MARKETING OF INFORMATION PRODUCTS AND
SERVICES
Course Material
LIBRARY AND INFORMATION SCIENCE
By
Dr. K. Elavazhagan
Librarian & Chief Knowledge Officer
Department of Library and Information Science
BHARATHIDASAN UNIVERSITY
TIRUCHIRAPALLI – 620024
TAMIL NADU
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Table of Contents Unit-I ...... Information as a Resource ...... 2 Economics of Information ...... 3 Marketing Concepts……………………………………………………………………………………………………………….9
Corporate Mission ...... 15 Marketing Strategies……………………………………………………………………………………………………………….18
Unit-II ...... Portfolio Management ...... 21 BCG Matrix Model ...... 21 Product Life Cycle……………………………………………………………………………………………………………….... 23 Pricing Information………………………………………………………………………………………………………………...32
Unit-III
Marketing Mix…….……………………………………………………………………………………………………………………..45
Unit-IV
Marketing Plan & Research………………………………………………………………………………………………………58
Corporate Identity…………………………………………………………………………………………………………………62
Market Segmentation and Targeting……………………………………………………………………………………..65
Geographic and Demographic Segmentation………………………………………………………………………..67
Behavioural and Psychographics Segmentation…………………………………………………………………….68
User Behavior and Adoption…………………………………………………………………………………………………69
Unit-V
Information Industry
Marketing Information Products & Services…………………………………………………………………………75
Social Media………………………………………………………………………………………………………………………..82
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Unit-I
Information as a Resource
Information
Information is an indispensable factor for promoting the development of society. Kemp (1976:101) observes, that information has been called, the fifth need of man, ranking after air, water, food, and shelter. Luck, et al., adds that information is the life blood of planning, directing, and controlling any enterprise (Luck et al, 1981:20). It makes the satisfaction of the demands of the population possible in an efficient way.
The present age is rightly characterized as the age of information, where it success in any activityis based on the amount and accuracy of information available. The fact that information is a key resource for the progress and development of a nation (Raina, 1998:3) is nothing but the socio-economic, cultural, and political development of its citizenry. Information is a commodity or economic good of worldwide significance, which contributes to the national economy. Information has become a commodity that people buy. The criteria that determine power have shifted from industry ownership to the information ownership, as the global economy has shifted from industry-based to information-based. The quality and quantity of the information resources of the country are two of the parameters for development. Countries with adequate information infrastructure and information technology can create artificial demand for superfluous products and use it as a weapon against the economy of other countries. Information is an indispensable input for technological and economic development. It is a negotiable product that moves about in international markets. In today's international developing economies, a country that is incapable of providing information to its citizens will lose autonomy and be at the mercy of developed countries for information.
IM is managing the processes of selection, collection building, processing, controlling, and dissemination of information in an organization. IM can help an organization recognize and use the potentials of the resources of information and information technology. (Brenner) Librarians have a significant role to play in IM. Considering the IM cycle, one can find that librarians have a role to play in almost every step in the information-user matching process.
. Information is essential in education, serving the process of learning, supplementing interaction with teachers, and providing (in books, media, and databases) much of the substance. . Information may be an educational objective in itself, since among things to be learned are the tools for access to and use of information.
Information is the substance of cultural enrichment, entertainment, and amusement
. Information can be a product, a commodity — something produced as a package. . Information can be a service. Indeed, the majority of ‗business services‘ (the national economic account that includes consulting) are information based.
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. Information is easily and cheaply transported. The first copy represents most of the costs in creation, and reproduction costs are relatively small. As a result, it that can be produced and distributed with minimal depletion of physical resources. . There is a complex relationship between the time of acquiring information and the value of it. For some, the value lies in immediacy—yesterday's stock information may be worthless tomorrow. For others, the value is likely to be received in the future rather than the present. . There are immense economies of scale. Combined with the value in accumulation, this provides strong incentives for sharing information, especially since, once available, it can be distributed cheaply, which makes sharing easy. . Information is not consumed by being used or transmitted to others. It can be resold or given away with no diminution of its content. Many persons may possess and use the same information, even at the same time, without diminishing its value to others. All these imply that information is a public good.
General Economic Policies
1. Encourage entrepreneurship 2. Shift from low technology to high technology 3. Shift from production of physical goods to information goods
. Develop the ―Information Economy‖
1. Encourage effective use of information in business 2. Provide incentives for information industries 3. Develop information skills
. Management of Information Enterprises
Establish technical information skills Develop information support staff skills
There is the need to invest in the creation, production, and distribution of information and that implies a wish to recover the investment. Furthermore, there may be value associated with exclusivity in knowledge, so there must be an incentive to make it available to others. This implies that information is a private good.
Economics of Information
A fundamental shift in the economics of information is under way—a shift that is less about any specific new technology than about the fact that a new behavior is reaching critical mass. Millions of people at home and at work are communicating electronically using universal, open standards. This explosion in connectivity is the latest—and, for business strategists, the most important—wave in the information revolution.
Over the past decade, managers have focused on adapting their operating processes to new information technologies. Dramatic as those operating changes have been, a more profound
5 | P a g e transformation of the business landscape lies ahead. Executives—and not just those in high- tech or information companies—will be forced to rethink the strategic fundamentals of their businesses. Over the next decade, the new economics of information will precipitate changes in the structure of entire industries and in the ways companies compete.
Just as the free flow of information is essential to well-functioning democracies, it is essential to well-functioning consumer marketplaces. Consumers need accurate, complete, and timely information to learn about alternatives and make good choices. Marketers need information about consumers to learn what they want (when and where and how much) and how much they value alternatives. Such information equips firms to offer the right product at the right place at the right time and at the right price.
Democracies and the consumer marketplace operate by persuasion and not coercion. Marketers and politicians need to make their cases through information and rhetoric. Typically they appeal to the emotions as well as to the intellect. But marketers (and politicians) are engaged in an advertising arms race, and the marketplace overflows with commercial message, many of them irrelevant and irritating. A question is whether all this signifies marketer power or consumer power.
Marketers‘ use of information about consumers must be balanced against consumer‘s privacy. Traditionally, the marketing research profession has agreed on codes of ethics to protect consumer information, such as walling off research from sales and ensuring respondent anonymity. However, now that digital technologies enable marketers to gather, store, and connect multiple pieces of behavioral data about individuals and tailor products accordingly, consumer privacy increasingly is traded for the benefits that marketers can provide by using such information. Reputable marketers need to ensure that files containing sensitive personal information are adequately protected and that individual‘s privacy and security are not put at risk.
Information issues are central to debates over marketers‘ rights versus consumers‘ rights, and governments are instrumental in mediating these clashes. Democratic governments permit marketers substantial freedom but intervene in response to sustained pressure from one side or the other, particularly when arguments convince policy makers that existing practices fail to conform to the ideal of a competitive, open, and well-informed marketing system.
Not everyone has equal access to information or equal ability to process it- for example, the poor of the world, the illiterate, and those living in remote areas. According to ―new growth‖ economic theory, rapid sharing of new ideas and accurate information are integral to economic expansion. For long-term market growth, it may be in marketers‘ best interest to contribute to investments that bridge the digital divide, possibly through public- private partnerships, grants, and incentives or by developing new ways to give consumers access to information.
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Information, Persuasion, and Advertising
In the consumer marketplace, much of the information about products and services comes directly from marketers, supplemented by personal experience and word of mouth. (By contrast, in the political marketplace, much of the information comes from the media.) Interactions with sales-people, assuming that they are knowledgeable and well trained, are information rich for buyers and sellers alike. Whether a consumer is shopping for a new computer or looking for the proper nut-and-bolt combination to complete a do-it-yourself project, expert assistance can help match the right product or service to the circumstance.
Salespeople, in turn, learn what consumers are looking for and which alternative solutions they are considering. Feedback from good salespeople can help marketers shape their product assortment or guide new-product development. The vaunted interactivity of new-generation websites is a pale approximation of the interactivity of the best person-to- person exchanges.
Marketer‘s merchandising activities, including packaging, pricing, and product display, as well as product samples from a test drive to a sample taste- are another source of information. But in large, dispersed, and fast changing marketplaces, no buyer can learn about available products based solely on experience, sales interactions, or merchandising. These sources are supplemented or substituted by commercial messages in various media.
In the developed world, commercial information is ubiquitous. It includes advertisements in newspapers, magazines, radio, television, and the Internet; street flyers, shop signs, and billboards; direct mail and e-mail; posters on buses and trains; and logos and signage at sporting events. And that‘s only the advertising that the average person can clearly identify as being paid messages. Public relations events, corporate press releases that form the basis for news stories, half-hour television ―advertorials‖ presented as objective journalism, product placements in movies or television, corporate sponsorships of not-for-profit arts organizations – these are less visible, more subtle versions of promotion.
In the name of acculturation to adulthood, even schools are not exempt from the commercialization of modern life: soft-drink vending machines line hallways and commercials are broadcast over audiovisual systems paid for by private enterprise. Churches may be next.
Only a few places in the world are free from rampant advertising, and, if history is a guide, they may not be ad-free for long.
The Evolution of Advertising
Modern consumer marketplaces exhibit a wide range of advertisements that differ in their information content and persuasive approach. Advertising has evolved from purely factual
7 | P a g e toward imagery-laden, emotional content. Early ads simply informed potential purchasers about product availability.
A typical mid-eighteenth-century merchant would place a long newspaper advertisement itemizing the goods in stock following a ship‘s arrival. Much current newspaper advertising still consists of factual information about product availability and price. Ads also introduce vocabulary or terms that educate consumers about product differences. Consumers learn to distinguish high-quality goods and to make ever finer distinctions among types- say, a two- megapixel versus a five-megapixel digital camera.
At the beginning of mass marketing, ads tended to extol the functional superiority of a product or a brand, sometimes incorporating a good dose of puffery. (This type of advertising is used in emerging economies, where advertisers need to educate consumers about basic product performance.) Marketers talked about things like maximum cleaning strength and presumed that consumers would choose the product on this basis. Marketers also sought to influence choice by framing the basis for comparison, teaching consumers, which attribute was more important or what constituted product superiority versus a competitor.
In Rosser Reeves‘s famous ―unique selling proposition‖ approach to advertising, all ads for a product had to demonstrate a single unique benefit: ―Each advertisement must say to each reader: ―Buy this product and you will get this specific benefit‖ Reeves didn‘t assume that consumers always knew they needed a particular feature or could see how products differed; it was advertising‘s job to point out consumers latent needs.
Apart from functional benefits, marketers hoped to influence consumer‘s choice by creating strong awareness of their product and transferring liking for an ad to liking for the product. Adman Leo Burnett forged emotional connections through association with invented characters like the Pillsbury Doughboy.
Television advertising emphasized visual images over wordy explanations (reflecting the fact that 80-90 % of the meaning in human communication is transmitted nonverbally). It aimed to talk to rather that at the audience and to demonstrate rather than proclaim benefits. Increasingly, marketers promised emotional benefits, including taking good care of one-self or one‘s family or achieving social success by buying the right brand. Colgate toothpaste, for example, promised ―the ring of confidence.‖
Perhaps in reaction to these developments, Vance Packard‘s sensationalist critique of the advertising industry in the 1950s accused advertisers of using subliminal techniques to influence consumers through their subconscious. (Some advertisers may have wished they had such power, but they never did.)
In addition to acting as a stimulus for immediate sales, marketers used advertising to maintain top-of-mind awareness. For example, consumers typically purchase automobiles every three years. In the interim, mass advertising aims to keep them interested enough to consider a brand or model the next time around. Automobile advertising also increases customers‘
8 | P a g e satisfaction with their choices. Recent purchasers notice advertising for their chosen brand; it reassures them that they chose well.
Advertising information and market efficiency:
For consumers, increasing quantities of advertising can be annoying and intrusive. For marketers, the more advertising there is, the harder it is to make it stand out. Marketers find themselves in an insidious cycle of spending more on advertising just to maintain parity. Keeping up with the times, they advertise in new media while maintaining a presence in the old media-wherever consumers can be reached.
Even with knowledge gleaned from test markets and experimentation, it is notoriously difficult to calculate returns on advertising spending. Advertising appears to be most effective in introducing consumers to new products or telling them something new. But marketers also believe that some advertising is needed to remind consumers of existing products and maintain brand awareness. Although marketers may desire to cut back, they remain uncertain about where to cut back or what the effect on sales might be. With Internet advertising, this situation may improve as marketers become more confident with detailed tracking measures.
Whether the sheer amount of advertising signifies that consumers have power over advertisers or whether advertisers have power over consumers is a matter of debate. Does it indicate that marketers have found that advertising works that speaking loudly and frequently to consumers influences choice significantly? Do consumers values the emotional connection advertising creates with brands? Or, as critics might say, can it create false desire, trick people into wanting things they don‘t need or excessive quantities of things they do need? This would suggest advertiser power.
Or is it a sign of desperation? Do advertisers‘ messages cancel each other out, suggesting that much advertising is wasted or at best defensive? Have consumers become sophisticated decoders of advertising formulas, indicating consumer power? Or, alternatively, have consumers become so inured to advertising that choice is essentially random? Despite endless debate, the jury is still out.
Furthermore, do consumers pay higher prices than they should in order to cover the costs of unnecessary advertising? Critics cite the prominent example of the pharmaceutical industry. Defenders of advertising say that any extra costs are justified because ads provide valuable information.
However, the volume of advertising, together with the prevalence of nonfactual messages, fuels criticisms that advertising is uninformative, intrusive, and wasteful. In any case, consumers see and hear so much advertising that it is difficult to say anything new to them. If advertising gives consumers a minimal amount of new information (except for new products and new features), that bolsters critics accusations that it is persuasive and manipulative. Some marketers advocate responding to the marketplace clutter by trying to create more intense bonds with consumers, such as an ―emotional level that can create loyalty beyond
9 | P a g e reason.‖ In trying to bypass conscious decisions perhaps they are adding fuel to the critics‘ fire.
Economists too have debated whether advertising is beneficial for markets, that is, whether it makes them more efficient and competitive. One school of thought holds that it makes markets more monopolistic by creating barriers to entry: to compete effectively, new entrants must be prepared to make large investments is advertising. Further, if advertising persuades consumers to be less sensitive to price, then monopolistic companies can raise prices over competitive levels.
A second school of economists argues that advertising promotes competition. Advertising, they reason, is an efficient way for competing sellers to communicate with potential customers. It allows new products and new sellers to gain a foothold. In itself, the increased competition keeps prices lower. Further, ads containing information about prices and products reduce consumers‘ time and search costs.
Both schools of thought associate information with market efficiency. They differ over whether advertising stifles or promotes the flow of information. To date there is little evidence that advertising plays a significant role in creating monopolistic behavior. Evidence that advertising leads to lower prices is also inconclusive.
The “economics of information” reflects a third view of the role of advertising. This branch of economics considers what happens to market efficiency when a seller has much better information about product quality than a potential buyer has. This is frequently the case in modern markets, where products are complex and buyers cannot determine quality by casual inspection.
In a seminal article, George Akerlof showed that such markets do not work very well. However, in his example of the used-car market, dealers whose stock is of more consistent quality offset the information problem by offering credible guarantees. They also advertise. Philip Nelson argued that regardless of an ad‘s content, advertising conveys the information that sellers are committed to their product and that they are willing to back up their product and reputation by spending large amounts on advertising. Consumers rightly reason that it would make no sense for marketers to advertise and develop a brand if quality were poor or if they were fly-by-night operators.
This explanation helps account for the prevalence of image-oriented ―non-informational‖ advertising. What matters to consumers is the advertiser‘s pledge to its audience that it is a reputable seller offering good-quality products to services. In the emerging automobile market in china, for example, car buyers place great weight on the manufacturer‘s industry leadership and aura of success. It is true that image advertising influences consumers through their emotions, but another part of the story is that consumers extract information from all sorts of ads. There is no strict dividing line between persuasive advertising and informative advertising.
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Marketing Concepts:
Kotler (1994), a professor of marketing, adopted the following definition of marketing:
"Marketing is the analysis, planning, implementation and control of carefully formulated programs designed to bring about voluntary exchanges of values with target markets for the purpose of achieving organizational objectives. It relies heavily on designing the organization's offering in terms of the target market's needs and desires and as using effective pricing, communication, and distribution to inform, motivate and serve the markets."
There are 7 major points to be emphasized in the above definition:
1. Marketing is a managerial process involving analysis, planning, implementation and control. 2. Marketing is concerned with carefully formulated programs - not random actions - designed to achieve desired responses. 3. Marketing seeks to bring about voluntary exchange. 4. Marketing selects target markets and does not seek to be all people. 5. Marketing is directly correlated to the achievement of organizational objectives. 6. Marketing place emphasis on the target market's (consumer's) needs and desire rather than on the producer's preferences.
Marketing defined—a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others.
Finally, Kotler defines Marketing concept as follows: The Marketing concept holds that the key to achieving organizational goals consist in determining the need and wants of target market and delivering the desired satisfaction more effectively and efficiently than competitors.
Core marketing concepts
A. Marketing concept—assumes 1. The key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets 2. Target market—no company can operate in every market and satisfy every need
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3. Customer needs—it‘s not enough to just find the market; marketers must also understand their customer‘s needs and wants. This is not a simple task 4. Integrated marketing—all of a company‘s departments must work together to serve the customer‘s interests. This begins among the various marketing functions and carries into other departments 5. Profitability—the ultimate purpose of marketing is to help organizations achieve profitability goals 6. Hurdles to adopting the marketing concept a) Organized resistance—some departments see marketing as a threat to their power in the organization b) Slow learning—despite efforts by management, learning comes slow c) Fast forgetting—there is a strong tendency to forget marketing principles 7. Needs, wants, and demands a) To need is to be in a state of felt deprivation of some basic satisfaction b) Wants are desires for specific satisfiers of needs c) Demands are wants for specific products that are backed by an ability and willingness to buy them Even for commercial organizations, it is quite difficult to assess the nature of needs and wants which customers would like satisfied. For libraries/information centers, this problem is compounded by the fact that the specific nature and quantum of requirements of their clients not known at a point in time, and there can be a great deal of variation across time. For most of their clients, the broad information requirement may be generally know. The specific needs can be quite variable and may be assessed through interactions with the customer (called interactive marketing). Through such interaction, important needs, specific to a customer at a particular time and situation, could be identified. As explained earlier, satisfaction can judged through assessing the difference between the total customer value and the total customer cost. A sharp focus on understanding the needs and wants of target customers, may help the library in enhancing the total customer value, by providing the needed information in time thereby, reducing the energy, time, and psychic cost.
