msca 2_dr.satish

8/3/2019 MSCA 2_Dr.Satish

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MSCA

Session 2

Dr.R.Satish Kumar


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Session Objectives

PEST Analysis

To show the value of an integrated marketing plan

To discuss the elements of a well-integrated marketing plan

To present five types of marketing plan analysis:

benchmarking, customer satisfaction research, marketing

cost analysis, sales analysis, and the marketing audit

To see the merit of anticipating and planning for the future


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PEST analysi

Political factors

Economic factors

Socio-cultural factors Technological fact


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Political/ Legal

Monopolies legislation

Environmental protection laws

Taxation policy Employment laws

Government policy

Legislation


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Economic Factors

Inflation

Employment

Disposable income Business cycles

Energy availability and cost


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Sociocultural factors

Demographics

Distribution of income

Social mobility Lifestyle changes

Consumerism

Levels of education


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Technological

New discoveries and innovations

Speed of technology transfer

Rates of obsolescence Internet

Information technology


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Definitions of Strategy and Tactics

Strategy:

An explicit statement of the firms vision of its

future, objectives, and purpose

Provides long-term direction for decisions

Includes corporate policies, resource allocations,

customer markets, and competitive environment


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Definitions of Strategy and Tactics (contd)

Tactics:

Serve as guidelines for implementing the intent of

the strategic plan

Are the basis for day-to-day operating decisions

(including the marketing mix)

Have a shorter-term planning horizon than

strategic planning


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Dimensions That Define Strategy

The product market in which the business will compete

The level of investment in a strategic business unit

The functional area strategies required for competing in

the chosen market

The underlying strategic assets and skills (core

competencies) that give the firm a sustainable

competitive advantage


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Marketing, Strategic Planning, andOrganizational Levels

Insert table 3.1


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Feedback

The Strategic Planning Process

Mission

Set Performance Objectives

Environmental and Self Analyses

Strategic Objectives & Strategy Definition

Implementation and Tactics

Execution

Evaluation and Control


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Strategic Perspectives

Strategic readiness Ability to take advantage of unexpected market opportunities by

having a long-term strategic plan and vision in place

Strategic vision Longer-term, futuristic perspective, requires patience and

determination

Strategic opportunism Focus on present, and seizing market opportunities in a dynamic,

uncertain environment


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External Environmental Analysis

Customers Who are most desirable? Should the market be segmented?

What are their characteristics, preferences, and behaviors?

Competitor Assessment Who are our present and potential competitors?

How well matched are their strategies and strengths to

the markets key success factors?

What are their weaknesses?

How much of a threat are they?


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Assaels Four types of Buying

Behaviour

1

Habitual buying

behaviour

(e.g. instant coffee)

3

Dissonance

reducing behaviour

(e.g. furniture)

2

Variety seeking

Behaviour

(e.g. chocolate bars,

And breakfast cereal)

4

Complex

buying

behaviour

(e.g. computers)


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A sequential model of buying

behaviour

The search for

Information

Evaluationof the

alternative

Thepurchase

decision

Recognitionof a

problem

Postpurchase

behaviour


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Obviously

Individual customers & organisational

customers buy goods & services

They are stimulated & prompted to buy

Marketers

are interested in their decision behaviour try to stimulate & influence this behaviour to

get better responses from the customer


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Buyer Behaviour Model

buyers

blackbox

buyers

blackbox

Needs - wants, stimuli

Product, price, place,

promotion etc

Environmental (PEST)

factors

Buyer

responses

Choices of

product

brand

dealer

timingprice

Buy more, less,

stay loyal etc


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Information searchInformation search

How we buy (a rational view)

Need recognition,

problem-awareness

Need recognition,

problem-awareness

Evaluate alternativesEvaluate alternatives

Information searchInformation search

BuyBuy

Post-purchase

evaluation

Post-purchase

evaluation

Shape desire, wantShape desire, want

Evaluate alternatives (against evoked set)Evaluate alternatives (against evoked set)

Window-shop simmering interestsWindow-shop simmering interests

BuyBuy

Post-purchase

evaluation

Post-purchase

evaluation

functional

emotional ?

current vs desired situation

relative importance

need inhibitors

are they aware of need ?

can we mediate need inhibitors?

can we stimulate awareness &

action

internal search (memory)

external search (personal

sources, commercial sources

third party reports (e.g. Which) personal observation/testing

Evokedset


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Five Roles in the buying decision processafter Blackwell/Miniard/Engel, 2007 Consumer Behaviour, 10th Ed, Thomson

Each role can be acted by parent, children or other

members of the buying centre.

