mm final notes

8/3/2019 MM Final Notes.

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Marketing Management

Module 1

Marketing is 'The management process responsible for identifying, anticipating and

satisfying customer requirements profitably.'

Marketing Management philosophies

http://mba-lectures.com/marketing/principles-of-marketing/641/five-marketing-

management-philosophies.html

One more concept is

Societal Marketing is basically a marketing concept that is of the view that a

company must make good marketing decisions after considering consumer wants,

the requirements of the company and most of all the long term interests of the

society.

Societal Marketing is actually an offshoot of the concept of Corporate Social

Responsibility and sustainable development. This concept urges companies to do

more than having an exchange relationship with customers, to go beyond delivering

products and work for the benefit of the consumers and the society.

The societal marketing concept calls upon marketers to build social and ethical

considerations into their marketing practices. They must balance and juggle the

often conflicting criteria of company profits, consumer want satisfaction, and public

interest. Yet a number of companies have achieved notable sales and profit gains by

adopting and practicing the societal marketing concept. Some companies practice a

form of the societal marketing concept called cause related marketing.

Example - Body Shop: Body Shop is a cosmetic company found by Anita Roddick.

The company uses only vegetable based materials for its products. It is also against

Animal testing, supports community trade, activate Self Esteem, Defend Human

Rights, and overall protection of the planet. Thus it is completely following the

concept of Societal Marketing.


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Relationship marketing: Textbook Page 22

Marketing and core concepts of marketing Page 6 and 14

Marketing mix - http://www.quickmba.com/marketing/mix/

Marketing myopia

Marketing myopia is an advertising strategy that does not focus on the needs and

wants of consumers, but the desires of a company to sell specific goods or services in

the economic market. Classic economic theory attempts to explain that consumers

will tell companies the type of goods and services desired through the economic

behavior demonstrated by individual consumers. Companies can benefit from this

behavior by actively researching how consumers are spending their money and what

goods are services are currently popular in the economicmarket. Marketing myopia can distort the companys view when managers focus

more on what the company can produce rather then what consumers are willing to

buy.

A classic example of marketing myopia is seen by Ford Motor Companys

development of the Edsel. The Ford Edsel was a late 1950s model passenger car built

under the strategy that it was going to revolutionize the automotive industry. The car

was designed with the intent of being a large, stylish vehicle that would meet the

driving needs for thousands of U.S. consumers and families. Although the Edsel was

released with much fanfare and publicity from marketing agencies and media

outlets, it was an almost immediate failure in the consumer market. While reviews at

the time cited the vehicles poor workmanship and styling, business experts have

attributed the failure to marketing myopia and a failure to understand consumer

desires. The name Edsel is now a business term synonymous with business

or marketing failure. According to the marketing myopia theory, to cater a market

a company not only needs to be technically sound and product oriented but it also

needs to be customer oriented. It needs to know what are the needs of the customer

and what further innovations can the company bring to maintain customer interest

or how it can adapt to the changing business market.


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The 5 Cs and Strategic Marketing Basics

Once you know the marketing mix, goals, and targets of your marketing effort, the

next step is to develop the marketing strategy. A good guideline to make the right

decisions, while constructing a marketing plan and strategy, are the 5 Cs:

1. Customer Determine what needs from which clients youre trying to

satisfy. A few areas to research would be the market segments, benefits the

customer wants, if the value of the benefits outweigh the costs, frequency of

purchases, quantity of purchases, retail channel, and needs based on trends

over time.

2. Company Determine if your company can meet those customer needs. For

example, does your company have the right product line and/or technical

expertise? A good tool to help determine your companys strengths and

weaknesses is SWOT analysis. This stands for Strengths such as innovative

products, expertise, great processes and procedures, Weaknesses such as the

lack of knowledgeable technical support or poor product

quality, Opportunities such as a new international market or a market led by a

weak competitor, and Threats such as a new competitor or price war. This is avery good tool to analyze the internal strengths and weaknesses, and the

external opportunities and threats.


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3. Competition Determine who competes with your company in meeting the

customers needs. Is it an active competitor or a potential threat? What are

their products exactly? What are their strengths and weaknesses?

4. Collaborators Determine if there is any outside source that can help thecompany such as distributors, suppliers, etc.

5. Context Determine if there are any limitations due to Political issues such as

legal problems, trade regulations, taxation, and labor laws, Economic concerns

such as growth rate, labor costs, and business cycle stage, Social impacts such

as demographics, education, and culture, and Technological developments such

as the impact on cost structures. This is also known as PEST

analysis. These forces can be dramatic and difficult to predict.

Module 2

Marketing process- http://www.netmba.com/marketing/process/

Marketing plan A marketing plan is a business document written for the purpose

of describing the current market position of a business and its marketing strategy for

the period covered by the marketing plan. Marketing plans usually have a life of

from one to five years.

y Purpose of a Marketing Plan - The purpose of creating a marketing plan

is to clearly show what steps will be undertaken to achieve the business'

marketing objectives. While some small business owners include their

marketing plan as part of their overall business plan, if a business

owner follows the recommended SBA format, parts of the marketing

plan will be included in the various areas of the business plan. As an

alternative, the marketing plan may be attached in its entirety as an

appendix to a business plan.y What's in a Marketing Plan? A typical small business marketing plan might

include a description of its competitors, the demand for the product or

service, and the strengths and weaknesses from a market standpoint of both

the business and its competitors.Other elements usually contained in a

marketing plan include:

- Description of the product or service, including special features


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- Marketing budget, including the advertising and promotional plan

- Description of the business location, including advantages and disadvantages

for marketing

- Pricing strategy

- Market segmentation (specializing in specific niche markets or, if massmarketing, how marketing strategy might differ between different segments,

such as age groups).

y M a r k e t i n g p l a n n i n g - s e t t i n g m a r k e t i n g o b j e c t i v e s

Introduction

y Objectives set out what the business is trying to achieve.

y

Objectives can be set at two levels:

(1) Corporate level

y These are objectives that concern the business or organisation as a whole

Examples of corporate objectives might include:

We aim for a return on investment of at least 15%

We aim to achieve an operating profit of over 10 million on sales of at

least 100 million

We aim to increase earnings per share by at least 10% every year for the

foreseeable future

(2) Functional level

e

Examples of functional marketing objectives might include:

We aim to build customer database of at least 250,000 households within

the next 12 months

We aim to achieve a market share of 10%

We aim to achieve 75% customer awareness of our brand in our target

markets

y Both corporate and functional objectives need to conform to the commonly

used SMART criteria.

y The SMART criteria (an important concept which you should try to

remember and apply in exams) are summarised below:

y Specific - the objective should state exactly what is to be achieved.


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y Measurable - an objective should be capable of measurement so that it is

possible to determine whether (or how far) it has been achieved

y Achievable - the objective should be realistic given the circumstances in which

it is set and the resources available to the business.

y

Relevant - objectives should be relevant to the people responsible forachieving them

y Time Bound - objectives should be set with a time-frame in mind. These

deadlines also need to be realistic.

M a r k e t i n g p l a n n i n g m i s s i o n - A mission describes the organisations

basic function in society, in terms of the products and services it produces for its

customers. A clear business mission should have each of the following elements:

(diagram refer to word) Taking each element of the above diagram in turn, what

should a good mission contain?

(1) A Purpose -Why does the business exist? Is it to create wealth for shareholders?

Does it exist to satisfy the needs of all stakeholders (including employees, and society

at large?)

