UNIT III---Marketing Research

UNIT 3

Q-1. Explain the marketing mix strategies used by companies providing financial service, insurance services, banking service and telecom services?

Ans.FINANCIAL SERVICE

In the past, marketing was seen as the concern of manufacturing industry with little or no relevance for a service industry such as banking. A banker was regarded as a professional, offering services to those who sought them rather than as a business person trying to sell products to new and existing customers. Competition was severely limited. There was little or no advertising, prices were fixed through a cartel,hours of opening were uniform and the range of services available varied little from one bank to another.

■ Product

What products or services will the organisation offer to the market? Decisions will cover what new or amended products the organisation wants to offer to the market, and how these are tested. Branding decisions are also considered here.

■ Price

What price is to be charged for these products? For example, in a price sensitive market, is the decision on price to attract a lot of customers to the product, or is the organisation going to set a higher price in exchange for a more discerning client who is willing to pay a premium for a more personal service?

■ Place

Where is the company seeking to carry out business? In the past twenty years there has been an explosion of the range of delivery channels that financial services organisations use to reach their customers. In the past the main delivery channel was the high street branch, and whilst this can still remain an important tool for some organisations, other methods now used include the internet and telephone banking, supermarket banking, etc. Decisions on these delivery channels will fall under the “place” heading.

■ Promotion

How is the business going to let potential customers know what they are offering to the market? What are the most suitable media by which potential customers can be informed about the organisation’s products and services?

■ People

Who is the organisation going to employ? How are these people to be trained and developed? How are they to be rewarded? Whilst these areas – commonly referred to as the “5 Ps” – have traditionally made up what is known as the marketing mix, two other areas have been added more recently:

• physical evidence

• process.

We will look at all of these areas in much more detail later in the course. As you have already seen, there is not only one definition of marketing. However, a number of common themes run through the most generally accepted definitions.

BANKING SERVICE

Collecting such information from the persons who are not currently customers of the  bank. All this can be done by conducting a survey of customers and non-customers of the bank. Moreover, this process of seeking information about the market must form an integral part of the system and must be done on a regular basis. The survey would give valuable information about  profiles and opinions of customers and non-customers of the bank, and it can be analyzed to find out the target group of the customers and their felt and latent needs.

Marketing Mix in Banking service

The second element in formulation of marketing strategy is development of proper marketing mix, so as to satisfy the needs of the target group of customers. This would involve decisions regarding product, place, price, promotion, process, physical evidence, and people.

1.Product

Decisions about product would answer questions about the design of the services offered to suit customer needs, the desirable hours for offering such services, the attractive names of such services and so on. Various alternative ways to provide the basic services might have to be worked out depending on the needs of the various target groups. A very good example of formulation of a market strategy under the "collective" approach is development of the  product,

"Credit Cards"

. The target group identified for this was farmers with the  purpose of dispensation of agricultural and rural credit to them. Agricultural credit cards and cash credit facilities which were niche-marketed and were exclusively preserved for the  privileged class of farmers were, thus, extended to the small and marginal farmers since 1999. Keeping this need of target group in mind, the decision on product was made. This  product decision involved questions regarding types of needs to be covered, number of withdrawals and repayments to be permitted, basis of determination of limits, validity period of the cards, its re-scheduling, the name of the product, and so on.

2. Place

Decisions about place should answer questions about location of the prospective customers and, therefore, location for offering such services. The place decision answered questions about the

location where the KCCs can be obtained. This involved all branches engaged in agricultural lending. Price decision required answering questions on margins, collateral, interest rates to be charged for different slabs, and so on.

3. Price

Decisions about price should answer questions about right price for services offered, worked out  by taking into consideration the cost of such services, competitor's charges and other factors.

