Complete Marketing

Marketing Management

Prof.Srini.R.Srinivasan

KJSIMSR

1prof.Srini.R.Srinivasan-KJSIMSR

2

Flow of the Presentation• Introduction to Marketing Planning

• Marketing Planning

• MKIS and MR

• The Marketing Environment & Competitor Analysis

• Buyer Behaviour

• Strategic Development

• Product Decisions

• Pricing Decisions

• Channel & Distribution Tactics

• Promotion Decisions

• Implementation

• Segmentation

• Targeting

• Positioningprof.Srini.R.Srinivasan-KJSIMSR

3

Environmental Audit

Marketing Mix Marketing Plans

Portfolio Analysis Segmentation TargetingPositioning

Marketing and the Marketing Concept

Consumer Buyer Behaviour

Marketing Mix

Promotion

Product

Price

Place/Channel

Marketing Environmen

t

PEST Analysis

SWOT Analysis

Five Forces Analysis

Ansoff's Matrix

Boston Matrix

Bowman's Strategy Clock

Porter's Generic Strategies

Objectives

Strategies

Marketing Plans

Control

Internal Marketing

Segmentation

Targeting

Positioning

prof.Srini.R.Srinivasan-KJSIMSR

http://www.marketingteacher.com/Lessons/lesson_what_is_marketing.htm

http://www.marketingteacher.com/Lessons/lesson_what_is_marketing.htm

http://www.marketingteacher.com/Lessons/lesson_consumer_buying_behaviour.htm

http://www.marketingteacher.com/Lessons/lesson_consumer_buying_behaviour.htm

http://www.marketingteacher.com/Lessons/lesson_marketing_mix.htm

http://www.marketingteacher.com/Lessons/lesson_promotion.htm

http://www.marketingteacher.com/Lessons/lesson_plc.htm

http://www.marketingteacher.com/Lessons/lesson_pricing.htm

http://www.marketingteacher.com/Lessons/lesson_place.htm

http://www.marketingteacher.com/Lessons/lesson_marketing_environment.htm



http://www.marketingteacher.com/Lessons/lesson_PEST.htm

http://www.marketingteacher.com/Lessons/lesson_swot.htm

http://www.marketingteacher.com/Lessons/lesson_fivefoces.htm

http://www.marketingteacher.com/Lessons/lesson_ansoff.htm

http://www.marketingteacher.com/Lessons/lesson_boston_%20matrix.htm

http://www.marketingteacher.com/Lessons/lesson_bowman.htm

http://www.marketingteacher.com/Lessons/lesson_bowman.htm

http://www.marketingteacher.com/Lessons/lesson_generic_strategies.htm

http://www.marketingteacher.com/Lessons/lesson_generic_strategies.htm

http://www.marketingteacher.com/Lessons/lesson_objectives.htm

http://www.marketingteacher.com/Lessons/strategy_page.htm

http://www.marketingteacher.com/Lessons/lesson_marketing_plan.htm

http://www.marketingteacher.com/Lessons/lesson_marketing_plan.htm

http://www.marketingteacher.com/Lessons/lesson_control.htm

http://www.marketingteacher.com/Lessons/lesson_internal_marketing.htm

http://www.marketingteacher.com/Lessons/lesson_internal_marketing.htm

http://www.marketingteacher.com/Lessons/lesson_segmentation.htm

http://www.marketingteacher.com/Lessons/lesson_targeting.htm

http://www.marketingteacher.com/Lessons/lesson_positioning.htm

4

Introduction to Marketing Planning


5

Definitions of marketing

‘Marketing is the management process that identifies, anticipates and satisfies customer

requirements profitably’

The Chartered Institute of Marketing


6

‘The right product, in the right place, at the right time, and at the

right price’ Adcock et al


7

‘Marketing is the human activity directed at satisfying human needs

and wants through an exchange process’

Kotler 1980


8

‘Marketing is a social and managerial process by which individuals and groups obtain

what they want and need through creating, offering and exchanging

products of value with others’Kotler 1991


9

Implications of marketing

• Who are our existing / potential customers?

• What are their current / future needs?

• How can we satisfy these needs?• Can we offer a product/ service that the customer

would value?

• Can we communicate with our customers?

• Can we deliver a competitive product of service?

• Why should customers buy from us?


10

The marketing concept

• choosing and targeting appropriate customers

• positioning your offering

• interacting with those customers

• controlling the marketing effort

• continuity of performance


11

Successful marketing requires:

• Profitable

• Offensive (rather than defensive)

• Integrated

• Strategic (is future orientated)

• Effective (gets results) Hugh Davidson 1972


12

Stage One - Situation Analysis • Marketing environment • Laws and regulations • Politics • The current state of technology • Economic conditions • Sociocultural aspects • Demand trends • Media availability • Stakeholder interests • Marketing plans and campaigns of competitors • Internal factors such as your own experience and resource availability • Also see tools for internal/external audit:

• SWOT • PEST

• Porter's Five Forces• Marketing Environment


13

Stage Two - Set marketing SMART Objectives

• Specific - Be precise about what you are going to achieve • Measurable - Quantify you objectives • Achievable - Are you attempting too much? • Realistic - Do you have the resource to make the objective happen

(men, money, machines, materials, minutes)? • Timed - State when you will achieve the objective (within a month?

By February 2010?)

If you don't make your objective SMART, it will be too vague and will not be realized. Remember that the rest of the plan hinges on the objective. If it is not correct, the plan will fail.


14

Stage Three - Describe your target market.

• Which segment? How will we target the segment? How should we position within the segment?

• Why this segment and not a different one? (This will focus the mind).

• Define the segment in terms of demographics and lifestyle. Show how you intend to 'position' your product or service within that segment. Use other tools to assist in strategic marketing decisions such as Boston Matrix , Ansoff's Matrix , Bowmans Strategy Clock, Porter's Competitive Strategies, etc.


15

Stage Four - Marketing Tactics • Convert the strategy into the marketing mix (also known as

the 4Ps). These are your marketing tactics. • Price Will you cost plus, skim, match the competition or

penetrate the market? • Place Will you market direct, use agents or distributors, etc? • Product Sold individually, as part of a bundle, in bulk, etc? • Promotion Which media will you use? e.g sponsorship, radio

advertising, sales force, point-of-sale, etc? Think of the mix elements as the ingredients of a 'cake mix'. You have eggs, milk, butter, and flour. However, if you alter the amount of each ingredient, you will influence the type of cake that you finish with.


