Marketing Management- Muscat

8/8/2019 Marketing Management- Muscat

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Marketing Management

Prof. Rajesh Panda

SIBM, Pune.


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What is Management

Management is a practice of utilizing all available

resources to obtain a desired result.

Management is necessary because A desired result must be established

Someone must be delegated, or assume the authority,

to obtain, organize, guide, and direct those resources

toward the desired result. Someone must "manage" the entire process.


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Mission Vision and Goal Setting


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Vision

A Vision is a description of the business as

you want it to be---'a mental image

produced by the imagination'. It involvesseeing the optimal future for the business,

and vividly describing this vision. The

description might include HOW things willbe, WHERE, WHO with, WHAT you'll be

doing and HOW you'll feel.


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Mission statement defines the companys major

competitive scopes:

Industry scope

Products and applications

scope

Competence scope

Mission

A Mission is the definition of the 'special assignment'

being undertaken by the business.

Illustration-vision and mission


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Goal setting

Establishing short- or long-term objectives,

usually incorporating deadlines and

quantifiable measures SMART goals

Goal Congruence

Organizational goal vs. Individual goal anddepartment Goal


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Marketing Defined

Marketing is the process of planning and

executing the conception, pricing,

promotion, and distribution of ideas,goods, and services to create exchanges

that satisfy individual and organizational

objectives.Arthasastra-Defining Business


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Sales vs. Marketing

FactoryExistingproducts

Selling andpromotion

Profits throughsales volume

Targetmarket

Integratedmarketing

Profits throughcustomer

satisfaction

Customerneeds

Startingpoint Focus Means Ends

The marketing concept

The selling concept

Production concept and Product Concept


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Who is a Customer ?

Stake Holder

Prospect

Understanding Need, Want and Demand

Customer InitiatorThe person who first suggests or thinks of the idea of buying a particular product or service

BuyerThe person who concludes the transaction

InfluencerA person whose view or advice influences the buying decision

DeciderThe individual with the power and/or financial authority to make the ultimate choice regarding which product to buy

Client

Advisor (WOM)


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Changing Customer Globalization

BRIC Report

GDP Structure

Demographic dividend

Exposed to different Cultures

Exposed to different brands and products

Revolution in IT

Revolution in media

Emergence of Nuclear families

Children and younger mass as deciders

Changing consumer behavior (Lifestyle)

Higher expectations in terms of better service, highercompliance


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Satisfied Customer and Growth

Satisfaction: Difference between perceived value and performance

Shifting loyalty

Increased Variety seeking behavior

Satisfied customer is the key to profitability

Profitability and Growth comes from Increasing Market share

Increasing the allocation to the defined product range

Diversification

Focus on core competency


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Customer Delivered ValueCustomer Delivered Value

Product valueProduct value

Services valueServices value

Personnel valuePersonnel value

Image valueImage value

Monetary costMonetary cost

Time costTime cost

Energy costEnergy cost

Totalcustomer

value

Totalcustomer

value

Psychic costPsychic cost

Totalcustomer

cost

Totalcustomer

cost

Customerdelivered

value

Customerdelivered

value


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B2B Costomer

Movie
http://../rajesh/MDP%20academics/MM-MDP/Customer%20service.mpghttp://../rajesh/MDP%20academics/MM-MDP/Customer%20service.mpg


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Based on the movie Customer Service answer the

followings:

1. How is a service different from a product?

2. What is customer life time value? What is the

significance of this from marketing point of view?

3. Customer retention is critical for growth, discuss.

4. One must move from customer satisfaction to customer

delight. Explain.


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Core Concepts

Corporate strategic planning

Divisional Strategy

Product Strategy


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Nature of Strategic Planning

Strategic planning requires actions in three keyareas

Strategic planning takes place at the corporate,division, business unit and product levels

Marketing plans operate at strategic andtactical levels


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Corporate

Strategic Planning Planning activities include:

Defining the Corporate Mission

Establishing Strategic Business Units (SBUs),

and Assigning Resources to SBUs

Planning New Businesses, Downsizing Older

Businesses


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The Boston Consulting Groups

Growth-Share Matrix

3

?

