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    Social

    Definition of

    Marketing

    Marketing is a

    societal process by

    which individuals

    and groups obtain

    what they need and

    want through

    creating, offering

    and freely

    exchanging

    products and

    services of value

    with others.

    Scope of Marketing A good marketer must be able to answer the following questions:

    Understanding Marketing Management

    Chapter 1

    What is Marketing?

    Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    Marketing is an essential art and science that is engaged in a vast number of activities

    by both persons and organizations. It has become an increasingly vital ingredient in the

    success of a business. Good marketing is the result of careful planning and execution.

    There are two sides to marketing the formulated side and the creative side. It is

    important to lay the foundation in marketing concepts, tools, frameworks and issues of

    the formulated side while at the same time instil the real creativity and passion for

    marketing, as we shall come to see in this chapter.

    Marketing is increasingly becoming an important function in all organizations to ensure

    that demand for a product or service persists along with customer retention.

    The formal definition of marketing is, Marketing is an organizational function and a set

    of processes for creating, communicating and delivering value to customers and for

    managing customer relationship in ways that benefit the organization and its

    stakeholders.

    Some of the common entities that are marketed are goods, services, events,

    experiences, persons, places, properties, organizations, information and ideas.

    What is Marketed?

  • A marketer is someone who seeks a response, attention, purchase, vote, donation etc

    from another party called the prospect. Marketing managers are responsible for demand

    management.

    Eight demand states are possible:

    Negative demand

    Nonexistent demand

    Latent demand

    Declining demand

    Irregular demand

    Full demand

    Overfull demand

    Unwholesome demand

    The key customer markets are consumer markets, business markets, global markets,

    non-profit and governmental markets.

    Chapter 1 - Understanding Marketing Management

    Needs - state of felt deprivation for basic items such as food and clothing and

    complex needs such as for belonging. i.e. I am hungry.

    Wants - form that a human need takes as shaped by culture and individual

    personality i.e. I want a hamburger, French fries, and a soft drink.

    Demands - human wants backed by buying power. i.e. I have money to buy this

    meal.

    Target Markets are the market segments identified by the marketer which

    present the greatest opportunity.

    Value Proposition is a set of benefits that companies offer to customers to

    satisfy their needs. The intangible value proposition is made physical by as

    offering. A brand is an offering from a known source.

    Value reflects the sum of the perceived tangible intangible benefits and costs to

    customers. Satisfaction reflects a persons judgements of a products perceived

    performance.

    To reach a target market a marketer uses different marketing channels like

    communication channels, distribution channels and service channels.

    Supply chain is a longer channel stretching from raw materials to components

    to final products that are carried to final buyers.

    Who Markets?

    Core Marketing Concepts:

    The five key

    functions of a

    marketing

    manager or

    CMO are:

    Strengthening

    the brand

    Measuring

    marketing

    effectiveness

    Driving new

    product

    development

    based on

    customer needs

    Gathering

    meaningful

    customer

    insights

    Utilizing new

    marketing

    technology

  • New

    Marketing

    Realities:

    Some of the major

    societal forces that

    marketers have to

    deal with today are

    network

    information

    technology,

    globalization,

    deregulation,

    privatization,

    heightened

    competition,

    industry

    convergence,

    consumer

    resistance, retail

    transformation and

    disintermediation.

    The major marketing philosophies are:

    The Production Concept

    o Consumers favor products that are available and highly affordable.

    o Improve production and distribution.

    Product Concept

    o Consumers favor products that offer the most quality, performance, and

    innovative features.

    Selling Concept

    o Consumers will buy products only if the company promotes/ sells these

    products.

    Marketing Concept

    o Focuses on needs/ wants of target markets & delivering satisfaction better

    than competitors.

    Societal Marketing Concept

    o Focuses on needs/ wants of target markets & delivering superior value.

    Holistic Marketing Concept

    o Based on the development, design and implementation of marketing

    programs, processes and activities that recognize their breadth and

    interdependencies.

    Relationship Marketing

    o Aims to build mutually satisfying long-term relationships with key

    constituents in order to earn and retain their business.

    Chapter 1 - Understanding Marketing Management

    Company orientation towards Marketplaces:

    Marketing Management Tasks: The following are the most important marketing management tasks:

    Developing Marketing Strategies and Plans

    Capturing Marketing Insights

    Connecting with Customers

    Building Strong Brands

    Shaping the Marketing Offerings

    Delivering Value

    Communicating Value

    Creating Long-Term Growth

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    Supply

    Chain

    Many companies

    today outsource less

    critical resources if

    they can obtain

    better quality or

    lower cost. Also,

    many companies

    partner with specific

    suppliers and

    distributors to

    create a superior

    value delivery

    network, also

    known as Supply

    Chain.

    Developing Marketing

    Strategies And Plans

    Chapter 2

    The Value Delivery Process

    Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    In this chapter, mainly the following points have been discussed

    How does marketing affect customer value?

    How is strategic planning carried out at different levels of the organization?

    What does a marketing plan include?

    Developing the right marketing strategy over time, through discipline and a creative

    thought process can go a long way in the marketing management process. Firms must

    constantly strive to improve every aspect of their strategy and the plans to guide the

    marketing process.

    In the new view of business processes, marketing is viewed at the beginning of the

    planning stage. A smart competitor must design and deliver products for well-defined

    micro-markets and cater to their specific wants, perceptions and preferences. The Value

    Creation and Delivery Sequence can be divided into two segments of marketing:

    Strategic Marketing and Tactical Marketing.

    Core Competencies Core Competency refers to areas of special technical and production expertise, whereas

    distinctive capability describes excellence in broader business processes. Market-driven

    organizations generally excel in three distinctive capabilities: market sensing, customer

    linking and channel bonding.

  • Holistic

    Marketing

    Holistic marketing

    orientation means,

    integrating the

    value exploration,

    value creation and

    value delivery

    activities with the

    purpose of building

    long-term,

    mutually satisfying

    relationships and

    co-prosperity

    among key

    stakeholders. It

    helps manage a

    superior value

    chain that delivers

    a high level of

    product quality,

    service and speed,

    in addition to

    expanding

    customer share,

    building customer

    loyalty and

    capturing customer

    lifetime value.

    The value chain is a tool which is used for identifying ways to create more customer

    value. There are 9 strategically relevant activities 5 primary and 4 support.

    Chapter 2 - Developing Marketing Strategies And Plans

    Companies need to focus on the customer and organize to respond effectively to their

    changing needs, to be known as master marketers. The marketing plan is the central

    instrument for directing and coordinating the marketing effort. The marketing plan

    operates at two levels: strategic and tactical.

    The strategic marketing plan lays out the target markets and the value

    proposition the firm will offer, based on an analysis of the best market

    opportunities.

    The tactical marketing plan specifies the marketing tactics, including product

    features, promotion, merchandising, pricing, sales channels and service.

    A firm must coordinate all the department activities to conduct its core business

    processes, through cross-functional teams

    Market-sensing process

    New-offering realization process

    Customer Acquisition process

    Customer Relationship Management Process

    Fulfillment Management Process

    Strategic Planning

    Value Chain

    Corporate Headquarters

    All corporate headquarters undertake four planning activities

    Defining the corporate mission

    Establishing strategic business units

    Assigning resources to each Strategic Business Unit

    Assessing growth opportunities

    Innovation in marketing is critical. Senior management should identify and encourage

    fresh ideas from a youth perspective, from people new to the field and organization, to

    gain an understanding and a new approach to marketing.

  • The best Mission Statement reflects a vision, an almost impossible dream that provides

    a direction for the company for the next 10 or 20 years. A good mission statement

    focuses on limited number of goals, links the companys policies and values and gives a

    long term view. It is as short, relevant and meaningful as possible.

    Chapter 2 - Developing Marketing Strategies And Plans

    Mission Statement

    Business Unit Strategic Planning

    The Business Unit Strategic Planning process consists of the following steps

    1. The Business Mission: Each business unit needs to define its specific mission

    within the broader company mission.

    2. SWOT Analysis: The overall analysis of a companys Strengths, Weaknesses,

    Opportunities and Threats is called SWOT analysis. It is a way of monitoring the

    external and internal marketing environment.

    To evaluate opportunities, companies can use Market Opportunity Analysis.

    3. Goal Formulation: Developing specific goals for a short term is known as Goal

    Formulation. They are specific with respect to magnitude and time. Goals must

    be consistent and realistic and could be a mix of various objectives.

