What is Marketing?
Marketing is a social & managerial process
by which individuals & groups obtain what
they need & want through creating, offering
& exchanging products of value with others
Marketing Concept
Holds that the key to achieving
organizational goals consists of being more
effective than competitors in integrating
marketing activities toward determining &
satisfying the needs & wants of target
markets.
Product
Variety
Quality
Design
Features
Brand name
Packaging
Sizes
Warranties
Price
List price
Discounts
Allowances
Payment period
Credit terms
Promotion
Sales promotion
Advertising
Sales force
PR
DM
Place
Channels
Coverage
Assortments
Locations
Inventory
Transport
4 P’s vs. 4 C’s
Product – Customer needs/wants
Price – Cost to customer
Place – Convenience
Promotion - Communication
SBU Strategies
Build:
Objective is to increase the SBU’s market
share, even forgoing short-term earnings.
Appropriate for question marks whose market
shares must grow if they are to become stars.
Hold:
Objective is to preserve SBU’s market share.
Appropriate for strong cash cows if they are to
continue yielding a large positive cash flow.
SBU Strategies
Harvest:
Objective is to increase the SBU’s short-term
cash flow regardless of long-term effect. Involves
a decision to eventually withdraw from a business
by implementing a program of continuous cost
retrenchment. Company plans to milk its business.
Hope is to reduce costs at a faster rate than any
potential drop in sales thus increasing company’s
cash flow. Appropriate for weak cash cows.
SBU Strategies
Divest:
Here the objective is to sell or liquidate the
business because resources can be better used
elsewhere. Appropriate for dogs & question
marks that are dragging down company’s profits.
SBUs start as question marks, become stars,
then cash cows & finally dogs.
GE Model
Each business is rated in terms of market
attractiveness & business strength. Companies
are successful to the extent that they enter
attractive markets & possess the required
business strengths to succeed in those markets.
If 1 of the factors is missing, the business will not
produce outstanding results (strong company in
unattractive market or weak company in
attractive market will not do well).
SWOT Analysis
S – Strength
W – Weakness
O – Opportunities
T – Threats
Remember - SW are internal, OT are
external
Strengths/Weaknesses
Marketing:
Company reputation
Market share
Product/service quality
Pricing/distribution/promotion/sales force
effectiveness
Geographical coverage
“Core competencies”
Finance
Deep pockets
Cash flow
Financial stability
Manufacturing:
Economies of scale
Latest technology
Dedicated work force
Organization
Visionary capable leadership
Dedicated employees
Entrepreneurial orientation
Flexible/responsive
Opportunities
A marketing opportunity is an area of buyer
need in which a company can perform profitably.
Opportunities can be classified according to
attractiveness & success probability.
Company’s success probability depends on
whether its business strengths not only match
key success requirements for operating in target
market but also exceed those of competitors.
Threats
A challenge posed by an unfavorable trend
or development that would lead, in the
absence of defensive marketing action, to
deterioration in sales or profit.
Threats should be classified according to
their seriousness & probability of
occurrence.
Porter’s generic strategies
3 game plans
Porter’s generic strategies
Overall cost leadership (e.g. the Chinese
Dragon!).
Differentiation –(It’s a Sony!).
Focus – (niche marketing).
PEST Analysis(
Analysis of macro-environment, of external
factors usually beyond firm’s control
(sometimes threats). Usually performed for
countries.
Political Analysis
Political stability
Risk of invasion
Legal framework for contract enforcement
PEST Analysis
IPR protection
Trade regulations & tariffs
Anti-trust laws
Pricing regulations
Taxation policy
Wage legislation
Mandatory employee benefits
Industrial safety regulations
PEST Analysis
Economic Analysis
Economic system
Govt. intervention
Comparative advantages
Exchange rate & stability of currency
Infrastructure quality
Workforce skill level
PEST Analysis
Labor costs
Economic growth rate
Discretionary income
Unemployment rate
Inflation rate
Interest rates
Business cycle stage (prosperity, recession
etc.)
PEST Analysis
Social Analysis
Demographics
Class structure
Education
Culture
Attitudes
Leisure interests
PEST Analysis
Technological Analysis
Recent techno development
Technology impact
Impact on cost structure
Rate of techno diffusion (spread of
technology)
VALS System
Divides US adults into 8 groups:
High resources
Actualizers – Successful, sophisticated, active, take-charge. Favor upscale/niche
products.
Fulfilleds – Mature, satisfied, comfortable. Favor durability, value.
Achievers – Successful, career & work oriented. Favor established, prestige
products.
Experiencers – Young, vital, enthusiastic, rebellious. Spend on clothing, fast food,
music, movies.
Maslow’s Hierarchy of Needs
Physiological needs (roti/kapda/makaan)
Safety needs (security)
Social needs (belonging, love)
Esteem needs (recognition, status)
Self actualization (realization/moksha)
Buying Decision Process
Buying roles:
Initiator – person who first suggests the idea
Influencer – person whose advice influences
the decision
Decider – person who decides on any
component of buying decision
Buyer – person who makes actual purchase
User – person who uses or consumes
Stages
Problem recognition
Information search
Evaluation of alternatives
Purchase decision
Post-purchase behavior
Business markets & business
buying behavior
Types of purchasing processes:
Routine products – office supplies
Leverage products – high value but low risk
(pistons)
Strategic products – high value & high risk
(mainframes)
Bottleneck products – low value but some
risk (spares)
Dealing with competition
Porter’s Model:
Threat of intense segment rivalry – segment
unattractive if it contains numerous strong &
aggressive competitors
Threat of new entrants – most attractive
segment has high entry & low exit barriers
Porter’s Model
Threat of substitute products – segment
unattractive when there are actual/potential
substitutes for product (placing limit on
prices)
Threat of buyers’ growing bargaining power –
segment unattractive if buyers possess
strong bargaining power
Threat of suppliers’ growing bargaining power
Dealing with competition - market
leader
Expanding total market –
New users – market penetration, new-
market segment, geographical expansion
New uses – soap/cream
More usage - shampoo
Dealing with competition - market
leader
Defending market share –
Position defense – make the brand
impregnable (Heinz)
Flank defense – P&G (Tide)
Preemptive defense – Seiko with 2300
watch models, has left nothing to chance!
Counteroffensive defense – Frontal, flank or
pincer
Dealing with competition - market
leader
Mobile defense – through a) broadening
(Reliance from petrochemicals to petrol,
LPG etc) & b) diversification into unrelated
industries (Tata)
Contraction defense – Withdrawing from
non core areas (HLL from agrovet etc.)
Dealing with competition - market
leader
Expanding market share – Best example is
P&G, thru:
Customer knowledge
Product innovation
Quality
Line/Brand extension/Multibrand
Heavy advertising/sales promo
Aggressive sales force etc
Dealing with competition –
market challenger
Frontal attack
Flank attack
Encirclement attack – grand offensive on
several fronts
Bypass attack – diversifying into unrelated
products/new markets/new technologies
Guerilla warfare - Shivaji
Market follower
Counterfeiter – sells fake look-alikes
Cloner – emulates with slight variations
Imitator – Copies with slight variations
Adapter – adapts from leader & improves