copy of m1 product & product related strategies
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8/8/2019 Copy of M1 Product & Product Related Strategies
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Product & ProductProduct & Product
Related StrategiesRelated Strategies
Module 1
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Product Characteristics &Product Characteristics &
ClassificationsClassifications Product Levels : Based on Customer Value
Potential ProductPotential Product
Augmented ProductAugmented ProductExpe
cted ProductExpected Product
Ba
sic ProductBasic Product
Core benefitCore benefit
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Product ClassificationsProduct Classifications
Based on Durability & Tangibility Non Durable Goods Durable Goods Services
Classification of Consumer Goods Convenience Goods
Staples, Impulse goods, Emergency goods
Shopping Goods Homogeneous, Heterogeneous
Specialty Goods Unsought Goods
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Product ClassificationsProduct Classifications
.Contd.Contd Classification of Industrial Goods Materials
Farm Products, Natural Products
Spare Parts Component Materials, Component Parts
Capital Items Installations, Equipments
Operating Supplies Business services
Maintenance & Repair, Business Advisory Services
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Differentiation of Products &Differentiation of Products &
ServicesServices Product Differentiation Form Features Performance Quality Conformance Quality Durability Reliability Repairability Style
Product Design
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Differentiation of Products &Differentiation of Products &
ServicesServices Service Differentiation Ease of Ordering
Service Delivery
Installation
Customer Training
Customer Consulting
Maintenance and Repair Product Returns / Service Cancellations
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Product & BrandProduct & Brand
RelationshipsRelationships The Product Hierarchy Need Family
Product Family
Product Class/Category
Product Line
Product Type
Item/Unit/Product Variant
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Product & BrandProduct & Brand
Relationships .Relationships . Product Systems & Mixes Width Length
Depth Consistency
Product Line Analysis Product Line Length Line Stretching Down Market, Up Market, 2 Way Line Filling Line Modernization, Featuring & Pruning
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Product & BrandProduct & Brand
Relationships .Relationships . Product Mix Pricing Product Line Pricing
Optional Feature Pricing
Captive Product Pricing
Two Part Pricing
By Product Pricing
Product Bundling Pricing Co Branding & Ingredient Branding
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Packaging, Labeling,Packaging, Labeling,
Warranties & GuaranteesWarranties & Guarantees Packaging Primary, Secondary & Shipping Packages
Need for Packaging Self Service
Consumer affluence
Company & Brand Image
Innovation Opportunity Labeling
Warranties & Guarantees
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New ProductNew Product
DevelopmentDevelopment
&&Product Life CycleProduct Life Cycle
StrategiesStrategiesModule - 2Module - 2
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New ProductsNew Products
Cost Reductions
Repositionings
Improvements & Revisions
Addition to Existing Product Lines
New Product Lines
New to the World Products
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Principles to Guide NPDPrinciples to Guide NPD
Working with Potential Customers
Employee Empowerment
Dabble Time for Employees
Letting the Things to Move on innovate
through failures
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Factors Hindering NPDFactors Hindering NPD
Shortage of Ideas in certain areas
Fragmented Markets
Social & Government Constraints
Cost of Development
Capital Shortages
Slower Development Time Shorter Product Life Cycles
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Lessons for the Success of NewLessons for the Success of New
ProductsProducts The Value Associated with the brand
Me-Too Marketing is the No.1 Killer
People dont want to highlight their
shortcomings
Too Different products are usually failures
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OrganizationalOrganizational
Arrangements of NPDArrangements of NPD Budgeting for NPD
Organizing NPD Desired team leadership & level of expertise
Team member skills & expertise
Level of interest in a particular NP Concept
Potential for personal reward
Diversity of team members
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Managing the NPDManaging the NPD
Stages in New Product Development Process
1. Idea Generation
2. Idea Screening
3. Concept Development & Testing
4. Marketing Strategy Development
5. Business Analysis
6. Product Development7. Market Testing
8. Commercialisation
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1. Idea Generation1. Idea Generation
Interacting with others
Creativity Techniques Attribute Listening
Forced Relationships
Morphological Analysis
Reverse Assumption Analysis
New Contexts Mind Mapping
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Idea ScreeningIdea Screening
Idea Manager/Idea Committee DROP Errors* & GO Errors
Product Failures Absolute, Partial, Relative
Product-Idea Rating Tool Probability of success Probability of Technical
completion X Probability of Product
Commercialisation X Probability of Technical
Commercialisation X Probability of EconomicSuccess
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Concept Development &Concept Development &
TestingTesting Concept Development Category, Brand concepts
Concept Testing Communicability & Believability
Need Level
Gap Level
Perceived Value Purchase Intention
User Targets, Purchase Occasion, Frequency
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Conjoint Analysis Ex: By considering Five Design elements such
as;
Package designs V/s Utility Brand Names V/s Utility,
Price V/s Utility,
Good Housekeeping seal V/s Utility,
Money Back Guarantee V/s Utility.
