PRODUCT: A tangible item, a service, an idea, a concept, a person.

DEVELOPMENT OF MARKETING - A HISTORICAL PERSPECTIVE

Production Era – 1850s to 1920s

Sales Era – 1930s to 1950s

Marketing Era – 196s & 1970s

Societal Marketing Era – 1970s to 1990s

The Future---?

MARKETING INTRODUCTION

The exchange of something to satisfy an un-fulfilled need.

CONDITIONS OF EXCHANGETwo or more persons/organizations must be

involved

There must be some unfulfilled need

The parties must be voluntarily involved

Each party must bring in something of value

There must be communication between the

parties involved.

CONCEPT OF UTILITY CREATION

Form Utility---- the physical or chemical form of a product that makes it of value , e.g., conversion of lumber into furniture.

Place Utility ---- ready access makes the product of value e.g., film on video.

Time Utility ---- timeliness creates utility e.g,. Life saving drug.

Information Utility --- knowledge of existence of a product.

Image Utility ---- emotional or psychological value attached to a product

Possession Utility --- occurs when the ownership exchange takes place.

The ability of a product to satisfy an un-fulfilled need

THE INTANGIBILITY & TANGIBILITY CONTINUUM

Babysitting

Education

Legal services

Air travel

Fast foods

Cosmetics

Soft drinks

Clothing

sugar

TANGIBLE ELEMENT

S

INTANGIBLE ELEMENTS

THE MARKETING CONCEPT

1. NATURE & RATIONALE

All an organization’s activities should be customer oriented.

All marketing activities should be coordinated

The above 2 activities are essential to achieving economic benefits for the organization

2. RELATIONSHIP MARKETING

Increasingly, customers are asking organizations to built a long term relationship which goes beyond short term benefits.

3. CUSTOMIZATION

This is a change from mass production / marketing concept of multi-skilling & economics of scope

4. ETHICAL MARKETING

Becoming an important issue with increasing education / awareness of customers and growing legislature.

MARKETING MIX

Traditionally, Marketing Mix refers to a product or service, its distribution, promotion and pricing strategies. These four elements must satisfy the needs of the target markets and simultaneously, achieve organizational objectives. Marketing Mix includes.

PRODUCT:

Managing existing products, adding new ones and droping the failed ones. Strategies must also be formulated regarding branding, packing and other product features such as warranties, etc.

PRICE:

Price flexibility, related items in a product line, terms of sale, allowing discounts.

PLACE (DISTRIBUTION):

Related to channel members, type of distribution, extensive, intensive,selective.

PROMOTION:

Coordination of individual methods of promotion such as advertising, personal selling and sales promotion. Promotional strategies should be adjusted according to the product life cycle

OPPORTUNITY WINDOW

REFERS TO THE TIME AVAILABLE FOR THE PIONEERING COMPANY IN THE BUSINESS TO MAXIMIZE PROFITS BEFORE A SECOND ENTRANT BECOMES A COMPETITOR

EXAMPLE TCS IN PAKISTAN GILLETTE ROOH E AFZA

STRATEGIC MARKETING PLANNING

POSITIONINGRefers to a product’s image in the minds of its

customers, in relation to directly competitive products as well as other products marketed by the same company.

DIFFERENTIALS ADVANTAGERefers to any feature of an organization or a

brand perceived by customer to be desirable and different from those of the competition.

SELECTION OF TARGET MARKETSRefers to a group of people/organizations at

which a firm directs a marketing strategy.

MEASUREMENT OF MARKET DEMAND

Enables the company to forecast its sales for a certain period of time.

Organizations internal environment

Controllable factors

Financial resources

Expansion/Retrenchment

Size of operations

Strength of the company

Lease/ buy options

Advertising

Securities for taking long/short-term loans

Production facilities

Production facilities to meet specifications

Operation on optimum capacity

Accepting external jobs

EXTERNAL MACRO ENVIRONMENT

NON – CONTROLLABLE

• DEMOGRAPHICS

Ratio of urban to rural population

High populating growth rate

Demographic shifts

Aging of population

Ration of minorities

• ECONOMIC CONDITIONS

business cycles marked by recessions & booms

Gross domestic product (GDP)

Real Income

Purchase Power Perity (PPP)

