Marketing Preparation for Summer

Placements Compendium
Module 1

Compiled by Fort MarQuity

Table of Contents
Serial
No Topic Page
1 Marketing v/s Selling 3
2 Need, Want, Demand, Desire, TG, Value Proposition 4
3 STP 6
4 4Ps & 7Ps (Marketing Mix; detail out each P) 7
5 Product and Brand (difference with examples) 9
6 Product Mix, Product Line and Product Line Depth 10
7 Line Extension & Brand Extension (difference, with examples) 12
8 Types of entry strategies, Specific attack strategies 13
9 Promotion Mix 14
10 Steps of Marketing Research 15
11 Category and Segment, Segmentation and Segmentation Parameters 17
12 SWOT Analysis 18
13 Product Life Cycle 19
14 Positioning 21
15 Product Differentiation 22
16 Porters 5 forces 24
17 BCG Matrix 27
18 Ansoff Matrix 29
19 McKinsey 7-S Framework 31
20 B2B, B2C, C2C Marketing 33
21 BTL & ATL 34
22 Brand Equity, Rituals and Rivalry 35
23 Competitive Advantage 36
24 Innovation; Disruptive Innovation 38
25 Customer Relationship Management and Marketing 39
Marketing vs. Selling

In general we use marketing and selling as synonyms but there is a substantial

difference between both the concepts.It is the action part of marketing only and has
short term goal of achieving market share. The end means of any sales activity is
maximizing profits through sales maximization.

Marketing as a concept and approach is much wider than selling and is also dynamic as
the focus is on the customer rather than the product. While selling revolves around the
needs and interest of the manufacturer or marketer, marketing revolves around that of
consumer. It is the whole process of meeting and satisfying the needs of the consumer.

SELLING
1 Emphasis is on the product
2 Company Manufactures the product first
3 Management is sales volume oriented
4 Planning is short-run-oriented in terms of todays products and markets
5 Stresses needs of seller

MARKETING
1 Emphasis on consumer needs wants
2 Company first determines customers needs and wants and then decides out how to
deliver a product to satisfy these wants
3 Management is profit oriented
4 Planning is long-run-oriented in todays products and terms of new products,
tomorrows markets and future growth
5 Stresses needs and wants of buyers
Needs, Wants, Demands, Desires, Target
Group, Value Proposition

Needs -Human needs are the basic requirements and include food clothing and shelter.
Without these humans cannot survive. An extended part of needs today has become
education and healthcare. Generally, the products which fall under theneeds
category of products do not require a push. Instead the customer buys it themselves.
Example of needs category products / sectors Agriculture sector, Real Estate (land
always appreciates), FMCG, etc.

Wants Wants are a step ahead of needs and are largely dependent on the needs of
humans themselves. For example, you need to take a bath but you take bath with the
best soaps. Thus Wants are not mandatory part of life. You DONT need a good smelling
soap. But you will definitely use it because it is your want. Example of wants category
products / sectors Hospitality industry, Electronics, Consumer Durables, FMCG, etc.

Demands You might want a BMW or a Mercedes for a car. You might want to go for
a cruise. But can you actually buy a BMW or go on a cruise? You can provided you have
the ability to buy a BMW or go on a cruise. Thus a step ahead of wants is demands.
When an individual wants something which is premium, but he also has the ability to
buy it, then these wants are converted to demands. The basic difference between wants
and demands is desire. A customer may desire something but he may not be able to
fulfil his desire.Example of demands Cruises, BMWs, 5 star hotels etc.
The needs wants and demands are a very important component of marketing because
they help the marketer decide the products which he needs to offer in the market. Thus
the flow is like this.
Market >> Identify needs wants and demands >> Offer products to satisfy
either needs, wants or demands.

Target Group
 First, the target group is a group of intended users of the product. These are the
people for whom the product was designed. These are the individuals who will be
experiencing the value proposition.
Second, the key target user is a predominant user for the product. There may be
other secondary and tertiary users for the product.
Third, the key target user does not refer to an individual. It refers to a segment of
individuals that share the same characteristics.

