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Marketing Management 1 / 200
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UNIT-1
Objectives
By studying this unit
e Understand the term Market and Marketing.

e Know the nuances in marketing.
*® Know the recent Developments in Marketing.
Unit Structure
1.1 Market and Marketing.

1.2 Scope of Marketing
1.3 Fundamental Concept.
1.4 Trends and Tasks.
1.5 Marketing and Customer value.
1.6 Contents of the Marketing Plan.
1.7 Components of Marketing Information System
1.8 Marketing Environment
1.9 Books For Further Reading
L10 ©Questions/exercises.
1.11 Answer for cyp questions.
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1.1 MARKET AND MARKETING:
In our study of the business world, we have often come across the terms market
and marketing. Both are similar sounding terms and relate to the same concept. However,
‘market’ and ‘marketing’ are two widely separate concepts individually that relate to each
other. Let us take a more detailed look at market and marketing.
DEFINITIONS
Marketing is a social and managerial process by which individuals and groups obtain what
they need and want through creating, offering and exchanging products of value with others.
“Marketing is the economic process by which goods and services are exchanged between the
maker and the user, and their values determined in terms of money prices.”
“Marketing is a total system of interacting business activities designed to plan, promote and
distributes need-satisfying products and services to existing and potential customers.”
“Marketing is a viewpoint, which looks at the entire business process as a highly integrated
effort to discover, create, arouse and satisfy consumer needs. *
“Marketing is the delivery of a standard of living to society.”
American Marketing Association [AMA] defined as "the activity, set of institutions, and
processes for creating, communicating, delivering, and exchanging offerings that have value
for customers, clients, partners, and society at large.”
The Chartered Institute of Marketing defines marketing as "the management process
responsible for identifying, anticipating and satisfying customer requirements profitably.” A
different concept is the value-based marketing which states the role of marketing to
contribute to increasing shareholder value. In this context, marketing is defined as "the
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management process that seeks to maximise returns to shareholders by developing
relationships with valued customers and creating a competitive advantage."
Market
The market actually refers to a set up where potential buyers and sellers can meet to exchange
goods or services. It is basically a medium that facilitates these transactions in an economy. It
allows for the exchange of goods, services, information under the protection of the law and
generally in exchange for consideration.
« Browse more Topics under Marketing
e Functions of Marketing
© Role of Marketing and Marketing Mix
® Marketing Management Philosophies
«® Product
e Labelling
® Packaging
e Pricing
e Distribution
* Personal Selling
« Promotion
e Branding
Sales Promotion and Publicity
Traditionally a market is a physical location or place, like a bazaar or a shopping mall. The
kind of market it is will depend on a lot of factors. Some of the ways in which we can
characterize markets are,
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According to the products being sold. Example: cotton market, iron market, share market
Based on geographical locations, like a local market or international market
By the types of buyers involved, example: consumer market, industrial market ete
The quantity of goods transacted between parties like a wholesale market or a retail market
However, in the modern world, we currently live in has a somewhat wider definition of a
market. In the world of e-commerce and start-ups, a market is no more just a meeting point
for buyers and sellers. It actually represents a set of all the potential buyers in
an environment.
So if you are launching a new product, your market will be every potential buyer of the said
product, wherever they are. It is not restricted to a geographical location, or to the meeting of
buyers and sellers.
Marketing
Marketing is a very wide term. It includes all the activities involved right from the production
of the goods, until their consumption. Every activity in between, like designing, pricing,
promotion, distribution, transportation, warehousing etc are activities of marketing.
Marketing is often taken to be a post-production activity, which is incorrect. Some activities
of marketing start even before the production begins. One of its main aims is to satisfy
customer needs, which requires understanding of these needs. And the product design will
follow the leads of this study.
In modern terms, economists such as Philip Kotler have termed marketing as a “social
process”. Here the wants and needs of the consumer are heard, and accordingly, products and
services are offered to them. People interact with each other to exchange goods and services
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they require in exchange for money. There is no force or coercion, people will choose these
products.
1.2 Scope of Marketing
Marketing being a part of social science is highly dynamic and complex in nature. The rapid
changes in various sectors have brought great changes in the concept of marketing.
Traditionally, marketing was concerned with buying and selling of goods and services only
but now its scope has widened and it encompasses a range of activities from consumer
satisfaction to consumer delight and management of customer relationship.
The scope (subject matter) of marketing is as follows:
Products and Services:
Products and Service are the basic element of marketing. If there is no product there is no
marketing. It is concerned with the nature and type of products, product quality and design,
product planning and development, product decisions relating to branding, labelling,
packaging, trademarks etc.
Marketing Research:
Though products and services were the starting point under traditional marketing, modem
marketing starts with an analysis of the various aspects of market and related areas. It
includes an analysis of nature and types of customers, size of market, customer attitude,
buyer behaviour etc. An in-depth analysis of customers and markets is a prerequisite for
every marketer
to have a successful marketing.
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Channel of Distribution:
The pathway through which the goods move from producer to consumer is the channel of
distribution. It includes a number of intermediaries like wholesaler, retailers, jobbers etc.
Channels by moving the goods help in transferring the ownership of goods from seller to
buyer.
Physical Distribution:
The physical movement of the goods from producer to consumer is physical distribution. It
includes transportation, warehousing, inventory control and management, order processing
etc.
Promotional Decisions:
Howsoever good a product is, it has no value if it is not properly promoted. Promotion has
the basic objective of informing the market about product availability and creating a demand
for it. Different promotional tools are there like advertising, sales promotion, personal selling,
publicity, public relations etc.
Pricing Decisions:
This is the only element of marketing which generates revenue for the firm. Pricing is
concerned with pricing policies and strategies, price determination, discounts, commissions
etc.
Environmental Analysis:
An analysis of the environment in which the business is to be carried out is the first step for
any organisation. The various macro and micro factors should be studied beforehand only to
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Channel of Distribution:
The pathway through which the goods move from producer to consumer is the channel of
distribution. It includes a number of intermediaries like wholesaler, retailers, jobbers etc.
Channels by moving the goods help in transferring the ownership of goods from seller to
buyer.
Physical Distribution:
The physical movement of the goods from producer to consumer is physical distribution. It
includes transportation, warehousing, inventory control and management, order processing
etc.
Promotional Decisions:
Howsoever good a product is, it has no value if it is not properly promoted. Promotion has
the basic objective of informing the market about product availability and creating a demand
for it. Different promotional tools are there like advertising, sales promotion, personal selling,
publicity, public relations etc.
Pricing Decisions:
This is the only element of marketing which generates revenue for the firm. Pricing is
concerned with pricing policies and strategies, price determination, discounts, commissions
etc.
Environmental Analysis:
An analysis of the environment in which the business is to be carried out is the first step for
any organisation. The various macro and micro factors should be studied beforehand only to
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develop an understanding of the strength, weaknesses, opportunities and threats, for an
organisation.
Feedback from Customers:
For successful marketing of goods it is essential that the marketer obtains the required
feedback from customers. A proper feedback mechanism should be developed so that reasons
for failure or less satisfaction may be identified and improvements in the products be made.
Responsibility towards the Society:
Business and society are interrelated and interdependent. A business cannot exist in vacuum.
It derives its much needed inputs from society and therefore owes a responsibility towards the
society. These social activities are a part of marketing as the units have to protect and
promote the interest of the society. A marketer to be socially responsive owes responsibility
towards employees, consumer, shareholder etc.
1.3 Fundamental concept:
Five Fundamental concept of Marketing are:
l. Exchange concept
2. Production concept
3. Product concept
4. Sales concept
5. Marketing concept
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1. Exchange Concept: The Exchange concept holds that the exchange of a product between
seller & buyer is the central idea of marketing Exchange is an important part of marketing,
but marketing is a much wider concept.
2. Production Concept: The production concept is one of the oldest concepts in business. It
holds that consumers will prefer products that are widely available & expensive. Manager of
production oriented business concentrate on achieving high production efficiency low cost &
mass distribution.
3. Product Concept: This concept holds that consumers will prefer those products that are
high in quality, performance or innovative features. Managers in these organization focus on
making superior products & improving them. Sometimes, this concept leads to marketing
myopia, Marketing myopia is a shortsightedness about business. Excessive attention to
production or the product or selling aspects at the cost of customer & his actual needs creates
this myopia.
4. Selling Concepts: This concept focuses on aggressively promoting & pushing its products,
it Cannot expect its products to get picked up automatically by the customer. The purpose is
basically to sell more stuff to more people, in order to make more profits.
5. Marketing Concept: The marketing concept emerged in the mid 1950's. The business
generally shifted from a product — centered, make & sell philosophy, to a customer centered,
sense & respond philosophy. The job is not to find the right customers for your product, but
to find night products for your customers. The marketing concept holds that the key to
achieving organizational goals consist of the company being more effective than competitors
in creating, delivering & communicating superior customers value. This concept puts the
customers at both the beginning & the end of the business cycle. Every department & every
worker should think customer & act customer.
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1.4 Trends and tasks:
Recent Developments in Marketing
Marketing and marketers operate in a dynamic environment. As a result, marketing concepts
and applications are constantly evolving and changing, so the strategic marketing planner
must consider these when formulating plans. We have selected the most important trends and
developments for consideration.
Anevolving marketing concept: relationship marketing
This concerns the evolving nature of the concept of marketing itself, and in particular the
trend towards a concept of marketing based upon developing and maintaining long-term
relationships with customers, referred to as relationship marketing (RM). This represents a
paradigm shift in the nature of marketing itself that gathered pace in the 1980s and still
continues. Anthanasopouloul9 argues that our understanding of relationship marketing
concepts and techniques is still at a comparatively early and underdeveloped stage. However,
the underpinning notion of RM is essentially simple in as much as it is based on the idea that
an organization's marketing effort should be designed around a series of contacts with
customers over time, rather than being based on single transactions (i.e. transactional
marketing).
The conventional marketing concept centres on the notion of understanding customer needs
so marketers can develop strategies that better meet these needs. As a consequence, the
organization achieves its aims. The process of dealing with customers has traditionally been
viewed as a one-off transaction where the customer receives satisfaction and the company
achieves its objectives, whether these are for profit, or some other organizational objective.
This transaction view is concerned with what marketing can do to buyers rather than do for
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buyers. In contrast, RM is built on creating and maintaining mutually satisfying commercial
relationships which appears to be only a slightly different perspective from the traditional
transactional view of marketing. In fact, it is a fundamentally different perspective on the
marketing concept, and gives rise to potentially very different approaches to developing
marketing strategies. Adopting a relationship marketing approach has implications for how
we promote products and services, how we deal with customers and customer service
functions and how we develop and use information about customers for targeting and other
purposes.
One of the reasons for the growth of relationship marketing is the recognition of the
importance and value of customer loyalty and retention. Put simply, keeping an existing
customer is more cost effective and profitable than creating new ones. In the same vein, loyal
customers can become advocates for a company or brand, thereby helping to sell a product
through word of mouth.
Many customer loyalty programmes that have been such a feature, particularly of retail
marketing, and which commenced in the 1990s are in part based on the concepts and ideas of
relationship marketing. Programmes such as Tesco Clubcard and Thomson Founders Club
are based on the notion of developing relationships with customers to create customer loyalty.
The essence of effective loyalty programmes is building communication and trust between
the marketer and customers. Companies such as Waitrose, the grocery retailer, and B&Q in
the home improvement market, place enormous importance on customer care tactics that
embrace high levels of customer service.
Many of these loyalty schemes involve rewarding customers in some way for loyalty. This
might involve the award of points as in for example the Tesco scheme or reduced
prices/special terms as in the case of The Thompson founders club. Although loyalty schemes
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are now Widespread in marketing, the marketer has to be careful not to assume that they
actually generate genuinely loyal customers. Often customers passively claim ‘loyalty points”
simply because they are being given out. In this way loyalty schemes can become just another
form of sales promotion with the customer being offered in essence a sort of financial or
other inducement to purchase.
True loyalty schemes encourage customers to decide to remain loyal to a supplier or brand
because they perceive this supplier or brand to best meet their needs. In other words true
customer loyalty stems from a supplier or brand being viewed as the best solution for that
customer. This applies in any type of product market, developed as well as developing ones.
Customers want to feel special and valued and they need to feel they can trust the marketer.
Ndubisi found that customer loyalty was affected by four major factors namely: ‘trust’,
‘commitment’, ‘communication’ and ‘conflict handling’.
Widespread though relationship marketing has become, we have to be careful if we assume
that all marketing exchanges should be relationship marketing based. Ward and Dagger21
have suggested that marketers should not always adopt a relationship marketing approach.
For some customers and in some situations a transaction marketing approach is most
appropriate: some customers do not want or seek a relationship with a suppler or brand.
Sometimes, even if customers might welcome it, building relationships and loyalty may
simply be too expensive compared to the potential benefits. The relationship marketing
concept is ‘complex’ and as yet there is no set of ‘rules’ that tell us when a relationship
marketing approach is needed.
1.5 Marketing and Customer value:
Customer value: customer value is the sum total of benefit that customers will accrue from a
service or product in relation to its cost.
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As per marketing, customer value proposition (CVP) would be the total amount of benefits
which is offered by the seller in return for the payment made for its respective goods or
services. It is a clearly defined statement that is formulated so as to convince customers that
this one particular product or service will add more value than competitor’s product or
service.
Conceiving and delivering excellent customer value is inevitable for every business
organizations in today’s competitive business environment. This holds true for every kind of
business organisation. Delivering value requires a deep insight into the art of value creation,
by choosing the best value for its customers and delivering that value in an effective and
efficient manner.
Creating good value proposition for its customers is also vital for an organisation to
differentiate its product from the competitor’s products. A good understanding of customer
needs and requirements are important aspects for creating a good value proposition.
Marketing management helps execute this function in the most efficient manner and assists
organisations to achieve sustainable competitiveness in the market place.
Example of Customer Value Proposition (CVP) :
BMW or Bavarian Motor Works, their value proposition is “the ultimate driving machine”.
BMW made luxury cars for people who could afford them. When other companies started
making luxury cars as a direct competition to them, BMW felt the need for differentiating its
product by adding a value proposition. They added a customer value proposition “No cost
maintenance”, this plan provides the owner of the car with a no cost maintenance for the first
four years / 50000 miles of use. No other competitor provides with this kind of service.
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The Nature And Contents Of Marketing Plan
Marketing managers follow a marketing process to carry out their responsibilities effectively.
Working within the plans set up by the top management product managers come up with a
marketing plan for individual products, lines, brands, channels, or customer groups. Each
product level (product line, brand) must develop a marketing plan for achieving its goals.
A marketing plan is a written document that summarizes what the marketer has learned about
the marketplace and indicates how the firms plan to reach its marketing objectives. It contains
tactical guidelines for the marketing programs and financial allocations over the planning
period. It is one of the most important outputs of the marketing process.
Marketing plans are becoming more customer- and competitor-oriented and better reasoned
and more realistic than in the past. The plans draw more inputs from all the functions and are
team-developed. Marketing executives increasingly see themselves as professional managers
first, and specialists second. Planning is becoming a continuous process to respond to rapidly
changing market conditions.
At the same time, marketing planning procedures and content vary considerably among
companies. The plan is variously called a business plan, marketing plan, and sometimes a
battle plan.? Most marketing plans cover one year. The plans vary in length from under 5 to
over 50 pages. Some companies take their plans very seriously, whereas others see them only
arough guide to action. Eisenhower once observed: In preparing for the battle I have always
found that plans are useless but planning is indispensable. At The most frequently cited
shortcomings of current marketing plans, according to marketing executives, are lack of
realism, insufficient competitive analysis, and a short-run focus.
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1.6 Contents of the Marketing Plan:
The marketing plan should open with a brief summary of the main goals and
recommendations. The executive summary permits senior management to grasp the plan
major thrust. A table of contents that outlines the rest of the plan and all the supporting
rationale and operational detail should follow the executive summary.
Situation analysis:
This section presents relevant background data on sales, costs, the market, competitors, and
the various forces in the macro environment. How is the market defined, how big is it, and
how fast is it growing? What are the relevant trends affecting the market? What is the product
offering and what are the critical issues facing the company? Pertinent historical information
can be included to provide context. All this information is used to carry out a SWOT analysis.
Marketing strategy:
Here the product manager defines the mission and marketing and financial objectives. The
manager also defines those groups and needs that the market offerings are intended to satisfy.
The manager thus establishes the product lineal€™s competitive positioning, which will
inform the pregame plane to accomplish the plane objectives. All this is done with inputs
from other organizational areas, such as purchasing, manufacturing, sales, finance, and
human resources, to ensure that the company can provide proper support for effective
implementation. The marketing strategy should be specific about the branding strategy and
customer strategy that will be employed.
Financial Projections:
Financial projections include a sales forecast, an expense forecast, and a break-even analysis.
On the revenue side, the projections show the forecasted sales volume by month and product
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category. On the expense side, the projections show the expected costs of marketing, broken
down into finer categories. The break-even analysis shows how many units must be sold
monthly to offset the monthly fixed costs and average per-unit variable costs.
Implementation Controls:
The last section of the marketing plan outlines the controls for monitoring and adjusting
implementation of the plan. Typically, the goals and budget are spelled out for each month or
quarter so management can review each periodat'™s results and take corrective action as
needed. A number of different internal and external measures must be taken to assess
progress and suggest possible modifications. Some organizations include contingency plans
outlining the steps management would take in response to specific environmental
developments, such as price wars or strikes
In this article we have discussed in detail how the marketing managers go about planning
their marketing strategies to overcome competition, increase market share and attract more
customers for their products. In practice all the players in the field adopt their market
planning techniques resulting in stiff competition and the faster innovations by any of the
firms the more shall be the market share.
1.7 Components of Marketing Information System
Components of Marketing Information System collect, analyses, and supplies alot of relevant
information to the marketing managers. It is a valuable tool for planning, implementing and
controlling the marketing activities.
The role of MIS is to identify (find out) what sort of information is required by the marketing
managers. It then collects and analyzes the information. It supplies this information to the
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marketing manager at the right time. MIS collects the information through its subsystems.
These subsystems are called components.
The four main components of Marketing Information System (MIS) are:
1. Internal Records,
2. Marketing Intelligence,
3. Marketing Research (MR)
4. Marketing Decision Support System.
Pour Rasic or Main Components of

_ Marketing Information System (MIS
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Internal records:
The first component of MIS is ‘Internal Record’. Marketing managers get lots of information
from the internal-records of the company. These records provide current information about
sales, costs, inventories, cash flows and account receivable and payable. Many companies
maintain their computerized internal records. Inside records help marketing managers to gain
faster access to reliable information.
Marketing intelligence:
The second component of MIS is ‘Marketing Intelligence’. It collects information from
external sources. It provides information about current marketing-environment and changing
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conditions in the market. This information can be easily gathered from external sources like:
magazines, trade journals, commercial press, so on. This information cannot be collected
from the Annual Reports of the Trade Association and Chambers of Commerce, Annual
Report of Companies, etc. The salesmen’s report also contains information about market
trends.
The information which is collected from the external sources cannot be used directly. It must
be first evaluated and arranged in a proper order. It can be then used by the marketing
manager for taking decisions and making policies about marketing.
So, marketing intelligence is an important component of MIS.
Marketing research:
The third important component of MIS is “Marketing Research’. MR is conducted to solve
specific marketing problems of the company. It collects data about the problem. This data is
tabulated, analyzed and conclusions are drawn, Then the recommendations are given for
solving the problem. Marketing research also provides information to the marketing
managers. However, this information is specific information. It can be used only for a
particular purpose. MIS and MR are not substitutes of each other. The scope of MIS is very
wide. It includes ‘MR’. However, the scope of MR is very narrow.
Marketing decision support system:
The fourth component of MIS is ‘Marketing Decision Support System’. These are the tools
which help the marketing managers to analyze data and to take better marketing decisions.
They include hardware, i.e. computer and software programs. Computer helps the marketing
manager to analyze the marketing information. It also helps them to take better decisions. In
fact, today marketing managers cannot work without computers. There are many software
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programs, which help the marketing manager to do market segmentation, price
fixing, advertising budgets, etc.
1.8 Marketing Environment
An environment can be defined as everything which surrounds and impinges on a system. A
good system will react to environmental change, for example the human body comprises
numerous systems which constantly react to changes in the body’s environment. Marketing
can be seen as a system which must respond to environmental change. Just as the human
body may die if it fails to adjust to environmental change (for example by not Compensating
for very low temperatures), businesses may fail if they do not adapt to external changes such
as new sources of competition or changes in consumers’ preferences. An organization's
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marketing environment can be defined as: "... the actors and forces external to the marketing
management function of the firm that impinge on the marketing management's ability to
develop and maintain successful transactions with its customers” (Kotler 1997.)
Micro-Environment
The micro-environment of an organization can best be understood as comprising all those
Other organizations and individuals who directly or indirectly affect the activities of the
Organization. The following key groups can be identified:
Customers
An organization should be concerned about the changing requirements of its customers and
should keep in touch with these changing needs by using an appropriate information
gathering system.
Intermediaries - Intermediaries often provide a valuable link between an organization and its
customers.
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Suppliers - These provide an organization with goods and services which it transforms Into
value added products for customers.
Analysing the Macro Environment
The Macro Environment Analysis is the first step of a strategic analysis which in turn kicks
off the traditional: strategic planning cycle: it is sometimes referred to as an external analysis,
a pest analysis ora pestle analysis.
The purpose of the Macro Environment Analysis is to identify possible opportunities and
threats that will impact on your industry as a whole and that are outside the control of your
industry.
The goal of completing a macro environment analyses is to answer the following questions
What environmental factors will affect the growth of our industry as a whole?
What is the likely cumulative impact of all of the things that affect the growth of our industry
i.e. Will our industry grow or shrink over the next 3-15 years?
Note: During your macro environment analysis you will be forecasting possible trends based
on what you currently know about your environment, such as “interest rates will remain low
for the next three years”. However, you will not always be correct as you are forecasting
based only on what you currently Know.
Analysis example: An aging population is a demographic or social trend in many western
counties which when combined with the trend of people living longer is resulting in an
increase in the total number of retired persons. Retired persons are the largest segment who
buys caravans.
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This trend should result in an increase in the total number of caravans sold - so if you are in
the caravan industry based on this one trend you should expect to see growth in the total size
of your industry. In the macro environment analysis your identified opportunities and threats
may affect many industries, for example: a possible interest rate rise will affect the amount of
disposable income people have.
A reduction in disposable income could affect the travel industry, pubs and clubs,
moviegoers, restaurants, clothing, kid's birthday party venues and the building and
renovation industries alike.
However only industries impacted by an increase in interest rates should consider it in their
analysis.
For Example: If you are in the greeting card industry and fluctuations in interest rates will not
affect the size of your industry then you do not need to consider interest rates in your macro
environment analysis. (However if you are heavily geared or have large borrowings you will
need to consider the impact of interest rates in your internal analysis)
Factors of the Macro Environment:
Analyzing the macro environment is an important part of strategic management. Business
analysts often conduct a PEST (political, economic, socio-cultural, and technological)
analysis to identify macro-economic factors that currently affect or in the future may affect
business. Some of the key factors composing the macro environment include the following:
Gross Domestic Product
GDP is a measure of a country’s output and production of goods and services. The Bureau of
Economic Analysis releases a quarterly report on GDP growth that provides a broad
overview of the output of goods and services across all sectors.1 An especially influential
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aspect of GDP is corporate profits for the economy, which is another measure of an
economy's comprehensive productivity.
Inflation
Inflation is a key factor watched by economists, investors, and consumers. It affects the
purchasing power of the US dollar and is closely watched by the Federal Reserve. The target
rate for annual inflation from the Federal Reserve is 2%. Inflation higher than 2%
significantly diminishes the purchasing power of the dollar, making each unit less valuable as
inflation rises.
Employment
Employment levels in the United States are measured by the Bureau of Labour Statistics,
which releases a monthly report on business payrolls and the status of
the unemploymentrate. The Federal Reserve also seeks to regulate employment levels
through monetary policy stimulus and credit measures. These policies can ease borrowing
rates for businesses to help improve capital spending and business growth, resulting in
employment growth.
Consumer Spending
Consumer spending makes up 68% of the U.S. GDP in 2020 and is widely considered to be
an important indicator of macroeconomic performance. Slow growth or decline in consumer
spending suggests a decline in aggregate demand, which economists consider to be a
symptom or even a cause of macroeconomic downturns and recessions.
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Monetary Policy
The Federal Reserve's monetary policy initiatives are a key factor influencing the macro
environment in the United States. Monetary policy measures are typically centered around
interest rates and access to credit. Federal interest rate limits are one of the main levers of the
Federal Reserve’s monetary policy tools. The Federal Reserve sets a federal funds rate for
which federal banks borrow from each other, and this rate is used as a base rate for all credit
rates in the broader market. The tightening of monetary policy indicates rates are rising,
making borrowing more costly and less affordable.
Fiscal Policy
Fiscal policy refers to government policy around taxation, borrowing, and spending. High tax
rates can reduce individual and business incentives to work, invest, and save. The size of a
government's annual deficits and total debt can influence market expectations regarding
future tax rates, inflation, and overall macroeconomic stability. Government spending drives
borrowing and taxation; it is also widely used as a policy tool to try to stimulate economic
activity during slow times and make up for sluggish, consumer spending and business
investment during recessions.
1.9 Book for Further Reading
1. Philip Kotler, Kevin Lane Keller, Abraham Koshy and Mithileswar Jha. 2012.
Marketing Management. [Thirteenth Edition]. Pearson Education, New Delhi.
1.10 Questions/Exercises
Part=A
1) Explain about market and marketing with definition
2) What are the scope for marketing
3) Explain the basic fundamental concepts in marketing
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Part -B
1) Write a Short notes on Trends and Tasks
2) What do you know about customer value
Part -C
1) Enumerate on contents of the marketing plan

2) Write about the major components of the marketing information system
3) Brief in detail about the environment around the marketing
1.11 Answer for CYP Questions

