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“Marketing is Managing profitable customer relationships.” “Fulfilling customers wants and desires in order to make a profit” “The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return”
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Page 1: Smm spring 2010

“Marketing is Managing profitable customer relationships.”

“Fulfilling customers wants and desires in order to make a profit”

“The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return”

Page 2: Smm spring 2010

New Definition of Marketing (est. in 2007) Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

(American Marketing Association)

Page 3: Smm spring 2010

Product/Service

Producer/Deliverer

Retailer

Distributor

Wholesaler Customer

RESEARCH

Attitude Behavior

Characteristics

Necessity/Desire

Existing Concept

MARKETING OUTLINE

MARKETING

AS A FIELD

OF STUDY

OPERATIONS

CONSUMER BEHAVIOUR

4Ps

Page 4: Smm spring 2010

Anticipating customer need

Developing and Selling Product Concept Creating/anticipating demand Fulfilling demand

Making and delivering a product to the customer

Page 5: Smm spring 2010

MARKETING PROCESS

Understand the marketplace, customer needs and wants

Design a Marketing Strategy

Construct a marketing program

Build Profitable relationships with Customers

Capture value from customers in return

Page 6: Smm spring 2010

Marketing

Management

Orientations

Production Concept

Product Concept

The idea that consumers will favour products that are available and highly affordable

The idea that consumers will favour products that offer the most in quality, performance and features and that organizations should therefore devote all its efforts to make continuous product improvements

Page 7: Smm spring 2010

Selling Concept

Marketing Concept

The idea that consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort

The marketing management concept holds that achei8ving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.

Marketing

Management

Orientations

Page 8: Smm spring 2010

Marketing

Management

Orientations

A principle of enlightened marketing that holds that a company should make good marketing decisions by considering consumers wants, the company’s requirements, consumer’s long term interests and society’s long run interests

Societal Marketing Concept

Page 9: Smm spring 2010

Psychological Factors

PerceptionPerception LearningLearning

Beliefs &AttitudesBeliefs &Attitudes

MotivationMotivation

Page 10: Smm spring 2010

Model of Consumer Behavior

BuyingDecision process

Problem recognitionInformation searchEvaluation of alternativesPurchase decisionPostpurchase behavior

Otherstimuli

EconomicTechnologicalPoliticalCultural

ConsumerPsychology

MotivationPerceptionLearningMemory

Purchase Decision

Product choiceBrand choiceDealer choicePurchase timingPurchase amount

Marketingstimuli

ProductPricePlacePromotion

Consumercharacteristics

CulturalSocialPersonalPsychological

Page 11: Smm spring 2010

NEED RECOGNITION

INFORMATION SEARCH

PURCHASE DECISION

POSTPURCHASE BEHVIOR

EVALUATION OF ALTERNATIVES

BUYER DECISION PROCESS

Page 12: Smm spring 2010

Steps Between Evaluation of Alternatives and a Purchase Decision

EvaluationEvaluationofof

alternativesalternatives

Purchasedecision

Unanticipatedsituational

factors

Attitudeof others

Purchaseintention

Page 13: Smm spring 2010
Page 14: Smm spring 2010

MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Decision Heuristics and Biases

Rules of thumb or mental shortcuts in the decision process

Availability Heuristic: Consumers base their predictions on the quickness and ease with which a particular example of an outcome comes to minds

Page 15: Smm spring 2010

MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Decision Heuristics and Biases

Representativeness Heuristic: Consumers base their predictions on how representative or similar the outcome is to other examples

Anchoring and Adjustment Heuristic: Consumers arrive at an initial judgment and them make adjustments of that first impression based on additional information.

Page 16: Smm spring 2010

MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Mental Accounting

The manner by which consumers code, categorize and evaluate financial outcomes of choices

Prospect Theory

“Consumers frame decision alternatives in terms of gains and losses according to a value function. Consumers are generally loss averse. They tend to overweight very low probabilities and underweight very high probabilities”

Page 17: Smm spring 2010

MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Mental Accounting

The manner by which consumers code, categorize and evaluate financial outcomes of choices

Prospect Theory

“Consumers frame decision alternatives in terms of gains and losses according to a value function. Consumers are generally loss averse. They tend to overweight very low probabilities and underweight very high probabilities”

Page 18: Smm spring 2010

MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Mental Accounting

Consumers tend to segregate gains

Consumers tend to integrate losses

Consumers tend to integrate smaller losses with larger gains. “Cancellation Principle”

Consumers tend to segregate small gains from large losses. “Silver-lining Principle”

Page 19: Smm spring 2010

MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Mapping the Customer’s Consumption System/Customer Activity Cycle/Customer Scenario

How are consumers thinking?

