The document provides an overview of key concepts in marketing management. It discusses the value of marketing in building demand and customer loyalty. It defines marketing and explores the scope of marketing activities. It also examines concepts like segmentation, targeting, positioning, the marketing mix, and the customer journey from acquisition to retention. The document highlights the importance of understanding customer perceived value and satisfaction in achieving business goals. It introduces frameworks for strategic planning, customer relationship management, and developing an effective marketing plan.

1. MARKETING MANAGEMENT 1
SESSION 1 AND 2

2. What do you think?
What do people think of marketing?

3. The Value of Marketing
• Financial success often depends on marketing ability
• Successful marketing builds demand for products and services, which, in turn,
creates jobs
• Marketing builds strong brands and a loyal customer base, intangible assets that
contribute heavily to the value of a firm

4. The Scope of Marketing
• Marketing is about identifying and meeting human and social needs
• AMA’s formal definition: Marketing is the activity, set of institutions, and
processes for creating, communicating, delivering, and exchanging offerings
that have value for customers, clients, partners, and society at large.
“…..marketing is both a philosophy centered on serving customers and a set of
activities and skills to solve economic and social problems. Almost everyone is
involved in marketing something to someone, whether it is a young man
courting a young woman, a CEO trying to get a contract or a junior worker
trying to get a promotion.” ( Excerpt from “ Philip Kotler : Some of my
adventures in marketing”)

5. Marketing Management
• The art and science of choosing target markets and getting, keeping, and growing
customers through creating, delivering, and communicating superior customer
value

6. What is Marketed?
• Goods
• Services
• Events
• Experiences
• Persons
• Places
• Properties
• Organizations
• Information
• Ideas

7. Who Markets?
• A marketer is someone who seeks a response—attention, a purchase, a vote, a
donation—from another party, called the prospect
Demand creation or demand stimulation??

8. 8 Demand States
• Negative
• Nonexistent
• Latent
• Declining
• Irregular
• Unwholesome
• Full
• Overfull

9. A Modern Exchange Economy

10. A Simple Marketing System

11. Key Customer Markets
• Consumer markets
• Business markets
• Global markets
• Nonprofit & governmental markets

12. Core Marketing Concepts
• Needs: the basic human requirements such as for air, food, water, clothing, and
shelter
• Wants: specific objects that might satisfy the need
• Demands: wants for specific products backed by an ability to pay

13. Types of Needs
• What customers explicitly say they want
• expensive Car
Stated Needs
• What customers actually want
• Car with low operating cost and initial price
and more mileage
Real Needs
• What customers do not mention but is
implicit
• Good after sales services
Unstated Needs
• When customers get more than
expectations
• Some gifts with the car
Delight Needs
• Needs that customers feel reluctant to
express
• Customers want their friends to see them
as a savvy buyers (want car for a status
symbol)
Secret Needs

14. • Segmentation: divide market into segments (groups of customers)
• Need identification
• Decide bases for segmentation
• Determine characteristics of each segment (persona development)
• Targeting: decide on which segment(s) to focus marketing efforts based
on potential and attractiveness of the segments
• Select one or more segments
• Positioning: create a positing which will appeal target segment(s)
• Value proposition and marketing mix
Core Marketing Concepts

15. Basis of Segmentation
• Geographic : region(continent, country, city), size of
region, population density, climate
• Demographic : age, gender, family size, income,
occupation, education, religion, race, nationality
• Psychographic : lifestyle, personality, activities,
interests, opinions, values, attitudes
• Behavioral : benefits sought, user status (daily use,
occasional etc.), usage rate, buyers status and
loyalty (nonuser, potential user, first time user,
regular user)
Core Marketing Concepts

16. Marketing Mix (4Ps for Product and 7Ps for Banking Services )
• Product : quality, design, packaging, services, features,
variants, warranties etc.
• Price : pricing strategy, price list, discounts, credit, payment
methods etc.
• Place : trade/distribution channels, transportation, logistics,
e-commerce etc.
• Promotion : advertising, marketing communications, sales
promotion (given by sales people), public relations (PR),
branding, digital marketing etc.
• (3 extra Ps for services) People -
• Physical evidence -
• Processes -
Core Marketing Concepts

17. Positioning (Product or Brand)
• Product differentiation
• Cutting through the clutter
• Perceptions of the prospects
• Mind share
Positioning Statement
• A positioning statement is an expression of how a given product, service or
brand fills a particular consumer need in a way that its competitors don't.
• Description of the target market and how you want the market to perceive your
offering.
Core Marketing Concepts

18. • Value proposition: a set of benefits that satisfy those needs
• The value or benefit that you promise to deliver to the customer
• Value for a consumer = benefits sought/ cost
• Offerings: a combination of products, services, information, and experiences
• Brands: an offering from a known source
Core Marketing Concepts

19. • Marketing channels
COMMUNICATION (messages)
Newspapers, magazines, radio, TV, mail, poster,
social media etc.
DISTRIBUTION (sales)
Distributors, retailers, wholesalers, agents etc.
SERVICE (transactions)
Warehouse, transportation, banks, insurance etc.
Core Marketing Concepts

20. • Paid media: TV, magazine and display ads, paid search, and
sponsorships
• Owned media: a company or brand brochure, web site,
blog, Facebook page, or twitter account
• Earned media: word of mouth, buzz, or viral marketing
Core Marketing Concepts

21. • Impressions: occur when consumers view a
communication
• Engagement: the extent of a customer’s
attention and active involvement with a
communication
Core Marketing Concepts

22. • Value: a combination of quality, service, and price (qsp: the
customer value triad)
• Satisfaction: a person’s judgment of a product’s perceived
performance in relationship to expectations
Core Marketing Concepts

23. • Supply chain: a channel stretching from raw materials to components to finished
products carried to final buyers
RM , WIP, FG (consumed)
Core Marketing Concepts

24. • Competition: all the actual and potential rival offerings and substitutes a buyer
might consider
Core Marketing Concepts

