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Introduction to
Marketing:Sessions 1-2
KNOW YOUR FACULTYProf. Freda J Swaminathan
Faculty at FORE since 3 years. Graduated from the Indian Institute of Management, Ahmedabad and Illinois State University ( USA).
•Professional in Advertising, Corporate Communications and Marketing. Worked with leading organizations viz LINTAS ( 8 years), JW Thompsons Associates ( 4 years ), Goodyear ( 3 years ), Advertising & Sales Promotions – CK Birla group ( 6 years ) and the Dalmias ( 3 years ).
•Worked on some of India’s leading FMCG brands and services.
•On the client side, handled major ad agencies including Leo Burnett, McCann Erickson, Enterprise Nexus & Percept Advertising.
Core Courses – Marketing 1 & 11Marketing 1Decision areas in Marketing• Assessing market opportunity
– Customer analysis– Competition Analysis– Assessing Marketing Environment
• Designing the Market Offering– Product offering– Promotions
Marketing 2• Market Assessment and Forecasting• Market Research and Information System• Delivering the Offer
– Sales and Distribution Management– Pricing
• Emerging Issues in Marketing
Assessment Methods and Marks Distribution
Method Weight
Class Participation & In class presentation
15%
Written submissionsGroup Projects @ 5*3 =15Cases @ 5 * 2 = 10Quiz @ 2.5 * 2=5
30%
Mid Term 15%
Final Exam 40%
Projects due in July, 2008Group Projects – 3 nos. Group to be of 3-5 membersRead the assignment given in the Reading
Material.Report is due on the day of presentation.First presentation on Session 5.Second presentation on Sessions 12 & 13Case analysisVora & Co – due on Session 9 Quiz on Session 7
M T W TH F S Remarks
1 2Session 1
3 4Session 2
5
7Session 3
8 9Session 4
10 11Session 5
12
14Session 6
15 16 17Session 7
18Session 8
19
21Session 9
22 23Session 10
24 25Session 11
26
28Session 12
29 30Session 13
31
JulyAugust
“ In the factory we produce cosmetics. In the drugstore we sell hope.” Charles Revson
Work in Pairs:Make a similar statement for anotherProduct.
Role of Marketing in an Organization
Introduction to Marketing
Activity 1Work in pairs
1.Name 3 Goods that are marketed in our country?2 Specify 3 brands within the goods mentioned. Select one brand that you will discuss.3 Who would be the customer and consumer of the brand?4 Describe a single judgement of the following for the brand selected :Product :(Can be variety, quality, Quality, Design, Features, Brand Name, Packaging, Sizes, Services, Warranties, Returns, etc)Price :(list price, discounted, credit, premium pricing, offers, etc)Place :(distributors, retailers, malls, kirana stores, dealers, showrooms )Promotion:( advertising, sales promotion, public relations, direct marketing, sales force)5. What are the following influences:TechnologyGlobalizationCustomizationCompetitionConsumer expectationsRetail changesInternet6. How does this brand affect the environment ?
Marketing Variables - Marketing Mix
• Product• Price• Promotion• Place
Using the Marketing Mix to build long term relationships.
What is Marketing?Marketing is finding out what the consumer wants and then
giving it to him / her, in a commerciallyviable manner.
Marketing therefore becomes an attitude, a state of mind and a philosophywhich guides the operations of a business.
.
What is Marketing?
"Marketing is 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.“
AMA, 2008
Concepts of Sesson 1
• What is Mktg• Marketing mix
Next session : Mark’s & Spencer’s. Read the case for a mini quiz.
Mark’s & Spencer’s
Session 2
Project 1
– What were the triggers of purchase.– What were the stages in the purchase processes.– What inputs were sought in each of these stages.– Who played what kinds of roles in each stage
and– Approximately how much time was taken in each
stage.– Was there any post purchase dissonance?
Methodology• Based on the learning’s and insight from the in-depth discussions
with THREE consumers, please draw implications for marketing decisions.
• Ask probing questions.• Do not construct a structured questionnaire. Just carry with you a
list of questions to guide you discussions.• The report should be limited to 3 pages ( one and a half space, 12pt
Times Roman / Arial ) including Appendix, if any.• The report is due just before the presentation.• Late submissions irrespective of reasons, however genuine, will
have a 50% reduction in marks if the report is submitted after the next 2 days and will not be accepted beyond 2 days.
Four Eras of Marketing History
“A good product will sell itself.”
“Creative advertising and selling will overcome consumers’ resistance and convince them to buy.”
“The consumer rules! Find a need and fill it.”
“Long term relationships with customers and other partners lead to success.”
Prior to 1920’s to 1950’s Since 1950’s Since 1990’sEra Production Sales Prior Marketing Relationship
In the United States and other highly industrialized economies
Relationship Marketing
The development, growth, and maintenance of long-term, cost-effective exchange relationships with individual customers, suppliers, employees, and other partners for mutual benefit.
