Marketing Management

Library Assignment 2010-11

S.Y. B.B.A. Semester- III

Prepared By:

1. Jatin Ramani (219)

2. Bhavik Rangunwala (220)

3. Jay Rashiwala (221)

Product: VACUUM CLEANER (Electrolux)

Mr. Jayesh Desai Submitted to:

Mr. Pratik Patel

26th September 2011 Submitted on:

INTRODUCTION ABOUT VACUUM CLEANER

A Vacuum cleaner, commonly referred to as a "vacuum," is a device that uses an air

pump to create a partial vacuum to suck up dust and dirt, usually from floors, and

optionally from other surfaces as well. The dirt is collected by either a dust bag or a

cyclone for later disposal. Vacuum cleaners, which are used in homes as well as in

industry, exist in a variety of sizes and models: small battery-operated hand-held

devices, domestic central vacuum cleaners, huge stationary industrial appliances that

can handle several hundred liters of dust before being emptied, and self-propelled

vacuum trucks for recovery of large spills or removal of contaminated soil.

Vacuum Cleaner Market Condition

In early 2007, TTI Floor Care North America of Glenwillow, Ohio, became the largest

vacuum manufacturer when it acquired the Hoover brand from Whirlpool for $107

billion. By the late 1990s, vacuum manufacturers tried to boost sales with new high-tech

products. In order to make filtration systems more desirable, vacuum manufacturers

wanted consumers to be alerted to the damage caused by fine dusts. Eureka Forbes, for

example, introduced a line of environmentally-friendly vacuums that were designed to

filter out 99 percent of the dust and dirt that entered the vacuum. Philips Home

Products Corp. introduced Blue Magic, a high-tech vacuum with a turbo-compressor

that operated by fuzzy logic. Another technological highlight included new polymers,

which allowed vacuum manufacturers to reduce unit costs and weight while improving

quality.

In 2010, there were 37 establishments operating in this industry with 5,631 employees.

The industry shipped more than $1.35 billion that year, only to decrease the following

year to $1.2 billion. In the middle years of the first decade of the 2000s, bagless models

were touted as the best alternative for those with allergies and for general air quality.

Hands-free "robotic" vacuums were also becoming more prevalent. An English

company, Dyson, entered the high-end market with a claim that their vacuums used a

filter less technology that never loses suction power.

Presently there are many companies working in vacuum cleaner industry. Like,

Eureka Forbes

LG

Philips

Bissell

Hoover

Whirpool

Electrolux

ROOTS Multi Clean Ltd.

Haier

Lindhaus

Kirby

Shark Clean

Dust Devil

Vacuum Cleaner market in India

Vacuum Cleaners in India until recently were a rarity because of the high Prices and less

awareness among the masses about their use. As the times have moved forward at a

rapid pace, which creates a demand for more and more mechanized and less time

consuming home appliances like vacuum cleaner.

The leading Vacuum Cleaner Brands world over are targeting India as a potential

Commercial market in their Marketing strategies. These include Electrolux, Whirlpool,

LG, Eureka Forbes and many more. The Best Vacuum Cleaners and Accessories in India

at present can certainly be accredited to them. These companies also have their

Authorized Service Centers all over the country.

We can find special Discount and Best Buy Deals on the Prices of Vacuum Cleaners.

Cheap and branded Vacuum Cleaners and Accessories are available in most of the

electronics shops and showrooms. Comparison can be made between the various

models available in the market on basis of:

Their Air-suction capacity that can be less than 6000 Pascal to more than 18,000

Pascal

Their chord length ranging from below 5 meters to above 6 meters

Their dust bag capacity that is less than 3 liters to above 5 liters

Price Comparison between Vacuum Cleaners is inevitable given the vast range For Sale

by the top companies like Electrolux, Whirlpool, LG and Eureka Forbes; that can be as

cheap as less than 2,500 Rupees to as high as above 8,000 Rupees. Additional features

which one can go for are the dust level indicator, air filtration or dust-mite inactivator.

Vacuum Cleaner Accessories like the Vacuum Cleaner belts and bags, cleaning tools like

carpet nozzle, dusting brush, bare floor brush, crevice tool or upholstery tool, filter and

scented tablets are available with the local vacuum cleaner dealers.

