Marketing Management PDF

Marketing Management  Marketing * Marketing is a customer centered approach which aims at the satisfaction of their wants through the distribution of valuable products and services. Process of Marketing 1) Development of Products 2) Determ...

Marketing Management  Marketing * Marketing is a customer centered approach which aims at the satisfaction of their wants through the distribution of valuable products and services. Process of Marketing 1) Development of Products 2) Determination Price 3) Distribution Channel 4) Promotion Strategy  Definition The Chartered Institute of Marketing, defines marketing as “ the management process responsible for identifying, anticipating and satisfying customer requirements profitably” Features 1) It is an organisational function of creating, communicating and delivering value to customers. 2) It is a societal process by which people obtain what they want through creating and exchanging products and value  with others. 3) It is a management process which identifies and anticipates customer needs so as to generate profits by satisfying them. 4) It is a commercial function of transferring goods from producers to consumers. 5) It is a process of manufacturing the right product, in the right place, at the right time, at the right price. 6) It is a process of utilizing the resources of an organisation in order to meet the changing needs of the customers.  Objectives 1) To identify the target market where the products can be marketed. 2) To identify the needs and wants of the target market. 3) To develop products sufficient enough to satisfy the needs of the target market. 4) To determine the price of the products on the basis of manufacturing cost, competition, market condition, and quality of the products. 5) To deliver / distribute the products to the customers with the help of adequate distribution channels. 6) To follow adequate promotion techniques for the purpose of informing or influencing the purchasing decision of the customers. 7) To continuously take the effort to satisfy the changing needs of the customers. 8) To use a variety of channels to gain new customers and keep existing customers. 9) To undertake researches for modifying the existing products and developing new products. Evolution of marketing Stages – 1) Barter Stage - First phase in evolution. - Exchanged goods for goods. - History can be tracked back to 6000 B C. - Popular during Great Depression in 1930’s. 2) Production Stage – * Beginning of capitalism to mid 1950’s. * Business enterprises highly concerned with production issues * Features : Limited lines of product. Pricing on the basis of cost of production and distribution. Limited research. Low promotion and advertisement strategy. 3) Sales Stage – * Mid 1950’s to beginning of 1970’s. * After the second world war, the accelerated demand for consumer products led to the development of this stage. * Advertisement and other sales promotion techniques were widely followed. * Pricing – based on price of competitors. 4) Marketing Stage – * Modern stage or orientation of marketing. * Developed in 1970’s. * Needs and wants of consumers govern the business decisions. Importance / Benefits of Marketing 1) Benefits to the Society * The focal point of marketing is the identification of societal needs & wants so as to satisfy them through the creation &  distribution of valuable goods /services a) Developing goods & services b) Connecting link : producers & consumers c) Help people to obtain products at stable & fair prices by creating a competitive market environment d) Generate more employment opportunities e) The distribution function makes the products available in different geographic regions f) Promotion function : educates people g) Offers wide range of products / services : choose on basis of taste / preference 2) Benefits to the Firm a) Helps to identify the target market b) Develops suitable products / services c) Determines demand for the products d) Gives adequate information to the customers e) Delivers the products to the customers by establishing suitable distribution system f) Identifies competitors & analyzes the competitive advantage of the firm’s products in the market ( competitive advantage refers to factors that allow a company to produce goods / services better or more cheaply than its rivals ) g) Identifies new product areas h) Identifies new target market / potential customers  Role of marketing in economic development * Marketing activities help in resolving the scarcity of goods & services 1) Marketing increases → entrepreneurial activities → productive utilisation of resources → increases national income 2) Promotes development of basic industries * Agriculture , mining , plantation : back bone of economic development 3) Marketing increases foreign exchange earnings of nation → through exporting 4) Helps in the growth of industrial sector 5) Earns capital for business projects through creation of demand & increased consumption 6) Generate employment opportunities → increase purchasing power Role of marketing in business * Direct influence on sales & profitability * More marketing → more sales & profit * Marketing activities come first to production & other functions of business & ends only after delivering goods & services to the customers * Execution function : manufacturer → final user * Enables a firm to find an ideal market , identify the needs & wants , relevant products & services , promote the products & finally deliver the products to the customers.  