Marketing management rajan saxen

Value Maximisation in Organisational PurchaseHierarchy of Customer Values Organisational Buyer Versus ConsumerFactors Differentiating Organisational Buyer from a Household BuyerOrganisat

Fifth Edition

Rajan Saxena is Vice Chancellor NMIMS (Deemed-to-be-University u/s 3 of UGC Act)since 2009 and former Director of IIM, Indore; S.P Jain Institute of Management andResearch, Mumbai; ICFAI Business School, Gurgaon; and Dean of Narsee MonjeeInstitute of Management Studies, Mumbai He has over 40 years of professionalexperience in management education, research, consulting and institution building He is

an alumnus of Shri Ram College of Commerce, Delhi He did his PhD work at DelhiSchool of Economics in Marketing and was awarded the degree by Delhi University Hehas taught at XLRI, Jamshedpur; S.P Jain Institute of Management and Research,Mumbai; IIM, Calcutta; IIM, Indore; and NMIMS, Mumbai He has also taught inUniversity of Calgary, Canada and has been a British Council visitor at the University ofSterling, U.K where he was involved in the entrepreneurship program He is a VisitingProfessor at Pace University, New York, USA

Dr Saxena’s teaching and research interests include Marketing Strategy, ServicesMarketing and Customer Relationship Management He is also a Fellow of the IndianSociety for Training and Development and Institute of Management Consultants of India

He is a life member of ISTD

Dr Saxena is widely respected in the country as an institution builder, marketingeducator, strategist and consultant He has consulted over 50 Indian and multinationalcompanies Some of his well-known clients are BSES (Now Reliance Energy), HDFC,MTNL Mumbai, Agrevo (formerly the agro chemical division of Hoechst and now takenover by Bayer), L&T, Parle Exports, Jindal Steel, Ispat, etc He has published over 60articles in Indian and Foreign journals

Dr Saxena has been conferred several awards by different organisations and media

Some of these are Best Teacher of Management by Bombay Management Association in 1990; Best Marketing Teacher in 1998; Distinguish Alumnus by Shri Ram College of Commerce in 2002; Higher Education Forum, Dr Suresh Ghai Memorial Award for the Outstanding Contribution to Management Leadership in 2013; Hall of Fame Award by DNA; Star Group of Industry’s Inspirational Leadership Award by Dainik Baskar in 2010;

ET NOW ‘Visionary Leadership’ Award in Education in 2013 and Leadership Award by Forum for Emotional Intelligence Learning (FEIL).

Dr Saxena is a member of the advisory and corporate board of several institutions and

of Information Technology and Management (ABV—IIITM), Gwalior (Ministry of HRD,Government of India Institution) He was the member of All India Board of ManagementStudies of AICTE (2000–2003) and was on the Executive Board of Association of IndianManagement Schools and Association of Management Development Institutions in SouthAsia He was also an Independent Director on the Board of Lodha Developers Ltd.,MTNL, Future Generali India Insurance Company Ltd and Future Generali LifeInsurance Company Ltd He continues to serve Anuvi Chemicals as an IndependentDirector He has been the Co-Chair of FICCI Higher Education Committee since 2011

Cover Printer:

Visit us at: www.mheducation.co.in

Dedicated to my Mother Mrs Bimla Devi Saxena Who was also my mentor and from whom I learnt the values of hard work , dedication and commitment

Marketing Orientation vis-a-vis Selling OrientationRelationship Marketing

Focus on Internal CustomerMarket Driven OrganisationsMarketing as a ‘Process’

The Needs, Wants and Demands of a CustomerMarkets, Marketplace, Virtual and MetamarketsMetamarkets

Interactive Technology and Marketing MixMarketing as a Managerial Function

McDonald’s in India

Role of Marketing in Modern OrganisationsIntegrative Function of Marketing

Purpose of MarketingMarket DevelopmentCustomer AcquisitionCustomer RetentionCustomer Loyalty

The Marketing MixMarketing TasksThree Stages of Marketing PracticeEntrepreneurial Marketing

