eem - module 9 marketing management

7/26/2019 EEM - Module 9 Marketing Management

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A.I.T.S. - - - - Rajkot

Prepared By : Pooja P. Chavda

Chapter 9 : Introduction to MARKETING MANAGEMENTSubject : EEM Prepared By : Pooja P. Chavda

What is Marketing?

-

Marketing is about identifying and meeting human and social needs. One of the shortest

definitions of marketing is: Meeting needs profitably

The American Marketing Association formal definition:

Marketing is an organizational function and a set of processes for creating, communicating, and delivering

value to customers and for managing customer relationships in ways that benefits the organization and its

stakeholders.

Managers som times think of marketing as The Art of Selling Products,but selling is not the most

important part of marketing!

Philip Kotler, said thatMarketing is a Social & Managerial Process by which individuals & groups

obtain(achieve) what they need and want through creating, offering and exchanging products of value with

others

Peter Drucker,says the aim of marketing is make selling superfluous. The aim of marketing is to know and

understand the customer so well that the product or service fits him and sells itself. Ideally, marketing

should result in a customer who is ready to buy.

The scope of Marketing :

To be a marketer, you need to understand what marketing is, how it works, what is marketed, and who

does the marketing.

What is Marketed??

1.

Goods:Physical goods, each year Indian companies market cars, trucks, television-sets, machine tools,

machines, industrial chemicals, watches, cosmetics, etc.

2.

Services:Service include the work of airlines, hotels, car rental firms, barbers, and beauticians,

maintenance and repair people, and accountants, bankers, lawyers, engineers, doctors, software

programmers, and management consultants.

3. Events:Marketers promote time-based events, such as major trade shows, artistic performances, and

company anniversaries. Global sporting events such as the Olympics and the World Cup.

4.

Experiences:An amusement park or a water park represents experiential marketing: a theme restaurant

that creates the ambience of a village in Rajasthan or Gujarat.


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5. Persons:Celebrity marketing is a major business. Artists, Musicians, CEOs, Physicians, High profile

Lawyers and financiers, etc. Amitabh Bachchan, Sachin Tendulkar, ShahRukh Khan, Aishwarya Rai, and

Sourav Ganguly are big brands.

6.

Places:In the software industry, Bangalore is positioned as the Silicon Vally of India. In the tourism

industry, Kerala is marketed as Gods own country. The government of India is marketing India as a

tourist destination through the Incredible India advertisement campaign.

7.

Properties:Properties are intangible rights of ownership of either real estate or stocks and bonds.

Properties are bought and sold, and these exchanges require marketing.

8.

Organizations: Organizations actively work to build a strong, favorable, and unique image in the minds of

their target publics. E.g. HUL, P&G, Dabar, etc.

9.

Information: information is essential what books, schools, and universities produce, market, and

distribute at a price to parents, students, and communities. The production, packaging and distribution of

information are some of our societys major industries.

10.

Ideas: every market offering includes a basic idea. In the factory, we make cosmetics; in the store we sell

hope. creating awareness about AIDS, encouraging family planning, and discouraging smoking, which fall

in the realm of social marketing.

4 Ps of Marketing or Marketing Mix

1. Product

The terms Product refers to tangible, physical products as well as services.

Product can be divided in Core products, Expected product and Augmented product.

A product decision will have to satisfy the following questions:

1.

What does the customer want from the product/services?

2.

What features does it have to meet these needs?

3. How and where will the customer use it?

4.

What does it look like? How will customers experience it?

5.

What size, color, and so on, should it be?

6. What name should be given to the product?


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7. How is it branded?

8.

How is it differentiated against the competitors?

1.

Product Mix:

When a company enters a market, it generally offers one or two product. As is grows bigger, it expands its

product offering.

The total number of products and services offered by a company is called its product mix

The product mix is characterized by the terms like product line width, product line length, and product line

depth.

2.

New Product Decisions:

Following are the steps involved in a new product development.

a)

Idea Generation: ideas can come from Customers, Employees, Dealers, advertising agencies etc.

b) Idea Screening

c)

Concept Testing and Analysis

d)

Product Development

e)

Product Use Testing

f) Test Marketing

g)

Commercialization

3.

Packaging:

Protection

Easy Identification

Convenience

Promotion

Innovation

4.

Product Quality:

Conformance Quality

Durability

Reliability

Reparability

Style & Design5. Branding:

Individual Branding

Blanket Family Branding

Separate Family Branding

Company & Individual Name combined Branding

6.