25. • Marketing environment
Core Marketing Concepts

26. The New Marketing Realities
• Technology
• Globalization
• Social responsibility
New consumer capabilities
New company capabilities
Impact on marketing

27. BUILDING CUSTOMER VALUE, SATISFACTION AND LOYALTY

28. CUSTOMER-ORIENTATION AND FIRM

29. CUSTOMER PERCEIVED VALUE
Customer perceived value is the difference between the prospective
customer’s evaluation of all the benefits and all the costs of an offering
when compared with alternatives.
How customers view a product?
What value it assigns to it?
Value = Benefits – Costs

31. DETERMINANTS OF
CUSTOMER PERCEIVED VALUE
Total customer benefit
Product benefit
Services benefit
Personnel benefit
Image benefit
Total customer cost
Monetary cost
Time cost
Energy cost
Psychological cost

32. Types or Sources of Customer Value

33. APPLYING VALUE CONCEPTS
A firm can improve its offers in three ways:
1. By improving the economic, functional, and psychological benefits of its
product, services, people, and/or image.
2. By reducing the buyer’s nonmonetary costs by lesser time, energy,
and psychological investment.
3. By reducing the product’s monetary cost to the buyer.

34. STEPS IN A
CUSTOMER VALUE ANALYSIS
• IDENTIFY MAJOR ATTRIBUTES AND BENEFITS THAT CUSTOMERS VALUE
• ASSESS THE QUALITATIVE IMPORTANCE OF DIFFERENT ATTRIBUTES AND
BENEFITS
• ASSESS THE COMPANY’S AND COMPETITOR’S PERFORMANCES ON THE
DIFFERENT CUSTOMER VALUES AGAINST RATED IMPORTANCE
• EXAMINE RATINGS OF SPECIFIC SEGMENTS
• MONITOR CUSTOMER VALUES OVER TIME

35. HIGH CUSTOMER VALUE
• The Value Proposition - Promise to customer on expected experience
• Value Delivery System – Ensures that promise is kept

36. SATISFACTION
Loyalty, advocacy
Perceived performance Vs Expectation
This concept integrates all stakeholders
• PERIODIC SURVEYS
• CUSTOMER LOSS RATE
• MONITOR COMPETITIVE PERFORMANCE
ONLY 5% OF TOTAL 25%DISSATISFIED CUSTOMERS COMPLAIN
54% TO 75% CUSTOMERS WILL REBUY IF COMPLAINTS ARE RESOLVED
DISSATISFIED CUSTOMERS GRIPES TO 11 PEOPLE.

37. CUSTOMERS AND VALUE TO FIRMS

38. Customer Profitability
Customer Equity(Sum
total of all value)
Lifetime Value

39. CUSTOMER-PRODUCT PROFITABILITY ANALYSIS

40. CLV
• What the customer is worth
• Discounted future stream of profits
• Enhances shareholder value
Term Value
Net Profit Margin(m) 100000
Maintenance Expenses(a) 15000
Adjusted Profit Margin(m-a) 85000
Discount Rate 12%
Retention rate ® 80%
Margin Multiple=r/(1+d-r) 2.5
CLV = (m-a)X r/(1+d-r) 212500
Increase
CLV??

41. WHAT IS
CUSTOMER RELATIONSHIP MANAGEMENT?
CRM IS THE PROCESS OF CAREFULLY MANAGING DETAILED INFORMATION
ABOUT INDIVIDUAL CUSTOMERS AND ALL CUSTOMER TOUCH POINTS
TO MAXIMIZE CUSTOMER LOYALTY.

42. FRAMEWORK FOR CRM
• IDENTIFY PROSPECTS AND CUSTOMERS
• DIFFERENTIATE CUSTOMERS BY NEEDS AND VALUE TO COMPANY
• INTERACT TO IMPROVE KNOWLEDGE
• CUSTOMIZE FOR EACH CUSTOMER
• SALES FUNNEL AND MARKETING FUNNEL

43. ATTRACTING AND
RETAINING CUSTOMERS
• REDUCE THE RATE OF DEFECTION
• INCREASE LONGEVITY
• ENHANCE SHARE OF WALLET
• TERMINATE LOW-PROFIT CUSTOMERS
• FOCUS MORE EFFORT ON HIGH-PROFIT CUSTOMERS

44. FRAMEWORK FOR CRM
• IDENTIFY PROSPECTS AND CUSTOMERS
• DIFFERENTIATE CUSTOMERS BY NEEDS AND VALUE TO COMPANY
• INTERACT TO IMPROVE KNOWLEDGE
• CUSTOMIZE FOR EACH CUSTOMER
• Sales funnel – prospect to customer to loyalist to advocacy

45. ATTRACTING AND
RETAINING CUSTOMERS
• REDUCE THE RATE OF DEFECTION
• INCREASE LONGEVITY
• ENHANCE SHARE OF WALLET
• TERMINATE LOW-PROFIT CUSTOMERS
• FOCUS MORE EFFORT ON HIGH-PROFIT CUSTOMERS

46. Holistic Marketing Dimensions

47. INNOVATION
https://www.youtube.com/watch?v=tV6gygNPetU

48. MODERN MARKETING MANAGEMENT
PEOPLE
PROCESSES
PROGRAMS
PERFORMANCE

49. MARKETING
MANAGEMENT TASKS
• Developing market strategies and plans
• Capturing marketing insights
• Connecting with customers
• Building strong brands

50. MARKETING
MANAGEMENT TASKS
• Creating value
• Communicating value
• Delivering value
Creating successful long-term growth

51. Session 3

52. Customer Relationship
Management
CRM is the process of carefully managing detailed
information about individual customers and all customer
touch points to maximize customer loyalty.

