Industrial Economics and Management, Schemes and Mind Maps of Industrial economy

Download Industrial Economics and Management and more Schemes and Mind Maps Industrial economy in PDF only on Docsity! Core Concepts of Marketing | Marketing Management In this article we will discuss about the core concepts of marketing. The concepts are:- 1. Needs 2. Wants 3. Demand 4. Customer Value 5. Exchange 6. Customer and Consumer 7. Customer Satisfaction 8. Customer Delight 9. Customer Loyalty 10. Marketing V/s Market. The core concept of marketing is a social and managerial process by which individuals or firms obtain what they need or want through creating, offering, exchanging products of value with each other. 1. Needs: Needs are the basic requirements which human beings require for existence. These mainly consist of air, water, food, clothing and shelter. Along with these needs, some other needs which are required to be satisfied are education, medical care, entertainment, and recreation. It is a difficult task for a marketer to identify the needs of the customers since costumers may not be conscious of their needs, and even if they are, then they might be unable to put forth their needs clearly. The notion that marketer creates needs is wrong. The need actually pre-exists in the market; the marketer just has to identify these needs, make the customers aware of these needs, and make the customers believe that only their company can satisfy these needs. The needs can be further classified into 5 types as: (i) Stated Needs: These are the clearly defined needs of the customer; i.e. the customer clearly tells his needs to the company. These are the parameters that the customer defines to the marketer of the product. They are the easiest to deal with since through the stated needs the marketer actually knows what the customer wants from them. For example, a customer may ask for an inexpensive fridge. (ii) Real Needs: These are the actual needs of the customers which he may not be able to pinpoint to the salesperson. In this case, salesperson has to ask questions to the customers to find out the exact nature of the stated need by the customer. From the above example – if a customer says that he wants an inexpensive fridge, he might be saying that he needs to buy a fridge which consumes less electricity and thus save the electricity cost. In this case the word “inexpensive” means that the initial cost might not be less but the operating cost should be less; and for this the seller needs to ask specific questions to understand the actual requirement of the customer. (iii) Unstated Needs: These are the benefits which are not asked by the consumers but they expect them naturally with the products/services offered. E.g. Customer expects good service from the showroom dealer from where he is going to purchase the fridge. (iv) Delight Needs: When a customer gets more than what he needs and if that makes him happy, then it is called as delight needs. These needs help the marketer to cross the expectation level of the customer. E.g. If the dealer provides the customer with free movable fridge trolley and free fridge cover on purchase of fridge then the customer will be delighted. (v) Secret Needs: These are the needs which customer does not want to disclose but still gives indication to have it from the seller. E.g. The customer wants his friends to see him as a savvy customer and gain a social status for himself after buying the fridge. 2. Wants: The wants are a step ahead of needs and are largely dependent on the human needs. A need becomes a want when a need is directed to a specified object. Wants are designed according to the taste and preferences of the society. Needs already exists in the market; however, wants may be created by the marketers. It can also be said that Need and Want are relative terms because a product may be considered to be a need by someone but it may also be perceived as a want by others. E.g. To have a food is a basic need of human beings but to have biscuits for food is a want created by the marketers. 3. Demand: A demand is generated when a customer is willing to buy a particular product and has an ability to pay for it. A company should study not only how many people want their product but also how many would actually afford to buy the product. E.g. Many people would be desirous to buy Ferrari car; however, there is only a small segment which can afford to buy it which reflects the demand for Ferrari car in the market. Demand = Willingness to pay + Ability to pay 4. Customer Value: Value reflects the sum of the perceived tangible and intangible benefits and costs to customers. Here the costs include both economic and non-economic costs whereas benefits include both tangible as well as intangible ones. A product or services is successful when it delivers value and satisfaction to the buyers. Value is usually a combination of quality, service, and price. Value increases with quality and service and decreased with price. A value is a relative term as perceived benefit for one person may not be a benefit for others. Value changes based on time, These front line employees are able to develop a relationship between the customer and the brand. Eg. A restaurant presenting a free cake to the customer during a birthday party bash thrown in that restaurant will keep the people delighted and astonished and might make the consumer loyal to them. 9. Customer Loyalty: Loyalty can be defined as a customer’s