16

Stage Five - Control

• Remember that there is no planning without control. Control is vital.

• Start-up costs• Monthly budgets • Sales figure • Market share data • Consider the cycle of control • Finally, write a short summary (or synopsis) which is placed at

the front of the plan. This will help others to get acquainted with the plan without having to spend time reading it all. Place all supporting information into an appendix at the back of the plan.


17

Marketing management process

• Analysis/Audit - where are we now?

• Objectives - where do we want to be?

• Strategies - which way is best?

• Tactics - how do we get there?

• (Implementation - Getting there!)

• Control - Ensuring arrival


18

Why is marketing planning necessary?

• Systematic futuristic thinking by management

• better co-ordination of a company’s efforts

• development of performance standards for control

• sharpening of objectives and policies

• better prepare for sudden developments


19

Definitions of marketing

‘Marketing is the management process that identifies, anticipates and satisfies customer

requirements profitably’

The Chartered Institute of Marketing


20

‘The right product, in the right place, at the right time, and at the

right price’ Adcock et al


21

‘Marketing is the human activity directed at satisfying human needs

and wants through an exchange process’

Kotler 1980


22

‘Marketing is a social and managerial process by which individuals and groups obtain

what they want and need through creating, offering and exchanging

products of value with others’Kotler 1991


23

Marketing Planning


24

Implications of marketing

• Who are our existing / potential customers?

• What are their current / future needs?

• How can we satisfy these needs?• Can we offer a product/ service that the customer

would value?

• Can we communicate with our customers?

• Can we deliver a competitive product of service?

• Why should customers buy from us?


25

The marketing concept

• choosing and targeting appropriate customers

• positioning your offering

• interacting with those customers

• controlling the marketing effort

• continuity of performance


26

Successful marketing requires:

• Profitable

• Offensive (rather than defensive)

• Integrated

• Strategic (is future orientated)

• Effective (gets results) Hugh Davidson 1972


27

Stage One - Situation Analysis • Marketing environment • Laws and regulations • Politics • The current state of technology • Economic conditions • Sociocultural aspects • Demand trends • Media availability • Stakeholder interests • Marketing plans and campaigns of competitors • Internal factors such as your own experience and resource availability • Also see tools for internal/external audit:

• SWOT • PEST

• Porter's Five Forces• Marketing Environment


28

Stage Two - Set marketing SMART objectives

• Specific - Be precise about what you are going to achieve • Measurable - Quantify you objectives • Achievable - Are you attempting too much? • Realistic - Do you have the resource to make the objective happen

(men, money, machines, materials, minutes)? • Timed - State when you will achieve the objective (within a month?

By February 2010?)

If you don't make your objective SMART, it will be too vague and will not be realized. Remember that the rest of the plan hinges on the objective. If it is not correct, the plan will fail.


29

Stage Three - Describe your target market.

• Which segment? How will we target the segment? How should we position within the segment?

• Why this segment and not a different one? (This will focus the mind).

• Define the segment in terms of demographics and lifestyle. Show how you intend to 'position' your product or service within that segment. Use other tools to assist in strategic marketing decisions such as Boston Matrix , Ansoff's Matrix , Bowmans Strategy Clock, Porter's Competitive Strategies, etc.


30

Stage Four - Marketing Tactics • Convert the strategy into the marketing mix (also known as

the 4Ps). These are your marketing tactics. • Price Will you cost plus, skim, match the competition or

penetrate the market? • Place Will you market direct, use agents or distributors, etc? • Product Sold individually, as part of a bundle, in bulk, etc? • Promotion Which media will you use? e.g sponsorship, radio

advertising, sales force, point-of-sale, etc? Think of the mix elements as the ingredients of a 'cake mix'. You have eggs, milk, butter, and flour. However, if you alter the amount of each ingredient, you will influence the type of cake that you finish with.


31

Stage Five - Control

• Remember that there is no planning without control. Control is vital.

• Start-up costs• Monthly budgets • Sales figure • Market share data • Consider the cycle of control • Finally, write a short summary (or synopsis) which is placed at

the front of the plan. This will help others to get acquainted with the plan without having to spend time reading it all. Place all supporting information into an appendix at the back of the plan.


32

Marketing management process

• Analysis/Audit - where are we now?

• Objectives - where do we want to be?

• Strategies - which way is best?

• Tactics - how do we get there?

• (Implementation - Getting there!)

• Control - Ensuring arrival


33

Why is marketing planning necessary?

• Systematic futuristic thinking by management

• better co-ordination of a company’s efforts

• development of performance standards for control

• sharpening of objectives and policies

• better prepare for sudden developments


34

MKIS & MR


35

Marketing Information Systems

• Marketing Research• What is Marketing Research?

• Process

• Terminology

• Techniques

• MKIS - Marketing Information Systems • What is MKIS

• Components of an electronic MKIS


36

Marketing Research

‘the systematic gathering, recording and analysing of data about problems relating to

the marketing of goods and services’

American Marketing Association


37

The most basic marketing question is:“What do our customers or potential customers really value?”

A well researched and considered answer to that question provides The foundation for the rest of the marketing program: segmentation &Targetting, new product development, product management, brand Management, channel management, mktg. Communications and evenThe structures of the mktg organisation.


