MODULE 1

MARKETING MANAGEMENT

When we say Marketing, what comes to your mind first?

CASE

Strong sales, no Provides great profits selection, good value, Customer-driven discovery and to its core convenience Each customers A true online experience is community unique Discussion: Will Amazon.com Survive?

WHAT IS MARKETING?
Marketing

is managing profitable customer relationships

Attracting

new customers Retaining and growing current customers Capture value in return
Marketing

is NOT synonymous with sales or advertising

POPULAR DEFINITIONS OF MARKETING

Definition by AMA- Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefits an organization and its stakeholder Marketing is the task of creating, promoting and delivering goods and services to consumers and businesses Philip Kotler. He is regarded as the father of Marketing, he adds It is not enough to satisfy customers, you should delight them.

POPULAR DEFINITIONS OF MARKETING

Marketing is the sum total of all business activities which deal with the movement of goods and services from producers to ultimate users". Hector Lazo, Head of Marketing, University of New York. Marketing is the act of identifying and meeting human and social needs. Marketing is the art and science of meeting needs in a profitable manner. Social definition: Marketing is a societal 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.

The process by which companies create value for customers and build a strong customer relationships in order to capture value from customers in return.

WHAT IS MARKETING MANAGEMENT?

Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

MARKETING PROCESS MODEL

Understand the market place and customer needs and wants

Design a customer driven marketing strategy Construct an integrated marketing program that delivers superior value
Build profitable relationships and create customer delight Capture value from customer to create profits and customer equity

WHAT CAN BE MARKETED?

Goods Services

Places

Properties
Organizations

Experiences
Events Persons

Information
Ideas

Goods

SERVICES

EVENTS

Advertisers prefer IPL over team India

EXPERIENCES

PERSONS

PLACES

PROPERTIES

ORGANIZATIONS

INFORMATION

IDEAS

WHY IS THE SUBJECT MARKETING IMPORTANT FOR THIS COURSE?

The essence of any managerial process is to achieve organizational objectives by satisfying the needs of the customer Marketing is the specialized tool by which the customer and his needs are first of all identified and the necessary managerial functions are adopted to satisfy the needs . Customer behavior, objectives and customer relationship management are critical for any organization whether they are in the supply of products or services Most systems and operational management techniques are associated with management of marketing or sales management.

IMPORTANCE OF MARKETING IN MODERN BUSINESS

Marketing was once only a Company department performing a staff function Marketing is now the driving force of all modern organizations and business. Marketing precedes all management activities of a new organization or in the introduction of a new product or market. With the advent of the Internet and the resulting information revolution, marketing has become the most important function in customer relationship management. Most Companies survive and grow by using the existing customers instead of trying to find new ones. Internet has made the customers very aware of the competition and have made them extremely price sensitive. Marketing has to be very Sophisticated to meet this factor head-on.

IMPORTANCE OF MARKETING IN THE GLOBAL ECONOMY

Nations depend upon marketing to sell their raw materials and industrial output to other countries After globalization most of the firms have realized that profit and growth objectives can be achieved by combining domestic and international marketing.

IMPORTANCE OF MARKETING IN SOCIO-ECONOMIC SYSTEM

Marketing creates utilities: (Something that makes a product capable of satisfying wants is its utility) Form Utility is associated with physical or chemical changes that make a product more valuable. ( More associated with production not marketing)

Eg: A dress designer provides a form utility by converting design concepts and fabric into wide range of clothing.

Place utility makes a product accessible to potential customers where they want it.

Eg: Dominos Pizza delivered at your doorsteps

Time utility makes a product available when they want it.

Eg: ATM installations by banks

IMPORTANCE OF MARKETING IN SOCIO-ECONOMIC SYSTEM

Information utility is created by informing prospective buyers that a product exists.

Eg: Ads

Image Utility (Special type of information utility) It is the emotional or psychological value that a person attaches to a product or brand because of its reputation or social standing.

Eg: Association with Prestigious or high status products like luxury automobiles

Possession utility is created when ownership is transferred to the buyer.

Eg: A car owner can use his car for commuting to office or go on for vacation with family or even rent it as taxi.