Advocate
LoyalSupporter
RegularPurchaser
NewCustomer
16l
Customer Needs / Wants / Demands
Directed at specificObjects – shaped byone’s society. Eg.Rice, dals, fruits
Wants for specific products backed by an ability to pay.
Eg : Pepsi, Benz, etc.
Customer Needs ( Basic )
Wants DemandsEg. FoodAir, shelter
I want it, I need it…..
5 Types of Needs
• Stated needs:• Real needs:• Unstated needs:• Delight needs:• Secret needs:
I want it, I need it…..
5 Types of Needs
• Stated needs: admission to a good institute.• Real needs: must afford the fees.• Unstated needs: good teaching from faculty• Delight needs: good placement• Secret needs: good brand to last a life time
How do we identity needs, wants , desires and market to diverse and large crowds :
STP
Brands &Benefits
CustomerSatisfaction
Markets:ChannelsSupply ChainCompetition
MktgEnvn.Societal
Forces
ConsumerCapabilities
Company Capabilities
Internal Marketing: Relationship Marketing;Integrated Marketing
4 P’s
Make Product(Design, Procure, Make)
Sell Product(4 P’s / 4 C’s)
Product Process
STPSegmentation, Targeting,
Positioning
Provide & CommunicateValue through
4 P’s / 4 C’s
Value Creation & Delivery
Strategic Marketing Tactical Marketing
Marks & Spencer
Decision Areas in Marketing•Creating customer value•Strategic planning
Characteristics of Company
• No senior mngt sign off – too much delegation• Too much inventory• High profile customers• St Michael’s – a value for money brand• 16 sub brands .• Advertising not aspirational but functional• Diverted from retail heartland – not customer focused.• New competition like Next, Walmart ( ASDA)• Led by consultants experimenting with projects• De motivated staff
What Stuart Rose did • Fighting off a hostile takeover• Managing Press• Support of 2 trusted execs – in IT and Marketing• Streamlined 5 sourcing offices• Made suppliers conscious of this being ‘our’ problem and reduced costs• House cleaning – off many brands• Retrenched 650 staff but retained home grown talent• Motivated retained staff – making them customer focused• HR measures• Stock management – 2 crimes : overstocked and short of stock• Daily reporting to ceo of stock position• Problems are not allowed to fester• Focus on the basics of the business – improve product / store / service• Selling off their financial services to HSBC• Buying Per Una womens wear brand
Marks & Spencer
• What is M&S strategy• What value is being created • What should S Rose do and why
Concepts of Sesson 2
• Strategic and Tactical Marketing• History of marketing• Relationship marketing• Consumer orientation in marketing• Needs wants demands (basic) ( aimed at object) desire for brand
Marketing Mix and the Customer
Four Ps• Product• Price• Place• Promotion
Four Cs• Customer solution• Customer cost• Convenience• Communication
Marks & Spencer
• What is the problem that Stuart Rose was facing when he took charge of M&S?
Stuart Rose’s concerns
Processes
Stakeholders
Resources
Organization
Defining the corporate mission for M&S
• Mission– What business is M&S in? What businesses should
we be in? What do we do best? What are the values/ethics of the firm?
– Define business by need rather than product features.
- Lodging vs hotel- Quick service restaurants vs fast food hamburgers
Marketing Myopia
Management’s failure to recognize the scope of its business.
Avoiding Marketing Myopia by Focusing on Benefits
“We are in the entertainment business.”
“We are in the video game business.”
Sony
“We are in the financial services business.”
“We are in the stock brokerage business.”
Prudential Securities
“We are in the transportation business.”
“We are in the airline business.”
Northwest Airlines
“We are a communications company.”
“We are a telephone company.”
MCI Worldcom
Marketing-Oriented Description
Myopic DescriptionCompany
Stuart Rose had multi portfolios
• Food• Textiles• Others
What strategy for each ?
Characteristics of SBUs
• It is a single business or collection of related businesses
• It has its own set of competitors• It has a leader responsible for:
– Strategic planning– Profitability– Efficiency
37
Assigning resources to each SBU.
• Analytical tools such as the Boston Consulting Group growth-share matrix are used to guide.
• Anticipate changes
Question Marks• High growth, low share • Build into Stars or phase out • Require cash to hold market share
Stars• High growth & share• Profit potential • May need heavy investment to grow Cash Cows• Low growth, high share• Established, successful SBU’s•Produce cash
Dogs• Low growth & share • Low profit potential
Relative Market ShareHigh Low
Mar
ket G
rowt
h Ra
te L
ow
H
igh
Analyzing Current SBU’s:Boston Consulting Group Approach
?
