Marketing:

Definition:The marketing concept holds that the main task of the company is to determine what a given set of customers needs, wants, and values are and to dedicate the organization to delivering the solution.

Why market?
To communicate that you are engaged in new and different activities To attract paying customers in sufficient numbers to support the activities

Market Segments:
A group of potential customers with a great deal in common for which a specialized set of goods or services may be provided. Examples: Lawyers Health Care Professionals Accountants

Image Marketing Should Target:

The general public Client or potential client organizations The government Funding organizations Other stakeholders The institution

Product Marketing Should Target:

Organizations Individuals

Stakeholders

Marketing Mix:
It is a set of Marketing tools that the firm uses to pursue its marketing objectives in the target market

Marketing Mix
The Four Ps vs. The Four Cs

Marketing Mix Place

Product

Customer Solution

Convenience

Price

Promotion

Cost
4 Ps

Communication

1. Product: is anything that can be offered to a market that might satisfy a want or need. It is the complete bundle of benefits or satisfactions that buyers perceive they will obtain if they purchase the product. It is the sum of all physical, psychological, symbolic, and service attributes. Types of Products: a. Specialty goods b. Unsought goods c. Shopping products

d. Convenience products Product Hierarchy: i. Need Family: Core need

ii. Product family: All product classes that satisfy the core need iii. Product Class: A group of products in the product family having some functional coherence iv. Product line: A group of products within a product class that are closely related because they perform similar functoin , are sold to the same consumer group , are marketed thru the same channels, or fall within given price range v. Product type: A group of items within a product line that share one of several possible forms vi. Brand vii. Item: Stock Keeping Unit Product Lines: Product lining is the marketing strategy of offering for sale several related products. A line can comprise related products of various sizes, types, colours, qualities, or prices. Line Management: i. Line depth

ii. Line consistency iii. Width of product mix. iv. length of product mix. Branding: I. II. A brand is a name, a term, a symbol or a combination of these used to identify the product and differentiate it from competitors. A brand is a symbolic embodiment of all the information connected to a company, product or service. A brand serves to create associations and expectations among products made by a producer. A brand often includes an explicit logo, fonts, color schemes, symbols, which are developed to represent implicit values, ideas, and even personality. Branding Policies: a. Company name b. Family branding c. Individual branding d. Line Branding e. Co Branding

III.

IV.

V. VI.

Brand extension: The existing strong brand name can be used as a vehicle for new or modified products; for example, after many years of running just one brand, Coca-Cola launched "Diet Coke" and "Cherry Coke" Cannibalism: is a particular problem of a "multi-brand" approach, in which the new brand takes business away from an established one which the organization also owns. Logo: A logotype (from the Greek ), commonly known as a logo, is the graphic element, symbol, and icon of a trademark or brand, which is set in a special typeface or arranged in a particular way. The shapes, colors, fonts and images of brands usually different from others in a similar market.

Expectations: i. Must meet customer requirements whatever these might be. ii. An important aspect is function products should do what they say they can do and what they are expected to do. iii. Appearance is also important for which consumers are prepared to pay premium prices.

2. Place: i. Roughly one fifth of the cost of a product is spent getting it to consumers. ii. Different organisations use different approaches to reaching their customers. iii. For example, McDonald's uses a franchising system enabling it to operate in a wide variety of geographical locations, and Amway distributes through Independent Business Owners worldwide. 3. Promotion: i. Is the process of communicating with customers. ii. For marketing purposes, communication of products and services contributes to the persuasion process to encourage consumers to avail themselves of whatever is on offer. iii. The key processes involved in promotion, include: * branding - creating a distinctive image and character to an organisation/and or its products and services * advertising - to inform and persuade the public * packaging - presenting the product in a desirable and appropriate way * public relations activities and other forms of publicity * sponsorship * special promotions - e.g. buy one get one free. Promotion mix: 1. Advertising 2. Sales Promotion 3. Personal Selling 4. Publicity 5. Public Relations

