UNIT-I

Definition of Marketing

According to American Marketing Association (2004) - "Marketing is an

organizational function and set of processes for creating, communicating and
delivering value to customers and for managing relationships in a way that benefits
both the organization and the stakeholder."
AMA (1960) - "Marketing is the performance of business activities that direct the
flow of goods and services from producer to consumer or user."

According to Eldridge (1970) - "Marketing is the combination of activities designed

to produce profit through ascertaining, creating, stimulating, and satisfying the
needs and/or wants of a selected segment of the market."

According to Kotler (2000) - "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."

AMA: Marketing is an organizational function and set of process for creating,

communicating and delivering values to customers and managing relationship
in a way that benefit both the organization and its stack holders.

Nature of Marketing

1. Marketing is an Economic Function

Marketing embraces all the business activities involved in getting goods and
services, from the hands of producers into the hands of final consumers. The
business steps through which goods progress on their way to final consumers is the
concern of marketing.
2. Marketing is a Legal Process by which Ownership Transfers
In the process of marketing the ownership of goods transfers from the seller to the
purchaser or from producer to the end-user.
3. Marketing is a System of Interacting Business Activities
Marketing is that process through which a business enterprise, institution, or
organization interacts with the customers and stakeholders with the objective to
earn a profit, satisfy customers, and manage relationships. It is the performance of
business activities that direct the flow of goods and services from producer to
consumer or user.
4. Marketing is a Managerial Function
According to the managerial or systems approach - "Marketing is the combination
of activities designed to produce profit through ascertaining, creating, stimulating,
and satisfying the needs and/or wants of a selected segment of the market."
According to this approach, the emphasis is on how the individual organization
processes marketing and develops the strategic dimensions of marketing activities.
5. Marketing is a Social Process
Marketing is the delivery of a standard of living to society. According to
Cunningham and Cunningham (1981) societal marketing performs three essential
functions:-

1. Knowing and understanding the consumer's changing needs and wants;

2. Efficiently and effectively managing the supply and demand of products and
services; and
3. Efficient provision of distribution and payment processing systems.

6. Marketing is a philosophy based on consumer orientation and satisfaction

7. Marketing had dual objectives - profit-making and consumer satisfaction

Scope of Marketing

1. Study of Consumer Wants and Needs

Goods are produced to satisfy consumer wants. Therefore the study is done to
identify consumer needs and wants. These needs and wants motivate the
consumer to purchase.
2. Study of Consumer Behaviour
Marketers perform a study of consumer behavior. Analysis of buyer behavior helps
marketers in market segmentation and targeting.
3. Production Planning and Development
Product planning and development starts with the generation of product ideas and
ends with product development and commercialization. Product planning includes
everything from branding and packaging to product line expansion and contraction.
4. Pricing Policies
The marketer has to determine pricing policies for their products. Pricing policies
differ from product to product. It depends on the level of competition, product life
cycle, marketing goals, and objectives, etc.
5. Distribution
The study of distribution channels is important in marketing. For maximum sales
and profit, goods are required to be distributed to the maximum consumers at
minimum cost.
6. Promotion
Promotion includes personal selling, sales promotion, and advertising. The right
promotion mix is crucial in the accomplishment of marketing goals.
7. Consumer Satisfaction
The product or service offered must satisfy the consumer. Consumer satisfaction is
the major objective of marketing.
8. Marketing Control
The marketing audit is done to control the marketing activities.
Marketing Challenges:
Introduction

Well said by Heraclitus - "The only thing that is constant is change." We are
experiencing changes in our daily life and in the marketplace too. Customer needs,
wants, and expectations are changing more rapidly; customers are increasingly
demanding better quality and reliability in products and services; new products and
services are coming to market more quickly, competition is getting intense and
global rather than just domestic; technology is changing rapidly, and e-commerce
and Internet are having a great impact on marketing practices.
In such a rapidly changing marketing environment it is really difficult for business
organizations to make quick and sound decisions, and facing various marketing
challenges. So, today we are here to let you know what marketing challenges the
business organizations are facing, and how to overcome these challenges

Marketing Challenges The Business Organizations Facing Today

• Rapidly changing customer needs, wants, and expectations;

• Increasing domestic and global competition;
• Heterogeneous and fragmented market
• Increasing popularity of Internet;
• Rapid technological changes;
• Challenge of selecting among too many options; and
• Challenge of generating leads.

Rapidly Changing Customer Needs, Wants, and Expectations

Today, the needs, wants, and expectations of the customer are changing rapidly. It
is a great challenge not only for small marketers but for big players too. It requires
extensive study of market trends and consumer behavior while developing a new
product or updating an existing product.

