MCM 605-eL4

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M.Com 2 All right are reserved with CU-IDOL Marketing Management Course Code: MCM 605 Semester: First e-Lesson: 4 SLM Unit: 4 www.cuidol.in Unit 4(MCM 605)

Marketing Management 33 OBJECTIVES INTRODUCTION  To know about the major elements of customer  In this unit students are going to learn about driven marketing strategy the demand forecasting and how to use it for  To Understand the need and methods of demand developing marketing strategy. forecasting.  Under this you will learn and understand the  To enable the students to learn the importance of  importance of market segmentation. market segmentation and its basis.  In this unit you will learn the implications of targeting and positioning in marketing. www.cuidol.in Unit 4(MCMM60650)5) INASlTl ITriUgThEt OarFeDrIeSsTeArNvCeEd AwNitDh OCNUL-IIDNOE LLEARNING

TOPICS TO BE COVERED 4 > Demand Forecasting > Market Segmentation > Basis of Market Segmentation > Targeting & Positioning. www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Demand Forecasting 5 Demand Forecasting is the process in which historical sales data Is used to develop an estimate of an expected forecast of customer demand. To businesses, Demand Forecasting provides an estimate of the amount of goods and services that its customers will purchase in the foreseeable future. Demand plays a vital role in the decision making of a business. In competitive market conditions, there is a need to take correct decision and make planning for future events related to business like a sale, production, etc. The effectiveness of a decision taken by business managers depends upon the accuracy of the decision taken by them. https://www.articlecube.com/role-demand- forecasting-predict-future-demand-products www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

6 www.cuidol.in https://theinvestorsbook.com/demand-forecasting.html All right are reserved with CU-IDOL Unit 4(MCM 605)

7 www.cuidol.in https://theinvestorsbook.com/demand-forecasting.html All right are reserved with CU-IDOL Unit 4(MCM 605)

Methods of Demand Forecasting 8 https://www.toppr.com/guides/business-economics/theory-of-demand/demand-forecasting/ www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Methods of Demand Forecasting 9 Survey Methods: Under the survey method, the consumers are contacted directly and are asked about their intentions for a product and their future purchase plans. This method is often used when the forecasting of a demand is to be done for a short period of time. The survey method includes: • Consumer Survey Method: Consumers' survey method of demand forecasting involves direct interview of the potential consumers. Consumers are simply contacted by the interviewer and asked how much they would be willing to purchase of a given product at a number of alternative product price levels. • Opinion Poll Method: he opinion polling methods of demand forecasting are of three kinds: (a) Consumer's Survey Method or Survey of Buyer's Intentions: In this method, the consumers are directly approached to disclose their future purchase plans. ... The firm may go in for complete enumeration or for sample surveys. www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Methods of Demand Forecasting 10 • Statistical Methods: The statistical methods are often used when the forecasting of demand is to be done for a longer period. The statistical methods utilize the time-series (historical) and cross-sectional data to estimate the long-term demand for a product. The statistical methods are used more often and are considered superior than the other techniques of demand forecasting due to the following reasons: • There is a minimum element of subjectivity in the statistical methods. • The estimation method is scientific and depends on the relationship between the dependent and independent variables. • The estimates are more reliable • Also, the cost involved in the estimation of demand is the minimum. The statistical methods include: • Trend Projection Methods • Barometric Methods • Econometric Methods www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Methods of Demand 11 Forecasting  The Trend Projection Method is the most classical method of business forecasting, which is concerned with the movement of variables through time. This method requires a long time-series data.  Barometric Method of demand forecasting: When the estimation on certain time series is done through observation (indicators) on another time series, then that method is known as barometric method of demand forecasting. This is the method that makes use of various indicators to predict the future.  The econometric methods are comprised of Regression Method: The regression analysis is the most common method used to forecast the demand for a product. Thus, through an economic theory, a general form of a demand function is determined. www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Identifying 12 Market Segments and Targets https://www.toppr.com/guides/business-economics/theory-of-demand/demand-segmentation www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Segmentation, Targeting and 13 Positioning • Segmentation: process of dividing the market into subsets of consumers with common needs or characteristics • Targeting: selecting one ore more of the segments to pursue • Positioning: developing a distinct image for the product in the mind of the consumer https://in.images.search.yahoo.com/yhs/search;_ylt=AwrxhWhHPfpdgAYAHwTnHgx.;_ylu=X3oDMTB0N2poMXRwBGNvbG8Dc2czBHBvcwMxBHZ0aWQDB HNlYwNwaXZz?p www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Steps in Market Segmentation, Targeting, 14 and Positioning Market Segmentation 1. Identify bases for segmenting the market 2. Develop segment profiles Market Targeting 3. Develop measure of segment attractiveness 4. Select target segments Market positioning 5. Develop positioning for target segments 6. Develop a marketing mix for each segment in.images.search.yahoo.com/yhs/search;_ylt=AwrxhWpROhheVRcAmzDnHgx.;_ylu=X3oDMTB0N2poMXRwBGNvbG8Dc2czBHB vcwMxBHZ0aWQDBHNlYwNwaXZz?p www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

