38174148-marketing-ppt
TRANSCRIPT
MARKETING AS A CONCEPTMARKETING AS A CONCEPT
Customer orientationCustomer orientation
Competition orientationCompetition orientation
Ability to respond to Ability to respond to environmental environmental
changeschanges
MARKETING AS A PROCESSMARKETING AS A PROCESS
Both buyer and seller must have Both buyer and seller must have something to give to each othersomething to give to each other
Both of them must gainBoth of them must gain
Should result in long-term Should result in long-term satisfying relationship satisfying relationship
MARKETING AS A MANAGERIAL MARKETING AS A MANAGERIAL FUNCTIONFUNCTION
Understanding consumer needsUnderstanding consumer needs Environmental scanning and Environmental scanning and
market opportunity analysismarket opportunity analysis Developing a competitive mktg. Developing a competitive mktg.
Plan to satisfy consumer needs Plan to satisfy consumer needs /its own objectives/its own objectives
Implementation of mktg. Plan and Implementation of mktg. Plan and development of tactical plan to development of tactical plan to overcome mktg. Place problems overcome mktg. Place problems
EVOLUTION OF MARKETINGEVOLUTION OF MARKETING
The stage of barter-pre The stage of barter-pre industrial eraindustrial era
The stage of money economyThe stage of money economy
The industrial revolutionThe industrial revolution
The stage of competitionThe stage of competition
The emergence of marketingThe emergence of marketing
DEVELOPMENT OF MARKETING DEVELOPMENT OF MARKETING CONCEPTCONCEPT
Exchange conceptExchange concept
Production conceptProduction concept
Product conceptProduct concept
Sales conceptSales concept
Marketing conceptMarketing concept
FEATURES OF A MARKETING FEATURES OF A MARKETING CONCEPTCONCEPT
Consumer orientationConsumer orientation
Integrated management Integrated management actionaction
Consumer satisfactionConsumer satisfaction
Realizing organisational goalsRealizing organisational goals
MARKETING CHALLENGES OF MARKETING CHALLENGES OF LIBERALISED ECONOMYLIBERALISED ECONOMY
De-licensing-degree of De-licensing-degree of destabilization for existing destabilization for existing playersplayers
The challenge of mnc’s dominanceThe challenge of mnc’s dominance
The challenge of all pervasive The challenge of all pervasive competitioncompetition
MARKETING CHALLENGES OF MARKETING CHALLENGES OF LIBERALISED ECONOMYLIBERALISED ECONOMY
The exacting demands of a The exacting demands of a buyer’s marketbuyer’s market
Indian companies are Indian companies are compelled to export and go compelled to export and go globalglobal
Vulnerability of companies Vulnerability of companies comes to the forecomes to the fore
ENVIRONMENTAL SCANNINGENVIRONMENTAL SCANNING
Socio-economic forcesSocio-economic forces
Socio-logical forcesSocio-logical forces
Demographic changesDemographic changes
Age-compositionAge-composition
Role of women/sex Role of women/sex structure of the populationstructure of the population
Occupation and literacy Occupation and literacy profileprofile
VALUE SYSTEMVALUE SYSTEM
Changed to materialistic and ready Changed to materialistic and ready to spend on leisure from the earlier to spend on leisure from the earlier
conservative conservative
ECONOMIC FACTORSECONOMIC FACTORS
Gross national productGross national product
Per capita incomePer capita income
Balance of payments positionBalance of payments position
Industry life cycle and its current phase Industry life cycle and its current phase (recovery, boom recession, depression (recovery, boom recession, depression etc)etc)
Trends in prices-inflationary/deflationaryTrends in prices-inflationary/deflationary
TECHNOLOGYTECHNOLOGY
From ambassador, premier, From ambassador, premier, to maruti, opel- astra, fiat to maruti, opel- astra, fiat unouno
Packaging developments Packaging developments like tetra pack, cellophinelike tetra pack, cellophine
TECHNOLOGYTECHNOLOGY
Sea-food industry - containerized Sea-food industry - containerized movement of goods, trawlers fitted movement of goods, trawlers fitted with deep freezerswith deep freezers
Shortening of product –life cycle-Shortening of product –life cycle-maturity phase reducedmaturity phase reduced
Mfg.-Electronic sector-volatile Mfg.-Electronic sector-volatile changeschanges
Steel, coal, textile, ferrous metals-Steel, coal, textile, ferrous metals-stablestable
GOVERNMENT POLICIESGOVERNMENT POLICIES
Usa - govt. Intervention is less Usa - govt. Intervention is less india-govt. Itself is major buyer and india-govt. Itself is major buyer and sellerseller
Public sector firms, defence forces Public sector firms, defence forces and other govt. Agencies and other govt. Agencies participate as buyers and sellers ..participate as buyers and sellers ..
SUPPLIERS (RAW MATERIAL, SUPPLIERS (RAW MATERIAL, ENERGY, LABOUR , CAPITAL)ENERGY, LABOUR , CAPITAL) Bargaining power of buyer Bargaining power of buyer
increases when,increases when,
Buyer firm is in a monopoly Buyer firm is in a monopoly position and buys large volume position and buys large volume relative to seller’s salesrelative to seller’s sales
Products purchased by buyer firm Products purchased by buyer firm represent a significant fraction of represent a significant fraction of the buyer’s purchase cost.the buyer’s purchase cost.
SUPPLIERS (RAW MATERIAL, SUPPLIERS (RAW MATERIAL, ENERGY, LABOUR, CAPITAL)ENERGY, LABOUR, CAPITAL)
Buyer firm has few switching costsBuyer firm has few switching costs
Profits are less hence pressure to Profits are less hence pressure to lower purchasing costslower purchasing costs
Buyer firm poses a real threat to Buyer firm poses a real threat to backward integrationbackward integration
CONTINUEDCONTINUED
Suppliers product/service is Suppliers product/service is unimportant in the buyer’s finished unimportant in the buyer’s finished product.product.
Buyer firm has full information of Buyer firm has full information of seller’s industryseller’s industry
BARGAINING POWER OF BARGAINING POWER OF SUPPLIER INCREASES WHENSUPPLIER INCREASES WHEN
Seller firm is a monopoly firmSeller firm is a monopoly firm
Buyer is not an important Buyer is not an important customercustomer
Suppliers products is important Suppliers products is important input to buyersinput to buyers
BARGAINING POWER OF BARGAINING POWER OF SUPPLIER INCREASES WHENSUPPLIER INCREASES WHEN
Finished productFinished product
Supplier’s products are Supplier’s products are differentiated / have built up differentiated / have built up switching costsswitching costs
Supplier poses a real threat of Supplier poses a real threat of forward integrationforward integration
COMPETITIONCOMPETITION
Existing competitorsExisting competitors
Their motivatorsTheir motivators
Current &future goalsCurrent &future goals
Current &future strategyCurrent &future strategy
Satisfaction with current Satisfaction with current performance levelperformance level
Factors that will lead to max. Factors that will lead to max. RetaliationRetaliation
FORECASTING FORECASTING COMPETITORS[PORTER]COMPETITORS[PORTER]
Low-technology using duplicatorsLow-technology using duplicators
Firms deriving synergy-soda Firms deriving synergy-soda water to soft drinkwater to soft drink
FORECASTING FORECASTING COMPETITORS[PORTER]COMPETITORS[PORTER]
Competing is an obvious extension of corporate strategy
Backward/forward integrating companies-(cable-to power, gear to forging shop etc.)
Identify weakness in competitor’s strengths
INFORMATIONINFORMATION
Sources(verbal information)Sources(verbal information)Radio & television reportsRadio & television reportsPeers,sub-ordinates,supervisorsPeers,sub-ordinates,supervisorsCustomersCustomersFinancial institutionsFinancial institutionsConsultantsConsultants
WRITTEN INFORMATIONWRITTEN INFORMATION
Trade &industry journalTrade &industry journal
Business magazinesBusiness magazines
Financial news-papersFinancial news-papers
Government publicationsGovernment publications
WRITTEN INFORMATIONWRITTEN INFORMATION
Helps in generating creative ideaHelps in generating creative ideaForecast can be used in actual Forecast can be used in actual
decision makingdecision makingFramework is established for Framework is established for
rapid assimilation of unexpected rapid assimilation of unexpected environmental changesenvironmental changes
Techniques for environmental Techniques for environmental scanning scanning
SPIRE APPROACH-(systematic probing and SPIRE APPROACH-(systematic probing and identification of relevant environment)identification of relevant environment)
Strategic marketing aspects on vertical axisStrategic marketing aspects on vertical axis Environmental factors on horizontal axisEnvironmental factors on horizontal axis Increases sensitivity of all decision makersIncreases sensitivity of all decision makers Helps in generating creative ideasHelps in generating creative ideas Forecasts can be used in actual decision Forecasts can be used in actual decision
makingmaking Framework is established for rapid assimilation Framework is established for rapid assimilation
of un-expected environmental changesof un-expected environmental changes
SCENARIO BUILDINGSCENARIO BUILDING
Steps-Steps-Analysis of the decisionAnalysis of the decisionIdentification of key decision Identification of key decision
fatorsfatorsKeying in societal factorsKeying in societal factorsAnalysis of each key variable Analysis of each key variable
separatelyseparatelySelection of scenario -logicSelection of scenario -logic
Topic-2-UNDERSTANDING Topic-2-UNDERSTANDING BUYER-(consumer and BUYER-(consumer and
organizational) organizational) Consumer mind is a black box.Consumer mind is a black box.By offering stimuli we can seek By offering stimuli we can seek
responseresponseCompany controlled stimuli are-Company controlled stimuli are-
product, price ,advertising, sales product, price ,advertising, sales promotion display, distribution promotion display, distribution
Social stimuli-word of mouth, Social stimuli-word of mouth, reference groupreference group
CHARACTERISTICSCHARACTERISTICS
High involvement products-High involvement products-High priceHigh priceComplex featuresComplex featuresLarge difference between Large difference between
alternativesalternativesHigh perceived riskHigh perceived riskReflect buyer’s self-conceptReflect buyer’s self-concept
LOW INVOLVEMENT PRODUCTLOW INVOLVEMENT PRODUCT
Does not reflect buyer’s conceptDoes not reflect buyer’s conceptAlternatives within the same Alternatives within the same
product class are similarproduct class are similarFrequent brand switching Frequent brand switching
