Description
Sales promotions can be directed at either the customer, sales staff, or distribution channel members (such as retailers)
Sales Promotion
Personal Communication Channels
Personal communication is communication between two or more persons with a specific person communication with others. The message emanates from a specific person. It can be done face to face, or by a person to audience, over telephone, or through post or couriers or through emails or through mobile messages.
The personal communications in the case of marketing can also be categorized as communications from advocate, expert and social contacts. The company salespersons? communication to customers is communication from advocates of the product.
An independent expert communicating to prospective buyers about the merits of the product is classified as expert communication. A neighbor saying good things about a brand is social channel of communication.
Companies take various steps to stimulate personal communications about their products and brands.
1. They identify influential individuals and devote extra effort on them. 2. Create opinion leaders by supplying possible opinion leaders with the product on attractive terms. 3. Use influential or believable people in testimonial advertising. 4. Develop word of mouth publicity by requesting satisfied clients to promote their product among their friends.
5. Establish online discussion groups and communities
Nonpersonal Communication Channels
They include media, atmospheres, and events.
Media channels include print media (newspaper, magazines, souvenirs, proceedings of conferences), broadcast media (radio, television), display media (billboards, signs, posters) and electronic media (audiotape, videotape, videodisk, CD-ROM).
Atmosphere is what firms create in their office environment. The office interiors and exteriors have a meaning to the potential buyers.
Events are occurrences designed to communicate particular messages to target audiences or audiences. Company arranged news conferences, opening ceremonies of various kinds, and sponsorships of various events come under event communications channels.
Communication through mass media stimulates personal communication channels.
The Promotional Tools
The characteristics of various promotional tools are as follows:
Advertising
Advertising is a public mode of communication. Because it is communicated simultaneously to large number of people and people know that the same communication is going to many people, they feel their motives for buying are understood by the advertiser.
Advertising messages can be repeated number of times. Buyers also can compare advertisements of various companies selling the same product. The media offers the facility to add color, sound etc. to the message and dramatize the message. But advertising cannot have dialogue with the people. People may not see and pay attention to the advertisement.
Advertising is an efficient way to reach geographically dispersed potential buyers at a low cost per exposure.
Advertising has two recent variants. Advertorials are offer editorial content and while it is paid for by the advertiser and it will be difficult for the reader to easily make out that it is an advertisement. Similarly infomercials are TV programs that are meant for promoting the products of the company. They discuss the working of the product, benefits of the products, and user experience etc. and they may beam the message to buy the product and the address to be contacted.
Sales promotion
Sales promotion tools like coupons, contests, premiums, and the like acts as communication medium and also promote sales.
They gain attention and provide information that may lead the consumer to the product. They include a distinct invitation to the consumer to do the transaction in a short period of time.
Public relations and publicity
News stories and feature articles are more authentic and credible than advertisements to readers. The articles act as testimonials. The message gets through to the potential buyers as news and they may not turn away from it as they turn away from the advertisements.
Personal selling
Personal selling as a communicative channel involves a live, immediate, and interactive relationship between persons. Personal selling leads to relationships. The listener feels obligated to respond to the salesman at least with a polite “thank you.”
Direct Marketing
The alternatives are direct mail, Email, and telemarketing. In these cases the message is addressed to a specific person. The message can be customized. Even though mailing folders and email are normally standardized to gain efficiency. The message can be up to date. IN case of telemarketing, message can be altered depending on the response. In the case of other alternatives subsequent communication can be altered depending on the response.
Philip Kotler, Marketing Management (Main text for revision and article)
Public Relation Definition
Public relations involve a variety of programs designed to promote and/or protect a company?s image or its individual products among public.
A public is any group that has an actual or potential interest in or impact on a company?s ability to achieve its objectives.
The Public Relations (PR) Department or Activity
Public relations is an important marketing tool. A public can help or hinder a company's ability to achieve it objectives.
The PR department monitors the attitudes of the organization?s publics and distributes information and communications to build goodwill. Public relations can potentially impact public awareness of a company and its brands and products at a fraction of the cost of advertising.
The PR departments perform the following activities to promote various causes, issues and organizations.
Press relations: Releasing news and information about organization to the press in the most positive light that helps build brand image for the company and improve sales in case of sales promotions.
Product publicity: Sponsoring various efforts to get good coverage of the company and its products in various pubic events. For example, some body from the company addresses a gathering or a seminar. PR persons arrange such opportunities. Corporate communications: Developing materials with detailed information that promotes understanding of the organization and its activities by external entities as well as interal employees. Lobbying: Communicating with legislators and government officials to promote legislation and regulation that helps in growth of the organization and to defeat legislation that is not in interest of the company.
Conseling: Advising managements public perception on the company position, suggesting measures to improve the company image.
Marketing public relations is a specialized PR segment with a special constituency, the marketing function of the company.
Marketing Public Relations (MPR)
The importance of public relations activity to marketing process is recognized by many companies and marketing public relations departments (MPRs) are being set up either as a part of marketing function or as a part of public relations functions. The MPR section can better understand the marketing objectives and programmes of the company and carry out its PR activity to contribute to the achievement of marketing plans. MPR needs to evaluate the return on investment on its various activities and propose funds for PR activities or programmes as a part of marketing budget.
Major Decisions in Marketing PR
Setting the objectives
The objectives can be one of the following:
1. Build awareness for the product. 2. Build credibility 3. Stimulate sales force and dealers dispersed around the country 4. Complement the sales promotion and hold down promotion costs
Choosing PR messages and vehicles
Implementing the MPR plan through a program
Evaluating the MPR program
An Interesting Illustration
Smart MPR practioners can find or create stories about even mundane products and get press support as well as audience for events. Kotler described the work of a public relations firm for the cat food category, Star-Kist Foods' 9-Lives. The firm organized a Morris "look-alike' content. Morris is the name of the cat used by the firm its advertisements. A book titled Morris, an Intimate Biography was proposed. Local cat shows were organized and the Morris awards were given. A movement with the message "adopt-a-cat a month" was launched with Morris as the spokescat. A booklet "The Morris Method" on cat care was produced and distributed. These publicity activities that involved cat owners in various activities stregthened the brand's market share. *****************************
Advertising Introduction
Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor (Kotler).
Advertising is aimed at a target market and buyer motives have to be considered in developing the advertisement strategy or program.
Five major decisions are to be made developing the advertisements.
Mission: the objectives of the advertisement Money: how many needs to be spent or how much can be spent? Message: What is the message to be sent to get the desired response? Media: What media should be sued? Measurement: What are the evaluation criteria for results of the advertisement? These five decision are known as Fives Ms (5 Ms) of advertising.
Objectives of Advertising
One classification of objectives is to inform, persuade or remind. Under the above broad heads more number of objectives can be specified. Colley lists 52 possible advertising objectives in his book „Defining Advertising Goals for Measured Advertising Results.? The objective is decided based on the marketing situation of the product or brand.
Advertising Budget Decision
Five specific factors are considered in this decision.
Stage in the production life cycle Market share and customer base size Competition and clutter Advertising frequency Product substitutability
In adaptive-control method of setting advertising budgets, the company tests in some market segments with low advertising, and in some market segments with high advertising. In most of the market segments, the normal advertising expenditure is incurred. The results give the response of the market to advertising expenditure by the company. These results will help the company to adjust the advertising expenditure.
Advertising Message
An advertisement has to gain attention of the reader or listener to generate sales. So the quotation to keep in mind is “Until it?s compelling, it isn?t selling.” Advertisers use four-step process to generate advertising messages and select the appropriate message. 1. Message generation 2. Message evaluation and selection 3. Message execution 4. Message social responsibility review
1. Message generation
Inductive and deductive methods are used to generate messages. In inductive method, creative people talk to customers, dealers, experts and competitors to know the strengths and weaknesses of the product or brand, their uses, the personalities of potential users and related demographic and psychographic variables. Deductive framework says buyers expect four types of reward from a product: rational, sensory, social, or ego satisfaction. Buyers might visualize these rewards from results-of-use experience, product –in-use experience, or incidental-to-use experience. The combinations from these give twelve types of advertising message themes. The advertiser with the now available computer facilities can prepare advertisement messages for each of the themes and provide them for evaluation.
2. Message evaluation and selection
The advertisement messages are to be rated on desirability, exclusiveness and believability. They have to be tested in the market to find determine which message is having the maximum desired effect.
3. Message execution
Style, tone, words and format etc. are to be decided in executing an advertising message.
4. Message social responsibility review
Advertising ethics and codes need to be followed by advertisers and advertising agencies. Social and legal norms are to be followed. Advertisers must not make false promises. They should not show false demonstrations.
Deciding on the Media
Media selection involves finding the most cost-effective media to deliver the desired number of exposures to the target audience.
Evaluating Advertising Effectiveness
Advertisers try to measure the communication effect of an advertisment - its effect on awareness, knowledge or preference. Ad?s sales effect can also be measured and Kilter says emphatically that sales effect also needs to be researched.
Marketing Intermediaries and Their Functions
Most manufacturers of products use marketing intermediaries to sell their products to the consumers. The marketing intermediaries make up a marketing channel (distribution channel or a trade channel). Stern and El-Ansary define: “Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption.”
The marketing channel overcomes the time, place, and possession gaps that separate gods and services from those who need or want them. Some of the functions that channel members perform are:
Information Promotion Negotiation Ordering Financing Risk taking Physical possession Payment Title
Channel Levels
A zero level channel is direct marketing between producer and consumer.
In one level channel a retailer is between producer and consumer.
Two level channels have wholesaler and retailer.
Still longer channels also exist in some industries.
Channel design decisions involve analyzing customers? desired service levels, channel objectives of the firm.
The major design decisions include the type of intermediary, number, terms and responsibilities of intermediaries.
An economic criterion is to be applied in final design of the channel.
The channel management decisions include selection of channel members, motivating the channel members to promote and achieve sales, and evaluation and modification of arrangements.
The Price Levels
A firm must set a price when it introduces a product into the market. In marketing terminology seven levels of price are identified, that give a range between very high price to very low price for a range of products that satisfy a need. The seven levels are;
1. Ultimate 2. Luxury 3. Special needs 4. Middle 5. Ease/convenience 6. Me Too, but Cheaper 7. Price Alone
Setting the Price
The process of setting the price has six steps.
1. Selecting the pricing objective.
The possible alternative objectives are:
Survival of the firm Maximum current profit Maximum current revenue Maximum sales growth Maximum market skimming Indication of product-quality leadership through price Other objectives like full cost recovery and partial cost recovery for government organization and social organizations
2. Determining the demand.
The possible demand for the product at various feasible prices is to be ascertained.
3. Estimating cost
The cost of production at the volume of estimated sale is to be ascertained.
4. Analyzing competitors costs and prices
The costs and margins that competitors are earning are to be determined from the analysis of their balance sheets and other alternative methods to be of use in setting prices.
5. Pricing methods
Various pricing methods like markup pricing, target return pricing, perceived value pricing,, value pricing, going rate pricing, etc. are available to give various alternatives for pricing.
6. Selecting the final price
Pricing methods give a narrow range for setting the price. The final stage might consider some psychological consideration related to market in arriving at the final price.
Adapting the Price
Companies usually do not set a single price for all customers and all transactions. A pricing structure is set up as a strategy that provides scope to account for different demand situations in different geographic markets and costs involved in serving customers and customer specified features related to delivery, credit etc.
Price Increases and Decreases
If there is recession in the economy, companies may have to decrease prices. Inflation may force companies to raise prices.
Marketing Strategies for Service Firms
Services firms require attention additional 3Ps according to Booms and Bitner. The additional 3Ps are people, physical evidence and process.
The marketing department or function has a say and a view on these additional Ps.
In a service business companies employees are in direct contact with the customer and hence their behavior with the customer has an influence on customer satisfaction. Ideally employees should exhibit competence, a caring attitude, responsiveness, initiative, problem solving ability, and goodwill. So they have to be trained to exhibit appropriate behavior. The employees must have authority to solve problems that arise in service encounters without much delay and contacting various levels of supervisors. This is empowerment of service employees.
The physical facilities are important because customers come there and have the service. Hence the design and maintenance of the facility becomes a marketing issue.
The processes used to deliver the services are marketing issues. If the customer does not like the process he will not come back. Hence market research has to find out the customer?s likes and dislikes about the processes.
Hence the idea that service marketing requires internal marketing or involvement of marketing function in internal aspects of the company or the firm emerged. Internal marketing describes the work done by the company and marketing department to convey the needs of the potential customers to the service employees and the effort to train them and motivate them to provide exceptional service to customers.
Another concept in services marketing is interactive marketing. It refers to the skill of employees to interact with the client in serving the client. Clients judge services by technical quality as well as the interaction quality. Whether the surgeon has done the operation properly or not is the technical quality. Whether he has shown concern and inspired confidence or not is interaction quality. Service providers must provide high touch along with high tech.
Managing the Differentiation
What are sources for differentiating in service businesses?
Service offer: while the core service could be the primary service package, a firm can come out with secondary service features that provide differentiation. We always have to remember that an additional feature added to a product must be valued by the customer and has to be profitable to the company. Hence marketers are involved to find those features which are valued by the customers and operations or process specialists are involved to deliver the feature at a cost that is profitable to the company.
Delivery: Reliability in service can be differentiating feature. Many firms find it difficulty to provide reliability.
Image: Developing an image that inspires trust is a differentiating feature.