Increasing Global and Domestic Competition

Competition today is global rather than just domestic. Marketers have to compete
not only with domestic players but with global players too. The intense and global
competition is a great challenge for marketers to deal with.
Increasing Popularity of Internet
With the increase in popularity of the Internet a new spectrum of marketing channel
is emerged. The worldwide increase in the number of Internet users brought a shift
from traditional print-based media to new online platforms. It presents a new set of
marketing challenges - the challenge of deciding how much to allocate to digital v/s
print-based media; the challenge of using social media marketing largely because of
regulatory issues and concerns over its measurability; and the challenge of doing
more with less money as the rise of the Internet made communication cheaper and
efficient.

Challenge of Selecting Among Too Many Options

The greatest challenge the marketers facing today is simply too many options. Too
many potential customer segments. Too many product or service options. Too many
communication tools. It is really difficult and challenging for marketers to choose
among too many options. The marketers today don't suffer from lack of opportunities
or options. The picture is totally opposite today. Now they suffer from too many
opportunities or options.

Ways to Overcome These Challenges

For the success of any business overall performance is required to be taken care of.
Not only financial performance but also marketing performance. Marketing
performance includes - sales volume, market share, and, customer satisfaction.
Various marketing challenges make it difficult for marketing managers to achieve
the targeted marketing performance. But, there are ways to overcome such
challenges. We are here to share the best possible ways to overcome the marketing
challenges the business organizations facing today.
Create a Learning Organization
Business organizations must include learning as a key to improvement in their
organizational values. Proper training must be given to marketing employees and it
should be considered as an investment rather than as a cost. Marketing managers are
required to continually question their own views of the marketplace. Learning is not
a one-time activity it's a continuous process, ability to learn can be a key competitive
advantage for any business.
Market Research
Marketing organizations must invest in market research and they are required to
make extensive use of it. Organizations are required to be good at using information
about markets, customers, and competitors. Market research must be focused on
understanding customer needs, wants, and expectations.

Reevaluate the Old Mix - Four Ps to Four Cs

With the increasing globalization, competition, and popularity of the Internet the old
marketing mix is facing many new challenges; and to tackle these challenges
marketing management must reevaluate the old marketing mix to new mix by
converting four Ps to four Cs.
Product / Customer Needs
Price / Cost to the Users
Place / Convenience
Promotion / Communication
CONCEPT OF GREEN MARKETING:

Introduction to Green Marketing

The negative impact of human activities over environment is a matter of concern

today. Governments all over the world making efforts to minimize human impact on
environment. Today our society is more concerned with the natural environment.
Understanding the society's new concerns businesses have begun to modify their
behaviour and have integrated environmental issues into organizational activities.
Academic disciplines have integrated green issues in their literature. This is true with
marketing subject too, and the terms like "Green Marketing" and "Environmental
Marketing are included in syllabus. Governments all over the world have become so
concerned about green marketing that they have attempted to regulate them.

Definition and Meaning of Green Marketing

Definition according to American Marketing Association - "Green marketing is

the marketing of products that are presumed to be environmentally safe."

According to Polonsky 1994 b, 2 - "Green or Environmental Marketing consists

of all activities designed to generate and facilitate any exchanges intended to satisfy
human needs or wants, such that the satisfaction of these needs and wants occurs,
with minimal detrimental impact on the natural environment.

Green Marketing incorporates broad range of activities including product

modification, changes to the production process, packaging changes, and modifying
advertising. Green marketing focuses on satisfaction of customer needs and wants
with no or minimum harm to the natural environment.

Why Green Marketing is Important ?

It is well known that increasing production and business activities are polluting the
natural environment. Damages to people, crops, and wildlife is reported in different
parts of the world. As resources are limited and human wants are unlimited, it is
necessary for marketers to use resources efficiently, so that organizational objectives
are achieved without waste of resources. So green marketing is inevitable. There is
growing interest among people around the world regarding protection of natural
environment. People are getting more concerned for environment and changing their
behaviour for the protection of environment. As a result of this, the term "Green
Marketing" has emerged. Hence, marketers are feeling their responsibility
towards environment and giving importance to green marketing.
Not only marketers but consumers are also concerned about the environment, and
consumers are also changing their behaviour pattern. Now, individual as well as
industrial consumers are becoming more concerned about environment-friendly
products.
Social Marketing Concepts:
Meaning: Definition of Social Marketing
According to Philip Kotler - Social Marketing is "the design, implementation, and
control of programs seeking to increase the acceptability of a social idea or practise
in a target group"

According to W. Smith, Academy for Educational Development - "Social

Marketing is a process for influencing human behaviour on a large scale, using
marketing principles for the purpose of societal benefit rather than commercial
profit."
The Societal Marketing Concept puts Human welfare on top before profits and
satisfying the wants.

