4. SELLING V/S MARKETING
SELLING MARKETING
STARTING POINT PRODUCT CUSTOMER NEEDS
MEANS AGGRESSIVE SUPERFLUOUS
SELLING & SELLING
PROMOTION
PROFITABILITY
PROFITS THRU THROUGH
ENDS SALES VOLUME CUSTOMER
SATISFACTION
5. PILLARS OF MARKETING / CUSTOMER ORIENTATION
1. CLEAR DEFINITION OF TARGET MARKET (DEMOGRAPHICS,
PSYCHOGRAPHICS, MEDIAGRAPHICS, GEOGRAPHICS)
2. PERFECT UNDERSTANDING OF CUSTOMER NEEDS
3. INTEGRATE / COORDINATE ALL ACTIVITIES (INTER & INTRA DEPT)
4. PROFITABILITY THROUGH CUSTOMER SATISFACTION
6. THUS CUSTOMER ORIENTATION MEANS
1. OBSESSED WITH CUSTOMER & AWARE OF COMPETITOR
2. MONITOR UNFULFILLED NEEDS CONTINUOUSLY THROUGH
RESEARCH.
3. FUTURISTIC - MARKETING EXPENDITURE AN INVESTMENT
4. MARKETING CULTURE - CUSTOMER OVERRIDES ORGANISATIONAL
INTERESTS
5. SPEED IN RESPONSE TO CUSTOMER’S PROBLEMS
6. CONSISTENCY IN DELIVERY OF VALUES, SATISFACTION
7. CUSTOMER RETENTION STRATEGIES
8. MASS CUSTOMIZATION
9. INTERACTIVE AND CUSTOMER FRIENDLY DELIVERY SYSTEMS
10. LOOKING AT CONSUMPTION SYSTEM RATHER THAN PRODUCT FOR
AUGMENTATION
11. ALL DEPARTMENTS THINK CUSTOMER
12. CUSTOMER SATISFACTION - GOAL & MARKETING TOOL
7. WHAT IS MARKETING
ALL ACTIVITIES DESIGNED TO GENERATE AND FACILITATE
EXCHANGE OF PRODUCTS AND VALUES INTENDED TO SATISFY
HUMAN NEEDS AND WANTS.
MARKETING MANAGEMENT IS THE PROCESS OF PLANNING AND
EXECUTING THE CONCEPTION, PRICING, PROMOTION, AND
DISTRIBUTION OF IDEAS, GOODS, AND SERVICES TO CREATE
EXCHANGE THAT SATISFY INDIVIDUAL AND ORGANIZATIONAL
GOALS.
8. MARKETER’S TASK
DEMAND MANAGEMENT (Level, Timing & Composition)
STATES OF DEMAND
NEGATIVE - Redesign Mix
NO DEMAND – Connect Benefits to Need
LATENT – Measure
FALLING – Creative Remarketing
IRREGULAR - Use Synchro Marketing
FULL – Maintain
OVERFULL – Use Selective Demarketing
UNWHOLESOME – Use Laws, Fear, Price Hike, Reduced Availability
9. CORE CONCEPTS OF MARKETING
NEEDS – Deprivation of basic satisfaction
WANTS –specific satisfiers of need
DEMAND-wants backed by ability and willingness to buy
PRODUCTS- anything( Physical good, service,person, idea0 that can
satisfy a need or want
UTILITY & VALUE &-SATISFACTION
EXCHANGE-A value creating process
TRANSACTION-Trade of values between parties
RELATIONSHIPS-relationship marketing V/s transaction marketing
MARKETS-all potential customers
11. The Four P Components of the Marketing Mix
Marketing Mix
Product Target market Place
Product variety Channels
Quality Coverage
Design Assortments
Features Locations
Brand name Inventory
Packaging Price Promotion Transport
Sizes List Price Sales promotion
Services Discounts Advertising
Warranties Allowances Sales force
Returns Payment period Public relations
Credit terms Direct marketing
11
12. MARKETING MIX - 7 PS
PRODUCT
PRICE
PLACE
PROMOTION
PEOPLE
PACE (PROCESS)
PROOF OF PERFORMANCE
CHOICE OF MARKETING MIX DEPENDS ON TARGET MARKET & POSITIONING
13. Expanded Marketing Mix For Product/Service
Product Place Promotion Price
Physical good features Channel type - Promotion blend Flexibility
Quality level coverage - Salespeople Price level
Services Intermediaries Number CreditTerms
Packaging Outlet locations Selection Differentiation
sizes Training Payment period
Warranties Transportation Incentives Discounts
Storage - Advertising Allowance
Branding Targets
variety Media types
Design ,style Types of ads
Copy thrust
- Sales promotion
- Publicity
-direct mktg
13
14. People Physical evidence Process
- Employees Facility design - Flow of activities
Recruiting Equipment Standardized
Training Signage Customized
Motivation Employees dress - Number of steps
Rewards - Other tangibles Simple
Teamwork Reports Complex
- Customers Business cards - Customer involvement
Education Statements
Training Guarantees
14
15. RESPONSIVE V/S CREATIVE MARKETER
1. STATED NEED - PRODUCT DEMANDED E.g. INEXPENSIVE CAR
2. REAL NEED - FUNCTIONAL BENEFIT DESIRED E.g. LOW
MAINTENANCE COST
3. UNSTATED NEED - EXPECTATION FROM COMPANY E.g. DEALER
SERVICE
4. DELIGHT NEED-Eg COMPLIMENTARY GIFT
5. SECRET NEED - EMOTIONAL BENEFIT - E.g. SEEN BY OTHERS AS
VALUE ORIENTED BUYER
16. CUSTOMER SATISFACTION V/S DELIGHT
PERCEIVED PERFORMANCE = EXPECTATIONS OK / SATISFIED
PERCEIVED PERFORMANCE < EXPECTATIONS DISSATISFIED/ UNHAPPY
PERCEIVED PERFORMANCE > EXPECTATIONS DELIGHTED
DELIGHTED CUSTOMERS HAVE EMOTIONAL AFFINITY WITH BRAND & HENCE
LOYALTY.
EXPECTATIONS BASED ON PAST BUYING EXPERIENCE, ADVERTISEMENTS,
FRIENDS, COMPETITORS EXPECTATIONS, PRICE, BENCHMARKING.
EXPECTATIONS DIFFER BASED ON PRODUCT, CUSTOMER.
17. Tools to track customer satisfaction
• Complaint and suggestion systems
• Customer satisfaction surveys
• Ghost shopping
• lost customer analysis
• Cautions to be exercised in C.S. surveys
• Definition in detail
• Manipulation by customers and managers
17
18. The Customer-Development Process
Suspects
Disqualified
Prospects
Prospects
First-time
customers
Repeat
customers
Clients
Inactive of
Ex-customers
Members
Advocates
Partners 18
19. DEFINING CUSTOMER VALUE
EXCELLENT PRODUCT IS OF NO USE IF IT FAILS TO MEET CUSTOMER
NEEDS. A COMPANY SHOULD BE SKILLED IN MARKET ENGINEERING
NOT JUST PRODUCT ENGINEERING.
20. CUSTOMER DELIVERED VALUE
CUSTOMER DELIVERED VALUE is the difference between
total customer value and total customer cost. TOTAL
CUSTOMER VALUE is the bundle of benefits customers expect
from a given product or service. TOTAL CUSTOMER COST is
the bundle of costs customers expect to incur in evaluating,
obtaining, and using the product or service.
21. CUSTOMER DELIVERED VALUE
PRODUCT
SERVICE
TOTAL CUSTOMER
PERSONNEL VALUE
IMAGE
CUSTOMER
DELIVERED VALUE
MONETARY VALUE
TIME COST TOTAL CUSTOMER
COST
ENERGY COST
PSYCHIC COST
22. DELIVERING CUSTOMER VALUE
1. MICHAEL PORTER’S GENERIC VALUE CHAIN
2. BENCHMARK AGAINST COMPETITION
3. VALUE CHAIN OF SUPPLIERS, DISTRIBUTORS, CUSTOMERS TO
CREATE SUPERIOR VALUE-DELIVERY NETWORK
23. GENERIC VALUE CHAIN
• PRIMARY ACTIVITIES
• Inbound Logistics
• Operations
• Outbound Logistics
• Marketing and Sales
• Service
• SUPPORT ACTIVITIES
• Procurement
• Technology development
• Human resource Management
• Firm Infrastructure
23
24. CORE BUSINESS PROCESS
1. NEW PRODUCT REALIZATION PROCESS
2. INVENTORY MANAGEMENT PROCESS
3. ORDER TO REMITTANCE PROCESS
4 CUSTOMER SERVICE PROCESS
5 MARKET SENSING PROCESS
6 CUSTOMER ACQUISITION PROCESS
7 CUSTOMER RELATIONSHIP MANAGEMENT PROCESS
25. CUSTOMER VALUE BUILDING APPROACHES - BERRY &
PARASHURAMAN
1. ADDING FINANCIAL BENEFITS-FREQUENCY MARKETING
PROGRAMS AND CLUBS
2. ADDING SOCIAL BENEFITS-INDIUALIZING AND PERSONALIZING
RELATIONSHIPS
3. ADDING STRUCTURAL TIES-SUPPLY CUSTOMERS WITH SPECIAL
EQUIPMENT OR COMPUTER LINKAGESTHAT HELP CUSTOMERS
MANAGE THEIR ORDERS,PAYROLL, INVENTORY ETC
26. CUSTOMER RELATIONSHIP BUILDING
BASIC MARKETING – Simply Sell
REACTIVE MARKETING – Sell & encourage customer to call if
any Questions, comments or complaints.