Inflation

Interest Rates

POLITICAL & LEGAL FORCES• Monetary & Fiscal Policies• Social legislation & Regulations• Government Relationship with Industries• Legislation special related to marketing

TECHNOLOGY• Invent of computer / internet• E B I Z (E-Commerce)• Change in lifecycle because of technology

advancements• Change in business pattern

LOCATION

• Prime location leads to reduced operating costs

RESEARCH & DEVELOPMENT

• Customer satisfaction from existing products

• product innovation

• keeping and edge over the competitor

HUMAN RESOURCES

• Employing Experts

• A Manager Concept (Multi–Tasking)

• An asset rather than a liability

COMPANY IMAGE

• Perception of the Consumer

• Providing meaningful benefit to the Customer

COORDINATION AMONG INTERNAL FACTORS

• Coordination for the conduction of 4/5 Ps

EXTERNAL MICROENVIRONMENT PARTIALLY CONTROLLABLE

THE MARKET

A place where buyers and sellers meet, goods & services are offered for sale, and transfers of ownership occur.

OR

People or organizations with need to satisfy, money to spend, and willingness to spend money.

FACTORS TO BE CONSIDERED

• People /Organizations with needs

• Purchasing Power

• Buying Behavior

THE SUPPLIER

No firm can sell a product without being able to make or buy it.

MARKET FORCES

• THE CUSTOMER

Who, what do they buy, how do they buy, when do they buy.

• industry behavior

Structure, CR, attitudes of intermediaries, motivation

• COMPETITORS

Company’s positioning relative to competitors, nature of competition (monopoly vs. oligopoly vs. pure competitions)

• GOVERNMENTS & REGULATORY AUTHORITIES

Control over marketing activities & competitors activities.

Psychological factors: motivation, perception, attidtud4es, personality and concept of self.

Situational factors: time dimensions: when do customers buy?

Physical & Social Dimensions: where do they buy?

Terms of Purchase: how do they buy?

Moods: Conditions in which thy buy

SOCIAL GROUP

SOCIAL

CLASSESCHARACTERISTICS

A Businessmen owning large properties or senior managers working with MNCs, large landowners.

B Smaller businessmen, middle level executives, small and medium size land holding farmers.

C1 White collar workers, e.g., school / College teacher, doctors, engineers.

C2 Blue collar workers, e.g., auto mechanics

D Un-skilled or semi-skilled blue collar workers, e.g., landless farmers, nomads, etc.

E Partially employed, old / retired people with limited income, unemployed

FAMILY LIFE CYCLE

STAGE IN LIFE CYCLE

CHARACTERISTICS

SINGLE Young, single, male / female living alone. Generally student / young professional. Emphasis on convenience products, dine-outs small packs.

MARRIED WITH NO CHILDREN

Younger, mid 20s-early 30s, emphasis on dine-out / entertainment. Dowry makes life easier.

MARRIED WITH YUONG CHILDERN

Emphasis on children products, e.g., baby food medicine, clothing. Later, children’s education.

MARRIED WITH GRWON UP CHILDREN

Emphasis on children’s professional education,savings for building a house. Children’s marriage

OLD COUPLE Emphasis on medical care, security

SINGLE SURVIVOR One member family continuous emphasis on health and security.

MULTIPLE ROLES IN BUYING

USERS

INFLUENCER

DECISION MAKER

GATE KEEPER

BUYER

CONSUMER MARKETS & BUYING BEHAVIOR

Critical variables include:

Geographic distributionUrban/ruralConcentration of population by geographic

areas, etc….

demographicsAge distributionGenderFamily life-cycleEducationIncomeEthnic groups

Social influencesCultures ad Sub-CulturesReligionSocial ClassReference groupsRole & influence of family

Psychological FactorsMotivationPerceptionAttitudesPersonality Concept of Self

BUSINESS MARKETS & BUYING BEHAVIOUR

BUSINESS MARKETS EXIST: To produce other goods / services To resell to other users or consumers To conduct Organizational Operations

COMPONENTS OF THE BUSINESS MARKETS

Agricultural Market Reseller Market Government Market Services Market Non-Business Market International Market

CHARACTERISTICS OF THE BUSINESS MARKET DEMAND

Derived demand Inelastic Demand Demand widely fluctuates Buyers are well informed

BUYING SITUATION New Task Buying Straight Re-buy Modified Re-buy

MULTIPLE ROLES IN BUYING

User Influencer Decision Maker Gate-keeper Buyers

BUYING PATTERN OF BUSINESS USERS

Direct Purchase Nature of Relationship Frequency of Purchase Size of Order Length of Negotiation Period Reciprocity Arrangements Service Expectations Dependability of Supplies leasing

“EVERY HUMAN IN THIS WORLD HAS THE

RIGHT TO BELIEVE THAT BECAUSE OF

HIM/HER WAS THE WORLD CREATED.”

