marketing management
TRANSCRIPT
Marketing Management
Sangeeta Singh
INDEXINDEX1) What Is Marketing?2) The Marketing Environment3) Marketing Management4) Marketing as Decision Making5) Analyzing Consumer Behaviour6) Organizational Buying Behaviour7) Market Segmentation8) Targeted Marketing9) The Marketing Mix10) The Product11) New Product Development12) Marketing Channels13) Physical Distribution14) The Promotion Effort15) Price Determination16) Price Administration
WHAT IS MARKETING?WHAT IS MARKETING?
Chapter - 1
WHAT’S MARKETING IS ALL ABOUT
A HUMAN ACTIVITY DIRECTED AT SATISFYINGNEEDS AND WANTS THROUGH EXCHANGEPROCESSES
PHILIP KOTLER
IT IS THE PERFORMANCE OF BUSINESS ACTIVITIESTHAT DIRECT THE FLOW OF GOODS AND SERVICESFROM PRODUCER TO CONSUMERS
AMERICAN MARKETING ASSOCIATION
MARKETING CONTINUED…IT IS THE PROCES OF
• IDENTIFYING CUSTOMER NEEDS
• CONCEPTUALISING THOSE NEEDS IN TERMS OF ANORGANISATION’S CAPACITY TO PRODUCE.
• CONCEPTUALISING THE CONSEQUENT OUTPUT IN TERMS OF THE CUSTOMER NEEDS EARLIER IDENTIFIED, AND
• COMMUNICATING THAT CONCEPTUALISATION TO THE CUSTOMER
JOHN.A. HOWARDCOLUMBIA UNIVERSITY 1973
What is Marketing?What is Marketing?
Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.
More simply: Marketing is all about satisfying needs (...profitably and fairly)!!!
Marketing is an Exchange of Marketing is an Exchange of ValueValue
An exchange is the process by which some transfer of value occurs between a buyer and a seller.◦At least two people or organizations must be
willing to make a trade, and◦Each must have something the other values.◦Most exchanges occur in the form of a
monetary transaction.
Marketing is an Exchange of Marketing is an Exchange of ValueValue
An exchange is the process by which some transfer of value occurs between a buyer and a seller.◦At least two people or organizations must be
willing to make a trade, and◦Each must have something the other values.◦Most exchanges occur in the form of a
monetary transaction.
WhyWhy is Marketing is Marketing Important?Important?Marketing Creates Utility
◦Place Utility◦Time Utility◦Possession Utility
Marketing’s Role in the Firm◦A firm’s marketing-related decisions must
affect and be affected by its other operations such as accounting and manufacturing.
WhyWhy is Marketing is Marketing Important?Important?
Marketing’s Role in Our Daily Lives
Marketing’s Role in Society
Production ConceptProduction Concept
Product ConceptProduct Concept
Selling ConceptSelling Concept
Marketing ConceptMarketing Concept
Consumers prefer products that are widely available and inexpensive
Consumers favor products that offer the most quality, performance,
or innovative features
Consumers will buy products only ifthe company aggressively
promotes/sells these products
Focuses on needs/ wants of target markets & delivering value
better than competitors
Company Orientations Towards Company Orientations Towards the Marketplacethe Marketplace
WhenWhen Did Marketing Begin? Did Marketing Begin?
Product OrientationProduct Orientation
Selling OrientationSelling Orientation
Customer OrientationCustomer Orientation
•Most Efficient Production & Distribution•Seller’s Market
•Satisfies Customers’ Needs and Wants•Total Quality
New Era OrientationNew Era Orientation •Benefits to Customers, Plus Firm’s Employees, Shareholders, and Communities.
•Marketing as a Sales Function•Buyer’s Market
Needs, Wants &Demands Products
Value & satisfaction
Exchange & transactionsMarkets & marketers
Mktg is a social process by which individuals & groups obtain what they need and want through creating & exchanging products &values with others.
The PILLSBURYThe PILLSBURYFirst Era in 1869 - 1930s. The idea for the formation of the company came from the availability of high quality wheat and the proximity of water power – NOT from the availability and proximity of growing major market areas or the demand for better less expensive, more convenient flour products. The principal concern here was with PRODUCTION
The PILLSBURYThe PILLSBURYIn this Era The company’s Philosophy might have been stated as: “ We are professional flour millers. Blessed with a supply of the finest North American wheat, plenty of water power, and excellent milling machinery, we produce flour of high quality. Our basic function is to mill high quality flour, and of course we must hire salesman to sell it just as we hire accountants to keep our books.”
The PILLSBURYThe PILLSBURY
Second Era in 1930s – 60s (Sales Orientation). This was the era of sales when for the first time the co began to be highly conscious of the consumer, her wants and her prejudices as a key factor in business equation. The first step along the road to become a marketing company has been taken.The principal concern here was with SALES.
The PILLSBURYThe PILLSBURY
In this Era The company’s Philosophy might have been stated as: “ We are a flour milling company, manufacturing a number of products for the consumer market. We must have a first rate sales organization which can dispose of all the products we can make at a favorable price. We must back up this sales force with consumer advertising and market intelligence. We want our salesman and our dealers to have all the tools they need for moving the output of our plants to the consumer.”
The PILLSBURYThe PILLSBURY
Second Era in 60s and beyond (Marketing Orientation). This was the era of product research and for the first time co felt the need to select the best new products. The first step the co took to set up a marketing department which developed criteria for determining which products to market. The criteria was nothing more or less than those of the consumer itself.The principal concern here was with Consumer Markets
The PILLSBURYThe PILLSBURY
In this Era The company’s Philosophy might have been stated as: “ We make and sell products for consumers.”
Needs, Wants &Demands Products
Value & satisfaction
Exchange & transactionsMarkets & marketers
Mktg is a social process by which individuals & groups obtain what they need and want through creating & exchanging products &values with others.
MarketIntegratedmarketing
Profits throughcustomer
satisfactionCustomer
needs
(b) The marketing concept
FactoryExistingproducts
Selling andpromotion
Profits throughsales volume
Startingpoint Focus Means Ends
(a) The selling concept
Customer Delivered Customer Delivered ValueValue
Difference Between Selling And Difference Between Selling And Marketing Marketing
Selling stats with the seller. Selling is preoccupied all the time with the needs of the seller; seller is the center of the business universe; activities start with seller’s existing products.
Emphasises on saleable surpluses available with in the corporation; seeks to quickly convert ‘product’ into ‘cash’; concerns itself with the tricks and techniques of getting the customers to part with their cash for the products available with the salesman.
Marketing starts with the buyers and focuses constantly on the needs of the buyers; buyer is the centre of the business universe; activities follow the buyer and his needs.
Emphasises on identification of a market opportunity; seeks to convert customer ‘needs’ into ‘products’; emphasises on fulfilling the needs of the customers.
Difference Between Selling And Difference Between Selling And Marketing Marketing
View business as a ‘goods producing process’.
Over emphasises the ‘exchange’ aspect without caring for the ‘value satisfactions’ inherent in the exchange.
Seller’s convenience dominates the formulation of the ‘marketing mix’
View business as a ‘customer satisfying process’.
Concerns itself primarily and truly with the ‘value satisfactions’ that should flow to the customer from the exchange.
Buyers determines the shape the ‘marketing mix, should take.
Difference Between Selling And Marketing Difference Between Selling And Marketing
The firm makes the product first and then figures out how to sell and make profit.
Emphasises on staying with the existing technology and reducing the cost of production.
Seller’s motives dominate marketing communications.
What is to be offered as a ‘product’ is determined by the customer; the firm makes a ‘total product offering’ that would match and satisfy the identified needs of the customers; the ‘product’ is the consequence of the marketing effort; the marketing effort leads to products that the customers would actually want to buy in their own interest.
