MARKETING ENVIRONMENT

“It is useless to tell a river to stop

running; the best thing is to learn
how to swim in the direction it is
flowing.”
-Anonymous
 Chapter Objectives
 List and discuss the importance of the elements of
the company’s microenvironment

 Describe the macroenvironmental forces that

affect the company’s ability to serve its customers

 Explain how changes in demographic and

economic environments affect marketing and
describe the levels of competition
 Chapter Objectives
 Identifythe major trends in the firm’s natural and
technological environments

 Explain the key changes that occur in the political

and cultural environments

 Discuss how companies can be proactive rather

than reactive when responding to environmental
trends
 Marketing Environment
 Includes:
– Microenvironment: 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.
 The
The Marketing
Marketing Environment
Environment
Demographic

Company
Cultural Economic

Publics Suppliers
Company
Customers
Political Competitors Natural
Intermediaries

Technological
 Actors in the
Microenvironment
 Microenvironment

1. The company

– Marketing must consider other parts of the organization

including finance, R&D, purchasing, operations and
accounting
– Marketing decisions must relate to broader company
goals and strategies

Goal 1: Describe environmental factors

 The Company
 Marketingmanagers must work with all
departments of a company

 All
Departments have an impact on the
marketing department’s plans and actions

 “Think Consumer”
 Suppliers:

– Provide resources
needed to produce
goods and services.
– Important link in the
“value delivery
system.”
– Most marketers treat
suppliers like partners.
 Marketing Intermediaries
 Marketing intermediaries help the company
promote, sell, and distribute its goods to the final
buyers

 Marketing service agencies help formulate and

implement marketing strategies

 Financial
intermediaries help hospitality
companies finance their transactions
Intermediaries…
 Resellers: the individuals and organizations that buy goods and
services to resell at a profit.
 Physical distribution firms: warehouse, transportation and other
firms that help a company to stock and move goods from their
point of origin to their destinations.
 Marketing-service agencies: marketing research firms,
advertising agencies, marketing consulting firms and other
service providers that help a company to target and promote its
products to the right markets.
 Financial intermediaries: banks, credit companies and other
businesses that help finance transactions or insure against the
risks associated with the buying and selling of goods.
Partnering With Intermediaries
 The
The Company’s
Company’s Microenvironment
Microenvironment
Customers
 - five types of markets that purchase a company’s
goods and services. (a diagrammatic rep. follows…)

 The company must study its customer markets

closely and keep up to date with changing
customer requirements.
 The company must communicate with its
customers, and must listen to them closely.
Customer
Customer Markets
Markets

International Consumer
Markets Markets

Company
Company
Government Business
Markets Markets

Reseller
Markets
 Competitors
 To be successful, a company must satisfy
needs and wants of consumers better than
competitors
 A company should monitor three variables
when analyzing each of its competitors
– Share of Market
– Share of Mind
– Share of Heart
Levels of
Competition
(Adapted from
Analysis for Market
Planning), Donald
R. Lehmann and
Russell S. Winer,
p.22, ©1994 by
Richard D. Irwin
 Competitors…
 Must understand competitor’s strengths
 Must differentiate firm’s products and
offerings from those of competitors
• Competitive strategies should emphasize
firm’s distinctive competitive advantage in
marketplace
Types of Publics
Publics - any group that perceives itself having an interest in a
company’s ability to achieve its objectives

 Financial publics influence the company’s ability to obtain funds.

Banks, investment houses and stockholders are the principal
financial publics.
 Media publics are those that carry news, features and editorial
opinion. They include newspapers, magazines and radio and
television stations.
 Government publics Management must take government
developments into account. Marketers must often consult the
company’s lawyers on issues of product safety, truth in
advertising and other matters.
 To be continued ….,
 Publics…
 Citizen action publics A company’s marketing decisions may
be questioned by consumer organizations, environmental
groups, minority groups and other pressure groups.
 Local publics Every company has local publics, such as
neighborhood residents and community organizations.
 General public A company needs to be concerned about the
general public’s attitude towards its products and activities.
The public image of the company affects its buying.
 Internal publics A company’s internal publics include its
workers, managers, volunteers and the board of directors.
The Company’s Macro environment
 Demographic Environment
 Demography is the study of human populations in
terms of size, density, location, age, gender, race,
occupation, and other statistics

 Demographics change over time and companies

must keep up with them
Age Distribution of the U.S.
Population

(78 million people born 1946-1964)

One of the most powerful forces shaping
the marketing environment, 30% of
population

(45 million people born 1965-1976)

More skeptical, cynical of frivolous
marketing pitches promising easy
success

(72 million people born 1977-1994)

Fluent and comfortable with
computer, digital, and Internet
technology (Net-Gens)
 Age distribution in India
Age group percentage

12-14 9.8
15-19 13.6
20-24 12.9
25-34 22.2
34-44 16.4
45-54 11.6
55+ 13.6
Households in Income
Brackets
1.0% 1.4%
2.3% 2.6%
4.8% 6.7% >1000k
19.3% 20.8%
500-1000k

28.1%
28.2% 300-500k

150 - 300k

44.5% 40.3% 75 - 150k

< 75k

2006 HH nos 2008 HH nos

Values in INR per annum

Source Market Skyline of India 2008-09
 Key
Key U.S.U.S. Demographic
Demographic
Changing Age Trends
Trends
Structure
Changing Age Structure
Population
Populationis
isgetting
gettingolder
older

Changing
ChangingFamily
FamilyStructure
Structure
Marrying
Marryinglater,
later,fewer
fewerchildren,
children,
working
workingwomen,
women,and
andnonfamily
nonfamilyhouseholds
households

Geographic
GeographicShifts
Shifts
Moving
Movingto
tothe
theSunbelt
Sunbeltand
andsuburbs
suburbs(MSA’s)
(MSA’s)

Increased
IncreasedEducation
Education
Increased
Increasedcollege
collegeattendance
attendance
and
andwhite-collar
white-collarworkers
workers
Growing
GrowingEthnic
Ethnicand
andRacial
RacialDiversity
Diversity
72%
72%Caucasian,
Caucasian,13%
13%African-American,
African-American,
11%
11%Hispanic
Hispanic&&3%
3%Asian
Asian
 Basis of consumer
classification
1. The affluent/ very rich(over Rs 2,15000) – households owing
personal car/jeep with other products
2. The well off(consuming class) (Rs45000 - 215000):
Households owning any/all of these – air-conditioners, motor
cycle, scooter, washing machine, refrigerator, color TV, other
durables but no car or four wheeler
3. The climbers(Rs 22000 - 45000) : Household owning any/all
of these – moped, VCR/VCP/CD player, mixer grinder, sewing
machine, but not any of the durable mentioned above
4. The aspirants(Rs16000 - 22000) – bicycles, electric fans,
electric iron etc but not mentioned in above three.
5. The destitute(below 16000) : wrist watches, pressure cooker,
radio etc
 Economic Environment
Consists of factors that affect consumer
purchasing power and spending
patterns.
 Changes in Income  Income Distribution
– 1980’s – consumption – Upper class
frenzy – Middle class
– 1990’s – “squeezed – Working class
consumer” – Underclass
– 2000’s – value marketing
 Economic Environment
Global
Global Economic
Economic
Development
Development

Key
Key
Changes
Changes in
in Income
Income Economic
Economic
Concerns
Concerns for
for
Marketers
Marketers

Changing
Changing Consumer
Consumer
Spending
Spending Patterns
Patterns
•Economic Factors
(a)Gross national product.
(b)Per capita income.
(c)Balance of payments position.
(d)Industry life cycle and current phase through which the industry
is passing. The different phases of this life cycle could be
classified as recovery, boom, recession and depression.
(e)Trends in the prices of goods and services—specifically, whether
the inflationary or deflationary trends are visible.
(f)Fiscal policies and prime rate of interest charged by commercial
banks.
 General Economic Conditions
 Business cycle: fluctuations in the economy that follow the
general pattern of prosperity, recession, depression and
recovery.
 Prosperity: A period during which unemployment is low and
total income is relatively high.
 Recession: A period during which unemployment rises and total
buying power declines.
 Depression: A period during which unemployment is extremely
high, wages are very low, total disposable income is at a
minimum and consumers lack confidence in the economy.
 Recovery: The stage of the business cycle in which the
economy moves from depression or recession to prosperity.
 Consumer Demand and
Spending Behaviour
 Buying power: Resources such as goods, services and financial
holdings that can be traded in an exchange situation.
 Income: The amount of money received through wages, rents,
investments, pensions and subsidy payments for a given period.
 Disposable income: After-tax income, which is used for spending or
saving.
 Discretionary income: Disposable income that is available for
spending and saving after an individual has purchased the basic
necessities of food, clothing and shelter.
 Wealth: The accumulation of past income, natural resources and
financial resources.
 Willingness to spend: A disposition towards using buying power,
influenced by the ability to buy, expected satisfaction from a
product and numerous psychological and social forces.
To be cont’d…..
Consumer Demand and Spending Behaviour…

 Consumer spending patterns: Information indicating the

relative proportions of annual family expenditures or the
actual amount of money spent on certain goods and services.
 Comprehensive spending patterns: The percentages of family
income allocated to annual expenditures for general classes of
goods and services.
 Product-specific spending patterns: The annual monetary
amounts families spend for specific products from within a
general product class.
 O bs c e ne ly R ic h (R s .Inc o m e > 1 C ro re )

O th e r s
19%
M ah ar s h tr a
Tam il N adu
39%
5%
P u n jab
6%
Gu jar at D e lh i
6% 25%
 Natural Environment
 Involves the natural
resources that are
needed as inputs by
marketers or that are
affected by marketing
activities.
 Natural
Natural
Environment
Environment
Conservation
Conservation
Of
Of Resources
Resources

Factors
Factors Affecting
Affecting
Ecotourism
Ecotourism the
the
Natural
Natural
Environment
Environment

Recycle
Recycle and
and
Reduce
Reduce Waste
Waste
 Natural Environment
 Natural Environment:
– Involves the natural resources that are needed
as inputs by marketers or that are affected by
marketing activities
 Trends
– Shortages of raw materials
– Increased pollution
– Increased government intervention

Goal 3: Identify trends in natural and technological environments

 The
The Company’s
Company’s Macro
Macro
environment
environment
 Technological -forces that create new product
and market opportunities.

 Political -
laws, agencies and groups that
influence or limit marketing actions.

 Cultural -forces that affect a society’s basic

values, perceptions, preferences, and behaviors.
Technological Environment

Most dramatic
force now
shaping our
destiny.
Technological
Technological Environment
Environment
Rapid
Rapid Pace
Pace of
of High
High R
R&&DD
Change
Change Budgets
Budgets

Issues
Issues in
in the
the Technological
Technological
Environment
Environment

Focus
Focus on
on Minor
Minor Increased
Increased
Improvements
Improvements Regulation
Regulation
Technological Environment
 Technology: the knowledge of how to accomplish tasks and goals.
 Forces that create new technologies, creating new product and market
opportunities.
 Issues
Fast pace of technological change
High R&D budgets
Concentration on minor improvements
Increased regulation
Effect of technology on society
Effect of technology on marketing
Technology assessment
 Cultural Environment

 The institutions and other

forces that affect a
society’s basic values,
perceptions, preference,
and behaviors.
Cultural
Cultural Environment
Environment

Of Of Of
the Universe Oneself Others
Views
Views
That
That Express
Express
Values
Values

Of Of Of
Nature Society Organizations
 Cultural Environment
Includes people’s
Marketing views
Management
of…
Themselves Society
 Identify with  Patriotism on the
brands for self- rise
expression Nature
Others  “lifestyles of
 Recent shift health and
from “me” to sustainability”
“we” society (LOHAS)
Organizations consumer
segment
 Trend of decline
in trust and Universe
loyalty to  Includes religion
companies and spirituality
Goal 4: Explore political and cultural environments
 Political Environment
ncludes
ncludes Laws,
Laws, Government
Government Agencies,
Agencies, Etc.
Etc. that
that Influence
Influence
&& Limit
Limit Organizations/
Organizations/ Individuals
Individuals in
in aa Given
Given Society
Society

Increased
Increased
Changing
Changing Emphasis
Emphasis on on
Increasing
Increasing Government
Government Ethics
Ethics &&
Legislation
Legislation Agency
Agency Socially
Socially
Enforcement
Enforcement Responsible
Responsible
Actions
Actions
 Political Trends
 Increased legislation and regulation
affecting business

 Changing government Agency Enforcement

 Increasedemphasis on socially responsible

actions and ethics
 Legal and Regulatory
Environment
 Laws and Regulations
– for safety
– for consumer protection
– to protect special interests
 Dangers of litigation--anyone can sue,
and juries often buy it!
 Examples:
– Antitrust
 Fair competition

 Pricing

– “Truth in Lending”--have to tell people

real costs of financing; car leases now
regulated
 Environmental Analysis
….
 PEST (STEP) analysis
 POLITICAL
 ECONOMIC
 SOCIAL/CULTURAL
 TECHNOLOGICAL
 SLEPT analysis
 SOCIAL/CULTURAL
 LEGAL
 ECONOMIC
 POLITICAL
 TECHNOLOGICAL
 To be continued…..
Environmental Analysis
….
 BPEST analysis
 BUSINESS
 POLITICAL
 ECONOMIC
 SOCIAL/CULTURAL
 TECHNOLOGICAL
 PESTLE analysis
 POLITICAL
 ECONOMIC
 SOCIAL/CULTURAL
 TECHNOLOGICAL
 LEGAL
 ENVIRONMENTAL/ECOLOGICAL
Examining
Examining and
and Responding
Responding to
to the
the Marketing
Marketing
Environment
Environment

 Environmental scanning: the process of

collecting information about the forces on the
marketing environment.
 Environmental analysis: the process of
assessing and interpreting gathered through
environmental scanning.
 Environmental management perspective: the
firm takes aggressive actions to affect the
publics and forces rather than simply watching
it and reacting to it.
 Responding to the Marketing
Environment
 Reactive: Passive Acceptance and
Adaptation
– Companies design strategies that avoid
threats and capitalize upon opportunities.
 Proactive: Environmental Management
– Use of lobbyists, PR, advertorials,
lawsuits, complaints, and contractual
agreements to influence environmental
forces.
The marketing Environment and Strategic
Opportunities

 Strategic windows: major developments or opportunities

triggered by changes in the marketing environment.
– new technology

– new markets
– new distribution channels
– market re-definition
– new legislation and regulation
– financial and political shocks
 Annual Marketing Plan
1. Executive Summary. In this one- or two-page section, the thrust of the plan is described
and explained. It is intended for executives who desire an overview of the plan but need not
be knowledgeable about the details.

2. Situation Analysis. Essentially, the marketing program for a major division of a company
(called a strategic business unit) or product covered by the plan is examined within the
context of pertinent past, present, and future conditions. Much of this section might be
derived from the results of strategic marketing planning. Additional information of particular
relevance to a one-year planning period may be included in this section.

3. Objectives. The objectives in an annual plan are more specific than those produced by
strategic marketing planning. However, annual objectives must help achieve organizational
goals and strategic marketing goals.

4. Strategies. As in strategic marketing planning, the strategies in an annual plan should

indicate which target markets are going to be satisfied through a combination of product,
price, distribution, and promotion.
1. Tactics. Specific activities, sometimes called action plans, are devised for carrying out
each major strategy included in the preceding section. For ease of understanding,
strategies and tactics may be covered together. Tactics specifically answer the question
of what, who, and how for the company’s marketing efforts.

2. Financial Schedules. This section normally includes two kinds of financial information:
projected sales, expenses, and profits in what’s called a pro forma financial statement;
and the amounts of resources dedicated to different activities in one or more budgets

3. Timetable. This section, often including a diagram, answers the question of when
various marketing activities will be carried out during the upcoming year.

4. Evaluation Procedures. This section addresses the questions of what, who, how, and
when connected with measuring performance against goals, both during and at the end of
the year. The results of evaluations during the year may lead to adjustment in the plan’s
strategies and/or tactics or even the objectives to be achieved.
Marketing Control
 Management is all about
 Planning
 Executing
 Control
 Marketing Organisation
 Functional
 Geographic
 Product/Brand
management
 Market Management
 Matrix
Any strategy is as good as its
implementation
Marketing Implementation
is the process that converts plans into
assignments, which after successful
achievement accomplishes the plan’s
stated objectives
 Marketing Control
 Budget
 Profitability
 Efficiency (Productivity)
 Strategic
 Budget Control
 Measurement of results against
 monthly/quarterly budgets (goals)

 Reasons for deviations (variances)

 Remedial steps to be taken to close the gaps
 between performance and goals

 Review performance in the next month/quarter

and assess results
 Benchmarks for Efficiency
 against last year % growths
 against budget  % variances
 against targets  % market share
 Marketing Expense
 Sales Force  Sales Administration
 Advertising  Public Relations
 Sales Promotion  Direct Marketing
 Market Research
 Financial Analysis
 RONW - Net Profits/Net Worth profit
margin *asset turnover*financial leverage
 Increase margins by increase in sales or
reduction in costs or both
 Increase asset turnover by increasing sales or
reducing the assets (inventories, debtors)
against a given level of sales
 Market based scorecard
analysis
 Customer Analysis
 Stakeholder Analysis
 Profitability Control
 80 : 20 rule
 Product rationalisation
 Customer rationalisation
 Costing Analysis
 Efficiency Control
 Sales force efficiency
 Advertising efficiency
 Sales promotion efficiency
 Distribution efficiency
 Sales force Efficiency
 No. of calls per salesperson per day
 Average revenue per sales call
 Average cost per call
 Average call time per call
 No. of new customers per period
 Sales force cost per unit sales
 Advertising Efficiency
 CPT(cost per thousand)
 Before and after measure of attitude
towards the product
 No. of enquiries per ad
 Cost per enquiry
 Sales Promotion Efficiency
% sales sold on ‘promotion’
 Display cost per sales rupee
 % coupons redeemed
 No. of enquiries resulting from a
demonstration
 Distribution Efficiency
 Time taken to execute orders
 % order executed
 service levels
 Other Control Measures
 Marketing Effectiveness Review
- customer philosophy, integrated marketing organization,
adequate marketing information, strategic orientation and
operational efficiency
 Marketing Audit
- comprehensive , systematic, independent and periodic
review of a company’s business environment, objectives,
strategies and activities with an idea to identify areas of
weaknesses and recommend a plan of action to improve on
such areas.
Segmentation, targeting and positioning

74
 Contents
 Introduction
 Concept of market segmentation
 Benefits of market segmentation
 Requisites of effective segmentation
 The process of market segmentation
 Bases for segmenting consumer
markets
 Targeting
 Market positioning

75
 Introduction
 Market segmentation is the first step in applying the
marketing strategy.
 Segmentation means dividing the market into similar sub-
markets by understanding the needs and expectations of
customers.
 Companies follow different marketing programs for
different segments to maintain better relationship with
customers.

76
 Concept of Market
Segmentation
Definition
Market segmentation is the process of dividing a potential market into
distinct sub markets of consumers with common needs and
characteristics.
For example, Cadbury India functions in three different markets namely,
malted foods, cocoa powder and drinking chocolates and chocolates
and sugar confectionary.

77
 Benefits of Market
Segmentation
The benefits of market segmentation are
1. Understanding the needs of Consumers
 To adopt better positioning strategies.
 Proper allocation of marketing budget.
 Helps in preparing a better competitive strategy.
 Provides guidelines in preparing media plan of the company.
 Different offerings in different segments enhance the sales.
 Customer gets more customized product.
 Helps Company to identify niches.
 Provides opportunities to expand market
 Encourages innovations

78
 Requisites of Effective
Segmentation
Segmentation is successful if it has the following
characteristics:
1.Measurable and obtainable – The size, profile and other
characteristics of the segment must be measurable and
should be obtained in the form of data.
2.Substantial – The size of the segment should be such that
it is profitable. For small segments the cost is high and
hence the products are priced very high.
3.Accessible – We should be able to reach the segment
through existing network at affordable cost.

79
4. Differentiable – The segments are different from
each other and hence require different 4Ps and
programs.
5. Actionable – The segments which a company wants
to target must be actionable, i.e., there should be
sufficient finance, personnel, and capability to target
the segment.

80
 Segmentation
The process of market segmentation.

81
1. Identify existing and future wants in the current
market
• Marketers must understand the changing needs of
customers.
• This process helps to know whether the customer is
satisfied with the existing products or not.
• It also helps to test the company’s new and
innovative concepts.

82
2. Examine the attributes that distinguish among
segments.

• In this process, marketers separate different types of

wants into similar categories.
• The separation may be done on the basis of product
features, lifestyle or behavior.

83
3. Evaluate the proposed segment attractiveness on the basis
of measurability, accessibility and size
• Segments selected in second step should be analyzed for measurability,
accessibility, substantial, actionable and differentiability.
• The further plans of the company depend on the result of this process.

84
 Bases for Segmenting Consumer
Markets
1. Geographic segmentation: Dividing the
market into different geographical units such as
nations, states, regions, cities or neighborhoods
2. Demographic Segmentation: In this
segmentation the market is divided into groups on
the basis of variable such as age, family size,
family life-cycle, gender, income, occupation,
education, religion, race, generation, nationality
and social class.
Some factors used for demographic
segmentation are:

85
• Age and life cycle stage – The needs and wants of
consumers change with age. On the basis of age, a
market can be divided into four classes, children,
young, adults and old. A good marketing manager
should understand the age group for which the
product is most suitable and then plan his
marketing, pricing and advertising policy
accordingly.
For example, Hindustan Unilever launched
Pepsodent Kids for small children.
• Gender – Segmentation on the basis of gender is
useful in clothing, hair-styling, cosmetics and
magazines.
• Income – Segmentation on the basis of income is
useful for products and services like automobiles,
clothing, cosmetics and travel.

86
3. Psychographic Segmentation: In this segmentation, buyers are
classified into different groups on the basis of life-style or personality
and values.
• People belonging to the same demographic group may show very
different psychographic characteristics.
• Some factors used for psychographic segmentation are
a) Life-style: Different people have different life-styles and the products
they use shows their life-style.
– One of the most common psychographic profiling scheme is the VALS, developed by
SRI International, INC.
– VALS defined adult consumers into eight segments. They are people with high resources
1. Innovators: They are successful, sophisticated, active, take charge. They are people with
high self-esteem and rich resources. They are business leaders and interested in growth,
innovation and change. They are image conscious.
2. Thinkers: They are mature, satisfied, comfortable, thoughtful people who value order,
knowledge and responsibility. Favor durability, functionality, and value in products.

87
3. Achievers: They are successful career and work oriented
people who want a controlled life. They prefer predictability
and stability over risk. They are committed to work and
family. Favor premium products that demonstrate success to
their peers.
4. Experiencers: They are young, enthusiastic, impulsive,
disloyal, disobedient. They want variety and excitement.
They like variety and enjoy new things. They like exercise,
sports, outdoor recreation and social activities.

88
3. People with lower resources :
4. Believers: They are traditional people with high commitment to family, community and nation. They have
a moral code. They prefer American products and established brands.
5. Strivers: They look for motivation and approval from others. They are unsure of themselves and have less
economic, social and psychological resources. Trendy and fun loving people who are resource
constrained. Favor stylish products that emulate the purchase s of those with great material wealth.
6. Makers: They are practical people who have constructive skills and value self-sufficiency. They are
happy with their families and have little interest outside their family. Favor american made products with
a practical and functional purpose.
7. Survivors: They are poorly educated, low skilled and concerned about their health. They satisfy urgent
needs of the present. They are concerned for security and safety. They are cautious consumers. They are
loyal to favorite brands.
b) Personality: Marketers use
personality variables to segment the
market. They promote their products
with brand personality that resembles
consumer personalities.
c) Social class: It has a strong
influence on preference in cars,
clothing, home furnishings, leisure
activities, reading habits, etc. Many
companies design products and services
for specific social classes.

90
4. In behavioral segmentation, buyers are divided into groups
on the basis of their knowledge or attitude towards the use of,
or response to a product.
• Some factors used for behavioral segmentation are
1. Occasions
2. Benefits
3. User status
4. Usage rate
5. Loyal status
6. Buyer readiness stage

91
1. Occasions: Buyers develop a need, purchase or use a product according to
occasion. For example, Tanishq offer schemes and promotions for purchasing
on Akshaya Truthiya.
2. Benefits: Buyers can be classified according to the benefits they are looking
for.
3. User status: Markets can be segmented into non-users, potential users, first
time users and regular users of a product. Marketing strategy for each
segment is different.
4. Usage rate: Markets can be segmented into light, medium and heavy product
users. Heavy users are less in number but responsible for a large part of total
consumption. Marketers like to attract one heavy user rather than many light
users. For example, textile brand Allan Paine offered 4 cotton trousers for Rs.
999. It wanted to earn profits from sales volume.

92
5. Loyal status: Consumers have different levels of loyalty for different
brands and stores. According to brand loyalty status, buyers can be
divided into four groups:
a) Hard core loyal: Such consumers buy only one brand all the time.
b) Split loyal: Such consumers are loyal to two or three brands.
c) Shifting loyal: Such consumers shift from one brand to another.
d) Switchers: Such consumers show no loyalty to any brand.
5. Buyer readiness stage: A market consists of buyers who are at different
stages of willingness to buy a product. Some are unaware of the product, some are
aware, some are informed, some are interested, some desire the product and some
plan to buy.

93
 Targeting
 Targeting is defined as a group of people or
organizations for which an organization designs,
implements and maintains the marketing mix.
 After segmentation, it is important to identify the
people or organization for which the product is meant.
 Selecting target market segments
 A company chooses its market segmentation strategy
on the basis of following factors
– Homogeneous preference showing no natural
segments as in case of cold drinks.
– Diffused preference showing clear preferences as
in case of automobiles.
– Clustered preference, market showing natural
segments as in case of occupation having impact
on the types of clothes worn.

94
 Undifferentiated marketing: In this strategy, the whole target market is treated
as one and it is considered that there are no market segments that show uncommon
needs. The company believes on ‘one product-all segments strategy’ and has one
marketing mix for the target market. For example, Coca Cola sells Coke, Limca,
Thums-up, etc. and does not differentiate between the target audience.
 Differentiated marketing: In this marketing strategy the company divides the
market into segments and uses different marketing mix for each segment. This
strategy is used by Hindustan Unilever which sells soaps like Lifebuoy, Lux,
Rexona, Liril, Pears, etc. and each has its own market.
 Concentrated marketing: In this marketing strategy the company follows ‘one
product one segment policy’. For example Ashok Leyland produces large chassis of
machines for buses and trucks.

95
 Comparison of Market Coverage Strategies

Focus Undifferentiated Differentiated Concentrated

Marketing Marketing Marketing

Product One/Few Many One/Few

Segment All Many One/Few

Marketing Mix One Many One/Few

96
 Choosing a Market Coverage Strategy

Undifferentiated Differentiated Concentrated

Marketing Marketing Marketing

Constrained Firm More suitable Least suitable Most suitable

Resources

Common Usage Most suitable More suitable Lease suitable

Products

Different need Least suitable Most suitable More suitable

satisfying products

97
 Market Positioning
 Positioning is defined as the process of designing the company’s products and
image to occupy a unique place in the target market’s mind.
 Many marketers favor promoting only one major benefit and Rosser Reeves called
it as “a unique selling proposition”. Some unique selling propositions (USPs)
companies use are best quality, best service, lowest price, best value, safest, more
advanced technology, etc.

98
The four major positioning errors that a company must avoid are

•Under positioning: Some companies find that buyers have only an

unclear idea of the brand.
•Over positioning: Buyers have very narrow image of the brand.
•Confused positioning: Buyers have confused image of the brand
because the company has made too many claims or changed the brand
positioning too frequently.
•Doubtful positioning: Buyers do not easily believe the claims made
by brands about the product’s features, price or manufacturer.

99
Bases of positioning the product
1. Attribute positioning: The company positions itself on the basis of attribute like
size or number of years in existence. Sunfeast positions its snacky brand as bigger,
lighter and cheaper.
2. Benefit positioning: The company positions its product as leader in providing a
certain benefit. For example Santro positioned itself as India’s simplest car to drive.
3. Use or application positioning: The company positions its products as best for
certain use or application. For example, Kenstar positioned its products as
unexpectedly cold.
4. User positioning: The company positions its product as best for some user group.
For example, Parle-G positions the boy in the advertisement as rock star targeting
the kids and boys.

100
5. Competitor positioning: The company claims its products as better than a
named competitor.
6. Product category positioning: The company positions its product as
leader in certain product category. For example, Bajaj CT 100 was
positioned as leader in the entry segment bikes.
7. Quality or price positioning: The product is positioned as offering the
best value. For example, the vegetable oil brand Dhara positions itself as
‘anokhi shuddata, anokha asar’. This means the company offers unique
purity and unique effect.

101
Positioning Is about Differences
The differences that are promoted for a product must be:

 Important: The difference delivers a highly valued benefit to the

target buyers
 Distinctive: Competitors do not offer the difference, or the
company can offer it in a more distinctive way
 Superior: The difference is superior to other ways that the
customer might obtain the same benefit
 Communicable: The difference can be explained and
communicated to the target buyers
 Preemptive: Competitors cannot easily copy the difference
 Affordable: Buyers can afford to pay the difference
 Profitable: Company can introduce the difference profitably
 Customer Positioning
Psychology
Customers rank brands in their minds

If a brand is not number 1, it must position itself against that

number 1 brand…marketers cannot try to ignore number 1

Avis – “Avis is only number 2 in rent-a-cars. So why go with

us? We try harder.”
7-Up – “The Uncola” -- behind numbers 1 and 2 – Pepsi and
Coke
Defining and Communicating the
Competitive Frame of Reference
 Defining a competitive frame of reference
for a brand positioning is to determine
category membership.
 The preferred approach to positioning is to
inform consumers of a brand’s membership
before stating its point of difference in
relationship to other category members.
Brand’s category membership
 The preferred approach to positioning is to
inform consumers of a brand’s membership
before stating its point of difference. There
are three main ways to convey brand
category membership
 A. Announcing category benefits
 B. Comparing to exemplars
 C. Relying on the product descriptor
 POPs
 Points-of-parity (POPs) – Associations that
are not necessarily unique to the brand but
may be shared by other brands
 Considered to be hygiene factors in any
product by the consumer
 Absence could drive rejection
 POD
 Point of difference (POD) is a term used to
describe the individual factors which make a
product different from its competitive set
 The key point of difference of a company is
synonymous with its unique selling proposition
(USP)
 Critical in defining its competitive advantage
 Must be attributes or benefits that consumers
strongly, uniquely, and positively associate with
the company's brand
Checks for a Good Positioning
 Have we established a frame of reference?

 Are we delivering on the points of parity?

 Are the points of difference compelling?

 Defining the Positioning
 Statementon how the marketer wants the
consumer to perceive the brand
 4 Elements:
– Target Audience
– Frame of Reference
– POD
– RTB(reason to believe)
 Example of good positioning
statement
 "For(target audience), (company name) offers
(competitive frame of reference) that provides
(greatest competitive advantage).”

 "For
low income housewives, Wheel offers the
wash of an expensive-like powder within her
budget."
 Choosing POPs and PODs
 Ther are three consumer desirability criteria
for PODs
 1. Relevance : Westin Stamfold hotel in
Singapore advertised that it was the world’s
tallest hotel, but a hotels height is not
important to many tourist
 2. Distinctiveness : Target consumers must
find the POD distinctive and superior
 3. Believability
 There are three key deliverability criteria
 1. Feasibility
 2. Communicability
 3. sustainibility
 Repositioning

 Used to revive an ailing brand or fix a

lackluster new market entry
 Advertising themes and positioning can be
trendy and become outdated

 The challenge: Changing perceptions of a

brand forged over years of advertising.

113
Capturing the Value Proposition

Functional V
Emotional A
Self-expressive L Relative Price
Benefits U
E

114
Marketing Research
and
Information Systems
 The Importance of Information

Marketing
Environment

Why
Information Competition
Customer Is
Needs Needed

Strategic
Planning
 What is a Marketing
Information System (MIS)?
 Consists of people, equipment, and
procedures to gather, sort, analyze, evaluate
and distribute needed, timely, and accurate
information to marketing decision makers.

 Function:Assess, Develop and Distribute

Information.
 The Marketing Information System

Marketing Managers
Marketing Information System

Distributing Assessing Information

Information Needs
Developing Information
Marketing Decisions and

Information Internal
Analysis Data
Communications

Marketing Marketing
Research Intelligence

Marketing
MarketingEnvironment
Environment
 Functions of a MIS:
Assessing Information Needs

Conduct Interviews and Determine

What Information is
Desired, Needed, and Feasible to Obtain.

