NMIMS, 2007-08 (Concepts & Environment)

Marketing Concepts
Needs, Wants, Demands
Needs Wants Demands
What Deprivation of Specific satisfiers of deeper Specific Wants for
basic, needs products Wants +
satisfaction Wants are many purchasing power
Existing, few Ability & willingness
Influencer Natural, not Shaped by Social-family, Shaped by status,
s created friends, Aspirations
Peers or Institutional-
Promotion
Instances Food, clothing, Needs food-Wants Mcdonalds Needs Car/TV, Wants
belonging Needs clothes-Wants Allen Luxury Sedan/flat, As
Solly willing + able,
Demand Benz/Plasma TV
Marketers Existing, Influence wants, Influence demand by
minimum Affordable&available Bank making product
influence, loan, EMls attractive/aspirational,
House 3 Bed Room Status Duplex /
Bungalow

Product-Offered to satisfy needs / wants

Product-tangible eg Books ; Service-Intangible eg Banking, Finance, Hospitality
Products also deliver services eg car-product & transportation-service, Mobile
Focus on products sans service risky eg TV, Fridge, AC without back-up Service
Team-Risky

Brand-An identifying symbol/words/mark distinguishing a product/company from

its competitors.
Branding is an essential part marketing.
Brand = (Functional + Economic + Emotonal) Value Propositions.
Nokia-Functional, Amul- Economic, Saffola- Emotional

Value Proposition- Bundle of benefits the product provides to fulfill customer

needs and wants
Market (mercor-to buy Latin)
Potential + Existing customers sharing a common need/want, able & willing to
engange/enter in exchange to satisfy their needs/wants Eg Pharma
Market=Doctors + Hospital + Trade
Economics-Buyers+ Sellers= Market, Marketers – Sellers is industry, Buyers is
Market

Value (valere – latin – worth)-

Consumer’s estimate of the utility/capacity of a product/brand to satisfy their
needs. Fair return.
Price is what you pay, value is what you get- Warren Buffet Mobiles-
convergence

Customer-One who buys goods or services- Mother

Consumer-One who consumes, but may or may not have purchased- Kid

Client-A customer/consumer/ party who pays for professional services- Lawyer,

Hotel, Consultancy
NMIMS, 2007-08 (Concepts & Environment)

Prosumer: Producing consumers, active, regular and influencing consumers who

also initiate feedback

Customer satisfaction: Core- Quality, service, value; Desire (Within an arms

length of desire- coke), customer delight (kingfisher airline), delivery (blue dart),
service (icici bank, taj)

Marketing
Marketer  Mix + Strategy  Brand  Value  Customer
• Mission: Create a difference between company’s & competitors offering
on a/an attribute/s important to customers, to provide value, Scope.
• Identifying, creating, managing demand to provide value to a customer for
a profit – Kotler
• Mgmt process that identifies, anticipates, satisfies customer requirements
profitability – CIM
• The right product, in the right place, at the right time, at the right price –
Adcock
• Marshalling organizational resources to meet changing needs of the
customer – Palmer
• Marketing is far too important to leave to the marketing department”,
David Packard (HP) 1950
• Concept- Satisfaction of the Customer & their needs, focus of business
activities. IBM
• Philosophy- Owned by everyone from within the organization
• Marketing is not only much broader than selling, but not a specialized
activity at all. Marketing encompasses the entire business. The whole
business seen from the point of view of the customer. Concern &
responsibility for marketing must therefore permeate all areas of the
enterprise. A business has only 2 basic functions that produce result,
marketing and innovation, the rest are all costs – Peter Drucker
• “if marketing is seminally about anything, it is about .. differentiating what
you do and how you operate. All else id=s derivative of that and only that.
“Theodore Levitt 1986”
• Holistic marketing: From product to customer focus, from selling
products to satisfying customers, visualizing broader ways to serve
customers and assess how all departments affect customers satisfaction-
delivery, service, performance
• Reserve marketing: Customer initiatives help design products marketing
mix – PCs, Travel
• Experiential marketing: Customer experience/ simulate product before
buying foods, CDs