IMPORTANCE OF MARKETING IN ORGANIZATIONS

The basic reason for firms existence is customers want satisfaction. Marketing helps the firm to identify the customer needs and wants. Marketing is the only revenue-producing activity for the firm. Marketing has become increasingly important for service firms and nonprofit organizations.

IMPORTANCE OF MARKETING IN YOUR LIFE

Marketing is a large part of your daily life. Consumers are exposed to number of commercial messages a day. Studying marketing will make you a betterinformed customer. Marketing probably relates -- directly or indirectly -- to your career aspirations.

WHO MARKETS

A Marketer is someone who seeks response (attention, a purchase, vote etc.) from other party called the prospect.

NATURE OF MARKETING

Marketing is transaction or exchange -Marketing can occur anytime a person or organization strive to exchange something of value with another person or organization. Basic objective of marketing is to attract new customers by promising and offering superior value To retain and grow current customers by delivering satisfaction

EVOLUTION OF MARKETING

The concept of Marketing emerged after Industrial Revolution (latter part of 1800) This concept has evolved through three successive stages: Production era Sales Era Marketing Era

PRODUCTION ERA

Manufacturers in this stage focused on increasing out put while assuming that customers would seek out and buy reasonably priced and well made product Executives with back ground in manufacturing and engineering shaped the firms strategy More emphasis was on efficiency and cost control

SALES ERA

This concept evolved in early 1930s During this stage managers realized that to sell the product a firm want to make some promotional activities

This era was characterized by aggressive selling and usage of unethical practices to sell the product.

MARKETING ERA

This era began in the mid of 1950s Companies identified the importance of customer needs and wants

Marketing activities were directed towards the twin goal Customer orientation and profitability.

PRODUCTION ORIENTATION
Some industries and organizations remain at the production-orientation stage.

PRODUCTION ORIENTATION

SALES ORIENTATION

Other industries and organizations have progressed only to the sales-orientation stage. PRODUCTION ORIENTATION SALES ORIENTATION MARKETING ORIENTATION

Many industries and organizations have progressed to the marketing-orientation stage.

Late 1800s Early 1930s Mid-1950s 1990s

MARKETING MANAGEMENT PHILOSOPHIES/CONCEPTS/ ORIENTATIONS

Production Concept Product Concept Selling Concept Marketing Concept
Societal Marketing Concept
Consumers favor products that are

available and highly affordable Improve production and distribution Consumers favor products that offer the most quality, performance, and innovative features Consumers will buy products only if the company promotes/ sells these product Focuses on needs/ wants of target markets & delivering satisfaction better than competitors

Focuses on needs/ wants of target markets & delivering superior value Societys well-being

PRODUCTION CONCEPT

View that the customers will prefer products that are widely available and Production specialists strove to mass produce consumer goods at the highest efficiency and at lowest prices

This usually happens in developing countries as labor is cheaper so product price is low Industries strove to produce large quantities at the best prices and made sure it was widely distributed Still effective for certain Government organization and in markets where the consumer needs are still basic

PRODUCT CONCEPT

This concept believes that consumers will automatically favor products that offers the most quality ,performance and innovative features. Thus the importance is on product development.

Producers ask "How can the consumer know what is the best product that can be made?
Danger of Marketing Myopia as expressed by Theodore Lewitt.

MARKETING MYOPIA

The marketing myopia theory was originally proposed by Theodore Levitt. The theory states that marketers should look towards the market and modify the company and products accordingly rather than looking towards your own company, its potential and then catering the market. The needs of the market should receive first priority.

Marketing myopia asks the companies to do the following Be more customer focused Innovate Be in control Understand customer desires Conduct marketing research programs Marketing strategy should be developed keeping feedback of customers in mind.

SELLING CONCEPT

This concept believes that left to themselves Consumers and business will not buy enough to satisfy the sellers volumes Thus constant sales promotions and efforts have to be made in order to reach the required sales volumes The sales concept is centered on the idea of high pressure selling to maximize sales volume and hence profits

SELLING CONCEPT

This concept seems to be effective for some industries such as insurance, encyclopedias etc. However the stress is on to sell what the industry has and not what the customer needs If the customers are pressed too hard and they buy things they do not need, dissatisfaction and bad word of mouth publicity possible

MARKETING CONCEPT

View that instead of make-and-Sell, Companies should Senseand-Respond. So the job is not to find the right customers for your products but the right product for your customers. Reactive Market orientation: You see the need and you respond with a product Proactive Market orientation: You see a future need and you respond with a product. So by the time the need arrives in the market your product is there.