ACCOUNTABLE MARKETING – Salesman phones after sale
PROACTIVE MARKETING – Salesperson contacts from time to
time with suggestions about improved product uses or new products
PARTNERSHIP MARKETING – Company works continuously
with customer to discover ways to effect customer savings or help
customer perform better.
27. LEVELS OF RELATIONSHIP MARKETING
HIGH MEDIUM LOW
MARGIN MARGIN MARGIN
Many customers/ Accountable Reactive Basic or
distributors reactive
Medium number Proactive Accountable Reactive
of customers/
distributors
Few customers / Partnership Proactive Accountable
distributors
28. LIFE TIME VALUE OF CUSTOMER
1. Lost customer revenue
2. Lost opportunity revenue
3. Customer replacement costs
29. COST OF ACQUISITION
1. COST OF AVERAGE SALES CALL = TOTAL COST
(SALARY, COMMISSION, BENEFITS, TOTAL SALES CALLS
EXPENSES)
2. AVERAGE NUMBER OF SALES CALLS = TOTAL SALES CALLS
TO CONVERT AVERAGE PROSPECT TOTAL NO. OF NEW
TO CUSTOMER CUSTOMERS
3. COST OF ATTRACTING NEW CUSTOMER = 2 X 1
30. Service Encounters or Moments of Truth
Service encounters are the building blocks of service quality
& satisfaction
- Every experience with product, service or person which
allows customer to judge/ form impressions about the quality
of service is a moment of truth.
- It takes 10 good moments of truth to wipe one bad moment of
truth.
- Disney Corporation 74 service encounters in amusement
park. Marriott Hotels - 4 of the top 5 factors come into play in
first 10 minutes of guest’s stay.
• Types of service encounters- remote, phone, face to face.
- In remote - tangible evidence & technical quality important.
- In phone- process quality
- In face to face - customer also play role.
30
32. Sample Marketing Metrics
I. External II. Internal
Awareness Awareness of goals
Market share (volume or value) Commitment to goals
Relative price (market share value/volume) Active innovation support
Number of complaints (level of dissatisfaction) Resource adequacy
Customer satisfaction Staffing/skill levels
Distribution/availability Desire to learn
Total number of customers Willingness to change
Perceived quality/esteem Freedom to fail
Loyalty/retention Autonomy
Relative perceived quality Relative employee satisfaction
32
33. Sample Customer-Performance Scorecard Measures
•Percentage of new customers to average number of customers.
• Percentage of lost customers to average number of customers.
•Percentage of win-back customers to average number of customers.
•Percentage of customers falling into very dissatisfied, dissatisfied, neutral, satisfied,
and very satisfied categories.
•Percentage of customers who say they would repurchase the product.
•Percentage of customers who say they would recommend the product to others.
•Percentage of target market customers who have brand awareness or recall.
•Percentage of customers who say that the company’s product is the most preferred in
its category.
•Percentage of customers who correctly identify the brand’s intended positioning and
differentiation.
•Average perception of company’s product quality relative to chief competitor.
•Average perception of company’s service quality relative to chief competitor.
33
35. STRATEGIC PLANNING
MARKET-ORIENTED STRATEGIC PLANNING - is the managerial
process of developing and maintaining a viable fit between the organizaiton’s
objectives, skills, and resources and its changing market opportunities. The
aim of strategic planning is to shape and reshape the company’s business and
products so that they yield target profits and growth.
Thus strategic planning is concerned with
4. Treating business as an investment portfolio.
5. Building game plan for each business – based on industry position
opportunity, resources, mission, objectives.
6. Future potential and not just current potential.
36. SEE APPENDIX – 18 (THE STRATEGIC
PLANNING, IMPLEMENTATION, AND
CONTROL PROCESS)
Planning Implementing Controlling
Corporate planning
Measuring Results
Organizing
Division planning
Diagnosing results
Business planning Implementing
Taking corrective
action
Product planning
37. CORPORATE & DIVISION STRATEGIC PLANNING
• DEFINING THE CORPORATE MISSION
• ESTABLISHING STRATEGIC BUSINESS UNITS (SBUS)
• ASSIGNING RESOURCES TO EACH SBU
• PLANNING NEW BUSINESSES
38. DEFINING THE CORPORATE MISSION
• Shaped by History, current preferences of owners and management, market
environment, resources, distinctive competences.
• Provides sense of purpose, direction, and opportunity.
• Good mission statements, limited number of goals and values and major
competitive scopes.
• Provides direction for 10 – 12 years.
39. ESTABLISH STRATEGIC BUSINESS UNITS AND ASSIGN
RESOURCES
Assigning resources by evaluating by using analytical tools for classifying its
businesses by profit potential.
1. Boston Consulting Group Model
2. General Electric Model
40. Boston Consulting Group Model
20%
18%
Market Growth Rate
16% Stars Question Marks
14%
12%
10%
8%
6% Cash Cow Dogs
4%
2%
0
0.2 X
0.3 X
0.5 X
0.1X
0.4X
10 X
1.5 X
1X
2X
4X
40
Relative Market Share
41. BCG’s GROWTH SHARE MATRIX
• An unbalanced portfolio would have too many dogs or question marks and/or
too few stars and cash cows.
• BUILD – for stars
HOLD - strong cash cows
HARVEST – weak cash cows, question marks, dogs.
DIVEST – dogs, question marks.
• SBUs - change their position in the growth-share matrix.
42. GENERAL ELECTRIC MODEL
Each business is rated in terms of two major dimensions, market attractiveness and
business strength.
• MARKET ATTRACTIVENESS – Overall market size,,mkt growth rate,profit
margin,competitive intensity,inflationary vulnerability.,technological
requiremnets,environmental impact..
• STRENGTH OF SBU / FIRM = Market share,share growth,product
quality,brand reputation,distribution network,promotion
effectiveness,production capacity,productive effeciency,R&D
performance,managerial personnel,
Each of these factors is assigned weights and business is measured of 5 point scale.
44. (B) Strategies
BUSINESS STRENGTH
BUILD SELECTIVELY
INVEST TO BUILD
PROTECT POSITION • Specialize around limited
• Challenge for
strength.
leadership.
• Invest to grow at maximum • Seek ways to overcome
• Build selectively on
digestible rate. weaknesses.
strengths.
• Concentrate effort on • Withdraw if indications of
• Reinforce vulnerable
maintaining strength. sustainable growth are
areas
lacking.
BUILD SELECTIVELY SELECTIVITY /
LIMITED EXPANSION
• Invest heavily in most MANAG FOR EARNING
attractive segments. • Protect existing program. OR HARVEST
• Build up ability to counter •Concentrate investments •Look for ways to expand
in segments where without high risk;otherwise,
competition.
• Emphasize productivity profitability is good and minimize investment and
risks are relatively low. rationalize operations.
by raising productivity.
PROTECT AND REFOCUS MANAGE FOR EARNINGS DIVEST
•Manage for current earnings. •Protect position in most • Sell at time that will
• Concentrate on attractive profitable segments. maximize cash value.
segments. •Upgrade product line. •Cut fixed costs and avoid
• Defend strength. • Minimize investment. investment meanwhile.
Strong Medium Weak 44
45. CORPORATE NEW BUSINESS PLAN
When gap between future desired sales and projected sales, then three
options.
• INTENSIVE GROWTH – current business
• INTEGRATIVE GROWTH – build or acquire businesses related to
the company’s current businesses.
• DIVERSIFICATION GROWTH – opportunities in unrelated
business.
46. GROWTH STRATEGIES
INTENSIVE GROWTH – (Ansoff’s Product / Market Expansion Grid )
INTEGRATIVE GROWTH – Backward, Forward, Horizontal
DIVERSIFICATION GROWTH – Concentric (Same technology /
Marketing synergy), Horizontal (Appeals to current customers), Conglomerate
(No relationship to the company’s current technology, products, or markets).
