Session 1,2 Intro

MARKETING MANAGEMENT Introduction SUBHADIP ROY Session 1, 2

What Are These?  Apple  Blackberry  Jaguar  Kingfisher  Nokia  Polo

What These Are  Apple – A Fruit  Blackberry – A Fruit  Jaguar – An Animal of the Cat Family  Kingfisher – A Bird  Nokia – A River  Polo – A Sport

Brands to Generic Product         

Band Aid – plastic bandages Walkman - portable cassette player with headphones Xerox - photocopier Lycra – Spandex Kleenex - facial tissues Scotch Tape - cellophane tape Teflon - nonstick coating Vaseline - petroleum jelly Velcro - hook and loop fastener

Definition of Marketing  AMA’s

Definition: Marketing is the process of Planning and Executing the Conception, Pricing, Promotion and Distribution of Ideas, Goods and Services to create Exchanges that satisfy Individual and Organisational Goals.

What is Marketing Management?  Marketing

Management is the Art and Science of choosing Target Markets and Getting, Keeping and Growing Customers through Creating, Delivering and Communicating Superior Customer Value - Kotler

Definition of Marketing Contd.  Social

Definition: Marketing is a societal Process by which Individuals and Groups obtain what they Need and Want through Creating, Offering and freely Exchanging Products and Services of Value with others.  Managerial Definition: Art of Selling Products /Services/Information

Selling is only the tip of the iceberg

“There will always be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available.” Peter Drucker

Transaction and Exchange  For Exchange to take Place  

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There need to be at least two parties. Each party has something that might be of value to the other party. Each party is capable of communication and delivery. Each party is free to reject the exchange offer. Each party believes it is appropriate or desirable to deal with the other party.

 Transaction is trading of value

What is/could be Marketed? Goods Services Events & Experiences Persons Places & Properties Organizations Information Ideas

Events and Experiences

Grand Canyon Railways

Person

Place

Adirondack National Park

Organization

Information

Idea

Needs, Wants and Demand  Needs

– states of felt deprivation including physical needs for food, social needs for belonging and individual needs for selfexpression. Ex: I am hungry.  Wants – form that a human need takes as shaped by culture and individual personality. Ex: I want Chinese Food.  Demands – human wants backed by buying power. Ex: I have money to go to Mainland China.

Demand States 1. 2. 3. 4. 5. 6. 7. 8.

Negative Demand (Pollution) Nonexistent/No Demand (????) Latent Demand (Organized Retail, Low Price Airline, Multiplex) Faltering Demand (Postal Services) Irregular Demand (Shares, Winter Clothes) Full Demand (mostly FMCG) Overfull Demand (Remember Swift?) Unwholesome Demand (Cigarettes, Drugs)

Flows in a Modern Exchange Economy

A Simple Marketing System

Changing Business Scenario  Technology  Globalization  Deregulation  Privatization  Customer Empowerment  Customization  Competition  Industry/Product Convergence  Retail Boom  Disintermediation

Company Responses to Competition  Reengineering  Outsourcing  Benchmarking  Alliances  Partner-suppliers  Decentralization  E-commercialization  “Glocal”ization

Company Orientations 1

2

Production

Product Holistic Marketing

Marketing 4

Selling 3

Holistic Marketing Dimensions

The Four P’s

Marketing Mix and the Customer Four P’s  Product  Price  Place  Promotion

Four C’s  Customer solution  Customer cost  Convenience  Communication

Some Terms        

Marketer and Prospect Target Market, Segmentation and Market Offering Channels (Communication, Distrbution, Service) Marketplace, Marketspace and Metamarket Product and Brand Value and Satisfaction Relationships and Networks Marketing Environment (Micro/Task, Macro)

Factors Influencing Marketing Strategy

Marketing Management Tasks    

Developing marketing strategies Capturing marketing insights Connecting with customers Building strong brands

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Shaping market offerings Delivering value Communicating value Creating long-term growth

MARKETING ENVIRONMENT Subhadip Roy Session 3, 4

Marketing Environment The actors and forces that affect a firm’s ability to build and maintain successful relationships with customers.

Objectives of Studying The Environment • Know the environmental forces that affect the company’s ability to serve its customers. • Realize how changes in the demographic and economic environments affect marketing decisions. • Identify the major trends in the firm’s natural and technological environments. • Know the key changes in the political and cultural environments. • Understand how companies can react to the marketing environment.

