• MARKETING MIX

Elements of the marketing mix are often referred to as the "Four P's":

 Product - A tangible object or an intangible service that is mass produced or

manufactured on a large scale with a specific volume of units. Intangible products are
service based like the tourism industry & the hotel industry or codes-based products like
cellphone load and credits. Typical examples of a mass produced tangible object are the
motor car and the disposable razor. A less obvious but ubiquitous mass produced service
is a computer operating system. Packaging also needs to be taken into consideration.
Every product is subject to a life-cycle including a growth phase followed by an eventual
period of decline as the product approaches market saturation. To retain its
competitiveness in the market, product differentiation is required and is one of the
strategy to differentiate from its competitors.

 Price – The price is the amount a customer pays for the product. The business may
increase or decrease the price of product if other stores have the same product.

 Place – Place represents the location where a product can be purchased. It is often
referred to as the distribution channel. It can include any physical store as well as virtual
stores on the Internet.

 Promotion- represents all of the communications that a marketer may use in the
marketplace. Promotion has four distinct elements: advertising, public relations, personal
selling and sales promotion. A certain amount of crossover occurs when promotion uses
the four principal elements together, which is common in film promotion. Advertising
covers any communication that is paid for, from cinema commercials, radio and Internet
adverts through print media and billboards. Public relations are where the communication
is not directly paid for and includes press releases, sponsorship deals, exhibitions,
conferences, seminars or trade fairs and events. Word of mouth is any apparently
informal communication about the product by ordinary individuals, satisfied customers or
people specifically engaged to create word of mouth momentum. Sales staff often plays
an important role in word of mouth and Public Relations (see Product above).

Any organization, before introducing its products or services into the market; conducts a
market survey. The sequence of all 'P's as above is very much important in every stage of
product life cycle Introduction, Growth, Maturity and Decline.
Extended Marketing Mix (3 Ps)

More recently, three more Ps have been added to the marketing mix namely People, Process
and Physical Evidence. This marketing mix is known as Extended Marketing Mix.

 People: All people involved with consumption of a service are important. For example
workers, management, consumers etc. It also defines the market segmentation, mainly
demographic segmentation. It addresses particular class of people for whom the product
or service is made available.
 Process: Procedure, mechanism and flow of activities by which services are used. Also
the 'Procedure' how the product will reach the end user.
 Physical Evidence: The marketing strategy should include effectively communicating
their satisfaction to potential customers. Satisfied customers can be the best
advertisement, with either tangible products or services.
Creating a successful marketing mix that will increase results often takes experimenting and
market research. There are many methods that can be used, both in person and the use of
impersonal presentations. The key is to not always depend on "one" mix always explore other
avenues. The combining and coordination of these elements will be more effective than
depending on one.

You must coordinate all elements so that the prospective consumer is not being sent mixed
messages that can cause confusion. Do all of your elements contain the same message? Take for
example the following scenario:

We are a company that specializes in marketing services and we cater to physicians, however the
products we offer fulfill the needs of lead generation for lawyers. Our price is geared an
enterprise budget and our magazine advertisements and promotions are being placed in
magazines that have a subscription base of senior citizens.

Do you see a problem with this? While in this scenario it is very obvious, I guarantee that by
looking at your marketing mix you may find discrepancies that surprise you. Always make sure
that your marketing mix has a message that speaks in unison.

For instance make sure that if you have a practice that caters to a niche market that your product
is geared towards the need of that market, your price is within the budget of that market, you are
distribution your product or service where it will be seen by that market, and gear your
promotion to solve the problems that they are encountering.

An example of SONY would help us further understand the marketing mix that can be
used fo various products.

Sony Corporation is a multinational conglomerate corporation

headquartered in Tokyo, Japan, and one of the world's largest media conglomerate with
revenue of US$88.7 billion (as of 2008) based in Minato, Tokyo. Sony is one of the leading
manufacturers of electronics, video, communications, video game consoles and information
technology products for the consumer and professional markets. Its name is derived from
Sonus, the Greek goddess of sound.
Sony Corporation is the electronics business unit and the parent company of the Sony
Group, which is engaged in business through its five operating segments—electronics, games,
entertainment (motion pictures and music), financial services and other. These make Sony one
of the most comprehensive entertainment companies in the world. Sony's principal business
operations include Sony Corporation (Sony Electronics in the U.S.), Sony Pictures
Entertainment, Sony Computer Entertainment, Sony BMG Music Entertainment, Sony Ericsson
and Sony Financial Holdings. As a semiconductor maker, Sony is among the Worldwide Top 20
Semiconductor Sales Leaders. The company's slogan is Sony. Like no other.
A. Television and Projectors
In the category of television and projector, Sony has further subdivided its products in
different models, style and performance. In this category we have several other sub categories
and designs which are:
i.
Bravia LCD TV.
ii.
CRT TV.
iii. Home theatre projector
iv. Business Projector.
v. Public Display Panel.
As it can be seen above, Sony has tried to cover many areas where the
need of displaying devices are of great need. For example here we can see that Sony has tried
to fulfill the demand of displaying devices from the home television sets, Office projectors and
Public display panels to cover different needs and the size of the people in need of those
displaying devices.
B. Home Video
 In this category, Sony has tried to bring in new format so as to dominate the
market, for example the emerging data storage format called Blue- ray has been
launched along with the devices which can be used to run such a latest storage
technology. In these category, Sony has included home video systems and
accessories which can enable the user to record various favorite TV programs.
These products include:
i. Blue-ray disc player.
ii. DVD player.
iii. DVD portable player.
C. Home Audio
Depending on the customer needs, usage and budgets, Sony has provided
several home products ranging from small packages to big audio systems. They
boast on their Hi-Fi which deliver rich music, made richer with preset equalizer
settings. Among other features which Sony boast to offer are like, multiple disc
changers which for putting many discs at a go. Also, Some even house additional
features such as the ability to handle multiple formats, track programming and
repeat and random play.
The home audio products categorized by Sony are:
i. Hi-Fi Systems.
ii.
Home audio accessories. E.g. Digital media port.
D. Home Theatre System
Sony has tried to combine the latest video and audio technologies. Sony
has developed a series of Home Theatre Systems that provides customers with
an enhanced home theatre experience, eg. Surround sound environment and
dedicated audio input for connecting portable digital music players.
In this category, Sony has categorized the products as:
i. DVD Home Theatre System
ii. Home Theatre Component System
iii. Home Theatre System Accessories
E. Digital Photography
In terms of digital photography, Sony has produced a variety of imaging
devices depending on the users and their professions. For example for a casual
user or girls there are slim camera which can be easy to carry or put on the
purse. For real photograph enthusiast and professionals there are more
sophisticated cameras with advanced features like digital SLR camera. And also
they have produced photo printers and frames.
The sub-categories in digital photography which Sony offers include:
i. Digital SLR
ii. Cybershot Digital Camera
iii. Digital Photo Printer
iv. Digital Photo Frame.

F. Handy Cam Video Camera

Sony has produced a variety of video camera for home and office use. A variety of these
handy cam video camera are easy to use as from producing family video, documentary filming
and developing feature films.
The subcategories of these hand cam video camera produced by Sony are as
follows:
i. Handycam high definition video Camera
ii. Handycam Standard Definition Video Camera
iii. Handycam Accessories
iv. Digital Photo Printer
v. Digital Photo Frame
G. Computer and Peripherals
Combining form, function and the latest in technology, Sony provides a
range of IT and computing devices. In case of the computer devices Sony has
produced a variety of laptops with different price ranges and performance to
meet the demands of the users like home users, students and businessmen.
The sub-categories of these are:
i. VAIO laptops and computers
ii. VAIO accessories
iii. Business Projectors
iv. Memory Stick
H. Portable Audio
Sony has produced a lot of various varieties of portable audio whose main
target are the youth of the new generation.
The sub-categories of these portable audio produced by Sony are:
i. Walkman mp3 series
ii. CD Walkman series
iii. CD/Radio/Cassette player
iv. Radio
v. Voice recorder
vi. Audio Accessories
I. Games
Sony offers games of all genres to match customers gaming preference.
Also, Sony has produced Powerful consoles which are accompanied with
compelling games.
These games produced by Sony includes:
i. Playstation 3
ii. Playstation 2
iii. PSP (Playstation Portable)
J. Mobile Phones
With Sony Ericsson, Sony has produced a variety of mobile phones for
different people, lifestyle, usage, budget and profession. Also a series of mobile
phone accessories have been produced by Sony so that customer can spruce up
their mobile phone’s appearance, prevent them from damage, or enhance their
usage.
Among the subcategories are:
i. Phones
ii. Phone Accessories.
K. In-Car Entertainment
Different in-car entertainment products have been produced by Sony.
Apart from the normal car radio and CD changer devices, Sony has produced
more entertaining devices to view different media like video and television.
Among the products subcategorized in this category are as follows:
i. Xplod CD receiver
ii. Xplod in car visual
iii. Xplod Cassette receiver
iv. Xplod Amplifier
v. Xplod Speaker/Subwoofer

