1.

5
MARKETING FOR CUSTOMER
VALUE
Hello!
I am,
Dr. Rajesh C. M.B.A., Ph.D
Facilitator for 1st Sem MBA, B.U., MCV

You can find me at:

rajesh.c@acharyabbs.ac.in
SESSION PLAN
The sessions would be conducted as per
the session plan
COURSE OUTLINE
BU SYLLABUS

PEDAGOGY
Assignments, Presentations and case
analysis
Mid semester and End semester

Group and Individual Presentations

Surprise tests

Attendance
INTERNAL & EXTERNAL
▷INTERNAL: 30marks
 Attendance: 5 marks
 Earnings: 25 marks

▷EXTERNAL: 70marks
 “
Money coming in says I've made the right
marketing decisions.

- Adam Osborne
 1.
ESSENTIALS OF
MARKETING
Importance of marketing, Core marketing concepts, Company
orientation towards market place, Marketing management tasks,
Marketing strategies and plans, SWOT analysis, Marketing
environment, Competitive dynamics
 Dr. Rajesh C.
EVOLUTION
Good Marketing is No
Dr. Rajesh C.
Accident

The roaring success

of four-wheeler Tata
Ace, in a market
earlier dominated by
three-wheeler load
carriers, was due to a
deep understanding
of the market needs
and customer
requirements.
 What is Marketing…?? Dr. Rajesh C.

 Selling?
 Advertising?
 Promotions?
 Making products available in stores?
 Maintaining inventories?

 All of the above, plus much

more!
 Dr. Rajesh C.
Importance of Marketing

 Financial Success often depends on marketing

ability
 All business functions will not really matter if
there is no sufficient demand for products and
services
 Companies at greatest risk are those that fail
to carefully monitor their customers and
competitors
 Skillful marketing is a never-ending pursuit
 Dr. Rajesh C.
MARKETING -Definitions
 Marketing is the process of planning and
executing the conception, pricing, promotion,
and distribution of ideas, goods, services to
create exchanges that satisfy individual and
organizational goals
-American Marketing Association

- 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.
MARKETING MANAGEMENT – Dr. Rajesh C.
DEFINITION
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.

- Kotler
 Selling is only the tip Dr. Rajesh C.
of the iceberg

―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.‖
-Peter Drucker
 Dr. Rajesh C.
What is Marketed?

Goods
Services
Events & Experiences
Persons
Places & Properties
Organizations
Information
Ideas
 Dr. Rajesh C.
Difference between Goods and Services
Goods Services
A physical commodity A process or activity
Tangible Intangible
Homogenous Heterogeneous
Production and distribution Production, distribution
are separated from their and consumption are
consumption simultaneous processes
Can be stored Cannot be stored
Transfer of ownership is Transfer of ownership is
possible not possible
Types of Products and Services Dr. Rajesh C.

Products
Services
Based on Durability
 Durable Products  Core Services
 Non-durable Products  Supplementary
Consumer Products Services
 Convenient Products
staple, impulse, and emergency items.  Business Services
 Shopping Products
 Speciality Products
 Unsought Products

Industrial Products
 Materials and Parts
 Capital Items
 Supplies
Dr. Rajesh C.
Demand States Dr. Rajesh C.

Negative Nonexistent Latent

demand—Consumers may
demand—Consumers dislike demand—Consumers may share a strong need that cannot
the product and may even be unaware of or uninterested be satisfied by an
pay to avoid it. in the product. existing product.

Declining Irregular
demand—Consumers begin demand—Consumer purchases
to buy the product less vary on a seasonal, monthly,
frequently or not at all. weekly, daily, or
even hourly basis.

Full Overfull
demand—Consumers are demand—More consumers
Unwholesome
adequately buying all would like to buy the product demand—Consumers may be
products put into the than can be satisfied. attracted to products
marketplace. that have undesirable
social consequences.

In each case, marketers must identify the underlying cause(s) of the demand state
and determine a plan of action to shift demand to a more desired state.
Key Customer Markets Dr. Rajesh C.