The varieties of Vacuum Cleaners present in the market are:

Floor Cleaners

Upright Vacuum Cleaners

Stick and Hand-Held Vacuum Cleaners

Canister Vacuum Cleaners

A strong global brand, attractive design and innovative products provide Electrolux with

the competitive edge to increase sales and capture market shares. The Electrolux brand

is now positioned in the profitable premium segment throughout the world.

The Electrolux Group is a Swedish appliance maker.

As of 2010 the 2nd largest home appliance manufacturer in the world after Whirlpool,

its products sell under a variety of brand names including its own and are primarily

major appliances and vacuum cleaners. The company also makes appliances for

professional use.

Forbes Magazine says Electrolux is one of the top 5 companies in consumer durable

goods, worldwide, and named it to its list of 130 Global High Performers in 2010.

Formed from a 1918 cooperative agreement between sales company Svenska Elektron

AB and kerosene lamp maker Lux AB, Electrolux grew rapidly through mergers and

acquisitions to become a world-class appliance manufacturer.

Electrolux made an initial public offering on the London Stock Exchange in 1928 and

another on the Stockholm Stock Exchange in 1930.

In the 1960s, the company successfully marketed vacuums in the United Kingdom with

the slogan "Nothing sucks like an Electrolux". Americans often assumed that using this

slogan was a brand blunder. In fact, the informal US meaning of the word sucks was

already well known in the UK at the time, and the company hoped the slogan, with its

possible double entendre, would gain attention. The company's current slogan is

"Thinking of you".

Hans Werthén, a President and later Chairman of the Board, led the strategic core of an

increasingly decentralized Electrolux—and was instrumental to its rapid growth from

1967 to 1991.

Keith McLoughlin took over as President and CEO on January 1, 2011, and became the

company's first non-Swedish chief executive.

ELECTROLUX: Present market condition

In addition to presenting significant events in 2009 and the Group’s strategic ambitions,

Electrolux CEO Hans Stråberg comments on current market conditions and

expectations for 2010. He repeats the outlook that operating income is expected to be

in-line with 2009, but that economic conditions remain uncertain.

Electrolux Annual General Meeting 2010: CEO’s comments on current market

conditions:

The appliance industry has been in recession since mid-2007. The market is on its way to

the seventh consecutive quarter of negative growth in the US.

They maintain the assessment that they issued in January that demand for appliances

shows a slightly negative development compared to 2009.

However, the year has started somewhat weaker than they anticipated. Their estimate

is that the market declined by 10% in February compared to the same month in 2009,

which means that demand was almost 15% lower than in February 2008.

While the US market has declined sharply, the European market has been stable in

recent years and showed a slight growth.

During the fourth quarter of 2009 they saw a clear slowdown in key markets such as

Germany, the UK and Spain – a trend that continued in the first quarter of 2010.

Demand in Western Europe remains weak, while they see continued growth in Eastern

Europe.

As previously, they expect Electrolux operating income in 2010 to be in-line with 2009.

A number of factors will have an impact on their results.

First, they have reduced complexity in their European operations and are now able to

manage the operations with a lower headcount. They expect this to lead to more than

400 people leaving the company. The cost of this will be around SEK 400 million and will

be taken in the first quarter.

Second, costs will continue to be higher for the products they launched in Europe, even

though they are now able to reduce costs on a stepwise basis.

Third, they expect the major Electrolux launch in the US to impact negatively on income

due to substantial initial marketing costs. The positive effects will not be seen until

2009.

Fourth, they anticipate that raw material costs will rise for the fourth consecutive year

and expect an increase of SEK 1 billion in 2010. They continue to make savings and raise

prices, but it will be difficult to entirely offset the cost increases.

However, they are gradually increasing underlying results through operational

improvements and I believe they will be able to compensate for these negative items.

They will see positive effects from their major restructuring program and from cost-

savings in purchasing, administration and production. The product launches in Europe

will raise margins. A slight market growth will also improve results.

But I will already at this stage announce that the first quarter will be very weak.

Historically, the first quarter is the seasonally weakest quarter, accounting for only 10-

15% of the full year results.

As a consequence of the initially weak trend of the markets in North America and

Europe as well as a number of negative non-recurring items, as previously announced,

they expect that operating income for the first quarter of 2010 will be somewhat

negative.

But I would like to repeat that their outlook for the full year remains unchanged and

that they expect operating income for 2010 to be in-line with 2009, but that economic

conditions remain uncertain.”

