CLASS LIVE SESSION MM01. Analysis Marketing Opportunities Marketing planningMarketing planning Demand Measurement & ForecastingDemand Measurement & Forecasting

CLASS LIVE SESSION

MM01

Analysis Marketing Opportunities

• Marketing planningMarketing planning• Demand Measurement & ForecastingDemand Measurement & Forecasting• Marketing Information SystemMarketing Information System• Indian Marketing EnvironmentIndian Marketing Environment

MARKETING PLANNING

Planning – Designing the Blueprint for the Future

•Planning is a process of designing the blueprint for the future.

•The basic function of management includes planning, organizing, executing, coordination & controlling the future course of action.

•Planning is the process of envisioning the future, establishing objectives and goals for the firm, designing organizational & marketing strategies and tactics to be implemented at different points of time in future to achieve the goals.

What is Strategic Planning?

• It is the managerial process that helps It is the managerial process that helps to develop a strategic and viable fit to develop a strategic and viable fit between the firm’s objectives, skills, between the firm’s objectives, skills, resources with the market opportunities resources with the market opportunities available. It helps the firm deliver its available. It helps the firm deliver its targeted profits and growth through its targeted profits and growth through its businesses and products.businesses and products.

Management Level & Focus of Planning

ManagemenManagement Levelt Level

Planning Planning FocusFocus

Key Marketing Key Marketing QuestionQuestion

Top Level of Top Level of managementmanagement

Corporate PlanCorporate Plan What is the organization’s What is the organization’s mission? How do we mission? How do we organize the business?organize the business?

Middle Level of Middle Level of ManagementManagement

Business Unit Business Unit PlanPlan

What is our competitive strategy What is our competitive strategy for growth in that particular for growth in that particular business unit? What are our business unit? What are our competitive advantages?competitive advantages?

Lower level of Lower level of ManagementManagement

Operational PlansOperational Plans How can we best support How can we best support both the corporate plan and both the corporate plan and the business unit plan? What the business unit plan? What are our operational are our operational schedules?schedules?

Corporate Planning Process

Steps in Corporate Planning ProcessSteps in Corporate Planning Process

1.Establishing corporate mission, objectives and goals1.Establishing corporate mission, objectives and goals

2.Establishing Strategic Business Units2.Establishing Strategic Business Units

3.Assigning resources to each Strategic Business Unit3.Assigning resources to each Strategic Business Unit

4.Planning for Business Growth4.Planning for Business Growth

Mission statement should posses the following seven

characteristics:• It should not be an impossible statement.It should not be an impossible statement.• It should be short and limited.It should be short and limited.• It should be motivating.It should be motivating.• It should be enough to define the functions, the It should be enough to define the functions, the

clientele and the method of operation.clientele and the method of operation.• It should be clear and should stress the company’s It should be clear and should stress the company’s

policy.policy.• It should be distinctive and should define company’s It should be distinctive and should define company’s

major competitive scope.major competitive scope.• It should indicate how objectives are to be It should indicate how objectives are to be

accomplished.accomplished.

Corporate Objectives

• A higher market shareA higher market share• High growth opportunitiesHigh growth opportunities• Increased ability to compete in global marketsIncreased ability to compete in global markets• Product innovationProduct innovation• Recognition as a leader in technologyRecognition as a leader in technology• Better customer servicesBetter customer services• Good reputation with customersGood reputation with customers• Low cost compared with competitorsLow cost compared with competitors• High quality goods and servicesHigh quality goods and services• Brand image and loyaltyBrand image and loyalty• Wider profit marginWider profit margin

Corporate Objective of Unilever Operation in India

• Unilever objective is to add vitality to life. We Unilever objective is to add vitality to life. We meet everyday needs for nutrition, hygiene and meet everyday needs for nutrition, hygiene and personal care with brands that help people feel personal care with brands that help people feel good, look good and get more out of life.good, look good and get more out of life.

• Our deep roots in local cultures and markets Our deep roots in local cultures and markets around the world give us our strong relationship around the world give us our strong relationship with consumers and are the foundation for our with consumers and are the foundation for our future growth.future growth.

5 questions that the firm must ask itself

• What is our business?What is our business?

• Who is our customer?Who is our customer?

• What does our customer need?What does our customer need?

• What will our business be?What will our business be?

• What should our business be?What should our business be?

Stage 1 Assess Organizational Opportunities and Resources

++

“ “Uncontrollable” Uncontrollable” Environmental EventsEnvironmental Events

TimingTiming

Market Opportunity

(Circumstances)

Assessing Organizational Opportunities and Resources

Will it fit?Will it fit?

