MARKETIN

G
MODULE-1 Overview of Marketing

OVERVIEW OVERVIEW OF MARKETING

OF
LEARNING OBJECTIVES
MARKETIN
After reading this module, students should:
G Know why marketing is important


1
 Know what is the scope of marketing
 Know some of the fundamental marketing concepts
111
Know how marketing management has changed
 Know what are the necessary tasks for successful marketing management
 Know scope and importance of marketing
 Know what are the recent trends of marketing
 Know what are the different levels of market segmentation
 Know how a company can divide a market into segments
 Know how a company should choose the most attractive target markets
 Know what marketing mixes are.

SUMMARY
From a managerial point of view, marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing customer relationships in ways that benefit the
organization and its stake holders. Marketing management is the art and science of choosing target markets and
getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.
Marketers are skilled at managing demand: They seek to influence the level, timing, and composition of demand.
Marketers are involved in marketing many types of entities: goods, services, events, experiences, persons,
places, properties, organizations, information, and ideas. They also operate in four different marketplaces:
consumer, business, global, and nonprofit.

Marketing is not done only by the marketing department. Marketing needs to affect every aspect of the customer
experience. To create a strong marketing organization, marketers must think like executives in other departments, and
executives in other departments must think more like marketers. Today’s marketplace is fundamentally different as a
result of major societal forces that have resulted in many new consumer and company capabilities. These forces have
created new opportunities and challenges and marketing management has changed significantly in recent years as
companies seek new ways to achieve marketing excellence. There are five competing concepts under which
organizations can choose to conduct their business: the production concept, the product concept, the selling
concept and the marketing concept.

Target marketing includes three activities: market segmentation, market targeting, and market positioning.
We can target markets at four levels: segments, niches, local areas, and individuals. Market segments are large,
identifiable groups within a market. A niche is a more narrowly defined group. Globalization and the Internet have
made niche marketing more feasible to many. Marketers appeal to local markets through grassroots marketing for
trading areas, neighborhoods, and even individual stores.

More companies now practice individual and mass customization. The future is likely to see more self-marketing, a
form of marketing in which individual consumers take the initiative in designing products and brands. There are two
bases for segmenting consumer markets: consumer characteristics and consumer responses. The major segmentation
variables for consumer markets are geographic, demographic, psychographic, and behavioral. Marketers use them
singly or in combination.

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Business marketers use all these variables along with operating variables, purchasing approaches, and situational
factors. To be useful, market segments must be measurable, substantial, accessible, differentiable, and actionable. A
firm has to evaluate the various segments and decide how many and which ones to target: a single segment,
several segments, a specific product, a specific market, or the full market. If it serves the full market, it must
choose between differentiated and undifferentiated marketing. Firms must also monitor segment relationships, and
seek economies of scope and the potential for marketing to super segments. Marketers must develop segment-by-
segment invasion plans and choose target markets in a socially responsible manner at all times.

The value delivery process involves choosing (or identifying), providing (or delivering), and communicating
superior value. The value chain is a tool for identifying key activities that create value and costs in a specific
business. Strong companies develop superior capabilities in managing core business processes such as new-
product realization, inventory management, and customer acquisition and retention. Managing these core
processes effectively means creating a marketing network in which the company works closely with all parties
in the production and distribution chain, from suppliers of raw materials to retail distributors. Companies no
longer compete—marketing networks do.

Target marketing includes three activities: market segmentation, market targeting, and market positioning.
We can target markets at four levels: segments, niches, local areas, and individuals. Market segments are large,
identifiable groups within a market. A niche is a more narrowly defined group. Globalization and the Internet have
made niche marketing more feasible to many. Marketers appeal to local markets through grassroots marketing for
trading areas, neighborhoods, and even individual stores. More companies now practice individual and mass
customization. The future is likely to see more self-marketing, a form of marketing in which individual consumers
take the initiative in designing products and brands.

There are two bases for segmenting consumer markets: consumer characteristics and consumer responses. The major
segmentation variables for consumer markets are geographic, demographic, psychographic, and behavioral.
Marketers use them singly or in combination. Business marketers use all these variables along with operating
variables, purchasing approaches, and situational factors. To be useful, market segments must be measurable,
substantial, accessible, differentiable, and actionable. A firm has to evaluate the various segments and decide how
many and which ones to target: a single segment, several segments, a specific product, a specific market, or the full
market. If it serves the full market, it must choose between differentiated and undifferentiated marketing. Firms must
also monitor segment relationships, and seek economies of scope and the potential for marketing to super segments.
Marketers must develop segment-by-segment invasion plans and choose target markets in a socially responsible
manner at all times.

Introduction- Market and Marketing

Who Markets?
Marketers and Prospects
A marketer is someone seeking a response (attention, purchase, vote, donation, etc.) from another party called the
prospect.
A) Marketers are responsible for stimulating demand for a company’s product. E.g just as production and logistics
professionals are responsible for supply management, marketers are responsible for demand management.
B) Marketing managers seek to influence the level, timing, and composition of demand to meet the organization’s
objectives. Eight demand states are possible:
1) Negative demand—consumers dislike the product and may even pay a price to avoid it.
2) Non-existent demand—consumers may be unaware or uninterested in the product.
3) Latent demand—consumers may share a strong need that cannot be satisfied by an existing product.
Marketers try to capture this demand and come out with newer and better products.

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4) Declining demand—consumers begin to buy the product less frequently or not at all.
5) Irregular demand—consumer purchases vary on a seasonal, monthly, daily, or even an hourly basis.
6) Full demand—consumers are adequately buying all product put into the marketplace.
7) Overfull demand—too many consumers would like to buy the product that can be satisfied.
8) Unwholesome demand—consumers may be attracted to products that have undesirable social consequences.
Markets
Economists describe a market as a collection of buyers and sellers who transact over a particular product or
product class.
Marketers use the term “market” to cover various groups of customers. The five basic markets are:
A) Resource Markets
B) Government Markets
C) Manufacturer Markets
D) Intermediary Markets
E) Consumer Markets

Structure of Flows in a Modern Exchange Economy

A) Sellers and buyers are connected by flows:
1) Seller sends goods, services, and communications to the market.
2) In return they receive money and information.
3) There is an exchange of money for goods and services.
4) There is an exchange of information.
Key Customer Markets
A) Consumer Markets - Consumer goods and services such as soft drinks and cosmetics spend a great deal of
time trying to establish a superior brand image.