SONY Promotion 15

Brief Introduction:
Promotion is a key element of marketing program and is concerned with effectively and
efficiently communicating the decisions of marketing strategy, to favorably influence target
customers’ perceptions to facilitate exchange between the marketer and the customer that may
satisfy the objective of both customer and the company.
A company’s promotional efforts are the only controllable means to create awareness
among publics about itself, the products and services it offers , their features and influence their
attitudes favorably.
Sony Marketing Communication Mix:
Sony India will spend Rs 200 crore in this financial year on advertising and promotion
(Promotional Budget) of the entire range of consumer electronics, out of which Rs 60 crore will
be spent only on digital imaging products.
The major elements of promotion mix include advertising, personal selling, sales
promotion, direct marketing, and publicity. Sony Corporation has used all of these marketing
communication mix elements.
Advertising
Advertising is any paid form of non-personal mass communication through
various media to present and promote product, services and ideas etc. by an identified sponsor.
So far, SONY has advertised its products through many different ways and media.
Through TV we have seen different advertisements of its products such as Bravia televisions or
Sony wega TV. Sony also advertise its products by targeting those favorable television
programs, like sports, series and also it has its own channel called Sony TV channel. Sony uses
some events like Miss India 2008 to promote its products.
Also, Sony has advertised its games like Playstation 3, Playstation 2
and PSP using sports like football in England premiere league.
Through newspapers like Times of India, Sony has advertised a wide range of
products it offers to its customers. And also through Posters a message has been sent to a lot
of people to be aware of the products which Sony offers.
16
Sony also uses direct – response advertising. This is type of advertising that
encourages the consumer to respond either by providing feedback to the advertiser or placing
the order with the advertiser either by telephone, mail or the internet. Such advertising is done
through direct mail or catalogues.
Sony incorporates co-operative advertising in its advertising process. Sony
corporation provides the dealers (e.g. Sony World) with the materials and guidelines to develop
ads for print, television or radio commercials. This ensures that message is in line with, what the
manufacture wants to communicate. The company and the dealers usually share the media
costs and hence, the name ‘co-operative advertising’.
Sales Promotion
 Sales promotion is a marketing discipline that utilizes a variety of incentives
techniques to structure sales – related programs targeted to customers, trade, and/or sales
levels that generate a specific, measurable action or response for a product or service.
Sales promotions for example includes free samples, discount, rebates, coupons, contents
and sweepstakes, premiums, scratch cards, exchange offers, early bird prizes, etc.
Sony has promoted its products through different sales promotional strategies. For
example after the release of the Sony BRAVIA television sets, Sony promoted them by earl bird
prizes by saying that all BRAVIA full HD LCD TVs purchased during July 2008 and registered
within two weeks of purchase qualify for a Bonus Playstation 3 as long as the customer claims
is one of the first 35,000 received and validated by Sony.
Also Sony has promoted its Sony Ericsson P1i phones by including a scratch cards which
gives the customer the offer to download 10 free software application for that mobile phone.
Sony Ericsson has also promoted its Sony Ericsson K550i Mid-Range Cyber-shot
Phone that if you buy it you get a free Bluetooth headset with one year manufacturer’s warranty.
Public Relations and Publicity
Public relations is a broad set of communication activities employed to
create and maintain favourable relationship with employees, shareholders,
suppliers, media, educators, potential investors, financial institutions, government
agencies and officials and society in general.
Through its website, Sony corporation has its provided contacts for those customers
who will be in need of any information from the company. In this way Sony can create a mutual
relationship with its customers and ensure that it serves the wishes and demands of its
customers.
Unpleasant situations arising as a result of negative events may precipitate unfavorable
public reactions for an organization. To minimize the negative effect of such situations leading to
unfavorable coverage, the company has policies and procedures in place to manage help any
such public relation problems.
For example, Sony released an ad depicting a man smiling towards the camera and
wearing on his head a crown of thorns with button symbols (Δ, O, X, □). At the bottom, the copy
read as "Ten Years of Passion". This supposedly took advantage of the publicity from the Mel
Gibson film The Passion of the Christ. The advertisement outraged the Vatican as well as
many local Catholics, prompting comments such as "Sony went too far" and "Vatican ex-
communicates Sony". After the incident, the campaign was quickly discontinued.
Another example is that, In July 2006, Sony released a Dutch advertising campaign
featuring a white model dressed entirely in white and a black model garbed in black. The first ad
featured the white model clutching the face of the black model. The words "White is coming"
headlined one of the ads. The ad has been viewed as racist by critics. A Sony spokesperson
responded that the ad does not have a racist message, saying that it was only trying to depict
the contrast between the black PSP model and the new ceramic white PSP. Other pictures of
the ad campaign include the black model overpowering the white model.
So it’s the duty of the public relation department of Sony to solve such issues as mentioned
above so as to ensure that it maintains a good public relation with the public
SONY Place (Distribution)
Decisions with respect to distribution channel focus on making the product available in
adequate quantities at places where customers are normally expected to shop for them to
satisfy their needs. Depending on the nature of the product, marketing management decides to
put into place an exclusive, selective or intensive network of distribution, while selecting the
appropriate dealers or wholesalers.
Sony being the company which positions itself as a seller of durable and
high-end products, it is practicing selective distribution of its products from the
selective dealers i.e. SONY World. Apart from this there aregrey-markets in
India and other countries where a practice of intensive market coverage is
practiced, and the products in these kind of markets normally do not posses all
the features and benefits which Sony offers e.g. warranty and guarantee.
Sony distributes its products in various channels. It uses Zero-level
channel, one level channel and two-level channel.
In India, Sony has used the method ofone-level distribution channel.
This means that, customer buy their Sony product from the retailers recognized
by Sony, and these retailers buy the products directly from the company itself.

Through the internet, Sony has helped its customers to find the nearest
retail shop where they can buy the Sony products. All you have to do is to go to
their website e.g. www.sony.co.in/section/shop and specify the product and
location. Then it will display all the nearest retail shop available.
21

SONY Price
Pricing decisions are almost always made in consultation with marketing management.
Price is the only marketing mix variable that can be altered quickly. Price variables such as
dealer price, retail price, discounts, allowances, credit terms etc. influence the development of
marketing strategy, as price is a major factor that influences the assessment of value obtained
by customers.
Customers directly relate price to quality, particularly in case of products that are ego
intensive of technology based. Sony being a company which emphasize product quality, it tends
to sell its products with price range from moderately-high to high-prices, depending on the use
and the targeted customers.
For example, Lets consider Sony series of VAIO laptops. Sony has tried to categorize the
laptops according to style, user, purpose, mobility and performance, and each a corresponding
price.
The laptops sold by Sony in India include a series of Sony VAIO, this are
VAIO SR, VAIO FW, VAIO tokage, VAIO CR, VAIO NR, VAIO TZ and VAIO SZ.
VAIO SR, boast on the excellence in mobility and perfection in performance. This
laptop was designed for businessmen and its price is around Rs. 75,000/-
 VAIO FW, boast of theatrical experience and world class performance. This model was
designed mainly for home user or casual user of laptops who aims on media playback. The
price of it is around Rs. 80,000 and Rs.1,25,000.
VAIO CR, boast on style and texture. Depending on the configuration, the
prices are from Rs. 40,000 to Rs. 65,000..
VAIO NR, boast of natural, chic design. It was designed to meet customers ambiance
and lifestyle. For this reason the Sony corporation has decided the price of the laptop to be Rs.
40,000 and Rs. 50,000 depending on the configuration.
VAIO TZ, boast of elite lifestyle, and high class performance. The laptop was designed
purposely for business as it is light weight, high processing speed, and flash memory storage
and longer backup power. For all this facts Sony has priced it to be between Rs. 1,15,000 and
Rs. 1,40,000.
VAIO SZ, boast of premier mobility and executive excellence. This laptop was developed
by Sony to target executives and business people who are mobile. The laptop is fitted with
hybrid hard disk drive and motion eye camera and Bluetooth compatible headset with
applications for increasing mobility and video conferencing. It’s price is about Rs. 1,24,000.
• RURAL INDIA- AN EMERGING MARKET

We now turn to the marketing mix for the rural markets. At the outset we should note that
marketer will need to adapt his/her marketing mix to suit rural conditions and the
maximum adaptation will have to be in the distribution and media mix.

 Product Decisions

Products for the rural markets will have to be simpler, and easy to use, service, or
maintain.
Consider the example of tractors; One of the reasons for EICHER’s success in the
tractor market has been with ease which it can be serviced and maintained in rural
areas. This has been different from ESCORTS which marketed the FERGUSSON
brand of tractors that were more sophisticated and posed difficulties in servicing or
maintenance to rural mechanics. A FERGUSSON tractor owner had to call a
mechanic from the nearby city to service it. Though it was rated as a superior product
in terms of technology and better than EICHER’s model, the latter was easier to use,
service, and maintain, and has hence been more successful.

