & backward
 Backward Integration – moving towards suppliers
- LG has set up its compressor facility
- Amazon book publishing
- E-comm giants having their own warehouses/mfg
facilities
 Forward Integration – moving towards end users
- TATA Steel into branded steel furniture business
- Godrej into processed chicken – Real Good
- Nilkamal - @ Home
- HUL’s Tea Parlour - Lipton T Place
- Linc Pens’ retail outlets – Just Linc
- Amaron Raja Batteries’ Amaron Pit Shops

25.  Horizontal Integration – acquiring competitors
HUL-Kwality, Software companies and mobile apps
4. Diversification growth
- Concentric diversification – tech and/or mktg synergy with
existing product line
- storewel & furniture, detergent powder/cake
- Horizontal diversification – appealing to current customers
though technologically unrelated
- toothpaste & brush, shaving cream & brush
- Conglomerate diversification – no relationship to current
tech/product/market

26. Product Life Cycle (PLC)
- Products have limited life
- Pass thru distinct stages - challenges & opportunities
- Profits rise and fall
- Require different strategies at different level
Introduction (Embryonic)
- Slow sales growth – newly introduced
- Profit non existent – heavy expenditure on intro
Growth
- Rapid market acceptance, substantial profit
improvement
Maturity
- Slowdown in sales growth because acceptance by most
- Profits stabilize or decline because of competition

27. Decline
- Downward sales
- Erosion of profits
 Product categories have longest life cycle
 Brands have either short or long PLC
 PLCs can also take
- Growth-slump-maturity pattern
- Cycle-recycle pattern
- Scalloped pattern, style, fashion and fad

28. Strategies throughout the PLC
Introduction
Promotional expenditure higher as to
- inform potential buyers
- induce product trial
- secure distribution in retail outlets
Pioneer (First-mover) Vs Late entrants
Growth
- rapid climb in sales, new competitors enter with new
product features, distribution expanded
- prices remain or fall, promo same level or increases,
profits increase (promo-sales ratio declines, learning effect)
- improve features, style

29. - new models and flanker prodts (diff size, flavors)
- enter new market segments
- increase distribution coverage/new distn channels
- shift from product awareness to preference ads
- lower price to attract the next level buyers
Maturity
- overcapacity in the industry, shakeout begins, weak players
withdraw, well established players vying for competitive
advantage thru high volume/lower cost.
- Market nichers find place – premium price
- Market penetration strategy, Product Improvement, marketing
mix modification
- abandon weaker products, concentrate on new/most profitable
products

30. Decline
- Sales decline due to technological advances, shift in
preferences, domestic/foreign competition
- withdraw from the smaller market segments, cut
promo expenditure, reduce the price
- Leave the industry if exit barriers are low
- Sell it to another firm – sentiments ?

31. STP – Segmenting, Targeting and Positioning
Segment – a large identifiable group within a market –
consumers are assumed to be having quite similar need
and wants in a segment
Niche – more narrowly defined group – a small market
whose needs are not being served
Patterns of market segmentation
Homogeneous preferences Diffused preferences
Clustered preferences
Bases of Segmentation
 Geographic segmentation – nation, state, region, cities
 Demographic segmentation – age, family size, FLC,
gender, income, occupation, education, religion, social
class – DINK, DINT, SOHO, OOH, MICE…

32. Market Targeting
Evaluating market segments – overall attractiveness of the
segment Vs Co’s objectives and resources
Selecting the market segments – which & how many
Single segment concentration P2M1
Selective specialization P1M3, P2M1, P3M2
Product specialization P2M1, P2M2, P2M3
Market specialization P1M1, P2M1, P3M1
Full market coverage
Differentiating market offering from competitors
Product differentiation
Features, Performance, Conformance, Durability, Reliability,
Reparability, Style and Design

33. Services differentiation
Ordering ease, delivery, installation, customer training, repairs &
maintenance, miscellaneous services
Personnel differentiation
Competence, courtesy, credibility, reliability, responsiveness,
communication
Channel differentiation
Coverage, expertise and performance
Image differentiation – company/brand image
Positioning
should be important to sufficient no. of buyers, distinctive,
superior, communicable & visible, preemptive, affordable and
profitable
ad line, tag line, punch line, projection of the brand/product
Perceptual Mapping in positioning

34. BOSTON CONSULTING GROUP (BCG)
 Matrix is developed by Bruce Henderson of the
Boston Consulting Group in the early 1970’s
 According to this technique, business or products
are classified as low or high performance
depending upon their market growth rate & relative
market share.

