Sales Promotion

Personal Communication Channels

 

Personal communication is communication between two or more persons with a specific person
communication with others. The message emanates from a specific person. It can be done face to
face, or by a person to audience, over telephone, or through post or couriers or through emails or
through mobile messages.

The personal communications in the case of marketing can also be categorized as

communications from advocate, expert and social contacts. The company salespersons’
communication to customers is communication from advocates of the product.

An independent expert communicating to prospective buyers about the merits of the product is
classified as expert communication. A neighbor saying good things about a brand is social
channel of communication.

Companies take various steps to stimulate personal communications about their products and
brands.

1. They identify influential individuals and devote extra effort on them.

2. Create opinion leaders by supplying possible opinion leaders with the product on attractive
terms.

3. Use influential or believable people in testimonial advertising.

4. Develop word of mouth publicity by requesting satisfied clients to promote their product
among their friends.
5. Establish online discussion groups and communities

Nonpersonal Communication Channels

 

They include media, atmospheres, and events.

Media channels include print media (newspaper, magazines, souvenirs, proceedings of

conferences), broadcast media (radio, television), display media (billboards, signs, posters) and
electronic media (audiotape, videotape, videodisk, CD-ROM).

Atmosphere is what firms create in their office environment. The office interiors and exteriors
have a meaning to the potential buyers.

Events are occurrences designed to communicate particular messages to target audiences or

audiences. Company arranged news conferences, opening ceremonies of various kinds, and
sponsorships of various events come under event communications channels.

Communication through mass media stimulates personal communication channels.

The Promotional Tools

 

The characteristics of various promotional tools are as follows:

Advertising

 
Advertising is a public mode of communication. Because it is communicated simultaneously to
large number of people and people know that the same communication is going to many people,
they feel their motives for buying are understood by the advertiser.

Advertising messages can be repeated number of times. Buyers also can compare advertisements
of various companies selling the same product. The media offers the facility to add color, sound
etc. to the message and dramatize the message. But advertising cannot have dialogue with the
people. People may not see and pay attention to the advertisement.

Advertising is an efficient way to reach geographically dispersed potential buyers at a low cost
per exposure.

Advertising has two recent variants. Advertorials are offer editorial content and while it is paid
for by the advertiser and it will be difficult for the reader to easily make out that it is an
advertisement. Similarly infomercials are TV programs that are meant for promoting the
products of the company. They discuss the working of the product, benefits of the products, and
user experience etc. and they may beam the message to buy the product and the address to be
contacted.

Sales promotion

Sales promotion tools like coupons, contests, premiums, and the like acts as communication
medium and also promote sales.

They gain attention and provide information that may lead the consumer to the product. They
include a distinct invitation to the consumer to do the transaction in a short period of time.

Public relations and publicity

 
News stories and feature articles are more authentic and credible than advertisements to readers.
The articles act as testimonials. The message gets through to the potential buyers as news and
they may not turn away from it as they turn away from the advertisements.

Personal selling

Personal selling as a communicative channel involves a live, immediate, and interactive

relationship between persons. Personal selling leads to relationships. The listener feels obligated
to respond to the salesman at least with a polite “thank you.”

Direct Marketing

The alternatives are direct mail, Email, and telemarketing. In these cases the message is
addressed to a specific person. The message can be customized. Even though mailing folders and
email are normally standardized to gain efficiency. The message can be up to date.  IN case of
telemarketing, message can be altered depending on the response. In the case of other
alternatives subsequent communication can be altered depending on the response. 

Philip Kotler, Marketing Management (Main text for revision and article)

Public Relation
Definition
 

Public relations involve a variety of programs designed to promote and/or protect a company’s
image or its individual products among public.
 

A public is any group that has an actual or potential interest in or impact on a company’s ability
to achieve its objectives.

The Public Relations (PR) Department or Activity

 

Public relations is an important marketing tool. A public can help or hinder a company's ability
to achieve it objectives.

The PR department monitors the attitudes of the organization’s publics and distributes
information and communications to build goodwill. Public relations can potentially impact
public awareness of a company and its brands and products at a fraction of the cost of
advertising.

The PR departments perform the following activities to promote various causes, issues and
organizations. 

Press relations: Releasing news and information about organization to the press in the most
positive light that helps build brand image for the company and improve sales in case of sales
promotions.

Product publicity: Sponsoring various efforts to get good coverage of the company and its
products in various pubic events. For example, some body from the company addresses a
gathering or a seminar. PR persons arrange such opportunities.
 
Corporate communications: Developing materials with detailed information that promotes
understanding of the organization and its activities by external entities as well as interal
employees.
 
Lobbying: Communicating with legislators and government officials to promote legislation and
regulation that helps in growth of the organization and to defeat legislation that is not in interest
of the company.
 
Conseling: Advising managements public perception on the company position, suggesting
measures to improve the company image.

Marketing public relations is a specialized PR segment with a special constituency, the

marketing function of the company.

Marketing Public Relations (MPR)

 
The importance of public relations activity to marketing process is recognized by many
companies and marketing public relations departments (MPRs) are being set up either as a part
of marketing function or as a part of public relations functions. The MPR section can better
understand the marketing objectives and programmes of the company and carry out its PR
activity to contribute to the achievement of marketing plans. MPR needs to evaluate the return on
investment on its various activities and propose funds for PR activities or programmes as a part
of marketing budget.

Major Decisions in Marketing PR

 

Setting the objectives

The objectives can be one of the following:

1. Build awareness for the product.

2. Build credibility

3. Stimulate sales force and dealers dispersed around the country

4. Complement the sales promotion and hold down promotion costs

Choosing PR messages and vehicles

 

Implementing the MPR plan through a program

Evaluating the MPR program

 
 

An Interesting Illustration
 
Smart MPR practioners can find or create stories about even mundane products and get press
support as well as audience for events. Kotler described the work of a public relations firm for
the cat food category, Star-Kist Foods' 9-Lives. The firm organized a Morris "look-alike' content.
Morris is the name of the cat used by the firm its advertisements. A book titled Morris, an
Intimate Biography was proposed. Local cat shows were organized and the Morris awards were
given. A movement with the message "adopt-a-cat a month" was launched with Morris as the
spokescat. A booklet "The Morris Method" on cat care was produced and distributed. These
publicity activities that involved cat owners in various activities stregthened the brand's market
share.

 *****************************

Advertising
Introduction
 

Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or
services by an identified sponsor (Kotler).

Advertising is aimed at a target market and buyer motives have to be considered in developing
the advertisement strategy or program.

Five major decisions are to be made developing the advertisements.

 
Mission: the objectives of the advertisement

Money: how many needs to be spent or how much can be spent?

Message: What is the message to be sent to get the desired response?

Media: What media should be sued?

Measurement: What are the evaluation criteria for results of the advertisement?
 
These five decision are known as Fives Ms (5 Ms) of advertising.

Objectives of Advertising
 

One classification of objectives is to inform, persuade or remind.

 Under the above broad heads more number of objectives can be specified. Colley lists 52
possible advertising objectives in his book ‘Defining Advertising Goals for Measured
Advertising Results.’

 The objective is decided based on the marketing situation of the product or brand.

Advertising Budget Decision

 

Five specific factors are considered in this decision.

