CONTENT 1.
EVOLUTION OF MARKETING CONCEPTS
7-13
2.
DEVELOPING MARKETING STRATEGIES AND PLANS
15-16
3.
MARKETING ENVIRONMENT
17-18
4.
MARKETING RESEARCH
19-20
5.
ANALYZING CONSUMER MARKETS AND IDENTIFYING MARKET SEGMENTS
21-25
6.
MARKET SEGMENTATION AND TARGETS
26-28
7.
BRANDS AND BRAND EQUITY
29-31
8.
CRAFTING THE BRAND POSITIONING
9
PRODUCT STRATEGY
34-38
10.
DESIGNING AND MANAGING SERVICES
39-41
11.
MANAGING RETAILING, WHOLESALES AND LOGISTICS
43-47
12.
MARKETING COMMUNICATIONS
48-63
33
C HA P T E R 1 EV OL UTI O N OF MA R KETI N G C ONC E PT S Marketing is used to create the customer, to keep the customer and to satisfy the customer. With the customer as the focus of its activities, it can be concluded that marketing management is one of the major components of business management. The evolution of marketing was caused due to mature markets and overcapacities in the last decades. Companies then shifted the focus from production more to the customer in order to stay profitable.
Importance of Marketing Marketing is a very important aspect in business since it contributes greatly to the success of the organization. Production and distribution depend largely on marketing. Many people think that sales and marketing are basically the same. These two concepts are different in many aspects. Marketing covers advertising, promotions, public relations, and sales. It is the process of introducing and promoting the product or service into the market and encourages sales from the buying public. Sales refer to the act of buying or the actual transaction of customers purchasing the product or service. Since the goal of marketing is to make the product or service widely known and recognized to the market, marketers must be creative in their marketing activities. In this competitive nature of many businesses, getting the product noticed is not that easy. Strategically, the business must be centered on the customers more than the products. Although good and quality products are also essential, the buying public still has their personal preferences. If you target more of their needs, they will come back again and again and even bring along recruits. If you push more on the product and disregard their wants and the benefits they can get, you will lose your customers in no time. The sad thing is that getting them back is the hardest part.
What is Marketed? Marketing people market 10 types of entities. They are: Goods: Physical goods that may be manufactured, produced in farms or mined. These account for the bulk of the marketing efforts in most of the countries. Services: These are intangible products that involve performing some service for the customers. This may be service performed on the customer, like a haircut, on customer’s possessions, like servicing of car, or for the customer, like screening of a movie. Services account the maximum marketing effort after products in most of the countries. In many developed countries the volume of services has exceeded that of goods. Events: Time based shows such as new year celebration, or a sporting event. Experiences: Experiences which results from a combination of products and services. The customer is interested in the total experience such as an organized holiday tour package rather than the individual products and services included in the package. Persons: Like marketing of a celebrity or of a candidate in a public election. Places: Like cities, state, nations,
for purposes such as attracting tourists and
investment. Properties: This could be physical properties like real estate or intangible rights in properties. Organizations: This basically refers to building positive image of organizations, such as companies, universities, and charitable organizations. Information: Books are the traditional means of selling information, but there are many other type of information marketed. For example market intelligence, economic analysis and mailing lists. Ideas: Every market offering includes a basic idea. In addition ideas may be WWW.BHASKARJOSH.COM
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marketed by themselves. For examples, some religious bodies try to promote their ideas of what constitutes the right behavior.
Company Orientations to the Marketplace What philosophy should guide a company marketing and selling efforts? What relative weights should be given to the interests of the organization, the customers, and society? These interest often clash, however, an organization’s marketing and selling activities should be carried out under a well-thought-out philosophy of efficiency, effectiveness, and socially responsibility. Five orientations (philosophical concepts to the marketplace have guided and continue to guide organizational activities: 1.
The Production Concept
2.
The Product Concept
3.
The Selling Concept
4.
The Marketing Concept
5.
The Societal Marketing Concept
Let us now discuss each of the concepts in detail. 1. The Production Concept: This concept is the oldest of the concepts in business. It holds that consumers will prefer products that are widely available and inexpensive. Managers focusing on this concept concentrate on achieving high production efficiency, low costs, and mass distribution. They assume that consumers are primarily interested in product availability and low prices. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features. 2. The Product Concept: This orientation holds that consumers will favor those products that offer the most quality, performance, or innovative features. Managers focusing on this concept concentrate on making superior products and improving them over time. They assume that buyers admire well-made products and can appraise quality and performance. However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs. Management might commit the WWW.BHASKARJOSH.COM WWW.SSCKAADDA.COMMarket Capsule For SBI Associate Clerk
“better-mousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door.
3. The Selling Concept: This is another common business orientation. It holds that consumers and businesses, if left alone, will ordinarily not buy enough of the selling company’s products. The organization must, therefore, undertake an aggressive selling and promotion effort. This concept assumes that consumers typically sho9w buyi8ng inertia or resistance and must be coaxed into buying. It also assumes that the company has a whole battery of effective selling and promotional tools to stimulate more buying. Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants. 4. The Marketing Concept: This is a business philosophy that challenges the above three business orientations. Its central tenets crystallized in the 1950s. It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers. The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability. 5. The Societal Marketing Concept: This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original Marketing Concept).
Additionally, it holds that this all must be done in a way that preserves or
enhances the consumer’s and the society’s well-being. This orientation arose as some questioned whether the Marketing
Concept is an
appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty,
and neglected social services.
Are
companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-run interests of consumers and society? The marketing concept possibly sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare. Just consider : The fast-food hamburger industry offers tasty but unhealthy food. The hamburgers have a high fat content, and the restaurants promote fries and pies, two products high in starch and fat. The products are wrapped in convenient packaging, which leads to much waste. In satisfying consumer wants, these restaurants may be hurting consumer health and causing environmental problems. The following table will help you understand the above five concepts even better. ORIENTATION
PROFIT DRIVERS
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TIMEFRAME
DESCRIPTION
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Production
Production methods
until the 1950s
A firm focusing on a production orientation specializes in producing as much as possible of a given product or service. Thus, this signifies a firm exploiting economies of scale until the minimum efficient scale is reached. A production orientation may be deployed when a high demand for a product or service exists, coupled with a good certainty that consumer tastes will not rapidly alter (similar to the sales orientation).
Product
Quality of the product until the 1960s
A firm employing a product orientation is chiefly concerned with the quality of its own product. A firm would also assume that as long as its product was of a high standard, people would buy and consume the product.
Selling
Selling methods
1950s and 1960s
A firm using a sales orientation focuses primarily on the selling/promotion of a particular product, and not determining new consumer desires as such. Consequently, this entails simply selling an already existing product, and using promotion techniques to attain the highest sales possible.
Marketing
Needs and wants
1970s to the
The 'marketing orientation' is
of customers
present day
perhaps the most common orientation used in contemporary marketing. It involves a firm essentially basing its marketing plans around the marketing concept, and thus supplying products to suit new consumer tastes. As an example, a firm would employ market research to gauge consumer desires, use R&D (research and development) to develop a product attuned to the revealed information, and then utilize promotion techniques to ensure persons know the product exists.
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Holistic Marketing
Everything matters
The holistic marketing concept looks
marketing 21st century in
at marketing as a complex activity and acknowledges that everything matters in marketing - and that a broad and integrated perspective is necessary in developing, designing and implementing marketing programs and activities. The four components that characterize holistic marketing are relationship m a rke t i n g , interna l
marketing,
integrated marketing, and socially responsive marketing.
1. Relationship marketing: Relationship marketing is a strategy designed to foster customer loyalty, interaction and long-term engagement. This customer relationship management (CRM) approach focuses more on customer retention than customer acquisition. Relationship marketing is designed to develop strong connections with customers by providing them with information directly suited to their needs and interests and by promoting open communication. This approach often results in increased word-ofmouth activity, repeat business and a willingness on the customer’s part to provide information to the organization. Relationship marketing contrasts with transactional marketing, an approach that focuses on increasing the number of individual sales. Most organizations combine elements of both relationship and transaction marketing strategies. 2. Integrated Marketing: It is a strategy aimed at unifying different marketing methods such as mass marketing, one-to-one marketing, and direct marketing. Its objective is to complement and reinforce the market impact of each method, and to employ the market data generated by these efforts in product development, pricing, distribution, customer service, etc. 3. Internal Marketing: It is the application of the principles of marketing within an organization. Internal marketing involves the creation of an internal market by dividing departments into business units, with control over their own operations and expenditure, with attendant impacts on corporate culture, politics, and power. Internal marketing also involves treating employees as internal customers with the goal of increasing employees’ motivation and focus on customers. 4. Performance Marketing: Performance marketing refers to marketing techniques and campaigns by which the advertiser pays only for results. Performance marketing is an important part of digital marketing due to the tracking capabilities of the Internet.
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C HA P T E R 2 D EV EL OPI N G MA R KETI N G STR A TE GI E S A N D PL A N S Customer Value It is the difference between what a customer gets from a product, and what he or she has to give in order to get it. Woodruff defines customer value as: “a customer perceived preference for and evaluation of those products attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes in use situations”. The definition above suggests that there are two aspects to customer value: desired value and perceived value. Desired value refers to what customers desire in a product or service. Perceived value is the benefit that a customer believes he or she received from a product after it was purchased. Customer value can be examined at different levels. At a low level, customer value can be viewed as the attributes of a product that a customer perceives to receive value from. At a higher level, customer value can be viewed as the emotional payoff and achievement of a goal or desire. When customers derive value from a product, they derive value from the attributes of the product as well as from the attribute performance and the consequence of achieving desired goals from the use of the product.
STRATEGIC BUSINESS UNITS (SBUs) In business, a strategic business unit (SBU) is a profit center which focuses on product offering and market segment. SBUs typically have a discrete marketing plan, analysis of competition, and marketing campaign, even though they may be part of a larger business entity. An SBU may be a business unit within a larger corporation, or it may be a business unto itself. Corporations may be composed of multiple SBUs, each of which is responsible for its own profitability. General Electric is an example of a company with this sort of business organization. SBUs are able to affect most factors which influence their performance. Managed as separate businesses, they are responsible to a parent corporation. For example: General electric has 49 SBUs.
SWOT ANALYSIS SWOT analysis (alternatively SWOT Matrix) also sometimes known as TOWS, is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. The technique is credited to Albert Humphrey, who led a convention at the Stanford Research Institute (now SRI International) in the 1960s and 1970s using data from Fortune 500 companies.[1][2] The degree to which the internal environment of the firm matches with the external environment is expressed by the concept of strategic fit. Setting the objective should be done after the SWOT analysis has been performed. This would allow achievable goals or objectives to be set for the organization. ?
Strengths: characteristics of the business or project that give it an advantage over others
?
Weaknesses: are characteristics that place the team at a disadvantage relative to others
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Opportunities: elements that the project could exploit to its advantage ?
Threats: elements in the environment that could cause trouble for the business or project Identification of SWOTs is important because they can inform later steps in planning to achieve the objective.