53. Framework for
CRM
 Identify prospects and customers
 Differentiate customers by needs and value to
company
 Interact to improve knowledge
 Customize for each customer
Managing the Marketing Funnel

56. Attracting and
Retaining
Customers
 Reduce the rate of defection
 Increase longevity
 Enhance share of wallet
 Terminate low-profit customers
 Focus more effort on high-profit
customers

57. HOLISTIC
MARKETING
 Holistic marketing refers to a marketing
strategy that considers the whole of a
business and all the different marketing
channels as a system. Under this strategy,
a business with different departments
comes together in synergy in pursuit of a
conscious mission, great customer
experience, and a positive brand image.

58. Holistic Marketing Dimensions

59. MARKETING
MANAGEMENT
TASKS
 Developing market strategies and
plans
 Capturing marketing insights
 Connecting with customers
 Building strong brands

60. The Micro and Macro Environment

62. MACRO ENVIRONMENT FORCES AND INTERACTIONS
Fad -Short lived, unpredictable without social,
political or economic significance
Trend- Reveals the shape of future- Online
buying, online reading…
Megatrend -slow to form, once in place
influences for longer period

63. Political Environment

64. Economic Environment
Consumer Psychology-income, prices,
savings, credits, expectations from future
Income Distribution – very low incomes,
mostly low incomes, very low-very high income, low-
medium-high income and mostly medium income

65. Economic Environment

66. Socio-cultural Environment
 Views of themselves
 Views of others
 Views of organizations
 Views of society
 Views of nature
 Views of the universe

68. Other Cultural Factors in Marketing
Core beliefs: hard to change ( Marriage )
Secondary beliefs: easier to change ( Environmental concerns)
Existence of subcultures ( Teens )

69. Technological Environment

•
Can lead to new product development
• Multiple channels to serve customers
Higher efficiency & effectiveness-Lower costs
 Accelerating change : Can render old products obsolete-
walkmanmp3ipod
 Impact of e-commerce
 Impact of Social media
 Innovation ( Sustainable solutions )

70. The Political-Legal Environment
Business Legislation -CSR Law
Growth of Special Interest Groups – Consumer
Forums
Government Agencies –RBI,SEBI,IT,Environment
etc.

71. Session 4

72. Marketing Myopia
https://hbr.org/video/3590615227001/the-explainer-marketing-myopia

73. Product Orientation vs.
Market Orientation
 Product orientation is a marketing approach whereby a company focuses on a
product hence maximum effort is put on quality and optimum performance of a
product. On the other hand, market orientation is a business culture that focuses
on the satisfaction of the customer.

74. Ex. Wine Company

75. Strategic planning and Marketing Plan
 Strategic planning - Strategic planning is an organization's
process of defining its strategy, or direction, and making decisions
on allocating its resources to pursue this strategy. It may also
extend to control mechanisms for guiding the implementation of
the strategy.
 A strategic plan is a document used to communicate with the
organization the organizations goals, the actions needed to
achieve those goals

77. Strategic planning and Marketing Plan
 A marketing plan is the advertising strategy that a business will
implement to sell its product or service.
 A marketing plan is a report that outlines your marketing
strategy for the coming year, quarter or month.
 A marketing plan is a document that lays out the marketing
efforts of a business in an upcoming period, which is usually a
year.

78. Phases of Value Creation and Delivery
Assessing market opportunities and customer
value
Choosing the value
Designing value
Delivering value
Communicating value
Growing and sustaining value

79. Phases of Value Creation and Delivery

80. Value Chain

81. Core Business Processes
 Core business processes include:
 Market-sensing process
 New-offering realization process
 Customer acquisition process
 Customer relationship management process
 Fulfillment management process
 Firms also need to look into the value chains of their suppliers,
distributors, and customers.
Coordination
Cross
functional
Teams
-Tata Nano?

82. Core Competencies
 A source of competitive advantage
 Applications in a wide variety of markets
 Difficult to imitate
Market sensing,
customer linking and
channel bonding!
Vigilant Firms
Walmart, IKEA,
Apple, Mother Dairy

83. Maximizing Core Competencies
 (Re)define the business concept
 (Re)shaping the business scope
 (Re)positioning the company’s brand identity
(Titan, Tanisq)
Business of News
or Advertising or
Marketing
Solutions

84. Value Exploration-Key Questions
What value opportunities are available?
How can we create new value offerings
efficiently?
How can we deliver the new offerings
efficiently?

85. Strategic Planning

86. The Strategic Planning, Implementation, and
Control Processes
Business as investment portfolio
Assessing market and company’s position
Establishing a strategy

87. Master Marketers

88. Marketing Plan
A marketing plan is the
central instrument for
directing and coordinating
the marketing effort.
It operates at a strategic and tactical level.

89. Levels of a Marketing Plan
 Strategic
 Target marketing decisions
 Value proposition
 Analysis of marketing
opportunities
 Tactical
 Product features
 Promotion
 Merchandising
 Pricing
 Sales channels
 Service

90. Corporate Headquarters’ Planning Activities
 Define the corporate mission
 Establish strategic business units (SBUs)
 Assign resources to each SBU
 Assess growth opportunities

91. Good Mission Statements
 Focus on a limited number of goals
 Stress major policies and values
 Define major competitive spheres
 Take a long-term view
 Short, memorable, meaningful

92. Characteristics of SBUs
 It is a single business or collection of related businesses ( LCV, HCV )
 It has its own set of competitors
 It has a leader responsible for strategic planning and profitability

93. SBU Evaluation- BCG Matrix
FMCG-others
Infotech
Shareholder value analysis
Market value of the firm with or without SBU
Valuation based on global expansion, re-positioning,
re-targeting and strategic outsourcing
Hotels,Agri Busines
Cigarettes

94. Opportunity Assessment :The Strategic Planning
Gap
Product – Market Expansion Grid

95. The Business Unit Strategic Planning Process

96. Market Opportunity Analysis (MOA)
 Can the benefits involved in the opportunity be articulated
convincingly to a defined target market?
 Can the target market be located and reached with cost-effective
media and trade channels?
 Does the company possess or have access to the critical capabilities
and resources needed to deliver the customer benefits?
 Can the company deliver the benefits better than any actual or
potential competitors?
 Will the financial rate of return meet or exceed the company’s
required threshold for investment?
Jinri Toutiaio ( Daily Headlines)
Aggregation from4000 websites
80 million users
900million revenue
11 b valuation

98. Goal Formulation
 Unit’s objectives must be hierarchical
 Objectives should be quantitative
 Goals should be realistic
 Objectives must be consistent
Topline growth or bottom-line growth?
Market share or Reach?