Marketing Utilities * Utility : state of being useful * Satisfaction of customer needs & wants depends on the utilities offered by marketing Major utilities 1) Form utility * Offers products to the customers in a usable form * This covers the physical characteristics & shape of the product 2) Place utility * It offers products at the place of customers so as to ensure the easy availability 3) Time utility * Time utility ensure the availability of the products & services as & when required by the customers 4) Possession utility * Utility which gives the buyer the right to own & use a product or service at his own will * Result of marketing : ownership & possession * Seller → Buyer Scope of marketing Core areas of Marketing : * Identification of target market * Identification of its needs and wants * Creation of the product , promotion , distribution and customer relationship * Marketing activities begin & end with the customer * Basic concepts of marketing : needs , wants and demand * The firm creates , communicates and supplies products and services to the customers in return for a price and builds a long lasting relationship with them 1) Identify and select the target market * Locating & selecting the most favourable customer group from large population of customers * Identification of a target market help firms to formulate & implement suitable marketing strategies for the selected customer group 2) Identify & select the customer value * After locating & selecting the target market , the specific needs & wants of that market are identified 3) Creation of Value * The major areas are product planning ,designing ,packaging , branding & pricing 4) Communicate the value * This involves product promotion strategies 5) Deliver the value * Establishing the channels of distribution , warehousing transportation & all activities related with the flow of goods from the point of origin to consumption 6) Customer relationship * Maintaining long lasting relationship with the customers by clearly identifying their expectations and giving more than what they expect 7) Marketing research * Pervasive function * Through marketing research a firm identifies - Target market , needs & wants of customers , develops , communicates & delivers products & services - The nature of market environment , competition , competitive advantage of a market Marketing Process * Marketing is a systematic process which encompasses through a sequence of stages / steps. 1) Market Analysis * Give a clear picture of unfulfilled customer needs & wants * Information related with market conditions , market regulators , competitors , existing products 3) Decision regarding 4 P ‘s * Arrives at serious decisions regarding the type of product to be produced , its price , distribution channels and the promotional measures 4) Implementation and Control * The firm is required to closely monitor the movement of the product in the market * It is necessary to understand : strengths & weakness of the  marketing efforts taken by the firm in the target market * Helps to know the deficiencies of product , price , distribution network & promotion measures * Take adequate steps to correct the deficiencies  Market * Derived from Latin word ‘Mercatus’ * Mercatus – place of trade * A market is referred to as a place where buyers and sellers meet and make transactions or exchanges directly or through intermediaries. Definition “Market is an area or atmosphere for a potential exchange”. - Philip Kotler  Market vs. Marketing Market Marketing *It is the total demand of a *It is an organisational product / service function aims at effectively meeting the needs & wants of the customers * Objective : physical flow * Objective : customer from seller to buyer satisfaction * Major forces : price , * Important elements: demand , supply and planning , designing , purchasing power advertising , storing and distribution * It is a system of existing * It is a process of making & potential buyers of a the market product / service * It performs all functions * Exchange of goods & related with the physical services takes place movement of goods from manufacturer to the consumer  Types of market 1) Place / Geographical Area Market a) Local Market * market in a particular locality which offers goods & services to people in that area. * Customers : residents of the area b) Regional Market * Covers a particular area of the country * eg : northern / southern region c) National Market * Marketing system which covers the whole nation d) International Market / Global market * Marketing system which crosses the boarders of the nation and deals with the demand of the customers in other nations. 2) Time Markets a) Very Short Period Market * Lasts for a very short time * Supply is limited to the existing stock * eg: Market for flowers, fruits , vegetables b) Short Period Market * Lasts for a week or few weeks * The supply in this market is able to adjust with the change in demand. c) Long Period Market * This market persists for a long time and adjusts production and supply on the basis of demand * Durable goods 3) Sales Market a) Wholesale Market * Bulk quantities to the customers * Customers : retailers –> consumers ( small quantities ) b) Retail Market * Goods are sold to consumers in small quantities * For consumption 4) Basis of type of goods a) Product Market *Delivers tangible goods to the consumers b) Service Market * Delivers intangible products to consumers * Cannot see and touch * Experience the benefits of services 5) Basis of use of goods a) Consumer Market * Firms sell household goods for the personal consumption of the goods * Household goods are products that we buy and use within  our homes. * eg: Furniture , clothing , books b) Industrial Market * The goods sold are for the use in business as raw materials 6) Basis of nature of goods a) Financial Market * Where financial instruments bought & sold * Divided into capital market and money market * eg: shares , debentures , currencies b) Commodity Market * Where raw materials or primary products bought & sold * Primary products are natural materials that are “extracted” from land or ocean * Divided into hard commodity market and soft commodity market * Hard commodity : gold , silver , oil * Soft commodity : agricultural products , livestock 7) Basis of nature of transactions a) Spot Market * Sold for cash and delivered immediately b) Future Market * The delivery and payment of the goods in a future market are made on a future date 8) On the basis of Competition a) Perfect market * No firm enjoys absolute power over the market * No firm can control / influence the price of the product * eg : agricultural products Features * Large number of buyers & sellers * Similar products * Free entry and exit ( no legal / other restrictions ) * Complete information ( market conditions ) * Costless transaction b) Imperfect market * Large number of buyers & sellers * Differentiated products c) Monopoly market * Large number of buyers & a single seller * eg : Railway , Google * An