47. Current Product New Product
Current 3. Product-
1. Market- penetration
Markets development
strategy
strategy
New 2. Market-
(Diversification
Markets development
Strategy)
strategy
47
48. THE BUSINESS STRATEGIC PLANNING PROCESS
1. BUSINESS MISSION
2. SWOT ANALYSIS
3. GOAL FORMULATION
4. STRATEGY FORMULATION
5. PROGRAM FORMULATION
6. IMPLEMENTATION
7. FEEDBACK AND CONTROL
49. OPPORTUNITY AND THREAT
• A MARKETING OPPORTUNITY - is an area of buyer need in which a
company can perform profitably.
OPPORTUNITIES - can be classified according to their attractiveness and
their success probability.
• AN ENVIRONMENTAL THREAT - is a challenge posed by an
unfavorable trend or development that would lead, in the absence of
defensive marketing action, to deterioration in sales or profit.
Threats should be classified according to their seriousness and probability of
occurrence.
50. CHECKLIST FOR STRENGTHS / WEAKNESSES
ANALYSIS
Importance of factor(High ,Medium , Low) and performance
rating (Major/minor strengh,Neutral,,Major/Minor weakness)on
dimensions in
Marketing –Company reputation,marketshare,product/service
quality,pricing/distribution/advtg/salesforce/innovation
effectiveness,geog coverage
Finance-cost/availability of capital,cash folw/,financial stability
Manufacturiing-facilities,economies of scale,capacity,mfg
skill ,dedicated workforce
Organization-visionary leadership,dedicated 50
employees,entrepreneurial orientation,flexible/responsive
52. STRATEGY FORMULATION
MICHAEL PORTER’S THREE GENERIC STRATEGIES
• OVERALL COST LEADERSHIP – firms should be good at engineering,
purchasing, manufacturing and distribution.
• DIFFERENTIATION – on key customer benefit area e.g. services, quality, style,
technology.
• FOCUS – on narrow market segment and pursue either cost leadership or
differentiation.
• “CLEAR STRATEGY IMPORTANT” - “Don’t be middle of the roaders”
• Firms pursuing same strategy in same to market constitute strategic group.
53. STRATEGIC ALTERNATIVES
Long -term
profits
Growth in
sales or market Efficiency,
share short-run profits
Market Market
Development Penetration Increase
Decrease
inputs outputs
New Existing
segments Customers Reduce Increase
costs price
Convert Competitors’
nonusers customers Improve Improve
asset 53
New product sales mix
developments utilization
54. PROGRAM FORMULATION AND IMPLEMENTATION,
FEEDBACK & CONTROL
PROGRAM FORMULATION - Develop programs in line with strategy
e.g. Technology leadership – strengths – R&D,
gather technological intelligence, develop leading edge products, train technical
sales force, develops ads to communicate technology leadership.
IMPLEMENTATION – The McKinsey 7-S Framework(Hardware-
strategy,structure,systems and Software-Style, Staff, Skills, Shared Values)
FEEDBACK & CONTROL - Need to review and revise implementation,
programs, strategies, or even objectives.
55. MARKETING PROCESS
Involves
2. Analysing Marketing Opportunities
3. Developing marketing strategies (Differentiating and positioning)
4. Developing marketing programs (Marketing mix)
5. Managing marketing effort through
- Annual plan control (Achievement of sales, profits and other goods).
- Profitability control (Analysis of profitability of products, customers, trade
channels and order sizes, Marketing profitability analysis and marketing
efficiency studies).
- Strategic control (Appropriateness of companies marketing strategy to
market conclusions through marketers audit).
56. A GOOD MARKETING STRATEGY
• CO-ORDINATES FUNCTIONAL AREAS OF ORGANISATION
• ALLOCATES RESOURCES EFFICIENTLY
• HELPS PRODUCT ATTAIN MARKET POSITION
• COMPETITIVE
57. OBJECTIVES OF MARKETING PLAN
TO,
2. Define current situation facing the product (and how we got there)
3. Define problems and Opportunities
4. Establish objectives
5. Define strategies and programs necessary to achieve objectives
6. Pinpoint responsibility to achieve
7. Encourage careful and disciplined thinking
8. Establish customer-competitor orientation
58. CONTENTS OF A MARKETING PLAN
I. Executive summary and table of Presents a brief over of the proposed plan
contents
II. Current marketing situation Presents relevant background data on the
market, product, competition, distribution, and
macro-environment.
III. Opportunity and issue analysis Identifies the main opportunities/threats,
strengths/weaknesses, and issues facing the
product line.
IV. Objectives Defines the plan’s financial and marketing goals
in terms of sales volume, market share, and
profit
V. Marketing strategy Presents the broad marketing approach that will
be used to achieve the plan’s objectives.
VI. Action programs Presents the special marketing programs
designed to achieve the business objectives.
VII. Projected profit-and-loss statement Forecasts the plan’s expected financial
outcomes.
VIII. Controls Indicates how the plan will be monitored
59. FREQUENT MISTAKES IN PLANNING PROCESS
1. Speed of planning
2. Amount of data collections
3. Who does the planning
4. Structure
5. Length of plan
6. Frequency of planning
7. Number of courses of action considered
8. Who sees the plan
9. Insufficient senior management leadership
10. Tying compensation to efforts
61. MARKETING ENVIRONMENT ANALYSIS
OUTSIDE - IN VIEW TO TRACK TRENDS, OPPORTUNITIES &
THREATS
FOLLOWED BY MARKET RESEARCH TO DETERMINE AN
OPPORTUNITY’S PROFIT POTENTIAL.
OPPORTUNITIES CAN BE CLASSIFIED ON ATTRACTIVENESS &
SUCCESS PROBABILITY (COMPETITIVE ADVANTAGE).
THREATS ARE CLASSIFIED ON BASIS OF SERIOUSNESS &
PROBABILITY OF OCCURRENCE.
62. CHECKLIST FOR STRENGTHS / WEAKNESSES
ANALYSIS
Importance of factor and performance rating on dimensions in
Marketing –Company reputation,marketshare,product/service
quality,pricing/distribution/advtg/salesforce/innovation
effectiveness,geog coverage
Finance-cost/availability of capital,cash flow/,financial stability
Manufacturing-facilities,economies of scale,capacity,mfg
skill ,dedicated workforce
Organization-visionary leadership,dedicated
employees,entrepreneurial orientation,flexible/responsive
63. MARKETING ENVIRONMENT
I. MAJOR FACTORS - (MACROENVIRONMENT)
A) DEMOGRAPHIC - (BREAKUP & CHANGES IN AGE, INCOME, SEX,
EDUCATION, URBAN-RURAL, LIFE EXPECTANCY, OCCUPATION,
PERSONS PER HOUSEHOLD).
B) SOCIO / CULTURAL - (FAMILY STRUCTURE, DECISION-MAKING,
PESTERPOWER VALUES LIFESTYLES).
C) TECHNO LOGICAL - (CREATIVE DESTRUCTION, IMPACT ON
PRODUCT, PACKAGING, ADVERTISING).
D) POLITICAL / LEGAL - (LAWS TO PREVENT UNFAIR COMPETITION,
CONSUMERS & SOCIETY).
E) ECONOMIC - (PER CAPITA INCOME, CREDIT AVAILABILITY,
SAVINGS, STAGE OF BUS CYCLE).
F) PHYSICAL - (GOVTAL INTERVENTION, NEW OPPORTUNITIES).
