MARKETING MANAGEMENT

Dr Alok Kumar Rai

Associate Professor
FMS BHU
 Market: An arena of potential buyers.

It is the physical place where buyers and sellers gathered to buy and
sell goods. There are five types of markets:
Resource Market
Manufacturer market
Government market
Intermediary market
Customer market: There are following key customer markets:
Consumer Markets:
Business Markets:
Global Markets:
Non Profit and Governmental Markets:
 Demand is said to be a state when following three conditions are
fulfilled:
Desire to Buy
Ability to pay
Willingness to pay
 There are eight demand states in
the literature of marketing:
Negative Demand: Customer dislikes the products and may even pay a
price to avoid it.
Nonexistent Demand: Customers may be unaware or dislike the product.
As wellness magazines or clinic.
Latent Demand: Customers may share a strong need that cannot be
satisfied by an existing product. of a management institute that provides
you knowledge, skill and career.
Declining Demand: Scooters
Irregular Demand: Medicines, hospitals, Gold, Shares
Full Demand: Clothes, Other essential commodities
Over full Demand: More consumers would like to buy the product than
can be satisfied
Unwholesome Demand: Consumers may be attracted to products that
have undesirable social consequences. Whisky, Cigarette
 Marketing
Marketing is Creating and Satisfying Demand.

Marketing is Creating, Communicating and Delivering Value

Marketing is a societal process by which individuals and groups

obtain what they need and freely exchanging products and services
of value with others.
The marketing concept

Choosing and targeting appropriate customers

Positioning your offering
Interacting with those customers
Controlling the marketing effort
Continuity of performance
 Holistic Marketing

1. Segmentation Targeting Positioning

2. 4 Ps of Marketing
3. Customer Relationship Management
4. Integrated Marketing
 Holistic Marketing Orientation

The holistic Marketing Framework is designed to address three key

management questions:

Value Exploration: How can a company identify new value opportunities?

Developing such a strategy requires an understanding of the relationships
and interaction among three spaces:
The customers cognitive space

The companys competence space

The collaborators resource space

 Value Creation: How can a company efficiently create more
promising value opportunities?

Value Delivery: How can a company use its capabilities and

infrastructure to deliver the new value offerings more efficiently?

For, Company must become proficient at

o Customer Relationship Management,

o Internal Resource Management, and

o Business Partnership Management

The Marketing Environment
Important Principles:

SWOT analysis

PEST analysis

Five forces analysis

SWOT analysis

Strengths (internal)

Weaknesses (internal)

Opportunities (external)

Threats (external)
PEST analysis
Political factors:
Monopolies legislation
Environmental protection laws
Taxation policy
Employment laws
Government policy
Legislation
Economic factors:
Inflation
Employment
Disposable income
Business cycles
Energy availability and cost
Contd.......

Socio-cultural factors:
Demographics
Distribution of income
Social mobility
Lifestyle changes
Consumerism
Levels of education

Technological factors:
New discoveries and innovations
Speed of technology transfer
Rates of obsolescence
Information technology
 Five forces analysis
Potential
entrants

Threat of
entrants

Suppliers COMPETITIVE Buyers

RIVALRY
Bargaining Bargaining
power power

Threat of
substitutes

Substitutes
Source: Adapted from M. E. Porter,
Competitive Strategy, Free Press,
1980, p. 4.
 Five Forces Analysis: Key
Questions and Implications
What are the key forces at work in the competitive environment?
Are there underlying forces driving competitive forces?
Will competitive forces change?
What are the strengths and weaknesses of competitors in relation to
the competitive forces?
Can competitive strategy influence competitive forces (eg by building
barriers to entry or reducing competitive rivalry)?
 The STP Process

Segmentation is the process of classifying customers into groups which

share some common characteristic

Targeting involves the process of evaluating each segments

attractiveness and selecting one or more segments to enter

Positioning is arranging for a product to occupy a clear, distinctive and

desirable place relative to competing products in the mind of the
consumer
 Market Segmentation

Market segmentation is a process of dividing a heterogeneous market

into homogeneous sub units. Not all the 1.2 bn people of India would
look for the same feature and buy for same reasons.
 Need for segmentation

The competitive advantage of a firm lies in being everything to

a select few. To be everything to every one is a sure recipe for a
strategic failure.

