PRINCIPLES OF MARKETING

UNIT-I

PREPARED BY

Dr.L.SHANTHI

Assistant Professor,

Department of Business Administration

Government Arts College(Autonomous)

Coimbatore-641018

REFERENCE BOOKS:

1. Marketing Management- Dr.Radha

2. Marketing Management Global Perspectives- Ramaswamy & Namakumari

3. https://www.yourarticlelibrary.com/marketing/approaches-to-the-study-of-marketing-4-

approaches/

4. https://www.enotesmba.com/2013/03/mba-notes-marketing-planning-process.html

INTRODUCTION

Marketing plays a major role in our daily lives. Each day is filled with consuming

products made available by marketers. We pay for marketing each time we buy a product.

Marketing is responsible for satisfying customers, which in turn increases our standard of living

and quality of life.

The word ‘Market’ is derived from the Latin word ‘Marcatus’ meaning merchandise,

wares, traffic, trade or a place where business is conducted. The common usage of market means

a place where goods are bought or sold. In its strict meaning market does not necessarily mean a

place of exchange. Market has been defined by different authorities in the following ways:

”Market includes both place and region in which buyers and sellers are in free competition

with one another.”-Pyle.

DEFINITION OF MARKETING:

According to Philip Kotler: “Marketing is a social and managerial process by which

individuals and groups obtain what they need and want through creating, offering and

exchanging products of value with others.

American Marketing Association :”Marketing is concerned with the people and activities

involved in the flow of goods and services from the producer to the consumer”.

Hugey & Mitchell: ”Marketing includes all activities involved in the creation of place,

time & possession utilities.

EVOLUTION OF MARKETING CONCEPT:-

(1) The Production Concept: It was the oldest one. The Production Concept holds that

consumers will prefer products that are widely available and inexpensive. Managers of

production oriented business concentrate on achieving high production efficiency, low costs, and

mass production. They assume that consumers are primarily interested in product availability and

low prices.

(2) The Product Concept: this stage it was believed that if the product is of good

quality and priced reasonably, nothing would prevent the producer from achieving

satisfactory sales and profit. It appears that producers, instead of being concerned with

the consumer preferences, concentrated on the mass production of goods for the purpose

of profit. They cared little about the customers.

(3)The Selling Concept: This stage witnessed major changes in all the spheres of

economic life. Thus drastic changes were reflected in the buying patterns and behavior of

consumers. There were also improvements in the growth of transport and

communications. All these changes compelled the producers to have an organized

marketing procedure. The selling activity becomes the dominant factor, without any

efforts for the satisfaction of the consumer needs.

(4)The Marketing Concept: As the consumers demand and the production capacity of

the manufacturers came in to an equilibrium, the producers were forced to rethink over

the philosophy of marketing. Customer’s importance was realized but only as a means of

disposing of goods produced. The marketing concept rests on four pillars: (i) target

market , (ii) customer needs, (iii)integrated marketing , and (iv) profitability

(5) The Societal Marketing Concept:-The Societal Marketing Concept holds that the

organization’s task is to determine the needs, wants and interests of target markets and to

deliver the desired satisfactions more effectively and efficiently than competitors in a

way that preserves or enhances the consumer’s and the society’s well being.

FACTORS RESPONSIBLE FOR THE ADOPTION OF MODERN MARKETING

CONCEPT: -

1. Growth of Marketing Channels: In olden days, the manufacturers have direct

contact with the consumers. But now various kinds of middlemen have come into

being. This has created many problems related to the management of distribution

channels.

2. Growth of population: The rapid growth in population especially during the last

two decades has opened a wide field in the marketing. The increase in population

not only brought an increase in demand but also created variety in tastes and

preferences. The producers have to meet the various types of demands of the

consumers.

3. Growth in the number of households: Joint family system has become

unpopular today but the small family concept has widely prevalent. Most of the

joint families are divided into a number of small families due to various reasons.

This division of joint families and the increase in the number of small families has

thrown new challenges before the marketing executives.