    4. Strategy Formulation: Strategy is a game plan for achieving the goals. It consists

    of a Marketing Strategy, Technology Strategy and a Sourcing Strategy.

    5. Program Formulation: The unit must plan programs in accordance with its goals

    and strategy and thus work upon the various departments, to strengthen them

    and integrate all of them together.

    6. Implementation: Even a great marketing strategy can be sabotaged by a poor

    implementation. It must coordinate its tasks to implement its plan properly.

    These tasks must be in line with the interests of the stakeholders as well.

    7. Feedback and Control: The key to organizational health is willingness to

    examine the changing environment and adopt new goals and behaviors. In the

    rapidly changing market environment, even large organizations which are

    subject to inertia can be changed through strong leadership.

    Strategic

    Business Unit

    A Strategic

    Business Unit is a

    single business (or

    a collection of

    similar businesses)

    that can be

    planned

    separately from

    the rest of the

    company. By

    identifying the

    companys SBUs, it

    is easy to develop

    separate strategies

    and assign

    appropriate

    funding.

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    MIS

    (Marketing

    Information

    System)

    Consists of people,

    equipment and

    procedures, to

    gather, sort,

    analyze, evaluate

    and distribute

    needed, timely and

    accurate

    information to

    marketers.

    Capturing Marketing insights

    and Spotting Market Trends

    Chapter 3

    MIS (Marketing Information System)

    Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    To provide insight into an inspiration for marketing decision making, companies must

    possess comprehensive, up-to-date information about macro trends as well as micro

    trends particular to their business. This chapter deals with various modes of obtaining

    this information and also looks into the major macroeconomic forces that affect

    marketing decisions.

    MIS can provide data e.g. Swiss eat most chocolates, Greeks eat most cheese. It relies

    on internal company records, marketing intelligence activities and Market Research.

    MIS provides information on market happenings and changes in environment. Purposes

    of MIS have been noted below.

    Train the sales force for intelligence gathering by observing competitors

    activities and listening to customer comments.

    Motivate retailers and distributors to pass intelligence. E.g. mystery shoppers to

    identify customer treatment and possible flaws.

    Network externally using competitors annual reports, talking with their

    retailers, distributors and employees, attending shareholder meetings. It should

    be done ethically and legally.

    Use government sources (Census, NSSO reports) or purchase data from outside

    suppliers (AC-Nielsen, etc)

    Create a panel of largest, sophisticated and important customers for feedback.

    Use online forums, sites offering customer and expert reviews, Customer

    compliant sites,

  • Analyzing the

    Macro

    Environment

    Fad

    Unpredictable,

    short-lived, without

    any economic or

    social significance

    Trend -

    Sequence of events

    that have

    momentum and

    durability, reveals

    the future.

    Megatrend

    Large social and

    economic influence,

    slow in formation

    but has lasting

    effect.

    Demographic 16.7% of World population in India; Male to Female ratio of 933:1000

    Population Age mix : median age of 23.8 years, 34% b/w 12 and 25yrs, 24% b/w 25 and

    34 years

    Literacy level: 65.38% literate, 75.8% males and 54.16% females, 76% literacy between

    15-24yrs age group, 64.5% literacy between 25-34yrs age group.

    Economic Purchasing Power depends on income, savings, prices, credit availability. Indias GDP is

    $1.2 trillion, per capital income of $3100

    Income distribution: 77.7% of urban households have income up to Rs3000/month while

    only 2.1% have income more than Rs 10,000/month.

    Categories of Indian consumers: Destitute ( less than Rs16,000 annually, inactive

    participants in market exchange), Aspirants ( Rs 16,000 to Rs22,000, new entrants in

    consumption system), Climbers, (Rs 22,000 to Rs 45,000, have desire and willingness to

    buy but has limited cash), Consuming Class ( Rs 45, 000 to Rs 2,15,000, majority have

    money and are willing to pay), Rich ( more than Rs 2,15 000, have money and own a

    variety of products).

    Trend shows increasing % of Consumers and Climbers while a decreasing % of Destitute

    and Aspirants.

    Social-Cultural Society shapes beliefs, values, demands, and requirements. It affects dress codes, food

    habits, brand preferences. Trend shows an increasing role of children on purchasing

    decisions e.g. bicycles, computers, wrist watches, shoes and other FMCG goods.

    Chapter 3 - Capturing Marketing insights and Spotting Market

    Trends

    Order to Payment cycle - Customer places order for goods -> Sales team sends

    invoice to various departments -> Sales team back orders out of stock items ->

    Suppliers send goods and sales team pays suppliers -> Sales team delivers order and

    receives payment. Purpose is to minimize number and duration of cycles.

    Sales Information System - Keeping constant track of sales, customers, etc. It can

    help in identifying trends.

    Database / Data warehousing / Data Mining - Separate databases are there for

    products, salespersons and customers. Purpose is to analyze (mine) data using

    statistical methods and discover trends.

    Major Macro Environmental Forces

    Internal Company Records

  • Natural Deterioration of environment is a significant concern e.g. Greenhouse Effect, Ozone

    layer and fossil fuel depletion. Government concerns in this aspect are Euro-2

    emissions norms and CNG.

    Although majority feels necessity of environmental friendly products, they do not buy

    because

    (a) Perception of green good being of inferior quality and (b) Perception that good does

    not contribute majorly to the environment.

    Corporate Environmentalism is recognizing the importance of environmental issues

    affecting the firm and integrating those in its strategic plans is fast gaining ground. E.g.

    Focus on Non-renewable sources like Jatropha oil, Pollution Control Systems like

    landfills, recycling centers and focus on CNG initiatives.

    Technological Four major trends are

    (a) Accelerated Pace of Change: e.g. Apple selling 23.5 million in 2006

    (b) Unlimited Opportunities for Innovation e.g. Developments in Bio-tech,

    telecommunication, Robotics, aid vaccines, contraceptive pills.

    (c) Varying R & D Budget: e.g. Increasing R & D in Pharmaceutical companies like Cipla,

    Dr. Reddys, and Ranbaxy

    (d) Increasing regulation of technological change e.g. Drugs and cosmetic act, control

    on clinical trial, standard for drugs.

    Political and Legal Two major trends are

    (a) Increase in business legislation: to protect companies from unfair competition, to

    protect consumers from unfair business practices, to protect society from unbridled

    business behavior and to charge businesses with social costs created by their products

    or processes

    (b) Growth of special interest groups and improvements like the Consumer Protection

    Act.

    Chapter 3 - Capturing Marketing insights and Spotting Market

    Trends

    What is the

    difference

    between a

    Fad and a

    Trend?

    A fad becomes a

    trend when it

    affects a large

    number of people,

    has functional

    value, has lesser

    number of

    substitutes, and has

    other trends

    promoting it.

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    What is

    Marketing

    Research?

    Systematic Design,

    collection, analysis

    and reporting of

    data and findings

    relevant to a

    specific marketing

    situation facing the

    company.

    Why Marketing Research? Successful Marketing Managers need timely, accurate and actionable information about

    consumers, competition and their brands to assess past performance, plan future

    activities and take strategic decisions leading to successful product launch or increase

    growth of a brand.

    Conducting Marketing Research

    and Forecasting Demand

    Chapter 4

    What are the major steps of Marketing Research

    Process?

    Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    Step 6 : Make the decision

    Step 5 : Present the findings

    Step 4 : Analyze the information

    Step 3 : Collect the information

    Step 2 : Develop the research plan

    Step 1 : Define the problem, the decision alternative and the research objective

  • Secondary

    Data:

    Already existing

    somewhere which

    was collected for

    some other

    purpose

    Primary

    Data:

    Freshly gathered

    data for research

    only. Expensive to

    collect.

    Step 1:

    Achieve clarity on the content, the scope of market research and what all decisions

    to be made on the basis of research.

    Step 2:

    Primary Data c

    Chapter 4 - Conducting Marketing Research and Forecasting

    Step 3:

    Data collection is one of the most expensive, time

    market research as it entirely depends on availability, honesty and consistency of

    respondents. However technology has eased the problem to a great extent.

    Step 4:

    This is the process to extract findings by tabulating the data and developing frequency

    distributions in hope of discovering additional findings.