64. MARKETING ENVIRONMENT
II. ACTORS - (MICROENVIRONMENT)
A) COMPANY
B) SUPPLIERS
C) MARKETING INTERMEDIARIES
D) CUSTOMERS
E) COMPETITORS
F) PUBLIC - ASCI, CONSUMER ACTION GROUP
65. A Socioeconomic Classification (SEC) Matrix – India (Urban)
Occupation Education
School School SSC/HSC Graduate/ Graduate/
up to 5-9 Non- Postgraduate Postgraduate
Illiterate 4 Years Years SSC/HSC Graduate (General) (Professional)
Unskilled workers E2 E2 E1 D D D D
Skilled workers E2 E1 D C C B2 B2
Petty traders E2 D D C C B2 B2
Shop owners D D C B2 B1 A2 A2
Businessmen/
Industrialists with
number of
employees:
*None D C B2 B1 A2 A2 A1
*1-10 C B2 B2 B1 A2 A1 A1
*10 + B1 B1 A2 A2 A1 A1 A1
Self-employed/ D D D B2 B1 A2 A1
Professionals
Clerical/ D D D C B2 B1 B1
Salesmen
Supervisory D D C C B2 B1 A2
level
Officers/ C C C B2 B1 A2 A2
Executives-
Junior
Officers/ B1 B1 B1 B1 A2 A1 A1
Executives – 65
Middle/Senior
66. B Socioeconomic Classification (SEC) – India (Rural)
Education Type of House
Pucca Semi-Pucca Kuccha
K
u
Illiterate R
R4A R4A c R4B
Below SSC 4 v
R3A R3B R4A
A
SSC/HSC R2 R3A R3B
Some college, R1 R2
Not Graduate R3B
Graduate/Postgraduate R1 R2 R3A
(General)
General/Postgraduate R1 R2 R3A
(Professional)
66
67. Socioeconomic Distribution of Class-Wise Households
Socioeconomic class % of Households
Urban
1.0
A1 1.8
A2 2.5
B1 2.4
B2 6.1
C 6.6
D 3.0
E1 5.0
E2 28.4
Social(Urban)
Rural
2.6
R1 8.0
R2 26.7
R3 34.3
R4 71.6
Subtotal (Rural)
100
Total (Urban + Rural)**
(** Estimated number of households (in thousands) = 198,457 67
(Source: Adapted from The Marketing White book, 2005, pp. 54 [Based on IRS 2003 – 2004]
68. Estimated Number of Indian Households by
Income Groups 1999-2000
Households (millions)
Income Groups
(Annual Household Income
Rupees at 1999 – 2000 prices) Urban Rural Total
Up to 40,000 8.2 56.0 64.2
(low) (16.0) (44.7) (36.3)
40,001 -80,000 16.7 43.7 60.4
(lower middle) (32.5) (34.8) (34.2)
80,000-1,20,000 11.8 15.5 27.3
(middle) (23.0) (12.3) (15.5)
1,20,000 – 1,60,000 6.9 5.6 12.5
(upper middle) (13.5) (4.5) (7.1)
Above 1,60,000 7.7 4.5 12.2
(high) (15.0) (3.7) (6.9)
Total 51.3 125.3 176.6
(100) (100) (100) 68
69. Projected Age Distribution of Population
Year-wise Population (million)
Age Group 2001 2006 2011 2016
0-4 366 362 355 343
(35.6) (32.5) (29.7) (27.1)
15-59 598 673 747 811
(58.2) (60.4) (62.5) (64.0)
60+ 65 78 94 113
(6.3) (7.0) (7.9) (8.9)
Total 1,027 1,114 1,194 1,268
(100) (100) (100) (100)
69
71. COMPETITION - WHAT DO YOU NEED TO KNOW
1. WHAT ARE THEIR CURRENT / FUTURE OBJECTIVES - GROW, HOLD,
HARVEST, DIVEST.
2. WHAT ARE THEIR CURRENT / FUTURE STRATEGY.
3. WHAT ARE THEIR STRENGTHS / WEAKNESS
4. WHAT ARE THE REACTION PATTERNS
HOW STRONG THEY ARE
72. ASSESSING COMPETITIORS STRENGTHS / WEAKNESS
1. BOTH CORPORATE & BRAND LEVEL
2. ANY INVALID ASSUMPTIONS
3. SHARE OF MARKET, MIND, HEART
4. SATISFACTION / DISSATISFACTION AREA
74. 7 O’s FRAMEWORK
• WHO BUYS - OCCUPANT
• WHAT DOES HE BUY - OBJECT
• WHY DOES HE BUY - OBJECTIVE
• WHEN DOES HE BUY - OCCASION
• WHERE DOES HE BUY - OUTLET
• HOW DOES HE BUY - OPERATIONS
• WHO ARE INVOLVED - ORGANISATION
75. MODEL OF BUYER BEHAVIOUR
Buyer’s Buyer’s
characteristics Decision
Marketing stimuli Other stimuli Process
Product Economic
Price Technological Cultural Buying roles
Place Political Social Buying types
Promotion Cultural Personal Buying Stages
Psychological
Buyer’s decisions
Product choice
Brand choice
Dealer choice
Purchase timing
Purchase amount
76. Factors influencing behavior
PERSONAL
CULTURALSOCIAL
•AGE AND LIFE
CYCLE STAGE PSYCHOLOGICAL
• MOTIVATION
• OCCUPATION
• REFERENCE •PERCEPTION
GROUP •ECONOMIC BUYER
• CULTURE
CIRCUMSTANCES •LEARNING
• FAMILY • LIFESTYLE
• SUBCULTURE •BELIEFS AND
•ROLES AND •PERSONALITY ATTITUDES
STATUSES AND SELF-
• SOCIAL CLASS CONCEPT
78. BUYING BEHAVIOUR TYPES
High Involvement Low Involvement
Difference COMPLEX VARIETY
between brands
SEEKING
perceived
B A P WB P A
DISSONANCE HABITUAL
Difference
REDUCING
between brands
not perceived B P New B A WB P A
79. STAGES OF BUYING DECISION PROCESS
• PROBLEM RECOGNITION
• INFORMATION SEARCH – Criteria, Alternatives
• EVALUATION OF ALTERNATIVES
• PURCHASE DECISION
• POSTPURCHASE BEHAVIOUR
81. SUCCESSIVE SETS INVOLVED IN CONSUMER DECISION MAKING
TOTAL SET
AWARENESS SET
CONSIDERATION SET
CHOICE SET
PURCHASE DECISION
POST-PURCHASE BEHAVIOUR
82. Profiling the Customer Buying Decision Process
1) Introspective method – Marketers think how
they would act if they were consumers
2) Retrospective method – Ask consumers who
have bought to recall the event
3) Prospective method – Ask prospective
consumers who plan to buy to think aloud.
4) Prescriptive method – Ask consumers ideal way.
82
84. EXPECTANCY VALUE MODEL OF CONSUMER
CHOICE
CAR ATTRIBUTES
ENGINE EXTERIORS PRICE MILEAGE PERCEIVED
CAPACITY VALUES
WTS. 0.4 0.2 0.3 0.1
FORD ESCORT 10 8 6 8 8.2
OPEL ASTRA 8 9 6 6 7.4
HONDA CITY 6 10 8 9 7.7
CIELO 4 6 5 5 4.8
85. STRATEGIES FOR MARKETERS
• MODIFY THE BRAND – REAL REPOSITIONING
• ALTER BELIEFS ABOUT THE BRAND – PSYCHOLOGICAL
REPOSITIONING
• ALTER BELIEFS ABOUT COMPETITOR’S BRAND – COMPETITIVE
DEPOSITIONING
• ALTER IMPORTANCE WEIGHTS
• CALL ATTENTION TO NEGLECTED ATTRIBUTES
• SHIFT BUYER’S IDEALS
88. Organizational buying behaviour
• Organizational Buying is the decision-making process by which
formal organizations establish the need for purchased products and
services and identify , evaluate, and choose among alternative brands
and suppliers.
Organizations could be corporate, manufacturing firms,Service firms,
Institutional & Government markets.
89. Business Market V/S Consumer Market
1. Fewer buyers
2. Larger buyers
3. Close supplier-customer relationship - Customization
4. Geographically oriented buyers
5. Derived demand -business marketer must closely monitor buying
patterns of ultimate consumers.
6. Inelastic demand - in short run as producer cannot make quick
changes in production methods, also small percentage of items total
cost.
7. Fluctuating demand - given 10% increase in consumer demand can
cause 200% increase in business demand.
8. Professional purchasing - Policies, constraints, requirements.
9. Several buying influences - buying committees
10. Direct purchasing
11. Leasing - e.g. Heavy construction equipment, computers, etc.
12. Reciprocity - Chemical manufacturer & Paper manufacturer
90. Buying Situations
1. Straight rebuy - recorder on routine basis automatic recording
system from approved list of suppliers. Insuppliers & outsuppliers
strategy.
2. Modified rebuy - modifying in product specifications. Prices,
delivery requirements or other terms.
3. New task - Buying for first time
* Greater cost or risk, more the decision participants & greater
the information gathering.
* Missionary sales force used by marketer
* Mass media in awareness stage, stage sales people in interest
stage & technical sources in evaluation stage.
91. Participants in Business Buying Process
• Straight rebuy & modified rebuy situations- purchasing
agent important.
• New buy- engineering or other departments.
• Purchasing agent dominate in selecting suppliers.
92. Buying roles in Buying centre
1. Initiators - Users or others.
2. Users - Users may initiate & help define product
requirements.
3. Influencers - help define specifications & provide
information for evaluating alternatives technical personnel.
4. Decider - decide on product requirements & suppliers.
5. Approver - authorize actions of decider buyer.
6. Buyer - formal authority to select suppliers, negotiate.
7. Gatekeeper - Prevent sellers or info reaching buying
center. e.g. - purchasing agents, telephone, operators,
receptionists.
93. Major influences on Industrial
Buying Behaviour
• Business buyers responds both to economic & personal
factors. Personal (treatment etc)when similarity in supplier
offers.
ENVIRONMENTAL
Level of demand ORGANIZATIONAL INTERPERSONAL
•Economic outlook INDIVIDUAL
•Objectives •Interest
•Interest rate
•Rate of technological •Age
•Policies
change •Authority •Income
•Political and •Procedures • Education BUSINESS
regulatory •Status • Job position BUYER
developments •Organizational •Personality
•competitive Structures •Empathy •Risk attitudes
developments •Culture
•Systems
•Social responsibility •Persuasiveness
concerns
94. Trends in Organizational Buying
1. Purchase department upgrading
2. Centralized purchasing - in multidivisional companies
3. Decentralized purchasing for small ticket items.
4. Long-term contracts
5. Purchasing performance evaluation & rewards hence
pressure put on suppliers.
