Principles of Marketing
PRINCIPLES OF MARKETING
Marketing
The process by which individuals and groups obtain what they
need and want through creating and exchanging products and value with
others.
In simple word – Marking is the delivery of customer satisfaction at a
profit.
Marketing Process
MARKET
NEEDS
WANTS
DEMAND
S
PRODUCTS
AND
SERVICES
VALUE
SATISFACTIO
N
QUALITY
EXCHANGE
TRANSACTION
S
RELATIONSHIP
1.Market
A market is the set of actual & potential buyers of a product.
2.Needs,Wants and Demands
1.Needs
State of felt deprivation for basic items such as food and clothing
and complex needs such as for belonging. i.e. I am thirsty
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Principles of Marketing
2.Wants
Form that a human need takes as shaped by culture and individual
personality. i.e. I want a Coca-Cola.
3.Demands
Human wants backed by buying power. i.e. I have money to
buy a Coca-Cola.
3.Products and Services
1.Products
Anything that can be offered to a market for attention,
acquisition, use or consumption and that might satisfy a need or want.
Examples: persons, places, organizations, activities, and ideas.
2.Services
Activities or benefits offered for sale that are essentially intangible
and don’t result in the ownership of anything.
Examples: banking, airlines, haircuts, and hotels
4.Value Satisfaction Quality
1.Customer Value
Benefit that the customer gains from owning and using a
product compared to the cost of obtaining the product.
2.Customer Satisfaction
Depends on the product’s perceived performance in
delivering value relative to a buyer’s expectations.Linked to Quality and
Total Quality Management (TQM).
5.Exchange Transaction Relationship
1.Exchanges
Act of obtaining a desired object from someone by offering
something in return.
2.Transactions
Trade of value between parties, Usually involves money and
a response.
3.Relationship
Building long-term relationships with consumers,
distributors, dealers, and suppliers.
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Principles of Marketing
Marketing Management
The art & science of choosing target markets &
building profitable relationship with them.
1.Marketing Management
Implementing programs to create exchanges with
target buyers to achieve organizational.
2.Demand Management
Finding and increasing demand, also changing or
reducing demand.
3.Profitable Customer Relationships
Attracting new customers and
retaining current customers.
Marketing Management Philosophies
1.Production Concept
Consumers favor products that are available and highly affordable
Improve production and distribution.
2.Product Concept
Consumers favor products that offer the most quality,
performance, and innovative features.
3.Selling Concept
Consumers will buy products only if the company
promotes/ sells these products.
4.Marketing Concept
Focuses on needs/want of target markets & delivering
satisfaction better than competitors.
Selling & Marketing Concepts Contrasted
Starting
Point
Focus
Means
Factory
Existing
Products
Selling &
Promoting
Ends
Profits through
Sales volume
Selling Concept
Market
Customer
Needs
Integrated
Marketing
Profits through
Customer Satisfaction
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Marketing concept
5.Societal Marketing Concept
Focuses on needs/wants of target markets &
delivering superior value Society’s well-being.
Society
(Human Welfare)
Societal
Marketing
Concept
Customers
(Want Satisfaction)
Company
(Profits)
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Marketing in Changing World
As the world Spins into 1st decade of
the 21st century,dramatic changes are occurring in the marketplace.In this
section ,we exmaine the major trends & forces that are changing the
marketing landscape & challenging marketing strategy.We discuss major
departments that are following
1. New Digital Age
2. Internet
3. Globalization
4. Ethics Concerns
5. Non-Profit Marketing
1.New Digital Age
The recent technology boom has created a new digital
age.Now we are all connected with each other through explosive growth in
computer,telecommunications,information,transpotation,& other technology
has had a major impact on the ways bring value to their customers.
The technology is also helping companies to distribute products
more effectively & efficiently and it’s helping them to communicate eith
customers in the large groups.Through E-Commerce, customers can learn
about design,order and pay for products & services.
2.Internet
The computer networks, which connects users of all types all
around the world.Companies are using the internet to build closer
relationship with customers and marketing partners.Before the internet the
customer has a bit knowledge about the market products but now the level of
customer in market is increased through internet.Internet is way through
customer of all over the world know about the latest product.
3.Globalization
Today,almost every company,large or small,is touched in
some way by global competition.Companies such as Toyota,Siemens,Nestle,
Sony and Samsung have often outperformtheir U.S competitors in america
markets.Many U.S companies have developed truly global operations.Coca
cola offers more than 300 different brands in more than 200 countries,BPM
energy drink in Ireland,Mare Rosso Bitter in Spain,Sprite Ice Cube in
Belgium,and Fanta in China
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4.Ethics Concerns
Marketers are reexamining their relationship with
social values and responsibilities.Corporate ethics and social resposibility
have become hot topics for almost every business and few companies can
ignore th renewed and very demanding environmental movement.
