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BASICS OF MARKETING

1. Introduction to Marketing: Definition & Functions of Marketing.


Core concepts of marketing – Need, Want, Desire, Benefits, Demand, Value, Exchange,
Goods – Services Continuum, Product, Market, Customer Satisfaction, Customer Delight.
Approaches to Marketing – Product – Production - Sales – Marketing – Societal – Relational. Concept of
Marketing Myopia. Selling versus marketing, Holistic Marketing Orientation & Customer Value,
Marketing Process, Functions of Marketing

2. Consumer Behavior: Concept, Characteristics of consumer and organizational


markets, 5 step Buyer decision process. Factors influencing buyer behavior - Consumer Psychology -
Industrial Buyer behavior Vs. Domestic Buyer behavior - Customer satisfactions Vs. Customer delight -
Consumer value and satisfaction

3. Marketing Environment: Analyzing needs and trends Macro Environment -


Political, Economic, Socio-cultural and Technical Environment – PEST
analysis. Micro Environment – Industry & Competition. Concept of Market
Potential & Market Share

4. Market segmentation: Definition, Need & Benefits. Bases for market


segmentation of consumer goods, industrial goods and services. Segment, Niche
& Local Marketing, Effective segmentation criteria, Evaluating & Selecting
Target Markets, Concept of Target Market and Concept of positioning – Value
Proposition & USP.

5. Sales Forecasting - Methods - Market Research - Scope, Obstacles in acceptance

6. Marketing Mix: Definition of each of the Four P's. Components of each P.


Extended 7Ps for services. Significance in the competitive environment.

7. Marketing Planning: Contents of Marketing Plan - Developing Marketing


Plan for variety of goods and services. The changing marketing environment - Analyzing needs and trends
in Macro Environment, Economic Environment, Technical Environment, Political Environment and Socio-
cultural Environment

8. Marketing organization: Concept, Types - Functional organization, Product


Focused organization, Geographic Organization, Customer Based
Organization, Matrix organization. Organization structure for a wide
customer orientation.

9. Market Evaluation and Controls: Generic Process, Need and Significance of


marketing control. Marketing Audit.

10. Social responsibility of marketing organizations.


11. Emerging Trends & Issues in Marketing: Rural Marketing,CRM, Services marketing,
B2B Marketing, Internet Marketing, Consumerism, Legal Issues, Broadening the
marketing concept.
Books Recommended:-
1. Principles of Marketing 12th Edition - Philip Kotler and Gary Armstrong
2. Fundamentals of Marketing - Stanton
3. Marketing Management – Rajan Saxena
4. Marketing Management - V.S.Ramaswamy and S.Namakumari
5. Analysis for Marketing Planning – Donald Lehmann & Rusell Winer, 6th ed.
6. Case Studies in Marketing - Indian context - R.Srinivas
Marketing Management Functions.
Marketing management is the analysis, planning, implementation & control
of programs design to bring about desired exchange with target audience
for the purpose of mutual or personal gain. It relies heavily on adoption &
co-ordination of product, price, promotion & place for achieving effective
response.

It is a management process & includes analysis, planning, implementation &


control of activities.
It is purposive activity which aims at bringing about desired exchange which
may be of goods & services.
It can be practiced by either the seller or buyer whoever seeks to stimulate
the exchange process.
It may be carried on for personal or mutual gain.
It stresses the adaptation & co-ordination of several factors like product,
price, promotion & place to achieve the effective response.

Functions of marketing management.

Sales & market analysis.


Determination of marketing goals.
Sales forecasting & marketing budget.
Formulation of marketing plan, policies & procedures.
Evolving appropriate marketing mix & programs.
Organizing all marketing functions.
Assembling of necessary marketing resources such as marketing personnel,
marketing finance & physical facilities like storage & transport.
Effective marketing communication through personal selling, advertising,
sales promotion.
Active participation in product planning & development to ensure best
relations between product & customer needs.
Wholehearted co-operation in introducing innovations, new products, new
markets, new processes.
Proper control & co-ordination of all marketing functions.
The core concept of Marketing
Marketing is a social & managerial process by which individuals & groups obtained
what they need & want through creating, offering & exchanging products of
value with others.

Human Needs –

It is a state of felt deprivation of some basic satisfaction.

Wants –
These are desires for specific satisfiers of these deeper needs.

Demands –
These are wants for specific products that are backed by an ability &
willingness to buy them.

Products –
These are anything that can be offered to satisfy a need or a want.
The importance of physical product lies not so much in owing them as in
obtaining the services they render.

Vehicle of services –

1. Person.
2. Place.
3. Activity.
4. Organization.
5. Ideas.

Value, Cost & Satisfaction –

1. Product value 1. Monitory cost


2. Service value 2. Time cost
3. Personnel value 3. Energy cost
4. Image value 4. Psychic cost

Exchange, Transactions & Relationship –


Exchange is one of the four ways people can obtain products.
a. Self production.
b. Coercion.
c. Begging.
d. Exchange.

Exchange is the act of obtaining a desired product from someone by offering


something in return.
Five conditions of exchange –
At least two parties.
Each party has something that might be of value to the other party.
Each party is capable of communication & delivery.
Each party is free to accept or reject the offer.
Each party believes it is appropriate or desirable to deal with the other party.

Transactions – These are basic unit of exchange. A transaction consists of a trade of


values between two parties.
Dimensions of transactions –
At least two things of value.
Agreed upon conditions.
A time of agreement.
A place of agreement.
Transaction v/s Transfer
The process of trying to arrive at mutually agreeable terms is called Negotiation.
Transaction marketing, Relationship marketing, Marketing network.