Emphasis on innovation in every sphere; on providing better value to the customer by adopting the most innovative technology.
Marketing communications is looked upon as the tool for communicating the benefits/satisfactions provided by the product.
Difference Between Selling And Difference Between Selling And Marketing Marketing
Costs determine price.
Transportation, storage and other distribution functions are perceived as mere extensions of the production function.
Emphasis is on ‘somehow selling’; there is no coordination among the different functions of the total marketing task.
Consumer determines price; price determines costs.
They are seen as vital services to be provided to the customer, keeping customer’s convenience in focus.
Emphasis is on integrated marketing approach, an integrated strategy covering product, promotion, pricing and distribution.
Difference Between Selling And Marketing Difference Between Selling And Marketing
Different departments of the business operate as separate watertight compartments.
In firms practicing ‘selling’ production is the central function of the business.
‘Selling’ views the customer as the last link in the business.
All departments of the business operate in a highly integrated manner, the sole purpose being generation of consumer satisfaction.
In firms practicing ‘marketing’, marketing is the central function of the business; the entire company or business is organized around the marketing function.
‘Marketing’ views the customer as the very purpose of the business; sees the business from the point of view of the customer; customer consciousness, all departments and all people in the organization, all the time.
HowHow is Marketing is Marketing Done?Done?Marketers Develop and Implement a Marketing
Plan Based on the Following Information:
Organization’s Strengths and Weaknesses
Organization’s Strengths and Weaknesses
Organization’s Overall ObjectivesOrganization’s Overall Objectives
Opportunities and Threats to theOrganization in the Marketplace
Opportunities and Threats to theOrganization in the Marketplace
Needs, Wants and Needs, Wants and BenefitsBenefits
NeedsNeeds
WantsDesire to Satisfy Needs in Ways That are Culturally and Socially Influenced.
Let’s go eat a cheeseburger.
BenefitsOutcome Sought by a
Consumer That Motivates Buying Behavior. Now I’m
full; I feel better.
Difference Between a Consumer’s Actual State
and Some Ideal or Desired State. I’m Hungry!
Markets, Consumers and Markets, Consumers and DemandDemand
Market
Customerswho share a common
need that can be satisfied by a
specific productAND
who are willing, able and have the authority to make the exchange.
Customers
PotentialCustomers
DEMAND
Customers
Front-line people
Middle Management
TopManagement
Traditional Organization ChartTraditional Organization Chart
Customer-Oriented Organization Customer-Oriented Organization ChartChart
Customers
Front-line people
Middle management
Topmanage-
ment
Customers Cus
tom
ers
Evolving Views of Marketing’s Evolving Views of Marketing’s RoleRole
a. Marketing as anequal function
FinanceProduction
Marketing Humanresources
b. Marketing as a moreimportant function
Finance
Humanresources
Marketing
Production
Evolving Views of Marketing’s Evolving Views of Marketing’s RoleRole
c. Marketing as themajor function
Marketing
Finance
Hum
an
resources
Production
d. The customer as thecontrolling factor
Customer
Human
reso
urces
FinanceProductio
n
Marketing
Evolving Views of Evolving Views of Marketing’s RoleMarketing’s Role
e. The customer as the controllingfunction and marketing as the
integrative function
Customer
Marketing
Production
Hum
an
resources
Finance
Changing Marketing Changing Marketing ArchitectureArchitecture
INDUSTRIAL AGE(Past)Customer DrivenOne-wayFinite ReachTime DelayInformation
Constraints
INFORMATION AGE(Current and Future)Customer DrivingInfinite ReachTime SavingInformation
Abundance
How Marketing is Changing?How Marketing is Changing?
From Exchange / Transaction to Customer Value
From Suppliers Making Marketing Decisions to Customers Driving Those Decisions
From Physical Channels to Seamless Channels
From Market Segments to Segments of Size One
From Personal Based Communication Campaign to Permission Based Communication Campaign
Views on the Marketing Processes
5-C AnalysisCustomer
CompetitorCompanyContext
Collaborators
S-T-P Marketing
SegmentationTargeting
Positioning
4 P’s Marketing Plan
ProductPricing
PromotionPlace
The Functional View
Views on the Marketing Processes
Understanding Customer
Value
Creating Customer
Value
The Process View
Capturing Customer
Value
Delivering Customer
Value
Sustaining Customer
Value
Understanding Customer Understanding Customer ValueValue
Value is defined as the perceived worth in monetary units of the of the set of economic functional / technical and psychological benefits received by the customer in exchange for the price paid for a product offering, taking into consideration the available offerings and prices.- Anderson, Jain and Chintagunta(1993)
Understanding Customer Understanding Customer ValueValue
Psychological
Functional Economic
MARKETING’S MARKETING’S CONTRIBUTION WITHIN THE CONTRIBUTION WITHIN THE FIRMFIRM
Corporate / Business Unit Level
The Policy Question: How to develop a Customer Focus?
Marketing’s Answer: Bring the Voice of the customer in the organization
Tools: Mkt Research, Customer Visits, Market Orientation Audits
MARKETING’S MARKETING’S CONTRIBUTION WITHIN THE CONTRIBUTION WITHIN THE FIRMFIRM
Product LevelThe Policy Question: How to best adapt
to the market? Marketing’s Answer: Develop a value
proposition and competitive positioning based on customer needs
Tools: Customer and Competitor analysis
MARKETING’S MARKETING’S CONTRIBUTION WITHIN THE CONTRIBUTION WITHIN THE FIRMFIRM
Product LevelThe Policy Question: How to best adapt
to the market? Marketing’s Answer: Develop a value
proposition and competitive positioning based on customer needs
Tools: Customer and Competitor analysis
Plea From an Anonymous Plea From an Anonymous CustomerCustomerDon’t Sell me Clothes, Sell me a sharp appearance,
style and attractiveness.Don’t Sell me a House, Sell me comfort, contentment, a
good investment and a pride of ownership.Don’t Sell me Toys, Sell my children happy moments.Don’t Sell me Insurance, Sell me peace of mind, and a
great future for my family and me.Don’t Sell me Books, Sell me pleasant hours and the
profits of knowledge.Don’t Sell me Computers, Sell me the pleasure and
profits of the miracles of modern technology.
The Moral is…..The Moral is…..
Don’t Sell me THINGS, Sell me Ideas, Feelings, Self-respect, Home, Life and
Happiness.
PLEASE DON’T SELL ME THINGS
MARKETS
NEEDS, WANTSAND DEMANDS
PRODUCTS AND SERVICES
VALUE, UTILITYSATISFACTION
QUALITY
EXCHANGERELATIONSHIPS
TRANSACTIONS
CORE MARKETING CONCEPTS
FUNDAMENTAL TERMINOLOGIESNEEDS : FELT DEPREIVATION
WANTS : FORM TAKEN BY HUMAN NEEDS AS THEY ARE SHAPED BY CULTURE AND PERSONALITY.
DEMAND : WANTS BACKED BY PURCHASING POWER.
PRODUCT : ANY OFFERING TO SATISFY NEEDS AND WANTS MAINLY PHYSICAL OBJECTS, SERVICES, INFORMATION, PROPERTIES EXPERIENCES, EVENTS, PLACES, ORGANISATIONS, IDEAS, PERSONS.
FEATURES : PHYSICAL ATTRIBUTES OF THE PRODUCT
ADVANTAGES : OPERATIONAL FEATURES OF THE PRODUCT
BENEFITS : IMPLICIT, SUBJECTIVE OUTCOME AFTER USE OF THE PRODUCT WHICH LEADS SATISFACTION.