Managing Service Quality
Quality is a differentiator. Parasuraman, Zeithaml, and Berry formulated a service-quality model that highlights the main requirements for delivering high service quality.
They identified possible five gaps that result in poor service.
1. Gap between consumer expectation and management perception 2. Gap between management perception and service quality specification 3. Gap between service quality specification and service delivery 4. Gap between service deliver and external communication 5. Gap between perceived service and expected service
The same researchers identified five determinants of service quality.
According to the order of preference of the variables is:
1. Reliability 2. Responsiveness 3. Assurance 4. Empathy 5. Tangibles
Product
A product is anything that can be offered to a market to satisfy a want or need.
We can see around us that physical goods (food items, televisions), services (taxi rides, film shows), persons (models, film actors), places (various tourist destinations), organizations (religious organizations, voluntary organizations), and ideas (family planning, safe driving are among the products that are marketed.
Five levels of a product
The marketer needs to understand that a market offer of a product can be made five levels.
1. Core benefit 2. Basic product 3. Expected product 4. Augmented product 5. Potential product.
Every product is bought by buyers because it serves a core benefit to them. Companies have to design their product to deliver a core benefit. (This series of management articles are being written by me to facilitate revision of management knowledge. If no person is interested in revising and updating his knowledge of management subjects, this product will not have a market).
At the second level is the product, which a firm has designed to deliver the core benefit. The firm has understood or noticed a need and then designed a product that delivers the need existing in the market.
At the third level is the expected product. As a need is being satisfied by various products offered in the market place or by the efforts of each individual, people develop expectations about products. When the marketer finds these expectations about products that fulfill particular needs and designs his offering, it will be an expected product.
The customer can design features that positively surprise an average customer. This requires additional effort by the marketer to find features which are valued by certain customers and then offering them to all customers.
While product augmentation refers to use of existing technology to augment products, potential product refers to development of new technology to enhance the product to provide new ways to satisfy customers. Companies that offer potential products invest a lot on research and development activities.
Product Hierarchy
Product hierarchy is another concept of product. Seven levels of product hierarchy are recognized.
1. Need family 2. Product family 3. Product class 4. Product line 5. Product type 6. Brand 7. Item
The example of a need family is products satisfying the core need of security of income. The product family is savings and income. The product class is financial instruments. The product line is mutual funds. The product type is systematic investment plan. The brand is prudential. The item is an index fund.
Product system is another concept related to product. This refers a group of diverse but related items that function in a related manner. Home theatre systems could be an example.
Product mix (or product assortment) is the set of all products that a particular seller offers for sale to buyers.
Product Classifications
It is usual to refer to certain product classifications and explain marketing issues related to these classifications
Classification based on durability and tangibility
1. Nondurable goods. 2. Durable goods 3. Services
Classification based on use
1. Consumer goods 2. Industrial goods
Classification of consumer goods
1. Convenience goods Staples Impulse goods Emergency goods
2. Shopping goods Homogeneous shopping goods Heterogeneous shopping goods
3. Specialty goods
4. Unsought goods
Classification of industrial goods
1. Materials and parts Raw materials – farm products, natural products Manufactured materials – component materials and component parts
2. Capital items Installations Equipment
3. Supplies and business services Operating supplies Maintenance and repair items
Product Mix Decisions
The term product mix was already defined. In the area of product mix, marketing decisions are width, length, depth and consistency.
Width refers to number of product lines (Refer the new product management article).
Length refers to the total number of items in a product line (different brands in a line).
Depth refers to variants of each product in a line (different pack sizes of a brand).
Consistency refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way.
Kotler says explicitly that product mix planning is largely the responsibility of the company?s strategic planners. The top management has to assess with the information supplied by company?s marketers, which the product mix. Hence the product mix is a shared decision by various functions of the company and not that of marketing department alone.
Product line analysis
Marketers have the need to know the current and potential sales and profits of each item in a line in order to determine which items to build, sustain, harvest, or divest.
They need to analyze the effect of increasing the length. Can more profit be made by increasing the length?
Brand Related Decisions
Concept of brand equity Challenges of branding Brand name decisions Brand extensions Brand repositioning
Competition
Competition is growing more intense every year. Michael Porter identified five forces that determine the level of competition in an industry. If the competition is very intense, profits will be low in the industry. The five forces are: 1. Intensity of rivalry among present competitors 2. Threat of new entrants 3. Threat of substitute products 4. Threat of buyers' growing bargaining power 5. Threat of suppliers' growing bargaining power The first three forces represent competitors. Therefore, the companies have to pay attention to the actions of their competitors in addition to their attention to customers' needs and desires.
Analysis of Competitors - Introduction
Companies need to know five things about competition. .
Who are our competitors? What are their strategies? What are their objectives? What are their strengths and weaknesses? What are their reaction patterns?
Who are our competitors?
Kotler outlined four levels of competition, based on the degree of product substitutability.
1. Brand competition. Companies that are offering similar products and services at similar prices. 2. Industry competition Companies offering the same class of products. 3. Form competition Companies offering a product to serve the same need. 4. Generic competition All companies that are competing for the customers' dollars.
What are their strategies?
Identifying Competitor Strategies
Resourceful competitors revise their strategy through time. Companies have to monitor the strategies of companies that fall in their strategic group more closely. A group of firms following the same strategy in a given target market is called a strategic group. A company needs to identify the strategic grouping in which it competes. It has to monitor efforts of even potential new entrants into this strategic group. Also it has to monitor efforts of companies in adjoining strategic groups.
What are their objectives?
Determining Competitors? Objectives The company has to make efforts understand what drives each competitor?s behavior. Normal microeconomic assumption is that every firm attempts to maximize their profits. However, in actual practice, companies differ in the weights they put on short-term versus long-term. Hence, each firm pursues a mix of objectives, current profitability, market share growth, cash flow, technological leadership, service leadership etc. with different weights attached to them.
What are their strengths and weaknesses?
Assessing Competitors? Strengths and Weaknesses Resources and capabilities determine the competitive advantage. Marketing department has to determine the strengths and weaknesses of competitors. When market share is to be increased, the marketing department has to know the weaknesses of competitors, which can be attacked in the market place for grabbing market share. For determining this, it may conduct a primary research among consumers, retailers and wholesalers regarding their satisfaction with various desirable attributes of a product and the offering of various competitors.
What are their reaction patterns?
Reaction Patterns of Competitors
The laid back competitor This firm does not react quickly or strongly. The selective competitor The firm reacts to certain types of attacks very strongly. The tiger competitor The firm does not remain quiet. Any attack on its market or product is given a strong response. The stochastic competitor The firm does not exhibit a predictable reaction pattern
Designing the Competitive Intelligence System
A well designed system provides company managers with timely information about competitors and responds better to requirements of more information when needed in response to significant new about the actions of a competitor
Markets can be segmented in a number of ways.
Market Segmentation
Two broad groups of variables are used to segment consumer markets. One group of variables is consumer characteristics. The other group of variables is behavioral characteristics. Behavior is consumer response in terms of benefits sought or occasions when the product is used.
Consumer characteristics used for market segmentation include geographic, demographic and psychographic characteristics.
Geographic segmentation
Geographic segmentation divides the market into different geographic units such as nations, states, regions, cities and neighbor hood etc.
Demographic segmentation
In this segmentation approach, the market is divided into groups on the basis of variables such as age, family size, family life cycle, gender, income, occupation, education, religion, race, generation, nationality, or social class.
Psychographic segmentation
In this approach to segmentation, buyers are divided into different groups on the basis of lifestyle and/or personality.
Lifestyle
Active lifestyle, country lifestyle, latenighters etc. are some of the segments under this classification
Personality
Markets are being segmented on the basis of personality. Personality is a group of traits exhibited persistently by a person. For example, Ford buyers were identified as independent, impulsive, masculine, alert to change, and self confident, while Chevrolet owners were conservative, thrifty, prestige conscious, less masculine, and seeking to avoid extremes.
Behavioral segmentation
In this approach buyers are classified into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. Some behavioral variables can be usage rate, readiness for buying the product, attitude toward the product, loyalty to the product, and occasions on which the product is used etc.
Multi-attribute segmentation (Geoclustering)
Some marketers are using multiple variables to define target groups. For example using socioeconomic status and lifestyle variables may be combined and market segmentation is done.
Effective Segmentation
To be useful, market segments identified in a segmentation exercise have to be:
? ? ? ? ?
Differentiable: the segments must have a conceptual basis and they have to respond differently to different marketing mix variable and attribute mix of the product. Measurable: The size and purchasing powre of the segments have to be measurable. Substantial: The segments have to be large enough to serve them with a separate market mix profitably. Accessible: The segments must be accessible to the marketer. Actionable: The company in consideration must be able to create marketing programs for the segments.
Market Targeting
After the doing the market segmentation, the firm has to evaluate the segments for their market potential. Then the company has to decide which and how many segments to serve and how to serve them. The decision alternatives available to the firm are:
Single segment concentration
In the simplest case, the company selects a single segment.
Selective specialization
The firm selects a number of segments, each objectively attractive and appropriate, for the firms objectives and resources. There may be little or no synergy among the segments, but each segment is a money maker on its own. Full market cover The firm may attempt to serve all customer groups ***********************
Buying Behaviour
Organization buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. (Webster and Wind)
Some of the characteristics of organizational buyers are:
1. Consumer market is a huge market in millions of consumers where organizational buyers are limited in number for most of the products. 2. The purchases are in large quantities. 3. Close relationships and service are required. 4. Demand is derived from the production and sales of buyers.
5. Demand fluctuations are high as purchases from business buyers magnify fluctuation in demand for their products. 6. The organizational buyers are trained professionals in purchasing. 7. Several persons in organization influence purchase. 8. Lot of buying occurs in direct dealing with manufacturers.
Organizational Buying Situations
Straight rebuy In this buying situation, only purchasing department is involved. Thet get an information from inventory control department or section to reorder the material or item and they seek quotations from vendors in an approved list. The "in-suppliers" make efforts to maintain product and service quality. The "out-suppliers" have to make efforts to get their name list in the approved vendors' list and for this purpose they have to offer something new or find out any issues of dissatisfaction with current suppliers and promise to provide better service.
Modified rebuy In this buying situation, there is a modification to the specifications of the product or specifications related to delivery. Executives apart from the purchasing department are involved in the buying decisions. The company is looking for additional suppliers or is ready to modify the approved vendors list based on the technical capabilities and delivery capabilities.
New task buy In this situation, the buyer is buying the product for the first time. As the cost of the product or consumption value becomes higher, more number of executives are involved in the process. The stages of awareness, interest, evaluation, trial, and adoption will be there for the products of each potential supplier. Only the products which pass all the stages will be on the approved list and price competition will follow subsequently.
Systems buy Systems buying is a process in which the organization gives a single order to a single organization for supplying a full system. The buying organization knows that no single party is producing all the units in the system. But it wants the system seller to engineer the system, procure the units from various vendors and assemble, fabricate or construct the system.
Participants in the Business Buying Process
Users The persons who use the item. Say for safety gloves the operators.
Initiators The persons who request the purchase. The safety officer may initiate the request for the purchase.
Influencers Persons who held define specifications. In this case of safety gloves, the safety officer may himself define specifications. If an industrial engineer is in the organization, he may also be consulted. There can a different gloves for different working situations and industrial engineer may be more aware of specific requirements due to his special nature of work - human effort engineering.
Buyers They are the person who actually do the buying transaction.
Gatekeepers They control access to personnel in a company. The receptionist, the secretaries etc.
Deciders People who decide on product requireements and suppliers. It is the final approval for product specfications and suppliers' list.
Approvers Persons who approve the purchase. In the case of safety gloves, the personal manager may have the power to approve.
Major Influencers on Business Buyers
Environmental factors Expected demand for the product that the buying organization is selling, expected shortages for the item, expected changes in technology related to the item etc. are the environmental factors that will have an effect.
Organizational factors Changes in purchasing department organization like centralized purchasing, decentralized purchasing and changes in purchasing practices like long-term contracts, relationship purchasing, zero-based pricing, vendor-performance evaluation are the organization factors of importance to marketers.
Interpersonal factors
These factors are the relationship between buyers and sales representatives of various competitor companies.
Individual factors These factors related to the buyer. What sort of ways of interacting and service are appreciated by the buyers and what ways are considered as irritants? Marketers have to understand the reactions of buyers.
Organizational Buying/Purchasing/Procurement Process
Steps in the Process Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order routine specification Supplier performance review
Consumer Behavior
The field of consumer behavior studies how consumers (individuals and groups) select, buy, use, and dispose of goods, services, ideas to satisfy their needs.
To understand the consumers in the target market, marketing managers rely on the 7 O?s framework of consumer research. 7 Os: Occupants, Objects, Objectives, Organizations, Operations, Occasions, Outletss Who constitutes the market? Occupants What does the market buy? Why does the market buy? Objects Objectives
Who participates in buying? Organizations How does the market buy? Operations
When does the market buy? Occasions Where does the market buy? Outlets
Buyer?s needs, characteristics and decision making process interact with the stimuli created by the environment and marketers and buying decisions are made by the buyers.
Hence marketers have to understand what happens in the buyer?s consciousness between the arrival of outside stimuli and the buyer?s purchase decision. They must answer two questions:
? How do the buyer?s characteristics – socio-cultural (sociological), personal, and psychological influence buying behavior? ? How does the buyer make purchasing decisions?