Labeling

7. Guarantee/Warranty

2. Price

Price is an important element of the marketing mix. It is the monetary value that the customer gives the

company in exchange to a product or service.

1. What is the value of the product or service as perceived by the buyer?

2.

Is the customer price sensitive?

3.

What discounts should be offered to trade customers, or to other specific segments of your market?

4. How will the price set by the company against that of the competitors?

1.

Pricing Methods:

Based on the various factors, companies choose a pricing method which are discussed below.

a. Mark-Up Pricing:


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The final price is arrived by including the production cost, including both cost of goods and fixed costs and

a certain profit margin is added over it.

b. Target Return Pricing:

The main motive is to achieve a target return-on-investment (ROI).

c. Going Rate Pricing:

The product is priced according to the price that competitors have adopted. Generally it is done in

comparison with the market leader.

d. Differentiated Pricing:

The product and services are priced differentially based on the demand, place and paying capacity. E.g.

Grocery shop, Shopping mall, Tour service in season and non-seasonal.

2.

Pricing Policy:

a. Market Skimming:

Price skimming means using a high introductory price to skim the cream of the demand.

This is done mainly when something new is introduced in the market. It can be a unique design or a

breakthrough technology.

b. Market Penetration:

Penetration pricing means using lower initial price to capture a large share of market.

This type of policy is adopted when a new company launches a product in a crowded market.

c.

Psychological Pricing:

Customer relate the price of a product with its quality. If the price is high, they perceive the quality of the

product to be good.

Luxury product marketers keep their price higher than the available alternatives.

In psychological pricing, the ending digit 9 helps in pricing a commodity.

d.

Transfer Pricing:

This type of pricing policy is adopted by multi-national companies. Transfer pricing is used by one division

of an organization to sell products to the other division of same organization in a different country.

3. Discounts:

Discounts are also a type of price adjustment which is done both for the channel members and the

customers. This can be due to various reasons such as higher production, less demand, high competition etc.

Types of discounts that companies offer:

a.

Quantity Discount

b. Seasonal Discount

c.

Promotional Discount

d.

Cash Discount

3. Place

Place refers to having the right product, in the right location, at the right time to be purchased by customers

with as much ease as possible.

It means the way in which an organization will distribute the product or service they are offering to the end

user.

The product placement is done through a distribution channel with the help of number of intermediaries.

Theses intermediaries can be Wholesalers, Retailers, Agents and Brokers.

Distributing goods to all parts of the country is a tedious and costly task and so even the bigger companies

take the help of intermediaries to distribute their goods.

1.

Channel Strategies:

Depending on the type of product being distributed, there are three common distribution strategies. They

are:


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a. Intensive Distribution:

This type of distribution is used commonly to distribute low priced impulse purchase product e.g.

chocolates, soft drinks.

b.

Exclusive Distribution:

This type of distribution involves limiting distribution to a single outlet. The product is usually highly

priced, and requires the intermediary to place much detail in its selling.

An example of exclusive distribution is the sale of Maruti Cars through single dealership.

c. Selective Distribution:

In selective distribution, a small number of retail outlets are chosen to distribute the product.

Selective distribution is common with products such as computers, televisions household appliances,

where consumers are willing to shop around and where manufacturers want a large geographical spread.

2. Channel Levels:

Based on the types of product, companies use a number of intermediaries to place its products and reach as

many customers as possible.

a.

Zero Level Channel

b. One Level Channel

c.

Two Level Channel

d.

Three Level Channel

3.

Channel Dynamics:

The channel members should put in integrated efforts for the proper working of a distribution channel

a.

Horizontal Marketing System:

Horizontal marketing system shares the marketing resources among two or more related business at the

same level of operations.b. Vertical Marketing System:

In this type of marketing system, the producers, wholesalers and retailers perform the marketing activities

together and a coordinated effort is put for this.

c. Multichannel Marketing System:

A single company or firm uses two or more marketing channels to reach one or more target segment.

4.

Physical Distribution:

Physical Distribution of goods is an important elements in the Place of the marketing mix.

Physical distribution means the physical handling and movement of goods from place of production to the

place of consumption


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5. Channel Conflict:

Since a number of intermediaries are present in a distribution channel, conflict between them is bound to

occur.

This is mostly because of differing goals and objectives of all channel members.

4. Promotion

To attain the sales goals, it is important that the customers are made aware about the product.

The four major types of promotion that marketers use:

1. Advertising:

This form of promotion involves non-personal, paid promotionsusing mass media outlets to deliver the

marketers message.