strong continuing belief that a particular organization’s products/services offer remains their best option. Customers are said to be loyal when they consistently purchase a certain product or brand over an extended period of time. Loyalty also means customers hanging in there, even when there may be a problem with the company’s products or services, just because the organization was good to them in the past and had addressed their issues whenever they arise. It means that customers do not seek out competitors and, even when approached by competitors do not show any interest in them. It also means customer being willing to spend the time and effort to communicate with the organization so as to build on past successes and overcome any weaknesses. The loyalty can be measured by measuring the strength of the relationship between buyer and seller or between the organization and its customer. True loyalty requires both share-of-wallet and share-of-heart so that loyal customers continue to buy even when situational factors may make a repeat purchase difficult, such as stock outage, or alternative providers try to persuade customers to switch to them by using promotional offers. Eg. A customer loyal to use a particular brand such as Nokia mobiles will always go for repurchase of Nokia mobiles irrespective of many other competitors offering the same features at relatively low price. 10. Marketing V/s Market: Marketing is the process of trying to get group of people interested in buying company’s products or services. It is an organizational function and a set of processes that work in tandem to serve the market effectively, efficiently and profitably. It is a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Marketing is all those activities that facilitate trade. These include activities that identify consumers’ needs such as market research and those activities that satisfy consumers’ needs e.g., packaging and distribution. Marketing activities therefore support the marketing of goods and services. Market is a collection of buyers and sellers. A market, colloquially, is a group of people who are willing to buy something. It is a public gathering held for buying and selling merchandise. It is a place where goods are offered for sale. It is a set of individuals or institutions that have similar needs and that can be met by a particular product. Therefore, a market is the set of all actual and potential buyers of a market offer. A market is any space within which trade takes place between buyers and sellers for a well-defined product. This space can be a produce market, a shop, internationally between countries, or over the internet. Eg. There is a “market” for detergent soap. What is Marketing? The principle of marketing is a trade or deal intended to fulfil human wants and desires by way of exchange mechanism. A demand is a wish for which customer is inclined to pay an amount. A wish or desire can be any element or service the consumer wants or look for. Desires become demands when reinforced by purchasing power. A want is any item the buyer feels to retain herself rife and active. An exchange involves an amount between two parties. But, the exchange is different from the transfer, there are chances that transferor will not get anything in return, but the aim of marketing is to generate sales to earn feasible profit for the manufacturer. Marketing in its prior explanation and in statutory aspect is said to be the effort by which the transmission of possession in products among the seller and the purchaser is implemented, priority ownership transfer. It confines the extent of marketing to the absolute transfer of holding” Marketing involves all the actions which are related to enacting changes in the holding and control of goods and services”. Marketing in an economic viewpoint is determined as a trade function by managing supply and demand in symmetry. It targets the formation of well-being and standard of living of the community as the purpose of marketing. It is also described as” That portion of economics which manages the formation of time, place and ownership utilities”. “That stage of business life by which human desires are fulfilled by the transfer of goods and services for some worthwhile payment”. Types of Marketing The word marketing can be determined from two points of view, i.e., Micro (Firm’s point of view) and Macro (Nation’s point of view). Micro Marketing Under micro marketing, if a company plan and enforce strategies for development of the product, pricing, promotion and dispersion, that assure circulation of want fulfilling and services at a gain. The eventual goal of micro marketing is the fulfillment of human wants and desires. i.e., it is customer-oriented. Again, the definite point or what is noticed as “micro marketing” is the procedure of regulating an individual company so as to gratify its particular consumers. Marketing also includes the administration of every facet of a business with the eventual customer in mind. It can be related to the inspection aspect of a scientist who examines a small substance by a microscope. The approach of micro marketing reveals two facets, they are:  Marketing should guarantee desires fulfilling goods and services, i.e., marketing starts with the consumer and not with the manufacturing procedure.  Instead of manufacturing marketing must conclude what products are to be manufactured. The above two facets suggest that all actions of marketing concentrate ultimately on the customer; the manufacturer does not decide the product. 