Market:“ Area for potential Exchange”

➢ Group of Buyers and sellers

➢ They are interested in negotiating terms of
purchase / sale of goods and services
➢ For some value
➢ Market place
➢Market space
 Marketing is a societal process by which
individuals & groups obtain what they
need and want through creating, offering,
and freely exchanging products and
services of value with others.
 American Marketing
Dr. Philip Kotler
Association

AMA : Marketing is an Kotler : A social and managerial

organizational function and a process whereby individuals and
set of processes for creating, groups obtain what they need
communicating, and delivering and want through creating and
value to customers and for exchanging products and value
managing customer with others.
relationships in ways that
benefit the organization and its
◆ Plays an important role in society

◆ Vital to business survival, profits

and growth

◆ Offers career opportunities

◆ Affects your life every day

Core concepts of Marketing
1. Needs, Wants And Demands
2. Exchange And Transaction
3. Segmentation, Targeting And Positioning
4. Offerings & Brands
5. Value & Satisfaction
6. Marketing Channels
7. Supply Chain
8. Competition
Needs - state of felt
deprivation including
physical, social, and
individual needs i.e hunger
Wants - form that a human
need takes as shaped by
culture and individual
personality i.e. bread
Demands - human wants
backed by buying power i.e.
money
Exchange And Transaction

“ An
act of obtaining a desired product from
someone by offering something in return”.

“ Trade
value between two or more parties is called as
Transaction.”
The idea that people give
up something to receive
something they would
rather have.
 At Least Two Parties

Something of Value

Necessary
Conditions Communication and Delivery
for Exchange
Freedom to Accept or Reject

Desire to Deal With Other Party

Definition emphasizes exchange: A
process in which people give up
something in order to receive something
that they would rather have

COMPANY ORIENTATIONS AND ITS

TYPES
 Segmentation, Targeting And Positioning

Dividing the market into different homogenous

groups…. Segmentation
Identify the segment which is more profitable & design
the mkting strategy to suit that market…….Targeting
Then the offering is positioned in the minds of target
market.
Offerings & Brands

Addressing the value proposition, set of benefits of products &

service to customers is called as “ Offerings”
Offerings from the known source is called as “Brand”.
Value & Satisfaction

Value reflects perceived tangible & intangible benefits & costs to

customers.
It is reflected in terms of Quality, Service & Price.
Satisfaction refers to a person’s comparative judgment about the
product or services
 Marketing Channels

It is a path used by Marketer to reach its Target Market.

He can use 3 kinds of Marketing Channels.

•Communication Channel: Delivers &receives messages
•Distribution Channel: Delivers physical goods & services to
users.
•Service Channel : Renders transaction with the potential
buyers.
 Supply Chain

It is chain that supplies raw materials to the components &

then final product to the customers.

Competition

It includes all the actual & potential rival offerings &

substitutes that the buyer might consider.
• Exchange is the essence of marketing.
• Marketing is customer/ consumer oriented.
• Marketing starts and ends with customers/ consumers.
• Modern marketing precedes and succeeds production.
• Marketing is goal oriented and the goal being profit maximization
through satisfaction of human needs.
• Marketing is a science as well as an art.
• Marketing is the guiding element of business (It tells what, when,
how to produce; Marketing is capable of guiding and controlling
business.
• Marketing is a system .
• Marketing is a process, i.e., series of interrelated functions.
• Study of Consumer Wants and Needs: Goods are produced to satisfy
consumer wants. Therefore study is done to identify consumer needs and
wants. These needs and wants motivates consumer to purchase.

• Study of Consumer behaviour: Marketers performs study of consumer

behaviour. Analysis of buyer behaviour helps marketer in market
segmentation and targeting.

• Product Planning and development : It includes the activities of product

research, marketing research, market segmentation, product development,
determination of the attributes, quantity and quality of the products.

• Branding: Branding of products is adopted by many reputed enterprises to

make their products popular among their customer and for many other
benefits. Marketing manager has to take decision regarding the branding
policy, procedures and implementation programs.

• Packaging: Packaging is to provide a container or wrapper to the product for

safety, attraction and ease of use and transportation of the product.
 Channels of Distribution: Decision regarding selection of most appropriate channel of
distribution like wholesaling, distribution and retailing is taken by the marketing
• manager and sales manager.

•Pricing Policies: Marketer has to determine pricing policies for their products. Pricing
policies differs form product to product. It depends on the level of competition, product
life cycle, marketing goals and objectives, etc.

• Sales Management: Selling is a part of marketing. Marketing is concerned about all

the selling activities like customer identification, finding customer needs, persuading
customer to buy products, customer service, etc.
•
Promotion: Promotion includes personal selling, sales promotion, and advertising.
• Right promotion mix is crucial in accomplishment of marketing goals.

Finance: Marketing is also concerned about the finance, as for every marketing activity
• be it packaging, advertising, sales force budget is fixed and all the activities have to be
completed with in the limit of that budget.
After Sales services: Marketing covers after sales services given to customers,
maintaining good relationships with customers, attending their queries and solving their
problems.
American Marketing Association Definition

Marketing is the process of planning and

executing the conception of pricing, promotion,
and distribution of ideas, goods, and services
to create exchanges that satisfy individual and
organizational goals.
American Marketing Association
Definition
Marketing mgt is defined as the art &
science of choosing target markets &
getting, keeping, & growing customer’s
through creating, delivering, &
communicating superior customer value.
Approaches To Marketing Management OR
Company orientations and its types
1. Production Concept
2. Product Concept
3. Selling Concept
4. Marketing Concept
5. Societal Marketing Concept
Production Concept

• This concept holds that “Consumer will prefer

those products which are widely available & low
in cost”

• Oldest Concept
• Marketing activities are diverted towards
production
•Goal was to increase production
 The Production Concept.