6. Just- in-time
7. Single sourcing & early supplier involvement.
95. Purchasing / Procurement Process
(Buy Phases)
1. Problem recognition - as a result of internal or external stimuli
2. General need description - items general characteristics, attributes &
quantity.
3. Product specification- Technical specifications.
4. Supplier search - buyer can examine trade directories, computer search, trade
shows, advertisements, recommendations of others.
5. Proposal solicitation - Buyer invites qualified suppliers to submit proposal,
make presentations.
6. Supplier selection - based on important factors e.g. product reliability,
technical service, price, supplier flexibility, reputation.
7. Routine order specification - Trend especially in MRO items is
blanket contract/ stockless purchase plan.
8. Performance review
96. Buying stages in buying classes
BUYCLASSES
NEW TASK MODIFIED STRAIGHT
REBUY REBUY
1. Problem recognition Yes Maybe No
2. General need description Yes Maybe No
3. Product specification Yes Yes Yes
4. Supplier search Yes Maybe No
BUYPHASES 5. Proposal solicitation Yes Maybe No
6. Supplier selection Yes Maybe No
7. Order-routine specification Yes Maybe No
8. Performance review Yes Yes Yes
97. Vendor analysis
An example of vendor Analysis
Rating scale
ATTRIBUTES IMPORTANCE (1) (2) (3) (4)
WEIGHTS POOR FAIR GOOD EXCELLENT
Price .30 X
Supplier reputation .20 X
Product reliability .30 X
Service reliability .10 X
Supplier flexibility .10 X
Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5
99. PORTER’S MODEL
Threat of new entrants
Intensity of Competitive rivalry
Bargaining power of buyers
Bargaining power of suppliers
Threat of substitutes
99
100. Five Forces Determining Segment Structural Attractiveness
Potential entrants
(Threat of
mobility)
Industry Buyers
Suppliers (Buyer
competitors
(Supplier power)
(Segment rivalry)
power)
Substitutes
(Threat of
substitutes)
100
101. Identifying Competition
• Industry Concept of Competition – Group of firms
that offer a class of products that are close
substitutes classified on basis of
I. Number of sellers & degree of differentiation
c) Pure monopoly
d) Oligopoly – Pure oligopoly (oil, steel) &
differentiated oligopoly (auto, computers)
e) Monopolistic competition – restaurants
f) Pure competition – stock market
II. Entry, mobility & exit barriers.
101
102. Identifying Competition Contd of Slide ….
III. Cost structure – shapes strategic conduct
e.g. steelmaking involves heavy
manufacturing & raw material costs
II. Degree of vertical integration
III. Degree of globalization – some industries
are highly local (babycare) others are global
(e.g. oil, cameras)
B. Market Concept of competition –
Brand/Form/Category/Desire
102
103. COMPETITION
WHAT DO YOU NEED TO KNOW
• WHO ARE OUR COMPETITORS - IDENTIFY &
SELECT
• WHAT ARE THEIR OBJECTIVES
• WHAT ARE THEIR STRATEGIES
• WHAT ARE THEIR STRENGTHS & WEAKNESSES
• WHAT ARE THEIR REACTION PATTERNS 103
104. IDENTIFYING COMPETITION
• CORRECT DEFINITION IMPORTANT TO MARKET
PLANNING & STRATEGY
• KEY QUESTION IS DEGREE EXTENT
• BALANCE BETWEEN TOO MANY & TOO FEW
• NOT EASY AS EMERGING COMPETITION
• WRONG DEFINITION LEADS TO
a) MARKETING MYOPIA
b) AMBIGUITY IN MARKET RELATED STATISTICS
104
106. INDUSTRY CONCEPT OF
COMPETITION
• 1)Number of sellers and degree of differentiation
a)Pure Monopoly
b)Oligopoly- a small no. of large firms Pure eg oil,steel Or
Differentiated automobiles,refrigerators
c)Monopolistic competition—Many competitors and
differentiated eg restaurants,beauty parlors
d)Pure competition eg stock market
2)Entry,Mobility,exit barriers
3)Cost structure
4)Degrree of vertical integration
5)Degree of Globalisation
106
107. Market concept of competition
• Stimulates long run strategic market planning
• Key to identify is mapping product/market
grid
• Opens eyes to broader set of actual &
potential competitors
• a) Brand
• b) Product form competition
• c) Category / Generic / Industry Competition
• d) Desire / Budget
107
108. COMPETITIVE LEVEL & TASKS
Competitive Level Product Manager’s task
Brand Convince customers brand is
better than others in product form
(inward oriented)
Convince product form is best in
Product Form
the category
(inward)
Convince product category is best
Generic / Category
to satisfy need
(Outward)
Convince Generic need / benefit is
Desire / Budget best way to spend discretionary
income
108
109. METHODS FOR DETERMINING COMPETITORS
I. PREDETERMINED CATEGORIES - ORG
II. MANAGERIAL JUDGEMENT
III. CUSTOMER BASED MEASURES
a) PURCHASE DATA FOR BRAND SWITCHING MATRIX
b) CROSS ELASTICITY OF DD
c) CONSUMER JUDGEMENTS
c.1. JUDGED OVERALL SIMILARITY
c.2. SIMILARITY OF CONSIDERATION SET
c.3. PRODUCT DELETION SET
109
c.4. SUBSTITUTION IN USE
110. BRAND SWITCHING MATRIX
TIME (++1)
A B C D E
A .6 .2 .2 0 0
B .2 .3 .4 .1 0
TIME
C .2 .3 .5 0 0
t
D 0 .1 .1 .5 .3
E .1 0 0 .4 .5
110
111. FIGURE 3.13: METHODS VERSUS COMPETITION LEVELS
AND INFORMATION REQUIRED
Level of Competition Typical Data Sources
Approach Brand Product Generic Budget Primary Secondary
Form
Existing definitions X X X
Technology substitution X X X X
Managerial judgment X X X X
Customer behavior based:
Brand switching X X X
Interpurchase times X X X
Cross-elasticities X X X X
111
112. FIGURE 3.13: METHODS VERSUS COMPETITION LEVELS
AND INFORMATION REQUIRED
Level of Competition Typical Data Sources
Approach Brand Product Generic Budget Primary Secondary
Form
Customer evaluation based:
Overall similarity X X X X
Similarity of consideration X X X X X
sets
Product deletion X X X X
Substitution in use X X X X
Note: An X indicates that either the method is useful for determining competition at
that level or it employs data of a certain type. 112
113. IDENTIFYING COMPETITORS
STRATEGIES
• A group of firms following same strategy in
given target market is called a strategic
group.
• Dimensions include level of technological
sophistication,geographicalscope,
manufacturing methods,marketing
strategies etc
113
114. ASSESSING COMPETITOR’S
CURRENT STRATEGY
1. TARGET MARKET
2. CORE MARKETING STRATEGY
a) POSITIONING
b) DIFFERENTIAL ADVANTAGE
3. MARKETING MIX
114
115. ASSESSING COMPETITOR’S
CURRENT OBJECTIVES
• growth v/s hold v/s harvest v/s divest.
