Marketing Nmims

7/30/2019 Marketing Nmims

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Marketing Management

Swati Sisodia

[email protected]


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Introduction to Marketing


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What is Marketing ?

Marketing is the ManageMent

process that identifies,

anticipates and satisfiescustoMer requireMents

profitably


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What is marketing?

the right product, in the right

place, at the right tiMe, and at

the right price


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What is marketing ?

Marketing is the huMan

activity directed at

satisfying huMan needs andwants through an exchange

process


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Management definition

it is the process ofplanning andexecutingtheconception, pricing,proMotion and distribution of ideas,goods and services to createexchangesthat satisfyindividualand organizational goals.


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What is Marketed?

Goods Services Events Experiences Persons Places Properties

Organizations Information Ideas


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Implications of Marketing

Who are our existing/potential customers?

What are their current/future needs?

How can we satisfy these needs/

Can we offer a product/service that the customerwould value?

Can we communicate with our customers?

Can we deliver a competitive product or service?

Why should customers buy from us?


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CUSTOMER VALUE AND SATISFACTION


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Customer Value & Customer Cost

Customer value Customer cost

Is the bundle

of benefitscustomer

expect from a

given product

or service

Is the bundle

of costs

customers

expect to incurin evaluating,

obtaining, and

using the

product or

service

Total Customer Cost is the summation of:-Monetary Cost-Time Cost-Energy Cost

-Psychic Cost


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Customer Satisfaction

Is a persons feelings of pleasure or

disappointment resulting from comparing a

products perceived performance in relation

to his or her expectations


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Maximizing Customer Lifetime Value

The key to retaining customers is relationshipmarketing

Losing profitable customers can dramaticallyaffect a firms profits. The cost of attracting a

new customer is estimated to be five times

the cost of keeping a current customer happy

Cultivating Customer Relationships

Customer Relationship Management (CRM)


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CONSUMER BEHAVIOUR


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Definitions, concepts and Interpretations

. Consumer behavior may be defined as:

.... . the decision process and physical activity individuals engage in when evaluating,

acquiring, using, or disposing of goods and services

Definitions of the consumer and the customer vary from context to context...

Consumer Customer Customer

+

Consumer

Consumption based understanding

- Consumers are the individuals engaged in the final

act of using the good

- Customers may be merely buying the good for the

consumer


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Participants in buying process

Purchase process

Initiator Influencer Buyer User

The person who

identifies the

products need

The person who

decides the process

brand of purchase

The person who

physically procures

The person who

applies

Decider

One who decides


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The five dimensions of consumer behaviour

Psychology

Study of the behavior and

mental processes of

individuals

Sociology

Study of the collective behavior of

people in groups

Social psychology

Study of how individuals

influence and are influenced by

groups

Economics

Study of people's production,

exchange, and consumption of

goods and services

Anthropology. Study of

people in relation to their

culture


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Developing Marketing StrategyWhere are we going and how will we get there?


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Benefits of Strategy

Coordinate efforts

of entire company

Specify what

resources will go

where

Leads to superiormarket position


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Elements of product strategy

Objective(s) for product

Strategic alternatives

Customer target(s) Core strategy

Supporting marketing mix

Supporting functional program


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Setting objectives

Where do we want to go with the product? Growth

Sales revenues

Market share

Profitability Cash flow

Maximize stock value

Quality

Brand equity Satisfaction

All the above


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Elements of objectives

Clearlyquantified

Challengingbut doable

Specifictime frame


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Market Segmentation,

Targeting, and Positioning


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Definition.

Segmentation is the process of classifying customers

into groups which share some common characteristic

Targeting involves the process of evaluating each

segments attractiveness and selecting one or more

segments to enter

Positioning is arranging for a product to occupy a clear,distinctive and desirable place relative to competing

products in the mind of the consumer

Advantages of segmentation as a process


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The closer matching of a companys products and capabili ties with customers

needs and more specifically, directing resources to the most potentially prof itable

segments

A greater understanding of how to most effect ively communicate with

customers in the market, including quantifying the responses of segments

already established

An insight into the first signs of behavioural changes of consumers,

allowing for such things as product repositioning

The identification of new product /service opportunit ies from segments that

have not been previously exploited , although marketing research oriented toward

this area has been limited

Improving s trategy by not competing head on with larger organisations with

superior resources

Advantages of segmentation as a process . . .

Dr.Deshpande : Market segmentation4


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Steps in Market Segmentation, Targeting & Positioning

MarketSegmentation

MarketTargeting

MarketPositioning

1. Identify

segmentation

variables and

segment the

market.

2. Develop

profi les of

resulting

segments

3. Evaluate

attractiveness

of each segment

4. Select the

target

segment(s)

6. Select,develop,and communicatethe chosen

positioningconcept

5. Identifypossible positioningconcepts for eachtarget segment



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Basis for Segmenting Consumer Markets

GeographicNations, states,regions or cities

DemographicAge, gender, fami lysize and life cycle,

PsychographicSocial class, lifestyle, or

personality

BehavioralOccasions,

benefits, uses, or

responses


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Dividing markets A logical base set for segmentation



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Requirements for Effective Segmentation

Measurable

AccessibleAccessible

Measurable

Substantial

Differential

Actionable

Size, purchasing power, profileof segments can be measured.

