MM All Units PDF

1 UNIT 1 What is Marketing? Philip Kotler defines marketing as “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures,...

1 UNIT 1 What is Marketing? Philip Kotler defines marketing as “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures, and quantifies the size of the identified market and the profit potential. Marketing V/s Market: Marketing is the process of trying to get a group of people interested in buying a company’s products or services. It is an organizational function and a set of processes that work in tandem to serve the market effectively, efficiently, and profitably. It is a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Marketing is all those activities that facilitate trade. These include activities that identify consumers’ needs such as market research and those activities that satisfy consumers’ needs e.g., packaging and distribution. Marketing activities therefore support the marketing of goods and services. A market is a collection of buyers and sellers. A market, colloquially, is a group of people who are willing to buy something. It is a public gathering held for buying and selling merchandise. It is a place where goods are offered for sale. It is a set of individuals or institutions that have similar needs and that can be met by a particular product. Therefore, a market is the set of all actual and potential buyers of a market offer. A market is any space within which trade takes place between buyers and sellers for a well-defined product. This space can be a produce market, a shop, internationally between countries, or over the internet. Eg. There is a “market” for detergent soap. Marketing In Old Vs New Economy Akash Sharma Notes  2 Benefits of Marketing In marketing, products and services often offer various types of benefits to customers, including emotional, functional, and symbolic benefits. These benefits contribute to the overall value proposition and play a significant role in shaping customer perceptions and purchasing decisions. Here's an explanation of each of these benefits:  Emotional Benefits: Feelings and Emotions: Emotional benefits are related to how a product or service makes customers feel. These benefits tap into customers' emotions, creating positive experiences and connections. For example: Happiness: Products like chocolates or vacation packages can evoke feelings of joy and happiness. Security: Insurance services can provide customers with peace of mind and a sense of security. Confidence: High-end fashion brands may boost customers' self-confidence. Brand Loyalty: Emotional benefits often lead to brand loyalty. When customers associate positive emotions with a brand, they are more likely to choose that brand repeatedly. Relationship Building: Brands that can establish an emotional connection with their customers tend to build stronger, long-lasting relationships. This can result in higher customer retention and word-of-mouth recommendations.  Functional Benefits: Utility and Performance: Functional benefits are related to the practical aspects of a product or service. They address how well a product or service fulfills its intended purpose. For example: Durability: Customers may choose a smartphone because it is known for its long-lasting battery life. Efficiency: A washing machine with multiple wash cycle options offers functional benefits by providing efficient cleaning. Problem Solving: Functional benefits often solve specific problems or address customer needs. Customers choose products or services because they believe these offerings will provide functional solutions to their challenges. Cost Savings: Many functional benefits relate to cost savings or efficiency improvements. Customers may choose a fuel-efficient car to reduce fuel expenses.  Symbolic Benefits: Social Status and Identity: Symbolic benefits are associated with how a product or service helps customers express their identity or social status. What a customer chooses often reflects their values and self-image. For example: Luxury Brands: High-end luxury brands often offer symbolic benefits by symbolizing wealth and social status. Akash Sharma Notes  3 Eco-Friendly Products: Eco-conscious consumers may choose products that symbolize their commitment to sustainability and environmental responsibility. Self-Expression: Some products or services allow customers to express themselves creatively or artistically. Customizable clothing or home decor items offer symbolic benefits by allowing customers to showcase their style. Belonging and Affiliation: Products or brands can provide symbolic benefits by helping customers feel like part of a specific group or community. This can include sports merchandise or membership in exclusive clubs. Effective marketing often leverages these emotional, functional, and symbolic benefits to connect with target audiences and communicate the unique value of a product or service. By understanding and effectively conveying these benefits, marketers can influence consumer behavior and drive sales and brand loyalty. Marketing Mix The 7 Ps of marketing is an extended marketing mix that goes beyond the traditional 4 Ps (Product, Price, Place, Promotion). It includes additional elements that are important for marketing success. Here are the 7 Ps of marketing along with examples of a single company for each: 7 Ps of Marketing 1. Product: This is the physical product or service you offer to customers. It includes features, design, quality, and branding. Example: Apple is known for its product innovation, sleek design, and user-friendly interfaces in its range of products, including the iPhone and MacBook. 2. Price: Price refers to the cost at which you sell your product or service. It involves pricing strategies, discounts, and payment options. Example: Walmart is known for its "Everyday Low Prices" strategy, offering a wide range of products at affordable prices. 3. Place: Place relates to the distribution and location where customers can access your products or services. It includes channels, outlets, and online presence. Example: Amazon offers a vast online marketplace where customers can access a wide variety of products and have them delivered to their doorstep. 4. Promotion: Promotion encompasses all the marketing and advertising efforts used to promote your product. This includes advertising, sales promotions, and public relations. Example: Coca-Cola runs various advertising campaigns and promotions to market its beverages and create a strong brand image. 5. People: People represent the employees, salespeople, and customer service personnel who interact with customers. They play a crucial role in customer experience. Example: Disneyland is known for its friendly and well-trained staff who create a magical experience for visitors. Akash Sharma Notes  4 6. Process: Process refers to the procedures, systems, and methods used to deliver your product or service. It ensures efficiency and consistency. Example: McDonald's has a highly streamlined and efficient process for preparing and serving its fast-food products. 7. Physical Evidence: Physical evidence is the tangible and visual cues that help customers evaluate a service. It includes elements like store layout, cleanliness, and packaging. Example: Starbucks creates a welcoming atmosphere in its coffee shops with comfortable seating, appealing decor, and iconic green cups. These 7 Ps provide a comprehensive framework for marketing, taking into account not only the product or service itself but also the entire customer experience, from pricing and promotion to the people and processes that shape it. Companies that effectively manage all these elements tend to be more successful in the marketplace. Proof of Delivery as 7th P of Marketing The concept of "Proof of Delivery" (POD) is not typically considered one of the traditional "4Ps" of marketing, which are Product, Price, Place, and Promotion. Instead, Proof of Delivery is often seen as a critical component of logistics and supply chain management. However, in some contexts, especially in the service industry and modern marketing approaches that prioritize customer experience, you can consider it as an additional "P" or an important element in the broader marketing mix. In this context, it is sometimes referred to as the "7th P of marketing." Here's an explanation of how Proof of Delivery can be viewed as the 7th P of marketing: 1. Product: This is the core offering, whether it's a physical product or a service. 2. Price: The pricing strategy for the product or service. 3. Place: The distribution channels and locations where the product or service is available. 4. Promotion: Marketing and advertising activities to create awareness and drive demand for the product or service. 5. People: The individuals involved in delivering the product or service, including customer service representatives, salespeople, and support staff. 6. Processes: The systems and procedures that govern how the product or service is developed, delivered, and supported. 7. Proof of Delivery: This is the final step in the customer journey. It involves providing evidence to the customer that the product or service has been successfully delivered or performed as promised. Proof of Delivery can take various forms:  Physical Receipts: For physical products, this might include a signed delivery receipt or a stamped invoice indicating the date and time of delivery.  Digital Confirmation: In the digital age, customers often receive email notifications, SMS messages, or app notifications confirming that a service has been completed or that a product has been delivered to their specified location.  Tracking and Transparency: Many businesses provide real-time tracking and status updates, allowing customers to monitor the progress of their delivery or service request.  