The product literature has to be simple and well illustrated for the rural customer to
understand easily. This will help in faster diffusion of the product in rural society.

Further, the product should be dispensable in single units.

For example; a typical rural buyer buys one unit of match box unlike an urban
consumer who may buy a full pack of ten or twelve match boxes. Likewise, a rural
smoker may either buy a packet of ‘bidis’ or just a single cigarette stick. Product
packaging needs to be functional and capable of dispensing smaller units of the
product. ‘Sachet’ packaging is one alternative which has been successfully used by
teas, shampoo, toothpaste, pan masala, and even tomato ketchup manufacturers to
enetrate rural markets. Today, one finds that a typical rural kiosk stores sachets and
smaller sized products of well-known brands like colgate toothpaste, Lifebuoy, Lux,
Lux and Cinthol toilet soaps, Parachute coconut hair oil, Pan Parag, Sunsilk shampoo
and so on. Atypical kiosk which earlier sold only cigarettes, bidis, and paan is a mini
departmental store today, serving the daily needs of consumers in rural areas.

In terms of media, television, radio, wall paintings, and even roof paintings are
effective. So are bus panels and hoardings. Wall hangings and other point of purchase
material like stickers and shelf display are also effective in getting the marketer’s
message through rural consumers.

Rural sports like kabbadi, kho-kho, bullock cart race, and rural fairs have a special
place in the rural consumers life. Firms like Bajaj Electricals, Hindustan lever,Parle ,
ITC etc.and now coke successfully used them to promote their brands. Gujrat
bottling, earlier a parle and now a coke franchisee in Ahmedabad, used to sponsor
rural Navratri shows in October through a breath taking display of the company’s
display of soft drinks.
Personal selling is also important here. But it doesn’t have to be through a flashy,
flamboyant and aggressive sales person. Research shows that a simple and subtle
salesperson can deliver better results here. Hence, many companies use local young
people to sell the product.

 Distribution

Distribution is the key to penetrating rural markets. It is here the firm has to
deploy a mobile distribution strategy. The firm may eirher have its own fleet of
vans or hire the services of a distributor having one. This is crucial because, today
a firm can no longer afford to wait for the rural buyer to come to the city to buy
his/her requirements. Competition is driving firms to reach out to the buyers. And
since no single village can consume the entire van load of products, the firm can
derive economies by covering several villages in a single van cycle.

Another key to effective distribution is the weekly rural market or haat. It is

important that the firm’s products are available here either through small petty
traders or through its vans.

Further, the marketer can laso consider using the post offices, ration shops and
bank branches in rural areas for distributing their products. The rural postman and
postal vans can even be considered for marketing purpose.

However, the marketer cannot afford to ignore the development of organized

retail stores like ITC’s chaupal sagar, Mahindra & Mahindra’s shubh Labh stores,
Escort’s rural stores etc. for distribution of its products. These developments may
mark the end of the rural dealers.

The marketers need to break the paradigm that urban and rural retail outlets differ
in terms of number of product categories stocked by them. The only difference
between the two is that urban outlets are serviced by more number of companies
as opposed to rural markets.
The 4Ps of Rural Marketing
Most of the companies treat rural market as a dumping ground for the lower end
products designed for an urban audience. But, this scenario is slowly changing
and importance is given to the need of the rural consumer. Hence it is important to
understand the 4Ps of rural marketing with respect to a rural consumer.
1. Product
They identify FMCG by three things: 1. Color, 2. Visuals of animals and birds
and 3. Numbers. So a 555, 777, hara goli, pila hathi, lal saboon, saphed
dantmanjan are the kind of terms with which they identify brands. Hence it is very
important for us to understand that a lot needs to be done in terms of
communications, media, marketing and branding. There are a number of cases
which suggest that to sell brands in the rural market, it is necessary to
simultaneously educate the consumers. If you have to create brand
communication, marketing efforts must be supported by education.

The following have to be kept in mind while the marketer makes a decision on the
product. 1. The product for the rural markets has to be simple, easy to use and
provide after sales service or maintenance. 2. The product has to be packed for
low price and convenient usage. 3. The pack has to be easily understood by the
rural consumer. The information on the pack is preferred in local language
communicating the functional benefit of the product.

2. Pricing
A rural customer is price sensitive and shops for value. This is mainly because of
his lower income levels than his urban counterparts. Hence the marketer has to
find ways of making the product affordable to the rural consumer. Banks offer
loans for tractors, pump sets, television sets and so on to make the product
affordable to a rural consumer. Smaller unit packs are preferred in the case of
FMCG products to offer at lower prices. The product packaging and presentation
offers scope for keeping the price low. Reusable packs or refills are also preferred
and are seen as value addition.

3. Placement or Distribution
Distribution of products is one of the biggest challenges of rural marketing. There
are CWC (Central Warehousing Corporation) and SWCS (State Warehousing
Corporations) set up in rural areas to store and distribute products. A three tier
rural warehousing setup exists:

CWC/SWCs

Co-operatives
Rural Godowns CWC and SWCs reach up to the district levels. The co-
operatives are at the mandi level. The Rural Godowns are at the village level
wherein they are owned by panchayat heads. All these tiers provide warehousing
facilities only to their own members. Hence it is a big problem for a company to
store its goods in rural areas. There are some problems of rural distribution:

Transportation has not been fully developed.


Lack of proper channels of communication like telephone, postal services, and so
on pose a lot of problem to marketer to service the retailer as it is difficult to the
retailers to place order for goods.

Storage of goods in rural areas is also a problem for the marketers.
30


Multiple tiers push up the costs and channel management is a major problem for
marketers due to lot of middlemen in the process.

Availability of suitable dealers

Poor viability of rural outlets

There are a lot of private shops in the rural sector.

4. Promotion
Communication to rural consumer is through organized media. More number of
rural consumer (~70%) listen to radio and many go to cinema.Rural
communication can be through Conventional media or through a nonconventional
media. The most common conventional media include: Print, Cinema, Television
and Print. The Non-conventional media include: Theatre,Posters, Haats and
Melas.The conventional media have excellent reach, less expensive and create a
better impact. But at the same time, it is not customized to each village and also
offers unnecessary coverage at times. Low literacy rates, culture, traditions, rural
reach, attitudes and behavior are the other problems in rural communication. An
effective promotion should plan for a proper mix of media. This is very important
to create a mind share in the rural consumers. Hence, talking to the customer in a
language known to him, advertising the functional benefits and demonstrating the
product go a long way in capturing the rural market. Hindustan Lever is the first
company that comes to mind while thinking of rural marketing. Amul is another
case in point of aggressive rural marketing. Some of the other corporates that are
slowly making headway in this area are Coca Cola India, Colgate, Eveready
Batteries, LG Electronics, Philips, BSNL, Life Insurance Corporation, Cavin
Kare, Britannia and Hero Honda to name a few
 • RELATIONSHIP MARKETING

Why focus on relationship marketing?

Customer relationships are the lifeblood of every good company. Relationships between a
company and their customers, distributors, employees, referral sources, are vital to
continued, sustained growth, and stability. Loyal relationships with these valued individuals
make for a strong bottom line. So, why do so few companies focus on customer relationship
marketing? That's a great question, and probably the most frequent answer is lack of
understanding of the potential profits in keeping existing customers happy versus constantly
acquiring new ones.

When you consider that two-thirds of customers switch from one company to another
because of a perceived attitude of indifference from the former company, it makes sense to
focus as much attention on customer retention as you do on customer acquisition. Don't be
a victim of indifference. Develop a good relationship marketing program that takes into
consideration both customer relationship marketing, and customer acquisition through
relationship marketing. With well-planned relationship marketing efforts, like a greeting card
campaign using our system, you can impact retention -- and that will impact the bottom line.

According to customer relationship management experts, companies can increase revenue

by 50% if they retain only 5% more of their customers. Don't you want your share of that
revenue? Our system is the way to put the process of keeping those dollars on autopilot.

Solidify loyal relationships with your most valuable customers.

Business owners tend to be driven, both financially and philosophically, to make cold calls,
pursue new contacts, and acquire new customers. But often, little thought is given to
nurturing relationships with the customers they already have. Given that acquiring a new
customer can cost five times more than retaining an existing one, this can be a costly
approach.

Customers who are continuously courted, interacted with, and reminded of your company's
presence are less likely to go racing off when competitors come calling. Making those
customers feel recognized, known and appreciated can go a long way toward locking up
their loyalty. And, it's also a great way to get them referring others.

Restore broken relationships and win back business.

Regardless of how effective your customer retention efforts are, some relationships will
inevitably break down. For various reasons, certain customers will suspend their relationship
with you and your business. But those relationships aren't lost. You can win back these
once-valuable customers.

