Sales and marketing

1. MARKETING….

2. Marketing: Definition
Market segmentation
Marketing concepts
• Market demand
• Product
• Value and satisfaction
• Exchange and transactions
Marketing channels
Competition
Marketing environment
Marketing mix

3. Marketing Defined…..
The Chartered Institute of Marketing define marketing as
“The management process responsible for identifying ,
anticipating and satisfying customer requirements
profitably”
According to William Stanton
“Marketing is a total system of business activities designed to
plan, price, promote & distribute want satisfying products to
target markets in order to achieve organisational objectives”
According to Philip Kotler
“Marketing is a human activity directed at satisfying needs
and wants through exchange process”

4. Scope of Marketing
• Marketing Research
• Product Planning & Development
• Pricing
• Advertising & Publicity
• Sales Promotion
• Packaging
• Branding & Labelling
• After Sales Service
• Test Marketing

5. Importance/ Benefits Of Marketing
• Satisfaction of human needs & wants
• Profits & market reputation
• Facilitates specialisation division of labour
• Widens the market
• Improves standard of living
• Bring economic growth
• Creates new norms of social economic behaviour
• Provides channels of communication to business firms
• Facilitates price control
• Develops social significance at.

6. MARKETING CONCEPTS

7. 7
Core Concepts of Marketing
Needs, wants
demands
Markets Marketing &
Marketers
Utility, Value &
Satisfaction
Exchange, Transaction
Relationships
Products

8. Need, Want &Demand
A need is a state of felt deprivation of some basic satisfaction
Wants are desires for specific satisfiers of these deprived needs
Demands are wants for specific products that are backed by an
ability and willingness to buy them

9. Marketing Concept Continued…
Product is any thing that can be offered to satisfy a need or
want
Exchange is the act of obtaining a desired product from
someone by offering something in return
A Market consists of all the potential customers sharing a
particular need or want who might be willing and able to
engage in exchange to satisfy that need or want.

10. Market Segmentation
Market segmentation is a marketing strategy that involves
dividing a broad target market into subsets of consumers who
have common needs, and then designing and implementing
strategies to target their needs and desires using media channels
and other touch-points that best allow to reach them.
The process of defining and subdividing a large homogeneous
market into clearly identifiable segments having similar needs,
wants or demand characteristics. Its objective is to design a
market mix that precisely matches the expectations of customers
in the targeted segment.

11. Four basic factors that affect market segmentation are
(1) clear identification of the segment,
(2) measurability of its effective size,
(3) its accessibility through promotional efforts
(4) its appropriateness to the policies and resources of
the company.

12. The Marketing Segmentation Process
Take marketing actions to reach target segmentsTake marketing actions to reach target segments
Select the product segments toward which the
firm will direct its marketing actions
Select the product segments toward which the
firm will direct its marketing actions
Develop a market/product grid to relate the market segments to the
firm’s products and actions
Develop a market/product grid to relate the market segments to the
firm’s products and actions
Find ways to group marketing actions
available to the organization
Find ways to group marketing actions
available to the organization
Find ways to group consumers
according to their needs
Find ways to group consumers
according to their needs

14. • Geographic—The study of city size,
urban/suburban/rural population distribution and
climate.
• Demographic—The study of distribution of
population’s age, sex, income, stage in family cycle
and ethnic background.
• Psychographic—Personalties, lifestyles, social class
including Activities Interests and Opinions (AIO).
• Behaviour towards products.
• Benefits desired or sought.
• Product usage rate.

15. Objectives of segmentation are:
1) To reduce risk in deciding where, when, how, and to
whom a product, service, or brand will be marketed;
2) To increase marketing efficiency by directing effort
specifically toward the designated segment in a
manner consistent with that segment's characteristics.

16. Market segmentation process
1. Identify the needs & wants of customers.
2. Identify the different characteristics
between market segments.
3. Estimate the market potential.