Planning Process of anticipating future events & conditions to determine the

best way to achieve organizational objectives
• Marketing planning- Implementing planning activities to achieve
marketing objectives
• Strategic planning- Adopting courses of action to achieve organizational
objectives
• Tactical planning- Planning that guides the implementation of activities
in the strategic plan
NMIMS, 2007-08 (Concepts & Environment)

Management (Manus – Hand Latin) – Optimal utilization of resources to achieve

objectives eg Electricity
• Management is doing things right, leadership is doing right things –
Peter Drucker
• Manager-Responsible for application & performance of knowledge- Peter
Drucker
• Marketing Management- Demand management

Dimensional Differentiation of Selling VS Marketing

Dimensio Selling Marketing
n
1 Concept Integral part of Broader concept, Includes Selling,
Marketing Brand, MR, Distribution, Promotion,
Strategy, etc
2 Objective Transaction Exchange, Customer & Demand
management
3 Target Buyer Needs/wants of the Customer
4 Focus Product Brand/Service
5 USP Price Value
6 Strategy Sales force & Marketing Mix
Promotion
7 Period Short term Long term
8 Controls Sales, delivery, Customer Satisfaction, Market Share
collection
9 Skills Selling, Analytical
Communication
10 Orientati People Team
on
11 Begins When you have a Much before and long after a produst
product

Organizational Orientation
Production- PSUs
Product- Infosys
Selling- Sansui
Marketing- Hutch
Finance- SBI
Service- ICICI

Marketing Environment
M8 +C5 + PESTND (Case – Mobile Industry)
Surrounds & impacts the organization, 3 key perspectives- Macro, Micro and
Internal environments.
Environment

Internal Micro Macro • Internal

Envt-M8-
8 M’s 6C’s PESTND Important for
Men Components Political managing
change
NMIMS, 2007-08 (Concepts & Environment)

Material Corporate Economic • Internal Envt-C5-

Money Channel Socio-cultural
Influences organization
Minutes Communication Technological
directly, Relationship
Markets Customer Natural between
firms & driving
Machines Competition Demographic forces
Methods Direct impact Out of direct control • Macro
Envt-PESTND
Mind Influencing factors,
but
Change management out of direct
control,
environmental
change

PEST ND
Political Factors
• Huge, influence policy & regulations and spending power of customers
• Government- VAT, WTO-GATT, Taxation, Reservations
Economic Factors
• Economy – Sensex, Forex, Interest rates, Inflation, Employment level, Per
Capita, GDP,
Sociocultural Factors
• Ethnicity, local factors and issues, environmental issues- Bandra- Worli
Sealink
• Attitudes to foreign products and services- KFC Bangalore, Language
impact
• Cultural and religious factors- Mcdonalds French fries controversy, Nivea in
Latin America
Technological Factors
• Technology- New, accessible, better, cheaper, innovation, investment
intensive- ATM, Net
Natural Factors
• Raw material availability, Pollution, Environment, Monsoon -
Pharmaceuticals
Demographics
• Age profile, Geriatrics, Life expectancy, Mortality, Geography,
Consumption, Psychographics

Analyzing the Environment

5 Forces Analysis
5 Forces Analysis (Porter)
• Analyses forces driving industry competition, intensity of
competition- Indian Hotels not Tatas
NMIMS, 2007-08 (Concepts & Environment)

• Collective strength determines profit potential,

identifies areas where company can defend
• 5 Key areas- threat of entry & substitutes, power of
buyers & suppliers, competitive rivalry

The threat of entry

• Economies of scale- Production, coverage,
distribution- Reliance Polyester
• Entry/Exit Barriers- FDI, Retail
• Access to distribution channels- Shelf space
• Cost advantages- Bazee- Ebay
• Product Differentiation- Baby products- J&J
• Government policy- Insurance Sector
NB: Gambar lihat di situs aslinya

Will competitors retaliate?