What is a Market Segment? 15 A market segment consists of a group of customers who share a similar set of needs ad wants. • Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs • The concept of market segmentation was coined by Wendell R. Smith who in his article “Product Differentiation and Market Segmentation as Alternative Marketing Strategies” observed “many examples of segmentation” in 1956. Present-day market segmentation exists basically to solve one major problem of marketers; more conversions. More conversion is possible through personalized marketing campaigns which require marketers to segment market and draft better product and communication strategies according to the needs of the segment. www.cuidol.in Unit 4(MCM 605) 1A5ll right are reserved with CU-IDOL

Basic Market Preference Patterns 16 https://in.images.search.yahoo.com/yhs/search;_ylt=AwrxhWhHPfpdgAYAHwTnHgx.;_ylu=X3oDMTB0N2poMXRwBGNvbG8Dc2czBHBvcwMxBHZ0aWQDB HNlYwNwaXZz?p www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Segmenting Consumer Markets (Bases) 17 Geographic Demographic Psychographic Behavioral www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Segmenting Consumer Markets 18 Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities. • This type of market segmentation is important for marketers as people belonging to different regions may have different requirements. For example, water might be scarce in some regions which inflates the demand for bottled water but, at the same time, it might be in abundance in other regions where the demand for the same is very less. • People belonging to different regions may have different reasons to use the same product as well. Geographic segmentation helps marketer draft personalized marketing campaigns for everyone. www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

19 https://www.hult.edu/blog/psychographics-big-data-watching/market-segmentation/ www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Segmenting Consumer Markets 20 Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality Demographic segmentation is the most popular segmentation method because consumer needs, wants, and usage often vary closely with demographic variables and are easier to measure than other types of variables. Demographic segmentation is seen almost in every industry like automobiles, beauty products, mobile phones, apparels, etc and is set on a premise that the customers’ buying behaviour is hugely influenced by their demographics. www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Demographic Segmentation 21 Age and Life Cycle Life Stage Gender Income Generation https://www.hult.edu/blog/psychographics-big-data-watching/market- Social Class segmentation/ www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Age and Life-Cycle Stage 22 Gender https://www.hult.edu/blog/psychographics-big-data-watching/market-segmentation/ www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Psychographic Segmentation 23 Psychographic segmentation divides buyers into different groups based on:  Social class  Lifestyle  Personality traits  Personality and lifestyle influence the buying decision and habits of a person to a great extent. A person having a lavish lifestyle may consider having an air conditioner in every room as a need, whereas a person living in the same city but having a conservative lifestyle may consider it as a luxury. https://www.hult.edu/blog/psychographics-big-data-watching/market-segmentation www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Behavioral Segmentation The market is also segmented based on audience’s behaviour, 24 usage, preference, choices and decision making. The segments are usually divided based on their knowledge of the product and https://www.pointillist.com/blog/behavioral-segmentation/ usage of the product. It is believed that the knowledge of the product and its use affect the buying decision of an individual. The audience can be segmented into – •Those who know about the product, •Those who don’t know about the product, •Ex-users, •Potential users, •Current Users, •First time users, etc. www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Steps in Segmenting Markets 25 1 2 3 4 5 6 Select Choose Select Profile Select Design, a market bases descriptors/ and target implement, knowing the markets for for customers analyze maintain study segmentati segments marketing on mix Note that steps 5 and 6 are actually marketing activities that follow market segmentation (steps 1 through 4). slideserve.com/talon/steps-in-market-segmentation-targeting-and-positioning www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Market Targeting 26 Evaluating Market Segments Selecting Market Segments Choosing a Market Coverage Strategy www.cuidol.in https://slideplayer.com/slide/5242632/ All right are reserved with CU-IDOL Unit 4(MCM 605)

Selecting Market 27 Segments • Single Segment Concentration (single product & single market) eq- Nirma, Mahindra & Mahindra • Selective Specialization (Multiple product & multiple market with selection of specific market for specific product) eq- Apple (laptop, ipad, iphones), HUL (Dove-beauty, lux-fragrance , lifebuoy-Hygiene) • Product Specialization (Single product & multiple market) eq- Nokia phones • Market Specialization (Multiple product & single market) eq- Johnson & Johnson, Amul • Full Marketing Coverage (all customer groups, multiple products & all markets) eq- Coca Cola, Kinley www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Target Marketing Strategies 28 www.cuidol.in https://link.springer.com/chapter/10.1007/978-981-10-8818-6_2 All right are reserved with CU-IDOL Unit 4(MCM 605)

