s2 theory of marketing 1

Marketing 1| Gurudas Nulkar

S2 –Theory of marketing

Marketing 1Gurudas NULKAR


Theory of marketing

• What is marketed• Demand states• Marketing mix• Market segmentation• Positioning• Product life cycle• Customer value hierarchy• Market dynamics• Porter’s 5 forces model


What all is covered in marketing?

• Goods• Services• Events• Experiences• Persons• Places• Properties

• Organizations• Information• Ideas


Needs, Wants & Demands

Demands

Wants

NeedsBasic human requirements.

Food, water, shelter, clothing, love, self esteem, recreation, education, entertainment,

social status etc.

These are shaped by society.By offerings in the market, society. Needs

directed at specific objects that may satisfy the needs

Wants backed by a willingness to pay for them. Specific wants.


Needs, Wants & Demands• Maslow’s Hierarchy of Needs

1. Physiological – food, water, shelter2. Safety – security & protection3. Social – sense of belonging, love4. Esteem – recognition, status5. Self actualization – self development, realization

Needs can be» Stated OR Unstated


Needs, Wants & Demands• Marketer cannot create Needs ! They pre-exist• Want can be created through communication


Marketing process


STP

• Identify market segments that you wish to serve

• Identify target markets that offer the greatest opportunity

• Develop the market offering• Position the offering to demonstrate value

Segmentation Targeting Positioning


Steps in segmentation

1. Establish overall segment strategy1. Commodity products / new features / inventions2. Consumer / business markets3. Mass, segmented or niche markets

2. Describe segments in GDPB 3. Evaluate segment attractiveness


Which market?• Existing markets – commodity goods, ample

choice to buyer, competitive – toothpaste, soap, pens

• Latent markets – defined needs, but not yet met with products, product needs SIGNIFICANT improvement over present – iPod, Airbags, Tata Nano

• Incipient markets – customers do not know these needs – Post-It notes, Xerox machine, Sony Walkman


Key types of markets

• Consumer markets – Buying by individuals/ families, for self-consumption

• Business markets – Buying by firms for further sale or company consumption, for economic reasons

• Global markets – Buyers from foreign lands, differing market than that served domestically

• Government & Non-profit markets – Buying for public use


Identifying markets• Which market would you like to serve?

Depends on your» Business considerations» Resources» Reach» Brand, reputation» Willingness


Which markets?

MARKET LEVELS• Mass markets• Segmented markets• Niche markets


Levels – Mass markets• Mass markets

» Highly Competitive, many competitors» Mass production, distribution & promotion» Preference for a large undifferentiated population» Economies of scale, resources» Building Product Brand is important» Coca Cola, Maggi Noodles, Anchor toothpaste,

Maruti 800, cell phone services, Petrol


Levels – Segmented markets• Segment markets

» Smaller volumes than mass» Identify smaller homogenous groups in the

population with similar set of preferences» More fine-tuned product for them, targeted

communications & distribution channels» Company & product brand is important» Colgate – Total, Calcium, Salt… Various models of

Maruti in 800-1000cc, Business class-Economy-No frills


Levels – Niche markets• Niche markets

» Narrowly defined sub groups, with distinctive preferences

» Willing to pay a premium for need satisfaction» Products may be dissociated from Company’s mass

products – Toyota / Lexus » Lower volumes typified by more loyal customers» Can have exclusive channels with value add services» Ezee – fabric wash for woolen clothes, Meswak-

Babool-Vicco-Neem, Gatorade, Health Spas


Target markets• Understand the demand state of that market• Demand is not the same for all products and

services, at all times


Demand states

•Buyers dislike the product

•Avoid purchases. Medical treatments, vasectomy etc.

Negative demand

•Unaware . Eg. Farmers in India of new techniques

•Uninterested. Students for a new language

Non-existent demand

•Have a strong need, which is not met by existing products

Latent demand

•Consumers buy this less frequently, going out of life cycle

Declining demand

•Seasonal, non-cyclical, dependant on other factors

•Varies monthly or weekly, or even hourly

Irregular demand

•Adequate purchasing, commodity products & services

Full demand

•Too many consumers, with demand not being met by current supply

Overfull demand

•Products with undesirable social consequences

Unwholesome demand


Demand states

• Why is it important for us?

• The Demand state of a market has a direct relation in the » Price Strategy - & therefore profitability» Communication - & therefore on reach and market

size


Describe Market in GDPB


Segment Markets

• How can you break up customers?• You can differentiate customer in terms of

• What they seek (Product)• What they read,see (Promotion)• Where they buy (Place)• How much they are willing to pay (Price)


How would you Segment

• For seeking homogeneity in customers, these factors can be a useful» Similar age groups, genders» Similar climatic conditions, rural/urban» Similar culture, background, region» Similar educational background, occupations» Similar income levels, lifestyle

• We use these factors to break into homogenous groups


Segmentation

• Break up the population into smaller more homogenous groups – Segmentation

• Segmentation helps by » Product development focused on needs of the

segment» More productive communication» Understanding how to position the offering» Value offering at an acceptable price

•


Basis for segmentation – consumer markets

• Geographic– Region, state, city, area– Regional characteristics– Cultural characteristics– Climate conditions– Population mix – urban, semi, rural

• Demographic– Age groups, gender, income level, occupation, family

size, marital status, education– Ethnicity, nationality, religion, social class


Basis for segmentation – consumer markets

• Psychographic – Interests, Activities & Opinions (IAO)– Personality, attitudes, values– Socio-economic segmentation SEC

• Behavioral – Benefits sought – value for money, brand association,

status, ‘with the times’ etc– Usage rate, frequency – casual user, regular user, very

frequent– Brand loyalty– Occasions – Loyalty status –none, medium, strong


Market segmentation - examples

In the ‘80s Scotch was an undifferentiated market• Johnnie Walker introduced “Black” for luxury segment –

60% higher priced• Glaxo was a leader in the Asthama market. It segmented it

to Severe, Moderate & variable sufferers – segmentation by buying behavior

• ColorPlus – decided to target only the premium smart casual users, thus segmented the market by income.


Basis for segmentation – business markets

• Industry type – manufacturing, electronics, IT, retail, hospitality etc

• End use, application• Size, volume of purchase• Organization type• By purchase frequency


Assignment

• Exercise in market segmentation» Garden pots for plants» Luggage / travel bags» Chairs & desks for colleges / institutions» Rainwear, raincoats» Jeans» Fitness equipment

• Identify market segments in each, rationale behind the segments, identify their common preferences


• You are the Marketing Manager assigned with the task of segmenting the market into smaller homogenous segments. Identify these segments and identify what would their preferences be for your chosen product.

• So that you can make products for these segments, which make sense to the segment

s2 theory of marketing 1

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