UNIT 2 – Marketing Strategy

Introduction
Strategic Management is a way in which strategists set the objectives and proceed about
attaining them. It deals with making and implementing decisions about future direction of an
organization. It helps us to identify the direction in which an organization is moving
Strategic Planning
The process of developing and maintaining a strategic fit between the organization’s goals and
capabilities and its changing marketing opportunities is called Strategic planning.
Steps in the Strategic Planning
“To be the world’s premier consumer Products Company focused on convenient foods and
beverages. We seek to produce healthy financial rewards to investors as we provide opportunities
for growth and enrichment to our employees, our business partners and the communities in which
we operate. And in everything we do, we strive for honesty, fairness and integrity.”
Designing the Business Portfolio
The business portfolio is the collection of businesses and products that make up the company.
Guided by the company’s mission statement and objectives, management must plan its Business
Portfolio. The best business portfolio is the one that best fits the company’s strengths and weakness
to opportunities in the environment.
Business Portfolio planning involves two steps.
1. The company must analyze its current business portfolio and decide which business should receive
more, less or no investment.
2. The company must shape the future portfolio by developing strategies for growth and downsizing.

Step 1 - Analyzing the Current Business Portfolio - Portfolio Analysis is the process by which
management evaluates the products and businesses making up the company. Management’s first
step is to identify the key businesses making up the company. These can be called Strategic
Business Units (SBUs). A Strategic Business Unit (SBU) is a unit of the company that has separate
mission and objectives and that can be planned independently from other company’s businesses.
An SBU can be a company division, a product line within a division, or sometimes a single product
or brand.
Step 2 -The next step in the business portfolio analysis calls for management to assess the
attractiveness of various SBUs and decide how much support each deserves. The purpose of
strategic planning is to find ways in which the company can best use its strengths to take advantage
of attractive opportunities in the environment. The best known portfolio planning method was
developed by the Boston Consulting Group, a leading management consulting firm.

The BCG Growth Share Matrix

A portfolio planning method that evaluates a company’s strategic
business units in terms of their market growth rate and relative
market share. As per BCG growth share matrix, SBUs are classified
as STARS, CASH COWS, QUESTION MARKS, and DOGS.
BCG Growth-Share Matrix
 Stars
 – High share of low growth market.
– Build into cash cow via investment.
 Cash Cows
– High share of low growth market.
– Maintain or harvest for cash to build STARS.
 Question Marks
– Low share of high growth market.
– Build into STAR via investment if warranted, or reallocate financing and let slip into DOG status.
 Dogs
– Low share of low growth market. Maintain or divest.
BCG Growth-Share Matrix

Some of the Problems with Matrix Approaches

 Can be difficult, time consuming, and costly to implement.
 Difficult to define SBUs and measure market share and growth rate.
 Focus is on current businesses; gives little help with future planning.
 Can place too much emphasis on growth.
Step3. Developing strategies for growth and Downsizing
Marketing has the main responsibility for achieving profitable growth for the company. Marketing
must identify, evaluate, and select market opportunities and lay down strategies for collecting them.
One useful device for identifying growth opportunities is the Product/Market Expansion Grid.

Product/Market Expansion Grid

 Example of Product/Market Expansion Grid Based on Starbucks
 Market Penetration: Make more sales to current customers without changing products.
– Add new stores in current market areas; improve advertising, prices, menu, and service.
 Market Development: Identify and develop new markets for current products.
– Review new demographic (seniors/ethnic consumers) or geographic (Asian, European, Australian, &
South American) markets.
 Product Development: Offering modified or new products to current markets.
– Add food offerings, sell coffee in supermarkets, co-brand products.
 Diversification: Start up or buy businesses outside current products and markets.
– Making and selling CDs, testing restaurant concepts, or branding casual clothing.
Downsizing - Reducing the business portfolio by eliminating the products or business units that
are not profitable or that no longer fit the company’s overall strategy.
Marketing Strategy
Marketing strategy is the marketing logic by which the business units hopes to achieve its
marketing objectives.
Customer centered marketing strategy - Companies know that they cannot profitably serve all
consumers in a given market or at least not all consumers in the same way. There are too many
different kinds of consumers with too many different kinds of needs. And most companies are in a
position to serve some segments better than the others. Thus each company must divide up the total
market, choose the best segments, and design strategies for profitably serving chosen segments.
This process involves three steps.
1. Market Segmentation
2. Target Marketing
3. Market Positioning
 1. Market Segmentation - Market segmentation is the process of dividing a market into distinct
groups of buyers with different needs, characteristics, or behavior who
might require separate products of marketing programs. A market segment consists of consumers
who respond in a similar way to a given set of marketing efforts.
2. Target Marketing - Target Marketing involves evaluating each market segment’s attractiveness and
selecting one or more segments to enter. Target segments that can sustain profitability should be
chosen. Alternatively, a company might choose to serve several related segments- perhaps those
with different kinds of customers but with same basic wants.
3. Market Positioning - Arranging for a product to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of target consumers. Process begins with differentiating
the company’s marketing offer so it gives consumers more value.
SWOT Analysis
An overall evaluation of the company’s Strength (S), Weakness (W), Opportunities (O), and
Threats (T) is called SWOT analysis.
SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate
the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business
venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves
specifying the objective of the business venture or project and identifying the internal and external
factors that are favourable and unfavourable to achieving that objective. The technique is credited
to Albert Humphrey, who led a convention at the Stanford Research Institute (now SRI
International) in the 1960s and 1970s using data from Fortune 500 companies. The degree to which
the internal environment of the firm matches with the external environment is expressed by the
concept of strategic fit. Setting the objective should be done after the SWOT analysis has been
performed. This would allow achievable goals or objectives to be set for the organization.

Strengths: Characteristics of the business or project that give it an advantage over others
Weaknesses: Characteristics that place the team at a disadvantage relative to others
Opportunities: Elements that the project could exploit to its advantage
Threats: Elements in the environment that could cause trouble for the business or project
 Identification of SWOTs is important because they can inform later steps in planning to achieve the
objective.

First, the decision makers should consider whether the objective is attainable, given the SWOTs.
If the objective is not attainable a different objective must be selected and the process repeated.
Users of SWOT analysis need to ask and answer questions that generate meaningful information
for each category (strengths, weaknesses, opportunities, and threats) to make the analysis useful
and find their competitive advantage.
Summary
Strategic Planning is the process of developing and maintaining a strategic fit between the
organization’s goals and capabilities and its changing marketing opportunities. The businesses
should define their purpose of existence through their mission and vision statements. Also, the
businesses should design their business portfolio which represents the collection of businesses and
products that make up the company. These should be evaluated from time to time. One of the tools
used for evaluation is BCG matrix. It evaluates a company’s strategic business units in terms of
their market growth rate and relative market share. As per BCG growth share matrix, SBUs are
classified as Stars, Cash Cows, Question Marks or Dogs. The other tool used is the Product/ Market
Expansion Grid. Another popular tool used is SWOT analysis for overall evaluation of the
company’s strength (S), weakness (W), Opportunities (O), and Threats (T). The organizations
should scan their environments from time to time for ensuring that they stay ahead of competition
and maintain their competitive advantage vis-à-vis competitors.

