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									Marketing Concepts

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