individual / firms enjoys: - absolute power ( production , distribution) - determines terms and conditions of buying & selling * Price : fixed by the firm d) Monopolistic competition market * Many sellers * Differentiated products which are closely identical to one another * eg : Toothpaste e) Oligopoly market * Small number of sellers * The firms have a clear idea of the actions of each other * The operations and decisions of one firm depend on the operations and decisions of others * Create barriers for the entry of new firms * eg : cement , steel , automobiles , household appliances f) Duopoly * Only two sellers/ producers controlling a market * Independent of each other * Formulate own policies of production & pricing * Operate on mutual understanding * eg : Soft drinks :- Coco cola , Pepsi : Electronic payments :- Master card , visa  Concepts / orientations of Marketing * The marketing concept is the strategy that firms implement to satisfy customers’ needs , increase sales , maximise profit and beat the competition. * There are 5 marketing concepts that organisations adopt and execute 1) Production concept * Focuses on reducing costs by way of mass production * Believes that by attaining economies of scale the business can : * maximise profits ; reduce costs (Economies of scale are the financial advantages that a company gains when it produces large quantities of products.) 2) Product concept * Firm tries to introduce the best product , based on quality and features * Believes that customers can be better influenced by designing and marketing excellent products * Continuous improvement of the product 3) Sales concept * Focus of this concept is to manufacture the product and then take maximum efforts to sell it in the target market * Sales volume cannot be increased by introducing a superior product * To increase sales volume : aggressive sales efforts are needed * Concentrate on intense sales promotion efforts 4) Market concept * Key element : Customers ( king of business ) * Firms attempt to know the needs and wants of the customers through market surveys & research 5) Societal concept * Make good marketing decisions by considering consumers’ wants , firm’s requirements and society’s long term interests. * Highlights : social responsibility * Firm should balance * Customer satisfaction * Profits * Long term welfare of the society * Marketing activities should not harm the interests of the society  Marketing Environment * It is a group of factors comprised of both controllable and uncontrollable factors that affect the ability of a firm to generate value and attract and serve consumers * Internal and external factors Definition According to Philip Kolter , “ Marketing environment refers to the external factors or forces that affect the company’s ability to develop and maintain successful relationship with  its target customers”. * The internal & organisation specific factors affecting marketing environment : Micro factors * Larger societal factors that affect the micro environment : Macro environment Deep understanding of Essential for success of environmental factors marketing activities of a firm * Marketing policies & Accordance with programmes marketing environment MICRO ENVIRONMENT OF MARKETING * Close to the organisation * Have direct impact on the marketing operations * Good analysis before deciding marketing strategy  Components in micro environment 1) The Company * The factors influencing marketing policies & programmes : - Type of organisation - Objectives - Structure - Management - Vision and mission * Marketing department work in co- operation with : - top management ; other departments * The entire organisation influences the marketing activities. 2) Suppliers * Who deliver the raw materials for production of goods or services * Quality , quantity , cost and availability of the raw material depend on the type of suppliers. 3) Marketing Intermediaries * Parties assisting in the promotion & distribution of goods and services * eg: wholesalers , retailers , physical distribution firms 4) Competitors * Rival firms marketing products and services similar to that of a firm * Set marketing strategies nature and degree accordance with of competition they face * To improve position within the market → competitor analysis and monitoring 5) Publics * Any party who maintains an interest in the marketing activities of a firm * It can hinder or help the ability of a firm to market its products or services * Types of public : Financial public , Govt public , Media public ,Citizen public , Local public , General public , Internal public a) Financial publics * Individuals or institutions who grant financial assistance to an organisation for its marketing activities b) Government publics ( central and state ) * Introduce and implement rules & regulations : which monitor , regulate and control the marketing activities c) Media publics * Agencies that publish information , features & news about the products & services of a firm eg: newspapers , paper , online magazines , radio , Tv d) Citizen publics * These are voluntary/ involuntarily formed public groups for the benefits of general consumers. * Consumer organisations & environmental associations * They raise the various concerns of the consumers , environment and society at large e) Local publics * People & households in the proximity & vicinity of a marketing firm :  who are directly / indirectly exposed to the benefits shortcomings of the marketing activities of a firm * Appoint community relations officer : to address & resolve the problems of the local publics f) General publics * Public at large / mass population * Firm has to understand the attitude & perception of the general public : on products & services g) Internal publics * People inside the organisation * Internal publics : Employees , Managers , BOD * Their attitude & behaviour influence the marketing activities * To motivate and educate internal public: memos ,newsletters , company meetings , intranets 6) Customers * Firms have to examine the needs and interests of their target market. * If the products and services fail to address the needs of the customers in the target market , firms cannot survive in the market. MACRO ENVIRONMENT OF MARKETING * It consists of a large number of