For Q.No.1 in Part A refer section No.1.1
For Q.No.2 in Part A refer section No.1 .2
For Q.No.3 in Part A refer section No.1.3
For Q.No.! in Part B refer section No. 1.4
For Q.No.2 in Part B refer section No.1.5
For Q.No.1 in Part C No.1.6
refer section
For Q.No.2 in Part C refer section No.1.7
For Q.No.3 in Part C refer section No.1.8
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UNIT-2
Objectives
*® Understand the term Market and Marketing.
e Know the nuances in marketing.
« Know the recent Developments in Marketing.
Unit Structure
2.1 Marketing Research Process
2.2 Measuring Marketing Productivity
2.3 Demand Measurement
2.4 5 Steps to Creating More Customer Value
2.5 Building Customer Satisfaction
2.6 CRM (customer relationship management)
2.7 Database Marketing
2.8 Factors Influencing Consumer Behaviour
2.9 Stages in Organizational Buying
2.10 Book For Further Reading
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2.1 Marketing Research Process
The 5 Step Marketing Research Process are as below:
1, Define the Problem or Opportunity
The most important part of the marketing research process is defining the problem. In order
to do any research and collect data, you have to know what you are trying to learn from the
research. In marketing research, defining the problem you need to solve will determine what
information you need and how you can get that information. This will help your organization
clarify the overarching problem or opportunity, such as how to best address the loss of market
share or how to launch a new product to a specific demographic.
Develop questions that will allow you to define your problem (or opportunity), and examine
all potential causes so that the research can be whittled down to the information you actually
need to solve that problem or determine what action to take regarding an opportunity.
Oftentimes, these are questions about who your target market or ideal buyer persona is (for
example: “What does our ideal customer look like?"). These might include questions about
demographics, what their occupation is, what they like to do in their spare time—anything to
help you get a clearer picture of who your ideal buyer persona is. Consider as many variables
and potential causes as possible.
2. Develop Your Marketing Research Plan
After you've examined all potential causes of the problem and have used those questions to
boil down exactly what you're trying to solve, it’s time to build the research plan. Your
research plan can be overwhelming to create because it can include any method that will help
you answer the research problem or explore an opportunity identified in step one.
To help you develop the research plan, let’s review a few techniques for conducting research:
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Interview prospects and customers. Oftentimes, you get the best feedback by using this tactic
because you're going straight to the source. This might take the form of a focus group or one-
on-one interviews. Use your defined research problem to help select the right people to
interview.
Conduct a survey using Survey Monkey or another tool.
Run user tests on your website or landing page(s). This is a cost-effective approach that can
provide a lot of insight and data on how your customers or potential customers behave or
respond to something, whether it's new messaging or branding or a modified product or
service you are thinking about offering. Simple A/B tests can go a long way in discovering
user behavior. Use heat mapping tools, such as Hotjar or Lucky Orange, and website
analytics tools, such as Google Analytics or HubSpot analytics, to track results depending on
what data you need to collect.
Oftentimes, we do all of this work and gather all of the data—only to realize that we didn’t
have to reinvent the wheel because someone had already run a similar, credible study or
solved the same problem. That doesn’t mean you don’t need to do any research, but learning
about what other organizations have done to solve a problem or seize an opportunity can help
you tweak your research study and save you time when considering all of the research
options. In marketing research, this is called secondary data because it has been collected by
someone else, versus the primary data that you would collect through your own research
study.
3. Collect Relevant Data and Information
In marketing research, most of the data you collect will be quantitative (numbers or data)
versus qualitative, which is descriptive and observational. Ideally, you will gather a mix of
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the two types of data. For example, you might run an A/B test on your website to see if a new
pricing tier would bring in more business. In that research study, you might also interview
several customers about whether or not the new pricing tier would appeal to them. This way,
you're receiving hard data and qualitative data that provide more color and insight. When
collecting data, make sure it’s valid and unbiased. You should never ask a research
interviewee, “You think that we should offer a higher pricing tier with additional services,
correct?” This type of question is clearly designed to influence the way the person responds.
Try asking both open-ended and closed-ended questions (for instance, a multiple-choice
question asking what income range best describes you).
4, Analyze Data and Report Findings
Now that you've gathered all of the information you need, it’s time for the fun part: analyzing
the data. Although one piece of information or data might jump out at you, it's important to
look for trends as opposed to specific pieces of information. As you're analyzing your data,
don’t try to find patterns based on your assumptions prior to collecting the data.
Sometimes, it’s important to write up a summary of the study, including the process that you
followed, the results, conclusions, and what steps you recommend taking based on those
results. Even if you don’t need a formal marketing research report, be sure that you review
the study and results so that you can articulate the recommended course of action. Sharing the
charts and data you collected is pointless if it doesn't lead to action.
Was your hypothesis proven wrong? Great—that’s why you do testing and don’t run with
assumptions when making decisions that could have a major impact on your organization. It’s
always better to take the results as they are than to twist the data to prove yourself right.
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5. Put Your Research into Action
‘Your research is complete. It’s time to present your findings and take action. Start developing
your marketing strategies and campaigns. Put your findings to the test and get going! The
biggest takeaway here is that, although this round of research is complete, it's not over.
The problems, business environment, and trends are constantly changing, which means that
your research is never over. The trends you discovered through your research are evolving.
You should be analyzing your data on a regular basis to see where you can improve. The
more you know about your buyer personas, industry, and company, the more successful your
marketing efforts and company will be. When you look at it that way, you should start to
wonder why so many organizations don’t budget time and resources for marketing research.
Of course, there is a lot more to the marketing research process than these five core steps, but
these are enough to get you started. Good luck, and be sure to share any tips you have
discovered for conducting marketing research!
2.2 Measuring Marketing Productivity
There are three core components to measuring how productive your marketing team is:
Input metrics — This is tracking what your team is actually working on. For example, the time
to send an email or how long it took to write a blog post.
Output metrics — This deliverable or result that was achieved. For example, the number of
blog posts published in a month, new leads generated, or conversion rate.
Cost— This is how much it actually cost you to get the specific output. For example, you
might track costs based on your individual team member's salaries, overall marketing budget,
or revenue per employee.
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The key is to strike the right balance between input and output metrics.
For example, if your marketing team is too focused on input metrics — like new blog posts
published- and you aren't also tracking website traffic, news leads generated, or a proxy for
that, your team could be working extremely hard but have little to show for the sheer volume
of content created.
19 Metrics for Measuring Marketing Productivity:
Here are some of the top ways and metrics marketers use to measure their productivity.
® Monthly Growth
® Conversion Rate
e Website Traffic
e Keyword Rankings
* Content Lifecycle Time
« Brand Advocacy Ratio
e Earned vs Owned Published Content
*® Return on Ad Spend (ROAS)
« CAC:LTV Ratio
* Organic Search Traffic
« New Leads
# Marketing Qualified Leads (MQLs)
e Sales Qualified Leads (SQLs)
« Intemal Team Feedback
* Cost Per Lead (CPL)
e Backlinks
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e Ad CPAs
« Conversions from Organic Users
e Performance Review Feedback
1. Monthly Growth
“To measure marketing productivity, I don’t recommend setting specific numbers,” says
Jonathan Aufray of Growth Hackers Agency. “Instead, what I suggest is to track performance
progress month over month.
How much did your team achieve this month compared to last month with the same time and
resources? If your marketing team has done more (And they should), your productivity and
business are on the right track.”
2. Conversion Rate
“Conversion rate is one of the important metrics for measuring marketing productivity,” says
CJ Xia of Boster Biological Technology. “It is useful to measure how many prospects
become paying customers.
An increased conversion rate indicates a successful marketing strategy.—adding more new
customers with the same level of marketing expenditures.
If the conversion rate goes well, it shows the excellent performance of the marketing team.
We make our company’s marketing strategy according to the conversion rate and make
changes according to its variation.”
Greg Gillman of MuteSix adds, “While there are a number of metrics that can paint a clear
picture when it comes to marketing productivity, conversion rates will always tell the full
story.
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When we look at leads that are generated, and follow those leads down the pipeline to
becoming qualified leads and so on, productivity can definitely be measured along the way
by seeing the final outcome.
3. Website Traffic
“Website views are what all of our marketing efforts come down to and are something we
track closely on a regular basis,” says Darcy Allan of BizDig. “Why did we receive less
traffic this week? What caused that spike in website views a few days ago?
These are questions we're constantly asking ourselves and we trace it back to a single
marketing effort we are running, Whether that be a Facebook ad, a new mention in an article,
or whatever it may be.”
Bruce Hogan of SoftwarePundit says, “By looking at this metric, and the performance of
individual sources, we can see how demand for our product and business is changing over
time, and which marketing efforts have had the greatest impact.”
4, Keyword Rankings
“We use a keyword position tool to check our keyword rankings,” says Janice Wald
of Mostly Blogging. “When we see our keywords are falling off Page 1, we update our
content, add media, and tweak our headlines. This pushes our content back up in the SERPs.
This is a simple trick that improves our content marketing ROT.”
§. Content Lifecycle Time
“Few methods actually exist for comprehensively tracing the chain of marketing
productivity,” says Nathan Sebastian of GoodFirms. “While marketing productivity, as the
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business analysis, is mostly a black-box approach. Almost every marketing silo works with
each other, making it limited to find true insight and understanding.
At GoodFirms, being a research and review platform, a majority of our staff works on
creating and publishing content related to the IT industry - Firms, Software, and Consumers
- one topic at a time. And thus one central metric we tack here is ‘content lifecycle time’ to
track the complete production and disposal of different content formats related to a single
category.
Similar to a project lifecycle, our system works on research, planning, production, monitor,
and publishing for different categories of services and software. Content production and
publishing are standardized to our branding guides. And so, most resources and requirements
are the same across the categories and almost the same benchmark used. Research and
planning are often different for different categories, for which we try to re-calibrate every
now and then.”
6. Brand Advocacy Ratio
Paige Amof-Fenn of Mavens & Moguls says, “The driving force to increased productivity is
improved awareness so finding ways to appeal to your target and pique their curiosity to
increase their affinity guides our strategy.”
7, Earned vs. Owned Published Content
“It's the most basic form of marketing production and should be tracked,” says Andy
Crestodina of Orbit Media Studios. “How much are you publishing? Where is published, on
your site or others? What formats, written or video?
I've tacked my basic production since my early days as a content marketer. You can see it on
a chart here:
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Ata glance, you can see my era of guest blogging and my recent doubling down on video.
All together, this is my Lifetime Body of Work a.k.a. my LBOW.”
8. Return on Ad Spend (ROAS)
“The primary metric we use isROAS (Return on Ad Spend).” says Ray Blakney of Live
Lingua. “This metric determines which ad units and audiences we spend more on and where
we spend less. Anything with a negative ROAS is let go.”
9, CAC:LTYV Ratio
“The number of ways to market can be dizzying for some business owners,” says Darren Litt
of Hiya Health Products. “Many pass control to an agency, yet since it's your business, it’s
up to you to make sure you are getting value from what you spend.
The best metric to track marketing performance is the ratio of your lifetime value to your cost
per conversion, This number measures what you’re generating against what you're spending.
As a rule, you're shooting for a ratio of 3 to |. If your ratio is closer 1, you're paying too
much for a lead and should lower your ad spend. If your ratio is closer to 5, go spend more
money to generate more customers.”
10. Organic Search Traffic
“Supplement Warehouse's Marketing team is constantly checking Google Analytics, as well
as a tool we use called SEMRush, to monitor and quantify our Search Engine Traffic
closely,” says Carley Hanna of Supplement Warehouse. “It’s interesting to see the exact
outcomes of specific SEO tactics that we're implementing to better our E-commerce sites,
and to see the changes actually paying off. SEMRush and Google Analytics will also pull
customized SEO reports for your team, and from there, allow your team to make the
necessary changes to improve overall Search Engine Traffic.”
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11. New Leads
“We recognize that the top of our funnel (TOFU) is one of the most important KPIs as it
reflects how the business will perform in one week, one month and six months from now,”
says Nate Nead of SEO.co. “It is the best metric for judging the vitality and potential of the
business into the future. It is the one metric we are constantly obsessing over and trying to
improve.”
Tara Miremadi of Margaux Agency adds, “If our agency is receiving phone calls and emails
to set up strategy sessions or informational meetings about our services, we know that our
marketing efforts are in the right place and that they are sharing the right, most compelling
information to prospective leads.”
Related: Turn More Leads Into Customers With These Tactics from 24 Experienced Digital
Marketers
12. Marketing Qualified Leads (MQLs)
Michat Suski of Surfer SEO shares, “Marketing Qualified Leads are close to our end-game
for marketing, which is sales. Because MQLs pose a real value, I believe that it is the best
indicator of marketing performance. Furthermore, our marketing team is solely responsible
for them, which makes it even easier for assessing our efforts. We adjust our criteria all the
time to be the most effective in tuming MLQs into sales. I believe that this is what represents
our marketing performance the best.”
13. Sales Qualified Leads (SQLs)
“Sales qualified lead refers to that one prospective customer who is deemed ready to be set up
in a one on one situation with your sales team for them to close the deal,” says Cale Loken
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of 30lconsulting. “This is where your sales team answers specific questions before
confirming the sale.
Your sales team should have enough sales experience to know who looks like the right
potential customer. You should also go easy on your sales team as all leads generated by the
marketing team are not sales-ready.
Marketing qualified lead is someone more likely to become your customer based on their
clicks and visited webpages. They perform these actions since they have already visited your
ads through the marketing team’s efforts. However, these leads are still not an efficient metric
to measure as many of them are only potential customers and not buying anything from you.
On the other hand, Sales Qualified Leads are leads ready to be closed after confirming a sale.
This metric is more valuable as it precisely tells you how many sales are being made and
whether you need to change your methods or not. Poor sales could mean the marketing team
is not targeting the right market, and most of the potential customers are only viewing ads,
not interacting with them.”
14, Internal Team Feed back
“In marketing, we're often used to only looking at quantitative KPIs: traffic sessions, leads,
MQLs — but qualitative feedback from our internal teams has become important for us at
PlayPlay as well,” says Sandra Chung of PlayPlay. “One example is when our sales team is
coming to us to let us know that the quality of the inbound leads we're sending them has
become better and better due to our marketing content.
Another is when our product team tells us that they've been super impressed with all the
marketing content we've been launching and can‘t wait to share them with their networks —
these are as valuable as quantitative KPIs and lets us know we're doing a good job.”
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15. Cost Per Lead (CPL)
“The cost per lead measures how cost-effective our marketing campaigns are for generating
sales leads,” says Matt Bertram of EWR Digital says. “It allows us to calculate our return on
marketing investment.”
For example, Colin Matthews of Cookwared says, “Being a founder of a company, the
success of a marketing campaign depends on how well your website and content convert your
website traffic into leads. Or, if they manage to acquire more customers with minimum
possible costs.
Thus, the Cost per Lead (CPL) is a metric that defines the main conversion index for a
particular campaign and the corresponding cost, giving information to everyone on the team
about its profitability. The ideal is to try to filter it to establish the cost for each channel and
identify which ones are the most profitable.
However, you should not reduce a channel simply because the CPL is higher. Often, you may
find that customers on that channel spend more or more often than those coming from
another channel, which is less expensive.”
16. Backlinks
“One of the key metrics that we use to guide our performance is the number of links earned
from high authority domains,” says EJ Mitchell of LiveCareer. “Our goal is to get our high-
quality content in front of our target audience — job seekers. As we want to be a trusted career
partner for this group, we need to convince strong websites that we're a reputable information
source that is worth referring to. When outlets with high Domain Rating link to us, they
simply tell others on the internet that they can trust our content.
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At LiveCareer, we believe that a strong backlink profile is an essential part of our marketing
strategy. That's why we put a lot of effort into incorporating link building into our team and
individual goals. Thanks to that KPI, we can reach our readers with top content, strengthen
our authoritativeness, and get better results on Google.”
17. Ad CPAs
“We use CPA to understand how efficient our marketing dollar is in helping us acquire
paying customers,” says Roshni Wijayasinha of Prosh Marketing. “If it’s high then we need
to improve things like our lead quality and conversion rates, otherwise it will eat into our
margin.”
18. Conversions from Organic Users
“If we're measuring our SEO efforts, we focus on conversions from organic users,” says
Elizabeth Weatherby of TOD Pros. “If we're measuring our PPC efforts, we would focus on
conversions coming from paid traffic. For SEO, we can look at specific pages where
traffic/conversions are decreasing, and this helps us pinpoint places on our site where we can
increase our optimization efforts.”
19, Performance Review Feedback
“T used to be terrified of performance reviews no matter how well I did at the company I
worked for,” says Abby Herman of Snap Agency. “I always felt like companies were trained
on giving you less than stellar reviews no matter how outstanding your performance was,
how much you sold, and how many clients you brought in. Why? I asked them those
questions and the answers were always the same: “You gotta have room for improvement.
You can always get better at something.”
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2.4 Demand Measurement
Terms commonly used in Demand Measurement/Sales Forecasting
Let us first explain certain expressions that are commonly used in relation to demand
measurement and sales forecasting.
e Market potential (or industry potential)
« Company potential (or sales potential)
e Market demand (or industry demand)
« Company demand (or company sales possibilities)
® Market forecast (or industry forecast)
e Company forecast (or sales forecast)
Market potential is a quantitative estimate of the total possible sales by all firms selling the
same product in a given market. It gives an indication of the ultimate potential for the product
for the industry as a whole, assuming that the ideal marketing effort is made.
Company potential refers to a part of the market potential: what an individual firm can
achieve at the maximum in a given market; again under ideal conditions and on the
assumption that the ideal marketing effort is made.
Market demand and company demand refer to those portions of market potential and
company potential that are achievable under existing conditions.
Market forecast is narrower in scope in comparison to market demand. It refers to that part of
the market demand that will materialize with the level of marketing effort the industry will
putin during the period of the forecast.
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Company forecast means the sales forecast of the company. It refers to that portion of the
company demand, which the company expects to capture with the chosen marketing effort.
It can be easily seen that 4€ company potential€™ is just a part of 4€ market potentialé™
company demand€™ is just a part of a€° market demand€™, and a€°company forecast€™, is
just a part of d€°market forecast€.
2.45 Steps to Creating More Customer Value
With these concepts in mind, think about ways you can improve customer value to grow your
business. Here are 5 steps you can take:
Step 1: Understand what drives value for your customers
Talk to them, survey them, and watch their actions and reactions. In short, capture data to
understand what is important to your customers and what opportunities you have to help
them.
Step 2: Understand your value proposition
The value customers receive is equal to the benefits of a product or service minus its costs.
What value does your product or service create for them? What does it cost them—in terms of
price plus any ancillary costs of ownership or usage (e.g., how much of their time do they
have to devote to buying or using your product or service?)
Step 3: Identify the customers and segments where are you can create more value
relative to competitors
Different customers will have varying perceptions of your value relative to your competitors,
based on geographic proximity, forexample, or a product attribute that one segment may find
particularly attractive.
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Step 4: Create a win-win price
Set a price that makes it clear thal customers are receiving value but also maximizes your
“take.” Satisfied customers that perceive a lot of value in your offering are usually willing to
pay more, while unsatisfied customers will leave, even at a low price. Using “cost-plus™
pricing (.e., pricing at some fixed multiple of product costs) often results in giving away
margin unnecessarily to some customers while losing incremental profits from others.
Step 5: Focus investments on your most valuable customers
Disproportionately allocate your sales force, marketing dollars, and R&D investments toward
the customers and segments that you can best serve and will provide the greatest value in
retum. Also, allocate your growth capital toward new products and solutions that serve your
best customers or can attract more customers that are similar to your best customers.
Your customers are the lifeblood of your business. They are the source of current profits and
the foundation of future growth. These steps will help you find more ways to grow your
business by better serving your best customers.
2.5 Building Customer Satisfaction:
In marketing perspective, satisfaction is elucidated as person’s feeling of pleasures or
disappointment resulting from comparing a product’s perceived performance in relation to
his/ her expectation. Consumer satisfaction is core conception in contemporary marketing
practices. It emphasizes the process of satisfying to consumers and get huge profits. It is
suggested that in order to maximize satisfaction, do not overstate the product or service
capabilities while running advertising campaign or other communication. Customer
satisfaction for the product can lead to profitability. Companies can boost the chance of
repeated sales to customers, while reducing the cost of sales and marketing. Customer
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satisfaction assists to increase customer faithfulness, reducing the need to assign marketing
budget to get new customers. Satisfied customers may also recommend company products or
services to other prospective consumers, increasing the chances for extra income and profit.
It's difficult to over-stress the importance of customer satisfaction. According to Henry Ford.
Sustained profitability is only possible through building customer value and satisfaction.
Profit comes as a consequence of building customer value.
Customer satisfaction is strongly associated with the expectation of purchaser. When
customers buy product, they compare the actual performance of the product with their
anticipation. They get satisfaction when product performance meets expectations and feelings
of dissatisfaction if it does not fulfil their demands. If actual performance exceeds
expectations, the customer is extremely elated. Clientele form their expectations from various
sources such as friends, past experiences, competitors as well as the marketer's messages and
promises. It can be established from this explanation that customers compare their views of
product performance with specific standards. Confirmation results when the perceived
performance matches standards, whereas disconfirmation results from a disparity.
CUSTOMER SATISFACTION FORMULA
f#P<E Dissatisfied
IfP=E Satisfied
fP>E Highly Satisfied / Delighted
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In modern business climate, it is necessary to measure the level of satisfaction. Business
organizations can use these measurements to enhance their business results. Measurement of
customer satisfaction requires quantitative and qualitative methods. In theoretical studies, it is
demonstrated that satisfaction is a result of purchase and use resulting from the buyer's
comparison of the rewards and costs of the purchase in relation to the anticipated outcomes.
Operationally, satisfaction is comparable to attitude in that it can be evaluated as the amount
of the satisfactions with the various attributes of the product or service (Churchill and
Suprenant, 1982). Organizations can recognize the customer satisfaction through number of
problem calls, number of complaints by E mail or phone, or number of returned goods
(Werth, 2002). Sometimes, managers must have to gauge customer dissatisfaction in order to
develop healthy relationship. It is the major responsibility of company to collect and analyse
relevant data which may give precise information about customer satisfaction.
Build customer loyalty
Businesses need to create a loyal customer base to stay afloat and propel the growth of their
brand. Especially now, we can't undersell the importance of customer loyalty efforts.
And it's important to go about it the right way, guided by your company values and a
commitment to deliver for your customers. You need to earn your customers trust so they
continue to support to your brand even as the market ebbs and flows over time.
Communicate your values
Before you can increase customer loyalty, you should first understand what aspects of your
brand are worthy of your customers’ loyalty. Sit down with your team and come up with a
marketing strategy that outlines what makes your brand stand out, what your purpose is, and
how your values align with your customers’ core beliefs.
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Specifically, your marketing should focus on those brand attributes that are unique to your
brand and where you can stand out from your competitors. Sometimes standing out can
mean taking a stand, which is becoming more common. Two thirds of customers now buy
based on beliefs, according to an Edelman study. But you don’t necessarily need to get
political. In fact, that might not be true to your values. Your brand values should be your
guiding light. Be firm in your beliefs and communicate them authentically.
Provide exceptional customer service
For new and existing customers, you want to provide the best possible experience. Your
customer experience includes everything about the way your customers interact with you,
from the moment they first land on your website to when they call and ask your customer
service team for assistance. People have high expectations, especially for customer service. A
study we conducted with Dimensional Research showed that 89% believe a quick response to
an initial inquiry is important when deciding who to buy from. Couple that with the fact
that nearly half of people say they would switch to a competing brand after just one bad
service experience, and it’s not hard to see why an emphasis on customer service is 50
important to building brand loyalty. To respond quicker to customer requests, you can start
by expanding your channel offerings. Taking an omni channel approach to customer support
will allow you to provide a fast, helpful experience no matter where your customers are
reaching out to you. See here for more best practices of omni channel support.
Activate loyalists to help spread the word
Once you understand your values, you can find your fan base—the most ardent supporters of
your brand and its values. These consumers are your ride-or-die customers, the ones who
mention you on Twitter, who tag you in their Instagram Stories and tell their friends how
much they like your product or service. It’s likely a small group of highly satisfied customers,
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especially if you're just starting out, but they are essential if you want to understand who is
connecting with your brand and why. It's your job to find them and learn as much as you can
about them, so you can find others who fit the same profile. These people will become your
brand ambassadors out in the world. You should engage with them often - you may even
Want to surprise an existing customer with special gifts to thank them for their loyalty, a
strategy Known as “surprise and delight” that can help increase retention and cultivate
customer loyalty.
Show your appreciation with a loyalty program
To build customer loyalty, it helps to incentivize repeat purchases with special offers,
discounts or perks. You might even consider creating your own customer loyalty program.
There are many different types of loyalty programs, such as those based on points systems—
the virtual equivalent of the coffee shop punch card. By giving your customers some kind of
reward, you make them feel good about purchasing and motivate them to keep coming back.
Loyalty programs like these help your customers feel valued and appreciated, while also
providing valuable customer data you can use to improve your customer experience. These
tactics can bolster your results in the short-term, but because they've become so
commonplace, they can sometimes fall flat when it comes to building a meaningful
relationship with your customers. You should also strive to serve your customers by creating
a good customer experience and living by your corporate values. Together, these efforts can
help turn repeat customers into loyal customers.
Connect in a deeper way
You can continue to grow the relationship with your customers by giving your loyalists a
place to connect with the brand and with each other. Creating a community forum is an easy
way to do that. They can share tips and tricks for optimizing the product, and community
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managers can continue nurturing the relationship by providing additional resources and
support. Sometimes these conversations happen organically on social networks, and if so, you
should take advantage of those opportunities as well. For example, more brands are creating
Facebook Groups where they can engage with their most active fans. These are often
successful when they focus on harnessing the enthusiasm of a niche group of supporters, like
the Facebook Group that Starbucks created for fans of their signature Pumpkin Spice Latte.
These types of community hubs serve the valuable purpose of engaging fans, and they can
also be a tool to collect feedback and product suggestions from some of your most loyal
customers and brand ambassadors.
Ask for feedback
If you're looking for ways to build customer loyalty, you should be asking your customers for
feedback every chance you get. Customer satisfaction (CSAT) surveys are commonly used
following a support interaction, and they give you an indication of how happy your customers
are with the help they received. You can also ask your customer service team members to
share anecdotal feedback about how customers are responding or common issues they are
encountering in the tickets they work on. Beyond surveys, you can also look at social media
activity or analyze online reviews. No one likes to get negative reviews, but negative reviews
can actually help you because they pinpoint the exact areas that need improvement. Plus,
taking customer feedback seriously shows customers and prospects that you care about them
and are committed to providing a good experience. This can help increase satisfaction and
build loyalty.
Continually improve your customer experience
To drive customer loyalty, make this a continuous process of evolution and improvement.
The world is constantly changing, so you should be checking in with your brand identity and
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values regularly. While your values shouldn't change drastically, your positioning should
match the mood of the moment. As new people join your community, you might also want to
refresh your messaging or develop communication strategies for multiple audiences. You
should always have a finger on the pulse of your customer experience, which means talking
to your customers and asking for their feedback frequently. Pay close attention to customer
complaints, because those are warning signs about the health of the customer relationship.
Customers’ behavior and channel usage can change seemingly overnight, and you want to be
ready to pivot and meet them where they are—wherever that might be in the months and
years to follow.
Building customer loyalty is really about building relationships. As with any relationship, it
takes time and effort to establish trust, and an ongoing investment to keep the relationship
afloat. Loyalty and retention can’t just be bought—they have to be earned. To improve
customer loyalty, look to your customer experience and do everything you can to make your
customers’ lives easier and hopefully, more enjoyable.
Maximize Customer Lifetime Value
“Customers are the lifeblood of your business.”
That phrase is a cliché among marketing circles...
But it doesn’t tell the whole story of what it takes to make a business successful. It leaves
important question unanswered:
What's the best way to grow a business? Focus on getting as many customers as possible? Or
doing whatever it takes to keep the ones you have?
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A lot of it comes down to customer lifetime value. If it's greater than the cost of acquiring a
new customer, you're in a good position to grow. But if the situation is reversed, you could
be in trouble.
1, Up-Sell and Cross-Sell
If you can increase the average amount a customer spends every time they buy from you, you
increase your customer lifetime value.
One of the most effective ways to do this is offering strategic up-sells and cross-sells. These
maximize the value both you and the customer get out of every transaction.
Up-sells make a product or service more valuable. An example would be selling premium
razor blades (instead of default ones) to someone buying a razor.
Cross-sells, on the other hand, don’t increase the value of the original product or service, but
share enough characteristics where customers are likely to want them too. An example would
be offering shaving cream to someone about to buy a razor.
Amazon does an amazing job of this. No two users’ Amazon homepages are alike. Valuable
space is dedicated to offering product recommendations based on each user’s recently
browsed—and recently purchased—items.
2. Open up Multiple Communication Channels
The easier you make it for customers to get in touch with you, the more likely they are to
stick around,
Tt isn’t always mind-blowing quality or Zippo’s-level customer service that wins the day
(though those things certainly help!) Sometimes the reason customers choose to stay with you
boils down to a matter of convenience.
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How easy is it for customers to get in touch with you if they have a question or complaint?
Some businesses get into trouble by limiting customers to a few channels of communication.
Fortunately, there are plenty of tools and technology available that allow you to open
up multiple communication channels—even on small budgets.
Your communication channels could include:
« Telephone
# Email
« Contact forms
® Live chat
# Social media
e Physical address
One customer might prefer to pick up the phone instead of email. You can’t be sure
beforehand, so the smart thing is to give them the option. Put the power to reach out in their
hands, and make it as easy as possible for them to do it.
3. Be Transparent with Testimonials, Reviews, and Feedback
In an online space full of scammers and fly by night operations, transparency will take you a
long way. It makes every other tactic in this article easier to put into action.
The words of satisfied customers will always be more persuasive than your best sales copy.
People are more receptive to testimonials and product reviews because they find them
credible. It’s easier to believe a third party than the seller—someone with a vested interest in
convincing you to buy.
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Including reviews and testimonials on sales pages is a great way to make customers more
comfortable buying high-ticket items. Without that reassurance, they might've only bought
an inexpensive product... or nothing at all. Transparency helps raise the average amount of
each transaction, which increases customer lifetime value.
4, Segment Your Customer Base
The days of generic online marketing are on their way out.
Now, your customers expect something more. They want more than products and services:
they demand an all-encompassing experience that reflects their unique needs.
‘You customers might have some things in common, but you'll have more success keeping
them around by appealing to their differences—the things that make them unique.
Communicating with customers on that level shows you appreciate them as more than a
revenue source: you respect them as people.
5. Cultivate Brand Loyalty
How can you tum customers into raving fans who buy practically everything you sell?
By cultivating brand loyalty. You probably know someone who will wait in line for six hours
to buy the newest iPhone...even though they bought the previous model less than a year ago.
Some companies resonate that strongly with their customers.
This isn’t something that companies are born with, though. You can encourage brand loyalty
by relating with customers through shared values. What do you stand for? What do you
absolutely hate? Get clear about those things—and let them shine through in your marketing
and everything you produce—and you'll attract likeminded people and promote loyalty.
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6. Give Customers Something Nice... Just for Being Customers
Most of us love good surprises.
The same goes for your customers. What if you went out of your way to give them something
special...just for being your customers? There’s hardly a better way to make someone feel
valued (and encourage them to remain a customer).
This can be something as small as offering a coupon or discount for their next purchase. Or it
can be something more significant like upgrading their service for free.
That's what Netflix did. When they started offering streaming movies and TV shows on their
website, they gave their current customer base—people who ordered DVDs in the mail
exclusively—tfree access Lo streaming.
You're working hard to improve your products or services all the time. So what better way to
make your customers feel valued than share some of those improvements for free?
7. Focus on Quality above All Else
Things move fast online. Startups pop up out of nowhere and become billion-dollar
companies. Social networks like MySpace rise and fall in the blink of an eye.
So it’s tempting to focus on speed. But resist! Yes, things move fast online. It’s nice when
things happen quickly. But Id take quality over speed anytime. 'm not alone in my opinion,
either. A study from Zendesk revealed that 88% of consumers rated quality as the most
important factor when it comes to customer loyalty.
You might not be able to be the fastest company around. But there’s something your business