behaviorbehavior
BUYING SITUATIONSBUYING SITUATIONS
Routinised response behaviour-Routinised response behaviour-toiletries,tea,coffeetoiletries,tea,coffee
Limited problem solving [modified Limited problem solving [modified re-buy]-bar soap to liquid toilet re-buy]-bar soap to liquid toilet soapsoap
Extensive problem solving [new Extensive problem solving [new task]-camcorder video-camera by a task]-camcorder video-camera by a camera buyercamera buyer
BUYER MOTIVATIONSBUYER MOTIVATIONS
MotivationMotivation
LearningLearning
PerceptionPerception
BUYER MOTIVATIONSBUYER MOTIVATIONS
Motivation theories-Sigmund Motivation theories-Sigmund Freud, Abraham Freud, Abraham maslow,herzberg,mcclellandmaslow,herzberg,mcclelland
Learning theoryLearning theoryCognitive dissonance theoryCognitive dissonance theoryPerception-selective attention, Perception-selective attention,
selective distortion ,selective selective distortion ,selective retentionretention
ROLES IN CONSUMER ROLES IN CONSUMER DECISION MAKINGDECISION MAKING
InitiatorInitiatorInfluencerInfluencerDeciderDeciderBuyerBuyerUserUser
DECISION MAKING PROCESSDECISION MAKING PROCESSNeed recognitionNeed recognitionProduct specificationProduct specificationLaying down qualifications for Laying down qualifications for
potential vendorspotential vendorsInviting proposalsInviting proposals
DECISION MAKING PROCESSDECISION MAKING PROCESS
Evaluating proposalsEvaluating proposalsSelecting the vendorSelecting the vendorDetermination of order Determination of order
size/placement of ordersize/placement of orderReview/feedback-repeat purchaseReview/feedback-repeat purchase
INFLUENCES ON BUYING INFLUENCES ON BUYING DECISIONSDECISIONS
1)Individual —age,education,income1)Individual —age,education,incomeEnvironmental factors-level of Environmental factors-level of
demand,economic outlook,interest demand,economic outlook,interest raterate
Interpersonal -authority, status, Interpersonal -authority, status, empathy, persuasivenessempathy, persuasiveness
2)organizational variables-2)organizational variables-Objectives and goals,organisation Objectives and goals,organisation policies,procedures policies,procedures
INFLUENCES ON BUYER INFLUENCES ON BUYER BEHAVIOURBEHAVIOUR
Cultural influences-values, ideas, Cultural influences-values, ideas, attitudesattitudes
Social influencesSocial influencesReference group—peers, relatives, Reference group—peers, relatives,
neighbors, friends, word of mouth neighbors, friends, word of mouth publicity by opinion leaderpublicity by opinion leader
Demographic influences- Demographic influences- 1)age—child market,youth 1)age—child market,youth
market,teenage marketmarket,teenage market2)income-low ,middle,higher 2)income-low ,middle,higher
middle,highermiddle,higher
CULTURAL INFLUENCESCULTURAL INFLUENCES
SELF CONCEPT—dress,hair-style,table SELF CONCEPT—dress,hair-style,table manners,credit cards,automobiles,ready-manners,credit cards,automobiles,ready-made garments,designer wares,cosmetics,made garments,designer wares,cosmetics,
PSYCHOGRAPHIC VARIABLES-[Arnold Mitchell]PSYCHOGRAPHIC VARIABLES-[Arnold Mitchell] 1)Survivors-despairing.depressed,with-drawn1)Survivors-despairing.depressed,with-drawn 2)Sustainers-trying to get out of poverty2)Sustainers-trying to get out of poverty 3)Belongers -conventional ,conservative, 3)Belongers -conventional ,conservative,
nostalgic, un-experimental, fit-in attitudenostalgic, un-experimental, fit-in attitude
CULTURAL INFLUENCESCULTURAL INFLUENCES
4)Emulators-ambitious4)Emulators-ambitious5)Achievers-nation’s 5)Achievers-nation’s
leaders,make things leaders,make things happen,work within the happen,work within the system,enjoy good lifesystem,enjoy good life
6)I-am-me—young ,self 6)I-am-me—young ,self engrossed,given to whimengrossed,given to whim
CULTURAL INFLUENCESCULTURAL INFLUENCES
7)Experimentials-pursue a rich 7)Experimentials-pursue a rich inner-life,experience directly what inner-life,experience directly what life has to offerlife has to offer
8)Societally conscious-have high 8)Societally conscious-have high sense of social responsibility,want sense of social responsibility,want to improve conditions in societyto improve conditions in society
9)Integrate-fully psychologically 9)Integrate-fully psychologically matured,combine best element of matured,combine best element of inner and outer directedness inner and outer directedness
TOOLS TO STUDY BUYER -TOOLS TO STUDY BUYER -BEHAVIOURBEHAVIOUR
SURVEYS-questionnaires, conscious SURVEYS-questionnaires, conscious response guarded and pre- judicedresponse guarded and pre- judiced
PROJECTIVE TECHNIQUES-word PROJECTIVE TECHNIQUES-word association,picture association,picture association,thematic appreciation association,thematic appreciation testtest
FOCUS GROUP DISCUSSIONSFOCUS GROUP DISCUSSIONS
ROLES IN ORGANISATIONAL ROLES IN ORGANISATIONAL BUYING CENTREBUYING CENTRE
ACTUAL user-foreman,technician ACTUAL user-foreman,technician etc.etc.
Influencer—consultants,panel Influencer—consultants,panel designers,architect.designers,architect.
DeciderDeciderBuyerBuyerGate-keeper—Gate-keeper—
receptionist,secretaryreceptionist,secretary
DECISION MAKING PROCESS-DECISION MAKING PROCESS-HIGH-INVOLVEMENT PRODUCTSHIGH-INVOLVEMENT PRODUCTSNeed recognition/problem Need recognition/problem
identificationidentificationDevelopment of decision criteriaDevelopment of decision criteriaSearch for alternativesSearch for alternativesEvaluation of alternativesEvaluation of alternativesDecisionDecision
DECISION MAKING PROCESS-DECISION MAKING PROCESS-low involvement productslow involvement products
Problem/need recognitionProblem/need recognition
Evaluation of alternativesEvaluation of alternatives
DecisionDecision
THEORY OF EVOKED SET-THEORY OF EVOKED SET-HOWARD&SHETHHOWARD&SHETH
TOTAL set-[all brands]TOTAL set-[all brands]Awareness set-[brands aware of]Awareness set-[brands aware of]Consideration set-[brands Consideration set-[brands
considered]considered]Decision set-brand decidedDecision set-brand decidedPurchase setPurchase set
topic-3-MARKET topic-3-MARKET SEGMENTATIONSEGMENTATION
One cannot be every-thing to One cannot be every-thing to every one; but one can be every one; but one can be everything to select few.everything to select few.
1)Customer based segmentation1)Customer based segmentation2)Product segmentation2)Product segmentation3)Competition related 3)Competition related
segmentationsegmentation
CUSTOMER BASED CUSTOMER BASED SEGMENTATIONSEGMENTATION
GEOGRAPHIC GEOGRAPHIC location-rural/urban/metro/non-location-rural/urban/metro/non-metrometro
Demographic characteristicsDemographic characteristicsAge—infant, child, teens, Age—infant, child, teens,
adolescent, youth, middle-aged, adolescent, youth, middle-aged, elderselders
Income—low,low-Income—low,low-middle,middle,upper-middlemiddle,middle,upper-middle
CUSTOMER BASED CUSTOMER BASED SEGMENTATIONSEGMENTATION
Sex-male/femaleSex-male/femaleOccupation-professionals [doctors, c.a.. Occupation-professionals [doctors, c.a..
Consultant]Consultant]Traders/shop-Traders/shop-
keepers,businessman.Industrialists,sales keepers,businessman.Industrialists,sales personnel, teachers, professors, students, personnel, teachers, professors, students, house-wiveshouse-wives
Education-illiterates,literates,high-Education-illiterates,literates,high-school,university,graduates,post-school,university,graduates,post-graduatesgraduates
Marital status-Marital status-
CUSTOMER BASED CUSTOMER BASED SEGMENTATIONSEGMENTATION
Un-married-spend-thrifts,use Un-married-spend-thrifts,use packaged goods,fast-foodpackaged goods,fast-food
Married Married people-conservative/frugalpeople-conservative/frugal
Family size and structure—Family size and structure—reduction in numbersreduction in numbers
Nuclear family-Nuclear family-
Socio-economic groups of Socio-economic groups of Indian customers-marketing Indian customers-marketing
research society of India-[MRSI research society of India-[MRSI ]]
A1&a2-white-collared ,professionals—A1&a2-white-collared ,professionals—9.5%9.5%
B1&b2—(S.S.C).Clerks/shopkeeper-17%B1&b2—(S.S.C).Clerks/shopkeeper-17%C-skilled workers,sales-persons-19.5%C-skilled workers,sales-persons-19.5%D-skilled workers [with S.S.C.]-22.4%D-skilled workers [with S.S.C.]-22.4%E1&e2—unskilled labor—31.6%E1&e2—unskilled labor—31.6%
PSYCHOGRAPHIC PSYCHOGRAPHIC VARIABLES[PERSONALITY&LIFEVARIABLES[PERSONALITY&LIFE
-STYLE]-STYLE]
Buyer-readiness-1)unaware Buyer-readiness-1)unaware buyer,buyer,
2)aware but not interested,2)aware but not interested,3)interested&desirous,3)interested&desirous,4)positively buy4)positively buy
PRODUCT RELATED PRODUCT RELATED SEGMENTATIONSEGMENTATION
Product use situation-Rasna-at a Product use situation-Rasna-at a party, for unexpected guests, party, for unexpected guests, drink at the end of long/tiring drink at the end of long/tiring dayday
Benefits Benefits segmentation-tangible/intangiblsegmentation-tangible/intangiblee
Quantity consumed-heavy, Quantity consumed-heavy, moderate, light users moderate, light users
LOYALTYLOYALTY
Soft- core loyals—2-3 brands in Soft- core loyals—2-3 brands in 9 shopping expeditions9 shopping expeditions
Hard-core loyals-cigarette, Hard-core loyals-cigarette, newspaper newspaper
Switchers-never stick to brandSwitchers-never stick to brand
SEGMENTING INDUSTRIAL SEGMENTING INDUSTRIAL MARKETMARKET
1)Size of the customer-large 1)Size of the customer-large medium,smallmedium,small
2)Geographical location2)Geographical location 3)End-use-steel-3)End-use-steel-
automobile,construction,cable,office automobile,construction,cable,office furniturefurniture
4)Buyer 4)Buyer BEHAVIOUR/motivation/purchase BEHAVIOUR/motivation/purchase criteria-price-sensitivity,service need-criteria-price-sensitivity,service need-standardized, tailor-made product standardized, tailor-made product
HOW TO SEGMENT?HOW TO SEGMENT?
Survey stage—two partsSurvey stage—two partsFocus-group discussion &in-Focus-group discussion &in-
depth interviewdepth interviewQuestionnaire design and Questionnaire design and
administeration to sample groupadministeration to sample groupAnalysis-cluster, factor analysisAnalysis-cluster, factor analysisprofilingprofiling
HOW TO SEGMENT?HOW TO SEGMENT?
Based on this developing a Based on this developing a questionnaire which is questionnaire which is administered to sample group of administered to sample group of consumersconsumers
HOW TO SEGMENT?HOW TO SEGMENT?
Analysis stage-factor Analysis stage-factor analysis/cluster analysisanalysis/cluster analysis
HOW TO SEGMENT?HOW TO SEGMENT?