Markets –
It consists of all potential consumers sharing a particular need or want who might
be willing & able to engage in exchange to satisfy that need or want.
Marketing –
It means Working with markets to actualize potential exchanges for the purpose
of satisfying human needs & wants.
Marketer –
It means someone seeking a resource from someone else & willing to offer
something of value in exchange.

1. The Production Concept.

The production concepts holds that customers will favor those products that are
widely available & low in cost. Managers of production oriented organizations
concentrate on achieving high production efficiency & wide distribution
coverage.
2. The Product Concept.

The product concept holds that consumers will favor those products that offer the
most quality, performance or innovative features. Managers in these product
oriented organizations focus their energy on making superior products &
improving them over time.
3. The Selling Concept.

The selling concept holds that consumers, in left alone, will ordinarily not buy
enough of the organizations products. The organization must therefore undertake
an aggressive selling & promotion effort.
4.The Marketing Concept.

The marketing concept holds that the key to achieving organizational goals consists
in determining the needs & wants of target markets & delivering the desired
satisfaction more effectively & efficiently than competitors.

5. The Societal Marketing Concept.

The societal marketing concept holds that the organization’s task is to determine the
needs, wants & interests of target markets & to deliver the desired satisfaction
more effectively & efficiently than competitors in a way that preserves or
enhances the consumer’s & society’s well being.

Consumer Market & Buyer Behavior.


There is an old saying in Spain “To be a bullfighter, you must first learn to be a
bull.”
A customer is the most important person ever in this office - - - - in person or by
mail.

A customer is not dependent on us – we are dependent on him.

A customer is not interruption of our work – he is purpose of it.

We are not doing favor by serving him – he is doing us a favor by giving us the
opportunity to do so.

A customer is not someone to argue – nobody ever won an argument with customer.

A customer is person who brings us his wants – it is our job to handle them
profitably to him & to ourselves.

A Model of Consumer Behavior.

Who constitutes the market? ( Occupants )


What does market buy? ( Objects )
Why does the market buy? ( Objectives )
Who participates in the buying? ( Organization )
How does the market buy? ( Operations )
When does the market buy? ( Occasion )
Where does the market buy? ( Outlets )
How do the buyer’s characteristics – cultural, social, personnel & psychological
influence buying behavior?
How does the buyer make purchasing decisions?

Model of buyer behavior.


Input –

Process -

Output –

I. Cultural factors.
Culture.
Set of values, perception, preferences & behavior.

Sub-culture –
Nationality, religious groups, racial groups, geographical areas.
Social class –
Upper-upper, lower-upper, upper-middle, middle class, working class, upper-lower,
lower-lower.

II. Social factors.


Reference groups –
1. Primary group – Family, friends, neighbors.
2. Secondary groups – Religious, professional.
3. Aspiration.
4. Disassociate group.
Family –
1. Husband dominated.
2. Wife dominated.
3. Equal.
Roles & status.

III. Personnel factors.


Age & life cycle stage.
Occupation.
Economic circumstances.
Lifestyle.
Pattern of living in the world as expressed in person’s activities, interests & opinion.
Personality & self concept.
Self concept or self image.
Actual, ideal & others self concept.

IV. Psychological factors.


Motivation.

Perception – Selects, organizes & interprets information.

a. Selective attention.
b. Selective distortion.
c. Selective retention.

Learning.

Beliefs & attitudes.


Belief is a descriptive thought that a person holds about something.
Attitude describes person’s enduring favorable or uncomfortable cognitive
evaluation, emotional feeling & action tendencies toward some object or idea.

Buying motives.

1. Fear. 2. Desire for money.


3. Vanity. 4. Pride.
5. Fashion. 6. Possession.
7. Sex & romance. 8. Love & affection for others.
9. Health & physical well being.
10. Control & convenience.

Patronage motives in retailing.


Location of the store.
Nature & variety of goods stocked.
Reputation of the stores.
Attitude adopted by salesman in stores.
The service offered by stores.
The appearance of the stores.

Factors influencing consumer buying behavior.


Buying decision process.
Buying roles –
Initiator – who first suggest the idea of buying a particular product or service.
Influencer – whose view or advice influence decision.
Decider – who decides whether to buy, what to buy, how to buy or where to buy.
Buyer – who makes actual purchase.
User – who consumes or uses the product or service.

2. Types of buying behavior –

Researching the buying decision process –

Introspective – Own probable behavior.


Retrospective – Asking recent purchaser to recall events.
Prospective – Prospective buyers buying behavior.
Prescriptive – Ideal way to buy the product.

Business market & Buying behavior.


Who is in the Business market?
Characteristics of Business market –
1. Fewer buyers. 2. Larger buyers.
3. Close supplier – customer relationship.
4. Geographically concentrated buyers.
5. Derived demand. 6. Inelastic demand.
7. Fluctuating demand.
8. Professional purchasing.
9. Several buying influences.
10. Miscellaneous characteristics –
- Direct purchasing. - Reciprocity.
- Leasing.

What buying decisions do Business buyers make?

Major types of buying situations.


- Straight rebuy. - Modified rebuy.
- New task.

Major sub decisions involved in the buying decision.


- Product specification. - Price limit.
- Delivering terms & times.
- Service terms. - Payment terms.
- Order quantities. - Acceptable supplier.
- Selected supplier.

The role of system buying & selling.

Who participates in the Business buying process?


Buying center defined as all those individuals & groups who participate in the
purchasing decision making process, who share some common goals & risks
arising from the decisions.

Users –
Who will use the product or service, initiate the buying proposal & define
product specification.

Influencers –
Define specifications & also provide information for evaluating alternatives;
technical people.

Deciders –
Who decide on product requirements & or on suppliers.

Approvers –
Who authorize the proposed actions of deciders or buyers.

Buyer –
Who have formal authority to select the supplier & arrange purchase terms;
High level managers.