5.Non-Profit Marketing
In the past,marketing has been applied in the
For-Profit business sector.In recent years,marketing also has been applied in
the Non-Profit business sector such as colleges,hospitals,churches.
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Customer Relationship Management
CRM is the overall process of
building & maintaining profitable customer relationship by delivering
superior customer value and satisfaction.It daels with all aspects of
acquiring,keeping,growing customer.
Customer
1. A customer is a key to profitability.
2. A customer is the most important person in our place,either in person
by mail.
3. A customer is not dependent on us,we are dependent on him.
4. A customer is a person who brings us his wants and it is our job to
handle them profitably to him and to our selves.
5. A customer is not somebody to argue with.Nobody even won an
argument with a customer.Customer is always right
Customer Value
Benefit that the customer gains from owning and using a
product compared to the cost of obtaining the product.Customer often do not
judge the product values and costs accurately,they act on Perceived
Value(the difference between total customer value & total customer cost).
Customer Satisfaction
The extent to which a product’s perceived
performance matches a buyer’s expectations.If the product’s performance
falls,the customer is dissatisfied.If the performance matches expectation,the
customer is satisfied.If performance exceeds expectation,the customer is
highly satisfied or delighted.
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Principles of Marketing
Strategic Planning
The process of development and maintaining a
strategic fit between the organization goals and capabilities and its changing
marketing opportunities.This process involves following,
1. Defining a Mission
2. Setting Company Objectives & Goals
3. Designing the Business Portfolio
1.Defining a Mission
The mission statement means a statement of the
organization purpose, what it want to accomplish in the larger
environment”A clear mission statement acts as an “Invisible hand” that
guides people in the organization.
Some companies define their mission myoptically in
product or technology term such as, we make and sell furniture or we are a
chemical-processing-firm but mission statement should be market oriented
and define in term of customer needs.A market-oriented mission statement
define the business in term of satisfying basic customer needs.
2.Setting Company Objectives & Goals
The company’s mission is
needed to be turned into detailed supporting objectives for each level of
management.Each manager should have objectives and be responsible for
reaching them.
For example “Monsanto” operates in many businesses,
such as agriculture and food products.The company defines its mission as
creating(abundant food & healthy environment)and give to exploding
population at the time of sustaining the environment.Monsanto’s overall
objective is to build profitable customer relationship by giving better
products at lower costs.
3. Designing the Business Portfolio
The Collection of businesses and
products that make up the company.Business portfolio involves steps as
below
1. Portfolio Analysis
2. Developing Strategies for Growth & Downsizing
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1. Portfolio Analysis
The process by which management evaluates the
products and businesses marking up the company.Management’s 1st step is
to indentify the key businesses making up the company.These can be called
the Strategic Business units (SBU’s).The portfolio analysis method evaluate
SBU’s in 2 important dimensions.
1. Attractivess of the SBU’s market
2. Strength of the SBU’s position in market
Boston Consulting Group
According to BCG, a company classifies all its SBU’s according to the
Growth-Share-matrix
High Star
Question Mark
Market
Growth
Rate
Low Cash Cow
Dog
High
Low
Relative Market Share
1.Star
1. High growth & Share business/product
2. Profit potential
3. May need heavy investment to grow
2.Cash Cows
1. Low growth & High share business/product
2. Established & successful SBU’s
3. Produces lot of cash
3.Question mark
1. High growth market & Low share business unit
2. Build into star/phase out
3. Requires lot of cash to hold market share
4.Dogs
1. Low growth & Low share business and product
2. Low profit potential
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2. Developing Strategies for Growth & Downsizing
1. Market Penetration
A strategy for company growth by increasing sales of
current product to current market segments without changing the product.
2.Market Development
A strategy for company growth by identifying &
developing new market segments for current company products.
3.Product development
A strategy for company growth by offering
modified or new products to current market segments.
4.Diversification
A strategy for company growth by starting up or acquiring
businesses outside the company’s current products & markets.
5.Downsizing
Reducing the business portfolio by eliminating products or
business units that are not profitable or no longer fit the campany’s overall
strategy.
The Product/Market Expansion Grid
Existing
Products
New
Products
Existing
Markets
Market
Penetration
Product
Development
New
Markets
Market
Development
Diversification
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Managing the Market Process
1.
2.
3.
4.
This process involves following
Marketing Analysis
Marketing Planning
Marketing Implementation
Marketing Control
1.Marketing Analysis
Managing the marketing function begin with a
complete analysis of company’s situation.The marketer should conduct the
SWOT Analysis,This is an acronymn which stands for Strength
Weaknesses, Opportunities and Threats.
Strength-“it include internal capabilities,resources and positive situational
factors that may help the company to serve its customer and achieve its
objectives”.Identify industry trends resources,availablility of trained man
power,nearness to raw materials,availability of raw materials,power of
suppliers, power of buyers, threat of new entrants.
