Introduction to Operation Management _123

Introduction to Operation Management _123

1. Marketing Management
MBA104
Dr. Moiz Akhtar
Faculty of Commerce & Management
Integral University, Lucknow

2. Topics Covered
1.Customer driven marketing Strategy creating value
for target customers.
2.Product Services and Brands Building Customer
Value.
3.New Product Development and Product Life Cycle
strategies.

3. Topic 1
Customer driven marketing Strategy
creating value for target customers.

4. Market Segmentation
•Dividingamarketintosmallersegmentswithdistinctneeds,characteristics,orbehaviorthat
mightrequireseparatemarketingstrategiesormixes.
•Fourimportantsegmentationtopics:segmentingconsumermarkets,segmentingbusiness
markets,segmentinginternationalmarkets,andtherequirementsforeffectivesegmentation.

5. Customer-Driven Marketing Strategy:
Creating Value for Target Customers

6. Segmentation
•Geographic segmentation-Dividing a market into different geographical units, such as nations,
states, regions, counties, cities, or even neighborhoods.
•Demographic segmentation-Dividing the market into segments based on variables such as age,
gender, family size, family life cycle, income, occupation, education, religion, race, generation, and
nationality.
•Age and life-cycle segmentation Dividing a market into different age and life-cycle groups.
•Gender segmentation-Dividing a market into different segments based on gender.
•Income segmentation-Dividing a market into different income segments.
•Psychographic segmentation-Dividing a market into different segments based on social class,
lifestyle, or personality characteristics.
•Behavioral segmentation-Dividing a market into segments based on consumer knowledge, attitudes,
uses, or responses to a product.
•Occasion segmentation-Dividing the market into segments according to occasions when buyers get
the idea to buy, actually make their purchase, or use the purchased item.
•Benefit segmentation-Dividing the market into segments according to the different benefits that
consumers seek from the product.

7. Using Multiple Segmentation Bases

8. Segmenting Business Markets
•Businessbuyerscanbesegmentedgeographically,demographically(industry,companysize),orby
benefitssought,userstatus,usagerate,andloyaltystatus.Yet,businessmarketersalsousesome
additionalvariables,suchascustomeroperationcharacteristics,purchasingapproaches,situational
factors,andpersonalcharacteristics.
•Itisbelievedthatbuyingbehaviorandbenefitsprovidethebestbasisforsegmentingbusiness
markets.

9. Segmenting International Markets
•Economicfactors,Politicalandlegalfactors
•Intermarketsegmentation(cross-marketsegmentation)-Formingsegmentsofconsumerswho
havesimilarneedsandbuyingbehavioreventhoughtheyarelocatedindifferentcountries.

10. Requirements for Effective Segmentation
•To be useful, market segments must be:
•-measurable
•-accessible
•-Substantial
•-Differentiable
•-Actionable

11. Market Targeting
•Marketsegmentationrevealsthefirm’smarketsegmentopportunities.Thefirmnowhastoevaluate
thevarioussegmentsanddecidehowmanyandwhichsegmentsitcanservebest.
•Inevaluatingdifferentmarketsegments,afirmmustlookatthreefactors:segmentsizeandgrowth,
segmentstructuralattractiveness,andcompanyobjectivesandresources.
Selecting Target Market Segments
Afterevaluatingdifferentsegments,thecompanymustdecidewhichandhowmanysegmentsitwill
target.
Targetmarket-Asetofbuyerssharingcommonneedsorcharacteristicsthatthecompanydecidesto
serve.
Markettargetingcanbecarriedoutatseveraldifferentlevels.Companiescantargetverybroadly
(undifferentiatedmarketing),verynarrowly(micromarketing),orsomewhereinbetween(differentiated
orconcentratedmarketing).

