Marketing management a decision making approach pingali venugopal

Marketing Management



Marketing Management
A Decision-making Approach

Pingali Venugopal


Copyright © Pingali Venugopal, 2010
All rights reserved. No part of this book may be reproduced or utilized in any form or by any
means, electronic or mechanical, including photocopying, recording or by any information
storage or retrieval system, without permission in writing from the publisher.
First published in 2010 by
Response Books
Business books from SAGE
B1/I-1 Mohan Cooperative Industrial Area
Mathura Road, New Delhi 110 044, India




SAGE Publications Inc
2455 Teller Road
Thousand Oaks, California 91320, USA

SAGE Publications Ltd
1 Oliver’s Yard, 55 City Road
London EC1Y 1SP, United Kingdom






SAGE Publications Asia-Pacific Pte Ltd
33 Pekin Street
#02-01 Far East Square
Singapore 048763

Published by Vivek Mehra for SAGE Publications India Pvt Ltd, typeset in 12/15 Adobe
Caslon by Diligent Typesetter, Delhi and printed at Chaman Enterprises, New Delhi.
Library of Congress Cataloging-in-Publication Data Available

ISBN:╇ 978-81-321-0471-1 (PB)

The SAGE Team: Qudsiya Ahmed, Swati Sengupta and Nand Kumar Jha




Contents
List of Tables
List of Figures
List of Boxes

Preface
Acknowledgements

ix
xi
xiii
xv
xvii

╇ 1.╅ Introduction

1

Section 1:â•… Understanding the Basics
╇ 2.╅ Needs, Wants and Need Hierarchy
╇ 3.╅ Marketing Product

11
21

Section 2:â•… Understanding the Market
╇ 4.╅
╇ 5.╅
╇ 6.╅
╇ 7.╅

Marketing Environment
SWOT Analysis
Purchase Process
Competitive Advantage: Building Entry Barriers

39
63
79
111

Section 3:â•… The Decision-making
╇ 8.╅ Segmentation and Targeting
╇ 9.╅ Positioning
10.â•… Marketing Planning Processs

145
161
187

vii


Marketing Management

viii

Appendix 1: Indian Consumer
Appendix 2: Country of Origin: A Surrogate for Quality
Appendix 3: Do Consumer Loyalty Programmes Build Loyalty?

205
209
213

References
Index
About the Author

215
229
245


List of Tables
2.1 Wants satisfying different needs
2.2 First category of status goods sought by the consumers
after satisfying a minimum level of lower order needs

16

3.1
3.2
3.3
3.4
3.5

25
33
34
35
36

Needs satisfied by bread
Marketing universe for different marketing products for yoga

Format for identifying the ideal marketing product
Coffee parlours as a marketing product
Marketing effort for different marketing products of fruit juice

17

4.1 Census of India (2003 est.)
4.2 India 2001 census: Percentage of population speaking
major languages
4.3 Marketing environment for TV industry

44

5.1 SWOT for a hypothetical example
5.2 The opportunities and threats for the refrigerator industry
5.3 SWOT based on the prioritization of environmental variables

66
68
74

6.1 Sequence of decisions
6.2 Place utility: Store choice drivers across stores
6.3 Average attribute rating for a SUV on a 4-point score

45
52

101
103

108

ix


Marketing Management

7.1 Profitability of IT training companies
123
7.2 Market performance of IT training companies
124
7.3 The prices of some of the super brands of the premium segment 139

x

8.1 Segmentation for two wheelers
8.2 Hypothetical example of segment attractiveness analysis
8.3 Segmentation for mobile phones

157
159
160

9.1 Intended and actual positioning of toothpastes

185

10.1 Factors influencing the brand decision process
10.2 Product characteristics and decision process
10.3 Attributes on which products are evaluated

10.4 Role of marketing planning process

191
192
202
203


List of Figures
1.1 Marketing planning process

6

2.1 Hierarchy of needs: A marketing perspective

17

3.1 Traditional approach to marketing
3.2 Product–market fit
3.3 Marketing implications of marketing product

24
24
31

4.1 Environmental factors

43

5.1 Logic of prioritization of environmental variables

73

6.1 Types of decision processes
6.2 Place of purchase of formal footwear

91
101

7.1
7.2
7.3
7.4
7.5
7.6

Classification of entry barriers
IT training market share
IT training market
IT training segments
Five forces model for the VSNL industry
Competitive position of VSNL