C HA P T ER 3 M A R K E TIN G E NV I R O NM E N T A marketing environment is what surrounds and creates impact on business organizations. The market environment is a marketing term and refers to factors and forces that affect a firm’s ability to build and maintain successful relationships with customers. Three levels of the environment are: Micro (internal) environment - small forces within the company that affect its ability to serve its customers. Meso environment – the industry in which a company operates and the industry’s market and the M acro (national) environment - larger societal forces that affect the microenvironment.
Micro Environment The micro environment refers to the forces that are close to the company and affect its ability to serve its customers. It includes the company itself, its suppliers, marketing intermediaries, customer markets and publics.
Macro-Environment (external environment) The macroenvironment refers to all forces that are part of the larger society and affect the microenvironment. It includes concepts such as demography, economy, natural forces, technology, politics, and culture. Factors affecting organisation in Macro environment are known as PESTEL, that is: Political, Economical, Social, Technological, Environmental and Legal. Demography refers to studying human populations in terms of size, density, location, age, gender, race, and occupation. This is a very important factor to study for marketers and helps to divide the population into market segments and target markets. PESTEL ANALYSIS Political Environment: The political environment includes all laws, government agencies, and groups that influence or limit other organizations and individuals within a society. It is important for marketers to be aware of these restrictions as they can be complex. Some products are regulated by both state and federal laws. There are even restrictions for some products as to who the target market may be, for example, cigarettes should not be marketed to younger children. Economic Environment: Another aspect of the macroenvironment is the economic environment. This refers to the purchasing power of potential customers and the ways in which people spend their money. Within this area are two different economies, subsistence and industrialized. Subsistence economies are based more in agriculture and consume their own industrial output. Industrial economies have markets that are diverse and carry many different types of goods. Social Environment: The social environment, social context, sociocultural context, or milieu, refers to the immediate physical and social setting in which people live or in which something happens or develops. It includes the culture that the individual was educated or lives in, and the people and institutions with whom they interact.The interaction may be in person or through communication media, even anonymous or one-way, and may not imply equality of social status.
Therefore the social environment is a broader concept than that of social class or social circle. Technological Environment: The technological environment is perhaps one of the fastest changing factors in the macroenvironment. This includes all developments from antibiotics and surgery to nuclear missiles and chemical weapons to automobiles and credit cards. As these markets develop it can create new markets and new uses for products. It also requires a company to stay ahead of others and update their own technology as it becomes outdated. They must stay informed of trends so they can be part of the next big thing, rather than becoming outdated and suffering the consequences financially. Environmental Factors: The natural environment is another important factor of the macroenvironment. This includes the natural resources that a company uses as inputs that affects their marketing activities. The concern in this area is the increased pollution, shortages of raw materials and increased governmental intervention. As raw materials become increasingly scarcer, the ability to create a company’s product gets much harder. Also, pollution can go as far as negatively affecting a company’s reputation if they are known for damaging the environment.
Meso-Environment
? ?
Marketing intermediaries help to sell, promote, and distribute goods. Intermediaries take many forms: Resellers Physical distribution firms
? ?
Marketing services agencies Financial intermediaries
?
Customer markets must be studied.
? ? ?
Market types Consumer Business
?
Government
? ? ? ? ?
International Customer markets must be studied: Market types Consumer Business Government
?
Reseller
? ? ?
International Various publics must also be considered: Government Media
? ?
Financial Local
?
General
? ?
Internal Citizen Action Groups
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C HA P T E R 4
MARKETING RESEARCH
? ? ? ?
Marketing research is “the process or set of processes that links the consumers, customers, and end users to the marketer through information — information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications.” It is the systematic gathering, recording, and analysis of qualitative and quantitative data about issues relating to marketing products and services. The goal of marketing research is to identify and assess how changing elements of the marketing mix impacts customer behavior. The term is commonly interchanged with market research; however, expert practitioners may wish to draw a distinction, in that market research is concerned specifically with markets, while marketing research is concerned specifically about marketing processes. Marketing research is often partitioned into two sets of categorical pairs, either by target market: Consumer marketing research, and Business-to-business (B2B) marketing research Or, alternatively, by methodological approach: Qualitative marketing research, and Quantitative marketing research
? ? ?
Marketing research methods Methodologically, marketing research uses the following types of research designs: Based on questioning Qualitative marketing research - generally used for exploratory purposes - small number of respondents - not generalizable to the whole population - statistical significance and confidence not calculated - examples include focus groups, in-depth interviews, and projective techniques Quantitative marketing research - generally used to draw conclusions - tests a specific hypothesis - uses random sampling techniques so as to infer from the sample to the population involves a large number of respondents - examples include surveys and questionnaires. Techniques include choice modelling, maximum difference preference scaling, and covariance analysis. Based on observations Ethnographic studies - by nature qualitative, the researcher observes social phenomena in their natural setting - observations can occur cross-sectionally (observations made at one time) or longitudinally (observations occur over several time-periods) - examples include product-use analysis and computer cookie traces. See also Ethnography and Observational techniques. Experimental techniques - by nature quantitative, the researcher creates a quasi-artificial environment to try to control spurious factors, then manipulates at least one of the variables examples include purchase laboratories and test markets Researchers often use more than one research design. They may start with secondary research to get background information, then conduct a focus group (qualitative research design) to explore the issues. Finally they might do a full nation-wide survey (quantitative research design) in order to devise specific recommendations for the client. Customer Relationship Management Customer relationship management (CRM) is a model for managing a company’s interactions with current and future customers. It involves using technology to organize, automate, and synchronize sales, marketing, customer service, and technical support. It entails all aspects of interaction that a company has with its customer, whether it is sales or service-related. CRM is often thought of as a business strategy that enables businesses to: Understand the customer Retain customers through better customer experience Attract new customer
? ? ?
Win new clients and contracts Increase profitably Decrease customer management costs How CRM is Used Today While the phrase customer relationship management is most commonly used to describe a business-customer relationship, CRM systems are used in the same way to manage business contacts, clients, contract wins and sales leads. Customer relationship management solutions provide you with the customer business data to help you provide services or products that your customers want, provide better customer service, cross-sell and up sell more effectively, close deals, retain current customers and understand who the customer is. Technology and the Web has changed the way companies approach CRM strategies because advances in technology have also changed consumer buying behavior and offers new ways for companies to communicate with customers and collect data about them. With each new advance in technology — especially the proliferation of self-service channels like the Web and smartphones — customer relationships is being managed electronically. Many aspects of CRM relies heavily on technology; however the strategies and processes of a good CRM system will collect, manage and link information about the customer with the goal of letting you market and sell services effectively. Organizations frequently looking for ways to personalize online experiences (a process also referred to as mass customization) through tools such as help-desk software, email organizers and different types of enterprise applications.
C HA P T E R 5 A N ALYZING CONSUMER MARKETS AND IDENTIFYING MARKET SEGMENTS
Consumer Behaviour
? ? ? ? ? ? ? ? ? ?
Consumer behaviour is the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.[1] It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the decision-making processes of buyers, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people’s wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Consumer Behaviour is a branch which deals with the various stages a consumer goes through before purchasing products or services for his end use. Why do you think an individual buys a product? Need Social Status Gifting Purpose Why do you think an individual does not buy a product? No requirement Income/Budget/Financial constraints Taste When do you think consumers purchase products? Festive season Birthday Anniversary Marriage or other special occasions
There are in fact several factors which influence buying decision of a consumer ranging from psychological, social, economic and so on.
Factor that influence Consumer Behaviour
? ? ? ?
? ?
Consumers do not make purchase decisions in a vacuum. Rather, they are subject to both external and internal factors that influence them. Consumer behavior is influenced by both internal and external factors. They are External Influences on Consumer Behavior External influences include culture, socioeconomic level, reference groups, and household. Internal Influences on Consumer Behavior In addition to external influences, internal influences affect consumers’ choices as well—personal needs and motives, experience, personality and self-image, and perceptions and attitudes. The exact influence of internal factors is less well known than the external factors, as internal factors are not as observable and therefore are not as well documented and understood. A consumer goes through several stages before purchasing a product or service. Step 1: Need is the most important factor which leads to buying of products and services. Need infact is the catalyst which triggers the buying decision of individuals. An individual who buys cold drink or a bottle of mineral water identifies his/her need as thirst. However in such cases steps such as information search and evaluation of alternatives are generally missing. These two steps are important when an individual purchases expensive products/services such as laptop, cars, mobile phones and so on. Step 2: When an individual recognizes his need for a particular product/service he tries to gather as much information as he can. An individual can acquire information through any of the following sources: Personal Sources - He might discuss his need with his friends, family members, co workers and other acquaintances. Commercial sources - Advertisements, sales people, Packaging of a particular product in many cases prompt individuals to buy the same, Displays (Props, Mannequins etc) Public sources - Newspaper, Radio, Magazine Experiential sources - Individual’s own experience, prior handling of a particular product Step 3: The next step is to evaluate the various alternatives available in the market. An individual after gathering relevant information tries to choose the best option available as per his need, taste and pocket. Step 4: After going through all the above stages, customer finally purchases the product. Step 5: The purchase of the product is followed by post purchase evaluation. Post purchase evaluation refers to a customer’s analysis whether the product was useful to him or not, whether the product fulfilled his need or not? Key Psychological Processes Marketing and environmental stimuli enter the consumer’s consciousness and a set of psychological processes combine with certain consumer characteristics to result in decision processes and purchase decisions. Four key psychological processes are: Motivation ? Perception Learning ? Memory Maslow’s Hierarchy of Needs Content theory of human motivation includes both Abraham Maslow’s hierarchy of needs and Herzberg’s two-factor theory. Maslow’s theory is one of the most widely discussed theories of motivation. The American motivation psychologist Abraham H. Maslow developed the hierarchy of needs consisting of five hierarchic classes. According to Maslow, people are motivated by unsatisfied needs. The needs, listed from basic (lowest-earliest) to most complex (highest-latest) are as follows:
?
Physiology (hunger, thirst, sleep, etc.)
?
Safety/Security/Shelter/Health
Belongingness/Love/Friendship Self actualization
? ?
? ?
?
Self-esteem/Recognition/Achievement
Herzberg’s two-factor theory Frederick Herzberg’s two-factor theory, a.k.a. intrinsic/extrinsic motivation, concludes that certain factors in the workplace result in job satisfaction, but if absent, they don’t lead to dissatisfaction but no satisfaction. The factors that motivate people can change over their lifetime, but “respect for me as a person” is one of the top motivating factors at any stage of life. He distinguished between: Motivators; (e.g. challenging work, recognition, responsibility) which give positive satisfaction, and Hygiene factors; (e.g. status, job security, salary and fringe benefits) that do not motivate if present, but, if absent, result in demotivation. The name hygiene factors is used because, like hygiene, the presence will not improve health, but absence can cause health deterioration. Herzberg’s theory has found application in such occupational fields as information systems and in studies of user satisfaction such as computer user satisfaction.