10x 4x 2x 1.5x 1x10x 4x 2x 1.5x 1x

20%-20%-

18%-18%-

16%-16%-

14%-14%-12%-12%-

10%-10%-

8%-8%-

6%-6%-4%-4%-

2%-2%-

00Marke

tg

row

th

rate

Relative market share

Stars

Cash cow

Question marks

Dogs

? ??

5

4

2

1

68

7.5x .4x .3x .2x .1x.5x .4x .3x .2x .1x


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SBU Turnover(00,000Rs.)

Turn over of the marketleader/ next biggestcompetitor(00,000Rs.)

Industrysize(00,000Rs.)

MarketGrowthrate(%)

MangaloreFertilizers ltd.

112 298 1200 6

Tubes India 23 459 742 17

TurriyaInformationSystems

12 121 540 30

Food RetailsLtd

67 98 900 35

Safe financeLtd.

98 88 789 25

HindustanSugar

23 12 139 12

Jaguar Steel 125 121 2100 8


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The Strategic-Planning Gap

Desiredsales

Diversification growth

Integrative growth

Intensive growth

Currentportfolio

SalesSales

Time (yearsTime (years)

Strategic-Strategic-

planningplanninggapgap

10105500


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Three Intensive Growth Strategies: Ansoffs

Product/Market Expansion Grid

1. Market-penetrationstrategy

(Diversification

strategy)

3. Product-developmentstrategy

2. Market-developmentstrategy

CurrentCurrentmarketsmarkets

NewNewmarketsmarkets

CurrentCurrentproductsproducts

NewNewproductsproducts


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Business Strategic Planning

Business Mission

SWOT Analysis: Internal

SWOT Analysis: External

Goal Formulation

Strategy Formulation

Program Formulation

Implementation

Feedback and Control

Planning Involves Eight Steps:


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Strategic Business Planning

SWOT Analysis

Opportunities andthreats stemming fromthe externalenvironment

Internal strengths andweaknesses

Monitoring key forces

for trends

For each trend, conductan MOA - Marketing

Opportunity Analysis


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Strategic Business Planning

SWOT Analysis

Opportunities andthreats stemming fromthe externalenvironment

Internal strengths andweaknesses

Brand awareness,image, reputation

Distribution, pricing,customer loyalty,

product benefits

Finance, R&D,

manufacturing


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Product strategy

Marketing Mix

Product: provides customer solution.

Price: represents the customers cost.

Place: customer convenience is key.

Promotion: communicates with customer.

Segmentation, Targeting and Positioning

Product life cycle


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Marketing Mix


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Case: Richer Sounds


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The Marketing Triangle

InternalMarketing

Interactive Marketing

ExternalMarketing

Company(Management)

CustomersEmployees

enablingpromises

keeping promises

settingpromises


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Case: Brand Reengineering


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Consumer Behavior

The field ofConsumer Behavior:

studies how individuals, groups, and

organizations select, buy, use, anddispose of goods, services, ideas, or

experiences to satisfy their needs and

desires.


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How and Why Consumers Buy

Buying behavior is influenced by:

Cultural factors

Social factorsPersonal factors

Psychological factors


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Influence Factors

Cultural Social

Personal

Psychological

Exert broadest and

deepest influence

Culture Subculture

Social classes


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Influence Factors

Cultural Social

Personal

Psychological

Reference groups

Membership

Primary vs. secondary

Aspirational vs. dissociative

Family

Social roles and statuses


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Influence Factors

Cultural Social

Personal

Psychological

Age

Stage in life cycle

Occupation

Economic circumstances

Lifestyle

Personality

Self-concept


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Influence Factors

Cultural Social

Personal

Psychological

Motivation

Perception

Learning Beliefs

Attitudes


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Maslows Hierarchy

of Needs

Psychological needs

(food, water, shelter)

Safety needs

(security, protection)

Social needs

(sense of belonging, love)

Esteem needs(self-esteem, recognition)

Self-

actualization(self-development

and realization)

1.