3. Order Maker  New Trade vendors The aim is to have a new business by recognizing and selling to a person or a company who have not earlier purchased from the salesperson organization.  Supervisory sellers These sellers have the work of managing, stable relations with the organizational consumers, i.e., industrialized buyers, purchasing for resale and corporate buyers. The selling work may include crew selling where prevailing salesperson backed by the product and economic specialists.  Customer sales assistant These persons sell tangible products and services like security apparatus, cars, insurance and special pension plans to an individual. Enough selling in this group turns to be “one-off” and salesperson are usually paid by way of commission. Thus, the incentive to complete an order is predominant, and it is a group that draws much attention to criticism in terms of “high pressure”, i.e., for pressurizing customers to make a purchase.  High -tech sales representative This crew of order-makers supplies sales assistance to front-line salespersons where a product is exceptionally technological and arbitration is complicated; salespeople may be backed by the product and economic specialists, who can supply the comprehensive technological facts needs by the consumers.  Marketer These persons contribute sales assistance in retail and wholesale selling conditions. Order can be arranged nationwide at head office, but sales to respective outlets are backed by merchandisers who express recommendations on display, enforce sales promotion, examine inventory levels and retain reach with store managers. Summary 1. Marketing is originated as a new means of arriving; whereas selling is a humanistic word. 2. Marketing activities involves the integrated procedure of determining and fulfilling the customer’s needs; whereas selling involves only the material distribution of goods and services. 3. Marketing involves the conduct of many associated actions; whereas the scope of selling is restricted only to the substantial dispersion. 4. Marketing is customer-aligned; whereas selling is product aligned. 5. The aim of the marketing is to fulfill the customer’s desires; whereas the aim of the selling is to draw the utmost profit. 6. Marketing gives emphasis upon escalation of profits by highest social contentment’s; whereas selling gives emphasis on the escalation of profits by expansion of sale. 7. Marketing has continuing targets with certain rational suggestions; whereas selling is a periodic activity with interim targets. 8. In marketing, what shall be provided as a product is resolved by the consumer; whereas in selling the seller decides what product is to be presented. 9. Marketing considers business as consumer gratifying procedure; whereas selling considers business as a product manufacturing procedure. 10. In marketing customer regulates price, and price ascertains cost; whereas in selling cost ascertains price. 11. Marketing perceives the consumers as the king; whereas in selling consumer is considered as a determinative channel of the business. 12. Marketing gives the prominence to an integrated approach, by a unified plan of action which covers, products, promotion, pricing and dispersion; whereas selling gives importance on anyhow selling, there is no strategy amidst the distinct activities of the overall marketing assignments. Conclusion The terms “Marketing” and “Selling” are generally used as if they had similar significances. Still, it is recommended to be precise as to the distinction in the explanation to be drawn in. Selling usually attracts the plans and suggestions to make customer barter money for goods and services. Marketing is engaged with the belief of gratifying a customer’s necessities by virtue of the product along with the supply of value-satisfaction to the consumer. Marketing vs. Selling: Difference and Comparison BASIS OF DIFFERENCE MARKETING SELLING Source Marketing is a new means of arriving Selling is a humanistic word Actions It involves the integrated procedure of determining and fulfilling the customer needs It involves only the material distribution of goods and services Extent Marketing involves the conducts of many associated actions also Selling is restricted only to the substantial dispersion Product/Customer orientation It is customer aligned It is product aligned Goals The goal of marketing is to fulfil the customer wants The goal of selling is to draw the utmost profit Way to Profit It emphasizes on the escalation of gains by highest social contentment It emphasizes on the escalation of gains by the expansion of sale Essence Marketing has continuing goals with certain rational suggestions Selling is a day-to-day periodic activity with interim goals Product assurance What shall be provided as a "product." is resolved by the consumer The seller decides what "product." is to be presented Perspective Marketing considers business as a " Consumer gratifying procedure." Selling consider business as a "product manufacturing procedure." Perseverance of cost In marketing customer regulates price and price ascertain the cost In selling cost ascertains price consumer's importance Marketing perceives the consumer as the "king." Selling consider the consumer as the determinant channel in the business Significance Marketing gives the prominence Selling gives importance "on and department stores all act as intermediaries and the point of contact for customers. You don’t go to the Jif store to buy peanut butter, after all. Not all retail distribution strategies take the same approach, however. Depending on the brand, product and audience, they may aim for the widest market penetration possible, while others focus on establishing exclusivity by limiting availability. 