C HA P T E R 6
MARKET SEGMENTATION AND TARGETS Levels of Market Segmentation Level of Market segmentation can be anything in the below list based on the marketing plan of the marketer and the product attributes. For some products, it can be marketed to all the customers and some products it can only be marketed to only high income group. Product attributes and branding play an important role while finalizing the level of market segmentation. Level of Market Segmentation can be ?
Mass Marketing
?
Segment Marketing
?
Niche Marketing
?
Local Marketing Individual Direct Marketing Mass Marketing: In mass marketing the seller or the marketer of the product targets the mass market or the entire consumer base. Here the seller engages in mass production and uses the mass distribution system to reach all the customers in the market. The promotional and advertisements are very much generic in nature attract the entire consumer base. Mass market can be profitable for the seller as it leads to lower cost of production and higher margin due to mass production. For mass marketing, the price is kept low to attract customers from all income level. At the same time, Mass marketing leads to high competition in the market and high advertising and promotional cost to reach to all the potential customers. One best example of mass marketing would be Mosquito coil, Toothpaste, Detergent etc. Segment Marketing: In Segment marketing, the seller or marketer divides the market into different segments depending on the consumers’ buying behavior, requirements, purchasing power, location and age level. Segment marketing helps the marketer to connect to each type of customers in the best possible way. Most company uses different market segments to market its entire list of products which caters to different market levels. The promotional and advertising activities for a particular focus only to the target market for that product only. The best example is a passenger car marker which has different range of passenger cars catering to different segment of markets. Its low cost cars cater to comparatively lower income level consumer group, Mid range cars cater to mid range consumer base, luxury segment caters to high net worth consumer base and SUV segment caters to mainly tourism segment. Niche Marketing: In Niche marketing, the seller caters to a very specific market segment which requires more attention and very high quality of services. Here the market segment size is very small which enables the seller to provide the niche area of services. The main requirements or characteristics of Niche marketing are
?
Customers have distinct set of needs or requires distinct set of services
?
Seller or service provider needs more skill or niche skill to provide niche services
?
Niches services come up with some more specialized services
?
Comes up with premium prices for higher quality and niche services Here in Niche marketing, the competition is usually lower which helps the service providers or sellers to ask for higher prices. Here the customers are either high net worth individuals (for product) or any organizations needs high end services to improve its competitiveness. Examples would be Harley Davidson which manufacturers very high end Niche bikes, Mckinsey which provides specialized consulting services. All these have a niche market for themselves. Local Marketing: In Local marketing, the seller or the marketer only concentrates in the local market. The products also have the local appeal or the local usage and the promotional activities are planned based on the location only with local flavors. Here the cost remains high due to lower production and competition is also less. Marketer can concentrate more in the local market to reach to all the customers in the region. The best example would be marketing of regional TV channels; regional chain of hotels or restaurants, Locally produced food products etc. Individual Marketing: It is almost same as Direct Marketing where the marketers target the individual customers separately either through direct communication channels or salesmen. This is mostly used for Business-to-Business marketing where more attention is required to market a product or services. Sales persons are used to meet each individual prospective customer and provide demo of the product or services. Best example would be specialized IT services or Aquaguard water purifier. Eureka Forbes uses direct salesmen to visit different houses and sell their famous water purifier product Aquaguard after providing the proper demo and information about the product.
Bases for Segmenting Consumer Markets Geographic segmentation Marketers may segment according to geographic criteria—nations, states, regions, countries, cities, neighborhoods, or postal codes. The geo-cluster approach combines demographic data with geographic data to create a more accurate or specific profile. With respect to region, in rainy regions merchants can sell things like raincoats, umbrellas and gumboots. In hot regions, one can sell summer wear. In cold regions, someone can sell warm clothes. A small business commodity store may target only customers from the local neighborhood, while a larger department store can target its marketing towards several neighborhoods in a larger city or area, while ignoring customers in other continents. Demographic Segmentation Demographic segmentation consists of dividing the market into groups based on variables such as age, gender family size, income, occupation, education, religion, race and nationality. As you might expect, demographic segmentation variables are amongst the most popular bases for segmenting customer groups. This is partly because customer wants are closely linked to variables such as income and age. Also, for practical reasons, there is often much more data available to help with the demographic segmentation process. The main demographic segmentation variables are summarised below:
Age: Consumer needs and wants change with age although they may still wish to consumer the same types of product. So Marketers design, package and promote products differently to meet the wants of different age groups. Good examples include the marketing of toothpaste (contrast the branding of toothpaste for children and adults) and toys (with many age-based segments). Life-cycle stage: A consumer stage in the life-cycle is an important variable - particularly in markets such as leisure and tourism. For example, contrast the product and promotional approach of Club 18-30 holidays with the slightly more refined and sedate approach adopted by Saga Holidays. Gender: Gender segmentation is widely used in consumer marketing. The best examples include clothing, hairdressing, magazines and toiletries and cosmetics. Income: Another popular basis for segmentation. Many companies target affluent consumers with luxury goods and convenience services. Good examples include Coutts bank; Moet & Chandon champagne and Elegant Resorts - an up-market travel company. By contrast, many companies focus on marketing products that appeal directly to consumers with relatively low incomes. Examples include Aldi (a discount food retailer), Airtours holidays, and discount clothing retailers such as TK Maxx. Social class: Many Marketers believe that a consumers “perceived” social class influences their preferences for cars, clothes, home furnishings, leisure activities and other products & services. There is a clear link here with income-based segmentation. Lifestyle: Marketers are increasingly interested in the effect of consumer “lifestyles” on demand. Unfortunately, there are many different lifestyle categorisation systems, many of them designed by advertising and marketing agencies as a way of winning new marketing clients and campaigns! Psychographic segmentation Psychographics involves using sciences like psychology and demographics to better understand consumers. Psychographic segmentation divides consumers according to their lifestyles, personality, values and social class. Consumers within the same demographic group can exhibit very different psychographic profiles. Behavioral segmentation Behavioral segmentation divides consumers into groups according to their knowledge of, attitude towards, use of or response to a product. Segmentation by occasions Segmentation according to occasions relies on the special needs and desires of consumers on various occasions - for example, for products for use in relation with a certain holiday. Products such as Christmas decorations or Diwali lamps are marketed almost exclusively in the time leading up to the related event, and will not generally be available all year round. Another type of occasional market segments are people preparing for a wedding or a funeral, occasions which only occur a few times in a person’s lifetime, but which happen so often in a large population that ongoing general demand makes for a worthwhile market segment. Segmentation by benefits Segmentation can take place according to benefits sought by the consumer or according to perceived benefits which a product/service may provide.
C HA P T E R 7
BRANDS AND BRAND EQUITY Brand Brand is the “name, term, design, symbol, or any other feature that identifies one seller’s product distinct from those of other sellers”. Initially, Branding was adopted to differentiate one person’s cattle from another’s by means of a distinctive symbol burned into the animal’s skin with a hot iron stamp, and was subsequently used in business, marketing and advertising. A modern example of a brand is Coca Cola which belongs to the Coca-Cola Company. A brand is often the most valuable asset of a corporation. Brand owners manage their brands carefully to create shareholder value, and brand valuation is an important management technique that ascribes a money value to a brand, and allows marketing investment to be managed (e.g.: prioritized across a portfolio of brands) to maximize shareholder value. Although only acquired brands appear on a company’s balance sheet, the notion of putting a value on a brand forces marketing leaders to be focused on long term stewardship of the brand and managing for value.
Brand awareness Brand awareness refers to customers’ ability to recall and recognize the brand under different conditions and link to the brand name, logo, jingles and so on to certain associations in memory. It consists of both brand recognition and brand recall. It helps the customers to understand to which product or service category the particular brand belongs and what products and services are sold under the brand name. It also ensures that customers know which of their needs are satisfied by the brand through its products. Brand awareness is of critical importance since customers will not consider your brand if they are not aware of it.
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Brands typically are made up of various elements, such as: Name: The word or words used to identify a company, product, service, or concept. Logo: The visual trademark that identifies the brand. Tagline or Catchphrase: “The Quicker Picker Upper” is associated with Bounty paper towels. “Can you hear me now” is an important part of the Verizon brand. Graphics: The dynamic ribbon is a trademarked part of Coca-Cola’s brand. Shapes: The distinctive shapes of the Coca-Cola bottle and of the Volkswagen Beetle are trademarked elements of those brands. Colors: Owens-Corning is the only brand of fiberglass insulation that can be pink. Sounds: A unique tune or set of notes can denote a brand. NBC’s chimes are a famous example. Scents: The rose-jasmine-musk scent of Chanel No. 5 is trademarked. Tastes: Kentucky Fried Chicken has trademarked its special recipe of eleven herbs and spices for fried chicken. Movements: Lamborghini has trademarked the upward motion of its car doors. Customer relationship management
Brand name
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The brand name is quite often used interchangeably with “brand”, although it is more correctly used to specifically denote written or spoken linguistic elements of any product. In this context a “brand name” constitutes a type of trademark, if the brand name exclusively identifies the brand owner as the commercial source of products or services. A brand owner may seek to protect proprietary rights in relation to a brand name through trademark registration and such trademarks are called “Registered Trademarks”. Types of brand names Brand names come in many styles. A few include: Initialism: A name made of initials such, as UPS or IBM Descriptive: Names that describe a product benefit or function, such as Whole Foods or Airbus
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Alliteration and rhyme: Names that are fun to say and stick in the mind, such as Tip n Top. Evocative: Names that evoke a relevant vivid image, such as Amazon or Crest Neologisms: Completely made-up words, such as Wii or Kodak Foreign word: Adoption of a word from another language, such as Volvo or Samsung Founders’ names:Using the names of real people, (especially a founder’s name), such as Hewlett-Packard, Dell or Disney Geography: Many brands are named for regions and landmarks, such as Cisco and Fuji Film Personification: Many brands take their names from myths, such as Nike; or from the minds of ad execs, such as Betty Crocker
Brand identity The outward expression of a brand – including its name, trademark, communications, and visual appearance – is brand identity. Because the identity is assembled by the brand owner, it reflects how the owner wants the consumer to perceive the brand – and by extension the branded company, organization, product or service. This is in contrast to the brand image, which is a customer’s mental picture of a brand. The brand owner will seek to bridge the gap between the brand image and the brand identity. Effective brand names build a connection between the brand personality as it is perceived by the target audience and the actual product/service. The brand name should be conceptually on target with the product/service (what the company stands for). Furthermore, the brand name should be on target with the brand demographic. Typically, sustainable brand names are easy to remember, transcend trends and have positive connotations. Brand identity is fundamental to consumer recognition and symbolizes the brand’s differentiation from competitors.
Brand equity is a phrase used in the marketing industry which describes the value of having a wellknown brand name, based on the idea that the owner of a well-known brand name can generate more money from products with that brand name than from products with a less well known name, as consumers believe that a product with a well-known name is better than products with less well known names. Some marketing researchers have concluded that brands are one of the most valuable assets a company has, as brand equity is one of the factors which can increase the financial value of a brand to the brand owner, although not the only one. Elements that can be included in the valuation of brand equity include (but not limited to): changing market share, profit margins, consumer recognition of logos and other visual elements, brand language associations made by consumers, consumers’ perceptions of quality and other relevant brand values.
