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Marketing management

Notes for Marketing Management

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Marketing management

  1. 1. MARKETING MANAGEMENT UNIT I Versatile Business School, Egmore, Chennai - 600 008
  2. 2. DEFINITION • Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives. Versatile Business School, Egmore, Chennai - 600 008
  3. 3. Exploring Creating Delivering VALUE Different from competitors Acc to customer requirement MARKETING Versatile Business School, Egmore, Chennai - 600 008
  4. 4. EVOLUTION PRODUCT SALES MARKETING MYOPIA MARKETING RELATIONSHIP MARKETING PRODUCTION Versatile Business School, Egmore, Chennai - 600 008
  5. 5. PRODUCTION • Consumer favor products that are available and highly affordable. • Improve production and distribution • Availability and affordability is what the consumer wants. Versatile Business School, Egmore, Chennai - 600 008
  6. 6. PRODUCT • Consumers favor products that offer the most quality, performance and innovative features • A good product will sell itself Versatile Business School, Egmore, Chennai - 600 008
  7. 7. SALES • Consumers will buy products only if the company promotes/sells these products. • Creative advertising and selling will overcome consumers resistance and convince them to buy. Versatile Business School, Egmore, Chennai - 600 008
  8. 8. MARKETING MYOPIA • A short-sighted and inward looking approach to marketing that focuses on the needs of the company instead of defining the company and its products in terms of the customers' needs and wants. • It results in the failure to see and adjust to the rapid changes in their markets. Versatile Business School, Egmore, Chennai - 600 008
  9. 9. MARKETING • Focuses on needs, wants of target markets and delivering satisfaction better than competitors. • The consumer is king! Find a need and fill it. Versatile Business School, Egmore, Chennai - 600 008
  10. 10. RELATIONSHIP MARKETING • Focuses on needs, wants of target markets and delivering superior value. • Long term relationship with customers and other partners lead to success. Versatile Business School, Egmore, Chennai - 600 008
  11. 11. MARKETING SALES APPROACH Determine future needs and has a strategy in place to meet those needs for the long term relationship. Makes customer demand match the products the company currently offers. PROCESS One to many Usually one to one FOCUS Fulfil customer's wants and needs through products and/or services the company can offer. Fulfil sales volume objectives HORIZON Longer term Short term STRATEGY pull push Versatile Business School, Egmore, Chennai - 600 008
  12. 12. MARKETING SALES SCOPE Identifying customer needs (research), creating products to meet those needs, promotions to advertise said products. Once a product has been created for a customer need, persuade the customer to purchase the product to fulfil her needs PRIORITY Marketing shows how to reach to the Customers and build long lasting relationship Selling is the ultimate result of marketing. IDENTITY Marketing targets the construction of a brand identity so that it becomes easily associated with need fulfilment. Sales is the strategy of meeting needs in an opportunistic, individual method, driven by human interaction. There's no premise of brand identity, longevity or continuity. It's simply the ability to meet a need at the right time. Versatile Business School, Egmore, Chennai - 600 008
  13. 13. CORE MARKETING CONCEPT Needs, wants and demands Products Value and satisfaction Exchange transactions and relationships Market Versatile Business School, Egmore, Chennai - 600 008
  14. 14. MARKETING MIX • "Marketing mix" is a general phrase used to describe the different kinds of choices organizations have to make in the whole process of bringing a product or service to market. • The 4Ps is one way probably the best-known way of defining the marketing mix, and was first expressed in 1960 by E J McCarthy Versatile Business School, Egmore, Chennai - 600 008
  15. 15. MARKETING MIX PRODUCT PRICE PLACE PROMOTION Versatile Business School, Egmore, Chennai - 600 008
  16. 16. PRODUCT • Refers to the item actually being sold. • The product must deliver a minimum level of performance; otherwise even the best work on the other elements of the marketing mix won't do any good. Versatile Business School, Egmore, Chennai - 600 008
  17. 17. PRICE • Refers to the value that is put for a product. • It depends on costs of production, segment targeted, ability of the market to pay, supply - demand and a host of other direct and indirect factors. • There can be several types of pricing strategies, each tied in with an overall business plan. • Pricing can also be used a demarcation, to differentiate and enhance the image of a product Versatile Business School, Egmore, Chennai - 600 008
  18. 18. PLACE • Refers to the point of sale. • In every industry, catching the eye of the consumer and making it easy for them to buy it is the main aim of a good distribution or 'place' strategy. • The mantra of a successful retail business is 'location, location, location'. Versatile Business School, Egmore, Chennai - 600 008
