Paradigms In

Indian Marketing Scenario

Prof. R.K. Vijayasarathy

Director - IFIM B-School

Management Development Program: IFIM B-School, Bangalore

December 12th & 13th 2003
CHANGING ENVIRONMENT AND NEW OPPORTUNITIES

•DEMOGRAPHIC
-Changing family structure
-More demand for items of children’s use
-Increasing number of elderly people and their special
needs
-Increasing number of working women
-Mobility of people
-Increased educational level
CHANGING ENVIRONMENT AND NEW OPPORTUNITIES
CONTD…..

•ECONOMIC
-Rising incomes of people and new consumption pattern
-Increasing higher income groups
-Increasing propensity to buy credits
-Emergence of rural markets

•SOCIO-CULTURAL
-Increasing westernization
-Increasing role of women
-Increasing status consciousness
-Increasing stress on education
-Increasing stress on physical fitness
CHANGING ENVIRONMENT AND NEW OPPORTUNITIES
CONTD…..

•GOVERNMENT REGULATIONS
-Increasing taxes / subsidies
-Liberalization and growth of capital markets
-Establishment of “procurement” centre near all villages
-Establishment in the “TV” network

•TECHNOLOGICAL
-Technology and operational efficiency
-Easy to handle and cheaper products
-Better packaging and longevity of perishable products
-New products in new fields
-Need for alternative energy sources and energy saving devices
-Environmental pollution control measures
PARADIGMS IN INDIAN MARKETING SCENARIO

•Shift in emphasis from technology driven to marketing driven

•Focus on people but not on products alone

•
•Focus on cost-leadership strategy
•
•Focus on being market driver rather than market driven
•
•Shift in emphasis from unique selling proposition to value
proposition

•Shift in emphasis from qualitative to quantitative criteria

•
•Changing trends in PEST
 THE NEW ECONOMY
•A substantial increase in buying power.

•A greater variety of available goods and services.

•A great amount of information about practically anything.

•A greater ease in interacting and placing and receiving orders.

•An ability to compare notes on products and services.

TODAY’S COMPANIES ALSO HAVE A NEW SET OF CAPABILITIES

•Companies can operate a powerful new information and sales channel

with augmented geographical reach to inform and promote their
businesses and products.

•Companies can collect fuller and richer information about markets,

customers, prospects and competitors.

•Companies can facilitate and speed up internal communication among

their employees.

•Companies can have two-way communications with customers and

prospects, and more efficient transactions.
 TODAY’S COMPANIES ALSO HAVE A NEW SET OF CAPABILITIES
CONTD……...

•Companies are now able to send ads, coupons, samples, and information
to customers who have requested these items or have given the company
permission to send them.

•Companies can customize offerings and services to individual customers.

•Companies can improve purchasing, recruiting, training and internal

and external communications.

•Companies can substantially improve logistics and operations for

substantial cost savings while improving accuracy and service quality.
 ADAPTING MARKETING TO THE NEW ECONOMY

•Companies are increasingly subcontracting activities to

outsourcing firms. Their maxim: Outsource those activities
that others can do cheaper and better, retain core activities.
•Companies are increasingly benchmarking their performance
against best-of-class companies anywhere in the world.
•Companies are deepening their partnering arrangements with
key suppliers and distributors.
•Companies are emphasizing interdepartmental teamwork to
manage key processes rather than relying on traditional
departmental systems.
 ADAPTING MARKETING TO THE NEW ECONOMY
CONTD….

•Companies are inventing new advantages rather than relying

on their existing advantages.
•Companies are recognizing that much of their market value
comes from intangible assets, particularly their brands,
customer base, employees, distributor and supplier relations,
and intellectual capital.
•Companies are making substantial investments in information
systems as the key to lowering their costs and gaining a
competitive edge.
•Companies are increasingly organizing their activities around
customer groups, not just around products.
THE MAJOR DRIVERS OF THE NEW ECONOMY

•Digitalization and connectivity

•Disintermediation and reintermediation

•Customization and customerization

•Industry convergence
 HOW BUSINESS PRACTICES ARE CHANGING

•From organizing by product units to organizing by customer segments

•From focusing on profitable transactions to focusing on customer

lifetime value

•From focusing on just the financial scorecard to focusing also on the

marketing scorecard
•
•From focusing on shareholders to focusing on stakeholders

•From marketing does the marketing to everyone does the marketing

 HOW BUSINESS PRACTICES ARE CHANGING
CONTD…..

