Business has only 2 functions:
1. Marketing
2. Innovation
Strategy - POA to achieve clear defined objectives. Objectives needed for developing clear POA
Business exist to deliver products and Services. Marketing strategy is the key for any firm and every other
function role is to assist marketing mission of the firm
Marketing is the process via which firm creates value for its target customers. Value met by meeting customer
needs. Firm needs to define itself by customer benefit rather than product
Portion of value capture via pricing from customers. Sustainable if you can capture value over time with proper
pricing. Plan via which value is capture is called Marketing Strategy. This consists of 2 activities
1. Selection of Target customer and desired positioning within target customer mind
2. Plan to achieve the positioning within the customer mind
5 major areas of analysis needed to be undertaken prior to marketing decisions They are termed as the 5C’s
 Customers
 Company
 Competitors
 Collaborators i.e. channel partner and suppliers
 Context
Customer
In-depth analysis of customer purchase and usage pattern. Fundamental unit is termed as
 The Decision Making Unit (DMU)
o Who is involved in the process
o What role does each play
Following 5 roles involved in buying situation
 Initiator - Raises need to solve an issue and search for solution
 Decider - who makes the final choice
 Influencer - Provide inputs
 Purchaser - who makes the payment
 User - Consumes the product
Second major area to be considered is
 Decision Making Process
o Is there search for info
o How is the search done
o Criteria used to evaluate alternatives
o Importance of various attributes such as price, performance and features
o How do various DMU members interact
 Other questions to be considered
o Where do customers wish to buy
o How will product be used
o Frequency of usage
o Need to have or nice to have or good to have problem that is being solved
Analysis in form of these questions can assist in development of market segments
Company Analysis
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Product/Company fit
Financial position
R&D capability
Manufacturing capability
Key assets of firm
Primary advantages
Disadvantages
Key differentiation
Competitive Analysis
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List of current competitors
Potential Competitor
Complementary product that are competition
Similar analysis as company analysis for competitors
Key Objectives of competitors
Collaborators Analysis
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Identify the following 2 key partners
o Downstream Trade
o Upstream supplier
Understand the following for both
o Cost Structure
o Margin expectation
o Revenue requirements
o Exclusive or open to competitors
o Support and training needs
o Lead time for delivery to customers
Context
Understand the current context for product existance. Customer preferences in relation to culture, technology,
change in value system, regulatory setting, political climate.
Finally develop economic benefit to arrive at what works and what does not work
Market simply is area where buyers and sellers meet i.e pocket of latent demand. New market opportunities
keep arising due to changes in different facets of people life with passage of time
Prerequisite to good plan is clear identification of customer segment. Market segment is a group of alike users
that perceive and value product, buying behaviors and final usage of product
Good to work on developing plans specifically to smaller segments than large mass market segments
Two Key questions to be answered
1. Which potential buyers should the firm attempt to serve? Focus on describing and differentiating
customers (Segmentation)
o General Dimensions to segment a market
1. Demography: Family, income, age, sex, ethnicity, education background, difference in
state, buying habits and consumption patterns.
2. Geography: Different areas of country that vary in terms of market potential, product
preferences and government regulations, shipping distance
3. Psychographic Variables: On basis of individual lifestyles, attitudes towards various
aspects of life, work, family, friends. Attitude change also present due to context of their
upbringing such as baby boomers, Y Get, GenX. Each segment has different use cases
and usage frequency. You can use corporate culture to segment Industrial firms. Some
are risk takers, price sensitive while some focus on better technology and service levels
4. Product applications and Usage: Different usage requirements can assist in segmenting
market as per use cases
5. Segments change with growth, competition, social and cultural changes, usage
requirements, changes in distribution channels. Lot of changes requires further market
segmentation. Focus to relook segmentation frequently to ensure touch with market.