Formulated MarketingIntrapreneurial MarketingCustomer Equity

New Marketing HorizonsCause Marketing

Summary Power Points Questions For Discussion Annexure: Green Marketing

First Time BuyersRepeat BuyersCore CustomersDefectors

Customer Acquisition and Customer RetentionFactors that Drive Customer AcquisitionAltering Acquisition Rates

Improving Retention RatesCustomer Value and Value Maximisation StrategiesCustomer Value from Customer’s Perspectives

Customer Value and Relationship MarketingCustomer Value and Loyalty

Strategy for Customer EngagementFinancial Dimensions of Customer Acquisition and RetentionCosts and Profits in Customer Acquisition and Retention

Summary Power Points Questions for Discussion

Chapter 3 The Competition

Nokia Loses to Samsung

Significance of CompetitionFactors Contributing to Enhanced Inter-Firm RivalryLow Barriers

Barriers to Entry and Exit in any MarketStages and Forms of Competition

Stages of CompetitionForces Driving/Shaping CompetitionForms of Competition

Framework for Competitive AnalysisAnalysing the Competitor Strengths and WeaknessesCustomer’s Perception of Competitors

How Well Entrenched in a SegmentGaps Left by Competitors

Competitor Profile AnalysisPreparing a War Map

Competitive Arena MappingSegmentation Matrix

Summary Power Points Questions For Discussion

Product-Market SelectionMaking Product-Market ChoicesApproaches to Marketing PlanningProfit Impact of Marketing Strategies (PIMS)Portfolio Methods

Structure of Marketing PlanObjectives

Marketing StrategyImplementation ProgrammeProjected Profit and Loss StatementControl Systems

Process of Marketing PlanningParticipation

SchedulingReviewMonitoring

Summary

Power Points Questions for Discussion

Chapter 5 Marketing Research and Information Systems

Data and Information Key to Marketing Decisions

Marketing Research in Taking Marketing DecisionMarketing Research Process

Problem DefinitionStatement of Research ObjectivesResearch Design

Sources of DataSampling ProcedureData CollectionData AnalysisReport and PresentationApplications of Marketing Research—Some ExamplesRetail Store Audit

Product TestingCorporate Image StudyMarketing Intelligence SystemMarketing Information SystemsDecision Making

Data Mining and WarehousingData Warehousing

Data MiningData Mining and CRMCustomer Relationship ManagementStandard Life

Future Trends: Online Mining (OLM) and Web Mining (WM)Big Data

Summary Power Points

Chapter 6 Consumer Behaviour

Indian Consumer Market Likely to be World’s Largest Consumer Market by

Indian Consumer Shaping the Market OpportunityMyths About the Consumer

Buyer—An EnigmaOnline Buyer BehaviourWhat Does the Customer Buy?

High Involvement ProductsLow Involvement ProductsBuying Situations

Buyer MotivationsConsumer Decision MakingMarket Values Sought by UsersMarket Values Sought by Decision MakerMarket Values Sought by Buyers

The Consumer Decision-making ProcessInfluences on Buyer Behaviour

Cultural InfluencesSocial InfluenceDemographic InfluencesGrowth of Urbanisation in IndiaSelf Concept

Psychographic VariablesLifestyle

PersonalityTools to Study Buyer BehaviourSurveys

Projective TechniquesFocus Group Discussions

Summary

Power Points Questions for Discussion

Chapter 7 Organisational Buying Behaviour

Vendor Development—The Case of Tata Motors

IntroductionHow Does the Indian Industry Buy?

Value Maximisation in Organisational PurchaseHierarchy of Customer Values

Organisational Buyer Versus ConsumerFactors Differentiating Organisational Buyer from a Household BuyerOrganisational Customer

Buying CentreBuying CriterionDecision Making ProcessBuying Situations

Straight RebuyModified RebuyNew Task

Influences on Buying DecisionsImpact of Technology on Organisational PurchaseImpact of ICT on Organisational Purchase Decisions

Summary Power Points Questions for Discussion

Chapter 8 Segmenting and Targeting

Fastrack Creates a New Paradigm in Youth Fashions

Segmentation and its NeedDefinition

Need for SegmentationBasis for SegmentationBases for Segmenting the Market

Targeting and Positioning

Summary Power Points Questions For Discussion

Chapter 9 Market Measurement and Demand Forecasting

Titan Uses Advance Planning System For Forecasting The Market Demand

IntroductionKey Terms in ForecastingMarkets to Study

Tools for Estimating Future Market DemandQualitative Tools

Quantitative TechniquesTools for Estimating Current DemandMarket Potential Estimation

