Marketing management

MARKETING
MANAGEMENT
JENNIFER M. CARRIAGA

MODULE 1:
BASIC CONCEPT OF
MARKETING

1. Absolute cost advantage
2. Absorptive Capacity
3. Accelerator principle
4. Achievement motivation theory
5. Adaptation level theory
6. Barnum Effect
7. Baumol’s Cost Disease
8. Boundary Spanning
9. Bounded Rationality in
organization decision making
10. Bundling
11. Cannibalization
12. What is a Market
13. What is a product
14. What is Marketing – Definition of
Marketing
15. What is Marketing communications
16. Types of Demand
17. Types of Market
18. The 4 Types of products
19. Three Levels of a product
Table of contents

Absolute
cost
advantage
is a term used by economists to explain the
competitive advantage a firm may have over its
competitors in a similar market.
 It suggests that even if a company is operating in a
highly competitive environment, the ability to
maintain relatively lower costs of operation will help
give it that competitive edge in the market.
the ability of a firm operate at a lower average cost
increase its capability to supply relatively lower
priced products and services thus creating a
competitive barrier in the market for new entrants

Absorptive
Capacity
a conceptual term characterizing a firm’s
ability to recognize value in information arising
outside the firm, internalize and assimilate such
information, and apply it for commercial
purposes.
Absorptive capacity is an idea showing an
organization’s capacity to secure outside
information, understand its value, absorb it and
after that apply the new information for
business purposes.

Absorptive
Capacity
According to research on the concept by
Cohen and Levinthal (1990), absorptive capacity as a
capability is critical in supporting firms’ innovation
capabilities and successful innovation processes within
firms. In terms of explaining what determines the extent
of a firm’s absorptive capacity, Cohen and Levinthal
(1990) argue the capability is driven to a large extent by
the firm’s level of related prior knowledge.

also known as accelerator effect or acceleration
principle. It can be described as an economic concept
that defines the association between output and capital
investment.
It is primarily an idea or theory, which stipulates that
the cumulative net investment by an individual firm in a
particular industry relies on the companies’ potentials in
regards to the changes in different outputs including
sales, profit, and cash flow among others.
The idea also suggests that such a relationship affects
the magnitude of variations in the company’s’ demands
on their suppliers.
Accelerator
Principle

The acceleration principle also suggests that
whenever there is an increase in
consumer goods, the percentage change
in demand for machines as well as other
necessary investments essential for making
such good will also augment more.
This is to say that increase in income led to
corresponding but expanded change in
investment.
Accelerator
Principle

How accelerator principle comes about
Several economic researchers have found out and documented
that accelerator effect operates within the industry.
The changes or adjustments in the inventory of the company affect
the suppliers as well as accelerating or hinder the growth of the
industry depending on the kind of change. You should also note
that the corresponding change also stimulates or decelerates
broader economic growth depending on how it changes.
Various decisions regarding increasing or decreasing inventory levels and
building factories as well as purchasing factory equipment are dependent on
several elements including, expected sales; profit generated and business
confidence. The need for accurately estimating the expected changes in
outputs is imperative for a company. It is also essential for businesses to
establish ways of sensitizing how associated changes planned for the firm
may have an effect on the economy.
Accelerator
Principle

How accelerator effect helps in describing the economic cycle
Accelerator
Principle
1. This principle is used in describing business cycles. It is essential to know that
most firms thrive in understanding these cycles because they make it possible
for them to determine the right investments to be done at a particular time
and hence establish and manage the expectations of
2. The accelerator effect also explains that the amount of total investment has to
be determined by the rate of change that is reflected in the national income.
This is also another significant aspect because it enables the firm to come up
with policies of ensuring that the total investments are not adversely affected
by the changes in the GDP.
3. If the GDP is growing, then it implies that there will be an increase in the
growth of net investment. On the same note, it also means that whenever the
growth rate of GDP reduces then a decline in the net investment shall also be
experienced.
4. An interaction between multiplier and accelerator may lead to relatively large
variations in the trade cycles. This may stimulate or hinder the broader
economic growth depending on the outcome.
It only means that it is important for the companies to be vigilant and
understand how their proposed changes and those proposed for the industry
affect the broader economic growth or decline depending on the ability of such
changes to accelerate or decelerate the economic prospects respectively .

 relates personal characteristics and background to
a need for achievement and the associated
competitive drive to meet standards of excellence.
explains the integral relationship between
an individual’s characteristics and his/her need to
achieve something in life. In doing so, it also takes
into account the kind of competitive drive a person
has to achieve set goals.
Achievement
Motivation
Theory

Achievement Motivation Theory Driving
Factors
AMT was put forward and refined by a group of
researchers Murray (1938), Lowel (1953), Atkinson,
Clark and Mc Clelland (1961) over the years.
According to this theory, an individual’s motivation
to achieve something in life or the dire need to
achieve a specific goal is governed by various internal
factors such as willingness, determination,
punctuality, personal drive along with numerous
external factors (also known as environmental
factors) such as pressures, expectations, targets, etc.,
set by relevant organizations, members of the family
or the society.
Achievement
Motivation
Theory

Importance Of Putting The Message Across
However, the theory also fondly explains that it is
imperative for an organization to thoroughly
understand the reason behind an individual’s
motivation to achieve something and propagate the
message to his/her colleagues in an attempt to inspire
them as well.
Passing along such inspirational messages to other
employees becomes all the more important in
organizations where the firm’s success is mostly
dependent on certain departments working in crucial
areas, such as the marketing or sales department.
Achievement
Motivation
Theory

Choosing Potential Employees Carefully
Taking the above factors into consideration, that
can have a strong influence on a company’s
success rate, it very important for a firm to
thoroughly investigate the backgrounds of the
potential employees before hiring them.
In doing so, the HR department should pay
enough attention towards the personal
characteristics of an interviewee as well as the
reasons behind his/her motivation or need for
achievement.
Achievement
Motivation
Theory

Other Influential Factors
For example, an Individual’s values (understanding the importance
of achieving goals compared to personal relationships), educational
background, cultural background, external support from the
organization in the form of appraisals, promotions, appropriate
awards and timely rewards, encouraging and celebrating
accomplishments, recognizing success, providing constructive
feedback and helping the employee evolve from within by providing
proper support mechanism, are all equally important and play a vital
role in achieving the required motivation.
Apart from looking for self drive, an organization must evaluate and
nurture an employ’s internal and external need for motivation to get
the best out of them.
Achievement
Motivation
Theory

Conclusion
In conclusion, Achievement Motivation Theory states
that, “as an employee starts tasting success and moves
up the ladder, he/she starts feeling that they have
achieved something and this feeling is what keeps them
fuelling to achieve even more.”
However, in organizations where moving up the ladder
is a bit hard pertaining to the limited vacancies,
handing the employees with a variety of incentives and
rewards will always help them keep motivated to
achieve what is required on both organizational and
personal fronts
Achievement
Motivation
Theory

also known as AL Theory is a Psychological
concept which explains that the basis of
an individual’s judgment on a stimulus depends
on their past experiences and/or recollections of
the encounters they have had with similar stimuli
in the past.
In other words, the Adaptation level theory puts
forward a hypothetical concept that states that the
judgments of an individual regarding a particular
class of stimuli is governed by his/her past
experiences and/or recollections of the judgments
in similar situations.
Adaption
Level Theory

Conclusion
Henry’s adaptation Level theory suggests that
the marketers should make a genuine attempt to
gauge the impact that can be caused by the
‘prevailing norms and adaptation levels’ on the
subjective judgment of an individual.
Understanding the influence of previous
experiences on consumer’s present evaluation,
provides marketers with better insights and helps
them to persuade, influence or alter the judgment
in their favor.
Adaption
Level Theory

 The Barnum effect says that individuals generally
listen to and accept statements which describes their
personality, provided that they feel that the message is
tailored for them. It is somewhat (though not
completely) meant for them.
What the barnum effect does is?
1. It makes an immediate connect with the individual.
2. It makes them listen to the one passing on the message
3. Once the belief is create, the person passing the message can
pass more messages, whether honest or scrupulous.
The barnum effect was proved by a pioneering research done by Betram
Forer in 1949, and it stands true to date and is being used even today
Barnum
effects

 Baumol’s Cost Disease (also called the Baumol effect) is
a phenomenon observed in certain primarily
labor intensive industries where there is little or no gain in
productivity over time, resulting in rising production costs.
Identified and developed in research by Baumol and
Bowen (1966) on the performing arts sector, the
phenomenon is generally attributed to conditions where labor
intensiveness in the provision of services, combined with
other constraints for the provision of services (e.g. desirable
service provider-to-customer ratios) make it difficult for
productivity gains to be achievable.
 As a result, increasing labor costs lead to increasing
production costs within such industries which may include
education, the performing arts, and certain public services
such as public hospitals.
Baumol’s
Cost
Disease