VALUE : IT IS (FUNCTIONAL BENEFIT+ EMOTIONAL BENEFIT)/ (MONEY + TIME+ ENERGY + PSYCHIC COSTS)
SATISFACTION : PERFORMANCE VS EXPECTATION FUNCTION
EXCHANGE : OBTAINING OF SOMETHING BY OFFERING SOMETHING ELSE IN RETURN.
CONCEPTS IN MARKETING
• PRODUCTION CONCEPT : WIDELY AVAILABLE &INEXPENSIVE PRODUCTS WILL BE PREFERRED.
• PRODUCT CONCEPTS : MOST QUALITATIVE, HIGH PERFORMING & INNOVATIVE FEATURES ORIENTED PRODUCTS WILL BE PREFERRED.
• SELLING CONCEPTS : IF LEFT ALONE, CONSUMERS AND BUSINESS WON’T BUY ENOUGH OF PRODUCTS SO DO AGGRESSIVE SELLING
• MARKETING CONCEPT : MEETING NEEDS PROFITABLY; FIND WANTS AND FILL THEM;
LOVE THE CUSTOMER, NOT THE PRODUT; HAVE IT YOUR WAY…
BURGER KING ->YOU’RE THE BOSS…
STARTINGPOINT
FOCUS
MEANS
ENDS
SELLINGCONCEPT
FACTORY
EXISTING
PRODUCTS
SELLING/
PROMOTING
PROFITS
THROUGH
SALES
VOLUME
MARKETINGCONCEPT
MARKET
CUSTOMERNEEDS
INTEGRATEDMARKETING
PROFITS THROUGHCUSTOMERSATISFACTION
THE MARKETING ENVIROMENTTHE MARKETING ENVIROMENT
Chapter -2
MARKETING ENVIRONMENTMARKETING ENVIRONMENTAll companies operate with in a marketing environment.
Micro Environment
Macro Environment
Micro EnvironmentMicro EnvironmentFive Components
Internal Environment
Marketing Intermediaries
Group of Customer
Competitors
Group of publics
Macro EnvironmentMacro Environment
Demographic Environment
Economic Environment
Natural Environment
Technological Environment
Political Environment
Cultural Environment
CO’S MKTG PROGRAMME
R & D
FINANCIALRESOURCES
HUMAN
RESOURCE
CO’SIMAGELOCATION
PRO-DUCTIONFACILITIES INTER
MEDIARIES
MARKET
COMPETITION
ECONOMIC CONDITIONS
DEMOGRAPHY
SUPPLIERS
INTERNEDIARIES
SOCIAL &CULTURALFORCES
POLITICAL &LEGAL FORCES
TECHNOLOGY
A COMPANY’S COMPLETE MARKETING ENVIRONMENT
THE BUSINESS CYCLETHE BUSINESS CYCLE•Prosperity (Boom)•Recession ( Slow Down)•Depression (Bust)•Recovery (Upswing)
STYLES FASHIONS FADS
STYLE
FASHION
FADS
BASIC AND DISTINCTIVE MODE OFEXPRESSIONCLOTHING – FORMAL VS. CASUAL
CURRENTLY ACCEPTED OR POPULARSTYLE IN A GIVEN FIELD
FASHION THAT ENTER QUCKLY, PEAK EARLY AND DECLINES VERYFAST
SALES
STYLE
TIME
SALES
FASHION
TIME TIME
FAD
SALES
(A) (B) (C)
PHASE- I INTRODUCTION
•STAGE JUST AFTER THE LAUNCH
•SALES GROWTH SLOW
•PROFITS MAY BE LACKING
•BECAUSE OF:
LOW SALES VOLUME
HIGH DISTRIBUTION ANDPROMOTION EXPENSES
HIGH COST OF MARKETDEVELOPMENT
TYPICAL FEATURES:
HIGH PRODUCT FAILURE RATE LITTLE COMPETITION FREQUENT PRODUCT MODIFICATION HIGH PRODUCTION AND MARKETING COST HIGH DEALER MARGINS
PROMOTION
RAPID SKIMMING
SLOW SKIMMING
RAPIDPENETRATION
SLOWPENETRATION
HIGH
LOW
HIGH LOW
DIFFERENT PRICE/ PROMOTION LEVELS CAN BE COMBINE
PR
ICE
STRATEGY
DEVELOP PRODUCT AWARENESS
INTENSIVE PERSONAL SELLING
SALE TO HIGH INCOME GROUPS
HEAVY SAMPLING / COUPENING FOR CONVE-NIENCE GOODS EDUCATIONAL ADVERTISING +PERSONAL SELLING FOR SPECIALITY PDT.
LIMITED DISTRIBUTION
PHASE – II GROWTH
IF PRODUCT SATISFIED MARKET ….. IT WILL ENTERGROWTH PHASE
SALES GROW AT INCREASING RATE
COMPETITION BUILDS UP FAST
NO. OF DISTRIBUTION OUTLETS GO UP
PROFITS HEALTHY ….. REACH AT PEAKPROMOTION/ SALES RATIO GO DOWN
STRATEGY
•EFFORT IS TO SUSTAIN RAPID MARKET GROWTH RATE•AND CAPTURING A DOMINANT POSITION
•IMPROVING PRODUCT QUALITY AND ADDING NEW•FEATURES AND MODELS
•MORE PRODUCT EXPOSURE•ENTRY INTO NEW MARKET SEGMENTS•AGGRESSIVE DISTRIBUTION STRATEGY
•SWITCH FROM CATEGORY RELATED PROMOTION TO•BRAND PROMOTION
PHASE – III MATURITY
LONGEST STAGE OF PLC MOST PRODUCTS … IN THIS STAGE MOST MARKETING STRATEGIES FOR MATURE PRODUCTS
THREE SUB- STAGES:
•GROWTH MATURITY
•RATE OF SALES GROWTH BEGINS TO DECLINE BECAUSE OF DISTRIBUTION SATURATION
•FULLEST POSSIBLE TAPPING OF MARKETALREADY OVER
STABLE MATURITY
SALES FLATTEN ON PER-CAPITA BASISFUTURE SALES – BY POPULATION GROWTHAND REPLACEMENT DEMAND
DECAYING MATURITY
•ABSOLUTE LEVEL OF SALES STARTS DECLINING
•CUSTOMERS MOVE TO RIVAL PRODUCTS/SUBSTITUTES
GENERAL FEATURES:
CUT- THROAT COMPETITION
PROFIT – EROSION
WEAK AND MARGINAL COMPETITORS DROP OUT
STRONG COMPETITORS TRY FOR COMPETITIVE ADVANTAGE
PRICES AND PROFITS CONTINUE TO FALL
DEALERS MARGINS SHRINK AND RELUCTANCE TO PUSH THE PRODUCTS
BASIC STRATEGIES IN MATURITY STAGE
(A) MARKET MODIFICATION
•LIFE OF PRODUCT CAN BE EXPANDED BY MARKETSTRETCHING•CONCENTRATING ON MARKET SEGMENTS YETUNTAPPED•STIMULATING INCREASED USAGE AMONGCURRENT USERS•PROMOTING MORE VARIED USAGE AMONGCURRENT USERS
- INCREASING NO. OF USE SITUATIONS USE OF BOROLINE FOR MANY PURPOSES
REPOSITIONING THE BRAND
CHANGING THE CUSTOMER’S PERCEPTIONS OF THE PLACE A PRODUCT OR BRAND OCCUPIES INA GIVEN MARKET
MILKMAID
JOHNSON’S BABY LOTION
COMPLAN
CHOCOLATE – CADBURY’S
(B) THE PRODUCT MODIFICATION
PRODUCT RELAUNCH TO BOOST UP SALES
QUALITY IMPROVEMENTINCREASING FUNCTIONAL PERFORMANCE OFPRODUCT – DURABILITY, RELIABILITY ETC.
