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8/7/2019 Basics of marketing MBA II
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Basics of marketing
Market / marketing/CustomerNeed / want / demand
concepts / philosophy /process
Difference between selling & marketingMarketing management
Marketing mix
environment
STP/Market research/communication
Customer satisfaction /feedback1
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Basics relationships
Customer
Market
Product / service Marketing activities
Profitability
Customer satisfaction
CREATE VALUE CAPTURE VALUE THROUGH
BUILDING RELATIONSHIP
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Market
from Latin word Marcatus which meansplace where business is conducted
A place where customers of similar need exist A place or region where buyer & seller are in
free competition with each other
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marketing
Marketing starts with the term Market which is a set ofactual and potential buyers . Buyer or customer is onewho buys the product form marketers.
Marketing is a broad term comprising of performances ofall the functions related to assessing, stimulating andfulfilling the need of the customers achieving their bestpossible satisfaction .
Marketing is the process of creating values for customersand building strong customer relationship in order tocapture value from customer in the form of sales, profit andlong term relationship
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TYPES OF CUSTOMERS
03 TYPES
1. Attached to company
2. Attached to competitor3. undecided
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marketing
Process of satisfying the need of a customer
and achieving the objectives in return
Creation of value for the customer as per hisneed and capture the value in exchange by
establishing relation with the customer and
achieving his satisfaction
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It is customer oriented approach
It is profitability oriented approach
It is optimum resource utilization approach It begins and ends at customer
it covers sales & after sales with respect to
customer satisfaction
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Features of marketing
Customer oriented produce & sell as perdemand of the customer
System approach all activities must beintegrated and planned
Dual objective - best service/product and bestprofit
Social approach social welfare ,apart fromcustomer welfare to be taken cared
MIS adequate and accurate information ofcustomer, need, and competition helps inplanning, action and control process
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Marketing process Process includes market place, demand,
marketing program, strategy, customerrelationship, satisfaction, profit and fulfillment ofcustomer needs capturing values from customer
it is a five step process ; 1) understanding the market and customer needs 2)design a customer driven marketing strategy 3) construct a marketing program that delivers
superior values 4)build profitable relationship and create
customer delight 5) capture value in return from customer as profit
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Understanding steps
1) need/ wants/demand Need- state of felt deprivation Wants-the form human need shaped by individual Demand wants supported by buying power 2) market searching that set of targeted buyers with
common need for the product 3)designing strategies- building profitable relationshipwith customers
production concept making availability product concept quality product selling concept - large scale selling to force
customers marketing concept customer need satisfaction social marketing - balancing profit, needs and
social interests
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Marketing concepts( Evolution )
Evolution of marketing concept
production concept
Product concept Selling concept
Marketing concept
Social marketing concept
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Factors responsible for growth of
marketing concept
Population growth
Growing households
New attitude towards lifeIncome growth
Technological changes
Growth of mediaGrowth of channels
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Advantages of marketing concept
Long term success if needs are recognized
Enables Capitalize opportunities
Customer demand receives top consideration
Enables Effective planning and development More emphasis on research and innovation
Provides integrated view of business
interdependence of all sections
Interest of organization and society harmonized
Marketing research provide vital information todecision making
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philosophy of marketing
Customer orientation satisfaction theobjective
Marketing information system adequateinformation about customer / needs andcompetition
System approach all marketing activitiesmust be properly integrated and coordinated
Dual objectives- profitability and customersatisfaction
Social orientation- broaderconcept . createsatisfied customers and contribute to the socialwelfare. Concern for environment trends.
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SELLING vs Marketing
Selling is part of marketing
Short term- long term
Profit oriented customer satisfaction oriented
Product oriented need base production
Company oriented market oriented
Cost determines the price- consumer determines
the price Converting goods into cash-converting consumer
need to product
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Marketing managementManagement which looks after the related marketing
activities towards achieving the objectives oforganization
Marketing management
Marketing + management
Management is a process of decision making andcontrol over the action of all concerned activities andhuman beings for attaining the pre determined goals
Marketing management is a creative management
function which promotes trade and employment byassessing consumer need and by initiating research and
development to meet them
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Functions
Planning
Implementation
Organization Control
analysis
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Responsibilities of marketing
management
Market analysis
Determining market goals
Organizing marketing activities Assembling
Product management
Controlling marketing activities
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Objectives of marketing management
Increase in profits
Growth of company
Increase sale volume Customer satisfaction
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Social functions
1. Survival under changing environment of demand and
competition survival for self and connected employeesand network
2. Profitability- it is indicator of efficiency but social normsof non exploitation of customers & employees must beadhered too .Black marketing , non fare pricing ,
adulteration and unfair means are to be avoided. 3.Service being road to profitability too, service to
customer must be on top as is serves the society also.Consumer protection must be followed over and aboveevery thing
4. Social responsibility being in socio economicenvironment, obligation to meet social responsibilitiestowards employees, community and public. Company isexpected to act as good citizen in public . Responsibilitiestowards govt. and also expected.