4. Promotion

Decision about promotion answers questions about communication with the customer. After getting information on needs and location of the prospective customer and after designing schemes to suit their needs, it is necessary to take decisions on making schemes known to the  prospective customers through proper communication media and through proper words, so as to  bring out the salient features of the scheme. Actual delivery of the schemes at the counters and at the manager's desk also plays a vital role in determining the success of the scheme. Expectations of the customers in post-reforms period have been changing very fast and customers have started shifting loyalty to better banks. It is, therefore, all the more necessary to ensure that not only the felt needs but also the latent needs of the customers are foreseen and satisfied. The promotion decisions answered questions regarding mode of advertising the KCCs so that it becomes widely known. These methods included radio and TV commercials and personal contacts by the employees of the bank apart from news paper insertions.

5. People

All people directly or indirectly involved in the consumption of banking services are an important part of the extended marketing mix. Knowledge Workers, Employees, Management and other Consumers often add significant value to the total product or service offering. It is the employees of a bank which represent the organization to its customers. In a bank organization, employees are essentially the contact personnel with customer. Therefore, an employee plays an important role in the marketing operations of a service organization. For instance to realize its  potential in bank marketing, ICICI is conscious in its potential in internal marketing - the attraction, development, motivation and retention of qualified employee-customers through need meeting job-products. Internal marketing paves way for external marketing of services. In internal marketing a variety of activities are used internally in an active, marketing like manner and in a coordinated way. The starting point in internal marketing is that the employees are the first internal market for the organization. The basic objective of internal marketing is to develop motivated and customer conscious employees. A service company can be only as good as its  people. A service is a performance and it is usually difficult to separate the performance from the  people.

6. Process

Flow of activities: All the major activities of banks follow RBI Guidelines. There has to be adherence to certain rules and principles in the banking operations. The activities have been segregated into various departments accordingly:

Standardization, Customization, Simplicity, Customer involvement etc

7. Physical Evidence

Physical evidence is the material part of a service. Strictly speaking there are no physical attributes to a service, so a consumer tends to rely on material cues. There are many examples of  physical evidence: 1.Paperwork 2.Brochures 3.Furnishings 4. Business cards 5.The building itself location where can be obtained.

TELECOM SERVICE

Bharti Airtel Limited (Bharti Airtel) is one of India’s most popular providers of integrated telecommunication services and is based in India and headquartered in New Delhi. Basically, the company is tasked with the work of operating telecommunication services in the larger Indian subcontinent. The company’s business services include mobile services, enterprise services and Tele media services.

Some of Bharti Airtel competitors include the following:

Idea

Tata DoCoMo.

Reliance Communications Limited

Bharat Sanchar Nigam Ltd.

Vodafone (strongest competitor)

1.Product

The company provides a wide array of products and services. In order to retain the maximum number of customers, Airtel has tried to provide as many products and services as possible in order to keep the customers. The following is a list of its products:

Airtel Pre-paid services

Blackberry Wireless Handheld

Airtel Post-paid services

Value added services like instant balance inquiry, caller line identification, 24 hour recharge facility, multimedia messaging service, call wait & call Hold, Caller divert, Airtel Live portal

SMS based information services

Voice mail services

Hello tunes, Ring tones,

Ringtones and hello tunes offers

Easy post-pay bill payment solutions

Enterprise Solutions.

2.Place

Airtel’s penetration in India is quite impressive because the services and networks can be found even in India’s remotest regions. Currently, gross subscriber base has pass the 200 million mark while the total wireless subscriber base for CDMA, GSM and WLL is about 162 million. Clearly, the customer base of Airtel is strong in India. It is also worth mentioning that millions of the network’s lines are added per year.

3.Promotion

Airtel engages in aggressive marketing strategy ranging from traditional print media to social network marketing. However, the company’s recent rebranding efforts bombed in the market and were not received positively. The company also engages in large scale TV and print advertising. The company frequently uses big celebrities who endorse the services. The company also managed to create its signature tune from Oscar winning musician A.R.Rahman which has become one of the most downloaded tunes in India.

4.Price

The company uses competitive pricing strategy just like any other network providers because of the competition which is present in this sector. However, Airtel also provides flexible pricing mechanism depending on the prevailing market conditions. For instance, when the company relaxes taxation, it also reduces its prices across all affected products. The make my plan introduced by Airtel was a smart strategy as customers could now modify their plan as they see fit.