Territory Market Potential EstimationEstimating Existing and Potential CustomersIndustry Sales and Market Shares

Summary Power Points Questions For Discussion

Why Profits Peak Before Sales DoPLC: Conditions and Strategies in Different PhasesWhy Changes Occur in the Product Life CycleLocating Products or Brands in their Life CyclesEmerging Issues in Product Policy

Adapting Products to Local ConditionsThreats from Duplication

Quality ImprovementTotal Quality ManagementProduct PerformanceEthics in Product MarketingUnethical Behaviour Towards CustomersProduct Liability

Product Compatibility with the Environment

Summary Power Points Questions For Discussion

Chapter 11 New Product Decisions

Tata’s Nano Car—A New Approach to Product Development

Indian Market and New Product DevelopmentLessons from New Product Introductions Post 2000New Product

Factors Contributing to New Product DevelopmentNew Product Development Process

Stage I: Idea GenerationStage II: Identifying Prospects and Defining Target MarketsStage III: Concept Development and Testing

Stage IV: Feasibility AnalysisStage V: Product Development

Manufacturer’s Brand Policy or National Brand PolicyDistributor’s or Store Brand Policy

Mixed Brand PolicyPositioning

Innovations and New Product DevelopmentSources of Innovation

Theory of Diffusion of an Innovation/New Product IdeaInnovators

Early AdoptersEarly Majority and Late MajorityLaggards

Role of Opinion Leadership and Social Networks in New ProductDiffusion

Organisation of New ProductsFormation of Venture GroupsMarketing Department

R&D DepartmentPlanning DepartmentInternet and New Product Development

Summary Power Points Questions For Discussion

Chapter 12 Brand Management and Decisions

Managing Brands as Value Brand Assets

Brands Connection with the CustomersFactors in Brand Power

Brand EquityBrand ValuationBrand Loyalty

Brand ValuesBrand ObjectivesBrand StrategyImplementation PlanPower of Internet and Brand ManagementWord-of-Mouth Publicity

Brand Archetypes

Summary Power Points Questions For Discussion

Chapter 13 Customer Service

Creating Sustainable Value through Customer Service

Role and Significance of Customer Service in Corporate StrategyLessons from Service Leaders

Service QualityService Quality ParametersMeasurement of Service QualityOrganisational Issues in Delivering Service QualityDeveloping a Shared Service Vision

Planning for ServiceRole Clarity and Empowering PeopleCustomer Service and Satisfaction is a Result of Team WorkPerformance Measurement and Reward Systems

Research

Summary Power Points Questions For Discussion

Chapter 14 Pricing Decisions

Strategies to Attract and Retain Price Sensitive Customer

Significance of Price in Marketing DecisionsPricing Objectives of Different Firms

Maximise Current Profits and Return on InvestmentExploit Competitive Position

Survival in a Competitive MarketBalancing Price Over Product LineDemand Estimation

Price SensitivityPricing Decision FrameworkCustomer Demand

CostsCorporate ObjectivesCompetitor ReactionsGovernment PolicyBarriers in the IndustryPricing Methods and Procedures Used by FirmsCost Oriented Method

Going Rate or ‘Follow the Crowd’

Sealed Bid PricingCustomer Oriented or Perceived Value PricingPricing Strategies, Tactics, and Policies

Types of Pricing StrategiesPricing Tactics

Ethics in Pricing DecisionsConsortium Pricing

Summary Power Points Questions For Discussion

Integrated Marketing Communication ProcessTarget Audience

Integrated Marketing Communication ModelsConsumer Response and Integrated Communication ModelsCommunication/Presentation

Consumers Buy ImagesMessage StructureMessage FormatSource of the MessageMedia DecisionsMeasuring the Effectiveness of Marketing CommunicationElements of Marketing Communication

Elements of Marketing Communication MixFactors Guiding the Selection of a Promotion MixIntegrated Marketing Planning Communication Process