Gatekeepers –
Who have the power to prevent sellers or information from reaching members of
buying centre.

What are the major influences on Business buyers?

Environmental factors –
Level of demand.
Economic outlook.
Cost of money.
Rate of technological change.
Political & regulatory developments.
Competitive development.

Organizational factors –
Objectives.
Policies.
Procedures.
Organizational structure.
Systems.

Organizational trends –
Purchasing department upgrading.
Centralized purchasing.
Long term contracts.
Purchasing – performance evaluation.

Interpersonal factors –
Authority.
Status.
Empathy.
Persuasiveness.

Individual factors –
o Age. o Income.
o Education. o Job position.
o Personality. o Risk attitude.
o Culture.
4. Stages in the buying decision process –

Need recognition –
Internal or external stimuli.

Information search –
Milder search – heightened attention.
Active information search.

Consumer information sources –


Personnel – Family, friends, neighbors, acquaintance.
Commercial – Advertising, salesperson, dealers, packaging, distributors.
Public – Mass media, consumer rating organization.
Experimental – Handling, examining, using product.

Sets involved in buying process.


Total set – Awareness – Consideration – Choice – Decision.

Evaluation of alternatives –
Product attributes.
Importance weights.
Brand beliefs or brand image.
Utility function.
Evaluation procedure.

Marketers strategy –
Modify the product.
Alter beliefs about the brand – DHL – Jumbo pack.
Alter beliefs about the competitors brands.
Alter importance weights – Caption cook.
Call attention to neglected attributes – Hamam.
Shift buyers ideals.

Purchase decision –

Factors intervene between the purchase intention & purchase decision.


Attitudes of others.
Unanticipated situational factors.
Perceived risk.

Purchase sub decisions –


Brand decision.
Vendor decision.
Quantity decision.
Timing decision.
Payment method decision.
Post purchase behavior –

Post purchase satisfaction –


Product expectation & perceived performance.
Disappointed – Satisfied – Delighted.

Post purchase actions –


Dissatisfied customer.
Takes some action – take no action.
Take some form of public action.
Seek redress directly from business firm.
Take legal action to obtain redress.
Complain to business, private or government agency.
Post purchase use & disposal –
Product –

Get ride of it temporarily.


Rent it.
Loan it.
Get ride of it permanently –
Give it away.
Trade it.
Sell it.
Throw it away.

To be sold. To be used.
o Direct to consumer.
o Through middle man.
o To middle man.

Keep it.
Use it to serve original purpose.
Convert it to serve a new purpose.
Store it.

How do Business buyer make their buying decisions?

Problem recognition –
o Internal. o External.

General need description –


Reliability, durability, price & other attributes.

Product specification –
Product value analysis is an approach to cost reduction in which components are
carefully studied to determine if they can be redesigned or standardized or
made by cheaper methods of production.

Supplier Search.

Proposal solicitation.

Supplier selection –
Primary, Secondary & out supplier.

Order routine specification –


Technical specification, quantity needed, expected time of delivery, return policies,
warranties etc.

Performance review.
BUSI NESS ENVI RONM ENT

[1] Internal Environment

A) Marketing Factors :

1. Competitive Competence
2. Product Mix
3. Marketing Research
4. Product Life Cycle
5. Channels of Distribution
6. Sales Forces
7. Pricing
8. Promotion

B) Production / Operational Factors :

1. Allocation & use of resources


2. Rationalisation of resources
3. Location Pattern
4. Production capacity & its use
5. Cost structure
6. Cost volume profit relationship
7. Operation procedure
8. Raw Material availability
9. Inventory control system
10. Research & Development
11. Patent Rights
C) Finance & Accounting :

1. Capital cost
2. Capital structure
3. Financial planning
4. Tax benefits
5. Pattern of share holding
6. Relationship between shareholder & financer
7. Accounting procedure

D) Personal & Management :

1. Corporate image & prestige


2. Organisational climate
3. Top management consultation & philosophy
4. Quality of management personnel
5. Management practices
6. Organisation Structure
7. Industrial relation
8. Organsiatioal External relationship

[2] Components of External Environment :

A) Social Environment :
1. Demographic
2. Social Concern – pollution, corruption
3. Social attitude – customs, beliefs, life styles
4. Family structure & change
5. Role of women in society
6. Educational level

B) Political Environment :
1. Political systems & structure
2. Political process
3. Political Philosophy

C) Economic Environment :
1. Economic stage & system
2. Economic policies
3. Economic planning
4. Economic indices
5. Infrastructural factors

D) Regulatory Environment :
1. Constitutional Framework
2. Licensing
3. Monopolist
4. Foreign Investment
5. Industrial policy
6. Distribution policies
7. Pricing & control policies
8. Import – Export policies
9. Public sector – S.S.I. policies
10. Development of backward area
11. Control of Environment
12. Consumer Protection

E) Market Environment :
1. Customer factor
2. Product factor
3. Marketing intermediaries
4. Competitors

F) Supplier Environment :
1. Cost & availabilities of raw material & component
2. Cost & availabilities of financing project implementation
3. Cost & availabilities for energy used in production
4. Cost & availabilities of Human Resource
5. Cost & availabilities of Plant & machinery
6. Cost & availabilities of Infrastructure

G) Technological Environment :
1. Source of technology
2. Technology development
3. Impact of technology on human being
4. Communication & infrastructure technology

[3] Economic Environment

• Meaning
• Nature
• Economic Factors :
1. Growth strategy
2. Economic Planning
3. Economic system
4. Industry
5. Agriculture
6. Infrastructure
7. Financial & fiscal sector
8. Removal of regional imbalance
9. Price & distribution control
10. Economic reform
11. Population
12. Per capita income & national income
13. New economic policy

