Marketing

WHAT’S MARKETING?

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• American Marketing Association definition of Marketing – the activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

FOCUS of CONTEMPORARY MARKETING

• In the past: marketing focused on helping the seller to sell
• Marketing today involves helping the buyer buy through:
• Websites that help buyers find the best price, identify product features, and question sellers. Eg: websites for old cars- cartrade, carwale, cardekho
• Blogs and social networking sites that cultivate consumer relationships.

FOUR ERAS of MARKETING

• Production Era (upto 1920s)
• Selling Era (1920-1960)
• Marketing Concept Era

(1945- 2000)

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• Customer Relationship Era

(from 1990s onwards)

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The PRODUCTION and �SELLING ERAS

• The general philosophy was “Produce what you can because the market is limitless.”
• Business owners: farmers, carpenters, trade workers
• After mass production, the focus turned from production to persuasion.

The MARKETING CONCEPT ERA

• After World War II, a consumer spending boom developed. Businesses knew they needed to be responsive to consumers if they wanted their business.

• The Marketing Concept includes three parts:
1. Customer Orientation -- Finding out what customers want and then providing it.
2. Service Orientation -- Making sure everyone in an organization is committed to customer satisfaction.
3. Profit Orientation -- Focusing on the goods and services that will earn the most profit.

The CUSTOMER RELATIONSHIP ERA

• Customer Relationship Management (CRM) - Learning as much as you can about customers and doing what you can to satisfy or exceed their expectations.
• Organizations seek to enhance customer satisfaction building long-term relationships.

SERVICE with a SMILE�Six Steps for Keeping Your Customers Happy

• The cost of acquiring a new customer is 5x the cost of retaining one. Here’s how to keep them:

• Build trust
• Emphasize the long term
• Listen
• Treat your customers like stars
• Show appreciation
• Remember employees are customers too!

NONPROFIT MARKETING

• Nonprofit marketing tactics include:

• Fund raising
• Public Relations
• Special Campaigns
• Ecological practices
• Changing public opinions and attitudes
• Increasing organizational membership

MARKETING STRATEGIES for NONPROFITS

• Nonprofit marketing strategies include:
• Determine the firm’s goals and objectives
• Focus on long-term marketing
• Find a competent board of directors
• Exercise strategic planning
• Train and develop long-term volunteers
• Carefully segment the target market

The marketing mix (The Four P’s)�The ingredients that go into a marketing program: product, price, place and promotion.

• Designing a want-satisfying product
• Setting a price for the product
• Putting the product in a place where people will buy it
• Promoting the product

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Product

Place

Promotion

Price

Target

Market

Marketing

process with

the four Ps.

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Product

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Price

Place

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Promotion

Find opportunities

Conduct research

Identify a target market

Design a product to meet the need based on research

Do product testing

Determine a brand name, design a package and set a price

Select a distribution system

Design a promotional program

Build a relationship with customers

Marketing mix……�DEVELOPING a PRODUCT

• Product - A good, service, or idea that satisfies a consumer’s want or need.

• Test Marketing - Testing product concepts among potential product users (Target Market: Group(s) of potential customers toward which a firm directs its marketing mix(es))
• Brand Name - A word, letter, or a group of words or letters that differentiates one seller’s goods from a competitor’s.

Marketing mix….�PRICING and �PLACING a PRODUCT

• Pricing products depends on many factors:
• Competitors’ prices
• Production costs
• Distribution
• High or low price strategies
• Middlemen are important in place strategies because getting a product to consumers is critical.

Marketing mix….Place (Distribution)

Dr. Rosebloom

Producer

Wholesaler

Retailer

Consumer

Marketing mix….�PROMOTING the PRODUCT

• Promotion - All the techniques sellers use to inform people about their products and motivate them to purchase those products.
• Promotion includes:
• Advertising
• Personal selling
• Public relations/publicity
• Word of mouth
• Sales promotions
• Corporate Image
• Exhibition

Marketing mix….�PERFECT PROMOTION�How to Get Customers to Need Your Product

• Get customers emotional about your product:
• Make your product “built to love”
• Use emotion-laden advertising (AXIS BANK AD)
• (https://www.youtube.com/watch?v=kvV_PZw0pBk)

• Be a likeable salesperson:
• Have confidence
• Be interesting
• Show interest in others
• Be enthusiastic and respectful

SEARCHING for INFORMATION

• Marketing Research -- Analyzing markets to determine challenges and opportunities, and finding the information needed to make good decisions.
• Research is used to identify products consumers have used in the past and what they want in the future.