AMBASSADOR
PREMIERPADMINI
AMBASSADOR- NOVA
NEW LATCHESUPHOLSTRY, ETC.
FEATURE IMPROVEMENT
ADDING UP NEW FEATURES THAT EXPANDSPRODUCT’S VERSTALITY, SAFETY, OR CONVENIENCE
FORHAN’SCOLGATE
FORHAN’S FLOURIDE
COLGATE FLOURIGUARD
ONE PROBLEM: FEATURES HIGHLY IMITABLE
STYLE IMPROVEMENT
INCREASING AESTHETIC APPEAL IN CONTRASTTO FUNCTIONAL APPEAL
CHANGE IN COLOR / TEXTURE / PACKAGE
(C) MARKET – MIX MODIFICATION
•SALES STIMULATION BY ALTERING MARKETING•MIX
•SLASHING PRICES TO ATTRACT NEW CONSUMERS
•MORE EFFECTIVE ADVERTISING CAMPAIGNS
•HEAVY USE OF SALES PROMOTION TECHNIQUES
•ALTERING DISTRIBUTION - CHANNELS
PROBLEM: ALL METHODS ARE HIGHLY IMITABLE
PHASE-IV DECLINE
WARNING SIGNAL: PERMANENT DROP IN SALESMOST PRODUCTS EVENTUALLY ENTERS IN DECLINE PHASERATE OF DECLINE DEPENDS ON:•CHANGE IN CONSUMERS’ TASTES AND ADOPTION•OF SUBSTITUTE PRODUCTS
•TECHNOLOGICAL INNOVATIONS DEVELOPMENT•OF EFFECTIVE SUSTITUTES
DECLINING DEMAND …. FORCE MANY COMPETITORS OUT OF MARKET
PROMOTION BECOMES SELECTIVE LESS EXPOSURE
STRATEGY IN DECLINE PHASE
IDENTIFY WEAK PRODUCTS THROUGH COMPREHENSIVE MARKETING RESEARCH
DETERMINE APPROPRIATE RESPONSE:
TO STAY ON OR
TO DROP THE PRODUCT
IF DECISIONS IS TO STAY:
THREE OPTIONS:
(A) CONTINUATION STRATEGY
- CONTINUE PAST PRACTICES
(B) CONCENTRATION - CONCENTRATE RESOURCES IN STRATEGY STRONGEST MARKETS
(C) HARVESTING - REDUCING EXPENSES TO STRATEGY INCREASE PROFITS
IF DECISION IS TO DROP:
-WHEN PRODUCT’S RATING FAIL TO MEET COMPETITION ON CERTAIN KEY CRITERIA
OPTION
DROPPING ITCOMPLETELY
SELLING OR TRANSFERING IT TOOTHER COMPANY
TYPES OF MARKET STRUCTURETYPES OF MARKET STRUCTUREPure Competition
◦ Many Small Buyers , Small Buyers, Homogeneous Product,◦ Easy Entry & Exit, Perfect information
Monopolistic Competition◦ Many Sellers & buyers and each is offering something different.◦ No close subsitute
Oligopoly◦ Few large independent firms account for bulk of the industry sales◦ Each oligopolist has vast industry customers.◦ Action of one firm tend to directly affect the others in the industry.◦ Each firm tries to anticipate what the others will do.
Pure Monopoly◦ It’s the opposite of pure competition
MARKETING MARKETING MANAGEMENTMANAGEMENT
Chapter - 3
THE BCG GROWTH-SHARE MATRIXTHE BCG GROWTH-SHARE MATRIX
Stars: High growth high share businesses or productsrequire heavy investmenteventually they will become cashcows.
Cash Cows: high share pproducts less investment to hold their market shareand provides the company with the money to support other SBUs (Strategic Business Unit)
Question Marks: High Growth, they require a lot of resources to hold their market sharemanagement has to decide which Q mark can become stars & which should be phased out.
Dogs: Low growth low share SBUs They may generate enough money to sustain themselves, but cannot contribute to the corporate kitty.
MARKETING AS MARKETING AS DECISION MAKING AND DECISION MAKING AND INFORMATION INFORMATION GATHERINGGATHERING
Chapter - 4
MARKETER’S PROBLEMSMARKETER’S PROBLEMSMarketers need to find solution of two problems
•Determining Goals
•Developing Plans to achieve them
Marketing Information Systems (MIS)
It’s a structured and interacting complex of persons, machines and procedures designed to generate an orderly flow of pertinent information collected from intra- and extra company resources, for use as the basis for decision making in specific responsibility areas of marketing management.
MARKETING INFORMATION SYSTEMMARKETING INFORMATION SYSTEM
Define the Problem or opportunity.
Is the value of Additional information worth the cost?
Make Decisions
Gather Additional Information
Available Informationye
s
no
External DataState of the EconomyPolitical EnvironmentCompetitive Situation
Customer Data
Internal DataSalesCosts
Marketing ObjectivesMarketing Research
Marketing Mix
Data BankData Processing
Information Bank
Gather, Store, Retrieve Data
Evaluate, Disseminate Information
Process, Analyses Data
MIS
MARKET RESEARCHMARKET RESEARCH
“The systematic gathering and recording and analysing of data about problems relating to the marketing of
goods and services.”
THE CONSUMER RESEARCH PROCESSTHE CONSUMER RESEARCH PROCESS
DEVELOP OBJECTIVES
COLLECTSECONDARY DATA
DESIGN QUALITATIVE RESEARCH•METHOD•SCREENER QUESTIONNAIRE•DISCUSSION GUIDE
DESIGN QUANTITATIVE RESEARCH•METHOD•SAMPLE DESIGN•DATA COLLECTION INSTRUMENT
EXPLORATORY STUDY
CONDUCT RESEARCH(USING HIGHLYTRAINED INTERVIEWERS)
ANALYZE DATA (SUBJECTIVE)
PREPARE REPORT
COLLECT PRIMARY DATA (USUALLY BY FIELD STAFF)
ANALYZE DATA (OBJECTIVE)
PREPARE REPORT
THE MARKETING RESEARCH THE MARKETING RESEARCH PROCESSPROCESS
1) Identify & Define the Problem/Opportunity.2) Conduct a Preliminary Exploration.3) Determine the Research Process.4) Determine Data Needs5) Determine Data Sources.6) Create the Research Design A) Functional Categories
i) Exploratory Researchii) Descriptive Researchiii) Casal Researchiv) Predictive Research.
B) Methodological Categoriesi) Historical Researchii) Survey Researchiii) Experimental Researchiv) Motivational Research
7) Collect the Data A) Primary Data B) Secondary Data8) Analyse the Data and convert to Information9) Communicate the information.
Defining the problem and Research Objectives
A marketing research project might have one of threetypes of objectives. The objective of exploratoryresearch is to gather preliminary information thatwill help define the problem and suggest hypotheses.The objective of descriptive research is to describethings such as the market potential for a product orthe demographics and attitudes of consumers whobuy the product. The objective of casual research isto test hypotheses about cause-and-effectrelationship.
ANALYZING CONSUMER ANALYZING CONSUMER BEHAVIOURBEHAVIOUR
Chapter - 5
Consumer BehaviourConsumer Behaviour•The Behavior that consumer display in searching for purchasing using evaluating & disposing of products and services that they expect will satisfy their needs.
•Study of how individuals make decisions to spend their available resources (Time….Money…Effort) on consumption related items.