1.

2.

CHARACTERISTICS OF MARKETING CONCEPT

First identify the needs of a target segment of the market. Design the most effective product that best meets the requirements of the consumer. Unlike the selling concept ,marketing concept focuses on the needs of the consumer. Correctly identify the target market and the target market consumers needs. Implement integrated marketing throughout all departments in the Organization. Aim at profitability by creating superior customer value.

SOCIETAL MARKETING CONCEPT.

Is marketing concept ethical enough? Marketing has to be made humane and ecological, hence the societal approach

Care should be taken to minimize environmental deterioration, hunger, poverty and moral breakdown
Hence needs to be satisfied in a manner which enhances and preserves consumers society and societys well being

SOCIETAL MARKETING CONCEPT

Society (Human Welfare)

Societal Marketing Concept

Consumers (Wants)

Company (Profits)

MARKETING & SALES CONCEPTS CONTRASTED

Starting Point Focus Means Ends

Factory

Existing Products

Selling and Promoting

Profits through Volume

The Selling Concept

Market

Customer Needs

Integrated Marketing

Profits through Satisfaction

The Marketing Concept

CUSTOMER CONCEPT

Concentrate on consumer loyalty and long term commitment One to one marketing

Suitable for specialized firms operating in the high end market

SELLING VS. MARKETING

Selling Marketing

1.Emphasis is on the 1.Emphasis is on product. customers wants. 2.Company first makes the 2. Company first product and then determines customers figures out how to sell wants and then figures it. out how to make and deliver a product to satisfy those wants

Selling 3.Management is Sales volume oriented 4.Planning is short run oriented, in terms of todays product and markets. 5.Need of seller are stressed.

Marketing 3.Management is profit oriented 4.Planning is long run oriented, in terms of new products, tomorrows markets, and future growth. 5.Wants of buyer are stressed.

CORE MARKETING CONCEPTS

Needs, wants, and demands Target markets, positioning, segmentation Offerings and brands

Value and satisfaction Marketing channels Supply chain Competition Marketing environment

WHAT ARE CONSUMERS NEEDS, WANTS AND DEMANDS?

Needs - state of felt deprivation for basic items such as food and clothing and complex needs such as for belonging. i.e. I am hungry/thirsty Wants - form that a human need takes as shaped by culture and individual personality. i.e. I want a hamburger, French fries, and a soft drink Demands - human wants backed by buying power i.e. I have money to buy this happy meal.

CUSTOMERS NEEDS WANTS AND WHAT LEADS TO DEMAND ?

Needs are the basic human requirements. People need food ,air, water ,clothing and shelter for basic survival People also have strong need for recreation, education and entertainment. Needs become wants when they are directed to specific objects that might satisfy their needs. An American needs food but wants hamburger while a hungry Chinese may want noodles. Thus wants are shaped by socio-cultural factors. Demands are wants for specific products backed by an ability to pay. People need transport, many people want a car but only a few can form the Demand for a Mercedes Car

TYPES OF NEEDS

Stated Need

A person wants to get married

He actually wants to set up a family

Real needs

Unstated needs

If the wife is there definitely she will look after him and care for him.
The person would love to get a soul-mate and perfect life partner The person wants his friends to see him as a happily married couple

Delight needs

Secret Needs

TYPES OF DEMAND

Negative demand : being almost nonexistent due to Inherently negative nature of the topic.

Eg: Birth control products like Nasbandi for which Govt. pays money to the person.

Non Existent Demand: Consumers are unaware or uninterested in the product.

Eg: Majority of the farmers are not aware or interested in the modern methods of farming.

Latent Demand: Huge demand exists for a product that is not yet in existence.

Eg: harmless cigarettes, non polluting cars, sweets which do not cause weight gain or pose problems for diabetic patients. Solution: Measure demand and produce a new revolutionary product.

