tony - dissertation - research paper
TRANSCRIPT
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DISSERTATION
On
A COMPARATIVE STUDY OF MARKETING MIX AT BARISTA
COFFEE (LAVAZZA) WITH CAF COFFEE DAY AND COSTACOFFEE
ByTony Jose
A0101910016MBA Class of 2012
Under the Supervision ofDr. Sumeet Singh Jasial
Asst. ProfessorDepartment of Decision Sciences & Operations Management
In Partial Fulfilment of Award of Master of Business Administration
AMITY BUSINESSSCHOOLAMITY UNIVERSITY UTTAR PRADESH
AMITY BUSINESS SCHOOL
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EXECUTIVE SUMMARY:
This research aims at establishing an understanding of the marketing strategies (pertaining to
marketing mix) of Barista Coffee in India. A comparison with other coffeehouse companies
like Costa Coffee and CCD has been conducted in order to highlight the different strategies
used by these companies, to survive in the market and build a greater customer base. It also
assists in finding out the consumer perception & preference towards these brands. In order to
find out the marketing mix of the mentioned coffee brands, data from the internet has been
gathered in addition to discussions held with store managers of these 3 coffee brands.
Also the primary data has been collected by drafting and distributing a consumer perception
and preference questionnaire which aims at finding out the driving forces behind their opting
for products from a particular coffee house. Different stores of the 3 coffee brands were visited
in various parts of Delhi NCR region like Connaught Place, Karol Bagh, Noida, and Rajouri
Garden etc. 10 respondents from each outlet have been interviewed in order to find out their
perception of the coffee brands.
The responses of 350 customers of these coffee shops have been taken into account in order to
study their perception towards the 3 coffee brands. For the study, the sampling procedure
followed is Convenience Sampling population is selected because the population is readily
available and convenient.
Objectives:
To understand how the elements of marketing mix and their relationship affect the
brand reputation of Barista Coffee.
To study the marketing mix of Barista Coffee with respect to its major competitors in
the Indian market.
To find out the consumer perception regarding Barista Coffee, Caf Coffee Day and
Costa Coffee.
Purpose of the Study:
This research will be helpful in understanding the marketing strategies (pertaining to marketing
mix) of Barista Coffee in India. A comparison with other coffeehouse companies like Costa
Coffee and CCD will help highlight the different strategies used by these companies, to survive
in the market and build a greater customer base. It will also help in finding out the consumer
perception & preference towards these brands.
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Methodology
The responses of 350 customers of have been taken into account in order to study their
perception towards the 3 coffee brands namely Barista Coffee, Caf Coffee Day and Costa
Coffee. The population of the survey are the customers of these 3 coffee brands in Delhi
NCR region. The data will be collected from the customers by conducting surveys and
interviews with the help of a questionnaire which will give an insight into the perception of the
consumers towards the 3 brands that have been selected for the research, and the factors that
drive their preference towards a particular coffee brand. For the study, the sampling procedure
followed is Convenience Sampling population is selected because the population is readily
available and convenient. Tools used- MS Excel, MS Word, and SPSS. Survey Area: Karol
Bagh, Rajouri Garden, Connaught Place & Noida Sec. 18 Market
Significance of the Study:
The reason of conducting this research is to study the marketing strategies adopted by Barista,
CCD and Costa Coffee with respect to marketing mix. This research will be helpful in
understanding why consumers have started preferring these coffee chains. Since Barista is one
of the largest and fastest growing chains of coffee cafes in India; its marketing strategies and
the reason for its success are studied in this research. Its competitors Caf Coffee Day and
Costa Coffee are also compared with it. The research will help Barista coffee company and the
other coffee parlours to understand the customers needs and preferences so they can devise
their marketing strategies accordingly and adopt the most effective marketing mix to attract
more customers.
Limitations:
Though the research contains reliable results but it still suffers from a few limitations. Firstly,
the research was carried in a limited time period (2 months) which was due to a time constraint
owing to academic commitments. Secondly, the sample size taken is restricted to Delhi NCR
region since it was not possible to acquire data from other states due to proximity issues.