Value Proposition
It is the promise that the value will be delivered from an organization to a customer. It
is based on cost, benefit and value analysis.
Segmentation, Targeting & Positioning

Segmentation is the process of grouping people or organizations within a market

according to similar needs, characteristics, or behaviours
Targeting is the actual selection of the segment you want to serve the target market is
the group of people or organizations whose needs a product is specifically designed to
satisfy
Positioning is the use of marketing to enable people to form a mental image of your
product in their minds (relative to other products)
Marketing Mix (The 4Ps of Marketing)
Marketing Mix is the general Phrase used to describe the different choices that the company has to get
its product in front of the people. It may also be said that the positioning is defined through the 4 Ps of
Marketing.

Apart from the Kotler definition of each of the 4Ps, the questions in the below diagram may be used to
simply define the 4 Ps for any product.

The 7Ps

The Marketing Mix in case of Services is often described using the 7Ps as marketers find them to be
more effective when defined in this way. The other 3Ps (in addition to those above) for Service
Marketing are as follows:

People:

People are a defining factor in a service delivery process, since a service is inseparable from the person
providing it. Thus, a restaurant is known as much for its food as for the service provided by its staff. The
same is true of banks and department stores. Consequently, customer service training for staff has
become a top priority for many organizations today.

Process:

Process here refers to the ways in which marketer employ to providing relevant and supportive services
to their customer in order to give them more satisfaction for their patronage. Marketing manager must
make key decisions such as the kind of after sales service, home delivery etc. to employ because these
process when effectively employed will go a long way to create brand loyalty and also a long lasting
relationship with the customer.

Physical Evidence: This refers to the physical environment of the business (or tangible part of services).
Consumers are likely to be influenced by what they see and most organizations today are accessed by
their physical structures. In order to Influence costumers confidence to the organization, marketing
manager must ensure a more conducive atmosphere to attract more customers while realizing
marketing objectives. Thus, there are hair salons that have well designed waiting areas often with
magazines and plush sofas for patrons to read and relax while they await their turn. Similarly,
restaurants invest heavily in their interior design and decorations to offer a tangible and unique
experience to their guests.
 Product v/s Brand

A product is very different from a brand. As an example, an Ipod is a product and Apple is a brand.
Soap is a product and Dove is a brand. Brand may be defined as "A name, term, design, symbol, or any
other feature that identifies one seller's product distinct from those of other sellers"

In Seth Godinswords: A brand is the set of expectations, memories, stories and relationships that, taken
together, account for a consumers decision to choose one product or service over another. If the
consumer (whether its a business, a buyer, a voter or a donor) doesnt pay a premium, make a selection
or spread the word, then no brand value exists for that consumer.

Few things to remember when differentiating between the two:

A product can be copied by the customer but a brand is unique (eg. Micromax can make
smartphones but can never make an IPhone)

A product is something that is made in the factory while a brand is something that is bought by
the customer.

A brand is much more than a nameits a symbol, trademark, logo, term, sign, design or
combination, which distinguishes a product from others.

A brand sets a companys products apart from competition. Its the perception of the product in
the minds of the consumers eg. Artists signing their work.

Products can become obsolete, but brands are timeless (the brand equity may change over the
years) eg.the cassette has become obsolete but the Elvis Presley brand is timeless and people
still listen to the music in digital form.

Brand is the companys definition of what they have to offer. The Brand has a personality and
refers to the promise that the company makes to their customers.
Product Mix, Product Line and Product
Line Depth
The complete set of all products that a company offers to the market is called as the Product
mix of the company. For example, the below picture shows the complete product mix of Proctor and
Gamble:

The product mix consists of both product lines and individual portfolios. A product line is a
group of products within the product mix that are closely related, either 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.

An individual product is a particular product within a product line. It is a distinct unit within the
product line that is distinguishable by size, price, appearance, or some other attribute. For example, all
the courses a university offers constitute its product mix, courses in the marketing department
constitute a product line, and the principles of marketing course is a product item.

There are four dimensions associated with a company's product mix: The product line breadth,
the length, the depth, and the consistency.

The breadth(or width) of the product mix consists of all the product lines that the company
has to offer to its customers. If we take P&G, for example, the breadth of the major product lines would
consists of hair products, oral care, soaps and detergents, baby care, and personal care. You may also
hear the product line breadth referred to as the product width, product assortment width, and
merchandize breadth. So if P&G has five product lines hair products, oral care, soaps and detergents,
baby care, and personal care. This means that the product mix breadth is five.