Socio-cultural (sociological), Personal, and Psychological Characteristics
Various sociological factors of importance
Cultural Factors
They have the broadest and deepest influence. Culture Culture is different for different societies. In the modern days, there are more common elements. Culture is the most fundamental determinant of a person?s wants and behavior.
Subculture Culture of a society is not uniform across all groups in the society. There can be subcultures with certain elements differing from other groups? cultural elements. Many subculture elements make up important market segments. In a country like USA, that allows people from various countries to come and settle in it, subcultures arise due to the original nationality, religion, racial group apart from the geographical subcultures and age group subcultures.
Social class Sociology identified that social stratification is common among many societies. Social class is a type of stratification. Social classes are relatively homogeneous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests and behavior.
Social Factors
They include reference groups, family, and roles and statuses of a person. Reference groups
Reference groups influence a person?s behavior directly or indirectly. Groups having a direct influence on a person are called membership groups. People are influenced in the consumption and purchase decisions by groups in which they are members like family, friend circle, neighbors, co-workers, sports teams etc.
People are also influenced by groups to which they do not belong presently, but want to belong in course of time. Such groups are called aspirational groups.
Family Family members constitute the most influential primary reference group or membership group. Each person has a family of orientation that consists of his parents, brothers and sisters. He has a family of procreation consisting of spouse and children. Statuses and roles People choose products that communicate their status in society. Marketers have to aware of the status symbol potential of products and brands. Each status has a role or group of activities to be performed. Persons have multiples statuses in different groups to which they belong. Therefore the roles have some bearing on the consumption and purchase decisions.
Personal factors of importance
Age and stage in the life cycle Children consume baby food. Old people may eat special diets. People diagnosed with specific ailments avoid certain food items. Hence it is easy to conclude thaat people buy different goods and services over their life time. Occupation Occupation determines the types of items people buy. Certain occupations demand simple living and certain occupations demand display of wealth and prosperity.
Economic circumstances People?s economic circumstances consist of their disposable or spendable income, assets, debts, and attitude toward spending versus saving. Marketing of income-sensitive goods has to take into consideration the shifts in personal income and savings habits. Life style
A person?s life style is the person?s pattern of living in the world as expressed in activities, interests, and opinions. People coming from the same subculture, social class, and occupation do lead quite different life styles. The life style is reflected in the consumption patterns. different agencies and authors have identified differnet life style categories. McCann Erickson London identifed among British, Avant-Gardians, Pontificators, Chamelons and Sleepwalkers. The advertising agency, D'arcy, Masius, Benton & Bowles identified five categories among Russians, Kuptsi, Cossacks, Students, Business Executives, and Russian Souls. Llifestyles among British people. Avant-Gardians (interested in change) Pontificators (traditionalists, very British) Chamelons (follow the crowd) Sleepwalkers (contented underachievers)
Psychological factors of importance
Personality and self concept Personality denotes a person?s distinguishing psychological characteristics that lead to relatively consistent and enduring responses to various stimuli. Motivation Motivation to purchase and consume an item is to be understood by marketers. Need sets up drive that seeks a goal. Marketers want the goal a person desires has to be the product that they are offering. A drive is a strong internal stimulus impelling action. Perception Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world. Learning Learning involves changes in an individual?s behavior arising from experience. Most human behavior is learned
Beliefs and attitudes A belief is a descriptive thought a person holds about something. An attitude is a person?s enduring favorable or unfavorable emotional feelings and action tendencies toward some object or an idea.
The Buying Process
Roles people play in buying process
In the buying decision a person can play any role in the list of roles given below. Initiator He may initiate the purchase by another person by explaining to him the needs served by a product. Influencer He may infuence another by suggesting which brand needs to be bought.
Decider He is the decider to buy it. Buyer He is the actual buyer who goes into the market and buys. User He is the user of the product.
Example: A school teacher may suggest to a child that he needs to buy a computer. His classmates may tell him that they own a particular brand of computer and they are very happy with its features. His father could be the decider of the purchase. His mother may go to shop and buy the computer. The child is the user.
Buying behavior
Habitual buying behavior In this buying situation, the purchaser is not involved in the product and there is not much risk and there is no appreciable difference between various brands available. He buys the brand by habit. Variety seeking buying behavior In this buying situation also, the purchaser is not that much involved, but likes to try various brands Complex buying behavior In this buying situation, the buyer is very involved and spends some time to learn about various alternatives available and buys the product/brand. Less careful buying behavior with more chance of dissonance In this buying situation, the differences between brands is not much and customer takes decisions quickly. But there is a possibility that he may experience some diappointment and tries to justify his purchase decision
The stages of buying decision process
Problem recognition A potential purchaser first recognizes a need for a product
Information search He goes around searching for information the available alternatives
Evaluation of alternatives He evaluates the alternatives
Purchase decision He makes the purchase decision
Post purchase behavior
Post purchase satisfaction The buyer's satisfaction is a function of the closeness between the buyer's product expectations and the product's perceived performance. Post purchase actions If buyers are satisfied they may purchase again. If they are dissatisfied, they may return the product. They will inform their friends not to buy. Post purchase use and disposal The marketer has to be monitor use of the product. If people bought the product but are not using it, sales will not grow. If people are using the product for additional uses not anticipated by the marketer, the information is of value in increasing sales.
Foreseeing and Foretelling Customer Needs
Innovation leadership will be with those firms, who have the capability to identify the customers' unarticulated needs for products and services. Future is an intersection of evolving regulations, technology, demographics and lifestyle. To visualize the unstated needs of the customers involves foreseeing the evolutions of these four dimensions. Discomfort in seeing beyond current reguatlions, technology, demographics and life style is not right ingredient for innovation in a company.
Reference Ranjan Das, Inventing Customer, Strategic Marketing, August-October, 1998, pp.10-14 "Predictive Analytics: Knowing What's On Your Customer's Mind". was a seminar organized by a newspaper group in India. Predictive Analytics: It utilizes historical data and techniques such as data mining and statistical analysis and can provide a clearer picture of what is going to happen, so that businesses can accurately decide their future course of action. It can provide companies with information such as future trends in customer buying habits, which customers are likely to return and which ones aren't, the amount of business that they'll bring, what could be the best way to retain the existing customers and other important information that companies can use to their advantage.
Scanning of Environment for Marketing Ideas and Decisions
Responsibility for Scanning the Environment
Unmet needs of people always exist. Companies can make fortunes if they can find a solution to problems of people like cancer, mental diseases, nonfattening but tasty food etc. There are many more problems awaiting a solution. Marketers have to scan the environment and find out problems requiring solutions and report them back to their product development specialists to facilitate focused efforts to develop solutions for them.
Marketers also have the responsibility to identify trends. A more detailed categorization of trends is trend, fad and megatrend.
A trend is a direction of sequence of events that have momentum and durability.
A fad is unpredictable, short-lived direction of sequence of events, and they are without social, economic, and political significance. Some business firms do profit from fads, but the firms have to take up very short payback period investments to profit from fads.
But trend have longevity and is observable across several market areas and consumer activities and is consistent with other significant social and economic events occurring and emerging at the same time.
John Naisbitt, coined the term megatrends and wrote books on it also, and he explain the megatrend as a large social, economic, political or and technological change that is slow to form, and once in place, it influences society for some time – say between seven and ten years or longer.
For the purpose of identifying changes in the market that include development of trends and megatrends, marketing executives scan macro environment. Macro environment is further divided into different environments for study purpose.
Demographic environment
The first macro environment that marketers monitor is global and domestic population and trends in it. The parameters they look for are worldwide population growth, population age mix, and geographical shifts in population, household patterns, educational groups and ethnic groups.
Economic environment
An exchange market requires purchasing power for transactions to take place along with people who want goods. The available purchasing power in an economy depends on parameters like current income, prices, savings, current debt levels and credit availability. Marketers have to identify major trends in income and spending patterns.
Natural environment
Marketers need to consider the threats and opportunities associated with four trends in the natural environment: the shortage of raw materials, the increased cost of energy, the increased levels of pollution, and the changing role of governments.
Technological environment
There is a rapid technological change. Technology is creating opportunities for new products and services. Research and development expenditure is an important variable that determines development of new technologies. Marketers have to promote R & D activities both at company level and country levels through government funds. Government regulation of technology has increases to assure public safe technologies.
Political/Legal environment
Regulation of various businesses by government and liberalization of some businesses are issues that need to be monitored by marketers.
Social/Cultural Environment
Culture denotes the ways of life of people of a society according to Sociology. There is high persistence of core cultural values of societies. There are subcultures in every society. There are shifts in secondary cultural values through time. Marketers have to be alert to such changes and analyze marketing implications of such changes.
Marketing Strategy - Differentiating and Positioning the Market Offering
Marketing Strategy
Philip Kotler discussed five issues of marketing strategy in his 9th edition of Marketing Management
Differentiating and Positioning the Market Offering Developing New Products Managing Life cycle Strategies Designing marketing Strategies for Market Leaders, Challengers, Followers, and Niches Designing and Managing Global Marketing Strategies
These issues are covered in different knols by me. This knol describes differentiating and positioning.
Differentiating and Positioning the Market Offering
The issues discussed in the area of differentiating and Positioning the market offering are:
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Tools for Competitive Differentiation Developing a Positioning Strategy Communicating the Company’s Positioning
Tools for Competitive Differentiation
Differentiation - Definition: is the act of designing a set of meaningful differences to distinguish the company's offering from competitor's offerings.
Boston Consulting Group's differentiation opportunities matrix: Actually it is a competitive advantage matrix applicable to differentiation opportunities.
Four types of industries identified by BCG matrix are:
Volume industry: only a few but very large competitive advantages are possible. The benefit of the advantage is proportional with company size and market share. Example given - construction industry
Stalemated industry: in this type there are only few opportunities and the benefit from each is small. The benefit is also not proportional to the size or market share. Example: Steel industry - It is hard to differentiate the product or decrease its manufacturing cost.
Fragmented industry: in this type, there are many opportunities, but the benefit of each of them is small. Benefit does not depend on size or market share.
Specialized industry: in this type, the opportunities are more and benefit of each opportunity is high. The benefit is not related to size or market share.
Kotler mentions, Milind Lele's observation that companies differ in their potential maneuverability along five dimensions: their target market, product, place (channels), promotion, and price. The freedom of maneuver is affected by the industry structure and the firm's position in the industry. For each potential competitive opportunity or option limited by the maneuverability, the company needs to estimate the return. Those opportunities that promise the highest return define the company's strategic leverage. The concept of maneuverability brings out the fact that a strategic option that worked very well in one
industry may not work equally well in the other industry because of low maneuverability of that option in the different industry and by the firm in consideration.
Five Dimensions of Differentiation
Regarding the tools of differentiation, five dimensions can be utilized to provide differentiation.
Product Services that accompany marketing, sales and after sales services. Personnel that interact with the customer Channel Image
Differentiating a Product
Features
Quality: performance and conformance
Performance - the performance of the prototype or the exhibited sample, Conformance - The performance of every item made by the company under the same specification
Durability Reliability
Reparability Style Design
Services differentiation
Ordering ease Delivery Installation Customer training Customer consulting Miscellaneous services
Personnel Differentiation
Competence Courtesy Credibility Reliability Responsiveness Communication
Channel differentiation
Coverage Expertise of the channel managers
Performance of the channel in ease of ordering, and service, and personnel
Image differentiation
First distinction between Identity and Image - Identity is designed by the company and through its various actions company tries to make it known to the market.
Image is the understanding and view of the market about the company.
An effective image does three things for a product or company.
1. It establishes the product's planned character and value proposition. 2. It distinguishes the product from competing products. 3. It delivers emotional power and stirs the hearts as well as the minds of buyers.
The identity of the company or product is communicated to the market by
Symbols Written and audiovisual media Atmosphere of the physical place with which customer comes into contact Events organized or sponsored by the company.
Developing a Positioning Strategy
Levitt and others have pointed out dozens of ways to differentiate an offering(Theodore Levitt: "Marketing success through differentiation-of anything", Harvard Business Review, Jan-Feb, 1980)
While a company can create many differences, each difference created has a cost as well as consumer benefit. A difference is worth establishing when the benefit exceeds the cost. More generally, a difference is worth establishing to the extent that it satisfies the following criteria.
Important: The difference delivers a highly valued benefit to a sufficient number of buyers.
Distinctive: The difference either isn't offered by others or is offered in a more distinctive way by the company.
Superior: The difference is superior to the ways of obtaining the same benefit.
Communicable: The difference is communicable and visible to the buyers.
Preemptive: The difference cannot be easily copied by competitors.
Affordable: The buyer can afford to pay the higher price
Profitable: The Company will make profit by introducing the difference.
Positioning
Positioning is the result of differentiation decisions. It is the act of designing the company's offering and identity (that will create a planned image) so that they occupy a meaningful and distinct competitive position in the target customer's minds.
The end result of positioning is the creation of a market-focused value proposition, a simple clear statement of why the target market should buy the product.
Example:
Volvo (station wagon) Target customer-Safety conscious upscale families, Benefit - Durability and Safety, Price - 20% premium, Value proposition - The safest, most durable wagon in which your family can ride.
How many differences to promote?
Many marketers advocate promoting only one benefit in the market (Your market offering may have many differentiators, actually should have many differentiators in product, service, personnel, channel, and image).