Summary Power Points Questions For Discussion

Advertising that Works

Advertising In Brand BuildingInstitutional Framework In AdvertisingAdvertising Agencies

The MediaAdvertising DecisionsAdvertising ObjectivesBudget

Copy DecisionsCopy TestingPurchase BehaviourMedia SelectionTotal Number of Exposures (E)Weighted Number of ExposuresTools for Measuring Advertising EffectivenessNew Media of Advertising

Online AdvertisingMobile AdvertisingEthics in AdvertisingEthical Standards in Advertising

Summary Power Points Questions For Discussion

Chapter 17 Sales Promotion and Public Relations

Push the Brand

Importance of Sales PromotionSignificance of Sales PromotionObjectives of Sales PromotionsTrade Promotion

Sales Promotion and the Brand Life Cycle

Coordination Between Sales Promotion and Advertising and all OtherElements of the Promotion Mix

Sales Promotion and Brand ImageSignificance of Public Relations in Image BuildingPublic Relations

Tools of Public RelationPublicity

Issues ManagementLobbying

Investor RelationsPublic Relations Management ProcessStage 1: Define the PR ProblemStage 2: Plan the Public Relations ProblemStage 3: Execution

Stage 4: EvaluationConclusion

Summary Power Points Questions For Discussion

Chapter 18 Managing the Sales Function

Selling Future Benefits

Challenges of Managing Sales ForceRole of a Sales Manager

FuturistStrategistManager of InformationLeader of People

Sales Management PlanningSales Budgets and QuotasManpower PlanningOrganising the Sales EffortProduct Based

Role of the Sales PersonDiagnostic

AnalystInformation ProviderStrategist

TacticianChange AgentSelling TheoriesStimulus Response TheoryProduct Oriented SellingNeed Satisfaction Theory

Summary Power Points Questions For Discussion

Chapter 19 Managing the Distribution Function

Pushing the Brand Across Geographies and Segments

IntroductionRole of the IntermediariesThe New Role of IntermediariesFactors Influencing Distribution DecisionsDetermining Length of Distribution ChannelFactors Influencing Distribution DecisionsEvaluation of Channel Alternatives

Evolution of ChannelsChannel ManagementChannel ConflictMotivating Channel Members

Traditional Logistics Management Approach versus Supply ChainManagement

Logistics DecisionsThird Party Logistics—An Emerging Alternative

Summary Power Points Questions For Discussion

Chapter 20 Retail Management

Indian Farmers’ Mall

IntroductionDrivers of Growth in Retailing IndustryStrategic Decision in Retail

Location DecisionTarget Market SelectionBusiness Model

Merchandise MixPositioning the Retail StoreWheel of Retailing

Why Wheel of Retailing?

Contemporary Challenges in Retail IndustryNon-store Retailers

Customer ServicePromotion DecisionGlobal Retailing

Information Technology and RetailingEmergence of Global Retailing

Summary Power Points Questions For Discussion

Amway Alters Customer Experience

Direct MarketingWhat is Direct MarketingDatabase DevelopmentDirect Marketing MixCommunication ProgrammeCustomer Service

Timing and SequencingDirect Marketing ModelHow Does Direct Marketing Work?

Future of Direct Marketing In IndiaReaching Out to Non-metro/Non-urban MarketsEnhancing Credibility of the Offer

Wider use of Debit and Credit CardEmergence of Specialised Database Firms

Summary Power Points Questions For Discussion

Finding Market NichesProduct and Service PlanningDistribution

Mass CustomisationValue AdditionMarketing Strategy ModelProduct Market FitExperience MarketingHow can a Firm Create this Experience?

Competition Oriented Marketing StrategiesValue Chain Analysis

Cost LeadershipDifferentiationFocus

Innovation StrategiesHow Can a Firm Create Value Innovation?