Competitor Analysis

Competitor analysis in marketing and strategic management is an assessment of the strengths and
weaknesses of current and potential competitors. This analysis provides both an offensive and
defensive strategic context to identify opportunities and threats. The analysis seeks to identify
weaknesses and strengths that a company's competitors may have, and then use
hat information to improve efforts within the company. An effective analysis will
first obtain important information from competitors and then based on this information predict how
the competitor will react under certain circumstances.

To be able to effectively gain an understanding of the market you are preparing to enter, it is vital
to have an in depth knowledge of your competitors. The better that you understand the competition,
the more effective the strategies you can make to compete with them.

Essentially if your product is something that people want you will have little trouble selling it,
provided that there are no competitors. However, there are almost always competitors, or at least
there soon will be if a product is successful. These competitors will either make a similar product in
a way that makes it superior to yours, or they will undercut you on price and offer better value to
the customer.
Understanding your competitors will also help you to develop a better understanding of your
customers. You can learn the reasons that customers buy from competitors as well as understanding
what strategies the competition use to market to these people.
 Identify your major competitors
 Identify the products/services that they offer.
 Describe the products/services that they offer.
 What factors contribute to their success?
 Assess their weaknesses.
 How will you address their strengths and capitalize on their weaknesses?
 What are their current market shares?

Competitor Profiling
A common technique is to create detailed profiles on each of your major competitors. These
profiles give an in-depth description of the competitor's background, finances, products, markets,
facilities, personnel, and strategies. This involves:

 Background
 location of offices, plants, and online presences
 history - key personalities, dates, events, and trends
 ownership, corporate governance, and organizational structure
 Financials
 P-E ratios, dividend policy, and profitability
 various financial ratios, liquidity, and cash flow
 profit growth profile; method of growth (organic or acquisitive)
 Products
 products offered, depth and breadth of product line, and product portfolio balance
 new products developed, new product success rate, and R&D strengths
 brands, strength of brand portfolio, brand loyalty and brand awareness
 patents and licenses
 quality control conformance
 reverse engineering or de formulation
 Marketing
 segments served, market shares, customer base, growth rate, and customer loyalty
 promotional mix, promotional budgets, advertising themes, ad agency used, sales force success
rate, online promotional strategy
 distribution channels used (direct & indirect), exclusivity agreements, alliances, and geographical
coverage
 pricing, discounts, and allowances
 Facilities
 plant capacity, capacity utilization rate, age of plant, plant efficiency, capital investment
 location, shipping logistics, and product mix by plant
 Personnel
 number of employees, key employees, and skill sets
 strength of management, and management style
 compensation, benefits, and employee morale & retention rates
 Corporate and marketing strategies
 objectives, mission statement, growth plans, acquisitions, and divestitures
 marketing strategies

MARKETING MIX

Marketing Mix
The Marketing mix of Nestle discusses the 4P’s of one of the strong FMCG companies of the
world. The Nestle marketing mix shows Nestle has a strong product line which boosts its marketing
mix. Below are the products, price, placement and promotions of Nestle.
Products - There are 4 different strategic business units within Nestle which are used to manage
various food products.
Beverages – One of the most known coffee brands Nescafe, belongs to the house of Nestle and is
one of the cash cows for Nestle. However, it is not the biggest cash cow. Nestle has a worldwide
distribution and has many different variants. Looking at India, Nestle has also launched Nestea.
Milk and Milk products – Nestle everyday, Nestle slim and Nestle Milk maid are some of the milk
and milk based products from the house of Nestle.
Prepared dishes and cooking aides – Nestle has a third category of products which comes into
prepared dishes and cooking aides. The major cash cow of Nestle lies in this segment, which is
Maggi Noodles. Probably one of the most widely sold ready to cook noodle brands is Maggi.
Maggi has a fantastic taste and quality. Thus, it was not a surprise, that Nestle expanded the Maggi
brand to create an umbrella of different products like Maggi pasta, Maggi sauce, Maggi cubes etc.
The maggi range contributes vastly to the bottom line of Nestle.
Chocolates – Nestle has some popular chocolate products, most popular being Nestle Kitkat,
Munch, Milky bar, Eclairs and Polo. The newly introduced Alpino is targeting the gifting segment
in response to various chocolates like Dairy milk and Bournville by Cadbury. The chocolates
segment of Nestle is a star, where the competition is high and the expense is high but at the same
time the market size is huge as well.
As we can see, two major brands of Nestle are a very high contributor to its Brand equity – Nescafe
and Maggi. These are two brands sold across India in small as well as big shops and super markets.
There have been many competitors for these products, like Bru for Nescafe and Top ramen and
SunfeastYippie against maggi.
The appreciable factor in Nestle is that quality maintenance of products is upto mark and there are
hardly any complaints about Nestles products in the market. This is a major achievement for a
company which relies majorly on food products.
Price
The price is dependent on the market of each individual product. For example, Nescafe and Maggi
being the clear leaders are priced with higher margins for the company as compared to competition.
This is because the product quality is good enough and a bit of skimming price will not cause the
customer to switch brands.
The strength of pricing for Nestle comes from its packaging or consumption based pricing. For
Nescafe as well as Maggi, Nestle offers a lot of sizes and package options. In supermarkets, you
can even find a 16 packet maggi whereas in small retail shops, you can find 5 rsmaggi.
Thus, with the variety available, customer can make his own choice based on his consumption. In
other products like Kitkat and Munch, due to tough competition from other companies, Nestle
offers competitive pricing. You will find that nestle will be similar priced to many of Cadbury’s
Products in the chocolate segment.
Placement – Nestle follows the FMCG strategy of distribution which involves breaking the bulk.
The typical distribution strategy of Nestle is as follows.
Manufacturing >> C & F agent >> Distributors >> Retailers >> Consumer
Manufacturing >> Bulk buyers >> Consumer
These are the two different forms of distribution which Nestle has. It is typical of any FMCG
company. However, the Nestle channel is known to be strong with a good marketing and sales
network for channel distribution.
On top of it, Nestle regularly introduces trade discounts and various tactics to keep the channel
motivated. The major challenge is in the distribution of Maggi which is the most in-demand
product along with Nescafe. Due to these two products, Nestle is able to drive other products in the
market as well. Thus, on purchase of one weak product, the distributor might get a discount on the
stronger product or vice versa.
The challenge for Nestle is in the chocolate segment where it faces stiff competition from Cadbury
and hence selling the chocolates becomes difficult. Kitkat might have its own brand positioning,
but it is not better than Dairy milk. Thus, converting retailers to sell Nestle instead of Cadbury is
the toughest task for Nestle. This is converted mainly through promotions.
Promotions
One of the most widely known tunes is the Nescafe tune. It was one of the best advertising
campaigns and was launched at least 2 decades back. However, that campaign brought Nescafe
strongly in the market.
On the other hand, Nestlé’s brand was pushed by the excellent product quality of Maggi and the
witty and innovative campaigns of Maggi. Where Nescafe focuses on value and the good things in
life, Maggi focuses on moments you had with your Maggi. The recent campaign was completely
focused on your maggi story, where people had to come out with various innovative ways that they
had their maggi.
 Promotions for other products too are done smartly. Kitkat focuses on “Take a break” and has done
some good marketing for the same. Kitkats website too is very innovative and shows nothing but
asks the visitor to take a break and have a Kitkat. The major push expected of a FMCG company is
in sales promotions at the ground level. This is where Nestle really rocks. Nestle focuses on its
strength which is Maggi, Nescafe and Kitkat which are the most promoted brands in the market on
ground level.
Besides this, Nestle regularly uses TVC’s and ATL marketing. It is also present online through
some smart creative. Overall, Nestle is a brand which has strong products as well as strong
marketing, and hence the brand has a very high brand recall value.
We hope that Nestle keeps bringing in good products and keeps maintaining the quality of the
products it already has.