TYPES OF DEMAND

Declining Demand: Falling demand due to change in technology or customer behavior.

Eg: market for type writers, Non-a/c Cinema halls, hand wound watches. Solution: Analyze cause for the demand fall, restimulate new target markets ,change product features, improve communications with new target markets.

Overfull Demand: Demand more than what the selling organization can handle.

Eg: Nano cars, Movie ticket for first day first show Solution: Demarketing - Discourage demand by increasing prices, reduce promotions and sales efforts.

Unwholesome Demand: When there is a strong demand for undesirable products and services.

Eg: Drugs, Alcohol, Pornography, pirated movies

Solution: Strong unselling campaigns necessary, restriction of selling efforts, penalties, price increases

TYPES OF DEMAND

Irregular Demand: Demand varies seasonally, and maybe periodically.

Solution: Synchro-marketing ,stimulate off-season marketing

Full Demand: Markets have reached their full potential of product intake, and organizations are incapable of selling more.

Eg: Newspapers, Lottery tickets Solution: Maintenance marketing, undertake customer relationship marketing to maintain the customer loyalty ,access changing customer needs and monitor and be one up on competition

WHAT WILL SATISFY CONSUMERS NEEDS AND WANTS?

Products - anything that can be offered to a market for attention, acquisition, use or consumption and that might satisfy a need or want.

Services - activities or benefits offered for sale that are essentially intangible and dont result in the ownership of anything

HOW DO CONSUMERS CHOOSE AMONG PRODUCTS AND SERVICES?

Value Gained From Owning a Product and Costs of Obtaining the Product is

Customer Value

Products Perceived Performance in Delivering Value Relative to Buyers Expectations is

Customer Satisfaction

Total Quality Management Involves Improving the

Quality of Products, Services, and Marketing Processes

HOW DO CONSUMERS CHOOSE AMONG PRODUCTS AND SERVICES?

The offering will be successful if it delivers value and satisfaction to the Target buyer . Customer Value - benefit that the customer gains from owning and using a product compared to the cost of obtaining the product. Value is a combination of quality, service, and price called customer value triad.

 Value
Ex:

reflects the perceived tangible and intangible benefits and costs to the customers.
your degree from IIM has value as long as its giving you a job and/or heightened sense of pride (intangible ). In other words customer always does a mental calculation against cost/benefit for a product. Ex: you will buy the coke from petty shop at Rs.10 but not for 300 rupees.

Value

increases with quality and servicebut decreases with price.

Customer Satisfaction - depends on the products perceived performance (out come) in delivering value relative to a buyers expectations. If performance falls short of expectation the customer is dissatisfied. If it matches the customer is satisfied If it exceeds the customer is delighted. Ex: you might be satisfied with a Lays pack (Rs.10) from a petty shop but not the same from a shop situated near tourist places (Rs.15)

HOW DO CONSUMERS OBTAIN PRODUCTS AND SERVICES?

Exchanges

Transactions

Relationships
Building a Marketing Network Consisting of The Company and All Its Supporting Stakeholders

HOW DO CONSUMERS OBTAIN PRODUCTS AND SERVICES?

Exchanges - act of obtaining a desired object from someone by offering something in return. This stage includes offering something, discussing the mutually beneficial and acceptable terms and trying to arrive at mutually agreeable terms. Transactions It is a consequence of exchange process. When two parties reach on terms of exchange it become transaction. It is a trade of values between two or more parties.

It involves 2 things of value, agreed upon conditions, a time of agreement and a place of agreement backed by legal support system.

Relationships - building long-term relationships with consumers, distributors, dealers, and suppliers.

MARKETS

Traditionally market was a physical place where buyers and sellers gathered to buy and sell goods Economists describe markets as a collection of buyers and sellers who transact over a particular product or product class

WHO PURCHASES PRODUCTS AND SERVICES?