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B) Business Markets - Companies selling business goods and services often face well-trained and well-informed
professional buyers who are skilled in evaluating competitive offerings.
C) Global Markets - Companies face challenges and decisions regarding which countries to enter, how to enter
the country, how to adapt their products/services to the country, and how to price their products.
D) Nonprofit and Governmental Markets - Companies selling to these markets have to price carefully because
these organizations have limited purchasing power like churches, universities, charitable organizations and
government agencies.
Marketplaces, Marketspaces, Metamarkets
A) The marketplace is physical, e.g shopping malls, roadside shops, central market place.
B) The marketspace is digital, online shopping e.g indiatimes shopping.com, mobilebazaar.com,
homeshop18.com, amazon.com, ebay.com etc.
C) The metamarket is a cluster of complementary products and services that are closely related in the consumer’s
mind but spread across a diverse set of industries. E.g automobile metamarket consist of automobile
manufacturers, new and used car dealers, financing companies, insurance companies, mechanics, spare parts
dealers, service shops, auto magazines, classified auto ads in newspapers, and auto sites on the internet.

Marketing in Practice
How is marketing done? Increasingly marketing is not done only by the marketing department. To create strong
marketing organizations, marketers must think like executives on other departments and other departments must think
like marketers.
Marketing planning process consists of analyzing marketing opportunities, selecting target markets, designing
marketing strategies, developing marketing programs, and managing the marketing effort.
There are five key functions for a CMO (chief marketing officer) in leading marketing within an organization
A) Strengthening the brands
B) Measuring marketing effectiveness
C) Driving new product development based on customer needs
D) Gathering meaningful customer insights
E) Utilizing new marketing technology

MODERN DEFINATION OF MARKETING

Marketing deals with identifying and meeting human and social needs. One of the shortest definitions of marketing is
“meeting needs profitably.”
A) The American Marketing Association offers the following formal definition: “Marketing is an organizational
function and a set of processes for creating, communicating, and delivering value to customers and for managing
customer relationships in ways that benefit the organization and its stakeholders”.
B) Marketing management is the art and science of choosing target markets and getting, keeping, and growing
customers through creating, delivering, and communicating superior customer value.
C) A social definition of marketing is that “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.”
What Is Marketed?
Marketing people are involved in marketing ten types of entities: goods, services, events, experiences, persons, places,
properties, organizations, information, and ideas.
1. Goods - Physical goods constitute the bulk of production and marketing efforts e.g automobiles, consumer
durable goods like television sets and refrigerator, industrial chemicals, machine tools, watches etc.
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2. Services - A growing portion of business activities are focused on the production of services e.g. services of
airlines, hotels, car rental firms, maintenance and repair people, software programmers and management
consultants.
3. Events - Marketers promote time-based events such as trade shows, artistic performances, and the Olympics.
4. Experiences - By orchestrating several services and goods, a firm can create and market experiences such as Walt
Disney World’s Magic Kingdom.
5. Persons - Celebrity marketing is a major business. E.g David Beckham, Oprah Winfrey.
6. Places - Cities, states, regions, and whole nations compete actively to attract tourists, factories, and new residents.
7. Properties - Are intangible rights of ownership of either real property (real estate) or financial property (stocks and
bonds).
8. Organizations - Actively work to build a strong, favorable, and unique image in the minds of their target publics.
9. Information - Can be produced and marketed as a product. Schools, universities, and others produce information
and then market it.
10. Ideas - Every market offering includes a basic idea. Products and services are platforms for delivering some idea
or benefit. Social marketers are busy promoting such ideas by creating awareness about AIDS, encourageing
family planning and discouraging smoking.
The concept also identifies the marketing variables – product, price, promotion and distribution – that
combine to provide customer satisfaction. In addition, it assumes that the organization begins by identifying and
analyzing the consumer segments that it will later satisfy through its production and marketing activities. The
concept’s emphasis on creating and maintaining relationships is consistent with the focus in business on long-term,
mutually satisfying sales, purchases and other interactions with customers and suppliers. Finally it recognizes that
marketing concepts and techniques apply to non-profit organizations as well as to profit-oriented businesses, to
product organization and to service organizations, to domestic and global organizations, as well as to organizations
targeting consumers and other businesses.
COMPANY ORIENTATION TOWARD THE MARKETPLACE
The competing concepts under which organizations have conducted marketing activities include; the production
concept, product concept, selling concept, marketing concept, and holistic marketing concept.
A) Production Concept - The production concept holds that consumers will prefer products that are widely available
and inexpensive.
B) Product Concept - The product concept holds that consumers will favor those products that offer the most quality,
performance, or innovative features.
C) Selling Concept - The selling concept holds that consumers and businesses, will ordinarily not buy enough of the
organization’s products, therefore, the organization must undertake aggressive selling and promotion effort.
D) Marketing Concept - The marketing concept holds that the key to achieving organizational goals consists of the
company being more effective than competitors in creating, delivering, and communicating superior customer
value to its chosen target markets.
• Reactive market orientation—understanding and meeting consumers’ expressed needs.
• Proactive marketing orientation—researching or imagining latent consumers’ needs through a “probe-
and-learn” process.
Companies that practice both reactive and proactive marketing orientation are implementing a total market
orientation.
E) Holistic Marketing Concept - Holistic marketing can be seen as the development, design, and implementation of
marketing programs, processes, and activities that recognizes the breath and interdependencies of their efforts.

