Marketing Skills : Unit 2

 Marketing Management Philosophies / Concepts

There are five alternative concepts under which organizations conduct than marketing activities.

1. Production

2. Product

3. Selling

4. Marketing

5. Societal Marketing

* Production Concept

The production concept holds that consumers favor products that are available, and highly affordable and management should focus on improving production and distribution.

The production concept is useful in two situations.

1. Demand for a product exceeds the supply. Management looks for ways to improve production.

2. Product's cost is too high and improved. productivity is needed to bring it down.

* Product Concept

Product concept holds that consumers favor products that offer the most and features, quality and performance and that organisation should make continuous product improvements.

* Selling Concept

The selling concept holds that consumers will not buy enough of the organisations products unless the organization undertakes a large-scale selling and promotion effort. 

* Marketing Concept 

The marketing concept holds that achieving organizational goal depends on determining the needs and wants of target markets and delivering the desired satisfaction more effectively and efficiently than competitors.

* Societal Marketing Concept 

The societal marketing concept holds that the organization should determine the needs, wants and interests of target markets and deliver the desired satisfactions more effectively and efficiently than competitors in a way that maintains or improves the consumers and society's well being.

 The societal marketing concept calls upon marketers to balance three consideration in setting their marketing policies.

1. Society (Human Welfare)

2. Consumer (Satisfaction)

3. Company (profits)

* Holistic Marketing Concept

Holistic Marketing recognises that "every thing matters. The four components of holistic marketing are relationship marketing integrated marketing, internal marketing, and socially responsible marketing.

1 Relationship Marketing: Relationship marketing has the aim of building mutually satisfying long-term relationships with key parties - customers, suppliers, distributors and other marketing partners. Companies build strong economic technical and social ties among the parties. The companies need to do Customer relationship management (CRM) and partner relationship management (PRM). The outcome of relationship is building of a unique company asset called marketing network consisting of customers, retailers marketing intermediaries, employees, ad agencies, university scientist, and others. It requires an understanding of the capabilities and resources of different groups, as well as their needs, goals, and desires.

2. Integrated Marketing: 

Marketing program consists of numerous decisions on value-enhancing marketing activities generally called marketing mix. Marketing mix is also defined as the set of marketing tools the firm uses to pursue its marketing objectives. These are classified into four - product, price, place and promotion.

3. Internal Marketing 

It is taking the employees along to reach company objectives. Designing appropriate programs to motivate them is important.

4. Socially Responsible Marketing 

It was explained earlier.

Marketing Plan & Strategies

• Under marketing concept, companies succeed by designing offers that satisfy target consumers' needs better than competitors' offers.

• Thus marketing strategies must consider not only the needs of target consumers, but also the strategies of competitors which require two steps 

1 competitor analysis and

2 compititive strategies.

1  Competitor Analysis

Competitor Analysis is the process of identifying. major competitors; assessing their objectives, shategies, stengths and weaknesses and reaction patterns; and selecting which competitors to attack or avoid

Competitive strategies are the strategies that strongly position the company against competitors and that give the company the strongest possible strategic advantage.

Competitor Analysis

• Steps in analysing competitors are

1. Identifying the company's competitors. 

2. Determining competitors objectives.

3. Identify competitors' strategies.

4. Assessing competitors' strengths and weaknesses. 

5. Estimating competitors' reaction patterns

6. selecting competitors to attack and to avoid.

___________________________

1. Identifying the company's competitors. 

Industry point of view - Those who are part of the present industry.

Market point of view - Those who can become part of industry in future.

2. Determining competitors objectives.

What do the competitors short term and long term objectives? Profitability, Market share, growth, cash flow, Technology leadership, and other goals 

3. Identify competitors' strategies.

Competitor's product, quality, features, mix, customer service, pricing policies, distribution coverage, sales strategy, advertising, sales promotion , R&D, manufacturing, purchasing, and other strategies.

4. Assessing competitors' strengths and weaknesses. 

Using secondary data, personal experience and hearsay.

Conducting 'Costomer Value Analysis ' to know what benefits customers Value and how they rate various customer offers.

5. Estimating competitors' reaction patterns

Understand the customers' philosophy, internal culture, and guiding beliefs. Do they live in harmony or fight constantly.

6. selecting competitors to attack and to avoid

Close or distant 

Strong or weak 

Well behaved or disruptive.

2   Competitive Strategies 

Michael Porter has described four basic competitive Strategies.

1. Overall cost leadership 

2. Differentiation 

3. Focus 

4. Middle of the roaders

A different classification of competitive positions can be adopted based the roles firms play in the target market.

# Market Leader Strategies 

1. Expanding the total market - new users, new usage, more usage 

2. Protecting the market share. - position defense, franking defense, preemptive defense, counter offensive defence, mobile defense (market diversification), contraction defense.

3. Expanding the market share - gain more share 

# Market Challenger Strategies 

1. Concentrate on its strength 

2. Attack competitors' weakness - frontal attack, flanking attack, encirclement attack, bypass attack (target easier Markets), guerrilla attack (periodic attack to harass and demoralise the competitor)

3.Bypass and develop new product and new market.

# Market Follower Strategy 

1. Cloner- copies everything product, distribution, advertising etc.

2. Imitator - copies with some differentiation.

3. Adapter- builds on leaders products but improves on them.

# Market Nicher Strategies 

Vertical Level Specialist(A niche specialist eg healthcare, education), customer size specialist, geographic specialist, feature specialist.

Market Segmentation 

Market segmentation : Buyers have unique needs and wants & each is potentially a separate market but designing a separate marketing program for each buyer is not worth while. Marketers look for broad classes of buyers who differ in their product needs or buying responses.

What is Market Segmentation?

Market Segmentation is dividing market into smaller groups of buyers based on their unique needs, behaviours or personality.