99. Porter’s Generic Strategies
Overall cost leadership –
Price/Distribution
Differentiation – Superior
performance/Customer Benefit
Focus - Niche

100. Categories of Marketing Alliances
 Product or service alliance ( The Star Alliance)
 Promotional alliance ( NOVA IVF/ TOI Fertile
conversations Campaign)
 Logistics alliances ( Allied Distributors )
 Pricing collaborations ( Airlines/Hotel + Car rental )
Partnership Relations Management

101. Program Formulation and Implementation McKinsey’s
Elements of Success
Strategy
Structure
Style Systems
Shared values
Staff
Skills
Feedback
And Control
Doing right
things the
right way!
HMT’s inertia

102. Marketing Plan Contents
 Executive summary
 Table of contents
 Situation analysis
 Marketing strategy
 Financial projections
 Implementation controls

103. Evaluating a Marketing Plan
 Is the plan simple?
 Is the plan specific?
 Is the plan realistic?
 Is the plan complete?

104. PRESENTATION 4 OF 24 / 104
What Is Insight? Holistic Marketing means understanding customers
Source: Impact Planning Group, by permission

105. PRESENTATION 4 OF 24 / 105
Consumer Behavior
Consumer behavior is the study of how
individuals, groups, and organizations select,
buy, use, and dispose of goods, services,
ideas, or experiences to satisfy their needs
and wants.

106. PRESENTATION 4 OF 24 / 106
Customer Insight
Session Roadmap
• Who are the customers?
• What do customers need and want?
• How do customers buy?
• Influences on customer purchase decisions

107. PRESENTATION 4 OF 24 / 107
Who Are the Customers?
A customer is any person or organization, in the channel of distribution
or decision (excluding competitors), whose actions can affect the
purchase of the firm’s products and services.

108. PRESENTATION 4 OF 24 / 108
Who Are the Customers?
• Macro versus micro
• Direct versus indirect
• Roles in the purchase process
• Evolution: current versus future

109. PRESENTATION 4 OF 24 / 109
Who Are the Customers?
Macro versus Micro
Organization
Purchasing Committee
Individuals
Macro level
Micro level
Decision-making
unit (DMU)

110. PRESENTATION 4 OF 24 / 110
Who Are the Customers?
Direct versus Indirect
Direct Customer
Indirect Customer 1
Indirect Customer 2
Influencing Organizations
Supplier Firm
Complementary
Supplier

111. PRESENTATION 4 OF 24 / 111
Who Are the Customers?
Roles in the Purchase Process
Customer
Roles
Specifier
Initiator
Coach
Informatio
n Provider
Gatekeeper
User
Buyer
Decision-
Maker
Influencer
Major Minor
Champion/
Sponsor
Spoiler

112. PRESENTATION 4 OF 24 / 112
Who Are the Customers?
Purchase Decision Roles: Illustration – B2B
Roles Purchase Decision: Multinational firm seeks supplier for marketing training programs
Initiator Head of HR
Specifier Junior HR personnel who develop the program
Influencer
Champion/sponsor
Spoiler
Senior line executives
Senior executives committed to Columbia Business School
Two senior line executives with MBAs from Harvard and Wharton
Decision-maker CEO
Buyer Purchasing officer
User Middle managers
Gatekeeper Senior HR personnel
Information provider Bricker’s – good source on executive education
Coach Consultant to firm; previously Columbia faculty member

113. PRESENTATION 4 OF 24 / 113
Who Are the Customers?
Purchase Decision Roles: Illustration – B2C
Roles Purchase Decision: Family is deciding whether to take a cruise for the family vacation
Initiator Family physician – advises family to take vacation for mother’s health
Specifier Grandmother (has basic requirements that must be met)
Influencer
Champion/sponsor
Spoiler
Children
Second cousin (works for cruise line)
Daughter’s boyfriend – has summer job at a Caribbean resort
Decision-maker Mother
Buyer Father
User Mother, father, children, grandparents
Gatekeeper Live-in housekeeper
Information provider Travel agent
Coach Neighbor – takes three cruises annually

114. PRESENTATION 4 OF 24 / 114
Customer Insight
Session Roadmap
• Who are the customers?
• What do customers need and want?
• How do customers buy?
• Influences on customer purchase decisions

115. PRESENTATION 4 OF 24 / 115
What Do Customers Need and Want?
• Recognized versus latent
• Hierarchy of needs
• Attributes and features, benefits, values ladder
• Types of value
• Customer value issues
• Customer experiences

116. PRESENTATION 4 OF 24 / 116
Maslow’s Hierarchy of Needs
What Do Customers Need and Want?
Self-Actualization
Self-fulfillment
Ego
Prestige, Success, Self-Respect
Social
Love, Affection, Friendship, Belonging
Safety & Security
Protection, Order, Security
Physiological
Food, Drink, Air, Shelter

117. PRESENTATION 4 OF 24 / 117
Attributes and Features, Benefits, Values Ladder
What Do Customers Need and Want?
Values
Benefits
Attributes and
Features
Why the customer
believes these benefits
are important
What attributes
and features do
for the customer
Key product
characteristics
Influence Power
Increases!

118. PRESENTATION 4 OF 24 / 118
Laddering: Illustration – Electric Drill
What Do Customers Need and Want?
Value
Benefit C
Benefit B
Benefit A
Features
Homeowner is
respected by family
Homeowner
feels competent
Supports do-it-yourself
activity
Makes holes easily
Color, drill speed, bit
hardness, drill bit gauge,
drill weight, etc.