Introspective method

Retrospective method

Prospective method

Prescriptive method

Page 20: Smm spring 2010

MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Biases in Decision Making

Plugging-in

Frame Blindness

Lack of frame control

Overconfidence in judgment

Shortsighted shortcuts

Shooting form the hip

Group failure

Pg 202 Marketing Management Jay Russo and Kevin Schoemaker

Page 21: Smm spring 2010

MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Biases in Decision Making by Marketing Managers

Fooling yourself about feedback

Not keeping track

Failure to audit your decision process

Page 22: Smm spring 2010

Problem RecognitionProblem Recognition

General Need DescriptionGeneral Need Description

Product SpecificationProduct Specification

Supplier SearchSupplier Search

Proposal SolicitationProposal Solicitation

Supplier SelectionSupplier Selection

Order Routine SpecificationOrder Routine Specification

Performance ReviewPerformance ReviewPostPostPurchasePurchase

PurchasePurchase

InfoInfoSearch/Search/

EvalEval

NeedNeedRecognitionRecognition

Page 23: Smm spring 2010

Participants in the Business Buying Process

Gatekeepers

Initiators

Buyers

Influencers

Deciders

Users

Approvers

Page 24: Smm spring 2010

Product

Place

Promotion

Price

(features, quality, service, support, product line etc.)

(channel of distribution, exclusive vs. intensive, etc.)

(advertising, sales force, brochures, coupons, etc.)

(list price, discount, deals, both end-user and channel)

The Marketing Mix

Page 25: Smm spring 2010

Packaging (Physical Evidence)

Positioning (Process)

People

The Marketing Mix

Page 26: Smm spring 2010

Product

Place

Promotion

Price

(features, quality, service, support, product line etc.)

(channel of distribution, exclusive vs. intensive, etc.)

(advertising, sales force, brochures, coupons, etc.)

(list price, discount, deals, both end-user and channel)

The Marketing Mix

Page 27: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

Preferences Segments

Homogeneous preferences

Diffused preferences

Clustered preferencesSEGMENT MARKETING

Page 28: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

Customers with distinct set of needs

Pay premium to a firm that best satisfies their needs

Unlikely to attract other competitors

Nicher gains certain economies through specialization

Niche has size, profit and growth potential

Fairly small and attract few competitors

NICHE

MARKETING

Page 29: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

LOCAL MARKETING

CUSTOMERIZATION

Customized Marketing

One-to-one Marketing

Page 30: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

GEOGRAPHIC

VARIABLES

Geographic region

City size

Density

Climate

Page 31: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

DEMOGRAPHIC

VARIABLES

Demographic age

Family size

Family Life cycle

Gender

Income

Occupation

Education

Religion

Page 32: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

DEMOGRAPHIC

VARIABLES

Race

Generation

Nationality

Social Class

Page 33: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

DEMOGRAPHIC

VARIABLES

Race

Generation

Nationality

Social Class

Page 34: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

PRIZM (Potential Rating Index by Zip Markets)

Combines Geographic and Psychographic segmentation variables together

Examples

Blue Blood Estates, Winner’s Circle, Hometown Retired, Latino America, Shotguns and Pickups, Black Country Folk, Young Digerati, Beltway Boomers, The Cosmopolitans, Old Milltowns

Page 35: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

PSYCHOGRAPHIC

VARIABLES

Psychographic Lifestyle

(Culture oriented, Sports oriented, Outdoor oriented)

Personality

(Compulsive, Gregarious, Authoritarian, Ambitious)

Page 36: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

PSYCHOGRAPHIC

VARIABLES

VALS Framework

Page 37: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

PSYCHOGRAPHIC

VARIABLES

Innovators

Survivors

Thinkers

Believers

Achievers

Strivers

Experiencers

Makers

Ideals Achievement Self-ExpressionPrimary Motivation

High Resource

High Innovation

Low Resource

Low Innovation

Page 38: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

PSYCHOGRAPHIC

VARIABLES

Groups with Higher Resources

Innovators – Successful, Sophisticated, Active, “Take Charge” people, with high self esteem. Purchases often reflect cultivated tastes for relatively upscale, niche-oriented products and services

Thinkers – Mature, satisfied and reflective people who are motivated by ideals and value order, knowledge and responsibility. Favour durability, functionality and value in products

Page 39: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

PSYCHOGRAPHIC

VARIABLES

Groups with Higher Resources

Achievers – successful goal-oriented people who focus on career and family. Favour premium products that demonstrate success to their peers