Segmentation needs to be done as per company requirements
2. How much customization will be offered and at which point
o Mass market
o Market Segments
o Market Niche
o Individual
Segment markets on basis of customer behavior. Customer determine the rules of the game, hence focus on
clearly knowing the segment so that rules are clear such that marketing plans are better defined within the game
rules
Post segment identification, focus on Positioning that firm wishes to place in customer mindset. Determining
positioning allows you to frame the marketing mix better and tactical details better
Marketing Mix
You can identify into the 12 major categories
Product Planning Pricing
Branding
Channels of Distribution
Personal Selling
Packaging
Advertising Promotion
Display
Servicing
Physical Handling Market research and fact finding
The above have been defined in 4 broad segments to allow for better planning of Marketing Mix
Product/Market Selection
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Identify total package of benefits offered to customer as value as customers purchase the entire package
apart from the simple physical product or service delivered. Important to list even negatives and
disadvantages so that they can be planned better for optimum customer exp
Understand the difference between perceived value and potential value
Focus on the key benefit that will attract your target segment and differentiate
Following decisions needed on product line
o Product Line Breadth: How many different line of the product will you offer (Eg: Laptops,
desktops, tablets). Focus to be consistent across different lines else drop a line if consisteny can’t
be provided
o Product Line Length: How many items will there be in a line providing coverage of different
price points i.e. customer segments
o Product Line Depth: How many types of a given product (Ex: color, material etc)
Product/Market Selection Criteria
o Product value: Focus on high segments with high perceived value
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Long-run growth potential: Profit potential is key and focus to understand any new usage cases
that can be generated with passage of time or pay attention to such opportunities if none can be
guessed
o Resource Commitment: Can we commit sufficient resources and financial backing to ensure
success. Many firms drop out due to low return or high entry barriers
o Company-Product/Market Fit: See if we can deliver the product. Don’t pause an attempt due to
fear of cannibalizing our own sales as if we avoid, we create market opportunities for competitor
to take away our sales
o First Mover Advantage: Higher brand recognition, economies of scale, lead in technology
development. Entering first is not first mover, ensuring product market fit at the earliest gives
first mover advantage
Answer following questions prior to finalizing planning
o Can we make money from the target segment
o Can we differentiate
o Impact on other products. Complementary or substitute
o Impact on brand perception
New Product Planning has following steps
o Opportunity Identification: Customer problem, Product market fit and product company fit
identification
o Design and Testing: Iterative process where idea is tested with customers and changes made
accordingly. You should even test the marketing mix among the target customers such as
communication and price
o Product Introduction: Launch of product to target customers and areas
o Life Cycle Management: Product improvement with time and changing customer demands along
with changes in firm capabilities
Place (Marketing Channels)
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The mechanism via which you goto market encompassing multiple activities ranging from demand
generation to delivery of goods
The following functions are expected from channel
o Product Info
o Product Customization
o Product Quality Assurance
o Lot size (ability to buy in quantities as needed by customer)
o Assortment of Products
o Availability
o After sales service
o Logistics
Every layer above performs a task and can’t be eliminated. You can have multiple roles played by a
single player but role can’t be eliminated as it will impact customer. Develop channels in way to meet
all needs of customers via channel but never eliminate a role
Two major design decisions needed are
o Channel Design: Length and breadth of channel
 Two means available
 Direct
 Indirect
 Different segments are served via either of the above 2 methods. Conflict happens hence
important to identify and ensure clarity between both means
 If few people represent bulk then adopt direct. If large groups need to be served, indirect
is recommended to allow for better cost structure
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If you need to ensure high quality and direct customer support then direct is
recommended. Only if intermediaries can accept your rules, don’t adopt indirect in these
cases. This is critical if firm wants to understand customers and market directly for future
planning
o Channel Breadth: Policies and procedures needed to have different parties perform different
roles
 Understand if you want high presence or selective.
 Selective can be taken if
 Customer is willing to travel extra
 High true selling needed prior to sale of product
 High unit cost for good storage
 As product becomes more widely accepted, you can become less selective in channel.