119. PRESENTATION 4 OF 24 / 119
Laddering: Illustration – Nivea Skin Cream
What Do Customers Need and Want?
Value
Benefit C
Benefit B
Benefit A
Features
“I have more self-respect
“I am more confident
socially”
“I feel young and beautiful”
Soft skin
Contains moisturizer

120. PRESENTATION 4 OF 24 / 120
Psychological
Types of Value
Functional Economic

121. PRESENTATION 4 OF 24 / 121
Customer Insight
Session Roadmap
• Who are the customers?
• What do customers need and want?
• How do customers buy?
• Influences on customer purchase decisions

122. PRESENTATION 4 OF 24 / 122
How Do Customers Buy?
• Purchase decision process
• Purchase decision categories

123. PRESENTATION 4 OF 24 / 123
Purchase Decision Process
How Do Customers Buy?
Recognize
Problems
Acquire
Information
Evaluate
Alternatives
Make a Choice
Post-Purchase
Processes

124. PRESENTATION 4 OF 24 / 124
Recognize Problems

125. PRESENTATION 4 OF 24 / 125
Sources of Information
Commercial
Personal
Public Experiential

126. PRESENTATION 4 OF 24 / 126
Acquire Information: Awareness Set Illustration – Soft Drink
How Do Customers Buy?
Awareness Set
Mountain Dew
Coke
Pepsi
Diet Pepsi
Root Beer
Ginger Ale
Diet Ginger Al
Limca
Snapple
Sprite
7-Up
Diet 7-Up
Maaza
Fanta
Thums Up
Frooti
Dr Pepper
Rasna
Apple Fizz
Caffeine-free Coke

127. PRESENTATION 4 OF 24 / 127
Evaluate Alternatives: Consideration Set Illustration – Soft Drink
How Do Customers Buy?
Consideration Set
Coke
Frooti
Sprite
Apple Fizz
Maaza

128. PRESENTATION 4 OF 24 / 128
Figure : Successive Sets in
Decision Making

129. PRESENTATION 4 OF 24 / 129
Table : A Consumer’s Brand Beliefs about Laptop Computers
(Expectancy-value model of attitude formation in decision making)

130. PRESENTATION 4 OF 24 / 130
Make a Choice
• Rational approaches
• linear compensatory
• lexicographic
• Less than fully rational approaches
How Do Customers Buy?

131. PRESENTATION 4 OF 24 / 131
Make a Choice: Linear Compensatory Set Illustration –
London–Mumbai Airline Trip
How Do Customers Buy?
Features/attributes Relative
importance
A
(1–100)
Air India (AI) British Airways (BA) United Airlines (UA)
Belief B
(1–10)
A x B
Belief B
(1–10)
A x B
Belief B
(1–10)
A x B
Frequent-flyer program 30 9 270 2 60 8 240
Price 20 6 120 6 120 6 120
Schedule 20 8 160 5 100 6 120
Service level 20 5 100 7 140 9 180
Upgrade probability 10 2 20 3 30 7 70
Total 100 670 450 730

132. PRESENTATION 4 OF 24 / 132
Make a Choice: Lexicographic Illustration – London–Mumbai
Airline Trip
How Do Customers Buy?
Features/attributes Relative
importance
A
(1–100)
Air India (AI) British Airways (BA) United Airlines (UA)
(1–10) (1–10) (1–10)
Frequent-flyer program 30 9 2 8
Price 20 6 6 6
Schedule 20 8 5 6
Service level 20 5 7 9
Upgrade probability 10 2 3 7
Total 100

133. PRESENTATION 4 OF 24 / 133
Conjunctive heuristic (minimum
acceptable cut-off for each
attribute)

134. PRESENTATION 4 OF 24 / 134
Figure: Steps Between
Alternative Evaluation
and Purchase

135. PRESENTATION 4 OF 24 / 135
Perceived Risk
• Functional
• Physical
• Financial
• Social
• Psychological
• Time

136. PRESENTATION 4 OF 24 / 136
Make a Choice: Illustration of Less Than Fully Rational Behavior
You are in a store about to buy a Rs 600 book. Your friend walks by and says you
can buy the same book two blocks away for Rs 450.
Question: Would you walk two blocks to save Rs 150?
You are in a store about to buy a home-entertainment system for Rs 8,000. Your
friend walks by and says you can buy the same system two blocks away for
Rs7,850.
Question: Would you walk two blocks to save Rs150?
How Do Customers Buy?

137. PRESENTATION 4 OF 24 / 137
How Do Customers Buy?
Make a Choice
You are about to buy a soft drink. You have 2 choices.
small – Rs 20
large – Rs 30
Which will you choose?
You are about to buy a soft drink. You have 3 choices.
small – Rs 20
large – Rs 30
very large – Rs 38
Which will you choose?

138. PRESENTATION 4 OF 24 / 138
How Do Customers Buy?
Post-Purchase Processes
Use
Use experience
Dissonance reduction
Communications with customers/potential customers
Comparison with others
Product and packaging disposal
Repurchase
Important
Post-
Purchase
Issues

139. PRESENTATION 4 OF 24 / 139
Figure: How Customers
Use or Dispose of Products
Source: Jacob Jacoby, et al., “What about Disposition?” Journal of Marketing (July
1977), p. 23. Reprinted with permission from the Journal of Marketing, published by the
American Marketing Association.

140. PRESENTATION 4 OF 24 / 140
Purchase Decision Process: Illustration – DVD Player
How Do Customers Buy?
Decision Process Stage Customer Action and Cognitions
Recognizing problems Sees advertisement: “That looks cool and I don’t have one.”
Acquiring information
Demonstration in store: “What is this thing?” “What does it do?”
“What is the price?” “Where can I get one?”
Evaluating alternatives Examine various options: “Is Sony better than Toshiba and Phillips?”
Making a choice “I am going to buy Sony”
Post-purchase processes “How do I hook this up?” “Where do I get service?”

