marketing management - amit

8/14/2019 Marketing Management - Amit

http://slidepdf.com/reader/full/marketing-management-amit 1/76

MarketingManagement

Amit Sharma



Fundamental Marketing

Concepts• The process for base management shifts

the marketer to building a relationship,

nurturing the links, enhancing the benefits

that sold the buyer in the first place, and

improving the product/service

continuously to protect the business from

competitive encroachments.



Concepts of Marketing

• "Marketing" is an instructive business domain that serves toinform and educate target markets about the value andcompetitive advantage of a company and its products.

• “Value” is worth derived by the customer from owning andusing the product

• “Competitive Advantage” is a depiction that the company or its products are each doing something better than their competition in a way that could benefit the customer.



Concepts of Marketing

• Marketing is focused on the task of conveying company and

product related information to specific customers.

• Multitude of decisions (strategies) are made within the

marketing domain on what information to deliver, how much

information to deliver, to whom to deliver, how to deliver,when to deliver, and where to deliver.

• Once the decisions are made, there are numerous ways

(tactics) and processes that could be employed in support of

the selected strategies



Range of Marketing

• Identifying and quantifying the need in the marketplace.

• Identifying and quantifying the target markets

• Identifying the optimum cost effective media – online and

offline - to reach the target markets• Reviewing the priorities of the product offering in your

overall product mix ‘matrix’



Range of Marketing

• Developing effective promotional strategies andeffective advertising and supporting collateral, offers,and launch strategies.

• Developing and documenting the sales process

• Finding the optimum execution of the sales process –through testing of selling scripts, people selection,supporting collateral, skills and attitudinal training,tracking, measuring and refining



Core Concepts of Marketing

• Needs, Wants & Demands

• Needs: Needs are the basic human

requirement.

• People need food, water, clothing, shelter to

survive.

• People also have strong need for

recreating, education & entertainment.




• Demands : Demands are wants for specific products backed by an ability to

pay. Many people want a Mercedes; only

a few are willing and able to buy one.




• The distinction between Needs, Wants &

Demands helps to understand the

frequent criticism that “marketers create

needs” or “marketers get people to buy

things they don’t want”




• Needs Preexist marketers.

• Marketers, along with other societal

factors, influence wants.

• Marketers might promote an idea (ex.

Buying a Mercedes) would satisfy a

person’s need for social status but they do

not create the need for social status.




• We can distinguish among five types of needs: Stated needs (the customer wants an inexpensive car).Real needs (the customer wants a car who operating cost,

not its initial price, is low).

Unstated needs (the customer expects good service fromthe dealer).Delight needs (the customer would like the dealer to

include an onboard navigation system).Secret needs (the customer wants to be seen by friends as

a savvy consumer).



Marketing Mix

• The marketing mix is generally accepted as the use

and specification of the four Ps describing the strategic

position of a product in the market place.

•In the early 1960s, Professor Neil Borden at HarvardBusiness School identified a number of company

performance actions that can influence the consumer

decision to purchase goods or services

• Borden suggested that all those actions of the

company represented a “Marketing Mix”.



Marketing Mix

• E. Jerome McCarthy divided marketing

into four general sets of activities. His

typology has become so universally

recognized that his four activity sets, theFour Ps, have passed into the language.



Marketing Mix



Marketing Mix

• Product : The product aspects of marketing

deal with the specifications of the actual

goods or services, and how it relates to

the end-user’s needs and wants. Thescope of a product generally includes

supporting elements such as warranties,

guarantees, and sup



Marketing Mix

• Pricing : This refers to the process of

setting a price for a product, including

discounts. The price need not be

monetary - it can simply be what isexchanged for the product or services,

e.g. time, energy, psychology or attention.



Marketing Mix

• Promotion: This includes advertising,

sales promotion, publicity, and personal

selling, branding and refers to the various

methods of promoting the product, brand,or company



Marketing Mix

ProductProduct PlacePlace PromotionPromotion PricePrice

Features Location Publicity List Price

Optional

Services

Frequency of

services

Sales

Promotion

Discounts

Productquality

Transportation PersonalSelling

Credit Terms

Style Distribution AdvertisingBrand Name Inventory Mailing List

Packaging

Guarantees



Marketing Mix – 7p s

• People: Any person coming into contact with customers canhave an impact on overall satisfaction. Whether as part of asupporting service to a product or involved in a total service,people are particularly important because, in the customer'seyes, they are generally inseparable from the total service . As

a result of this, they must be appropriately trained, wellmotivated and the right type of person. Fellow customers arealso sometimes referred to under 'people', as they too canaffect the customer's service experience, (e.g., at a sportingevent).