Stage in the production life cycle

 Market share and customer base size

 Competition and clutter

 Advertising frequency

 Product substitutability
 

In adaptive-control method of setting advertising budgets, the company tests in some market
segments with low advertising, and in some market segments with high advertising. In most of
the market segments, the normal advertising expenditure is incurred. The results give the
response of the market to advertising expenditure by the company. These results will help the
company to adjust the advertising expenditure.

Advertising Message
 

An advertisement has to gain attention of the reader or listener to generate sales. So the quotation
to keep in mind is “Until it’s compelling, it isn’t selling.”

 Advertisers use four-step process to generate advertising messages and select the appropriate
message.

 1. Message generation

2. Message evaluation and selection

3. Message execution

4. Message social responsibility review

 

1. Message generation

 Inductive and deductive methods are used to generate messages.

 In inductive method, creative people talk to customers, dealers, experts and competitors to know
the strengths and weaknesses of the product or brand, their uses, the personalities of potential
users and related demographic and psychographic variables.

 Deductive framework says buyers expect four types of reward from a product: rational, sensory,
social, or ego satisfaction. Buyers might visualize these rewards from results-of-use experience,
product –in-use experience, or incidental-to-use experience. The combinations from these give
twelve types of advertising message themes. The advertiser with the now available computer
facilities can prepare advertisement messages for each of the themes and provide them for
evaluation.

 2. Message evaluation and selection

 The advertisement messages are to be rated on desirability, exclusiveness and believability.
They have to be tested in the market to find determine which message is having the maximum
desired effect.

 3. Message execution

 Style, tone, words and format etc. are to be decided in executing an advertising message.

 4. Message social responsibility review

 Advertising ethics and codes need to be followed by advertisers and advertising agencies. Social
and legal norms are to be followed. Advertisers must not make false promises. They should not
show false demonstrations.

Deciding on the Media

 Media selection involves finding the most cost-effective media to deliver the desired number of
exposures to the target audience.

Evaluating Advertising Effectiveness

 

Advertisers try to measure the communication effect of an advertisment - its effect on awareness,
knowledge or preference. Ad’s sales effect can also be measured and Kilter says emphatically
that sales effect also needs to be researched.

Marketing Intermediaries and Their Functions

 

Most manufacturers of products use marketing intermediaries to sell their products to the
consumers. The marketing intermediaries make up a marketing channel (distribution channel or a
trade channel).

Stern and El-Ansary define: “Marketing channels are sets of interdependent organizations
involved in the process of making a product or service available for use or consumption.”
 

The marketing channel overcomes the time, place, and possession gaps that separate gods and
services from those who need or want them. Some of the functions that channel members
perform are:

Information

Promotion

Negotiation

Ordering

Financing

Risk taking

Physical possession

Payment

Title

Channel Levels
 

A zero level channel is direct marketing between producer and consumer.

In one level channel a retailer is between producer and consumer.

Two level channels have wholesaler and retailer.

Still longer channels also exist in some industries.

 

Channel design decisions involve analyzing customers’ desired service levels, channel objectives
of the firm.

The major design decisions include the type of intermediary, number, terms and responsibilities
of intermediaries.

An economic criterion is to be applied in final design of the channel.

The channel management decisions include selection of channel members, motivating the
channel members to promote and achieve sales, and evaluation and modification of
arrangements.

The Price Levels

 

A firm must set a price when it introduces a product into the market. In marketing terminology
seven levels of price are identified, that give a range between very high price to very low price
for a range of products that satisfy a need. The seven levels are;

1. Ultimate

2. Luxury

3. Special needs

4. Middle

5. Ease/convenience

6. Me Too, but Cheaper

7. Price Alone
 

Setting the Price

 

The process of setting the price has six steps.

1. Selecting the pricing objective.

The possible alternative objectives are:

Survival of the firm

Maximum current profit

Maximum current revenue

Maximum sales growth

Maximum market skimming

Indication of product-quality leadership through price

Other objectives like full cost recovery and partial cost recovery for government organization
and social organizations

2. Determining the demand.

The possible demand for the product at various feasible prices is to be ascertained.

 
3. Estimating cost

The cost of production at the volume of estimated sale is to be ascertained.

4. Analyzing competitors costs and prices

The costs and margins that competitors are earning are to be determined from the analysis of
their balance sheets and other alternative methods to be of use in setting prices.

5. Pricing methods

Various pricing methods like markup pricing, target return pricing, perceived value pricing,,
value pricing, going rate pricing,  etc. are available to give various alternatives for pricing.

6. Selecting the final price

Pricing methods give a narrow range for setting the price. The final stage might consider some
psychological consideration related to market in arriving at the final price.

Adapting the Price

 

Companies usually do not set a single price for all customers and all transactions. A pricing
structure is set up as a strategy that provides scope to account for different demand situations in
different geographic markets and costs involved in serving customers and customer specified
features related to delivery, credit etc.
 

Price Increases and Decreases

 

If there is recession in the economy, companies may have to decrease prices. Inflation may force
companies to raise prices.

Marketing Strategies for Service Firms

 

Services firms require attention additional 3Ps according to Booms and Bitner. The additional
3Ps are people, physical evidence and process.

The marketing department or function has a say and a view on these additional Ps.

In a service business companies employees are in direct contact with the customer and hence
their behavior with the customer has an influence on customer satisfaction. Ideally employees
should exhibit competence, a caring attitude, responsiveness, initiative, problem solving ability,
and goodwill.  So they have to be trained to exhibit appropriate behavior. The employees must
have  authority to solve problems that arise in service encounters without much delay and
contacting various levels of supervisors. This is empowerment of service employees.

The physical facilities are important because customers come there and have the service. Hence
the design and maintenance of the facility becomes a marketing issue.

The processes used to deliver the services are marketing issues. If the customer does not like the
process he will not come back. Hence market research has to find out the customer’s likes and
dislikes about the processes.

 
Hence the idea that service marketing requires internal marketing or involvement of marketing
function in internal aspects of the company or the firm emerged. Internal marketing describes the
work done by the company and marketing department to convey the needs of the potential
customers to the service employees and the effort to train them and motivate them to provide
exceptional service to customers.

Another concept in services marketing is interactive marketing. It refers to the skill of employees
to interact with the client in serving the client. Clients judge services by technical quality as well
as the interaction quality. Whether the surgeon has done the operation properly or not is the
technical quality. Whether he has shown concern and inspired confidence or not is interaction
quality. Service providers must provide high touch along with high tech.

Managing the Differentiation

 

What are sources for differentiating in service businesses?

Service offer: while the core service could be the primary service package, a firm can come out
with secondary service features that provide differentiation. We always have to remember that an
additional feature added to a product must be valued by the customer and has to be profitable to
the company. Hence marketers are involved to find those features which are valued by the
customers and operations or process specialists are involved to deliver the feature at a cost that is
profitable to the company.

Delivery: Reliability in service can be differentiating feature. Many firms find it difficulty to
provide reliability.

Image: Developing an image that inspires trust is a differentiating feature.

Managing Service Quality

 

Quality is a differentiator. Parasuraman, Zeithaml, and Berry formulated a service-quality model

that highlights the main requirements for delivering high service quality.

They identified possible five gaps that result in poor service.

1. Gap between consumer expectation and management perception

2. Gap between management perception and service quality specification

3. Gap between service quality specification and service delivery

4. Gap between service deliver and external communication

5. Gap between perceived service and expected service

The same researchers identified five determinants of service quality.