•Short term v/s long term profits, satisfycing v/s maximizing
profits, cash flow,,market sharegrowth,,technological/,service
/cost leadership
• objectives shaped by size, history, management perspective,
financial situation, place in larger organisation
• objectives can be assessed
a) from strategy
b) geographical home of parent
115
c) ownership of firm - private / public/ government
116. ASSESSING COMPETITOR’S
STRENGTHS & WEAKNESSES
1. THROUGH
- SECONDARY DATA
- PERSONAL EXPERIENCE
- PRIMARY SOURCES (CUSTOMERS, SUPPLIERS, DEALERS)
2. ANALYSIS SHOULD BE FOR BOTH CORPORATE & BRAND
LEVELS
3. ANY INVALID ASSUMPTIONS THAT COMPETITOR IS
MAKING
4. SHARE OF MARKET, MIND, HEART
5. SATISFACTION / DISSATISFACTION AREA
6. COMPARISION VIS-A-VIS OUR BRAND
116
117. ESTIMATING COMPETITOR’S
REACTION PATTERNS
DEPENDS ON
a) IMPORTANCE OF BUSINESS OR PRODUCT
b) HOW COMMITTED IS THE COMPETITOR
(PHILOSOPHY, MIND-SET)
c) AGGRESSIVENESS OF MANAGERS
117
118. ESTIMATING COMPETITOR’S
REACTION PATTERNS
TYPES OF COMPETITORS
• LAID BACK
• SELECTIVE
• TIGER
• STOCHASTIC
118
119. DESIGNING COMPETITOR
INTELLIGENCE SYSTEM
1. COSTLY SIGNALS
2. CHEAP TALK SIGNALS
PRODUCT MANAGER MUST COLLECT BOTH TYPES
OF INFORMATION BUT BE WARY OF (2)
119
120. SOURCES OF INFORMATION OF
COMPETITORS
I. SECONDARY
II. PRIMARY
III. OTHERS
IV. UNETHICAL
120
121. SELECTING COMPETITION
1. LEVEL
2. SELECTING COMPETITOR FOCUS
CHOOSING WHO TO COMPETE HAS IMPLICATIONS
ON PERFORMING STDS (MARKET SHARE) &
COMPETITIVE STRATEGY
DEPENDS ON
a) TIME HORIZON
b) STAGE OF PLC
c) RATE OF CHANGE OF TECHNOLOGY
121
122. SELECTING COMPETITORS TO ATTACK &
AVOID
1. STRONG V/S WEAK COMPETITORS
2. CLOSE V/S DISTANT
3. GOOD V/S BAD
122
124. COMPETITIVE POSITIONS
• DOMINANT-Controls behavior of other competitors ,wide
choice of strategic options
• STRONG-can take independent actions and maintain its
long term position
• FAVOURABLE-exploitable strength and above average
opportunity to improve position
• TENABLE-exists at sufferance of dominant company and
has lesser than average opportunity to improve position
• WEAK-poor performance.must change or exit
• NON-VIABLE-poor performance and no opportunity for
improvement
124
125. MARKET LEADER STRATEGIES
I. EXPANDING TOTAL MARKET
II. DEFENDING MARKET SHARE
III EXPANDING MARKET SHARE
125
126. Market- Leader Strategies
Expanding Total Market
NEW USERS :
Non-users or competitors users (Market penetration)
Different segments (New Market Strategy)
Geographical segments (Geographical Expansion
Strategy)
NEW USES :For example Vaseline as lubricant. Skin
ointment, healing agent, hair dressing.
MORE USAGE :Shampoo
126
127. MARKET LEADER DEFENSIVE STRATEGIES
Through continuous innovation, increasing competitive
effectiveness and value to customers.
a) POSITION DEFENSE – not enough today. e.g. Coke has
also diversified.
b) FLANK DEFENSE – Erect outposts to protect a weak
front or serve as an invasion base for counter attacking. E.g.
Asian Paints Tractors.
c) PREEMPTIVE DEFENSE – Launch attack before
enemy starts offense across market with many models.
127
128. Market Leader Defensive
Strategies
d) COUNTER OFFENSIVE DEFENSE – e.g. HLL reaction to
Tide.
b) MOBILE DEFENSE – Stretch Domain over new territories
through market broadening i.e. shifting focus from current
product to generic need E.g. Bank to insurance, Mutual
Funds etc. Aquafina & Kinley
c) CONTRACTION DEFENCE- Recognising that there is no
sense to spread too thin. (Strategic withdrawal)
128
129. EXPANDING MARKET SHARE
• Increased market share above 40% earns
ROI of 38.5%,more than 3 times that of
those firms with shares under 10%
• But important to consider 3 factors
• Provoking monopolist action
• Economic cost—holdout customers
• Wrong marketing mix
129
130. MARKET CHALLENGER STRATEGIES
Firms that occupy 2nd,3rd or lower ranks
are called runner ups. These firms can
either attack leader and make aggressive
bid for further market share( market
challenger ) or play ball and not rock
boat ( market follower)
130
131. Market challenger strategies
1. Can attack Market leader- high risk-high
payoff.Makes good sense if false leader
2. Can attack firms of own size that are not
doing well or are under financed.
3. Small and regional firms
131
132. MARKET CHALLENGER STRATEGIES
• FRONTAL ATTACK-attacking opponent’s strength rather
than weakness.Matching opponent on
product,advertising,price with 3:1 advantage otherwise cant
succeed
•MODIFIED FRONTAL ATTACK-Match leader’s offer on
all and beat on price
• FLANK ATTACK-Blind spots. Flank attack can be geog
or segmental eg Nirma. Much more likely to succeed than
frontal attack
132
•
133. MARKET CHALLENGER STRATEGIES
•ENCIRCLEMENT ATTACK-Comprehensive Blitz attack
on front,sides rear.Offer everything opponent offers and
more
• BYPASS ATTACK-is an indirect assault strategy.like
diversifying into unrelated products,new geographical
markets and leapfrogging into new technology
• GUERRILLA ATTACK-waging small intermittent
attacks. Harass , Demoralise eg price cuts, promotional
blitz,legal action
133
134. MARKET FOLLOWER STRATEGIES
Company prefers to follow than to challenge.
1. COUNTERFEITER
2. CLONER-The cloner emulates the leader’s
products,distribution, advertising etc Sudar dust
3. IMITATOR-copies some things of leader but maintains
differentiation on packaging, advertising, pricing etc
4. ADAPTER –adapts or improves leader’s product. Can
become future challenger E.g. Japanese firms
134
135. MARKET NICHER STRATEGIES
• SPECIALIZATION- Customer, geographic product line,
• MULTIPLE NICHING BETTER THAN SINGLE
NICHING
135
136. MARKETING ROLES NICHE SPECIALIST ROLES
The key idea in successful nichemanship is specialization. Here are some possible niche roles:
End – user specialist:
Vertical-level specialist:
Customer-size specialist:
Specific-customer specialist:
Geographic specialist:
Product or product – line specialist:
Product - feature specialist:
Job – shop specialist:
Quality – price specialist:
Service specialist:
Channel specialist:
136
138. Levels of Market Segmentation
1) Segment Marketing
2) Niche Marketing
3) Local Marketing
4) Customerization or segments of one or
customized marketing or one to one
marketing.
138
139. Steps in the Segmentation Process
Description
1. Need-Based Segmentation Group customers into segments based on similar needs
and benefits sought by customer in solving a particular
consumption problem.
3. Segment Identification For each needs-based segment, determine which demo-
graphics, lifestyles, and usage behaviors make the
segment distinct and identifiable (actionable).
4. Segment Attractiveness Using predetermined segment attractiveness criteria
(such as market growth, competitive intensity,
and market access), determine the overall attractiveness
of each segment.
5. Segment Profitability Determine segment profitability.
6. Segment Positioning For each segment, create a “value proposition” and
product-price positioning strategy based on
that segment’s unique customer needs and
characteristics.
7. Segment “Acid Test” Create “segment storyboards” to test the attractiveness
of each segment’s positioning strategy.
8. Marketing-Mix Strategy Expand segment positioning strategy to include all
139
aspects of the marketing mix: product, price,
promotion and place.
142. BASIS FOR SEGMENTING CONSUMER MARKETS
I. CONSUMER CHARACTERISTICS
1. GEOGRAPHIC (REGION, URBAN-RURAL)
2. DEMOGRAPHIC (AGE, SEX, OCCUPATION, INCOME, EDUCATION, FAMILY
LIFE CYCLE, FAMILY SIZE).
3. PSYCHOGRAPHICS (SOCIAL CLASS, LIFESTYLE, PERSONALITY)
II. CONSUMER RESPONSES
1. BENEFITS SOUGHT
2. OCCASIONS
3. USAGE RATE (HEAVY, MEDIUM, LIGHT)
4. USER STATUS (EX, CURRENT, NON, POTENTIAL, REGULAR, 1ST TIME)
5. LOYALTY STATUS (HARDCORE, SOFT CORE, SHIFTING, SWITCHERS)
6. BUYER READINESS (UNAWARE, AWARE, INFORMED, INTERESTED)
7. ATTITUDE TO PRODUCT (ENTHUSIASTIC, POSITIVE, INDIFFERENT,
NEGATIVE, HOSTILE).
143. MAJOR SEGMENTATION VARIABLES FOR BUSINESS
MARKETS
DEMOGRAPHIC
1. Industry : which industries should we serve?
2. Company size: What size companies should we serve?
3. Location: Which geographical areas should we serve ?
OPERATING VARIABLES
4.Technology : What customer technologies should we focus on?
5. User / customer status: Should we serve heavy users, medium users, light users, or nonusers?
6. Customer capabilities: Should we serve customers needing many or few services?
PURCHASING APPROACHES
7. Purchasing -function organization : Should we serve companies with highly centralized
or decentralized purchasing organizations?
8. Power structure: Should we serve companies that are engineering dominated,
financially dominated, and so forth?
9. Nature of existing relationships: Should we serve companies with which we have strong
relationships or simply go after the most desirable companies?
10. General purchase policies: Should we serve companies that prefer leasing?
Service contracts? Systems purchases? Sealed bidding?
11. Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?
144. MAJOR SEGMENTATION VARIABLES FOR BUSINESS
MARKETS
SITUATIONAL FACTORS
12. Urgency: Should we serve companies that need quick and sudden
delivery or service?