17. Marketing channels
Marketing channels can be viewed as a sets of interdependent organizations
involved in the process of making a product or service available for use or
consumption
Functions
• Information
• Promotion
• Negotiation
• Ordering
• Financing
• Risk taking
• Physical possession
• Payment
• Title

18. Channel selection
• Analyzing the customer needs (lot size, waiting time, product
variety, service backing etc)
• Establishing channel objectives( product characteristics)
• Identifying the major alternatives (types & No of intermediaries)
• Evaluating (Economic, Control, Adaptive Criteria)

19. Distribution Channel Decisions
SelectingSelecting
ManagingManaging
MotivatingMotivating
Distribution
Channel
Decisions
Distribution
Channel
Decisions

20. Distribution Intermediaries
Distribution Channel
Intermediaries
Distribution Channel
Intermediaries
BrokersBrokers
DistributorsDistributors
WholesalersWholesalers
RetailersRetailers

21. Competition
To prepare an effective marketing strategy, a
company must study its competitors as well as its
actual and potential customers
A company's closest competitors are those seeking to
satisfy the same customers and needs and marketing
similar offers
A company needs to gather information on
competitor’s strategies objectives, strengths,
weakness, and reaction pattern

22. Types
• Pure Competition
low barriers to entry, many choices, no business has
dominance, many companies competing and nobody
has a significant advantage
examples
• small bars and restaurants, variety stores,
convenience stores, barbers, small grocery stores,
doughnut shops, professional services (dentist,
doctor, architects)

23. Oligopoly
very similar products, few sellers, small firms follow
lead of big firms, fairly inelastic demands
- many barriers to establishing a business so only the
oldest and biggest businesses are operating
examples
all the businesses are big and of equal size
banking industry, automotive manufacturers,
gasoline retail companies, insurance companies,
telecommunications companies

24. • Monopoly
one single large seller with no close
competition and no alternate substitutes
examples
• Indian Railway
• Electricity
• Postoffice

25. Monopolistic Competition
sellers feel they do have some competition
there is one big company dominating the
market with a few medium or smaller sized
companies
examples
Google
Walmart
Airlines

26. Market
Structure
Seller Entry
Barriers
Seller
Number
Buyer Entry
Barriers
Buyer
Number
Monopolistic competitionNo Many No Many
Monopoly Yes One No Many
Monopsony No Many Yes One
Oligopoly Yes Few No Many
Oligopsony No Many Yes Few
Perfect CompetitionNo Many No Many

27. strategies
• Price discounts
• Lower-priced goods
• Value-priced goods
• Prestige goods
• Product proliferation
• Product innovation
• Improved services
• Distribution innovation
• Manufacturing-cost reduction
• Intensive advertising promotion

28. Marketing environment
The market environment refers to factors and forces
that affect a firm’s ability to build and maintain
successful relationships with customers.
Two levels of the environment are:
• Micro (internal) environment - small forces within
the company that affect its ability to serve its
customers.
• Macro (national) environment - larger societal forces
that affect the microenvironment.

31. Marketing Mix
Is the set of marketing tools that the firm uses to pursue its
marketing objectives in the target market.
From the sellers view point (4P)
• Product
• Price
• Place
• Promotion
Customers View point (4C)
• Customer needs and wants
• Cost
• Convenience
• Communication

32. FUNCTIONS OF MARKETING
The ten (11) functions of marketing are;
· Researching
· Buying
· Product development and management
· Production
· Promotion
· Standardization and grading
· Pricing
· Distribution
· Risk bearing
· Financing
· After sales-service

34. Sales forecasting
Elements of a Good Forecast
Timely
AccurateReliable
M
eaningful
Written
Easy
to
use

35. Why is forecasting important?
Demand for products and services is usually uncertain.
Forecasting can be used for…
• Strategic planning (long range planning)
• Finance and accounting (budgets and cost controls)
• Marketing (future sales, new products)
• Production and operations

36. Principles of Forecasting
Many types of forecasting models that differ in
complexity and amount of data & way they
generate forecasts:
1. Forecasts are rarely perfect
2. Forecasts are more accurate for grouped data than
for individual items
3. Forecast are more accurate for shorter than longer
time periods

37. Types of Forecasting Methods
Forecasting methods are classified into two groups:

38. Qualitative Methods
Type Characteristics Strengths Weaknesses
Executive
opinion
A group of managers
meet & come up with
a forecast
Good for strategic or
new-product
forecasting
One person's opinion
can dominate the
forecast
Market
research
Uses surveys &
interviews to identify
customer preferences
Good determinant of
customer preferences
It can be difficult to
develop a good
questionnaire
Delphi
method
Seeks to develop a
consensus among a
group of experts
Excellent for
forecasting long-term
product demand,
technological
changes, and
Time consuming to
develop

39. Executive Judgment: Opinion of a group of high level
experts or managers is pooled
Market Research/Survey: Solicits input from customers
pertaining to their future purchasing plans. It involves
the use of questionnaires, consumer panels and tests
of new products and services.
Delphi Method: As opposed to regular panels where the
individuals involved are in direct communication, this
method eliminates the effects of group potential
dominance of the most vocal members. The group
involves individuals from inside as well as outside the
organization.