What is Societal Marketing?

The societal marketing concept holds that a company should make good
marketing decisions by considering consumers’ wants, the company’s
requirements, and society’s long-term interests.

Philip Kotler defines it as “the societal marketing concept holds that the
organization’s task is to determine the needs, wants, and interests of target
markets and to deliver the desired satisfactions more effectively and efficiently
than competitors in a way that preserves or enhances the consumer’s and the
society’s well-being.”

Considerations of Societal Marketing Concept

1. Society (Human Welfare)

Companies must make sure the products, services, actions, investment

innovations servers society first.

2. Consumers (Satisfaction)

Products and services should be satisfying the consumer’s needs.

3. Company (Profits)

Building long-term customer relationships, being socially responsible, and

providing satisfactory products are important for profit-making and wealth
maximization.

Objectives of Societal Marketing Concept

• To maintain a long-term relationship with customers.

• To create a better image in the society for the company than its competitors.
• To carry out its social responsibilities.
• Developing community awareness towards its brands.
• To carry out its social responsibilities.
• To increase the consumer base and market share.

Societal Marketing Concept Advantages and Benefits

• It helps to build a better image for the company.

• It gives a competitive advantage over the competitors.
• Useful in customer retention and long-term relationships.
• Increases sales and market share.
• Facilitate expansion and growth in the long term.
• Products and company policies should prioritize social welfare and society in
general.
• Economic resources are properly used.
 • Societal marketing raises the living standard of people in society.
• It ensures economic planning more significant and more fruitful to society.

Importance of Societal Marketing Concept

Societal Marketing is essential to society, the environment, and businesses. This

concept was developed to tackle consumerism and profit, only the motive of
business.

The societal marketing concept helps to maximize profits for the organization and
creates a long-term relationship with customers.

It encourages developing products that benefit society in the long run and satisfies
consumers.

Examples of Societal Marketing

The most recent examples of societal marketing are the super bowl 2017 ads of
several companies.

Most ads took on issues like the environment and immigration. These come after
President Donald Trump implemented executive orders that raised controversies.

• Kia’s “Hero’s Journey” commercial starring Melissa Mccarthy is the prime

example of societal marketing.
• Coca-Cola releases an ad that shows people of different ethnicities and
singing “America is Beautiful” in different languages.
• Airbnb’s #WeAccept super bowl 2017 ad.
• Budweiser ad showing how its immigrant founder founded a company.

Societal marketing does not stop there.

Societal marketing policies make companies actively trying to change social policy,
participate in social activities, invest time and money in corporate social
responsibility.

Societal marketing concept questions whether the pure marketing concept overlooks
possible conflicts between consumer short-run wants and long-run consumer
welfare.
The societal marketing concept holds “marketing strategy should deliver value to
customers in a way that maintains or improves both the consumer’s and society’s
well-being.”

Instruments of Societal Marketing

Philip Kotler identified four categories of products based on long-term benefits and
immediate satisfaction:

• Deficient products bring neither long-run nor short-term benefits.

• Pleasing products bring a high level of immediate satisfaction but cause long-
term harm long in society.
• Salutary products bring low short-term satisfaction to the Nut Benefit
society in the long run.
• Desirable products bring both long-run benefits and immediate satisfaction.

Based on societal marketing, Kotler suggested deficient products must be eliminated

from the market.

The pleasing and salutary products need modification to bring both long-run benefits
to society and immediate satisfaction to the consumer.

Meaning that these products should be launched on the market without turning them
into desirable products. This way, rather than focusing on selling products, the focus
is on consumer and societal well-being.
Marketing Planning:

Introduction

Marketing is a process of developing and implementing plans to identify and satisfy

customer needs and wants with the objective of customer satisfaction and profits
making. The main elements of marketing planning are - market research to identify
and anticipate customer needs and wants; and planning of appropriate marketing mix
to meet market requirements/demands.

Definition of Marketing Planning

"Marketing Planning is the process of developing marketing plan incorporating

overall marketing objectives, strategies, and programs of actions designed to
achieve these objectives."

Marketing Planning involves setting objectives and targets, and communicating

these targets to people responsible to achieve them. It also involves careful
examination of all strategic issues, including the business environment, the market
itself, the corporate mission statement, competitors, and organisational capabilities.