C HA P T E R 8
CRAFTING THE BRAND POSITIONING Positioning In marketing, positioning is the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. Re-positioning involves changing the identity of a product, relative to the identity of competing products. De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product. Although there are different definitions of brand positioning, probably the most common is: identifying and attempting to occupy a market niche for a brand, product or service utilizing traditional marketing placement strategies (i.e. price, promotion, distribution, packaging, and competition). Positioning is also defined as the way by which the marketers create an impression in the customers mind.
Product Life Cycle (PLC)
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A new product progresses through a sequence of stages from introduction to growth, maturity, and decline. This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix. Introduction Stage: In the introduction stage, the firm seeks to build product awareness and develop a market for the product. The impact on the marketing mix is as follows: Product branding and quality level is established, and intellectual property protection such as patents and trademarks are obtained. Pricing may be low penetration pricing to build market share rapidly, or high skim pricing to recover development costs. Distribution is selective until consumers show acceptance of the product. Promotion is aimed at innovators and early adopters. Marketing communications seeks to build product awareness and to educate potential consumers about the product. Growth Stage: In the growth stage, the firm seeks to build brand preference and increase market share. Product quality is maintained and additional features and support services may be added. Pricing is maintained as the firm enjoys increasing demand with little competition. Distribution channels are added as demand increases and customers accept the product. Promotion is aimed at a broader audience. Maturity Stage: At maturity, the strong growth in sales diminishes. Competition may appear with similar products. The primary objective at this point is to defend market share while maximizing profit. Product features may be enhanced to differentiate the product from that of competitors. Pricing may be lower because of the new competition. Distribution becomes more intensive and incentives may be offered to encourage preference over competing products. Promotion emphasizes product differentiation. Decline Stage: As sales decline, the firm has several options: Maintain the product, possibly rejuvenating it by adding new features and finding new uses. Harvest the product - reduce costs and continue to offer it, possibly to a loyal niche segment. Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product. The marketing mix decisions in the decline phase will depend on the selected strategy. For example, the product may be changed if it is being rejuvenated, or left unchanged if it is being harvested or liquidated. The price may be maintained if the product is harvested, or reduced drastically if liquidated
C HA P T ER 9 Pr o d u c t L e ve l s PRODUCT STRATEGY The Consumer Value Hierarchy ?
Core benefit: The customer in search of a hotel room demand only rest and sleep from a marketer.
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Now the marketer must turn the core benefit into Basic product. For example customer need basic things like bed, bathroom, chair, fan etc.
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At the third level marketer must prepare for the expected product of the clients. For example if bed, bathroom, fan are the basic product, then clean bed sheet, neat and clean bathroom are the expected products.
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At the fourth level, the marketers prepare an augmented product that exceeds customers expectations. For example, beautiful wall hanging, lovely balcony, Television set etc. In western countries particularly in USA and UK, marketers focused more on augmented product relatively different to the Brazil and Indian counterpart. At the fifth level stands the potential product that the marketer needs to search for the future operation. For example high speed internet, telephone line etc.
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Product Classification
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Durability and Tangibility: The marketers classify products into three groups according to durability and tangibility. Durable Goods: A durable good or a hard good is a good that does not quickly wear out, or more specifically, one that yields utility over time rather than being completely consumed in one use. Items like bricks could be considered perfectly durable goods, because they should theoretically never wear out. Highly durable goods such as refrigerators, cars, or mobile phones usually continue to be useful for three or more years of use. Non-Durable Goods: Nondurable goods or soft goods (consumables) are the opposite of durable goods. They may be defined either as goods that are immediately consumed in one use or ones that have a lifespan of less than 3 years. Services: Services are intangible, inseparable, variable and perishable products. Examples: Haircut, legal advice and appliance repairs. Consumer Goods Classification: The vast of goods consumers buy can be classified on the basis of shopping habits. We can distinguish among convenience, shopping, specialty and unsought goods. Convenience Goods: A category of consumer goods which are bought frequently, quickly and with a minimum of emotional involvement. Most are nondurable goods of low value that are frequently purchased in small quantities. Examples: include tobacco products, soaps and newspaper. Further, convenience goods can be sub-categorized into:
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Staple Convenience Consumer Goods: Goods which come under the basic demands of human beings are called staple convenience goods. For ex: milk, bread, sugar, toilet paper etc.
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Impulse Convenience Consumer Goods: Goods which are brought without any prior planning or which are brought impulsively are called impulse convenience goods. For ex: potato wafers, candies, ice creams, cold drinks, magazines etc.
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Emergency Convenience Consumer Goods: A category of consumer goods consisting of items purchased quickly in necessity. Ex: Umbrellas during rainy season, sweaters during winter season.
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Shopping Goods: In shopping consumer goods, consumer do lot of selection and comparison based on various parameters such as cost, brand, style, comfort etc, before buying an item. Shopping goods are purchased only after the buyer compares the products of more than one store
or looks at more than one assortment of goods before making a deliberate buying decision. These goods are usually of higher value than convenience goods, bought infrequently, and are durable. Price, quality, style, and color are typically factors in the buying decision. Consumer goods companies usually try to set up their shops and show rooms in active shopping area to attract customer attention and their main focus is to do lots of advertising and marketing to become popular. Examples: Goods like clothing items, Televisions, computers, lawnmowers, bedding, camping equipment, home furnishing, jewelleries etc. Shopping goods can be further divided: -> Homogeneous Shopping Goods: Homogeneous shopping goods are those that are similar in quality but different enough in other attributes (such as price, brand image, or style) to justify a search process. This difference in characteristics is sufficient for the customer to justify a search for the item. After the consumer has decided on desired characteristics, he or she then looks for the most favorable price. Examples: Televisions of Sony and Konka brands, their quality is same, both are delivering well picture but their price, brand image and style are different. ->Heterogeneous Goods: Heterogeneous shopping goods have product features that are often more important to consumers than price; examples include clothing, high-tech equipment, and furniture. The item purchased must meet certain consumer-set criteria, such as size, color, or specific functions performed. When buying heterogeneous shopping goods, consumers often seek out information and advice from salespeople and other experts before purchasing the item. Examples: computer hardware for computer engineers. ?
Specialty Goods: Goods which are very unique, unusual, and luxurious in nature are called specialty goods. Specialty items have characteristics that impel consumers to make special efforts to find them. Consumers often do not consider price at all when shopping for specialty products, which can include almost any kind of shopping product: Particular types of food, expensive imported cars, or items from a well-known fashion designer or manufacturer can all be considered specialty goods. Usually, specialty goods have a brand name or other type of distinguishing characteristic. Characteristics: 1. Specialty goods do not involve making comparisons. 2. Buyers invest time only to reach dealers carrying the wanted products. 3. Dealers do not need convenient locations; however they must let prospective buyers know their location. Examples: antiques, jewelry, wedding dresses, cars, stereo components, mens suit etc
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Unsought Goods: Unsought goods are products that consumers do not want, use, or even think about purchasing. An unsought shopping good could be a product that a consumer may not even know about—or knows about but has never considered purchasing. Unsought goods are requiring advertising and personnel-selling support. Unsought shopping goods are frequently brought to customers’ attention through advertising, promotions, or chance. Sometimes they are something new on the market, such as digital telephones. The classic examples of known but unsought goods are life insurance, plots, gravestones, encyclopedia.
Packaging, Labeling, Warranties, and Guarantee Packaging: Packaging is the science, art, and technology of enclosing or protecting products for distribution, storage, sale, and use. Packaging also refers to the process of design, evaluation, and production of packages. Packaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use. Packaging contains, protects,
preserves, transports, informs, and sells. In many countries it is fully integrated into government, business, institutional, industrial, and personal use. Labeling: It is Display of information about a product on its container, packaging, or the product itself. For several types of consumer and industrial products, the type and extent of information that must be imparted by a label is governed by the relevant safety and shipping laws. The purposes of packaging and package labels ?
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Packaging and package labeling have several objectives: Physical protection – The objects enclosed in the package may require protection from, among other things, mechanical shock, vibration, electrostatic discharge, compression, temperature,[8] etc. Barrier protection – A barrier from oxygen, water vapor, dust, etc., is often required. Permeation is a critical factor in design. Some packages contain desiccants or Oxygen absorbers to help extend shelf life. Modified atmospheres [9] or controlled atmospheres are also maintained in some food packages. Keeping the contents clean, fresh, sterile[10] and safe for the intended shelf life is a primary function. Containment or agglomeration – Small objects are typically grouped together in one package for reasons of efficiency. For example, a single box of 1000 pencils requires less physical handling than 1000 single pencils. Liquids, powders, and granular materials need containment. Information transmission – Packages and labels communicate how to use, transport, recycle, or dispose of the package or product. With pharmaceuticals, food, medical, and chemical products, some types of information are required by governments. Some packages and labels also are used for track and trace purposes. Marketing – The packaging and labels can be used by marketers to encourage potential buyers to purchase the product. Package graphic design and physical design have been important and constantly evolving phenomenon for several decades. Marketing communications and graphic design are applied to the surface of the package and (in many cases) the point of sale display. Security – Packaging can play an important role in reducing the security risks of shipment. Packages can be made with improved tamper resistance to deter tampering and also can have tamper-evident features to help indicate tampering. Anti-counterfeiting Packaging - Packages can be engineered to help reduce the risks of package pilferage or the theft and resale of products: Some package constructions are more resistant to pilferage and some have pilfer indicating seals. Counterfeit consumer goods, unauthorized sales (diversion), material substitution and tampering can all be prevented with these anti-counterfeiting technologies. Packages may include authentication seals and use security printing to help indicate that the package and contents are not counterfeit. Packages also can include anti-theft devices, such as dye-packs, RFID tags, or electronic article surveillance[12] tags that can be activated or detected by devices at exit points and require specialized tools to deactivate. Using packaging in this way is a means of loss prevention. Convenience – Packages can have features that add convenience in distribution, handling, stacking, display, sale, opening, reclosing, use, dispensing, reuse, recycling, and ease of disposal
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Portion control – Single serving or single dosage packaging has a precise amount of contents to control usage. Bulk commodities (such as salt) can be divided into packages that are a more suitable size for individual households. It is also aids the control of inventory: selling sealed oneliter-bottles of milk, rather than having people bring their own bottles to fill themselves. Types of Packaging Packaging may be looked at as being of several different types. For example a transport package
or distribution package can be the shipping container used to ship, store, and handle the product or inner packages. Some identify a consumer package as one which is directed toward a consumer or household. Packaging may be described in relation to the type of product being packaged: medical device packaging, bulk chemical packaging, over-the-counter drug packaging, retail food packaging, military materiel packaging, pharmaceutical packaging, etc. It is sometimes convenient to categorize packages by layer or function: “primary”, “secondary”, etc. ?
