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Unit I:

Introduction to Marketing: Nature, Scope


and Importance of Marketing, Basic
concepts, Marketing Environment,
Market Segmentation, Targeting and
Positioning
Introduction
Marketing deals with identifying and meeting
human and social needs. One of the shortest
definitions of marketing is meeting needs
profitably.

What is marketed?
i. Goods: Goods constitute the bulk production and
marketing efforts. Companies market cars, trucks,
television sets, machine tools, watches, cosmetics
etc.Service can also be associated
ii. Services: Services include the work of airlines, hotels,
maintenance and repair people, bakers, lawyers, doctors
variable mix of goods and services. At fast food restaurant,
for example consumes both a product and a service.
iii. Events: Marketers promote time based events, such as
major trade shows, artistic performances, Global sporting
events such as the Olympics and the World Cup are
promoted.
iv. Experiences: An amusement park or a water park represents
experiential marketing: customers by taking rides in the
amusement park or the water park enjoy the thrill provided by
these experiences.

v. Persons: Celebrity marketing is a major business. Artists, musicains
people all get help from celebrity marketers. Celebrities such
as Amitabh Bachchan, Sachin Tendulkar, Shah Rukh Khan,
Aishwarya Rai are big brand themselves.

vi. Places: Cities, states, regions, and whole nations compete actively
to software industry Bangalore is positioned as the silicon valley
of India. In tourism industry, Karnataka is marketed as One state
many words. The Government of India is marketing India as a
tourist destination through the Incrediable india campaign.
.
Vii.Organizations: Organizations actively work to
build a strong, favorable, and unique image in the
minds of their target publics. Universities,
museums, performing arts organizations, and
nonprofits all use marketing to boost and to
compete for audiences and funds.

viii. Property: Properties are intangible rights of
ownership of either real property (real estate) or
financial property (stocks and bonds). Properties
are brought and sold exchanges require
marketing. Investment Companies and banks
market securities to both institutional and
individual investors.
ix.Information: Information is essentially what
books, schools, and universities produce,
market, and distribute at a price to parents,
students and communities.Eg: Travel guides,
Periodicals, newspapers etc.
x. Idea: Every market includes a basic idea.
Products and services are platforms for
delivering some idea or benefit.Eg: ideas
creating awareness about AIDS, discouraging
smoking and so on.

What is market?
A market is a set of all actual and potential
buyers of product or services.
In other words, market is a situation where
sellers and actual and perspective buyers
exist.
Types of market
1.Consumer Markets: When an individual buys product for
personal consumption or for gifting to another individual
for his personal consumption is called as Consumer market.
Eg: Cosmetics, shoes etc.
2. Business Markets: When buyer buys the product for a
resell or to manufacture a product for a sale. It is called as
Business market. Eg: Furniture, PC etc.
3. Global Market: When companies market the product
across the countries, across the continent by altering the
product as per the requirement of that specific market is
known as Global market. The decision is made in the face of
different requirements for buying ,negotiating, owing;
different culture, language and legal and political system
currencies that might fluctuate in value.

4. Non-profit and Governmental Markets:
organizations such as churches, universities,
charitable institutions and government
organization need to price carefully.
5. B-B Market Business to Business Market
6. B-C Market Business to Consumer Market
7. C-C Market Consumer to Consumer Market
.

Defining marketing
Product oriented definition: the performance
of business activities that direct the flow of
goods and services through producers to
consumers.
Customer oriented definition: marketing is
the business process by which products are
matched with the markets and through which
transfers of ownership are effected.
System oriented : marketing is a total system
of interacting business activities designed to
plan, price, promote and distribute wants
satisfying products to target markets to
achieve organizational objectives.

Kotlers definition
Marketing is defined as a social and
managerial process by which individuals and
group obtain what they need and want
through creating offering and exchanging
products of value with others.
Marketing management "is a science and art
of choosing target market and getting growing
and keeping customers by creating, delivering
and communicating customer superior value.
According to AMA, Marketing is a function
and set of processes for creating,
communicating and delivering a value to
customer and managing customer
relationship in the way that benefits
organization as well as consumer.
Marketing system
Core Marketing Concepts
Target Markets and Segmentation: A
marketer can rarely satisfy everyone in a
market. Not everyone likes the same soft
drink, automobile, college, and movie.
Therefore, marketers start with market
segmentation. They identify and profile
distinct groups of buyers who might prefer or
require varying products and marketing mixes
Marketers and Prospects: A marketer is someone who is
seeking a response (attention, a purchase, a vote, a
donation) from another party, called the prospect. If two
parties are seeking to sell something to each other, both
are marketers.

