ONE

The art and science of

Creating & Communicating value to Customers

Originally scripted by

Brought to this classroom by

Easwar Krishna Iyer

Great Lakes Institute of Management

Philip Kotler
Kellogg School of Management

Communicating value

Creating value

1. Basics of Marketing

2. Basics of Strategy
3. Environment analysis

4. STP

MM1

5. 4 Ps of kotler
1. Product
2. Price, Place, Promotion

6. Services marketing 7. B2B Markets

MM2

8. Global Markets

1. Definitions of Marketing

2. What Gets Marketed?

3. Needs, Wants & Demands 4. Basics of STP 5. Porters Value Chain & Core Competence 6. Case Study No. 01 : Marketing Myopia 7. Corporate Vs. Business Strategy Planning A. Corporate Strategy i. Define Corporate Mission ii. Establish SBUs iii. Assign Resources [Intro to BCG Matrix] iv. Assess Growth [Intro to Ansoff Grid] B. Business Strategy i. SWOT Analysis ii. Opportunity / Threat Matrix iii. Goal Formulation iv. Strategy Formulation [Porter] v. Program Formulation / Implementation 8. Case Study No. 02 : The IPL Case

Chapter 1

Defining Marketing for the 21st Century

Chapter 2

Developing Marketing Strategies & Plans

Shortest definition of Marketing

Marketing is Meeting Needs Profitably

HUL identifies a Need of the market Freshness It packages freshness the need into a product called soap Creation element Then it Communicates freshness through a catchy image A lime fresh girl bathing under a lime fresh waterfall Finally HUL meets its basic objective it Profitably meets markets need called freshness through its product called soap This is marketing in its essence Meeting a need profitably.

Product
Boost

Need
Energy

Communication
Boost is the secret . Sachin (Why not Aishwarya?) Thandurusti ka raksha . - Rustic Football players (Why not stars?)

Lifebuoy

Health at low cost

American Marketing Associations Definition of Marketing

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 benefit the organization and its stakeholders.

SURF
First creating a Product that meets a very common need (brightness / whiteness) Then Pricing it at an affordable point for the Indian middle class (At lower price point, we have Nirma. At higher price point Ariel) [creating contd...] Then Placing it using multiple marketing channels all over the market (The delivery element) Finally Promoting it by effectively communicating its value proposition

Lalithaji

Typical no-compromise, quality conscious, bargaining Indian housewife

Surf ki kharidaari mein hi zyaada samajhdari hai Bhai saab, aagar itni saari safedi yadee kam daam me mile....... Tou koi yeh kyoun le ?

Continued For which P is Lalithaji pitching? And against which competitor?

The Peter Drucker definition - Delineates Marketing from Sales

There will always be a need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available.

Introduction to Environment Analysis

TATA ACE
Growing Indian Economy This growth is reaching out to rural markets

Demand for smaller vehicle for narrow roads

Last mile delivery (smaller sub-one-ton load) Safety & comfort of 4 wheeler Prestige of 4 wheeler (compared to auto) Willing to pay more for social status

Small is Big.

Mini Size Wider cargo Bed

High Quality Standards Low turning radius

Higher Speed (wrt auto) Sporty front end

Continued

Within 2 years, the Tatas rolled out the 1,00,000th ACE

Goods Services
Events

2
3 4 5 6 7 8

Experiences Persons Places

Properties Organizations Information Ideas

9 10

Goods
Goods are Physical Goods They are Tangible Before buy, there is a Touch & Feel about Goods

Automobiles FMCG Goods

Consumer Durables Industrial Raw Materials

Electronic Goods Textiles / Apparels

Furniture
Books

Cosmetics
Electrical Fittings

Heavy Machinery
Computers

Durables Vs. Consumables Industrial Vs. Domestic Intermediary Vs. Finished goods

White Goods Vs. Brown Goods B2B goods Vs. B2C goods Raw Vs. Processed goods Perishables Vs. Non-perishables

Continued

Cheap Vs. Premium goods

Services

Cellular Phone is a Product Cellular Telephony is a Service

Any Act, Performance, Process or Benefit, that does not result in the customer owning anything.

Banking Financial Services Education

Hospitality Mobile Telephony Beauty care

Airlines Legal Services Consultancy

Healthcare Media IT / ITeS

4 Characteristics of a Service
Simultaneity Heterogeneity Intangibility
Continued
[Shampoo & Shampooing] [Course & Faculty] [Software, Legal Advise] [Airline seats of yesterday]

Non- Inventorability

Pure Product Marketing Vs. Product + Service Marketing Vs. Pure Service Marketing

Easy to evaluate

Mostly Goods

Mostly Services

Difficult to evaluate

+
Can Market the SEARCH qualities Can Market ONLY the EXPERIENCE qualities Market (?) CREDENCE qualities