Business Marketing Vs Consumer Marketing

Business Marketing: Business Marketing refers to the sale of either products or services or both
by one organization to other organizations that further resell the same or utilize to support their
own system.
Consumer marketing: on the other hand refers to the transaction of goods and services between
organizations and potential customers.
The above definitions of business marketing and consumer marketing highlight the difference
between the two commonly used terms in marketing (B2B and B2C).Business marketers do not
entertain consumers who purchase products and services for their end-use. They deal only with
other businesses/firms to sell their products.
In consumer markets, products are sold to consumers either for their own use or use by their family
members.
Products in consumer market are further categorized into:

1. Fast Moving Consumer Goods (Abbreviated as FMCG)

Fast moving consumer goods are items that are sold quickly to the end-users generally at nominal
costs. Example - Aerated drinks, grocery items and so on.

2. Consumer Durables

Goods that a consumer uses for a considerable amount of time rather than consuming in one use are
categorized under Consumer Durables.
Consumer Durables are further categorized into - White Goods and Brown Goods

i. White Goods - (Refrigerators, Microwaves, air conditioners and so on (Majorly all household
appliances)
ii. Brown Goods - (Television, CD Players, Radio, Game Consoles (Majorly used for entertainment
and fun)
3. Soft Goods

Soft goods are products which have a shorter lifecycle and their value decreases after every use.Eg
shirts, clothes, shoes.
Examples of Business Marketing (industrial marketing)
Office furniture (Cabinets, desks, workstations, drawers) - End user will not purchase
workstations for his own use at home.
Bulk SMS service (utilized by organizations)
In business marketing, marketers deal with lesser number of individuals as compared to
consumer marketing where one has to deal with the mass market. Generally a single employee
of one organization would be appointed to deal with the concerned employee of the other
organization (client). He does not have to interact with the entire organization.
Organization A sells laptops and desktops to Organization B (A case of B2B marketing).Tom from
Organization A has to deal only with either the IT professional or the administration representative.
Organizations dealing with consumers need to interact with every individual who is a potential end-
user.
Industrial marketing is more focused as compared to consumer marketing.
Business marketers generally deal with sophisticated employees whereas it is not at all
necessary every end user in consumer market would respond to marketers politely. Business buyers
generally are educated and well informed. In consumer market, your buyer can be anyone-
educated, uneducated, labour and so on. Business marketers themselves need to be well spoken and
polished. They must have a pleasing personality and good convincing power.
Business marketers need to be extremely careful about their mode of communication. Emails
exchanged with clients should have appropriate subject line. Mails with irrelevant subject line are
generally not read by clients. In business marketing, marketers ought to send personalized emails.
Bulk SMSes or mass mailers do not work in business marketing. In consumer marketing, products
can be promoted through advertising, pamphlets, brochures, hoardings or simply mass mailers.
There are less number of business buyers as compared to individuals who purchase for their own
end use.

The Difference between Industrial and Consumer Marketing

Product complexity. First and foremost, industrial products are very complicated and require a lot
of technical knowledge to sell. Industrial and technical products range from off-the-shelf bearings
to custom-engineered machines of incredible complexity. The more custom the product, the more
custom the marketing strategy.

Industrial buyers. Consumer marketing presupposes powerful sellers and passive, inexpert buyers
who can be influenced to purchase by a variety of advertising techniques. In contrast, industrial
markets consist of very knowledgeable buyers (and often buyer teams) who analyze products and
purchases in terms of user benefits often measured in dollars or as ROI.

Bids and quotations. Consumers either buy or don't buy from listed prices. On the other hand,
industrial products are often sold by request for quotes that may require a quotation with elaborate
specifications to define the product.
Advertising and promotion. Developing a newspaper ad for impulsive shoe buyers is relatively
straightforward, but it is very difficult to even identify the buying influences of dragline machines
or material-handling robots. Inquiries produced by industrial advertising are only the beginning of a
long, expensive selling process—sometimes lasting years before the sale occurs.

Market information. There is a lot of database information available on consumer products and an
enormous amount of consumer demographic information, making consumer market research
relatively easy to accomplish. On the other hand, information on industrial market niches is very
difficult to acquire and is generally qualitative. This requires considerable industrial experience to
gather.

Case studies. Cases showing how large consumer products companies’ market hairspray have little
relevance to a small company marketing dragline shovel teeth. In fact, marketing strategies used by
large companies aren't even practical for small companies that must market with limited staff,
money, and time.

Product range. Marketing strategies change drastically with the type of product, length of the sales
cycle, product size, and the number of decision makers. For example, the selling, promotion, and
pricing strategies used to sell low-unit-price, standard motors to known accounts are fairly
straightforward. In contrast, capital equipment designed for production lines is usually large,
complex in design, and has high unit prices that must be justified in terms of returns to the
company and approved by the board of directors.

Fundamentally, as the industrial products become more complex with higher prices and longer
sales cycles, the advertising, and selling, pricing, and product development strategies are more
complex and more specific to the situation.

Manufacturers of industrial products, large and small, need help with industrial marketing.
Therefore, large companies have to train new employees on the job, and small companies hope to
hire people with industrial marketing experience.

As mentioned earlier, there is definitely a need for college courses, seminars, and training on
industrial marketing. Of the 2,500 business schools in the U.S., I believe less than 10 percent teach
an industrial marketing course. I'd be very curious to hear from marketing professors and get their
take on this problem.