you can be the best at. Finding that and perfecting it allows you to offer customers something
they literally can’t find anywhere else.
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2.5 CRM (customer relationship management)
Customer relationship management (CRM) is the combination of practices, strategies and
technologies that companies use to manage and analyze customer interactions and data
throughout the customer lifecycle. The goal is to improve customer service relationships and
assist in customer retention and drive sales growth. CRM systems compile customer data
across different channels, or points of contact, between the customer and the company, which
could include the company's website, telephone, live chat, direct mail, marketing materials
and social networks. CRM systems can also give customer-facing staff members detailed
information on customers’ personal information, purchase history, buying preferences and
concems.
Why CRM benefits businesses
The use of CRM systems can benefit organizations ranging from small businesses to large
corporations, through:
Having customer information such as past purchases and interaction history easily accessible
can help customer support representatives provide better and faster customer service.
Collection of and access to customer data can help businesses identify trends and insights
about their customers through reporting and visualization features.
Automation of menial, but necessary, sales funnel and customer support tasks.
Components of CRM
At the most basic level, CRM software consolidates customer information and documents it
into a single CRM database so business users can more easily access and manage it.
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Over time, many additional functions have been added to CRM systems to make them more
useful. Some of these functions include recording various customer interactions over email,
phone, social media or other channels; depending on system capabilities, automating various
workflow automation processes, such as tasks, calendars and alerts: and giving managers the
ability to track performance and productivity based on information logged within the system.
Marketing automation. CRM tools with marketing automation capabilities can automate
repetitive tasks to enhance marketing efforts at different points in the lifecycle for lead
generation. For example, as sales prospects come into the system, it might automatically send
email marketing content, with the goal of turning a sales lead into a full-fledged customer.
Sales force automation. Sales force automation tools track customer interactions and
automate certain business functions of the sales cycle that are necessary to follow leads,
obtain new customers and build customer loyalty.
Contact center automation. Designed to reduce tedious aspects of a contact center agent's
job, contact center automation might include prerecorded audio that assists in customer
problem-solving and information dissemination. Various software tools that integrate with
the agent's desktop tools can handle customer requests in order to cut down on the length of
calls and to simplify customer service processes. Automated contact center tools, such
as chatbots, can improve customer user experiences.
Geolocation technology, or location-based services. Some CRM systems include technology
that can create geographic marketing campaigns based on customers’ physical locations,
sometimes integrating with popular location-based GPS (global positioning system)
apps. Geolocation technology can also be used as a networking or contact management tool
in order to find sales prospects based on a location.
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Workflow automation. CRM systems help businesses optimize processes by streamlining
mundane workloads, enabling employees to focus on creative and more high-level tasks.
Lead management. Sales leads can be tracked through CRM, enabling sales teams to input,
track and analyze data for leads in one place.
Human resource management (HRM). CRM systems help track employee information, such
as contact information, performance reviews and benefits within a company. This enables the
HR department to more effectively manage the internal workforce.
Analytics. Analytics in CRM help create better customer satisfaction rates by analyzing user
data and helping create targeted marketing campaigns.
Artificial intelligence. Al technologies, such as Salesforce Einstein, have been built
into CRM platforms to automate repetitive tasks, identify customer-buying patterns to predict
future customer behaviors and more.
Project management. Some CRM systems include features to help users keep track of client
project details such as objectives, strategic alignment, processes, risk management and
progress.
Integration with other software. Many CRM systems can integrate with other software, such
as call center and enterprise resource planning (ERP) systems.
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Types of Customer Relationship Management (CRM) Technology
CRM Software
Special CRM software aggregates customer information in one place to give businesses easy
access to data, such as contact data, purchase history and any previous contact with customer
service representatives. This data helps employees interact with clients, anticipate customer
needs, recognize customer updates and track performance goals when it comes to sales.
CRM software's main purpose is to make interactions more efficient and productive.
Automated procedures within a CRM module include sending sales team marketing materials
based on a customer's selection of a product or service. Programs also assess a customer's
needs to reduce the time it takes to fulfill a request.
CRM Cloud Solutions
Cloud-based systems provide real-time data to sales agents at the office and in the field as
long as a computer, smartphone, laptop or tablet connects to the internet. Such systems boast
heightened accessibility to customer information and eliminate the sometimes-complicated
installation process involved with other CRM products or software.
The convenience of this type of system, however, has a trade-off. If a company goes out of
business or faces an acquisition, access to customer information may become compromised.
A business might have compatibility issues when and if it migrates to a different vendor for
this kind of software. Also, cloud-based CRM programs typically cost more than in-house
programs.
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CRM Human Management and Artificial Intelligence
All of the computer software in the world to help with CRM means nothing without proper
management and decision-making from humans. Plus, the best programs organize data in a
way that humans can interpret readily and use to their advantage. For successful CRM,
companies must learn to discern useful information and superfluous data and must weed out
any duplicate and incomplete records that may give employees inaccurate information about
customers
2.7 Database Marketing
Database marketing is all about leveraging your customer data to deliver more personalized,
relevant and effective marketing messages to your customers.
What is Database Marketing?
Database marketing is the practice of leveraging customer data to deliver more personalized,
relevant and effective marketing messages to customers (both existing and potential
customers). While the term database marketing can be applied to marketing programs that are
aimed at acquiring new customers, the huge amount of data available on existing customers
(and the high relative value of retaining them) makes it much more valuable in the realm of
customer marketing.
Deploying A Marketing Database for Personalized Marketing
While deploying a large-scale marketing database is not a new concept, two recent factors
have made this approach to personalized marketing more practical to implement:
Vast quantities of customer data are now typically collected by, and otherwise available to,
companies.
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Powerful new technologies allow companies to mine and analyze their customer data to
better understand their customers’ wants and needs, to segment them into small and
homogenous micro-segments, and even to predict how individual customers will behave in
the near future.
The overriding goal of marketing via a customer information database is to utilize all the
customer data available to establish and maintain a successful, mutually beneficial and long-
term relationship with each customer. With a deep understanding of how the company can
please — and provide value to — each customer, companies are able to develop the kinds of
customer relationships that lead to dedicated brand loyalty, extensive word-of-mouth
promotion and dramatically higher customer lifetime value.
The Sources of Customer Data Used in Database Marketing, There are many internal sources
and external sources of data that companies can aggregate in order to construct a single
customer view database, These include:
Acquisition data - when and how the customer came to the site/app initially, via which
channel/affiliate, in response to which promotional campaign, etc.
Demographic data — age, gender, marital/family status, education, physical address, etc.
Website/app activity history — pages visited, frequency of visits, products browsed or games
played, features used, etc. (including activity recorded before registration or first purchase)
Purchase/spend history — number of purchases, number of items purchased (total and avg. per
purchase), prices of items purchased, dates/intervals of previous purchases
Campaign response history - how many campaigns have customers received, how and how
often did they respond, to which types of campaigns did they respond and via which channels
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Loyalty program data — loyalty tier earned, points earned, promotions redeemed, etc.
Customer surveys and questionnaires — customer answers to surveys, and even the fact that
the customer took the time to complete a survey!
Correspondence history — records of all interactions between a customer and the brand
Location data — geo locations recorded on the user’s mobile devices
Social media activity — topics and brand names discussed, app ratings, profile details, etc.
Third-party adtech data — other sites browsed, ads clicked, purchase intent data, demographic
indicators, etc.
It is important that the various data sources are combined in such a way that the data is clean
(free of errors), up-to-date and correctly linked to each individual customer. Each of these
requirements can pose challenges, especially the need to associate all customer data, from all
sources, with a unique customer identifier. Only once all data sources are properly collected
and linked to individual customers can the promises of database marketing be realized.
Fortunately, technology has made terrific advantages in all of these areas over the past few
years, a fact that makes it practical — perhaps even mandatory! — for companies to deploy
database marketing solutions and reap the benefits.
Putting Database Marketing into Action
The primary value of database marketing is that it enables a brand to communicate with
customers so that they feel they’re involved in a one-on-one conversation with the brand.
Really knowing customers — their wants, needs, preferences, tendencies and even their likely
future behaviors — allows the brand to make them feel understood and appreciated, without
wasting their time or patronizing them with irrelevant communications. This high degree of
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messaging personalization and relevance embodies “emotional intelligence” which naturally
results in customers who are more engaged, more loyal to the brand and who remain active
customers longer.
This process begins with multi-layered customer segmentation based on the data available in
the customer data warehouse. Basic segmentation methods rely on one or more database
fields, such as demographic characteristics, website/app activity, purchase patterns and
response patterns to earlier offers. More complex segmentations leverage analysis of
numerous data points, using methods such as Recency, Frequency, Monetary (RFM) analysis
or cluster analysis. The most sophisticated segmentation approaches are found in the family
of predictive behavior modeling solutions that work well for predicting a customer's future
behavior, forecasting customer lifetime value (LTV), likelihood of churn and other future-
facing factors.
By combining the various segmentation approaches, marketers are able to achieve customer
micro-segmentation, or even individual-level segmentation (which is sometimes
called segment-of-one customer-marketing). This results in highly relevant personalized
interactions that exhibit emotional intelligence and can successfully rise above the noise in
today’s marketing-saturated world.
The results include dramatically increased customer engagement, spend, long-term loyalty
and overall profitability.
Additional Uses of the Customer Database
Valuable Customer Insights for Strategic Database Marketing
Analyzing the aggregated customer data can yield rich insights and even lead to strategic
evolution. Beyond the practical day-to-day applications that database marketing enables,
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companies can exploit their rich customer data to analyze their customer base and reach
strategic insights that have the potential to improve various aspects of the business or even to
reshape the brand itself.
Just two possible examples of this are tracking the balance of future revenues expected to
come from existing customers versus new customers, and determining the balance of high-
value (VIP) customers versus low-value and one-time customers.
Better Customer Service
Once created for the sake of personalized retention marketing, the customer data warehouse
can also be used to improve customer support, usually through integration with the
company’s CRM and/or call center system. When a customer contacts the brand for service
via a phone call, email or social media channel, company reps can tap into the single
customer view database and instantly access everything the company knows about the
customer. This allows for more relevant and personalized responses that further enhance
customers’ perceptions of the brand as one that really “gets” them.
Improved Product Selection/Development
Mining customer data for a better understanding of what products or services customers want
is another benefit. For example, by cross-referencing purchase/engagement patterns and
demographic parameters, a brand may discover important insights into its overall product
mix. After all, great marketing and customer service can only go so far — the offering must be
one that the target market wants!
The Leading Database Marketing Software
If you are considering deploying a database marketing solution, take a close look at
Optimove. Optimove is a Relationship Marketing Hubthat combines the most advanced
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customer modeling, micro-segmentation and analytics technologies with an automated
marketing orchestration platform. Optimove enables marketers to implement a systematic
approach to deploying and optimizing a complete database marketing based customer
retention solution.
Request a Web demo to learn more about using Optimove to realize all the benefits of a
cutting-edge database marketing solution.
2.8 Factors Influencing Consumer Behaviour
Definition: The Consumer Behaviour is the study of how an individual decides to purchase a
particular product over the other and what are the underlying factors that mold such
behaviour.
Factors Influencing Consumer Behaviour
The marketers try to understand the actions of the consumers in the marketplace and the
underlying motives for such actions. These motives are the factors that influence the
consumer behavior. These are:
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Psychological Factors:
The human psychology plays a crucial role in designing the consumer's preferences and likes
or dislikes for a particular product and services. Some of the important psychological factors
are
® Motivation
e Perception
® Leaming
« Attitudes and Beliefs
Social Factors:
The human beings live in a complex social environment wherein they are surrounded by
several people who have different buying behaviors. Since the man is a social animal who
likes to be acceptable by all tries to imitate the behaviors that are socially acceptable. Hence,
the social factors influence the buying behavior of an individual to a great extent. Some of the
social factors are:
e Family
*® Reference Groups
e Roles and status
Cultural Factors:
It is believed that an individual learns the set of values, perceptions, behaviors, and
preferences at a very early stage of his childhood from the people especially, the family and
the other Key institutions which were around during his developmental stage. Thus, the
behavioral patterns are developed from the culture where he or she is brought up. Several
cultural factors are:
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e Culture
* Subculture
Personal Factors:
There are several factors personal to the individuals that influence their buying decisions.
Some of them are:
« Age
e Income
* Occupation
« Lifestyle
Economic Factors:
The last but not the least is the economic factors which have a significant influence on the
buying decision of an individual. These are:
e Personal Income
® Family Income
« Income Expectations
e Consumer Credit
® Liquid Assets of the Consumer
*® Savings
These are some of the underlying factors that influence the consumer behavior, and the
marketer must keep these in mind, so that appropriate strategic marketing decision 1s made.
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Consumer Buying Decision Process:
The consumer buying process in retail and ecommerce comes down to a single decision to
add an item to their cart—but that’s just the tip of the iceberg. Plenty of things are going on
behind the scenes. Usually a lot of thought and actions beneath that decision are in place to
encourage customers to complete a purchase.
With the exception of impulse buys, consumers do a considerable amount of research before
deciding to buy. And in today’s marketplace, the brands that thrive are the ones that get in
front of shoppers long before they decide to make the purchase.
How exactly can you do that?
It all starts with understanding the full consumer buying process. You need to be aware of the
different stages that shoppers experience in their retail journey and find ways to win as they
go from one step to the next.
e Stage 1: Problem Recognition
*® Stage 2: Information Gathering
Stage 3: Evaluating Solutions
Stage 4: Purchase Phase
* Stage 5: The Post-Purchase Phase
Stage 1: Problem Recognition
The consumer buying process starts off with the customer having a problem that can be
solved by a product or service. This manifests itself in a number of ways.
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In some cases, the shopper starts off feeling the symptoms of an issue. For example, an office
worker might find their computer is slowing down, but they're not sure of the exact problem
or how to solve it.
In other cases, the problem is more straight cut. Say a woman develops blisters after wearing
a pair of high heels for a full day. She immediately recognizes the problem and knows she
needs something (e.g., anti-blister products or new shoes) to fix it.
There are times when consumers discover a problem they didn’t know existed. This might
occur in a situation like when a driver sees an auto insurance ad and realizes they're
overpaying. As a brand marketer, you need to understand when and how the need for your
product or service arises.
Ask yourself these questions:
What scenarios or incidents push people to look for your offerings?
What ways create a demand for your products?
How do you get people to realize a need you can fulfill?
Once you've answered these questions, you figure out what content or campaigns types to
create. The ultimate goal is to engage shoppers as they move through the next stage of the
buying journey. This is the consumer buying process when they search for more information.
Stage 2: Information Gathering
Tt might sounds simple, but once the consumer recognizes they have a problem (or symptom
of it), they proceed to research to solve the issue. So, the office worker who has a slow
computer might start looking for software improvements to speed things up. And the driver
who's overpaying for insurance, they'll start searching for a way to lower their payments.
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The goal at this stage is to put your brand on the radar of your target customers. There are a
number of ways to do this.
Stage 3: Evaluating Solutions
After doing their research, consumers typically make a shortlist of brands or products for
their needs. At this stage, shoppers look at specific solutions to their problems.
For instance, someone who’s dealing with a slow computer would be deciding whether they
should hire an IT expert, purchase software that or buy a new computer altogether.
The objective is to position your product as the best choice for the shopper. Here are some of
the steps you can take to influence your product in the consumer buying process:
Stage 4: Purchase Phase
All your efforts led customers to choose your brand at the purchase phase of the buying
journey. This is the stage when they're ready to get the credit card and buy your product.
It’s an excellent position to be in, but don’t get complacent. You can still lose them if you
don’t offer a smooth checkout experience.
Strive to make the process as quick and painless as possible. Amazon is a master at this with
its one-click checkout. This lets people complete their purchase with a tap of a button.
Stage 5: The Post-Purchase Phase
Finally, we have the post-purchase phase. At this point, you've successfully converted
lookers into buyers.
Congrats!
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Now it’s time to gather feedback. You also want to ensure shoppers remain customers for as
long as possible. It’s all about retention if you truly want to increase sales. Check out a few
ways you can retain customers in the final stages of the consumer buyer process:
2.9 Stages in Organizational Buying
The organizational buying process contains eight stages, or key phrases, which are listed in.
Although these stages parallel those of the consumer buying process, there are important
differences that have a direct bearing on the marketing strategy. The complete process occurs
in the case of a new task. Even in this situation, however, the process is far more formal for
the industrial buying process than for the consumer buying process.
Most of the information an industrial buyer receives is delivered through direct contacts such
as sales representatives or information packets. It is unlikely that an industrial buyer would
use information provided through a trade ad as the sole basis for making a decision.
Problem recognition
The process begins when someone in the organization recognizes a problem or need that can
be met by acquiring a good or service. Problem recognition can occur as a result of internal or
external stimuli. External stimuli can be a presentation by a salesperson, an ad, or information
picked up ata trade show.
General need description
Having recognized that a need exists, the buyers must add further refinement to its
description. Working with engineers, users, purchasing agents, and others, the buyer
identifies and prioritizes important product characteristics. lists several sources of
information for many industrial customers. Armed with extensive product knowledge, this
individual is capable of addressing virtually all the product-related concerns of a typical
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customer. To a lesser extent, trade advertising provides valuable information to smaller or
isolated customers. Noteworthy is the extensive use of direct marketing techniques (for
example, toll-free numbers and information cards) in conjunction with trade ads. Finally,
public relations plays a significant role through the placement of stories in various trade
journals.
Product specification
Technical specifications come next. This is usually the responsibility of the engineering
department. Engineers design several alternatives, depending on the priority list established
earlier,
Supplier search
The buyer now tries to identify the most appropriate vendor. The buyer can examine trade
directories, perform a computer search, or phone other companies for recommendations.
Marketers can participate in this stage by contacting possible opinion leaders and soliciting
support or by contacting the buyer directly. Personal selling plays a major role at this stage.
Proposal solicitation
Qualified suppliers are next invited to submit proposals. Some suppliers send only a catalog
or a sales representative. Proposal development is a complex task that requires extensive
research and skilled writing and presentation. In extreme cases, such proposals are
comparable to complete marketing strategies found in the consumer sector.
Supplier selection
At this stage, the various proposals are screened and a choice is made. A significant part of
this selection is evaluating the vendor. One study indicated that purchasing managers felt that
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the vendor was often more important than the proposal. Purchasing managers listed the three
most important characteristics of the vendor as delivery capability, consistent quality, and fair
price. Another study found that the relative importance of different attributes varies with the
type of buying situations. For example, for routine-order products, delivery, reliability, price,
and supplier reputation are highly important. These factors can serve as appeals in sales
presentations and in trade ads.
Order-routine specification
The buyer now writes the final order with the chosen supplier, listing the technical
specifications, the quantity needed, the warranty, and so on.
Performance review. In this final stage, the buyer reviews the supplier's performance. This
may be a very simple or a very complex process.
® Philip Kotler, Kevin Lane Keller, Abraham Koshy and Mithileswar Jha. 2012.
Marketing Management. [Thirteenth Edition]. Pearson Education, New Delhi.
Part-A
1) Explain about marketing research process
2) What is Measuring Marketing Productivity
3) Explain demand measurement
Part -B
1) Write about 5 Steps to Creating More Customer Value
2) What do you know about Building Customer Satisfaction
Part -C
1) Enumerate on CRM (customer relationship management)
2) Write about the Database Marketing
3) Brief in detail about Factors Influencing Consumer Behaviour
4) Explain in detail about Stages in Organizational Buying
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« For Q.No.1 in Part A refer section No.2.1
e For Q.No.2 in Part A refer section No.2.2
e For Q.No.1 in Part B refer section No.2.4
e For Q.No.1 in Part C refer section No.2.6
® For Q.No.2 in Part C refer section No.2.7
® For Q.No.3 in Part C refer section No.2.8
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UNIT-3
Objectives
*® Understand the term market segmentation.
e Know the nuances in about growth strategies.
« To develop about how to position.
Unit Structure
3.1 Levels of marketing segmentation
3.2 Several types of micro marketing
3.3 The Four Types of Market Segmentation
3.4 Market Targeting
3.5 Building and Managing Brand Equity
3.6 Developing And Communicating A Positioning Strategy
3.7 Growth Strategies For Existing Markets
3.8 Differentiation strategies
3.9 Product Life Cycle Strategies
3.10 Strategies for leaders
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UNIT-3
Objectives
*® Understand the term market segmentation.
e Know the nuances in about growth strategies.
« To develop about how to position.
Unit Structure
3.4 Market Targeting
3.10 Strategies for leaders
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4 levels of market segmentation are:
® Mass Marketing or Undifferentiated Marketing.
« Product-Variety Marketing or Differentiated Marketing.
e Concentrated Marketing or Niche Marketing.
® Micro Marketing.
To understand market segmentation levels, we need to see what a market looks like with no,
partial and full segmentation. Let see a hypothetical six buyers the market and how they are
segmented:
1. Mass Marketing or Undifferentiated Marketing — Target the entire market with just one
marketing campaign.
Mass marketing is the process of communicating a product to the entire market with one
marketing strategy, using the power of mass distribution and mass media.
Also, know as undifferentiated marketing because this strategy does not target individual
market segments. Different market segments are marketed with the same blanket approach,
usually to maximize sales volume.
Most businesses try combining mass and niche marketing strategies.
Advantages of Mass Marketing
Economies of scale can be obtained in mass markets because of enormous size. Thus, the
average cost of bringing the product to the market will be lower, and hence, profit margins
higher.
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Only one marketing plan is required, and no specific market segment is targeted. One
marketing campaign targets the whole market, facilitating marketing economies of scale.
Providing products for a mass market enables establishing a more extensive base of
customers. This will generally increase profitability.
Limitations of Mass Marketing
In mass marketing, the competition is usually broad and extreme.
There are very high barriers to entry for mass markets. Often incumbent competition has
invested in capital equipment, large-scale factories, offshore centers, efficient supply chain
management processes, etc. Huge competition can make it extremely difficult to compete in a
mass-market as a new firm successfully. Mass marketing is less focussed, requires more
resources. The company can suffer a high loss if the marketing strategy fails.
2. Product-Variety Marketing or Differentiated Marketing
Target the Entire market with different products and marketing mix
In Product-Variety Marketing or Differentiated Marketing, the marketer divides the market
into different segments depending on the consumer's buying behavior, requirements,
purchasing power, location, and age level.
In product-variety marketing, the seller produces two or more products that have different
features, styles, quality, and so on. Subsequently, Kohinoor produced several kinds of
toothpaste bearing different brands with other packages. They were designed to offer variety
to consumers rather than creating various appeals to different market segments.
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Differentiated marketing helps the marketer to connect to each type of customer in the best
possible way. Most companies use different market segments for marketing its entire list of
products which caters to different market levels.
The promotional and advertising activities for a particular focus only to the target market for
that product.
For example, Unilever sells different brands of soap-like—Lux, Lifebuoy, wheel, etc.
In differentiated marketing, firms promote several products with different marketing mixes
for serving smaller market segments.
By providing increased satisfaction for each of many target markets, a company produces
more sales, increases production, inventory, and promotional costs.
A company can remain competitive and profitable despite the higher marketing costs. The
increased marketing cost actually comes back as ROI with a high number of sales and a huge
loyal customer base.
3. Niche Marketing or Concentrated Marketing
Target a few well-defined segments of the market Niche marketing targets specific and well-
defined market segments and concentrates all marketing efforts on a small but specific and
well-defined segment of the population.
Niches are ‘created’ by identifying needs, wants, and requirements addressed poorly or not at
all by other firms, and developing and delivering goods or services to satisfy them.
As a strategy, niche marketing aims to be a big fish in a small pond instead of being a small
fish in a big pond.
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A niche may be identified by dividing a segment into sub-segments or by defining a group
with a different set of characteristics who may look for a unique combination of benefits of
attributes in the product
The main requirements or characteristics of Niche Marketing are
« Customers have a distinct set of needs and want from the service or product.
© The seller of the service provider needs more skill or niche skills.
e Premium prices for higher quality and specialized niche services.
Advantages of Niche Marketing
When a specific market segment is targeted in a firm’s marketing, marketing tends to be more
focused and likely to have a greater appeal within the targeted segment. Mass marketing is
not as focussed and, as such, tends to focus on the ‘average’ consumer.
Businesses can become highly specialized in finding out the needs and wants of a niche
market they are targeting. With needs and wants being better met, customer loyalty can
ensue.
Competitive rivalry within a niche market is less than that for broader markets. Less
competition can translate into increased pricing power for a firm’s differentiated products,
which, in turn, can lead to increased profitability.
Limitations of Niche Marketing
Niche markets, by their definition, are small. The number of total potential customers in the
market is limited. Niche marketing strategies may miss potential customers and depress sales
revenues.
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Economies of scale may not be obtained in niche markets due to their limited size. Thus, the
average cost of bringing the product to the market will be higher, leading to higher prices and
or lower profit margins.
Profitable niche markets with low barriers to entry are likely to attract new competitors into
the industry. Niche markets are small and cannot sustain a relatively high number of
competitors.
Rather than market its products separately to several segments, a firm opt for a concentrated
marketing approach.
With concentrated marketing or niche marketing, a firm focuses on profitably satisfying only
one market segment. It may be a small segment but a profitable segment.
This approach can appeal to a small firm that lacks the financial resources of its competitors
and to a company that offers highly specialized goods and services. Along with its benefits,
concentrated marketing has its dangers.
Since this approach ties a firm’s growth to a particular segment, changes in the size of that
segment or customer buying patterns may result in severe financial problems.
Sales may also drop if new competitors appeal successfully to the same segment. Niche
marketing leaves the fortunes of a firm to depend on one small target segment.
4. Micro Marketing — Target at a very basic level of the market segment
Micro-marketing looks at the activities individual in marketers in the entire economic sector.
This approach is still more narrowly focused than concentrated marketing. Micro-marketing
involves targeting potential customers at a very basic level, such as postal code, specific
occupation, or lifestyle.
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Ultimately, micromarketing may even target individuals themselves. It is referred to as
marketing to segments of one. The internet allows marketers to boost the effectiveness of
micromarketing.
With the ability to customize (individualization attempts by the firm) and to personalize
(individualization attempts by the customer), the internet offers the benefit of mass
customization — by reaching the mass market with individualized offers for the customers.
* Local Marketing.
« Individual Marketing
* Local marketing
In Local marketing, the seller or the marketer only concentrates on the local market. The
products also have the local appeal or the local usages, and the promotional activities are
planned based on the location only with local flavour.
Here the cost remains high due to lower production, and competition is also less. Marketers
can concentrate on mom in the local market to reach all the customers in the region. The best
example would be the marketing of regional chain of hotels or restaurants, locally produced
food products, etc.
Local marketing can be studied from both the retailer and manufacturer perspective. For the
retailer, local marketing implies the optimization of the store’s marketing mix.
For the manufacturer, local marketing implies optimizing the product's marketing mix at the
store level. We focus on the interaction between manufacturers and retailers, how
manufacturers and retailers optimize the marketing mix for a product (category) at the store
level.
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Individual Marketing
Individual marketing focuses on satisfying the needs and wants of individual customers it’s
also known as one-to-one marketing and customized marketing: it’s the segmentation level
where the seller offers a customized product to the consumer.
In simple words, making and selling product(s) according to the needs and preferences of the
consumer.
For example, a Fabrics company will cut your cloths according to the needs of the individual
customers.
Individual Marketing happens when several specific attributes are “fulfilled” will the
personal message be automatically triggered by one person.
The more attributes included triggering the message, the more relevant it becomes for the
person. Let’s look at the type of attributes.
Customer profile attributes:A simple message commonly used is the birthday month
promotion.
New and renewal: Sending automatic messages triggered to the person based on the new,
active, lapsing, or inactive customers (or members) group. The content will be relevant based
on their activity level.
Buying behaviour: The spending history (the type of product, average spend, frequency,
changing spending patterns) is used to trigger a message.
Channel behaviour: the channel interactions (web, mobile, e/m-commerce, social media,
visits) is used to trigger a message.
Customer sentiments: may include feedback forms, service cases, likes on social media.
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Location: These are often real-time messages being sent when a person is close to, outside, or
inside a particular location.
Segmenting Consumer Market:
Market segmentation is the process of dividing atarget market into smaller, more defined
categories. It segments Customers and audiences into groups that share similar characteristics
such as demographics, interests, needs, or location.
The four bases of market segmentation are:
« Demographic segmentation
e Psychographic segmentation
® Behavioural segmentation
e Geographic segmentation
Within each of these types of market segmentation, multiple sub-categories further classify
audiences and customers.
4 Types of
MARKET SEGMENTATION
EVAR
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Demographic Segmentation
Demographic segmentation is one of the most popular and commonly used types of market
segmentation. It refers to statistical data about a group of people.
Demographic Market Segmentation Examples
e Age
« Gender
e Income
e Location
«® Family Situation
« Annual Income
e Education
Ethnicity
Where the above examples are helpful for segmenting B2C audiences, a business might use
the following to classify a B2B audience:
® Company size
« Industry
e Job function
Because demographic information is statistical and factual, it is usually relatively easy to
uncover using various sites for market research.
A simple example of B2C demographic segmentation could be a vehicle manufacturer that
sells a luxury car brand (ex. Maserati). This company would likely target an audience that has
a higher income.
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Another B2B example might be a brand that sells an enterprise marketing platform. This
brand would likely target marketing managers at larger companies (ex. 500+ employees) who
have the ability to make purchase decisions for their teams.
Psychographic Segmentation
Psychographic segmentation categorizes audiences and customers by factors that relate to
their personalities and characteristics.
Psychographic Market Segmentation Examples
e Personality traits
* Values
« Attitudes
e Interests
* Lifestyles
« Psychological influences
e Subconscious and conscious beliefs
*® Motivations
* Priorities
Psychographic segmentation factors are slightly more difficult to identify than demographics
because they are subjective. They are not data-focused and require research to uncover and
understand.
For example, the luxury car brand may choose to focus on customers who value quality and
status. While the B2B enterprise marketing platform may target marketing managers who are
motivated to increase productivity and show value to their executive team.
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Behavioural Segmentation
While demographic and psychographic segmentation focus on who a customer
is, behavioural segmentation focuses on how the customer acts.
Behavioural Market Segmentation Examples
e Purchasing habits
« Spending habits
e User status
e Brand interactions
Behavioural segmentation requires you to know about your customer's actions. These
activities may relate to how a customer interacts with your brand or to other activities that
happen away from your brand.
A B2C example in this segment may be the luxury car brand choosing to target customers
who have purchased a high-end vehicle in the past three years. The B2B marketing platform
may focus on leads who have signed up for one of their free webinars.
Geographic Segmentation
Geographic segmentation is the simplest type of market segmentation. It categorizes
customers based on geographic borders.
Geographic Market Segmentation Examples
e ZIP code
e City
® Country
e Radius around a certain location
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e Climate
® Urban or rural
Geographic segmentation can refer to a defined geographic boundary (such as a city or ZIP
code) or type of area (such as the size of city or type of climate).
An example of geographic segmentation may be the luxury car company choosing to target
customers who live in warm climates where vehicles don’t need to be equipped for snowy
weather. The marketing platform might focus their marketing efforts around urban, city
centres where their target customer is likely to work.
Bases for segmentation business markets:
Just like for consumer markets, business or organizational markets should be segmented in
order for the firm to effectively develop a successful marketing program. The segmentation
bases/variables for business markets vary a little in terminology, but are quite similar in
concept and application to the process of segmenting consumer markets.
The main segmentation bases/variables used in business markets include: geographic
location, business description (sometimes referred to as demographics),
behavioural/operating practices, culture/personality, and organizational goals.
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A brief description of the various main business segmentation bases is outlined in t
following table:
Broad Category of Business Which factors are being considered?