38

Market Research Vs. Marketing Research

Market research and marketing research are often confused. 'Market' research is simply research into a specific market. It is a very narrow concept. 'Marketing' research is much broader. It not only includes 'market' research, but also areas such as research into new products, or modes of distribution such as via the Internet. Here are a couple of definitions:


39

The Marketing Research ProcessSet objectives

Define research Problem

Assess the value of the research

Construct a research proposal

Specify data collection method

Specify techniques of measurement

Select the sample

Data collection

Analysis of results

Present in a final report


40

Terminology of Marketing Research

• Primary data - collected firsthand• Secondary data - already exists, desk

research• Quantitative research - statistical basis• Qualitative research - subjective and

personal• sampling - studying part of a ‘population’ to

learn about the whole


41

Marketing Research Techniques• Interviews

• face-to-face

• telephone

• postal questionnaire

• Mystery Shopping• Attitude measurement

• cognitive component (know/believe about an act/object)

• affective component (feel about an act/object)

• conative component (behave towards an object or act)


42

• Likert scale• strongly agree• agree• neither agree nor disagree• disagree• strongly disagree

• Semantic differential scales - differences between words e.g. practical v impractical

• Projective techniques• sentence completion• psychodrama (yourself as a product)• friendly martian (what someone else might do)


43

• Group discussion and focus group• Product Tests• Use of Internet• Postal research questionnaires• Diary panels - sources of continuous data• In-home scanning - hand-held light pen to scan

barcodes• Telephone research• Observation

• home audit• direct observation

• In-store testing


44

Secondary Research

Secondary (or desk) research uses data that has been collected for other objectives than your own i.e. it already exists. There are a number of such sources available to the marketer, and the following list is by no means conclusive:


45

• Trade associations National and local press Industry magazines National/ international governments Web sites Informal contacts Trade directories Published company accounts Business libraries Professional institutes and organisations Omnibus surveys Previously gathered marketing research Census data Public records


46

What is MKIS?

‘MKIS (MIS) is a set of procedures and methods for the regular, planned collection, analysis and presentation of information for

use in marketing decisions’

American Marketing Association


47

The components of a computerised MKIS

Model Bank

Data Bank

StatisticalBank

MKISDisplay

unitMarketingManager


48

The components of a computerised MKIS

• Data bank - raw data e.g historical sales data, secondary data

• Statistical bank - programmes to carry-out sales forecasts, spending projections

• A model bank - stores marketing models e.g Ansoff’s matrix, Boston Matrix

• Display unit - VDU and keyboard


49

The Marketing Environment & Competitor Analysis


50

The Marketing Environment and Competitor Analysis

• SWOT analysis

• PEST analysis

• Five forces analysis


51

SWOT analysis

• Strengths (internal)

• Weaknesses (internal)

• Opportunities (external)

• Threats (external)


52

INTERNAL

EXTERNAL

PAST FOCUS

FUTURE ORIENTED


53

PEST analysis

• Political factors

• Economic factors

• Socio-cultural factors

• Technological factors


54

The Model


55

Political/legal

• Monopolies legislation

• Environmental protection laws

• Taxation policy

• Employment laws

• Government policy

• Legislation

• Others?prof.Srini.R.Srinivasan-KJSIMSR

56

Economic Factors

• Interest Rates

• Inflation

• Employment

• Disposable income

• Business cycles

• Energy availability and cost

• Others?prof.Srini.R.Srinivasan-KJSIMSR

57

Sociocultural factors

• Religion• Demographics• Distribution of income• Social mobility• Lifestyle changes• Consumerism• Levels of education• Others?


58

Technological

• New discoveries and innovations• Speed of technology transfer• Rates of obsolescence• Internet• Information technology• Others?


59

Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.

Threat ofThreat ofsubstitutessubstitutes

Potentialentrants

Threat ofThreat ofentrantsentrants

Suppliers

BargainingBargaining powerpower

Substitutes

Buyers

BargainingBargaining powerpower

COMPETITIVE RIVALRY

Five forces analysis

Complementors

As Suggested byAndrew GroveEx-CEO Intel Corporation“Only The Paranoid Survive”


60

Five Forces Analysis: Key Questions and Implications

• What are the key forces at work in the competitive environment?

• Are there underlying forces driving competitive forces?

• Will competitive forces change?• What are the strengths and weaknesses of

competitors in relation to the competitive forces?• Can competitive strategy influence competitive forces

(eg by building barriers to entry or reducing competitive rivalry)?


61

The MODEL


62

Volume Vs. Margin Analysis

Normal Profits

Normal ProfitsSubnormal Profits

Superprofits

Mar

gins

Low

Low

Volume

High

High


63

The threat of entry.

• Economies of scale e.g. the benefits associated with bulk purchasing.• The high cost of entry e.g. how much will it cost for the latest

technology?• Ease of access to distribution channels e.g. Do our competitors have

the distribution channels sewn up?• Cost advantages not related to the size of the company e.g.

personal contacts or knowledge that larger companies do not own or learning curve effects.

• Will competitors retaliate? • Government action e.g. will new laws be introduced that will weaken

our competitive position?• How important is differentiation? e.g. The Champagne brand cannot

be copied. This desensitises the influence of the environment.


64

The power of buyers

• This is high where there a few, large players in a market e.g. the large grocery chains.

• If there are a large number of undifferentiated, small suppliers e.g. small farming businesses supplying the large grocery chains.

• The cost of switching between suppliers is low e.g. from one fleet supplier of trucks to another.


65

The power of suppliers• The power of suppliers tends to be a reversal of the power of

buyers. • Where the switching costs are high e.g. Switching from one

software supplier to another. • Power is high where the brand is powerful e.g. Cadillac,

Pizza Hut, Microsoft. • There is a possibility of the supplier integrating forward e.g.

Brewers buying bars. • Customers are fragmented (not in clusters) so that they have

little bargaining power e.g. Gas/Petrol stations in remote places.


66

The threat of substitutes

• Where there is product-for-product substitution e.g. email for fax Where there is substitution of need e.g. better toothpaste reduces the need for dentists.

• Where there is generic substitution (competing for the currency in your pocket) e.g. Video suppliers compete with travel companies.

• We could always do without e.g. cigarettes.


67

Competitive Rivalry

• This is most likely to be high where entry is likely; there is the threat of substitute products, and suppliers and buyers in the market attempt to control. This is why it is always seen in the center of the diagram.