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Holistic marketing recognizes that “everything matters” with marketing—the consumer, employees, other
companies, competition, as well as society as a whole.

CORE MARKETING CONCEPTS

Needs, Wants, and Demands

Needs (basic human requirements)
A) Stated needs
B) Real needs
C) Unstated needs
D) Delight needs
E) Secret needs
Demands (for specific products backed by the ability to pay)
The most basic concept underlying marketing is that of human needs. A need is a state of felt deprivation. It is a part
of the human makeup. Humans have many needs, viz., physical needs, social needs, spiritual needs and so on. Wants
are the form taken by needs as they are shaped by the one’s culture and personality. Wants are thus shaped by both the
internal and external factors. Wants are described in terms of objects that will satisfy needs. For example, thirst is a
need. To quench this thirst, a person may consider a number of options – drink water or a soft drink or a fruit juice.
These objects (which represent the different choices for a person to fulfill his/her need) comprise the potential want-
list. As people are exposed to more objects that arouse their interest and desire, marketers try to provide more choices,
that is, more want-satisfying products. People have almost unlimited wants but limited resources. Therefore, they
want to choose products that provide the most satisfaction for their money. When backed by buying power (ability), a
want becomes a demand.

Products
A product is anything that can be offered to a market to satisfy a need or want. People satisfy their needs and wants
with products. Though the word suggests a physical object, the concept of product is not limited to physical objects.
Marketers often use the expressions goods and services to distinguish between physical products and intangible ones.
These goods and services can represent cars, groceries, computers, places, persons and even ideas. Customers decide
which entertainers to watch on television, which places to visit for a holiday, which ideas to adopt for their problems
and so on. Thus the term ‘product’ covers physical goods, services and a variety of other vehicles that can satisfy
customers’ needs and wants. If at times the term ‘product’ does not seem to be appropriate, other terms such as market
offering, satisfier are used.

Value and Satisfaction

When the customers have so many choices to choose from to satisfy a particular need, how do they choose from
among these many products? They make their buying choices based on their perceptions of a product’s value. The
guiding concept is customer value. A customer will estimate the capacity of each product to satisfy his need. He/ she

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might rank the products from the most need-satisfying to the least need-satisfying. Of course, the ideal product is the
one which gives all the benefits at zero cost, but no such product exists. Still, the customer will value each existing
product according to how close it comes to his/her ideal product and end up choosing the product that gives the most
benefit for the rupee – the greatest value.
Value and Satisfaction
 Successful if it delivers value and satisfaction to the target buyer
 Value is a central marketing concept
 Satisfaction reflects a person’s judgment of a product’s perceived performance

Exchange, Transactions and Relationships

Marketing occurs when people decide to satisfy needs and wants through exchange. Exchange is the act of obtaining a
desired object from someone by offering something in return. Thought it is only one of the many ways people can
obtain a desired object, it allows a society to produce much more than it would with any alternative system. For an
exchange to take place, several conditions must be satisfied. Of course, at least two parties must participate, and each
must have something of value to the other. Each party also must want to deal with the other party and each must be
free to accept or reject the other’s offer. Finally, each party must be able to communicate and deliver. These
conditions simply make exchange possible. Whether the exchange actually takes 20 place depends on the parties’
coming to an agreement. If they agree, we must conclude that the act of exchange has left both of them better off or at
least not worse off. After all, each was free to reject or accept the offer. In this sense, exchange creates value just as
production creates value. It gives customers more consumption possibilities. A transaction is marketing’s unit of
measurement. It consists of a trade of values between two parties. A monetary transaction involves trading goods and
services in return for money whereas a barter transaction involves trading goods and services for other goods and
services. Transaction marketing is part of the larger idea of relationship marketing. Marketing is shifting from trying
to maximize the profit on each individual transaction to maximizing mutually beneficial relationships with consumers
and other parties. This is based on the assumption that if good relationships are built, profitable transactions will
simply follow.

Markets
The concept of transactions leads to the concept of a market. A market is the set of actual and potential buyers of a
product. It may exist in a physical environment as a marketplace or in a virtual environment (on the internet platform)
as a marketspace. Merchants and central marketplaces greatly reduce the total number of transactions needs to
accomplish a given volume of exchange. As economies grow, exchange becomes even more centralized, as seen in
the growth of huge companies. Large supermarkets now serve millions of people who formerly shopped in smaller
outlets.

Target markets, Positioning and Segmentation

A) Identify and profile distinct groups of buyers who might prefer or require varying products and services mixes by
examining
 Demographic information
 Psychographic information
 Behavioral information
B) Target market
C) Market offering

Offering and Brands

 Value proposition: a set of benefits they offer to customers to satisfy their needs
 Brand: is an offering from a known source

Marketing Channels
 Communication channels
 Distribution channels

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 Service channels

Supply Chain

Competition
 Marketing environment
 Task environment
 Broad environment:
i. Demographic
ii. Environment
iii. Economic
iv. Physical
v. Technological
vi. Political-Legal
vii. Social-cultural

NATURE, SCOPE AND IMPORTANCE OF MARKETING

The application, tracking and review of a business' marketing resources and activities. The scope of a business'
marketing management depends on the size of the business and the industry in which the business operates.
Effective marketing management will use a company's resources to increase its customer base, improve
customer opinions of the company's products and services, and increase the company's perceived value.
Financial success often depends on marketing ability. Many firms have created a Chief Marketing Officer (CMO) to
put marketing on an equal footing with other Chief Executives such as a CFO and CEO. Marketing is tricky and
making the right decisions is not always easy. Skillful marketing is a never-ending pursuit.

Nature of marketing
 Marketing is consumer oriented process.
 Market starts and ends with the customer (C2C)
 Marketing is the guiding element of business.
 Marketing is a system.
 Marketing is goal oriented process.
 Marketing is process of exchange.
 Marketing is a process.