  19. 19. PROMOTION • This refers to all the activities undertaken to make the product or service known to the user and trade. • This can include advertising, word of mouth, press reports, incentives, commissions and awards to the trade. • It can also include consumer schemes, direct marketing, contests and prizes. Versatile Business School, Egmore, Chennai - 600 008
  20. 20. Versatile Business School, Egmore, Chennai - 600 008
  21. 21. UNIT II Versatile Business School, Egmore, Chennai - 600 008
  22. 22. PRODUCT MIX • Set of all product offered for sale by a company. • It consist of various product line. • Any company’s product mix has four dimension ▫ Width ▫ Length ▫ Depth ▫ Consistency Versatile Business School, Egmore, Chennai - 600 008
  23. 23. PRODUCT MIX • Width : Number of different product lines carried by the company. • Length : Total number of items in the product mix of the company. • Depth : Assortment of size, color and models offered in each item of a product line. • Consistency : It refers to the relationship of various product line either in their end use, production requirement, distribution channel or other way. Versatile Business School, Egmore, Chennai - 600 008
  24. 24. Product Mix of Hindustan Unilever Limited Home & Personal Care Beverages Personal Wash Laundry Skin Care Hair Care Oral Care Tea CoffeeDeodorants Lux Lifebuoy Liril Hamam Breeze Dove Pears Rexona Surf excel Rin Wheel Fair & Lovely Ponds Vaseline Sunsilk Clinic + Pepsodent Close-up Axe Rexona Lipton Brooke Bond Bru Versatile Business School, Egmore, Chennai - 600 008
  25. 25. UNIT III PRICING Versatile Business School, Egmore, Chennai - 600 008
  26. 26. PRICING • Pricing is the process of determining what a company will receive in exchange for its product. Pricing factors are manufacturing cost, market place, competition, market condition, brand, and quality of product • Pricing is a fundamental aspect of financial modeling and is one of the four Ps of the marketing mix. Versatile Business School, Egmore, Chennai - 600 008
  27. 27. OBJECTIVES OF PRICING • Current profit maximization • Current revenue maximization • Maximize quantity • Maximize profit margin • Quality leadership • Partial cost recovery • Survival • Status quo Versatile Business School, Egmore, Chennai - 600 008
  28. 28. METHODS OF PRICING • Cost based pricing • Demand based pricing • Competition oriented pricing • Product line pricing • Tender pricing • Affordability based pricing • Differentiated pricing Versatile Business School, Egmore, Chennai - 600 008
  29. 29. COST BASED PRICING • Mark-Up Pricing(cost plus pricing) • Absorption cost pricing (full cost pricing) • Target rate of return pricing • Marginal cost pricing Versatile Business School, Egmore, Chennai - 600 008
  30. 30. COST BASED PRICING Mark-up pricing • The selling price is fixed by adding Mark-up or Margin to its cost • Usually used by: Distributers, Marketing firms etc.. Versatile Business School, Egmore, Chennai - 600 008
  31. 31. COST BASED PRICING Absorption cost pricing • Mainly used by manufacturing firms. • It uses standard costing techniques. • It includes : Fixed cost-Variable cost + PROFIT- Selling and administering cost – Advertisement cost • It is also known as full cost pricing. Versatile Business School, Egmore, Chennai - 600 008
  32. 32. COST BASED PRICING Target rate of return pricing • Similar to Absorption cost pricing. • The difference is in fixing the profit margin. • The profit margin/ mark up is fixed by considering the ROI. • Firm will have return objectives, like 5% of invested capital, or 10% of sales revenue. • Then you arrange your price structure so as to achieve these target rates of return. • Market leaders or monopolists uses this pricing strategy.Versatile Business School, Egmore, Chennai - 600 008
  33. 33. Marginal Cost Pricing • It takes cost and demand into consideration while fixing the price. • It aims at maximizing contribution towards fixed cost. • It gives flexibility to recover the fixed cost depending on the market condition. • It also gives flexibility in recovering a large portion of cost from certain segment and a small portion from some other segment. Versatile Business School, Egmore, Chennai - 600 008
  34. 34. Demand Based Pricing • The pricing decision is also depending on Demand and supply of the commodity. • More realistic . • Types of cost based pricing are: • Skimming pricing • Penetration pricing Versatile Business School, Egmore, Chennai - 600 008
  35. 35. DEMAND BASED PRICING Penetration Pricing: • Price set to ‘penetrate the market’ • ‘Low’ price to secure high volumes • Typical in mass market products-chocolate bars, food stuffs, household goods, etc. • Suitable for products with long anticipated life cycles • May be useful if launching into a new market Versatile Business School, Egmore, Chennai - 600 008
  36. 36. DEMAND BASED PRICING Market Skimming • High price, Low volumes • Skim the profit from the market • Suitable for products that have short life cycles or which will face competition at some point in the future (e.g. after a patent runs out) • Examples include: digital technology, new DVDs, etc. Versatile Business School, Egmore, Chennai - 600 008
  37. 37. COMPETITION ORIENTED PRICING Competition Oriented Pricing • It need not mean that pricing the commodity matching its competitors, it can also be the following: -Premium pricing -Discounted Pricing -Parity Pricing/going rate pricingVersatile Business School, Egmore, Chennai - 600 008
