MKTG 80: MARKETING MANAGEMENT
The second, the two
LESSON 1: OVERVIEW ON THE INTRODUCTION TO MARKETING
MANAGEMENT
Overview on Marketing Management
-Can marketing be the same as selling or advertising? In most cases
when people have heard the term 'marketing', often have different
perspective of understanding of it. But usually, their view of
marketing is partial or biased. Very few properly understand what
the concept really means.
-Many people tend to think of marketing as selling, shopping or
advertising. Though these assumptions are not completely wrong,
they are not completely true either. Marketing is much more than
selling or advertising - it involves a broader scope of activities and
ideas.
-Generally, marketing management is the process of planning,
executing, and tracking the marketing strategy of an organization.
This includes the marketing plan, campaigns, strategies and tactics
used to create and meet the demand of target customers to drive
profitability (Dickerson, 2022).
-In this section, the meaning of “marketing” and as well as
“marketing management” and other terms, concepts and topics
related to marketing and marketing management will be covered.
Key Words and Concepts related to Marketing Management
Marketing
Marketing deals with identifying and meeting human and social
needs. One of the shortest definitions of marketing is “meeting
needs profitably.” Whether the marketer is Procter & Gamble, which
notices that people feel overweight and want tasty but less fatty
food and invents Olestra; or CarMax, which notes that people want
more certainty when they buy a used automobile and invents a new
system for selling used cars; or IKEA, which notices that people want
good furniture at a substantially lower price and creates knock-down
furniture—all illustrate a drive to turn a private or social need into a
profitable business opportunity through marketing
TERMS THAT DEFINE MARKETING
The word marketing encompasses a broad scope of activities and
ideas and thus settling on one definition is difficult. Over a period of
time, various experts, authors and professionals have described
marketing in different ways using different perceptual routes. Some
of these descriptions are given in the table below.
-an art, a process, a philosophy, a science, a practice, an exchange
process, a function, a system, an activity
Kotler's Marketing Definition
Understanding the keywords will not only help to understand the
concept of marketing but also to appreciate the role of marketing
within an organization.
The following are the key terms in this definition. The first one is
societal process. It is process and it is societal. Hence, marketing is a
societal process where the marketer satisfies the consumption
requirements of the consumers inside the society and hence the
starting point, which is the societal process.
terms individuals and groups were used separately. Now individuals
behaving individually and individuals behaving in a group are very
different from each other. When people go to buy any item
individually for themselves or for their family, they decide based on
their own choices whereas if they go along with their friends or
along with their family to buy even a simple item, the decision-
making process takes a long-winded elongated route. So even the
group behavior is different than individual behavior and this kind of
distinction can be seen in the shopping pattern as well. What they
buy, how they buy, how much they buy, so on and so forth. The way
a consumer behaves in a store and chooses the product when she is
alone and when she is in a group is entirely different and hence the
definition. More discussions covered about the requirements, and
individuals and groups differently at different points of time. The
next part. Need and want. One of the most important things,
important basis for marketing. Marketers clearly tried to satisfy the
needs and wants of consumers, but there is a difference between
need and want. Need is a felt sense of deprivation of some basic
necessities, for example, food, clothing, shelter, or anything without
which today you will not be able to survive.
Different Definitions of Marketing
There are various definitions of marketing. The following are the list
of various definitions of marketing given the marketing experts like
Philip Kotler and Professional Body like American Marketing
Association.
• Marketing is a societal process by which individuals and groups
obtain what they need and want through creating, offering, and
freely exchanging products and services of value with others.
• Marketing is the set of activities, set of institutions and processes
for creating, communicating, delivering and exchanging offerings
that have value for customers, clients, partners and society at large.
• Marketing is an organizational function and a set of processes for
creating, communicating, delivering value for customers and for
managing customer relationships in ways that benefit the
organizations and its stakeholders.
• Marketing is the performance of business activities that directs the
flow of goods and services from producer to consumer or user.
Meaning and Types of Markets
Market is defined as a physical place where potential customers,
buyers, and sellers gathered, they gathered together and to buy and
sell some goods. Today, in a more complex business environment, a
market means a set of buyers, sellers, intermediaries, and
organizations who are involved in the process of exchange. As per
Oxford illustrated dictionary, market is the gathering of people for
the purchase and sale of provisions, livestock,etc., and the space, it
could be open or covered, that is used for the same purpose.
Though the meaning of market remains the same, there are
different types of markets. There are broadly three types of market
that we will be discussing as part of this course, one is the consumer
market, the business market, and finally the institutional market.
Meaning of Market
Traditionally, a market is a place where parties or people can gather
to facilitate the exchange of goods and services. The parties involved
are usually buyers and sellers. The may be physical, like a retail
outlet, where people meet face-to-face, or virtual, like an online
market, where there is no physical presence or contact between
buyers and sellers.
Some key characteristics help define a market, including the
availability of an arena, buyers and sellers, and a commodity that
can be purchased and sold (Kenton, 2023).
Additionally, a market comprise of all possible customers sharing a
particular need or want who might be eager and able to engage in
exchange to gratify this needs or wants (Serrano, 2019).
The first type of market that is called the consumer market. It is also
called B2C market that is business to consumer market. As the name
suggests, it is the end consumers of various merchandise like