According to the order of preference of the variables is:

1. Reliability

2. Responsiveness

3. Assurance

4. Empathy

5. Tangibles
Product
 

A product is anything that can be offered to a market to satisfy a want or need.

We can see around us that physical goods (food items, televisions), services (taxi rides, film
shows), persons (models, film actors), places (various tourist destinations), organizations
(religious organizations, voluntary organizations), and ideas (family planning, safe driving are
among the products that are marketed.

Five levels of a product

The marketer needs to understand that a market offer of a product can be made five levels.

1. Core benefit

2. Basic product

3. Expected product

4. Augmented product

5. Potential product.

Every product is bought by buyers because it serves a core benefit to them. Companies have to
design their product to deliver a core benefit. (This series of management articles are being
written by me to facilitate revision of management knowledge. If no person is interested in
revising and updating his knowledge of management subjects, this product will not have a
market).

At the second level is the product, which a firm has designed to deliver the core benefit. The firm
has understood or noticed a need and then designed a product that delivers the need existing in
the market.
 

At the third level is the expected product. As a need is being satisfied by various products offered
in the market place or by the efforts of each individual, people develop expectations about
products. When the marketer finds these expectations about products that fulfill particular needs
and designs his offering, it will be an expected product.

The customer can design features that positively surprise an average customer. This requires
additional effort by the marketer to find features which are valued by certain customers and then
offering them to all customers.

While product augmentation refers to use of existing technology to augment products, potential
product refers to development of new technology to enhance the product to provide new ways to
satisfy customers. Companies that offer potential products invest a lot on research and
development activities.

Product Hierarchy

Product hierarchy is another concept of product. Seven levels of product hierarchy are
recognized.

1. Need family

2. Product family

3. Product class

4. Product line

5. Product type

6. Brand

7. Item

 
 

The example of a need family is products satisfying the core need of security of income. The
product family is savings and income. The product class is financial instruments. The product
line is mutual funds. The product type is systematic investment plan. The brand is prudential.
The item is an index fund.

Product system is another concept related to product. This refers a group of diverse but related
items that function in a related manner. Home theatre systems could be an example.

Product mix (or product assortment) is the set of all products that a particular seller offers for
sale to buyers.

Product Classifications
 

It is usual to refer to certain product classifications and explain marketing issues related to these
classifications

Classification based on durability and tangibility

1. Nondurable goods.

2. Durable goods

3. Services

Classification based on use

1. Consumer goods

2. Industrial goods
 

Classification of consumer goods

1. Convenience goods

          Staples

          Impulse goods

          Emergency goods

2. Shopping goods

          Homogeneous shopping goods

          Heterogeneous shopping goods

3. Specialty goods

4. Unsought goods

Classification of industrial goods

1. Materials and parts

          Raw materials – farm products, natural products

          Manufactured materials – component materials and component parts

 
2. Capital items

          Installations

          Equipment

3. Supplies and business services

          Operating supplies

          Maintenance and repair items

Product Mix Decisions

 

The term product mix was already defined. In the area of product mix, marketing decisions are
width, length, depth and consistency. 

Width refers to number of product lines (Refer the new product management article).

Length refers to the total number of items in a product line (different brands in a line).

Depth refers to variants of each product in a line (different pack sizes of a brand).

Consistency refers to how closely related the various product lines are in end use, production
requirements, distribution channels, or some other way.

Kotler says explicitly that product mix planning is largely the responsibility of the company’s
strategic planners. The top management has to assess with the information supplied by
company’s marketers, which the product mix. Hence the product mix is a shared decision by
various functions of the company and not that of marketing department alone.

 
Product line analysis

Marketers have the need to know the current and potential sales and profits of each item in a line
in order to determine which items to build, sustain, harvest, or divest.

They need to analyze the effect of increasing the length. Can more profit be made by increasing
the length?

Brand Related Decisions

 

Concept of brand equity

Challenges of branding

Brand name decisions

Brand extensions

Brand repositioning

Competition
Competition is growing more intense every year. Michael Porter identified five forces that
determine the level of competition in an industry. If the competition is very intense, profits will
be low in the industry. The five forces are:
 
1. Intensity of rivalry among present competitors
2. Threat of new entrants
3. Threat of substitute products
4. Threat of buyers' growing bargaining power
5. Threat of suppliers' growing bargaining power
 
The first three forces represent competitors. Therefore, the companies have to pay attention to
the actions of their competitors in addition to their attention to customers' needs and desires.

 
Analysis of Competitors - Introduction
 
 
Companies need to know five things about competition. .

Who are our competitors?

What are their strategies?

What are their objectives?

What are their strengths and weaknesses?

What are their reaction patterns?

Who are our competitors?

 

Kotler outlined four levels of competition, based on the degree of product substitutability.

1. Brand competition.
Companies that are offering similar products and services at similar prices.
 
2. Industry competition
Companies offering the same class of products.
 
3. Form competition
Companies offering a product to serve the same need.
 
4. Generic competition
All companies that are competing for the customers' dollars.
 

What are their strategies?

 
Identifying Competitor Strategies

Resourceful competitors revise their strategy through time.  Companies have to monitor the
strategies of companies that fall in their strategic group more closely.
 
A group of firms following the same strategy in a given target market is called a strategic group.
A company needs to identify the strategic grouping  in which it competes.
 
It has to monitor efforts of even  potential new entrants into this strategic group. Also it has to
monitor efforts of companies in adjoining strategic groups.
 

What are their objectives?

 

Determining Competitors’ Objectives

 The company has to make efforts understand what drives each competitor’s behavior. Normal
microeconomic assumption is that every firm attempts to maximize their profits. However, in
actual practice, companies differ in the weights they put on short-term versus long-term. Hence,
each firm pursues a mix of objectives, current profitability, market share growth, cash flow,
technological leadership, service leadership etc. with different weights attached to them.

 What are their strengths and weaknesses?

Assessing Competitors’ Strengths and Weaknesses

 Resources and capabilities determine the competitive advantage. Marketing department has to
determine the strengths and weaknesses of competitors. When market share is to be increased,
the marketing department has to know the weaknesses of competitors, which can be attacked in
the market place for grabbing market share. For determining this, it may conduct a primary
research among consumers, retailers and wholesalers regarding their satisfaction with various
desirable attributes of a product and the offering of various competitors.

What are their reaction patterns? 

 

Reaction Patterns of Competitors

 

The laid back competitor

This firm does not react quickly or strongly.
 
The selective competitor
The firm reacts to certain types of attacks very strongly.
 
The tiger competitor
The firm does not remain quiet. Any attack on its market or product is given a strong response.
 
The stochastic competitor
The firm does not exhibit a predictable reaction pattern

Designing the Competitive Intelligence System

 

A well designed system provides company managers with timely information about competitors
and responds better to requirements of more information when needed in response to significant
new about the actions of a competitor

Markets can be segmented in a number of ways.

Market Segmentation
 

Two broad groups of variables are used to segment consumer markets. One group of variables is
consumer characteristics. The other group of variables is behavioral characteristics. Behavior is
consumer response in terms of  benefits sought or  occasions when the product is used.

Consumer characteristics used for market segmentation include geographic, demographic and
psychographic characteristics.

