mm session-1, 2 & 3. let’s understand marketing ‘marketing is the management process that...
TRANSCRIPT
MM SESSION-1, 2 & 3
LET’s UNDERSTANDMARKETING
‘Marketing is the management process that identifies, anticipates
and satisfies customer requirements profitably’
The Chartered Institute of Marketing
What is Marketing?
‘Marketing is reaching the right product, in the right place, at the right
time, and at the right price’
Adcock et al
‘Marketing is the human activity directed at satisfying human needs
and wants through an exchange process’
Kotler 1980
‘Marketing is a social and managerial process by which individuals and groups obtain what they want and
need through creating, offering and exchanging products of value with
others’
Kotler 1991
• Marketing: “The (1) process of (2) planning and (3) executing the (4) conception, (5) pricing, (6) promotion, and (7) distribution of (8) ideas, (9) goods, and (10) services to create (11) exchanges that (12) satisfy (13) individual and (14) organizational (15) objectives.”
American Marketing Association “official” definition
ACQUIRING &
RETAINIG CUSTOMERS
Requirements for Marketing to Occur
• 2+ parties– with unsatisfied needs
• Desire and ability to satisfy these needs
• A way to communicate• Something to exchange
The Marketing Concept
• Focus on finding (or creating) consumer needs and satisfying them—not
– just producing--no guarantee that anyone will buy
Or
– aggressive selling--there is too much competition around
Marketing is Important
Achieves top line
Contributes to society as a whole
Builds strong brands and loyal customers
Decides on the 4 Ps
Meets challenges for sustainability
Marketing is Versatile
Goods
Services
Events
Experiences
Persons
Places
Properties
Organisations
Informations
Ideas
Marketing is Demand Management
NEGATIVE - Change consumer perception, Redesign Mix
NO DEMAND - Connect benefits to need, Generate interest
LATENT - Measure the size of potential market, Develop effective product
FALLING - Creative remarketing, Change the product
IRREGULAR - Use flexible pricing, Promotion
FULL - Maintain
OVERFULL - Use selective de-marketing, Reduce promotion
UNWHOLESOME - Use laws, fear, price hike, reduced availability
B2C – Brand image, Availability, Communication and Services
B2B – Informed people, Volume, Price, Sales force, Reputation
Global – Adapting, Culture, Quotas, Currency, Political
NGOs & Government – Tender, Volume, Price, Contracts, Quality?
Marketing is Addressing Customers
Some Core Marketing Concepts
Marketplace is physical, as when one goes shopping in a store
Marketspace is digital, as when one goes shopping on the internet
Metamarket a cluster of complementary products & servicesthat are closely related in the minds of customers but arespread across a diverse set of industries
eg. the Automobile Metamarket consists of automobile manufacturers, new car & used car dealers, financing companies, insurance companies, spare partsdealers, service shops, auto magazines, car mechanics etc.
Some Core Marketing Concepts
Needs are basic human requirements
Wants specific satisfiers of need
Demand wants backed by ability and willingness to pay
Stated Needs - Product Demanded: wants an affordable car
Real Needs - Functional Benefit Desired: low maintenance cost
Unstated Needs - Expectation from Company: want good service
Delight Needs - Complimentary Freebies: want insurance, warranty
Secret Needs - Emotional Benefits: Image oriented
Some Core Marketing Concepts
Some Core Marketing Concepts
Segmentation: process of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs
Target Markets: that which presents the greatest opportunity
Positioning: find a slot in the customers mind space
Some Core Marketing Concepts
Product a value proposition, a set of benefits they offer to customers to satisfy their needs
Offering the intangible value proposition that is made physicalthrough a combination of products, services, information, and experiences
Brand is an offering from a known source. A brand carrymany associations in the minds of people. These associations make up the brand image
The offering will be successful if it delivers value & satisfaction, The buyer chooses between different offerings on the basis of which is perceived to deliver the most value
Value is primarily a combination of Quality, Service & Price(QSP), called the Customer Value Triad
Value increases with quality & service and decreases withprice
Value can be defined as a ratio between what the customergets and what he gives – the customer gets benefits for acost
Some Core Marketing Concepts
Value = Benefits = Functional Benefits + Emotional Benefits
Costs Monetary Cost + Time Cost + Energy Cost + Psychic Cost
The marketer can increase the value of the offering to customers in several ways;
Raise benefitsReduce costsRaise benefits and reduce costsRaise benefits by more than the raise in costsLower benefits by less than the reduction in costs
Some Core Marketing Concepts
P-S-P-I
Perceived Performance = Expectations OK / Satisfied
Perceived Performance < Expectations Dissatisfied / Unhappy
Perceived Performance > Expectations Delighted
Delighted customers have emotional affinity with brand & hence loyalty
Expectation is based on; Past buying experience, Advertisements, Friends, Price, Benchmarking
Some Core Marketing Concepts
To reach a target market, the marketer uses 3 kinds ofMarketing Channels;
Communication Channels
Distribution Channels
Service Channels
Some Core Marketing Concepts
While marketing channels connect the marketer to the target buyers, the Supply Chain describes a longer channel stretching from raw materials to final product to final buyers.