 Boundary spanning is a term wherein you pass the
boundaries set for you, for a greater good or do get some
work done. In business, boundary spanning is when you
cross the boundaries set by your organization, and
collaborate with someone else to get a task done.
 “Boundary Spanning is an effort within an
organization that involves activity aimed at bridging one
or more recognized organizational boundaries to facilitate
the flow of information across such boundaries.”
Boundary
Spanning

There are 3 ways that boundary spanning can be
used by an organization.
1) Within the department – As an individual, you can
contact a different individual from the same department
to solve a problem. Example would be a sales guy
contacting a senior sales guy to solve an issue. The
boundary here is just the difference in their levels within
an organization and such boundaries should anyways not
exist.
2) Within business units – There can be information and
resources exchanged within strategic business units. A most
common example is that advertising and marketing costs are
generally bourne by different business units of an
organization. These units then co ordinate within themselves
to use the budget appropriately.
Boundary
Spanning

There are 3 ways that boundary spanning can be
used by an organization.
R&D might co ordinate with sales, product management
might co ordinate with service, so on and so forth.
3) With other businesses – Many a times i have seen that
boundary spanning is done when two different businesses
want something in common. For example, if 2 businesses
have the same customer and the customer wants something
unique, then the businesses can collaborate within
themselves to give a better solution. Same
ways, cooperative advertising is a term wherein 3 different
business entities are marketing.
Boundary
Spanning

 Holistic marketing means that the marketing
manager is trying to present a united front to the
customer. He is trying that each and every customer
touch point is excellent in its response and it is building
the brand for the company.
 A holistic approach for an organization can only be
achieved through boundary spanning. In an
organization, if you want to measure performance and
growth, then boundaries will have to be made. But you
have to span them from time to time to become a better
organization.
Boundary
Spanning

 Bounded rationality about decision making proposes
that people don’t utilize ideal decision-making approaches as a
result of cognitive limitations in the capacity to understand
and oversee complex information and also a consequence of
difficulties related with impediments in information
accessibility.
Rather, the idea proposes that people embrace approaches
that are more constrained and which depend upon heuristics
to make the decision-making process manageable, which
incorporates the way toward generating and assessing options
for conceivable activity
Bounded
Rationality
in
organization
decision
making

Marketers on the other hand also need to realize that bounded
rationality is a concept that is far reaching and has a greater
influence on both marketing and consumer decision making processes.
Therefore, it is of the great essence for them to understand better the
process used in making decisions by the firm to be able also to
understand how this concept influences consumer decision making
regarding their products and services.
 All in all bounded rationality as a concept is something that has
to be given deep thought as part of the decision-making process in an
organization. In a case where rational thinking is not applicable, this
concept will serve as a guide for developing solutions to problems that
arise within the organization.
Bounded
Rationality
in
organization
decision
making

MODULE 2:
PRODUCT
MANAGEMENT
FOR MARKETING

1. What is a product?
2. Shopping products
3. The Product Concept
4. What is Product portfolio
5. 7 tactics for excellent product management
6. Adaptation of product or Product
adaptation
7. Adoption Process
8. Adoption theory – Theory of product
adoption
9. Benefits and limitations of Product life
cycle
10. Leveraging the power of specialty products
11. New product adoption
12. New Product Development
13. New product development is necessary
for survival
14. Product classification – Classification
of products
15. Product Placement
16. Product Recall
17. Product Sampling methods
18. Role of marketing in new product
adoption
19. How to analyze the product mix of any
brand? With example of coca cola.
20.Product mix and Product line
Table of contents

Product is a bundle of physical, chemical and / or
intangible attributes that have the potential to satisfy present
and potential customer wants. In addition to the physical Good
itself, other elements include the warranty, installation, after
sales service accessories and package.
product is a good, service, or idea consisting of a bundle of
tangible and intangible attributes that satisfies consumers and
is received in exchange for money or some other unit of value.
The organizations that are production-oriented look at a
product basically as a manifestation of resources used to
produce it and the organizations that are marketing oriented
view a product from the target consumer’s perspective as a
bundle of benefits by benefits I mean to say functional as well
as emotional benefits.
What is
a
product?

Shopping products generally involve more time, cost and
efforts from the consumers part as they are considered as a
higher risk proposition by the consumer.
2 TYPES OF SHOPPING PRODUCT
1) Homogenous products
- Homogenous shopping products are ones which fall
in same product categories. As they are in the same category,
they are considered by the customers to be quite alike.
The consumer is always on the lookout for such
features so that he can come to a decision. These features are
therefore considered as USP’s – unique selling propositions.
In case of homogenous shopping products, the more USP’s a
product has, more is its competitive advantage.
Shopping
products

2 TYPES OF SHOPPING PRODUCT
2) Heterogenous products
- heterogenous shopping products are products which
are considered to be unlike and non standardised. There is no
one particular standard for clothing.
Some other examples of heterogenous shopping products
includes jewellery (varying quality of same product), cars,
furniture etc. Each and every one of these products belongs to
one category, but every product is different from each other in
not only features but the basic make as well.
Shopping
products

The product concept proposes that consumers will
prefer products that have better quality,
performance and features as opposed to a normal
product. The concept is truly applicable in some niches
such as electronics and mobile handsets.
Thus companies following the product concept need to
concentrate on their technology such that they provide
with excellent feature rich and innovative products for
optimum customer satisfaction.
The
Product
Concept

A product portfolio is comprised of all
the products which an organization has. A product portfolio
may comprise of different categories of products, different
product lines and finally the individual product itself.
Product portfolio should be such that each and every product
in the portfolio is focused towards one goal – Bringing the
organization on top by optimally using the resources available.
How do we classify the products in a product
portfolio?
Product classification is done on the basis of the BCG matrix.
The BCG matrix classifies products on the basis of the market
share of the product as well as the growth rate which a product
may have.
What is
Product
portfolio?

How do we classify the products in a product
portfolio?
The number of products you have today
determines the strength of your organization tomorrow.
This is why the field of product portfolio management is
gaining importance. Although product portfolio
management is not an important task for small
businessmen, portfolio management is a must for
enterprises and it leads to a strong organization with
planned goals and optimum resource allocation.
What is
Product
portfolio?

Product management is a very important function for organization and
it deals with the planning, forecasting or marketing of a product.
A product manager is usually responsible for selecting the
right product for the company, planning the procurement /
manufacturing, as well as its marketing
Here are some pointers to have an excellent and
planned product management in your organization.
1) Know the market
2) Know the demand
3) Know your manufacturing capacity
4) Keep an eye on procurement
5) Market or de-market
6) Anticipate your competitors
7) Always have alternates
7 tactics for
excellent
product
management

Here are some pointers to have an excellent and
planned product management in your organization.
1) Know the market
While thinking of product management, knowing the
market is absolutely important. Each and every product in the market
has several competitors. You need to know which features help
you differentiate yourself from the competitors.
The marketing mix model can be used for find out these
differentiating features, or you can also conduct a
comprehensive SWOT analysis of your product portfolio. Of the 4P’s of
marketing there would be at least one P in which you would be
differentiated. Furthermore you also need to know what
particular products are the most “in demand” in the market and which
type of products do you have.
Accordingly you can devise a strategy where you can go for
product expansion and can build further product variants thereby
capturing market share.
7 tactics for
excellent
product
management

2) Know the demand
A single marketing company can have a lot of
products and more products are added to the portfolio through
various product lines and length. However the company
cannot have efficiency in product management unless and
until it knows the demand of each and every product.
This is exactly why you should know the demand of
the product. Until and unless you don’t know the demand of
each and every product in your portfolio, managing your
product portfolio would become very difficult for you.
3) Know your manufacturing capacity
Once you know the demand of each and every product of
the portfolio, you need to balance your manufacturing capacity
accordingly. These are decisions which the product
management team has to take, and communicate the same to
manufacturing operators.
7 tactics for
excellent
product
management

4) Keep an eye on procurement
A manufacturing company normally works
through channel sales. Thus, needless to say, your channel
would require stock of each and every product. Here the
procurement of the product would involve shifting the product
from the main go down to your distribution outlets in your
city. Only after this happens, the material can be forwarded to
your channel retailers and dealers. To maintain this
continuous flow of goods and products, you need to have an
eye on procurement of the material. Do remember, if
procurement is not on time, there is a high chance that the
customer might shift over to a competitor brand or he might
leave the product altogether. In both the cases you would lose
the sale.
7 tactics for
excellent
product
management

5) Market or de-market
Several times company might have to market or de-market a product.
Whenever the product is new or it needs more brand awareness the
product is marketed. But there can also be situations wherein the
product needs to be de-marketed.
For example, if a handset company has 10 different handsets, and only
one of them is selling, the company will focus on the marketing of the
products which are NOT in demand. This is because, the in demand
product is selling by itself and hence the inventory is getting
liquidated. The company would not spend money on marketing that
one particular product but rather it would try to bring our better
schemes for the other products such that they too move in the market.
7 tactics for
excellent
product
management