FOUR STEPS in the MARKETING RESEARCH PROCESS

• Defining the problem or opportunity and determining the present situation.
• Collecting research data.
• Analyzing the data.
• Choosing the best solution and implementing it.

DEFINING the PROBLEM or OPPORTUNITY

• What’s the present situation?
• What are the alternatives?
• What information is needed?
• How should the information be gathered?

COLLECTING PRIMARY �RESEARCH DATA

• Primary Data - In-depth information gathered by marketers from their own research.
• Telephone, online and mail surveys, personal interviews, observations, questionnaires, letters from customers and focus groups are ways to collect primary data.

FOCUS GROUPS

• Focus Group -- A group of people who meet under the direction of a discussion leader to communicate opinions.

COLLECTING SECONDARY RESEARCH DATA

• Secondary Data - Existing data that has previously been collected by sources like the government.

• Secondary data incurs no expense and is usually easily accessible.
• Secondary data does n’t always provide all the needed information for marketers.
• Sources: Govt. & commercial publications, Magazines, newspaper, internal sources, general sources

ANALYZING the DATA and IMPLEMENTING the DECISION

• Marketers must turn data into useful information.
• Must use their analysis to plan strategies and make recommendations.
• Finally, marketers must evaluate their actions and determine if further research is needed.

KEY BENEFITS of MARKETING RESEARCH

• Analyze customer needs and satisfaction.
• Analyze current markets and opportunities.
• Analyze the effectiveness of marketing strategies.
• Analyze marketing process and tactics currently used.
• Analyze the reasons for goal achievement or failure.

SCANNING the MARKETING ENVIRONMENT

• Environmental Scanning -- The process of identifying factors that affect marketing success.

• Factors involved in the environmental scan include:
• Global factors
• Technological factors
• Sociocultural factors
• Competitive factors
• Economic factors

The MARKETING ENVIRONMENT

The CONSUMER and �B2B MARKET

• Consumer Market -- All the individuals or households that want goods and services for personal use and have the resources to buy them.

• Business-to-Business (B2B) -- Individuals and organizations that buy goods and services to use in production or to sell, rent, or supply to others.

MARKETING to CONSUMERS

• The size and diversity of the consumer market forces marketers to decide which groups they want to serve.
• Market Segmentation -- Divides the total market into groups with similar characteristics.
• Target Marketing -- Selecting which segments an organization can serve profitably.

SEGMENTING the CONSUMER MARKET

• Geographic Segmentation -- Dividing the market by cities, countries, states, or regions.
• Demographic Segmentation -- Dividing the market by age, income, education, and other demographic variables.
• Psychographic Segmentation -- Dividing the market by Personality, group values, and Life style.

SEGMENTING the CONSUMER MARKET�(continued)

• Benefit Segmentation -- Dividing the market according to product benefits the customer prefers (Comfort, Economy, luxury, durability) .
• Volume (Usage) Segmentation -- Dividing the market by the volume of product use (usage, Loyalty status).

MARKETING to �SMALL SEGMENTS

• Niche Marketing -- Identifies small but profitable market segments and designs or finds products for them.

• One-to-One Marketing-- Developing a unique mix of goods and services for each individual consumer. (Eg: Dell)

https://www.rolls-roycemotorcars.com/en-US/configure-your-rolls-royce.html

MASS MARKETING vs. �RELATIONSHIP MARKETING

• Mass Marketing -- Developing products and promotions to please large groups of people.
• Relationship Marketing-- Rejects the idea of mass production and focuses toward custom-made goods and services for customers.

The CONSUMER DECISION MAKING PROCESS AND OUTSIDE INFLUENCES

BUSINESS-to-BUSINESS �MARKET (B2B)

• B2B marketers include:
• Manufacturers
• Wholesalers and retailers
• Hospitals, schools and charities
• Government
• Products are often sold and resold several times before reaching final consumers.

B2B MARKET DIFFERENCES

• There are relatively few customers.
• Customers tend to be large buyers.
• Markets are geographically concentrated.
• Buyers are more rational than emotional.
• Sales are direct.
• Promotions focus heavily on personal selling.

Developing and Pricing Goods and Services

DEVELOPING VALUE

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• According to the American Marketing Association, value is a foundation of marketing.
• Value -- Good quality at a fair price.
• Adapting products to new markets is an ongoing challenge.
• Product development is a key activity in any modern business.