68

Consumer Behaviour


69Descriptive Model prof.Srini.R.Srinivasan-KJSIMSR

70

Buyer Behaviour

• Dominant Family Purchase - Cozenza 1985• Demographic Factors• The Consumer Buying Process• Maslow’s hierarchy of needs• UK socioeconomic classification scheme• Types of buyer behaviour• The Buying Decision Process• Organisational Buyer Behaviour


71

Dominant Family Purchase - Cozenza 1985

PRODUCT DOMINANT DECISION

MAKER

TYPICAL DECISION

Women’s casualclothing

Wife Price, style

Vacations Syncratic (both) Whether to go, where

Men’s casual clothing Husband Type, price, style

Life insurance Husband Company, coverage

Homeowner’sinsurance

Husband Company, coverage

Household appliances Wife Style, brand, price


72

Demographic Factors• Age• Stage in family life cycle• Occupation• Economic circumstances• Lifestyle• social influence variables

• family background• reference groups• roles and status


73

The Consumer Buying Process

Consumer

Purchase Decisions

Product Choice

Location Choice

Brand Choice

Other Choices

Psychological Inputs

Culture

Attitude

Learning

Perception

Based on Cohen (1991)

Marketing Inputs

Product

Price

Promotion

Place


74

Maslow’s Hierarchy of Needs

Physiological

Safety

Social

Esteem

Self Actualisation


75

UK socioeconomic classification scheme

Class name Social status Occupation of head of household

% of population

A Upper middle Higher managerial,administrative or professional

3

B Middle Intermediate managerial,administrative or professional

14

C1 Lower middle Supervisors or clerical, juniormanagerial, administrative or

professional27

C2 Skilled working Skilled manual workers 25

D Working Semiskilled and unskilledworkers

19

E Those at lowest levels ofsubsistence

Pensioners, widows, casual orlower-grade workers

12


76

Types of buyer behaviour

• Complex buyer behaviour e.g. Intel Pentium Processor

• Dissonance-reducing behaviour (brand reduces after-sales discomfort)

• Habitual buying behaviour e.g. salt - little difference

• variety seeking behaviour - significant brand differences e.g soap powder


77

The Buying Decision Process

• recognition of the need e.g a new PC

• choice of involvement level (time and effort justified) e.g. two week ends

• identification of alternatives e.g. Dell, PC World

• evaluation of alternatives I.e. price, customer service, software support, printer/scanner package

• decision - choice made e.g Epsom • action e.g buy Epsom model from

Comet• post-purchase behaviour I.e. use,

breakdowns, etc


78

Consumer Spending Vs Age


79

Organisational Buyer Behaviour

‘The decision-making process by which formal organisations establish the need for

purchased products and services, and identify, evaluate, and choose among

alternative brands and suppliers’

Kotler and Armstrong 1989


80

Characteristics of organisational buyer behaviour

• Organisation purpose - Goodyear Tyres• Derived demand - follows cars and lorries• Concentrated purchasing - stockholdings of rubber• Direct dealings - large purchaser of basic rubber -

no intermediaries• Specialist activities - learns about the product• Multiple purchase influences - DMU - Decision

making unit


81

Strategic Development


82

Strategic Development

• Product Life Cycle (Revisited in ‘Product’)

• Bowman’s Competitive Strategy Options

• New Product Development (NPD)


83

Initial Customer Segments


84

PLC Characteristics



86

Five stages of the PLC

• Product development - sales are zero, investment costs are high

• Introduction - profits do not exist, heavy expense of product introduction

• Growth - rapid market acceptance and increasing profits

• Maturity - slowdown in sales growth. Profits level-off. Increase outlay to compete


87

• Decline - sales fall-off and profits drop

• Descriptive Model


88

Demand Life Cycle

Time

Sal

es Need

T2

T1


89Time

Sal

es

Need

Product-Form Life Cycles

P1

P2

P3


90

Product Has Life Cycle….

• Limited life

• Pass through distinct stages

• Profits rise/fall with stages

• Each stage requires different marketing resource strategies*---------

Also financial, manufacturing, purchasing and human resource.


91

Product Life Cycle Stages

Introduction: Slow sales, profits nil

Growth: Market acceptance, profits improve

Maturity: Sales Slowdown, Profits stabilize or decline

Decline: Sales/ profits show downward drift


92

Product Life Cycle

Time

Sal

es &

Pro

fits

($

$$)

Profit

Sales


93

Other Shapes of the PLC

Time

Sal

es V

olu

me

Time

Sal

es V

olu

me

Growth-slump-maturity

Cycle-recycle pattern


94

Other Shapes of the PLC

Time

Sal

es V

olu

me

Scalloped Pattern


95

Style, Fashion & Fad Life Cycles

Time

Sal

es V

olu

me

Style

Time

Sal

es V

olu

me

Fashion


96

Time

Sal

es V

olu

me

Fad

Style, Fashion & Fad Life Cycles


97

Marketing Strategies Throughout The PLC

Introduction

Marketing Pioneers

• Advantages

• Risks

Growth

Sustaining Sales

• Improve Quality/Add features

• New models/Flanker Brands

• Lower prices to attract next layer of $$$ sensitive buyers


98

Marketing Strategies Throughout The PLC

Maturity Stage

Market Modification

Volume = # brand users x usage rate

# of brand users

• Convert non-users

• Enter new market segments

• Win competitors’ customers

Volume

• More frequent use

• More usage per occasion

• New & more varied usesprof.Srini.R.Srinivasan-KJSIMSR

99

Marketing Strategies ThroughoutThe PLC

Maturity

Product Modification

• Quality & Feature Improvement

Marketing Mix Modification

Prices, Distribution, Advertising

Sales Promotion, Personal Selling, Services

Decline

• Increase Firm’s Investment, Maintain

• Decrease investment selectively

• Harvest

• Divestprof.Srini.R.Srinivasan-KJSIMSR

100

PLC exercise

• The Ford Escort

• The Mini Cooper

• The Internet Phone

• Cadbury’s Fuse

• The Boeing 747

• The Millennium Dome

• KIT KATprof.Srini.R.Srinivasan-KJSIMSR

101

Family Life Cycle


102

Source: Based on the work of Cliff Bowman. See C.Bowman and D.Faulkner. Competitive and Corporate Strategy, Irwin, 1996.

Bowman’s Strategy Clock


103

•1 Low price/low added value Likely to be segment specific

•2 Low price Risk of price war and low• margins/need to be cost leader

•3 Hybrid Low cost base and reinvestment in• low price and differentiation

•4 Differentiation• (a) Without price premium Perceived added value by user,• yielding market share benefits• (b) With price premium Perceived added value sufficient to• bear price premium

The Strategy Clock: Bowman’s Competitive Strategy Options


104

• 5 Focused differentiation Perceived added value to a particular segment,

warranting price premium

• 6 Increased price/standard

Higher margins if competitors do not value follow/risk of

losing market share

• 7 Increased price/low value

Only feasible in monopoly situation

• 8 Low value/standard price

Loss of market share


105

Generic Strategies


106

Generic Strategies And Five Forces Model

Industry

Force

Cost Leadership Differentiation Focus

EntryBarriers

BuyerPower

SupplierPower

Threat of

Substitutes

RivalryBetter able to compete on price.

