Chapter 8- Identifying Market Segments and Targets

Levels of Market Segmentation

• Segment Marketing
• Niche Marketing
• Local Marketing
• Customerization

Segmeting Consumer Markets

• Geographic Segmentation
• Demographic Segmentation (Age and life-cycle stage, gender, income, generation, social class)
• Psychographic Segmentation (VALS Segmentation System- innovators, thinkers, achievers, experiencers, belivers, strivers, makers, survivors)
• Behavioural Segmentation (decision roles-initiator, influencer, decider, buyer, user + behavioural variables - occasions, benefits, user status, usage rate, buyer readiness stage, layalty stgae, Attitude)

Chapter 7: Analysing Business Markets

The Business Market Vs Consumer Market

Differences between B2B (Business to Business) and B2C (Business to Customer) markets

• Fewer, Larger buyers in B2B
• Closer Suplier-Customer Relationship due to higerr magnitude of business
• Professional Purchasing Department in bing businesses, more formal, less flexible, tough to negotiate with, lots of rules and regulations to be followed.
• Several Buying influences: The interacting person may not be the decsion maker.
• Multiple Sales Calls-it takes longer and lots of efforts to win trust of the customer.
• Derived Demand: Many a times the demand for B2B is derived from demand from B2C- demand for cars goes up, demand for steel in car making companies also goes up.
• Inelastic Demand: B2B demand is not much affected by the price fluctuations till the time great changes can be made in the production process or a substitue product comes in.
• Fluctuating Demand: B2B demand more volatile than B2C demand due to accelaration effect (10% increase in customer demand for cotton shirts brings 200% rise in cotton bale demand)
• Geographically concentrated customers
• Direct Purchasing from the manufacturers than from intermediaries.

Buying Situations

• Straight Re-Buy: Purchasing dept. reorders at a regular basis.
• Modified Rebuy: Before reodering customer modifies the order
• New Task: First time buyer.

Systems Buying and Selling- Prime contrator to deliver a turn key final product and take care of all subcontractors, materials for production etc.

Participants in Business Buying Process

Buying centers (Initiators, Users, influencers, deciders approvers, buyers, gatekeepers)

Chapter 6: Analyzing Consumer Markets

Influencers of Consumer Behaviour

1. Cultural Factors (Culture, Subculture, social class)
2. Social Factors (Reference groups-family, friends, peers, aspirational group- one wants to join, dissociative group- one want to keep away, Roles and Statuses)
3. Personal Factors Age and stage in life cycle, occupational and economic circumstances, personality and self concept, life-style and values

Key Psychological Processes

Motivation

1. Freud -Unconscious Mind contains associations with Subtle cues that can ifluence a persons's preferences. Can be understood with laddering techniques, projection techniques -word association, role playing, picture interpretation etc.
2. Maslow's Theory: Need Hierarchy in the order of- Physiological Needs (food, water, shelter), Safety (security, protection), Social Needs (sense of belongingness, love), Esteem Needs (self esteem, recognition, status) and Self Actualization Needs (self-developent and realization)
3. Herzberg's Theory: A two factor theory- Dissatisfiers (which cause dissatisfaction-confilict, clash, physical discomfort, distrust, lack of faith etc) and Satisfiers (which cause satisfaction). Lack of dissatisfiers is not enough, there need to be satisfiers as well for motivating people.

Perception

• Selective Attention
• Selective Distortion
• Selective Retention
• Sublimal Perception

Learning (Drive, Cues and Discrimination)

Memory (Short Term and Long Term)

Buying Decion Process-A Five Stage Model

• Problem Recognition (need triggered by external or internal stimuli)
• Information Search (In a state of heightened attention, information gathered from personal-family, friends relatives, commercial,-ads, websites, displays, public-mass media consumer ratings and experienced sources-handling, examining, using the product)
• Evaluation of Alternatives (with the help of beliefs and attitudes, expectancy-value model)
• Purchase Decision (non compensatory model- conjunctive heuristic: a minimum cutoff limit for each attribute, lexicographic heuristic: customer chooses best brand on the basis of perceived most important attribute, elimination-by-aspects heuristic: customer compares brand on an atribute selected heuristically, Interveneing factors-attitude of others, intermediaries like consumer reports)
• Postpurchase Behaviour (Satisfaction, Actions, Use and Disposal)

Level of Customer Involvement

1. Elaboration Likelihood Model (Consumers follow Central Route of persuation by trying the product only when they have 3 factors: Motivation, ability and opportunity)
2. Low involvement marketing strategies :

• try to convert a commoditized low involvement product into high involvement by linking product to something very important (toothpaste to cavity reduction),
• Linking product to some involving personal situation (fruit juices linked with Vitamins),
• designing advertising to trigger strong emotions related to personal ego or values ,
• by adding an important feature.

3. Variety Seeking buying behaviour: For the products that are low involvement but high brand value (like cookies) where the customer tries while consuming and tries another brand next time.