Customer Widely
Prefer Available

Inexpensive
products
Product Concept

• Products are given importance

• Focus is on superior product
• Product features are given high priority
• This concept holds that “ Consumer prefer those
products which offer superior performance”
•Selling activities were neglected
• Managers engaged in making superior products
irrespective of its cost
 The Product Concept.

Customer Products
which are
high quality,
performance
or innovative
features
 Selling Concept

This concepts holds that “ If consumers left alone they will

not buy enough of organization's product. The organization
must undertake aggressive selling & promotional activities”.
“ Make & Sell”
•Aggressive selling activities were given importance
• Central Theme is to “ Fit the Right Customers to your
Product”.
•Generally used in those products which are not preferred by
customers. Ex: Insurance
Marketing Concept
• It is oriented towards customer.
• Holds that “Consumer is a king”
•Marketing research gained importance in this era.
• “ Sense & Respond”
• Co-ordination among all departments
•This concept holds that “ The key to achieving organizational goals
consists in determine the needs & wants of target market & delivering
the desired satisfaction more effectively & efficiently than competitors”
Central Theme is to “ Find the Right Product for Your Customer”.
 Societal Marketing
Concept

• Societal marketing is process to “ Return to environment

“
•Concerned with safety, health, ethics, legal rules, codes of
conduct for business
• Emphasis on long run welfare of consumers
•This concept holds that “Organization task is to determine
the need, wants of target market & deliver the desired
satisfaction more efficiently than it’s competitors in the
way that preserve the customer’s & society’s well being”.
 Holistic marketing is a marketing philosophy that
believes ‘everything matters’ and that a business
cannot exist and excel in vaccum.
• This is an approach which proposes that marketing
should be looked from a broad and integrated
perspective and not as an isolated management
• function.

•
•
Marketing Concept Selling Concept
 Starting point is  Starts from factory
Target Mkt
 Focus on Consumer  Focus on products
needs
 Co-ordination is a  Selling & promoting
means  Sales Volume
 Customer Satisfaction  Planning is short term
 Planning is long term  Find Right Consumer
 Find Right product
Objectives Of Marketing Management
•To satisfy needs & wants
•To Plan & Develop product
•To Increase profit
•To co-ordinate all activities
•To Organize, direct & control
•To inform customers
•To enable successful distribution
•To supply necessary information to make important managerial
decision
•To develop organization by considering the welfare of society
•To integrate the companies operation
 Marketing Mix

It is defined as “ Specific combination of 4 Elements of

marketing such as Product, Price, Place & Promotion”.

According to Kotler “ It is the set of controllable

tactical marketing tools such as Product, Price, Place
& Promotion, that the firm blends to produce the
response it wants in the target market.”
 The Marketing Mix
(The 4 P's of Marketing)

The major marketing management decisions can be

classified in one of the following four categories:
•Product
•Price
•Place (distribution)
•Promotion
 MARKETING MIX

PRODUCT PRICE

Target
Market

PROMOTION
PLACE
 PRODUCT

❑Everything, both favorable and unfavorable, that a

person receives in an exchange.
❑Anything that can be offered to satisfy the needs and
wants of customers.” is a Product.
❑The product is the physical product or service offered
to the consumer. In the case of physical products, it
also refers to any services or conveniences that are part
of the offering.
 Product: Product refers to the goods and services
offered by the organization.
 A pair of shoes, a plate of rice, a lipstick, all are products.
All these are purchased because they satisfy one or more
of our needs.
 We are paying not for the tangible product but for the
benefit it will provide. So, in simple words, product can be
described as a bundle of benefits which a marketer offers
to the consumer for a price.
 While buying a pair of shoes, we are actually buying
comfort for our feet, while buying a lipstick we are actually
paying for beauty.
 The range of products offered by an
organization is called the product mix.
Price: Price is the amount charged for a product or
service. It is the second most important element in the
marketing mix. Fixing the price of the product is a
tricky job. The factors have to kept in mind while
pricing a product are:
like demand for a product,

cost involved,

consumer’s ability to pay,

 prices charged by competitors for similar

products, government restrictions etc.
•Pricing decisions should take into account profit margins
and the probable pricing response of competitors. Pricing
includes not only the list price, but also discounts,
financing, and other options such as leasing.
The activities of competitors have an important bearing

on pricing decision.
 The most obvious example is when a competitor’s
raises or lowers his prices. If your product can offer no
particular advantages over his, then if he drops his price,
you will have to follow suit.
 PLACE

It includes all the companies activity that make the product

or service available to target market.

Place (or placement) decisions are those associated with

channels of distribution that serve as the means for getting
the product to the target customers. The distribution system
performs transactional, logistical, and facilitating functions.
Distribution decisions include market coverage, channel
member selection, logistics, and levels of service.
Most common channels of distribution are given below:

Channel A represents a direct marketing channel. Manufacturers of

goods such as m/c tools, computers, ships and other large expensive
items tend to move them direct to the buyer without involving
middleman or inter middleman. e.g.: ship/plane
PROMOTION

•It is the activity that communicates merits of the

product and persuade target customers to buy it.