Actual Buyers Market-A place where buyers and sellers meet to buy or sell products

Potential Buyers

CLASSIFICATION OF MARKETS

Consumer market Companies selling mass consumer goods and services. Companies spend a great amount of time and money to build superior brand image. Resource market Banks, raw material sellers, labor Manufacturer market a market which is involved in the production of goods for resale to other markets. Intermediary market Sells goods made by the manufacturers to the consumers Government market Provides public service, collects tax revenue, buys from manufacturers or intermediary markets Global Markets Markets across political boundaries. Marketers must decide which countries to target, how to adapt their products and communications and how to price themetc

MARKET PLACE MARKET SPACE. META MARKET

Market place can be a physical entity (market-store, supermarket etc.) Market space which is in fact digital cyber space where products and services are offered and exchanged. Metamarkets- These are a cluster of complementary products or services that are closely related in the minds of consumers but are spread across a diverse set of industries

Example: automobile Metamarket consists of automobile manufacturers, new and used car dealers, Financing companies, Insurance companies, Mechanics, Spare parts dealers, Service shops, auto magazines, classifieds, Auto sites on internet etc.

MODERN MARKETING SYSTEM

Suppliers
Competitors Company (Marketer)

Environment

Environment

Marketing Intermediaries End User Market

HOLISTIC MARKETING CONCEPT

Four broad themes characterizing holistic marketing

Relationship

Marketing Integrated Marketing Internal Marketing Performance Marketing

Financial

Accountability Social Responsibility Marketing

HOLISTIC MARKETING CONCEPT

The holistic marketing concept looks at marketing as a complex activity and acknowledges that everything matters in marketing - and that a broad and integrated perspective is necessary in developing, designing and implementing marketing programs and activities. The four components that characterize holistic marketing are relationship marketing, internal marketing, integrated marketing, and socially responsive marketing.

MARKETING MIX
Set of controllable, tactical, marketing tools that the firm blends to produce the response it wants in the target market. A prominent marketer E. Jerome Mc Carthy proposed a 4Ps classification in 1960, which would see wide popularity.

THE FOUR PS OF THE MARKETING MIX

2-11

THE MARKETING MIX

To achieve the companys objective a marketing program based on the most suitable marketing mix will be drawn up. Marketing mix is made up of the following factors: Product

Goods and services offered by a company to the target market, to satisfy needs and wants The different physical attributes of the products such as design, features, quality, brand name, usage etc Money value that the consumers have to pay to buy the product or service Discounts, allowances, payment periods, credit facilities

Price

THE FOUR PS OF THE MARKETING MIX

Place

Physical distribution activities through which the product moves from the factory to the customer Include the aspects of Channels, Coverage (extent), Location, Transport, inventory and Logistics management

Promotion

activities of personal selling, advertising and communicating product benefits and attributes to target consumers to persuade them to purchase

MORE ABOUT PRICING

Pricing is the only mix which generates a turnover for the organisation
The remaining 3Ps are the variable cost for the organisation It costs to produce and design a product, it costs to distribute a product and costs to promote it

Price must support these elements of the mix

Pricing is difficult and must reflect supply and demand relationship.

MARKETING MIX (4PS) PRICE

PRICING STRATEGIES

PENETRATION SKIMMING BUNDLE

PSYCHOLOGICAL COMPETITION

MARKETING MIX (4PS) PROMOTION

A successful product or service means nothing unless the benefit of such a service can be communicated clearly to the target market. An organisations promotional mix can consist of:
Promotional Mix
Advertising

Personal Selling

Sales Promotion

Public Relation

Publicity
Direct Marketing

MARKETING MIX (4PS)}PRODUCT

PRODUCT DECISIONS
BRANDING QUALITY FEATURES
BENEFITS OFFERED

MARKETING MIX (4PS) PLACE

Direct Distribution Indirect Distribution
Manufacturer wholesaler Retailer

Manufacturer

Consumers
Consumers

ILLUSTRATION- PRODUCT CHEVROLET SAIL SEDAN

PRODUCT SPECIFICATIONS
Engine Transmis Variants Descripti sion on 1.2 Base (Petrol) 1.2 LS (Petrol) Manual Mileage City Highway 18.3 Power 84.8bhp @ 6000rpm 84.8bhp @ 6000rpm 84.8bhp @ 6000rpm 84.8bhp @ 6000rpm 76.9 @ 4000rpm 76.9 @ 4000rpm 76.9 @ 4000rpm 76.9 @ 4000rpm AC Power Steering Standard Central Locking Not Available Standard