unpredictable and uncontrollable external factors that affect the environment as a whole * These forces greatly influence the marketing decisions of an organisation  Factors of macro environment 1) Demographic Factors * Demography :- characteristics of the population chosen for marketing * It includes size , location , age , gender , occupation * Characteristics influence the buying habits of people * Firm has to study demographic variables 2) Economic Factors * It consists of factors that influence the purchasing power of consumers in the market * Elements influence buying decisions : income , savings , expenditure , consumption pattern 3) Cultural Factors * It includes moral values , norms , religion and traditions of the society 4) Natural Factors * It include the utilisation of natural resources for the manufacturing of products * Wastage of raw materials & finished goods can cause harm to the environment * Other issues affecting nature : Surplus production and environment pollution due to production & marketing activities 5) Technological Factors * Marketing activities are subject to changes in technology * Outcomes of advancements in technology : Innovations & modifications in production & marketing 6) Political Factors * It includes government policies and various rules & regulations affecting the marketing operations * Frame marketing activities : accordance with the laws of the country Functions of Marketing * Range from 5 to 120 * Clark and Clark have analyzed and classified marketing functions into 3 categories : 1) Functions of Exchange 2) Functions of Physical Supply 3) Facilitating Functions 1)Functions of Exchange a) Buying and assembling * First stage * Raw materials → Manufacturer → Wholesaler → Retailer → Consumers * Assembling is the process of bringing together similar goods purchased from different sources for the purpose of selling * Starts after buying * Creation and maintenance of the stock of goods purchased from different sources b) Selling * Ownership & possession of the goods & services are transferred from the seller → buyer ( in return of money ) 2) Functions of Physical Supply * Aims at ensuring that goods & services are offered at the right place at the right time a) Transportation * Means the movement of goods from the place of origin to the place of customers * Important modes of transportation : road , air , water b) Storage and Warehousing * Used by manufacturers , wholesalers , retailers * For preserving the raw materials & finished goods to ensure an uninterrupted & smooth supply of goods to consumers * Sufficient storage & warehousing facilities : meet seasonal changes in demand 3) Facilitating Functions * Supporting function * These functions are highly essential for conducting the whole process of marketing a) Financing * Marketing is an economic process (requires money) * Effectiveness of marketing function depends on availability of fund * Major function : procurement of money for financing different activities b) Risk bearing * Possibility / chance of loss * Efficient marketer can adopt measures to reduce/ minimise the risk factors * A marketer has to be always prepared to face all the risks inherent in the marketing process c) Standardisation and grading * Fixing and maintaining the standards for quality, quantity , size and other features of the product * Standard : description of a product by authority * Standardisation → 2 phase - fixing the standards - manufacturing the products as per the standards fixed * A buyer can purchase a standardised product with a high level of confidence because the marketer has certified its quality * Grading : part of standardisation * Process of classifying products on the basis of size , shape , colour , weight , quality etc * Helps to determine the value of the product 4) Market Information * To formulate adequate marketing strategies : requires information regarding the needs & wants of the customers , market condition , competitor’s product * Market surveys and customer feedback  Marketing management Marketing Process of satisfying the needs & wants of the consumers Management Processes of planning , organising , staffing , directing, motivating , coordinating and controlling of various activities of a firm. Management of marketing activities : Marketing management Main functions : Planning , organising , staffing , directing , co – ordinating, Budgeting , reporting & controlling of marketing activities Marketing activities: Refer to things an organisation undertakes to boost the sales of products or services & also to improve its brand Definition “ Marketing management is concerned with the direction of purposeful activities towards the attainment of marketing goals”.  Features * Functional branch of business management Business management : the activities associated with a running company * Process of planning & executing marketing functions * Attempts to achieve the marketing goals of a firm * Optimum use of the resources of the firm & co-ordinate the efforts of its people * Carried out to put the marketing concepts into practice  Marketing concepts : is a philosophy that firms should analyze the needs of their customers & then make decisions to satisfy those needs better than the competition Objectives * To plan , organise , direct & control all the marketing activities of a firm * Give maximum satisfaction * To carryout marketing activities efficiently & effectively * Expand customer bases  Customer base is the group of customers who repeatedly purchase the goods / services of a business * Formulate ideal marketing mix * To create & maintain a good image for the firm & its products in the market Functions 1) Determining the marketing objective : * Beginning * May be short term or long term * It must be in accordance with objectives of the organisation 2) Planning * Formulate plans to achieve objectives * Includes formulation of marketing programmes , marketing strategies & sales forecasting 3) Organising * Collection & coordination of adequate resources to implement the marketing plan so as to achieve the specified objectives * Establishes a framework for performing marketing activities , fixes duties , responsibilities & powers of people working to achieve the marketing objectives. 