• Process: This is the process (es) involved

in providing a service and the behaviour of

people, which can be crucial to customer

satisfaction.




• Physical evidence: Unlike a product, a service cannot be

experienced before it is delivered, which makes it

intangible. This, therefore, means that potential

customers could perceive greater risk when deciding

whether to use a service. To reduce the feeling of risk,thus improving the chance for success, it is often vital to

offer potential customers the chance to see what a

service would be like. This is done by providing physical

evidence, such as case studies, testimonials or demonstrations.



Marketing Mix – Four New Ps

• Personalization: It is here referred customization of

products and services through the use of the

Internet. Early examples include Dell on-line and

Amazon.com , but this concept is further extended

with emerging social media and advanced

algorithms. Emerging technologies will continue to

push this idea forward.




• Participation: This is to allow the

customer to participate in what the brand

should stand for; what should be the

product directions and even which ads torun. This concept is laying the foundation

for disruptive change through

democratization of information.




• Peer-to-Peer: This refers to customer networks andcommunities where advocacy happens. The historicalproblem with marketing is that it is “interruptive” in nature,trying to impose a brand on the customer. This is most

apparent in TV advertising. These “passive customer bases” will ultimately be replaced by the “active customer communities”. Brand engagement happens within thoseconversations. P2P is now being referred as SocialComputing and is likely to be the most disruptive force in

the future of marketing.




• Predictive modeling: This refers to

algorithms that are being successfully

applied in marketing problems (both a

regression as well as a classificationproblem).



The Product Life Cycle (PLC)

• The Product Life Cycle (PLC) is based upon

the biological life cycle. For example, a seed is

planted (introduction); it begins to sprout

(growth); it shoots out leaves and puts downroots as it becomes an adult (maturity); after a

long period as an adult the plant begins to

shrink and die out (decline).



The Product Life Cycle (PLC)

• In theory it's the same for a product. After a period of development it is introduced or launched into the market;it gains more and more customers as it grows; eventuallythe market stabilises and the product becomes mature;

then after a period of time the product is overtaken bydevelopment and the introduction of superior competitors, it goes into decline and is eventuallywithdrawn. However, most products fail in theintroduction phase. Others have very cyclical maturity

phases where declines see the product promoted toregain customers.



Strategies for the differing stages of the

Product Life Cycle

• Introduction

The need for immediate profit is not a

pressure. The product is promoted to create

awareness. If the product has no or fewcompetitors, a skimming price strategy is

employed. Limited numbers of product are

available in few channels of distribution




Product Life Cycle

• Maturity

Those products that survive the earlier stages tend to

spend longest in this phase. Sales grow at a decreasing

rate and then stabilise. Producers attempt to differentiate

products and brands are key to this. Price wars andintense competition occur. At this point the market

reaches saturation. Producers begin to leave the market

due to poor margins. Promotion becomes more

widespread and use a greater variety of media.




Product Life Cycle

• Decline

At this point there is a downturn in the market. For

example more innovative products are introduced or

consumer tastes have changed. There is intense

price-cutting and many more products are

withdrawn from the market. Profits can be improved

by reducing marketing spend and cost cutting




Product Life Cycle

• Problems with Product Life Cycle

In reality very few products follow such a prescriptive

cycle. The length of each stage varies enormously The

decisions of marketers can change the stage, for example

from maturity to decline by price-cutting. Not all productsgo through each stage. Some go from introduction to

decline. It is not easy to tell which stage the product is in.

Remember that PLC is like all other tools. Use it to inform

your gut feeling.

Pl di t ib ti h l



Place, distribution, channel, or

intermediary• Another element of Neil H.Borden's

Marketing Mix is Place. Place is also

known as channel, distribution, or

intermediary. It is the mechanism throughwhich goods and/or services are moved

from the manufacturer/ service provider to

the user or consumer

Pl di t ib ti h l




intermediary• There are six basic 'channel' decisions:• Do we use direct or indirect channels? (e.g. 'direct' to a

consumer, 'indirect' via a wholesaler)

• Single or multiple channels

• Cumulative length of the multiple channels

• Types of intermediary (see later)

• Number of intermediaries at each level (e.g. how manyretailers in Southern Spain).