Customers - Top Priority
The new customers do not know about library rules and regulation, therefore it is duty of library staff to give orientation for maximum utility of library. They do not care about rules and ways of doing business. They care to adapt its products and services to fit their problems. This represents the evolution of marketing to the customer-driven. We must always remember the following points:
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Customers are the most important people to be served in library and information centers. They are not dependent on the library; rather the library depends on them. They are not just from outsiders but part of the library. They are not just statistics, but also they are human beings. They are the people who bring their wants and needs and we are there to meet their information needs exceedingly.
Customers - Expectation
Library and information professionals should strive hard to gain a far vision of 'who our customers are', 'what they want', and 'what are their social characters, values, desires, and aspiration‘. The advancement of information and communication technologies (ICTs) has enabled education and technology in self-help and do-it-yourself activities in libraries. The 21st century customer will place high value on self-reliance, adaptability and survival under difficult conditions and the ability to do things of his/her own.
Quality Services
The user of the service is the ultimate judge of the quality. S/he weighs the value s/he receives from a service organization against the time spent and/or the efforts involved besides the monetary burden in getting the desired service and thus decides the quality. Users seldom define the quality of the library and its services in terms of stock size, annual budget, physical facilities, staff and the mere number of services. No doubt, these are some of the essential criteria for providing quality services; it benefits the service itself that users look for. Quality service in part depends on how well various elements function together in a service system (see Figure 1). These elements include the people who perform the specific service in the service chain, the equipment that supports these performances and the physical environment in which the services are provided. The management concept achieving service excellence is termed as Total Quality Management. It is a customer need driven management process. It emphasizes on identifying customers‘ needs expressed in customer's own words and then linking customers' perceived quality into internal processes and measuring the impact of quality measurement on the market place.
Figure1. Relationships between library services and the customer
8. Target markets , Positioning and segmentation
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a) Every product or service contains features that a marketer must translate into benefits for a target market
No organization is going to have large enough resources to cater to the needs of the total market. Careful selection of the target market customers thus helps in an efficient allocation/utilization of scarce organizational resource.
b) The consumer perceives these benefits to be available in a product and directly impacts the perceived ability to meet the consumer need(s) or want(s) The concept of focusing on some markets/segments is quite alien to service organizations where everybody is treated on par. There is a greater need for libraries/information centers to be selective in their choice of clientele and/or prioritize among the selected target segments.
9. Marketers and prospects a) A marketer is someone actively seeking one or more prospects for an exchange of values b) A prospect has been identified as willing and able to engage in the exchange
10. Product or offering
a) Anything offered for sale that satisfies a need or want. b) Products consist of three primary components: goods, services and ideas c) The physical product provides the desired service or action.
What do they buy? This question can help in identifying the current products, services, and mechanisms used by customers to satisfy their needs/requirements. In other words, it helps to identify which of the current competing products and services are chosen, for satisfying the specific needs.
How do they use the product/service? Answer to this question may help in identifying current and/or potential products, services, and mechanisms which could fit into the customer‘s use process better.
Why do they buy? This could throw significant light on the motivation of customers to buy, as well as be in assessment of the current products/services being used. A deeper probe into the motivations may reflect the relative importance of price and non-price factors in deciding the purchase. Specific advantages and disadvantages of currently used products/services could be assessed, to find, if there is any dissatisfaction, for which improved/new products/services could be designed. Also the information could be used for deciding how to promote the products/services.
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How do they buy? Customers use some process of buying which could be identified through this question. Some products/services are known and are being used on an ongoing basis. Orders for such products/services may be placed with a previously selected supplier as soon as the stock is over, or the need is felt. In case of high value products & services with uncertain outcomes, and with which the customer does not have much experience, there may be several in buying which are as follows:
Recognize the need. Search for information to generate potential alternative products/services which could satisfy the need. Evaluate the alternatives generated for satisfying the need. Decide on purchase of one of the options. Assess post-use and post-purchase experiences and feelings.
Who participates in buying? Different roles are played by different participants in the buying process. Identification of participants in the buying process (called Decision making unit- DMU), and their considerations in deciding in favor of or against a specific option, would go a long way in deciding the person to whom the promotion should be address to, in the target segment, and how to promote the product/service.
What are their sources of information? The customer and the participants in the buying process may be using specific sources for collecting information on products/services. Knowledge of these could help in deciding the means/media of promotion.
Where do they buy? Answer to this question could lead to identification of agents/suppliers through whom the products/services are bought. This can help in deciding distribution element of the marketing plan.
In case of services, post-purchase and post-use feelings and actions of customers may be quite critical in influencing potential customers. This is because benefits of most services, particularly electronic information products and services become obvious only after use. A satisfied customer would spread a good word and lead to improved demand from other customers.
11. Value and satisfaction a) Value is the consumer‘s estimate of the product‘s overall capacity to satisfy his or her needs b) Needs are determined according to the lowest possible cost of acquisition, ownership and use
II. Marketing today embraces an integrated value proposition. This in effect, would mean that with making a decision about using a particular service or evaluating a marketing relationship a customer not only looks at the product or value related to it, but s/he also evaluates the process, the total transaction cost. To a customer, value is the
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benefits received from the burden endured. Benefits may be product quality, personal service and convenience. Cost includes price and non-monetary cost as time, energy and efforts. In the process s/he interacts with the people, technology, methods, environment and the materials used to serve the customers in the library. In the marketing oriented library, the process depends on the customer preferences and cues to their requirements. Even the customers are an important partner to the process and in libraries most of the time, they put forward their views to overcome their problems and work with the staff to solve them.
III. By simply shedding long standing stereotypes, librarians have been able to take the 5P's of the traditional external marketing mix and use them to paint a more accessible service-oriented picture of library offerings for their customers.
IV. The 5 P's of the traditionally external marketing mix with an internal twist for libraries should be considered is mentioned in Table 1.
V. Table 1. Five P's Product: Information resources and research services. Free to employees. In other words, company sponsored. This is particularly Price: important in an R&D environment where research budgets are tight and the company may not realize Return on Investment (ROI) in a project for some time. Not necessarily a physical location anymore. A strong web presence is Place: necessary. Libraries are virtual as well as physical spaces now and the possibilities in both these worlds are endless. Internal bulletins, e-mails, the company intranet, the library web site, newsletters Promotion: and poster campaigns are all effective promotional vehicles for highlighting new tools and advertising events. Staff is relatively a new element in marketing mix as its importance for the Development of strategies has only recently been realized. It is difficult to People achieve satisfactory exchanges with public without suitable staff. That is why (Staff): marketing experts now talk about "internal marketing", emphasizing that the entire staff must be at all costs involved in the organization's marketing strategies.
VI. For the library to remain competitive, or even more fundamentally, to remain relevant, it has to change its image. It has to shed the image of a highly fortified storehouse of knowledge guarded by staff and security devices, a treasure house where the borrower is a nuisance or a potential thief. The new-age library ought to be a true service organization, a group of professionals who quickly identify in the vast ocean of knowledge the kind of information that different customers need and help them access it with the least waste of time and effort. A library that can survive and thrive in the Internet age is a knowledge-based social structure.
1. Exchange and transactions—exchange means obtaining a desired product by offering something desirable in return a) Five conditions must be satisfied (see text)
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b) A transaction is the trade of values (involves several dimensions) 2. Relationships and networks a) Relationship marketing{ XE "Relationship marketing" } seeks long-term, ―win-win‖ transactions between marketers and key parties (suppliers, customers, distributors) b) The ultimate outcome of relationship marketing is a unique company asset called a marketing network of mutually profitable business relationships 3. Marketing channels a) Reaching the target market is critical b) To do this the marketer can use two-way communication channels (media including newspapers and the Internet), versus more traditional means The marketer also must decide on the distribution channel, trade channels, and selling channels (to effect transactions)
VII. Company orientations toward the marketplace A. Production concept—assumes consumers will favor those products that are widely available and low in cost B. Product concept—assumes consumers will favor those products that offer the best combination of quality, performance, or innovative features C. Selling concept—assumes organizations must undertake aggressive selling and promotion efforts to enact exchanges with otherwise passive consumers 1. Profitability D. Societal marketing concept 1. The organization‘s task is to determine the needs, wants, and interests of target markets To deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer‘s and the society‘s well-being.
Corporate Mission
A mission statement is a pragmatic, literate statement of enterprise cohesion and future prospect. Magna International is an example of a corporation going beyond the ordinary mission statement to a Corporate Constitution. Where nation states are involved, a mission statement is insufficient, a constitution is required.
A mission statement is a statement of the purpose of a company, organization or person, its reason for existing. It is a written declaration of an organization's core purpose and focus that normally remains unchanged over time. Properly crafted mission statements (1) serve as filters to separate what is important from what is not, (2) clearly state which markets will be served and how, and (3) communicate a sense of intended direction to the entire organization.
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A mission is different from a vision in that the former is the cause and the latter is the effect; a mission is something to be accomplished whereas a vision is something to be pursued for that accomplishment. Also called company mission, corporate mission, or corporate purpose.
The mission statement should guide the actions of the organization, spell out its overall goal, provide a path, and guide decision-making. It provides "the framework or context within which the company's strategies are formulated
Effective mission statements start by cogently articulating the organization's purpose of existence.
Mission statements often include the following information:
1. Aim(s) of the organization 2. The organization's primary stakeholders: clients/customers, shareholders, congregation, etc. 3. How the organization provides value to these stakeholders, for example by offering specific types of products and/or services 4. A declaration of an organization's sole core purpose. A mission statement answers the question, "Why do we exist?"
According to Bart, the commercial mission statement consists of 3 essential components:
1. Key market – who is your target client/customer? (generalize if needed) 2. Contribution – what product or service do you provide to that client? 3. Distinction – what makes your product or service unique, so that the client would choose you?
The mission statement can be used to resolve trade-offs between different business stakeholders. Stakeholders include: managers & executives, non-management employees, shareholders, board of directors, customers, suppliers, distributors, creditors/bankers, governments (local, state, federal, etc.), labour unions, competitors, NGOs, and the community or general public. By definition, stakeholders affect or are affected by the organization's decisions and activities. A mission statement may be the most visible and public part of a strategic plan. As such, it is comprehensive in its coverage of broad organizational concerns. Although no empirical research has been published to guide corporate mission statement development, the limited evidence available suggests eight key components of mission statements:
1. The specification of target customers and markets. 2. The identification of principal products/ services. 3. The specification of geographic domain.
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4. The identification of core technologies. 5. The expression of commitment to survival, growth, and profitability. 6. The specification of key elements in the company philosophy. 7. The identification of the company self-concept. 8. The identification of the firm's desired public image.
Mission Statement Creation
1. To create your mission statement, first identify your organization's "winning idea". 2. This is the idea or approach that will make your organization stand out from its competitors, and is the reason that customers will come to you and not your competitors (see tip below). 3. Next identify the key measures of your success. Make sure you choose the most important measures (and not too many of them!) 4. Combine your winning idea and success measures into a tangible and measurable goal. 5. Refine the words until you have a concise and precise statement of your mission, which expresses your ideas, measures and desired result.
Example:
Take the example of a produce store whose winning idea is "farm freshness". The owner identifies two keys measures of her success: freshness and customer satisfaction. She creates her mission statement – which is the action goal that combines the winning idea and measures of success.
The mission statement of Farm Fresh Produce is:
"To become the number one produce store in Main Street by selling the highest quality, freshest farm produce, from farm to customer in under 24 hours on 75% of our range and with 98% customer satisfaction."
Vision Statement Creation
Once you've created your mission statement, move on to create your vision statement:
First identify your organization's mission. Then uncover the real, human value in that mission.
1. Next, identify what you, your customers and other stakeholders will value most about how your organization will achieve this mission. Distil these into the values that your organization has or should have.
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2. Combine your mission and values, and polish the words until you have a vision statement inspiring enough to energize and motivate people inside and outside your organization. 3. Using the example mission statement developed for Farm Fresh Produce, the owner examines what she, her customers and her employees value about her mission. 4. The four most important things she identifies are: freshness, healthiness, tastiness and "local-ness" of the produce. Here's the Vision Statement she creates and shares with employees, customers and farmers alike:
"We help the families of Main Town live happier and healthier lives by providing the freshest, tastiest and most nutritious local produce: From local farms to your table in under 24 hours."
Marketing Strategies:
A strategy is a long-term plan to achieve certain objectives. A marketing strategy is therefore a marketing plan designed to achieve marketing objectives. For example, marketing objective may relate to becoming the market leader by delighting customers. The strategic plan therefore is the detailed planning involving marketing research, and then developing a marketing mix to delight customers. Every organisation needs to have clear marketing objectives, and the major route to achieving organisational goals will depend on strategy. It is important, therefore, to be clear about the difference between strategy and tactics.
Marketing strategy is a process that can allow an organization to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage. Marketing strategy includes all basic and long-term activities in the field of marketing that deal with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies and therefore contribute to the goals of the company and its marketing objectives.
There are three basic types of marketing strategies that all businesses, big and small use. All marketing plans can be broken down into one or all of these types. They are:
1. Online or internet marketing. 2. Offline marketing. 3. Word of mouth or relationship marketing.
Developing a marketing strategy
Marketing strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives. Plans and objectives are generally tested for measurable results. Commonly, marketing strategies are developed as multi-year plans, with a tactical plan detailing specific actions to be accomplished in the current year. Time horizons covered by the marketing plan vary by company, by industry, and by nation, however, time
20 | P a g e horizons are becoming shorter as the speed of change in the environment increases. Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned. See strategy dynamics.
Marketing strategy involves careful scanning of the internal and external environments. Internal environmental factors include the marketing mix, plus performance analysis and strategic constraints. External environmental factors include customer analysis, competitor analysis, target market analysis, as well as evaluation of any elements of the technological, economic, cultural or political/legal environment likely to impact success. A key component of marketing strategy is often to keep marketing in line with a company's overarching mission statement.
Once a thorough environmental scan is complete, a strategic plan can be constructed to identify business alternatives, establish challenging goals, determine the optimal marketing mix to attain these goals, and detail implementation. A final step in developing a marketing strategy is to create a plan to monitor progress and a set of contingencies if problems arise in the implementation of the plan.
Types of strategies
Marketing strategies may differ depending on the unique situation of the individual business. However there are a number of ways of categorizing some generic strategies. A brief description of the most common categorizing schemes is presented below:
Strategies based on market dominance - In this scheme, firms are classified based on their market share or dominance of an industry. Typically there are four types of market dominance strategies:
Leader Challenger Follower Nicher
Porter generic strategies - strategy on the dimensions of strategic scope and strategic strength. Strategic scope refers to the market penetration while strategic strength refers to the firm‘s sustainable competitive advantage. The generic strategy framework (porter 1984) comprises two alternatives each with two alternative scopes. These are Differentiation and low-cost leadership each with a dimension of Focus-broad or narrow. Product differentiation Cost leadership Market segmentation Innovation strategies — this deals with the firm's rate of the new product development and business model innovation. It asks whether the company is on the cutting edge of technology and business innovation. There are three types: Pioneers Close followers Late followers Growth strategies — In this scheme we ask the question, ―How should the firm grow?‖. There are a number of different ways of answering that question, but the most common gives four answers:
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Horizontal integration Vertical integration Diversification Intensification
These ways of growth are termed as organic growth. Horizontal growth is whereby a firm grows towards acquiring other businesses that are in the same line of business for example a clothing retail outlet acquiring a food outlet. The two are in the retail establishments and their integration lead to expansion. Vertical integration can be forward or backward. Forward integration is whereby a firm grows towards its customers for example a food manufacturing firm acquiring a food outlet. Backward integration is whereby a firm grows towards its source of supply for example a food outlet acquiring a food manufacturing outlet.
Q & A:
1 How important the information as a resource for the organizational growth? 2 Discuss the impact of inefficient management of information in the organization?
References:
Quelch, John A. & Jocz, Katherine E. Greater Good: How good marketing makes for better democracy. Chapter: Information, 95-101pgs
Basanta Kumar Das & Sanjay Kumar KarnMarketing of Library and Information Services in Global Era: A Current Approach; Webology, Volume 5, Number 2, June, 2008
Abhinandan K Jain(ed.) and others.Marketing Information products and services: A primer for librarians and information professionals
Dr. M. Madhusudhan(2008),Marketing of Library and Information Services and Products in University Libraries: A Case Study of Goa University Library; Library Philosophy and Practice
Robert M. Hayes (2005) The Economics of Information.
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Unit-2 Portfolio Management
As growing numbers of companies have discovered the benefits of effective marketing planning, they have developed planning methods to assist in this important function. This section discusses two useful methods: the strategic business unit concept and the market share/market growth matrix.
Business Portfolio Analysis.
Although a small company may offer only a few items to its customers, a larger organization frequently offers and markets many products to widely diverse markets. Top managers at these larger firms need a method for spotting product lines that deserve more investment as well as lines that aren‘t living up to expectations. So they conduct a portfolio analysis, in which they evaluate their company‘s products and divisions, to determine which are strongest and which are weakest. Much like securities analysts review their portfolios of stocks and bonds, deciding which to retain and which to discard, marketing planners must perform the same assessment of their products, the regions in which they operate, and other marketing mix variables. This is where the concept of an SBU Comes in.
Strategic Business units (SBUs) are key business units within diversified firms. Each SBU has its own managers, resources, objectives, and competitors. A division, product line, or single product may define the boundaries of an SBU. Each SBU pursues its own distinct mission, and each develops its own plans independently of other units in the organization.
SBUs also called categories focus the attention of company managers so that they can respond effectively to changing consumer demand within limited markets. Companies may have to redefine their SBUs as market conditions dictate.
