What is Marketing ?

Marketing is about identifying and meeting human and social needs. One of the
Shortest definitions of Marketing is “meeting needs profitably”.

American Marketing Association ---- “Marketing is an organizational function and a

Set of processes for creating, communicating, and delivering value to customers
And for managing customer relationships in ways that benefit organization and its
Stakeholders.”

Marketing Management is the art and science of choosing target markets and
Getting, keeping, and growing customers through creating, delivering, and
Communicating superior customer value.

Metamarket is a cluster of complementary products and services that are closely

Related in the minds of consumers, but spread across a diverse set of industries.
Mohan Sawhney, Northwestern University
Marketing Management Tasks : : :

Developing Marketing Strategies & Plans

Capturing Marketing Insights
Connecting With Customers
Building Strong Brands
Shaping The Market Offerings
Delivering Value
Communicating Value
Creating Long Term Growth
Marketing And Customer Value
Corporate & Division Strategic Planning
Defining The Corporate Mission
Establishing Strategic Business Units
Assigning Resources To Each SBU
Assessing Growth Opportunities

SBU Level Strategic Planning

The Business Mission
SWOT Analysis
Goal Formulation
Strategic Formulation
Program Formulation & Implementation
Feedback & Control
 Marketing Research Process

Define Problem/Research Objectives

Develop The Research Plan
Collect The Information
Analyze The Information
Present The Findings
Make The Decision

Break-even volume = Fixed Cost/(Price-Variable Cost)

Measuring Marketing Productivity

Marketing Metrics is the set of measures that helps Marketers to quantify, compare,
And interpret their marketing performance.

Marketing-Mix Modeling

Marketing Dashboards : A Customer- Performance Scorecard

A Stakeholder-Performance Scorecard

London Business School’s Tim Ambler suggests that if firms think they are already
Measuring marketing performance adequately, they may be mistaken.

Wharton’s Dave Reibstein notes shortcomings of Marketing-Mix Modeling.

Total Market Potential == Potential no. of buyers X Average qty. purchased by a
Buyer X The Price

Brand Development Index == Brand Sales/Category Sales X 100 ( in percentage)

Customer Lifetime Value describes the net present value of the stream of future
Profits expected over the customer’s lifetime purchases.

Buying Process in B2B Environment : :

Problem Recognition
Product Specification
Supplier Search
Proposal Solicitation
Supplier Selection
Order-Routine Specification
Performance Review
Levels Of Market Segmentation
Mass Marketing
Segment Marketing
Niche Marketing
Local Marketing
Individual Marketing

Effective Segmentation Criteria : :

Measurable
Substantial
Accessible
Differentiable
Actionable
Evaluating and Selecting the Market Segments

Single-Segment Concentration
Selective Specialization
Product Specialization
Market Specialization
Full Market Coverage
Defending Market Share : :

Position Defense
Flank Defense
Preemptive Defense
Counteroffensive Defense
Mobile Defense
Contraction Defense

Market Challenger Strategies

Frontal Attack
Flank Attack
Encirclement Attack
Bypass Attack
Guerrilla Warfare

Branding is endowing products and services with the power of a

BRAND.
BCG Matrix
Customer Equity is sum total of lifetime values of all customers.

Positioning Strategy : :
POPs
PODs

Product Levels : : : Customer Value Hierarchy

Core Product
Basic Product
Expected Product
Augmented Product
Potential Product
Service Differentiation
Ordering Ease
Delivery
Installation
Customer Training
Customer Consulting
Maintenance & Repair
Sales Returns

Dr. Pawan Goenka ----- Aapke Saath Hamesha

Characteristics of Service : :

Intangibility Knowledge Gap

Inseparability Standards Gap
Heterogeneity Delivery Gap
Perishability Communication Gap
 Setting The Price : Analyzing Competition
Setting The Price : Selecting A Pricing Method

Markup Pricing : Unit Cost=Variable Cost+Fixed Cost/Unit Sales

Target-Return Pricing : Breakeven Volume=Fixed Cost/

Price-variable cost

Perceived Value Pricing

Value Pricing : Charging low Price to loyal customers : IKEA

Wal- Mart
Going-Rate Pricing

Auction Type Pricing

• Isolated Store

• Unplanned Business District

• Planned Shopping Center

 Evaluate
Alternate
Geographic
(Trading)
Areas

Determine
Type of Location

Select
General
Location

Analyze
Alternate
Sites
Total Revised Sales Total Sales Total Previous Sales
+ -
of Existing Store of New Store of Existing Store
 Reilly’s Law

Reilly’s law of retail gravitation attempts to establish a Point of Indifference between

two cities or communities, so that trading area of Each can be determined. The
Point of indifference is the geographical Breaking point between two
cities/communities at which consumers Are indifferent to shopping at either.