6) Anticipate your competitors
Product management does not involve only monitoring your
own company but also involves monitoring your competitors as well.
You need to see which of your competitors product is selling the most?
Why is it selling so much in the market? And what can you do such
that your product has higher market share in that category? You also
need to be aware of which new products are being launched in the
market by a competitor. Remember that a single innovative product
being launched by the competitor can actually take away the market
from us. Thus anticipating your competitor is absolutely important.
7) Always have alternates
it is essential that you should always have alternates in your kitty.
If one particular product fails, you should always have another product
in the pipeline which might succeed and therefore save face for your
company. A company might deliver may products throughout its
lifespan. The qualitative and quantitative management of these
products is also important and this is where the product management
team comes in. The product management team is the ingredient which
can result in the success or failure of particular company.
7 tactics for
excellent
product
management

Adaptation of product is a process or strategy of adapting or
tailoring an otherwise standardized product or service offering to meet
the needs and preferences of a particular market or set of consumers,
where such markets and consumers are typically examined and
managed within an international marketing context.
In international marketing, adaptation is an essential consideration
when marketing to multiple countries or cultures where there are
likely to be significant differences in consumer wants and needs
relative to a particular product or service offering.
Marketing managers involved in international or regional marketing
should consider the potential for adapted marketing strategies or
marketing mix elements. As the decision to adapt such offerings is
highly context dependent, research assessing the market, industry, and
competition will be essential. Company resources and skills will also
be an important consideration to determine whether the assets and
competencies of the firm can accommodate and support an
adaptation approach for possible competitive advantage.
Adaptation of
product or
Product
adaptation

Adoption process is a series of stages by which a consumer might
adopt a NEW product or service. Whether it be Services or Products, in
today's competitive world, a consumer is faced with a lot of choices.
There are numerous stages of adoption which a consumer
goes through. These stages may happen before or even after
the actual adoption.
1. Awareness
This is the area where major marketeers spend billions of dollars.
Simply speaking, if you are not AWARE of the product, you are
never going to BUY the product.
2. Interest and Information Search
Once you are aware, you start searching for information. Whether
it be your daily soap, your car or for that matter your home, you
wont buy it unless you KNOW about it.
Adoption
Process

There are numerous stages of adoption which a consumer
goes through. These stages may happen before or even after
the actual adoption.
3. Evaluation / Trial – Evaluation is wherein you test or have a
trial of the product. This is pretty difficult in services as services
are generally intangible in nature. However service marketing
managers do find ways of offering Trial packs to users.
Comparatively, it is pretty easier in Product marketing and finds a
major usage in BTL ( Below the Line) sales promotion.
4. Adoption – The actual adoption of the product. Wherein the
consumer finally decides to adopt the product.
Adoption
Process

The adoption theory has a simple objective – To observe
new product adoptions and new product diffusion in the market to
understand how and why as well as to what extent a new product is
adopted by Individuals or organizations. It can also be called as theory
of product adoption.
Do note that it is this theory which gave rise to the second more
popular theory – Diffusion of innovation.
The diffusion of innovation is a part of the adoption theory where
the diffusion of a new and innovative product or even normal product
is studied. It is observed that the products are always picked up first by
innovators, then by early adopters, early majority, late majority and
finally laggards.
Any new product can be targeted towards either individuals or
organizations. In any top company, there is a long product line and
product depth. Each of these product line and depth exists because
some marketer somewhere thought that the product is required.
Adoption
Theory
Theory of
product
adoption

Important points about the adoption theory
1. The adoption theory assumes that there are multiple
influencing factors responsible for the decision of the
customer.
2. These factors might include the consumers knowledge and
awareness of the product, his acceptance of innovation, as
well as experience in buying such products.
3. The marketer thus gathers more information so that he
can influence purchasers to buy the product thereby resulting
in faster product penetration in the market.
Adoption
Theory
Theory of
product
adoption

Product life cycle is an excellent tool which can be used by
Business managers, strategists and marketing managers to come
up with product strategies. Such product strategies look at the
various stages the product is in the life cycle and then come up
with the appropriate strategies.
The Benefits of Product Life Cycle
Strategies – The number 1 benefit of Product life cycle is that it can
help you to define the strategies which can be used based on the life
cycle stage. So if a product is in growth stage, then naturally a lot of
advertising and investments are needed to keep the product in the
growth stage. Thus, strategizing becomes easier with the Product life
cycle.
Decision making – Whenever you are presented with multiple
options, you need more data to take a decision on which direction to
move in. Product life cycle helps managers with such decision making
because it has the sales data as well performance over time data. The
combination of these 2 can help managers take decisions faster.
Benefits
and
Limitations
of
Product
life cycle

The Benefits of Product Life Cycle
Forecasting sales becomes easier – With enough experience, it is
easier to forecast how a product will move through the product life cycle
and therefore, what levels of sales will it achieve.
Competitive advantage – A marketing manager can also run the
product life cycle of competitors products besides running their own
(provided they have the sales data). This gives a good insight into the
preparations the competitors must be going through. Accordingly, the
firm doing this analysis has a competitive advantage as it can take one
step ahead of the competitor.
Saying Goodbye – Its always hard to say goodbye especially to a
product you launched with so many hopes. However, the product life
cycle is the perfect measure of when to say goodbye to a product and it
can help marketing managers with the decision to eliminate a product
from their portfolio when the sales has declined far below the market
average. Such products will demandinvestments but the returns will be
very poor.
Benefits
and
Limitations
of
Product
life cycle

Limitations of the Product Life Cycle
Fluctuations in sales data – One major problem in the Product life
cycle is that the graph is completely dependent on sales data. Thus if
there are fluctuations in the sales data, then the graph is useless and
cannot be used to predict precisely the movement of products or the
overall product rise and decline. Such fluctuations can arise due to
production issues, seasonal sales of the product or due to any other
reason.
Delay in sales data – Another limitation for the product life cycle is
that there is delay in collecting and analysing the sales data. Sales is
generally recorded after the movement of goodsand besides this, the
actual movement of one product from one life cycle to another might be
recorded months down the line. This is because of delay in analytics.
Varying market conditions – There may be a variance in the sales
data due to varying market conditions. Therefore products which are hit
in one place, might not be hit in other regions or territories due to the
differences in consumption patterns of those territories.
Benefits
and
Limitations
of
Product
life cycle

Limitations of the Product Life Cycle
Effect of other elements – There are various other elements which
effect the product life cycle. Product itself is just one P amongst the 4 P’s
of marketing and there are three other elements such as Price,
Place, promotions or even people and packaging. Overall Marketing,
Logistics, Price etc have an effect on the sales of the product and hence
the stages and their length in the PLC might vary based on these
elements.
Not applicable to brands or services – Product life cycle is
generally applicable to products only and not applicable to brands or
services. For example – Microsoft has so many products which have
come and gone but this does not mean that the brand Microsoft is in
Maturity stage or decline stage. Some products of the brand are growing
whereas others are maturing or declining.
Benefits
and
Limitations
of
Product
life cycle

Each and every marketer out there wants a product which the
customer demands himself. The best product for a start up company
can be one wherein there is automatic demand for the product.
The products having an automatic demand or in other words,
products for which the customers will go out of their way, are known
as specialty products.
Building a specialty product takes time or innovation.
That was an invention and it was a specialty product when it was
invented. However, look at the status of a light bulb today. It is
being sold as commonly as any other household product. Thus it is
now a convenience product.
Leveraging
the power
of
specialty
products

New product adoption can be defined as: “A good, service or
idea that is “perceived” by some potential customers as new.”
It may have been available for some time, but many potential
customers have not yet adopted the product nor decided to become
a regular user of the product. Thus if they buy this product, it is
“New product adoption.”
Five stages in the process of new product adoption or
service
Awareness – the customer becomes aware of the new product, but
lacks information about it.
Interest – the customer seeks information about the new product.
New
product
adoption