(2) A Strategy and Strategic Scope - A mission statement provides the commercial

logic for the business and so defines two things:

- The products or services it offers (and therefore its competitive position)

- The competences through which it tries to succeed and its method of competing

A business strategic scope defines the boundaries of its operations. These are set by

management.For example, these boundaries may be set in terms of geography,

market, business method, product etc. The decisions management make about

strategic scope define the nature of the business.

(3) Policies and Standards of Behavior - A mission needs to be translated into

everyday actions. For example, if the business mission includes delivering

outstanding customer service, then policies and standards should be created and

monitored that test delivery.


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These might include monitoring the speed with which telephone calls are answered

in the sales call centre, the number of complaints received from customers, or the

extent of positive customer feedback via questionnaires.

(4) Values and Culture -The values of a business are the basic, often un-stated, beliefs

of the people who work in the business. These would include:

Business principles (e.g. social policy, commitments to customers)

Loyalty and commitment (e.g. are employees inspired to sacrifice their personal

goals for the good of the business as a whole? And does the business demonstrate a

high level of commitment and loyalty to its staff?)

Guidance on expected behavior a strong sense of mission helps create a work

environment where there is a common purpose

What role does the mission statement play in marketing planning?

In practice, a strong mission statement can help in three main ways:

It provides an outline of how the marketing plan should seek to fulfill the mission

It provides a means of evaluating and screening the marketing plan; are marketing

decisions consistent with the mission?

It provides an incentive to implement the marketing plan

SBU STRATEGIC BUSINESS UNIT

Strategic business units are self contained divisions formed within an organization

for dealing with specific business concerns. These units pull together the diverse

parts of the concerned organization while cutting across the geographical and diverse

lines for serving a specific market in a more efficient manner.

These strategic business units are also referred to as independent business units or

strategic planning units. The main philosophical concept behind the formation of

strategic business units is to serve a clear and defined market segment along with a

clear and defined strategy. These business units have to contain all the needs and

corporate capabilities of the respective organization. The entire portfolio of the

concerned business has to be managed by allocation of managerial and capital

resources for serving the overall interest of the entire organization. This helps in

developing a balance in the earnings, sales and the assets at a level which is

controlled and acceptable for taking the right amount of risks.


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The strategic business unit (SBU) is created with the application of set criteria which

consist of the competitors, price models, customer groups and the overall experience

of the company. It is also sometimes seen that a number of different verticals present

in the same organization having similar competitors and target customers are

amalgamated to form a single SBU. This helps in strategically planning the overall

business of the organization. This is also true for the company which has different

product ranges and some of them have similar capabilities in terms of research and

development, marketing and manufacturing. Such products can also be

amalgamated to form a single unit.

The main notion which rests behind the concept of strategic business units is to gain

a competitive advantage in the populated marketplace. This can be done because theSBU helps in segmenting the activities of the company in a strategic manner and the

resources are thus allocated competitively

Porters generic strategies

http://www.quickmba.com/strategy/generic.shtml

Strategic planning is a management tool, period. As with any management tool, it is

used for one purpose only: to help an organization do a better job - to focus its

energy, to ensure that members of the organization are working toward the same

goals, to assess and adjust the organization's direction in response to a changing

environment. In short, strategic planning is a disciplined effort to produce

fundamental decisions and actions that shape and guide what an organization is,

what it does, and why it does it, with a focus on the future. (Adapted from Bryson's

Strategic Planning in Public and Nonprofit Organizations).Marketing management is the process of setting marketing goals for an organization

(considering internal resources and market opportunities), the planning and

execution of activities to meet these goals, and measuring progress toward their

achievement.


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Strategic management is the process of specifying an organization's objectives,

developing policies and plans to achieve these objectives, and allocating resources to

implement the policies and plans to achieve the organization's objectives. It is the

highest level of managerial activity, usually performed by an organization's Chief

Executive Officer (CEO) and executive team. Strategic management provides overall

direction to the enterprise.

Strategic management is a combination of strategy formulation and strategy

implementation.

"Marketing is the process of planning and executing the conception, pricing,

promotion and distribution of ideas, goods and services to satisfy customers."

Marketing management is a business discipline focused on the practical application

of marketing techniques and the management of a firm's marketing resources and

activities. Marketing managers are often responsible for influencing the level, timing,

and composition of customer demand in a manner that will achieve the company's

objectives

Strategic marketing planning

Developing the Strategic Marketing Plan

The strategic marketing plan process typically has three stages:

1. Segment the market

Geographic

Demographic

Psychographic

Behavior

2. Profile the market segments

Revenue potential

Market share potential

Profitability potential

3. Develop a market segment marketing strategy

Market leader or product line extension


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Mass marketing or targeted marketing

Direct or indirect sales

After analyzing market segments, customer interests, and the purchase process, it's

time to create the strategic marketing plan. The strategic marketing plan document

usually includes:

Situational Analysis - Where is the company now?

a. Market Characteristics

b. Key Success Factors

c. Competition and Product Comparisons

d. Technology Considerations

e. Legal Environment

f. Social Environment

g. Problems and Opportunities Marketing Objectives - Where does management want the company to go?

a. Product Profile

b. Target Market

c. Target Volume in Dollars and/or Units

Marketing Strategies - What should the company do to achieve its objectives?

a. Product Strategy

b. Pricing Strategy

c. Promotion Strategy

d. Distribution Strategye. Marketing Strategy Projection

How to Use a Strategic Marketing Plan

Once a company's executive team has approved the strategic marketing plan it's time

to take the next step -- create the tactical marketing programs and projects needed to

implement the plan.

These tactical programs usually include:

Product Development Plan

Marketing Communications Plan

Sales Development Plan

Customer Service Plan


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Benefiting from a Strategic Marketing Plan

The top-down process of developing a strategic marketing plan helps insure that all

tactical marketing programs support the company's goals and objectives, as well as

convey a consistent message to customers.

This approach improves company efficiency in all areas, which helps improve

revenue and market share growth, and minimizes expenses -- all of which lead to

higher profitability.

Module 3

A marketing information system (MIS) is a set of procedures and methods designed

to generate, analyze, disseminate, and store anticipated marketing decision

information on a regular, continuous basis. An information system can be used

operationally, managerially, and strategically for several aspects of marketing.

A marketing information system can be used operationally, managerially, and

strategically for several aspects of marketing.

We all know that no marketing activity can be carried out in isolation, know when

we say it doesnt work in isolation that means there are various forces could be

external or internal, controllable or uncontrollable which are working on it. Thus to

know which forces are acting on it and its impact the marketer needs to gathering

the data through its own resources which in terms of marketing we can say he istrying to gather the market information or form a marketing information system. This

collection of information is a continuous process that gathers data from a variety of

sources synthesizes it and sends it to those responsible for meeting the market places

needs. The effectiveness of marketing decision is proved if it has a strong

information system offering the firm a Competitive advantage. Marketing

Information should not be approached in an infrequent manner. If research is done

this way, a firm could face these risks:

1. Opportunities may be missed.

2. There may be a lack of awareness of environmental changes and competitors

actions.

3. Data collection may be difficult to analyze over several time periods.

4. Marketing plans and decisions may not be properly reviewed.

5. Data collection may be disjointed.

6. Previous studies may not be stored in an easy to use format.


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7. Time lags may result if a new study is required.

8.Actions may be reactionary rather than anticipatory.

The total information needs of the marketing department can be specified and

satisfied via a marketing intelligence network, which contains three components.