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PRODUCTS CONSUMERS �WON’T GIVE UP

• Internet service
• Cell phone service
• Cable television
• Discount apparel
• Haircuts and coloring
• Fast-food

PRODUCTS “EXPENDABLE” �by SPENDING CUTS

• Luxury handbags
• Satellite radio
• Specialty apparel
• High-end cosmetics
• Facials

DEVELOPING a �TOTAL PRODUCT OFFER

• Total Product Offer -- Everything consumers evaluate when deciding whether to buy something.

• Products are evaluated on many different dimensions, both tangible and intangible.
• Marketers must think like and talk to consumers to find out what’s important.

POTENTIAL COMPONENTS �of a TOTAL PRODUCT OFFER

ANYTHING YOU CAN DO…�Products Replacing Products

UNDERSTANDING �PRODUCT LINES

• Product Line - A group of products that are physically similar or intended for a similar market.

• Product lines often include competing brands like:
• Coca-Cola
• Diet Coke
• Coke Zero
• Cherry Coke

The PRODUCT MIX

• Product Mix -- The combination of all product lines offered by a manufacturer or service provider.
• Product mixes like Procter & Gamble’s can be extensive:
• Toothpaste
• Cosmetics
• Diapers
• Batteries
• Bar soap

DIFFERENTIATING PRODUCTS

• Product Differentiation -- The creation of real or perceived product differences.
• Marketers use a mix of pricing, advertising and packaging to create different images. Examples include:
• Bottled water
• Aspirin
• Fast-food
• Laundry detergent
• Shampoo

CONSUMER GOODS and SERVICES �Classification

• Four classification consumers goods and services:
• Convenience Goods and Services
• shopping Goods and Services
• Specialty Goods and Services
• Unsought Goods and Services

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Convenience Goods and Services

• Convenience Goods and Services -- Products consumers purchase frequently with minimal effort. These include:
• Candy and snacks
• Gas
• Milk and eggs

SHOPPING�GOODS and SERVICES

• Shopping Goods and Services -- Products consumers buy only after comparing value, quality, price, and styles. These include:
• Clothes and shoes
• Appliances and furniture
• Childcare
• Home remodeling

SPECIALTY�GOODS and SERVICES

• Specialty Goods and Services -- Products with unique characteristics and brand identity. These include:
• Tiffany jewelry
• Rolex watches
• Lamborghini automobiles
• Ritz Carlton Hotels

UNSOUGHT�GOODS and SERVICES

• Unsought Goods and Services -- Products consumers aren’t aware of or haven’t thought of buying until they need them. These include:
• Car-towing services
• Funeral services
• Renter’s insurance

LG2

Photo Courtesy of: Paul Chenoweth

INDUSTRIAL �GOODS and SERVICES

• Industrial Goods -- Products used in the production of other products and sold in the B2B market.

• Industrial goods include:
• Installations
• Capital items
• Accessory equipment
• Supplies
• Service

INDUSTRIAL �GOODS and SERVICES� Classification

• Industrial Goods classification:
• 1) Production goods
• Raw materials
• Component parts(engines)
• production materials(nuts and bolts)

Support goods

• Industrial Goods classification:
• 2) Support goods
• Installations (buildings,equipment, and

capital items)

• Accessory equipment (tools and office equipment)
• supplies(paper clips, stationery, and other supplies)
• Service(maintenance and repair)

USES of PACKAGING

• Companies often use packaging to change and improve their basic product. Examples include:
• Chocolates
• Mobiles
• Cosmetic

• Good packaging can also make a product more attractive to retailers.

SOME KEY FUNCTIONS of PACKAGING

• To attract buyers’ attention
• Protect the goods inside and be tamperproof
• Be easy to open
• Describe and give information about the product
• Explain the product’s benefits
• Provide warranty information and warnings
• Give an indication of price, value, and uses

BUNDLING

• Bundling -- Grouping two or more products together and pricing them as a unit.

• Virgin Airlines bundles door-to-door limo service and inflight massage with some tickets.
• Financial institutions bundle advice with purchases.

Photo Courtesy of: Joey Day

UNDERSTANDING BRANDING

• Brand -- Name, symbol, or design that identifies the goods or services and distinguishes them from competitors’ offerings.

• Trademark -- A brand that has exclusive legal protection for both its brand name and design.

