Chapter 1 – Defining Marketing for the 21st Century

Marketing is a significant aspect of any business in today’s highly competitive milieu. In the
past decades, an organizations competitive advantage was derived from product features,
distribution channels, or manufacturing efficiencies. No more. The ability for a company to
understand customer needs, and align their organization to those needs with a clear execution
plan to connect to the customer at multiple levels is the only path to success today. Companies
that do not understand the value of marketing have their days numbered.

Some of the benefits of good marketing are

It promotes the company, increases its visibility and exposure and lets people know
about the company’s products and services
Differentiates Products/Services of the company by positioning it in a unique way
Helps the company to acquire new business and retain old customers
Generates income for the company and helps build networks with other professionals--
to further enhance company growth.

The American Marketing Association defines marketing as “an organizational function and
a set of processes for creating, communicating and delivering value to customers and for
managing customer relationships in ways that benefit the organization and its stakeholders”.

According to Kotler, “Marketing management is the art and science of choosing target markets
and getting, keeping and growing customers through creating, delivering and communicating
superior value”.

Peter Drucker opines that the aim of marketing is to make selling superfluous.

Exchange, a key concept in marketing is the process of obtaining a desired product from
someone by offering something in return. When an agreement is reached in an exchange a
transaction takes place. The key conditions for and exchange potential to exist are:
There must be atleast two parties
Each party must have something of value for the other party
Each party must be capable of communication and delivery
They should be free to accept or reject the offer
Each party should believe that it is appropriate to deal with the other party

Marketing people are involved in marketing 10 different types of entities namely goods,
services, experiences, events, persons, places properties, organizations, information and
ideas. A marketer is someone who seeks a response from another party who is called the
prospect. Marketers also seed to influence the level, timing and composition of demand to
meet the organizations objectives. There can be eight possible demand states namely negative
demand, nonexistent demand, latent demand, declining demand, irregular demand, full
demand, overfull demand and unwholesome demand. Markets can be classified as
consumer, business, global and non profit markets.
Markets and businesses are changing today due to changing technology, globalization,
deregulation, privatization, customer empowerment, customization, competition and industry
convergence. This has posed increased challenges and benefits to marketers and customers.
Today we have marketplace (which is physical as when you shop in a store) existing along
with marketspace (which is digital as when you shop on the internet)

The different concepts based on which the marketing philosophies are based are
Production concept – the focus is on achieving high production efficiency, low costs
and distribution so that the products are inexpensive and widely available to the
customers
Product concept – the focus is on the product quality, performance and innovative
features
Selling concept – the focus is on aggressive selling and promotion in order to sell
more and make profit
Marketing concept – the focus is on being more effective than the competitor in
creating, delivering and
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Diversification ( add businesses that are unrelated to current business) Types are
• Concentric Diversification – seek now products which have synergy with
existing product lines
• Horizontal diversification – develop new but unrelated to current products for
existing customers
• Conglomerate diversification – seek new opportunities which have no relation
with current technology, product or market

Business units strategic planning entails the following:

Defining the business mission
SWOT analysis to identify the internal strengths and weaknesses and external
opportunities and threats
Formulation of goals
Formulation of strategy
Program formulation and implementation
Feed back and control

Strategy is a game plan for achieving the goals and every company must design a strategy for
achieving its goals. According to Michael Porter there are three generic strategies which can be
adopted by organizations. They are overall cost leadership, differentiation and focus.

Once the plans have been set at the various levels a marketing plan is prepared for individual
products, lines, brands, channels or customer groups. This is a written document that
summarizes what the marketer has learned about the marketplace and how the marketer intends
reaching his objectives. It should contain the following:
Executive summary and table of contents
Situation analysis
Marketing strategy
Financial projections
Implementation controls

The key to successful marketing is developing creative marketing strategies and plans that can
guide marketing activities.
Chapter 3 – Gathering Information and Scanning the Environment
In order to take marketing decisions and implement marketing plans marketers need to
constantly monitor the external environment, which poses significant opportunities and threats
to the organizations. To possess comprehensive information a marketer should have a detailed
Marketing Information System (MIS). A MIS consists of people, equipment, and
procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate
information to marketing decision makers. MIS is developed from internal company records,
marketing intelligence activities and marketing research.