•From building brands through advertising to building brands through

performance

•From focusing on customer acquisition to focusing on customer

retention

•From no customer satisfaction measurement to in-depth customer

satisfaction measurement

•From over-promise, under-deliver to under-promise, over-deliver

•The new hybrid

HOW MARKETING PRACTICES ARE CHANGING:
E-BUSINESS

•Shift from E-business to E-commerce

•
•Brick - Mortar Companies
Vs
Brick - Click Companies
Vs
Pure - Click Companies
HOW MARKETING PRACTICES ARE CHANGING:
SETTING UP WEB SITES

DESIGNING AN ATTRACTIVE WEB SITE

•Context : Layout and design

•Content: Text, pictures, sound, and video the site contains
•Community: How the site enables user-to-user communication
•Customization: Site’s ability to tailor itself to different users to
allow users to personalize the site
•Communication: How the site enables site-to-user, user-to-site,
or two-way communication
•Connection: Degree that the site is linked to other sites.
•Commerce: Site’s capabilities to enable commercial transactions
HOW MARKETING PRACTICES ARE CHANGING:
SETTING UP WEB SITES
CONTD…...
CONTEXT FACTORS

Attracting and Keeping Visitors

How can we get more prospects to know and visit our site?
How can we use marketing to spread word-of-mouth?
How can we convert visitors into repeaters?
How do we make our site more experiential and real?
How can we build a strong relationship with our customers?
How can we build a customer community?
How can we capture and exploit customer data for up-selling and
cross-selling?
How much should we spend on building and marketing our site?
HOW MARKETING PRACTICES ARE CHANGING:
SETTING UP WEB SITES
CONTD…...
CONTEXT FACTORS

Advertising on the Internet

What are the various ways that we can advertise on the Internet?
How do we choose the right sites for placing our ads or sponsorship?

Dealing with Retailers

How can we sell direct and yet keep our retailers happy?
How can we coordinate our online commerce and own-store sales
and service?
How much will our retail operations be hurt by our online sales and
by other e-tailers?
HOW MARKETING PRACTICES ARE CHANGING:
SETTING UP WEB SITES
CONTD…...
CONTEXT FACTORS

Putting the site together and making it profitable

How do we pick and manage suppliers and partners?
Should the site be set up inside or outside of the company?
How do we get management buy-in and funding?
How can we fight price pressure and price transparency on the
internet?
Which revenue and profit model makes the most sense?
HOW MARKETING PRACTICES ARE CHANGING:
SETTING UP WEB SITES
CONTD…...

CONTENT FACTORS

1.Deep information with links to related sites

2.Changing news of interest
3.Changing free offers to visitors
4.Contests and sweepstakes
5.Humor and jokes
6.Games

GETTING FEEDBACK
HOW MARKETING PRACTICES ARE CHANGING:
CUSTOMER RELATIONSHIP MARKETING

•Reducing the rate of customer defection.

•Increasing the longevity of the customer relationship.

•Enhancing the growth potential of each customer through

“share-of-wallet”, cross-selling and up-selling.

•Making low-profit customers more profitable or terminating them.

•Focusing disproportionate effort on high value customers.

•Identify your prospects and customers. Do not go after everyone.

HOW MARKETING PRACTICES ARE CHANGING:
CUSTOMER RELATIONSHIP MARKETING
CONTD……
•Differentiate customers in terms of
1.their needs and
2.their value to your company.
As for customer value, companies should spend proportionately more
effort on their most valuable customers (MVCs). Customer value
of all future profits coming from purchases, margin levels, and
referrals, less customer-specific servicing cost.

•Interact with individual customers to improve your learning about

their individual needs and to build stronger relationships.

•Customize products, services, and messages to each customer.