Weaknesses-“it include limitations and negative situational factors that may
interfere with the company’s performace”.Lack of technical knowledge,
you may have to rely on imported technical know how,Your cost of
production will be higher than your competitors,dismal chances of survival.
Opportunities-“are favourable factors or trends in the external environment
that the company may be able to exploit to its advantage”.Demand is
available.Therefore you can market your products. There is a shortage.
Threats-“are unfavourable external factors or trends that may present
challenges to performance”.Huge competition,people are switching to better
and improved innovative products,obsolete.
Internal
External
Strengths
Weaknessess
Opportunities
Thearts
Positive
Negative
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2. Marketing Planning
Through strategic planning, the company decides
what it wants to do with each business unit.Marketing planning involves
deciding on marketing strategies that will help the company attain its overall
strategic objectives.A detailed marketing plan is needed for each
business,product,or brand.A marketing strategy consists of specific
strategies for target markets,positioning,marketing mix and marketing
expenditure levels.
3. Marketing Implementation
The process that turns marketing
strategies and plan into marketing actions in order to accomplish strategic
marketing objectives.Implementation involves day to day,month to month
activities that effectively put the marketing plan to work.
4. Marketing Control
Marketing control is a process of measuring and
evaluating the results of marketing strategies,plans and taking corrective
action to ensure that objectives are achieved.Marketing involves 4 steps.
1st step is management sets specific marketing goals & then measure its
performance & then evaluates causes between the expected & actual
performance.
2nd step is operating control which means checking ongoing performance
against the annual plan & taking correct action when necessary.
3rd step is strategic control which means looking at whether the company
basic strategies are well matched to its opportunities.
4th step is marketing audit which means a company’s
environment,objective,strategies, and activities to determine problem areas
and a plan to improve the company’s marketing performance.
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Marketing Environment
The actors and forces outside marketing that
affect marketing management’s ability to build and maintain successful
relationships with target customers.The marketing environment is made up
of a Micro-environment and Macro-environment.
1.Micro-Environment
The micro-environment consists of the actors close to the company
that
affect
its
ability
to
serve
its
Cutomers,The
Company,Suppliers,Marketing Intermediaries,Competitors,Publics.
1. The Company
In designing marketing plan,marketing management takes other
company groups into account---groups such as top management,finance,research and
development,purchasing,operations and accounting.Top management sets the
company’s mission,objectives,strategies and polices.
2. Suppliers
Suppliers form an important link in the company’s overall customer
value delivery system.They provide the resources needed by the company to produce
its goods and servicers.Supplier problems can seriously affect marketing.Marketing
managers must watch supply availability and also monitor the price trends of their
key inputs,raising supply cost may force price increase that can harm the company’s
sales volume.
3. Marketing Intermediaries
Firm that help the company to promote,sell, and
distribute its goods to final buyers;they include resellers,physical distribution
firms,marketing service agencies,and financial intermediaries.
4. Customers
The company needs to study the 4 types of customer markets
closely.Consumer markets consist of individuals and households that buy goods &
services for personal use,Business market buy goods & services for resell purpose at a
profit,Govt market buy goods & services to produce public transfer the goods &
services to other who need them,International market consist of these buyers in the
countries including consumers, producer,reseller,govts.
5. Competitors
A company must provide greater customer value and satisfaction than
its competitors do.Thus,marketers must for more than simply adapt to the need of
target consumers.They also must gain strategic advantage by positioning their
offerings strongly against competitors’offerings in the mind of consumers.
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6. Public
Any group that has an actual or potential interest in an organization’s ability
to achieve its objectives.
2.Macro-Environment
The larger societal forces that affect the microenvironmentdemographic,economic,natural,technological,political and cultural forces.
7. Demographic Environment
The study of human population in term of
size,density,location,age,gender,race,occupation,and other statistics.
8. Economic Environment
The economic environment consists of factors that affect consumers
buying power and spending patterns.
9. Natural Environment
The natural environment involves the natural resources that are needed as
inputs by the marketers or that affected by the marketing activities.
10. Technological Environment
The technological forces that create new technologies,creating new
product and market opportunities.
11. Political Environment
The political Environment consists of law,govt agencies,and presure
groups that influence various organizations & individuals in a given society.
12. Cultural Environment
The cultural environment is made up of institutions and other forces that
affect a society’s basic values,perceptions,preferences and behaviors.
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Consumer Behavior
Consumer purchases are influenced by
Culture,Social,Personal and Psychological factors.
1.Cultural Factors
A consumer’s behavior is influenced by the culture
factors such as concumer’s Culture,Sub-Culture and Social Class.
1. Culture
Culture is a set of basic values,perceptions,wants and behavior
learned by a member of society from family and other impotant
institutions.Buyer’s Black Box is the characteristics of buyers and the
decision process,Buyer responses.