Quality Assurance: Ensuring that the product or service meets or exceeds the customer's expectations is also a crucial aspect of Proof of Delivery. This can include quality checks, follow-up calls, or surveys to gather feedback. Akash Sharma Notes  5 Proof of Delivery is essential because it not only assures the customer that they have received what they paid for but also contributes to overall customer satisfaction and trust. Positive Proof of Delivery experiences can lead to repeat business, referrals, and brand loyalty. In this sense, it plays a significant role in modern marketing strategies that prioritize customer experience and satisfaction. While it may not be a traditional "P" in the marketing mix, Proof of Delivery's role in ensuring customer satisfaction and building long-term customer relationships is increasingly recognized as a critical aspect of marketing strategy. Difference Between 4Ps, 4As & 4Cs The 4Ps, 4As, and 4Cs are different frameworks used in marketing to understand and analyze various aspects of a product or service. Here's a comparison of these three marketing frameworks: 1. 4Ps of Marketing:  Product: Focuses on the actual product or service being offered to the market. This includes decisions related to product design, features, quality, branding, and packaging.  Price: Involves setting the right pricing strategy for the product, taking into consideration factors like cost, competition, customer demand, and perceived value.  Place: Concerned with the distribution and placement of the product. It addresses questions related to where and how the product will be made available to customers, such as through physical stores, online channels, or intermediaries.  Promotion: Encompasses all the marketing and advertising activities aimed at promoting the product. This includes advertising, sales promotions, public relations, and other communication strategies. 2. 4As of Marketing:  Acceptability: Emphasizes the importance of making the product or service acceptable to the target audience. This involves understanding customer needs, preferences, and cultural considerations to tailor the offering accordingly.  Affordability: Focuses on pricing strategies that align with the financial capabilities of the target market. It aims to ensure that the product or service is affordable and accessible to the intended customers.  Accessibility: Addresses the distribution and availability of the product or service. It involves ensuring that customers can easily access and purchase the offering through various channels and locations.  Awareness: Centers on creating awareness and visibility for the product or service through marketing and advertising efforts. Building a strong brand and a positive image is critical to this aspect. 3. 4Cs of Marketing:  Customer Value: Shifts the focus from the product to the customer. It emphasizes creating and delivering superior value to customers by understanding their needs, preferences, and pain points.  Cost to the Customer: Considers not only the price but also the total cost incurred by the customer, including time, effort, and any additional expenses associated with acquiring and using the product. Akash Sharma Notes  6  Convenience: Stresses the importance of making the purchasing process as convenient as possible for customers. This includes factors like ease of access, user- friendliness, and after-sales support.  Communication: Recognizes that effective communication is a two-way process. It encourages brands to engage in meaningful conversations with customers and build strong relationships. In summary, while the 4Ps are the traditional marketing mix elements focusing on the product, price, place, and promotion, the 4As and 4Cs are more customer-centric frameworks that place a greater emphasis on understanding and meeting customer needs and preferences. These frameworks can be used together or separately, depending on the specific marketing goals and strategies of a business. Concepts of Marketing Concept Simple Focus Orientation Assumptions Examples Meaning Production The focus is on Production Inward- Assumes that Henry Ford's Concept efficient efficiency and looking; consumers will Model T production and cost emphasizes favor products emphasized distribution of reduction. product quality that are available mass high-quality and and affordable. production products. availability. and efficiency. Product Concentrates Product Inward- Assumes Apple's Concept on creating features, looking; consumers dedication to high-quality quality, and emphasizes admire well- producing products and innovation. product made products innovative, improving excellence. and seek quality. user-friendly them over time. devices. Selling Emphasizes Selling and Inward- Assumes Timeshare Concept aggressive promoting the looking; consumers need vacation sales tactics to product. focuses on persuasion to buy companies convince sales and products. using high- consumers to Akash Sharma Notes  7 buy the revenue pressure sales existing generation. tactics. product. Marketing Places the Customer Outward- Assumes Companies Concept customer at the satisfaction looking; businesses like Amazon, center, and market prioritizes should be tailor their focusing on research. customer needs customer-centric. offerings meeting their and wants. based on needs and customer wants. preferences. Holistic Incorporates all Ethical, Outward- Assumes Patagonia's Concept aspects of sustainable, looking; businesses commitment business (e.g., and emphasizes should be to ethics, responsible social and socially and sustainability sustainability) practices. environmental environmentally and ethical into marketing. responsibility. responsible. sourcing. Societal Extends Social Outward- Assumes TOMS Shoes, Concept beyond profit, responsibility looking; businesses with their emphasizing and stresses should actively "One for One" the well-being community broader contribute to giving of society and welfare. societal societal well- program. community. benefits. being. Holistic marketing is a marketing strategy that connects all the different marketing channels and departments of a company. It emphasizes a unified and consistent approach to marketing, which can improve customer relationships and increase efficiency. If you want to streamline your marketing process and make your company more efficient, then holistic marketing might be the right approach for you. In this article, we discuss what holistic marketing is, including its principles and benefits, and an example of holistic marketing. New Model/Concepts of Marketing Marketing 5.0 – https://www.think-beyond.co.uk/marketing-5-0-and-understanding-modern-marketing-lessons/ Akash Sharma Notes  8 Paradigm Marketing 1.0 Marketing 2.0 Marketing 3.0 Marketing 4.0 Marketing 5.0 Customer- Experience- Technology- Product-Centric: Values-Centric: Centric: Focus Centric: Focus Centric: Focus on Focus Focus on Focus on shared on customer on customer technology-driven product features. values. needs. experience. solutions. Segmented AI and Data- Niche Interactive Mass Marketing: Marketing: Driven Marketing: Marketing: Marketing: Approach One-size-fits-all Targeting Utilizing Targeting Engagement and approach. specific technology and specific niches. interaction. segments. data. Akash Sharma Notes  9 Paradigm Marketing 1.0 Marketing 2.0 Marketing 3.0 Marketing 4.0 Marketing 5.0 One-way Two-way Multi-way Collaborative AI-driven communication, communication, communication, communication, communication, Communication traditional feedback, and dialogue, and co-creation of personalized advertising. engagement. sharing. value. interactions. Passive Engaged Active Co-creators of Co-innovators and Customer Role consumers. customers. participants. value. data co-creators. Data-driven value Product-driven Customer- Values-driven Experience- Value Creation and value. focused value. value. based value. personalization. Brands Disney theme Amazon's Apple's promoting social Henry Ford's parks provide personalized Examples customer- and Model T. immersive product focused design. environmental experiences. recommendations. causes. These marketing paradigms represent the evolving nature of marketing from product-centric approaches to customer-centric, values-centric, experience-centric, and ultimately technology- centric approaches. Each stage reflects changing consumer expectations and advancements in technology and communication. What Is Marketing Myopia? Marketing myopia is a situation when a company has a narrow-minded marketing approach, and it focuses mainly on only one aspect out of many possible marketing attributes. A brand focusing on the development of high-quality products for customers who disregard quality and only focus on the price is a classic example of marketing myopia. Akash Sharma Notes  10 UNIT 2 MARKETING ENVIRONMENT (Important) The marketing environment consists of various factors and forces that influence a company's ability to develop and maintain successful marketing strategies. This environment is dynamic and ever-changing, and marketers need to adapt to these factors to make informed decisions. The marketing environment can be broadly categorized into two main components: the macro- environment and the micro-environment. Let's briefly discuss each of these and their sub-heads: 1. Macro-Environment: The macro-environment includes the larger societal forces that impact a company's marketing activities. These factors are generally beyond the control of a company but have a significant influence on its marketing strategies. The commonly recognized sub-heads within the macro- environment include: a. Demographic Factors: These include population size, age, gender, ethnicity, and other demographic characteristics of the target market. Demographics play a crucial role in understanding consumer behavior and preferences. b. Economic Factors: Economic conditions such as inflation, employment rates, economic growth, and consumer spending power have a significant impact on the purchasing behavior of consumers. c. Social and Cultural Factors: Societal norms, values, beliefs, and cultural trends influence consumer choices and marketing strategies. Understanding these factors helps in effective market segmentation. d. Technological Factors: Advances in technology affect how businesses operate and how consumers interact with products and services. Staying up to date with technology is critical for marketing success. e. Political and Legal Factors: Government policies, regulations, and political stability can impact marketing strategies. Companies must comply with relevant laws and regulations. f. Environmental Factors: Growing environmental concerns have led to a focus on sustainability and green marketing. Environmental factors can influence consumer preferences and regulations. g. Competitive Factors: The competitive landscape within an industry can shape marketing strategies. Understanding competitors' strengths and weaknesses is essential for effective marketing. 