Marketing Management
Complete Exam-Oriented Study Guide
1Segmentation, Targeting & Positioning (STP)
Market Segmentation
Market segmentation is the process of dividing a heterogeneous market into distinct homogeneous groups of consumers with similar needs, characteristics, or behaviors who might require separate products or marketing mixes.
Four Major Bases of Segmentation:
1. Geographic Segmentation: Division based on nations, states, regions, cities, climate, population density (urban, suburban, rural).
2. Demographic Segmentation: Based on age, gender, income, occupation, education, family size, religion, nationality, generation (Baby Boomers, Gen X, Millennials, Gen Z).
3. Psychographic Segmentation: Based on lifestyle, personality, values, attitudes, interests, social class.
4. Behavioral Segmentation: Based on user status, usage rate, loyalty status, benefits sought, occasions, buyer readiness stage.
1. Geographic Segmentation: Division based on nations, states, regions, cities, climate, population density (urban, suburban, rural).
2. Demographic Segmentation: Based on age, gender, income, occupation, education, family size, religion, nationality, generation (Baby Boomers, Gen X, Millennials, Gen Z).
3. Psychographic Segmentation: Based on lifestyle, personality, values, attitudes, interests, social class.
4. Behavioral Segmentation: Based on user status, usage rate, loyalty status, benefits sought, occasions, buyer readiness stage.
Exam Tip: Remember the acronym "GDPB" for the four bases. Be prepared to give examples for each type and explain which is most effective in different scenarios.
Targeting
Target marketing involves evaluating market segments and selecting one or more segments to enter with tailored marketing strategies.
Five Target Market Selection Strategies:
1. Undifferentiated Marketing (Mass Marketing): Single offer for entire market, ignoring segment differences.
2. Differentiated Marketing: Different offers for several segments with separate marketing mixes.
3. Concentrated Marketing (Niche Marketing): Large share of one or few segments.
4. Micromarketing: Tailoring products to suit specific individuals/locations (Local and Individual marketing).
5. Mass Customization: Combining mass production with individual customization.
1. Undifferentiated Marketing (Mass Marketing): Single offer for entire market, ignoring segment differences.
2. Differentiated Marketing: Different offers for several segments with separate marketing mixes.
3. Concentrated Marketing (Niche Marketing): Large share of one or few segments.
4. Micromarketing: Tailoring products to suit specific individuals/locations (Local and Individual marketing).
5. Mass Customization: Combining mass production with individual customization.
Positioning
Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.
Common Positioning Strategies:
• Product attributes/benefits positioning
• Price/quality positioning
• Use/application positioning
• Product user positioning
• Product class positioning
• Competitor positioning
• Product attributes/benefits positioning
• Price/quality positioning
• Use/application positioning
• Product user positioning
• Product class positioning
• Competitor positioning
2Marketing Mix (4Ps/7Ps)
The 4Ps of Marketing Mix
1. Product: Anything offered to satisfy customer needs and wants. Includes physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.
Product Levels:
• Core Product: Fundamental benefit/service
• Actual Product: Features, design, quality, brand, packaging
• Augmented Product: Additional services (warranty, delivery, installation, after-sales service)
• Core Product: Fundamental benefit/service
• Actual Product: Features, design, quality, brand, packaging
• Augmented Product: Additional services (warranty, delivery, installation, after-sales service)
2. Price: Amount of money customers pay for the product. It's the only element that produces revenue; others represent costs.
3. Place (Distribution): Activities that make products available to target customers. Includes channels, coverage, locations, inventory, transportation, logistics.
4. Promotion: Activities that communicate product merits and persuade customers to buy. Includes advertising, sales promotion, personal selling, public relations, direct marketing.
Extended Marketing Mix (7Ps) for Services:
5. People: Employees who deliver service and interact with customers
6. Process: Procedures, mechanisms, and flow of activities for service delivery
7. Physical Evidence: Environment where service is delivered, tangible clues
5. People: Employees who deliver service and interact with customers
6. Process: Procedures, mechanisms, and flow of activities for service delivery
7. Physical Evidence: Environment where service is delivered, tangible clues
Exam Tip: For case study questions, analyze all 4Ps systematically. Remember that all elements must be coordinated for an effective marketing strategy.