"Marketing Plan is a comprehensive blue print which outlines an organisation's

overall marketing efforts."

Marketing Plan is a written document that describes an organisation's advertising

and marketing efforts for a coming period of time. It includes description of target
markets, marketing situation, organisation position, competition, and description of
marketing mix the organisation intend to use to reach their marketing goals.

Marketing Planning Process Defined

A marketing planning process is a systematic approach to developing marketing

goals, strategies, and implementation tactics. It may be adapted to a wide variety of
situations, from the launch of a new firm or practice area to the repositioning of an
existing firm — even the routine planning of new business development activities.

Steps of marketing planning process:

1. Developing the action plan

• Setting up the goals and vision

 • Setting up the mission statement
• Objectives of the firm

The first and foremost step towards making a product successful is to make a careful
observation of the objective of the firm. Hence the first stage of the planning process
of marketing is to set the goal which you like to accomplish. One should be aware
of your final goal, the vision of the company regarding the product depicts what the
company is for and where they want to reach.

2. Monitor your current position:

• Through marketing audit and monitoring

• SWOT analysis

The second step entails the observation of the current situation. This is a subset of
long term and strategic planning processes in order to observe the current situation,
the resources company holds depict the direction in which the company is moving.

Draw the layout of the resources; assess the in addition to assessing the internal and
external factors. Identify the risk and favors associate with introducing the product.
Review the market, target the appropriate one and divide it into different segments
through resources so that you can penetrate the product in the market more clearly.

Conduct a SWOT analysis of the business which involves different internal and
external facets involved. Through this, you can analyze and improve the current
situation. Design the inner view of the firm which will define that you understand
the need of your customer; you know whom you are targeting.

Perform market research to understand your competitor and understand the fact that
which needs of the consumer are necessary to be fulfilled, what depreciation is
connected to it and how much needs will change with the passage of time.

While implementing the planning process you have to observe the current situation
in order to consider certain external facets that are directly linked to the internal
possibilities and performance of the firm. Such external facets are directly connected
to the internal facets and the level of the business which are legal aspects, political
scenario and competition in the market while we are moving, economy, culture and
various demographics.
3. Developing a strategy for Marketing

• Marketing Mix
• Designing objectives and strategy for marketing
• Vehicles and sources of communication
• Observe the alternative strategies and processes for marketing available

This involves making the marketing strategies and objectives in order to gain the
overall objective of the firm. This involves observing the marketing tactics which fit
the best for the promotion of the business. This step will be useful in making the
selection of various strategies that will be helpful in approaching the target market.

This will help you in guiding you towards the segment of the market which you have
selected to reach. This will also guide you to how you will reach the desired market
by selecting the most appropriate type of communication means and way of
positioning your product.

Hence through properly involving the marketing efforts of all the known marketers
such as Kotler, Porter, Ansoff one can design a single market report in which they
have monitored how they will introduce the product and the vehicle they will be
utilizing.

With the help of the components of the marketing mix, one can design the marketing
strategy in order to gain a successful competitive advantage. Relying on the core
competencies of the company one decides their needs to be the first-mover
advantage or incorporate any strategy and how you will implement your marketing
efforts in order to target the desired customer.

4. Employing, executing and evaluating the planning process

• Make the budget

• Define the resources and implement
• Analyzing and overviewing

This is the milestone of every planning process which involves the operational level
activities. In this, you will allocate the resources, design the budget for
implementation of the discussed processes and design some action plans. One has to
monitor the process consistently and observe the plan based on the opinion and
feedback of the customer. Hence make a regular review of the promotional plan.
Benefits of the Marketing Planning Process

It’s important to take a thoughtful, step-by-step approach to your marketing plan.

Done right, it can yield a number of valuable benefits that can jumpstart success:

1. It encourages you to revisit old habits and assumptions. In a changing

world, you have to learn to adapt — doing things the way you’ve always done
them is not a winning strategy. A good marketing plan should take you, to
some degree, outside your comfort zone and question everything you’ve done
to date and why you thought it would work. Just because you’ve “always done
something that way” doesn’t mean it’s effective or even a good idea.

2. It reduces risk by adding new facts. The process of developing a marketing

plan forces you to reexamine your marketplace, your competition, your target
audience, and your value proposition to prospects. This kind of focused
research reduces risk because it compels you to evaluate your business model
and marketing program before you commit time and money to them.
According to our studies of professional services marketing, firms that
conduct systematic research into their target audiences grow faster and are
more profitable.

3. It provides accountability. Marketing planning makes both your marketing

and business development teams set specific targets and measure their
progress toward them. Management is accountable for providing enough
resources to ensure the marketing plan has a reasonable chance to succeed.