• Which companies as intermediaries to avoid 'intrachannelconflict' (i.e. infighting between local distributors)

Pl di t ib ti h l




intermediary• Selection Consideration - how do we decide upon a distributor?

• Market segment - the distributor must be familiar with your targetconsumer and segment.

• Changes during the product life cycle - different channels can beexploited at different points in the PLC e.g. Foldaway scooters are now

available everywhere. Once they were sold via a few specific stores.• Producer - distributor fit - Is there a match between their polices,

strategies, image, and yours? Look for 'synergy'.

• Qualification assessment - establish the experience and track recordof your intermediary.

• How much training and support will your distributor require?

Pl di t ib ti h l




intermediary• Types of Channel Intermediaries.

• There are many types of intermediaries such as

wholesalers, agents, retailers, the Internet,

overseas distributors, direct marketing (frommanufacturer to user without an intermediary),

and many others. The main modes of

distribution will be looked at in more detail.



Pl di t ib ti h l




intermediary• Channel Intermediaries - Agents• Agents are mainly used in international markets.

• An agent will typically secure an order for a producer and will take acommission. They do not tend to take title to the goods. This means thatcapital is not tied up in goods. However, a 'stockist agent' will holdconsignment stock (i.e. will store the stock, but the title will remain with

the producer. This approach is used where goods need to get into amarket soon after the order is placed e.g. foodstuffs).

• Agents can be very expensive to train. They are difficult to keep control of due to the physical distances involved. They are difficult to motivate.

Pl di t ib ti h l




intermediary• Channel Intermediaries - Retailers

• Retailers will have a much stronger personal relationship with theconsumer.

• The retailer will hold several other brands and products. A consumer willexpect to be exposed to many products.

• Retailers will often offer credit to the customer e.g. electrical wholesalers,or travel agents.

• Products and services are promoted and merchandised by the retailer.

• The retailer will give the final selling price to the product.

• Retailers often have a strong 'brand' themselves e.g. Ross and Wall-Martin the USA, and Alisuper, Modelo, and Jumbo in Portugal.

Pl di t ib ti h l




intermediary• Channel Intermediaries - Internet• The Internet has a geographically disperse market.

• The main benefit of the Internet is that niche products reach a wider audience e.g. Scottish Salmon direct from an Inverness fishery.

• There are low barriers low barriers to entry as set up costs are low.

• Use e-commerce technology (for payment, shopping software, etc)• There is a paradigm shift in commerce and consumption which

benefits distribution via the Internet



Promotion

• Another one of the 4P's is 'promotion'. This includes all of

the tools available to the marketer for 'marketing

communication'. As with Neil H.Borden's marketing mix,

marketing communications has its own 'promotions mix.'

Think of it like a cake mix, the basic ingredients arealways the same. However if you vary the amounts of one

of the ingredients, the final outcome is different. It is the

same with promotions. You can 'integrate' different

aspects of the promotions mix to deliver a unique

campaign



Promotion

• Personal Selling

• Sales Promotion

• Public Relations

• Direct Mail

• Trade Fairs and Exhibitions

• Advertising

• Sponsorship



Promotion



Promotion

• 1. Personal Selling

Personal Selling is an effective way to manage personal

customer relationships. The sales person acts on behalf

of the organization. They tend to be well trained in the

approaches and techniques of personal selling. However sales people are very expensive and should only be used

where there is a genuine return on investment. For

example salesmen are often used to sell cars or home

improvements where the margin is high.



Promotion

• 2. Sales PromotionSales promotion tend to be thought of as being allpromotions apart from advertising, personal selling, andpublic relations. For example the BOGOF promotion, or Buy One Get One Free. Others include couponing,money-off promotions, competitions, free accessories(such as free blades with a new razor), introductory offers(such as buy digital TV and get free installation), and soon. Each sales promotion should be carefully costed andcompared with the next best alternative



Promotion

• 3. Public Relations (PR)Public Relations is defined as 'the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics' (Institute of Public Relations). It is relatively cheap, butcertainly not cheap. Successful strategies tend to belong-term and plan for all eventualities. All airlines exploitPR; just watch what happens when there is a disaster.The pre-planned PR machine clicks in very quickly with avery effective rehearsed plan.