Profiling-cluster is profiled in Profiling-cluster is profiled in terms of demographics, terms of demographics, psychographics, media habits, psychographics, media habits, attitudes, behavior and attitudes, behavior and consumption habitsconsumption habits
EFFECTIVE SEGMENTATION EFFECTIVE SEGMENTATION REQUIRMENTSREQUIRMENTS
AccessibilityAccessibilityMeasurableMeasurableViableViableCompetition intensityCompetition intensity
TARGETING STRATEGIESTARGETING STRATEGIES
Standardization-coke/PepsiStandardization-coke/PepsiDifferentiation-air-line-classesDifferentiation-air-line-classesFocus-combination of aboveFocus-combination of above
Topic-4 -MARKET Topic-4 -MARKET MEASUREMENT&FORECASTINGMEASUREMENT&FORECASTINGMarket potentialMarket potentialMarket demandMarket demandMarket forecastMarket forecastCompany demandCompany demandCompany potentialCompany potentialSales forecastSales forecast
TOOLS FOR MARKET DEMAND TOOLS FOR MARKET DEMAND ESTIMATIONESTIMATION
Qualitative tools [opinion Qualitative tools [opinion surveys]surveys]
Survey of buying intentionSurvey of buying intentionComposite of sales force opinionComposite of sales force opinionDelphi techniqueDelphi techniqueTools for data collection-Tools for data collection-
questionnaire, interview questionnaire, interview schedule, association testsschedule, association tests
MARKETING INTELLIGENCE MARKETING INTELLIGENCE SYSTEMSYSTEM
CUSTOMER intelligence-CUSTOMER intelligence-customer’s business customer’s business preferences, loyalties, preferences, loyalties, demographic details, whims and demographic details, whims and fancies, what to do/not to fancies, what to do/not to do/what words to/use/avoiddo/what words to/use/avoid
-topic-5-PRODUCT -topic-5-PRODUCT MANAGEMENTMANAGEMENT
Core product [core ingredients]Core product [core ingredients]AttributesAttributesStylingStylingColorColorBrand nameBrand namePackagingPackagingQualityQualityInstructions manualInstructions manual
AUGMENTED PRODUCTAUGMENTED PRODUCTAfter sales serviceAfter sales serviceDelivery points and systemsDelivery points and systemsInstallation [bulky products]Installation [bulky products]Customer education and trainingCustomer education and trainingCustomer complaint managementCustomer complaint managementPayment options [for high pricedPayment options [for high pricedReplacement/returns policyReplacement/returns policyGuarantees/warranties Guarantees/warranties
DEFINITIONSDEFINITIONS
Product mix—the number of Product mix—the number of products carried by a firm at a products carried by a firm at a given point of timegiven point of time
Product line—group of products Product line—group of products clubbed together having clubbed together having common characteristics common characteristics
PRODUCT MIX CHANGES PRODUCT MIX CHANGES EXAMPLESEXAMPLES
Bpl- Sanyo launching Bpl- Sanyo launching refrigerators, washing machines, refrigerators, washing machines, microwave ovensmicrowave ovens
Raheja builders- getting into Raheja builders- getting into theatre shopping centretheatre shopping centre
HLL-different brands of HLL-different brands of detergent powder at different detergent powder at different pricesprices
EXAMPLES OF PRODUCT LINE EXAMPLES OF PRODUCT LINE ADDITION/DELETIONADDITION/DELETION
BAJAJ electrical launching hi-tech BAJAJ electrical launching hi-tech washing machine—technology washing machine—technology And product line stretching upAnd product line stretching up
BAJAJ launching manual washing BAJAJ launching manual washing machine-stretching product line machine-stretching product line downwardsdownwards
TAJ launching ‘taj-gateway for TAJ launching ‘taj-gateway for midddle executivesmidddle executives
Product Product abandonment/modification abandonment/modification
examplesexamplesBajaj electrical abandoned Bajaj electrical abandoned
entertainment electronics line in entertainment electronics line in 19851985
Parle-exports had to withdraw from Parle-exports had to withdraw from fast-food market twice-big bite and fast-food market twice-big bite and biscabisca
Examples of product-modification—Examples of product-modification—Pan- parag introduced in new sachet Pan- parag introduced in new sachet
packs,added tobacco to the pan-packs,added tobacco to the pan-masalamasala
Product mix decision toolsProduct mix decision tools
BCG model[BOSTON consulting ]BCG model[BOSTON consulting ]GE approachGE approachProduct becomes a[ SBU] when,Product becomes a[ SBU] when,The SBU identifiable competitor The SBU identifiable competitor
trying to out-smart the firmtrying to out-smart the firmThe SBU can be planned separately The SBU can be planned separately
from the rest of the firmfrom the rest of the firmHas an independent manager Has an independent manager
responsible for its sales,profits,and responsible for its sales,profits,and strategic planningstrategic planning
Topic-6-PRODUCT LIFE-CYCLE Topic-6-PRODUCT LIFE-CYCLE PHASES,STRATEGIESPHASES,STRATEGIES
IntroductionIntroductionHigh-promotion-high-price—High-promotion-high-price—
rapid-skimmingrapid-skimmingLow-promotion-high price-slow Low-promotion-high price-slow
skimmingskimmingHigh-promotion low price-rapid High-promotion low price-rapid
penetrationpenetrationLow promotion-low price-slow Low promotion-low price-slow
penetrationpenetration
WHEN RAPID SKIMMING?WHEN RAPID SKIMMING?
When customer awareness for When customer awareness for the product is not very highthe product is not very high
Among aware,willingness to pay Among aware,willingness to pay any price /buy is highany price /buy is high
WHEN RAPID SKIMMING?WHEN RAPID SKIMMING?
Market size for the product is Market size for the product is large;Threat from competition is large;Threat from competition is imminentimminent
Firm’s objective is short-term Firm’s objective is short-term sales/profit maximization in the sales/profit maximization in the short- termshort- term
For products like-TV/VCR/music For products like-TV/VCR/music system/video-games system/video-games
WHEN SLOW-SKIMMING?WHEN SLOW-SKIMMING?
When the firm has sufficient time When the firm has sufficient time to re-cover its pre-launch to re-cover its pre-launch expensesexpenses
Firm’s technology is Firm’s technology is sophisticated; competitor will sophisticated; competitor will have to invest substantial re-have to invest substantial re-sourcessources
WHEN SLOW-SKIMMING?WHEN SLOW-SKIMMING?
Market-size is limited; those Market-size is limited; those aware are willing to pay price to aware are willing to pay price to buy it.buy it.
For products like-laser For products like-laser technology, renewable energy, technology, renewable energy, petro-chemicals petro-chemicals
WHEN RAPID PENETRATION?WHEN RAPID PENETRATION?
Conditions same as rapid-Conditions same as rapid-skimmingskimming
Long-term perspectiveLong-term perspectiveExamples- Nirma &T-series Examples- Nirma &T-series
cassettescassettes
WHEN SLOW-PENETRATION?WHEN SLOW-PENETRATION?
Competitor’s threat is minimalCompetitor’s threat is minimalMarket size is largeMarket size is largeMarket is pre-dominantly price Market is pre-dominantly price
sensitivesensitiveMarket is familiar with the productMarket is familiar with the productFirm’s objective is-maximize Firm’s objective is-maximize
sales/profits in the long runsales/profits in the long runExample---MARUTI-800-safety Example---MARUTI-800-safety
&fuel efficiency&fuel efficiency
WHAT HAPPENS DURING WHAT HAPPENS DURING GROWTH?GROWTH?
Firm operates at economic levelFirm operates at economic levelLess production bottle-necks; Less production bottle-necks;
costs are lowcosts are lowTo remain competitive ,productTo remain competitive ,productImprovement/modification Improvement/modification
programmeprogramme
WHAT HAPPENS DURING WHAT HAPPENS DURING GROWTH?GROWTH?
Sales &profits grow exponentiallySales &profits grow exponentiallyEnd of standardization/mass-End of standardization/mass-
marketingmarketingHow to handle growth?How to handle growth?Product-modification, enlarging Product-modification, enlarging
distribution/service network, distribution/service network, maintaining a competitive price level, maintaining a competitive price level, newer packaging, extending product newer packaging, extending product to different use-situationsto different use-situations
MATURITY--STRATEGIESMATURITY--STRATEGIES
Slower growth rates of sales Slower growth rates of sales &profits&profits
Cut-throat Cut-throat competition-price/promotion competition-price/promotion warswars
Investment in service Investment in service augmentationaugmentation
Cost reduction-price reductionCost reduction-price reduction
HOW TO HANDLE MATURITY HOW TO HANDLE MATURITY PHASE?PHASE?
Adopt segmental approachAdopt segmental approachService augmentationService augmentationImage –marketingImage –marketingCreating new value imageCreating new value image
HOW TO HANDLE MATURITY HOW TO HANDLE MATURITY PHASE?PHASE?
Positioning of the brandPositioning of the brandChanges in distribution channelsChanges in distribution channels
DECLINE PHASE-DECLINE PHASE-
Sales declineSales declineCompetition firms get reducedCompetition firms get reducedLimited product version Limited product version
availableavailableCustomer’s value-perception Customer’s value-perception
undergoes changeundergoes changeStrategy—diverting and gradual Strategy—diverting and gradual
withdrawalwithdrawal
CHANGES IN SHAPE AND CHANGES IN SHAPE AND DURATION OF PLCDURATION OF PLC
Can be brought by—promoting Can be brought by—promoting more frequent use of the product more frequent use of the product among existing customersamong existing customers
Developing more uses of the Developing more uses of the product among current usersproduct among current users
Creating new users by expanding Creating new users by expanding marketmarket
Finding new users for the Finding new users for the productproduct..
Topic-7-NEW PRODUCT Topic-7-NEW PRODUCT DECISIONSDECISIONS
Reasons for fast pace of new Reasons for fast pace of new product introduction—product introduction—1)changing market environment1)changing market environment
2)More liberal and open market2)More liberal and open market3)Import of foreign 3)Import of foreign
products/machineries allowedproducts/machineries allowed
WHAT IS A NEW PRODUCT?WHAT IS A NEW PRODUCT?
In 70% cases, new product In 70% cases, new product involves changes within current involves changes within current product lineproduct line
In30% cases it is new to the In30% cases it is new to the organizationorganization
Product modification—26%Product modification—26%Product line addition/extensionsProduct line addition/extensions
—26%—26%
WHAT IS A NEW PRODUCT?WHAT IS A NEW PRODUCT?
New product line-20%New product line-20%Re-positioning-11%Re-positioning-11%Break-through product—10%Break-through product—10%Cost-reduction—7%Cost-reduction—7%
WHY NEW PRODUCT WHY NEW PRODUCT DEVELOPMENT?DEVELOPMENT?