3Marketing Strategies
Porter's Generic Strategies
| Strategy | Description | Example |
|---|---|---|
| Cost Leadership | Becoming the lowest-cost producer in the industry | Walmart, McDonald's |
| Differentiation | Offering unique products/services that command premium prices | Apple, Rolex |
| Focus Strategy | Concentrating on specific market niche (cost focus or differentiation focus) | Rolls Royce, Ferrari |
Ansoff's Growth Matrix
| Strategy | Market | Product | Risk Level |
|---|---|---|---|
| Market Penetration | Existing | Existing | Low |
| Product Development | Existing | New | Medium |
| Market Development | New | Existing | Medium |
| Diversification | New | New | High |
Competitive Strategies
Market Leader Strategies: Expanding total market, protecting market share, expanding market share
Market Challenger Strategies: Frontal attack, flank attack, encirclement, bypass attack, guerrilla warfare
Market Follower Strategies: Cloning, imitating, adapting
Market Nicher Strategies: Specialization by customer, geography, product, quality-price
Market Challenger Strategies: Frontal attack, flank attack, encirclement, bypass attack, guerrilla warfare
Market Follower Strategies: Cloning, imitating, adapting
Market Nicher Strategies: Specialization by customer, geography, product, quality-price
4Consumer Behaviour Analysis
Consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.
Factors Affecting Consumer Behavior
1. Cultural Factors:
• Culture: Basic values, perceptions, preferences, behaviors
• Subculture: Nationality, religion, racial groups, geographic regions
• Social Class: Income, occupation, education, wealth
2. Social Factors:
• Reference Groups: Membership groups, aspirational groups
• Family: Husband, wife, children influence
• Roles and Status: Position in groups
3. Personal Factors:
• Age and lifecycle stage
• Occupation and economic circumstances
• Personality and self-concept
• Lifestyle and values
4. Psychological Factors:
• Motivation (Maslow's Hierarchy of Needs)
• Perception (selective attention, distortion, retention)
• Learning (drives, stimuli, cues, responses)
• Beliefs and attitudes
• Culture: Basic values, perceptions, preferences, behaviors
• Subculture: Nationality, religion, racial groups, geographic regions
• Social Class: Income, occupation, education, wealth
2. Social Factors:
• Reference Groups: Membership groups, aspirational groups
• Family: Husband, wife, children influence
• Roles and Status: Position in groups
3. Personal Factors:
• Age and lifecycle stage
• Occupation and economic circumstances
• Personality and self-concept
• Lifestyle and values
4. Psychological Factors:
• Motivation (Maslow's Hierarchy of Needs)
• Perception (selective attention, distortion, retention)
• Learning (drives, stimuli, cues, responses)
• Beliefs and attitudes
Consumer Buying Decision Process
Five-Stage Model:
1. Problem Recognition: Consumer recognizes a need or problem
2. Information Search: Internal memory and external sources
3. Evaluation of Alternatives: Comparing different products/brands
4. Purchase Decision: Actual purchase (influenced by others' attitudes and unexpected situations)
5. Post-Purchase Behavior: Satisfaction or dissatisfaction, cognitive dissonance
1. Problem Recognition: Consumer recognizes a need or problem
2. Information Search: Internal memory and external sources
3. Evaluation of Alternatives: Comparing different products/brands
4. Purchase Decision: Actual purchase (influenced by others' attitudes and unexpected situations)
5. Post-Purchase Behavior: Satisfaction or dissatisfaction, cognitive dissonance
Exam Tip: Be prepared to apply this model to real-world scenarios. Understand how marketers can influence each stage.
Types of Buying Behavior
| Behavior Type | Involvement | Differences | Example |
|---|---|---|---|
| Complex | High | Significant | Cars, Houses |
| Dissonance-Reducing | High | Few | Carpets, Jewelry |
| Habitual | Low | Few | Salt, Sugar |
| Variety-Seeking | Low | Significant | Cookies, Snacks |
5Product Life Cycle (PLC)
The Product Life Cycle describes the stages a product goes through from introduction to withdrawal from the market.
Stages of PLC
1. Introduction Stage
• Low sales, high costs
• Losses or minimal profits
• Few competitors
• Marketing Strategy: Create awareness, induce trial
• Pricing: Skimming or penetration pricing
2. Growth Stage
• Rapidly rising sales
• Increasing profits
• Growing number of competitors
• Marketing Strategy: Maximize market share
• Product: Improved quality, features, models
• Distribution: Intensive distribution
3. Maturity Stage
• Peak sales, leveling off
• High profits, then declining
• Many competitors
• Marketing Strategy: Maximize profit, defend market share
• Product: Diversification, modification
• Promotion: Emphasis on brand differences
• Price: Competitive pricing
4. Decline Stage
• Declining sales
• Low or negative profits
• Competitors dropping out
• Marketing Strategy: Reduce expenditure, harvest/divest
• Product: Phase out weak items
• Price: Cut prices
• Low sales, high costs
• Losses or minimal profits
• Few competitors
• Marketing Strategy: Create awareness, induce trial
• Pricing: Skimming or penetration pricing
2. Growth Stage
• Rapidly rising sales
• Increasing profits
• Growing number of competitors
• Marketing Strategy: Maximize market share
• Product: Improved quality, features, models
• Distribution: Intensive distribution
3. Maturity Stage
• Peak sales, leveling off
• High profits, then declining
• Many competitors
• Marketing Strategy: Maximize profit, defend market share
• Product: Diversification, modification
• Promotion: Emphasis on brand differences
• Price: Competitive pricing
4. Decline Stage
• Declining sales
• Low or negative profits
• Competitors dropping out
• Marketing Strategy: Reduce expenditure, harvest/divest
• Product: Phase out weak items
• Price: Cut prices
Exam Tip: Draw a PLC curve in your answers when discussing stages. Link strategies to each stage and explain how sales, profits, and competition change.