4) Co-ordinating * Integration of the various activities of marketing * Coordination among sales forecasting , product planning , product development , pricing , distribution , promotion , transportation , warehousing etc. 5) Directing * Leading & motivating the people associated with the marketing efforts in the desired path to attain the objectives. * Involves leadership motivation , inspiration , guiding & supervision of the people 6) Controlling * Aim : improving effectiveness of marketing activities * Steps : - establishing standards for marketing activities - evaluation of actual performance - variations - take corrective measures 7) Staffing * Success depends on efficiency of people employed * Searches & selects competent people to perform marketing activities  Marketing Mix / 4 P’s * Basic Components : Product , Price , Place , Promotion * The varying mix of these ingredients influences the demand for a product & customer satisfaction * A firm has to prepare a mix of right product , right place , right price and right promotion to attain success in marketing  Definition According to Stanton , “ Marketing mix is the term / used to describe / the combination of the four inputs /which constitute the core of a company’s marketing system. / The product , the price structure , the promotional activities and the distribution system”.  Features of marketing mix 1) Combination of 4 marketing variables 2) Tool adopted to achieve marketing targets in terms of sales , profit and consumer satisfaction 3) Mixture can be altered on the basis of changes in the target market 4) Periodical modifications are necessary 5) Aim : giving maximum satisfaction to customers  Elements of marketing mix * In order to attract consumers and for boosting sales , every firm has to concentrate on the four marketing variables * A suitable combination of these ingredients of marketing : marketing mix * Govern the whole system of marketing Product * Something a firm offers to give satisfaction to consumer * Final output of a production process * Soul of marketing mix * Major decisions : product development , branding , packaging , labeling and other features of the product * According with needs & expectations of target market Definition * According to Philip Kotler , “a product is anything / that can be offered to a market / for attention , acquisition , use or consumption/ that might satisfy a want or need” / It includes physical objectives , services , persons , places , organisations and ideas”.  Product decision areas 1) Product line (1) 2) Style , shape , design , colour , quality , others 3) Packaging & labeling (2) 4) Branding & trade mark (3) given to a product 5) Product servicing & channel of distribution 6) Product pricing (4) 7) Guarantees & warranties 1) Product line : is a group of related products all marketed under a single brand name that is sold by the same company 2) Labeling : is the display of label in a product. A label contains information about a product on its container, packaging or the product itself 3) Trademark : is a recognizable phrase, word / symbol that denotes a specific product & legally differentiates it from all other products of its kind 4) Pricing strategy : method companies use to price their products or services. Product mix * A group of products manufactured / traded by the firm to : strengthen its presence in the market , increase its market share , increase the sales turnover According to Philip Kotler , “ product mix is the set of all product lines & items / that a particular seller / offers for sale to buyers”.  Price * The value that is required to purchase a specific quantity of a good or service * Consideration given * Pricing decisions & strategies directly influence the sales volume & profits of the firm * Periodical review & adjustments in price are necessary to manage the survival of the product in target market * The price fixed should be sufficient enough to generate desired profit but reasonable to consumers to purchase the product * Overcome competition Objectives of pricing 1) Maximise profit 2) Increase sales volume 3) Increase market share 4) Growth of the firm 5) Discourage new entrants into the industry 6) Enhance the image of the firm & the product 7) Encourage customers to buy the product 8) Discourage competitors from cutting prices*** 9) Get competitive edge *** *** Competitive edge : It is a piece of information , a skill , a process , a product or a resource that competitors don’t have & that gives our firm an advantage *** Cutting price: Cutting the price of goods to one lower than the usual / advertised price  Price mix * Term used to cover all the factors associated with pricing such as unit price level to be adopted , discount to be offered , pricing strategies , price discrimination & terms of credit to be allowed to consumers * Offer rational mix of price : is one which is reasonable to the customers , gives the expected return to the firm and effectively handles competition in market  Factors considered while determining the price : Cost of production , cost of distribution , competitors’ price , expected return , demand of the product , govt. policy , pricing regulations & economic environment of the country. Place * A location where a firm expects to find its customers and where the sale is carried out * Place in marketing : location of consumers * A firm has to understand the place of the consumers & choose adequate distribution channel to reach there. * A firm has to choose a channel which is convenient , economical and suitable for the distribution of a specific product Place decision areas 1) Distribution channel 2) Transportation 3) Warehousing 4) Inventory management (1) 5) Order processing (2) 6) Logistics management (3) 1) Inventory management : it refers to the process of ordering , storing and using a company’s inventory 2) Order processing : is the process or work flow associated with the picking , packing and delivery of the packed items to a shipping carrier 3) Logistics management : process that plans, implements and controls the efficient , effective flow & storage of goods , services and related information from the point of origin to the point of consumption Place mix * The combination of all decisions related with the flow of goods from the place of manufacturers