KOTLER KRASHER Marketing Mantra

Lets get serious for a moment !

IIM Kozhikode

Core Concepts of Marketing

Target Markets & Segmentation Needs, Wants, and Demands

Product or Offering
Value and Satisfaction Exchange & Transactions Relationships & Networks Marketing Channels Supply Chain Competition Marketing Environment
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Quick definitions
Marketing Environment: refers to factors and forces that affect a firms ability to build and maintain successful relationships with customers. Three levels of the environment are: Micro (internal) environment - small forces within the company that affect its ability to serve its customers. Meso environment the industry in which a company operates and the industrys market(s). Macro (national) environment - larger societal forces that affect the microenvironment.
Supply Chain : It is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier or customer. Marketing Channels : A marketing channel is a set of practices or activities necessary to transfer the ownership of goods, and to move goods, from the point of production to the point of consumption and, as such, which consists of all the institutions and all the marketing activities in the marketing process Product/offering : is anything that can be offered to a market that might satisfy a 3 want or need.

Quick definitions
Needs : is something that is necessary for organisms to live a healthy life.
Wants : are a step ahead of needs and are largely dependent on the needs of humans themselves.

Demand : is an economic concept that describes a buyer's desire, willingness and ability to pay a price for a specific quantity of a good or service.
Target market : is a group of customers that the business has decided to aim its marketing efforts and ultimately its merchandise towards. Segmentation : is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs, and then designing and implementing strategies to target their needs and desires using media channels and other touch-points that best allow to reach them.
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The Famous Marketing Mix

Marketing Mix Product
Customer Solution Place Convenienc e Promotion

Price

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Cost

Communication

PRODUCT/SERVICE
What does the customer want from the product/service? What needs does it satisfy? What features does it have to meet these needs? Are there any features you've missed out? Are you including costly features that the customer won't actually use? How and where will the customer use it? What does it look like? How will customers experience it? What size(s), color(s), and so on, should it be? What is it to be called? How is it branded? How is it differentiated versus your competitors? What is the most it can cost to provide, and still be sold sufficiently profitably? 6

PLACE

Where do buyers look for your product or service? If they look in a store, what kind? A specialist boutique or in a supermarket, or both? Or online? Or direct, via a catalogue? How can you access the right distribution channels? Do you need to use a sales force? Or attend trade fairs? Or make online submissions? Or send samples to catalogue companies? What do you competitors do, and how can you learn from that and/or differentiate?
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PRICE
What is the value of the product or service to the buyer? Are there established price points for products or services in this area? Is the customer price sensitive? Will a small decrease in price gain you extra market share? Or will a small increase be indiscernible, and so gain you extra profit margin? What discounts should be offered to trade customers, or to other specific segments of your market? How will your price compare with your competitors?
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MODELS OF PRICING
- Absorption pricing Method of pricing in which all costs are recovered. The price of the product includes the variable cost of each item plus a proportionate amount of the fixed costs and is a form of cost-plus pricing. - Contribution margin-based pricing Contribution margin-based pricing maximizes the profit derived from an individual product, based on the difference between the product's price and variable costs (the product's contribution margin per unit), and on ones assumptions regarding the relationship between the products price and the number of units that can be sold at that price. - Cost-Plus pricing Cost-plus pricing is the simplest pricing method. The firm calculates the cost of producing the product and adds on a percentage (profit) to that price to give the selling price. This method although simple has two flaws; it takes no account of demand and there is no way of determining if potential customers will purchase the product at the calculated price. - Creaming or skimming In most skimming, goods are sold at higher prices so that fewer sales are needed to break even. Selling a product at a high price, sacrificing high sales to gain a high profit is therefore "skimming" the market. Skimming is usually employed to reimburse the cost of investment of the original research into the product: commonly used in electronic markets when a new 9 range, such as DVD players, are firstly dispatched into the market at a high price.

- Decoy pricing Method of pricing where the seller offers at least three products, and where two of them have a similar or equal price. - Freemium Freemium is a business model that works by offering a product or service free of charge (typically digital offerings such as software, content, games, web services or other) while charging a premium for advanced features, functionality, or related products and services. - High-low pricing Method of pricing for an organization where the goods or services offered by the organization are regularly priced higher than competitors, but through promotions, advertisements, and or coupons, lower prices are offered on key items. - Limit pricing A limit price is the price set by a monopolist to discourage economic entry into a market, and is illegal in many countries. - Penetration pricing Penetration pricing includes setting the price low with the goals of attracting 10 customers and gaining market share.

PROMOTION
Where and when can you get across your marketing messages to your target market? Will you reach your audience by advertising in the press, or on TV, or radio, or on billboards? By using direct marketing mail shot? Through PR? On the Internet? When is the best time to promote? Is there seasonality in the market? Are there any wider environmental issues that suggest or dictate the timing of your market launch, or the timing of subsequent promotions? How do your competitors do their promotions? And how does that influence your choice of promotional activity?
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THE 7 Ps FOR SERVICES

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Company Orientations Towards the Marketplace

Production Concept Product Concept Selling Concept Marketing Concept
Consumers prefer products that are widely available and inexpensive Consumers favor products that offer the most quality, performance, or innovative features Consumers will buy products only if the company aggressively promotes/sells these products

Focuses on needs/ wants of target markets & delivering value better than competitors

Determinants of Customer Delivered Value

Image value Personnel value Services value Total customer value

Product value
Monetary cost Time cost Energy cost Psychic cost
IIM Kozhikode

Customer delivered value

Total customer cost

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Strategic Planning, Implementation, & Control Proce

Planning Corporate planning Division planning Business planning Product planning Implementing Implementation Organizing Control

Measuring results

Diagnosing results
Taking corrective action

IIM Kozhikode

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Good Mission Statements

Limited number of goals Stress major policies & values

Define competitive scopes

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Boston Consulting Groups Growth-Share Mat

IIM Kozhikode

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Boston Consulting Groups GrowthShare Matrix

() = () Benefits of the matrix: Easy to perform; Helps to understand the strategic positions of business portfolio; Its a good starting point for further more thorough analysis.
Limitations of the analysis: Business can only be classified to four quadrants. It can be confusing to classify an SBU that falls right in the middle. It does not define what market is. Businesses can be classified as cash cows, while they are actually dogs, or vice versa. Does not include other external factors that may change the situation completely. Market share and industry growth are not the only factors of profitability. Besides, high market share does not necessarily mean high profits. It denies that synergies between different units exist. Dogs can be as important as IIM Kozhikode 18 cash cows to businesses if it helps to achieve competitive advantage for the rest of

Boston Consulting Groups GrowthShare Matrix

IIM Kozhikode

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Market Attractiveness: Competitive Position Portfolio Classification

Strong BUSINESS STRENGTH Medium Weak

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MARKET ATTRACTIVENESS High Low Medium

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2.33

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Joints Hydraulic pumps Aerospace fittings

3.67 Clutches Flexible diaphragms Fuel pumps Relief valve 1.00 Invest/grow IIM Kozhikode Selectivity/earnings Harvest/divest 20

2.33