4. Growth of Disposable income: With an increase in personal income and

education, people now-a-days want to spend more for procuring more comforts,

satisfaction and variety in consumption. This sophistication of consumers demand

has given new ideas in the marketing concept.

5. Development of Science and Technology: Science and technology are making

progress more fastly. The development in these fields made the consumers

demand more sophisticated, and changes in the traditional line of thinking have

become inevitable.

6. Development of mass Communication Media: Mass communication media like

Radio, Television, etc., have become increasingly popular today. This growth has

enlightened the minds of the public and broadened their mental outlook. The

continuous advertisements in Radio, etc., made them well informed and created

more demand besides making the business field more competitive.

WHAT IS SOCIETAL MARKETING?

Societal Marketing emphasizes on social responsibilities and suggests that to sustain

long-term success, the company should develop a marketing strategy to provide value to the

customers to maintain and improve both the customers and society’s well being better than the

competitors. This concept is also termed as “the Human concept,” “The intelligent consumption

concept,” and the “Ecological imperative concept.”

T Philip Kotler defines it as “the societal marketing concept holds that the organization’s

task is to determine the needs, wants, and interests of target markets and to deliver the desired

satisfactions more effectively and efficiently than competitors in a way that preserves or

enhances the consumer’s and the society’s well-being.”.

The societal marketing concept is one of the 5 marketing concepts.

OBJECTIVES OF SOCIETAL MARKETING CONCEPT

• To maintain a long-term relationship with customers.

• To create a better image in the society for the company than its competitors.

• To carry out its social responsibilities.

• Developing community awareness towards its brands.

• To carry out its social responsibilities.

• To increase the consumer base and market share.

SOCIETAL MARKETING CONCEPT ADVANTAGES AND BENEFITS

• It helps to build a better image for the company.

• It gives a competitive advantage over the competitors.

• Useful in customer retention and long-term relationships.

• Increases sales and market share.

• Facilitate expansion and growth in the long term.

• Products and company policies should prioritize social welfare and society in general.

• Economic resources are properly used.

• Societal marketing raises the living standard of people in society.

• It ensures economic planning more significant and more fruitful to society.

IMPORTANCE OF SOCIETAL MARKETING CONCEPT

• Societal Marketing is very important to society, the environment, and businesses. This

concept was developed to tackle the consumerism and profit only the motive of business.

• The societal marketing concept helps to maximize profits for the organization and creates

a long-term relationship with customers.

• It encourages developing products that benefit society in the long run and satisfies

consumers.

APPROACHES TO STUDY OF MARKETING:

The study of marketing has been approached in more than one way. To some it has meant

to sell something at a shop or market place; to some it has meant the study of individual product

and its movement in the market; to some it has meant the study of persons-wholesalers, retailers,

agents etc., who move the products and to some it has meant the study of behaviour of

commodity movement and the way the persons involved to move them. The approach to the

study of marketing has passed through several stages before reaching the present stage. There is

a process of evolution in the development of these approaches.

To facilitate the study, these different approaches may be broadly classified as follows:

1. Product or Commodity Approach:

Under the commodity approach the focus is placed on the product or it is an approach on the

marketing on commodity wise basis. In other words, the study relates to the flow of a certain

commodity and its movement from the original producer right up to the ultimate customer. The

subject-matter, under this study, is commodity. The system claims that it is simple and gives

good result over the marketing of each product; description study is possible. But at the same

time this approach is time-consuming and repetitive process which is a drawback.

2. Institutional Approach:

In the institutional approach, the focus is on the study of institutions- middlemen, wholesalers,

retailers, importers, exporters, agencies, warehousing etc., engaged in the marketing during the

movement of goods. The approach is also known as middlemen approach. Here, emphasis is

given to understand and analyses the functions of institutions, who are discharging their

marketing functions.

3. Functional Approach:

The functional approach gives importance on the various functions of marketing. In other words,

one concentrates attention on the specialized services or functions performed by marketers. In

this approach, marketing splits into many functions-buying, selling, pricing, standardization,

storage, transportation, advertising, packing etc. This may be studied one after another. Here

each function is studied in detail in order to understand it and analyses the nature, need and

importance of each function.