Advertising generally means one-way communication with little feedback opportunity for the customer

experiencing the advertisement.

Following are various types of media used for advertising:

Television, Newspapers, Magazines, Pamphlets, Hoardings, Direct Mail, Newsletters, Radio, Brochures.

2. Sales Promotion:

Sales promotion involves the use of special short term techniques, often in the form of incentives, to

encourage customers respond or undertake some activity.

There are three basic categories of sales promotion: Consumer, Trade, & Business.

For Consumers: Free samples, Coupons, Rebates & Refund, Price Packs, Premiums, Patronage rewards,

Point-of-purchase coupons, Contests, Sweepstakes & Games.

For Trade Promotion: Discounts & allowances directed at wholesalers and retailers, Free Goods, Push

Money, Novelties.

For Business Promotion: Trade fairs are organized.

3.

Public Relations:

The opinion of the public is very important for the growth of any company.

Here public means the customers, shareholders, suppliers, trade groups etc.

4.

Personal Selling:

This form of promotion involves personal contact between company personnel and those who have a role

in purchase decisions.

This occurs face-to-face or via telephone, online interaction via video conferencing or text chat.

-- CONCEPTS IN MARKETING-

With industrial revolution, marketing has evolved in different phases. Different phases have given rise to different

marketing concepts

1. The Production Concept

2. The Product Concept

3.

The Selling Concept

4.

The Marketing Concept

5. The Societal Marketing Concept

6.

Holistic Marketing Concept

1 Production Concept

The idea that consumers will favour those products which are available & highly affordable and

organization focus on improving Production and Distribution efficiency.

For eg. Computer maker Lenovo dominates Chinese PC Market through Lower Labour Cost, Mass

distribution


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This concept believes that production of goods is the most important part of marketing activity.

According to this concept consumers will buy goods which are easily and cheaply available.

Companies that run on this concept focus more on the production process to produce goods efficiently.

These companies do not even give much importance to features or services.

2 Product Concept

The idea that consumers will favour products which offers the most Quality, Performance, Features and the

organization should force its Energy to making continuous product development.

For eg. Manufacturers of Mousetraps in Old days now with better solution with Chemical spray because

Attentionis necessary.

This concept lays emphasis on the quality of product and the services provided to the customers.

They work ruthlessly to bring about innovation which can provide superior quality and services to the

customers.

It is important to understand that the markets today are shifting from being product-centric to customer-

centric.

This concept soon be realize that a product cannot just be sold based on its quality and other factors.

Market communication is also very important for the success of a product

3 Selling Concept

The idea that consumers will not buy enough of the firms products unless it undertakes a large scale

selling and promotion effort. For eg. Product benefits Insurance, Blood donation etc.

Marketers began to realize that just producing goods of superior quality does not help in capturing market

base or gaining profits.

It was more important to sell the product rather than manufacturing it or packing features in it.

Selling is more important for the product for which the demand is low or it has declined over a period of

time.

In sales concept companies produce goods which they want and not those which the customer want, such

companies have to face the problem of overcapacity.


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4 Marketing Concept

Marketing Management philosophy that holds that achieving organizational goals depends on knowing the

Needs and Wants of Target Market and Delivering the desired satisfactions better than Competitors do.

The problem in selling concept became the basis of marketing concept.

The marketing concept taught companies to recognize the needs and preferences of the customer and

design the product accordingly.

Selling was required because the companies made products that they found suited for the markets.

Selling means finding customers for the products that companys produce. Marketing aims at finding the

right products for the customers.

The attainment of company goal by meeting and exceeding customer needs better than the competitors.

Marketing concept is based on three factors:

1. Customer Orientation:

The corporate objective should be defined with the motive of providing customer satisfaction.

2.

Integrated Effort:

In providing customer satisfaction, the entire staff team, team management committed towards the goal of

providing customer satisfaction.

3.

Goal Achievement:

The employees and the top management should have firm belief that goals and objectives can be met

through customer satisfaction.

Difference between Selling and Marketing

Selling Marketing

1. Selling is done with the intention of

benefiting the seller.

Marketing is done keeping in interest of the buyers.

2. Selling is the process of fulfilling a

need.

Marketing is the process of establishing the needs.

3. It focuses on short term goals of thecompany. It focuses on fulfilling the long term objectives ofthe company.4. Selling means finding customers for

the products that companies produce.

