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Marketing Management
Prepared by
Ahmed Sabbir
1) Negative demand: If consumer dislikes the product and may even pay a price to avoid
it. For example, vaccinations, Dentist, many people avoid seeing the dentist.
Associated marketing task: The marketing task is to analyze the reasons for this dislike
and to find out whether a marketing program consisting of product redesign, lower
prices, and more positive promotion could change the customers belief and attitude.
Marketing approach is Conversational marketing.
Negative demand can be a positive one by doing:
Try to create awareness rather than promotion.
Inform the customers about the importance of your products.
2) Non-existent demand/No demand: Customers are unaware or uninterested in these
types of product.
Task: The marketing task is to measure the size of the potential market and develop
effective goods and services that would satisfy the demand.
Needs: Needs are states of felt deprivation. They include basic physical needs for
food, clothing, warmth, and safety; social needs for belonging and affection; and
individual needs for knowledge and self-expression. These needs were not invented
by marketers; they are a basic part of the human makeup. When needs is not
satisfied, people will try either to reduce the need or look for an objects that will
satisfactory.
Wants: Wants are the form human needs take as they are shaped by culture and
individual personality. An American needs food but wants a hamburger, French
fries, and a soft drink. A person in Mauritius needs food but wants a mango, rice,
lentils, and beans. A person of Bangladesh needs foods but wants rice, fishes and a
glass of water. Wants are shaped by one's society and are described in terms of
objects that will satisfy needs. Wants are describes in terms of objects that will satisfy
needs.
Demand: Human wants that are backed by buying power is defined as demand.
People have almost unlimited wants but limited resources. Thus, they want to
choose products that provide the most value and satisfaction for their money. When
backed by buying power, wants become demands.
Brand
A brand is an offering from a known source.
A brand name such as McDonald’s carries many associations in the minds of people:
hamburgers, fun, children, fast food, and golden arches. These associations make up the
brand image. All companies strive to build a strong, favorable brand image.
Marketing channel:
To reach a target market, the marketer uses three kinds of marketing channels.
Marketing Environment
The marketing environment is made up of the internal and external environment of the
business. While internal environment can be controlled, the business has very less or no
control over the external environment.
Internal Environment
The internal environment of the business includes all the forces and factors inside the
organisation which affect its marketing operations. These components can be grouped
under the Five Ms of the business, which are:
Men
Money
Machinery
Materials
Markets
The internal environment is under the control of the marketer and can be changed with the
changing external environment.
External Environment
The external environment constitutes factors and forces which are external to the business
and on which the marketer has little or no control. The external environment is of two types:
Micro Environment: factors those are close to the company, suppliers, competitors,
management, distributors. Micro environment examples include customers, banks
and trade unions as they all interact with the firm.
Macro Environment: In general macro environment factors are not close to the firm.
Macro environment examples include legislation, the economy (e.g. recession,
inflation, VAT changes), and technological change such as the internet. Macro
environment factors are uncontrollable factors but still influence company strategy.
Supply Chain
Holistic Marketing Concept is probably the newest approach to marketing and the latest
business concept.
A holistic marketing concept is based on the development, design and implementation of marketing
programs, processes and activities that recognize the breadth and interdependencies. Holistic
marketing recognizes that ‘everything matters’ with marketing and that a broad, integrated
perspective is necessary to attain the best solution.”
Holistic marketing is based on the philosophy that everything matters in marketing.
Relationship Marketing
Relationship marketing includes of building mutual satisfaction with customers long term
relationships with key parties as well as go through profit of the business.
Key parties are
• Customers-People those who are the target market for a firm.
Integrated Marketing
The marketer task is to device marketing activities and assemble fully integrated
marketing programs to create, communicate and deliver value for customers.
Marketing programs are the combination of decisions on value enhancing marketing
activities to use.
Marketing activities are related with 4P or marketing mix.
Product
Price
Place
Promotion
Internal marketing
Internal Marketing is the task of hiring, training and motivating to able employees who
want to serve customers well. Internal marketing must take place on two levels-
Marketing Management, Course-MKT-309 Prepared by Ahmed Sabbir 10 |
At one level think the various marketing function-
Sales forcing
Advertising
Customer service
Product management
Marketing research and so on
Another level think about the customers wants, needs, demand and satisfaction.