A product line can contain one product or hundreds. The number of products in a product line
refer to its product line depth. The depth of product blend refers to how many variants are obtainable
of each product in the line. For example, since Lux comes in 4 type of scents (exotic flower petals &
almond oil, jojoba oil, and milk cream, fruit extracts and honey and sandal saffron in milk cream),
it contain a depth of 8.

Length of the product mix refers to the whole number of items in the mix. For example, ABC
company may have two product lines, and five brands within each product line. Thus, ABC's product mix
length would be 10.

Product mix consistency pertains to how closely related product lines are to one another--in
terms of use, production and distribution. A company's product mix may be consistent in distribution
but vastly different in use. For example, a small company may sell its health bars and health magazine in
retail stores. However, one product is edible and the other is not.
Brand extension:
Brand extension refers to the expansion of the brand itself into new territories or markets. Mostly it refers
to new product launch under the same brand name. For Example Classmate introducing Classmate Pens
in addition to Classmate Notebooks is Brand Extension.

Line extension on the other hand refers to the expansion of an existing product line. For example, Coca-
Cola launching Diet Coke is a line extension. Line extension can be viewed as subset of Brand Extension.

Generally firms do brand extensions and line extensions to leverage the strong brand name. New
products get much needed acceptability due to brand name and brand name gets positive feedback.
However there is always risk of weakening brand association with specific product which might result in
Brand Dilution.

Attack Strategies (Market Challenger Strategies)

Frontal Attack: Direct Challenge on the basis of better Product,

Price, Distribution, Advertisement.

Flank Attack: Target weak spots or gaps. They can be geographic gaps (where competition product or
distribution is weak) or product gaps (when competition product is not meeting some specific needs). E.g.
Idea targeted rural and semi urban areas which were underserved. Japanese companies launched fuel
efficient cars where American cos. were weak.
Encirclement Attack: A series of offensive attacks on several fronts to capture wide slice of enemys
territory. E.g. In an attack against Microsoft; Sun licensed Java to thousands of companies and developers.
As a result Java surfaced on all sorts of electronic devices and not just computers.
Bypass Attack: Bypassing enemy and attacking easier markets. Generally it is done by diversifying into
unrelated products and new geographical markets along with leapfrogging to new technologies. E.g.
Google leapfrogged Yahoo in search technology. Pepsi diversified into snacks to bypass Coke.

Guerilla Attack: Conventional and unconventional attacks to embarrass competition

which include selective price cuts, intense promotional blitzes and even legal actions.
Coke became official sponsor of Wills Cricket World Cup and Pepsi launched
promotional campaign Nothing Official About It
Entry Strategies

Export through domestic Export Management Companies

for a fee
Indirect Exporting
Cooperative agencies run exports for multiple producers
(Handicrafts, Dry fruits and nuts etc.)

Export through domestic export division/overseas sales

Direct Exporting branch/travelling export sales representative
Export via Exclusive rights holding foreign distributors

Licensor issues license to use manufacturing process,

trademark, patent etc. for royalty (%age-Cut) or fee
Licensing
Management Contract, Contract Manufacturing and
Franchisee (KFC, McD)

Sharing of ownership by foreign and domestic investors for

Joint Ventures political , economic and strategic reason s
e.g. Bharti - Walmart , Nokia Siemens Network

Buliding own manufacturing or service facilities

Direct Investment Most common format iss fully owned and partly ownded
subsidiaries
Promotion/Marketing Communication
Mix
Advertising: Paid non-personal form of presentation and promotion of ideas, goods or
services by identified sponsor on media (Print/Digital/Network/Display). Network media
includes telephone, cable, satellite etc. and display media includes billboards, posters etc.

Sales Promotion:Short term incentives for consumer, trade and sales representatives.
Consumer promotion includes samples, coupons, premiums and freebies for consumers. E.g.
20% extra Uncle Chips Offer limited till 5th July, 2013. Trade promotions include advertising
and display allowances to trade channel members (Distributors, Retailers, and Wholesalers etc.).
E.g. 23+1 on Uncle chips (1 packet free on purchase of every 23 packets). Sales promotion
includes incentive for sales force in the form of contests and monthly sales value target tied to a
monetary incentive.