Brand loyalty to keep customers from rivals.

Rivals cannot meet differentiation-focused customer needs.

Generic Strategies

Ability to cut price in retaliation discourages potential entrants.

Customer loyalty can discourage potential entrants.

Focusing develops core competencies that can act as an entry barrier.

Can use low price to defend against substitutes.

Customer's become attached to differentiating attributes, reducing threat of substitutes.

Specialized products & core competency protect against substitutes.

Ability to offer lower price to powerful buyers.

Large buyers have less power to negotiate because of

Large buyers have less power to negotiate because of

Better insulated from powerful suppliers.

Better able to pass on supplier price increases to customers.

Suppliers have power because of low volumes, but a differentiation-


107

1. Cost Leadership • The low cost leader in any market gains competitive

advantage from being able to many to produce at the lowest cost. Factories are built and maintained, labor is recruited and trained to deliver the lowest possible costs of production. ‘cost advantage’ is the focus. Costs are shaved off every element of the value chain. Products tend to be ‘no frills.’ However, low cost does not always lead to low price. Producers could price at competitive parity, exploiting the benefits of a bigger margin than competitors. Some organization, such as Toyota, are very good not only at producing high quality autos at a low price, but have the brand and marketing skills to use a premium pricing policy.


108

2. Differentiation • Differentiated goods and services satisfy the needs of

customers through a sustainable competitive advantage. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. The benefits of differentiation require producers to segment markets in order to target goods and services at specific segments, generating a higher than average price. For example, British Airways differentiates its service. The differentiating organization will incur additional costs in creating their competitive advantage. These costs must be offset by the increase in revenue generated by sales. Costs must be recovered. There is also the chance that any differentiation could be copied by competitors. Therefore there is always an incentive to innovated and continuously improve.


109

3. Focus or Niche strategy • The focus strategy is also known as a ‘niche’ strategy.

Where an organization can afford neither a wide scope cost leadership nor a wide scope differentiation strategy, a niche strategy could be more suitable. Here an organization focuses effort and resources on a narrow, defined segment of a market. Competitive advantage is generated specifically for the niche. A niche strategy is often used by smaller firms. A company could use either a cost focus or a differentiation focus. With a cost focus a firm aims at being the lowest cost producer in that niche or segment. With a differentiation focus a firm creates competitive advantage through differentiation within the niche or segment. There are potentially problems with the niche approach. Small, specialist niches could disappear in the long term. Cost focus is unachievable with an industry depending upon economies of scale e.g. telecommunications. prof.Srini.R.Srinivasan-KJSIMSR

110

The danger of being ‘stuck in the middle.’

• Make sure that you select one generic strategy. It is argued that if you select one or more approaches, and then fail to achieve them, that your organization gets stuck in the middle without a competitive advantage.


111

New- Product Development Process

• New product strategy

• Idea generation

• Idea screening

• Concept development and testing

• Marketing strategy

• Business analysis

• Product development

• Test Marketing

• Commercialisation


112

Product Decisions


113

Products Decisions

• Product and Service Classification System

• The Product Life Cycle

• Introduction to product matrices

• Boston Matrix (Growth/Share)

• Ansoff’s Matrix (Product Market)


114

Product and Service Classification System

• Convenience goods - little effort, relatively inexpensive

• Shopping goods - e.g ‘white goods’, DIY equipment, more expensive, infrequent

• Speciality goods - extensive search e.g Jewellery, gourmet food

• Unsought goods - e.g. double glazing,


115

• Industrial goods

• Installations - ‘speciality’ goods of industrial markets - plant and machinery

• Accessories - maintenance and office equipment

• Raw materials

• components

• Business to business e.g. consultants, accountants


116

The Product Life Cycle


117

The Boston Matrix (Growth/Share Matrix) Market Share


118

Market Share

MarketGrowth

High

Low

High Low

FUSEMaverickMiniature Heroes

KIT KATMARS BAR

TOPICBOUNTY

The Boston Matrix - Chocolate Bars


119

Diversification

Market Penetration

Market Development

Product Development

Existing Markets New Markets

Exi

stin

g P

rod

uct

sN

ew P

rod

uct

s

Ansoff’s Matrix (Product/Market Matrix)


120

Diversification -related or unrelated

E.g. Realignments of the marketing mix

E.g. Geographical expansion

Same outlets and sales strategy - new product

Existing Markets New Markets

Exi

stin

g P

rod

uct

sN

ew P

rod

uct

s

Ansoff’s Matrix (Product/Market Matrix)


121

Market Penetration

• Here we market our existing products to our existing customers. This means increasing our revenue by, for example, promoting the product, repositioning the brand, and so on. However, the product is not altered and we do not seek any new customers.


122

Risk Vs Control Graph of International Market Penetration Strategies

DIRECT EXPORTING

Distributors

Agents

Direct Marketing

Franchising

Mgmt. Controls

MANUFACTURING

Own Subsidiary

Acquisition

Assembly

JOINT VENTURES

Strategic Alliances

INDIRECT EXPORTING

Piggybacking

Trading Cos

Export Mgmt Cos

Domestic Purchasing

Risk

Con

trol


123

Market Development

• Here we market our existing product range in a new market. This means that the product remains the same, but it is marketed to a new audience. Exporting the product, or marketing it in a new region, are examples of market development.


124

Product Development

• This is a new product to be marketed to our existing customers. Here we develop and innovate new product offerings to replace existing ones. Such products are then marketed to our existing customers. This often happens with the auto markets where existing models are updated or replaced and then marketed to existing customers.


125

Diversification

• This is where we market completely new products to new customers. There are two types of diversification, namely related and unrelated diversification. Related diversification means that we remain in a market or industry with which we are familiar. For example, a soup manufacturer diversifies into cake manufacture (i.e. the food industry). Unrelated diversification is where we have no previous industry nor market experience. For example a soup manufacturer invests in the rail business.


126

Products Decisions

• Product and Service Classification System?

• The Product Life Cycle stages?