Importance of Marketing
 Marketing helps in achieving the organizational objectives. Effective marketing is essential for survival and
growth of the organization.
 It helps the community to satisfy their economic and social needs and thus raise their standard of living.
 It helps in producing those products that are needed by the consumers and community at large.
 It helps the enterprise to adapt to the changing conditions and circumstances.
 It provides guidance to the organization on the innovations to be adopted, enabling it to face competition.
 It helps the enterprise in achieving the maximum efficiency, productivity and profitability with the minimum
effort and cost.
 It ensures the economic growth of the enterprise which results in growth and economic development of the
country.

FUNCTIONS OF MARKETING

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Marketing function Descr

A. Exchange functions. 1. Ensuri
Buying quanti
2. Selling Using
person

B. Physical distribution Movin

SELLING VS MARKETING

Point of difference Sel

functions conve
Starting point Fac
3. Transporting
The difference between selling and marketing can be best illustrated by this popular customer quote: ‘Don’t tell me
how good your product is, but tell me how good it will make me’.
Focus Exi
THE NEW MARKETING REALITIES

4. Storing
Major societal Forces affecting marketing:
Means
 Network information technology
Ware
Sel
 Globalization
 Deregulation

End
 Privatization
 Heightened Competition Pro
 Industry Convergence
 Consumer Resistance

C. Facilitating functions 5. Ensuri

 Retail Transformation
 Disintermediation

New Consumer Capabilities

Standardizing and grading

 A substantial increase in buying power
 Greater variety of goods and services quanti
 Great deal of information available

6. Financing
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Provid
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 Greater ease in interacting and placing orders

 Ability to compare notes on products and services
 Amplified voice to influence peer and public opinion

New Company Capabilities

 Internet
 Research
 Speed of internal information
 Speed of external information “buzz’
 Better target marketing
 Mobile marketing
 Differentiated goods
 Improved purchasing, recruiting, training, and communications
 Direct marketing is a sub-discipline and type of marketing. There are two main definitional characteristics
which distinguish it from other types of marketing. The first is that it attempts to send its messages directly
to consumers, without the use of intervening media. This involves commercial communication (direct mail,
e-mail, and telemarketing) with consumers or businesses, usually unsolicited. The second characteristic is
that it is focused on driving a specific "call-to-action." This aspect of direct marketing involves an emphasis
on trackable, measurable positive (but not negative) responses from consumers (known simply as
"response" in the industry) regardless of medium. If the advertisement asks the prospect to take a specific
action, for instance call a free phone number or visit a website, then the effort is considered to be direct
response advertising.
 Internet marketing also referred to as i-marketing, web marketing, online marketing, or eMarketing, is
the marketing of products or services over the Internet. The Internet has brought many unique benefits to
marketing, one of which being lower costs and greater capabilities for the distribution of information and
media to a global audience. The interactive nature of Internet marketing, both in terms of providing instant
response and eliciting responses, is a unique quality of the medium. Internet marketing is sometimes
considered to have a broader scope because it not only refers to digital media such as the Internet, e-mail,
and wireless media; however, Internet marketing also includes management of digital customer data and
electronic customer relationship management (ECRM) systems. Internet marketing ties together creative
and technical aspects of the Internet, including design, development, advertising, and sale.
 Market intelligence (MI) according to Cornish, “the process of acquiring and analyzing information in
order to understand the market (both existing and potential customers); to determine the current and future
needs and preferences, attitudes and behavior of the market; and to assess changes in the business
environment that may affect the size and nature of the market in the future.”
 Market research was an offshoot of the advertising boom of the 1950s in the USA. Advertisers began to
realize the significance of demographics revealed by Radio and television sponsorship, and to seek more
direct feedback about their markets. Market research is for discovering what people want, need, or believe.
It can also involve discovering how they act. Once that research is completed, it can be used to determine
how to market your product. Questionnaires and focus group discussion surveys are some of the instruments
for market research.

Marketing Framework
The basic elements of a marketing strategy consist of (1) the target market, and (2) the marketing mix variables of
product, price, place and promotion that combine to satisfy the needs of the target market. The outer circle in Figure
lists environmental characteristics that provide the framework within which marketing strategies are planned.

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Elements of a marketing strategy and its environmental framework

Marketing activities focus on the consumer. Therefore, a market-driven organization begins its overall strategy with a
detailed description of its target market: the group of people toward whom the firm decides to direct its marketing
efforts. After marketers select a target market, they direct their activities towards profitably satisfying that target
segment. Although they must manipulate many variables to reach this goal, marketing decision making can be
divided into four areas: product, price, place (distribution) and promotion (marketing communication). These 4 Ps of
marketing are referred to as the marketing mix. The 4 Ps blend to fit the needs and preferences of a specific target
market. These are the four variables that a marketer can use and control in different combinations to create value for
customers. Figure illustrates the focus of the marketing mix variables on the central choice of consumer or
organizational target markets. In addition, decisions about the 4 Ps are affected by the environmental factors in the
outer circle of that figure. Unlike the controllable marketing mix elements, the environmental variables frequently lie
outside the control of marketers.
The product strategy involves deciding what goods and services the firm should offer to a group of consumers and
also making decisions about customer service, brand name, packaging, labeling, product life cycles and new product
development. The pricing strategy deals with the methods of setting profitable and justifiable prices. Marketers
develop place (distribution) strategy to ensure that consumers find their products available in the proper quantities at
the right times and places. Place-related decisions involve the distribution functions and marketing intermediaries
(channel members). In the promotional strategy, marketers blend together the various elements of promotion to
communicate most effectively with their target market. Many firms use an approach called Integrate Marketing
Communications (IMC) to coordinate all promotional activities so that the consumer receives a unified, consistent and
effective message.
Marketers do not make decisions about target markets and marketing mix variables in a vacuum. They must take into
account the dynamic nature of the five marketing environmental dimensions as shown in Figure – competitive,
political- legal, economic, technological and social-cultural dimensions.
 Marketers compete for the same consumers. So the developments in the competitive environment will have lot of
repercussions.
 The political-legal environment includes the governing and regulatory bodies who impose guidelines to the
marketers. Adherence to the law of the land is an imperative for a marketer to be a good and responsible corporate
citizen.
 The economic environment dictates the mood in the target market who take decisions such as to buy or save, to
buy now or later.
 The technological environment can spell life or death for a marketer with break-through technologies. Marketers
often leap forward or get left behind owing to the changes in the technological environment. The social-cultural
environment offers cues for the marketers to ‘connect’ well with the target market.
 Failure on part of the marketer to understand the social-cultural environment will have serious consequences. A
marketers can not afford to rub a society/culture on the wrong side!