13. Specific application: Should we focus on certain applications of our
product rather than all applications?
14. Size of order: Should we focus on large or small orders?
PERSONAL CHARACTERISTICS
15. Buyer-seller similarity: Should we serve companies whose people and
values are similar to ours?
16. Attitudes toward risk: Should we serve risk- taking or risk-avoiding
customers?
17. Loyalty: Should we serve companies that show high loyalty to their
suppliers?
145. STEPS IN MARKET TARGETING
1. DEVELOP MEASURE OF SEGMENT ATTRACTIVENESS AND
EVALUATE.
2. SELECT TARGET SEGMENTS.
146. BASIS FOR EVALUATION & SELECTION OF TARGET SEGMENTS
1. SIZE
2. GROWTH
3. STRUCTURAL ATTRACTIVENESS (PORTER’S MODEL)
4. OBJECTIVES & RESOURCES
5. ECONOMIES OF SCOPE
147. PATTERNS OF TARGET MARKET SELECTION
1. SINGLE SEGMENT CONCENTRATION
2. MARKET SPECIALISATION
3. PRODUCT SPECIALISATION
4. SELECTIVE SPECIALISATION
5. FULL MARKET COVERAGE
148. ALTERNATIVE TARGETING STRATEGIES
CO’S MARKETING MIX WHOLE MARKET
UNDIFFERENTIATED MARKETING
MARKETING MIX 1 SEGMENT 1
M M 2 SEGMENT 2
M M 3 SEGMENT 3
DIFFERENTIATED MARKETING
SEGMENT 1
MARKETING MIX
SEGMENT 2
SEGMENT 3
CONCENTRATED MARKETS
149. Additional Considerations
1) Segment by segment invasion plans – mega
marketing to counter blocked markets
2) Updating segmentation schemes – market
partitioning
3) Ethical choice of Target markets
4) Counter segmentation.
149
150. DIFFERENTIATION & POSITIONING
DIFFERENTIATION IS THE ACT OF DESIGNING A SET OF MEANING
DIFFERENCES TO DISTINGUISH THE COMPANY’S OFFERS FROM
COMPETITOR’S OFFERS.
POSITIONING IS THE ACT OF DESIGNING COMPANY’S OFFER AND
IMAGE SO THAT IT OCCUPIES A DISTINCT AND VALUED PLACE IN
THE TARGET CUSTOMER’S MIND.
151. Developing a Positioning Strategy
Involves:
2) Defining the Target Market
4) Competitive frame of reference
6) Points of Parity & Points of Difference
151
152. Choosing POPs & PODs
POP are driven by needs of category membership (to create category POPs) & need
to negate competitors PODs ( to create competitive POPs).
Consumer desirability criteria for PODs.
1) Relevance – e.g. tallest hotel (irrelevant)
2) Distinctive
3) Believable & credible
152
153. Choosing POPs & PODs Contd. Of slide …
Deliverability criteria
3) Feasibility – in terms of resources,image of company
5) Communicability – Verifiable evidence or proof points need
to be created e.g. zpto
7) Sustainability – enduring
Marketers must decide at which level (s) to anchor brand’s
PODs – At lowest level are brand attributes, then brand
benefits & at top are brand values.
153
154. EFFECTIVE POSITIONING REQUIRES
1. DETERMINING IMPORTANT DIMENSIONS
2. ASSESSING IDEAL POSITIONS
3. ASSESSING CURRENT POSITION OCCUPIED BY COMPETITORS
155. STEPS IN POSITIONING
1. DEVELOP ALTERNATIVE POSITIONING CONCEPTS
2. SELECT POSITIONING STRATEGY
3. SIGNAL THROUGH MARKETING MIX
156. Positioning Strategy
1. ATTRIBUTE – for e.g. clinic with zpto
2. BENEFIT –
3. USE/ APPLICATION
4. USER
5. COMPETITOR
6. LEADERSHIP – quality , technology, service
7. PRODUCT CATEGORY DISASSOCIATION
8. EXCLUSIVE CLUB
156
157. POSITIONING STRATEGY TO BE AVOIDED
1. UNDERPOSITIONING - VAGUE IDEA
2. OVERPOSITIONING - TOO NARROW AN IMAGE
3. CONFUSED POSITIONING
4. DOUBTFUL POSITIONING
158. PRODUCT REPOSITIONING
1. CHANGING TARGET CONSUMER PROFILE
2. COMPETITOR TOO CLOSE
3. INCREASE MARKET - E.g. CADBURY
4. COMMUNICATE TECHNOLOGICAL ADVANCEMENT /
UPGRADATION IN THE PRODUCT - E.g. SURF.
5. CHANGING CUSTOMER NEED.
158
159. DIFFERENTIATION VARIABLES
PRODUCT SERVICES PERSONNEL CHANNEL IMAGE
Features Ordering ease Competence Coverage Symbol
Performance Delivery Courtesy Expertise Written and
Conformance Installation Credibility Performance audiovisual
Durability Customer training Reliability media
Reliability Customer consulting Responsiveness Atmosphere
Reparability Maintenance and communication Events
Style repair
Design Miscellaneous
160. MEASURING CUSTOMER EFFECTIVENESS VALUE - METHOD
FOR COMPETITIVE ADVANTAGE SELECTION
FEATURE COMPANY COST CUSTOMER VALUE CUSTOMER
EFFECTIVENESS
(1) (2) (3 = 2/ 1)
Rear window defrosting $100 $200 2
Cruise control 600 600 1
Automatic transmission 800 2400 3
160
161. Methods for competitive - Advantage selection
2 3 4 5 6 7
1
Competitive Company Competitor Importance Affordability Competitor’s Recommend
Standing Standing of and speed Ability to ed
Advantages
Improving (H-M-L) Improve Action
Standing standing
(H-M-L)* (H-M-L)
Technology 8 8 L L M Hold
Cost 6 8 H M M Monitor
Quality 8 6 L L L
Monitor
Service 4 3 H H L
Invest
* H = High; M = Medium; L= Low
161
163. 5 LEVELS OF PRODUCT
1. CORE BENEFIT
2. BASIC PRODUCT - FEATURES, BENEFITS, DESIGN & STYLE,
PACKAGING, BRAND NAME.
3. EXPECTED PRODUCT - CREATES NO PREFERENCE
4. AUGMENTED PRODUCT - TOTAL CONSUMPTION SYSTEM
5. POTENTIAL PRODUCT
THE 5 LEVELS CONSTITUTE CUSTOMER VALUE HIERARCHY WITH
EACH LEVEL ADDING MORE CUSTOMER VALUE.
164. CLASSIFICATION OF PRODUCTS-CONSUMER
GOODS
DURABILITY & TANGIBILITY
2. NON-DURABLE GOODS – tangible, consumed in few uses. Many
locations, small mark up, heavy advertising.
3. DURABLE GOODS – personal selling, guarantees, higher margin.
4. SERVICES – intangible, variable, credibility of supplier very
important.
SHOPPING HABITS
6. CONVENIENCE GOODS – staples, impulse & emergency goods
7. SHOPPING GOODS – comparison shopping .Homogenous &
heterogenous strategies differ.
8. SPECIALITY GOODS – goods with unique characteristics and or
brand identification.Location should be advertised.
9. UNSOUGHT GOODS – advertising and personal selling.
165. Classification Of Products
Most goods Most services
Difficult to
Easy to evaluate
evaluate
{
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High in experience qualities High in credence qualities
High in search qualities
166. The Product Hierarchy
• Need family – thirst
• Product family – All product classes that
serve a core need with reasonable
effectiveness – Non-alcoholic beverages,
alcoholic beverages
• Product class – A group of products within
a product family having certain functional
coherence e.g. Aerated soft drinks
166
167. The Product Hierarchy Contd of Slide ….
1) Product line – A group of products within a
product class that are closely related because
they perform a similar function, are sold to
same customer groups, are marketed through
same outlets or channels or fall within price
ranges. Soft drink
2) Product type – share same form. Cola drink.
3) Item – (SKU or variant) Coke 300 ml.
167
168. Product systems & Mixes
A product system is a group of diverse but related
items that function in a compatible manner.
A product mix (product assortment is set of all
products & items a particular seller offers for sale.
A product mix has width, length, depth &
consistency.
168
169. PRODUCT LINE DECISIONS
1. PRODUCT LINE ANALYSIS
A. PRODUCT LINE SALES & PROFITS
B. PRODUCT LINE MARKET PROFILE - PRODUCT MAPPING
C. PRODUCT LINE LENGTH - UPWARD / DOWNWARD / TWO WAY
STRETCH
D. LINE MODERNIZATION
E. LINE FEATURING
F. LINE PRUNING
170. BRAND
A BRAND IS ESSENTIALLY A SELLER’S PROMISE TO
CONSISTENTLY DELIVER A SPECIFIC SET OF FEATURES, BENEFITS
AND SERVICES TO BUYERS.A BRAND IS ABOUT INTANGIBLE AND
TANGIBLE ASSOCIATIONS
171. Brand
A brand is a product or service that is
differentiated on dimensions – functional,
rational, tangible (brand performance) and/or
symbolic, emotional, intangible (what brand
represents).