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MARKETING MIX
The combination of marketing methods ordevices towards the objective of marketing ,iscalled marketing mix
Basic 4 Ps
ProductPrice
Promotion
Physical distribution
Additional 3 PsPerception
Persistence
packaging21
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Elements of marketing mix
Decision on overall frame work
Decision on product
Decision on price
Decision on promotion
Decision on distribution and physical
handling
Decision on Sales force
Decision on Market researchDecision in one area affects all other areas,the are closely interrelated and form the
core of marketing management22
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Product mix-
product rangeService / after sales
Brand
Package*Warranty
Style/ design
color scheme
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Price mix
Pricing strategy/policy
discounts Allowances
margin
Terms of credit
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Promotion mix
Personal selling
Advertisement Publicity
Sales promotion- dealers aid & customer aid
Word of mouth
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Physical Distribution mix
Distribution channels
wholesalers
retailers
mercantile agentsPhysical distribution
Transportation Warehousing
inventory
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Factors influencing marketing mix
a) Variables related to market consumer behavior
competition
distribution pattern
govt. control
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b)Variable related to Product -
product planning
branding
packagingchannel of distribution
personal selling
advertisingpromotion
market research
physical distribution28
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Marketing process
ConcentrationDispersion
equalization
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ar e ng unc ons:
Buying raw material at right time at right place at rightprice
Selling at targeted market , at defined price ,at right profit,at right time at
Product planning and development
Standardization of product- as per requirement of thecustomer
Financing arranging finance for the production and related
activitiesDistribution- arranging channel of distribution/transportation
Risk bearing- during the waiting period from production tosale
PricingPackaging
Managing sales force
Market feed back- though management information systemwhich collects, processed and interpretedhelp management decisions
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Marketing planning
Analysis of market opportunity
Marketing objectives to match
marketing opportunity in a competitive
market
Marketing strategy providing market
segmentation and market share
Marketing mix formation
Controlling the marketing plan
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MARKETING ENVIRONMENT
The factors and forces affecting the
marketing managements ability to build
and maintain successful relationship withtarget customers are called environment
Any organization works under system
approach which consists of inputs,processor ,outputs and feed backs
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Microenvironment- factors that affect its ability
to serve its customers
Macro environment- societal factors that affects
microenvironment
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1)The company interrelated groups of thecompany viz. purchase ,operations, finance
production management etc. form internal
environment which effect the marketing
management functions a great deal.
2) Suppliers suppliers form an important
link in any companys delivery system and
effect customer satisfaction and selling varymuch
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3) Marketing intermediaries- firms that help the
management to promote ,sell/ resell, store,transport ,finance etc. are playing very important
role in the performance of marketing functions of
any management
4) Customer markets- various types of customermarkets effect marketing environment
Individual & household
Business market for their products
/serviceResellers market
Government market
International market
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5) Competition- company must provide
greater customer value than
competitors according to their status
and analysis of market competitors
6) Publics group that can have impact
on the organizational ability viz.Financiers
Media
Internal
Local publicConsumer organization
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Macro environment
Demographic forces human
population as per size , location, age ,
density, all affect the marketing
functions
economic forces -changing values and
income status effecting a lot
natural forces shortages of raw
material, pollution ,govt. intervention,
natural environment existing etc.