Types of Environment • Micro-environment: actors close to the company that affect its ability to serve its customers. • Macro-environment: larger societal forces that affect the microenvironment. – Considered to be beyond the control of the organization.

Microenvironment

Microenvironment • Suppliers: – Provide resources needed to produce goods and services. – Important link in the “value delivery system.” – Most marketers treat suppliers like partners.

• Marketing Intermediaries: – Help the company to promote, sell, and distribute its goods to final buyers.

• Customers: • Competitors: – Those who serve a target market with products and services that are viewed by consumers as being reasonable substitutes

• Publics: – Group that has an interest in or impact on an organization's ability to achieve its objectives

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The Macro-environment

• The larger environment consisting of forces that shape opportunities and pose threats to the company.

Macro-environment • Demographic: – The study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics.

• Economic: – Consists of factors like Per Capita Income, Income Distribution, Trade Duties, Taxes, etc.

• Natural: – Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.

Macro-environment contd. • Technological: – Involves a rapidly changing scenario and considerations for technology diffusion, obsolescence, etc.

• Political: – Includes Laws, Government Agencies, and Pressure Groups that Influence or Limit Various Organizations and Individuals In a Given Society.

Macro-environment contd. • Culture: – The forces that affect a society’s basic values, perceptions, preference, and behaviors.

Themselves

Society’s Major Cultural Views Are Expressed in People’s Views of:

Others Organizations Society Nature

The Universe

Culture

Global Environment Session 5 Subhadip Roy

Basis for International Trade

• Classical Theories • Modern Theories • Theory of The MNC

The International Trade System • Tariffs – Levied on certain products, designed to raise revenue and protect domestic markets. • Quota systems – Limit on product categories to conserve foreign exchange and protect local industry and employment. – Embargos • Exchange controls – Imposed to limit foreign exchange with other countries and on its exchange rate against other currencies. • Non-tariff trade barriers – Biases against foreign company’s bids or product standards.

Some TRADE Bodies • The General Agreement on Tariffs and Trade (1948) designed to promote world trade by reducing tariffs and other international trade barriers. • WTO came in 1995 • European Union (EU) • North American Free Trade Agreement (NAFTA) • BIMSTEC – Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal.

What is an MNC?

A Multinational corporation (MNC) or Transnational corporation (TNC) is one that spans multiple nations.

Marketer’s Definition • Multinational Firm – Focused on marketing to different countries with local adaptation of products and promotions; production localized and technology less advanced. Ex- McDonalds

• Global Firm – Involves more standardization of products and integration across countries; driven by strong foreign competition and growing homogenization of world markets. Ex- Coke, Microsoft

Global vs. Multinational GLOBAL R & D, DESIGN MANUFACTURING

MULTINATIONAL

CENTRALIZED AND STANDARD

DECENTRALIZED AND CUSTOMIZED

LIMITED LOCATIONS

MANY LOCATIONS

MANAGEMENT SALES & MKTG

CENTRALIZED AND INTEGRATED

INDEPENDENT LOCAL COUNTRY MANAGERS

CUSTOMER

GLOBAL SEGMENTS

REGIONAL SEGMENTS

AFTER-SALES SERVICE

LOCAL-SUBCONTRACTED LOCAL-COMPANY HANDLED

INTERNATIONAL MARKET ENTRY

EXPORTING-LICENSING

WHOLLY-OWNED OR J.V. LOCAL MANUFACTURING

TO GO OR NOT TO GO INTERNATIONAL THAT IS THE QUESTION YES Should I Think of Going International ?

Evaluate & Revise International Product, Pricing, Distribution, Advertising and Product Positioning & Control Strategies

Do I Have a Chance of Success Internationally? INTERNAL AUDIT

Where Should I Go First? External Environmental Analysis: Economics Political, Legal, Cultural, Technology SEGMENT

Foreign Country-Region Choice SELECT

DEVELOP

Choice of the Foreign Entry Method

MACROECONOMIC ENVIRONMENT Size – GDP, GNP, Trade – Population – Growth Rates

Corporate Capabilities & Objectives – Develop The List Of Most Economically Optimum Countries & Regions