4. Price: i. Needs to be relevant to the product/service and the market. ii. A firm's pricing decision is often aimed at attracting a particular market segment. iii. The price of a product should reflect its image and the need to give a consumer what they want. For example, upmarket products are associated with premium prices. Popular pricing strategies to choose from: 1. Cost-plus pricing: A common way to make pricing decisions is to calculate how much it costs to do a particular job or activity, and then add on a given percentage as a return for the job or activity. This is sometimes known as mark-up. For example, a business may decide that it will cost Rs.100 to do a small repair job on a car, including parts, labour, use of premises, equipment, etc. The business works on the basis of making a return of 20% on all the work that it does. It therefore charges the customer Rs.120. 2. Hour-based pricing: Many small businesses are able to work out what their typical costs are for every hour of work they do. e.g. for gardening, sign writing, photography, etc. The business owner is then able to charge a standard rate per hour. 3. Penetration pricing: When a firm brings out a new product into a new or existing market, it may feel that it needs to make a lot of sales very quickly in order to establish itself and to make it possible to produce larger quantities. It may therefore start off by offering the product at quite a low price. When market penetration has been achieved, prices can be raised. 4. Skimming: When you bring out a new product, you may be able to start off by charging quite a high price. Some customers may want to be the first to buy your product because of the prestige of being seen with it, or because they want to be associated with your product before anyone else. An exclusive dress could be sold initially at an exclusive price to wealthier customers. The next season, the price could be lowered making it accessible to a less wealthy group of customers. Later on, the dress could be mass produced and made available at low prices to the mass market. Other pricing strategies: 1. Psychological Pricing 2. Product Line Pricing 3. Optional Product Pricing 4. Captive Product Pricing 5. Product Bundle Pricing 6. Promotional Pricing 7. Geographical Pricing

8. Mark up Pricing 9. Target Return Pricing

Pricing Policy: 1. Selecting the pricing objective 2. Determining Demand 3. Estimating Costs 4. Analysing Competitors Pricing 5. Selecting A pricing Method 6. Selecting a final Price

In addition to the traditional four Ps it is now customary to add some more Ps to the mix to give us Seven Ps. The additional Ps have been added because today marketing is far more customer oriented than ever

before, and because the service sector of the economy has come to dominate economic activity in this country. These 3 extra Ps are particularly relevant to this new extended service mix.

This 3 extra Ps are 1. Physical outlet: the physical layout of production units such as factories was not very important to the end consumer because they never went inside the factory. However, today consumers typically come into contact with products in retail units - and they expect a high level of presentation in modern shops - e.g. record stores, clothes shops etc. 2. Provision of consumer service: customer service lies at the heart of modern service industries. Customers are likely to be loyal to organisations that serve them well - from the way in which a telephone query is handled, to direct face-to-face interactions. 3. Processes: associated with customer service are a number of processes involved in making marketing effective in an organisation e.g. processes for handling customer complaints, processes for identifying customer needs and requirements, processes for handling order etc The 7 Ps - Price, Product, Place, Promotion, Physical Presence, Provision of service, and Processes comprise the modern marketing mix that is particularly relevant in service industry, but is also relevant to any form of business where meeting the needs of customers is given priority.

Strategic Management consists of Managerial Decisions that relate the organization to its environment, guide internal activities and determines long term organizational performance. 3 Levels of Strategic Planning: 1. Corporate Level 2. Business Unit Level 3. Division Level 4. Product level

1. Corporate Level Strategic Planning: Defining the Corporate Mission Establishing the strategic business units Assigning resources to each SBU Planning new businesses, downsizing, or terminating older businesses 2. Business Unit Strategic Planning: Business Mission SWOT Analysis Goal Formulation Strategy Formulation Programme Formulation and Implementation a. Establishing strategic business units: b. Strategies for Growth of Businesses: Growth within current businesses: Intensive Growth

 Acquire businesses related to current businesses: Integrative Growth Add attractive businesses unrelated to current businesses: Diversification Growth. i. Growth within current businesses: Intensive Growth 1. Market Penetration Strategy: Current Products+ Current Markets 2. Market Development Strategy: Current Products+ New Markets 3. Product Development Strategy: New Products+ Current Markets 4. Diversification Strategy: New Products+ New Markets (Ansoffs Product-Market Expansion Grid) ii. Acquire businesses related to current businesses: Integrative Growth 1. Forward Integration 2. Backward Integration 3. Horizontal Integration iii. Add attractive businesses unrelated to current businesses: Diversification Growth. 1. Concentric Diversification 2. Horizontal Diversification 3. Conglomerate Diversification c. Planning new businesses, downsizing, or terminating older businesses I. Downsizing: Releases energy Reduces Cost Step 1.Situational Analysis: i. Environment Analysis: Cultural, Social Legal, Political, Technological.