Kotler mentions that double benefit promotion may be necessary, if some more firms claim to be best on the same attribute. Kotler gives the example of Volvo, which says and "safest" and "durable".
Four major positioning errors
1. Underpositioning: Market only has a vague idea of the product.
2. Overpositioning: Only a narrow group of customers identify with the product. 3. Confused positioning: Buyers have a confused image of the product as it claims too many benefits or it changes the claim too often. 4. Doubtful positioning: Buyers find it difficult to believe the brand’s claims in view of the product’s features, price, or manufacturer.
Different positioning strategies or themes
1. Attribute positioning: The message highlights one or two of the attributes of the product. 2. Benefit positioning: The message highlights one or two of the benefits to the customer. 3. Use/application positioning: Claim the product as best for some application. 4. User positioning: Claim the product as best for a group of users. - Children, women, working women etc. 5. Competitor positioning: Claim that the product is better than a competitor. 6. Product category positioning: Claim as the best in a product category Ex: Mutual fund ranks – Lipper. 7. Quality/Price positioning: Claim best value for price
Which differences to promote:
This issue is related to the discussion of worthwhile differences to incorporate into the market offering done earlier. But now competitors positioning also needs to be considered to highlight one or two exclusive benefits offered by the product under consideration.
Communicating the Company’s Positioning
Once the company has developed a clear positioning strategy, the company must choose various signs and cues that buyers use to confirm that the product delivers the promise made by the company. **************************************
Marketing Strategy for New Industry Products
Pioneer in a Product - Issues
When a product is new in the industry life cycle, the firm starting the production and sale is the pioneer. Normally the growth is slow in the introduction of phase of a new industry product as the technical problems with the product are to corrected, production capacities have to be built up based on market acceptance and growth, distribution capacity is to be built up from scratch when distributors have no familiarity with the product, and customer may have reluctance to change his old behavior. If the product is an expensive high technology one, only small number of buyers can afford it.
Companies have choice to be a pioneer or a follower. A pioneer has to initiate every thing connected with the product. A follower has the benefit using various firms that helped the pioneer for his venture. Also he has the opportunity of studying the pioneer’s product and market response to it. He can examine the distribution channels used by the pioneer and gauge their effectiveness and he can evaluate various marketing strategies employed by the pioneer. Thus an early follower has some extra knowledge about the product and the market.
Is there any Advantage to the
Pioneer?
Some studies indicate that the market pioneer if it can capture the leadership position gains the most advantages. Some studies dispute the finding that pioneers have sustained their leadership. Robertson and Gatignon give the opinion that an alert pioneer-leader can pursue various strategies to prevent later market entrants from wresting away leadership. Being a pioneer has an advantage that can be capitalized. The pioneer has to dynamically compete in the market place to exploit his pioneering advantage. He needs to have a grand plan for life-cycle of marketing of the product and launch strategy has to be the first step in that grand plan.
The pioneer may start from a specific product-market segment his launch but must have plans to cover the larger part of the market over a period of time by launching appropriate product variations and covering more market segments.
The competitive Cycle – The Pioneer’s Challenge
Initially, the pioneer is the sole supplier with 100% production capacity and market share.
In the second stage, there is competitive penetration as competitors build capacities and enter market.
In the growth phase, capacity tends to be overbuilt and any cyclical downtrends will impact margins for all. After some time share stability may happen.
Then a commodity competition stage will come where returns are average.
The final stage will be a decline for the industry and firms withdraw from the industry. The pioneer needs to steer through all the stages of the industry life cycle.
Pricing and Promotion Strategies for Pioneers
Pioneer has the alternative of Skimming pricing or Penetration pricing.
Skimming is entering the market layer by layer in the order of value exchange. Initially buyers who are willing to pay a high price are serviced. This strategy is feasible if market is unaware of the product and special efforts are to be done by firms to make the potential buyers aware of the product.
Pioneer will do rapid skimming if the potential competition is imminent. In this strategy he will spend substantial amount on promotion to enlarge the sale quickly. If the potential competition is not imminent, the pioneer can undertake slow skimming. He can expand sales slowly by limiting promotion expenditure.
Penetration is entering a large market with a lower price. It is done for price sensitive products. Rapid penetration is preferred when the market is unaware of the product. The pioneer spends a good deal on launch and advertising. A slow penetration approach is used when market is aware of the product, but potential competition is limited.
Thus price and promotion are the two alternative dimensions which the pioneer has use in his strategy.
Marketing Strategies for Challenger Firms
Introduction
Firms that are not market leaders in their industry or product category are trailing firms. One or two of them could be close competitors to the market leader and they can be termed as runner-up firms. These firms can take the role of challengers when they make aggressive efforts to further their market share or they can be termed followers when they keep quiet and maintain their market share.
There are successful trailing firms which challenged and became industry No. 1 firms. Canon is one such example in copiers. Toyota is now the world No. 1 company in automobiles; it displaced General Motors.
The challenger companies have to attack the leader, other comparable firms, and smaller firms in their bid to gain market share.
Attack has a greater probability of success when there customer dissatisfaction with the current leader. There is a gap in the market which the leader is not serving. Comparable firms can be successfully attacked when they are underfinanced and are charging excessive prices and customers are showing dissatisfaction. Similarly, underfinanced smaller firms can be attacked to gain market share.
With each attack, the challenger may hope to gain a reasonable increase in its market share.
The following attack strategies are possible.
Frontal Attack
An attack is called a frontal attack when the opponent?s strength is challenged head on. In marketing, the fight is done all fronts in market segments and areas where the opponent is currently strong. The general idea is that to win in a frontal attack, the challenger requires three times the fire power of the opposite side. What is fire power in marketing? Price of the product, quality of the product, sales effort, advertising effort, and service effort etc. are the various types of fire power in marketing. The challenger must be able to deploy superior fire power in the markets he is challenging.
Modified Frontal Attack
A modified frontal attack uses price as the challenging dimension. The challenger matches the opponent in other dimensions but will charge a lower price over an extended period.
Flank Attack
Attacking a weak position in the opponent?s force is flank attack. Challenger identifies the weak areas in the offering as well as marketing territories of the opponent and attacks those areas. A front attack may also be launched simultaneously, but the frontal attack is only to engage the opponent. But the real victory is won in the flanks. Market share gain in weak territories is the objective, but the opponent is forced to defend his share even in his strong territories and products.
Encirclement Attack
In this attack both strong areas and weak areas attacked simultaneously. This type of attack is more often done by a leader when challenged. When the leader makes an aggressive attack to gain market share from the trailing firms, he can use this strategy. Even other firms, can use this strategy when they are attacking a much smaller firm?s market share.
Guerilla Attack
Guerilla attacks consist of waging small, intermittent attacks on different marketing territories of the opposing firm. The aim is to harass and demoralize the opponent initially before launching the main attack.
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.
The Marketing Firepower
Price discounts: The challenger can sell a comparable product at a lower price.
Cheaper goods: The challenger can come out with economy goods with lesser number of features. The strategy will succeed when there is significant number of buyers in need of lower priced product.
Prestige goods: A challenger can launch a higher quality product with more features.
Product proliferation: The challenger can offer a greater product variety.
Product innovation: the challenger can come out with an improve product.
Service innovation: Improvement in service offered to the buyers.
Distribution innovation: a new distribution outlet that offers additional convenience to buyers.
Process innovations: The challenger may have done a process innovation that gives better quality or lower cost and it is passed on to buyers.
Advertising innovation: The challenger may have innovative communications strategy that reaches and motivates larger number of potential customers resulting in higher sales.
Challenger needs to have a product-service offer or marketing mix advantage that is of value in the market place. Then he can use that advantage to gain market share by employing a suitable attack strategy.
Political Party Marketing - Understanding the Needs and Desires of People
Political parties in a democracy exist to reflect the desires and needs of people. An individual or group of persons should try to form a political party only when they have the intention to represent the people in the legislature and administrative wings of a state. Before the party is formed as well as when the party is in power, political party has to carry out marketing. It has to know what people want and desire. In a democracy, wherein political parties are not adequately connected to people, there will be frustration among people. There will be agitation to change the system whenever majority of the people feel frustrated with the system. Every political party member is to be entrusted the work of meeting around 50 persons every year to know people, keep the channels of contact open and ascertain the desires and needs of people. Print based newspapers and periodicals were available and were used to some extent by political parties.
Information technology based systems now can be put in place to leverage the basic personal contact established by primary members of the party.
Political Parties and the Internet: Net Gain www.amazon.com/Political-Parties-Internet-Net-Gain/dp/041528273X
The web sites of political parties can be used to ascertain the popular opinion on various issues. Various TV channels are employing this method. But are political parties employing the technique? Each and every politician needs to put up a voting facility on his website for his constituency people for each piece of legislation on which he has to vote in the legislature. He has to ascertain first desire of his people and if there is a marginal difference he may call for a public meeting to explain his reasoning. But if a overwhelming majority gives an opinion, he has to honor the opinion even if he is personally against it. Can visitors cite any legislator who follows the practice of asking his constituency people to vote on pending legislations?
Behavioral Segmentation of Potential Voters
Kotler in his discussion of behavioral segmentation includes segmentation based on attitude. In attitude based segmentation, five groups are identified for a product or service in a market. The five groups of people are enthusiastic, positive, indifferent, negative, and hostile. Door-to-door political campaigners change their canvassing approach according to the attitude of the voter. Enthusiastic voters are thanked and will be asked to vote without fail. Reinforcement is done for positive voters. Efforts are made to win over indifferent voters. They do not spend time with voters with negative and hostile attitude to the party and the candidate. Party has to undertake its marketing and communication activities to see that negative and hostile voters with respect to their party are in a minority at the start of the election campaign. Then only their team can hope to effectively canvass for victory.
The Marketing Concept - Kotler
Marketing - Definition
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. A human need is a state of deprivation of some basic satisfaction. People require food, clothing, shelter, safety, belonging, and esteem. These needs are not created by society or by marketers. They exist in the very texture of human biology and the human condition. Wants are desires for specific satisfiers of needs. Although people?s needs are few, their wants are many. They are continually shaped and reshaped by social forces and institutions, including churches, schools, families and business corporations. Demands are wants for specific products that are backed by an ability and willingness to buy them. Companies must measure not only how many people want their product but, more importantly, how many would actually be willing and able to buy it.
Market
A market consists of all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want.
Marketers
When one party is more actively seeking an exchange than the other party, we call the first party a marketer and the second party a prospect. A marketer is some one seeking one or more prospects who might engage in an exchange of values. A prospect is someone whom the marketer identifies as potentially willing and able to engage in an exchange of values.
Marketers do not create needs. Marketers influence wants. Marketers influence demand by making the product appropriate, attractive, affordable, and easily available
to target consumers. They also communicate their offering to prospects. Society influences wants. People living in differnent societies prefer different types of food items, different types of apparel and even different types of jewellery. A product is anything that can be offered to satisfy a need or want. Offering and solution are synonyms to the product in marketing context. A product or offering can consist of as many as three components: physical good(s), service(s), and idea(s). Value is the consumer?s estimate of the product?s overall capacity to satisfy his or her needs. Marketers offer value to a consumer when the satisfaction of customer's requirements takes place at the lowest possible cost of acquisition, ownership, and use.
Marketing management
Marketing management takes place when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties.
Definition of American Marketing Association Marketing (Management) is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. Marketing management has the task of influencing the level, timing, and composition of demand in a way that help the organization achieve its objectives. Marketing management is essentially demand management. Marketing managers manage demand by carrying out marketing research, planning, implementation and control. Within marketing planning, marketers must make decisions on target markets, market positioning, product development, pricing, distribution channels, physical distribution, communication, and promotion.
Marketing work in the customer market is formally carried out by sales managers, salespeople, advertising and promotion manages, marketing researchers, customer service managers, product and brand managers, market and industry managers, and the marketing vice-president.
The Marketing Concept
The marketing concept holds that the key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets. The marketing concept rests on four pillars: target market, customer needs, integrated marketing, and profitability.
Target market
No company can operate in every market and satisfy every need. Nor can it always do a good job within one broad market.
Customer needs
Marketing is about meeting needs of target markets profitably. The key to professional marketing is to understand their customers? real needs and meet them better than any competitor can.
Some marketers draw a distinction between responsive marketing and creative marketing. A responsive marketer finds a stated need and fills it. A creative marketer discovers and produces solutions that customer did not ask for but to which they enthusiastically respond.
Integrated Marketing
When all the company?s departments work together to serve the customer?s interests, the result is integrated marketing. Integrated marketing takes on two levels. First, the various marketing functions-sales force, advertising, product management, marketing research, and so on – must work together.
Second must be well coordinated with other company departments. The company is doing proper marketing only when all employees appreciate their impact on customer satisfaction. To foster teamwork among all departments, the company carries out internal marketing as well as external marketing. External marketing is marketing directed at people outside the company. Internal marketing is the task of successfully hiring, training, and motivating employees who want to serve the customers well. In fact internal marketing must precede external marketing. It makes no sense to promise excellent service before the company?s staff is ready to provide excellent service.