Services Marketing

Events

A time-bound event that is neither a product nor a

service

Yet it requires marketing Event marketing is aimed at both Customers &

Consumers

Customers : For sponsorships, advertisements etc Consumers : Tickets, TV viewership etc

Olympics T 20 World Cup / IPL Trade Fairs Performances / Shows Seminars, conclaves, workshops, press meets, book release etc

Continued

One of the most successful examples of Event Marketing

Dubai Shopping Fest is an Event

Experiences

Paris Lido Show is an Experience

Unlike an event, an experience is not a time bound happening. It is perpetual and hence has to be continuously marketed An orchestration of several goods and service offerings What you eventually sell ( i.e., what the consumer eventually buys ) is an integrated Experience The marketing effort underplays the individual offerings and focuses on the aggregate

Continued

Persons

Marketing of David Beckham

Don't confuse with celebrity endorsements.

In endorsements, what is marketed is the product (Boost / Santro). The endorser (Sachin / Shahrukh) is only an attester for quality / performance. In Celebrity Marketing, an agency markets the celebrity as a value proposition to advertisers

The marketing could be done either by self or by professional agencies like IMG

Obama & the recent US Presidential elections Marx & Co. and Kerala elections Shivaji and Siva sena [Maharashtra] All Gandhis for Congress

Continued

When you sell an AR Rahman CD, do you sell Music or Rahman?

Places
To IT clients To all tourists To tourists & investors To international tourists

Bangalore as Silicon Valley of India Kerala as Gods own country Malaysia as Truly Asia India itself as Incredible India

Continued

Properties

Has the feel of Goods & Services Kotler has separately categorized them as Property because of their Intangibility

Real Estate properties

Buying, renting, leasing, hiring etc

Financial properties

Stocks, bonds, commodities, etc

Continued

Organizations

Corporate Ads with logo

Tata, Kingfisher, ICICI

Election Ads with Symbol

Hand, Lotus, Elephant

Universities, NGOs, Hospitals .

Amrita, Apollo, Red Cross

Continued

Information
What does a website sell? How is a book promoted?

10

What does a brochure / pamphlet sell?

What does Google sell?

Ideas
Hindutva & BJP AIDS awareness campaign Family Planning Campaign Jagore.com The recent voting campaign Hindutva

Continued

Needs / Wants / Demands How they relate to Marketing

Needs are basic human necessities Needs are NOT created / shaped by marketers NEEDS PREEXIST MARKETING

Energy

Food

Reputation Sleep

Security Self-Actualization Health Privacy Fulfillment Knowledge

Needs / Wants / Demands How they relate to Marketing

& Maslows Hierarchy

Self - Actualization Needs

Fulfillment, lack of prejudice etc

Esteem Needs

Status, respect, reputation

Knowledge

Social (Belongingness) Needs

Promotion

Family, friends, affection

Safety Needs
Networking

Security, employment, law & order

Physiological & Biological Needs
Placement

Air, food, drink, sex, sleep

Needs / Wants / Demands How they relate to Marketing

Need Types

A middle class man has a requirement for transportation An esteem need at his level I want an inexpensive car Inexpensive implies running cost as well as initial vehicle cost

A rich man wants a second car for status again a esteem need at his level among his peers I want an expensive higher end car Expensive implies initial cost. Even a rich man would like a good mileage It should have features that lower end car owners cannot afford Weekend stay in a 5 star hotel with every car purchase type scheme Been seen by friends as one who has hit big time

Stated
Real Unstated Delight Secret
Continued

Good life long service & good resale value

Extended warranty, more accessories etc at same price Been seen by his friends circle as a value for money customer

The cash rich urban youth population has a requirement for

Stated Need Real Need Unstated Need Delight Need Secret Need I want a powerful motor bike I need power. I need enhanced machismo. I want a tool called motor bike which will accentuate this effect I want this powerful me to be noticed. Powerful headlights, noisy engine, flashy indicators, loud horn My powerful bike to be ergonomically designed too Slanting seat which will make her slide towards me !!

Continued

Sex Appeal

Needs / Wants / Demands How they relate to Marketing

Needs become wants when the customer directs his attention towards a specific object that satisfies his need Wants are first shaped by the society Then they get productized by marketers Need to Want Mapping
He wants burgers, french fries & coke He wants roti, dal & buttermilk [Amul Masti meets this want] He wants a cycle He wants a club membership She wants a part-time job She wants to buy Lifebuoy soap She wants a mid-range soap

An American needs food An Indian needs food A daily wage laborer needs mobility (transportation) A recently became rich man needs status / recognition A house wife needs additional financial safely for her family Needs cost effective hygiene Needs cost + quality balance

Continued

Needs beauty at any cost

She wants to buy Dove soap

Needs / Wants / Demands How they relate to Marketing

Needs become wants when the customer directs his attention towards a specific object that satisfies his need Want becomes demand for a specific product when the customer has the ability to pay Willingness & interest by itself does not create a market Demand comes when it is backed by buying power
Every society has a need for shopping With economic liberalization, higher growth rates, higher disposable incomes, more internet driven awareness and more internationally exposed Indians, there is a want for modern retail outlets in every city But demand for a mega format full scale mall will exist only when:

Continued

o o o o

There is a critical mass of high end buyers

The political climate of the state is pro-consumerist

Demographic & cultural climate High end salaried class (like say IT) present in plenty

1. Negative Demand : Consumers dislike product, will pay to avoid buying it Vaccination, Vasectomy, barber shops in Sardarji area, pork in Islamic countries 2. Non-Existent Demand :Unaware of or disinterested in such a product Ski equipments in India, Non English European movies, Air-conditioned auto rickshaw

3. Latent Demand :Have a strong need not satisfied by an existing product

Navigational aid in cars, e-mail access during travel, bed-cum sofa for small residences . Non-side-effect cigarettes, 24 hour battery back up laptop, Alternative fuel cars, Mac speed trains, medicine for baldness, learning through e-classes from home, Massaging shoe . 4. Declining Demand :Yesterdays products. Losing market today Scooters, typewriters, B/W Television, Pagers, non-AC theaters, bell bottoms, housewives 5. Irregular Demand : Seasonally varying purchase International holidays, Umbrellas, Text books / uniforms, Event-driven brand length extensions 6. Full Demand : Whatever is produced is adequately consumed

Normally priced FMCG goods, moderately priced consumer goods, salt, atta, milk, vegetables
7. Overfull Demand :Current demand is not met by current supply NANO, Modest high quality apartments, Education seats (MBA, Engineering, Medicine) 8. Unwholesome Demand : A demand that has undesirable consequences

Alcohol , sexual liberation & freedom etc

Grouping the entire consumer market using a combination of buying criteria

Choosing which group to sell, based on your perception of attractiveness

Select appropriate marketing mix for the target segment that you have chosen

1 Identify variables and segment the market

3 Evaluate attractiveness of each segment

5 Identify positioning concepts for each target segment

Develop profiles of resulting 2 segments

Select your 4 target segment

Communicate the chosen positioning 6 concept

Example : Food Processing Industry

The Indian Food Processing Industry size : US $ 70 billion (As per Ministry of Food Processing, Government of India) Food processing industry contributes 7% to Indias GDP

With agri - produce to processed food conversion being less than 10%, processed food is a huge market for the future
Product-wise Segments Market-wise Segments

Children
Youth House wives Working women

College Students
Men Young Mothers Elderly couples
Continued

Live-ins, single parents

Target Market

Target market for Nestle is children (0 14 age group) (Except for Nescafe) 31% of Indian population is this age group This demographic dividend will continue till 2020

Plus children are brand loyal

Great Target Choice

Continued

MBA Aspirant Clusters & Targeting

Primary focus on extreme academic brilliance Killer instinct & go-getter attitude No income specificity for family Perfectionist attitude

IIMs

Primary focus on 3-4 years work experience Between form and substance, focus marginally more on form Coming from upper middle class and above homes PGPM Ruthless corporate climbers Primary focus on human values ASB Coming primarily from Indian middle class homes Between form and substance, focus clearly on substance Good people first, good managers next Primary focus on earn & learn together PGWPM Has to be from in and around Chennai Might not crack a CAT or a GMAT with a high score Switching from technical to managerial roles an aspiration

Continued

Positioning
Is the science / art of designing the companys offering / product / service plus its associates imagery in such a way that it occupies a distinctive place (USP space) in the target markets mind
3 Steps for Implementing

Positioning
1.
2.
Continued Identifying all Possible Competitive Advantages Competitive Differentiation
Selecting the Right Competitive Advantage Unique Selling Proposition (USP) Communicating and Delivering the Chosen Position

3.

Market-wise Segments for Processed Food Men Youth

Continuing on Nestl's STP Story

Young Mothers Children

Elderly couples House wives Live-ins Single parents Working women Students

Chosen Target Market

How do you Position to this segment ? 1 Logo : Mother feeding her babies, an image
which has a subconscious connect

Name : Synonyms are Nuzzle, Snuggle,

Cuddle all synonymous with children

Continued

Ads : Even for a product that is not a child

only, the focus is on the hunger of the child Mummy bhook lagi hai; beta do minute

The New Value Creation & Delivery Sequence

Marketing is there right from the Beginning
Unlike old times when there was first Production, then Marketing

CHOOSE
Market Selection / Target Customer Segmentation

PROVIDE
Distributing & Servicing

COMMUNICATE

Product Development

Service Development

Sourcing & Making

Value Positioning

Sales Promotion

Sales Force

Strategic Marketing
Continued

Tactical Marketing

Advertising

Pricing

A tool for delineating CORE COMPETENCE

5 Primary Activities
That proceed in a specific flow

4 Support Activities
Support all primary activities