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    MODULE-1 Overview of Marketing

    LEARNING OBJECTIVES

    After reading this module, students should:

    Know why marketing is important

    Know what is the scope of marketing

    Know some of the fundamental marketing concepts

    Know how marketing management has changed

    Know what are the necessary tasks for successful marketing management

    Know scope and importance of marketing Know what are the recent trends of marketing Know what are the different levels of market segmentation

    Know how a company can divide a market into segments

    Know how a company should choose the most attractive target markets

    Know what marketing mixes are.

    SUMMARY

    From a managerial point of view, marketing is an organizational function and a set of processes for creating,communicating, and delivering value to customers and for managing customer relationships in ways that benefit the

    organization and its stake holders. Marketing management is the art and science of choosing target markets and

    getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.Marketers are skilled at managing demand: They seek to influence the level, timing, and composition of demand.

    Marketers are involved in marketing many types of entities: goods, services, events, experiences, persons,

    places, properties, organizations, information, and ideas. They also operate in four different marketplaces:

    consumer, business, global, and nonprofit.

    Marketing is not done only by the marketing department. Marketing needs to affect every aspect of the customer

    experience. To create a strong marketing organization, marketers must think like executives in other departments, andexecutives in other departments must think more like marketers. Todays marketplace is fundamentally different as a

    result of major societal forces that have resulted in many new consumer and company capabilities. These forces have

    created new opportunities and challenges and marketing management has changed significantly in recent years ascompanies seek new ways to achieve marketing excellence. There are five competing concepts under which

    organizations can choose to conduct their business: the production concept, the product concept, the selling

    concept and the marketing concept.

    Target marketing includes three activities: market segmentation, market targeting, and market positioning.

    We can target markets at four levels: segments, niches, local areas, and individuals. Market segments are large,identifiable groups within a market. A niche is a more narrowly defined group. Globalization and the Internet have

    made niche marketing more feasible to many. Marketers appeal to local markets through grassroots marketing for

    trading areas, neighborhoods, and even individual stores.

    More companies now practice individual and mass customization. The future is likely to see more self-marketing, aform of marketing in which individual consumers take the initiative in designing products and brands . There are two

    bases for segmenting consumer markets: consumer characteristics and consumer responses. The major segmentation

    variables for consumer markets are geographic, demographic, psychographic, and behavioral. Marketers use them

    singly or in combination.

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    G

    OVERVIEW

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    111 1OVERVIEW OF MARKETING

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    Business marketers use all these variables along with operating variables, purchasing approaches, and situational

    factors. To be useful, market segments must be measurable, substantial, accessible, differentiable, and actionable . A

    firm has to evaluate the various segments and decide how many and which ones to target: a single segment,

    several segments, a specific product, a specific market, or the full market. If it serves the full market, it must

    choose between differentiated and undifferentiated marketing. Firms must also monitor segment relationships, andseek economies of scope and the potential for marketing to super segments. Marketers must develop segment-by-

    segment invasion plans and choose target markets in a socially responsible manner at all times.

    The value delivery process involves choosing (or identifying), providing (or delivering), and communicatingsuperior value. The value chain is a tool for identifying key activities that create value and costs in a specific

    business. Strong companies develop superior capabilities in managing core business processes such as new-

    product realization, inventory management, and customer acquisition and retention. Managing these coreprocesses effectively means creating a marketing network in which the company works closely with all parties

    in the production and distribution chain, from suppliers of raw materials to retail distributors. Companies no

    longer competemarketing networks do.

    Target marketing includes three activities: market segmentation, market targeting, and market positioning.

    We can target markets at four levels: segments, niches, local areas, and individuals. Market segments are large,identifiable groups within a market. A niche is a more narrowly defined group. Globalization and the Internet have

    made niche marketing more feasible to many. Marketers appeal to local markets through grassroots marketing fortrading areas, neighborhoods, and even individual stores. More companies now practice individual and masscustomization. The future is likely to see more self-marketing, a form of marketing in which individual consumers

    take the initiative in designing products and brands.

    There are two bases for segmenting consumer markets: consumer characteristics and consumer responses. The major

    segmentation variables for consumer markets are geographic, demographic, psychographic, and behavioral.

    Marketers use them singly or in combination. Business marketers use all these variables along with operatingvariables, purchasing approaches, and situational factors. To be useful, market segments must be measurable,

    substantial, accessible, differentiable, and actionable. A firm has to evaluate the various segments and decide how

    many and which ones to target: a single segment, several segments, a specific product, a specific market, or the full

    market. If it serves the full market, it must choose between differentiated and undifferentiated marketing. Firms mustalso monitor segment relationships, and seek economies of scope and the potential for marketing to super segments.

    Marketers must develop segment-by-segment invasion plans and choose target markets in a socially responsiblemanner at all times.

    Introduction- Market and Marketing

    Who Markets?

    Marketers and Prospects

    A marketer is someone seeking a response (attention, purchase, vote, donation, etc.) from another party called theprospect.

    A) Marketers are responsible for stimulating demand for a companys product. E.g just as production and logistics

    professionals are responsible for supply management, marketers are responsible for demand management.

    B) Marketing managers seek to influence the level, timing, and composition of demand to meet the organizations

    objectives. Eight demand states are possible:

    1) Negative demandconsumers dislike the product and may even pay a price to avoid it.

    2) Non-existent demandconsumers may be unaware or uninterested in the product.

    3) Latent demandconsumers may share a strong need that cannot be satisfied by an existing product.

    Marketers try to capture this demand and come out with newer and better products.

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    4) Declining demandconsumers begin to buy the product less frequently or not at all.

    5) Irregular demandconsumer purchases vary on a seasonal, monthly, daily, or even an hourly basis.

    6) Full demandconsumers are adequately buying all product put into the marketplace.

    7) Overfull demandtoo many consumers would like to buy the product that can be satisfied.

    8) Unwholesome demandconsumers may be attracted to products that have undesirable social consequences.

    Markets

    Economists describe a market as a collection of buyers and sellers who transact over a particular product or

    product class.

    Marketers use the term market to cover various groups of customers. The five basic markets are:

    A) Resource Markets

    B) Government Markets

    C) Manufacturer Markets

    D) Intermediary Markets

    E) Consumer Markets

    Structure of Flows in a Modern Exchange Economy

    A) Sellers and buyers are connected by flows:

    1) Seller sends goods, services, and communications to the market.