INSURANCE SERVICE:

The term Insurance Marketing refers to the marketing of Insurance services with the aim to create customer and generate profit through customer satisfaction. The Insurance Marketing focuses on the formulation of an ideal mix for Insurance business so that the Insurance organisation survives and thrives in the right perspective.

1. PRODUCT

A product means what we produce. If we produce goods, it means tangible product and when we produce or generate services, it means intangible service product. A product is both what a seller has to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore services are their product. In India, the Life Insurance Corporation of India (LIC) and the General Insurance Corporation (GIC) are the two leading companies

offering insurance services to the users. Apart from offering life insurance policies, they also offer underwriting and consulting services.

2. PRICING

With a view of influencing the target market or prospects the formulation of pricing strategy becomes significant. The pricing in insurance is in the form of premium rates. The three main factors used for determining the premium rates under a life insurance plan are mortality, expense and interest. The premium rates are revised if there are any significant changes in any of these factors.

3.PLACE

This component of the marketing mix is related to two important facets

      i)Managing the insurance personnel, and

ii) Locating a branch. The management of agents and insurance personnel is found significant with the viewpoint of maintaining the norms for offering the services. This is also to process the services to the end user in such a way that a gap between the services- promised and services -- offered is bridged over. In a majority of the service generating organizations, such a gap is found existent which has been instrumental in making worse the image problem. The transformation of potential policyholders to the actual policyholders is a difficult task that depends upon the professional excellence of the personnel. The agents and the rural career agents acting as a link, lack professionalism.

4. PROMOTION:

The insurance services depend on effective promotional measures. In a country like India, the rate of illiteracy is very high and the rural economy has dominance in the national economy. It is essential to have both personal and impersonal promotion strategies. In promoting insurance business, the agents and the rural career agents play an important role. Due attention should be given in selecting the promotional tools for agents and rural career agents and even for the branch managers and front line staff. They also have to be given proper training in order to create impulse buying.

5. PEOPLE

Understanding the customer better allows to design appropriate products. Being a service industry which involves a high level of people interaction, it is very important to use this resource efficiently in order to satisfy customers. Training, development and strong relationships with intermediaries are the key areas to be kept under consideration. Training the employees, use of IT for efficiency, both at the staff and agent level, is one of the important areas to look into. Human resources can be developed through education, training and by psychological tests. Even incentives can inject efficiency and can motivate people for productive and qualitative work.

6. PROCESS:

The process should be customer friendly in insurance industry. The speed and accuracy of payment is of great importance. The processing method should be easy and convenient to the customers. Instalment schemes should be streamlined to cater to the ever growing demands of the customers. IT & Data Warehousing will smoothen the process flow. IT will help in servicing large no. of customers efficiently and bring down overheads. Technology can either complement or supplement the channels of distribution cost effectively. It can also help to improve customer service levels. The use of data warehousing management and mining will help to find out the profitability and potential of various customers product segments.

7. PHYSICAL EVIDENCE:

Distribution is a key determinant of success for all insurance companies. Today, the nationalized insurers have a large reach and presence in India. Building a distribution network is very expensive and time consuming. Technology will not replace a distribution network though it will offer advantages like better customer service. Finance companies and banks can emerge as an attractive distribution channel for insurance in India. In Netherlands, financial services firms provide an entire range of products including bank accounts, motor, home and life insurance and pensions. In France, half of the life insurance sales are made through banks. In India also, banks hope to maximize expensive existing networks by selling a range of products.

Q-2. What do you mean by segmentation? What are the basis of segmentation?

Ans. “Segmentation is the division of heterogeneous market into homogeneous grop-.”

Definition of Market segmentation “Market segmentation is an alternative to mass marketing and is often more effective. In this lesson, you'll learn what a market segment is, types of market segments, and be provided some examples. A short quiz follows.”

“The process of defining and subdividing a large homogenous market into clearly identifiable segments having similar needs, wants, or demand characteristics. Its objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment.”

Few companies are big enough to supply the needs of an entire market; most must breakdown the total demand into segments and choose those that the company is best equipped to handle.

