BMK 2102: MARKETING OPERATION

UNIT 1 INTRODUCTION

I. Understanding Marketing

What image comes to mind when you hear the word “marketing”? Some people think of
advertisements or brochures, while others think of public relations (for instance, arranging for
clients to appear on TV talk shows). The truth is, all of these—and many more things—make up
the field of marketing.

What is Marketing?
Definitions:

• Marketing can be defined as the process of planning and executing the conception,
pricing, promotion and distribution of ideas, goods, or services to create exchanges that
satisfy individual and organizational objectives.
• Marketing is defined as the process of determining the needs and wants of consumers and
being able to deliver products that satisfy those needs and wants. Marketing includes all
of the activities necessary to move a product from the producer to the consumer.
• The Knowledge Exchange Business Encyclopedia defines marketing as “planning and
executing the strategy involved in moving a good or service from producer to consumer.”

Marketing can be thought of as a bridge from the producer to the consumer. It starts with market
research- a learning process in which marketers get to know everything they can about the needs
and wants of consumers- and it ends when somebody buys something. Many companies feel that
services provided to customers after the purchase also are an important part of marketing. All of
these enterprises -- production, advertising, transportation, processing, packaging, and selling –
are included in the marketing process.
II. Historical Perspective and Evolution of Marketing

There are several factors that contributed to the evolution of marketing:

1. End of the Mass Market

Companies today recognize that they cannot appeal to all buyers in the marketplace or at least
not to all buyers in the same way. Buyers are too numerous, too widely scattered, and too varied
in their needs and buying practices. Moreover, the companies themselves vary widely in their
abilities to serve different segments of the market. Rather than trying to compete in an entire
market, sometimes against superior competitors, each company must identify the parts of the
market that it can serve best and most profitably. Thus, most companies are more selective about
the customers with whom they wish to connect.

Most have moved away from mass marketing and toward market segmentation and targeting,
which involves identifying market segments, selecting one or more of them, and developing
products and marketing programs tailored to each. Instead of scattering their marketing efforts
firms are focusing on the buyers who have greater interest in the values they create best.

Companies have not always practiced target marketing. In fact, for most of the 1900s, major
consumer product companies held fast to mass marketing--mass producing, mass distributing,
and mass promoting the same product in about the same way to all consumers. Henry Ford
epitomized this marketing strategy when he offered the Model T Ford to all buyers; they could
have the car " in any color as long as it is black." Similarly, Coca-Cola at one time produced only
one drink for the whole market, hoping it would appeal to everyone.

2. Marketing Management Philosophies:

There are several alternative philosophies that can guide organizations in their efforts to achieve
their marketing goal(s). Marketing efforts should be guided by a marketing philosophy.
Decisions about the weight given the interests of the organization, customers, and society need to
be made by marketing managers. There are five alternative concepts under which organizations
conduct their marketing activities.

These philosophies can be seen to represent how marketing has been thought to be over the
years, beginning with the production marketing management philosophy to the most modern
societal marketing concept.

a. The Production Concept

The production concept holds that consumers will favor products that are available and highly
affordable and that management should, therefore, focus on improving production and
distribution efficiency. This is one of the oldest philosophies that guide sellers. The production
concept is useful when:

(i) Demand for a product exceeds the supply.

(ii) The product’s cost is too high and improved productivity is needed to bring it down.

The production concept holds that consumers will favor products that are affordable and
available, and therefore management’s major task is to improve production and distribution
efficiency and bring down prices.

b. The Product Concept

The product concept holds that consumers favor quality products that are reasonably priced, and
therefore little promotional effort is required. The product concept states that consumers will
favor products that offer the most quality, performance, and features, and that the organization
should, therefore, devote its energy to making continuous product improvements.

The risk with this concept is in focusing company operations too narrowly.

c. The Selling Concept

The selling concept is the idea that consumers will not buy enough of the organization’s products
unless the organization undertakes a large-scale selling and promotion effort.
(i) This concept is typically practiced with unsought goods (those that buyers do not
normally think of buying e.g. insurance policies).
(ii) To be successful with this concept, the organization must be good at tracking down the
interested buyer and selling them on product benefits.
(iii) Industries that use this concept usually have overcapacity. Their aim is to sell what they
make rather than make what will sell in the market.
(iv) There are not only high risks with this approach but low satisfaction by customers.

d. The Marketing Concept

The marketing concept holds that achieving organizational goals depends on determining the
needs and wants of target markets and delivering the desired satisfactions more effectively and
efficiently than competitors do. The marketing and selling concepts are often confused. Their
primary differences are:

(i) The selling concept takes an “inside-out” perspective (focuses on existing products and
uses heavy promotion and selling efforts).
(ii) The marketing concept takes an “outside-in” perspective (focuses on needs, values, and
satisfactions).

Many companies claim to adopt the marketing concept but really do not unless they commit to
market-focused and customer-driven philosophies.

Customer-driven companies research current customers to learn about their desires, gather new
product and service ideas, and test proposed product improvements.
Such customer-driven marketing usually works well when there exists a clear need and when
customers know what they want.

When customers do not know what they want, marketers can try customer-driving marketing—
understanding customer needs even better than customers themselves do, and creating products
and services that will meet existing and latent needs now and in the future.

e. The Societal Marketing Concept

The societal marketing concept holds that the organization should determine the needs, wants,
and interests of target markets. It should then deliver the desired satisfactions more effectively
and efficiently than competitors in a way that maintains or improves the consumer’s and the
society’s well- being.

The societal marketing concept is the newest of the marketing philosophies.

It questions whether the pure marketing concept is adequate given the wide variety of societal
problems and ills. According to the societal marketing concept, the pure marketing concept
overlooks possible conflicts between short-run consumer wants and long- run consumer welfare.
The societal concept calls upon marketers to balance three considerations in setting their
marketing policies:

(i) Company profits

(ii) Customer wants.
(iii) Society’s interests.

It has become good business to consider and think of society’s interests when the organization
makes marketing decisions.

3. Evolving Views of Marketing’s Role:

Formerly, Marketing was considered to play an equal function as other departments of the
organization. But with the passage of time and growing importance of the customers, the
marketing department attained more importance and attained the central part in the organization.
The customer is now the main actor that is controlling almost all functions and efforts of the
marketing department, because the success of any organization in today’s competitive era
depends upon the level of satisfaction provided by the company. Nowadays the marketing
department is acting as an integration department to provide integration among the functions
performed by the company and the customer is acting as controlling factor.
III. Importance of Marketing to the Marketers, Consumers and Society

To the Marketers:

1. Financial Success

Finance, operations, accounting, and other business functions will not really matter if there is not
sufficient demand for products and services. Marketing is a profit centre, other functions are cost
centres.

2. Marketing is often the Route to the Top

Most companies have now created a position of Chief Marketing Officer, similar to Chief
Finance Officer or Chief Strategy Officer. Most of the top positions in the company are being
filled by people from marketing. There is no management discussion in the annual reports
without describing their latest marketing achievements, and the strategies and tactics adopted.

3. Helps Boost Product Sales

Marketing creates desire among the general public to buy the product through effective strategic
marketing plans including integrated marketing communication. The more people hear and see
the products, the more they would be interested to buy.

4. Builds Company Reputation

Marketers aim at creating brand equity through brand 'name, images, logo, or caption that the
customers listen and watch in the advertisements.With an established name it is easier for
marketers to expand and to grow.

5. Marketing is the biggest component of a product offering

Normally 40-60% of the price charged from a customer comprises of marketing-related costs,
like advertising, market research, development, etc. The greatest challenge before the marketer is
how to bring it down without sacrificing marketing objectives.
6. To Cope up with the Changing Marketing Environment

Marketing is becoming more important as organizations around the world strive to develop
products and services that appeal to their customers and aim to differentiate their offering in the
increasingly-crowded global marketplace.

To the Consumers:

1. They can buy goods globally:

Marketers through computer and information technology are able to satisfy more customers
across the globe than ever before. Marketers do recognize the role of websites and the blogs,
online communities, SMS, e-mail etc. which facilitate marketing exchanges.

2. Promotes Product Awareness

Getting the product recognized by the market is the primary objective of marketing, by which
customers take advantage of them. Customers never thought of mobile phones, personal
computers or laptops. Awareness of them was spread by marketers only. Thus, marketing helps
to improve the quality of life.

3. Creating Utilities:

Marketing creates form utility (from timber into desired furniture), place utility (moving product
closure to customer), time utility (product being made available when it is needed), information
utility (informing of availability of a particular product at a particular place and at a particular
price), and possession utility (through transfer of ownership).

To the Society:

1. Protection against Evil Effects of Depression

It is through marketing that the spending is continued and the depression is kept at bay.

2. Employment:
Marketing offers many exciting, interesting, and challenging careers, like personal selling,
advertising, transportation, packaging, marketing research, product development and design,
cash and carry stores, retailing, lobbying, event management, etc. Apart from such commercial
activities, many non-governmental organizations engaged in cause marketing, advocacy
marketing, social marketing etc. also provide great opportunities.

3. Availability of Various Products:

Society would have no choice in the absence of marketing. Today, there are hundreds of new
products and tens of variants of every product are available only because of marketing.
UNIT 2 THE MARKETING ENVIRONMENT

Introduction

A company’s Business/marketing environment consists of the actors and forces outside

marketing that affect marketing management’s ability to build and maintain successful
relationships with target customers. Companies constantly watch and adapt to the
changing environment.