4. Management Approach:

This approach is the latest and scientific. It concentrates upon the activities or marketing

functions and focuses on the role of decision-making at the level of firm. This approach is

mainly concerned with how managers handle specific problems and situations. It aims through

evaluation of current market practices to achieve specific marketing objectives.

Generally there are two factors-controllable and uncontrollable, which are more concerned with

the decision-making. Controllable include price adjustment, advertisement etc. Uncontrollable-

economical, sociological, psychological, political etc. are the basic causes for market changes.

And these changes cannot be controlled by any firm.

5. System Approach:

The system approach can be defined as “a set of objects together with the relationships among

them and their attributes.” Systems focus on interrelations and interconnections among the

functions of marketing. The system examines marketing connections (linkage) inside as well as

outside the firm. Inside the firm there is a co-ordination of business activities-engineering,

production, marketing, price etc.

On the basis of feedback information proper control is exercised to modify or alter in the

producing process, so that the desired output can be produced. Here, the aim is to secure profit

through customer-satisfaction. Markets can be understood only through the study of marketing

information. For instance, business is composed of many functions, which are composed of sub

functions. Each function or sub-function is independent, but interrelated and enables the other to

achieve marketing objectives.

6. Societal Approach:

This approach has been originated recently. The marketing process is regarded as a means by

which society meets its own consumption needs. This system gives no importance as to how the

business meets the consumer’s needs. Therefore, attention is paid to ecological factors

(sociological, cultural, legal etc.) and marketing decisions and their impact on the society’s well-

being.

7. Legal Approach:

This approach emphasizes only one aspect i.e., transfer of ownership to buyer: It explains the

regulatory aspect of marketing. In India, the marketing activities are largely controlled by Sales

of Goods Act, Carrier Act etc. The study is concentrated only on legal aspects, leaving other

important aspects. This does not give an idea of marketing.

8. Economic Approach:

This approach deals with only the problems of supply, demand and price. These are important

from the economic point of view, but fail to give a clear idea of marketing.

MARKET SEGMENTATION

DEFINITION:

“Market segmentation consists of taking the total, heterogeneous market for a product

and dividing it into several sub−markets or segments each of which tends to be

homogeneous in all significant aspects” −William J. Stanton

Market segments are grouping of consumers according to such characteristics as income,

age, degree of administration, race, or either classification, geographic location or

education”.−Cundiff & Still

NEED / BENEFITS OF MARKET SEGMENTATION:

1. To fix up target market: It helps the marketing people to distinguish one customer

group from another within a given market and thereby enables them to decide which

segment of the market should form their target market.

2. To develop market plan: specific needs of the buyer in the target market can be

identified exactly. So the marketing people can develop their plans on predictable

and reliable base.

3. To develop suitable marketing offers: when the needs and characters of the customer

group have been brought into clear focus marketing offers that are most suitable to

the particular customer group can be developed easily. The specialization that is

required in the product mix, distribution mix, the promotion mix and the pricing

policy to suit the particular customer group can be easily achieved.

4. To decide on marketing strategies: Through segmentation the marketing people can

continuously look for the differences among the customer group and decides on

appropriate strategies.

4. To find out their future markets: Segmentation help the marketing people to spot the

relatively less satisfied segments and a successive business by satisfying them. The

firm can anticipate the future wants of customers and plan their future markets.

1. Demographic variables or Socio – economic variables.

Bases for consumer market segmentation

1. Demographic 2. Geographic 3. Psychographic 4. Behaviour

1. Age

2. Sex

3. Family size

4. Family life cycle

5. Income

6. Occupation

7. Education

8. Religion

9. Race

10. Nationality

1. Regions

2. Villages

3. Cities

4. Density

5. Climate

1. Social Class

2. Life style

3. Personality

1. Occasions

2. Benefits

3. User status

4. Usage rate

5. Loyalty status

6. Readiness stage

7. Attitude towards

product.

Demographic variables are the most popular bases for segmenting consumer markets.