Market Segmentation Base
Geographic location Where does the organization

operate?(Could be multiple locations)
Business description What sort of business is it, where does it

fit into its industry?
Behavioral/operating How does the organization undertake its

practices purchasing decisions?
Culture/personality What is the management style of the

organization?
Understanding business market segmentation bases/variables
The following table outlines some of the segmentation variables that can be utilized
business markets, listed by main categories:
Main Category Segmentation Base Questions to help define segment gro
Geographic location/s Country/continent In which countries do they operate?
Region/area of the country In which regions do they operate?
Number of outlets Does the firm have one office
potentially 1,000s of outlets?
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Geographic spread Does the firm operate in one geographic area,
or spread over a wide area?
Business description Industry What industry do they operate in?
Size (by staff or outlets) How many staff do they have, or how many
outlets do they have?
Size (revenues/profits) What is their financial position?
Products sold What is their product mix?
Equipment/technology What is the main forms of manufacturing
and/or IT equipment do they use?
3.4 Market Targeting:
Introduction:
A company cannot concentrate on all the segments of the market. The company can satisfy
only limited segments. The segments the company wants to serve are called the target market,
and the process of selecting the target market is referred as market targeting. Market
segmentation results into dividing total market into various segments or parts.
Such segments may be on the basis of consumer characteristics or product characteristics or
both. Once the market is divided into various segments, the company has to evaluate various
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segments and decide how many and which ones to target. It is simply an act or process of
selecting a target market.
Definitions:
Market is segmented using certain bases, like income, place, education, age, and life cycle,
and so on. Out of them, a few segments are selected to serve them. Thus, evaluating and
selecting some market segments can be said as market targeting. The quoted definitions are
not available.
However, we can define the term as:
1. We can define the term as: Market targeting is a process of selecting the target market from
the entire market. Target market consists of group/groups of buyers to whom the company
wants to satisfy or for whom product is manufactured, price is set, promotion efforts are
made, and distribution network is prepared.
2. It involves basically two actions - evaluation of segments and selection of the appropriate
market segments. In this relation, market targeting can be defined as: Market targeting is an
act of evaluating and selecting market segments.
3. Finally, we define market targeting as: Market targeting consists of dividing the total
market into segments, evaluating these segments, and selecting the appropriate segments as
the target market.
Procedure of Market Targeting:
I, Evaluating Market Segments:
Evaluation of market segments calls for measuring suitability of segments. The segments are
evaluated with certain relevant criteria to determine their feasibility.
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To determine overall attractiveness/suitability of the segment, two factors are used:
I. Attractiveness of Segment:
In order to determine attractiveness of the segment, the company must think on
characteristics/conditions which reflect its attractiveness, such as size, profitability,
measurability, accessibility, actionable, potential for growth, scale of economy,
differentiability, etc. These characteristics help decide whether the segment is attractive.
ii. Objectives and Resources of Company:
The firm must consider whether the segment suit the marketing objectives. Similarly, the firm
must consider its resource capacity. The material, technological, and human resources are
taken into account. The segment must be within resource capacity of the firm.
2. Selecting Market Segments:
When the evaluation of segments is over, the company has to decide in which market
segments to enter. That is, the company decides on which and how many segments to enter.
This task is related with selecting the target market. Target market consists of various groups
of buyers to whom company wants to sell the product: each tends to be similar in needs or
characteristics. Philip Kotler describes five alternative patterns to select the target market.
Selection of a suitable option depends on situations prevailing inside and outside the
company.
Alternative Strategies (Methods) for Market Targeting:
Basically five alternative patterns/strategies are available.
Company may opt for any one of the following strategies for market targeting based on the
situations:
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1. Single Segment Concentration:
It is the simplest case. The company selects only a single segment as target market and offers
a single product. Here, product is one: segment is one. For example, a company may select
only higher income segment to serve from various segments based on income, such as poor,
middleclass, elite class, etc. All the product items produced by the company are meant for
only a single segment.
Single segment offers some merits like:
(1) Company can gain strong knowledge of segment’s needs and can achieve a strong market
position in the segment.
(2) Company can specialize its production, distribution, and promotion.
(3) Company, by capturing leadership in the segment, can eam higher return on its
investment.
It suffers from following demerits like:
(1) Competitor may invade the segment and can shake company’s position.
(2) Company has to pay high costs for change in fashion, habit, and attitude. Company may
not survive as risk cannot be diversified.
Mostly, company prefers to operate in more segments. Serving more segments minimizes the
degree of risk.
2. Selective Specialization:
In this option, the company selects a number of segments. A company selects several
segments and sells different products to each of the segments. Here, company selects many
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segments to serve them with many products. All such segments are attractive and appropriate
with firm’s objectives and resources.
There may be little or no synergy among the segments. Every segment is capable to promise
the profits. This multi-segment coverage strategy has the advantage of diversifying the firm’s
risk. Firm can earn money from other segments if one or two segments seem unattractive. For
example, a company may concentrate on all the income groups to serve.
3. Product Specialization:
In this alternative, a company makes a specific product, which can be sold to several
segments. Here, product is one, but segments are many. Company offers different models and
varieties to meet needs of different segments. The major benefit is that the company can build
a strong reputation in the specific product area. But, the risk is that product may be replaced
by an entirely new technology. Many ready-made garment companies prefer this strategy.
4, Market Specialization:
This strategy consists of serving many needs of a particular segment. Here, products are
many but the segment is one. The firm can gain a strong reputation by specializing in serving
the specific segment. Company provides all new products that the group can feasibly use.
But, reduced size of market, reduced purchase capacity of the segment, or the entry of
competitors with superior products range may affect the company’s position.
5. Full Market Coverage:
In this strategy, a company attempts to serve all the customer groups with all the products
they need. Here, all the needs of all the segments are served. Only very large firm with
overall capacity can undertake a full market coverage strategy.
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Brands vs. Brand Equity
A brand is much more than just the products or services a company sells. It's also a way for
consumers to differentiate goods from those of competitors. Wrapped up in a brand are all the
ways it identifies itself, such as product names, logos, or distinctive colours. For example,
Honda has brands in the names Honda and Accord, each of which have separate reputations
in the public eye. The Pepsi brand is instantly recognizable by its red, white, and blue colour
palette.
Brand equity, on the other hand, is the value a brand brings to a company once it becomes
widely recognized by customers. If a consumer would choose a generic product over a
branded one, the brand has a negative brand equity, and vice versa. Positive brand equity
often results in increased customer loyalty, which is when a consumer is willing to pay a
premium for a brand they prefer.
Por example, people with brand loyalty to Campbell's Soup believe that it tastes better or has
more beneficial qualities than soup of similar price. People who always buy a Mercedes
believe they are of higher quality than BMWs or Cadillac’s. This is one reason why brands,
particularly luxury ones, so rigorously defend their trademarks and public image.
Ways of Building Brand Equity
Positive brand equity is not created overnight but rather is developed over time by:
Developing a quality product or offering excellent customer service.
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Engaging in an effective marketing plan. You can have the best product, brand name, and
logo ever, but that won't build brand equity if your potential customers don't know about
them.
« Creating a memorable brand name or logo.
* Protecting the brand with appropriate copyright or trademark registration.
Measuring Brand Equity
While no one doubts the existence of brand equity, quantifying it is another matter. Some
marketing organizations lean toward a customer-based measurement, which focuses on
aspects such as customer loyalty and consumer awareness, recognition, and opinion of the
brand.
Others use a measurement model that emphasizes factors such as:
The proportion of sales attributed to the brand recognition
Comparing the price of the product to the price of other brands or generics
The brand's market share for its product or industry
Still others use a combination of these approaches or more complex methods that analyze
stock performance, projected profits, total company value relative to tangible and intangible
assets, and various other factors.
However, many of the factors used are vague and intangible and, just like with celebrity
endorsements and event sponsorships, there is no universally accepted method for
measurement. On top of that, many measurement models are created by marketing consulting
firms, which are in the business of charging companies for conducting consumer marketing
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surveys and so may have an interest in manipulating the perceived value of a company's
brand equity.
Managing Brand Equity
Once brand equity is established, it needs to be managed in order to maintain or increase its
value. The stability of the brand recognition may need to be balanced with changing markets,
consumer attitudes, government regulations, and other factors. In some situations, efforts may
be needed to revitalize the brand or even to rebrand a product.
Once established for an existing product, brand equity can be managed to extend brand
recognition to new ones.
For example, once Whirlpool established its brand for clothes washers and dryers, it
expanded the brand to ovens, dishwashers, and microwave ovens.
If consumers develop a negative impression of the company or product, a brand's equity
could be negative, decreasing both sales and the value of the company. This might happen in
the event of unfavorable media attention, such as from a highly publicized lawsuit against the
company, repeated product recalls, or cybersecurity breaches. For example, widely publicized
concerns about the privacy of personal information led to many users canceling their
Facebook accounts.
Tt can takes years to establish a reputation with consumers, although it's easier today than it's
ever been. Focusing on consumer satisfaction and quality goods goes a long way towards
building positive brand equity and even making your company more attractive to buyers or
investors.
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All marketing strategy is built on STP Segmentation, Targeting, and Positioning. A company
that discovers different needs and groups in the marketplace, targets those needs and groups
that it can satisfy in a superior way, and then positions its offering so that the target market
recognizes the company’s distinctive offering and image. If a company does a poor job of
positioning, the market will be confused. This happened when National Car Company and
Alamo Rent-a-Car were combined by their former parent, ANC Rental Corp, following its
bankruptcy.
Premium brand National traditionally catered to business travellers, whereas Alamo Rent-a-
Car has been getting 90% of its business from travellers. After two merged, the dual
Alamo/National logos were plastered on everything from airport shuttle buses to workers
polo shirts. Customers of both Alamo and National had problems distinguishing between the
brands, even though National cars typically rent for 10 to 20% more. After all, the customers
had to stand in the same line behind the same airport counter, receive from the same rental
agents, ride the same shuttle buses, and drive cars from the same fleet. National was most
hurt by the lack of differentiation at these Key touch points, and its market share fell 3 to
10%.
Interestingly, after consolidation of the brands, shuttle bus frequency improved 38% and
business travellers were given even more options to bypass the rental counter entirely. Still,
in surveys, National renters perceived the buses to be slower, the lines longer, and customer
service poorer, The clear implication was that in order for the two brands to maintain their
integrity and their positioning with their respective market segments, they had to be
separated.
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If a company does an excellent job of positioning then it can work out the rest of its
marketing planning and differentiation from its positioning strategy.
We define positioning as follows: Positioning is the act of designing the company’s offering
and image to occupy a distinctive place in the mind of the target market. The goal is to locate
the brand in the minds of consumers to maximize the potential the potential benefit to the
firm. A good positioning helps guide marketing strategy by clarifying the brand’s essence,
what goals it helps the consumer achieve, and how it does so in a unique way. The result of
positioning is the successful creation of a customer-focused value proposition, a cogent
reason why the target market should buy the product.
The word positioning was popularized by two advertising executives. They see positioning as
a creative exercise done with an existing product.
Positioning starts with a product. A piece of merchandise, a service, a company, an
institution, or even a person But positioning is not what you do to a product. Positioning is
what you do to the mind of the prospect. That is, you position the product in the mind of the
prospect.
Marketing Insight:
Value Disciplines Positioning offers another point of view about positioning. According to
virtually all approaches, positioning requires that similarities and differences between brands
be defined and communicated. Specifically, deciding on a positioning requires determining a
frame of reference by identifying the target market and the competition, and identifying the
ideal points-of-parity and points-of-difference brand associations.
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Competitive Frame Of Reference:
A starting point in defining competitive frame of reference for a brand positioning is
determining category membership a€“the products or sets of products with which a brand
competes and which function as close substitutes.
Target market decisions are often a key determinant of the competitive frame of reference.
Deciding to target a certain type of consumer can define the nature of competition because
certain firms have decided to target that segment in the past or plan to do so in the future, or
consumers in that segment already may look to certain brands in their purchase decisions.
Determining the proper competitive frame of reference requires understanding consumer
behaviour and the consideration sets consumers use in making brand choices.
3.7 Marketing Strategy
“Marketing Strategy is a series of integrated actions leading to a sustainable competitive
advantage.” - John Scully
Marketing strategy is a process that can allow an organization to concentrate its limited
resources on the greatest opportunities to increase sales and achieve a sustainable
Competitive advantage.
Nature of Strategic Management
*® Strategic Management is an on-going process of analysis, planning and action.
« It attempts to keep an organization aligned with its environment while capitalizing on
organizational strengths and environmental opportunities and minimizing or avoiding
organizational weaknesses and external threats.
* Strategic management is also a future-oriented provocative management system.
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e Managers who use strategic management skills are seeking a competitive advantage
for their organizations and long-term organizational effectiveness.
* Strategy is a process, a continuous process which can be summed up into these three
statements:
e Where do we wish to go? (in terms of growth, profitability, status. The mission and
vision of an organization is to be developed and its value system is to be framed.)
® Where we are? (It assess the current situation of the company. It analyses SWOT
inside the company.)
« How do we reach there? (Resources reqd in terms of manpower, money,
infrastructure, etc. /policies /procedures)
Strategic Marketing Decision Process
Step 1 -Reaffirm the firm's intended general direction [company mission, objectives, goal]
Step 2 —Determine broad areas of environment opportunity. [Market characteristics, political,
legal, economic, & technological , cultural & social]
Step 3-Narrow down alternative to those compatible with the company’s strength
[management & finance, marketing, R&D]
Step 4 —Segment markets into groups having similar needs [market & strategy, market
satisfaction vs cost, measurability]
Step 5— Assess Segment opportunities against competitor positions then select target
[Market segment opportunities, competitor strength analysis, target selection]
Step 6 - Determine Marketing strategy [Market entry, expansion, development,
retrenchment]
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Step 7 — Develop, implement and control company’s marketing actions [organise, plan,
budget & control marketing actions]
Types Of Marketing Strategies
I Market leader Strategies:
The leader firm might become weaker or old-fashioned against new entrants as well as
existing rival firms. The leader firm can use one or a combination of three strategies:
|. Expand the total market strategy:
The market-leader firms can gain the maximum when the total market expands. The focus of
expanding the total market depends on where the product is in the maturity stage.
2. Defending market share strategy: When the leader firm tries to expand the total market
size, it must also continuously defend its current business against enemy attacks. For
Example: Bajaj Auto should constantly maintain its guard against LML Scooters. In this
Strategy, the leader firm must keep its costs down, and its prices must be consistent with the
value that customers see in the product. There are six ways that a market leader might use to
protect its market position.
(a) Position defence: This Strategy involves pouring maximum firm’s resources into its
current successful brands. To overcome a position defence an attacker therefore, typically
adopts an indirect approach rather than the head-on attack that the defender expects.
(b) Flanking defence: This strategy both guards the market positions of leading brands and
develops some flank market niches to serve as a defensive comer either to protect a weak
front or to establish an invasion base for counterattack, if necessary.
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(c) Pre-emptive defence: This defence strategy involves the launching of an offence against
an enemy before it starts an offence. For ex: TITAN launched more brands and sub-brands
called Insignia Collection.
(d) Counter-offensive defence: This a strategy of identifying a weakness in an attacker and
aggressively going after that market niche so as to cause the competitor to pull back its efforts
to defend its own territory. When a leader is attacked .he may base his counter-attack in the
attacker's territory. The attacker has to deploy resources to this territory for defence.
(e) Mobile defence: This strategy involves the leader’s broadening and expanding its
territories into new market areas by diversifying. The leader takes innovation into new market
areas by diversifying .The leader takes innovation works in both these directions. E.g.: A
five-star hotel can become foreign exchange dealer. Diversification into related areas is used
in mobile defence.
(f) Contraction defence: This strategy involves retrenching into areas of strength and is
often used in later stages of a product life cycle or when the firm has been under considerable
attack .For ex: HUL decided to concentrate on its core business areas, i.e. soaps and
detergents and etc.
3. Expanding the market share strategy: Market leaders can improve their profitability
through increasing their market shares. Market leaders are successful at expanding their
market shares like, HUL, Procter and Gamble, McDonald’s and titan.
In Conclusion, market leaders who stay on top have learned the art of expanding the total
market, defending their current territory, and increasing their market share and profitability.
Competing with highly aggressive market leaders presents a formidable challenge to all
newoomers.
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Il Market Challenger Strategies:
Those firms which occupy second or third places in the market can be called as Runner up or
Market Challenger. The market challengers’ strategic objective is to gain market share and to
become the leader eventually
How?
* By attacking the market leader
¢ By attacking other firms of the same size
* By attacking smaller firms
Types of Attack Strategies:
* Frontal attack
* Flank attack
* Encirclement attack
* Bypass attack
* Guerrilla attack
Frontal Attack:
This strategy is used when the challenger masses its competitive forces right up against those
of the opponent by attacking its competitor’s strengths rather than its weaknesses. For this to
succeed, the challenger needs a strength advantage over its opponent. An attack is called a
frontal attack when the opponent's strength is challenged head on.
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Flank Attack:
This strategy is used when the challenger sets its sights on its target's weakest points.
Attacking a weak position in the opponent's force is flank attack.
Encirclement Attack: It is used only by well-financed firms. In this attack both strong areas
and weak areas attacked simultaneously.
Guerilla Attack: Guerilla attacks consist of making small, intermittent attacks on different
marketing territories of the opposing firm.
Bypass Attack: In a bypass attack to gain market share, a firm identifies segments not served
by the existing firms and makes efforts to gain market share
Ii Market-Followers strategy
Market follower is the one who follows a leader ora challenger... the strategies are:
e.g. Product innovation—Sony , Product-imitation--Panasonic
Following Closely - Follower appears to be challenger in many respects, but doesn’t muster
too great an effort so as to block direct conflict.
Following at a distance - Follower parallels the leader’s general price levels, product
innovations and distribution at a distance without thread to challenger.
Following selectively - Follower follows the leader quite closely in some ways, goes its own
way in other instances, and sometimes chooses not to participate at all.
IV Niches Strategy
A market niche strategy coincides with a concentrated marketing strategy. Firm realizes that
it lacks the resources to compete directly with bigger firms in the industry and Seeks to
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identify a particular niche or segment of the market upon which it can concentrate all its
energies. The key to success in developing such a strategy is to define a viable market
segment and then develop an offering which is perceived as differentiated from the
competition by the users comprising the segments thereby by conferring a temporary
monopoly upon the supplier.
e.g. Logitech , Babool
The nicher can play a role of specialist in the following ways
Channel specialist - large size distribution network Service specialist - one or
more services not available from other companies
L] Product feature specialistcertain type of product or product features
C] Product line specialist only one product
(| Geographic specialist certain locality, region or area
LJ Specific Customer specialist one or few major customers