Surplus capacitySurplus capacityChanging customer preferencesChanging customer preferencesTechnological changesTechnological changesGovernment policyGovernment policy
NEW PRODUCT DEVELOPMENT NEW PRODUCT DEVELOPMENT PROCESSPROCESS
Idea generationIdea generationIdentifying prospective Identifying prospective
customers/defining target marketcustomers/defining target marketConcept development &testingConcept development &testingFeasibility analysisFeasibility analysisProduct developmentProduct developmentTest-marketingTest-marketingCommercializationCommercialization
IDEA GENERATIONIDEA GENERATION
Techniques—brain-storming, Techniques—brain-storming, need/problem identification, need/problem identification, attribute listingattribute listing
Toyota receives 2million ideas Toyota receives 2million ideas annually-85% are implementedannually-85% are implemented
Ford motors receives ideas from Ford motors receives ideas from their employeestheir employees
COMMON SOURCES OF NEW COMMON SOURCES OF NEW PRODUCT IDEASPRODUCT IDEAS
Changing customer needs and Changing customer needs and trends in the consumer marketstrends in the consumer markets
CompetitorsCompetitorsR&D scientists-IIIs/UDCTsR&D scientists-IIIs/UDCTs
COMMON SOURCES OF NEW COMMON SOURCES OF NEW PRODUCT IDEASPRODUCT IDEAS
Laboratories/quality circlesLaboratories/quality circlesForeign markets/mediaForeign markets/mediaEmployeesEmployeesTrade channels/top managementTrade channels/top management
SOURCES OF IDEAS AND SOURCES OF IDEAS AND RANKINGRANKING
Most productive sources [in Most productive sources [in order of importance]order of importance]
Finding the customer’s needs, Finding the customer’s needs, problems, expectations problems, expectations
R&DR&DUn-solicited customer feed-backUn-solicited customer feed-backWatching competitorsWatching competitorsCompany Sales representativesCompany Sales representatives
Ranking –idea-sourcesRanking –idea-sources
Other productive sources-top Other productive sources-top management/university labs.management/university labs.
Least productive sources—Least productive sources—commercial laboratories, commercial laboratories, industrial consultants, patent, industrial consultants, patent, attorneys, lawyersattorneys, lawyers
CONCEPT CONCEPT DEVELOPMENT&TESTING-DEVELOPMENT&TESTING-
(THEODORE LEVITT)(THEODORE LEVITT)
Product idea-possible product that Product idea-possible product that the company might offer to the the company might offer to the marketmarket
Product-concept—elaborated Product-concept—elaborated version of the idea expressed in version of the idea expressed in meaningful consumer termsmeaningful consumer terms
Product image—particular picture Product image—particular picture that consumer acquires that consumer acquires
CONCEPT DEVELOPMENT CONCEPT DEVELOPMENT [SOFTDRINKTO NEW FRUIT [SOFTDRINKTO NEW FRUIT
JUICE)JUICE)
Concept1—fresh fruit-juice for Concept1—fresh fruit-juice for children and adolescents-as a children and adolescents-as a health supplement at breakfasthealth supplement at breakfast
Concept2—bottled fresh juice for Concept2—bottled fresh juice for young, grown ups as a fun, thirst young, grown ups as a fun, thirst quencher at any timequencher at any time
CONCEPT CONCEPT DEVELOPMENT[SOFTDRINKTO DEVELOPMENT[SOFTDRINKTO
NEW FRUIT JUICENEW FRUIT JUICE
Concept3—fresh bottled Concept3—fresh bottled mango juice-other things as mango juice-other things as concept2concept2
Concept4—mango-juice for Concept4—mango-juice for adults as a health supplementadults as a health supplement
FEASIBILITY ANALYSISFEASIBILITY ANALYSIS
Estimation of demand in the Estimation of demand in the target market at different price-target market at different price-levellevel
Forecasting sales based on Forecasting sales based on demand estimation &competitive demand estimation &competitive analysisanalysis
FEASIBILITY ANALYSISFEASIBILITY ANALYSIS
Cost of serving the market Cost of serving the market segment—transportation, segment—transportation, warehousing, margins, warehousing, margins, promotion expenses, sales-force promotion expenses, sales-force costcost
Calculate break-even price, sales Calculate break-even price, sales volume volume
PRODUCT DEVELOPMENTPRODUCT DEVELOPMENT
Product form should be simpleProduct form should be simpleTyre manufacturers conduct Tyre manufacturers conduct
intensive stress testsintensive stress testsPharmaceuticals companies Pharmaceuticals companies
conduct clinical trials conduct clinical trials
Topic-8-Topic-8-BRANDING/BRANDING/
POSITIONINGPOSITIONINGBranding is an important Branding is an important strategy to differentiate the strategy to differentiate the product from its competitors. It product from its competitors. It may be name, logo, trade-mark, may be name, logo, trade-mark, patent number, package designpatent number, package design
BRANDING DECISIONS BY A BRANDING DECISIONS BY A FIRMFIRM
Manufacturer’s name-family Manufacturer’s name-family brand/independent brandbrand/independent brand
Mktg. Organization/distributor Mktg. Organization/distributor brand name-Bajaj /voltas brand name-Bajaj /voltas /Akbarallys/Akbarallys
Combination of above—Combination of above— Kelvinator-own fridge +blue starKelvinator-own fridge +blue starWhirl pool-own +onidaWhirl pool-own +onida
POSITIONINGPOSITIONING
Is the act of communicating Is the act of communicating company’s offer so that it company’s offer so that it occupies a distinct and valued occupies a distinct and valued place in the customer’s mindplace in the customer’s mind
This concept was developed by This concept was developed by Al-ries and Jack-Trout in 1972Al-ries and Jack-Trout in 1972
POSITIONING WAYSPOSITIONING WAYS
1)Based on use situation—Rasna1)Based on use situation—RasnaSoft drink after shopping/days Soft drink after shopping/days
workworkWhen you have guests suddenly When you have guests suddenly
appearingappearingWhen you feel thirstyWhen you feel thirsty
Positioning-continuedPositioning-continued
2)Emphasizing tangible benefits2)Emphasizing tangible benefitsAriel—micro cleaning systemAriel—micro cleaning systemColgate-prevents cavity-offers Colgate-prevents cavity-offers
fresh breathfresh breathPromise-Balsara—clovePromise-Balsara—clove Nirma -low priceNirma -low priceMaruti Suzuki-maximum fuel Maruti Suzuki-maximum fuel
efficiency and safetyefficiency and safety3)Linking to uses-VCR/VCP3)Linking to uses-VCR/VCP
Positioning (continued)Positioning (continued)
4)Head on competitive 4)Head on competitive positioning—examplespositioning—examples
Onida—we are no.2;we try Onida—we are no.2;we try harderharder
Wheel/ nirma-wheel claimed it Wheel/ nirma-wheel claimed it was better because of lemon was better because of lemon componentcomponent
Kinetic Honda /Bajaj—more Kinetic Honda /Bajaj—more mileage per liter of petrolmileage per liter of petrol
Positioning -continuedPositioning -continued
Life-style positioning—micro-Life-style positioning—micro-wave oven, textiles, ready-made wave oven, textiles, ready-made garments, watchesgarments, watches
POSITIONING ERRORSPOSITIONING ERRORS
1)Under-positioning—occurs 1)Under-positioning—occurs when buyers know much less when buyers know much less about the brand/do not know about the brand/do not know anything specialanything special
2)Over positioning-occurs when 2)Over positioning-occurs when buyers have too narrow a view of buyers have too narrow a view of the firm, product, brandthe firm, product, brand
POSITIONING ERRORSPOSITIONING ERRORS
3)Confused positioning—3)Confused positioning—frequent changes in positioning frequent changes in positioning statementsstatements
4)Doubtful positioning-occurs 4)Doubtful positioning-occurs when buyers doubt the veracity when buyers doubt the veracity of the claimof the claim
HOW TO POSITION THE HOW TO POSITION THE BRAND?BRAND?
1)Study the tangible/intangible 1)Study the tangible/intangible attributes that a customer looks attributes that a customer looks for-for-
Tangible—product features, Tangible—product features, performance levels, style performance levels, style /aesthetics of the product, /aesthetics of the product, packaging, product components, packaging, product components, distributiondistribution
positioningpositioning
Intangibles—after sales-service, Intangibles—after sales-service, how-to use training, financing how-to use training, financing assistanceassistance
Step-2-get the customers to rank Step-2-get the customers to rank these attributes in the order of these attributes in the order of importanceimportance
positioningpositioning
Step-3-customer’s knowledge of Step-3-customer’s knowledge of the competitor’s brandthe competitor’s brand
Step-4 customer’s assessment of Step-4 customer’s assessment of the competitor’s brand on the the competitor’s brand on the ideal product mapideal product map
Step-5product managers identify Step-5product managers identify vacant slots/build positioning vacant slots/build positioning strategy strategy
COMMUNICATING THE BRAND COMMUNICATING THE BRAND POSITIONING STRATEGYPOSITIONING STRATEGY
Involves—Involves—Developing appropriate product Developing appropriate product
formformPackagingPackagingUse of colorsUse of colorsStationeryStationeryDistribution out-letsDistribution out-letsPricing strategyPricing strategy
BRAND POSITIONING BRAND POSITIONING COMMUNICATING-(EXAMPLES)COMMUNICATING-(EXAMPLES)
Raymond's-positioning itself as Raymond's-positioning itself as a firm producing quality a firm producing quality woolen textiles-fashion firm for woolen textiles-fashion firm for upper middle &high income upper middle &high income male, high on achievementmale, high on achievement
Park-avenue—renovated its Park-avenue—renovated its retail outlets to give an elite retail outlets to give an elite look; trained its sales forcelook; trained its sales force
-topic-9 THEORY OF DIFFUSION -topic-9 THEORY OF DIFFUSION OF AN INNOVATION/NEW OF AN INNOVATION/NEW
PRODUCT IDEAPRODUCT IDEARATE OF DIFFUSION DEPENDS RATE OF DIFFUSION DEPENDS
ON—ON—EXTENT TO WHICH ECONOMY EXTENT TO WHICH ECONOMY
IS OPEN TO NEW PRODUCTSIS OPEN TO NEW PRODUCTSMEDIAMEDIATRANSPORTATIONTRANSPORTATIONWAREHOUSING /DISTRIBUTION WAREHOUSING /DISTRIBUTION
NETWORKNETWORK
CUSTOMER GROUPINGCUSTOMER GROUPING
InnovatorsInnovatorsEarly adoptersEarly adoptersEarly majorityEarly majorityLate majorityLate majorityLaggardLaggard
Customer-groupingCustomer-grouping
1)Innovators—2.5% of the total 1)Innovators—2.5% of the total marketmarket
High on risk-takingHigh on risk-takingMore open to changeMore open to changeMore awareMore awarePerceived as opinion leadersPerceived as opinion leadersBrand switchersBrand switchersOthers seek Others seek
guidance/recommendationguidance/recommendation
Customer-groupingCustomer-grouping
2)Early-adopters—13.5%2)Early-adopters—13.5%Same as innovators but take Same as innovators but take
little more time to buy and adopt little more time to buy and adopt the new product than innovatorsthe new product than innovators
Customer-groupingCustomer-grouping
3)Early majority &late majority3)Early majority &late majority68% of the market68% of the marketModerate on risk-takingModerate on risk-takingWait for positive Wait for positive
recommendations from recommendations from innovators and early adoptersinnovators and early adopters
Customer-groupingCustomer-grouping
4)Laggards—16% of the total 4)Laggards—16% of the total marketmarket
Have high resistance to changeHave high resistance to changeAverse to risk-takingAverse to risk-takingLoyal to existing brandsLoyal to existing brands
RATE OF ADOPTION OF AN RATE OF ADOPTION OF AN INNOVATION(-KOTLER)INNOVATION(-KOTLER)
Innovation’s relative advantageInnovation’s relative advantage—higher the perceived —higher the perceived advantage, faster the pace of advantage, faster the pace of adoptionadoption
Example-PCs are being adopted Example-PCs are being adopted fasterfaster