Michael Porter
 Bases for Market Segmentation

Bases for Market segmentation can broadly be divided into three

major groups:

A) Customer based Segmentation

i) Geographical Location of Customers:
Rural, Semi Urban and Urban Customers, Tier 1, Tier 2 and Tier 3 cities,
Hilly and Plane regions,
The biggest role of this basis for segmentation is in planning distribution
decision.
ii) Psychographic Variables:
Customers differing attitude towards product, store, brand, promotion etc
leads to differing impact on purchase.
There are different categories
i) Innovator
ii) Thinker
iii) Achiever
iv) Experiencer
Example:
1. The Titan watch company, has three product range Timex and Titan
Quartz based on differing lifestyle.
2. Femina Magazine, earlier used to target more older, traditional middle
class women later shifted its focus to Woman of Substance
iii) Buyer Readiness:

There are different readiness stages of buyer:

a) Unaware buyer
b) Aware but not interested
c) Interested and desirous buyer
d) Positive buying
 B) Product Related Segmentation:
i) Product Use Situations: Same product may be used differently by
different consumers.
Example: Bicycle, Mobile Phone, Rasna

ii) Benefit segmentation: Here, the marketer identifies benefits that a

customer looks for when buying the product.
Example: Watches whether bought for office use, sports use, gift
use, status use, accessory use
iii) Consumption: Frequency of consumption is another factor used
for segmentation as Heavy, moderate or light user
Example: Cigarette, Mobile calls, Air travel

iv) Decision Criteria: There are following four parameter identified

a) Price
b) Perceived Quality
c) Service Offered by the firm
d) Technology
 C) Competition Based Segmentation:

Customer Loyalty is an important indicator in determining

segmentation
i) Hard Core Loyals: Same brand is used over and over again.
Newspaper reading, cigarette, tea drinking
ii) Soft-Core Loyals: Those use 2-3 brands. Largely prevalent in
toiletteries and low involvement purchases.
iii) Switchers: Those who do not stick to a brand.
 D) Demographic Factors:

There are certain other factors that act as basis for segmentation:
i) Income
ii) Occupation
iii) Gender
iv) Age and life cycle
v) Life stage
vi) Education
vii) Social Class
 Stages of Market Segmentation:

There are three important stages:

1. Survey Stage: The objective is to get an insight into customers
motivation, attitudes and behaviour. This is divided into two parts:
i) Focus group discussions
ii) In depth interviews
Based on the finding, a questionnaire is prepared to collect data on
securing relevant information.
2. Analysis Stage: Data obtained using factor analysis to identify
factors that differentiate customer groups. Cluster analysis is then
used to cluster customers into maximally different groups.

3. Profiling Stage: These clusters then are profiled in terms of

demographics, psychographics, media habits, consumption habits,
attitude and behaviour
 Effective Segmentation Criteria
Not all types of segments are useful. It is important to recognize that a
marketer needs to use variables to segment a market. Market
segments must rate favourably on five criteria:

i) Measurable

ii) Substantial

iii) Accessible

iv) Differentiable

v) Actionable
Essentials for Effective Segmentation

Measurable Size, purchasing power, profiles

of segments can be measured.

Accessible Segments can be effectively

reached and served.

Substantial Segments are large or profitable

enough to serve.

Differential Segments must respond

differently to different marketing
mix elements & programs.

Actionable Effective programs can be

designed to attract and serve
the segments.
 Levels of Market Segmentation
Mass Marketing
Same product to all consumers
(no segmentation)

Segment Marketing
Different products to one or more segments
(some segmentation)

Niche Marketing
Different products to subgroups within segments
(more segmentation)

Micromarketing
Products to suit the tastes of individuals and locations
(complete segmentation)

Local Marketing Individual Marketing

Tailoring brands/ promotions Tailoring products/ programs
to local customer groups to individual customers
 Market Targeting
After identifying segment, one or more segment is targeted.

