3/19/2013 Opening Case • It was the early 1930s when a physician –turned textile trade in rural Karnataka found his business getting interrupted for want of regular supplies of cloth from the weavers. When he enquired with weavers about the reason for their irregularity, he was told that there was no working capital available to them. There were no banks in the area. The one located in the town was not interested in lending to small operators particularly in the rural area.
Local money lenders used to change very high rates of interest; borrowing at those rates had ruined same in the past. The weavers therefore have developed a habit of working intermittently as and when their own money from sales come in. Introduction Marketing Module-1 Opening Case • The trader therefore had to find a way to ensure uninterrupted supply of goods in his shop, without which his own business was not viable.
He thought of bringing the good from Mumbai, but found that the process be very expensive and time consuming, a the area did not have any direct road /rail links with Mumbai. Besides, transporters were not all reliable. Introduction Marketing occupies an important position in the organization of business unit. Any business is likely to be successful when a strong marketing viewpoint or philosophy permeates the thinking and guides the decision and actions of everyone in the business.
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A business exists only to serve people, and marketing is the function that primarily determines - 1 3/19/2013 Introduction What the product or services shall be How it shall be presented, promoted and distributed How it shall be priced. What is Marketing? Classical Definitions ( Product Oriented View) “ The performance of business activities that directs the flow of goods and services from producer to consumer or user” “ Marketing consists of those efforts which affect transfers in the ownership of goods and services and provide for their physical distribution”
What is Marketing? Modern Definitions ( Customer Oriented View) “ Marketing is a social and managerial 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” According to American Marketing association“ Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas and services to create exchanges that satisfy individual and organizational goals” What is Marketing Management? Marketing Management is the art and science of choosing target market and getting, keeping and growing customers through creating, delivering and communicating superior customer value” “ Marketing Management is the marketing concept in action” 2 3/19/2013 What is Marketed? Goods Services Events & Experiences Persons Places & Properties Organizations Information Ideas A Brief History of Marketing 3 Areas Production Economies of scale. Simple products 1945 Birth of the mass consumer market 1950 Sales Development of sales forces to distinguish products in competitive markets. Sold what companies wanted to sell.
Evolving distribution channels 1960 Increasing diversity of media & technologies Marketing Rapidly increasing competition…the fight for customers. A Brief History of Marketing 1960s A Brief History of Marketing Massive rise in customer expectations Increasing competition Massive growth in advertising Growth in ‘direct’ marketing Much easier for customers to switch business Proliferation of channels, dictated increasingly by customers …a growing need for 2-way dialogue between business & The 4 Ps Product (goods, services, knowledge) Price Promotion Place The dominant marketing template for the last 40 years But... notice something curious….
Where is the customer mentioned? customers 3 3/19/2013 Development of Marketing Approaches Evolution Of Marketing Transactional Relationship Production Concept Product Concept Selling Concept Marketing Concept Holistic Marketing one-off investment in products market segmentation short-term profit relationship-building investment in customers customer analysis long-term profit Late 1800 Early 1900 Early 1930 Mid 1950 1990 Production Concept Consumers prefer products that are widely available and inexpensive Managers of production – oriented businesses Concentrate on achieving high production efficiency, Low costs, and mass distribution.
The production era can be divided into four phases ? Subsistence phase ? Made to order phase ? Early production for market phase ? Mass production for market phase Product Concept Consumers favor products that offer the most quality, performance, or innovative features. Managers in product oriented organizations focus their energy on making superior products and improving them over time. To improve quality and innovation companies gave importance to product engineering. Some times the product concept leads to marketing myopia. Marketing myopia means – focus on the product rather than customers need 4 3/19/2013
Selling Concept The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organizational products. Consumers will buy products only if the company aggressively promotes/sells these products. The selling concept is practiced most aggressively with unsought goods that buyers normally do not think of buying such as insurance, encyclopedias etc. Firms practice the selling concept when they have over capacity. It gives more importance to seller needs Selling Concept Starting point Factory Focus Existing products Means Selling and promotion Ends Profits through sales volume
The selling concept Marketing Concept Focuses on needs/ wants of target markets & delivering value better than competitors. The Marketing concept holds that the key to achieving its organizational goals consists of the company being more effective than competitors in creating delivering and communicating superior customer value to its chosen target markets. The Marketing concept rests on four pillars ? Target Market ? Customer needs ? Integrated marketing ? Profitability Marketing Concept Starting point Market Focus Customer Needs Means Integrated Marketing Ends Profits through Customer satisfaction
The Marketing concept 5 3/19/2013 Selling V/S Marketing Concept Starting point Factory Selling V/S Marketing Concept Ends Profits through sales volume Focus Existing products Means Selling and promotion Focuses on the needs of seller Profit through sales volume Planning is short term oriented Marketer first makes the product and then figures out how to sell it. Importance selling to aggressive Focuses on the needs of buyer Profit through customer satisfaction Planning is long term oriented Marketer first determines the needs and wants of the customers and then delivers the product to satisfy those needs and wants.