New product development is a task taken by the company to
introduce newer products in the market. Regularly there will arise a
need in the business for new product development.
There are 7 stages of new product development and they
are as follows:
1) Idea generation
In this you are basically involved in the systematic search for
new product Ideas. A company has to generate many ideas in
order to find one that is worth pursuing. The Major sources of
new product ideas include internal sources, customers,
competitors, distributors and suppliers.
New product
development

are as follows:
2) Idea Screening
The second step in New product development is Idea screening.
The purpose of idea generation is to create a large pool of ideas.
The purpose of this stage is to pare these down to those that are
genuinely worth pursuing. Companies have different methods
for doing this from product review committees to formal market
research.
3) Concept Development and Testing
The third step in New product development is Concept
Development and Testing. An attractive idea has to be
developed into a Product concept. As opposed to a product idea
that is an idea for a product that the company can see itself
marketing to customers, a product concept is a detailed version
of the idea stated in meaningful consumer terms.
New product
development

are as follows:
4) Marketing Strategy Development
This is the next step in new product development.
The strategy statement consists of three parts: the first part
describes the target market, the planned product
positioning and the sales, market share and profit goals for the
first few years.
5) Product Development
Here, R&D or engineering develops the product concept into a
physical product. This step calls for a large investment. It will
show whether the product idea can be developed into a full-
fledged workable product.
New product
development

are as follows:
6) Test Marketing
If the product passes the functional tests, the next step is test
marketing: the stage at which the product and the marketing
program are introduced to a more realistic market settings. Test
marketing gives the marketer an opportunity to tweak
the marketing mix before the going into the expense of a
product launch.
7) Commercialization
The final step in new product development is
Commercialization. Introducing the product to the market – it
will face high costs for manufacturing
and advertising and promotion. The company will have to
decide on the timing of the launch (seasonality) and the location
(whether regional, national or international). This depends a lot
on the ability of the company to bear risk and the reach of
itsdistribution network.
New product
development

Nowadays, each and every brand is involved in rapid
new product development. R & D expenses have gone up
because companies know that consumers get tired of the
same product and consumers themselves are looking for
the next big thing.
Overall, new product development has become such a
trend that marketers are beginning to realize the value of
variety in their products. Marketers now know that each
customers preference is different, and if they cant
customize a product separately for each customer, they
can at least develop a new product for a mass or niche
population. This is the reason that new product
development is essential for survival.
New product
development
is necessary
for survival

Reasons why new product development is necessary for
survival
1) To cater market segments which are niche
Samsung has launched the Samsung note and Samsung S4 series
which are widely popular but still very expensive. Thus, this
leaves a market segment untouched which is the middle class
who don't want to spend more
Thus, Samsung brings in the Galaxy S4 mini which is smaller in
size and several other features are also changed. Thus this phone
is a slightly toned down version of the original Samsung galaxy.
However, the niche is now explored and Samsung is sure to have
its presence even in middle class houses rather than letting
these people go to other, cheaper brands.
New product
development
is necessary
for survival

survival
2) More offerings to customer
LG is a consumer durables company which slowly shifted to
consumer appliances as well. Along with selling ACs, TV and
washing machine, numerous home appliances were brought in.
For example – microwaves, ovens, cleaners etc.
These home appliances ensured the launch of LG shoppes, a store
exclusively dedicated to LG products. A company which had one
or two products becomes a vast consumer appliances player due
to new product development. With the help of new product
development, your brand will act as a one stop shop for your
customers.
New product
development
is necessary
for survival

survival
3) Development as a brand
Today, Nokia has lost its brand image because whatever new
products were developed were not up to customers expectations.
Nokia had one of the simplest operating systems and it was the
easiest to use. Nokia too in its sunny days used to launch a new
phone every 2 months. Each of the phone was a development
over the previous.
The inference we can make from this example is that new product
development in the right manner gives a very good boost to
Brand image. Asian paints, Sony, Hyundai, Apple are companies
which have seen a phenomenal growth in their brand image
because of regular launch of good products.
New product
development
is necessary
for survival

survival
4) More revenue from existing customers
As we know from experience, acquiring a new customer is 5 times
costlier than retaining or cross selling to an existing customer.
Banks have perfected this method. Banks develop so many
different financial products and cross sell these products in such
a manner that they get fantastic revenue generation from their
existing customers.
Similarly, laptops are evolving and desktops are almost
redundant. Thus the person who was using a desktop is now
using a laptop. Therefore, with a change in the product, comes a
chance to sell a different product to the same customer.
New product
development
is necessary
for survival

survival
5) Operation cost goes down
Due to the same fixed cost being applicable for manufacturing the
product, operation costs will definitely go down. An ice cream
company which is manufacturing vanilla flavor, might attract a
vast market by expanding into Mango flavor.
The raw material and the factory is the same. However, by
changing the flavor, the company has attracted a whole new set of
consumers. Thus, by new product development, you can cater to
more people without raising your operating costs.
New product
development
is necessary
for survival

survival
6) Reduce risks
Putting all your eggs in one basket is a risk we have learned to
avoid in personal as well as business life. By putting all your
efforts in one product, you risk the chance of being myopic and
not watching the whole picture. By launching different products,
you avoid the risk of product failure.
The failure of the product in a single product portfolio will affect
you much worse as compared to the failure of 3 different products
in a portfolio of 10 products. Thus diversifying risk is also a
benefit of new product development.
New product
development
is necessary
for survival

 The concept of “product classification” consists of
dividing products according to specific characteristics so that they
form a structured portfolio.
In general, manufacturers use an informal product classification
system but there are also many standardized methods of product
classification devised by various industry organizations.
A basic product classification can be made based
on consumer and business products.
 The consumer products are afterwards divided based on
preference for shopping habits or durability and tangibility.
 The business products are the industrial goods.
What is Product
classification?

The informal classification of products based on variables
Classification of products on the basis of Shopping
habits.
Based on the first variable, the shopping habits, the products can
be classified into convenience goods, shopping goods and unsought
goods.
1. CONVENIENCE GOODS
Generally for convenience goods, once customers makes a
choice for their preferred brand, then stay loyal to that
brand because it is convenient to keep repeating the choice over
time. Other examples of such convenience purchases include
bread, cold drinks, chewing gum, etc
What is Product
classification?

Classification of products on the basis of Shopping
habits.
2. SHOPPING GOODS
- The shopping goods are another category of products.
Compared with the convenience goods, the shopping goods are
not so frequent. A relevant example can be clothing,
electronics, etc.. This category relies heavily on advertising and
trained sales people who can influence customer’s choices.
3. UNSOUGHT GOODS
- For the unsought goods consumers don’t put much thought
into purchasing them and generally don’t have compelling
impulse to buy them. An example in this category would be life
insurances.
What is Product
classification?

Classification of products on the basis of durability and
tangibility.
 Based on the second variable of durability and tangibility there
are non-durable and durable goods as well as services.
1. NON- DURABLE
-The non-durable category consists of tangible goods that are low
priced and purchased frequently such as shampoos, deodorants,
etc.
2. DURABLE GOODS
-the durable goods are also tangible goods but are targeted for
many uses.
3. SERVICE
-
What is Product
classification?

Classification of products based on industrial
consumption
 The last category of products mentioned as the industrial goods
classification involves the materials ( raw materials such as
wood, cooper, aluminum) and parts (tiers, computer chips) ,
capital items such as installations and equipment (cranes,
bulldozers), accessory equipment ( hand tools, computers,
calculators), process materials (food preservatives), operating
supplies ( papers, pencils, oil).
What is Product
classification?

Product placement refers to the art of placing your products in
Movies, games or books so that they receive more visibility from
Audiences.
A product placement can basically happen in three main
ways:
1. It can simply happen with neither the brand nor the movie
maker having any intention to take any profit from it.
2. The product placement can be arranged and a certain amount
of the product can be given in kind from the company to the
movie makers as compensation.
3. It can be arranged based on a financial compensation of both
parties involved.
Product
Placement

A product recall is done by a company when it finds a faulty
product / production batch being released in the market.
The same product is called back, the defect removed and then
the product has to be replaced or a completely new unit given to the
customer. A major Reason for timely product recalls is to limit the
damage which might be caused to the brand, product or company
image.
Besides damage to intangible assets of the company, the company
is also liable to face legal actions if its products are found faulty.
These legal actions may be done from the government against the
company or may also be done by a consumer or industrial buyer
under the consumer protection act. The bottomline is that a
discovery of faulty product demands an immediate product recall.
Thus many companies make it a point to recall a faulty product
themselves to avoid any penalties – legal or otherwise.
Product
Recall

Product recall Procedure
A product recall generally has a huge cost component involved and
one of the major cost over here is of logistics as well as material
costing (Bring the machine back, correcting defects, sending
the machine back or replacing it altogether)
1) The first step generally involves the consumer informing the
company or the proper authority (channel dealers, selling
agents) of the fault. There are consumer hotlines for the same.
If there are not, then it also reflects an improper standard set
by the company.
2) The documentation is completed by taking down the proper
invoice numbers, machine serial numbers, production batches
and sent for approval to the recall authority
Product
Recall

Product recall Procedure
3) Once the product recall is approved, the customer is notified and
the faulty machine is picked up and a replacement machine given
at the same time.
4) Depending on the type of fault, this machine can also be
repaired or be sold at a discount rate to second hand vendors who
sell it ahead.
5) If these steps are not taken for a confirmed faulty machine, the
consumer can go to consumer court and complaint against the
company. If approved, the customer is liable to receive
compensation from the company.
Product
Recall

Product sampling methods generally involves products being
given away as freebies to customers to attract the customer and
build trust on the product.
 There are various kinds of product sampling.
 Dry sampling mainly addresses the mass market through super
markers and events.
 Wet sampling is more specific.
Product
Sampling
methods

Role of
marketing
in new
product
adoption
The most important role of marketing is when it wants to create a
brand for the company or when it wants the new product to be a
success.
The role of marketing in new product adoption is when the
product has to be marketed to Innovators who are likely to pick
up the product from the market.
The role of marketing is manifold to ensure the product
adoption.:
It has to use multiple marketing channels to announce the
launch of the product. Both ATL and BTL campaigns are used
for the same.
It has to identify the market segment which are most likely to
adopt the products.

