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Introduction to Marketing

Why Study Marketing ?

What really is a business?


Is it about money ?

[including investing & managing money] Is it Advertising & Marketing?


[including brand building & promotion ) Is it Production?
[including design / materials management / conversion / manufacturing]

Is it about people?
[including training & development]
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Case

CASE STUDY OF A RS. 100 /- BOTTLE OF SHAMPOO

AV

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Selling and Marketing

Selling Selling starts with seller & is preoccupied all the time with the needs of the seller Emphasizes on saleable surplus available with the company Seeks to convert products in to cash Views business as goods producing process Selling views the customer as the last link in the business

Marketing Marketing starts with the buyer and focuses constantly on the needs of the buyer Emphasizes on identification of market opportunity Seeks to convert customer needs in to products Views business as a customer satisfying process Marketing views the customer as the very purpose of business.

Evolution of Indian Retail


Importance of Point of Purchase

2000s

Exclusive Brand Outlets Hyper / Super Markets Department Stores Super Malls

1990s 1980s 1960s

Khadi Stores Cooperatives Specific Stores

Convenience Stores(Mom & Pop) Kiranas

Weekly Markets Village Fairs Melas

AV1

Winning at Point of Purchase

Definitions ( contd ) :
Shopper :
Who influences the brand choice at the POP

Consumer :
The End User of the Product

Buyer :
Who finances the purchase of the Brand

Customer :
The level in the Trade Distribution Chain which is serviced directly by the Marketer categorized into Primary, Secondary, & Tertiary

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Shrirang Altekar

Understanding The Importance of POP Activation

Consumer

Shopper

There is a need to recognize the Shopper and Consumer as different entities Need to understand shopper behavior & category shopping insights

Consumer to Shopper
Facts 40 % of TV advertising goes WASTE

60 % of purchase decisions can be influenced at the POP


Hence what is important for a brand is

Interaction with Shopper on the shelf

&

Interaction with Consumer on usage

Building Brands Through Shoppers : The P & G FMOT & SMOT

Communication

Shopping

Usage

One of the last marketing mediums that consumers are willing to be marketed from An environment where they really want to touch, experience our brands, compare & contrast : does this brand meet my need ? The moment of truth for consumers to exercise their belief in our brand messageif we are relevant

3/10/2012 Shrirang Altekar Source: Marketing Contact Audit Meta-Analysis, Arc WW, 2005

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Distinguishing Shoppers and Consumers


Shopper Vs Consumer The mindset of a shopper and a consumer are fundamentally different. Shoppers are in-store; They are on a mission, have a need or problem and are trying to navigate their way through a complex variety of different products to find a solution. Consumers have already made their purchase decision and are using the products - they want it to work or they won't buy again. Proctor & Gamble have described these states of mind as the first and second moments of truth. In Modern Trade, it has been stated that 70% of all purchase decisions are made at the shelf the point of purchase

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Shrirang Altekar

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How are Marketers seeking to achieve the FMOT ?


Till some years back, the battle at the marketplace was about Availability and Distribution The battle has shifted from being merely about availability and distribution to winning within the retail environment. Being there is not enough being preferred by the shopper who will ultimately purchase you is what matters Winning at the point of purchase is equal to being preferred over a competitor

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Shrirang Altekar

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How Shoppers Behave - The AIDA(S) model:


Awareness Generated by availability, basic visibility and media on air and in print Interest Generated by superior eye catching visibility, presence on the shelf and point of sale materials Desire Generated by promotions and experiencing the brand (touching with either or all the five senses) Action When the shopper actually buys (prefers) the product / brand
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Marketers Strategy for the Customers

Leveraging Brands for the customer

Customer as a communication channel

Shopping = brand experience


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Marketers Strategy for the Consumer an example

Wanted to find a way to create news and excitement in the laundry category. Wanted to reinforce family values.

Customer Objective

Surf Excel

Surf Excel stood for modern parenting go ahead, get dirty. Sf Xl is the category leader and needed to drive excitement and news.

Shopper insights

Shopping for household staples like laundry detergent is just a part of daily life, not something to get excited about. I might try something new if it really caught my eye, but I tend to be focused on other things.