35. THE BCG GROWTH-SHARE MATRIX

37. It is portfolio planning model which is based on the
observation that company’s business unit can be
classified in to four categories .
Question Marks
Stars
Cash cows
Dogs
It is based on the combination of market growth &
market share relative to the next based
competitor.

39. (
QUESTION MARKS/PROBLEM CHILDREN
HIGH GROWTH, LOW MARKET SHARE)
 Most business start of as question marks
 They will absorb great amount of cash if the market
share remains unchanged (low)
 Question marks have potential to become star &
evenly cash cow but can also become dog.
 Investment should be high for question marks.

40. STARS
(HIGH GROWTH, HIGH MARKET SHARE)
 Stars are leader in business
 They also require heavy investment to maintain it’s
large market share.
 It leads to large amount of cash consumption &
cash generation.
 Attempts should be made to hold the market share
otherwise the star will became a cash cow.

41. CASH COWS
( LOW GROWTH, HIGH MARKET SHARE)
 They are foundation of the company & often the
stars of yesterday.
 They generate more cash than required
 They generate more cash than required.
 They extract the profits by investing as little cash as
possible
 They are located in an industry that is mature not
growing or declining

42. DOGS
(LOW GROWTH, LOW MARKET SHARE)
 Dogs are the cash traps
 Dogs do not have potential to bring
 High cost – Low quality
 Business is situated at a declining stage

43. WHY BCG MATRIX
To asses
Profile of product /business
Cash demands of products
The development cycle of product
Resource allocation & divestment
decisions

44. MAIN STEPS OF BCG MATRIX
 Identifying & dividing a company into SBU
Assessing & comparing the prospects of each SBU
according to two criteria
1) SBU’s relative market share
2) Growth rate of SBU’s industry
Classifying the SBU’s on the basis of BCG matrix
Developing strategic objective for each SBU

45. PRICING
 Selecting the pricing objective
Survival – over capacity, competition, changing consumer
wants Max. current profit
Max. current revenue
Max. sales growth – penetration pricing
Max. market reach
Product-quality relationship
 Determining demand
Statistical analysis on the past data
Conducting price experiments (controlled environment)
Consumer survey - reaction to different price level

46. Price elasticity of demand – elastic, inelastic
Demand is less elastic if
- there r few or no substitutes/competitors
- buyers don’t notice the higher price
- buyers are slow to change buying habits
- buyers think higher prices are justified
 Estimating costs
 Analysing competitors’ costs, price and offers
 Selecting pricing methods
Mark-up pricing – Cost plus strategy
Target return pricing – Fixed ROI
Perceived value pricing – through MR
Value pricing - VFM

47. Going rate pricing – based on competitors’ price
Penetration pricing
Skimming pricing
 Selecting the final price
Influence of other mktg mix elements on price
Impact of price on stakeholders like employees,
distributors/dealers, suppliers, Govt. regulation...
 Adapting the price
Geographical pricing-barter, buyback arrangement
Price discounts and allowances – cash, quantity, trade
discount, seasonal discount, exchange...
Promotional pricing-cash rebate, low interest fin, longer
payment terms, psychological discounting..
Discriminatory pricing – railways, STD...