Strategic Windows

Core Competencies (Relative skills)

• A temporary period of optimal A temporary period of optimal fit between the key fit between the key requirements of a market and requirements of a market and a firm’s capabilitiesa firm’s capabilities

Marketing Marketing MixMix

Assessing Organizational Opportunities and Resources

A Competitive Advantage exists when your core competencies (relative to

competition) match marketplace opportunities

…identifies a company’s competitive advantage that can be absolute or relative Physical or Psychological

Business Unit Level Strategic Planning Process

Business Mission

Internal Environment (Strengths/Weakness

Analysi)

SWOTAnalysis

Formulation of Business Goal

External Environment(Opportunities and Threats Analysis)

Formulation of Business Strategy

Formulation of Programs

Feedback and control

Implementation of the planPrograms

Levels of Strategic Planning(Stage 1 SWOT Analysis)

• Market orientationMarket orientation: The organizationwide : The organizationwide generation of, dissemination of and generation of, dissemination of and

responsiveness to market intelligence responsiveness to market intelligence pertaining to current and future customer pertaining to current and future customer

needs. needs.

Developing Corporate and Business-Unit Strategies

Stages 3-4

A SBU is self supporting profit center organized A SBU is self supporting profit center organized around some meaningful common element such around some meaningful common element such as….as….

SBU

Industry

Customerneed

Technology

TargetMarket

Corporate & Business-Unit Strategy

Strategic Business Unit (SBU)Strategic Business Unit (SBU)

• Analyze the current business portfolio & shape the future business portfolio: build, hold, harvest, divest

• SBU ‘s change positions overtime

What Is A Market ?

A market is . . .A market is . . . Access to a Access to a Sufficient NumberSufficient Number of of

potentialpotential c customersustomers sharing similar sharing similar wants/needswants/needs

WhoWho WantWant thethe Available ProductAvailable Product Who have Sufficient Who have Sufficient ResourcesResources (Rs) (Rs) who are who are willingwilling to exchange value (Spend to exchange value (Spend Rs Rs)) and are and are eligibleeligible (legal) to buy (legal) to buy

Remember The

Market

Domestic carriers fly 19% more passengers in February 2011

About 18.5% more passengers flew by domestic airlines in February, but carriers are worried that the steep

increase in fuel costs would erode gains. India's seven domestic airlines flew 4.57 million passengers in

February, up from 3.86 million a year earlier, data from the directorate general of civil aviation (DGCA)

show. Market share for Jet Airways (India) Ltd and its low-fare subsidiary JetLite India Ltd remained static at

26.1%. State-run Air India Ltd's passenger share on domestic routes slumped to 15.8% from 17.2% a year earlier, and Kingfisher Airlines Ltd's fell to 19% from 22.7%. Low-cost carriers saw their market shares rise. IndiGo's passenger traffic in February rose to 18.7% from 14.9% a year earlier, SpiceJet Ltd's to 13.8%

from 12%, and GoAir's to 6.6% from 5.5%.

Flight occupancy was in the range of 68-88%. The increase in passengers is not providing the airlines any comfort. Fuel costs have risen from about $75 a barrel in December to about US$100. "We are staring at losses this quarter," said an airline executive who declined to be identified. "It's going to be a tough time for everybody." Fuel accounts for 30-40% of an airline's cost in India. The airline regulator received 1,137 complaints from passengers in February. Jet drew the highest number of complaints at 4.1 per 10,000 passengers carried, followed by IndiGo's 3.1, SpiceJet's 2.8, GoAir's 2.2, JetLite's 2.2, Kingfisher's 1.7 and Air India's 1.1.

The marketing plan

Provides clear and unambiguous statement about the strategies and actions that will be implemented, by whom, when and with what outcomes.

Planning - the benefits

Planning - the pitfalls

• Planning can become technique oriented.

• Embracing planning eagerly with dedicated planning departments can divorce the professional planner from those who have to implement them.

• Planning can fail if unreliable information is used.

The Planning Process

• Analysing Market opportunitiesAnalysing Market opportunities

• Developing Marketing strategiesDeveloping Marketing strategies

• Planning Marketing ProgramsPlanning Marketing Programs

• Managing the Marketing EffortManaging the Marketing Effort

The Marketing Process• The strategic planning The strategic planning

and business portfolio and business portfolio analysis processes help to analysis processes help to identify and evaluate identify and evaluate marketing opportunities.marketing opportunities.

• The purpose of the marketing The purpose of the marketing process is to help the firm process is to help the firm plan how to capitalize on plan how to capitalize on these opportunitiesthese opportunities..