Internal records system supplies results data and comprises of the order-to-payment cycle and
sales information system. Marketing Intelligence System is a set of procedures and source
marketers use to obtain everyday information about developments in the marketing
environment. To improve the quality of its marketing intelligence a company can take the
following steps:
Train and motivate its sales force to sport and report new development
Motivate distributors, retailers and other intermediaries to pass along important
information
Network externally
Set up a customer advisory panel
Get information from government data sources
Purchase information from outside suppliers like syndicated research data
Use online customer feedback
For any marketing program to be successful it has to satisfy unmet needs and wants and for this
purpose the marketer has to make a clear distinction between fads, trend and megatrends so
that the program is in line with the trends and megatrends. All organizations operate in the
macroenvironment, the forces of which are uncontrollable. The main macroenvironment
factors and its components are :
Demographic Environment
a) Worldwide Population Growth b) Population Age Mix c) Literacy Levels
Economic Environment
a) Income Distribution b) Levels of savings, debt and credit availability
Socio-Cultural Environment
Understand need of different subcultures in a society
Market products that correspond to society’s core and secondary values
Natural Environment
a) Raw material shortages b) Increased energy cost and pollution levels
c) Government’s role in environmental protection
Technological Environment
a) Pace of technological change b) Government regulations regarding technology
c) Innovation & R&D
Political-Legal Environment
a) Business legislations b) Protection of interest of special groups

The marketing environment must be continuously monitored and adapted to in order to make
use of the opportunities and to overcome the threats presented by it.
Chapter 4 – Conducting Marketing Research And Forecasting Demand

Timely and accurate information is necessary to evaluate past performance and plan future
activities. According to Kotler, “Marketing Research is the systematic design, collection,
analysis and reporting of data and findings relevant to a specific marketing situation facing the
company”. Companies can do their own market research or have specialist firms doing it for
them.

The research process consists of the following steps

a) Defining the problem and research objectives b) Developing the research plan
c) Collecting the information d) Analysis of the information
e) Presentation of findings f) Decision-making based on the information provided

In order to develop a good research plan decision regarding the following have to be taken:
Data Sources – Primary, Secondary or both
Research Approach – Observational research, focus group research, survey research,
behavioral data or experimental research
Research Instruments – Questionnaire or Mechanical devices
Sampling Plan – Sampling unit, size and procedure
Contact Methods – Mail questionnaire, telephone interview, personal interview or
online interview

To check the marketing plan performance the following tools can be used: Sales analysis,
market share analysis, marketing expense to sales analysis, financial analysis.

For in-depth analysis and control profitability analysis can be done which measures the
profitability of the products, territories, customer groups, segments, trade channels and order
sizes. This involves identifying the functional expenses, assigning them to marketing entities
and preparing P&L statements for each marketing entity.

Demand can be classified as market demand and company demand. Market demand for a
product is the total volume that would be brought by a defined customer group in a defined
geographical area in a defined time period in a defined marketing environment under a defined
marketing program. Company demand is the company’s estimated share of market demand at
alternatives levels of company marketing effort in a given time period. Practical methods for
estimating current market demand include estimating the total market potential, area market
potential and total industry sales and market shares.

To estimate future demand survey of buyer’s intention, composite of sales force opinions,
expert opinion, past sales analysis and market testing is done. Mathematical models and
statistical techniques play an important role in demand and sales forecasting.

Marketers need to develop specific knowledge about their markets. They should have access
to information that would help them interpret pat performance and plan future activities. Good
Marketing Research provides marketers with timely and accurate information regarding
consumer, competitors and brands based on which they can take strategic decisions.
Chapter 5 – Creating Customer Value, Satisfaction, And Loyalty
Customers today are well informed and seek value maximization in the choices they make.
Customer perceived value is the difference between the prospective customer’s evaluation of
all the benefits and costs of the offerings and its alternatives.

Customer lifetime value describes the net present value of the stream of future profits
expected over the customer’s lifetime purchases. Its objective is to maximize long term
customer profitability.