115
117
118
118
128
132

8.1 Segmentation: The decision-making approach

153

xi


Marketing Management

xii

9.1 Generic positioning
9.2 Emergence of a new positioning matrix from the generic
positioning
9.3 Quality price positioning matrix
9.4 New positioning matrix embedded in the perceived
quality matrix
9.5 Attribute-based positioning of CEAT tyres
9.6 Perceptual map for shoes
9.7 Attributes: Normalized score and ranking
9.8 Flight timings/schedule and price perception of
domestic airlines
9.9 Price and on-time performance perception of
domestic airlines
9.10 Flight timing/schedule and on-time performance perception
of domestic airlines

166

10.1 Product involvement v/s purchase involvement

195

167
168
169
170
174
175
176
176
177


List of Boxes
3.1 Needs satisfied by detergents

26

6.1 Utility

89

8.1 Segmenting and targeting: Mobile phones

158

9.1 Positioning green products

172

10.1 Saffola the ‘healthy oil’

200

xiii



Preface
Most people think that marketing is only about advertising or selling. Even
lots of business people perceive it to mean simply promotion and advertising (Bizjobs 2009).
Advertising is only one element of marketing, however, the most visible.
Simply advertising would not ensure that the product sells. Advertising has
to be supported by other activities of marketing. Unnecessary advertisements may be seen as a nuisance.
Selling is another element of marketing. Completing a sale does not ensure good marketing. Selling has a short-term orientation whereas marketing has a long-term orientation. Customers should be satisfied with what
they are buying; they should not feel cheated after the purchase and create
a negative propaganda for the product. An unsatisfied customer is the worst
advertisement for a brand.
Marketing is about understanding customers’ needs and finding ways to
provide products or services, which customers demand. Marketing should
start by creating a want for the product by associating it to a need and converting a technical product into a marketing product. Having developed the
marketing product, marketing plans need to be formulated to satisfy the
needs of the customer in a better way than the competing products. Factors
which could help or deter the company in marketing the product must be
taken into account considering the marketing environment. Finally, looking
at marketing from the company’s perspective, the company has to market
the product at the lowest cost.

xv

Marketing Management

The book, therefore, discusses marketing to include all activities associated with identifying the needs of target customers and making them ‘want’
the product (by satisfying the customers better than the competitor) at the
lowest possible cost.
The book is divided into three sections.
Section 1 focuses on the basics. Here the ‘hierarchy of needs’ is redefined
to suit marketing requirements. The book also introduces the concept of
rebel need, which could provide a basis for introducing new products that
are not currently accepted by the society. This section also discusses the process of modifying technical products into several marketing products, thus,
providing an option of choosing the ideal marketing product.
Section 2 focuses on information required for the marketing planning
process. Environmental analysis and SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis are integrated to give a more meaningful
analysis of this information. Similarly, consumer behaviour and competition
are discussed to provide inputs for decision-making.
Section 3, covering marketing decisions, describes a process of developing
loyal customers by building a multilayered positioning process.
The book is unique as it:
• redefines the need hierarchy to suit the marketing context;
• develops the marketing product concept, which would allow marketers to convert
a technical product into more than one marketing product;
• integrates marketing environmental variables and SWOT analysis to give a better
understanding of information for making marketing decisions;
• suggests a multilayered positioning strategy for companies.

xvi

Acknowledgements
I began developing the concepts and frameworks discussed in this book
several years ago. Gaps in these concepts and frameworks were rectified only
with the help of the valuable comments given by my students over these
years. It may be difficult to name the students individually. I sincerely thank
each one of them for making this possible.
XLRI has always supported me through my endeavours. Their culture of
encouraging flexibility, helped me to try innovative ideas and develop new
concepts and frameworks. Special thanks to Fr Abraham, Director; Fr
George, Dean (Administration and Finance); and all the faculty and staff
for their support.
Veni, my wife, helped immensely during the preparation of the manuscript. I extend special thanks to her.
Sincere thanks to Reema Singhal for her valuable comments on the initial
manuscript. Thanks also to Vivek Mehra, Sugata Ghosh, Qudsiya Ahmed,
Swati Sengupta, and others at SAGE Publications who made this possible.
I also thank Sanjay Saha and Anjelina who helped me in the preparation
of the manuscript.
I am grateful to my father and mother-in-law for their moral support.

xvii



1

Introduction



A

consumer-oriented economy is emerging in
India. The Indian consuming class is also expanding. As a result of market
capitalism and globalization, India has seen a dramatic rise in its middle
class and a significant reduction in its low income, deprived group.
The McKinsey Global Institute study titled ‘The Rise of India’s Consumer Market’ (May 2007) shows that:
•  T
 he ‘deprived group’ is expected to decrease from 77 per cent of the Indian
population (1985) to only 3 per cent by 2025.
•  India’s middle class is expected to increase from 8 per cent of the population
(1985) to almost 60 per cent of the population in 2025.