Primary packaging is the material that first envelops the product and holds it. This usually is the smallest unit of distribution or use and is the package which is in direct contact with the contents.
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Secondary packaging is outside the primary packaging, perhaps used to group primary packages together.
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Tertiary packaging is used for bulk handling, warehouse storage and transport shipping. most common form is a palletized unit load that packs tightly into containers. These broad categories can be somewhat arbitrary. For example, depending on the use, a shrink wrap can be primary packaging when applied directly to the product, secondary packaging combining smaller packages, and tertiary packaging on some distribution packs. Warranties and Guarantees All sellers are legally responsible for fulfilling a buyer’s normal or reasonable expectations. Warranties are formal statements of expected product performance by the manufacturer. Products under warranty can be returned to the manufacturer or designated repair center for repair, replacement or refund. Extended warranties can be sold by the retailer or manufacturer to customers and can be extremely lucrative for them. It represented 30% of Best Buy‘s operating profits in 2005. Guarantees reduce the buyer’s perceived risk. They suggest that the product is of high quality and that the company and its service performance are dependable. They can be especially helpful when the company or product is not that well known or when the product’s quality is superior to competitors. Guarantees is more than legal statements that guides the warranties, they can be seen as extra benefits to induce consumer to buy the product. For instance, Procter & Gamble promises complete satisfaction without being more specific (General Guarantee) and A. T. Cross guarantees its Cross pens and pencils for life, repairing and replacing at no charges (Specific Guarantee).
CHAPTER 10
DESIGNING AND MANAGING SERVICES Services
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A service is an intangible commodity. That is, services are an example of intangible economic goods. A service is a set of one time consumable and perishable benefits delivered from the accountable service provider, mostly in close coaction with his internal and external service suppliers, effectuated by distinct functions of technical systems and by distinct activities of individuals, respectively, commissioned according to the needs of his service consumers by the service customer from the accountable service provider, rendered individually to an authorized service consumer at his/her dedicated trigger, and, finally, consumed and utilized by the triggering service consumer for executing his/her upcoming business activity or private activity. Characteristics of Services Services can be paraphrased in terms of their key characteristics, sometimes called the “Five I’s of Services”. Intangibility: Services are intangible and insubstantial: they cannot be touched, gripped, handled, looked at, smelled, tasted. Thus, there is neither potential nor need for transport, storage or stocking of services. Furthermore, a service can be (re)sold or owned by somebody, but it cannot be turned over from the service provider to the service consumer. Solely, the service delivery can be commissioned to a service provider who must generate and render the service at the distinct request of an authorized service consumer. Inventory (Perishability): Services have little or no tangible components and therefore cannot be stored for a future use. Services are produced and consumed during the same period of time. Inseparability: The service provider is indispensable for service delivery as he must promptly generate and render the service to the requesting service consumer. In many cases the service delivery is executed automatically but the service provider must preparatorily assign resources and systems and actively keep up appropriate service delivery readiness and capabilities. Additionally, the service consumer is inseparable from service delivery because he is involved in it from requesting it up to consuming the rendered benefits. Examples: The service consumer must sit in the hair dresser’s shop & chair or in the plane & seat; correspondingly, the hair dresser or the pilot must be in the same shop or plane, respectively, for delivering the service. Inconsistency (Variability): Each service is unique. It is one-time generated, rendered and consumed and can never be exactly repeated as the point in time, location, circumstances, conditions, current configurations and/or assigned resources are different for the next delivery, even if the same service consumer requests the same service. Many services are regarded as heterogeneous or lacking homogeneity and are typically modified for each service consumer or each new situation (consumerised). Example: The taxi service which transports the service consumer from his home to the opera is different from the taxi service which transports the same service consumer from the opera to his home – another point in time, the other direction, maybe another route, probably another taxi driver and cab. Involvement: One of the most important Characteristic of services is the participation of the customer in the service delivery process. A customer has the opportunity to get the services modified according to specific requirement. Each of these characteristics is retractable per se and their inevitable coincidence complicates the consistent service conception and make service delivery a challenge in each and every case. Proper service marketing requires creative visualization to effectively evoke a concrete image in the service consumer’s mind. From the service consumer’s poino t f view, these characteristics make
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it difficult, or even impossible, to evaluate or compare services service delivery.
prior to experiencing the
Service Mix
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The range of services offered by a services marketing company is called service mix. Category of Service Mix As we all know, service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. It is like having a massage on your body or manicure your hands. Service is kind of product wherein we used it to fulfill one’s needs and wants without having them a physical evidences. And as we go along, we will know the categories of offerings that I could say, as a marketing, we should know. These are the five categories of offerings that features the service. The component can be minor or a part of the total offering. Pure tangible good - this are offering that consist tangible goods primarily. There will be no services accompany by the product. (such as soap, toothpaste, or salt.) Tangible good with accompanying services - this offering consist one tangible good accompanied by one or two services. Hybrid - the offering consist of equal parts of goods and services. Major Service with accompanying minor goods and services – the offering consist of a major service along with additional services or supporting goods. Pure service – the offering consist primarily of a service.
Service Marketing
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Services marketing is a sub field of marketing, which can be split into the two main areas of goods marketing (which includes the marketing of fast moving consumer goods (FMCG) and durables) and the marketing of services. Services marketing typically refers to both business to consumer (B2C) and business to business (B2B) services, and includes marketing of services like telecommunications services, financial services, all types of hospitality services, car rental services, air travel, health care services and professional services. 7P’s of Service Marketing The first four elements in the services marketing mix are the same as those in the traditional marketing mix. However, given the unique nature of services, the implications of these are slightly different in case of services. Product: In case of services, the ‘product’ is intangible, heterogeneous and perishable. Moreover, its production and consumption are inseparable. Hence, there is scope for customizing the offering as per customer requirements and the actual customer encounter therefore assumes particular significance. However, too much customization would compromise the standard delivery of the service and adversely affect its quality. Hence particular care has to be taken in designing the service offering. Pricing: Pricing of services is tougher than pricing of goods. While the latter can be priced easily by taking into account the raw material costs, in case of services attendant costs - such as labor and overhead costs - also need to be factored in. Thus a restaurant not only has to charge for the Place: Since service delivery is concurrent with its production and cannot be stored or transported, the location of the service product assumes importance. Service providers have to give special thought to where the service would be provided. Thus, a fine dine restaurant is better located in a busy, upscale market as against on the outskirts of a city. Similarly, a holiday resort is better situated in the countryside away from the rush and noise of a city. Promotion: Since a service offering can be easily replicated promotion becomes crucial in differentiating a service offering in the mind of the consumer. Thus, service providers offering identical services such as airlines or banks and insurance companies invest heavily in advertising their services. This is crucial in attracting customers in a segment where the services providers have nearly identical offerings. The final three elements of the services marketing mix - people, process and physical evidence -
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are unique to the marketing of services. People: People are a defining factor in a service delivery process, since a service is inseparable from the person providing it. Thus, a restaurant is known as much for its food as for the service provided by its staff. The same is true of banks and department stores. Consequently, customer service training for staff has become a top priority for many organizations today. Process: The process of service delivery is crucial since it ensures that the same standard of service is repeatedly delivered to the customers. Therefore, most companies have a service blueprint which provides the details of the service delivery process, often going down to even defining the service script and the greeting phrases to be used by the service staff. Physical Evidence: Since services are intangible in nature most service providers strive to incorporate certain tangible elements into their offering to enhance customer experience. Thus, there are hair salons that have well designed waiting areas often with magazines and plush sofas for patrons to read and relax while they await their turn. Similarly, restaurants invest heavily in their interior design and decorations to offer a tangible and unique experience to their guests.
CHAPTER 11 MANAGING RETAILING, WHOLESALES AND LOGISTICS Retailing Retail is the sale of goods and services from individuals or businesses to the end-user. Retailers are part of an integrated system called the supply chain. A retailer purchases goods or products in large quantities from manufacturers directly or through a wholesale, and then sells smaller quantities to the consumer for a profit. Retailing can be done in either fixed locations like stores or markets, door-to-door or by delivery. Retailing includes subordinated services, such as delivery. The term “retailer” is also applied where a service provider services the needs of a large number of individuals, such as for the public. Shops may be on residential streets, streets with few or no houses or in a shopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. Online retailing, a type of electronic commerce used for business-to-consumer (B2C) transactions and mail order, are forms of nonshop retailing.
Types of Retailers Retail is usually classified by type of products as follows: o
Food products
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Hard goods or durable goods (“hardline retailers”) - appliances, electronics, furniture, sporting goods, etc. Goods that do not quickly wear out and provide utility over time.
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Soft goods or consumables - clothing, apparel, and other fabrics. Goods that are consumed after one use or have a limited period (typically under three years) in which you may use them. There are the following types of retailers by marketing strategy:
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Department stores - very large stores offering a huge assortment of “soft” and “hard goods; often bear a resemblance to a collection of specialty stores. A retailer of such store carries variety of categories and has broad assortment at average price. They offer considerable customer service.
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Discount stores - tend to offer a wide array of products and services, but they compete mainly on price offers extensive assortment of merchandise at affordable and cut-rate prices. Normally retailers sell less fashion-oriented brands.
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Warehouse stores - warehouses that offer low-cost, often high-quantity goods piled on pallets or steel shelves; warehouse clubs charge a membership fee;
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Variety stores - these offer extremely low-cost goods, with limited selection;
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Demographic - retailers that aim at one particular segment (e.g., high-end retailers focusing on wealthy individuals).
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Mom-And-Pop - It is a small retail outlet owned and operated by an individual or family. Focuses on a relatively limited and selective set of products.
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Specialty stores- A typical speciality store gives attention to a particular category and provides high level of service to the customers. A pet store that specializes in selling dog food would be regarded as a specialty store. However, branded stores also come under this format. For example if a customer visits a Reebok or Gap store then they find just Reebok and Gap products in the respective stores.
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Boutiques or Concept stores are similar to specialty stores. Concept stores are very small in size, and only ever stock one brand. They are run by the brand that controls them.
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General store - a rural store that supplies the main needs for the local community;
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Convenience stores- It is essentially found in residential areas. They provide limited amount of merchandise at more than average prices with a speedy checkout. This store is ideal for emergency and immediate purchases as it often works with extended hours, stocking everyday;
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Hypermarkets- They provide variety and huge volumes of exclusive merchandise at low margins. The operating cost is comparatively less than other retail formats.
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Supermarkets- It is a self-service store consisting mainly of grocery and limited products on non food items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The supermarkets can be anywhere between 20,000 and 40,000 square feet (3,700 m2). Example: SPAR supermarket.
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Malls- They have a range of retail shops at a single outlet. They endow with products, food and entertainment under a roof.
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Category killers or Category Specialist- By supplying wide assortment in a single category for lower prices a retailer can “kill” that category for other retailers. For few categories, such as electronics, the products are displayed at the centre of the store and sales person will be available to address customer queries and give suggestions when required. Other retail format stores are forced to reduce the prices if a category specialist retail store is present in the vicinity.