Pet bottles/tetra packs/metal Pet bottles/tetra packs/metal cans/glass bottlescans/glass bottles
innovationinnovation
Innovator’s compatibility—with Innovator’s compatibility—with user values and experiencesuser values and experiences
Innovation’s complexity—more Innovation’s complexity—more complex innovation to complex innovation to understand, more time for understand, more time for diffusiondiffusion
innovationinnovation
Innovation’s divisibility—suitable Innovation’s divisibility—suitable for multiple basis, more options-for multiple basis, more options-faster diffusionfaster diffusion
Innovation’s communicability—Innovation’s communicability—degree to which benefits of degree to which benefits of innovation can be observed and innovation can be observed and communicated--communicated--
OTHER FACTORS FOE NEW OTHER FACTORS FOE NEW PRODUCT SUCCESSPRODUCT SUCCESS
CostsCostsRisk and uncertaintyRisk and uncertaintyScientific credibilityScientific credibilitySocial-cultural acceptanceSocial-cultural acceptance
ORGANISATION OF NEW ORGANISATION OF NEW PRODUCTSPRODUCTS
Formation of venture groups-Formation of venture groups-executives from other functions executives from other functions are brought togetherare brought together
Marketing department—to Marketing department—to consider organisational consider organisational resources/constraintsresources/constraints
Organization of new-productsOrganization of new-products
R&d departmentR&d departmentPlanning department (corporate Planning department (corporate
planning)planning)
Topic-10-PRICINGTopic-10-PRICING
Has become important because-Has become important because-Product differentiation getting Product differentiation getting
blunted; brands have become blunted; brands have become commoditiescommodities
Intensity in inter-firm rivalry Intensity in inter-firm rivalry increased—investment in new increased—investment in new product development becomes product development becomes essential, cost of operation essential, cost of operation increases, leads to increases, leads to high-overhead/low marginhigh-overhead/low margin
PRICINGPRICING
Matured products &markets—Matured products &markets—makes companies to makes companies to differentiate on the basis of differentiate on the basis of augmented service/price-cutsaugmented service/price-cuts
PRICINGPRICING
Customer’s value perception-Customer’s value perception-products should be priced at the products should be priced at the right levelright level
Inflation in the economy—lowers Inflation in the economy—lowers the purchasing power of the the purchasing power of the customer ;firm’s cost increases, customer ;firm’s cost increases, inputs cost moreinputs cost more
PRICINGPRICING
Price—quantity of money Price—quantity of money received by the seller/qty. of received by the seller/qty. of goods & services received by the goods & services received by the buyerbuyer
PRICING OBJECTIVESPRICING OBJECTIVES
1)Maximize current profits & 1)Maximize current profits & return on investmentreturn on investment
2)Exploit competitive position 2)Exploit competitive position [being a leader][being a leader]
3)Survival in a competitive 3)Survival in a competitive market [discounting]market [discounting]
4)Balance price/product line4)Balance price/product line
””
PRICE -SENSITIVITYPRICE -SENSITIVITY
1)Unique value effect—more 1)Unique value effect—more unique the product; lower is unique the product; lower is price-sensitivityprice-sensitivity
PRICE -SENSITIVITYPRICE -SENSITIVITY
2)Substitute awareness effect-if 2)Substitute awareness effect-if buyers are aware of buyers are aware of substitutes ;price-sensitivity will substitutes ;price-sensitivity will be highbe high
3)Difficult comparison effect—if 3)Difficult comparison effect—if buyer has difficulty comparing buyer has difficulty comparing alternatives ,price –sensitivity alternatives ,price –sensitivity will be lowwill be low
Price-sensitivityPrice-sensitivity
4)Total-expenditure effect—if the 4)Total-expenditure effect—if the expenditure on product expenditure on product represents a low proportion of represents a low proportion of the consumer income, price-the consumer income, price-sensitivity will be lesssensitivity will be less
PRICINGPRICING5)End-benefit effect—less price 5)End-benefit effect—less price
sensitivity where the sensitivity where the expenditure on the product is expenditure on the product is low compared to the total cost of low compared to the total cost of the end productthe end product
6)Shared-cost effect-if the cost 6)Shared-cost effect-if the cost of the product is shared by of the product is shared by another party; less prone to another party; less prone to price sensitivityprice sensitivity
PRICINGPRICING7)Sunk-investment effect-price 7)Sunk-investment effect-price
sensitivity is low in products, sensitivity is low in products, which are used along with assets which are used along with assets previously boughtpreviously bought
8)Price quality effect—higher the 8)Price quality effect—higher the perceived quality of the product, perceived quality of the product, lower the price-sensitivitylower the price-sensitivity
9)Inventory effect—if the product 9)Inventory effect—if the product cannot be stored, buyer will be cannot be stored, buyer will be less price-sensitiveless price-sensitive
PRICING STRATEGYPRICING STRATEGY
Is dependent on—Is dependent on—Corporate goals and objectivesCorporate goals and objectivesMay be, to skim the cream, May be, to skim the cream,
penetrate the market and penetrate the market and establish leadership, balance establish leadership, balance profit across product-line profit across product-line
PRICING-CUSTOMER PRICING-CUSTOMER CHARACTERISTICSCHARACTERISTICS
If search cost is low-customer If search cost is low-customer look for discount saleslook for discount sales
High brand loyalty gives a firm a High brand loyalty gives a firm a greater degree of leveragegreater degree of leverage
INTENSITY OF INTER-FIRM INTENSITY OF INTER-FIRM RIVALRYRIVALRY
Monopoly market,-low intensity-Monopoly market,-low intensity-price at premiumprice at premium
High intensity-price at survival High intensity-price at survival levellevel
Differential pricing Differential pricing strategystrategy
Air-line seat—business Air-line seat—business executive-full fare basisexecutive-full fare basis
Individuals/family on holidays—Individuals/family on holidays—discounted farediscounted fare
PRODUCT-LINE PRICINGPRODUCT-LINE PRICING
Shampoos-normal, Shampoos-normal, conditioners ,clinicalconditioners ,clinical
Restaurant- mughlai, Chinese, Restaurant- mughlai, Chinese, continentalcontinental
PRICE-BUNDLINGPRICE-BUNDLING
Restaurant may charge lower Restaurant may charge lower rate for buffet than la-carte mealrate for buffet than la-carte meal
Off-season discounts-season Off-season discounts-season tickets for music festivaltickets for music festival
Passive strategy aimed at Passive strategy aimed at correctly bundling the prices of correctly bundling the prices of related items-firm should be able related items-firm should be able to maximize the product to maximize the product
PRICE-DECISION PRICE-DECISION FRAMEWORKFRAMEWORK
Government policyGovernment policyCompetitor reactionsCompetitor reactionsDemandDemandCostsCostsCorporate Corporate
objectives-skim/penetrateobjectives-skim/penetrateBarriers in Barriers in
industry-technology/exit barrierindustry-technology/exit barrier
PRICING METHODSPRICING METHODS
1)Cost oriented method—full 1)Cost oriented method—full cost/mark-up pricingcost/mark-up pricing
2)Marginal cost/contribution 2)Marginal cost/contribution pricingpricing
3)Going rate-follow the crowd-3)Going rate-follow the crowd-competition oriented approachcompetition oriented approach
4)Sealed bid pricing4)Sealed bid pricing5)Customer oriented –perceived 5)Customer oriented –perceived
value pricingvalue pricing
PRICING METHODSPRICING METHODS
6)Premium pricing6)Premium pricing7)Image pricing-color TV with 7)Image pricing-color TV with
remote-high/upper incomeremote-high/upper incomeHigh price in a high image storeHigh price in a high image storeLow price in a low image storeLow price in a low image store8)Complimentary pricing-8)Complimentary pricing-
registration fee for flatregistration fee for flatProcessing fee for a credit cardProcessing fee for a credit card
PRICING TACTICSPRICING TACTICS
High price-sensitivity-low concern for High price-sensitivity-low concern for quality-customer educationquality-customer education
High price sensitivity-high concern for High price sensitivity-high concern for quality-value added marketingquality-value added marketing
Low price sensitivity-high concern for Low price sensitivity-high concern for quality-maintain and growquality-maintain and grow
Low price sensitivity-low concern for Low price sensitivity-low concern for quality-quitquality-quit
Topic-11-PROMOTIONTopic-11-PROMOTION
Taken from Latin [promovere]Taken from Latin [promovere]All communications are action All communications are action
orientedorientedCommunication involves sender Communication involves sender
and receiver and receiver
PROMOTION MIXPROMOTION MIX
AdvertisingAdvertisingPersonal sellingPersonal sellingSales promotionSales promotionPublic relationsPublic relations
SELECTING A PROMOTION SELECTING A PROMOTION MIXMIX
1)Nature of the product/market-1)Nature of the product/market-consumer/industrialconsumer/industrial
2)Over-all marketing strategy 2)Over-all marketing strategy (push/pull)(push/pull)
Push-through distribution Push-through distribution Pull-create demand by Pull-create demand by
advertising/consumer promotionadvertising/consumer promotion3)Buyer readiness stage3)Buyer readiness stage4)Product-life-cycle stage4)Product-life-cycle stage
ADVERTISING MANAGEMENTADVERTISING MANAGEMENT
Is a paid form of mass Is a paid form of mass communication that can be communication that can be traced to an identified sponsor.traced to an identified sponsor.
Top ad-spenders-Top ad-spenders-1)Automobile industry1)Automobile industry2)Beer &alcohol2)Beer &alcohol
ADVERTISING MANAGEMENTADVERTISING MANAGEMENT
3)Cement3)Cement4)Chemicals4)Chemicals5)Cigarettes5)Cigarettes6)Construction6)Construction7)Cosmetics7)Cosmetics
TOP AGENCIESTOP AGENCIES
HTAHTALINTASLINTASMUDRAMUDRAOGILVY&MATHEROGILVY&MATHERULKAULKATRIKAYA-GREYTRIKAYA-GREYRKSWAMYRKSWAMY
Recent Recent mergers/acquisitions mergers/acquisitions
MUDRA—DDB NEEDHAMMUDRA—DDB NEEDHAMTRIKAYA-GREYTRIKAYA-GREYTARA SINHA-MCCANN-ERICKSONTARA SINHA-MCCANN-ERICKSON
ORGANISATION STRUCTURE OF ORGANISATION STRUCTURE OF AN AGENCYAN AGENCY
Creative –copy writers, art Creative –copy writers, art personnelpersonnel
Account management-counter Account management-counter part to product/brand/marketing part to product/brand/marketing managersmanagers
Media executives—media Media executives—media planning [computer based]planning [computer based]
MEDIAMEDIA
NEWSPAPERSNEWSPAPERSTECHNICAL JOURNALSTECHNICAL JOURNALSMAGAZINESMAGAZINESHOARDINGSHOARDINGSBILL-BOARDSBILL-BOARDSNEON-SIGNSNEON-SIGNS
MEDIAMEDIA
CINEMACINEMATVTVVIDEOVIDEOCABLE TVCABLE TVRADIORADIOVIDEO-ON WHEELSVIDEO-ON WHEELS
DEVELOPMENT OF TVDEVELOPMENT OF TV
TV started in 1959TV started in 1959Door- darshan net-work-1992Door- darshan net-work-1992TV coverage is 83%TV coverage is 83%Reaches 77% urban populationReaches 77% urban populationReaches 30%rural populationReaches 30%rural population1991-star TV launched1991-star TV launched1992-zee-tv launched1992-zee-tv launched1994-el- TV & zed channel 1994-el- TV & zed channel
[education[education]]
DEVELOPMENT OF TVDEVELOPMENT OF TV
For consumer non-durable For consumer non-durable products like soft-drink, tea, products like soft-drink, tea, coffee, toiletries, the effect of an coffee, toiletries, the effect of an advertising exposure can take up advertising exposure can take up to 9 months to get dissipatedto 9 months to get dissipated
EFFECTIVE ADVERTISING?EFFECTIVE ADVERTISING?
