Principles of Marketing PDF - Amity University

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Principles of Marketing Programs Offered n e i Post Graduate Programmes (PG) l Master of Business Administration Principles of Master of Computer Applications n Master of Commerce (Financial Management / Financial Technology) Marketing O Master of Arts (Journalism and Mass Communication) Master of Arts (Economics) Master of Arts (Public Policy and Governance) Master of Social Work Master of Arts (English) Master of Science (Information Technology) (ODL) Master of Science (Environmental Science) (ODL) i t y Diploma Programmes Post Graduate Diploma (Management) r s e Post Graduate Diploma (Logistics) Post Graduate Diploma (Machine Learning and Artificial Intelligence) Post Graduate Diploma (Data Science) i v Undergraduate Programmes (UG) Bachelor of Business Administration Bachelor of Computer Applications Bachelor of Commerce Bachelor of Arts (Journalism and Mass Communication) Un English / Sociology) Bachelor of Social Work y Bachelor of Arts (General / Political Science / Economics / it Bachelor of Science (Information Technology) (ODL) A m c) DIRECTORATE OF Product code ( DISTANCE & ONLINE EDUCATION Amity Helpline: 1800-102-3434 (Toll-free), 0120-4614200 AMITY For Distance Learning Programmes: [email protected] | www.amity.edu/addoe DIRECTORATE OF For Online Learning programmes: [email protected] | www.amityonline.com DISTANCE & ONLINE EDUCATION (c )A m ity U ni ve r si Principles of Marketing ty O nl in e  e in © Amity University Press All Rights Reserved nl No parts of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher. O SLM & Learning Resources Committee ty Chairman : Prof. Abhinash Kumar si Members : Dr. Divya Bansal Dr. Coral J Barboza Dr. Apurva Chauhan Dr. Monica Rose r ve Dr. Winnie Sharma Member Secretary : Ms. Rita Naskar ni U ity m )A (c Published by Amity University Press for exclusive use of Amity Directorate of Distance and Online Education, Amity University, Noida-201313  Contents e Page No. in Module-1: Introduction to Marketing 01 1.1 Meanings of Marketing nl 1.2 Core Concepts of Marketing 1.3 Evolution and its Role in the Changing Business Environment, 1.4 Various Marketing Management Philosophies, O 1.5 Relationship between Marketing and Strategic Planning Module - 2: Analyzing Marketing Opportunities and Understanding Consumers 19 ty 2.1 Internal and External Marketing Environment Analysis 2.2 Introduction to Marketing Information System and Marketing Research 2.3 Introduction to Consumer Markets si 2.4 Introduction to Industrial Markets Module - 3: Segmentation, Targeting and Positioning 54 3.1 Segmentation r ve 3.2 Bases for Segmenting Consumer and Business markets 3.3 The Requirements for Effective Segmentation 3.4 Differentiation and Positioning ni Module–4: Product and Pricing Strategies 68 4.1 Product U 4.2 Packaging & Labeling 4.3 Introduction to various objectives of pricing Module–5: Distribution and Marketing Communication Mix 92 ity 5.1 Introduction to Wholesaling, Retailing and Logistics. 5.2 Marketing Channels 5.3 Marketing Communication Mix m )A (c  Course: Principles of Marketing e Syllabus Module I: Introduction to Marketing in  Meaning of marketing  Core concepts of marketing  Evolution and its role in the changing business environment, nl  Various marketing management philosophies,  Relationship between Marketing and Strategic Planning O Module II: Analyzing Marketing Opportunities and Understanding Consumers  Internal and External Marketing Environment Analysis,  Introduction to Marketing Information System and Marketing Research, ty  Buying Behaviour for Consumer Markets and Industrial Markets,  Buying Decision Process and  Factors Affecting Buyer Behaviour Consumer Adoption Process. si Module III: Segmentation, Targeting and Positioning  Concept of Market Segmentation,  r Bases for segmenting Consumer and Business markets, ve  Approaches for Targeting,  Differentiation and Positioning. Module IV: Product and Pricing Strategies ni  Product: Concept & Levels  Classification of Products: Consumer and Industrial  Product Mix Product Line Decision U  Product Life Cycle and various strategies  New Product Development: Challenges & Process  Packaging & Labeling: Concept & Importance Introduction to various objectives of pricing, ity  Pricing Process.  Understanding various pricing strategies and their application Module V: Distribution and Marketing Communication Mix m  Nature of Marketing Channels,  Channel Functions and Flows,  Channel Design and Management Decisions, )A  Channel Dynamics. Introduction to Wholesaling, Retailing and Logistics.  The process of deciding the Marketing communication mix,  Marketing communication budget.  Introduction to various elements of integrated marketing communications (c  Principle of Marketing 1 Module-1: Introduction to Marketing Notes e Objectives in 1. To help students to understand the concept of marketing and its application. 2. To expose the students to the latest trends in marketing. nl 3. The focus will be both on developing and helping them imbibe basic marketing principles and establishing appreciations of contemporary realities. O Outcomes 1. The learner will be able to understand the Basics concepts of Marketing 2. To understand the importance of Relationship Marketing and Social Marketing ty “The Marketing Guru”, defines marketing as the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a si profit”. Philip Kotler Introduction er Marketing is as ancient as civilizations. Although marketing is talked about and discussed today in terms of business, its origin goes back to the ancient civilization v when man used symbols, signs and material artifacts to transact and communicate with others. Modern marketing revolves around the age-old conceptions. The first signs ni man had created to connect with others gave birth to the marketing idea. The evolution of marketing has made advertising a formal discipline; otherwise, in the ancient past, marketing existed. U Marketing deals with the customers more than any other business function. Creating value and satisfaction for customers is at the very heart of modern marketing thinking and practice. Marketing is an integral part of any enterprise. The marketing ity activities of today are linked to the aim, products, objectives, services and innovation. 