Business to Business Marketing Strategies

Business to business marketing refers to transaction of goods and services between two businesses.
Let us go through some business to business marketing strategies:
Business buyers are more sophisticated and educated than end-users. Employees appointed for
business to business marketing need to understand the requirements of their clients well. Do not try
to mislead your client. Provide adequate and relevant information. Never play with words. It will
cost you later. Business buyers never believe in emotional and impulse buying. Your brand must
stand apart from the rest.
Business to business marketers need to adopt an extremely focused approach. One just can’t
afford to be casual towards his/her clients. Do your homework well. Prepare a list of your target
clients keeping in mind the products and services your organization offers and how they would be
useful to your client. Don’t add names just for the sake of increasing your client list.
In business to business marketing one needs to choose the right mode of communication. Try
to fix up a meeting with the concerned person representing your client. Be very polite and confident
over the phone. Do not attend phone calls at a noisy place. Keep a pen and paper handy. Politely
introduce yourself and your organization. Be a good and patient listener. Ask for a convenient time
for meeting. Do not be after your client’s life to fix an appointment.
Always be on time for business meetings. Never ever be late. A Business to business marketing
professional always needs to be dressed in formals. Do not forget to carry your business card or
other essential documents such as Company brochures, demo kits and so on. Your business card
should contain all the necessary information about you and your organization. If you have a
tendency to forget things, keep few business cards either in your wallet or office bag, something
which you carry daily to work. Keep a pen and notepad handy. Never write on loose papers in front
of the client. It shows your unprofessional attitude. Carry important presentations in your laptop.
Do go through your presentation once before leaving for the meeting. No files should be corrupt
and make sure your laptop is adequately charged.
Be very confident while interacting with clients. Believe in your brand. Be prepared to answer
any of his questions. Remember you just need to convince your client to invest in your
organization’s products or services. You just can’t force him for anything. It is simply the client’s
decision.
Once the meeting is over, do send the minutes of meeting or points of discussion to the client.
Be very careful about your mail body and subject line. Use bullets and highlight information
wherever required.
Follow ups are essential but don’t be after the client’s life. Regular reminders and follow ups
can sometimes spoil the deal. Send gentle reminders once in a while either through mail or a simple
text message. If the client has disconnected your call once, do not keep calling him. If the client is
not responding to your emails and messages, it is wise to visit him at his office. You will
automatically come to know his /her interest level. If the client still does not respond, move on, else
you will be wasting your time and energy. Concentrate on some other client.
As they say “Too many cooks spoil the dish”. In the same way no two individuals should handle a
single client. It simply leads to confusions.
Business to business marketing survives on healthy relationship with the client. Maintain a strong
relationship with existing and potential clients.
Do not forget your client once the deal is closed. Don’t ignore his calls. After sales service is
essential to retain your clients.

Service Marketing

The Nature of Services

Service industries are quite varied. The government sector, with its courts,
employment services, hospitals, loan agencies, military services, police and fire
departments, post office, regulatory agencies, and schools, is in the service business.
The private non-profit sector, with its museums, charities, temples, mosques, colleges,
 foundations, and hospitals, is in the service business. A good part of the business
sector, with its airlines, banks, hotels, insurance companies, law firms, management
consulting firms, medical practices, motion-picture companies, plumbing repair
companies, and real estate firms, is in the service business. Many workers in the
manufacturing sector, such as computer operators, accountants, and legal staff, are
really service providers. In fact, they make up a “service factory” providing services
to the “goods factory.”

l A service is any act or performance that one party can offer to another that is
essentially intangible and does not result in the ownership of anything. Its production
may or may not be tied to a physical product.

Services are also popping up on the Internet. A little surfing on the Web will turn up
virtual service providers. “Virtual assistants” will word process, plan events, and
handle office chores online consultants will dispense advice by e-mail.

Categories of Service Mix

A company’s offering to the marketplace often includes some services. The service
component can be a minor or a major part of the total offering. Five categories of
offerings can be distinguished:

1. Pure tangible good: The offering consists primarily of a tangible good such as soap,
toothpaste, or salt. No services accompany the product.

2. Tangible good with accompanying services: The offering consists of a tangible good
accompanied by one or more services. Levitt observes that “the more technologically
sophisticated the generic product (e.g., cars and computers), the more dependent are
its sales on the quality and availability of its accompanying customer services (e.g.,
display rooms, delivery, repairs and maintenance, application aids, operator training,
installation advice, warranty fulfillment).

3. Hybrid: The offering consists of equal parts of goods and services. For example,
people patronize restaurants for both food and service.

4. Major Service with accompanying minor goods and services: The offering consists of
a major service along with additional services or supporting goods. For
Example, airline passengers buy transportation service. The trip includes some tangibles, such as
food and drinks, a ticket stub, and an airline magazine. The service requires a capital-intensive
good—an airplane—for its realization, but the primary item is a service.

5. Pure service: The offering consists primarily of a service. Examples include baby-sitting,
psychotherapy, and massage.

Because of this varying goods-to-services mix, it is difficult to generalize about services without
further distinctions. However, some generalizations seem safe:

First services vary as to whether they are equipment based (automatic car washes, vending
machines) or people based (window washing, accounting services). People-based services vary by
whether they are provided by unskilled, skilled, or professional workers.
Second, some services require the client’s presence and some do not. Brain surgery involves the
client’s presence but a car repair does not. If the client must be present, the service provider has to
be considerate of his or her needs. Thus beauty shop operators will invest in their shop’s decor,
play background music, and engage in light conversation with the client.

Third, services differ as to whether they meet a personal need (personal services) or a business need
(business services). Physicians will price physical examinations differently for private patients
versus employees on a prepaid company health plan. Service providers typically develop different
marketing programs for personal and business markets.

Fourth, service provider differ in their objectives (profit or non-profit) and ownership (private or
public). These two characteristics, when crossed, produce four quite different types of
organizations. The marketing programs of a private investor hospital will differ from those of a
private charity hospital or a Veterans Administration hospital.

The defining characteristics of a service are:

Intangibility: Services are intangible and do not have a physical existence. Hence services
cannot be touched, held, tasted or smelt. This is most defining feature of a service and that
which primarily differentiates it from a product. Also, it poses a unique challenge to those
engaged in marketing a service as they need to attach tangible attributes to an otherwise
intangible offering.

1. Heterogeneity/Variability: Given the very nature of services, each service offering is

unique and cannot be exactly repeated even by the same service provider. While
products can be mass produced and be homogenous the same is not true of services.
eg: All burgers of a particular flavour at McDonalds are almost identical. However,
the same is not true of the service rendered by the same counter staff consecutively to
two customers.
2. Perishability: Services cannot be stored, saved, returned or resold once they have
been used. Once rendered to a customer the service is completely consumed and
cannot be delivered to another customer. eg: A customer dissatisfied with the services
of a barber cannot return the service of the haircut that was rendered to him. At the
most he may decide not to visit that particular barber in the future.
3. Inseparability/Simultaneity of production and consumption: This refers to the fact
that services are generated and consumed within the same time frame. Eg: a haircut is
delivered to and consumed by a customer simultaneously unlike, say, a takeaway
burger which the customer may consume even after a few hours of purchase.
Moreover, it is very difficult to separate a service from the service provider. Eg: the
barber is necessarily a part of the service of a haircut that he is delivering to his
customer.

Types of Services

1. Core Services: A service that is the primary purpose of the transaction. Eg: a haircut
or the services of lawyer or teacher.
2. Supplementary Services: Services that are rendered as a corollary to the sale of a
tangible product. Eg: Home delivery options offered by restaurants above a minimum
bill value.
Difference between Goods and Services

Given below are the fundamental differences between physical goods and services:

Goods Services

A physical commodity A process or activity

Tangible Intangible

Homogenous Heterogeneous

Production and distribution are separation Production, distribution and consumption are
from their consumption simultaneous processes

Can be stored Cannot be stored

Transfer of ownership is possible Transfer of ownership is not possible

Features of Services:
1. Intangibility:
A physical product is visible and concrete. Services are intangible. The service cannot be
touched or viewed, so it is difficult for clients to tell in advance what they will be getting. For
example, banks promote the sale of credit cards by emphasizing the conveniences and
advantages derived from possessing a credit card.

