Market: Set of all the present customers and the future prospects.

Building Customer Satisfaction: For long term sustainability business entity needs to build customer satisfaction. Customer satisfaction involves: A. Customer creation B. Customer maintenance /retention Customers decide which product to buy based on perceived value (customer delivered value) (CPV/CDV). Eg: Splendour Rs 54000 @ 70 km/lit over sales Bajaj Boxer Rs 31000 @ 81 km/lit. Buyers buy the product from that company which they perceive offers the highest CDV. CDV is the difference between total customer value and total customer cost. (TCV-TCC). Total customer value: Bundle of benefits customers expects/ experienced from a product/services. Total Customer cost: The bundle of costs the customer expects to incur in evaluating /obtaining/using products and services.

Deviation from customer delivered value could be due to : o Policy of buying lowest price product o Long term benefits not appreciated o Other reasons (what a customer is willing to compromise).

Customer retention: Customer can be retained by: o Setting high switching barriers. o Delivering high customer satisfaction o Achieved thru relationship marketing.

Developing loyal customers increases company's revenue. However company needs to spend more to build customer loyalty. How much should a customer invest in customer relationship building company should ensure that returning profits from customer loyalty should be more than investment in customer relationship building. Based on the above five levels, company investment in CRB emerge. Basic Marketing: Sales person simply sells products. Reactive Marketing: Sales person sells products, encourage customer to call if he/she has any complaints or questions or comments. Accountable Marketing: Phone customer once after sales to check whether product is meting expectation. Also ask for suggestions to increase product/services. Proactive Marketing: Companies contact customer from time to time with suggestions @ improved product uses and new products. Partnership Marketing: Company and customer work together to discover ways to increase customer savings and performance. RED OCEAN VS BLUE OCEAN

MARKET ORIENTED STRATEGIC PLANNING (MOSP) Aim to shape/ reshape the companys business product so that they yield target profits/ growth. Strategic Planning Action areas: Managing companys portfolio as an investment portfolio. Assessing each business accurately by considering markets growth rate and companys position and fit in that market. Developing a strategy (game plan) to achieve long run objective. Strategic planning takes into account that large organization consists of organizational levels: Corporate Level Division Level Business Unit level Product Level

MARKETING IS PRODUCT LEVEL STRATEGIC PLANNING STP- Strategic Marketing Plan 4Ps- Tactical Marketing Plan

IDENTIFYING MARKET SEGMENTS (STP) Instead of competing everywhere, organization needs to identify market segments that it can serve more effectively. For this, they need to choose/select its markets and serve them well i.e. instead of scattering the market effort (shotgun approach), they can focus on buyers whom they have greatest chance of satisfying (rifle approach). This is called target marketing. Target marketing consists of: (i) Market segmentation identify/profile distinct buyer groups who may require separate products/marketing mix. (ii) Market targeting Select one/more segments to enter (iii) Product positioning Establishing/communicating products key distinctive benefits to market. Relative image of product in minds of people. Value Proposition- Why the target market should buy the product? Steps in STP (Segmentation, Targeting, Positioning): S P T Identify segmentation variables and segment the market Develop profiles of resulting segment Evaluate attractiveness of each segment Select the target segment

T S

Identify possible positioning concept for each target segment Select/ develop/ communicate the chosen positioning concept

MARKET SEGMENTATION Effort to increase companys targeting precision. Levels of segmentation could be: 1. Mass Marketing. Eg: Nirma 2. Segment Marketing. Eg: Two Wheeler (Hero Honda) Price conscious buyer (CD-Dawn). Fuel economy buyer (Splendor). Power buyer (CBZ). Style/Luxury (Karizma). 3. Niche Marketing Eg: Herbal cigarettes, Mercedes, Colgate herbal, Tag Heuer for mountaineers.

4. Local/ Local area Marketing. Eg: Alpha TV (Regional communication), E- TV, Pune times, Medimix ad in tamil, gujarati, Malayalam, etc. 5. Individual Marketing. Eg: Greeting cards, vacations. PATTERNS OF MARKET SEGMENTATION One way of looking at segments could be in terms of preference patterns. Eg: Ice cream preference for: Sweetness Creaminess

MARKET SEGMENTATION PROCEDURE Steps involved are: 1. Survey/ research method 2. Analysis of data 3. Profiling customers into segments. BASIS FOR SEGMENTATING MARKETS Consumers markets may be segmented on the basis of: 1. Consumer characteristics: Demographics Geographics Mediagraphics Psychographics 2. Consumer responses: Behavioural Segmentation variables may be used singly/in combination.