Marketing aims at finding the right products for

the customers.5. Selling is just a part of marketing and

so it is a much narrow term than

marketing.

Marketing includes selling & it makes it easier. It

also includes planning, pricing, packaging,

advertising.

5- Societal Marketing Concept

The idea that companys marketing decisions should consider Consumers Wants, the Companys

Requirements , Consumers Long-Rrun Interests and Societys Long- Run Interests.

For eg. Short-run as Wants and Long-run as Welfare like Johnson & Johnson company having Honesty,Integrity and company prefer People before Profits, so the benefits to both Consumers + Company

Companies began to realize the importance of including the benefits of society in its marketing efforts.

The offerings of a company to its customers have a direct bearing on the society as a whole. So apart from

finding what the customer wants it is also important to know the implication of such a product.

To be in the race for a longer run and be profitable as well, the companies are aware of their corporate

social responsibility. In this regard the companies are especially concerned about the environment from

where they use resources. E.g. Pepsi Co. India believes in Performance with Purposehere the area may

focuses on Replenishing Water, Partnership with Farmers, Waste to Wealth, Healthy Kids.


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6 Holistic Marketing

Philip Kotler and Kevin Kellerdefined Holistic Marketing as:

The Development, Design and Implementation of marketing programs, processes and activities .

Everything Matter in Marketing

1.

Integrated Marketing:

In this, marketing efforts should be fully integrated to communicate with the customers.

All the 4 Ps of marketing i.e. Product, Price, Place and Promotion must be take care of.

2.

Internal Marketing:

The participation of employees at all levels in a company is ensured.

For a marketing communication program to be successful, it is imperative that the junior employees and

the middle and senior management should work in proper coordination.

Internal marketing involves the process of Hiring, Training, and Motivating the marketing staff so that they

provide excellent services to the customers.


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3. Performance Marketing:

The marketers are held accountable for the financial, social, legal, ecological efforts of a marketing

campaign.

The marketers are asked to justify the financial gains that a campaign has achieved.

The societal marketing concept that we have already discussed comes into picture.

4.

Relationship Marketing:

The long term profitability and customer loyalty was the main focus.

This was built through catering to the needs and wants of the customer for a long period.

Customer relationship management is the most important area in marketing. It is achieved by integration

of all the areas of service such as marketing, sales and customer service.

Relationship marketing can be defined as the process of creating, developing, maintaining and enhancing

relationship with customers and other stakeholders of the company.

** Market Segmentation**

Starting point of Market Segmentation isMass Marketing.

Market Segmentation:

Dividing a market into distinct(separate) groups of Buyes who have different needs, Characteristics andwho might require separate products or marketing programs

Market segmentation is the process of Dividing the market on the basis of tastes and preferences along

with the paying capacity of the customers.

It can also be defined as the identification of individuals or organizations with similar characteristics that

have similar implication for the determination of marketing strategy.

Market Segment :A group of Consumers who respond in a similar way to a given set of Marketing Efforts.

Modern days of companies are trying to position their products according to the specific preferences of the

customers. For eg. Car segment available in High and Low price segment.

For eg. Coca cola company following Mass marketing concept and having large number of Buyers of the

same products. The company creates awareness through variety of Promotional strategy so that it coversLargest Potential market + Lowest costs of the Products + Lower prices compare with Higher Profit

Margins but Companies are now a days turning to Micro Marketing Concept

For eg. HUL launched soaps like Lux, which costs around Rs. 13 targeting the mass base of customers and

has also launched Dove, which cost around Rs. 27, targeting the upper middle class and high class segment.

Need of Market Segmentation

Over a period of time, customers have become very particular about the needs and preferences. A

generalized product cannot satisfy customers from all segments.

So market segmentation helps to categorize the market base on the needs, preferences and paying capacity

of customers and design the product which is customized as per the need of that segment.

Smaller companies do not possess the required resources to cater to the mass market.

Market segmentation is used to categorize the market and then position the product in a particular

segment only.

Importance of Market Segmentation

1.

It helps in better understanding of the customers needs and wants.

2.

It catalyzes innovation by identifying the needs of a particular product.

3. If a product meets and exceeds a customers expectations by adding superior value, the customer normally

is willing to pay a higher price.

4.

It leads to two-way communication among the potential buyers and the organization.

5. It helps the marketers to distinguish one customer group from the other.

6.

It helps in maintaining good relationship with the customers.


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7. It helps in retaining the existing customers and attracting new ones.

8.

It helps in reducing cost / expenses on various marketing activities and increases market share.