1.Product Choice
2.Brand Choice
3.Dealer Choice
4.Purchase Timing
5.Purchase Amount
It is stored in customer mind.
2. Sub-Culture
Each culture contains sub-culture.Sub-culture include
nationalities,religions,racial groups and geographic regions.
3. Social Class
Relatively permanent and ordered division in a society whose
members share similar values,interests and behaviors.Social class is measured as a
combination of occupation,income,education,and wealth.Social class include upper
class,middle class,working class and lower class.
2.Social Factors
A consumer’s behavior is also influenced by social factors such as the
consumer’s Groups,Family and Roles & Status.
4. Group
Two or more people who interact to accomplish individual or mutual
goals.Leader a person who have special skill,knowledge and personality that
influence on others.
5. Family
Family members can influence buyer behavior.The family is the most
impotant consumer buying organization in society.Marketers are interested in the role
of husband,wife and the children on the purchase of different goods and services.
6. Roles & Status
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A person belongs to many groups,family,clubs and organization,So
person position can be defined in term of both role and status.A role consists of
activities people are expected to perform.Each role carries a status reflecting the
general esteem given to it by society.
3.Personal Factors
A consumer’s behavior is also influenced by personal factors such
as the consumer’s Age & Life cycle,Occupation,Economic Situation,Life
Style,Personality.
7. Age & Life Cycle
People change the goods & services over their
lifetimes. More than 12 percent of the Us population is over 65 years of age.
Past the age of 50 years they are stable in life and have money to spend on
luxuries.
8. Occupation
A person’s occupation affects the goods and services. Blue Collar
Workers they tend to wear more rugged clothes while White Collar Workers will
opt for more sophisticated clothes like shirts, suites, blazers, neckties etc.
Economic Situation
A person’s economic situation will affect product choice.
Consumer’s will opt for goods which are affordable in accordance with
his income and status.
9. Life Cycle
A life cycle is a person’s pattern of living as expressed in his or her
activites(hobbies,shopping,sports),interest(food,fashion,family) and opinions(about
themselves,business,products).
A person’s whole pattern of acting and interacting in the world(VALS)divides
consumers into 8 groups as below.
Primary Motivation
Ideals
Thinkers
Believers
Achievement
Achievers
Strivers
Self-Expression
Experiences
Makers
Resources
High Resources
Innovators
Low Resources
Survivors
10.Personality
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Unique characteristics that lead to relatively consistent and lasting
responses to one’s own environment.Personality involves following process.
1.Sincerity (Honest & Cheerful)
2.Excitement (Daring & Spirited)
3.Competence (Intelligent & Successful)
4.Sophistication (Manner & Etiquettes)
5.Ruggedness (Outdoorsy & Tough)
4.Psychological Factors
A consumer’s behavior is also influenced by psychological factors
such as the consumer’s Motivation,Perception,Learning and Beliefs & Attitudes.
11. Motivation
A need that is sufficiently pressing to direct the person to seek
satisfaction of the need.
12. Perception
A process by which people select,organize and interpret information to
form meaningful picture of the wolrd.
13. Learning
Changes in an individual’s behavior arising from experience.
14. Beliefs & Attitudes
Belief is a descriptive thought that a person holds about something.
Attitude persistent favourable or unfavorable evaluation, feelings and tendencies
towards an object or idea.
Consumer Market
All the individuals and households who buy goods and
services for personal consumption.All of these final consumers combine to
make up the consumer market.
The american consumer consists of more than 295 million
people who consume many trillions of dollars for goods and services each
year, making it one of the most attractive consumer markets in the world.
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The world consumer market consists of almost 6.4 billion people.Consumers
around the world vary tremendously in age,income,education level, and
taste.They also buy an incredible variety of goods and services.
Marketing Mix
“The set of controllable and tactical marketing tools
(Product,Price,Promotion,Place) that the firm blends to produce the response
it wants in the target market”.The markting mix is defined as below,
1. Most famous marketing term.
2. Its elements are the basic and tactical components of a marketing plan.
3. It is also known as “4Pcs” of the marketing program like product,
price,promotion and place.
4. The concept is simple.
5. Think about another common mix - say a cake mix.All cakes contain
eggs,milk,flour and sugar.
6. However,you can alter the final cake by altering the mix elements
contained in it.So for a sweet cake add more sugar.
7. It is the same with the marketing mix.The offer you make to the
customer can be altered by varying the mix elements.
8. So for a high profile brand increase the focus on promotion.
Another way to think about the marketing mix is to use the image of an
artist's palette.The marketer mixed the prime colors in different quantities to
deliver a particular final color.Every hand painted picture is original in some
way,as is every marketing mix.