3. Intensive distribution Consumers are probably most familiar with this form of retail distribution, where products are sold through as many outlets as possible. Take Jif, for instance. You can find the brand in virtually any grocery store and convenience store in the United States, regardless of the market or location. Jif has an enormous market penetration, and is one of a handful of peanut butter brands that are ubiquitous across the country. This style of retail distribution is best-suited for goods and products that rarely command a great deal of brand loyalty. If a customer’s preferred brand is unavailable, they are perfectly fine buying another product at a similar price point. For most consumers, if Skippy’s sold out, Jif’s an acceptable alternative. Intensive distribution gives brands the largest presence possible, reaching more potential customers across disparate markets. Only a select few brands can achieve that high level of distribution. Inventory management, supply chain logistics and marketing demands all become incredibly complicated with an intensive distribution strategy, and many companies simply do not have the resources or capabilities to make this approach work. This approach is a poor fit for niche products with limited appeal. Those brands require a more targeted strategy that zeroes in on their target audiences. Luxury products with high price points may also suffer with intensive distribution, as lower quality offerings can easily undercut them and better appeal to less discerning shoppers. 4. Selective distribution Not all companies that sell through retailers are looking to achieve the widest distribution possible. Luxury brands are often highly selective about where their products are placed and how they are represented. You won’t find Hermes handbags in a big-box store, for instance. For those companies, the in-store experience is part of their brand and they tightly regulate retail displays and even how clerks describe or demo their products. Selective distribution makes sense when brands and products cannot be swapped out interchangeably. Target audiences are extremely discriminating and are willing to travel to specific outlets where their preferred brands are available. 5. Exclusive distribution Selective distribution strategies still use a variety of intermediaries and outlets to sell wares, but brands have an even more discerning option to consider: exclusive distribution. Under this business model, companies partner with a single wholesaler or retailer in a particular market. The idea is to restrict availability to protect brand equity and project a more selective and exclusive brand image. Rolex is one of the more famous examples of exclusive distribution. The company partners with one wholesaler in each market to control precisely where its products are sold and how they are represented. Even though a third party is the final point of contact with the end user, Rolex can still dictate the in-store experience, creating strict brand guidelines for clerks and agents to follow. Brands also tend to have more leverage in exclusive distribution relationships since wholesalers, retailers and distributors are dependent on the presence of luxury, high-quality products to appeal to their upscale and discerning clientele. Manufacturers are in a stronger position to negotiate distribution and marketing costs with their intermediaries since there are few alternatives to take their place on store shelves. An exclusive distribution partner agency can also be a huge asset when expanding into new markets. Distributors already have a presence in these markets and understand what motivates local customer bases. That means less risk for businesses that want to reach international audiences, but are concerned about the logistics involved in such a move. Obviously, exclusive distribution is reserved only for luxury brands where product scarcity isn’t just acceptable – it’s expected. 6. Dual distribution Many businesses choose to use a variety of distribution channels to sell their products, working with wholesalers and retailers while also maintaining brand storefronts to sell directly. This approach is known as dual distribution. The Apple example we cited earlier is one instance of dual distribution, although it leans more toward the direct-to-customer end of the spectrum. Smartphones, in general, highlight this approach, as manufacturers sell their devices through big-box stores, telecom partners, e-commerce markets and their own online store fronts. Dual distribution allows brands to reach a large audience with varied purchase options. It makes perfect sense for smartphone manufacturers to partner with wireless service providers because customers can’t use one without the other. Many users will naturally want to sign up for a wireless plan when they buy a new smartphone, so why not make those devices available in wireless stores? 