Four basic factors that affect market segmentation are-

A-clear identification of the segment,

B-measurability of its effective size,

C-its accessibility through promotional efforts, and

D-Its appropriateness the policies and resources of the company.

Basis of segmentation-: The selection of the right basis for dividing the market is of vital importance. Companies will takes into consideration service characteristics, requirement of facilitating service, supporting service, the availability of service outlets and financial and other resources for the selection of the right basis of market segmentation.

Companies divided the market on the basis of-:

1.Consumer characteristics-: Such as Geographic segmentation, Demographic segmentation, Psychographic segmentation &Behavioural segmentation.

2.Consumer Response-: which means benefit’s shots by a consumer from a service provider. This may be related to quality price, benefit accustom etc.

Broadly market segmentation can be based on following basis-:

1.Geographic Segmentation.

2.Demographic Segmentation.

3.Psychographic Segmentation.

4.Behavioural Segmentation.

1.Geographic Segmentation-: It is the simplest way of segmenting the market. Under this approach the market will be divided into various geographical units. Companies generally use the market divisions of such as nation, states, region cities and town to get the benefits of already existing database resources at a very low price. Geographic segmentation reflects in the identification of cultural groups, climatic differences, resource combinations, demand supply gaps, religion and race. It provides opportunities to the service stalls to explore distinctive opportunities for product development as well as product differentiation.

2.Demographic Segmentation-:Demography is the study of population. Under this approach the market will be divided into segment into based on various demographic variables Such as age, family size, gender, family life cycle, income, occupation, education, religion, race, nationality and social class. The differences in consumer responses based in the demographic variables are studied and accordingly segmentation plan is worked out. The demographic variables are the most popular basic for differentiating customer group. Wants, preferences, user status and uses rates are mostly associated with demographic variables in addition in demographic variables are easier to measure.

3.Psychographic Segmentation-: This approach is more focused then geographic and demographic approaches. Under this approach, consumers are divided into groups based on life style, personality and values many a time, the customer belonging to the same geographic and demographic group may exhibit different psychographic profiles. People belonging to the same demographic group may vary in their activities, opinions, value perceptions and interest. To use this basic of segmentation, service providers have a develop a sound data base on the psychographic of the market in order to make the service offer more focused.

4.Behavioural Segmentation-: For this approach, consumers are divided into groups based on their knowledge, attitudes and use of response to a service the variable used under this segmentation are occasions, benefits, user status, uses rates, loyalty status, buyer reediness stage and attitude towards the service.

Market segmentation variables relating the geographic, demographic, psychographic, and behavioural segmentation are illustrated.

Stages of Market Segmentation-: There are at least three stages in in the process of market segmentation. They are-

●Search.

●Selection.

●Strategy.

Search-: The first step in market segmentation is to conduct a survey by using exploratory interviews and focus group in order to have greater insight into the motivation, attitudes and behaviour of consumer. Consumer opinion on the attributes of the service package, the rating of importance, brand awareness and rating, attitudes, demographics, psychographics, geographic and media graphics are collected for a sound based for segmentation. The data collected through the survey in analysed by using statistical techniques Like- correlation, regression, factor analysis, cluster analysis and so on to identify the specific number of the differentiable segment.

Selection-: Based on the search information and analysis, segment are identified the identified segment have to be given a name , based on their dominant characteristics. The identifiable characteristics may be active home guarding , self sufficient, socially active, passive home body, sports and enthusiast and so on. Each segments full details relating to attitudes, behaviour, demographic, psychographic and media partners and studied.

Such a study is helpful to the select the right customers.

Strategy-: The information of a right strategy is essential for achieving success through market segmentation. While formulating the strategy three issue are given special focused. This are value maximisation, capacity utilisation and customer participation.

Value generation by creating and adoptable service package, keeping in view the needs and Wants of customers, is pivotal for service firms. Besides, they need to focused upon creating value perception in customers in customer in the process  of service performance. The orientation of firms should be to maximise value for customers.

Capacity utilisation is another dimension in the formulation of strategy. The demand and capacity management ensure quality service production in minimum cost.