More than any other group in the company, marketers must be environmental trend-
trackers and opportunity seekers. Although every manager in an organization should
watch the outside environment, marketers have two special aptitudes. They have
disciplined methods—marketing research and marketing intelligence—for collecting
information about the marketing environment. They also spend more time in customer
and competitor environments. By carefully studying the environment, marketers can
adapt their strategies to meet new marketplace challenges and opportunities.

The marketing environment consists of a micro-environment and macro-environment.

The micro-environment consists of the actors close to the company that affect its ability
to serve its customers—the company, suppliers, marketing intermediaries, customer
markets, competitors, and publics. The macro-environment consists of the larger societal
forces that affect the micro-environment—demographic, economic, natural,
technological, political, and cultural forces. We look first at the company’s
microenvironment.

The Microenvironment
Marketing management’s job is to build relationships with customers by creating
customer value and satisfaction. However, marketing managers cannot do this alone.
Marketing success requires building relationships with other company departments (the
internal environment), suppliers, marketing intermediaries, competitors, various publics,
and customers (the company’s task/industry environment), which combine to make up
the company’s value delivery network.

Marketers must work in harmony with other company departments to create customer
value and relationships. For example, BIDCO’s marketers can’t promise us low prices
unless its operations department delivers low costs.

In creating value for customers, marketers must also partner with other firms in the
company’s value delivery network. For example, Lexus cannot create a high-quality
ownership experience for its customers unless its suppliers provide quality parts and its
dealers provide high sales and service quality.

Actors in the Micro-environment

a) The Company
In designing marketing plans, marketing management takes other groups in the company
into account—groups such as top management, finance, research and development
(R&D), purchasing, operations, and accounting. All of these interrelated groups form the
internal environment. Top management sets the company’s mission, objectives, broad
strategies, and policies. Marketing managers make decisions within the strategies and
plans made by top management.

Marketing managers must work closely with other company departments. Other
departments have an impact on the marketing department’s plans and actions. And, under
the marketing concept, all of these functions must “think consumer.” According to a
former Xerox CEO, to provide a great customer experience, Xerox must “find out what
customers are facing—what their problems and opportunities are. Everyone at Xerox
shares this responsibility. That includes people and departments that do not directly
interact with customers- like finance, legal, and human resources.”

b) Suppliers
These provide the resources needed by the company to produce its goods and services.
Supplier problems can seriously affect marketing. Marketing managers must watch
supply availability and costs. Supply shortages or delays, labor strikes, and other events
can cost sales in the short run and damage customer satisfaction in the long run. Rising
supply costs may force price increases that can harm the company’s sales volume.
c) Marketing Intermediaries
Marketing intermediaries help the company promote, sell, and distribute its products to
final buyers. They include resellers, physical distribution firms, marketing services
agencies, and financial intermediaries.
• Resellers are distribution channel firms that help the company find customers or
make sales to them. These include wholesalers and retailers who buy and resell
merchandise.
• Physical distribution firms help the company stock and move goods from their
points of origin to their destinations.
• Marketing services agencies are the marketing research firms, advertising
agencies, media firms, and marketing consulting firms that help the company
target and promote its products to the right markets.
• Financial intermediaries include banks, credit companies, insurance companies,
and other businesses that help finance transactions or insure against the risks
associated with the buying and selling of goods.

d) Competitors
The marketing concept states that to be successful, a company must provide greater
customer value and satisfaction than its competitors do. Thus, marketers must do more
than simply adapt to the needs of target consumers. They also must gain strategic
advantage by positioning their offerings strongly against competitors’ offerings in the
minds of consumers.
e) Publics
The company’s marketing environment also includes various publics. A public is any
group that has an actual or potential interest in or impact on an organization’s ability to
achieve its objectives. We can identify seven types of publics:
• Financial publics. This group influences the company’s ability to obtain funds. Banks,
investment analysts, and stockholders are the major financial publics.
• Media publics. This group carries news, features, and editorial opinion. It includes
newspapers, magazines, television stations, and blogs and other Internet media.
• 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.
• Citizen-action publics. A company’s marketing decisions may be questioned by
consumer organizations, environmental groups, minority groups, and others. Its public
relations department can help it stay in touch with consumer and citizen groups.
• Local publics. This group includes neighborhood residents and community
organizations. Large companies usually create departments and programs that deal with
local community issues and provide community support. For example, Safaricom
sponsors a lot of sporting events every year.
• General public. A company needs to be concerned about the general public’s attitude
toward its products and activities. The public’s image of the company affects its buying.
• Internal publics. This group includes workers, managers, volunteers, and the board of
directors. Large companies use newsletters and other means to inform and motivate their
internal publics. When employees feel good about the companies they work for, this
positive attitude spills over to the external publics.

f) Customers
Customers are the most important actors in the company’s micro-environment. The aim
of the entire value delivery network is to serve target customers and create strong
relationships with them. The company might target any or all five types of customer
markets.
Consumer markets consist of individuals and households that buy goods and services for
personal consumption. Business markets buy goods and services for further processing or
use in their production processes, whereas reseller markets buy goods and services to
resell at a profit. Government markets consist of government agencies that buy goods and
services to produce public services or transfer the goods and services to others who need
them. Finally, international markets consist of these buyers in other countries, including
consumers, producers, resellers, and governments. Each market type has special
characteristics that call for careful study by the seller.

The Macro-environment

The company and all of the other actors operate in a larger macro-environment of forces
that shape opportunities and pose threats to the company. In the remaining sections of
this chapter, we examine these forces and show how they affect marketing plans.

a) The Demographic Environment

Demography is the study of human populations in terms of size, density, location, age,
gender, race, occupation, and other statistics. The demographic environment is of major
interest to marketers because it involves people, and people make up markets. The
world’s large and highly diverse population poses both opportunities and challenges.
Changes in the world demographic environment have major implications for business.

Thus, marketers keep a close eye on demographic trends and developments in their
markets—both at home and abroad. They analyze changing age and family structures,
geographic population shifts, educational characteristics, and population diversity.

b) The Economic Environment

The economic environment consists of economic factors that affect consumer
purchasing power and spending patterns. Marketers must pay close attention to major
trends and consumer spending patterns. Import things to consider in this environment
include:

(i) Distribution of income. Nations varies greatly in their levels and distribution of
income. Some countries have industrial economies, which constitute rich markets
for many different kinds of goods. At the other extreme are subsistence
economies which consume most of their own agricultural and industrial output
and offer few market opportunities. In between are developing economies that can
offer outstanding marketing opportunities for the right kinds of products.

Marketers should pay attention to income distribution as well as income levels.

The distribution of income has created a tiered market. Many companies
aggressively target the affluent. Others target those with more modest means. Still
other companies tailor their marketing offers across a range of markets, from the
affluent to the less affluent.
(ii) Changes in Consumer spending patterns
Economic factors can have a dramatic effect on consumer spending and buying
behavior. For example, in today’s harsh economic situation many Kenyans have
now adopted prudence in their lifestyles and spending patterns. They are buying
less and looking for greater value in the things that they do buy. In turn, value
marketing has become the watchword for many marketers. Marketers in all
industries are looking for ways to offer today’s more financially cautious buyers
greater value—just the right combination of product quality and good service at a
fair price.

c) The Natural Environment

The natural environment involves the natural resources that are needed as inputs by
marketers or that are affected by marketing activities.
Environmental concerns have grown steadily over the past three decades. In many cities
around the world, air and water pollution have reached dangerous levels.

Marketers should be aware of several trends in the natural environment. The first
involves growing shortages of raw materials. Air and water may seem to be infinite
resources, but some groups see long-run dangers. Renewable resources, such as forests
and food, also have to be used wisely.

Nonrenewable resources, such as oil, coal, and various minerals, pose a serious problem.
Firms making products that require these scarce resources face large cost increases, even
if the materials remain available.
A second environmental trend is increased pollution. Industry will almost always damage
the quality of the natural environment. Consider the disposal of chemical and nuclear
wastes; the dangerous mercury levels in the ocean; the quantity of chemical pollutants in
the soil and food supply; and the littering of the environment with non-biodegradable
bottles, plastics, and other packaging materials.

A third trend is increased government intervention in natural resource management. The

governments of different countries vary in their concern and efforts to promote a clean
environment. Some, such as the German government, vigorously pursue environmental
quality. Others, especially many poorer nations, do little about pollution, largely because
they lack the needed funds or political will.

Instead of opposing regulation, marketers should help develop solutions to the material
and energy problems facing the world. Concern for the natural environment has given
rise to the so-called green movement. Today, enlightened companies go beyond what
government regulations dictate. They are developing strategies and practices that support
environmental sustainability—an effort to create a world economy that the planet can
support indefinitely. They are responding to consumer demands with more
environmentally responsible products. For example, General Electric is using its
“ecomagination” to create products for a better world—cleaner aircraft engines, cleaner
locomotives, and cleaner fuel technologies.

Other companies are developing recyclable or biodegradable packaging, recycled

materials and components, better pollution controls, and more energy-efficient
operations.

d) The Technological Environment

The technological environment changes rapidly. New technologies create new markets
and opportunities. However, every new technology replaces an older technology. CDs
hurt phonograph records, and digital photography hurt the film business. When old
industries fought or ignored new technologies, their businesses declined. Thus, marketers
should watch the technological environment closely. Companies that do not keep up will
soon find their products outdated. And they will miss new product and market
opportunities.