Product
Variety
Quality
Design
Features
Target
Consumer
s
Price
List Price
Discounts
Allowances
Payment Period
Intended
Positionin
g
Promotion
Advertising
Personal Selling
Sale Promotion
Public Relations
Places
Location
Channels
Transpotation
Inventory
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1.Product
Product means the Goods and Services combination the company
offer to the target market.
2.Price
Price is the amount of money that consumers have to pay to obtain
the product.
3.Promotion
Promotion means activities that communicate the merits of the
product and persuade target customers to buy the product.
4.Place
Place includes company activities that make the product available to
target customer.
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Marketing Strategy
The marketing logic by which the business unit
hopes to achieve it’s marketing objectives.This process involves 3 steps as
below.
1. Market Segmentation
2. Target Marketing
3. Market Positioning
1. Market Segmentation
“The process of dividing a market into smaller
groups of buyers who have different needs,characteristics,or behaviors,who
might require separate products or marketing programs”.
We discuss 4 impotant segmentation topics as given below,
1. Geographic Segmentaion
2. Demographic Sementaion
3. Psychographic Segmentaion
4. Behavioral Segmentation
1.Geographic Segmentaion
Dividing the market into groups based on
geographical variables such as
• Region: of the world or country, East,West,South,North.
• Country size: Metropolitan Cities,Small Cities,Towns.
• Density of Area: Urban,Semi-Urban,Rural.
• Climate: Hot,Cold,Humid,Rainy.
2.Demographic Sementaion
Dividing the market into groups based on demographic
variables such as
• Age
• Gender Male and Female
• Family size
• Education High School,College,Universities.
• Income
• Occupation
• Religion
• Language
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3.Psychographic Segmentaion
Dividing the market into groups based on psychographic
variables such as
• Personality
• Life style
• Value
4.Behavioral Segmenation
Dividing the market into groups based on Behavioral
variables such as
• Attitude
• Knowledge
• Income status
• Profitability
• Product end use
2.Target Marketing
After evaluating different segments,the company must decide which
and how many segments it will target.A Target Market is a set of buyers
sharing common needs or characteristics that the company decides to
serve.Because buyers have unique needs & wants,a seller could potentially
view each buyer as a separate target market.Ideally,a seller might design a
separate marketing program for each buyer.However,target marketing is
discussed as below
1. Undifferentiated Marketing(Mass)
2. Differentiated Marketing(Segmented)
3. Concentrated Marketing(Niche)
1. Undifferentiated Market(Mass)
The first market-coverage strategy is undifferentiated/mass
marketing.A market-coverage strategy in which a firm decides to ignore
market segment differences and go after the whole market with one offer.
2. Differentiated Marketing(Segmented)
The secound market-coverage strategy is differentiated/segmented
marketing.A market-coverage strategy in which a firm decides to target
several market segments and designs separate offer for each.
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3. Concentrated Marketing(Niche)
The third market-coverage strategy is concentrated/niche
marketing.A market-coverage strategy in which a firm goes after a large
share of one or a few segments or niches.
Marketing Strategy
The marketing logic by which the business unit
hopes to achieve it’s marketing objectives.This process involves 3 steps as
below.
4. Market Segmentation
5. Target Marketing
6. Market Positioning
1.Market Segmentation
The process of dividing a market into smaller
groups of buyers who have different needs,characteristics,or behaviors,who
might require separate products or marketing programs.
Market Segment a group of customer who respond in a similar way to a
given set of marketing efforts.
For example in the car market,consumers who want the biggest and most
comfortable car regardless of price make up one market segment.
2.Target Marketing
The process of evaluating each market segments
attractiveness and selecting one or more segments to enter.A company
should be target segment in which it can generate the profitable & greatest
customer value and sustain it over time.
3. Market Positioning
Arranging for a product to occupy a
clear,distinctive,and desirable place relative to competing products in the
minds of target consumers.Thus,marketers plan positions that distinguish
their products from competing brands.
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What is the importance of segmentation:
The importance of market segmentation results from the fact that buyers of a
product or a service are not a homogenous group. Actually every buyer has individual
needs, characteristics, and behaviors. Who might require separate products or marketing
programs. So it is impossible to cater for every customer's individual
needs,characteristics and behavior.
1. Efficient use of resources
2. Better understanding of customer needs
3. Better understanding of competitors
4. Identification of customers needs and market segments
5. Develop profiles of resulting marketing segments
6. Targeting your market based on your segmentation exercise
What are difference b/w Products & Services:
1. Products are tangible but Services are intangible
2. Products can be possessed/used but Service cannot be possessed
3. The ownership b/w the product and services is different
4. You can count the products as you count ur money but not services
5. A product is produced by manufacturing process but service is
provided by the company by itself.
Types of products:
Convenience Product – Product that the customer buys frequently and
immediately. For example soap,newpaper,fast foods etc.
Shopping Product – Products that the customer buys less
frequently and in the process of selection and purchase on the
base of quality,price and style. For example clothes,used
cars,furniture etc.