  38. 38. PRODUCT LINE PRICING Product line pricing • The products in a given product line are related to each other. • The manufacturing cost of these products also will not be much different. • It is mainly indented to get optimum profit from the line. Versatile Business School, Egmore, Chennai - 600 008
  39. 39. TENDER PRICING Tender pricing • Industrial products • The customers go by competitive bidding through sealed tenders. • The seller can only get the best possible price. • He should thoroughly analyze the competitors. Versatile Business School, Egmore, Chennai - 600 008
  40. 40. AFFORDABILITY BASED PRICING Affordability based Pricing • Essential commodities • Social welfare pricing • The idea of this pricing is to make the product available to the targeted population at an affordable rate. • Items usually distributed through public distribution system. • Subsidies may be involved Versatile Business School, Egmore, Chennai - 600 008
  41. 41. DIFFERENTIATED PRICING Differentiated pricing • Different price for the same product in different location. (SanDisk cruzer balde Pen-drive, Petrol )• • The price difference may also be made in the case of customer class. • Volume of purchase. ( Offer packs Lux soap, Colgate value packs etc Versatile Business School, Egmore, Chennai - 600 008
  42. 42. PRICING STRATEGIES Value Pricing • Price set in accordance with customer perceptions about the value of the product/service • Examples include status products/exclusive products Versatile Business School, Egmore, Chennai - 600 008
  43. 43. PRICING STRATEGIES Loss Leader • Goods/services deliberately sold below cost to encourage sales elsewhere • Typical in supermarkets, e.g. at Diwali, selling sweets at low cost in the hope that people will be attracted to the store and buy other things • Purchases of other items more than covers ‘loss’ on item sold Versatile Business School, Egmore, Chennai - 600 008
  44. 44. PRICING STRATEGIES Psychological Pricing • Used to play on consumer perceptions • Classic example-Rs.999 instead of Rs.1000! • Links with value pricing-high value goods priced according to what consumers THINK should be the price Versatile Business School, Egmore, Chennai - 600 008
  45. 45. PRICING STRATEGIES Price Discrimination • Charging a different price for the same good/service in different markets • Requires each market to be impenetrable • Requires different price elasticity of demand in each market • Example: Prices for rail travel differ for the same journey at different times of the dayVersatile Business School, Egmore, Chennai - 600 008
  46. 46. PRICING STRATEGIES Destroyer/Predatory Pricing • Deliberate price cutting or offer of ‘free gifts/products’ to force rivals (normally smaller and weaker) out of business or prevent new entrants • Anti-competitive and illegal if it can be proved Versatile Business School, Egmore, Chennai - 600 008
  47. 47. INTERNAL FACTORS AFFECTING PRICING DECISIONS • Marketing objectives • Marketing mix strategy • Cost • Organization Versatile Business School, Egmore, Chennai - 600 008
  48. 48. INTERNAL FACTORS AFFECTING PRICING DECISIONS Marketing objectives Survival in the market Maximizing profit Market share leadership Product quality leadership Versatile Business School, Egmore, Chennai - 600 008
  49. 49. INTERNAL FACTORS AFFECTING PRICING DECISIONS • Marketing mix strategy: Price should be related to the product design, distribution and promotion strategies • Cost: Directly related to price • Organization: Large organizations-Line managers Industrial organization-Versatile Business School, Egmore, Chennai - 600 008
  50. 50. EXTERNAL FACTORS AFFECTING PRICING DECISIONS i) The nature of the market and demand ii) Elasticity of demand iii) Competitor’s cost, price and offers iv) Inflation and deflation v) Interest rate vi) Reseller reaction vii) Social consideration viii) Government policies and regulation ix) Customer Expectation Versatile Business School, Egmore, Chennai - 600 008
  51. 51. PRODUCT DIFFERENTIATION • “the process of distinguishing a product or offering from others, to make it more attractive to a particular target market in comparison with competitors' products as well as a firm's own product offerings Versatile Business School, Egmore, Chennai - 600 008
  52. 52. PRODUCT DIFFERENTIATION • Offered under different brands by competing firms, products fulfilling the same need typically do not have identical features. • The differentiation of goods along key features and minor details is an important strategy for firms to defend their price from levelling down to the bottom part of the price spectrum. • Within firms, product differentiation is the way multi-product firms build their own supplied products' range Versatile Business School, Egmore, Chennai - 600 008
  53. 53. PRODUCT DIFFERENTIATION • At market level, differentiation is the way through which the quality of goods is improved over time thanks to innovation. • Launching new goods with entirely new performances is a radical change, often leading to changes in market shares and industry structures. • In an evolutionary sense, differentiation is a strategy to adapt to a moving environment and its social groups Versatile Business School, Egmore, Chennai - 600 008
  54. 54. BASIS OF DIFFERENTIATION • Attributes of the product or service • Relationship between the firm and its customers • Linkages between/within firms Versatile Business School, Egmore, Chennai - 600 008
