 Good morning. Can we start? Yeah, I am Professor Dinesh Sharma. I am in SGM School of Management in IIT Bombay. I teach marketing. It is great to be here with you. I will be discussing some of the key concepts of marketing. Most of you might be knowing some concepts, but it might refresh in your minds or we can discuss the implications and further we can discuss the implications of these concepts. Now, before I start, I like to understand what marketing issues you face in your business. So, that will help me in pinpointing certain concepts, focusing on more on some concepts and just not discussing some others. So, can some of you start with what issues you might face in your businesses? I will just write down and compile all these issues and then it will help me in focusing on few concepts. Yeah, prospecting, okay. Visibility of product service, understanding the customer requirements, demand estimation. Okay, great. How to understand the legal terms and condition for marketing or whatever legal issues that we will be facing when we market the product? Finding market for your products, approaching the market. Yeah. Marketing of new products which may be similar in existing market, customer education basically. What I would like to know is how to understand a fragmented market? So, if I understand you want to estimate the demand in a fragmented market? In a fragmented market. And how do you market in that basically? Exactly. What do you mean a fragmented market? Fragmented, I mean when there are lot many small players involved and no recognized very little or less recognized brands involved in it. Marketing plan. Positioning for a new product to be launched into the market. How much to spend it? Yeah, how much to spend? Where to spend? How to grow existing product in existing market or new product in existing market. Good. I will try to focus on few. I may not focus on few, but I will try to find some solution for it. I will just start with some of the basics. What do you understand by marketing and what are the basic concepts in marketing? We will come back to these issues after a session and see how many issues could be solved by what we have. I will start with what are the core concepts in marketing and I will focus on the concept of customer value. What do you understand by marketing? Is it same as selling or advertisement or promotion? Any ideas on this? What is marketing? Process of selling your products. Understanding the requirements of the customer and proposing a solution which adds value to the customer's point and creates wealth in return to yourself. Yeah, operationally these are all the functions of a marketing department or marketing function what you say. I will just focus on the process of marketing. Marketing is a function in an organization. Marketing is a process. Yes, very true. Marketing is also an orientation which I will focus on here or mindset. I will start with the definition of marketing which you might have read. This is very recent definition by American Marketing Association. It does not helps much in solving your problem but it just a good starting point actually. Marketing is an organizational function and a set of process for creating, communicating and delivering value to the customers. It is not talking of products or services and for managing the customer relationships in a way that benefit the organization and stakeholders. So it encompasses, it is a social process. It is a exchange process wherein you create, communicate and deliver value. Value is the abstract form of the tangible products or services you deliver. So what can be marketing is of anything of value to the customers. It can be a product, good, tangible, good, service, idea, experience. It can be a person. It can be a place, anything. Anything of some value. Marketing orientation or marketing concept is one of the concepts with which a firm works. There are many other concepts. One of the very old concept is a production concept. There is a story of Ford Motors. You know the story of Ford Motors? Ford was, you know, first time the assembly line started with the Ford Motors and the owner said that I want to make car as long as it is black. He wanted everybody to have a car. His concept was a production concept. Make things cheap, widely available so that everybody can buy it. Focus on your production efficiencies. Mindset is produced cheap, not poor quality but decent quality, affordable, widely available, high volume, typical assembly line concept. So one of the concept with which any business works assumes that consumers favour those products which are widely available and low cost. Second concept is product concept which assumes that consumer will favour the product that offer most quality, best quality products, performance and features. There are many firms which work on this concept and sell products based upon this. They try to give innovative features, best quality. This is the predominant concept with which any business works, selling concept. A concept which assumes that customer will not buy unless you pushed up your product to it. Organization has to stimulate and substantiate the effort for the purchase. So whatever you produce, you have to sell that and it is a prerogative of your marketing department or sales department to sell the product. So you can promote, you can advertise but sell the product. Traditionally all the insurance products promoted by the LIC were with this concept only. Not MBA products but insurance products are not only insurance products. I mean many products, you know. In India almost everything was with sales concept earlier. So whatever you produce, you push and sell. Many things, you forget ration products and others. But typically insurance policies, they thought that agent has to push their policies to sell. So unless you convince a customer that you have to buy this, nobody will buy insurance policy. Things have changed. We will discuss how. Then force is marketing concept which says you focus on the needs and wants of the target customer and make profit. Deliver the