Professional Documents
Culture Documents
fundamentals
What is mrktg all about?
Understanding mrkts
and
managing markts
effectively,efficiently to be
successful
how to do this?
What are markets?
• Mrkts are prospects,customers and
consumers with unfulfilled needs,with a
desire to fulfill the same and
• An ability to buy and willingness to buy,
• An ability to pay& willingness to pay and a
willingness to be loyal as long as the
marketer’s offer is perceived to be of far
higher value than those of all substitute
and competitive offers
What is mrktng?
• Marktg is a continuous and proactive
process of creating,nurturing and retaining
a loyal customer base and helping them
perceive that the co’s offer is far superior
to those of all current and future substitute
and competitive offers
Purpose of any business-what is it?
• Because it’s purpose is to create a customer,a business
has two and only two basic functions; marktg and
innovation. Mrktg and innovation produce results; all the
rest are costs.
• Mrktng is too important to leave to a mrktng department.
Mrktng is so basic that it cannot be considered to be a
separate function.it is the whole business seen from the
point of view of its final result, that is ,from the
customer’s point of view,
• Peter F Drucker’
• 7.customer-focussed organisation
• Inverting and flattening the pyramid
• Prioritising service providers
• Lower costs-faster response—greater motivation
• 2.objectives
• Marketing
• Financial
• Human
• 3.positioning strategy
• A.tarjet market segment(s)
• B.differential advantage
Mrktng plan
• 4.marketing mix
• A.product
• B.price
• C.promotion
• D.place
• 5 action programs
Functional Product
Value Price
TMS DA
Availability Distribution
Service Servicing
• 1product
Product
• Quality-features—options—style—brand name—packaging—sizes
—services—warranties—returns
• 2price
• List price—discounts—allowances—payment period—credit terms
• 3place
• Channels—coverage—locations—inventory—transport
• 4.promotion
• Advertising—personal selling—sales promotion—public relations
• 7. Customer-focussed organisation
• Inverting and flattening the pyramid
• Prioritising service providers
• Discussion q’s
• 1List all benefits of segmentation to all stakeholders of the airlines
• 2Who all could be the beneficiaries
• 3Do u think any segment is subsidising for any other segment? If so who to whom? If
not,why not?What do u understand by absolute satisfaction and relative satisfaction?
Do u think that there is a possibility that any cass may feel relatively dissatisfied
although absolutely satisfied, When wd that happen? How wd mgmnt prevent it?
• 4When can segmentation go wrong?How to avoid segmentation from going wrong?
What precautions to take?
What is your position?are we
positioned correctly?
• A manufacturer of industrial cutting equipment
was concerned about its poor market share and
wondered whether its prices were the problem.
• It undertook a markt research study which
identified the product and service attributes most
desired by customers and evaluated how its
product “ X “ & its key competitors were rated in
tablebelow on a 1to 6 scale where 1 is lowest
and 6 is highest.
Table assessing price & value
competitiveness
Importa Quality Competi
nce wt dimensio tors
ns
abcx
35% Precision 6 5 4 6
25% reliability 6 6 3 4
15% durability 5 3 2 5
5% Delivery 2 5 5 5
weigh A B C X
tedsc
ore
5.5 4.6 3.7 4,3
Actual
prices
29 K 21 K 15 K 22 K
Mrkt
share 27 45 20 8
%
1.What is the problem of x In
marktng jargon?
• 2.how do you solve? What srategy do u
recommend? Why?
• 3. What alternates can be considered by
X? Why should they be dropped?
How to take positions? - 2 ways
based on Quality&price conscious
•
markets
QUALITY-CONSCIOUS MARKTS-steps
• 1.find out quality dimensions,relative importance
between them and assess performance of all current
players on each dimension
• 2.If there is a gap between expectations and
performance tae a position
• 3. fill the position by offering the highest value than the
average value provider as well as the best value provider
so that no one will find a gap in value to replace u in
future.
• 4 constantly monitor and defend this position thro
innovation.
Price conscious
customers/markts---how to take
positions
• 1.find out what price are the markets willing to
pay?
• 2.find out what quality are they willing to accept
for the price they are willing to pay
• 3.find put a gap if any where u can offer a higher
value for the price they are willing to pay –better
than the average value privider as well as the
highest value provider in the markt.
• 4defend and protect .
Concepts of
cost,price,revenue,value &
quality.how are they connected?
• Adi godrej said,when asked what is important,top line or
bottom line?