5.

4.

3.

2.


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Consumer Buying Decision Process

In addition to understanding how these

factors influence consumers, marketers

must identify and understand:Who makes the buying decision

The types of buying decisions

The stages in the buying process


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Understand

Buying roles Buying behavior

Buying decision process

Initiator

Influencer

Decider Buyer

User


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Understand



Complex buying behavior

Dissonance-reducing buyingbehavior

Habitual buying behavior Variety-seeking buying

behavior


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Understand



Problem recognition

Information search

Evaluation of alternatives

Purchase decision

Postpurchase behavior


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Postpurchase Behavior:

Consumers expectations are compared to

performancePostpurchase satisfaction influences future

behavior

Purchasing behavior

Word-of-mouth communications


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Communication Shopping Usage

One of the last marketing mediums that consumers are willing to be marketed from

An environment where they really want to touch, experience our brands, compare & contrast :

does this brand meet my need?

The moment of truth for consumers to exercise their belief in our brand messageif we are

relevant


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Advertisements should make a shopper pick up your brand.. But in reality does

this happen??

The answer is a BIG NO..

Unless your product stand-out at the Point of Purchase, the shopper tends to

pick up brands which he/she finds fit.

The point of purchase is the culmination of the following three elements:Channel Strategy aimed at the customer(retailer)

Brand Strategy aimed at the consumerCategory Strategy aimed at the shopper

Building Brands Through Customers


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Marketers should attempt to influence and monitor

postpurchase behavior

Postpurchase communications reduce dissonance,returns, and order cancellations

Talk with customers to discover new uses for existing

products

Investigate methods of product disposal


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Strong Customer Bonds

Keys to Success

Adding Financial Benefits

Adding Social Benefits

Adding Structural Ties

Frequency programs

Club memberships


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Keys to Success

Adding Financial Benefits Adding Social Benefits

Adding Structural Ties

Personalize customer

relationships


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Keys to Success

Adding Financial Benefits Adding Social Benefits

Adding Structural Tie

Create long-term

contracts

Charge less for ongoingpurchases

Link product to long-

term service


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20 80 30 Rule

Half of your profit is lostserving the bottom 30%

of your customer base

20% of your customers

Generate 80% of your profit

30

8020


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STP


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Target Marketing

Target marketing requires marketers to take threemajor steps: Market segmentation: Identifying and profiling distinct groups of

buyers who differ in their needs and preferences. Market targeting: Selecting one or more market segments to enter.

Market positioning: Establishing and communicating the keydistinctive benefit(s) of the companys market offering to eachtarget.


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Using Market Segmentation

Mass marketing is losing popularity

Micromarketing can be undertaken at four levels:

Segment marketingNiche marketing

Local marketing

Individual marketing


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Segmenting Consumer Markets

Bases forSegmentation

Geographic

Demographic

Psychographic

Behavioral

Nation or country

State or region

City or metro size Density

Climate


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Geographic

Demographic

Psychographic

Behavioral

Age, race, gender

Income, education

Family size

Family life cycle Occupation

Religion, nationality

Generation

Social class


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Geographic

Demographic

Psychographic

Behavioral

Lifestyle

Activities

Interests Opinions

Personality

Core values


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Geographic

Demographic

Psychographic

Behavioral

Occasions

Benefits

User status

Usage rate

Loyalty status

Buyer-readiness

Attitude


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Using Market Segmentation

Useful market segments share certaincharacteristics:

MeasurableSubstantial

Accessible

Differentiable

Actionable


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Segmenting Business Markets

Rackman and Vincentis proposed a segmentationscheme that classifies business buyers into threegroups:

Price-oriented customers: best served via transactionalselling

Solution-oriented customers: best served by means ofconsultative selling

Strategic-value customers: best served by means ofenterprise selling


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Market Targeting Strategies

Evaluating and selecting market segments requires

assessing the segments overall attractiveness in

light of companys objectives and resources.