12. Market Targeting Strategies

13. Market Targeting Strategies
•Undifferentiated(mass)marketing-A
market-coveragestrategyinwhichafirm
decidestoignoremarketsegment
differencesandgoafterthewholemarket
withoneoffer.
•Differentiated(segmented)marketing-A
market-coveragestrategyinwhichafirm
decidestotargetseveralmarketsegments
anddesignsseparateoffersforeach.
Differentiated (segmented) marketing

14. Concentrated (niche) marketing
•Concentrated (niche) marketing -A market-coverage strategy in which a firm goes after a large
share of one or a few segments or niches.

15. Micromarketing
•Micromarketing-Tailoringproductsandmarketingprogramstotheneedsandwantsofspecific
individualsandlocalcustomersegments;Itincludeslocalmarketingandindividualmarketing.
•Localmarketing-Tailoringbrandsandpromotionstotheneedsandwantsoflocalcustomer
segments—cities,neighborhoods,andevenspecificstores.
Local marketing-

16. Individual marketing
•Tailoringproductsandmarketingprogramstotheneedsandpreferencesofindividualcustomers—
alsocalledone-toonemarketing,customizedmarketing,andmarkets-of-onemarketing.

17. Choosing a Targeting Strategy
•Companies need to consider many factors when choosing a market-targeting strategy: company’s
resources, The product’s life-cycle stage, competitors’ marketing strategies and etc.
Differentiation and Positioning
Beyonddecidingwhichsegmentsofthemarketitwilltarget,thecompanymustdecideonavalueproposition—
howitwillcreatedifferentiatedvaluefortargetedsegmentsandwhatpositionsitwantstooccupyinthose
segments.
Productposition-Thewaytheproductisdefinedbyconsumersonimportantattributes—theplacetheproduct
occupiesinconsumers’mindsrelativetocompetingproducts.
Inplanningtheirdifferentiationandpositioningstrategies,marketersoftenprepareperceptualpositioningmaps
thatshowconsumerperceptionsoftheirbrandsversuscompetingproductsonimportantbuyingdimensions

18. Differentiation and Positioning Strategy
•Thedifferentiationandpositioningtaskconsistsofthreesteps:identifyingasetofdifferentiatingcompetitive
advantagesonwhichtobuildaposition,choosingtherightcompetitiveadvantages,andselectinganoverall
positioningstrategy.Thecompanymusttheneffectivelycommunicateanddeliverthechosenpositiontothemarket
Competitiveadvantage-Anadvantageovercompetitorsgainedbyofferinggreatercustomervalue,either
byhavinglowerpricesorprovidingmorebenefitsthatjustifyhigherprices.
Companiescandifferentiatealongthelinesofproduct,services,channels,people,orimage.
Identifying Possible Value Differences and Competitive
Advantages

19. Choosing the Right Competitive Advantages
•Many marketers think that companies should aggressively promote only one benefit to the target market.
•Unique Selling Proposition
•Buyers tend to remember number one better, especially in this overcommunicated society. Thus, Walmart promotes its unbeatablelow prices,
and Burger King promotes personal choice—“have it your way.”

20. Selecting an Overall Positioning Strategy

21. Developing a Positioning Statement
•Positioning statement -A statement that summarizes company or brand positioning. It takes this
form: To (target segment and need) our (brand) is (concept) that (point of difference).
Brand Statement

22. Topic 2
Product Services and Brands
Building Customer Value.

23. What Is a Product?
Productis anything that can be offered in a market for attention, acquisition, use, or consumption that might
satisfy a need or want
Experiencesrepresent what buying the product or service will do for the customer
Product and Service Classifications
Consumer
products
Industrial
products

24. Product and Service Classifications
•Consumer products are products and services for personal consumption
•Classified by how consumers buy them
•Convenience products
•Shopping products
•Specialty products
•Unsought products
Convenience products are consumer products and services that the customer usually buys frequently,
immediately, and with a minimum comparison and buying effort
•Newspapers
•Candy
•Fast food
Shopping products are consumer products and services that the customer compares carefully on
suitability, quality, price, and style
•Furniture
•Cars
•Appliances

25. Product and Service Classifications
Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group
of buyers is willing to make a special purchase effort
•Medical services
•Designer clothes
•High-end electronics
Unsought products are consumer products that the consumer does not know about or knows about but
does not normally think of buying
•Life insurance
•Funeral services
•Blood donations