1199cc 15.9 4 Cylinder 1199cc 15.9 4 Cylinder 1199cc 15.9 4 Cylinder 1199cc 15.9 4 Cylinder 1248cc 18.9 4 Cylinder 1248cc 18.9 4 Cylinder 1248cc 18.9 4 Cylinder 1248cc 18.9 4 Cylinder

Standard

Manual

18.3

Standard

Standard

1.2 LS ABS (Petrol) 1.2 LT ABS (Petrol)

1.3 Base (Diesel) 1.3 LS (Diesel) LS ABS (Diesel) LT ABS (Diesel)

Manual

18.3

Standard

Standard

Standard

Manual Manual Manual Manual Manual

18.3 22.1 22.1 22.1 22.1

Standard Standard Standard Standard Standard

Standard Standard Standard Standard Standard

Standard Not Available Standard Standard Standard

PRICING AND PLACE OF THE PRODUCT

Variants 1.2 Base (Petrol) , 18.3 kmpl 1.2 LS (Petrol) 18.3 kmpl 1.2 LS ABS (Petrol) 18.3 kmpl New Delhi 4,99,000 Bangalor e 5,07,871 Mumbai 5,23,750 Chennai 5,07,871 Pune 5,09,785 Hyderaba d 5,07,871 Kolkata 5,08,787

5,49,300

5,59,065

5,76,549

5,59,065

5,61,173

5,59,065

5,60,022

5,75,300

5,85,528

6,03,845

5,85,528

5,87,738

5,85,528

5,86,507

1.3 Base (Diesel) 6,29,000 22.1 kmpl

1.2 LT ABS 6,41,550 (Petrol) 18.3 kmpl 1.3 LS (Diesel)22.1 kmpl LS ABS (Diesel) 22.1 kmpl LT ABS (Diesel) 22.1 kmpl 6,59,300

6,40,182

6,60,202

6,40,182

6,42,596

6,40,182

6,41,203

6,52,955

6,73,371

6,52,955

6,55,415

6,52,955

6,53,986

6,71,021

6,92,003

6,71,021

6,73,550

6,71,021

6,72,066

6,85,300

6,97,483

7,19,305

6,92,394

7,00,117

6,97,483

6,98,551

7,51,550

7,64,911

7,88,830

7,64,911

7,67,794

7,64,911

7,66,030

Starting from Fuel efficiency INR

Max. Torque

22.1 4,99,000 kmpl

Performance Safety 2Airbags 78

TCDi Engine 1248 cc**

205
Nm#

PS+

COMPETITORS
Maruti Suzuki Swift Dzire Toyota Etios Tata Manza Club Class Mahindra Verito Ford Classic

PRODUCT LAUNCH

Starting from a price of INR 4.99 lakh (ex showroom Delhi) for the petrol variant all the way up to INR 7.51 lakh (ex-showroom Delhi) for the top end diesel variant. The Sail sedan is Chevrolet's first entry level sedan to be introduced this year. Like its smaller hatchback version is quite spacious and the added boot (370 litres) now makes it a even more practical and affordable family car. Powering the new Sail sedan is a 1.2-litre petrol unit developing 86 PS and a 1.3 litre Multijet engine, which develops 78 PS Claimed fuel efficiency of 22.1 kmpl

MARKETING ENVIRONMENT

The marketing environment consists of actors and forces outside and inside the organization that affect managements ability to build and maintain relationships with target customers.
Environment offers both opportunities and threats.

Environment scanning is
Gathering

information regarding a companys external environment Analyzing it Forecasting the trends

The marketing environment can be divided into two:

Microenvironment: actors close to the company that affect its ability to serve its customers. Macro environment: larger societal forces that affect the microenvironment and considered to be beyond the control of the organization

The The Marketing Marketing Environment Environment

Demographic
Company

Cultural
Publics

Economic Company
Suppliers Customers

Political

Competitors

Natural

Intermediaries

Technological

MICRO ENVIRONMENT INCLUDES:

1. Companys Internal Environment
Includes

functional areas such as top management, finance, and manufacturing, marketing etc