  55. 55. DIFFERENTIATING FACTORS PRODUCT SERVICE IMAGECHANNEL PERSONNEL Versatile Business School, Egmore, Chennai - 600 008
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  66. 66. Positioning in the market place - It is the act of designing the company’s offering and image to occupy a distinctive place in the target market’s mind. - Positioning is not what you do to the product - Positioning is what you do to the mind of the prospect - Customer does the Positioning Versatile Business School, Egmore, Chennai - 600 008
  67. 67. POSITIONING IN THE MARKET PLACE Examples Crest toothpaste • Promotes its anti-cavity protection Mercedes • Promotes its great engineering BMW • Ultimate driving machine Attribute can be single or even multiples Versatile Business School, Egmore, Chennai - 600 008
  68. 68. DEVELOPING AND COMMUNICATING A POSITIONING STRATEGY ▫ Four major positioning errors 1. Under positioning 2. Over positioning 3. Confused positioning 4. Doubtful positioning Versatile Business School, Egmore, Chennai - 600 008
  69. 69. Under positioning ▫ Seen as just another entry in a crowded market ▫ Pepsi introduces its clear crystal Pepsi 1993 ▫ Customer was not impressed ▫ “Clarity” not seen as an important benefit Versatile Business School, Egmore, Chennai - 600 008
  70. 70. Over positioning - Narrow image of the brand - Trying to widen - Customer do not accept this - Maruti Baleno  Customers think Maruti can make cars pricing only up to 5 lacs  Not higher end  Image issue  Poor sales Versatile Business School, Egmore, Chennai - 600 008
  71. 71. Confused Positioning Company making too many claims Milkmaid Started as Tea Whitener Did not click As a topping on pudding Did not click Finally clicked as base for dessert Versatile Business School, Egmore, Chennai - 600 008
  72. 72. Doubtful Positioning Find it to difficult believe in what company claims Maruti 1000 - Launches in ’89 - Positioned as ‘ultimate in luxury’ - Only luxury car - Launch of Esteem in ’94 - More luxurious than Maruti 1000 - Is it now ‘Ultimate in luxury - Sales dipped - Customer confused - Repositioned as ‘Affordable luxury’ Versatile Business School, Egmore, Chennai - 600 008
  73. 73. DEVELOPING A POSITIONING STRATEGY ▫ Positioning possibilities:  Attribute positioning  Benefit positioning  Use or application positioning  User positioning  Competitor positioning  Product category positioning  Quality or price positioning • Which Positioning to Promote? Versatile Business School, Egmore, Chennai - 600 008
  74. 74. ATTRIBUTE POSITIONING ATTRIBUTE POSITIONING - Positioning on attribute  Size  No of years in existence  Culture Disneyland Positioned as the largest manmade park in the world Dove soap Contains moisturizing cream Versatile Business School, Egmore, Chennai - 600 008
  75. 75. BENEFIT POSITIONING BENEFIT POSITIONING ▫ Positioned as a leader in certain benefit McDonald’s ▫ Positioned as a family restaurant (QSCV) Honda ▫ Economy and reliability BMW ▫ Ultimate driving machine Volvo ▫ Safety and Durability. Versatile Business School, Egmore, Chennai - 600 008
  76. 76. USE / APPLICATION POSITIONING USE / APPLICATION POSITIONING ▫ Positioning for some use or application Nestle ‘Maggi Noodles’  Positioned as a snack item  Between meals  Fast to cook, good to eat Nestle Milkmaid  Positioned as a base for dessert preparation. Versatile Business School, Egmore, Chennai - 600 008
  77. 77. USER POSITIONING USER POSITIONING ▫ Positioning the product as best for some user group. Versatile Business School, Egmore, Chennai - 600 008
  78. 78. COMPETITOR POSITIONING COMPETITOR POSITIONING ▫ Product claims to have better performance than competitors Brooke Bond Taj Mahal Tea Endorsed by Zakir Hussain ▫ “If you find a better tea than Taj Mahal, then Zakir Hussain will stop playing Tabla. ▫ Directly or indirectly refer competitors. Versatile Business School, Egmore, Chennai - 600 008
  79. 79. PRODUCT CATEGORY POSITIONING PRODUCT CATEGORY POSITIONING ▫ Positioning as a leader in certain category. Maruti 1000  Launched in 1990  Only luxury car in India  Positioned as ‘ultimate in luxury’ Livon  After hair wash oil  Smooth and silky hair Versatile Business School, Egmore, Chennai - 600 008
  80. 80. QUALITY OR PRICE POSITIONING QUALITY OR PRICE POSITIONING ▫ Positioning as offering the best scooters Bajaj Scooters  Lowest prices  You just cannot beat a Bajaj  Repositioned as ‘Hamara Bajaj’ Versatile Business School, Egmore, Chennai - 600 008
  81. 81. UNIT IV CHANNELS OF DISTRIBUTION Versatile Business School, Egmore, Chennai - 600 008
  82. 82. DISTRIBUTION CHANNELS • A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption. • Channel decisions – affect other marketing decisions – involve long-term commitments Versatile Business School, Egmore, Chennai - 600 008
  83. 83. ROLE OF INTERMEDIARIES • Greater efficiency in making goods available to target markets. • Intermediaries provide – Contacts – Experience – Specialization – Scale of operation • Match supply and demand. Versatile Business School, Egmore, Chennai - 600 008
  84. 84. CHANNEL FUNCTIONS •Information •Promotion •Contact •Matching •Negotiation •Physical Distribution •Financing •Risk taking Versatile Business School, Egmore, Chennai - 600 008