2. Micro-Environment: The micro-environment consists of factors that are closer to the company and have a more direct impact on its day-to-day operations. The key sub-heads within the micro-environment include: Akash Sharma Notes  11 a. Customers: Understanding the needs, preferences, and behaviors of target customers is crucial. It involves market research and segmentation to identify and reach the right audience. b. Suppliers: Relationships with suppliers and their reliability can impact the supply chain and product quality. Good supplier relationships are essential for smooth operations. c. Intermediaries: Distribution channels, such as retailers and wholesalers, can influence how a company's products reach the end consumers. d. Competitors: Knowing the competitive landscape and the strengths and weaknesses of rivals helps in developing effective marketing strategies. e. Publics: This includes various public groups like media, financial institutions, government bodies, and consumer advocacy groups, whose opinions and actions can affect the company's reputation and business operations. 3. Internal Factors: These refer to the company's internal departments and functions, such as marketing, sales, research and development, and human resources. Effective coordination among these departments is essential for successful marketing. The marketing environment is a complex and interconnected system that marketers must continually monitor and adapt to. Understanding these environmental factors is essential for creating and implementing marketing strategies that are responsive to the changing business landscape. Akash Sharma Notes  12 Environment Internal External Marketing Micro Macro HR Customer Socio-Cultural Shareholders Finance Technology /Stakeholders Suppliers/ Producation Vendors/ Economical Distributors And other departments exits Banks/ Political & Legal within the Finanacial Institues organiization Goodwill International Natural Ethical Akash Sharma Notes  13 SWOT analysis is a simple but powerful framework that helps you evaluate a situation, whether it's for a business, project, or even your personal life. It stands for Strengths, Weaknesses, Opportunities, and Threats, and it involves identifying and assessing these four key aspects: 1. Strengths: These are the positive, internal factors that your situation or entity has. They represent the things you're good at or the advantages you possess. For a business, strengths could include a strong brand, skilled employees, or efficient processes. 2. Weaknesses: These are also internal factors, but they are negative aspects or limitations. Weaknesses are things that you need to improve or overcome. In a business context, this could be inadequate resources, poor customer service, or outdated technology. 3. Opportunities: Opportunities are external factors in your environment that you can potentially take advantage of. They are situations or trends that could benefit your situation Akash Sharma Notes  14 or entity. For a business, an opportunity might be a growing market, a new technology, or changing consumer preferences that align with your products or services. 4. Threats: Threats, like opportunities, are external factors, but they represent potential challenges or risks. These are situations or trends that could harm your situation or entity. In a business context, threats could include intense competition, economic downturns, or unfavorable government regulations. By conducting a SWOT analysis, you can identify what you're good at (strengths) and where you need to improve (weaknesses), as well as what external factors you can leverage (opportunities) and what challenges you need to be aware of (threats). This information can help you make more informed decisions and develop strategies to achieve your goals, whether it's for business planning, project management, or personal development. Environmental Scanning Tools 1. PESTEL Analysis: A tool for assessing the Political, Economic, Social, Technological, Environmental, and Legal factors that impact an organization's external environment. 2. SWOT Analysis: A framework for evaluating an organization's internal strengths and weaknesses and external opportunities and threats in its environment. Akash Sharma Notes  15 UNIT 3 Core Concepts of Marketing 1. Needs: Needs are the basic requirements that human beings require for existence. These mainly consist of air, water, food, clothing, and shelter. Along with these needs, some other needs that are required to be satisfied are education, medical care, entertainment, and recreation. It is a difficult task for a marketer to identify the needs of the customers since customers may not be conscious of their needs, and even if they are, they might be unable to put forth their needs. The notion that marketers create needs is wrong. The need pre-exists in the market; the marketer just has to identify these needs, make the customers aware of these needs, and make the customers believe that only their company can satisfy these needs. 2. Wants: The wants are a step ahead of needs and are largely dependent on human needs. A need becomes a want when a need is directed to a specified object. Wants are designed according to the tastes and preferences of society. Needs already exist in the market; however, wants may be created by the marketers. It can also be said that Need and Want are relative terms because a product may be considered to be a need by someone but it may also be perceived as a want by others. E.g. To have food is a basic need of human beings but to have biscuits for food is a want created by marketers. 3. Demand: A demand is generated when a customer is willing to buy a particular product and can pay for it. A company should study not only how many people want their product but also how many would afford to buy the product. E.g. Many people would be desirous to buy a Ferrari car; however, there is only a small segment that can afford to buy it which reflects the demand for a Ferrari car in the market. Demand = Willingness to pay + Ability to pay 4. Customer Value: Value reflects the sum of the perceived tangible and intangible benefits and costs to customers. Here the costs include both economic and non-economic costs whereas benefits include both tangible as well as intangible ones. A product or service is successful when it delivers value and satisfaction to the buyers. Value is usually a combination of quality, service, and price. Value increases with quality and service and decreases with price. A value is a relative term as a perceived benefit for one person may not be a benefit for others. Value changes based on time, place, and people about changing environmental factors. It is a creative energy exchange between people and organizations in our marketplace. Companies try to figure out the list of add-on benefits that they can provide based on the tastes and preferences of the customers. A high-value product not only helps the company to generate new customers but also helps to retain the older ones. Eg. an Online parcel tracking facility Akash Sharma Notes  16 provided by courier companies without any additional cost can be one of the best examples of customer value. The same goes for free delivery of products purchased through online shopping portals. 5. Exchange: It is an act of obtaining an object that one needs from another by offering some other thing in return. Marketing occurs when individuals decide to satisfy needs and wants through exchange. Marketing helps to create a business environment where the exchange of value can take place. For an exchange to happen: (i) There should be at least two parties involved in any kind of exchange. (ii) Each party must have something or other that interests the other party. (iii) Each party must be willing to have an exchange with the other party and must have a desirable or at least acceptable opinion about the other party. (iv) Each party must be free from any obligation regarding accepting or denying the offer. (v) Each party must be able to communicate and deliver the product as per the requirement of the other. Eg. A man visiting a fast food chain might have enough money to buy a burger while the fast food chain should have a burger. If the customer in the fast food chain shop cannot make himself understood, or if he decides he does not want a burger, or if he does not have quite enough money to buy the burger, then there will be no exchange. If all of the needed conditions are met then there will be an exchange of money for a burger. 