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How Do Customers Buy?
• Purchase decision process
• Purchase decision categories

142. PRESENTATION 4 OF 24 / 142
Purchase Decision Categories
• Routinized-response behavior – straight rebuy
• established alternatives and criteria, minimal uncertainty
• Limited problem solving – modified rebuy
• novel alternative(s), well-developed criteria, performance unknown
• Extended problem solving – new buy
• novel alternative(s), poorly developed criteria, great uncertainty
How Do Customers Buy?

143. PRESENTATION 4 OF 24 / 143
Purchase Decision Categories: Implications
• DMU varies by type of purchase
• Purchase categories depend on the customer, NOT on the product
• Potential suppliers should consider shifting decision-making from
simple to complex
How Do Customers Buy?

144. PRESENTATION 4 OF 24 / 144
Customer Insight
Session Roadmap
• Who are the customers?
• What do customers need and want?
• How do customers buy?
• Influences on customer purchase decisions

145. PRESENTATION 4 OF 24 / 145
What Influences
Consumer Behavior?
Cultural Factors
Social Factors
Personal Factors

146. PRESENTATION 4 OF 24 / 146
What Is Culture?
Culture is the fundamental determinant
of a person’s wants and behaviors
acquired through socialization processes
with family and other key institutions.

147. PRESENTATION 4 OF 24 / 147
Subcultures
• Nationalities
• Religions
• Racial groups
• Geographic regions

148. PRESENTATION 4 OF 24 / 148
Social Classes
A1
A2
B1
B2
C
D
E1
E2

149. PRESENTATION 4 OF 24 / 149
Social Factors
Reference groups
Family
Social roles
Statuses

150. PRESENTATION 4 OF 24 / 150
Reference Groups
• Membership groups
• Primary groups
• Secondary groups
• Aspirational groups
• Disassociative groups

151. PRESENTATION 4 OF 24 / 151
Family
 Family of orientation: parents and
siblings
 Family of procreation: spouse and
children

152. PRESENTATION 4 OF 24 / 152
Personal Factors
• Age
• Life cycle stage
• Occupation
• Wealth
• Personality
• Values
• Lifestyle
• Self-concept

153. PRESENTATION 4 OF 24 / 153
Age and Stage of Lifecycle

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Occupation and Economic
Circumstances
Marketers try to identify the occupational
groups that have above-average interest in
their products and services. Product and brand
choice are also affected by economic
circumstances—spendable income, savings
and assets, debts, borrowing power, and
attitudes toward spending and saving—to a
great extent.

155. PRESENTATION 4 OF 24 / 155
Personality
Personality refers to a set of distinguishing human
psychological traits that lead to relatively consistent
and enduring responses to environmental stimuli.
Personality can be a useful variable in analyzing
consumer brand choices.

156. PRESENTATION 4 OF 24 / 156
Brand Personality
• Sincerity
• Excitement
• Competence
• Sophistication
• Ruggedness

157. PRESENTATION 4 OF 24 / 157
Lifestyle and Values

158. PRESENTATION 4 OF 24 / 158
Figure : Model of
Consumer Behavior

159. PRESENTATION 4 OF 24 / 159
Motivation
Freud’s
Theory
Behavior
is guided by
subconscious
Motivations (laddering.
Projective techniques)
Maslow’s
Hierarchy
of Needs
Behavior
is driven by
lowest,
unmet need
Herzberg’s
Two-Factor
Theory
Behavior is
guided by
motivating
and hygiene
factors

160. PRESENTATION 4 OF 24 / 160
Perception
• Selective attention
• Selective retention
• Selective distortion
• Subliminal perception

161. PRESENTATION 4 OF 24 / 161
Learning (drives, stimuli, cues, responses, and
reinforcement)
 Drive: A strong internal stimulus impelling action
 Cue: Minor stimuli that determine when, where,
and how a person responds
 Discrimination:. (A countertendency to
generalization) Learning to recognize differences
in sets of similar stimuli and adjusting our
responses accordingly

162. PRESENTATION 4 OF 24 / 162
Emotions

163. PRESENTATION 4 OF 24 / 163
Memory
• Short term memory (limited repository of
information)
• Long term memory (a more permanent,
essentially unlimited repository)
Any type of information can be stored in the memory network,
including verbal, visual, abstract etc
Consumer brand knowledge looked as a node in memory with a
variety of linked associations.

164. PRESENTATION 4 OF 24 / 164
Figure : Hypothetical LIC Mental Map

165. PRESENTATION 4 OF 24 / 165
High/Low-Involvement Decision
Making
• Elaboration Likelihood Model
–Central Route
–Peripheral route

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Influences on Customer Purchase Decisions
Consumer Decisions – B2C
Organizational Decisions – B2B

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Questions
• What is the business market, and how
does it differ from the consumer market?
• What buying situations do organizational
buyers face?
• Who participates in the business-to-
business buying process?

168. PRESENTATION 4 OF 24 / 168
Questions
• How do business buyers make their
decisions?
• How can companies build strong
relationships with business customers?
• How do institutional buyers and
government agencies do their buying?

169. PRESENTATION 4 OF 24 / 169
What Is Organizational Buying?
Organizational buying refers to 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.