to the place of consumers * 2 components 1) Channel of distribution: route through which a product moves from the producer to the ultimate consumer * It includes the original producer , middlemen and final buyer 2) Physical distribution : set of activities involved in the movement of goods from the producer to consumers * It includes transportation , warehousing , inventory management and order processing Promotion * Communication link between the firm & the consumer * Various methods of promotion influence the purchasing decisions of a potential buyer * Generation of sales is possible if customers are informed about the product and its benefits * Promotion fills the gap between product & customer Objectives of promotion 1) Product awareness 2) Creation of interest 3) Building demand 4) Product differentiation 5) Brand image  Promotion mix * The overall marketing communication programmes of a firm. a) Advertising : any paid form of non- personal communication through electronic or print media b) Personal selling : it is a process of helping & stimulating the consumers to purchase a product or service through oral presentation c) Sales promotion : It is providing incentives to the customers for encouraging them to purchase the product d) Publicity : It is giving favourable presentations & news about the product & its features in the media  Importance of marketing mix * An effective marketing mix strategy contributes to the success of the marketing activities of an organisation 1) Development of effective marketing strategies * Clear understanding of marketing mix : formation of effective marketing strategy (1) * Helps to analyse the feasibility & role of product , price , place & promotion in different market situation * Provides clear direction to marketing functions 2) Effective communication * Helps organisation to effectively communicate the relevant information to the target market. 3) Value creation & modification * Helps companies to study the merits & drawbacks of the product , price , place & promotion strategies. * Adequate changes & modifications can be made 4) Customer satisfaction * Attract , retain & satisfy customers 5) Competitive advantage (2) * Appropriate marketing mix : increases competitive strength * Right product , price , place , promotion : to attain success in the market (1)Marketing strategy : refers to a business’s overall game plan for reaching prospective consumers & turning them into customers of the products & services the firm provides (2)Competitive advantage : factors that allow a company to produce goods / services better or more cheaply than its rivals  Factors affecting marketing mix 1) Availability of funds * If the firm is in a position to spend money in product research , design , physical distribution & sales Promotion then it can formulate a strong mixture of 4 P’s. 2) Requirements of the target market * Needs influence the proportion of four basic ingredients of marketing * If customers are rational & well informed about all the  available products : no use in spending more money in promotion 3) Size of the market * Proportion varies on size of the target market * Size of market is big : spend more money on promotion and distribution 4) Competition * Marketing mix formulated by competitors : influences marketing mix of a firm * Use as response to actions of competitors 5) Technology * Drastic changes occurred in marketing mix as a result of development of science & technology * Firms use hi-tech methods of production , distribution & promotion 4 C’s of marketing 1) Consumer / Customer * Aim of marketing : identification & satisfaction of customer needs & wants * Sustain in market * Market products & services which meet the demands of the customers 2) Cost * Offer products to customers at a fair cost * 4 P’s → maximisation of product * Cost → customer centric * Manufacturers & marketers have to plan the cost of the products on the basis of their customers 3) Convenience * Search & find convenience of customers to purchase * Place factor : considers capacity 7 resources of the marketing firm 4) Communication * Two way communication: customer & firm * Aim : relation with customers * Company : better understanding of marketing & increase loyalty  Market Segmentation Objective of marketing : Satisfaction of customer needs Different customers → Different needs Buyers differ in their tastes , preferences , purchasing power , income , sex , geographical locations A firm cannot address the needs of a market with a particular marketing mix Market segmentation is a process of identifying the areas of market that are different from one another A market can be segmented / divided on the basis of age , sex , income , education , occupation Segmentation helps to understand the needs & characteristics of different sections of market Definition According to William J Stanton, “ market segmentation consists of / taking the total heterogeneous market / for a product / & dividing it into several sub markets or segments / each of which tends to be homogeneous in all significant aspects”.  Features of market segmentation 1) Process of dividing a market into different groups on the basis of customer needs & behaviours 2) Aim : identify & select the best suitable target market for the firm 3) Large market → small accessible segments 4) Heterogeneous market → different homogeneous segments Particular segments : uniformity in behavioural pattern of consumers 5) It leads to market targeting (1) & product positioning (2) 6) Adopted when it is difficult to carry out mass marketing (3) with the same marketing mix 1) Market targeting : process whereby one or more of the market segments previously identified are evaluated & selected 2) Positioning : a process by which firms create impression in the customer mind 3) Mass marketing : marketing of a single product to everyone  Need & Importance Market segmentation helps firm to formulate suitable marketing mix for the target market 1) Essential to learn & understand the behavioural pattern of different consumers in a market 2) Identifies a consumer segment which a firm can effectively manage 3) Gives information inputs to marketing mix decisions 4) Locate homogeneous segments : to develop target market 5) Study the nature & degree of