desired satisfactions effectively and efficiently than competitors. Then focus on needs and wants. It is not that marketers do not produce efficiently. Marketers do not have a sales force or marketers do not focus on product quality. But the actual focus is somewhere else. Probably needs and wants of the target consumer customer. Can we differentiate between all these concepts? Is it easy to differentiate? It is not that you do not produce again, I repeat. You produce efficiently low cost cheap products. You may produce products with highest quality. You may have a very efficient sales force. But where is the focus? Focus is on needs and wants of the target consumer. Can I say it is up to the main concept, fund up main, main, main, main, money, authority and needs? You can paraphrase in many words. That is up to you. It is, how do you say authority? What is the person who needs? Okay. Simple way is to see needs and wants of the customer and you sell to the product. So you do not focus on just cheaper products, just highest quality products. See what are the wants of the, can you differentiate between need and want? If I do not have a cloth, it is not in my need. If I want to purchase a whirlpool washing machine, it is I want to purchase. Okay. Anything else? I do not need. Any way I have to purchase the cloth if I do not have. Okay. If I want to purchase a whirlpool washing machine, it is my want. If I have the money, I will purchase it. If I do not have the money, I will not purchase it. It is my just a g, g bills that I need, that need is a customer requirement, like need is food, want is idly or McDonald's. Okay. Yeah. We can actually discuss this at length on this, but I will cut short because many of you know this. Needs, see these words are very common words and very frequently used and subject to many interpretations. In marketing, we say needs are very basic to any human being and every customer has similar needs, but wants are specific to certain segments. Needs can be need for security. Want can be something else. Needs are basic to every human being and they are common. Wants are specific to certain segments of the customer. For example, simple is you are hungry and you need food, but want is you need a particular type of food. That is very basic level. The idea is to identify what is the need of the customer. Why? Want will vary from customer to customer. The problem is we focus on only wants and not on need. What need cosmetics satisfy for women? What is the need for cosmetics? Looking good. Looking good. Seeking appreciation. What else? Security, assessing the environment. Influencing the environment. Controlling. So if you can filter down, you know, somebody asked a revelant, what need you satisfy? What do you sell? They said we sell hope. That is all. We do not sell cosmetics, we sell hope. So hope summarizes everything sometimes. Just filter down to the lowest form of need of a customer. Like washing machine you want. What purpose washing machine serves? Cleans the clothes? Now why? Why you want this? Just go back to the basics. You want what? Hygiene? Again why you want hygiene? You want security. So probably need for security for something is your basic need. But you want a washing machine for that. So you climb a ladder of needs and wants. So when you sell a product, just find out which category of need it falls into and which category of wants it falls into. Then you will understand who are the competitors of the product because competition comes in a similar want and need category. For example you want, there is a need for security. There is a need for financial security. First level is security, second is financial security. What you want for that? Some people will like to invest in stock market. Some people will like to invest in FDs. Some people will like to invest in real estate. Some people will like to invest. But what is the basic need? Basic need is security and financial security. So mutual funds have a competition with so many products. So we have to see, we have to filter down to the basic need and want category and that makes our mind clear of what market we are serving. Need and want defines the market. It is very easy to discuss. Like he said, it is very easy to discuss and conceptualize and you know even derive fun in discussing the big marketing products. But it is easy to understand also like Coca-Cola and Pepsi. They are the competitors which need category they satisfy, which want category they satisfy. So Coca-Cola drinks satisfy which need and want. Thirst, you agree? I do not agree with this. Coca-Cola satisfy which market, which need, which want. Thirst? I think the perception could be different based on which market you are addressing on this. Yeah, see that is what I am asking you know. How do you define the market for a Coca-Cola? Is it a beverage market? So there is lot of confusion in this and clarity, people lack clarity in this. This, they are in every market actually. At one level they are competing with Pepsi for carbonated drink market. Some people say and say Coca-Cola say I have 50% market share. So which market he is referring to? Carbonated drink market. But like he said, he is a beverage market. When I talk of beverage market, who are the competitors? Then you are talking of thirst as a need and then the competitors are probably Nimu Pani and Lassi and others also. But how do Coca-Cola sees themselves as operating in the market? They say we serve a fun drink market. It is not thirst. So when I say they are satisfying the need for fun, it is they are going out of the realm of the thirst need. That is a fun drink. So your assessment of need for, want for Coca-Cola is different. So in this way just think what need and want category your product is satisfying or you want it to satisfy? I have a product, the only differentiating factor or perhaps the more alternate product. Any other thing in the market is, it is ease of use. It is a differentiator. I know that is a differentiator. But how would it, when I am looking at wants and needs, am I satisfying the