• REVENUE IS (read sales) vanity,PROFIT IS SANITY
and cash is reality.Cost is a fact & Value is a perception.
• Value is benefit divided by price
• Customer delivered value=total customer benefits(TCB)-
total customer costs(TCC).
• TCB=Product benefits+Service benefits+personnel
benefits +image benefits
• TCC=monetory cost+Time cost+energy cost+psychic
cost
Quality is 2 types –Quality of
conformance & quality of
•
performance
QUALITY OF CONFORMANCE-consistently meeting specifications
laid down batch after batch/supply after supply.—at any agreed
level of quality
• Performance as per promise.supplier commits to buyer a certain
level of quality features,prices and performance and delivers in
practice what was promised.
• QUALITY OF PERFORMANCE-this has got to do with the level of
quality Certain products promise and perform at higher level of
quality and certain other products promise and perform at a lower
level of quality.
• EXAMPLE.Which product has a higher quality of
performance,Mercedes Benz? Or Maruti 800? Answer is the former.
• Which of the above 2 products has a higher quality of conformance/
Answer is both can have the same level or one can have a higher or
loer level than the other depending on the actual percetved
performance over a period of time.
Cdv=tcb-tcc
• Compare the customer deliverd value of
any 2 brands fighting with each other in
the same TMS/
• Compare cdv of kinetic Honda to ladies
with cdv of Hero Honda to male Youth.
Which one is greater?
Caterpiller VS komatsu how to
price caterpiller’s buldozer?
• Cost to make =$30k
• Perceived worth of customers=$100k
• Added value=$70k
• Pricing options—A.Share equally,P=$65k.
—B.take a higher share,P=$80k—C.Take
a smaller share,
• P=$50k.
• How to decide what strategy to follow.?
Caterpiller ‘s price strategy
depends on
• 1.the Co’s goals/ambitions
• 2.the competitive factors and
• 3. the customers value perceptions
• If the co wanta a short run high return,and
doesn’t mind losing competitive entry, price it
high.
• If the co’s interest is to gain a high markt share
quickly and protect it over a long term,go for a
low price but a longer pay-back.
positionings
• Usp development—an attribute to tout as
number 1—common no1 positions—best
quality ----lowest price—safest---best
service—best value---fastest—most
customised—most convenient—most
advanced technology etc.
• Examples of value propositions
Co/prod Target 1 uniquePercvd Value Remark
uct custome benefit benefit propositi s—
rs’ to price on compact
profile ratio stateme ,artistic,
nt punchy-
--
• Service image
• Corporate image
• Channel image
Right Business orientation needed
for success?
• Production orientation
• Product orientation
• Selling orientation
• Marketing orientation
• Customer focus/orientation
• to company ?
• to society?
Purpose driven R&D-in commercial
firms
• What goals should we have?
• Market goals
• Financial goals
• People goals
Segmenting markts-how will we be
different & better?
• “all skills are subsidiary to the master skill of concentrated focus”
• FOCUS ON THE MARKT FOR SUCCESS
• 2 stages to undertake segmentation—Definition of potential
segments & selection of target segments
• DEFINITION-in a lot of different ways;
• FOR INDUSTRIAL MARKETS,
• Geographic; ,Industry,Type of application,Customer size,Markt
served,Channels of distribution,
• Demographic,Psychographic,Technographic, Behavioural etc.
• FOR CONSUMER
MARKTS;_GEO,DEMO.ECONOMIC,Psyco,Techno,Behavioural—
all can be used.
• When >2or3 variables are used, the process becomes complex.
• SELECTION—Is easier based on MA & DA.
A practical approach to segmenting
markts-cascade method
• Step1;what is our definable markt?
Questions to ASK;POTENTIAL
BENEFITS?—MAIN OVERALL NEED?—
KEY CUSTOMER PROBLEMS?—KEY
BUSINESS PROCESS?
• STEP2;BREAKING THE CASCADE OUT
THROUGH SUPPLEMENTARY
QUESTIONS
• EG:HARD COPY PRINTING
Cascade---
• 1.HOW MUCH?—v low—low—med—high
• 2.WHAT QUALITY?—
• LOW Q—LETTER QUALITY—DRAFT GRAPHICS—
BUSiness GRAPHICS
• 3.HOW OFTEN?—SPORADIC NON_URGENT—
SPORADIC URGENT—UNIFORM NON-URGENT—
UNIFORM URGENT
• 4.WHERE?—PERSONAL—WORK GROUP—
DEPARTMENT—SITE
• 5.WHAT PRICE?--<5k--5K-25K—25K-100K-->100k
Step3.Defining segments by
sentence
• EG.;DEPARTMENTS PRINTING LETTER
QUALITYOUTPUTS SPORADICALLY &URGENTLYIN
VOLUMES UPTO100K PAGES PER MONTH
• STEP4;make as many segment statements as possible.
