Module marketing 1.1

Marketing

• Why is it easy to identify these logos

even when they

are incorrect?

• Why would you purchase

Adidas/Nike running shoes

over Bata?

• Why do people ask for a

‘Xerox’ when they want a

photocopy?

MARKETING:

defined

Fulfilling a need/want or solving a

problem by creating products

& services for the target

audience AND delivering it in a

manner that is relevant and

accessible….

In other words

Successful

Marketing

Customer

Shopper

Consumer

Marketing: Work Overview

IDEAS Screening & Mix

Development Launch

Consolidation & Growth

Evolution &

Diversification

Innovation: Creating New Brands

Managing Existing Brands

Understanding Consumer, Shopper,

Customer & Market/Environment is

fundamental to successful marketing

roles because:-

•It provides insight into consumer needs,

lifestyles and attitudes, to help discover what

they want and how to talk to them. Key to

successful innovation & growing/diversifying

brands.

•It provides an in-depth knowledge of the

marketplace and the shoppers within it. Any

marketing strategy / activity is more likely to be

successful, if it is based on reality of how things

really are, and not on assumptions.

•It provides feedback on how consumers &

shoppers react to our new marketing initiatives.

This allows us to refine and fully optimise them

before they are launched/re launched into the

marketplace.

This greatly increases the chances of success.

Innovation: Creating New Brands

Innovation Funnel

Idea Phase Concept

Screening Mix Devt &

Testing Capability

Assessment Launch

Opportunity Identification

On average 2 out of 10 innovations succeed i.e. only

20% - Innovation requires patience and

perseverance!!

Idea Phase

Opportunity Identification

Opportunity Identification:

• Utilize and Correlate different data points to arrive

at areas that show promise for growth

•Broad Spaces/Areas are identified at this stage.

Idea Generation:

• Generating broad product ideas based on the

areas of opportunity identified

• A mass of ideas are generated –

NO elimination/sorting is done at this stage

>> Qualitative Exploration, understanding

rather than statistical

precision. Small samples;

specialised interviewers to

analyse consumer responses.

>> Quantitative About facts & figures; large sample –

representative of given population, to

Enable statistical analysis. Indicates

consumer behaviour at overall level.

• Open ended focus

groups

• Holistic Consumer

Immersion

•Habits & Attitudes

•Segmentation

Studies

•Preference

Mapping Surveys

• Databases (AC Neilsen,

Euromonitor, etc.)

• Trend Analysis

• Online Research, Blogs

• Internal Data

•Past Failures

•Experienced Members

ON THE GO PROJECTION MARKET

• Mini/Pocket Projectors

• Projector Phones

MID TIER FITNESS MARKET

• Cheap Gym Equipment

• Fitness Drinks & Supplements

FOREIGN EDUCATION MARKET

• Edu Consultants

• Cheap Student Loans

Examples:-

Concept Screening

Opportunity Areas & Broad Ideas

•CONCEPT: defined

• Simple, understandable and appealing

renditions of your ‘broad ideas’ for your target

audience

• Conveys the essence and salient points that

help consumers evaluate your idea

• A tool that helps to assess consumer interest in

the particular idea and whether it deserves to be

developed further or junked

Concept Screening

Opportunity Areas & Broad Ideas

•CONCEPT: defined

• Simple, understandable and appealing

renditions of your ‘broad ideas’ for your target

audience

• Conveys the essence and salient points that

help consumers evaluate your idea

• A tool that helps to assess consumer interest in

the particular idea and whether it deserves to be

developed further or junked

Initial

Concept Development

Qualitative Recycling

with Consumers

Fine-tuning preferred concepts & Conducting a Concept Test

Winning Consumer Concept

Mix Devt & Testing

Consumer

Validated

Concept

Creating the Marketing Mix

• Formally these comprise the Product, Price,

Place and Promotion .

• These defines exactly how and in what

manner your brand will interact with the

Customer, Shopper and Consumer .