MARKET TARGETING
Market targeting process is made up of: (i) Evaluation of market segment (ii) Selection of market segments in which the company should be in (i) Evaluation of market segment (a) Market attractiveness Segment attractiveness ids based on 1. Size of segment 2. Growth 3. Profitability 4. Scale economies 5. Low risk 6. Attractiveness points as in GE matrix In addition, other considerations could be: 1. How easy would it be to persuade current market segment to shift/switch their purchase to our product. For this, avoid brand loyals & deal-prone shoppers. Instead target dissatisfied customers & those who are not yet brand loyal. 2. How much is their business worth? Company should try to focus on customers who spend more/be loyal. (b) Companys objective and resources (ii) Selecting market segment:

POSITIONING
Relative image of product in minds of people. Steps involved in Positioning are Differentiating product / offerings from competitor. Developing / communicating positioning strategy. Competitive Differentiation: Q: In an intensely competitive market, how can a small company compete against market leaders? A: By differentiating its product/services and avoiding direct competition. Example: Paras Pharmaceuticals (Krack Cream, Livon). Maggi Hot & Sweet tomato ketchup.

Differentiation can happen along five dimensions Product. Services. Personnel. Channel. Image.

Avoid 4 positioning errors: 1. Under positioning. Eg: Babool toothpaste 2. Over positioning. Eg: Bajaj eliminator 3. Double. Eg: Bajaj calibre, TATA docomo 4. Confused

DESIGNING PRICING STRATEGIES: Price: Sacrifice made by buyer to avail benefits provided by product. Determine revenues that a firm generates in conjunction with units sold. Firm needs to set price: When it develops a New Product/ acquires New Product. When it enters new distribution channel/ geographical area. When it enters bid on new contractor. Firm needs to decide product position based on: Quality. Price. Based on these, strategies could be:

Diagonal strategies 1/5/9 can co-exist in the same market. Strategies 2/3/6 would attack the diagonal strategies. Strategies 4/7/8 amount to over pricing product in relation to its quality. These are avoidable.

To set pricing policy, firms need to consider various factors. Hence a formal procedure is used for price setting. Procedure is: 1. Select pricing Objectives. a. Survival b. Maximizing current profit c. Maximizing current revenue d. Maximize sales growth(market penetration pricing) Eg: Tide e. Maximize market skimming. Eg: Nokia f. Product quality leadership Premium product- Dove Low maintenance in consumer durables- Compaq.

2. Determine demand. a. Demand at various price levels can be estimated thru:: Time series analysis using past data/ trends. Price based experimental research. Causal marketing research. 3. Estimate costs. a. Company costs set the floor price. b. Costs should cover cost of 1. Manufacturing/production. 2. Distribution. 3. Selling products. 4. Return on Investment/ Risk 4. Analyse competition costs/prices/ offers. 5. Select pricing method. a. Pricing method could be: b. Mark up price. c. Targets return pricing. d. Perceived value pricing. e. Value pricing. f. Going rate pricing. g. Sealed bid pricing 6. Select final price.

BRAND
A Brand is a name/ term/ sign/symbol design or combination of them intended to identify the good/services/ ideas of one seller /group of sellers & to differentiate them from these of competition. Essentially, Brand identifies seller/maker. It can be a name/ trademark/logo/symbol. As per law, seller is granted exclusive rights to the use of the brand name in perpetuity i.e. there is no expiry date. A brand is essentially a sellers promise to consistently deliver what it stands for to the buyer. This is to meaning to consumers. A Brand may convey up to 6 levels of meaning: Attribute: A brand first brings to mind certain attribute/features. Example: Mercedes: o Expensive. o Well-Engineered. o High Prestige. o High Resale Value. o Durable/Fast/Safe. The company may use one/more of these attributes to advertise the car. Engineered like no other car in the world. Benefits: Customer dont buy attributes, they buy benefits. Attributes need to be translated into final/emotional benefits. Example: Expensive: Mercedes helps me feel important/admired. Values:

Brand makes a statement about producers values. Example: Mercedes: High Performance /safety/ prestige. Brand marketer needs to identify customer groups who are seeking these values.