Consumer Markets Global Markets

Business Markets Nonprofit/ Government Markets

A Simple Marketing System Dr. Rajesh C.
Structure of Flows in a Modern
Dr. Rajesh C.
Exchange Economy
 Dr. Rajesh C.
MARKET CONCEPTS

 MARKETPLACES - Physical
 MARKETSPACES - Digital
&
 METAMARKETS (Mohan Sawhney)
―A cluster of complementary products and services
that are closely related in the minds of consumers
but are spread across a diverse set of industries‖
 Dr. Rajesh C.
Rural Markets in South Asia

 Rural markets offer immense potential for

market expansion and growth:
 Consumption in rural markets predicted to grow at
a CAGR of 5% in the next two decades.
 Size and growth rate for many products and
product categories are very attractive.
 48 percent of the rural population is below 20
years of age.
 Core Marketing Concepts
NEEDS & WANTS
Needs: Basic Requirements
Stated/ Real/ Unstated/
Delight/ Secret
Wants: Needs directed to
specific objects that might
satisfy the need
OFFERINGS AND
BRANDS
Offering: Set of benefits
that satisfy needs.
Intangible value
preposition to tangible
Brand: is an offering from
a known source
SUPPLY CHAIN
Longer channel stretching from
raw materials to componets to
finished products carried to final
buyers
Supplier‟s Supplier and „Buyer‟s
Buyer
DEMANDS
are wants for specific
products backed by a
ability to pay
VALUE AND SATISFACTION
Value: Tangible+ intangible
benefits and cost to
customer
Quality, Service & Price
Satisfaction: A person‟s
judgement of a product‟s
perceived performance with
relation to expectations
COMPETITION
All the actual and
potential rival offerings
and substitutes a buyer
might consider
TARGET MARKETS,
POSITIONING,
SEGMENTATION
S-T-P on the basis of
demographic,
psychographic and
behavioural
MARKETING CHANNELS
Communication channels
Distribution Channels
Service Channels
MARKETING ENVIRONMENT
Task Environment:
Producing, Distributing, ad
promoting the offering
Broad Environment:
Demographic, Economic,
Social-Cultural, Natural,
technoclogical and Political-
legal
The marketplace isn’t what
Dr. Rajesh C.
it used to be…

Information technology

Globalization
Deregulation

Privatization

Heightened Competition

Industry Convergence
Consumer resistance

Retail transformation
 Dr. Rajesh C.
New Consumer Capabilities

 A substantial increase in buying power

 A greater variety of available goods and services
 A great amount of information about practically anything
 Greater ease in interacting and placing and receiving
orders
 An ability to compare notes on products and services
 An amplified voice to influence public opinion
Company Orientations Dr. Rajesh C.

Production Product

Selling Marketing

Societal
THE PRODUCTION
Dr. Rajesh C.
CONCEPT

Company

Produce more & more

Produce Consumers
Sell Practically sells itself

 Consumers will favor those products that are

widely available and low in cost.
 Therefore increase production and cut down
costs.
 And build profit through volume.
 Dr. Rajesh C.
THE PRODUCT CONCEPT
Practically sells itself,
Produce if it gives most quality
Quality for money
Products
Consumers
Sell

 Buyers admire well-made products and can

appraise product quality and performance.
 Consumers will favour those products that offer the
most quality, performance, or innovative features.
 Therefore, improve quality, performance and
features.
 This would lead to increased sales and profits.
 Dr. Rajesh C.
SELLING CONCEPT

Aggressive selling &

promotion efforts
Produce
Consumers
Sell it
Making sales becomes primary function and consumer
satisfaction secondary .

 Consumers have normal tendency to resist.

 Consumers, if left alone, will not buy enough
of company’s products.
 Therefore, promote sales aggressively.
 And, build profit through quick turnover.
 Dr. Rajesh C.
MARKETING CONCEPT

Learn what they

want(MR) Produce it
Consumers
Market it

Sell what they want(Satisfy needs of customers)

“ LOVE THE CUSTOMER , NOT THE PRODUCT ”