Product Price Place Promotion

Mix Devt & Testing

Consumer

Validated

Concept

Tangible good or intangible service. Includes the core product attributes, the proposition, how it will be

differentiated in a burgeoning market and its Packaging

Mix Devt & Testing

Consumer

Validated

Concept

The amount that a consumer pays for the product. Price is affected by competition/substitutes, market dynamics,

target audience, etc. A strong brand can charge a Premium!

Mix Devt & Testing

Consumer

Validated

Concept

Location (Distribution Channels) through which the product is sold. It can be physical (general trade or modern

trade stores) or virtual

Mix Devt & Testing

Consumer

Validated

Concept

Advertising: Paid & Unpaid communication to spread awareness, drive trial for a product (TV, Radio, PR, Internet, etc.)

Promotion: Sales promos, schemes aimed at lubricating Trade

•Issue detailed product brief to technical/R&D team including product attributes, competition benchmarks, cost details and timelines

•Develop initial prototypes

•Recycle/Perform iterations after (qualitative) consumer feedback

•Test product in blind (unbranded) form vs. competition benchmark to see if the core offering is at least at parity (preferably better)

•Create packaging and form that the product will be accessible to consumers in – keep in mind their needs, usage patterns, environmental concerns, etc. A well designed pack can attract/detract shoppers in a crowded store!!

•Test/Recycle and fine-tune

•Test the product in branded form with the concept vs. competition – Acid test of success. See if product delivers a) vs. the expectations set by the concept and b) vs. competition

• A parity/inferior product in blind testing can often significantly improve/worsen in branded testing depending on perceived brand strength

A well designed offering will

engage more than one sense in

a compelling manner.

Example:

•iPhone: Visually appealing

design (easily recognizable)

• Touch-friendly/intuitive usage

• Signature

ringtones/sounds/alerts

A strong and well liked pack can

be a HUGE asset.

• Tropicana introduced its new pack in Jan, 09 as part of a $35

million ad campaign.

• Sales fell 20% in <2 months

forcing it to go back to the

classic design!

P.S – the product was unchanged

How much someone needs to pay to buy your product/service. Setting a price depends on the following:-

1) Competition & Market Dynamics: How much others are charging can influence your price specially where close substitutes are available

2) Internal Considerations: Do you have other brands in the portfolio that could be affected? (Eg. Would Cadbury price Silk and regular dairy milk the same??). Cost of production is obviously a key component here.

3) Brand Strength: How much people are willing to pay for you given your concept and product. Loyalty/strength of existing brand (iPad: would it be as successful if Onida launched instead of Apple??)

Head (example) MRP (Rs.)

Consumer Price (MRP) 150

Less: Trade Margin 15

Trade Price 135

Less: Distributor Margin 10

Gross Sales Price 115

Less: Taxes 23

Net Sales Price/ Turnover 92

Less: Costs (direct+indirect) 64.4

Profit 27.6

The final Price

is very different

from the

amount a co.

realizes!

Pricing Strategy Definition

Penetration pricing Low initial price to gain penetration/trial, sales and market share. Post that price may

be increased

Skimming pricing Initial high price and gradual reduction to make the product available to a wider

market. Skim profits of the market layer by layer.

Competition pricing Setting a price in comparison with competitors- parity, x% lower or higher.

Product Line Pricing Pricing different product variants within the same product range at different prices for

a range.

Bundle Pricing Bundled group of products at a reduced price.

Psychological pricing Pricing just below a ‘psychological price band’. Eg. Rs.999 or Rs.990 instead of Rs.1000.

Premium pricing High price to reflect the exclusiveness of the product.

Optional pricing Sell optional extras along with the product to maximise its turnover.

Cost Based/Cost Plus Pricing

Cost of production and distribution, plus mark up % for profit

DISCUSS: What is iPods Strategy?? Does it work for them?? Why??

How your product gets from the factory to the end

shopper/consumer.

Important to reach the right person at the right

place at the right time!