1. Continuous monitoring is the procedure by which the changing environment isregularly viewed.

2. Marketing research is used to obtain information on particular marketing issues.

3. Data warehousing involves the retention of all types of relevant company records,

as well as the information collected through continuous monitoring and marketing

research that is kept by the organization.

Depending on a firms resources and the complexity of its needs, a marketing

intelligence network may or may not be fully computerized. The ingredients for a

good MIS are consistency, completeness, and orderliness. Marketing plans should be

implemented on the basis of information obtained from the intelligence network.

An Marketing Information System offers many advantages:

1. Organized data collection.

2. A broad perspective.

3. The storage of important data.

4. An avoidance of crises.

5. Coordinated marketing plans.

6. Speed in obtaining sufficient information to make decisions.

7. Data amassed and kept over several time periods.8. The ability to do a cost-benefit analysis.

The disadvantages of a Marketing information system are high initial time and labor

costs and the complexity of setting up an information system. Marketers often

complain that they lack enough marketing information or the right kind, or have

too much of the wrong kind. The solution is an effective marketing information

system.

The information needed by marketing managers comes from three main sources:

1) Internal company information E.g. sales, orders, customer profiles, stocks,customer service reports etc

2) Marketing intelligence This can be information gathered from many sources,

including suppliers, customers, and distributors. Marketing intelligence is a catchall

term to include all the everyday information about developments in the market that

helps a business prepare and adjust its marketing plans. It is possible to buy

intelligence information from outside suppliers (e.g. IDC, ORG, MARG) who set up


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data gathering systems to support commercial intelligence products that can be

profitably sold to all players in a market.

(3) Market research Management cannot always wait for information to arrive in

bits and pieces from internal sources. Also, sources of market intelligence cannot

always be relied upon to provide relevant or up-to-date information (particularly forsmaller or niche market segments). In such circumstances, businesses often need to

undertake specific studies to support their marketing strategy this is market

research.

Marketing research

According to American Marketing Association, Marketing Research is the function that lin

consumer, customer and public to the marketer through information-information used to i

and define marketing opportunities and problems, generate, refine and evaluate marketing

monitor marketing performance; and improve understanding of marketing as a process.

Marketing Research is systematic problem analysis, model building and fact finding for the

purpose of important decision making and control in the marketing of goods and services.

Marketing Research is a well-planned, systematic process which implies that it needs planni

the stages. It uses scientific method. It is an objective process as it attempts to provide accur

authentic information. Marketing Research is sometimes defined as the application of scien

method in the solution of marketing problems.

Marketing Research plays a very significant role in identifying the needs of

customers and meeting them in best possible way. The main task of Marketing

Research is systematic gathering and analysis of information.

Before we proceed further, it is essential to clarify the relationship and difference

between Marketing Research and Marketing Information System (MIS). Whatever

information are generated by Marketing Research from internal sources, external

sources, marketing intelligence agencies-consist the part of MIS.

MIS is a set of formalized procedures for generating, analyzing, storing and

distributing information to marketing decision makers on an ongoing basis.


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While Marketing Research is done with a specific purpose in mind with information

being generated when it is conducted, MIS information is generated continuously.

MIS is continuous entity while Marketing Research is a ad-hoc system.

While in Marketing Research information is for specific purpose, so it is not rigid;

in MIS information is more rigid and structured.

Marketing Research is essential for strategic market planning and decision making.

It helps a firm in identifying what are the market opportunities and constraints, in

developing and implementing market strategies, and in evaluating the effectiveness

of marketing plans.

Marketing Research is a growing and widely used business activity as the sellers need

to know more about their final consumers but are generally widely separated from

those consumers. Marketing Research is a necessary link between marketing decision

makers and the markets in which they operate.

Marketing Research includes various important principles for generating

information which is useful to managers. These principles relate to the timeliness

and importance of data, the significance of defining objectives cautiously and clearly,

and the need to avoid conducting research to support decisions already made.

Module 4

Consumer adoption process

Textbook Page 578

Or

The theory of innovation diffusion and consumer adoption helps marketers identify

early adopters.An innovation is any good, service, or idea that is perceived by someone as new. The

idea may have a long History, but it is an innovation to the person who sees it as

new. Innovations take time to spread through the social system. The Innovation

diffusion process is defined as the spread of a new idea from its source of invention

or creation to its ultimate users or adopters. The consumer adoption process is the


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mental process through which an individual passes from first hearing about an

innovation to final adoption.

Adopters of new products have been observed to move through five stages:

1. Awareness = The consumer becomes aware of the innovation but lacksinformation about it.

2. Interest = The consumer is stimulated to seek information about the innovation.

3. Evaluation = The consumer considers whether to try the innovation

4. Trial = The consumer tries the innovation to improve his or her estimate of its

value.

5. Adoption =The consumer decides to make full and regular use of the

innovation.

A persons level of innovativeness is the degree to which an individual is relativelyearlier in adopting new ideas than the other members of his social system. In each

product area, there are pioneers and early adopters. Some people are the first to

adopt new clothing fashions or new appliances; some doctors are the first to

prescribe new medicines; and some farmers are the first to adopt new farming

methods. People can be classified into the adopter categories. After a slow start and

increasing number of people adopt the innovation, the number reaches a peak, and

then it diminishes as fewer non-adopters remain.

The five adopter groups differ in their value orientations and their motives for

adopting or resisting the new product.

y Innovators are technology enthusiasts; they are venturesome and enjoy

tinkering with new product and mastering their intricacies. In return for low

process, they are happy to conduct alpha and beta testing and report on early

weakness.

y Early adopters are opinion leaders who carefully search for new technologies

that might give them a dramatic competitive advantage. They are lesser price

sensitive and willing to adopt the product if given personalized solutions and

good service support.

y Early majority are deliberate pragmatists who adopt the new technology when

its benefits are proven and a lot of adoption has already taken place. They

make up the mainstream market.

y Late majority are skeptical conservatives who are risk adverse, technology shy,

and price sensitive. Laggards are tradition bound and resist the innovation

until they find that the status quo is no longer defensible


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Levels of Consumer Decision Making

There are three levels of consumer decision making

y Extensive problem solving - When consumers have no established criteria for

evaluating a product category or specific brands in that category or have not

narrowed the number of brands they will consider to a small, manageable

subset, their decision-making efforts can be classified as extensive problem

solving. Here, the consumer needs a great deal of information to establish a

set of criteria on which to judge specific brands and a correspondingly large

amount of information concerning each of the brands to be considered.

y Limited problem solving - Here, the consumers have already established the

basic criteria for evaluating the product category and the various brands in the

category. They have not fully established preferences concerning a select group

of brands. The search for additional information is more like fine-tuning;

they must gather additional brand information to discriminate among the

various brands.

y Routinized response behavior - Here, consumers have experience with the

product category and a well-established set of criteria with which to evaluate

the brands they are considering. In some situations, they may search for a

small amount of additional information; in others, they simply review what

they already know. In extensive problem solving customer seek for more

information to make a choice, whereas in routinized response behavior

customers need only little additional information.

Consumer decision making process


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Textbook Page 159 to 165

Consumer decision rules

These are generally referred to as information processing strategies. These areprocedures that help consumers to evaluate various options and reduce the risk of

making complex decisions by providing the guidelines. Decision rules have been

broadly classified into two categories:

1. Compensatory Decision Rules

Consumers evaluate brand or model interms of each attribute and computes a

weighted score for each brand. The computed score reflects the brands relativemerit as a potential purchase choice. The assumption is that consumer will select the

brand that scores highest among alternative brands. The unique feature of this

rule is that it balances the positive evaluation of a brand on one attribute to balance

out a negative evaluation on some other attribute. For example, positive attribute


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like high fuel efficiency is balanced with the negative evaluation of high maintenance

cost.