Experiencers – Young, enthusiastic, impulsive people who seek variety and excitement. Spend comparatively high proportion of their income on fashion, entertainment and socializing

Page 40: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

PSYCHOGRAPHIC

VARIABLES

Groups with Lower Resources

Believers – Conservative, conventional and traditional people with concrete beliefs. Favour familiar products and are loyal to established brands

Strivers – Trendy and fun-loving people who are resource constrained. Favour stylish products that emulate the purchases of those with greater material wealth

Page 41: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

PSYCHOGRAPHIC

VARIABLES

Groups with Lower Resources

Makers – Practical down-to-earth, self-sufficient people who like to work with their hands. Favour products with a practical or functional purpose.

Survivors – Elderly, passive people who are concerned about change. Loyal to their favourite brands

Page 42: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

BEHAVIORAL

VARIABLES

Behavioral Occasions

(Regular Occasion, Special Occasion)

Benefits

(Quality, Service, Economy, Speed)

User Status

(Non-user, Ex-user, Potential User, First time user, Regular User)

Usage Rate

(Light user, Medium user, Heavy user)

Page 43: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

BEHAVIORAL

VARIABLES

Loyalty Status

(None, Medium, Strong, Absolute)

Readiness Stage

(Unaware, Aware, Informed, Interested, Desirous, Intending to buy)

Attitude toward product

(Enthusiastic, Positive, Indifferent, Negative, Hostile)

Page 44: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

BEHAVIORAL

VARIABLES

Behavioral Segmentation Breakdown

(Pg 257 MM )

Page 45: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

BEHAVIORAL

VARIABLES

The Conversion Model

Measures the strength of Psychological Commitment between brands and consumers and their willingness and openness to change

Page 46: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

CONVERSION

MODEL - Users

COMMITTMENT

LOW

HIGH

CONVERTIBLE

SHALLOW

AVERAGE

ENTRENCHED

Page 47: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

CONVERSION

MODEL –

Nonusers

BALANCE OF DISPOSITION

LOW

HIGH

AVAILABLE

AMBIVALENT

WEAKLY UNAVAILABLE

STRONGLY UNAVAILABLE

Page 48: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

BUSINESS MARKETS

SEGMENTATION

Page 49: Smm spring 2010

MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

STEP S IN

SEGMENTATION

PROCESS

1. Needs Based Segmentation

2. Segment Identification

3. Segment Attractiveness

4. Segment Profitability

5. Segment Positioning – “Value Proposition”

6. Segment “Acid Test” - “Segment Story Board”

7. Marketing-Mix Strategy

Page 50: Smm spring 2010

BRAND EQUITY Executive Summary

Table of Contents

Situation Analysis

Marketing Strategy

Financial Projections

Implementation Controls

Page 51: Smm spring 2010

BRAND EQUITY

BRANDING

Benefits of Branding to Companies

• Simplify Product Handling or tracing

• Organize inventory and accounting records

• Legal Protection (Intellectual Property)

• Brand Name – Registered Trademarks

• Manufacturing Process – Patents

• Packaging – Copyrights and designs

• Brand Loyalty

• Predictability of Demand

• Entry barriers for competition

Page 52: Smm spring 2010

BRANDING

Benefits of Branding Marketing Advantages• Improved Perceptions of Product Performance

• Greater Loyalty

• Less Vulnerability to Competitive Marketing Actions

• Larger Margins

• More Inelastic Consumer Response to Price Increases

• More Elastic Consumer Response to Price Decreases

Page 53: Smm spring 2010

BRANDING

Benefits of Branding Marketing Advantages• Greater Trade Cooperation and Support

• Increased Marketing Communication Effectiveness

• Possible Licensing Opportunities

• Additional Brand Extension Opportunities

Page 54: Smm spring 2010

BRANDING

Benefits of Branding Marketing Advantages• Greater Trade Cooperation and Support

• Increased Marketing Communication Effectiveness

• Possible Licensing Opportunities

• Additional Brand Extension Opportunities

Page 55: Smm spring 2010

Product

Core Benefit

Actual Product

Brand Name

Quality Level

Packaging

Features

Design

Augmented Product

Delivery & Credit

InstallationWarranty

After sales service

Page 56: Smm spring 2010

ProductPRODUCT LINE

A group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets or fall within given price ranges

PRODUCT MIX

The set of all product lines and items that a particular seller offers for sale

Page 57: Smm spring 2010

ProductBRAND EQUITY

The positive differential effect that knowing the brand name has on customer response to the product or service

BRAND POSITIONING

- Product Attributes

- Benefits

- Beliefs and Values

Page 58: Smm spring 2010

ProductBRAND NAME SELECTION

- Selection

- Protection

BRAND SPONSORSHIP

- Manufacturer’s brand

- Private brand

- Licensing

- Co-branding

Page 59: Smm spring 2010

ProductBRAND DEVELOPMENT

- Line Extension

- Brand Extension

- Multibrands

- New brands

Page 60: Smm spring 2010

ProductLine Extension: Different versions of the same product

Brand Extension: New products are added under the name of an existing brand

Multibrands: Different brands of the same product.