Demographic variables include age, sex, income, education, religion, race, family level,

occupation, etc.

2. Geographic variables.

It includes the variables such as areas, climate, density, etc. on the basis of climate,

market can be segmented into hilly areas, plain areas, and etc. marketing strategies are to

be prepared by considering the characteristics of each and every market.

3. Psychographic variables.

It includes social class of people like lower class, middle class, upper class, etc.

They are not the same in all the consumers. Hence based on psychographic variables,

buyers can be divided into various groups and accordingly goods are to be produced and

distributed. For instance, based on life styles of consumers cigarette company develops

brands for casual smoker, etc.

4. Behavioural variables.

In behavioural segmentation, consumers can be divided into group the basis of their

attitude use knowledge and expectation from the product i.e., the benefit they expect from

the product, usage rate, rate, usage habits, etc.

1. Type of Business Activity

Based on the type of activity, it can be classified into so many segments. According to the

standard industrial classification system, which is practically used by the Government agencies,

the business activities can be classified into ten decisions. They are:

1. Agriculture, Forestry and Fisheries.

2. Construction.

3. Finance, Insurance and Real Estate.

4. Mining

5. Manufacturing

6. Distribution channel- Wholesale and retail trade.

7. Transportation and communication.

8. Services

9. Government, and

10. All others.

Bases for the Segmentation of industrial markets

Type of business

activity

Geographical

location of the

user

Usual purchasing

procedure

Size of the user

2. Geographical Location of the User

The way of conducting various industrial marketing activities in various areas differs due to

factors like variations in climate, topography, etc.

3. Usual purchasing procedure

Generally, industrial users are more systematic buyers when compared to ultimate

consumers. For example, if a concern purchases a major installation, it requires technical

investigations and the approval of top-level management committee in the concern. But if a

concern purchases an ordinary item like postage, it will not require much investigation and

approval, and it is a tontine requirement of an ordinary nature.

4 .Size of the user:

The size of an industrial purchase may vary because industrial users may vary from the

small machine shop to industrial giants. Generally, manufactures prefer to sell goods in large

quantities than in small and so they fixes lower price for the bulk purchases and vice versa.

MARKETING MIX:

The idea of marketing mix was first conceived by Prof. Neil H. Borden of the Harward Business

School.

"Marketing mix refers to the apportionment of effort, the combination, the designing and the

integration of the elements of marketing into a programme or mix which on the basis of an

appraisal of the market force will best achieve the objectives of an enterprise at a given time."

Professor Neil H. Borden

"Marketing mix is the set of controllable marketing variables that the firm blends to produce the

response it wants in the target market." -Philip Kotler

"Marketing mix is the term that is used to describe the combination of the four inputs that

constitute the core of an organisation's marketing system. These four elements are the product

offerings, the price structure, the promotional activities and the distribution system. The four

ingredients in the marketing mix are interrelated." –William Stanton

Elements of Marketing Mix:

From the definition it is clearly known that the following are the components of

marketing mix: 1.Product, 2.Pricing, 3.Physial Distribution or Place, 4.Promotion. These are

popularly denoted as marketing decision variables. These are popularly known as Four “Ps”.

1. Product: The management should first decide the product, which the firm should produce. It

should produce only those products, which can be marketed. It may offer a single product or

several products. The management should also revise the product design, make improvements in

the product frequently so as to suit the changing tastes and preferences of the customers.

Decisions related to branding and packing also come under this head.

2. Price: Price is another powerful element in the marketing mix and vitally affects the volume

of sales. The firm should take decisions with regard to the basis for fixing its price and profit

margin. It should also frame policies for allowing trade and other discount allowances.

3. Promotion: The business enterprise should inform the customers about its products and

persuade them to buy. Advertising, personal selling and other sales promotional activities are the

various promotional activities. All these activities increase the volume of sales by expanding as

well as retaining the market share for the product.

4.Physical Distribution or Place: Marketing channel policy is another integral part of the

marketing mix. The management should select the channels through which the product should

reach the target market at the right time. Other aspects such as physical handling, transporting

and their financial considerations should be taken into account.