By Eleanor Roosevelt

DIMENSIONS OF SEGMENTATION GEOGRAPHIC SEGMENTATION

DEMOGRAPHIC SEGMENTATION

AGE

YOUNGSTERS

TEEANGERS

MIDDLEDAGED

SENIORS

PSYCHOGRAPHIC SEGMENTATION

PERSONALITY CHARACTERS

LIFE STYLE

VALUES

BEHAVIORAL SEGMENTATION

BENEFITS DESIRED

USAGE RATE

SINGLE SEGMENT VS MULTIPLE SEGMENT STRATEGIES

SINGLE SEGMENT STRATEGIES

Enable the seller to penetrate the market

in depth and to acquire a reputation as

specialist in a limited market.

Risk associated is, the firm has all eggs

in one basket.

MULTIPLE-SEGMENT STRATEGY

Two or more groups of buyers are

identified. Different marketing mix is

developed to attract each segment.

Segmentation with no change in product,

separate promotional appeals each

tailored to a given segment are devised.

SEGMENTS SHOULD BE:

Identifiable

Measurable

Accessible

Economically viable

SEGMENTATION PROCESS

ON THE BASIS OF PRIOR

experience and judgment

BASED ON STRUCTURED

analyses supported by some marketing

research.

POSITIONING THE PRODUCTS

The ability of the organization to attract attention of the prospective customer towards the product and to differentiate it in a favorable way from competitors is called positioning. This effort basically aims at developing the image of a product in such a way that the targeted clientele gets quickly attracted.

POSITIONING IN RELATION TO COMPETITOR

FLANK ATTACK OR HEAD-TO-HEAD POSITIONING

Positioning the product directly against the competitor is called a Flank Attack. This strategy is suitable for a firm that already has a consolidated differential advantage or not be adopted when a competitor has a stronger market position.

e.g., Launch of newspaper Aaj Ki Awaz

Seven Star Cigarettes

Delta Airlines

POSITIONING IN RELATION TO A

PRODUCT CLASS OR ATTRIBUTE An organization’s positioning strategy may entail association or distancing it from a product class or attribute.

Examples

Made in Japan

Environmentally friendly

Recyclable Packing

Green Peace

POSITIONING BY PRICE AND QUALITY

This type of positioning strategy defines the price & quality relationship and advocates that the higher price signifies a higher quality.

Examples:

A Rolls Royce car

The diamond called Kohinoor

Statues of Buddah

The painting called Mona Lisa

Local Market Examples

Foreign franchises offering edibles

Food offered in five star hotels

At the speed of 60 miles an hour, the only sound you hear is the tickling of a clock.

Hamaisha saath nibhana tou, sooti hay mairi ladli

Hamaisha saath nibhana too, parhti hai mairi ladli

Hamaisha saath nibhana too, rukhsat hoi meri ladli

Apnay saath bhi lai thi baiti ko bhi yayhi doongi

Gold Leaf, for the taste alone

Red & White - the taste of adventure

Berger Robbiolac All Rounder

Wills Kings – Paradigm Shift

Low hassle in getting rid of packaging

Environmentally friendly product

MARKET SEGMENTATION

Market segments are groups of customers

having similar needs / wants and preferences.

It enables the organization to more closely

match its marketing mix with the customers

needs or demands.

OPPORTUNITIES

Can we enter new markets? Can we expand our product line? Are competitors weak or complacent? Will our markets grow?

THREATS

Are we likely to get new competitors? Will other products be substituted for ours? Will new government policies impede our

business? Are we vulnerable to economic downturns? Will buyer’s tastes and preferences change? Will demographic shifts hurt us?