products that are purchased by the consumer for their own or
household usage that constitutes the consumer market. Every week
people might be buying vegetables from the market. In addition to
vegetables, they might be buying household items, or groceries,
baby care items, blankets, towels, dresses, furniture, soap,
detergent. All these things are part of consumer market. What’s
common across all these items? These are the products that is used
within the households and that is used by the final consumer. So,
the market involved here is called consumer market. Please keep it
in mind that the products brought and sold in the market doesn't
decide the type of market here. It is the buyers and sellers that
decide the type of market. Majority of the things that we will be
discussing at part of this course will be talking about consumer
market. However, that is not the only market here.
The other type of market is called business market. Say people want
to buy sugar.
Now, when a sugar is bought for your own consumption that
becomes consumer market. If the same sugar is purchased by a
company to make glycerin soap, then that becomes part of a
business market. Remember the products are the same here. A
business market is defined as a market where output of one form
goes either as raw material, or as processed goods, or as
consumable goods into another industry. This is called B2B market
that is business to business. Thus, in business market, buyers buy
goods to resell at some point of time for profit to some other
business buyer. So, the major difference between the consumer and
business market is the end user. For a consumer market, the product
is used by the end consumer whereas a business market, the
product is used by a business entity for making something else,
which eventually will be sold to the end consumer. In this market,
the buyers are professionals who buy based on rational evaluation
of the offer, unlike in consumer market, where people make buying
decisions based on experience, emotions, sentiments, or even
impulse. Also, in this business market, the purchasing is done
generally in bulk, unlike in consumer market where people purchase
in small quantities because it is for their own household
consumptions. The third type of market is called institutional
market, and this is called institutional market because the purchase
is done by institutions, organizations. The purchase is bulk just like
business market. However, it is not for profit making. It is not for
reselling to any third party. For example, the provisions or
stationeries purchased by hotels, hospitals, schools, universities and
even institutions like CvSU. Say CvSU buys chairs, tables, benches,
laptops, desks for its students, faculties, staff. These are all part of
institutional purchasing. It is bulk purchasing, but not for reselling it
to somebody else for profit making. This market is called
institutional market.
Ten Types of Entities that can be Marketed
Most of the marketing efforts revolve around physical goods coming
out of the manufacturing systems. Organizations make products
from safety pins to refrigerators to satellites. However, such physical
goods are just one of the ten types of entities that can be marketed
(Philip Kotler, 2016).
Marketing people are involved in marketing 10 types of entities:
goods, services, experiences, events, persons, places, properties,
organizations, information, and ideas.
Goods. Physical goods constitute the bulk of most countries’
production and marketing effort. Example Philippines produces and
markets billions of physical goods, from eggs to steel to hair dryers.
In developing nations, goods— particularly food, commodities,
clothing, and housing—are the mainstay of the economy.
Services. As economies advance, a growing proportion of their
activities are focused on the production of services. The Philippine
economy today consists of a services-to-goods mix. Services include
airlines, hotels, and maintenance and repair people, as well as
professionals such as accountants, lawyers, engineers, and doctors.
Many market offerings consist of a variable mix of goods and
services.
Experiences. By orchestrating several services and goods, one can
create, stage, and market experiences. Enchanted Kingdom is an
experience; so is the SkyRanch.
Events. Marketers promote time-based events, such as the
Olympics, trade shows, sports events, and artistic performances.
Persons. Celebrity marketing has become a major business. Artists,
musicians, CEOs, physicians, high-profile lawyers and financiers, and
other professionals draw help from celebrity marketers.
Places. Cities, states, regions, and nations compete to attract
tourists, factories, company headquarters, and new residents. Place
marketers include economic development specialists, real estate
agents, commercial banks, local business associations, and
advertising and public relations agencies.
Properties. Properties are intangible rights of ownership of either
real property (real estate) or financial property (stocks and bonds).
Properties are bought and sold, and this occasions a marketing effort
by real estate agents (for real estate) and investment companies and
banks (for securities).
Organizations. Organizations actively work to build a strong,
favorable image in the mind of their publics. Philips, the Dutch
electronics company, advertises with the tag line,“Let’s Make Things
Better.” The Body Shop and Ben & Jerry’s also gain attention by
promoting social causes. Universities, museums, and performing arts
organizations boost their public images to compete more
successfully for audiences and funds.
Information. The production, packaging, and distribution of
information is one of society’s major industries.6 Among the
marketers of information are schools and universities; publishers of
encyclopedias, nonfiction books, and specialized magazines; makers
of CDs; and Internet Web sites.
Ideas. Every market offering has a basic idea at its core. In essence,
products and services are platforms for delivering some idea or
benefit to satisfy a core need.
The Marketing Environment
The marketing environment consists of a micro-environment such as
actors engaged in producing, distributing and promoting its offering.
These are called internal factors that is close to the company
because they have a direct impact on the organization’s strategy,
and they are controllable by the organization, whether completely
or partially. These factors include competitors, customers,
employees, the suppliers to the organization and the various
shareholders in the organization. So, as you can see, while
employers are completely controllable by the organization, the
competitor, the customers, the suppliers, and the shareholders, they
are not really controllable by the organization, but then because
they are one way or the other used in the organization’s business.
So, organization also partially controls them one way or the other.