Five patterns of target market selection can then be

considered.


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Single-segmentconcentration

Selective

specialization

Productspecialization

Market

specialization

Patterns of Target Market Selection

Full market coverage


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Targeting multiple segments may result in cost

economies

Supersegment targeting may be appropriate


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PLC


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IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

TimeTime

Sales

Sales &

profits

&

pr

ofits


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Stages of the Product Life Cycle

PLC Stages

Introduction Growth

Maturity

Decline

Low sales

High costs percustomer

Negative profits

Innovator customers

Few competitors


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PLC Stages

Introduction Growth

Maturity

Decline

Rising sales

Average costs

Rising profits Early adopterscustomers

Growing competition


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PLC Stages

Introduction Growth

Maturity

Decline

Peak sales

Low costs

High profits Middle majoritycustomers

Stable/declining

competition


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PLC Stages

Introduction Growth

Maturity

Decline

Declining sales

Low costs

Declining profits Laggard customers

Declining competition


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Objectives and Strategies for the

Product Life CyclePLC Stages

Introduction Growth

Maturity

Decline

Objective: to create awareness

and trial

Offer a basic product

Price at cost-plus Selective distribution

Awareness dealers and early

adopters

Induce trial via heavy sales

promotion


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Introduction

Growth

Maturity

Decline

Objective: maximize marketshare

Offer service, productextensions, warranty

Price to penetrate Intensive distribution

Awareness and interest massmarket

Reduce promotions due to heavy

demand


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Introduction

Growth

Maturity

Decline

Objective: maximize profit whiledefending market share

Diversify brands/items

Price to match or beat competition

Intensive distribution Stress brand differences and

benefits

Increase promotions to encourageswitching


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Introduction

Growth

Maturity

Decline

Objective: reduce costs and milkthe brand

Phase out weak models

Cut price

Selective distribution

Reduce advertising to levels neededto retain hard-core loyalists

Reduce promotions to minimallevels


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Product


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What is a Product?

Goods

Services

Experiences

Events

Persons

Places

Properties

Organizations

Information

Ideas


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The Product and Product Mix

The customer value hierarchy:

Core benefit

Basic productExpected product

Augmented product

Potential product


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Product

Classifications

Durability and

tangibility

Consumer goods

Industrial goods

Classified by shopping

habits:

Convenience goods

Shopping goods

Specialty goods

Unsought goods


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Product

Classifications

Durability and

tangibility

Consumer goods

Industrial goods

Materials and parts

Farm products

Natural products

Component materials

Component parts Capital items

Installations

Equipment

Supplies and business services

Maintenance and repair

Advisory services


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Product mix dimensions:

Width: number of product lines

Length: total number of items in mixDepth: number of product variants

Consistency: degree to which product lines are

related


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Product-Line Decisions

Product-Line Analysis

Product-Line Length

Line stretching


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Brand Decisions

The AMA definition of a brand:

A name, term, sign, symbol, or design, or

a combination of these, intended toidentify the goods or services of one

seller or group of sellers and to

differentiate them from the competition.


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Brand Decisions

Brand identity decisions include:Name

Logo

Colors

Tagline

Symbol

Consumerexperiences create brand bonding, brandadvertising does not.


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Brand Decisions

Marketers should attempt to create or facilitate

awareness, acceptability,preference, and loyalty

among consumers.

Valuable and powerful brands enjoy high levels of

brand loyalty.


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Brand Decisions

Brand equity refers to the positive differential effect

that a brand name has on customers.

Brand equity: is related to many factors.

allows for reduced marketing costs.

is a major contributor to customer equity.