THE BCG MATRIX
To evaluate each of their organizations‘ strategic business units, marketers need some type of portfolio performance framework. A widely used framework was developed by the Boston Consulting Group (BCG). This market share/market growth matrix places SBUs in a four- quadrant chart that plots market share - the percentage of a market that a firm controls – against market growth potential. The position of an SBU along the horizontal axis indicates its market share relative to those of competitors in the industry. Its position along the vertical axis indicates the annual growth rate of the market. After plotting all of a firm‘s business units, planners divided them according to the matrix‘s four quadrants. Figure illustrates this matrix by labeling the four quadrants cash cows, stars, dogs and question marks. Firms in each quadrant require a unique marketing strategy.
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Relative Market Share
High Low
Stars Question Marks
Generate considerable Have potential to become stars or cash
Income cows
Strategy:Invest more funds for future Strategy:Either invest more funds for growth growth or consider disinvesting
Cash Cows Dogs
Generate Strong cash flow Generate little profits Industry Growth Rate IndustryGrowth
LowHigh Strategy:Milk profits to finance Strategy: Consider withdrawing
growth of stars and questions marks
Starsrepresent units with high market shares in high-growth markets. These products or business are high-growth market leaders. Although they generate considerable income, they need inflows of even more cash to finance further growth. Apples‘ popular iPod is the No.1 selling portable digital music player in the world, but because of rapidly changing technology, Apple will have to continue to invest in ways to update and upgrade the player.
Cash cowscommand high market shares in low-growth markets. Marketers for such an SBU want to maintain this status for as long as possible. The business produces strong cash flows, but instead of investing heavily in the unit‘s own promotions and production capacity, the firm can use this cash to finance the growth of other SBUs with higher growth potentials.
Question marks achieve low market shares in high-growth markets. Marketers must decide whether to continue supporting these products or business since question marks typically require considerably more cash than they generate. If a question mark cannot become a star, the firm should pull out of the market and target other markets with greater potential. So far, Apple‘s online iTunes Music Store hasn‘t turned a profit, but it is an important factor in the success of iPod, selling millions of songs to music buffs. In addition, Apple has signed a deal with Hewlett-Packard (HP) to sell iPods and load iTunes into millions of PCs manufactured by HP. So iTunes could transform itself from a question mark to a star.
Dogsmanage only low market shares in low-growth markets. SBUs in this category promise poor future prospects, and marketers should withdraw from these businesses or product lines
24 | P a g e as quickly as possible. In some cases, these products can be sold to other firms, where they are a better fit.
THE PRODUCT LIFE CYCLE
Product:
In a narrow sense, a product is a set of tangible attributes in an identifiable form; a golf ball, a rock concert, a pair of underpants and so on. In marketing, we believe that consumers want to buy the benefits or solutions to problems that products offer, rather than the products themselves. For example, we don‘t want ‗sandpaper‘, we want a ‗smooth surface‘ – the sandpaper is the means to achieve it. So what, you might say – we still have to buy the sandpaper. Well, yes, but only until someone comes along with a better or cheaper or easier method of obtaining a smooth surface. That‘s why marketers focus on the customer wants rather than the product itself. Products are the means of satisfying customer wants, as diverse and changeable as they may be. Because Calvin Klein and Holeproof underwear might offer different benefits - style, prestige, fit, durability – we see them as different products. To marketers, two brands of the same basic item can be considered as different products. Changes in a product feature, such as design, color, size or packaging, also create another product, and each such change provides the seller with an opportunity to use a new set of appeals to satisfy a different set of customer wants. For example, Panadol in a capsule form is a different product from the same brand in tablet form, even though the chemical contents of the tablet and capsule are identical. We can broaden our definition of ‗product‘ further. A Sony TV set bought in a discount store on a cash-and-carry basis is a different product from an identical model purchased in a department store, where the customer might pay a higher price for the se, but is given credit, has it delivered free of charge and receives other store services. So, the concept of a product also includes services accompanying the sale. Because marketers see a ‗product‘ as anything capable of satisfying a want, it can include physical goods, intangible services, places, people and ideas. (However, we acknowledge that many people, marketers included, mean physical goods when they use the term ‗product‘.)
What is a ‘new’ product?
There is no clear definition of exactly when an innovation is a new product. For example:
Are the new models that car manufacturers introduce each year considered to be new products?
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If a firm adds a wrinkle-remover cream to its assortment of women‘s cosmetics, is this a new product? If a new size of an existing breakfast cereal is launched, is this a new product? Must an item be totally new in concept before we can class it as a new product?
There is no universal agreement to these questions. We might agree on three types of new products, however:
1. True Innovations: Such products might include a hair restorer that really works or a cancer cure. Past examples might include Post-It notes, Viagra and laser eye surgery. 2. Innovative replacements for existing products. Such products should be significantly different from existing ones, such as disposable contact lenses, digital TV and genetically modified foods. 3. Imitative products those are new to a particular company. The ‗newness‘ of these products is really internal to one particular firm, although the firm may well present the product to the market as an innovation based on some small improvement or change.
In the end, of course, regardless of what the firm believes, does or says a product is ‗new‘ if the market sees it as new.
A new product strategy and stages in development process:
Modern organizations need a well-prepared, explicit strategy for developing new products. A new-product strategy is a statement identifying the strategic role the product will play in achieving corporate and marketing goals.
This strategy should guide the development of each new product. This is very important because new products are exciting, and marketers can become carried away by every new product idea that pops up. A clear strategy helps to ensure that the firm takes on only those new-product projects that ‗fit‘ the firm‘s resources and goals and have a strong chance of success.
Some common strategic roles for new products include:
Defending a market-share position Maintaining the company‘s position as a product innovator Meeting a specific return-on-investment goal Establishing a position in a new market.
The development of new products should be carried out through a series of six steps.
1. Idea generation 2. Screening and evaluation of ideas 3. Business analysis 4. Product prototype development 5. Test marketing
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6. Commercialization
While this might seem rather a formal approach, it has several advantages:
Improved teamwork, especially between departments Less re-working Earlier detection of probable failure Higher success rates.
The disadvantage of the six-step approach is that a longer development period (or lead time) is often required. Senior management should be actively involved in the process to prevent projects from becoming bogged down. At each stage, management should pause and decide whether or not to proceed to the next stage, abandon the project or seek additional information.
The Product life cycle can be divided into four stages:
1. Introduction 2. Growth 3. Maturity 4. Decline
The life cycle concept applies to a product category (e.g. microwave oven, digital cameras or Pilates classes) rather than specific brands (e.g. Sharp or Olympus).
A company‘s marketing success can be affected considerably by its ability to understand and manage the life cycles of its products. These life cycles can be illustrated with sales-volume and profit curves, as show in Figure. The shapes of these curves will vary from product to product, but the basic shapes and the relationships between the two curves are usually as illustrated.
It is worth noting two initial points about the life cycle curve. As Figure shows, the profit curve for most new products is negative through most of the introductory stage. Also, in the latter part of the growth stage, the profit curve starts to descend while the sales volume is still rising. This happens because a company usually has to increase its advertising and selling effort, or cut its prices – or do both – to continue its sales growth during the maturity stage in the face of intensifying competition.
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Introduction Growth Maturity Decline
Sales
Volume
s
Dollar
0 Life of product Loss
Product Life Cycle Introduction Growth Maturity Decline Market Characteristics: Sales Low Rapidly Rising Peak Declining Costs per High Average Low Low customer Profits Negative Rising High Declining Customers Innovators Early adopters Middle majority Laggards Competitors Few Growing Stable number Declining number beginning to number decline Strategic considerations: Marketing Create Product Maximize Maximize Reduce objectives awareness and market share profits while expenditures and
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trial defending milk the brand market share Product Offer a basic Offer product Diversify brand Phase out weak strategies product extensions, and models items service, warranty Distribution Build selective Build intensive Build more Go selective; Strategies distribution distribution intensive phase out distribution unprofitable outlets. Promotion Build product Build awareness Stress brand Reduce strategies awareness and interest in differences and promotion among early mass market; benefits; activity to the adopters and reduce sales increase sales level needed to dealers; use promotions to promotions to retain hard-core heavy sales take advantage encourage brand loyal customers promotional to of heavy switching entice trial consumer demand Price Strategies Charge cost-plus Price to Price to match Cut price penetrate market or beat competitors Source: Kotler, 1997. Table: Strategic Considerations Across the Traditional product life cycle.
Introducing a new product at the proper time will help maintain the company‘s desired level of profit.
Characteristics of each life cycle stage
We must be able to recognize what part of the life cycle our product is in at any given time. The competitive environment, and the marketing strategies that should be used, will usually depend on the particular stage. Let‘s examine each in turn.
Introduction:
These are the features of the introduction stage:
The product has gone through idea evaluation, pilot models and test marketing. There are a high percentage of product failures in this stage. Costs are high, sales volumes are low, there are net losses and distribution is limited. Achieving distribution is a key goal, so that more customers can have access to the product when promotion begins. In many respects, the introduction or pioneering stage is the most risky and expensive stage; however, for completely new products there is the advantage of having little direct competition.
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Promotional programs at this stage (if any) are designed to stimulate primary demand (demand for the product type, such as ‗Hybrid cars are better because…‘) rather than secondary demand (demand for a particular brand).
Growth:
These are the features of the growth stage:
Both sales and profits rise, often at a rapid rate. Competitors enter the market – in large numbers if the profit outlook is particularly attractive. Sellers shift to secondary demand promotion (‗The Toyota Prius is a better hybrid car because…‘) The number of distribution outlets increases, economies of scale is established and prices might come down. A services firm will open more branches at this stage. Typically, profits peak near the end of the growth stage and may decline thereafter.
Maturity:
These are the features of the maturity stage:
During the first part of this period, sales continue to increase, but at a decreasing rate. While sales are leveling off, the profits of both the producer and retailers are declining. Marginal producers are forced to drop out of the market. Price competition intensifies. The Producer assumes a greater share of the total promotional effort in the fight to retain dealer‘s support and shelf space in their stores. New models are introduced as producers broaden their lines, and trade-in sales become significant. Services firms may offer free or low-cost extra services.
Decline and possible abandonment:
For virtually all products, obsolescence inevitably sets in as new products start their own life cycles and replace the old ones:
Cost control becomes increasingly critical as demand drops. Advertising expenditure is reduced because it seems too difficult to obtain a return on the investment. A number of competitors may withdraw from the market. It is often management‘s abilities that determine whether or not the product has to be abandoned, or whether the surviving sellers can continue on a profitable basis.
The length of the product life cycle
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The length of the life cycle varies from product to product. It ranges from a few weeks or a short season (for a fad or clothing fashion) to many decades (for cars or telephones).
In general, however, product life cycles are getting shorter. Rapid changes in technology can make a product obsolete virtually overnight. In addition, if competitors can quickly introduce ‗me-too‘ versions of a popular product, it can move swiftly into the maturity stage.
(As a teacher, I‘m always amazed how each semester my students seem to arrive with a new model of mobile phone-what was hot in February is decidedly uncool by July!)
The product life cycle stages cover nearly equal periods, for any given product the different stages usually last for different lengths of time. In addition, the duration of each stage varies from product to product. For example, certain products take years to pass through the introductory stage, whereas others are accepted in a few weeks.
Not all brands go through all of the stages. Some fail in the introductory stage, and others are not introduced until the market is in the growth or maturity stage. In most cases, however, decline and possible abandonment are inevitable, for one of the following reasons:
The need for the product disappears (e.g. mobile phones may soon eliminate the need for households to have telephones connected by land line) A better or less expensive product is developed to fill the same need (e.g. CDs replaced cassette tapes, and music downloads and MP3 players are replacing CDs) People simply grow tired of a product (e.g. a clothing style), so it disappears from the market.
A product might be in the growth or maturity stage in a number of markets, but in the introductory stage in others. Notebooks are in the mature stage in the business market, but are still growing as a consumer product. In terms of the international market, a product might be in its maturity stage in one country and in the introductory stage in another.
Product life cycle management.
The shape of a product‘s sale and profit curves is not fixed. To a surprising extent these shapes can be controlled. There are two types of successful life cycle management strategies:
1. Predicting the shape of the proposed product‘s cycle even before it is introduced. 2. At each stage, anticipating the marketing requirements of the following stage.
Introductory stage Strategies:
A firm entering a new market must decide whether to plunge in during the introductory stage, or wait and make its entry during the early part of the growth stage, after innovating companies have proved that there is a viable market. By delaying entry, the firm may save on market development and education costs and avoid the risk of investing in a product category failure.
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On the other hand, it gives the firm‘s competitors the advantage of being the first – the world of marketing is filled with examples of brands like eBay, Nokia, Perrier and Microsoft that became market leaders because they captured consumer attention and loyalty with their innovations before others did. Marketing history generally supports this strategy: the first brands into a market often become the strongest. Even a powerful firm like IBM could not manage to achieve the success it had hoped for in the PC market after it delayed its entry for a decade and followed Compaq and Dell.
However, there are also good reasons for delaying entry until the market is proven:
Pioneering requires a large investment. The risks of launching a brand new product are great, as demonstrated by their high failure rate. Brands that are launched before the technology or other aspects are perfected may bear the brunt of consumer dissatisfaction, while later brands that get it right may reap the benefits of waiting. There are examples of firms that have entered a market later in the life cycle and have still done well. Boost juice was certainly not among the earliest entrants into the Australian juice bar market, and yet is has developed the strongest business model.
Growth Stage Strategies:
During the growth stage, usually an exciting one, a company has to devise the right strategies for its brand in the category. Often, the strategies put in place during this stage will determine.
Target markets have to be confirmed or, if necessary, adjusted. The product range has to be determined, and product improvements may have to be developed. Initial pricing strategies have to be monitored and possibly adjusted. Distribution may also have to be expanded, and it is likely that this will have to be achieved against new competition. For example, there are only so many sites suitable and available for a fresh juice bar.
Maturity stage strategies:
There are a number of common strategies for maintaining or boosting sales during maturity. Their aim is to extend the economic life of the product.
Modifications to a product can give it a new lease of life, as can line extensions (e.g. Omo laundry detergent in a concentrated form, or new flavors of Magnum ice-cream).
New uses can be devised for a product, to increase usage rates by existing consumers or to attract new users. Even aspirin – a good example of a mundane, mature product – was found to thin the blood and developed new markets among heart disease sufferers and air travelers.
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New promotional activities can offer extra ‗reason to buy‘ – contests and bonus offers are good examples. ‗Twenty per cent more at no extra cost‘ is a common offer made to support supermarket lines in the mature stage.
Decline stage strategies
It is probably the sales decline stage that poses the greatest challenges in terms of life cycle management. At some point in a product‘s life, management might have to consider whether or not to abandon it. The costs of carrying profitless products go beyond the expenses that show up on financial statements; the real burdens are the costs in managerial time and effort diverted to sick products.
Many firms often seem reluctant to discard a product, even in the decline stage. They may believe the category still has enough life left in it to justify preserving, or it may be that the line is a traditional favorite with a small group of loyal customers who also buy other lines from the firm. Strategies in these instances include:
Improving the product in a functional sense, or revitalizing it in some manner, perhaps with new packaging. Making sure that the marketing and production programs are as efficient as possible – it takes great restraint to carefully manage the progress of declining products, but it can be done, at least for a time Streamlining the product range by pruning out unprofitable sizes and models – this tactic will frequently decrease sales and yet at the same time increase profits Running out the product – that is, cutting all costs to the bare-minimum level that will optimize profitability over its limited remaining life.
In the final analysis, the only alternative might still be to abandon the product. Knowing when and how to delete products successfully might be as important as knowing when and how to introduce new ones. Certainly, management should develop a systematic procedure for phasing out weak products.
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PRICING INFORMATION
The meaning of ‘price’
As with product, the first P of the marketing mix, marketers also have a specialized view of price. So, in marketing terms, what is price?
Suppose you paid $2900 for a notebook, but I paid only $1575 for mine. At first glance, it looks as though I got a better deal… but did I?
Your notebooks is a well-known brand, is fully optioned and comes with a twelve- month warranty, and you received comprehensive pre-sale advice and assistance loading your software. I bought a basic model of a no-name brand and was simply handed the box at the discount store counter.
So, who paid the higher price? The answer really depends on exactly what each of us was purchasing.
With pricing, marketers consider more than just the tangible good by itself, but rather a combination of the core product plus all relevant services and other want-satisfying benefits. At its most simple level, price is what we pay for what we get! It is the amount of money needed to acquire a product. In our notebook example, each of us paid a price to obtain a set of benefits. It may be that you placed a greater value than I did on the peace of mind you gained from buying a trusted brand. And, although it might not have been specified on the invoice, you paid an amount for advice and assistance. So, understanding what customers are prepared to pay for different tangible and intangible benefits of a product is an important aspect of the marketing approach to pricing. This also raises the issue of value, which is the quantitative measure of the worth of a product in an exchange for something else. So, price is value expressed in money terms. Different customers may place different amounts (values) on different benefits. Price and quality are also often seen as directly related. For example, King Island brie (soft cheese) became more popular after the price was increased to the level of imported brie cheeses. To some customers, price is the single most important factor in a purchase decision. Aldi supermarkets are growing in popularity because, in spite of their small product range and low service levels, they are becoming known as having the cheapest groceries. Most firms, however, try hard to minimize their dependence on price. They encourage customers to assign value to other non-price aspects of the product. The more they can emphasize quality, convenience, service and brand, the less they need to rely on price to win customers.
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Have a close look at a product you have purchased recently, preferably a shopping or specialty good or a service. What did the price include? Compile a list of the tangible and intangible elements that were included in the price. Can you suggest attributes that could have been included in the price but were not?
Marketers see price setting as a four-stage process, as illustrated by figure. These stages are:
1. Selecting a pricing goal 2. Considering the various factors that might influence pricing 3. Selecting a method of setting the base price 4. Designing appropriate price adjustment strategies
Let‘s examine each stage in turn.