Macro or broad environment such as demographic environment,
economic environment and so on, in this case, marketing manager
will not be able to influence these external forces. However, the
impact of these forces too will be felt in the organization’s strategy
and implementation. Macro environmental factors would include
demographic factors, cultural factors, social factors, economic
factors, legal and political factors, technological environment, and
even many natural factors. Now you can see here that the two
types, one is something that organization can influence, organization
can control and the other is something that the organization cannot
control but is influenced by it. So, it is important over here for the
organization to appreciate both these factors and keep a track of
how these factors are changing, and accordingly modify and develop
its strategy. So, analyzing this marketing environment, both external
and internal, macro and micro is crucial to effectively monitor
changes that may suddenly pose various opportunities or threats.
This kind of analysis is done through environmental scanning and
analysis. “Environmental scanning” refers to systematically
collecting information about environmental forces that affect the
performance of the company and of course its competitors.
“Environmental analysis” refers to assessing, interpreting and
estimating the gathered information and forecast the impact of
various macro as well as micro environmental trends and focus it on
organizational strategy.
How this is going to influence organizational strategy? The
organizations often develop or modify their strategies based on such
information in order to achieve their objectives effectively.
Marketing and Selling
Many people tend to think of ‘marketing’ as synonymous with
‘selling’. Selling is the act of persuading or influencing a customer to
buy a product or service but marketing is much more than that.
Selling and marketing bring different orientations to business; hence
managers are expected to follow different kinds of strategies for
business success. In this unit, the difference between marketing and
selling will be discussed.
What is the difference between Marketing and Selling?
Marketing as was defined by Reis and Trout a long time ago in their
best-selling book “Positioning” as The Battle for the Customers
Mind. So marketing is creating a demand in the customers mind so
that they will seek you out. Sales on the other hand, is chasing
customers and asking for the order. Another way of thinking about
the difference between selling and marketing is the difference
between a product and a brand. A product is something that is
typically created by a company, made in their factory and placed in
stores or given to salesmen to sell. Much like what has been
happening for a long time now with the American auto
manufacturers. The assumption is that the cars will be sold by their
dealer’s salesmen.
Difference between Marketing and Selling
Most often selling is used as a synonym for marketing. While selling
is surely part of marketing it is definitely not a synonym. Marketing
is a process, and the process involves selling as a promotional tool.
However, because these two terms are used very frequently and
almost used as a synonym, the major differences between marketing
and selling were clarified that right at the beginning. Now, the major
difference is marketing starts with the consumer.Marketing tries to
find out the requirement of the consumer and based on that they
create a an offering. However, selling starts with the marketer or the
manufacturer. Example, a Eureka Forbes guy come to some house
and some demo of the Euroclean or Aqua guard or any such kind of
products and decide whether people want to buy or do not want to
buy it, then it is called marketing because the customer requirement
were explained, the products also were explained about its the
functioning. Selling is the act of persuading or influencing a
customer to buy a product or a service. Marketing is much more
than that. As it is understood it by now through our discussion of
various definitions and processes. Now, marketing is a process of
identifying customer needs, translating those needs into products
and services, creating the demand for these products and service,
and satisfying the consumer of course finally creating the value for
the customer. There is another major difference, the emphasis of
selling is more on closing the sale, that is, it is a short-term focus
with no strategy for long-term development.
On the contrary, the emphasis of marketing is on customer
satisfaction with a strong focus on building a brand which often is
long-term in nature.
Introduction to Business Models
Though marketing is one of the most crucial functions of any
organization, it cannot work in isolation. There are various
stakeholders and multiple activities in any business and a successful
appreciation and interaction between these stakeholders is the key
to feasibility of any business. Through the study of business models,
marketers try to identify the reasons for the feasibility of any
business. In other words, they try to answer this question: “How any
business makes money?”. In this unit, the discussion focused on
what business model is and its significance to marketing.
Business Model Templates
A business model template typically has nine different blocks or
constituents. They are the customer segment that is who is the
customer, the value proposition that is what is value to the
customer, the various channels that is how to reach the customer
both physically, as well as emotionally, or cognitively. And the fourth
component is customer relations, how to develop and maintain
relationships with the customer. Fifth, revenue stream. What will be
the revenue cost and hence the net earnings? Sixth, key resources.
What assets are required to deliver this value? That is physical
resources, financial resources, manpower resources, intellectual
resources whatever kind of resources. Seven, key activities. What
activities need to be carried out to provide value to the customers?
That is manufacturing, or retailing, or consulting, or supply chain,
what kind of activities? Then the eighth component is key
partnerships. What activities they do in-house and what they
outsource? And if outsource, to whom do they outsource? And the
ninth component is the cost structure. What are the different costs
incurred to operate the business? That is the fixed cost, the variable
cost, and eventually the economy of scale etc.
Typically, for a business which is based on marketing, it will involve
the suppliers, the manufacturers, the third-party logistics. If you look
up to the key activities then for a marketing organization, the key
activities will be manufacturing, retailing, logistics, supply chain. If a
company are looking at key resources, what will be the key