Finally, there was also lack of co-operation on behalf of some customers of the coffee brands
while filling up the questionnaire, which resulted in answers or opinions given out of haste and
frustration, which were hence not included in the research.
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Introduction:
Coffee Industry in India
The beverage industry in India has gained importance in the last few years. The beverage retail has
become a fashionable concept today. A significant change in this industry in particular has been the
growth of coffee industry. India had been traditionally tea drinking country for ages. Recently, a new
mode of distribution for coffee has emerged in form of coffee chains. The coffee consumption by
Indians has increased in the last 4 to 5 years. The coffee demand was 169 MT in 1990-91 has
increased to 306 MT in 2003-04 and is further estimated to increase to 405 MT in 2009-10.
Traditionally coffee in India was restricted to the south and that too, predominantly in peoples home.
The main reason responsible for this proliferation of cafes is the increased spending power among the
youths apart from other reasons.
By the turn of the 20th century, the face of the Indian retailing industry had changed
significantly. Earlier this was largely dominated by unorganized sector but the entry of
organized sectors bought significant changes in this industry. The coffee drinking revolution
has had its biggest boost due to opening of thousands of coffee parlours like Barista, Caf
Coffee Day, and Costa Coffee among others in the country. These bought prominent changes in
the eating habits of Indian consumers.
In India, People go to the coffee parlours to just sit over a cup of well-brewed coffee, chill out
and chat for hours at length with friends or simply to be with oneself in such a relaxed
atmosphere. Even working people meet to discuss work in the peaceful environment. These
chains offer a wide variety of things. These coffee chains offer the "total experience" which
consists of right coffee, food and ambience with Wi-Fis and jukeboxes for customers.
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Review of Literature
In this paper(Bowen Jr. John J., 2000), the author highlights the importance of the 4Ps of
marketing and their impact on creating an environment which is conducive for sales in any
organisation in the finance industry.
In the paper(Jagmohan.S, Raju, V.Srinivasan and Rajiv Lal, 2000) the role played by brand
loyalty in determining optimal price promotional strategies used by firms in a competitive
setting is analyzed.
According to the paper (Christie Koontz, 2004), the 4 P's for Optimal Customer-Based
Marketing have been tweaked for desired results.
In the paper (Christian Grnroos, 2004), the nature and consequences of the dominating
marketing paradigm of today, marketing mix management of the managerial school and how
evolving trends in business and modern research info, for example, industrial marketing,
services marketing and customer relationship economics, demand a relationship-oriented
approach to marketing have been broadly discussed by the authors.
According to the paper(Edo Rajh, 2005), the structural model of the effects of marketing mix
elements on brand equity is defined in line with the existing theoretical findings.
In the paper (Ekrem Cengiz, Hilmi Erdogan Yayla, 2007), the relationship between
marketing mix and word of mouth communication has been examined. These variables are
increasingly recognized as being sources of competitive advantage
According to the paper(Ankit Gupta, Vidya Bhat, 2007), the existing marketing mix of iPod
has been studied where the Product, Promotion and the Price have been analysed.
According to the paper(R.B. Mason, 2007), the proposition regarding the choice of marketingtactics is determined, or at least significantly influenced, by the nature of the companys
external environment has been put forth.
According to the paper(Syed Ehtesham Ali, 2008), the marketing mix and their relationship
affecting the brand reputation of NOKIA has been focused upon. The reasons for preference of
NOKIA based on established parameters of marketing mix (the 4 Ps) have been researched
upon.
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Comparison of Marketing Mix Strategies
Coffee
Shop
Product Price Place Promotion People Process Physical
Evidence
Barista Appealingprimarily to
traditional
coffee lovers.
Food items :
croissant,
pastas, and
sandwiches -
project a
very classicimage of
Barista;
Coffee
beans, coffee
machines,
etc.