Concept Development &Concept Development &
TestingTesting
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Marketing Strategy &Marketing Strategy &
Business AnalysisBusiness Analysis Marketing Strategy
Business Analysis Estimating Total Sales
Estimating Costs & Profits Breakeven, Risk Analysis
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Product DevelopmentProduct Development
Physical Prototypes QFD, CA EA
Customer Tests Alpha and Beta Testing
The Rank Order Method
The Paired Comparison Method
The Monadic Rating Method
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Market TestingMarket Testing
Consumer Goods Market testing Sales Wave Research
Simulated Test Marketing
Controlled Test Marketing Test Markets Selection
How many test cities?
Which cities?
What information? What action to take?
Business Goods Market Testing
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CommercializationCommercialization
When : Timing First, Parallel & Late entries
Where : Geographic Strategy
To Whom: Target Market Prospects
How: Introductory Market Strategies Critical Path Scheduling
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The Consumer AdoptionThe Consumer Adoption
ProcessProcess BCG Matrix
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The Consumer AdoptionThe Consumer Adoption
ProcessProcessUnderstanding Adoption through PLC
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Drop ErrorsDrop Errors I Have got a Great Idea
It Wont Work Here
We Have Tried it Before
This Isnt The Right Time It Cant Be done
It Is Not the Way We Do Things
We Have Done All Right Without It So Far It Will Cost Too Much
Let Us Discuss It At Our Next Meeting
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Budgeting for NPD
Stage No. of Ideas Pass Ratio Cost / Idea Total Cost
Idea Screening 1:4 5000
Concept Testing 1:2 75000
Product Development 1:2 1000000
Test Marketing 1:2 5000000
National Launch 1:2 50000000
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Product-Idea Rating ToolProduct-Idea Rating Tool
Product SuccessRequirements
RelativeWeightage
(a)
ProductScore
(b)
Product
Rating
C=a x b
Unique or Superior Prod .40 .8 .32
High Performance : Cost .30 .6 .18
High Market Support .20 .7 .14
Lack of Strong Competition .10 .5 .05
Total 1.00 .69
Rating Scale : .00 to .30 Poor, .31 to .60 Fair,
.61 and Above Good and can be accepted
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Pricing StrategiesPricing Strategies
Module - 3Module - 3
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PricingPricing
Meaning
Importance
Consumer Psychology & Pricing Reference Prices
Price Quality Inferences
Price Cues
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Setting the PriceSetting the Price
Step 1: Selecting the Pricing Objective Survival
Maximum Current Profit
Maximum Market Share Maximum Market Skimming
Product Quality Leadership
Other Objectives
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Setting the PriceSetting the Price
Contd.Contd.Step 2: Determining the Demand Price Sensitivity
Estimating Demand Curves
Price Elasticity of Demand
Step 3: Estimating Costs Types of Costs & Levels of Production
Accumulated Production Activity Based Cost accounting
Target Costing
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Setting the PriceSetting the Price
Contd.Contd.Step 4: Analyzing Competitors Costs,Prices and Offers
Step 5: Selecting a Pricing Method Markup Pricing
Target Return Pricing
Perceived Value Pricing
Value Pricing
Going Rate pricing Auction Type Pricing
Group Pricing
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Setting the PriceSetting the Price
Contd.Contd. Step 6: Selecting the Final Price Impact of Other Marketing Activities
Company Pricing Policies
Gain & Risk Sharing Pricing Impact of Price on Other Parties