• STEP5;FIND WHICH SEGMENTS ARE CURRENTLY
OCCUPIED BY WHOM?
• STEP6;FIND NICHE.
• STEP7;MEASURE ATTRACTIVENESS OF THE NICHE
& OUR CO’S CAPABILITY TO CREATE “DA”
Guidelines for cascading
• 1.AVOID TOO NARROW/BROAD DEFINITION AT STEP1
• 2.DON’T LET PRODUCTS APPEAR ON THE CASCADE.IT IS
NEED /SITUATION ANALYSIS
• 3.DEFINE “Q” TERMS WHEREVER POSSIBLE.
• 4.KEEP A MAX OF 5-6 LAYERS.
• 5.QUANTIFY ACROSS EACH LEVEL.RESEARCH IF
REQIUIRED DATA NOT AVAILABLE.
Cascade--
• 6.ANALYSE OBJECTIVELY.DON’T BE BIASED.
• 7.SEPARATE SEGMENTS FROM
SELECTION.SELECTION IS NEXT STEP.
• 8.ALTERNATE THE “Q”s.ELIMINATE NON_USEFUL
LREVELS.
• MYTHS OF SEGMENTATION
• “we segment our mrkts”
• ‘THERE IS ONE IDEAL SEGMENTATION VARIABLE”
• “segments are technologies or products”
• “Segments are forever”
• “WE want to be in all segments” ETC.
Assignment on cascade method of
segmenting markts
• Tke any markt u like and do follow the above
swtep by step process of cascade method,
• Divide into segments,
• Mention at least 3-4 segment statements,find out
if thjose sedgments were already occupied by
current players,if so who and if not check
attractiveness of the niche u have just
discovered.
• HOW DID U DISCOVER THENICHE?
Plc strategies. ch- fig--
Product strategies-Ansoff diagram
or directional policy matrix.
• 4 types of product strategies
• BCG matrix –ch fig
• GE or McKinsey matrix
Product strategies.HLL
• 1.product mix width strategy
• 2.product mix consistency satrategy
• 3.product line length strategy
• 4.product depth strategy
• PRODUCT MIX WIDTH measures the no of
individual(INDEPENDENT) lines of products the co
carries in its product portfolio.
• For ex,HLL has roughly 3 dozens of lines of products—
say,soaps,detergents,tooth
pstes,toiletries,cosmetics,personal care products,ice
creams,bread,shampoos,atta,salt,jams,jellies,tea,coffee
etc,
Product stra----
• Advantages;wide mix helps
• 1,growth in bad times for some lines
• 2.good customer coverage
• 3.prevent competitor entry
• 4develop trade interest
• 5reduce overall cost
• 6synergy etc.
• DISADVANTAGES
• 1.resources scarcely distributed
• 2.lack of focus
• 3.Confusion if overlap
• 4.too much inventories.
What is optimum width?
• If mix is too narrow,vulnerability, competitors get
strong if they discover & enter into new niches,
and stake holders growth expectations not met,
• Optimum width depends on
• 1,co’s resource capability
• 2.co’s ambitions for growth with matching
capability
• 3.ability to start a new line when the existing
lines can survive & grow on their own merits,
2.Product mix consistency strategy
• This measures how well each line is related to every other line in
terms of
• 1,technical capability
• 2.manufacturing skill& capability,
• 3.distribution capability,4,employee talent and skills,5branding&
commncn skills
• 6,customer mix etc.
• Advantages of high mix consistency
• 1.lower costs
• 2.quicker growth
• 3higher profit
• Disadvantages;1inability to venture into unrelated but high
opportunity areas.ex reliance.
Product line length strategy
• Line length measures the no of
independent products in a line.
• For example,HLL’s soaps line has a
dozen different soaps
• Jay Lux Hamam
• Breeze Liril Dove
• Lifebuoy Fair&lovely
• Rexona Pears
Long lines-advantages
• 1different segments
• 2high sale,MS & profit
• 3.prevent competition
• 4.be first to open a swegment
• 5overal markt leadership
• 6.More satisfied customer
groups7.synergies in marktng costs
• 7.satisfied trade
Long line-disadvantages
• Too long –unnecessary-wasted inventory
• Slow non-moving stocks
• Low ROI
• Confuse customer choice if overlap.