2. Noncompensatory Decision Rules

: In contrast to the above rule non compensatory rules do not allow consumers to

balance positive evaluation of a brand on one attribute against negative evaluation

on some other attribute. There are three types of noncompensatory rules.

y Conjunctive Decision Rule - In conjunctive decision rule the consumer

establishes a different, minimally acceptable level as a cut off point for each

attribute. In this the option is eliminated for further consideration if a specific

brand or model falls below the cutoff point on any attribute.

y Disjunctive Rule - It is the mirror image of conjunctive rule. Here the

consumer establishes a separate minimally acceptable cut off level for each

attribute. In this case if an option meets or exceeds the cut off establishes for

any one attribute it is accepted.

y Lexicographic Decision Rule - In this rule the consumer initially ranks the

attributes in terms of perceived relevance or importance. Later he compares

different alternatives in terms of the single attribute that is considered most

important. On this top ranked alternative, regardless of the score on any

other attribute, if one option scores sufficiently high it is selected and the

process ends

Factors affecting consumer decision process

Consumer behavior refers to the selection, purchase and consumption of goods and

services for the satisfaction of their wants. There are different processes involved in

the consumer behavior. Initially the consumer tries to find what commodities he

would like to consume, then he selects only those commodities that promise greater


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utility. After selecting the commodities, the consumer makes an estimate of the

available money which he can spend. Lastly, the consumer analyzes the prevailing

prices of commodities and takes the decision about the commodities he should

consume. Meanwhile, there are various other factors influencing the purchases of

consumer such as social, cultural, personal and psychological. The explanation of

these factors is given below.

1. Cultural Factors

Consumer behavior is deeply influenced by cultural factors such as: buyer culture,

subculture, and social class.

y

Culture - Basically, culture is the part of every society and is the importantcause of person wants and behavior. The influence of culture on buying

behavior varies from country to country therefore marketers have to be very

careful in analyzing the culture of different groups, regions or even countries.

y Subculture - Each culture contains different subcultures such as religions,

nationalities, geographic regions, racial groups etc. Marketers can use these

groups by segmenting the market into various small portions. For example

marketers can design products according to the needs of a particular

geographic group.y Social Class - Every society possesses some form of social class which is

important to the marketers because the buying behavior of people in a given

social class is similar. In this way marketing activities could be tailored

according to different social classes. Here we should note that social class is

not only determined by income but there are various other factors as well

such as: wealth, education, occupation etc.

2. Social Factors

Social factors also impact the buying behavior of consumers. The important social

factors are: reference groups, family, role and status.


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y Reference Groups - Reference groups have potential in forming a person

attitude or behavior. The impact of reference groups varies across products

and brands. For example if the product is visible such as dress, shoes, car etc

then the influence of reference groups will be high. Reference groups also

include opinion leader (a person who influences other because of his special

skill, knowledge or other characteristics).

y Family - Buyer behavior is strongly influenced by the member of a family.

Therefore marketers are trying to find the roles and influence of the husband,

wife and children. If the buying decision of a particular product is influenced

by wife then the marketers will try to target the women in their advertisement.

Here we should note that buying roles change with change in consumer

lifestyles.

y Roles and Status - Each person possesses different roles and status in the

society depending upon the groups, clubs, family, organization etc. to which

he belongs. For example a woman is working in an organization as finance

manager. Now she is playing two roles, one of finance manager and other of

mother. Therefore her buying decisions will be influenced by her role and

status.

3. Personal Factors

Personal factors can also affect the consumer behavior. Some of the important

personal factors that influence the buying behavior are: lifestyle, economic situation,

occupation, age, personality and self concept.

y Age - Age and life-cycle have potential impact on the consumer buying

behavior. It is obvious that the consumers change the purchase of goods and

services with the passage of time. Family life-cycle consists of different stages

such young singles, married couples, unmarried couples etc which helpmarketers to develop appropriate products for each stage.

y Occupation - The occupation of a person has significant impact on his buying

behavior. For example a marketing manager of an organization will try to

purchase business suits, whereas a low level worker in the same organization

will purchase rugged work clothes.


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y Economic Situation - Consumer economic situation has great influence on

his buying behavior. If the income and savings of a customer is high then he

will purchase more expensive products. On the other hand, a person with low

income and savings will purchase inexpensive products.

y Lifestyle - Lifestyle of customers is another import factor affecting the

consumer buying behavior. Lifestyle refers to the way a person lives in a

society and is expressed by the things in his/her surroundings. It is

determined by customer interests, opinions, activities etc and shapes his

whole pattern of acting and interacting in the world.

y Personality - Personality changes from person to person, time to time and

place to place. Therefore it can greatly influence the buying behavior of

customers. Actually, Personality is not what one wears; rather it is the totality

of behavior of a man in different circumstances. It has different characteristics

such as: dominance, aggressiveness, self-confidence etc which can be useful to

determine the consumer behavior for particular product or service.

4. Psychological Factors

There are four important psychological factors affecting the consumer buying

behavior. These are: perception, motivation, learning, beliefs and attitudes.

y Motivation - The level of motivation also affects the buying behavior of

customers. Every person has different needs such as physiological needs,

biological needs, social needs etc. The nature of the needs is that, some of

them are most pressing while others are least pressing. Therefore a need

becomes a motive when it is more pressing to direct the person to seek

satisfaction.

y Perception - Selecting, organizing and interpreting information in a way to

produce a meaningful experience of the world is called perception. There arethree different perceptual processes which are selective attention, selective

distortion and selective retention. In case of selective attention, marketers try

to attract the customer attention. Whereas, in case of selective distortion,

customers try to interpret the information in a way that will support what the


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customers already believe. Similarly, in case of selective retention, marketers

try to retain information that supports their beliefs.

y Beliefs and Attitudes - Customer possesses specific belief and attitude towards

various products. Since such beliefs and attitudes make up brand image and

affect consumer buying behavior therefore marketers are interested in them.

Marketers can change the beliefs and attitudes of customers by launching

special campaigns in this regard.

Types of consumer behavior

Four types of consumer buying behavior outline product purchase decisions.

y Impulse Purchases

When a consumer stands at the checkout and notices lip moisturizer, magazines and

gum, and adds one of the items to his cart of groceries, it's often referred to as an

impulse purchase. The consumer makes a purchase with little to no thought or

planning involved. In most instances this happens with low-priced items.

y Routine Purchases

There are items consumers are used to purchasing every day, once a week or

monthly. These can range from a morning cup of coffee from a nearby conveniencestore, to milk, eggs and cheese from the supermarket. Customers spend very little

time deciding whether or not to purchase these items and don't typically need to

read reviews or consult with friends for their opinions before they make routine

purchases.

y Limited Decision Making

When customers engage in purchases that require limited decision making, they may

seek advice or a suggestion from a friend. For example, if a young professional is

preparing for an interview and wants to get her hair colored the week before, she

might solicit advice from friends to find out which salon does good hair coloringwork. As she shops for a suit for the interview, she might also ask for suggestions on

which store to go to and which brand of suit is the best. The consumer may research

a few options, but the search is not as thorough, or as time consuming, as with a

higher priced item.

y Extensive Decision Making


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Purchases for high priced electronics, such as a television, computer or camera, or

major purchases such as a home or car require consumers to use extensive decision

making. Consumers spend substantial amounts of time researching a high number

of potential options before they buy. They speak with trusted friends, family,

colleagues and sales professionals, and read reviews and ratings online and inconsumer magazines. The decision making process lasts longer, as the consumer is

investing a substantial amount of money

Classification of b2b markets

1) Producer market - The producers buy the products from the

suppliers (raw material) not for direct sales to the customers but

for processing them and converting them into finished goods.