Each actor may display

multiple roles when buyinga toy purchase

a house

a washing machine

an armoured vehicle

a sound system

computer software

Each actor may display

multiple roles when buyinga toy purchase

a house

a washing machine

an armoured vehicle

a sound system

computer software

Infants, teenagers, working

women, husbands?

Infants, teenagers, working

women, husbands?

Influencing Strategies

1. expert influencing

2. subtle (incl. use of

rewards

3. emotional

4. combination

Influencing Strategies

1. expert influencing

2. subtle (incl. use of

rewards

3. emotional

4. combination

Who is initiator

influencer

decider

buyer user


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What is the Relative Influence of HusbandsWhat is the Relative Influence of Husbands

vs. Wives in Decision Making?vs. Wives in Decision Making?

How is this changing?


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Influences on Consumer Behaviour

Cultural broadest & deepest influence

cultures & subculture

social classesSocial

Family

Social roles and status (multiple)

Reference groups

Membership - primary vs. secondary Aspirational vs. dissociative

PersonalPersonal AgeAge

Life cycle stageLife cycle stage

OccupationOccupation

Economic circumstancesEconomic circumstances LifestyleLifestyle

PersonalityPersonality

SelfSelf--conceptconcept

PsychologicalPsychological MotivationMotivation PerceptionPerception

LearningLearning

BeliefsBeliefs

AttitudesAttitudes


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Consumer thinks, feels, is involved & acts

Behaviour,

action

GoalsNeeds,

desires,

wants

drive

construes

achieve

satisfy

A simple need-satisfaction Motivation ModelSocial & psychological construction after Abraham Maslow


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Evaluate Harley-Davidson Consumer Behaviour

Hells Angels ? Burly,leathers, bikers, rebels

New breed: older

more affluent

better educated

rubbies (rich urbans)

Showrooms + salesapproaches

Customer types from HD

research

adventure-loving traditionalists

sensitive pragmatists

stylish status seekers

laid-back campers

classy capitalists

cool-headed loners

cocky misfits

all loved their Harleys because

independence, freedom, power

more than a machine part ofself-expression

classic look, throaty sound

American legend


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Scope of B2B Market

Agriculture Mining

Construction

Manufacturing

Transport Wholesale & retail

Finance, insurance,property

Government

Non-profit & voluntaryorganisations

different needs & buyingdifferent needs & buyingpatterns e.g. medical frompatterns e.g. medical fromrubber glovesrubber gloves vsvs body scannerbody scanner

buy raw materials/inputs tobuy raw materials/inputs tomake other goods/services e.g.make other goods/services e.g.

sugar & flavouring as inputs forsugar & flavouring as inputs forPepsiPepsi

sell on to other business userssell on to other business usersor consumers e.g. Argosor consumers e.g. Argos

use purchases to conductuse purchases to conductbusiness e.g. stationery, legalbusiness e.g. stationery, legalservices, IT/systemsservices, IT/systemsconsultancy, marketing servicesconsultancy, marketing services


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Purchasing decisions in B2B MarketsB

uying is less frequent.

new task buy buying decision not been

made before

modified rebuy

bought before but this timechange spec. or new supplier

straight rebuy routine purchase made many

times before

One-off, a batch or steadyflow (JIT)

Long, complex negotiation

Service & consistency ofquality & supply are vital

Buying centreBuying centre Buying often a group process.Buying often a group process.

Who is in the buying group?Who is in the buying group?

UsersUsers

use the product e.g. trucksuse the product e.g. trucks

Influencers (direct or indirect)Influencers (direct or indirect) Tech knowTech know--how, budget etchow, budget etc

DecidersDeciders

Make the actual decision:Make the actual decision:purchasing officer, manager,purchasing officer, manager,product/service userproduct/service user

GatekeepersGatekeepers

Control flow of informationControl flow of information

BuyersBuyers

Select suppliers & negotiateSelect suppliers & negotiatetermsterms


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Organisational buying

Need recognition,

problem-awareness

Need recognition,

problem-awareness

Evaluate, negotiate,

select

Evaluate, negotiate,

select

Search for sources,

research & approve

Search for sources,

research & approve

Finalise contract &

order routines

Finalise contract &

order routines

Performance feedback &

evaluation

Performance feedback &

evaluation

Determine specification &quantity

Determine specification &quantity

Receive proposals & analyseReceive proposals & analyse

Integrate partner

systems

Integrate partner

systems

competition

legal steps

financing

JIT

logisticsconflict

outsourcing

quantity

continuity

quality

price

financing

life cycle costs

prody

maintenance

residual values

risks

politics

personal

Choice criteria


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Eight stages model of organization