Importance integrated marketing (a) The selling concept Market Customer needs Integrated marketing Profits through customer satisfaction (b) The marketing concept Societal Marketing Concept ? The Societal Marketing concept holds that organization’s task is to determine the needs , wants and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in way that preserve the customers and society’s well being. ? It calls upon marketers to build social and ethical considerations into their marketing practices. There should be balance between company profits, customer satisfaction, and public interest. Societal Marketing Concept Society (Human Welfare) Societal Marketing Concept Consumers Company (Want Satisfaction) (Profits) 6 3/19/2013 Holistic Marketing Core Concepts of Marketing Core Concepts Needs, wants, and demands Marketing offers: including products, services and experiences • Value and satisfaction • Exchange, transactions and relationships • Markets • • • Need ? State of felt deprivation ? Example: Need food • Wants ? The form of needs as shaped by culture and the individual • Demands ? Wants which are backed by buying power
Core concepts of Marketing Core Concepts of Marketing Core Concepts Needs, wants, and demands Marketing offers: including products, services and experiences • Value and satisfaction • Exchange, transactions and relationships • Markets • • • Marketing offer ? Combination of products, services, information or experiences that satisfy a need or want ? Offer may include services, activities, people, places, information or ideas Core Concepts Needs, wants, and demands Marketing offers: including products, services and experiences • Value and satisfaction • Exchange, transactions and relationships • Markets • • • Value Customers form expectations regarding value ? Marketers must deliver value to consumers • Satisfaction ? A satisfied customer will buy again and tell others about their good experience 7 3/19/2013 Core Concepts of Marketing Core Concepts of Marketing Core Concepts Needs, wants, and demands Marketing offers: including products, services and experiences • Value and satisfaction • Exchange, transactions and relationships • Markets • • • Exchange ? The act of obtaining a desired object from someone by offering something in return ? One exchange is not the goal, relationships with several exchanges are the goal ?
Relationships are built through delivering value and satisfaction Core Concepts Needs, wants, and demands Marketing offers: including products, services and experiences • Value and satisfaction • Exchange, transactions and relationships • Markets • • • Market ? Set of actual and potential buyers of a product ? Marketers seek buyers that are profitable Core Concepts of Marketing Core Concepts of Marketing Core Concepts Target Market Marketing place, Marketing Space and Meta Market • Segmentation • Marketers Prospects • Relationship Marketing and Networks • • Distinctive category of market which includes market for company’s products and services Core Concepts Target Market Market Place, Market Space and Meta Market • Segmentation • Marketers Prospects • Relationship Marketing and Networks • • • Market place ? Market place is physical. As one goes shopping in a store Market Space ? Market space is digital. As one goes shopping on internet • • Meta Market ? Meta market is a cluster of complementary product and services that are closely related in the minds of consumers but are spread across a a diverse set of industries. 8 3/19/2013
Core Concepts of Marketing Core Concepts of Marketing Core Concepts Needs, wants, and demands Market place, Market space and Meta market • Segmentation • Marketers Prospects • Relationship Marketing and Networks • • • Segmentation ? Grouping of consumers according to such characteristics as income, age, degree of urbanization, race, or education Core Concepts • Target Market • Market Place, market • Marketer ?Marketer is seeking response. someone Space and Meta Market • Prospect ?Prospect is someone giving response. • Segmentation • Marketers and Prospects • Relationship marketing nd Network Core Concepts of Marketing Core Concepts of Marketing Core Concepts Target Market Market Place, market Space and Meta Market • Segmentation • Marketers and Prospects • Relationship Marketing and Network • • • Relationship Marketing ? Building mutually satisfying long-term relations with key partiescustomers, supplies, distributors in order to earn and retain their business Core Concepts • • • • • Marketing Network ? Marketing network consists of the company and its supporting stakeholders with whom it has built mutually profitable business relationship
Marketing Channels Supply Chain Marketing Mix Competition • Sets of Inter dependent organizations involved in the process of making a product or service available for use or consumption 9 3/19/2013 Core Concepts of Marketing Core Concepts of Marketing Core Concepts • • • • • Supply Chain ?Longer channel stretching from raw materials to components to final products that are carried to final buyers Core Concepts • • • • • Marketing Mix ? MM is the set of marketing tools, the firm uses to pursue its marketing objectives in the target market. Product Pric e Place (Distribution) Promotion
Marketing Channel Supply Chain Marketing Mix Competition Marketing Channels Supply Chain Marketing Mix Competition Core Concepts of Marketing Marketing Environment Core Concepts • • • • Marketing Channels Supply Chain Marketing Mix Competition • Competition ?Rivalry to attract customers discretionary income • It includes ?Generic Competition ? Brand Competition ? Form Competition ? Industry Competition • The actors and forces that affect a firm’s ability to build and maintain successful relationships with customers. • It consists of ? Internal Marketing Environment ? External Marketing Environment 10 /19/2013 Internal Marketing Environment • ? ? ? ? ? ? These are controllable factors Value System Vision, mission, and Objectives Organizational structure Marketing Staff Company Reputation Financial Factors External Marketing Environment ? Microenvironment: • Actors close to the company Micro Level Influences that affect a particular firm ? Macro environment • Larger societal forces Macro Level Influences that affect all firms The Microenvironment Forces in the Microenvironment company’s immediate environment and that affect the company’s ability to produce goods and services and serve consumers. 1 3/19/2013 Suppliers • • • Suppliers are those who supply the raw material and components to the company. Reliable sources of supply are necessary for smooth functioning of business. It is very risk to depend on a single supplier because a strike, lockout or any other production problem with supplies may seriously affect the company. ? Treat suppliers as partners. Customers • • • A business exits only because of its customers. A company may have different categories of customer like individuals, households. Industries and other institutions.