1.1.1 What is marketing? Marketing is an important functional business sector that produces revenue by m selling commodities that meet customers’ needs. It includes taking decisions in the fields of product, quality, location and promotion and taking into account consumer business requirements” Marketing is a common trend at this time. )A Marketing is the bridge covering the void between two big economic axes, the manufacturer and the consumer. Marketing is considered as the back-bone of all company activities in this age of rapid change. It is said that marketing is the eye and company years because it holds the company in close touch with its climate. (c According to Pyle - “Marketing comprises both buying and selling activities”. Amity Directorate of Distance & Online Education  2 Principle of Marketing 1.1.2 Understanding Marketing and Scope of Marketing Notes e There are many definitions of marketing but no single definition can justify the marketing objective. The majority of definitions stress upon customer orientation and in satisfaction of customer needs. According to American Marketing Association (AMA, 2004), “Marketing is an organizational function and a set of processes for creating, communicating, and nl delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders”. More recently, in 2007, AMA revised the definition of marketing to consider it as an O ‘activity’ instead of a ‘function’ so as to position marketing as a broader activity in the organization and not just the role of a department. The marketers are recognizing unmet needs and desires. They identify measures ty and calculate the size of the defined market and its potential for profit. The marketers also focus on selecting segments that the company is capable of serving best and thus designing and promoting the products and services that are appropriate. Marketing is si typically the role of an organisation’s department. However, the marketing activities must not be carried out in a single department; instead they should be reflected in all the activities of the organization. Marketing’s key processes are: er Opportunity identification New product development Customer attraction v Customer retention and loyalty building ni Order fulfillment Scope of Marketing The early marketing ideas emerged from economics. It helped to clarify the U theoretical disparities left by economists in the United States in the first part of the twentieth century. Marketing is considered to be both an art and a science. There is a marketing formulated and innovative side of it. The formulated part discusses ity conceptual models, established facts etc. Knowing and applying the formulated marketing concepts is important, as it helps marketers produce interesting findings through marketing analysis, market modeling and predictive analytics. Creativity is equally important and leads to marketing success many times over. Therefore marketing activities for efficient, effective and socially responsible marketing should be m carried out in a thoughtful way. What is marketed? )A There are 10 main types of entities that are marketed. They are - Goods - The goods constitute the bulk production and marketing efforts of a business. For Example: Laptops, Televisions, Soaps, etc. Services - As economies advance, a growing proportion of their activities (c are also focused on the service production. The superstructure of developed economies today consists of 70-30 services-to-goods mix. Services include hotels, airlines, repair and maintenance and the professional services by Amity Directorate of Distance & Online Education  Principle of Marketing 3 accountants, lawyers, etc. Most market offerings consist of a variable mix of Notes e goods and services. Experiences – A firm can create, stage, and market experiences by in combining several services and goods. For Example – Disneyland in Europe and USA, Esselworld in Mumbai, etc. Events - Marketers promote time-based events, like trade shows, Olympics, nl sports events, and artistic performances. Persons - Celebrity marketing has become popular with popular personalities being marketed like - artists, musicians, CEOs, physicians, high-profile O lawyers and financiers, etc. Places – Destination marketing is also becoming very popular with states, cities, regions, and also nations competing to attract tourists, factories, headquarters of companies, and new residents. Place marketers can include ty economic development specialists, commercial banks, real estate agents, local business associations, and advertising and public relations agencies. Properties - Properties are intangible rights of ownership of either real estate si or financial properties such as Stocks and Bonds. Properties are bought and sold involving marketing effort by real estate agents and investment companies and banks for securities. er Organizations - Organizations actively work to build a strong and favourable image in the mind of their audience. Similarly, universities, museums, and performing arts organizations boost their public images to compete more v successfully for audiences and funds. Information - The production, packaging, and distribution of information is ni an important entity that is marketed. Among the marketers of information are Schools and Universities; publishers of Encyclopedias, nonfiction Books, and specialized magazines, CDs makers and Internet Web sites. U Ideas - Every market offering has a basic idea at its core and in essence, products and services are platforms for delivering some idea or benefit to satisfy a core need. For Example – creating awareness about HIV/ AIDS, discouraging alcoholism and smoking, etc. ity 1.1.3 The Marketing Process A marketing process is: “A set of steps allowing the firms to recognize consumer problems, evaluate business opportunities and develop marketing campaigns to m attract the target audience. The situation is analyzed in marketing process to define opportunities, the approach is designed for a value proposition, tactical decisions are taken, plan is implemented and results are monitored. )A There are four stages in a marketing process - Situation Analysis While, analyzing the situation the company finds itself in serves as the basis for identifying opportunities to satisfy unfulfilled customer needs. Situation and (c environmental analyzes are conducted to define strategic strategies, understand the company’s own capabilities and understand the company’s operating environment. Amity Directorate of Distance & Online Education  4 Principle of Marketing Marketing Strategy Notes e After identifying the marketing options available, a strategic plan is to be developed to pursue the identified options. An analysis is done and the best available option is in then chosen; a plan or strategy is made for that option. Marketing Mix Decisions At this step, elaborated tactical decisions are made for various controllable parameters nl of the marketing mix. It includes decisions related to product development, product pricing, product distribution and also product promotion. O Implementation and Control Lastly, the marketing plan is executed and marketing efforts outputs are monitored to adjust the marketing mix according to changes in the market. That being the final step, the written or planned strategy is transformed into action and the product is ty presented according to this process 1.2.1 Defining Marketing for the New Realities si The marketplace is dramatically different from even 10 years ago, with new marketing behaviors, opportunities, and challenges emerging. er Marketing deals with the customers more than any other business function. Creating value and satisfaction for customers is at the very heart of modern marketing thinking and practice. Marketing is an integral part of any enterprise. The marketing activities of today are linked to the aim, products, objectives, services