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Adapting the PriceAdapting the Price
Geographical Pricing
Price Discounts & Allowances
Promotional Pricing
Differentiated Pricing
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Initiating & Responding toInitiating & Responding to
Price ChangesPrice Changes Initiating Price Reduction
Initiating Price Increase
Responding to Competitors Price Changes
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IntegratedIntegrated
MarketingMarketing
CommunicationCommunication(IMC)(IMC)Module - 4Module - 4
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Marketing CommunicationMarketing Communication
Role
Marketing Communication & Brand Equity
The Communications Process Models Macro-Model of Communication Process
Micro-Model of Communication Process
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Developing EffectiveDeveloping Effective
CommunicationCommunication Identify Target Audience Determine The Communications Objectives
Design Communication
Select Communications Channels Establishing Total Mark. Comm. Budget
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Developing EffectiveDeveloping Effective
CommunicationCommunication Identify the Target Audience
Determine the Communications objective Category Need, Brand Awareness, Brand
Attitude, Brand Purchase Intention
Design the Communications Message Strategy
Creative Strategy Informational & Transformational Approach
Message Source
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Developing EffectiveDeveloping Effective
CommunicationCommunication Select the Communication Channels Personal Communication Channels
Non Personal Communication Channels
Integration of Communication Channels
Establishing Total Mark. Comm. Budget Affordable Method
Percentage Of Sales Method Competitive Parity Method
Objective & Task Method
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D idi M k CD idi M k C
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Deciding on Mark. Comm.Deciding on Mark. Comm.
MixMix Types of Mark. Comm. Mix
Advertising Sales promotion Publicity & PR Events & Experiences
Direct Marketing Personal Selling
Factors in Setting the Mark. Comm. Mix Type of Product Market Buyer Readiness Stage Product Life Cycle Stage
Measuring Communication Results44
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Managing the IMC ProcessManaging the IMC Process
Coordinating Media Single Vehicle Single Stage Campaign
Single Vehicle Multi Stage Campaign
Multi Vehicle Multi Stage Campaign
Implementing IMC
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Marketing Communication &Marketing Communication &
Brand EquityBrand Equity
Marketing
Communication
Program
Advertising
Sales
Promotion
Events &
Experiences
Publicity
& PR
Personal
Selling
Direct
Marketing
Brand
Awareness
Brand
Image
Brand
Responses
Brand
Relationships
Brand
Equity
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Media
Macro-Model ofMacro-Model of
Communication ProcessCommunication Process
Sender EncodingMessage
Decoding Receiver
Feedback Response
Noise
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Micro-Model ofMicro-Model of
Communication ProcessCommunication ProcessStages AIDA
Model
Hierarchy
Of Effects
Innovation
adoption
Comm.
Model
Cognitive
Stage
Affective
Stage
BehaviourStage
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DistributionDistribution
ManagementManagement
Module 5Module 5
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Marketing Channels & ValueMarketing Channels & Value
NetworksNetworksMarketing Channels Intermediaries Merchants, Agents, Facilitators Marketing Channel System Push, Pull
Strategies
Channel Development Customer types Habitual shoppers, High value
Deal seekers, Variety Loving shoppers, High
Involvement shoppers.
Hybrid Channel IBM, ICICI Bank, RelianceMoney.
Channel Integration Order, Return, Discounts.