Depending on a single customer is risky because it may place company in poor bargaining position. • Suppliers help to create and deliver customer value. Customers • Customer markets must be studied. • Market types ? Consumer ? Business ? Government ? Reseller ? International Competitors • In general competitors are those who sell the goods and services of the same and similar products in the same market. • A firms competitors include not only the other firms which are marketing same products but also those who compete for the discretionary income of the consumer. Successful companies provide better customer value than the competition ? Size and industry position help to determine the competitive strategy. 12 3/19/2013 Marketing Intermediaries • Every producer has to appoint a number of intermediaries in assisting him in promoting, selling and distributing the goods and services to ultimate customers. • Marketing intermediaries help the firm in overcoming the discrepancies in quality , place, assortment. ?Intermediaries take many forms. • • • • Resellers Physical distribution firms Marketing services agencies Financial intermediaries Publics A public is any group that has actual or potential interest in or impact on company’s ability to achieve its objectives. • It is the duty of the company to satisfy the people at large, which is necessary for future stay and growth. • In order to build goodwill and seek favorable response from the public, it is necessary for the firm to satisfy the needs of the public as well. Macro Environment • These factors are external to the firm and are quite uncontrollable Demographic Environment • Study of the population in terms of age, sex, size of the population, family size, and occupation is known as demography. Rapidly increasing population indicates a growing demand for many products. • Increasing population also indicates that availability of surplus labour which affects the wage rates. 13 3/19/2013 Demographic Environment • • • • • • Population growth Population age mix Ethnic markets Educational groups Household patterns Geographical shifts Economic Forces • Affects consumer purchasing power and spending patterns. • Income Distribution • Savings, Debt, and Credit • factors relating to the economic conditions, systems, economic policies of a country and includes structure f economy, agriculture, industrial sectors, transportation etc Natural Environment • Concern for the natural environment has grown steadily, increasing the importance of these trends: ? Shortage of raw materials ? Increased pollution ? Increased governmental Technological Environment ?The technological environment is characterized by rapid change. ?New technologies create new opportunities and markets but make old technologies obsolete. ?The U. S. leads the world in research and development spending. ? Pace of change ? Opportunities for innovation ? Varying R&D budgets ? Increased regulation of change ntervention ? Shortage of raw materials ? Increased energy costs ? Anti-pollution pressures ? Governmental protections 14 3/19/2013 The Political Environment • Includes laws, governmental agencies, and pressure groups that impact organizations and individuals. • Increased legislation to protect businesses as well as consumers. • Changes in governmental agency enforcement. • Increased emphasis on ethical behavior and social responsibility. The Cultural Environment • Is composed of institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors. The cultural factors like buying and consumption habit of the people, customs and traditions, tastes and preferences, languages etc. are the factors that affect the Marketing strategy. SWOT Analysis Marketing Challenges in the globalised Economy • Grey marketing • Terrorism • Skills and Competence gaps in knowledge about Customer Preferences • Cultural differences 15 3/19/2013 Marketing Challenges in the globalised Economy • Nationalism • Stability of Governments and Economic legislations. • Corruption • Property rights and Piracy • Price Sensitivity Closing Copy Travel solution Ltd is a cutting edge IT Company in India. Its domain expertise is in finding software solutions for the Travel Industry. Its Client list included Thomas Cook, American airlines, Swissair besides several others. However the big 3 clients accounted for over 60% of the total business. The sales turnover of the company in the last financial year was Rs. 18 crore, of which over 90% was export earnings. Closing Copy • The team strength of Travel solution Ltd had been augmented last year and the total number of employees touched to 120. Of this, over 20 were senior executives, with stock options.
The hardcore design and systems work was executed by a team of 48 very highly paid executives, who formed the core team. This team was normally on deputation at client sites all year around. Closing Copy • In the last 3 months, over 40 executives had been taken in, primarily in marketing, administration and HR. The average age of the company employee was 27 while the average salary was Rs. 4. 5 lakhs PA • On September 21st, 2001, a board meeting of Travel solution Ltd was held in Bangalore at the headquarters to discuss and plan the strategy of the company for the next half year. 16 3/19/2013 ??? 17
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