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Levels of Market Segmentation

The starting point for discussing segmentation is mass marketing. In mass marketing, the seller engages in the
mass production, mass distribution, and mass promotion of one product for all buyers.
A) The argument for mass marketing is that it creates the largest potential market, which leads, to the
lowest costs that in turn can lead to lower prices or higher margins.

Segment Marketing
The market place is heterogeneous with differing wants and varying purchase power. The heterogeneous
marketplace can be divided into many homogeneous customer segments along several segmentation variable.
The division of the total market into smaller relatively homogeneous groups is called market
segmentation. Products seldom succeed by appealing to everybody. The reasons are simple: not every customer
is profitable nor worth retaining, not every product appeals to every customer. Hence the organizations look for
a fit between their competencies and the segments’ profitability. The identified segments are then targeted with
clear marketing communications. Such communications are referred to as positioning the product or service in
the mind of the customer so as to occupy a unique place. This involves identifying different points of
differentiation and formulating a unique selling proposition (USP). In today’s marketplace, differentiation
holds the key to marketing success.

A market segment consists of a group of customers who share a similar set of needs and wants.
A) The marketer does not create the segments.
B) The marketer’s task is to identify the segments and decide which one(s) to target.
C) A flexible market offering consists of two parts:
1) A naked solution containing the product and service elements that all segment member’s value
2) Discretionary options that some segment member’s value.
D) Market segments can be defined in many different ways:
One way to carve up a market is to identify preference segments
Homogeneous preferences
Diffused preferences
Clustered preferences

Niche Marketing
A niche is a more narrowly defined customer group seeking a distinctive mix of benefits.
Marketers usually identify niches by dividing a segment into sub-segments.
A) Niche marketers presumably understand their customers’ needs so well that the customers willingly
pay a premium.
B) Globalization has facilitated niche marketing.
C) The low cost of setting up shop on the Internet has led to many small business start-ups aimed at
niches.

Local Marketing
Target marketing is leading to marketing programs tailored to the needs and wants of local customer groups.
A) Local marketing reflects a growing trend called grassroots marketing.
Philip Kotler mentioned five criteria for an effective segmentation which states that Segmentation should be: -
1. Measurable: - it should be possible to determine the values of the variable used for the segmentation.
2. Relevant: - it should justify the expected profits and the growth potential.
3. Accessible: - the target customers must be reachable and servable for the organization.
4. Distinguishable: - the target audiences must be diverse and able to show different reactions to different
marketing mix.
5. Feasible: - the firm must have an ability to draw an effective marketing program for its customers.

BASES FOR SEGMENTING CONSUMER MARKETS

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Two broad groups of variables are used to segment consumer markets.

A) Descriptive characteristics: geographic, demographics, and psycho-graphic.
B) Behavioral considerations: such as consumer responses to benefits, use occasions, or brands
Regardless of which type of segmentation scheme is employed, the key is that the marketing program can be
profitably adjusted to recognize customer differences.

Geographic Segmentation
Geographic segmentation calls for dividing the market into different geographical units.
More and more, regional marketing means marketing right down to a specific zip code.

Demographic Segmentation
In demographic segmentation, the market is divided into groups on the basis of variables such as age, family
size, family life cycle, gender, income, occupation, education, religion, race, generation, nationality, and social
class.
A) A) Consumer needs, wants, usage rates, and product and brand preferences are often associated with
demographic variables.
B) Demographic variables are easy to measure.

Age and Life-Cycle Stage

A) Consumer wants and abilities change with age.

Life Stage
A) Persons in the same part of the life cycle may differ in their life stage. Life stage defines a person’s
major concern. These life stages present opportunities for marketers who can help people cope with their
major concerns.
Gender
A) Men and women tend to have different attitudinal and behavioral orientations, based partly on genetic
makeup and partly on socialization.
B) Some traditionally more male-orientated markets, are beginning to recognize gender segmentation,
changing how they design and sell their products.
Income
A) Income segmentation is a long-standing practice in product and service categories.
B) However, income does not always predict the best customers for a given product.
C) Increasingly, companies are finding that their markets are “hourglass-shaped” as middle-market
Americans migrate toward more premium products.

Generation
A) Each generation is profoundly influenced by the times in which it grows up.
B) Demographers call these groups cohorts.
1) They share similar outlooks and values.
2) Marketers often advertise to a cohort group by using icons and images prominent in
their experiences.
C) Generational cohorts also influence each other.
D) Marketers often advertise to a cohort by using the icons and images prominent in its experiences.
Social Class
A) Social class has a strong influence on preferences for consumers.
B) Many companies design products and services for specific social classes.
Psychographic Segmentation

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A) Psychographics is the science of using psychology and demographics to better understand

consumers.
B) In psychographic segmentation, buyers are divided into different groups on the basis of lifestyle
or personality or values.
C) One of the most popular commercially available classification systems is SRI Consulting
Business Intelligence’s VALS framework.
1) The major tendencies of the four groups with high resources are:
a. Innovators
b. Thinkers
c. Achievers
d. Experiencers

2) The major tendencies of the four groups with lower resources are:
a. Believers
b. Strivers
c. Makers
d. Survivors

Behavioral Segmentation
Many marketers believe behavioral variables are the best starting points for constructing market segments:
)A Occasions: can be defined in terms of the time of day, week, month, year, or other well-defined
temporal aspects of a consumer’s life.
)B Benefits: Not everyone who buys a product wants the same benefits from it.
)C User Status: Every product has its nonusers, ex-users, potential users, first-time users, and
regular users.
)D Usage rate: Light, medium, and heavy product users.
)E Buyer-Readiness stage: unaware, aware, informed, interested, desire, and intend to buy.
)F Loyalty status:
)1 Hard-core loyals
)2 Split loyals
)3 Shifting loyals
)4 Switchers

BASIS FOR SEGMENTING BUSINESS MARKETS

Business markets can be segmented with some of the variables used in consumer market segmentation but
business marketers also use other variables. Within a given target market industry and customer size, a company
can segment further by purchase criteria. Business marketers generally identify segments through a sequential
process.