• Impact of New Economic Policy on Business Environment

[4] Technological Environment

• Features of Technology
• Impact of Technology :
1. Technology & Society
a) Technology reaches people through business
b) High expectation of consumers
c) System Complexity
d) Social & financial change

2. Technology & Economic :


a) Increase productivity
b) Need to spend on R & D
c) Job tend to became more intellectual
d) Problem of techno-structure
e) Need far bio-professional manager
f) Increase regulation & stiff competition
g) More demand for Capital
h) Rise & decline of product & organization

[5] Social & Cultural Environment

• Culture :
1) Culture is understood that complex phenomena which includes
knowledge, belief, art, morals, law, customs & other capabilities
& habit, acquired by an individual as a member of a society.
2) The though & behaviour pattern that members of society learn
through language & other form of symbolic interaction their
customs, habits, beliefs & values. The common view point which
binds them together as a social entity.

• Impacts :
1. Culture creates people
2. Culture & Globalisation
3. Culture determines goods & service
4. Peoples attitude to business
5. Attitude to work
6. Caste system
7. Collective & individualism
8. Ambition or Complacement
9. Education
10. Family
11. Authority
12. Views of scientific method
13. Ethics in business
14. Religion
15. Marriage
16. Time dimension
17. Cultural Resources

Market Segmentation.
Small opportunities are often the beginning of great enterprises.
Stages of marketing strategy –
Mass marketing.
Product – variety marketing.
Target marketing.
Niche marketing.
Individual marketing.

Market segmentation consists of taking the total heterogeneous market for a


product & dividing it into several submarket or segments, each of which tends
to be homogeneous in all significant aspects.

Market segmentation is the subdivision of a market into homogeneous subsets of


customer where subset may conceivably selected as a market target to be reached
with distinct marketing mix. The power of this concept is that in an age if intense
competition for the mass market individual seller may prosper through creatively
serving specific market segment whose needs are imperfectly satisfied by mass
market offering.
2.
STP Process.

Market segmentation.
The general approach to segmenting the market.

Markets, market segment & niches.


Pattern of market segmentation.
Homogeneous preference.
Diffused preference.
Clustered preference.
Three options –
Undifferentiated.
Concentrated.
Differentiated.

Market segmentation procedure –


Survey stage.
Attributes & their important ratings.
Brand awareness & brand rating.
Product usage pattern.
Attributes towards the product category.
Demographics, psychographics, media graphics.
Analysis stage.
Profiling stage –
Demographics, psychographics, media habits.

Bases for segmenting consumer markets -


Consumer characteristics –
Geographic segmentation –
Region.
City or metro.
Density – Urban, suburban, rural.
Climate.
Demographic segmentation –
Age. o Family size.
Gender. o Family life cycle.
Income. o Occupation.

Education. o Religion.
Race. o Nationality.

Psychographic segmentation –

Social class. o Life style.


Personality.

Consumer responses –

Behavioral segmentation –

Occasion – regular, special.


Benefits.
User status – Nonusers, ex-users, potential users, first time & regular.
Usage rate.
Loyalty status.
Readiness stage.
Attitudes towards the product

Bases for segmenting business market –


Demographic –
Industry – which industry should we focus on?
Company size – what size companies should we focus on?
Location – what geographical areas should we focus on?
Operating variables –
Technology – what customer technology should we focus on?
User/Nonuser status – Should we focus on heavy, medium, light users or nonusers?
Customer capabilities – Should we focus on customers needing many or few
services?

Purchasing approaches –

Highly centralized or decentralized purchasing organization – purchasing function


organization.
Engineering dominated, financially dominated – power structure.
Strong relationships or go after most desirable companies.
Leasing, service contracts, system purchase, sealed bidding – General purchase
policies.
Companies seeking qualities, service, price – purchasing criteria.

Situational factors –

Urgency – needing quick & sudden delivery or service.


Specific application – certain application or all application.
Size of order – large or small orders.

Personal characteristics –

Buyer sellers similarity – companies whose people & values are similar to ours.
Attitude towards risk – risk taking or risk avoiding companies.
Loyalty – companies that show high loyalty to their suppliers.

Developing customer segment profile.

Requirements for effective segmentation.


Measurable.
Substantial.
Accessible.
Differentiable.
B. Market targeting.
Evaluating the attractiveness of market segment –
Segment size & growth.
Segment structure & attractiveness.
The company has to appraise the impact of long run profitability of five groups

Threat of intense segment rivalry.
Threat of new entrants.
Threat of substitute products.
Threat of bargaining power of buyer.
Threat of bargaining power of supplier.
c. Company objectives & resources.
Attractiveness of the segment.

Selecting the market segment.

Large firms can cover whole market by two ways -


- Undifferentiated marketing.
- Differentiated marketing.
Following costs are likely to be higher –
- Product modification cost.
- Manufacturing cost.
- Administrative cost.
- Inventory cost.
Cautions –
- Over segmentation.
- Counter segmentation or broadening customer base.

Additional considerations in evaluating & selecting segments –


Ethical choice of market targets.
Segment interrelationships & super segments.
On cost, performance & technology.
Synergy as raw materials, manufacturing facilities or distribution channels.
Segment by segment invasion plan.

C. Market positioning.
Positioning is the act of designing the company’s image & value offer so that the
segment’s customers understand & appreciate what the company stands in
relation to it’s competitors.

How can the firm identify sources of potential competitive advantage?


What are the major differentiating attributes available to firm?
How can the firm choose an effective positioning in the market?
How can the firm communicate it’s positioning to the market?