• Analyzing marketing Analyzing marketing opportunitiesopportunities

• Selecting target marketsSelecting target markets• Developing the marketing Developing the marketing

mixmix• Managing the marketing Managing the marketing

efforteffort

Key ElementsKey Elements

The Marketing Process• The segmentation process The segmentation process

divides the total market into divides the total market into market segments.market segments.

• Target marketingTarget marketing determines determines which segment(s) are which segment(s) are pursued.pursued.

• The The market positioning market positioning for the for the product is then determined.product is then determined.




efforteffort


The Marketing Process• Competitor analysis guides Competitor analysis guides

competitive marketing strategy competitive marketing strategy development.development.

• Strategy leads to tactics by Strategy leads to tactics by way of the marketing mix: way of the marketing mix: – The “Four Ps” – product, price, The “Four Ps” – product, price,

place, promotion (seller place, promotion (seller viewpoint)viewpoint)

– The “Four Cs” – customer The “Four Cs” – customer solution, cost, convenience, solution, cost, convenience, and communication (customer and communication (customer viewpoint)viewpoint)




efforteffort


The Marketing Process• Marketing analysisMarketing analysis

– Provides information helpful in Provides information helpful in planning, implementation, and planning, implementation, and controlcontrol

• Marketing planningMarketing planning– Strategies and tacticsStrategies and tactics

• Marketing implementationMarketing implementation– Turns plans into actionTurns plans into action

• Marketing controlMarketing control– Operating controlOperating control

– Strategic controlStrategic control• Marketing auditMarketing audit




efforteffort


The marketing planning process

SWOT Analysis

• StrengthsStrengths

• WeaknessesWeaknesses

• OpportunitiesOpportunities

• ThreatsThreats

Components of SWOT Analysis

StrengthsStrengths WeaknessesWeaknesses OpportunitiesOpportunities ThreatsThreats

ResourcesResources

Relative Relative competitive competitive advantagesadvantages

Image Image

InfrastructureInfrastructure

Market leadershipMarket leadership

Deficiencies in Deficiencies in resources , skills resources , skills and capabilitiesand capabilities

Financial resourcesFinancial resources

Sources of outfitSources of outfit

Inadequate Inadequate measures viewed measures viewed against changes in against changes in product/market product/market scopescope

Favourable situationFavourable situation

Identification of a new Identification of a new market segmentationmarket segmentation

Changes in Changes in competitive or competitive or regulatory regulatory circumstancescircumstances

Technological Technological changeschanges

Unfavorable Unfavorable situationsituation

Entry of new Entry of new competitorscompetitors

Slow market Slow market growthgrowth

Major Major technological technological changeschanges

Appearance of Appearance of substitute substitute productsproducts

Internal Capability Evaluation

In te rn a l R e so u rc es

-P a te n ts-B rn ads

-R e ta i lingc a pa c i ty

B ar r ie rs to E n try

- M arke t sh a re

M ono po ly

-F irm s izeF ina n cia lre so u rces

V er tica lb a rg a in in g po w er

In d us try a ttrac tuv e ne ss

P roc e sste cj \h no lo gy

- S iz e o f p lan ts-A cce s s to low c os t inp u ts

C o s tA dv a n tag es

- B ra nds- P ro du ct techn o lo gy

-D is tr ib u tion-S erv ic e C a pa b i lit ies

D iffe re n tia t ionA d an tag es

C o m pe ti tiv e a dv an tag es

R a te o f re tu rn in E xce sso f the co m p e ti tv e lev e l

Market Opportunity Analysis (MOA)

• Can the benefits involved in the Can the benefits involved in the opportunity be articulated to a defined opportunity be articulated to a defined target market?target market?

• Can the target market be located and Can the target market be located and reached with cost-effective media and reached with cost-effective media and trade channels?trade channels?

• Does the company have access to the Does the company have access to the critical capabilities and resources needed critical capabilities and resources needed to deliver the customer benefits?to deliver the customer benefits?

Market Opportunity Analysis (MOA)

• Can the company deliver the benefits Can the company deliver the benefits better than any actual or potential better than any actual or potential competitors?competitors?

• Will the financial rate of return meet or Will the financial rate of return meet or exceed the company’s required exceed the company’s required threshold for investment?threshold for investment?

Strategic Planning

• Step 1: Step 1: Analyze the current Analyze the current business portfoliobusiness portfolio

• Step 2:Step 2: Shape the future Shape the future business portfoliobusiness portfolio

• Determine the future role Determine the future role of each SBU and choose of each SBU and choose the appropriate resource the appropriate resource allocation strategy:allocation strategy:– BuildBuild– HoldHold– HarvestHarvest– DivestDivest

• SBUs change positions SBUs change positions over timeover time

Portfolio Portfolio DesignDesign

The aim of a portfolio analysis is: 1) Analyze its current business portfolio and decide which SBU's should receive more or less investment, and2) Develop growth strategies for adding new products and businesses to the portfolio3) Decide which businesses or products should no longer be retained.