HOW MARKETING PRACTICES ARE CHANGING:
CUSTOMER RELATIONSHIP MARKETING

MASS MARKETING ONE-TO-ONE MARKETING

Average customer Individual customer
Customer anonymity Customer profile
Standard product Customized market offering
Mass production Customized production
Mass distribution Individualized distribution
Mass advertising Individualized message
Mass promotion Individualized incentives
One-way message Two-way messages
Economies of scale Economies of scope
Share of market Share of customer
All customers Profitable customers
Customer attraction Customer retention
 WHAT IS A BUSINESS STRATEGY?

•The product-market in which the business is to compete.

•The level of investment.
•The sustainable competitive advantage or advantages that
will provide the business core.
•The objectives to guide strategic decision making.
•The functional area policies needed to compete in the
selected product market.
•The distinctive competences to maintain the sustainable
advantages.
WHY STRATEGIC MARKET MANAGEMENT?

•Precipitate the consideration of strategic choices.

•Force a long-range view.
•Make visible the resource allocation decision.
•Provide methods to help strategic analysis and
decision making.
•Provide a strategic management and control system.
•Provide a communication and coordination system both
horizontally and vertically.
•Help a business cope with change.
STRATEGIC MARKET MANAGEMENT

•External market orientation

•Proactive strategies
•Importance of the information system
•On-line analysis and decision making
•Entrepreneurial thrust
•Implementation
•Global realities
•Longer time horizon
•Empirical research
•Interdisciplinary developments
 IS STRATEGY NECESSARY?

IF NOT EVOLVED: ADVANTAGES

•The firm would save the time, money, and executive

talent which are required for a thorough strategic analysis.
•The field of potential opportunities will be in no way
restricted.
•The firm reaps the full advantage of the “delay principle.”
 IS STRATEGY NECESSARY?
CONTD…...

IF NOT EVOLVED: DISADVANTAGES

•In the absence of strategy, there are no rules to guide the

search for new opportunities, both inside and outside the firm.
•Project decisions will be of poorer quality than in firms with
strategy.
•The firm will have no formal provision for partial ignorance.
•The firm will lack an internal ability to anticipate change.
•Without the benefit of a periodic appraisal, the firm would
have no assurance that its overall resource allocation pattern
is efficient.
 CUSTOMER ANALYSIS
SEGMENTATION
Who are the customers for our products?
•Who are the largest customers?
•What potential customers, who are not using our
products can be identified?
•How does the market segment?
•How should market be segmented.

CUSTOMER MOTIVATION
What motivates customers to use our products?
•What attributes of the offering are really important?
•What objectives do the customers seek?
•What changes in customer motivation are occuring or
likely to occur?

UNMET NEEDS
Are the customers satisfied with our products
they are using?
•Do they experience problems?
•Are there unmet needs they are unaware?
 INDUSTRY ANALYSIS

DIMENSIONS:

•Actual & potential industry size

•Industry structure
•Cost structure
•Distribution systems
•Industry trends and developments
•Industry growth and the product life cycle
 UNDERSTANDING THE COMPETITORS
COMPETITOR ANALYSIS

Size, growth Objectives

& profitability & assumptions

Strengths Current
& COMPETITOR
ACTIONS & past
weaknesses strategies

Cost structure Organization

& exit barriers & culture
MARKET SELECTION AND PRODUCT PLANNING

•What markets should be served?

•What form should the product take?
•What should the product do for the user?
•For whom is the product most important?
FACTORS INFLUENCING COMPANY MARKETING STRATEGY
Marketing intermediaries
Demographic/ Technological/
economic physical
environment environment
t i ng n Ma
e io r
ark mat m pla ketin
M or t e n
inf sys sys ning g
tem

Product

Target
Suppliers Place Price Publics
customers

Promotion
Ma
rk e t ing and
con eting rk n n
Ma izatio tatio
sys trol an men
tem rg
o ple stem
im sy
Political/ Socio/
legal cultural
environment environment
Competitors
MARKETING CONCEPT REPRESENTS ESSENTIALLY
A CHANGE IN ORIENTATION

THE CHANGE IS :