6. Customer and Consumer: Customers and consumers are used interchangeably to define the same individual but there is a difference. The path of the product, after it is purchased, differentiates the customer from the consumer. If an individual purchases an item for his use, then that individual is a consumer; however, if the individual buys the product as a gift or purchases it for someone else for any reason then the person purchasing that product is the customer and the person who will use the product or benefit from its purchase is the actual consumer. The customer can be a consumer but a consumer may or may not be a customer. Eg. If a person buys a bike for himself then he is the customer as well as the consumer of that bike but if a father purchases a bike for his son then the father will be a customer and the son the consumer. 7. Customer Satisfaction: Satisfaction reflects a person’s judgment of a product’s perceived performance in relationship to expectations. Customer satisfaction with a purchase depends on how well the product’s performance lives up to the customer’s expectations. (i) If the performance falls short of expectations, the customer is dissatisfied. (ii) If it matches expectations, then the customer is satisfied. (iii) If it exceeds expectations, then the customer is delighted. Akash Sharma Notes  17 In short: Performance < Expectation → Dissatisfied Customer Performance = Expectations → Satisfied Customer Performance > Expectations → Delighted Customer Satisfied customers will buy the product repeatedly and recommend the same to others; however, dissatisfied customers may switch to the competitors and discourage others from buying the product. Marketers should be careful while setting expectations. If they set expectations too low, they may satisfy those who buy but fail to attract enough customers. If they raise expectations too high, customers might be disappointed. 8. Customer Delight: Customer delight can be defined as the effect of delivering a product or service that surpasses customer expectations in a favorable experience. Performance > Expectations → Delighted Customer In most cases delighted customers tend to come back again because of the great services they have received from the company. Customer Delight directly affects the sales and profitability of a company as it distinguishes the company and its products and services from the competition. Customer delight can be created by the product itself, by accompanying standard services, and/or by interaction with people at the front line. The customer’s interaction with the staff is the greatest source of opportunities to create delight as it can be personalized and tailored to the specific needs and wishes of the customer. During contact with touch points in the company, more than just customer service can be delivered. The person at the front line can surprise the customer by showing a sincere personal interest in him, offering small attention that might please the customer, or finding a solution specific to the customer’s particular needs. These front-line employees can develop a relationship between the customer and the brand. For, A restaurant presenting a free cake to the customer during a birthday party bash thrown in that restaurant will keep the people delighted and astonished and might make the consumer loyal to them. 9. Customer Loyalty: Loyalty can be defined as a customer’s strong continuing belief that a particular organization’s products/services offer remains their best option. Customers are said to be loyal when they consistently purchase a certain product or brand over an extended period. Loyalty also means customers hanging in there, even when there may be a problem with the company’s products or services, just because the organization was good to them in the past and had addressed their issues whenever they arose. It means that customers do not seek out competitors and, even when approached by competitors do not show any interest in them. Akash Sharma Notes  18 It also means customers are willing to spend the time and effort to communicate with the organization to build on past successes and overcome any weaknesses. Loyalty can be measured by measuring the strength of the relationship between buyer and seller or between the organization and its customer. True loyalty requires both share-of-wallet and share-of-heart so that loyal customers continue to buy even when situational factors may make a repeat purchase difficult, such as stock outage, or alternative providers trying to persuade customers to switch to them by using promotional offers. Eg. A customer loyal to use a particular brand such as Nokia mobiles will always go for the repurchase of Nokia mobiles irrespective of many other competitors offering the same features at relatively low prices. Types of Marketing Organizational Structures There are various types of marketing organizational structures. Some common ones include: 1. Line Organization: In line organization, the marketing department operates as a separate entity under the direct control of top management. It follows a linear hierarchy, where decision-making and authority flow from the top down. 2. Functional Organization: In this structure, the marketing function is one of several functional departments, such as finance, production, and human resources. Each department operates independently under its head. 3. Matrix Organization: A matrix organization combines elements of both line and functional structures. It often includes a central marketing team responsible for strategic decisions, while other marketing tasks are distributed among various functional units. 4. Network Organization: In a networked organization, the company collaborates with external partners, agencies, and vendors to provide marketing services and expertise. This structure promotes flexibility and access to specialized skills. 5. Geographic Organization: Companies with a global presence may organize their marketing teams by geographical regions or locations. Each region has its marketing department tailored to the specific needs of that market. 6. Product-Based Organization: In this structure, the marketing department is organized around product lines or categories. Each product group has its marketing team focused on the unique marketing requirements of those products. 7. Market-Based Organization: In a market-based structure, the marketing department is divided based on different target markets or customer segments. Each market segment has its team responsible for understanding and catering to that specific audience. 8. Hybrid Organization: Some companies create hybrid structures, combining elements of multiple organizational types to fit their unique needs and goals. The choice of marketing organization structure depends on the company's size, industry, goals, and specific requirements. Each structure has its advantages and challenges, and the right one should align with the company's strategy and operational needs. Akash Sharma Notes  19 The Ansoff Matrix, developed by Igor Ansoff in 1957, is a strategic planning tool used by businesses to help them identify growth opportunities for their products and services. It provides a framework for assessing and planning market expansion strategies. The matrix consists of four growth strategies, each representing a different level of risk and opportunity. Here's an overview of the four components of the Ansoff Matrix: 1. Market Penetration:  Description: Market penetration is the strategy of selling more of the same products or services to the existing customer base or targeting the same market.  Purpose: The goal is to increase market share, revenue, and profitability by gaining a larger share of the current market.  Tactics: This might involve price adjustments, sales promotions, advertising, or improving customer loyalty and retention.  Example: A fast-food chain offering discounts and loyalty programs to encourage existing customers to visit more often. 2. Market Development:  Description: Market development involves introducing existing products or services to new markets or customer segments.  Purpose: This strategy seeks to expand the customer base by tapping into new geographic regions, demographics, or market niches.  Tactics: Activities may include entering new geographic areas, reaching out to a different target audience, or adapting products for new market needs. Akash Sharma Notes  20  Example: A smartphone manufacturer launching its products in a new international market. 3. Product Development:  Description: Product development focuses on creating and introducing new products or services to the existing market or customer base.  Purpose: The goal is to cater to evolving customer needs, enhance product lines, and increase revenue by offering new solutions.  Tactics: Activities include research and development, innovation, and product diversification.  Example: An electronics company introducing a new line of smart home devices for its existing customer base. 4. Diversification:  Description: Diversification is the strategy of introducing new products or services to new markets or customer segments.  Purpose: This strategy involves the highest level of risk and is often undertaken when a company is seeking entirely new revenue streams.  Tactics: Activities may include entering entirely different industries or markets to reduce risk through diversification.  