• Lack of focus
• Resources too thinly distributed.
product depth-no. of variants of
same product-by
sige,packing,colors,styles etc.
• Lux is available in 2 formulations,3 siges,3
colors and 2 skin types
• Therefore lux’s product depth is 2.3.3.2=36
• Why product depth?
• To cater to subsegmental needs
• To retain customers
• To meet needc fragmentation in evolving
markts
Plc strategies. ch- fig--
Branding strategies
Brands
Creating & Nurturing Them
The Agenda Today
• Product image
• Service image
• Corporate image
• Channel image
Right Business orientation needed for
success?
• Production orientation
• Product orientation
• Selling orientation
• Marketing orientation
• Customer
focus/orientation
The role of engineering/R&D in success
The elephantine electronics case
Benefits of brands
To customers
To company
To society
Purpose driven R&D-in commercial
firms
1. Market goals
2. Financial goals
3. People goals
The Kano Model
Delighting Features
+
Insufficient Sufficient
Product features
Expected
Features
-
Assumed Features
From Commodities to Brands
Low High
Strong Brands
High
Relationship
Cognitive
d
ran
g B
i n
r od
E
Low
Commodity
Emotional
Relationship
Perceived
Name quality Brand
Awareness Associations
Proprietary
Brand Equity
Brand Assets
Name
Loyalty
Symbol
Provides value to firm by
enhancing:
•Efficiency and effectiveness
Provides value to customer by
of marketing programs.
enhancing Customer’s
•Brand loyalty
•Interpretation/processing of
information •Prices/margin
•Confidence in the decision •Brand Extension
•Use satisfaction •Trade leverage
•Competitive Advantage
Product
Unique Me - Too
Well Known
80% Depends
Supplying company
Buy Decision On
Whisper Sales Efforts
Depends
80%
Un known
On
Not – Buy
Sales Efforts
Decision
Branded
markets
Differentiation
Product Image
Whisper
Commodity
Low
Market
Outstanding
Niche
High
Success
Marketing
Innovation
Commodity Cost
Low
Marketing Leadership
SWISS SWATCH
High
Production
SEIKO
Low
Low cost
Volume
Production
Contd...
3. Will it sustain its strong share of profit against
emerging competition?
•G
ti
lla
ua
t a
Ins
ra
• Basi
nt
ee
•Payback
c
•Re
•Styling
Approach
•Sensitivity
•System
Core •Package
sp o
Benefit
ns
•Brand
iv
•Operational
e
name
ness
•N •Quality efficiency ing
n
fa am
m e rai
e • T
an •Consultancy
d
•Maintenance
•Credibility
•Reliability
In a Project Sales
80% of price
20% of price
The essence Of marketing
Customer Wants Marketing MIX Variables
Functional Product
Value Price
TMS DA
Availability Distribution
Service Servicing
• CP,PG,LEVER
• STRIPED-Beecham andcp,pg,lever
• Smoker’s TP---------- • Beecham beecham
• Topol topol
Identifying competitors---
• P&G with several versions of Crest & Gleam and
CP with Colgate occupy 9 of the segments
• Lever Bros with Aim occupy 3
segments,Beecham one(AquaFresh) and Topol
two.
• If Topol wants to enter other seg bments it must
estimate the market size of each segment,the
shares of current competitors,and their current
capabilities,objectives and strategies.
• Each product/Markt segment poses different
competitive problems and opportunities.
2.Determine competitors’ objectives
• What drives each competitor’s behaviour?
A,short term vs long term profits? B,satisfactory
profits or maximise profits?
• C what goals beyond profits?
• Know relative impotance of each competitor for
a,current profitability,b.MS growth c.cash
flow,d.tech leadership.f.service leadership and
other goals.
• Judge competitive actions-Likely to pursue Low-
cost production strategy?or Ad promotion
strategy?
3.Identify competitors’ sytrategies
• Strategic group-A group of firms in an industry following
same or similar strategy.Ex.GE,Whirlpool,Maytag in
home appliances industry form a strategic group offering
a full line of medium price appliances plus good sevices.
• Sub-Zero and Kitchen Aid belong to a different group-
offering a narrow line of higher quality at a higher
price.but with a higher level service.