Performance Marketing
Performance Marketing requires understanding the financial and nonfinancial returns to
business and society from marketing activities and programs.
Performance may be of two types-
Financial Accountability
Environmental and legal concern.
o Social Responsibility Marketing/ Societal marketing concept is fall under performance
marketing, build social and ethical consideration into their marketing parties.
o Focus on satisfying customer needs and wants while enhancing individual and societal
well-being.
o Consider the collective needs of society as well as customer desires and the
organization’s profits.
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Unit-III
Developing Marketing Strategies and Plans
3.3 What is Strategic Planning Gap? Discuss the methods to fill the gaps?
Strategic Planning Gap means the gap between future desired sales and projected sales.1
Figure illustrates this strategic-planning gap for a hypothetical manufacturer of blank DVD
discs called Cineview. The lowest curve projects expected sales from the current business
portfolio over the next five years. The highest describes desired sales over the same period.
Evidently, the company wants to grow much faster than its current businesses will permit.
1. Intensive Strategy:
Corporate management should first review opportunities for improving existing
businesses. One useful framework is a “product-market expansion grid,” which considers
the strategic growth opportunities for a firm in terms of current and new products and
markets. There are four strategies:
1
A sales projection is a forecast used to estimate sales for defined time in the future.
Marketing Management, Course-MKT-309 Prepared by Ahmed Sabbir 15 |
i) Market-penetration strategy-Increasing sale of existing product in existing
market and gain more market share by attracting competitors’ customers or
non- users or by encouraging the current customer to buy more. The strategies
are-
Price reduction
Making available in more location
Packaging in different size
Advertising stressing many benefits of the product.
ii) Market-development strategy-Finding new market for the existing product. For
example, Walton finds new market in Nepal and Bhutan.
iii) Product-development strategy: It develop new products for the existing
market/current market. E.g., Unilever introduce new Pepsodent Charcoal.
iv) Diversification strategy.-Developing new products and finding new market.
For example, Canon diversified from Camera making company into producing
new range of office equipment.
2. Integrative Strategy
A business can increase sales and profits through backward, forward, or horizontal
integration within its industry.
Backward Integration: Integration (acquiring or partnering) with one or more of its
suppliers.
Forward Integration: Integration with one or more of its distributors/middleman.
Horizontal Integration: Merger or integration with its competitors.
Supplier
Backward
Integration
Manufacturer
Wholesaler Forward
Integration
Retailer
Customer
3. Diversification Strategy
Goal: Goals are objectives that are specific with respect to magnitude and time.
Goals indicate what a business unit wants to achieve; strategy is a game plan for getting
there. Every business must design a strategy for achieving its goals, consisting of a
marketing strategy and a compatible technology strategy and sourcing strategy.
Customer-Perceived Value
It means that the prospective customer’s evaluation of all the benefits and costs related to
competing offer.
Total customer benefit is the perceived monetary value of the bundle of economic,
functional, and psychological benefits customers expect from a given market offering
because of the product, service, people, and image.
Total customer cost is the perceived bundle of costs customers expect to incur in
evaluating, obtaining, using, and disposing of the given market offering, including
monetary, time, energy, and psychological costs.
Customer-perceived value is thus based on the difference between benefits the customer
gets and costs, he or she assumes for different choices.
Customer Satisfaction
What do you mean by “Satisfaction”? Discuss satisfaction measurement techniques?
Definition:
The extent to which product’s perceived performance matches with buyer’s satisfaction.
If the product’s performance falls short of the customer’s expectations, the customer
is dissatisfied.
If performance matches expectations, the customer is satisfied.
A highly satisfied customer generally stays loyal longer, buys more as the company
introduces new and upgraded products, talks favorably to others about the company and
its products, pays less attention to competing brands and is less sensitive to price, offers
product or service ideas to the company, and costs less to serve than new customers because
transactions can become routine
Customer 1 is very profitable; he buys two profit-making products (P1 and P2) of
the firm.
Customer 2 yields mixed profitability; he buys one profitable product (P1) and one
unprofitable product (P3).
Customer 3 is a losing customer because he buys one profitable product (P1) and
two unprofitable products (P3 and P4).
Strategies
1. The company should retain the high value customers.
2. The company can encourage customer-2 and customer -3 to purchase both
profitable products.