•Promotion decisions are those related to communicating

and selling to potential consumers.
•It is useful to know the value of a customer in order to
determine whether additional customers are worth the
cost of acquiring them.
•Promotion decisions involve advertising, public
relations, media types, etc.
Advertising: Advertising is the process of
communication, persuasive information about the

 product to target market by means of the written and spoken word,

and by visual material. There are five principal media of advertising
as follows:
 The press- newspaper, magazines, journals etc.
 Commercial Television
 Direct mail
 Commercial radio
 Outdoor- hoardings, transport advertisements etc.
 Personal Selling: Personal selling is the promotion
activity consists of face to face meeting between the
buyer and seller or his repetitive. Advertising creates
the interest and the desire, but personal selling
clinches the deal. Personal selling is the most
expensive from of promotion.
 Companies which utilize an aggressive sales policy,
based on personal selling, are said to be adopting a
push strategy. By comparison firms which rely more
heavily on advertising are described as adopting a
pull strategy
Sales representative’s tasks:
After sales servicing (dealing with technical quires,

deliveries matters etc.)

Gathering information (feedback on customers

reactions, competitors activities etc.

Communicating regular information to customers

and prospective buyers.

Prospecting (Looking out new selling opportunities)
Sales promotion: Sales promotion activities are a form of indirect
advertising designed to stimulate sales mainly by the use of incentives.
Sales promotion activities are organized and funded by the organization’s
own resources. They can take a no. o different forms, as, for example:
Customer oriented:
 Free samples
 Twin pack bargains
 Temporary price reductions
 Point of sale demonstrations Trade oriented:

 Special discounts
 Co-operating advertising
 Bonuses/ prizes for sales representatives
 Provision of display material
 Strategic
Marketing Planning

20-1
What is Strategic Planning?
◼ It is the managerial process that helps to
develop a strategic and viable fit between
the firm’s objectives, skills, resources with
the market opportunities available. It helps
the firm deliver its targeted profits and
growth through its businesses and
products.
How to go about it?
◼ Defining the corporate mission
◼ Establishing SBUs
◼ Allocating resources for SBUs
◼ Planning for new business
Corporate Mission
◼ This seeks to embody the entire goals of
the organization and the objective of its
existence.
◼
It seeks to provide a sense of purpose,
direction and opportunity
 Three Levels of Organizational
Planning

20-57
SBU
◼ It is a company within a company
◼ The business is differentiated from the rest
of the company
◼ It has its own set of competitors It is a
◼ separate profit centre
Product-Market Growth Matrix

20-59
 Market Penetration:
When marketers try to sell the existing product to the
existing customers, they engage in penetration
strategy. It can be achieved in multiple ways. For
example, by changing pricing, by adding minor
features (new and improved!), changing the
packaging (shampoo sachets), or highlighting
alternative uses. In this commercial, we get to how
Cadbury India is pushing for chocolates to be used as
small gifts instead of more traditional sweets used
during Diwali festival.
 Product Development:

McDonald's introduced salads in their outlets

in order to retain its existing customers, many
of whom were becoming more health
conscious. Salads are exactly opposite of what
McDonald's is known for! However,
regulatory pressures, changing consumer
behavior, and negative media coverage forced
them to introduce more healthy choices on the
menu.
20-61
 Market Development:

Introducing an existing product in different markets is perhaps

one of the most used strategies to extract full benefit of a
successful product. A very common example is entering
different geographical areas nationally and internationally

..

20-62
 Diversification:

When marketers introduce a totally new product to a

completely new market, they engage in diversification. I think
that iPod was perhaps one of the most successful
diversification ever.
A classic diversification….

20-63
 Swot analysis of

20-64
Porter’s Five Forces
of Competitive
Analysis
 Introduction

• This model aimed to provide a new way to use effective strategy to identify,
analyze and manage external factors in an organization’s environment.

• Porter’s five forces model is an analysis tool that

uses five industryforces to determine the intensity of
competition in an industry and its profitability level.

• An attractive market place does not mean that all companies will enjoy similar
success levels. Rather, the unique selling propositions, strategies and
processes will put one company over the other.

• The Five Forces were Porter’s conclusions on the reasons for differing levels of
competition, and hence profitability, in differing industries. They are empirically
derived, i.e. by observation of real companies in real markets, rather than the
result of economic analysis.
 Competitive Rivalry within
an Industry
• This force is the major determinant on how competitive and
profitable an industry is. In competitive industry, firms have to
compete aggressively for a market share, which results in low
profits. Rivalry among competitors is intense when:

- There are many competitors

- Exit barriers are high
- Industry growth is slow or negative
- Products are not differentiated and can be easily substituted
- Competitors are of equal size
- Low customer loyalty
 Competitive Rivalry within an Industry -
Example

McDonald’s faces tough competition because the fast food restaurant market is already saturated.
This element of the Five Forces analysis tackles the effect of competing firms in the industry
environment. In McDonald’s case, the strong force of competitive rivalry is based on the following
external factors:

High number of firms (strong force)

High aggressiveness of firms (strong force) Low switching costs (strong force)

The fast food restaurant industry has many firms of various sizes, such as global chains like
McDonald’s, KFC and local fast food restaurants and road side stops (vada pav) . Also, most medium
and large firms aggressively market their products. In addition, McDonald’s customers experience low
switching costs, which means that they can easily transfer to other restaurants. Thus, this
element of the Five Forces analysis of McDonald’s shows that competition is among the most
significant external forces on the business.
 Bargaining Power of
Suppliers

• Strong bargaining power allows suppliers to sell higher priced or low

quality raw materials to their buyers. This directly affects the buying
firms’ profits because it has to pay more for materials. Suppliers
have strong bargaining power when:

- There are few suppliers but many buyers

- Suppliers are large and threaten to forward integrate
- Few substitute raw materials exist
- Suppliers hold scarce resources
- Cost of switching raw materials is especially high.
 Example of Suppliers also influence the competiveness of an
industry
• The bargaining power of Toyota’s supplier is Weak

• Toyota has many suppliers in its automotive manufacturing sector. Resources

like metal, raw materials, leather, plastic, computers, cooling system, electrical
system, breaking system and fuel supply system are all bought from hundreds
of different suppliers and different bargaining prices distributed across the
globe.