competition prevailed in a particular market 6) To identify & concentrate on the special needs of a particular segment of the market Advantages / benefits * Principle : Divide & conquer * Market segmentation simplifies the marketing process & allows the firms to concentrate on groups of consumers who share similar characteristics * Can formulate suitable marketing mix for a particular market segment 1) Better understanding of the customers’ needs & wants 2) Differentiate products & services to address the customer needs & wants 3) Design & redesign products & services 4) New opportunities : unexplored segments 5) Select & focus on the most approachable market segments 6) Helps to study the behaviours & buying motives of the consumers 7) Classify most profitable & least profitable market segments 8) Helps to avoid unprofitable markets 9) Better positioning of the products in the market 10) Helps firms to make a proper allocation of marketing resources by concentrating only on segments which are best suited  Disadvantages / Limitations 1) Increase in marketing expenses 2) Difficult when there are great differences in the consumer behaviour & buying practices 3) Additional cost & expenses 4) Not practical in the case of market where the buyers are small in number 5) Get only limited coverage  Market segmentation process / Steps in market segmentation * Heterogeneous market → homogeneous segments * Helps marketers to formulate & implement relevant marketing strategies to promote their products & services in target market * Similar choices , interests , preferences * Similar perceptions & interested in buying similar products 1) Identification of a market * To select the most appropriate target markets & develop a marketing mix accordingly * Market → large number of consumers , preferences & interest → numerous market opportunities * Heterogeneities → small homogeneous market 2) Identification of the market needs * Needs of potential customers on a given product in the identified market are closely examined * Interact with customers → interest & demand 3) Division / Segmentation of the market * On the basis of identified needs of the market , the firm has to divide the selected market into several sub markets / segments 4) Study of the different market segments * Closely examine the needs , preferences , buying behaviour & size of identified segments * Detailed study → further break down of segments into different homogeneous sub segments 5) Selection of a particular market segment * Selection depends on marketing resources possessed by the firm & its ability to address the needs of the segments 6) Formulation & implementation of marketing strategies * Positioning stage * Market its products in the selected market segments * Necessary to create an identity or image of the product in the minds of the consumers * Multiple target market → different strategies * Positioning followed by monitoring & correction phase * Find deficiencies & make corrections & modifications Prerequisites / requirements for effective segmentation 1) Measurable * Segmentation is carried out on the bases of certain variables * Some variables are difficult to measure * Variables must be clear & measurable → determine the accuracy in a segmentation * The size , purchasing power , growth & buying behaviour  of the segment can be measured 2) Accessible * The market segments must be effectively reached & served * A firm has to make sure that the segmented market is conveniently reachable for the instant & effective marketing of its products & services 3) Substantial * Evaluates the profitability of a segment * Checks the spending power of customers within segment * The targeted segment should have a large customer base with sufficient purchasing power 4) Differential * Examines the degree of differences between different segments * Ensure segments identified are distinguishable & they respond differently to different marketing mix strategies * If a segment is almost same compared to another then  there is no use in considering the two segments separate 5) Actionable * It is the ability of a firm to formulate & implement adequate programmes to market the product in the targeted segment * Capacity to mobilise sufficient resources to reach its segments  Bases for segmentation / Segmentation variables 1) Demographic Segmentation Classifies consumers according to their demographic characteristics such as age , sex , income , education , occupation , household size (1) & family life cycle (2) Advantage : helps firms to determine the needs of the consumers on the basis of their demographic characteristics 1) Household : number of persons in a private household 2) Family life cycle : is a series of stages through which a family may pass over time. Typical stages in family development include the periods of a single young adult , a newly married couple , a family with young children , a family with adolescents and a family in later life On the basis of age On the basis of gender On the basis of income 2) Geographic Segmentation It is a market segmenting strategy by which the markets are divided on the basis of region , size of metropolitan area , population density & climate zone. Grouping of the consumers on the basis of their physical location Needs are identified on the basis of geographical regions, climatic zones / conditions 3) Psychological segmentation * Separates consumers on the basis of Psychological characteristics ( a person’s mind & thoughts ) * Inner / intrinsic qualities of the individual consumer * It includes personal traits , interests & lifestyles of the consumers 4) Socio-cultural segmentation * Divides on the basis of social values , culture , religion , race & nationality * These factors influence the way of thinking & life of consumers 5) Behavioural segmentation * Is a way to segment the market on the basis of consumers’ knowledge , usage and attitude towards the product a) Purchase occasion * Segments market on the basis of the occasion of purchase of the product * Helps a firm to know the occasions when consumers use its products & group them accordingly * The marketing firm can take adequate measures to extend its use by encouraging the customers to use the product on other occasions. * Example : Denim jeans b) Benefits