The BCG Matrix (Boston Consulting Group Matrix) is the best-known portfolio planning framework. The GE / McKinsey Matrix is a later and more advanced form of the BCG Matrix.

http://www.valuebasedmanagement.net/methods_bcgmatrix.html

Boston Consulting Group’s Market Growth- Market Share Matrix

HighHigh

Relative Relative Market ShareMarket Share

HighHigh LowLow

LowLow

Pro

du

ct-M

arke

t P

rod

uct

-Mar

ket

Gro

wth

(%

)G

row

th (

%)

A strategic planning tool A strategic planning tool based on the philosophy that a based on the philosophy that a product’s market growth rate product’s market growth rate

and market share are and market share are important in determining important in determining

marketing strategymarketing strategy

Portfolio Analysis

Increase market share, increase economies of scale, increase profits

Market Growth – Market Share Matrix

HighHigh

Relative Relative Market ShareMarket Share

HighHigh LowLow

STARSSTARS PROBLEMPROBLEMCHILDCHILD

CASH COWSCASH COWS DOGSDOGS

LowLow

Pro

du

ct-M

arke

t P

rod

uct

-Mar

ket

Gro

wth

(%

)G

row

th (

%)

Source: Perspectives. No. 66. “The Product Portfolio.” Reprinted by permission from the Boston Consulting Group, Inc. Boston, MA Copyright 1970.

Low market share in growth mkt needs much cash to incr mkt sh

The Boston Consulting Group’s Strategic Business Unit Classification & Suggested Strategies

S.B.U S.B.U ClassificationClassification

S.B.U S.B.U Characteristics Characteristics

StrategyStrategy Strategy Strategy CharacteristicsCharacteristics

1. Dogs (Low1. Dogs (Low

share,low growth)share,low growth)

•Generate low Generate low profits or lossesprofits or losses•Consume more Consume more management timemanagement time

Divest Divest Sell or liquidate the Sell or liquidate the business because business because resources can be better resources can be better used elsewhereused elsewhere

2.Question Marks2.Question Marks

(Low share, high(Low share, high

growth)growth)

•Requires a lot of Requires a lot of cash for fast growthcash for fast growth•Continue investing Continue investing in the SBU or in the SBU or withdraw form the withdraw form the marketmarket

Build/HarvestBuild/Harvest Increase the SBU’s Increase the SBU’s market share or short-market share or short-term cash flow and term cash flow and eliminate R & D eliminate R & D expenditureexpenditure

3.Stars (High share, 3.Stars (High share,

high growth)high growth)

•Generate large Generate large amount of cashamount of cash•Competitors attack Competitors attack on SBUon SBU

BuildBuild Increase the SBU’s Increase the SBU’s market sharemarket share

4.Cash Cows High 4.Cash Cows High

share, low growthshare, low growth

•Generate considerable Generate considerable sums of cashsums of cash•Enjoy economies of Enjoy economies of scales and higher scales and higher profit marginsprofit margins

Hold/HarvestHold/Harvest Preserve the SBU’s market Preserve the SBU’s market share or increase the share or increase the short-term cash flow and short-term cash flow and involve eliminating R&D involve eliminating R&D expenditureexpenditure

G.E. Model and Strategies

ProtectProtect

PositionPosition

Invest to Invest to buildbuild

Build Build selectivelyselectively

Build Build SelectivelySelectively

Selectivity/ Selectivity/ Manage for Manage for EarningsEarnings

Limited Limited expansion expansion for harvestfor harvest

Protect and Protect and RefocusRefocus

Manage for Manage for EarningsEarnings

DivestDivest

Strong Medium Weak Business Strength

High

Market Attractiveness Medium

Low

Typical (external) factors that affect Market Attractiveness:

- Market size- Market growth rate- Market profitability - Pricing trends - Competitive intensity / rivalry - Overall risk of returns in the industry- Entry barriers - Opportunity to differentiate products and services- Demand variability- Segmentation - Distribution structure- Technology development

Typical (internal) factors that affect Competitive Strength of a Strategic Business Unit:

Strength of assets and competencies- Relative brand strength (marketing)- Market share- Market share growth- Customer loyalty- Relative cost position (cost structure compared with competitors)- Relative profit margins (compared to competitors)- Distribution strength and production capacity- Record of technological or other innovation- Quality- Access to financial and other investment resources- Management strength

