Marketing Management Philosophies

• Consumers favor products that are

Production Concept available and highly affordable
•Improve production and distribution

•Consumers favor products that offer

Product Concept the most quality, performance, and
innovative features

•Consumers will buy products only if

Selling Concept the company promotes/ sells these
product

•Focuses on needs/ wants of target

Marketing Concept markets & delivering satisfaction
better than competitors

Societal Marketing •Focuses on needs/ wants of target

Concept markets & delivering superior value
•Society’s well-being
 Marketing & Sales Concepts
Theodore Levitt, Harvard

Starting Focus Means Ends

Point
Selling Profits
Existing
Factory and through
Products
Promoting Volume

The
The Selling
Selling Concept
Concept

Profits
Customer Integrated
Market through
Needs Marketing
Satisfaction

The
The Marketing
Marketing Concept
Concept
 Products &
Marketing Senior Other
Services
Departme Manageme departments Communicatio Channels
nt nt ns
Price
INTERNAL INTEGRATE
MARKETIN D
G MARKETIN
G
HOLISTIC
MARKETIN
G

SOCIALLY
RELATIONSHI
RESPONSIBL
E P
MARKETING MARKETING
Ethics
Societal benefits
& welfare Other
Environment Customers Stakeholders
Channels
Legal
framework
 What
What motivates
motivates aa Consumer
Consumer
to
to take
take action?
action?
• Needs - state of felt deprivation for
basic items such as food and clothing
and complex needs such as for
belonging. i.e. I am thirsty
• Wants - form that a human need
takes as shaped by culture and
individual personality. i.e. I want a
Coca-Cola.
• Demands - human wants backed by
buying power. i.e. I have money to
buy a Coca-Cola.
 Marketplace, Marketspace &
Metamarkets
• Marketplace is physical; Marketspace is virtual
(internet).
• Metamarkets:
Metamarkets cluster of complementary products
and services in the same industry.
E.g. Automobile Co.s, Car dealers, financial
companies, Insurance companies, spare parts
dealers, service shops, auto magazines auto sites
over internet.
internet
 Target Markets, Positioning &
Segmentation
• Target Markets: Identifying & profiling distinct group of
buyers – prefer varying product/services mixes – examining
the Macro-environment (Demographic, psychographic, and
behavioural differences among buyers) – For SEGMENT(S)
company may offer ‘customized’ or ‘standardized’ benefit(s).
• Segmentation: based on demographic, psychographic and/or
behavioural similarities/ dissimilarities.
• Positioning: Offering is suitably/ appropriately placed in the
mind of the customer – based on unique features/identified
“gap(s)” in the market. E.g. Scorpio launched by M&M in
2002 – Sports utility vehicle (SUV) – ‘luxury’ and ‘comfort’
(positioning: ‘luxury’ – of a car and ‘adventure’ of a SUV).
 Demand States
• Negative demand: consumers dislike the product and may even pay the
price to avoid it. (e.g. Vaccination, dental treatment etc.)
• Nonexistent demand:
demand consumer may be unaware or not interested in
the product/ service. (e.g. Pharma retail chains ‘Membership’ schemes)
• Latent demand:
demand consumers may have a strong need- which either may
not be satisfied by existing products or may not have specified. (e.g.
Insurance etc.)
• Declining demand:
demand consumer begin to buy the product less frequently.
(e.g. ice-creams, cold beverages during Winter)
• Irregular demand:
demand consumer purchase very occasionally. (e.g. Cement,
Wall Paint, electric switches and other appliances etc)
• Full demand:
demand consumers are adequately buying all products available in
the market. (e.g. Milk products)
• Overfull demand:
demand More consumers would like to buy than the supply.
(e.g. Milk pdts. during Shivratri festival)
• Unwholesome demand:
demand consumers may be using products that have
undesirable social consequences. (e.g. Cigarettes, Alcoholic drinks etc.)
 PEST Framework for Environmental
Auditing
• Political/Legal factors
– Political/legal structure
 Socio-Cultural factors
– Political alliances & stability
– Monopoly restrictions  Demographics
– Taxation policies
– Employment policies  Lifestyles
– Foreign Trade regulations
– Environment protection laws
 Attitudes
– Trade Union Laws  Behaviour
– RTI Act etc.
• Economic factors Psychographics
– Business cycles
– Inflation rates Technological factors
– Investment levels
– Employment & Health  Industrial focus on R&D
standards
– GNP trends  Speed of technology
– Nature of competition transfer
– Trade blocks
 Shorter Product Life
cycles
 Inorganic growth
 MARKETING ENVIRONMENT
Demographic/ Intermediaries Technological/
Economic Natural
Logistics R&
ting D
k e
r