ii. Competitive Analysis iii. Trade Analysis. iv. Market Segment Analysis v. Demand Analysis Internal marketing audit checklist:

Operating Results (by product, customer, geographic region

Marketing Mix Effectiveness Strategic Issues Analysis

Marketing Structures

Marketing Systems

D Jobber, Principles and Practice of Marketing, 2001 McGraw-Hill

Business Portfolio Evaluation Models: 1. Boston Consultancy Group Approach 2. General Electric Approach Market Attractiveness: 1. Overall Market Size 2. Annual Market Growth rate 3. Historical Profit Margin 4. Competitive Intensity 5. Technological Requirements 6. Inflatiory Vulnerability

Business Strength: 1. Market Share 2. Share Growth 3. Product Quality 4. Brand Reputation 5. Distribution Network 6. Promotional Effectiveness 7. Productive Capacity 8. Unit Costs Step 2: Mission Statement: i. It describes the businesses the firm is in. ii. It includes why the organization exists, its chief products and services, the markets it serves, the values it provides. Step 3: Set Objectives: i. Objectives are kinds of results the firm seeks to achieve. ii. Objectives are set at all levels in the company: a. Top Management Level: Long term objectives b. Middle level Management: Medium term objectives c. Lower Level Management: Short term objectives Step 4: SWOT Analysis: Strength : Strength is a condition internal to the organisation that may lead to a customer benefit or competitive advantage Weakness : Weakness is a condition internal to the organisation that may lead to negative customer value or competitive advantage Opportunity: It is an issue or condition in the environment that may help it to reach its goals. Threat: It is an issue or condition in the environment that may prevent it from reaching its goals. Step 5: Strategic Formulation: Strategic options for increasing sales volume: 1. Market penetration: a. Win competitors customers

2.

3.

4.

5.

b. Buy competitors c. Discourage competitive entry Market expansion: a. Convert non-users b. Increase usage rate Product development: a. Product line extension b. Product replacement c. Innovation Market development: a. Promote new uses b. Enter new segments Entry into new markets

Porters Generic Strategies: 1. Overall Cost Leadership 2. Differentiation 3. Focus

Levels of Marketing Plan: STRATEGIC MARKETING PLAN: It lays out the target market and the value proposition that will be offered based on the analysis of the best Marketing Opportunities TACTICAL MARKETING PLAN: It identifies the marketing tactics ,including the product features ,Promotion , merchandising, pricing ,sales channel and service.

Business mission Re-definition Situational Analysis SWOT analysis Marketing objectives

(strategic thrust, strategic objectives)

Marketing planning at the business level

Core strategy (target markets, competitive advantage, competitor targets) Marketing mix decisions Organization and implementation Control
D Jobber, Principles and Practice of Marketing, 2001 McGraw-Hill

Marketing planning at the product level

Contents of a Marketing Plan: 1. Executive Summary and table of contents. 2. Current Marketing Situation 3. Opportunity and issue analysis 4. Objectives 5. Marketing Strategy: Planning on the 4 P,s. 6. Action Programmes: Marketing Programmes derived from Marketing Strategy. 7. Financial Projections: Budget from Action Plans 8. Implementing Controls

Market dominance strategies are a type of marketing

strategy that classifies firms based on their market share or dominance of an industry.

Market dominance is a measure of the strength of a brand, product, service, or firm,

relative to competitive offerings. There is often a geographic element to the competitive landscape. In defining market dominance, you must see to what extent a product, brand, or firm controls a product category in a given geographic area. There are several ways of calculating market dominance. The most direct is market share. This is the percentage of the total market serviced by a firm or brand. A declining scale of market shares is common in most industries: that is, if the industry leader has say 50% share, the next largest might have 25% share, the next 12% share, the next 6% share, and all remaining firms combined might have 6% share. Market share is not a perfect proxy of market dominance. We must take into account the influences of customers, suppliers, competitors in related industries, and government regulations. Although there are no hard and fast rules governing the relationship between market share and market dominance, the following are general criteria:

A company, brand, product, or service that has a combined market share exceeding 60% most probably has market power and market dominance. A market share of over 35% but less than 60%, held by one brand, product or service, is an indicator of market strength but not necessarily dominance. A market share of less than 35%, held by one brand, product or service, is not an indicator of strength or dominance and will not raise anti-combines concerns of government regulators.