    Step 5:

    The researcher presents finding relevant to the major marketing decisions facing

    management

    Research Methods

    Observational Research: Observing

    consumers, informal interviews, using

    tools from anthropology to provide

    deeper understanding of consumers.

    Focus Group Research: A meeting of a

    group of people who represent potential

    customers or important actors for

    research discussing issues relevant to

    research

    Survey Research: Companies undertake

    descriptive research to learn about

    peoples beliefs, preferences and

    satisfaction.

    Behavioral Data: Customers actual

    purchases do not match their

    statements made in surveys always

    hence certain techniques help in

    exposing these discrepancies

    Experimental Research: This captures

    cause and effect relationship in

    observed findings.

    Achieve clarity on the content, the scope of market research and what all decisions

    to be made on the basis of research.

    Primary Data can be collected through following:

    Conducting Marketing Research and Forecasting

    Data collection is one of the most expensive, time-taking and most error prone phase of

    market research as it entirely depends on availability, honesty and consistency of

    respondents. However technology has eased the problem to a great extent.

    This is the process to extract findings by tabulating the data and developing frequency

    stributions in hope of discovering additional findings.

    The researcher presents finding relevant to the major marketing decisions facing

    management.

    Research Methods

    Observational Research: Observing

    consumers, informal interviews, using

    tools from anthropology to provide

    deeper understanding of consumers.

    Focus Group Research: A meeting of a

    group of people who represent potential

    customers or important actors for

    research discussing issues relevant to

    Survey Research: Companies undertake

    descriptive research to learn about

    peoples beliefs, preferences and

    satisfaction.

    Behavioral Data: Customers actual

    purchases do not match their

    statements made in surveys always

    hence certain techniques help in

    exposing these discrepancies

    Experimental Research: This captures

    cause and effect relationship in

    observed findings.

    Questionnaires: A set of questions

    soliciting responses that is of relevance

    to market situation. They can be either

    open-ended or closed

    Qualitative Measures: Relatively

    unstructured measurement approach

    for exploring consumers responses

    Technological Devices: devices like skin

    sensors brain wave scanners to

    capture consumers response.

    Sampling Plan: A plan addressing

    questions like whom all to survey, how

    many people to survey, how should we

    select people for survey.

    Contact Methods: Mail Questionnaire,

    Telephone Interview, Personal

    Interview, Online Interview.

    Achieve clarity on the content, the scope of market research and what all decisions are

    Conducting Marketing Research and Forecasting

    taking and most error prone phase of

    market research as it entirely depends on availability, honesty and consistency of

    respondents. However technology has eased the problem to a great extent.

    This is the process to extract findings by tabulating the data and developing frequency

    The researcher presents finding relevant to the major marketing decisions facing

    Research Tools

    Questionnaires: A set of questions

    soliciting responses that is of relevance

    to market situation. They can be either

    ended or closed-ended.

    Qualitative Measures: Relatively

    unstructured measurement approach

    for exploring consumers responses

    Technological Devices: devices like skin

    sensors brain wave scanners to

    capture consumers response.

    Sampling Plan: A plan addressing

    questions like whom all to survey, how

    many people to survey, how should we

    select people for survey.

    Contact Methods: Mail Questionnaire,

    Telephone Interview, Personal

    Interview, Online Interview.

  • Step 6:

    Market research is just a tool to provide insight to the managers. Depending on their

    confidence in the findings, managers decide to use it

    Barriers to Marketing Research

    Narrow approach to Marketing Research

    Uneven Caliber of researchers

    Poor framing of problem

    Late and occasionally erroneous findings

    Personality & presentational differences

    Measuring Marketing Productivity

    To assess the efficiency and effectiveness of marketing of marketing activities there are

    Marketing metrics to assess marketing effects

    Marketing mix modeling to estimate casual relationships and measure how

    marketing activity affect outcomes

    Marketing Dashboard are a structured way to disseminate the insights gleaned

    from these two approaches within the organizations

    Types of Demand

    Market Demand

    It is the total volume that would be bought by a defined customer group in a

    defined geographical area in a defined time period in a defined marketing

    environment under a defined marketing program

    Company Demand

    It is the companys estimated share of the market demand at alternative levels of

    company marketing effort in a given time period

    Current Demand

    It is the demand that companies attempt to determine by measuring total

    market potential, area market potential industry sales and market share

    Future Demand

    It is the demand that companies determine by surveying buyers intentions,

    solicit their sales forces input, gather expert opinions, analze past sales or

    engage in market testing mathematical models, advanced statistical techniques

    and computerized data collection procedures

    To estimate current demand companies attempt to determine total market potential,

    area market potential industry sales and market share

    To estimate future demand companies survey buyers intentions solicit their sales

    forces input, gather expert opinions, analyze past sales or engage in market testing

    mathematical models, advanced statistical techniques and computerized data collection

    procedures are essential to all types of demand and sales forecasting.

    Types of

    Market

    Potential

    market

    Set of consumers who

    profess a sufficient

    level of interest in a

    market offer.

    Available

    market

    Set of consumers who

    have interest income

    and access to a

    particular offer.

    Target market

    The part of the

    qualified available

    market the company

    decides to pursue.

    Penetrated

    market

    Set of consumers who

    are buying the

    company's product.

    Chapter 4 - Conducting Marketing Research and Forecasting

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    Customer

    Perceived

    Value:

    Customer

    Perceived Value: It

    is the difference

    between the

    prospective

    customers

    evaluation of all the

    benefits and all the

    costs of an offering,

    and the perceived

    alternatives.

    Creating Customer Value, Satisfaction and Loyalty

    Chapter 5

    Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    In the face of increasing competition, companies today face their toughest test of

    survival. Moving from a product-to-sales philosophy to a holistic marketing philosophy,

    however, may provide a better chance of outperforming competition. And at the

    cornerstone of this philosophy are strong customer relations.

    This chapter discusses the importance and various methods of creating customer value

    and sustaining customer loyalty. As customers have become more informed and

    educated than ever, organisations have started to adopt business models where the

    customer is at the top.

    Total Customer Benefit It is the perceived monetary value of the bundle of economic, functional, and

    psychological benefits customers expect from a given market offering because of the

    products, services, personnel and image involved.

    Total Customer Cost It is the perceived bundle of costs customers expect to incur in evaluating, obtaining,

    using, and disposing of the given market offering, including monetary, time, energy, and

    psychological costs.

    Very often, a customer value analysis is undertaken by managers to better understand

    the companys strengths and weaknesses in comparison with competition. It follows the

    pattern below

    1. Identify the major attributes and benefits that customers value.

    2. Assess the quantitative importance of the different attributes and benefits.

  • Total

    Customer

    Satisfaction:

    It is the measure of

    a customers

    feelings of pleasure

    or disappointment

    that results from

    comparing a

    products perceived

    performance to

    their expectations.

    Satisfaction is

    usually measured

    with the help of

    customer surveys.

    The two major

    factors involved in

    customer

    satisfaction are

    complaint handling

    and product/service

    quality.

    Chapter 5 - Creating Customer Value, Satisfaction and Loyalty

    Trends

    3. Assess the companys and competitors performances on the different customer

    values on each attribute and benefit.

    4. Assess how customers in a specific segment rate the companys performance

    against a major competitor on an individual attribute or benefit basis.

    5. Monitor customer values over time as the economy, technology, and features

    change.

    Customer profitability A profitable customer is one that over time yields a revenue stream that is significantly

    greater than that companys cost stream for attracting, selling and servicing that

    customer.

    150-20 Rule The 20% most profitable customers generate as much as 150% of the profits of the

    company; the 20% least profitable customers lose 100% of the profits.

    Measuring customer profitability lies in the concept of Customer Lifetime Value (CLV).

    CLV describes the net present value of the future stream of profits expected over the

    customers lifetime purchases. CLV calculations are generally used by marketers to

    develop a long-term perspective.

    Customer Relationship Management (CRM) It is the process of carefully managing detailed information about individual customers

    and all occasions where a customer encounters a brand/product to maximise customer

    loyalty.

    CRM can be conducted using the following 4 steps

    1. Identify your prospects and customers.

    2. Differentiate customers in terms of their needs and their value to your

    company.

    3. Interact with individual customers to improve your knowledge about their

    needs and to build stronger relationships.

    4. Customize products, services, and messages to each customer.

    The value of the customer base can be increased by improved by measures such as

    reducing the rate of customer defection, increasing the longevity of the customer

    relationship, making low-profit customers more profitable or terminating them, etc.