need of the customer to actually do it easily? Easily doing, is it a need or is it not a need? I just want that clarity. Why not? Doing it easily, doing it efficiently. Again see why efficiently? Why easily? What need it satisfy? No. Just again ask why? Just ask why and then you understand whether he will buy this product for that need or not. Coca-Cola is not only serving. See of course thirst is there. There is no doubt about it. But beyond thirst, the need is some fun. And that is a predominant need. A want or what, a want time turned into a need for Coca-Cola and Pepsi's in the developed markets or even in the Indian market in the last 10 years I would say. I will not say. Again I will see. It is all play, it is all play of words. Let us not play with words. I will say needs are very basic to human beings or business. When I say human beings, I also mean business which you run in. For the industrial, what is the need of an office? Become more efficient, paper less. So these are the need. Now I will ask why. So rather than, you can say that, but I will say let us filter down to the need is very basic. I think there is some confusion when you said the word basic. In the master's hierarchy, the food, shelter and clothing is basic and there are other basic needs also like show social security. And a steam need. Yeah. Whole hierarchy. All our needs, even self-actualization is a need. So we can have, create products in any of these levels of need. Yeah. The problem, you know why we face problem? We face problem when we, you know, categorize the product in a different need category. And think, then you know the question why it is not selling? Because we are selling to a different market actually. We are not trying to address the need. It actually serves. So asking question why, so I am going other way round. Let us go other way round. One way is find the need and make a product. The other way round is what need category or want category this existing product is serving? It can be both ways. From product to need, from need to product. You can do both ways and just try to see which product is serving or what your product is serving, which need of the customer. And are you able to communicate that? Are you able to communicate that? And a person will only buy if that product solves that need or want and add some value to its solution, add some value. If I am thirsty, if some water quenches or some carbonate you want to quench is my thirst, some value it adds to my basic needs. So marketing stresses on understanding the needs and wants again not for everybody but target customer. We will see what is, what I mean by target customer. There is a process of identifying a target customer. So you can go both ways, need to a product or product to need and try to identify what is the ladder, what is the ladder. Asking question why, why, why will lead with a basic needs category. Is video conferencing a competitor to aircraft industry? They are two different product categories but video conferencing is proving to be biggest threat to aircraft industry. So because they are addressing similar needs of the customer. The need category is similar, product categories might be different. So you have to filter down the first thing. So marketer does this. That is why they stress on need and wants of the customer. X software competing with Y application, do Microsoft word compete with typewriters? Just think. So it is ultimate, so from software you, for example many of your software in software industry. So what need and want of your customer it actually satisfies. Because of business to business, it might be a solution. Then is that solution valuable? For example a customer will prefer a solution as valuable if it makes his operations more efficient with a lower investment. Plus quality, plus reliability, plus servicing X, Y, Z. So is it actually adding some value to its needs and wants, to wants not needs. Needs are there, he has needs. So there are needs of human being, there are needs of businesses. So filtering down to very basic level, asking question why, why, why and if you stop somewhere, it means you have reached the ultimate. So it makes, for example you ask your software makes a business efficient, do not stop. Why efficient? How? Then again go. So you will reach to the basic. Then you can build on later on and that gives you ideas for promotion, pricing and everything. So marketers make product cheap, marketers make product widely available. But the focus is different. So all these concepts, production, product selling and marketing, marketing focuses on need and wants and values. When the product or organization goes to business, can we say that it is passing through all these concepts, starting with maybe marketing concept, developing it on a product, superior product, then pushing it to reduce prices over a period of time, moving into the production and then whatever you have produced, you are getting into selling. Is it possible that in an organization, you have products at different platforms or running with a different premises at the same time? Yes, it is possible and there are many companies who are working on different concepts. Because an organization has to dedicate itself to a concept or it keeps moving through the different concepts depending on the life cycle of the product and life cycle of the organization as well. See no, just these concepts already exist in your mind. These are mind sets. I am not saying you do not sell your product, you do not push some of the range of your products for selling. I am not saying you do not produce cheap or you do not work on the quality and features of some products. You can, but the major focus is need and want. You do all these things. These are just concepts. This is not a transitionary thing that organization moves into, but it is a mindset that it will lead the organization. Yes, yes. Finally it will lead. For example, if you are with production concept, your main focus will be only on production. Like Ford, for example, Ford Motors, for years they kept on making only