7. Wholesaler Like retailers, wholesalers act as middlemen that buy products from manufacturers and then sell those goods to end users at an increased price point. The biggest differences between these business models are scale and audience. As anyone who’s shopped at Costco or Sam’s Club can tell you, products are purchased in bulk from wholesalers. Customers wind up spending less money per unit while buying large quantities of a particular product. Although consumer-facing membership warehouses are the most visible examples of wholesale distribution channels, most wholesalers sell to other businesses. Restaurants, for instance, buy their equipment from wholesale providers. Certain retailers may purchase products in bulk from a wholesaler and then sell those goods to consumers individually at a higher price point. Brands benefit from wholesale distribution by moving large volumes of products at once. The tradeoff is wholesalers expect discounts and reduced rates in exchange for buying in bulk. Another factor to consider is that manufacturers can avoid the logistical challenges of selling directly to customers. There’s no store to manage, on-site personnel to train or inventory to stock. Once products have changed hands, those issues are someone else’s concern. That also means brands have limited – if any – say about how their products are handled and displayed. They can address those concerns by creating brand guidelines for distributors to follow, but there is some added cost to conduct on-site reviews and assess compliance. In essence, marketing research covers the conception, development, placement and evolution of a product or service, its growing audience and its branding – all the way from brand awareness to, we hope, brand equity. Market research, because it emphasizes Place, is an integral part of marketing research. We could sum it up like this: market research is a subset of marketing research. A typical marketing research process is as follows:  Identify an issue, discuss alternatives and set out research objectives  Develop a research program  Gather information  Gather data  Organize and analyze information and data  Present findings  Make a decision based on the research The differences between marketing research and market research Although market research informs marketing research, the table below compares the considerable differences between them. Market research Marketing research What does it do? It involves study of the marketplace and the buyer’s behavior within that market. It involves the systematic study of all aspects of a business’s marketing. Feeds into Marketing research. The whole of a business’s marketing information system. Scope of research Limited – it studies only market and consumer behavior. Wide – it studies the entire marketing process – the Four Ps, as well as the market itself. Nature of research Specific – its research gives insights into a particular market, and cannot easily be applied to other markets. Generic - its research can be used for solving various marketing problems and issues. Dependent or independent? Dependent upon the requirements of marketing research. Independent - marketing research is developed by the business for the business. Purpose To research the viability of a product or service in the target market. To inform decision-making about all marketing activities. The similarities between marketing research and market research Both are:  crucial for a business’s success.  research projects, and as such produce valuable data.  useful for quantitative and qualitative tools and techniques such as surveys, focus groups, questionnaires and interviews to gather information  effective for making decisions regarding type and quality of products and services offered to customers, suitable locations for the business, the best advertising, and the most efficient distribution channels and networks. Difference Between Advertising and Promotion Marketing mix implies combinations of various elements that help the company in attracting customers, to buy the products offered by the company. It includes product, price, place, and promotion. Promotion is a marketing mechanism, that involves informing the customers about the product offered by the company, and includes advertising, public relation, personal selling, direct marketing, etc.arketing mix implies combinations of various elements that help the company in attracting customers, to buy the products offered by the company. It includes product, price, place, and promotion. Promotion is a marketing mechanism, that involves informing the customers about the product offered by the company, and includes advertising, public relation, personal selling, direct marketing, etc. It includes product, price, place, and promotion. Promotion is a marketing mechanism, that involves informing the customers about the product offered by the company, and includes advertising, public relation, personal selling, direct marketing, etc. Most of the people are having the opinion that promotion and advertising are one, and the same thing but both of the terms differ in the sense that advertising is that form of communication, which is intended to induce potential customers, to buy your product, over the competitors. It is a tool that reaches thousands of customers in one go. In this article, our main focus is to explain all the difference between advertising and promotion. But, first of all, you must know that promotion is a marketing technique, and advertising is a promotional tool. BASIS FOR COMPARISON ADVERTISING PROMOTION Meaning Advertising is a technique of driving public attention towards a product or