Segments must be effectivelyreached and served.

Segments must be large or

profi table enough to serve.

Segments must respond

differently to different marketing

mix elements & actions.

Must be able to attract and

serve the segments.


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Market Targeting

Once the firm has identified its market-segment opportunities, it has to decide

how many and which ones to target

Decisions relating to segment targeting are taken on the growth/ risk

parameters


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Can be defined with some

precision, a niche

Well timed, within market

window

Customers accessible Growing fast enough

Not owned by one established

vendor

Expansion paths to other niches

Well suited to strengths

Criteria for well chosenmarkets

Vague

Too large

Premature, or too late

No clear way to reach customers

Static or declining

Already owned by others

Not suited to strengths

Criteria for poorly chosenmarkets



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Product Differentiation

Form Features Performance Quality

Conformance

Quality

Durability Reliability Repair-abilityStyle Design



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Positioning Basis

Positioning is

the act of designing the

companys offering and image

to occupy a distinctive place

in the target markets mind

relative to competitors

Positioning Basis

Attribute

Price and Quality

Use or Application

Product User

Competitor


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Product management


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Product assortment HLL perspective

Product dynamics

Number of

different

product lines

Breadth DepthLength Consistency

HLL:

Detergents,

cosmetics,Toiletries, Food

etc..

Total number

of items the

companycarries

HLL:

Detergents

category, Surf

& Wheel

Number of

versions

offered of each

product in the

line

HLL:

Toothpaste has

close-up as a

brand with

Blue and Red

variants

Closeness of

end use,

production etc.

HLL: Detergent

manufacturing

process is the

same for all

brands


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The product life cycle A typical case

Time

ProductDevelopment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments (Rs)

Sales andProfits (Rs)


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Exercise

Which phase of product life cycleshall we place the following

products?1. Desktop2. Laptop

3. Mobile4. Tablet PC


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Creating reputation Branding

A brand is name, term, sign, symbol or design or a combination of them used to signal

value and differentiate offerings

Product brands Corporate brands

Multi brands

Single brands Umbrella brands

Fevicol from

Pidilite

Lux, Dove , Lirilall brands of soap

from Hindustan Lever

Tatas ,

L&T etc

Park Avenue forpersonal

grooming products


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Pricing Strategies

Pricing strategy will depend mainly

on

Targeted segment

Expected positioning

Growth plans

Profitability expectation etc.


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Pricing Strategy

how does a company decide what priceto charge for its products and services?

what is the price anyway? doesntprice vary across situations and over time?

some firms have to decide what tocharge different customers and in differentsituationsthey must decide whether discounts areto be offered, to whom, when, and forwhat reason

M k t E t


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Market Entry

Pricing Strategies

Market-Skimming Pricing: Setting a high initial pricefor a new product.

Works if product is new, distinctive and desiredEarly in Product Life Cycle, when demand inelasticProtected by entry barriers, e.g. patents

Market-Penetration Pricing: Setting a low initial price

for a new product.Works if large market, elastic demandEconomies of scale are possibleFierce competition


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Discounts and Allowances

Quantity discount: The more youbuy, the cheaper it becomes--cumulative and non-cumulative.

Trade discounts: Reductions fromlist for functions performed--storage, promotion.Cash discount: A deduction grantedto buyers for paying their bills withina specified period of time, (after firstdeducting trade and quantitydiscounts from the base price)

Everyday Low Price (EDLP)


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Everyday Low Price (EDLP)vs. High/Low Pricing

In EDLP pricing, a retailer charges aconstant, low price with no temporary

discounts. For example: Wal-Mart,Big Bazar D Mart

In high-low pricing, a retailer chargeshigher prices but then runs frequentpromotions in which prices aretemporarily lowered.


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Pricing strategies & tactics

Skimming Launching with a high price when there is littlecompetition, then reducing the price later. Oftenused with technology.

Penetration Low price charged initially to penetrate themarket and build brand loyalty; price is thenincreased e.g. introductory offers on magazines.

Competitive A similar price is charged to that of competitorsproducts.

Psychological A price is set which customers perceive as lowerthan it is e.g. Rs 39 instead of Rs40.


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ACTIVITY

how should youprice if your

product is a life-saving drug?


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Marketing Mix

The marketing mix principles are

controllable variables

which have to be carefully managedand must meet the

needs of the defined target group.

All elements of the mix are Linkedand must support each other.


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Product refers to the

functions and features of a

good or serviceShould satisfy the needs of

the customer

May have a Unique Selling

Proposition (USP)

Product also includes a

range of factors such aspackaging, quality,

warranties, after-sales

service and branding

The price of a product will

depend on:The cost to make it

The amount of profit

desired

Other objectives of the

business

The price competitorscharge

The price customers are

willing to pay

Is there a high

demand?