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Brand Decisions

Key Challenges

To brand or not

Brand sponsor

Brand name

Brand strategy

Brand repositioning

Advantages of branding: Facilitates order processing

Trademark protection

Aids in segmentation

Enhances corporate image

Branded goods are desired byretailers and distributors


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Brand Decisions

Key Challenges

To brand or not

Brand sponsor

Brand name

Brand strategy

Brand repositioning

Options include: Manufacturer (national)

brand

Distributor (reseller,store, house, private)

brand

Licensing the brand name


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Brand Decisions

Key Challenges

To brand or not

Brand sponsor

Brand name

Brand strategy

Brand repositioning

Strong brand names: Suggest benefits

Suggest product qualities

Are easy to say, recognize, andremember

Are distinctive

Should not carry poormeanings in other languages


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Brand Decisions

Key Challenges

To brand or not

Brand sponsor

Brand name

Brand strategy

Brand repositioning

Line extensions

Brand extensions

Multibrands Co-branding


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Brand Decisions

Key Challenges

To brand or not

Brand sponsor

Brand name

Brand strategy

Brand repositioning

A brand report cardcan beused to audit a brandsstrengths and weaknesses.

Changes in preferences orthe presence of a newcompetitor may indicate aneed for brand repositioning.

Case-Santoor


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by knowing where customers are

moving & staying ahead of them!

Branding is about creating

the right experiences,

associations & impressions


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Brand

What is a brand?

ReputationHow others perceive us

=

Identity

What we believe in

What we stand for

Our personality &

how we express it

+ Behaviour

How we act and

behave

The relationships we

form and experiences

people have of us

+ Performance

What we do and how

we deliver it

The value we deliver

B di i f MR P d t d l t


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Branding is a consequence of- MR, Product development,

Product differentiation, Market segmentation, Positioning,

Pricing, Advertising etc.

Brand image is a consequence of Positioning

Brand identity comes out of product differentiation

Brand equity= brand asset- (cost of branding, cost of

invested capital)

Brand equity is built up upon all the marketing and

branding effort that you put.


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Functional

Concrete, Rational

Describes What

Generic

Limited life span

Transaction oriented

Easy to copy

Products

Emotional/Functional

Conceptual, Perceived

Describes What &Who

Unique, Distinct

Unlimited life span

Relationship oriented

Cant be copied

Brands


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APPLEAPPLE OPPOSESOPPOSES

IBMIBM SOLVESSOLVES

NIKENIKE EXHORTSEXHORTS

VIRGINVIRGIN ENLIGHTENSENLIGHTENS

SONYSONY

DREAMSDREAMS

BENETTONBENETTON PROTESTSPROTESTS

BRANDS ARE NOTBRANDS ARE NOT NOUNS BUT VERBSNOUNS BUT VERBS

WHATWHAT FEELINGFEELING

DOES YOURDOES YOUR

BRAND EVOKES??BRAND EVOKES??


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HOW DOES YOUR BRANDHOW DOES YOUR BRAND

SMELL, TASTE, TOUCH, HEAR & FEEL ??SMELL, TASTE, TOUCH, HEAR & FEEL ??


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You cant miss the Singapore ExperienceYou cant miss the Singapore Experience

-Signature Smell Perfume, hot towels-Signature Smell Perfume, hot towels

-Signature Look- Colours, Interiors, Hostess-Signature Look- Colours, Interiors, Hostess

-Signature Voice: Scripted Welcome Messages-Signature Voice: Scripted Welcome Messages


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STRATEGIC SHIFTSTRATEGIC SHIFT

HOW??


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PRE

PURCHASE

EXPERIENCES

AT THE TIME OF

PURCHASEEXPRERINCES

POST

PURCHASE

EXPERIENCES

360 BRAND EXPERIENCE BRAND WHEEL

HOW??



