BY : PROF KAMAL TANDON
The definition of Marketing used to be
―human activities directed at the satisfaction of needs and wants through exchange processes‖
The definition of Marketing
―the process of identifying customer needs; conceptualizing those needs in terms of an organization’s capacity to produce; communicating the conceptualization to the appropriate laws of power in the organization; conceptualizing the consequent output in terms of the customer needs earlier identified; and communicating that conceptualization to the customer‖
(Howard, Columbia University)
A better definition of marketing:
What is the role of Marketing in a company?
Understand the customer, the target market Understand the competition Support the sales function Create shareholder value Determine what products a company can sell Providing customer value
FUNDAMENTAL DIMENTIONS OF MARKETING AND RELATED CONCEPTS
Marketing management is the practical application of marketing techniques. It is the analysis, planning, implementation, and control of programs designed to create, build, and maintain mutually beneficial exchanges with target markets. The marketing manager has the task of influencing the level, timing, and composition of demand in way that will achieve organizational objectives.
Marketing is the craft of linking the producers (or potential producers) of a product or service with customers, both existing and potential. Some form of marketing arises naturally in all capitalist societies but is not limited to capitalist societies. Marketing techniques are also applied in politics, religion, personal affairs, and many other aspects of life.
Concepts of Marketing
The Marketing Concept The Production Concept The Sales Concept The Marketing Concept
The Marketing Process
1. 2. 3. 4.
Situation Analysis Marketing Strategy Marketing Mix Decisions Implementation & Control
5 C Analysis - company, customers, competitors, collaborators, climate. Company represents the internal situation; the other four cover aspects of the external situation PEST analysis - for macro-environmental political, economic, societal, and technological factors. A PEST analysis can be used as the "climate" portion of the 5 C framework. SWOT analysis - strengths, weaknesses, opportunities, and threats - for the internal and external situation. A SWOT analysis can be used to condense the situation analysis into a listing of the most relevant problems and opportunities and to assess how well the firm is equipped to deal with them.
1. 2. 3. 4.
Once the best opportunity to satisfy unfulfilled customer needs is identified, a strategic plan for pursuing the opportunity can be developed. Market research will provide specific market information that will permit the firm to select the target market segment and optimally position the offering within that segment. The result is a value proposition to the target market. The marketing strategy then involves: Segmentation Targeting (target market selection) Positioning the product within the target market Value proposition to the target market
Marketing Mix Decisions
2. 3. 4.
Detailed tactical decisions then are made for the controllable parameters of the marketing mix. The action items include: Product development - specifying, designing, and producing the first units of the product. Pricing decisions Distribution contracts Promotional campaign development
Implementation and Control
At this point in the process, the marketing plan has been developed and the product has been launched. Given that few environments are static, the results of the marketing effort should be monitored closely. As the market changes, the marketing mix can be adjusted to accommodate the changes. Often, small changes in consumer wants can addressed by changing the advertising message. As the changes become more significant, a product redesign or an entirely new product may be needed. The marketing process does not end with implementation continual monitoring and adaptation is needed to fulfill customer needs consistently over the long-term
A customer is someone who purchases or rents something from an individual or organisation.
TYPES OF CUSTOMER
Customers can be classified into two main groups; internal and external customers. An internal customer is someone who works for the organisation, possibly in another department or another branch. External customers are essentially the general public. These two groups can be further broken down:
People working in different departments People working in different branches
Individuals Individuals of different needs Individuals of different cultures Business people Groups
NEEDS AND EXPECTATIONS
Customers have needs and expectations that need to be observed by the organisation. A need is something that the customer needs, like car insurance being low. An expectation is something that the customer won't necessarily get but they expect to get, like a car getting from a person's place of departure to their destination.
A target market is the market segment which a particular product is marketed to. It is often defined by age, gender and/or socioeconomic grouping.
Figure 3.1 Bases for Market Segmentation
4 main Categories
From the Beckman, Kurtz, Boone text
Criteria for Segmenting
Single Target Market approach
Multiple Target Market approach Combined Target Market approach
Properties of Market Segments
Segments ideally should possess the following set of properties: – Identifiable – Sizable – Accessible – Stable – Responsive – Actionable
A demand is a forceful request. In economics it is a term for the call or need within a market for a particular commodity. It is effective demand when a person's wants or needs are endorsed by the person's ability to pay (income and/or wealth). When this commercial demand is met by virtually zero supply, there is said to be a market gap. "Demand" is often used as short-hand for the demand curve, which represents the general state of effective demand at any specific time, given the number of buyers, their wants (and the intensity of their wants), their income and wealth, and so forth. The demand curve summarizes the idea that if the price of a commodity rises, the amount demanded falls (all else constant). (Similarly, if price falls, the quantity demanded rises.)
The Marketing Mix
Product Price Place (distribution) Promotion
The product is the physical product or service offered to the consumer. In the case of physical products, it also refers to any services or conveniences that are part of the offering. Product decisions include aspects such as function, appearance, packaging, service, warranty, etc.