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E-tailers- The customer can shop and order through internet and the merchandise are dropped at the customer’s doorstep. Here the retailers use drop shipping technique. They accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler. This format is ideal for customers who do not want to travel to retail stores and are interested in home shopping. However it is important for the customer to be wary about defective products and non secure credit card transaction. Example: Amazon, Pennyful and eBay.
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Vending Machines- This is an automated piece of equipment wherein customers can drop the money in the machine and acquire the products. Some stores take a no frills approach, while others are “mid-range” or “high end”, depending on what income level they target. Other types of retail store include:
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Automated Retail stores are self-service, robotic kiosks located in airports, malls and grocery stores. The stores accept credit cards and are usually open 24/7. Examples include ZoomShops and Redbox.
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Big-box stores encompass larger department, discount, general merchandise, and warehouse stores.
Retailers can opt for a format as each provides different retail mix to its customers based on their WWW.BHASKARJOSH.COM WWW.SSCKAADDA.COM Market Capsule For SBI Associate Clerk
customer demographics, lifestyle and purchase behaviour. A good format will lend a hand to display products well and entice the target customers to spawn sales. Levels of Services The wheel of retailing hypothesis explains one reason that new store types emerges. Conventional retail stores typically increases their services and raise their prices to cover the costs. Retailers position themselves as offering one of the four levels of services: ?
Self Service
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Self Selection- Customers find their own goods, although they may ask for assistance.
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Limited Service- These retailers carry more shopping goods and services such as credit and merchandise return privileges.
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Full Service- Salespeople are ready to assist in every phase of the locate- compare select process. Retailing can be broadly divided into two categories- store and nonstore retailing. Nonstore retailing falls into four major categories:
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Direct Selling- Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling.[1] Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as well as internet sales.
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Direct Marketing- Direct marketing is a channel-agnostic form of advertising that allows businesses and nonprofits organizations to communicate straight to the customer, with advertising techniques that can include Cell Phone Text messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional letters, and outdoor advertising. Direct marketing messages emphasize a focus on the customer, data, and accountability. Characteristics that distinguish direct marketing are:
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Marketing messages are addressed directly to the customer and/or customers. Direct marketing relies on being able to address the members of a target market. Addressability comes in a variety of forms including email addresses, mobile phone numbers, Web browser cookies, fax numbers and postal addresses.
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Direct marketing seeks to drive a specific “call to action.” For example, an advertisement may ask the prospect to call a free phone number or click on a link to a website.
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Direct marketing emphasizes trackable, measurable responses from customers — regardless of medium. Direct marketing is practiced by businesses of all sizes — from the smallest start-up to the leaders on the Fortune 500. A well-executed direct advertising campaign can prove a positive return on investment by showing how many potential customers responded to a clear call-to-action. General advertising eschews calls-for-action in favor of messages that try to build prospects’ emotional awareness or engagement with a brand. Even well-designed general advertisements rarely can prove their impact on the organization’s bottom line. Direct selling is distinct from direct marketing because it is about individual sales agents reaching and dealing directly with clients. Direct marketing is about business organizations seeking a relationship with their customers without going through an agent/consultant or retail outlet.
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Automatic Vending- is used to sell products like milk, beverages and magazines and to dispense money (through ATM).
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Wholesaling Wholesaling, jobbing, or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional, or other professional business users; or to other wholesalers and related subordinated services.[1] In general, it is the sale of goods to anyone other than a standard consumer. In the United Kingdom, the Cash and Carry is a term used describe a wholesale warehouse, particularly those that are open to the general public on payment of a subscription. In the banking industry “wholesale” usually refers to wholesale banking, providing tailored services to large customers, in contrast with retail banking, providing standardized services numbers of smaller customers.
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Types of wholesalers Following are the types of wholesalers existing in a society: ?
Merchant Wholesalers – These wholesale suppliers own and produce a product or service and resell their products to resellers, retailers, distributors and other wholesalers. If you can buy the products you require direct from the supplier you will usually be able to obtain the best prices and profit margins.
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General Wholesalers - Wholesalers that fall into this category will usually buy large quantities of products from one or more suppliers and will be intending to add value to them by reselling in smaller quantities to distributors, retailers and resellers. This type of wholesale supplier will often have multiple suppliers adding diversity to their product range and choice for their customers. This type of wholesaler may resell products from a number of different industries and in several different categories.
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Speciality Wholesalers - This type of wholesaler will resell products in a specific industry or product category, but may have products from multiple suppliers. Because specialty wholesalers specialize in a specific industry or product type they tend to have good product knowledge and good pricing.
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Specific Product Wholesalers - These are wholesalers who only supply 1 type of product for example footwear or computers. They may supply several brands but only within one product category. Manufacturers often use this type of wholesaler to distribute one or more of their products.
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Discount Wholesalers – This type of wholesaler will supply significantly discounted stock. Generally the stock is discounted because the products are discontinued lines, returned goods or refurbished goods.
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Drop Ship Wholesalers - This type of wholesaler will complete the sale of a product but will have it dispatched from their supplier directly to their customer without actually handling the goods.
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On-line Wholesaler - Wholesalers who sell their products on-line offer discounted prices as they can reduce their overheads such as rent and rates of physical premises. This type of wholesaler is therefore able to add a lower percentage to their purchase
price and still make margin.
Functions of a Wholesaler A wholesaler is necessary because he performs several marketing functions which are given below: Assembling- A wholesaler buys goods in bulk from different manufacturers and keeps them at one place. He collects goods from several places much in advance of demand. He may also import goods from foreign countries. WWW.BHASKARJOSH.COM WWW.SSCKAADDA.COM Market Capsule For SBI Associate Clerk ?
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Warehousing or storage- There is usually a large time gap between production and consumption of goods. Goods must, therefore, be stored for a considerable time. A wholesaler stores goods in his warehouse and makes them available to retailers as and when demanded. He stabilizes prices of the goods by adjusting the supply with the demand. He creates time utility.
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Dispersion- A wholesaler distributes the assembled goods among a large number of retailers scattered at different places. He sells goods in small quantities according to the choice of retailers. This is known as ‘breaking of bulk’.
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Transportation- A wholesaler arranges for the transport of goods from producers to his warehouse and from the warehouse to retailers. He carries goods in bulk thereby saving costs of transport. Many wholesalers maintain their own trucks and tempos to carry goods far and wide quickly. Thus, a wholesaler adds place utility to the goods.
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Financing- A wholesaler often provides advance money with orders to manufacturers. He purchases goods in bulk on cash basis from them. In addition, he often sells goods on credit basis to retailers. In this way, he provides finance to both producers and retailers.
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Risk –bearing- A wholesaler assumes the risk of damage to goods in transit and in storage. He also bears the risks arising from changes in demand and bad debts. He serves as the shock absorber in the distribution of goods.
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Grading and Packing- Many wholesalers classify the assembled goods into different grades, pack them into small lots and put their own trademarks or brand names. In this way, they perform the functions of grading, packing and branding.
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Pricing- A wholesaler anticipates demand and market conditions. He helps to determine the resale price of goods.
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CHAPTER 12
MARKETING COMMUNICATIONS Marketing communications are messages and related media used to communicate with a market. Marketing communications is the “promotion” part of the “marketing mix” or the “four Ps”: price, place, promotion, and product. Marketing communications is focused on the product/service as opposed to corporate communications where the focus of communications work is the company/ enterprise itself. Marketing communications is primarily concerned with demand generation and product/service positioning while corporate communications deal with issue management, mergers and acquisitions, litigation, etc.
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The marketing communications mix consists of eight major modes of communications: Advertising- Any paid form of non-personal presentations and promotion of ideas, goods or services by an identified sponsor. Sales promotion- A variety of short-term incentives to encourage trial or purchase of a product or service. Public Relations and Publicity- The professional maintenance of a favorable public image by an organization or a famous person. Direct MarketingA form of advertising in which physical m a r k e t i n g m a t e r i a l s a r e provided to consumers in order to communicate information about a product or service. Types of direct marketing materials include catalogs, mailers and fliers. I n t e r a c t i v e M a r k e t i n g - Interactive Marketing refers to the evolving trend in marketing whereby marketing has moved from a transaction-based effort to a conversation. Word-of-mouth Marketing- Word-ofmouth marketing also c a l l e d w o r d o f m o u t h advertising, is an unpaid form of promotion—oral or written— in which satisfied customers tell other people how much they like a business, product, service, or event. Personal Selling- Face-to-face selling in which a seller attempts to persuade a buyer to make a purchase. Events and Experiences- Company Sponsored activites and programs designed to create daily or special brand related interactions.
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Characteristics of Marketing Communication Mix Each communication tool has its own unique characteristics and costs. Let us define them in details.