26. Industrial products are products purchased for further processing or for use in conducting a business
•Classified by the purpose for which the product is purchased
•Materials and parts
•Capital
•Raw materials
•Capital items are industrial products that aid in the buyer’s production or operations
•Materials and partsinclude raw materials and manufactured materials and parts usually sold directly
to industrial users
•Supplies and services include operating supplies, repair and maintenance items, and business
services

27. Organizations, Persons, Places, and Ideas
Organization marketing consists of activities undertaken to create, maintain, or change attitudes and
behavior of target consumers toward an organization.
Person marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of
target consumers toward particular people
Place marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of
target consumers toward particular places
Social marketing is the use of commercial marketing concepts and tools in programs designed to influence
individuals’ behavior to improve their well-being and that of society
Individual Product and Service Decisions
Product attributesare the benefits of the product or service
• Quality
• Features
• Style and design

28. Individual Product and Service Decisions
Product quality includes level and consistency
• Quality levelis the level of quality that supports the product’s positioning
• Conformance qualityis the product’s freedom from defects and consistency in delivering a targeted level of
performance
• Product featuresare a competitive tool for differentiating a product from competitors’ products Product features are
assessed based on the value to the customer versus the cost to the company.
• Styledescribes the appearance of the product
• Design contributes to a product’s usefulness as well as to its looks
• Brand is the name, term, sign, or design—or a combination of these—that identifies the maker or seller of a product
or service. Brand equity is the differential effect that the brand name has on customer response to the product and its
marketing.
• Packaginginvolves designing and producing the container or wrapper for a product
• Labelsidentify the product or brand, describe attributes, and provide promotion.

29. Product Line Decisions
•Product lineis a group of products that are closely related because they function in a similar manner, are sold to
the same customer groups, are marketed through the same types of outlets, or fall within given price ranges.
•Product linelength is the number of items in the product line
Line stretching
Line filling
•Product mix consists of all the products and items that a particular seller offers for sale
Width
Length
Depth
Consistency

30. Branding Strategy: Building Strong Brands
•Brandrepresentstheconsumer’sperceptionsandfeelingsaboutaproductanditsperformance.Itisthe
company’spromisetodeliveraspecificsetoffeatures,benefits,services,andexperiencesconsistentlyto
thebuyers
Brand Positioning
Brand strategy decisions include:
Product attributes
Product benefits
Product beliefs and values

31. Brand Name Selection
Desirable qualities
 Suggest benefits and qualities
 Easy to pronounce, recognize, and remember
 Distinctive
 Extendable
 Translatable for the global economy
 Capable of registration and legal protection
Brand Sponsorship
 Manufacturer’s brand
 Private brand
 Licensed brand
 Co-brand

32. Types of Service Industries
•Government
•Private not-for-profit organizations
•Business services
Marketing Strategies for Service Firms
In addition to traditional marketing strategies, service firms often require additional strategies
•Service-profit chain
•Internal marketing
•Interactive marketing
•Service-profit chain links service firm profits with employee and customer satisfaction
•Internal service quality
•Satisfied and productive service employees
•Greater service value
•Satisfied and loyal customers
•Healthy service profits and growth

33. Marketing Strategies for Service Firms
Internalmarketingmeansthattheservicefirmmustorientandmotivateitscustomercontactemployeesand
supportingservicepeopletoworkasateamtoprovidecustomersatisfaction.Internalmarketingmust
precedeexternalmarketing.
Interactivemarketingmeansthatservicequalitydependsheavilyonthequalityofthebuyer-sellerinteraction
duringtheserviceencounter
• Servicedifferentiation
• Servicequality
• Serviceproductivity
Managingservicedifferentiationcreatesacompetitiveadvantagefromtheoffer,delivery,andimageoftheservice
• Offercanincludedistinctivefeatures
• Deliverycanincludemoreableandreliablecustomercontactpeople,environment,orprocess
• Imagecanincludesymbolsandbranding