• Growth/Share?

• Product Market?


127

Pricing Decisions


128

Pricing Decisions

• Pricing strategies

• Pricing exercise• Ten ways to ‘increase’ prices

without increasing price - Winkler


129

Low High

Low

High

EconomyStrategye.g. Tesco spaghetti

Penetratione.g. Telewest cable phones

Skimminge.g. New film or album

Premiume.g. BA first class

Price

Quality


130

Pricing strategies• Premium pricing

• Uses a high price, but gives a good product/service exchange e.g. Concorde, The Ritz Hotel

• Penetration pricing• offers low price to gain market share - then

increases price

• e.g. France Telecom - to attract new corporate clients (or Telewest cable)

• Economy pricing• placed at ‘no frills’, low price

• e.g. Soups, spaghetti, beans - ‘economy’ brands


131

• Price skimming• where prices are high - usually during introduction

• e.g new albums or films on release

• ultimately prices will reduce to the ‘parity’

• Psychological pricing• to get a customer to respond on an emotional, rather than

rational basis

• .e.g 99p not £1.01 ‘price point perspective

• Product line pricing• rationale of a product range

• e.g. MARS 32p, Four-pack 99p, Bite-size £1.29

• Pricing variations• ‘off-peak’ pricing, early booking discounts,etc

• e.g Grundig offers a ‘cash back’ incentive for expensive goods


132

• Optional product-pricing• e.g. optional extras - BMW famously under-

equipped

• Captive product pricing• products that complement others• e.g Gillette razors (low price) and blades (high

price)

• Product-bundle pricing• sellers combine several products at the same price• e.g software, books, CDs.

• Promotional pricing• BOGOF e.g. toothpaste, soups, etc


133

• Geographical pricing• different prices for customers in different parts of

the world

• e.g.Include shipping costs, or place on PLC

• Value pricing• usually during difficult economic conditions

• e.g. Value menus at McDonalds

In deciding which pricing strategy to use must consider the Elasticity of demand for the product


134

Ten ways to ‘increase’ prices without increasing price - Winkler

• Revise the discount structure

• Change the minimum order size

• Charge for delivery and special services

• Invoice for repairs on serviced equipment

• Charge for engineering, installation

• Charge for overtime on rushed orders

• Collect interest on overdue accountsprof.Srini.R.Srinivasan-KJSIMSR

135

• Produce less of the lower margin models in the line

• Write penalty clauses into contracts

• Change the physical characteristics of the product


136

Channel & Distribution

Tacticsprof.Srini.R.Srinivasan-KJSIMSR

137

Channel and Distribution Tactics• Bucklin’s definition of distribution• Today’s system of exchange• Channel intermediaries• Six basic channel decisions• Selection consideration• Potential Influence Strategies - Frazier and Sheth

(1989)• Frequencies of use of influence strategies - Frazier

and Summers (1984)


138

A channel of distribution comprises a set of institutions

which perform all of the activities utilised to move a product and its title from

production to consumption

Bucklin - Theory of Distribution Channel Structure (1966)


139

Negotiation

Promotion

Contact

Transporting and storing

Financing

Packaging

Money

Goods

Today’s system of exchangeP

rod

uce

rsU

sers


140

Channel intermediaries - Wholesalers

• Break down ‘bulk’• buys from producers and sell small quantities to

retailers• Provides storage facilities• reduces contact cost between producer and

consumer

• Wholesaler takes some of the marketing responsibility e.g sales force, promotions


141

Channel intermediaries - Agents

• Mainly used in international markets

• Commission agent - does not take title of the goods. Secures orders.

• Stockist agent - hold ‘consignment’ stock

• Control is difficult due to cultural differences

• Training, motivation, etc are expensive


142

Channel intermediaries - Retailer

• Much stronger personal relationship with the consumer

• Hold a variety of products

• Offer consumers credit

• Promote and merchandise products

• Price the final product

• Build retailer ‘brand’ in the high street


143

Channel intermediaries - Internet

• Sell to a geographically disperse market• Able to target and focus on specific segments• Relatively low set-up costs• Use of e-commerce technology (for payment,

shopping software, etc)• Paradigm shift in commerce and consumption


144

Six basic channel decisions

• Direct or indirect channels

• Single or multiple channels

• Length of channel

• Types of intermediaries

• Number of intermediaries at each level

• Which intermediaries? Avoid intrachannel conflict


145

Selection consideration• Market segment - must know the specific segment and

target customer• Changes during plc - different channels are exploited at

various stages of plc• Producer-distributor fit - their policies, strategies and

image• Qualification assessment - experience and track record

must be established• Distributor training and support• The width and depth of distribution networks will also

decide other strategies like:– How much of branding– How large a production facility to employ– Where to set up the production facility so as to be able to supply to

my target market


146

Potential Influence Strategies-Frazier and Sheth (1989)

• Indirect influence strategies - information is merely exchanged with channel member personnel

• Direct unmediated strategies - consequences of a poor response from the market are stressed

• Reward and punishment strategies - given to channel members and their firms


147

• Direct unweighted strategy or request - producer’s wishes are communicated . No consequences are applied or mentioned

• Direct mediated strategies - specific action is requested and consequences of rejection are stressed– e.g.1 control of retail pricing– e.g.2 minimum order size– e.g.3 salesperson training– e.g.4 physical layout of store– e.g. 5 territorial and customer restrictions


148

Meanuse

Mostfrequentlyused

Tied formostfrequentlyused

Neverused

Informationexchange

49% 62% 6% 8%

Requests 27 13 7 11Recommendations

19 8 7 23

Promises 15 4 9 37Threats 10 1 5 53Legalisticpleas

6 0 3 59

Frazier and Summers (1984)

Frequencies of use of Influence Strategies


149

Promotion Decisions


150

Promotions Decisions

• Elements in the communication process

• Promotions mix

• The promotions message

• Executions style

• Media choice?

• Promotional objectives


151

MediaMessageSender Encoding

ResponseFeedback

Noise

Decoding Receiver

Elements in the Communication Process


152

• Sender - party sending the message

• Encoding - message in symbolic form

• Message - word, pictures and symbols that the sender transmits

• Media - the communication channel e.g radio

• Decoding - receiver assigns meaning to symbols encoded by the sender


153

• Response - reaction of the receiver after being exposed to the to the message

• Feedback - the part of the receiver’s response after being communicated to the sender

• Noise - unplanned static or distortion during the communication process e.g. competitor action (Creature Comforts?)