Affordability – Per Capita GDP or GNP – Personal Income – PPP-measures

Need – – – –

Economic Need Social Need Maslow’s Concept Engel’s Law

MICROECONOMIC ENVIRONMENT Product – New – Differentiated – Existing

Corporate Capabilities & Objectives – Determine The Actual & Desired Product Positioning In Foreign Markets

Demand – Exists & Is Satisfied – Exists & Is Unsatisfied – Is Expected To Emerge

Competition – Highly Competitive – Niche Competition – Non-Existent

Microeconomic Environment Demand Structure in the Foreign Market Satisfied Needs

New To Them or New To All

Tang

Unsatisfied Needs

Emerging Needs

Bravia

Nintendo Wii

Innovative Companies

Your Product

Modified for ThemDifferentiated

Common or “Me Too”

High Cash

Whirlpool

McDonalds

Konka TV

Creative Labs

Nokia

Comp anies

PC Games

Culture • •

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•

Language: e.g., in Canada labels must be in both English and French Colors: e.g., in Japan black and white are colors of mourning and should not be used on a product’s package Customs and taboos: e.g., McDonald’s in India serves chicken burgers as beef and pork are religiously tabooed meat Values: e.g., Americans are materialistic, Indians’ philosophy is non-materialism

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•

•

Aesthetics: e.g., Americans believe suntans are attractive, Japanese do not Time: e.g., Americans value punctuality and deadlines; Latin Americans consider deadlines rude and pushy Business norms: e.g., Americans are more verbose than Japanese who prefer periods of silence in negotiations Religious beliefs: e.g., in conservative Islamic countries women have less or no say in household buying decisions

Some Cultural Blunders •

Coca-Cola: – Pronunciation in China – "ko-ka-ko-la." meaning - ‘Bite The Wax Tadpole’

More Cultural Mistakes

• Coke: – 2 Litre bottles too big for Spanish fridges • Johnson’s Floor Wax: – Made Japanese floors slippery • The Japanese do not wear shoes indoors • McDonald’s: – The white face of ‘Ronald McDonald’ • A white face is seen as a death mask in Japan • Radio Shack: – Christmas Promotion in Holland in Dec 25th whereas the Dutch Celebrate St Nicholas Day on Dec 6th • Disney: – Websites for South East Asian countries are designed differently

Feedback and continually reassess

THE INTERNATIONAL MARKETING STRATEGY Understand the environmental influences on firm’s international markets Segment international markets, identify & analyse opportunities Develop appropriate international marketing Strategies for small and medium sized firms and global players

Decide marketing entry strategies and determine product portfolio Build added value through communication, distribution and pricing Using enabling technologies

Consumer Behavior Session 6 Subhadip Roy

What Influences Consumer Behavior?

Culture The fundamental determinant of a person’s wants and behaviors acquired through socialization processes with family and other key institutions

Subcultures Nationalities Religions Racial groups Geographic regions Special interests

Social Classes Upper uppers Lower uppers Upper middles Middle class Working class Upper lowers Lower lowers

Characteristics of Social Classes

• Within a class, people tend to behave alike • Social class conveys perceptions of inferior or superior position • Class may be indicated by a cluster of variables (occupation, income, wealth) • Class designation is mobile over time

Social Factors Reference groups

Family

Social roles

Statuses

Reference Groups Membership groups Primary groups Secondary groups Aspirational groups Dissociative groups

Family • Family of Orientation – Religion – Politics – Economics • Family of Procreation – Everyday buying behavior

Personal Factors Age Selfconcept

Life cycle stage

Lifestyle

Occupation

Values

Wealth Personality

Behavior changes according to life cycle stage •Family •Psychological •Critical life events

Model of Consumer Behavior

Key Psychological Processes Motivation

Perception

Learning

Memory

Motivation

• Freud’s theory • Maslow’s hierarchy of needs • Herzberg’s two-factor theory

Maslow’s Hierarchy of Needs

Perception Selective Attention

Selective Retention

Selective Distortion

Subliminal Perception

Consumer Buying Process Problem Recognition

Information Search

Evaluation

Purchase Decision

Postpurchase Behavior

Sources of Information Personal

Commercial

Public

Experiential

Non-compensatory Models of Choice

• Conjunctive • Lexicographic • Elimination-by-aspects

Perceived Risk

• Functional • Physical • Financial

• Social • Psychological • Time

Other Theories of Consumer Decision Making

Involvement • Elaboration Likelihood Model • Low-involvement marketing strategies • Variety-seeking buying behavior