Profitability
The ultimate purpose of the marketing concept is to help organizations achieve their goals. In the case of private firms, the major goal is profit. Marketing managers have to provide value to the customer and profits to the organization. Marketing managers have to evaluate the profitability of all alternative marketing strategies and decisions and choose most profitable decisions for long-term survival and growth of the firm
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Sales promotions can be directed at either the customer, sales staff, or distribution channel members (such as retailers)
Sales Promotion
Personal Communication Channels
Personal communication is communication between two or more persons with a specific person communication with others. The message emanates from a specific person. It can be done face to face, or by a person to audience, over telephone, or through post or couriers or through emails or through mobile messages.
The personal communications in the case of marketing can also be categorized as communications from advocate, expert and social contacts. The company salespersons? communication to customers is communication from advocates of the product.
An independent expert communicating to prospective buyers about the merits of the product is classified as expert communication. A neighbor saying good things about a brand is social channel of communication.
Companies take various steps to stimulate personal communications about their products and brands.
1. They identify influential individuals and devote extra effort on them. 2. Create opinion leaders by supplying possible opinion leaders with the product on attractive terms. 3. Use influential or believable people in testimonial advertising. 4. Develop word of mouth publicity by requesting satisfied clients to promote their product among their friends.
5. Establish online discussion groups and communities
Nonpersonal Communication Channels
They include media, atmospheres, and events.
Media channels include print media (newspaper, magazines, souvenirs, proceedings of conferences), broadcast media (radio, television), display media (billboards, signs, posters) and electronic media (audiotape, videotape, videodisk, CD-ROM).
Atmosphere is what firms create in their office environment. The office interiors and exteriors have a meaning to the potential buyers.
Events are occurrences designed to communicate particular messages to target audiences or audiences. Company arranged news conferences, opening ceremonies of various kinds, and sponsorships of various events come under event communications channels.
Communication through mass media stimulates personal communication channels.
The Promotional Tools
The characteristics of various promotional tools are as follows:
Advertising
Advertising is a public mode of communication. Because it is communicated simultaneously to large number of people and people know that the same communication is going to many people, they feel their motives for buying are understood by the advertiser.
Advertising messages can be repeated number of times. Buyers also can compare advertisements of various companies selling the same product. The media offers the facility to add color, sound etc. to the message and dramatize the message. But advertising cannot have dialogue with the people. People may not see and pay attention to the advertisement.
Advertising is an efficient way to reach geographically dispersed potential buyers at a low cost per exposure.
Advertising has two recent variants. Advertorials are offer editorial content and while it is paid for by the advertiser and it will be difficult for the reader to easily make out that it is an advertisement. Similarly infomercials are TV programs that are meant for promoting the products of the company. They discuss the working of the product, benefits of the products, and user experience etc. and they may beam the message to buy the product and the address to be contacted.
Sales promotion
Sales promotion tools like coupons, contests, premiums, and the like acts as communication medium and also promote sales.
They gain attention and provide information that may lead the consumer to the product. They include a distinct invitation to the consumer to do the transaction in a short period of time.
Public relations and publicity
News stories and feature articles are more authentic and credible than advertisements to readers. The articles act as testimonials. The message gets through to the potential buyers as news and they may not turn away from it as they turn away from the advertisements.
Personal selling
Personal selling as a communicative channel involves a live, immediate, and interactive relationship between persons. Personal selling leads to relationships. The listener feels obligated to respond to the salesman at least with a polite “thank you.”
Direct Marketing
The alternatives are direct mail, Email, and telemarketing. In these cases the message is addressed to a specific person. The message can be customized. Even though mailing folders and email are normally standardized to gain efficiency. The message can be up to date. IN case of telemarketing, message can be altered depending on the response. In the case of other alternatives subsequent communication can be altered depending on the response.
Philip Kotler, Marketing Management (Main text for revision and article)
Public Relation Definition
Public relations involve a variety of programs designed to promote and/or protect a company?s image or its individual products among public.
A public is any group that has an actual or potential interest in or impact on a company?s ability to achieve its objectives.
The Public Relations (PR) Department or Activity
Public relations is an important marketing tool. A public can help or hinder a company's ability to achieve it objectives.
The PR department monitors the attitudes of the organization?s publics and distributes information and communications to build goodwill. Public relations can potentially impact public awareness of a company and its brands and products at a fraction of the cost of advertising.
The PR departments perform the following activities to promote various causes, issues and organizations.
Press relations: Releasing news and information about organization to the press in the most positive light that helps build brand image for the company and improve sales in case of sales promotions.
Product publicity: Sponsoring various efforts to get good coverage of the company and its products in various pubic events. For example, some body from the company addresses a gathering or a seminar. PR persons arrange such opportunities. Corporate communications: Developing materials with detailed information that promotes understanding of the organization and its activities by external entities as well as interal employees. Lobbying: Communicating with legislators and government officials to promote legislation and regulation that helps in growth of the organization and to defeat legislation that is not in interest of the company.
Conseling: Advising managements public perception on the company position, suggesting measures to improve the company image.
Marketing public relations is a specialized PR segment with a special constituency, the marketing function of the company.
Marketing Public Relations (MPR)
The importance of public relations activity to marketing process is recognized by many companies and marketing public relations departments (MPRs) are being set up either as a part of marketing function or as a part of public relations functions. The MPR section can better understand the marketing objectives and programmes of the company and carry out its PR activity to contribute to the achievement of marketing plans. MPR needs to evaluate the return on investment on its various activities and propose funds for PR activities or programmes as a part of marketing budget.
Major Decisions in Marketing PR
Setting the objectives
The objectives can be one of the following:
1. Build awareness for the product. 2. Build credibility 3. Stimulate sales force and dealers dispersed around the country 4. Complement the sales promotion and hold down promotion costs
Choosing PR messages and vehicles
Implementing the MPR plan through a program
Evaluating the MPR program
An Interesting Illustration
Smart MPR practioners can find or create stories about even mundane products and get press support as well as audience for events. Kotler described the work of a public relations firm for the cat food category, Star-Kist Foods' 9-Lives. The firm organized a Morris "look-alike' content. Morris is the name of the cat used by the firm its advertisements. A book titled Morris, an Intimate Biography was proposed. Local cat shows were organized and the Morris awards were given. A movement with the message "adopt-a-cat a month" was launched with Morris as the spokescat. A booklet "The Morris Method" on cat care was produced and distributed. These publicity activities that involved cat owners in various activities stregthened the brand's market share. *****************************
Advertising Introduction
Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor (Kotler).
Advertising is aimed at a target market and buyer motives have to be considered in developing the advertisement strategy or program.
Five major decisions are to be made developing the advertisements.
Mission: the objectives of the advertisement Money: how many needs to be spent or how much can be spent? Message: What is the message to be sent to get the desired response? Media: What media should be sued? Measurement: What are the evaluation criteria for results of the advertisement? These five decision are known as Fives Ms (5 Ms) of advertising.
Objectives of Advertising
One classification of objectives is to inform, persuade or remind. Under the above broad heads more number of objectives can be specified. Colley lists 52 possible advertising objectives in his book „Defining Advertising Goals for Measured Advertising Results.? The objective is decided based on the marketing situation of the product or brand.
Advertising Budget Decision
Five specific factors are considered in this decision.
Stage in the production life cycle Market share and customer base size Competition and clutter Advertising frequency Product substitutability
In adaptive-control method of setting advertising budgets, the company tests in some market segments with low advertising, and in some market segments with high advertising. In most of the market segments, the normal advertising expenditure is incurred. The results give the response of the market to advertising expenditure by the company. These results will help the company to adjust the advertising expenditure.
Advertising Message
An advertisement has to gain attention of the reader or listener to generate sales. So the quotation to keep in mind is “Until it?s compelling, it isn?t selling.” Advertisers use four-step process to generate advertising messages and select the appropriate message. 1. Message generation 2. Message evaluation and selection 3. Message execution 4. Message social responsibility review
1. Message generation
Inductive and deductive methods are used to generate messages. In inductive method, creative people talk to customers, dealers, experts and competitors to know the strengths and weaknesses of the product or brand, their uses, the personalities of potential users and related demographic and psychographic variables. Deductive framework says buyers expect four types of reward from a product: rational, sensory, social, or ego satisfaction. Buyers might visualize these rewards from results-of-use experience, product –in-use experience, or incidental-to-use experience. The combinations from these give twelve types of advertising message themes. The advertiser with the now available computer facilities can prepare advertisement messages for each of the themes and provide them for evaluation.
2. Message evaluation and selection
The advertisement messages are to be rated on desirability, exclusiveness and believability. They have to be tested in the market to find determine which message is having the maximum desired effect.
3. Message execution
Style, tone, words and format etc. are to be decided in executing an advertising message.
4. Message social responsibility review
Advertising ethics and codes need to be followed by advertisers and advertising agencies. Social and legal norms are to be followed. Advertisers must not make false promises. They should not show false demonstrations.
Deciding on the Media
Media selection involves finding the most cost-effective media to deliver the desired number of exposures to the target audience.
Evaluating Advertising Effectiveness
Advertisers try to measure the communication effect of an advertisment - its effect on awareness, knowledge or preference. Ad?s sales effect can also be measured and Kilter says emphatically that sales effect also needs to be researched.
Marketing Intermediaries and Their Functions
Most manufacturers of products use marketing intermediaries to sell their products to the consumers. The marketing intermediaries make up a marketing channel (distribution channel or a trade channel). Stern and El-Ansary define: “Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption.”
The marketing channel overcomes the time, place, and possession gaps that separate gods and services from those who need or want them. Some of the functions that channel members perform are:
Information Promotion Negotiation Ordering Financing Risk taking Physical possession Payment Title
Channel Levels
A zero level channel is direct marketing between producer and consumer.
In one level channel a retailer is between producer and consumer.
Two level channels have wholesaler and retailer.
Still longer channels also exist in some industries.
Channel design decisions involve analyzing customers? desired service levels, channel objectives of the firm.
The major design decisions include the type of intermediary, number, terms and responsibilities of intermediaries.
An economic criterion is to be applied in final design of the channel.
The channel management decisions include selection of channel members, motivating the channel members to promote and achieve sales, and evaluation and modification of arrangements.
The Price Levels
A firm must set a price when it introduces a product into the market. In marketing terminology seven levels of price are identified, that give a range between very high price to very low price for a range of products that satisfy a need. The seven levels are;
1. Ultimate 2. Luxury 3. Special needs 4. Middle 5. Ease/convenience 6. Me Too, but Cheaper 7. Price Alone
Setting the Price
The process of setting the price has six steps.
1. Selecting the pricing objective.
The possible alternative objectives are:
Survival of the firm Maximum current profit Maximum current revenue Maximum sales growth Maximum market skimming Indication of product-quality leadership through price Other objectives like full cost recovery and partial cost recovery for government organization and social organizations
2. Determining the demand.
The possible demand for the product at various feasible prices is to be ascertained.
3. Estimating cost
The cost of production at the volume of estimated sale is to be ascertained.
4. Analyzing competitors costs and prices
The costs and margins that competitors are earning are to be determined from the analysis of their balance sheets and other alternative methods to be of use in setting prices.
5. Pricing methods
Various pricing methods like markup pricing, target return pricing, perceived value pricing,, value pricing, going rate pricing, etc. are available to give various alternatives for pricing.
6. Selecting the final price
Pricing methods give a narrow range for setting the price. The final stage might consider some psychological consideration related to market in arriving at the final price.
Adapting the Price
Companies usually do not set a single price for all customers and all transactions. A pricing structure is set up as a strategy that provides scope to account for different demand situations in different geographic markets and costs involved in serving customers and customer specified features related to delivery, credit etc.
Price Increases and Decreases
If there is recession in the economy, companies may have to decrease prices. Inflation may force companies to raise prices.
Marketing Strategies for Service Firms
Services firms require attention additional 3Ps according to Booms and Bitner. The additional 3Ps are people, physical evidence and process.
The marketing department or function has a say and a view on these additional Ps.
In a service business companies employees are in direct contact with the customer and hence their behavior with the customer has an influence on customer satisfaction. Ideally employees should exhibit competence, a caring attitude, responsiveness, initiative, problem solving ability, and goodwill. So they have to be trained to exhibit appropriate behavior. The employees must have authority to solve problems that arise in service encounters without much delay and contacting various levels of supervisors. This is empowerment of service employees.
The physical facilities are important because customers come there and have the service. Hence the design and maintenance of the facility becomes a marketing issue.
The processes used to deliver the services are marketing issues. If the customer does not like the process he will not come back. Hence market research has to find out the customer?s likes and dislikes about the processes.
Hence the idea that service marketing requires internal marketing or involvement of marketing function in internal aspects of the company or the firm emerged. Internal marketing describes the work done by the company and marketing department to convey the needs of the potential customers to the service employees and the effort to train them and motivate them to provide exceptional service to customers.
Another concept in services marketing is interactive marketing. It refers to the skill of employees to interact with the client in serving the client. Clients judge services by technical quality as well as the interaction quality. Whether the surgeon has done the operation properly or not is the technical quality. Whether he has shown concern and inspired confidence or not is interaction quality. Service providers must provide high touch along with high tech.
Managing the Differentiation
What are sources for differentiating in service businesses?
Service offer: while the core service could be the primary service package, a firm can come out with secondary service features that provide differentiation. We always have to remember that an additional feature added to a product must be valued by the customer and has to be profitable to the company. Hence marketers are involved to find those features which are valued by the customers and operations or process specialists are involved to deliver the feature at a cost that is profitable to the company.
Delivery: Reliability in service can be differentiating feature. Many firms find it difficulty to provide reliability.
Image: Developing an image that inspires trust is a differentiating feature.