170. PRESENTATION 4 OF 24 / 170
Top Marketing Challenges
• Understanding customer needs in new ways;
• Identifying new opportunities for growth;
• Improving value management techniques
• Calculating better marketing performance and
accountability metrics;
• Competing and growing in global markets
• Countering the threat of product and service
commoditization

171. PRESENTATION 4 OF 24 / 171
Characteristics of
Business Markets
• Fewer buyers
• Close supplier-
customer
relationships
• Professional
purchasing
• Many buying
influences
• Multiple sales calls
• Derived demand
• Inelastic demand
• Fluctuating
demand
• Direct purchasing

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Buying Situation
Straight Rebuy
Modified Rebuy
New Task

173. PRESENTATION 4 OF 24 / 173
Systems Buying and Selling

174. PRESENTATION 4 OF 24 / 174
The Buying Center
• Initiators
• Users
• Influencers
• Deciders
• Approvers
• Buyers
• Gatekeepers

175. PRESENTATION 4 OF 24 / 175
Who Are the Customers?
Purchase Decision Roles: Illustration – B2B
Roles Purchase Decision: Multinational firm seeks supplier for marketing training programs
Initiator Head of HR
Specifier Junior HR personnel who develop the program
Influencer
Champion/sponsor
Spoiler
Senior line executives
Senior executives committed to Columbia Business School
Two senior line executives with MBAs from Harvard and Wharton
Decision-maker CEO
Buyer Purchasing officer
User Middle managers
Gatekeeper Senior HR personnel
Information provider Bricker’s – good source on executive education
Coach Consultant to firm; previously Columbia faculty member

176. PRESENTATION 4 OF 24 / 176
Of Concern to Marketers
• Who are the major decision participants?
• What decisions do they influence?
• What is their level of influence?
• What evaluation criteria do they use?

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Stages in the Buying Process:
Buyphases
• Problem recognition
• General need description
• Product specification
• Supplier search (traditional/online)-Supplier’s task-
Lead generation
• Proposal solicitation
• Supplier selection
• Order-routine specification (listing of technical
specifications, expected time of delivery, return
policies, warranties etc)
• Performance review

178. PRESENTATION 4 OF 24 / 178
Table:Buygrid Framework

179. PRESENTATION 4 OF 24 / 179
Supplier search online
Forms of Electronic Marketplaces
• Catalog sites
• Vertical markets
• Pure play auction sites
• Spot markets
• Private exchanges
• Barter markets
• Buying alliances

180. PRESENTATION 4 OF 24 / 180
Table : An Example of
Vendor Analysis

181. PRESENTATION 4 OF 24 / 181
Methods for Researching
Customer Value
• Internal
engineering
assessment
• Field value-in-use
assessment
• Focus-group value
assessment
• Direct survey
questions
• Conjoint analysis
• Benchmarks
• Compositional
approach
• Importance ratings

182. PRESENTATION 4 OF 24 / 182
Categories of Buyer-Seller
Relationships
• Basic buying and
selling
• Bare bones
• Contractual
transaction
• Customer supply
• Cooperative
systems
• Collaborative
• Mutually adaptive
• Customer is king

183. PRESENTATION 4 OF 24 / 183
Institutional Markets
The institutional market consists of schools,
college and university hostels, hospitals and
nursing homes, and other institutions that
provide goods and services to people in their
care. Many of these organizations are
characterized by low budgets and captive
clienteles.

184. Session 8 and 9

185. Forecasting and Demand Measurement

186.  Potential market(Interest in the market offering)
 Available market( interest, income and access to an offer)
 Target market ( Part of the available market )
 Penetrated market ( Set of consumers for a company’s product )
Market Break Down

187. A Vocabulary for Demand Measurement
Market Demand
Market Forecast
Market Potential
Company Demand
Company Sales Forecast
Company Sales Potential

188. Estimating Current Demand: Total Market Potential
Calculations
 Multiply potential number of buyers by average quantity each
purchases times price
 Chain-ratio method

189. Estimating Future Demand
Forecasts : What people say, what people do, what people have done.
 Survey of Buyers’ Intentions – market research
 Composite of Sales Force Opinions
 Expert Opinion – delphi method
 Trend projection (past sales analysis)
 Statistical demand analysis/Econometric – impact of causal factors-
price, marketing expenditure, income levels (past sales analysis)

190. Marketing Research

191. Marketing Research
for Decision Making
Marketing research is the systematic design, collection, analysis, and
reporting of data and findings relevant to a specific marketing
situation facing the company.
The systematic collection and objective recording, classification, analysis
and presentation of data concerning the behavior, needs, attitudes,
opinions, motivation etc. for individuals and organizations within the
context of their economic, social, political and everyday activities.

192. Commissioning MarketingResearch
 In house activity
 Research Agencies – Cost effective
 Mix ( Only Field and Tab)
The Research Brief :
Background summary
Problem definition ( Business decision )
Research questions ( Information needed to take business decision)
Scope of research ( What to cover, deadlines)
Tendering Procedure ( How to pitch )

193. Market Research process

194. Define the Problem
 Define the problem
 State research objectives
Sales at the New store has not met co expectations, possibly
due to emergence of a new competitor
RQ : What are the reasons for sales not meeting co
expectations?
Has customer’s disposable income gone down?
Is the new competitor taking awaycustomers?
Are customers bored of the product range availability in the store?
Are customers moving to online buying?
Was the management expectation based on overestimated market potential?

195. Step 2: Develop the Research Plan
 Data sources – Primary data and secondary data ( Field vs Desk
research)
 Research approach ( Exploratory, Descriptive and Causal Research )
 Research instruments
 Sampling plan
 Contact methods

196. Research Approaches
 Observational and ethnographic ( Bank of America – Women at home
study – Keep the change program )
 Focus group
 Survey
 Experimental research ( Shopping behavior at different levels of
available cash)

197. Research Instruments
 Questionnaires (Dichotomous, Multiple choice, Likert scale, Rating scale,
Intention-to buy scale etc.)
 Qualitative Measures( Word associations, Projective techniques, open
ended questions, Brand personification etc)
 Technological Devices ( Galvanometers, Tachistoscope, Eye Cameras)

198. Sampling Plan
 Sampling unit: Who is to be surveyed?
 Sample size: How many people should be surveyed?
 Sampling procedure: How should the respondents be chosen?

199. Contact Methods
 Mail contacts
 Telephone contacts
 Personal contacts
 Online contacts

200. Ethical Issues in Marketing Research
 Participation – voluntary
 Confidentiality
 Objective and fair – Competition
 Data Collection Methods
 Adequacy of research scope

201. Session 10
Segmentation and Targeting

202. A market segment consists of a group of
customers who share a similar set of needs
and wants.

203. Segmenting Consumer Markets
Geographic
Demographic
Psychographic
Behavioral

204. Geographic Segmentation
Geographic segmentation divides the market into geographical units
such as nations, states, regions, counties, cities, or neighbourhoods.
The company can operate in one or a few areas, or it can operate in
all but pay attention to local variations.