Direct Marketing: Targetingindividual members of defined consumer groups directly

through mail, telephone, fax, internet with clear Call to Action (CTA) E.g. Dial 800- 888-8888,
place your order and receive your bonus gift!". QR code is a tool for direct marketing as CTA is
inherently built into it.

Personal Selling: Face to face interaction using aggressive sales tactics trying to influence
buying process. Its purpose can be procuring order, advertising or even enhancing customer
satisfaction.

Public Relations and Publicity: Personal communication to internal (employees) and

external (customers, government, other firms) entities to promote or protect image of
company, brands, products and employees.

Interactive Marketing: Activities and programs on internet to engage customers in order

to educate, persuade or communicate on a rather personal level. E.g. Flipkart shows suggested
readings on the basis of past book purchases of customer.
Events and experiences: Company sponsored activities to interact with customers
through sports, entertainment, cause or informal games etc. Major use includes Brand
Activation campaigns (to make brand active in the mind of consumer). E.g. Red Bull adventure
sports competition.
Steps of Marketing Research

Marketing research is conducted to help management in taking the better decisions. Below the steps,
description is written in fairly simplistic manner to form just the basic understanding. Thus

Define the problem

What is Management Decision Problem? What is Marketing Research Problem?

Develop Approach to Problem

What is Research Question? Develop Hypothesis

Research Design
Exploratory Descriptive Causal

Data Collection
Instrument (E.g. Questionnaire, In-depth interviews)

Data Analysis
Technique (e.g. Frequency distribution, regression, Factor Analysis)

Data Interpretation and report

Findings Recommendations

SAMPLE CASE:

Sharma Fast Foods in MDI has hired you as marketing experts to help SFF double its sales in 2013-2014.
So we need to help it in deciding products, pricing and promotions (since the place is fixed!).

Management decision problems

o How should they price their most selling product egg role?
o How can they improve their service quality?
Marketing Research Problem
What should be the price point that maximizes the sales value of egg roll 20/30?
 o Identify the service factors that contribute most to consumer perception of service
quality? (So that management can make suitable investment)
Hypothesis (Null Hypothesis is inverse statement of H1)
o H1: More sales value would be realized at 20 than 30
o H1: Cleanliness is positively related to consumer perception of service quality
Research design
o Since more or less sale is effect of underlying cause (price point) it can be causal
research and it is confirmatory and actionable
o Since research tries to find the most important service factors Taste of food, Cleanliness
etc. It is descriptive in nature. (If we wanted to know what all service factors are important
It would be exploratory. Factor analysis is commonly used data analysis technique to group
a large no. of factors into a few major factors)
Data Collection
o We could prepare appropriate questionnaire and send it to mandevian Ids
o We could conduct face to face in depth interviews f students
o We could have focus group discussions in lecture halls (GD with a facilitating moderator
who observes the participants and conducts the GDs in an unobtrusive and unbiased
manner)
Data Analysis
o Frequency distributions are used to check data trends (Mean, Variance etc.)
o Regression is used to find degree of correlation (To predict the change in y if x changes
by x)
o Various other techniques can be used depending on research design e.g. Chi Square,
Independent sample t-test, Paired sample t test, ANOVA etc. depending on the research
design and variables.
o E.g. Here Paired sample t-test can be used to find appropriate price point and regression
can be used to find correlation between cleanliness and customer perception of service
quality (How and Why are out of scope of this document!)
Recommendations and report
o On the basis of data analysis appropriate price point and most important service quality
factor would be recommended to management.
Segmentation

means identifying and profiling customer groups who differ in their needs and wants.

It can be done on the basis of geographical, demographic, psychographic and behavioral factors.

Examples of these factors are as follows:

Geographical Regional (Rural/Urban)

DemographicSocio-Economic (SEC) Classification (SEC A/B/C)
PsychographicPersonality on the basis of resources and innovation
(Innovator/Thinker/Achiever/Experiencer/Believer/Strivers/Makers/Survivors/Initiator)
BehavioralDecision roles (Influencer/ Decider/ Buyer/User)

Segmentation Criterion

A segment should be measurable, substantial, accessible, differentiable and actionable as

marketing strategies are developed for specific segments.