PLC Patterns and Extensions
Not all products follow the traditional S-shaped curve. Variations include style (fashion), fad (rapid rise and fall), and revival patterns. Companies can extend PLC through market modification, product modification, or marketing mix modification.
6Sales and Distribution Management
Distribution Channels
A distribution channel is a set of interdependent organizations involved in making a product or service available for use or consumption.
Types of Distribution Channels:
Direct Channels:
• Manufacturer → Consumer (No intermediaries)
• Example: Dell computers, company-owned retail stores
Indirect Channels:
• One-level: Manufacturer → Retailer → Consumer
• Two-level: Manufacturer → Wholesaler → Retailer → Consumer
• Three-level: Manufacturer → Agent → Wholesaler → Retailer → Consumer
Direct Channels:
• Manufacturer → Consumer (No intermediaries)
• Example: Dell computers, company-owned retail stores
Indirect Channels:
• One-level: Manufacturer → Retailer → Consumer
• Two-level: Manufacturer → Wholesaler → Retailer → Consumer
• Three-level: Manufacturer → Agent → Wholesaler → Retailer → Consumer
Channel Distribution Strategies
| Strategy | Description | Products |
|---|---|---|
| Intensive Distribution | Stock product in as many outlets as possible | Convenience goods (snacks, beverages) |
| Selective Distribution | Use limited number of outlets in geographic area | Shopping goods (electronics, clothing) |
| Exclusive Distribution | Limited outlets with exclusive dealing rights | Luxury goods (designer brands) |
Sales Force Management
Key Steps in Sales Force Management:
1. Designing sales force strategy and structure
2. Recruiting and selecting salespeople
3. Training sales representatives
4. Compensating salespeople (salary, commission, bonus)
5. Supervising and motivating salespeople
6. Evaluating sales force performance
1. Designing sales force strategy and structure
2. Recruiting and selecting salespeople
3. Training sales representatives
4. Compensating salespeople (salary, commission, bonus)
5. Supervising and motivating salespeople
6. Evaluating sales force performance
Personal Selling Process
Seven Steps:
1. Prospecting and Qualifying: Identifying potential customers
2. Pre-approach: Learning about customer needs
3. Approach: Meeting and greeting customer
4. Presentation and Demonstration: Showing product benefits
5. Handling Objections: Addressing customer concerns
6. Closing: Asking for the sale
7. Follow-up: Ensuring satisfaction and repeat business
1. Prospecting and Qualifying: Identifying potential customers
2. Pre-approach: Learning about customer needs
3. Approach: Meeting and greeting customer
4. Presentation and Demonstration: Showing product benefits
5. Handling Objections: Addressing customer concerns
6. Closing: Asking for the sale
7. Follow-up: Ensuring satisfaction and repeat business
7Pricing Policy and Methods
Factors Affecting Pricing Decisions
Internal Factors:
• Marketing objectives (survival, profit maximization, market share leadership, product quality leadership)
• Marketing mix strategy
• Costs (fixed and variable)
• Organizational considerations
External Factors:
• Market and demand (price elasticity)
• Competition
• Economic conditions
• Government regulations
• Social and ethical considerations
• Marketing objectives (survival, profit maximization, market share leadership, product quality leadership)
• Marketing mix strategy
• Costs (fixed and variable)
• Organizational considerations
External Factors:
• Market and demand (price elasticity)
• Competition
• Economic conditions
• Government regulations
• Social and ethical considerations
Pricing Methods
1. Cost-Based Pricing:
a) Cost-Plus Pricing (Markup Pricing):
Adding a standard markup to product cost
Setting price to achieve target return on investment (ROI)
Setting price to break even on costs or target profit
a) Cost-Plus Pricing (Markup Pricing):
Adding a standard markup to product cost
Price = Unit Cost + (Unit Cost × Markup %)
b) Target Return Pricing:Setting price to achieve target return on investment (ROI)
Price = Unit Cost + (Desired ROI × Invested Capital) / Unit Sales
c) Break-Even Pricing:Setting price to break even on costs or target profit
Break-Even Volume = Fixed Costs / (Price - Variable Cost)
2. Value-Based Pricing:
Setting prices based on buyers' perceived value rather than seller's cost. Used for products where perceived value is high (luxury goods, unique features).