• Intensive distribution – Majority of resellers stock the 'product‘ .

• Selective distribution – Selected group of ‘suitable’ resellers

stock the product.

• Exclusive distribution - Only specially selected

resellers/authorized dealers (typically

only one per geographical area) sell the ‘product’

• Selling to a distributor is not a FINAL sale for a manufacturer! If the

product doesn’t

reach the end of the chain (shopper/consumer) it will be stranded

at some link! Does not attract repeat purchases by distributors!

• Important to motivate and recognize distribution and trade partners via incentives,

schemes – ‘marketing’ to customers(trade) as important as

consumers!

Inventory management & Warehousing:

How inventory will be stored? When it will be released from factory to depots to

markets?

Transportation: Mode of transport of finished goods to ensure they reach on

time and in the right form (one bad

apple really does spoil the rest!!)

Take Back Policies: How are damaged

stocks taken back?

(What Aamir Khan is GREAT at )

Communicating your brand offering in a manner that delivers

your brand message holistically and in a manner that attracts trial for the brand.

Attract Consumer Attention

Heighten Interest in the Brand

Create Desire to Purchase

Push them into ACTION: BUY

DIVIDED normally into 2 parts

Advertising

•Radio •Public Relations

•Internet •Print

Sales Promotion

•Consumer Based

•Sales Force Based

•Trade Based

So what really is a goooooood piece of communication??

?Discuss?

Insert 2 videos of the fall ads (then show the last

1) Blackberry boys jingle – by vodafone

2) JK Super Cement – the one with the girl dancing

on the beach!

1) Advertising

ANSWER: Well it depends!! A Good piece of

communication is one which satisfies the objectives behind its creation!

1) Advertising

Creating Great Communication starts with a great BRIEF

for the Agency

Typical Agency Brief

• What is the Objective that

drives this brief ?

•Who is the target audience?

•What are the intended

channels of choice (TV,

Radio, etc.)?

• What does the audience

currently think and do (wrt

the category)?

• What do you want them to

think and do in response to

the communication?

• What is the most important

point to communicate?

• Why should the audience

believe it?

• Cost and time constraints

Once the above points are mutually agreed

with the agency, should they start making

campaigns!

Creating STELLAR communication:

Agency

Presents Script

Options basis brief

Mutually

Decide 2-3

options

Create

‘Anima tic’

Versions for Testing

Qual Test

Consumers

1) Advertising

Post qual testing, the winning ‘animatics’ are put into

quantitative consumer testing.

A sample result (called PREVIEW) is given below – basis this

a film is shot with improvements:

MEDIA PLANNING: Communication through the desired

channels is created in line with the overall marketing and media

plan – HOW WHAT WHEN WHERE and WHY each piece of

communication will be deployed to have the desired effect.

Media Channel selection needs to be done carefully to

maximize chances of success with the given budget:

1) Advertising

Sales are generated not only by ‘pulling’ or ‘attracting’

consumers towards your brand but by also ‘pushing’ your brand towards them

2) Sales Promotion

Trade Promotions Consumer Promos Sales Team

2) Sales Promotion

• POP Display Incentive • Trade Allowance

• Contests

• Trade Shows

• Trade Schemes & Discounts

2) Sales Promotion

• Samples • Coupons

• Freebies

• Refund/Rebate

• Contests • Price Offs

2) Sales Promotion

• Target • Achievement

• Bonuses

• Contests

• Incentives/Gift

Mix Devt & Testing

Consumer

Validated

Concept

Marketing Mix: Does it work TOGETHER?????

• Once the 4Ps of the mix are defined in this manner a

company wishes to know how much they can sell/earn if they launch this mix into the market

Quantitative Volumetric Testing:

• Done to identify the volume potential of a mix

• Often done at varying prices and market conditions to

find the most suited launch plan

• Gives volume and sales forecast of the mix for 2-3 years

together with key measures like trial and repeat rates

• Done by agencies like

A Brand must have a unique identity, character and consistency

that shines through in all aspects of its being.

