Introduction to Marketing

The substance of marketing

Not merely selling and advertising. The function with the responsibility of serving customers, dealing with intermediaries and external support organizations such as distributors and advertising agencies.

Some decisions which marketers take

To which customers should we sell our product ? What product features should we offer ? What price should we charge ? Should we sell direct or through stores, what type of stores ? How do we communicate to our customers to whom we wish to sell. Should we advertise, what media do we use ?

Participants involved with marketing

Company : a business enterprise; a non profit organization ; a government entity Customer Channel Competitor

The marketing process

Analysis i) a balance of quantitative and qualitative approaches : segmentation. ii) straight forward quantitative analysis : breakbreak-even analysis and profitability projections Plans , strategies and programs Implementation Monitor , review , audit

Marketing is a combination of art and science. Only creativity or cleverness cannot replace careful disciplined analysis, formulation and implementation. Marketing is like invention

Scope of marketing
Creating , promoting and delivering products and services. Influence level, timing and composition of demand to meet Organizational objectives. Types of entities that are marketed: Goods Experiences Persons Properties Information Services Events Places Organizations Ideas

Marketing concepts
Market segments :Division of market by identifying and profiling distinct groups of buyers (demographic, psychographic and behavioral distinctions) Target markets :segments that present the greatest opportunity/suits the resources. Prospects

Marketing Concepts
Three levels of marketing performanceperformanceRESPONSIVE MARKETING- finding and filling MARKETINGneeds (washing m/c, microwave oven; dryer; etc.) etc.) ANTICIPATIVE MARKETING- recognize an MARKETINGemerging or latent need.( bottled drinking water) water) NEEDNEED-SHAPING MARKETING- the boldest level MARKETINGof marketing. introducing a product or service that no one has asked for.(Sony Walkman)

Concepts
Needs :Basic human requirements food, water, clothing, security, shelter, recreation, education , information, transportation, etc. Wants needs become wants when directed towards specific objects. Demands wants for a specific products along with the ability to pay.

Concepts continued
value proposition needs are addressed by putting forth a value proposition i.e a set of benefits that may satisfy the needs. needs. Offering making the value proposition physical by combining products , services, information and experiences . Brand an offering from a known source

Concepts
Exchange the process of obtaining a desired product or service from someone by offering something in return. It is an important value creating process. Relationship marketing as against a one off transaction RM aims at building mutually satisfying long-term relations with longcustomers, suppliers and distributors.

Concepts contd.
Marketing channels Communication channels Inform, educate, create visibility, enhance recall Distribution channels Service channels transportation, banking, insurance, advertising

Market places
Consumer markets-mass consumption marketsgoods and services Business markets-trained and well marketsinformed professional buyers. Global marketscountry and culture markets specific challenges. Governmental and nonprofit markets.

Competition
Brand : companies offering similar products and services to the same customers at similar prices (Safari, Scorpio , Qualis ) Industry : All companies making the same products or class of products (Bajaj Auto , Hero Honda ) Form : companies that try to satisfy the same customer need thru their products.(Air Deccan, Indian Railways, Tata, Bajaj Auto)

The customer focused firm

Customer delight is exceeding customer expectations thru Value marketing. Customers estimate which offer will deliver the most value. Customers are value maximizers. maximizers. Customer Delivered Value Value Chain Value Network

Marketing process
The value delivery sequence: Traditional process sequence make the product then sell the product Value creating process sequence Choose the Value: segmenting , targeting , Value: positioning. (strategic marketing ) Provide the Value: product development ,Pricing , Value: making , distributing. (tactical marketing ) Communicate the Value :sales force, promotion :sales

Effective marketing enables customer acquisition, satisfaction , retention and loyalty. Good marketing drives enterprise growth and profitability

Analysing marketing opportunities

Scanning the environment Planning Demand forecasting and measurement Buyer behavior Competition Segmenting Targeting

Environmental forces
Demographic Economic Natural Technological Political legal Social - cultural

Types of marketing plans

Brand marketing plans Product category marketing plans New product plans Market segment plans Geographical marketing plans Customer plans. (In each case there is a long term and an annual plan.)

Marketing plans contents

Situation analysis: current situation; SWOT; analysis: Issues facing the business; assumptions about the future. Objectives and goals : margins, market share; customer satisfaction. Measureable with time and magnitude dimensions Strategy :target market; core positioning; pricing ; distribution ; communication.