black car, the Model T car and it was wildly successful. They made lot of money, but what happened finally? What happened to Model T 800? Finally came General Motors who produced cars of different sizes, different power, different colors and they overtook the Ford. It is not that General Motors did not focus on a good quality, did not focus on producing cheap or did not focus on, but they focus on, they thought they, you know, focus on needs and want. Not everybody wants a black car. Not everybody wants a car of same horsepower. People have different applications and people want cars for different applications. So General Motors was more of marketing concept. They saw that there are many segments of customers which do not want the existing car. Would these be concepts? As a mindset, would those be, these be like 24 carat, marketing concept or 24 carat, like 100% selling concept or would it be a blend of it depending on the style of working? It is predominant. It can never be total. It is predominant. For example, for one range of product, you think, you have made a product. Again needs can be latent. Right? For example, you think the existing set of customers have this need, but you have to, they are latent. So you probably focus on pushing your salesperson highlighting that need to him. Eucophobes sold so many vacuum cleaners, you know. Have you seen the process of selling direct marketing? They will come to your home and they will sell the product. How they will sell? For vacuum cleaner, the typical process was they will go to a home, ask for a dirty carpet. They clean the carpet. They will show the dust. They will again pour the dust on the carpet and then clean again. Then they will say, what are you doing? And they will again clean. They will show that this is the dirt. I am again throwing in the carpet and then again clean the carpet. And that was such a great impact on the customer. So lead was latent, latent actually. So Eucophobes used more of a selling concept. They knew that there is a need for hygiene or need for cleanliness of customer, but it is not so apparent. Focus was marketing, tool they used was selling. When it is a latent need, you took a right example in terms of Eureka Phobes. For companies to identify latent needs, a demo of a product, the experience after the demo is that a good approach always. Because it is a demo of the product, Eureka Phobes, which actually showed the customer the value. After that he is buying it. To identify a latent need, is that a very good method or that is the only method? Is there any other alternate? See, this is one of the very powerful method, you know, demonstrate, demonstrate the product and demonstrating how will it satisfy your need and want for them. It is very powerful thing. In B2B context, no, while your demonstration, last demonstration failed, you cannot relate to that always because there can be so many other factors. There is a difference between individual buying behavior and an industrial buying behavior because there are a lot of influencers in industrial buying behavior. An individual buying behavior, the decision maker is one or two. So there are other factors also, but demonstrating is one of the powerful way of making a customer understand, yes, this product will satisfy your need and this is the way it will satisfy. As you said, in a B2B scenario, where there are multiple people who are making decisions, would you recommend actually doing demonstrations for everybody? Because that will not actually happen when you are actually doing a product demo. See, there are no easy answers. Ideally, yes. But if one demonstration does not have, we have to go to individuals and again in that scenario, you have to find out who is the most powerful, what is the hierarchy, understanding the dynamics of the organization and see who is the decision maker, who is the influencer, who is the gatekeeper in the process. And then try to see, see, sometimes the user is different from the decision maker. Decision consultant is different from the purchaser. So there are four, five typical and there is a gatekeeper. Gatekeeper means who will say no, no, no. So the four, five key people, user, in some organization, user is more powerful. In some organization, the purchase person is more powerful. In some organization, the consultant is more powerful. So understanding the dynamics of the organization will help actually because it will vary from organization to organization. So I am now focusing on only value because I see any product or any service as a bundle of values only. This is the abstraction of a tangible product and I am sure if you use this abstraction, it will help. It has helped. There are many tools available in understanding the value of a tangible product and service and which has helped organizations in improving the service. What is customer value? Worth, utility, benefit. Just think what do you mean by value? Value of any product or this is how you explain what is the worth, utility, benefit. Sometimes you say a price represents the value of a product. What actually value of a product means? Esteem. Which fulfills the need. Needs. But how do you see? While making a decision that this product is more valuable than the other, what is the underlying criteria? Usefulness. Satisfaction. Satisfaction. Is it, again satisfaction comes after you use basically, not before you use. But when are you making a purchase decision, what are the underlying criteria you have for any product? Beneficially. Is it beneficial to you? Value. Is it only benefit? Okay. In other words, the value benefit that you get for a unit price you pay? Service, durability, point of view, service point of view, cost point of view. The customer satisfaction. I will just simplify this. You are right, alright. I will say value is not only benefit. It is a relation between benefit and the cost. Value is never single dimensional. When I talk of benefits, when you talk of benefits, it means you are talking about single dimension. And benefit is again a different term from features. So value, just