The Substance of The Substance of MarketingMarketing
Want To Enter the Watch Business!!!
You Must Make A Set Of Important (Marketing Related) Decisions!!!
WHAT ARE THESE DECISIONS???
The Probable Decisions are…!!!The Probable Decisions are…!!!
To which consumer should I sell my watches?
How should I define the consumer I hope to serve? Should I think in terms of geography, perhaps the country in which my consumer lives? Or may be the consumer’s income or sex or fashion orientation is more important?
The Probable Decisions are…!!!The Probable Decisions are…!!!
To which consumer should I sell my watches?
How should I define the consumer I hope to serve? Should I think in terms of geography, perhaps the country in which my consumer lives? Or may be the consumer’s income or sex or fashion orientation is more important?
The Probable Decisions are…!!!The Probable Decisions are…!!!
To which consumer should I sell my watches?
How should I define the consumer I hope to serve? Should I think in terms of geography, perhaps the country in which my consumer lives? Or may be the consumer’s income or sex or fashion orientation is more important?
The Probable Decisions are…!!!The Probable Decisions are…!!!
Should I sell direct to consumers or through stores, and if through stores, what type of stores?Do I want to offer my product in several types of outlet or only in one type?How do I select and service the particular outlets I Chose?Finally, How do I convince the store to carry my brand?
The Probable Decisions are…!!!The Probable Decisions are…!!!
How should I communicate to the consumers to whom I wish to sell?Do I use advertising, and if so in what media?How do I reach the stores? Do I use sales people?Should the salespeople visit the stores or should they just telephone them?
FRAMEWORK FOR ANALYZINGCONSUMER BEHAVIOUR
ENVIRONMENTAL ANDINDIVIDUAL ANFLUENCES
BUYERDECISION PROCESS
OUTCOME
TYPEOFBUYINGSITUATION
SOME CONSUMER BEHAVIOUR ROLES
Role Description-----------------------------------------------------------------------Initiator The person who determines that some need
or want is not being met.
Influencer The person who intentionally/unintentionally influencesthe decision to buy the actual purchase and/or use of product or service.
Buyer The person who actually makes the purchase.
User The person who actually uses or consumes theproduct or service.
Studying consumer behaviour
PURCHASING PROCESS
INFORMATION SERACH & EVALUATION
FEEDBACK
DECISION PROCESS
PROBLEM RECOGNITION
POST PURCHASE BEHAVIOUR
INDIVIDUAL DETERMINANTS
INFORMATION PROCESSING` MOTIVATION & INVOLVEMENT
ATTITUDES PERSONALITY & SELF-CONCEPT
LEARNING & MEMORY
EXTERNAL ENVIRONMENT
CULTURAL INFLUENCES SUBCULTURAL INFLUENCES
OTHER INFLUENCES
PERSONAL INFLUENCES
FAMILY INFLUENCES
SOCIAL GROUP INFLUENCES`
SOCIAL CLASS INFLUENCES
FACTORS INFLUENCING CONSUMER FACTORS INFLUENCING CONSUMER BEHAVIOURBEHAVIOUR
CultureSub-CultureSocial Class
CULTURAL
ReferenceGroupsFamilyRolesStatus
SOCIAL
Age & Life CycleStage
OccupationEconomics
CircumstancesLife Style
Personality & Self
PERSONAL
MotivationPerceptionLearningBeliefs
Attitudes
PSYCHOLOGICAL
BUYER
SOCIAL CLASSESSOCIAL CLASSESUpper-UpperLower-UppersUpper-MiddlesMiddle ClassWorking ClassUpper LowersLowers Lowers
FAMILY LIFE CYCLEFAMILY LIFE CYCLE
FOUR TYPES OF BUYER BEHAVIOURHENRY ASSEL 2X2 MATRIX
SIGNIFICANTDIFFERENCESBETWEENBRANDS
FEWDIFFERENCESBETWEENBRANDS
HIGH INVOLVEMENT LOW INVOLVEMENT
COMPLEXDECISION MAKING
IMPULSE PURCHASING
BRANDLOYALTY
INERTIA
MEDICAL SERVICESAUTO,FINANCIALPLANNING SERVICES
CEREALS SNACKS
PERFUMESCIGARETTEBEVERAGES
LIGHT BULBESSOAPS
TYPES OF PURCHASE DECISION
CONSUMER BUYINGDECISION PROCESS
PROBLEMRECOGNITION
INFO.SEARCH
EVALUATIONBEHAVIOUR
PURCHASEDECISION
POST-PURCHASEBEHAVIOUR
ORGANIZATIONAL ORGANIZATIONAL BUYING BEHAVIOURBUYING BEHAVIOUR
Chapter - 6
Key Linkages
External Environment Internal Organization
External Linkages Internal Linkages
Customer Marketing Manufacturing
Derived DemandComplex Buying Process
Concentrated Customer base
Emphasis on Technology High Level of Customization
Made to Order
INDUSTRIAL MARKETINGINDUSTRIAL MARKETING“The decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate and choose among alternative brands & suppliers.”
CONTRASTING INDUSTRIAL MARKETING & CONTRASTING INDUSTRIAL MARKETING & CONSUMER MARKETINGCONSUMER MARKETING
` INDUSTRIAL MARKETS CONSUMER MARKETS
Market structure geographically concentrated dispersedFewer buyers mass marketsOligopolistic competition Monopolistic
competitionProducts Technical complexity Standardised
CustomisedService, delivery and availabilityVery important somewhat important
Buyer behavior functional involvement family involvementRational/task motives dominate social/psychological
motives predominatetechnical expertise less tech expertisestable interpersonal relations nonpersonal relationsreciprocity
Decision making distinct, observable stages Unobservable, mental Stages
Channels Short, More direct, Fewer linkages Indirect, Multiple linkages
Promotion emphasis on personal selling emphasis on advttg.Price Competitive bidding list prices
Negotiating on complex purchasesList prices on standard items
ORGANISATIONAL CUSTOMERORGANISATIONAL CUSTOMER
Raw materialExtraction
MaterialProcessing
Manufacturing ofparts andAssembly
Finalassembly
Distri-bution
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
The chain Indicative of the Zone of the Organisational Customer
ORGANIZATIONAL BUYING ORGANIZATIONAL BUYING BEHAVIOURBEHAVIOUR
OrganizationalBuyer
Individual* Age* Income* Education* Job Position* Risk Attitude
Interpersonal
* Authority* Status* Empathy* Persuasiveness
Organizatioanl
* Objectives* Policies* Procedures* Organizational structure* System
ExternalEnvironment
* Economic* Infrastructural* Social* Political* Competition* Regulatory
INDUSTRIAL MARKETINGINDUSTRIAL MARKETINGTHE INDUSTRIAL CUSTOMERS BUYER MOTIVES
The Industrial Buyer Is Motivated By Budgetary Considerations Like Profit Goals, Expense
Quotas And The Cost Benefit Guidelines.
The Major Objective Variables Derived From The Above Are
QUALITY : Consistency Which Can Also Result In The Savings On The Inventory, Standardisation
SERVICE : Products And Materials, Technical, Sales & Replacement Parts, Delivery, Information.
PRICE : Evaluated Price / Perceived PricesSAVINGS : Motivation Provided By Savings Even More In The
Accelerating Costs Times
ASSURANCE OF : The Confidence On Timely SuppliesSUPPLYBUYER : Personal Feelings And Emotions As Well As Some
ExtraneousTEMPERAMENT Important Factors
The Reseller MarketThe Reseller MarketUtilities Produced :-
Time Place Possession
Buying Decisions in Reseller Make•What Assortment to carry?•What Vendors to buy from•What prices & terms to negotiate?