Content of the message is Content of the message is important than executionimportant than execution
Search for a great idea Search for a great idea /campaign may fail/campaign may fail
Talk straight to the customerTalk straight to the customerDon’t create boring/dull copiesDon’t create boring/dull copiesAvoid clowningAvoid clowning
EFFECTIVE ADVERTISING?EFFECTIVE ADVERTISING?
Create contemporary advertisingCreate contemporary advertisingKeep the campaign on till it pulls Keep the campaign on till it pulls
the target audience to the brandthe target audience to the brandBe honest-avoid fluff, telling liesBe honest-avoid fluff, telling lies
EFFECTIVE ADVERTISING?EFFECTIVE ADVERTISING?
Brand &image is important-Brand &image is important-create distinctive brand create distinctive brand personalitypersonality
Don’t be an imitatorDon’t be an imitatorCreativity is always individual Creativity is always individual
specific; committees do not specific; committees do not create campaignscreate campaigns
GIANTS OF ADVERTISINGGIANTS OF ADVERTISING
Albert laskerAlbert laskerLeo BurnettLeo BurnettMarcel- Bleustein -BlanchetMarcel- Bleustein -BlanchetDavid OgilvyDavid OgilvyBill Bern BachBill Bern Bach
INSTITUTIONAL FRAME-INSTITUTIONAL FRAME-WORKWORK
GovernmentGovernmentIndustry structureIndustry structureCompetitionCompetitionAdvertiserAdvertiserAdvertising agencyAdvertising agencyMediaMediaResearch agenciesResearch agencies
media-approximate media-approximate numbersnumbers
DAILIES-3600DAILIES-3600TRI/BI WEEKLIES-300TRI/BI WEEKLIES-300WEEKLIES-10500WEEKLIES-10500FORT-NIGHTLIES-4500FORT-NIGHTLIES-4500MONTHLIES-9600MONTHLIES-9600OTHERS-4000OTHERS-4000TOTAL-33’000TOTAL-33’000
PERSONAL SELLINGPERSONAL SELLING
Personality traitsPersonality traitsDominant—moderate degreeDominant—moderate degreeAchievers—creative, innovative, Achievers—creative, innovative,
lonersloners
PERSONAL SELLINGPERSONAL SELLING
Affiliation—moderate, exhibit Affiliation—moderate, exhibit warmthwarmth
Creativity-new ideas & ways to Creativity-new ideas & ways to approachapproach
Exhibitionism—high-take Exhibitionism—high-take legitimate pride; no unnecessary legitimate pride; no unnecessary creditcredit
Problem-solving-logical thinkers, Problem-solving-logical thinkers, positive personalitypositive personality
ROLE OF A SALES-PERSONROLE OF A SALES-PERSON
DiagnosticDiagnosticAnalystAnalystChange agentChange agentTacticianTacticianStrategistStrategistInformation providerInformation provider
ROLES-SALES-PERSONROLES-SALES-PERSON
Diagnostic—Diagnostic—Needs of his customersNeeds of his customersCompetitive forces/their impactCompetitive forces/their impactStrengths and weaknesses of Strengths and weaknesses of
competitor’s sales competitor’s sales team/distributorsteam/distributors
Major developments in the Major developments in the territory/implicationsterritory/implications
ROLES-SALESPERESONROLES-SALESPERESON
Analyst—identify customer Analyst—identify customer needs, market trends and needs, market trends and linkageslinkages
Customer situation & its Customer situation & its implicationsimplications
Trends in the market share of his Trends in the market share of his organization/competitorsorganization/competitors
ROLES-SALES PERSONROLES-SALES PERSON
Information-providerInformation-providerShift in competitor’s Shift in competitor’s
strategy/tacticsstrategy/tacticsEntry of new competitor, if anyEntry of new competitor, if anyCompetitor’s new trade policyCompetitor’s new trade policy
ROLES-SALES PERSONROLES-SALES PERSON
Customer Customer expansion/diversificationexpansion/diversification
Change in buying personsChange in buying personsCustomer/competitor Customer/competitor
informationinformationInformation to customerInformation to customer
ROLES SALES-PERSONROLES SALES-PERSON
Strategist—soldier in the fieldStrategist—soldier in the fieldMan in commandMan in commandTime and route planningTime and route planningPrice –change announcementPrice –change announcementStrategy to sell to an aggressive Strategy to sell to an aggressive
customercustomer
ROLES-SALES PERSONROLES-SALES PERSON
Tactician—[evolve tactics]Tactician—[evolve tactics]To win over the customerTo win over the customerEnhance dealer satisfactionEnhance dealer satisfactionChoice of words in face-to-face Choice of words in face-to-face
negotiationnegotiationHow much and when to give in-How much and when to give in---
SALES PERSON-ROLESSALES PERSON-ROLES
Change-agent [in Change-agent [in market/territory]market/territory]
Introduces new product ideasIntroduces new product ideasInfluences the life-style and Influences the life-style and
consumption patternconsumption patternInfluencing opinion leaders Influencing opinion leaders
Selling theoriesSelling theories
1)stimulus response theory1)stimulus response theory2)product oriented selling2)product oriented selling3)need satisfaction/customer focused 3)need satisfaction/customer focused
sellingselling
SELLING THEORIESSELLING THEORIES
Stimulus response theory-states Stimulus response theory-states that right stimulus of appropriate that right stimulus of appropriate strength will help prospect strength will help prospect respond positivelyrespond positively
Examples of stimuliExamples of stimuliSelf—appearance ,mannerism, Self—appearance ,mannerism,
tone of the voice, inter-personal tone of the voice, inter-personal skillsskills
Price-concessionsPrice-concessions
SELLING THEORIESSELLING THEORIES
Announcement of price-changesAnnouncement of price-changesPreferential treatmentPreferential treatmentPresumes a passive role of the Presumes a passive role of the
prospectprospectWorks in organizations having Works in organizations having
selling orientations-pushing salesselling orientations-pushing salesThrust on relationship-Thrust on relationship-
management is less management is less
PRODUCT-ORIENTED SELLINGPRODUCT-ORIENTED SELLING
Involves explaining new Involves explaining new developments developments (technological/scientific)(technological/scientific)
Spending 80% of the time in Spending 80% of the time in presenting ideas to the prospect-presenting ideas to the prospect-motivating the prospectmotivating the prospect
Suitable for- pharmaceutical, Suitable for- pharmaceutical, computers, project-sellingcomputers, project-selling
NEED NEED SATISFACTION/CUSTOMER SATISFACTION/CUSTOMER
FOCUSSED SELLINGFOCUSSED SELLINGBased on inter-active approachBased on inter-active approachWin-win assumptionWin-win assumption80-85% buyer does the talking80-85% buyer does the talkingStages-need development, need Stages-need development, need
identification, need satisfactionidentification, need satisfaction
SELLING PROCESSSELLING PROCESS
1)Opening of a call1)Opening of a call2)Need exploration2)Need exploration3)Presentation3)Presentation4)Managing objections4)Managing objections5)Closing the call5)Closing the call
SELLING PROCESSSELLING PROCESS
Opening the call-Opening the call-Rapport building stageRapport building stageSensitive to verbal-non verbal Sensitive to verbal-non verbal
messagemessageProbes the prospect to make him Probes the prospect to make him
speak outspeak out
EXPLORING NEEDSEXPLORING NEEDS
Tangible-intangible needs by Tangible-intangible needs by probing and sensitivity skillsprobing and sensitivity skills
Probes are of three types-Probes are of three types-1)Open ended-aimed at drawing 1)Open ended-aimed at drawing
out the customer to enable the out the customer to enable the sales person to cope with sales person to cope with prospect’s negative emotions prospect’s negative emotions [anger, disgust, hostility, [anger, disgust, hostility, indifference]indifference]
PROBINGPROBING
2)Probes that keep the talk 2)Probes that keep the talk going—going—
A) Verbal---I'm listening to you, A) Verbal---I'm listening to you, go-ahead, how did it happen? I-go-ahead, how did it happen? I-see, really!see, really!