CONTINUED..
2. Suppliers
Provide

resources needed to produce goods and services. Can influence on the profit of the company Most marketers treat suppliers like partners

CONTINUED
3. Marketing Intermediaries They help the company to promote, sell, and distribute its goods to final buyers
agents, dealers, wholesalers etc Physical distribution firms- warehousing firms, transportation firms Marketing services agencies marketing research firms, advertising agencies, media firms Financial intermediaries credit companies, insurance companies
Resellers

MARKETING RESEARCH

AD AGENCIES

CONTINUED
4. Competitors
Must understand competitors strength Must differentiate firms products and offerings from those of competitors Competitive strategies should emphasize firms distinctive competitive advantage in marketplace Competition takes place at different levels

Direct at the brand/store level Substitute product/services

CONTINUED.
5. Customers five types of markets that purchase a companys goods and services These are : International markets Consumer markets Government Markets Reseller markets Business Markets

CONTINUED
6. Publics These are certain group that has an interest in or impact on an organization's ability to achieve its objectives

Public can facilitate/ slow down the ability of an organization to accomplish its goals
Most organizations establish public relations departments to plan constructive relations with various publics

Financial Public: influence the companys ability to obtain funds. Banks, investment houses, and stockholders and the major financial publics. Media Publics: carry news, features, and editorial opinion. They include newspapers, magazines, and radio and television stations. Government Publics: Management must take government developments into account. Marketers must often consult the companys lawyers on issues of product safety, truth in advertising etc. Citizen-Action Publics: A companys marketing decisions may be questioned by consumer organizations, environmental groups, minority groups, and others. Its public relations department can help it stay in touch with consumer and citizen groups.

Local Publics: include neighborhood residents and community organizations. Large companies usually appoint a community relations office to deal with the community, attend meetings, answer questions, and contribute to worthwhile causes. General Public: A company needs to be concerned about the general publics attitude toward its products and activities. The publics image of the company affects its buying. Internal Publics: include workers, managers, volunteers, and the board of directors. Large companies use newsletters and other means to inform and motivate their internal publics. When employees feel good about their company , this positive attitude spills over to external publics.

THE MICRO-ENVIRONMENT

MACRO ENVIRONMENT
Macro environment : larger societal forces that affect the microenvironment Considered to be beyond the control of the organization

The Companys Macroenvironment

DEMOGRAPHIC ENVIRONMENT
The

study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. Marketers have to keep track of changing age and family structures, geographic population shifts, educational characteristics, religious structures etc. Ex: Increase in working women have created a good market potential for ready to eat and packaged foods.

MAJOR PLAYERS IN RURAL MARKETS

CHANGING FAMILY SYSTEM

Allen Solly clothing for Indian women-executive Exclusive Wedding jewelry

ECONOMIC ENVIRONMENT

Consists of factors that affect consumer purchasing power and spending patterns. Factors that affect the economic environment are:

Rising Incomes
Trend toward dual-income families is a leading contributor. Provides more disposable income.

Inflation
Inflation

causes consumers to do two things:

1. Decrease brand loyalty to search for lowest prices.

2.Take advantage of discount sales.

To capture Indias growing middle class, Tata Motors introduced Tata Nano

Business Cycle
A

pattern of economic fluctuations that has four stages:

Positive Economic Indicators

Boom

Recession

Recovery

Depression

Time

Stages in the Business Cycle Boom Recession Low unemployment and high total income create high buying power Rising unemployment reduces total buying power; consumer and business spending decline Unemployment extremely high, wages and total disposable income are very low, and there is a lack of consumer confidence Economy is moving out of recession or depression towards prosperity

Depression

Recovery

CONTINUED..
c) Recovery This is the period when the economy is moving from recession to prosperity. At this stage :
Unemployment decreases Disposable income increases Organizations concentrate in improving sales and profits.