• One of the competitive advantages of Toyota is its strong relationship with the
suppliers and its efficient manner of monitoring supply chain places low
bargaining power on the suppliers.

• In addition most vehicle manufactures own many interchangeable suppliers,

and also have the ability to produce the components by their own in the short
time. Thus, the suppliers do not own the power to change the price.
 Bargaining Power of
Buyer
• Customers have the power to demand lower price or higher product
quality from industry producers when their bargaining power is
strong. Lower price means lower revenues for the producer, while
higher quality products usually raise production costs. Both
scenarios result in lower profits for producers. Customers exert
strong bargaining power when:
-
Buying in large quantities or control
many
customer
- Only few customers exist
- Switching costs to other supplier are low
- They threaten to backward integrate
- There are many substitutes
- Customers are price sensitive
 Example of Bargaining power of
Buyer
Depends on the marketing channel used for Coca-Cola

1.Super Markets
2.Convenience Stores
3.Soda Shop
4.Vending Machine
5.Restaurant and Food stores

Bargaining power of buyer is high for fountain supermarkets and

mass merchandising because of the low profitability and strong
negotiation power of retail channels but for vending machine
bargaining power is non-existing caused by high profitability.
 Threat of New
Entrants
• This force determines how easy (or not) it is to enter a particular
industry. If an industry is profitable and there are few barriers to
enter, rivalry soon intensifies. When more organizations compete
for the same market share, profits start to fall. It is essential for
existing organizations to create high barriers to enter to deter new
entrants. Threat of new entrants is high when:
- Low amount of capital is required to enter a market
- Existing companies can do little to retaliate
- Existing firms do not possesspatents,
trademarks or do not have established brand
reputation
- There is no government regulation
- There is low customer loyalty
- Products are nearly identical
- Economies of scale can be easily achieved
 Example of Threat of New Entrant – Entry of
Reliance JIO Telecommunications

1. Jio has grown at a scorching pace:-the network, which has been

adding 1-
1.2 million subscribers a day, will likely have 25 million 4G customers.
2. Jio has set off a fierce mobile tariff war in the country:
3. Jio is hurting the balance sheets of other telecom companies: Airtel
saw a
4.9% decline in its Q2 profit following the operator slashing data tariffs.
4. Jio is forcing the other players to join forces:-Vodafone and Idea
Merger
5. Jio could impact the online content market in India:-The Jio suite
offers more than 300 live streaming TV channels and hundreds of
music albums and movies. This forces other incumbents to up their
game in the online video streaming space.
 Threat of Substitutes

• This force is especially threatening when buyers can easily find substitute
products with attractive prices or better quality and when buyers can switch
from one product or service to another with little cost. For example, to switch
from coffee to tea doesn’t cost anything, unlike switching from car to bicycle.

• Determining Factors :-
➢ First, if the consumer’s switching costs are low
➢ Second, if the substitute product is cheaper than the industry’s product
➢ Third, if the substitute product is of equal or superior quality compared to
the industry’s product, the threat of substitutes is high
➢ Fourth, if the functions, attributes, or performance of the substitute product
are
equal or superior to the industry’s product
 Example of Threat of
substitutes
• EXAMPLE – THE AIRLINE INDUSTRY
• From the point of view of airlines themselves, the flying business is very
competitive. There are hundreds of airlines all trying to get a bigger piece of the
pie. Global recessions have also meant cost cutting exercises for most airlines in the
industry and often less travel in the part of consumers.
• Depending on the nature of the airline’s business, the threat of substitutes can
range from lower on the scale to mid-range.
• For domestic or regional airlines or routes, there is always the option of taking a car,
bus or train. It may take longer but often this consideration is outweighed by the
cost advantages of substitute methods
• There is also no switching cost to deal with.
• In the case of international airlines, the threat of substitutes is almost non-existent
• On longer routes, a traveler needs to take a flight with no possible alternates
• Threat here is from competitors who may offer better rewards, better prices or a
better
flying experience
• There is also somewhat of a switching cost
BCG Matrix
 BOSTON CONSULTING GROUP
(BCG)

 Matrix is developed by Bruce Henderson of the

Boston Consulting Group in the early 1970’s

 According to this technique, business or products

are classified as low or high performance
depending upon their market growth rate & relative
market share.
 RELATIVE MARKET
SHARE

Business Unit Sales this year

RMS:
Leading rival sales this year

The higher your market share, the

higher proportion of the market you
control.
 MARKET GROWTH
RATE
 Market Growth is used as a measure of a market’s
attractiveness.