Geographic segmentation
 

Geographic segmentation divides the market into different geographic units such as nations,
states, regions, cities and neighbor hood etc.

Demographic segmentation

In this segmentation approach, the market is divided into groups on the basis of variables such as
age, family size, family life cycle, gender, income, occupation, education, religion, race,
generation, nationality, or social class.

Psychographic segmentation

In this approach to segmentation, buyers are divided into different groups on the basis of lifestyle
and/or personality.

Lifestyle

Active lifestyle, country lifestyle, latenighters etc. are some of the segments under this
classification

Personality

Markets are being segmented on the basis of personality. Personality is a group of traits exhibited
persistently by a person. For example, Ford buyers were identified as independent, impulsive,
masculine, alert to change, and self confident, while Chevrolet owners were conservative, thrifty,
prestige conscious, less masculine, and seeking to avoid extremes.

 
Behavioral segmentation

In this approach buyers are classified into groups on the basis of their knowledge of, attitude
toward, use of, or response to a product. Some behavioral variables can be usage rate, readiness
for buying the product, attitude toward the product, loyalty to the product, and occasions on
which the product is used etc.

Multi-attribute segmentation (Geoclustering)

Some marketers are using multiple variables to define target groups. For example using
socioeconomic status and lifestyle variables may be combined and market segmentation is done.

Effective Segmentation
 

To be useful, market segments identified in a segmentation exercise have to be:

 Differentiable: the segments must have a conceptual basis and they have to respond differently
to different marketing mix variable and attribute mix of the product.
 Measurable: The size and purchasing powre of the segments have to be measurable.
 Substantial: The segments have  to be large enough to serve them with a separate market mix
profitably.
 Accessible: The segments must be accessible to the marketer.
 Actionable: The company in consideration must be able to create marketing programs for the
segments.

Market Targeting
 

After the doing the market segmentation, the firm has to evaluate the segments for their market
potential. Then the company has to decide which and how many segments to serve and how to
serve them. The decision alternatives available to the firm are:
 

Single segment concentration

In the simplest case, the company selects a single segment.

Selective specialization

The firm selects a number of segments, each objectively attractive and appropriate, for the firms
objectives and resources. There may be little or no synergy among the segments, but each
segment is a money maker on its own.

 Full market cover

 The firm may attempt to serve all customer groups

 ***********************

Buying Behaviour
Organization buying is the decision-making process by which formal organizations establish the
need for purchased products and services and identify, evaluate, and choose among alternative
brands and suppliers. (Webster and Wind)

Some of the characteristics of organizational buyers are:

1. Consumer market is a huge market in millions of consumers where organizational buyers are
limited in number for most of the products.

2. The purchases are in large quantities.

3. Close relationships and service are required.

4. Demand is derived from the production and sales of buyers.

5. Demand fluctuations are high as purchases from business buyers magnify fluctuation in
demand for their products.

6. The organizational buyers are trained professionals in purchasing.

7. Several persons in organization influence purchase.

8. Lot of buying occurs in direct dealing with manufacturers.

Organizational Buying Situations

Straight rebuy
In this buying situation, only purchasing department is involved. Thet get an information from
inventory control department or section to reorder the material or item and they seek quotations
from vendors in an approved list.
 
The "in-suppliers" make efforts to maintain product and service quality. The "out-suppliers" have
to make efforts to get their name list in the approved vendors' list and for this purpose they have
to offer something new or find out any issues of dissatisfaction with current suppliers and
promise to provide better service.

Modified rebuy
 
In this buying situation, there is a modification to the specifications of the product or
specifications related to delivery. Executives apart from the purchasing department are involved
in the buying decisions. The company is looking for additional suppliers or is ready to modify
the approved vendors list based on the technical capabilities and delivery capabilities.

New task buy

 
In this situation, the buyer is buying the product for the first time. As the cost of the product or
consumption value becomes higher, more number of executives are involved in the process. The
stages of awareness, interest, evaluation, trial, and adoption will be there for the products of each
potential supplier. Only the products which pass all the stages will be on the approved list and
price competition will follow subsequently.
 

Systems buy
 
Systems buying is a process in which the organization gives a single order to a single
organization for supplying a full system. The buying organization knows that no single party is
producing all the units in the system. But it wants the system seller to engineer the system,
procure the units from various vendors and assemble, fabricate or construct the system.

Participants in the Business Buying Process

Users
 
The persons who use the item. Say for safety gloves the operators.

Initiators
 
The persons who request the purchase. The safety officer may initiate the request for the
purchase.

Influencers
 
Persons who held define specifications. In this case of safety gloves, the safety officer may
himself define specifications. If an industrial engineer is in the organization, he may also be
consulted. There can a different gloves for different working situations and industrial engineer
may be more aware of specific requirements due to his special nature of work - human effort
engineering.

Buyers
 
They are the person who actually do the buying transaction.

 
Gatekeepers
 
They control access to personnel in a company. The receptionist, the secretaries etc.

Deciders
 
People who decide on product requireements and suppliers. It is the final approval for product
specfications and suppliers' list.

Approvers
 
Persons who approve the purchase. In the case of safety gloves, the personal manager may have
the power to approve.

Major Influencers on Business Buyers

Environmental factors
 
Expected demand for the product that the buying organization is selling, expected shortages for
the item, expected changes in technology related to the item etc. are the environmental factors
that will have an effect.

Organizational factors
 
Changes in purchasing department organization like centralized purchasing, decentralized
purchasing and changes in purchasing practices like  long-term contracts, relationship
purchasing, zero-based pricing, vendor-performance evaluation are the organization factors of
importance to marketers.

Interpersonal factors
 
These factors are the relationship between buyers and sales representatives of various competitor
companies.

Individual factors
 
These factors related to the buyer. What sort of ways of interacting and service are appreciated
by the buyers and what ways are considered as irritants? Marketers have to understand the
reactions of buyers.

Organizational Buying/Purchasing/Procurement Process

Steps in the Process

Problem recognition

General need description

Product specification

Supplier search

Proposal solicitation

Supplier selection

Order routine specification

 Supplier performance review

Consumer Behavior

The field of consumer behavior studies how consumers (individuals and groups) select, buy, use,
and dispose of goods, services, ideas to satisfy their needs.

 
To understand the consumers in the target market, marketing managers rely on the 7 O’s
framework of consumer research.

 7 Os: Occupants, Objects, Objectives, Organizations, Operations, Occasions, Outletss

Who constitutes the market?   Occupants

What does the market buy?    Objects

Why does the market buy?     Objectives

Who participates in buying?   Organizations

How does the market buy?     Operations

When does the market buy?   Occasions  

Where does the market buy?  Outlets

Buyer’s needs, characteristics and decision making process interact with the stimuli created by
the environment and marketers and buying decisions are made by the buyers.

Hence marketers have to understand what happens in the buyer’s consciousness between the
arrival of outside stimuli and the buyer’s purchase decision. They must answer two questions:

        How do the buyer’s characteristics – socio-cultural (sociological), personal, and

psychological influence buying behavior?

        How does the buyer make purchasing decisions?

Socio-cultural (sociological), Personal, and

Psychological Characteristics
 

Various sociological factors of importance

 

Cultural Factors

They have  the broadest and deepest influence. 