9.

Improves service delivery standards.

Bases for Market Segmentation of Consumer Products

Before segmenting the markets, the companies need to take care of certain things and have a clear

understanding of some basic questions related to segmentation.

1. Does the segmentation strategy help the company profit in short and long term by increasing sales and

market share?2.

Is the size of the segment being targeted ideal?

3. What is the level of competition in the segment that the company intends to enter?

4.

How many segments of the markets does the company intend to enter?

1. Demographic Segmentation

In demographic segmentation, the consumer market is segmented based on variables such as gender, age,

occupation, income, social class, family size, and nationality.

Taste and preferences of a particular demographic group believed to be similar and so the positioning of

the product is done accordingly.

Here we will be discussing the variables used to segment the market.

Gender:some products are segmented according to the gender. There are brands which have products

exclusively for male or female customers. Age & Life Cycle Stage:tastes and preferences keep on changing with age and life cycle-stage. Toys,

Games, etc.

Income and Social Class:tastes and preferences change with social class as well. E.g. Cars, Bikes, Cloths,

Shoes

Generation:with succeeding generations, the buying pattern of customers changes. The new generation is

tech-savvy and analyzes a product based on the features and then makes a decision to buy the product.


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2. Geographic Segmentation

Dividing the market according to geographical areas such as countries, states, cities, regions and zones is

called as geographic segmentation.

A thorough knowledge of the demography and taste and preferences of that region helps the marketer to

develop products that are best suited for that place.

Rural and urban markets differ on a number of important parameters such as literacy level, income,

spending power and availability of infrastructure such as roads, electricity, telephone services as well as

social and cultural acceptance of people that affect market potential and buying patterns and habits.

3. E.g. Times of India in Rajkot gives Rajkot Plus to add the local taste with the news that is nationally and

internationally circulated.

3.

Psychographic Segmentation :

- Demographic segmentation identifies the group of people who will be inclined to buy a Mercedes car. But

the reason why that group likes to buy Mercedes is made clear by Psychographic Segmentation.

- Here we will discuss the Psychographic variables that affect the buying behavior of a group of people.

1.

Life style: lifestyle is a very important parameter which affects the buying behavior of individuals. Based

on the work one does, the need also changes. The mall and multiplex culture has emerged in the urban

areas because people there are interested to spend some quality time even during shopping as Sports,

Outdoor or cultural trends.

2.

Values:Marketers use beliefs and values to determine the buying behavior of a group of people. Values

mold the buying decision in the long run and if the values are taken care of, the customer may turn to be

loyal customer and be profitable for the company.

E.g. McDonalds introduce Mc Aloo Tikki in India & then Non-vegetarian burgers.

3.

Personality:The personality traits such as ambitious, sportsmanship, aggression form an important

buying motivator. So when companies design or communicate about a product, they keep in mind the

personality trait of the target group.

E.g. Sporty person attracted to sports bike, Axe, Wild stone, etc.

4.

Behavioral Factors Segmentation

This kind of segmentation is done for existing customers and is done on the basis of the usage of the

product.

This kind of segmentation can be done only for the existing customers as their buying pattern has to be

observed before making the segmentation.

This kind of segmentation is done mainly for product driven organization.

1. Benefits: Consumer market is segmented based on the benefits that the customers seek from a product. A

company can place different products based on benefits sought by the customers like quality, speed, services

etc. for E.g. Liril soap for freshness, Cinthol soap for anti body, Dettol soap for germs free

2.

Occasions: Markers can also be classified based on the occasions on which the product is used. Different

products are best suited for different occasions like regular or special occasions.

E.g. Archies & Hallmark cards forValentine day, Mothers day, New Year,Birthday etc.

3.

Usage Rate:Products are used by users with varying frequency of usage with the measurement light,

medium and heavy. Those who use the product rarely, intermittently or regularly. Marketers target the

customers with heavy usage of product.

4.

Attitude:of the customers is also important factor in behavioral segmentation of the consumer market.

Customers are classified as positive, negative, enthusiastic, indifferent and hostile according to the attitude

of the customers.


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5. Loyalty of the Customers:The customers can be classified based on their loyalty with the company.

Loyalty of the customers can be classified into four types.

a.

Strong Loyalists: E.g. users of Mercedes will never be attracted to any other brand.

b. Shifting Loyalty: E.g. user may use Colgate, Close-Up or Pepsodent.

c.

Switchers: Users keep changing brand based on availability, discounts and added features of the product.