Specialyt Product – Consumer product with unique characteristics or brand
identification for significant group of buyer willing to make special effort to
purchase it.
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Unsought Product – Products that the consumer either does not know about
it but does not normally think of buying.
Industrial Product – Product bought by individual and organization for
futher process or for resale purpose at a profit
What is consumer market and business market:
Consumer Market – The final consumers,individuals or household who
buy the goods and services for personal consumption is called consumer
market.
Business Market – The buy of goods or services for futher processing or for
resale purpose at a profit is called business market.
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Product Life Cycle
The course of a product’s sales and profits over its lifetime. The product life
cycle Include the Fellowing stages,
1. Introduction Stage
2. Growth Stage
3. Maturity Stage
4. Decline Stage
01.Introduction Stage
The product life cycle stage in which slow sale growth as product 1st
time introduced in market.
Characteristics
Low sales
• High cost per customer
• Negative profits
Innovators(Customers)
• Few competitors
Marketing Objectives
Create product awareness & trials
Stategies
• Offer a basic product
• Use cost- plus
• Build selective distribution
02.Growth Stage
The product life cycle stage in which a product’s sales start climbing
quickly.
Characteristics
• Increase sale
• Average cost per customer
• Increase profit
• Early adopters(Customers)
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• Increase competitors
Marketing Objectives
Maximize market share
Strategies
• Product Extensions
• Price to penetrate market
• Bulid intensive distribution
03.Maturity Stage
The product life cycle stage in which sales growth slows or level off.
Characteristics
• Peak Sales
• Low cost per customer
• High profit
• Middle majority(Customers)
• Stable number beginning to decline(Competitors)
Market Objectives
Maximize profit while defending market share
Strategies
• Diversify brand & models
• Beat competitors
• Build more intensive distribution
04.Decline Stage
The Product life cycle stage in which product’s sales decline.
Characteristics
• Declining sales
• Low cost per customer
• Declining profits
• Laggards(Customers)
• Decreasing Competitors
Marketing Objectives
Reduce Expenditure & milk the brand
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Strategies
• Phase out weak items
• Cut price
• Phase out unprofitable outlets
Creating New Product Development Strategy
The product is the 1st p of the marketing mix. “The development of original
product, product improvements, product modified, and new brands through
the firm’s R&D efforts”. There are 8 steps which you should keep in mind.
1. Idea Generation – new idea about the products, employees,
2.
3.
4.
5.
6.
customers and general public.
Idea Screening – how far they are practical to use or work on them.
Separate the goods ideas from the bad ones.
Concept development & Testing – new product idea stated in
meaningful consumer terms such as U.P.S R&D.
Marketing Strategy – create marketing strategy for a new product
based on the product concept.
Marketing Analysis – cost of production, cost of sales, employment
of capital, machinery, man power, return of investment along with
selling price.
Product Development – you will make a replica(sample) of the
product. You will have to make a product which meets the needs and
requirements of your customers.
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7. Test Marketing – introducing the product in only the selected
markets – dooth patti.
8. Commercialization – introducing the new product into the market.
Product Pricing
nd
The pricing is the 2 p of the marketing mix. The pricing is a dynamic
process. Companies design a pricing structure that cover all their products.
They change this structure with the passage of time.
New-Product Pricing Strategies
The new-product pricing include 2 pricing as given below
1. Market-Skimming Pricing
2. Market-Penetration Pricing
01.Market-Skimming Pricing
Market-skimming pricing means many companies that invent new
product setting the high price to skim maximum revenues layer by layer
from the market.
For example – sony uses these strategy.
02. Market-Penetration Pricing
Market-Penetration Pricing means many companies that set the
low price for a new product in the order to attract a large number
of buyers and marketing share.
For example – wal mart uses these strategy.
Product Mix Pricing Strategies
The Product Mix Pricing Strategies include 5 pricing as given below
01.Product line pricing
Means setting the price steps between various product in a product
line based on different cost.
For example – sony offer many versions of t.v such as flat, semi flat, wega
etc.
02.Opitonal Product line Pricing
Means setting the price of optional or accessory product along with a
main product.
For example – a car buyer may choose to order power window & cd changer
03.Captive Product pricing
Means setting the price for product that must be used along with a main product.
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For example – camara with a film
04.By Product Pricing
Means setting the price low value by the products to get rid of
them.
For example – most zoos don’t realize that one benefit of their by product
“their occupants manure”
05.Product Bundle Pricing
Means setting the price bundle of product sold together.
For example – bundle of soaf sold at a combo price.
Push Strategy
A promotion strategy that calls for using the sales force and trade
promotion to push the product through the channels. The producer promotes
the product to wholesaler, the wholesaler promote to retailers and retailer
promote to consumers.