[1] Customer siz specialist -(Small or medium or large-size)
V Rivalry Strategies
a) Cost leadership Strategy
A cost leadership strategy aims to exploit scale of production, well defined scope and other
economies (e.g. a good purchasing approach), producing highly standardized products, using
high technology
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b) Differentiating Strategy
It is the process of distinguishing a product or offering from others, to make it more attractive
to a particular target market. This involves differentiating it from competitors’ products as
well as a firm's own product offerings. (Design, Brand image, Technology, Service, Dealer
Network, etc)
c) Product Flanking Strategy
Introduction of various combination of products at different prices to cover the maximum
market segments
d) Confrontation Strategy:
A combination of Market-challenger Strategies (Frontal attack, Plank attack, encirclement
attack and guerilla attack)
e) Defensive Strategy;
Adopted by companies which are strong and not by the leader... attacking a perceived
weakness in the leader's strategy33
f) Offensive Strategy;
Strategy for market leader and attacking the competitors by introducing new products,
services
g) De marketing Strategy
Withdrawing a product which is enjoying good demand and satisfies the demand by some
other products, which it likes to popularise.
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1. Market penetration
Aims at increasing sales of existing products in the current market. It is achieved by
increasing the level of marketing efforts or lowering the prices. Status quo strategy
2. Product Development
« Development of new products for the existing markets
* Meeting changing needs and wants
* Match new competitive advantage
« Get the advantage of new technology
« Fulfill the requirements of new market segments
3.Vertical integration
Vertically integrated companies in a supply chain are united through a common owner.
Usually each member of the supply chain produces a different product or (market-specific)
service, and the products combine to satisfy a common need. It is contrasted with horizontal
integration.
* Backward Integration
« Forward Integration
* For New Markets
Differentiation strategy is one of the most important marketing strategies in
today’s business environment. With so many brands and so many varieties of products and so
much advertising noise, it becomes very difficult but ultimately very necessary to
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differentiate your brand from competition. Thus, Differentiation strategy is being u
lop companies for their products. There are various ways to differentiate your p
using a differentiation strategy.
1) Innovation / Invention
The best way to implement differentiation strategy is to invent or innovate. By inn
inventing, you become the market leader because your product is the first entr
market. Inventions are of course difficult and require regular R&D expend
innovations are more practical and are a Differentiation strategy used by tec!
companies like Apple and Google.
2) Product-level differentiation strategy
Observed in many industries, Differentiation strategy can be executed at product
which is known as Product differentiation. Taking an example of the tourism ind
packages of all companies are different and the tour package might have
differentiating factors. Some might be giving international tours whereas othe
giving national and regional tours only. Thus, by incorporating product diff
strategy at product level, the brands can use differentiation strategy themse
competitors in the eyes of the customer.
3) Price differentiation strategy
The most used form of differentiation strategy is price differentiation. In the abow
of tour packages, some brands might give the luxury package whereas other bra
give a cheap and affordable pricing. Mobile handset companies like Samsung
target the cream segment whereas companies like Micromax and Xolo target
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sensitive segment. Price segmentation is the biggest Differentiation weapon in the hands of
marketers.
4) Branding
Your promotion mix and the marketing communications of the company play a crucial role in
the differentiation strategy of your product. Companies like Pepsi and Coke rely heavily on
their branding efforts to convert the customer to their products. Thus, youngsters will like
pepsi, young adults will like Thums up, families will like Fanta, and Coke can be an all time
favourite for everyone. Your promotion mix helps you target the correct segment and hence
plays a crucial role in differentiation strategy.
5) Packaging
If you go to any publications and ask them what are the critical factors in selling a book, the
publication agency will say that, after the story of the book, the top cover of the book plays a
critical role in the success of the book. In fact, many a times, customers might buy a book
based on the top cover. Thus, packaging is important. The same can be seen when you enter a
mall and you have 100's of shelves with different types of cereals, soaps, shampoos,
detergents etc. At such a time, the color, the packaging, the taglines, the ease of handling can
play an important role in converting the customer to your brand. The tetrapack introduced by
Frooti in the Indian market was a wonderful example of Packaging playing a role in
differentiation strategy.
6) Service pre sale and post sale
Word of mouth marketing is another product differentiator and all brands targeting a niche
audience know the importance of word of mouth marketing. And how does word of mouth
marketing happen? Through very good pre and post sales service. Ever heard a friend say that
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not only does the restaurant serve good food, but the service and the ambiance are awesome
as well? Thats the service i am talking of. If your service is beyond customers expectation,
than that can be a big boost to your differentiation strategy.
7) Point of customer interaction
There are Sec A, B and C segment customers. You have to ensure that you take care of all
Kinds of customers when they interact with your company. For this, you have to take care of
point of interactions and ensure that the customer has a good experience whenever he
interacts with the company. In fact, banks and retail showrooms regularly have audits to
ensure that the front end staff is polite and helpful to customers because this can be a major
point for differentiation. A service company, which does not have good interactions with the
customer will always suffer in its profits and operations.
8) User convenience
The banking industry shows us an example of how User convenience can help you in your
differentiation strategy. The banks differentiate themselves with the type of net banking
services they offer as well as the number of ATM’s that they have in your vicinity. This is an
excellent example of differentiation through user convenience. If you are taking care of user
convenience, the customer will always come back to you. This is the reason why, even
though there are so many big retail] outlets in the market, the smaller shops still run well. This
is because they give personalized service to a handful of customers and the customers find it
convenience to shop at the local retail store.
9) Offer variety of products
Another way to implement differentiation strategy

is to attack the psychology of the
customers. Many a customer will tell you that they picked a brand just because the brand had
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more variety in the number of products it offered. A customer, during prospecting, likes to
have more variety so that he finds the right product and can pick that product for himself.
Thus, the more variety of products you offer, the more chances you have of getting a higher
positioning in the mind of the customer and therefore, differentiating yourself from
competition. This is a high investment strategy, because you need to invest in a product
line, but it is useful and profitable in the long run.
Thus, there are many ways for implementing a differentiation strategy. What the company
has to realise is that it cannot sit back and enjoy the customers loyalty today. In this
saturated business environment, each and every company has to take steps to differentiate
itself from competition and ensure that it has a high positioning in the customers mind. An
example of this is websites and google. If a website is not in the top 10 pages of google, than
it is likely to be ignored by 50-60% of the searchers on google. Thus, by improving your
website and your content, you can reach the top 10 on google and differentiate your website
from others.
Product life cycle [PLC] can be understood as “the period of time over which an item is
developed, brought to market and eventually removed from the market. First, the idea for a
product undergoes research and development. If the idea is determined to be feasible and
potentially profitable, the product will be produced, marketed and rolled out. Assuming the
product becomes successful and its production will grow until the product becomes widely
available. Eventually, demand for the product will decline and it will become obsolete.”
Every product passes through almost similar type of phases, which are known as the product
life cycle. Though all products have a different life cycle and several products do not pass
through all phases.
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In today’s highly competitive and rapidly changing scenario it is getting increasingly difficult
to predict any changes that may affect the very survival of the company. Given the
importance of predicting the business environment accurately, it is advisable to have a robust
technique which will help in anticipating the pattern of industry changes which one can
anticipate. One of the most reliable techniques for predicting the probable course of events in
the future is the product life cycle [PLC].
5 Important Stages:
Products, like people, have a life cycle. They are bom, grow, mature and finally decline and
die. The innovation of a new product and its degeneration into a common product is termed
as the life cycle of a product.
The product life cycle (PLC) identifies and explains the stages that a product may go through
from the moment it is launched on to the market to the moment it is withdrawn. Knowledge
of the PLC can help identify important marketing environmental factors that managers should
be aware of before they decide upon the most effective marketing effort.
There are five stages in the life cycle of a product are discussed below:
I. Introduction Stage:
At this stage the product is launched into the market, hence awareness and acceptances are
minimal. So here the emphasis should be on promotional activities so as to acquaint
customers with the product and gain acceptance.
In the initial stage with distinctive speciality a firm can charge a high price but as this
characteristic fades away and the product becomes a pedestrian one, he has to either soften
the pricing or bring a change in the product to create some fresh interest so as to compete
well with the new products that have entered the market.
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Advertising and sales promotions are extensively used in order to build awareness, encour
evaluation and trial and initial adoption.
ii. Growth Stage:
During this stage mass market acceptance will take place through early adopters. Growth '
be rapid, profits will emerge and all initial costs covered during this period. This stagi
marketed by increase in the number of competitors, major product improvements, etc.
Intensifying competition might lead to price reductions. An expansion of the distribui
network will be sought in order to facilitate market penetration in view of increasing press
from competitors.
iii. Maturity Stage:
When the product reaches maturity, sales growth continues but at a diminishing rate dui
declining number of potential customers. This stage represents the most competitive stag:
the life of a product but one in which profits are flowing in steadily. Special promotic
efforts are needed to attract new users to the product. During this stage emphasis is giver
opening new distribution channels and retail outlets.
iv. Saturation Stage:
There are now many competitors in the market, profits per unit have further declined
there is no growth in sales. It is time to consider new markets, changes in prices, promot
and introduction of new product versions or new products.
v. Decline Stage:
The product reaches a stage of declining sales as it faces competition from better product
better substitutes developed by the competitors. At this stage the product has to be redesig
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or the cost of production reduces so that they can continue to make some contribution to the
company.
The manufacturer may have to accept the gradual decline and ultimate withdrawal of the
product from the market or may try to revitalize it by introducing new product applications,
new packaging, a different advertising theme, new selling methods, new distribution channels
or new markets.
Strategies followed During Various Stages of Product Life Cycle are:
1. Strategies during Product Development Stage:
e® Focus is on product
* Emphasis is on cost reduction
e Trials are the main tools
e Exploring of the market starts
® Publicity of the product (about its coming)
e Minimum expenses to be maintained during this period
e Production capacity must be looked after
® Quality must be checked
* Focus on work is to be given
e <A good introducer of the product is required
e In-house working should be emphasised.
2. Strategies during Introduction Stage:
e Persuade people to try the products.
® Stress should be on advertising to inform the customer about the product
* Give introductory offers by providing some attractive gifts to entice the customers.
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Give a valid reason to the customers to buy the product
Dealers should be given good discounts
There should be selective distribution to focus on target customers
Skimming pricing should be followed to earn higher profits in the initial stages
Removing the product deficiencies must be focused on
3. Strategies during Growth Stage:
Aggressive advertising is required to stimulate the sales of the product
Availability of the product should be ensured to a large number of customers
Modifications or new versions of the product are required to be introduced to fulfil the
requirement of different customer classes. Strengthening of the distribution channels
is required so that the product is easily available wherever required.
Focus should be on developing the brand image through promotional activities
Competitive prices must be maintained to grab the market.
Activities should be customer oriented, an emphasis should be given on customer
services to satisfy them to a maximum level.
4. Strategies during Maturity Stage:
More and more emphasis is required on the brand image in order to differentiate the
product from products of the competitors.
More benefits may be provided to the customers e.g. extending the warranty period,
guarantee period etc.
Change in packaging may be introduced (Reusable packaging).
Packaging may be used as a silent salesman by making it more attractive.
Requirement to explore the new markets for the product.
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e New uses of the product may be developed.
« New users of the product may be developed.
e New Technology can be adopted to enhance the quality of the product.
e New features can be added to enhance the value of the product.
5. Strategies during Decline Stage:
® More emphasis on the promotional schemes
e Distribution cost should be reduced and the benefit should be transferred to the
customers
® More value addition to the product can be done.
« Packaging will play a very important role at this stage also, so it should be focused on.
e Cost of production should also be reduced.
® Economy packs of the products should be introduced.
« Try to increase the life of the stage
e Emphasis is on sales volume with minimum profit margins.
If after all these efforts company fails to restore its position in the market, than the best thing
for the company is to take out their existing product from the market and come up with a new
product comprising of unique features that can hit the market.
3.10 Competitive Strategies for leaders
Philip kotler, the eminent writer, has discussed the military-type marketing strategies for
competitors. He adopted many terms from military science to suggest suitable strategic
actions against the enemy. His work is based on many research projects and studies carried
outin the United States of America.
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Though the strategies are based on American economic and marketing systems, they are
equally applicable to other countries including India. He is the only expert and writer on this
topic who provides sufficient insights into the competitive dynamics. The entire portion of
the article is based on Kotler’s views.
Competitive Positions:
Normally, a firm occupies one of six positions in the target market:
1. Dominant:
The firm has control over other competitors. Naturally, it can enjoy more freedom to select
suitable strategic options.
2. Strong:
The firm doesn’t control behaviour of other competitors, but can take independent actions
without endangering its long-term position. Other competitors’ actions do not have a notable
impact on its position.
3. Favourable:
The firm is in position to exploit opportunities to improve its position. It has to constantly
adjust its strategies to continue enjoying the better-than-average opportunities. It has to
remain alert and struggle constantly.
4. Tenable (Average):
The firm has satisfactory performance, but has to suffer due to dominant and strong
competitors. It has less-than-average Opportunities to improve its position.
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5. Weak:
The firm has unsatisfactory performance. However, there exists opportunities to improve its
position. It must change or adjust constantly to exist.
6. Nonviable (non-survivable):
The firm has unsatisfactory performance and has no opportunity to improve its performance
and position.
Major Types of Competitors:
On the basis of market position, market shares, brand image, resources capacities, and
domination power (degree of control over others), there are broadly four types of
competitors, such as:
|. Market Leaders
2. Market Challengers
3. Market Followers
4. Market Niches
Every company must formulate different strategies to react with different competitors. Let us
analyse relevant marketing strategies for different position holders. Figure 2 shows broad
strategies for different competitors.
Marketing Strategies for Market Leaders:
Market leader has the largest market share in the relevant product in the industry. It has a a
dominant position in the market. Obviously, it leads other firms in new product development,
price change, distribution coverage, promotional activities, and novel experiments.
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The leader may or may not be respected by other firms, but other firm has to acknowledge its
dominance. Other firms can challenge, follow or avoid the market leader. In India, well-
known market leaders are Maruti Suzuki in cars, Hero Honda in two-wheelers, Hindustan
Unilever in consumer packages goods, Coca-Cola in soft-drink, McDonald’s in fast food,
Life Insurance Corporation in life-insurance, and so forth.
A few market leaders have monopoly in the market. They have to remain alert all the time
leadership to maintain their leader-position. Other firms are constantly challenging leadership
position. A litte mistake can plunge the leader into second or third position. It has to adopt
innovative practices in all the marketing areas. Sometimes, it has to incur excessive costs to
maintain the number-one position.
Figure 2: Broad Marketing Strategies tor Competiors
Marketing Strategies for Market Challengers:
Market challengers are known as runner-up firms. They occupy second, third and lower ranks
in an industry. Bajaj Auto in two-wheelers, Tata Motors and Hyundai in cars, Reliance Petro
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and Essar Oils in refineries, Pepsi-Cola in soft-drink, Procter and Gamble in consumer
packaged goods, Vodafone in cellular service providers, Sony and Samsung in cell-phone
instruments, etc,, are some of the market challengers in India.
Market challengers are capable to attack the leader and other competitors. Sometimes,
capable challengers can overtake the leader, too. Let us examine three-staged marketing
strategies available to market challengers. Figure 4 shows the market challengers’ three-stage
marketing strategies.
Defining Strategh Objectives and

Cheong
First Silage
mr
Second Stape
fi|e
“Third Stage
5 chy
Manvtactring-cost-reduction Strategy
intensive Aches tina cored Proommedions
Figure 4; [hree-stage Marketing Strategies for Market Challengers
Marketing Strategies for Market Followers:
The firms prefer to follow leader rather than to challenge are called the followers. They do
not face the leader directly. Some followers are capable to challenge but they prefer to
follow. However, market followers always react strongly in case of any loss.
In some capital goods industries like steel, cement, chemical, fertilizer, etc., product
differentiation is low, service qualities are similar, and price sensitivity is high. They decide
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to provide similar offers by copying the market leader. But, one must be aware that
followership is not always rewarding path to pursue.
Market followers prefer to follow the leader doesn’t mean that they don’t require specific
market strategies. They cannot be simply passive or a carbon copy of leaders. They must
know how to hold current customers and win a fair share of new customers. Followers must
keep manufacturing cost low and offer better quality products with satisfactory services. At
the same time, they must enter new markets as and when there are opportunities.
Marketing Strategies for Market Niches (Tiny Firms):
A niche is a more narrowly defined small market (limited number of buyers) whose needs are
not being well-served by existing sellers. Itis a small segment that has distinctive needs and
is, mostly, ready to pay high price. Marketers can identify niches by dividing a segment into
sub-segments or by dividing a group with a distinctive set of traits.
They may seek a special combination of benefits. Niches (small groups of buyers) are fairly
small and normally attract a few competing firms (nichers). A nicher is the small firm serving
only small specific groups of customers called as the niches. The firm’s marketing efforts to
serve the niches successfully is called nichemanship.
Nichers understand their niches’ needs so well and minutely that their customers are willing
to pay a premium price. They design special products with distinctive features, qualities,
uses, and value for special group of limited customers. They have the special skills to serve
the niches in a superior fashion and can gain certain economies through specialization.
For example, a footwear company can create niches by designing shoes for different sports
(like crickets, hokey, athletes, golf, etc.), 3nd exercises (like cycling, running, jogging,
waking, etc). In the same way, niches can be created in hotels, cosmetics, cloths, airways,
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hospitals, and others. Nichers can gain comparatively high returns. They can achieve high
margin while large companies can achieve high volume.
Smaller firms normally avoid competing with larger firms by targeting small markets in
which large firms have a little or no interest. Companies with low market shares can be
highly profitable through effective niching. Nichers have to perform three main tasks —
creating niches, expanding niches, and protecting niches. They have to remain alert for all the
time as they can be invaded any time by the large competitors
Balancing Customer and Competitor Orientations:
In practice today, companies have to be market-cantered: being able to watch their
competitors while developing strong relationships with their customers and delivering better
value than their competitors.
Product oriented company is one that pays little attention to the competitors and customers,
but focused solely on the development of product.
A competitor-centered company has its efforts focused on tracking competitors’ moves and
market shares while deriving strategies to counter them. Though this enables the company to
be always on the watch for one’s own weaknesses and others’ actions, the company may end
up being too reactive and may compromise itself in terms of innovation ability.
A customer-centered company on the other hand is more focused on customer developments
when designing its marketing strategies and delivering superior value to its target customers.
This is done through paying attention to the evolution of customer needs and deciding which
customer groups and emerging needs are most important to serve.
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® Ramaswamy, V.S and Namakumari S$, 2009. Marketing Management. [Third
Edition]. Macmillan India Lid, New Delhi.
Part-—A
1) Explain about marketing segmentation and their levels
2) What do you know about micro marketing
3) Explain four types of market segmentation
Part -B
1) Write about market targeting
2) What do you know building and managing brand equity
Part -C
1) Enumerate on how to develop and communicate positioning strategy
2) Write about the Growth Strategies for Existing Markets
3) Brief in detail about Differentiation strategies
4) Explain in detail about Product Life Cycle Strategies