From Production orientation To Marketing orientation

From Product orientation To Customer orientation
From Supply orientation To Demand orientation
From Sales orientation To Satisfaction orientation
From Internal orientation To External orientation
 EXCELLENCE IN MARKETING

•Customer orientation
•Quality
•Innovation
•Perceivable differentiation
•Distinctive competence
•Effective segmentation
•Strategy
•Competitive Analysis
•New product development
•Build a winning team
MARKETING STRATEGY AND IMPLEMENTATION
STRATEGY IS:

APPROPRIATE INAPPROPRIATE
MARKETING IMPLEMENTATION

SUCCESS ROULETTE
EXCELLENT

Good execution mitigates

Targets met for poor strategy, gives mgt.
growth, share, profits Time to see and correct it.
Or, it hastens failure
IS:

TROUBLE FAILURE
POOR

Poor execution hampers But hard to diagnose

good strategy, mgt. May because poor strategy is
never become aware of. masked by inability to
execute.
 MARKETING STRATEGY

PEST FACTORS AT WORK IN THE INSURANCE INDUSTRY

Political/environmental factors Implications

Government retirement from Poor cannot pay for traditional
welfare provision life assurance

Self-help encouragement by Only middle income groups can

Government afford to pay

Increasingly severe pensions Driving up costs of compliance

legislation and complexity of selling
 MARKETING STRATEGY
CONTD…….

PEST FACTORS AT WORK IN THE INSURANCE INDUSTRY

Economic environment factors Implications
Widening gap between rich and Poor will jettison life/savings
poor costs - traditional market will
be unprofitable
Socio-cultural factors
Major increases in working women No one at home to pay
in lower income groups premiums

Less manual jobs/more office admin. Less need for home collection
jobs of life assurance
 MARKETING STRATEGY
CONTD…….

PEST FACTORS AT WORK IN THE INSURANCE INDUSTRY

Economic environment factors Implications

Lottery Reduces disposable income

Higher expectations of middle Better services and returns

income groups demanded

Demographic factors
Population shift to middle/old ages Need for care and illness cover

Less young people Falling market for life/savings

products
 MARKETING STRATEGY
CONTD…….

PEST FACTORS AT WORK IN THE INSURANCE INDUSTRY

Technological factors Implications

New tech not easily accepted by Benefits of automation (costs)
lower income groups not immediately available in
traditional market

Growth in telemarketing / database Key cost cutting force

marketing
THE FOUR CELL SWOT MATRIX AS A CATALYST
FOR STRATEGY SELECTION

CONVERT
STRENGTH WEAKNESS
MATCH MINIMIZE/AVOID

CONVERT
MATCH
OPPORTUNITY THREAT
MINIMIZE/AVOID

Strengths matched with opportunities = CAPABILITIES

Weakness tied to opportunities = LIMITATIONS
Weakness tied to threats = LIABILITIES
ELEMENTS OF STRATEGIC PLANNING

QUESTIONS TO OBTAIN ANSWERS

1.Where are we going? •Determine the corporate mission

•Determine the scope of operations
•Establish specific goals

2.What is the environment? •Examine the internal condition of

the firm
•Examine the external environment
•Analyse threats & opportunities

3.How do you get there? •Develop strategies

•Develop contingency plans
•Develop operational plans
 CORPORATE MISSION

NARROW LINES BROAD LINES OF

OF BUSINESS BUSINESS

Oil Energy
Banking Financial services
Soap Personal hygiene products
Newspaper Communications
Guard service Security
Movie/Theatre Entertainment
 WHAT BUSINESS ARE YOU IN?

COMPANY PRODUCTION- MARKETING-

ORIENTED ORIENTED ANSWER

•A studio We make movies. We market entertainment.

•A drug firm “In the factory we “In the drugstore we sell

Chief Executive make drugs & hope.”
said medicines.”

•An airconditio- We make We provide a comfortable

ning firm Air conditioners climate in the home.