Product/Market Expansion Product/Market Expansion Grid Grid

Strategic Planning

Existing ProductsExisting Products New ProductsNew Products

Existing Existing MarketsMarkets

New New MarketsMarkets

Market Market PenetrationPenetration

Market Market DevelopmentDevelopment

Product Product DevelopmentDevelopment

DiversificatioDiversificationn

Product Strategy

MarketPenetration

• Increase share of Increase share of existing product in existing product in existing marketexisting market

• Two strategies:Two strategies:

• Persuade users to buy Persuade users to buy more product ORmore product OR

• Take business from Take business from competitorscompetitors

Present product

Pre

sen

t m

arke

t

Product Strategy

MarketDevelopment

• Find new uses for Find new uses for existing productexisting product

• Two strategies:Two strategies:

• Find new markets for Find new markets for product ORproduct OR

• Aim at a broader Aim at a broader marketmarket

Present product

New

mar

ket

Product Strategy

ProductDevelopment

• Major modification of Major modification of the product for the the product for the current marketcurrent market

New product

Pre

sen

t m

arke

t• Launch new products in Launch new products in

new market to minimize new market to minimize riskrisk

New product

New

mar

ket

Diversification (minimize risk)

Planning Is a Continuous Cycle

1. Assess Marketing

Opportunities and Resources

4. Develop or Revise Plan for Imple-

mentation and Control

3. Revise or Formulate Marketing Strategy

2. Develop orRevise Mktg.

Goals Relative to

Performance

5. Implement Marketing

Plan

5. Implement Marketing

Plan

Short Range – Medium Range - Long Range

The Strategic Marketing Process

6. Execute the plan6. Execute the plan

7.7. ControlControl set performance standards, set performance standards, evaluate the results & reduce any gapsevaluate the results & reduce any gaps

IntendedIntendedStrategyStrategy

RealizedRealizedStrategyStrategyImplementationImplementation

Theory Reality

Desired Performance Actual Performance

Marketing Unit Organization

ProductProductGroupsGroups

ProductProductGroupsGroups

CentralizedCentralizedoror

DecentralizedDecentralized

CentralizedCentralizedoror

DecentralizedDecentralized

MarketingMarketingFunctionsFunctions

MarketingMarketingFunctionsFunctions

GeographicGeographicRegionsRegions

GeographicGeographicRegionsRegions

CustomerCustomerTypesTypes

CustomerCustomerTypesTypes

Alternatives for OrganizingAlternatives for Organizingthe Marketing Unitthe Marketing Unit

Alternatives for OrganizingAlternatives for Organizingthe Marketing Unitthe Marketing Unit

Low delegation of responsibilities, top management delegates little top management delegates little authority to levels below it.authority to levels below it.

Decentralized has high delegation of authorityhigh delegation of authority

There is no single best way! It depends…

Measuring Marketing Plan Performance

• Sales analysisSales analysis

• Market share analysisMarket share analysis

• Marketing expense-to-sales analysisMarketing expense-to-sales analysis

• Financial analysisFinancial analysis

Qualitative targets

Figure 21.3

Sales analysis

Figure 21.8

Tracking Market Share

• Overall market shareOverall market share

• Served market shareServed market share

• Relative market shareRelative market share

Methods of Improving Return on Assets

• Method 1: Increase the profit margin by Method 1: Increase the profit margin by increasing sales or cutting costsincreasing sales or cutting costs

• Method 2: Boost the asset turnover by Method 2: Boost the asset turnover by increasing sales or reducing assets that increasing sales or reducing assets that are held against sales levelsare held against sales levels

Objective trade offs

• Short term v long-term growth.

• Profit margin v market positioning.

• Direct sales effort v market development.

• Penetrating existing markets v developing new ones.

• Profit v non-profit goals.

• Growth v stability.

• Change v stability.

• Low risk v high risk.

(2)- The marketing audit

• Takes stock of a company’s marketing health.

• Is the launching pad for the marketing plan.

• Encourages management to reflect on the environment and company’s ability to respond.

• Encompasses the external and internal audit.

Marketing costs and profitability analysis

Marketing Decisions Flowing to the Marketing

Marketing Environment

Marketing Decisions Flowing to the Marketing Environment

Marketing Mix Factors

Marketing Information Systems

Internet Record System

MarketingIntelligence

System

AnalyticalMarketing

System

Marketing ResearchSystem

•Market Potential

•Target Market

•CompetitiveEnvironment

Intermediaries

•Product•Price•Place

•Promotion•Packaging

•People•Process

•Physical Evidence

Major Environmental Factors Influencing Business

Internal Organizational

Processes

Internal Organizational

Processes

External Environment

Competitive Environment

Demographical Environment

CulturalEnvironment

Economic Environment

LegalEnvironment

TechnologicalEnvironment

SocialEnvironment

Dimensions of Marketing EnvironmentDimensions of Marketing Environment

Technological EnvironmentTechnological Environment•To what extent are existing technologies maturing?To what extent are existing technologies maturing?•What technological developments or trends are affecting or could affecting or could affect our What technological developments or trends are affecting or could affecting or could affect our industry?industry?