Targeting involves the process of evaluating each segments

attractiveness and selecting one or more segments to enter
 Target Market
A market is a set of all actual and potential buyers

A target market is a group of people toward whom a firm markets its

goods, services, or ideas with a strategy designed to satisfy their
specific needs and preferences.

Any marketing strategy must include a detailed (specific)

description of this.
 Targeting
Company
Marketing Market
Mix

A. Undifferentiated Marketing
Company
Marketing Mix 1 Segment 1
Company
Segment 2
Marketing Mix 2
Company
Segment 3
Marketing Mix 3
B. Differentiated Marketing

Segment 1
Company
Marketing Segment 2
Mix
Segment 3

C. Concentrated Marketing
 Step 2. Market Targeting
Choosing a Market-Coverage Strategy

Company
Resources

Product
Variability

Products Life-Cycle
Stage

Market
Variability

Competitors
Marketing Strategies
 Evaluating and Selecting the Market Segments

1. Single Segment Concentration

2. Selective Specialisation

3. Market Specialisation

4. Full Market Coverage

 Discussion Question

How significant is the strategy of mass marketing in

Cell phone industry.
Market Positioning
What comes to your mind first when you think of
following products?
Amul Butter:
Airtel:
Hotel Taj:
Kingfisher Airlines:
Indian Cricket Team:
Mahatma Gandhi:
Mcdonalds:
Amitabh Bachchan:
 Positioning

Creating a unique space in the mind of consumer is positioning

Positioning is arranging for a product to occupy a clear, distinctive

and desirable place relative to competing products in the mind of the
consumer
 Market Positioning

6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s) Market
3. Develop Selection Criteria
Targeting

2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market
 Positioning for Competitive Advantage

Products Position - the way the product is defined by

consumers on important attributes - the place the product
occupies in consumers minds relative to competing
products.

Marketers must:
- Plan positions to give their products the greatest advantage in
selected target markets,
- Design marketing mixes to create these planned positions.
Positioning Strategies for Competitive Advantage:

Product Product
Class Attributes

Away from Benefits

Competitors G Offered
H
C

D
Against a E
B
Usage
Competitor F
Occasions

User Class
 Choosing and Implementing
a Positioning Strategy

Step 1: Identifying Possible Competitive Advantages: Competitive

Differentiation.

Step 2: Selecting the Right Competitive Advantage: Unique Selling

Proposition (USP).

Step 3: Communicating and Delivering the Chosen Position.

Step 4: Support the positioning strategy with a unique marketing mix

Developing Competitive Differentiation

Product Service

Areas for Competitive

Differentiation

Image People
Selecting the Right Competitive Advantages

Important

Profitable Distinctive
Criteria
for
Determining
Which
Differences
Affordable to Superior
Promote

Preemptive Communicable
Step 4 Supporting the positioning strategy

At this stage the company has decided on its positioning strategy

and must now design a marketing mix to support this strategy. The
next part of the course looks at Developing the Marketing Mix
 The Buying Decision Process
Consumer Buying Decision involves Five Stage Decision Process:
1. Problem Recognition
2. Information Search: Major Sources are:
i) Personal: Family, Friends, Neighbour, Acquaintances
ii) Commercial: Advertising, Websites, Sales Persons, Dealers, Packaging, Displays
iii) Public: Mass Media, Consumer Rating organisations
iv) Experiential: Handling, Examining, Using the product.
This Information search also moves as :
i) Total Sets
ii) Awareness Sets
iii) Consideration Sets
iv) Choice Sets
v) Decision
Contd..