Managing Service Quality
Quality is a differentiator. Parasuraman, Zeithaml, and Berry formulated a service-quality model that highlights the main requirements for delivering high service quality.
They identified possible five gaps that result in poor service.
1. Gap between consumer expectation and management perception 2. Gap between management perception and service quality specification 3. Gap between service quality specification and service delivery 4. Gap between service deliver and external communication 5. Gap between perceived service and expected service
The same researchers identified five determinants of service quality.
According to the order of preference of the variables is:
1. Reliability 2. Responsiveness 3. Assurance 4. Empathy 5. Tangibles
Product
A product is anything that can be offered to a market to satisfy a want or need.
We can see around us that physical goods (food items, televisions), services (taxi rides, film shows), persons (models, film actors), places (various tourist destinations), organizations (religious organizations, voluntary organizations), and ideas (family planning, safe driving are among the products that are marketed.
Five levels of a product
The marketer needs to understand that a market offer of a product can be made five levels.
1. Core benefit 2. Basic product 3. Expected product 4. Augmented product 5. Potential product.
Every product is bought by buyers because it serves a core benefit to them. Companies have to design their product to deliver a core benefit. (This series of management articles are being written by me to facilitate revision of management knowledge. If no person is interested in revising and updating his knowledge of management subjects, this product will not have a market).
At the second level is the product, which a firm has designed to deliver the core benefit. The firm has understood or noticed a need and then designed a product that delivers the need existing in the market.
At the third level is the expected product. As a need is being satisfied by various products offered in the market place or by the efforts of each individual, people develop expectations about products. When the marketer finds these expectations about products that fulfill particular needs and designs his offering, it will be an expected product.
The customer can design features that positively surprise an average customer. This requires additional effort by the marketer to find features which are valued by certain customers and then offering them to all customers.
While product augmentation refers to use of existing technology to augment products, potential product refers to development of new technology to enhance the product to provide new ways to satisfy customers. Companies that offer potential products invest a lot on research and development activities.
Product Hierarchy
Product hierarchy is another concept of product. Seven levels of product hierarchy are recognized.
1. Need family 2. Product family 3. Product class 4. Product line 5. Product type 6. Brand 7. Item
The example of a need family is products satisfying the core need of security of income. The product family is savings and income. The product class is financial instruments. The product line is mutual funds. The product type is systematic investment plan. The brand is prudential. The item is an index fund.
Product system is another concept related to product. This refers a group of diverse but related items that function in a related manner. Home theatre systems could be an example.
Product mix (or product assortment) is the set of all products that a particular seller offers for sale to buyers.
Product Classifications
It is usual to refer to certain product classifications and explain marketing issues related to these classifications
Classification based on durability and tangibility
1. Nondurable goods. 2. Durable goods 3. Services
Classification based on use
1. Consumer goods 2. Industrial goods
Classification of consumer goods
1. Convenience goods Staples Impulse goods Emergency goods
2. Shopping goods Homogeneous shopping goods Heterogeneous shopping goods
3. Specialty goods
4. Unsought goods
Classification of industrial goods
1. Materials and parts Raw materials – farm products, natural products Manufactured materials – component materials and component parts
2. Capital items Installations Equipment
3. Supplies and business services Operating supplies Maintenance and repair items
Product Mix Decisions
The term product mix was already defined. In the area of product mix, marketing decisions are width, length, depth and consistency.
Width refers to number of product lines (Refer the new product management article).
Length refers to the total number of items in a product line (different brands in a line).
Depth refers to variants of each product in a line (different pack sizes of a brand).
Consistency refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way.
Kotler says explicitly that product mix planning is largely the responsibility of the company?s strategic planners. The top management has to assess with the information supplied by company?s marketers, which the product mix. Hence the product mix is a shared decision by various functions of the company and not that of marketing department alone.
Product line analysis
Marketers have the need to know the current and potential sales and profits of each item in a line in order to determine which items to build, sustain, harvest, or divest.
They need to analyze the effect of increasing the length. Can more profit be made by increasing the length?
Brand Related Decisions
Concept of brand equity Challenges of branding Brand name decisions Brand extensions Brand repositioning
Competition
Competition is growing more intense every year. Michael Porter identified five forces that determine the level of competition in an industry. If the competition is very intense, profits will be low in the industry. The five forces are: 1. Intensity of rivalry among present competitors 2. Threat of new entrants 3. Threat of substitute products 4. Threat of buyers' growing bargaining power 5. Threat of suppliers' growing bargaining power The first three forces represent competitors. Therefore, the companies have to pay attention to the actions of their competitors in addition to their attention to customers' needs and desires.
Analysis of Competitors - Introduction
Companies need to know five things about competition. .
Who are our competitors? What are their strategies? What are their objectives? What are their strengths and weaknesses? What are their reaction patterns?
Who are our competitors?
Kotler outlined four levels of competition, based on the degree of product substitutability.
1. Brand competition. Companies that are offering similar products and services at similar prices. 2. Industry competition Companies offering the same class of products. 3. Form competition Companies offering a product to serve the same need. 4. Generic competition All companies that are competing for the customers' dollars.
What are their strategies?
Identifying Competitor Strategies
Resourceful competitors revise their strategy through time. Companies have to monitor the strategies of companies that fall in their strategic group more closely. A group of firms following the same strategy in a given target market is called a strategic group. A company needs to identify the strategic grouping in which it competes. It has to monitor efforts of even potential new entrants into this strategic group. Also it has to monitor efforts of companies in adjoining strategic groups.
What are their objectives?
Determining Competitors? Objectives The company has to make efforts understand what drives each competitor?s behavior. Normal microeconomic assumption is that every firm attempts to maximize their profits. However, in actual practice, companies differ in the weights they put on short-term versus long-term. Hence, each firm pursues a mix of objectives, current profitability, market share growth, cash flow, technological leadership, service leadership etc. with different weights attached to them.
What are their strengths and weaknesses?
Assessing Competitors? Strengths and Weaknesses Resources and capabilities determine the competitive advantage. Marketing department has to determine the strengths and weaknesses of competitors. When market share is to be increased, the marketing department has to know the weaknesses of competitors, which can be attacked in the market place for grabbing market share. For determining this, it may conduct a primary research among consumers, retailers and wholesalers regarding their satisfaction with various desirable attributes of a product and the offering of various competitors.
What are their reaction patterns?
Reaction Patterns of Competitors
The laid back competitor This firm does not react quickly or strongly. The selective competitor The firm reacts to certain types of attacks very strongly. The tiger competitor The firm does not remain quiet. Any attack on its market or product is given a strong response. The stochastic competitor The firm does not exhibit a predictable reaction pattern
Designing the Competitive Intelligence System
A well designed system provides company managers with timely information about competitors and responds better to requirements of more information when needed in response to significant new about the actions of a competitor
Markets can be segmented in a number of ways.
Market Segmentation
Two broad groups of variables are used to segment consumer markets. One group of variables is consumer characteristics. The other group of variables is behavioral characteristics. Behavior is consumer response in terms of benefits sought or occasions when the product is used.
Consumer characteristics used for market segmentation include geographic, demographic and psychographic characteristics.
Geographic segmentation
Geographic segmentation divides the market into different geographic units such as nations, states, regions, cities and neighbor hood etc.
Demographic segmentation
In this segmentation approach, the market is divided into groups on the basis of variables such as age, family size, family life cycle, gender, income, occupation, education, religion, race, generation, nationality, or social class.
Psychographic segmentation
In this approach to segmentation, buyers are divided into different groups on the basis of lifestyle and/or personality.
Lifestyle
Active lifestyle, country lifestyle, latenighters etc. are some of the segments under this classification
Personality
Markets are being segmented on the basis of personality. Personality is a group of traits exhibited persistently by a person. For example, Ford buyers were identified as independent, impulsive, masculine, alert to change, and self confident, while Chevrolet owners were conservative, thrifty, prestige conscious, less masculine, and seeking to avoid extremes.
Behavioral segmentation
In this approach buyers are classified into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. Some behavioral variables can be usage rate, readiness for buying the product, attitude toward the product, loyalty to the product, and occasions on which the product is used etc.
Multi-attribute segmentation (Geoclustering)
Some marketers are using multiple variables to define target groups. For example using socioeconomic status and lifestyle variables may be combined and market segmentation is done.
Effective Segmentation
To be useful, market segments identified in a segmentation exercise have to be:
? ? ? ? ?
Differentiable: the segments must have a conceptual basis and they have to respond differently to different marketing mix variable and attribute mix of the product. Measurable: The size and purchasing powre of the segments have to be measurable. Substantial: The segments have to be large enough to serve them with a separate market mix profitably. Accessible: The segments must be accessible to the marketer. Actionable: The company in consideration must be able to create marketing programs for the segments.
Market Targeting
After the doing the market segmentation, the firm has to evaluate the segments for their market potential. Then the company has to decide which and how many segments to serve and how to serve them. The decision alternatives available to the firm are:
Single segment concentration
In the simplest case, the company selects a single segment.
Selective specialization
The firm selects a number of segments, each objectively attractive and appropriate, for the firms objectives and resources. There may be little or no synergy among the segments, but each segment is a money maker on its own. Full market cover The firm may attempt to serve all customer groups ***********************
Buying Behaviour
Organization buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. (Webster and Wind)
Some of the characteristics of organizational buyers are:
1. Consumer market is a huge market in millions of consumers where organizational buyers are limited in number for most of the products. 2. The purchases are in large quantities. 3. Close relationships and service are required. 4. Demand is derived from the production and sales of buyers.
5. Demand fluctuations are high as purchases from business buyers magnify fluctuation in demand for their products. 6. The organizational buyers are trained professionals in purchasing. 7. Several persons in organization influence purchase. 8. Lot of buying occurs in direct dealing with manufacturers.
Organizational Buying Situations
Straight rebuy In this buying situation, only purchasing department is involved. Thet get an information from inventory control department or section to reorder the material or item and they seek quotations from vendors in an approved list. The "in-suppliers" make efforts to maintain product and service quality. The "out-suppliers" have to make efforts to get their name list in the approved vendors' list and for this purpose they have to offer something new or find out any issues of dissatisfaction with current suppliers and promise to provide better service.
Modified rebuy In this buying situation, there is a modification to the specifications of the product or specifications related to delivery. Executives apart from the purchasing department are involved in the buying decisions. The company is looking for additional suppliers or is ready to modify the approved vendors list based on the technical capabilities and delivery capabilities.
New task buy In this situation, the buyer is buying the product for the first time. As the cost of the product or consumption value becomes higher, more number of executives are involved in the process. The stages of awareness, interest, evaluation, trial, and adoption will be there for the products of each potential supplier. Only the products which pass all the stages will be on the approved list and price competition will follow subsequently.
Systems buy Systems buying is a process in which the organization gives a single order to a single organization for supplying a full system. The buying organization knows that no single party is producing all the units in the system. But it wants the system seller to engineer the system, procure the units from various vendors and assemble, fabricate or construct the system.
Participants in the Business Buying Process
Users The persons who use the item. Say for safety gloves the operators.
Initiators The persons who request the purchase. The safety officer may initiate the request for the purchase.
Influencers Persons who held define specifications. In this case of safety gloves, the safety officer may himself define specifications. If an industrial engineer is in the organization, he may also be consulted. There can a different gloves for different working situations and industrial engineer may be more aware of specific requirements due to his special nature of work - human effort engineering.
Buyers They are the person who actually do the buying transaction.
Gatekeepers They control access to personnel in a company. The receptionist, the secretaries etc.
Deciders People who decide on product requireements and suppliers. It is the final approval for product specfications and suppliers' list.
Approvers Persons who approve the purchase. In the case of safety gloves, the personal manager may have the power to approve.
Major Influencers on Business Buyers
Environmental factors Expected demand for the product that the buying organization is selling, expected shortages for the item, expected changes in technology related to the item etc. are the environmental factors that will have an effect.
Organizational factors Changes in purchasing department organization like centralized purchasing, decentralized purchasing and changes in purchasing practices like long-term contracts, relationship purchasing, zero-based pricing, vendor-performance evaluation are the organization factors of importance to marketers.
Interpersonal factors
These factors are the relationship between buyers and sales representatives of various competitor companies.
Individual factors These factors related to the buyer. What sort of ways of interacting and service are appreciated by the buyers and what ways are considered as irritants? Marketers have to understand the reactions of buyers.
Organizational Buying/Purchasing/Procurement Process
Steps in the Process Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order routine specification Supplier performance review
Consumer Behavior
The field of consumer behavior studies how consumers (individuals and groups) select, buy, use, and dispose of goods, services, ideas to satisfy their needs.
To understand the consumers in the target market, marketing managers rely on the 7 O?s framework of consumer research. 7 Os: Occupants, Objects, Objectives, Organizations, Operations, Occasions, Outletss Who constitutes the market? Occupants What does the market buy? Why does the market buy? Objects Objectives
Who participates in buying? Organizations How does the market buy? Operations
When does the market buy? Occasions Where does the market buy? Outlets
Buyer?s needs, characteristics and decision making process interact with the stimuli created by the environment and marketers and buying decisions are made by the buyers.
Hence marketers have to understand what happens in the buyer?s consciousness between the arrival of outside stimuli and the buyer?s purchase decision. They must answer two questions:
? How do the buyer?s characteristics – socio-cultural (sociological), personal, and psychological influence buying behavior? ? How does the buyer make purchasing decisions?