Example: A software company entering the automotive industry by developing software for self-driving cars. The Ansoff Matrix is a valuable tool for strategic planning as it helps companies assess their growth options and consider the risks and rewards associated with each strategy. It is essential for businesses to carefully evaluate their internal capabilities, market conditions, and competitive landscape before choosing the most suitable growth strategy to pursue. Marketing Strategy Planning The marketing planning process is a systematic approach that businesses use to develop, implement, and evaluate their marketing strategies and activities. It involves a series of steps to ensure that marketing efforts align with the company's goals and effectively reach the target audience. Here are the key steps in the marketing planning process: 1. Setting Objectives: The first step is to define clear and measurable marketing objectives. Objectives should be specific, achievable, and aligned with the overall business goals. These objectives serve as the foundation for the entire marketing plan. 2. Market Research: Conduct thorough market research to gather data and insights about the target market, customer needs, industry trends, and competitive landscape. This step helps in understanding the market environment and identifying opportunities and challenges. 3. SWOT Analysis: Perform a SWOT analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats. This analysis helps in identifying internal strengths and weaknesses as well as external opportunities and threats, providing a clear understanding of the current situation. 4. Segmentation and Targeting: Segment the market into distinct groups based on factors like demographics, psychographics, or behavior. After segmentation, select the most attractive target segments that align with the company's goals and resources. 5. Positioning Strategy: Determine how the product or service will be positioned in the minds of the target audience. Positioning involves creating a unique value proposition that differentiates the offering from competitors. Akash Sharma Notes  21 6. Marketing Mix (4Ps): Develop strategies for each element of the marketing mix, which includes:  Product: Define product features, quality, design, and branding.  Price: Determine pricing strategies and pricing models.  Place: Decide on distribution channels and market reach.  Promotion: Plan advertising, sales promotions, public relations, and other promotional activities. 7. Budgeting: Allocate a budget to each marketing activity and determine the financial resources needed to execute the plan effectively. 8. Implementation: Execute the marketing strategies and activities according to the plan. This step involves coordinating all efforts, such as product development, advertising, and sales initiatives. 9. Monitoring and Control: Continuously track the performance of marketing activities and compare the results against the established objectives. Make adjustments and improvements as needed based on the data and feedback collected. 10. Evaluation and Feedback: Evaluate the effectiveness of the marketing plan by comparing the actual results with the expected outcomes. Analyze what worked and what didn't, and use this feedback to refine future marketing strategies. 11. Adaptation: Based on the evaluation and feedback, make necessary adjustments to the marketing plan. The marketing planning process is dynamic, and it's important to adapt to changing market conditions and consumer preferences. 12. Reiteration: The marketing planning process is ongoing, and businesses should regularly revisit and update their marketing plans to ensure they remain relevant and effective. Effective marketing planning is essential for achieving business goals and ensuring that marketing efforts are aligned with market conditions and customer needs. It allows businesses to be proactive and responsive in a competitive and ever-changing environment. Akash Sharma Notes  22 Return on Marketing Investment (ROMI) is a metric used to measure the financial return generated from the money invested in marketing activities. It assesses the effectiveness and efficiency of marketing campaigns and initiatives in terms of generating revenue or profit. ROMI helps businesses determine whether their marketing efforts are providing a positive return on the investment made. Formula: ROMI is typically calculated using the following formula: ROMI = Net Revenue from Marketing Activities / Marketing Costs Akash Sharma Notes  23 In simpler terms, it's the revenue generated from marketing activities divided by the cost of those activities. Use and Applications: 1. Performance Evaluation: ROMI is used to assess the effectiveness of specific marketing campaigns, channels, or strategies. It helps marketers determine which initiatives are generating the best returns and which ones may need adjustments or discontinuation. 2. Budget Allocation: ROMI assists in allocating marketing budgets efficiently. By analyzing the return on investment for various marketing activities, companies can allocate resources to the most effective channels and campaigns. 3. Decision-Making: Businesses use ROMI to make informed decisions about marketing investments. It helps in optimizing marketing strategies by focusing on what works and eliminating or reducing spending on less effective efforts. 4. Comparing Marketing Channels: ROMI allows businesses to compare the performance of different marketing channels, such as social media, email marketing, PPC advertising, or content marketing. This helps in determining where to allocate resources for the best results. 5. Campaign Optimization: ROMI can be used to fine-tune marketing campaigns. By monitoring ROMI during a campaign, businesses can adjust strategies in real time to maximize returns. 6. Forecasting: Marketers can use historical ROMI data to forecast the potential return on future marketing investments, aiding in budget planning and setting performance targets. 7. Performance Accountability: ROMI helps marketing teams be accountable for the financial impact of their activities. It provides a measurable link between marketing efforts and business outcomes. 8. Resource Allocation: ROMI aids in the allocation of resources not only within marketing but across the entire organization. By understanding the financial impact of marketing, businesses can make informed decisions about resource distribution. ROMI is a valuable tool for assessing the profitability of marketing activities and making data- driven decisions to improve marketing strategies and optimize return on investment. It provides a clear picture of the financial impact of marketing efforts and helps businesses allocate resources effectively. BCG matrix The BCG Matrix (Boston Consulting Group Matrix), also known as the Growth-Share Matrix, is a strategic tool used by businesses to analyze their product or service portfolio. Developed by the Boston Consulting Group, it categorizes products or business units into four distinct categories Akash Sharma Notes  24 based on their market growth rate and relative market share. These categories help businesses make decisions about resource allocation and product strategies. The four components or categories of the BCG Matrix are: 1. Stars:  Description: Stars are products or business units with a high market share in a high- growth market. They typically require substantial investment to maintain their growth rate and market dominance.  Significance: Stars have the potential to become future cash cows if their market share can be maintained once the market growth slows down.  Strategy: Businesses should invest in stars to sustain and potentially increase their market share. These products have high growth potential but also require substantial resources. 2. Question Marks (or Problem Children):  Description: Question marks are products or business units with low market share in high-growth markets. They have the potential to become stars, but they are not yet dominant in the market.  Significance: Question marks are uncertain and may become stars or turn into dogs if not managed effectively.  Strategy: Businesses need to decide whether to invest in question marks to help them capture market share and become stars, or to divest if the prospects are not promising. 3. Cash Cows:  Description: Cash cows are products or business units with a high market share in a low-growth or mature market. They generate consistent cash flow but have limited growth potential.  Significance: Cash cows are key contributors to a company's profitability and are often used to support and finance other products or business units.  Strategy: Businesses should maintain and milk cash cows to maximize their profitability while considering cost efficiencies. 4. Dogs:  Description: Dogs are products or business units with low market share in low- growth markets. They neither generate significant cash flow nor have significant growth potential.  Significance: Dogs may not contribute significantly to the company's profitability and may be candidates for divestment.  Strategy: Businesses may consider divesting or discontinuing dogs to free up resources for more promising products or business units. The BCG Matrix helps businesses determine the allocation of resources and investment strategies for their products or business units. It encourages portfolio analysis and guides decision-making, such as whether to invest, maintain, harvest, or divest. The goal is to optimize the product or business unit mix to maximize long-term profitability and growth. Akash Sharma Notes  25 Purpose of BCG Matrix: The BCG Matrix serves several purposes in strategic management: 1. Portfolio Analysis: It helps businesses assess and analyze their product or business unit portfolio, making it easier to allocate resources effectively. 2. Resource Allocation: The matrix aids in decision-making about how to allocate resources to different products or units based on their growth potential and market share. 