38174148-marketing-ppt

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

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

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

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-

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

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

Analysis stage-factor Analysis stage-factor analysis/cluster analysisanalysis/cluster analysis

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

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

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

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

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

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

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

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

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

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

SalesSalesProfitsProfitsMarketing effectivenessMarketing effectivenessOrganization's preparedness to Organization's preparedness to

respond to external respond to external environmental challengesenvironmental challenges

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

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

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

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

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

38174148-marketing-ppt

seller firm buyer

relationship marketing

major buyer

capital buyer firm profits

monopoly firm

product suppliers products

actual decision

buyers market

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