Socio-cultural (sociological), Personal, and Psychological Characteristics
Various sociological factors of importance
Cultural Factors
They have the broadest and deepest influence. Culture Culture is different for different societies. In the modern days, there are more common elements. Culture is the most fundamental determinant of a person?s wants and behavior.
Subculture Culture of a society is not uniform across all groups in the society. There can be subcultures with certain elements differing from other groups? cultural elements. Many subculture elements make up important market segments. In a country like USA, that allows people from various countries to come and settle in it, subcultures arise due to the original nationality, religion, racial group apart from the geographical subcultures and age group subcultures.
Social class Sociology identified that social stratification is common among many societies. Social class is a type of stratification. Social classes are relatively homogeneous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests and behavior.
Social Factors
They include reference groups, family, and roles and statuses of a person. Reference groups
Reference groups influence a person?s behavior directly or indirectly. Groups having a direct influence on a person are called membership groups. People are influenced in the consumption and purchase decisions by groups in which they are members like family, friend circle, neighbors, co-workers, sports teams etc.
People are also influenced by groups to which they do not belong presently, but want to belong in course of time. Such groups are called aspirational groups.
Family Family members constitute the most influential primary reference group or membership group. Each person has a family of orientation that consists of his parents, brothers and sisters. He has a family of procreation consisting of spouse and children. Statuses and roles People choose products that communicate their status in society. Marketers have to aware of the status symbol potential of products and brands. Each status has a role or group of activities to be performed. Persons have multiples statuses in different groups to which they belong. Therefore the roles have some bearing on the consumption and purchase decisions.
Personal factors of importance
Age and stage in the life cycle Children consume baby food. Old people may eat special diets. People diagnosed with specific ailments avoid certain food items. Hence it is easy to conclude thaat people buy different goods and services over their life time. Occupation Occupation determines the types of items people buy. Certain occupations demand simple living and certain occupations demand display of wealth and prosperity.
Economic circumstances People?s economic circumstances consist of their disposable or spendable income, assets, debts, and attitude toward spending versus saving. Marketing of income-sensitive goods has to take into consideration the shifts in personal income and savings habits. Life style
A person?s life style is the person?s pattern of living in the world as expressed in activities, interests, and opinions. People coming from the same subculture, social class, and occupation do lead quite different life styles. The life style is reflected in the consumption patterns. different agencies and authors have identified differnet life style categories. McCann Erickson London identifed among British, Avant-Gardians, Pontificators, Chamelons and Sleepwalkers. The advertising agency, D'arcy, Masius, Benton & Bowles identified five categories among Russians, Kuptsi, Cossacks, Students, Business Executives, and Russian Souls. Llifestyles among British people. Avant-Gardians (interested in change) Pontificators (traditionalists, very British) Chamelons (follow the crowd) Sleepwalkers (contented underachievers)
Psychological factors of importance
Personality and self concept Personality denotes a person?s distinguishing psychological characteristics that lead to relatively consistent and enduring responses to various stimuli. Motivation Motivation to purchase and consume an item is to be understood by marketers. Need sets up drive that seeks a goal. Marketers want the goal a person desires has to be the product that they are offering. A drive is a strong internal stimulus impelling action. Perception Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world. Learning Learning involves changes in an individual?s behavior arising from experience. Most human behavior is learned
Beliefs and attitudes A belief is a descriptive thought a person holds about something. An attitude is a person?s enduring favorable or unfavorable emotional feelings and action tendencies toward some object or an idea.
The Buying Process
Roles people play in buying process
In the buying decision a person can play any role in the list of roles given below. Initiator He may initiate the purchase by another person by explaining to him the needs served by a product. Influencer He may infuence another by suggesting which brand needs to be bought.
Decider He is the decider to buy it. Buyer He is the actual buyer who goes into the market and buys. User He is the user of the product.
Example: A school teacher may suggest to a child that he needs to buy a computer. His classmates may tell him that they own a particular brand of computer and they are very happy with its features. His father could be the decider of the purchase. His mother may go to shop and buy the computer. The child is the user.
Buying behavior
Habitual buying behavior In this buying situation, the purchaser is not involved in the product and there is not much risk and there is no appreciable difference between various brands available. He buys the brand by habit. Variety seeking buying behavior In this buying situation also, the purchaser is not that much involved, but likes to try various brands Complex buying behavior In this buying situation, the buyer is very involved and spends some time to learn about various alternatives available and buys the product/brand. Less careful buying behavior with more chance of dissonance In this buying situation, the differences between brands is not much and customer takes decisions quickly. But there is a possibility that he may experience some diappointment and tries to justify his purchase decision
The stages of buying decision process
Problem recognition A potential purchaser first recognizes a need for a product
Information search He goes around searching for information the available alternatives
Evaluation of alternatives He evaluates the alternatives
Purchase decision He makes the purchase decision
Post purchase behavior
Post purchase satisfaction The buyer's satisfaction is a function of the closeness between the buyer's product expectations and the product's perceived performance. Post purchase actions If buyers are satisfied they may purchase again. If they are dissatisfied, they may return the product. They will inform their friends not to buy. Post purchase use and disposal The marketer has to be monitor use of the product. If people bought the product but are not using it, sales will not grow. If people are using the product for additional uses not anticipated by the marketer, the information is of value in increasing sales.
Foreseeing and Foretelling Customer Needs
Innovation leadership will be with those firms, who have the capability to identify the customers' unarticulated needs for products and services. Future is an intersection of evolving regulations, technology, demographics and lifestyle. To visualize the unstated needs of the customers involves foreseeing the evolutions of these four dimensions. Discomfort in seeing beyond current reguatlions, technology, demographics and life style is not right ingredient for innovation in a company.
Reference Ranjan Das, Inventing Customer, Strategic Marketing, August-October, 1998, pp.10-14 "Predictive Analytics: Knowing What's On Your Customer's Mind". was a seminar organized by a newspaper group in India. Predictive Analytics: It utilizes historical data and techniques such as data mining and statistical analysis and can provide a clearer picture of what is going to happen, so that businesses can accurately decide their future course of action. It can provide companies with information such as future trends in customer buying habits, which customers are likely to return and which ones aren't, the amount of business that they'll bring, what could be the best way to retain the existing customers and other important information that companies can use to their advantage.
Scanning of Environment for Marketing Ideas and Decisions
Responsibility for Scanning the Environment
Unmet needs of people always exist. Companies can make fortunes if they can find a solution to problems of people like cancer, mental diseases, nonfattening but tasty food etc. There are many more problems awaiting a solution. Marketers have to scan the environment and find out problems requiring solutions and report them back to their product development specialists to facilitate focused efforts to develop solutions for them.
Marketers also have the responsibility to identify trends. A more detailed categorization of trends is trend, fad and megatrend.
A trend is a direction of sequence of events that have momentum and durability.
A fad is unpredictable, short-lived direction of sequence of events, and they are without social, economic, and political significance. Some business firms do profit from fads, but the firms have to take up very short payback period investments to profit from fads.
But trend have longevity and is observable across several market areas and consumer activities and is consistent with other significant social and economic events occurring and emerging at the same time.
John Naisbitt, coined the term megatrends and wrote books on it also, and he explain the megatrend as a large social, economic, political or and technological change that is slow to form, and once in place, it influences society for some time – say between seven and ten years or longer.
For the purpose of identifying changes in the market that include development of trends and megatrends, marketing executives scan macro environment. Macro environment is further divided into different environments for study purpose.
Demographic environment
The first macro environment that marketers monitor is global and domestic population and trends in it. The parameters they look for are worldwide population growth, population age mix, and geographical shifts in population, household patterns, educational groups and ethnic groups.
Economic environment
An exchange market requires purchasing power for transactions to take place along with people who want goods. The available purchasing power in an economy depends on parameters like current income, prices, savings, current debt levels and credit availability. Marketers have to identify major trends in income and spending patterns.
Natural environment
Marketers need to consider the threats and opportunities associated with four trends in the natural environment: the shortage of raw materials, the increased cost of energy, the increased levels of pollution, and the changing role of governments.
Technological environment
There is a rapid technological change. Technology is creating opportunities for new products and services. Research and development expenditure is an important variable that determines development of new technologies. Marketers have to promote R & D activities both at company level and country levels through government funds. Government regulation of technology has increases to assure public safe technologies.
Political/Legal environment
Regulation of various businesses by government and liberalization of some businesses are issues that need to be monitored by marketers.
Social/Cultural Environment
Culture denotes the ways of life of people of a society according to Sociology. There is high persistence of core cultural values of societies. There are subcultures in every society. There are shifts in secondary cultural values through time. Marketers have to be alert to such changes and analyze marketing implications of such changes.
Marketing Strategy - Differentiating and Positioning the Market Offering
Marketing Strategy
Philip Kotler discussed five issues of marketing strategy in his 9th edition of Marketing Management
Differentiating and Positioning the Market Offering Developing New Products Managing Life cycle Strategies Designing marketing Strategies for Market Leaders, Challengers, Followers, and Niches Designing and Managing Global Marketing Strategies
These issues are covered in different knols by me. This knol describes differentiating and positioning.
Differentiating and Positioning the Market Offering
The issues discussed in the area of differentiating and Positioning the market offering are:
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Tools for Competitive Differentiation Developing a Positioning Strategy Communicating the Company’s Positioning
Tools for Competitive Differentiation
Differentiation - Definition: is the act of designing a set of meaningful differences to distinguish the company's offering from competitor's offerings.
Boston Consulting Group's differentiation opportunities matrix: Actually it is a competitive advantage matrix applicable to differentiation opportunities.
Four types of industries identified by BCG matrix are:
Volume industry: only a few but very large competitive advantages are possible. The benefit of the advantage is proportional with company size and market share. Example given - construction industry
Stalemated industry: in this type there are only few opportunities and the benefit from each is small. The benefit is also not proportional to the size or market share. Example: Steel industry - It is hard to differentiate the product or decrease its manufacturing cost.
Fragmented industry: in this type, there are many opportunities, but the benefit of each of them is small. Benefit does not depend on size or market share.
Specialized industry: in this type, the opportunities are more and benefit of each opportunity is high. The benefit is not related to size or market share.
Kotler mentions, Milind Lele's observation that companies differ in their potential maneuverability along five dimensions: their target market, product, place (channels), promotion, and price. The freedom of maneuver is affected by the industry structure and the firm's position in the industry. For each potential competitive opportunity or option limited by the maneuverability, the company needs to estimate the return. Those opportunities that promise the highest return define the company's strategic leverage. The concept of maneuverability brings out the fact that a strategic option that worked very well in one
industry may not work equally well in the other industry because of low maneuverability of that option in the different industry and by the firm in consideration.
Five Dimensions of Differentiation
Regarding the tools of differentiation, five dimensions can be utilized to provide differentiation.
Product Services that accompany marketing, sales and after sales services. Personnel that interact with the customer Channel Image
Differentiating a Product
Features
Quality: performance and conformance
Performance - the performance of the prototype or the exhibited sample, Conformance - The performance of every item made by the company under the same specification
Durability Reliability
Reparability Style Design
Services differentiation
Ordering ease Delivery Installation Customer training Customer consulting Miscellaneous services
Personnel Differentiation
Competence Courtesy Credibility Reliability Responsiveness Communication
Channel differentiation
Coverage Expertise of the channel managers
Performance of the channel in ease of ordering, and service, and personnel
Image differentiation
First distinction between Identity and Image - Identity is designed by the company and through its various actions company tries to make it known to the market.
Image is the understanding and view of the market about the company.
An effective image does three things for a product or company.
1. It establishes the product's planned character and value proposition. 2. It distinguishes the product from competing products. 3. It delivers emotional power and stirs the hearts as well as the minds of buyers.
The identity of the company or product is communicated to the market by
Symbols Written and audiovisual media Atmosphere of the physical place with which customer comes into contact Events organized or sponsored by the company.
Developing a Positioning Strategy
Levitt and others have pointed out dozens of ways to differentiate an offering(Theodore Levitt: "Marketing success through differentiation-of anything", Harvard Business Review, Jan-Feb, 1980)
While a company can create many differences, each difference created has a cost as well as consumer benefit. A difference is worth establishing when the benefit exceeds the cost. More generally, a difference is worth establishing to the extent that it satisfies the following criteria.
Important: The difference delivers a highly valued benefit to a sufficient number of buyers.
Distinctive: The difference either isn't offered by others or is offered in a more distinctive way by the company.
Superior: The difference is superior to the ways of obtaining the same benefit.
Communicable: The difference is communicable and visible to the buyers.
Preemptive: The difference cannot be easily copied by competitors.
Affordable: The buyer can afford to pay the higher price
Profitable: The Company will make profit by introducing the difference.
Positioning
Positioning is the result of differentiation decisions. It is the act of designing the company's offering and identity (that will create a planned image) so that they occupy a meaningful and distinct competitive position in the target customer's minds.
The end result of positioning is the creation of a market-focused value proposition, a simple clear statement of why the target market should buy the product.
Example:
Volvo (station wagon) Target customer-Safety conscious upscale families, Benefit - Durability and Safety, Price - 20% premium, Value proposition - The safest, most durable wagon in which your family can ride.
How many differences to promote?
Many marketers advocate promoting only one benefit in the market (Your market offering may have many differentiators, actually should have many differentiators in product, service, personnel, channel, and image).