and innovation. v Marketing is the bridge covering the void between two big economic axes, the ni manufacturer and the consumer. Marketing is considered as the back-bone of all business activities in this age of rapid change. It is said that marketing is the eye and business years because it holds the business in close touch with its climate. U 1.2.2 Basic Concepts Needs, Wants and Demands ity Needs, wants and demands are the part of basic principles of marketing. A product may also be distinguished according to how it meets the desires, wants or demands of a consumer. Needs are the basic requirements which include food, clothing and shelter without which humans cannot survive. Wants rely largely on the basic needs of humans. The needs become attractive when they are directed at specific goods which m meet the needs. If a person wants something that is premium, but still has the money to buy it, then such wishes are known as demands. The fundamental difference between demands and wants is based on ability to pay. A customer may want something but )A may not be able to fulfill his desire. The needs, wants and demands are very important components of marketing because they help the marketer decide the products which he needs to offer in the market. Value and Satisfaction (c The concept of customer value is important for the marketers because the primary goal of marketing is to deliver and enhance the customer value. Customer value can be Amity Directorate of Distance & Online Education  Principle of Marketing 5 defined as the difference between the values a customer gains from owning and using Notes e a product and the costs of obtaining the product. It may also be defined as the sum of tangible and intangible benefits vis-à-vis cost to the customer. in Often, customers don’t accurately or objectively assess the product values and costs. They act upon a value also known as the perceived value of the customer. In comparison, consumer satisfaction depends on the perceived success of a company in nl providing value according to the expectations of a buyer. When the performance of the product falls short of consumer expectations, the buyer will be disappointed. The buyer will be delighted if performance exceeds expectations. O Customer expectations are based on their past purchasing experiences, friends’ opinions and information and promises from marketers and competitors. They may satisfy those who buy but fail to attract majority if they set expectations too low, and if they raise expectations, buyers may become disappointed. ty Marketplace, Market space and Meta - markets The economists used the term market for the place where buyers and sellers si meet to exchange their goods and transact in a particular product class, like grains, spices, clothes etc. But for marketers, a market is the set of ‘potential’ buyers of a product. These buyers have a particular need or want which can be satisfied through er exchanges and the size of the market depends on the number of people who need the product, have resources to engage in exchange (i.e., pay) and are willing to offer these resources (i.e., money) in exchange for what they want. The sellers as constitute the industry and the buyers as constitute the market. v Market space is the digital space allowing the interaction and transaction between the buyers and sellers. For example - buying train tickets on IRCTC’s website, buying ni books/ stationary from Amazon.com, buying electronic devices from Flipkart.com, etc. A Meta market is the term used to describe a group of complementary products U and services closely related in the minds of the consumers but spread across a diverse set of industries. For Example – IRCTC’s website offers train tickets as well as accommodation, Make my Trip allows customers to book travel, hotels as well as sightseeing, etc. ity 1.2.3 The New Marketing Realities (Technology, Globalization, Social Responsibility) The marketplace is dramatically different from even 10 years ago, with new m marketing behaviors, opportunities, and challenges emerging. 1. Technology )A With rapid growth in e-commerce, mobile internet, and web penetration in emerging markets, the Boston Consulting Group claims that brand marketers need to strengthen their “digital balance sheets.” Consumers and advertisers today have access to vast quantities of knowledge and data on almost everything. Technology profoundly influences all the conventional (c marketing practices. Amity Directorate of Distance & Online Education  6 Principle of Marketing 2. Globalization Notes e The world has become a smaller place. New transportation, shipping, and communication technologies have made it easier for us to know the rest of the world, to in travel, to buy and sell anywhere. It is estimated that By 2025, the annual consumption in emerging markets will total $30 trillion and contribute more than 70% of global GDP growth. A staggering 56% of global financial services consumption is forecast to come nl from emerging markets by 2050, that is up from 18% in 2010. Demographic trends favour the developing markets such as India, Pakistan, and Egypt, with populations whose median age is below 25. Globalization changes O innovation and product development as companies take ideas and lessons from one country and apply them to another. 3. Social Responsibility ty Poverty, pollution, water scarcity, climate change, conflicts and accumulation of wealth demand our attention. The private sector is taking more responsibility for improving living standards, and the position of corporate social responsibility has been si elevated by corporations around the world. The firm’s task is to determine the needs, wants, and interests of target markets and satisfy them more effectively and efficiently than the competitors, while preserving er or enhancing consumers’ and society’s long-term well-being. As goods become more commoditized and customers become more socially aware, some businesses integrate social responsibility as a way of separating themselves from rivals, creating customer loyalty, and achieving substantial revenue and profit gains v 1.2.4 Pricing ni Price is the value that a marketing transaction exchanges. A marketer usually sells a specific combination of a product or service that satisfies the needs, as well as U additional services such as warranty or guarantee. Pricing exercise starts with an understanding of corporate mission, target markets and marketing targets. Pricing objectives are developed on the basis of those factors. Management will analyze the costs to assess how much flexibility it has in setting rates ity and the lowest level of prices necessary to achieving profit and other business goals. Determining the role prices play relative to other marketing mix variables and set the boundaries and guidelines for pricing decisions. Pricing decision should also take into consideration the impact on other items in m the product line, promotional decisions, and distribution channels. There are two types of pricing decision situations; new product pricing, and adjusting prices of existing products. Pricing strategies of particularly new products are high-level responsibility are )A shared by marketing and other top-level executives. Factors Affecting Pricing Decisions There are a number of different internal and external factors that affect pricing (c decisions and that may be complex. There is generally uncertainty as to how consumers, competitors, resellers etc. would react to prices. In market planning, Amity Directorate of Distance & Online Education  Principle of Marketing 7 research, marketing mix variables, demand forecasting, competitive structure, costs Notes e and government actions, pricing considerations are relevant. 