3. Evaluation of Alternatives : Following attributes affect consumer

alternative evaluation process:
i) Beliefs and Attitudes
ii) Expectancy-Value Model
4. Purchase Decision:
5. Post Purchase Behaviour: Marketers must monitor following post
purchase behaviour:
i) Post Purchase Satisfaction
ii) Post Purchase Action
iii) Post Purchase Use and Disposal
 Products Decisions

Product and Service Classification System

The Product Life Cycle
Introduction to product matrices
Boston Matrix (Growth/Share)
Ansoffs Matrix (Product Market)
Levels of Products: The Customer Value Hierarchy

Core Benefit:

Basic Product:

Expected Product:

Augmented Product:

Potential Product:
 Products Classifications:
1. Durability and Tangibility:
Nondurable Goods
Durable Goods
Services
2. Consumer Goods Classification:
Convenience Goods
Shopping Goods
Speciality Goods
Unsought Goods
3. Industrial Goods Classification:
Material and Parts
Capital Items
Supplies and Business Services
 Product Mix
Product Width: refers to how many different product lines the
company carries

Product Length: The depth of a product mix refers to the total no. of
items in the mix. This is also called as the average length of a line.

Product Depth: The depth refers to how many variants are offered of
each product in the line.

Product Consistency: This refers to how closely related the various

product lines are in end use, production requirements, distribution
channels or some other way.
 Product Line Stretching: It occurs when a company lengthens its
product line beyond its current range.
Down Market Stretching: When a new range of low price and
attributes are introduced.

Up Market Stretching: When premium additions are done

Two Way Stretch: When both are down simultaneously.

 Product Life Cycle:

Development Growth Maturity Decline

Few:
Growing adopters: Growing selectivity Saturation of Drop-off
trial of
trial of of purchase users in usage
early
product/service Repeat purchase
adopters
reliance
Entry of May be many Fight to maintain Exit of some
competitors share competitors
 Stages of PLC

Product development - sales are zero, investment costs are high

Introduction - profits do not exist, heavy expense of product
introduction
Growth - rapid market acceptance and increasing profits
Maturity - slowdown in sales growth. Profits level-off. Increase outlay
to compete
Decline - sales fall-off and profits drop
 New- Product Development Process

New product strategy

Idea generation
Idea screening
Concept development and testing
Marketing strategy
Business analysis
Product development
Test Marketing
Commercialisation
 The Boston Matrix (Growth/Share Matrix)

Market Share

High 3. Question
1. Stars Mark (Problem
Child)
Market
Growth

2. Cash Cows 4. Dogs

Low

High Low
 The Boston Matrix - Chocolate Bars

Market Share

High Maverick
FUSE Miniature Heroes

Market
Growth

KIT KAT TOPIC

Low MARS BAR BOUNTY

High Low
 Ansoffs Matrix (Product/Market Matrix)

Existing Markets New Markets

Market Penetration Market Development

Product Development Diversification

New Products
 Ansoffs Matrix (Product/Market Matrix)

Existing Markets New Markets

E.g. Realignments of the E.g. Geographical

marketing mix expansion

Same outlets and Diversification -

New Products

sales strategy related or unrelated

- new product
 Packaging

Packaging is the set of activity of designing and producing the container

for a product. Packaging might include upto three levels of material.

Various factors have contributed to the growing use of packaging:

i) Self Service:

ii) Consumer affluence:

iii) Company and Brand Image:

iv) Innovation Opportunity:

Packaging must achieve following objectives:

i) Identify the brand

ii) Convey descriptive and persuasive information

iii) Facilitate product transformation and protection

iv) Assist at home storage

v) Aid product consumption

Pricing Decisions
 There are three basic fundamentals of prices:

Cost

Existence of Demand

Competition
 Setting the Price

1. Selecting the Pricing Objective: The objectives could be as follows:

Survival
Maximum Current Profit
Maximum Market Share
Maximum Market Skimming
Product Quality Leadership
Other Objectives
Contd..

2. Determining Demand:
Price Sensitivity:
Estimating Demand Curves:
Price Elasticity of demand:
3. Estimating Costs:
4. Analysing Competitors Costs, Prices and Offers:
5. Selecting a Pricing Method: There are following pricing methods:
Mark up Pricing:
Target Return Pricing
Perceived Value Pricing
Value Pricing
Going Rate Pricing
Auction Type Pricing
English Auction- One seller many buyer. Open bidding is done after
placing the offer and continues till the maximum price is achieved.
Dutch Auction: Auctioneer announces the prices and gradually lowers
the price till someone agrees to purchase.
Sealed Bid auction: Would be suppliers can make only one bid and
are not permitted to change.
6. Selecting the final Price:
i) Impact of Other marketing activities
ii) Companys pricing policy
iii) Gain and Risk Sharing Pricing
iv) Impact of Price on other parties
 Price Adaptation