 The key to achieving organizational goals consist in

determining the needs and wants of target markets and
delivering the desired satisfactions more effectively and
efficiently than competitors.
 And build profit through customer satisfaction and loyalty.
 THE SOCIETAL MARKETING Dr. Rajesh C.
CONCEPT
 It is Marketing Concept (+) Society’s well being.
 Balancing of following three considerations while setting
marketing policies :
-Customer’s want satisfaction
-Society’s well being
-Company’s profits
 The societal marketing concept holds that the organization’s
task is to determine the needs, wants, and interests of target
markets and to deliver the desired satisfactions more
effectively and efficiently than competitors in a way that
preserves or enhances the consumer’s and the society’s well
being.
 It addresses conflicts between consumer’s and firm’s short
run wants and long term welfare.
 SELLING AND MARKETING
Dr. Rajesh C.
CONCEPT CONTRASTED

Starting point Focus Means Ends

Factory Products Selling and Profit through
Promoting Sales Volume
Selling Concept
Target Market Customer Coordinated Profit through
Needs Marketing Customer
Satisfaction
Marketing Concept
 Dr. Rajesh C.
Holistic Marketing Dimensions
 Dr. Rajesh C.

Relationship Marketing Integrated Marketing

Customers (1) Many different marketing activities can create,

communicate, and deliver value, and
Employees (2) Marketers should design and implement any
one marketing activity with all other activities in
Marketing Partners mind.

Financial Community

Internal Marketing Performance

Marketing
is the task of
hiring, training, and Social
motivating able employees Financial Responsibility
who want to serve customers well. Accountability Marketing
 MARKETING MIX Dr. Rajesh C.

McCarthy's four Ps
(1960)
Lauterborn's four Cs
 Product (1990)
 Price
 Promotion  Consumer
 Place  Cost
 Communication
 Service‟s 3ps  Convenience
 Physical evidence
 People
 Process
Elements of Marketing
Dr. Rajesh C.
Mix
Modern Marketing
Dr. Rajesh C.
Management 4P’s

 People
 Processes
 Programs
 Performance
 Dr. Rajesh C.
Marketing Management Tasks

 Develop market strategies and plans

 Assess market opportunities and customer value
 Choose value
 Design value
 Deliver value
 Communicate value
 Sustain growth and value
 Dr. Rajesh C.

Marketing strategies and

plans
 Dr. Rajesh C.
The Value Delivery Process
Three V’s Approach to Marketing - Dr. Rajesh C.
Ref: Nirmalya Kumar of London Business School.

Define the value segment

Define the value proposition

Define the value network

 The Value Chain /
Dr. Rajesh C.
The Porter’s Value Chain
 The value chain is a tool for identifying ways to create more customer
value because every firm is a synthesis of primary and support activities
performed to design, produce, market, deliver, and support its product.
 Dr. Rajesh C.
Core Business Processes

 Market-sensing process
 New-offering realization process
 Customer acquisition process
 Customer relationship management process
 Fulfillment management process
 Dr. Rajesh C.
Core Competencies

 A source of competitive advantage

 Applications in a wide variety of markets

 Difficult to imitate
 Dr. Rajesh C.
Holistic Marketing

Holistic marketing sees itself as integrating the

 Value exploration
 Value creation, and
 Value delivery
activities with the purpose of building long-
term, mutually satisfying relationships and
coprosperity among key stakeholders
 Dr. Rajesh C.
What is a Marketing Plan?

A marketing plan is the central instrument for

directing and coordinating the marketing effort.
It operates at a strategic and tactical level.
 Dr. Rajesh C.
Levels of a Marketing Plan

• Strategic • Tactical
– Target marketing – Product features
decisions – Promotion
– Value proposition – Merchandising
– Analysis of marketing – Pricing
Opportunities – Sales channels
– Service
The Strategic Planning, Implementation, and Dr. Rajesh C.
Control Processes
Corporate headquarters’
Dr. Rajesh C.
Planning Activities

 Define the Corporate Mission

Vision
Mission
Business Definition
 Establish SBUs
 Assign resources to each SBU
 Assess growth opportunities
Dimensions That Define a
Dr. Rajesh C.
Business

Customer
groups

Customer
Technology
needs
 Dr. Rajesh C.
Characteristics of SBUs

 It is a single business or collection of related

businesses
 It has its own set of competitors
 It has a leader responsible for strategic
planning and profitability
 Dr. Rajesh C.
The Strategic Planning Gap
 Strategies Suggested by Dr. Rajesh C.
Ansoff’s Product-Market Expansion Grid

Current products New products

Current Mkts Mkt penetration Product development

strategy strategy

Mkt development Diversification

strategy strategy
New Mkts
 Dr. Rajesh C.
What is Corporate Culture?

