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BASICS OF MARKETING
SAGAR PRADEEP SONAWANE
What is Marketing?
Selling ?
Advertising?
Promotions?
Marketing is managing profitable customer relations
Marketing defined by AMA
The new definition reads:“Marketing is the activity, set of institutions and processes for creating, communicating,delivering, and exchanging offerings that have value for customers, clients, partners, andsociety at large.”
The previous definition stated:“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 thatbenefit the organization and its stakeholders.”
MARKETING DEFINED…….
The process by which companies create value for customers and build strong relationship in order to capture value in return. – P. KOTLER.
“ The aim of marketing is to make selling unnecessary” - PETER DRUCKER
SCOPE
WHAT IS MARKETED ????????
WHAT IS MARKETED? GOODS
TV, Bike, Car
SERVICES Airlines, Hotels, doctors, lawyers
EXPERIENCES
Amusement parks, Water park, theme restaurants
EVENTSOlympics, company anniversaries, major trade shows, sports event and artistic performances, world cup
PERSONSCelebrity marketing has become a major business. Eg artists, musicians, politicians etc
WHAT IS MARKETED?
PLACESKerala –Gods own country, Incredible India, Silicon Valley – Bangalore, Pune - …..
PROPERTIESProperties are intangible right of ownership of either real property (real estate) or financial property (stocks and bonds)
ORGANIZATIONSOrganizations actively work to build a strong, favorable image in the mind of their publics eg TATA,
INFORMATIONSInformation can be produced and marketed as a product. Eg – Siemens Mediacal Systems –
IDEASEvery market offering includes a basic idea at its core eg Encouraging family planning , Discouraging smoking, JAGO – RE – Tata Tea, etc
MARKETING PROCESS
UNDERSTAND THE MARKETPLACE &
CUSTOMER NEEDS & WANTS
DESIGN A CUSTOMER –
DRIVEN MARKETING STRATEGY
CONSTRUCT AN INTEGRATED
MARKETING PROGRAM THAT DELIVERS
SUPERIOR VALUE
BUILD PROFITABLE RELATIONSHIP AND CREATE CUSTOEMR
DELIGHT
CAPTURE VALUE FROM CUSTOMERS TO PROFITS AND CUSTOMER EQUITY
1. UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS
CORE CONCEPTS OF MARKETINGCUSTOMER NEEDS, WANTS & DEMAND :NEEDS – States of felt deprivationEg. a. Physical needs – food, clothing,
shelter, warmth safety. b. Social needs – for belonging & affection c. Individual needs – for knowledge & self
expression
1. UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS
CORE CONCEPTS OF MARKETINGNEEDS – 1. Stated Needs: The customer wants an inexpensive car2. Real Needs : The customer wants a car whose
operating cost, not its initial price is low.3. Unstated Needs: The customer expects good service
from the dealer4. Delight needs : The customer would like the dealer to
include an onboard navigation system.5. Secret Needs : The customer wants friends to see him
as a savvy consumers
1. UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS
CORE CONCEPTS OF MARKETINGNEEDS – Responding to stated needs –
shortchange the customer.
Eg. Nokia, Apple Companies must help customers learn
what they want.
1. UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS
CORE CONCEPTS OF MARKETINGWANTS : The form of human needs take
as shaped by culture and individual personality.
Eg. Needs food but wants …..DEMAND : Human wants that are backed
by buying power ( Ability to pay) & willingness to buy.
1. UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS
CORE CONCEPTS OF MARKETING
VALUE PROPOSITION : A SET OF BENEFITS THAT COMPANY OFFERS TO SATISFY CUSTOMER NEEDS
MARKET OFFERINGS : The intangible value proposition is made physical by an offering. Market offering is some combination of product, services, information or experience offered to market to satisfy a need or want.
17
VALUE VALUE
Value = Benefit / CostBenefit = Functional Benefit + Emotional
BenefitCost = Monetary Cost + Time Cost +
Energy Cost + Psychic Cost
18
CUSTOMER SATISFACTION & CUSTOMER DELIGHT CUSTOMER SATISFACTION & CUSTOMER DELIGHT
Customer Delight:
Product Performance > Expectations
Customer Satisfaction:
Product Performance = Expectations
Customer Dissatisfaction:
Product Performance < Expectations
1. UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS
CORE CONCEPTS OF MARKETING
PRODUCT-Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need.
It includes physical objectives, services, persons, places, organizations, ideas etc.
1. UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS
CORE CONCEPTS OF MARKETING
EXCHANGE : The act of obtaining a desired object from someone by offering something in return.
TRANSACTION : Transaction is a trade between two parties that involves at least two things of value, agreed-upon conditions, time of agreement and a place of agreement.
1. UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS
CORE CONCEPTS OF MARKETING
MARKET : Traditionally market was place where buyers and sellers gathered to buy or sell goods.
P. Kotler: Defines market as the set of all actual and potential buyer of a product or service
1. UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS
Markets:
Manufacturer Markets
Government Markets
Consumer Markets
Intermediary Markets
Resource Markets
Resources
Money
Resources
Money
Money
Goods and services
Money
Goods and services
Service, Money
Service, Money
Taxes, goods
Taxes, goods
Service, Money
Taxes, goods
Taxes
goods
1. UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS
Market places, Market spaces & Metamarkets:
Market place : The marketplace is physical. E.g. – store you shop in.
Market space : Marketspace is digital, as when you shop on Internet.
Metamarkets : Metamarket describes cluster of complementary products and services
that are closely related in the minds of consumer, but spread across diverse set of industries. E.g. Automobile Metamarket.
1.UNDERSTAND THE MARKETPLACE AND CUSTOMER NEEDS & WANTS
A Modern Marketing System :
Suppliers
Company
Channel
Members
Consumers
Competitors
2. DESIGNING A CUSTOMER DRIVEN MARKETING STRATEGY
1. Who it will serve?2. How it will serve?Eg TATA Nano – Is this a right decision?
STRATEGY :
SegmentationTargeting DifferentiationPositioning
2. DESIGNING A CUSTOMER DRIVEN MARKETING STRATEGY
Marketing Orientations (Philosophies):
The Production Concept The Product Concept The Selling Concept The Marketing Concept The Societal Marketing Concept
2. DESIGNING A CUSTOMER DRIVEN MARKETING STRATEGY
Marketing Orientations (Philosophies):
The Production Concept :“The idea that consumers will favor products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency”.
E.g. Lenovo – Dominates Chinese PC Market
2. DESIGNING A CUSTOMER DRIVEN MARKETING STRATEGY
Marketing Orientations (Philosophies):
The Product Concept :“The idea that consumers will favor products that offer the most quality, performance and features and that the organization should therefore devote its energy to making continuous product improvements”.
Note: Product concept can lead to Myopia.
2. DESIGNING A CUSTOMER DRIVEN MARKETING STRATEGY
Marketing Orientations (Philosophies):
The Selling Concept :“The idea that consumers will not buy enough of the firm’s products unless it undertakes a large – scale selling & promotion effort”.
E.g. Insurance
2. DESIGNING A CUSTOMER DRIVEN MARKETING STRATEGY
Marketing Orientations (Philosophies):
The Marketing Concept :“The Marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors do”.
2. DESIGNING A CUSTOMER DRIVEN MARKETING STRATEGY
SELLING CONCEPT MARKETING CONCEPT
Starting Point – Factory Focus – Existing
Products Means – Selling &
Promoting Ends – Profits through
sales volumes
Starting Point – Market Focus – Customer Needs Means – Integrated
Marketing Ends – Profits through
Customer satisfaction
2. DESIGNING A CUSTOMER DRIVEN MARKETING STRATEGY
Marketing Orientations (Philosophies):
The Societal Marketing Concept :“The idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long – run interests and society’s long – run interests
E.g. Bottled water industry
2. DESIGNING A CUSTOMER DRIVEN MARKETING STRATEGY
Product Concept leads to …….
Marketing Myopia :
Myopia : Short Sightedness.Ted Levitt – HBR 1960Eg. American Rail , Bajaj Auto
Definition: The mistake of paying more attention to specific products a company offers than to the benefits & experiences produced by these product.