2. Inseparability:
Personal services cannot be separated from the individual. Services are created and consumed
simultaneously. The service is being produced at the same time that the client is receiving it;
for example, during an online search or a legal consultation. Dentist, musicians, dancers, etc.
create and offer services at the same time.

3. Heterogeneity (or variability):

Services involve people, and people are all different. There is a strong possibility that the
same enquiry would be answered slightly differently by different
people (or even by the same person at different times). It is important to minimize the
differences in performance (through training, standard setting and quality assurance). The
quality of services offered by firms can never be standardized.

4. Perishability:
Services have a high degree of perishability. Unused capacity cannot be stored for future use.
If services are not used today, it is lost forever. For example, spare seats in an aeroplane
cannot be transferred to the next flight. Similarly, empty rooms in five-star hotels and credits
not utilized are examples of services leading to economic losses. As services are activities
performed for simultaneous consumption, they perish unless consumed.
5. Changing demand:
The demand for services has wide fluctuations and may be seasonal. Demand for tourism is
seasonal, other services such as demand for public transport, cricket field and golf courses
have fluctuations in demand.

6. Pricing of services:
Quality of services cannot be standardized. The pricing of services are usually determined on
the basis of demand and competition. For example, room rents in tourist spots fluctuate as per
demand and season and many of the service providers give off-season discounts.

7. Direct channel:
Usually, services are directly provided to the customer. The customer goes directly to the
service provider to get services such as bank, hotel, doctor, and so on. A wider market is
reached through franchising such as McDonald’s and Monginis.

Problems in Marketing Services:

1. A service cannot be demonstrated.

2. Sale, production and consumption of services takes place simultaneously.

3. A service cannot be stored. It cannot be produced in anticipation of demand.

4. Services cannot be protected through patents.

5. Services cannot be separated from the service provider.

6. Services are not standardized and are inconsistent.

7. Service providers appointing franchisees may face problems of quality of services.

8. The customer perception of service quality is more directly linked to the morale,
motivation and skill of the frontline staff of any service organization

COMPETITION ANALYSIS

Competitive analysis involves identifying your direct and indirect

competitors using research to reveal their strengths and
weaknesses in relation to your own. In this guide, we’ll outline
how to do a competitive analysis and explain how you can use
this marketing strategy to improve your business.

The purpose of this type of analysis is to get a competitive

advantage in the market and improve your business strategy.
Without a competitive analysis, it’s difficult to know what others
 are doing to win clients or customers in your target market. A
competitive analysis report may include:
 A description of your company’s target market
 Details about your product or service versus the competitors’
 Current and projected market share, sales, and revenues
 Pricing comparison
 Marketing and social media strategy analysis
 Differences in customer ratings

How to do a competitive
analysis
Follow these five steps to create your competitive analysis report
and get a broad view of where you fit in the market. This process
can help you analyze a handful of competitors at one time and
better approach your target customers.

1. Create a competitor overview

In step one, select between five and 10 competitors to compare
against your company. The competitors you choose should have
similar product or service offerings and a similar business model
to you. You should also choose a mix of both direct and indirect
competitors so you can see how new markets might affect your
company. Choosing both startup and seasoned competitors will
further diversify your analysis.
Tip: To find competitors in your industry, use Google or Amazon to
search for your product or service. The top results that emerge
are likely your competitors. If you’re a startup or you serve a
niche market, you may need to dive deeper into the rankings to
find your direct competitors.
 2. Conduct market research
Once you know the competitors you want to analyze, you’ll begin
in-depth market research. This will be a mixture of primary and
secondary research. Primary research comes directly from
customers or the product itself, while secondary research is
information that’s already compiled. Then, keep track of the data
you collect in a user research template.
Primary market research may include:
 Purchasing competitors’ products or services
 Interviewing customers
 Conducting online surveys of customers
 Holding in-person focus groups
Secondary market research may include:
 Examining competitors’ websites
 Assessing the current economic situation
 Identifying technological developments
 Reading company records
Tip: Search engine analysis tools like Ahrefs and SEMrush can
help you examine competitors’ websites and obtain crucial SEO
information such as the keywords they’re targeting, the number
of backlinks they have, and the overall health of their website.

3. Compare product features

The next step in your analysis involves a comparison of your
product to your competitors’ products. This comparison should
break down the products feature by feature. While every product
has its own unique features, most products will likely include:
 Price
 Service offered
 Age of audience served
 Number of features
 Style and design
 Ease of use
 Type and number of warranties
 Customer support offered
 Product quality
Tip: If your features table gets too long, abbreviate this step by
listing the features you believe are of most importance to your
analysis. Important features may include cost, product benefits,
and ease of use.

4. Compare product marketing

The next step in your analysis will look similar to the one before,
except you’ll compare the marketing efforts of your competitors
instead of the product features. Unlike the product features
matrix you created, you’ll need to go deeper to unveil each
company’s marketing plan.
Areas you’ll want to analyze include:
 Social media
 Website copy
 Paid ads
 Press releases
 Product copy
As you analyze the above, ask questions to dig deeper into each
company’s marketing strategies. The questions you should ask
will vary by industry, but may include:
 What story are they trying to tell?
 What value do they bring to their customers?
 What’s their company mission?
 What’s their brand voice?
Tip: You can identify your competitors’ target demographic in this
step by referencing their customer base, either from their
website or from testimonials. This information can help you build
customer personas. When you can picture who your competitor
 actively targets, you can better understand their marketing
tactics.

5. Use a SWOT analysis

Competitive intelligence will make up a significant part of your
competitor analysis framework, but once you’ve gathered your
information, you can turn the focus back to your company.
A SWOT analysis helps you identify your company’s strengths and
weaknesses. It also helps turn weaknesses into opportunities
and assess threats you face based on your competition.
During a SWOT analysis, ask yourself:
 What do we do well?
 What could we improve?
 Are there market gaps in our services?
 What new market trends are on the horizon?
Tip: Your research from the previous steps in the competitive
analysis will help you answer these questions and fill in your
SWOT analysis. You can visually present your findings in a SWOT
matrix, which is a four-box chart divided by category.

6. Identify your place in the

market landscape
The last step in your competitive analysis is to understand where
you stand in the market landscape. To do this, you’ll create a
graph with an X and Y axis. The two axes should represent the
most important factors for being competitive in your market.
For example, the X-axis may represent customer satisfaction,
while the Y-axis may represent presence in the market. You’ll
then plot each competitor on the graph according to their (x,y)
coordinates. You’ll also plot your company on this chart, which
will give you an idea of where you stand in relation to your
competitors.
 This graph is included for informational purposes and does not represent Asana’s market
landscape or any specific industry’s market landscape.