Page 61: Smm spring 2010

Price

PRICING APPROACHES

Cost based Pricing

Cost Plus pricing – Add standard profit (mark-up) to the cost of the product

Break-Even Analysis and Target Profit Pricing

Value-based pricing

Setting price based on buyer’s perceptions of value rather than on the seller’s cost

Page 62: Smm spring 2010

Price

NEW-PRODUCT PRICING STRATEGIES

Market Skimming Pricing

Selling a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price

- Fewer but more profitable sales

Market-Penetration Pricing

Setting a low price for a new product in order to attract large number of buyers and a large market share

Page 63: Smm spring 2010

Principles of Marketing

4 P’s of Marketing

Price

PRODUCT MIX PRICING STRATEGIES

Product Line Pricing

Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features and competitor’s prices

Optional-Product Pricing

The pricing of optional or accessory products along with a main product

Page 64: Smm spring 2010

Price

PRODUCT MIX PRICING STRATEGIES

Captive Product Pricing

Setting a price for products that must be used along with a main product e.g blades for razors, cartridges for printers

By-Product Pricing

Setting a price for by products in order to make the main product’s price more competitive

Page 65: Smm spring 2010

Price

PRICE ADJUSTMENT STRATEGIES

Discount

Allowance

Segmented Pricing

Psychological

Geographical

Promotional

International

Page 66: Smm spring 2010

Place

Distribution or Supply Chain Management

Marketing Channel or Distribution Channel:

Producer

Consumer

Producer

Retailer

Consumer Consumer

Retailer

Wholesaler

Producer

Direct MarketingChannel

InDirect Marketing Channel

InDirect Marketing Channel

Page 67: Smm spring 2010

Promotion

• Advertising

• Sales Promotion

• Personal Selling

• Public Relations

• Direct Marketing

Page 68: Smm spring 2010

Customer Value and Loyalty

“A deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior” - Oliver

Loyalty

Value Proposition

Consists of the whole cluster of benefits a company promises to deliver to its customers

Page 69: Smm spring 2010

CustomerSatisfaction - Elements of company performance

- On-time transportation

- Completeness of order

- Repurchase intention

- Product Quality

- Customer Service

Measuring Satisfaction

Page 70: Smm spring 2010

STRATEGY FORMULATION LEVELS • Product / Brand Level

• SBU Level

• Corporate Level

Page 71: Smm spring 2010

ANALYSIS TOOLS

• BCG Matrix

• SWOT Analysis / TOWS Analysis

• Customer Matrix

• Customer Profitability Analysis

• Intensive Growth Strategies

Page 72: Smm spring 2010

MARKETING

MANAGEMENT

TASKS

• Developing Marketing Strategies and Plans

• Capturing Marketing Insights

• Connecting with Customers

• Building Strong Brands

• Shaping the Market Offerings

• Delivering Value

• Communicating Value

• Creating Long-term Growth

Page 73: Smm spring 2010

MARKET

INTELLIGENCE

Market Scanning

• Internal

• External

Page 74: Smm spring 2010

MARKET

INTELLIGENCE

• Internal Reports – Sales, Prices, Inventories

• Order-to-Payment Cycle

• Sales Force

• Data Warehouses, Data MiningInternal

MARKET

INTELLIGENCE

Market Scanning

Page 75: Smm spring 2010

MARKET

INTELLIGENCE

• Sales Force to spot and report new development

• Distributors, Retailers and other intermediaries

• External Networking – competitor products, trade shows, competitor reports,

• Advisory Panel

• Government data resources

• Information Suppliers – Gartner, AC Nielsen, Biz360

• Customer feed back

External

MARKET

INTELLIGENCE

Market Scanning

Page 76: Smm spring 2010

MARKET

INTELLIGENCE• Trend – A direction or sequence of events that has some momentum and durability

• Fad – A sequence of events that is unpredictable, short lived and without social, political and economic significance