Income Distribution
Upper

class Upper Middle class Middle Class Working class Underclass

NATURAL ENVIRONMENT

The natural environment involves the natural resources that are needed as inputs by marketers or those that are affected by marketing activities. Green Marketing is a recent trend that has been adopted by the marketers to promote their product. Most of the organizations are coming up with eco friendly products like CFC (chloro fluoro carbon) free refrigerators, herbal tea, coffee, organic fruits, paper bags. To save the resources some companies are demarketing their products. Ex: Indian Oil Corporation tries to reduce the demand for its products by airing adv like Save oil Save India Weather and climatic conditions also create opportunities for marketers by increasing the demand for soft drinks, woolen clothes, air coolers etc.

Save oil- save India ad campaign by Indian Oil Electric car by Toyota and Reva

Environmentally responsible

FACTORS IMPACTING THE NATURAL ENVIRONMENT

Shortages of Raw Materials

Increased Pollution
Increased Government Intervention Environmentally Sustainable Strategies

TECHNOLOGICAL ENVIRONMENT

These are the forces that create new product and market opportunities. Today technology shapes the lives of human being Can create new forms of competition and communications : ATMs, CD, cellular, internet
Impact how people spend their time

Contributors to the Technological breakthroughs

CONTINUED

Issues in the Technological Environment

1.Rapid Pace of Change 2.High Research & Development Budgets . 3.Focus on Minor Improvements 4.Increased Regulation

The technology has a major impact on business functions that are directly influenced by technology are product ,price, promotion, distribution

POLITICAL/LEGAL ENVIRONMENT
Marketing decisions are strongly affected by developments in political and legal environment . This includes laws, agencies and groups that influence or limit marketing actions. A stable political system is a must for the economic development of a country.

Political and Legal Environment

RECENT TRENDS IN THE POLITICAL/LEGAL ENVIRONMENT

1.Increase in business legislation business legislation has three major purposes : a) To protect companies from unfair competition. b) To protect customers from unfair business practices. c) To protect society from unbridled business behavior.
2.Increased Emphasis on Ethics and Socially Responsible Actions. 3. Cause related Marketing

SOCIO -CULTURAL ENVIRONMENT

Socio-Cultural forces refers to the attitudes beliefs, norms, values, and life style of individuals in a society. The cultural environment is made up of institutions and other forces that affect a societys basic values, perceptions, preferences and behaviors.

FACTORS AFFECTING THE CULTURAL ENVIRONMENT

core cultural values

In any society, some cultural values are deep rooted; they cannot be changed easily. These are termed as core cultural values.

secondary cultural values

There are some values and beliefs which constitute secondary cultural values; they are more amendable to change and can be molded and manipulated relatively.

CONTINUED.

Existence of subculture
Each

society contains subcultures, groups with shared values emerging from their special life experience or circumstances. Members of subculture share common beliefs, preferences ,and behavior

Recent trends in social and cultural environment Changing roles of men and women Health and fitness Impulse buying convenience

Recent trends in social & cultural environment

ENVIRONMENTAL SCANNING/ MONITORING

This is the process of gathering information regarding companies external and internal environment, analyze it and forecast the impact of whatever trends the analysis suggest.

IMPORTANCE/NEED OF ENVIRONMENTAL SCANNING

1.Knowledge of marketing environment is necessary for Marketing Management. 2.Strategic response is possible only with proper environmental analysis. 3.Spotting the opportunities and threats. 4.Scanning enables the organization to act upon rather than react to opportunities and threats.

FACTORS TO BE COVERED IN ENVIRONMENT ANALYSIS 1. External macro environment factors 2.External micro environment factors 3.Organizations internal environment

The The Importance Importance of of Information Information

Marketing Environment Why Information Is Needed Strategic Planning

Competitio n

Customer Needs

Marketing information system

A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers Function : Assess , develop and distribute information

Components of Marketing Information system

1.Internal record information 2.Marketing Research 3.Marketing Intelligent System

1.Internal record information

It

includes information gathered from sources within the company to evaluate marketing performance and to detect marketing problems and opportunities. Ex: Sales records ,customer data bases etc.

2.Marketing Research
It

can be define as the systematic design, collection, analysis, a specific marketing situation facing an organization.

3.The Marketing Intelligent System

A

marketing intelligence system is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment. Marketing managers collects marketing intelligence by
Reading

magazines, news papers and trade publications Interacting with customers, suppliers and distributors. Meeting with other company managers.

MARKET INTELLIGENCE SYSTEM