1. Internal Factors: Marketers must consider several factors which are the result of in company decisions and actions before setting up the price. To a large extent these factors are controllable and, if necessary, they can also be altered. However, while the organization may have control over these factors, making a quick change is not nl always realistic. Example: Product pricing may depend heavily on the productivity of a manufacturing facility, i.e., how much can be produced within a certain period of time. The marketer O knows that increasing productivity can reduce each product’s cost of production and thus allow the marketer to potentially lower the price of the product. However, increasing productivity may require major changes at the manufacturing facility, which will take time, be costly and also not translate into lower price products for a ty considerable period of time. 2. External Factors: There are a variety of factors affecting the business that are not regulated but can influence pricing decisions. Understanding these factors requires si that the marketer conduct research to monitor what happens in each market that the company serves, as the effect of these factors can vary by market. 3. Competitive Structure: The market conditions vary considerably, and the market er structure affects not only a company’s pricing decisions, but also the type of likely response from other players in the same sector. Much of it depends on the number of buyers and sellers in a market, and the extent of barriers to entry and exit. These v factors affect the degree of flexibility a company has in setting prices. ni 1.3.1 A Brief Economic Review of Indian Economy India’s economy is characterized as a competitive market economy. It is the fifth largest economy in the world by nominal GDP, and the third largest by parity of U purchasing power. The Indian economy’s long-term prospect of growth remains positive due to its young population and corresponding low dependency ratio. It also caters to healthy savings and investment rates and increased integration into the global economy. About 60% of India’s GDP is driven by private domestic consumption ity and remains the sixth largest consumer market in the world. In addition to private consumption, GDP in India is also driven by government spending, production and exports. India has classified and tracked three sectors of its economy and GDP: agriculture, m manufacturing, and services. Agriculture involves agriculture, horticulture, husbandry of milk and livestock, forestry, and related practices. Industry comprises various sub- sectors of manufacturing. India’s services sector definition includes its construction, )A retail, software, IT, communications, hospitality, infrastructure operations, education, healthcare and other economic activities. 1.3.2 How Future Marketing Will (and should) Be (c Marketing combined with sales is the growth driver that any business needs and while most know how important it is, the fact that what works today does not work tomorrow makes keeping up to speed a challenge. In the past decade the strategy has Amity Directorate of Distance & Online Education  8 Principle of Marketing changed significantly. While the days of the Madmen were before a reality, today times Notes e have changed. 1. Famous elements of Product, Price, Place and Promotion, the marketing mix in elements are not effective and a firm must tackle it. The digital world is evolving at an extremely fast pace and every business must look forward to follow it, else they will lose. Now instead of 4Ps instead, they need to welcome the 4Es-the latest customer nl value proposition approach that combines engagement, experience, exclusivity and emotion. 2. The personalization would be more prominent in product design and communications. O More businesses are able to deliver personalized products and designs thanks to big data, social media and versatile manufacturing. This trend reaches an increasing number of sectors including the health sector. 3. Consumers use all sorts of media to make buying choices and placing the people ty who purchase those items into a box is becoming more harder than it used to be. Categories of consumers, such as mainstream, or high and low end, are beginning to disappear. Segmentation is becoming ever more dynamic. One high end product si and one low end product can be purchased at the same time by the same customer. 4. A few years ago, in a business on one side was the digital team and on the other the marketing department. It can’t be like this any more. Digital now needs to be part of er everything so the two need to be fully integrated. Business don’t really need a digital strategy, what they really need to learn is how to integrate the digital aspect into the dynamic cycle of making purchasing decisions for customers! v 1.4.1 Company Orientation towards Marketplace ni The organization’s business approaches focus on identifying and meeting the customers stated or hidden needs and wishes are described as marketing orientations. These are also known as philosophies of marketing. The five alternative concepts under U which organizations carry out their marketing activities are the concepts of production, product, selling, marketing and holistic marketing. They describe the orientations of the organization towards market place. ity 1. The Production Concept – This philosophy suggests that the consumers will favour the products that are readily available as well as affordable. The management should therefore focus on improving the efficiency in production and distribution. This concept describes one of the oldest philosophies sellers were guided by. This principle is also true in circumstances where the demand for a product exceeds m the supply and the cost of the product is too high, and there is a need for improved productivity to reduce it. 2. The Selling Concept – Many companies believe that consumers will not buy )A enough of the organization’s products unless it undertakes a large-scale selling and a promotional effort. This concept is popular among companies marketing unsought goods such as insurance products, encyclopedias, etc. The organizations may practice the selling concept when they have overcapacity. The primary aim of such companies is to sell what they make rather than make what the market wants. The (c focus is on creating a sales transaction, rather than building a long-term, profitable relationship with consumers. Amity Directorate of