• Mega trends – large social, economic, political and technological changes that are slow to form but influence us for sometime

Needs and Trends

MARKET

INTELLIGENCE

Market Scanning

Page 77: Smm spring 2010

MARKET

INTELLIGENCE• Political - Legal

• Economic

• Technological

• Social & Cultural

Major Factors These factors have an impact on all environments

MARKET

INTELLIGENCE

Market Scanning

Page 78: Smm spring 2010

MARKET

INTELLIGENCE• Political - Legal

• Economic

• Technological

• Social & Cultural

Major Factors

MARKET

INTELLIGENCE

Market Scanning

Page 79: Smm spring 2010

MARKET

INTELLIGENCE • Demographic Environment

• Population growth, Age Mix, Household patterns

• Economic Environment

• Geographical shifts in population, Income redistribution, Credit culture

• Social & Cultural Environment

Application of Factors on Environments

MARKET

INTELLIGENCE

Market Scanning

Page 80: Smm spring 2010

MARKET

INTELLIGENCE • Social & Cultural Environment

• Views of themselves

• Views of others

• Views of organizations

• Views of society

• Views of nature

• Views of the universe

Application of Factors on Environments

MARKET

INTELLIGENCE

Market Scanning

Page 81: Smm spring 2010

MARKET

INTELLIGENCE • Social & Cultural Environment

- Core Values

- Secondary Beliefs

Application of Factors on Environments

MARKET

INTELLIGENCE

Market Scanning

Page 82: Smm spring 2010

MARKET

INTELLIGENCE • Natural Environment

- Consumption of vital resources

- Oil, Water, Metals, Nuclear

Materials

- Global Warming, Weather

patterns

Application of Factors on Environments

MARKET

INTELLIGENCE

Market Scanning

Page 83: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Define the problem and research objectives

Develop the research plan

Collect the Information

Analyze the information

Present the findings

Make the decision

Process

Page 84: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Step - 1

What is the problem?

Research objectives?

Page 85: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Step – 2

Research Plan

DATA SOURCES

Primary Data

Secondary Data

Page 86: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Step – 2

Research Plan

RESEARCH APPROACHES

Observational Research

Focus Group Research

Survey Research

Behavioral Data

Experimental Research

Page 87: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Step – 2

Research Plan

RESEARCH INSTRUMENTS

Questionnaires

Focus Groups

Qualitative Measures

Page 88: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Step – 2

Research Plan

RESEARCH INSTRUMENTS

Qualitative Measures

Shadowing

Behaviour mapping

Consumer journey

Camera journals

Extreme user interviews

Unfocus groups

Page 89: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Step – 2

Research Plan

Analyze the InformationAdvanced Statistical Techniques

Frequencies

Crosstabs

Factor Analysis

Cluster Analysis

Discriminant Analysis

Regression Analysis

Page 90: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Step – 2

Research Plan

Present the findings

Make the decision

Page 91: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Measuring Marketing Productivity

Sales Analysis

Sales variance analysis

Micro-sales analysis

Market Share

Overall Market Share

Served Market Share

Relative Market Share

Page 92: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Measuring Marketing Productivity

Market Share

Overall Market Share

Served Market Share

Relative Market Share

Company’s sales expressed as a percentage of total market sales

Is all the buyers who are willing and able to buy a company’s product

A market share that is in comparison with the market leader

Page 93: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Measuring Marketing Productivity

Market Share

Overall Market Share

Overall Market Share = Customer Penetration

X

Customer Loyalty

X

Customer Selectivity

X

Price Selectivity

Page 94: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Measuring Marketing Productivity

Customer Penetration

Customer Loyalty

Customer Selectivity

Price Selectivity

% of all customers who buy from the company

Purchases made by customers as a % of total purchases made from all suppliers

Size of the average customer purchase from the company expressed as a % of the average customer purchase from an average company

Average price charged by the company as a percentage of the average price charged by all companies

Page 95: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Measuring Marketing Productivity

Sales Analysis

Sales variance analysis

Micro-sales analysis

Expense to Sales Analysis

Financial Analysis

DuPont Analysis

Page 96: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Measuring Marketing Productivity

Profitability Analysis

Page 97: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Forecasting and Demand Measurement

Measures of Market Demand

Potential Market: Is the set of consumers who profess a sufficient level of interest in a market offer. They must have enough income and have access to the product offer.

Page 98: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Forecasting and Demand Measurement

Measures of Market Demand

Available Market: Is the set of consumers who have interest, income, access and qualifications for the particular market offer.