4. It is proactive rather than reactive. Planning ahead puts you in control of

your marketing so you can maximize its impact. However, it’s important to
be agile enough to react to changing circumstances. Having well-documented
plans makes it easier to change them.

5. It can become a competitive advantage. High-growth firms use

their marketing strategy as a differentiator. By giving some thought to what
makes your firm unique, you should be able to develop compelling
differentiators — one or more clear reasons to select your firm over an
apparently similar one.
MARKETING COMPETETIVENESS:
Introduction
Whatever product a marketer has to offer in the market, one thing is sure, it's going to get
competition. It depends on the product type and marketplace what degree of competition
it'll get. For the success of any business it is necessary to compete effectively with other
businesses. The best way to mitigate competition is to develop marketing competitiveness.
Marketing Competitiveness is the ability of an marketing organization to deliver better
value to customers than competitors.

Meaning of Marketing Competitiveness

A universal and exact definition of marketing competitiveness does not exist.
Competitiveness means different things to different organizations. Some marketers view
marketing competitiveness as the ability to persuade customers to choose their offerings
over alternatives; while others view marketing competitiveness as the ability to deliver
better values to customers than competitors.

"Marketing Competitiveness is the ability of a business to improve continuously marketing

process capabilities and deliver better value to customers than competitors."

It is the ability of a business to add more values for its customers than competitors and
attain a position of relative advantage. It leads to a situation where a business has an
advantage over its competitors by being able to offer better value, quality, and service.

Customer values are the combination of several benefits offered for a given price, and
comprises all aspects of the physical product and the accompanying services.

Ways to Improve Marketing Competitiveness

• Customer values - Customer values should be viewed not only in terms of product
characteristics, but also in terms of processes which deliver the product. Both the
product and process concept have to be right to achieve customer satisfaction.
• Identify and Promote USP - Unique Selling Proposition is something that sets a
product apart from its competitors in the eyes of existing customers as well as new
customers. Marketers are required to identify USP of their product and effectively
communicate it with the target audience.
• Cost efficient operations - Business is required to be organized and
operated efficiently, so that the cost of production and distribution be minimized.
• Customer delight - Business organizations must provide proper customer services
to delight its customers.

The above points can lead a business to a situation where it has an competitive advantage
over its competitors by being able to offer better value, quality, and service.
Competitive Analysis in Marketing
Every brand can benefit from regular competitor analysis. By performing a competitor analysis,
you'll be able to:

• Identify gaps in the market

• Develop new products and services
• Uncover market trends
• Market and sell more effectively

How to do a Competitive Analysis

1. Determine who your competitors are.
2. Determine what products your competitors offer.
3. Research your competitors' sales tactics and results.
4. Take a look at your competitors' pricing, as well as any perks they offer.
5. Ensure you're meeting competitive shipping costs.
6. Analyze how your competitors market their products.
7. Take note of your competition's content strategy.
8. Learn what technology stack your competitors' use.
9. Analyze the level of engagement on your competitors' content.
10. Observe how they promote marketing content.
11. Look at their social media presence, strategies, and go-to platforms.
12. Perform a SWOT Analysis to learn their strengths, weaknesses, opportunities, and
threats.
CUSTOMER VALUE:
Introduction
We are living in a world that is most unstable and dynamic. World is not only changing
but the rate of change is accelerating. We are experiencing change in our daily life and in
marketplace too. Customer needs, wants, expectations are changing more rapidly;
customers are increasingly demanding better quality and reliability in products and
services; new products and services are coming to market more quickly, competition is
getting more intense and global; and technology is changing rapidly.
Businesses are operating in an uncertain, highly competitive, and highly complex
environment. Not only small but big players are also facing difficulties and challenges. Top
companies are loosing market share and new companies are taking their place. In cell-
phone industry Nokia was the market leader, but it is not so today, Samsung took its place.
Today, the leading edge companies are giving importance to customer satisfaction, loyalty,
and value. They are providing higher customer value to attract new customers and retain
existing customers and it leads to their long term profitability and growth.
Definition of Customer Value
According to Woodruff (1997, p. 142) - “Customer value is a customer’s perceived
preference for and evaluation of those product attributes, attribute performances, and
consequences arising from use that facilitate (or block) achieving the customer’s goals and
purposes in use situations".
Customer value is the difference between the values the customer gains from owning and
using a product and the cost of obtaining the product.
How to Measure Customer Value
1. Identify customer benefits.