Distance & Online Education  Principle of Marketing 9 3. The Product Concept - The product concept suggests that consumers will favour Notes e the products offering the best quality, good performance, and innovative features. Hence, a company should focus on making continuous product improvements. The selling concept takes an inside-out perspective. It starts with the factory, focuses on in the company’s existing products, and calls for heavy selling and promotion to obtain profitable sales. It focuses heavily on customer conquest—getting short-term sales with little concern about who buys or why. nl 4. The Marketing Concept – Marketing concept promotes the achievement of organizational objectives by determining the needs and wants of customers and delivering the products and services more effectively and efficiently than their O competitors. It also takes an outside-in perspective. It starts with a well-defined market, focuses on customer needs, coordinates all the marketing activities affecting customers, and makes profits by creating long-term customer relationships based on ty customer value and satisfaction. Under the marketing concept, companies produce what consumers want, thereby satisfying consumers and making profits. 5. Holistic Marketing Concept - The holistic marketing concept is a relatively new marketing perspective taking into account an entire organization, in addition to si its counterparts when determining or executing its overall marketing strategy. It recognizes involvement of many stakeholders in each transaction— from suppliers, to employees, customers, shareholders, the community at large, and also the er environment. The company must take the interdependencies into account in order to achieve success, since companies operate within a multi-dimensional, global and interconnected countryside. The concept of holistic marketing is based on the v development, design and implementation of marketing programs, processes and activities recognizing their scope and interdependencies. ni Internal Marketing Integrated Marketing Marketing Dept. Channels U Other Departments Products and Services Senior Management Communications Holistic Marketing ity Socially Responsible Marketing Relationship Marketing Ethics Environment Customers Legal Channel Community Partners m 1. Relationship Marketing – Relationship Marketing is a marketing strategy whose objective is to establish and maintain a profitable, long-term relationship with a customer, which goes beyond the initial contact. Relationship marketing is a form of )A marketing that evolved from direct response marketing; it places emphasis on building longer-term relationships with customers rather than on individual transactions. Relationship marketing involves an understanding of customers’ needs and wants through their lifecycle and providing a range of products or services accordingly. The overall goals are to find, attract and win new clients, nurture and retain those the (c company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. Amity Directorate of Distance & Online Education  10 Principle of Marketing 2. Integrated Marketing – It involves synchronizing the marketing efforts for designing Notes e and implementing an overall unified marketing strategy. Each component of the marketing initiative is not treated as a separate task but an integrated approach is followed which involves a cohesive strategy using different marketing tactics (such in as web and email marketing, print advertising, social media, sales collateral and websites, direct marketing, event marketing, etc.) All marketing efforts have to be planned and coordinated to achieve synergy. Hence this concept involves unifying nl different marketing methods such as mass marketing, one-to-one marketing, and direct marketing. 3. Internal Marketing - Holistic marketing incorporates internal marketing, ensuring O that everyone in the organization embraces appropriate marketing principles. Internal marketing is the task of hiring, training, and motivating the employees of the organization who want to serve customers well. The marketers recognize that ty marketing activities within the company can be as important as, or even more so than, marketing activities directed outside the company. Internal marketing must take place on two levels. At one level, the various marketing functions-sales force, advertising, customer service, product management, marketing research-must work si together, and at the second level the partners of the organization should be motivated 4. Socially Responsible Marketing - Socially responsible marketing is a marketing philosophy that states a company should take into consideration what is in the best er interest of society in the present and long term. Socially responsible companies should aspire to produce desirable products. Desirable products provide immediate satisfaction and long term benefits. These products are sought by consumers for v immediate gratification and also benefit society and consumers in the long term. ni 1.5.1 Marketing Strategies Strategizing is called the art of action planning to achieve a specific goal and the action plan is known as strategy. A marketing strategy articulates the best utilization of the U company’s resources and tactics to reach its marketing goals. It should also match the desire for value of the customers with the distinctive capabilities of the organisation. Internal capabilities should be used for maximizing external opportunities. The planning process must be guided by a marketing-oriented culture and processes in the organization. ity A good marketing strategy also allows a company to achieve its business-unit and corporate goals when properly implemented. Though to some extent corporate, business unit, and marketing strategies overlap, marketing strategy is the most detailed and specific of the three. Marketing strategy is the analysis, development, and the m implementation of the selected market target strategies for product markets in which the organization has an interest. It involves implementing and managing the marketing strategies that have been formulated to meet the marketing objectives and customer )A needs. It focuses on the performance of products and services in the target market and combines the customer-influencing strategies with market focused activities to gain a competitive advantage in the industry. 