All the ”Four Ps” are the strong weapons of the management and with them the firm can

fight out its rivals in the market for a larger share of the sales and built up greater good will. The

effectiveness of the marketing effort mainly depends upon the decisions made in each of “p”

areas and all the four “Ps” should be directed towards the consumer so as to ascertain the needs,

requirements, tastes, preferences and expectations.

7Ps’ OF SERVICE MARKETING

The first four elements in the services marketing mix are the same as those in the traditional

marketing mix. However, given the unique nature of services, the implications of these are

slightly different in case of services.

1. Product: In case of services, the product' is intangible, heterogeneous and perishable.

Moreover, its production and consumption are inseparable. Hence, there is a scope

for customising the offering as per customer requirements. However, too much

customisation would compromise the standard delivery of the service and adversely

affect its quality. Hence, particular care has to be taken in designing the service

offering.

2. Pricing: Pricing of services is tougher than pricing of goods. While the latter can be

priced easily by taking into account the raw material costs; in case of services, attendant

costs such as labour and overhead costs - also need to be factored in. Thus, a restaurant

not only has to charge for the cost of the food served but also has to calculate a price for

the ambience provided. The final price for the service is then arrived at by including a

mark up for an adequate profit margin.

3. Place: Since service delivery is concurrent with its production and cannot be

stored or transported, the location of the service product assumes importance.

Service providers have to give special thought to where the service would be

provided. Thus, a fine dine restaurant is better located in a busy, upscale market

as against on the outskirts of a city. Similarly, a holiday resort is better situated in

the countryside away from the rush and noise of a city.

4. Promotion: Since a service offering can be easily replicated, promotion becomes

crucial in differentiating a service offering in the mind of the consumer. Thus,

service providers, offering identical services such as airlines or banks and

insurance companies, invest heavily in advertising their services. This is crucial in

attracting customers in a segment where the services providers have nearly

identical offerings.

Let us know look at the three new elements of the services marketing mix -people, process

and physical evidence - which are unique to the marketing of services.

5. People: People are a defining factor in a service delivery process, since a service

is inseparable from the person providing it. Thus, a restaurant is known as much

for its food as for the service provided by its staff. The same is true of banks and

department stores. Consequently, customer service training for staff has become a

top priority for many service organisations today.

6. Process: The process of service delivery is crucial since it ensures that the same

standard of service is repeatedly delivered to the customers. Therefore, most

companies have a service blueprint which provides the details of the service

delivery process, often going down to even defining the service script and the

greeting phrases to be used by the service staff.

7. Physical Evidence: Since services are intangible in nature, most service

providers strive to incorporate certain tangible elements into their offering to

enhance customer experience. Thus, there are hair salons that have well designed

waiting areas. Similarly, restaurants invest heavily in their interior design and

decorations to offer a tangible and unique experience to their guests.

MARKETING ENVIRONMENT

▪ Marketing activities are influenced by several factors inside and outside a

business firm. These factors or forces influencing marketing decision making are

collectively called Marketing environment.

▪ It comprises all those forces which have an impact on market and marketing

efforts of the enterprises

▪ According to Philip Kotler, marketing environment refers to “external

factors and forces that affect the company’s ability to develop and maintain

successful transactions and relationships with its target customers”

VARIOUS ENVIRONMENTAL FACTORS AFFECTING THE MARKETING FUNCTIONS.

▪ The marketing environment consists of a

▪ Microenvironment and

▪ Macro environments.

The microenvironment implies the factors and forces in the immediate

environment which affect the company’s ability to serve its market.

The factors are suppliers, Intermediaries, customer, competitors, and publics.

The macro environments consist of the larger social forces that affect the whole

microenvironment- demographic, economic, natural, technological, political-

legal, and socio-cultural forces.

MICROENVIRONMENTS

Marketing management’s job is to create attractive offers for target markets.