Buying Process

Problem recognition

Determine product dimensions and quantity

Precise description of product characteristics

Search and qualification of potential sources

Acquisition and analysis of proposals

Evaluation of proposals and supplier selection

Selection of an order routine

Performance feedback and evaluation


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New Task-Firm has no experience in purchasing the

product; requires

extensive problem solving

Strong predispositions toward suppliers do

not exist

Two distinct buying decision approachesare employed

Judgmental new task: when unfamiliar

with parts, technology, etc.Strategic new task: when decision is

extremely important to the firm


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Straight rebuy

A recurring requirement; buyers

have substantial experience with

the purchase

Information needs are low; little need to

Evaluate alternative solutions

Routinized response behavior; selection of

Vendor from a list of acceptable vendors

Choice criteria are well developed

Strong predisposition to certain suppliers


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Modified rebuy

Buyer perceives benefits from a

reevaluation of alternatives LIMITED PROBLEM

SOLVING

THERE ARETWOTYPES

SIMPLE

COMPLEXComplex: involves a large set of choice alternatives

IN VS OUT SUPPLIER


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Conceptual Framework

Payer

UserBuyer UNDERSTANDINGCUSTOMER

BEHAVIOR

Model of Relationship-Based

Buying

Relationship Buying and Selling

in Business Markets

Art of Nurturing Suppliers

Supplier-Customer Partnering

Customer Relationship

Management on the Web

Relationship-Based Buying


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A Model of Relationship-Based Buying

Relationship-

Based Buying

Trust

Commitment

Search costs Risk reduction

Switching costs

Value-added benefits

Cost-Benefit Factors

Early socialization

Reciprocity

Keiretsu

Friendships

Socio-Cultural Factors

Supplier loyalty

Increased buying

Willingness to pay more

Proactive word-of-mouth

Goodwill (customer equity)

Antecedents (Motivators) Relationships Outcomes


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Cost Benefit Factors

The cost-benefit factors that drive decisions

about relationship-based buying include:

The search costs

The potential for risk reduction

The switching costs

The value-added benefits of the relationship


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Combinations ofPerceived Risk and

Switching Costs

High Low

Switching Costs

High Constrained in relationship Relational buying

Low Transactional exchange Vulnerable relationship


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Value-Added Benefits

Differentiation

These added benefits serve as a motivation for

customers to engage in relationship-based buying


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Sociocultural Factors

The sociocultural factors that influence the

formation of a customer relationship include:

Socialization

Reciprocity

Networks

Friendships


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The Supplier-Customer Relationship

Trust

A willingness to rely on the ability, integrity, and

motivation of the other party to act to serve my needs and

interests as agreed upon implicitly or explicitly Commitment

An enduring desire to continue the relationship and to

work to ensure its continuance


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Outcomes of Relationship-Based Buying

Supplier loyalty

Increased buying

Willingness to pay more Proactive word-of-mouth

Goodwill (customer equity)


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Process of Relationship Buying in Business

Markets

IMP Model

A model that describes the processes or steps in

the development of relationships in a series of

interactions

Industrial Marketing and Purchasing (IMP) group

established that long-term patronage is quite

common in business buying


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Characteristics of Relational Buying

The IMP model has identified three key factors

that characterize all relational buying by

business customers:

Transaction-specific investments/adaptations

Power dependence

Role formalness


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Steps in Relationship Development

The IMP group identified the steps thatcompanies go through in building arelationship

Needs complementarity Interactions

Outcomes and satisfaction

Investments

Commitment


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Copyright 1999 by Thomas

Southwestern. All rightsreserved.