As products and technology become more complex, the public needs to know that these
are safe. Thus, government agencies investigate and ban potentially unsafe products.
Such regulations have resulted in much higher research costs and longer times between
new product ideas and their introduction. Marketers should be aware of these regulations
when applying new technologies and developing new products.

e) The Political and Social Environment

Marketing decisions are strongly affected by developments in the political environment.

The political environment consists of laws, government agencies, and pressure groups
that influence or limit various organizations and individuals in a given society.

Well-conceived regulation can encourage competition and ensure fair markets for goods
and services. Thus, governments develop public policy to guide commerce—sets of laws
and regulations that limit business for the good of society as a whole. Almost every
marketing activity is subject to a wide range of laws and regulations.

Legislation affecting business around the world has increased steadily over the years.
Kenya has many laws covering issues such as competition, fair trade practices,
environmental protection, product safety, truth in advertising, consumer privacy,
packaging and labeling, pricing, and other important areas.

Business legislation has been enacted for a number of reasons. The first is to protect
companies from each other. Although business executives may praise competition, they
sometimes try to neutralize it when it threatens them. So laws are passed to define and
prevent unfair competition.

The second purpose of government regulation is to protect consumers from unfair

business practices. Some firms, if left alone would make shoddy products, invade
consumer privacy, mislead consumers in their advertising, and deceive consumers
through their packaging and pricing. Unfair business practices have been defined and are
enforced by various agencies.

The third purpose of government regulation is to protect the interests of society against
unrestrained business behavior. Profitable business activity does not always create a
better quality of life. Regulation arises to ensure that firms take responsibility for the
social costs of their production or products.

f) The Cultural Environment

The cultural environment consists of institutions and other forces that affect a society’s
basic values, perceptions, preferences, and behaviors. People grow up in a particular
society that shapes their basic beliefs and values. They absorb a worldview that defines
their relationships with others. The following cultural characteristics can affect marketing
decision making.
The Persistence of Cultural Values
People in a given society hold many beliefs and values. Their core beliefs and values
have a high degree of persistence. For example, most Americans believe in individual
freedom, hard work, getting married, and achievement and success. These beliefs shape
more specific attitudes and behaviors found in everyday life. Core beliefs and values are
passed on from parents to children and are reinforced by schools, churches, business, and
government.

Secondary beliefs and values are more open to change. Believing in marriage is a core
belief; believing that people should get married early in life is a secondary belief.
Marketers have some chance of changing secondary values but little chance of changing
core values. For example, family-planning marketers could argue more effectively that
people should get married later than not getting married at all.

Shifts in Secondary Cultural Values

Although core values are fairly persistent, cultural swings do take place. Consider the
impact of popular music groups, movie personalities, and other celebrities on young
people’s hairstyling and clothing norms. Marketers want to predict cultural shifts to spot
new opportunities or threats.
UNIT 3 CONSUMER & ORGANIZATIONAL BUYER BEHAVIOR
CONSUMER BUYER BEHAVIOR

A Model of Consumer Behavior

Consumers make many buying decisions every day. Most large companies research
consumer buying decisions in great detail to answer questions about what consumers buy,
where they buy, how and how much they buy, when they buy, and why they buy.
Marketers can study actual consumer purchases to find out what they buy, where, and
how much. But learning about the whys of consumer buying behavior is not so easy—the
answers are often locked deep within the consumer's head.

The central question for marketers is: How do consumers respond to various marketing
efforts the company might use? The company that really understands how consumers will
respond to different product features, prices, and advertising appeals has a great
advantage over its competitors. The starting point is the stimulus-response model of
buyer behavior shown in the figure below. This figure shows that marketing and other
stimuli enter the consumer's "black box" and produce certain responses. Marketers must
figure out what is in the buyer's black box.

Marketing stimuli consist of the four Ps: product, price, place, and promotion. Other
stimuli include major forces and events in the buyer's environment: economic,
technological, political, and cultural. All these inputs enter the buyer's black box,

where they are turned into a set of observable buyer responses: product choice, brand
choice, dealer choice, purchase timing, and purchase amount.
The marketer wants to understand how the stimuli are changed into responses inside the
consumer's black box, which has two parts. First, the buyer's characteristics influence
how he or she perceives and reacts to the stimuli. Second, the buyer's decision process
itself affects the buyer's behavior. This chapter looks first at buyer characteristics as they
affect buying behavior, and then discusses the buyer decision process.

Factors influencing Consumer Buying Behavior

i. Marketing Factors
Each element of the market mix – product, pricing, promotion and place (distribution) –
has the potential to affect the buying process at various stages.
a) Product: The uniqueness of the product, the physical appearance and packaging
can influence buying decision a consumer.
b) Pricing: Pricing strategy does affect buying behaviour of consumers. Marketers
must consider the price sensitivity of the target customers while fixing prices.
c) Promotion: The various elements of promotion such as advertising, publicity,
public relations, personal selling, and sales promotion affect buying behaviour of
consumers. Marketers select the promotion mix after considering the nature of customers.
d) Place: The channels of distribution, and the place of distribution affects buying
behaviour of consumers. Marketers make an attempt to select the right channel and
distribute the products at the right place.
ii. Personal Factors:
The personal factors of a consumer may affect the buying decisions. The personal factors
include:
a) Age Factor: The age factor greatly influences the buying behaviour. For instance,
teenagers may prefer trendy clothes, whereas, office- executives may prefer sober and
formal clothing.
b) Gender: The consumer behaviour varies across gender. For instance, girls may
prefer certain feminine colours such as pink, purple, peach, whereas, boys may go for
blue, black, brown, and so on.
c) Education: Highly educated persons may spend on books, personal care products,
and so on. But a person with low or no education may spend less on personal grooming
products, general reading books, and so on.
d) Income Level: Normally, higher the income level, higher is the level of spending
and vice-versa. But this may not be always the case in developing countries, especially in
the rural areas.
e) Status’ in the Society: Persons enjoying higher status in the society do spend a
good amount of money on luxury items such as luxury cars, luxury watches, premium
brands of clothing, jewellery, perfumes, etc.
Other Personal Factors: The other personal factors such as personality, lifestyle, family
size, etc., influence consumer behaviour.
iii. Psychological Factors:
A person’s buying behaviour is influenced by psychological factors such as follows:
a) Learning: It refers to changes in individual behavior that are caused by
information and experience. For example, when a customer buys a new brand of perfume,
and is satisfied by its use, then he/she is more likely to buy the same brand the next time.
Through learning, people acquire beliefs and attitudes, which in turn influence the buying
behaviour.
b) Attitude: It is a tendency to respond in a given manner to a particular situation or
object or idea. Consumers may develop a positive, or negative or neutral attitude towards
certain product or brands, which in turn would affect his/her buying behaviour.
c) Motives: A motive is the inner drive that motivates a person to act or behave in a
certain manner. The marketer must identify the buying motives of the target customers
and influence them to act positively towards the marketed products. Some of the buying
motives include: Pride and possession;Love and affection;Comfort and convenience;Sex
and romance, etc.

iv. Perception: It is the impression, which one forms about a certain situation or
object. A motivated person is ready to act. But the way or the manner in which he acts is
influenced by his/her perception of the situation. For instance, a student may perceive
examinations as an important event, and therefore, he/she would make every possible
effort including purchase of new stationery like pens, whereas, another student may be
casual about the examinations, and therefore, would not make extra efforts.
v. Beliefs: A belief is a descriptive thought, which a person holds about certain
things. It may be based on knowledge, opinion, faith, trust and confidence. People may
hold certain beliefs of certain brands/products. Beliefs develop brand images, which in
turn can affect buying behaviour.
d) Situational Influences:
Major situational influences include the physical surroundings, social surroundings, time,
the nature of the task, and monetary moods and conditions.
i. Physical Surroundings: The physical surroundings at the place of purchase affects
buying behaviour. For instance, when a customer is shopping in a store, the features that
affect buying behaviour would include the location of the store, the decor, the layout of
the store, the noise level, the way merchandise is displayed, and so on.
ii. Social Surroundings: The social surroundings of a situation involve the other
people with the customer that can influence buying decision at the point of purchase. For
instance, a bargain hunter shopping with an impatient friend may do quick purchases, and
may not haggle over the price, so as to please the impatient friend.
iii. Time Factor: Customers may make different decisions based on when they
purchase – the hour of the day, the day of the week, or the season of the year. For
instance, a consumer who has received a pay cheque on a particular day may shop more
items, than at the end of the month when he is short of funds.
iv. Task: A customer may make a different buying decision depending upon the task
to be performed by the product. For instance, if the product is meant as a gift rather than
for personal use, then the customer may buy a different brand/product depending upon to
whom the gift is purchased.
v. Momentary Conditions: The moods and condition of the customer at the time of
purchase may also affect the buying decision. A customer who is very happy would make
a different buying decision, as compared to when he is not in a happy mood
e) Social Factors:
The social factors such as reference groups, family, and social and status affect the
buying behaviour:
i. Reference Groups: A reference group is a small group of people such as
colleagues at work place, club members, friends circle, neighbours, family members, and
so on. Reference groups influence its members as follows: They influence members’
values and attitudes; They expose members to new behaviours and lifestyles; They create
pressure to choose certain products or brands.
ii. Family: The family is the main reference group that may influence the consumer
behaviour. Nowadays, children are well informed about goods and services through
media or friend circles, and other sources. Therefore, they influence considerably in
buying decisions both FMCG products and durables.
iii. Roles and Status: A person performs certain roles in a particular group such as
family, club, organisation, and so on. For instance, a person may perform the role of
senior executive in a firm and another person may perform the role of a junior executive.
The senior executive may enjoy higher status in the organisation, as compared to junior
executive. People may purchase the products that conform to their roles and status,
especially in the case of branded clothes, luxury watches, luxury cars, and so on.
iv. Cultural Factors:
Culture includes race and religion, tradition, caste, moral values, etc. Culture also include
sub-cultures such sub-caste, religious Sects, language, etc.
a) Culture: It influences consumer behaviour to a great extent. Cultural values and
elements are passed from one generation to another through family, educational
institutions, religious bodies, social environment, etc. Cultural diversity influences food
habits, clothing, customs and traditions, etc. For instance, consuming alcohol and meat in
certain religious communities is not restricted, but in certain communities, consumption
of alcohol and meat is prohibited.
b) Sub-Culture: Each culture consists of smaller sub-cultures that provide specific
identity to its members. Subcultures include sub-caste, religious sects (Roman Catholics,
Syrian Catholics, Protestant Christians, etc), geographic regions (South Indians, North
Indians), language (Marathi, Malayali, Tamilian, Guajarati) etc. The behaviour of people
belonging to various sub-cultures is different. Therefore, marketers may adopt
multicultural marketing approach, i.e., designing and marketing goods and services that
cater to the tastes and preferences of consumers belonging to different sub-cultures