    2) In return they receive money and information.

    3) There is an exchange of money for goods and services.

    4) There is an exchange of information.

    Key Customer Markets

    A) Consumer Markets - Consumer goods and services such as soft drinks and cosmetics spend a great deal oftime trying to establish a superior brand image.

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    B) Business Markets - Companies selling business goods and services often face well-trained and well-informed

    professional buyers who are skilled in evaluating competitive offerings.

    C) Global Markets - Companies face challenges and decisions regarding which countries to enter, how to enterthe country, how to adapt their products/services to the country, and how to price their products.

    D) Nonprofit and Governmental Markets - Companies selling to these markets have to price carefully because

    these organizations have limited purchasing power like churches, universities, charitable organizations and

    government agencies.

    Marketplaces, Marketspaces, Metamarkets

    A) The marketplace is physical, e.g shopping malls, roadside shops, central market place.

    B) The marketspace is digital, online shopping e.g indiatimes shopping.com, mobilebazaar.com,

    homeshop18.com, amazon.com, ebay.com etc.

    C) The metamarket is a cluster of complementary products and services that are closely related in the consumers

    mind but spread across a diverse set of industries. E.g automobile metamarket consist of automobile

    manufacturers, new and used car dealers, financing companies, insurance companies, mechanics, spare parts

    dealers, service shops, auto magazines, classified auto ads in newspapers, and auto sites on the internet.

    Marketing in Practice

    How is marketing done? Increasingly marketing is not done only by the marketing department. To create strong

    marketing organizations, marketers must think like executives on other departments and other departments must think

    like marketers.

    Marketing planning process consists of analyzing marketing opportunities, selecting target markets, designingmarketing strategies, developing marketing programs, and managing the marketing effort.

    There are five key functions for a CMO (chief marketing officer) in leading marketing within an organization

    A) Strengthening the brandsB) Measuring marketing effectiveness

    C) Driving new product development based on customer needs

    D) Gathering meaningful customer insightsE) Utilizing new marketing technology

    MODERN DEFINATION OF MARKETING

    Marketing deals with identifying and meeting human and social needs. One of the shortest definitions of marketing is

    meeting needs profitably.

    A) The American Marketing Association offers the following formal definition: Marketing is an organizational

    function and a set of processes for creating, communicating, and delivering value to customers and for managing

    customer relationships in ways that benefit the organization and its stakeholders.

    B) Marketing management is the art and science of choosing target markets and getting, keeping, and growing

    customers through creating, delivering, and communicating superior customer value.

    C) A social definition of marketing is that marketing is a societal process by which individuals and groups obtain

    what they need and want through creating, offering, and freely exchanging products and services of value with

    others.

    What Is Marketed?

    Marketing people are involved in marketing ten types of entities: goods, services, events, experiences, persons, places,properties, organizations, information, and ideas.

    1. Goods - Physical goods constitute the bulk of production and marketing efforts e.g automobiles, consumer

    durable goods like television sets and refrigerator, industrial chemicals, machine tools, watches etc.

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    2. Services - A growing portion of business activities are focused on the production of services e.g. services of

    airlines, hotels, car rental firms, maintenance and repair people, software programmers and managementconsultants.

    3. Events - Marketers promote time-based events such as trade shows, artistic performances, and the Olympics.

    4. Experiences - By orchestrating several services and goods, a firm can create and market experiences such as Walt

    Disney Worlds Magic Kingdom.

    5. Persons - Celebrity marketing is a major business. E.g David Beckham, Oprah Winfrey.

    6. Places - Cities, states, regions, and whole nations compete actively to attract tourists, factories, and new residents.

    7. Properties - Are intangible rights of ownership of either real property (real estate) or financial property (stocks andbonds).

    8. Organizations - Actively work to build a strong, favorable, and unique image in the minds of their target publics.

    9. Information - Can be produced and marketed as a product. Schools, universities, and others produce information

    and then market it.

    10.Ideas - Every market offering includes a basic idea. Products and services are platforms for delivering some ideaor benefit. Social marketers are busy promoting such ideas by creating awareness about AIDS, encourageing

    family planning and discouraging smoking.

    The concept also identifies the marketing variables product, price, promotion and distribution that

    combine to provide customer satisfaction. In addition, it assumes that the organization begins by identifying andanalyzing the consumer segments that it will later satisfy through its production and marketing activities. The

    concepts emphasis on creating and maintaining relationships is consistent with the focus in business on long-term,

    mutually satisfying sales, purchases and other interactions with customers and suppliers. Finally it recognizes thatmarketing concepts and techniques apply to non-profit organizations as well as to profit-oriented businesses, to

    product organization and to service organizations, to domestic and global organizations, as well as to organizations

    targeting consumers and other businesses.

    COMPANY ORIENTATION TOWARD THE MARKETPLACE

    The competing concepts under which organizations have conducted marketing activities include; the productionconcept, product concept, selling concept, marketing concept, and holistic marketing concept.

    A) Production Concept - The production concept holds that consumers will prefer products that are widely available

    and inexpensive.

    B) Product Concept - The product concept holds that consumers will favor those products that offer the most quality,

    performance, or innovative features.

    C) Selling Concept - The selling concept holds that consumers and businesses, will ordinarily not buy enough of theorganizations products, therefore, the organization must undertake aggressive selling and promotion effort.

    D) Marketing Concept - The marketing concept holds that the key to achieving organizational goals consists of the

    company being more effective than competitors in creating, delivering, and communicating superior customer

    value to its chosen target markets.

    Reactive market orientationunderstanding and meeting consumers expressed needs.

    Proactive marketing orientationresearching or imagining latent consumers needs through a probe-

    and-learn process.

    Companies that practice both reactive and proactive marketing orientation are implementing a total market

    orientation.

    E) Holistic Marketing Concept - Holistic marketing can be seen as the development, design, and implementation ofmarketing programs, processes, and activities that recognizes the breath and interdependencies of their efforts.

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    Holistic marketing recognizes that everything matters with marketingthe consumer, employees, other

    companies, competition, as well as society as a whole.