3. Strategic Planning: It informs strategic planning by categorizing products or units and guiding decisions on whether to invest, maintain, harvest, or divest. Advantages of BCG Matrix: 1. Simplicity: The BCG Matrix is a straightforward and easy-to-understand tool that provides a quick visual representation of a company's portfolio. 2. Resource Allocation: It helps in optimizing the allocation of resources by focusing on high-potential products or units and divesting from those with lower potential. 3. Strategic Clarity: It offers clarity on the strategic direction for each product or unit, making it easier for management to set priorities. 4. Financial Insights: The matrix provides insights into the financial contributions of products or units, helping businesses maximize profitability. Limitations of BCG Matrix: 1. Solely Based on Two Factors: The matrix only considers two factors (market growth rate and market share) and may oversimplify complex business situations. 2. Market Growth Rate Assumption: The matrix assumes that market growth rates are a reliable indicator of future profitability, which may not always be the case. 3. Lack of Detailed Analysis: It lacks an in-depth analysis of factors like competitive advantage, customer preferences, and industry dynamics. 4. Not Suitable for All Industries: It may not be suitable for all industries or businesses, especially those in dynamic or emerging markets. Akash Sharma Notes  26 Main Steps in Applying the BCG Matrix: 1. Identify Business Units or Products: Determine the products or business units to be evaluated. 2. Calculate Market Share: Calculate the relative market share of each product or unit, typically as a ratio of the company's market share to that of the largest competitor. 3. Determine Market Growth Rate: Assess the market growth rate for each product or unit. This is typically done through market research or analysis. 4. Plot Products on the Matrix: Place each product or unit on the BCG Matrix based on their market share and market growth rate. 5. Strategic Decisions: Make strategic decisions based on the quadrant in which each product or unit falls:  Stars: Invest to maintain and grow.  Question Marks: Consider investment or divestment based on potential.  Cash Cows: Maintain and generate cash flow.  Dogs: Consider divestment or harvest to maximize cash flow. 6. Regular Review: The matrix should be regularly reviewed and updated to reflect changes in market conditions and the performance of products or units. The BCG Matrix is a useful starting point for portfolio analysis, but it should be used in conjunction with other strategic tools and a more comprehensive analysis to make well-informed business decisions. Akash Sharma Notes  27 Developing New Market Offerings Akash Sharma Notes  28 UNIT 4 Consumer Buying Behavior Consumer Buying Behavior refers to the decisions and actions individuals or households take when purchasing products and services for their personal use. It involves a complex process influenced by personal needs, preferences, cultural factors, and marketing efforts. Marketers aim to understand and influence this behavior to create effective strategies that resonate with consumers. By asking questions like, "What motivates consumers to buy? What influences their choices?" companies can tailor their marketing approaches to better meet consumer needs and foster positive responses to their products and services, ultimately driving sales and building brand loyalty. Buyer Decision Process Consumer behavior is a complex process influenced by various factors. One common model used to understand and analyze consumer behavior is the Engel-Kollat-Blackwell (EKB) Model. This model was developed by James Engel, David Kollat, and Roger Blackwell and outlines the steps consumers go through when making purchasing decisions. The EKB Model consists of five stages: 1. Problem Recognition: This is the first stage where a consumer identifies a need or problem. It may result from an internal stimulus (e.g., hunger) or an external stimulus (e.g., an advertisement). Akash Sharma Notes  29 2. Information Search: After recognizing a problem, consumers often engage in information search. They seek information about potential solutions, which can involve gathering information from various sources like friends, family, the internet, or product reviews. 3. Evaluation of Alternatives: In this stage, consumers assess the various alternatives available to satisfy their needs. They compare the features, benefits, and drawbacks of different products or services to make an informed choice. 4. Purchase Decision: Once consumers have evaluated the alternatives, they decide which product or service to purchase. This decision can be influenced by factors like product availability, pricing, and personal preferences. 5. Post-Purchase Evaluation: After making a purchase, consumers evaluate their decision. If the product or service meets or exceeds their expectations, they are likely to be satisfied. If not, they may experience post-purchase dissonance (buyer's remorse). The EKB Model acknowledges that consumers do not always go through all these stages for every purchase. Some purchases, especially routine ones, may involve minimal information search and evaluation, while more significant or complex purchases may require more time and effort at each stage. Additionally, the model recognizes that external factors, such as cultural, social, and psychological influences, play a crucial role in shaping consumer behavior. In addition to the EKB Model, there are several other models and theories of consumer behavior, including the Howard-Sheth Model, the Theory of Reasoned Action, and the Hierarchy of Effects Model, among others. These models provide different perspectives on how consumers make decisions and can help marketers better understand and influence consumer behavior. Characteristics Affecting Consumer Behavior Consumer behavior is influenced by various characteristics that shape how individuals or households make buying decisions. Some key factors affecting consumer behavior include: 1. Cultural Factors: Culture, subculture, and social class impact consumer behavior. Cultural values, beliefs, and norms influence preferences, while subcultures (such as nationality, religion, or ethnic groups) and social class affect choices and buying patterns. 2. Social Factors: Social influences, such as family, reference groups, and social networks, significantly impact consumer behavior. Family roles, opinions of friends, and the influence of social media all play a role in purchasing decisions. 3. Personal Factors: Individual characteristics like age, occupation, lifestyle, personality, and economic status influence consumer choices. Personal preferences and individual experiences shape how consumers perceive and select products and services. 4. Psychological Factors: Psychological aspects, including motivation, perception, learning, attitudes, and beliefs, significantly affect consumer behavior. These factors shape how consumers interpret and respond to marketing messages. 5. Situational Factors: The context in which purchasing decisions are made, such as the time, place, mood, and occasion, can affect consumer behavior. For instance, impulse buying or decision-making during specific events may differ from routine purchases. 6. Marketing Efforts: Marketing strategies, advertising, pricing, and promotions directly influence consumer behavior. Effective marketing efforts can sway consumer perceptions, preferences, and purchasing decisions. Akash Sharma Notes  30 Understanding these characteristics enables marketers to tailor strategies that resonate with consumer needs and preferences, ultimately influencing their behavior and purchasing decisions. Consumer Buying Decision Behavior Consumer buying decision behavior can vary based on the level of involvement and the degree of complexity in the decision-making process. There are four main types of buying decision behavior: 1. Complex Buying Behavior:  Description: This occurs when consumers are highly involved in the purchase of a product or service and perceive significant differences among available options. They invest time and effort in gathering information, evaluating alternatives, and making a well-informed decision.  Example: Buying a new car involves complex buying behavior, as consumers extensively research various makes, models, features, and prices before making a decision. 2. Dissonance-Reducing Buying Behavior:  Description: In this situation, consumers face high involvement but perceive little difference between available options. They may experience post-purchase doubts or cognitive dissonance. To reduce this discomfort, they seek additional information after the purchase.  Example: Purchasing a high-end smartphone may lead to dissonance-reducing behavior, where consumers seek reassurance through online reviews or opinions from friends. 3. Variety-Seeking Buying Behavior:  Description: Consumers in variety-seeking behavior are involved in the purchase, but they are not looking for significant differences among options. They seek variety and novelty in their choices and may switch brands or products for the sake of change.  Example: Buying snacks or fast food occasionally, where consumers seek variety in taste and experience, demonstrates variety-seeking buying behavior. 4. Habitual Buying Behavior:  Description: This is the least complex buying behavior, involving low consumer involvement and a habitual or routine purchase. Consumers don't actively seek Akash Sharma Notes  31 information or evaluate alternatives; instead, they stick to familiar brands or products out of habit.  