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The Role/Functions of MarketingThe Role/Functions of Marketing
ChannelsChannels Intermediaries bring in pooled financial resources They help in breaking the bulk They are normally cost effective due to
specialization Many small value large volume items can be sold
through Marketing channels only Gathers information about customers, competitors
and other marketing forces Develop & disseminate persuasive
communications Reach agreements on price and other terms Place orders, provide successive movement and
storage of physical products taking risks
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Channel & FlowsChannel & Flows
Physical Product & Service channel types Sales channel Delivery channel Service channel
Channel flows Forward & Backward Physical flow Title flow Payment flow Information flow Promotion flow
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Ph i l Titl P t
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Physical Title PaymentInfo Promotion
Suppliers
Transporter
Warehouses
Customers
Transporters
Dealers
Manufacturer
Transporter
Warehouses
Suppliers
Customers
Dealers
Manufacturer
Suppliers
Banks
Customers
Banks
Dealers
Manufacturer
Banks
Suppliers
Transporter
Warehouses
Customers
Trans, Banks
Dealers
Manufacturer
Transporter
Warehouses
Suppliers
Ad
Agency
Customers
Dealers
Manufacturer
Ad
Agency
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Channel LevelsChannel Levels
Consumer Marketing Channels Zero Level Channel
Indirect Channels
Industrial Marketing Channels Zero Level Channel
Indirect Channels
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Consumer MarketingChannels0 Level 1 Level 2 Level 3 LevelManufacturer Manufacturer Manufacturer Manufacturer
Wholesaler Wholesaler
Jobber
Retailer Retailer Retailer
Consumer Consumer Consumer Consumer
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d i l k i Ch l
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Industrial Marketing Channels
0 Level 1 Level 2 Level 3 Level
Manufacturer Manufacturer Manufacturer Manufacturer
Manufacturers
Reps.
Manufacturers
Sales Branch
Industrial
Distributor
Industrial
Distributor
Industrial
Distributor
Industrial
Consumer
Industrial
Consumer
Industrial
Consumer
Industrial
Consumer
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Ch l D i D i i
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Channel Design DecisionsChannel Design Decisions
Customers Expectations Lot Size Waiting & Product Delivery Time
Spatial Convenience
Product Variety
Service Backup
Establishing Objectives & Constraints
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Channel Design DecisionsChannel Design Decisions
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Channel Design DecisionsChannel Design Decisions Identifying Major Channel Alternatives
Types of Intermediaries Direct Sales Force Expansion Agents/Jobbers Hiring Distributors Appoint/Contract/Agreement
Number of Intermediaries Exclusive Distribution Selective Distribution Intensive Distribution
Terms & Responsibilities of Intermediaries Price Policy
Conditions of Sale Distributors Territorial rights Mutual services & Responsibilities
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Ch l iCh l D i
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Channel DesignChannel Design
DecisionsDecisions Evaluating Major Alternatives Economic Criteria l v ta e d a ageC
Control & Adaptive Criteria Agents concentrating on Profitability
Lack of Technical Knowledge of the Product/Service
Lack of Commitment
Lack of Adaptability
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E i C it i Ch l
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Economic Criteria ChannelAdvantage
High
HighLow
Value
Addof
Sales
Cost Per Transaction
Internet
Tele
Mktg
RetailStores
Distrib-
utors
Value Add
Partners
Sales
Force
DirectM
ktg.
Chan
nel
Indire
ctMk
tg.
Chan
nel
Direct
Sales
Ch
annel
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E i C it i Ch l
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Economic Criteria ChannelAdvantage
Level of Sales (Rs.)
SellingCosts
(Rs.)
Manufacturers SalesAgencies
Company Sales Force
SB
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Ch l M tCh l M t
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Channel ManagementChannel Management
DecisionsDecisions Selecting Channel Members Training Channel Members Motivating Channel Members Channel
Power
Coercive Power Reward Power Legitimate Power Expert Power
Referent Power Evaluating Channel Members Modifying Channel Arrangements
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Ch l I t ti &Ch l I t ti &
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Channel Integration &Channel Integration &
SystemsSystems Vertical Marketing Systems (VMS) Corporate VMS
Administered VMS
Contractual VMS New Competition in Retailing
Horizontal Marketing Systems
Multi-Channel Marketing Systems Planning Channel Architecture
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Pl i Ch l
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Planning ChannelArchitecture
V
E
ND
O
R
Demand Generation Tasks
C
U
S
TO
M
E
R
LeadGenrn
QulfngSales
PreSales
SalesClose
Sr. AftSales
AccountMgmt
Internet
National Ac
Mgmt
Direct Sales
Tele Mktg
Direct Mail
Retail Stores
Distributors
Dealers, VAP
AdvertisingMarke ti
ngChanne
ls&
Method
s
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C fli t C ti &Conflict Cooperation &
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Conflict, Cooperation &Conflict, Cooperation &
CompetitionCompetition Types of Conflict & Competition
Vertical Channel Conflict
Horizontal Channel Conflict
Multi - Channel Conflict
Causes of Channel Conflict Managing Channel Conflict
Cooperation
Diplomacy
Mediation Arbitration
Legal & Ethical Issues in Channel Relations