Price
Skimming
Policy
The prices
are
constantly
changing
g; main
factors thataffect their
pricing are
their cost of
goods sold.
High Street/
Family
Entertainme
nt Centers.
In and
around
Cinema,
Colleges,
Malls, and
Offices
Appeals to
coffee
lovers of all
ages.
Press, TV
and Radio
Medias
Do not rely
heavily on
advertisin
g, but rely
more on
sponsorshi
ps andstrategic
alliances
with other
corporatio
ns.
Sales
promotion
activities
trained
to be
Pleasan
t, Polite
and
Positive
uniform:
in sober
shades
ofbrown
The
order
and
delivery
process
at
Barista
is based
on self-
service
caf
interiors -
project a
warm,
earth
glow,
synonym
ous with
coffee
furniture
-
made of
light
shades of
wood
comforta
ble sofas
Cafe Coffee
Day
appeal to
Indian coffee
and snack
lovers
capture
Indian taste
along with
classic coffee
samosas,
biryani, tikka
sandwich,
masala
sandwich,
etc.
derive a
policy to
satisfy all its
customers
price for a
cup of coffee
Rs.25 to
Rs.75.
Malls,
Cinemas,
Colleges,
Offices, etc
Through
television;
Ticket
sales;
Tie-ups
Peopl
e are
hired
for
what
they
know
but
fired
for
how
they
behave
.
Motivati
based
on self-
service
flexible
delivery
process
used
bright
red and
green
colors in
its logo
The font
used forCaf is
called
SLURRY
Change
from the
largely
wood and
granite
based
interiors,
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on and
persona
l skills
are laid
strong
emphas
is upon.
maintai
n high
standar
ds of
quality
in their
performance
and
behavio
ur
there is
more of
steel and
lots more
colour
now.
young
colours of
today,
lime
green,
yellow,
orange,
and
purple
Costa
Coffee
Coffee
products
include -
Espresso,
Espresso
Americano,
Macchiato,
Cappuccino,
Caf Latte,
and
Chococinno
& Irish
Coffee.
Variety of
snacks like
grilled
sandwiches,
pastries,
patties,
tiramisu,brownies etc.
The pricing
strategy
adopted is
premium
pricing
The target :
people with
high
spending
capacity
Eg. A cup of
cappuccinocosts Rs.65-
80
selection of
the cities :
Sizeablepopulation
of
executives,
students
High
disposable
income
High level
or
organized
retail
activity
Rapid socio-
economic
developmen
t
Most of
the
awareness
through
word of
mouth
Reputation
plays a
very vital
role.
During
launch ofany new
product,
costa
serves
free
samples to
customer
with other
products.
Given
compet
ent
training
in
addressi
ng the
demand
s of
their
custom
ers.
Dressedsmartly
(in red
and
black)
and are
well
groome
d.
Committed to
Self
service.
Decent
look by
using
wood and
glass
based
interiors
of colors
brown,
chocolate
, and red.
Lighting:
not verybright;
creates a
soothing
environm
ent.
Music
system
[playing
pop and
currentmusic],
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providin
g top
quality
services
.
wifi
connectiv
ity, and
LCD TV
display.
Marketing Mix Leading to Brand Reputation of Barista:
The various elements of marketing mix namely product, price, place, promotion, physical
evidence, people and process have led to the building of the Barista brand over the past few
years.
Barista has positioned itself as a brand for everyone who loves coffee. Their products, services
and outlets are more like the traditional European cafs, where people would meet for the love
of coffee, and for an intellectually appealing time. They position their outlets as a place where
the world meets, and they look to appeal to anyone in the 14- 60 age group that loves good
coffee and looks for a nice quiet time.
By offering a variety of products at reasonable prices, the company has managed to rope in
more customers over the years. Also having located itself in prime areas like cinemas, malls
where the footfall is high, theyve managed to catch the eye of the people around. By adopting
effective promotional strategies, their sales have gone up by more than 60% which has resulted
in greater awareness about the brand.