However, marketing managers cannot simply focus on the target markets needs. Their

success also will be affected by actors in the company’s microenvironment – other

company departments, suppliers, marketing intermediaries, customers, com0petitors, and

various publics as follows:

The company:

In designing marketing plans marketing management takes other company groups

into account – groups such as top management, finance, research and

development(R&D), purchasing, manufacturing, and accounting as follows:

➢ Top management sets the company‘s mission, objectives, broad strategies, and

policies. Marketing managers must make decisions within the plans made by top

management, and marketing plans must be approved by top management before

they can be implemented.

➢ Marketing managers also must work closely with other departments.

➢ Finance is concerned with finding and using funds to carry out the marketing

plans.

➢ The R&D department focuses on the problems of designing safe and attractive

products.

➢ Purchasing worry about getting suppliers and materials, where as manufacturing

is responsible for producing the desire quality and quantity of product.

Therefore, all of these departments have an impact on the marketing department’s

plans and actions.

Marketing intermediaries:

Marketing intermediaries are firms that help the company to promote, sell, and

distribute its goods to final buyers. They include,

➢ Middlemen-middlemen are distribution channel firms that help the company

to find customers or make sales to them.

➢ Physical distribution firms- it help the company to stock and move goods from

their points of origin to their destination.

➢ Marketing service agencies- they are the marketing research firms, advertising

agencies, media firms, and consulting firms that help the company to find target

market and promote its products to the right markets.

Customers:

The company must study its customer markets closely. The following figure

shows the five types of customer markets:

➢ Consumer markets- consist of individuals and households that buy goods and

services for personal consumptions.

➢ Business markets- buy goods and services for further processing or for use in

their production process.

➢ Reseller markets- buy goods and services to resell at a profit.

➢ Government markets- are made up of government agencies that buy goods and

services in order to produce public services or transfer the goods and services to others

who need them.

➢ International markets- consist of buyers in other countries, including consumers,

producers, resellers and governments.

Competitors:

The marketing concept states that if the company wants to be successful it must

satisfy the needs and wants of consumers.

The marketing manager has no or very little control over the activities of

competitors. He has to anticipate the activities of the competitors and should try to

act accordingly. This is because, competitors influence the choice of the company

to a greater extent as to the marketing strategies relating to selection of target

markets, suppliers, channels of distribution, etc.

Publics:

A public is any group that has an actual or potential interest in an organizations

ability to achieve its objectives.

MACROENVIRONMENT

The following figure shows the six major forces in the company’s macro

environment:

1.DEMOGRAPHIC ENVIRONMENT:

The term demography refers to the statically study of human population and its

distribution. Further, geographical distribution of population, density of

population, urban and rural population, characteristics, age distribution, sex

distribution, racial, caste, ethnic, religions and class distribution all will be useful

in making suitable marketing strategies for target consumers and a good market

share. Demographic data helps in preparing marketing plans, household

Company

Demographic forces

Economic

forces

Socio-Cultural

forces

Natural

forces

Political / Legal

Forces

Technological forces

marketing plans, age etc it includes, Worldwide population growth: The explosive

world population

2.ECONOMIC ENVIRONMENT:

People alone do not constitute market. They must have surplus income to

purchase goods. Markets require both purchasing power as well as people. The

economic environment includes the factors, which affect the purchasing power

and spending pattern of consumer. Hence, marketers should know well about

major trends in income and change in consumer spending patterns. Consumer’s

saving habit and debt pattern, and the consumers’ expenditure will change in the

income level influence consumer buying behaviour.

3.SOCIO-CULTURAL ENVIRONMENT:

Socio-cultural environment plays a major role in deciding the wants and needs of

the people, because their life-style patterns depends mainly on these forces.

Socio-cultural forces having the major implications on the marketing activities as

follows:

(i). Personal life styles and social values of individuals:

Personal life styles and social values of individual are the set of forces that have

significant marketing implications.

Examples of such changes are:

➢ From cash purchase to purchase on credit basis.

➢ From natural to artificial.

➢ From substandard goods to quality goods.

➢ From a husband dominated family to equality in husband-wife roles.

(ii). Social problems:

The second set of social forces encompasses broader, non-personal social

problems.

These forces have concern about:

➢ Environment pollution.