Culture 

Culture is different for different societies. In the modern days, there are more common elements.
Culture is the most fundamental determinant of a person’s wants and behavior.

Subculture 

Culture of a society is not uniform across all groups in the society. There can be subcultures with
certain elements differing from other groups’ cultural elements. Many subculture elements make
up important market segments. In a country like USA, that allows people from various countries
to come and settle in it, subcultures arise due to the original nationality, religion, racial group
apart from the geographical subcultures and age group subcultures.

Social class 

Sociology identified that social stratification is common among many societies. Social class is a
type of stratification. Social classes are relatively homogeneous and enduring divisions in a
society, which are hierarchically ordered and whose members share similar values, interests and
behavior.

Social Factors

They include reference groups, family, and roles and statuses of a person.

 Reference groups

Reference groups influence a person’s behavior directly or indirectly.

Groups having a direct influence on a person are called membership groups. People are
influenced in the consumption and purchase decisions by groups in which they are members like
family, friend circle, neighbors, co-workers, sports teams etc.
People are also influenced by groups to which they do not belong presently, but want to belong
in course of time. Such groups are called aspirational groups.

  

Family 

Family members constitute the most influential primary reference group or membership group.
Each person has a family of orientation that consists of his parents, brothers and sisters. He has a
family of procreation consisting of spouse and children. 

Statuses and roles 

People choose products that communicate their status in society. Marketers have to aware of the
status symbol potential of products and brands. Each status has a role or group of activities to be
performed. Persons have multiples statuses in different groups to which they belong. Therefore
the roles have some bearing on the consumption and purchase decisions.

Personal factors of importance

Age and stage in the life cycle

Children consume baby food. Old people may eat special diets. People diagnosed with specific
ailments avoid certain food items. Hence it is easy to conclude thaat people buy different goods
and services over their life time. 

Occupation

Occupation determines the types of items people buy. Certain occupations demand simple living 
and certain occupations demand display of wealth and prosperity.

Economic circumstances

People’s economic circumstances consist of their disposable or spendable income, assets, debts,
and attitude toward spending versus saving. Marketing of income-sensitive goods has to take into
consideration the shifts in personal income and savings habits.

Life style
A person’s life style is the person’s pattern of living in the world as expressed in activities,
interests, and opinions. People coming from the same subculture, social class, and occupation do
lead quite different life styles. 

The life style is reflected in the consumption patterns. different agencies and authors have
identified differnet life style categories. McCann Erickson London identifed among British,
Avant-Gardians, Pontificators, Chamelons and Sleepwalkers. The advertising agency, D'arcy,
Masius, Benton & Bowles identified five categories among Russians, Kuptsi, Cossacks,
Students, Business Executives, and Russian Souls. 

Llifestyles among British people.

Avant-Gardians (interested in change)

Pontificators (traditionalists, very British)

Chamelons (follow the crowd)

Sleepwalkers (contented underachievers)

Psychological factors of importance

Personality and self concept 

Personality denotes a person’s distinguishing psychological characteristics that lead to relatively

consistent and enduring responses to various stimuli.

Motivation 

Motivation to purchase and consume an item is to be understood by marketers. Need sets up

drive that seeks a goal. Marketers want the goal a person desires has to be the product that they
are offering. A drive is a strong internal stimulus impelling action.

Perception 

Perception is the process by which an individual selects, organizes, and interprets information
inputs to create a meaningful picture of the world.

Learning

 Learning involves changes in an individual’s behavior arising from experience. Most human
behavior is learned
 Beliefs and attitudes

 A belief is a descriptive thought a person holds about something.

 An attitude is a person’s enduring favorable or unfavorable emotional feelings and action
tendencies toward some object or an idea.

The Buying Process

 

Roles people play in buying process

In the buying decision a person can play any role in the list of roles given below. 

 Initiator

He may initiate the purchase by another person by explaining to him the needs served by a
product.

 Influencer

He may infuence another by suggesting which brand needs to be bought.

Decider

He is the decider to buy it.

 Buyer

He is the actual buyer who goes into the market and buys. 

User

He is the user of the product.

Example: A school teacher may suggest to a child that he needs to buy a computer. His
classmates may tell him that they own a particular brand of computer and they are very happy
with its features. His father could be the decider of the purchase. His mother may go to shop and
buy the computer. The child is the user.
 

Buying behavior

Habitual buying behavior

In this buying situation, the purchaser is not involved in the product and there is not much risk
and there is no appreciable difference between various brands available. He buys the brand by
habit.

Variety seeking buying behavior

In this buying situation also, the purchaser is not that much involved, but likes to try various
brands

Complex buying behavior

In this buying situation, the buyer is very involved and spends some time to learn about various
alternatives available and buys the product/brand.

Less careful buying behavior with more chance of dissonance

In this buying situation, the differences between brands is not much and customer takes decisions
quickly. But there is a possibility that he may experience some diappointment and tries to justify
his purchase decision

The stages of buying decision process

Problem recognition

A potential purchaser first recognizes a need for a product

Information search

He goes around searching for information the available alternatives

 
Evaluation of alternatives

He evaluates the alternatives

Purchase decision

He makes the purchase decision

Post purchase behavior

Post purchase satisfaction

The buyer's satisfaction is a function of the closeness between the buyer's product expectations
and the product's perceived performance.

Post purchase actions

If buyers are satisfied they may purchase again.

If they are dissatisfied, they may return the product. They will inform their friends not to buy.

Post purchase use and disposal

The marketer has to be monitor use of the product. If people bought the product but are not using
it, sales will not grow. If people are using the product for additional uses not anticipated by the
marketer, the information is of value in increasing sales.

Foreseeing and Foretelling Customer Needs

Innovation leadership will be with those firms, who have the capability to identify the customers'
unarticulated needs for products and services.
 
Future is an intersection of evolving regulations, technology, demographics and lifestyle. To
visualize the unstated needs of the customers involves foreseeing the evolutions of these four
dimensions.
 
Discomfort in seeing beyond current reguatlions, technology, demographics and life style is not
right ingredient for innovation in a company.
 
 
 
Reference
Ranjan Das, Inventing Customer, Strategic Marketing, August-October, 1998, pp.10-14 

"Predictive Analytics: Knowing What's On Your Customer's Mind". was a

seminar organized by a newspaper group in India. 

Predictive Analytics:  It utilizes historical data and techniques such as data
mining and statistical analysis and can provide a clearer picture of what is
going to happen, so that businesses can accurately decide their future
course of action. It can provide companies with information such as future
trends in customer buying habits, which customers are likely to return and
which ones aren't, the amount of business that they'll bring, what could be
the best way to retain the existing customers and other important
information that companies can use to their advantage.

Scanning of Environment for Marketing Ideas and Decisions

Responsibility for Scanning the Environment

 
 

Unmet needs of people always exist. Companies can make fortunes if they can find a solution to
problems of people like cancer, mental diseases, nonfattening but tasty food etc. There are many
more problems awaiting a solution. Marketers have to scan the environment and find out
problems requiring solutions and report them back to their product development specialists to
facilitate focused efforts to develop solutions for them.

Marketers also have the responsibility to identify trends. A more detailed categorization of trends
is trend, fad and megatrend.

A trend is a direction of sequence of events that have momentum and durability.