The staff, physical evidence and simplification of processes creates a strong recall value in the
mind of the customers which drives them to visit again in the future, which increases the
popularity as well as the profitability of the company.
Data Analysis
Reliability Test:
Case Processing Summary
N %
Cases Valid 351 99.4
Excluded 2 .6
Total 353 100.0
a. Listwise deletion based on all variables in the procedure.
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Cronbach`s alpha above 0.60 shows that the data of 350 respondents is reliable to
draw inference out of it.
The respondents were asked about the factor which they felt was most important from their
point of view while deciding upon a specific coffee shop. Majority of the respondents i.e. 168
respondents stated the taste of products played a vital role while 90 respondents felt that
ambience was an important factor.
This is because people visit coffee shops to have a well prepared cup of coffee and unwind
after a tiring day of work or college. So, it is important that the products offered by the coffee
brands are tasty and also the ambience should be soothing. Thus, this signifies that customers
visit coffee shops after considering certain factors which help in moulding their decision to
visit the coffee shop, in this case, taste of product and ambience.
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1. Ambience
rate the ambience (colour and lighting) of barista * rate the ambience (colour and lighting) of CCD
Crosstabulation
Count
rate the ambience (colour and lighting) of CCD
Totalaverage good very good excellent
rate the ambience (colour and
lighting) of barista
average 16 15 11 0 42
Good 26 33 81 18 158
very good 0 24 51 32 107
Excellent 5 9 13 17 44
Total 47 81 156 67 351
rate the ambience (colour and lighting) of barista * rate the ambience (colour and lighting) of costa coffee
Crosstabulation
Count
rate the ambience (colour and lighting) of costa coffee
Totalaverage good very good excellent
rate the ambience (colour
and lighting) of barista
average 0 42 0 0 42
good 32 78 31 17 158
very good 17 39 42 9 107
excellent 5 21 14 4 44
Total 54 180 87 30 351
The ambience of barista has been compared with that of cafe coffee day and
costa coffee across 5 parameters namely: poor, average, good, very good &
excellent.
From the above data we can observe that barista when compared with cafe coffee
day has lesser respondents giving it a favourable rating (very good + excellent)
151 as compared to cafe coffee day 223 respondents.
When barista was compared with costa coffee, it was however noted that it has a
higher favourable rating i.e. 151 as compared to 117 of costa coffee. This signifies
that respondents preferences is more favourable towards CCD due to better
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colour and lighting, comfort and feel facilities which are major attributes of
ambience.
2. Overall Service
The overall service of barista has been compared with that of cafe coffee day
and costa coffee across 5 parameters namely: unsatisfactory, ordinary,
satisfactory, exceeds expectations and highly satisfactory.
From the above data we can observe that barista when compared with cafe coffee
day has lesser respondents giving it a favourable rating (exceeds expectations +
highly satisfactory) 169 as compared to cafe coffee day 222 respondents.
rate the overall service (coffee) of barista * rate the overall service (coffee) of CCD Crosstabulation
Count
rate the overall service (coffee) of CCD
Totalordinary satisfactory
exceeds
expectations
highly
satisfactory
rate the overall service
(coffee) of barista
Ordinary 11 8 3 0 22
Satisfactory 21 42 69 28 160
exceeds expectations 12 23 82 27 144
highly satisfactory 0 12 9 4 25
Total 44 85 163 59 351
rate the overall service (coffee) of barista * rate the overall service (coffee) of costa coffee Crosstabulation
Count
rate the overall service (coffee) of costa coffee
Total
unsatisfactor
y ordinary satisfactory
exceeds
expectations
highly
satisfactory
rate the overall service
(coffee) of barista
Ordinary 0 21 0 1 0 22
satisfactory 0 24 99 33 4 160
exceeds
expectations
8 5 60 44 27 144
highly satisfactory 0 0 1 21 3 25
Total 8 50 160 99 34 351
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When barista was compared with costa coffee, it was however noted that it has a
higher favourable rating i.e. 169 as compared to 133 of costa coffee. This signifies
that respondents preferences is more favourable towards CCD due to better
overall service provided which includes timely delivery of orders, food quality,
mannerism of staff, cleanliness etc.