40. Quantitative Forecasting Methods
Quantitative
Forecasting
Regression
Models
2. Moving
Average
1. Naive
Time Series
Models
3. Exponential
Smoothing
a) simple
b) weighted
a) level
b) trend
c) seasonality

41. Time Series Models
Try to predict the future based on past data. Assume
that factors influencing the past will continue to
influence the future
Naive Approach:
Demand in next period is the same as demand in most
recent period

42. 2. Simple Moving Average
n
A+...+A+A+A
=F 1n-t2-t1-tt
1t
+
+
• Assumes an average is a good estimator of future
behavior
– Used if little or no trend
– Used for smoothing
Ft+1 = Forecast for the upcoming period, t+1
n = Number of periods to be averaged
A t = Actual occurrence in period t

43. • Gives more emphasis to recent data
• Weights
– decrease for older data
– sum to 1.0
2. Weighted Moving Average
1n-tn2-t31-t2t11t Aw+...+Aw+Aw+Aw=F ++
Simple moving
average models
weight all previous
periods equally
Simple moving
average models
weight all previous
periods equally

44. 3. Exponential Smoothing
• Assumes the most recent observations have the
highest predictive value
– gives more weight to recent time periods
Ft+1 = Ft + α(At - Ft)Ft+1 = Ft + α(At - Ft)
et
Ft+1 = Forecast value for time t+1
At = Actual value at time t
α = Smoothing constant
Need initial
forecast Ft
to start.
Need initial
forecast Ft
to start.

45. • Collect historical data
• Select a model
– Moving average methods
• Select n (number of periods)
• For weighted moving average: select weights
– Exponential smoothing
• Select α
• Selections should produce a good forecast
To Use a Forecasting Method
…but what is a good forecast?

46. Measures of Forecast Error
b. MSE = Mean Squared Error ( )
n
F-A
=MSE
n
1=t
2
tt∑
MAD =
A - F
n
t t
t=1
n
∑
et
 Ideal values =0 (i.e., no forecasting error)
MSE=RMSEc. RMSE = Root Mean Squared Error
a. MAD = Mean Absolute Deviation

47. Regression Analysis as a Method for
ForecastingRegression analysis takes advantage of
the relationship between two
variables. Demand is then forecasted
based on the knowledge of this
relationship and for the given value of
the related variable.
Ex: Sale of Tires (Y), Sale of Autos (X) are
obviously related
If we analyze the past data of these two
variables and establish a relationship
between them, we may use that
relationship to forecast the sales of
tires given the sales of automobiles.
The simplest form of the relationship is,
of course, linear, hence it is referred
to as a regression line.
Sales of Autos (100,000)

48. Selecting the Right Forecasting Model
1. The amount & type of available data
 Some methods require more data than others
1. Degree of accuracy required
 Increasing accuracy means more data
1. Length of forecast horizon
 Different models for 3 month vs. 10 years
1. Presence of data patterns
 Lagging will occur when a forecasting model meant for a
level pattern is applied with a trend

49. Forecasting Software
• Spreadsheets
– Microsoft Excel, Quattro Pro, Lotus 1-2-3
– Limited statistical analysis of forecast data
• Statistical packages
– SPSS, SAS, NCSS, Minitab
– Forecasting plus statistical and graphics
• Specialty forecasting packages
– Forecast Master, Forecast Pro, Autobox, SCA

50. Pricing Decisions
What consumers give up
to purchase a product or
service
What consumers give up
to purchase a product or
service
TimeTime
Price VariablePrice Variable
Mental activityMental activity
Behavioral effortBehavioral effort
Factors the firm must
consider
Factors the firm must
consider
CostsCosts
DemandDemand
CompetitionCompetition
Perceived valuePerceived value