These finished goods are then sold to the customers for their

use. The producer market revolves around personal service and


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selling, profit considerations, reliability, and customization to

meet the needs of individual customers. Buyers in the producer

market tend to make informed choices. The purchase decision is

usually made by several persons with varying points of focus

2) Original equipment manufacturer (OEM) makes equipment or

components that are then marketed by its client, another

manufacturer or a reseller, usually under that reseller's own

name. An OEM may make complete devices or just certain

components, either of which can then be configured by the

reseller. An example of this relationship would be a large

automobile manufacturer that uses an OEM's components in the

production of the cars it makes and sells.

3) End user -This type of producers are users who buy the products

which will facilitate their production process though they are not

part of the end product. E.g. Industrial tools , Lathe machines

Or Computers in data processing.

4) Resellers Market-Resellers are those marketers who do not

purchase products for converting them into finished products or

for personal use, but for selling them to other customers for a

monetary gain. Wholesalers, jobbers, retailers are part of the

resellers market.

5) Government Market - Govt. agencies are the largest buyers of

the goods and services. The procedures adopted by different

Gov. Dept. are similar. The purchasing is generally done by the

tender processes, Defense purchases, railways purchases etc.

6)An institutional market is a consumer market composed of large

buyers who tend to purchase in volume quantities. Several

different types of organizations may be involved in a given


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institutional market, including educational institutions,

businesses, and non-profit organizations. In most instances, the

purchases are made in order to allow the organization to in turn

provide services and goods to the individuals they serve. Colleges

and universities also are consumers in an institutional market.Purchases such as textbooks, computers, seating for classrooms,

and various teaching aids are just a few of the items that buyers

of this type will purchase on an ongoing basis. As with other

larger buyers, universities often purchase in bulk as a way of

obtaining a discount and thus stretching the institutional budget

a little further.

Module 5: Segmentation, Targeting and Positioning

Market segmentation

Diagram Page 6

Market segmentation is a strategy that involves dividing a larger market into subsets

of consumers who have common needs and applications for the goods and services

offered in the market. These subgroups of consumers can be identified by a numberof different demographics, depending on the purposes behind identifying the

groups. Marketing campaigns are often designed and implemented based on this

type of customer segmentation.

The purpose of market segmentation is to leverage scarce resources; in other words,

to ensure that the elements of the marketing mix, price, distribution, products and

promotion, are designed to meet particular needs of different customer groups.

Since companies have nite resources it is not possible to produce all possible

products for all the people, all of the time. The best that can be aimed for is to

provide selected offerings for selected groups of people, most of the time. This

process allows organizations to focus on specic customers needs, in the most

efficient and effective way

One of the main reasons for engaging in market segmentation is to help the

company understand the needs of the customer base. Often the task of segregating


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consumers by specific criteria will help the company identify other applications for

their products that may or may not have been self evident before.

Basis for segmentation

Notebook Text book Page 206.

Criteria for effective market segmentation

A decision to use a market segmentation strategy should rest on consideration of

four important criteria that affect its profitability. In order for segmentation to be

viable; the market must be (1) identifiable and measurable (2) accessible, (3)

substantial and (4) responsive.

Identifiable and measurable: Segments must be identifiable so that the marketer can

determine which consumers belong to a segment and which do not. However, there

may be a problem with the segments measurability (that is, the amount of

information available on specific buyer characteristics) because numerous variables

(e.g. psychological factors) are difficult, if not impossible, to measure at the present

time. For example, if the marketer discovered that consumers who perspire profusely

favored a particular brand, very little could be done with this information since such

a group would be difficult to measure and identify for segmentation purposes.

Accessible: This criterion refers to the ease of effectively and economically reaching

chosen segments with marketing efforts. Some desired segments may be inaccessible

because of legal reasons; for example, liquor manufacturers are unable to market

directly to young teenagers, In fact, there is a vigorous debate dealing with the

constitutionality of segmenting and targeting certain groups. Cigarette companies

that aimed recent new brands at 18 24 year old black women with a high school

education or less have been criticized, and legislation to protect these targeted

groups from such advertising has been proposed. The Association of National

Advertisers defends the practice and claims such proposals amount to censorship

and a violation of First Amendment rights.

It is more likely, however, that segments may be inaccessible because the marketer is

unable to reach them at a reasonable cost and with minimum waste via existing

promotional media and retail outlets.


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Substantial: This collection refers to the degree to which a chosen segment is large

enough to support profitably a separate marketing program. As was noted preciously

a strategy of market segmentation is costly. Thus, one must carefully consider not

only the number of customers available in a segment but also the amount of theirpurchasing power.

Responsive: There is little to justify the development of a separate and unique

marketing program for a target segment unless it responds uniquely to these efforts.

Therefore, the problem is to identify market segments that will respond favorably to

marketing programs designed specifically for them.

If the four criteria above are fulfilled segmentation will be an attractive marketing

strategy.

Market segmentation strategies:

a) Concentration strategy A firm directs all or most of its resources to a single

market (for single product or single technology). In this strategy a company

chooses to pursue a large share of one or few submarkets rather than chasing

a small share of a large market. The risk in this strategy arises when the

demand in the submarket suddenly drops or if a strong competitor enters the

submarket.

b) - Differentiated strategy: This is also referred to multi-segment or selective

specialization plan. In this way, more than one target market is offered the

product and service. The product may be the same or it might be different.

But the branding, advertising campaign and even promotional message will be

different for each target customer group. For example, a Company like Toyota

that sells different models of Camry to different set of customers. The designs

are different, but the spare parts are all the same.

c) - Undifferentiated Marketing strategy: This plan entails providing the whole

broad market with a single product or service. The marketer will attempt to

appeal to the whole Total Available Market with just one single product or he

might provide mass marketing mixes to a single market division. The only

advantage of this type of strategy is that it lowers the cost of production and


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development of the product. This approach was used in the olden days where

people do not have much choice of selecting. Nowadays, the strategy seems to

be rather unreasonable.

d) - There is also customized or micro-marketing strategies whereby the marketerfocuses a particular product to different market groups or serving a particular

group and offers that group an array of different products. The first type of

plan is called product specialization strategy while the later is market

specialization. This plan requires marketer to have advanced and extensive

technical capabilities to reach his targeted customers. The Internet is notable

for providing enhancement for this target marketing strategy. Many marketers

now learn to utilize the Internet micro-marketing scheme to promote their

products.

Main Purpose of Segmentation

- Facilitates consumer-oriented marketing: Market segmentation facilitates

formation of marketing-mix which is more specific and useful for achieving

marketing objectives. Segment-wise approach is better and effective as

compared to integrated approach for the whole market.

- Facilitates introduction of suitable marketing mix: Market segmentationenables a producer to understand the needs of consumers, their behavior and

expectations as information is collected segment-wise in an accurate manner.

Such information is purposefully usable. Decisions regarding Four Ps based

on such information are always effective and beneficial to consumers and the

producers.

- Facilitates introduction of effective product strategy: Due to market

segmentation, product development is compatible with consumer needs as

there is effective crystallisation of the specific needs of the buyers in the targetmarket. Market segmentation facilitates the matching of products with

consumer needs. This gives satisfaction to consumers and higher sales and

profit to the marketing firm.