Principles of Marketing WarfareDefensive Warfare

Offensive WarfareFlanking WarfareGuerilla Warfare

Summary Power Points Questions For Discussion

Chapter 23 Customer Relationship Management

Complaint Management—A Tool to Customer Loyalty

IntroductionCustomer Relationship ManagementCustomer Loyalty as a Goal

Return on Customer Segment/Account as a Goal

Organisational StructureTechnology

PeopleMeasuring Customer Relationship ManagementBalanced Score Card

Catalytic Measure

Summary Power Points Questions For Discussion

Chapter 24 Marketing Organisation

L’Oréal Stays Ahead of Competition Through Innovation

Contemporary Economic Developments Impacting Marketing OrganisationOutsourcing of Marketing Operations

Franchising BrandsNetworked OrganisationRelationship ManagementInternal Marketing

Global MarketingIssues in Marketing Organisation StructureGoals and Focus of the Strategy

Key CompetenciesControls

Integrating CustomersCharacteristics of Innovative OrganisationApproaches to Organisational StructuringFunctional Organisation

TerritorialisationMatrix Form

Summary Power Points Questions For Discussion

Chapter 25 Marketing Performance and Control

The Right Ingredients of Performance—For the Great Taste of Success

IntroductionMarketing Strategy And ImplementationLeadership

Framework for Cultural ChangeOvercoming Implementation ProblemsWhat to Measure in Marketing?

Tools of Measuring Marketing PerformanceAnnual Plan Control

Profitability ControlEfficiency ControlStrategic Control

Summary Power Points Questions For Discussion

Implications of GlobalisationFirm Orientation

Ethnocentric Orientation (E)Polycentric Orientation (P)

ParametersDecision Making for Global MarketingProduct Strategy for Global MarketsRise of Global Giants from Emerging EconomiesUnderstanding the Growth of Emerging Markets’ Global FirmsOrganising for Global Marketing

The Role and Impact of ICT on Global Marketing

Summary Power Points Questions For Discussion

Chapter 27 Service Marketing

Flying People … so the Sky’s the Limit

Scope and Paradigms in Services MarketingWhat is Included in Services Marketing?

Paradigms in Services MarketingCharacteristics of Service MarketingIntangibility

Low Price Sensitivity

No InventoryValue Creation ProcessTangibility

Customer Expectations and Zone of ToleranceUnderstanding Customer Expectations and Zone of ToleranceRole of Service Employees

Role of the CustomerSegmentation and Zone of ToleranceServices Marketing Mix

Pricing StrategiesDistributionRole of Communication

Summary Power Points Questions For Discussion

Chapter 28 Rural Marketing

Technology in Rural Markets

IntroductionImportance of Rural MarketsIncreasing Competition in Urban MarketsSocioeconomic Changes in Rural IndiaInformation Technology Reaches Rural IndiaIncome Generation through Self-Help GroupsAccess More Important Than OwnershipFacts About Rural Markets

Size of the Rural MarketRural Consumer

Myths about Rural MarketEducation Profile

Low Income LevelsOccupations

Reference GroupsMedia HabitsBrand Conscious CustomerValue for Money

Understanding the Rural ConsumersMarketing Mix for the Rural MarketsProduct Decisions

Relationship Management

Summary Power Points Questions For Discussion

The Indian market is a market of aspirations and expectations It is a market which is adream for any marketer, for it provides an opportunity to develop products and servicesfor different market segments In fact, the marketer can choose to remain in one segmentand still grow big Be it the child, teenager, young adult, adult, or even the elders segment,each of these segments is a huge wanting to be served The Indian market is today driven

by these demographic characteristics and technology which has made value creation anddelivery far more exciting and challenging New products and business models havereplaced the old ones Innovations are today imperative for an emerging market like India

It is in this context that this edition of Marketing Management has been prepared Thefocus of this edition is therefore on:

While some of the relevant chapters have been retained, significant changes have beenmade in many others to make them contemporary with new data, research inputs andconcepts For example, a new section on Virtual Focus Groups, Customer Engagement,

Affordable Innovations also termed as ‘Jugaad’ and Social Networks, and Consumer

Behaviour have been added Most of the opening vignettes termed as ‘In Practice’ are new.All the data in the book is reviewed and made up-to-date, i.e of 2014 and 2015 The bookhas been structured into the following six sections:

Chapters in this edition have been realigned within each section accordingly In thisedition, a new case study on Saffola Oats has been included in addition to the earlier casestudies on Tata Nano, Fabindia and Jaago Re This book is also supported by onlinelearning material which will have among many other features, a quiz on each chapter andadditional exercises These can be accessed from www.mhhe.com/saxena5e