Needs, Wants, and Demands: Needs describe basic human
requirements such as food, air, water, clothing, and shelter.
People also have strong needs for recreation, education,
and entertainment. These needs become wants when they
are directed to specific objects that might satisfy the need.
A person needs food but wants a burger, French fries, and a
soft drink. A person needs food but wants a mango, rice,
lentils, and beans. Clearly, wants are shaped by ones
society. Demands are wants for specific products backed by
an ability to pay. Many people want a Mercedes; only a few
are able and willing to buy one.
Product or Offering: A product is any offering
that can satisfy a need or want, such as one of
the 10 basic offerings of goods, services,
experiences, events, persons, places,
properties, organizations, information, and
ideas. A brand is an offering from a known
source. A brand name such as McDonalds
carries many associations in the minds of
people: hamburgers, fun, children, fast food,
golden arches. These associations make up
the brand image.
Value and Satisfaction:value is a ratio
between what the customer gets and what he
gives. The customer gets benefits and assumes
costs,
as shown in this equation:
Value =benefits
costs

Exchange and Transactions:Exchange, the core of
marketing, involves obtaining a desired product from
someone by offering something in return. For exchange
potential to exist, five conditions must be satisfied:
1. There are at least two parties.
2. Each party has something that might be of value to
the other party.
3. Each party is capable of communication and delivery.
4. Each party is free to accept or reject the exchange
offer.
5. Each party believes it is appropriate or desirable to
deal with the other party.

Relationships and Networks: Relationship
marketing aims to build long-term mutually
satisfying relations with key partiescustomers,
suppliers, distributorsin order to earn and
retain their long-term preference and business.
The ultimate outcome of relationship marketing
is the building of a unique company asset called a
marketing network. A marketing network
consists of the company and its supporting
stakeholders (customers, employees, suppliers,
distributors, university scientists, and others) with
whom it has built mutually profitable business
relationships.
Marketing Channels:
Communication channels deliver messages to and
receive messages from target buyers.hey include
newspapers, magazines, radio, television, mail,
telephone, billboards, posters, and the Internet.
Distribution channels to display or deliver the
physical product or service(s) to the buyer or
user. There are physical distribution channels and
service distribution channels, which include
warehouses, transportation vehicles, and various
trade channels such as distributors, wholesalers,
and retailers.
Supply Chain: supply chain describes a longer
channel stretching from raw materials to
components to final products that are carried
to final buyers. For example, the supply chain
for womens purses starts with hides, tanning
operations, cutting operations,
manufacturing, and the marketing channels
that bring products to customers.
Competition: includes all of the actual and
potential rival offerings and substitutes that a
buyer might consider.
Marketing Environment: The task
environment includes the immediate actors
involved in producing, distributing, and
promoting the offering, including the
company, suppliers, distributors, dealers, and
the target customers.
broad environment consists of six components:
demographic environment, economic
environment, Natural environment,
technological environment, political-lgal
environment, and social-cultural environment.
Marketing Mix: is the set of marketing tools
that the firm uses to pursue its marketing
objectives in the target market.

McCain Foods was founded in 1957 in Canada by the McCain brothers
Harrison, Wallace, Robert and Andrew. McCain Foods is now the
largest chip producer in the world with a market share of almost
33% and more than 20,000 employees working in 57 locations
worldwide. Since 1968 McCain GB has been operating from its UK
base in Scarborough, North Yorkshire. McCain prides itself on the
quality and convenience of its product range and for over three
decades has been making healthier versions of favourite staple
foods. The McCain brothers had a simple philosophy 'Good ethics is
good business'. This lies behind the McCain brand message 'It's All
Good'. It is not just the food that is good. The philosophy also refers
to the way McCain works with its suppliers and builds its
relationship with its customers. McCain believes it is important to
take care of the environment, the community and its people. It
works with around 300 farmers in the UK, chosen for the quality of
their potato crop. McCain factories are located in key potato
growing areas, which help to reduce food miles.
explain 4 P in context of McCain and to what extent is product the
most important of the four Ps for McCain?
Nature of marketing
It is customer focused
It must deliver value
It is business
It is surrounded by customer needs
It is part of total environment
It affects company strategy
It a discipline
It creates mutually beneficial relationships
Functions of marketing
Functions of
research
Marketing research
Product planning and
development
Function of
exchange
Buying and
assembling
selling
Function of
physical treatment
Standardisation,gradi
ng and branding
Packaging
Storage
Transportation
Function facilitating
exchange
Salesmanship
Advertising
Pricing
Financing
insurance
Objectives of marketing management
To create customers for the business
To satisfy the needs of the customers
To determine marketing mix that will satisfy
the needs of the customer
To generate adequate profits for the business
To earn goodwill for the business
To raise standards of living of the people.
responsive marketing, anticipative marketing, and
creative marketing. A responsive marketer finds a
stated need and fills it, while an anticipative marketer
looks ahead to the needs that customers may have in
the near future. In contrast, a creative marketer
discovers and produces solutions that customers did
not ask for, but to which they enthusiastically
respond. Sony exemplifies a creative marketer
because it has introduced many successful new
products that customers never asked for or even
thought were possible: Walkmans, VCRs, and so on.
Sony goes beyond customer-led marketing
Distinction between marketing and
selling
Starting
point
Factory