Tip: In this example, you’ll see three companies that have a

greater market presence and greater customer satisfaction than
yours, while two companies have a similar market presence but
higher customer satisfaction. This data should jumpstart
the problem-solving process because you now know which
competitors are the biggest threats and you can see where you
fall short.

Competitive analysis example

Imagine you work at a marketing startup that provides SEO for
dentists, which is a niche industry and only has a few
competitors. You decide to conduct a market analysis for your
business. To do so, you would:
 Step 1: Use Google to compile a list of your competitors.
 Steps 2, 3, and 4: Use your competitors’ websites, as well as SEO analysis tools like
Ahrefs, to deep-dive into the service offerings and marketing strategies of each company.
 Step 5: Focusing back on your own company, you conduct a SWOT analysis to assess
your own strategic goals and get a visual of your strengths and weaknesses.
 Step 6: Finally, you create a graph of the market landscape and conclude that there are
two companies beating your company in customer satisfaction and market presence.
After compiling this information into a table like the one below,
you consider a unique strategy. To beat out your competitors,
you can use localization. Instead of marketing to dentists
nationwide like your competitors are doing, you decide to focus
your marketing strategy on one region, state, or city. Once you’ve
become the known SEO company for dentists in that city, you’ll
branch out.
You won’t know what conclusions you can draw from your
competitive analysis until you do the work and see the results.
Whether you decide on a new pricing strategy, a way to level up
your marketing, or a revamp of your product, understanding your
competition can provide significant insight.

Analysis of Consumer and Industrial Markets

 1.Consumer Market

It’s a market that involves the sale of goods/services to the end-users. So, if you
are selling, say, books, groceries, bags, or shoes, that are purchased by
customers who are going to use or consume them finally, then you are in the
consumer market.

 2.Industrial Market

It is a factor market that involves the sale of unfinished or semi-finished goods

that buyers use as raw materials in their production process. For example - when
a manufacturer of large toy-making machinery sells it to another business that
uses this machinery to produce and sell toys in the market, these businesses are
in the industrial market..
Difference between Industrial and Consumer Marketing

 1.Industrial Marketing

Industrial marketing or B2B marketing refers to marketing industrial

goods/services in the industrial market. Industrial marketing management relies
on the tools of competitive tendering and effective communication channels
between industrial companies and professional buyers of their highly specialised
products. It involves a protracted sale-purchase process to provide innovative
solutions to industrial customers' problems.

 Key Characteristics of Industrial Marketing

 Relationship-Oriented: Industrial marketing relies heavily on building

enduring relationships between companies. The emphasis is on trust,
reliability, and effective communication.
 Rational Decision-Making: B2B transactions often involve complex
purchasing decisions, emphasising cost-effectiveness, efficiency, and
long-term benefits.
 Customised Solutions: Industrial advertising often requires tailored
products or services to address specific business needs, resulting in long-
term partnerships.
 Multiple Stakeholders: Purchasing decisions in industrial marketing
involve several stakeholders within the buying organisation, necessitating
targeted communication.

 2.Consumer Marketing

Consumer or B2C marketing refers to marketing finished products/services to the

potential end-customers in a consumer market. It relies on gaining extensive
knowledge about the tastes and preferences of the end customers. It focuses on
generating demand through marketing tools such as advertising campaigns,
attractive packaging, after-sales services, etc.

 Key Characteristics of Consumer Marketing:

 Emotion-Driven: Consumer marketing leverages emotions, aspirations,

and psychological triggers to connect the product or service with the
individual consumer.
 Impulsive Purchases: B2C transactions often involve more spontaneous
buying decisions driven by advertising, branding, and perceived benefits.
 Mass Appeal: Consumer marketing targets a broader audience, focusing
on reaching as many potential buyers as possible through various
channels.
 Brand Loyalty: Building brand loyalty and a strong customer base is
crucial in consumer marketing to ensure repeat business and positive
word-of-mouth.

Comparative Analysis: Industrial Marketing vs Consumer Marketing

Criteria Industrial Marketing Consumer Marketing

Products are simple and easy-

Products are complex and
to-use that can be
Type of Products highly specialized that
straightforwardly mass-
require expert knowledge.
marketed.

Professional and trained

business owners who use
End-users who purchase the
the product of your
product or avail the services
Target Audience industrial company as a
for final consumption and
factor of production, i.e. as
gratification.
an input in their production
process.

To create awareness of the

To influence institutional availability of a product or
buyers throughout their service by a particular brand
Motives of Sellers
complete industrial buying and generate demand by
process. highlighting the salient
features

Strategic Focus Developing and nurturing Dynamic advertising that

 induces the impulsive buying
partnerships that focus on behavior of the customers
building long-term and makes them loyal to the
relations with business brand. Customers may or
partners by gaining their may not be the long-term
trust. users of the
products/services.

Digital Content marketing

(posting blogs, white Various online and offline
papers, case studies on advertising and marketing
Marketing Strategies informational websites), tools including print,
personalized presentations television, and several online
to clients, distributing or social media platforms.
product samples, etc.

Encompasses all the Encompasses only

operational competencies highlighting the
Marketing Elements and processes employed by benefits/utilities that
the company in delivering customers will derive by
value to their customers. using the product/service.

Narrow and constricted as

industrial marketers deal Wide and extensive as
with the limited magnitude consumer marketers market
Market Reach
of businesses requiring the products/services to
products/services of their potential mass customers.
clients.

influence of economic and behavioral factors in marketing

Economic factors are another key factor that influence consumer

behavior and preferences. Economic factors include income,
purchasing power, inflation, exchange rates, and taxation. They
affect how much people can afford to spend, what they prioritize,
and how they perceive value.
Importance of Consumer Behavior
Understanding consumer behavior is paramount for businesses aiming to thrive in today's dynamic and
competitive marketplace. Consumer behavior encompasses the myriad factors that influence individuals'
decisions, preferences, and actions when engaging with products or services. In this introduction, we'll
explore the significance of consumer behavior and its pivotal role in shaping business strategies, driving
innovation, and fostering long-term success.

1. Effective Marketing Strategies:

Consumer behavior insights allow businesses to develop and implement more effective marketing
strategies. By understanding how consumers make purchasing decisions, what influences their choices, and
their preferences, businesses can tailor their marketing efforts to target the right audience with the right
message at the right time. This targeted approach increases the chances of capturing consumer attention,
increasing brand awareness, and ultimately driving sales.

2. Product Development and Innovation:

Consumer behavior research provides valuable insights into consumer needs, preferences, and pain points.
By analyzing consumer behavior, businesses can identify opportunities for product development and
innovation. Understanding what consumers want and how they use products or services allows companies
to create offerings that better meet consumer needs, differentiate themselves from competitors, and stay
ahead in the market.

3. Enhanced Customer Experience:

Consumer behavior insights enable businesses to improve the overall customer experience. By
understanding consumers' expectations, preferences, and behaviors at different touchpoints along the
customer journey, businesses can optimize their products, services, and interactions to better meet
customer needs and exceed expectations. Providing a positive and seamless customer experience not only
leads to increased customer satisfaction and loyalty but also encourages repeat purchases and positive
word-of-mouth recommendations, which are essential for long-term business success.