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E C M k tiE C M k ti
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E-Commerce MarketingE-Commerce Marketing
PracticesPracticesE- Business/Commerce E-Purchasing, E -Marketing
Pure-Click Companies The Dot Com Bubble
B2B & B2C E-Commerce Supplier Websites
Infomediaries
Market makers
Customer Communities
Brick-and-Click Companies
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Module IV
Business Buying Behavior
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TYPES OF BUSINESS MARKETS
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Industrial market
Reseller market
Government market
Non-profit organizations
Different players in the buying company evaluate
supplier offerings along different choice criterias
Satisfy diverse requirements through one offering
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CHARACTERISTICS OF BUSINESS
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BUYER
Time taken in the purchasing process is long
Business buyers are less in number
Business buyers purchase in large quantities
Specialized products and marketing services
could be offered by sellers
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Nature and size of customers are different
Complexity of buying
Economic and technical choice criteria
Higher Risks
Buying to specific requirements
Reciprocal buying
Negotiation 70
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Close customer-supplier relationship Professional purchasing
Several buying influences
Multiple sales calls
Fluctuating demand
Geographically concentrated buyers
Direct purchasing
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PARTICIPANTS IN BUSINESS BUYING
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PROCESS
Initiator
Influencer
Decider
User
Buyers
Gatekeepers
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BUSINESS BUYING DECISION PROCESS
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1. Recognition of a problem or Need
2. Determination of specification and quantity
3. Search for potential sources / suppliers
4. Evaluation of proposals and selection of
suppliers
5. Selection of an order routine
6. Multiple Sourcing
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EVALUATION OF CHOICE
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Quality
Price and life cycle costs
Continuity of supply
Perceived risk
Personal likes and dislikes
Implications for marketers
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BUYING SITUATIONS
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Straight Re-buy
Modified Re-buy
New Task - AIETA
Systems Buying & Selling
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DEVELOPMENTS IN PURCHASING
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PRACTICE
JUST IN TIME PURCHASING (JIT)
Aims to minimize stocks by organizing a supply
system which provides materials and
components as they are required
Stockholding costs of the buyers significantly
reduced or eliminated
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CENTRALIZED PURCHASING
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CENTRALIZED PURCHASING
Several operating units within a company
having common requirementsOpportunity to strengthen a negotiating
position by bulk buying, central purchasing
Encourages purchasing specialists to focuson a small group of products
Develops an extensive knowledge of costfactors and operations of suppliers
Supplier: Dedicated teams to serve a largecompany; Develop long term relationships
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REVERSE MARKETING
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REVERSE MARKETING
Proactive, aggressive stance on purchasing
Buyer attempts to persuade the supplier toprovide exactly what the organization wants
Purchaser takes initiative to approach new
or existing suppliers, persuades them to meettheir supply requirements
Pose threats to non-cooperative in-suppliers
Major opportunities to responsive in-andout-suppliers
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LEASE
Contract by which the owner of anasset grants the right to use the assetfor a period of time to another party in
exchange for payment of rent
Supplier will improve the quality ofproduct as the risks of ownershipremains with him
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DIFFERENCE BETWEEN
BUSINESS AND CONSUMERMARKETS CHARACTERISTICS OF
BUSINESS MARKETS
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MARKET STRUCTURE
Fewer sellers and buyers
Business demand is derived
No direct one-to-one relationship betweenbusiness buyers sales fluctuations and
business marketers sales
Reverse price elasticity of demand
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Business market significantly larger than
consumer market
Organizational decision-making unit
(DMU) involves several individuals
Businesses tend to concentrate
geographically
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MARKETING PERSPECTIVE
Segmentation variables different
Business markets have higher investments
in capital equipments and R&D
Business goods are less dependent on
regional and tastes and preferences
Business marketers focus on improving
profits in the short run
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B i k t i ti t h l
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Business market innovations technology-push type and consumer market
innovations demand-pull type Business marketers are far more customer
oriented than are consumer marketers
Reciprocity in business markets Key account management in business
markets
For many business marketers educatingtheir customers is an important task
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CUSTOMER BEHAVIOR
Business marketers are closer to customers
Number of customers in business marketsare small but their per order size is normally