Setting prices based on buyers' perceived value rather than seller's cost. Used for products where perceived value is high (luxury goods, unique features).
3. Competition-Based Pricing:
a) Going-Rate Pricing: Pricing based on competitors' prices
b) Sealed-Bid Pricing: Pricing based on expectations of competitors' bids
a) Going-Rate Pricing: Pricing based on competitors' prices
b) Sealed-Bid Pricing: Pricing based on expectations of competitors' bids
Pricing Strategies
New Product Pricing:
Market Skimming Pricing:
• Setting high initial price to skim maximum revenues
• Suitable when: product quality and image support price, enough buyers at high price, competitors can't enter easily
• Example: Apple iPhone launches
Market Penetration Pricing:
• Setting low initial price to penetrate market quickly
• Suitable when: market is price sensitive, costs fall with volume, low price discourages competition
• Example: Jio telecom services
Market Skimming Pricing:
• Setting high initial price to skim maximum revenues
• Suitable when: product quality and image support price, enough buyers at high price, competitors can't enter easily
• Example: Apple iPhone launches
Market Penetration Pricing:
• Setting low initial price to penetrate market quickly
• Suitable when: market is price sensitive, costs fall with volume, low price discourages competition
• Example: Jio telecom services
Product Mix Pricing:
1. Product Line Pricing: Setting price steps between product line items
2. Optional Product Pricing: Pricing optional/accessory products
3. Captive Product Pricing: Pricing products that must be used with main product (razors and blades)
4. By-Product Pricing: Pricing low-value by-products to get rid of them
5. Product Bundle Pricing: Combining several products at reduced price
1. Product Line Pricing: Setting price steps between product line items
2. Optional Product Pricing: Pricing optional/accessory products
3. Captive Product Pricing: Pricing products that must be used with main product (razors and blades)
4. By-Product Pricing: Pricing low-value by-products to get rid of them
5. Product Bundle Pricing: Combining several products at reduced price
Price Adjustment Strategies:
1. Discount Pricing: Cash, quantity, seasonal, trade discounts
2. Allowance Pricing: Trade-in allowances, promotional allowances
3. Segmented Pricing: Different prices for different customers, locations, times
4. Psychological Pricing: Odd pricing (₹99 instead of ₹100), reference pricing, prestige pricing
5. Promotional Pricing: Loss leaders, special event pricing, cash rebates
6. Geographical Pricing: FOB, uniform delivered pricing, zone pricing, freight absorption
7. Dynamic Pricing: Adjusting prices continually based on demand (surge pricing, yield management)
1. Discount Pricing: Cash, quantity, seasonal, trade discounts
2. Allowance Pricing: Trade-in allowances, promotional allowances
3. Segmented Pricing: Different prices for different customers, locations, times
4. Psychological Pricing: Odd pricing (₹99 instead of ₹100), reference pricing, prestige pricing
5. Promotional Pricing: Loss leaders, special event pricing, cash rebates
6. Geographical Pricing: FOB, uniform delivered pricing, zone pricing, freight absorption
7. Dynamic Pricing: Adjusting prices continually based on demand (surge pricing, yield management)
Exam Tip: For numerical problems, practice calculating break-even points, markup percentages, and ROI. Memorize pricing formulas. For theory questions, provide real-world examples for each pricing method.
Price Elasticity of Demand
Price Elasticity = % Change in Quantity Demanded / % Change in Price
Elastic Demand (E > 1): Quantity demanded changes more than price (luxury goods)Inelastic Demand (E < 1) : Quantity demanded changes less than price (necessities)
Unitary Elastic (E = 1): Proportional changes
Quick Revision Checklist
✓ Memorize all bases of segmentation with examples
✓ Understand STP process flow and application
✓ Know all 4Ps/7Ps elements thoroughly
✓ Remember Porter's strategies and Ansoff Matrix
✓ Learn consumer behavior factors and buying process
✓ Draw and explain PLC curve with strategies
✓ Understand distribution channel types and levels
✓ Master all pricing methods and formulas
✓ Practice numerical problems on pricing
✓ Prepare real-world examples for each concept
Remember: Marketing is both science and art. Support theoretical concepts with practical examples in your exam answers for maximum marks!