1.5.2 Vision & Mission Statements (c A mission statement defines the business of the enterprise, its goals and its approach to achieving those goals. A Vision Statement describes the company’s wanted Amity Directorate of Distance & Online Education  Principle of Marketing 11 future position. Elements of mission and vision statements are often combined to state Notes e the purposes, goals and values of the company. The two words are therefore often used interchangeably. Senior managers usually should compose the overall Mission and in Vision statements for the organization. Certain managers at different levels can write declarations for their particular divisions or business units. The production process calls for managers to - nl Clearly identify the business culture, values, strategy and view of the future by interviewing employees, suppliers and customers Address the commitment the firm has to its key stakeholders, including O customers, employees, shareholders and the communities Ensure that the objectives are measurable, the approach is actionable and the vision is achievable ty Communicate the message in clear, simple and a precise language Develop a buy-in and support throughout the enterprise. si 1.5.3 Marketing Strategy & Marketing Mix(7Ps) Marketing Mix - Four P’s of Marketing er The term Marketing Mix was suggested by Borden and was popularized by McCarthy who proposed the 4P’s classification. Marketing mix represents the classification of marketing activities under four broad categories namely the Product, Price, Place and Promotion. v The variables under each category can be influenced by the marketer to promote ni a product or service and these essentially are the marketing tools. Hence, a planned mix, of the controllable elements of the 4Ps of a product’s marketing plan forms the ‘Marketing Mix’. These four elements are balanced until the right combination is U found that meets the needs of the consumers of the company, while at the same time producing maximum business revenue. ity m )A (c Product - Product refers to the goods and services that a business offers to its customers. Apart from the physical product itself, there are elements associated with the product that customers may be attracted to, like its packaging. Other Amity Directorate of Distance & Online Education  12 Principle of Marketing product attributes include quality, features, options, after sale services, warranties, Notes e and the brand name. The task of the marketer is to decide about the bundle of products to be offered. The product bundle must meet the needs of a particular in target market or set of customers. Other important aspects of a product include an appropriate product range, design, etc. Price - Price refers the price charged by a business for a product or service. nl Determination of the product’s price is a challenging task. The pricing approach must reflect the product’s market positioning and result in a price that will cover both the cost per item and the profit margin. There are a number of alternative O pricing strategies-some pricing decisions can involve complex calculations while others are judgment based. The pricing strategy is based on the product, customer demand, the competitive environment, and other products being offered. Place - The right product at the right price available in the right time to be bought ty by customers. Place refers to the channels of distribution used by the marketer to make the product reach to the customers. The nature of the product or the service greatly influences as to how it is distributed. si Promotion - Promotion refers to the advertising and selling aspect of marketing. Informing potential customers is promotion of the product’s quality, its price and its location. Promotion is intended to make people understand what your product er is, what it can be used for and why they may want it. To be successful, your promotional efforts should contain a clear message targeted at a specific audience reached through a suitable channel. v The target audience should be those people who use or influence the product’s purchase. The message has to be consistent with the overall marketing image, to ni get the attention of the target audience, and elicit the desired response, whether to buy the product or form an opinion. Promotion activities involve advertising, personal selling, Public Relations, and Sales Promotions U Physical Evidence - Physical evidence is a tangible component of a service. Strictly speaking, a service has no physical characteristics so a customer appears to depend on material indications. There are many examples of physical evidence ity including some of the following buildings, facilities, signs and logos, annual accounts and business reports, brochures, your website, and even your business cards. People- People are the most important element of any service or an experience. m Services tend to be produced and consumed at the same moment, and the aspects of the customer experience are altered to meet the individual needs of the person consuming it. )A Process - There are a many perceptions of the concept of process within the business and also the marketing literature. Some see processes as a means to achieve an outcome, for example – to achieve a 35% market share a company implements a marketing planning process. However in reality it is more about the (c customer interface between the business and consumer and how they deal with each other in a series of steps in stages, i.e. throughout the process. Amity Directorate of Distance & Online Education  Principle of Marketing 13 1.5.4 Product Life Cycle and Marketing Strategies Notes e Product passes through four stages of its life cycle. Every stage presents the marketer with different chances and challenges. Each stage calls for the unique or in distinct set of marketing strategies. A marketer should watch on its market and sales situations to identify the stage in which the product is passing through, and accordingly, appropriate marketing strategies must be designed. Here, strategy basically involves nl four elements the product, price, promotion, and distribution. 1. Marketing Strategies for Introduction Stage: O Introduction stage is marked with slow growth in sales and a very little or no profit. Note that product has been newly introduced, and a sales volume is limited; product and distribution are not given more emphasis. Basic constituents of marketing strategies for the stage include price and promotion. Price, promotion or both may be ty kept high or low depending upon market situation and management approach. Promotion Prices si High Low Price High Rapid Skimming Strategy Slow Skimming Strategy er Low Rapid Penetration Strategy Slow Penetration Strategy 1. Rapid Skimming Strategy: This strategy consists of introducing new high-priced v products and high promotional costs. The goal of the high price is to get as much profit as possible per unit. The high promotional expenditures are intended to ni reassure even at a high price the product merits the market. In all, strong marketing speeds up consumer penetration; the technique is chosen to skim the cream off the market. U 2. Slow Skimming Strategy: This strategy includes the introduction of a high-priced commodity and low advertising. The high price goal is to extract as much gross profit as possible. And, low promotion keeps expenditures for marketing small. That combination allows the maximum profit value to be skimmed from the market. ity 3. Rapid Penetration: The strategy consists of launching the product at a low price and high promotion. The purpose is to fasten the market penetration to get a larger market share. The marketer tries to expand the market, by increasing the number of buyers. m 4. Slow Penetration: The strategy consists of introducing a product with low price and also