BRAND CATEGORIES

• Manufacturers’ Brands – Brand names of manufacturers that distribute products nationally. (intel)
• Dealer (Private-Label) Brands -- Products that carry a retailer’s or distributor’s brand name instead of a manufacturer’s.

Photo Courtesy of: Joe Mudd

BRAND CATEGORIES

• Generic Goods – Non-branded products that sell at a discount compared to manufacturers’ or dealers’ brands.
• Knockoff Brands -- Illegal copies of national brands. Knockoff products are those that copy or imitate the physical appearance of other products but which do not copy the brand name or logo of a trademark. 

Generating BRAND EQUITY �and LOYALTY

• Brand Equity – The value of the brand name and associated symbols.
• Brand Loyalty -- The degree to which consumers are satisfied and are committed to further purchases.

MOST VALUABLE BRANDS

ORIGINS of �AUTOMOBILE SYMBOLS

• Volvo - Symbol for iron
• Lamborghini - Company founder’s zodiac sign was Taurus
• Volkswagen - Product of an office contest
• Porsche - Coat of arms for city and state headquarters

Source: World Features Syndicate.

BUILDING BRAND AWARENESS

• Brand Awareness -- How quickly or easily a given brand name comes to mind when someone mentions a product category.
• Consumers reach a point of brand preference when they prefer one brand over another.
• When consumers reach brand insistence, they will not accept substitute brands.

CREATING BRAND �ASSOCIATIONS

• Brand Association -- Linking a brand to other favorable images, like celebrities or a geographic area.
• Brand Manager -- Person responsible for a particular brand and handles all the elements of the brand’s marketing mix.

��The NEW PRODUCT �DEVELOPMENT PROCESS

��NPD STAGE 1 – Idea generation�

Ideas come from everywhere, can be of any form, and can be numerous. This stage involves creating a large pool of ideas from various sources, which include:

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• Internal sources – many companies give incentives to their employees to come up with workable ideas.
• SWOT analysis – Company may review its strength, weakness, opportunities and threats and come up with a good feasible idea.
• Market research – Companies constantly reviews the changing needs, wants, and trends in the market.
• Customers – Sometimes reviews and feedbacks from the customers or even their ideas can help companies generate new product ideas.
• Competition – Competitors SWOT analysis can help the company generate ideas.

��NPD STAGE 2 – Idea Screening�

Ideas can be many, but good ideas are few. It involves finding those good and feasible ideas and discarding those which aren’t.

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Many factors play a part here, these include :

• Company’s strength
• Company’s weakness
• Customer needs
• Ongoing trends
• Expected ROI
• Affordability, etc.

����NPD STAGE 3 – �Concept development �and Testing�

• A concept is a detailed strategy or blueprint version of the idea. Basically, when an idea is developed in every aspect so as to make it presentable, it is called a concept.
• All the ideas that pass the screening stage are turned into concepts for testing purpose. You wouldn’t want to launch a product without its concept being tested.
• The concept is now brought to the target market. Some selected customers from the target group are chosen to test the concept. Information is provided to them to help them visualize the product. It is followed by questions from both sides. Business tries to know what the customer feels about the concept. Does the product fulfil customer’s need or want? Will they buy it when it’s actually launched?
• Their feedback helps the business to develop the concept further.

Roadmap to Engineering Design

��NPD STAGE 4 &5 – Business Strategy Analysis & Development�

• Analyse and decide the marketing, branding, and other business strategies to be used
• Estimate product profitability, marketing mix, and other product strategies for the product

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Other important analytics includes:

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• Competition of the product
• Costs involved
• Pricing strategies
• Breakeven point, etc.

��NPD STAGE 6 – Product Development�

• Once all the strategies are approved, the product concept is transformed into an actual tangible product.

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• This development stage of new product development results in building up of a prototype or a limited production model.

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• All the branding and other strategies decided previously are tested and applied in this stage.

NPD STAGE 7 – Market testing ��

• Unlike concept testing, the prototype is introduced for research and feedback in the test marketing phase.

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• Customers feedback are taken and further changes, if required, are made to the product. This process is of utmost importance as it validates the whole concept and makes the company ready for the launch.

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NPD STAGE 8- Commercialization

• Promoting the product to distributors and retailers and developing the promotional campaign
• Final decisions on the marketing mix is arrived
• Markets are decided for the product to launch in. This stage involves briefing different departments about the duties and targets. Every minor and major decision is made before the final introduction stage of the new product development.