  85. 85. Physical Distribution - Nature and Importance - Physical distribution: Moving tangible products through distribution channels - Physical distribution (or logistics) consists of all activities involved in moving the right amount of the right products to the right place at the right time - In the past years, the surge of e-commerce has underscored the importance of physical distribution  the challenge relates to fulfillment, which entails having the merchandise that is ordered by a customer in stock and then packing and shipping it in an efficient, timely manner Versatile Business School, Egmore, Chennai - 600 008
  86. 86. THE ROLE OF MARKETING CHANNELS IN MARKETING STRATEGY • Marketing channels are key because they are the means of making goods and services available to ultimate users. • Four functions of marketing channels: • Channels facilitate the exchange process by reducing the number of marketplace contacts necessary to make a sale. • Distributors adjust for discrepancies in the market’s assortment of goods and services via sorting, channeling products to meet the buyer’s and producer’s needs. • Channel members tend to standardize payment terms, delivery schedules, prices, purchase lots, and other conditions. • Channels facilitate searches by both buyers and sellers and bring them together to complete the exchange process. Versatile Business School, Egmore, Chennai - 600 008
  87. 87. TYPES OF MARKETING CHANNELS • Most channel options involve at least one marketing intermediary, an organization that operates between producers and consumers or business users. • A retailer owned and operated by someone other than the manufacturer of the products it sells. • A wholesaler who takes title to the goods it handles and then distributes these goods to retailers, other distributors, or sometimes end consumers. • Service firms market primarily through short channels because they sell intangible products and need to maintain personal relationships within their channels. Versatile Business School, Egmore, Chennai - 600 008
  88. 88. DIRECT SELLING • Direct channel-carries goods directly from a producer to the business purchaser or ultimate user. • Direct selling-a marketing strategy in which a producer establishes direct sales contact with its product’s final users. • Internet and direct mail are also potentially important tools for direct selling. CHANNELS USING MARKETING INTERMEDIARIES • For some products, using intermediaries may be more efficient, less expensive, and less time-consuming. Versatile Business School, Egmore, Chennai - 600 008
  89. 89. DUAL DISTRIBUTION • Movement of products through more than one channel to reach the firm’s target market. • Used to maximize the firm’s coverage in the marketplace or to increase the cost-effectiveness of the firm’s marketing effort. REVERSE CHANNELS • Channels designed to return goods to their producers. • Growing importance because of rising prices for raw materials, increasing availability of recycling facilities, and passage of additional antipollution and conservation laws. • Also used for recalls and repairs. Versatile Business School, Egmore, Chennai - 600 008
  90. 90. CHANNEL STRATEGY DECISIONS SELECTION OF A MARKETING CHANNEL • Multiple factors affect selection of a marketing channel. Market Factors Product Factors Organizational Factors Competitive Factors Versatile Business School, Egmore, Chennai - 600 008
  91. 91. DETERMINING DISTRIBUTION INTENSITY • Intensive distribution: Distribution of a product through all available channels. • Selective distribution: Distribution of a product through a limited number of channels. • Exclusive distribution: Distribution of a product through a single wholesaler or retailer in a specific geographic region. • Restrictions are illegal if they reduce competition or create a monopoly. WHO SHOULD PERFORM CHANNEL FUNCTIONS? • Intermediary must provide better service at lower costs than manufacturers or retailers can provide for themselves. • Consolidation of channel functions can represent a strategic opportunity for a company. Versatile Business School, Egmore, Chennai - 600 008
  92. 92. CHANNEL MANAGEMENT AND LEADERSHIP • Marketers have relationships with intermediaries in distribution channels. • Channel captain Dominant and controlling member of a marketing channel. CHANNEL CONFLICT • Horizontal conflict—disagreements among channel members at the same level, such as two competing discount stores. • Vertical conflict occurs among members at different levels of the channel. • The gray market—goods produced for overseas markets that re-enter the home market and compete against domestic versions. ACHIEVING CHANNEL COOPERATION • Best achieved when all members of channel see themselves as equal components; channel captain should provide this leadership. Versatile Business School, Egmore, Chennai - 600 008
  93. 93. VERTICAL MARKETING SYSTEMS • Vertical marketing system (VMS) Planned channel system designed to improve distribution efficiency and cost-effectiveness by integrating various functions throughout the distribution channel. CORPORATE AND ADMINISTERED SYSTEMS • Corporate marketing system—single owner runs organizations at each stage of the marketing channel. • Administered marketing system—dominant channel member exercises power to achieve channel coordination. CONTRACTUAL SYSTEMS • Contractual marketing system—coordinates distribution through formal agreements among channel members. • Include wholesaler-sponsored voluntary chains, retail cooperatives, and franchises. Versatile Business School, Egmore, Chennai - 600 008