154

Promotions Mix• Personal selling• Telemarketing• Direct mail• Trade fairs and exhibitions• Commercial television• Newspapers and magazines• Radio• Cinema• Point of sale displays• Packaging

CRM Asks to avoid traditional mass mediaWhich are only one way andAdopt dialogue media like:•Telemarketing•Personalised emails•direct mail, •direct sales


155

The Promotional Message

Grab ATTENTION

Excite INTEREST

Create DESIRE

Prompt ACTION

AIDA


156

Execution styles

• Slice of life e.g. OXO

• Lifestyle e.g. After Eight mints

• Fantasy e.g .Turkish Delight

• Mood or image e.g. Timotei shampoo

• Musical e.g .Gap

• Personality symbol e.g. Richard Branson


157

• Technical expertise e.g.Vorsprung durch Technik - Audi

• Scientific evidence e.g. Whiskers

• Testimonial evidence e.g. Ian Botham


158

Media choice?

• Marketing objectives

• Definition of problem e.g falling awareness

• Evaluation of different tools

• choice of optimum mix of promotional methods

• Integration into overall marketing communication programme


159

Exercise - What beliefs and expectations do you have about the following brands? How far are these due to

promotion as opposed to personal experience?

• Fairy liquid

• Persil washing powder

• Midland Bank

• Virgin Radio

• Nissan

• Tesco


160

Promotional objectives• To support sales increases• To encourage trial• To create awareness• To inform about a feature or benefit• To remind• To reassure• To create an image• To modify attitudes


161

Implementation


162

Implementation

• The implementation process• An action checklist• Total quality and marketing• Managing the organisation/stakeholder interface• Activities to establish and build customer

relationships• Relationship marketing• McKinsey 7-S framework


163

MarketingStrategy

Tactical Decisions

Implementing theMarketing Mix

Monitoring Results

Internal Factors

External Factors

Adaptation of strategy/tactics Berman and Evans 1985

The Marketing Implementation Process


164

Implementation problems

• Internal problems e.g change of management

• External problems e.g. changing competition

• Poor planning e.g. Hoover’s flight tickets

• Poor intelligence e.g. 1985 Coca-Cola

• Poor execution


165

Implementing a programme - an action checklist

• Agree the implementation strategy

• Agree a timeframe

• Draw up detailed implementation plans

• Set up a team of stakeholders

• Establish good project management

• Personalise the case for change

• Ensure participationprof.Srini.R.Srinivasan-KJSIMSR

166

• Create a sense of purpose and urgency to tackle real problems which have prevented progress in the past

• motivate• be prepared for conflict• Be willing to negotiate• Anticipate stress• Build skills• Build in the capacity for learning• Monitor and evaluate


167

Total Quality and Marketing• Quality is what customers say it is.• Juran and TQM

• zero defects• right first time• continuous improvement

• Statistical process control (SPC)• New relationships with suppliers (JIT)• Quality Assurance e.g BS EN ISO 9000


168

Managing the organisation/stakeholder interface• External and internal relationships• Accountability of managers• Marketer projects an image and style• Ethical responsibilities towards consumers• Social responsibility

• dangerous products e.g. cigarettes• dishonest marketing and promotion• the abuse of power• the availability of information


169

Activities to establish and build customer relationships

• Need for long term relationships• UACCA - ‘expensive’ in promotional terms• Build sales to existing customers• Improving service quality• Auditing the fulfilment of customer needs• Cause a cultural change to a marketing

orientation - Marketing Myopia Levitt (1960)


170

Relationship marketing

• The consistent application of up-to-date knowledge of individual customers to product and service design . . . . In order to develop a continuous and long-term relationship’ Cram

• Not mass marketing. Aimed at individual.• Customer retention not attraction• Long term, ongoing relationships• Regular customer contact• Spirit of trust


171

Mckinsey 7-S framework

• Strategy

• Structure

• Systems

• Share values

• Style

• Skills

• Staffprof.Srini.R.Srinivasan-KJSIMSR

172

Segmentation, Targeting, Positioning


173

Segmentation


174

Product Market Segmentation

P1

P2

P3

P4

M1 M2 M3 M4

HALLS – (Institutions)WALLS – (Government)MALLS – (Retail)INDIVIDUALS


175

Example


176

Types of TargettingM1 M2 M3 M4

P1

P2

P3

P4

M1 M2 M3 M4

P1

P2

P3

P4

M1 M2 M3 M4

P1

P2

P3

P4

M1 M2 M3 M4

P1

P2

P3

P4

M1 M2 M3 M4

P1

P2

P3

P4

M1 M2 M3 M4

P1

P2

P3

P4

Full Market Coverage

Multiple Niches

Market SpecialisationProduct Specialisation

Niche Marketing


177

Definition

• Segmentation is essentially the identification of subsets of buyers within a market who share similar needs and who demonstrate similar buyer behavior. The world is made up from billions of buyers with their own sets of needs and behavior. Segmentation aims to match groups of purchasers with the same set of needs and buyer behavior. Such a group is known as a 'segment'.


178

Characteristics of a “Good” Segment

• Is the segment viable? Can we make a profit from it? A minimum Level of sales value

• Must have a Minimum volume for me to set up a minimum volume of production.

• Is the segment accessible? How easy is it for us to get into the segment?

• Is the segment measurable? Can we obtain realistic data to consider its potential

• The segment must be Homogeneous from within and Heterogeneous with other segments


179

Basis for Segmentation

• by Geography - such as where in the world was the product bought

• by Psychographics - such as lifestyle or beliefs • by Socio-cultural factors - such as class • by Demography - such as age, sex, and so on.

attitudes held

benefits sought


180

Targeting

• After the market has been separated into its segments, the marketer will select a segment or series of segments and 'target' it/them. Resources and effort will be targeted at the segment. Its like looking at a dart board or a shooting target. You see that it has areas with different scores - these are your segments. Aiming the dart or the bullet at a specific scoring area is 'targeting'


181

POSITIONING


182

Positioning

Positioning is the development of a service and a marketing mix to occupy a specific place in the minds of customers within target markets.