resources for a marketing organization? It would be brands. It would
be customer databases. It will be manpower who run the business,
the distribution network which is very important for marketing, the
financial power to run the business, launch new products, launch
new brands, reach out to new customers. If the company look up to
the value proposition, very significant, what is value to the
customer? What will satisfy the customer? So, typically, if the
company look up to a marketing organization or different products
and brands, why do people buy the products and brands? So that
typically would be price conscious consumers, or value conscious
consumers, or experience seeking consumers, or luxury seeking
consumers. So that will lead to the obvious things, who are the
customers? Geographic, demographic, psychographic,behavioral,
different type of consumer segments, how to establish relationship
with the customers and of course the channels that is distribution
network, store formats, online formats, the different promotion that
is the emotional connect. So these are the different attributes of a
business model. Apart from that, of course, we will be talking about
the cost and the revenue streams. So this is quite relevant for a
marketing organization.
Summary of Marketing Terminologies
Market. Physical or virtual place where buyers and sellers assemble
to carry out business transactions. The sellers are always business
organizations (commercial organizations like Unilever, P&G, Nstle,
etc.) and the buyers could be final consumers or some other
business organizations. In the former case, the market is called
consumer market and type of marketing is called B2C marketing. In
the latter case, the market is called business market and the type of
marketing is called B2B marketing.
Marketing. It is the process of identifying the right customer for you,
identifying the requirements of the customers and developing an
offering to satisfy the customer. Marketing management involves
developing an appropriate managerial process to implement the
marketing strategy and satisfy the customer.
Consumer. Anyone who consumes the product/service that is
offered by the marketer
Customer. Anyone who regularly purchases any product / service /
brand from any specific store
Target segment. A consumer group on which the marketer wants to
focus for their marketing efforts
Segmentation. Process of dividing the market into various
homogenous groups based on some common parameters
Positioning. Creating an image in the mind of the target consumers
Marketing mix. A combination of marketing tools to create a
marketing strategy. Typically, the marketing mix consists of 4Ps
(Product, price, place and promotion). However, there are different
instances where different combinations are proposed.
5Ps: - Any of packaging, people, positioning, performance etc.
6Ps:- Any of Political power, public opinion, production etc.
7Ps:- Any of Packaging, process, people, practice, physical evidence
etc.
Logistics: Physical movement of goods from one location to another.
It includes all the commercial activities in the process of
transportation (viz. warehousing, storage, physical distribution etc.)
Supply chain: It includes all activities and processes (including
organizations, resources and people) involved in transportation of
goods from the manufacturer / supplier to the end consumer. For a
marketing organization like Nestle or P&G that manufactures and
sells various FMCG products, supply chain starts from procurement
of the raw materials from various vendors and it ends with the
finished good reaching the end consumer.
Marketing channels: The means through which the products reach
the end consumer from the marketers’ site. It includes the physical
stores, online channels and personal selling etc.
Niche marketing: Focusing on a small customer segment with
specific requirements and trying to satisfy the customers at a
premium.
LESSON 2: Market Segmentation and Targeting
CONCEPT OF SEGMENTATION
Consumer markets are typically large and heterogeneous in nature
in which consumers are quite different from one another. Even
though no two consumers are exactly similar to each other, there
may be some commonality between them. Such commonality
parameter can be used to divide the market into relatively
homogeneous groups. This is the essence of segmentation. Once
such groups are made, it is easier to put concentrated effort on
specific groups. This is popularly called targeting in marketing
terminology.
MARKET SEGMENTATION
-Market segmentation is an increasingly important part of a strong
marketing strategy and can make all the difference for companies in
competitive market landscapes, such as ecommerce. When up
against a range of online competitors, effective communication is
the best way to differentiate your business.
-Market segmentation offers an opportunity to pinpoint exactly
what messaging will drive your customers to make a purchase
WHAT IS SEGMENTATION?
Segmentation is the process of dividing the market
into various homogeneous groups based on some
common parameters.
BENEFITS OF SEGMENTATION
Segmentation not only helps in identification of customers with
substantial similarity but also helps in profiling them and their need
structure. Some of the major benefits of segmentation are:
-Segmentation helps to distinguish one customer group from
another within a given market.
-It facilitates proper choice of target market.
-When there exists a clear distinction between segments, the
marketing manager can use the resources in an efficient manner by
spending optimally on high potential and most profitable segments.
-It provides useful insights into the value sought by each segment.
-It helps in a better understanding of the competitive situation in
each of the segments.
-It helps spot the less satisfied segments and concentrate on them as
unique opportunities.
BASES MARKET SEGMENTATION
1.Demographic segmentation: The who
Demographic segmentation might be the first thing people think of
when
they hear ‘market segmentation’. This is perhaps the most
straightforward way of defining customer groups, but it remains
powerful. Demographic segmentation looks at identifiable non-
character traits such as:
Age, Gender, Ethnicity,Income, Level of education, Religion,
Profession/role in a company
2. Psychographic segmentation: The why
-Psychographic segmentation is focused on your customers’
personalities and interests. Here we might look at customers and
define them by their:
-Personality traits • Hobbies • Life goals • Values • Beliefs •
Lifestyles
-Segmentation based on the internal self of consumers is known as
psychographic segmentation
-Compared to demographic segmentation, this can be a harder set
to identify. Good research is vital and, when done well,
psychographic segmentation can allow for incredibly effective
marketing that consumers will feel speaks to them on a much more
