FOUR ERAS IN THE HISTORY OF MARKETING

1. FOUR ERAS IN THE HISTORY OF MARKETING • Exchange process Activity in which two or more parties give something of value to each other to satisfy perceived need.

2. Marketing defined as: “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others”

3. Core Marketing Concepts

4. Consumer Buying Process • Need recognition • Information collection • Evaluation of alternatives • Purchase decision • Post purchase behaviour

5. Segmentation, Targeting and Positioning • What customer to serve? • Companies have to be selective, cannot serve everyone. • Segment the market to choose who to serve • How to serve? • How the company will differentiate and position itself in the market • 3 steps in Target Targeting: Market Segmentation Identify bases for segmenting the market Develop segment profiles Target Marketing Develop measure of segment attractiveness Select Target segments Market Positioning Develop positioning for target segments Develop a marketing mix for each segment

6. Segmentation • Market Segmentation: • Dividing a market into distinct groups of buyers who have distinct needs, characteristics, or behavior and who might require separate products or marketing mixes • Segment: A group of consumers who respond in a similar way to a given set of marketing efforts. Can be: • geographic, demographic, psychographic, behavioral.

7. Segmentation • Geographic Segmentation: • Dividing a market into different geographical units such as nations, states, regions, counties, cities or neighborhoods. • May operate in different geographic regions but cater to the respective needs of segments • Many companies “localizing” their product, advertisements, promotions etc.

8. Segmentation • Demographic Segmentation: • Dividing the market into groups based on demographic variables such as age, sex, family size, family life cycle, income, occupation, education, religion, race and nationality • Most popular bases for segmentation: • Consumer needs/wants/usage vary closely with demographic variables • They are easier to measure • Different types of Demographic Segmentation: • Age and Life-Cycle Stages: needs/wants change with age. Examples: Clothing line, Insurance products • Gender: largely used in cosmetics, clothing, toiletries and magazines. Example: Hugo Boss, L'Oreal, Chen One, Bonanza • Income Groups: dividing into different income groups. Used by companies such as Automobiles, clothing, cosmetics, financial services, travel etc. Example: Toyota and Lexus, Mobilink: Jazz and Indigo

9. Segmentation • Psychographic Segmentation: • Dividing a market into different groups based on social class, lifestyle or personality characteristics • People in same demographic segment can have different psychographic attributes • Lifestyle segmentation: Based on the notion that people buy products that reflect their lifestyle – Rolex, Lawrencepur etc.

10. Segmentation • Behavioral Segmentation: • Dividing a market into groups based on consumer knowledge, attitude, use or response to a product • By occasion: buyers are grouped according to occasion when they get the idea to buy,actually make their purchase or use the purchased items – weddings, Valentine’s day, “TCS Sentiments Express”, Ramadan, Eid etc • Benefits Sought: groups buyers according to the different benefits they seek from the product. Shampoos – anti-dandruff, color care, conditioning etc.

11. Segmentation • Behavioral Segmentation – contd • User Status: Segmented according to groups of: • Nonusers • Ex-users • Potential users • First time users • Regular users • Market share leader tries to attract potential users • Smaller firms: attract leader’s customers to themselves • Usage Rate: Light, medium or heavy product users • Heavy users – usually low but high in consumption. • It’s good to have few heavy users than several light users but companies try to spend more on attracting light customers • Loyalty Status: how loyal customers are to particular brand • Completely loyal, somewhat loyal or non-loyals • Helps companies to devise strategies to improve positioning for somewhat loyals, attract non-loyals and study behavior patterns of completely loyals.

12. Segmentation • Can we use multiple segmentation bases? • Examples? • Requirements of Effective Segmentation: • Measurable: Should have right data for the segment • Accessible: can be effectively reached and served. • Substantial: Profitable enough • Differentiable: distinguishable and should respond differently to different marketing mix • Actionable: effective marketing programs/plans can be designed for them.