• If a Co enters one of the groups, it becomes a member
of others key competitors,
• It can succeed conly if it develops some strategic
advantage over these competitors.GE now offers a
premium quality premium price line to compete with
Kitche Aid and Sub-Zero.
Look at all dimensions of
competitors’ strengths
• Know each competitors’
• Product quality
• Features & mix.
• Customer services
• Pricing policy,
• Distrbution coverage
• Sales force strategy,
• Ad &sales promo programs.Also study each
competitor’s
R&D,Manufacturing,Purchasing,Financial,Manpo
wer & other strategies.
4 assessing competitors’strengths
& weaknesses
• What can our competitors do? Find their
goals,strategies,& performance over last few
years
• Collect info from secondary data,personal
experience & hearsay.
• Bench mark compare vyr Co’s products
,services and processes to those of competitors
or leading firms in other industries to find ways
to improve Q and performance.
• BENCH MARKING iS A POWERFULTOOL FOR
INCREASING A CO’S COMPETITIVENESS.
5 estimating competitors’ reactions
• What will our competitors do? SWOT analysis can help
us know their recations or actions.
• Each has a philosophy,a culture,guiding principles and
beliefs
• Each competitor reacts differently
• Some don’t react quickly/strongly.Some react only to
price-cuts,others only to Ad promos!
• Some competitors don’t show any predictable reaction
pattern.
• P&G is a fierce reactor.No new competitor wd like to
fight directly with P&G,who doesn’t let a new comer into
the detergent mrkt.
6,selecting competitors to attack
and avoid.(A).Strong or weak
(B)Close or distant competitors
• 1.Strong or weak.Assess strength by “customer
value analysis”-what benefits target customers
value and how they rate the relative valueof
various competitors ‘offers.
• The key to gaining competitive adv is to take
each customer segment and examine how the
the Co’s offer compares with that of its major
competitor.If Co’s offer exceeds that of major
competitor,on all key attributes,Co can charge
higher prices and earn higher profits or charge
same prices and get higher share,
2.Close or distant competitors
• Most want to compete with competitors who
resemble them most.Eg.Chevrolet competes
more with Ford than Jaguar
• A Co may also want to avoid trying to destroy a
close competitor.Eg. Bausch7 Lomb attacked
othersoft lens manufacturers but these were
forced to sell out to larger ones such as Revlon
& Johnson& Johnson.B&L now faced larger
competitors like J&J and faced the
consequences.
Hypothetical market structure
• Mrkt leader-40%
• Challenger-30%
• Follower-20%
• Nicher-10%
• MARKET LEADER STRATEGIES
• Competitors focus on the leader as a Co to
challenge,imitate or avoid.
• Leaders keep
• A constant watch
Leaders’ strategies
• A product innovation may come along and hurt the
leader .Ex.Tylenol’s non-aspirin pain killer took the lead
from baeyer”s aspirin .
• The leading firm might grow fat & slow ,losing against
new & peppier rivals.Xerox’s share came down from
80% to 35%,when Japanese producers challenged with
cheaper & more reliable copiers.
• SOME BEST KNOWN LEADERS ARE
• GM in autos,Kodak in photography,IBM in
computers,COCA Cola in soft drinks,WaLL MART in
retailing,Mc Donald’s in fast food,And Gillette in razors
and blades.
3 actions for leader to remain no 1-
• 1.Expand total market
• 2.Protect MS thro defensive and offensive actions
• 3.Expand MS further even if mrkt size remains same or even
declines.
• 1.EXPANDING THE TOTAL MARKET
• A.Find new users.Some customers are still unaware and some
resist on price or features.Ex Revlon’s perfume.Opened virgin mrkt
by convincing women who don’t use perfumes, and also looked at
other demographics by producing cologne for men,and
geographically by selling perfumes in other countries.
• Johnson’s baby shampoo Ad campaign aimed at adults and it soon
became a leading brand total shampoo market.
Leader’s actions---
• B.Find new uses.Eg.Dupont’s Nylon
• Fiber for parachutes
• Womens’ stockings
• Major matl in shirts/blouses
• Automobile tyres
• Upholstery and carpeting
• ARM&HAMMER baking soda as refrigerator
deodorant-by heavily advertising to put an open
box of baking soda in Fridge,
Leader’s 3 actions
• C.more usage;Convince people to use
more often or more per
occasion.Eg.Colgate tooth paste.Head &
Shoulders shampoo;more effective with 2
applications instead of one per shampoo.