Discuss: Why do you recognize a Nike, Adidas or Blackberry product so easily ??

Brand Identity Document: a definition of what a brand stands for that

helps it stay consistent and true to itself in future

• Brand Vision and Mission

• Target Audience

• Competitive Environment

• Benefits it Provides – Rational & Emotional • Its Values, Personality and Tone of Communication

• Brand Essence and Promise

• Scope of the Brand – Categories/Services/Offerings it can and

cannot go into • Brand Properties – Signature assets that a brand wants to own

(Eg. Vodafone puppy, Nike Swoosh, Nokia hand-shake, etc.)

Validated

Marketing

Once a mix is ready a company

needs to gear up to be able to produce it and be ready to

handle all aspects of the mix

Capability Assessment

Validated

Marketing

Product Readiness

Supply Chain Readiness

Legalities Competitor Assessment

• Shelf Life/Storage

Test Clearance

• Transit/Transport

Test Clearance

•Govt. Safety

Clearances

Validated

Marketing

Product Readiness

• Raw Material

Sourcing

• Factory Trials &

Sample Batch Production

•Distribution Chain

in order

Validated

Marketing

Product Readiness

• Govt. Licenses, etc

• Trademarks, Copyright Filing

Validated

Marketing

Product Readiness

• Assessing Competition Readiness to retaliate

• Drawing up contingency plans

for the same

What the last 12-18 months

was spent waiting for!!

D DAY!!

Launch

• PRE Launch Sales Briefing: ESSENTIAL to brief the front

end/sales/execution teams about ALL aspects of the launch so that they

can execute it FLAWLESSLY

• Important to get them MOTIVATED and EXCITED about this – A

demotivated sales team can KILL the Best of mixes in days!!

Test Market launch in a restricted

geography to evaluate in market

performance in a given area. Done to

correct chinks before a full launch

Complete launch (phased or

simultaneous) in all intended geographies and markets

• The first 12 Months after a launch are CRITICAL to its success.

Important to have first hand feedback on the brand from:

• The Market and Trade

• Consumers & Shoppers

• Early detection can help correct serious/minor flaws that can make

or break a brand

A successful launch isn’t always so the first time

round – what makes it so is the BELIEF and

RESILIENCE of the brand owner/manager!!

p.s.- Guess which Pizza brand

you wouldn’t be ordering

from if it withdrew after its initial unsuccessful entry

• Managing one or a set of existing/new brands consumes the maximum amount of a brand manager/marketer’s time.

• A successful launch is just half the battle won

Launch Consolidation &

Growth

Evolution

Diversification

MANAGE YOUR

OBSESS over Consumer Understanding:

Understand them completely because you will often need to

make judgement calls without referring to research always

• Meet your Consumers OFTEN: Read what they do, visit the

places they visit for leisure, watch the movies they would – get under their skin. Make sure your you understanding is based

on reality and is CURRENT/UP TO DATE

• Watch how shoppers make their category choices.

INTERNALIZE your Brand:

Know it like the back of your hand

• Know what users, non users think about you – why they

like/love/hate you

• Track every detail about your brand – sales, shares, distribution,

imagery, trends

• Monitor your finances REGULARLY!

ENVIRONMENT Understanding:

This is constantly changing.

• Visit the markets often – see what trade and competition is

• Keep track of competitive actions, reactions and new

launches

• How can you stand out in an ever increasing clutter of

brands/products?

Have a good overview of the different data sources for consumer, market and shopper Understanding.

How to interpret it and how to use it in your everyday work.

Sustainable

Growth

Sales Objectives

Profitability

= f BRAND

STRENGTH ) (

Keeping all Ps in line with strategy & modifying

as per the environment .

Giving a brand enough resources to fuel its

growth and expansion

Portfolio Management to ensure low cannibalization of

internal brands

Evolving to stay continually relevant with changing

consumer needs

Well defined 4Ps keep your brand moving smoothly.