personal level.
3. Geographic segmentation: The where
By comparison, geographic segmentation is often one of the easiest
to identify, grouping customers with regards to their physical
location. This can be defined in any number of ways:
Country • Region • City • Postal code
4.Behavioral segmentation: The how
Behavioral segmentation is possibly the most useful of all for e-
commerce businesses. As with psychographic segmentation, it
requires a little data to be truly effective – but much of this can be
gathered via your website itself. Here they group customers with
regards to their:
-Spending habits • Browsing habits • Interactions with the brand •
Loyalty to brand • Previous product ratings
-Behavioral segmentation divides a population based on their
behavior, with respect to their purchase and usage of the products.
Conditions for Effective Segmentation
-The total market should be heterogeneous. However, each of the
identified segments must be homogeneous (within the segment) •
-There should be enough potential customers in each of the
identified segments for the business to be profitable. Too small a
segment becomes infeasible from the company’s perspective.
-The customers within the segment should be willing and should
have the ability to buy the product.
-The final condition is that marketers should be able communicate
effectively with the customers. It must be possible to effectively
reach the target segment.
WHAT IS TARGETING?
Targeting, also known as multisegmented marketing, is a marketing
strategy that involves identifying specific personas or markets for
specific content. Companies use target marketing to learn more
about their consumers and thus create advertisements for specified
groups to maximize response.
Targeting means selecting one or more identified segments and
concentrating on those segments rather than the whole market.
TARGET STRATEGIES
1.Demographic Targeting. These targets are based on age, gender,
ethnicity, race, income, education, religion, economic status and
more, and are extremely commonly used in all types of marketing.
Using demographics is a tried and true marketing technique, a
foundation for target marketing. By combining different segments,
say age and gender, specific consumers can be targeted for specific
products in a myriad of ways, from ads to product placement and
more.
2.Geographic targeting. This targeting is based on a certain location
and can be as broad as a country or region, or as specific as a city or
neighborhood. Also known as geo-targeting or geo-filtering,
gathering
geographic information (such as city, state, IP address) and then
targeting consumers within certain locations has proven to be a very
effective marketing strategy, as it results in ads being sent to exactly
the right people in the right place.
Geographic targeting also uses the information on where the
consumer goes on a regular basis or has been to in the past to create
interest and habit profiles, which can be very valuable in choosing
what group the consumer belongs in. On a more practical level,
knowing the consumer’s geographic location ensures they are within
the area of the product or service you are offering.
3.Psychological and behavioral targeting.
-This targeting uses personality traits, previous purchases, favorite
places, shopping habits, “Likes” on Facebook or Twitter, opinions,
etc. Knowing the consumer’s personality can greatly enhance the
efficacy of a marketing campaign.
-Think about how to best pitch a sale to them. Have they already
bought the product? Time to sell them that product a second time
or offer something related to it. Using data gathered about the
user’s psychological and behavioral patterns using website cookies
gives more than a one-up in figuring out how to sell a product to
them, as you can also influence them and predict their response
better.
TARGETING STRATEGIES
1.Single Segment Concentration-focusing on one segment.
Example: Company decides to focus on adult ladies, that is, 25 to 35
age and cosmetics
2.Selective Specialization-which means the focus is on two or three
segments which are apparently not related with each other; or you
are looking.
Example:cosmetics, apparel, and shoes
3.Product Specialization
-One product satisfying all the different markets
-Catering to all the needs of one particular group, that is, the ladies,
that is, teens, adults, elders, and so on and so forth.
Example: Having cosmetics for all the categories( teens, adults ladies
and elderly ladies).
-Providing the cosmetic needs of all the categories of consumers is
about specialization by product.
4.Market Specialization
Here the company takes up a particular market segment for
supplying all relevant products to the target group.
Looking up to the needs and wants of one total market in different
stages;
5.Full Market Coverage
The full market coverage could be different offers for each of these
different segments or it is the same offer for the total market. Even
though you are supplying cosmetics to each of these different
segments, like teens and adults and elder ladies, but they are
different. The cosmetics offering to the teen females is not the same
cosmetics that you are offering to adult ladies.
probably the brands are different,
probably the pricings are different,
probably the packaging is different,
probably the sizes are different, so on and so forth
LESSON 3: DIFFERENTIATION
INTRODUCTION TO DIFFERENTIATION
-Differentiation is a marketing tool used to distinguish a product
from others in the same category.
-Marketing differentiation is crafting unique products and services to
attract and retain customers.
-Companies that use marketing differentiation can differentiate
between their 2 offerings and competitors in several ways, including:
price, quality, service, innovation, and accessibility
-There are several ways in which you can differentiate your goods or
services.
-You could sell them at a lower price than those offered by
competitors, provide more value than they do, or create new
markets for products that were previously unsold.
-You could also reorder the way your goods or services are
presented: use an unusual color scheme for packaging
MARKETING DIFFERENTIATION
WHAT IS DIFFERENTIATION?
Differentiation is a marketing tool used to distinguish a product from
others in the same category.
Differentiation is the act of designing a set of meaningful differences
to distinguish the company’s offerings from competitor’s offerings
UNDIFFERENTIATED MARKETING
-Markets which are non-segmented and all consumers have more or
less similar needs for a specific product. Hence marketers do not
differentiate their products for such markets. We call such marketing
as 'undifferentiated marketing’.
-Undifferentiated marketing assumes the lack of significant
differences among the consumers and their requirements.
DIFFERENTIATION STRATEGIES
PRICE
Price is one of the most common ways businesses differentiate