Indian and Western marketers alike wishing to take advantage of this
growing market made ‘the Indian marketplace extremely competitive’ (Chao
et al. 2004). Not only have multi-nationals stormed into the country, but
there are more brands available than ever before in virtually every segment

3


Marketing Management

of every market, making life difficult for corporates. New technologies, new
legislation, and newer and better products keep companies on their toes. For
the first time in India, consumers are beginning to deliver the final verdict.
‘They are already finicky about what they want, are increasingly spoilt for
choice, and will in future buy only what meets their every desire. Under such
circumstances, only those who deliver superior value to their consumers on a
continuous basis will survive and grow’ (Aggarwal and Singh 2004).
Companies differing in their capabilities and governed by their company philosophy, company image and objectives have developed different

growth-oriented marketing strategies to cater to this market. Some of them
are successful and some not so successful.
For instance, Hindustan Lever found that the Indian middle class used
high priced soap flakes or detergent for washing their expensive clothes and
low priced detergents for inexpensive clothes and linen. So they developed
a long product line to meet the needs of various groups of customers and to
have wide market coverage (Rahman and Bhattacharyya 2003).
After the opening of the Indian market, the Honda Motor Company of
Japan entered into its two-wheeler market. Despite its superior technology,
quality, brand appeal and success in selling to the Western countries, the
company failed to compete with Bajaj Auto, the largest manufacturer and
seller of two wheelers in India. The company failed to gain acceptance and
decided to withdraw from the Indian market in 1998. The major reason
for withdrawal was that Indian consumers preferred low cost, durable machines and wide availability of maintenance facilities. Bajaj Auto scored over
Honda in these respects (Dawar and Frost 1999).
ITC Ltd has developed a distribution network in India that replenishes
the stocks of many small-scale sellers selling small quantities of goods worth
a few hundred rupees per day, almost on a daily basis. This has helped the
company to capture a market share of around 77 per cent by value in the
Indian cigarette market (Fortune 1994).
Taking into account the fact that a large number of Indian consumers
are vegetarian, McDonald’s not only introduced vegetable burgers, but also
decided to not serve beef in its restaurants lest it offended Hindu religious
sentiments (Saxena 1997).

4


Introduction

Nestle India, a subsidiary of Nestle S.A., launched an instant noodle in
1983 under the brand name Maggi. It is the first branded noodle in the
organized sector and currently holds a market share of about 70 per cent.
However, the product sale went up substantially only when Nestle included
cooking instructions on the pack and added tastemakers to suit Indian taste
buds (Saxena 1997).
Availability of adequate demand alone does not guarantee success. Companies need to adopt appropriate market-oriented strategies for success.

Process of Marketing
Marketing is all about satisfying the customer and ensuring that the consumers become loyal to the brand in question. As a company influences the
consumer, its competitors also try to influence the customers about their
products. As a result, companies should not only focus on acquiring customers, but should also reinforce their behaviour so as to ensure customer loyalty. This means that satisfying customers not only involves understanding
the needs of the customers, but also ensuring that the company’s products
satisfy the customers’ needs better than the competitor’s. In satisfying the
needs better than the existing products (competition), the company may
have to tackle several externalities in marketing the product. This marketing also needs to be done without deviating from the company objective and
working within the capabilities of the company.
Thus, marketing includes all activities associated with identifying the
needs of the target customers and ensuring they buy the product (by satisfying the customers better than the competitors) by working within the
capabilities of the company. The underlying principles for marketing can be
summarized by the three Cs.
•  S
 atisfying the needs of the CUSTOMER
•  Better than the COMPETITOR
•  By working within the COMPANY’S CAPABILITIES

5


Marketing Management

This detailed process of marketing is depicted in Figure 1.1.
Product

Need

Market Universe

Marketing Product

Marketing
Environment

Competition

Buying Behaviour

Internal
Capability

Competitive Analysis

SWOT Analysis

Segmenting
Targeting
Positioning

Marketing Plan

Figure 1.1â•… Marketing planning process
Source: Author

Overview of the Book
Section 1: Understanding the Basics
Chapter 2: Needs, Wants and Need Hierarchy—This chapter describes the
satisfaction of a need as the base for any purchase. Starting by defining the

6