B) Non-verbal—intentional B) Non-verbal—intentional pause, an eye-contact, taking pause, an eye-contact, taking notes, bending forward to the notes, bending forward to the prospectprospect
PROBINGPROBING
3)Probes that check 3)Probes that check understanding—of the prospect’s understanding—of the prospect’s needs, problems and needs, problems and expectations by asking closed-expectations by asking closed-ended questionsended questions
-topic-12-MANAGING -topic-12-MANAGING DISTRIBUTIONDISTRIBUTION
Besides making the product Besides making the product available—available—
Information—about the market to Information—about the market to manufacturersmanufacturers
Changes in customer demography, Changes in customer demography, psychography, media-habitspsychography, media-habits
Entry of a new competitor, brandEntry of a new competitor, brandChanges in customer preferencesChanges in customer preferences
DISTRIBUTIONDISTRIBUTION
Role in price-stabilityRole in price-stabilityAbsorb price-increaseAbsorb price-increaseSupply at old rates by keeping Supply at old rates by keeping
low over-headslow over-heads
DISTRIBUTIONDISTRIBUTION
Role in promotion-design own Role in promotion-design own sales –incentive programmessales –incentive programmes
Role in financing-provide Role in financing-provide working capital in the form of working capital in the form of advance paymentsadvance payments
Title-take title and physical Title-take title and physical possessionpossession
TYPE /NATURE OF TYPE /NATURE OF MIDDLEMENMIDDLEMEN
Merchant middle-men-(dealers, Merchant middle-men-(dealers, wholesalers retailer)wholesalers retailer)
Take title to the goods/services Take title to the goods/services & resell them& resell them
Get margins/bonuses as Get margins/bonuses as compensationcompensation
Share the risk with Share the risk with manufacturers manufacturers
MIDDLEMEN-TYPESMIDDLEMEN-TYPES
Agents [c&f agents, Agents [c&f agents, brokers ,jobbers]brokers ,jobbers]
Do not take title to the goods Do not take title to the goods and servicesand services
MIDDLE-MENMIDDLE-MEN
Help in identifying potential Help in identifying potential customers/negotiationcustomers/negotiation
Act to the limited extent of Act to the limited extent of prospecting, ware-housing and prospecting, ware-housing and re-distributionre-distribution
Earn commission & expense Earn commission & expense reimbursementreimbursement
Facilitators-(banks, Facilitators-(banks, transporters)transporters)
Facilitate the flow of goods Facilitate the flow of goods &services from producer to &services from producer to customercustomer
Do not take title/negotiateDo not take title/negotiateEarn service charges/rent Earn service charges/rent
CHANNEL LEVELSCHANNEL LEVELS
Zero-level—manufacturer to Zero-level—manufacturer to customer—capital customer—capital equipment/project marketingequipment/project marketing
One One –level-manufacturer-agent/deale–level-manufacturer-agent/dealer/wholesaler-customer-industrial r/wholesaler-customer-industrial chemicalschemicals
DISTRIBUTION ALTERNATIVESDISTRIBUTION ALTERNATIVES
1)Intensive distribution-soft-1)Intensive distribution-soft-drinkdrink
2)Selective distribution2)Selective distribution3)Exclusive distribution-design 3)Exclusive distribution-design
wares, major domestic wares, major domestic appliances, automobilesappliances, automobiles
RESPONSIBILITIES OF RESPONSIBILITIES OF INTERMEDIARIESINTERMEDIARIES
Price policyPrice policyPayment termsPayment termsReturns policyReturns policyTerritorial rightsTerritorial rightsMutual services & Mutual services &
responsibilitiesresponsibilities
CHANNEL-CONFLICT-CAUSESCHANNEL-CONFLICT-CAUSES
Goal incompatibilityGoal incompatibilityManufacturer’s long run goal will Manufacturer’s long run goal will
be to increase market share be to increase market share /profit maximization/profit maximization
Whole- saler’s might be-sales Whole- saler’s might be-sales maximization /profit maximization /profit maximizationmaximization
CHANNEL CONFLICTCHANNEL CONFLICT
Role-ambiguity-multi-channelRole-ambiguity-multi-channelDifferences in perceptions of the Differences in perceptions of the
marketmarketManufacturer may see the middle Manufacturer may see the middle
–class boom and introduce the –class boom and introduce the new products/appoint wholesalersnew products/appoint wholesalers
Existing dealers may see this as a Existing dealers may see this as a dilution of their controldilution of their control
Factors determining the Factors determining the length of channel-length of channel-
Size of the marketSize of the marketLarger the market size-longer Larger the market size-longer
the channelthe channelSmaller the market-smaller the Smaller the market-smaller the
channelchannel
ORDER LOT SIZEORDER LOT SIZE
Average order lot small-longer Average order lot small-longer channelchannel
Average order is bulk/container Average order is bulk/container load-longer channelload-longer channel
LENGTH OF CHANNEL?LENGTH OF CHANNEL?
Service Service requirements—product/market requirements—product/market requires a high level of service-requires a high level of service-shorter channelshorter channel
Product variety-if the customer shop Product variety-if the customer shop for product assortment (careful range for product assortment (careful range of accessories)-wider channel of of accessories)-wider channel of distributiondistribution
DISTRIBUTION DECISIONSDISTRIBUTION DECISIONS
1)Market characteristics—1)Market characteristics—Attitude towards waiting Attitude towards waiting
time ,special time ,special convenience/preference for convenience/preference for buying in a comfortable/relaxed buying in a comfortable/relaxed environmentenvironment
Ex-automobile Ex-automobile dealership/mixer/grinder dealership/mixer/grinder dealershipdealership
Distribution -decisionDistribution -decision
Company characteristics-Company characteristics-Long –term objectivesLong –term objectivesFinancial resourcesFinancial resourcesManufacturing capacityManufacturing capacityMarketing. mixMarketing. mixPhilosophyPhilosophy
PRODUCT CHARACTERISTICSPRODUCT CHARACTERISTICS
Capital equipments, precious Capital equipments, precious stones, gems—shorter channelstones, gems—shorter channel
Perishable product-short channelPerishable product-short channelNon-perishable [textile, foot-Non-perishable [textile, foot-
wear]—longer channelwear]—longer channelStandardized ---longer channelsStandardized ---longer channelsNon- standardized—direct Non- standardized—direct
distributiondistributionBulky products—shorter channelBulky products—shorter channel
MIDDLEMEN MIDDLEMEN CHARACTERISTICSCHARACTERISTICS
Aptitude for serviceAptitude for serviceAptitude for promotionAptitude for promotionHandling negotiationsHandling negotiationsStorage Storage
MIDDLEMENMIDDLEMEN
Intensity of competitionIntensity of competitionIntensive distributionIntensive distributionExclusive distributionExclusive distribution
MIDDLEMENMIDDLEMEN
Environmental characteristicsEnvironmental characteristicsGovt. PolicyGovt. PolicyStatutory provisionsStatutory provisionsState of the economyState of the economyTechnological & infrastructure Technological & infrastructure
developments developments
Managing the channel Managing the channel conflictconflict
Communication—Communication—Sending in-house news-letter to Sending in-house news-letter to
all major dealersall major dealersSenior executives to meet the Senior executives to meet the
dealersdealers
DEALER-CONFLICTDEALER-CONFLICT
Dealer councils—Dealer councils—To resolve horizontal/vertical To resolve horizontal/vertical
conflictconflictManufacturer continues to play Manufacturer continues to play
key role in these councilskey role in these councils
DEALER CONFLICTDEALER CONFLICT
Super-ordinate goals—Super-ordinate goals—Customer satisfaction can be the Customer satisfaction can be the
super-ordinate goalsuper-ordinate goalThis is easier when the threat This is easier when the threat
from other firms is highfrom other firms is high
MOTIVATING CHANNEL MOTIVATING CHANNEL MEMBERSMEMBERS
Financial rewards—high margins, Financial rewards—high margins, extended credit time, bonuses, extended credit time, bonuses, reimbursement of expensesreimbursement of expenses
Non-financial rewards—contests, Non-financial rewards—contests, public-recognition, paid-public-recognition, paid-holidays-India/abroadholidays-India/abroad
MOTIVATING CHANNEL MOTIVATING CHANNEL MEMBERSMEMBERS
Bajaj, Parle, Philip acknowledge Bajaj, Parle, Philip acknowledge high performing dealers in their high performing dealers in their annual get-togethersannual get-togethers
Reliance, videocon sponsor Reliance, videocon sponsor holidaysholidays
L&t switch-gear division gives L&t switch-gear division gives training to its high-performing training to its high-performing dealers.dealers.
DESIGNING MARKET-DRIVEN DESIGNING MARKET-DRIVEN DISTRIBUTION SYSTEMDISTRIBUTION SYSTEM
1)Know what customers want—1)Know what customers want—Lot –size—unit purchasesLot –size—unit purchasesMarket de-centralization-willing Market de-centralization-willing
to travel to buy?to travel to buy?Waiting time—Waiting time—Product variety—spares ,tyresProduct variety—spares ,tyresService back-upService back-up
DESIGNING DISTRIBUTION DESIGNING DISTRIBUTION SYSTEMSYSTEM
2)Decide on the out-let2)Decide on the out-letHigh image out-let—Benzer, High image out-let—Benzer,
shopper’s stopshopper’s stopLow-image out-let- Babubhai Low-image out-let- Babubhai
JagjivandasJagjivandas
DESIGNING DISTRIBUTION DESIGNING DISTRIBUTION SYSTEMSYSTEM
3)Determine the costs-additional 3)Determine the costs-additional market share required to off-set market share required to off-set added cost of new distributionadded cost of new distribution
DESIGNING DISTRIBUTION DESIGNING DISTRIBUTION SYSTEMSYSTEM
4)Bound the ideal—ideal alternative 4)Bound the ideal—ideal alternative should be tested against—should be tested against—
Efficiency-[cost, revenue, profit]Efficiency-[cost, revenue, profit] Effectiveness-[market-share]Effectiveness-[market-share] Adaptability [to accept new product, Adaptability [to accept new product,
adjust to new technologies]adjust to new technologies]
DESIGNINGDESIGNING
5)Compare the alternatives by costs, 5)Compare the alternatives by costs, discounts etcdiscounts etc
6)Review the assumptions in the light 6)Review the assumptions in the light of researchof research
7)Confront the gap between ideal 7)Confront the gap between ideal &actual distribution system,&actual distribution system,
8)Implement the changes in the 8)Implement the changes in the system ,if requiredsystem ,if required
RE-TAILINGRE-TAILING
Indian retail scenario-smaller Indian retail scenario-smaller structure, inventory structure, inventory management/funds management management/funds management is the focus. Dotted by bazaarsis the focus. Dotted by bazaars
Profitability—2 to 3%Profitability—2 to 3%
NORTH-AMERICAN/NORTH-AMERICAN/EUROPEAN RETAILINGEUROPEAN RETAILING
Bigger structure (Sears, Wal-Bigger structure (Sears, Wal-mart, K-mart, Safeway's mart, K-mart, Safeway's (Canada)(Canada)
Focus is on organisational Focus is on organisational design, customer –service, design, customer –service, promotions, inventory planningpromotions, inventory planning
Huge malls developed/promoted Huge malls developed/promoted by builders by builders
TYPES OF RETAIL STORESTYPES OF RETAIL STORES
1)Specialty stores—Tribhovandas 1)Specialty stores—Tribhovandas Bhimji, in-style ,chirag-din, book Bhimji, in-style ,chirag-din, book stores, sporting goodsstores, sporting goods
2)Single-line stores-shopper’s 2)Single-line stores-shopper’s stopstop
3)Limited line stores-Raymond's3)Limited line stores-Raymond's
TYPES OF RETAIL STORESTYPES OF RETAIL STORES
4)Super-speciality store- Louis 4)Super-speciality store- Louis Phillip, van- heusenPhillip, van- heusen
5)Department store—akbarallys5)Department store—akbarallys6)Super-market-large, low-cost, 6)Super-market-large, low-cost,
low-margin, high volume, self-low-margin, high volume, self-service-food-landservice-food-land
NON-STOP RETAILINGNON-STOP RETAILING
Automatic vending machinesAutomatic vending machinesDirect selling-Eureka ForbesDirect selling-Eureka ForbesBuying services—store-less re-Buying services—store-less re-
tailing services—TVs-whirl- tailing services—TVs-whirl- pool ,sony-orson,bajaj electrical, pool ,sony-orson,bajaj electrical, auto-rider has arrangement with auto-rider has arrangement with employee’s of govt, universities, employee’s of govt, universities, hospitalshospitals
RETAIL STORE DECISION?RETAIL STORE DECISION?
1)Target market1)Target market2)Location2)Location3)Merchandise—no. Of brands, 3)Merchandise—no. Of brands,
colors, styles, sizescolors, styles, sizes
RETAIL STORE DECISION?RETAIL STORE DECISION?
4)Price4)Price5)Store ambience & 5)Store ambience &
lay-out—ac/background music, lay-out—ac/background music, shelf-display, lay-outshelf-display, lay-out
6)Services—credit? Credit-card 6)Services—credit? Credit-card holders? Cost of providing holders? Cost of providing service and recovery?service and recovery?