13. Target Marketing • Evaluate the segments: • Segment size and growth: whether it is profitable or not • The largest and fastest-growing might not be the most profitable one • Segment structural attractiveness: too many competitors? Actual or potential substitutes? Power of buyers? Powerful suppliers? • Company’s objectives and resources: segment vs. strategy of company, company may lack resources to cater to the segment.

14. Target Marketing • Target Market: • The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter • Target profitably generate the greatest customer value and sustain it over time. • Target marketing can be carried out at several different levels Undifferentiated (mass) marketing Differentiated (segmented) marketing Concentrated (niche) marketing Micromarketing (local or individual marketing) Targeting Broadly Targeting Narrowly

15. Target Marketing • Undifferentiated (Mass) Marketing: • A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer • Focus on commonality rather than differences • Utility goods (KESC) etc • But in general, difficult as no one solution for all is possible • Competition will soon oust such firms

16. Target Marketing • Differentiated Marketing: • A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each. • Most of the firms engage in this: Mobilink, Ufone, Nokia, Unilever, Banks etc. • Advantages: • May give company higher sales and better position within a segment • Disadvantage: • Costly and time-consuming

17. Target Marketing • Concentrated (niche) Marketing: • A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches. • From small share of large market to large share of one or few segments • Bentley, Rolls Royce, Ferrari, Rolex, Café Flo • Advantages: • Strong market position because of greater knowledge of segment and reputation • Effective marketing: fine-tuning products, prices and programs to carefully defined segments • Efficient marketing: targeting the products/services, channels, communication towards customers that it can serve best and profitably. • Small segments and less competitive, therefore higher revenue • Many companies start as nichers and become big players whereas at times large companies introduce niches. • Disadvantages: High Risk

18. Target Marketing • Micro Marketing: • The practice of tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups • Includes Local marketing and Individual marketing • Local Marketing: Tailoring brands and promotions to the needs and wants of local customer groups – cities, neighborhoods, and even specific stores e.g. A-1 Karak chai, Halal food shops etc • Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers • Also known as “customized marketing”, “one-to-one marketing”, “mass customization” etc. • High end luxury cars e.g. Maybach, Dell, Designer Clothing, Wedding dresses etc. • Common in Business-to-business firms as well. • Sees individual in every customer rather than seeing customer in every individual

19. Target Marketing • Choosing a Target Marketing Strategy depends on: • Company Resources • Product variability (how much variation is there in design, models etc) • Product Life Cycle Stage • Market Variability (buyer tastes and preferences) • Competitors’ Marketing Strategies

20. Positioning • Product Position/positioning: • Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers • Nokia: Connecting People • Nike: Just Do It • Malaysia Truly Asia • Why Position? : Competitive Advantage • Also simplifies the buying process • Consumers may position with or without marketer’s help but marketers can’t leave things on consumers’ own perception. • What you position is what you promise and what you promise you should deliver or else: Disaster

21. Developing a Positioning Strategy 1. Analyze Competitors’ Positions: • Current picture of competitors: who they are and how they are perceived by target market • Not only in your own product categories but substitutes as well 2. Identify Competitive Advantage • Give consumers reason to prefer your brand over competitor’s • Can be on various dimensions: Price, status, service, product feature, people etc.

22. Developing a Positioning Strategy 3. Finalize the Marketing Mix • Put the pieces together of each element in marketing mix • Marketing mix elements should match the selected segment 4. Evaluate the target market’s responses and modify the strategy • Target marketing is an ongoing process • Segment might need to be changed or people in the segment may have changed • Monitory the changes and adjust positioning strategies • Repositioning: Redoing a product’s position to respond to marketplace changes.

23. Keys to Successful Positioning Clarity The idea must be clear to be remembered easily Consistency Lasting, without any confusion Successful Positioning Credibility The selected position/advantage should be credible in the minds of target customers, close to reality Competitiveness Substantial reason to prefer your brand over competitors