Role of
marketing
in new
product
adoption
The role of marketing is manifold to ensure the product
adoption.:
It has to reach the market segment through appropriate means.
It has to find out ways to make it easier for the customer to adopt
the product or to purchase the product.
Customer service is an aspect to be taken care of in the earlier
days so that product adoption is smooth.
Overall, multiple tactics are used during the launch of the product and in the next few
months so that the product received traction in the market. If we look at the Smart phone
market, you will observe that adoption of the product completely depends on the months
before the launch of the product and for a few weeks after the launch.
After that, the competition adapts and the word spreads around by itself. If the product is
good, word of mouth ensures that the product stays alive in the market. So overall,
marketing’s work is 70% when the product launches (in the smart phone market) and 30%
when it has launched and has settled in the market.

Product mix is a combination of total product lines within a
company. A company like HUL has numerous product lines
like Shampoos, detergents, Soaps etc. The combination of
all these product lines is the product mix.
Product line is a subset of the product mix. The product line
generally refers to a type of product within an organization.
As the organization can have a number of different types of
products, it will have similar number of product lines.
Product line length the total number of products against the
total number of product lines forms the length of the
product mix.
Product
mix and
Product
line

Product line width the width of the product mix is equal
to the number of product lines within a company. Product
line width is a depiction of the number of product lines
which a company has.
Product line depth where length and width were a
function of the number of product lines, the depth of the
product mix is the total number of products within a
product line.
Product line consistency the lesser the variations
between the products, the more is the product line
consistency.
Product
mix and
Product
line

MODULE 3:
TARGETING
TUTORIALS

1. 7 detailed steps to find your target
market
2. Customer loyalty ladder and how to
use it to target customers
3. How to target youngsters for a
product?
4. Justdial – Should it target businesses
or customers?
5. Target market selection
6. Target marketing explained
7. What is Target market and how to
find one?
Table of contents

How to find a new target market?
1. Start by defining your segment – The trio is most
commonly known as Segmentation, targeting and positioning.
So targeting always comes after segmentation. This is because
before you target, you need to know the segment to target.
There are numerous types of
segmentation. Geographic, demographic, psychographic etc. So
first, what form of segmentation do you want?
2. Make an ideal customer profile – If your segmentation is
demographic, and you want to have customers who have a
rich lifestyle, then that’s your ideal customer profile. If yours is
a premium health product, then you need customers who are
rich, regularly exercise, are located in an affluent area with
open spaces and jogging parks nearby. Similarly, as the product
belongs to you, you can optimally design an ideal customer
profile which helps you find the target market.
7 detailed
steps to
find your
target
market

3. Gather lots of secondary data – Once you have the
segmentation in hand as well as an ideal profile of the target
market, you can start using trade journals or government
publications to find the best areas which will have the qualities
that you want. For example – Continuing the above premium
health product example, you need to research for a locality
having a high cost of living but also having a jogging park, a
swimming pool or other landscape which helps healthy living.
4. Do a primary market research – Once your secondary data
is collected, it is imperative that you do a primary data before
launching the product in the market. Besides the secondary
data, the primary data gives more insight on the target market
and whether you have found the right target market.
7 detailed
steps to
find your
target
market

5. Be open to feedback – The primary market matters a lot and
even if you think you have found a target market, still if the
market demands changes in your product than you have to be
open to such feedback. This will ensure that you come out with
a product which already has the confidence of the market and
hence will sell better.
6. Choose the entrance strategy for the new target
market – No target market can be entered without a lot of
hoopla behind the product launch. So whenever you are
entering a new target market, based on your positioning
and segmentation strategy, you need to implement the
right marketing strategy as well. Otherwise your planning of
hitting your target market can fail if the product is not
launched properly in this new market.
7 detailed
steps to
find your
target
market

7. Keep fail safes in place – Fail safes can be the exit strategy
which should have in place even before entering a new market.
If you entered a new country thinking that your products will
sell there, but if it doesn’t, then what’s your exit strategy? In
fact, what if you enter multiple markets at once, and all of them
fail, what your exit strategy and where do you fall back? Thus,
entering new target markets is a risky endeavour and you need
to consider the negatives also.
Finding your target market can be relatively easy if you are
targeting a mass segment. However, as you enter niche
marketing, finding target markets becomes difficult. For
example – For Industrial products, you need to research the
places where you can establish a manufacturing or distribution
plant. Thus, the search for new target markets is difficult in
niche marketing. At such a time, the above steps to find a target
market will come in use.
7 detailed
steps to
find your
target
market

There are two facts about customer acquisition and
customer retention most commonly referred to in
the marketing world.
1. It takes at least 30 times as much marketing budget to
attract a new customer via traditional forms of
advertising as to re-attract a repeat customer.
2. Most business owners spend less than 5% of their
marketing budget on their existing customers but they
spend 95% of their marketing budget trying to find new
customers.
Customer
loyalty
ladder and
how to use
it to target
customers

Basically, the customer loyalty ladder involves five
main stages based on the customers interest in the
company or the product.
1. The suspect – The first customer loyalty ladder, this
segment includes anyone who reads or hears an ad,
takes a look into a brochure or encounters some other
type of promotion. Basically, anyone who has seen an
advertisement or has been in touch with the company.
2. The prospect – This category involves the people who
actually pay attention to the promotion provided by a
company. They are the second and possibly, from a sales
point of view, the most important customer loyalty
ladder because these prospects later on become
customers.
Customer
loyalty
ladder and
how to use
it to target
customers

Basically, the customer loyalty ladder involves five
main stages based on the customers interest in the
company or the product.
4. The customers – They are the actual customers,
meaning the persons who actually make a purchase
from the respective company, either a product or a
service.
5. The client – This a more developed segment than the
previous one, as it represents a customer who buys for
the second time. This can be achieved only when the
service given by the company was as per the customers
expectation.
6. The advocate – It represents a customer who gives
unpaid advertising for the products or services of a
company. Word of mouth marketing is mainly done
through advocates of the company.
Customer
loyalty
ladder and
how to use
it to target
customers

Today’s youngsters are smart, knowledgeable and capable of
making the right decisions. They still have the same influencers.
But because of the amount of information available to them
through television, radio or even mobiles, these youngsters have
become a force to reckon.
So how to target youngsters? Typically youngsters are people in
their higher teens and up to 23-25 years of age. Or at least they can
be categorized as youngsters till the time the leave college and join
a job, which converts them to a professional.
To target youngsters, you need to know their profile. They are
people with limited funds, funds which their parents have given to
them and for which they are generally answerable. Also, these are
funds which they will not part quickly with especially if they think
that the product is not exciting or will not give them social
approval.
How to
target
youngsters
for a
product?

Here are four points in the way you should communicate
to youngsters while targeting them.
1. Use an energetic message – The first thing you need to
know to target youngsters is that the run of the mill, typical
advertising messages wont work. Look at Pepsi who is using all
tricks under the sleeve, including various brand ambassadors,
to show energy in its ads. An energy which attracts youngsters
and is at par with their energy levels.
2. Create excitement – Youngsters are more likely to
decide purchasing a product or a service when they are really
excited about it. A youngster wont go out and buy a DVD
player. That’s going to be his dads decision. But he can decide
which DVD’s to buy on new years or on Christmas or even on
his birthday. Similarly, they will buy the mobile phone which
has excellent and unique features, something that is not
common and gets him or her excited. Cadbury, which targets
youngsters, always has an emotional excitement aspect in its
advertising message.
How to
target
youngsters
for a
product?

Here are four points in the way you should communicate
to youngsters while targeting them.
3. Attract them with low prices and offers – Like the
opening point, youngsters are supposed to have lesser funds. So
discounts, offers and such sales promotion tactics are useful
tools to target youngsters. The wise mind of the informed
youngster chooses to purchase when the offers are available.
4. Deliver what you promise – Of all the generations born on
Earth, the current youngsters are the biggest Blabbermouths. If
they don’t like something, its going to go straight
to Facebook, twitter or any other social networks. In fact,
people ask online whether they should watch a movie or not. So
if you don’t deliver your promises while targeting youngsters,
be ready to watch your brand fall online. And once that
happens, it will be difficult to rise up.
How to
target
youngsters
for a
product?