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BENEFITS OF MARKET SEGMENTATION

The following are the advantages of Market Segmentation for a firm:
• Helps in better understanding of the customers’ needs and wants.
• Better targeting and position of the product.
• Encourages two-way communication among the potential buyer and the organization.
• Maintaining effective relationship with the customers.
• Retaining the existing customers and attracting new ones.
• Improving service delivery standards.
• Reducing cost / expenses on various marketing activities and increases market share; resulting in higher
profits.

MARKET TARGETING
Once a firm has identified its market-segment opportunities, it must decide how many and which ones to target.
This has lead some researchers to advocate a needs-based market segmentation approach.
Effective Segmentation Criteria
To be useful, market segments must rate favorable on five key criteria:
)A Measurable
)B Substantial
)C Accessible
)D Differentiable
)E Actionable

Evaluating and Selecting the Market Segments

In evaluating different market segments, the firm must look at two factors: The segment’s overall attractiveness
and the company’s objectives and resources.
A) Single-segment concentration
1) Through concentrated marketing, the firm gains a strong knowledge of the segment’s needs and
achieves a strong market presence.
2) However, there are risks, a market segment can turn sour, or a competitor may invade
the segment.
3) For these reasons, many companies prefer to operate in more than one segment.
4) Companies can try to operate in super-segments rather than in isolated segments.
a. A super-segment is a set of segments sharing some exploitable similarity.
B) Selective specialization
1) The firm selects a number of segments, each objectively attractive and appropriate.
2) This multi-segment strategy has the advantage of diversifying the firm’s risk.
C) Product specialization
1) The firm makes a certain product that it sells to several different market segments.
D) Market Specialization
1) The firm concentrates on serving many needs of a particular customer group.
E) Full market coverage
1) The firm attempts to serve all customer groups with all the products they might need.
2) In undifferentiated marketing, the firm ignores segment differences and goes after the whole market
with one offer.
3) In differentiated marketing, the firm operates in several market segments and designs different
products for each segment.
F) Differentiated Marketing Costs
Differentiated marketing typically creates more total sales than undifferentiated marketing but also increases
the cost of doing business.

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Additional Considerations
Three other considerations must be taken into account in evaluating and selecting segments: segment-by-
segment invasion plans, updating segmentation schemes, and ethical choice of market targets.
A) Segment-by-segment invasion plans
1) A company would be wise to enter one segment at a time.
2) A company’s invasion plans can be thwarted when it confronts blocked markets.
3) The problem of entering blocked markets calls for a megamarketing approach.
4) Megamarketing is the strategic coordination of economic, psychological, political, and public-
relations skills, to gain the cooperation of a number of parties in order to enter or operate in a given
market.
5) Once in, a multinational must be on its best behavior. This calls for well-thought-out civic positioning.

Ethical Choice of Market Targets

Market targeting generates public controversy. The public is concerned when marketers take unfair advantage
of vulnerable groups or promote potentially harmful products.

MARKET TARGETING
Target market selection is the next logical step following segmentation. Once the market-segment opportunities
have been identified, the organization got to decide how many and which ones to target. Lot of marketing effort
is dedicated to developing strategies that will best match the firm’s product offerings to the needs of particular
target segments. The firm should look for a match between the value requirements of each segment and its
distinctive capabilities. Marketers have identified four basic approaches to do this:

1. Undifferentiated Marketing
A firm may produce only one product or product line and offer it to all customers with a single marketing mix.
Such a firm is said to practice undifferentiated marketing, also called mass marketing. It used to be much more
common in the past than it is today. A common example is the case of Model T built by Henry Ford and sold
for one price to everyone who wanted to buy. He agreed to paint his cars any colour that consumers wanted, ‘as
long as it is black’. While undifferentiated marketing is efficient from a production viewpoint (offering the
benefits of economies of scale), it also brings in inherent dangers. A firm that attempts to satisfy everyone in the
market with one standard product may suffer if competitors offer specialized units to smaller segments of the
total market and better satisfy individual segments.

2. Differentiated Marketing
Firms that promote numerous products with different marketing mixes designed to satisfy smaller segments are
said to practice differentiated marketing. It is still aimed at satisfying a large part of the total market. Instead of
marketing one product with a single marketing program, the firm markets a number of products designed to
appeal to individual parts of the total market. By providing increased satisfaction for each of many target
markets, a company can produce more sales by following a differentiated marketing approach. In general, it
also raises production, inventory and promotional costs. Despite higher marketing costs, a company may be
forced to practice differentiated marketing in order to remain competitive.

3. Concentrated Marketing
Rather than trying to market its products separately to several segments, a firm may opt for a concentrated
marketing approach. With concentrated marketing (also known as niche marketing), a firm focuses its efforts on
profitably satisfying only one market segment. It may be a small segment, but a profitable segment. This
approach can appeal to a small firm that lacks the financial resources of its competitors and to a company that
offers highly specialized good and services. Along with its benefits, concentrated marketing has its dangers.
Since this approach ties a firm’s growth to a particular segment, changes in the size of that segment or in
customer buying patterns may result in severe financial problems. Sales may also drop if new competitors
appeal successfully to the same segment. Niche marketing leaves the fortunes of a firm to depend on one small
target segment.
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4. Micro Marketing
This approach is still more narrowly focused than concentrated marketing. Micro marketing involves targeting
potential customers at a very basic level, such as by the postal code, specific occupation or lifestyle. Ultimately,
micromarketing may even target individuals themselves. It is referred to as marketing to segments of one. The
internet allows marketers to boost the effectiveness of micromarketing. With the ability to customize
(individualization attempts by the firm) and to personalize (individualization attempts by the customer), the
internet offers the benefit of mass customization – by reaching the mass market with individualized offers for
the customers.