4. Market Segmentation:
Consumer behavior analysis aids in segmenting markets effectively. By understanding the diverse needs,
preferences, and behaviors of different consumer segments, businesses can tailor their marketing strategies
and offerings to cater to each segment more precisely. This targeted approach allows companies to allocate
resources more efficiently, maximize return on investment, and gain a competitive edge in the market.

5. Competitive Advantage:
A deep understanding of consumer behavior can provide businesses with a competitive advantage. By
continuously monitoring and analyzing consumer trends, preferences, and purchasing patterns, companies
can anticipate changes in the market, identify emerging opportunities, and adapt their strategies
accordingly. This proactive approach enables businesses to stay ahead of competitors, maintain market
relevance, and sustain long-term success.

6. Building Brand Loyalty:

Consumer behavior insights play a crucial role in building and maintaining brand loyalty. By
understanding what drives consumer loyalty, such as positive experiences, emotional connections, and
perceived value, businesses can develop strategies to strengthen relationships with customers over time.
This includes providing exceptional customer service, offering personalized experiences, and consistently
delivering high-quality products or services. By fostering strong brand loyalty, businesses can generate
repeat business, increase customer lifetime value, and benefit from positive word-of-mouth referrals,
ultimately contributing to sustained growth and profitability.
 Meaning of Factors Influencing Consumer
Behavior:
Factors influencing consumer behavior encompass a range of internal and external elements that shape
individuals' decisions in selecting, purchasing, and using products or services. These factors include
psychological aspects such as perceptions, attitudes, motivations, and learning processes, alongside social
influences from family, friends, and cultural norms. Additionally, personal characteristics like age, income,
and lifestyle, as well as economic, technological, and environmental factors, all play significant roles in
guiding consumer choices and behaviors.

Understanding these diverse influences aids businesses in crafting effective marketing strategies and
tailoring their offerings to meet consumer needs and preferences. By analyzing these factors, companies
can anticipate shifts in consumer behavior, adapt their approaches accordingly, and foster stronger
connections with their target audience, ultimately driving growth and success in the marketplace.

5 Factors Influencing Consumer Behavior:

The main factors influencing customer behavior are:

1. Psychological Factors,
2. Social factors,
3. Cultural factors,
4. Personal factors,
5. Economic factors.

1. Psychological factors influencing consumer behavior

Factors based on human psychology are a major determinant of consumer behavior, and they are on four
aspects:

a. Motivation
Motivation is the inward drive we have to get what we need. Every person has different needs such as
physiological needs, security needs, social needs, esteem needs, and self-actualization needs. Basic needs
such as food, water, and sleep are in nature most pressing, while others are least pressing. Therefore, a
need becomes a motive when it is more pressing to direct the person to seek satisfaction.

b. Perception
Customer perception is a process where a customer collects information about a particular product and
interprets the information to make a meaningful image of it. There are three different perceptual processes,
as follows:

Selective attention– is the process of filtering out information based on how relevant it is to you, and
through which marketers try to attract the customer's attention.

Selective retention– where people forget information that contradicts their belief, even if it’s quite
relevant to them. Here, marketers try to retain information that supports consumers’ beliefs.

Selective distortion– the misinterpretation of the intended message. Customers tend to interpret the
information in a way that will support what they already believe, but not necessarily what the product
provides.
c. Learning
Refers to the process by which consumers change their behavior after they gain information or experience.
It doesn’t just affect what you buy; it affects how you shop. Learning can be either conditional or
cognitive, as follows:

Conditional learning– when the consumer is exposed to a situation repeatedly, resulting in positive or
negative consequences. Companies engage in conditional learning by rewarding consumers, which causes
consumers to want to repeat their purchasing behaviors.

Cognitive learning– the consumer will apply his knowledge and skills to find satisfaction and a solution
from the product that he buys. It occurs by associating a conditioned stimulus (CS) with an unconditioned
stimulus (US) to get a particular response.

d. Attitudes
Attitudes are enduring “mental positions” or emotional feelings, favorable or unfavorable evaluations, and
action tendencies people have about products, services, companies, or ideas. Since such beliefs and
attitudes make up brand image and affect consumer buying behavior, marketers aim to change the beliefs
and attitudes to positive ones through designing special campaigns.

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2. Social factors influencing consumer behavior

People wish to be socially accepted, so they tend to imitate others including their purchases. Among the
most important social factors are:

a. Family
Buyer behavior is strongly influenced by the family they belong to. A person develops preferences from
his childhood by watching family buy products and continues to buy the same products even when they
grow up. Companies, therefore, are interested in which family members have the most influence over
certain purchases.

b. Reference Groups
Reference groups are groups (social groups, workgroups, or close friends) a consumer identifies with and
may want to join. The impact of reference groups varies across products and brands. For example, if the
product is visible such as dress or car, then the influence of reference groups will be high.

c. Roles and Status

A role consists of the activities that a person is expected to perform. Each role carries a status. For
example, if a woman works as a finance manager, she plays two roles: finance manager and mother.
Therefore, she is largely influenced by her role and will choose products that communicate it.

3. Cultural factors influencing consumer behavior

A group of people is associated with a set of values and ideologies that belong to a particular community.
Therefore, cultural factors have a strong influence on consumer buying behavior. They include:

a. Culture
Culture is a handed-down way of life and is often considered the broadest influence on a consumer’s
behavior. The influence of culture on buying behavior varies from country to country, therefore marketers
have to be very careful in analyzing the culture of different groups, regions, or even countries.
b. Subculture
A subculture is a group of people within a culture who are different from the dominant culture but share
the same set of beliefs and values. Marketers can use these groups by segmenting the market into various
small portions by, for example, designing products according to the needs of a particular geographic group.

c. Social Class
A social class is a group of people who have the same social, economic, or educational status in society.
To some degree, consumers in the same social class exhibit similar purchasing behavior. In this way,
marketing activities could be tailored according to different social classes.

4. Personal factors influencing consumer behavior

Personal factors vary from one person to another, thereby producing different perceptions and consumer
behavior. Some of the personal factors are:

a. Age
Age and life cycle have a potential impact on consumer buying behavior. Each age stage has different
buying choices that differ from the other. For example, teenagers will be more interested in buying colorful
clothes and beauty products, while middle-aged are focused on houses, property, and vehicles for the
family.

b. Occupation & Lifestyle

Lifestyle refers to the way a person lives in a society and is expressed by the things in his/her
surroundings. Along with occupation, it makes up a great determinant of consumer behavior. For example,
a vegetarian consumer would naturally buy vegan products instead of regular or meat-containing types of
food. Similarly, the doctor will have different buying patterns than a farmer for example.

c. Personality
Personality describes a person’s disposition, helps show why people are different, and encompasses a
person’s unique traits. The “Big Five” personality traits include openness, conscientiousness, extraversion,
agreeableness, and neuroticism. Depending on these traits, marketers determine consumer behavior for a
particular product or service.