Types of Products
consumer products - used by end users industrial products - used in the production of other goods convenience goods - purchased frequently and with minimal effort impulse goods - purchase stimulated by immediate sensory cues emergency goods - goods required immediately shopping goods - some comparison with other goods specialty goods - extensive comparisons with other goods and a lengthy information search unsought goods - e.g., cemetery plots, insurance perishable goods - goods that will spoil quickly even without use durable goods - goods that survive multiple use occasions non-durable goods - goods that are used up in one use occasion capital goods - installations, equipment, and buildings parts and materials - goods that go into a finished product supplies and services - goods that facilitate production commodities - undifferentiated goods (e.g., wheat, gold, sugar) by-products - a product that results from the manufacture of another product
In economics and marketing, a service is the non-material equivalent of a good. Service provision has been defined as an economic activity that does not result in ownership, and this is what differentiates it from providing physical goods. It is claimed to be a process that creates benefits by facilitating either a change in customers, a change in their physical possessions, or a change in their intangible assets. By supplying some level of skill, ingenuity, and experience, providers of a service participate in an economy without the restrictions of carrying stock (inventory) or the need to concern themselves with bulky raw materials. On the other hand, their investment in expertise does require marketing and upgrading in the face of competition which has equally few physical restrictions.
Services can be described in terms of their main attributes.
Intangibility - They cannot be seen, handled, smelled, etc. There is no need for storage. Because they are difficult to conceptualize, services’ marketing requires creative visualizations to effectively make the intangible more concrete. From the customer's point of view, this makes it difficult to evaluate or compare services prior to experiencing the service. Perishability - Unsold service time is "lost", that is, it cannot be regained. It is a lost economic opportunity. For example a doctor that is booked for only two hours a day cannot later work those hours— she has lost her economic opportunity. Other service examples are airplane seats (once the plane departs, those empty seats cannot be sold), and theatre seats (sales end at a certain point). Lack of transportability - Services must be consumed at the point of "production". Lack of homogeneity - Services are typically modified for each client or each new situation (customised). Mass production of services is very difficult. This can be seen as a problem of inconsistent quality. Both inputs and outputs to the processes involved providing services are highly variable, as are the relationships between these processes, making it difficult to maintain consistent quality. Labour intensity - Services usually involve considerable human activity, rather than precisely determined process. Human resource management is important. The human factor is often the key success factor in service industries. It is difficult to achieve economies of scale or gain dominant market share. Demand fluctuations - It is very difficult to estimate demand. Demand can vary by season, time of day, business cycle, etc. Buyer involvement - Most service provision requires a high degree of interaction between client and service provider.
EXAMPLES OF ECONOMIC SERVICES
CUSTOMER SERVICE CONSTRUCTION DATA PROCESSING EDUCATION PROVISION FINANCIAL SERVICES CONSULTING HEALTH PROVISION LANGUAGE TRANSLATION AND LANGUAGE INTERPRETATION HAIRDRESSING DRY CLEANING LAUNDRETTE LIBRARY (GOVERNMENT FUNDED) MUSEUM BANKS AND BUILDING SOCIETIES PLUMBING ELECTRICIAN TRANSPORTATION UTILITIES SUCH AS POWER OR WATER PRODUCERS ENTERTAINMENT INCLUDING SPORTS,GAMBLING,AND PERFORMING ARTS PRODUCTIONS.
New-Product Development Strategy
Strategies for Obtaining New-Product Ideas
Acquisition of: Companies Patents Licenses New Products: Original Products Improvements Modifications
Major Stages in New-Product Development
Product Life Cycle
Sales and Profits ($) Profits Time Decline
Product Development Losses/ Investments ($)
Sales and Profits Over the Product’s Lifetime
Pricing decisions should take into account profit margins and the probable pricing response of competitors. Pricing includes not only the list price, but also discounts, financing, and other options such as leasing.
A well chosen price should do three things:
achieve the financial goals of the firm (eg.: profitability) fit the realities of the marketplace (will customers buy at that price?) support a products positioning and be consistent with the other variables in the marketing mix
TYPES OF PRICING
MARK UP PRICING TARGET-RETURN PRICING PERCEIVED VALUE PRICING VALUE PRICING GOING RATE PRICING SEALED BID PRICING PSYCHOLOGICAL PRICING GEOGRAPHICAL PRICING PROMOTIONAL PRICING DISCRIMINATORY PRICING PRODUCT MIX PRICING
Place (or placement) decisions are those associated with channels of distribution that serve as the means for getting the product to the target customers. The distribution system performs transactional, logistical, and facilitating functions. Distribution decisions include market coverage, channel member selection, logistics, and levels of service.
Distribution is one of the four aspects of marketing. The other three parts of the marketing mix are product management, pricing, and promotion. Distribution deals with how to get the product or service to the customer.