 

A fad is unpredictable, short-lived direction of sequence of events, and they are without social,
economic, and political significance. Some business firms do profit from fads, but the firms have
to take up very short payback period investments to profit from fads.

But trend have longevity and is observable across several market areas and consumer activities
and is consistent with other significant social and economic events occurring and emerging at the
same time.

John Naisbitt, coined the term megatrends and wrote books on it also, and he explain the
megatrend as a large social, economic, political or and technological change that is slow to form,
and once in place, it influences society for some time – say between seven and ten years or
longer.

For the purpose of identifying changes in the market that include development of trends and
megatrends, marketing executives scan macro environment. Macro environment is further
divided into different environments for study purpose.

Demographic environment
 

The first macro environment that marketers monitor is global and domestic population
and trends in it. The parameters they look for are worldwide population growth,
population age mix, and geographical shifts in population, household patterns,
educational groups and ethnic groups.

Economic environment
 

An exchange market requires purchasing power for transactions to take place along
with people who want goods. The available purchasing power in an economy depends
on parameters like current income, prices, savings, current debt levels and credit
availability. Marketers have to identify major trends in income and spending patterns.
 

Natural environment
 

Marketers need to consider the threats and opportunities associated with four trends in
the natural environment: the shortage of raw materials, the increased cost of energy,
the increased levels of pollution, and the changing role of governments.

Technological environment
 

There is a rapid technological change. Technology is creating opportunities for new

products and services. Research and development expenditure is an important variable
that determines development of new technologies. Marketers have to promote R & D
activities both at company level and country levels through government funds.
Government regulation of technology has increases to assure public safe technologies.

Political/Legal environment
 

Regulation of various businesses by government and liberalization of some businesses

are issues that need to be monitored by marketers.

Social/Cultural Environment
 

Culture denotes the ways of life of people of a society according to Sociology. There
is high persistence of core cultural values of societies. There are subcultures in every
society. There are shifts in secondary cultural values through time. Marketers have to
be alert to such changes and analyze marketing implications of such changes.
Marketing Strategy - Differentiating and Positioning the Market Offering

Marketing Strategy
 

Philip Kotler discussed five issues of marketing strategy in his 9th edition of Marketing
Management

Differentiating and Positioning the Market Offering

Developing New Products

Managing Life cycle Strategies

Designing marketing Strategies for Market Leaders, Challengers, Followers, and Niches

Designing and Managing Global Marketing Strategies

  

These issues are covered in different knols by me.  This knol describes differentiating and
positioning. 

Differentiating and Positioning the Market Offering

The issues discussed in the area of differentiating and Positioning the market offering are:

 Tools for Competitive Differentiation

 Developing a Positioning Strategy
 Communicating the Company’s Positioning

 
 

Tools for Competitive Differentiation

Differentiation - Definition: is the act of designing a set of meaningful differences to distinguish the
company's offering from competitor's offerings.

Boston Consulting Group's differentiation opportunities matrix: Actually it is a competitive advantage

matrix applicable to differentiation opportunities.

Four types of industries identified by BCG matrix are:

Volume industry: only a few but very large competitive advantages are possible. The benefit of the
advantage is proportional with company size and market share. Example given - construction industry

Stalemated industry: in this type there are only few opportunities and the benefit from each is small.
The benefit is also not proportional to the size or market share.

Example: Steel industry - It is hard to differentiate the product or decrease its manufacturing cost.

Fragmented industry: in this type, there are many opportunities, but the benefit of each of them is
small. Benefit does not depend on size or market share.

Specialized industry: in this type, the opportunities are more and benefit of each opportunity is high.
The benefit is not related to size or market share.

Kotler mentions, Milind Lele's observation that companies differ in their potential maneuverability along
five dimensions: their target market, product, place (channels), promotion, and price. The freedom of
maneuver is affected by the industry structure and the firm's position in the industry. For each potential
competitive opportunity or option limited by the maneuverability, the company needs to estimate the
return. Those opportunities that promise the highest return define the company's strategic leverage.
The concept of maneuverability brings out the fact that a strategic option that worked very well in one
industry may not work equally well in the other industry because of low maneuverability of that option
in the different industry and by the firm in consideration.

Five Dimensions of Differentiation

 

Regarding the tools of differentiation, five dimensions can be utilized to provide differentiation.

Product

Services that accompany marketing, sales and after sales services.

Personnel that interact with the customer

Channel

Image

Differentiating a Product

Features

Quality:  performance and conformance

Performance - the performance of the prototype or the exhibited sample,

Conformance - The performance of every item made by the company under the same
specification

Durability

Reliability
Reparability

Style

Design

Services differentiation
 

Ordering ease

Delivery

Installation

Customer training

Customer consulting

Miscellaneous services

Personnel Differentiation

Competence

Courtesy

Credibility

Reliability

Responsiveness

Communication

Channel differentiation

Coverage

Expertise of the channel managers

Performance of the channel in ease of ordering, and service, and personnel

Image differentiation

First distinction between Identity and Image - Identity is designed by the company and through its
various actions company tries to make it known to the market.

Image is the understanding and view of the market about the company.

An effective image does three things for a product or company.

1. It establishes the product's planned character and value proposition.

2. It distinguishes the product from competing products.

3. It delivers emotional power and stirs the hearts as well as the minds of buyers.

The identity of the company or product is communicated to the market by

Symbols

Written and audiovisual media

Atmosphere of the physical place with which customer comes into contact

Events organized or sponsored by the company.

Developing a Positioning Strategy

 

Levitt and others have pointed out dozens of ways to differentiate an offering(Theodore Levitt:
"Marketing success through differentiation-of anything", Harvard Business Review, Jan-Feb, 1980)

While a company can create many differences, each difference created has a cost as well as consumer
benefit. A difference is worth establishing when the benefit exceeds the cost. More generally, a
difference is worth establishing to the extent that it satisfies the following criteria.

  

Important: The difference delivers a highly valued benefit to a sufficient number of buyers.

Distinctive: The difference either isn't offered by others or is offered in a more distinctive way by the
company.

Superior: The difference is superior to the ways of obtaining the same benefit.

Communicable: The difference is communicable and visible to the buyers.

Preemptive: The difference cannot be easily copied by competitors.

Affordable: The buyer can afford to pay the higher price

Profitable: The Company will make profit by introducing the difference.

Positioning  
Positioning is the result of differentiation decisions. It is the act of designing the company's
offering and identity (that will create a planned image) so that they occupy a meaningful and
distinct competitive position in the target customer's minds.

The end result of positioning is the creation of a market-focused value proposition, a simple clear
statement of why the target market should buy the product.

Example:

Volvo (station wagon)

Target customer-Safety conscious upscale families,

Benefit - Durability and Safety,

Price - 20% premium,

Value proposition - The safest, most durable wagon in which your family can ride.

How many differences to promote?

Many marketers advocate promoting only one benefit in the market (Your market offering may have
many differentiators, actually should have many differentiators in product, service, personnel,
channel, and image).

Kotler mentions that double benefit promotion may be necessary, if some more firms claim to be best
on the same attribute. Kotler gives the example of Volvo, which says and "safest" and "durable".

Four major positioning errors

1. Underpositioning: Market only has a vague idea of the product.

2. Overpositioning: Only a narrow group of customers identify with the product.

3. Confused positioning: Buyers have a confused image of the product as it claims too many benefits or
it changes the claim too often.

