MARKETING MANAGEMENT

HDFC BANK PREPARATION SERIES CLASS 1

DEFINITIONS OF MARKETING:
Marketing is a human activity directed at

satisfying needs & wants through exchange processes (Al Ries & Jack Trout) Process by which Individuals & Groups obtain what they Need and Want through Creating, Offering and Exchanging products (Philip Kotler) Solving customer problems profitably.

Market

Traditionally, a Market was the place

where buyers & sellers gathered to exchange their goods

Market

People or Organizations

Needs to Satisfy

Market
Money to Spend Willingness to Spend

Production
Profit driver --Production methods

Western European timeframe-- until the 1950s

A firm focusing on a production orientation

specializes in producing as much as possible of a given product or service. Signifies a firm exploiting economies of scale These methods may be deployed when a high demand for a product or service exists A certainty that consumer tastes will not rapidly alter

Product
Profit driver --Quality of the product

Western European timeframe-- until the 1960s

A firm employing a product orientation is chiefly

concerned with the quality of its own product. As long as its product was of a high standard, people would buy and consume the product.

Selling
Profit driver --Selling methods

Western European timeframe-- 1950s and

1960s A firm using a sales orientation focuses primarily on the selling/promotion of a particular product, and not determining new consumer desires as such. Simply selling an already existing product, and using promotion techniques to attain the highest sales possible. Firm sells a product that is in high demand, with little or no concern about changes in consumer

Customer Orientation
A firm in the market economy survives by

producing goods that people are willing and able to buy. Consumer demand is vital for a firm's future viability Many companies today have a customer focus (or market orientation). This implies that the company focuses its activities and products on consumer demands. No strategy is pursued until it passes the test of consumer research.

PORTERS 5 Forces..(to determine industrial profitability)

Determine Avg. rate of return for the industry

PORTERS 5 Forces.
A. Threat of Substitutes

The price that consumers are willing to pay for a product or service depends in part on the availability of substitute products Characterized by
Relative price of substitute Relative quality of substitute Switching costs to buyers

PORTERS 5 Forces.
B. Threat of New Entrants 5 major sources of barrier to entry

Economies of Scale Product differentiation Capital requirement Access to distribution channels Government & legal barriers

PORTERS 5 Forces.
C. Rivalry among existing firms

Number & balance of competitors Degree of difference between products Growth rate of an industry Level of fixed costs

PORTERS 5 Forces.
D. Bargaining power of Suppliers

Suppliers can suppress industry profitability by raising prices & reducing the quality of components which they supply Supplier concentration Threat of forward integration

PORTERS 5 Forces.
E. Bargaining power of buyers

Buyer group concentration Buyers costs Degree of standardization of suppliers products Threat of backward integration

Service: Deeds, processes and performances

Deeds- actions of the service provider

Process- steps in the provision of the service Performance Customer understanding of how the service has been delivered
Zeithmal

Some Service Industries

Hotels- Hospitality

Education Design Services Investment Banking and Securities Dealing Management Consulting Services Satellite Telecommunicationstelecom Telemarketing Bureaus Entertainment-Media Tourism

Airlines-Transportation Weight Reducing Centers-Beauty and Health care Advertising Legal services

Hospitals Health care

Banking Railway-Public service organization

Defining the Essence of a Service

An act or performance offered by one party to another An economic activity that does not result in ownership(Philip Kotler) Servicesanything that cannot be dropped on your foot (The Economist)

Tangibility Spectrum
A pure tangible product (includes commodities

like toothpaste, rice, cereals etc., where no service accompanies the product)
A tangible good with accompanying services

(consumer durables like television, refrigerators which have installation & after sales services)

Tangibility Spectrum
A major service accompanying minor goods &

services (first class air travel has customized services)

A pure service (consultancy, teaching,

babysitting)

Characteristics of Services

Intangibility

Intangibility of Services
A pure service cannot be seen, touched , tasted

or smelt but can be only experienced by customers A pure service cannot be examined before purchase Features for verification of quality cannot be measured
Level of tangibility present derives from 3

principle sources: 1. Tangible goods included in service (food) 2. Physical environment (hotel)

Intangibility of Services

Physical Evidence- to tangibalize the intangible (e.g.: dcor of the bank, ambience of the restaurant, infrastructure in a college)

Classification of Service Products: Tangibility Continuum

Sugar House Automobil e Custom-Made Clothing
(Tangible)
Good-dominant products Service-dominant products (Intangible)

Dining Experience Air Travel Health Care Ad Agency Services Education

Service Mottos of Companies

COMPANY SERVICE MARKS MASTER CARD There are some things money cant buy. For everything else theres Master card

LIC Mutual Fund

With you, all the time

Citibank. N.A

The citi never sleeps

Franklin Templeton Investments

Take money of your mind

Development Credit Bank

Old fashioned banking: New fashioned technology

Characteristics of Services
Inseparability of

Production and Consumption

Inseparability
In production of goods, economy of scales &

proper quality control checks take place Production & consumption are said to be separable
For services, producer & consumers must

interact in order to realize the benefits of a service Production & consumption of services is hand-in-hand

Inseparability
Service is measured by analyzing technical

competency of the service provider Interpersonal skills of the people involved (E.g.: 1. A slight misbehavior of hotel receptionist may turnoff the customer forever. The same is not true in goods purchases 2.The marketing class in b-school is cancelled due to non arrival of faculty although the students were present in full strength 3. During surgery both doctors & patient should be present)

Characteristics of Services
Perishability

Perishability
Services cannot be stored or inventoried

Has to be transacted during the given time

If there is no transaction, the service loses its

value An empty seat in movie theatre & an aero plane is an opportunity lost forever Empty seats for B-school session is a lost opportunity

Perishability
No constant pattern of demand throughout

Daily variation (restaurants at lunchtime)

Seasonal variation (hotels during summer

vacation Cyclical variation (mortgages)

Perishability
During exceptionally high or low demands service

organizations can have severe difficulties Hence, service quality deteriorate during peak hours Some measures to counter perish ability (Movie theatres-matinee shows & shows before 12pm have cheaper tickets) (Discounts on resorts/hotels on week days) (Happy hours in a restaurant & bar)

Characteristics of Services
Heterogeneity/Variability

Heterogeneity/Variability
The extent to which production standards vary

Service is always unique-it only exists once &

cannot be duplicated 2 service reps will always give different levels of service Also, the customer might get a different quality of service of two different branches of the same bank Variability can be reduced by building strong brands Computerized voice systems & automating banking services are some typical examples to

Heterogeneity/Variability Examples
The students of a B-school could have a certain

subject taught by 3 different faculties, & each delivery would be vastly different
A theatre actor in a play would give different

levels of performances in different stage shows

Characteristics of Services
Lack of Ownership

Lack of Ownership
When goods are brought ownership is transferred

from seller to buyer When a service is performed, no ownership is transferred from seller to the buyer The buyer merely buys a right to a service process

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