Decision Heuristics • Availability • Representativeness • Anchoring and adjustment

Consumer Behavior Session 6B Subhadip Roy

Key Psychological Processes

Motivation

Perception

Learning

Memory

Motivation

• Freud’s theory (The Unconscious) • Maslow’s hierarchy of needs • Herzberg’s two-factor theory (Motivators and Hygiene Factors)

Maslow’s Hierarchy of Needs

Perception Process by which an individual selects, organizes and interprets information inputs to create a meaningful picture of the world.

Selective Attention

Selective Retention

Selective Distortion

Subliminal Perception

Learning • Involves changes in an individuals behavior arising out of experience. – Drive: Internal stimulus impelling action – Cues: Minor stimuli determining response – Discrimination: Distinguishing between different sets of stimuli and adjusting responses

Memory • Short and Long Term • Associative Network Theory • Memory Storage and Retrieval

Consumer Buying Process Problem Recognition

Information Search

Evaluation

Purchase Decision

Postpurchase Behavior

Sources of Information

Personal

Commercial

Public

Experiential

Information Search • • • • •

Total Set Awareness Set Consideration Set Choice Set Purchase Decision

Evaluation of Alternatives • Beliefs and Attitudes • Expectancy Valued Model • Product: Camera, Airlines, Motorbike, Perfume

Purchase Decision

• Non-Compensatory Models of Choice • Conjunctive • Lexicographic • Elimination-by-aspects

Perceived Risk

• Functional • Physical • Financial

• Social • Psychological • Time

Post-purchase

• Satisfaction • Post-purchase Actions • Post-purchase Use and Disposal

Other Theories of Consumer Decision Making Involvement • Elaboration Likelihood Model • Low-involvement marketing strategies • Variety-seeking buying behavior

Decision Heuristics • Availability • Representativeness • Anchoring and adjustment

ANALYZING BUSINESS BUYING BEHAVIOUR

Session 7 SUBHADIP ROY

DEFINITION • Business buyer behavior refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.

Difference with Consumer Buying • Market Structure: – Contains fewer but larger buyers. – Customers are more geographically concentrated. – Reciprocal Buying – Leasing

Difference with Consumer Buying

• Demand: – Derived demand – Inelastic demand – Fluctuating demand

Difference with Consumer Buying • Nature of the Buying Unit: – Business purchases involve more decision participants. – Business buying involves a more professional purchasing effort. – Multiple Sales Call

Types of Buying Situations Straight Rebuy

The buyer routinely reorders something without any modifications.

Modified Rebuy

The buyer wants to modify product specifications, prices, terms, or suppliers.

New Task

The buyer purchases a product or service for the first time.

Influences on Business Buyer Behavior

Model of Business Buyer Behavior

The Buying Center • Decision-making unit of a buying organization is called its buying center. • Buying Center Members: – – – – – – –

Initiators Users Influencers Deciders Approvers Buyers Gatekeepers

Buying Center Influences

• Different Backgrounds • Different Needs

Buying Center Targeting • Customer Types – – – –

Price Oriented Solution Oriented Gold-Standard Strategic-Value

• Solutions – To Enhance Revenue – To Decrease Risk – To Reduce Cost

Purchasing/Procurement Process • Purchasing Orientation – Buying Orientation – Procurement Orientation – SCM Orientation

• Purchased Product Types – – – –

Routine Products Leverage Products Strategic Products Bottleneck Products

Procurement Orientation

SCM Orientatio n

The Business Buying Process

e-Supplier Search

eSolutions

Partial e-Procurement

Order Routine Specification and Inventory • Stockless purchase plans • Vendor-managed inventory • Continuous replenishment Desirable Outcomes of a B2B transaction: OTIFNE • On time • In full • No error

Factors Affecting Buyer-Supplier Relationships • • • •

Availability of alternatives Importance of supply Complexity of supply Supply market dynamism

Categories of Buyer-Seller Relationships • Basic buying and selling • Bare bones • Contractual transaction • Customer supply

• Cooperative systems • Collaborative • Mutually adaptive • Customer is king

Institutional B2B

Govt. Purchas e

Thank You, Class