•Indian Railways We run a railroad We offer a transportation

and materials.
- handling system

•I.T.I produce/we operate We market a communication

telephones system
 RELATIVE MARKET SHARE
STARS
•High profitability
•Strong growth prospects
HIGH
•Net cash flow balance
•ROI & growth objectives
•Leaders with strong general
MARKET
GROWTH management skills
RATE
CASH FLOWS
•High profitability
•Few growth prospects
LOW •Cash generators
•ROI objectives
•Leaders with production &
accounting backgrounds
HIGH
QUESTION MARKS
•Low profitability
•Good growth prospects
•Cash users
•Growth objectives
•Leaders with marketing & product
development backgrounds
DOGS
•Very low profitability
•Few or no growth prospects
•Net cash flow balance
•Strict ROI objectives
•Leaders with financial and
legal backgrounds
LOW
 SUCCESS SEQUENCE
MARKET SHARE
HIGH LOW

GROWTH
HIGH
?
LOW Rs.
DISASTER SEQUENCE
MARKET SHARE
HIGH LOW

GROWTH
HIGH
?
LOW Rs.
 GROWTH OPPORTUNITY ANALYSIS
STRATEGIC OPTIONS INDUSTRY MARKET
POTENTIAL
11.Find new uses
10.Find new users
9.Increase the variety of use USAGE
8.Increase usage frequency GAP

7.Expand distribution intensity DISTRIBUTION

6.Expand distribution coverage GAP
5.Add product line elements
PRODUCT LINE
4.Add product features
GAP

3.Penetrate position of
other competitors COMPETITIVE
2.Penetrate position of GAP
most direct competitors

1.Defend present position

FIRM SALES
 Original Rural
version segment

Lifebuoy Double-action Urban Germ-killing

plus teenagers action

Gold Young
girls
Original version Value
Lalithaji position

Surf Excel Power “Made for Cleaning

consumers” power

Excel with oxygen Stain-cleaning

bubbles power

Surf - Excelmatic Washing machines

Surf - Value with adequate cleaning power
Surf Excel Power - Better cleaning power
Surf Excel + Oxygen bubbles- Stain -removing action
Surf Excelmatic - Washing machines (a small niche-just 0.5% of Indian households own a washing machine)
 WHERE MARKETING FAILS

ARE MORE PRONE TO TRAPPINGS RATHER

THAN SUBSTANCE

•Does not understand the marketing concept.

•Lack of commitment to action.
•Failure to implement the marketing concept.
MARKET ORIENTATION VERSUS
PRODUCT ORIENTATION

Product orientation Market orientation

We are a night club We offer an experience

We run a airline We transport people and their
goods anywhere in the world

We sell jewellery We enhance your appearance

We sell houses We create happy living
environments for people

We sell newspapers We provide interesting

information for people

We run university We provide the opportunity

for self development
 MARKET ORIENTATION VERSUS
PRODUCT ORIENTATION
CONTD…..

Product orientation Market orientation

We market personal computers We bring a new dimension of

interpersonal communication
into people’s lives

We are travel agents We make people’s dreams

come true

By taking a market rather than a product view of what one has to offer new
possible strategic windows may seem worthy of investigation. Newspaper
producers, for example, might consider other ways of providing interesting
information for people or may look more closely at the kind of information
that they do provide. Travel agents might consider various ways of making
people’s dreams come true.
GROWTH SECTOR COMPONENTS RELATIVE TO
DEGREE OF INNOVATION

Product (1) (2)

mission Present New

(a) Present Penetrate current Develop improved

markets for higher or new product to
rate of usage serve present markets

Develop new markets Diversify into new

(b) New products to serve
or uses of present
product new markets
THE PERFORMANCE - IMPORTANCE MATRIX

Performance
Low High
1 2
The focus for Continue with the
High greater managerial effort current effort to ensure
in order to improve that performance does
performance not decline
Importance

3 4
RE-think the current
Low Areas of low priority effort. Is it worth
spending in these
areas?
REACHING OUT TO THE CUSTOMER

•Integrated distribution
•Info-based channels
•Communication - distribution synergy
•Unconventional retailing
•Distribution in marketing planning
•Horizontal distribution systems
•Value-added reselling
•Branded channels
•Finance - based channels
•Image-based retailers