Marketing Management FYUGP Module 1 & 2 Notes PDF

Module I: UNDERSTANDING THE CONCEPT OF CONSUMER BUYING BEHAVIOR Module 1 Topics 1. Marketing - Nature, Scope, and importance of marketing. 2. Concept of marketing: Product concept, Production concept, selling concept and marketing concept. 3. Marketing Vs. selling. 4. Marketing...

Module I: UNDERSTANDING THE CONCEPT OF CONSUMER BUYING BEHAVIOR Module 1 Topics 1. Marketing - Nature, Scope, and importance of marketing. 2. Concept of marketing: Product concept, Production concept, selling concept and marketing concept. 3. Marketing Vs. selling. 4. Marketing environment: Economic, Political, Social, legal and technological. 5. Portfolio approach : BCG matrix and GE McKinsey matrix (with real world examples Marketing: Meaning and Definition Marketing is the process of identifying, anticipating, and satisfying customer needs and wants through the exchange of goods, services, or ideas. Example: Apple's iPhone marketing involves identifying customer desires for advanced technology and creating products that meet these needs. Scope and Importance of Marketing The scope of marketing is extensive and encompasses various aspects beyond just products. Here's a breakdown of the scope of marketing, including products, services, people, places, events, ideas, information, properties, organizations, and experiences: 1. Products: Traditional marketing often focuses on tangible products, such as consumer goods (electronics, clothing, food), industrial equipment, and other physical items. 2. Services: Service marketing involves promoting and delivering intangible services such as healthcare, education, consulting, hospitality, banking, and more. 3. People: Personal branding and marketing individuals have gained significance in recent years. Celebrities, influencers, professionals, and public figures often market themselves to build a personal brand and influence their audience. 4. Places: Marketing places involves promoting geographical locations as tourist destinations, investment hubs, or attractive places to live and work.  5. Events: Event marketing pertains to promoting and organizing events like concerts, conferences, sports events, and trade shows. It involves attracting attendees, sponsors, and media coverage. 6. Ideas: Marketing ideas can involve social causes, political campaigns, or educational initiatives. It aims to persuade people to support or adopt a particular idea or belief. 7. Information: Information marketing involves promoting and selling valuable information products, such as e-books, online courses, and research reports. 8. Properties: Real estate marketing focuses on promoting properties for sale or rent, including residential, commercial, and industrial properties. 9. Organizations: Marketing for organizations includes promoting businesses, non-profit organizations, government agencies, and institutions to build brand awareness, attract customers, and communicate their mission or values. 10. Experience: Experience marketing focuses on creating memorable and positive customer experiences. This can apply to both product-based and service-based businesses and involves aspects like customer service, user interface design, and post-purchase interactions. Importance of Marketing Evolution of Marketing Concepts 1. Production Era: During the Production Era, the primary focus was on producing goods efficiently and in large quantities. The belief was that consumers would buy whatever was readily available and affordable. Example: Ford's Model T production in the early 20th century exemplifies this era. Ford famously said, "Any customer can have a car painted any color that he wants, so long as it is black." 2. Product Era: In the Product Era, businesses shifted their focus from sheer production volume to product quality, innovation, and differentiation. Companies aimed to create superior products that would stand out in the market. Example: A notable example from the Product Era is the Sony Walkman, introduced in 1979. Sony revolutionized personal music consumption with this portable cassette player. The Walkman was designed to be a high-quality, portable music device, and it represented a leap in product innovation and design. It allowed users to enjoy music on the go, which was a significant shift from traditional stationary home audio systems. 3. Sales Era: The Sales Era emerged when companies realized that just having a good product was not enough. They started employing aggressive sales and marketing tactics to convince consumers to buy their products. Example: In the mid-20th century, vacuum cleaner companies relied heavily on door-to-door salespeople to sell their products directly to homeowners. Sales representatives would visit homes, often unannounced, to demonstrate the vacuum cleaner's features and capabilities. They used persuasive tactics to convince homeowners to purchase these appliances. 4. Marketing Era: The Marketing Era marked a significant shift towards customer-centric strategies. Businesses began conducting market research to understand customer needs and preferences. The focus was on satisfying those needs through targeted marketing efforts. Example: Amazon epitomizes the Marketing Era. The company uses data-driven marketing to personalize recommendations and offers based on individual customer behavior and preferences. 