Advertising
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Advertising or advertizing is a form of communication for marketing and used to encourage, persuade, or manipulate an audience (viewers, readers or listeners; sometimes a specific group) to continue or take some new action. The American Marketing Association (AMA) defines advertising as, “Any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor.” This definition suggests the following features of advertising. Advertisement is a paid form of communication. Advertiser exercises a control over it. It is non-personal selling. It is a medium of mass communication for large-scale selling. It acts as an important marketing tool for presentation and promotion of ideas, goods and services. It needs the sponsor of the message known. Advertising will be meaningless if the advertiser is not clearly identified. Features of Advertising The nine important features of advertising are as follows: Provides information- The basic purpose of advertising is to provide information about products or services to prospective buyers. The details of products such as features, uses, prices, benefits, manufacturer’s name, and instructions to be followed while using the product are given in the advertisements. The advertising message and brand name are also given. The information supplied gives education and guidance to consumers and facilitates to correct selection of goods by them. Paid communication- The advertiser has to pay to the media for giving publicity to his advertising message. He pays for the advertisement, and naturally; he decides the size, slogan, etc. given in the advertisement. Advertising is a form of paid communication. Non-personal presentation- Advertising is non-personal in character as against salesmanship, which is personal (face to face communication) in character. In advertising, the message is given to all and not to one specific individual. This rule is applicable to all advertising-media, including press. However, even in advertising target consumers or target market can be selected for making an advertising appeal. Publicity- Advertising gives publicity to goods, services and ideas. It is basically for giving information to consumers. This information is always related to the features and benefits of goods and services of different types. Advertising gives new ideas to consumers as its contents are meaningful. The aim is to make the ideas popular and thereby to promote sales. For example, advertising on family planning, family welfare, and life insurance is useful for placing new ideas before the people. Basically for persuasion- Advertising aims at persuasion of potential customers. It attracts attention towards a product, creates a desire to have it, and finally induces consumers to visit the market and purchase the same. Advertising has a psychological impact on consumers. It influences the buying decisions of consumers. Target oriented- It is possible to make intensive advertising by selecting a specific-market or specific-segment of consumers (e.g. children, housewives, etc.) for advertising. This selection of a specific market is called target market. Advertising becomes effective and result-oriented when it is target oriented. The waste in advertising can be minimized through such a target oriented advertising. Art, science and profession- It is now universally accepted that advertising is an art, science and a profession. It is an art as it needs creativity for raising its effectiveness. Advertising is a science as it has its principles and rules. Advertising is now treated as a profession with its professional bodies and code of conduct for members. Advertising agencies and space brokers function as professionals in the field of advertising. Element of marketing mix- Advertising is an important element of a marketing mix It supports the sales promotion efforts of the manufacturer and makes positive contribution in sales promotion provided other elements in the marketing-mix are reasonably favorable. This is natural as advertising
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alone is not adequate for promoting sales. Many companies now spend huge funds on advertising and public relations. Creativity- Advertising is a method of presenting a product in an artistic, attractive and agreeable manner. This is possible through the element of creativity, which is the essence of advertising. Creativity can be introduced by creative-people (professionals) in the field of advertising. They introduce new techniques for introducing creativity. Without creativity, advertising will be like a body without a soul. It is therefore known as the essence of advertising. Advantages of Advertising The advantages of advertising can be divided into two main groups. One group denotes benefits to manufactures and other group denotes benefit to consumers. Let’s find out how each of them gets benefited by advertising. The advantages of advertising for manufacturers: Large-scale production & marketing- Advertising is useful as a sales promotion technique. It gives information to consumers and encourages them to purchase more. Manufacturers expand their production base due to higher market demand created through advertising. Introduction of new products- Advertising facilitates the introduction of new products. Due to advertising, information about new products is given to the prospects. This creates demand and the manufacturer is able to sell new products along with the existing ones. Creates new demand- Advertising spreads information and encourages consumers to purchase new products. Such advertising leads to the creation of new demand. Various concessions are offered to consumers in the initial period. This gives positive response from the consumers. Thus, advertising creates new demand from non-users. Effective personal selling- Advertising creates a proper background for personal selling. It gives advance information to the prospects. They visit the shop in order to purchase a particular product which they know through advertising media. The job of a salesman becomes easy as consumers develop affinity to specific products. In brief, it supports and supplements personal selling. Builds brand image- Manufacturers introduce branding for making their products popular with distinct personality. The brands are made popular through advertising. As a result, consumers develop loyalty towards a specific brand. Advertising builds brand image and this develops consumer loyalty towards a specific brand. Reduces cost of production- Advertising creates demand and promotes sales. This enables a manufacturer to conduct production on a large scale. This leads to reduction in the cost of production and distribution. As a result, the profit margin of the manufacturer increases. Facing competition- A manufacturer can face market competition effectively and can make his products popular through advertising. He can remove misunderstanding among consumers about his products through appropriate advertising. Sales promotion- A manufacturer can make his sales promotion campaign successful by using the support of advertising. He can prepare proper background for the success of such an adcampaign as it facilitates direct communication with consumers. Goodwill builder- A manufacturer can build up goodwill and good image in the business world and also among the consumers through advertising. The social welfare programs and community service activities can be given wide publicity through advertising. Even the progress of the Organisation can be brought to the notice of the public through it. The advantages of advertising for consumers: Information and guidance- Consumers get information and guidance from advertising. They can study the advertisements of competitors and select the products which are profitable to them. This avoids their cheating and exploitation at the hands of middlemen. Acts as reminder- Advertising acts as a reminder to consumers. They remember what is urgently required to be purchased through advertising. Attracts consumers- Advertising leads to competition among manufacturers and retailers. They have to offer something special in order to attract consumers. Such attraction offers benefits to consumers. For example, manufacturers have to bring down the price in order to attract customers.
They have to supply quality goods in order to attract more customers. All this is beneficial to consumers in terms of price and quality of goods. ? Raises living standards- Advertising raises the standard of living of people by supplying information about goods and services, which can offer convenience and pleasure to them. It guides consumers in the selection of most suitable goods for their daily life. Thus, it provides higher standard of living to consumers as a social group. ? Effective product use- Consumers get information about uses or benefits of different products through advertising. They also get guidance as regards the right manner of using the product. This avoids possible damage of the product purchased. Even the product can be used for different purposes because of the information supplied through advertisements. ? Removes misunderstanding- Advertising helps consumers in removing their misunderstanding about certain products. They change their attitudes towards products and services due to it. Types or Modes of Advertising Virtually any medium can be used for advertising like. ? Television advertising / Music in advertising- The TV commercial is generally considered the most effective mass-market advertising format, as is reflected by the high prices TV networks charge for commercial airtime during popular TV events. ? Infomercials- An infomercial is a long-format television commercial, typically five minutes or longer. The word “infomercial” is a portmanteau of the words “information” & “commercial”. The main objective in an infomercial is to create an impulse purchase, so that the consumer sees the presentation and then immediately buys the product through the advertised toll-free telephone number or website. Infomercials describe, display, and often demonstrate products and their features, and commonly have testimonials from consumers and industry professionals. ? Radio advertising- Radio advertising is a form of advertising via the medium of radio. Radio advertisements are broadcast as radio waves to the air from a transmitter to an antenna and a thus to a receiving device. Airtime is purchased from a station or network in exchange for airing the commercials. While radio has the limitation of being restricted to sound, proponents of radio advertising often cite this as an advantage. Radio is an expanding medium that can be found not only on air, but also online. ? Online advertising- Online advertising is a form of promotion that uses the Internet and World Wide Web for the expressed purpose of delivering marketing messages to attract customers. Online ads are delivered by an ad server. Examples of online advertising include contextual ads that appear on search engine results pages, banner ads, in text ads, Rich Media Ads, Social network advertising, online classified advertising, advertising networks and e-mail marketing, including e-mail spam. ? New media- Technological development and economic globalization favors the emergence of new and new communication channels and new techniques of commercial messaging. ? Press advertising- Press advertising describes advertising in a printed medium such as a newspaper, magazine, or trade journal. This encompasses everything from media with a very broad readership base, such as a major national newspaper or magazine, to more narrowly targeted media such as local newspapers and trade journals on very specialized topics. A form of press advertising is classified advertising, which allows private individuals or companies to purchase a small, narrowly targeted ad for a low fee advertising a product or service. Another form of press advertising is the Display Ad, which is a larger ad (can include art) that typically run in an article section of a newspaper. ? Billboard advertising- Billboards are large structures located in public places which display advertisements to passing pedestrians and motorists. Most often, they are located on main roads with a large amount of passing motor and pedestrian traffic; however, they can be placed in any location with large amounts of viewers, such as on mass transit vehicles and in stations, in shopping malls or office buildings, and in stadiums. ? Mobile billboard advertising- Mobile billboards are generally vehicle mounted billboards or digital screens. These can be on dedicated vehicles built solely for carrying advertisements along routes WWW.BHASKARJOSH.COM WWW.SSCKAADDA.COM Market Capsule For SBI Associate Clerk
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preselected by clients, they can also be specially equipped cargo trucks or, in some cases, large banners strewn from planes. In-store advertising- In-store advertising is any advertisement placed in a retail store. It includes placement of a product in visible locations in a store, such as at eye level, at the ends of aisles and near checkout counters (aka POP—Point of Purchase display), eye-catching displays promoting a specific product, and advertisements in such places as shopping carts and in-store video displays. Celebrity branding- This type of advertising focuses upon using celebrity power, fame, money, popularity to gain recognition for their products and promote specific stores or products. Advertisers often advertise their products, for example, when celebrities share their favorite products or wear clothes by specific brands or designers. Celebrities are often involved in advertising campaigns such as television or print adverts to advertise specific or general products. The use of celebrities to endorse a brand can have its downsides, however. One mistake by a celebrity can be detrimental to the public relations of a brand. For example, following his performance of eight gold medals at the 2008 Olympic Games in Beijing, China, swimmer Michael Phelps’ contract with Kellogg’s was terminated, as Kellogg’s did not want to associate with him after he was photographed smoking marijuana. Celebrities such as Britney Spears have advertised for multiple products including Pepsi, Candies from Kohl’s, Twister, NASCAR, Toyota and many more. Consumer-generated advertising- This involves getting consumers to generate advertising through blogs, websites, wikis and forums, for some kind of payment. Aerial advertising- Using aircraft, balloons or airships to create or display advertising media. Skywriting is a notable example.
Sale Promotion
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According to American Marketing Association, sales promotion refers to those activities other than personal selling, advertising and publicity, that stimulate consumer purchasing and dealer effectiveness, such as display shows and exhibitions, demonstrations, and various other nonrecurrent selling efforts not in ordinary routine. Sales promotions can be directed at either the customer, sales staff, or distribution channel members (such as retailers). Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers and wholesale are called trade sales promotions. Some sale promotions, particularly ones with unusual methods, are considered gimmicks by many. Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase. Examples of devices used in sales promotion include coupons, samples, premiums, point-ofpurchase (POP) displays, contests, rebates, and sweepstakes. Consumer sales promotion techniques Price deal: A temporary reduction in the price, such as 50% off. Loyal Reward Program: Consumers collect points, miles, or credits for purchases and redeem them for rewards. Cents-off deal: Offers a brand at a lower price. Price reduction may be a percentage marked on the package. Price-pack deal: The packaging offers a consumer a certain percentage more of the product for the same price (for example, 25 percent extra). Coupons: coupons have become a standard mechanism for sales promotions. Loss leader: the price of a popular product is temporarily reduced in order to stimulate other profitable sales Free-standing insert (FSI): A coupon booklet is inserted into the local newspaper for delivery. On-shelf couponing: Coupons are present at the shelf where the product is available. Checkout dispensers: On checkout the customer is given a coupon based on products purchased. On-line couponing: Coupons are available online. Consumers print them out and take them to the store.
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Mobile couponing: Coupons are available on a mobile phone. Consumers show the offer on a mobile phone to a salesperson for redemption. Online interactive promotion game: Consumers play an interactive game associated with the promoted product. Rebates: Consumers are offered money back if the receipt and barcode are mailed to the producer. Contests/sweepstakes/games: The consumer is automatically entered into the event by purchasing the product. Point-of-sale displays Sampling: Consumers get one sample for free, after their trial and then could decide whether to buy or not. Trade sales promotion techniques Trade allowances: short term incentive offered to induce a retailer to stock up on a product. Dealer loader: An incentive given to induce a retailer to purchase and display a product. Trade contest: A contest to reward retailers that sell the most product. Point-of-purchase displays: Used to create the urge of “impulse” buying and selling your product on the spot. Training programs: dealer employees are trained in selling the product. Push money: also known as “spiffs”. An extra commission paid to retail employees to push products. Trade discounts (also called functional discounts): These are payments to distribution channel members for performing some function.