  • Building Customer Loyalty

    It involves the following procedures

    1. Interacting with customers

    2. Developing loyalty programs

    3. Personalising marketing

    4. Creating institutional ties

    Database marketing It is the process of building, maintaining and using customer databases and other

    databases to contact, transact and build customer relationships.

    Customer Database It contains customers past purchases, past volumes, past prices and profits; buyers

    personal details, status of current contacts, the companys share of the buyers

    business, competitive suppliers, etc.

    Datamining Through datamining, marketers can extract information about individuals, trends, etc.

    from the customer database. It uses techniques such as cluster analysis, predictive

    modelling, etc.

    Disadvantages of Datamining and CRM 1. Building and maintaining a database requires huge amounts of investment in

    terms of computer hardware.

    2. Convincing employees to be customer oriented than using traditional methods.

    3. Customer attitudes about privacy of personal data.

    Probability of error of CRM methods or assumptions made thereof.

    Chapter 5 - Creating Customer Value, Satisfaction and Loyalty

    Trends

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    Analyzing Consumer Markets

    Chapter 6

    Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    Since marketing starts from the customer, it is of primary importance to understand the

    psyche of the customers and their buying motives. This chapter talks about the various

    behavioural patterns that govern the decision making process of a customer. A

    marketer needs to understand these factors affecting the customers purchase

    decisions so as to design an appropriate marketing strategy.

    Factors affecting Consumer Buying

    Behaviour 1. Cultural Factors

    a. Culture - Frames traditions, values, perceptions, preferences. E.g. Child

    learning from family & surroundings.

    b. Sub-culture - Provides more specific identification and socialization. Include

    nationalities, religions, racial groups and geographic regions.

    c. Social Class Homogeneous and enduring divisions in a society which are

    hierarchically ordered. Members share similar tastes and behaviour.

    2. Social Factors

    a. Reference Groups Have direct or indirect influence on persons attitude

    and behaviour. Primary groups: regular interaction, e.g. family, friends,

    neighbours. Secondary groups: religious, professional, trade union groups.

    Aspirational Groups: ones that a person hopes to join. Dissociative groups:

    whose values or behaviour and individual rejects.

    b. Family Family of orientation: parents and siblings. Acquires orientation

    towards religion, politics and economics, sense of personal ambition, self

    worth and love. Family of procreation: spouse and children. More direct

    influence on buying behaviour.

    c. Roles and Status Role consists of activities a person is expected to

    perform. Each role carries a status. Marketers must be aware of the status

    symbol of each product.

  • Chapter 6 - Analyzing Consumer Markets

    3. Personal Factors

    a. Age and Stage in the Life Cycle Tastes are age related. Markets should also

    consider critical life events or transitions.

    b. Occupation and Economic Circumstances Economic Circumstances like

    spendable income, savings, assets, debts, borrowing power etc affect

    consumption patterns.

    c. Personality and Self Concept Personality, set of distinguishing

    characteristics that influence his/her buying behaviour. Consumers match

    brand personality with their ideal self concept instead of their actual self

    concept.

    d. Lifestyle and Values

    4. Psychological Factors

    a. Motivation: Freuds theory of id, ego and super ego; Maslows need

    hierarchy theory; Herzbergs two factor model.

    b. Perception: Process by which we select, organize and interpret information

    inputs. In marketing, perceptions are more important than reality.

    c. Learning Induces changes in behaviour arising from experience. Marketers

    can build demand by associating the product with positive drives.

    d. Memory Short term and long term memory. Build brand knowledge and

    brand recall as node in memory.

    Problem Recogniton

    Information Search

    Evaluation of Alternatives

    Purchase Decision

    Postpurchase Behaviour

    The Buying Decision Process

    Problem Recognition - Customer recognises a need triggered by internal or

    external stimuli. Marketers need to identify circumstances that trigger needs.

    Information Search - Two levels of involvement Heightened attention when

    person becomes more receptive to information about the product. At next level

    consumer may enter into active information search, looking for reading

    material, phoning friends etc.

    Evaluation of Alternatives - Factors influencing a particular choice over the

    other include attitudes, beliefs and expectancy value.

    Purchase Decision - Between purchase intention and purchase decision, 2

    intervening factors come into play- Attitudes of others and Unanticipated

    situational factors. Marketers should understand that these factors provoke risk

    and should provide information to reduce it.

    Post purchase Behaviour - Marketers must monitor postpurchase satisfaction,

    postpurchase actions, and postpurchase product uses.

  • Complex

    Buying

    Behaviour

    Variety Seeking

    Dissonance

    Reducing

    Habitual

    Level of customer involvement

    Chapter 6 - Analyzing Consumer Markets

    Trends

    Involvement

    High Low

    Differences in Brands

    Insignificant Significant

    1. Complex Buying Behaviour: When a customer purchases something for the

    first time.

    2. Variety Seeking: Consumers will keep switching varieties just out of

    boredom. Eg- Biscuits. Marketer should keep introducing new products and

    display the product prominently.

    3. Habitual: Buying the same thing out of habit and not out of loyalty.

    Distribution network should be excellent in this case. Maintain consistency

    in product and advertising.

    4. Dissonance Reducing: In case of repeat purchase of same product.

  • logo copy.tif

    Organizatio-

    nal buying

    is the decision-

    making process by

    which

    organizations

    establish the need

    for purchased

    products and

    services and

    identify, evaluate,

    and choose among

    alternative brands

    and suppliers.

    Analyzing Business Markets and Buyer Behavior

    Chapter 7

    Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    Business buyers purchase goods and services to achieve specific goals, such as making

    money, reducing operating costs, and satisfying social or legal obligations. Therefore to

    provide superior customer value to the business buyers this chapter familiarizes you

    with the underlying dynamics and process of business buying.

    Blanket contract establishes a long-term relationship in which the supplier promises to

    resupply the buyer as needed at agreed-upon prices over a specified period. Because

    the seller holds the stock, blanket contracts are sometimes called stockless purchase

    plans.

    Product value analysis is an approach to cost reduction in which components are

    carefully studied to determine if they can be redesigned or standardized or made by

    cheaper methods of production.

    The Business Market versus the Consumer

    Market Fewer buyers: Business marketers normally deal with far fewer buyers than do

    consumer marketers.

    Larger buyers: Buyers for a few large firms do most of the purchasing in many

    industries.

    Close supplier customer relationship: Smaller customer base and importance of

    larger customers, suppliers have to customize offerings to meet the needs of

    individual customers.

    Geographically concentrated buyers

    Derived demand: Demand for business goods is derived from demand for consumer

    goods, so business marketers must monitor the buying patterns of ultimate

    consumers.

    Inelastic demand: Not much affected by price changes as producers cannot make

    quick production changes.

  • Three types of

    Business

    Buying

    Situations:

    Straight rebuy:

    situation in which

    the purchasing

    department

    reorders on a

    routine basis (e.g.,

    office supplies, bulk

    chemicals).

    Modified rebuy:

    situation in which

    the buyer wants to

    modify product

    specifications,

    prices, delivery

    requirements, or

    other terms.

    New task:

    situation in which a

    purchaser buys a

    product or service

    for the first time

    (e.g., office

    building, new

    security system).

    Chapter 7 - Analyzing Business Markets and Buyer Behavior

    Fluctuating demand: Demand for business products is more volatile than consumer products.

    Professional purchasing: Organizational purchasing policies and constraints are followed

    Multiple buying influences: More people typically influence buying decisions

    Multiple sales calls: Multiple sales calls to win most business orders, and the sales cycle

    can take years.

    Direct purchasing: Business buyers often buy directly from manufacturers rather than

    intermediaries

    Reciprocity: Business buyers often select suppliers who also buy from them.

    Leasing: Many industrial buyers lease rather than buy heavy equipment to conserve

    capital, get the latest products, receive better service, and gain tax advantages.

    The Buying Center (Decision-making unit of a buying organization)

    Seven roles in the purchase decision process:

    Initiators: People who request that something be purchased

    Users: use the product or service; often, users initiate the buying proposal and help

    define product requirements.

    Influencers: People who influence the buying decision, including technical personnel.

    Deciders: Those who decide on product requirements or on suppliers.

    Approvers: People who authorize the proposed actions of deciders or buyers.