Individual Sales this year – Individual sales last year

MGR =
Individual Sales last year
THE BCG GROWTH-SHARE
MATRIX
 QUESTION MARKS/PROBLEM CHILDREN
(
HIGH GROWTH, LOW MARKET SHARE)

 Most business start of as question marks

 They will absorb great amount of cash if the market
share remains unchanged (low)
 Question marks have potential to become star &
evenly cash cow but can also become dog.
 Investment should be high for question marks.
 STARS
(HIGH GROWTH, HIGH MARKET
SHARE)
 Stars are leader in business
 They also require heavy investment to maintain it’s
large market share.
 It leads to large amount of cash consumption &
cash generation.
 Attempts should be made to hold the market share
otherwise the star will became a cash cow.
 CASH COWS
( LOW GROWTH, HIGH MARKET SHARE)

 They are foundation of the company & often the

stars of yesterday.
 They generate more cash than required

 They generate more cash than required.

 They extract the profits by investing as little cash as

possible
 They are located in an industry that is mature not
growing or declining
 DOGS
(LOW GROWTH, LOW MARKET
SHARE)
 Dogs are the cash traps
 Dogs do not have potential to bring

 High cost – Low quality

 Business is situated at a declining stage

BENEFITS

BCG matrix is simple & easy to understand

It helps to quickly & simply screen the opportunity
open to you, & help you think about how you can
make the most of them.
It is used to identify how corporate cash resources
can best be used to maximize company’s future
growth & profitability.
 LIMITATION

 BCG matrix uses only two dimensions relative

market share & market growth rate.
 Problem of getting data on market share & market
growth
 High market share does not mean profits all time.

 Business with market share can be profitable too.

BCG-MATRIX FOR THE PRODUCT LINE OF

Coca-Cola
 QUESTION MARKS
(HIGH GROWTH, LOW MARKET
SHARE
 STARS
(HIGH GROWTH, HIGH MARKET
SHARE)
 CASH COWS
(LOW GROWTH, HIGH MARKET
SHARE
 DOGS
(LOW GROWTH, LOW MARKET
SHARE)
GE Nine Cell Matrix
 GE Nine Cell Matrix
❖The GE/McKinsey Matrix is a nine-cell (3 by 3) matrix used
to perform business portfolio analysis as a step in the strategic
planning process.

❖The GE/McKinsey Matrix identifies the optimum business

portfolio as one that fits perfectly to the company's strengths
and helps to explore the most attractive industry sectors or
markets.

❖The objective of the analysis is to position each SBU on the

chart depending on the SBU's Strength and the Attractiveness
of the Industry Sector or Market on which it is focused.
 GE Nine Cell Matrix
➢ Different factors can be used to define Industry Attractiveness. Like:-
Market Size, Market Growth Rate, Demand variability, Industry
Profitability, Competitive Rivalry, Global Opportunities, Entry and exit
barriers, Capital requirement, Macro environmental Factors (PEST)

➢ Different factors can also be used to define SBU Strength. Like:-

Market Share, Distribution Channel Access, Financial Resources, R&D
Capability, Brand equity, Production Capacity, Knowledge of
customer and market, Caliber of management. Relative cost position
 GE Nine Cell Matrix
Industry Business Unit Strength
Attractiveness

Strong Average Weak

High Grow Grow Hold

Medium Grow Hold Harvest

Low Hold Harvest Harvest

 The GE Business Screen

20-
 GE Nine Cell Matrix
❑ Grow – Business units that fall under grow attract high
investment. Firms may go for product differentiation or Cost
leadership. Huge cash is generated in this phase. Market leaders
exist in this phase.

❑ Hold – Business units that fall under hold phase attract moderate
investment. Market segmentation, Market penetration, imitation
strategies are adopted in this phase. Followers exist in this phase.

❑ Harvest - Business units that fall under this phase are

unattractive. Low priority is given in these business units.
Strategies like divestment, Diversification, mergers are adopted in
this phase.
 Market Attractiveness

➢ Annual market growth rate

➢ Overall market size
➢ Historical profit margin
➢ Current size of market
➢ Market structure
➢ Market rivalry
➢ Demand variability
➢ Global opportunities
 Business Strength

➢ Current market share

➢ Brand image
➢ Production capacity
➢ Corporate image
➢ Profit margins relative to
competitors
➢ R & D performance
➢ Promotional
effectiveness
 Maruti Udyog

20-
UNDERSTANDING THE MARKET
ENVIRONMENT

A company’s marketing environment consists of

the actors & forces outside marketing that affects
marketing management’s ability to build &
maintain successful relationships with the target
customers.

Philip Kotler

107
 Marketing Environment

Micro Environment Macro Environment

Mkg Environment provides both opportunities and threats

108
 Micro Environment
The actors close to the company that affects its
ability to serve customers.
▪ Company
▪ Suppliers
▪ Marketing Intermediates
▪ Customers
▪ Competitors
▪ Public
109
 1. COMPANY
While formulating plans, Mkg managers must take into
account the other groups such as top mgt, finance, R &
D, purchasing, manufacturing, & accounting.
All these groups constitute a company’s
microenvironment for the planners.
They should think about the consumer & work in
harmony to provide customer value & satisfaction.

2. SUPPLIERS
Developments in the supplier environment can have a
substantial effect on the company’s mkg operations.
Price change, supply shortages, and other events
can interfere with the fulfillment of delivery promises to
customers & lose sales in the short run & damage
customer relationship in the long run
110
 3. Mkg Intermediaries

Mkg Intermediaries are firms that aid the company in promoting, selling
& distributing its goods to the final buyers.
• Physical Distribution firms – assist the company in stocking & moving
goods from factory to their destinations.
• Warehousing firms – Stores and protects goods
• Transportation firms – move goods
• Mkg Servicing Agencies – assists the company in targeting &
providing its products to the right markets.
• Financial intermediaries – include banks, credit companies, insurance
companies, etc. that help with the buying & selling of goods, & also
insure against risk involved.