3. PREPARING AN INTEGRATED MARKETING PLAN & PROGRAM
Company’s marketing strategies outlines Which customers to serve How it will create value for these
customers
3. PREPARING AN INTEGRATED MARKETING PLAN & PROGRAM
Need satisfying market offering – PRODUCT Amount to be charged for the offering -
PRICE Making the offering available to the
customers – PLACE Communicate Offering & persuade them
of its merits – PROMOTION 4Ps OF Marketing - Marketing Mix – TOOLS
MARKETING MIX
4. BUILDING CUSTOMER RELATIONSHIPS
Customer Relationship Management: The overall process of building & maintaining profitable customer relationship by delivering superior customer value & satisfaction.
a. Customer relationship levels & tools: E.g. HUL, Harley Owners Group HOG
(Magazines, touring handbook, roadside assistance, insurance, fly & ride program)
4. BUILDING CUSTOMER RELATIONSHIPS
b. Relating with more carefully selected
customers E.g.. Best Buy – Customer-centricity
strategy, Angels & Demons.
c. Relating more deeply & Interactively. E.g.. Social networking , Online communities, Pantene.
4. BUILDING CUSTOMER RELATIONSHIPS
d. Partner Relationship Management:- Partners Inside the Company E.g.. P & G – Customer development
teams
Marketing Partners Outside the Firm Suppliers, Distributors, Dealer,
Retailers.
5. CAPTURING VALUE FROM CUSTOMERS
Creating Customer Loyalty E.g. Shoppers Stop – Reward Points
Customer lifetime value:The value of entire stream of purchases that the customer would make over a lifetime of patronage.
Customer Equity Increasing share of customer
MARKETING PROCESS
UNDERSTAND THE MARKETPLACE &
CUSTOMER NEEDS & WANTS
DESIGN A CUSTOMER –
DRIVEN MARKETING STRATEGY
CONSTRUCT AN INTEGRATED
MARKETING PROGRAM THAT DELIVERS
SUPERIOR VALUE
BUILD PROFITABLE RELATIONSHIP AND CREATE CUSTOEMR
DELIGHT
CAPTURE VALUE FROM CUSTOMERS TO PROFITS AND CUSTOMER EQUITY
GOODS SERVICES CONTINUUM
GOODS SERVICES CONTINUUM
WE DISCUSSED….
Scope & importance Core concepts Marketing process Philosophies / orientations
CAN ANYONE DEFINE MARKETING?
DEFINITION OF MARKETING
THE PROCESS BY WHICH COMPANIES CREATE VALUE FOR CUSTOMERS AND BUILD STRONG RELATIONSHIPS IN ORDER TO CAPTURE VALUE FROM CUSTOMERS IN RETURN .
– P. KOTLER.
TO CREATE VALUE ..
Value for whom? ……………………………for CUSTOMERS.
Who is customer?
“A customer is the most important person ever in this office …..in person or by mail.”
WHO IS CUSTOMER?
A customer is not dependant on us ….we are dependant on him
We are not doing favor by serving him……………………………………….he is doing favor by giving us the opportunity to do so.
WHO IS CUSTOMER?
A customer is not interruption of our work………………………………………............................. he is purpose of it.
………….So it is must for any & every organization to understand customer first (The purpose of organization)
Importance of studying consumer behaviour.
Buying process Factors influencing consumer buyer
behaviour.
Why we should Study Consumer Behaviour ?
IMPORTANCE
To know –
Why customers buy ?
Motives
fear vanity pridepossession love & affection convenience
health & physical well being
IMPORTANCE
To know –
What buys?when buys?Where buys?How buys?
IMPORTANCE
Why to know these things?
To design Strategy & Marketing Plan Related to Product (What) Related to Place (where) Related to Frequency (when) Related to price / promotions (How) Overall marketing Efforts.
CONSUMER BEHAVIOUR
Definition :
“Consumer behaviour is the study of when, why, how, and where people do or do not buy a product.”
FACTORS/ CHARACTERISTICS INFLUENCING BUYER BEHAVIOUR
What are the factors that can influence buyer behaviour ????