3. The company can increase the price of unprofitable product to make this profitable.
4. All customers are not valued customers for the firm. Unprofitable customers who
defect should not concern the company. Company should encourage them to switch
to competitors.
One-to-one marketing.
It is a CRM strategy that focuses on personalized interactions with customers or potential
customers. We also use the terms personalized marketing and individual marketing with
the same meaning as one-to-one marketing. We sometimes refer to one-to-one marketing
as a ‘segment of one.’
When a company creates an entirely unique product or marketing program for each customer in the
target segment, it employs one-to-one marketing. This approach is common in business markets
where companies design unique programs and/or systems for each customer.
Dell was a revolutionary company in terms of one to one marketing. Its success was
founded on the principles of customization, allowing each customer to tailor their personal
computer to their own personal needs and preferences.
Market segmentation involves dividing a market into distinct groups of buyers who have
different needs, characteristics, or behaviors and who might require separate marketing
strategies or mixes. The major segmentation variables for consumer markets are
geographic, demographic, psychographic, and behavioral. Marketers use them singly or in
combination.
Levels of Segmentation
1) Mass Marketing: The seller engages in mass production, distribution and promotion of
one product for all buyers.
In mass marketing, the seller offers the same product for all the buyers with
different needs.
In this marketing, the size of the market will be larger and the promotion and
advertising expenses become generic to attract the entire customers.
For example, mass marketing would be Coca-Cola, etc.
The problem of mass marketing is it can’t satisfy most of the customer.
2) Segment Marketing: A segment is a group of customers who share similar types of
need.
The marketers’ task is to identify segment not to create segments.
Under segment marketing, a firm will develop products and services with separate
marketing mix strategies for each of the segments chosen by the firm.
3) Niche Marketing:
Narrowly defined customer group seeking a distinctive mix of benefits within a
segment.
Characteristics:
The customers in niche market must pay a premium price.
The niche is fairly small but has size, profit, and growth potential.
Niche customers have a distinct set of needs
Customers may require a special type of services
The niche market should not attract competitors.
The marketer needs more skill and specialized knowledge.
For example, Hamdard.
4) Local Marketing
Tailoring products and marketing program to the needs and wants of the local
customer group.-Cities, Neighborhoods, stores.
For example, Baskin Robbin’s “3 mile marketing” program, emphasizing local
events and promotions close to its local store locations.
5) Individual Marketing
Tailoring products and marketing programs to the needs and preferences of
individual customers.
Definition of Brand
A brand is thus a product or service whose dimensions differentiate it in some way from
other products or services designed to satisfy the same need.
2
The brand name can be protected through registered trademarks, manufacturing processes can be
protected through patents, and packaging can be protected through copyrights and proprietary
designs.
Branding creates mental structures that help consumers organize their knowledge about
products and services in a way that clarifies their decision making and, in the process,
provides value to the firm.
Brand Equity
Brand equity is the added value endowed on products and services due to a brand. Brand
equity may be reflected through consumer perception, price difference, market share and
profitability.
For example,
Non-branded toothpaste Branded toothpaste
Pepsodent
Added Value
Branding Strategy
A firm’s branding strategy—often called its brand architecture—reflects the number and
nature of common and distinctive brand elements applies to the products.
Another Example of Meril with meril petroleum jelly, meril beauty soap, Olive
oil, meril baby lotion etc.
When a new brand is combined with an existing brand, the brand extension
is called as sub-brand. Sub-brands are typically created as an opportunity to
reach a new audience. Apple, Inc. has sub brands like iPhone, iPad, iPod,
etc.
The existing brand that gives birth to a brand extension or sub-brand is the
parent brand
If the parent brand is already associated with multiple products through
brand extensions, it can also be called a master brand or family brand.
Family branding is also known as umbrella branding. For example, Pran is
a family brand.
For example, Lifebuoy introduce new fragrance or color soap such as Lifebuoy
total, Lifebuoy Neem, Lifebuoy turmeric having different color and flavor or
Coca-Cola of various flavor.
Toothpaste
Multi-brand
Line Extension
A brand line consists of all products—original as well as line and category extensions—sold
under a particular brand.
A brand mix (or brand assortment) is the set of all brand lines that a particular seller offers
to the buyer.