Target Marketing Strategies 29 Undifferentiated marketing targets the whole market with one offer (eg- Coca Cola) • Mass marketing • Focuses on common needs rather than what’s different Differentiated marketing targets several different market segments and designs separate offers for each (eg- Colgate) • Goal is to achieve higher sales and stronger position • More expensive than undifferentiated marketing www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Target Marketing Strategies 30 Concentrated marketing targets a small share of a large market (eq- Ford, Volkswagen) • Limited company resources • Knowledge of the market • More effective and efficient Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations • Local marketing • Individual marketing www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Target Marketing Strategies 31 Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups (depend upon area, cities and local stores) • Increased marketing effectiveness in competitive markets • More customer-specific offerings Individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers (individual plans) • Also known as: • One-to-one marketing • Mass customization www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Choosing a Targeting Strategy 32 Company resources Competitor’s Product marketing variability strategies Market Product life- variability cycle stage www.cuidol.in https://www.anchorcomputer.com/index.php/2016/03/07/direct-mail-guide/ All right are reserved with CU-IDOL Unit 4(MCM 605)

Positioning 33 Positioning is the act of defining the company’s offering and image to make a distinct place in the mind of target market or consumer. Positioning Strategies Products can be positioned on specific attributes or against another product class. www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Types of Positioning 34 • Attribute based positioning (physical & other, Raymonds Since 1925) • Benefit based positioning (Colgate sensitive) • Usage Occasion based positioning (Itch Guard) • Competitor’s based positioning (Compaq & IBM, Thumps & Pepsi) • Quality based positioning (Sony) • Price based positioning (Tata, McD) www.cuidol.in Unit 4(MCM 605) 3A4ll right are reserved with CU-IDOL

Multiple Choice Questions 35 The process of dividing a total market into market groups so that persons within each group have relatively similar product needs is called: 1)segmenting 2)differentiating 3)target marketing 4)concentrating www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Multiple Choice Questions 36 By offering Signal for Kids (attractive taste for children), Regular Signal for cavity control, and Tartar Control Signal toothpastes, Unilever is segmenting the market based on: 1)benefits 2)psychographics 3)lifestyle 4)demographics 5)attitudes www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Multiple Choice Questions 37 Toyota knows that some people want sports cars, others want vans, estate cars, or economy cars. In this case Toyota has found its markets to be: 1) heterogeneous 2) undifferentiated 3) focused 4) homogeneous www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Summary 38 • Demand forecasting is an important activity for all marketing companies to understand the potential of the market and based on which to develop their sales forecast. • Market segmentation is the process of dividing the total market into small groups or subgroups of homogenous customers. • After segmentation, target market is selected and then positioning is done. www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

Frequently Asked Questions 39 Q1What are the techniques of Demand Forecasting? Ans. 1) Survey methods 2) Statistical Methods Q2. What is Mass Marketing? Ans. Mass marketing is a market strategy in which a firm decides to ignore market segment differences and appeal the whole market with one offer or one strategy, which supports the idea of broadcasting a message that will reach the largest number of people possible. Q3. What are the two major segmentation strategies followed by the marketing organizations? Ans. The two major segmentation strategies followed by marketing organizations are concentration strategy and multi-segment strategy. Segmentation of a market to reach a target consumer base can be done by defining consumers in terms of geographic, demographic, psychographic, and behavioral characteristics. Q4. Identify the main criteria used to segment most consumer markets. Ans. It divides the market into segments based market segmentation criteria that tell us something about the population: age, gender, family size etc. Worthy of note is the fact that demographic market segmentation variables are the most popular bases for consumer market segmentation. www.cuidol.in Unit 4(MCM 605) All right are reserved with CU-IDOL

REFERENCES 40 1. Kotler,P., Keller, K.L. Koshy, A. and Jha, M. (2009). Marketing Management: A South Asian Perspective. New Delhi: Pearson Education. 2. Etzel, M., Walker, B., Stanton, W. and Pandit, A.(2007). Marketing Management. New Delhi: Tata McGrawHill. 3. Ramaswamy, V.S., Namakumari, S. (2009). Marketing Management: Global Perspective Indian Context. New Delhi: Macmillan Publishers India Ltd. 4. Saxena, Rajan. (2010). Marketing Management. New Delhi: Tata McGraw Hill Education Pvt. Ltd. www.cuidol.in Unit 4(MCM 605) 4A0ll right are reserved with CU-IDOL

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