    Buyers: People who have formal authority to select the supplier and arrange the

    purchase

    Gatekeepers: People who have the power to prevent sellers or information from reaching

    members of the buying center

    Major Influences on Business Buying Environmental Factors

    Attention to numerous economic factors, including interest rates and levels of production,

    investment, and consumer spending. Business buyers also monitor technological, political-

    regulatory, and competitive developments.

    Organizational Factors

    Business marketers need to be aware of the following organizational trends in purchasing:

    Purchasing department upgrading: Strategically positioned and highly

    Cross-functional roles: strategic, technical, team-oriented, and involving more

    responsibility

    Centralized purchasing: recentralized their purchasing, to gain more purchasing clout and

    savings.

    Decentralized purchasing of small-ticket items

    Long-term contracts: Buyers are increasingly initiating long-term contracts

    Internet purchasing: Low transaction and personnel costs reduce time between order and

    delivery, purchasing companies moving towards internet purchasing.

    Purchasing-performance evaluation & incentive systems and buyers professional

  • Lean production: incorporates just-in-time (JIT) production, stricter quality control,

    development frequent and reliable supply delivery, suppliers locating closer to

    customers, computerized purchasing, and stable production schedules.

    8 stages of PURCHASING PROCESS Stage 1: Problem Recognition

    Someone in the company recognizes a problem or need that can be met by acquiring a good

    or service. Internally, developing a new product, need for new equipment and materials or

    to obtain lower prices or better quality. Externally, occur when a buyer gets new ideas at a

    trade show, sees a suppliers ad, or is contacted by a sales representative offering a better

    product. Business marketers can stimulate problem recognition by direct mail,

    telemarketing, effective Internet communications, and calling on prospects.

    Stage 2: General Need Description

    The buyer has to determine the needed items general characteristics and the required

    quantity. In this stage, business marketers can assist buyers by describing how their products

    would meet such needs.

    Stage 3: Product Specification

    Company assigns a product value analysis (PVA) to engineering team. By getting in early and

    influencing buyer specifications, a supplier can significantly increase its chances of being

    chosen.

    Stage 4: Supplier Search

    The supplier should get listed in online catalogs or services develop communications to reach

    buyers, and build a good reputation in the marketplace. After evaluating each company, the

    buyer will end up with a short list of qualified suppliers

    Stage 5: Proposal Solicitation

    The buyer invites qualified suppliers to submit proposals. When the item is complex or

    expensive, the buyer will require a detailed written proposal from each qualified supplier.

    After evaluating the proposals, the buyer will invite a few suppliers to make formal

    presentations.

    Stage 6: Supplier Selection

    The buying center specifies desired supplier attributes (such as product reliability and service

    reliability) and indicate their relative. A blanket contract may be established. The buyers

    computer automatically sends an order to the seller when stock is needed, and the supplier

    arranges delivery and billing according to the blanket contract.

    Stage 7: Order-Routine Specification

    The buyer negotiates the final order, listing the technical specifications, the quantity needed,

    the delivery schedule, and so on. In the case of MRO items, buyers are moving toward

    blanket contracts rather than periodic purchase orders.

    Stage 8: Performance Review

    The buyer periodically reviews the performance of the chosen supplier(s). Three methods

    are used. The buyer may contact the end users and ask for their evaluations. Or the buyer

    may rate the supplier on several criteria using a weighted score method. Or the buyer might

    aggregate the cost of poor supplier performance to come up with adjusted costs of

    purchase, including price.

    Chapter 7 - Analyzing Business Markets and Buyer Behavior

    Major

    Influences on

    Business Buying:

    Interpersonal Factors

    Buying centers usually

    include several

    participants with

    differing interests,

    authority, status,

    empathy, and

    persuasiveness.

    Individual Factors

    Each buyer carries

    personal motivations,

    perceptions, and

    preferences, as

    influenced by the

    buyers age, income,

    education, job position,

    personality, attitudes

    toward risk, and

    culture.

    Cultural Factors

    Marketers carefully

    study the culture and

    customs of each region

    to better understand

    the cultural factors that

    can affect buyers and

    the buying

    organization.

  • logo copy.tif

    Mass

    Marketing:

    The seller engages

    in mass

    production, mass

    distribution and

    mass promotion

    of one product for

    all buyers

    Identifying Market Segments and Targets

    Chapter 8

    Marketing ManagementBy Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    This chapter deals with one of the quintessential concepts of Marketing:

    Segmentation, Target and Positioning. It explains different levels of Market Segmentation,

    bases for Segmenting Consumer Markets, choosing target Markets & finally analyses the

    various requirement for effective segmentation.

    Steps in market segmenta

    1. Market Segmentation

    2. Target Marketing

    3. Market Positioning

    Levels of Market Segmentation: Micromarketing

    A. Segment marketing

    characteristics, or wants who might require separate products or marketing mixes.

    Segment Marketing offers key benefits over Mass Marketing as the company can

    offer better design, price, disclose

    better reflect competitors marketing.

    B. Niche Marketing

    distinctive mix of benefits. Marketers usually define niches by dividing segments into

    sub segments. For e.g. Ezee, the liquid detergent from Godrej is a fabric washing

    product for woolen clothes.

    Identifying Market Segments

    Marketing ManagementBy Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    This chapter deals with one of the quintessential concepts of Marketing:

    Segmentation, Target and Positioning. It explains different levels of Market Segmentation,

    bases for Segmenting Consumer Markets, choosing target Markets & finally analyses the

    various requirement for effective segmentation.

    Steps in market segmentation, targeting and

    positioning

    Identify bases for segmenting the market

    Develop segment profiles

    1. Market Segmentation

    Develop measure of segment attractiveness

    Select target segments2. Target Marketing

    Develop positioning for target segments

    Develop a marketing mix for each segment3. Market Positioning

    Levels of Market Segmentation: Micromarketing

    Segment marketing: Dividing a market into distinct groups with distinct needs,

    characteristics, or wants who might require separate products or marketing mixes.

    Segment Marketing offers key benefits over Mass Marketing as the company can

    offer better design, price, disclose and also can fine

    better reflect competitors marketing.

    Niche Marketing: A niche is a more narrowly defined customer group seeking a

    distinctive mix of benefits. Marketers usually define niches by dividing segments into

    egments. For e.g. Ezee, the liquid detergent from Godrej is a fabric washing

    product for woolen clothes.

    Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    This chapter deals with one of the quintessential concepts of Marketing: STP i.e.

    Segmentation, Target and Positioning. It explains different levels of Market Segmentation,

    bases for Segmenting Consumer Markets, choosing target Markets & finally analyses the

    tion, targeting and

    Identify bases for segmenting the market

    Develop segment profiles

    Develop measure of segment attractiveness

    Select target segments

    Develop positioning for target segments

    Develop a marketing mix for each segment

    Levels of Market Segmentation: Micromarketing

    Dividing a market into distinct groups with distinct needs,

    characteristics, or wants who might require separate products or marketing mixes.

    Segment Marketing offers key benefits over Mass Marketing as the company can

    and also can fine-tune the marketing program to

    is a more narrowly defined customer group seeking a

    distinctive mix of benefits. Marketers usually define niches by dividing segments into

    egments. For e.g. Ezee, the liquid detergent from Godrej is a fabric washing

  • Chapter 8 - Identifying Market Segments and Targets

    C. Local Marketing:needs and wants of local customer groups in trading areas, neighborhoods and even

    individual stores is called as Local Marketing. E.g. Many Banks in Kerala have special

    NRI Branches to cat

    abroad.

    D. Individual Marketing:

    one, customized marketing or one

    customers to de

    Paints retailers facilitate customers to mix and match colors of their choice from a

    catalogue.

    Bases for Segmenting Consumer MarketsA. Geographic Segmentation:

    such as nations, cities, states, regions, neighborhoods etc

    Region: South India, Western Region, North, East

    City: Class

    Rural, urban , semi urban areas

    B. Demographic Segmentation:

    age, family size, family life cycle, gender, income, occupation, education, religion etc.

    Demographic variables are easy to measure and are directly associated with customer

    needs and wants

    Stage1: Bachelorhood

    Stage2: Honeymooners

    Stage3: Parenthood

    Stage4:Post

    Stage5: Solitary Survivor(SS)

    C. Psychographic Segmentation:

    basis of psychological/personality traits, lifestyles or values.