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Shrirang Altekar

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The Changing Indian Consumer

The Urban Consumer Getting exposed to international lifestyles Inclined to acquiring assets (Source: NCAER)

The Top of the pyramid is growing at a faster rate 6% of the Indian HH - MHI of >Rs.10,000 (CAGR 25% over 00) 56% of HH have - MHI less than Rs. 3000 (CAGR is -3%) (Source:NRS05)
Consumer of tomorrow Youngest population profile High and Middle income population growing at a pace of over 10%* per annum over last decade (Source : NCAER)

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Shrirang Altekar

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Four Distinct Consumer Worlds in India Learning from Nestle

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Income Per Capita > INR 200000 > INR 40000 > INR 18000 < INR 18000

Per Annum INR (2005- 06 Prices) Source : NCAER 4% Global India 20% Seeking and Striving India 42% Aspiring India 34% Deprived India
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Four Distinct Consumer Worlds in India

Most FMCG companies address - Global, Seeking & Aspiring India Economic Progress Forecasts Middle - class (Part of Seeking & Striving) to grow from less than 100 million to 250 -300 million by 2015 Inclusive Economic Growth should sharply reduce Deprived India from 65% to approximately 34% in 2015 A Young, growing, large population 540 million people below 25 Years (50% of India Population)

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Indian Consumer Segmentation Psychographic (Nestle)

Segment
Global India

Occupation
HNI, Corp. Execs, Owners of large businesses etc BPO Executive, Shop Owner, Officer/Supervisor in Organized sector/MNC/ mid level government Clerk, small shop keepers/Shop floor Supervisor in small scale / unorganized sector/semi skilled Daily wage earners, agri labourers, construction workers

Durables Food basket owned


100 % own a car Very health conscious, High affordability Packaged Foods, Snacks etc Health Conscious, Cost Cautious Health Drink, Butter, Jam

Target for Co.


Nescafe, Maggi Noodles Everyday, Nescafe Sunrise

Seeking and Striving India

70% have a Two-Wheeler

Aspiring India

47% have a Two-wheeler

Health is a concern but cost prevails Packaged tea, snacks, biscuits Cost is the only concern Unbranded products

Munch, Half Maggi noodles

Deprived India

17 % own a B & W TV

Eclairs

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Winning at POP

Availability Visibility

Attractive Display
Change with changing times

Appreciation of the Shopper-POP Levels of Engagement

Buying Decision Process

1. At Home 2. Pre-store 3. In-store

Consumer / Shopper Behavior & Buying Situations


Monthly House-hold Purchases Impulsive Purchases Trial and variety seeking behavior Emergency Purchases Service Seekers

Shopping as an experience

Buying Occasions & Specific Channels


Type of Outlet
Consumer buying situations

Groceries
Monthly shopping by residents of the middle income groups upwards

General Stores
Trial and variety seeking behavior by middle income groups upwards is predominant. Purchases of floating population

Chemists
Impulse or variety seeking behavior is predominant

Paan / Bidi Shops


Emergency purchases of middle income group residents and trial purchases by lower income groups

(80 % situations)

Marketing Overview

The definition of Marketing used to be: human activities directed at the satisfaction of needs and wants through exchange processes (Kotler, Northwestern University) or

Performance of business activities that direct the flow of goods and services from producer to consumer (American Marketing Association)

or

the process of identifying customer needs; conceptualizing those needs in terms of an organizations capacity to produce; communicating the conceptualization to the appropriate laws of power in the organization; conceptualizing the consequent output in terms of the customer needs earlier identified; and communicating that conceptualization to the customer (Howard, Columbia University) why does it say customer and not consumer ? or

the process of creating, distributing, promoting, and pricing goods, services and ideas to facilitate satisfying exchange relationships with customers in a dynamic environment (Pride [Texas A&M] - Ferrell, [Colorado State])

or

Is this enough? Is knowing what the customer wants enough when all of your competitors know it as well? Or is success based primarily on strategies and tactics?

A better definition of marketing:

Marketing is War!

War belongs to the province of business competition, which is also a conflict of human interests and activities. (Karl von Clausewitz, On War)

The true nature of marketing today involves the conflict between corporations. Not the satisfying of human needs and wants!

What is the role of Marketing in a company?