4. Doubtful positioning: Buyers find it difficult to believe the brand’s claims in view of the product’s
features, price, or manufacturer.

Different positioning strategies or themes

1. Attribute positioning: The message highlights one or two of the attributes of the product.

2. Benefit positioning:  The message highlights one or two of the benefits to the customer.

3. Use/application positioning: Claim the product as best for some application.

4. User positioning: Claim the product as best for a group of users. - Children, women, working women
etc.

5. Competitor positioning: Claim that the product is better than a competitor.

6. Product category positioning: Claim as the best in a product category Ex: Mutual fund ranks – Lipper.

7. Quality/Price positioning: Claim best value for price

Which differences to promote:

 

This issue is related to the discussion of worthwhile differences to incorporate into the market offering
done earlier. But now competitors positioning also needs to be considered to highlight one or two
exclusive benefits offered by the product under consideration.

Communicating the Company’s Positioning

Once the company has developed a clear positioning strategy, the company must choose various signs
and cues that buyers use to confirm that the product delivers the promise made by the company.

 **************************************
Marketing Strategy for New Industry Products

Pioneer in a Product - Issues

 
When a product is new in the industry life cycle, the firm
starting the production and sale is the pioneer. Normally the
growth is slow in the introduction of phase of a new industry
product as the technical problems with the product are to
corrected, production capacities have to be built up based on
market acceptance and growth, distribution capacity is to be
built up from scratch when distributors have no familiarity
with the product, and customer may have reluctance to
change his old behavior. If the product is an expensive high
technology one, only small number of buyers can afford it.
 
Companies have choice to be a pioneer or a follower. A
pioneer has to initiate every thing connected with the
product. A follower has the benefit using various firms that
helped the pioneer for his venture. Also he has the
opportunity of studying the pioneer’s product and market
response to it. He can examine the distribution channels used
by the pioneer and gauge their effectiveness and he can
evaluate various marketing strategies employed by the
pioneer. Thus an early follower has some extra knowledge
about the product and the market.
 
Is there any Advantage to the
 Pioneer?
 
Some studies indicate that the market pioneer if it can
capture the leadership position gains the most advantages.
Some studies dispute the finding that pioneers have
sustained their leadership.  Robertson and Gatignon give the
opinion that an alert pioneer-leader can pursue various
strategies to prevent later market entrants from wresting
away leadership. Being a pioneer has an advantage that can
be capitalized. The pioneer has to dynamically compete in
the market place to exploit his pioneering advantage. He
needs to have a grand plan for life-cycle of marketing of the
product and launch strategy has to be the first step in that
grand plan.
 
The pioneer may start from a specific product-market
segment his launch but must have plans to cover the larger
part of the market over a period of time by launching
appropriate product variations and covering more market
segments.
 
The competitive Cycle – The Pioneer’s
Challenge
 
Initially, the pioneer is the sole supplier with 100%
production capacity and market share.
 
In the second stage, there is competitive penetration as
competitors build capacities and enter market.
 
In the growth phase, capacity tends to be overbuilt and any
cyclical downtrends will impact margins for all. After some
time share stability may happen.
 
Then a commodity competition stage will come where
returns are average.
 
The final stage will be a decline for the industry and firms
withdraw from the industry. The pioneer needs to steer
through all the stages of the industry life cycle.
 
Pricing and Promotion Strategies for
Pioneers
 
 
Pioneer has the alternative of Skimming pricing or
Penetration pricing.
 
Skimming is entering the market layer by layer in the order
of value exchange. Initially buyers who are willing to pay a
high price are serviced. This strategy is feasible if market is
unaware of the product and special efforts are to be done by
firms to make the potential buyers aware of the product.
 
Pioneer will do rapid skimming if the potential competition
is imminent. In this strategy he will spend substantial
amount on promotion to enlarge the sale quickly. If the
potential competition is not imminent, the pioneer can
undertake slow skimming. He can expand sales slowly by
limiting promotion expenditure.
 
Penetration is entering a large market with a lower price. It
is done for price sensitive products. Rapid penetration is
preferred when the market is unaware of the product. The
pioneer spends a good deal on launch and advertising. A
slow penetration approach is used when market is aware of
the product, but potential competition is limited.
 
Thus price and promotion are the two alternative
dimensions which the pioneer has use in his strategy.
Marketing Strategies for Challenger Firms

Introduction
 

Firms that are not market leaders in their industry or product category are trailing firms. One or
two of them could be close competitors to the market leader and they can be termed as runner-up
firms. These firms can take the role of challengers when they make aggressive efforts to further
their market share or they can be termed followers when they keep quiet and maintain their
market share.

There are successful trailing firms which challenged and became industry No. 1 firms. Canon is
one such example in copiers. Toyota is now the world No. 1 company in automobiles; it
displaced General Motors.

The challenger companies have to attack the leader, other comparable firms, and smaller firms in
their bid to gain market share.

Attack has a greater probability of success when there customer dissatisfaction with the current
leader. There is a gap in the market which the leader is not serving. Comparable firms can be
successfully attacked when they are underfinanced and are charging excessive prices and
customers are showing dissatisfaction. Similarly, underfinanced smaller firms can be attacked to
gain market share.

With each attack, the challenger may hope to gain a reasonable increase in its market share.

The following attack strategies are possible.

Frontal Attack
 
An attack is called a frontal attack when the opponent’s strength is challenged head on. In
marketing, the fight is done all fronts in market segments and areas where the opponent is
currently strong. The general idea is that to win in a frontal attack, the challenger requires three
times the fire power of the opposite side. What is fire power in marketing? Price of the product,
quality of the product, sales effort, advertising effort, and service effort etc. are the various types
of fire power in marketing. The challenger must be able to deploy superior fire power in the
markets he is challenging.

Modified Frontal Attack

 

A modified frontal attack uses price as the challenging dimension. The challenger matches the
opponent in other dimensions but will charge a lower price over an extended period.

Flank Attack
 

Attacking a weak position in the opponent’s force is flank attack. Challenger identifies the weak
areas in the offering as well as marketing territories of the opponent and attacks those areas. A
front attack may also be launched simultaneously, but the frontal attack is only to engage the
opponent. But the real victory is won in the flanks. Market share gain in weak territories is the
objective, but the opponent is forced to defend his share even in his strong territories and
products.

Encirclement Attack
 

In this attack both strong areas and weak areas attacked simultaneously. This type of attack is
more often done by a leader when challenged. When the leader makes an aggressive attack to
gain market share from the trailing firms, he can use this strategy. Even other firms, can use this
strategy when they are attacking a much smaller firm’s market share.

Guerilla Attack
 

Guerilla attacks consist of waging small, intermittent attacks on different marketing territories of
the opposing firm. The aim is to harass and demoralize the opponent initially before launching
the main attack.

Bypass Attack
 

In a bypass attack to gain market share, a firm identifies segments not served by the existing
firms and makes efforts to gain market share.

The Marketing Firepower

 

Price discounts: The challenger can sell a comparable product at a lower price.

Cheaper goods: The challenger can come out with economy goods with lesser number of
features. The strategy will succeed when there is significant number of buyers in need of lower
priced product.

Prestige goods: A challenger can launch a higher quality product with more features.

Product proliferation: The challenger can offer a greater product variety.