Tools for competitive differentiation –


a. Product differentiation.
Features – are characteristics that supplement the product basic functioning.
Performance quality – refers to the levels at which the product primary
characteristics operate.
Conformance – is the degree to which the products design & operating
characteristics come close to the target standards.
Durability – is a measure of the products operating life.
Reliability – is a measure of the probability that a product will not
malfunction or fail within a specified time period.

Reparability – is a measure of the ease of fixing a product that malfunction


or fails.
Style – describes how well product looks & feels to the buyer.
Design – integrated force – all foregoing qualities are design parameters.

b. Service differentiation –
Delivery – speed, accuracy & care attending delivery.
Installation – work done to make a product operational in it’s planned
location.
Customer training – training to customer employees.
Consulting service – refers to data information, systems & advising services
at free or price to buyers.
Repair – quality of repair service available to buyer.
Miscellaneous – warranty, maintenance & patronage awards.

c. Personnel differentiation –
Competence – employees skill & knowledge.
Courtesy – friendly, respectful & considerate.
Credibility – performance of service with consistency & accuracy.
Responsiveness – responding quickly to requests & problems.
Communication – understanding customer & communicating clearly.

d. Image differentiation –
- Identity v/s image –
o Identity the ways that company aims to identify
itself to it’s public.
o Image is the way the public perceives the
company.

Symbols – logo, object, color, sound/music.


Written & audio-visual media – advertisement.
Atmosphere – physical space.
Events – types of events sponsored.

Developing a positioning strategy –


- A difference is worth establishing to the extent that it
satisfies the following criteria –

Importance – valued benefit to buyer.


Distinctive – not offered by others or offered in a more distinctive way.
Superior – superior to others to obtain same benefit.
Communicable – communicable or visible to buyer.
Preemptive – not easily copied by competitors.
Affordable – afford to pay for the difference.
Profitable – profitable to introduce the difference.

Differentiation is the act of designing a set of meaningful differences to distinguish


the company’s offer from competitors offer.
Positioning is the act of designing company’s offer & image so that it occupies a
distinct & valued place in the target customer’s mind.
How many differences to promote?
- Single benefit.
- Double benefit.
- Triple benefit.
Unique selling proposition.

Avoid positioning errors –

Under positioning – vague idea about the brand.


Over positioning – too narrow image about the brand.
Confused positioning – confused image of the brand.
Doubtful positioning – hard to believe brand’s claim.

Which differences to promote –

Company’s standing, competitor’s standing, importance of improving,


affordability & speed, competitor’s ability.

Communicating the company’s positioning.


Marketing Mix.
It was James Culliton – The American Marketing expert, who coined the
expression, marketing mix & describe marketing manager as a mixer of
ingredients.

Marketing mix variable.

Product variable.
Product line & range.
Design, quality, features, models, style, appearance, size, warranties of product.
Packaging type, material, size, appearance & label.
Branding & trademark.
Merchandising.
Service – Presales, After sales.
New products.

Place variable.

Channel distribution.
Type of intermediaries.
Channel policy & design.
Location of outlets.
Channel remuneration.
Dealer principle relations.
Physical distributions – Transportation – Ware housing – Inventory level – Order
processing.

Price variable.

Pricing policy.
Levels of prices.
Levels of margins, discounts & rebates.
Terms of delivery.
Payment terms.
Credit terms.
Installment facility.
Resale price maintenance.

Promotion variable.

Personal selling – Objectives – Level of efforts – Quality of sales force – Cost level –
Level of motivation.
Advertisement – Media mix – Budget – Allocation & programs.
Sales promotion efforts – Display contest – Trade promotions.
Publicity & public relations.
Marketing mix & environment variable.

Customer variable.

No. of customers.
Location of customers.
Purchasing power of customers.
Buying behavior & habits of purchase.
Personality traits & attitudes.
Lifestyle & needs.
Brand awareness & brand loyalty.

Competition variable.

Structure of the industry.


Nature & intensity of competition – Buyer – Seller market.
No. of competitors, size, capacity & territory of operation.
Products & services offered by the competitors.
Competitors sales level in each market segment / product.
Competitor’s strength, weaknesses – Product – Cost – Logistic – Channel – Sales
force – Promotion & marketing organization.
Competition from substitute product.

Trade variable.

Structure of the trade.


Type of intermediaries, number & strength.
Trade practices.
Services provided by the trade.
Motives & attitudes of intermediaries.
Extent of sophistication of the trade.

Environment variable.

Level of technology.
Government regulations on products, prices & distributions.
Controls on trade practices.
Economic conditions in the country.
Geography & climate.
Culture & tradition.
Law & politics.
Attitude of public & press.
Strategic or Corporate Planning.
There are five types of companies, those who make things happen, those who think
they make things happen, those who watch things happen, those who wonder
what happen & those that did not know that anything had happen.

Market oriented strategic planning is the managerial process of developing &


maintaining a viable fit between the organization’s objectives, skills, resources &
it’s changing marketing opportunities. The aim of strategic planning is to shape
& reshape the company’s businesses & products so that they yield target profits
& growth.
Business as an investment portfolio.
Assessment of business on growth & position.
Strategic planning is strategy.

Strategic Management Process.

Corporate & Division strategic planning.

Defining corporate mission.


Establishing strategic business units.
Assigning resources to each SBU.
Planning new businesses.

Defining the corporate mission.

Questions.
What is our business?
Who is the customer?
What is value to the customer?
What will our business be?
What should our business be?

Mission.
Mission is shaped by five elements.
History.
Current preferences of owner & the management.
Market environment.
Resources.
Distinctive competence.

Major Characteristics.
Focus on limited no. of goals.
Stress on major policies & values.

Define major competitive scope.

Industry scope.
Products & application scope.
Competence scope.
Market segment scope.
Vertical scope.
Geographic scope.

Establishing strategic business unit.