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Reasons for Relationship Development in

Business Buying

Businesses may need a long-term exchange

contract to assure long-term supply

Business customers also want to reduce the

cost of buying transactions

Buyers and sellers may also have quality and

cost goals that require collaboration


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Determinants of Trust and Commitment in

Business Relationships

Determinants for the Customer Determinants for the Supplier

Switching costs Supplier-specific investments

Partner-specific investments Customer avoidance of opportunistic behavior

Mutually shared goals Single-source policy

Communication and product support Data sharing and nurturance

Supplier avoidance of opportunistic behavior


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Relationship Based Buying: The Art of

Nurturing Suppliers

The art of nurturing suppliers is clearly needed

when the existing suppliers cannot meet the

required quality, quantity, price, service, and

delivery objectives

Rather than select from the slate of existing

suppliers, the purchaser task is then to create

suppliers


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Reasons For Nurturing Suppliers

Meeting future needs

Government policy compliance

Good citizenship Promoting environmental policies

Quality assurance

Cost reduction


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d l d h


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Vendor Relations in Japan and the

United States

Traditional U.S. Model Japanese Partnering Model

Department or firm focus, optimize firm efficiency. Business system focus (includes supplier/customereconomics), optimize value chain efficiency.

Emphasis on unit cost/price (minimum quality

standards).

Emphasis on full value chain (systems) costs as well

as on improving quality.

Manufacturer defines needs; specifications of

activities; sequential planning.

Joint efforts to define needs and problem solve;

highly integrated operations and planning.

Communication is sporadic, problem driven; little

sharing of information or assistance.

Communication is frequent and planned; continuous

sharing of information and assistance.

General investments; uniform approach. Customized investments to meet unique customer or

supplier needs (e.g., in information systems, people,

manufacturing equipment).

Precise contracts that split economic benefits

beforehand.

Flexible contracts that adjust to spilt economic gains

fully as market conditions change.


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Factors for the Growth of Supplier

Partnering

Competitive intensity

Pressure on market prices

Concern with quality Enabling technology


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Customer Relationship Management and the

Three Customer Roles

CONCEPT BUYERPAYERUSER

General concept of

relationship marketing

Marketer refocuses on

the user after the sale.

A model of relationship-

based buying

Motivation

Search costs Search entails time and

effort of the buyer role.

Risk reduction P

erformance risk touser is reduced.

Switching costs Effort to learn to deal

with the new supplier.

Retooling costs. Usage learning of

product from new

supplier.

Value-added benefits Better financing plan

may benefit the

payer.

Add-on benefits for

the user.


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Customer Relationship Management and the

Three Customer Roles (contd)

CONCEPT BUYERPAYERUSER

Early socialization Buyer socialization. User socialization.

Reciprocity Source availability

assured.

Payment through

reciprocal exchange

assured.

Networks Easier to do business. Firms in network are

accommodating in

financial exigencies.

Friendships Friendly vendors give

friendly service.

Suppliers in network

more trustworthy with

product/service

quality.

Friendly supplier

assures quality

product/service.

Reverse marketing Lower costs over the

long run.

Better performance

value.

Supplier partnering Buying function

becomes more

efficient.

Total cost reduction. Better performance

value; data sharing;

joint planning helpful

to user.


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The Marketing Audit

A marketing auditmarketing audit is a

systematic,

critical,

impartial

review and appraisal

of the basic goals and policies of the marketing

function, and of the organization, methods,procedures, and personnel employed to

implement the policies and achieve the goals.


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The Marketing Audit Process (1)

1.

Determining

Who Does the

Audit

2.

Determining

When and

How Often

Audit IsConducted

3.

Determining

the Areas to

Be Audited4.

Developing

Audit Forms

5.

Implementing

the Audit

6.

Presenting the

Results to

Management


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The Marketing Audit Process (2)

1. The audit is conducted by company specialists, company divisionor department managers, or outside specialists.

2. It may be done at the end of a calendar year, the of the annual

reporting year, or when doing a physical inventory.3. A horizontal audithorizontal audit studies the overall performance of a firm,

emphasizing the interrelationship of variables. A vertical auditvertical audit isan in-depth analysis of one aspect of a firms marketing strategy.

4. Audit forms list the topics to be examined and the exactinformation required to evaluate each topic.

5. Implementation decisions include: the timing and duration,employee awareness, when and how audit is performed, andhow the audit report will be prepared.

6. Findings and recommendations are given to management.


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DEFINING THE

MARKETING AUDIT

Is a comprehensive ,systematic, independent,

and periodic examination of a companys or

business units marketing environment,

objectives, strategies & activities.


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MARKETING AUDIT

PURPOSE

View to assessing problems areas orweaknesses, opportunities &

recommending a strategic plan for action

to improve the companys marketing

performance


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4 CHARACTERISTICS OF MARKETING

AUDIT

1. COMPREHENSIVE - covers ALL aspects of thebusiness. So not just trouble areas.

Unlike the Functional audit which would only coverthe sales force or pricing etc.