Stage 1: Select a pricing goal
Profit-oriented Sales –Oriented Status quo-oriented
Stage 2: Consider factors influencing price
Extent of demand other parts of the marketing mix Product cost
Stage 3: Select a method of setting the base price Cost-based pricing Demand-based pricing Competition-based pricing
Stage 4: Design appropriate price adjustment strategies Entry price strategy Discounts and allowances Freight Charges Fixed v flexible pricing Price lining Psychological pricing Loss leader pricing Recommended retail price
Stage 1: Select a pricing goal
Every marketing task – including pricing – should be directed towards a goal – what do we want this price to achieve for us? The main choices are to maximize short-term profits, to generate quick and substantial sales, or to avoid causing conflicts with competitors.
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Marketers should decide which of these is more important before determining the price itself. Not enough firms consciously establish a pricing objective.
The three main pricing goals are called profit-oriented, sales-oriented and status quo goals.
Profit-oriented goals
Profit-oriented pricing goals are often expressed as achieving a target return on sales or investment, or maximizing short-term profit.
Woolworths and many other firms, for example, set prices to achieve a required gross profit on each sales dollar – say, 15-25 per cent. Other firms might set prices to achieve a certain rate of return on investment – if the cost of launching a new product is estimated to be one million dollars, the firm might set prices that it hopes will product an annual profit of, say, 15% of the investment over the first three years.
The pricing objective of making as much money as possible – profit maximization can be considered over the short term or long run. A food or beverage licensee at the MCG will probably set prices to maximize returns from each season or even from each game. Other firms, however, may take a longer-term view, might be prepared to earn less than maximum profits initially then look to increase prices when their product is established – many products in the computer software market have been marketed this way. Or, they may be prepared to take a loss on some product lines and look at maximizing profit overall from the whole range.
Sales-Oriented goals
Alternatively, a firm might not look to maximize profits, but rather to set a price aimed at increasing sales volume or market share. These are sales-oriented pricing goals.
The goal might be to achieve, say, a 15 percent annual growth in sales over three years. This goal will probably require a lower than profit- maximizing price, or regular discounting. Pricing may be set to achieve viable operational levels of sales. When Jetstar entered the Australian air travel market, for example, it set prices well below profit-maximization levels in order to achieve viable passenger loads. In growing markets, such as those for computers and other technology-based products, companies want large market shares in order to gain added bargaining power with suppliers, drive down production costs and/or project a dominant appearance to consumers. In other situations, firms might set prices to use up excess production capacity or to gain the benefits from economies of scale.
Occasionally a price war is started when one firm cuts its price in an effort to increase its market share. The battle for share of the cross-Tasman air route, for example, led to both Qantas and Air New Zealand incurring large losses. Other airlines in the market were then forced to cut their prices just to maintain their own market share.
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Status quo pricing goals
The aim in the case of status quo pricing goals might be a stabilize prices or to meet competition. The primary intention here is to avoid price competition, to live and let live.
Status quo is often the goal in industries where the product is highly standardized (e.g. steel, petrol, copper, and bulk chemicals) and one large firm has acted, historically, as a leader in setting prices. Smaller firms in these industries simply adopt a follow-the-leader policy- meeting competition- when setting their own prices. A major reason for seeking price stability is to avoid price wars.
Many other firms consciously price their products to meet the competitive market price. This policy gives management an easy means of avoiding difficult pricing decisions.
A status quo pricing goal may, of course, still be accompanied by aggressive marketing strategies in others aspects of the mix – product, distribution and especially promotion. This approach is called non-price competition.
If you were launching a new MP3 player to compete with Apple‘s iPod, would you focus on profit-oriented, sales-oriented or status quo pricing goals when choosing your price? Justify
Stage 2: Consider factors influencing price
In setting its pricing goal, there are several other factors a firm needs to consider in setting its base price. The base price (some firms call this list price) is the price of one unit of the product at the point of production or resale. This is the price before provision is made for discounts, freight charges or any other modifications.
The extent of demand
First, we need to estimate the total potential demand for the product. There are two steps here.
Step 1: Determine the expected price
The expected price is the price at which customers consciously or unconsciously values a product – that is, what they think the product is worth:
It is more realistic to think of a range of prices, rather than a specific amount. The expected price for a certain type of restaurant meal, for example, might be $ 20-30, or a real estate agent might tell a prospective buyer that ‗two-bed units in this area of Brisbane are usually under $ 250000‘. We must also consider the middleman‘s reaction to price. Middlemen are more likely to give a product favorable treatment in their stores if they feel the price is viable. Professional retail buyers can often make an accurate estimate of the amount that the market will spend for a particular item. It is possible to set a price too low – customers become suspicious of prices that are below their expectations.
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Many sellers have raised the price of a product and experienced a considerable increase in sales. This situation is called inverse demand – the higher the price, the greater the unit sales. The example given earlier or King Island brie illustrates this concept. Inverse demand though is relatively rare, and usually exists only within a given price range and only at low levels; once a price rises to some particular point, inverse demand ends and the usual demand curve takes over. Demand then declines as prices rise (see figure) To gauge the expected price, marketers might talk to their wholesalers or retailers, sample typical consumers or conduct a test market in a particular region.
Step 2: Estimate sales at various prices
It is helpful if we can estimate what the sales volume for a product might be at several different price levels – this establishes what is known as the demand curve for the product. This curve reflects the product‘s demand elasticity – the responsiveness of quantity demanded to price changes. We will discuss demand elasticity shortly.
There are several methods sellers can use to estimate potential sales at various prices (you will notice that these are similar to the methods suggested for establishing expected price; in fact, marketers usually work on both aspects simultaneously):
Conduct a survey of buyer intentions to determine consumer‘s buying interest at different prices.
Conduct test-market experiments, offering the product at a different price in each market and measuring consumer purchases in each case
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Normal Demand
Curve
Price
Inverse Demand
Quantity Sold
Design a computerized model that will simulate field-selling conditions and sales responses at various prices Obtain sales estimates by surveying wholesalers and retailers Ask members of the sales team to estimate sales for their areas or customers.
The price elasticity of demand
This is the effect that price changes have on the number of units sold and on total revenue. (Total revenue –that is, total sales in dollars –equals the price for each unit times the number of unit sold.)
Demand is elastic when:
1. Reducing the unit price causes an increase in total revenue. 2. Raising the unit price causes a decrease in total revenue.
Demand in inelastic when:
1. A price cut causes total revenue to decline 2. A price rise results in an increase in total revenue.
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In general, the demand for necessities (salt, sugar, petrol, and telephone, gas and electricity services etc.) tends to be inelastic. For example, if the price of petrol goes up or down 5 to 10 cents a liter, the total number of liters sold will not change very much. In contrast, the demand for products purchased with discretionary income (luxury items, large appliances, furniture or cars) is typically much more elastic.
Stage 3: Select a method of setting the base price
Marketers usually work with three variables to set actual prices:
1. Cost-based: what profit margin can/should we add to the cost of the product? 2. Demand –based: how much of the product will be able to sell at different price levels? 3. Competition-based: what prices have our competition set, and where should our price be in relation to theirs?
In most cases, the price set will have taken into account all three perspectives, although one might well be dominant in the decision. Let‘s examine each of these price-setting approaches in turn.
Cost-plus pricing
Cost-plus pricing means setting the price of each unit of a product at a level equal to the unit‘s total cost plus the desired profit on it (or mark-up)
Price based on marginal costs only
Another approach to cost-plus pricing is to set prices based on marginal costs only, rather than total costs. Marginal-cost pricing might be feasible, however, if management want to keep its staff employed during a slack season. It might also be used when one product is expected to attract business for another. A department store might price meals in its café at a level that covers only the marginal costs; the reasoning here is that this café will bring shoppers to the store, where they will buy other, more profitable products.
Marginal costing is sometimes used for export sales. If the firm has recovered its fixed costs in the domestic market, for example, it needs only to get back variable production costs, export costs and profit from its overseas pricing. The firm must be careful it is not dumping, however – that is, illegally selling below cost in the overseas market.
Evaluation of cost-plus pricing
Marketers believe that firms should be market-oriented and cater to customer wants.
On the other hand, used by itself, cost-plus pricing is a weak and unrealistic method because it ignores competition and market demand:
It does not take into account the way in which the two main types of cost fixed and variable respond to changes in sales volume.
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It ignores market demand. Cost-plus pricing assumes that cost determines the price of a product, or what customers are prepared to pay for it, but this is really back-to-front. In fact, the builder may have been able to sell the units at a higher price.
Demand-based pricing
Many marketers believe that cost should not be the starting point for setting prices. Rather, they attempt to estimate the value of the product to the customer, remembering that value includes both tangible and intangible attributes.
Importantly, in this demand-based pricing approach, it is the price the firm believes customers will pay that drives the process, rather than cost.
Break-even analysis
One tool used to consider both demand and cost when setting prices is break-even analysis:
A break-even point is that quantity of output at which total revenue equals total cost, assuming a certain selling price. There is a different break-even point for each different selling price. Sales of quantities above the break-even output result in a profit on each additional unit - the further the sales are above the break-even point, the higher the total and unit profits. Sales below the break-even point results in a loss.
Competition-based pricing
Sometimes the dominant influence in a firm‘s price setting will be the prices being charged by competitors:
In some markets, customers appear to increasingly see products as commodities (the various available types or brands are identical or very similar): basic clothing, stationery and even PCs are in this category. Accordingly, buying at the best possible price becomes the customer‘s main goal.
The internet is certainly assisting this process – it is easy now for prospective purchasers to quickly scan the available suppliers and their offerings.
Initially, the firm needs to decide whether it will set its price to meet the competition, or to be above or below it.
Stage 4: Design appropriate price adjustment strategies
Once a firm has examined its cost structure, market demand and competitive environment, it is ready to set the actual prices that customers will pay. There are a number of strategies that need to be considered here.
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Market entry strategies
A product is only new once, so it is important that the initial price accurately reflects the market image and pricing goal set by the firm. There are two basic strategies for the market entry price for a new product: market-skimming pricing and market-penetration pricing.
Market-skimming pricing (sometimes called skim-the-cream pricing) involves setting a relatively high initial price – that is, a price that is high in range of expected prices for the target market. The price is set at the highest possible level that interested consumers will pay for the new product.
This strategy is particularly suitable for new products because, often in the early stages of a product‘s life cycle, price is less important to buyers, competition is minimal and the product‘s distinctiveness creates opportunities for non-price competition.
With Market-penetration pricing, a relatively low initial price is set for a new product. In other words, the price is low in relation to the target market‘s range of expected prices.
Market penetration has two main potential benefits:
1. It can reach the mass market immediately, and in so doing generates a substantial sales volume and market share. 2. It can discourage competitors from entering the market.
Penetration pricing is likely to be used rather than market skimming when:
The product has a highly elastic demand, which is typical in the later stages of the product life cycle for a product category.
Substantial reductions in unit costs can be achieved through large-scale operations that is, economies of scale are possible.
The product is expected to face very strong competition soon after it is introduced to the market.
Discounts and allowances
Discounts and allowances result in a deduction from the base (or list) price. The deduction might be in the form of a reduced price or some other concession, such as free merchandise or advertising allowances (where a producer allows another organization say, a retailer a discount in return for the retailer advertising the producer‘s products). There are many types of these discounts and allowances.
Quantity discounts a) Non-cumulative quantity discount b) Cumulative discounts
Trade discounts
Cash discounts
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Promotional discounts
Freight Costs and Geographic pricing strategies:
When setting prices for physical goods, marketers need to take into account the cost involved in shipping goods to the buyer. The greater the proportion of total variable costs, the more important the freight costs are
The alternatives here are: the buyer pays all the freight, or the seller does, or the two parties share the expense. Which geographic pricing strategy a firm should use depends on four factors:
1. The geographic limits of the firm‘s market 2. The location of its production facilities 3. The source of its raw materials 4. Its competitive strength in various markets areas.
Four alternative methods of pricing for freight are point-of-production pricing, uniform- delivered pricing, zone-delivered pricing and freight-absorption pricing.
Other pricing tactics
There are a number of other pricing tactics a firm‘s management might consider using.
Flexible pricing
Under flexible pricing, similar customers might pay a different price when buying similar quantities of a product, according to the market conditions at the time or the buyer‘s ability to negotiate.
Airlines, banks and many retailers use flexible pricing-although they will often try to create the impression that their prices are fixed.
With a flexible pricing strategy, weak bargainers may feel that they are at competitive disadvantage.
Flexible pricing is also used to meet a competitor‘s price.
Airlines, too, have used flexible pricing in recent years to enter new markets or gain an increased market share. Their new business comes from two sources – passengers now flying on other airlines, and passengers who would not fly at higher prices. In the second group, especially, demand for air travel s highly elastic. The trick is to keep the market segment of price-sensitive passengers separate from the business-traveler segment, whose demand is inelastic. Airlines keep these segments apart by placing restrictions on lower-priced tickets, requiring advance purchase and, for example, a Saturday-night stays in the destination city.
Fixed pricing (the alternative to flexible pricing) can create an image of consistency and stability that can build customer confidence. On the other hand, it can appear inflexible and
43 | P a g e lacking in customer focus. Obviously, for flexible pricing, the reverse perceptions can be created.
Price lining
Price lining involves selecting a limited number of prices at which a business will sell related products. The tactic is used extensively by clothing retailers, for example. A limited number of prices are selected at which a store will sell its merchandise. For the consumer, the main benefit is that it simplifies buying decisions. From the retailer‘s point of view, price lining helps store owners to plan their purchases. Rising costs can put a real squeeze on price lines, because companies will hesitate to change their price lines every time costs go up. But, if costs increase and prices remain stationary, profit margins will be compressed, and the retailer might be forced to seek products with lower costs.
Psychological (or odd) pricing
. Psychological pricing is a strategy used by retailers for setting prices at uneven (or odd) amounts –for example, Books may cost at $ 29.95. . The rationale for odd pricing is that uneven endings suggest lower prices. In general, retailers believe that pricing items at odd amounts will result in larger sales. Hence a price of $39.95 or Rs.198/- will bring greater revenue that $40 or Rs.200/-. While studies have reported inconclusive results about the value of odd pricing, it does appear to be effective in stores that emphasis low prices. . Odd pricing is often avoided in prestige stores or on higher-priced items. An expensive men‘s suit, for example, might be priced at $ 1600 not $ 1599.95.
Loss Leader pricing
Many firms – especially retailers – temporarily cut prices on a few items to attract customers. This pricing and promotional strategy is called loss leader pricing, and the items whose prices are cut are called ‗loss leaders‘. Loss leaders should be well known, heavily advertised articles that are purchased frequently. The idea is that customers will come to the store to buy the advertised leader items and will stay to but other – regularly priced – merchandise. The net results, the firm hopes will be increased total sales volume and net profit.
Recommended retail price
Some manufacturers want to control the prices at which middlemen resell their product. This is called ‗resale-price maintenance‘. In other words, retailers must be free to set their prices without interference from manufactures.
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However, manufacturers often seek to exercise some influence on the prices at which their products are offered to consumers. They do this to protect the brand‘s image – those with market-leader brands, in particular, worry that the continual discounting of these brands will eventually erode brand equity as consumers develop perceptions of the brand as ‗ always on special‘ or ‗cheap‘, and therefore of doubtful quality.
In contrast, many retailers feel that promoting well-known brands – for example, Coca-Cola – at low prices will draw extra shoppers into their stores.
To comply with the Act while still influencing resale prices, many sellers issue a recommended retail price – a price that, they suggest, will provide retailers with an acceptable sales volume and an acceptable profit margin on the item.
Changing prices
After an initial price has been set, a number of situations might prompt a business to change its price. It might be initiating a change, or reacting to a change made by competitors. Changes can be made for the following reasons:
. To recover cost increases (prices might have to be raised) . To clear excess inventories (prices might have to be cut temporarily) . To gain or regain market share (prices might be reduced) . As part of a promotional program (prices might be reduced temporarily) . To help the sales team to achieve monthly or yearly sales budgets (temporary price reductions may have to be introduced).
Firms should take account of several factors when prices are about to be changed:
. Before initiating any price change, marketers should consider their competitors‘ probable reactions. Similarly, if a competitor has initiated a price change, it is advisable to try to understand the reasons for this change before responding. . The timing of price changes is important. Usually, if a competitor increases prices, a short delay before responding will not be too dangerous, and may even gain some brand switchers. Responses to competitor‘s price reductions, however, must usually be more prompt to avoid losing customers. . Perhaps the biggest danger with competitive pricing is the price war. There might be a strategic reason for initiating a major marketing battle based on price – attempting to gain a long-term market share is probably the most common one. Experienced marketers know, however, that price wars are easily started – often for unsound reasons – but they are very hard to stop.
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Questions:
What are SBUs?
Identify the four quadrants in the BCG Matrix.
References:
Kurtz/Boone, Principles of marketing; 12/e. Chapter 2: pg.54-56. Peter Rix, Marketing: A practical approach;6/e; pg. 232-233, 244-246, 254-25 &336- 368 Kenneth B. Kahn, New product planning; 184p.
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Unit-III
Marketing Mix
Marketing mix is the central task of marketing professionals. Marketing mix consists of the following four major activities usually referred to as elements of marketing mix. The key elements in the marketing mix are shown in Figure 1(course pack MKT-101)
Product: Activities relating to the product, service or idea to be offered. Price: Activities relating to the price to be charged for the product, service or idea. Promotion: Activities relating to promotion (advertising, personal selling, sales promotion and publicity, called promotional mix) of the product, service or idea. Place: Activities relating to distribution of the product, service or idea (Physical distribution and channels of distribution).
PRODUCT Brand Quality Price Design List price Size Discounts Features Allowances Trade Margins Variety Labeling Payment terms Packaging Credit Service Trade-in Support Guarantees
Target Market Figure 1- Marketing Mix
Promotion Place Sales Force Distribution Channels Direct Marketing Coverage Sales Promotion Assortments
Advertising Locations Public Relations Inventories Exhibitions Transport Internet 47 | P a g e
Product
A product is anything that can be offered to a market to satisfy a need or want. The products, which can be marketed, include physical goods, services, persons, places, organizations, and ideas. In the deeper sense, the product is not a physical item but a perception of the consumer or the user. Product means the satisfaction of the customer rather than a physical good. Goods are ingredients of customer satisfaction.Marketing mix is the process or device that makes this customer satisfaction.