Market opportunity
Market size determination requires the following analysis: Demand analysis Segment analysis Industry analysis : industry structure affects market size and hence market opportunity. Competitor analysis

Marketing Mix -Tools/variables

ProductProductVariety,quality,design, Variety,quality,design, Features,packaging, Features,packaging, Size PromotionPromotion-advertising, Communication, Positioning, visibility Price- price,MRP, Price-list price,MRP, Discounts,credit terms, Taxes

PlacePlacechannels,location, hannels,location, inventory, logistics

Product levels
The first level is the fundamental level and therefore offers the Core benefit that a customer is buying.( a hotel guest is buying rest and sleep; A purchaser of a drill is buying holes ) Second level is the offering of the basic product. ( bed,bathroom,desk,towel ) Third level is the offering of an expected product. ( clean bed , fresh towels,)

Product levels
Fourth level offers an augmented product, that exceeds customer expectations. ( complimentary fruits & chocolates, welcome drink ) Fifth level offers a potential product aimed at enhanced customer satisfaction or delight. (free pick up and drop, free nights stay )

Product major attributes

Physical characteristics Price Quality Packaging Warranty Sellers services Sellers reputation brand

Product meaning
Marketing defines a Product not just with attributes or features because customers dont just buy the attributes but rather the benefits that satisfy their needs. Product includes goods, services, persons, places and ideas. Every brand is a product. Every change in a feature is a new product.

Product classification -consumer

Durable goods-long lasting tangible goods goodsviz. refrigerators, TVs. NonNon-durable goods-tangible goods which goodsare consumed quickly-soap, shampoo quicklyServices not tangible-hotels, beauty tangibleparlours..

Product classification -consumer

These are based on buying habits and not on product characteristics. Convenience goods bought frequently, not too much involvement - soaps Shopping goods - bought infrequently, with some involvement - furniture, appliances Specialty goods - very infrequently bought, usually expensive not easily substituted wedding dress, jewellery

Product classification -business

Raw materials: Cotton, iron ore. Fabricating materials or parts: engine block, zippers. Installations : Blast furnace, large ovens, diesel power plants. Accessory equipments: Fork lft, power tools, vending machines Operating supplies: Cosumables

Buyer behaviour
Marketing stimuli product,price,place,promotion Environment stimuli economic,technical,political,legal Buyer characteristics cultural,social,personal,psychological Buyers decision processprocessrecognise,search,evaluate,buy Buyers decisionsdecisionsproduct,brand,dealer,time,amount

Buyer Roles
Initiator first suggests the idea of buying the product InfluencerInfluencer-whose view or advice influences the decision DeciderDecider- should? What? How ? Where ? PurchaserPurchaser-makes the actual purchase. UserUser-consumes or uses the product.

What is price ?
the amount of money exchanged by a customer for a product or service.

Price
Price reflect the total company philosophy All the three Ps of marketing revolve around the price. Price reflects the product strategy. Price reflects the distribution channel used. Price is often driven by the promotion and advertising plan.

Price
Price determines the companys profits. Lower price could also mean higher profits

Price
Price is the only marketing variable to appear on the revenue side of profit equation: PROFIT = REVENUE COSTS PROFIT =(PRICE x QUANTITY) - PRODUCT COSTS - PROMOTION EXPENSES - DISTRIBUTION EXPENSES - OTHER EXPENSES.

Price : learning objectives

How should price be set for the first time? How should the price be adapted to meet varying circumstances and opportunities ? When should price changes be initiated and how should one respond to competitors price changes ?

Setting the price a 6 step procedure

1.

2. 3. 4. 5.

6.