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technological forces - with fast
changing technologies in every field it isvery difficult for companies to make
modifications and stand in competition
political forces changes in political
scenario , laws, pressure groups etc.
affects the company
cultural forces according to the
cultural environment, institutions andbeliefs
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CONSUMER BEHAVIOR ( buyer
behavior)
It is defined as all psychological, social andphysical behavior of potential customers asthey become aware , evaluate, purchase,consume, and tell to others about product and
servicesDeterminants of consumer behavior
Inputs
Processing Outputs
Feedback loop
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FACTORS INFLUENCING BEHAVIOR
1. Cultural factors
Every group or society has its own culture
that influence buying behavior and it changesfrom place to place
2. Social factors
family , groups, social roles, and status
Income/ occupation/ education/wealth
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Upper class/ middle class/working class/lower class
Group a persons behavior is influenced by smallgroups
Membership group the group where a personbelongs to.
Reference group they affect directly or indirectly .
customers are exposed to new life style and behavior.Influence their personal attitude , self concept and
create pressure to affect their choices of brand andproduct
Aspiration group where person wishes to join
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Opinion leader is the person or persons ;
within a reference group ;who with their
experience, knowledge, special skill
,personality or some other characteristics,
affect the group for their preferences
Family family members are the strongest
influencer of the buyer behavior
Role and status
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SegmentationIn order to provide right product at right price to
right customer, companies believe in targeting thespecific buyers with similar needs and buyingbehavior in the market instead of going formasses.These buyers have greater interest in thevalues created best for them
BASES OF SEGMENTATION
customer based segmentation
product related segmentation
competition related segmentation
MARKET SEGMENTATION, TARGET MARKETING
AND POSITIONING
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customer based segmentation
Geographical segmentation- dividing the market into
geographical units such as nations, countries, regions ,cities, density of population ( viz. urban, rural), climateetc.
Company may decide to operate in one or more or allsegments, but pay attention to them according to
geographical needs
Demographic segmentation dividing the market intogroups based on age , sex, family size, family life cycle ,income , occupation, education, religion, generation,
nationality etc.This is the most popular way of segmentation because
the needs and usage vary closely with such variablesand easy to measure than other variables and alsoeasier to reach effectively to the customers
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Psychographic segmentation -
Social class such as lower/ middle/upper
middle/ higher /working class etc.
Lifestyles - such as achievers, survivors,
strivers
Personality- such as ambitious, compulsive,
authoritarian etc.
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Behavioral segmentation
Occasions special occasion, regular occasion
Benefits- quality/service/convenience/economy
User status- non user/ftu /potential user/ex-user/potential user
User rates- light user/medium/heavy user
Loyalty status none /medium/strong/absolute
Readiness stage- unaware/aware/informed//interested
Attitude towards product
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PRODUCT RELATED SEGMENTATION
product use situation product is selected by a customerdepending upon the use situation
benefits segmentation according to use the customerslook for
consumption heavy , medium and light use markets ofproduct
decision criteria what criteria is being used by customersfor evaluation of product
price
perceived quality / service service offered
technology
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COMPETITION BASED SEGMENTATION
hard core loyal- continue to by over and again
soft core loyal loyal to two three brands
switchers change brand easily
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Multiple segmentation bases
Marketers rarely limit their segmentation
analysis of customers to one or few variables
but use multiple segmentation bases to
identify smaller and better defined target
group. This provides powerful tool for
segmenting market, refining demand
estimates, selecting target market and shapingpromotional messages
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STAGES OF MARKET SEGMENTATION
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STAGES OF MARKET SEGMENTATION
marketers believe that buying behavior and benefits arethe best basis for business segmentation
survey stage - surveys of market by
a.focus group discussion and in depth interview to getinsight into customer motivation , attitudes , behavior
b. sample group of consumers with questionnaire to
collect data on brand awareness, attributes sought inthe product, usage pattern,demographic/psychological/media habits ofrespondents
analysis stage collecting data , it is analysed using factor
analysis . differentiation of segments is done to clusterthe customers into different groups
profiling stage each cluster is profiled in terms ofconsumption habits , behavior ,attitude etc.