Culture: Brand may represent certain culture. Example: Mercedes: German efficiency/precision. Personality: Brand may project certain personality If brand was an animal what animal comes or what object? or which personality? Example: Mercedes: o No Nonsense Boss o King of the Jungle (lion) o Place User: Brand suggests kind of consumer who buys/uses product. Users are those who respect/conform to products values/ culture /personality. Example: Mercedes: Chief Executives. If the audience can visualize all 6 dimensions of a brand then the brand is DEEP otherwise it is SHALLOW.

BRAND EQUITY: (BRAND POWER IN MARKET PLACE) Brands vary in the amount of power/value they have in the market place. Some brand may be unknown to most buyers in the market place. Some brands may have fairly high degree of brand awareness measured by brand recall/ brand recognition. Few brands have high degree of brand acceptability i.e. most customer could not resist buying them. Some brands enjoy a high degree of brands preference i.e. they are selected over others. Few brands command brand loyalty i.e. if the brand is not available at one store they would go to another store for it, without buying a substitute product.

Brand equity is related to: Degree of Brand recall /recognition. Perceived brand quality. Strong mental/ emotional association. Strong channel relationship. Percentage(%) of customer who are: Satisfied with brand (Brand acceptance). Value the brand (Brand preference). Denoted to the Brand (Brand loyalty). Brand Equity is difficult to measure, but it can be learned through: Price premium that Brand commands. Extra volume brand generates over that of an augmented brand. Other aspects listed above.

Brand Name Decision: To select Brand name, company may follow any of the four strategies: o Individual Brand names. Example: HLLs Lux, Dove. o Blanket family name for all products. Example: Philips. o Separate family names for all products. Example: Videocon /Kenstar: (premium range). o Companys name combined with individual products name. Example: Kelloggs Cornflakes.

Brand Name should be: o Distinctive o Easy to pronounce/ recognize/ remember o Should suggest something about pdts benefits /pdts qualities such as color/action o Should not carry poor meaning in multiple languages

Brand Strategy Decision

PRODUCT LINE SAME DIFF.

SAME

LINE EXTENSION

BRAND EXTENSION E.g. Maggi Noodles,

BRAND

E.g. Esteem Lx, Vx,

DIFF.

MULTI BRANDING

NEW BRAND
STRATEGY

E.g. Tata, Titan,

Co-Branding (Dual Branding): Two/more brands are combined in a product offering. Example: o Hero Honda. o Wipro Spectramind. o Swaraj Majda. Co-branding could be: o Components co-branding. Example: Zenith/Compaq PC with Intel Inside. o Joint venture co-branding.

Example: Mahindra British Telecom. Multiple branding. Example: Mobile Communication.

Brand Repositioning: Over a period of time, market dynamics change. As a result, a brand may need to be repositioned. Example: Bajaj Caliber- Hoodi Baba. Repositioning due to: Decrease sales of Brand. Mkt Evolution. Competition. INTEGRATED MARKETING COMMUNICATION (PROMOTION) In addition to: Developing a good product. Pricing it attractively. Making it accessible to target customer. Companies need to communicate with: Present/ Potential customer. Retailer/ Distributor/ Suppliers. Other Stakeholders. General Public. For this, companies need to determine: What to say? Whom to say? How often to say? To communicate effectively, marketers create/ use the marketing communication mix/ promotion mix. Promotion mix made up of: o Advertising: Paid form of non-personal presentation & promotion of ideas/ goods/ services by an identified sponsor. o Sales Promotion: Variety of short term incentives to encourage trial/ purchase of product/ service. o Public Relations & Publicity. Variety of programs designed to promote/ protect companys image/ individual product. o Personal Selling: Face to face interaction with one/ more prospective purchasers for the purpose of making presentation/ answering questions/ procuring order. o Direct Marketing: Use of mail/ phone/ fax/ e-mail/ other non-personal contact tools to communicate directly with/ solicit direct response from specific customer & prospectors.