3. Quality of Products
rate the taste and quality of products (coffee) of barista * rate the taste and quality of products (coffee) of
CCD Crosstabulation
Count
rate the taste and quality of products (coffee) of CCD
Totalaverage good very good excellent
rate the taste and quality of
products (coffee) of barista
average 5 14 29 13 61
good 3 8 19 19 49
very good 7 37 81 36 161
excellent 5 20 39 16 80
Total 20 79 168 84 351
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rate the taste and quality of products (coffee) of barista * rate the taste and quality of products (coffee) of costa
coffee Crosstabulation
Count
rate the taste and quality of products (coffee) of costa coffee
Totalpoor average good very good excellent
rate the taste and quality of
products (coffee) of barista
average 0 17 28 16 0 61
good 1 12 25 9 2 49
very good 0 41 67 42 11 161
excellent 0 24 27 21 8 80
Total 1 94 147 88 21 351
The taste and quality of products of barista has been compared with that ofcafe coffee day and costa coffee across 5 parameters namely: poor, average,
good, very good & excellent. From the above data we can observe that barista
when compared with cafe coffee day has lesser respondents giving it a favourable
rating (very good + excellent) 241 as compared to cafe coffee day 252
respondents.
When barista was compared with costa coffee, it was however noted that it has a
higher favourable rating i.e. 241 as compared to 109 of costa coffee. This signifies
that respondents preferences is marginally more favourable towards CCD due to
better tasting and higher quality products like sandwiches, desserts, pasta etc.
which leads to greater satisfaction among customers and eventually better
perception and preference.
4. Value for Money
rate the value for money (coffee) for barista * rate the value for money (coffee) for CCD Crosstabulation
Count
rate the value for money (coffee) for CCD
Totalpoor average good very good excellent
rate the value for money
(coffee) for barista
average 0 8 20 49 0 77
good 0 10 26 62 10 108
very good 8 0 28 23 94 153
excellent 0 4 0 1 8 13
Total 8 22 74 135 112 351
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rate the value for money (coffee) for barista * rate the value for money (coffee) for costa coffee Crosstabulation
Count
rate the value for money (coffee) for costa coffee
Totalpoor average good very good excellent
rate the value for money
(coffee) for barista
average 0 41 19 17 0 77
good 3 18 59 23 5 108
very good 0 3 85 49 16 153
excellent 0 0 4 1 8 13
Total 3 62 167 90 29 351
The value for money of barista has been compared with that of cafe coffee dayand costa coffee across 5 parameters namely: poor, average, good, very good &
excellent.
From the above data we can observe that barista when compared with cafe coffee
day has lesser respondents giving it a favourable rating (very good + excellent)
166 as compared to cafe coffee day 247 respondents.
When barista was compared with costa coffee, it was however noted that it has a
higher favourable rating i.e. 166 as compared to 119 of costa coffee.
This signifies that respondents preferences is more favourable towards CCD due
to products and services that back their worth i.e. are providing the customers
with the desired quality level for the price they are being offered.
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The pricing of products of barista has been compared with that of cafe coffee
day and costa coffee across 5 parameters namely: strongly disagree, disagree,neutral, agree & strongly agree.
From the above data we can observe that barista when compared with cafe coffee
day has lesser respondents giving it a favourable rating (agree + strongly agree)
135 as compared to cafe coffee day 195 respondents.