themselves from competitors. Sometimes this differentiation comes
from price wars among competitors, but it comes from companies
offering low prices to attract more customers. Some businesses only
sell their products online to keep the price lower than if the
products were sold in stores.
QUALITY
Quality is another common way marketing differentiation occurs.
While it's not always possible to be the highest quality product on
the market, some companies can distinguish themselves with higher
or unique quality.
SERVICE
-Service sets many companies apart from their competition,
particularly in industries where personal relationships are essential
(such as real estate).
-Providing excellent service is a crucial differentiator for many
businesses because adding this value proposition increases
customer loyalty. A company might give excellent service at no
charge as a way to stand out from competitors.
DIFFERENTIATION PARAMETERS
1.PRODUCT DIFFERENTIATION
-Product differentiation is related to the concept of how the
marketer differentiates the offer on certain product attributes.
-It is the characteristic or characteristics that make your product or
service stand out to your target audience. It's how you distinguish
what you sell from what your competitors do, and it increases brand
loyalty, sales, and growth.
-It the process of distinguishing your offering from similar products
orservices in the market. It's about identifying the unique features
and benefits of your product or service and positioning it in a way
that sets it apart from competitors.
-Product differentiation is a way for products and brands to
command market share based on consumer preferences.
3 TYPES OF PRODUCT DIFFERENTIATION
VERTICAL INTEGRATION
Vertical integration is when two products are similar but priced
differently. However, if the price of both products was the same,
one would be considered "the best" because of its perceived quality.
For example, a Hanes T-shirt vs. a Gucci T-shirt.
HORIZONTAL DIFFERENTIATION
Horizontal differentiation occurs regardless of a product’s quality or
price point. The customer chooses a product or brand according to
personal preference. For example, Coca-Cola or Pepsi.
MIXED DIFFERENTIATION
Mixed differentiation is complex and involves factors of both vertical
and horizontal differentiation.
IMPORTANCE OF PRODUCT DIFFERENTIATION
it allows different brands or companies to gain a competitive
advantage in the market.
If differentiation were unachievable, the bigger companies with
economies of scale would
always dominate the market because they can undercut smaller
producers in terms of price.
Product differentiation is also a way to control costs for the
consumer by maintaining a competitive market.
Differentiation is also a way for market forces to do their work and
keep prices down for the consumer
2.SERVICE DIFFERENTIATION.
-Companies try to differentiate not only through products but also
through valued services and improving service quality. Services
differentiation is the specific way in which a company provides
certain services to its customers.
-Services differentiation is the specific way in which a company
provides certain services to its customers.
-Services differentiation is more common in industries with
significant customer-facing interaction, like travel and leisure
activities, and less common in industries that work primarily
business to business or provide products rather than services.
However, even these product driven companies can employ services
differentiation as a tool to increase customer satisfaction and,
potentially, sales.
TYPES OF SERVICE DIFFERENTIATION
ENVIRONMENT
The environment in which your customers or clients interact with
your organization is a great services differentiation opportunity.
Consider the architecture, interior design and convenience items,
like pillows or access to beverages and snacks, in your space for
optimal customer comfort during their interaction with your
company
CUSTOMER SERVICE
Most companies have a customer service department to help clients
solve problems and ensure customers have a positive experience
with the organization. Giving excellent customer service that offers
support and communication options beyond what yourcompetitors
provide is an excellent way to differentiate your service in the
marketplace.
BRANDING
Consistent and effective branding can help entice potential
customers to engage with your services or products. Branding
includes elements like the colors and design you use in your logo,
documents and other marketing and customer materials.
Usually, branding also includes your slogan or tagline, which your
customer service or sales team will likely use when interfacing with
customers.
FUNCTIONALITY
By maximizing the functionality of your product or service, you're
improving the customer experience with your company.
Functionality can also apply to the ways in which your customers
communicate or interact with your organization, not just the
product or service you sell. You can use different feature
You can use different features to improve your service options and
provide customers with choices.
RELIABILITY
Keep the services you offer reliable. Make plans and backup plans to
address potential problems before they happen so you can quickly
resume your work as normal.
REPUTATION
-Your company's reputation is a key service differentiation option.
-Take active steps to not only improve, but to share your reputation
broadly in the marketplace.
-Ask customers for feedback and testimonials you can post on your
website and social media pages.
-Find ways to show your company is trustworthy and dependable to
your target demographic.
CONVENIENCE
-Make your services easy to access. Many customers will choose a
convenient option over a more complex, though potentially
preferable, service.
-Ensure customers can access your services, storefront, customer
service team or any other business offering you have quickly and
easily
USABILITY
Make any products, applications or digital offerings you provide user
friendly and as intuitive as possible. Should a customer want to
make a service or product purchase online through your website, do
your best to make the purchasing process simple, with a limited
number of steps and actions required to complete the transaction.
TERMS
Some services require contracts with terms and conditions. If your
company offers a service like this, keep your terms as simple,
concise and straightforward as you can.
Review your competitor's terms and find a way to make yours more
enticing to potential customers.
CUSTOMIZATION
Offer customization options when applicable for your products or
services.
SELF SERVICE
-Implement self service options for customers when applicable to
your organization and convenient for the customer.
-Some customers prefer to solve problems or access information on
their own without working with a company representative during