Understand the customer and the target market Understand the competition Support the sales function Create shareholder / stakeholder value Determine what products a company can sell Providing customer value What else?

Concepts
Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept

What do we mean when we use the term Marketing Concept?


A view from the perspective - that we will offer to a given target audience, what we can profitably sell, using a clearly defined set of actions!

Define Providing value to customers In terms of the Price/Value ratio In terms of product features In terms of product benefits V=f( c,v,t ) where v =( q,s )

What is the Marketing Mix?


Marketing deals with Products, Place, Pricing, and Promotion directed at a particular target audience. Together these elements form the Marketing Mix.

Decisions Within the Four Elements of the Marketing Mix


Product Quality Style Options Packaging Features Brand name Guarantees/warranties Services/spare parts Place Numbers and types of middlemen Locations/availability Inventory levels Transportation

The target market Price Discounts Allowances Credit terms Payment period Rental/lease List price Promotion Advertising Personal selling Sales promotion Point-of-purchase materials Publicity

What is relationship marketing?


Establishing a long-term relationship with a buyer that is mutually beneficial. Often the term CRM is used to describe this marketing process

What leads to defeat in both War and Marketing?


Over-pessimism (Fear of Failure) Over-optimism (Failure to Fear Failure)

We learn more from failures than success.

Good Marketing professionals need to understand the nature, causes, and cures of marketing failures

Marketing Failures are never Single Point Most Common Marketing Errors Failure to keep products/services up-to-date Failure to estimate market potential accurately Failure to gauge the trend of the market Failure to appreciate regional differences in market potential and in trend of market Failure to appreciate seasonal differences in your customers demand

Most Common Marketing Errors

Failure to establish the advertising budget based on the job to be done Failure to adhere to policies established in connection with long-range goals Failure to test-market new ideas ( Innovation ! ) Failure to differentiate between long-term strategies and short-term tactics Failure to admit defeat

Most Common Marketing Errors

Failure to try new ideas while a brand is climbing Failure to integrate all phases of the marketing operation into the over-all program Failure to appraise objectively your competitors brands Failure to get the facts and interpret them correctly

Differences Between Production-Oriented and MarketOriented


Business activity or function Product offering Production orientation Marketing orientation

Company sells what it can make; primary focus on functional performance and cost. Narrow.
Based on production and distribution costs.

Company makes what it can sell; primary focus on customers needs and market opportunities. Broad.
Based on perceived benefits provided.

Product line
Pricing

Research

Technical research; focus on product improvement and cost cutting in the production process.

Market research; focus on identifying new opportunities and applying new technology to satisfy customer needs.

Differences Between Production-Oriented and MarketOriented


Business activity or Function Packaging Production orientation Marketing orientation

Protection for the product; minimize costs.

Designed for customer convenience; a promotional tool. A customer service; a tool to attract customers. Emphasis on product benefits and ability to satisfy customers needs or solve problems.

Credit

A necessary evil; minimize bad debt losses. Emphasis on product features, quality, and price.

Promotion

Non Sequitur by Wiley Miller

Goals and Objectives


Whats the difference between a Goal and a Strategy?
Goals are commitments. Inflexible, rigid, unwavering, focused. Strategies can be changed, modified or eliminated based on market conditions

Strategy
Companies often talk about their strategies. What does strategy mean? A fundamental pattern of present and planned objectives, resource deployments, and interactions of an organization with markets, competitors, and other environmental factors.

Components of Strategy
Scope Goals and objectives Resource deployments Identification of sustainable competitive advantage Synergy

Corporate Growth Strategies


Current products New products

Current markets

Market penetration

Product development

New markets

Market development

Diversification

Corporate Growth Strategies


Current products Market penetration strategies Increase market share Increase product usage Increase frequency of use Increase quantity used New applications New products Product development strategies Product improvements Product-line extensions New products for same market

Current markets

New markets

Market development strategies Expand markets for existing products Geographic expansion Target new segments

Diversification strategies Vertical integration Forward/backward integration Diversification into related businesses (concentric diversification) Diversification into unrelated businesses (conglomerate diversification)

Contents of a Marketing Plan

Executive summary Current situation (SWOT) and trends Performance review (for an existing good or service only) Key issues Objectives Marketing strategy Action plans Projected profit-and-loss statement Controls Contingency plans

Strategic Planning

What is a SWOT Analysis? An assessment of the companys Strengths, Weaknesses, Opportunities, and Threats.