5) What are the strategies for leaders, briefly explain?
e ForQ.No.! in Part A refer section No.3.1
® For Q.No.2 in Part A refer section No.3.2
* For Q.No.2 in Part B refersection No.3.5
« For Q.No.1 in Part C refer section No.3.6
e ForQ.No.2 in Part C refer section No.3.7
e For Q.No.3 in Part C refersection No.3.8
* For Q.No.4 in Part C refer section No.3.9
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UNIT-4
Objectives
e Understand about products and their classification.
e Knowing about developing price strategies.
e Understand the role of marketing channels.
Unit Structure
4.1 Product Characteristics and Classification
4.2 Industrial Goods
4.3 Product and Brand Relationships
4.4 Developing Price Strategies and Programs
4.5 Initiating Price Increases
4.6 Customer reactions
4.7 Role of Marketing Channels
4.8 Types of intermediaries
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4.1 Product Characteristics and Classification
Definitions of Product:
Term product has been variously defined by the experts in the field.
Philip Kotler:
“Product is anything that can be offered to someone to satisfy a need or a want.”
Characteristics of Product:
Careful analysis of concept of product essentially reveals following features:
1. Product is one of the elements of marketing mix or programme.
2. Different people perceive it differently. Management, society, and consumers have
different expectations.
3. Product includes both good and service.
4. Marketer can actualize its goals by producing, selling, improving, and modifying the
product.
5. Product is a base for entire marketing programme.
6. In marketing terminology, product means a complete product that can be sold to
consumers. That means branding, labelling, colour, services, etc., constitute the product.
7. Product includes total offers, including main qualities, features, and services.
&. It includes tangible and non-tangible features or benefits.
9. It is a vehicle or medium to offer benefits and satisfaction to consumers.
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10. Important lies in services rendered by the product, and not ownership of product. People
buy services, and not the physical object.
Classification of Products:
Goods or products are classified as either consumer goods or industrial goods. Consumer
goods are produced for the personal use of the ultimate consumer, while industrial goods are
produced for industrial purposes. There are many goods, such as typewriters and stationery
can be classified as both industrial and consumer goods.
1, Consumer Goods:
Consumer goods are generally classified into five different types:
Convenience goods
Shopping goods
Specialty goods
Impulse goods
Emergency goods.
i. Convenience Goods:
Convenience goods are bought with a minimum of shopping effort. These goods are bought
with the maximum of convenience such as ready availability and the satisfaction of
immediate requirements, standard quality and more or less uniform price. Typical examples
are cigarettes, grocery products, drugs, newspapers, etc.
Characteristics of convenience goods are:
(a) They are non-durable —they are frequently required.
(b) They are often bought by hand.
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(c) They are often bought by habit, without much deliberation.
(d) They are inexpensive and are not worth going and bargaining from shop to shop.
Since shopping convenience is most important, place is a vital factor. Customers will not go
out of their way to purchase convenience goods; frequently the purchase is not planned. For
successful marketing, convenience goods must be placed in as many outlets as possible.
Customers will not search for these goods and they must be placed in front of them wherever
possible. Convenience goods need minimum shopping effort and maximum exposure.
Convenience goods need large promotion budget.
ii. Shopping Goods:
Shopping goods are those goods which are bought by consumers after some shopping, 1.e.
making comparisons about their price, quality and suitability. Before purchasing such goods,
the shopper usually visits several stores. Typical shopping goods are furniture, car,
appliances, shoes, etc.
Characteristics of shopping goods are:
(a) They are relatively durable and long-lasting.
(b) They are generally high-priced items.
(c) They require much shopping time.
(d) They do not stores brand identification.
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Shopping goods are of two types — homogeneous goods and heterogeneous goods.
Homogeneous goods are considered to be of equal quality, suitability and styling and
comparison with competing goods is limited to price. Examples of homogeneous goods are
TY sets, refrigerators and washing machines.
Heterogeneous goods are the goods that the consumer compares for quality, suitability and
styling with the price being relatively unimportant. Furniture, famous brand clothing are
examples of heterogeneous goods.
Shoppers generally do not know all the characteristics of the goods they buy and part of the
shopping effort is spent for learning about the product. For example, an automobile purchaser
learns about the features of a particular model from the salesperson. Unlike convenience
goods, shopping goods are planned and there is no rush to get the product.
Since the customer is willing to visit more than one shop for shopping goods, such goods do
nol require a Maximum number of outlets. It may, however, be noted that all consumers do
not shop to the same extent for shopping goods as they do for convenience goods. In
particular, rich consumers would just walk to a well-known shop and purchase their
requirements from there.
The advertising of both homogeneous and heterogeneous shopping goods is usually the
responsibility of the retailer, although many producers encourage the promotion through
advertising.
iii. Specialty Goods:
Specialty goods are those goods for which consumers are willing to make a special
purchasing effort. Substitutions will not be made because of a brand name or a characteristic
that the customer insists upon. In the case of shopping goods consumers move from shop to
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shop unaware of the particular type of products that suit them as regard to price, quality or
style.
In other words, their minds are open for the choice. But specialty goods possess such unique
characteristics and brand identification that the consumers would make any effort to have that
particular product. In other words, they know what special type of products they want.
They have to only spend time and energy to locate the shops where it is available. A Titan
watch, a Maruti Zen car, a Reid and Taylor men’s suits are examples of specialty goods.
Every producer would like his product to be classified under the specialty goods label. Such
goods are the most sought after and yield the highest profits.
Characteristic of speciality goods is the customer’s insistence on the particular product. As
regard to place, this insistence brings about a willingness to travel a considerable distance to
make the purchase. As a result, specialty goods are generally restricted to single outlet in
each region, Middlemen are rarely found in the distribution channels of specialty goods. This
provides a very close relationship between the manufacturer and the retailer which is
beneficial to both parties.
Much of the advertising of specialty goods is done by retailers, frequently with the
cooperation of the producer. Mass media as newspapers and magazines are used and
advertisements simply remind the public where the product can be bought.
iv. Impulse Goods:
Some authors consider impulse goods to be a specific type of convenience goods. Impulse
goods are those bought without planning. Consumers have no pre-thinking about their
purchase nor do they indulge in any serious deliberation to purchase them. The decision to
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purchase is taken on the spot and generally induced by some attractive sign or symbol or by
some special canvassing.
A man goes to a market with a shopping list. If he buys a new cosmetic that was not in his
list, that purchase is impulsive. Impulse goods are relatively low-priced products such as
cosmetics, foods, books for light reading in railway stalls, etc.
Impulse goods are highly competitive and sensitive to price differences. One reason is that
substitutes are easily available. Impulse goods require massive advertising in the largest
media and it is the responsibility of the producer. Since the location of the store is vital to the
success of impulse goods, producers develop high budgets to points of purchase and displays.
v. Emergency Goods:
Emergency good is purchased immediately to fill an urgent need. They may be convenience
goods or shopping goods, for example, a sudden need for an umbrella or drug.
Most of the goods sold under emergency conditions are convenience goods. Market strategy
for emergency goods is mainly concerned with getting them to the places where the customer
expects them.
Many retailers stock emergency goods in anticipation of their customers’ needs. A producer
promoting his convenience goods is promoting his emergency goods at the same time, since
they are the identical goods sold under different conditions. Promotion of such goods needs
nothing more than informing the neighbourhood customers of the stores location and working
hours.
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vi. FMCG:
Fast Moving Consumer Goods refer to non-durable products such as grocery items, toiletries,
cosmetics, etc. A consumer generally spends a minimum effort to secure them. FMCGs can
be further subdivided into three classes — Convenience goods, Shopping goods and
Speciality goods.
An FMCG has the following characteristics:
(a) Frequent Purchase:
These goods are frequently purchased by the consumers. A product like soap is bought very
frequently. It is an inexpensive product and is available almost everywhere.
(b) Low Involvement:
FMCGs are low-involvement goods. When a customer walks into a shop to buy a packet of
salt, he rarely makes an effort to choose the item. There are exceptions to this rule. Products
like cigarettes, though an FMCG product, are found to command a high level of brand
loyalty. Once a consumer gets used to a particular brand of cigarettes, he does accept any
other brand.
(c) Low Price:
FMCGs are usually low-priced products. Low price of the product puts these products in the
low involvement category.
(d) High Volumes:
The market for FMCGs is characterized by high volumes. A small family may use three to
four cakes of soaps in a month. If that number is multiplied by the number of such families
throughout the country, there will be an enormous number.
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(e) Low Margins:
Because of cut-throat competition these products are sold at a price which is very close to
their production costs and the margins offered to the distributors are rather low.
(f) Extensive Distribution Networks:
Consumer preferences for the FMCG products are not rigid. Generally a buyer asks for a
product but accept whatever brand is given by the shopkeeper. The notion of brand loyalty is
not prevalent in a large section of the market. The consumer will allow the shopkeeper to
decide for him. In view of such customer behaviour, it becomes necessary for companies to
make sure that their product is well distributed.
(g) High Stock Turnover:
FMCGs have a very high stock tumover. This is due to the fact that these products are bought
frequently and at regular intervals. In other words, these goods have a short shelf life.
The basic characteristics of fast moving consumer goods. Now we shall consider various
growth strategies followed by FMCG companies.
The success of an FMCG depends greatly on its marketing strategy. A marketer follows a
wide combination of strategies.
More important ones are discussed below:
(1) Multi-Brand Strategy:
A firm often nurtures a number of brands in the same category. There are various motives for
doing this. The rationale behind this strategy is to capture as much of the market share as
possible by trying to cover as many segments as possible as it is not possible for one brand to
cater to the entire market. Consider the strategy adopted by Hindustan Lever.
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They have introduced many brands in the soaps market so that no segment is left untouched.
It has Dove for ultra-premium segment, Lifebuoy for the economy segment and brands like
Rexona, Liril and Lux for the intervening segments. Thus the company has covered itself
against competition and captured market shares in every possible segment.
(2) Product Flanking:
Product flanking refers to the introduction of different combinations of products at different
prices to cover as many market segments as possible. It is fundamentally offering the same
product in different sizes and price combinations to tap diverse market opportunities.
(3) Building Product Lines:
Some companies add related new product lines to give the consumer all the products he
would like to buy under one umbrella. Britannia has precisely adopted a similar strategy. It
has introduced a wide variety of biscuits in the past few years.
(4) New Product Development:
Owing to the intensive competition between most products, companies which fail to develop
new products are exposing themselves to great risks. Companies develop new products to
compete with existing similar products or services or to improve an established product or
service.
A company can add new products through the acquisitions of other companies or by devoting
one’s own efforts on new product development. With the help of new products a company
can enter an expanding market for the first time and supplement its existing product lines.
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(5) Innovations in Core Products:
In the FMCG market, the life of a product is short. Marketers should therefore continually try
to introduce new brands to offer something new and meet the changing needs of the
customers.
(6) Advertising and Media Coverage:
Advertising is required to build awareness about an FMCG which is available in the market
but not many people might know about it. Informative advertising is important in the
pioneering stage of a product while persuasive advertising becomes important in the
competitive stage. Most advertising falls into this category. Reminder advertising is quite
common with mature products.
4.2 Industrial Goods
In many cases the same goods may be classified as industrial or consumer goods, but
classification is important because their market strategies required in the distribution of the
two are entirely different.
Industrial goods may be divided into the following categories:
i, Raw Materials:
Raw materials used in the production of other goods are called industrial goods. Such goods
may be sold in their natural state or may be processed.
(a) Natural products such as iron ore, crude petroleum, lumber.
(b) Farm products such as livestock and agricultural products, fruits, cotton, vegetables, etc.
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Raw materials in their natural state are characterized by limited supplies and small number of
large producers. Since extractive industries must be located where the product is found, the
cost of transportation is a major part of the total cost of product. Marketing strategy should
reduce the cost of transportation. Brand identification is unimportant to industrial users, who
are more concemed with low prices and certainty of supply.
Agricultural products are sold in the industrial market to businesses like restaurants, hotels,
packers. Such goods must be graded and standardized. They are generally produced by small
farmers. This means that the goods need a great deal of handling which can be done through
long channels of distribution. Many middlemen are necessary to deliver the goods from the
farmer to the industrial user. Little attention is paid to the promotion of agricultural goods
that are destined for industry.
ii. Fabricating Materials and Parts:
Many manufacturers purchase rather than construct some of the component parts of their
product. These parts become part of the product. The automobile industry is a classic
example of the industrial market for fabricating materials. The major producers are
essentially assembly plants that put together such parts as tyres, batteries, etc., that have been
purchased from affiliated companies rather than internally produced.
Producers of fabricating materials and parts are usually located near their important
customers. Sale of such goods is usually by contract and for a long period of time and as a
result marketing is minimal.
iii. Installations:
Machinery and equipment of an industrial producer are depreciated by long use and new ones
are to be installed. Examples are blast furnaces, locomotives, factory buildings, etc.
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Middlemen are rarely used for the purchase of installations and the ch:
short, running from the producer directly to the industrial user. T)
products should only be entrusted to engineers trained in selling.
iv. Accessory Equipment:
Accessory equipment facilitates rather than perform the basic operatic
plant. Small motors, computers, office furniture are examples of
Advertising and other sales promotion strategies are used in marketing
The more expensive is the accessory product, the shorter is the channel
because the higher-priced articles have a smaller market and their sal
make it worthwhile for a producer to send a salesman to a prospective ¢
v. Supplies:
Supplies are materials used in the operation of a business that do nol
finished product. Lubricating oil, coal, stationery are examples of sup
convenience products of the industrial market. They are relatively Ic
bought in small quantities. The channel of distribution for these goods
are frequently negotiated in large contract lots by top executives.
Low cost industrial supplies need extensive channels of distribu
carrying the lines of many manufacturers, are able to have their salesn
and sell large quantities of the goods of various producers to make the¢
vi. Services:
Nearly half of all consumer expenditures are for services. There is a bi
services. Realizing this, many large organizations are moving into t


example, in USA, Gerber, the baby food company, owns nursery schools and Coca-Cola has
entered the education market.
The growing complexity of business has reached a point where even the largest
manufacturers are unable to fulfil all their needs internally. When they face problems, they
turn to highly specialized service companies for help. These may be trained engineers or
Management cons ultants or programmers.
Generally, outside service companies are used when the cost of self-servicing is higher than
the cost of buying the service.
Services are defined as activities, benefits or satisfactions which are offered for sale or are
provided in connection with the sale of goods.
Services are:
e Intangible
« Perishable
* Unstandardized
e Based on buyer involvement.
Services cannot be seen, touched, tasted, smelled or heard. They are difficult to display,
demonstrate or illustrate. Por this reason, they cannot be marketed by normal promotion but
need special and imaginative programmes.
Perishability of services is obvious. Most services are used up the moment the job is done.
When the move is over the service is complete. Services cannot be stored for later use.
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Services are difficult to standardize. Different hairdressers will give different results. Buyers
are very much involved in the service product. Tax specialists give advice on the specific
problems of each of their customers.
Since sales of services are essentially one-on-one transactions, personal selling is the most
important marketing feature and service industries depend heavily on training programmes.
Some marketers advocate the creation of a tangible product in the minds of their potential
customers. Service companies often charge cost-plus while others charge, what the traffic
will bear.
The most important factors in the success of a service company are speed and satisfaction.
For that purpose, they must be located near its customers, maintain an adequate stock of parts
and should have sufficient number of skilled service personnel. Services are rarely sold
through middlemen. The normal distribution channel is from the service company directly to
the user.
4.3 Product and Brand Relationships
A Brand is a recognized name in a market, through which client can associate with, in today's
world brand has actually ended up being rather essential, need for top quality product has
actually increased dramatically. The factor behind this pattern is that individuals presume that
top quality items transcend in quality and provide more fulfillment compared with non top
quality product, with increasing per capita earnings a growing economies there is a
considerable boost in need for top quality items. And here comes the relationship in between
the brand and a product, when a client purchases a product of particular brand, he has
expectations that have actually been set by the online marketer while marketing the product,
and it’s needed that these expectations are satisfied by the product.
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If the quality of product being provided by that brand is constant throughout the time, brand
image stays in the hearts of individuals just. Whenever a particular brand presents some
brand-new product, individuals have expectations from their previous experience with the
brand and they anticipate the very same or often much more, it's crucial for a product to
please their expectations. There is a direct relationship in between a product and its brand
since a product is exactly what represents the brand, so if the product stops working the brand
experiences an obstacle as well as one stopped working product can show to be deadly since
of the stiff competitors in the market.
Disney has number f kids toys, motion pictures, amusement parks to its name and they all are
offered under | brand name DISNEY. The services and items provided by Disney are
constantly of high requirements and constantly attempt satisfy the consumer expectations,
which has actually positioned Disney in the list of many relied on and appreciated Brand
names Bad service or bad quality items can damage Disney's image terribly, in their theme
park this brand ensures that whatever depends on the mark and if it's not it takes all the step
to enhance it, this is exactly what makes it stick out of the crowd, and | error can shatter the
image.
We can presume now that how crucial is the relationship in between the brand and a product,
both depend on each other some or other method, it's difficult for a product to be effective
without having a great brand, and it's hard for a brand to make it through without having
excellent quality items under its umbrella. By carrying out 5 minutes interview with 2 various
individuals choosing Cadbury and Nestle as their brand names, it was rather clear that ads of
these 2 brand names have a strong effect in their minds. While conversation, it was
discovered that Cadbury is a traditional brand that stresses on all ages right from kid to old
age. Hence, they desire if brand would have been an individual, they desire to see Cadbury,
either as an old individual, kid, dad, mom or child, any individual of any age.
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The function of this research study is to check out the developing nature of brand
relationships and their function in intake pattern shifts in the lives of migrants. The
theoretical structure develops around the principles of identity cosmopolitanism, story, and
brand relationships. Ties to and memories of the previous self are kept through the usage of
brand names and items from house. Brand relationships are discovered to play a popular part
in identity shift. In the case of Fazer Blue, the long-lasting brand relationship is safeguarded
by love felt towards the brand. Brand self-connection which includes the existence of
psychological connection, the scientist established a scale to match the homes of brand
construct, and created tools to determine to tap brand self-connection and brand sensations.
The goal of the short article was to figure out whether brand accessory includes worth: to be
successful the brand needs to contro] others which might be done though awareness, repeated
marketing the brand need to intend to establish an association as it would lead to commitment
which would allow the company to produce money circulations in future.
By performing 5 minutes interview with 2 various individuals choosing Cadbury and Nestle
as their brand names, it was rather clear that ads of these 2 brand names have a strong effect
in their minds. In the case of Fazer Blue, the long-lasting brand relationship is secured by
love felt towards the brand. The scientist specifies conceptual homes as the strength of the
brand to produce abundant retention network with the brand the customer is able to quickly
remember the brand. Brand self-connection which includes the existence of psychological
connection, the scientist established a scale to match the homes of brand construct, and
produced tools to determine to tap brand self-connection and brand sensations. The goal of
the short article was to figure out whether brand accessory includes worth: to prosper the
brand should control others which might be done though awareness, recurring marketing the
brand should intend to establish an association as it would lead to commitment which would
make it possible for the company to create money circulations in future.
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4.4 Developing Price Strategies and Programs
Marketing mix for companies comprises of 4 Ps Product, Price, Place and Promotion. Price is
directly related to bottom-line of any business. Profitability of product is required for future
operation of the company. Price strategy should communicate to the customer the value
company is providing.
There is in-numerable price related challenges in the market for companies. Furthermore,
with the advent of internet customer awareness for pricing information has improved. Sites
like Priceline and eBay are encouraging customer to name their price for products as well as
services.
Pricing strategy is dynamic in nature and should reflect changing condition in competition as
well as the market. Overall price strategies follow six step models:
Step 1: Pricing can facilitate in achieving the positioning objectives of the company. If the
company is facing tough competition or running at over capacity then price would be set
taking into account the variable cost and some part of fixed cost. This strategy is a short term
in nature. If the company is looking forward to maximizing profit then it sets higher price by
considering competition and cost. This strategy has risk of running into trouble with
consumer or legal issue. If the company is looking forward to improving and maximize
market share then it will set lower price as to generate maximum volume. Companies looking
forward to introducing new technology and revolutionary product look to set market
skimming price.
Step 2: Law of economics says that at every price level, there is a definite demand for the
product. However, this law varies with nature of product, for example, commodity demand
will fall with the rise in the price and for luxury good demand will rise with a price increase.
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Companies need to plot the demand curve with respect to price as to understand price
sensitivity. This demand curve can be estimated using statistical methods by analyzing
historical data or by perform price related experiments to understand what customers are
willing to pay or through market research and putting the question directly to the customer.
Step 3: companies need to manage cost for to be left with respectable margin of profit.
Companies need to establish a level of production at which fixed and variable cost can be
maintained. Generally, it is observed that production level increase cost per unit decreases
owing to the learning curve effect which comes through experience. Activity based costing is
getting in prominence as to allocate the cost properly which helps in estimation profit
correctly. Another way of cost setting is through the target costing, made famous by Japanese
companies. In target costing companies set price and profit level. After which they
concentrate on cost as to maintain the profit level.
Step 4: companies need to pay particular attention to what competition is doing with respect
to price, cost and promotional offer. Companies need to be aware by how much competitors
can vary their price against the price set by the company.
Step 5: There are various method used to the set the price. Most common is the mark up
method where price is set at a desired profit level. Target return pricing method talks about
setting price based on return on investment set by the company. Perceived value pricing
method talks about setting price based on the perceived value in consumer price and
companies ability to deliver that value. In value pricing method, companies charge lower
price for high quality product from loyal customers. This method is usually seen in the super
market. Auction type pricing, going rate pricing and group pricing are other pricing methods.
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Step 6: following above the five steps companies can now make the final choice of price.
This final price is set looking at consumer perception towards quality and product.
Positioning as per the marketing and advertising campaign also determine final price.
Pricing should adapt to factors like geographical location, market segment and economic
conditions. Companies should remain flexible towards pricing policy and change as per
market dynamics. Companies should also not react blindly to price change by competition
rather should focus on analyzing the underlying motives.
Setting & Price Adapting:
Pricing strategy is a huge element of an overall marketing strategy. In some cases, companies
establish a set price for a good or service that is constant across the business. However, some
companies use adaptation strategies, which mean different customers pay different prices in
certain circumstances. This approach has some merits but also some marketing management
risks,
Promotions and Discounts
One of the most common forms of adaptation involves the use of special pricing and
discounts. A furniture store might offer free delivery to a customer who buys $1,000 or more
in products, for instance, but not to one who only purchases $300 in goods. Similarly, a
manager at one store may discount a product that doesn't sell well, but the other stores in the
chain may maintain a constant price point. Coupon promotions are a common tool to discount
for price-sensitive buyers without offering a promotional price to everyone.
Geographical Pricing
Another common adaptation approach is geographical pricing. Instead of having a company-
wide price, you set prices based on geographical factors. The costs of property, materials,
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equipment and labour can vary in different regions or countries. Thus, some businesses adjust
prices to maintain a consistent profit margin. You might also price based on varying
geographical demand for particular goods and services, and the income levels of customers in
a particular marketplace.
Discriminatory Pricing
Though the term itself sounds negative, discriminatory pricing is a fairly common adaptation
strategy. With this strategy, you charge different prices to customers based on certain factors.
Student discounts and senior citizen discounts are often used by companies to attract or cater
to these particular customer types. Sports and entertainment venues routinely apply
discriminatory pricing by charging different prices for seating for events. Airlines adjust
ticket prices based on the timing of your purchase. Some companies also offer discounts if
you buy goods or services in advance.
Bundle Pricing
Bundle pricing means that your total price is based on how many products or services you
purchase in combination, though individual prices are constant. A customer of a
telecommunications company might pay less per service if he carries local, long-distance,
mobile, Internet and digital television services with the same provider. Someone buying one
or two services individually would likely pay more per service.
Marketing Management Consideration
From a marketing management perspective, you have to weigh the long-term revenue, profit
and customer-retention benefits and risks of each adaptation approach. In general, if a
strategy alienates a sizable portion of your core customer group, it likely isn't a good idea.
Many companies catch flack from existing customers when they offer better "new customer”
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incentives than were previously offered. Some companies accommodate upset customers to
retain them, but they may still suffer some negative word-of-mouth advertising.
Initiation Price Changes:
Companies are bound to face market situations where they are required to initiate price
changes. It means, either they are to cut the prices or increase the present prices to survive,
maintain status quo or further growth. Initiating price changes involves two possibilities of
price cuts and price increases.
Initiating Price Cuts:
There are good many circumstances where a firm is to resort to price cuts.
There are genuine reasons for cutting prices:
First may be existence of excess capacity. In such situation the firm is badly in need of
additional business and cannot generate it through increased sales efforts, product
improvement or even price rise.
It may resort to aggressive pricing, but in initiating price out, the company may trigger a price
war. Second reason for initiating price cut is a drive to dominate the market through lower
costs.
Here, either the company starts with lower costs than its competitors or it initiates price cuts
in the hope of gaining the market share and lower costs to price cutting policy involves the
following possible traps:
1. Low-quality trap:
Consumers will assume that quality is low.
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2. Fragile-market share trap:
A low price buys market share but not market loyalty. The same customers will shift to any
lower- priced firm that comes along.
3. Shallow-pockets trap:
The higher priced competitors may cut their prices and may have longer staying power
because of deeper cash resources.
45 Initiating Price Increases
Price increase is a source of maximising the profit or maintaining it if done carefully. Say a
company eams 3 percent profit on sales, and one percent price increase will increase profits
by 33 per cent if sales volume is not affected.
The factors leading to price increase can be:
1. Increase in cost inflation. That is rising costs unmatched by productivity gains squeeze
profit margins and lead companies to regular rounds of price increases. Companies often raise
their by more than the cost hike, in anticipation of further inflation or government price
controls, in a practice called anticipatory pricing.
2. Over demand can be another cause that leads to price increase. When the company cannot
supply all of its customers, it can raise its prices, ration or cut supplies to customers or both.
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The price can be increased by at least four ways:
1. Delayed quotation pricing:
Here, the company does not set final price until product is finished or delivered. T
is prevalent in industries with long production lead times like construction
industrial equipments.
2. Unbundling:
The company under this plan maintains its price but removes or prices separately o
elements that were part of the former offer, such as free delivery or installation.
Automobile companies, sometimes, add antilock brakes and passenger-side
supplementary extras to their whiles.
3. Escalator clauses:
Under this, the company asks the customer to pay today’s price and all or part of an
increase that takes place before delivery. This hike based on specified price inc
escalation clauses are quite common in construction line whether it is a house o1
project or air-craft and ship building.
4. Reduction of discounts:
The company asks the sales force to offer its normal cash and quantity discounts
rate. To gain four such attempts, the company must avoid looking like a pri
Companies also think of who will bear the brunt of the increased prices.
It is so because, customer memories are long, and they can turn against the compar
perceived as price gauger.


Reactions to Price Changes:
Naturally any price change provokes response or reaction from customers, comp
distributors and suppliers and even the government. Here, we shall touch only the react
consumers and competitors.
4.6 Customer reactions
Consumers are more interested in knowing the cause or causes of price change.
A price cut can be interpreted in several ways:
« The item or product is about to be replaced by a new model.
e = The item is faulty and it is not selling well.
«® The firm’s financial position is badly affected.
« The price will come down further.
e The quality has been reduced.
A price hike may have some positive meanings:
* The items is “hot”
e It has a high value because of quality.
Competitor Reactions:
Competitors are most likely to react when the number of firms is few, the pro
homogeneous, and buyers are highly informed. Competitor reactions can be a
problem when they have a strong value proposition. The price hike them to take step:
on objectives of such price hike where they will resort to advertising and product imf
efforts.
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In case of price cuts, they have different interpretations:
1. That the company’s trying to steal the market
2. That the company is doing poorly and trying to boost its sales
3. That company wants the whole industry to reduce prices to stimulate total demand
4.7 Role of Marketing Channels
A marketing channel is a set of interdependent organisations involved in the process of
placing products and services with consumers.
The introduction of intermediaries between the manufacturers and the final consumer is
adopted by many organisations to facilitate the distribution of their products, especially
where a wide distribution will provide maximum exposure of their products.
Manufacturers of snack foods, pies, cigarettes and many similar products require mass
distribution in often small quantities. This distribution makes the demand management
process by one company difficult to achieve cost effective distribution.
In situations where many deliveries are made to retail outlets, the intermediaries can reduce a
large portion logistics costs, and distributors endeavour to act as middle-men for many
manufacturers. This increases their profitability and can lead them to offering lower
distribution costs.
One disadvantage in using marketing channels is that the manufacturer relinquishes a level of
control over the products, as well as increasing their distance from the end consumer.
The parties involved in the marketing channel render various key functions which increase
the effectiveness of placement through the channel. The functions are:
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« Information gathering and distribution
* Product promotion
« Arranging contacts and matching products to meet buyers needs
e Negotiation of prices and financing the costs of the activities in the channel
*® Physical distribution of products through the channel.
Channel design decisions:
Manufacturers face several channel design decisions. Manufacturers often struggle between
what is ideal & what is practical in the designing marketing channels. Having limited capital
offer limited sales in a limited market area of a firm. In these cases, this firm needs to choose
the best channel that’s more effective. There is a problem that how to convince one or few
good intermediaries to handle the line.
If these intermediaries become successful then new segment may select to enter. In the small
markets, producer directly sells to retailers but in the large market, producer chooses
distributors to persuade consumers.
For maximum revenue, channel analysis & channel design decision plays a vital role. This
channel design calls on analyzing consumer needs, setting channel objectives, identifying
major alternatives, evaluating those alternatives.
Analyzing consumer needs
Previously we learned that marketing channels are the part of the overall customer value
delivery network. Each channel member adds value to the customer. In this case, designing a
marketing channel, the producer needs to find out some questions like
e What the target consumers want from the channel members?
« Does the consumer want to buy from nearby locations?
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® Or are they willing to travel to more distant?
* The way of purchasing system of consumers.
« Do they value the breadth of assortment?
e Do they prefer specialization?
* Do consumers want many add-on services like delivery, warranty, repair, installation,
and credit terms?
e Will the obtain these services elsewhere?
2. Setting channel objectives
In this step, the company should decide its marketing channel objectives. The nature of the
company, its products, marketing intermediaries, competitors & environment is influenced
the channel objectives.
3. Identifying major alternatives
It has too many major alternatives. Here, I°ll discuss three major alternatives.
4.8 Types of intermediaries
At first, a company identifies the different channel members who can work for the producer
to carry out its channel work. For example: at first, Dell directly sold to final consumers as
well as business buyers. Dell uses the phone call or intemet marketing channel to sell directly
to the customer. But at present to match with its competitors HP or Apple, dell starts indirect
selling through retailers & value-added resellers, independent distributors.
The number of marketing intermediaries: At each level of marketing intermediaries, a
company must determine the numbers of channel members. There’re three strategies
available.
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Intensive distribution: Intensive distribution is a strategy in which sellers collect products as
many as it can & make them stored for future selling.
Exclusive distribution: Exclusive distribution is a strategy in which the producer gives the
right to a limited number of dealers to distribute the company’s products.
Selective distribution: Selective distribution lies on between intensive & exclusive
distribution. It has more than one but less than all intermediaries who're worked for carrying
out the company's products.
Responsibilities of channel members: All the channel members should agree on the terms &
conditions with the producer. They should maintain their responsibilities & agree on price
policies, territory rights & sale conditions. At first, producer fixed a list price for channel
members than the channel members set discount price for customers. These members are
much concer about their territory & their customers.
All the channel members should work together. Because mutual understanding between them
can be so effective.
Evaluating the major alternatives
Imagine, after identified of all major channel alternatives, a company wants to select one
segment that will satisfy in the long-run objectives. There’re three core factors that will affect
the channel —
Economic: After using economic criteria, a company can get the better idea about it sales,
costs & profitability in the different alternatives channel. Like, how much investment will
need in the future? What’ll be the results in the near future?
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Control: All companies must consider the contro] issues. It means the company should give
less control over the marketing of the product. But others things should keep equally if
possible.
Adaptability criteria: Finally, a company needs this adaptability ability to cope up with the all
favourable or unfavourable situation.