- Facilitates the selection of promising markets: Market segmentation facilitates

the identification of those sub-markets which can be served best with limited


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resources by the firm. A firm can concentrate efforts on most productive/

profitable segments of the total market due to segmentation technique. Thus

market segmentation facilitates the selection of the most suitable market.

- Facilitates exploitation of better marketing opportunities: Market

segmentation helps to identify promising market opportunities. It helps the

marketing man to distinguish one customer group from another within a

given market. This enables him to decide his target market. It also enables the

marketer to utilise the available marketing resources effectively as the exact

target group is identified at the initial stage only.

- Facilitates selection of proper marketing programme- Market segmentation

helps the marketing man to develop his marketing mix programme on a

reliable base as adequate information about the needs of consumers in the

target market is available. The buyers are introduced to marketing programme

which is as per their needs and expectations.

- Provides proper direction to marketing efforts: Market segmentation is rightly

described as the strategy of "dividing the markets in order to conquer them".

Due to segmentation, a firm can avoid the markets which are unprofitable

and irrelevant for its marketing purpose and concentrate on certain promising

segments only. Thus due to market segmentation, marketing efforts are given

one clear direction for achieving marketing objectives.

- Facilitates effective advertising: Advertising media can be more effectively used

because only the media that reach the segments can be employed. It makes

advertising result oriented.

- Provides special benefits to small firms: Market segmentation offers special

benefits to small firms. The resources available with them are limited as they

are comparatively new in the market. Such firms can select only suitable

market segment and concentrate all efforts within that segment

- t only for better marketing performance. Such firms can compete even with

large firms by offering personal services to customers within the segment

selected.

- Facilitates optimum use of resources: Market segmentation facilitates efficient

use of available resources. It enables a marketing firm to use its marketing

resources in the most efficient manner in the selected target market. The


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marketing firm selects the most promising market segment and concentrates

all attention on that segment only. This offers best results to the firm in terms

of sale, profit and consumer support as compared to the results available from

spending such resources on the total market.

Market Segmentation Process

Stage I: Identify Segmentation Process

Marketers follow two methods to determine the bases on which to

identify markets:

-Segments are predefined by managers based on their observation

of the behavioral and demographic characteristics of likely users

-Segments are defined by asking customers which attributes

are important and then

clustering the responses

Stage II: Develop Relevant Profile

Next, marketers seek further understanding of the consumer in each

promising segment

Must develop a profile of the typical consumer and each segment

Helps to accurately match consumer needs with the firms marketing

offers

Stage III: Forecast Market Potential

Market segmentation and market opportunity analysis combine to

produce a forecast of market potential within each segment

Defines a preliminary go or no-go decision since the sales potential in

each segment must justify resources devoted to further analysis

Stage IV: Forecast Market Share

The next step is to forecast the firms probable market share


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Competitors positions in targeted segments must be analyzed

A specific marketing strategy must be designed to serve the targeted

segments

The firm determines the expected level of resources it must commit to

tap the potential demand in each segment

Stage V: Select Specific Segment

The preceding information, analysis, and forecasts allow management

to assess the potential for achieving company goals and to justify

committing resources in developing one or more segments

Marketers also weigh more thanmonetary costs and benefits

at this stage

Levels of Market Segmentation

MASS MARKETING. In mass marketing, the seller engages in the mass

production, mass distribution, and mass promotion of one product for all buyers.

Henry Ford epitomized this marketing strategy when he offered the Model-T Ford to

all buyers; they could have the car "in any color as long as it is black." Coca-Cola alsopracticed mass marketing for many years when it sold only one size Coke in a 6.5-

ounce bottle.

The traditional argument for mass marketing is that it creates the largest

potential market, which leads to the lowest costs, which in turn can translate into

either lower prices or higher margins. However, many critics point to the increasing

splintering of the market, which makes mass marketing more difficult. According to

Regis McKenna:

[Consumer]. . . have more ways to shop: at giant malls, specialty shops, and

superstores; through mail-order catalogs, home shopping networks, and virtual stores

on the Internet. And they are bombarded with messages pitched through a growing

number of channels: broadcast and narrow-cast television, radio, on-line computer


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networks, the Internet, telephone services such as fax and telemarketing, and niche

magazines and other print media.

The proliferation of advertising media and distribution channels is making it

difficult to practice "one size fits all" marketing. No wonder some have claimed thatmass marketing is dying. Not surprisingly, many companies are retreating from mass

marketing and turning to micromarketing at one of four levels.

SEGMENT MARKETING. A market segment consists of a large identifiable

group within a market. A company that practices segment marketing recognizes that

buyers differ in their wants, purchasing power, geographical locations, buying

attitudes, and buying habits. At the same time, though, the company is not willing to

customize its offer/communication bundle to each individual customer. The

company instead tries to isolate some broad segments that make up a market. For

example, an auto company may identify four broad segments: car buyers seeking

basic transportation, those seeking high performance, those seeking luxury, and

those seeking safety.

Thus segmentation is a midpoint between mass marketing and individual marketing.

The consumers belonging to a segment are assumed to be quite similar in their

wants and needs. Yet they are not identical. Some segment members will want

additional features and benefits not included in the offer, while others would gladlygive up something that they don't want very much. For example, Ritz-Carlton Hotels

target affluent guests and provide many amenities and a lower price. Thus segment

marketing is not as precise as individual marketing but is much more precise than

mass marketing.

Segment marketing offers several benefits over mass marketing. The company can

create a more fine-tuned product/service offer and price it appropriately for the

target audience. The choice of distribution channels and communications channelsbecomes much easier. And the company may face fewer competitors if fewer

competitors are focusing on this market segment.

NICHE MARKETING. Market segments are normally large identifiable groups

within a marketfor example, nonsmokers, occasional smokers, regular smokers,

and heavy smokers. A niche is a more narrowly defined group, typically a small


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market whose needs are not being well served. Marketers usually identify niches by

dividing a segment into subsegments or by defining a group with a distinctive set of

traits who may seek a special combination of benefits. For example, the sema, and

heavy smokers with emphysema who are overweight.

While segments are fairly large and thus normally attract several competitors, niches

are fairly small and normally attract only one or a few competitors. Niches typically

attract smaller companies. Larger companies, such as IBM, whose lose pieces of their

market to nichers; Dalgic labeled this confrontation as "guerrillas against gorillas." As

a defense, some larger companies have turned to niche marketing, which has

required more decentralization and some changes in the way they do business. For

example, Johnson & Johnson consists of 170 affiliates (business units), most of

which pursue niche markets.

Niche marketers presumably understand their niches' needs so well that their

customers willingly pay a price premium. For example, Ferrari gets a high price for

its cars because its loyal buyers feel that no other automobile comes close to offering

the product-service-membership benefit bundle that Ferrari does.

An attractive niche is characterized as follows: The customers in the niche have a

distinct and complete set of needs; they will pay a premium to the firm best

satisfying their needs; the "nicher" has the required skills to serve the niche in asuperior fashion; the nicher gains certain economies through specialization; the

niche is not likely to attract other competitor or the nicher can depend on itself; and

the niche has sufficient size, profit, and growth potential.

An advertising agency executive wrote: "There will be no market for products that

everybody likes a little, only for products that somebody likes a lot." A chemical

company executive predicted that chemical companies that succeed in the future will

be those that can identify niches and specialize their chemicals to serve each niche's

needs. According to Linneman and Stanton, niche-pickers will find riches in niches

and companies will have to niche or be niched. Blattberg and Deighton claim that

"niches too small to be served profitably today will become viable as marketing

efficiency improves." In many markets today, niches are the norm.