Assortment StrategiesExclusive AssortmentsDeep AssortmentBroad AssortmentScrambled Assortment
MARKET SEGMENTATIONMARKET SEGMENTATION
Chapter - 7
MARKETERS-MARKETMARKETERS-MARKETTo the marketer, the term market means:-
1. People ( as individuals or members of an organization.)
2. People with Desires
3. People with willingness and ability (Buying power) to satisfy their desires.
4. People who can become customers because they have been authorized to buy.
STRATEGIES FOR IDENTIFYING TARGET STRATEGIES FOR IDENTIFYING TARGET MARKETSMARKETS
Mass Market StrategyOrganization’s Single
Marketing MixMass
Market
Concentration StrategyOrganization’s Single
Marketing Mix
Organization’s Several Marketing Mixes
Multi Segment Strategy
ABCD
ABCD
EFGH
EFGH
MarketSegmentati
on
MarketSegmentati
on
THE CONCENTRATION STRATEGYTHE CONCENTRATION STRATEGYAdvantages
1. Can thoroughly research the segment’s wants and run a much lower risk of not being able to satisfy its target market.
2. Long productions run may be possible.
3. Distribution, promotion and price can be keyed to satisfy one segment.
Disadvantages
1. The organizational cannot spread its risk. Thus, a decline in the selected segment’s buying power, or a change in taste or the entry of rivals can have a negative impact on profitability.
2. Sometimes a firm that focuses exclusively on one segment develops a specialist image in that segment. As a result it may encounter difficulties in directing its efforts to other segments.
MULTI-SEGMENT STRATEGYMULTI-SEGMENT STRATEGYAdvantages
1. Can serve a greater number of potential consumers.
2. Can utilize excess capacity to serve additional segments.
Disadvantages
1. The Organizations may spread itself too thinly as a result.
2. Productions costs may go up
3. Marketing costs also tend to go up.
SEGMENTING CONSUMER SEGMENTING CONSUMER MARKETSMARKETS
GEOGRAPHY DEMOGRAPHICS PSYCHO-GRAPHICS
PRODUCT RELATED CONSUMER CHARACTERISTICS
POTENTIAL
CONSUMER
SEGMENTS
Nation/ Region
State/ Region
City/ Nbhrhd
Climate/Terain
Population
Density
Mkt Density
Age, Sex, Buying
Power, Expenditure
Patterns, Occuptn, Eductn, Race, or Nationality, Family Life Cycle
Social Class
Personality
Life Style
Amount of Usage
Types of usage
Brand Loyalty
Benefits Soughts
TARGETED MARKETINGTARGETED MARKETING
Chapter - 8
DEVELOPING MARKETING DEVELOPING MARKETING STRATEGYSTRATEGY
1. Define the relevant market2. Analyze characteristics and wants of potential
customers.3. Identify bases for segmenting the market4. Define and describe market segments.5. Analyze competitor’s positions6. Evaluate market segments7. Select the market segment (s)8. Finalize the marketing mix (es)
123
1) Segmentation consists of marketers identifying & profiling distinct groupsof buyers who require separate market offerings
2) Targeting consists of selecting one or more of these segments.
3) Positioning consists of establishing& communicating the products key distinctive benefits in the market
SALES FORECASTING METHODSSALES FORECASTING METHODS1) Simple Trend Analysis
2) Correlation Methods
3) Executive Judgment
4) Sales Force Composite
5) Surveys of Buyers Intentions
6) Market Tests
7) Substitute Method
The Four Ps: The ToolsThe Four Ps: The Tools
MarketingMix
Product
Price Promotion
Place
The Four Cs: The EndsThe Four Cs: The Ends
CustomerSolution
CustomerCost
Communication
Conven-ience
The Other 4Cs: The The Other 4Cs: The ParticipantsParticipants
Company
Consumer Channel
Competitors
The Participants
Marketing’s Tools: The Marketing Marketing’s Tools: The Marketing MixMix
ProductGood, Service, Idea, Place, Person
ProductGood, Service, Idea, Place, Person
PriceAssignment of Value
PriceAssignment of Value
PlaceAvailability of Product
PlaceAvailability of Product
PromotionActivities to Inform Consumers
PromotionActivities to Inform Consumers
Tools that Are Used Together to Create a Desired Response Among a Set of Defined Customers
Tools that Are Used Together to Create a Desired Response Among a Set of Defined Customers
THE MARKETING MIXTHE MARKETING MIX
Chapter - 9
THE PRODUCT/ MARKET THE PRODUCT/ MARKET EXPANSION GRIDEXPANSION GRID
Nuts &boltsNuts &bolts
Marketer creates the product that will meet the identified needs of the consumer.
Carries out function as transportation so that the product can conveniently reach the consumer.
Price that is acceptable to the consumer. Communicates the benefits of the offer.
Sole Vehicle for Creating Customer Sole Vehicle for Creating Customer ValueValue
James Culliton coined the term Marketing Mix as marketing mgr is a mixer of ingredients.
Jerome Mccarthy the American professor first described the marketing mix in terms of 4 P’s.
MARKETING MIXMARKETING MIX
4Ps 4Cs
Product Customer needs & wants
Price Cost to the Company
Place Convenience
Promotion Communication
MARKETING MIX
MARKETING MIX
TARGETMARKET
PRODUCT PLACE
QualityFeaturesOptionsStyleBrand NamePackagingSizesServicesWarrantiesReturns
ChannelsCoverageLocationsInventoryTransport
PRICE PROMOTION
List PriceDiscountsAllowancesPayment PeriodCredit terms
AdvertisingPersonal SellingSale promotionPublic Relations
The Four Ps of the Marketing Mix
MARKETING MIX STRATEGYMARKETING MIX STRATEGY
Offer Mix
ProductsServicesPrices
Company
Promotion Mix
Channels Customers
SalesPromotion
Advertising
Sales force
Publicrelations
Direct mail andtelemarketing
Environmental Variables Of MarketingEnvironmental Variables Of Marketing
CompetitionConsumerGovernment of the landForces of natureMM can control the marktg mix but not
these.He can not dictate what the competitor
should or should not do.Environmental Variable is also known as non
controllable variables & Marktg Mix is controllable variables
Marketing can basically be looked upon as interaction between the MarktgMix & EV.
MMix elements can be combined in an infinite number of ways.
MMix in effect signifies the manner in which the mrktg effort or mrktg budgets distributed.
MMix expressed in Rs terms becomes the marketing budget.
PRODUCTPRODUCT
Chapter - 9
THREE LEVELS OF PRODUCTTHREE LEVELS OF PRODUCT
Corebenefit
or service
Packaging
Brand Features name
Quality Styling
Warranty
After Sale service
Delivery and credit
Installation AugmentedProduct
TangibleProduct
CoreProduct
PRODUCTS CLASSIFICATION PRODUCTS CLASSIFICATION SYSTEMSSYSTEMS
Consumer Products◦“ Used by ultimate consumers or households and can be used
without any commercial processing”
Industrial Products◦“Sold Primarily for use in producing other goods or
rendering services”
MaggieMaggieBas 2 mints, Fast to cook & good to eat.
Health bhi taste bhi no MSG groupMaggie is Nestle Flagship brand& globally
alsoMaggie came to India 25 years ago1983 as
2mts noodles In the80s market was beginning to change with the noodles category& consumer fancy was Chinese Noodles.Maggie understood what was happening with the consumer.
Key need for a product that provides good quality & convenience.This allowed mother to add her own inputs like vegetables.
Tagline fast to cook & good to eat was also to educate the consumer about the advantages of using it.