    CORE MARKETING CONCEPTS

    Needs, Wants, and Demands

    Needs (basic human requirements)

    A) Stated needsB) Real needs

    C) Unstated needsD) Delight needs

    E) Secret needs

    Demands (for specific products backed by the ability to pay)

    The most basic concept underlying marketing is that of human needs. A need is a state of felt deprivation. It is a partof the human makeup. Humans have many needs, viz., physical needs, social needs, spiritual needs and so on. Wants

    are the form taken by needs as they are shaped by the ones culture and personality. Wants are thus shaped by both the

    internal and external factors. Wants are described in terms of objects that will satisfy needs. For example, thirst is aneed. To quench this thirst, a person may consider a number of options drink water or a soft drink or a fruit juice.

    These objects (which represent the different choices for a person to fulfill his/her need) comprise the potential want-list. As people are exposed to more objects that arouse their interest and desire, marketers try to provide more choices,that is, more want-satisfying products. People have almost unlimited wants but limited resources. Therefore, they

    want to choose products that provide the most satisfaction for their money. When backed by buying power (ability), a

    want becomes a demand.

    Products

    A product is anything that can be offered to a market to satisfy a need or want. People satisfy their needs and wants

    with products. Though the word suggests a physical object, the concept of product is not limited to physical objects.Marketers often use the expressions goods and services to distinguish between physical products and intangible ones.

    These goods and services can represent cars, groceries, computers, places, persons and even ideas. Customers decide

    which entertainers to watch on television, which places to visit for a holiday, which ideas to adopt for their problemsand so on. Thus the term product covers physical goods, services and a variety of other vehicles that can satisfy

    customers needs and wants. If at times the term product does not seem to be appropriate, other terms such as market

    offering, satisfier are used.

    Value and Satisfaction

    When the customers have so many choices to choose from to satisfy a particular need, how do they choose from

    among these many products? They make their buying choices based on their perceptions of a products value. Theguiding concept is customer value. A customer will estimate the capacity of each product to satisfy his need. He/ she

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    might rank the products from the most need-satisfying to the least need-satisfying. Of course, the ideal product is the

    one which gives all the benefits at zero cost, but no such product exists. Still, the customer will value each existingproduct according to how close it comes to his/her ideal product and end up choosing the product that gives the most

    benefit for the rupee the greatest value.

    Value and Satisfaction

    Successful if it delivers value and satisfaction to the target buyer

    Value is a central marketing concept

    Satisfaction reflects a persons judgment of a products perceived performance

    Exchange, Transactions and Relationships

    Marketing occurs when people decide to satisfy needs and wants through exchange. Exchange is the act of obtaining adesired object from someone by offering something in return. Thought it is only one of the many ways people can

    obtain a desired object, it allows a society to produce much more than it would with any alternative system. For an

    exchange to take place, several conditions must be satisfied. Of course, at least two parties must participate, and eachmust have something of value to the other. Each party also must want to deal with the other party and each must be

    free to accept or reject the others offer. Finally, each party must be able to communicate and deliver. These

    conditions simply make exchange possible. Whether the exchange actually takes 20 place depends on the parties

    coming to an agreement. If they agree, we must conclude that the act of exchange has left both of them better off or atleast not worse off. After all, each was free to reject or accept the offer. In this sense, exchange creates value just as

    production creates value. It gives customers more consumption possibilities. A transaction is marketings unit ofmeasurement. It consists of a trade of values between two parties. A monetary transaction involves trading goods andservices in return for money whereas a barter transaction involves trading goods and services for other goods and

    services. Transaction marketing is part of the larger idea of relationship marketing. Marketing is shifting from trying

    to maximize the profit on each individual transaction to maximizing mutually beneficial relationships with consumersand other parties. This is based on the assumption that if good relationships are built, profitable transactions will

    simply follow.

    Markets

    The concept of transactions leads to the concept of a market. A market is the set of actual and potential buyers of a

    product. It may exist in a physical environment as a marketplace or in a virtual environment (on the internet platform)

    as a marketspace. Merchants and central marketplaces greatly reduce the total number of transactions needs toaccomplish a given volume of exchange. As economies grow, exchange becomes even more centralized, as seen in

    the growth of huge companies. Large supermarkets now serve millions of people who formerly shopped in smaller

    outlets.

    Target markets, Positioning and Segmentation

    A) Identify and profile distinct groups of buyers who might prefer or require varying products and services mixes byexamining

    Demographic information

    Psychographic information

    Behavioral informationB) Target market

    C) Market offering

    Offering and Brands

    Value proposition: a set of benefits they offer to customers to satisfy their needs

    Brand: is an offering from a known source

    Marketing Channels

    Communication channels

    Distribution channels

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    Service channels

    Supply Chain

    Competition

    Marketing environment

    Task environment

    Broad environment:i. Demographic

    ii. Environment

    iii. Economiciv. Physical

    v. Technological

    vi. Political-Legal

    vii. Social-cultural

    NATURE, SCOPE AND IMPORTANCE OF MARKETING

    The application, tracking and review of a business' marketingresources and activities. The scope of a business'

    marketing management depends on the size of the business and the industry in which the business operates.Effective marketing management will use a company's resources to increase its customer base, improve

    customeropinions of the company'sproducts and services, and increase the company'sperceived value.

    Financial success often depends on marketing ability. Many firms have created a Chief Marketing Officer (CMO) toput marketing on an equal footing with other Chief Executives such as a CFO and CEO. Marketing is tricky and

    making the right decisions is not always easy. Skillful marketing is a never-ending pursuit.

    Nature of marketing

    Marketing is consumer oriented process.

    Market starts and ends with the customer (C2C) Marketing is the guiding element of business.

    Marketing is a system. Marketing is goal oriented process.

    Marketing is process of exchange. Marketing is a process.

    Importance of Marketing

    Marketing helps in achieving the organizational objectives. Effective marketing is essential for survival and

    growth of the organization.

    It helps the community to satisfy their economic and social needs and thus raise their standard of living. It helps in producing those products that are needed by the consumers and community at large.

    It helps the enterprise to adapt to the changing conditions and circumstances.

    It provides guidance to the organization on the innovations to be adopted, enabling it to face competition. It helps the enterprise in achieving the maximum efficiency, productivity and profitability with the minimum

    effort and cost.

    It ensures the economic growth of the enterprise which results in growth and economic development of the

    country.