48. MARKETING CHANNELS – trade/distribution channel
Intermediaries/channel members
Producers lack financial resources to market directly
Product nature demands intermediaries – FMCGs
Rate of return in retailing is low
Zero level channel
Door to door sales – Eureka Forbes, Oriflame...
Home parties – Tupperware
Online – E commerce
Telemarketing ~ today it can be seen as mobile ads
Teleshopping Network - TSN
Manufacturer owned retail outlets – Bata, Raymond
One level channel – ManufacturerRetailerCustomer

49. Two level channel – MfrWholesalersRetailersEU
Multilevel channel – MfrWholesalersDistributors
DealersSub dealersRetailersConsumers
Functions of the channel members
Transfer of ownership thru selling
Transfer of possession thru transportation
Order processing, Inventory carrying
Storage, sorting, negotiation and promotion
Wholesalers
 Merchant wholesalers – take title of the goods
 Manufacturer’s agents – on behalf of mfrs
visit : tradeindia.com,
indiamart.com
Retailers – Department stores, supermarkets, hypermalls

50. Criteria for selecting the channel members
 Market – size and location
Buyers concentration – scattered/dense
 Product – Nature – perishability
Value of the product – high unit cost
Technicality
Substitutability – loyalty – traders’ push
Customer service
Availability
 Company’s characteristics – size, financial capability
 Competitive characteristics
 Environmental characteristics–boost/decline in economy

51.  Product differentiation – dual distribution
Mfrs directly sell to outlets - HUL to Big Bazaar
Thru wholesalers to reach small markets
 Geographic differentiation
Densely populated – Direct Marketing
Less populated – wholesalers/retailers
Establishing objectives for intermediaries
Distribution objectives Vs Overall objectives
with other M.Mix of the firm
 Location of selling space – where & how much space
 Investment in Inventory – capacity
 Use of personal selling

52. Providing motivation to intermediaries
 Co-operative approach
Promotional assistance
Training of intermediaries’ salespersons
Free display materials
Part payment for store improvement
Commission on extra sales
 Partnership approach
 Through the use of power – reward, coercion, legitimate and
expertise leadership

53. Channel Conflict may occur between the
Manufacturer and the channel member
Channel members
- Carrying competitors’ products
- Encroaching another member’s territory
- Not adhering to the price laid down by the firm
Case : Maruti’s stringent stand on its dealers,
Visi-coolers by soft drink manufacturers
Control Tools
 Contract – agreement enforceable by law
Elements of contract
Products handled
Classes or types of customers

54. Geog Territory to be covered
Inventory – buy back arrangements
Installation, repairs, replacements, AMC, guarantee,
warranty…
Prices and margins
Advt & SP obligations – local ads, interiors...
Sales quota
Terms – duration of contract, terms of renewal /
cancellation
Payment – terms and conditions
 Power
Coercive power – rewards withheld, punishment
Reward power
Legitimate power, Expert power

55. Manufacturer also derives his power from
Product specialization - demand > supply
Size – captive outlets
Brand image/Corporate image
Horizontal Marketing system
Two or more unrelated companies put together resources to
exploit an emerging mktg opportunity
Multichannel marketing system – 2 or more channels
Physical Distribution
Physical handling and movement of products through and
among the channel members
Actual movement and storage of goods

56. Elements of physical distribution
Transportation, Inventory maintenance, order processing,
acquisition, protective packaging, warehousing, materials
handling, info maintenance
Warehousing
How many?
Location of warehouse?
Ownership (Private/public)
Fewer no. of warehouses ?
Cost – Service trade off
Factors affecting warehouse choice
Product type, transportation cost, markets, rent, labour
supply, taxes, geography and competition

57. Elements of total cost in physical distribution system
 Transportation cost – labour, fuel, tax
 Inventory carrying cost – Insurance, pilferage, deterioration
loss
 Fixed warehouse cost – land, building, light, heat,
maintenance, admin, materials handling equipments..
 Material handling cost – picking, packing, (un)loading
 Cost of information – order processing, data storage and
retrieval, forecasting and production planning
Transportation – Road/Rail/Air/Sea – Cost-Benefit