Page 99: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Forecasting and Demand Measurement

Measures of Market Demand

Target Market: Is the part of the qualified market that the company decides to pursue.

Page 100: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Forecasting and Demand Measurement

Measures of Market Demand

Penetrated Market: The set of consumers who are buying the company’s product.

Page 101: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Forecasting and Demand Measurement

Market Demand

Is the total volume that would be bought by a defined consumer group, in a defined geographical area in a defined time period, in a defined marketing environment under a defined marketing program

Page 102: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Forecasting and Demand Measurement

Estimating Future Demand

Past Data Analysis

Time-Series analysis

Exponential Smoothing

Statistical Demand Analysis

Econometric Analysis

Page 103: Smm spring 2010

MARKET

INTELLIGENCE

MARKETING

RESEARCH

Forecasting and Demand Measurement

Estimating Future Demand

Survey of buyer’s intentions

Composite of sales force opinion

Expert Opinion

Market Test Method

Page 104: Smm spring 2010

5 Factor’s of Production

Porter’s Value Chain

Porter’s 5 Forces model

Analysis of Capabilities

SWOT - TOWS

Page 105: Smm spring 2010

Analysis of Capabilities

Porter’s Value Chain

SWOT - TOWS

Page 106: Smm spring 2010

Analysis of Capabilities

Porter’s 5 Forces Model

New Entrants

SuppliersIndustry Competition

Substitutes

CustomersSWOT - TOWS

Page 107: Smm spring 2010

Analysis of Capabilities

AirTel

SWOT - TOWS

Strengths Bharti Airtel has more than 65 million customers (July 2008). It is the largest cellular provider in India, and also supplies broadband and telephone services - as well as many other telecommunications services to both domestic and corporate customers.

Other stakeholders in Bharti Airtel include Sony-Ericsson, Nokia - and Sing Tel, with whom they hold a strategic alliance. This means that the business has access to knowledge and technology from other parts of the telecommunications world.

The company has covered the entire Indian nation with its network. This has underpinned its large and rising customer base.

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Analysis of Capabilities

AirTel

SWOT - TOWS

Weaknesses

SBU technical as well as organizational capabilities are outsourced.

As opposed to competitors (Hutshison Essar), Key Infrastructure (Communication Towers) are not owned by AirTel.

Lack of any resolve to develop future markets once the Indian market has become mature.

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Analysis of Capabilities

Environmental Analysis

SWOT - TOWS

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Analysis of Capabilities

Environmental Analysis

SWOT - TOWS

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Analysis of Capabilities

Environmental Risk

SWOT - TOWS

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Analysis of Capabilities

Environmental Analysis

SWOT - TOWS

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Analysis of Capabilities

Environmental Analysis

SWOT - TOWS

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Analysis of Capabilities

Ratios

Performance Analysis

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Analysis of Capabilities

Marketing Ratios

Performance Analysis

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Analysis of Capabilities

Profit Impact of Market Strategy

Performance Analysis

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Analysis of Capabilities

Profit Impact of Market Strategy

Performance Analysis

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Analysis of Capabilities

Portfolio Analysis

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Analysis of Capabilities

Portfolio Analysis

War Horses Dodos

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Analysis of Capabilities

Portfolio Analysis

1. Build

2. Hold

3. Harvest

4. Divest

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Analysis of Capabilities

Portfolio Analysis

SALES (In thousands)PRODUCTS

LAPTOPS 2007 2008 2009Sony 300 400 410Toshiba 400 450 470Dell 425 500 490Acer 600 610 500IBM 100 90 75

HARD DISK DRIVESSeagate 900 1050 2000Toshiba 800 700 900Samsung 810 811 900

TVSony 2000 2100 1500LG 980 1500 2000Samsung 1000 920 1700Sharp 800 900 800Toshiba 1200 1800 1300

DVD PLAYERSToshiba 700 900 1800Sony 1000 2000 1070LG 900 1600 1500Samsug 400 1000 1200Phillips 1000 950 1100

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Model of Consumer Behavior

BuyingDecision process

Problem recognitionInformation searchEvaluation of alternativesPurchase decisionPostpurchase behavior

Otherstimuli

EconomicTechnologicalPoliticalCultural

ConsumerPsychology

MotivationPerceptionLearningMemory

Purchase Decision

Product choiceBrand choiceDealer choicePurchase timingPurchase amount

Marketingstimuli

ProductPricePlacePromotion

Consumercharacteristics

CulturalSocialPersonalPsychological

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MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Decision Heuristics and Biases

Rules of thumb or mental shortcuts in the decision process

Availability Heuristic: Consumers base their predictions on the quickness and ease with which a particular example of an outcome comes to minds

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MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Decision Heuristics and Biases

Representativeness Heuristic: Consumers base their predictions on how representative or similar the outcome is to other examples

Anchoring and Adjustment Heuristic: Consumers arrive at an initial judgment and them make adjustments of that first impression based on additional information.