Example: Purchasing everyday items like toothpaste, where consumers tend to buy the same brand repeatedly without much thought, reflects habitual buying behavior. Understanding these types of buying decision behavior helps marketers tailor their strategies and messages to align with how consumers approach purchasing decisions, whether they involve extensive research or habitual choices. "4Ps and 3Cs" Model of Consumer Behavior The model you're describing seems to be a simplified representation of consumer behavior, often referred to as the "4Ps and 3Cs" model. It's a framework that's used in marketing to understand and influence consumer decision-making. Let's break down the components: 1. Marketing (4Ps):  Product: This represents the product or service being offered to consumers.  Price: It refers to the cost of the product or service.  Place: This focuses on the distribution channels and the availability of the product to consumers.  Promotion: This includes the marketing and advertising efforts to promote the product or service. Other Stimuli:  Economic: Economic conditions, such as inflation, unemployment, and income levels, can impact consumer behavior.  Technological: Technological advancements and innovations can influence product choices and preferences.  Political: Government policies and regulations can affect consumer choices and market dynamics.  Cultural: Cultural factors like values, beliefs, and social norms play a significant role in shaping consumer behavior. 2. Buyer's Black Box:  Buyer Characteristics: This includes personal traits like age, income, lifestyle, and psychological factors like motivation, perception, and attitudes.  Buyer Decision Process: This involves the stages consumers go through when making purchase decisions, including problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase evaluation. 3. Buyer Responses:  Product Choice: This refers to the selection of a specific product or service from the available options.  Brand Choice: Consumers may choose a particular brand within a product category based on their perceptions and preferences.  Dealer Choice: This involves the selection of a specific place or retailer from which to make the purchase.  Purchase Timing: It refers to when the consumer decides to make the purchase.  Purchase Amount: This is the quantity or size of the purchase. Akash Sharma Notes  32 This model is a simplified representation of consumer behavior and is often used as a starting point for understanding how marketing efforts and external stimuli impact the choices consumers make. It's essential to recognize that consumer behavior is a complex process influenced by a wide range of factors, and this model provides a structured way to analyze and influence those behaviors. Maslow’s Hierarchy of Needs Maslow's Hierarchy of Needs is a theory that explains what motivates people. It's often shown as a pyramid with different levels. Here's a simple explanation: 1. Physiological Needs (Basic Needs): These are the most important needs, like food, water, and shelter. You need them to survive. 2. Safety Needs: After your basic needs are met, you want to feel safe and secure. This includes having a stable job, a safe home, and good health. 3. Love and Belongingness: Once you feel safe, you want to be with people who care about you, like friends and family. You also want to belong to a group or community. Akash Sharma Notes  33 4. Esteem Needs: After you belong to a group, you want to feel good about yourself. You want respect from others and to achieve things that make you proud. 5. Self-actualization: This is the highest level. It's about becoming the best version of yourself. You want to reach your full potential, be creative, and do things that matter to you. The idea is that you need to satisfy the lower needs before you can focus on the higher ones. It's like building a pyramid – you start at the bottom and work your way up. Business Markets are where companies buy and sell products or services to each other instead of selling to individual consumers. It's like businesses shopping for what they need from other businesses. Business Buyer Behavior is how companies make decisions when buying things for their business. They often consider factors like quality, price, and how the purchase will help their own business succeed. It's different from how individuals buy things for themselves. Stages in the Adoption Process The stages in the adoption process, often applied to the adoption of new products or innovations, can be summarized as follows: 1. Awareness: In this initial stage, potential adopters become aware of the existence of a new product or innovation. They may hear about it through advertising, word of mouth, or other marketing efforts. 2. Interest: Once aware, individuals develop an interest in the new product or idea. They begin to seek more information and learn about its potential benefits and features. 3. Evaluation: During this stage, potential adopters evaluate the new product or innovation. They compare it to existing alternatives and consider how it fits with their needs, values, and lifestyle. 4. Trial: In the trial stage, individuals experiment with the new product or innovation on a small scale. This may involve a test purchase, a trial period, or a limited adoption to assess its practicality. 5. Adoption: After a successful trial and positive evaluation, individuals decide to adopt the new product or innovation on a larger scale. They fully incorporate it into their daily lives or business operations. It's important to note that not everyone moves through these stages at the same pace, and some may never adopt the innovation. The adoption process is influenced by factors like the perceived benefits, ease of use, social influences, and personal motivations. Akash Sharma Notes  34 Influence of Product Characteristics on Rate of Adoption The rate of adoption of a new product or innovation is influenced by several key product characteristics. These characteristics can affect how quickly or slowly people and businesses adopt the innovation. Here are some of the key product characteristics and their influence: 1. Relative Advantage: If a new product offers a clear and significant improvement over existing alternatives, it is more likely to be adopted quickly. People and businesses are attracted to innovations that provide clear benefits. 2. Compatibility: The extent to which the new product is compatible with existing practices, values, and needs of potential adopters is crucial. If it aligns well with what people are already comfortable with, adoption is more likely. 3. Complexity: A complex or difficult-to-understand product may face slower adoption. Simplicity and ease of use are often preferred by adopters. 4. Trialability: If people or businesses can try the product on a limited scale without making a significant commitment, adoption may happen more quickly. Trialability reduces the perceived risk of adoption. 5. Observability: When the results or benefits of using the product are easily visible to others, it can lead to faster adoption. People are more likely to adopt something if they can see others benefiting from it. 6. Risk: The perceived risk associated with adopting the product can influence the rate of adoption. High-risk products may be adopted more slowly, while low-risk products may be adopted more quickly. 7. Communicability: The ease with which information about the product can be communicated and shared with others affects adoption. If it's easy to talk about and recommend, adoption may be faster. These product characteristics, in combination with external factors like marketing efforts, social influences, and economic conditions, play a significant role in determining the rate of adoption of new products or innovations. Akash Sharma Notes  35 UNIT 5 Concept Simple Meaning Differentiation A set of elements that a company It consists of 4Ps: Product, Price, Place, 1. Marketing Mix uses to promote and sell its products and Promotion. Each element addresses or services effectively. different aspects of marketing strategy. The specific group of people or Identifies the ideal customers and 2. Target Market organizations that a business aims to tailors marketing efforts to meet their reach with its products or services. needs and preferences. The process of dividing a larger Helps businesses understand and reach 3. Market market into smaller, distinct different customer groups with tailored Segmentation segments based on shared strategies. characteristics or behaviors. Creating a unique and memorable identity for a product, service, or Establishes brand recognition, trust, 4. Branding company to distinguish it from and customer loyalty. competitors. The systematic collection and Provides insights for making informed analysis of data to understand 5. Market Research marketing decisions and adapting consumer preferences, market trends, strategies. and competition. A strategy and technology used to 6. Customer Helps businesses build long-term manage and nurture relationships Relationship customer loyalty and improve customer with customers throughout their Management (CRM) satisfaction. lifecycle. STP Process stands for Segmentation, Targeting, and Positioning. It's a fundamental concept in marketing that helps companies identify and reach their target audience effectively. Here's an introduction to each component: 1. Segmentation: Market segmentation is the process of dividing a larger market into smaller, more manageable groups based on certain shared characteristics or needs. These smaller groups are called market segments. The idea is to understand that not all consumers are the same, and by identifying segments with common traits, companies can tailor their marketing efforts more precisely. 