Measurable- Size, purchasing power and characteristics can be measured. E.g. Urban Rural is
measurable, Good-Badis not.
Substantial- Size should be such that it is profitable to serve. E.g. If you are an SUV maker, Kids
can be a non-substantial segment.
Accessible- Segment should be reachable. E.g. Customer in Naxalite areas can be profitable
segment but might not be reachable.
Differentiable- Segments should be different from each other in needs, wants or responses to
specific marketing strategies. E.g. If you are a lager beer manufacturer, there might be no point
in segmenting the customer into married and unmarried men as they might be same in needs,
wants and responses w.r.t lager beer.
Actionable- Effective marketing strategies can be formulated for segment. E.g. for Tata, sports
bikers might be non-actionable segment due to possible brand image conflict or available
technology.
SWOT Analysis

SWOT Example: Target Market

SWOT Example: Product Marketing Initiative

Product Life Cycle

Life Cycle for Basic & Fashion products

Fashion Adoption Consumer Types

Product Life Cycle Sales & Profit

Common Product Life Cycle Patterns

Positioning
Designing the companys offering and image to occupy a distinctive place in the minds of the target
market.

Positioning Example
Product Differentiation
Product Differentiation Examples

Form Toblerone Bar, Polo (Mint)

Features Mobile Phones

Customization Dell Computers

Performance
German Cars(BMW, Audi)
Quality

Conformance McDonalds (McAalo tikki remains

Quality the same irrespective of the outlet)

Durability Duracell Battery (A P&G Product)

Reliability Toyota

A common Fax machine (the user

Reparability can fix normal issues)

Style Harley Davidson

PORTERS FIVE FORCES
The five forces are environmental forces that impact on a companys ability to compete in a given
market

The purpose of five-forces analysis is to diagnose the principal competitive pressures in a market
and assess how strong and important each one is

Helps in understanding overall attractiveness of the industry

a. Threat of new entrants

New entrants to an industry bring new capacity and a desire to gain market share that puts pressure on
prices, costs, and the rate of investment necessary to compete.

The threat of entry in an industry depends on the height of entry barriers that are present and on the
reaction entrants can expect from incumbents. If entry barriers are low and newcomers expect little
retaliation from the entrenched competitors, the threat of entry is high and industry protability is
moderated.

Barriers to entry-

Economies of scale
Product differentiation
Capital requirement
Switching costs
Unequal access to distribution channels
Government policies
 Expected Retaliation

b. Bargaining power of suppliers

Suppliers exert power in the industry by threatening to raise prices or to reduce quality. Powerful
suppliers can squeeze industry profitability if firms are unable to recover cost increases. Suppliers are
likely to be powerful if:

Supplier industry is dominated by a few firms

Suppliers products have few substitutes
Buyer is not an important customer to supplier
Suppliers product is an important input to buyers product
Suppliers products are differentiated
Suppliers products have high switching costs
Supplier poses credible threat of forward integration

c. Bargaining Power of Buyers

Buyers compete with the supplying industry by:

Bargaining down prices

Forcing higher quality
Playing firms off of each other

Buyer groups are likely to be powerful if:

Buyers are concentrated or purchases are large relative to sellers sales

Purchase accounts for a significant fraction of suppliers sales
Products are undifferentiated
Buyers face few switching costs
Buyers industry earns low profits
Buyer presents a credible threat of backward integration
Product unimportant to quality
Buyer has full information

d. Threat of Substitute Products

Products with similar function limit the prices firms can charge. Keys to evaluate substitute products
is- products with improving price/performance tradeoffs relative to present industry products. For
instance
 Electronic security systems in place of security guards
Fax machines in place of overnight mail delivery

e. Rivalry Among Existing Competitors

Intense rivalry often plays out in the following ways:

Jockeying for strategic position

Using price competition
Staging advertising battles
Increasing consumer warranties or service
Making new product introductions
Occurs when a firm is pressured or sees an opportunity
Price competition often leaves the entire industry worse off
Advertising battles may increase total industry demand, but may be costly to smaller
competitors
Cutthroat competition is more likely to occur when:
Numerous or equally balanced competitors
Slow growth industry
High fixed costs
High storage costs
Lack of differentiation or switching costs
Capacity added in large increments
Diverse competitors
High strategic stakes
High exit barriers

For further reading refer- The Five Competitive Forces That Shape Strategy by Michael E. Porter
BCG MATRIX

The BCG matrix, invented by the Boston Consulting Group, is a tool that helps to classify and evaluate
the products and services of a business. It is based on product life cycle theory. It can be used to
determine what priorities should be given in the product portfolio of a business unit. To ensure long-
term value creation, a company should have a portfolio of products that contains both high-growth
products in need of cash inputs and low-growth products that generate a lot of cash.