7 TIPS FOR TARGETING YOUNGSTERS
1) Creating buzz online – Blogs, forums, online news, social
media, there are many ways to create buzz online. And this
buzz is necessary when you want to target youngsters. For
example – a post of 10 different type of Maggi recipes
by Nestle on a popular portal can attract many youngsters as
well as adults. Facebook events is another example of creating
buzz online for an event.
2) Sports – Because of the emotional appeal of sports, and
because most youngsters are involved in one sport or another,
imbibing a theme of sports in the message can go a long way in
communicating to youngsters. These sports can be
conventional like football or cricket or even unconventional like
motorsports, WWE, tennis etc.
How to
target
youngsters
for a
product?

3) Television and music – Youngsters are huge fans of movies
as well as television. Hence we find a lot of youngsters
following tv series like friends, big bang theory, how i met your
mother, or even many hollywood movies. Television and music
is an evergreen medium to target youngsters. Product
placement can be used for youngsters also.
4) Events – An example used above mentions facebook events.
And surely, events targeted towards youngsters are a fantastic
way for brands to build brand equity.
5) Student leaders / Ambassadors – Student leaders and
ambassadors are mainly used by Socially driven organizations
like NGO’s or even political parties. These students can pass on
the message very quickly far and wide. Off course, using such
student leaders is not possible for businesses looking
for profitability. This concept is only possible for social welfare.
How to
target
youngsters
for a
product?

6) Games – All youngsters like gaming. And so do adults. Many
games like Need for Speed as well as FIFA (both by electronic arts)
are games which have many endorsements, from cars as well as
from brands respectively. Product placement in games or having
your own games (like movies do) are an excellent way of targeting
youngsters.
7) Videos – Ever heard of viral videos? There are nowadays stand
up comedians whose only job is to upload videos on popular video
sites like Youtube. These sites then share revenue with the
performers. Such videos are excellent ways to attract and target
youngsters.
8) Communities – Building communities, online or offline, helps
youngsters meet other like minded people and thereby spread the
name of the brand or at least keep the brand recall high in
consumers mind.
How to
target
youngsters
for a
product?

Target market selection is a part of marketing strategy and
involves deep analysis and discussions up to the corporate level.
Target market selection is a component of the three main
elements of strategy :
1. Segmentation
2. targeting and
3. positioning.
 A starting point in choosing your target market is to segment
the population by clearly defining segmentation factors such as
segment size, segment growth rate, profit margins, competitors,
distribution channels, the strategy and goals the company want
to achieve as well as the required resources
Target
market
selection

The second step in selecting your target market consists in
conducting an industry analysis of the industry in which your
company operates, and identify the potential customers in the
respective industry. Only after the analysis of the industry, will you
find a group of people who might be interested in your products.
Thus, the result of industrial analysis will be the identification of a
primary market segment.
After collecting sufficient information from the industry analysis
(which also involves market, competitors and broad potential
customers), a customer profile should be identified. This customer
profile will involve an in depth description including geographical,
demographical, psychographic and behavioral insights about your
target customers.
Target
market
selection

The best way to collect the data is to actually speak with the
potential customers in non-selling situation. In this way, you
can be sure about how genuine the data is.
The target market selection goes hand in hand with customization.
By mapping the exactly worries, concerns and needs of your
customers, you will be able to shape your offer according to
them. Your main question should be “Do I solve their
problems?” and aligning all your marketing, sales and
resources functions in order to provide your customers with a
solution for their problem.
The customization based on target market selection represents the
fastest path to development and growth of your company. The
ideal target market has to fit with your firm’s objectives
admission, and it has to be accessible.
Target
market
selection

Target marketing, also sometimes known as niche marketing is
the art of marketing only to a desired target market.
Target marketing mainly involves two steps :
1) Deciding your market segment as well as deciding on who your
target customer is going to be.
2) Designing your marketing mix with the proper product,
price, promotions and place such that your target market
adopts it quickly.
Deciding your target segment – A major step of target
marketing is to first decide who is going to be your target market.
As mentioned in segmentation, targeting and positioning, the first
step in targeting is to carry out segmentation of a population. Only
through segmentation we would come to know which segment
would be most profitable for us.
Target
marketing
explained

The segmentation can be done on three basis:
1. Geographic segmentation
2. Behavioral segmentationPsycho graphic segmentation
3. Demographic segmentation
A firm can target one type or a mix of the above segments. Thus a
segment can be both geographic as behaviorally defined. Once you
know which kind of a segment you are targeting, your marketing
mix can be decided accordingly for target marketing.
Marketing mix for target marketing – Once the target
segment is decided, the marketing mix strategy automatically
follows. If your product is independent, but you have adopted
geographic segments, then your pricing, promotions and placement
depends on the purchasing power and other characteristics of that
geographic segment.
Target
marketing
explained

Target Market selection
In target marketing, the target market selection is done
on the basis of five factors:
1. Single segment concentration – Concentrating on one single
segment such as concentration of several FMCG products only
on low income group segment
2. Selective specialization – As said above, concentrating on a
segment which is hybrid. Such as middle class segment in A
grade cities only.
3. Product specialization – Launching products which appeal to a
specific target group. Such as Volvo which targets only safety
conscious people.
4. Market specialization – Targeting to one single market. Such
as Mahindra and Mahindra which targets mainly the
government sector.
5. Full market coverage – Automobiles such
as Honda or Maruti which targets the complete market with
various offerings.
Target
marketing
explained

Case study of Target marketing – Titan watches
Titan watches are the best example of target marketing. Here are some
pointers as to why this excellent brand is known for its target marketing skills
1. Segment selection – Titan mainly targets multiple segments based on
their income, social standing as well as behavioral attributes. Thus it
targets customers who have low incomes along with customers with high
income.
2. Marketing mix – Titan does not offer the same product to different
customers. In fact it has a new product for each segment thereby micro
managing its target marketing efforts. Thus a Sonata will be offered to
the low income group whereas a Tommy hilfiger will be offered to the
high purchasing power individual
3. Positioning – Each product of Titan is positioned separately.
Furthermore when you walk into the retail store of Titan (World of titan)
you will find that there are separate sections for each class of customers
depending on their income groups.
4. Customer life cycle marketing – Another example of target marketing
is having every product in the kitty for each level of a customers life
cycle. Thus by having brands like Fast track, raga and others, Titan
ensures that it has a product whether its customer is a college going
individual, a working women or a high income professional.
Target
marketing
explained

A Target market is a group of population which is of most
interest to a business or marketer. It is ultimately this group
of people whom you are going to target with your Marketing
campaigns. The target market is the complete focus of your current
marketing strategy.
There are two ways to find your target market –
A new business might start with a product in hand or with a target
market in mind. Thus, an entrepreneur can manufacture a product
and then find the target market for the product; or he can find the
target market and then form a product.
In both the cases, it is important to find a target market which
matches your product or service
What is
Target
market?

Step by step process to find your target market.
1) Know yourself
To find your target market, the first step is Know yourself. The
strength of your business and your products, your core
competency and what your company can or cannot do. You need to
list the advantages of your products or your services and WHY the
customer will be interested in your product. The more you know
about yourself, the more target markets you can find.
2) Know your competition
The second step in finding a target market is to define the
competition. Which are the companies giving direct or indirect
competition to you? Which of them should you consider as
competitor and which of them should you ignore?.
What is
Target
market?

3) Define your customers
The third step is to define your customers or the profile of
customers who will buy your products. This step can be explained
with the example of Dominos. Dominos unlike Pizza hut, did not
want customers to visit showroom. Its major focus was home
delivery. Thus, Dominos by internally researching its capacity and
its competitors, could decide the target market. As Dominos had
defined his customer as a person who will order his pizza at home,
he was clear on his target market.
4) Finding the gap or conducting gap analysis
Once you know your strengths and the strength of the competition,
you can easily do a gap analysis. You can know which are the
products or services which the customer is getting from you or your
competitor, and at the same time, which are the products which the
customer needs but they are not being provided by you or your
competitor. Thus you have found a target market through gap
analysis.
What is
Target
market?

5) Geographic expansion
Another way to find a target market is
through geographic expansion. Thus, if your product is being
manufactured in Mumbai, it is likely that the requirement might
come from Delhi as well. Thus, you are missing out on your target
market if you have not expanded your operations geographically.
6) Demographics
Can youngsters use your products even though it is meant for
mature people? Playstation and Xbox was made for young adults
but surprisingly, even old people love the games as much as young
people. Thus, analyze the demographics to find your target market
and define who can be your next customer.
7) Conduct market research
Market research can also help you to find your target market.
In banking segment, regular market research is conducted to find a
target market which will be suitable for the wide variety of financial
products.
What is
Target
market?

8) Niche marketing
It is not necessary that you expand only in the mass market. You
can expand in niche market as well. However, the niche market will
have very specific requirements. By conducting a niche marketing
research, you can find the target market which is niche but very
much an expandable market for your products.
9) Customer feedback
You can dig deeper in your customer base through customer
feedback. Customer’s who are irritated or even delighted with your
products can very well give feedback’s to you. These feedback’s can
be ideas within themselves to find your target market.
What is
Target
market?