When barista was compared with costa coffee, it was however noted that it has a
higher favourable rating i.e. 135 as compared to 104 of costa coffee. This signifies
that respondents preferences are more favourable towards CCD due to products
1. Pricing
prices of products of barista is reasonable * prices of products of CCD is reasonable Crosstabulation
Count
prices of products of CCD is reasonable
Totaldisagree neutral agree strongly agree
prices of products of barista is
reasonable
strongly disagree 5 5 0 0 10
disagree 4 9 36 0 49
neutral 11 55 91 0 157
agree 0 48 22 43 113
strongly agree 6 13 0 3 22
Total 26 130 149 46 351
prices of products of barista is reasonable * prices of products of costa coffee is reasonable Crosstabulation
Count
prices of products of costa coffee is reasonable
Total
strongly
disagree disagree neutral agree strongly agree
prices of products of
barista is reasonable
strongly disagree 0 0 5 0 5 10
disagree 0 11 22 0 16 49
neutral 7 54 61 35 0 157
agree 0 21 47 40 5 113
strongly agree 0 8 11 0 3 22
Total 7 94 146 75 29 351
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being reasonably priced which makes it easier to afford especially the youth
(school & college).Suggestion & Recommendations
Based on the analysis carried out, certain gap areas have been identified regarding the
perception of consumers towards the coffee brands:
It has been observed that costa coffee and barista fall short in terms of performance
when it comes to the aspect of ambience. Hence, the brands should look into creating an
environment in the coffeehouse which is more appealing to the customers by
incorporating changes to their existing setup; by working upon the lighting, colourcombination or the arrangement of lounges and sofas.
The coffee brands namely barista and costa coffee have to strategise their service plan
in order to provide a more comprehensive overall service to its customers. This should
be done with a view to provide the customers with timely orders, product quality,
mannerisms of staff etc. The brands should strive towards overall satisfaction for their
customers in order to retain them in the long run.
Value for money is something which all customers strongly crave for. Thus, in order to
meet this desire of customers, the company should bring about necessary product
innovations by bringing in more variations for the price they charge from the
customers. Apart from the product quality, the companies should provide a rich
experience which will make the customers want to return to the coffee shop again in the
future.
Despite having branded itself as a premium brand, costa coffee has not garnered
favourable reviews from the respondents when it comes to value for money, service
provided and pricing being reasonable. Due to this fewer people choose to visit costa
coffee as a result of which the customer turnout is low as compared to other coffee
brands like barista and CCD. Thus, costa coffee should either bring its products to the
high standards they have claimed to set for themselves or should venture into cheaper
alternatives or variants which can be afforded by the youth like college going students
since they comprise a significant percentage of coffee shop customers.
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The taste and quality of products offered by barista and costa coffee has come under the
scanner, with several dissatisfied customers voicing their opinions. This needs to be
looked into quickly since coffee is their core service offered to the customers and if this
takes a hit, the whole brand might suffer. Hence, the companies should run frequent
quality checks on their products and replenish their stock on a regular basis, to provide
the customers with fresh tasting coffee and food items.
Conclusion
Based on the research carried out it has been observed that the 3 coffee brands barista,
caf coffee day and costa coffee use various marketing strategies pertaining to
marketing mix in order to position their products better in the market and also to create
a larger pool of customers.
Basically, the above mentioned coffee house brands aim at roping in more customers in
order to gain a favourable edge over the competitors in terms of customer base and
profitability. Through the survey conducted in order to find out the customer
perception and preference towards these 3 brands, it has been observed that caf coffee
day enjoys a more favourable customer perception and preference as compared to
barista and costa coffee.
The reasons identified for this result are that CCD is preferred more in terms of value
for money, taste and quality of products, ambience, delivery of service etc. due to
which the customers feel comfortable at the coffee house, which implies that they are
greatly satisfied with what the company is offering.
This has resulted in a greater number of customers visiting caf coffee day and
consuming their products, thereby, boosting their profitability.
The major gap area which has been identified for barista is the delivery of services
while costa coffee faces the problem of high prices, in which case the products dont
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live up to the expectations of the customers in terms of product quality or the service
provided.
Thus, the shortcomings of the companies leading to lower customer preference has been
analysed and various suggestions like frequent quality checks, providing qualityexperience, recruiting and training staff, continuous innovations etc. have been
suggested in order to overcome this problem and eventually gain favourable perception
of the customers.
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