All the brand lines that Unilever offers like products Dove, Surf Excel, Sunsilk, Rin, Axe,
Lakme etc. would constitute the brand mix of Unilever in Bangladesh.
Branded variants: when a single brand line offered to a particular seller/retailer/distributor is called
Branded variants.
Bata Apex
Durable Luxury
DBBL IBBL
ATM Card Service
Points-of-parity (POPs
Points-of-parity (POPs), are attribute or benefit associations that are not necessarily
unique to the brand but may in fact be shared with other brands.
For example, two bank have some point of parity, such as cash counter, Help desk etc.
Typically there are four types of market dominance strategies that a marketer will consider:
1. Market leader
2. Market challenger
3. Market follower, and
4. Market nicher.
Market Leader
A market leader has the largest market share and usually leads in price changes, new-
product introductions, distribution coverage, and promotional intensity.
Some historical market leaders are Microsoft (computer software), Gatorade (sports
drinks), Best Buy (retail electronics), McDonald’s (fast food), BlueCross BlueShield (health
insurance), and Visa (credit cards) etc.
Market Challenger
A market challenger is a firm that has a market share below that of the market leader, but
enough of a presence that it can exert upward pressure in its effort to gain more control.
Market challengers are the firms trying to catch the leader’s position and fighting hard to
increase their market shares.
Pepsi is a good example of a challenger brand.
Generally, the market challengers are those firms, which have a good reputation in the
market and enjoys a strong financial position. These firms target the market leader or the
competitor at the same level with the objective, to reach the first position in the market or
become an industry leader.
The Market Challenger Strategies are the marketing strategies adopted by the firms to
attack the leader or the immediate competitor with the intention to capture a greater market
share. The following are the general attack strategies adopted by the market challengers
with a view to becoming a market leader and increase the market share.
1. Frontal Attack:
In this strategy, attacker matches its opponent’s price, advertising methods,
and distribution.
The one which has better and more resources wins the market.
Examples: Pepsi v/s Coke, P&G v/s HUL, Hero motor corp. v/s Bajaj, Maruti
V/s Hyundai
The market challenger can even cut the price of the product, provided he
convinces the customers that the quality is not compromised and is as good
as the high priced products.
2. Flank Attack:
The flank attack means, attacking the competitor on its weak points.
4. Bypass attack.
Bypassing the enemy altogether and attacking easier spots.
The bypass attack is the indirect attack, wherein the market challenger does
not attack the leader directly, but broaden its market share by attacking the
easier markets.
The challengers can bypass the leader by following any of the strategies viz.
expanding into the untapped markets, diversifying into the unrelated
products, modernizing the existing product with the invention of
technology.
E.g. Pepsi adopted this strategy when it launched its mineral water brand
“Aquafina” very well before the Coca Cola’s mineral water brand.
5. Guerrilla Warfare:
Small, intermittent attacks to harass and demoralize the opponent and
eventually the challenger may get a permanent footholds.
It may conduct in 2 ways: conventional and unconventional
Conventional:
Sudden price cuts,
intense promotional blitzes,
Creative promotions
Un-conventional:
Occasional legal action-make a petition against a company.
Example manhole marketing or Pizza hut in Russia, advertise in spaceship
One must maintain ethical standard in case of guerilla warfare.
Market Nicher
A niche is a small market whose needs are not being well served by the existing
products.
A niche may be identified by dividing a segment into sub-segments or by defining
a group with a different set of characteristics who may look for a special
combination of benefits of attributes in the product.
Marketing communications are the means by which firms attempt to inform, persuade,
and remind consumers-directly or indirectly—about the products and brands they sell.
Marketing Communication can be described as all the messages and media you deploy to
communicate with the market in order to reach your target audience.
The marketing communications mix—also called its promotion mix— specific blend of
promotion tools that the company uses to persuasively communicate customer value and
build customer relationships. The marketing communications mix consists of eight major
modes of communication.
1. Advertising:
Any paid form of non-personal presentation and promotion of ideas, goods, or
services by an identified sponsor. This is done through
print media (newspapers and magazines),
2. Sales promotion:
Short-term incentives to encourage the purchase or sale of a product or service.