171
172. BRANDING DECISIONS
1. BRAND OR NOT – Advantages of branding – easy processing, legal
protection, brand loyalty, segmentation ,corporate image. Also
distributors and consumer s prefer brands.
• SPONSOR – Manufacturer / Distributor / Licensed
• BRAND NAME – Individual / Blanket / Separate family / Co. +
Individual.
Company names legitimizes and individual name individualizes
• BRANDING STRATEGY – Line extensions (success rate higher),
Brand extensions (risk of brand dilution test association), Multi-brands,
New brands, Co brands (also called dual branding).
• REPOSITIONING – shifting customer preferences or competitor too
close.
173. Devising a Branding Strategy
4 General Strategies:
3) Individual names or house of brands
4) Blanket family names or branded house
5) Separate family names
6) Corporate name + individual product name.
173
174. Devising a Branding Strategy Contd of Slide ….
- Brand extension – line extensions & category
extensions
- Parent brand & sub brand
- Brand line consists of all products – original as well
as line and category extensions – sold under a
particular brand.
- Brand mix (or brand assortment) is the set of all
brand lines that a particular seller makes available to
buyers.
- Licensed brands, co-branding, ingredient branding.
174
175. ESSENTIALS OF A GOOD BRAND NAME
1. Easy to pronounce, spell and remember.
2. Suggest about benefits, quality, use or action.
3. Unique, distinctive.
4. Versatile – can be added to new products / global reach.
5. Registered and protected.
176. BRAND NAME TESTS
A. ASSOCIATION TEST
B. LEARNING TESTS (PRONOUNCABILITY)
C. MEMORY
D. PREFERENCE
E. GLOBAL REACH
PACKAGING TESTS
1. ENGINEERING
2. VISUAL
3. DEALER & CONSUMER TESTS
177. BRAND - MEANING
1. ATTRIBUTES
2. BENEFITS - FUNCTIONAL & EMOTIONAL
3. VALUE
4. CULTURE
5. PERSONALITY
6. USER
DEEP V/S SHALLOW BRAND
178. BRAND ASSOCIATIONS Product attributes
Intangibles
Country/geographic area
Customer benefits
Competitors Brand-name Relative price
and symbol
Product class Use/application
Lifestyle/personality Celebrity/person User/customer
179. HOW VALUES AFFECT BRAND CHOICE
FUNCTIONAL CONDITIONAL SOCIAL
VALUE VALUE VALUE
BRAND CHOICE
EMOTIONAL EPISTEMIC
VALUE VALUE
181. ATTITUDE TOWARDS BRAND
1. CUSTOMER WILL CHANGE BRAND FOR PRICE REASONS
2. CUSTOMER IS SATISFIED - NO REASON TO CHANGE
3. CUSTOMER IS SATISFIED & WOULD INCUR COSTS BY
CHANGING BRAND
4. CUSTOMER VALUES THE BRAND AND SEES IT AS A FRIEND
5. CUSTOMER IS DEVOTED TO BRAND.
BRAND EQUITY IS RELATED TO 3, 4, 5.
182. IMPORTANCE OF PROPER PACKAGING
1. PROTECTION
2. ADVERTISING VALUE
3. CONVENIENCE TO CONSUMERS
4. BENEFIT TO RETAILERS
5. AFTER-USE VALUE
6. IDENTIFICATION
7. INFORMATION
182
183. FACTORS TO BE CONSIDERED FOR PACKAGE DESIGNING
1. LANGUAGE
2. COLOUR
3. SIZE
4. CLIMATE
5. NATURE OF THE PRODUCT
6. LENGTH OF DISTRIBUTION CHANNEL
7. ACCEPTED NORMS
8. METHOD OF TRANSPORT USED
9. TRENDS IN PACKAGING
10. COST-BENEFIT ANALYSIS
183
184. PACKAGING
1. PRIMARY
2. SECONDARY
3. SHIPPING
DECISIONS
6. The first task is to establish packaging concept. What packaging should
be or do. e.g. protection, novel dispensing method, visibility.
7. Decision on packing elements
8. Tests – engineering tests, visual tests, dealer tests and consumer tests.
9. Labeling – identify, describe and promote.
184
186. Services Characteristics V/s Goods
Goods Services Resulting implications
Tangible Intangible - Services cannot be inventoried.
- Patented.
- Readily displayed or communicated.
- Pricing is difficult.
Standardized Heterogeneous - Service delivery and customer satisfaction
depend on employee actions.
- Service quality depends on uncontrollable
factors
Production Simultaneous production - Customers & employees affect the service
separate from and consumption outcome.
consumption
Nonperishable Perishable - Difficult to synchronize supply and
demand with services.
- Services cannot be returned or resold.
186
187. The services triangle and technology
Company
Internal Marketing
External Marketing
Enabling promises
Making promises
Technology
Providers Customers
Interactive Marketing 187
Keeping promises
188. Expanded Marketing Mix For Services
Product Place Promotion Price
Physical good features Channel type - Promotion blend Flexibility
Quality level Exposure - Salespeople Price level
Accessories Intermediaries Number Terms
Packaging Outlet locations Selection Differentiation
Training
Warranties Transportation Incentives Discounts
Product lines Storage - Advertising Allowance
Branding Managing channels Targets
Media types
Types of ads
Copy thrust
- Sales promotion
- Publicity
188
189. People Physical evidence Process
- Employees Facility design - Flow of activities
Recruiting Equipment Standardized
Training Signage Customized
Motivation Employees dress - Number of steps
Rewards - Other tangibles Simple
Teamwork Reports Complex
- Customers Business cards - Customer involvement
Education Statements
Training Guarantees
189
191. Continuum of evaluation for different types of products
Most goods Most services
Difficult to
Easy to evaluate
evaluate
High in search qualities High in experience qualities High in credence qualities
192. Consumer decision making and evaluation of services
Information Search
Evaluation of Alternatives
• Use of personal sources • Evoked set smaller
• Perceived risk high
Culture
• Language
• Values and customs
• Material culture * Aesthetics
Purchase and Consumption Postpurchase Evaluation
• Attribution of dissatisfaction to
• Emotion & mood self & less complaints
• Service provision as drama
• Service roles and expected scripts
• Innovation diffusion slow
• Compatibility of customers • Brand loyalty high due to more
search costs
192
194. Gaps Model of Service Quality
Customer
Expected Service
Customer Gap
Perceived Service
Service Delivery External
Company Communications
Gap 3 Gap 4 to customers
Gap 1
Customer-driven service
designs and standards
Gap 2
Company perceptions of
consumer expectations 194
195. The provider gaps are the underlying causes behind the
customer gap:
Gap 1 -- Not knowing what customers expect.
Gap 2 -- Not selecting the right service designs and standards.
Gap 3 -- Not delivering to service standards.
Gap 4 -- Not matching performance to promises.
195
197. Customer Expectations of Service - The Zone of Tolerance
Desired Service Expectations
Zone of
Tolerance
Adequate Service Expectations
197
198. 1. Desired service which reflects what customers
want.
• Adequate service what customers are willing to
accept;
• Predicted service what customers believe they are
likely to get.
198
199. - Zone of tolerance is range in which customers do not notice
service performance.
- A customers desired service expectation is same for all service
providers within a category e.g. Service expectations from fast
food restaurants V/s fine dine restaurants.
- Adequate service expectation level varies for different firms
within a category.
- Zone of tolerance expands or contracts for a customer from time
to time. E.g. Customer hard pressed for time will have narrow
zone of tolerance.
- Zone of tolerance varies for different customers.
- Zone of tolerance varies for service dimensions. E.g.
unreliability will be least tolerated.
- Zone of tolerance varies for first time & recovery service.
199
200. Nature and determinants of customer expectations of service
Explicit Service promises
Enduring Service Intensifiers * Advertising
* Derived expectations from others (customers) family * Personal Selling
* Personal Service Philosophies ∴of your own trained * contracts
standards. * Other communications
Implicit Service Promises
Personal Needs * Tangibles
* Price
Expected Service
Transitory Service Intensifiers Word of Mouth
* Emergencies Desired * Personal
* Service problems earlier Service * “Expert” (Consumer Reports,
publicity, Consultants,
Perceived Service Alternatives Zone of surrogates)
Tolerance Past Experience
Self- Perceived Service Role Across Industries
e.g. articulate customer Adequate
Situational Factors Service Predicted Service
* Bad weather * Catastrophe Gap 5 200
* Random overdemand Perceived Service