Channel breadth changes with time and important to keep focus on this area
Distribution channels are the hardest to change. Important to keep revisiting the distribution strategy
frequently to ensure you don’t lose any competitive advantage or market touch. People will it harder to
change if current system is good and successful compared to peers. You need to expand or close as per
needs and don’t fear risk else you will lose out
Channel management is key to ensure that everyone is clear on their daily to do task list. Its not about
conflict management but ensuring no conflict. Channels need to align with your objectives
Promotion (Marketing Communication)
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The appropriate set of ways to communicate with customers to foster awareness of product, generate
interest for purchase, improve sales conversion and increase purchase frequency
The following tasks need to be done in planning the communication strategy (6 M Model)
o Market - To whom is the communication to be addressed
o Mission - Objective of Communication
o Message - Specific points of communication
o Media - Vehicles used to convey the message
o Money - How much needed for effort
o Measurement - How to measure impact post the campaign
Focus to address various players in DMU to ensure better conversion
Non Personal Selling
o Primarily advertising focusing on
 Product Awareness
 Feature description
 Usage suggestions
 Differentiation from competition
 Push customers to sale points
 Improve brand perception
o Limited in closing sales. Needs to be complemented by Sales Promotion
 Customer Promotions
 Trade Promotions
 Retail Promotions
o PR is also part of non-personal but you have limited advantage though expenses are incurred for
same. Control is limited and needs to be kept in mind
Personal Selling mostly via sales team
o Communication can be catered as per need of customer.
o Sales person responsible for perception of brand
o Understand the entire tasks to be performed to ensure that no confusion
o Training needed to ensure consistency
o Ease to reach harder to communicate segments
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Focus to spread money to various media to ensure that objective are met. Important to decide between
Push and Pull strategy when planning final spends
o Push: Intermediator is key for closure. Ads focus to encourage people to head to point of sale
o Pull: Customer keen to purchase and intermediary only sells. Ads focus to convince people
clearly to buy
o Good plans focus on Both ends to ensure faster growth and adoption rather than trying to stick to
one. Focus needed to ensure both ends are planned and executed assuming that only one is in
play
Pricing
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Product, Place and Promotion define value that customer places in the competitive context. Pricing is the
means by which firm capture certain value from the product
Prices primarily determined by following 5 inter related factors
o Supply / Demand Conditions
 Higher supply, lower the price and vice versa. Artificial supply constraints are put by large
firms via regulations, cartel formation (OPEC)
 Competitive signaling or methods to make market less lucrative can help in lower competition
o Firms Cost of Doing business
 Cost is floor for pricing but you can sell at loss. However hard to increase pricing later due to
lower price reference in customer mind
 Multiple firms face high fixed overheads so they may discount prices in certain time periods
as any income during low sales period provide high contribution
 Low Cost producers have high advantages as they can survive price wars and better profits
o Competition
 Competition establishes the ceiling of price for a product
 You can enjoy price premium to the extent that value is more than price. If you charge more
than you lose customers
 Price Leadership enjoyed by largest firm due to tech and distribution network. Not every
move appreciated but lot of them follow if it allows better profits i.e. Conscious Parallelism
o Buyer Bargaining Power
 High Power When:
 High contribution of sales
 Multiple substitutes available
 Low switching cost
o Product perceived value to potential customers
 “The worth of a thing is the price it will bring"
 Different customers place different value so identify pricing to get most optimum revenue
should be key objective
 Different prices can only be sustainable via different functions differentiation. Packaging and
distribution differentiation never works as customer will soon pick the lowest priced
Determine whether you are adopting skim or penetration pricing strategy
o Penetration works best when
 Customer price sensitive
 Economies of scale is key
 High capacity available. Low variable cost
 Preempt Competitive threats
 Faster learning curve
 Keen to gain high market share
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Penetration works well when
 Avoid product defect so that you face no recall
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High production capacity
Good distribution channel
Low adoption curve from customers
Price customization can be done to extract higher value from customers but not always possible due to
legal constraints
Pricing needed to be done in context of competition. Price wars undertaken when
o High fixed costs
o Commodity product
o Low growth rate
o Economies of scale needed and hard to change capacity easily
Focus to ensure that pricing does not result in destroying industry profitability