Bases for Market Segmentation of Industrial Products Few approaches have been advocated on industrial market segmentation.

Some of the variables based on which industrial goods market can be segmented are: Demographics, Operating variables, Situational factors, Purchasing approaches and Personal

characteristics.

Here we will be discussing the variable one by one.

1. Demographic

Demographics are used to segment both the consumers and industrial goods.

But the demographic variables are used to segment the consumers and industrial markets are different.

The variables used to segment industrial markets based on demographics are companys size, industry and

customers location.

Company Size:The size of the product selling company is an important factor while segmenting industrial

markets.

If the company is small and its manufacturing capacity is less, then it will not take orders from huge firms

as the order size will be large and the company may not be able to supply the order on time.

Industry: The working of different industries is different. So an in depth knowledge of the industries givesthe marketer a basis to segment the market. An industry may have so many sub industries in it.

Customer Location: The proximity of the customer location is yet another variable for the market

segmentation of the industrial products. The vendors of TATA are mostly located in the surrounding area of

the manufacturing plant of the company.

2.Operating Variables:

Company Technology, Product and brand-use status Customer Capabilities

3. Purchasing Approaches:

Organizations purchasing Function

Power Structure


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Relationship among buyers and sellers

General Purchasing policies of Companies

4.Situational Factors:

Urgency of Order , Product Application , Size of Order

---- Product Life Cycle----

The classic product life cycle has four stages : Introduction, Growth, Maturity and Decline..

1. Introduction Stage : When the Product is introduced sales will be low until customers becomeaware of the product and its benefits.

-Some firms may announce their product before it is introduced, but such announcements also alert

competitors and remove the element of surprise.

-Advertising costs typically are high during this stage in order to rapidly increase customer awareness of

the product and to target the early adopters.

-During the introductory stage the firm is likely to target the early adopters. During this stage the firm is

likely to incur additional costs associated with the initial distribution of the product. These higher costs

coupled with a low sales volume usually make introduction stage a period of negative profits.

- During this stage the primary goal is to establish a market and build primary demand for the Product

class.The marketing mix are..

Product :one or few products, relatively undifferentiated

Price :Generally high, assuming a skim pricing strategy for a high profit margin as the early adopters buy the

product and the firm seeks to recover development costs quickly. In some cases a penetration pricing strategy

is used and introductory prices are set low to gain market share.

Place :It is selective and developed as the firm commences implementation of the distribution plan.

Promotion :it is aimed at Building brand awareness. Samples or trial incentives may be directed toward

early adopters. The introductory promotion also is intended to convince potential resellers to carry the

product.


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2. Growth Stage :This is a period of rapid revenue growth. Sales increase as more customers becomeaware of the product and its benefits and additional market segments are targeted.

-Once the product has been proven a success and customers begin asking for it, sales increases further as

more retailers become interested in carrying it.

-The marketing term may expand the distribution at this point. When competitors enter the market, often

during the later part of the growth stage, the may be price competition and increased promotional costs in

order to convince consumers that the firms product is better than that of the competitors.

- During the Growth stage , the goal is to gain consumer preference and increase sales.

The marketing mix may be :

Product :New product features and packaging options; improvement of product quality.

Price :Maintained at a high level if demand is high, or reduced to capture additional customers.

Place :it becomes more intensive. Trade discounts are minimal if resellers show a strong interest in the

product.

Promotion :increased advertising to build brand preferences.

3. Maturity Stage :The Maturity stage is the most Profitable. While sales continue to increase into thisstage, they do so at a slower pace. Because brand awareness is strong, advertising expenditures will be

reduced. Competition may result in decreased market share and prices.

-The competing products may be very similar at this point , increasing the difficulty of differentiating theproduct. The firm places effort into encouraging competitors customers to switch, increasing usage per

customer and converting non-users into customers.

-Sales promotions may be offered to encourage retailers to give the product more shelf space over

competing products.

- During the Maturity stage, the primary goal is to maintain market share and extend the Product

Life Cycle.

TheMarketing Mix decisions..

Product :Modifications are made and features are added in order to differentiated the product from

competing products that may have been introduced.

Price :possible price reductions in response to competition while avoiding a price war.

Place :New distribution channels and incentives to resellers in order to avoid losing shelf space.Promotion :Emphasis on differentiation and building of Brand Loyalty. Incentives to get Competitors

Customers to switch.