 Corporate culture is the shared experiences,

stories, beliefs, and norms that characterize an
organization.
 Dr. Rajesh C.
Tactics for Managing Change

 Avoid the innovation title for the team

 Use the buddy system
 Set the metrics in advance
 Aim for quick hits first
 Get data to back up your gut
The Business Unit
Dr. Rajesh C.
Strategic Planning Process
 Dr. Rajesh C.
SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats
 Dr. Rajesh C.
SWOT Analysis
 Internal environment helps a business firm to understand its strengths and
weaknesses. However, the opportunities and threats can be identified by the
analyses of the external environment.

 Strengths are the unique characteristics and capabilities of a business firm

that help the firm to gain strategic advantage.

 Weaknesses, on the other hand, are the constraints or limitations of the

company that create strategic disadvantage to the firm.

 Opportunity is a favourable condition in the company’s environment

(external) which enables it to gain strategic advantage over its competitors.

 Threat is an unfavourable situation which creates uncertainty and risk to a

business firm. It can even lead to the loss of major customers.
―SWOT analysis helps managers to select an appropriate
strategy that matches their firm’s resources and
capabilities to the environment in which they operate” Dr. Rajesh C.
(Johnson et al., 2007)

 It can be explained through the following

diagram:
 Dr. Rajesh C.
The Matching Stage- SWOT

 The Strengths-Weaknesses-Opportunities-
Threats (SWOT) Matrix helps managers
develop four types of strategies:

SO (strengths-opportunities) Strategies

WO (weaknesses-opportunities) Strategies
ST (strengths-threats) Strategies
WT (weaknesses-threats) Strategies
 Dr. Rajesh C.
Cont…

• SO • WO
Strategies Strategies
aim at
use a firm’s improving
internal internal
strengths to weaknesses by
take advantage taking
of external advantage of
opportunities external
opportunities

use a firm’s defensive

strengths to tactics directed
avoid or reduce at reducing
the impact of internal
external threats weakness and
avoiding
• ST external threats • WT
Strategies Strategies
 Dr. Rajesh C.
Steps to create SWOT Matrix

1. List the firm’s key external opportunities

2. List the firm’s key external threats
3. List the firm’s key internal strengths
4. List the firm’s key internal weaknesses
5. Match internal strengths with external opportunities
6. Match internal weaknesses with external opportunities,
and record the resultant WO Strategies
7. Match internal strengths with external threats, and
record the resultant ST Strategies
8. Match internal weaknesses with external threats, and
record the resultant WT Strategies
Dr. Rajesh C.
Market Opportunity Analysis
Dr. Rajesh C.
(MOA)
 Can the benefits involved in the opportunity be articulated
convincingly to a defined target market?

 Can the target market be located and reached with cost-

effective media and trade channels?

 Does the company possess or have access to the critical

capabilities and resources needed to deliver the customer
benefits?

 Can the company deliver the benefits better than any

actual or potential competitors?

 Will the financial rate of return meet or exceed the

company’s required threshold for investment?
 Dr. Rajesh C.
Opportunity Matrix
 Dr. Rajesh C.
Threat Matrix
 Dr. Rajesh C.
Goal Formulation and MBO

 Unit’s objectives must be hierarchical

 Objectives should be quantitative
 Goals should be realistic
 Objectives must be consistent
 Dr. Rajesh C.
Porter’s Generic Strategies

Overall Cost Leadership

Differentiation

Focus
Categories of Marketing
Dr. Rajesh C.
Alliances

Product or Service Alliances

Promotional Alliances

Logistics Alliances

Pricing Collaborations
 Dr. Rajesh C.
Marketing Plan Contents

 Executive summary
 Table of contents
 Situation analysis
 Marketing strategy
 Financial projections
 Implementation controls
 Dr. Rajesh C.
Evaluating a Marketing Plan

 Is the plan simple?