The law may be expressed algebraically as : : :

The law was developed by William J Reilly in 1931

 Huff’s Law

Huff’s Law may be expressed as : : :

i= consumer’s home
j= shopping location
n = no. of other shops

MPSI Systems offers a software package called Huff’s Marketing

Area Planner
 Key concepts In Financial Strategy
Net sales=Gross sales-goods return-customer allowances

Gross margin=Net sales-cost of goods sold

Net profit=Gross margin-Expenses

Current Assets=Inventory+Accounts receivable+other current

assets

Inventory turnover=Net sales/Average inventory

Fixed Assets are those that require more than a year to convert
To cash.
Other Retail Pricing Strategies
•Coupons

•Rebates

•Leader Pricing

•Price Bundling : Example can be holiday package

•Multiple-Unit Pricing : 3 shirts for Rs 1000.00

•Price Lining : Predetermined Price Points

•Odd Pricing
 Ethical and Legal Issues In Pricing
Predatory Pricing

Vertical Price Fixing

Deceptive Pricing : This unfair practice is often called

“bait-and-switch pricing”

Horizontal price-fixing involves agreements to set prices

made among one particular class of sellers — such as
producers, wholesalers, or retailers. Price
Cartel among Voltas , Carrier and Shriram .
Retail Selling Process
• Preparing For The Customer

• Prospecting The Customer

• Contacting The Customer

• Presenting The Merchandise

• Handling Objections

• Closing The Sale

• Follow up and Follow Through

 Factors Influencing the Retail Shopper

d of T
ro un rav
el
c kg tim
l ba er ea
ra nd
u ltu hopp dis
-c s tan
cio c
So e

Lo
Factor’s influencing

c a
customer’s decision making

ti onal
c on v
e ni ence
Range of merchandise

11/04/2021 28
 LTV Before New Strategies
Year 1 Year 2 Year 3
Retention Rate 40% 45% 50%
Customers 200,000 80,000 36,000
Visits Per Year 1.4 1.6 1.8
Spending Per Visit $50 $60 $70
Revenue $14,000,000 $7,680,000 $4,536,000

Cost Percentage 50% 49% 48%

Costs $7,000,000 $3,763,200 $2,177,280
Acquisition Cost $32 $6,400,000
Total Costs $13,400,000 $3,763,200 $2,177,280

Profit $600,000 $3,916,800 $2,358,720

Discount Rate 1 1.12 1.32
NPV Profit $600,000 $3,497,143 $1,786,909
Cum NPV Profie $600,000 $4,097,143 $5,884,052
Lifetime Value $3.00 $20.49 $29.42
 Discount Rate Basic Formula
Market Rate of Interest...5%

Assume Risk (Double rate)...10%

Years = n Interest = I

Formula: D = (1 + i)n
Calculation of rate after 2 years:

 D = (1 + .10)2 = (1.10)2 = 1.21

 Order Quantity Decisions
Economic Order Quantity (EOQ)

EOQ = [2 DS / IC]

Where D = Annual demand in units

S = Order Cost
I = Inventory carrying cost per unit
C = Value of inventory

Reorder Point (ROP) (Illustration in next slide)

ROP = d T where T = lead time in weeks

d = rate of demand per week
 Service Recovery
• Listening To Customers

• Providing A Fair Solution

• Resolving The Problem Quickly

 Distribution Channel
Certain discrepancies exist between a typical production
Activity and typical consumption activity. These
Discrepancies are : : Spatial Discrepancy
Temporal Discrepancy
Need to break the bulk
Need to provide assortment

Wore Alderson

In this sense , a marketing channel can be described as an

Orchestrated network that creates value for end-users by
Generating form , possession , time and place utilities.
 Positioning Errors
Underpositioning : Buyers have a vague idea of the Brand

Overpositioning : Too narrow image of the Brand

Confused Positioning : Confused image Whether Brand stands

For boys or girls or mature professionals

Doubtful Positioning : Buyers find Brand claims difficult to believe

Source :Marketing Management, Kotler, Eleventh Edition, PHI, p-311

Megamarketing is the strategic coordination of economic,
Psychological, political, and public relations skills, to gain the
Cooperation of a number of parties in order to enter or operate
In a given market. Pepsi used megamarketing to enter the Indian
Market.