Target market
Focus
Product
Customer
needs
Means
Selling and
promotion
Integrated
marketing

objective
Profit through
sales volume

Profit through
customer
satisfaction
Selling concept
Marketing
concept
Difference between marketing and
selling
Selling Marketing
Emphasizes on the product Emphasizes on customers want
Sales are the primary motive. Satisfaction of the customer is primary
concern
First production, then selling takes place
without knowing customers need
First the customers need is determined
and then production takes place
Internal company orientation External, market orientation
Companys need is the motive Customers need is the motive
Selling views the customer as the last link
in the business
Marketing vies the customer as the very
purpose of the business.
It is an activity that converts the good into
cash
It is a function that convert the consumer
needs into product
The seller determine what product is to
be offered
What should be offered as a product is
determined by the customer.
Marketing environment
It denotes all the external factors and forces
that affect a firms ability to develop and
maintain successful transaction and
relationship with the target market.
Marketing environment
Micro environment
Suppliers
Customer
Intermediaries
Competitors
General public
Macro environment
Demographic
Economic
Natural technological
Politico-legal
Socio cultural
Macro environment

1. Demographic Pattern and change in the society based on
age,sex,education,ethnic background etc.the
characteristics of generation and household
pattern
2. Economic Nature of economic system, role of
government policies.
3. Natural Environmental concern, natural resources,
effect of improper handling of natural
resources and environment
4. Technological Technology, information technology, invention
etc.
5. Political/legal Stability of government,laws,judiciary and
politics, consumer and environmental
protection
6. Social/cultural Changing role of persons/consumer,conduct of
business, marketers and social cultural
behaviour
Strategies to deal with marketing
environment
Anticipating and adapting: marketing manager
can anticipate changes in environmental
conditions and adopt appropriately .eg hotels and
restaurants in hill stations can anticipate the
tourist season.
Smoothing or levelling:This strategy aims at
smoothing the sales through out the year, for
example during the period of low demand an
organization may offer price reduction and during
peak periods it may charge premium rate.
Rationing :it leads to establishing a set of
priorities for using scarce resources such as
material or capital.
Contracting : there may be uncertainty over
the supply of working capital and material or
sale of finished product. The management
may enter into an agreement with commercial
banks for supply of working capital.
Coalescing: refers to merging or joining into a
venture with another firm. a coalition is
formed to achieve certain common objectives.
Procurement of key personnel: the marketing
organization can offer employment to
dynamic persons working in other
organization to increase its competitiveness.
Market segmentation
Market segmentation is the process of
dividing a potential market into distinct sub
markets of consumers with common needs
and characteristics.
Niche is a narrowly defined group of
customers that have a distinct and complex
set of needs
Benefits of market segmentation
Helps know company capabilities: by looking at a
particular segment company can carry SWOT
analysis
Provide opportunities to expand market: by
segmenting the market, a marketer is able to
create new markets for their product .
Helps create innovation: marketer get benefits in
focusing the relevant segment more closely and
look for changes in the market requirement.
Create gains to customers: segmentation result
into wars and the consumers gain in terms of
added quantity and variety.
Requisites of effective segmentation
Measurable and obtainable: the size ,profile and
other relevant characteristics of the segment
must be measurable and obtainable in terms of
data.
Substantial :the segment should be large enough
to be profitable .for consumer markets ,the small
segment might disproportionally increase the
cost and hence product might be priced too high.
Accessible: the segment must be accessible
through existing network of people at a cost that
is affordable.
Differentiable: the basis of segmentation
should be such that it leads to different
segment .
Actionable: the segments which a company
wishes to pursue must be actionable in the
sense that there should be sufficient finance,
personnel and capability to take them all.
General consideration: must have growth
potential,profitable,carries no unusual risk
and has competitors who do not fight directly
with the product.
Philosophies of market segmentation
Mass marketing :before the onset of the
marketing age ,there was wide-spread adoption
of mass marketing, mass
production,distribution,and promotion.
Product-variety marketing: once it is learnt that
the consumer would not accept standard
products, the marketer might try to provide
different sizes,colour,shapes,features and
qualities to attract them. The product variety
approach satisfies a customer more than
standardized one model product.
Target marketing: target marketing helps the marketer
to correctly identify the markets -the group of
customers for whom the product is designed.
Micro-marketing: it occurs when target market in
further bifurcated and the needs of the smaller
customer group are addressed on a local basis.
Customized marketing: the focus of the target
marketing is further shifting from local basis to
individual customer basis.
Personalized marketing: mass production with product
varieties ,and target marketing for segments, which are
further divided into customers on a local basis or on
individual customer needs, the focus of the company is
shifting more minutely.
Mass
marketing