Geographical Pricing
Price Discounts and Allowances
Promotional Pricing
Loss Leader Pricing
Special event pricing
Cash Rebates
Low interest financing
Longer Payment terms
Warranties and service contracts
Psychological discounts
 Differentiated Pricing: To accommodate different categories of
customers. There are variety of forms of Differentiated Pricing as
Price Discrimination
Differential Pricing

Other different forms of Differentiated Pricing are:

Customer Segment Pricing
Product Form Pricing
Image Pricing
Channel Pricing
Location Pricing
Time Pricing
 Initiating Price Changes

Price change may be in form of

Increase in Price or

Decrease in Price

Both the strategies have their own fallouts

 Responding to Price Changes

Maintain Price

Main price and add value

Reduce Price

Increase price and Improve quality

Launch a low price fighter line

 Pricing strategies
Premium pricing
Uses a high price, but gives a good product/service
exchange e.g. Concorde, The Ritz Hotel
Penetration pricing
offers low price to gain market share - then increases
price
e.g. France Telecom - to attract new corporate clients (or
Telewest cable)
Economy pricing
placed at no frills, low price
e.g. Soups, spaghetti, beans - economy brands
 Price skimming
where prices are high - usually during introduction
e.g new albums or films on release
ultimately prices will reduce to the parity
Psychological pricing
to get a customer to respond on an emotional, rather than rational
basis
.e.g 99p not 1.01 price point perspective
Product line pricing
rationale of a product range
e.g. MARS 32p, Four-pack 99p, Bite-size 1.29
Pricing variations
off-peak pricing, early booking discounts,etc
e.g Grundig offers a cash back incentive for expensive goods
 Optional product-pricing
e.g. optional extras - BMW famously under-equipped
Captive product pricing
products that complement others
e.g Gillette razors (low price) and blades (high price)
Product-bundle pricing
sellers combine several products at the same price
e.g software, books, CDs.
Promotional pricing
BOGOF e.g. toothpaste, soups, etc
 Geographical pricing
different prices for customers in different parts of the
world
e.g.Include shipping costs, or place onPLC
Value pricing
usually during difficult economic conditions
e.g. Value menus at McDonalds
Distribution Decisions
A channel of distribution comprises
of a set of institutions which
perform all of the activities utilised
to move a product and its title from
production to consumption

Bucklin - Theory of Distribution Channel Structure (1966)

 Modern Exchange System

Promotion

Contact

Negotiation

Transporting and storing

Users
Producers

Financing

Packaging

Money

Goods
 Marketing Distribution Channels

Push Strategy: Is used in case of Low brand equity, brand choice is

made in store and product is an impulse purchase item.

Pull Strategy: For products with high brand equity and high
involvement purchase
 Channel Flow

Zero Level

One Level

Two Level

Three Level
 Channel Functions

Making the product available to the customers

Breaking the lot

Sharing the cost

Easy selling

Pooling of financial resources

 Six basic Issues in channel management decisions

Direct or indirect channels

Single or multiple channels

Length of channel

Types of intermediaries

Number of intermediaries at each level

Which intermediaries? Avoid intrachannel conflict

 CHANNEL DESIGN DECISION

1. Analyzing Customers Desired Service Output Levels:

i) Lot Size
ii) Waiting and delivery time
iii) Spatial Convenience
iv) Product Variety
v) Service Backup

2. Establishing Objectives and Constraints:

3. . Identifying Major Channel Alternatives:
i) Types of Intermediaries
ii) Number of Intermediaries
iii) Terms and Responsibilities of Channel Members

4. Evaluating Major Alternatives:

i) Economic Criteria
ii) Control and Adaptive Criteria
 Channel intermediaries - Wholesalers

Break down bulk

buys from producers and sell small quantities to retailers
Provides storage facilities
reduces contact cost between producer and consumer
Wholesaler takes some of the marketing responsibility e.g sales
force, promotions
 Channel intermediaries - Agents

Mainly used in international markets

Commission agent - does not take title of the goods. Secures orders.