  94. 94. Tasks in Physical Distribution Management - Physical distribution refers to the actual physical flow of products - In contrast, physical distribution management is the development and operation of processes resulting in the effective and efficient physical flow of products - Effective physical distribution management requires careful attention to five interrelated activities: 1. Order processing 2. Inventory control 3. Inventory location and warehousing 4. Materials handling 5. Transportation Versatile Business School, Egmore, Chennai - 600 008
  95. 95. Tasks in Physical Distribution Management 1. Order Processing - The starting point in a physical distribution system is order processing, which is a set of procedures for receiving, handling, and filling orders promptly and accurately - Electronic data interchange (EDI): - Between customer and supplier orders, invoices, and other business functions are transmitted by computer - Originally, EDI required a direct computer link between supplier and customer, now it is being conducted via the Internet - EDI can trim the cost of order processing significantly, which in Versatile Business School, Egmore, Chennai - 600 008
  96. 96. Tasks in Physical Distribution Management 2. Inventory Control - The goal of inventory control is to satisfy the order-fulfillment expectations of customers while minimizing both the investment and fluctuations in inventories - Just-in-Time: - JIT combines inventory control, purchasing, and production scheduling - Applying JIT, a firm buys in small quantities that arrive just in time for production and then it produces in quantities just in Versatile Business School, Egmore, Chennai - 600 008
  97. 97. Tasks in Physical Distribution Management 2. Inventory Control (continued) - Just-in-Time: - … - Benefits of JIT are: - Dramatic cost savings - Shortened and more flexible and reliable production and delivery schedules - Quick responses to quality problems - Market-Response Systems: - The central promise is that those who intend to consume a product should activate a process to produce and deliver replacement items - In this way, a product is pulled through a channel on the basis of demand Versatile Business School, Egmore, Chennai - 600 008
  98. 98. Tasks in Physical Distribution Management 3. Inventory Location and Warehousing - Management must make critical decisions about the size, location, and transportation of inventories - These areas are interrelated, often in complex ways - One key consideration in managing inventories is warehousing, which embraces a range of functions, such as assembling, dividing, and storing products and preparing them for reshipping Versatile Business School, Egmore, Chennai - 600 008
  99. 99. Tasks in Physical Distribution Management 4. Materials Handling - Selecting the proper equipment to physically handle products, including the warehouse building itself, is the materials handling subsystem of physical distribution management - Equipment that is well matched to the task can minimize losses from breakage, spoilage, and theft - Efficient equipment can reduce handling costs as well as time required for handling Versatile Business School, Egmore, Chennai - 600 008
  100. 100. Tasks in Physical Distribution Management 5. Transportation - Management must decide on both the mode of transportation and the particular carriers - The leading modes of transportation are railroads, trucks, pipelines, water vessels, and airplanes - Using two or more modes of transportation to move freight is termed intermodal transportation; this approach is intended to seize the advantages of multiple forms of transportation Versatile Business School, Egmore, Chennai - 600 008
  101. 101. Designing the Marketing Channel Versatile Business School, Egmore, Chennai - 600 008
  102. 102. Decisions involving the development of new marketing channels either where none had previously existed or to the modification of existing channels Channel Design: Versatile Business School, Egmore, Chennai - 600 008
  103. 103. Channel Design 1. A decision made by the marketer 2. The creation or modification of channels 3. The active allocation of distribution tasks in an attempt to develop an efficient structure 4. The selection of channel members 5. A strategic tool for gaining a differential advantage Distinguishing points of the definition include: Versatile Business School, Egmore, Chennai - 600 008
  104. 104. Who Engages in Channel Design? • Producers, manufacturers, service providers, franchisors • Look down the channel toward the market • Look up the channel to secure suppliers • Look both up and down the channel Firms Wholesalers Retailers Versatile Business School, Egmore, Chennai - 600 008
  105. 105. Channel Design Paradigm 1. Recognize the need for channel design decision 7. Select channel members 5. Evaluate relevant variables 6. Choose the “best” channel structure 2. Set & coordinate distribution objectives 3. Specify distribution tasks 4. Develop alternative channel structures Versatile Business School, Egmore, Chennai - 600 008