    FUNCTIONS OF MARKETING

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    http://www.businessdictionary.com/definition/tracking.htmlhttp://www.businessdictionary.com/definition/review.htmlhttp://www.businessdictionary.com/definition/business.htmlhttp://www.businessdictionary.com/definition/marketing.htmlhttp://www.businessdictionary.com/definition/resource.htmlhttp://www.businessdictionary.com/definition/activity.htmlhttp://www.businessdictionary.com/definition/scope.htmlhttp://www.investorwords.com/2931/management.htmlhttp://www.businessdictionary.com/definition/industry.htmlhttp://www.businessdictionary.com/definition/operate.htmlhttp://www.businessdictionary.com/definition/effective.htmlhttp://www.businessdictionary.com/definition/company.htmlhttp://www.businessdictionary.com/definition/customer-base.htmlhttp://www.businessdictionary.com/definition/improve.htmlhttp://www.businessdictionary.com/definition/customer.htmlhttp://www.businessdictionary.com/definition/opinion.htmlhttp://www.businessdictionary.com/definition/product.htmlhttp://www.businessdictionary.com/definition/services.htmlhttp://www.businessdictionary.com/definition/perceived-value.htmlhttp://www.businessdictionary.com/definition/tracking.htmlhttp://www.businessdictionary.com/definition/review.htmlhttp://www.businessdictionary.com/definition/business.htmlhttp://www.businessdictionary.com/definition/marketing.htmlhttp://www.businessdictionary.com/definition/resource.htmlhttp://www.businessdictionary.com/definition/activity.htmlhttp://www.businessdictionary.com/definition/scope.htmlhttp://www.investorwords.com/2931/management.htmlhttp://www.businessdictionary.com/definition/industry.htmlhttp://www.businessdictionary.com/definition/operate.htmlhttp://www.businessdictionary.com/definition/effective.htmlhttp://www.businessdictionary.com/definition/company.htmlhttp://www.businessdictionary.com/definition/customer-base.htmlhttp://www.businessdictionary.com/definition/improve.htmlhttp://www.businessdictionary.com/definition/customer.htmlhttp://www.businessdictionary.com/definition/opinion.htmlhttp://www.businessdictionary.com/definition/product.htmlhttp://www.businessdictionary.com/definition/services.htmlhttp://www.businessdictionary.com/definition/perceived-value.html
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    Marketing function

    A. Exchange functions. 1.

    Buying

    Ens

    qua

    2. Selling Usi

    per

    B. Physical distribution

    functions

    3. Transporting

    4. Storing

    Mo

    con

    4. Storing Wa

    C. Facilitating functions 5.

    Standardizing and grading

    Ens

    qua

    6. Financing Pro

    SELLING VS MARKETING

    Point of difference

    The difference between selling and marketing can be best illustrated by this popular customer quote: Dont tell mehow good your product is, but tell me how good it will make me.

    THE NEW MARKETING REALITIES

    Major societal Forces affecting marketing:

    Network information technology

    Globalization

    Deregulation

    Privatization

    Heightened Competition Industry Convergence

    Consumer Resistance

    Retail Transformation

    Disintermediation

    New Consumer Capabilities

    A substantial increase in buying power

    Greater variety of goods and services

    Great deal of information available

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    Greater ease in interacting and placing orders

    Ability to compare notes on products and services

    Amplified voice to influence peer and public opinion

    New Company Capabilities

    Internet

    Research

    Speed of internal information Speed of external information buzz

    Better target marketing

    Mobile marketing

    Differentiated goods

    Improved purchasing, recruiting, training, and communications Direct marketing is a sub-discipline and type of marketing. There are two main definitional characteristics

    which distinguish it from other types of marketing. The first is that it attempts to send its messages directly

    to consumers, without the use of intervening media. This involves commercial communication (direct mail,

    e-mail, and telemarketing) with consumers or businesses, usually unsolicited. The second characteristic isthat it is focused on driving a specific "call-to-action." This aspect of direct marketing involves an emphasis

    on trackable, measurable positive (but not negative) responses from consumers (known simply as"response" in the industry) regardless of medium. If the advertisement asks the prospect to take a specificaction, for instance call a free phone number or visit a website, then the effort is considered to be direct

    response advertising.

    Internet marketing also referred to as i-marketing, web marketing, online marketing, oreMarketing, is

    the marketing of products or services over the Internet. The Internet has brought many unique benefits tomarketing, one of which being lower costs and greater capabilities for the distribution of information and

    media to a global audience. The interactive nature of Internet marketing, both in terms of providing instant

    response and eliciting responses, is a unique quality of the medium. Internet marketing is sometimesconsidered to have a broader scope because it not only refers to digital media such as the Internet, e-mail,

    and wireless media; however, Internet marketing also includes management of digital customer data and

    electronic customer relationship management (ECRM) systems. Internet marketing ties together creativeand technical aspects of the Internet, including design, development, advertising, and sale.

    Market intelligence (MI) according to Cornish, the process of acquiring and analyzing information in

    order to understand the market (both existing and potential customers); to determine the current and futureneeds and preferences, attitudes and behavior of the market; and to assess changes in the business

    environment that may affect the size and nature of the market in the future.

    Market research was an offshoot of the advertising boom of the 1950s in the USA. Advertisers began to

    realize the significance of demographics revealed by Radio and television sponsorship, and to seek moredirect feedback about their markets. Market research is for discovering what people want, need, or believe.

    It can also involve discovering how they act. Once that research is completed, it can be used to determine

    how to market your product. Questionnaires and focus group discussion surveys are some of the instruments

    for market research.

    Marketing Framework

    The basic elements of a marketing strategy consist of (1) the target market, and (2) the marketing mix variables of

    product, price, place and promotion that combine to satisfy the needs of the target market. The outer circle in Figurelists environmental characteristics that provide the framework within which marketing strategies are planned.

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    Elements of a marketing strategy and its environmental framework

    Marketing activities focus on the consumer. Therefore, a market-driven organization begins its overall strategy with a

    detailed description of its target market: the group of people toward whom the firm decides to direct its marketing

    efforts. After marketers select a target market, they direct their activities towards profitably satisfying that target

    segment. Although they must manipulate many variables to reach this goal, marketing decision making can bedivided into four areas: product, price, place (distribution) and promotion (marketing communication). These 4 Ps of

    marketing are referred to as the marketing mix. The 4 Ps blend to fit the needs and preferences of a specific target

    market. These are the four variables that a marketer can use and control in different combinations to create value forcustomers. Figure illustrates the focus of the marketing mix variables on the central choice of consumer or

    organizational target markets. In addition, decisions about the 4 Ps are affected by the environmental factors in the

    outer circle of that figure. Unlike the controllable marketing mix elements, the environmental variables frequently lieoutside the control of marketers.

