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Human Needs –
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.
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.
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.
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.
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.
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.
a. Selective attention.
b. Selective distortion.
c. Selective retention.
Learning.
Buying motives.
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.
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.
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 –
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.
Problem recognition –
o Internal. o External.
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.
Performance review.
BUSI NESS ENVI RONM ENT
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
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
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
• 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
• 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
• 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.
The general approach to segmenting the market.
Education. o Religion.
Race. o Nationality.
Psychographic segmentation –
Consumer responses –
Behavioral segmentation –
Purchasing approaches –
Situational factors –
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.
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.
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.
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.
Trade variable.
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.
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.
Industry scope.
Products & application scope.
Competence scope.
Market segment scope.
Vertical scope.
Geographic scope.
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.
Intensive Growth.
Market penetration.
To encourage current customer to buy more.
To attract the competitors customers.
To convince the non users.
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.
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.
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?
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.
Stages of development.
Small.
Bigger.
Large & scattered.
Most complex.
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.
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.
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.
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.
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.
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.
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.
Task environment
Markets.
Customers.
Competitors.
Distribution & dealers.
Suppliers.
Facilitators & marketing firms.
Publics.
Marketing strategy audit.
Business mission.
Strategy.
Marketing objectives & goals.
SALES FORCASTING
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
FORECASTING REQUIRES
FORCASTING METHODS:
1) The Jury of Executive opinion method
2) Sales force composite opinion method
3) The users Expectation method
4) Statistical method
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
Limitation:
1) Fashion
2) Lack of sales History
3) Anticipating growth Elements
4) Psychology