  106. 106. When to Make a Channel Design Decision • Developing a new product or product line • Aiming an existing product at a new market • Making a major change in some other component of the marketing mix • Establishing a new firm • Adapting to changing intermediary policies that may inhibit attainment of distribution objectives • Dealing with changes in availability of particular kinds of intermediaries • Opening up new geographic marketing areas • Facing the occurrence of major environmental changes • Meeting the challenge of conflict or other behavioral problems • Reviewing and evaluating Versatile Business School, Egmore, Chennai - 600 008
  107. 107. Distribution Objectives Setting distribution objectives requires knowledge of which, if any, existing objectives & strategies may impinge on these distribution objectives. Versatile Business School, Egmore, Chennai - 600 008
  108. 108. Channel Structure Dimensions 1. Number of levels in the channel 2. Intensity at the various levels 3. Types of intermediaries at each level Allocation Alternatives
  109. 109. NUMBER OF LEVELS • Range from two to five or more • Number of alternatives is limited to two or three choices • Limitations result from the following factors: ▫ Particular industry practices ▫ Nature & size of the market ▫ Availability of intermediaries
  110. 110. Intensity at the Various Levels Intensive Selective Exclusive Many Few One Intensity Dimension Numbers of Intermediaries (retail level) Relationship between the intensity of distribution dimension & number of retail intermediaries used in a given market area
  111. 111. Types of Intermediaries • Numerous types • Manager’s emphasis on types of distribution tasks performed by these intermediaries • Watch emerging types ▫ Electronic online auction firms (eBay) ▫ Industrial products sold in B2B markets (Chemdex, Converge.com) Versatile Business School, Egmore, Chennai - 600 008
  112. 112. Variables Affecting Channel Structure 1. Market Variables 2. Product Variables 3. Company Variables 4. Intermediary Variables 5. Environmental Variables 6. Behavioral Variables Categories of Variables Versatile Business School, Egmore, Chennai - 600 008
  113. 113. Market Geography Location, geographical size, & distance from producer Market Size Number of customers in a market Market Density Number of buying units (consumers or industrial firms) per unit of land area Market Behavior Who buys, & how, when, and where customers buy Market Variables Versatile Business School, Egmore, Chennai - 600 008
  114. 114. Product Variables Bulk & Weight Perishability Unit Value Degree of Standardization Technical versus Nontechnical Newness Versatile Business School, Egmore, Chennai - 600 008
  115. 115. Company Variables 6 Size The range of options is relative to a firm’s size Financial The greater the capital, the Capacity lower the dependence on intermediaries Managerial Intermediaries are necessary Expertise when managerial experience is lacking Objectives Marketing & objectives may & Strategies limit use of intermediaries Versatile Business School, Egmore, Chennai - 600 008
  116. 116. Intermediary Variables 6 Availability Availability of intermediaries influences channel structure. Cost Cost is always a consideration in channel structure. Services Services that intermediaries offer are closely related to the selection of channel members. Versatile Business School, Egmore, Chennai - 600 008
  117. 117. Environmental Variables The impact of environmental forces is a common reason for making channel design decisions. Economic Sociocultural Competitive Technological Legal Versatile Business School, Egmore, Chennai - 600 008
  118. 118. Behavioral Variables Develop congruent roles for channel members. Attend to the influence of behavioral problems that can distort communications. Be aware of available power bases. Versatile Business School, Egmore, Chennai - 600 008
  119. 119. UNIT V Versatile Business School, Egmore, Chennai - 600 008
  120. 120. GREEN MARKETING • Green marketing is the marketing of products that are presumed to be environmentally safe. • The marketing of products that are presumed to be environmentally safe. • (social marketing definition) The development and marketing of products designed to minimize negative effects on the physical environment or to improve its quality. • (environment definition) The efforts by organizations to produce, promote, package, and reclaim products in a manner that is sensitive or responsive to ecological concerns Versatile Business School, Egmore, Chennai - 600 008
  121. 121. GREEN MARKETING • Macdonald’s have stopped packaging their hamburgers etc. in polystyrene containers and now use cardboards which comes from a renewable resource and is biodegradable or recyclable. • HCL-The key objective under HCL ECOSAFE is targeted at integrating environmental management procedures into its business processes thereby protecting the environment, health, and safety of all its stakeholders Versatile Business School, Egmore, Chennai - 600 008
  122. 122. GLOBAL MARKETING • Global Marketing is defined as Marketing activities that are coordinated and integrated across multiple markets • Integration can involve Standardized products, Identical Brand names, Uniform packaging, Synchronized product introductions, Similar advertising messages etc. • Coordination can involve competitive pricing, sales campaigns, market promotions etc. Versatile Business School, Egmore, Chennai - 600 008