5. Relationship Marketing Era: Explanation: In the Relationship Marketing Era, the emphasis is on building and maintaining long-term customer relationships. Companies recognize that loyal customers can provide consistent revenue over time and act as brand advocates. Example: Starbucks is known for its loyalty program and mobile app, which rewards repeat customers with discounts and free drinks, fostering strong customer relationships. These eras represent the evolving philosophies in marketing. While modern marketing incorporates elements from each era, the emphasis has shifted from merely producing goods to understanding and fulfilling customer needs while maintaining strong relationships with customers. Marketing v. Selling Marketing and selling are both important functions in a business, but they have different goals and tools: Marketing The process of creating awareness and demand for a company's products or services. Marketing involves identifying customer needs and wants, and developing strategies to meet those needs. Marketing activities can include market research, product development, pricing, arranging for physical distribution, paid advertising, email marketing, social media, and content marketing etc. Marketing Mix (4Ps) Product: The tangible or intangible offering that satisfies customer needs. Example: Apple's iPhone, a high-end smart phone with innovative features. Price: Determining the right price for profitability and customer value. Example: The pricing strategy for budget smart phones vs. premium smart phones. Place: Distribution channels to make the product accessible. Example: Amazon's extensive global delivery network. Promotion: Marketing communications to inform, persuade, and remind customers. Example: Coca- Cola's advertising campaigns during major sporting events. Selling Selling is the process of converting leads into paying customers. Sales involves directly interacting with potential customers to close deals. Salespeople use tools such as emails, newsletters, and personal relationships to make sales. Marketing Environment Marketing environments encompass various factors and forces that influence a company's marketing activities and decisions. These environments are typically categorized into two main categories: internal and external. The external environment is further divided into the microenvironment and macroenvironment. Additionally, the PESTEL framework is a tool used to analyze key external macroenvironmental factors. Let's explore these concepts in detail: 1. Internal Environment: The internal environment consists of factors and elements within the organization's control. These factors directly affect a company's marketing strategies and can include: Corporate Culture: The values, beliefs, and norms that shape the organization's behavior and decisions. Management and Leadership: The competence and style of leadership in guiding marketing efforts. Resources: Including financial, human, and technological resources available for marketing activities. Product and Service Offerings: The quality, features, and variety of products or services. Pricing Strategies: Determining how products or services are priced. Distribution Channels: Strategies for getting products or services to customers. Marketing Mix: The company's product, price, place, and promotion decisions. 2. External Environment: The external environment consists of factors and forces outside the organization's control but can significantly impact marketing strategies. External Microenvironment: The external microenvironment includes elements that are closer to the organization and have a more immediate impact on its marketing decisions. Key factors in the microenvironment include: Customers: Understanding customer needs, preferences, and behaviors is critical for marketing success. Suppliers: Reliable suppliers and their pricing, quality, and delivery capabilities are essential. Competitors: Monitoring and analyzing competitors' strategies and strengths is crucial for gaining a competitive advantage. Intermediaries: Such as retailers, distributors, and agents who help in delivering products to customers. Public: Groups that can influence the company, including the media, government agencies, and advocacy groups. Marketing Intermediaries: Advertising agencies, marketing research firms, and other partners in the marketing process. External Macroenvironment: The external macroenvironment involves broader societal forces that affect the entire industry or market. The PESTEL framework is commonly used to analyze these factors: PESTEL Framework: PESTEL stands for Political, Economic, Social, Technological, Environmental, and Legal factors. It helps organizations assess the impact of these macroenvironmental forces on their marketing strategies. Political: Refers to government policies, regulations, stability, and trade barriers that can affect marketing decisions. For example, changes in taxation policies can impact pricing strategies. Economic: Includes factors like economic growth, inflation, exchange rates, and consumer spending. Economic downturns may lead to changes in consumer purchasing behavior and pricing strategies. Social/cultural: Encompasses cultural trends, demographics, lifestyle changes, and societal values that influence consumer preferences. Marketing strategies may need to adapt to shifting social norms. Technological: Refers to advancements in technology, innovation, and automation that can create new marketing opportunities or disrupt existing ones. Environmental: Concerns sustainability, ecological factors, and consumer awareness of environmental issues. Companies are increasingly adopting eco-friendly practices in their marketing efforts. Legal: Involves laws, regulations, and industry standards that can impact marketing activities. Compliance with consumer protection laws and advertising regulations is crucial. Understanding and effectively responding to the external macroenvironment, including the PESTEL factors, is vital for developing resilient and adaptive marketing strategies. These factors can create opportunities or threats that directly influence an organization's ability to meet customer needs and achieve marketing objectives. Portfolio Approach to Marketing 1) The BCG Matrix 1. Question marks: Products with high market growth but a low market share. 2. Stars: Products with high market growth and a high market share. 3. Dogs: Products with low market growth and a low market share. 4. Cash cows: Products with low market growth but a high market share. Question Marks Products in the question marks quadrant are in a market that is growing quickly but where the product(s) have a low market share. Question marks are the most managerially intensive products and require extensive investment and resources to increase their market share. Investments in question marks are typically funded by cash flows from the cash cow quadrant. In the best-case scenario, a firm would ideally want to turn question marks into stars (as indicated by A). If question marks do not succeed in becoming a market leader, they end up becoming dogs when market growth declines. Dogs Products in the dogs quadrant are in a market that is growing slowly and where the product(s) have a low market share. Products in the dogs quadrant are typically able to sustain themselves and provide cash flows, but the products will never reach the stars quadrant. Firms typically phase out products in the dogs quadrant (as indicated by B) unless the products are complementary to existing products or are used for a competitive purpose.  Stars Products in the star quadrant are in a market that is growing quickly and one where the product(s) have a high market share. Products in the stars quadrant are market-leading products and require significant investment to retain their market position, boost growth, and maintain a competitive advantage. Stars consume a significant amount of cash but also generate large cash flows. As the market matures and the products remain successful, stars will migrate to become cash cows. Stars are a company’s prized possession and are top-of-mind in a firm’s product portfolio. Cash Cows Products in the cash cows quadrant are in a market that is growing slowly and where the products have a high market share. Products in the cash cows quadrant are thought of as products that are leaders in the marketplace. The products already have a significant amount of investments in them and do not require significant further investments to maintain their position. Cash flows generated by cash cows are high and are generally used to finance stars and question marks. Products in the cash cows quadrant are “milked” and firms invest as little cash as possible while reaping the profits generated from the products. 2) GE McKnsey Matrix Similar to BCG’s well-known growth share matrix, but more comprehensive, the GE McKinsey Matrix offers a “systematic approach for the multi-business corporation to prioritize its investments among its business units.”  This tool is also known as the GE McKinsey Nine Cell Matrix or the McKinsey GE Stoplight Matrix. Its approach to evaluating products, services, and business units takes into account two main attributes: 1. The strength of a business unit/product 2. Industry attractiveness The strength of a business unit or product is evaluated on how well the business unit is competing in a particular market. Evaluating the strength of a business unit is broken down to include the following factors: A) Market penetration B) Market share C) Brand strength D) Profitability Industry attractiveness focuses on external market factors. Industry attractiveness can be challenging to ascertain because of the volatility of certain markets. Also because of the disruption that is happening at warp speed across industries. Industry attractiveness may be evaluated based upon the following: A) How many competitors are in the market? B) What is the market share by competitor? C) Is the overall market growing? D) What are the average gross margins on a particular product/service industry-wide? E) What are the barriers to entry in this market? How to interpret the McKinsey Matrix Grow Business units in the top left corner (green squares) are in a strong position in an attractive industry. These are good for investment, and you can look for growth opportunities. Hold Business units in the middle (yellow squares) are average. You can consider investing more resources, defending your position, or finding a niche. Harvest/Exit Business units in the bottom right corner (pink squares) are in a weak position or an unattractive industry. It's best to look at exit strategies, such as divesting or closing the business unit.  