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MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Mental Accounting

The manner by which consumers code, categorize and evaluate financial outcomes of choices

Prospect Theory

“Consumers frame decision alternatives in terms of gains and losses according to a value function. Consumers are generally loss averse. They tend to overweight very low probabilities and underweight very high probabilities”

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MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Mental Accounting

The manner by which consumers code, categorize and evaluate financial outcomes of choices

Prospect Theory

“Consumers frame decision alternatives in terms of gains and losses according to a value function. Consumers are generally loss averse. They tend to overweight very low probabilities and underweight very high probabilities”

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MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Mental Accounting

Consumers tend to segregate gains

Consumers tend to integrate losses

Consumers tend to integrate smaller losses with larger gains. “Cancellation Principle”

Consumers tend to segregate small gains from large losses. “Silver-lining Principle”

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MARKET

INTELLIGENCE

CONSUMER

BEHAVIOUR

Mapping the Customer’s Consumption System/Customer Activity Cycle/Customer Scenario

How are consumers thinking?

Introspective method

Retrospective method

Prospective method

Prescriptive method

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MARKET

INTELLIGENCE

COMPETITION 1 Against whom are we competing?

2 What strengths and weaknesses do they possess?

3 What are their objectives?

4 What strategies are they pursuing and how successful are they?

5 How are they likely to behave and, in particular, how are they likely to react to offensive moves?

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MARKET

INTELLIGENCE

COMPETITION

Levels of Competition

1 Competition consists only of those companies offering a similar product or service to the target market, utilizing a similar technology, and exhibiting similar degrees of vertical integration. Thus, Nestlé (which makes Nescafé) sees General Foods, with its Maxwell House brand, as a similar competitor in the instant coffee market, while Penguin sees its direct competitors in the chocolate snack bar market to be Kit-Kat’s six pack, Twix and Club.2 Competition consists of all companies operating in the same product or service category. Penguin’s indirect competitors, for example, consist of crisps and ice-creams.3 Competition consists of all companies manufacturing or supplying products that deliver the same service. Thus, long-distance coach operators compete not just against each other, but also against railways, cars, planes and motorcycles.4 Competition consists of all companies competing for the same spending power. An example of this is the American motorcycle manufacturer, Harley Davidson, which does not necessarily see itself as competing directly with other motorcycle manufacturers. Instead, for many buyers it is a choice between a Harley Davidson motorcycle and a major consumer durable such as a conservatory or a boat

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MARKET

INTELLIGENCE

COMPETITION

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MARKET

INTELLIGENCE

COMPETITION

1. Industry Perspective of Competition

2. Market Perspective of Competition

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MARKET

INTELLIGENCE

COMPETITION

IndustryPerspective of Competition

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MARKET

INTELLIGENCE

COMPETITION

IndustryPerspective of Competition

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MARKET

INTELLIGENCE

COMPETITION

IndustryPerspective of Competition

1. Conflict

2. Competition

3. Coexistence

4. Cooperation

5. Collusion

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MARKET

INTELLIGENCE

COMPETITION

Competitor Responses

1. The relaxed competitor

2. The tiger competitor

3. The selective competitor

4. The unpredictable competitor

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MARKET

INTELLIGENCE

COMPETITION

Identifying Competitor Weaknesses

Financial factors ➡ Cash flow problems ➡ Under funding ➡ Low margins ➡ High-cost operations and/or distribution.

Market and performance-related factors ➡ Slow/poor growth ➡ An overdependence on one market ➡ An overdependence on one or a small number of customers ➡ Strength in declining market sectors ➡ Little presence in growing and high margin markets ➡ Low market share ➡ Distribution weaknesses ➡Weak segmentation of the market ➡ Poor/confused and/or unsustainable positioning ➡ A weak reputation and/or poorly defined image.

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MARKET

INTELLIGENCE

COMPETITION

Identifying Competitor Weaknesses

Product-related factors ➡ Outdated products and a failure to innovate ➡ Product weaknesses ➡Weak or non-existent selling propositions.