Price cuts, promotional onslaught, technology – Mobiles

The power of buyers

Monopoly, Oligopoly, Cartelling- Tyre, Vitamin manufacturers

The power of suppliers

• Switching costs high – technology, distribution – Tata GSM
• Power Brand- Amul, Integration- Tata Tea- Barista
• Fragmentation, consolidation, integration

The threat of substitutes

• Disruptive innovations- Mobiles- convergence affects 32 industries
• Need substitution- Better toothpaste reduces need for dentist, Diagnostics
can avoid diseases
• Generic substitution- Stop smoking cigarettes, Gutka ban
• Technology- Blue tooth, Java

Competitive Rivalry
• High, where entry is likely/threat of substitute products/suppliers/buyers
control the market FMCG, Pharma, IT
• Pre-emptive eg leader drops price/intensifies promotion to scuttle new
competitor entry

Effective 5-Force Analysis

• Structural analysis and competitive strategy for defending/increasing
market share
• Strategic moves to influence balance of force
• Anticipating and exploiting change to emerge stronger

PEST Analysis (Porter)

• Environmental analysis preceding the marketing process
• Should be continuous & feed all aspect of planning
NMIMS, 2007-08 (Concepts & Environment)

SWOT Analysis (Case)

• Tool for auditing organization and environment
• 1st Stage of planning, helps marketers focus on key issues
• Identify key issues & objectives, use with other audit & analysis tools, like
PEST / 5-Forces
• Strength & weaknesses- internal factors, Opportunities & threats-external
• Strengths- Specialty, economies, reputation, innovation, service, tech,
location, quality
• Weaknesses- lack of strengths
• Opportunities- Competition, innovation, technology, regulatory

Successful SWOT analysis guidelines

• Short, simple and fair analyses especially about strengths & weaknesses
of your organization
• Anticipation of PEST factors in the industry, Avoid grey areas
• Competitive analysis through benchmarking, popular tool, quick & easy to
learn

Disadvantages
• Can be very subjective, Not very reliable, Bias steps in
• Two people rarely come-up with the same final version of SWOT
• Use only as a guide

Marketing Mix (Neil H. Borden)

• Marketing ‘tactics’ or tools or ‘4Ps’ (McCarthy)
• Other Ps- Pace, People, Policy, Process, Packaging, etc
• Car-Mix of Engine, Mileage, Looks, Price, Features, Quality, EMI options
• Mix element vary leading to different strategies, perception & value
proporsitions
Product Price
Brand, features, design, quality, range Strategies,
Warranty, AMC, service, size, Credit,
packing, performance Costs
Promotion Place
Sales promotion, Personal Selling, Channels, location, coverage,
Advertising, Transportation, inventory, width,
Sponsorship, Multi-level Marketing, Spread, reach, shippers
Direct
Marketing, Trade fair & Expositions

Promotion
• Marketing communication
• Objectives- Sales, attract/retain/covert, trial, awareness, remind,
reassure
• Retention Levels- reading 10%, listening 20%, Audio-visual 70%; Sight,
Sound, Motion effective. Integrate individuals promotion mix components
for effective communication

Promo Tools / Mix (SPPASM DT)

Sales Personal Public Adverti Sponsor MLM Direct Trade
Promot Selling Relati sing ship Fair
ion ons Expo
NMIMS, 2007-08 (Concepts & Environment)