Porter’s Generic Strategies
• Overall cost leadership• Differentiation• Focus
Current Market
New Markets
1 2 3 4 5 6
Time ( years )
Sales(Value )
Current Portfolio
Intensive growth
Integrative growth
Diversification growth
ThroughCurrent products
Backward / forwardIntegration in same business
New Business
Alternative Strategies
HOLISTIC RELATIONSHIP MARKETING FRAMEWORK
MARKETSPACE
POTENTIALOPPORTUNITIES
BUSINESSINVESTMENT
CUSTOMERS CORPORATION COLLABORATORS
3) What are the potential opportunities emerging from the market space?
4) What business capabilities and infrastructure required?
1) Who is involved?
2) How can we define relevant market space?
HOLISTIC RELATIONSHIP MARKETING FRAMEWORK
MARKETSPACE
POTENTIALOPPORTUNITIES
BUSINESSINVESTMENT
CUSTOMERS CORPORATION COLLABORATORS
CUSTOMER CUSTOMER FOCUSFOCUS
CORE CORE COMPETENCIESCOMPETENCIES
COLLABORATIVE COLLABORATIVE NETWORKNETWORK
2) How can we define relevant market space?
3) What are the potential opportunities emerging from the market space?
4) What business capabilities and infrastructure required?
1) Who is involved?
ExploreValue
Createvalue
DeliverValue
Characteristics of Core Competencies
• A source of competitive advantage• Applications in a wide variety of markets• Difficult to imitate
Printed on CANON
COMPETITIVE PLATFORMS
MarketOfferings
COGNITIVESPACE
CUSTOMERVALUE
BUSINESS DOMAIN
COMPETENCYSPACE
BusinessArchitecture
BUSINESS PARTNERS
CRM ERP
RESOURCE SPACE
SCM
Marketing Activities
OperationalSystem
Creating Creating ValueValue
DeliveringDeliveringValueValue
Customer Customer FocusFocus
Core Core CompetenciesCompetencies
Collaborative Collaborative NetworkNetwork
Categories of Marketing Alliances
• Product or Service Alliances• Promotional Alliances• Logistics Alliances• Pricing collaborations
When you create a concept, you
create a future…
Marketing….
Concepts of Sesson 3
• A holistic marketing framework• Marketing myopia• Core competency• SBU• BCG Matrix
Consumer Decision Making Process
6-50
What Influences Consumer Behavior?
• Cultural factors – related to values/social class / religion/community
• Social factors – related to reference groups, family, roles & status.
• Personal factors – related to family life cycle / occupation / personality / self-concept / life style
6-51
Social Factors
Referencegroups
Social roles Statuses
Family
6-52
Reference Groups
• Membership• Primary• Secondary• Aspirational• Dissociative
6-53
Family
• Family of orientation– Religion– Politics– Economics
• Family of procreation– Everyday buying behavior
6-54
Personal Factors
• Age• Life cycle stage• Occupation• Wealth
• Personality• Values• Lifestyle• Self-concept
Socio economic Classification
• Urban : Occupation & Education ( SEC A, B,C & D )
• Rural : Type of House ( pucca, semi-pucca and kucha ) and education ( R 1, R2 etc )
Socioeconomic Classification (SEC) Matrix—India (Urban)
Key Psychological Processes
• Motivation• Perception• Learning• Memory
Motivation
• Maslow’s hierarchy of needs• Freud’s theory• Herzberg’s two-factor theory
Physiological Needs(Food, water, air, shelter, sex)
Safety and Security Needs(Protection, order, stability)
Social Needs(affection, friendship, belonging)
Maslow’s Hierarchy of Needs
Ego Needs(Prestige, status, self esteem)
Self-Actualization(Self-fulfillment)
Besides ‘Needs’ behavior is due to :
• Unconscious psychological process ( Freud )
• Motivations that cause satisfaction or dissatisfaction ( Herzberg )
• High involvement or low involvement product
Perception
• Selective attention• Selective retention• Selective distortion• Subliminal perception
How do consumers make buying decision?
• Initiators• Influencers• Deciders• Buyers• Users
6-63
Consumer Buying Process• Problem recognition• Information search• Evaluation• Purchase decision• Postpurchase behavior
6-64
Other Theories of Consumer Decision Making
Involvement• Elaboration likelihood
model• Low-involvement marketing
strategies• Variety-seeking buying
behavior
Decision Heuristics ( non rational)
• Availability – quickness & ease• Representativeness ie how
similar is the outcome• Anchoring and adjustment .
First impressions are lasting impressions.
Economic Conditions
New Technology
Media
Law & Politics
Social Culture
Marketing mix (competitor & own)
Characteristics resultingfrom:-social /reference groups-family values-role & status
Personal circumstances-socio-economic-life style-personality
Decision process-need recognition-information search-evaluation-purchase intention-purchase-post purchase perceptions
Product form
Brand
Retail outlet
Value
Form of payment
Timing of purchase
External Factors Buyer’s Black Box Outcomes
Consumer’s Purchase Decision
Session 3
• Reference group• Aspirations• Maslow• Freud• Herzberg• Selective Attention• Decision making process• High & Low involvement
Pages 163 – 171 are optional readings.