The matrix will position the products/services in two ways:

Rate of growth of the market ;

Market share of a product/service offered facing the competitors

BCG Classification

Starhigh growth market, dominant market share

requires additional resources for continued growth
Cash cowlow growth, dominant market share
generates surplus resources for allocation to other SBUs
Doglow/declining market, subordinate market share
has diminished prospects and represents a drain on the portfolio
Question markhigh growth market, low market share
 represents a high-risk/cost opportunity requiring a large commitment of resources to build
market share

After plotting the company one among the four quadrants, depending on its respective market share
and growth of its market in which it is operating, we determine what to do with each product/product
line. There are typically four different strategies to apply:

Build Market Share: Make further investments (for example, to maintain Star status, or to turn a
Question Mark into a Star).
Hold: Maintain the status quo (do nothing).
Harvest: Reduce the investment (enjoy positive cash flow and maximize profits from a Star or a Cash
Cow).
Divest: For example, get rid of the Dogs, and use the capital you receive to invest in Stars and
Question Marks.

Disadvantages:

The model uses only two dimensions (i.e. growth and share) to assess competitive position, others
are ignored.
More focus on balancing cash flows rather than other interdependencies.
More emphasis on cost leadership rather than differentiation as a source of competitive advantage.
Poor correlation between market share and profitability.
A high market share does not necessarily lead to profitability at all times.
Low share or niche businesses can be profitable too (some Dogs can be more profitable than cash
Cows).
ANSOFF MATRIX
The Ansoff Growth Matrix is a tool that helps business decide their product and market growth strategy.
Ansoffs product/ market growth matrix suggests that a business attempts to grow depend on whether
it markets new or existing products in new or existing markets. The output from the Ansoff product/
market matrix is a series of suggested growth strategies that set the direction for the business strategy.

Ansoff's matrix provides four different growth strategies-

Market Penetration - the firm seeks to achieve growth with existing products in their current
market segments, aiming to increase its market share.
Market Development - the firm seeks growth by targeting its existing products to new market
segments.
Product Development - the firms develops new products targeted to its existing market segments.
Diversification - the firm grows by diversifying into new businesses by developing new products for
new markets.
Impact of these strategies keeping in mind Clients and competitors

Market Penetration:
Company strategies based on market penetration normally focus on changing incidental clients to
regular clients, and regular client into heavy clients. Typical systems are volume discounts, bonus cards
and customer relationship management.

Market Development:
Company strategies based on market development often try to lure clients away from competitors or
introduce existing products in foreign markets market.

Product Development:
Company strategies based on product development often try to sell other products to (regular) clients.
This can be accessories, add-ons, or completely new products. Often existing communication channels
are leveraged.

Diversification:
Company strategies based on diversification are the most risky type of strategies. Often there is a
credibility focus in the communication to explain why the company enters new markets with new
products. This 4th quadrant (diversification) of the product/market grid can be further split up in four
types:

Horizontal diversification (new product, current market)

Vertical diversification (move into firms supplier's or customer's business)
Concentric diversification (market)
Conglomerate diversification (new product in new market).
Mc KINSEY 7S FRAMEWORK
The model is based on the theory that, for an organization to perform well, these seven elements need
to be aligned and mutually reinforcing. So, the model can be used to help identify what needs to be
realigned to improve performance, or to maintain alignment (and performance) during other types of
change.
The model is most often used as a tool to assess and monitor changes in the internal situation of an
organization.
Improve the performance of a company
Examine the likely effects of future changes within a company
Align departments and processes during a merger or acquisition
Determine how best to implement a proposed strategy

The McKinsey 7S model involves seven

interdependent factors which are
categorized as either "hard" or "soft" elements:

"Hard" elements are easier to define or identify and management can directly influence them: These are
strategy statements; organization charts and reporting lines; and formal processes and IT systems.

"Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and more
influenced by culture.

Strategy: the plan devised to maintain and build competitive advantage over the competition.
Structure: the way the organization is structured and who reports to whom.
Systems: the daily activities and procedures that staff members engage in to get the job done.
Shared Values: called "superordinate goals" when the model was first developed, these are the core
values of the company that are evidenced in the corporate culture and the general work ethic.
Style: the style of leadership adopted.
Staff: the employees and their general capabilities.
Skills: the actual skills and competencies of the employees working for the company

However, these soft elements are as important as the hard elements if the organization is going to be
successful.
B2B MODEL (Business 2 Business):
A type of commerce transaction that exists between businesses, such as those involving a
manufacturer and wholesaler, or a wholesaler and a retailer. Business to business refers to
business that is conducted between companies, rather than between a company and individual
consumers.

For instance, the tires, batteries, electronics, hoses and door locks may be manufactured
elsewhere and sold directly to the automobile manufacturer.

B2C MODEL (Business 2 Customer):

Business or transactions conducted directly between a company and consumers who are the
end-users of its products or services

While most companies that sell directly to consumers can be referred to as B2C companies, the
term became immensely popular during the dotcom boom of the late 1990s, when it was used
mainly to refer to online retailers, as well as other companies that sold products and services to
consumers through the Internet.

C2C MODEL (Customer 2 Customer):

A type of business model that facilitates interaction between customers. Customer to customer
businesses provides individuals with a place to converse, exchange and interact with other
people.

Many C2C businesses have online operations. Online auctions and classifieds such as Ebay and
Craig's List are examples of very successful customer to customer business models. These sites
don't look to directly sell goods to their members, instead the customers are exchanging with
other customers.
ATL & BTL Activities
Above The Line (ATL) advertising is where mass media is used to promote brands and reach out
to the target consumers. These include conventional media as we know it, television and radio
advertising, print as well as internet. This is communication that is targeted to a wider spread of
audience, and is not specific to individual consumers. ATL advertising tries to reach out to the
mass as consumer audience.

BTL Activities: Below the line (BTL) advertising is more one to one, and involves the distribution
of pamphlets, handbills, stickers, promotions, brochures placed at point of sale, on the roads
through banners and placards. It could also involve product demos and samplings at busy places
like malls and market places or residential complexes. For certain markets, like rural markets
where the reach of mass media like print or television is limited, BTL marketing with direct
consumer outreach programs do make the most sense.

Interesting Fact: When you are communicating with a niche audience BTL is better. However,
digital media has more or less broken these boundaries of ATL versus BTL as digital
communication can address both at the same time.

Interestingly, there is a new phrase called Through the Line, or TTL, which integrates both ATL
and BTL activities. BTL communications from brands is rapidly becoming a dying form of
reaching out to the audience with agencies and clients going adopting the Integrated
Communication approach.
Brand Equity:
The value premium that a company realizes from a product with a recognizable
name as compared to its generic equivalent. Companies can create brand equity for
their products by making them memorable, easily recognizable and superior in
quality and reliability. Mass marketing campaigns can also help to create brand
equity

Eg: The additional money that consumers are willing to spend to buy Coca Cola
rather than the store brand of drink is an example of brand equity.
Competitive Advantage
The theory was proposed by Michael Porter in 1985. Competitive advantage occurs when an
organization acquires or develops an attribute or a combination of attributes that allow it to outperform
its competitors. It is the ability to perform at a higher level than others in the same market or industry.
There are four strategies that can be followed to achieve a competitive advantage.

Cost Leadership: The idea here is to produce goods at the lowest cost possible, typically by exploiting
economies of scale. This is important because nearly all segments in the market focus on minimizing
costs and if the seller can achieve the average selling price while having the lowest costs, it can gain the
greatest profits. This is usually followed by companies that have standard products that have low
differentiation and are accepted by a wide range of customers. Examples : Ryan Air has a low cost model
where they provide only the basic services, operate in smaller airports, newer and more fuel efficient
airplanes and with virtually zero debt. This means they have some of the lowest costs in the industry.
Cost Focus: In this case a business seeks a low cost advantage in fewer segments. The product will be
basic - perhaps a similar product to the higher-priced and featured market leader, but acceptable to
sufficient consumers. Such products are often called "me-too's".