Pull Strategy
A promotion strategy that call for spending a lot on advertising and
consumer promotion to build up consumer demand. If the strategy is
successful, consumers will ask their retailers for the product, the retailers
will ask the wholesalers, and wholesaler ask the producers
Product Mix Decision
01.Width
Width refers to the number of different product lines the company
carries.
For example – Proctor & Gamble consist of 250 brands that organized into 5
major product line.
02.Length
Length refers to the total number of item the company carries within
its product line.
For example – Proctor & Gamble carries many brands in each line such as
home line include detergents,shampoos,dettol,6 hand soaps etc.
03.Depth
Depth refers to the number of version offered of each product in the
line.
For example – colgate include colgate herbal,cavity protection,etc.
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04.Consistency
Consistency refers to the how closely related the various product lines
are in end use, production requirement.
For example – P&G product line are consistent insofar as they are consumer
product that go through the same distribution channels. The line are less
consistent insofar as they perfom different functions fot buyers.
Value Chain and Logistics
“To better understand the activities by which firm develop a competitve
advantage & create shareholder value. It is useful to saparate the business
system into a series of value creating activities referred as value chain”.
“Logistics is an area of saving cost of delivery cost of arrival of raw
materials in the factory – improved customer satisfaction”.
Logistics Activities
There are 2 types of logistics activities as given below,
1. Primary Activities
2. Secondary Activities
01.Primany Activities
The primary activities of logistics are as given below,
1. Inbound Logictics
2. Operations
3. Outbound Logictics
4. Marketing & Sales
5. Services
01.Inbound Logistics
The receiving & warehousing of raw material and their distribution to
manufacturing. It include material handling, material storage and testing.
02.Operation
The process of transforming input into finish products and services. It
include process, packaging and testing.
03.Outbound Logistics
The warehousing and distribution to finish goods. It include
transportation, communications and information system.
04.Marketing & Sales
The identification of the customer needs and the generation of sales. It
include media, audio/video and information system.
05.Services
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The support of customer after the products and services are sold to
them. It include testing, communications and information system.
02.Secondary Activities
The secondary activities of logistics are as given below,
1. Infrastructure
2. Human Resource Management
3. Technology Development
4. Procurement
01.Infrastructure
The Infrastructure of the firm, organization structure, control system
and the company culture etc.
02.Human Resource Management
Employee recruiting, hiring, training, development and compensation.
03.Technology Development
Technology to support value-creating activites.
04.Procurement
Purchasing input such as material, supplies, and Equipment.
The firm margin is depend on performing these activities effectively and
efficiently so that the customer is willing to pay. The value chain model is
very useful anaysis tools.
The competitive advantages of value chain analysis as given below
01.Cost Advantages
By better understading cost and sqeezing them out the value adding
activites.
02.Differentiation
By focusing on those activites associated with core competencies and
capabilities in order to perform them better than do competitors.
Supply Chain Management and Marketing Logistics
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“Managing upstream & downstream value-added flow of raw material, final goods,
and related information among the suppliers, the company, resellers, and final
consumers”.
“Marketing logistics is also called physical distribution that include
planning, implementation, and controlling the physical flow of goods or
services and it also include getting the right product to right customer in the
right place at right time”.
Inbound
Outbound
Logistic
Logistic
Suppliers
Company
Resellers
Customers
Reserve Logistics
Marketing logistics include not only outbound logistics but also
include inbound logistics and reserve distribution(moving the unbroken or
unwanted product return by the reseller or customer).
Thus, logistics manager’s task is to coordinate activities of suppliers,
purchaser, marketers, channel members and customers. These activities
include warehousing, inventory management, transportation and logistics
information management.
Major Logistics Fuctions
The major logistic fuctions are as given below,
1. Warehousing
2. Inventory Management
3. Transportation
4. Logistics information management
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01.Warehousing
The warehousing the the 1st major logistics function. In which a
company decide on how many and what type of warehousing it needs and
where they will be located. The company might use warehouses.
The warehousing include fellowing points
1. Receiving of good in warehouse
2. Identify sort and lebal
3. Dispatch the goods to the temporary storage
4. Recall and select the goods for transportion or shipment
02.Inventory Management
The inventory management is 2nd major logistics function. In which
company manager buy the supplies(raw material) from the supplier due to
short stock in the warehouses, only to satisfy the customer about the
company’s product or services.
03.Transportation
The transportation is 3rd major lagistics function. In which a company
manager choose the transportation for receiving the supplies(raw material)
and providing the final goods to final consumer that affect the pricing of
product and customer satisfaction.
The transportation include fellowing points
1. Cost
2. Transit time
3. Reliability
4. Capability
5. Accessability
6. Traceability
04.logistics information management
The logistics information management is 4th major logistics function.