111
 4. CUSTOMERS

Customers belong to consumer markets, industrial markets,

reseller markets & international markets.
The taste and preferences of customers keeps on
fluctuating.
Only by studying the market demand & customer-
related factors on a regular basis can marketers carry out
their business activities successfully.
Marketers have to keep track of what customers
want, and grab emerging market opportunities.

112
 5. COMPETITORS

The competitors have to be identified, monitored to gain and

maintain customer loyalty.
Development of mkg plans and strategy is based on
knowledge about competitor’s activities.
Competitive advantage building also depends on
understanding the status, strength & weakness of
competitors in the market.

113
 6. PUBLIC

The company must also acknowledge a large group of publics that take
an interest. Whether welcome or not, in its method of doing business.
Most organizations establish public relations (PR) departments to plan
constructive relations with various publics. Every company is surrounded
by seven types of publics
• Financial – banks, stock brokers, financial institutions
• Media – newspaper, magazines, radio, TV
• Government – Government departments
• Citizen –action – consumer organizations, environment groups
• Local – neighborhood residents, community groups
• General – general public – public opinion
• Internal – workers, officers, board of directors.
114
 Macro Environment
The largest societal factors that affects the micro
environment. These are uncontrollable factors.
It includes factors such as,
❖Demographic
❖Economic
❖Natural
❖Technological
❖Political
❖Legal
❖ Cultural
115
 1.Demographic

It is the study of human population in terms of :

▪Age ▪Occupation
▪ Gender ▪Education
▪Family Size ▪Religion
▪Income ▪Nationality

Ex – Teenagers market have created marketing opportunities in India

116
 2.Economic Factors

Economic Areas
of Concern to
Marketers

Distribution of
Consumer Recession
Income

Inflation

117
Distribution Of Income
▪Income distribution affects purchasing power of people
▪Consumption pattern is affected by income generation
Inflation
• Prices rise with no wage increase
Purchasing Power decreases
• Increase profit margins by increasing efficiency
• Consumers reaction:
– Search for lowest prices
– Rely on coupons and sales
Recession
• Income, production and employment fall
• Reduced demand for goods and services

118
 3.Natural Factor

 These also affect the pattern of industries and

marketing
 Industries create pollution of air, water and
environment
 The package in the form of plastic bags and
bottles create a lot of problems
 Some governments have banned the use of
plastic bags.

119
119
 4.Technological Environment

Technological discoveries and

developments create opportunities and
threats in the market. The marketers
should watch the trends in technology.

120
 5.Political Factors

The political environment consists of laws, government

agencies that influence or limit various organizations and
individuals in a given society.
Substantial number of laws have been enacted to
regulate business and marketing – to protect companies
from each other, to protect consumers from unfair trade
practices.

121
 6.Legal Factors

Marketers have to function within the legal framework

prevailing in the country. There have been many
legislations passed in India to control or guide businesses
and industry. There are legal regulations on products,
prices, distribution and promotion.
For example : Liquor and cigarette ads have been banned.

122
 7. Cultural Factors
Affect a society’s basic values, perceptions, preferences, and behaviors.
Culture is the unified result of factors like religion, language, education
and upbringing. The following cultural characteristics can affect
marketing decision-making-
• Persistence of core cultural values – These are deep rooted and do not
change easily.
• Ex: ethnocentrism, i.e., affinity to local made products and aversion to
foreign goods.
• Shifts in secondary cultural values – These can be changed and can
be moulded and manipulated easily.
• Ex: The influence of film stars, models and celebrities on our young
people’s trend in hair styles, fashion of dresses and even lifestyles.

Marketers have a keen interest in anticipating cultural shifts in order to

spot new mkg opportunities or threats.

123
What is market segmentation?
Mass-marketing
◼ A strategy that presumes there is one
undifferentiated market and that one
product will appeal to all consumers in that
market.
Market matching strategy

◼ Today, mass marketing has largely been

replaced by a three-step market matching
strategy
Market Matching Strategy

Market Matching

Segmentation Targeting Positioning

Markets are Heterogeneous; Segmentation divides them
into Homogeneous Sub-Units
The market for a product is nothing but the aggregate of
the consumer of that product
Markets break up the heterogeneous market for product
into several sub units, or sub markets, each relatively more
homogeneous within itself, compared to market into a
number of sub markets/ distinct sub units of buyer , each
with relatively more homogeneous characteristics, is
known as market segmentation.
Benefits of Market
Segmentation

Identifies opportunities for new product

development

Helps design marketing programs

most effective for reaching
homogenous groups of buyers

Improves allocation of marketing

resources
 The need for marketing
segmentation
▶ The marketing concept calls for
understanding customer and satisfying
there needs better than the
competition.

▶ Different customers have different

needs, and its rarely possible to satisfy
all the customers by treating them
alike.
Requirements of market
segments
▶ Indefinable: the differentiating
attributes of the segments must be
measurable so they can be identified.

▶ Accessible: the segments must be

reachable through
communication and distribution channels.
Requirements of market
segments
▶ Unique needs: to justify separate
offerings, the segments must respond
differently to different marketing
mixes.