Often times, repairing a broken relationship is more efficient than trying to build one from
scratch. But many companies make the mistake of attempting to re-acquire lost customers
in the same way that they acquire new ones. But failing to use what you know about those
past customers -- and what they know about you -- to your advantage can cost you time and
money. Our automated greeting card system lets you minimize the potential for losing a
client or customer, and also streamlines the process of acquiring new ones, all at a cost that
cannot be matched in any other customer acquisition or retention system. So, if you have
not formulated a marketing plan that includes a focus on relationship marketing with an
automated tool like ours, you owe it to yourself and to your business to try it out today.

 Status of Customer Relationship Management in India

Slowing growth rates, intensifying competition and technological developments made

businesses look for ways to reduce costs and improve their effectiveness. Business
process reengineering, automation and downsizing reduced the manpower costs.
Financial restructuring and efficient fund management reduced the financial costs.
Production and operation costs have been reduced through Total Quality Management
(TQM), Just in Time (JIT) inventory, Flexible Manufacturing Systems (FMS), and
efficient supply chain management. Studies have shown that while manufacturing
costs declined from 55% to 30% and management costs declined from 25% to 15%,
the marketing costs have increased from 20% to 55% (Sheth, 1998). The practice of
relationship marketing has the potential to improve marketing productivity through
improved marketing efficiencies and effectiveness (Sheth and Parvatiyar, 1995).
Still relationship marketing appears to be an expensive alternative to firms practicing
mass marketing due to the relatively high initial investments. Firms would adopt
relationship marketing only if it has the potential to benefit them. The benefits come
through lower costs of retention and increased profits due to lower defection rates
(Reichheld and Sasser, 1990). When customers enter into a relationship with a firm,
they are willingly foregoing other options and limiting their choice. Some of the
personal motivations to do so result from greater efficiency in decision-making,
reduction in information processing, achieving more cognitive consistency in d
ecisions and reduction of perceived risks with future decisions (Sheth & Parvatiyar,
1995).
The current research was aimed at determining the approach being adopted by businesses in
India for relationship marketing. The research focused on the following major issues –
1. Do managers in service firms believe that their processes are customer centric?
2. Do they select technology based on an understanding of customer needs?
3. Have they empowered their employees to deliver superior service?
4. Do they have a customer knowledge strategy? How well do they manage their
customer relationships?
It adopted the framework recommended by Peppers, Rogers and Dorf (1999) for the survey to
understand the status of relationship marketing across service businesses in India.
Methodology
The research was exploratory in nature and adopted a two-stage process.
During the first stage, 73 managers of service firms operating in India were surveyed through
respondent administered questionnaires. These managers belonged to the following three
categories –
a. Hospitality industry encompassing hotels and restaurants
b. IT and Telecom industry, which included software firms and telecom service providers
c. Financial services included commercial banks and mutual funds
The distribution across the sectors is as follows -

The survey focused on the quality and customer centric processes, technology selection,
employee empowerment, and customer knowledge strategy to gauge the status of CRM
practices in these firms.
In the second stage, managers of select firms in each category of services were interviewed to
understand the relationship marketing practices adopted by them. These interviews explored
the following issues –
1. What are the various CRM initiatives undertaken by the firm?
2. How do they develop these programs?
3. How do they measure the effectiveness of these programs?
4. How successful are these programs in retaining customers?
Analysis of Findings
Processes - The managers reported a wide divergence with respect to the adoption of quality
assurance across the three sectors.
The IT and telecom sector is at the forefront of adopting a formal quality management
organisation. Most of the players in the finance and hospitality sector report having some
methods in place to ensure quality management initiatives. About 8% of the overall samples
have indicated the absence of any quality initiatives in their organisations.

At a broad level, most managers believe that they understand most of the interactions
between customers and their business processes. About 50% of them h ave indicated that they
have a full understanding of all possible interactions between customers and their business
processes. Customer-centric marketing emphasizes understanding and satisfying the needs,
wants, and resources of individual consumers and customers rather than those of mass
markets or market segments (Sheth, Sisodia and Sharma 2000). In customer-centric
marketing, marketers assess each customer individually to determine whether to serve that
customer directly or via a third party. Also, customer-centric marketers determine whether to
create an offering that customizes the product and/or some other element(s) of the marketing
mix or standardize the offering. Therefore, it is very important to have an understanding of all
the linkages between the customers and the business processes, which help fulfill the
customer needs.

Technology Selection –

Information technology (IT) is a major facilitator for CRM implementation. In response to the
question on whether they take, consider customers’ needs when selecting and implementing
IT, about 30% of managers have indicated that they consider customer needs. Only 14% of
managers in financial services do custome r validation when selecting technology. While only
23% the managers in IT & telecom firms believe that their technology selections are customer
centric whereas this was over 50% in the other two sectors.
Employee Empowerment

When asked whether their employees are empowered to make decisions in favor of the
customers, less than a quarter of the managers across the three sectors indicated that every
employee is empowered to take actions to ensure the ultimate satisfaction of the customer.
Most of them feel that their employees have been empowered to take independent decisions
within the guidelines. This aspect of limited empowerment gets reinforced when one looks at
the linkage between the employee’s rewards with customer centric behavior. Over 18% of the
respondents across the sectors have reported no linkages or use of ad hoc methods to reward
customer centric behavior.
Facilitation of employees for their role fulfillment through IT is another aspect of employee
empowerment. IT helps employees respond to customer queries and provide support in a fast
and timely manner. It helps them access information which is normally spread across the
organisation. Over 54% of IT and telecom firms have provided the most effective technology
to all employees who interact with customers. This reduces to 42% for the hospitality and
19% for the financial services sector.
Customer Knowledge Strategy
Customer knowledge gets built when information is collected systematically over a period of
time. This can be done through regular surveys and during customer interactions. But
importantly this information has to be combined with the organisation’s experiences with
customers to build rich customer profiles, buying behavior, preferences and usage patterns.
Over 60% managers in the hospitality industry have indicated that they have a continuous
strategy for collecting customer information. In most of the services, opportunities to come in
direct contact with their customers are high in comparison to other businesses who have
intermediaries and hence have a arms length relationship with their customers. Therefore, it is
natural for service firms to collect customer information on a regular basis. But information
collection is just the first step in generating customer knowledge. This information has to be
combined with experiences to develop consumer insights, which help them serve their
customers better.
When it comes to combining customer information with experiences, service firms seem to be
economising. Most of them seem to be doing it for select customers. Hotels do it for their
regular guests specially those who have enrolled for their membership schemes. Financial
www.decisioncraft.com
service providers selectively do it for their high net worth individuals who typically use multiple
offerings of the service provider.
Most service firms rely on periodic surveys to understand their customers’ expectations and
also understand and anticipate their behaviors. Over 40% of managers in the financial
services have indicated that they work with customers as a team to ensure that their
expectations are met or exceeded. It is very important to work with customers to understand
their expectations as research has consistently indicated that one of the major reasons for
poor service quality is the gap between managers perceptions about customers expectations
and actual customer expectations (Parasuraman, Zeithaml and Berry 1985).
The purpose of collecting customer information and developing knowledge is to be able to
differentiate customers and meet their specific requirements. Peppers, Rogers and Dorf (1999)
have recommended a four-stage process of Identification, Differentiation, Interaction, and
Customization for implementing one to one relationships with customers. Over 50% managers
in financial services have indicated that they have critical business information about their
relationships with individual customers. This falls to about 40% in the hospitality and IT
services.
Customer knowledge can be used to initiate customization of the service for customers based
on their needs. By tailoring the elements of services marketing mix, firms can customize their
offerings to all or select customers.
A majority of the marketing programs are targeted for smaller segments of the markets. But
there is a growing trend towards individualizing these programs. With the emergence of
ecommerce,
this trend is going to further intensify.
Some of the important findings of the depth interviews with managers of these services are –
a. The relationship initiatives undertaken by firms have been directed towards customer
retention. The initiatives were mostly membership /privilege schemes with gradations based
on frequency and value of usage / purchase.
www.decisioncraft.com
b. Most of them also indicated that these schemes were table stakes i.e. they cannot survive
in the business without these schemes if everyone else offers them. But the race is always to
differentiate based on convenience for customers.
c. The source and reasons for these programs were found to be diverse - frontline initiatives,
adaptation of successful programs in parent organisations abroad especially for the
multinational firms, or copying competitor’s offerings. Pioneers in the industry like one of the
multinational bank, which introduced the concept of relationship manager, adopted the

practices of their parent organisation.

  Relationship Marketing In India

A live example of Coca-cola in India serves as the exact point that we would be looking for
knowing the dos and the don’ts in relationship marketing.

Pharmacist produced in 1866 a syrup that if mixed with carbonated waste would produce a
delightful drink that later became known as Coca-Cola through the leadership of Asa Candler
(Polk, 2008). Coca-Cola Company is well-known for its cola drink Coke although the company
has 400 non-alcoholic beverages distributed around the world supported with operations in 200
countries (Holcomb, 2008). Coca-Cola brand strength is supported by its worldwide distribution
and availability (Peter & Donnelly, 2006). In August 2006, Coca-Cola Company stated that their
products are tested using European standards and did not break any laws in India. However,
Coke was found containing pesticides 24 times higher than the European standard by an Indian
laboratory that Coca-Cola discredit (Burnett & Welford, 2007). Coca-Cola has many bottling
plants which are in different locations in India sharing large quantities of water to local farmers
especially during seasonal droughts (Burnett & Welford, 2007).