The company manage their supply chains through information. From a
logistics perspective, information flowa such as customer orders,
billing,inventory levels and even customer data
The logistics information management is shared as fellowing points
1. Mail / telephone
2. Salesman
3. Internet
4. Electronic data interchange
Integrated Logistics Management
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Integrated logistics management means emphasizes teamwork, both inside
the organization and among the all marketing channels organization, to
maximize the performance of the entire distribution system.
01.Cross function teamwork inside the company
In most companies – assign the different functional units to logistics
such as marketing sales, finance, operations, purchasing etc. however,
transportation, warehousing,inventory and order processing activities
interact, often in an inverse way. Lower inventory levels reduce the
inventory-carrying cost as well as cutomer service and increase cost such as
fast freight shipment.
02.Builing logistics partnerships
Some companies for improve their own logistics, they also work with
other companies logistics to improve the whole channels distribution. Both
companies channels of distribution create customer value and building
customer relationships. The success of each member of distribution depends
on the performance of the entire supply chain.
03.Third Party Logistics
Most organiztions perform their own logistics functions, but in some
organizations, outside logistics(other country logistics) perform all the
functions required to get its clients product to market. Such as U.P.S supply
chain services provides warehousing, inventory control, transportation to
customer.
Place/Channel of Distribution/Intermediary
The place is 3rd p of the marketing mix. “The place is comprises of a set
institutions which perform all activities, utilized to move a product and its
title from production to consumption”. It is a machanism through which
goods and services are moved from manufacturer to consumer. There are 6
basic channel decisions you should keep in mind.
1. Do we use direct / indirect channels
2. Single / multiple channels
3. Cumulative lengh of the multiple channels
4. Types of intermediary selected
5. No of intermediary at each level
6. Which companies as intermediaries to avoid intrachannel
conflict.
For example – distribution channels increase the convenience of customer to
get a product or service. When the accessibility of the customer is increases
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for the specific product then the demand is also increased, therefore whole
salers and retailers in markets.
Functions of Markerting Channels
There are 3 major functions of marketing channels are as given below
1. Transactional Functions
2. Logistical Functions
3. Facilitating Functions
01.Transational Functions
Marketing channels perform the transational functions such as
1. Buying – buy the raw material
2. Selling – selling the product
3. Risk Taking – risk taking for overall process
02.Logistical Functions
Marketing channels perform the Logistical functions such as
1. Assorting – retain the product with organization
2. Sorting – divide the product according to quality
3. Storing – store the product for more distribution
4. Transporting – transport the product to buyer
03.Facilitating Functions
Marketing channels perform the facilitating functions such as
1. Financing – using fund to cover the cost of channels work
2. Information – collection the information about new product
3. Researching – research for creating the new product
Advertising
“Any paid form of nonpersonal presentation and promotion of idea,
goods or services by an identified sponsor”
The marketing management make the 4 major decision when
developing the advertising program. These 4 decision include such as
given below,
1. Setting Advertising Objectives
2. Setting Advertising Budget
3. Developing Advertising Strategy
4. Evaluating Advertising
01.Setting Advertising Objectives
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The 1st step is to set the advertising objectives. These objectives based
on past decisions about target market, positioning, and market mix which
define job.
“An advertising objective is a specific communication task to be
accomplished with a specific target audience during the specific period of
time”.
The advertising objectives can be classified into 3 possible advertising
objectives.
01.Informative
1. Telling the market about the new product.
2. Informating the market about the price change.
02.Persuasive
1. Building brand preference
2. Encourging switching to your brand
03.Reminding
1. Reminding consumer,where to but it.
2. Reminding consumer,the product may be needed in the near
future.
02.Setting Advertising Butget
After setting advertising objectives the next step is to set advertising
bedget. There are some specific factor that should be considered when
setting advertising budget.
A brand’s advertising budget often depend on it’s stage in the product
life cycle. For example – new product requires large advertising budget to
build customer’s awareness and trials. However mature brands requires low
advertising budget.
03.Developing Advertising Strategy
Advertising Strategy include 2 major elements as given below
1. Creating Advertising Message
2. Selecting Advertising Media
01.Creating Advertising Message
The 1st step is to create effective adverting message to decide what
general message will be communicated to customers. The purpose of
advertising is to get consumer to think or react to the product. They will
react only if they will believe that they will be benefit from doing so.
02.Selecting Advertising Media
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The 2nd step is selecting the effective advertising media such as
newspaper, magazines, radio, outdoor, television, direct mail and internet
are very effective for advertising.
04.Evaluating Advertising
The advertising program should evaluate both the Communication
Effect and Sale Effect.
Measuring the Communication Effect of ad – Copy Tesing – tells
whether the ad is communicated well. Copy testing can be done Before or
After an ad is printed.
Before the ad is placed, the advertiser can show it to consumer, ask
how they like it.
After the ad is places, the advertiser can be measure how the ad
affected consumer product awareness
Measuring the Sale Effect of ad is to compare the past sale with past
expenditures. Another way is through experiments.
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