POSITIONING
Having chosen an approach for reaching the firm’s target segment, marketers must then decide how best to
position the product in the market. The concept of positioning seeks to place a product in a certain ‘position’ in
the minds of the prospective buyers. Positioning is the act of designing the company’s offer so that it occupies a
distinct and valued place in the target customers’ minds. In a world that is getting more and more homogenized
differentiation and positioning hold the key to marketing success!
Positioning is not what you do to your product, but what you do to the mind of your customer. Every product
must have a positioning statement. A general form of such a statement is given below:
Product X is positioned as offering (benefit) to (target market) with the competitive advantage of (competitive
advantage) based on (basis for competitive advantage). For example, the positioning statement of toothpaste X
may read as follows:
Toothpaste X is positioned as offering to kids a toothpaste made especially for those kids who don’t like to
brush with the competitive advantage of a mild fruit taste and lower foaming.

Positioning can be done along different possibilities. Attribute positioning is when the positioning is based on
some attribute of the product. Benefit positioning is when a derived benefit is highlighted as the unique selling
propositioning. Competitor positioning is when a comparison is drawn with the competitor and a differentiation
from the competitor is emphasized. Product category positioning is when a product is positioned to belong to a
particular category and not another category which probably is crowded. Quality/price positioning is when the
product is positioned as the best value for money. For example, a Pizza may be positioned on its taste or it’s
natural contents or as an easy meal or with a thicker topping or as the lowest priced offering the best value for
money. Each one of them offers a distinct positioning possibility for a pizza. In the positioning decision, caution
must be taken to avoid certain positioning errors: Underpositioning is done when a unique, but not so important
attribute is highlighted. As a result, the customer does not see any value in such a position. Overpositioning is
done when the product performance does not justify the tall claims of positioning. Confused positioning is when
the customer fails to categorize the product correctly and the product ends up being perceived differently from
what was intended.

Positioning = Differentiation + Segmentation

Doubtful positioning is when the customer finds it difficult to believe the positioning claims. Positioning map is
a valuable tool to help marketers position products by graphically illustrating consumers’ perceptions of
competing products within an industry. For instance, a positioning map might present two different
characteristics, price and quality, and show how consumers view a product and its major competitors based on
these traits. Marketers can create a competitive positioning map from information solicited from consumers or
from their accumulated knowledge about a market.

DEVELOPING AND COMMUNICATING A POSITIONING STRATEGY

All marketing strategy is built on STP—Segmentation, Targeting, and Positioning. A company discovers
different needs and groups in the marketplace, targets those needs and groups that it can satisfy in a superior
way, and then positions its offering so that the target market recognizes the company’s distinctive offering and
image.
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A) If a company does an excellent job of positioning, then it can work out the rest of its marketing planning and
differentiation from its positioning strategy.
B) Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the mind
of the target market.
1) The goal is to locate the brand in the minds of consumers to maximize the
potential benefit to the firm.
2) The result of positioning is the successful creation of a customer-focused value
proposition, a cogent reason why the target market should buy the product.
3) Positioning requires that similarities and differences between brands be defined
and communicated.
4) Deciding on positioning requires determining a frame of reference by identifying
target markets and competition and identifying the ideal points-of-parity and points-of-difference brand
associations.

MARKETING MIX
The most popular 4 Ps’ framework as suggested by McCarthy with the marketing mix variables- products, place,
promotion and price had origination from the study of the manufacturers – i.e. the organization engaged in production
and marketing of goods – it is more oriented to deal with goods marketing situations. However service characteristics
are radically different fro goods; and so are the challenges in their marketing. It is wrong to imply that services are just
like products except for intangibility. But such wax-like logic as “apples are just like oranges, except for their apple
ness’’ does not stand the heat of nuts-and-bolts. Marketing Product / service characteristics and add new dimensions
to a marketing situation that is faced by the service manager. Given the product / service characteristics and activities
in product/service firms, eight Ps’ framework for services has been proposed. For the services, the additional
prescribed Ps given below refer to activities that are service marketing mix can be summarized as follows:
Product - service core, levels, additional services, branding.
Price - price, discounts, terms of payment.
Place - location, channels of distribution, coverage.
Promotion - Advertising, sales promotion, personal selling and publicity.

Product: The product, service, or program includes both tangible and intangible elements. The tangible, of course,
are those things that the customer can see, touch, feel, taste, or smell. The intangible include such things as the image
of the offering ... which includes the image of the organization making the offering, the psychological aspects of
pricing (high price to many customers is equated with high quality - and vice versa).
Price: The price is what the customer pays. It includes direct and indirect costs as well as opportunity costs. The
benefits of the product have to be great enough to warrant the price. Price includes all costs associated with the
product, service, or program.
Place: The place is where the customer receives the product, service, or program. The place of delivery, including all
of its resources, is part of what the consumer buys. A place that meets his or her needs better may be worth more. The
place may be a park, a visitor center in the park, or an interpretive exhibit along a trail. In setting its strategy, the
organization must determine how much the target market is willing to pay for atmosphere and physical resources of
place.
Promotion:Promotion includes all forms of communication you use to communicate the benefits of your offering to
the target market(s). The objective is to persuade the customer in such a way that he or she recognizes that your
offering is uniquely qualified to meet his or her needs. The term promotion mix is commonly used to refer to the types

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of communication that are available: advertising, public relations, personal selling, publicity, and sales promotion.
Some authors include direct marketing. Word of mouth, though seldom discussed, is powerful promotion.