MODULE 4:
SERVICES
MANAGEMENT

1. 5 steps to setup better customer
service process in your organization
2. Classification of services
3. Difference between goods and services
4. Flowcharting in services – Service flow
chart
5. Heterogeneity in service marketing
6. How Businesses Are Using Analytics &
Software to Serve Customers Better?
7. How to build, streamline and enhance
your CRM for best customer service?
8. Intangibility of services
9. Ownership in service marketing
10. Perishability in services marketing
11. Service Channels in Marketing and
their role in services
12. Service Differentiation and 7 Ways to
Differentiate Service from Competitor
13. Service triangle or The service
marketing triangle
14. Seven characteristics of services
Table of contents

Services usually refer to processes and not physical products.
Some services may include people whereas other services (like
online services) may including objects which are managed by
people.
Examples of services which include people can be a hair salon,
education, theater, restaurants, public transportation. On the other
hand services that include objects include repairs and
maintenance, dry cleaning, banking, legal services, insurance, etc.
classification of services based on two general dimensions
1. what is being processed, whether is it a person or an object,
(tangible)
2. and how is it being processed? ( intangible actions).
Classification
of services

1) Classification of service based on tangible action
Classification
of services
▪ a) Services for people –
Like Health care,
restaurants and saloons,
where the service is
delivered by people to
people.
▪ b) Services for goods –
Like transportation, repair
and maintenance and
others. Where services are
given by people for objects
or goods.

2) Classification of service based on intangibility
Classification
of services
▪ a) Services directed at
people’s mind – Services
sold through influencing
the creativity of humans are
classified on the basis of
intangibility.
▪ b) Services directed at
intangible assets –
Banking, legal services, and
insurance services are some
of the services most difficult
to price and quantify.

2) Classification of service based on intangibility
Classification
of services
The most intangible form of service output is represented by
information processing.
The customer’s involvement in this type is service is not
required. Generally, customers have a personal desire to
meet face to face but there is no actual need in terms of the
operational process.
Consultancy services can be an example of this type of
services where the relationship can be built or sustained on
trust or telephone contact.
However, it is more indicated to have a face-to-face
relationship in order to fully understand the needs of the
customer.

Goods are basically objects or products which have to be
manufactured, stored, transported, marketed and
sold. Lays chips, BMW, Adidas are some companies
manufacturing goods.
Services on the other hand are output of individuals and they can
be a collective or individualistic action or performance by
an individual. For example a barber or a chartered accountant are
giving individual services.
Thus the difference between goods and services is based on
tangibility. Where goods are tangible in nature, services are
mostly intangible.
The classic rules which defined services
were intangibility, heterogeneity, perishability and variability.
Difference
between
goods and
services

7 differences between goods and services
1) Ownership is not transferred
When buying a service, the service ownership is not transferred to
the end customer. If you buy a car then the car is yours. But if you
buy a ticket for an airline, then the airline is definitely not yours.
2) Intangibility
How do you measure service? In a restaurant, the dish can be
measured, but the efforts gone in making the same dish by two
different chefs cannot be measured from the customer end. Same
goes for large service corporate like Accenture and Infosys. The
time and effort gone for giving service to the customer is
intangible. Both ownership and intangibility are old school
differences between goods and services.
Difference
between
goods and
services

3) Involvement of customer
When comparing the difference between goods and services we
have to look at the involvement of customer as well. In services
involvement of customers is much more than in products. For
example – ATM’s are services wherein customer has to use the
machine. The same goes for vending machines as well as for self
service restaurants.
4) Quality
In case of products, mass manufacturing is common. And mass
manufacturing means uniformity. However, services involve a lot
of manual labor due to which the quality may vary each time.
Uniformity in services is a factor which each service owner tries
for. For example – The major challenge of food chains like
Subway, Pizza hut and dominos is to give the same quality over
and over again, whereas in local restaurants the quality of food
may vary time to time from the same restaurant.
Difference
between
goods and
services

5) Evaluation of services is tougher
As quality varies from time to time and the involvement of
customer is maximum, evaluation of different services becomes
tougher. For example – HDFC has more number of ATM than SBI.
Thus we can evaluate that HDFC service is better because they
have more reach to the end customer. But how do we evaluate how
a barber cuts your hair.
6) Inventories are absent
Production and consumption of services happens at the same
time. This does not mean that the raw material is not present to
provide the service. For example in a restaurant, a dish is made
only after you order it. The raw material and the chef might be
present. But the production does not begin unless and until there
is a customer to consume the service.
Difference
between
goods and
services

7) Time is very important in services
Because inventories are absent in services, and because
production and consumption is at the same time, time is a very
important difference between goods and services. The keyword
here is “delay”. There should be no delay in providing the service.
Thus the cab should arrive on time, the food should be prepared
by time and the trains should run on time. Because time is
important.
Thus the difference between goods and services is based on many
different factors. These factors have become more and more acute
as the services sector rises in demand.
Difference
between
goods and
services

The concept of flowcharting in services, also known as
service flow chart, process flow chart or process flow diagram
constitutes a picture of the separate steps of a process in a
sequential order.
The flowcharting process can be considered as a tool useful for
developing an understanding of how a process is done. It can be
useful in any phase of business or even in personal life for that
matter. The type of process can be anything, such as
manufacturing processes, administrative services, project plans,
etc. But it is most useful in services and is plotted regularly in
services.
As it can be adapted to a wide range of purposes and project, the
flowcharting process is considered to be a generic tool. The main
reason why people decide to use it consists in the fact that the tool
itself can provide a holistic overview of the entire project and its
components
Flowcharting
in services –
Service flow
chart

1. In the flowcharting process, the first step consists in defining
the process that needs to be analyzed and write its title at the top
of the work surface.
2. Afterwards, a decision should be made upon the boundaries of
the project, in terms of when does it start, when should it finish, as
well as the level of detail that should be included in the project.
For a flowcharting process to be significantly useful it should
include independent sections for brainstorming activities in the
project. Once the activities have been decided upon, they should
be put in a sequential order to reflect which are going to be the
steps of the project and arrows should be drawn to show the flow
of the process.
3. Finally, the flowchart should be review with the people involved
in the process and ask for their opinions.
Flowcharting
in services –
Service flow
chart

Each and every service is different in nature. That’s the simple
meaning of heterogeneity in service marketing.
The perception of service by all customers is different which
contributes to heterogeneity. Hence we can say
that heterogeneity mainly arises through interactions. Each
interaction with a service is important to maintain the service
levels. Heterogeneity needs to be controlled to give a uniform
customer experience.
Implications of heterogeneity – We can therefore say
that heterogeneity is constant in services marketing. Quality of
service depends on many parameters such as customer demands,
expectations and fulfillment. As each customer has different
demands and expectations, Quality in his perception may be
completely different.
Heterogeneity
in service
marketing

Some Popular Statistical Methods Used on Data
1) Simple Correlations
Simple Correlations are very useful in understanding the
relationship between two variables, one being the dependent and
one being the independent. This is one of the simplest methods
used to gain marketing insights. Marketers should however be
cautious to remember that correlation does not necessarily mean
causation. But causation necessarily means correlation.
2) Regression Models
– Regression Models are used when the marketer wants to plot a
Line of Best Fit to observe the trend that a set of variables have
been following and also to predict values of the dependent
variables for different values of the independent variable. The Line
of Best Fit ensures that the sum of error terms is zero and the sum
of square of error terms in minimal. In layman terms, what this
ensures is that the line plotted most accurately describes the data.
Regression models can be made using any number of independent
variables but caution will have to be maintained with regards to its
accuracy.
How
Businesses
Are Using
Analytics &
Software to
Serve
Customers
Better?

3) Text Analytics
There is something called as ‘Text Analytics’ that allows marketers and
researchers to segregate searches and accordingly give the most optimal
results back to the customer. Also many surveys have open ended answers
for which it is difficult to assign a numerical value to. Text Analytics again
comes in very handy here to gain insights about the data and accordingly
segment customer responses.
4) RFM Model
– The RFM Model stands for Recency, Frequency & Monetary
Worth. This model calculates from the data is the time of the most recent
purchase made by a customer, the frequency with which the customer
makes his purchases and the amount of money the customer spends on an
average (or his total spending, depending on what the marketer wants)
when he makes his purchases. Each customer in the seller’s database is
given a score for each parameter in the RFM model and the best customer
is the one with the highest score in all three. This makes it easy for
marketers to identify their best customers and target advertising
campaigns towards them and not waste money by targeting each and every
one.
How
Businesses
Are Using
Analytics &
Software to
Serve
Customers
Better?