4. Decline Stage : Eventually sales begin to decline as the market becomes saturated, the productbecomes technologically obsolete, or customer tastes change. If the product has developed brand

loyalty, the profitability may be maintained longer. Unit costs may increase with the declining

production volumes and eventually no more profit can be made.

- During the decline phase, the firm generally has three options :

1. Maintain the product in hopes that competitors will exit. Reduce costs and find new uses for the product.

2. Reducing marketing support and costing along until no more profit can be made.

3. Discontinue the product when no more profit can be made or there is successor product.

The marketing mix are:

Product :the number of products in the product line may be reduced and surviving products to make them

look new again.

Price : prices may be lowered to liquidate inventory of discontinued products. Prices may be maintained for

continued products serving a niche market.

Place :it becomes more selective because channels that are no longer profitable.

Promotion :Expenditures are lower and aimed at reinforcing the brand image for continued products.


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--- Demand Forecasting---- Demandsarewants for specific products through which ability and willingness to purchase the same

products which offers satisfaction.

For eg. Many people want Mercedes cars but only few people are able +willing to buy that.

- Market Demand :

It is the total volume that would be bought by a defined customer group in a defined customer group in a

defined geographical area in a defined time period in a defined Marketing Environment under a

Marketing Program.

Market demand is not a fixed number, but rather a function of the stated conditions. For this reason, we

can call it the Market Demand Function.

-Company Demand :

It is the companys estimated share of market demand at alternative levels of company marketing effort

in a given time period. it depends on how the company s products, services, prices and communications

are perceived relative to the competitors. If other things are equal, the company s market share will

depend on the relative scale and effectiveness of its Market Expenditures.

-Demand Forecasting : It is the activity of estimating the quantity of a product or service that consumerswill purchase. A demand forecast is the prediction of what will happen to your companys existing

product sales. Through Multi-Functional approach which helps the Inputs from sales & marketing,

finance and production should be considered.

Importance of Demand Forecasting:

1) Planning and Scheduling Production

2)

Budgeting of costs and sales revenue

3) Making Policies for Long-term Investment

4)

Controlling Inventories

5)

Achieving Targets of the Company

6)

Planning for Finance

7) Planning for Labour

Criteria/Features for Good Forecasting Method :

1)

Accuracy :it requires maximum accuracy because various important plans are prepared on the

basis of forecast. Wrong forecasts may create trouble in Business and result into heavy losses.

2)

Simplicity :selected method must be as simple as possible because if it is difficult who is

engaged in forecasting will not do his job properly and there is always mistake in solution for

future.

3)

Availability :the objects and scope of forecasting should be as such as the relevant informationare collected immediately with reasonable accuracy.

4)

Stability: The stable figure helps to forecast the idea about the future changes are expected to be

minimal and are reliable(trustworthy) for planning.

5)

Economy :Here the Forecast is directly related with growth of GDP(gross domestic product)

because costs must be weight against the importance of the forecast to the operations of the

Business.

6)

Utility :The forecasting Techniques must be easily understandable and reliable to the

management.


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--- Demand Forecasting Approaches ---


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1. SURVEY OF BUYERS INTENTION

It is also known as Consumer Market Survey

It is the most basicand least sophisticated (difficult)method of all the Forecasting

Method..

Customers are asked about their Purchasing Plans & their Projected Buying Behavior..

Customers are directly contacted to find out their Intentions & Intentions are recorded

through Personal Interviews, Mails, Post/courier Services, Telephone, and Questionnaires..

Here, Largenumber of Respondents are needed to achieve results.

Merits Demerits

Simpleto understand and Easyto

implement.

This method is most popular among all

methods.

A direct communication with the

customersis possible.

The method is Effectivefor Short-Run

estimates.

For Long-Run sales this method is not

Suitablebecause customers have

Changing nature..

Household consumers can be identified

through this method butit is

impractible &costly..

Basic limitationis measurement of the

variables is under management

control..

2. SALES FORCE OPINION

The method is also known as Sales Force Composite Method.

Sales force are allocated according to any area, territory to collecting data.

Sales people is asked to project their sales because he is the closestto the marketplace so he

also know what the customer wants means Estimation.

Salesare the Lifebloodof the Companyand Sales people are Lifeline.

Sales force surveys gather information related with Sales Force Collective Knowledge which

Experiencesabout customers & support information, tools, training and other resources your

sales people need to Boost Sales.

Merits Demerits

The sales force is aware of the ground

realitiesof the area in which they

operate.