All of the services offered by the library – lending services, inter library loan, on-line searching, housebound readers‘ services, picture loans etc. are library‘s products that can be marketed successfully. Library can provide bibliographic information, abstracts and summaries of information, which disseminate the core level information. Books, databases, journals, bulletins, etc. represent the tangible information.Library can also augment information through quality, reliable, speedy and timely professional services.Under the product mix, library‘s resource collection represents as a product line while product items include books, periodicals, videos, films, audio recordings etc. For further fact, services of the library can be considered as a product line and the circulation of library materials, ILL, reference services, and online searching represent as product items.
Place
It represents the distribution channels that an organization utilizes to convey its own physical products or services to the end users. The distribution of the library‘s products refers to ‗When‘ ‗Where‘ and ‗How‘ service is made available for the user. ‗When‘ implies the time period in which information is provided. ‗Where‘ indicates the location of the services and ‗How‘ constitutes the type of distribution.
Price
It is a flexible and dominant element, which determines the revenue/profitability/market share for the organization. From the customer‘s viewpoint price is a determinant factor because most customers depending on their income level consider the price before they purchase the product. The concept of price constitutes two different types – the monetary price, and the social price. Monetary price implies the payment of certain sum by the customer, and the social price refers to the additional effort that the customer must make in order to obtain access to a product. Price for the product is set when the organization introduces or acquires a new product. Price can be revised to match the change of the product. Librarians should consider the ‗monetary price‘ concept as well as the ‗social price‘ concept when the price is decided for library products. In calculation of monetary price, factors such as size of the demand, cost for the product, and the impact of the competition must be taken into account. Real value of the product can be ascertained by the practice of cost analysis. Costing is important even when a service is provided free of charge. Social price is related to determine the needs, wants, and interests of target markets and to deliver the desired satisfaction more effectively and efficiently.
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Price is a means of exchange offered by a buyer for buying the product/service being marketed by a seller/marketer. It is generally expressed in currency units, such as dollars and cents. However, it may also be expressed in services or other goods which the seller and buyer may agree to exchange for the item.
NICMAN at IIM Ahmedabad: Considerations in Pricing
What is Marketing? National Information Centre of Management (NICMAN) has been set up at the Indian Institute of Management, Ahmedabad. NICMAN would utilize the resource of the Vikram Sarabhai Library of IIMA. As per the agreement, between IIMA and National Information System for Science and Technology, NICMAN should, ultimately, become financially self-sufficient and offer sustainable products and services to its clients in business and industry, as well as academic and research organizations.
What is Being Marketed?
NICMAN plans to develop and market information products and services in three phases. In the first phase, the offering will be:
1) Extend indexing and current awareness services to external clients (both, academic and business and industry). 2) Start abstracting service from our own database, as well as CD-ROM based databases, and extend to external clients. 3) Extend to external clients database search service using our own database and CD-ROMs. 4) Extend access to external clients for case bibliography and develop an electronic delivery system, i.e., through e-mail or floppy diskettes.
Immediate introduction of Current contents and Index of Management Literature was planned in each of the six areas of management. The products would be delivered monthly and would be, to begin with, in hardcopy.
Who are the Buyers?
The clients being targeted for both, the products and the services are: Business and industrial organizations. Academic Organizations offering MBA Programs Executives Teacher and students.
The value of information on management literature is likely to be higher for executives in certain departments (like training, human resource development, corporate planning, etc.) of organizations. Although the organizations and executives
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are likely to buy. Purchase of such information by executives in India is mostly governed by ‗allowances‘ provided by organizations. The allowances vary with the level of executive in the hierarchy within an organization and also across organizations.
In academic institutions, the grants from government and public agencies have been frozen/limited. The private ones also, are not likely to have significant funds. Most private academic institutions charge a hefty fee for their programs, but do not necessarily have even adequate premises to house a library. Students are likely to be hard pressed for buying such materials, as the fees charged are already high. Teachers/researchers may be able to buy depending on the allowances available to them, and/or provision for information acquisition in research projects.
Competition
Management information, especially conceptual and theoretical, originates mostly from educational and research institutions in developed countries. It is available to Indian users mostly through foreign journals and books. But the prices of such publications are un-affordable to Indian academic institutions, as well as to small and medium size organizations. Indian material is extremely limited.
Services like Indexing and abstracting mostly originate from the developed countries. Coverage of literature on management as a discipline/subject is very limited, as management is treated as a part of social science information. This limitation of coverage is a great handicap for locating the right and relevant information. National institutions like IIMs, and few sectorial institutions have the base sources and are generating indexing and bibliographic services, targeted mainly to the in-house users. The benefit to the clientele, outside the campus is minimal because no conscious effort has been made to develop products/services which could meet their needs.
Increased availability of access to internet in future and availability of information products and services is likely to affect the market for such products. However, in usefulness price and accessing the picture is not yet clear.
Price-Volume Relationship
No secondary information was available on the price-volume relationship of such products similar to the ones being planned by IIMA. IIMA therefore, had conducted a countrywide market research to assess the potential demand for Current Contents, and Index of Management Literature in each or the functional areas of General Management, Finance, Marketing, Production, Personnel and Industrial Relations, and Purchase/Materials. For arriving at the Price-Volume Relationship, following steps were followed:
1. Sample products were prepared and specific prices (options) at which the product could be marketed were decided. 2. Each respondent in the survey was shown and requested to go through a sample of the product. 3. The respondent was then asked to indicate his interest in buying the product for his organization on the following scale: Very keen, Interested, Will Think,
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Not Decided, Not Interested. 4. The respondent was asked to show the interest at the lowest price, the middle price and the highest price. 5. Those mentioning ‗Very Keen‘ and ‗Interested‘ Categories of responses were assumed to be prospective buyers giving rise to demand. 6. By aggregating the responses, demand at different prices was assessed.
Following relationship was found between demand per year and price charged for the two products:
For Current Content
Price/Year 1500 2000 2500 3000 3500 4000 Demand in % penetration on the basis 7 605 5.5 5.0 4.5 4.0 of ‗very keen‘ Only
Cost-Volume Relationship
It was assessed that the number of copies per functional area could vary from 100 to 1000. It was therefore, decided to find the (fixed and variable) costs for these levels of sales. It was further assessed that the number of pages in each monthly issue would be about 20.
S.No Cost of Elements Cost Nature of Cost 1. Composing and Plate Making Rs.180/page Fixed 2. Cost of Paper/page Rs.0.25 Variable 3. Cost of Printing/Page Rs.0.55 Variable 4. Cost of Cover and Binding per copy Rs.2.50 Variable 5. Cost of Postage per copy Rs.12.00 Variable 6. Cost of (Paper + Printing) per copy: Rs.16 Variable 20* (0.25 + 0.55) 7. Total Variable Cost/Copy (4+5+6) Rs.30.50 Variable 8. Fixed Cost/Issue (no. of pages *1) Rs.3,600 Fixed 9. Fixed Cost/Year (12 issues) 8*12 Rs.43,200 Fixed
The per month and per year costs for volumes of 100, 250, 500, 750, 1000 copies per issue were calculated as follows:
Per Month Per Year Per Issue Volume Variable Fixed Total Variable Fixed Total Cost Cost Cost Cost Cost Cost Cost 100 3,050 3,600 6,650 36,600 43,200 79,800 798.0 250 7,625 3,600 11,225 91,200 43,200 134,700 538.8 500 15,250 3,600 18,850 183,000 43,200 226,200 452.4 750 22,875 3,600 26,475 274,500 43,200 317,700 423.6 1000 30,500 3,600 34,100 366,000 43,200 409,200 409.2
Other costs of operation of the center were mostly fixed and could not be traced directly to the products under consideration. These for the first two years were as
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given below. The costs have been adjusted for 10% inflation for the second year.
First Year Second Year (Rs) (Rs) Fixed costs of equipment (depreciation etc., 2,40,000 2,40,000 excluding software) Base resource costs, CD-ROM etc., 4,00,000 5,50,000 Staff costs 1,32,000 2,40,000 Promotion (mailers, ads, travel) 1,10,000 1,60,000
It was difficult to identify costs of infrastructure, supplies etc., because of lack of data and hence was not included.
Promotion
The basic purposes of promotion are to:
Attract and hold the attention of the clients (both potential and existing) Make the clients aware of the product or service and the organization providing it. Position the product or service and the organization in the minds of the potential clients in a unique and favorable manner. Motivate the clients to actually buy the product or service (i.e., requesting further information) Constantly reinforce the message on the clients.
Promotional methods:
In general, promotion, as Philip Kotler points out, involves one or more or all of the following methods to reach the clients:
Direct Marketing Public Relations Advertising Sales promotion Personal selling
The most relevant promotion methods for librarians and information managers are direct marketing, public relations, and advertising – in that order. For them, sales promotion and personal selling may not be much relevant. Fairs, trade shows, presentations, demonstrations, and meetings, which librarians and information managers do sometimes conduct, are more the direct marketing and public relations kind, rather than the sales promotion and personal selling variety.
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Moreover, given that the nature of a library of an information center is that of a social and service institute educating the clients becomes an important promotion tool, particularly about how to use the library and how to use the new information technology available in the library. Therefore, educational and training programs may have to be organized for clients to help them make the best use of the library or the information Centre, and of the new information technology. Teaching, participation in educational programs of academic institutions and community organizations and conduction short training programs for clients become major promotional activities of librarians and information managers.
Libraries and Information centers have to do promotion not only to their clients, but also to their own staff and to the managers of their sponsoring organizations. Without the internal bridges, the external promotion activity will not be effective.
Promotion Activities:
Some of the relevant promotion activities for librarians and information managers under direct marketing, public relations, and advertising are as follows:
Direct Marketing Public Relations Advertising Catalogues Press Kits Print and Broadcast Mailings Speeches Ads Telemarketing Seminars Packaging Electronic Shopping Annual reports Packaging inserts TV Shopping Charitable donations Brochures and Direct response Sponsorships Booklets Radio, magazine and Publications Posters and leaflets newspapers Kiosk shopping Lobbying Display signs Free samples News Point-of-purchase displays (events/people/products) user Audiovisuals Symbols and interest articles in media logos
From the
While these four factors are important individually, their real significance lies in the mix, the unique way they are combined into a careful plan or strategy.
Sometimes marketing research the systematic gathering of information to solve marketing problems is also included in marketing mix.
McCarthy proposed this four-factor classification of different marketing activities. Please note that this is not the only way of classifying marketing activities but certainly the one, which has caught our imagination most. The below two are some other classifications
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(1) According to Frey (1961) all marketing decision variables ( i.e., activities) could be categorized into two factors, viz., the offering consisting of product, packaging brand, price and service and the methods and tools comprising distribution channels, personal selling, advertising, sales promotion and publicity. (2) Lazer and Kelly (1962) who proposed a three-factor classification viz., goods and service mix, distribution mix, and communication mix. –
Eg. Information is essentially what books, schools, and universities product, market, and distribute at a price to parents, students, and communities. The production, packing and distribution of information are some of our society‘s major industries. Even companies that sell physical products attempt to add value through the use of information.
The central assumption is that if marketing professionals make and implement the right decisions about the features of the product, its price, and how it will be promoted and distributed, then the business will be successful. Unfortunately, marketers have ignored the tautological nature of this view. What is the ‗right‘ decision when it comes to making these choices concerning the marketing mix? Most marketing professionals would answer that the right marketing mix is the one that maximizes customer satisfaction and results in the highest sales or market share. But a moment‘s reflection reveals the fallacy of this approach. Customer satisfaction and sales can always be increased by offering more product features, lower prices than competition, higher promotional budgets and the immediate availability of the product, of outstanding customer service and support. But inadequate margins and excessive investment requirements would make this strategy a quick route to bankruptcy.
Some writers have tried to get around this problem by stating that the objective is to devise a marketing mix that provides superior customer satisfaction at a profit to the company. But profit is an ambiguous goal. Are managers to aim at short or long term profits? Should they seek to maximize profits or achieve some satisficing goal? Each alternative would lead to radically different recommendations for marketing mix decisions. It is fair to conclude that most of the writing on marketing has described the marketing mix but not provided a rational framework for managing it.
The Traditional approach to the Marketing Mix:
Marketing professionals have normally been taught a four-step approach to marketing mix decisions. Step one is to define the product‘s (or service‘s) strategic objective. This emerges form an analysis of its strengths, weakness, opportunities and threats. Typically, a strategic matrix has market growth or market attractiveness as one dimension and competitive advantage as the other. A product in a highly attractive market with a strong competitive advantage would normally have as its strategic objective rapid sales growth. A product in a poor market with no competitive advantage would be targeted for divesting.
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Step two is a detailed analysis of the target market to assess the nature of the opportunity. What is its size and potential? How strong is the competition and how is it likely to evolve in the future. Step three is research into the needs of prospective customers. What is it that customers actually want? Today, this goes beyond merely asking customers what they are looking for, but creatively seeking to discover needs that customers cannot articulate because they are unaware of the possibilities offered by new technologies and the changing environment. To most marketing professionals the marketing mix is designed to meet these customer needs and wants. Each element of the mix is designed to meet a customer need. Lauterborn (1990) articulated this with the concept of the four C‘s Consumers have certain needs, which can be grouped into four C‘s – a customer solution, cost, convenience and communication. According to this popular view, the function of the four P‘s is to match each of these C‘s.
Four C‟s Four P‟s
Customer Solution Product Customer Cost Price Communication Promotion Convenience Place
An effective marketing mix is then one which offers a product that solves the customer‘s problem that is of low cost to the customer, that effectively communicates the benefits, and that can be purchased with the utmost convenience.
The problem with this ‗marketing‘ view of the marketing mix is that it ignores whether the mix makes economic sense for the company. While it maximizes value for customers it can easily minimize value for shareholders. For example, the product that gives the best customer solution is likely to be one individually tailored to a specific customer, incorporating all the features of value to that customer. But for the company, this would require a very broad product line with high manufacturing costs and substantial investment requirements. Unfortunately, what customers also want is low cost, which is most situations will mean offering them low prices. Similarly, the unconstrained pursuit of convenience and communication of the brand‘s benefits also involves higher costs and investment. The formula of low prices, high operating costs and high investment in promotion and distribution is not one that builds successful businesses.
The Accounting approach to the Marketing Mix:
Faced with poor returns, some companies especially in the UK, adopted an accounting approach to marketing. The marketing mix was seen not as an instrument for gaining and retaining customers, but rather as a tool for directly increasing the return on investment. Return on investment can be increased in four ways – increasing sales, raising prices, reducing costs or cutting investment. The marketing mix is the central determinant of each of these levers.
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For example, cutting back on the number of product variants offered to customers will reduce costs and investment. Raising prices will usually increase profitability in the short term because higher margins will offset the volume loss. Cutting advertising and promotional budgets will also boost short-term profits. Finally, savings on distribution and service will normally have positive effects on profitability, even though customers may suffer some inconvenience.
As illustrated in Figure 2, the accounting approach leads to a completely opposite marketing mix to the marketing approach. While the marketing focus, which puts the customer first, normally leads to broader product ranges, lower prices and more spending on promotion and distribution, the accounting one leads to the opposite pressures. The cost of the marketing approach is lower profitability and cash flow, the cost of the accounting approach is the longer-term loss of market share resulting from the lack of customer focus.
Marketers need to be aware that there are other important problems in considering profits as the objective of the business.
Short or long – term profits: Most managers are conscious of the dangers of focusing on short-term profits. Cutting projects to boost this year‘s results can lead to permanent erosion of the firm‘s ability to compete. But emphasizing long-term profits does not help much because they are so ill-defined. Are long-term profits defined over 3, 5, 20 years? How does one deal with the time value of money?
Maximum or acceptable profits: Should managers be seeking to maximize (short or long – term) profits or achieving an acceptable level, e.g. the average return in the industry? Each would give quite different recommendations when it comes to the marketing mix. How would shareholders respond to managers consciously accepting sub-optimal returns?
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Profit Marketing Buyer Marketing Financial Objectives Objectives Expectations Mix Variables
Performance Product Sales Design Choice Strategy Costs Inventory
Price Value Pricing Margins Sales Debt Target Marketing Discounts Market Plan Budg RoI ets Segment Service Distribution Sales
Delivery Credit & Service Assets Expenses
Information Advertising Sales Image Security & Expenses
Promotion Assets
Marketing - led Approach Accounting led approach
Figure 2 – Alternative approaches to the marketing mix
Ambiguity of profit measurement: Unlike cash flow, profits are a matter of judgment. Different but equally legally acceptable treatments of depreciation, stocks and the costs of restructuring lead to vastly different reported profits. Profits also fail to incorporate the cost of capital. So, a company can be growing profits, but declining in value because it is not achieving a return above its cost of capital on new investment. Finally, profits excluded the added investments in working and fixed capital needed to support the company‘s growth. So, a company can be profitable but rapidly running out of cash.
Alternative measures of profitability: Most companies set objectives not in terms of absolute profits, but express them as a ration such as return on assets, return on investment, and return
57 | P a g e on equity or earnings per share. All these measures, because they have profits in the numerator, suffer the same problems as outlined above. There are even added problems since measures of assets, investment and equity are equally ambiguous. For example, should assets be valued at cost or replacement value? Should R&D spending be treated as investment or as a cost?
Value-based approach to Marketing Mix:
A value-based approach to the marketing mix reconciles the marketing and accounting approaches in an optimal manner. The key principle is the optimum marketing mix is that which maximizes shareholder value. The concept of value-based management – That the job of the board and its senior executive is to maximize shareholder value – has become almost universally accepted in major businesses. As a recent Business Week (2000) study concluded, ‗the fundamental task of today‘s CEO is simplicity itself: get the stock price up period.‘ Most companies – even those with a strong marketing orientation – now have the goal enshrined in their mission statements.
Why value-based management?
Value-based management says that decisions have to be made which maximize the wealth of the company‘s shareholders. Today, these shareholders are not the bloated capitalists of socialist propaganda, but rather the pension funds and insurance companies responsible for managing the saving of ordinary people. It is the financial value of the companies in their portfolios that will determine the future quality of life for most of us.
The key arguments for value-based management are:
Ownership rights: In a market-based economy, companies are owned by their shareholders. The central responsibility of management is to maximize shareholder value and to do so legally and with integrity. Managers have neither the legitimacy nor the expertise to pursue other social goals. Social objectives are the function of government or other social institutions.