205. Demographic Segmentation
 Age and life cycle
 Life stage
 Gender
 Income
 Generation
 Social-Economic classification

206. Psychographic Segmentation
• Study of psychology and demographics
• Different groups based on psychological/personality traits
• Consumers in the same demographic group can exhibit different
psychographic profiles

207. Psychographic Segmentation
and The VALS Framework(strategicbusinessinsights.com)
Innovators : Successful, ‘take-
charge’ people with high self-
esteem
Thinkers : Mature reflective.
Durability, functionality, value
are important
Achievers : Successful. Prefer
premium products
Experiencers : Seek variety
and excitement
Believers: Conservative
people with concrete beliefs
Strivers : Trendy but resource
constrained
Makers : Down-to-earth, self-
sufficient people
Survivors : Elderly people
loyal to their favorite brands

209. Behavioral Segmentation
Based on attitude towards products, use of products and response to
products
 Needs and Benefits
 Decision Roles
 User and Usage

210. Behavioral Segmentation Based on Needs and
Benefits
• Consumers buying a particular product need not have same
needs and same perceived benefits from the product
• E.g. Shampoo variants satisfy different needs, Soap
variants, Car variants etc.
• Marketers use this approach to identify distinct segments.

211. Behavioral Segmentation: Decision Roles
Initiator
Influencer
Decider
Buyer
User
Communication strategy

212. Behavioral Segmentation: User and Usage
 Occasions ( Festivals, Seasons such as marriage, Vacations etc)
 User Status ( Non users, Potential Users, ex users, existing users etc)
 Usage Rate ( Low, moderate, high : talktime, Internet usage,
restaurant/bars etc)
 Attitude – Enthusiastic, positive, indifferent, negative and hostile
 Buyer-Readiness
 Loyalty Status

213. Example of a Brand Funnel

214. Loyalty Status
 Hard-core – insights on brand strengths
 Split loyals – competitors close to the brand
 Shifting loyals – weakness in the marketing program
 Switchers
Brand loyalty must be considered with other factors such as habit,
indifference, low price, high switching cost, unavailability of other brands.

215. Behavioral Segmentation Breakdown

216. Segmenting for Business Markets
 Demographic- Industry, company size, location
 Operating variable –Technology, User/Non-user, Customer capabilities
 Purchasing approaches – purchase organization, Power structure,
existing relationship, Purchasing policies, Purchasing criteria
 Situational factors- Urgency, specific application, size of order
 Personal characteristics- Buyer seller similarities, Attitude towards risk,
Loyalty

217. Steps in Segmentation Process
 Need-based segmentation – similar needs and benefits
 Segment identification – define the demographics, lifestyle and behavior
 Segment attractiveness – Market growth, competitive intensity, market
access
 Segment profitability- Profits
 Segment positioning- value proposition/product-price positioning
 Market mix strategy – expand positioning strategy to include elements of
marketing mix.

218. Porter’s Five Forces Model

219. Possible Levels of Segmentation

220. Brand Positioning

223. Positioning
• Its an act of designing company’s offering
and image to occupy a distinct place in the
minds of target market.
• A good positioning clarifies the brand
essence by identifying the goals that it
can help consumer’s achieve.( and
in a unique way )
• Good positioning is a result of right
balancing of ‘ what the brand is’ and what
the brand could be’.

224. Customer Focused Value Propositions

225. Positioning Essentials
 Determine a frame of reference ( Identify target market and relevant
competition)
 Optimal points of parity and points of difference – in brand
associations
 Creating Brand essence, also known as a brand mantra - a short
statement that expresses the core of what that brand
represents or the image it seeks to project. A brand essence
statement is often just two to three words.

226. Competitive Frame of Reference
Identifying Competitors
Analyzing Competitors ( SWOT )

227. Customer Ratings of Competitors

228. Defining Associations
Points-of-difference
Attributes or benefits consumers
strongly associate with a brand,
positively evaluate, and believe
they could not find to the same
extent with a competitive brand
Points-of-parity
Associations that are not
necessarily unique to the brand but
may be shared with other brands

229. Point-of-Difference Criteria
Desirable to consumer
Deliverable by company
Differentiating from competitors

230. POPs and PODs : Multiple Frames of Reference
 #1 : Quick serve restaurants : Intended POD is taste, quality,
focus…..intended POPs could be convenience, value and variety.
 # : Local Restaurants : Intended POD’s could be convenience and
service quality and POPs could be price, variety and quality.

231. Choosing POPs and PODs : Perceptual Maps

232. Perceptual Map: Current Perceptions

233. Brand Mantras
• Articulation of heart and soul of the brand in 3-5 words phrases
• Powerful device : it states what the brand is and what it is not
Food Folks and Fun
Authentic Athletic Performance

234. Designing a Brand Mantra
Communicate – category, what is unique.
Simplify- Short, Crisp and Vivid
Inspire – Personally relevant and meaningful

235. Establishing Brand Positioning

236. Brand Positioning Bull’s-Eye

237. Communicating POPs and PODs :Examples of
Negatively Correlated Attributes and Benefits
 Low-price vs. High quality
 Taste vs. Low calories
 Nutritious vs. Good tasting
 Efficacious vs. Mild
 Powerful vs. Safe
 Strong vs. Refined
 Ubiquitous vs. Exclusive
 Varied vs. Simple

238. Means of Differentiation
Employee – Singapore Airlines, Taj
Channel: Direct To Home
Image – Apparel brands, Hotels
Services(Reliability,Resilience, Innovation)

239. Emotional Branding
Strong culture
Communication style
Emotional hook (mystery, sensuality
and intimacy)

240. Market Share (vol. of sales b/w competitors)
Mind Share (consumer awareness & product popularity)
Heart Share (personal emotions instead of logic)