But need regular maintenance!!

Purchase frequency

Purchase Size

How much they buy

Penetration

How many people buy

PRODUCT PRICE PLACE PROMOTION

4Ps: Impact Al key Attributes

Why Regular Monitoring is essential ??

PRODUCT PRICE

PLACE PROMOTION

Reducing price, advertising more, following competition is not

always the answer though – what’s important is that you adapt to

stay consistent with your strategy in changing times

PLACE PROMOTION

PRODUCT

•MSG becomes issue in foods –

continued use would’ve reduced

Lays sales

• Plasma to LCD/LED TVs – Could

SONY afford to fall behind??

• 1MP Camera to 5MP in 14 months –

change or lose out

PRODUCT

PLACE PROMOTION

• Raw Material Prices up 45% -

Increase price (ST/LT) or get wiped

• DVD prices fall sharply – Can

VCDs afford to be priced the

PRODUCT PRICE

PROMOTION

• Small (Tier 2, 3) towns sharply

increasing luxury car purchases

ahead of larger towns – can BMW

neglect this?

• Rural banking exploding – Private

banks rush to smaller geographies

PRODUCT PRICE

PROMOTION

• HP, Compaq, others offer MASSIVE

discounts during Diwali – if Lenovo

stays out it mite lose up to 25% of its

sales .

• Luxury travel brands: what are the

risks of not advertising on TLC if your

competitor suddenly decides to

sponsor 5 shows on it?

Planning Success: Annual Brand Marketing Plans

AUDIT ANNUAL

PLAN BRAIN STORM

RESULT

ANALYSIS

QUATERLY

REVIEW LOCK-IN

AUDIT ANNUAL

PLAN BRAIN STORM

RESULT

ANALYSIS

QUATERLY

REVIEW LOCK-IN

1. Take Stock of all Key Brand Metrics over

last year (and before. Evaluate each P. 2. Evaluate Environment Changes

FIND KEY Issues & Opportunities

AUDIT ANNUAL

PLAN BRAIN STORM

RESULT

ANALYSIS

QUATERLY

REVIEW LOCK-IN

ANNUAL PLAN

1. Identify Goals for the brand to achieve

over next year 2. Define key success metrics &

sales/profit/growth objectives Create SMART GOALS basis Audit

AUDIT ANNUAL

PLAN BRAIN STORM

RESULT

ANALYSIS

QUATERLY

REVIEW LOCK-IN

BRAIN STORM

1. Think of multiple ways to achieve

these goals – be innovative! 2. Cut down and hone into the ideas

that the team agrees on

AUDIT ANNUAL

PLAN BRAIN STORM

RESULT

ANALYSIS

QUATERLY

REVIEW LOCK-IN LOCK-IN

1. Sign-off plans with larger

category/company plans 2. Sign-off resource Requirements

3. Identify detailed targets by month

AUDIT ANNUAL

PLAN BRAIN STORM

RESULT

ANALYSIS

QUATERLY

REVIEW LOCK-IN

QUATERLY

REVIEW

1. Monitor Progress at Quarterly Intervals

2. Course Correct as required

Ensure YEARLY Plan is on Target

AUDIT ANNUAL

PLAN BRAIN STORM

RESULT

ANALYSIS

QUATERLY

REVIEW LOCK-IN

RESULT

ANALYSIS

1. Year End Result Tabulation 2. Identify key sources of success and failure 3. Team Meetings to discuss and plan for the

following year

A strong financial position provides the fuel to propel a brand further

Managing a Brand P&L

• P & L: Profit & loss. Statement of

financial performance for a

particular time

• Managing this is essential to a

brands survival

Brand P&L:

Affected

Marketing

A strong financial position provides the fuel to propel a brand further

Managing a Brand P&L

Brand P&L:

Affected

Marketing

Key Terms

1. Gross Sales Value - Sales at the ‘max

trade price’ before any trade

reductions/discounts

2. TM Inv: Discounts/Promo for Trade

3. Supply Chain Costs - Costs incurred

in producing and supplying

products to customers (materials,

production, buying, planning,

distribution)

4. Advertising and Promotion - All costs

of supporting the product in the

market place through A&P.