FACTORS/ CHARACTERISTICS INFLUENCING BUYER BEHAVIOUR
1. Buyer’s Characteristicsa. Cultural Factors - Culture, Subculture, social
classb. Social Factors – Social groups, Ref. groups,
opinion leader, family, roles & statusc. Personal Factors – Age, Life cycle stage,
education, occupation, Economic situation, life style, personality, self concept
d. Psychological Factors - Motivation, perception, learning, belief & attitude
FACTORS/ CHARACTERISTICS INFLUENCING BUYER BEHAVIOUR
2. Product Characteristicsa. Attributes / featureb. Qualityc. Availabilityd. Price e. Packagingf. Promotionsg. Brand
FACTORS/ CHARACTERISTICS INFLUENCING BUYER BEHAVIOUR
3. Seller’s Characteristics
a. Repute & Reliability of Producerb. Repute & Reliability of Authorized stockiest
FACTORS/ CHARACTERISTICS INFLUENCING BUYER BEHAVIOUR
4. Situational Characteristics:
a. Festive Seasonb. Marriagec. Religious occasionsd. Seasonal Productse. Scarcity in Product ( Artificial demand)
1. Buyer’s Characteristics:Cultural - Culture, Subculture, social classSocial – Ref. groups, family, roles & statusPersonal – Age, Life cycle stage, education, occupation, Economic situation, personality, life style, self conceptPsychological- Motivation, perception, learning, belief & attitude
2
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Factors/ Characteristics
influencing buyer behaviour
BUYER DECISION PROCESS
5 STEP BUYER DECISION PROCESS (CONSUMER BUYING)
1. NEED RECOGNITION
2. INFORMATION SEARCH
3. EVALUATION OF ALTERNATIVES
4. PURCHASE DECISION
5. POST PURCHASE BEHAVIOUR
BUSINESS BUYING PROCESS
The decision process by which business buyers determine which products and services their organization need to purchase, and then find, evaluate and choose among alternative suppliers and brands.
BUSINESS BUYING PROCESS
1. PROBLEM RECOGNITION :The first step of business buying process in which someone in the company recognizes a problem or need that can be met by acquiring a good or a service.
BUSINESS BUYING PROCESS
2. GENERAL NEED DESCRIPTION :The stage in the business buying process in which the company describes the general characteristics and quantity of a needed item.
BUSINESS BUYING PROCESS
3. PRODUCT SPECIFICATION :The stage of the business buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item.
BUSINESS BUYING PROCESS
4. SUPPLIER SEARCH :The stage of business buying process in which the buyer tries to fine the best vendors.
BUSINESS BUYING PROCESS
5. PROPOSAL SOLICITATION:The stage of business buying process in which the buyer invites qualified supplier to submit proposal.
BUSINESS BUYING PROCESS
6. SUPPLIER SELECTION:The stage of business buying process in which the buyer reviews proposal and select a supplier or suppliers.
BUSINESS BUYING PROCESS
7. ORDER-ROUTINE SPECIFICATION:The stage of business buying process in which the buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties.
BUSINESS BUYING PROCESS
8. PERFORMANCE REVIEW:The stage of business buying process in which the buyer assesses the performance of the supplier and decides to continue, modify or drop the arrangement.
BUSINESS BUYING PROCESS
Stages of Business Buying Process
1. Problem Recognition 5. Proposal Solicitation
2. General need description
6. Supplier Selection
3. Product Specification 7. Order- routine specification
4. Supplier Search 8. Performance Review.
CONSUMER MARKET & ORGANIZATIONAL MARKET BUYING BEHAVIOUR
Parameter
Organizational Market – Consumer Behaviour
Consumer Market – Domestic buyer Behaviour
Type Micro ( Concerned @ function)
Macro ( Concerned @ function, style, use, fashion etc.
Role of packaging
Protection Promotion
Price Negotiation
More concerned Less concerned
Method of Buying
Direct buying Through channels
Method of Buying
Rational Buying (Head) Emotional Buying (Heart)
People Involved
More Less
CONSUMER MARKET & ORGANIZATIONAL MARKET
Parameter Organizational Market – Consumer Behaviour
Consumer Market – Domestic buyer Behaviour
Influence Public Relations Advertisement
Proposal Proposal solicitation & Qualifying suppliers
Less bothered to invite proposals
Impulse buying
Absent Present
No of Buyers
Limited Unlimited
Time Spends more time, High Price
Spends less time, low price
Nature of market
Concentrated Scattered
E.G. Raw Material, Parts, Accessories
Convenience goods, soap, furniture
BUYING DECISION BEHAVIOUR
TYPES OF BUYING DECISION BEHAVIOUR
INVOLVEM ENT HIGH
INVOLVEMENT LOW
DIFFERENCES BETWEEN BRANDS - SIGNIFICANT
COMPLEX BUYING BEHAVIOUR
VARIETY SEEKING BUYING BEHAVIOUR
DIFFERENCE S BETWEEN BRANDS - FEW
DISSONANCE REDUCING BUYING BEHAVIOUR
HABITUAL BUYING BEHAVIOUR
PARTICIPANTS IN CONSUMER BUYING
PARTICIPANTS IN CONSUMER BUYING
1. Initiator :The person who determines that some need or
want is to be met)
2. Influencer : The person/persons who intentionally or unintentionally influence the decision to buy 3. Buyer :The person who actually makes a purchase
4. User :The person/persons who actually use/consume the product
PARTICIPANTS IN BUSINESS BUYING
Buying center All the individuals and units that play a role in the purchase decision-making process.