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LOCAL MARKETING - Target marketing is increasingly taking on the character

of regional and local marketing, with marketing programs being tailored to the

needs and wants of local customer groups (trading areas, neighborhoods, even

individual stores). Thus Citibank provides different mixes of banking services in its

branches depending on the bank's neighborhood demographics. And Kraft helps

supermarket chains identify the cheese assortment and shelf positioning that will

optimize cheese sales in low-income, middle-income, and high-income stores, and in

different ethnic communities.

Those in favor of localizing a company's marketing point to the pronounced regional

differences in communities' demographics and lifestyles. They see national

advertising as wasteful because it fails to address local target groups. They also see

powerful local and regional retailers who are demanding more fine-tuned productassortments for their neighborhoods.

Those against local marketing argue that it drives up manufacturing and marketing

costs by reducing economies of scale. Logistical problems become magnified when

companies try to meet different regional and local markets' requirements. And a

brand's overall image might be diluted if the product and message differ in different

localities.

INDIVIDUAL MARKETING. The ultimate level of segmentation leads to"segments of one," "customized marketing," or "one-to-one marketing." The

prevalence of mass marketing has obscured the fact that for centuries consumers

were served as individuals: The clothier tailor-made the suit, the cobbler designed

shoes for the individual, and so on. And much business-to-business marketing today

is customized, in that a manufacturer will customize the offer, logistics, and financial

terms for each major account. It is the new technologiesspecifically computers,

databases, robotic production, and instant communication media such as e-mail and

faxthat are permitting companies to consider a return to customized marketing, orwhat is called "mass customization." Mass customization is the ability to prepare on a

mass basis individually designed products and communications to meet each

customer's requirement


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Targeting

Also known as a target audience or a targeted market, a target market is a

specific group of consumers that a business wishes to attract and sell its line of

goods or services to. A target market may be defined in terms of age, gender,sexual orientation, economic class, ethnicity, religion, or location. This

process of socio-economic grouping allows businesses to create profiles of the

typical customer who is likely to purchase products from the company, which

in turn provides the basis for the creation of marketing and sales initiatives

that allow the business to build a clientele within that customer demographic

The identification of a target market is very important to the long-term

operation of a business. Without a clear understanding of who is likely to be

interested in the products offered by the company, it is very difficult toproactively take steps to connect with potential customers. By defining the

basic characteristics of a given target audience, and then identifying the ways

that the company can meet their needs and wants, the process of building

a base becomes much easier.

Strategies for Reaching Target Markets

y Undifferentiated marketing strategyAn undifferentiated strategy exists when the supplier offers the same or

undifferentiated product to all persons or organizations believed to have a

demand for a product of that type. Three sets of circumstances suggest

themselves as being suited to an undifferentiated strategy: (a) the

introduction of an INNOVATION; (b) the mature/ decay stage of the

PRODUCT LIFE CYCLE; (c) commodity marketing where the conditions

most closely approximate the economist's model of PERFECT

COMPETITION. When introducing a new product into the marketplace,

especially a radically different product, several factors may predicate anundifferentiated strategy. For example it is widely recognized that much of

the risk attendant upon a new product launch is uncertainty as to the

scope and nature of demand, which may result in a perceptual mismatch

between supplier and potential user. Inertia and commitment to the

known and safe product or process make it very difficult to forecast just

what interpretation prospective users will make of the benefits offered by


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the innovation. Under such circumstances, a broad approach may be

preferable to an attempt to pre-identify receptive customers as a basis for

MARKET SEGMENTATION and the development of either

differentiated or concentrated strategies. Similarly, by the time that the

product is moving into its decline it is safe to assume that theusers/consumers are strongly committed to the product and so there is

little need for special marketing effort. In the third case, the essential

homogeneity of the commodity militates against either a differentiated or

concentrated strategy.

y Differentiated Marketing

Differentiated marketing combines the best attributes of undifferentiated

marketing and concentrated marketing. It appeals to two or more distinctmarket segments, with a different marketing plan for each. Typically

differentiated marketing creates more total sales than undifferentiated

marketing, but it also increases the costs of doing business.Differentiated

Marketing also called as multisegment marketing is wherein a company

attempts to appeal to two or more clearly defined market segments with a

specific product and unique marketing strategytailored to each separate

segment. Firms such as Maruti-Suzuki use differentiated marketing to

attract all segments. Others, such as Hyundai, and Microsoft appeal to two

or more segments, but not all segments.

y Concentrated Marketing

Concentrated marketing is a marketing approach that is aimed at connecting

with and selling products to a specific consumer group. This strategy calls for

taking steps to identify the target market that is highly likely to be attracted to

the products, and developing a plan that is unique to reaching that group of

consumers. The process also normally includes planning the delivery of

products in a manner that is likely to generate repeat business from thoseconsumers. In many cases, concentrated marketing is an ideal approach for

smaller businesses with limited resources, since it does not rely on the

creation and use of mass marketing, production, or distribution to reach a

wide range of potential consumers. The concept of concentrated marketing is

the opposite of what is known as undifferentiated marketing strategies. With

an undifferentiated approach, the idea is to capture as much of the market as


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possible by creating a broad campaign that appeals to consumers of all ages,

genders, economic backgrounds and geographical locations. By contrast, a

concentrated marketing seeks to identify the niche market or markets where

there is likely to be a high demand for the products produced. In order to

reach those niche markets, the producer will create a plan that involves onlythose forms of media that are regularly used to reach consumers in those

niche markets, rather than going with a broader campaign approach. For

example, a company that markets farming implements will make use of

advertising in print media aimed at farmers, rather than creating ads that are

found in magazines with a broader reader base. While a concentrated

marketing approach can help a business make the most of a small advertising

budget, there are some potential drawbacks with this type of marketing. First,

a concentrated effort requires a highly developed marketing plan, since it is

targeted to a specific audience. This means a great deal of research into thewants, needs, and buying habits of that group of consumers, a task that can be

somewhat costly on the front end. In addition, this type of focused or targeted

marketing means that other consumer groups are not targeted and thus are

not likely to be reached. In the event that the company is unable to capture an

appreciable share of the targeted group of consumers, there may not be the

luxury of more time to cultivate a client base with a different consumer group.

y Micro marketing

There is also customized or micro-marketing strategies whereby the marketer

focuses a particular product to different market groups or serving a particular

group and offers that group an array of different products. The first type of

plan is called product specialization strategy while the later is market

specialization. This plan requires marketer to have advanced and extensive

technical capabilities to reach his targeted customers. The Internet is notable

for providing enhancement for this target marketing strategy. Many marketers

now learn to utilize the Internet micro-marketing scheme to promote theirproducts.

Positioning

Positioning is defined as the act of designing the companys offering and image to

occupy a distinctive place in the target markets mind.


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For Example What brand occurs in your mind when I say walkman? I guess Sony.

Similarly what do you think of when I say photocopies? I think Xerox or Cannon.

Thus these brands have positioned themselves in the mind of their customer such

that whenever the generic product is mentioned immediately these brands comeinto our mind. Now if I ask most innovative company I guess you will name

APPLE : I agree with you.

Thus Positioning can be defined with the following core points

Positioning requires a holistic approach and is one of the most useful tools for

marketers. Positioning is almost completely about perception. How the customer

perceives your product or brand is what positioning is all about. Thus the best mass

marketers like to use marketing tactics which touch the whole market (Example

Vodafone Zoozoos). Perceptual mapping is generally used to determine the

Positioning of a product in the target market. Positioning can make or break a

brand. A rightly perceived product / company gets lots of returns from the market as

compared to a wrongly perceived company. Example Airtel vs Reliance telecom.