5. Indirect Costs - Costs of running

business (except Supply Chain and

Advertising and Promotion Eg.

selling, admin, R & D,accounting,

A brand team controls part of the total P&L – but the critical part.

To ensure a healthy trading contribution (margin)/end result, a

brand must deliver on its part of the P&L i.e. Gross Profit and PBI.

By Managing Costs

A P&L should be used as an important tool to assess the financial

impact of all key brand decisions like increasing Advertising by 20%,

price reductions by Rs.5/unit, etc.

Each Brand should define a target margin that it should aim to attain in

a given period

PRODUCT

•Raw Material Costs

• Packaging Costs

• Increase Shelf Life

• Price Elasticity – A Rs.xx

increase in price will cause

overall sales growth or fall?

• Can my brand charge a greater

premium

•Reducing Transport Cost

• Reducing Inventory

• Reduce Damages

PROMOTION

•Is TV the most cost effective medium?

• Can PR work harder?

• Is price off better or sampling

A Brand Owner should continually ask the right questions to his team

to ensure all the Ps are delivered as cost effectively as possible

PRODUCT

• Packaging Costs

premium

• Reduce Damages

PROMOTION

PRODUCT

• Packaging Costs

premium

• Reduce Damages

PROMOTION

PRODUCT

• Packaging Costs

premium

• Reduce Damages

PROMOTION

Eg. Category Architecture: Hyundai India

A brand in many companies is part of a larger portfolio of offerings

each with its own role to perform. It must recognize and stick to

that role.

Mass Segment: 60% of Buyers

Offering: Santro, Getz

Mid Tier (25% buyers)

Offering: Verna, Accent

Luxury

Sonata

While the mid tier segment is

booming, would SONATA be the brand to cut prices and target

it? Or would an accent or verna

do the job better??

A brand must stay in the

segment defined for it.

Even after a segment is defined (generally done a for a pd. Of 3-5

years) there is enough room within to decide what a brand

should/should not do

Created for a period of 2-4 years this defines what the brand

seeks to do and a strategy for how it will do so over the said

period. This defines the boundary for a brand

What it includes:

• Brand Identity Document

• Key Thrust/Focus Areas

• Key Innovations Planned

• Target Consumers

• Target Geographies • Brand Scope (in & out)

• Range Architecture of a Brand

• Key Properties of a Brand

• A&P Spending Guidelines • Communication Guides

Eg. Range Architecture

• When each brand stays in its defined segment and

the category strategy is well defined there can

often be a positive rub-off of the mother brand on

each individual brand (called a ‘halo’)

•The iPhone 5/iPad 3 have barely been

announced yet!! Why are people

DYING to get their hands on it??

•Because APPLE has worked hard to

ensure that all its sub brands (iPod, MacBook, iPhone, etc.) benefit from the positive image it has built for itself.

p.s. – iPhone 5 should be out by mid november

A brand, however successful cannot survive unchanged,

for a long time.

WHY? A few have been listed below:

CATEGORY EVOLUTION

CULTURE, BELIEFS & TRENDS

ENVIRONMENTAL CHANGES

OTHER REASONS

CATEGORY EVOLUTION

Categories changes over time acc. to evolving

customer needs. Brands must deliver these to

avoid falling out of their consideration set. Eg. Demand for communication/e-mail/ internet on

the go has led to a convergence in PCs and

Phones with devices like the iPad.

Cars with more fuel efficient engines. (Euro I/II/III/IV) .

ENVIRONMENTAL

CHANGES OTHER REASONS

Module marketing 1.1

Business

Module 1.1: Operating-System Structures

Module 7 Marketing

Module 1- Marketing

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