ORGANIZATIONAL BUYER BEHAVIOR

Individual consumers are not the only buyers in a market. Companies and other
organizations also need goods and services to operate, run their businesses, and produce
the offerings they provide to one another and to consumers. These organizations, which
include producers, resellers, government and nonprofit groups, buy a huge variety of
products including equipment, raw materials, finished goods, labor, and other services.
Some organizations sell exclusively to other organizations and never come into contact
with consumer buyers.

Characteristics of Organizational Buying

B2B purchasing decisions include levels of complexity that are unique to organizations
and the environments in which they operate.
i. Timing Complexity
The organizational decision process frequently spans a long period of time, which creates
a significant lag between the marketer’s initial contact with the customer and the
purchasing decision. In some situations, organizational buying can move very quickly,
but it is more likely to be slow. When personnel change, go on leave, or get reassigned to
other projects, the decision process can take even longer as new players and new
priorities or requirements are introduced. Since a variety of factors can enter the picture
during the longer decision cycles of B2B transactions, the marketer’s ability to monitor
and adjust to these changes is critical.
ii. Technical Complexity
Organizational buying decisions frequently involve a range of complex technical
dimensions. These could be complex technical specifications of the physical products, or
complex technical specifications associated with services, timing, and terms of delivery
and payment. Purchases need to fit into the broader supply chain an organization uses to
operate and produce its own products, and the payment schedule needs to align with the
organization’s budget and fiscal plans. For example, a purchasing agent for Volvo
automobiles must consider a number of technical factors before ordering a radio to be
installed in a new vehicle model. The electronic system, the acoustics of the interior, and
the shape of the dashboard are a few of these considerations.
iii. Organizational Complexity
Because every organization is unique, it is nearly impossible to group them into precise
categories with regard to dynamics of buying decisions. Each organization has a
characteristic way of functioning, as well as a personality and unique culture. Each
organization has its own business philosophy that guides its actions in resolving conflicts,
handling uncertainty and risk, searching for solutions, and adapting to change. Marketing
and sales staff need to learn about each customer or prospect and how to work with them
to effectively navigate the product selection process.

Types of organizational markets

These may be divided into four types: government, institutional, producer and reseller
markets.
i. Government
Government is a major purchaser in any country, spending billions of shillings across the
range of government expenditure, e.g. on health, defense, social security, transport,
communications and education.
ii. Institutional markets: organizations with non-business goals
These include organizations with educational, charitable and other non-business goals.
Producer markets, including buyers of raw materials, semi-finished and finished items.
Such purchases include buyers of raw materials and semi-finished items used to produce
other products. For example, farmers may require animal feed, a range of machinery from
milking machines to tractors, seeds for planting and fertilizer. The demand for industrial
products derives from that for consumer products and is called derived demand. The
demand for many industrial products is relatively inelastic, i.e. a price increase or
decrease will not alter greatly the demand for the item.
iii. Reseller markets
Reseller markets are composed of those intermediaries between manufacturer and the
consumer which are known as wholesalers and retailers. Wholesalers purchase products
for direct sale to retailers, other wholesalers, producers and government. On the other
hand, retailers purchase products and resell them to final customers.

The Organizational Buying Centre

Most high-value purchases in B-to-B markets involve people from different departments
and functions within the organization. People play different roles with respect to the
buying decision. Several roles are listed below:
i. Users: In the case of the purchase of a new university computer network system, users
are the people who will use the network. Users should be involved in the buying process
so that they can feel included and can contribute usefully their experience of the present
system.
ii. Influencers provide information for evaluating alternative products and suppliers.
With respect to the computer network example, the university central computing services
personnel should have the expertise to evaluate different standards and platforms. They
should be able to help in drawing up a technical specification for the network system and
to advise on the performance and reliability of different options. Other influencers would
include computing officers within departments who could communicate the specific
requirements of each department.
iii. Gatekeepers control the flow of information to other people in the purchasing
process. Primarily, they involve the organization’s purchasing agents and the suppliers’
sales people. Within the university example, staff within the computing services section
and departmental computing officers would act as gatekeepers and would be able to slant
the information flow with respect to the options which they thought were most feasible.
iv. Buyers are usually referred to as the purchasing agents within the role of
purchasing manager. In most organizations buyers have the authority to contact suppliers
and negotiate the purchase transaction. In the university computer network example, this
may be carried out by a person nominated by the university IT committee, who would
report back to the committee.
v. Deciders are the persons with the authority to make a final purchase decision. In
the university computing network example it would probably be the university IT
committee. This would include personnel from the central university administration and
persons representing departments directly involved.

The B-TO-B Buying Process

A typical model of the organizational buyer decision process involves recognition of

need, determination of characteristics and the quality of the needed item; specification of
the characteristics and quality of the needed item; search for and qualification of potential
suppliers; acquisition and analysis of proposals; evaluation of proposals and supplier
selection; selection of order routine; performance evaluation and feedback.
i. Recognition of Need
The organizational purchasing process begins with the recognition of the need for a
product or service. For example, computer manufacturers have a need for printed circuit
boards (PCBs). Some firms will make PCBs internally; for others it is more convenient to
outsource this to a subcontractor who will deliver PCBs to a pre-defined routine.
ii. Determination of Product Specifications
The business buyer must specify the physical characteristics of the product in some
detail, detailing its function, design, expected quality and performance levels as well as
its relationship and compatibility with related components.
iii. Evaluation and Selection of Suppliers
The next stage involves the search for a suitable supplier who can best meet all the
specified criteria. Theorists suggest that B-to-B marketers evaluate potential suppliers
according to a list of attributes which reflect desired benefits.
There are three kinds of buying tasks or situations: the straight rebuy, the modified rebuy
and new task buying.
i. Straight rebuy. Here the buyer orders something without any modification which,
usually, is handled on a routine basis by the purchasing department. The buyer simply
chooses from the various suppliers on his/her list.
ii. Modified rebuy. This happens when the organization’s needs remain unchanged
but when buying centre members are not satisfied either with the product or with the
supplier. They may wish to have a better-quality product, better service or are looking for
a keener price. In this case, the buyer requires information about the different products
and suppliers. This opens up an opportunity for new suppliers to gain entry. The modified
rebuy may end with renegotiation of the contract with an existing supplier or with the
choice of a new supplier.
iii. New task buying. A firm that is buying a product or service for the first time faces
a new task situation. The size of the buying centre rises in proportion to the cost and
complexity of the decision. In this case, the procedure for supplier selection will be more
complex and lengthy, involving negotiations at a high level with a number of potential
suppliers before a decision is made.
iv. Commitment
The process does not end once the decision has been finalized. The supply situation is
monitored as it unfolds and the supplier performance is measured to determine whether
or not it is suitable. For example, frequently a sample of goods supplied is tested to
ensure that it has been produced according to specification. If the sample is not deemed to
satisfy specifications which have been set, the whole batch may be returned to the
supplier.
UNIT4 MARKET SEGMENTATION, TARGETING & PRODUCT
POSITIONING

Introduction

We know that when we talk about consumers we recognize there are two different kinds -
final consumers and business buyers. In other words we have broken down a broad,
heterogeneous group of customers into two more homogeneous segments. This means
that we can be more specific about directing our marketing activities to meeting the needs
and wants of one or the other of the two groups. In short, we have segmented the market.

Organizations operating in broad markets cannot serve all customers in that market since
customers have diverse needs. Instead of producing products for every customer,
organizations need to identify market segments that it can serve most effectively. Instead
of scattering their marketing effort (Shot Gun Approach), they can focus on buyers whom
they have greatest chance of satisfying (Rifle Approach). This is called target marketing.