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PRE

PURCHASE

EXPERIENCES

AT THE TIME OF

PURCHASEEXPRERINCE

POST

PURCHASE

EXPERIENCES


Sales

PersonStore &

Shelf

Placements

P.O.P

Display

Packaging

Product

Performance

Customer

Service

Newsletters

Loyalty

Prog

Advertising

Deals &

Promotions

Coupons &

Incentives

Direct Mail


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Positioning and differentiating


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Positioning and Differentiation

Two views of positioning:Ries and Trout: products are positioned in the

mind of prospect

Treacy and Wiersema: positioning via valuedisciplines

Product leader firm

Operationally excellent firm

Customer intimate firm


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Positioning statements:

To (target group and need) our(brand) is (concept) that

(point-of-difference)

Example: To young, active soft-drink consumers who have littletime for sleep, Mountain Dew is the soft drink that gives you

more energy than any other brand because it has the highest

level of caffeine.


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Differentiatedproducts feature meaningful and

valuable differences that distinguish the companys

offering from the competition.

Differences are stronger when they are important,

distinctive, superior, preemptive, affordable, and

profitable.


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Ordering ease

Delivery

Installation

Customer training

Customer consulting

Maintenance and

repair

Miscellaneous

Services Differentiation Tools


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Competence

Courtesy

Credibility

Reliability

Responsiveness

Communication

Personnel Differentiation Tools


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Very satisfied


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Did it wellDid not

do it well

Very dissatisfied

Basic

Performance

Excitement


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What is their positioning?

Ikea

Sony

Panasonic


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Santoor : A Case of Mistaken

Identity

Santoor : A Case of Mistaken


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Identity

Launched as a Sandal + Turmeric soap by Wipro in 1986

Attractively priced and a good product offering

Conceived as an affordable soap with the goodness of

Sandal

Till then sandal seen as a high value ingredient only

available in Mysore Sandal soap

Vicco making a success of sandal + turmeric cream


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Santoor : Phase I Promotion

Advertised as a sandal + turmeric soap

Offering age old beauty secrets of India

Price flagged off at the end

Traditional imagery of woman in sari, temple,

sandal paste


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Santoor : Phase I Results

Brand attracted decent volumes : 2,500

tonnes

Got a core group of Value oriented

consumers to try and remain with the brand

But growth stopped in Year 2

No new users coming into brand !


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Santoor : The Challenge

Need to retain the traditional users

Need to rapidly attract new users

Need to provide image values that will

build the brand for future growth

Santoor : The Brand


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Santoor : The Brand

Interrogation Sandal and turmeric traditional beauty aids in India What are their roles in skin care?

Searched literature for finding how sandal and

turmeric are useful for beauty care The Secret: Skin Care

Both are great skin care aids

In fact help reduce wrinkles and impart a youthfulglow

Santoor : The Ingredient Vs The


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Santoor : The Ingredient Vs The

Benefit Santoor selling ingredients to a set of believers But not many knew of the benefits the brand

and its ingredients offered

Why not move away from ingredient based

advertising to benefit based advertising?

What if the core users moved away thinking the

brand has changed?


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Santoor : Finding the Balance

New advertising needed to present the brand in

a new light to attract new users

But old users should not get alienated either! The answer : Benefit based advertising rooted

in the ingredients

Santoor cares for your skin because itcontains the goodness of sandal and turmeric

Santoor : Skincare to Younger


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Santoor : Skincare to Younger

Looking Skin Skin care, too broad an offer

Narrowed down to younger looking skin

Based on product interrogation

Delivering the younger looking skin story

Mistaken identity

A common occurrence

Based on a consumer insight

Santoor : The Growth Path


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Santoor : The Growth Path

New advertising broke in 1989 - the brand sales

have climbed consistently over the last years

Santoor has outperformed the market constantly

Built a brand without

Mega media budgets

High-power sales force

Major technological innovations


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What should be Santoors moves now in building a strong brand?

Brand Extentions

Advertising

Promotions

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Packaging and Labeling

Packaging includes:The primary package

The secondary package

The shipping package

Many factors have influenced the increaseduse of packaging as a marketing tool.