    The product strategy involves deciding what goods and services the firm should offer to a group of consumers and

    also making decisions about customer service, brand name, packaging, labeling, product life cycles and new product

    development. The pricing strategy deals with the methods of setting profitable and justifiable prices. Marketersdevelop place (distribution) strategy to ensure that consumers find their products available in the proper quantities at

    the right times and places. Place-related decisions involve the distribution functions and marketing intermediaries(channel members). In the promotional strategy, marketers blend together the various elements of promotion to

    communicate most effectively with their target market. Many firms use an approach called Integrate MarketingCommunications (IMC) to coordinate all promotional activities so that the consumer receives a unified, consistent and

    effective message.

    Marketers do not make decisions about target markets and marketing mix variables in a vacuum. They must take into

    account the dynamic nature of the five marketing environmental dimensions as shown in Figure competitive,political- legal, economic, technological and social-cultural dimensions.

    Marketers compete for the same consumers. So the developments in the competitive environment will have lot of

    repercussions. The political-legal environment includes the governing and regulatory bodies who impose guidelines to the

    marketers. Adherence to the law of the land is an imperative for a marketer to be a good and responsible corporatecitizen.

    The economic environment dictates the mood in the target market who take decisions such as to buy or save, to

    buy now or later.

    The technological environment can spell life or death for a marketer with break-through technologies. Marketersoften leap forward or get left behind owing to the changes in the technological environment. The social-cultural

    environment offers cues for the marketers to connect well with the target market.

    Failure on part of the marketer to understand the social-cultural environment will have serious consequences. A

    marketers can not afford to rub a society/culture on the wrong side!

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    Levels of Market Segmentation

    The starting point for discussing segmentation is mass marketing. In mass marketing, the seller engages in themass production, mass distribution, and mass promotion of one product for all buyers.

    A) The argument for mass marketing is that it creates the largest potential market, which leads, to the

    lowest costs that in turn can lead to lower prices or higher margins.

    Segment Marketing

    The market place is heterogeneous with differing wants and varying purchase power. The heterogeneous

    marketplace can be divided into many homogeneous customer segments along several segmentation variable.The division of the total market into smaller relatively homogeneous groups is called market

    segmentation. Products seldom succeed by appealing to everybody. The reasons are simple: not every customer

    is profitable nor worth retaining, not every product appeals to every customer. Hence the organizations look fora fit between their competencies and the segments profitability. The identified segments are then targeted with

    clear marketing communications. Such communications are referred to as positioning the product or service in

    the mind of the customer so as to occupy a unique place. This involves identifying different points ofdifferentiation and formulating a unique selling proposition (USP). In todays marketplace, differentiation

    holds the key to marketing success.

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

    A) The marketer does not create the segments.B) The marketers task is to identify the segments and decide which one(s) to target.

    C) A flexible market offering consists of two parts:1) A naked solution containing the product and service elements that all segment members value

    2) Discretionary options that some segment members value.

    D) Market segments can be defined in many different ways:One way to carve up a market is to identify preference segments

    Homogeneous preferences

    Diffused preferencesClustered preferences

    Niche MarketingA niche is a more narrowly defined customer group seeking a distinctive mix of benefits.Marketers usually identify niches by dividing a segment into sub-segments.

    A) Niche marketers presumably understand their customers needs so well that the customers willingly

    pay a premium.B) Globalization has facilitated niche marketing.

    C) The low cost of setting up shop on the Internet has led to many small business start-ups aimed at

    niches.

    Local Marketing

    Target marketing is leading to marketing programs tailored to the needs and wants of local customer groups.

    A) Local marketing reflects a growing trend called grassroots marketing.Philip Kotler mentioned five criteria for an effective segmentation which states that Segmentation should be: -

    1. Measurable: - it should be possible to determine the values of the variable used for the segmentation.

    2. Relevant: - it should justify the expected profits and the growth potential.

    3. Accessible: - the target customers must be reachable and servable for the organization.

    4. Distinguishable: - the target audiences must be diverse and able to show different reactions to different

    marketing mix.

    5. Feasible: - the firm must have an ability to draw an effective marketing program for its customers.

    BASES FOR SEGMENTING CONSUMER MARKETS

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    Two broad groups of variables are used to segment consumer markets.

    A) Descriptive characteristics: geographic, demographics, and psycho-graphic.B) Behavioral considerations: such as consumer responses to benefits, use occasions, or brands

    Regardless of which type of segmentation scheme is employed, the key is that the marketing program can be

    profitably adjusted to recognize customer differences.

    Geographic Segmentation

    Geographic segmentation calls for dividing the market into different geographical units.

    More and more, regional marketing means marketing right down to a specific zip code.

    Demographic Segmentation

    In demographic segmentation, the market is divided into groups on the basis of variables such as age, familysize, family life cycle, gender, income, occupation, education, religion, race, generation, nationality, and social

    class.

    A) A) Consumer needs, wants, usage rates, and product and brand preferences are often associated withdemographic variables.

    B) Demographic variables are easy to measure.

    Age and Life-Cycle Stage

    A) Consumer wants and abilities change with age.

    Life Stage

    A) Persons in the same part of the life cycle may differ in their life stage. Life stage defines a persons

    major concern. These life stages present opportunities for marketers who can help people cope with their

    major concerns.

    Gender

    A) Men and women tend to have different attitudinal and behavioral orientations, based partly on genetic

    makeup and partly on socialization.B) Some traditionally more male-orientated markets, are beginning to recognize gender segmentation,

    changing how they design and sell their products.

    IncomeA) Income segmentation is a long-standing practice in product and service categories.B) However, income does not always predict the best customers for a given product.

    C) Increasingly, companies are finding that their markets are hourglass-shaped as middle-market

    Americans migrate toward more premium products.

    Generation

    A) Each generation is profoundly influenced by the times in which it grows up.

    B) Demographers call these groups cohorts.

    1) They share similar outlooks and values.

    2) Marketers often advertise to a cohort group by using icons and images prominent intheir experiences.

    C) Generational cohorts also influence each other.

    D) Marketers often advertise to a cohort by using the icons and images prominent in its experiences.

    Social Class

    A) Social class has a strong influence on preferences for consumers.

    B) Many companies design products and services for specific social classes.