low-level promotion. Low price encourages the product acceptance, and low promotion helps in the realization of more profits, even at a low price. )A 2. Marketing Strategies for Growth Stage: It is the stage of rapid acceptance of the market. The strategies aim to sustain market growth for as long as possible. The goal here is not to increase awareness, but (c to get the product tested. Company seeks to penetrate the new markets, although the competitors are in the market already. The company tries to strengthen their competitive Amity Directorate of Distance & Online Education  14 Principle of Marketing position in the market and may forgo maximum current profits to earn still greater profits Notes e in the future. The strategy focuses on - Product quality and features improvement in Adding new models and improving styling Entering new market segments Designing, improving and widening distribution network nl Shifting advertising and other promotional efforts from increasing product awareness to product conviction O Reducing price at the right time to attract price-sensitive consumers Preventing competitors to enter the market by low price and high promotional efforts ty 3. Marketing Strategies for Maturity Stage In this stage, the competitors have entered the market, and there is a fight among them for more market share. The company adopts offensive or aggressive marketing si strategies to defeat the competitors. Strategies followed are – To Do Nothing - A successful marketing strategy at maturity stage may be to do nothing. It’s not formulating new tactics. Company believes doing nothing er is desirable. The decline in the sales is certain, sooner or later. Marketer is seeking to save capital that can be invested in more competitive goods later on. It only continues regular activities, and begins preparing for new products. v Market Modification - The strategy is aimed to increase the sales by raising the brand user’s number and the usage rate per user. Sales volume is the ni product i.e., the outcome of number of users and usage rate per users. Thus, sales can be increased either by increasing the number of users or by increasing the usage rate per user or by both. U Marketing Mix Modification - It is the last optional strategy for the maturity stage. Modification of marketing mix involves changing the marketing mix elements, which may stimulate sales. Company should reasonably modify one or more elements of marketing mix (4P’s) to attract the buyers and to fight with ity competitors. Marketing mix modification should be made carefully as it can be easily imitated. 4. Marketing Strategies for Decline Stage m Company formulates various approaches for managing stage of decline. The first significant role is identifying the defective goods. An organization should determine after finding poor goods, whether poor goods should be withdrawn. For the mission known as the Product Evaluation Committee, some businesses appoint a special committee. The )A committee gathers data and analyses items from internal and external sources. On the basis the committee report, suitable decisions are taken. The strategies followed are – Continue with the Original Product - That strategy is followed by the belief rivals are leaving the market. Reduced marketing and advertising prices. (c Sometimes, a company only continues its goods in successful segments, and they are removed from remaining segments. These goods survive as long as they are profitable. Amity Directorate of Distance & Online Education  Principle of Marketing 15 Continue Products with Improvements - The features and qualities of the Notes e goods are improved to accelerate sales. Products undergo minor changes to attract buyers. in Drop the Product - When it is not possible to continue the products either in original form or even with improvements, then company finally decides to drop the products. nl 1.5.5 Porter’s Generic Strategies Framework The way to generate high customer loyalty is to deliver high customer value O by designing a competitively superior value proposition aimed at a specific market segment backed by a superior value-delivery system. The value proposition consists of the whole cluster of benefits the company promises to deliver and is basically a statement about the resulting experience customers will gain from the company’s ty market offering. The brand must present a promise which can only be kept depending on how the company can manage its value-delivery system. The value-delivery system includes all the experiences the customer will have si on the way to obtaining and using the offering. In a hyper-competitive economy, a company’s success depends on how it can create and deliver superior value. In order to do so, the company must develop the following five capabilities: er 1. Understanding customer value 2. Creating customer value v 3. Delivering customer value 4. Capturing customer value ni 5. Sustaining customer value In order to succeed, therefore, the company needs to use the concept of value and a value-delivery network. The value chain is a tool developed by Michael Porter for the identification of ways U to create more customer value. The value chain considers nine strategically important activities among the various activities of a firm, which create a value and cost in a specific business. ity Firm Infrastructure support activities human resource management m m ar gi technology development n procurement )A inbound operations outbound marketing service logistics logistics & sales m ar gi n (c primary activities Amity Directorate of Distance & Online Education  16 Principle of Marketing The primary value activities represent the sequence of bringing materials into the Notes e business, converting them into final products, shipping out the final products, marketing them and servicing them, apart from support activities such as procurement, technology development, human resource management and firm infrastructure, that are required in for supporting the primary activities. Primary Value Activities nl Inbound logistics: material handling and warehousing. Operations: transforming inputs into the final product. O Outbound logistics: order processing and distribution. Marketing and sales: communication, pricing and channel management. Service: installation, repair and parts supply. ty Support Activities - The support activities are handled in certain specialized departments. Procurement: procedures and information systems. Technology development: improving the product and process or system. si Human resource management: hiring, training and compensation. Firm infrastructure: general management, finance, accounting, government er relations and quality management. 