7)Communication—copy, media7)Communication—copy, media
CONVENIENCE STORECONVENIENCE STORE
Generally food stores, smaller in Generally food stores, smaller in size than super-market, located size than super-market, located near residential areas, have near residential areas, have long hours of operation, home long hours of operation, home deliverydelivery
Ex. Street corner grocery storeEx. Street corner grocery store
DISCOUNT STORESDISCOUNT STORES
Regularly sells its goods at Regularly sells its goods at discounted pricediscounted price
Carries national/reputed brands for Carries national/reputed brands for imageimage
Operational costs minimum-self Operational costs minimum-self service/no frillsservice/no frills
Location in low rent areaLocation in low rent areaE.g.-wal-mart (usa)-Bombay-BJE.g.-wal-mart (usa)-Bombay-BJ
POSITIONING RETAIL-POSITIONING RETAIL-STORESTORE
High value added-high breadth High value added-high breadth of product lineof product line
benzer /akbarallysbenzer /akbarallys
POSITIONING RETAIL-POSITIONING RETAIL-STORESTORE
High value added-low breadth of High value added-low breadth of product line-shopper’s product line-shopper’s stop/Benettonstop/Benetton
Low value added-high breadth of Low value added-high breadth of product line-apna- bazar product line-apna- bazar /sahakari bhandar/sahakari bhandar
Low value added-low breadth of Low value added-low breadth of product line-Bata/ carona shoe product line-Bata/ carona shoe storestore
Topic-13-MARKETING Topic-13-MARKETING PERFORMANCE AND PERFORMANCE AND
CONTROLCONTROLSuccess—appropriate strategy-Success—appropriate strategy-
excellent implementationexcellent implementationTargets for growth,shareTargets for growth,shareProfits are metProfits are met
Marketing performance Marketing performance and controland control
Trouble—appropriate strategy-Trouble—appropriate strategy-poor implementationpoor implementation
Management may conclude Management may conclude strategy is in-appropriatestrategy is in-appropriate
MARKETING CONTROLMARKETING CONTROL
Rescue/ruin—in-appropriate Rescue/ruin—in-appropriate strategy-excellent strategy-excellent implementationimplementation
Good execution may give Good execution may give management time to management time to correct/hasten failure correct/hasten failure
MARKETING CONTROLMARKETING CONTROL
Failure—in-appropriate strategy-Failure—in-appropriate strategy-poor implementationpoor implementation
Causes hard to diagnoseCauses hard to diagnoseStrategy and execution maskedStrategy and execution masked
WHAT TO MEASURE IN WHAT TO MEASURE IN MARKETING?MARKETING?
Customer satisfactionCustomer satisfactionCustomer’s perception of firmCustomer’s perception of firmAnd its competitor brandsAnd its competitor brandsMarket shareMarket share
WHAT TO MEASURE IN WHAT TO MEASURE IN MARKETING?MARKETING?
SalesSalesProfitsProfitsMarketing effectivenessMarketing effectivenessOrganization's preparedness to Organization's preparedness to
respond to external respond to external environmental challengesenvironmental challenges
WHAT TO MEASURE IN WHAT TO MEASURE IN MARKETING?MARKETING?
Customer attitude tracking—Customer attitude tracking—measures are quantitative andmeasures are quantitative and
Do not reflect customer Do not reflect customer satisfactionsatisfaction
Methods—Methods—Customer survey [questionnaire]Customer survey [questionnaire]Customer panels-Customer panels-Feed-back & suggestion system Feed-back & suggestion system
Types of controlsTypes of controls
1)profitability control1)profitability control2)annual-plan control2)annual-plan control3)efficiency control3)efficiency control4)strategic control4)strategic control
PROFITABILITY CONTROLPROFITABILITY CONTROL
Identify the functional expensesIdentify the functional expensesAssign these expenses to Assign these expenses to
marketing entitiesmarketing entitiesPrepare a profit &loss statement Prepare a profit &loss statement
for each marketing entity-helps for each marketing entity-helps the marketer focus on key issuesthe marketer focus on key issues
PROFITABILITY CONTROLPROFITABILITY CONTROL
Identifying loss making Identifying loss making territories, products, segments, territories, products, segments, channel typeschannel types
Identify the impact of non-Identify the impact of non-marketing expenses on profit marketing expenses on profit contributioncontribution
Based on such identifications, Based on such identifications, marketer may take corrective marketer may take corrective actionaction
ANNUAL-PLAN-CONTROLANNUAL-PLAN-CONTROL
Objectives—what did we set out Objectives—what did we set out to achieve?to achieve?
Actual performance-how far have Actual performance-how far have we been able to achieve itwe been able to achieve it
Diagnosis—what contributed to Diagnosis—what contributed to our performance?our performance?
How do we correct the situation?How do we correct the situation?Future planning-where do we go Future planning-where do we go
from here? from here?
TOOLSTOOLS
1)Sales-analysis—actual sales to 1)Sales-analysis—actual sales to targeted salestargeted sales
2)Market share analysis—2)Market share analysis—product wise, segment wise, product wise, segment wise, region-wiseregion-wise
Difficult to make because it is Difficult to make because it is difficult to find out small scale difficult to find out small scale firm’s market sharefirm’s market share
TOOLSTOOLS
3)Marketing expenses to sales 3)Marketing expenses to sales analysis—analysis—
4)Advertising to sales ratio4)Advertising to sales ratio5)Sales promotion to sales ratio5)Sales promotion to sales ratio6)Sales-force cost to sales ratio6)Sales-force cost to sales ratio7)Distribution expenses to sales7)Distribution expenses to sales 8)Sales administration to sales8)Sales administration to sales9)Marketing research to sales ratio 9)Marketing research to sales ratio
TOOLSTOOLS
10)Financial analysis10)Financial analysis11)Rate of return11)Rate of return12)Return on assets12)Return on assets13)Financial leverage13)Financial leverage
EFFICIENCY CONTROLEFFICIENCY CONTROL
Sales-force efficiency indictors—Sales-force efficiency indictors—Average no. Of sales calls/sales Average no. Of sales calls/sales
person/dayperson/dayAverage no. Of sales calls per Average no. Of sales calls per
sales person/day/customer groupsales person/day/customer groupAverage time spent per Average time spent per
customer customer Average time spent on travelAverage time spent on travel
EFFICIENCY CONTROLEFFICIENCY CONTROL
Return on time invested on Return on time invested on different customer groupsdifferent customer groups
No. Of new customers added/lostNo. Of new customers added/lostVolume of potential business lost Volume of potential business lost
to competitionto competitionAverage cost /sales callAverage cost /sales callSales force cost as a % of total Sales force cost as a % of total
salessales
ADVERTISING EFFICIENCY ADVERTISING EFFICIENCY INDICATORSINDICATORS
Advertising. Cost/thousand Advertising. Cost/thousand target customers reached by the target customers reached by the mediamedia
Advertising. Re-call as a% of the Advertising. Re-call as a% of the total target market reached by total target market reached by the campaignthe campaign
ADVERTISING EFFICIENCY ADVERTISING EFFICIENCY INDICATORSINDICATORS
Top of the mind awareness of Top of the mind awareness of the brandthe brand
No. Of enquiries generated by an No. Of enquiries generated by an advertisementadvertisement
Cost/enquiryCost/enquiry
DISTRIBUTION EFFICIENCYDISTRIBUTION EFFICIENCY
Market reach [customers served] Market reach [customers served] by the channel memberby the channel member
Sales extraction—brand’s sale to Sales extraction—brand’s sale to the total product sales the total product sales
Cost per channel member Cost per channel member
STRATEGIC CONTROLSTRATEGIC CONTROL
Help management determine the Help management determine the fit between firm’s marketing & fit between firm’s marketing & external environmentexternal environment
Two tools-Two tools-1)Customer relationship 1)Customer relationship
barometerbarometer2)Marketing audit2)Marketing audit
CUSTOMER RELTIONSHIP CUSTOMER RELTIONSHIP BARO-METER PROVIDESBARO-METER PROVIDES
Core value of the organization and Core value of the organization and their internalizationtheir internalization
Organization structure—decision Organization structure—decision making for customer primacymaking for customer primacy
Organisational policies/systemsOrganisational policies/systems People skills, attitudes, knowledgePeople skills, attitudes, knowledge TechnologyTechnology Strategy of customer retentionStrategy of customer retention
MARKETING AUDITMARKETING AUDIT
Comprehensive, systematic, Comprehensive, systematic, independent and periodic independent and periodic examination of a company’s examination of a company’s marketing environment, objectives, marketing environment, objectives, strategies and activities with a view strategies and activities with a view to determine problem area and to determine problem area and opportunities and recommending a opportunities and recommending a plan of action to improve company’s plan of action to improve company’s mktg. Performance [with out-side mktg. Performance [with out-side help]help]
TYPES OF MARKETING TYPES OF MARKETING CONTROLCONTROL
1)Annual plan control—1)Annual plan control—By top-middle managementBy top-middle managementTo examine the variance between To examine the variance between
planned & actual performanceplanned & actual performanceTools-sales analysis, market-Tools-sales analysis, market-
share analysis, sales-expense share analysis, sales-expense ratios, financial analysis ,attitude ratios, financial analysis ,attitude trackingtracking
PROFITABILITY CONTROLPROFITABILITY CONTROL
By marketing directorBy marketing directorTo examine the sources of profit To examine the sources of profit
& loss& lossTools—measuring profitability by Tools—measuring profitability by
product/territory/customer product/territory/customer group/trade channel/order sizegroup/trade channel/order size
EFFICIENCY CONTROLEFFICIENCY CONTROL
By marketing directorBy marketing directorTo evaluate and improve the To evaluate and improve the
efficiency and impact of marketing efficiency and impact of marketing expendituresexpenditures
Tools-efficiency of advertising, sales Tools-efficiency of advertising, sales promotion, distributionpromotion, distribution
STRATEGIC CONTROLSTRATEGIC CONTROL
By top managementBy top managementTo examine whether the To examine whether the
company is pursuing goals with company is pursuing goals with respect to markets, products, respect to markets, products, channelschannels
Tools—relationship barometer, Tools—relationship barometer, marketing auditmarketing audit
THE END OF MARKETING-THE END OF MARKETING-SERGIO ZYMAN-SR.V.P.COCA-SERGIO ZYMAN-SR.V.P.COCA-
COLACOLAMarketing in future will be Marketing in future will be
grounded on the old principle grounded on the old principle of commerceof commerce
You spend money to make You spend money to make money ;you hire people when money ;you hire people when you need them & they are you need them & they are supposed to produce supposed to produce incremental volume and profitincremental volume and profit
THE END OF MARKETING-THE END OF MARKETING-SERGIO ZYMAN-SR.V.P.COCA-SERGIO ZYMAN-SR.V.P.COCA-
COLACOLA Marketing is a science &spending on Marketing is a science &spending on
marketing is an investment that pays marketing is an investment that pays returns. Marketing is supposed to sell returns. Marketing is supposed to sell stuff and move consumers to actionstuff and move consumers to action
‘‘I don’t care about making award I don’t care about making award winning commercials. The only thing i winning commercials. The only thing i care is real consumptioncare is real consumption
Marketing is nothing more than a Marketing is nothing more than a business proposition ; it is a cultural business proposition ; it is a cultural extravaganza or a circusextravaganza or a circus