PARTICIPANTS IN INDUSTRIAL (BUSINESS) BUYING
1. Users : Actual Users (front line operators/ Labour)
2 Influencers : who affect buying decision (Design Dept. provides specifications,3. Deciders: who have formal /informal power to select or approve4. Buyers : who make an actual purchase (formal authority, purchase dept.5. Gatekeepers : who control the flow of information (security, personal secretary,recp.)
BUSINESS BUYING SITUATIONS
Straight Rebuy : A business buying situation in which the buyer routinely reorders something without any modifications.
BUSINESS BUYING SITUATIONS
Modified Rebuy : A business buying situation in which the buyer wants to modify product specifications, prices, terms or suppliers
BUSINESS BUYING SITUATIONS
New Task : A business buying situation in which the buyer purchases a product or service for the first time.
3. THE MARKETINGENVIRONMENT
MARKETING ENVIRONMENT
Marketing Environment The actors and forces that affect a firm’s ability to build and maintain successful relationships with target customers.
Marketing environment:
Microenvironment Macroenvironment
MICROENVIRONMENT:
The actors close to the company that affect its ability to serve its customers.
Controllable factors.
COMPANY’S MICROENVIRONMENT
Company Suppliers Customer
Markets
Competitors Public Marketing
Intermediaries
MICROENVIRONMENT
MICROENVIRONMENTThe Company : Departments within the
company impact marketing planning.
Suppliers : Suppliers help create and deliver customer value.
Treat suppliers as partners.
Intermediaries: Marketing intermediaries help sell, promote, and distribute goods.Intermediaries take many forms.
MICROENVIRONMENTCustomer : Organization Can serve any
customer Customers are nothing but markets Consumer market, business market, government
market, reseller and international markets.
Competition: Successful companies provide better customer value than the competition. Size and industry position help to determine the
appropriate competitive strategy.
Public: Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objective
Financial - Gain access to business funds Media - Maintain positive publicity Government - Must comply with
regulations Citizen action – Consumer organizations
and minority groups Local - Generate good community
relations General - Gain acceptance by general
public Internal- Positive staff attitude/
motivation.
Customers: The firm can operate in any one or all
five types of customer markets: 1. Consumer markets2. Business markets3. Reseller markets4. Government markets5. International markets
THE MACROENVIRONMENT
THE MACROENVIRONMENT:
The larger societal forces that affect the microenvironment.
Uncontrollable factors.
COMPANY’S MACROENVIRONMENT
THE MACROENVIRONMENT
Demographic
Economic Natural
(Environmental)
Technological
Political Socio-
Cultural
Macroenvironmental Forces
THE MACROENVIRONMENT
Demographic Environment :
Demography is the study of human population in terms of size, density, location, age, gender, race, occupation and other statistics.
DEMOGRAPHIC ENVIRONMENT :
KEY DEMOGRAPHIC CHANGES
Increasing Population A growing middle class Growth in the rural population A changing family system from joint to
nuclear The changing role of women A better educated, more white-collard,
more professional population Increasing diversity ( Japan & US)
.
DEMOGRAPHIC ENVIRONMENT :
Population classification:1. Deprived households (<90K)
e.g. Unskilled workers, 2. Aspirers (90K-200K)
e.g. small farmers, low skilled workers3. Seekers(2 – 5 LPA)
e.g. White collar, employed young postgraduates, medium scale traders.
4. Strivers ( 5-10 LPA)e.g. CAs, MBAs, Senior gov. officials, rich farmers
5. Global Indians ( More than 10 LPA)e.g. Large b’ness owners, topmost professionals, film actors, big farmers, graduates from leading educational institutes
MGI ( Mckinsey Global Institute) defines middle class as a combination of seekers and strivers ( 2-10 LPA)
THE ECONOMIC ENVIRONMENT :
Factors that affect consumer buying power and spending pattern
THE ECONOMIC ENVIRONMENT
Affects consumer purchasing power and spending patterns.
Two types of national economies: subsistence vs. industrial.
In between are developing economies
Indian consumers now spend carefully and desire greater value.
THE ECONOMIC ENVIRONMENT
Key Economic Trends Indian income distribution.