1.5.6 Buying Motives and Marketing Strategies v Consumer behaviour starts with needs. Need may be of various forms, at different times. Abraham Maslow’s need hierarchy classifies the needs into five categories ni viz. Basic need, need for safety , social need, need for esteem and needs for self- actualization. A person moves from one level need to another, as one need is satisfied, he moves on to next need. Consumers must show some behaviour for this need. U Buying motives are those consumer motives that are induced enough to encourage the customer to purchase the product. Those are the needs that are urgent, causing the consumers anxiety and restlessness, so much so that the buyer has to make an effort to buy a suitable product. Buying motive is a motive that the purchase of the products will satisfy. ity Motives for buying can be grouped up into different levels. First, when the buyer understands the need and then talks about the (conscious) reasons for buying the product. Secondly, the buyer is persuaded that he wants to purchase but is not in a position to understand the (subconscious) motives and the last buyer is not in a position m to clarify the factors which affect their (unconscious) purchasing decisions. These motives are known as conscious, sub-conscious and unconscious motives. )A Key Takeaways Marketing: Marketing is the bridge covering the void between two big economic axes, the manufacturer and the consumer. Marketing is considered as the back- bone of all business activities in this age of rapid change. (c Marketing Channel: A marketing channel is a set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user Amity Directorate of Distance & Online Education  Principle of Marketing 17 Micro Environment: These are the factors which are close to the business Notes e and affect its ability to serve its customers, suppliers, marketing intermediaries, customer markets, competitors and publics. Micro Environment includes the business itself, supplies, marketing channel firms, customer markets, competitors, in and publics. Macro Environment: The larger societal forces affecting the Micro Environment nl constitute the macro environment. These forces are considered to be beyond the control of the organization. Macro environment includes the demographic, natural, technological, economical political, and cultural forces. O Price: It is the value that a marketing transaction exchanges Strategic Planning: The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities is called Strategic planning. ty SWOT Analysis: SWOT stands for strengths, weaknesses, opportunities and threats. SWOT analysis is a widely used framework to summaries a business’s situation or current position. si Buying motives: The consumer motives that are induced enough to encourage the customer to purchase the product. er Check your progress 1. ______ is an important functional business sector that produces revenue by selling commodities that meet customers’ needs. v a) Communication ni b) Marketing c) Strategy U d) Marketing environment 2. How many types of entities are marketed ? a) 4 ity b) 8 c) 10 d) 15 m 3. ________ deals with the choices of a product or a service and its features, pricing strategy, targeted markets, distribution, and also the promotion considerations. a) Marketing communication )A b) Marketing Framework c) Marketing Strategy d) Marketing environment (c 4. ________________ is an important link in the company’s overall “Value Delivery System” since they provide the resources needed by the company to produce its goods and services. Amity Directorate of Distance & Online Education  18 Principle of Marketing a) Marketing intermediaries Notes e b) Competitor networks c) Suppliers in d) Service representatives 5. _____ is the value that a marketing transaction exchanges nl a) Price b) Product O c) Promotion d) Stock Questions & Exercises ty 1. Explain the need for the business organization to scan the environment on a continuous basis? si 2. Briefly discuss various elements of a company’s micro-environment. 3. Explain the Buying motives ? 4. Illustrate the value chain and how it adds value in a business? er 5. What are the factors affecting the pricing decisions ? Check your progress: v 1. b) Marketing ni 2. c) 10 3. c) Marketing Strategy 4. c) Suppliers U 5. a) Price For further readings ity 1. Kotler, P. & Armstrong, G. (2017). Principles of Marketing (17th ed.), Pearson. 2. Perrault. W.D (Jr.), Cannon, J.P., & McCarthy, E.J. (2010). Basic Marketing. New Delhi: Tata McGraw-Hill. 3. Luthans, F. (2015). Organizational Behaviour: An Evidence Based Approach m (13th ed.). McGraw-Hill Irwin 4. Etzel, M. J., Bruce, J. W., Stanton, W. J., & Pandit, A. (2011). Marketing (14thed.). New Delhi: Tata McGraw-Hill. K )A 5. Kotler, P., Keller, K., Koshy, L., & Jha, M. (2012). Marketing Management: A South Asian Perspective (14thed.). New Delhi: Pearson. 6. Ramaswamy, V. S. & Namakumari, S. (2010). Marketing Management: Global perspective Indian context (4thed). New Delhi: Macmillan. (c Amity Directorate of Distance & Online Education  Principle of Marketing 19 Module - 2: Analyzing Marketing Opportunities and Notes e Understanding Consumers in Objectives 1. To make them aware of the Marketing environment challenges and opportunities nl 2. To understand the concept of the marketing process 3. To Understand Marketing research and ethical considerations in marketing. 4. Learner will be able to understand the buyer behaviour in the digital age. O 5. To know how to target the market Outcomes ty After the completion of course the learner will be able to - 1. Implement the Marketing Environment knowledge in the Business Environment si 2. To gain knowledge of Consumer’s different purchasing behaviour 3. To understand the importance of segmentation on the basis of Demography, Psychographic, Behaviour. er “Consumer behaviour is the process whereby individuals decide whether, what, when, where, how and from whom to purchase goods and services.” v According to Professor Walter C.G and Professor Paul G.W.- ni 2.1 Introduction The marketing environment consists of all the external factors that can affect the U marketing activities of an organization. These factors are mainly uncontrollable, although marketers can still influence some of them. All marketers face the difficult task of identifying important elements of their organization’s marketing environment, evaluating current and likely future relationships among these factors, and developing effective ity strategies for a changing environment. In recent years this role has become increasingly difficult, as many aspects of the marketing environment shift rapidly and unpredictably. A marketer’s job is to identify marketing environment opportunities or threats, and then make strategic decisions that focus on opportunities and reduce the threats. This chapter describes the environmental elements under which the companies work. m 2.2 Environment Analysis )A Environment plays a critical role in business, especially in marketing. The marketing environment is constantly changing and thus presenting new opportunities and threats. A marketer’s task is to correctly analyse the environment and design a marketing mix, which will fit the environment. The ultimate purpose of the environmental analysis is to facilitate the firm’s strategic response to the environmental changes. The firm can attain (c its objective with strategic planning in order to cash in on environmental opportunities. Amity Directorate of Distance & Online Education  20