Decision Heuristics and Biases

• Availability Heuristic: If one product of company was of poor quality, next one would also be.
• reprentative Heuristic: Similar looking packaging for different products of same brand
• Anchoring and Adjustment Heuristic: Customer reach an initial judgement with the first impression of roduct and keep adjusting it laer on. THus first impression is extremely important.

Mental Accounting

• Customer tend to segregate gains
• They tend to integrate losses
• They tend to integrate smaller losses with larger gains
• They tend to segregate small gains from large losses

Chapter 4: Marketing Research

Who can carry it out?

For Big companies:

1. Syndicted Service Research Firms (free lancer: gather consumer and trade info; sell for a fee)
2. Custom Marketing Research Firms (Hired for specific projects)
3. Specialty-line marketing research firms (provide specialized research services)

For small companies:

1. Engage students and professor with small projects within curricula
2. Use the internet (Google for secondary info)
3. Cheking out the rivals: Visit, call etc as customers

The Marketing Reseach Process

Step 1: Use very clear and objective terms to

1. Define the problem:
2. Define Decision Alternatives
3. Define research objectives

Step 2: Develop the Research Plan

1. Data Sources: whether Primary or Secondary Source of data to be used?
2. Research Approaches:

• Observational Research: Observe consumer behaviour
• Focus Group Research: FGD of customers from desired segments
• Survey research: Design a survey to know from the customers
• Behavioural Data: to know about people's knowledge, beliefs, preferences, satisfaction etc
• Experimental Data: Blind tasting etc

3. Research Instruments

• Questionnaires (dichotmous- yes or no, multiple, likert- 5 choices from strongly agree to strongly disagree, semantic differential- scale with bi-polar words, gap in between to let subject mark, importance, rating scale, intention to buy)
• Qualitative Measures (Shadowing, beaviour mapping, consumer journey, story telling, sentech completion etc)

4. Sampling Plan

• Sampling Unit- Who is to be surveyed?
• Sample Sze: how many to be surveyed?
• Sampling Process: how should be respondents be chosen?

5. Contact Methods

• Mail Questionnaires
• Telephone interviews
• Personal Interviews
• Online Interviews

Step 3: Collect the information

Step 4: Analyze the information

Step 5: Present the findings

Step 6: Make the decision

Measuring Marketing Plan Performance

Sales Analysis

Market Share Analysis

Marketing Expenses to Sales Analysis

Financial Analysis

Profitablity Analysis

Step 1: Identify Functional Expenses

Step 2: Assigning Functional Expenses to Marketing Entities

Step 3: Preparing a Profit and Loss statement for each marketing entity

Forecasting and Demand Measurement

Market Demand= total volume to be bought by a customer group in a defined geographical area in a defined period of time under a marketing program

Market Minimum= Base sales, would take place without any marketing efforts

Market Potential= Upper limit of mkt demand beyond which marketing efforts are useless

Market Senstivity of Demand= Gap between Market Minimum and Market Potential

Two types of markets:

• expansible (company should try to use marketing to increase size of pie),
• non-expansible (company should try to increase its share in the pie)

Market Penetration Index: Ratio of current mkt demand to potential mkt demand

• Low Mkt Penetration Index= substantial growth potential for all players
• High Mkt Penetration Index= Increased cost to atract more customers, price wars, falling margins

Share Penetration Index: Ratio of Current Mkt Share to Potential Mkt Share

• Low Share Penetration Index= substantial growth potential for all players
  High Share Penetration Index= Increased cost to atract more customers, price wars, falling margins

Company Demand: Estimated share of market demand at alternative levels of company marketing efforts in a given time period

Company's Demand depends on how its products/ services are perceived relative to those of the competition. Other things being equal it depends on the size and effectiveness of its marketing expenditure with those of its rivals.

Company's Demand can be measured by using slaes response functions by taking into account its marketing expenditure level, marketing mix and marketing effectiveness.

Company Sales Forecast

It is the expected level of company sales based on chosen marketing plan and an assumed marketing environment. Sales forecast depends on the marketing expenditure.

Sales Quota: Quota of sales set for sales rep, product line or company division.

Comapnay Sales Potential

It is the sales limit approached by company demand as company marketing effort increases relative to that of competition.

Estimating Current Demand

Total Market Potential= total number of buyers X avg quantity purchased by each buyer

(no. of buyers to be estimaed by taking one group and rejecting those who don't fit the bill till the tiem a realistic number is achieved. )

Chain Ratio method: Multiplying a base number by several adjusting percentages

Area Market Potential

Two ways to calculate this:

1. Market Build-up method: Identifying all potential buyers in each market and estimating their potential purchases.
2. Multiple Factor Index Method: Sales oportunity can be claculated by using multiple factors like percentage of disposable personal income, retail sales, total population etc for any particular area as compared with the total market. Weightscan be assigned as per the importance. These can by used by a multifactor index to give indication about the sales opportunity in an area.