sought * A marketing firm segments the market on the basis of the specific benefits that consumers seek from its product * Example : Lifebuoy – health & hygiene Pears – high quality skin care soap c) User status * Which divides the market on the basis of the product using status of the consumers * Nonusers , ex-users , potential users , first – time users , regular users * Different user status : different kinds of marketing appeals * Marketing appeals : are communication strategies that marketing & advertising professionals use to grab attention & persuade people to buy d) Usage rate * On the basis of the quantity of usage * Segments market as light , medium & heavy user group e) Loyalty Status * Divides a market on the basis of consumer loyalty Consumer loyalty is a measure of a customer’s likeliness to do repeat business with a company * Certain customers : * Cent percent loyalty * Loyalty towards two or three brands * Not loyal to any brand f) Buyer Readiness Stage * Divided on the basis of the readiness of the consumers to purchase the product * Stages before the purchasing decision is taken / * Segmentation bases : Awareness , Knowledge , Liking , Preference, Confidence , Purchase g) Attitude * Segmentation of a market based on the perception of the consumers towards the product * People’s attitude towards the product can range from enthusiastic , positive , indifferent , negative to hostile  Target Market * Specific market focused by a firm to carry out its marketing activities Target Marketing * Overall marketing efforts taken by a company to meet the requirements of the target market Market Targeting * Is a process whereby one or more of the market segments previously identified are evaluated & selected * First essential step in the overall process of market targeting : market segmentation Definition “ The process of evaluating / each market segment’s attractiveness (feasibility) / & selecting one or more to enter”. * With the help of market targeting , a firm identifies specific market segments that are highly likely to become loyal customers  Benefits of Market Targeting 1) Helps a firm to conduct a detailed analysis of the different segments identified & select the best market segments. 2) Enables comparative study ( cost – benefit ) basis 3) Determine where & how to market its products 4) Decide the nature & course of its marketing strategies 5) Helps to properly allocate & utilise the marketing resources  Market targeting process / Steps in market targeting 1) Evaluation of the market segments * Begins after completion of market segmentation * Factors considered during evaluation stage : a) Economic feasibility ( Profitability ) : is the ability of a market segment to generate the financial return expected by the firm b)Size of the segment : volume of sales & growth opportunities c) Structure of the segment : different components of a  segment (competitors , substitutes , buyers & sellers) * Ideal segment : which gives maximum financial return , sales volume & minimum competition 2) Selection of the segment * A firm selects one or more ideal segments and formulates the appropriate target marketing strategies Types / Approaches of market targeting 1) Undifferentiated marketing / Mass marketing * Focus the entire market with one particular product * Objective : cover large number of buyers with the same product * No segmentation * Single marketing mix One Product Entire Market 2) Differentiated marketing strategy * Firm decides to target several segments & develops distinct products / services with separate marketing mix strategies for the different segments Segment 1 Company Segment 2 Segment 3 3) Concentrated marketing / Niche marketing * Concentrates on one particular segments * The firm will develop a product that caters for the needs of that particular group Segment 1 Company Segment 2 Segment 3  Market positioning * Marketers try to create an image / identity in the minds for its product , brand or organisation * Process by which firm create impression in the customers mind “Positioning is the act of designing the company’s offering & image so that they occupy a meaningful & distinct competitive position in the target customers’ mind” : Defined by Philip Kotler  Elements of market positioning 1) Attributes: * Characteristics of a product sold and marketed by the company in the target market * Includes qualities (shape, size, price, colour, weight, speed, durability, maintainability) 2) Product Communication: * Way in which a product is communicated through various advertisement & promotional measures * Helps to create awareness, knowledge & interest 3) Perception : * It deals with how consumers perceive a product compared to other competing brands in the target market * Positive or negative attitude * Attitude depends on perception * It is the sum total of all the attributes , communication & perception of the consumers regarding the value of a product compared to the products of the competitors  Market Positioning Strategies 1) Positioning by product attributes & benefits * Sometimes a product can be positioned in terms of two or more attributes simultaneously * Positioning a product on the basis of specific characteristics / benefits offered 2) Positioning by price : Premium brands are positioned at high price to capture the market whereas others offer their brands at competitive price Positioning by product attributes /benefits 3) Positioning by use or application * Another positioning strategy followed by companies is relating their products with a specific use / application 4) Positioning by product user * This strategy is based on certain products being suited for certain users 5) Positioning by product class * When close substitutes exist , the firm may focus on the benefits its product class relative to other product classes Positioning by price Positioning by use / application Positioning by product user Positioning by product class 6) Positioning by competitor * Certain firms compare their brands with the competitors’ brands as a means of gaining the desired position for their brands in the mind of the consumer 7) Positioning by cultural symbols * Some companies use cultural symbols to differentiate their brands Positioning by competitor Positioning by cultural symbols