QUESTION CHECKLIST FOR SWOT ANALYSES

STRENGTHS

Do we have a distinct competitive advantage? Do we have adequate financial resources? Can we do something better than our

competitors.? Do buyers think well of us? Are we known at the market leader? Do we have proprietary technologies.? Can we produce and market at lower costs? Does our management team have a good track

record?

WEAKNESSES

Do we lack a clear strategic direction? I sour competitive position deteriorating? Are our profitability obsolete? Is our profitability lower than it should be? Do we lack management depth and talent? Are we missing any key skills? Do we have internal operating problems? Are we short of cash to fund current and

future business efforts? Do we have a weak image in the market?

GENERIC NAMES WHICH WERE EARLIER BRAND NAMES

ASPIRIN

ESCALATOR

KEROSENE

ZIPPER

THERMOS

STAGES IN ADOPTION PROCESS

AWARENESS

INTEREST

EVALUATION

ADOPTION

CONFIRMATION

ADVOCACY

VALUATION OF BRANDS

BRAND ORGANIZATION

VALUE IN $ BILLION

Marlboro Philip 31.2

Coca Cola Coca Cola 24.4

Budweiser Anheuser Busch

10.2

Pepsi Cola Pepsico 9.6

Nescafe Nestle 8.5

Winston Nabisco 6.1

Pampers P & G 6.1

Camel Nabisco 4.4

Johnnie Guinness 2.6

Barbie Dolls

Mattel 2.2

Smirnoff Vodka

Grand Metropolitan

2.2

Kraft Cheese

Philip Morris 2.2

Source: Financial World 1992

BRAND AWARENESS

The ability of potential buyers to

recognize or recall a brand as a member

of a certain product category. Linkages

between product class and brand are

involved.

DRIVE FOR BRAND AWARENESS

HIGH INVESTMENT ON TV

Average 10% of sales turnover in case of leading brands.

PROMOTION AGAINST TARGET MARKETS

Pepsi – YouthGold Leaf – The older man

CONSTRUCTION OF A BRAND NAME

NAME, SYMBOLS, SLOGANS NAME

Easy to learn increases recall rate

Different / unusual Interesting – rhyme, humor Creates a mental picture Precise – less number of words used Emotional – disseminating joy,

obsession, passion.

METHODS FOR THE COLLECTION OF DATA

SURVEY METHOD

Personal Interviews Focus Group Discussions Telephonic Survey

OBSERVATION

EXPERIMENTAL METHOD

Trends in Retailing – Experiences from Developed Countries

MAJOR STRATEGIES BEING EMPLOYED BY RETAILERS

SHORT-TERM

loyalty cards Use of customer data-base Sharing of EPOS data for inventory

management, segmentation, response time,etc

efficient Customer response (ECR)

LONG TERM

Increasing shopping experience – catering for young mothers, better layout, more extensive range.

Additional facilities – banking, direct marketing etc.

DETERMINING INTENSITY OF DISTRIBUTION

INTENSIVE – Distribution through every reasonable outlet.

SELECTIVE – Distribution through multiple but not all outlets.

EXCLUSIVE – Distribution through limited / restricted outlets.

LEGAL ISSUES IN DISTRIBUTION

EXCLUSIVE DEALERSHIP – Prohibits dealer from carrying products of competitors.

TYING CONTRACTS – Supplier sells to middleman on condition that a less demanded product is also bought.

REFUSAL TO DEAL – Manufacturer refuses to deal with certain independent middlemen.

EXCLUSIVE TERRITORY POLICY – When producer demarks territory and sales can only be made in the particular territory.

MARKETING RESEARCH

WHY MARKET RESEARCH?

COMPETITIVE PRESSURE

As more and more companies enter in a particular market, there is always need to maintain differential advantage or a unique selling proposition (USP)

EXPENDING MARKETS

because of globalization, companies enter new markets and there is need to know about these new markets, so as to formulate appropriate marketing mix for a environment.

COST OF MISTAKES

Experimentation in market is no longer possible because it can be fatal for the organization, e.g., cost of introducing a new drug is approximately US $500 million and takes around 10-12 years.

GROWING CUSTOMER EXPECTATIONS

Customer now expect more benefits for less money. It is only through research that we, as marketers, can find out what they expect and try to provide to them economically.