The jingle for the Maggie was was pretty catchy & went down well with Children
In some areas they were ahead of their times like the launch of sweet noodles.
Not that everything always workbut what pulled them through is the fact that they have been able to be ahead of their times.
Nestle gauged the needs & requirements of the consumer in depth.
Evolve the instant noodles categorywhile retaining the companys DNA focus of wellness & nutrition.
Improving further the goodness Quotient in the products
Company moved away from not so healthy maida to Atta & Rice noodles.
Also enriched traditional range with Protien & Calcium
Push was mainly on Taste bhi health bhi
After noodles it launchedKetchup& maggie hot N sweetsNestle world widespends a lot of money on
research & development in terms of taste health & convenience.
CONSUMER PRODUCT CONSUMER PRODUCT CLASSIFICATIONSCLASSIFICATIONS
Consumer Products
Convenience Products
Specialty Product
Unsought Product
Shopping Product
Staples Impulse EmergencyHomogeneou
s Heterogeneou
sRegularly New
SERVICESSERVICESCharacteristics of Services
1) Sold Exclusively on the basis of benefits
2) Can not produce in anticipation of demand.
3) Time Utility is crucial
4) Cannot be produced in one location for consumption in another.
5) Perishing upon offering
6) Once consumed it can not be returned to seller.
7) Quality control.
Product Mix & Product LineProduct Mix & Product Line
They are two expressions denoting the range & variety of the products of the firm.
Product mix- Denotes the complete set of all products offered for sale by a company
Product Line- It is the number of item brands in the line. Line stretching is a measure firms under take frequently in to enter a new price slot & a new market segment.
Eg HLL, Ariel , Parker , Prestige ,
PRODUCT MIXPRODUCT MIX
WidthWidth - number of different
product lines
LengthLength - total number of itemswithin the lines
Depth Depth - number of versions of each product
Product Mix - Product Mix - all the product
lines offered
Co
nsi
sten
cy
NEW PRODUCT NEW PRODUCT DEVELOPMENT DEVELOPMENT AND AND LIFE CYCLE STRATEGIESLIFE CYCLE STRATEGIES
Chapter - 10
STAGES IN NEW PRODUCT STAGES IN NEW PRODUCT DEVELOPMENTDEVELOPMENT
SIX CATEGORIES OF NEW PRODUCTSSIX CATEGORIES OF NEW PRODUCTS
New-to-the-world product.
New-product line.
Additions to existing product lines.
Improvements in/revisions to existing products.
Repositioning.
Cost reductions.
MARKETING CHANNELSMARKETING CHANNELS
Chapter - 12
MARKETING CHANNELSMARKETING CHANNELSMarketing channels can be viewed as sets of interdependent organizations involved in the process of making a product or service available for use of consumption.
Functions and Flows
Information Promotion Negotiation Ordering Financing Risk Taking Physical Possession Payment Title
NUMBER OF CHANNEL LEVELSNUMBER OF CHANNEL LEVELS
Zero-level channel (M-C)
One-level channel(M-R-C)
Two-level channel(M-W-R-C)
Three-level channel(M-W-J-R-C)
Man
ufac
ture
rRetailer
JobberWholesaler
Wholesaler Retailer
Retailer
(a) Consumer marketing Channels
Con
sum
er
NUMBER OF CHANNEL LEVELSNUMBER OF CHANNEL LEVELS
Manufacturer Industrial consumer
Industrialdistribution
Manufacturer’s representative
Manufacturer’s sales branch
(b) Industrial marketing channel
CHANNEL-DESIGN DECISIONSCHANNEL-DESIGN DECISIONS
Analyzing Consumer Needs for Service Outputs
Lot sizeWaiting timeSpaital convenience Product variety
Establishing the channel Objectives and Constraints
Product CharacteristicsMiddlemen
CharacteristicsCompetitive
CharacteristicsCompany CharacteristicsEnvironmental
Characteristics
CHANNEL PLANNINGCHANNEL PLANNINGThe Types of Middlemen
◦Dual Distribution◦Facilitating Distribution
Determining the Number of Middlemen◦Intensive Distribution◦Selective Distribution◦Exclusive Distribution
Determining which specific middlemen to use
Determining how to motivate middlemen
WHOLESALINGWHOLESALINGNature and Importance :Wholesaling includes all activities involved in selling goods or service to those who buy for resale or business use.
Function of Wholesalers
•Selling and promoting•Buying and assortment building•Bulk-breaking•Warehousing•Transportation•Financing•Risk bearing•Market information•Management services and counseling
TYPE OF WHOLESALERSTYPE OF WHOLESALERS
FULL-SERVICE WHOLESALERSWholesale merchantsIndustrial distribution
LIMITED-SERVICE WHOLESALEERS
Cash-and-carry wholesalersTruck wholesalersProducers’ cooperativesMail-order wholesalers
PHYSICAL PHYSICAL DISTRIBUTIONDISTRIBUTION
Chapter - 13
PHYSICAL DISTRIBUTIONPHYSICAL DISTRIBUTIONIt Involves
1) Moving raw material from their source destination to the beginning of the production process.
2) Moving raw materials, semi finished products & finished products through warehouse
3) Moving finished products to Middleman or final buyers as required.
THE SUBSYSTEMS OF PDTHE SUBSYSTEMS OF PDWarehousing
◦ Number◦ Location◦ Size
Inventory Control◦ Order Timings◦ Order Quantity
Materials Handling
Order Processing
Transportation
MODES OF TRANSPORTATIONMODES OF TRANSPORTATIONRail Roads
Motor Carriers
Air Freight
Pipelines
Water Transportation
PHYSICAL DISTRIBUTIONPHYSICAL DISTRIBUTION
• Transportation
Total cost per unit
Inventory carrying cost per unit
Order-processing cost per unit
Q*
Order Quantity
Cos
t per
Uni
t (R
upee
s)
Determining OptimalOrder Quantity
THE PROMOTION THE PROMOTION EFFORTEFFORT
Chapter - 14
THE COMMUNICATION PROCESS
Noise
ResponseFeedback
Message
Media
Sender Encoding Decoding Receiver
PositioningPositioning
◦Positioning is the platform for the brand◦Positioning is the fact of fixing locus of the
product offer in the minds◦Al Ries & Jack Trout “ Positioning is what you do
to the mind of the prospect.That is you position the product to the mind of the prospect.”