Leviti argued that market definition of business are superior to product definitions.
A Business must be viewed as customer satisfying process not a goods producing
process.

Cautions.
Should avoid a market definition too narrow or too broad?
What their product accomplished instead of what they are?
Business can be defined in terms of three dimensions.
Customer groups.
Customer needs.
Technology.

An SBU has three characteristics.

It is a single or collection of related business that can be planned separately.


It has it’s own set of competitors.
It has manager for a strategic planning & profit performance.

Assigning resources to each SBU.

Build – To increase market share.


Hold – To preserve the market share.
Harvest – To increase the short term cash flow.
Divest – To liquidate the business.

Planning new businesses.

Intensive Growth.
Market penetration.
To encourage current customer to buy more.
To attract the competitors customers.
To convince the non users.

Market development strategy.


Consumer market to industrial market.
Urban market to rural market.
New types of outlets for distribution.
New locations.

Product development.

Integrative growth.

Backward integration.
Forward integration.
Horizontal integration.

Diversification Growth.

Concentric diversification.
Seek new product – Technological or marketing synergies for different
customer groups.
Horizontal diversification.
New product aiming at current customers though technologically different.
Conglomerate diversification.
No relationship to company’s current technology, product or markets.

Nature & content of marketing plan.

Executive summery –
Brief overview of proposed plan for the quick management skimming.
Current marketing situation –
Relevant background data on market, product competition, distribution &
macro environment.
Market situation –
Size & growth of the market.
Customer needs, perception & buying behavior

Product situation –
Sales, prices, contribution margin & net profits.
Competitive situation –
Size, goals, market share, product quality marketing strategy.
their intention & behavior.
Distribution situation –
Size & importance of each distribution channel.
Macro environment situation –
Demographic, economic, technological, political, legal, socio-cultural trends.

Opportunities & issue analysis –


Identify the main opportunities threats, strength/weakness & issue facing
product.
Objectives –
Defines goals the plan wants to reach in the areas of sales volume, market share
& profit.
Financial objectives –
Rate of return, net profits & cash flow.
Marketing objectives –
Sales revenue, volume, awareness, number of distribution outlets.

Marketing strategy –
Presents the broad marketing approaches that will be used to achieve plan’s
objectives.
a. Target market. b. Positioning.
c. Product line. d. Price.
e. Distribution outlets. f. Sales force.
g. Service. h. Advertising.
i. Sales promotion. j. R&D
k. Marketing research.

Action programs –
Answers what will be done? When will it be done? Who will do it? How much
will it cost?

Projected profit & loss statement –


Forecasts the expected financial outcomes from the plan.

Controls –
Indicates how the plan will be monitored.

Structural implementation.

Structural considerations.

What is structure?
It is way how tasks & subtasks required to implement strategy.

Structural mechanisms.
Defining major tasks.
Grouping tasks on common skills.
Subdivision of responsibility & dele of authority.
Co-ordination of divide of responsibility.
Design & administration of information system.
Design & administration of control system.
Design & administration of appraisal system.
Design & administration of motivation system.
Design & administration of Development system.
Design & administration of planning system.

Environment, strategy & structure.

Stages of development.
Small.
Bigger.
Large & scattered.
Most complex.

Structure for strategies.

Entrepreneurial structure.
Owner – management.

Employee
Advantages.
Quick decision making – Power centralized.
Timely response to environmental changes.
Informal & simple organizational system.
Disadvantages.
Excessive reliance on owner manager.
More attention towards operation from strategic development.
Inadequate for future requirements.

Functional structure.

Advantages.
Efficient distribution of work by specialization.
Delegation of operational function.
More time for top management for strategic decisions.
Disadvantages.
Co-ordination difficulty among functional.
Creates specialist in narrow specialization.
Leads & line & stuff conflict.

Divisional structure.

Advantages.
Grouping of functions.
Quick response to environment.
More time for top management strategic decision.

Disadvantages.
Allocation of resources & corporate oreched costs.
Sharing of authority between corporate & division level.
Policy inconsistencies between divisions.

Strategic business unit.

Advantages.
Enables co-ordination between division.
Facilitates strategic management & control.
Fixes accountability at SBU level.

Disadvantages.
Too many SBU’s.
Difficulty in assigning responsibility & autonomy.
Another layer between corporate & division.

Matrix structure.

Advantages.
Individual specialists can be used where mist needed.
Allows creativity due to pooling of diverse talents.
Good exposure in general management.

Disadvantages.
Dual accountability creates confusion.
Requires high level co-ordination vertical / horizontal.
Shared authority may create communication problems.

Network organization structure.

Advantages.
High level of flexibility to change structural arrangement in line with business
requirements.
Permits concentration on Core competencies of the firm.
Adaptability to cope with rapid environmental change.

Disadvantages.
Loss of control & lack of o-ordination as there are several partners.
Risk of over specialization as more tasks are performed by others.
High cost as duplication of resources could be there.

Other types of structures.


Product based structures.
Customer based structures.
Process based structures.
Geographic based structures.
Intrapreneurial structure.

Organizational design & change.


Structural change.
Behavioral change.

Organizational system.

Information system.
Efficiency.
Decisional oriented.

Control system.
Formal direct.
Informal indirect.

Appraisal system.
Quantitative / Objective.
Qualitative / Subjective.
Motivation system.
Monetary.
Non monetary.

Development system.
Internal.
External.

Planning system.
Directive.
Participative.

Marketing control process.

What do we want to achieve?- Goal setting.


What is happening?- performance measurement.
Why it is happening?- performance diagnosis.
What should we do about it?- corrective action.

Types of marketing control.


Annual plan control.
Sales analysis –
Consists of measuring and evaluating actual sales in relation to sales goals.
Sales variance analysis –
Measures relative contribution of different factors to gap in sales
performance

Market share analysis.