see your product as a bundle of a value. It gives something to customer and you get something out of it from customer. So customer sacrifices something for some benefit and customer always, always will compare the value of the competing products. And if he thinks he gets more value from this product, he will purchase that. Take any example and you can, you know, come to this conclusion. It is never benefit only. It is never price only. It is a relationship between benefit and price or cost. And benefits can be functional. It can be emotional. It can be social. Why you want to acquire, why you want a car? What is the need for a car? Transportation? Transportation. They will not buy a A class car. He will buy something beyond that. So car satisfies more than one needs. One is basic transportation and second is your prestige. So there is some benefit. What is the cost? Now you understand. Cost is not the price paid. It is the effort and time also. So we call it a customer perceived value. I am using the word perceive now. Perceived benefits or quality divided by the sacrifices. Sacrifice is the cost or the price, time and effort. Now think of any product and see what are the benefits you derive and what is the sacrifice you make. And have you ever bought a product without this process? Tell me. Think of any product as a consumer. Have you analyzed? This might be process in your subconscious. But just be conscious of this process. Have you ever as a consumer, be industrial consumer, be household consumer? Have you ever done that? Just give me a single example that you never did that. Don't think over it. Even when you go and buy a product like salt, I can explicate that process of buying. This value, valuation of products might vary from product to product. The intensity of valuation. There are some products like car, your sofa set which are high involvement products. And there can be products like salt or any other product which are low involvement product. But the process of valuation is same. Intensity of involvement might be higher low. You agree? Any disagreements? I do not know if it is a disagreement. Let us say benefits are there. We have cost and perceived benefit and perceived cost. I go to a customer. He is already having one of my competing products. It is costing lesser than what I am proposing to him. He is already benefiting and his cost is also less. I go to him, I talk to him, I will show him the benefits. And the cost, as you said, if I buy Mercedes, I have a certain advantage. I have a prestige class, I have this and I have that. And there are certain 8, 9 needs which are being fulfilled versus an accent. Accent fulfills only 4 of the needs. The cost factor is totally different. The cost factor does not even apply there. In terms of final value, the customer is getting. If I put the cost value, I mean, if it is benefits minus just cost or whatever you said, benefits already includes cost, is it not? When I am talking about the needs, if the needs are the benefits, is getting it, the features is getting, that is already included in that. How would you differentiate the cost and the benefit there? They are already merged inside each other. So, the process I am asking you to follow is just to thread beer that actually. Now, I will again introduce a term. When I say need want, I will introduce a term demand. Is the relation between need want and demand? You need transportation. You need something which improves your esteem value in a society and you need a Mercedes or you want a Mercedes to satisfy those needs. Should a Mercedes manufacturer think that you are the prospective customer? Do you form a demand set? There is another condition. Everybody has a need and a want, but if a customer has willingness to pay and ability to pay, that form the demand set. So, somebody asks, how do I estimate demand? Demand set is want plus ability and willingness to pay. Everybody needs something, few people want something and very few people have ability to pay and willingness to pay. So, a demand set is much smaller than the generic need and want level. When we say willingness to pay, isn't it a want? Because we are adding want, we are saying ability and willingness to pay. Willingness to pay is equal to want that. Sometimes, sometimes may not. For example, two of you have same level of wealth or money in your pocket, but because of your culture, because of your value system, because of your, you know, the area you have brought in, you may not be willing to purchase that. You may not be willing to purchase that. You have money, but you will not be willing to purchase that. So, proceed. So, demand is very small subset of need and want and this is the process which is followed in every purchase decision by every human being beat individual purchase process or organizational purchase process. Conscious or subconscious, it is never benefit alone, it is never sacrifice alone. Now what I do, if I know this, so marketer can enhance the value of its product and services by any of these means, raising benefits compared to your competitor. When I say raising benefits, it is compared to your competitor. Reduce cost, you will increase value. Raising benefits while lowering cost. Raising benefits by more than increase in cost. Lowering benefits by less than reduction in cost. All these actions will increase value and I assume that you are doing thing and you are communicating also. That is a different problem. When you do this with your product and services, second thing is you communicate to customer that I have done this. This is more valuable to you. So, knowing this, you can play with the increase. So, ultimately if you give, see the base, the theory is if you give more value to customer compared to competitor, he will buy your product. Simple. Now I ask what is value, benefit by cost? What are the benefits? What is the cost? I have to thread beer. Sometimes it is assumed that, like he says, the cost is already built in your benefits. If it is built in, just see what are the benefits. Again, just throw these things out.