Electrolux is a global leader in home appliances and appliances for professional use,

selling more than 40 million products to customers in 150 countries every year. The

company focuses on innovations that are thoughtfully designed, based on extensive

consumer insight, to meet the real needs of consumers and professionals. Electrolux

products include refrigerators, dishwashers, washing machines, vacuum cleaners and

cookers sold under esteemed brands such as Electrolux, AEG-Electrolux, Eureka and

Frigidaire. In 2009, Electrolux had sales of SEK 105 billion and 57,000 employees.

Consumer Buying Behavior

Consumer behavior is comparatively a new field of study which evolved just after the

Second World War. The sellers’ market has disappeared and buyers’ market has come

up. This led to the manufacturer’s attention from product to consumer and specially

focused on the consumer behavior. The evaluation of marketing concept from more

selling concept to consumer- oriented marketing has resulted in buyer behavior

becoming an independent discipline. Consumer behavior is a study of how individuals

make decision to spend their available resources or consumption related aspects.

The heterogeneity among people makes understanding consumer behavior a

challenging task to marketers. Hence marketers felt the need to obtain an in depth

knowledge of consumers buying behavior. Finally this knowledge acted as an imperative

tool in the hands of marketers to forecast the future buying behavior of customers and

devise four marketing strategies in order to create long term customer relationship.

The reason for a business firm to come into being is the existence of a consumer who

has unfulfilled needs and wants. To fulfill these consumer needs an organization is set

up. In your professional capacity you may also be a part of one such business

organization. But as part of the organization, have you ever wondered about who are

the consumers of your products and services? Why do these consumers buy your brand

and not that of the competitors? How do your consumers perceive your product fulfills

their needs? After having bought your product do they feel satisfied or dissatisfied? And

how are these feelings reflected in their behavior as consumers?

It is important to the survival and growth of your organization that you regularly raise

such questions and attempt to find answers to them. It is only through such a process of

questioning and seeking that you can be sure of keeping your firm on the growth path. A

thorough knowledge of your consumers and an understanding of their behavior (as

consumers) are essential if you wish to continue to remain in business.

Consumer Buying Process

Consumer buying behavior process is basically divided in 5 steps which are as follows,

1. Problem Recognition:

The buying process begins with recognition on the part of the buyer that he has a

problem or need. Market Research should try to identify what are the factors that make

a buyer go for buying a vacuum cleaner.

In the first step the consumer has determined that for some reason he/she is not

satisfied and wants to improve his/her situation. For instance, internal triggers, such as

hunger or thirst, may tell the consumer that food or drink is needed. External factors

can also trigger consumer’s needs. Marketers are particularly good at this through

advertising; in-store displays and even the intentional use of scent. At this stage the

decision-making process may stall if the consumer is not motivated to continue.

For example, Mr. Mehta wants to buy a vacuum cleaner for his car by seeing his

neighbor’s one.

2. Information Search:

Next step is to identify different available alternatives and to find information about

alternatives. Assuming consumers are motivated to satisfy his or her need, they will next

undertake a search for information on possible solutions. The sources used to acquire

this information may be as simple as remembering information from past experience

(i.e., memory) or the consumer may expend considerable effort to locate information

from outside sources How much effort the consumer directs toward searching depends

on such factors as: the importance of satisfying the need, familiarity with available

solutions, and the amount of time available to search. To appeal to consumers who are

at the search stage, marketers should make efforts to ensure consumers can locate

information related to their product.

Total Set Awareness Set Consideration Set Choice Set Decision

LG

Philips

Hoovers

Electrolux

Eureka Forbes

Bissell

Whirlpool

Haier

Dirt Devil

.

.

.

.

LG

Hoovers

Electrolux

Whirlpool

Philips

Haier

Dirt Devil

LG

Hoovers

Whirlpool

Electrolux

Philips

Haier

Hoovers

Electrolux

?

3. Evaluate Alternatives:

Having collected the information, the consumer clarifies and evaluates the alternatives.