Defining & measuring market share
Overall market share –
Company’s overall market share is it’s sales expressed as a % of total market
sales.
Served market share –
As a % of total sales to it’s served market.
Relative market share – To top three competitor.
Company sales as % of combined sales of three largest competitor.

These conclusions from market share analysis are subject to certain qualification.

The assumption that outside forces affect all companies in the same ways is often
not true.
That a company’s performance should be judged against the average performance
of all companies is not always valid.
If new firm enter the industry then existing firms market share might fall.
Sometimes market share decline is deliberately engineered by a company to
improve profits.
Market share can fluctuate for many minor reasons.

Managers must carefully interpret market share by product line, customer type,
regions & other breakdowns.
Four components of market share movements –

Customer Selectivity.
It is the size of average customer purchase from company expressed as a
percentage of size of average customer purchase from an average company.
Price Selectivity.
It is the average price charged by this company expressed as a percentage of the
average price charged by all companies.

Marketing expenses to sales analysis.


Sales force to sales – 15%
Advertising to sales – 5%
Sales promotion to sales – 6%
Market research to sales – 1%
Sales administration to sales – 3%
Upper control limit.
Desired level.
Lower control limit.

Financial analysis.
Rate of return on net worth.
Profit margin.
Net profits Return on Financial
Net sales assets Leverage
Asset Turnover X
Net Sales Net Profits Total assets
Total assets Total assets Net worth

Return on
net worth
=
Net profits
Net worth
Customer Satisfaction Tracking.

Profitability Control.
Methodology of marketing profitability analysis.
Identifying the functional expenses.
Selling – Advertising – Packaging – Delivery – Billing – Collection.
Sales.
Cost of goods sold.
Gross Margin.
Expenses.
Salaries.
Rent.
Supplies.
Net Profit.

Assigning the functional expenses to the marketing entities.


Preparing a profit & loss statement for each marketing entity.
Determining the best corrective action.
Alternative action evaluation.
Direct v/s Full costing.
Direct cost.
Traceable common costs.
Non traceable common costs.

Efficiency Control.
Sales force efficiency.
Average no. of sales calls per sales person per day.
Average sales call time per contact.
Average revenue per sales call.
Average cost per sales call.
Entertainment cost per sales call.
Percentage of orders per hundred sales call.
No. of new customers per period.
No. of loss customers per period.
Sales force cost as a percentage of total sales.

Advertising efficiency.
Advertising cost per thousand target buyers reached by media vehicle.
Percentage of audience who noted, saw, associated & read most of each print
advertisement.
Consumer opinion on the advertisement content & effectiveness.
Before & after measurement of attitude towards the product.
No. of enquiries stimulated by the advertisement.
Cost per enquiry.
Sales promotion efficiency.
Percentage of sales sold on deal.
Display cost per sales dolor.
Percentage of coupons redeemed.
No. of enquiries resulting from demonstration.

Distribution efficiency.
Inventory control.
Warehouse location.
Transportation modes.

Strategic control.
Marketing effectiveness rating review.
Customer philosophy.
Integrated marketing organization.
Adequate marketing information.
Strategic orientation.
Operational efficiency.

Marketing audit.
It is a comprehensive, systematic, independent & periodic examination of
company’s business unit’s marketing environment, objectives, strategies &
activities with a view to determine problems areas & opportunities &
recommending a plan of action to improve the company’s marketing
performance.

Marketing audit procedure.


Components of marketing audit.
Marketing environment audit.
Macro environment.
Demographic.
Economic.
Ecological.
Technological.
Political.
Cultural

Task environment
Markets.
Customers.
Competitors.
Distribution & dealers.
Suppliers.
Facilitators & marketing firms.
Publics.
Marketing strategy audit.
Business mission.
Strategy.
Marketing objectives & goals.

Marketing organization audit.


Formal structure.
Functional efficiency.
Interface efficiency.
Marketing system audit.
Marketing information system.
Marketing planning system.
Marketing controlling system.
New product development system.
Marketing productivity audit.
Profitability analysis.
Cost effectiveness analysis.

Marketing function audit.


Product.
Price.
Distribution.
Advertising sales promotion publicity.
Sales force.

Marketing excellence review.


Company ethical & social responsibility review.

• Social Responsibility of Business :


• Arguments for Social Responsibility :
1. Change public expectations of business
2. Better environment for business
3. Public Image
4. Avoidance of Govt. Regulation
5. Balance of Responsibility with power
6. Business has the resources
7. Let Business try
8. Prevention is better than cure
9. Moral Responsibility
10. Citizenship argument
11. Duty & Gratitude

• Argument against Social Responsibility :


1. Profit maximization
2. Society has to pay the cost
3. Lack of social skill
4. Business has enough power
5. Social overhead cost
6. Lack of Accountability
7. Lack of broad support
8. Friedman & Levit’s view

• Responsibility towards Shareholders:


1. To protect the interest of shareholders
2. To provide sufficient profit for dividend
3. To improve & consolidate its position
4. Image Building
5. Guidance & control of policies & activities

• Responsibility towards Employees :


1. Payment of fair wages
2. Best possible working conditions
3. Fair work standards & norms
4. Labour welfare facilities
5. Proper training & education of the workers
6. Opportunities for accomplishment & promotion
7. Encouragement of special skills & capabilities workers
8. Efficient grievance handing system
9. Participation in managerial decision

• Responsibility towards Consumers :


1. Increase productivity & reduce price
2. Improve quality
3. Smoothen the distribution system
4. To do a research & development
5. Step to remove imperfection
6. In monopolistic market supply the goods at reasonable prices
7. After sales services
8. Provide sufficient information
9. To provide an opportunity of being heard Y redress grievance
10. Avoid misleading the customer
11. Understand consumer need & take measures to satisfy the needs