58. Packaging – Self study topic
Opportunity for innovation
Blister pack, pillow pack (Halls), tetra pack, combi pack
(Prestige), sachet/pouch, brick pack (Dhara), spout pack
(Surf Excel Power), nitrogenous pack (Lays), bionic man
pack (Boost), bubble pack (Clinic Plus), peek-a-boo
plastic pack (Allenz Polo), summer & winter pack
(Parachute), flow wrap pack (Aim), MTR’s idli, ...
Labeling – Statutory regulations
MRP, Mfrg/Exp date, Ingredients
(Veg/Non-veg) with colour code – red & green
Cigarettes – warning on the package
Requirements from the retailers - barcode,
RFID
Dictum for the soft drink manufacturers - caffeine

59. Marketing Management
New Product Development

60. NEW PRODUCT DEVELOPMENT
 New to the world products
 New product lines – to a company
 Additions to existing product lines(flavour, pack
size)
 Improvements/Revisions of existing products
 Repositioning – targeting new markets/segments
 Cost reductions – similar performance with lower
cost and lesser frills(optional)
Incremental Innovation Vs Disruptive Technology

61. Challenges in NPD
 Shortage of ideas – Steel, Commodities.. TATA,
Saint Gobain… in branding commodities
 Cost of Development
 Capital shortage
 Shorter development time
 Shorter PLC
 Maximizing the reach of products
 Identifying and addressing consumer dynamics
 Managing customization

62. Managing NPD - Steps
 Idea generation
customers, scientists, competitors, employees, channel
members and top management
 Idea screening
Drop error – dropping good ideas
Go error – Permitting poor ideas
 Concept development and testing
Product idea – possible prod the Co. might offer to mkt
Product concept – elaborated version of the idea
Concept development – Product positioning, Brand
positioning
Concept testing – testing product concepts with the
appropriate target consumers

63. Testing on the following parameters
Communicability & believability
Need level
Gap level – Need-Gap score
Perceived value
Purchase intention
User targets, purchase occasion, purchasing frequency
 Market strategy development
Target mkt size, structure, behavior, positioning, sales, mkt
share and profit goals in the first few years
Planned price, distribution strategy and mktg budget
Long run sales and profit goals, mktg mix strategy

64.  Business Analysis – Estimating business attractiveness
Estimating the total sales
Estimating costs and profits – breakeven analysis
 Product Development
Moving to R&D, prototype testing (Alpha & Beta)
 Market testing
Test marketing with different marketing mixes in different
markets/segments
 Commercialization
when, where, to whom & how

65. The consumer adoption process
Individual’s decision to become a regular user
Innovation Diffusion process
The spread of new idea from its source of invention
or creation to its ultimate users or adopters – focuses
on the mental process thru which an individual
passes
Stages
 Awareness – aware of innovation but lacks info.
 Interest – stimulated to seek info about the
innovation
 Evaluation – considers whether to try
 Trial – tries the innovation
 Adoption – decides to make regular use

66. Factors influencing adoption process
 Readiness to try new products – 5 adopter groups
Innovators – venturesome, trying out new ideas
Early adopters – opinion leaders, adopt new ideas
early but carefully
Early majority – deliberate, adopt new ideas before the
average person
Late majority – skeptical, adopt only after majority
have tried
Laggards – tradition bound, suspicious
 Personal/societal Influence

67. Adopter Categories
Innovators
2.5%
Early
Adopters
13.5%
Laggards
16%
Percentage of Adopters by Category Sequence
Early
Majority
34%
Late
Majority
34%
“Diffusion of Innovation” by Rogers

68. Why products fail ??
 Marketers assess the marketing climate inadequately.
 The wrong group was targeted.
 A weak positioning strategy was used.
 A less-than-optimal "configuration" of attributes and
benefits was selected.
 A questionable pricing strategy was implemented.
 The ad campaign generated an insufficient level of
awareness.
 Cannibalization depressed corporate profits.
 Over-optimism about the marketing plan led to a unrealistic
forecast.
 Poor implementation of the marketing plan in the real world.