While the graphic above highlights some general benefits, here are some specific one you can
consider:

• The quality of your product or service

• The ability to provide a better solution
• Your brand's reputation
• Your unique customer experience
• The quality of your customer service team
• The social advantages of partnering with your business

2. Total customer costs.

When measuring customer costs, it helps to differentiate between tangible and intangible. That
way you can calculate the total of your monetary costs and compare it to your other costs.

Tangible Costs:

• The price of your product or service

• Installation or onboarding costs
• The cost of accessing your product or service
• Maintenance costs
• Renewal costs

Intangible Costs:

• Time invested in buying your product or service

• A poor customer experience
• Physical or emotional stress induced from buying or installing your product
• A poor brand reputation
• Time spent understanding how your product or service works

3. Find the difference between customer benefits and customer costs.

To calculate customer value, we can use the equation below.

Customer Value Formula

The formula for customer value can be written as: (Total Customer Benefits - Total Customer
Costs) = Customer Value, or (B - C = CV).
Tips for Increasing Customer Value
1. Evaluate your customer experience.

When increasing customer value, the best place to start is by analyzing your customer experience.
Create a customer journey map that outlines each step your customers take when buying something
from your business and look for interactions that might cause friction within the experience. Once
you can visualize every action your customers are taking, it's easier to identify opportunities to add
value.

2. Focus on more than price.

For some businesses, it's tough to compete through price alone. Sometimes the cost to make a
product is static, and there's not much room for a business to lower its price tag.

But, that doesn't mean you can't create a competitive offer in your industry.

This is where you should look for alternative ways to add value to your customer experience. Keep
in mind that customer needs range from convenience to performance and there are plenty of non-
monetary benefits that can convince people to buy your product.

3. Collect customer data.

It's hard to make effective changes if you're only looking at customer value from the business
perspective. Instead, you should be centering your focus on the customer's perceived value of your
product or service.

To do that, you'll need access to quantitative and qualitative customer data. With it, management
teams will have facts and statistics that justify their proposed changes. Leadership can make
decisions confidently knowing their perception of customer value aligns with your customer base.

Additionally, it's important to collect both quantitative and qualitative data as this will give you a
diverse data set that includes insightful statistics and captures the voice of the customer.

4. Target your most loyal customers.

You might think that because a customer is loyal, they're already receiving value from your
business. And, you'd be right.

However, just because someone is loyal to your business, that doesn't mean you can't — or
shouldn't — outsize their customer value. Encompassing additional benefits through customer
loyalty programs can generate even more value for these customers.

While this approach not only retains your most valuable audience, it acquires new customers as
well. For example, you can leverage benefits in exchange for customer advocacy. Have customers
submit feedback or write a testimonial that shares their positive experience with potential leads.
Since 93% of consumers use reviews when making buying decisions, this will add another benefit
to your customer value equation.

5. Segment your customer base.

As we mentioned earlier, customer value can vary depending on who you're surveying, and a
customer's needs and goals will influence their definition of "value." Since not all customers are
alike, this creates discrepancies when measuring value at your business.

That's why it's important to segment your customer base into specific target audiences. Start with
your buyer personas and use customer data to identify specific purchasing behaviors. Once your
groups are established, you can measure customer value for each.

Customer value is important to track, but it's not as easy as inputting numbers into a simple
formula. It's all about measuring tangible benefits and perceived value in addition to the actual
cost of a product.
 Marketing Control and Process
Definition of Marketing Control
Marketing Control can be defined as "the process of measuring and evaluating the
results of marketing strategies and plans, and taking corrective action to ensure that
marketing objectives are achieved."
Meaning of Marketing Control
Developing and implementing marketing plan is not enough to reach marketing
objectives; marketing plans and strategies are required to be monitored, evaluated,
and adapted to meet the changing market environment, needs, and opportunities.
Marketing control ensures performance improvement by minimizing gap between
desired results and actual results. If the actual results are found deviated from the
expected results, plans and strategies are adapted to bring the results back to the
desired level.
Marketing Control Process
Marketing control is a four step process: -

1. Define Marketing Objectives

2. Set Performance Standards
3. Compare Results Against Standards
4. Corrections and Alterations

Types of Marketing Control:

Annual Plan Control

As the name suggests, the plans which are determined for one year for the control
of operational activities through the successful implementation of management by
objectives is termed as annual plan control.

Such programs are usually framed and controlled by the top management of the
organization.

Following are the five vital tools used under the annual plan control mechanism:

Sales Analysis

The first one is the sales analysis, where the manager determines whether the sales
target of the organization have been achieved or not. For this purpose, the actual
sales are compared with the desired sales and deviation is computed.