Kotler mentions that double benefit promotion may be necessary, if some more firms claim to be best on the same attribute. Kotler gives the example of Volvo, which says and "safest" and "durable".
Four major positioning errors
1. Underpositioning: Market only has a vague idea of the product.
2. Overpositioning: Only a narrow group of customers identify with the product. 3. Confused positioning: Buyers have a confused image of the product as it claims too many benefits or it changes the claim too often. 4. Doubtful positioning: Buyers find it difficult to believe the brand’s claims in view of the product’s features, price, or manufacturer.
Different positioning strategies or themes
1. Attribute positioning: The message highlights one or two of the attributes of the product. 2. Benefit positioning: The message highlights one or two of the benefits to the customer. 3. Use/application positioning: Claim the product as best for some application. 4. User positioning: Claim the product as best for a group of users. - Children, women, working women etc. 5. Competitor positioning: Claim that the product is better than a competitor. 6. Product category positioning: Claim as the best in a product category Ex: Mutual fund ranks – Lipper. 7. Quality/Price positioning: Claim best value for price
Which differences to promote:
This issue is related to the discussion of worthwhile differences to incorporate into the market offering done earlier. But now competitors positioning also needs to be considered to highlight one or two exclusive benefits offered by the product under consideration.
Communicating the Company’s Positioning
Once the company has developed a clear positioning strategy, the company must choose various signs and cues that buyers use to confirm that the product delivers the promise made by the company. **************************************
Marketing Strategy for New Industry Products
Pioneer in a Product - Issues
When a product is new in the industry life cycle, the firm starting the production and sale is the pioneer. Normally the growth is slow in the introduction of phase of a new industry product as the technical problems with the product are to corrected, production capacities have to be built up based on market acceptance and growth, distribution capacity is to be built up from scratch when distributors have no familiarity with the product, and customer may have reluctance to change his old behavior. If the product is an expensive high technology one, only small number of buyers can afford it.
Companies have choice to be a pioneer or a follower. A pioneer has to initiate every thing connected with the product. A follower has the benefit using various firms that helped the pioneer for his venture. Also he has the opportunity of studying the pioneer’s product and market response to it. He can examine the distribution channels used by the pioneer and gauge their effectiveness and he can evaluate various marketing strategies employed by the pioneer. Thus an early follower has some extra knowledge about the product and the market.
Is there any Advantage to the
Pioneer?
Some studies indicate that the market pioneer if it can capture the leadership position gains the most advantages. Some studies dispute the finding that pioneers have sustained their leadership. Robertson and Gatignon give the opinion that an alert pioneer-leader can pursue various strategies to prevent later market entrants from wresting away leadership. Being a pioneer has an advantage that can be capitalized. The pioneer has to dynamically compete in the market place to exploit his pioneering advantage. He needs to have a grand plan for life-cycle of marketing of the product and launch strategy has to be the first step in that grand plan.
The pioneer may start from a specific product-market segment his launch but must have plans to cover the larger part of the market over a period of time by launching appropriate product variations and covering more market segments.
The competitive Cycle – The Pioneer’s Challenge
Initially, the pioneer is the sole supplier with 100% production capacity and market share.
In the second stage, there is competitive penetration as competitors build capacities and enter market.
In the growth phase, capacity tends to be overbuilt and any cyclical downtrends will impact margins for all. After some time share stability may happen.
Then a commodity competition stage will come where returns are average.
The final stage will be a decline for the industry and firms withdraw from the industry. The pioneer needs to steer through all the stages of the industry life cycle.
Pricing and Promotion Strategies for Pioneers
Pioneer has the alternative of Skimming pricing or Penetration pricing.
Skimming is entering the market layer by layer in the order of value exchange. Initially buyers who are willing to pay a high price are serviced. This strategy is feasible if market is unaware of the product and special efforts are to be done by firms to make the potential buyers aware of the product.
Pioneer will do rapid skimming if the potential competition is imminent. In this strategy he will spend substantial amount on promotion to enlarge the sale quickly. If the potential competition is not imminent, the pioneer can undertake slow skimming. He can expand sales slowly by limiting promotion expenditure.
Penetration is entering a large market with a lower price. It is done for price sensitive products. Rapid penetration is preferred when the market is unaware of the product. The pioneer spends a good deal on launch and advertising. A slow penetration approach is used when market is aware of the product, but potential competition is limited.
Thus price and promotion are the two alternative dimensions which the pioneer has use in his strategy.
Marketing Strategies for Challenger Firms
Introduction
Firms that are not market leaders in their industry or product category are trailing firms. One or two of them could be close competitors to the market leader and they can be termed as runner-up firms. These firms can take the role of challengers when they make aggressive efforts to further their market share or they can be termed followers when they keep quiet and maintain their market share.
There are successful trailing firms which challenged and became industry No. 1 firms. Canon is one such example in copiers. Toyota is now the world No. 1 company in automobiles; it displaced General Motors.
The challenger companies have to attack the leader, other comparable firms, and smaller firms in their bid to gain market share.
Attack has a greater probability of success when there customer dissatisfaction with the current leader. There is a gap in the market which the leader is not serving. Comparable firms can be successfully attacked when they are underfinanced and are charging excessive prices and customers are showing dissatisfaction. Similarly, underfinanced smaller firms can be attacked to gain market share.
With each attack, the challenger may hope to gain a reasonable increase in its market share.
The following attack strategies are possible.
Frontal Attack
An attack is called a frontal attack when the opponent?s strength is challenged head on. In marketing, the fight is done all fronts in market segments and areas where the opponent is currently strong. The general idea is that to win in a frontal attack, the challenger requires three times the fire power of the opposite side. What is fire power in marketing? Price of the product, quality of the product, sales effort, advertising effort, and service effort etc. are the various types of fire power in marketing. The challenger must be able to deploy superior fire power in the markets he is challenging.
Modified Frontal Attack
A modified frontal attack uses price as the challenging dimension. The challenger matches the opponent in other dimensions but will charge a lower price over an extended period.
Flank Attack
Attacking a weak position in the opponent?s force is flank attack. Challenger identifies the weak areas in the offering as well as marketing territories of the opponent and attacks those areas. A front attack may also be launched simultaneously, but the frontal attack is only to engage the opponent. But the real victory is won in the flanks. Market share gain in weak territories is the objective, but the opponent is forced to defend his share even in his strong territories and products.
Encirclement Attack
In this attack both strong areas and weak areas attacked simultaneously. This type of attack is more often done by a leader when challenged. When the leader makes an aggressive attack to gain market share from the trailing firms, he can use this strategy. Even other firms, can use this strategy when they are attacking a much smaller firm?s market share.
Guerilla Attack
Guerilla attacks consist of waging small, intermittent attacks on different marketing territories of the opposing firm. The aim is to harass and demoralize the opponent initially before launching the main attack.
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.
The Marketing Firepower
Price discounts: The challenger can sell a comparable product at a lower price.
Cheaper goods: The challenger can come out with economy goods with lesser number of features. The strategy will succeed when there is significant number of buyers in need of lower priced product.
Prestige goods: A challenger can launch a higher quality product with more features.
Product proliferation: The challenger can offer a greater product variety.
Product innovation: the challenger can come out with an improve product.
Service innovation: Improvement in service offered to the buyers.
Distribution innovation: a new distribution outlet that offers additional convenience to buyers.
Process innovations: The challenger may have done a process innovation that gives better quality or lower cost and it is passed on to buyers.
Advertising innovation: The challenger may have innovative communications strategy that reaches and motivates larger number of potential customers resulting in higher sales.
Challenger needs to have a product-service offer or marketing mix advantage that is of value in the market place. Then he can use that advantage to gain market share by employing a suitable attack strategy.
Political Party Marketing - Understanding the Needs and Desires of People
Political parties in a democracy exist to reflect the desires and needs of people. An individual or group of persons should try to form a political party only when they have the intention to represent the people in the legislature and administrative wings of a state. Before the party is formed as well as when the party is in power, political party has to carry out marketing. It has to know what people want and desire. In a democracy, wherein political parties are not adequately connected to people, there will be frustration among people. There will be agitation to change the system whenever majority of the people feel frustrated with the system. Every political party member is to be entrusted the work of meeting around 50 persons every year to know people, keep the channels of contact open and ascertain the desires and needs of people. Print based newspapers and periodicals were available and were used to some extent by political parties.
Information technology based systems now can be put in place to leverage the basic personal contact established by primary members of the party.
Political Parties and the Internet: Net Gain www.amazon.com/Political-Parties-Internet-Net-Gain/dp/041528273X
The web sites of political parties can be used to ascertain the popular opinion on various issues. Various TV channels are employing this method. But are political parties employing the technique? Each and every politician needs to put up a voting facility on his website for his constituency people for each piece of legislation on which he has to vote in the legislature. He has to ascertain first desire of his people and if there is a marginal difference he may call for a public meeting to explain his reasoning. But if a overwhelming majority gives an opinion, he has to honor the opinion even if he is personally against it. Can visitors cite any legislator who follows the practice of asking his constituency people to vote on pending legislations?
Behavioral Segmentation of Potential Voters
Kotler in his discussion of behavioral segmentation includes segmentation based on attitude. In attitude based segmentation, five groups are identified for a product or service in a market. The five groups of people are enthusiastic, positive, indifferent, negative, and hostile. Door-to-door political campaigners change their canvassing approach according to the attitude of the voter. Enthusiastic voters are thanked and will be asked to vote without fail. Reinforcement is done for positive voters. Efforts are made to win over indifferent voters. They do not spend time with voters with negative and hostile attitude to the party and the candidate. Party has to undertake its marketing and communication activities to see that negative and hostile voters with respect to their party are in a minority at the start of the election campaign. Then only their team can hope to effectively canvass for victory.
The Marketing Concept - Kotler
Marketing - Definition
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. A human need is a state of deprivation of some basic satisfaction. People require food, clothing, shelter, safety, belonging, and esteem. These needs are not created by society or by marketers. They exist in the very texture of human biology and the human condition. Wants are desires for specific satisfiers of needs. Although people?s needs are few, their wants are many. They are continually shaped and reshaped by social forces and institutions, including churches, schools, families and business corporations. Demands are wants for specific products that are backed by an ability and willingness to buy them. Companies must measure not only how many people want their product but, more importantly, how many would actually be willing and able to buy it.
Market
A market consists of all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want.
Marketers
When one party is more actively seeking an exchange than the other party, we call the first party a marketer and the second party a prospect. A marketer is some one seeking one or more prospects who might engage in an exchange of values. A prospect is someone whom the marketer identifies as potentially willing and able to engage in an exchange of values.
Marketers do not create needs. Marketers influence wants. Marketers influence demand by making the product appropriate, attractive, affordable, and easily available
to target consumers. They also communicate their offering to prospects. Society influences wants. People living in differnent societies prefer different types of food items, different types of apparel and even different types of jewellery. A product is anything that can be offered to satisfy a need or want. Offering and solution are synonyms to the product in marketing context. A product or offering can consist of as many as three components: physical good(s), service(s), and idea(s). Value is the consumer?s estimate of the product?s overall capacity to satisfy his or her needs. Marketers offer value to a consumer when the satisfaction of customer's requirements takes place at the lowest possible cost of acquisition, ownership, and use.
Marketing management
Marketing management takes place when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties.
Definition of American Marketing Association Marketing (Management) is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. Marketing management has the task of influencing the level, timing, and composition of demand in a way that help the organization achieve its objectives. Marketing management is essentially demand management. Marketing managers manage demand by carrying out marketing research, planning, implementation and control. Within marketing planning, marketers must make decisions on target markets, market positioning, product development, pricing, distribution channels, physical distribution, communication, and promotion.
Marketing work in the customer market is formally carried out by sales managers, salespeople, advertising and promotion manages, marketing researchers, customer service managers, product and brand managers, market and industry managers, and the marketing vice-president.
The Marketing Concept
The marketing concept holds that the key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets. The marketing concept rests on four pillars: target market, customer needs, integrated marketing, and profitability.
Target market
No company can operate in every market and satisfy every need. Nor can it always do a good job within one broad market.
Customer needs
Marketing is about meeting needs of target markets profitably. The key to professional marketing is to understand their customers? real needs and meet them better than any competitor can.
Some marketers draw a distinction between responsive marketing and creative marketing. A responsive marketer finds a stated need and fills it. A creative marketer discovers and produces solutions that customer did not ask for but to which they enthusiastically respond.
Integrated Marketing
When all the company?s departments work together to serve the customer?s interests, the result is integrated marketing. Integrated marketing takes on two levels. First, the various marketing functions-sales force, advertising, product management, marketing research, and so on – must work together.
Second must be well coordinated with other company departments. The company is doing proper marketing only when all employees appreciate their impact on customer satisfaction. To foster teamwork among all departments, the company carries out internal marketing as well as external marketing. External marketing is marketing directed at people outside the company. Internal marketing is the task of successfully hiring, training, and motivating employees who want to serve the customers well. In fact internal marketing must precede external marketing. It makes no sense to promise excellent service before the company?s staff is ready to provide excellent service.
Profitability
The ultimate purpose of the marketing concept is to help organizations achieve their goals. In the case of private firms, the major goal is profit. Marketing managers have to provide value to the customer and profits to the organization. Marketing managers have to evaluate the profitability of all alternative marketing strategies and decisions and choose most profitable decisions for long-term survival and growth of the firm
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