business hours.
PRICING
-Consider inventive pricing structures for your products or services
to maximize your impact in the marketplace.
SPEED
-Efficiency and speed is another excellent service differentiation
strategy.
-Consider a business like a car wash. Implement a system in which
drivers can get their car washed in less than 10 minutes to appeal to
customers who want to save time when completing errands.
TIPS FOR DIFFERENTIATING SERVICES
Consult your customers. The goal of services differentiation is to
increase customer engagement and purchasing. Find out what your
customers want and implement those specific strategies.
Speak with your team. Look for opportunities by asking your team
and colleagues what they think would improve your competitive
edge in services differentiation.
Have a person answer the phone. If possible, have an employee
answer all phone calls rather than an automated answering service.
Maintain customer focus. Ensure any services differentiation
strategies you choose to use put the customer first.
Choose a few. Rather than implementing 10 or 15 strategies, look
for two or three that will best suit your organization and your
customers' needs.
Build relationships. Take time to build relationships with your
customers to establish loyalty. Many services differentiation
strategies help you do this.
Track progress. Once you've implemented a services differentiation
strategy, track it to ensure it's helping your company meet goals and
objectives.
Watch your competitors. See what services differentiation choices
your competitors are making to ensure you're maintaining your
competitive edge in the marketplace.
3.PERSONNEL DIFFERENTIATION.
-Personnel differentiation refers that the corporation obtains
differential advantage through hiring and training staff better than
competitors‘.
-Personnel differentiation requires that a company should select its
customer-contact people carefully and train them well.
-These personnel must be competent -they must possess the
required skills and knowledge.
-They need to be courteous, friendly and respectful. They must serve
customers with consistency and accuracy.
-And they must make an effort to understand customers, to
communicate dearly with them, and to respond quickly to customer
requests and problems
CONCEPT OF COMPETITION
-Competition in business and marketing refers to a situation in which
one company attempts to outperform another. Companies compete
against one another in order to boost sales, raise revenues, and
acquire market share.
-It is a situation in which someone is trying to win something or be
more successful than someone else.
-In economics, it is defined as an activity involving two or more
firms, in which each firm tries to get people to buy its own goods in
preference to the other firm's goods.
-These are businesses offering similar (or identical) products or
services in the same market. They also vye for the same customer
base. Some famous examples of direct competitors include Apple
versus Android, Pepsi versus Coca-Cola, etc.
-If any other player in the market offers the same product as yours
to the same consumer group that company serve at similar price
levels, then this refers to a competitor.
-Potentially, customers could move between you and your
competitors as there is no significant difference between both of
your offerings (in the perception of the customer).
-Competitor is anyone who provides the same offering to the same
target segment.
-Competition like brand level, industry level, form level and generic
level.
-More competition means greater choice and more services
-Competition is not just a matter of price. In practice it means
greater product diversity and it promotes the emergence of new
services.
-The pressure exerted by their competitors encourages companies
to promote their products and to stand out by focusing on originality
or quality of service or by targeting new customer segments.
WHAT IS COMPETITION?
-Competition” is when many producers try to sell similar goods to
the same set of consumers.
-The producers need to “compete” to try to attract more consumers,
usually by lowering prices, offering better versions of the goods or
services, or through marketing.
-Competition is the core concept of the Market Economy.
WHY DOES COMPETITION WORK?
-Competition generally leads to lower prices, more choice, and
better qualities of product for consumers than other types of
economies.
-The reason for this is that with competition, there is very little
“central planning” of the economy, while producers and consumers
are able to act in their own self-interest.
-For a producer, this means that they want to attract as many
customers as possible, and earn the highest profit. In an ideal
setting, there are thousands of potential producers for any good.
POSITIONING
WHAT IS POSITIONING?
-Positioning is the act of designing a company's offering and image
to occupy a distinctive place in the minds of the target market.
-To be successful in positioning, marketers should define and
communicate similarities and differences between their brand and
their competitors in order to have successful positioning.
-A good positioning should be done based on not only the current
state of the market but alsokeeping in mind the future.
-It needs to be forward-looking and somewhat aspirational so the
brand has room to develop and improve. Thus, a good positioning
strategy should strike the right balance between what the brand is
and what it could be.
VALUE PREPOSITION
The output of such good positioning is the creation of value
proposition, a convincing reason why the target group should buy
the product.
Value proposition indicates, “what value are you proposing to the
target market” that is “why the target market should buy your
product”. Successful creation of ‘value proposition’ is the result of
effective positioning
LESS0N 4: CONSUMER BEHAVIOR
INTRODUCTION TO CONSUMER BEHAVIOR
-Human behavior is complex.
-When a consumer decides to buy a product or a service, there are
several factors, (viz. Personal, situational, psychological etc.) which
influence their purchase decision.
-Marketers need to understand why consumers behave the way
they do.
CONSUMER AND CUSTOMER ARE THEY THE SAME?
CONSUMER
A consumer is the end user of the product or the one who
'consumes' the product.
CUSTOMER
Customer is involved in the purchase of the product, he may or may
not consume it.
CONSUMER BEHAVIOR AND ITS IMPORTANCE
-When marketers study consumer behavior, they attempt to
understand the basic reason behind the purchase of a product.
-A useful premise to the understanding consumer behavior is
"people do not buy products or services, they buy benefits". As
consumers a few common questions we may ask ourselves before -It can also assume that the risk involved in making a wrong decision
making a purchase is: in routine problem solving is very low.