Selecting the price objective - survival, cost leader, profit maximization, dominate the market & skim the market Determine demand Estimating cost Analyzing competitors costs / prices Select a pricing method - return on investment pricing, market penetration with low pricing, loss containment pricing & follow the leader pricing Selecting the final price

Adapting the price

Geographical pricing: multiple MRPs in domestic pricing: sales ;USD prices for exports ;INR prices for neighbor countries Price discounts & allowances : trade discount ; quantity discount ; seasonal discount ;cash discount ; usage/consumption discount ; nonoclaim bonus Promotion pricing Discriminatory pricing: customer segment; product form ;channel pricing; location pricing; time pricing

(Place) Distribution
Value network / supply chain Channels of distribution i.e institutions thru which the goods move Factors which influence the choice of a distribution channel Costs of distribution

Different channels
Manufacturer and consumer (door to door salesmen, B to B sales, Dell computers, Avon cosmetics) Manufacturer, Retailer and Consumer (used when selling consumer durables) Manufacturer, Wholesaler, Retailer and Consumer (used when selling soap, tooth paste, hair oil etc.) Manufacturer, Sole distributor, Wholesaler, Retailer and Consumer (food products)

Distribution cost
Do middlemen add to marketing costs? Middlemen perform specialised tasks. Middlemen carry a basket of related products.

Distribution channel functions

Functions focused at bridging the discrepancies that exist between manufacturing and consumption activities Discrepancy of distance Discrepancy of time Discrepancy of bulk or volumes Discrepancy of assortment Discrepancy of information

Classification of wholesalers
The sole distributor The Franchisee The Stockist General line wholesaler-variety of goods in wholesalera single line ,like mens clothing Speciality wholesaler specialise in a few items like tea,coffee,dairy products.

Agents
Brokers : represents the buyer or seller, they negotiate the purchase or sale for the principal Commission Agent : generally have broader powers than the broker. They arrange deliveries and collect payments Sole Selling Agents : undertake to sell the full output of the manufacturer. They even give financial aid to the manufacturer. They are virtually the marketing arm of the manufacturer.

segmenting
Not everyone who wears pants want to wear jeans. Some vacationers prefer rest & relaxation; some vacationers prefer adventure and excitement. Within the same general market there are groups of customers SEGMENTS. A group of customers who share a similar set of wants .

3 segmentation groups
1. Customer based:

1.1 customers geographic location(urban vs rural; metro vs.non metro ;north vs south) 1.2 psychographic variables (lifestyle;personality;conservative,modern cautious,risk taking etc.) 1.3 customer preparedness to buy ( awareness interest,desire,determined/decided)

Segmentation groups
2. Product based: 2.1 product use situation (daily use,special occasion e.g wrist watch,cold drink) 2.2 product benefit ( economy,comfort,safe) 2.4 product consumption/usage (heavy,light moderate) 2.5 decision criteria (price,quality,service,technology)

Segmentation groups
3.Competition based segmentation. 3.1 hard core loyalists 3.2 soft core( split) loyalists 3.3 shifting loyalists 3.4 Switchers

Segmentation bases
Geographic Demographic Psychographic how a person thinks, feels or behaves. BehavioralBehavioral- benefits desired; rate of usage.

Segmenting business markets

Customer location Customer type industry, size, orgn. structure, purchase criteria. Transaction conditions buying situation, usage rate, buying procedure, service requirements

Targeting
Evaluating and selecting market segments on the following factors: 1-attractiveness indicators (size,growth,profitability,risk) 2-organizations objectives,resources and competencies)

Patterns of selecting target markets

1. Single segment focus-almost extinct. focus2. Selective specialisationspecialisation3. Product specialisation-single product for specialisation-

multiple segments 4. Market specialisation multiple products for a single segment/group 5. Full market coverage

Positioning
designing the product offering in a manner which distinguishes it, gives it a distinct personality and creates a recognisable perception in the mind of the customer Positioning is not what you do to the product but what you do to the mind of the prospect Ries and Trout.

Positioning
Well known products generally hold a distinctive position in the consumers mind Just as individuals carry a distinctive personality trait or charcteristic Helpful , talkative , handsome , simple , petite , fun loving , rebellious , dependable Mercedes engineering excellence Bata durability Dominos home delivery

Positioning errors
Underpositioning also ran,just another entrant Overpositioning perception is exagerated Confused positioning- lack of consistency positioningDoubtful positioning purely cosmetic or superficial positioning

Positioning possibilities
Attribute positioning Benefit positioning Application or use positioning User positioning thrill seekers Competitor positioning Product category positioning Quality or price positioning

Promotion
A form of marketing communication. Other communication forms are: Advertising a nonnon-personal promotion with the purpose of leading to an immediate sale or a sale at a later point of time. PublicityPublicity-indirect advertising Personal selling covers the activities of salesmen Sales promotion-communication activities other promotionthan advt. publicity, personal selling. exhibitions, events, displays demonstrations, etc.