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Developing an effective package:

Determine the packaging concept

Determine key package elements

Testing:

Engineering tests

Visual tests

Dealer tests

Consumer tests

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Labeling functions:Identifies the product or brand

May identify product grade

May describe the product

May promote the product

Legal restrictions impact packaging for

many products.


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Setting the Price

Pricing Procedure

Select pricing objective

Determine demand

Estimate costs

Analyze competition

Select pricing method

Select final price

Survival

Maximize current profits Maximize market share

Penetration strategy

Market skimming

Skimming strategy

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Setting the Price

Pricing Procedure


Determine demand

Estimate costs

Analyze competition


Select final price

Understand factors thataffect price sensitivity

Estimate demand curves

Understand price elasticityof demand Elasticity

Inelasticty

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Setting the Price

Pricing Procedure


Determine demand

Estimate costs

Analyze competition


Select final price

Types of costs and levels of

production must be considered

Accumulated production leads to

cost reduction via the experience

curve Differentiated marketing offers

create different cost levels

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Setting the Price

Key Pricing Terms:

Fixed costs: do not vary directly with changes in level

of production

Variable costs: vary with production

Total costs: sum of fixed and variable costs a given

level of production

Average cost: cost per unit at a given level of

production

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Setting the Price

Pricing Procedure


Determine demand

Estimate costs

Analyze competition


Select final price

Firms must analyze the

competition with respect to:

Costs

Prices

Possible price reactions

Pricing decisions are also

influenced by quality of offering

relative to competition

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Setting the Price

Pricing Procedure


Determine demand

Estimate costs

Analyze competition


Select final price

Select method:

Markup pricing

Target-return pricing

Perceived-value pricing

Value pricing

Going-rate pricing

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Penetration Pricing

Price set to penetrate the market

Low price to secure high volumes

Typical in mass market products chocolate bars,food stuffs, household goods, etc.

Suitable for products with long anticipated life

cycles

May be useful if launching into a new market

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Market Skimming

High price, Low volumes

Skim the profit from the market

Suitable for products that have

short life cycles or which will

face competition at some pointin the future (e.g. after a patent

runs out)

Examples include: Playstation,

jewellery, digital technology,

new DVDs, etc.Plasma Screens: Currently athigh prices but for how long?

Title: Thin-shaped television. Copyright: Getty Images,available from Education Image Gallery.

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Value Pricing

Price set in accordance

with customer perceptions

about the value of the

product/service. Examples include status

products/exclusive

products

Companies may be able to

set prices according toperceived value.

Title: BMW At The Frankfurt Auto Show. Copyright:Getty Images, available from Education Image Gallery.

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Loss Leader

Goods/services deliberately sold below cost

to encourage sales elsewhere

Promotes cross selling Purchases of other items more than covers

loss on item sold

e.g. Free mobile phone when taking oncontract package

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Psychological Pricing

Used to play on consumer perceptions

Classic example - 9.99 instead of 10.99!

Links with value pricing high value goodspriced according to what consumers

THINK should be the price

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Going Rate (Price Leadership)

In case of price leader, rivals have difficulty in competing

on price too high and they lose market share, too low and

the price leader would match price and force smaller rival

out of market May follow pricing leads of rivals especially where those

rivals have a clear dominance of market share

Where competition is limited, going rate pricing may be

applicable banks, petrol, supermarkets, electrical goods find very similar prices in all outlets

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Destroyer/Predatory Pricing

Deliberate pricecutting or offer offree gifts/products to

force rivals (normallysmaller and weaker)out of business or

prevent new entrants

Anti-competitive andillegal if it can be

proved

Microsoft have been accused of predatorypricing strategies in offering free software aspart of their operating system InternetExplorer and Windows Media Player - forcing

competitors like Netscape and Real Player outof the market.

Title: Bill Gates speaks at UNIX convention. Copyright:Getty Images, available from Education Image Gallery.