Advantages of Market Segmentation.

Distinguish one customer group from another.

Understand Potential Customers.

Pay Proper attention to them.

Formulate Maketing Programmes & Marketing Mix.

Select channels of distribution.

Understand Competition

Efficient use of marketing resources

Accurate measurement of goals & performance.

Facilitate proper choice of target market.

Helps achieve specialization.

Helps spot the less satisfied segments and succeed in satisfying them.

Market Segments require separate products, have unique needs and wants, have unique responses and behaviour, 

Requirements for Effective Segmentation.

To be useful, market segments must have the following characteristics.

1. Measurability - The degree to which the size and purchasing power of the segment can be measured.

2. Accessibility - The degree to which the segments can be reached and served.

3. Substantiality - The degree to which segments are large and profitable enough.

4. Actionability The degree to which affective. programs can be designed for attracting and serving the segments.

5. Growing

6. Compatible with present policies.

7. Profitable.

Bases of Segmenting Consumer Markets.

Geographic: North, s, e, w, region, city, density of population, climate .

Demographic: age, family size, family life cycle, gender, income, occupation, religion, social class.

Psychographic: life-style, personallity, Activities, Interests, Opinions. 

Behavioral

Occasions: regular, special

Benefits: quality, economy, features

User status: non-user, ex- user, potential user, first time user, regular user.

User Rate: light, medium, heavy

Loyalty Status: none, medium, strong, absolute, 

Readiness Stage: unaware, aware, informed, interested, desirous, intending to buy

Attitude : enthusiastic, positive, indifferent, negetive, hostile.

New Product Development

 

New Product Development Process consists of the following eight major steps.

1.       Idea Generation

2.       Screening

3.       Concept Development & Testing

4.       Marketing strategy

5.       Business Analysis

6.       Product Development

7.       Test marketing

8.       Commercialization

 

1  Idea Generation

Major sources of Idea generation are – Internal sources, Customers, Competitors, Distributors, Suppliers. Other sources can be trade magazines, shows, seminars, consultants, Ad agencies, universities and brain storming.

 

2  Idea Screening

It is screening new product ideas in order to spot good ideas and drop poor ones.

Have a rough idea about market size, market growth, market positioning

 

3  Concept Development & Testing

A Product Idea is an idea for a possible product that the company can envision offering to the market.

A Product Concept is a detailed version of the new product idea stated in meaningful consumer terms.

A Product Image is the way consumers. perceive an actual or potential product.

Concept Development

Customers do not buy a product idea, they buy a product concept.

Concept Testing

Concept testing is testing new product concepts with a group of target consumers to find out if the concepts have strong Consumer appeal.

 

 

4  Marketing. Strategy Development

•Marketing Strategy Development is designing an initial marketing strategy for a new product based on product concept.

• Marketing Strategy statement is a statement of the planned strategy for a new product that outlines the intent target market, the planned product positioning, plus the sales, market share and profit goals for the first few years.

* Marketing Strategy Statement consists of three parts

1. The first part describes the target market, the planned product positioning and the sales, market share and profit goals for the first few years.

2. The second part outlines the products planned price, distribution and marketing budget for the first year.

3. The third part of the marketing strategy statement describes the planned long run. sales, profit goals and marketing-mix strategy.

 

 

5  Business Analysis

• Business Analysis is a review of the sales, costs and profit projections for a new product to find out whether these factors satisfy the company objective

• If they do the product can move to the product development stage.

• This is done by looking at the sales & history of similar products, survey of market opinion etc.

 

 

6  Product Development

• Product development is developing the product concept into a physical product in order to assure that the product idea can turned intobe workable product.

It calls for lage jump in investment.

Developing it may take days, weeks, month or even years

• The prototypes must have required functional features and also convey intended psychological characteristics. 

 Previously the goal was to produce customer satisfying products and without much concern about how the designs will be produced, which was left to manufacturing department. Recently companies have adopted a new approach called called design for manufacturing and assembly (DFMA). Using this approach companies work to fashion products that are both satisfying to consumers and easy to manufacture.

 

 

7  Test Marketing

 

•Text Marketing is the stage of new-product development in which the product and marketing programe are tested in more realistic market setting.

Test marketing allows the company to test its entire marketing program for the product - its portioning strategy, advertising distribution, pricing, branding & packaging.

• Test marketing is used to find potential problems of consumers and dealers while handling, using and repurchasing the product.

• When cost of developing and introducing the product are low and the company is confident that the product will succeed or the product is a minor modification of current product the company may do little or no test marketing.

 Test marketing takes time during which competitor may gain advantage.

 

•Consumer product companies usually choose one of the three approaches to test Marketing 

 1 Standard test market 

2 Controlled test market 

3 Simulated test market 

 

Standard Test Market

• Standard test markets test the new consumer product in situations like those it would a face in a full scale launch. A few test cities are found where Salesforce tries to persuade resellers to give shelf space and promotional support. The product is backed by full advertising and promotion campaign and the product performance is measured. The results are used to forecast national sales and profits.

• Standard test Markets take a long time to complete, it is costly, competitors know it even before it launch, and get time to develop defensive strategies.

 

Controlled Test Market

Several research firms keep controlled panel of stores which carry new products for free. The research firms delivers the product to the participating store and controls shelf location, space, displays and point of purchase promotions and pricing.

 

Simulated Test Markets

The consumers are given some a small amount of money and invited to a real or laboratory store where they buy items. 

 • The process is a test of commercial effectiveness.

Some weeks later the consumers are interviewed by phone to determine product attitudes, usage satifaction, repurchase intentions etc.

 

 

8  Commercialization 

Commercialization is introducing a new product into the market.

The company takes decisions on when, where, to whom and how to inter the market.