COMMITTED BUYER

LIKES THE BRANDConsider it a friendSATISFIED BUYER

Has switching costs

SATISFIED / HABITUAL BUYERNo reason for change

SWITCHER / PRICE SENSITIVEIndifferent – no brand loyalty

THE LOYALTY PYRAMID

Business markets & buying behavior

Business Markets exist.

To produce other goods/servicesTo resell to other users or consumersTo conduct organizational operations

Components of the Business Markets

Agricultural MarketReseller MarketGovernment MarketsServices MarketNon-Business MarketInternational Market

Characteristics of the Business Market Demand

Derived DemandInelastic DemandDemand Widely FluctuatesBuyers are Well Informed

Buying situationsNew task buyingStraight Re-buyModified Re-buy

Multiple Roles in Buying

User

Influencer

Decision Maker

Gate-Keeper

Buyers

Buying Pattern of Business Users

Direct Purchase

Nature of Relationship

Frequency of Purchase

Size of Order

Length of Negotiation Period

Reciprocity Arrangements

Service Expectations

Dependability of Supplies

Leasing

Competition

Brand competition

Substitute Products

General competition

Social & cultural forces

Change in consumption patter

Difference in lifestyle

Two income families

Changing gender roles

Conspicuous consumption

A premium on time

Health & environmental issues

Multiple roles in buying

User

Influencer

Decision Maker

Gate Keeper

Buyer

QUESTION CHECK FOR SOWT

STRENGTHS

• Do we have a distinct competitive advantages?

• Do we have adequate financial resources?

• Can we do something better than our competitors?

• Do buyers think well of us?

• Are we known at the market leader?

• Do we have proprietary technologies?

• Can we produce and market at lower costs?

• does our management team have a good track record?

WEAKNESS

• Do we lack a clear strategic direction?

• I sour competitive position deteriorating?

• Are our facilities obsolete?

• Do we lack management depth and talent?

• Are we missing any key skills?

• Do we have internal operating problems.?

• Are we have short of cash to fund current and future business efforts?

• Do we have a weak image in the market?

SINGLE SEGMENT VS MULTIPLE SEGMENT STRATEGIES

SINGLE SEGMENT STRATEGIES

Enable the seller to penetrates the market in depth and to acquire a reputation as specialist in a limited market. Risk associated is, the firm has all eggs in one basket.

MULTIPLE – SEGMENT STRATEGY

Two or more groups of buyers are identified. Different marketing mix is developed to attract each segment. Segmentation with no change in product, separate promotional appeals, each tailored to a given segment are devised.

MARKET RESEARCH

Why Market Research?

COMPETITIVE PRESSURE

As more and more companies enter in a particular market, there is always need to maintain a differential advantage or a Unique Selling Proposition (USP)

EXPANDING MARKETS

Because of globalization, companies enter new markets and there is need to know about these new markets, so as to formulate appropriate market6ing mix for a new environment.

COST OF MISTAKES

Experimentation in market is no longer possible because it can e fatal for the organization, e.g. cost of introducing a new drug is approximately US $ 500 million and takes around 10-12 years.

GROWING CUSTOMER EXPECTATIONS

Customers now expect more benefit for less money. It is only through research that we, as marketers, can find out what they expect and try to provide to them economically.

A BRAND

A Name

Symbol

Sign

Mark

Color

Or the combination of above

REASONS FOR BRANDING FOR CONSUMER

Ensure recognition

Ensure repeat purchase

Ensure Quality

REASONS FOR BRANDING FOR BRAND OWNERS

Offers Premium on Price

Can be Sold

Can be Promoted

BRANDING STRATEGIES

CORPORATE BRANDING STRATEGY

Suggest that every product is promoted by a different brand name e.g. Lux, Surf Excel, Lifebuoy, Dalda, Lirl etc.

FAMILY BRANDING STRATEGY

Suggest that all products of one company be promoted by the same name, e.g. HP, Sony, Panasonic, LG etc.

PRODUCT NAME COMBINED WITH FAMILY NAME

Suggest that a company may use that strength the of the company name with the name of the product e.g. Toyota Corolla, Service Don Carlos, City Bank Visa etc.

BRAND REORGANIZATION

Refers to the ability of the customer to the reorganization to brand

THE RECALLABLE PYRAMID

Top of the mind Recall

RecallRecognitionAwareness

UName

BRAND EQUITY

Term refers to a combination of recognition loyally and Awareness.