I am confident that this edition will once again help all the students and facultyinterested in studying marketing and about markets in India

The Indian economy has finally been unchained Archaic policies and institutions havebeen done away with in order to link the economy to the world economy India has alreadylost the decade of the 80s to her South East Asian neighbours and had the planners notwoken up to the realities of the post cold war era, there was every likelihood that thecountry would have got marginalised The opening up of the economy means newcompetition in almost all sectors This competition is posed by foreign companies andbrands, large Indian firms and industrial houses diversifying into different sectors, andfrom other small and medium sized companies The impact of increased competition hasbeen felt by several companies who have lost their market leadership to newer and moreeffecient entrants The distribution channels are choked up with multiple brands indifferent product categories Today there is hardly any product, except core sectorproducts like power, gas and petroleum, where the supplies do not exceed market demand

In such a situation its only a marketing oriented firm that can succeed Customer focus isthe key and Indian firms are realising that aggressive advertising and selling will no longerhelp if they are not customer focussed

This is a book on marketing in the contemporary and future India To many it mayappear just another book and perhaps may even wonder at the need for yet another text.During my several years of teaching marketing at the MBA and doctoral level and alsotraining corporate executives in the field of marketing, I always felt the need for a goodtext which will deal with contemporary marketing decisions in Indian firms My studentsand executives participating in my programmes shared with me their similar concerns.Further, as I continue to delve in marketing problems of several of my client organizationsand as I looked for solutions in the books originating in North America, I realised thatmost of them just would not help solve the problems of Indian companies The reason notbeing that the concepts are inapplicable or inadequate, but because the organisationalculture, environment and the Indian buyer’s behaviour and market structures differsignificantly from North American firms and markets Hence, we need indigenisation orlocalisation of marketing management This book does this and is based extensively on

my research and consultancy experiences as also on published data and cases from Indianindustry

Chapter 3 is on marketing planning and addresses issues in marketing opportunity

Chapter 6 takes a look at the organisational buyer’s decision making and Chapters 7and 8 are market segmentation and demand forecasting.

Chapters 13, 14, 15 and 16 are devoted to promotion decisions and the differentelements of mix

Chapter 20 is on marketing organisation This chapter helps the reader understand themarketing organisation in Indian firms and also the issues that confront management indesigning focussed organisation

This book is a departure from others as it contextualises marketing problems by citing

I am hopeful that management students across the country as also marketingexecutives will find this useful

RAJAN SAXENA

I am indeed grateful to all faculty members and students who adopted the book and alsogave feedback from time to time These feedbacks have helped in the revision of this titleand have truly made it a book of Marketing in and for India—a market that is today apriority for all global and national brands

In addition to these feedbacks, my grateful thanks to my research scholars, Dr HufrishMajra and Ms Saloni Gandhi who helped in preparing the case on Saffola Oats Salonialso gave research inputs on Brand Archetypes

A book like this cannot be completed without the active support from corporate.Linopinion helped provide ads for brands they had worked with to help elucidate conceptsand communication approaches For this, I am grateful to Mr Ameer Ismail, ExecutiveDirector, Linopinion and Mr Sani Rajan, Group Head, Linopinion Lodha developers andMarico also helped with ads of their brands and products My grateful thanks to Mr.Abhinandan Lodha, Joint Managing Director, Lodha Developers and Mr Harsh Mariwala,Chairman Marico Industries

My secretaries, Ms Lizzy Gonsalves and Ms Flora D’Souza, were of great help incompiling this edition They compiled the revisions for fifth edition in word document,which I would dictate on days and times I was free My daughter, Shruti Saxena Iyer,provided critical inputs and write-ups in sections on Virtual Focus Groups in Chapter 5,Customer Engagement in Chapters 13 and 27—Thank you Shruti

I would also like to express my gratitude to the team at McGraw Hill—Mr KaushikBellani, Managing Director; Ms Vibha Mahajan, Mr Hemant Jha, Ms Laxmi Singh and

Ms Jagriti Kundu

My wife Priti has not only supported me but actively encouraged me in contributing tomarketing thought, through this book and articles

R AJAN S AXENA