    Lifestyle:

    done on three parameters:

    Personality:

    D. Behavioral segmentation:

    attitude toward, use of, or response to a product. The behavioral variables are as

    follows:

    Occasions:

    Identifying Market Segments and Targets

    Local Marketing: Target marketing that involves marketing programs tailored to the

    needs and wants of local customer groups in trading areas, neighborhoods and even

    individual stores is called as Local Marketing. E.g. Many Banks in Kerala have special

    NRI Branches to cater to the needs of customers whose relatives remit money from

    Individual Marketing: This is the ultimate level of marketing that leads to segments of

    one, customized marketing or one-to-one marketing.

    customers to design the product and service offering to their choice. For e.g. Asian

    Paints retailers facilitate customers to mix and match colors of their choice from a

    catalogue.

    Bases for Segmenting Consumer MarketsGeographic Segmentation: Division of the Market into different geographical Units

    such as nations, cities, states, regions, neighborhoods etc

    Region: South India, Western Region, North, East

    City: Class-I cities, class-II cities, Metro cities etc

    Rural, urban , semi urban areas

    Demographic Segmentation: The market is divided on the basis of variables such as

    age, family size, family life cycle, gender, income, occupation, education, religion etc.

    Demographic variables are easy to measure and are directly associated with customer

    needs and wants

    FAMILY LIFE CYCLE STAGES

    Single,Focus of expenditure on selfStage1: Bachelorhood

    Young married couple without kids,focus on building home and relation

    Stage2: Honeymooners

    Full Nest-I,1 child less than 6 yrs old

    Full Nest-II,youngest child under 6

    Full Nest-III: all adult children

    Stage3: Parenthood

    Children not living with parents

    Empty Nest1 :Working

    Empty Nest2: Not Working

    Stage4:Post-ParentHood

    One spouse dies

    SS-I: Working

    SS-II: Not Working

    Stage5: Solitary Survivor(SS)

    Psychographic Segmentation: Here buyers are divided into different groups on the

    basis of psychological/personality traits, lifestyles or values.

    Lifestyle: Culture-oriented, sports oriented, outdoor oriented. Classification is

    done on three parameters: AIO-Activities, Interests and Opinions.

    Personality: Compulsive, gregarious ,authoritarian ,ambitious

    Behavioral segmentation: Buyers are divided on the basis

    attitude toward, use of, or response to a product. The behavioral variables are as

    Occasions: Regular, Special

    Identifying Market Segments and Targets

    Target marketing that involves marketing programs tailored to the

    needs and wants of local customer groups in trading areas, neighborhoods and even

    individual stores is called as Local Marketing. E.g. Many Banks in Kerala have special

    er to the needs of customers whose relatives remit money from

    This is the ultimate level of marketing that leads to segments of

    one marketing. Customerization empowers

    sign the product and service offering to their choice. For e.g. Asian

    Paints retailers facilitate customers to mix and match colors of their choice from a

    Bases for Segmenting Consumer Markets into different geographical Units

    such as nations, cities, states, regions, neighborhoods etc

    The market is divided on the basis of variables such as

    age, family size, family life cycle, gender, income, occupation, education, religion etc.

    Demographic variables are easy to measure and are directly associated with customer

    LIFE CYCLE STAGES

    Single,Focus of expenditure on self

    Young married couple without kids,focus on building

    I,1 child less than 6 yrs old

    II,youngest child under 6

    III: all adult children

    Children not living with parents

    Empty Nest2: Not Working

    Here buyers are divided into different groups on the

    basis of psychological/personality traits, lifestyles or values.

    oriented, sports oriented, outdoor oriented. Classification is

    Activities, Interests and Opinions.

    Compulsive, gregarious ,authoritarian ,ambitious

    Buyers are divided on the basis of their knowledge of,

    attitude toward, use of, or response to a product. The behavioral variables are as

  • Usage Rate:

    Loyalty Status:

    Readiness Stage:

    buy

    Attitude towards Product:

    Requirements for Effective Segmentation

    Chapter 8 - Identifying Market Segments and Targets

    Evaluating and Selecting Market SegmentsFive patterns of target market selection that can be followed are:

    Single Segment Concentration

    strong knowledge of segments needs and acquires a strong market presence

    Selective Specialization

    attractive and appropriate, there may be little or no synergy between the segme

    Product Specialization:

    different market segments.

    Market Specialization:

    customer.

    Full Market Coverage:

    products they may need. E.g. Coca Cola (non

    (Software Market) etc.

    P = Product

    M = Market

    Usage Rate: Light, Medium, Heavy

    Loyalty Status: None, medium, strong, absolute

    Readiness Stage: Unaware, aware, informed, interested, desirous, intending to

    buy

    Attitude towards Product: Enthusiastic, positive, indifferent, negative, hostile

    Requirements for Effective Segmentation

    Identifying Market Segments and Targets

    Evaluating and Selecting Market SegmentsFive patterns of target market selection that can be followed are:

    Single Segment Concentration: Concentrated Marketing

    strong knowledge of segments needs and acquires a strong market presence

    Selective Specialization: a firm selects a number of segments. Each objectively

    attractive and appropriate, there may be little or no synergy between the segme

    Product Specialization: The firm makes a certain product that it sells to several

    different market segments.

    Market Specialization: The firm concentrates on serving many needs of a particular

    customer.

    Full Market Coverage: The firm attempts to serve a

    products they may need. E.g. Coca Cola (non-alcoholic beverage segment), Microsoft

    (Software Market) etc.

    P = Product

    M = Market

    med, interested, desirous, intending to

    Enthusiastic, positive, indifferent, negative, hostile

    Requirements for Effective Segmentation

    Identifying Market Segments and Targets

    Evaluating and Selecting Market Segments Five patterns of target market selection that can be followed are:

    : Concentrated Marketing where the firm gains a

    strong knowledge of segments needs and acquires a strong market presence

    : a firm selects a number of segments. Each objectively

    attractive and appropriate, there may be little or no synergy between the segments

    The firm makes a certain product that it sells to several

    The firm concentrates on serving many needs of a particular

    The firm attempts to serve all customer groups with all

    alcoholic beverage segment), Microsoft

  • logo copy.tif

    Technological

    leapfrogging

    is a bypass strategy

    practiced in high-tech

    industries. The

    challenger patiently

    researches and

    develops the next

    technology and

    launches an attack,

    shifting the

    battleground to its

    territory, where it has

    an advantage.

    Dealing with Competition

    Chapter 9

    Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    Building strong brands requires a keen understanding of competition. To effectively devise and

    implement the best possible brand positioning strategies, companies must pay attention to

    their competitors. Markets have become too competitive to just focus on the consumer alone.

    Vertical Integration is to integrate backward or forward i.e. with suppliers and costumers which often lowers costs and can manipulate prices and costs in different parts of

    the value chain.

    Benchmarking is the art of learning from companies that perform certain tasks better than other companies.

    Competitive Forces (Michael Porters 5 forces) 1. Threat of intense segment rivalry - segment is unattractive if it contains numerous, strong,

    or aggressive competitors.

    2. Threat of new entrants - segment's attractiveness varies with the height of its entry and exit

    barriers. The most attractive segment has high entry barriers and low exit barriers.

    3. Threat of substitute products - A segment is unattractive when there are actual or potential

    substitutes for the product.

    4. Threat of buyers' growing bargaining power - A segment is unattractive if buyers possess

    strong or growing bargaining power.

    5. Threat of suppliers' growing bargaining power - A segment is unattractive if the company's

    suppliers are able to raise prices or reduce quantity supplied.

    Identifying Competitors Industry Concept

    Number Of Sellers And Degree Of Differentiation

    Entry, Mobility, And Exit Barriers

    Cost Structure

    Degree Of Vertical Integration

    Degree Of Globalization

    Marketing Concept

    According to marketing approach, competitors are companies that satisfy the same customer

    need. The market concept of competition reveals a broader set of actual and potential

    competitors. By mapping the buyer's steps in obtaining and using the product a company's

    direct and indirect competitors can be identified.

  • Chapter 9 - Dealing with Competition

    Trends Analyzing Competitors Strategies: What strategies a company uses to enter/survive in the market?

    Objectives: What are the objectives of the competitors and what drives its behavior?

    Factors shaping a competitors objectives include size, history, current management,

    and financial situation.

    Strengths and Weaknesses: A company needs to gather information on each

    competitor's strengths and weaknesses.

    Three Important Variables for analyzing competitors

    Share of market - The competitor's share of the target market.