5. Economic factors influencing consumer behavior

Economic factors bear a significant influence on the buying decision of a consumer, and they can be on
several aspects, as follows:

a. Country Economic Situation

Consumer buying habits and decisions greatly depend on the economic situation of their country. When a
nation is prosperous, the economy is strong, which leads to a greater money supply in the market and
higher purchasing power for consumers. In contrast, a weak economy reflects a struggling market that is
impacted by unemployment and lower purchasing power.

b. Personal Income
The disposable personal income refers to the actual income remaining after deducting taxes from the gross
income. When a person has a higher disposable income, the purchasing power increases simultaneously.
On the contrary, when disposable income reduces, parallelly the spending on multiple items is also
reduced.

c. Liquid Assets
Liquid assets refer to those assets, which can be converted into cash quickly without any loss. When a
consumer has higher liquid assets, it gives him more confidence to buy luxury goods. On the other hand, if
they have fewer liquid assets, they cannot spend more on buying comforts and luxuries.
Consumer behavior is influenced by many things: psychological, social, cultural, personal, and economic
factors.

In turn, businesses, for the purpose of improving their profits, try to figure out trends so they can reach and
influence the people most likely to buy their products in the most cost-effective way possible such as the
layout of a store, music, grouping, and availability of products, pricing, and advertising.

Strategic Marketing Mix Components

In the sequence of strategic analysis and decisions, "marketing mix" analysis
falls after various external and internal environmental analyses such as
PESTEL analysis, Porter's Five Forces analysis, SWOT Analysis and even
formulation of competitive strategies (Porter's Generic Strategies).

Marketing mix is an imperative concept in modern marketing and academically

it is referred to as the set of controllable tools that the firm blends to produce
the response it wants in the target market, so it consists of everything the firm
can do to influence the demand for its product (Kotler and Armstrong, 2004). It
is important to realise that marketing mix strategy of any company can have
one major function, that is, strategic communication of the organisation with its
customers (Proctor, 2000). It was further argued that marketing mix provides
multiple paths as such communication can be achieved either in spoken form
and written communications (advertising, selling, etc.) or in more symbolic
forms of communication (the image conveyed in the quality of the product, its
price and the type of distribution outlet chosen). However, the key element is
that the main aspects of marketing mix that will be discussed below "should
not be seen as individual entities, but as a set of interrelated entities which have
to be set in conjunction with one another" (Proctor, 2000: 212).

1.Main Aspects of Marketing Mix (100)

The easiest way to understand the main aspects of marketing is through its
more famous synonym of "4Ps of Marketing". The classification of four Ps of
marketing was first introduced and suggested by McCarthy (1960), and
includes marketing strategies of product, price, placement and promotion.

The following diagram is helpful in determining the main ingredients of the

four Ps in a marketing mix.

Product
In simpler terms, product includes all features and combination of goods and
related services that a company offers to its customers. So the Air bus product
includes its body parts such as the engine, nut bolts, seats, etc along with its
after-sales services and all are included in the product development strategy of
the Airbus. However, a serious criticism can be raised here in terms of how
marketing mix analysis will cater for companies such as ABN Amro
Bank,Natwest Bank, British Airways and Fedex Corporation as they don't
possess tangible products. It was argued that is it feasible to omit service-
oriented companies with the logic that the term "services" does not start with a
"P", however, it was asserted that these companies can use the terminology of
"service products" under marketing mix strategy making (Kotler & Armstrong,
2004).

Lazer (1971) argued that product is the most important aspect of marketing mix
for two main reasons. First, for manufacturers, products are the market
expression of the company's productive capabilities and determine its ability to
link with consumers. So product policy and strategy are of prime importance to
an enterprise, and product decisions dictate the scope and direction of company
activity. Moreover, the market indicators such as profits, sales, image, market
share, reputation and stature are also dependent on them. Secondly, it is
imperative to realise that the product of any organisation is both a component
and a determinant of the marketing mix as it has a great influence on the other
elements of the mix: advertising, personal selling, channels of distribution,
physical distribution and pricing. So without proper product policy, a company
can not pursue for further elements of marketing mix.

Pricing

Pricing is basically setting a specific price for a product or service offered. In a

simplistic way, Kotler and Armstrong (2004) refer to the concept of price as
the amount of money that customers have to pay to obtain the product. Setting
a price is not something simple. Normally it has been taken as a general law
that a low price will attract more customers. It is not a valid argument as
customers do not respond to price alone; they respond to value so a lower price
does not necessarily mean expanded sales if the product is not fulfilling the
expectation of the customers (Lazer, 1971).
Generally pricing strategy under marketing mix analysis is divided into two
parts: price determination and price administration (ibid). Price determination
is referred to as the processes and activities employed to arrive at a price
for a product including consideration of relative prices of products within
the same line, and differences in price for similar products of differing
grades and qualities.
Price administration is referred to as the activities involved in fitting basic
prices to particular sales situations such as geographic locale, functions
performed by customers, position of distribution channel members, or special
sales situations. An example of this is special discounted prices at, for instance,
GAP,NEXTetc or Coca Cola and Pepsi where different prices are set in
different geographical areas considering the difference in patterns of usage as
well as varying advertisement costs.

Placement
Placement under marketing mix involves all company activities that make the
product available to the targeted customer (Kotler and Armstrong, 2004).
Based on various factors such as sales, communications and contractual
considerations, various ways of making products available to customers can be
used (Lazer, 1971). Companies such as Ford, Ferrari, Toyota, and Nissan use
specific dealers to make their products available, whereas companies such
asNestle involve a whole chain of wholesaler retailers to reach its customers.
On a general note, while planning placement strategy under marketing mix
analysis, companies consider six different channel decisions including
choosing between direct access to customers or involving middlemen, choosing
single or multiple channels of distributions, the length of the distribution
channel, the types of intermediaries, the numbers of distributors, and which
intermediary to use based on the quality and reputation (Proctor, 2000)

2.Promotion

Promotional strategies include all means through which a company

communicates the benefits and values of its products and persuades targeted
customers to buy them (Kotler and Armstrong, 2004). The best way to
understand promotion is through the concept of the marketing communication
process. Promotion is the company strategy to cater for the marketing
communication process that requires interaction between two or more people
or groups, encompassing senders, messages, media and receivers (Lazer,
1971). Taking the example of Nokia, the sender of the communication in this
case is Nokia, the advertising agency, or both; the media used in the process
can be salesmen, newspapers, magazines, radio, billboards, television and the
like. The actual message is the advertisement or sales presentation and the
destination is the potential consumer or customer, in this case mobile phone
users.

3.Limitation of Marketing Mix Analysis (4Ps of Marketing)

Despite the fact that marketing mix analysis is used as a synonym for the 4Ps
of Marketing, it is criticised (Kotler & Armstrong, 2004) on the point that it
caters seller's view of market analysis not customers view. To tackle this
criticism, Lauter born (1990) attempted to match 4 Ps of marketing with 4 Cs
of marketing to address consumer views:

4 P AND 4 C
Product – Customer Solution
Price – Customer Cost
Placement – Convenience
Promotion – Communication