Total market as one segment
Product-
variety
maeketing
Mass marketing with product variety
Target
marketing

Total market different segment

Micro
marketing

Serves one segment on local basis
Customized
marketing
Serves individual customer needs
Personalized
marketing
Serve the person customer needs
Bases of market segmentation
Geographic segmentation
Demographic segmentation
Psychographic segmentation
Behavioral segmentation

region
North
East
West
south
central
City size
Metropolitan cities
Small cities
Town
Density
of area
Urban
Semi urban
rural
Climate
Geographic
segmentation
Hot
Humid
Cold
Rainy
Demographic segmentation
age
Sex
Marital status
Income
Family size
Occupation
Family life style
Religion
Nationality

Psychographic
segmentation
Conservative,Liberal,Health and fitness
conscious, adventuresome, status seekers
Life style
Lower class, lower middle class, middle class,
rich class
Social class
Continental,mughai,chienese,indian,north
indian,south Indian
Cultural
Extrovert,introvert,aggressive,complainants
personality
Behavioural segmentation
Needs-
motivation
Shelter
Safety
Security
affection
Sense of self
worth
Perception
Low risk
Moderate risk
High risk
Learning
involvement
Low involvement
High
involvement
Attitude
Positive
Negative
neutral

Occasions
Regular
special
Benefits
Convenience
Prestige
Economy
Value for
money
Quality
services

Readiness
stage
Unaware
Aware
Informed
Interested
Desirous
Intending to
buy
enthusiastic
Steps in market segmentation
1. Identify the target market: The first and foremost step is to
identify the target market. The marketers must be very clear
about who all should be included in a common segment.
Make sure the individuals have something in common. A
male and a female cant be included in one segment as they
have different needs and expectations.
Maruti Suzuki has adopted a focused approach and wisely
created segments within a large market to promote their cars.
Lower Income Group - Maruti 800, Alto
Middle Income Group - Wagon R, Swift, Swift Dzire, Ritz
High Income Group - Maruti Suzuki Kizashi, Suzuki Grand
VitaraSuzuki Grand Vitara would obviously have no takers
amongst the lower income group.


2. Identify expectations of Target Audience
Once the target market is decided, it is essential to
find out the needs of the target audience. The product
must meet the expectations of the individuals. The
marketer must interact with the target audience to
know more about their interests and demands.
Kelloggs K special was launched specifically for the
individuals who wanted to cut down on their calorie
intake.
Marketing professionals or individuals exposed to sun
rays for a long duration need something which would
protect their skin from the harmful effects of sun rays.
Keeping this in mind, many organizations came with
the concept of sunscreen lotions and creams with a
sun protection factor especially for men.

3. Create Subgroups
The organizations should ensure their target
market is well defined. Create subgroups
within groups for effective results.
Cosmetics for females now come in various
categories.
Creams and Lotions for girls between 20-25 years
would focus more on fairness.
Creams and lotions for girls between 25 to 35
years promise to reduce the signs of ageing.

4. Review the needs of the target audience
It is essential for the marketer to review the
needs and preferences of individuals belonging to
each segment and sub-segment. The consumers
of a particular segment must respond to similar
fluctuations in the market and similar marketing
strategies.
5. Name your market Segment
Give an appropriate name to each segment. It
makes implementation of strategies easier.
A kids section can have various segments namely
new born, infants, toddlers and so on.