Product innovation: the challenger can come out with an improve product.

Service innovation: Improvement in service offered to the buyers.

 

Distribution innovation: a new distribution outlet that offers additional convenience to buyers.

Process innovations: The challenger may have done a process innovation that gives better quality
or lower cost and it is passed on to buyers.

Advertising innovation: The challenger may have innovative communications strategy that
reaches and motivates larger number of potential customers resulting in higher sales.

Challenger needs to have a product-service offer or marketing mix advantage that is of value in
the market place. Then he can use that advantage to gain market share by employing a suitable
attack strategy.

Political Party Marketing - Understanding the Needs and Desires of

People

Political parties in a democracy exist to reflect the desires and needs of people. An individual or
group of persons should try to form a political party only when they have the intention to
represent the people in the legislature and administrative wings of a state.
 
Before the party is formed as well as when the party is in power, political party has to carry out
marketing. It has to know what people want and desire.
 
In a democracy, wherein political parties are not adequately connected to people, there will be
frustration among people. There will be agitation to change the system whenever majority of the
people feel frustrated with the system.
 
Every political party member is to be entrusted the work of meeting around 50 persons every
year to know people, keep the channels of contact open and ascertain the desires and needs of
people.
 
Print based newspapers and periodicals were available and were used to some extent by political
parties.
 
Information technology based systems now can be put in place to leverage the basic personal
contact established by primary members of the party.
 
 
Political Parties and the Internet: Net Gain
www.amazon.com/Political-Parties-Internet-Net-Gain/dp/041528273X
 
 
The web sites of political parties can be used to ascertain the popular opinion on various issues.
Various TV channels are employing this method. But are political parties employing the
technique? Each and every politician needs to put up a voting facility  on his website for his
constituency people for each piece of legislation on which he has to vote in the legislature. He
has to ascertain first desire of his people and if there is a marginal difference he may call for a
public meeting to explain his reasoning. But if a overwhelming majority gives an opinion, he has
to honor the opinion even if he is personally against it. 
 
Can visitors cite any legislator who follows the practice of asking his constituency people to vote
on pending legislations?
 

Behavioral Segmentation of Potential Voters

 
Kotler in his discussion of behavioral segmentation includes segmentation based on attitude. In
attitude based segmentation, five groups are identified for a product or service in a market. The
five groups of people are enthusiastic, positive, indifferent, negative, and hostile. Door-to-door
political campaigners change their canvassing approach according to the attitude of the voter.
Enthusiastic voters are thanked and will be asked to vote without fail. Reinforcement is done for
positive voters. Efforts are made to win over indifferent voters. They do not spend time with
voters with negative and hostile attitude to the party and the candidate. Party has to undertake its
marketing and communication activities to see that negative and hostile voters with respect to
their party are in a minority at the start of the election campaign. Then only their team can hope
to effectively canvass for victory.

The Marketing Concept - Kotler

Marketing - Definition
 
Marketing is a social and managerial process by which individuals and groups obtain
what they need and want through creating, offering, and exchanging products of value
with others.
 
 A human need is a state of deprivation of some basic satisfaction. People require
food, clothing, shelter, safety, belonging, and esteem. These needs are not created by
society or by marketers. They exist in the very texture of human biology and the
human condition. 
 
Wants are desires for specific satisfiers of needs. Although people’s needs are few,
their wants are many. They are continually shaped and reshaped by social forces and
institutions, including churches, schools, families and business corporations.  
 
Demands are wants for specific products that are backed by an ability and willingness
to buy them.  Companies must measure not only how many people want their product
but, more importantly, how many would actually be willing and able to buy it.
 
 

 Market 
 
A market consists of all the potential customers sharing a particular need or want who
might be willing and able to engage in exchange to satisfy that need or want.

 
 Marketers
 
When one party is more actively seeking an exchange than the other party, we call the
first party a marketer and the second party a prospect. A marketer is some one seeking
one or more prospects who might engage in an exchange of values. A prospect is
someone whom the marketer identifies as potentially willing and able to engage in an
exchange of values.
 
 
 Marketers do not create needs. Marketers influence wants. Marketers influence
demand by making the product appropriate, attractive, affordable, and easily available
to target consumers. They also communicate their offering to prospects. Society
influences wants. People living in differnent societies prefer different types of food
items, different types of apparel and even different types of jewellery.
 
 A product is anything that can be offered to satisfy a need or want. Offering and
solution are synonyms to the product in marketing context.
 
A product or offering can consist of as many as three components: physical good(s),
service(s), and idea(s). 
 
Value is the consumer’s estimate of the product’s overall capacity to satisfy his or her
needs.
 
Marketers offer value to a consumer when the satisfaction of customer's requirements 
takes place at the lowest possible cost of acquisition, ownership, and use. 
 
 

 Marketing management 
 
Marketing management takes place when at least one party to a potential exchange
thinks about the means of achieving desired responses from other parties.  
 
 

Definition of American Marketing Association 

Marketing (Management) 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 goals. 
 
 
Marketing management has the task of influencing the level, timing, and composition
of demand in a way that help the organization achieve its objectives. Marketing
management is essentially demand management. 
 Marketing managers manage demand by carrying out marketing research, planning,
implementation and control.  
Within marketing planning, marketers must make decisions on target markets, market
positioning, product development, pricing, distribution channels, physical distribution,
communication, and promotion.  
Marketing work in the customer market is formally carried out by sales managers,
salespeople, advertising and promotion manages, marketing researchers, customer
service managers, product and brand managers, market and industry managers, and
the marketing vice-president.
 
 
 

 
The Marketing Concept
 

The marketing concept holds that the key to achieving organizational goals consists of
being more effective than competitors in integrating marketing activities toward
determining and satisfying the needs and wants of target markets.

 The marketing concept rests on four pillars: target market, customer needs, integrated
marketing, and profitability.
 

Target market
 

No company can operate in every market and satisfy every need. Nor can it always do
a good job within one broad market.

Customer needs
 

Marketing is about meeting needs of target markets profitably.

The key to professional marketing is to understand their customers’ real needs and
meet them better than any competitor can.

Some marketers draw a distinction between responsive marketing and creative

marketing. A responsive marketer finds a stated need and fills it. A creative marketer
discovers and produces solutions that customer did not ask for but to which they
enthusiastically respond.

Integrated Marketing
 

When all the company’s departments work together to serve the customer’s interests,
the result is integrated marketing.

Integrated marketing takes on two levels. First, the various marketing functions-sales
force, advertising, product management, marketing research, and so on – must work
together.
 
Second must be well coordinated with other company departments.

The company is doing proper marketing only when all employees appreciate their
impact on customer satisfaction. To foster teamwork among all departments, the
company carries out internal marketing as well as external marketing. External
marketing is marketing directed at people outside the company. Internal marketing is
the task of successfully hiring, training, and motivating employees who want to serve
the customers well. In fact internal marketing must precede external marketing. It
makes no sense to promise excellent service before the company’s staff is ready to
provide excellent service.

Profitability
 

The ultimate purpose of the marketing concept is to help organizations achieve their
goals. In the case of private firms, the major goal is profit. Marketing managers have
to provide value to the customer and profits to the organization. Marketing managers
have to evaluate the profitability of all alternative marketing strategies and decisions
and choose most profitable decisions for long-term survival and growth of the firm