This method is also used for finding out the efficiency of sales personnel by
comparing the individual sales with the target set for each salesperson.

Market Share Analysis

To evaluate the competitiveness, the management needs to find out the market share
acquired by the organization.

However, it is quite challenging to determine the market share of other organizations

which constitute of unorganized firms, due to lack of sufficient data.
Marketing Expense to Sales Analysis

Sometimes the firms spend much on the marketing of products, which diminishes
their profit margin or increases the product price.

Therefore, a marketing expense to sales ratio is calculated to know the percentage

of sales value paid off as a marketing expense.

Let us now go through the other ratios computed to determine the share of each
marketing expense in sales value:

• Sales Force Cost to Sales Ratio estimates the percentage of sales value used
to pay the salespeople.
• Sales Administration to Sales Ratio determines the share of sales amount
utilized for meeting the selling and administration expenses.
• Sales Promotion to Sales Ratio is the value of sales invested in the sales
promotion activities.
• Advertising to Sales Ratio is the percentage of sales value, which is
contributed to the advertising expenses of the products.
• Distribution Expenses to Sales Ratio is the value of sales, which is utilized
for paying off distribution expenses.

Financial Analysis

The management needs to handle its finances well. It should examine the reasons
and factors which influence the rate of return and financial leverage and return on
assets in the organization through financial analysis tools.

It also helps to enhance the financial leverage position of the company.

Customer Attitude Tracking

Consumer satisfaction has been considered as an essential parameter to analyze the

organization’s performance. It is a qualitative analysis tool which can be of the
following three types:

1. Customer Surveys: The companies get the questionnaires filled or make calls
to the past customers for finding out the level of consumer satisfaction. It
provides a direction to the sales team and the management.
2. Customer Panels: The organizations form consumer panels where the
customers are hired to review the products, advertisements and other
 marketing activities. It helps the management to know about the consumer’s
perception and attitude.
3. Feedback and Suggestion Systems: Market performance of the products can
be analyzed with the help of genuine feedback from the customers, and the
same can be improved through their suggestions and input.

Profitability Control

Maximizing the profit margin has become a difficult task in today’s highly
competitive market. This has enforced pressure on the marketing team of the
organizations too.

They now need to frame strategies for profit assessment and control in the different
product line, trade channels and territories.

Following is the process of profitability control in an organization:

The first step is to understand the functional expenses, i.e., selling, distribution,
administrative and advertising expenses incurred while carrying out the marketing
function of a territory or marketing channel.

The second step is to segregate the non-marketing expenses from the marketing
overheads and then to associate these pure marketing expenses to the marketing
entities (like apportioning the building rent into marketing function).
Lastly, to compile everything systematically and to ascertain the profit or loss
incurred on carrying out the particular marketing activity, an individual profit and
loss account is prepared for each operation.

Efficiency Control

The management and the marketers are regularly involved in finding out ways to
improve the task performance in the organization. These improvements bring in
efficiency and perfection in marketing operations.

The three essential mechanisms used under efficiency control are as follows:

SalesForce Efficiency Indicators

The competence of the sales team can be determined by evaluating the various
factors. It includes acquisition of new customers, customer turnover, average cost
incurred on each sales call, return on time invested on the prospective customers,
market share lost to the competitors, average sales made by each person per day, etc.

Advertising Efficiency Indicators

To know the effectiveness of the advertising activities, the marketers analyze the
various advertising functions on different grounds. For this purpose, it finds out the
brand awareness, cost incurred on each enquiry, media cost to reach per thousand
customers, advertising campaign reach, etc.
Distribution Efficiency

The performance of the distribution channels in comparison to the cost incurred on

channel partners and distribution of products can be analyzed through the
distribution efficiency control.

It includes the measurement of the channel member’s market reach, cost incurred on
operating a particular channel and the contribution of each channel member in
selling the brand’s products.

Strategic Control

The external environment creates a significant impact on the organization’s

marketing strategies. To understand and align the plans with the prevailing external
environment, the organization can adopt any of the following control functions:

Customer Relationship Barometer

To determine the customer’s loyalty towards the brand and its products, the
organization uses the relationship barometer.

Here, the company studies the customer’s perception based on the criteria like
organization’s core values, system, policies, structure, customer orientation strategy,
technology, personnel attitude, knowledge, skills and behaviour.
Marketing Audit

Like accounting audits, marketers carry out marketing audit to get a clear picture of
the company’s performance while executing the various marketing operations.

It is a systematic record which periodically examines the problem areas and provides
for the means of rectification, to overcome the weakness by utilizing the
organizational strength and grab the current opportunities.