The purpose of this example explain through secondary data

review the relationship between Coca-Cola leadership in Indian market and the effects of its
wrongdoing on its marketing effort.

Coca-Cola and its main competitor, PepsiCo had saturated the local U. S. A. and Europe
markets. Coca-Cola found India to be a good market for its products because of the large
population and the low-cost labor to operate its bottling plants. International markets are usually
different from the local market, which necessitates different marketing strategy and stronger
relationship building effort. Coca-Cola had difficulty in handling the protesters around its
bottling plants although nearby breweries are consuming similar water quantities and produce
equivalent waste (Burnett & Welford, 2007). Protesters targeted the Coca-Cola’s fully owned
and operated plants but the licensed plants did not have the same difficulties.

Market needs the long-term relationship between the buyer and seller to maintain growth (Bejou,
1997). Zikmund, Mcleod, and Gilbert (2003) used the term “one-to-one marketing” to describe
relationship marketing theory because of the business owner’s tailored marketing to individuals.
The customers are loyal to sellers with high product quality if they equate the product price with
its value.
The relationship marketing theory revolves around three aspects. According to Zikmund,
Mcleod, and Gilbert (2003),

• The first aspect is financial incentives, in which the customer receives rewards or
discounts in exchange for their repeated business.
• The second aspect is social bonding between the company and the customer.
• The third aspect is structural interaction. The relationship marketing importance resides
in the strong bonding between the company and the customers which result in long-term
relationship that allows the business owner to plan, stock and provide products wanted
repeatedly by the loyal customers (Hair, Bush, & Ortinau, 2003).

Coca-Cola target customers who will benefit from its products in exchange for their
profitable and repeated purchase (Peck, Payne, Christopher, & Clark, 1999). Coca-Cola
built bottling plants in India to strengthen its relationship with the Indian customers in
exchange to their loyalty. However, Coca-Cola had malpractices that seriously affected
its relation with the Indian consumers. The problem is Coca-Cola plants in India consume
water when it is a scarce resource, pollute the underground water resources and dump
hazardous materials like lead and cadmium while bottling a drink that contains pesticides
(Burnett & Welford, 2007). Indian states banned the sale of Coca-Cola in governmental
institutions and Pollutions Control Board of Kerala closed a bottling plant after a lengthy
protest by the villagers. Coca-Cola acknowledges their safety standard violation by
failing to take toxicity test on one of their dumping sites.

Coca-Cola Company had difficult challenges in India and was not treated similarly to the local
businesses. Coca-Cola faults and wrongdoings are documented and approved, which obliged the
company to react according to international norms and business ethics. Coca-Cola’s values call
for a leadership that have “the courage to shape a better future” and an integrity to “be real”
(“Our Company,” 2009). Coca-Cola Company had a leadership challenge when one of its
employees filed a suit accusing Coca-Cola of inflating Burger King’s study in 2002 (Polk, 2008).
The results of the study were exaggerated to show higher profits from soft drink test. Coca-Cola
fired several executives and paid $21 million to Burger King (Polk, 2008).
Coca-Cola Company had situations in India that clearly contradict with its mission and values.
These situations require the right leadership to acknowledge them, responsibly act to correct the
wrongdoings and set up measures to prevent its reoccurrence. The study will produce a set of
recommendations to achieve the above requirement and recommend that Coca-Cola either pay to
remedy the damages or recuperate the harm done in India.

Committed customers would forgive the seller if the mistakes or harm are minor but the same
committed customers would be increasingly dissatisfied if the level of perceived wrongdoing
increases (Ingram, Skinner, & Taylor, 2005). Regular customer would not tolerate wrongdoing
and will not forgive the sellers for mistakes although they committed with the good intention.
Customers may retaliate by boycotting the seller or organize an offensive campaign to state their
objection (Baxter, 2007). One of the best customer disobedience examples started in the 1960s
like dolphin killing by tuna fisherman, unethical treatment of animals and the anti-fur campaigns
(Baxter, 2007). Most of these campaigns are still holding strong and have large and effective
base of supporters. Ingram, Skinner and Taylor (2005) recommend that sellers like Coca-Cola
should have a contingency plan in case unintentional wrongdoing take place to recover from the
impact of the situation.

Coca-Cola is a non-alcoholic drink that is marketed as a joyful and refreshing drink for all age
groups. Coca-Cola Company’s mission statement is to refresh the world, inspire moments of
optimism and create value (“Our Company,” 2009). Coca-Cola’s values include leadership,
collaborations, integrity and accountability but Coca-Cola’s practices have serious implications
that contradict its values. Prospect theory gives marketers the chance to use the customers’ risk-
averse behavior to steer their decision toward a profitable choice for the company. Company
practices are legal and ethical because the choice was made by the customers who build it on
their internal risk-averse behavior (Novemsky & Kahneman, 2005).

Coca-Cola Company has more than 400 non-alcoholic beverages that include Coke, with
distribution and bottling operations in 200 countries (Holcomb, 2008). Coca-Cola brand strength
is supported by its worldwide distribution and availability (Peter & Donnelly, 2006). Coke is the
most famous soft drink produced by Coca-Cola Company and is consumed around the world.
Coca-Cola Company stated that their products are tested using European standards and did not
break any laws in India. However, Coke was found containing pesticides 24 times higher than
the European standard by an Indian laboratory, which Coca-Cola discredit (Burnett & Welford,
2007). The Indian bottling plants consume large quantities of water, which is much needed by
the farmers especially during seasonal droughts (Burnett & Welford, 2007).

The principle “let the buyer beware” is opposite to the

relationship marketing principle in which the seller seeks long-lasting relationship with the
customer. The relationship is maintained by stating the facts and giving the necessary
information to the customer. Relationship marketing takes part of the risk to prevent any risk that
the buyer may encounter from the selling and buying experience. “The relationship marketing
strategies are concerned with the development and enhancement of relationships with a number
of key markets” (Šimberová, 2007, p. 207). Marketers should not subscribe to the caveat emptor
principal because it makes the relationship between the seller and the buyer deteriorate. Inks,
Avila and Chapman (2004) found that buyers are more ethically sensitive to unethical behavior.
Buyers have stronger negative reaction to lying when this lying was from the seller; however, the
buyers were less sensitive to their deceit (lying) because they justify it with the resulting low
price.

Companies seek customer’s commitment by deferent means; however customer commitment can
result from satisfying the customer by offering him or her good product or service in exchange
for his or her money. Satisfaction comes from product quality and service quality, which is
supported by price fairness (Worrall, Parkes & Cooper, 2004). Polk (2008) state that managers
should be accountable for the company’s innovations and the change it leads to successfully.
Managers should abandon old ideas when they become a threat to the organization but learn that
failures are opportunities to learn. Peter Drucker stated that the organizations profit is necessary
to supply capital for future innovation and expansion (Drucker, 2004).
 • SEGMENTING OF MARKETS

Market segmentation is a concept in economics and marketing. A market segment is a sub-set

of a market made up of people or organizations with one or more characteristics that cause them
to demand similar product and/or services based on qualities of those products such as price or
function. A true market segment meets all of the following criteria: it is distinct from other
segments (different segments have different needs), it is homogeneous within the segment
(exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a
market intervention. The term is also used when consumers with identical product and/or service
needs are divided up into groups so they can be charged different amounts. These can broadly be
viewed as 'positive' and 'negative' applications of the same idea, splitting up the market into
smaller groups.

Examples:

• Gender
• Price
• Interests

While there may be theoretically 'ideal' market segments, in reality every organization engaged
in a market will develop different ways of imagining market segments, and create Product
differentiation strategies to exploit these segments. The market segmentation and corresponding
product differentiation strategy can give a firm a temporary commercial advantage.

Positive" market segmentation

Market segmenting is dividing the market into groups of individual markets with similar wants
or needs that a company divides the market into distinct groups who have distinct needs, wants,
behavior or who might want different products & services. Broadly, markets can be divided
according to a number of general criteria, such as by industry or public versus private although
industrial market segmentation is quite different from consumer market segmentation, both have
similar objectives. All of these methods of segmentation are merely proxies for true segments,
which don't always fit into convenient demographic boundaries.

Consumer-based market segmentation can be performed on a product specific basis, to provide a

close match between specific products and individuals. However, a number of generic market
segment systems also exist, e.g. the system provides a broad segmentation of the population of
the United States based on the statistical analysis of household and geodemographic data.

The process of segmentation is distinct from positioning (designing an appropriate marketing

mix for each segment). The overall intent is to identify groups of similar customers and potential
customers; to prioritize the groups to address; to understand their behavior; and to respond with
appropriate marketing strategies that satisfy the different preferences of each chosen segment.
Revenues are thus improved.