    Psychographic Segmentation

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    A) Psychographics is the science of using psychology and demographics to better understand

    consumers.B) In psychographic segmentation, buyers are divided into different groups on the basis of lifestyle

    or personality or values.

    C) One of the most popular commercially available classification systems is SRI ConsultingBusiness Intelligences VALS framework.

    1) The major tendencies of the four groups with high resources are:

    a. Innovators

    b. Thinkersc. Achievers

    d. Experiencers

    2) The major tendencies of the four groups with lower resources are:

    a. Believers

    b. Striversc. Makers

    d. Survivors

    Behavioral Segmentation

    Many marketers believe behavioral variables are the best starting points for constructing market segments:

    )A Occasions: can be defined in terms of the time of day, week, month, year, or other well-defined

    temporal aspects of a consumers life.

    )B Benefits: Not everyone who buys a product wants the same benefits from it.)C User Status: Every product has its nonusers, ex-users, potential users, first-time users, and

    regular users.

    )D Usage rate: Light, medium, and heavy product users.)E Buyer-Readiness stage: unaware, aware, informed, interested, desire, and intend to buy.

    )F Loyalty status:

    )1 Hard-core loyals)2 Split loyals

    )3 Shifting loyals

    )4 Switchers

    BASIS FOR SEGMENTING BUSINESS MARKETS

    Business markets can be segmented with some of the variables used in consumer market segmentation but

    business marketers also use other variables. Within a given target market industry and customer size, a companycan segment further by purchase criteria. Business marketers generally identify segments through a sequential

    process.

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    BENEFITS OF MARKET SEGMENTATION

    The following are the advantages of Market Segmentation for a firm:

    Helps in better understanding of the customers needs and wants.

    Better targeting and position of the product.

    Encourages two-way communication among the potential buyer and the organization.

    Maintaining effective relationship with the customers.

    Retaining the existing customers and attracting new ones.

    Improving service delivery standards.

    Reducing cost / expenses on various marketing activities and increases market share; resulting in higher

    profits.

    MARKET TARGETING

    Once a firm has identified its market-segment opportunities, it must decide how many and which ones to target.This has lead some researchers to advocate a needs-based market segmentation approach.

    Effective Segmentation Criteria

    To be useful, market segments must rate favorable on five key criteria:)A Measurable

    )B Substantial)C Accessible

    )D Differentiable)E Actionable

    Evaluating and Selecting the Market Segments

    In evaluating different market segments, the firm must look at two factors: The segments overall attractiveness

    and the companys objectives and resources.

    A) Single-segment concentration1) Through concentrated marketing, the firm gains a strong knowledge of the segments needs and

    achieves a strong market presence.

    2) However, there are risks, a market segment can turn sour, or a competitor may invade

    the segment.3) For these reasons, many companies prefer to operate in more than one segment.

    4) Companies can try to operate in super-segments rather than in isolated segments.

    a. A super-segment is a set of segments sharing some exploitable similarity.B) Selective specialization

    1) The firm selects a number of segments, each objectively attractive and appropriate.

    2) This multi-segment strategy has the advantage of diversifying the firms risk.C) Product specialization

    1) The firm makes a certain product that it sells to several different market segments.

    D) Market Specialization1) The firm concentrates on serving many needs of a particular customer group.

    E) Full market coverage

    1) The firm attempts to serve all customer groups with all the products they might need.

    2) In undifferentiated marketing, the firm ignores segment differences and goes after the whole marketwith one offer.

    3) In differentiated marketing, the firm operates in several market segments and designs different

    products for each segment.F) Differentiated Marketing Costs

    Differentiated marketing typically creates more total sales than undifferentiated marketing but also increases

    the cost of doing business.

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    Additional Considerations

    Three other considerations must be taken into account in evaluating and selecting segments: segment-by-segment invasion plans, updating segmentation schemes, and ethical choice of market targets.

    A) Segment-by-segment invasion plans

    1) A company would be wise to enter one segment at a time.2) A companys invasion plans can be thwarted when it confronts blocked markets.

    3) The problem of entering blocked markets calls for a megamarketing approach.

    4) Megamarketing is the strategic coordination of economic, psychological, political, and public-

    relations skills, to gain the cooperation of a number of parties in order to enter or operate in a givenmarket.

    5) Once in, a multinational must be on its best behavior. This calls for well-thought-out civic positioning.

    Ethical Choice of Market Targets

    Market targeting generates public controversy. The public is concerned when marketers take unfair advantage

    of vulnerable groups or promote potentially harmful products.

    MARKET TARGETING

    Target market selection is the next logical step following segmentation. Once the market-segment opportunitieshave been identified, the organization got to decide how many and which ones to target. Lot of marketing effort

    is dedicated to developing strategies that will best match the firms product offerings to the needs of particulartarget segments. The firm should look for a match between the value requirements of each segment and its

    distinctive capabilities. Marketers have identified four basic approaches to do this:

    1. Undifferentiated Marketing

    A firm may produce only one product or product line and offer it to all customers with a single marketing mix.Such a firm is said to practice undifferentiated marketing, also called mass marketing. It used to be much more

    common in the past than it is today. A common example is the case of Model T built by Henry Ford and sold

    for one price to everyone who wanted to buy. He agreed to paint his cars any colour that consumers wanted, aslong as it is black. While undifferentiated marketing is efficient from a production viewpoint (offering the

    benefits of economies of scale), it also brings in inherent dangers. A firm that attempts to satisfy everyone in the

    market with one standard product may suffer if competitors offer specialized units to smaller segments of thetotal market and better satisfy individual segments.

    2. Differentiated Marketing

    Firms that promote numerous products with different marketing mixes designed to satisfy smaller segments aresaid to practice differentiated marketing. It is still aimed at satisfying a large part of the total market. Instead of

    marketing one product with a single marketing program, the firm markets a number of products designed to

    appeal to individual parts of the total market. By providing increased satisfaction for each of many targetmarkets, a company can produce more sales by following a differentiated marketing approach. In general, it

    also raises production, inventory and promotional costs. Despite higher marketing costs, a company may be

    forced to practice differentiated marketing in order to remain competitive.