® Rajan Saxena. 2009. Marketing Management. [Fourth Edition]. Tata-McGraw Hill,
New Delhi.
Part-A
1) Explain about Product Characteristics and Classification
2) What do you know about Industrial Goods
3) Explain Product and Brand Relationships
Part -B
1) Write about Developing Price Strategies and Programs
2) What do you know about Initiating Price Increases
Part -C
1) Enumerate on Customer reactions
2) Write about the Role of Marketing Channels

3) Brief in detail about Types of intermediaries
4,11 Answer for CYP Questions
* For Q.No.1 in Part B refer section No.4.4
e For Q.No.1 in PartC refer section No.4.6
* For Q.No.2 in Part C refer section No.4.7
« For Q.No.3 in Part C refer section No.4.8
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UNIT-5
Objectives
® Understand about marketing communication.
e Knowing about new product development process.
*® Understand about concept testing
Unit Structure
5.1 Role of Marketing Communication
5.2 Develop an Effective Communications
5.3 Deciding and managing marketing communication mix
5.4 Direct Marketing And Interactive Marketing
3.5 The New Product Development Process
5.6 Concept Testing
5.7 Consumer Adoption Process
5.8 Types of Meanings and Purposes of Control and Evaluation
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§.1 Role of Marketing Communication
While ‘planning communication strategy’ the wa
both planning and strategy. Communication has
transmitting knowledge and being a channel for ¢
within itself the potential for generating change
Tesponse systems.
Communication has critical role to play in the new
have easy access to local markets and can deliver|
has not kept itself abreast of developments ir
changing nature of consumer demand. To safegu:
nurture its channels of communication to enable
challenges.
Primary Influences on Consumer — The Basis 0
This study of communication strategy begins by t:
customer and his wants are not taken to be static '
exercise that recognises the involving nature of
influences working on him. Instead of using pred
seeking those cues that can help to comprehend th:
To understand the primary influences on the cu
which are the main influencers. These influenc
customer. The internal influencer is the ‘inner d
being expressed in two ways i.e. seeking better *
affected by the position of the customer in Maslo:


level of need hierarchy may express their individuality and creativity in a different way while
seeking better value. The inner influencers form part of the customers private ‘self’.
Communication is the common thread that not only ties up the customers private ‘self with
the ‘outside influencers’ but also has a role in linking the outside influencers with each other
too.
The outside influencers are:
Growth of knowledge and information
Technology and its ability to deliver products
The socialisation process.
The growth of knowledge and availability of information has an impact on the process of
technology development. This creates not only the present products but also new products
through efforts of firms. Technology influences the way customers fulfill their needs. This
sometimes has social implications. Often these may be hidden influences.
While seeking better value is an inner desire of all customers, it is the individuality of
customer which enables segmentation. All customers do not seek greater value in exactly the
same way. They have their individuality of needs. Creativity is another important variable
which imparts the element of dynamism to customer wants. This aspect makes the study of
marketing management interesting.
Customers possess an ability that enables then to relate the ever-increasing knowledge and
information in new and different ways. This creates the need for better products to satisfy
current wants. This creative process can shape new wants as the customer is exposed to
greater information, knowledge and technology possibilities in the socialisation process of
course, some customers and firms may prefer status quo in varying degrees.
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Such firms may be less exposed to the growing information and knowledge or may not be
able to develop access to it. Organisational inertia may be a cause of this. Similarly, some
customers may not be inclined to assimilate the new learning curve that consumption of new
products may require. Others may not feel the need for doing so. Their response to the
influencers may be slower or non-existent.
The influencers’ impact on the customer results in the emergence of the primary influencers
for customer wants. These primary influences can be satisfied through present, new and
alternate products.
We have seen above that the value seeking customer has three primary influences working on
him.
. Seeking better value delivery for current wants through current products i.e. the desire
to satisfy the present needs and wants through present products in a better way,
. Seeking better value delivery of current wants through alternate products i.e. alternate
ways of satisfying present needs and wants.
* Seeking better value delivery of new wants through new products. Here products have
to be designed for fulfilling new and emerging needs and wants.
The value seeking customer re-shapes his current wants which can be satisfied with present
or modified present products. These could also be satisfied through alternate products that
satisfy the same want in a different way. Emerging or new wants, being different from
current ones, are unlikely to be satisfied with present products or even their alternates.
The nature of these three primary influences give a new dimension to the firm's dynamism.
Firms which ignore the continuing nature of these influences are unlikely to hold loyalty of
such customers who keep evolving their needs and wants based on new information and
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knowledge. To keep their loyalty the firm has to concentrate on the wants of the customer
and develop and adapt its products to suit them. This may require different strategic choices.
For giving better value through present products, firms may need to rely upon modification
strategies. The modification could be in product features and attributes or in production
processes to give more efficiency and result in lower cost for customers. The quality of
product could be improved and newer models designed to suit individual needs offered. The
styling of the product could be improved to improve its functional use.
Even repositioning could be done to highlight those features which can give additional value
but were not perceived by the customer in that manner. New or alternate distribution channels
may be opened to make it more convenient for customers to access the product.
Technology fuelled by growth of knowledge could create alternate ways of satisfying current
wants. Such threats could be faced more by firms in the knowledge based industries.
Development of new software could make many old processes redundant. The use of
computers could change delivery of banking services. Intemet has opened many new
possibilities. In the area of impact of technology Kodak, for example is worrying about the
invention of the filmless camera and the bearing this could have on its future business.
The firm also needs to develop new products to meet the emerging wants of the customers.
While the customer has many alternatives in terms of firms and countries offering products,
the individual firm has to develop core strengths that can help build systems as well as
structure that augments innovation. This process should form a part of the firm’s strategy.
Innovation, often results from working close with the customer or from cooperation within
the firm's departments with a concerned focus for delivering better value.
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It could also emerge from cooperating with related or supporting industries, firm’s own R &
D as well as new people joining the firm. Even if a firm keeps track of competitors who have
inducted new people, a study of their responses and processes could give a firm many new
ideas. Links with scientific community, laboratories, universities and other research
institution also helps the firm prepare itself for the challenge of change thrown up by the new
and emerging wants of customers.
The firm and the customers view the changing nature of time differently. Customers view the
future based on the three primary influences working on them. Firms have to understand
these primary influences but prepare for their future using core strengths.
While the customer can choose products that are being offered by firms all over the world,
the firm that has to offer has to produce these products within its own national context. Of
course, it can set up production facilities overseas but even at the new location it will be
working within a national context.
The national context, then, emerges as a critical variable in determining how firms address
their future and its tasks. However, firms may choose a national context to work in.
Firms, therefore, to succeed have to plan to achieve a competitive advantage through present
and future product offerings in a given/chosen national context.
§.2 Develop an Effective Communications
A smart communications plan is essential to the success of any rollout.
Whether you’re looking to launch a capital campaign, announce a new program or implement
a new service, you'll need a communications plan to help you deliver the night message to the
right audience to achieve optimal results and return on investment.
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Developing a communications plan can seem like a daunting task, so we distilled the process
down to six steps to help you get started.
1. Set Clear Goals and Objectives
A common pitfall for building a communications plan is jumping straight to the tactics. Goals
and objectives are the roadmap of a plan and help you clarify the results you want to achieve
with your tactics.
More specifically, goals are long-term in nature and can be viewed as the final destination on
the roadmap. Generally, a plan will have up to three goals. Objectives are specific,
measurable outcomes or results that an organization plans to achieve in a given period.
To ensure you hit your goals, your objectives need to be specific, measurable, achievable,
relevant and time-bound, or SMART:
2. Identify and Prioritize your Target Audience(s)
Once your goals and objectives are established, the next step is identifying who you want to
deliver your message to. As you begin to identify who your audiences might be, it’s
important to consider who they are, both in a demographic sense and a behavioral sense. This
is where the target audience comes into play.
Here are a few thought starters to help you pinpoint your target audience:
® What groups or individuals do you need to engage to help you reach your goals?
« Who would benefit most from your offerings?
e What actions do you want the audience to take?
« Who do you generally engage in your programs, projects, and initiatives?
« What challenges hold supporters back from contributing?
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e What characteristics do your current supporters share?
* What characteristics does an ideal supporter embody?
e How are individuals finding your organization (e.g. social media, events, word of
mouth)?
e While identifying your target audience(s) may reveal several groups, consider
prioritizing three or four audiences.
3. Craft a Compelling Message
Each target audience has distinct motivators and barriers: therefore, a one-size-fits-all
approach to messaging often falls short. No matter who you're writing for, though, keep
messaging Clear, concise, personalized and jargon-free.
Compelling messages are comprised of four key elements that need to be tailored to each
audience:
Key message: The core takeaway you want to deliver to your audience
Secondary messages: Supporting messages that enhance the key message
Proof points: Factual evidence that affirms what you say is true
Calls to action: Actions you want your audience to take
4. Develop Integrated Strategies and Tactics
Now it’s time to bring the communications plan to life! This is accomplished through
integrated strategies and tactics. Strategies are a unique approach for pursuing one or more
communications goals, and tactics are the methods you employ to execute against the
strategy.
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The PESO model is a great framework to reference when building out your communications
strategies and tactics:
P: Paid media
Promotional efforts that involve paying for placements on third-party channels via social
media ads, sponsored posts and native advertising
E: Earned media
Buzz generated by the public (e.g. the press or your audience) through methods such as PR
and word of mouth
S: Shared media
Content on social media channels designed to drive engagement between a brand and its
audience
O: Owned media
The channels you have complete ownership of such as your website, blog, events, etc.
When developing tactics, it’s important to remember the 80/20 rule, which entails allocating
20% of social media content for direct asks (e.g. donations, event registration, etc.) and
dedicating 80% for building community through engaging content.
§. Build a Better Budget
After crafting integrated strategies and tactics, the next critical step is to build a feasible
budget. Budgeting gives you visibility into the costs associated with implementing your
communications plan. In addition, establishing a budget is essential for containing costs and
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identifying opportunities for efficiencies. Lastly, budgets are a fundamental resource for
assessing your plan’s return on investment.
To build a budget, you'll need to consider the following:
Does your organization have an existing budget allocated for communications activities?
How much will each line item in the tactical portion of your plan cost?
If applicable, what were the projected vs. actual costs for previous campaign
implementations?
Your budget should serve as a guardrail to help keep your plan on time and track, so don't be
afraid to tweak your tactics to ensure budget alignment.
6, Create an Actionable Timeline
The final step in any plan development is mapping activities against a timeline. Timelines are
essential for helping you stay the course when transitioning from the planning phase to
implementation, Create a monthly or quarterly timeline, taking into consideration major
events and holidays you want to leverage (e.g. fundraising campaign launch, company
anniversary, Giving Tuesday, New Year's Day, etc.).
Developing a smart communications plan before launching a campaign, program or service is
integral to setting expectations and ensuring success. With these six steps, you're all set to get
started on planning. Don’t forget to make the plan your own by tailoring the steps to best
achieve your goals!
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5.3 Deciding and managing marketing communication mix
The communications mix involves all the tools you use to communicate with your custome
or potential customers. This could be through advertising, social media, product packagin
direct marketing, websites, events, exhibitions — the list goes on!
Successful campaigns consider all elements of the communications mix. To see even bett
results, you must effectively use all areas to create an integrated multi-channel or omn
channel campaign.
What's the difference between the marketing communications mix and the marketing mix?
They may both include mix in their names, and they do link together — but they are actual
very different tools.
On one hand, the Marketing Mix is used to shape brand strategies through factors unique
each business (the 7 Ps — product, price, promotion, place, physical evidence, people ar
process).
On the other hand, the Communications Mix defines the ways you communicate with yo)
customers, i.e. the tools you use.
Marketing communications tools
The promotional mix is made up of five elements, shown below:
1. Advertising (TV, radio, press, PPC)
Advertising covers all avenues where a business pays for their message to be broadcast.
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In 1922, the first radio advertisement was aired in New York, promoting apartments in
Jackson Heights. Video came next, but luckily, it didn’t quite kill the radio star. Instead, it
became its own highly effective advertising tool, working harmoniously alongside radio.
Television has mostly been confined to brands with deep pockets. However, with the digital
age came more affordable online tools such as PPC and social media advertising.
Successful advertising campaigns can be emotive, creative, eye-catching, catchy, musical, or
even intentionally annoying (anything to grab attention!)
2, Direct marketing & digital marketing (email, social media, gasification, etc)
The emergence of digital didn’t just bring social media and online shopping. It also gave us a
whole new way to do marketing. This way is significantly cheaper; and if done correctly can
be even more effective than broadcasting to the masses through TV or radio.
One of the major benefits of direct marketing is its targeted approach. So, if you've done the
best and most accurate market research on your customers, you'll know exactly who to target.
It’s also attractive to marketers because its results can be directly measured.
3. Public relations (PR)
Public relations tums brand messages into stories that appeal to the media and its target
audiences. It amplifies news, strategies and campaigns to create a positive view of a company
through partnerships with newspapers, journalists and other relevant organisations.
But not everything can be shared via PR. The idea is to separate the stories they think could
be developed into an effective PR strategy. So, usually anything considered too ‘salesy’ is a
no no. A great PR campaign revolves around a public interest, current event or trend that can
be connected to a product, service or brand.
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4. Personal selling
Personal selling is, you guessed it, selling through a person (usually in a face-to-face setting).
This includes salespeople, representatives, brand ambassadors or even influencers.
Using their experience, specialist knowledge and communication skills, their aim is to inform
and encourage customers to buy or try a product or service.
5. Sales promotion
Using various online and offline outlets, sales promotion creates limited time deals or
promotions on products or services in order to increase short-term sales. It can include sales,
coupons, contests, freebies, prizes and product samples.
When conducting a sales promotion, it's important to consider:
« how much it costs and whether the volume of sales will make up for the lost revenue ?
« whether it will build loyalty or just attract one-off purchasers ?
« ifthe promotion fits with the brand's image ?
Loyalty cards are a more recent addition to the sales promotion sphere, adding important
elements such as customer retention and brand loyalty. Discounts or special offers reward
loyal and repeat purchasers. Its also a great way to gather valuable customer data on
purchasing habits and behaviour.
Social media
A relatively new tool, and always expanding with ‘the next big thing’, social media has
changed the way we communicate. As part of the Direct Marketing section of
the communications mix, it can be used to advertise, retain and gain customers, gather
feedback about products or services and as a customer service tool.
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Sponsorship
Just about anything can be sponsored. Sponsorship is something you see a lot of with major
brands and especially in sports. It is often used to get the attention of new communities and
align with them.
Effective sponsorship as a marketing and communications tool requires detailed target
audience research and setting clear objectives.
Product packaging
Packaging is an element which can be considered as part of the marketing mix as well as the
communications mix. It’s the last point of sale for the company, and the impact of packaging
could set brands apart from their competitors.
Communicating effectively through packaging can include the visual design, what's written
on the product, size and shape of the packaging, materials it's made from etc. All of these
aspects could sway a customer to buy or not buy the item.
New variables/innovations
We have many more communications tools now than existed 10 years ago - or even 5 years.
This is why it’s really important to Keep track of new innovations and releases that could
become a fantastic way to communicate with your demographic. Some stick around for the
long haul, and others end up more like one-hit wonders (what ever happened to Vine?!) - but
it's still great to keep an eye out.
Examples include new social media platforms (networking, video, messaging), gaming
platforms, forums, mobile apps and more!
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We hope this blog post has helped you understand the communications mix ani
valuable insight into how these tools can complement your marketing campaigns.
Want to learn more?
Professional Academy's Marketing Theories Explained is a video series that
marketing models in more detail.
Watch the recording for the Communications Mix to see CIM tutor, Professional
trainer and all-round marketing pro Peter Sumpton talk about the importance of it
and organising your communications using the PESO tool.
The communications mix and many other important marketing theories are taught in
Marketing Courses. You will be supported by excellent and experienced tute
receiving interactive learning materials to support your studies. Discover new
innovate in marketing and thrive in your career!
Advertising VS Promotion:
Marketing mix implies combinations of various elements that help the company in
customers, to buy the products offered by the company. It includes product, price, ,
promotion. Promotion is a marketing mechanism, that involves informing the «
about the product offered by the company, and includes advertising, public relation.
selling, direct marketing, etc.
Most of the people are having the opinion that promotion and advertising are one
same thing but both of the terms differ in the sense that advertising is that
communication, which is intended to induce potential customers, to buy your proc
the competitors. It is a tool that reaches thousands of customers in one go.
16:

In this article, our main focus is to explain all the difference between advertising and
promotion. But, first of all, you must know that promotion is a marketing technique, and
advertising is a promotional tool.
Comparison Chart
BASIS FOR
ADVERTISING PROMOTION
COMPARISON
Meaning Advertising is a technique of The set of activities that spread a

driving public attention towards a word about the product, brand or
product or service, through paid service is known as promotion.
network.
What is it? Subset Superset
Objective Building brand image and boosting Short term sales push
sales.
Strategy Promotional strategy Marketing strategy
Effects Long term Short term
Results Generally slow, can be seen over Instant