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Requirement for effective
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Requirement for effective
segmentation
Measurable- the size, purchasing power and profiles of segmentcan be measured
Accessible- can be reached and served effectively
Substantial- should be largest possible homogeneous worthperusing a tailor made marketing program
Differentiable- should be differing conceptually and responddifferently from other segments to different marketing mixprograms
Actionable - effective programs can be designed for attracting and
serving segments Viable should be cost effective
Intensity in competition in the light of inter firm rivalry how muchit is intensive
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targeting
After segmenting the market, evaluation ofsegments is done to decide and select the targetsegment to operate with.This process consists
1.Evaluation of market segments
a)Segment size and growth-according to thecapacity to serve and gain more
b)Structural attractiveness- potential / power ofbuyers/ power of competitors
c)Company objectives and resources- enter onlythose, where you can provide superior valuesthan competitors
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2.Selecting target market segment- / targeting
strategies
a)Undifferentiated marketing ( mass marketing) /
standardization (very broad approach) with
concept of what is common in customers instead
of what is different and ignoring the segment
differentiation and just targeting mass. As it is notpossible to develop the product of such mass
customers this is facing difficulties
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c)Concentrated marketing- / focus ( niche
marketing) when company resources are
limited. Companies try for large share of small
market segment instead of small share of
large market segments. market is handled
more effectively, efficiently with fine tuning of
products and earn special reputation. Manycompanies apply this approach to gain large
status at later stages.
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d)Micro marketing ( narrow approach)- it is to reach individualcustomers through local marketing and personal marketing. It is thepractice of tailoring the product and program to suit the taste ofspecific individuals and locations
i)Local marketing- approach different groups locally to reacheffectively but sometime face problems of varied requirements andlogistics apart from fear of brand image due to varying messages in
different localities
ii)Individual marketing it is also called one to one, masscustomization or markets of one marketing.Tailoring program andmarketing to the need and preferences of individual customer. Masscustomization is being made possible with the help of detailed
database, quick production through modern technology, flexiblemanufacturing.This has made relation with the customers mostimportant than ever. Here customers are also searching for thequality product with the help of information received undercustomize marketing approach from companies.
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CHOOSING TARGET MARKETING
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CHOOSING TARGET MARKETING
STRATEGY Company resources- limited resources concentrated
marketing Product viability-uniform product-undifferentiated
marketing
variety product differentiation orconcentrated marketing
Products life cycle stage- introduction undifferentiatedmarketing
-mature stage differentiated marketing
Market variability if customers react similarly thenundifferentiated marketing
Competitors strategy-if competitor is already gone fordifferentiated marketing then one should not go forundifferentiated marketing but if they are usingundifferentiated or concentrated, one can go for the same
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BENEFITS / IMPORTACE OF MARKET
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BENEFITS / IMPORTACE OF MARKET
SEGMENTATION
Increase in sale volume recognizes multiple demand &sale accordingly , increase sale vis a vis multiple demand
Specialized marketing- marketing ,promotions can bedone for specialized segment and demand
Sound marketing programme- sound marketingprogramme can be prepared
Increase in marketing opportunities- manufacturers cancome more closer to particular group of customers andbecomes more responsive to changes
Better utilization of market resources- provides betteropportunities to tap resources
Other advantage-provides various market relatedinformation, to get help and evaluate activities
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Target marketing helps companies to be more
efficient and effective by focusing on the
segments that they can satisfy by reaching
the specific customers with offers specially
tailored for them that too most profitable
way
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POSITIONING OF PRODUCT
The way any product is defined by the customers onimportant attributes, the place the product occupiesin the mind of customers relative to the competingproducts is called product positioning. It involves the
unique benefits and differentiation of product w.r.t.competitors
Hence product positioning is the complex set of
perceptions ,impressions,and feelings that customershave for the competitive products
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choosing positioning strategy a)Identifying a set of possible competitive advantages
upon which to build a positionto provide superiorvalues than competitors ,companies begin withactually differentiating the offer to gain competitiveadvantage but then it must deliver the promisedadvantage or difference. It can differentiate on
following lines
product differentiation
service differentiation
channel differentiation people or personnel differentiation
image differentiation
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b)choosing the right competitive advantages. Choosing how manydifferences to promote and which differences to promote is the keyto success in positioning by any company.
This process of choosing the differences to promote is done as perfollowing criteria
Important the difference deliver a highly valued benefits to target
buyers Distinctive non similar to competitors, it should be distinctive
Superior superior to other ways to provide benefits to customers
Communicable- the difference is visible and communicable tobuyers
Preemptive ( difficult to copy) difficult to copy by anybody orcompetitors
Affordable buyers can afford to pay for the difference
profitable company can introduce the difference profitably