Contests Presentati Inserts Advts Events Residual Databa Demos

Coupons ons Press Hoarding Period Income se Brochur
Low Samples kit s Theme Network Mailers es
finance Demo Semina Banners Commissi CRM Teach-
rs on info
Personal Selling- (Car, Insurance)
• Effective but expensive way to manage personal customer relationships
(Medical Representative)
Sales Promotion- (Akai/Aiwa/Sansui)
• Incentive to buy, ensure trial, D2C through trade BOGOF, Coupons,
Discounts, Contests, Trial
Public Relation (PR)- (Political parties/top companies/IPO)
• Subtle inserts used in image building, firefighting- impact if managed well,
economical, if long-term
Direct (Credit card/insurance company mailers)
• Targeted communication- update database, response monitoring, multiple
use 2% response
• Mailers of contests, EMI options, transfer of credit, mail order catalogues,
CRM
Trade Fairs and Exhibitions (Print/Auto/Pharma/IT Expo)
• Trade, product display / demonstration/awareness/trial, recent decline due
to internet
Advertising
• ‘Paid for’ communication, difficult to measure Ad impact (Amul bylines
excellent, sales impact). Helps develop attitudes/create
awareness/communicate message, elicit response
• Type of Ads- FRESHEN- Fear, Rational, Emotional, Social, Humour, Ethical,
Negative
• Media- Print- Newspaper/magazine/journals (local, national, trade,
specialty)/ pamphlets Electronic- TV/ radio Virtual- Internet, Mobiles
Outdoor- Hoarding/Banners/kiosks/transport ( bus, train, taxi, vans)
Captive- Theatres, train compartments, Cable TV
Sponsorship (Femina-Miss India)
• Organization pays to associate with an event/cause- Sahara- Indian
Cricket/Hokey/Olympics
• Event attributes then associate with sponsor- Pepsi- Youth, Sahara-
Patriotism
Multi-Level Marketing (HerbalLife, Amway)
• Networking, Residual Income, Flexi-timings, Initiators earn maximum,
financial schemes- suspect
Promotional Spend Methods- (Half my Ad- spend is wasted, but which hall?
John Wanamaker)
• Affordable- Amount decided on supposed affordability, ignores promo
needs
• % of sales- Anticipated sales, not guided by opportunities, promo- spend
varies, % basis arbitrary
• Competitive parity- Share of voice, Assumes competitive spend-
collective industry wisdom- debatable, Own
opportunities/strength/reputation not considered- IIPM highest print
spender
• Objective & Task Method- Define objective/tasks, allocate promo-
spend, difficult to implement
NMIMS, 2007-08 (Concepts & Environment)

Full VS Push: Push – Sales Force + Trade Promotion, Pull – Advertising +

Customer Promotion
Strategies differ across industry players, traditionally HLL – Push and P&G – Pull
strategy worldwide
Promotion Mix Strategy – ICICI

Place (distribution/channel/intermediary)
• Set of institutions performing activities to move product from production
to consumption- Bucklin
• Functions- Order Processing, Warehousing, Inventory, Transportation,
Collections
• Ensures- Availability, Visibility (Dikhta hai voh bikhta hai), Movement,
CRM, Feedback
• Width- Trade coverage, Reach- Customer coverage, Depth- Brand
coverage
• Growing impact of convergence- internet, mobile, retail, revolution

1-Level 2-Level 3-Level 4-Level 5-Level

Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer
C&F C&F
Stockiest Stockiest
Retailer Retailer Retailer
Consumer Consumer Consumer Consumer Consumer
Industrial, IT IT Hardware Retail/Malls Garments Pharma/FMC
G

Channel Intermediaries
• Distributor (C&F)- Bulk to smaller packs, handle major area, supply to
stockists
• Wholesalers (Stockists)- Resell to retailers, storage, coverage essential
• Others- Commission agents, co-operative (farmers), Indentors (Imports),
agents (magazine)
• Retailers- Strong customer influence, consumption/purchase pattern
insight, service
• Specialty (Sport), Supermarket (Big Bazar) Convenience (Kirana), Factory
Outlets, Warehouse, Direct sellers (Encyclopedia)- D2D, Vending Machine
(Tea, Coffee), co-operative (Apna Bazar, Grahak Peths, Societies), Chain
stores (Monginis)
• Internet (Service)- Channel margins and inventory costs major saving- can
be passed, hence economical, death of distance, geographically disperse
market, niche products reach wider audience, low entry barriers, display
variety & functionality, interactive, Payment Risky, gaining popularity,
delivery costly- Books, CDs, medicine, travel, tourism
• 3rd Party Logistic (AirFreight, GATI)- tremendous scope
Channel Decisions
• Direct or indirect channels/single or multiple channels
• Length of channel
• Types of intermediaries/Number of intermediaries at each level
• Which intermediaries? Avoid intrachannel conflict- Nike