It includes-
consumer promotions (such as samples, coupons, and premiums),
trade promotions (such as advertising and display allowances), and
Business and sales force promotions (contests for sales reps).
For example gift, Premium, Contests, games, lotteries, coupon, money-off
promotions, discount, rebate, Buy One Get One Free, free accessories (such as
free blades with a new razor), introductory offers (such as buy digital TV and
get free installation), tie-ins, and so on.
3. Events and experiences
Company sponsored activities and programs designed to create brand-related
interactions with consumers
It includes sports (IPL or world cup Cricket), festivals (Boishakh), arts,
entertainment, and cause events as well as less formal activities.
4. Public relations and publicity
A variety of programs to promote or protect a company’s image or its individual
product.
For example, annual report, charatible donation (Shikha Birti for poor
meritorious student)
Public relations perform the following five activities:
Press relations
Product publicity
Corporate communication
Lobbying
Counseling
5. Direct and digital marketing
With the intent of technology, the companies make use of emails, fax, and
mobile phones, to communicate directly with the prospective customers
without involving any third party in between.
Direct mail is very highly focused upon targeting consumers based upon a
database.
In the narrowest sense, price is the amount of money charged for a product or a service.
More broadly, price is the sum of all the values that customers give up to gain the benefits
of having or using a product or service.
Pricing Objective
Pricing objectives can be partitioned into 5 major heads:
1. Survival:
Companies set survival as their major objective, when they plagued with
overcapacity, intense competition, or changing consumer wants.
Survival is a short-run objective; in the long run, the firm must learn how to
add value or face extinction.
The company might lower the prices in order to increase sales by taking a
hit on profitability or undergoing losses to keep the business going.
2. Maximum Current Profit:
Company estimate demand and cost associated with alternative prices and
set the price that will provide maximum current profit, cash flow, or rate
of return on investment.
This strategy assumes the firm knows its demand and cost functions; in
reality, these are difficult to estimate.
3. Maximum Market Share:
5. Product-Quality Leadership
The companies who want to be product quality leader can follow this
objective.
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Some companies try to provide “affordable luxuries”—products or services
characterized by high levels of perceived quality, taste, and status with a
price just high enough not to be out of consumers’ reach.
E.g., BMW, Starbucks, Vikings etc.
6. Other Objectives
Partial cost recovery- rely on private gifts and public grants to cover its
remaining costs. E.g., University, Library, govt. hospital
Full cost recovery-Only objective is to draw full cost but not make profit. e.g.,
Hospital
Pricing Methods
1. Markup Pricing
The most elementary pricing method
Adding a standard markup with the product’s cost.
If cost of a product is Tk.16 and the manufacturer wants to earn a 20 percent
markup on sales, the markup price of the product will be Tk. 20.
Advantage:
It is a simple method for setting prices;
Requires little information as information on demand and costs
Markup pricing provides the means by which fair prices can be easily found.
When all firms in the industry use this pricing method, prices tend to be
similar and price competition is minimized
Disadvantages of Markup Pricing: Some of the drawbacks of markup pricing are:
This pricing method does not take into account competition, current
demand, and perceived value.
2. Target-Return Pricing
The Target-Return Pricing is a method wherein the firm determines that will yield
its target rate of return on investment.
General motors using this approach they can earned 15-20%return on investment.
Example for calculating Target Return Pricing: suppose a pen manufacturer has
invested 1 million Tk. in the business and wants to set a price to earn a 20% ROI.
The manufacturing cost of per pen is Tk.16. Assuming that the sales can reach 50,000
units, the Target return price will be = 16 + (0.2 * 1000000)/ 50,000 = Tk.20
The target-return pricing is easy to calculate and understand.
Pricing products in such a manner has certain disadvantages.
This method does not take into account price elasticity and competitor’s
prices.
4. Value Pricing
Charging a fairly low price or a high-quality offering.
Companies that adopt value pricing win loyal customers
The objectives of Value Pricing are-
Capture Market share
Get customer’s confidence
EDLP-everyday low pricing-charges a constant low price with little or no price
promotion or special sales. Example: Walmart promises everyday low prices on
everything it sells.
High-Low Pricing-In high-low pricing, the retailer charges higher prices on an
everyday basis but runs frequent promotions with prices temporarily lower than
the EDLP level.
3
Only a few sellers and large buyers
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