Do I have the need for this product? Do I want it? FIVE STAGES OF DECISION MAKING PROCESS

How will this product/service benefit me? 1.NEED RECOGNITION

Is this worth the money I paid?
In addition, a customer buys a product, he may not necessarily seek
one benefit but there could be several benefits; a combination of
both tangible as well as intangible benefits.
CONSUMER BUYING ROLES
-In the beginning of this course, we discussed that need is the felt
sense deprivation of some necessities. In this step, consumers
evaluate the gap between the actual state and the desired state.
-This step can also be called the "problem recognition" stage, where
the consumer attempts to solve a problem by making a purchase

Consumer behavior is and why it is important for marketers to

appreciate what is going on in the minds of his consumers.

Now, it will be useful to think how a purchase decision is made. 2.PRE-PURCHASE INFORMATION SEARCH
There are various stakeholders involved in every purchase decision.
They can be broadly classified as -Once the consumer feels the need for a product or a service, the
next step is to look for relevant information
1. Initiator
-In today's age information is very easily available. Product
2. Influencer hoardings, advertisements in social media, radio and television.

3. Decision maker -Once a consumer decides to purchase a certain product/service her

attention to these stimuli becomes more intense and she actively
4. Buyer starts looking for information related to her product/service.
5. User 3. EVALUATION OF ALTERNATIVES
CONSUMER DECISION MAKING PROCESS -Evaluation of alternatives involves the process of comparing and
The consumer decision making process primarily consists of 5 stages contrasting the various available alternatives of the product/ service
that the consumer desires to buy.
1. Need recognition
-This step is important in case of high involvement products, but a
2. Pre-purchase information search consumer can choose to skip this step if she is making a routine
purchase.
3. Evaluation of alternatives
-In several cases, evaluation of alternatives happens simultaneously
4. Purchase decision when a consumer is looking for information
5. Post-purchase behavior COMPENSATORY AND NON- COMPENSATORY DECISION-MAKING
A purchase related behavior could be broadly classified into: PROCESS

1.EXTENSIVE PROBLEM SOLVING -A non-compensatory decision-making strategy eliminates

-The consumer absolutely has no idea about the product category
nor has any idea about the brands.
-Consumer will put in all his energy and efforts and follow all the
steps. It is often assumed that bigger the purchase, the risk involved
in higher.
alternatives that do not meet a particular criterion.
-A compensatory decision-making strategy weighs the positive and
negative attributes of the considered alternatives and allows for
positive attributes to compensate for the negative ones.
4.PURCHASE DECISION

2.LIMITED PROBLEM SOLVING
Limited problem solving, the consumer may choose to skip a few
steps as he may have some idea about the product category, but no
idea about the brands involved.
-After the consumer carefully evaluates the alternatives available to
her, she then arrives at the purchase decision.
-This step need not necessarily translate into immediate purchase.
The purchase decisions could also be:

3.ROUTINE PROBLEM SOLVING No purchase

-In routine problem solving the consumer may not follow most of Postponing the purchase
the steps as has complete knowledge about the products and brands Immediate purchase
involved.
If the consumer decides not to make the purchase, in such cases,
she generally goes back to the first step and revisits her need.
5.POST-PURCHASE BEHAVIOR
Once the purchase is made, there are 3 possible outcomes
1. The product exceeds consumer expectations
2. The product matches consumer expectations
3. The product does not meet consumer expectations
The first two instances are examples of positive post-purchase
behavior,while the last instance is an example of dissatisfaction.
POST PURCHASE BEHAVIOR
POST-PURCHASE DISSONANCE
In certain cases, after buying a product, consumers go through post
purchase dissonance or cognitive dissonance.
-This means that the consumer may regret the purchase.
-Dissonance is more common in case of high involvement products,
this is also because the risk associated with high involvement
products is higher.
-Therefore it is important for both marketers and consumers to take
steps to reduce dissonance.
HOW CAN MARKETERS REDUCE DISSONANCE?
-Marketers do play an important role in reducing, if not eliminating
cognitive dissonance.
-Positioning the product to the right segment of consumers.
-Educating the consumers on the product/service.
-Staying in touch with the consumers after the sale, will help
marketers understand their post-purchase behavior, which will help
them address dissonance.
-Communicating the return and the post sales warranty will help in
reducing dissonance to a large extent.
HOW CAN CONSUMERS REDUCE DISSONANCE?
Consumers also need to take steps to ensure that they face lower
levels of anxiety/dissonance.
The evaluation of alternatives stage plays an important role in
reducing dissonance to a certain extent. The following steps may
help buyers reduce dissonance:
-A thorough research on the product/service and its attributes
before making the purchase.
-Having clarity on the purpose that the product or service is likely to
serve.
-Returning the product before use or during the allowed return
period in case of dissatisfaction during usage
INFLUENCES OF CONSUMER BEHAVIOR
1.PERSONAL FACTORS
-Personal factors are essentially demographics such as age,
occupation, income, education and lifestyle choices strongly
influence the buying behavior of a consumer.
-They differ from person to person.
(age, lifecycle stage, economic situation, occupation, lifestyle,
personality/self-concept)
2.CULTURAL FACTORS
-Culture does influence the way a consumer behaves in a purchase
situation.
-This can be further divided into • Culture • Sub-culture • Social
class
-In most cases culture is learned behavior. A child growing in a family
belonging to a certain culture and a social class is likely to adapt the
buying behavior of her family.
-However her social class may change later due to educational
background and job opportunities and consequently, her buying
behavior may undergo modifications.
However, culture and sub-culture will continue to influence his
buying behavior, though the consumer may be influenced by
different subcultures over a period of time.
3.SOCIAL FACTORS
The social factors consist of reference groups and family.
-Reference groups primarily consist of people that consumers
interact with on a regular basis.
-Consumers look for approval from this group.
-However, a reference group is not constant and is likely to change
from time to time. For example, a consumer's buying behavior is
likely to change when she moves from one job to another, as she
attempts to conform to the expectations of the new group.
-Family on the other hand has a very strong influence on the buying
behavior of a consumer. It is common to see a child to be influenced
by the parents' buying behavior.
4.PSYCHOLOGICAL FACTORS
-Psychological factors refers to the internal self of any consumer.
-These factors influence their behavioral patterns that include
purchase decisions.
-The most important psychological influences on consumer behavior
can be classified into the following :

• Perception • Motives • Learning • Attitudes • Personality •

Lifestyle

All the variables influence a consumers' buying behavior to varying

degrees.