Module II: CUSTOMER DRIVEN MARKET STRATEGY Module 2 Topics 1. Segmentation- Concept. Levels of segmentation. Basis for market segmentation. 2. Targeting- Concept. Targeting strategies. 3. Differentiation: concept and Importance. 4. Positioning- Concept, Positioning strategies. 5. Consumer behavior- Defining term consumer- Meaning and definition of consumer behavior. Role of consumer behavior in consumer buying decision process. Market Segmentation: Definition: Market segmentation involves dividing a broader market into distinct groups of consumers with similar characteristics, needs, and preferences. Market segmentation is the process of dividing a broader market into smaller, more homogenous segments based on specific characteristics or criteria. The basis for market segmentation can vary depending on the industry, product, and target audience. Example: A beverage company like Coca-Cola segments the market based on demographics (age, gender), psychographics (lifestyle, values), and behavior (usage patterns). They may target young adults with energy drinks and families with soft drinks. Here are some common bases for market segmentation: Demographic Segmentation: Basis: Demographic factors such as age, gender, income, education, occupation, marital status, and family size. Example: A cosmetics company might use demographic segmentation to target women aged 18-35 with products suitable for young adults. Psychographic Segmentation: Basis: Lifestyle, values, interests, attitudes, and personality traits. Example: An outdoor gear retailer might target adventure enthusiasts who value ruggedness and outdoor experiences. Behavioral Segmentation: Basis: Consumer behavior, including usage patterns, brand loyalty, buying frequency, and benefits sought. Example: An airline might offer different loyalty programs and promotions for frequent travelers (business travelers) and infrequent travelers (leisure travelers). Geographic Segmentation: Basis: Geographic location, such as region, city size, climate, or population density. Example: A beverage company might adjust its product offerings based on regional preferences, offering spicier flavors in areas where they are popular. Targeting & Positioning Targeting and positioning are essential components of a marketing strategy that help businesses identify and reach their ideal customers while establishing a unique and compelling brand identity in the marketplace. Let's explore each concept in detail with examples: 1. Targeting: Definition: Targeting involves selecting specific customer segments or groups within the broader market that a company intends to serve with its products or services. The company, after fixing on their target segments, concentrate their marketing efforts to serve that particular group effectively. Targeting in marketing involves breaking the target audience into segments and then designing marketing activities that will reach the segments most likely to be responsive to your efforts. Target marketing can greatly increase the success you have in reaching potential customers. Importance: Targeting is crucial because it allows a company to allocate its resources (time, money, and effort) more efficiently and effectively by focusing on the most promising customer groups. Example: Starbucks, known for its differentiated targeting strategy, offers a variety of coffee products and related experiences to cater to various segments. They have different product lines, such as espresso-based drinks, tea, and cold beverages, to appeal to diverse customer preferences. 2. Positioning: Definition: Positioning is the process of creating a distinct image or perception of a brand or product in the minds of target customers relative to competitors. It answers the question, "What makes our brand or product unique?" Importance: Positioning helps a company stand out in a crowded marketplace, differentiating its offerings from competitors and influencing customers' perceptions.  A Toyota is recognized by people as a car which is reliable. This perception is a result of the companies positioning strategies. Steps in Positioning: Identify Target Customer Needs: Understand the specific needs and preferences of the target audience. Analyze Competitors: Assess the strengths and weaknesses of competitors to identify gaps in the market. Develop a Unique Value Proposition: Craft a compelling value proposition that addresses customer needs and distinguishes the brand or product. Communicate the Positioning: Use marketing and branding strategies to convey the unique positioning to the target audience. Additional Examples: Volvo: Volvo positions itself as a brand focused on safety, emphasizing features like advanced safety technology and rigorous safety testing. This positioning distinguishes Volvo from competitors and appeals to safety-conscious consumers. Apple: Apple positions its products as sleek, innovative, and user- friendly. This positioning has established Apple as a leader in design and