When a company moves upstream or downstream, its aim is to capture a higher percentage of Supply Chain value.
Some Core Marketing Concepts
Competition includes all the actual and potential rivalofferings and substitutes that a buyer might consider
There are 4 levels of competition, based on the degree ofproduct substitutability;
Brand Competition other companies offering similar products and services to the same customers
Industry Competition all companies making the same product or class of products
Some Core Marketing Concepts
Form Competition all companies manufacturing products that supply the same service
eg. A car manufacturer will not only compete with other car manufacturers but also against manufacturers of motorcycles, bicycles, trucks etc.
Generic Competition all companies that compete for the same consumer income
eg. A car manufacturer would see itself competing with companies that sell major consumer durables, foreign vacations and new homes.
Some Core Marketing Concepts
Competition represents only one force in the environment inwhich the marketer operates
The other force is Marketing Environment: consists of theTask Environment & the Broad Environment
Task Environment includes the immediate actors involved inproducing, distributing, and promoting the offering. The mainactors are the company, suppliers, distributors, dealers andthe target customers
Broad Environment consists of 6 components; Demographicenvironment, Economic environment, Natural environment,Technological environment, Political-legal environment, andSocio-cultural environment
Some Core Marketing Concepts
Some Core Marketing Concepts
The Marketing Mix is the set of marketing tools the companyuses to pursue its marketing objectives in the target market
The 4 Ps of Marketing
PRODUCT PRICE PROMOTION PLACE
MARKETING MIX
PRODUCT PRICE PROMOTION PLACE
Product varietyQualityDesignFeaturesBrand namePackagingSizesServicesWarranties
List priceDiscountsCredit termsPayment period
Sales promotionAdvertisingSales forcePublic relationsDirect marketing
Channel typeCoverageLocationsInventoryTransportStorage
Some Core Marketing Concepts
People Physical Evidence Process
- Employees Facility design - Flow of activities
Recruiting Equipment Standardized
Training Signage Customized
Motivation Employees dress - Number of steps
Rewards - Other tangibles Simple
Teamwork Reports Complex
- Customers Business cards - Customer involvement
Education Statements
Training Guarantees
Some Core Marketing Concepts
Robert Lauterborn propounded that the Sellers 4-Pscorrespond to the Buyers’ 4-Cs
Four PsProductPricePlacePromotion
Four CsCustomer SolutionCustomer CostConvenienceCommunication
“Winning companies will be those that can meet customerNeeds Economically and Conveniently and with Effective
Communication”
Some Core Marketing Concepts
Marketing is Changing…
Information TechnologyGlobalizationDeregulation / LiberalizationIntense competitionRetail Transformation
DisintermediationIncreasing Consumer Buying PowerProliferation of Consumer InformationReducing brand loyaltyCo-creation
Evolution of Company Orientation
PRODUCTION – volume, low cost, easy availability (D>S / Product cost)
(Texas Instruments, Ford, Scooters in 1970s, CD, LCD, RMs,)
PRODUCT - superior products, innovative features (Marketing Myopia / Fallacy of Better Mousetrap)
(Reliance, Nokia, Slide Rule, Bajaj, IBM, LCA, BEST, Post Office, Cameras, Tata TS
Elgin watches, Kevlar, Amazon)
SELLING - aggressive selling and promotion (Over capacity, Push and Make & Sell)
(Insurance, MFs, Pharmaceuticals, Political parties, Housing loans, Commodities)
Evolution of Company Orientation
MARKETING / CUSTOMER - customer focused / centric, more effective than competitors (Sense & Respond / Creating, delivering & communicating superior customer value M-C-C-C-O)
(DuPont, Nestle, HUL, Maruti, Taj Group, ITC)
SOCIETAL - consumer wants, company profits and social welfare (Preserves and enhances consumer’s and society’s well being)
(McDonalds, HUL detergents, CFC free, Body Shop, Aquafina, Jain Irrigation, Energy saving mfg, American autos, Aerated drinks)
FactoryExistingProducts
Sellingand
Promoting
ProfitsthroughVolume
MarketCustomer
NeedsIntegratedMarketing
Profitsthrough
Satisfaction
The Selling ConceptThe Selling Concept
The Marketing ConceptThe Marketing Concept
StartingPoint
Focus Means Ends
Evolution of Company Orientation
FactoryExistingProducts
Mfg &Dist.