2. Targeting: Targeting involves selecting one or more of the identified market segments to focus your marketing efforts on. You choose the segments that are the most attractive and align with your business goals and capabilities. Targeting helps you allocate resources more Akash Sharma Notes  36 effectively and customize your products or marketing messages to meet the specific needs of your chosen audience. 3. Positioning: Positioning is the final step, where you establish a unique and desirable place in the minds of your target customers. It's about creating a distinct image and value proposition that sets your product or brand apart from competitors in the eyes of your target audience. Certainly, here are the steps of segmentation explained in simple terms: 1. Select a Market for Study: Decide which market or group of people you want to understand and sell to. This could be a specific group of consumers or businesses. 2. Choose Bases for Segmentation: Determine the criteria or characteristics you'll use to divide this market. It could be factors like age, income, or location for consumer markets, or industry, size, or location for business markets. 3. Select Descriptors: Once you've chosen your criteria, select specific descriptors within each category. For example, if you're using age as a basis, you might choose descriptors like "young adults" or "seniors." 4. Profile and Analyze Segments: Create detailed profiles of the segments you've identified. Understand their needs, preferences, and behaviors. This helps you see the differences and similarities between these groups. 5. Select Target Markets: Decide which of these segments you want to focus on, or "target." You might pick the ones that are most profitable or align best with your business goals. 6. Design, Implement, and Maintain Marketing Mix: Tailor your product, pricing, advertising, and distribution to match the needs of your chosen segments. Then, keep adjusting your strategies as needed to reach and satisfy your target markets. Akash Sharma Notes  37 Bases For Segmentation Bases for segmentation are the categories or characteristics used to divide a market into smaller groups. It's like sorting people or businesses into different groups based on things that are important for marketing. Some simple examples of bases for segmentation are: 1. Demographics: This is about characteristics like age, gender, income, and education. It's like dividing people by their basic personal information. 2. Geographics: Here, you're looking at where people or businesses are located. It's like sorting by their physical location, such as city or region. 3. Psychographics: This focuses on people's lifestyles, values, and interests. It's like grouping them based on their hobbies and beliefs. 4. Behavior: This is all about how people or businesses behave. For instance, it's like sorting them by how often they use a product or whether they're loyal to a brand. 5. Usage Occasion: It's about when and how people use a product. Are they using it on special occasions or every day? It's like sorting by the specific times they use something. Akash Sharma Notes  38 Targeting Target Market: A target market is a specific group of customers that a business aims to reach with its products or services. It's the group of people or businesses that are most likely to be interested in what the company offers. Identifying a target market is essential for effective marketing because it helps businesses focus their resources on the right audience. Targeting Approaches: 1. Undifferentiated (Mass) Marketing:  Approach: In this strategy, a company chooses to ignore segment differences and targets the entire market with a single product or marketing message.  Use Case: This approach is suitable when the product or service has mass appeal and is not significantly different in the eyes of consumers. It aims for economies of scale and cost-efficiency in marketing. 2. Differentiated (Segmented) Marketing:  Approach: In this strategy, a company recognizes that the market consists of different segments with distinct needs and preferences. It tailors products and marketing messages for each segment.  Use Case: It is employed when the company wants to address the unique requirements of various customer groups. It allows for more personalized marketing and product development. Evaluation of Targeting Approaches: The choice between undifferentiated and differentiated marketing depends on various factors, including the nature of the product, the market's diversity, and the company's resources. The evaluation involves considering: Akash Sharma Notes  39 1. Market Diversity: If the market has diverse customer groups with varying needs, a differentiated strategy may be more effective. 2. Resource Allocation: Assess the company's resources in terms of budget, personnel, and production capabilities. Undifferentiated marketing can be more cost-effective. 3. Product Variation: Evaluate whether the product can be easily adapted or customized to meet the preferences of different market segments. 4. Competitive Environment: Consider the competitive landscape. If competitors are using a differentiated strategy, it may be necessary to follow suit. 5. Customer Insights: Analyze the availability of customer data and insights to make informed decisions about segmentation and targeting. 6. Marketing Goals: Align the choice of strategy with the company's marketing objectives. For example, a company looking to dominate a niche market may prefer differentiated marketing. 7. Legal and Ethical Considerations: Ensure that the chosen strategy complies with legal and ethical standards. Some markets have regulations that affect targeting approaches. In summary, businesses must carefully assess their market, resources, and objectives when deciding between undifferentiated and differentiated targeting approaches. The choice can significantly impact the success of marketing efforts. Positioning Positioning in marketing refers to the way a brand or product is perceived by customers about its competitors. It's about creating a distinct image and value proposition that sets the product apart in the minds of consumers.  Point-of-Difference (POD): A POD is a unique and compelling characteristic or benefit that makes a brand or product stand out from competitors. It's something that customers associate specifically with your product, and it forms the basis of your brand's positioning.  Point-of-Parity (POP): A POP is a similarity or parity that a brand or product shares with its competitors. It's something that customers expect a product in a category to have, so not having it would be a disadvantage. For example, if you're selling bottled water, having a POP like "contains water" is essential because it's something all bottled water brands should have.  Perceptual Mapping: Perceptual mapping is a visual representation of how customers perceive different brands or products in a particular market. It helps businesses understand where they stand with competitors and identify opportunities for positioning their products more effectively. Products are plotted on a map based on their attributes, and their positions show how customers perceive them.  Repositioning: Repositioning is the process of changing how a brand or product is perceived in the minds of customers. This can be necessary when a product is not Akash Sharma Notes  40 performing well or when the market conditions change. It involves altering the product's image, attributes, or target audience to create a more favorable position in the market. Repositioning can be challenging because it requires changing established perceptions. It may involve rebranding, changing the product's features, or shifting the marketing strategy to create a new and more appealing position in the market. Differentiation Differentiation in marketing is the process of making a product or brand distinct from its competitors by emphasizing unique qualities, features, or benefits that set it apart. The goal of differentiation is to create a perception of added value in the minds of customers. This can be achieved through product attributes, branding, marketing, or a combination of these elements. Product Differentiation specifically refers to making a product different from similar products in the market. It can involve various aspects, such as design, quality, functionality, and features, or even intangible aspects like branding or customer service. Why Differentiation: 1. Competitive Advantage: It allows a product or brand to stand out in a crowded market, which can lead to a competitive advantage. 2. Price Premium: Differentiation often justifies higher prices, as customers are willing to pay more for unique features or benefits. Akash Sharma Notes  41 3. Customer Loyalty: Unique attributes create customer loyalty. When customers find something special in a product, they are more likely to stick with it. 4. Reduced Price Sensitivity: Differentiation can make customers less sensitive to price changes because they value the uniqueness of the product. Difference from Positioning:  Differentiation is about making a product unique and distinct from competitors by highlighting specific attributes.  Positioning, on the other hand, is about how the product is perceived in the minds of customers relative to its competitors. It's the overall strategy of where you want your product to be in the market and the minds of your target audience. In essence, differentiation is one of the strategies used to achieve a desired position in the market. You differentiate your product to create a particular position in the minds of customers that sets it apart from the competition. Positioning is the bigger picture, while differentiation is one of the tactics used to achieve that positioning. Akash Sharma Notes