More effective in locating the real source of the

problem.


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AUDIT

2. SYSTEMATIC the marketing audit is an

orderly examination of macro marketing

environment and micro marketing

environments. Marketing objectives &

strategies, marketing systems and specific

activities.


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Cont.

Indicates the most need improvements these

are incorporated into a corrective action plan

include both short and long term steps for

improving all round effectiveness.


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AUDIT

3. INDEPENDENT - ,FREE FROM CONTROL BYOTHERS. The best AUDITS come from

outside consultants objective , board

experience in various industries or specific or

some industry knowledge. Plus the time and

attention to give to the audit.


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cont

Audits come in 6 types

1. Self audit

2. Audit from across3. Audit from above

4. Company auditing office

5. Company task force audit6. Outsider audit


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AUDIT

4. PERIODIC - Typically audit are after, a down turn in sales orprofits, sales force morale has fallen, and other problems

occur

A periodic marketing audit can benefit companies in good

health as bad corporate health

Generally companies wait till when they are in crisis to conduct

an audit


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Marketing audit

Starts with:-

1. Meetings between the companys officers and theauditors to work out the audits

Objectives

Coverage

Depth

Data

Report format Time frame


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6 COMPONENTS OF MARKETING AUDIT

1. Marketing environment audit

2. Marketing strategy audit

3. Marketing organisation audit4. Marketing systems audit

5. Marketing productivity audit

6. Marketing functions audits


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PROGRAMME FORMULATION &

IMPLEMENTATION

The resulting profile exposes weakness and

strengths highlighting problems or

opportunities, with a view to the company

becoming an outstanding player in the

marketplace.


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FEEDBACK & CONTROL

As strategies are implemented a company need

to detail and record results then monitor new

developments or new opportunities


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Macro environment

Political/legal

Economic/competitive

Socio/cultural Technological


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Environmental types - The Miles

Framework

1. What degree of complexity exists in the

environment?

2. How standardised or routine are the

organisations interactions with its

environment?

3. What interconnections exist between the

various dimensions of the environment?


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Types ofEnvironment

Simple/static

Dynamic

Complex


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Environmental Analysis

Audit the environment

Assess its nature

E

xamine specific factors Identify own position

Assess how environment will affect

organisation Decide future strategic position


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Types of environmental information

Market Tidings

structure, industry

competitors, customers

Acquisition leads leads for mergers, JVs

and acquisitions

Technical tidings

licenses, patents,processes etc.

Broad issues

general conditions and

trends

Other tidings suppliers, resources


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Strategic Groups

Organisations within the same industry that

are pursuing equivalent strategies.

Organisations targeting groups of consumers

with similar products.

Provides basis for competitor analysis by

focusing on most relevant competitors.


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Attributes identifying Strategic Groups

Size

Assets and skills

Scope of operations Breadth of product range

Choice of distribution channel

Brand image Relative product quality


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Strategic groups in the airline industry

Regional Global

Easyjet

Ryanair

etc.

Brittania

Air 2000

Monarch

KLM

British Airways

Air France

Price

Scope


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Competitor analysis

Response to challenge

Vulnerable areas

Likely directional shifts

What provokes them

Goals

Motivation

Current strategy

& performance

Assumptions

How realistic?

Strengths and

weaknesses


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Thoughts of Chairman Porter

Competition in an industry is rooted in its

underlying economic and competitive forces

that go well beyond the established

competence in a particular industry.


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Vulnerability

Financial factors

Market factors

P

roduct factors Organisational factors


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The Innovation Audit

Means of measuring organisations capabilities

& skills in the area of innovation

Involves coming to terms with the

organisations past & projected innovation

performance


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Conclusion

DEFINING THE MARKETING AUDIT

PURPOSE OF THE MARKETING AUDIT

4 CHARACTERISTICS OF THE AUDIT

GOAL FORMULATION

STRATEGIC FORMULATION

PROGRAMME FORMULATION & IMPLEMENTATION

FEEDBACK & CONTROL


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Conclusion

This session shows the value of an integrated marketing plan.

It discusses the elements of a well-integrated marketing plan.

It presents five types of marketing plan analysis:benchmarking, customer satisfaction research, marketing cost

analysis, sales analysis, and the marketing audit.

It shows the merit of anticipating and planning for the future.

msca 2_dr.satish

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