◦To create a perception of brand in consumers mind
MARKETING COMMUNICATIONMARKETING COMMUNICATION
Major toolsAdvertisingSales promotionPublicityPersonal sellingPackagingPublic Relation
COMMON COMMON COMMUNICATION/PROMOTION COMMUNICATION/PROMOTION TOOLSTOOLS
--------------------------------------------------------------------------- Sales Personal
Advertising Promotion Publicity Selling
---------------------------------------------------------------------------Print and Contests,games Press kits Sales presentationsbroadcast ads sweepstakes, Speeches Sales meetingsPackaging-outer lotteries Seminars TelemarketingPackaging inserts Premiums and gifts Annual reports Incentive programsMailings,Catalogs Sampling Salesmen samplesMotion pictures Fairs and trade show donations Fairs and trade showsHouse magazines Exhibits Public relationsBrochures and Demonstrationsbooklets Couponing,RebatesReprints of ads Low-interest financingBillboards EntertainmentDisplay signs Trade-in allowancesPoint-of-purchase Trading stampsdisplay Tie-insAudiovisulas material
Symbols and logos
OBJECTIVES OF PROMOTIONAL OBJECTIVES OF PROMOTIONAL ACTIVITIESACTIVITIES
1) Creating Awareness
2) Providing Information
3) Explaining Company Actions
4) Inducing Product Trials
5) Inducing Middlemen to Stock Product
6) Retaining Loyal Customers
7) Increasing Amount & Frequency of use
8) Learning about Customers
9) Reducing Sales fluctuations
ADVERTISINGADVERTISING
Public presentation
Pervasiveness
Amplified expessiveness
Impersonality
Personal sellingPersonal sellingPersonal confrontationCultivationResponse
• Communication• incentive• invitation
• High credibility• Off guard• Dramatization
Sales Promotion
Publicity
Major Decisions in Advertising Major Decisions in Advertising ManagementManagement
Objectives settingCommunication Objectives Sales Objectives
Budget decisions
Affordable approach Percent of sales Competitive parity Objectives and task
Message decision
Message generationMessage evaluation and selectionMessage execution
Media decision
Reach, frequency, impact Major media typesSpecific media vehicles Media timing
Advertising evaluation
Communication impact Sales impact
PRICE DETERRMINATIONPRICE DETERRMINATION
Chapter - 15
NINE MARKETING-MIX STRATEGY ON NINE MARKETING-MIX STRATEGY ON PRICEPRICE
1. Premium Strategy
2. High-value Strategy
3. Superb-value Strategy
4. Overcharging Strategy
5. Average Strategy
6. Good-value Strategy
7. Rip-off Strategy
8. False economy Strategy
9. Economy Strategy
High Medium Low Price
High
Medium
Low
Pro
duct
Qua
lity
SELECTING THE PRICE OBJECTIVESELECTING THE PRICE OBJECTIVESurvival
Maximum Current Profit
Maximum Current Revenue
Maximum Sales Growth
Maximum Market Skimming
Product-Quality Leadership
DETERMINING DEMANDDETERMINING DEMAND1. Unique value effect. Buyers are less price-sensitive when the
product is more unique.2. Substitute awareness effect. Buyers are less price-sensitive
when they are less aware of substitutes.3. Difficult comparison effect. Buyers are less price-sensitive
when they cannot easily compare the quality of substitutes.4. Total expenditure effect. Buyers are less price-sensitive the
lower the expenditure is as a ratio to their income.5. End-benefit effect. Buyers are less price-sensitive the less the
expenditure is to the total cost of the end product.6. Shared cost effect. Buyers are less price-sensitive when part of
the cost is borne by another party.7. Sunk investment effect. Buyers are less price-sensitive when
the product is used in conjuction with assets previously bought.8. Price-quality effect. Buyers are less price-sensitive when the
product is assumed to have more quality, prestige, or exclusiveness.
9. Inventory effect. Buyers are less price-sensitive when they cannot store the product.
INELASTIC AND ELASTIC INELASTIC AND ELASTIC DEMANDDEMAND
P1
P2
P’2
P’1
Q’2 Q’1 Q2 Q1
Pri
ce
Quantity Demanded per Period Quantity Demanded per Period (a) Inelastic demand (b) Elastic demand
D
D
PRICING METHODPRICING METHOD
Low Price-------------No possible profit atthis price
High Price-------------No possible demand at this price
Competitor’s prices UniqueProduct and product costs prices of substitutes features
Major Considerations in Setting a Price
1,200
1,000
800
600
400
200
0 10 20 30 40 50 (Sales Volume in unit ‘0000)
}Target Profit
Total revenue
Total Cost
Fixed Cost
Break-even Chart for Determining Target Return Price & Break-Even Volums
D o
l l o
r s
(
I n
`0
0 0
)
Promotional Pricing & Discriminatory Promotional Pricing & Discriminatory PricingPricing
PROMOTIONAL PRICING
Special event pricing
Cash rebatesLow-interest
financingPsychological
discounting
DISCRIMINATORY PRICING
Customer-segment pricing
Product-form pricing
Image pricingLocation pricingTime pricing
HOW TO ADD VALUE THROUGH HOW TO ADD VALUE THROUGH DIFFERENTIATED PRICINGDIFFERENTIATED PRICING
Plan forpremium pricing
Set pricewell above highestprice-point
Ensurematching value
Determine product benefits
Check whether extraordinary pricing is possible
Planpredatory pricing
Set pricewell below lowestprice point
Ensurematchingbenefits
Convey pricedifferential
Reinforce positioning throughmarketing mix
Ensureincrease in customer value
BREAKEVEN ANALYSISBREAKEVEN ANALYSIS
Absorption CostingAbsorption Costing
All costs incurred are allocated to particular cost centres – direct costs, indirect costs, semi variable costs and selling costs
Allocates indirect costs more accurately to the point where the cost occurred
Marginal CostingMarginal Costing
The cost of producing one extra unit of output (the variable costs)
Selling price – MC = Contribution
Contribution is the amount which can contribute to the overheads (fixed costs)
Total RevenueTotal Revenue
Total RevenueTotal Revenue
Total Revenue = Price x Quantity SoldPrice can be raised or lowered to change revenue –
price elasticity of demand important here◦Different pricing strategies can be used – penetration,
psychological, etc.
Quantity Sold can be influenced by amending the elements of the marketing mix – 4Ps
Break EvenBreak Even
Break Even AnalysisBreak Even Analysis
Costs/Revenue
Output/Sales
Initially a firm will incur fixed costs, these do not depend on output or sales.
FC
As output is generated, the firm will incur variable costs – these vary directly with the amount produced.
VC The total costs therefore (assuming accurate forecasts!) is the sum of FC+VC
TC Total revenue is determined by the price charged and the quantity sold – again this will be determined by expected forecast sales initially.
TR The lower the price, the less steep the total revenue curve.
TR
Q1
The break even point occurs where total revenue equals total costs – the firm, in this example, would have to sell Q1 to generate sufficient revenue to cover its costs.
Break Even AnalysisCosts/Revenue
Output/Sales
FC
VCTCTR (p = £2)
Q1
If the firm chose to set price higher than £2 (say £3) the TR curve would be steeper – they would not have to sell as many units to break even
TR (p = £3)
Q2
Break Even AnalysisCosts/Revenue
Output/Sales
FC
VCTC
TR (p = £2)
Q1
If the firm chose to set prices lower (say £1) it would need to sell more units before covering its costs.
TR (p = £1)
Q3
Break Even AnalysisCosts/Revenue
Output/Sales
FC
VC
TCTR (p = £2)
Q1
Loss
Profit
Break Even AnalysisBreak Even Analysis
•Importance of Price Elasticity of Demand
•Higher prices might mean fewer sales to break even but those sales may take a longer time to achieve
•Lower prices might encourage more customers but higher volume needed before sufficient revenue generated to break even
Break Even AnalysisBreak Even Analysis
Links of break even to pricing strategies and elasticity
Penetration pricing – ‘high’ volume, ‘low’ price – more sales to break even
Market Skimming – ‘high’ price ‘low’ volumes – fewer sales to break even
Elasticity – what is likely to happen to sales when prices are increased or decreased?
PRICE ADMINISTRATIONPRICE ADMINISTRATION
Chapter - 15
DISCOUNTS & ALLOWANCESDISCOUNTS & ALLOWANCES
1) Quantity Discount Cumulative Quantity Discounts Non-Cumulative Quantity Discounts
2) Trade Discounts3) Seasonal Discounts4) Cash Discounts5) Trade-in Allowances6) Damaged good Allowances7) Brokerage Allowances8) Promotional Allowances
PSYCHOLOGICAL PRICINGPSYCHOLOGICAL PRICING
Prestige Pricing
Leader Pricing
Odd Pricing
Competitive Bidding Expected Profit =P (Bid Price – Cost Estimate) P = Probability of winning the bid
Any Queries?
Thank you!!!