    Share of mind - The percentage of customers who named the competitor in

    responding to the statement, "Name the first company that comes to mind in this

    industry."

    Share of heart - The percentage of customers who named the competitor in

    responding to the statement, "Name the company from which you would prefer to buy

    the product."

    Companies that make steady gains in mind share and heart share will inevitably make gains in

    market share and profitability.

    Competitive Strategies for Market Leaders Expanding the Total Market

    New customers: Potential new users maybe divided into three groups:

    Those who might use it but do not (market-penetration strategy)

    Those who have never used it (new-market segment strategy)

    Those who live elsewhere (geographical-expansion strategy)

    More usage: Two ways of increasing usage

    Increasing the level or quantity of consumption: through packaging or product

    design or by increasing the availability of product

    Increasing the frequency of consumption: identifying completely new and different

    ways to use the brand and communicate the advantages of using the brand more

    frequently

    Defending Market Share The most constructive response is continuous innovation. The leader leads the industry in

    developing new product and customer services, distribution effectiveness, and cost cutting. It

    keeps increasing its competitive strength and value to customers.

    Position Defense: It involves occupying the most desirable market space in the minds

    of the consumers

    Flank Defense: the market leader should also erect outposts to protect a weak front or

    possibly serve as an invasion base for counterattack.

    Preemptive Defense: A more aggressive maneuver is to attack before the enemy starts

    its offense. A company can launch a preemptive defense in several ways

    Counteroffensive Defense: the leader can meet the attacker frontally or hit its flank or

    launch a pincer movement. An effective counterattack is to invade the attacker's main

    territory so that it will have to pull back to defend the territory.

    Mobile Defense: In mobile defense, the leader stretches its domain over new

    territories that can serve as future centers for defense and offense through market

    broadening and market diversification.

    Contraction Defense: giving up weaker territories and reassigning resources to

    stronger territories.

    Selecting

    Competitors:

    Strong versus Weak:

    Weak require fewer

    resources per share

    point gained. The firm

    should also compete

    with strong

    competitors to keep

    up with the best.

    Close versus Distant:

    Most companies

    compete with

    competitors who

    resemble them the

    most

    "Good" versus "Bad":

    should support its

    good competitors

    (Play by the rules)

    and attack its bad

    competitors.

  • Expanding Market Share A company should consider four factors before pursuing increased market share:

    The possibility of provoking antitrust action

    Economic cost

    Pursuing the wrong marketing-mix strategy

    The effect of increased market share on actual and perceived quality

    Competitive Strategies for Market Challengers

    Defining the Strategic Objective and Opponent(S)

    A market challenger must decide whom to attack:

    It can attack the market leader. This is a high-risk but potentially high-payoff strategy

    It can attack firms of its own size that are not doing the job and are underfinanced

    It can attack small local and regional firms

    Choosing a General Attack Strategy

    Frontal Attack: The attacker matches its opponent's product, advertising, price, and

    distribution

    Flank Attack: Identifying shifts in market segments geographic areas that are causing

    gaps to develop, and then rushing in to fill the gaps and develop them into strong

    segments.

    Encirclement Attack: The encirclement involves launching a grand offensive on

    several fronts. Make sense when the challenger commands superior resources

    Bypass Attack: It means bypassing the enemy and attacking easier markets to

    broaden one's resource base. Three lines of approach: diversifying into unrelated

    products, diversifying into new geographical markets, and leapfrogging into new

    technologies to supplant existing products.

    Guerrilla Warfare: Small, intermittent attacks to harass and demoralize the

    opponent and eventually secure permanent footholds (selective price cuts, intense

    promotional blitzes, and occasional legal action)

    Few more specific strategies: Price discount, Lower price goods, Value-priced goods and

    services, Prestige goods, Product proliferation, Product innovation, improved services,

    Distribution innovation, Manufacturing-cost reduction, Intensive advertising promotion

    Competitive Strategies for Market-Nicher The nicher achieves high margin, whereas the mass marketer achieves high volume. Nichers

    have three tasks: creating niches, expanding niches, and protecting niches. Because niches

    can weaken, the firm must continually create new ones therefore multiple niching is

    preferable to single niching. The key idea in successful nichemanship is specialization. Here

    are some possible niche roles:

    End-user specialist: The firm specializes in serving one type of end-use customer.

    Customer-size specialist: The firm concentrates on selling to small, medium-sized, or

    large customers.

    Geographic specialist: The firm sells only in a certain locality, region, or area of the

    world.

    Product-feature specialist: The firm specializes in producing a certain type of

    product or product feature

    Quality-price specialist: The firm operates at the low- or high-quality ends of the

    market

    Channel specialist: The firm specializes in serving only one channel of distribution

    Chapter 9 - Dealing with Competition

    Competitive

    Strategies for

    Market

    Follower:

    A market follower must

    know how to hold

    current customers and

    win a fair share of new

    customers. It must keep

    its manufacturing costs

    low and its product

    quality and services

    high. Four broad

    strategies can be

    distinguished:

    Counterfeiter -

    duplicates the

    leader's product and

    package and sells it

    Cloner - emulates the

    leader's products,

    name, and

    packaging, with slight

    variations.

    Imitator - copies

    some things from the

    leader but maintains

    differentiation in

    terms of packaging,

    advertising, pricing,

    or location.

    Adapter - takes the

    leader's products and

    adapts or improves

    them.

  • logo copy.tif

    Brand:

    A name, term, sign,

    symbol or design, or a

    combination of them,

    intended to identify

    the goods or services

    of one seller or group

    of sellers and to

    differentiate them

    from those of

    competitors.

    Creating Brand Equity

    Chapter 10

    Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    It is important for the marketer to create a strong brand and maintain customer loyalty. This

    chapter talks about the concepts of brand and how branding works. We will understand

    what brand equity is, how it is built and measured as well as the decisions involved in

    branding strategy.

    Brand Equity Added value endowed on products and services. Reflected in way consumers think, feel and

    act with respect to a brand. Customer based brand equity differential effect brand

    knowledge has on customer response to the marketing of a brand. Maybe positive or

    negative depending on how consumers respond. It has three key ingredients

    Brand equity arises from differences in customer response

    Differences in response are a result of consumers knowledge of the brand. Brand

    Knowledge consists of all thoughts, feelings, images, experiences, beliefs and so on that

    become associated with the brand

    The differential response is reflected in perceptions, preferences and behaviour related

    to all aspects of the marketing of the brand

    Marketer must build a strong brand that ensures that the consumers have the right

    experiences.

    Brand Promise Marketers vision of what the brand must be and do for the consumers. The true and future

    value depends on customers, their brand knowledge and their likely response to marketing

    activity.

  • Chapter 10 - Creating Brand Equity

    Trends Brand Equity Models

    Brand Asset Valuator It provides comparative measures of the brand equity of thousands of brands across

    hundreds of different categories.

    Brand

    Element:

    Those trademark able

    devices that identify

    and differentiate the

    brand. Most strong

    brands employ

    multiple brand

    elements. Brand

    element choice

    criteria includes 6

    main parameters

    first three being

    memorable,

    meaningful and

    likable (brand

    building) and last

    three being

    transferable,

    adaptable and

    protective

    (defensive).

    Up and coming/Niche

    JetBlue

    Ikea

    TiVo

    Redbull

    Leaders

    Google

    USA Declining

    Pringles Leaders

    Nike Kodak

    AAA

    Tide

    New/Undeveloped

    Blackberry

    Sephora

    SAP

    Brtish Airways

    Eroded/Commoditized

    Centrum

    Entertainment Weekly

    Wells Fargo

    Budget Rent-A-Car

    Energized Brand Strength

    (Differentiation, Relevance, Energy)

    Brand Structure

    (Esteem & Knowledge)

    (E There are the five key components of the model

    1. Differentiation degree to which a brand is seen as different from others

    2. Energy brands sense of momentum

    3. Relevance breadth of brands appeal

    4. Esteem how well the brand is regarded and respected

    5. Knowledge how familiar and intimate customers are with the brand

    Brand Resonance Model Creation of significant brand equity requires reaching the top or pinnacle of the brand

    pyramid, which occurs only if the right building blocks are put into place.

    Resonance

    Judgement Feelings

    Performance Imagery

    Salience

  • Brand Salience how often and how easily customers think of the brand under

    various purchase or consumption situations.