Fi
M
M
a Product

na
Suppliers

nc

Publics
e
Place Target Price
Pr on

Consumers

g
od

t in
uc

un
Promotion
ti

co
Ac
Eng sing
ng ineeri r c ha
Pu
Political/ Social/
Legal Competitors Cultural
 Industry Structure types
• Absolute Monopoly: Due to patent protection,
license, economies-of-scale: only one firm provides
the product or service. (e.g. Pharmaceutical Co.s
formulations)
• Differentiated Oligopoly: few firms produce
specialized products- partially differentiated. (e.g.
Zhandu & Dabur Chawanprash)
• Pure Oligopoly: few firms produce the same
product (e.g. BHEL & Crompton’s - Switchgears division)
• Monopolistic competition: many firms offer
differentiated product/ service. (e.g. Automobiles,
Banking, Insurance, Mutual Fund Companies)
• Pure competition: numerous firms offer the
same product/ service. (e.g. reaching a stage similar to
pani-puri wallas)
Analyzing Competitors cont…

Company need to gather information

about competitor’s strengths and
weaknesses on three parameters:
– Share of market: competitors share of
the target market.
– Share of mind: percentage of customers
remember competitors features.
– Share of heart: percentage of
customers prefer competitors features.
 Defense Strategies
(2) Flank defense

(3) Preemptive
defense (1)
Attacker Position
defense
(4) Counter- (6) Contraction
offensive defense
defense Defender

(5)
Mobile
defense
 Six Defensive Strategies
• Position Defense: building superior brand power and
making the name unique in the market. e.g. Nescafé.
• Flank Defense: to protect a weak front or use as
counterattack. e.g. HLL’s Surf Excel powder – price hike
from Rs. 19 to Rs. 20 to consolidate the position in
detergent market specially against small players in the
Indian market- protect and leverage brand identity.
• Preemptive Defense: Attack before the competitor starts
its offense. e.g. ICICI Bank’s ATM networks and core banking
across branches keep their local and regional banks
competition on check, and Microsoft’s ‘preannouncement’
approach on new software launch in future – force smaller
firms to concentrate on other segments.
 Six Defensive Strategies cont…
• Counter-offensive Defense: Attack the competitor from front
or protect the weak front (Flank attack). e.g. US Automobile
companies often launch a counteroffensive attack against
Japanese counterparts in their markets for the disturbances that
had been created by them in US market.
• Mobile Defense: Market leader stretches/ leverage its strengths
into new sales territories – can serve for future centers for
defense & offense – market broadening like Reliance from
Petroleum into Energy (using R&D for Oil, coal, hydroelectric and
chemicals), and market diversification like ITC from Cigarettes
into e-choupals, garments etc.
• Contraction Defense: When it is difficult to defend the old
territories, leader go for ‘planned contraction’ (strategic
withdrawal) – giving up weaker/ unprofitable territories and
reassigning resources to stronger territories - like US companies
relocating their operations from Europe to emerging economies
like India & China.
 Attack Strategies

(4) Bypass attack

(2) Flank
attack
(1) Frontal
Attacker attack
Defender
(3) Encirclement
attack

(5) Guerilla
attack
 Attacking Strategies
• Frontal Attack: attacker concentrate on leader’s
product ranges, advertising, price & distribution
like Pepsi-Coca Cola, HLL-P&G.
• Flank Attack: Hit competitor’s weak front at two
strategic dimensions – geographic and segmental.
Geographical like IBM’s rival Honeywell set-up
sales branches in smaller cities, that were not
targeted by IBM. Segmental like Japanese
automobile co.s did against US auto makers by
developing fuel-efficient cars.
 Attacking Strategies cont…
• Bypass Attack: Indirect assault strategy – bypass the rival
and attack the easier markets to broaden the resource
base and share the risk. Can be done through:
– Diversifying into unrelated product categories
– Diversifying into new geographical areas
– Launch new technologies to enhance existing products
e.g. Pepsi used bypass strategy against Coke by:
– Purchasing the Orange juice giant ‘Tropicana’ for $3.3
billion in 1998 which is double the market share of Coca
Cola’s ‘Minute Maid’.
– Acquired The Quaker Oats Co. for $14 billion in 2000 –
‘Gatorade’ thirst quenchers (health drink) captured huge
share from Coca Cola’s ‘Powerade’.
 Attacking Strategies
cont…
• Encirclement Attack: Capture large proportion of
leader’s share by launching massive offensive attack
on several fronts. Use when challenger commands
superior resources/ coverage. Mohan’s against Kelloggs
Cornflakes in India based on price points and distribution
coverage – from groceries to organised chains.
• Guerrilla Attack: Launching small and irregular
attacks to make competitor tired – to secure
permanent foothold in the market – by both
conventional & unconventional means like price cuts,
intensive promotions etc. e.g. small Generic players against
the Ethical drug manufacturers.
 Specific Attack
Strategies
• Price-discount – Super Bazar vs. Big Bazar daily
price offers across categories.
• Cheaper goods/ services (low quality) – Nirma,
SpiceJet & IndiGo.
• Value priced goods/services – Nirma’s Nima
soap, Subhiksha, Air Deccan.
• Prestige goods – (high quality-premium price) –
Samsung India launch Plasma TVs to attack the
Sony’s markets.
• Product proliferation (large pdt. variety – more
choice) - Asian Paints against ICI paints.
• Product innovation – 3M entered new markets
through breakthrough technologies into their
product ranges.
Specific Attack Strategies
cont…
• Improved services – ICICI Bank offers better ATM and
core Banking coverage against HSBC in India.
• Distribution innovation – Dell vs. other traditional
rivals like Compaq, HP, and IBM.
• Reduced Manufacturing cost – US automobile co.s
operations in India to sustain their markets in
developing markets like US, Europe.
• Intensive advertising promotion – Pepsi & Coca Cola
wars.
 Market Follower Strategies
Four broad strategies adopted are:
• Counterfeiter: Duplicated leader’s products and sell in
the ‘parallel’ or grey market like general generic drugs.
• Cloner: Use the leader’s products, name, packaging
with slight variations like electric fittings, pipe fittings at
local markets.
• Imitator: copy few things but also maintains
differentiation in packaging, promotions, & pricing like
Domino Pizza vs. Pizza Hut.
• Adapter: Adapt with better offer or improved version
of leader’s products – launch in the same or different
markets – Kissan vs. Maggi’s Tomato Ketchup.
 “Nichemanship”
• Customer-size specialist (M80 mopeds in rural
India being neglected by big players till recently)
• Specific-customer specialist (BHEL, Crompton
Ltd)
• Geographic specialist (Wagh Wakri tea in G
• Product or product-line specialist (Levi’s,
Peter England, Parker)
• Product-feature specialist (few Insurance Co.
only cover Marine insurance)
• ujarat)
 “Nichemanship”
cont…
• Job-shop specialist (customised)
(Dell, 7-Eleven’s)
• Quality-price specialist (HP, Apple –
high quality & high price computer
systems & peripherals)
• Service specialist (Banks having
-evening branches)
• Channel specialist (Nike’s & Addidas
exclusive outlets)
 Customer vs. Consumer
Value
Customer Value Consumer Value
Focuses on – Focuses on –
“the buyers “evaluation on the
evaluation of consumption or
product purchase at possession of
the time of buying” products”
(Lai 1995)

Pre-purchase Post-purchase
judgment that assessment of the
generates a series consumption
 Customer/Product
Profitability Analysis
Customers

C1 C2 C3
Highly
P
r
o
P1 + + + profitable
product
d
u P2 + Profitable
product
c
t
s P3 - - Losing
product