➢ Safety in products and occupations.

➢ Conservation of scare resources.

➢ Maintaining ethical and socially responsible position in marketing.

(iii). Consumerism:

Consumerism is considered as the third aspect of social environment. It was

started in mid-1960 as an outcome of the unrealized expectations and perceived

injustices faced by the consumers in the market place. As the movement was

found to be genuine, it attracted the attention of Government regulatory agencies

and now much legislation has been passed to protect the innocent consumers,

(eg). Standards of weights and Measures Act, Consumers Protection Act, etc.

4.POLITICAL AND LEGAL ENVIRONMENT:

Generally, speaking, every company’s conduct is influenced greatly by the

political-legal environment forces. The history of business legislation during the

past 100 years has been characterized by three legislative philosophies.

i) To prevent monopoly

ii) To protect the individual consumers

iii) To protect the society

5.TECHNOLOGICAL ENVIRONMENT:

Technological has a tremendous impact on our lives. Technological changes are

faster in the last twenty-five years. We do not know VCR, VCP, satellite

communication system, washing machine, personal computers, fax machines,

calculators, etc two decades ago. Besides, Audio cum Vedio CDs, E mail, E

commerce, Internet, etc., are the latest additions.

Major technological changes carry certain market impact such as,

▪ Starting of entirely new industries like computers.

▪ Altering or abolishing existing industries-cable TVs affect the

movie industries.

▪ Stimulating the markets for other products, which are not related to

the new technology.

DEFINITION OF MARKETING PLANNING

"Marketing Planning is the process of developing marketing plan incorporating overall

marketing objectives, strategies, and programs of actions designed to achieve these objectives."

Marketing Planning involves setting objectives and targets, and communicating these targets to

people responsible to achieve them. It also involves careful examination of all strategic issues,

including the business environment, the market itself, the corporate mission statement,

competitors, and organisational capabilities.

MARKETING PLANNING PROCESS

Marketing planning process is a series of stages that are usually followed in a sequence.

Organisations can adapt their marketing plan to suit the circumstances and their requirements.

Marketing planning process involves both the development of objectives and specifications for

how to achieve the objectives. Following are the steps involved in a marketing plan.

1) Mission

Mission is the reason for which an organisation exists. Mission statement is a straightforward

statement that shows why an organisation is in business, provides basic guidelines for further

planning, and establishes broad parameters for the future. Many of the useful mission statements

motivates staff and customers.

2) Corporate Objectives

Objectives are the set of goals to be achieved within a specified period of time. Corporate

objectives are most important goals the organisation as a whole wishes to achieve within a

specified period of time, say one or five years. All the departments of an organisation including

marketing department works in harmony to achieve the corporate objectives of the organisation.

3) Marketing Audit

Marketing audit helps in analysing and evaluating the marketing strategies, activities,

problems, goals, and results. Marketing audit is done to check all the aspects of business directly

related to marketing department.

4) SWOT Analysis

The information gathered through the marketing audit process is used in development of SWOT

Analysis. It is a look at organisation's marketing efforts, and its strengths, weaknesses,

opportunities, and threats related to marketing functions.

o Strengths and Weaknesses are factors inside the organisation that can be controlled by

the organisation. USP of a product can be the example of strength, whereas lack of

innovation can be the example of weakness.

o Opportunities and Threats are factors outside the organisation which are beyond the

direct control of an organisation. Festive season can be an example of opportunity to

make maximum sales, whereas increasing FDI in a nation can be the example of threat to

domestic players of that nation.

5) Marketing Assumptions

A good marketing plan is based on deep customer understanding and knowledge, but it is not

possible to know everything about the customer, so lot of different things are assumed about

customer.

6) Marketing Objectives and Strategies

After identification of opportunities and challenges, the next step is to develop marketing

objectives that indicate the end state to achieve. Marketing objective reflects what an

organisation can accomplish through marketing in the coming years. Objective identify the end

point to achieve. Marketing strategies are formed to achieve the marketing objectives. Marketing

strategies are formed to determine how to achieve those end points. Strategies are broad

statements of activities to be performed to achieve those end points.