    3. Concentrated Marketing

    Rather than trying to market its products separately to several segments, a firm may opt for a concentrated

    marketing approach. With concentrated marketing (also known as niche marketing), a firm focuses its efforts onprofitably satisfying only one market segment. It may be a small segment, but a profitable segment. This

    approach can appeal to a small firm that lacks the financial resources of its competitors and to a company that

    offers highly specialized good and services. Along with its benefits, concentrated marketing has its dangers.Since this approach ties a firms growth to a particular segment, changes in the size of that segment or in

    customer buying patterns may result in severe financial problems. Sales may also drop if new competitors

    appeal successfully to the same segment. Niche marketing leaves the fortunes of a firm to depend on one smalltarget segment.

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    4. Micro Marketing

    This approach is still more narrowly focused than concentrated marketing. Micro marketing involves targeting

    potential customers at a very basic level, such as by the postal code, specific occupation or lifestyle. Ultimately,

    micromarketing may even target individuals themselves. It is referred to as marketing to segments of one. Theinternet allows marketers to boost the effectiveness of micromarketing. With the ability to customize

    (individualization attempts by the firm) and to personalize (individualization attempts by the customer), the

    internet offers the benefit of mass customization by reaching the mass market with individualized offers for

    the customers.

    POSITIONING

    Having chosen an approach for reaching the firms target segment, marketers must then decide how best to

    position the product in the market. The concept of positioning seeks to place a product in a certain position inthe minds of the prospective buyers. Positioning is the act of designing the companys offer so that it occupies a

    distinct and valued place in the target customers minds. In a world that is getting more and more homogenized

    differentiation and positioning hold the key to marketing success!

    Positioning is not what you do to your product, but what you do to the mind of your customer. Every productmust have a positioning statement. A general form of such a statement is given below:

    Product X is positioned as offering (benefit) to (target market) with the competitive advantage of (competitive

    advantage) based on (basis for competitive advantage). For example, the positioning statement of toothpaste Xmay read as follows:

    Toothpaste X is positioned as offering to kids a toothpaste made especially for those kids who dont like tobrush with the competitive advantage of a mild fruit taste and lower foaming.

    Positioning can be done along different possibilities. Attribute positioning is when the positioning is based on

    some attribute of the product. Benefit positioning is when a derived benefit is highlighted as the unique selling

    propositioning. Competitor positioning is when a comparison is drawn with the competitor and a differentiationfrom the competitor is emphasized. Product category positioning is when a product is positioned to belong to a

    particular category and not another category which probably is crowded. Quality/price positioning is when the

    product is positioned as the best value for money. For example, a Pizza may be positioned on its taste or its

    natural contents or as an easy meal or with a thicker topping or as the lowest priced offering the best value formoney. Each one of them offers a distinct positioning possibility for a pizza. In the positioning decision, caution

    must be taken to avoid certain positioning errors: Underpositioning is done when a unique, but not so importantattribute is highlighted. As a result, the customer does not see any value in such a position. Overpositioning is

    done when the product performance does not justify the tall claims of positioning. Confused positioning is when

    the customer fails to categorize the product correctly and the product ends up being perceived differently fromwhat was intended.

    Positioning = Differentiation + Segmentation

    Doubtful positioning is when the customer finds it difficult to believe the positioning claims. Positioning map is

    a valuable tool to help marketers position products by graphically illustrating consumers perceptions ofcompeting products within an industry. For instance, a positioning map might present two differentcharacteristics, price and quality, and show how consumers view a product and its major competitors based on

    these traits. Marketers can create a competitive positioning map from information solicited from consumers or

    from their accumulated knowledge about a market.

    DEVELOPING AND COMMUNICATING A POSITIONING STRATEGY

    All marketing strategy is built on STPSegmentation, Targeting, and Positioning. A company discovers

    different needs and groups in the marketplace, targets those needs and groups that it can satisfy in a superiorway, and then positions its offering so that the target market recognizes the companys distinctive offering and

    image.

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    A) If a company does an excellent job of positioning, then it can work out the rest of its marketing planning and

    differentiation from its positioning strategy.

    B) Positioning is the act of designing the companys offering and image to occupy a distinctive place in the mindof the target market.

    1) The goal is to locate the brand in the minds of consumers to maximize the

    potential benefit to the firm.

    2) The result of positioning is the successful creation of a customer-focused valueproposition, a cogent reason why the target market should buy the product.

    3) Positioning requires that similarities and differences between brands be defined

    and communicated.

    4) Deciding on positioning requires determining a frame of reference by identifying

    target markets and competition and identifying the ideal points-of-parity and points-of-difference brandassociations.

    MARKETING MIX

    The most popular 4 Ps framework as suggested by McCarthy with the marketing mix variables- products, place,

    promotion and price had origination from the study of the manufacturers i.e. the organization engaged in productionand marketing of goods it is more oriented to deal with goods marketing situations. However service characteristics

    are radically different fro goods; and so are the challenges in their marketing. It is wrong to imply that services are just

    like products except for intangibility. But such wax-like logic as apples are just like oranges, except for their appleness does not stand the heat of nuts-and-bolts. Marketing Product / service characteristics and add new dimensions

    to a marketing situation that is faced by the service manager. Given the product / service characteristics and activities

    in product/service firms, eight Ps framework for services has been proposed. For the services, the additionalprescribed Ps given below refer to activities that are service marketing mix can be summarized as follows:

    Product - service core, levels, additional services, branding.

    Price - price, discounts, terms of payment.

    Place - location, channels of distribution, coverage.

    Promotion - Advertising, sales promotion, personal selling and publicity.

    Product: Theproduct, service, or program includes both tangible and intangible elements. The tangible, of course,

    are those things that the customer can see, touch, feel, taste, or smell. The intangible include such things as the imageof the offering ... which includes the image of the organization making the offering, the psychological aspects of

    pricing (high price to many customers is equated with high quality - and vice versa).

    Price: Theprice is what the customer pays. It includes direct and indirect costs as well as opportunity costs. The

    benefits of the product have to be great enough to warrant the price. Price includes all costs associated with the

    product, service, or program.

    Place: Theplace is where the customer receives the product, service, or program. The place of delivery, including all

    of its resources, is part of what the consumer buys. A place that meets his or her needs better may be worth more. The

    place may be a park, a visitor center in the park, or an interpretive exhibit along a trail. In setting its strategy, theorganization must determine how much the target market is willing to pay for atmosphere and physical resources of

    place.