Political EnvironmentPolitical Environment•What changes in regulation are possible?What changes in regulation are possible?•What will their impact be?What will their impact be?•What tax or other incentives are being developed that may affect marketing strategy?What tax or other incentives are being developed that may affect marketing strategy?•What are the political risks of operating in a government jurisdiction?What are the political risks of operating in a government jurisdiction?

Economic EnvironmentEconomic Environment•What are the economic prospects and inflation outlets for the countries in which the firm What are the economic prospects and inflation outlets for the countries in which the firm operates?operates?•How will they affect our marketing strategy?How will they affect our marketing strategy?

Cultural EnvironmentCultural Environment•What are the current, emerging trends in lifestyles, fashions and other components of culture?What are the current, emerging trends in lifestyles, fashions and other components of culture?•Why are they emerging?Why are they emerging?•What are their implications?What are their implications?

Demographic EnvironmentDemographic Environment•What demographic trends will affect the market size of the industry or its sub-markets?What demographic trends will affect the market size of the industry or its sub-markets?•What demographic trend represents opportunities and threats to our business?What demographic trend represents opportunities and threats to our business?•What are the significant trends and future events related to population growth?What are the significant trends and future events related to population growth?

Income Classes (at 2001-02 prices)

Income Income classclass

Rs per annum $ per annum (@ Rs Rs per annum $ per annum (@ Rs 48/$)48/$)

LowLow <=45.000 <=940<=45.000 <=940

Lower-Lower-middlemiddle

45,000 – 90000 941 – 1,875 45,000 – 90000 941 – 1,875

MiddleMiddle 90,001 – 135,000 1,876 – 2,81090,001 – 135,000 1,876 – 2,810

Upper-Upper-middlemiddle

135,001 – 175,000 2,811 – 3,650135,001 – 175,000 2,811 – 3,650

HighHigh >175,000 >3,650>175,000 >3,650

Mapping India’s Income Class

The ClassesThe Classes 1994-951994-95 1999-001999-00 2005-062005-06

Rich Rich (Above Rs. 2,15,000) (Above Rs. 2,15,000)

Benefit MaximisersBenefit Maximisers : Own car, PCs : Own car, PCs

1 million1 million householdhouseholdss

3 million3 million householdshouseholds


Consuming Consuming (Rs. 45,000 – 2,15,000)(Rs. 45,000 – 2,15,000)

Cost benefit optimizers:Cost benefit optimizers: Have bulk of Have bulk of branded consumer goods, 70% of two – branded consumer goods, 70% of two – wheeler , refrigerators, washing machineswheeler , refrigerators, washing machines




Climbers Climbers (Rs. 22,000 – 45,000)(Rs. 22,000 – 45,000)

Cash Cash – constrained benefit seekers : Have at – constrained benefit seekers : Have at least one major durable mixer, sewing least one major durable mixer, sewing machine/ television)machine/ television)




Aspirants Aspirants (Rs. 16,000 –22,000)(Rs. 16,000 –22,000)

New entrants into consumptionNew entrants into consumption : Have : Have bicycles, radio, fansbicycles, radio, fans




Destitute Destitute (Less than Rs.16,000)(Less than Rs.16,000)

Hand-to-mouth existenceHand-to-mouth existence: Not buying: Not buying




Urban India’s Income Classes by Size (in million)

1995-961995-96 2001-022001-02 2006-072006-07

The very richThe very rich 0.8 (5)0.8 (5) 1.9 (11)1.9 (11) 4.0 (23)4.0 (23)

The consuming The consuming classclass

16.6 (93)16.6 (93) 26.5 (150)26.5 (150) 40.8 40.8 (230)(230)

The climbersThe climbers 16.8 (94)16.8 (94) 17.4 (98)17.4 (98) 13.7 (77)13.7 (77)

The aspirantsThe aspirants 7.1 (40)7.1 (40) 3.9 (22)3.9 (22) 0.7 (4)0.7 (4)

The destituteThe destitute 5.3 (30)5.3 (30) 2.7 (16)2.7 (16) 0.9 (5)0.9 (5)

Rural India’s Income Classes by Size (in million)

1995-961995-96 2001-022001-02 2006-072006-07

The very richThe very rich 0.4 (2)0.4 (2) 0.7 (4)0.7 (4) 1.2 (7)1.2 (7)