Examples: The Family Dollar uses a Cost Focus to cater to customers who would like to buy cheap
products, but cant travel to the suburbs to Walmart because they dont have a car. This is now a
fortune 500 company.

Differentiation Focus: In this case, a business seeks to provide a differentiated offering within one or a
few target segments. The needs of the customers in this segment are differentiated from the broad
customer. The important issue is to know that the customers in this segment have different needs and
to identify them. This is a niche marketing strategy.

Examples: Disney cruises focus on families with young children whereas Saga Holidays focuses on older
couples, typically over fifty years old.

Differentiation Leadership: Here the business targets a much larger audience with its offerings. This
strategy involves selecting one or more criteria used by buyers in a market - and then positioning the
business uniquely to meet those criteria. This strategy is usually associated with charging a premium
price for the product - often to reflect the higher production costs and extra value-added features
provided for the consumer. Differentiation is about charging a premium price that more than covers the
additional production costs, and about giving customers clear reasons to prefer the product over other,
less differentiated products.

Examples: McDonalds focus is on fewer offerings, but a standard product and quick service. It caters to
all groups of people.

These strategies are not mutually exclusive. Dell for example managed to achieve a status where it had a
low cost and differentiated offering.
Innovation
The term innovation can be defined as something original and new that "breaks in to" the market or
into society. Innovation differs from invention in that innovation refers to the use of a better and, as a
result, novel idea or method, whereas invention refers more directly to the creation of the idea or
method itself. Innovation differs from improvement in that innovation refers to the notion of doing
something different rather than doing the same thing better.

There are two types of innovations, Incremental Innovation and Radical Innovation

Incremental Innovation: Incremental Innovation is not about huge sweeping changes. Its about adding
little to the product in small increments, either cutting costs or by adding features. This has lower costs
compared to Radical Innovation. Incremental Innovation usually follows a Radical Innovation.

Examples: Gmail is a classic example of Incremental Innovation. When Gmail was released it had few
features, but delivered emails well and did not allow spam. Over a period of time more and more
features was added and the mail service was made faster, easier to use and still did not have any
distracting ads. This continues till date where newer and newer features are added over a period of
time.

Radical Innovation: A radical innovation is an emerging technology that improves on existing

technologies, enables new applications, and changes behaviors and patterns of consumption. Radical
innovations are riskier, more expensive and take longer to develop than incremental innovations - but
they provide a source of long term growth. Radical Innovation or Disruptive Innovation is a case of Blue
Ocean strategy. Instead of fighting it out in the existing market, a company creates a new market space
where there is no competition.

Examples: When first introduced, the PC did not provide the computational power or speed of existing
mainframe or minicomputers. The PC created completely new segments of computer users such as
home users, small office home office (SOHO) users, and students. Later, the Wintel PC configuration
became so powerful that it displaced workstations from the market.
Customer Relationship Management and
Marketing
Customer Relationship Management is used to describe the relationship between a business and its
customers. Customer relationship management solutions provides the business data that helps provide
services or products that its customers want, provide better customer service, cross-sell and up sell
more effectively, close deals, retain current customers and understand who the customer is. Technology
and the Web has changed the way companies approach CRM strategies because advances in technology
have also changed consumer buying behavior and offers new ways for companies to communicate with
customers and collect data about them. With each new advance in technology -- especially the
proliferation of self-service channels like the Web and smartphones -- customer relationships is being
managed electronically.

As a simple example for CRM, consider how a bank works,

An account number provides a unique identification

All transactions made by a customer are recorded

Regular updates of any transactions, deposits, withdrawals are all made

Then the data is used to provide customized offers, like credit cards, loans, movie tickets in a
few cases etc.

The basic purpose of all this is to increase the life time value of the customer. Customer lifetime value is
the total profit that a customer is expected to make for a company over his lifetime. As a simple
example, consider a gym member who spends $20 every month for 3 years.

The value of that customer would be:

$20 X 12 months X 3 years = $720 in total revenue (or $240 per year)

So the longer a customer lasts, the more money the company makes. Customer Relationship
Management is a way to ensure that customers stick around for longer and can provide a greater source
of revenue.