Improved segmentation can lead to significantly improved marketing effectiveness. Distinct

segments can have different industry structures and thus have higher or lower attractiveness

Using Segmentation in Customer Retention

Segmentation is commonly used by organizations to improve their customer retention programs
and help ensure that they are:

• Focused on retaining their most profitable customers

• Employing those tactics most likely to retain these customers

The basic approach to retention-based segmentation is that a company tags each of its active
customers with 3 values:

Tag #1: Is this customer at high risk of canceling the company's service? One of the most
common indicators of high-risk customers is a drop off in usage of the company's service. For
example, in the credit card industry this could be signaled through a customer's decline in
spending on his card.

Tag #2: Is this customer worth retaining? This determination boils down to whether the post-
retention profit generated from the customer is predicted to be greater than the cost incurred to
retain the customer. Managing Customers as Investments. [1] [2]

Tag #3: What retention tactics should be used to retain this customer? For customers who
are deemed “save-worthy”, it’s essential for the company to know which save tactics are most
likely to be successful. Tactics commonly used range from providing “special” customer
discounts to sending customers communications that reinforce the value proposition of the given
service.

Process for tagging customers

The basic approach to tagging customers is to utilize historical retention data to make predictions
about active customers regarding:

• Whether they are at high risk of canceling their service

• Whether they are profitable to retain
• What retention tactics are likely to be most effective

The idea is to match up active customers with customers from historic retention data who share
similar attributes. Using the theory that “birds of a feather flock together”, the approach is based
on the assumption that active customers will have similar retention outcomes as those of their
comparable predecessor.
Price Discrimination
Where a monopoly exists, the price of a product is likely to be higher than in a competitive
market and the quantity sold less, generating monopoly profits for the seller. These profits can be
increased further if the market can be segmented with different prices charged to different
segments charging higher prices to those segments willing and able to pay more and charging
less to those whose demand is price elastic. The price discriminator might need to create rate
fences that will prevent members of a higher price segment from purchasing at the prices
available to members of a lower price segment. This behavior is rational on the part of the
monopolist, but is often seen by competition authorities as an abuse of a monopoly position,
whether or not the monopoly itself is sanctioned. Examples of this exist in the transport industry
(a plane or train journey to a particular destination at a particular time is a practical monopoly)
where business class customers who can afford to pay may be charged prices many times higher
than economy class customers for essentially the same service.

The purpose for segmenting a market is to allow your marketing/sales program to focus on the subset
of prospects that are "most likely" to purchase your offering. If done properly this will help to insure
the highest return for your marketing/sales expenditures. Depending on whether you are selling your
offering to individual consumers or a business, there are definite differences in what you will consider
when defining market segments.

Category of Need
The first thing you can establish is a category of need that your offering satisfies. The following
classifications may help.

For businesses:

• Strategic - your offering is in some way important to the enterprise mission, objectives and
operational oversight. For example, a service that helped evaluate capital investment
opportunities would fall into this domain of influence. The purchase decision for this category
of offering will be made by the prospect's top level executive management.
• Operations - your offering affects the general operating policies and procedures. Examples
might be, an employee insurance plan or a corporate wide communications system. This
purchase decision will be made by the prospect's top level operations management.
• Functional - your offering deals with a specific function within the enterprise such as data
processing, accounting, human resources, plant maintenance, engineering design,
manufacturing, inventory control, etc. This is the most likely domain for a product or service,
but you must recognize that the other domains may also get involved if the purchase of the
product or service becomes a high profile decision. This purchase decision will be made by the
prospect's functional management.

For the individual consumer:

• Social Esteem or Pleasure - your offering satisfies a purely emotional need in the consumer.
Examples are a mink coat or a diamond ring. There are some products that are on the
boundary between this category and the Functional category such as a Rolex watch (a Timex
would satisfy the functional requirement and probably keep time just as well).
• Functional - your offering meets a functional requirement of the consumer such as a broom,
breakfast cereal or lawnmower.
Segmentation of Needs
Then you should establish what the need is and who is most likely to experience that need. Your
segmentation will be determined by a match between the benefits offered by your offering and the
need of the prospect. Some "need" categories for segmentation include:
Reduction in expenses
Prospects might be businesses that are downsizing (right sizing), businesses that have
products in the mature stage of their life cycle or individuals with credit rating problems.
Improved cash flow
Prospects might be businesses that have traditionally low profit margins, businesses that have
traditionally high inventory costs or individuals that live in expensive urban areas.
Improved productivity
Prospects might be businesses that have traditionally low profit margins, businesses that have
recently experienced depressed earnings or individuals with large families.
Improved manufacturing quality
Prospects might be businesses with complex, multi-discipline manufacturing processes.
Improved service delivery
Prospects might be service businesses in highly competitive markets, product businesses
requiring considerable post-sale support or individuals in remote or rural areas.
Improved employee working conditions/benefits
Prospects might be businesses where potential employees are in short supply.
Improvement in market share/competitive position
Prospects might be new entrants to a competitive market.
Need for education
Prospects might be businesses or individuals looking for books on business planning, or
seminars on Total Quality Management.
Involvement with social trends
Prospects might be businesses concerned with environmental protection, employee security,
etc. or individuals who believe in say 'no' to drugs, anti-crime, etc.
Specific - relating to product/service characteristics
Prospects might be businesses or individuals interested in safety, security, economy, comfort,
speed, quality, durability, etc.
Factors that segment prospects
Having determined the more general segmentation characteristics you can proceed to a more detailed
analysis of the market. There are literally thousands of ways to segment a market, but the following
are some of the more typical segmentation categories.