high Purchasing motives of business buying are
maintaining and furthering organizational
goals Business buyers may impose substantial
penalties for non-performance by suppliers
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Business markets characterized by
reverse marketing
Business buyers show strong loyalty to
their current supplier
Business buyers involvement in a
purchase is much greater than that of a
customer in consumer market
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Business buying decision process is
complex and involves several functionalareas of the buying organization
Business buyers risk can be very high
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Market Segmentation
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Segmentation is the process of dividing the market
of a product or service in smaller groups of
customers
Customers in one group should:
Buy the product for the same purpose
Use the product in the same wayBuy the product in the same way
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Market Segmentation Levels
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Segment Marketing Serving a particular Segment
Individual Marketing Targeting Individuals (B2B)
Niche Marketing Narrow Market & No / Few Players
Local Marketing With ref. to Global Marketing
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Purpose of Market Segmentation
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Target market selection
Tailored marketing mix
Differentiation
Opportunities and threats
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Market Segmentation for TargetM k ti
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Marketing
Selection of a target market
Target market strategies
Undifferentiated targeting
Concentrated targeting
Multi-segment targeting
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Bases of Market Segmentation C M k t
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Consumer Markets
Behavioral variables
Psychographic variables
Profiling
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Market Segmentation - Behavioralt ti
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segmentation
Benefits sought
Purchase occasion
Purchase behavior
Brand loyalty
Usage
Perception and beliefs
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Market Segmentation-P h hi t ti
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Psychographic segmentation
Lifestyle
Personality
Demographic variables
Socio economic variables
Geographic variables
Market Segmentation - Profile segmentation
94
Market Segmentation BusinessMarkets
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Markets
Demographics
Industry Sector
Organizations Size
Location
Operating Variables
Organizations Technology
Product & Service Use Status
Organizational Capabilities
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Market Segmentation
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Purchasing Approaches
Purchasing Function
Purchasing Policies
Relationship among Buyers & Sellers
Situational Factors
Urgency of Order Fulfillment
Product ApplicationSize of Order
Other Personal Factors Risk Taking & Etc96
Effective Segmentation
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Measurable
Substantial
Accessible
Differentiable
Actionable
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POSITIONING
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Positioning is the perception or the image that
customers have of the company and its products
Responsibility of the company to manage its
customers perceptions
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Every fact and act of the company shapes customer
perceptions directly or indirectly
Company should evaluate every activity in terms of
its role in creating positive customer perceptions
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ELEMENTS OF POSITIONING
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Target market
Undifferentiated targeting
Concentrated targeting
Multi-segment targeting
Differential advantage
Communicating the differential advantage to
customers
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POSITIONING, DIFFERENTIATIONAND MARKETING MIX
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AND MARKETING MIX
Product
Promotional
Distribution Price
Packaging
People
Process
Physical evidence
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DIFFERENTIATION IN THE STEPSOF THE CONSUMPTION CHAIN
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OF THE CONSUMPTION CHAIN
Make the customer aware of his needs
Facilitate his search process
Differentiate to make it convenient for the customerto buy the product
Provide real value through product or service
delivery
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Facilitate installation
Payment modes according to customer
convenience
Storage mechanism should match with the
physical surrounding of the customer
Erase customer worry about repair or
replacement
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No-questions-asked return policy
Convenient disposal of product
Differentiate by always being forthcoming to helpthe customer
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CRITERIA FOR SUCCESSFULPOSITIONING
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POSITIONING
Clarity Consistency
Credibility
Competitiveness
Precision
Target audience
Differentiate
Reflect organizationalvalues
Address customer
needs Specific
Ability to deliver the
promise
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DILUTION OF POSITIONINGREPOSITIONING
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REPOSITIONING
Same product and target market
Change in the image of the product
Product repositioningIntangible repositioning
Tangible repositioning
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