Managerial factors ➡ A short-term orientation ➡ The poor management of staff ➡ The failure to focus upon what is important ➡Managerial predictability and the adherance to well-tried formulae ➡ Product or service obsolescence/weaknesses ➡ An over- and ill-justified confidence ➡Managerial arrogance and a belief that the organization has an

inalienable right to a place in the market ➡ Competitive arrogance, competitive myopia and competitive

sclerosis ➡ Bureaucratic structures ➡ A fiscal year short-term fixation

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MARKET

INTELLIGENCE

COMPETITION

Competitive Intelligence System

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MARKET

INTELLIGENCE

SEGMETATION, TARGETTING & POSITIONING

Stages of STP

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MARKET

INTELLIGENCE

IDENTIFYING

MARKET

SEGMENTS

AND TARGETS

PSYCHOGRAPHIC

VARIABLES

VALS Framework

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MARKET

INTELLIGENCE

SEGMETATION, TARGETTING & POSITIONING

Segmentation Psychographic

Young & Rubicam, 4Cs (a Cross-CulturalConsumer Characterization) for UK

1 The constrained(i) the resigned poor(ii) the struggling poor.

2 The middle majority(i) mainstreamers(ii) aspirers(iii) succeeders.

3 The innovators(i) transitionals(ii) reformers.

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INTELLIGENCE

Source: The Times, 1 February 1997, p. 17.SEGMETATION, TARGETTING & POSITIONING

Segmentation Psychographic

Consumer profiling and shopping habits

• Habit-bound diehards.

• Self-indulgent shoppers. • Struggling idealists. • Comfortable and contenteds. •Frenzied copers.

• Mercenaries

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MARKET

INTELLIGENCE

SEGMETATION, TARGETTING & POSITIONING

Target Marketing

Strategies

1. Undifferentiated or mass marketing

2. Product-variety or differentiated marketing

3. Target or concentrated marketing.

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INTELLIGENCE

SEGMETATION, TARGETTING & POSITIONING

Positioning

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MARKET

INTELLIGENCE

SEGMETATION, TARGETTING & POSITIONING

Positioning

1. Single benefit positioning

2. Primary and secondary benefit positioning

3. Double benefit positioning

4. Triple benefit positioning.

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INTELLIGENCE

SEGMETATION, TARGETTING & POSITIONING

Positioning

1 Confused positioning, where buyers are unsure of what the organization stands for

2 Over-positioning, where consumers perceive the organization’s products as being expensive and fail to recognize the full breadth and value of the range

3 Under-positioning, where the message is simply too vague and consumers have little real idea of what the organization stands for or how it differs from the competition.

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MARKET

INTELLIGENCE

GENERIC STRATEGIES

BCG based strategies

1. BUILD

2. HOLD

3. HARVEST

4. DIVEST

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MARKET

INTELLIGENCE

GENERIC STRATEGIES

GE MATRIX based strategies

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MARKET

INTELLIGENCE

GENERIC STRATEGIES

Shell Matrix

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MARKET

INTELLIGENCE

GENERIC STRATEGIES

PORTER’S STRATEGIES

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MARKET

INTELLIGENCE

GENERIC STRATEGIES

PORTER’S STRATEGIES

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MARKET

INTELLIGENCE

GENERIC STRATEGIES

POSITION BASED STRATEGIES

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MARKET

INTELLIGENCE

SCORPIO TECHNIQUE

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MARKET

INTELLIGENCE

SCORPIO TECHNIQUE

Industry or Market

Industry or Technology thinking

Market or Customer Thinking

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MARKET

INTELLIGENCE

SCORPIO TECHNIQUE

Industry or Market-Importance

● It defines your real competition● It defines your customers ’ needs● It defines your potential for growth● It defines your strategic threats and opportunities● It can kill you early if you don’t get it right .

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MARKET

INTELLIGENCE

SCORPIO TECHNIQUE

Customer

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MARKET

INTELLIGENCE

SCORPIO TECHNIQUE

Customer

Market Research

Consumer Insights

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MARKET

INTELLIGENCE

SCORPIO TECHNIQUE

Segmentation and Targeting

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MARKET

INTELLIGENCE

SCORPIO TECHNIQUE

Positioning and Branding

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MARKET

INTELLIGENCE

SCORPIO TECHNIQUE

Customer Retention

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MARKET

INTELLIGENCE

SCORPIO TECHNIQUE

Customer Retention

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MARKET

INTELLIGENCE

SCORPIO TECHNIQUE

Organization: Processes and Culture

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MARKET

INTELLIGENCE

SCORPIO TECHNIQUE

Offerings

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MARKET

INTELLIGENCE

SCORPIO TECHNIQUE

Offerings