Target marketing consists of:

Market Segmentation: Identify distinct buyer group who may require separate
products
Market Targeting: Select one/more segments to enter.
Market Positioning: Establishing/Communicating product’s key distinctive benefits to
markets

Market segmentation
We can segment markets into many other, and much more homogeneous, smaller groups.
Each of those can be further segmented into other groups in turn.
At each lower level of segmentation, we find greater homogeneity of needs and wants of
customers, and we can be increasingly precise in targeting our market activities towards
meeting those needs and wants.
One basic segmentation strategy is undifferentiated marketing- when you choose not to
segment your market at all. This strategy is also known as mass marketing and is used
less today. Differentiated marketing is used when the focus is on what is specific to
buyers and different marketing mixes are used to reach different market segments.

Levels of Market Segmentation

Segmenting a market is a company’s effort to increase company’s targeting precision.

Levels of segmentation could be:
• Mass Marketing
• Segment Marketing
• Niche Marketing
• Local/ Local area Marketing.
• Individual Marketing.

Mass Marketing:

Seller engages in Mass production, Mass distribution and Mass promotion of one product
for all buyers. Benefits could be:
• Creates largest potential market.
• Leads to lowest cost of production.
May lead to:
• Low prices, or
• High margin.

Segment Marketing

Market segment consists of a large identifiable group within a market. Arises due to
company’s recognition of buyer’s having different interests. At the same time, company
is not willing to customize its product to each individual customer. - Hence, company
tries to isolate some broad segments that make up a market.
Niche Marketing

A segment is a large identifiable group within a market while a niche is a more narrowly
defined group. Typically a niche is a small market whose needs are not served well
enough. A niche is identified by dividing a segment into sub segments or by dividing a
group within a distinctive set of traits who seek special combination of benefits.

Local Marketing

Involves localizing company’s marketing mix to cater for clear, regional differences in
Customers’ demographics/psychographics. This is manifested through:
• Fine tuning product assortments area wise.
• Using promotional campaigns with local flavor.

Individual Marketing

Company tries to prepare on an individual or mass basis, individually designed

products/communications to meet each customer’s requirements. It is also called one-to-
one, segment of one or customization marketing. It is most common in B2B marketing.
Examples: greeting cards, vacations.

Requirements/Criteria for meaningful segmentation

Segmentation strategies can help us meet the needs and wants of our customers more
directly and profitably, but what are the guidelines for successful segmentation strategy?
The question can be answered in terms of four key requirements: Measurability,
Accessibility, Responsiveness (also referred to as differentiability), and Substantiality.
MARS is a useful acronym to help remind you of these four requirements. The following
diagram presents the requirements for successful segmentation strategy for you in visual
form.
Determining whether a market segment is meaningful
In determining whether a segment is worthy of being a target market, the marketer needs
to address the following questions:
Measurable: It has to be possible to determine the values of the variables used for
segmentation with justifiable efforts. This is important especially for demographic and
geographic variables. For an organization with direct sales (without intermediaries), the
own customer database could deliver valuable information on buying behavior
(frequency, volume, product groups, mode of payment etc).
Accessible: The segment has to be accessible and servable for the organization. That
means, for instance, that there are target-group specific advertising media, as magazines
or websites the target audience likes to use. These marketer has to be able to reach the
segment with the available marketing program.;
Responsiveness/Distinguishable/Variable: The market segments have to be that diverse
that they show different reactions to different marketing mixes
Substantial/ Relevant: The size and profit potential of a market segment have to be large
enough to economically justify separate marketing activities for this segment.
Feasible/Actionable: It has to be possible to approach each segment with a particular
marketing program and to draw advantages from that.

Dimensions used to segment consumer markets

A marketer can either choose to market to a mass undifferentiated market or it can divide
the market into smaller, more homogeneous parts or segments. Often the potential buyers
of a product share similar characteristics, needs or behaviors. Once identified, targeting
that buyer segment is a more effective and efficient use of marketing effort.
The bases of segmentation could be any one of the factors that influence purchase
behavior. These include:
• Type of problem-solving (routine response, limited, extensive)
• Geographics (country, region or city)
• Demographics (age, sex, marital status)
• Usage rate (heavy user, brand loyal)
• Benefit- sought (convenience, economy, luxury).
• Multiple Segmentation: This is where a company uses more than one
segmentation criteria. Company may start with one segmentation base and then use
another base/s to further subdivide the market into more homogeneous markets.

Segmentation in B2B Markets

• Many of the same bases used to segment consumer markets are also used to
segment B2B markets. For example, Goya Foods is a U.S. food company that sells
different ethnic products to grocery stores, depending on the demographic groups the
stores serve—Hispanic, Mexican, or Spanish. Likewise, B2B sellers often divide their
customers by geographic areas and tailor their products to them accordingly. Segmenting
by behavior is common as well. B2B sellers frequently divide their customers based on
their product usage rates. Customers that order many goods and services from a seller
often receive special deals and are served by salespeople who call on them in person. By
contrast, smaller customers are more likely to have to rely on a firm’s Web site, customer
service people, and salespeople who call on them by telephone.

• According to Harrison, Hague, and Hague, the behavioral, or needs-based,

segments in B2B markets include the following:
i. A price-focused segment is composed of small companies that have low profit
margins and regard the good or service being sold as not being strategically important to
their operations.
ii. A quality and brand-focused segment is composed of firms that want the best
possible products and are prepared to pay for them.
iii. A service-focused segment is composed of firms that demand high-quality
products and have top-notch delivery and service requirements.
iv. A partnership-focused segment is composed of firms that seek trust and reliability
on the part of their suppliers and see them as strategic partners.
Targeting: Choosing a Market
The second step in selecting target markets requires the marketer to critically evaluate the
segments identified in Step 1 in order to select those which are most attractive. For small
firms this step may not be very involving since they may lack the resources needed to do
it effectively. So they are often left with using their own intuition or judgment to
determine which segments are the most promising. For companies with the time and
money to commit to this step, the results may identify the segments that are primary
candidates for current marketing efforts and also present segments that are future targets
for the company’s offerings.

Once one or more segments have been identified the marketer must choose the most
attractive option(s) for their marketing efforts. At this point the choice becomes the firm’s
target market(s).

The results of analyzing market segments leads the marketer to consider one of the
following target marketing strategies.
• Undifferentiated or Mass Marketing – Under this strategy the marketer attempts
to appeal to one large market with a single marketing strategy. While this approach offers
advantages in terms of lowering development and production costs, since only one
product is marketed, there are few markets in which all customers seek the same benefits.
While this approach was very popular in the early days of marketing (e.g., Ford Model-
T), few companies now view this as a feasible strategy.
• Differentiated or Segmentation Marketing – Marketers choosing this strategy try
to appeal to multiple smaller markets with a unique marketing strategy for each market.
The underlying concept is that bigger markets can be divided into many sub-markets and
an organization chooses different marketing strategies to reach each sub-market it targets.
Most large consumer products firms follow this strategy as they offer multiple products
(e.g., running shoes, basketball shoes) within a larger product category (e.g., footwear).
• Concentrated or Niche Marketing –This strategy combines mass and
segmentation marketing by using a single marketing strategy to appeal to one or more
very small markets. It is primarily used by smaller marketers who have identified small
sub-segments of a larger segment that are not served well by larger firms that follow a
segmentation marketing approach. In these situations a smaller company can do quite
well marketing a single product to a narrowly defined target market.
• Customized or Micro-Marketing - This newest target marketing strategy attempts
to appeal to targeted customers with individualized marketing programs. For micro-
marketing segmentation to be effective the marketer must, to some degree, allow
customers to “build-their-own” products. This approach requires extensive technical
capability for marketers to reach individual customers and allow customers to interact
with the marketer. The Internet has been the catalyst for this target marketing strategy. As
more companies learn to utilize the Internet micro-marketing is expected to flourish.

Product Positioning

Having segmented the market and decided on a targeting strategy, the next stage is to
create and maintain a clear and appropriate positive image of the product or service in the
minds of consumers. This helps to differentiate the product from current and potential
competing products. For example, Porsche is positioned in the prestige segment of the car
market with a differential advantage based on performance while Volvo is positioned in
the family segment, where it has capitalized on its reputation for safety. No matter which
target marketing strategy is selected, the overall marketing strategy should involve the
process of positioning the firm’s offerings in ways that will appeal to targeted customers.
Positioning is concerned with the perception customers hold regarding a product or
company. In particular, it relates to marketing decisions an organization undertakes to get
customers to think about a product or company in a certain way compared to its
competitors. The goal of positioning is to convince customers to believe the marketer’s
offerings are different in some way from its competitors on an important benefit sought
by the market. For instance, if a customer has discovered she has a need for an affordable
laptop computer, a company such as Dell may come to mind since their marketing efforts
position their products as offering good value at a reasonable cost.
To position successfully the marketer must have thorough knowledge of the key benefits
sought by the market. Obviously the more effort the marketer expends on segmentation
the more likely they will know the benefits sought by the market. Once known, the
marketer must: 1) tailor marketing efforts to ensure their offerings satisfy the most sought
after benefits, and 2) communicate to the market in a way that differentiates the
marketer’s offerings from competitors.