In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells individual items or small quantities to the general public or end user customers, usually in a shop, also called store. Retailers are at the end of the supply chain. Marketers see retailing as part of their overall distribution strategy.
In commerce, a wholesaler buys goods in large quantities from their manufacturers or importers, and then sells smaller quantities to retailers, who in turn sell to the general public.
Amway Equinox (MLM) Herbalife Mary Kay NuSkin Pre-Paid Legal Primerica Vector Marketing
Promotion decisions are those related to communicating and selling to potential consumers. Since these costs can be large in proportion to the product price, a break-even analysis should be performed when making promotion decisions. It is useful to know the value of a customer in order to determine whether additional customers are worth the cost of acquiring them.
This includes advertising, sales promotion, publicity, and personal selling, and refers to the various methods of promoting the product, brand, or company.
Advertising is the paid promotion of goods, services, companies and ideas, by an identified sponsor. Marketers see advertising as part of an overall promotional strategy
Radio, television, movies, magazines, newspapers and the World Wide Web billboards, printed flyers, radio, cinema and television ads, web banners, skywriting, bus stop benches, magazines, newspapers, town criers, sides of buses, taxicab doors and roof mounts, musical stage shows
Advertising Persuasive Advertising Reminder Advertising
promotion is media and non-media marketing communications employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability.
coupons discounts and sales contests point of purchase displays rebates
Publicity is closely related to public relations. Whereas public relations is the management of all communications between the firm and the general public, publicity is the management of product or brand related communications between the firm and the general public
Public relations (PR) is internal and external communication (use of symbols and symbolic acts) to inform or influence specific publics using writing, marketing, advertising, publicity, promotions, and special events.
Press Conference Press Release Publicity Event Talk Show on TV Road Show Feed back Survey
primary function of sales is to find and close leads, turning prospective customers into actual ones.
6 Sales Positions
Deliverer Order Taker Missionary Technician Demand Creator Solution Vender
Forms of selling
Direct Sales - involving face-to-face contact – retail or consumer – door-to-door or travelling – business-to-business Indirect - human-mediated but with direct contact – telephone or telesales – mail-order Electronic – web B2B, B2C – EDI Agency-based – consignment – multi-level – sales agents (real estate, manufacturing)
Types of research
Marketing research - Marketing research (also called "consumer research") comprises a form of applied sociological study which concentrates on understanding the behaviours, whims and preferences, mainly current and future, of consumers in a marketbased economy. Market research - Market research has a broad scope and includes all aspects of the business environment. It asks questions about competitors, market structure, government regulations, economic trends, technological advances, and numerous other factors that make up the business environment. (See Environmental scanning.) Sometimes the term refers more particularly to the financial analysis of companies, industries, or sectors. In this case, financial analysts usually carry out the research and provide the results to investment advisors and potential investors. Product research - This looks at what products can be produced with available technology, and what new product innovations near-future technology can develop. (see New Product Development) Advertising research - This attempts to assess the likely impact of an advertising campaign in advance, and also measure the success of a
Marketing research methods
Qualitative marketing research - generally used for exploratory purposes - small number of respondents - not generalizable to the whole population - statistical significance and confidence not calculated - examples include focus groups, depth interviews, and projective techniques Quantitative marketing research - generally used to draw conclusions - tests a specific hypothesis - uses random sampling techniques so as to infer from the sample to the population - involves a large number of resondents - examples include surveys and questionnaires Observational techniques - the researcher observes social phenomena in their natural setting - observations can occur crosssectionally (observations made at one time) or longitudinally (observations occur over several time-periods) - examples include product-use analysis and computer cookie traces Experimental techniques - the researcher creates a quasi-artificial environment to try to control spurious factors, then manipulates at least one of the variables - examples include purchase laboratories and test markets
DIVISION GLOBAL ORGANISATION
EXPORTS THROUGH THIS DIVISION COMPANY EXPORTS TO OTHER PARTIES IN THE OVERSEAS MARKET.
THROUGH THIS DIVISION COMPANY CONTROLS ALL THE OVERSEAS OFFICES
THIS IS THE MATURITY LEVEL, WHEN COMPANY HAS WORLDWIDE MANUFACTURING FACILITIES, MARKETING POLICES, FINANCIAL FLOWS AND LOGISTICAL SYSTEM.
Strategy Multinational Strategy Glocal Strategy
Supply Chain Management
Demand planning: (forecasting) Demand collaboration: (collaborative resolution process to determine consensus forecasts) Order promising: (When can one promise a product to a customer taking account lead times and constraints) Strategic network optimization: (what plants and DC's should serve what markets for what products) (monthly - yearly) Production and distribution planning: (Coordinate the actual production and distribution plans for a whole enterprise) (daily) Production scheduling: (For a single location create a feasible production schedule) (minute by minute) Plan of reduction of costs and management of the performance (diagnosis of the potential and the indicators, the organization and planifiaction strategic, masters dysfunctions in real time, evaluation and accounting reporting, evaluation and reporting quality