    Brand Performance how well the product or service meets customers functional

    needs

    Brand Imagery - describes the extrinsic properties of the product or service; also the

    way in which brand attempts to meet customers psychological or social needs

    Brand Judgements focus on customers own personal opinions and evaluations

    Brand Feelings customers emotional responses and reactions with respect to the

    brand

    Brand Resonance nature of the relationship customers have with the brand and the

    extent to which they feel theyre in sync with it

    Brand Audit consumer focussed series of procedures to assess the health of the brand, uncover its sources of brand equity and suggest ways to improve and leverage its

    equity.

    Brand Valuation Job of estimating the total financial value of the brand.

    Devising a Brand Strategy When a firm introduces a new product it has 3 choices

    Develop new brand elements for the new product

    Apply some of the existing brand elements (Product is called brand extension)

    Use a combination of new and existing brand elements (Maybe called a sub brand)

    Brand Portfolios Marketers need multiple brands to cater to multiple markets. The reasons for diversifying

    the brand portfolio -

    1. Increasing shelf presence and retailer dependence in the store

    2. Attracting customers seeking variety who may otherwise have switched to another

    brand

    3. Increasing internal competition within the firm

    4. Yielding economies of scale in advertising, sales, merchandising and physical

    distribution

    Customer Equity Sum of lifetime values of all customers. The aim of Customer Relationship Management

    (CRM) is to produce high customer equity.

    Chapter 10 - Creating Brand Equity

    Trends

    Brand

    Reinforcement

    Brand needs to be

    managed so its value

    does not depreciate.

    Brand equity

    reinforced by

    marketing actions that

    consistently convey the

    meaning of the brand

    in terms of what it

    represents and how it

    makes the products

    superior. Reinforcing

    requires innovation

    and relevance

    throughout the

    marketing program.

  • logo copy.tif

    Positioning:

    Positioning is the act

    of designing the

    companys offering

    and image to occupy

    a distinctive place in

    the minds of the

    target market.

    Positioning requires

    determining on a

    frame of reference

    based on the

    following factors:

    1. Identifying the

    target market.

    2. Analyzing the

    competition.

    Crafting the Brand Positioning

    Chapter 11

    Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    This chapter illustrates how a firm can choose an effective positioning in the market and

    differentiate its brand. It describes the various strategies a firm can employ at each stage of a

    products life cycle and finally shows the implications of Market evolution for marketing

    strategies.

    Developing and Communicating a Positioning Strategy

    Category Membership: products or set of products with which the brand competes and which function as close substitutes.

    Points of Difference (POD): Attributes or benefits consumers strongly associate with a brand, positively evaluate and believe they could not find to the same extent

    in another brand.

    Points of Parity (POP): They are associations that are not unique to the brand but in fact maybe shared with other brands. It has two forms:

    Category Points of Parity: Associations customers view as essential to a legitimate and

    credible offering within a certain product or service category.

    Competitive Points of Parity: Associations designed to negate a competitors points-

    of-difference.

    Choosing POPs and PODs POPs: They are driven by the needs of category membership (to create category POPs) and the

    necessity of negating competitors PODs (to create competitive PODs)

    PODs: The following two criteria are considered while choosing POPs

    Desirability Criteria Deliverability Criteria

    Relevance Feasibility

    Distinctiveness Communicability

    Believability Sustainability

  • Chapter 11 - Crafting the Brand Positioning

    Establishing category membership The typical approach to positioning is to inform consumers about a brands category

    membership before stating its points of difference. Initial advertising often concentrates on

    create brand awareness and subsequent advertising attempts to craft the Brand Image.

    Differentiating Strategies

    Competitive Advantages It is a companys ability to perform in 1 or more ways that competitors cant match. Two

    sustainable competitive advantages are:

    Leverageable Advantage: is one that a company can use as a springboard to new

    advantages

    Customer Advantage: is an advantage that a customer sees in the companys

    offering

    Dimensions to differentiate Market Offerings Personnel differentiation: Better trained employees E.g. smartly dresses flight

    attendants of Kingfisher Airlines.

    Channel Differentiation: more effectively and efficiently designed channels,

    coverage, expertise and performance.

    Image differentiation: Companies can craft powerful compelling images. E.g.

    Marlboros macho cowboy image.

    Product Lifestyle Marketing Strategies Most product life-cycle curves are portrayed as bell shaped curves.

    Straddle

    Positing:

    It is a common

    positioning technique

    used when a

    company tries to

    straddle between two

    frames of reference.

    E.g. BMW through a

    well crafted

    marketing program

    straddled Luxury

    and Performance as

    both POD and POP.

    A companys positioning and differentiation strategy must change as the product, market and

    competitors change over the product life cycle (PLC).

  • Introduction Growth Maturity Decline

    Characteristics

    Sales Low Sales Rapidly rising

    sales

    Peak Sales Declining Sales

    Costs High Cost per

    customer

    Average Cost per

    customer

    Low cost per

    customer

    Low cost per

    customer

    Profits Negative Rising Profits High Profits Declining Profits

    Customers Innovators Early Adopters Middle majority Laggards

    Marketing

    Objectives

    Create product

    awareness and

    trial

    Maximize market

    share

    Maximize profit

    while defending

    market share

    Reduce

    expenditure and

    milk the brand

    Strategies

    Product Offer a basic

    product

    Offer product

    extensions,

    service, warranty

    Diversify brands

    and items models

    Phase out weak

    products

    Price Charge cost-plus Price to penetrate

    market

    Price to match or

    best competitors

    Cut price

    Distribution Build selective

    distribution

    Build Intensive

    distribution

    Build more

    intensive

    distribution

    Go selective: phase

    out unprofitable

    outlets

    Advertising Build product

    awareness

    among early

    adopters

    Build awareness

    and interest in

    mass market

    Stress brand

    differences and

    benefits

    Reduce to level

    needed to retain

    hard-core loyals

    Sales Promotion Use heavy sales

    promotion to

    entice trial

    Reduce to take

    advantage of

    heavy consumer

    demand

    Increase to

    encourage brand

    switching

    Reduce to

    minimum level

    Summary of Product Lifecycle Characteristics,

    Objectives and Strategies

    Chapter 11 - Crafting the Brand Positioning

    Trends

    Market Evolution Emergence: Before a market materializes it exists as a latent market. Here the

    entrepreneur has three options:

    1. Single Niche Strategy: Design a product to meet preferences of 1 segment of the

    market

    2. Multiple-Niche Strategy: Launch 2 or more products simultaneously to capture 2 or

    more parts of the market

    3. Mass Market Strategy: Design a product for the middle of the Market

    Maturity

    Decline: Eventually demand for the current products will begin to decrease because

    either:

    1. Societys total need level declines

    2. New Technology replaces the old

    Maturity:

    When the

    competitors cover all

    major segments of

    the market maturity

    stage occurs.

    Competitors invade

    each others profits

    and as market growth

    slows down, market

    splits into finer

    segments and market

    segmentation occurs.

    This is often followed

    by market

    consolidation caused

    by the emergence of

    a new attribute that

    has greater appeal.

    Mature markets

    swing between

    fragmentation and

    consolidation.

  • logo copy.tif

    Product:

    Anything that can

    be offered to a

    market to satisfy a

    need or want,

    including physical

    goods, services,

    experiences,

    events, persons,

    places, properties.

    Setting Product Strategy

    Chapter 12

    Marketing Management By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

    SUMMARY by

    Product is the first and the most important element of a marketing mix. This chapter deals

    with various product strategies for making coordinated decisions on product mixes, product

    lines, brands, packaging, labeling and warranties and guarantees.

    Product Levels Marketers need to address 5 product levels:

    Core Benefit: The benefit a customer really buys. E.g. Hotel guest buys rest and sleep

    Basic Product: e.g. hotel room includes bed, bathroom, desk, dresser, closet, towel etc

    Expected product: attributes that buyers normally expect along with their product.

    Augmented product: attributes that exceed buyer expectations. In developed countries,

    brand positioning and competition take place at this level, while in developing countries

    it takes place at expected product level.

    Potential product: it encompasses all the augmentations and transformations the

    product or offering might undergo in the future.

    Product classification Durability and tangibility

    1. Nondurable goods: tangible goods that are normally consumed in a day or two. E.g.:

    soaps, soft drinks. They are purchased frequently, thus should be made available in

    many locations, charged a small markup, and advertised heavily to induce trial.

    2. Durable