Positioning statements

Many companies use taglines in their advertising to try to position their products in the
minds of the buyer—where they want them, of course. A tagline is a catchphrase
designed to sum up the essence of a product. You perhaps have heard Wendy’s tagline
“It’s better than fast food.” The tagline is designed to set Wendy’s apart from restaurants
like McDonald’s and Burger King—to plant the idea in consumers’ heads that Wendy’s
offerings are less “fast foodish,” given the bad rap fast food gets these days. Here are
some more examples of positioning statements.
• Mercedes-Benz: Engineered like no other car in the world
• Wharton Business School: The only business school that trains managers who are
global, cross-functional, good leaders, and leveraged by technology
• BMW: The ultimate driving machine
• Southwest Airlines: The short-haul, no-frills, and low-priced airline
• Avis: We are only Number 2, but we try harder
• Famous Footwear: The value shoe store for families
• Miller Lite: The only beer with superior taste and low caloric content
• The Heidel House Resort: The place to reconnect with loved ones
• Northern Nevada Business Weekly: The only source for local business news

Stages involved in market positioning

There are six stages involved in product positioning, each of which is described below.
i. Identify key product characteristics
Marketing research data should be studied in order to select the key product
characteristics that members of the target market consider most important when making
purchasing decisions. These features may be tangible, e.g. colour, size, design, or
intangible, e.g. reputation or guarantees
ii. Draw a perceptual map
This is a useful tool by which the current brands available to a market segment can be
depicted visually. In its simplest form the perceptual map consists of a grid that shows the
two most important attributes identified at Stage 1 placed at two axes on the grid.
Qualitative marketing research enables consumer perceptions about the current brands to
be plotted, so that the organization can see at a glance where competition is most intense
and where there might be gaps in the market. For example financial institutions are
evaluated with respect to constructs such as ‘personal service’ versus ‘impersonal
service’, ‘reliable service’ versus ‘unreliable service’, ‘friendly’ versus ‘clinical’ attitude,
etc.
iii. Decide on a competitive strategy
Perceptual mapping provides insights into appropriate competitive actions and helps
firms to decide whether they should compete head-on or position their products away
from competition.
iv. Design product attributes and associated imagery
At this stage the features of the product should be designed, along with the type of
imagery to help the targeted customers identify the benefits being offered to them.
Features such as brand name, packaging, advertising themes, price levels and distribution
outlets are all important in creating this position in the mind of the customer.
v. Sustain a competitive advantage
Competitive advantage is gained when the firm establishes a market position that sets its
product apart from competitors in the eyes of its target market. In order for this advantage
to be sustained, marketing information must be kept up to date to ensure that the needs of
the target markets are being met more effectively and efficiently than by competition.

Brand Repositioning
Sometimes firms find it advantageous to reposition their products—especially if they
want the product to begin appealing to different market segments. Repositioning is an
effort to “move” a product to a different place in the minds of consumers. Brand
repositioning focuses on changing what customers associate with the brand and
sometimes competing brands. This usually entails a change in the brand’s promise and its
personality. Taglines often change with brand repositioning (to communicate the new
promise). And sometimes the identity itself is updated or refreshed to reinforce the
change in the brand’s positioning
There are many reasons why organizations engage in a brand overhaul including:
competitive influences; predicted growth; intent to boost relevance; the desire to target a
new audience ; diversification of the enterprise; completed merger or acquisition; the
threat of legal issues; a spate of negative publicity
UNIT 5 STRATEGIC MARKETING PLANNING

Introduction

Although the process of strategic marketing planning can be complex (a large

multinational corporation) or relatively straightforward (a small single proprietor
business), the planning process is the same in many ways. Large or small, all marketers
strive to meet the needs of their customers while meeting their own business and
marketing objectives.
The marketing planning process can be pictured as a funnel with corporate decisions a the
top, business-unit decisions in the middle, and specific functional planning and decision
making at the bottom.

The Strategic Planning Process

Whether at the corporate, business unit, or functional level, the planning process begins
with an in-depth analysis of the organization's internal and external environments—
sometimes referred to as a situation analysis. Planning efforts within each functional area
will result in the creation of a strategic plan for that area. A marketing plan is a written
document that provides the blueprint or outline of the organization's marketing activities,
including the implementation, evaluation, and control of those activities.

The marketing plan serves a number of purposes:

1. It clearly explains how the organization will achieve its goals and
objectives.
2. It serves as the "road map" for implementing the marketing strategy.
3. It instructs employees as to their roles and functions in fulfilling the plan.
4. It provides specifics regarding the allocation of resources and includes the specific
marketing tasks, responsibilities of individuals, and the timing of all marketing activities.
Marketing decisions must be made within the boundaries of the organization's overall
mission, goals, and objectives.
Organizational Mission Versus Organizational Vision
1. A mission, or mission statement, seeks to answer the question "What business are we
in?" It is a clear and concise statement (a paragraph or two at most) that explains the
organization's reason for existence.
2. A vision, or vision statement, seeks to answer the question "What do we want to
become?" An organization's vision tends to be future oriented, in that it represents where
the organization is headed and where it wants to go.
3. Elements of the Mission Statement
a) A well-devised mission statement for any organization, unit within an organization, or
single-owner business should answer the same five basic questions:
1) Who are we?
2) Who are our customers?
3) What is our operating philosophy (basic beliefs, values, ethics, and so on)?
4) What are our core competencies or competitive advantages?
5) What are our responsibilities with respect to being a good steward of our human,
financial, and environmental resources?
b) A mission statement that delivers a clear answer to each of these questions installs the
cornerstone for the development of the marketing plan.
c) The mission statement should be included in annual reports and major press releases,
framed on the wall in every office, and personally owned by every employee of the
organization.
Mission Width and Stability
In crafting a mission statement, management should be concerned about the statement's
width. Overly broad missions can lead companies to establish plans and strategies in
areas where their strengths are limited. Such endeavors almost always result in failure.
Overly narrow mission statements that constrain the vision of the organization can prove
just as costly. Mission stability refers to the frequency of modifications in an
organization's mission statement. Of all the components of the strategic plan, the mission
should change the least frequently.

Corporate or Business-Unit Strategy

All organizations need a corporate strategy, the central scheme or means for utilizing and
integrating resources in the areas of production, finance, research and development,
human resources, and marketing, to carry out the organization's mission and achieve the
desired goals and objectives. Larger firms often find it beneficial to devise separate
strategies for each strategic business unit (SBU), subsidiary, division, product line, or
other profit center within the parent firm. Business-unit strategy determines the nature
and future direction of each business unit, including its competitive advantages, the
allocation of its resources, and the coordination of the functional business areas.In small
businesses, corporate strategy and business-unit strategy are essentially the same.

Functional Goals and Objectives

Marketing and all other business functions must support the organization's mission and
goals, translating these into objectives with specific quantitative measurements. All
functional objectives should be expressed in clear, simple terms so that all personnel
understand what type and level of performance the organization desires. In other words,
objectives should be written so that their accomplishment can be measured accurately.
It is also important for all functional objectives to be reconsidered for each planning
period.

Functional Strategy
Organizations design functional strategies to provide a total integration of efforts that
focus on achieving the area's stated objectives. In marketing strategy, the process focuses
on selecting one or more target markets and developing a marketing program that
satisfies the needs and wants of members of that target market. Functional strategy
decisions must:
a) fit the needs and purposes of the functional area with respect to meeting its goals and
objectives.
b) be realistic given the organization's available resources and environment.
c) be consistent with the organization's mission, goals, and objectives.

Implementation Functional Strategies

Implementation involves activities that actually execute the functional area strategy. All
functional plans have at least two target markets: an external market (customers,
suppliers, investors, potential employees, the society at large) and an internal market
(employees, managers, executives). Even seemingly disconnected events in finance or
human resources can have an effect on the firm's ultimate customers—the individuals and
businesses that buy the firm's products. In order for a functional strategy to be
implemented successfully, the organization must rely on the commitment and knowledge
of its employees—its internal target market.

Evaluation and Control

Organizations design the evaluation and control phase of strategic planning to keep
planned activities on target with goals and objectives. The critical issue in this phase is
coordination among functional areas. The key to coordination is to ensure that functional
areas maintain open lines of communication at all times. In some ways, the evaluation
and control phase of the planning process is an ending and a beginning. On one hand,
evaluation and control occur after a strategy has been implemented. On the other hand,
evaluation and control serves as the beginning point for the planning process in the next
planning cycle.

The Marketing Plan

The marketing plan provides a detailed formulation of the actions necessary to carry out
the marketing program. Think of the marketing plan as the handbook for marketing
implementation, evaluation, and control.