 Is the plan specific?
 Is the plan realistic?
 Is the plan complete?
 Dr. Rajesh C.

Marketing Environment
Marketing Environment
Dr. Rajesh C.
Definition

 A company’s marketing environment consists

of the task environment of actors and the
broad environment that affect the company’s
ability to develop and maintain successful
transactions with its target customers.

-Kotler (2000)
Analyzing Needs and Trends
Dr. Rajesh C.
in the Macroenvironment

 Trend: a direction or sequence of events that

has some momentum and durability

 Fad: unpredictable, short-lived, and without

social, economic, and political significance

 Megatrends: large social, economic, political

and technological changes that had great
influences for some longer time
 Colgate-Palmolive’s Total
Dr. Rajesh C.
Global Branding Strategy

 Colgate-Palmolive
has had global
success with its
Colgate line of tooth-
care products. The
products and their
packaging design do
not vary from country
to country; the only
thing that changes is
the language on the
packages.
Forces (Macro) &
Dr. Rajesh C.
Actors (Micro)
Broad Forces

Political/Legal Technological
Task Actors

Customers Suppliers
Competitors Company

Publics/Stak Intermediari
eholders es
Economic

Social/Cultural
 Dr. Rajesh C.
Marketing Environments

 Opportunities from Macro Environments

Social security
CCTV or security
systems
Telecommunication
VOLT/ Mobile phones (4G)
 Dr. Rajesh C.
Marketing Environments

 Challenges from Macro Environments

Recruitment of
Decrease in birth rate private schools

Improvement of
technology Short Product Life Cycle

Dynamic strategic planning

 Dr. Rajesh C.
The PEST Analysis

 Political
 Economic
 Societal (The Social/Cultural Environment
- Demographic Change)

 Technological
Strategic Marketing
Dr. Rajesh C.
Planning(SMP)

 The managerial process of developing and

maintaining a viable fit between the
organisations objectives, skills, and resources
and its changing market opportunities. The aim
of strategic planning is to shape the company’s
businesses and products so that they yield
target profits and growth.

-Kotler (2001)
 Strategic Marketing Planning
Dr. Rajesh C.
(SMP)
Business Mission
Where are we
Marketing now?
planning and Marketing Audit - Internal
control at and External Analysis How did we get
corporate/busines here?
s level SWOT Analysis Where are we
heading?
(Re) evaluation of Mission

Strategic Options
Where would we like to
Marketing planning Marketing Objectives be?
at product level
Tactical Plans & Mixes (4Ps) How do we get
there?
Evaluation & Control Are we on
course?
 Dr. Rajesh C.
Drawing a Conclusion

 Formulate strategic options that:

Minimise weaknesses and threats
Maximise strengths and opportunities

 For example:
Threat: Increased competition and limited India
coverage

Strategy: Take over competitor increasing coverage of

India market
 Dr. Rajesh C.
Competitive Forces
Threats of: Five Forces Determining Segment Structural
Attractiveness
 intense segment
rivalry
 new entrants
 substitute products
 buyers’ growing
bargaining power
 suppliers’ growing
bargaining
power
 Dr. Rajesh C.
Identifying Competitors

Industry Concept of Competition

Industry
Number of Sellers and Degree of Differentiation
Perfect and imperfect Competition
 Dr. Rajesh C.
Identifying Competitors
Entry, Mobility, Exit Barriers
Entry barriers
Mobility barriers
Exit barriers
Cost Structure
Degree of Vertical Integration
Vertical integration
Degree of Globalization
 Market Concept of Competition
Designing Competitive
Dr. Rajesh C.
Strategies

 Hypothetical Market
Structure
(Kolter, 2003)
 Dr. Rajesh C.
Benefits of SMP
 Forces organisation to critically evaluate its current
situation in light of current and future environmental
trends
 Prompts firm to identify its strengths and weaknesses
 Increases awareness of opportunities and threats
 Encourages organisations to adapt
 Stimulates achievement
 Promotes search for competitive advantage

However there are also problems:

 How confident are we in identifying and predicting
trends?
 By selecting certain options are we restricting
ourselves and losing flexibility/stifling creativity?
 Dr. Rajesh C.

END OF MOD 1