Is demand sensitiveto changes in price?

PRODUCT PRICE


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Productsshould be

conveniently

available for

customers to

buy

The aims of

promotion

are to:

Raise

awareness

Encourage

sales

Create or

change a

brand image

Maintain

market share

The use of

e-commerce (promoting

and selling on the

internet) has grown

massively over the last

few years

PLACE PROMOTION


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Extended Marketing Mix

Service industry


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Channels of distribution

Manufacturers

Wholesaler

Retailer

Consumer


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Promotion Strategy

Above-the-line promotion

This uses advertising media over which a firmhas no direct control e.g. television, radio and

newspapers

Below-the-line promotion

This uses promotional media which the firm cancontrol e.g. direct mail, sales promotions andsponsorship


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Marketing Communications

Communication by marketers that informs,persuades, and reminds potential buyers of a

product in order to influence an opinion or

elicit a response

Purposes of Marketing

Communications

not only informs, but is also used

to differentiate the sellers

products/servicesInforms, persuades and remindsIs part of the marketing mix

Includes all the means by which acompany communicates directlywith potential customers.Atempts to influence feelings,beliefs, or behaviour.

Marketing Communication


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Marketing Communication

Methods

Personal selling: The direct presentation of a product to a prospective customer by arepresentative of the selling organization.

Advertising: A paid, impersonal mass communication with a clearly-identified sponsor.

Sales promotion: Demand-stimulating activity designed to supplement advertisingand facilitate personal selling.

Publicity: A special form of public relations that involves news stories about anorganization or its products.

Public relations: A planned communication effort by an organization to contribute togenerally favourable attitudes and opinions toward an organization and its products.


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BCG Matrix

BCG MATRIX


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BCG MATRIX


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MARKET SHARE

Market share is the percentage of the total market that isbeing serviced by your company, measured either in revenueterms or unit volume terms.

RELATIVE MARKET SHARE

RMS = Business unit sales this yearLeading rival sales this year

The higher your market share, the higher proportion of themarket you control.

MARKET GROWTH


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MARKET GROWTH

RATE

Market growth is used as a measure of a marketsattractiveness.

MGR = Individual sales - individual salesthis year last year

Individual sales last year

Markets experiencing high growth are ones where the totalmarket share available is expanding, and theres plenty of

opportunity for everyone to make money.


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THE BCG GROWTH-SHARE MATRIX

It is aportfolio planning modelwhich is based on theobservation that a companys business units can be classified

in to four categories:

Stars

Question marks

Cash cows

Dogs

It is based on the combination of market growth and marketshare relative to the next best competitor.

STARS


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STARSHigh growth, High market share

Stars are leaders in business.

They also require heavy investment, to

maintain its large market share. It leads to large amount of cash

consumption and cash generation.

Attempts should be made to hold themarket share otherwise the star willbecome a CASH COW.

CASH COWS


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CASH COWS

Low growth , High market share

They are foundation of the company and often

the stars of yesterday. They generate more cash than required. They extract the profits by investing as little

cash as possible

They are located in an industry that is mature,not growing or declining.

DOGS


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Low growth, Low market share

Dogs are the cash traps.

Dogs do not have potential to bring inmuch cash.

Number of dogs in the company should beminimized.

Business is situated at a declining stage.

QUESTION MARKS


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QHigh growth , Low market share

Most businesses start of as question marks.

They will absorb great amounts of cash if the

market share remains unchanged, (low). Why question marks?

Question marks have potential to become star

and eventually cash cow but can also becomea dog.

Investments should be high for question

marks.

WHY BCG MATRIX ?


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WHY BCG MATRIX ?

To assess :

Profiles of products/businesses

The cash demands of products

The development cycles of products

Resource allocation and divestment

decisions


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MAIN STEPS OF BCG MATRIX

Identifying and dividing a company into SBU.

Assessing and comparing the prospects ofeach SBU according to two criteria :

1. SBUS relative market share.

2. Growth rate OF SBUS industry.

Classifying the SBUS on the basis of BCG

matrix.

Developing strategic objectives for each SBU.

BENEFITS


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BCG MATRIX is simple and easy to understand.

It helps you to quickly and simply screen theopportunities open to you, and helps you

think about how you can make the most ofthem.

It is used to identify how corporate cash

resources can best be used to maximize acompanys future growth and profitability.

LIMITATIONS


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LIMITATIONS

BCG MATRIX uses only two dimensions,Relative market share and market growth rate.

Problems of getting data on market share and

market growth.

High market share does not mean profits allthe time.

Business with low market share can beprofitable too.

Exercise


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Exercise

Lets work out the BCG model for Maruti Suzuki


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Though BCG MATRIX has its limitations it is one of the

most FAMOUS AND SIMPLE portfolio planning matrix ,

used by large companies having multi-products.

Documents

Marketing Nmims