Communication is of ultimate importance in positioning. The right communication

can go a long way in determining the perception of a product / brand. Finally,

Attributes tangible or intangible (in case of services) are necessary to be involved in

the product which increases the positioning of the product in the customers mind.

Positioning strategies

Positioning is the very crux of marketing strategy and proper positioning is the

right potion for successful marketing management. Product positioning is a

crucial decision that a marketer needs to implement to establish a distinctive

and strong image of its product/brand as against its competitors, in the mind

of the target consumer. Very often, a product fails because of wrong

positioning.

1) Product Features and Benefits Positioning Strategy: A consumer buys a productwhen he/she perceives some promised benefit that would satisfy the need and

that the offer is better or enticing as against other competing brands. This

positioning strategy is implemented by differentiating the brand from its

competitors on the basis of its features and benefits offered. This is known as

Unique Selling Proposition or USP


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2) Competitive Positioning Strategy: This is a very effective offensive strategy

where the marketer seeks to persuade the consumer that his product/brand is

superior or at par with an established competitor.

3) Product Category Positioning Strategy: This strategy is used when an existingproduct category is too congested and the new brand is positioned as

belonging to another product category.

4) User Positioning Strategy: Products can be positioned according to their user

bases. For instance, beer marketers often position their products as light and

strong beers. Again Kellogg's has cornflakes for cereal users, weight- watchers

and kids. This is a smart way of doing niche marketing

5) Attribute positioning In this case the firm uses one or more productattributes or features as the basis for positioning its product

Purpose of positioning.

1. Product and Service

A product is anything that can be offered to a market to satisfy a want or need.

Generally speaking, a product is held out as a tangible thing while service isregarded as intangible. Options open to an organization for the purpose of

positioning a product would entail tinkering with specific elements of the

product such as features, performance, conformance, durability, reparability, style

and design. For a service, the synonyms are ordering ease, delivery, installation,

customer training etc.

2. Personnel

The body of persons employed by an organization to carry out its variousfunctions is central in maintaining a favorable position for the company. The

essential attributes that qualifies for positioning in this regard include

competence, courtesy, credibility, reliability, responsiveness and communication.


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3. Channel

The interdependence of business entities lend credence to the importance of

distribution channels. The route by which an organization makes available its

product or service to the consumers will mark it out from the pack. The crucial

factors for positioning in this regard are coverage, expertise and performance.

4. Image

Positioning of the image of the organization will entail the alignment of symbols,

written and audiovisual media, atmosphere and events with the value propositionof the organization. These elements must be in total sync with the kind of image

that the company intends to project to its customers.

In developing a positioning strategy, one of the best approaches is to employ a

systemic process of identifying varying opportunities existing in the market for

the company, evaluate the competitive environment and then decide on planned

activities aimed at conferring advantage on the organization. The following steps

are instructive in strategy formulation for the organization:

y Current Position

The starting point for the organization would be the perceptions that existing and

prospective customers have about your product, service, or company. This calls for

objective analysis, not wishful thinking. Existing perceptions are important because

you cannot change minds easily. For a start-up organization, there are no perceptions

to overcome. In this case, what is more important is the perception of your potential

customer about the competition. For the existing company however, there is need toresearch into what both existing and prospective customers view as the key product

or service attributes in your category so as to learn their general product or service

perceptions about you and the competition. Such an effort would provide the clue

as to how the company compare to its competition on key product and service

attributes.


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y Desired Position

In presenting a positioning idea, the company should be guided by some importantcriteria capable of differentiating the offering of the organization from the

competition. It is imperative that the difference be important, distinctive, superior,

communicable, preemptive, affordable and profitable. It could even be an idea that

the company already has but which is now presented in a stronger way. It is

important for the company to articulate why the new position is worthwhile. If the

new position offers increased market share, an explanation has to be provided. For

example, it may be that the new position being touted is more appealing to a larger

or faster-growing market segment. Claiming an idea often requires support. Thecompany has to decide on viable sources of support to whip up in order to make the

positioning credible. Some typical sources of support include sales leadership,

growth leadership, third-party reviews and customer preference.

Pitfalls in Positioning

There are four main errors that all organizations should watch out for in

communicating its positioning to the market.

1) Under positioning: This is a situation where the avowed position of the

company creates a vague idea in the mind of the public. Laying claim to what is

assumed as a standard feature of a product exemplifies this situation as the

consumers may not see anything special in such a position. Ex: Volvos positioned as

drive safely.

2) Over positioning: When customers have the impression that the product or

service being offered by a company is only available to a restricted class of

consumers, there exists a narrow image of the offering in the minds of the public.

This problem could create a wedge between the company and its customers. Ex:

Tanishq it suits all budgets.


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3) Confused Positioning: Claim to numerous areas of difference in the companys

offering or frequent change of the companys positioning may create a confused

image in the minds of customers. Ex: Maggie soup noodles.

4) Doubtful Positioning: This error occurs when consumers find it hard to believethe positioning claim of the products features, price or even the caliber of the

company itself. For example, a company might claim to be a high profile company

while failing to do those things naturally expected of high profile companies either

in terms of its location or designing and pricing of its products. In trying to solve the

positioning problem, the organization naturally realizes the need to blend the

legendary 4 Ps popularly known as the marketing-mix. This process of marketing-

mix i.e. Product, price, place and promotion is very crucial as a fore-thought before

any organization could adopt a positioning strategy.

The 3cs of successful positioning

The Channel: a great source of information about all three Cs

The channel is how your product reaches the customer, whether you sell directly or

through VARs. It will be the first topic of the 3C's series, because your channel is -

or should be - one of your best sources of information about the other two Cs, your

customers and your competition. It's your first avenue of interaction with what youhope will become your customer. And it's the battleground for the ongoing war with

your competitors. So, it's vital that your channel partner is your ally with shared

goals and a trusting relationship. Unfortunately, this is rarely the case, even at B2B

software companies that sell direct. I'll suggest ways you can overcome this problem

in the column about the channel.

From the channel, you learn what gets your customers excited about your product (it

may surprise you), and what they feel is missing. You learn why you win and lose -and against whom. All these factors contribute to help you converge on the ideal

positioning statement for your product. Learn what's really happening in the

channel, and you gain insights into the details of purchase processes, demographics,

psychographics, sales strategies, and customer concerns.


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The channel can also provide valuable feedback on the viability of your marketing

message. Ongoing communication with your channel will improve the relationship

and, as a result, the flow of honest information and insights vital for your product

positioning strategies.

Know your customer ... at least as well as you know your own products

You can't successfully position your product unless you know the answer to this

basic question: "What is my target customer's most pressing problem?" Notice that

this question asks about THE problem, not problems. Although it may be tempting

to think of your product as a Swiss Army Knife, don't, because it's doomed to fail.

Your prospects are overwhelmed by communication in today's fast-paced, high-tech

world. They get so many marketing messages - somewhere between 5,000 and 10,000

per day - that they have become experts at filtering them out.

You can get through the filter, but only with a benefit statement that addresses the

primary concern that keeps your prospect awake at 2 am. Your target buyers will

listen to your message when you demonstrate an understanding of their problem,

and clearly communicate the benefit your product offers to solve the problem.

Besides customer concerns, other psychographics such as industry and technology

trends can affect your message strategy. A good grasp of demographics is

mm final notes

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