Public Relations and Publicity
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Public relations (PR) is the practice of managing the spread of information between an individual or an organization and the public.[1] Public relations may include an organization or individual gaining exposure to their audiences using topics of public interest and news items that do not require direct payment. The aim of public relations by a company often is to persuade the public, investors, partners, employees, and other stakeholders to maintain a certain point of view about it, its leadership, products, or of political decisions. Common activities include speaking at conferences, winning industry awards, working with the press, and employee communication. Public relations professionals present the public face of an organization or individual, usually to articulate its objectives and official views on issues of relevance, primarily to the media. Public relations contributes to the way an organization is perceived by influencing the media and maintaining relationships with stakeholders. Specific public relations disciplines include: Financial public relations – communicating financial results and business strategy Consumer/lifestyle public relations – gaining publicity for a particular product or service Crisis communication – responding in a crisis Internal communications – communicating within the company itself Government relations – engaging government departments to influence public policy Within each discipline, typical activities include publicity events, speaking opportunities, press releases, newsletters, blogs, social media, press kits and outbound communication to members of the press. Video and audio news releases (VNRs and ANRs) are often produced and distributed to TV outlets in hopes they will be used as regular program content. Building and managing relationships with those who influence an organization or individual’s audiences has a central role in doing public relations. After a public relations practitioner has been working in the field, they accumulate a list of relationships that become an asset, especially for those in media relations.
Direct Marketing Direct marketing is practiced by businesses of all sizes — from the smallest start-up to the leaders on the Fortune 500. A well-executed direct advertising campaign can prove a positive return WWW.BHASKARJOSH.COM
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Direct Marketing Channels Any medium that can be used to deliver a communication to a customer can be employed in direct marketing, including: Email Marketing- Sending marketing messages through email or Email marketing is one of the most widely used direct-marketing methods.[citation needed] One reason for email marketing’s popularity is that it is relatively inexpensive to design, test, and send an email message. It also allows marketers to deliver messages around the clock, and to accurately measure responses. Online Tools- With the expansion of digital technology and tools, direct marketing is increasingly taking place through online channels. Most online advertising is delivered to a focused group of customers and has a trackable response. Mobile- Through mobile marketing, marketers engage with prospective customers and donors in an interactive manner through a mobile device or network, such as a cellphone, smartphone, or tablet. Types of mobile marketing messages include: SMS: (short message service) — marketing communications are sent in the form of text messages, also known as texting. MMS: (multi-media message service) — These messages use elements such as images, video, and audio; Mobile Applications: Smartphone-based mobile apps contain several types of messages. Telemarketing- Another common form of direct marketing is telemarketing, in which marketers contact customers by phone. The primary benefit to businesses is increased lead generation, which helps businesses increase sales volume and customer base. The most successful telemarketing service providers focus on generating more “qualified” leads that have a higher probability of getting converted into actual sales. Voicemail Marketing- Voicemail marketing emerged out of the market prevalence of personal voice mailboxes, and business voicemail systems. Voicemail marketing presented a cost effective means by which to reach people directly, by voice. Couponing- Couponing is used in print and digital media to elicit a response from the reader. An example is a coupon which the reader receives through the mail and takes to a store’s check-out counter to receive a discount. Digital Coupons- Manufacturers and retailers make coupons available online for electronic orders that can be downloaded and printed. Digital coupons are available on company websites, social media outlets, texts, and email alerts. There are an increasing number of mobile phone applications offering digital coupons for direct use. Direct Response TV- Direct marketing via television (commonly referred to as DRTV) has two basic forms: long form (usually half-hour or hour-long segments that explain a product in detail and are commonly referred to as infomercials) and short form, which refers to typical 30-second or 60second commercials that ask viewers for an immediate response (typically to call a phone number on screen or go to a website). TV-response marketing — i.e. infomercials — can be considered a form of direct marketing, since responses are in the form of calls to telephone numbers given onair. This allows marketers to reasonably conclude that the calls are due to a particular campaign, and enables them to obtain customers’ phone numbers as targets for telemarketing. Direct Mail- The term “direct mail” is used to refer to communications sent to potential customers or donors via the postal service and other delivery services. Direct mail is sent to customers based on criteria such as age, income, location, profession, buying pattern, etc. Direct mail includes advertising circulars, catalogs, free-trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail to homes and businesses. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tourism industries. Direct Response Radio- In direct response radio, ads contain a call to action with a specific tracking mechanism. Often, this tracking mechanism is a “call now” prompt with a toll-free phone number or a unique Web URL. Results of the ad can be tracked in terms of calls, orders, customers, leads, sales, revenue, and profits that result from the airing of those ads. Insert Media- Another form of direct marketing, insert media are marketing materials that are inserted into other communications, such as a catalog, newspaper, magazine, package, or bill.
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Coop or shared mail, where marketing offers from several companies are delivered via a single envelope, is also considered insert media. Out-of-Home- Out-of-home direct marketing refers to a wide array of media designed to reach the consumer outside the home, including billboards, transit, bus shelters, bus benches, aerials, airports, in-flight, in-store, movies, college campus/high schools, hotels, shopping malls, sport facilities, stadiums, taxis — that contain a call-to-action for the customer to respond. Direct Response Magazines and Newspapers- Magazine and newspaper ads often include a direct response call-to-action, such as a toll-free number, a coupon redeemable at a brick-andmortar store, or a QR code that can be scanned by a mobile device — these methods are all forms of direct marketing, because they elicit a direct and measurable action from the customer. Direct Selling- Direct selling is the sale of products by face-to-face contact with the customer, either by having salespeople approach potential customers in person, or through indirect means. Grassroots/Community Marketing- The door-to-door distribution of flyers and leaflets within a local community is a business-to-consumer form of direct marketing used extensively by restaurants, fast food companies, and many other business focusing on a local catchment. Similar to direct mail marketing, this method is targeted purely by area and community, and costs a fraction of the amount of a mailshot, since it is not necessary to purchase stamps, envelopes, or address lists with the names of home occupants.
Interactive Marketing Interactive marketing is a one to one marketing process that reacts and changes based on the actions of individual customers and prospects. This ability to react to the actions of customers and prospects means that trigger based marketing is dramatically more effective than normal direct marketing. Interactive marketing is typically 2-12 times more effective than traditional direct marketing. Interactive marketing is called many things. You may have heard it called event based marketing or event driven marketing or even trigger based marketing but it is all the same idea: reacting to what the customer is doing and driving up marketing effectiveness.
Word-of-Mouth Marketing Word-of-mouth marketing, which encompasses a variety of subcategories, including buzz, blog, viral, grassroots, brand advocates, cause influencers and social media marketing, as well as ambassador programs, work with consumer-generated media and more, can be highly valued by product, social media and performance marketers. Because of the personal nature of the communications between individuals, it is believed that they are more credible. Research points to individuals being more inclined to believe WOMM than more formal forms of promotion methods; the listener tends to believe that the communicator is being honest and doesn’t have an ulterior motive (i.e. they are not being paid for their referrals). Word-of-mouth depends on the extent of customer satisfaction with the product or service and on the degree of its perceived value. To promote and manage word-of-mouth communications, marketers use publicity techniques as well as viral marketing methods to achieve desired behavioral response. Companies can focus on brand advocates, the people who proactively recommend their favorite brands and products online and offline without being paid to do so.[16] Influencer marketing is also increasingly used to seed WOMM by targeting key individuals who have authority and many personal connections.
Personal Selling Personal selling occurs where an individual salesperson sells a product, service or solution to a client. Salespeople match the benefits of their offering to the specific needs of a client. Today, personal selling involves the development of longstanding client relationships. In comparison to other marketing communications tools such as advertising, personal selling tends to: Use fewer resources, pricing is often negotiated. Products tend to be fairly complex (e.g. financial services or new cars). There is some contact between buyer and seller after the sale so that an ongoing relationship is built. WWW.BHASKARJOSH.COM WWW.SSCKAADDA.COM Market Capsule For SBI Associate Clerk
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WWW.SSCKAADDA.COM Market Capsule For SBI Associate Clerk
Client/prospects need specific information. The purchase tends to involve large sums of money. There are exceptions of course, but most personal selling takes place in this way. Personal selling involves a selling process that is summarised in the following Five Stage Personal Selling Process. The five stages are: Prospecting Making first contact The sales call Objection handling Closing the sale A Five Stage Personal Selling Process Stage One - Prospecting Prospecting is all about finding prospects, or potential new customers. Prospects should be ‘qualified,’ which means that they need to be assessed to see if there is business potential, otherwise you could be wasting your time. In order to qualify your prospects, one needs to: Plan a sales approach focused upon the needs of the customer. Determine which products or services best meet their needs. In order to save time, rank the prospects and leave out those that are least likely to buy. Stage Two - Making First Contact This is the preparation that a salesperson goes through before they meet with the client, for example via e-mail, telephone or letter. Preparation will make a call more focused. Stage Three - The Sales Call (or Sales Presentation) It is best to be enthusiastic about your product or service. If you are not excited about it, don’t expect your prospect to be excited. Stage Four - Objection Handling Objection handling is the way in which salespeople tackle obstacles put in their way by clients. Some objections may prove too difficult to handle, and sometimes the client may just take a dislike to you (aka the hidden objection). The sales person could also tactfully and respectfully contradict the client. Stage Five - Closing the Sale This is a very important stage. Often salespeople will leave without ever successfully closing a deal. Advantages of Personal Selling One key advantage personal selling has over other promotional methods is that it is a two-way form of communication. In selling situations the message sender (e.g., salesperson) can adjust the message as they gain feedback from message receivers (e.g., customer). So if a customer does not understand the initial message (e.g., doesn’t fully understand how the product works) the salesperson can make adjustments to address questions or concerns. Many non-personal forms of promotion, such as a radio advertisement, are inflexible, at least in the short-term, and cannot be easily adjusted to address audience questions. The interactive nature of personal selling also makes it the most effective promotional method for building relationships with customers, particularly in the business-to-business market. This is especially important for companies that either sell expensive products or sell lower cost but high volume products (i.e., buyer must purchase in large quantities) that rely heavily on customers making repeat purchases. Because such purchases may take a considerable amount of time to complete and may involve the input of many people at the purchasing company (i.e., buying center), sales success often requires the marketer develop and maintain strong relationships with members of the purchasing company. Finally, personal selling is the most practical promotional option for reaching customers who are not easily reached through other methods. The best example is in selling to the business market where, compared to the consumer market, advertising, public relations and sales promotions are often not well received.
Viral Marketing Viral marketing, viral advertising, or marketing buzz are buzzwords referring to marketing techniques that use pre-existing social networks and other technologies to produce increases in brand awareness or to achieve other marketing objectives (such as product sales) through self-replicating viral processes, analogous to the spread of viruses or computer viruses (cf. Internet memes and memetics). It can be delivered by word of mouth or enhanced by the network effects of the Internet and mobile networks. Viral marketing may take the form of video clips, interactive Flash games, advergames, ebooks, brandable software, images, text messages, email messages, or web pages. The most common utilized transmission vehicles for viral messages include: pass-along based, incentive based, trendy based, and undercover based. However, the creative nature of viral marketing enables an “endless amount of potential forms and vehicles the messages can utilize for transmission”, including mobile devices. The ultimate goal of marketers interested in creating successful viral marketing programs is to create viral messages that appeal to individuals with high social networking potential (SNP) and that have a high probability of being presented and spread by these individuals and their competitors in their communications with others in a short period of time.
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