Marketing Control Process

Marketing control is a systematic and integrated process. A marketer follows the

following steps while exercising control over the marketing operation in an
organization:

1. Determining Marketing Objectives: The initial step in marketing control is

the setting up of the marketing goals, which are in alignment with the
organizational objectives.
2. Establishing Performance Standards: To streamline the marketing process,
benchmarking is essential. Therefore, performance standards are set for
carrying out marketing operations.
3. Comparing Results with Standard Performance: The actual marketing
performance is compared and matched with the set standards and variation is
measured.
4. Analyzing the Deviations: This difference is then examined to find out the
areas which require correction, and if the deviation exceeds the decided range,
it should be informed to the top management.
5. Rectification and Improvement: After studying the problem area
responsible for low performance, necessary steps should be taken to fill in the
gap between the actual and expected returns.
 UNIT-III
PRODUCT DEVELOPMENT:
Introduction to Product Development
In this fast-changing world we are experiencing change in our daily life and at
marketplace too. Customer needs, wants, and expectations are changing more
rapidly. Customers are increasingly demanding advance features, appealing designs,
better quality, and reliability in products. To meet the changing demands of
customer, business organizations are investing heavily in research and development
(R&D). Business organizations are updating existing products and developing new
products to satisfy changing customer needs, wants, and expectations.
The development of competitive new products is a prerequisite for every business
organization to be successful. Samsung has outperformed Nokia in the global
mobile-phone market and become the global leader. Samsung updates its existing
mobile phones and brings new mobile phones more frequently at competitive low
price with advance features, appealing designs, better quality and reliability. Nokia
failed to satisfy changing customer needs, wants, and expectations, and lost its
market position.
Definition of Product Development
In general, the Product Development can be defined as "creating, innovating, or
developing entirely a new product, or presenting an existing product with
enhanced utility, improved features, more appealing design, better quality and
reliability to satisfy the requirements of its end-users."
Meaning of Product Development:
Product means a good, service, idea or object created as a result of a process and
offered to serve a need or satisfy a want. Development means the act or process of
growing, progressing, or developing.
Product Development is a process of improving the existing product or to introduce
a new product in the market. It is also referred as New Product Development. The
functions of product development are as follows: -
• Creation of an entirely new product or upgrading an existing product,
• Innovation of a new or an existing product to deliver better and enhanced
services,
• Enhancing the utility and improving the features of an existing product,
 • Continuous improvement of a product to satisfy rapidly changing customer
needs and wants.
Product Development Process/Stages:
Product development process is a crucial process for the success and survival of any
business. Today, businesses are operating in a highly dynamic and competitive
environment. Business organizations have to continuously update their products to
conform to current trends. The product development process starts from idea
generation and ends with product development and commercialization. Following
are the steps in the process of product development.
Idea Generation - The first step of product development is Idea Generation that is
identification of new products required to be developed considering consumer needs
and demands. Idea generation is done through research of market sources like
consumer liking, disliking, and competitor policies. Various methods are available
for idea generation like - Brain Storming, Delphi Method, or Focus Group.
Idea Screening - The second step in the process of product development is Idea
Screening that is selecting the best idea among the ideas generated at the first step.
As the resources are limited, so all the ideas are not converted to products. Most
promising idea is kept for the next stage.
Concept Development - At this step the selected idea is moved into development
process. For the selected idea different product concepts are developed. Out of
several product concepts the most suitable concept is selected and introduced to a
focus group of customers to understand their reaction. For example - in auto expos
different concept cars are presented, these models are not the actual product, they
are just to describe the concept say electric, hybrid, sport, fuel efficient, environment
friendly, etc.
Market Strategy Development - At this step the market strategies are developed to
evaluate market size, product demand, growth potential, and profit estimation for
initial years. Further it includes launch of product, selection of distribution channel,
budgetary requirements, etc.
Business Analysis - At this step business analysis for the new product is done.
Business analysis includes - estimation of sales, frequency of purchases, nature of
business, production and distribution related costs and expenses, and estimation of
profit.
Product Development - At this step the concept moves to production of finalized
product. Decisions are taken from operational point of view whether the product is
technically and commercially feasible to produce. Here the research and
development department develop a physical product.
Test Marketing - Now the product is ready to be launched in market with brand
name, packaging, and pricing. Initially the product is launched in a test market.
Before full scale launching the product is exposed to a carefully chosen sample of
the population, called test market. If the product is found acceptable in test market
the product is ready to be launched in target market.
Commercialization - Here the product is launched across target market with a
proper market strategy and plan. This is called commercialization phase of product
development.