7) Forecast the Expected Results

Marketing managers have to forecast the expected results. They have to project the future

numbers, characteristics, and trends in the target market. Without proper forecasting, the

marketing plan could have unrealistic goals or fall short on what is promised to deliver.

8) Create Alternative Plan

A alternate marketing plan is created and kept ready to be implement at the place of primary

marketing plan if the whole or some part of the primary marketing plan is dropped.

9) Marketing Budget

The marketing budget is the process of documenting the expected costs of the proposed

marketing plan. One common method to allocate marketing budgeting is based on a percentage

of revenue. Other methods are - comparative, all you can afford, and task method.

10) Implementation and Evaluation

At this stage the marketing team is ready to actually start putting their plans into action. This

may involve spending money on advertising, launching new products, interacting with potential

new customers, opening new retail outlets etc.

The marketing planning process is required to be evaluated and updated regular. Regular

evaluation of marketing efforts helps in achieving marketing goals.

o

DIFFERENT MARKETING STRATEGIES

Strategies based on the firm’s share in target market:

Based on the role they play in the target market, firms can be classified into four viz,

1. Market leader

2. Market challenger

3. Market follower

4. Market nichers.

This can be explained with the help of the following chart.

40%

Market leader

30%

Market challenger

20%

Market follower

10%

Market nichers

1.Market leader Strategies:

Most of the industries have one firm as the market leader. This firm has the largest share

in the market of the relevant product. In the above chart, the share of the leader firm is 40%

which is the highest of all the other firms. Usually, such a firm leads the other firms in prices

changes, product introductions, distribution coverage and promotional severity. Its dominance is

acknowledged by the other firms. Some of the examples for market leaders are Kodak for

photography, Procter & gamble for consumer-packaged goods, coco-cola for soft drinks, etc.

Product innovation may come along and affect the market leader. The leader might spend

conservatively, expecting hard times. In order to retain its current position in the market, it has to

take necessary action for the following.

1. Expansion of the total market demand.

2. Protection of its current market share.

3. Increase of its market share further.

II. Market Challenger Strategy:

Market challenger is a firm that aggressively tries to expand its market by attacking leaders.

They are:

• Price- Discount strategy: Offering a goods to the public at a price less than the prevailing

market price is called price-discount strategy.

• Cheaper goods strategy: It is offering an average or low-quality product at a much lowr

price. It is suitable for price sensitive consumers.

• Prestige goods strategy: It is a strategy of launching a higher quality product at a higher

price than the market leader.

• Product innovation strategy: the challenger might pursue product innovation to attack the

leader’s market position. The public often gains most from challenger strategies oriented

toward product innovation.

• Product Proliferation strategy: The challenger can attack the leader launching a large

product variety, thus giving buyers more choice.

• Improved service strategy: The challenger might try to offer new or better services to

customers.

• Distribution innovation strategy: A challenger might discover or develop a new channel

of distribution.

• Manufacturing-cost -reduction strategy: The challenger might pursue lower

manufacturing costs than its competitors through more efficient purchasing, lower labour

costs, and more modern production equipment. The company can use this lower costs to

price more aggressively to gain market share.

• Intensive Advertising promotion: Some challenger attacks the leader by increasing their

expenditure on advertising and promotion.

III. Market – Follower Strategy:

Market follower is nothing but a strategy of product imitation. After a new product has been

developed and introduced successfully in to the market, another firm can come along, copy or

improve the new product and launch it. Such a firm is called as market follower. They are:

• Cloner: The cloner imitates with enthusiasm the leader’s products, distribution,

advertising, and so on. He doesn’t originate anything but lives on the market leader’s

investments.

• Imitator: The imitator copies things from the leader but maintains differentiation in terms

of packaging, advertising, pricing, and so on.

• Adopter: The adopter takes the leader’s products and adapts and often improves them.

The adopter grows in to the future challenger.

IV. Market – Nicher Strategies:

A market nicher is a small firm that choose to operate in some specialized part of the market

that is unlikely to attract large firms.