The aim of customer relationship management is to produce high customer equity. CRM is the
process of managing detailed information about individual customers and managing all
customer contact points to maximize their loyalty. In order to attract and retain customers the
marketer not only has to satisfy the customers but delight them. To form strong bonds with
customers the following retention building approaches can be adopted
Adding financial benefits
Adding social benefits
Adding structural ties

To know the customer the company must collect information and store it in a customer
database and also do database marketing which is the process of building maintaining and
using customer databases and other databases.
Chapter 6 – Analyzing Consumer Markets

In order to serve consumers more effectively marketers must have information regarding the
factors that affect consumer behavior. The main factors that affect consumer behavior are:
Cultural factors:
• Culture
• sub culture
• social class
Social factors:
• Reference groups – membership group, aspirational group, dissociative group
• Family – family of orientation and family of procreation
• roles and statuses
Personal factors:
• Occupation and economic circumstances
• personality and self-concept
• lifestyle and values

The psychological factors that affect consumer behavior are:

Motivation
Perception
Learning
Memory

The five-stage model of the buying decision process is as follows:

Problem recognition
Information search
Evaluation of alternatives
Purchase decision]
Post purchase behavior

The level of consumer involvement and decision heuristics and biases also influence the
buying decision process. Heuristics are rules of thumb or mental shortcuts in decision
process.

The marketer has to understand the influence of each of the factors and the role of various
people in the buying process to design and target marketing campaigns and offers to the
selected segment.
Chapter 7 – Analyzing Business Markets

Organizational buying is the decision making by which formal organizations establish the need
for purchased products and services and identify, evaluate and choose among alternative
brands and suppliers. Business markets include all organizations that buy goods and
services for production of other goods and services, which are then sold, rented or
supplied to others.

The features that differentiate business markets from consumer markets are as follows:
Fewer larger buyers
Close supplier customer relationship
Professional purchasing
Several buying influences
Multiple sales calls
Derived demand
Inelastic demand
Fluctuating demand
Geographically concentrated buyers
Direct purchasing

The following factors influence the decisions of the organizational buyer:

Buying situation – Straight rebuy, Modified rebuy, New task

Buying center – Initiators, Users, Influencers, Deciders, Approvers, Buyers and Gatekeepers

The different types of products that could be purchased by an organization are

Routine products
leverage products
Strategic products
Bottleneck products
The purchase process will vary for each of these products.

There are eight stages in the buying process and they are called buyphases. They are
1. Problem recognition 2. General need description
3. Product specification 4. Supplier search
5. Proposal solicitation 6. Supplier selection
7. Order-routine specification 8. Performance review

The institutional markets comprises of schools, college and university hostels, hospital and
nursing homes. They are characterized by special needs and characteristics. Government
organizations are major buyers; they usually invite bids, prefer domestic suppliers and require
considerable paper work. Proper guidelines have to be followed while selling to government
agencies.
Chapter 8 – Identifying Market Segments and Targets

To compete more effectively companies are now adopting target marketing, which involves
market segmentation, market targeting and market positioning. The four levels at which
markets can be targeted are segments, niches, local areas and individuals.

Segmenting the market is done by identifying group of customers, who share a similar set of
needs and wants. A more narrowly defined group is called a. Local marketing reflects
grassroots marketing, where marketing activities are aimed towards trading areas,
neighborhood and individual stores. The last level of segmentation is segments of one or
customized marketing.

The major segmentation variables for consumer markets can be classified as follows:
Geographic segmentation- Region, city, rural and semi-urban areas
Demographic segmentation- age and life cycle stage, life stage, gender, income,
generation and social class
Psychographic Segmentation – Life style and personality
Behavioral Segmentation – Occasions, benefits, user status, user rate, loyalty status,
readiness stage and attitude towards product.

The major segmentation variables for business markets are

Demographic – Industry, company, location
Operating variables – technology, user/ non user, customer capabilities
Purchasing approaches
Situational factors
Personal characteristics

For any segmenting criteria to be effective, they must be measurable, substantial, accessible,
differentiable and actionable.

After evaluating the market segments based on their overall attractiveness and the company’s
objectives and resources the company can consider the following patterns of target market
selection:
Single segment concentration
Selective specialization
Product specialization
Market specialization
Full market coverage
Managing multiple segments

A company cannot serve large, broad or diverse markets. It has to carefully identify the market
segments it can serve effectively in order to focus its marketing efforts and achieve its goals.