6. Marketing Strategies
Devise relevant strategies to promote brands amongst each
segment. Advertisements promoting female toiletries cant
afford to have a male model.
A model promoting a sunscreen lotion has to be shown
roaming or working in sun for the desired impact.
7. Review the behavior
Review the behavior of the target audience frequently. It is not
necessary individuals would have the same requirement
(demand) all through the year. Demands vary, perceptions
change and interests differ. A detailed study of the target
audience is essential.
8. Size of the Target Market
It is essential to know the target market size. Collect necessary
data for the same. It helps in sales planning and forecasting.


Market segment selection
Once the marketer has evaluated the different
segments for their size,growth,and
attractiveness ,and found that they are
compatible with the company objective and
resources, the obvious step is to go far
selecting the market segment .kotler has
suggested five patterns of target market
selection
Contd
Single segment concentration: the company may
select single segment eg sport car manufacturing
company. Through concentrated marketing the
firm gains a strong knowledge of segment needs
and achieve a strong market presence.
Selective specialization: the firm selects a number
of segment each objectively attractive and
appropriate eg television channels
Product specialization: here the firm specializes in
making a certain product that it sells to several
segments.eg microscopes universities, lab,
commercial labs etc.through such kind of
specialization the firm builds a strong reputation
in specific product area.
Market specialization: here the firm
concentrates on serving many needs of the
particular customer group.eg the firm sells
product only to university lab includes
microscope,burners,chemical flasks etc.
Full market coverage: here the firm attempts
to serve all customer group with all the
product they might need ,only a very large
firm can undertake a full market coverage.
Positioning
It is the act of designing the companys
offering and image to occupy a distinctive
place in the target markets mind.
Many marketers advocate promoting only one
central benefit referred to as Unique Selling
Proposition (USP).which includes best
quality", "best services", "lowest price"," best
value"," safest etc.
Positioning of product or service is nothing
but creating a image in consumers mind
.consumer generally tend to use images while
making a purchase ;they buy brand image
rather than actual product. Consumer
associate brand name with life style, social
position, professional roles and these
association combine to form an image or
position.
Qualities of a successful position
Relevance
Distinctiveness
Durability
Clarity
Courage
Positioning approaches
Positioning by product attributes
Positioning by price-quality
Positioning by product-user
Positioning by use of application
Product repositioning

Wahaha - Taking the fizz out of the giant cola brands!

When Zong Qinghou, a Chinese farm worker, started a company of beverages and ice creams with
two retired teachers in 1987, hardly anyone could have imagined that this company could give
sleepless nights to global giants such as Coca-Cola and Pepsi Co. But the new company, Wahaha, the
pride of many contemporary Chinese consumers, has managed to do just that.
Wahaha, one of the leading homegrown Chinese beverage brands, had revenues of US$1.37 billion
(11.4 billion yuan) and profits of US$162.7 million (1.34 billion yuan) in 2004.
Wahaha, which is meant to mimic the sound of a baby laughing, demonstrates clearly what great
brand stories are made of. The company started small, and in 1991, it merged with the state-owned
Hangzhou Canning Factory. The 1996 joint venture with the Danone Group gave the company foreign
investment to the extent of US$45 million. After dabbling in many product categories, it launched its
trademark brand the "Future Cola" in 1998 to compete against the global cola giants.
Today, Wahaha's product portfolio includes milk and yogurt drink, purified and mineral water,
carbonated soft drink, fruit and vegetable juice, sports drink, and iced tea including cognee (rice
porridge), canned food and health products.
Wahaha has been careful in its strategy to compete against the global cola and food giants. As the
fashion conscious Chinese consumers seem to prefer the global colas in the larger costal Chinese
cites, Wahaha has till now focused on rural and semi-urban Chinese areas. Further, the Wahaha
brand has generously used home grown celebrities for all its products. This is in line with its overall
strategy to position Wahaha as a patriotic company and to tap into the patriotic fervor of the Chinese
consumers.
By projecting Wahaha's products as China's own, the Wahaha brand has carved out a clear
positioning in the market against the global brands. But whether this strategy will work in the long
run is a million dollar question and will require constant efforts to balance the brand promise and its
careful delivery in a hostile and increasingly competitive Chinese market place

questions

What aspects of consumer behaviour have
been discussed in this case
Discuss the positioning strategy of wahaha