P4 + - Mixed-bag
product
High Mixed-
Losing
profit bag
customer
customer customer
 The 20-80 rule: top 20% of the customers
may generate 80% of the company’s
profits.
profits (Peppers & Rogers, 1993)
 The 20-80-30 rule: top 20% customers
generate 80% of company’s profits, half of
which are lost serving the bottom 30% of
unprofitable customers.
customers (William, A. Sherden,
1994)
 These studies suggested that the
companies could improve their profits by
“firing” unprofitable customers.
customers
• GREEN MARKETING ARE THOSE
ACTIVITIES WHICH ATTEMPT TO
REDUCE THE NEGATIVE SOCIAL AND
ENVIRONMENTAL IMPACTS OF
EXISTING PRODUCTS AND
PRODUCTION SYSTEMS ,AND WHICH
PRORMOTE LESS DAMAGING
PRODUCTS AND SERVICES
 Steps in Segmentation, Targeting,
& Positioning

6. Develop Marketing
Mix for Each Target SegmentMarket
Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s)
Market
3. Develop Measures
of Segment Attractiveness
Targeting
2. Develop Profiles
of Resulting Segments
1. Identify Bases Market Segmentation
for Segmenting the Market
 Basic Market-Preference
Patterns
 Homogeneous preferences: shows all consumers tend
towards same preference on product attributes.
 Diffused preferences: Preferences scattered.
Competitors map differences in choice more clearly.
 Clustered preferences: Distinct market segments
based on preferences – concentrated marketing.
 Niche Marketing: (Crack, Itchguard etc)
 Unlike Segments, niches are small.
 Customers have very specific/ distinct set of needs and are very
few in number.
 Willing to pay premium for the product/ service who satisfy
them.
 Few competitors
 Market based on specialization
 Step
Step 1.
1. Market
Market Segmentation
Segmentation
Levels
Levels of
of Market
Market Segmentation
Segmentation
Mass
Mass Marketing
Marketing
Same
Same product
product to
to all
all consumers
consumers
(no
(no segmentation)
segmentation)
Segment
Segment Marketing
Marketing
Different
Different products
products to
to one
one or
or more
more segments
segments
(some
(some segmentation)
segmentation)

Niche
Niche Marketing
Marketing
Different
Different products
products toto subgroups
subgroups within
within segments
segments
(( more
more segmentation)
segmentation)

Micromarketing
Micromarketing
Products
Products to
to suit
suit the
the tastes
tastes of
of individuals
individuals or
or locations
locations
(complete
(complete segmentation)
segmentation)
 Step
Step 1.1. Market
Market Segmentation
Segmentation
Bases
Bases for
for Segmenting
Segmenting
Consumer
Consumer Markets
Geographic Markets
Nations, states,
regions or cities

Demographic
Age, gender, family
size and life cycle, or
income

Psychographi
cSocial class, lifestyle,
or personality

Behavioral
Occasions, benefits,
uses, or responses
 Step
Step 1.
1. Market
Market Segmentation
Segmentation
Bases
Bases for
for Segmenting
Segmenting International
International
Markets
Markets
Industrial
Industrial Markets
Markets

Political/
Political/
Geographic
Geographic Economic
Economic Legal
Legal

Cultural
Cultural Intermarket
Intermarket
Evaluating & Selecting Market Segments:
Five Patterns of Target Market Selection
Single-segment Selective Product
concentration specialization specialization
M1 M2 M3
M1 M2 M3 M1 M2 M3
P1 P1 P1
P2 P2 P2
P3 P3 P3

Market Full market

specialization coverage
M1 M2 M3 M1 M2 M3
P1 P1
P2 P2
P = Product
M = Market P3 P3
 Segment-by-Segment
Invasion Plan
Customer Groups
Airlines Railroads Truckers
Product Varieties

Large
computers

Mid-size
computers

Personal
computers

Company A Company B Company C

Factors Influencing Consumer
Behavior
Buyer Decision Process
Maslow’s Hierarchy of Needs
Straight Buying Situations
Rebuy Buyer reorders an
existing product or

 
service from the list
of acceptable
suppliers.
Modified                                                           
Rebuy Users, influencers,
or deciders in the                                                                  
buying center want            
to change the
product
specifications, price,
delivery schedule, or
supplier.

New Buy
Organization is a
first-time buyer of
the product or
service. This involves
greater risks, so the
buying center is
• CLV
• Flanker brands
• Cash cows
• Low end entry level
• High end prestige