▶ Substantial: the segments should be

sufficiently large to
justify the resources required to target
them.
Requirements of market
segments
▶ Durable: the segments should be
relatively stable to minimize the
cost of frequent changes.
It is the Consumer who are Segmented, Not Product, nor Price
It would be useful to provide one important clarification right
at the beginning.
Markets, sometime, speaks of product segments and price
segments and use these expressions as synonymous with market
segments.
This can leads to a wrong understanding of what market
segments, or for that matter, the process of market
segmentation as a whole, actually connote
We have to be clear that in market segmentation, it is the
consumers who are segmented, not the product, nor price.
Market is about people who consume the product, not about
the product that’s gets consumed
 Example of market segmentation?
Titan Watches For the youth /the
Arrives in three broad Segments outdoor lovers:
• The Rich
• The Middle
• The Lower
For the Gold lovers:
For Designer Segment
For Children Segment
Facilitates Right Choice of Target Market Facilitates
Effective Tapping of the Chosen Market
Makes the Marketing Effort More Efficient and Economic
Helps Identify Less Satisfied Segments and
Concentrate on Them
• A market/ consumer population for a product can be
segmented using several relevant bases. The major ones
include:
• Geographic
• Demographics
• Socio-cultural
• Psychographic
• Buying Behavior
Bases for segmentation
 Bases for segmentation

Segmentation of consumer based on factors like climate zone,

continents/ country, region, state, district, and urban/rural area,
constitutes geographic segmentation

Marketer, who operate globally, often segment the market

segments the market by continents/country/region in the first
instance, and then go for segmentation on other bases.

National markets within a country like India, often segment

the market by region, state, district and urban/rural area, in the
first instance, and then go for segmentation on other bases.
1. Geographic Segmentation.

Geographical segmentation calls for

dividing the market into different
geographical units such as:
Nations States
Regions Countries
Cities Neighborhood
Bases for segmentation
 Bases for segmentation

Segmentation of consumer based on variables such as race,

religion, community, language, age, stage in family cycle,
gender, marital status, family size, occupation, economic
position/income/purchasing capacity level, and social status ,of
the consumer demographic segmentation
Age: Based on age on can have the 1) Infants 2) Child Market
Teen Market 3) Youth Market 4) Middle Aged Market 5)Elders
Market
Genders: On the basis of gender, the consumer market may be
classified into male market female market.
Social Class: Companion design their products and services for
particular social classes. There are three social classes: 1 Upper
classes 2. Middle classes 3. Lower class
2. Demographic Segmentation.
Dividing the market into groups
based on demographic variables such
as age,family
1. Age
etc. 6. Occupation
2. Gender 7. Education
3. Family Life Cycle. 8. Religion
4. Family Size. 9. Nationality
5. Income.
1. Age and Life
Cycle Stage.
• Under 6,
• 6-11,
• 12-19,
• 20-34,
• 35 – 49,
• 50 – 64,
• 65 +.
 Garnier Wrinkle Free

p
r Fair & lovely
o
Fair & Lovely
d
teen
u
c
t J&J
s

Below 12-19 20- 40-

6 40 50
Age and life stage
2. Gender segmentation means dividing the
whole population in to male and female
Gender
:

3. Income: Upper class, middle class,

lower class etc
Professional and technical; managers,
4. Occupationofficials
: and proprietors, clerical,
sales, farmers , students;
housewives;unemployed.
5. EducationGrade school or less; some high
school; high school graduate; some
college; college graduate
6. Hindu, Muslim, Christian, Sikh, etc
Religio
n
7.Nationalit
Indian, American, British etc
y
8.Family 1-2, 3-4, 5+
Size
10. Family Life
Cycle
1. The FLC is a series of stages determined
by a combination of age, marital status,
and the presence or absence of children.
2. Consumption patterns among people of the
same age and gender differ because of
differences in the family life cycle stage.
Bases for segmentation
Bases for segmentation
 Bases for segmentation
Culture and social class are the two main bases of segmentation
here.
Culture: Culture influence consumer behavior, deeply. A given
culture brings in its own unique pattern of social conduct. A
person usually acquires his cultural attributes right at his
childhood. Culture includes religious, caste, traditional,
language, pattern of social behavior .

Social Factor: Social group of varying types exert influenced on

the consumer. Social group include family, peer group, close
colleges. They adopt their common life style.
 Bases for segmentation
Example:
Zee Televisions deals with variety of channels regional channel,
sports channel, movie channel.
McDonald has both veg and non veg burger.
McDonald has veg burger for vegetarian and nonveg
burger for non vegetarian.
 Bases for segmentation
Example:
Zee Televisions deals with variety of channels regional channel,
sports channel, movie channel.
McDonald has both veg and non veg burger.
McDonald has veg burger for vegetarian and nonveg
burger for non vegetarian.
3.Psychographics segmentation.