  123. 123. GLOBAL MARKETING • … the coordinated performance of marketing activities to create exchanges across countries that satisfy individual, organizational , and societal objectives Versatile Business School, Egmore, Chennai - 600 008
  124. 124. BUZZ MARKETING • Marketing that captures the attention of consumers and the media to the point where talking about your brand or company becomes entertaining, fascinating, and newsworthy. • Simply put: Buzz starts conversations. • It’s a great story or big idea that others are willing to share. Versatile Business School, Egmore, Chennai - 600 008
  125. 125. BUZZ MARKETING 1. consumer who truly like a brand and tell others 2. consumer who like a brand and are sponsored by a company to tell others 3. company or agency employees who tell others about the brand • These messages can be delivered in person or via the internet in chat rooms, blogs or e-mails. • Many musical groups have gained fame and fortune through this type of support by those who have seen the bands in bars or a small concert or tour. Versatile Business School, Egmore, Chennai - 600 008
  126. 126. VIRAL MARKETING • Any strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the message's exposure and influence. • Viral marketing is a self-propagating marketing technique. • It is spread from person to person across the Internet. Versatile Business School, Egmore, Chennai - 600 008
  127. 127. CUSTOMER RELATIONSHIP MANAGEMENT • CRM “is a business strategy that aims to understand, anticipate and manage the needs of an organization's current and potential customers” • It is a “comprehensive approach which provides seamless integration of every area of business that touches the customer- namely marketing, sales, customer services and field support through the integration of people, process and technology” • CRM is a shift from traditional marketing as it focuses on the retention of customers in addition to the acquisition of new customers • “ The expression Customer Relationship Management (CRM) is becoming standard terminology, replacing what is widely perceived to be a misleadingly narrow term, relationship marketing (RM)” Versatile Business School, Egmore, Chennai - 600 008
  128. 128. DEFINITION OF CRM • CRM is concerned with the creation, development and enhancement of individualized customer relationships with carefully targeted customers and customer groups resulting in maximizing their total customer life-time value” Versatile Business School, Egmore, Chennai - 600 008
  129. 129. PURPOSE OF CRM • The focus [of CRM] is on creating value for the customer and the company over the longer term” • When customers value the customer service that they receive from suppliers, they are less likely to look to alternative suppliers for their needs • CRM enables organizations to gain ‘competitive advantage’ over competitors that supply similar products or services Versatile Business School, Egmore, Chennai - 600 008
  130. 130. STRATEGIC MARKETING PROCESS EVALUATION IMPLEMENTATION MARKETING PROGRAM MARKET-PRODUCT FOCUS AND GOAL SETTING SITUATION ANALYSIS Versatile Business School, Egmore, Chennai - 600 008
  131. 131. 3 - 131 MARKETING STRATEGY IN THE DIGITAL AGE • E-business: ▫ uses electronic means and platforms to conduct business. Versatile Business School, Egmore, Chennai - 600 008
  132. 132. 3 - 132 MARKETING STRATEGY IN THE DIGITAL AGE • E-commerce: ▫ facilitates the sale of products and services by electronic means. Versatile Business School, Egmore, Chennai - 600 008
  133. 133. 3 - 133 MARKETING STRATEGY IN THE DIGITAL AGE • Buyer Benefits of E-Commerce: ▫ Convenience ▫ Easy and private ▫ Greater product access/selection ▫ Access to comparative information ▫ Interactive and immediate Versatile Business School, Egmore, Chennai - 600 008
  134. 134. 3 - 134 MARKETING STRATEGY IN THE DIGITAL AGE • Seller Benefits of E-Commerce: ▫ Relationship building ▫ Reduced costs ▫ Increased speed and efficiency ▫ Flexibility ▫ Global access Versatile Business School, Egmore, Chennai - 600 008
  135. 135. 3 - 135 E-MARKETING DOMAINS Versatile Business School, Egmore, Chennai - 600 008
  136. 136. 3 - 136 E-COMMERCE DOMAINS • B2C • B2B • C2C • C2B • Online consumers ▫ Now more diverse ▫ Online consumers differ from traditional off-line consumers Major Domains Versatile Business School, Egmore, Chennai - 600 008
  137. 137. 3 - 137 E-COMMERCE DOMAINS • B2C • B2B • C2C • C2B • B2B sales far exceed B2C sales • Open trading networks Major Domains Versatile Business School, Egmore, Chennai - 600 008
  138. 138. 3 - 138 E-COMMERCE DOMAINS • B2C • B2B • C2C • C2B • C2C web sites help consumers exchange goods or information • Auction sites facilitate the exchange process • Newsgroups / forums Major Domains Versatile Business School, Egmore, Chennai - 600 008
  139. 139. 3 - 139 E-COMMERCE DOMAINS • B2C • B2B • C2C • C2B • Allow consumers to search out sellers, learn about offers, initiate purchase, or dictate purchase terms • Some sites facilitate the feedback process between customers and companies ▫ Ex: Planetfeed.com Major Domains Versatile Business School, Egmore, Chennai - 600 008
  140. 140. 3 - 140 CONDUCTING E-COMMERCE • Creating web sites • Placing online ads and promotions • Creating or using web communities • Using E-mail and webcasting E-Marketing Versatile Business School, Egmore, Chennai - 600 008

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