The consuming The consuming classclass

15.9 (92)15.9 (92) 19.9 (115)19.9 (115) 34.8 34.8 (202)(202)

The climbersThe climbers 37.3 (216)37.3 (216) 57 (331)57 (331) 68.1(395)68.1(395)

The aspirantsThe aspirants 36.9 (214)36.9 (214) 29.3 (170)29.3 (170) 19.5(113)19.5(113)

The destituteThe destitute 27.7 (161)27.7 (161) 21.4 (124)21.4 (124) 15.5 (90)15.5 (90)

Indian Market in a Transition

The Important The Important PhasePhase

1988 -931988 -93 1993-981993-98 1998-001998-00 After 2001After 2001

Infancy Infancy Adolescence Adolescence MaturityMaturity

ECONOMY/ INCOME ECONOMY/ INCOME GROWTHGROWTH

Runway growthRunway growth Slowing Down of GrowthSlowing Down of Growth Recovery but not Recovery but not like beforelike before

CONSUMER CONSUMER DEMANDDEMAND

Spurting Spurting discontinuous discontinuous growthgrowth

Cooling DownCooling Down Steady and Steady and slow with ups slow with ups and downsand downs

COMPANY COMPANY PERFORMANCE PERFORMANCE

Abundance for allAbundance for all Early bird Early bird find wormsfind worms

Worms are Worms are harder to harder to findfind

Winner and Winner and losers begin to losers begin to emergeemerge

COMPANY COMPANY RESPONSERESPONSE

Ride the waveRide the wave Ride faster Ride faster on a slower on a slower wavewave

Operational Operational performance performance improvementimprovementss

Make Strategic Make Strategic choices/priorities choices/priorities

COMPANY’S COMPANY’S STRATEGIC STRATEGIC POSITIONPOSITION

Being thereBeing there Being betterBeing better UniqueUnique

Members of Competitive Environment

General Public

Suppliers Intermediaries

•ConsumersPotential

•ConsumersPast Consumers

Company

Competitors

Other Players

Market Entry Decisions

If we are in Business

Should we Compete ?

In what Product-Market shouldWe compete?

How Should we Compete?

If Yes

Demand Forecasting

• Demand forecasting is a process of Demand forecasting is a process of estimating the future demand or sales estimating the future demand or sales patterns of a firm by taking into account the patterns of a firm by taking into account the past information, opinion of industry past information, opinion of industry observers and evolving consumption pattern observers and evolving consumption pattern for a desired time period.for a desired time period.

Company Demand and Sales Forecast

• Company demandCompany demand is the company’s is the company’s estimated share of market demand at estimated share of market demand at alternative levels of company marketing alternative levels of company marketing effort in a given timeeffort in a given time

• Company sales forecastCompany sales forecast is the is the expected level of company sales based expected level of company sales based on a chosen marketing plan and an on a chosen marketing plan and an assumed marketing environmentassumed marketing environment

Market Potential

• Market potential refers to the upper limit of Market potential refers to the upper limit of market demand . It is important for us to market demand . It is important for us to understand that there are three key terms understand that there are three key terms involved in defining the market potential. involved in defining the market potential. These include market, market expenditure by These include market, market expenditure by the industry and defined market environment. the industry and defined market environment.

Measures of Market Demand

Potential Market

Available Market

Qualified Available Market

Target Market

Penetrated Market

Market Forecast: Market forecast refers to the estimates of future sales of a company’s products in the market.

Market Potential

Industry Sales

Company Sales

Actual Forecast

Primary demand gap

Sales (in units)

Secondary demand gap

Current Time Period

Forecasting and Demand Measurement

• Which market to measure?Which market to measure?

– Potential marketPotential market

– Available marketAvailable market

– Target marketTarget market

– Penetrated marketPenetrated market

Estimating Current Demand

• Total market potentialTotal market potential is the maximum is the maximum number of sales that might be available to all number of sales that might be available to all of the firms in an industry during a given of the firms in an industry during a given period, under a given level of industry period, under a given level of industry marketing effort and environmental conditionsmarketing effort and environmental conditions

• Area market potentialArea market potential is the market potential is the market potential of a specific location:of a specific location:– Market buildup methodMarket buildup method– Multiple-factor index methodMultiple-factor index method

Market Demand

• Market demand is always defined with Market demand is always defined with reference to a price and a time period.reference to a price and a time period.

• Demand for a commodity may be defined as Demand for a commodity may be defined as the ‘Quantity of a commodity that will be the ‘Quantity of a commodity that will be bought at a particular price and during a bought at a particular price and during a given period or point of time.given period or point of time.