Elements of the Marketing

Mix Sub-El
Produc
Produc
Produc
Packag
Product Breadth
Level a
Produc
New pr
Produc
ADDITIONAL 4 Ps WERE ADDED FOR MARKETING SERVICES. THEY ARE:

Manufa
People - customer-provider relationship, training, culture, skills, and attitudes.
Physical- ambience, appearance, equipment, machines Evidence – Buildings, physical facilities.

prices
Process – Activity sequence, quality management, customer participation and delivery process
Services Marketing and the Extended Marketing Mix (7P's).
A service is the action of doing something for someone or something. It is largely intangible (i.e. not material). A

Terms a
product is tangible (i.e. material) since you can touch it and own it. A service tends to be an experience that is
consumed at the point where it is purchased, and cannot be owned since is quickly perishes. A person could go to a
café one day and have excellent service, and then return the next day and have a poor experience.

Price Bidding
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Physical Evidence - Physical Evidence is the material part of a service. Strictly speaking there are no physical
attributes to a service, so a consumer tends to rely on material cues. There are many examples of physical evidence,
including some of the following: Physical evidence is the material part of a service. Strictly speaking there are no
physical attributes to a service, so a consumer tends to rely on material cues. There are many examples of physical
evidence, including some of the following:
• Packaging.
• Internet/web pages.
• Paperwork (such as invoices, tickets and despatch notes).
• Brochures.
• Furnishings.
• Signage (such as those on aircraft and vehicles).
• Uniforms.
• Business cards.
• The building itself (such as prestigious offices or scenic headquarters).

People - People are the most important element of any service or experience. Services tend to be produced and
consumed at the same moment, and aspects of the customer experience are altered to meet the 'individual needs' of the
person consuming it. Most of us can think of a situation where the personal service offered by individuals has made or
tainted a tour, vacation or restaurant meal. Remember, people buy from people that they like, so the attitude, skills and
appearance of all staff need to be first class. Here are some ways in which people add value to an experience, as part
of the marketing mix - training, personal selling and customer service.
• Training - All customer facing personnel need to be trained and developed to maintain a high quality of personal
service. Training should begin as soon as the individual starts working for an organization during an induction.
The induction will involve the person in the organization's culture for the first time, as well as briefing him or her
on day-to-day policies and procedures. At this very early stage the training needs of the individual are identified.
A training and development plan is constructed for the individual which sets out personal goals that can be linked
into future appraisals. In practice most training is either 'on-the-job' or 'off-the-job.' On-the-job training involves
training whilst the job is being performed e.g. training of bar staff. Off-the-job training sees learning taking place
at a college, training centre or conference facility. Attention needs to be paid to Continuing Professional
Development (CPD) where employees see their professional learning as a lifelong process of training and
development.
• Personal Selling - There are different kinds of salesperson. There is the product delivery salesperson. His or her
main task is to deliver the product, and selling is of less importance e.g. fast food, or mail. The second type is the
order taker, and these may be either 'internal' or 'external.' The internal sales person would take an order by
telephone, e-mail or over a counter. The external sales person would be working in the field. In both cases little
selling is done. The next sort of sales person is the missionary. Here, as with those missionaries that promote faith,
the salesperson builds goodwill with customers with the longer-term aim of generating orders. Again, actually
closing the sale is not of great importance at this early stage. The forth type is the technical salesperson, e.g. a
technical sales engineer. Their in-depth knowledge supports them as they advise customers on the best purchase
for their needs. Finally, there are creative sellers. Creative sellers work to persuade buyers to give them an order.
This is tough selling, and tends to offer the biggest incentives. The skill is identifying the needs of a customer and
persuading them that they need to satisfy their previously unidentified need by giving an order.
• Customer Service - Many products, services and experiences are supported by customer services teams.
Customer services provided expertise (e.g. on the selection of financial services), technical support (e.g. offering
advice on IT and software) and coordinate the customer interface (e.g. controlling service engineers, or
communicating with a salesman). The disposition and attitude of such people is vitally important to a company.
The way in which a complaint is handled can mean the difference between retaining or losing a customer, or
improving or ruining a company's reputation. Today, customer service can be face-to-face, over the telephone or

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using the Internet. People tend to buy from people that they like, and so effective customer service is vital.
Customer services can add value by offering customers technical support and expertise and advice.
Process - Process is another element of the extended marketing mix, or 7P's.There are a number of perceptions of the
concept of process within the business and marketing literature. Some see processes as a means to achieve an
outcome, for example - to achieve a 30% market share a company implements a marketing planning process. Another
view is that marketing has a number of processes that integrate together to create an overall marketing process, for
example - telemarketing and Internet marketing can be integrated. A further view is that marketing processes are used
to control the marketing mix, i.e. processes that measure the achievement marketing objectives. All views are
understandable, but not particularly customer focused. For the purposes of the marketing mix, process is an element of
service that sees the customer experiencing an organisation's offering. It's best viewed as something that your
customer participates in at different points in time. Here are some examples to help your build a picture of marketing
process, from the customer's point of view. Going on a cruise - from the moment that you arrive at the dockside, you
are greeted; your baggage is taken to your room. You have two weeks of services from restaurants and evening
entertainment, to casinos and shopping. Finally, you arrive at your destination, and your baggage is delivered to you.
This is a highly focused marketing process. Processes essentially have inputs, throughputs and outputs (or
outcomes). Marketing adds value to each of the stages.

The marketing process model based on the publications of Philip Kotler. It consists of 5 steps, beginning with
the market & environment research. After fixing the targets and setting the strategies, they will be realized by
the marketing mix in step 4. The last step in the process is the marketing controlling.

REFERANCE:
 ‘Marketing management : A south Asian Perspective’ 13th ed. by Philip kotler, Kevin Lane Keller,
Abraham Kosley and Mithileshwar Jha. Pearson Education.
 http://en.wikipedia.org/wiki/Marketing_management
 http://www.marketingteacher.com

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