For businesses:
Industry by SIC code
This is especially beneficial for vertical market offerings.
Size - revenues, # employees, # locations
In general if your offering is highly sophisticated, requires significant resources or provides
greater value based on volume, then the target should be the larger enterprises.
Job position/responsibility
Examples of offerings might be planning software for managers or cleaning agents for
maintenance managers.
Climate
Examples of offerings might be dehumidifiers in areas near the ocean or snow plows in
northern areas.
Time related factors
Some services in this category are vacation related industries in summer and tax planners in
the spring.
Language
An example of a language specific service is a Spanish TV channel.
Status in the industry
You might want to target businesses that are the technology leader or revenue leader or
employee satisfaction leader, etc.
Accessibility
 To minimize promotion and sales expense you may want to target urban rather than rural or
local rather than national prospects.
Future potential
A good example is how Apple Computer supplied products to schools at all levels to condition
students graduating into the marketplace.
Ability to make a quick purchase decision
Targeting individual purchasers versus business committees can significantly reduce marketing
expense and increase the probability of a quick close.
Access (or lack of access) to competitive offerings
Cable TV business's significant investment in their service delivery system has allowed a near
monopoly for some time. IBM's service reputation insured minimal competition during the
mainframe days.
Need for customization
Offerings such as police cars, busses for municipalities and specialized computer systems fall
into this category.
Product or service application to a business function
Examples are data processing, accounting, human resources and plant maintenance.
For Individual Consumers:
Physical Size
Offerings might be big men's clothing, golf clubs for shorter players, etc.
Creation of or response to a fad
Examples are hula hoops, Jurassic Park T-shirts, pet rock, physical fitness, etc.
Geographic location
Marketers take advantage of location by selling suntan lotion in Hawaii, fur coats in Alaska,
etc.
Time related factors
You may be able to target vacationers in summer, impulse buyers during the holidays or
commuters at 7AM.
Demographics/culture/religion
Ethnic products would fall into this category.
Gender
Product examples are scarves for women, ties for men, etc.
Age
Product examples are toys for children, jewelry for women, etc.
Social status
This could include country club memberships, philanthropic contributions, etc.
Education
Product and service examples are encyclopedias, scientific calculators, learning to read tools
and financial counseling.
Avocation
This could include products for hunting, fishing, golf, art work, knitting, etc.
Special Interests
You could target cat lovers, science fiction readers, jazz music collectors, etc.
Accessibility
Because the individual is more difficult to reach you may want to segment by urban versus
rural, train commuters, people who read Wall Street Journal, etc.
Access (or lack of access) to competitive offerings
Due to high investment capital requirements or timing of market entry you may be able to
capture a significant market share in a specific geographical area. Examples might be a trash
service, emergency medical support, etc.
Need for specific information
Based on features or content of your offering you can target a market segment. A product
might be books on how to start a business or a service might be seminars on how to quit
smoking.
Need for customization
Product/service examples are home decoration, fashion wear, personal portraits, etc.
Need for quality, durability, etc.
Product examples are mountain climbing gear, carpenter's tools, etc.
Degree of a product/service ingredient
 Segmentation based on prospect preferences is common. An example is dark chocolate for
some tastes, light chocolate for others.
Purchase decision influencers
Once you have isolated a specific segment of the market on which to focus, then you can consider
more subtle influences on the purchase decision. Some of these are:
Preference for channel of distribution
Many prospects prefer to buy through a specific distributor or wholesaler. For individuals this
may be due to subtle, as well as, economic reasons. For example, an individual prospect may
immediately think of Wal-Mart or Home Depot when considering an offering like yours. A
business often has a preference so they can have a single communication point for all
purchases. This also often results in lower purchase prices.
Number of decision makers
When selling to consumers or businesses, the more individuals or groups involved in the
purchase decision, the more difficult the sale. Marketing costs for selling bread can stay low
because one person normally makes the purchase decision. Car purchases are more complex
because the purchase decision normally involves a husband and wife. Business sales to
committees often require months to achieve a decision.
Financial strength of the prospect
Less affluent prospects may desire time payments versus a cash purchase and Chevrolets
instead of Cadillacs.
Quantity/volume requirements
Restaurants will want large jars of pickles while individuals want small jars. Businesses use
large amounts of electricity at predictable times.
Ability to use the offering
Trying to sell to a prospect who lacks either the knowledge or resources to properly benefit
from your offering will result in a 'no sale' situation or an unhappy customer. The prospect
should have knowledge and resources such as time, equipment, facilities, personnel and
complementary products/services.
Commitment required
If the offering requires a high commitment in terms of time, resources or money by the
customer then the target should be prospects who 'really need' the offering rather than
prospects who get some, but not a lot, of benefits.
Brand awareness/users
Examples are prospects who ask for IBM compatible PC's or Pitney Bowes mailing machines or
Winnebago R.V.s
Attitude toward a personality or enterprise
Reputation helps sell AT&T long distance service, IBM computers, Michael Jordan tennis shoes,
etc.
Attitude toward price versus value
For example, purchasers of collectors items aren't price sensitive while purchasers of
commodity items are price sensitive.
Experience with other products/services your enterprise has offered
You are looking for a reaction like "I liked your first product so I'll try your second."
Prospect bias
Examples are, 'Buy USA', I want a car with a 'solid' feel, fast cars, sweet wines, large print
playing cards, etc.
Affiliation with other organizations
Such as the U.S. Chamber of Commerce, AMA, IEEE, doctors, attorneys, pastors, franchisors,
entrepreneurs, etc.
After sale support expectations
It is often beneficial to target prospects who have enough expertise that they will require a
minimum of after sale support.
Seller Characteristics that can influence purchase decision:
Another form of influence is how the prospect perceives your offering and/or enterprise. If you can
determine the characteristics your prospects most value in an enterprise they purchase from, you can
identify those your organization possesses and promote them to the prospect.
Unique employee skills, knowledge
 Extensive experience with a specific market segment or field of scientific inquiry can be a
powerful promotional tool. For example if an enterprise could sat, "Our scientists knows more
about corn silk genetic structures than anyone in the world" they would have a strong sales
statement.
Special relationships with distribution channels
Product or service accessibility is a critical factor in sales success. If an enterprise could say,
"Due to a unique relationship, the XYZ video stores give us more shelf space than any
competitor" prospects will likely respond positively.
Customer service capabilities
Prospects like to know that they can depend on post sale support from the product or service
provider. A statement like, "We have more service outlets in New Hampshire than any
competitor" will help secure sales.
Unique product forms
Credible uniqueness such as, "Our product is the only one that offers dynamic digi-whirling" is
appealing to the market.
Manufacturing expertise
The market is always interested in purchasing from the "best". If an enterprise can confidently
state, "We are the only enterprise that can manufacture molecular engineered widgets", they
have created an image of being the "best".
Longevity
Reliability is important. A statement like, "We have been in business for 50 years, so you can
count on us to be there when you need us" is usually a strong selling point.
Purchase Decision Makers
Finally, a point to consider is, given the characteristics of your offering, what type of decision maker
will most likely be interested in purchasing from you. It may be beneficial to rank your prospects
based on the following classifications. While you may not be able to make this classification of the
prospect prior to the first contact, if your sales personnel are sensitive to these characteristics it can
strongly influence your sales strategy.

Ultra Conservative - don't rock the boat, whatever they purchase must be consistent with their
current way of doing things.

• They are most likely interested in products/services that are improvements to existing
offerings rather than something new.
• Once established as a customer they are seldom inclined to review alternatives.
• Very negative to technically complex offerings or offerings requiring extensive user education.
• Cost effective offerings are only of interest if they don't disturb the status quo.
• They are likely to react positively to any volume purchasing opportunities.

Conservatives - are willing to change, but only in small increments and only in a very cost effective
manner.

• Will consider new products/services but only if related concept has been proven to be
effective. More likely to purchase improvements to existing offerings.
• Will probably want to review competitive offerings, but will gravitate to best known offering
with lowest risk decision.
• Negative to neutral when considering technically complex offerings or offerings requiring
extensive user education.
• Strongly influenced by cost effective offerings and/or 'best price' opportunities

Liberals - regularly looking for new solutions, willing to make change (even major change) if the
benefit can be shown.

• Will usually consider new products/services even if the related concept has not yet been
proven to be effective, but only if the potential benefits can be specified and understood.
 • Wants offerings that make effective use of technology, but is not interested in offerings just
because they use a certain technology.
• Will always want to review competitive offerings, but will usually choose the one offering the
greatest benefit, even if there is some risk involved.
• Neutral to positive when considering technically complex offerings or offerings requiring
extensive user education.
• Usually concerned with keeping employees informed and educated, so will often consider
educational offerings.
• Strongly influenced by offerings that most closely deliver the 'end results' desired, even if they
are not the most cost effective.
• Often are on social trend bandwagons so react positively to offerings that address these
needs.

Technical Liberals - enamored with the benefits provided by high tech solutions and any purchase
decision will be biased by the technical content of the offering.

• Usually consider new products/services even if the related concept has not yet been proven to
be effective.
• Often consider just because they use a certain technology.
• Will always want to review competitive offerings, but will usually choose the one offering the
most hi-tech features, even if there is some risk involved.
• Consider themselves technically competent and will expect leading edge use of technology.
• Positive to fanatic when considering technically complex offerings even when requiring
extensive user education.
• Conversion costs usually not a major concern if technical benefits are there.
• Not particularly concerned with keeping employees informed and educated, so educational
offerings are not of great interest.
• Strongly influenced by offerings that most closely deliver the 'end results' desired, even if they
are not the most cost effective.

Self Helpers - consistently defines/designs solutions to their problems, likes to acquire tools that help
in the innovation process.

• Will usually consider new products/services, but the related concept must have been proven to
be effective.
• Often consider just because they use a certain technology that is relevant to the development
program they have underway.
• Will always want to review competitive offerings, but will usually choose the one offering the
most effective 'do it yourself' features.
• Usually consider themselves technically competent and will expect very effective use of proven
technology.
• Not especially inclined toward technically complex offerings, would rather have user friendly,
but thought provoking, offerings.
• Conversion costs usually not a major concern if offering promises potential for innovation.
• Usually concerned with keeping employees informed and educated, so educational offerings
are of interest.
  Segmentation In India

India is one of the emerging markets and it is becoming more and more important buyer in our
global economy. India has a nice percentage of world total population so if not right now, in few
years, India will be one of the most important buyers in the world.

1. Segmentation by income
We all know that India is a very poor country, but as in every country , India also has a “rich
group of people”. You for sure need to divide the India market in those two groups, since the rich
part can be very big buyer becouse of lots and lots of cash they have.

2. Segmentation by religion
The second very important segmentation by my opinion is segmentation by religion. India has
many religions and with those religions many different cultures come. So you will need to adjust
your marketing campaign to those cultures.

3. Segmentation by location
India also has a very different terrain, since it’s a big country. We all know that people in flat
places and people in mountains want different products so market segmentation by location is in
place in India.

BASES FOR SEGMENTATION

BASES FOR SEGMENTATION
Markets can be segmented using several relevant bases. There are huge number of variables
which leads to market segmentation. They comprise easy to determine demographic factors as
well as variables on user behavior or customer preferences. Segmentation is done for consumer
market
consumer marketand industrial market.
industrial market.