183

Positioning

• Positioning is all about 'perception'. As perception differs from person to person, so do the results of the positioning map e.g what you perceive as quality, value for money, etc, is different to my perception. However, there will be similarities.


184

Reasons for Increased Importance of Positioning

1. Perceptual processes of customers They screen out most information2. Greater competition

More organizations competing for share of mind

3. Growing volume of commercial messagesAdvertising and promotion clutter


185

Steps Required for Effective Positioning (the five Ds)

Documenting Deciding Differentiating Designing Delivering


186

The 5 Ds of Positioning

DocumentingWhat benefits are the most important to your current and potential customers?

DecidingWhat image do you want your current and potential customers to have of your organization?

Differentiation

Which competitors do you want to appear different from, and what are the factors that you will use to make your organization different from them?


187

The 5 Ds of Positioning

DesigningHow will you develop and communicate these differences?

DeliveringHow will you make good on what you’ve promised, and how do you make sure that you have “delivered?”


188

Positioning Approaches:Six Major Alternatives

Specific product features Benefits, problem solution, or

needs Specific usage occasions User category Against another “product” “Product class” dissociation


189

Positioning Map


190

Things to think about.• Ensuring that all the levels of your distribution channels project the

same “face” to your customer

• Guerilla marketing


191

MARKETING MODELS


192

What is a ModelA model is simply a representation. A map, which represents the countryside, is a model, and so is a graph which represents a company's sales over time. In this sense, all our perceptions of reality are "models" since they are only perceptions and not reality itself. Our language is a model, since words are only representations of objects or ideas. Similarly, our numbering system is a model by which quantities of objects or ideas can be represented. These are trivial, but real, distinctions between models and reality.

Models characterize either what currently exists in fact, or what might exist in the future. Marketing models might depict such operations as an existing product distribution system; a consumer's value structure, consumer preference modeling for product choices, or the effects of advertising on consumer awareness, knowledge, attitudes, or intention to purchase.The purpose of a model is typically to provide the manager with a guide for evaluating the effect of a set of input variables. For example, a design engineer for General Motors might model the aerodynamics of a different body design features to determine their impact on airflow and fuel economy. Or a civil or hydraulics engineer designing a dam to hold back a reservoir 200 feet deep might use a model to determine the concrete density and materials necessary to withstand the water pressure at each depth level.

Model builders in the applied or physical sciences often use readily measurable and quantifiable input data. But marketing model builders typically often have only very loose and imprecise inputs. These inputs are often estimates of such unknowns as new product demand, advertising effectiveness, advertising efficiency, optimal sales force allocation, results of a product positioning option, or estimates of pricing strategy. prof.Srini.R.Srinivasan-KJSIMSR

193

Characteristics of a good Model• 1. The model must be simple to use and

understand,• 2. It must be robust -- its results must not vary

wildly with small changes to the input data,• 3. It must be easy to communicate with,• 4. It must be easy to control,• 5. It must be adaptable to other products or

situations, and • 6. It must be complete on important details.

Model builders should measure the quality of their models against the criteria of validity and utility. Validity refers to the accuracy of the model in describing and predicting reality. A sales forecasting model which does not forecast sales with reasonable accuracy is probably worse than no sales forecasting model at all.


194

Advantages of Modelling• In spite of the complexities of model building, models offer significant benefits.

Perhaps most important is the sensitization process they help develop. Managers must gather and enter the input data, then evaluate the model's outputs. They re-evaluate the input data, modify it, and watch the effect on the model's outputs. By using models in this way, managers become sensitized to recognize and evaluate the elements that are important to making an appropriate decision.

• Modeling activities also force both the manager and the researcher to be critical (and parsimonious) in evaluating the impact of variables that could explain the process. They begin to question assumptions about supposedly influential variables, and begin to discover important new variables.

• Finally, the manager is forced, as part of the variable selection process, to consider the relationships between variables. He or she begins to be aware of interactions between them, and they may begin to recognize that a symbiotic, synergistic, relationship exists between many marketing activities and effects.


195

Types of Models• Descriptive

eg: Revenue = Price - Costs

• Prescriptive• Normative

Normative (or, control) models are the most difficult models to construct since these models not only describe and predict, but provide direction about the proper course of action.

• Iconic(which means "image") models are like reality in the sense that they

look like reality. Photographs, maps, architectural miniatures, and rough layouts of advertisements are all iconic models.

• Symbolicsymbolic models do not look like reality, but emulate reality in other ways. They include either

(a) verbal, (b) schematic, or (c) mathematical forms that describe a specific process


196

DEVELOPING MARKETING MODELS

Marketing models, like all management science models, are

developed through either inductive or deductive logic which leads to generalization about market

behavior. From these generalizations, sets of premises or theories are developed. These lead to sets of relationships which constitute marketing models.



198

CUSTOMER RELATIONSHIP MANAGEMENT

CRMprof.Srini.R.Srinivasan-KJSIMSR

199

Basic Model of CRM1. a database of customer activity, analyses of the

database, 2. given the analyses, decisions about which

customers to target, 3. tools for targeting the customers, 4. how to build relationships with the targeted

customers, 5. privacy issues, and 6. metrics for measuring the success of the CRM

program. 7. Creating a Customer Database


200

Information needs for the database

• Transactions-complete purchase history with details (price paid, SKU, delivery date).

• Customer Contacts-Touchpoints used by the customer

• Descriptive Information-for segmentation and other data analysis purposes.

• Response to Marketing Stimuli-whether or not the customer responded to a direct marketing initiative, a sales contact, or any other direct contact.


201

• The data should also be represented over time


202NATURE OF INTERACTION

DIRECTINDIRECT (through channel

Intermediaries)

FR

EQ

UE

NC

Y O

F I

NT

ER

AC

TIO

N (

wit

h cu

stom

ers)

LO

WH

IGH

•Banks,•Retail

Easy to develop database

•FMCG

Hardest to developdatabase


203

Limitations

• FMCG: – Lack of systematic information– Millions of customers– Use of indirect means (intermediaries)

• Challenge is to create opportunities for customer interaction


Complete Marketing

Documents

marketing tactics

srinivasan kjsimsr prof

successful marketing

marketing planningprof

implications of marketing

marketing managementprof

strategic marketing

right product