Pressure from capital markets: Today, chief executives have little choice. Unless shareholders believe top management is pursuing strategies to create shareholder value, executives will not retain their jobs? In recent years, a stream of CEO‘s from major companies have been ousted for allowing their company‘s share price to slide. As the Financial Times (2000) commented, ‗the model of capitalism, which emphasizes shareholder value, is the yardstick on which global capital markets are converging.‘
Consistency with other stakeholder‘s interests: A company seeking to maximize shareholder value cannot neglect other stakeholders. In today‘s knowledge-intensive business, satisfying the interests of the knowledge workers is essential for the business‘ long-run health. No company can ignore the needs if it is interested in retaining long-term cash flows. Conversely, all stakeholders- workers, customers, suppliers and the community – become
58 | P a g e vulnerable if the business fails to generate shareholder value. Ultimately, the needs of all the stakeholders depend upon the firm‘s ability to generate sufficient cash to meet them.
Focus on long-term performance: Marketing people often think of the shareholder value orientation as creating a short-term focus, discouraging long-term investment in brands and market development. Nothing could be further from the truth. As we shall see, short-term movements in profits have little impact on shareholder value. The first 5 years of profits and cash flow rarely account for more than one-third of the company‘s value. The shareholder value approach encourages a long-term perspective about marketing mix decisions – as long as these investments promise to generate a return above the cost of capital.
Strong intellectual rational: The key reason why marketing management has failed to develop as an intellectual discipline is tis lack of a clear objective. Without a rational goal it is impossible to develop a framework for optimizing marketing mix decisions. As we have noted, maximizing market share or customer satisfaction makes no sense. Nor is a focus on maximizing profits or return on investments any better. Optimizing shareholder value, a framework that lies at the heart of modern finance, offers the basis for redefining marketing in a precise and rational manner. It provides a powerful tool for optimizing the marketing mix.
Questions:
References:
Anil Kumar Dhiman & Hemant Sharma, Services Marketing Mix in Library and Information Centers.
Abhinandan K Jain & others, Marketing information products and services; 171-174 pgs.
S K Baral & S C Bihari,Advanced Approach Marketing Management;13 & 14 pg.
Philip Kotler…et.al., Marketing Management: A South Asian Perspective; (13th ed.) by 8th page.
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Unit-IV
Marketing Plan
A marketing plan is a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives. It contains tactical guidelines for the marketing programs and financial allocations over the planning period. It is one of the most important outputs of the marketing process.
Marketing plans are become more customer and competitor oriented and better reasoned and more realistic than in the past. The plans draw more inputs from all the functions and are team developed. Marketing executives increasingly see themselves as professional managers first, and specialists second. Planning is becoming a continuous process to respond to rapidly changing market conditions.
Contents of the Marketing plan:
Executive Summary and table of contents. The marketing plan should open with a brief summary of the main goals and recommendations. The executive summary permits senior management to grasp the plan‘s major thrust. A table of contents that outlines the rest of the plan and all the supporting rationale and operational detail should follow the executive summary.
Situation Analysis. This section presents relevant background data on sales, costs, the market, competitors, and the various forces in the macro environment. How is the market defined, how big is it, and how fast is it growing? What are the relevant trends affecting the market? What is the product offering and what are the critical issues facing the company? Pertinent historical information can be included to provide context. All this information is used to carry out a SWOT (Strengths, Weaknesses, Opportunities, threats) analysis.
Marketing strategy. Here the product manager defines the mission and marketing and financial objectives. The manager also defines those groups and needs that the market offerings are intended to satisfy. The manager then establishes the product line‘s competitive positioning, which will inform the ―game plan‖ to accomplish the plan‘s objectives. All this is done with inputs from other organizational areas, such as purchasing, manufacturing sales, finance, and human resources, to ensure that the company can provide proper support for effective implementation. The marketing strategy should be specific about the branding strategy and customer strategy that will be employed.
Financial projections. Financial projections include a sales forecast, an expense forecast, and a break-even analysis. On the revenue side, the projections show the forecasted sales volume by month and product category. On the expense side, the projections show the expected costs of marketing, broken down into finer categories. The break-even analysis
60 | P a g e shows how many units must be sold monthly to offset the monthly fixed costs and average per-unit variable costs.
Implementation controls. The last section of the marketing plan outlines the controls for monitoring and adjusting implementation of the plan. Typically, the goals and budget are spelled out for each month or quarter so management can review each period‘s results and take corrective action as needed. A number of different internal and external measures must be taken to assess progress and suggest possible modifications. Some organizations include contingency plans outlining the steps management would take in response to specific environmental developments, such as price wars or strikes.
Marketing Plan Criteria:
Here are some questions to ask in evaluating a marketing plan.
Is the plan simple? Is it easy to understand and act on? Does it communicate its content easily and practically?
Is the plan Specific? Are its objectives concrete and measurable? Does it include specific actions and activities, each with specific dates of completion, specific persons responsible, and specific budgets?
Is the plan realistic? Are the sales goals, expense budgets, and milestone dates realistic? Has a frank and honest self-critique been conducted to raise possible concerns and objections?
Is the plan complete? Does it include all the necessary elements?
Creating a marketing plan:
Keep in mind that a marketing plan should be created in conjunction with the other elements of a firm‘s business plan. In addition, a marketing plan often draws from the business plan, restating the executive summary, competitive analysis, and mission statement to give its readers an overall view of the firm. The marketing plan is needed for a variety of reasons:
To obtain financing because banks and most private investors require a detailed business plan – including a marketing plan component – before they will even consider a loan application or a venture capital investment. To provide direction for the firm‘s overall business and marketing strategies. To support the development of long-term and short-term organizational objectives. To guide employees in achieving these objectives. To serve as a standard against which the firm‘s progress can be measured and evaluated.
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In addition, the marketing plan is where a firm puts into writing its commitment to its customers and to building long-lasting relationships. After creating and implementing the plan, marketers must reevaluate it periodically to gauge its success in moving the organization toward its goal. If changes are need, they should be made as soon as possible.
Marketing Research;
It is the process of collecting and using information for marketing decision making. Data comes from a variety of sources. Some results come from well-planned studies designed to elicit specific information. Other valuable information comes from sales force reports, accounting records, and published reports. Still other data emerges from controlled experiments and computer simulations. Marketing research, by presenting pertinent information in a useful format, aids decision makers in analyzing data and in suggesting possible actions. Marketing research techniques are used to make accurate sales forecasts, a critical component of marketing planning. The use of decision support systems is also discussed, as is their vast impact on market research decision making and planning.
Scope of Marketing Research:
Research is the process of finding a solution to a problem or a question through the use of scientific tools & techniques. Marketing research is a methodical and purposeful study conducted to obtain solutions for specific marketing problems. Marketing research is the process of collection of data in an organized manner, with subsequent recording and analyzing of such data that will help the business manager in an effective decision making process.
Marketing research encompasses all the spheres of marketing, right from the idea for a new product to after sales service. The information gathered and analyzed through marketing research can be sued for internal purposes or for making important strategic decisions. The research process provides a scientific platform, contrary to the traditional intuitive approach of decision making by managers, which used to put large amounts of resources of the organization at risk. Marketers need to analyze the various paradigms of the market with precision to serve their customers and survive. Marketing research operates precisely in this area by helping marketers to analyze the market correctly and take effective decisions from time-to-time.
Purpose of Marketing Research:
The basic purpose of marketing research is to facilitate the decision-making process. A manager has before him a number of alternative solutions to choose from in response to every marketing problem and situation.
The second purpose of marketing research is that it ―helps to reduce the risk associated with the process of decision-making.‖
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Marketing research is concerned with all aspects of marketing, relating to product design and development, product-mix, pricing, packaging, branding, sales, distribution, competition, target customer segments and their buying behavior, advertising and its impact.
The Marketing Research Process:
Business executives rely on marketing research to provide the information they need to make effective decision regarding their firm‘s current and future activities. The chances of making good decisions improve hen the right information provided at the right time during decision making. To achieve this goal, marketing researchers often follow the six-step process given below. In the initial stages, researchers define the problem, conduct exploratory research and formulate a hypothesis to be tested. Next, they create a design for the research study, followed by the collection of needed data. Finally, researchers interpret and present the research information.
1. Defining the Problem 2. Conduct Exploratory Research 3. Formulate a Hypothesis 4. Create a Research Design 5. Collecting (primary & secondary) Data 6. Interpret and Present Research Information
Marketing Research Methods:
Data Collection is an integral part of the marketing research process. One of the most time- consuming parts of collecting data is determining what method the marketer should use to obtain the data.
Primary Data Collection Secondary Data Collection Sampling Plan Sampling Unit: Who is to be surveyed? Sample Size: How many People to be surveyed? Sampling Procedure: How should the Respondents be Chosen? Types of Sampling Probability- Simple Random, Stratified Random, Cluster Non-Probability- Convenience, Judgmental, Quota Primary Research Methods Observation Method Survey Method i. Telephone Interviews, ii. Personal Interviews, iii. Focus Groups, iv. Mail Surveys, v. Fax Surveys, vi. Online Surveys and
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vii. other internet-Based Methods Experimental Method
Research Instruments Questionnaires Qualitative Measures Shadowing Behavior Mapping Consumer Journey Camera Journals Extreme User Interviews Story Telling Unfocused Groups Mechanical Devices Galvanometers Tachistoscope Eye Cameras Audiometers GPS
Corporate Identity:
Corporate identity of a firm is, firm‘s representation by visually and physically with factors like; special vehicles, air vehicles, emblem, typography, color selection, uniforms, announcement board, exhibitions, flags and cutlery. Addition to this corporate identity includes corporate design, corporate communication, corporate behavior and corporate philosophy.
An identity of a person is the most important thing which differentiates him from the others. Likewise, identities of the firms are also differentiating them from others.
Today, the need of a definite identity improvement for every corporate has come with changes in markets, corporates and societies. What is corporate identity? It is an integrity concept which a corporate reveals in philosophy, conception, communication and behavior to be distinguished from its rivals. Differentiation from rivals and recognition by target mass as a consequence of this concept.
A corporate which has a long term founding target, an image essence based and corporate identity determined founding philosophy, performs his targets on the basis of this concept by planning strategically and reflects its behavior vehicles and manners to target mass. A corporate which can introduce itself by this way, brings up its behavior towards situations.
If a corporate has corporate identity, it is believed to be more powerful and more organized.
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The shape of corporates‘ name and colors of vehicles and other equipment‘s increase corporate identity. To success an efficient communication between corporate and target mass, especially printed things has an important role. For this reason, printed things must be seen as a tool for creating corporate identity and keeping it whole. In big companies there can be departments responsible for press, but to keep integrity opinion of public relations must be taken into account. In small companies, press must completely be in public relations responsibility. Most of corporate products and ads are easily recognized, because corporate vision is very powerful. This can be gained by a logo, a color, a different print style or with combination of these. Corporate unity can comprise from letterhead paper to writing, color, or logo on a transportation vehicle. The importance of giving unity to printed tools becomes greater if company has firm report, company newspaper, reference book or more other prints. Creating integrity in corporate vision depends on having an image which stress relationships between this prints
With respect to successful corporate vision as playing an important role on company recognition, it became a different job to establish differentiating corporate identity which must be a harmony of color, shape and names. Due to contribution of public relations to recognition of corporate identity, repeating, which is also an effective factor in advertisement, must not be forgotten.
Corporate philosophy, corporate behavior, corporate design and corporate communication concepts must be taken into consideration in practice of corporate identity. If we explain these concepts briefly;
Corporate philosophy; is the basis of corporate identity. It is a philosophy which companies perform in their behaviors, design and communication. According to Wolf, main thoughts of a corporate about itself, shows corporates philosophy.
Corporate behaviour; is a corporates‘ common behavior, manner and reaction in definite decision cases. In the context of corporate behavior, there is how should company react against various situations.
Corporate design; includes creation of companies image and target harmonized visible factors which are in accordance with corporate identity.
Corporate communication; indicates the desire of creating various methods for image with the help of companies identity. Corporate communication is the application of all communication precautions systematically integrated, which aims to impact public opinion and enterprise climate against a company, an association, a corporate or organization.
Some other subjects which must be taken into account are logo, color, letter type, and commercial character.
Logo: A special design which is a corporates badge, like Ford as founders signature, TRT as first letters of organizations name or other symbols and definite letters.
Corporate‟s color element: Examples for corporate related colors, green Holiday Inn, yellow Kodak, navy blue British Airways, and red Coca Cola.
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Letter Type: Printed equipment‘s which are created by using same and distinguishing letters, like Pepsi with its special letter type.
Commercial Character Element: Characters related with commercial corporates. The white horse on White Horse Whisky, soldier on Johnnie Walker are some examples for Commercial Character Element. Slogans which are integrated with company and reminding corporate identity like, BMWs‘ ―only flying is better‖, Benetton‘s ―united Colors of Benetton‖, Coca- colas‘ ―life is this‖, are also commercial character elements.
Developing an efficient corporate identity programme: A corporate identity programme can be a powerful and efficient communication tool. When used properly, corporate can catch its essence and effects with meaningful result can be obtained. When done careless it yields money and time loss. A current example for efficient identity programme is advertisement procedure of Absolut Vodka. This brand is a classic example to power of communication procedure where there is image difference between products. When first advertisement campaign started in 1980 Absolut was able to sell only 12000 case of vodka. Until 1990 this increased to 2.7 billion cases. One of the features of Absolut advertisements was the state of same product and message.
When creating a corporate identity programme, there are some procedures which will yield minimum stress and a successful programme. 3 main elements of an efficient programme are; Research Strategy Practice The factors above are highly important. Strategy is the outcome of an investigation and if strategy and investigation is target based, practice will be successful, like placing last piece of a puzzle.
Include everyone in programme: First of all the programme must include everyone who has something to say. First and mostly the hardest one is selling the programme to the company. This necessitates skilled political tricks, but it is worth to escape efforts from programmes whichbecame weak due to intercompany competition. A comity must be formed to gather information and date from people who can be included in the programme. That is absolutely a key element. Everyone in the company will be affected from suggested changes, and by this they will contribute to process.
Start with a sentence explaining your mission: Most company has a mission expression. A Professional corporate identity advisor can make an objective point of view. If you decided that you need an advisor, how do you choose him? It is mostly same as choosing an architect, doctor or any other professional according to experience, cost and other factors. Invite some company for presentation and as soon as possible you will find someone for your needs. Starting job with required qualifications and after this try to compare alike companies with similar capacity and structure.
Develop an action course: When you are trying to develop a corporate identity, you have to use every information you discovered from studies for developing action course of a target. It is the point where copy and plan professionals use their abilities, to get the target under consideration. Main lines must be clear, detailed and evident. The most popular corporates rely on a strong strategy and indicators of this clear, robust and observable strategy.
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Logo is the most eye catching attribute: To change or not, to protect or not and to repair or not the logo is a problem for companies. Naturally most company doesn‘t want to lose its commercial capital and accepted logo. General Electric is an example for his. This company has made a lot of changes in its structure. But didn‘t change his ―GE‖ logo. Only made small modification. Companies‘ graphics modernized GE logo. GE example is a good example for strategy of keeping own capital while taking steps to the future.
Market Segmentation:
Markets are Heterogeneous; Segmentation divides them into Homogeneous Sub-Units:
Market for a product is nothing but the aggregate of the consumers of that product and consumers of a product vary in needs, motives, characteristics and buying behavior. It means that the market for a product is essentially a heterogeneous unit. Marketers break up the heterogeneous market for a product into several sub units, or sub-markets, each relatively more homogeneous within itself, compared to the market as a whole. This breaking up helps tap the market better. This act of disaggregating a market into a number of sub- markets/distinct sub-units of buyers, each with relatively more homogeneous characteristics, is known as market segmentation.
The consumers in the various segments will vary „Across‟ Segments, but be Homogeneous „within‟:
The disaggregation is made for a specific purpose – tapping the market more effectively, for that purpose to be served, the disaggregation much enable distinctive treatment to the various segments. It means that the segments arrived at by the disaggregation must have an identity of their own and be distinct from one another. It also means that the members within a segment must be relatively homogeneous, showing commonality in relevant characteristics. So, Segmentation is the art of disaggregating a market into sub-markets in such a manner that in needs, motives, characteristics and buying behavior, the members would vary across segments, but be homogeneous within each of them. It is obvious that the both these qualifications have implications for marketing.
It is the Consumers who are Segmented, Not product, Nor price
It would be useful to provide one important clarification right at the beginning. Marketers, sometimes, speak of product segments and price segments (product segmented on the basis of price points) and use these expressions as synonymous with market segments. This can lead to a wrong understanding of what market segments, or for that matter, the process of market segmentation as a whole, actually connote. We have to be clear that in market segmentation, it is the consumers who are segmented, not the product, nor price. Market is about people who consume the product, not about the product that gets consumed. For example, in segmentation of the passenger car market, it is not the passenger cars (product) that are segmented, but it is the consumers/buyers of cars that are segmented. Similar is the position about price segments. Taking the passenger car instance again, it is not the cars that are segmented with price as the base, but is the buyers of cars that are segmented, with their price preference for the car as the base. We do speak of ‗price slots‘ in segmentation. But it does
67 | P a g e not mean that the price slots constitute the segments. What is signifies is that different offers are made available matching the differing price preferences of the consumer segments involved. ‗Price slots‘ and specific product offers thereof is just a derivative of the segmenting of the consumers. It is the consumers, who invariably define the segments, not products, nor price slots.
Geographic‘s
Demographics Socio-Cultural
Market Segmentation
Behavioural Psychographics
Markets can be segmented using several bases:
A market/consumer population for a product can be segmented using several relevant bases (variables). The major ones include:
1. Geographics 2. Demographics 3. Socio-Culturals 4. Psychographics 5. Behaviour
Geographic Segmentation
Segmentation of consumers based on factors like climatic zone, continent/country, region, state, district, and urban/rural area, constitutes geographic segmentation. Marketers, who operate globally, often, (not necessarily, nor in all cases) segment the market by continent/country/region in the first instance, and then go for segmentation on other bases. National marketers within a country like India, often segment the market by region, state,
68 | P a g e district, and urban/rural area, in the first instance, and then go for segmentation on other bases. Sometimes the marketers treat the north and south of India as two separate geographies and segment the market on that basis. As long as there are clearly identifiable differences between one region and the other, with implications to marketing, geographic segmentation will be useful.