    Promotion:Promotion includes all forms of communication you use to communicate the benefits of your offering to

    the target market(s). The objective is to persuade the customer in such a way that he or she recognizes that youroffering is uniquely qualified to meet his or her needs. The termpromotion mix is commonly used to refer to the types

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    of communication that are available: advertising, public relations, personal selling, publicity, and sales promotion.

    Some authors include direct marketing. Word of mouth, though seldom discussed, is powerful promotion.

    emen s o e ar e

    Mix

    Product

    Price

    ADDITIONAL 4 Ps WERE ADDED FOR MARKETING SERVICES. THEY ARE:

    People - customer-provider relationship, training, culture, skills, and attitudes.

    Physical- ambience, appearance, equipment, machines Evidence Buildings, physical facilities.

    Process Activity sequence, quality management, customer participation and delivery process

    Services Marketing and the Extended Marketing Mix (7P's).

    A service is the action of doing something for someone or something. It is largely intangible (i.e. not material). Aproduct is tangible (i.e. material) since you can touch it and own it. A service tends to be an experience that is

    consumed at the point where it is purchased, and cannot be owned since is quickly perishes. A person could go to a

    caf one day and have excellent service, and then return the next day and have a poor experience.

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    Physical Evidence - Physical Evidence is the material part of a service. Strictly speaking there are no physicalattributes to a service, so a consumer tends to rely on material cues. There are many examples of physical evidence,

    including some of the following: Physical evidence is the material part of a service. Strictly speaking there are no

    physical attributes to a service, so a consumer tends to rely on material cues. There are many examples of physicalevidence, including some of the following:

    Packaging.

    Internet/web pages.

    Paperwork (such as invoices, tickets and despatch notes).

    Brochures.

    Furnishings.

    Signage (such as those on aircraft and vehicles).

    Uniforms.

    Business cards.

    The building itself (such as prestigious offices or scenic headquarters).

    People - People are the most important element of any service or experience. Services tend to be produced and

    consumed at the same moment, and aspects of the customer experience are altered to meet the 'individual needs' of the

    person consuming it. Most of us can think of a situation where the personal service offered by individuals has made ortainted a tour, vacation or restaurant meal. Remember, people buy from people that they like, so the attitude, skills and

    appearance of all staff need to be first class. Here are some ways in which people add value to an experience, as part

    of the marketing mix - training, personal selling and customer service.

    Training - All customer facing personnel need to be trained and developed to maintain a high quality of personalservice. Training should begin as soon as the individual starts working for an organization during an induction.

    The induction will involve the person in the organization's culture for the first time, as well as briefing him or her

    on day-to-day policies and procedures. At this very early stage the training needs of the individual are identified.A training and development plan is constructed for the individual which sets out personal goals that can be linked

    into future appraisals. In practice most training is either 'on-the-job' or 'off-the-job.' On-the-job training involves

    training whilst the job is being performed e.g. training of bar staff. Off-the-job training sees learning taking place

    at a college, training centre or conference facility. Attention needs to be paid to Continuing ProfessionalDevelopment (CPD) where employees see their professional learning as a lifelong process of training and

    development.

    Personal Selling - There are different kinds of salesperson. There is the product delivery salesperson. His or hermain task is to deliver the product, and selling is of less importance e.g. fast food, or mail. The second type is the

    order taker, and these may be either 'internal' or 'external.' The internal sales person would take an order by

    telephone, e-mail or over a counter. The external sales person would be working in the field. In both cases little

    selling is done. The next sort of sales person is the missionary. Here, as with those missionaries that promote faith,the salesperson builds goodwill with customers with the longer-term aim of generating orders. Again, actually

    closing the sale is not of great importance at this early stage. The forth type is the technical salesperson, e.g. a

    technical sales engineer. Their in-depth knowledge supports them as they advise customers on the best purchase

    for their needs. Finally, there are creative sellers. Creative sellers work to persuade buyers to give them an order.This is tough selling, and tends to offer the biggest incentives. The skill is identifying the needs of a customer and

    persuading them that they need to satisfy their previously unidentified need by giving an order.

    Customer Service - Many products, services and experiences are supported by customer services teams.Customer services provided expertise (e.g. on the selection of financial services), technical support (e.g. offering

    advice on IT and software) and coordinate the customer interface (e.g. controlling service engineers, or

    communicating with a salesman). The disposition and attitude of such people is vitally important to a company.The way in which a complaint is handled can mean the difference between retaining or losing a customer, or

    improving or ruining a company's reputation. Today, customer service can be face-to-face, over the telephone or

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    using the Internet. People tend to buy from people that they like, and so effective customer service is vital.

    Customer services can add value by offering customers technical support and expertise and advice.

    Process - Process is another element of the extended marketing mix, or 7P's.There are a number of perceptions of theconcept of process within the business and marketing literature. Some see processes as a means to achieve an

    outcome, for example - to achieve a 30% market share a company implements a marketing planning process. Another

    view is that marketing has a number of processes that integrate together to create an overall marketing process, forexample - telemarketing and Internet marketing can be integrated. A further view is that marketing processes are used

    to control the marketing mix, i.e. processes that measure the achievement marketing objectives. All views are

    understandable, but not particularly customer focused. For the purposes of the marketing mix, process is an element ofservice that sees the customer experiencing an organisation's offering. It's best viewed as something that your

    customer participates in at different points in time. Here are some examples to help your build a picture of marketing

    process, from the customer's point of view. Going on a cruise - from the moment that you arrive at the dockside, youare greeted; your baggage is taken to your room. You have two weeks of services from restaurants and evening

    entertainment, to casinos and shopping. Finally, you arrive at your destination, and your baggage is delivered to you.

    This is a highly focused marketing process. Processes essentially have inputs, throughputs and outputs (or

    outcomes). Marketing adds value to each of the stages.

    The marketing process model based on the publications of Philip Kotler. It consists of 5 steps, beginning withthe market & environment research. After fixing the targets and setting the strategies, they will be realized by

    the marketing mix in step 4. The last step in the process is the marketing controlling.

    REFERANCE: Marketing management : A south Asian Perspective 13th ed. by Philip kotler, Kevin Lane Keller,

    Abraham Kosley and Mithileshwar Jha. Pearson Education.

    http://en.wikipedia.org/wiki/Marketing_management

    http://www.marketingteacher.com

    .

    http://en.wikipedia.org/wiki/Marketing_managementhttp://www.marketingteacher.com/http://en.wikipedia.org/wiki/Marketing_managementhttp://www.marketingteacher.com/