Stockist agent - hold consignment stock

Control is difficult due to cultural differences

Training, motivation, etc are expensive

 Channel intermediaries - Retailer

Much stronger personal relationship with the consumer

Hold a variety of products

Offer consumers credit

Promote and merchandise products

Price the final product

Build retailer brand in the high street

 Channel intermediaries - Internet

Sell to a geographically disperse market

Able to target and focus on specific segments

Relatively low set-up costs

Use of e-commerce technology (for payment, shopping software, etc)

Paradigm shift in commerce and consumption

 Selection consideration

Market segment - must know the specific segment and target

customer

Changes during PLC - different channels are exploited at various

stages of plc

Producer-distributor fit - their policies, strategies and image

Qualification assessment - experience and track record must be

established

Distributor training and support

 CHANNEL MANAGEMENT DECISION

Selecting Channel Members

Training Channel Members
Motivating Channel Members
Coercive Power
Reward Power
Legitimate Power
Expert Power
Referent Power
Evaluating Channel Members
Modifying Channel Members
 CHANNEL INTEGRATED SYSTEM
Vertical Marketing System: A conventional marketing system
comprises of an independent producer, wholesaler and retailer. Each is a
separate business seeking to maximize its own profit. A vertical
marketing system comprises the producer, wholesaler and retailer acting
as a unified system. One channel member, the channel captain, owns
the others and enjoys so much power so that they all cooperate.
Corporate VMS: A corporate VMS combines the successive stages of production
and distribution under a single ownership.
Administered VMS: This coordinates the successive stages of production and
distribution through the size and power of one of the members.
Contractual VMS: It consists of independent firms at different levels of production
and distribution integrating their programs on a contractual basis to obtain more
economies or sales impact that they could achieve alone.
 HORIZONTAL MARKETING SYSTEMS

In this, two or more unrelated companies put together resources or

programs to exploit an emerging marketing opportunity.
As: Mitsubishi being sold through the dealer network of Hindustan
Motors
Post Offices selling insurance and mutual funds
McDonalds selling CocaCola.
 MULTICHANNEL MARKETING SYSTEMS

When a single firm uses two or more marketing channels to reach to

one or more customer segments.
 CHANNEL CONFLICTS

Types of Channel Conflicts:

Vertical Channel Conflicts
Horizontal Channel Conflicts
Multichannel Channel Conflicts

Causes of Channel Conflicts

Goal Incompatibility
Unclear Roles
 Managing Channel Conflicts

Co-optation

Mediation

Arbitration

Diplomacy
 PROMOTION MIX
Four Components
Advertising
Publicity
Personal Selling
Public Relations
 Advertising
Advertising is any paid form of nonpersonal
presentation and promotion of of ideas, goods
or services by an identified sponsor.
There are five major decisions known as 5 Ms of
Advertising. These are:
i) Mission: What are the advertising
objectives?
ii) Money: What is the ad budget?
iii) Message: What message to be send?
iv) Media: What media to use?
v) Measurement: How to evaluate the results?
 Personal Selling
There is a SPIN method to build long term
relationships: These are as follows:
Situation Questions
Problem Questions
Implication Questions
Need-payoff Questions
 The six steps in P S
Prospecting and Qualifying
Preapproach
Presentation and demonstration
Overcoming Objections
Closing
Follow-up and maintenance
 Public Relations
PR includes a variety of programs to promote
or protect a companys image or individual
products.
Press relations
Product publicity
Corporate communications
Lobbying
Counseling
 Marketing Audit
A systematic, critical, and impartial review and appraisal
of the total marketing operation, of the basic objectives
and policies of the operation, and the assumptions
underlie them as well as of the methods, procedures,
personnel and organisation eployed to implement the
policies and achieve the objectives.

Abraham Shuchman
 Characteristics of Marketing Audit
Comprehensive
Systematic
Independent
Periodic
 Components of Marketing Audit
Marketing Environment Audit