5) Cluster Analysis
– In Cluster Analysis, the numerous data points collected are sorted into
clusters based on parameters that the researcher is looking for. The
objective is to have such data points in a group that are more similar to
each other as compared to other clusters. Clusters help marketers make
focused and personalized decisions for customers falling into different
clusters.
6) Newspaper Vendor Model (NVM)
– Since Ecommerce is booming at an alarming rate, it is imperative to
maintain a balanced inventory of goods. This becomes more important
during festive and discount seasons when the demand for products
changes rapidly. The NVM helps to maintain inventory levels based on the
historical average and deviation of demand for a product. This is used a lot
by Ecommerce companies like Big Basket where their main product is
a perishable good. To avoid loss of revenue due to spoilt goods in the
inventory and to also avoid loss of revenue due to lack of stock, the NVM is
used to calculate the optimum inventory levels. This helps companies
serve their customers better and ensure fewer disappointed customers.
How
Businesses
Are Using
Analytics &
Software to
Serve
Customers
Better?

Few popular Companies that provide software services that
are used in Marketing Analytics
Marketo is one of the biggest and most established marketing
analytics companies which provides solutions to launch, monitor and
analyse marketing campaigns. Marketo offers everything marketers
need including tools for automating inbound marketing, lead
management, social media marketing, sales management dashboards
as well as analytics.
Yesware is an email platform which makes it easier for salespeople
to manage and track emails and thus close more deals. The platform
tracks email opens, provides in-email analytics as well as data on user
engagement. The platform syncs seamlessly with CRMs (Customer
Relationship Models) like Salesforce, Microsoft Dynamics
and Oracle ORCL CRM, thereby saving time and increasing efficiency
of marketing efforts.
How
Businesses
Are Using
Analytics &
Software to
Serve
Customers
Better?

Optimove platform leverages proprietary customer
modeling technology to help marketers at online companies maximize
the value of every customer. The software helps Internet businesses
convert more leads, increase customer spending and engagement,
reduce churn and win back more lost customers. By influencing
customer behaviour through highly-relevant, sophisticated and
personalized offers and incentives, Optimove helps businesses
understand customers and maximize revenue. It includes some big
clients like Conduit and GetTaxi.
 LocalVox is a platform to analyse social and mobile marketing
campaigns of businesses, thereby helping them to generate news and
engage local customers across the web, mobile, social media, email
newsletters and search engines.
How
Businesses
Are Using
Analytics &
Software to
Serve
Customers
Better?

Vocus is a leading cloud-based marketing software which helps
with customer acquisition and retention by making it easier for
marketers to reach out via social media and other online media
channels. Vocus offers a comprehensive suite of tools which integrate
social media marketing, search marketing, email marketing as well as
effective PR.
How
Businesses
Are Using
Analytics &
Software to
Serve
Customers
Better?

1) The Customer Service Challenge
In a Harris poll taken in May of 2015, 82% of US corporate
executives said that their customers’ expectations were higher
than they were three years ago. 47% said that they were
“somewhat” higher, while 35% said that they were “much” higher.
60% said it was somewhat difficult to please customers, and 9%
said that it was “very” difficult. 77% were in agreement that the
internet and consumer apps were responsible for setting a new
bar in customer service.
2. The Right Channels
Today’s consumers can be reached through a number of channels,
including telephone, email, instant messaging, and social media.
Increasingly, smartphones are replacing desktop computers as the
most common internet channel. One of the most important ways
to build and maintain relationships with your customers is by
knowing which channel they prefer using. Customized
experiences using the channels that customers most prefer help
create long-term connections and unleash the power of word-of-
mouth marketing.
How to build,
streamline
and enhance
your CRM for
best customer
service?

3. The Right Tools
One of the newest tools for elevating customer relationship
management to a higher level is cognitive analytics. Companies
have access to more data than ever before, but the key is
determining which data to utilize and how best to utilize it.
Software programs and other technologies analyze data in-depth
to provide a view of business processes, customer preferences and
other valuable information necessary to improve every aspect of
business operations. The benefits of CRM software, such as the
ability to automate many time-consuming repetitive tasks, are so
numerous that industry-specific software has already been
developed (example here).
Whatever tools and strategies you employ, nothing takes the place
of human interaction with talented customer service
representatives. Any investment in improving customer service
should include investing in the right people to represent your
company, which will always result in consistent, long-term
dividends
How to build,
streamline
and enhance
your CRM for
best customer
service?

Intangibility of services is derived from the fact that you cannot
see or touch a service. A service is made and delivered on spot and
hence it cannot be measured as easily as a tangible product.
As a marketer, due to the intangibility of services, you face a lot of
problems in services marketing. You will have to add tangible
elements to your service to make your marketing possible.
Another problem due to intangibility of services is that services
cannot be stored.
There are 5 main characteristics of intangibility of services.
1)Service cannot be touched
2) There is no precise standardization method for services
3) Services cannot be patented
4) There are no inventories in services
5) The consumer is part of the service process because he
consumes the service. Thus, either the service must go to the
customer or the customer has to come to the service.
Intangibility
of services

Marketing implications of Ownership
A lot of the implications of ownership depend on how
your people perform while delivering the service. The ownership
criteria comes after the service product has been delivered to the
customer and not before.
Example, A customer might not like the service in a shop, a restaurant
or an airline. However he would have already paid for the usage of
the service product. Thus in such a case he can positively or
negatively impact the service product. Hence measures should be
taken in the complete marketing mix to not disappoint the
customer post the service sale.
Ownership in
service
marketing

One of the crucial factors / problems faced by marketers is
the perishability factor in services marketing. In other words
services have Zero Inventory! Once sold, they stand sold and
cannot be returned. Hence several times in the services industry
the saying “First impression is the last impression” actually stands
true.
Lets take an example. A restaurant is serving food on a daily basis.
One day there is a strike. Can it serve the same food on the other
day? Sure. If it wants to go out of business!!!. But otherwise, the
restaurant will have to serve fresh food because the previous food
prepared would have perished. Thus we can understand that
services such as a doctors treatment, a hair dressers haircut, a
movie or airline ticket etc cannot be saved for later use. They can
be used only once else they perish. That’s perishability in services
marketing.
Perishability
in services
marketing

One of the concepts which we explained to our readers a few days
back is the Marketing channel and how you can build value
networks in the marketing channel. In this post, we talk about the
service channels and what role they play in marketing.
Overall, service channels present their own line of challenges, which
have to be fought by the business owners. Any channel, be it
a product channel of service channel, is established to provide
maximum value to the end customer. And if one link within the
channel is a weak link, then the channel can fail in delivering
value.
Service
Channels in
Marketing
and their role
in services

Where products are tangible in nature and easily differentiated on the
basis of features, form, performance and quality, service
differentiation is quite challenging and needs out of the box
thinking. A common question is “How can you differentiate your
services” and the answer lies in this article.
Services may be offered individually to the customer or they may be
bundled with a product. For example, tours and travels are
independent services offered to customers. But the service which
accompanies the Volkswagen car you bought, is dependent on the
product – Volkswagen.
Service
Differentiation
and 7 Ways to
Differentiate
Service from
Competitor

7 ways to differentiate your services from competition.
1) Ordering ease
This is a differentiator on which many internet businesses are based
nowadays. Have you noticed an increase in overall purchases
because of the penetration of E-commerce? People used to do
window shopping when they had time.
2) Delivery
Delivery is a major marketing tactic to differentiate your services. Just
look at the popularity of Pizza Hut or Dominos and the only
reason these 2 brands are popular because of their claim of “30
minutes delivery or free”. On the other hand look at services like
Laundromat. They don’t give you clean clothes with delivery, they
ask you to come to the store and get your clothes cleaned.
Service
Differentiation
and 7 Ways to
Differentiate
Service from
Competitor

3) Installation
Companies which sell Air conditioners or technical equipment like
Cold rooms, Ducting equipment etc, have to differentiate
themselves through their services. Are you likely to install a cold
room when you know that the brand provides poor service?
4) Customer training
Customer training is necessary and an important aspect of
differentiating your services. When you are selling products which
are new in the market, you have to impart proper customer
training so that the customer does not misuse the product.
Remember – the customer is more likely to blame your company
than he is to blame himself. If he does not understand the
handling of the product, that is your fault too.
Service
Differentiation
and 7 Ways to
Differentiate
Service from
Competitor

5) Customer consulting
Firms like IBM and Accenture have made big bucks through their
consultation offers. Customer consulting includes numerous
infrastructure or operation related consulting which can be
offered in the form of data management, information systems and
service advisory.
6) Maintenance and repair
Repair services need to differentiate themselves with the response
time. Many tech products like your Ipod and Printer have online
knowledge bases which users can refer to, so as to solve their
problems immediately. Other times, companies like Hewlett
packard and others offer fast services to their corporate and
enterprise customers.
Service
Differentiation
and 7 Ways to
Differentiate
Service from
Competitor

Marketing management

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