technology, attracting customers who value these qualities. Successful positioning creates a strong brand identity and helps customers associate specific attributes or qualities with a brand or product. It guides marketing efforts, product development, and customer engagement strategies to reinforce the desired positioning in the minds of consumers. Consumer Behavior: Definition: Consumer behavior refers to the study of how individuals, groups, or organizations make decisions to select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy their needs and desires. Example: During the holiday season, many consumers exhibit different buying behaviors. Some might be motivated by the need for gift-giving (utilitarian motive), while others might be driven by the desire to express love and care (emotional motive) through their purchases. Buying Motives: Definition: Buying motives are the reasons or factors that drive consumers to make purchasing decisions. These motives can be rational, emotional, or a combination of both. Examples: Rational Motive: Buying a fuel-efficient car to save money on gas. Emotional Motive: Purchasing a high-end smart phone to feel a sense of prestige and status. Consumer Buying Process: Stages: The consumer buying process typically involves several stages: Problem Recognition: Identifying a need or desire that triggers the buying process. Information Search: Gathering information about available options and alternatives. Evaluation of Alternatives: Comparing products or services to make a decision. Purchase Decision: Choosing a specific product or service. Post-Purchase Evaluation: Reflecting on the purchase and assessing satisfaction. Example: When buying a laptop, a consumer might start by recognizing the need for a new computer, then conduct research online, compare different models and brands, make a purchase decision, and finally, assess their satisfaction after using the laptop. Factors Influencing Consumer Buying Decision/Buying Behaviour: 1. Personal Factors: Age: Different age groups have varying needs and preferences. Young adults may prioritize trendy products, while older consumers may seek reliability. Gender: Gender can play a role in product choices. For instance, cosmetics and grooming products are often marketed differently to men and women. Income: Income levels determine purchasing power. High-income consumers may opt for premium brands, while lower-income individuals may seek budget-friendly options. Occupation: A person's occupation can influence buying decisions. Professionals may invest in high- end business attire, while manual laborers might prioritize durable workwear. Lifestyle: A consumer's lifestyle, including hobbies, interests, and values, affects their preferences. A health-conscious individual may choose organic food products. 2. Cultural Factors: Culture: Cultural norms, values, and beliefs shape consumer behavior. Dietary preferences, clothing choices, and traditions are influenced by culture. Subculture: Subcultures within a broader culture, such as ethnic or religious groups, can impact preferences. For example, Diwali celebrations influence shopping behavior in Indian subcultures. Social Class: Social class divides consumers into different socioeconomic groups, affecting product choices and brand preferences. 3. Economic Factors: Income and Wealth: Disposable income and accumulated wealth impact spending capacity. Economic fluctuations and job security also play a role. Price Sensitivity: Consumers' sensitivity to price changes can determine whether they opt for premium or budget products. Interest Rates: Interest rates influence consumer borrowing and spending. Low rates may encourage borrowing for major purchases like homes or cars. Inflation: Rising prices can impact consumer choices as they seek to maintain their purchasing power. 4. Psychological Factors: Perception: How consumers perceive a product, brand, or advertisement can affect their buying decisions. A positive perception can lead to purchase. Motivation: Consumer motivation, driven by needs and desires, prompts action. Motives can be utilitarian (practical) or emotional (psychological). Attitudes and Beliefs: A person's attitude toward a product or brand can influence their likelihood of purchasing. Beliefs about a product's quality or benefits matter. Learning and Memory: Consumer learning, memory, and past experiences can impact decision- making. Positive experiences may lead to brand loyalty. 5. Social Factors: Reference Groups: People often look to reference groups (family, friends, colleagues) for opinions and recommendations when making decisions. Family: Family dynamics, roles, and decision-making processes can shape purchasing choices, especially for household items. Social Status and Aspiration: Consumers may be influenced by the social status associated with certain brands or products. Culture and Social Values: Social values, ethics, and societal norms can guide consumer preferences, particularly in ethical and sustainable choices. These factors are interrelated and can vary significantly from one individual to another. Understanding them is crucial for businesses to develop effective marketing strategies that resonate with their target audience and meet consumers' needs and desires.