Bases for segmentation in consumer market:-
Bases for segmentation in consumer market:-
Consumer market can be segmented on the following customer characteristics
1.
1.Geographic Segmentation.
Geographic Segmentation.
2.
2.Demographic Segmentation.
Demographic Segmentation.
3.
3.Psychographic Segmentation.
Psychographic Segmentation.
4.Behaviouralistic Segmentation
Behaviouralistic Segmentation.
.
1)Geographic Segmentation
Geographic Segmentation: - Potential customers are in a local, state,
regional or national marketplace segment. If a firm selling a product such as farm equipment,
geographic location will remain a major factor in segmenting your target markets since their
customers are located in particular rural areas. While for retail store, geographic location of the
store is one of the most important considerations, in this case city areas are preferred.
Segmentation of customers based on geographic factorsare:-
a.Region:
Region:-
- Segmentation by continent / country / state / district / city.
b.Size:
Size:- Segmentation on the basis of size of a metropolitan area as
per its population size.

c.Population density
Population density: - Segmentation on the basis of population
density such as urban / sub-urban / rural etc.
d.Climate:
Climate: - Segmentation as per climatic condition or weather.
2)Demographic Segmentation
Demographic Segmentation: -
: - Segmentation
Segmentation of customers based
on
demographic factors are:-
a.Age
Age(
(dominant factor
dominant factor):-Segmentation is done on the basis of age of
person. Example Titan has segmented its product according to different
age group of person.
Titan’s product segmentation on the bases of age:-
Titan’s product segmentation on the bases of age:-
Titan
Titan created a sub brand,Fastrack. These watches are specifically for young, vibrant, and cool
outgoing young generation. While for older person and professional it has created the steel series
watches and also the famous,Sonata.
Titan Fastrack( for the younger segment)
Titan Fastrack( for the younger segment)

Steel-1077SM01(for elder person and professional)

Steel-1077SM01(for elder person and professional)
a.Income (dominant factor
Income (dominant factor):-Segmentation is done on the basis of
income level of a person.
Example of Titan watches can be citied such as Titan offeredAurum andRoyale in the
gold/jewellery watch range with price ranges between Rs. 20000 to Rs.1 lakh.
Titan Nebula (Luxury segment watch)
Titan Nebula (Luxury segment watch)
For middle segment
For middle se
gment, Titan offeredExacta range in stainless steel, aimed
at withstanding the rigours of daily life. There were 100 models in the
range. Price ranges within Rs500-700.
For the third segment
For the third se
gment, Titan offered theSonata range. The price range
was between Rs.350 to 500.

Titan Sonata (Watch for the third segment)

Titan Sonata (Watch for the third segment)
b.Purchasing power
Purchasing power (dominant factor
dominant factor):- Segmentation done on
the basis of purchasing power of the customer. Examples of different
car segment based on purchasing power are :-
Budget car segment
Bud
get car segment-
It is the largest segment in Indian market. Here the entry level starts
from Rs 1.5 to 3 lakh. Maruti 800
Maruti 800andOmni
Omni are the dominant players
in these segments. With the launch of Tata Nano
Tata Nano with a price range
of 1lakh the outlook of this segment has changed. This segment is sometimes referred to as the
small car segment. Competition in this segment is extreme in Indian market.
Maruti 800 (Budget Car Segment)
Maruti 800 (Budget Car Segment)
Compact car
Compact carsegment
segment-
It lies between budget car and family car. Preferred price range is
between Rs 3 to 4.5 lakh. Maruti Zen, Fiat Uno, Tata Indica,
Santro, Matiz is some of the dominant players in this segment.
Maruti Zen (Compact car segment)
Maruti Zen (Compact car segment)
Daewoo Matiz (Compact car segment)
Daewoo Matiz (Compact car segment)
Cars of compact segment
Cars of compact segment
Family car segment
Famil
y car segment-
-
The purchasing capacity of buyers of this segment is somewhat higher than that of the budget
and compact car segment. Price ranges between Rs 4.5 to 6 lakhs. Maruti Esteem, Daewoo Cielo,
Maruti Esteem, Daewoo Cielo,
and HM
and HMContessa
Contessa belongs to this segment. In India cars that are
sold in India as ‘Budget Car’ and ‘Compact Car’ do not meet their purpose, especially in term of
space, that they turn to ‘the family car segment’.

Many of the consumer market segmentation variables can be applied to industrial

markets. Industrial markets might be segmented on characteristics such as:
1.
1.Location.
Location.
2.
2.Company type.
Company type.
3.Behavioral characteristics
Behavioral characteristics.
.
1)Location
Location
In
industrial markets, customer location may be important in some cases. Shipping costs may be a
purchase factor for vendor selection for products having a high bulk to value ratio, so distance
from the vendor may be critical. In some industries firms tend to cluster together geographically
and therefore may have similar needs within a region.
2)Company Type:
Company Type: Business customers can be classified according to type as
follows :
a.Company size
Company size:-Whether the company is a large scale industry / a small
scale industry. Large industry always tries to order in bulk commodities
while opposite for small scale sector.
b.Industry:
Industry: - Whether the industry is manufacturing industry / service
industry. Also sometime differentiation is done between public sector
industry or a private sector industry.
c.
c.Decision making unit.
Decision making unit.
d.
d.Purchase Criteria.
Purchase Criteria.
3)
3)Behavioral Characteristics
Behavioral Characteristics
In industrial markets, patterns of purchase behavior can be a basis for
segmentation. Such behavioral characteristics may include:
•
•
Usage rate
Usage rate
~ 17 ~
•
•
Buying status: potential, first-time, regular, etc.
Buying status: potential, first-time, regular, etc.
•
•
Purchase procedure: sealed bids, negotiations, etc.
Purchase procedure: sealed bids, negotiations, etc.
•Multi-level Segmentation: A Market can be segmented, using several
Multi-level Segmentation: A Market can be segmented, using several
bases in succession-
bases in succession- While discussing about bases of segmentation we must
discuss about multi-level segmentation, as it is not as through segmentation bases discussed
above are mutually exclusive and a market can be segmented only with one particular base, on
either / or basis. Since customer characteristic are spread over several variables, any market can
be segmented through several bases. Different bases can be used in combination in segmenting a
given market. They just have to be relevant for the concerned market. Actually, the different
bases can be used in succession in a suitable order, and the market can be segmented at multi-
levels.
For example, a market can be segmented using the demographic base in the first instance,
followed by the psychographic base and the buyer behavior/benefit base. Or, the market can be
segmented using volume as the base in the first instance, followed by the
demographic/psychographic/buyer behavior/benefit base. Assuming for example, that the firm
first carries out volume segmentation of its market, it can know who the heavy user of its product
are, but it cannot know the purpose for which they buy the product. The firm can then pick up
the heavy users and carry out a multi-level segmentation, and continue its probe more deeply.
Since each of these bases has several sub-bases, the numbers of levels in which a market can be
segmented are indeed numerous. Actually, the aim should always be to go as deep as possible in
segmenting the market so that segments that are most attractive and most suited can be chosen.
•Multi-level segmentation enables better selection of target market and
Multi-level segmentation enables better selection of target market and
better choice of marketing mix
better choice of marketing mix:
Multi-level segmentation enables the marketers to choose his target market better. It also helps
him to make the winning strategy and strike the right product offer and the right marketing mix.
With the information generated from multi-level segmentation, he can obtain a deeper
understanding of the customers in each segment, their needs, buying motives and buying
behaviour. He can understand in what way each of the different segments want the product to be,
he can then tailor his product, marketing offer and promotional appeal, to fit the individual
segment; he can select the priced, distribution method/channels, media vehicles, advertising
massages and sales appeal, which will be appropriate.
Example of General Motors:-
Example of General Motors:-
GM has identified about 40 different ‘customer needs’ and correspondingly, 40 different market
segments in which it would present with its vehicles. For example, it has targeted the Pontiac at
active, sports-oriented, young couples, the Chevrolet at price-conscious young families, the
Oldsmobile at affluent families, and the Buick at older, more conservative couples.
•
•APPROACHES IN SEGMENTATION
APPROACHES IN SEGMENTATION
George Day
George Day (1980) describes models of segmentation as the
top-down
top-down
approach
approach: In this approach “firms starts with the total population and divide it
into segments”. He also identified an alternative model which he called the
bottom-up approach
bottom-up approach. In this approach,” firms starts with a single customer and
build on that profile”. This typically requires the use of customer relationship
management software or a database of some kind. Profiles of existing customers
are created and analysed. Variousdemographic
demo
graphic,behavioural
behavioural
, and
psychographic
psychographicpatterns
patterns are built up using techniques such as cluster analysis.
This process is sometimes called database marketing or micro-marketing. Its use is most
appropriate in highly fragmented markets. McKenna (1988) claims that this approach treats
every customer as a "micro majority". Pine (1993) used the bottom-up approach in what he
called "segment of one marketing". Through this
process mass customization is possible.
•
•ADVANTAGES OF MARKET SEGMENTATION
ADVANTAGES OF MARKET SEGMENTATION

Various advantages of market segmentation are:-

1.
1.Helps distinguish one customer group from another within a given
market.
2.
2.Facilitates proper choice of target market.
3.
3.Facilitates effective tapping of the market.
4.
4.Helps divide the markets and conquer them.
5.
5.Helps crystallize the needs of the target buyers and elicit more
predictable responses from them ; helps develop marketing programmes on a more predictable
base; helps develop market offer that are most suited to each group.
6.
6.Helps achieve the specialization required in product; distribution,
promotion, and pricing for matching the customer group and develop
marketing offers and appeal that match the need of each group.
7.
7.Makes the marketing effort more efficient and economic.
8.
8.Helps concentrate efforts on the most productive and profitable
segment, instead of frittering them over irrelevant, or unproductive, or
unprofitable segment.
9.
9.Helps spot the less satisfied segments and succeed by satisfying such
segments.
10.
10.Brings benefits not only to the marketer but also to the customer as
well.
11.
11.When segmentation attains high sophistication, customers and companies
can choose each other and stay together.