34. Marketing Strategies for Service Firms
Managingservicequalityprovidesacompetitiveadvantagebydeliveringconsistentlyhigherqualitythan
itscompetitors
Servicequalityalwaysvariesdependingoninteractionsbetweenemployeesandcustomers
Managingserviceproductivityreferstothecostsideofmarketingstrategiesforservicefirms
• Employeerecruiting,hiring,andtrainingstrategies
• Servicequantityandqualitystrategies

35. Topic 3
New Product Development and
Product Life Cycle strategies.

36. New Product Development
•Development of original products, product improvements, product modifications, and new brands through the
firm’s own R & D efforts.
New Product Development Strategy
•New products can be obtained via acquisition or development.
•New products suffer from high failure rates.
•Several reasons account for failure.
Stages of the New Product Development Process
Stage 1: Idea Generation
Internal idea sources:
•R & D
External idea sources:
•Customers, competitors, distributors,
suppliers
Stage 2: Idea Screening
Product development costs increase substantially in
later stages so poor ideas must be dropped
Ideas are evaluated against criteria; most are
eliminated

37. Stages of the New Product Development Process
Stage 3: Concept Development and Testing
•Concept development creates a detailed version of the idea stated in meaningful consumer
terms.
•Concept testing asks target consumers to evaluate product concepts.
Stage 4: Marketing Strategy Development
•The target market, product positioning, and sales, share, and profit goals for the first few years.
•Product price, distribution, and marketing budget for the first year.
•Long-run sales and profit goals and the marketing mix strategy.
Stage 5: Business Analysis
•Sales, cost, and profit projections
Stage 6: Product Development
•Prototype development and testing
Stage 7: Test Marketing
•Standard test markets
•Controlled test markets
•Simulated test markets
Stage 8: Commercialization

38. Product Life-Cycle Strategies
•The Product Life Cycle (PLC) has Five Stages
•Product Development, Introduction, Growth, Maturity, Decline
•Not all products follow this cycle:
•Fads
•Styles
•Fashions
•The product life cycle concept can be applied to a:
•Product class (soft drinks)
•Product form (diet colas)
•Brand (Diet Dr. Pepper)
•Using the PLC to forecast brand performance or to develop marketing strategies is
problematic

39. Product Life-Cycle Strategies
PLC Stages
•Product development
•Introduction
•Growth
•Maturity
•Decline
Product development
•Begins when the company develops a new-product idea
•Sales are zero
•Investment costs are high
•Profits are negative
Introduction
•Low sales
•High cost per customer acquired
•Negative profits
•Innovators are targeted
•Little competition

40. Marketing Strategies: Introduction Stage
•Product –Offer a basic product
•Price –Use cost-plus basis to set
•Distribution –Build selective distribution
•Advertising –Build awareness among early adopters and dealers/resellers
•Sales Promotion –Heavy expenditures to create trial
Growth
•Rapidly rising sales
•Average cost per customer
•Rising profits
•Early adopters are targeted
•Growing competition
Marketing Strategies Growth Stage
Product –Offer product extensions, service, warranty
Price –Penetration pricing
Distribution –Build intensive distribution
Advertising –Build awareness and interest in the mass
market
Sales Promotion –Reduce expenditures to take advantage of
consumer demand

41. Maturity
•Sales peak
•Low cost per customer
•High profits
•Middle majority are targeted
•Competition begins to decline
Marketing Strategies: Maturity Stage
Product –Diversify brand and models
Price –Set to match or beat competition
Distribution –Build more intensive distribution
Advertising –Stress brand differences and benefits
Sales Promotion –Increase to encourage brand switching
Decline
•Declining sales
•Low cost per customer
•Declining profits
•Laggards are targeted
•Declining competition
Marketing Strategies: Decline Stage
Product –Phase out weak items
Price –Cut price
Distribution –Use selective distribution: phase out
unprofitable outlets
Advertising –Reduce to level needed to retain hard-core
loyalists
Sales Promotion –Reduce to minimal level

42. Thank You