Region North, East, West, South, Central, Coastal, Hilly City Size Metropolitan Cities, Small Cities, Towns Density of Area Urban, Semi-urban, Rural Climate Hot, Humid, Cold, Rainy
Demographic Segmentation:
Segmentation of consumers based on variables such as race, religion, community, language, age state in family cycle, gender, marital status, family size, occupation, economic position/income/purchasing capacity, educational level, and social status, of the consumers, constitutes demographic segmentation.
Age 0-5; 6-12; 13-19; 20-34; 35-49; 59-64; 65+ Sex Male/Female Marital Status Married/Unmarried Income Under Rs.20,000; Rs.20,000-Rs.50,000; Rs.50,000-Rs.1,00,000; Rs.1,00,000-Rs.5,00,000; over Rs.6,00,000 Family Size 1, 2-3, 4, 5+ Occupation Professional, Clerical Manager, Craftsman, Sales, Students, Housewife Education Primary, Secondary , Senior Secondary, College, University Family Life Young single, Young married, no child, young, married, children under 6; Young Married, children between 6-12; Children between 13-19; Older married, children 20-24; Older Married and so on Religion Hindu, Muslim, Sikh, Christian, Others Nationality Indian-Resident, Indian-Non-Resident, Expatriates from other countries
Socio-Cultural Factors:
Culture and social class are the two main bases of segmentation, here.
Psychographic Segmentation:
It divides a population into groups that have similar psychological characteristics, values and lifestyle. Lifestyle refers a person‘s mode of living; it describes how an individual operates on a daily basis. Consumer‘s lifestyles are composites of their individual psychological profiles, including their needs, motives, perceptions, and attitudes. A lifestyle also bears the mark of many other influences, such as family, job, social activities, and culture.
Life-style Conservation, Liberal, Health and Fitness Conscious, Adventuresome, Status-seekers Social-Class Lower class, Lower-Middle-class, Middle Class, Rich class
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Cultural Continental, Mughal, Chinese, Indian, Royal, South Indian, Hindu Culture Personality Extroverts, Introverts, Aggressive, Complainants
Behavioural:
Here the geographical, demographical or psychographical boundaries do not come together but become more irrelevant for marketers. The consumers are segmented on the basis of their behavior through need-motivation, perception, learning-involvement, attitudes, occasions, benefits, user-status, usage-rate, loyalty status, and buyer-readiness stage. These along with their typical breakdown have been shown in the below mentioned table.
Behaviour Segmentation
Needs-Motivation Shelter, Safety, Security, Affection, Sense of self-worth Perception Low Risk, Moderate Risk, High Risk Learning-Involvement Low involvement, High Involvement Attitudes Positive Attitude, Neutral, Negative Attitude Occasions Regular Occasions, Special Occasions Benefits Convenience, Prestige, Economy, Value for Money, Quality Service, Speed. Reading Stage Unaware, Aware, Informed, Interested, Desirous, Intending to Buy, Enthusiastic Use-Situational Segmentation Time Leisure, Work, Rush, Morning, Night Objective Personal use, Gift, Fun, Achievement Location Home, Office, Friend‘s Home, In-store Person Self, Friends, Boss, Peers Palace New, Old Use-Related Segmentation Usage-Rate Heavy user, Medium user, Light user Loyalty Status None, Medium, Strong, Absolute User-Status Non-user, Co-user, Potential user, First-time user, Regular user Behavioural Market Segmentation
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User Behavior and Adoption
Why do fans develop loyalty to a certain team? Why do people prefer one brand of soda over another? Because the answers directly affect every aspect of the marketing strategy, from product development to pricing and promotion, finding them is the goal of every marketer. It requires an understanding of customer behavior, the process by which consumers and business-to-business buyers make purchase decisions. Customer behavior includes both individual consumers who buy goods and services for their own use and organizational buyers who purchases business products.
Cultural Influences:
Culture can be defined as the values, beliefs, preferences, and tastes handed down from one generation to the next. Culture is the broadest environmental determinant of consumer behavior. Marketers need to understand its role in consumer decision making, both in the U.S. and abroad. They must also monitor trends in cultural values as well as recognize changes in these values.
International Perspective on Cultural Influences:
Cultural differences are particularly important for international marketers. Marketing strategies that prove successful in one country often cannot extend to other international markets because of cultural prove successful in one country often cannot extend to other international markets because of cultural variations. Europe is a good example, with many different languages and a wide range of lifestyles and product preferences. Even though the continent is becoming a single economic unit as a result of the expansion of the European Union and the widespread use of the euro as currency, cultural divisions continue to define multiple markets.
Subcultures
Cultures are not homogeneous entities with universal values. Each culture includes numerous subcultures – groups with their own distinct modes of behavior. Understanding the differences among subcultures can help marketers develop more effective marketing strategies.
The U.S., like many nations, is composed of significant subcultures that differ by ethnicity, nationality, age, rural versus urban location, religion, and geographic distribution. The Southwestern lifestyle emphasizes casual dress, outdoor entertaining, and active recreation. Mormons refrain from buying or using tobacco and liquor. Orthodox Jews purchase and consume only kosher foods. Understanding these and other differences among subcultures contributes to successful marketing of goods and services.
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America‘s ethnic mix is changing. By 2050, ethnic and racial minority groups will constitute half the U.S. population. Marketers need to be sensitive to these changes and to the differences in shopping patterns and buying habits among ethnic segments of the population. Business can no longer succeed by selling one-size-fits-all products; they must consider consumer needs, interests, and concerns when developing their marketing strategies.
Social Influences
Every consumer belongs to a number of social groups. A child‘s earliest group experiences come from membership in a family. As children grow older, they join other groups such as friendship groups, neighborhood groups, school groups, and organizations such as Girl Scouts, Boys‘ and Girls‘ Clubs. And little League. Adults are also members of various groups at work and in the community.
Group membership influences an individual‘s purchase decisions and behavior in both overt and subtle ways. Every group establishes certain norms of behavior. Norms are the values, attitudes, and behaviors that a group deems appropriate for its members. Group members are expected to comply with these norms. Members of the Nature Conservancy, National Rifle Association, American Medical Association, and the local country club tend to adopt their organization‘s norms of behavior. Norms can even affect nonmembers. Individuals who aspire to membership in a group may adopt its standards of behavior and values.
Differences in group status and roles can also affect buying behavior. Status is the relative position of any individual member in a group: roles define behavior that members of a group expect of individuals who hold specific positions within that group. Some groups (such as Rotary Club or Lion‘s Club) define formal roles, and others (such as friendship groups) impose informal expectations. Both types of groups supply each member with both status and roles; in doing so, they influence that person‘s activities – including his or her purchase behavior.
The Internet provides an opportunity for individuals to form and be influences by new types of groups. Usenet mailing lists and chat rooms allow groups to form around common interests. Some of these online ―virtual communities‖ can develop norms and membership roles similar to those found in real-world groups. For example, to avoid criticism, members must observe rules for proper protocol in posting messages and participating in chats.
Social Classes
W. Lloyd Warner‘s research identifies six classes within the social structures of both small and large. U.S. cities: the upper-upper, lower-upper, upper-middle and lower-middle classes, followed by the working class and lower class. Class rankings are determined by occupation, income, education, family background, and residence location. Note, however, that income is not always a primary determinant; pipe fitters paid at union scale earn more than many college professors, but their purchase behavior may be quite different. Thus, Marketers are likely to disagree with the adage that ―a rich man is a poor man with more money.‖
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Opinion Leaders
In nearly every reference group, a few members act as opinion leaders. These trendsetters are likely to purchase new products before others in the group and then share their experiences and opinions via word of mouth.
Family Influences
Most people are members of at least two families during their lifetimes- the ones they are born into and those they eventually form later in life. The family group is perhaps the most important determinant consumer behavior because of the close, continuing interactions among family members. Like other groups, each family typically has norms of expected behavior and different roles and status relationships for its members.
Autonomic role is seen when the partners independently make equal numbers of decisions. Personal-care items would fall into the category of purchase decisions each would make for him or herself.
Husband-dominant role occurs when the husband usually makes certain purchase decisions. Buying a life insurance policy is a typical example.
Wife-dominant role has the wife making most of certain buying decisions. Children‘s clothing is a typical wife-dominant purchase.
Syncratic role refers to joint decisions. The purchase of a house follows a syncretic pattern.
Children and Teenagers in Family Purchases
As parents have become busier, they have delegated some family purchase decision to children, especially teenagers. Children learn about the latest products and trends because they watch so much television and cruise the Internet, often becoming the family experts on what to buy. As a result, children have gained sophistication and assumed new roles in family purchasing behavior.
Personal Determinants of Consumer Behavior
Consumer behavior is affected by a number of internal, personal factors in addition to interpersonal ones. Each individual brings unique needs, motives, perceptions, attitudes, learned responses, and self-concepts to buying decisions.
Needs and Motives
Individual purchase behavior is driven by the motivation to fill a perceived need. A need is an imbalance between the consumer‘s actual and desired states. A person who recognizes or feels a significant or urgent need then seeks to correct the imbalance. Marketers attempt to
73 | P a g e arouse this sense of urgency by making a need ―felt‘ and then influencing consumer‘s motivation to satisfy their needs by purchasing specific products.
Motives are inner states that direct a person toward the goal of satisfying a felt need. The individual takes action to reduce the state of tension and return to a condition of equilibrium.
Maslow‟s Hierarchy of Needs
Psychologist Abraham H. Maslow developed a theory that characterized needs and arranged them into a hierarchy. Maslow identified five levels of needs, beginning with physiological needs and progressing to the need for self-actualization. A person must at least partially satisfy lower-level needs, according to Maslow, before higher needs can affect behavior.
Physiological Needs: Needs at the most basic level concern essential requirements for survival, such as food, water, shelter, and clothing. The Coca-Cola Co. promotes its Dasani bottled water with the slogan ―Can‘t live without it,‖ emphasizing that it satisfies physiological needs.
Safety Needs: Second-level needs include security, protection from physical harm, and avoidance of the unexpected. To gratify these needs, consumers may buy disability insurance or security devices. State Farm Insurance appeals to these needs by saying, ―Like a good neighbor State Farm is there.‖
Social/Belongingness Needs:Satisfaction of physiological and safety needs leads a person to attend to third-level needs – the desire to be accepted by people and groups important to that individual. To satisfy this nee, people may join organizations and buy goods or services that make them feel part of a group.
Esteem Needs: People have a universal desire for a sense of accomplishment and achievement. They also wish to gain the respect of others and even to exceed others‘ performance one lower-order needs are satisfied.
Self-Actualization Needs:At the top rung of Maslow‘s ladder or human needs is people‘s desire to realize their full potential and to find fulfillment by expressing their unique talents and capabilities. Companies specializing in exotic adventure vacations aim to satisfy consumers‘ needs for self-actualization.
Perceptions
Perception is the meaning that a person attributes to incoming stimuli gathered through the five senses – sight, hearing, touch, taste and smell. Certainly, a buyer‘s behavior is influenced by his or her perceptions of a good or service.
A person‘s perception of an object or event results from the interaction of two types of factors:
1. Stimulus factors – characteristics of the physical object such as size, color, weight, and shape.
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2. Individual factors – unique characteristics of the individual, including not only sensory processes but also experiences with similar inputs and basic motivations and expectations.
Attitudes
Perception of incoming stimuli is greatly affected by attitudes. In fact, a consumer‘s decision to purchase an item is strongly based on his or her attitudes about the product, store, or salesperson.
Attitudes are the person‘s enduring favorable or unfavorable evaluations, emptions, or action tendencies toward some object or data. As they from over time through individual experiences and group contacts, attitudes become highly resistant to change.
Because favorable attitudes likely affect brand preferences, marketers are interested in determining consumer attitudes toward their offerings. Numerous attitude-scaling devices have been developed for this purpose.
Learning
Marketing is concerned as seriously with the process by which consumer decisions change over time as with the current status of those decisions. Learning, in a marketing context, refers to immediate or expected changes in consumer behavior as a result of experience. The learning process includes the component of drive, which is any strong stimulus that impels action. Fear, pride, desire for money, thirst, pain avoidance, and rivalry are examples of drives. Learning also relies on a cue – That is, any object in the environment that determines the nature of the consumer‘s response to a drive.
A response is an individual‘s reaction to a set of cues and drives. Responses might include reactions such as purchasing Frontline flea and tick prevention for pets, dining at Pizza Hut, or deciding to enroll at a particular community college or university.
Reinforcement is the reduction in drive that results from a proper response. As a response becomes more rewarding, it creates a stronger bond between the drive and the purchase of the product, likely increasing future purchases by the consumer. Reinforcement is the rationale that underlies frequent buyer programs, which reward repeat purchasers for their loyalty.
Self-Concept Theory:
The consumer‘s self-concept – a person‘s multifaceted picture of himself or herself – plays an important role in consumer behavior. Say a young woman views herself as bright, ambitious, and headed for a successful marketing career. She‘ll want to buy attractive clothes and jewelry to reflect that image of herself. Say an older man views himself as young for his age; he may purchase a sports car and stylish clothes to reflect his self-concept. A person‘s self- concept as a competitor may affect how he or she responds to winning or losing, as described in the ―Etiquette Tips‖ box.
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The concept of self emerges form an interaction of many of the influences – both personal and interpersonal – that affect buying behavior. The individual‘s needs, motives, perceptions, attitudes, and learning lie at the core of his or her conception of self. In addition family, social and cultural influences affect self-concept.
A person‘s self-concept has four components: real self, self-image, looking-glass self, and ideal self. The real self is an objective view of the total person. The self-image – the way an individual views himself or herself – may distort the objective view. The looking-glass self – the way an individual thinks others see him or her – may also differ substantially from self- image because people often choose to project different images to others that their perceptions of their real selves. The ideal self serves as a personal set of objectives, since it is the image to which the individual aspires. In purchasing goods and services, people are likely to choose products that move them closer to their ideal self-images.
References:
Boone/Kurtz, Principles of Marketing, (12th ed.)159-174pg., 258&302 pg.
Baral & Bihari, Advanced approach to marketing management; pg.88-89, pg.163
Ramaswamy & Namakumary, Marketing Management; 4th ed. Pg.296-301
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Unit-V
Information Industry
Marketing Information Products & Services:
Introduction
Librarians and information specialists have debated the idea of marketing for the information sector. Several things have compelled us to learn about marketing and begin doing it. Librarianship is experiencing rapid change. Information technology has created a new gateway for information services. Information products and services in a multiplicity of formats have made libraries and information centers more competitive and alert. Libraries are being subjected to significant pressures from the information revolution. The challenges of budget cuts, increased user base, the rapid growth of material, rising costs, networking demands, competition by database vendors, and complexity in information requirements are forcing the professionals to adopt marketing to improve the management of library and information centers.
Marketing aims to identify the client base, and to determine and fill its needs, wants, and demands by designing and delivering appropriate products and services. The main focus of the concept is the client, and the goal is client satisfaction. Rowley (2001) calls marketing, the management process which identifies, anticipates, and supplies customer requirements efficiently and profitably. Kotler (1999) says, that marketing is the process of planning and executing the conception, pricing, promotion and distribution of goods, services and ideas to create exchanges with target groups that satisfy customers and organizational objectives. Under the umbrella term marketing, we study concepts like building customer relationships, branding and corporate identity, marketing communications, price and pricing policy, collecting marketing data and marketing strategy and planning.
Libraries and other non-profit organizations have only recently become aware of the need to market their products and services. Library and information products and services are now being recognized as commodities that can be sold, exchanged, lent, and transmitted. University libraries rely on their host organizations for operational costs. To gain some self- sufficiency, university libraries think seriously about not only recovering the costs incurred but also making a profit through their services. Narayana (1991:187) points out that the, "survival of a library depends among other things on its image in the minds of the users and the fund allocators. This image should be the outcome of the quality and effectiveness of the services, the ability to anticipate the desires and requirements of actual and potential users and their fulfillment. Marketing is the instrument through which these library objectives can be fulfilled. Vishwa Mohan, Srinivas, and Shakuntala (1996:16) observe that marketing is essential, because those who lack information may not even be aware of this need. Information marketing by university libraries in India is essential in order to:
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• Promotion of the use of information resources; • Create perception of need and thereby create demand; • Ensure the optimum use of information. • Improve the image and status of the libraries and library professionals. • Tackle the problems of rising costs of reading materials, journals, and databases; • Cope with the information explosion; • Introduce cutting-edge information technology systems in library services; • Balance shrinking funds; • Save libraries from devaluation • Save libraries from declining reader-support; • Uphold the dictum that information is power.
The marketplace for document delivery is currently very complex. There are a number of suppliers all offering a slightly different range of products with differing pricing strategies to different user groups. Increasing availability of electronic documents challenges the viability of equivalent printed products, but the resolution of the competition between electronic documents and printed documents will only be achieved by a series of battles between the two formats in a number of more specific arenas such as scientific journals, professional journals, reference works and directories and encyclopedias. Since the outcome is difficult to predict there are many contenders holding stakes in both the print and electronic document marketplace. Pricing strategies in a number of areas are still at a formative stage as players seek to establish some loyalty in the market and to claim a market share.
Marketing of Library and Information Services and Products
Product:
People satisfy their needs and wants with products. A product is any offering that can satisfy a need or want, such as one of the 10 basic offerings of goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.
Or
A product can be physically seen and felt and its performance measured. The task of assessing customer requirements and the testing of product acceptability, etc., can be assigned to specialized staff like those in market research (agency). Having obtained the customer requirements, the same could be turned over to the product designers for product design. Specialized personnel in engineering and manufacturing then design the production process, and produce the required volume of the product. Marketing personnel prepare a marketing program and market the product to satisfy customers. Besides some adjustments in the aftersales service, much change in the product may not be required. Unit-II of this has the detail information.