51. Relating Price to Ads and
PromotionPrice must be consistent with perceptions of
the product
Price must be consistent with perceptions of
the product
Higher prices communicate higher product
quality
Higher prices communicate higher product
quality
Lower prices reflect bargain or “value”
perceptions
Lower prices reflect bargain or “value”
perceptions
Price, advertising and distribution be unified
in
identifying product position
Price, advertising and distribution be unified
in
identifying product position
Pricing
Considerations
Pricing
Considerations
A product positioned as high quality while
carrying a lower price than competitors will
confuse customers
A product positioned as high quality while
carrying a lower price than competitors will
confuse customers

52. Legal and Ethical Issues in Pricing
Unfair Trade Practices
Key Legal
and Ethical
Issues
Related to
Price
Key Legal
and Ethical
Issues
Related to
Price
Price Fixing
Price Discrimination
Predatory Pricing

53. Special Pricing Tactics
Odd-Even
Pricing
Two-Part
Pricing
Bundle
Pricing
Bait
Pricing
Price
Lining
Flexible
Pricing
Professional
Services
Leader
Pricing
Single
Price
Common
Special Pricing
Tactics
Common
Special Pricing
Tactics

54. • Advertising
– Any paid form of nonpersonal presentation and
promotion of ideas, goods, or services by an
identified sponsor.

55. Major
Advertising Decisions

56. 16- 56
Advertising
• Advertising objectives can be
classified by primary
purpose:
– Inform
• Introducing new products
– Persuade
• Becomes more important
as competition increases
• Comparative ads
– Remind
• Most important for mature
products
Setting objectivesSetting objectives
Setting the budgetSetting the budget
Developing theDeveloping the
advertisingadvertising
strategystrategy
EvaluatingEvaluating
advertisingadvertising
campaignscampaigns
Key Decisions:Key Decisions:

57. 16- 57
Advertising
Major Media TypesMajor Media Types
• Newspapers
• Television
• Direct Mail
RadioRadio
MagazinesMagazines
OutdoorOutdoor
InternetInternet

58. Major Types of Advertising
Corporate Image
Advocacy Advertising
Types
of
Advertising
Types
of
Advertising
Pioneering
Competitive
Comparative
Product
Advertising
Institutional
Advertising

59. Advertising Campaign Decision Process
Determine the campaign objectives.
Make creative decisions. Make media decisions.
Evaluate the campaign.

60. Sales promotion is the short-term incentives to
encourage the purchase or sale of a product or
service

61. Tools for Consumer Sales Promotion
Coupons
Premiums
Frequent Buyer Programs
Contests and
Sweepstakes
Samples
Point-of-Purchase
Displays
Six
Categories
of
Consumer
Sales
Promotions
Six
Categories
of
Consumer
Sales
Promotions

62. Elements of the Promotion
Mix
Advertising
Ingredients
of the
Promotion
Mix
Ingredients
of the
Promotion
Mix
Public Relations
Personal Selling
Sales Promotion

63. • Sales Promotions
–Can be targeted at final buyers,
retailers and wholesalers, business
customers, and members of the sales
force.
–The use of sales promotions has been
growing rapidly.
Sales Promotion

64. 16- 64
Sales Promotion
Consumer Promotion ToolsConsumer Promotion Tools
• Samples
• Cash Refunds
(Rebates)
• Price packs (cents-
off deals)
• Advertising
Specialties
PremiumsPremiums
PatronagePatronage
RewardsRewards
Point-of-PurchasePoint-of-Purchase
CommunicationsCommunications
Contests, Games,Contests, Games,
and Sweepstakesand Sweepstakes

65. 16- 65
• Trade Promotion Tools
– Discounts (also called price-offs,
off-list, and off-invoice discounts)
– Allowances
• Advertising allowances
• Display allowances
– Free goods
– Push money
– Specialty advertising items
Sales Promotion

66. 16- 66
• Key Decisions When Developing the Sales
Promotion Program:
– Size of the incentive
– Conditions for participation
– Promotion and distribution of the actual sales
promotion program
– Length of the promotional program
– Evaluation
• Surveys and experiments can be used
Sales Promotion

67. Creating a Promotion
Plan
Choose Promotion Mix
Develop Promotion Budget
Set Promotion Objectives
Identify Target Market
Analyze the Marketplace