Upper class, middle class, working class and the underclass.
As Per MGI report, middle class is rising and is expected to be 41 % of the population by 2025
Consumer spending patterns are changing.
Global Financial crisis
THE NATURAL ENVIRONMENT
The natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.
THE NATURAL ENVIRONMENT
Concern for the natural environment has grown steadily, increasing the importance of these trends: Shortage of raw materials Increased pollution Increased governmental intervention
THE NATURAL ENVIRONMENT
Shortage of raw materials :-By 2030, more that one in three of the world’s human being will not have enough of water to drink.-Renewable resources such as forests and food also have to be used wisely.- Non renewable resources, such as oil, coal, minerals, pose a serious problem-Firms using scares resources face large cost increase
THE NATURAL ENVIRONMENT
Increased pollution :-Industry will almost always damage the quality of the natural environment
-Disposal of chemical and nuclear wastes-Dangerous mercury levels in the ocean-The quantity of chemical pollutants in the soil and food supply-The littering of the environment with nonbiodegradable bottles, plastics, and other packaging materials.
THE NATURAL ENVIRONMENT
Increased government interventions:-In natural resource management, the govt. of different countries vary in their concern and efforts to promote a clean environment.
e.g. German Govt., vigorously pursue environmental quality, many poor nations, do little about pollution, may be b’coz of lack of funds, political will.
-Govt’s pressure on industries by legislation
TECHNOLOGICAL ENVIRONMENT
Forces that create new technologies, create new products and market opportunities
TECHNOLOGICAL ENVIRONMENT
The technological environment is the most dramatic force, shaping our destiny.
New technologies create new markets and opportunities, however every new technology replaces an old technology.
TECHNOLOGICAL ENVIRONMENT
e.g. Robotic surgery, miniaturized electronics, laptop, computer and the internet, nuclear missiles, chemical weapons, automobile, television, credit cards, RFID, etc
THE POLITICAL & SOCIAL ENVIRONMENT
Includes laws, governmental agencies, and pressure groups that impact organizations and individuals. Key trends include:
Increased legislation to protect businesses as well as consumers.
Increased emphasis on ethical behavior and social responsibility.
Increase in Business Legislation – Business legislation has four main
purposes : to protect companies from unfair
competition, to protect consumers from unfair business
practices, to protect the interests of society from
uncontrolled business behaviour, and to charge businesses with the social costs
created by their products or production processes.
Growth of special interest groups –
Consumerist movement – an organized movement by the citizens and govt. to strengthen the rights and powers of buyers in relation to sellers.
In order to protect the interest of consumers, govt. of India has passed legislation under the Consumer Protection Act 1986.
Six rights of consumers are recognized – 1. Safety – The right to be protected against
the marketing of goods and services that are hazardous to life and property.
2. Information – Protection against unfair trade practices, and the right to be informed about the quality, quantity, purity, standard and price.
3. Choice – The right to choose a variety of products and services at competitive prices.
4.Representation – The right to be heard and be assured that the consumer’s interests are received due considerations at appropriate forums.
5.Redressal – The right to seek redressal against unfair and restrictive trade practices and exploitation of consumers.
6.Consumer Education – Right to consumer education.The legislation ensures establishment of consumer dispute redressal forums such as District Forums prescribes specific processes to address consumer complaints with speed and in an inexpensive manner.
CULTURAL ENVIRONMENT
CULTURE :
The set of basic values, perceptions, wants and behaviours learned by a member of society from family and other important institutions.
CULTURAL ENVIRONMENT
BASIC VALUES : A child normally learns or is exposed to following values;
Achievement & success Activity & involvement Efficiency & practicality Progress, hard work, material comfort
Respect for elders, youthfulness etc
CULTURAL ENVIRONMENT
Is composed of institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors.
Culture can influence decision making.
Core beliefs are persistent; secondary cultural values change and shift more easily.
The cultural values of a society are expressed through people’s views.
Fad- unpredictable, short-lived, and
without social, economic and political significance.
Trend- Is a direction or sequence of events
that has some momentum and durability.
Trends are more predictable and durable than fads.
Megatrends- Large social, economic, political,
and technological changes that are slow to form and once in place, they influence us for some-time between 7 to 10 yrs, or longer.
RESPONDING TO THE MARKETING ENVIRONMENT
Reactive: Passive Acceptance and Adaptation .