Product Characteristics
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Important characteristics of information which have influence on pricing are: accuracy, timeliness, fittingness with easy use and reproduction ability. More accurate, timely and fitting the information, higher would it be valued by the user, and higher it would also cost to collect and provide to the buyer by the marketer. Charging a higher price may encourage reproduction of written and electronic information as these are easy and low cost operations. It introduces a significantly different feature to information, not found in any other product. This aspect is supposed to be taken care of by laws relating to intellectual property rights. Irrespective of the laws, their implementation is always a problem. Information marketer needs to take care of such practices through appropriate mechanisms like price of (additional) copy being unattractive enough to bear the hassles and cost of reproducing. Another mechanism could be written contracts with buyers for non-reproduction or per unit reproduction fee.
Type of product
Information can be classified into three broad categories: product, service and value added (product/service). Pricing a product is very different from pricing service, or value added information.
Value of a physical product, say an issue of current content may be enhanced by better packing; faster delivery (speed post, courier vis-à-vis ordinary mail) or making is user friendly. The improvement in these characteristics can lead to commanding a better price.
However, in case of a service, none of the above attributed is visible to the buyer before the service is bought. Services are primarily retailing activities, with the seller/provider dealing directly with the intended user. Unlike shopkeepers, service retailers generally cannot turn to a manufacturer to produce the product in bulk and advice on the price.
Customers of most services are unable to assess the price-quality relationship prior to purchase, and often, they cannot assess it, even after purchase and use. Thus they feel vulnerable, and seek ways to reduce the risks inherent in buying a product which has not yet been produced. Customers may use price as an indicator of service quality, specifically, for first time buying. They frequently return to a supplier whose service has been satisfactory in the past: perceived quality and reliability are more important than price. Also, they expect savings from a supplier who ‗knows us, knows our situation and our objectives.‘ These may not be price savings, but the customers save on the time invested in explaining their needs and circumstances to a consultant or information broker. Costly errors result if the briefing is incomplete or unfocussed, or if the consultant does not recognize or comprehend some vital element.
Most information products and services lie somewhere between pure private goods and pure public goods, and the same information may alternate as a public and private good at different stages of information processing and distribution.
Services:
In case of services, the benefits accruing to the customer cannot be realized till it is experienced by the customer. Further different customers may have specific requirements which need modifications in the basic service. These specific requirements may be gauged only through close interaction between the supplier and the customer. Many times, the
79 | P a g e customer participates in designing and producing a service like generating a specialized reference list. The delivery of appropriate customized service requires that the person, who senses the customer requirements, also uses the resources of the service organization to product and deliver the service. In other words, the consumer contact person has to be customer, as well as with the production system to put together the required service. For the customer contact person to perform well, it may be necessary that the internal staff and systems are geared to meet the requirements of the ultimate customers by fulfilling the needs of the customer contact personnel.
Attributes that the product or service contains:
These are basic characteristics of a product/service which included features, styling, quality levels, brand names, packaging, size variants, etc.
Value Added Products/Services
New information products and services will be developed through adding value to what is currently available. Increasingly, the scarce resource of customers is time; they will buy products/services which allow them to maximize the return on their most scarce resource. Researchers who want raw data, or want to browse through databases, increasingly have the capability to do so for themselves. On-line access to virtual libraries enables huge quantities of information, but it allows a school-child with a modem or a CD-ROM drive to do the same. Huge quantities of undigested information have no value; indeed, they are a liability. They take up space on hard drives or shelves, and they irritate and threaten those who know they will never have time to look through them, and fear that some vital fact may be hidden therein. The need is for screening, customization and personalization of information. This ‗value-added‘ process includes assistance with management of information overload. The new information technology supports the creating and use of new, more dynamic integrated formats for presenting data, information and knowledge.
If the centers are to market such value-added products/services, they will also have to accept higher responsibility for quality offered and benefits promised to the customers. It is to be expected that customers who purchase value-added information and act upon it, will take legal action against the provider, to recoup any losses resulting from a faulty product, in appropriate mechanisms, involving higher costs leading to higher prices. It may also be necessary, to devise creative pricing structures to assure promised value to the customers, and compensate them in case of any deficiencies/service failure.
Planners, policy makers and managers do not want bibliographies or thick texts. Increasingly, they want policy options neatly set out with pros and cons. They want data, of course, but they want processed data for analyzing, planning and implementing solutions, set out in easy- to-understand tables, or better yet, graphs. They want management tips and strategies that will allow them to solve problems, control costs, and get the job done with the least possible delay, confusion or ill-feeling. They want short, cogently reasoned briefing papers and reports to put before their bosses. They want public information materials to orchestrate public approval for themselves and their projects. This kind of brief and high-quality document have been produced by staff in some agencies. In most agencies it has hardly been available at all, because manual methods do not suffice to product it in cycles, short enough to meet the demand, before another crisis shifts attention elsewhere.
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Pricing of each type of product/service, therefore, has to be undertaken differently. The nature of product/service along with the type of customer probably would help in understanding how to price the offer.
Information can be a capital resource, especially for companies that produce information products and services.
Benefits that the product or services offers
These are what consumers derive from the product. Each of the elements mentioned as a product attribute, by itself, does not have a meaning as a product attribute, by itself, does not have a meaning unless it either individually or collectively, offers some benefits to the customers.
Marketing support Services
These include delivery, guarantees, after sales service, etc. In fact, no product is complete without support series, although its level may vary depending on the nature of the product/service. For example, a product like an automobile or a consumer durable will require a strong after sales service, whereas, products like detergents perfumes etc., does not require any after sales service.
In summary, product is an object of exchange for delivering value satisfaction to a customer by providing a bundle of benefits through physical and non-physical attributes and other marketing support elements.
The task of marketing, therefore, includes marketing to external customers, called external marketing, in case of both products and services. However, in case of services, the marketing task also includes marketing to customer contact personnel, called interactive marketing, and other personal called internal marketing, so as to prepare the organization for delivering the promised benefits to external customers.
Marketing management to external customers, as would be discussed in this section, has three broad concepts: Selection of market opportunity, design of marketing plan for tapping the opportunity, and implementation and control. Selecting Opportunities:
Organizations need to first identify alternative opportunities in terms of alternate markets, and within markets alternate segments whose requirements it wishes to satisfy. Next, on the basis of viability of each opportunity to satisfy organizational goals, target market and segment need to be selected. The organization might like to occupy a unique position, called positioning, in the selected segments. Thus, the three key decisions are selection of target market, target segment, and position to be occupied in the minds of target segments.
Product Market
The product market is a set of customers with similar needs which are satisfied through similar products/services.
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Target Segment:
Any product market may be composed of one of more groups of customers, wherein each group has customers, who are similar to each other, or customers in any two different groups, who are different, with respect to some key aspect of behavior towards the product offering. Segmentation is the process of dividing the market into major parts called market segments, which are mutually exclusive and collectively exhaustive. The objective of segmentation may be to evaluate and then select those market segments that the organization can best serve.
Selective Dissemination Information (SDI) Grouped- Faculty, Students, Staff etc.,
Positioning:
Positioning a product or an organization is to create a specific image in the minds of the selected segment of customers. The image selected by the organization should be such that it is distinct from that of competitors, that it can be created by the organization (given its resources), and it provides the expected satisfaction to customers.
Indexing and classifying of the current management literature which is highly valuable to the faculty.
For selecting appropriate opportunities, the organization might like to analyze the environmental trends, so as to assess the current, and predict the future nature and size of each opportunity. Also, the analysis of competitors would help in assessing whether specific opportunities can be tapped by the organization, better than the competitors.
Developing Marketing programmed/Marketing Mix
Libraries and information centers have to choose appropriate programs relating to product, price, promotion and distribution to tap the selected opportunity. Unit-III of this publication has the detailed information.
Beyond the costs of the producer and distributor, there will be costs incurred by users or by information intermediaries — reference librarians, brokers or information entrepreneurs.
Organization, Implementation, and Control
In addition to selecting good market opportunities and devising appropriate marketing programs, an organization needs to have an appropriate structure, systems, style, staff, skills and shared values. The marketing programmed must be coordinated by integrated effort from the marketing department, rest of the internal organization, and wherever necessary, collaborating organizations. The concept of coordinated marketing has already been
82 | P a g e explained earlier. Here, we will deal with the concepts of internal and interactive marketing, the processes of delivering customer satisfaction, and monitoring and control of programs.
Today, three forms of distribution need to be recognized: o Printed and film, o Magnetic tapes (VHS-VCR) and optical disks (CD-ROM and DVD) o Electronic. For the first two, distribution is by a combination of wholesale distributors, retail outlets, and libraries. For electronic, by television (broadcast, cable, and satellite) and the Internet. Databases and digital libraries include digitized text, numerical data files, images, reference databases, and bibliographic catalogs. They have become, through the Internet, a widespread means of electronic publication. There are no data on which to estimate the distribution of costs between capital and delivery functions.
Implementation
For achieving coordinated marketing effort, it is necessary to devise effective internal marketing and interactive marketing programs and systems for delivering customer value.
Internal Marketing is the task of preparing an organization to undertake a product/service marketing activity to satisfy the customers. Thus, internal marketing is a task of successfully hiring, training and motivating able employees who want to serve the customers well. Certain organizational and technological changes may be necessary, to enable the employees to contribute fully to the activity.
Interactive Marketing reflects the effort put in by the employees of the company while interacting with the customers for either assessing their requirements and/or providing the service to satisfy them. This involves interaction of employees with customers.
Value Delivery Process Value to the customers arises from a variety of processes used by the organization. These in case of service marketing are: New product Introduction process, order-remittance process, and customer service process.
An organization needs to devise appropriate systems to effectively and efficiently manage the process for delivering customer value.
Control:
All the activities associated with the business will have to be properly monitored to ensure timely corrections and optimal use of resources. Systems have to be evolved to collect such information that ensures control of the business activities. Examples of such system are production control, supply control, payables control, receivables control, client servicing systems, etc. Two major tools of monitoring and control are marketing research and feedback system.
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Marketing Research may be used not only for identifying and selecting opportunities and devising marketing programs, but also for monitoring the achievement of program objectives in the marketplace. Unit-IV of this publication has the detailed information.
Feedback Systems is necessary to set up an internal system for providing a feedback on critical parameters of customer satisfaction.
Value of information to individuals . The value of cultural enrichment, entertainment and amusement as uses of information is demonstrated by the willingness of people to pay for them. Motion pictures, television, theatre and the arts, sports— these are all major, multi-billion-dollar industries, supported both by consumers of them and by advertisers.
Value of information services to professionals . The other major individual use of information is for education and personal development. Statistical Abstracts of the United States reported in 2000 that the total expenditure in 1998 for formal education, both public and private at all levels, was $601 billion. Thus, expenditures for formal education represent about 7 per cent of the gross national product (GNP).
Value of information in commerce and industry Beyond that are those for industrial training. Research Institute of America reported that more than $30 billion was spent in 1986 (about 0.7% of the GNP) for formal employee training but that an additional $180 billion was spent for on-the-job training. Fortune (1993: 62-64) uses the figure of $30 billion as the magnitude of formal industrial training programs in 1993.
Social Media:
DEFINITIONS OE SOCIAL MEDIA (SM) AND SOCIAL NETWORKING SITES (SNS)
Ryan and Jones (2009, p. 152) defined social media as:
The umbrella term for web-based software and services that allow users to come together online and exchange, discuss, communicate and participate in any form of social interaction. That interaction can encompass text, audio, video and other media, individually or in any combination. It can involve the generation of new content; the recommendation of and sharing of existing content; reviewing and rating products, services and brands; discussing the hot topics of the day; pursuing hobbies, interests and passions; sharing experience and expertise—in fact, almost anything that can be distributed and shared through digital channels is fair game.
It seems appropriate to also look to a digital social media site for a definition and description of the term. According to Wikipedia :
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Social media refers to the means of interactions among people in which they create, share, exchange and comment contents among themselves in virtual communities and networks. Andreas Kaplan and Michael Haenlein define social media as "a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content. Furthermore, social media employ mobile and web-based technologies to create highly interactive platforms via which individuals and communities share, co-create, discuss, and modify user-generated content. It introduces substantial and pervasive changes to communication between organizations, communities and individuals.
Different types of social media include collaborative projects such as Wikipedia, blogs such as Blogger, social networking sites like Facebook, content communities like YouTube, and virtual worlds like Second Life.http://en.wikipedia.org/wiki/Social_media - cite_note-4 As of 2012, social media has become one of the most powerful sources for news updates through platform such as Facebook, blogger, Twitter, WordPress, LinkedIn etc. In addition, there has been an increase in mobile social media which has created new opportunities, in particulate for business, which are able to utilize social media for marketing research, sales promotions, and customer relationship development among others.
Social media technologies take on many different forms including magazines, Internet forums, weblogs, social blogs, micro blogging, wikis, social networks, podcasts, photographs or pictures, video, rating and social bookmarking. By applying a set of theories in the field of media research (social presence, media richness) and social processes (self-presentation, self- disclosure) Kaplan and Haenlein created a classification scheme in their Business Horizons (2010) article, with six different types of social media: collaborative projects (for example, Wikipedia), blogs and micro blogs (for example, Twitter), content communities (for example, YouTube), social networking sites (for example, Facebook), virtual game worlds (e.g., World of War craft), and virtual social worlds (e.g. Second Life). Technologies include: blogs, picture-sharing, vlogs,wall-postings, email, instant messaging, music- sharing, crowdsourcing and voice over IP, to name a few. Many of these services can be integrated via social network aggregation platforms. Social media network websites include sites like Facebook, Twitter, Bebo and MySpace.
Mobile social media When social media is used in combination with mobile devices it is called mobile social media. Social media is a group of mobile marketing applications that allow the creation and exchange of user-generated content. Due to the fact that mobile social media runs on mobile devices, it differentiates from traditional social media as it incorporates new factors such as the current location of the user (location-sensitivity) or the time delay between sending and receiving messages(time-sensitivity). According to Andreas M. Kaplan, mobile social media applications can be differentiated among four typeshttp://en.wikipedia.org/wiki/Social_media - cite_note-mobileKaplan-6:
1. Space-timers (location and time sensitive): Exchange of messages with relevance for one specific location at one specific point-in time (e.g., Facebook Places; Foursquare) 2. Space-locators (only location sensitive): Exchange of messages, with relevance for one specific location, which are tagged to a certain place and read later by others (e.g., Yelp; Qype)
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3. Quick-timers (only time sensitive): Transfer of traditional social media applications to mobile devices to increase immediacy (e.g., posting Twitter messages or Facebook status updates) 4. Slow-timers (neither location, nor time sensitive): Transfer of traditional social media applications to mobile devices (for example, watching a YouTube video or reading a Wikipedia entry)
Social media marketing is a recent addition to organizations‘ integrated marketing communications plans. Integrated marketing communications is a principle organizations follow to connect with their targeted markets. Integrated marketing communications coordinates the elements of the promotional mix; advertising, personal selling, public relations, publicity, direct marketing, and sales promotion. In the traditional marketing communications model, the content, frequency, timing, and medium of communications by the organization is in collaboration with an external agent, i.e. advertising agencies, marketing research firms, and public relations firms. However, the growth of social media has impacted the way organizations communicate. With the emergence of Web 2.0, the internet provides a set of tools that allow people to build social and business connections, share information and collaborate on projects online.
Social media marketing programs usually center on efforts to create content that attracts attention and encourages readers to share it with their social networks. A corporate message spreads from user to user and presumably resonates because it is coming from a trusted source, as opposed to the brand or company itself.
Social media has become a platform that is easily accessible to anyone with internet access, opening doors for organizations to increase their brand awareness and facilitate conversations with the customer. Additionally, social media serves as a relatively inexpensive platform for organizations to implement marketing campaigns. Organizations can receive direct feedback from their customers and targeted markets
Mobile social media and business potential While traditional social media offer a variety of opportunities for companies in a wide range of business sectors, mobile social media makes use of the location- and time-sensitivity aspects of it in order to engage into marketing research, communication, sales promotions/discounts, and relationship development/loyalty programs.
Marketing research: Mobile social media applications offer data about offline consumer movements at a level of detail heretofore limited to online companies. Any firm can now know the exact time at which a customer entered one of its outlets, as well as comments made during the visit. Communication: Mobile social media communication takes two forms, the first of which is company-to-consumer in which a company may establish a connection to a costumer based on its location and provide reviews about locations nearby. The second type of communication is user-generated content. For example, McDonald's offered $5
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and $10 gift cards to 100 users randomly selected among those checking in at one of the restaurants. This promotion increased check-ins by 33% (from 2,146 to 2,865), resulted in over 50 articles and blog posts, and prompted several hundred thousand news feeds and Twitter messages. Sales promotions and discounts: While in the past customers had to use printed coupons, mobile social media allows companies to tailor promotions to specific users at specific times. For example, when launching its California-Cancun service, Virgin America offered users who checked in through Loopt at one of three designated Border Grill taco trucks in San Francisco and Los Angeles between 11 am and 3 pm on August 31, 2010, two tacos for $1 and two flights to Mexico for the price of one. Relationship development and loyalty programs: In order to increase long term relationships with customers, companies are able to create loyalty programs that allow customers who check-in regularly at a location to earn discounts or perks such as American Eagle Outfitters that remunerates such customers with a tiered 10%, 15%, or 20% discount on their total purchase. Business Marketing Analysts have stated that one of the key take always of the Nielsen Company's "State of the media: The social media report 2012"[5] is that more consumers are accessing social media content today via mobile platforms, especially apps.[11]
Q & A:
1. Why do you need to market the information products and services? 2. Differentiate between promoting and market the information services? 3. How the social media helps the Library and Information centers to promote its products and services? 4. The impact of Google in the Library and Information services?
References:
Dr. M. Madhusudhan (2008),Marketing of Library and Information Services and Products in University Libraries: A Case Study of Goa University Library; Library Philosophy and Practice. ISSN 1522-0222;
Jain, Abhinandan K and others.Marketing Information Products and Services: A primer for Librarians and Information Professionals
Robert M. Hayes (2005) The Economic of Information
Abhinandan K Jain,Marketing information products and services
The Complete Guide to Social Media from The Social Media Guys-Wikipedia
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