It is In-house methodso the cost of this

forecast is less. It is actively involved in the forecasting

their morale increases which helps to

improve performance and achieving

of Targets.

Many time some people underestimate

how much they spend and

overestimate how much they sell, it

may prove harmful to the company as

the production process will be basedon the forecast given by the sales

people.

This method is not consider while

changing scenarioor the effect of the

competitors product on the demand.

The method has noScientific

backing(support).


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3. EXPERT OPINION METHOD

It is more focused approach to Demand Forecasting .

A Panel of Expertsare identified where an expert could be a Decision Maker eg.An Ordinary

Employeeor an Industry Expert

It is Systematic, Interactive method which depends on a Panel of Experts.

The Principal is that Forecasts from a structured group of Experts are more accuratethan

unstructured group of Individuals.

Merits Demerits

1.

This technique can be used in a wide

range of Environmentfor eg.

Government Planning, Business &

Industry prediction

2.

Expenses : It savescorporations money

in Travel expenses, there is no need to

gather Participants from far areas,

generate ideas from the People Best

Expertise3.

Information : It is compiled on the

basis of Pooled(collective) Opinion

rather than Field work, so Information

is obtained Quickly

1.

The Method is Somewhat Time

Consuming..

2.

This technique can be difficult for

researchers to design an effective study..

3.

There is possibility of Biased(unclear)

Judgmentbecause to get immediate

benefits that may not give thoughtful

consideration

4. MARKET TEST METHOD

To test Multiple Marketing scenario and select the most promising for expansion.

First testing is always necessary for introducing a new product or service..

Marketers


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Time Series Analysisthere are 4 Methods .

Time Series Forecasting Method Description

1.Nave Approach

--- The method assumes that demand in the next period is

the same as demand in most recent period but demad

pattern may not always be that stable.

--- Eg. If July sales were 50 units then August sales will be

also 50 units but not more than one month/day/year

2.Moving Average (MA)

It is a series of Arithmetic means and it is used if little/no

trend is present in the data.

Simple Moving Average

--- the method uses average demand for a fixed sequence of

period and is good for stable demand with no behavioral

patterns

Weighted Moving Average :

--- The method used to reflect fluctuations more closely by

assigning weights to the most recent data means the older

data is usually less important.

Note : W = Weights are lie between 0 and 1 for a total of 1.0

3.Exponential Smoothing

The Method that reacts more strongly to recent changes in

demand by assigning a smoothing constant to the most

recent data more strongly,

Where, Ft+1= Forecast for the next period

Dt= actual demand in the present period

Ft= previously determined forecast for the present period

a= weighting factor as the smoothing constant

4.Time Series DecompositionThis method adjusts the Seasonality by multiplying the

normal forecast by a seasonal factor.


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Merits Demerits1.

As it uses secondary data, so cost of data

collection is not there.

Past may not be future same like, demand is not a

function of time but a function of price, income,

population, etc.

2. Statistical Demand Analysis.. (Causal Model)

SDA uses a Mathematical Technique known as the Regression Analysis(weakening, failure) which

relates a dependent variable to an Independent variable(eg. Price, Advertisement)(change of graph inincrease/decrease order)

This Method s are based on a known relationship between the factor to be forecast and other External

Internal Factors ..

1. Regression

Mathematical equation relates a dependent

variableto one or more independent

variablesthat are believed to

influence(control) the dependent variable

2. Econometric Models

System of Interdependent regression

equations that describes some sector of

Economic Activity..

3.

Input Out Model

Describes the Flows from one sector of the

Economy to another, so predicts the Inputs

required to produce outputs in another..

4. Simulation Modeling

(Recreation or Reproduction)

It is among the more complex technique..

Method tend to work best for Revenues

that are heavily on economic factors like.Business License fees, Income tax, Retail

sales

Thus external data representing relevant

economic performance indicators are usedto predict level of revenue expected

Merits Demerits

1.

It is more reliable because the

correlation is established between

Variables and demand.

2.

It is difficult to define all variables which

affect the demand.

::: Important Questions for GTU Exam :::

1.

Explain the Marketing Mix with 4Ps of Marketing.2.

Explain the concept of Product Life Cyclewith four stagesDiagram.

3. Differentiate : Marketing v/s Selling

4.

Discuss : Marketing concepts in brief(All 6 concepts).

5.

Explain Market segmentation with their Basesin Consumer Marketsand Industrial Markets.

6. Demand forecasting? Explain various Qualitative andQuantitativeForecasting Methods.

eem - module 9 marketing management

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