Proactive: Environmental Management
UNIVERSITY QUESTIONS What do you mean by Marketing Environment? Discuss the various types of
marketing environmental forces influencing marketing decisions.- May 07
‘Marketing managers have to constantly take and revise their marketing decisions considering the changes in the internal and external marketing environmental forces. ‘ Comment. Explain various types of environmental forces and factors influencing marketing decisions. – Dec07
What is meant by the terms – Macro environment & Micro environment? Explain the term PEST analysis in the context of macro environment.
- May 08 Discuss various types of macro & micro environmental forces influencing
marketing decisions. What do you mean by marketing environment. Discuss various types of
marketing environment. Focus in few things marketing decisions. Give suitable illustration for Indian marketing world.
Marketing Managers have to constantly take and revise their marketing decisions considering the changes in macro environmental forces” comment. Explain various types of environmental forces and factors influencing marketing decision. Dec09
Short Notes : STEP Analysis.
WE DISCUSSED………
1. Introduction to marketing2. Consumer Behaviour3. Marketing Environment
If we check marketing process…Step1.Understanding Needs, want, market.Step2.Designing customer driven
marketing strategy.
OBJECTIVES
1. Understand major steps in designing a customer driven marketing strategy.
2. Discuss the major bases for segmenting consumer markets & business markets
3. Understand how companies identify attractive market segments and choose a market targeting
4. Discuss how companies differentiate and position their products for competitive advantage in the marketplace.
CUSTOMER DRIVEN MARKETING STRATEGY
Who it will serve? How it will serve?
…..Select customers to serve…..Decide on a value proposition
WHAT IS MARKET SEGMENTATION?
-Market segmentation is sub-dividing of a market in to
homogeneous sub-sects of customers where any sub-sect may
conceivably be selected as a market target to be reached with a
distinct marketing mix. - P. Kotler
- Market Segmentation consists of taking the total
heterogeneous market for a product and dividing it in to
several submarkets or segments, each of which tend to be
homogeneous in all respects. - William Stanton.
WHY MARKET SEGMENTATION?
To locate market opportunities To find varying & specific needs of different
customers To set selling objectives To prepare marketing plans, actions. To identify new profitable segments To deal with competition To analyze, assess & interpret the motivation,
belief & attitude, behaviour & habits of each indefinite sub-group in market.
HOW TO DO SEGMENTATION?
MAJOR SEGMENTATION VARIABLES / BASES
Geographic Segmentation
Demographic Segmentation
Psychographic Segmentation
Behavioral Segmentation
GEOGRAPHIC SEGMENTATION
Dividing the market into different geographic units
Nations States Regions Density Cities Climate
GEOGRAPHIC SEGMENTATION
DEMOGRAPHIC SEGMENTATION
Dividing the market into groups based on demographic variables Age Gender (Clothing, cosmetics etc) Family size Family life cycle Income ( Automobile) Occupation Education
PSYCHOGRAPHIC SEGMENTATIONDividing buyers into different groups
based on
social class lifestyle personality traits/characteristics
Religion
Value &
Lifestyle
Product/
Brand Choice
s
BEHAVIOUR SEGMENTATION Buyers are divided into groups based on their
knowledge of, attitude towards, and use or response to a product
Types Occasion segmentation- Regular, Special,
holiday Benefits sought- Quality, service, economy,
convenience User status- Nonuser, potential, first time,
regular Usage rate- light, medium, heavy Loyalty status – None, medium, strong,
absolute Buyer readiness stage – Unaware, aware,
informed, desirous, intending to buy.
CRITERIA FOR GOOD SEGMENTATION
EACH MARKET SEGMENT SHOULD BE…
Measurable
Accessible
Actionable
Substantial
Differentiable
• Size, purchasing power, profiles of segments can be measured.
• Segments can be effectively reached and served.
• Segments are large or profitable enough to serve.
Measurable Measurable
AccessibleAccessible
SubstantialSubstantial
ActionableActionable
• Effective programs can be designed to attract and serve the segments.
REQUIREMENTS FOR EFFECTIVE SEGMENTATION
DifferentiableDifferentiable• Each segment should be different
TARGETING
Target Market:A set of buyers sharing common needs or characteristics that the company decides to serve.
Targeting: The process of evaluating each market segments attractiveness & selecting one / more segments to enter.