Marginal Cost Pricing


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Marginal Cost Pricing

Marginal cost the cost of producing ONE extra or ONE

fewer item of production

MC pricing allows flexibility

Particularly relevant in transport where fixed costs may berelatively high

Allows variable pricing structure e.g. on a flight from

Mumbai to Delhi providing the cost of the extra

passenger is covered, the price could be varied a good dealto attract customers and fill the aircraft

Contribution Pricing


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Contribution Pricing

Contribution = Selling Price Variable (direct

costs)

Prices set to ensure coverage of variable

costs and a contribution to the fixed costs

Similar in principle to marginal cost pricing

Break-Even analysis might be useful insuch circumstances

Target Pricing


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Target Pricing

Setting price to target a specified profit

level

Estimates of the cost and potential revenueat different prices, and thus the break-even

have to be made, to determine the mark-up

Mark-up = Profit/Cost x 100

Cost Plus Pricing


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Cost-Plus Pricing

Calculation of the average cost (AC) plus a

mark up

AC = Total Cost/Output

Captive-Product Pricing


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Pricing products that must be used with the

main product High margins are often set for supplies

Services: two-part pricing strategy

Fixed fee plus a variable usage rate

Captive Product Pricing

Setting the Price


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Setting the Price

Pricing Procedure


Determine demand

Estimate costs

Analyze competition


Select final price

Requires consideration of

additional factors:

Psychological pricing

Gain-and-risk-sharing pricing

Influence of other marketingmix variables

Company pricing policies

Impact of price on other parties


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Differential pricing helps when


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Differential pricing helps when-

Place


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Place

Channels


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Channels

Distributor

Dealer

Retailer C & F

Stockist

Factory


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C&F Agent

(2-3%)

Retailers(8-12%)

Stockist/Distributor(4-6%)

Wholesaler

Retailers-Small

- Upcountry

Typical FMCG Distribution Structure (Margin)

Issues


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Issues

Proper selection of Dealers or distributors

Growing power of retailers

POP influence Data collection and demand forecasting

Integrated Marketing


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Communication

Marketing Communications


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Marketing Communications

Advertising

Sales Promotion

Personal selling

Communications Platforms

Sales Promotion


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Sales Promotion

Samples

Coupons

Cash refunds (rebates)

Premiums

Prizes (contests, sweepstakes, games)

Patronage awards

Free trials

Product warranties

Tie-in promotions Cross-promotions

Point-of-purchase displays anddemonstrations

Major Consumer-Promotion Tools

Public Relations


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Public Relations

Public relations activities promote or protect theimage of a firm or product

Public relations functions:

Press relations Product publicity

Corporate communications

Lobbying

Counseling

Public Relations


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Public Relations

Marketing Public Relations (MPR) Plays an important role in

New product launches

Repositioning of mature brand

Building interest in product category

Influencing specific target groups

Defending products with public problems

Building the corporate image

Public Relations


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Public Relations

Speeches

Public-service activities

Identity media

Major Public Relations Tools

Direct Marketing


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Direct Marketing

Direct marketinguses consumer-direct channels to

reach and deliver offerings to consumers without

intermediaries.

Direct marketing is growing and offers consumerskey benefits.

Firms are recognizing the importance of integrated

direct marketing efforts.

Direct Marketing


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Direct Marketing

Face-to-face selling

Direct mail

Catalog marketing

Telemarketing

Direct-responseTV marketing

Kiosk marketing

E-marketing

Major Direct Marketing Tools

Indian culture


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Indian culture

Frugality- Relaince(99 paisa per min)

Hierchy- Hyundai Accent

Tangible value- McDonalds Face 1st -Ponds

Self respect- HDFC

Kids first

Marketing-sub topics


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Marketing sub topics

Market forecasting

Sales force management

Retailing

Rural Marketing

Innovations in marketing-Videos

Basics of market research

Mathematical metrics in Marketing

Documents

Marketing Management- Muscat