Marketing Plan Structure

There are many ways to structure a marketing plan. A good marketing plan outline is:
a) comprehensive: to ensure that there are no omissions of important information.
b) flexible: to ensure the plan will fit the unique needs of your situation.
c) consistent: to ensure that the marketing plan and the planning process will be
understood by executives and employees outside of marketing.
d) logical: to ensure that the plan can be sold to top managers.
Executive Summary
The executive summary is a synopsis of the overall marketing plan, with an outline that
conveys the main thrust of the marketing strategy and its execution. Individuals both
within and outside of the organization may read the executive summary for reasons other
than marketing planning or implementation. The executive summary should always be
the last element to be written because it is easier (and more meaningful) to write after the
entire marketing plan has been developed.
Situation Analysis
The situation analysis summarizes all pertinent information obtained about three key
environments: the internal environment, the customer environment, and the firm’s
external environment. A clear and comprehensive situation analysis is one of the most
difficult parts of developing a marketing plan. SWOT (Strengths, Weaknesses,
Opportunities, and Threats) Analysis .SWOT analysis focuses on the internal factors
(strengths and weaknesses) and external factors (opportunities and threats)— derived
from the situation analysis in the preceding section—that give the firm certain advantages
and disadvantages in satisfying the needs of its target market(s). Strengths and
weaknesses are internal issues unique to the firm conducting the analysis. Opportunities
and threats are external issues that exist independently of the firm conducting the
analysis. A common mistake is to list the firm's strategic alternatives as opportunities.
Marketing Goals and Objectives
Marketing goals and objectives are formal statements of the desired and expected
outcomes resulting from the marketing plan. This section of the marketing plan sets the
performance targets that the firm seeks to achieve and it defines the parameters by which
the firm will measure actual performance in the evaluation and control phase.
Marketing Strategy
The strategy section of the marketing plan outlines how the firm will achieve its
marketing objectives. In its broadest sense, marketing strategy refers to how the firm will
manage its relationships with customers in a manner that gives it an advantage over the
competition.
Marketing Implementation
The implementation section of the marketing plan describes how the marketing program
will be executed. This section also answers several questions:
1) What specific marketing activities will be undertaken?
2) How will these activities be performed?
3) When will these activities be performed?
4) Who is responsible for the completion of these activities?
5) How will the completion of planned activities be monitored?
6) How much will these activities cost?
Without a good plan for implementation, the success of the marketing strategy is
seriously jeopardized. For this reason, the implementation phase of the marketing plan is
just as important as the marketing strategy phase.
Evaluation and Control
This section of the marketing plan details how the results of the marketing program will
be evaluated and controlled. Marketing control involves establishing performance
standards, assessing actual performance by comparing it with these standards, and taking
corrective action if necessary to reduce discrepancies between desired and actual
performance. The financial assessment of the marketing plan is also an important
component of evaluation and control. Estimates of costs, sales, and revenues determine
financial projections. A marketing audit—a systematic examination of the firm's
marketing objectives, strategy, and performance—can be used to pinpoint potential
causes for discrepancies.

Purposes and Significance of the Marketing Plan

A good marketing plan will fulfill five purposes in detail:
a) It explains both the present and future situations of the organization. This includes the
situation and SWOT analyses and the firm's past performance.
b) It specifies the expected outcomes (goals and objectives) so that the organization can
anticipate its situation at the end of the planning period.
c) It describes the specific actions that are to take place so that the responsibility for each
action can be assigned and implemented.
d) It identifies the resources that will be needed to carry out the planned actions.
e) It permits the monitoring of each action and its results so that controls may be
implemented. Feedback from monitoring and control provides information to start the
planning cycle again in the next time frame.
UNIT 6 INTERNATIONAL MARKETING

International marketing refers to marketing of goods and service across the political
boundaries as well as the marketing activities of an enterprise that sells and /or
manufactures within a given country when that organization is a subsidiary of or is
affiliated to another firm which is in another nation.

a) International marketing decisions facing managers

• Whether to go abroad
• Which market to enter
• How to enter the market(s)
• On an appropriate marketing mix, and
• On a suitable marketing organization

b) Reasons for involvement in international marketing

• The possibility of obtaining higher profits
• The possibility of getting a higher sales volume with the subsequent reduction in
cost per unit.
• The possibility of lengthening the product life cycle when the product is
introduced into foreign market
• The possibility of "even out" seasonal fluctuations in demand since some markets
may buy the product during one period of the year while others buy the same
during another period of the year.
• The risk of spreading the risks inherent in any business
• The possibility of selling obsolete products in foreign markets without detriment
to the domestic market
Also the following two questions must be answered in the affirmative:
• Are the opportunities in foreign market sufficiently attractive?
• Does the organization have or can it acquire the resources and capabilities to
international marketing?
c) Risks involved in going international.
Before making a decision to go international, the company must weigh several risks:
• The company might not understand foreign customer preferences and fail to offer
a competitively attractive products
• The company might not understand the foreign country's business culture or know
how to deal effectively with foreign nationals.
• The company might underestimate foreign regulations and incur unexpected
costs.
• The company might realize that it lacks managers with international experience
• The foreign country might change its commercial laws devalue its currency, or
undergo a political revolution and expropriate foreign companies.
UNIT 7 MARKETING OF SERVICES

Services are defined as "separately identifiable, intangible activities which provide want-
satisfaction when marketed to household consumers and/ or industrial users and which
are not necessarily tied to the sale of a product or another service" (Kotler).

The service marketing mix

Due to their unique nature, services may not be successfully marketed using the
traditional 4 P’S e.g. the intangibility nature of services require that marketers emphasis
on tangibles that accompany the service. This can be enhanced through the physical
evidence in the service delivery process and people (staff) who are competent enough to
deliver quality service.
The perishability nature requires that marketers engage in special marketing techniques
to maximize returns from the services. Variability nature requires that people involved in
service delivery follow a standardized system or process to reduce the rate of variability.
This requires marketers of services to develop clear procedures guidelines and rules to
guide service delivery process.

Product
In service marketing, product refers to the service just like the tangible products or the
physical product; services should be matched with the customer needs. However, due to
their nature, marketers find it difficult to match services with the needs since the service
delivery can be affected by many factors.
Marketers should therefore emphasize on service delivery in addition to other
attributes or benefits. Just like the physical products services can be packaged and labeled
- Packaging of services refers to the total experience that the customer is likely to
encounter when receiving the service.
Service packaging is enhanced through branding and the other intangible assets such as
perceived quality, loyalty, level of awareness, associations, corporate image e.t.c.
Services go through a life cycle just like products do i.e. also services go through the
adoption process i.e. Awareness, Interest, evaluation, trial, adoption. However, due to the
intangibility nature, services cannot be tried before use and this makes the adoption
process more complicated because of the high risk involved due to lack of trialability.

Price
Services pricing is complex due to their intangibility nature. Some marketers will base
their prices on intangible reasons hence not able to justify the prices to the customers e.g.
many people based services that requires a lot of personal contact between the service
provider and customer may be hard or difficult to price effectively. These service
providers will base their pricing on intangible elements such as their experience, the
consumers expectation, location, time complexity e.t.c.

Place (Distribution)
Due to the inseparability nature of services direct distribution is common especially
when the services are people are people based. Some service companies use distributors
but on a limited capacity or basis. This is because the service provider requires to
maintain a close monitoring and control to enhance service quality e.g. when a bank
appoints an intermediary to offer ATM services on their behalf, the banks needs to
maintain a close monitor and control to enhance service quality. People based services
such as hair dressing; medical etc. may be difficult to use distributors/agents because of a
personal interaction between the consumers and the provider.

Promotion
Just like tangible products services can be promoted through the 5 promotional tools. i.e.
Advertising, Sales Promotion, Public Relations or Publicity, Personal Selling and Direct
Marketing. However, due to their inseparability and perishability nature, services
emphasize on personal selling and direct marketing. e.g. services that require direct
contact between the service provider and the consumer can be effectively promoted
through personal selling or direct marketing.

People
Due to increase in competition, many companies both in manufacturing and services
sector have realized the importance of the personnel within the organization. The
inseparable natures of services require that a human element be included as an important
part of service delivery. This means service companies must pay more attention to
recruiting and maintaining a qualified team of personnel. This therefore makes ‘people’
to become a vital element of the service marketing mix.

During service delivery, people play different roles depending on the nature of the
service.
a. Primary role – This is where the service is actually carried out by the service
provider personally e.g. Medical care, hair dresser, trainer etc.
b. Facilitating role – This is where the people or person or employee facilitates the
service transaction and participates in it e.g. bank cashier, hotel waiter, cyber café
attendant etc.
c. Ancillary role – This is where the employee helps to create the service exchange
but is not part of it e.g. travel agent, tour guide, insurance broker, equipment cleaner etc.
in many cases, the overall service offering will be made up of a combination of these
roles. Customer perception on quality will also be highly influential by the roles the
people play.

Physical evidence
It refers to the tangibles that which customers use as a point of reference while judging
the quality of service. The physical evidence includes the following:-
1. Corporate image i.e.
This is the customer’s perception and attitude towards the overall company or its
products and services. The corporate image is a long term asset which is built through
various activities that the company engages in.
A positive corporate image gives the company a competitive edge since the positive
attitude and perception are transferred to the company’s product or services. This is why
service companies must invest in corporate identity such as branding. In many
organizations use of corporate identity is a unique selling proposition in their promotion
campaigns.
2. Equipment and facilities
Includes the various enhances or equipments that facilitate service delivery e.g. in a hotel
the tables, hospital equipment.
3. Service delivery atmosphere
The general conditions in the point of sale e.g. condition, point of sale, customer care,
congestion e.t.c.
4. Location /Accessibility
Refers to the proximity or how easy it is for the customer to access the service provider
premises.
5. Neatness of the service delivery point.

There are 2 types of physical evidence;-

1. Peripheral evidence.
Refers to evidence which requires exchange of items such as a receipt or a hotel key
when booking a hotel. The peripheral evidence is used to guarantee the customer that the
service will be delivered e.g. A receipt or air ticket which is given to the customers is a
clear indication that the service will be delivered.
2. Essential evidence
The physical evidence that is used during the service delivery moment. This includes,
equipment and facilities that facilitates service delivery e.g. shaving machine by a barber,
table, chairs, plates in a hotel, screens in movie, theatre.