Estimating Future Demand

• Survey of buyers’ intentionsSurvey of buyers’ intentions

• Composite of sales force opinionsComposite of sales force opinions

• Expert opinionExpert opinion

• Past-sales analysisPast-sales analysis

• Market-test methodMarket-test method

Sales Forecasting

• Accurate sales forecasting is essential Accurate sales forecasting is essential for a firm to enable it to produce the for a firm to enable it to produce the required quantities at the right time and required quantities at the right time and arrange well in advance for the various arrange well in advance for the various factors of production, viz., buildings, factors of production, viz., buildings, equipment, machine accessories, raw equipment, machine accessories, raw materials, labor etc.materials, labor etc.

Forecasting Methods

C o nsum er S u rve y M e th od C olle ctive O p in ion M e th od R e ason ed O p in ion (D e lp h i) M e th od M a rke t E xp e r im en ts M eth od

S u rv e y M e tho ds

G rap h ica l M e th od S e m i A ve rag es M e th od M ov ing A v erag es M e th od L e as t S q ua res M e th od

T im e S e rie s A na lys is R e gre ss ion A n a lys is

S ta tis t ica l M e tho ds

F o re cas ting M e tho ds

Marketing Information System

A marketing information system (MIS) consists of

people, equipment, and processes to gather, sort, analyze, evaluate, and distribute

needed, timely, and accurate information to marketing decision makers

MIS Resources

• Internal company recordsInternal company records

• Marketing intelligenceMarketing intelligence

• Marketing researchMarketing research

Internal Records

• Order-to-payment cycleOrder-to-payment cycle

• Sales information systemSales information system

• Databases and warehousesDatabases and warehouses

• Data miningData mining

Improving the Quality of Marketing Intelligence

• Train sales force to scan for new Train sales force to scan for new developmentdevelopment

• Motivate channel members to share Motivate channel members to share intelligenceintelligence

• Network internallyNetwork internally• Establish a customer advisory panelEstablish a customer advisory panel• Utilize government data resourcesUtilize government data resources• Purchase informationPurchase information• Collect customer feedback onlineCollect customer feedback online

MARKETING RESEARCH

What is Market Research?

• Simply a matter of finding out as much Simply a matter of finding out as much as you can before committing yourself as you can before committing yourself to an irretrievable stepto an irretrievable step

• When you do not have answers through When you do not have answers through your own Market Information and your own Market Information and Intelligence SystemIntelligence System

What to find out?

• What does the customer need?What does the customer need?

• Who is the target audience and how Who is the target audience and how much can you find out about them?much can you find out about them?

• What is the competition?What is the competition?

• Are there any gaps in the market?Are there any gaps in the market?

• Would the product be acceptable in the Would the product be acceptable in the market?market?

The MR Process

• What is the Marketing Problem?What is the Marketing Problem?• What is the Research Problem?What is the Research Problem?• Developing the Research PlanDeveloping the Research Plan• Research ApproachResearch Approach• Research InstrumentsResearch Instruments• Collecting the InformationCollecting the Information• Analysing the informationAnalysing the information• Presentation of findingsPresentation of findings

Marketing Research Defined

Systematic design, collection,

analysis, and reporting of data

and findings relevant to a specific

marketing situation facing a company

The Marketing Research Process

• Define the problemDefine the problem

• Develop research planDevelop research plan

• Collect informationCollect information

• Analyze informationAnalyze information

• Present findingsPresent findings

• Make decisionMake decision

Step 2

• Identify data sourcesIdentify data sources

• Design research approachDesign research approach

• Develop research instrumentsDevelop research instruments

• Design sampling planDesign sampling plan

• Select contact methodsSelect contact methods

Data Sources

• Secondary dataSecondary data • Primary dataPrimary data

Research Approaches

• ObservationObservation

• Focus groupFocus group

• Survey researchSurvey research

• Behavioral dataBehavioral data

• ExperimentationExperimentation

Research Instruments

• QuestionnairesQuestionnaires

• Qualitative research techniquesQualitative research techniques

• Mechanical devicesMechanical devices

Sampling Plan

• Sampling unit: Who is to be surveyed?Sampling unit: Who is to be surveyed?

• Sample size: How many people should Sample size: How many people should be surveyed?be surveyed?

• Sampling procedure: How should the Sampling procedure: How should the respondents be chosen?respondents be chosen?

Contact Methods

• Mail questionnaireMail questionnaire

• Telephone interviewTelephone interview

• Personal interviewPersonal interview

• Online interviewOnline interview

THANKYOU

Documents

CLASS LIVE SESSION MM01. Analysis Marketing Opportunities Marketing planningMarketing planning Demand Measurement & ForecastingDemand Measurement & Forecasting