SIBM SWOT - 2007


strengths Strong visiting faculty base Physical location ( Pune ) Alumni base, corporate tie ups Moving to world class infrastructure Rich Library resources, e data, databases Strong Revenue generation through corporate training programs Strong brand equity, especially in North & West India Strong innovation in teaching methodologies, involvement of corporates in education Reasonable fee structure, high return to student stakeholders through excellent placements Overseas collaborations and tie- ups. Strong IT base, computer labs, wi-fi campus Multicultural student base, strong student loyalty to SIBM Strong support from Symbiosis Management, Society. Extending campuses in Bangalore and Hyderabad opportunities Huge Market for corporate training Inability of competing B- schools to retain corporate clients Industry growth affecting B- schools positively State of the art technology in new campus will enable new teaching methodologies Strong Indian brand, now can be projected internationally Can target quality student input and corporate clients. Quality experience in FMCG sector training can be leveraged for corporate clients New campuses will enable reaching out and accommodating new quality students Customized training programs for corporates Major opportunities available with existing clients : HUL, ITC, L & T, MNYL etc Setting up research cell for creation of knowledge, not just dissemination will improve quality of teaching as well as corporate education and training Enhanced brand equity for international tie -ups Weaknesses Low permanent faculty base, being rectified now. Lower reach in East and comparatively as compared to North and West. Faculty attrition, inability to attract top faculty on permanent basis. Pressure of 2 additional new campuses on brand equity Current infrastructure inadequate, leading to loss in teaching time. ( being remedied now ) Long term planning especially in HR and HR practices required. Morale low due to compensation packages by other B- schools Low top international collaborations ( being worked on ) Inadequate faculty training programs

Threats Competition from other B-schools likely to increase for students, academics, and corporate training programs Government interference in admissions process Rapid changes in IT may make current systems obsolete In case new campuses do not perform, may affect brand value of SIBM Pune New technologies, services, ideas being utilized by other B schools Other B- school collaborations with international partners or setting up of international campuses Sustaining internal capabilities, retention of existing faculty members, Loss of key staff may happen due to shift to Lavale

Marketing Jeopardy
What are Stars, Cash Cows, Question Marks, and Dogs? The four cells in the Boston Consulting Group growth share matrix

Strategic Planning
Product Portfolio Matrix High Stars Question Marks

Market growth rate

Cash Cows

Dogs

Low High Relative Market Share Low

Environmental Analysis

Key Macro Trends To Evaluate


Demographic environment Socio - cultural environment Economic environment Political/legal environment Technological environment Legal Environment Physical environment

Shifts Occurring in Demographics


Family Structure: Traditional is becoming less typical Aging: Baby boomers dominate growth Geographic Distribution: Increase in immigrants and migration of jobs and people to suburbs Ethnic Composition: PoP strata becoming more diverse What else?

Shifting Values in Our Society


Traditional values New values

Self-denial ethic Higher standard of living Traditional sex roles Accepted definition of success Traditional family life Faith in industry, institutions Live to work Hero worship Expansionism Patriotism Unparalleled growth Industrial growth Receptivity to technology

Self-fulfillment ethic Better quality of life Blurring of sex roles Individualized definition of success Alternative families Self-reliance Work to live Love of ideas Pluralism Less nationalistic Growing sense of limits Information/service growth Technology orientation

Economic Environment

GDP gap has increased between rich and poor countries Worlds economic growth continues to increase ( though rate may vary ) Developing countries are expected to have higher growth rates than developed countries

Political/Legal Environment

Potential Political Problems


Confiscation Expropriation Domestication Changes in exchange control Local content laws Import restrictions Taxes Price controls

Potential Technological Problems


Development

of Fiber-optic Cables Storage devices developed to handle the increasing volume of data Use of flexible low-cost wireless transmission Development of low-cost multimedia chip Advances in biology Progress in agriculture

Physical Environment
Depletion of valuable resources Deserts growing Forests shrinking Lakes dying Quality and quantity of groundwater declining Rise in temperature