Estimating Future Demand

It can be done by

• Survey of Customer's intentions
• Compostie of Sales force opinions
• Expert Opinion
• Pst-Sales Analysis
• Market Test Method

Chapter 3: Gathering Info and Scanning the environment

Marketing Information System (MIS): Sources of Information

Internal Records and Marketing Intelligence:

1. Info from Order to payment cycle (involves sales rep, dealers, customers),
2. Sales Info System (automatic information about inventory- keeps supplier in loop to replenish- Wal-Mart system),
3. Database and database warehousing (to find trends from the analysis of customer data),

Marketing Intelligence:

• Sales force to spot and report trends of demand etc,
• Motivate the people in distribution channel to pass on the information,
• get information from the external networks.
• Set a customer advisory panel to provide suggestions,
• use secondary data sources from the government,
• purchase information from outside suppliers,
• customer feedback form.

Analyzing Macroenvironment

1. Need and trends: Everchanging need and demands of customer
2. Major Forces: Uncontrollable changes in Global Economy

Demographic Environment

1. Worldwide population boom
2. Population Age Mix
3. Ethinic and Other markets
4. Educational Groups
5. Household patterns
6. Geographic Population Shifts

Others

1. Changing economic environment: emerging economies
2. Social Cultural Environment
3. Politico-legal environment
4. Technological environment- Disruptive Technologies
5. Natural Environment: Pollution control, strict govt and UN regulations etc

Chapter 2: Growth and Strategy

Types of Growth

1. Intensive Growth: To capture more share in the same market with sae product
2. Integrative Growth: To increase sales and profits with backward, forward, verticla or horizontal integration within the indutry
3. Diversified Growth: To grow by tapping opportunities outside the industry
4. Downsizing and Divesting older business: If the things are not going its way and there is no hope to improve in future too, the company divests from the business to use resources elsewhere.

Porter's Generic Strategies

1. Overall cost leadership: lowest production and distribution costs, lowest prices in the market to beat the competition (eg South West)
2. Differentiation: Superior performance, features over the competitors.
3. Focus/ Niche: Focusing on a narrow market segment; pursue either cost or differentiation leadership within the segment.

Strategic Alliances

1. Product or Service alliance
2. Promotional Alliance
3. Logistics Alliance
4. Pricing Collaborations

Marketing Planning Framework (By Prof. Shailendra Jain)

• Market Analysis
• Consumer Analysis
• Company Analysis
• Competitor Analysis
• Goals & Objectives
• Segmentation and Positioning
• Marketing Strategy

1. Product Strategy
2. Pricing Strategy
3. Place (Distribution) Strategy
4. Promotion Strategy
5. Organization & Implementation

• Financial Projections

Contents of a Marketing plan

1. Executive Summary and table of contents

2. Situational Analysis

• Market Summary- target market, market demographics, behaviour factors, market needs, market trends, market growth
• SWOT Analysis
• Competition
• Product Offering
• Keys to success: Product Quality, differentiation
• Critical Issues

3. Marketing Strategy (Mision, Marketing Objectives, Financial Objectives, Target Markets, Positioning, Strategies, Marketing Mix, Marketing Research)

4. Financial Projections (Break-even Analysis, Sales Forecast, Expense Forecast)

5. Implementation Controls (controls, implementation, contingency planning)

Marketing Step 1: Develop Market Strategies and Plans

1. Marketing and Customer Value

i) Value Delivery Process: It has three steps-

a. Chose the value- Segement Customer, Select the Market, find the positioning of value

b. Provide the value- Develop product, Develop service, Price, Make or source, Distribute or serve

c. Communicate the value- by using sales force, promotions, advertising.


ii) The Value Chain Activities:
Five Primary Activities and Four Secondary Activities

Primary Activities: Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, Service

Secondary Activities: Firm Infrastructure, HRM, Technology Development, Procurement.

iii) Core Competencies
Activities that can provide a company competitive advantage over others

• Can be used for lowering the costs to have cost leadership or
• TO differentiate the product from competition
  
  
  
  

Chapter 1: Marketing Process

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Diagram Showing Marketing Process

(Mug it up, it can save your ass in interview)

Marketing Tasks

1. Developing Marketing Strategies and Plans: What opportunities is the company targetting (based on its market experience and core competencies).
2. Capturing Market insights: Using a Marketing Information System, Market Research, Macroenvironment scan etc.
3. Connecting with the customers: To understand the customer markets, How best to create value for the customers, their shopping preferences, tastes, price senstivity etc.
4. Building Strong Brands: What kind of brand image and associations are there with the customers, how company can position its brand to appeal the customers.
5. Shaping the market offerings: What kind of features does the product have, its quality and packaging etc. Pricing is critical.
6. Delivering Value: Delivering the product, supply and services to increase the access of product.
7. Communicating Value: Advertising, sales promotions, events, PR campaigns, direct and interactive marketing etc.
8. Creating long term growth: Based on product positioning, initiate new product development, testing and launching etc while taking into consideration local and global opportunities.