Market segmentation on
the basis of personality, Social
Class, motives, and lifestyles.
 Bases for segmentation
Psychographic Segmentation groups customers according to
their life-style and buying psychology.
Many businesses offer products based on the attitudes, beliefs
and emotions of their target market
The desire for status, enhanced appearance and more money
are examples of psychographic variables.
They are the factors that influence your customers' purchasing
decision.
In psychographic segmentation, elements
attitude, self-concept and value system, form the base.
A person’s pattern of interests,
opinions, and combine to represent his or
her lifestyle.
 Bases for segmentation
Knowledge of lifestyle can provide a very rich and meaningful
picture of a person.
It can indicate whether the person is interested in outdoor
sports, shopping, culture, or reading.
It can include information concerning attitudes and
personality traits.
Lifestyle also can be used to define a segment empirically; this
is often called psychographic (as opposed to demographic)
segmentation..
Bases for segmentation
 Bases for segmentation
The customer can also be divided into certain segments on the
basis of their knowledge, attitude, use, or response to a product.
Such behavioural variables are discussed below
Occasions : (Marraiges, festival occasasions)
Benefits sought : (Colgate- White teeth stops bad breath,
Cibaca Provides Therapeutic benefits, Vicco vajradanthi and
neem gives ayurvedic benefit)
User Status: (Ex-users, first users, regular users, Potential
users)
Usage rate: (Light, Medium, and heavyu user segments)
Loyality status: (Hard core loyals, Split Loyals(Two r Three
brans), Shifting Loyals (Shift from one brand to another),
Switchers (No loyalty to any brand))
Attitude: Customers are divided into five groups(Enthusiastic,
Positive, Indifferent, Negtive and Hostile)
Bases for segmentation
 Advantages of Segmentation
Various advantages of market segmentation are:-
Helps distinguish one customer group from another within a
given market
Facilitates proper choice of target market. Facilitates effective
tapping of the market. Helps divide the markets and conquer
them. Helps crystallize the needs of the target buyers
Makes the marketing effort more efficient and economic
Helps spot the less satisfied segments and succeed by satisfying
such segments.
Makes the marketing effort more efficient and economic
Helps spot the less satisfied segments and succeed by satisfying
such segments
Brings benefits not only to the marketer but also to the customer
as well.
 Effective Market Segmentation
Measurability (Interms of size and purhcasing
power)
Accessibility (Reached and served through suitable
means of distribution of promotion)
Substantiality(Large and profitable)
Differentiability (Clearly distinguishable)
Actionalbility.(to be effective makers of segmentation
should be compatible with the manpower, financial
and managerial resources)
 Target
Market:

A group of people or organizations for

which an organization designs,
implements, and maintains a marketing
mix intended to meet the needs of that
group, resulting in mutually satisfying
exchanges.
Selecting the Market Segments.
Strategies for Selecting the Target
Market

Undifferentiated Concentrated Multisegment

Strategy Strategy Strategy
 Undifferentiated Targeting Strategy
[ Mass Marketing ]
Marketing approach that views the
market as one big market with no
individual segments and thus requires a
single marketing mix.
 Concentrated Targeting
Strategy
[ Niche Marketing]
A strategy used to select one segment of
a market for targeting marketing efforts.

A concentrated strategy often enables

small firms to compete effectively
with much larger firms.
Niche
• One segment of a
market.
• A concentrated strategy
of focusing on a narrow
market is sometimes
more profitable than
spreading resources over
Niche
several different
segments.
 Multisegment Targeting
Strategy
A strategy that chooses two or
more well-defined market
segments and develops a
distinct marketing mix for
each.
 Choosing a target market
strategy

Factors to be considered while

choosing the target marketing
strategy:

• The company’s resources

• product variability
• product’s life cycle stage
• market variability
• Competitor’s mkg strategy.
 Positioning

Developing a specific marketing mix to

influence potential customers’ overall perception
of a brand, product line, or organization in
general.

Positioning is an act of designing the

company’s offering and image to occupy
distinctive place in the mind of the target
market.
 Position

The place a product, brand, or group

of products occupies in consumers’
minds relative to competing offerings.
 Product feature/Attribute

Price and Quality

Use or Application

Product User
Positioning
Product Class
Bases
Competitor
1. Attribute: Association of a product with a product feature, an
attribute, or customer benefit.
2. Price and quality: High price as a symbol of quality, or low
price as an indicator of value may be used to position a
product.
3. Use or application: Stressing use or applications.
4. Product user: Positioning base focuses on a personality or
type of user.
5. Product class: Product is positioned as associated with a
particular category of products.
6. Competitor: Positioning against competitors is a part of
every positioning strategy.
 Product Differentiation

A positioning strategy that some

firms use to distinguish their
products from those of competitors.
 Product Differentiation

• Personnel Differentiation: Competence,

courtesy, Credibility, reliability,
responsiveness, communication
• Channel Differentiation: coverage,
expertise, Performance
• Image Differentiation
 Product Differentiation

• It helps a company to move to a

position where it can claim a
premium for its product in the
market.
 Product Differentiation
•
strategies
Form : shape, size
• Features:
• Performance Quality: operation of
product
• Conformance Quality
• Durability
• Reliability
• Reparability
• Style
• Design
• Services
 Positioning Error

Positioning
Errors
There are various positioning
errors, such as-

❖ Under positioning
❖ Over positioning
❖ Confused positioning
❖ Double Positioning
❖ Irrelevant Positioning
 Under
positioning
❖Failing to present a strong central
benefit or reason to buy the product.

❖occurs when customers cannot readily

identify the brand or the brand s
features. The product must stand out
in the mind of the consumer

Example: solar lamp

 Over
positioning
❖marketers makes the product too
special, so the potential customer
group becomes too small.

❖It means that buyers believe that the

product is meant for a very select
audience because it is premium
priced.

Example: Aqua Sure

 Confused
positioning
❖By claiming two are more benefits
thatcontradict each other.

❖Too many benefits or claims,

or when the brand attempts to
position in too many segments.

Example: NeXT
computers
 Doubtful
Positioning
• Claiming a benefit that customers will
doubt that the brand can actually
deliver.

Example: Fair and

Handsome
 Irrelevant
Positioning
❖By claiming a benefit which few
prospects care about the brand will
have an irrelevant brand position.

Example: Motorola’s
Razr V3