Promotion

• 4. Direct MailDirect mail is very highly focussed upon targeting consumersbased upon a database. As with all marketing, the potentialconsumer is 'defined' based upon a series of attributes andsimilarities. Creative agencies work with marketers to design a

highly focussed communication in the form of a mailing. Themail is sent out to the potential consumers and responses arecarefully monitored. For example, if you are marketing medicaltext books, you would use a database of doctors' surgeries asthe basis of your mail shot



Promotion

• Trade Fairs and ExhibitionsSuch approaches are very good for making new contactsand renewing old ones. Companies will seldom sell muchat such events. The purpose is to increase awarenessand to encourage trial. They offer the opportunity for companies to meet with both the trade and theconsumer. Expo has recently finish in Germany with thenext one planned for Japan in 2005, despite a recentdecline in interest in such events.



Promotion

• AdvertisingAdvertising is a 'paid for' communication. It is used todevelop attitudes, create awareness, and transmitinformation in order to gain a response from the targetmarket. There are many advertising 'media' such asnewspapers (local, national, free, trade), magazines and journals, television (local, national, terrestrial, satellite)cinema, outdoor advertising (such as posters, bus sides).



Promotion

• Sponsorship

Sponsorship is where an organization pays to

be associated with a particular event, cause or

image. Companies will sponsor sports eventssuch as the Olympics or Formula One. The

attributes of the event are then associated with

the sponsoring organization



Pricing Strategies

• There are many ways to price a product.

Let's have a look at some of them and try

to understand the best policy/strategy in

various situations.



Pricing Strategies

• Premium Pricing

Use a high price where there is a uniqueness

about the product or service. This approach is

used where a a substantial competitiveadvantage exists. Such high prices are charge

for luxuries such as Cunard Cruises, Savoy

Hotel rooms, and Concorde flights.



Pricing Strategies

• Penetration Pricing

The price charged for products and

services is set artificially low in order to

gain market share. Once this is achieved,the price is increased. This approach was

used by France Telecom in order to attract

new corporate clients.



Pricing Strategies

• Economy Pricing

This is a no frills low price. The cost of

marketing and manufacture are kept at a

minimum. Supermarkets often haveeconomy brands for soups, spaghetti, etc.



Pricing Strategies

• Price SkimmingCharge a high price because you have a substantialcompetitive advantage. However, the advantage is notsustainable. The high price tends to attract newcompetitors into the market, and the price inevitably fallsdue to increased supply. Manufacturers of digital watchesused a skimming approach in the 1970s. Once other manufacturers were tempted into the market and thewatches were produced at a lower unit cost, other marketing strategies and pricing approaches areimplemented.



Pricing Strategies

• Premium pricing, penetration pricing,

economy pricing, and price skimming are

the four main pricing policies/strategies.

They form the bases for the exercise.However there are other important

approaches to pricing



Pricing Strategies

• Psychological Pricing

This approach is used when the marketer

wants the consumer to respond on an

emotional, rather than rational basis. For example 'price point perspective' 99 pence

not one pound



Pricing Strategies

• Product Line Pricing

Where there is a range of product or

services the pricing reflect the benefits of

parts of the range. For example car washes. Basic wash could be £2, wash

and wax £4, and the whole package £6.



Pricing Strategies

• Optional Product PricingCompanies will attempt to increase the amount

customer spend once they start to buy. Optional

'extras' increase the overall price of the product or

service. For example airlines will charge for optionalextras such as guaranteeing a window seat or

reserving a row of seats next to each other



Pricing Strategies

• Captive Product Pricing

Where products have complements,

companies will charge a premium price where

the consumer is captured. For example arazor manufacturer will charge a low price and

recoup its margin (and more) from the sale of

the only design of blades which fit the razor.



Pricing Strategies

• Product Bundle Pricing

Here sellers combine several products in

the same package. This also serves to

move old stock. Videos and CDs are oftensold using the bundle approach.



Pricing Strategies

• Promotional Pricing

Pricing to promote a product is a very

common application. There are many

examples of promotional pricing includingapproaches such as BOGOF (Buy One

Get One Free).



Pricing Strategies

• Geographical Pricing

Geographical pricing is evident where

there are variations in price in different

parts of the world. For example rarityvalue, or where shipping costs increase

price.



Pricing Strategies

• Value Pricing

This approach is used where external

factors such as recession or increased

competition force companies to provide'value' products and services to retain

sales e.g. value meals at McDonalds

marketing management - amit

Documents