Market shares within an industry might not exhibit a declining scale. There could be only two firms in a duopolistic market, each with 50% share; or there could be three firms in the industry each with 33% share; or 100 firms each with 1% share. The concentration ratio of an industry is used as an indicator of the relative size of leading firms in relation to the industry as a whole. One commonly used concentration ratio is the four-firm concentration ratio, which consists of the combined market share of the four largest firms, as a percentage, in the total industry. The higher the concentration ratio, the greater the market power of the leading firms. Alternatively, there is the Herfindahl index. It is a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them. It is defined as the sum of the squares of the market shares of each individual firm. As such, it can range from 0 to 10,000, moving from a very large amount of very small firms to a single monopolistic producer. Decreases in the Herfindahl index generally indicate a loss of pricing power and an increase in competition, whereas increases imply the opposite.

Market dominance strategies

These calculations of market dominance yield quantitative metrics, but most business strategists categorize market dominance strategies in qualitative terms. Typically there are four types of market dominance strategies that a marketer will consider: There are market leader, market challenger, market follower, and market nicher.

Market leader
The market leader is dominant in its industry. It has substantial market share and often extensive distribution arrangements with retailers. It typically is the industry leader in developing innovative new business models and new products (although not always). It tends to be on the cutting edge of new technologies and new production processes. It sometimes has some market power in determining either price or output. Of the four dominance strategies, it has the most flexibility in crafting strategy. There are few options not open to it. However it is in a very visible position and can be the target of competitive threats and government anti-combines actions. The main options available to market leaders are:

Expand the total market by finding o new users of the product o new uses of the product o more usage on each use occasion Protect your existing market share by: o developing new product ideas o improve customer service o improve distribution effectiveness o reduce costs Expand your market share: o by targeting one or more competitor o without being noticed by government regulators

Market challenger
A market challenger is a firm in a strong, but not dominant position that is following an aggressive strategy of trying to gain market share. It typically targets the industry leader (for example, Pepsi targets Coke), but it could also target smaller, more vulnerable competitors. The fundamental principles involved are:

Assess the strength of the target competitor. Consider the amount of support that the target might muster from allies. Choose only one target at a time.

Find a weakness in the targets position. Attack at this point. Consider how long it will take for the target to realign their resources so as to reinforce this weak spot. Launch the attack on as narrow a front as possible. Whereas a defender must defend all their borders, an attacker has the advantage of being able to concentrate their forces at one place. Launch the attack quickly, and then consolidate.

Some of the options open to a market challenger are:

price discounts or price cutting line extensions introduce new products reduce product quantity increase product quality improve service change distribution cost reductions intensify promotional activity

Market follower
A market follower is a firm in a strong, but not dominant position that is content to stay at that position. The rationale is that by developing strategies that are parallel to those of the market leader, they will gain much of the market from the leader while being exposed to very little risk. This play it safe strategy is how Burger King retains its position behind McDonalds. The advantages of this strategy are:

no expensive R&D failures no risk of bad business model best practices are already established able to capitalize on the promotional activities of the market leader no risk of government anti-combines actions minimal risk of competitive attacks dont waste money in a head-on battle with the market leader

Market nicher
In this niche strategy the firm concentrates on a select few target markets. It is also called a focus strategy. It is hoped that by focusing ones marketing efforts on one or two narrow market segments and tailoring your marketing mix to these specialized markets, you can better meet the needs of that target market. The niche should be large enough to be profitable, but small enough to be ignored by the major industry players. Profit margins are emphasized rather than revenue or market share. The firm typically looks to gain a competitive advantage through effectiveness rather than efficiency. It is most suitable for relatively small firms and has much in common with guerrilla marketing warfare strategies. The most successful nichers tend to have the following characteristics:

They tend to be in high value added industries and are able to obtain high margins. They tend to be highly focussed on a specific market segment. They tend to market high end products or services, and are able to use a premium pricing strategy. They tend to keep their operating expenses down by spending less on R&D, advertising, and personal selling.