MARKET TARGETING
Evaluating Market Segments
Selecting Market Segments
Choosing a Market-Coverage Strategy
EVALUATING MARKET SEGMENTS
Segment Size and Growth
Segment Structural Attractiveness
Company Objectives and
Resources
SELECTING TARGET MARKET SEGMENT/S
Undifferentiated Marketing
Differentiated Marketing
Concentrated (Niche)Marketing
Micromarketing- Local Marketing & Individual Marketing
SELECTING TARGET MARKET SEGMENT/S
Undifferentiated (Mass) Marketing:
“A market – coverage strategy in which firm decides to ignore market segment differences and go after the whole market with one offer.”
UNDIFFERENTIATED MARKETING
Single product addressing all segments with a single marketing program.
Mass production is possible giving scale economies
Pushes price downwards enabling to attract price sensitive segments
SELECTING TARGET MARKET SEGMENT/S
Differentiated (Segmented) Marketing:
“A market – coverage strategy in which firm decides to target several market segments and designs separate offers for each.”
DIFFERENTIATED MARKETING
A separate market offering for every segment
Marketing programs for every segment could be different
Pushes up costs at various levels, call for sufficient volumes for viability
Generates inter-segment rivalry
SELECTING TARGET MARKET SEGMENT/S
Concentrated (Niche) Marketing:
“A market – coverage strategy in which firm goes after a large share of one or few segments or niches. ”
NICHE MARKETING
What is an attractive niche ? A distinct set of needs A premium can be charged Not likely to attract competition Gains certain economies through
specialization Sufficient size, profit and growth
potential
SELECTING TARGET MARKET SEGMENTS
Micromarketing (local or individual marketing):
“The practice of tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups-includes local marketing and individual marketing”.
SELECTING TARGET MARKET SEGMENTS
Local Marketing :“Tailoring brands & promotions to the needs and wants of local customer groups – cities, neighborhoods and even specific stores”.
Individual Marketing :“Tailoring marketing programs to the needs & preferences of individual customers – also labeled one-to-one marketing”.
LOCAL MARKETING
When the marketing mix is altered to suit the local conditions
eg. Giving a higher/ lower discount than what’s prevailing in the rest of the markets
or implementing a different promotion scheme
INDIVIDUAL MARKETING
When the firm deals with each customer on a one – to – one basis
When products are customized for the customer
CHOOSING A MARKET – COVERAGE STRATEGY
Company resources
Product Variability
Market Variability
Competitors’ strategies
TARGET MARKET SELECTION :
DIFFERENTIATION & POSITIONING
Differentiation:Actually differentiating company's product from competitor’s product.
Positioning:The process of acquiring clear, distinct & favorable space in the minds of customers for company’s product relative to competing products.
PRODUCT DIFFERENTIATION Physical Attribute Differentiation
Service Differentiation
Personnel Differentiation
Location Differentiation
Image Differentiation
POSITIONING STRATEGIES
Positioning by attributes / features / specifications
Positioning by Price & quality Positioning by function / use /
application Positioning by product class Positioning by user Positioning by competitor
CHOOSING AND IMPLEMENTING A POSITIONING STRATEGY
1. Identifying a set of possible competitive advantages upon which to build a position
2. Selecting the right competitive advantages
3. Effectively communicating and delivering the chosen position to a carefully selected target market
SELECTING THE RIGHT COMPETITIVE ADVANTAGES Competitive Advantage:
An advantage over competitors gained by offering greater customer value, either through lower price or by providing more benefits that justify higher price
Avoid: Under positioning Over positioning Confused positioning
SELECTING THE RIGHT COMPETITIVE ADVANTAGES
How many differences to promote? Which differences to promote?
Brand differences should meet the following criteria prior to marketing: Important Distinctive Superior Communicable Preemptive Affordable Profitable
SELECTING AN OVERALL POSITIONING STRATEGY
PRICE
BENEFITS
Possible value Propositions
MORE THE SAME LESS
MORE MORE FOR MOREApple iPhone
MORE FOR THE SAME
Lexus- Toyota
MORE FOR LESS
Tata- Indica
THE SAME
THE SAME FOR LESS
Wal-Mart, Big Bazaar
LESS LESS FOR MUCH LESSMaruti 800, Nano,IndiGo
Airlines
UNIQUE SELLING PROPOSITION (USP)
Unique selling proposition is a set of features that would distinguish a product from its competitors in the market and thus create its identity.
USP by-Form, - Durability
-Feature, - Reliability-Performance - Reparability-Conformance -