service, through paid network. The set of activities that spread a word about the product, brand or service is known as promotion. What is it? Subset Superset Objective Building brand image and boosting sales. Short term sales push Strategy Promotional strategy Marketing strategy Effects Long term Short term Results Generally slow, can be seen over time. Instant Cost involved Highly expensive Cost Effective Best suited for Medium and big enterprises All enterprises Definition of Advertising Advertising is an impersonal promotional tool which is used to draw public attention towards a product or service, through a selected and paid media. It is a means of communication that helps to communicate a single message, to a large number of people in less time. In a nutshell, advertising is nothing but “telling and selling” of commercial items. Pricing and Related factors Pricing is a key element of the marketing mix. All the other elements – Product, Packaging, and Promotion are cost generators, i.e. they cost the company money. But pricing is an income generator. Let us look at the factors that determine the pricing of a product. Pricing A price is a value in monetary terms that one party pays to another in a transaction in exchange for some goods or services. So the definition of price is the amount of money the buyer will pay as consideration to the seller in exchange for goods or services. Pricing isn’t always as easy as setting a price the seller hopes to obtain. It involves aspects such as demand and supply, cost of the product, its perception and value for the customer and many such factors. So while pricing a product, the company has to take immense care and consideration. If the price is too high or even too low the product will fail in the market. This is also the reason why the determination of price is not a one-time event. A company changes the prices according to the market conditions and other circumstances. Factors Affecting Price Determination A company has to keep in mind various factors while determining the price of a product. Some such important factors are given here. 1] Cost of the Product The most important factor affecting the price of a product is the product cost. The same principle also applies in case of services. The product cost will be inclusive of the cost of production, the distribution costs and the selling and promotion costs. This cost will act as a benchmark for setting the price. In the long run, the company will obviously try to cover the entire cost of the product. And in addition, it will set for itself a profit margin over and above such cost. But perhaps in the short run, the company may set a price lower than the cost of the product. This is a marketing strategy to boost sales and capture a share in the market. But in the long run, no company can survive unless the prices of the products/services do not even cover their costs. Let us also learn about the three types of costs of a company  Fixed Cost: These costs are fixed. They have no relation to the level of activity or production of the company. Even if there is no production of goods these costs will occur. For example, the rent of the factory is a fixed cost.  Variable Cost: These are the costs that vary in direct proportion to the production levels of an entity. Higher the production, higher the cost and vice versa. The raw material is a classic example of a variable cost  Semi-Variable Costs: These costs also vary with the production levels. But they are not directly proportional. Say for example the salary of a manager is 10,000/- a month fixed and then 10% of his sales. This is a semi-variable cost. 2] The Demand for the Product The cost of the product will only give you a benchmark to determine the price. The upper limit of the price range will depend on the utility the product has and hence its demand in the market. So the cost of the product is the seller’s concern. The buyer’s concern is the utility of the product. The demand for the product will depend on its utility and its price. The law of demands states that lower the price higher the demand. Another factor to consider when determining the price is the elasticity of demand. This means the corresponding change in demand to the change in the price of a product. If the demand is inelastic then the company can charge a higher price for their products. 3] Price of Competitors One factor that affects price termination is the price the competition charges for their product. Not only their price but their products, its features and other factors like distribution channel, promotions etc. should also be studied. In a market, with free competition, the prices have to be very competitive. You cannot risk pricing yourself out of the market. But on the other hand, if your products have special r additional features this must be reflected in the price. 4] Government Regulation The government has a duty to protect its citizens from unfair practices and pricing. So it may impose certain laws and regulations with regards to the pricing of a product. It can even regulate the prices of goods that it considers essential goods. This generally happens in the pharmaceutical industries. Manufacturers charge exuberant prices for life-saving drugs and the buyers have no choice but to pay. In such cases, the government may step in and regulate the prices of these essential medicines. There are other factors also which help a company in their pricing aspect of the marketing mix.