NANO

NANO IDEA

Parking problem

BASIC NEEDS

Traffic problem

Demand & potentiality

• CHOOSING BEST IDEA FOR FURTHER DEVELOPMENT�

• Company capabilities to produce & market the product
• Nature & wants of Buyer

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SCREENING

Seeking potential buyers’ responses to a product idea

Low cost determination :1,00,000(Excluding Taxes)

• Gasoline Model
• Electric Model

CONCEPT TESTING

PRODUCT DEVELOPMENT

• The car was designed at Italy's Institute of Development in Automotive Engineering
• Low cost 4 wheeled Ace truck in May 2005 �

• The interior space is 20% more than a Maruti 800.
• The use of a rear mounted engine to help maximize interior space makes the Nano similar to the original Fiat 500.

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• Low price with new design attracts comparing to other cars.

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• The air intakes on the flanks indicate the position of the engine and is necessary for cooling the engine. This feature is common to Ferraris and Nano.

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• It’s two–cylinder engine’s counter balancer rod keeps the vibration away.

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COMPARISION BETWEEN NANO &

OTHER

TEST MARKETING

Sample launching

78th edition of the Geneva Motor Show

The Nano will be available in three trim levels:

• Standard-without A.C.
• Deluxe-The Deluxe and Luxury variants will get AC and body colored bumpers
• Luxury-Luxury variant will also have alloy wheels, fog lamps and ICE ��

Two types of variant cars are available:

• Gasoline variant(G-Variant)
• Electric Variant(E-Variant)���

Crossing all Barriers (Political,Techinical) Tata promise to launched NANO in Feb,26,2009.

COMMERCIALISATION

The FOUR STAGES of a �PRODUCT LIFE CYCLE (PLC)

• Product Life Cycle -- A theoretical model of what happens to sales and profits for a product over time.
• Product Life Cycle Stages:
1. Introduction
2. Growth
3. Maturity
4. Decline

SALES and PROFITS DURING �the PRODUCT LIFE CYCLE

Sample strategies followed during the product life cycle

How sales, profits and competition vary over the product life cycle

https://prezi.com/a58kncokxapb/product-life-cycle/

PRICING OBJECTIVES

• Achieving a target return on investment or profit
• Building traffic (Super markets)
• Achieving greater market share
• Creating an image (Rolex watches)
• Furthering social objectives both short-run and long-run (milk, gas)

PRICING STRATEGIES

• Cost-based pricing- measures cost of producing a product including materials, labor, and overhead. Eg: car prices
• Demand (Target) Costing – Designing a product that satisfies customers and meets the firm’s targeted profit margins. Eg: custom made jewelry, nano car
• Competition-Based Pricing -- A strategy based on what the competitors are charging for its products. Price leadership – oil companies, Pepsi and Coca Cola. Both brands compete against each other over pricing ...

BREAK-EVEN ANALYSIS

• Break-Even Analysis -- The process used to determine profitability at various levels of sales. The break-even point is where revenues equals cost.
• Total Fixed Costs(FC) -- All costs that remain the same no matter how much is produced or sold.
• Variable Costs (VC)-- Costs that change according to the level of production.
• BEP = FC/ (P-VC) * P-Price of one unit

BREAK-EVEN ANALYSIS

• You have a fixed cost of $200,000. Variable cost(eg.labour and material) per item is $2. If you sold the products for $4 each, the break even point would be 100,000 items.
• BEP= FC/p-VC = $200,000/$4-$2
• = 100,000 boxes.

Break even chart

OTHER PRICING STRATEGIES

• Skimming Price Strategy – is a pricing strategy where businesses tend to markup the initial price of the product to a much higher rate and slowly decrease it as time goes on. Pricing new products high to recover costs and make high profits while competition is limited. Eg: BMW i8 (2.3 crore) , apple iphone,sony
• Penetration Price Strategy - Pricing products low with the hope of attracting more buyers and discouraging other companies from competing in the market.
• Everyday Low Pricing (EDLP) - Setting prices lower than competitors with no special sales (Wal-Mart & big retailers).

PRICING STRATEGIES of RETAILERS

• High-Low Pricing – setting prices that are higher than EDLP stores, but having many special sales where the prices are lower than competitors (Departmental stores and some retailers).

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• Psychological Pricing -- Pricing products at price points that make a product seem less expensive than it is. (BATA SHOES)

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