time.
Cost involved Highly expensive Cost Effective
Best suited for Medium and big enterprises All enterprises
Definition of Advertising
Advertising is an impersonal promotional tool which is used to draw public attention towards
a product or service, through a selected and paid media. It is a means of communication that
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helps to communicate a single message, to a large number of people in less time. In a
nutshell, advertising is nothing but “telling and selling” of commercial items.
Advertising is a technique used by most of the companies, to persuade the potential
customers to buy the product. Various channels are used for the purpose of advertising like
television, radio, newspaper, magazines, billboards, pamphlets, posters, cabs, buses, walls,
etc.
Due to extreme competition between companies, the cost of advertising a single product is
very high, these days. In general, people get attracted to the advertisement and the demand
for that product increases. So, the effects of advertising are positive. The result of advertising
is seen in the long run when there is an upward movement in the sales figure.
However, it is quite difficult for a common man to identify good products among an array of
products because only positive aspects are disclosed in the ads. The more the ads are
displayed to the customer, the more it will make an impression on the customer’s mind. In
this way, it helps the companies to make money easily with their product no matter whether
the quality is up to the mark or inferior.
Definition of Promotion
Promotion refers to the set of activities that communicate the merits of a product, service or
brand to persuade target customers to buy it. It is one of the four elements of the marketing
mix. It is a way of attracting, inducing and creating awareness among the people to initiate
the purchase.
The ways of promotion include, discount coupons, free distribution of samples, rebate, offers
like giving two items at the price of one, trial offers, offers on festivals and occasions,
contest, value added services, etc. Due to these methods, the companies get an instant boost
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in their sales because customer response is impulsively when they know that they will get
more at the price of less. It involves activities like:
Direct Marketing: It is a technique in which companies sell their products directly to the
customers, by eliminating the middleman.
Advertising: Advertising (as explained above) is a paid announcement, wherein the message
is conveyed to attract the customer and bring is attention towards the product, through a
medium.
Public Relation: Every company wants to build and maintain an image in front of the public,
through various channels.
Personal Selling: In this technique, the salesman sells the company’s product by directly
visiting and influencing them to buy the product.
5.4 Direct Marketing And Interactive Marketing
What Is Direct Marketing?
Direct marketing consists of any marketing that relies on direct communication or
distribution to individual consumers, rather than through a third party such as mass media.
Mail, email, social media, and texting campaigns are among the delivery systems used. It is
called direct marketing because it generally eliminates the middleman, such as advertising
media.
How Direct Marketing Works
Unlike traditional public relations campaigns pushed out through a third party such as media
publications or mass media, direct marketing campaigns operate independently to directly
communicate with target audiences. In direct marketing, companies deliver their messaging
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and sales pitches by social media, email, mail, or phone/SMS campaigns. Although the
number of communications sent can be massive, direct marketing often attempts to
personalize the message by inserting the recipient's name or city in a prominent place to
increase engagement.
The call to action is an essential part of direct marketing. The recipient of the message is
urged to immediately respond by calling a toll-free phone number, sending in a reply card, or
clicking on a link in a social media or email promotion. Any response is a positive indicator
of a prospective purchaser. This variety of direct marketing is often called direct response
marketing.
Targeting in Direct Marketing
A direct marketing pitch that is delivered to the widest possible audience is probably the least
effective. That is, the company may gain a few customers while merely annoying all of the
other recipients. Junk mail, spam email, and texting all are forms of direct marketing that
many people can't get rid of fast enough.
The most effective direct marketing campaigns use lists of targeted prospects in order to send
their messages only to the likeliest prospects. For example, the lists might target families who
have recently had a baby, new homeowners, or recent retirees with products or services that
they are most likely to need.
Catalogs are the oldest form of direct marketing, with a history that dates back to the latter
half of the 19th century. In modem times, catalogs are usually sent only to consumers who
have indicated an interest in a previous purchase of a similar product while social media has
emerged as the most modern form of direct marketing. Targeting strategies can also be used
on social media when putting out ads: platforms like Facebook allow brands to choose the
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age, gender, demographics, and even interests of potential new audiences that an ad could
reach.
The Advantages and Disadvantages of Direct Marketing
Direct marketing is one of the most popular and effective marketing tools in order to establish
a direct connection with a target audience. Direct marketing has its appeal, particularly to
companies on a shoestring budget who can't afford to pay for television or Intemet
advertising campaigns. Especially as the world becomes increasingly connected through
digital platforms, social media becomes an effective way to market to customers.
The main drawback with direct marketing, however, is the profile-raising and image building
that comes with a third party accrediting your brand. For example, although a company may
pay for a sponsored article in The New York Times, this can greatly enhance a brand's image
and can help "seal the deal” with customers who are willing to trust a supposedly unbiased
source or external opinion.
By its nature, the effectiveness of a direct marketing campaign is easier to measure than other
types of advertising, since brands can analyze their own analytics, track unique source codes,
and tweak strategies effectively without going through a middleman. The company can
measure its success by how many consumers make the call, return the card, use the coupon,
or click on the link.
What Is Interactive Marketing?
Interactive marketing is a big part of modern-day communications and a concept that ties
into Conversational Marketing pretty neatly.
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What exactly is it? Its a two-way approach to marketing that focuses on interaction and
collaboration. Instead of simply talking at your customers with a one-way stream of
marketing, an interactive approach makes it a group activity.
This makes it a perfect companion for Conversational Marketing because they both focus on
building relationships and having meaningful interactions that go beyond the often cold and
impersonal approach of traditional marketing.
To illustrate the idea in a little more detail, let's take a look at some common forms of
interactive marketing and how they can be done in a conversational way.
Product Launches
One of the advantages of remote digital presentations is the ability to dynamically
demonstrate and launch your products in real time.
With traditional forms of online content and sales it’s very hard to do this, and even pre
recorded videos don’t quite capture the real-time nature of a good demo. Also, with static
channels, your audience can’t ask questions live or interact with the demonstration.
Virtual events are perfect for this. They allow you to showcase features of products and
services in real-time, so the experience for viewers is almost like actually being there in
person.
Here’s how to get your virtual product launches just right:
Be clear on the purpose. Is it a how-to video, or a troubleshooting guide? Are you introducing
a brand new product or a new feature on an existing one? Are you just clarifying a common
issue?
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Rely on your sales teams and their knowledge. Sales staff are often more intimately aware of
the product and its features and benefits than anyone else.
Mention connect chatbot to broadcast — viewer can go straight to landing page via chatbot,
get more viewer details
FAQs
FAQs (Frequently Asked Questions) have been around as long as the internet. On the face of
it, they are a tool for solving common issues and questions, so users can overcome simple
problems by themselves without having to bother support staff with them.
However, FAQs are also a valuable opportunity to make a closer connection with your
visitors, have a conversation, and market your products.
In fact, FAQs can be seen as a basic precursor to modern-day Conversational Marketing.
They were traditionally just a static list of questions and answers, but that’s still a
conversational format.
Using Video Broadcasts for FAQs
Chatbots are a great solution for FAQs, but an increasingly popular option is using live video.
This allows for a much more dynamic Q&A format, not only addressing existing questions
but also allowing customers to ask their own questions in real-time.
Some of the benefits of live video FAQs include:
They help address customers with specific problems outside the normal FAQ
It allows you to expand your online video presence
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It’s a more personable and interactive kind of FAQ, helping you connect with your customers
more effectively
You can record it and share the video later
Effective Crisis Communication
In times of crisis and uncertainty, marketing teams have an important role to play. It’s their
job to provide reassurance and help, communicate clearly and regularly with customers, and
be a stable and reliable presence in the midst of fear and uncertainty.
Done right, challenging times can allow marketers to establish a strong reputation for their
brand which will last beyond the current situation.
This is also a great opportunity to build interactive and conversational sales and marketing
into your crisis communication strategy. Chatbots can be used to handle the increased volume
of customer problems and take the load off staff when offices are closed.
Crisis communication is also another area where live video broadcast can be really effective.
This is because:
It provides immediate, reliable updates when events might be changing fast
It’s a more personal and reassuring way to contact your customers
You can reach large numbers of people at one time
Whisbi Live Video Broadcast is the perfect tool for this, built for reaching large numbers of
your audience with real-time video interactions.
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Virtual Events
Virtual, remote events are becoming increasingly popular. As communications technology
develops it's easier than ever to collaborate with people on the other side of the world
through a screen.
This is a huge boost for interactive marketing — businesses can now reach members of their
audience even when they re thousands of miles away. You're able to reach a remote audience
ina much more personal way.
During the COVID-19 crisis, lockdowns and social distancing measures drove a spike in
remote collaboration, as it was the only way to reach anyone, not just faraway followers.
Here are some more of the benefits of virtual events:
They're scalable. Unlike a packed conference center, virtual meeting rooms practically have
no limit, allowing you to easily reach — and interact with — large numbers of your audience.
They're cheap. You don’t need to hire a venue, invest in expensive equipment, or pay for
refreshments.
It’s easy to collect data, like how many attended, how many left early, how many questions
were asked, and much more. This allows you to understand your audience better and make
any changes.
They're green. Virtual events massively cut down on transport and other energy expenditures,
making them extremely eco-friendly.
Conversational marketing platforms, like Whisbi Video Broadcast solution, are built for
virtual events, allowing you to reach large audiences with live demonstrations and the
possibility for interactive Q&A sessions.
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Training your Remote Teams
So far we've focused entirely on interactions with customers, but conversational
selling technology and interactive marketing techniques can also be used inwards, on your
own company.
One good example of this is remote team training sessions.
Even before the Coronavirus pandemic uprooted the way we do business, remote work was
already growing fast, with 30% of people working for a fully remote company.
One of the challenges involved in managing a remote team is training, and this is where
interactive marketing can play a key role.
Solutions like Whisbi Video Broadcast and automated Q&A sessions can be used to
streamline remote training and create a collaborative and productive environment even when
team members are on different continents.
Here are some tips for effectively training your remote teams:
Use lots of personalization. Remote interaction can feel distant and isolating if you aren't
careful, so be sure to personalize your approach as much as possible. Maximize engagement
and interaction.
Make things as practical as possible. When learning through a screen it’s easier to get
confused and miss important details. Demonstrate often and show things in action.
Communicate very regularly. Check-in with your team members often, track progress
closely, and address concerns as they arise.
Interactive marketing, combined with conversational marketing tools, is a powerful asset to
modern businesses.
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It helps overcome many of the challenges involved in remote collaboration and brings
customers and staff closer together even when they’re physically far apart, making it a
powerful asset to a crisis communication strategy.
Most importantly, it helps build relationships and makes customers feel more connected with
your brand, and that’s the essence of effective conversational marketing.
5.5 The New Product Development Process
In order to stay successful in the face of maturing products, companies have to obtain new
ones by a carefully executed new product development process. But they face a problem:
although they must develop new products, the odds weigh heavily against success. Of
thousands of products entering the process, only a handful reach the market. Therefore, it is
of crucial importance to understand consumers, markets, and competitors in order to develop
products that deliver superior value to customers. In other words, there is no way around a
systematic, customer-driven new product development process for finding and growing new
products. We will go into the eight major steps in the new product development process.
Idea generation
Idea screening
Concept development and lesting
Marketing stratery development
Gusiness analysis
Preduct development
Test marketing.
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Idea generation - The New Product Development Process
The new product development process starts with idea generation. Idea generation refers to
the systematic search for new-product ideas. Typically, a company generates hundreds of
ideas, maybe even thousands, to find a handful of good ones in the end. Two sources of new
ideas can be identified:
Internal idea sources
the company finds new ideas internally. That means R&D, but also contributions from
employees.
External idea sources
the company finds new ideas externally. This refers to all kinds of external sources, e.g.
distributors and suppliers, but also competitors. The most important external source are
customers, because the new product development process should focus on creating customer
value.
Idea screening
The New Product Development Process
The next step in the new product development process is idea screening. Idea screening
means nothing else than filtering the ideas to pick out good ones. In other words, all ideas
generated are screened to spot good ones and drop poor ones as soon as possible. While the
purpose of idea generation was to create a large number of ideas, the purpose of the
succeeding stages is to reduce that number. The reason is that product development costs rise
greatly in later stages. Therefore, the company would like to go ahead only with those
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product ideas that will turn into profitable products. Dropping the poor ideas as soon as
possible is, consequently, of crucial importance.
Concept development and Testing — The New Product Development Process
To go on in the new product development process, attractive ideas must be developed into a
product concept. A product concept is a detailed version of the new-product idea stated in
meaningful consumer terms. You should distinguish
A product idea a an idea for a possible product
A product concept 4 a detailed version of the idea stated in meaningful consumer terms
A product image a the way consumers perceive an actual or potential product.
Let's investigate the two parts of this stage in more detail.
Concept development
Imagine a car manufacturer that has developed an all-electric car. The idea has passed the
idea screening and must now be developed into a concept. The marketer’s task is to develop
this new product into alternative product concepts. Then, the company can find out how
attractive each concept is to customers and choose the best one. Possible product concepts for
this electric car could be:
Concept 1: an affordably priced mid-size car designed as a second family car to be used
around town for visiting friends and doing shopping.
Concept 2: a mid-priced sporty compact car appealing to young singles and couples.
Concept 3: a high-end midsize utility vehicle appealing to those who like the space SUVs
provide but also want an economical car.
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As you can see, these concepts need to be quite precise in order to be meaningful.
sub-stage, each concept is tested.
5.6 Concept testing
New product concepts, such as those given above, need to be tested with grou
consumers. The concepts can be presented to consumers either symbolically or
The question is always: does the particular concept have strong consumer appeal
concept tests, a word or picture description might be sufficient. However, to i
reliability of the test, a more concrete and physical presentation of the product c
be needed. After exposing the concept to the group of target consumers, they will
answer questions in order to find out the consumer appeal and customer val
concept.
Marketing strategy development - The New Product Development Process
The next step in the new product development process is the marketing strategy di
When a promising concept has been developed and tested, it is time to desig
marketing strategy for the new product based on the product concept for introduci
product to the market.
The marketing strategy statement consists of three parts and should be formulated
A description of the target market, the planned value proposition, and the sales, n
and profit goals for the first few years
An outline of the product's planned price. distribution and marketing budget for th
The planned long-term sales, profit goals and the marketing mix strategy.
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Business analysis - The New Product Development Process
Once decided upon a product concept and marketing strategy, management can evaluate the
business attractiveness of the proposed new product. The fifth step in the new product
development process involves a review of the sales, costs and profit projections for the new
product to find out whether these factors satisfy the company’s objectives. If they do, the
product can be moved on to the product development stage.
In order to estimate sales, the company could look at the sales history of similar products and
conduct market surveys. Then, it should be able to estimate minimum and maximum sales to
assess the range of risk. When the sales forecast is prepared, the firm can estimate the
expected costs and profits for a product, including marketing, R&D, operations etc. All the
sales and costs figures together can eventually be used to analyse the new product's financial
attractiveness,
Product development — The New Product Development Process
The new product development process goes on with the actual product development. Up to
this point, for many new product concepts, there may exist only a word description, a
drawing or perhaps a rough prototype. But if the product concept passes the business test, it
must be developed into a physical product to ensure that the product idea can be turned into a
workable market offering. The problem is, though, that at this stage, R&D and engineering
costs cause a huge jump in investment.
The R&D department will develop and test one or more physical versions of the product
concept. Developing a successful prototype, however, can take days, weeks, months or even
years, depending on the product and prototype methods.
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Also, products often undergo tests to make sure they perform safely and effectively. This can
be done by the firm itself or outsourced.
In many cases, marketers involve actual customers in product testing. Consumers can
evaluate prototypes and work with pre-release products. Their experiences may be very
useful in the product development stage.
Test marketing - The New Product Development Process
The last stage before commercialisation in the new product development process is test
marketing. In this stage of the new product development process, the product and its
proposed marketing programme are tested in realistic market settings. Therefore, test
marketing gives the marketer experience with marketing the product before going to the great
expense of full introduction. In fact, it allows the company to test the product and its entire
marketing programme, including targeting and positioning strategy, advertising, distributions,
packaging etc. before the full investment is made.
The amount of test marketing necessary varies with each new product. Especially when
introducing a new product requiring a large investment, when the risks are high, or when the
firm is not sure of the product or its marketing programme, a lot of test marketing may be
carried out.
Commer cialisation
Test marketing has given management the information needed to make the final decision:
launch or do not launch the new product. The final stage in the new product development
process is commercialisation. Commercialisation means nothing else than introducing a new
product into the market. At this point, the highest costs are incurred: the company may need
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to build or rent a manufacturing facility. Large amounts may be spent on advertising, sales
promotion and other marketing efforts in the first year.
Some factors should be considered before the product is commercialized:
Introduction timing. For instance, if the economy is down, it might be wise to wait until the
following year to launch the product. However, if competitors are ready to introduce their
own products, the company should push to introduce the new product sooner.
Intreduction place. Where to launch the new product? Should it be launched in a single
location, a region, the national market, or the international market? Normally, companies
don't have the confidence, capital and capacity to launch new products into full national or
international distribution from the start. Instead, they usually develop a planned market
rollout over time.
In all of these steps of the new product development process, the most important focus is on
creating superior customer value. Only then, the product can become a success in the market.
Only very few products actually get the chance to become a success. The risks and costs are
simply too high to allow every product to pass every stage of the new product development
process.
§.7 Consumer Adoption Process
The adoption process for a new product is the mental process through which an individual
passes from first learning about an innovation to final adoption” and adoption as the decision
by an individual to become a regular user of the product. A new product is a good, service, or
idea perceived by some potential customers as new.
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Concept of Consumer Adoption Process
Though most buyers of a product have some common needs, they are not alike in all res
Purchasers in the initial stages of a product's life are considerably different from thos
make their purchases later. Some of their demographic characteristics may vary, their b
behavior may be distinct, and their purchasing motives may differ.
To describe the various types of buyers who purchase a product over the course of i
cycle, the marketing experts proposed an adoption process.
To build an effective strategy for market penetration, management must understar
consumer adoption process. Kotler defines adoption as an individual's decision to bec:
regular user of a product.
There was a time when marketers would offer their products to the mass market. Und
concept, people everywhere were thought to buy a company’s product, and consequ
companies were inviting everybody to buy their products by making them available in
dreds.
Tt would cost companies to spend heavily on promotion and distribution, most of which
wasted. It led to the development of a concept called “heavy user target marketing.’
Under this concept, companies would target heavy users initially with their offers. Thi
suffered some limitations as the heavy users vary in their tastes, preferences, adopter:
and brand loyalty levels.
Consumers go through 5 stages in the process of adopting a new product.
e Product Awareness.
® Product Interest.
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e Product Evaluation.
* Product Trial.
e Product Adoption.
These stages imply that the new-product marketer should consider how to help consumers
move through these stages. A manufacturer of large-screen televisions may discover that
many consumers in the interest stage do not move to the trial stage because of uncertainty and
the large investment.
If these same consumers would be willing to use a large-screen television on a trial basis for a
small fee, the manufacturer should consider offering a trial-use plan with the option to buy.
For adopting a new product, at first, the consumer becomes aware of the new product but
does not have information about it. The consumer shows interest and searches for information
about the new product. In the third stage, the consumer evaluates whether trying the new
product is worthwhile. After that, the consumer tries the new product on a limited scale to
improve its value assessment. At the last stage, the consumer decides to make full and regular
use of the new product.
Let’s understand them in details:
1. Product Awareness
The consumer becomes aware of the new product but lacks information about it. Initially, the
consumer must become aware of the new product.
Awareness leads to interest, and the customer seeks information about the new product.
Whether an innovation is continuous or not, people are either litthe aware or aware of it
initially.
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Innovator, therefore, has to inform the adopters about the innovation. In the awareness stage,
individuals become aware that the product exists, but they have little information about it and
are not concered about getting more.
Adopters may be informed through advertising, publicity, or any other effort of the marketer.
2. Product Interest
The consumer seeks information about the new product. Once the information has been
gathered, the consumer enters the evaluation stage and considers buying the new product.
By this time, the innovation is introduced. It is now the time for the decision-makers to
determine whether the innovation relates to their needs.
They enter the interest stage when they are motivated to get information about its features,
uses, advantages, disadvantages, price, or location.
Interest may or may not sparked, depending on whether the decision-makers perceive the
innovation as a relevant, feasible alternative to existing items.
3. Product Evaluation
Next, in the trial stage, the consumer tries the product on a small scale to improve its value
estimate. The consumer considers whether trying the new product makes sense.
Adopters of the innovations have to establish some evaluation measures to compare the new
product with existing ones.
During the evaluation stage, individuals consider whether the product will satisfy certain
critical criteria for meeting their specific needs. The potential adopters consider the
innovation’s benefits and determine whether to try it.
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4. Product Trial
The consumer tries the new product on a small scale to improve their estimate of its value. If
the consumer is satisfied with the product, they enter the adoption stage, deciding to use the
new product thoroughly and regularly.
At this stage, the potential adopters examine, test, or try the innovative product to determine
its usefulness.
In this stage, they use or experience the product for the first time, possibly by purchasing a
small quantity, taking advantage of a free sample or demonstration, or borrowing the product
from someone.
During this stage, potential adopters determine the product's usefulness under the specific
conditions they need.
The trial stage for innovations is complex. Successful introduction depends greatly on the
new product’s characteristics, benefits, and perceived risks. Effective communication is the
key to achieving trial by consumers.
§. Product Adoption
The consumer decides to make full and regular use of the new product. The new product is a
good, service, or idea perceived by some potential customers as new.
Individuals move into the adoption stage when choosing that specific product when they need
a product of that general type. Here the buyers purchase the new product and can be expected
to use it to solve problems.
So, this final stage of the process is indicated most directly by sales, but the innovation’s
visibility is also a success measure.
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However, please do not assume that they will eventually adopt the new product because a
person enters the adoption process. Rejection may occur after any stage, including the
adoption stage.
Factors Affecting the Adoption Process
The three important factors affecting the adoption process are people's readiness to try new
products, personal influence, and innovation characteristics.
We shall now take up a brief discussion on how they influence the product adoption process:
People’s Readiness
People differ in their readiness to accept new products, services, opinions, and ideas. Some
people always prefer adopting new market offers. Those who are venturesome and enjoy
taking risks, younger in age, have higher social status, and have favorable financial positions
will be the innovators.
Those who are guided by respect treated as opinion leaders and consider themselves as
cautious adopt early. The deliberate persons are usually the early majority. Those who are
skeptical and follow the majority adopt once a large number of people try the product.
Those who are tradition-bound, having insular attitudes, and are suspicious, usually accept a
product when the masses use it.
To understand adopter categories and locate the innovators and early adopters, a marketer
should undertake an extensive study based on potential customers’ demographic,
psychographic, and media characteristics.
Personal Influence
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Since we are social and human beings, we are always subject to interpersonal influence in our
decisions. The degree of personal influence varies according to the buying situation and
individual in question.
There are some buying situations where we are influenced more by others. Again, personality
type determines the susceptibility of interpersonal influence.
Characteristics of the Innovation Influence Adoption Process
The following five characteristics of an innovation influence the adoption process.
Relative Advantage: If a new product is perceived as superior to existing products, it will be
adopted quickly.
Compatibility: If innovation is considered consistent with the individuals’ values and
experiences, it will soon be adopted.
Complexity: If innovation is perceived as complex by a particular group of people, they will
adopt it slowly.
Divisibility: If there is a scope of trying the innovation on a test or sample basis, the chances
will be adopted soon.
Communicability: If the innovation benefits can be described easily or observed, it will be
adopted fast.
There are some other characteristics of the innovation that also influence the rate of adoption
of the innovation. They are the cost, nisk and uncertainty, technical standard, social
acceptance, and so on.
To be successful, a marketer should study the factors as detail as possible, and his strategy
should be based on the findings of the said study.
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Marketing Implementation:
Marketing Implementation is the process of taking your marketing plan and assigning team
members to execute it, setting deadlines to complete tasks, and creating the collateral needed
to achieve your marketing goals.
While a marketing plan lives on paper, it won't translate to results unless you have a clear
implementation strategy to pursue.
A perfect marketing plan has no worth without a proper implementation strategy.
How To Implement Your Marketing Plan In 11 Steps
If you still haven't crafted an implementation strategy, here’s a 10 step guide for you to
successfully implement your marketing plan and bring your ideas to life.
1, Set Realistic Expectations
The first step of implementing your marketing plan is to set realistic expectations for
everyone involved. Having too optimistic expectations can pressurize your team and make
them averse to risks and experimentations.
A common mistake while setting expectations is keeping tight deadlines which ignore the
possibilities of an unexpected delay in the process.
The entire process of implementing a marketing plancannot be controlled strictly by
your marketing team since it involves actions by other parties, including the audience. You
might need to make adjustments to cope with new developments.
Make sure you have enough room to measure results. Trying to make sense of results too
early will lead to an inaccurate assessment of the implementation process.
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So set expectations for the implementation process that are aligned to the overall goal of
the marketing plan, and are achievable within the set timeframe
2. Document Your Implementation Strategy
Now that you have set your expectations for the implementation, make sure you have a
documented plan and strategy to guide you through the process.
Improvising the marketing implementation process is a mistake made by too many marketers.
The most effective marketing is documented before the plan is implemented. About 16%
of marketers document their entire marketing strategy, while others do it partially or avoid it
entirely.
This can cause you to lose your efficiency in implementing the marketing plan. However
sharp your mind may be, trying to improvise an implementation process will hinder
your decision-making, as you have to create tasks on-the-go.
Documenting a marketing strategy helps you spend more time planning each task and time
frame carefully, effectively channelling your effort towards achieving your marketing goal.
This doesn't have to be fancy either. I use Google Sheets to document my content strategy.
Start with your goals, which need to be SMART (Specific, Measurable, Attainable, Relevant,
and Time-bound). Next, try to figure out what internal and external challenges you may face.
Besides, you also need to keep your audience in mind at all times. This helps you keep
your marketing strategies aligned with the needs of your audience.
Identify the proper channels to target. You can combine multiple channels according to the
presence of your intended audience, including offline, digital marketing and social media.
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Your brand message should also be an important part of your overall goal, as you want
your marketing efforts to be recognizable by your audience and aligned with your brand
identity.
Set a realistic budget and timeline, along with room to extend if needed. Finally, make sure
you have appropriate KPIs to measure your performance accurately.
Having all these documented properly will give you concrete guidelines to refer to during the
implementation process
3.Build a Great Team
A great marketing team is a competitive advantage that you can build on. After all,
marketing is about the people.
Assess the needs of your marketing plan and determine what skills and resources to complete
the marketing activities to make achieving your goals a reality.
For a marketing department, you can either have your in-house team do the work or hire an
external agency to do so. You also have the option to combine both. For example, if you're
asmall business, you can collaborate with an agency to do all your design work and let your
in-house team take care of the rest.
The next step is to make sure your team has the right tools at their disposal. Building the right
tool stack can be challenging, especially if you are trying something different with
your marketing plan. Experiment with tools and techniques to see what works best for your
team and your execution strategy.
Once you have your team and equipped them with tools, it’s time to move on to create
outlines on how they will use these tools.
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4. Optimize Your Workflows
Building workflows for each task gives your marketing team a clear idea of how to approach
them and when to adjust the marketing program. The purpose of making specific workflows
is to identify the most efficient way of completing a task using as few steps as possible.
The first step of making workflows is mapping out the tasks needed to be completed. After
defining the steps involved in completing the task, your marketing managers can assign them
to the team members and set a deadline.
Once you've built a map of the tasks that need to be completed, you can then build out a
template for how to get things done.
5. Create a Timeline for Tasks
Creating a timeline is essential for your strategy implementation as it helps you and your
team realize if you are on track to finish the tasks on time.
You can do so by breaking down each of your tasks and assigning deadlines to each. This
will help your team stay on top of the progress and not scramble to meet project deadlines.
You can divide your projects into phases and work with your team to get a realistic idea of
how long each phase should be. You can also use equally spaced phases and work backward
from your deadline to assign tasks in each phase.
Once you have your timeline established, keep revising it as you proceed to help you adjust
to any delays or setbacks.
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6. Manage Your Projects Efficiently
Project management is an important part of the marketing implementation process. This
involves making necessary adjustments when needed or prioritizing tasks to achieve the best
possible results.
As mentioned earlier, the implementation process involves actions by your audience too. So
there is an unpredictable element to it, which you need to be prepared to tackle.
Have enough flexibility in managing projects to make changes without hampering the
progress of the project or without having to restart the entire project.
Besides, you need to make sure you are prioritizing high-value tasks and maintain swift
communication with your team.
7. Monitor Progress Regularly
Since a marketing implementation is a dynamic process, you need to monitor and track your
progress regularly.
Monitoring involves tracking your progress to see whether you are on pace to meet your next
target in terms of time, resources and budget. You also have to monitor the consumer-end to
understand which efforts are working with your audience and which are not.
Monitoring allows you to be prepared to take steps for tackling any issue before they cause a
problem.
Set specific intervals and metrics for monitoring your progress and keep revising them too.
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8. Make Necessary Changes to Optimize Results
One of the reasons for monitoring your progress is to identify opportunities t
adjustments to your marketing implementation strategy.
Apart from monitoring your efforts and results, you also need to consider external
including market trends and economic factors, to be able to make necessary adjust
needed.
Once you have identified the opportunity or need for adjusting your marketing effo
try to build on the existing efforts. If that doesn’t work, reconsider your tactic and try
for new ways to approach the issue.
You might want to channel your efforts to achieve growth by coming up with new
engage with your audience.
While you're carefully documented marketing implementation strategy can gui
through the process, it is wise to have enough flexibility to deviate from it to ge
results.
9. Have a Contingency Plan:
Having a backup plan if your original one doesn’t work will save you the time and¢
start back from scratch if a part of your implementation strategy isn’t working.
Contingency plans also allow you to have room for error, which encourages your
experiment with new ideas. If any new ideas fail, then you always have your cont
plan as a fall-back option.
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But keep in mind that since it’s a fall-back option, you need to be a little conservative and
avoid including bold ideas in it. It is also wise to keep extended timelines in your contingency
plans as it will make up for any time wasted to shift to your Plan B.
10. Review and Measure Results
Once your implementation plan is up and running, you might try to stop and try to understand
how your current efforts and progress fit your overall goal.
This will help you understand if you are on track to achieve the desired results or even help
you identify opportunities to improve your workflows.
Try to understand which phase of the broad timeline your team is currently in and whether
they are producing the expected results. You can also get an idea if you need to expand your
team and diversify the skillset of your team.
While reviewing your results, work backward and try to understand what strategies, tools, or
approaches are contributing to the results.
Take this opportunity to gather feedback from your team about the progress of
the implementation plan. They might have insights to add which can prove to be valuable for
your current project or future ones.
11. Communicate the Final Results
By now, you have documented and executed your marketing implementation strategy and
measured your results. But your work is not done yet.
Communicate the results to your team and congratulate them. While it might look like a small
step for you, it goes a long way to boost your team’s motivation.
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If they have worked exceptionally, let them know how great their efforts have been and try to
reward them for it. If they’ve failed to meet the project expectations, provide constructive
feedback and guidance on how to improve in the next project.
Finally, to give them a broader picture, you can also let them know how their efforts have
created a difference in consumers’ lives.
Marketing Evaluating and Controlling:
Marketing is a complex activity. It involves many options, it requires coordination among
many functions and tasks, and it must respond to changes in customers and competitors.
These factors make planning difficult and often make the achievement of a marketing
strategy or program even more problematic. Without good control and evaluation procedures,
even the best marketing effort could produce unexpected and often undesirable results.
5.8 Meanings and Purposes of Control and Evaluation
The terms control and evaluation are often used with the same meaning, but they can be
distinguished. Control is “the feedback process that helps the manager learn (1) how ongoing
plans are working and (2) how to plan for the future”.
Control means keeping on target. Control occurs while an activity or project is in progress,
and managers are informed immediately when any significant deviation from objectives is
detected or even suspected so that corrective action can be taken.
Steps Taken in Establishing an Evaluation Program
The major steps that must be taken in establishing an evaluation program are discussed
below:
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To compare actual performance with performance standards, marketing managers must know
what marketers within the company are doing and have information about external
organizations’ activities that provide the firm with marketing assistance.
Information is required about marketing personnel’s activities at the operations level and
various marketing management levels.
Most businesses obtain marketing assistance from external individuals or organizations, such
as advertising agencies, intermediaries, marketing research firms, and consultants.
To acquire the most benefit from external sources, a marketing control process must monitor
their activities. Although it may be difficult to obtain the necessary information, it is
impossible to measure actual performance.
Records of actual performance are compared with performance standards to determine
whether and how much discrepancy exists. For example, a salesperson’s actual sales are
compared with their sales quota to determine how much difference exists.
If a significant negative discrepancy exists, the marketing manager takes corrective action. In
some organizations, electronic data processing equipment enhances a marketing manager's
ability to evaluate actual performance.
Marketing Control Process — Controlling Marketing Activities
To achieve marketing objectives and general organizational objectives, marketing managers
must control marketing activities effectively.
The marketing control process consists of establishing performance standards, evaluating
actual performance by comparing it with established standards and reducing the differences
between desired and actual performance.
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No management process can be completed without control. Marketing control, you know, is
the process of evaluating achieved results against established standards and of taking
corrective action to exploit opportunities or solve problems.
Planning and controlling are closely interrelated because plans include statements about what
to be accomplished.
For purposes of control, these statements function as performance standards. A performance
standard is an expected level of performance against which actual performance can be
compared.
Examples of performance standards might be reducing customers’ complaints by 50 percent,
a monthly sales quota of $100,000, or a 20 percent increase per month in new customer
accounts.
The Control Process
The control process involves evaluating results against objectives. Although this stage of the
process is crucial, it tells us if we have met, exceeded, or fallen short of objectives. Perhaps
the most creative aspect of control involves establishing why those results were achieved and
what we should do in response — in other words, what, if any, corrective action should we
take.
For example, suppose that Mr. Ali, the marketing manager for a division of a pharmaceutical
company, has established a sales objective of $5 million for the year. The first quarter's goal
was $1.5 million, but the results reported by the accounting department show sales of only $1
million,
Therefore, Mr. Ali will have to take a hard look at the planning process's assumptions and
how the marketing plan has been implemented.
196 |Page

He will look for data on total industry sales compared with those forecast by the
pharmaceutical industry. He will reevaluate the company’s plan to add salespeople and
probably a dozen other marketing plan aspects.
The results of all this effort may lead Mr. Ali and other executives to the conclusion that
environmental factors have depressed the industry and that the original objective of $5
million is no longer realistic. If that is the case, they may revise the planned objectives
accordingly.
However, their study may reveal that the industry is doing well and that the problem is more
specific to their firm. Perhaps the sales department has failed to add salespeople as planned
and, in fact, has failed to replace some who have quit or retired.
In this case, a midcourse correction might be in order. The firm may wish to hire a new sales
manager who will be more successful at replacing personnel. Still, a third conclusion may be
reached.
The original marketing plan may be found to be valid. The $0.5 million shortfalls in sales
may be simply a technical problem. Clearly, these are essential parts of the control process.
Managers must not only measure the results but also decide what to do about them.
197 |Page


® Rajan Saxena. 2009. Marketing Management. [Fourth Edition]. Tata-MeGraw Hill,
New Delhi.
Part-—A
1) Explain about Role of Marketing Communication
2) What do you know about developing effective communications
3) Explain Deciding and managing marketing communication mix
Part-B
1) Write about Direct Marketing And Interactive Marketing
2) What do you know about The New Product Development Process
Part -C
| Enumerate on Concept Testing
2 Write about the Consumer Adoption Process
3 Brief in detail about Types of Meanings and Purposes of Control and Evaluation

* For Q.No.1 in Part C refersection No.3.6
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Marketing Management 1 / 200

i = -O, Leeman sting

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By studying this unit

e Understand the term Market and Marketing.

1.1 Market and Marketing.

1.11 Answer for cyp questions.

Marketing Management 2 / 200

1.1 MARKET AND MARKETING:

other. Let us take a more detailed look at market and marketing.

distributes need-satisfying products and services to existing and potential customers.”

effort to discover, create, arouse and satisfy consumer needs. *

“Marketing is the delivery of a standard of living to society.”

for customers, clients, partners, and society at large.”

The Chartered Institute of Marketing defines marketing as "the management process

responsible for identifying, anticipating and satisfying customer requirements profitably.” A

contribute to increasing shareholder value. In this context, marketing is defined as "the

Marketing Management 3 / 200

management process that seeks to maximise returns to shareholders by developing

relationships with valued customers and creating a competitive advantage."

goods or services. It is basically a medium that facilitates these transactions in an economy. It

generally in exchange for consideration.

« Browse more Topics under Marketing

© Role of Marketing and Marketing Mix

® Marketing Management Philosophies

Sales Promotion and Publicity

characterize markets are,

Marketing Management 4 / 200

Based on geographical locations, like a local market or international market

buyers and sellers.

promotion, distribution, transportation, warehousing etc are activities of marketing.

Marketing is often taken to be a post-production activity, which is incorrect. Some activities

follow the leads of this study.

Marketing Management 5 / 200

1.2 Scope of Marketing

satisfaction to consumer delight and management of customer relationship.

The scope (subject matter) of marketing is as follows:

Products and Services:

product planning and development, product decisions relating to branding, labelling,

packaging, trademarks etc.

Marketing Management 6 / 200

distribution. It includes a number of intermediaries like wholesaler, retailers, jobbers etc.

includes transportation, warehousing, inventory control and management, order processing

publicity, public relations etc.

Marketing Management 7 / 200

distribution. It includes a number of intermediaries like wholesaler, retailers, jobbers etc.

includes transportation, warehousing, inventory control and management, order processing

publicity, public relations etc.

Marketing Management 8 / 200

develop an understanding of the strength, weaknesses, opportunities and threats, for an

Feedback from Customers:

Responsibility towards the Society:

towards employees, consumer, shareholder etc.

1.3 Fundamental concept:

Five Fundamental concept of Marketing are:

Marketing Management 9 / 200

but marketing is a much wider concept.

high in quality, performance or innovative features. Managers in these organization focus on

myopia, Marketing myopia is a shortsightedness about business. Excessive attention to

worker should think customer & act customer.

Marketing Management 10 / 200

1.4 Trends and tasks: