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Chapter 1. Marketing function Four P’s in marketing Different concepts in marketing Production concept Product concept Selling concept Marketing concept.

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Presentation on theme: "Chapter 1. Marketing function Four P’s in marketing Different concepts in marketing Production concept Product concept Selling concept Marketing concept."— Presentation transcript:

1 Chapter 1

2 Marketing function Four P’s in marketing Different concepts in marketing Production concept Product concept Selling concept Marketing concept Societal and holistic concept

3 Method of demand fprecasting  Survey of buyers’ intention  Sales force opinion  Expert opinion  Market test  Time series analysis  Statistical demand analysis Marketing demand

4 Meaning Importance Different bases of market segmentation with reference to consumer product and industrial product

5 What is Marketing ? Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others.

6 What is Marketing management ? Marketing Management is the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value.

7 What is marketed ? Goods Services Events Experiences Persons Places Properties Organizations Information Ideas

8 What is marketed ? Goods Cars, electronic items, industrial chemicals etc Services Airlines, hotels, Banking, beauticians, doctor Events World Cups, Award Functions, Olympics

9 What is marketed ? Experiences Amusement park, water park, theme restaurant Persons Celebrity Marketers Places Cities, State and Nations

10 What is marketed ? Properties Real Property, Financial Property Organizations Universities, Non Profit organization Information Discount, Offers, Change Ideas Child Labor, Discouraging Smoking, education

11 Four P’s in Marketing Product Price Promotion Place

12 Marketing Mix Product Quality Design Features Packaging Sizes Services Warranties Return Variety Price Price list Discounts Allowances Payment Period Credit terms Promotion Sales Promotion Advertising Sales Force Public relations Direct Marketing Online advertising Place Channels Coverage Assortments Locations Inventory Transport

13 Different concepts in marketing The Production Concept The Product Concept The Selling Concept The Marketing Concept The societal and holistic Concept

14 The Production Concept Oldest concept in business Consumer prefer products that are widely available and inexpensive Businesses concentrate on achieving high production efficiency, low costs and mass distributions Applicable for developing countries and also in expanding market E.g. inexpensive toys, electronics

15 The Product Concept Products with high quality, performance or innovative features Managers focus on superior products and improving them over the time Little or no customer input Rarely examine competitor’s product For success it’s necessary to be perfectly priced, distributed, advertise and sold properly Leads to marketing myopia E.g HMT, ambassador car

16 Marketing myopia Ignoring the demand, taste and liking of consumer Looking into mirror than looking out Colored and crooked perception of marketing Short sightedness about business Excessive attention to production Obsession with the product Inadequate understanding of market

17 The Selling Concept Consumers and businesses if left alone will not buy enough It undertake an aggressive selling and promotion effort The selling concept is practiced most aggressively with unsought goods that buyers normally don't think of buying such as insurance. Sell more stuff to more people for more profit Many use it at the time of over capacity or competition E.g. consumer durables

18 The Marketing Concept Customer – centric concept Reactive market orientation and proactive marketing orientation More effective than competitors in creating, delivering and communicating superior customer value Fulfilling buyer’s needs HP and Motorola have made a practice of researching latent need through a :Probe – and – learn” process.

19 Selling concept Start FocusMeansEnd FactoryProductsSelling &Profit through promotionhigh sales volume Marketing concept CustomerCustomerIntegratedProfit through needsmarketingcustomer satisfac

20 Distinction between marketing and selling Marketing Selling Focuses on customer’s needs Customer enjoys supreme importance Product planning and development to match products with markets Integrated approach achieve long term goals Converting customer’s needs into products Focuses on seller’s nee ds Product enjoys supreme importance High pressure selling to sell goods already produced Fragmented approach to achieve immediate gains Converting products into cash

21 Marketing Selling Let the seller beware principle is followed Profits through customer satisfaction Let the buyer beware principle is followed Profits through sales volume

22 The societal and and holistic Concept The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often conflicting criteria of company profits, consumer want satisfaction, and public interest. Yet a number of companies have achieved notable sales and profit gains by adopting and practicing the societal marketing concept.

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24 To determine the needs, wants and interest of the target market and deliver the desired satisfaction that preserves the society’s well being They see it as affording an opportunity for companies to enhance their corporate reputation, raise brand awareness, increase customer loyalty, build sales, and increase press coverage. They believe that customers will increasingly look for demonstrations of good corporate citizenship. Smart companies will respond by adding “higher order” image attributes than simply rational and emotional benefits.benefits Environment deterioration

25 Method of demand fprecasting  Survey of buyers’ intention  Sales force opinion  Expert opinion  Market test  Time series analysis  Statistical demand analysis Marketing demand

26 Demand forecasting Demand forecasting means expectations about the future course of the market demand for the product.

27 Survey of buyer’s intention method A firm can determine the demand for its products through a market survey. It may launch a new products, if the survey indicates that there is a demand for that particular product in the market. For example, Coke in India expanded its product range beyond carbonated drinks, after the company conducted a nation wide survey. The survey revealed that about 80% of the youth preferred to drink tea or coffee rather than carbonated drinks at regular intervals. The remaining 20% preferred to have milk products while only 2% preferred to drink carbonated drinks like coke. The company is now trying to bring tea and coffee brands to India by installing vending machines. It is also planning to introduce a coconut flavored drink in kerala and a black currant in Tamilnadu named portello.

28 Merits of survey of buyer’s intention method The forecast comes straight from the horse’s mouth – the customer himself and hence more reliable. It gives readymade forecast user-wise and user industry-wise.

29 Demerits of survey of buyer’s intention method It is expensive. It is time consuming.

30 Sales force opinion method Sales forecasts are made on the basis of the opinion of the salesmen or top management in the respective areas. Salesmen are more in personal contact with the customers, their opinions and estimates can be more reliable.

31 Merits of salesforce opinion method Demerits of salesforce opinion method It is easy and simple. As salesmen’s opinions are used for sales forecasting they do feel that their importance is accepted by the management. The forecasts developed by this method have greater stability and reliability because of the largeness of the sample. Their opinions cannot be of much use if their knowledge is limited. Salesmen are certainly not experts in forecasting, they cannot use sophisticated techniques.

32 Expert Opinion method The expert opinion method, also known as “EXPERT CONSENSUS METHOD”, is being widely used for demand forecasting. This method utilizes the findings of market research and the opinions of management executives, consultants, and trade association officials, trade journal editors and sector analysts. When done by an expert, qualitative techniques provide reasonably good forecasts for a short term because of the expert’s familiarity with the issues and the problems involved. DELPH I METHOD:- The Delphi method is primarily used to forecast the demand for “NEW PRODUCTS”.

33 Merits of expert opinion method Demerit of expert opinion method As expert’s knowledge is used, forecasting will be accurate. It is also suitable where past record of sales is not available or a new product is to be introduced. It is time consuming. It is expensive.

34 Market Test method In this case, a test area is selected, which should be a representative of the whole market in which the new product is to be launched. A test area may include several cities and towns, or a particular region of a country or even a sample of consumers. More than one test area can be selected if the firm wants to assess the effects on demand due to various alternative marketing mix. Advertising or packaging can be done in various market areas. Then the demand for the product can be compared at different levels of price and advertising expenditure. In this way, consumer’s response to change in price or advertising can be judged.

35 Demerits of market test method 1) The test experiments are that they are very costly and much time consuming. 2) If in a test market prices are raised, consumer may switch to the competitor’s products. 3) It may be difficult to regain lost customers even if the price is reduced to the previous level. Moreover, it is often difficult to select an area, which accurately represents the potential market.

36 Time series analysis method 1)TREND:- Past data is used to predict the future sales of firm. 2)SEASONAL VARIATIONS:- It is taken into account the variations in demand during different seasons. Eg:- The sale of cotton dresses increases in summer. The sale of Woolen clothes increases in winter. 3)CYCLICAL VARIATIONS:- This variations in demand due to the fluctuations in the business cycle – Boom, recession and depression. 4) RANDOM FLUCTUATIONS:- It may happen due to Natural calamities like flood, earthquake, etc. which cannot be predicted accurately.

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38 Statistical demand analysis If two variables are correlated in a definite manner, the behaviour of one of them can be predicted on the basis of the data about the other variable. For example, in many developed countries sales of toothbrush clearly seem to be related with the size of population. Thus if any two variables are correlated and if reliable data about one of them is available, the value of the other variable can be predicted with accuracy. Demerit of this method is that it depends too much on the past events.

39 Importance of advertising To producers and traders 1. Meeting competition- by creating brand loyalty 2. Steady demand e.g. hot and cold coffeee 3. Higher sales volume 4. Introduction of new products 5. Economies of scale 6. Goodwill 7. Employee morale- product is known to customers so task of salesmen becomes easy

40 To customers 1. Convenience 2. Education of consumers 3. Fair prices 4. Better quality To society 1. Employment 2. Standard of living 3. Sustain the press 4. Stimulates research and development 5. Incentive to progress 6. Art and culture

41 Meaning Importance Different bases of market segmentation with reference to consumer product and industrial product

42 Meaning of market segmentation The concept of market segment is based on the fact that the market of commodity are not homogeneous but they are heterogeneous. Market represent a group of customer having common characteristics but two customers are never common in their nature, habits, hobbies, income and purchasing techniques.

43 According to Philip kotler, “Market segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers where any group can conceivably be selected as a target market to be met with distinct marketing mix.” Dividing large market into small group Each group should have common characteristic

44 Importance of market segmentation Facilitates consumer-oriented marketing Facilitates introduction of suitable marketing mix Facilitates introduction of effective product strategy Facilitates the selection of promising markets Facilitates exploitation of better marketing opportunities Facilitates selection of proper marketing programme

45 Facilitates effective advertising Provides proper direction to marketing efforts Provides special benefits to small firms Facilitates optimum use of resources

46 Different bases of market segmentation of consumer product Demographic Geographic Psychographic Behavioral

47 Demographic segmentation Age and life-cycle stage Gender Income Generation Social class

48 Geographic segmentation Region City Rural and semi-urban areas

49 Psychographic segmentation Lifestyle Personality Values

50 Behavioral segmentation Occasions Benefits Usage rate Loyalty status Readiness stage Attitude toward product

51 Different bases of market segmentation of industrial product Demographic Operating variables Purchasing approaches Situational factors Personal characteristics

52 Demographic Industry Company size Location

53 Operating variables Company Technology Product and brand use status Customer capabilities

54 Purchasing approaches Purchasing function organisation- highly centralised or decentralised purchasing organisation Power structure- engineering dominated, financially dominated Nature of existing relationship among buyers and sellers General purchasing policies- leasing, service contract, system purchases, sealed bidding Purchasing criteria- Quality, service, price

55 Situational factors Urgency Product application Size of the order

56 Personal characeristics Buyer-seller similarity Attitude towards risk Loyalty

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