Efficiency
ProfitsthroughVolume
MarketCustomer
NeedsIntegratedMarketing
Profitsthrough
Satisfaction
The Production ConceptThe Production Concept
The Marketing ConceptThe Marketing Concept
StartingPoint
Focus Means Ends
Internal Marketing
Marketing
Department
Senior
Management
Other
Departments
Performance
Marketing
Holistic
Marketing
Integrated Marketing
Communications
Product &Services
Channels
RelationshipMarketing
Customers Channel Partners Ethics
Environment Legal Community
SalesRevenue
Brand &CustomerEquity
Holistic Marketing Concept
1. OBSESSED WITH CUSTOMER & AWARE OF COMPETITOR
2. MONITOR UNFULFILLED NEEDS CONTINUOUSLY THROUGH RESEARCH.
3. FUTURISTIC - MARKETING EXPENDITURE AN INVESTMENT
4. MARKETING CULTURE - CUSTOMER OVERRIDES ORGANISATIONAL INTERESTS
5. SPEED IN RESPONSE TO CUSTOMER’S PROBLEMS
6. CONSISTENCY IN DELIVERY OF VALUES, SATISFACTION
7. CUSTOMER RETENTION STRATEGIES
8. INTERACTIVE AND CUSTOMER FRIENDLY DELIVERY SYSTEMS
9. LOOKING AT CONSUMPTION SYSTEM RATHER THAN PRODUCT FOR AUGMENTATION
10. ALL DEPARTMENTS THINK CUSTOMER
11. CUSTOMER SATISFACTION - GOAL
Customer Orientation Means
Tools to Track Customer Satisfaction
• Complaint and suggestion systems• Customer satisfaction surveys• Ghost shopping• Lost customer analysis
• Cautions to be exercised in C.S. surveys
Define what specifics to identify
Manipulation by customers and managers
Customer Development Process
Suspects
PartnersProspects
Rejects
First-timeCustomers
Repeat Customers
Clients Advocates
Low
High
Deg
ree
of In
volv
emen
t
Nature of Customer Relationship
Transactional Collaborative
RepeatCustomers
1st TimeCustomers
Advocates
Clients
Partners
Stages in the Development of Customer Relationship
Life Cycle of Customer Relationship
High CooperationLow Competition
Low CooperationHigh Competition
Time
Pre-RelationshipStage
DevelopmentStage
MaturityStage
SeveranceStage
What should the FOCUS & MAIN ACTIVITIESof a sales person be in each stage of the
Relationship Development Process?
Defining Customer Value
EXCELLENT PRODUCT IS OF NO USE IF IT FAILS TO MEET CUSTOMER NEEDS
A COMPANY SHOULD BE SKILLED IN MARKET ENGINEERING NOT JUST PRODUCT ENGINEERING
Delivering Customer Value
1. MICHAEL PORTER’S GENERIC VALUE CHAIN
2. BENCHMARK AGAINST COMPETITION
Generic Value Chain
PRIMARY ACTIVITIES• Inbound Logistics• Operations• Outbound Logistics• Marketing and Sales• Services
SUPPORT ACTIVITIES• Procurement• Technology development• Human Resource Management• Firm infrastructure
Core Business Process
1. NEW PRODUCT REALIZATION PROCESS
2. INVENTORY MANAGEMENT PROCESS
3. ORDER TO REMITTANCE PROCESS
4. CUSTOMER SERVICE PROCESS
5. CUSTOMER ACQUISITION PROCESS
6. CUSTOMER RELATIONSHIP MANAGEMENT PROCESS
Customer Value Analysis
Identify the major benefits customers value
Assess the quantitative importance of the different benefits
Assess the company’s and competitors performance on the valuesagainst their rated importance
Examine how customers in a specific segment rate the company’sperformance against a specific major competitor on an individual benefit
Monitor customer values over time
VALUE PROPOSITION
VALUE DELIVERY SYSTEM
Customer Profitability Analysis
Profitable Customer
Customer revenue stream > company’s cost stream
Product-Customers-Profitability Analysis
Raise the price of less profitable productsEliminate the less profitable productsSell profitable products to unprofitable customers
ABC
Total revenue from customer LESS all cost incurred by the company
Lifetime Value of Customer
1. Lost customer revenue
2. Lost opportunity revenue
3. Customer replacement costs
Facets of CRM
• Customer needs
• Customer response
• Customer satisfaction
• Customer loyalty
• Reclaiming lost customer
• Customer complaints
• Customer service
DATA MINING & DATABASE MARKETING
Merci