Process
It refers to the way in which the service is created and delivered. It is concerned with the
functional aspect of service delivery such as the procedures involved, the timeliness and
quality of delivery i.e. the way things are actually done and steps taken to achieve desired
results. The principal by which service delivery process can be designed implemented
and monitored are not different from those related to manufacturing however, due to the
unique nature of services there are specific characteristics of service process design and
this includes;-
1. The involvement of customer in the process.
2. The location of service delivery i.e. is the service consumed delivered at the
services provider premises or customer premises.
3. Nature of the service – is it people based or equipment based?
4. Level of contact – is it high contact or low contact?
5. Degree of standardization – is the service delivered through a standard process or
customized process.
6. Complexity of the service- the number of steps or stages/ activities that are
involved in the service delivery. The more the stages, the more complex a service
becomes.

Categories of service mix

A company's offering to the marketplace often includes some services. The service
component can be a minor or a major part of the total offering. Five categories of
offerings can be distinguished.
a. Pure tangible goods: The offering consists of primarily of a tangible goods such
as soap, toothpaste or salt. No service accompanies the product.
b. Tangible goods with accompanying services: The offering consists of tangible
good accompanied by one or more services. Levitt observes that " the more
technologically sophisticated the generic product (e.g. cars and computers), the
dependent are its sales on the quality and availability of its accompanying
customer services.
c. Hybrid: The offering consists of equal parts of goods and services. For example ,
people patronize restaurants for both food and service.
d. Major service with accompanying minor goods and services: The offering
consists of a major service along with additional services supporting goods. For
example, airline passengers, buy transportation service. The trip includes some
tangibles, such as food and drinks, a ticket stub, and airline magazine. The service
requires a capital-intensive good-an airplane- for its realization, but the primary
item is a service.
e. Pure services: The offering consists of primarily of a service. For example, baby-
sitting, psychotherapy, and massage

Unique Characteristics of Services

The uniqueness of services have important marketing implications. These unique

characteristics include: intangibility, perishability, inseparability, and heterogeneity.
a. Intangibility: They are intangible, and therefore they do not appeal to a customer's sense
of sight and smell. They are more difficult to demonstrate in an exhibition, show and/
display in a shop. Customers are often unable to judge the quality of a service before
buying it. To reduce the uncertainty, buyers look for evidence of the service quality. They
draw inferences about quality from the place, people, equipment, communication
material, symbols, and price that they see. Therefore the task of the service provider is to
"manage the evidence," to tangibilize the intangible"
b. Perishability: Services are highly perishable because they cannot be stored. An empty
seat in a plane, unoccupied bed in a hotel, is revenue lost forever. Synchronizing demand
and supply is necessary to deal with fluctuating demand. Examples: on the demand side,
differential pricing will shift some demand from peak to off-peak period. On the supply
side, part-time employees can be hired to serve peak demands.
c. Inseparability: In many cases the service producer and the service consumer cannot be
separated. The production and the consumption of the service are done simultaneously.
d. Heterogeneity: Services are normally heterogeneous rather than homogeneous. It is
difficult if not impossible to standardize the output of different sellers of presumably the
same service.
UNIT 8 ELECTRONIC MARKETING

What is e-marketing?
As many other English words, the term e-marketing was born by adding the prefix “e-“ to
a term already known and used, in this case marketing”. The prefix “e-“ is actually the
extreme contraction of the word electronic” and is quite present in today’s language of
many people: e-marketing”, “e-business”, “e-mail”, “e-learning”, “e-commerce”, “e-“, e-
“, e-“…E-marketing is the marketing that uses internet as manifestation channel.

A more comprehensive, practical definition is the one formulated by specialists of

CISCO company: e-marketing is a generic term utilized for a wide range of activities –
advertising, customer communications, branding, fidelity programs etc. – using the
internet. More than the simple development of a website, the e-marketing focuses on
online communications, direct dialog with consumers who thus participate to the creation
of new products, finding efficient methods to win customer’s fidelity and ease their
business-making process. E-marketing is the sum of activities a company makes with the
purpose of finding, attracting, winning and retaining customers.

The benefits of e-marketing over traditional marketing

E Marketing is the product of the meeting between modern communication technologies
and the age-old marketing principles that humans have always applied. Its benefits
include;
• Reach
The nature of the internet means businesses now have a truly global reach. While
traditional media costs limit this kind of reach to huge multinationals, eMarketing opens
up new avenues for smaller businesses, on a much smaller budget, to access potential
consumers from all over the world.
• Scope
Internet marketing allows the marketer to reach consumers in a wide range of ways and
enables them to offer a wide range of products and services. eMarketing includes, among
other things, information management, public relations, customer service and sales. With
the range of new technologies becoming available all the time, this scope can only grow.
• Interactivity
Whereas traditional marketing is largely about getting a brand's message out there, e-
Marketing facilitates conversations between companies and consumers. With a two-way
communication channel, companies can feed off of the responses of their consumers,
making them more dynamic and adaptive.

• Immediacy
Internet marketing is able to, in ways never before imagined, provide an immediate
impact.Imagine you're reading your favorite magazine. You see a double-page advert for
some new product or service, maybe BMW's latest luxury sedan or Apple's latest iPod
offering. With this kind of traditional media, it's not that easy for you, the consumer, to
take the step from hearing about a product to actual acquisition. With e Marketing, it’s
easy to make that step as simple as possible, meaning that within a few short clicks you
could have booked a test drive or ordered the iPod. And all of this can happen regardless
of normal office hours. Effectively, Internet marketing makes business hours 24 hours per
day, 7 days per week for every week of the year. By closing the gap between providing
information and eliciting a consumer reaction, the consumer's buying cycle is speeded up
and advertising spend can go much further in creating immediate leads.
• Demographics and Targeting
Generally speaking, the demographics of the Internet are a marketer's dream. Internet
users, considered as a group, have greater buying power and could perhaps be considered
as a population group skewed towards the middle-classes. Buying power is not all
though. The nature of the Internet is such that its users will tend to organise themselves
into far more focussed groupings. Savvy marketers who know where to look can quite
easily find access to the niche markets they wish to target. Marketing messages are most
effective when they are presented directly to the audience most likely to be interested.
The Internet creates the perfect environment for niche marketing to targeted groups.
Email marketing
It is a form of direct marketing which uses electronic mail as a means of communicating
commercial or fund-raising messages to an audience. In its broadest sense, every email
sent to a potential or current customer could be considered email marketing. However,
the term is usually used to refer to:
sending email messages with the purpose of enhancing the relationship of a merchant
with its current or previous customers, to encourage customer loyalty and repeat business,
sending email messages with the purpose of acquiring new customers or convincing
current customers to purchase something immediately,
adding advertisements to email messages sent by other companies to their customers,
and
sending email messages over the Internet, as email did and does exist outside the
Internet (e.g., network email ).

E- advertising
E-advertising is defined as the placement of electronic messages on a website or in e-mail
to:
• Generate awareness for a brand
• Stimulate interest/preference for a product or service
• Provide the means to contact the advertiser for information to make a purchase
"E-advertising" is unique in that it can provide a one-tool process from introduction of a
product to close of sale. Traditional advertising requires that the consumer take some
action to make a purchase…
call a phone number, mail a coupon, go into a store, etc. Electronic advertising allows a
company to develop a tool capable of closing the sale by offering a "click here" button…
the consumer need never get out of their chair. The Web has become a pathway through
multiple access points created to allow consumers to compare goods and services from
one company to the next - with the click of a mouse. The ease of information flow has
required some retailers and service organizations to re-think the way that they distribute
information about their product, thus requiring integration between traditional and
interactive advertising and marketing techniques.
E- branding
Business have now started the potential of electronic means for building brand
awareness. Byusing trade and service marks as their domain names, business attract
potential customers to their websites and increase their market visibility. E-branding
simply means using electronic channels to support brands. In other words, e-branding
means supporting the brand by developing an online experience of the brand.

E-payment Systems
Electronic Payment is a financial exchange that takes place online between buyers and
sellers. Thecontent of this exchange is usually some form of digital financial instrument
(such as encrypted credit card numbers, electronic cheques or digital cash) that is backed
by a bank or an intermediary, or by a legal tender.
Problems of Traditional payment systems
There are also many problems with the traditional payment systems that are leading to its
fade out. Some of them are enumerated below:
• Lack of Convenience:
Traditional payment systems require the consumer to either send paper cheques by snail-
mail or require him/her to physically come over and sign papers before performing a
transaction. This may lead to annoying circumstances sometimes.
• Lack of Security:
This is because the consumer has to send all confidential data on a paper, which is not
encrypted, that too by post where it may be read by anyone.
• Lack of Coverage:
When we talk in terms of current businesses, they span many countries or states.These
business houses need faster transactions everywhere. This is not possible without the
bank having branch near all of the companies offices. This statement is self-explanatory.
• Lack of Eligibility:
Not all potential buyers may have a bank account.
• Lack of support for micro-transactions:
Many transactions done on the Internet are of very low cost though they involve data
flow between two entities in two countries. The same if done on paper may not be
feasible at all.

Security Risks in Internet

The business organization need to acquire technology solutions to overcome the risks of
Internet based transaction. The following are the major risks faced in Internet based
transactions.
1) Spoofing: It involves someone masquerading as someone else.
2) Unauthorized disclosure: Hackers can catch the transmissions to obtain customers
sensitive information.
3) Unauthorized action: Altering a website so that it refuses service to potential clients.
4) Eavesdropping: The private content of a transaction if unprotected can be intercepted,
when it goes through the route over the internet.
5) Data alteration: The content of a transaction may be altered either maliciously or
accidently.
6) Phishing: It is a specialized form of online identity theft. It means obtaining personal
details online through sites and e-mails masquerading as legitimate business.