• Responsibility towards Community :


1. Prevention of environmental pollution
2. Rehabilitating the population displace by the operation of the business
3. Development of locality
4. Conserve scare resource & develop alternative
5. Improving efficiency
6. Contributing to R&D
7. Development of backward area
8. Promotion of ancillary & small scale sector
9. Contribution for promotion of education & population control
10. Contributing to the national effort to build up the society

SALES FORCASTING

" An estimate of sales in Rs or physical units for a specified future


period under a proposed marketing plan or Programme and under
an assumed set of economic and others forces outside the unit for
which the forecast is made"
-American Marketing Association
Important Terms
A) Market: " Market is aggregate demand of the potential buyers
of a commodity or service"
B) Market Potential: " A calculation of maximum sales
opportunity for all sellers of a goods or service during stated
period"
C) Market Share: "Market Share is the ratio of a company's sales
to the total Industry sales on either an actual or potential basis"
D) Sales Potential: "A calculation of maximum sales opportunities
open to specified company selling goods or services during
stated future period"

(A) Period for sales forecasting:


a) long-range forecast and it's uses
Period from 5 years to 10 years
1) Anticipating the magnitude and timing of capital
expenditures required for new facilities in future.
2) Determining probable trends and range of cash inflows from
sales
3) Estimating company's long-range personnel needs
4) Highlighting future problems and requirements regarding
raw materials
5) To determine R & D objective to achieve the future sales and
profitabiling

b) Medium-range forecasting
Over 1 year to 4 years
1) Determining Budgetary control over expenses
2) Determining Dividend policy
3) Deciding rate of maintenance expenditures
4) Determining schedule of operations

c) Short-run-forecast:
Three months upto one year
1) Estimating inventory requirement
2) Providing adequate shipping facilities
3) Assessing production- worker requirements
4) Estimating working- capital needs
5) Setting production runs for each product
6) Fixing sales quotas

(B) Factors influencing sales forecasting


1) General Business condition
2) The conditions within the industry
3) The changed market situation
4) The conditions within the company

(c) Types of forecasts


1) The Economic forecast
2) The Industry forecast
3) The Company's sales forecast
4)

FORECASTING REQUIRES

(A) An understanding of demand Concepts and Demand


Determinants
(B) An Appropriation of the Economic trends
(C) Adoption of the correct sales forecasting procedure and
techniques.
(D) An awareness of limitation of sales forecasting

(A) Demand Concept and Determinants

1) Types a) Primary b) Selective c) Derived


2) Determinants:
1) Price
2) Population
3) Income ( Disposable Income )
4) Satisfaction ( Economic & Non Economic )
5) Substitutability
6) Competition
7) Advertising and Promotion

(B) Economic Trends

National Income Statistics


a) Gross or Net national product
b) Factor Incomes
1) Wages and Salaries
2) Interest
3) Rent and
4) Profit before tax
c) Consumer expenditure
d) Private Income
e) Personal Income
f) Disposable Income

(C) SALES FORCASTTING PROCEDURE & METHODS

1) Determining the objectives and purposes for which the forecasts


are to be used.
2) Dividing the company products into homogenous groups
3) Determining the relative important of the factors which affect
sales of each such group
4) Selecting the appropriate forecasting method
5) Collecting, analyzing, cross-checking the data and drawing
deduction therefrom
6) Making assumption regarding effect of factors which are not
susceptible to being measured
7) Converting the deductions and assumptions into specific
forecasts relating to the products and territories involved
8) Applying these forecasts to the company's operations
9) Periodically reviewing and revising the forecasts

FORCASTING METHODS:
1) The Jury of Executive opinion method
2) Sales force composite opinion method
3) The users Expectation method
4) Statistical method

1) The Jury of Executive opinion method


Advantages:
a) Provides forecasts easily and speedily
b) Without preparing elaborate statistics
c) Permits pooling of specialized viewpoints
d) In the absence of adequate data, supplies only feasible means of
forecasting
Disadvantages:
a) Interior method compared with other factual basis
b) Disperses responsibilities for accurate forecasting
c) Utilizes costly executive time

2) The sales force composite method


Advantages:
a) Specialized knowledge of persons closest to market
b) Provides confidence among sales force for quotas developing
c) Greater stability through magnitude of sample
d) Responsibility on those who are expected to give results
e) Easy breakdown by product, territory or salesmen
Disadvantages:
a) Salesmen poor estimator being unduly optimistic
b) Salesmen often unaware about broad economic trends
c) Salesman's time curtailed for primary job of selling
d) Intentional underestimation of demand

3) The Users Expectation method


Advantages:
a) Based on direct information from end users
b) Provides subjective feel of the market
c) More appropriate when other methods are inappropriate
Disadvantages:
a) Not practical when numerous users are there
b) Based on expectations which may change
c) Based on the judgement of ill-informed users

4) Statistical & quantitative methods


1) The Trend method
2) The Regression Technique

Advantages:
a) Describe the measurable objective
b) The degree of reliably in indicated
c) Quantity assumptions enables checking results
d) Major factors influenced sales
Disadvantages:
a) Correlates sales to indicators which are generally estimates
b) Places anrreliance on statistical methods
c) Complicated statistical method
d) Requires considerable technical skill and experience

THE FORECASTING TECHNIQUE:

a) Ability of executive to understand method and confidence they


place in the results
b) Extend of accuracy and crosschecks on accuracy
c) Ability of technique to give timely results
d) Cost involved in terms of efforts and money

Limitation:
1) Fashion
2) Lack of sales History
3) Anticipating growth Elements
4) Psychology