Monitors
Monitors Environment
Environment for
for Examine
Examine Cost/
Cost/ Benefit
Benefit of
of
Information
Information Managers
Managers Desired
Desired
Should
Should Have
Have Information
Information
 Functions of a MIS:
Developing Information
Obtains
Obtains Needed
Needed Information
Information for
for Marketing
Marketing Managers
Managers
From
From the
the Following
Following Sources
Sources

Internal
Internal Data
Data
Collection
Collectionof
ofInformation
Informationfrom
fromData
DataSources
SourcesWithin
Withinthe
theCompany
Company
From:
From:Accounting,
Accounting,Sales
SalesForce,
Force,Marketing,
Marketing,Manufacturing,
Manufacturing,Sales
Sales

Marketing
Marketing Intelligence
Intelligence
Collection
Collectionand
andAnalysis
Analysisof
ofPublicly
PubliclyAvailable
AvailableInformation
Informationabout
about
Competitors
Competitorsand
andthe
theMarketing
MarketingEnvironment
Environment
From: Employees, Suppliers, Customers,
From: Employees, Suppliers, Customers,
Competitors,
Competitors,Marketing
MarketingResearch
ResearchCompanies
Companies

Marketing
Marketing Research
Research
Design,
Design,Collection,
Collection,Analysis,
Analysis,and
andReporting
Reportingof
ofData
Dataabout
aboutaa Situation
Situation
 Functions of a MIS:
Distributing Information

Information Must be Distributed

to the Right Managers at the Right Time.

Distributes
Distributes Routine
Routine Distributes
Distributes Nonroutine
Nonroutine
Information
Information for
for Information
Information for
for Special
Special
Decision
Decision Making
Making Situations
Situations
 The Marketing Research
Process

Defining
Defining the
the Problem
Problem and
and the
the Research
Research Objectives
Objectives

Developing
Developing the
the Research
Research Plan
Plan

Implementing
Implementing the
the Research
Research Plan
Plan

Interpreting
Interpreting and
and Reporting
Reporting the
the Findings
Findings
 Marketing Research Process
Step 1. Defining the Problem &
Research Objectives

••Gathers
Gatherspreliminary
preliminaryinformation
Exploratory that
information
that will help define theproblem
will help define the problem
Research and suggest hypotheses.
and suggest hypotheses.

Descriptive ••Describes
Describesthings
thingssuch
suchasasconsumers’
consumers’
attitudes and demographics
Research or
attitudes and demographics
or marketpotential
market potentialfor
foraaproduct.
product.

Causal ••Test
Testhypotheses
hypothesesabout
aboutcause-
cause-
Research and-effect
and-effectrelationships.
relationships.
 Marketing Research Process
Step 2. Develop the Research Plan

Determine
Determine the
the Specific
Specific Information
Information Needed
Needed

Secondary Primary

Information
Informationthat
thathas
has Information
Informationcollected
collected
been
beenpreviously
previously for
forthe
thespecific
specificpurpose
purpose
collected.
collected. at
athand.
hand.

Both
BothMust
MustBe:
Be:
Relevant
Relevant
Accurate
Accurate
Current
Current
Impartial
Impartial
 Primary Data Collection Process
Step 1. Research Approaches

Observational
Observational Research
Research
Gathering
Gatheringdata
databy
byobserving
observingpeople,
people,
actions and situations
actions and situations
(Exploratory)
(Exploratory)

Survey
SurveyResearch
Research
Asking
Askingindividuals
individualsabout
about
attitudes,
attitudes, preferencesor
preferences or
buying behaviors
buying behaviors
(Descriptive)
(Descriptive)

Experimental
Experimental Research
Research
Using
Usinggroups
groupsof ofpeople
peopleto
to
determine cause-and-effect
determine cause-and-effect
relationships
relationships
(Causal)
(Causal)
Primary Data Collection Process
Step 2. Contact Methods

Contact
Mail Methods
Telephone Personal Online
Flexibility Poor Good Excellent Good
Quantity of Good Fair Excellent Good
Data Collected
Control of Excellent Fair Poor Fair
Interviewer
Control of Fair Excellent Fair Poor
Sample
Speed of Data Poor Excellent Good Excellent
Collection
Response Rate Fair Good Good Good
Cost Good Fair Poor Excellent
Primary Data Collection Process
Step 3. Developing a Sampling Plan

Probability Who
Whoisisto
tobe
Probabilityor
or be
Non-probability surveyed?
surveyed?
Non-probability
sampling?
sampling?
Sample -
representative
segment of the
population

How
Howshould
shouldthe How
sample
the Howmany
many
samplebe
be should
shouldbe
be
chosen?
chosen? surveyed?
surveyed?
Primary Data Collection Process
Step 4. Research Instruments

Research
Research Instruments
Instruments

Questionnaire
Questionnaire Mechanical
Mechanical Devices
Devices
••What
What to
to ask? ••People
ask? People Meters
Meters
•• Form
Form of
of each
each •• Grocery
Grocery Scanners
Scanners
question?
question? •• Galvanometer
•• Wording? Galvanometer
Wording? •• Tachistoscope
•• Ordering? Tachistoscope
Ordering?
Marketing Research Process
Step 3. Implementing the Research Plan

Collection
Collection
of
of
Data
Data

Processing
Processing
of
of
Research
Research
Data
Data Plan
Plan

Analyzing
Analyzing the
the
Data
Data
Marketing Research Process
Step 4. Interpreting and Reporting
Findings

Interpret
Interpret the
the Findings
Findings

Draw
Draw Conclusions
Conclusions

Report
Report to
to Management
Management