Customer participation influence the value generation as well as value perception.

Q-3. What is positioning? what are the different strategic adopted by telecom and banking financial company to positioning their services?

Ans. “Positioning is a marketing concept that outlines what a business should do to market its product or service to its customers. In positioning, the marketing department creates an image for the product based on its intended audience. This is created through the use of promotion, price, place and product. The more intense a positioning strategy, typically the more effective the marketing strategy is for a company. A good positioning strategy elevates the marketing efforts and helps a buyer move from knowledge of a product or service to its purchase.”

Service positioning-: “positioning means projecting the image of the product or service in such a way that consumer perceive its value distinctivelyfrom that of companies offer.”

In other words, positioning intend to influence the perceptual process of consumers against a product or services. The studies on consumer behaviour provide that consumers do perceive against a stimulation. Since marketing stimulations are many a consumer may not respond selectively through a perceptual process.

Positioning Strategy:- A service company can use any of the following themes for positioning

●Service attributes-: A company can position the service attributes such as a facilitating service and the supporting service.

●Service benefits-:This strategy focused upon the distinctive benefit the consumer can get with the use of the service.

●Service application positioning-: The service company makes the consumer identify the service needs and desire and the suitability of the service offered to satisfy his/her needs or desire.

●Service user positioning-:A service company may identify target group and position the service as the best for them.

●Competitive positioning-: The positioning may be against the competition or away from the competition.

●Quality positioning-: The positioning focused on quality leadership of the firms.

●Price positioning-: The positioning is to communicate the best value for the price the consumers pay.

●Leadership positioning-: This communicate to the consumers that the service company is a major shareholders in the market and enjoys the acceptance of the majority. Some companies may focus on innovation leadership.

●Excellence positioning-:The positioning is on the performance and the efficiency of the firm.

                           Differentiation Strategy

Market Positioning-: A well-positioned company will beat the competition that has a comparable offering. The company that clearly articulates what it does, why it's relevant and how it's different helps customers make better and faster buying decisions. Why are we suggesting you get our help? When we place a Chief Outsider with your company, or consult with you on a strategic direction, you get access to the human capital of our entire executive marketing team.

●Brand Positioning Strategy

●Product Positioning Strategy

●Competitive Pricing Strategy

●Competitive Positioning Strategy

1.Brand Positioning Strategy-:Positioning a brand is serious business. There are several key questions which have to be answered in brand positioning. First, you determine WHAT dimensions are critical to the positioning. This has everything to do with the target customers.

2.Product Positioning Strategy-: Good product positioning strategy requires looking both internally and externally. First, your business as a whole needs to be properly positioned, then your product or services portfolio needs to be positioned. Some companies fail to recognize that their own offerings need to “hang together” and make sense – relative to one another and to your business overall. When a company has diverging offerings or brands, they might best consider two different company banners. Similarly, when companies try to extend the brand of a product in too many directions they can dilute the value of the offering and confuse the customer. With a product portfolio that makes sense, your business also needs to successfully differentiate each product from its competition.

3. Competitive Pricing Strategy-:Pricing strategy has its roots in the very heart of competitive positioning. If your company boasts a better product or service and also leads in market reputation (or brand) then you have the opportunity to command premium pricing. However, an initial question becomes: to what degree are my customers price-sensitive? In many cases, especially in small or middle market companies, the unique value your offerings bring may fully justify a premium price.

4. Competitive Positioning Strategy-:Positioning strategy, by its very nature, involves your value relative to your competition. What do you do or offer that’s better (or not as competitive) as others who offer similar products and services? When these differences are identified, supported with proof points, and properly merchandised your prospects will have an accurate and compelling basis to compare your company to others. However, there is always more to understanding your offerings than defining them in light of competitive offers. Companies can easily make the mistake of “over positioning” their products and services. As there are three dimensions to establishing value propositions – what it is you DO, why it’s RELEVANT and how it’s DIFFERENT – companies, marketers and sales teams can focus too much attention on differentiation before assuring the first two dimensions are understood. Your customers are typically most interested in getting their problems solved.