The Retail Revolution Case

NMIMS, 2007-08 (Concepts & Environment)

Price
• Fit between crucial financial component-cost & marketing component-
value
• Center-stage in marketing wars, inter-firm rivalry-Mobile Industry
• Product differentiation blunted- Surf-Ariel, Mature product/Markets- TVs
• Economic Value Proposition- Titan- High priced brands inspite of local &
grey market competition
• Objective- Profits/ROI, competitive position, demand, costs, survival,
product, Portfolio, Entry
Pricing Methods
• By cost- Cost Plus and Break Even
• By competition- Going rate, competitive pricing, cartelling- Tyre industry,
sealed bids (tenders)
• Customer Oriented- Perceived Value (Lifestyles), Auctions (Bazee), Value-
Buffett, McDonalds
Pricing Strategies
• Penetration- HQLP- NPL, Entry, Attract, Ensure trial- Amul
• Premium- HQHP- Sustainable advantage- Bose Speakers, Benz
• Economy- Functionally & Value-, Nirma, Supermarket- own brand
• Skimming- LQHP- Significant advantage, unsustainable- Reliance Mobile
• Rip-Off- Medium quality, very high price- Pricey Hotels/ Restaurant
• 1,5,9- coexist in same market till buyers insist on quality, price, value
• 2,3,6- ways to attack 1,5,9 as 2 = HQMP, 3 = HQLP, 6 = MQLP
• 4,7,8 overpricing wrt quality- customers feel ‘taken’, bad oral publicity,
avoid
Exercise- Gives Price
examples of each High Medium Low
pricing strategy
Quality High 1- Premium 2- High 3- Penetra
(Quality is Value tion
only Mediu 4- Over- 5- Medium 6- Good
indicative) m charging Value Value
Low 7- RipOff/Skim 8- False 9- Econom
ming Economy y

Other Pricing Strategies

• Psychological- Bata, Mobile Airtime Tariffs
• Geographical- Medicine/Electronics across countries or Urban/Rural-
Electronics
• Promotional- Extensive usage, if successful-copied, if unsuccessful-
financial drain
• Loss leader- Factory outlets
• Special Discount/Rebates- BOGOF, % Off, Sale
• Financing- EMIs, Low interest rates
• Warranties/AMCs- Extended warranties, TVs-Onida 4 year warranty, Free
AMC
• Psychological Discounting- Prices slashed 399 to 199, Baazee
• Old for New- New for Old discounts- Exchange offers- Van Heusen, TVs
• Price Point- Cadburys- Re1- Éclair, Rs2-Chocky, Rs5-5star, Rs50-Heroes,
RS100-(Heroes)
• Value- Superstores- Big Bazaar
NMIMS, 2007-08 (Concepts & Environment)

Discriminatory- Same brand/ service, 2 price

• Customer segment- Student discount
• Product form- Ketchup- 100gm-20, 250gm-45, 500gm-75
• Image- Hotels- Taj Palaces (Premium), Resorts (Lifestyle), Hotels
(Business), Indione (Budget)
• Location- Theatres- Stall-50, Balcony-75, Dress Circle-100, Stadium-
Pavilion, Stands
• Time- Seasonal- Cheaper/costlier during season, Happy Hours, Bakeries-
25% off after 8pm

Product Mix- Profitable brands take care of others in the portfolio

• Product line- full range in all segments- Maruti Cars 2 Lacs at every 25000
intervals
• Optional feature pricing- Ford Ikon-Insurance+Deck+Central Lock+Auto
Cop Free
• Captive product- Cameras/Razors cheaper but consumables – Film / Blades
costly
• 2-Part- Esselworld-admision + rides, Airtime + SMS/VMS/STD
• By-Product- Lubricants with petrol
• Product bundling- Season tickets, Time share