There is, unfortunately no simple and single evaluation process used by all consumers or

even by one consumer in all buying situations. The most current process of evaluation is

to judge the product largely on a conscious and rational basis. Various considerations

form the part of judgment such as product attributes, importance, weights, brand

image, utility function for each attribute, and attitude etc. After evaluation of various

alternatives, he takes the decision to buy. Most importantly, marketers must determine

which criteria consumers are using in their selection of possible options and how each

criterion is evaluated. Returning to the television example, marketing tactics will be

most effective when the marketer can tailor their efforts by knowing what benefits are

most important to consumers when selecting options (e.g., picture quality, brand name,

screen size, etc.) and then determine the order of importance of each benefits. To find

perceived value for each bike, according to the expectancy-value method, we multiply

weights by belief about each bike’s attributes. This computation leads to the following

perceived values:

Vacuum Cleaner

Attributes

Price

(30%)

Filter/sucking

power

(20%)

Carpet-height

adjustment

(35%)

Weight

(15%)

Upright vacuums 8 7 9 7

Canister vacuums 8 9 8 8

Central vacuums 7 8 7 6

Small vacuums 8 9 6 10

Stick vacuums 9 8 8 7

Upright Vacuums: 0.3(8) + 0.2(7) + 0.35 (9) + 0.15(7) = 8.0

Canister Vacuums: 0.3(8) + 0.2(9) + 0.35 (8) + 0.15(8) = 8.2

Central Vacuums: 0.3(7) + 0.2(8) + 0.35 (7) + 0.15(6) = 7.85

Small Vacuums: 0.3(8) + 0.2(9) + 0.35 (6) + 0.15(10) = 7.8

Stick Vacuums: 0.3(9) + 0.2(8) + 0.35 (8) + 0.15(7) = 8.0

The expectancy-model formulation predicts that it will favor canister vacuums, which

has the highest perceived value. Mr. Mehta now perceives that canister vacuums are

better than all available alternatives so he will go to buy it from any resources.

4. Purchase Decision:

Evaluation behavior leads the consumer to form a ranked set of preferences. Normally a consumer buys the article, he or she likes most but there are three more important consideration for taking the buying decision: (a) attitude of other such as of wife, relatives, and friends, (b) anticipated situational factors as expected family income, expected total cost of the product and the expected benefits of the product; (c) unanticipated situational factors as looks or manner of the salesman or the way business is carried on.

In many cases the solution chosen by the consumer is the same as the product whose evaluation is the highest. However, this may change when it is actually time to make the purchase. The "intended" purchase may be altered at the time of purchase for many reasons such as: the product is out-of-stock, a competitor offers an incentive at the point-of-purchase (e.g., store salesperson mentions a competitor’s offer), the customer lacks the necessary funds (e.g., credit card not working), or members of the consumer’s reference group take a negative view of the purchase (e.g., friend is critical of purchase). Marketers whose product is most desirable to the consumer must make sure that the transaction goes smoothly. For example, Internet retailers have worked hard to prevent consumers from abandoning online purchase (i.e., online shopping carts) by streamlining the checkout process. For marketers whose product is not the consumer’s selected product, last chance marketing efforts may be worth exploring, such as offering incentives to store personnel to "talk up" their product at the checkout line.

In our case he may be go for purchase a vacuum cleaner system from a showroom or can also buy it from internet. He purchases it from a company show room near his home.

5. Post-Purchase Behavior:

After buying and trying the product, the consumer will feel some level of satisfaction or dissatisfaction and level of satisfaction depends very much on the expectation and the product's perceived performance. If the product matches up to his expectations, the consumer is satisfied; if it exceeds, he is highly satisfied; and if it falls short of expectations, he is dissatisfied. After the purchase, the customer might experience dissonance about their purchase and be alert to inform that supports their decision. The marketer’s job therefore doesn’t end with the purchase. Marketers must monitor post purchase satisfaction, post purchase actions, and post purchase product uses and dispose.

Satisfaction

Satisfaction is a function of the closeness between expectations and the

product’s perceived performance. If performance fall shorts of expectations, the

consumer is disappointed; if it meets expectations, the consumer is satisfied.

Use and Disposal

Marketers should also monitor how buyers use and dispose of the product. A key

driver is product consumption rate – the more quickly buyers consume a product,

the sooner they may be back in the market to repurchase it.

In our case Mr. Mehta’s wife is very satisfied with canister vacuum cleaner which is very

comfortable to use and she also give reference to their peer group and to other to buy

this vacuum cleaner.

Business Buying Behavior

The business market includes firms that buy goods and services in order to produce

products and services to sell to others. It also includes retailing and wholesaling firms

that buy goods in order to act resell them at a profit. Because asp of business-to-

business marketing applies to institutional markets and government markets, we group

these together. The business marketer needs to know the following: Who are the major

participants? In what decisions do they exercise influence? What is their relative degree

of influence? What evaluation criteria does each decision participant use? The business

marketer also needs to understand the major environmental, interpersonal, and

individual influences on the buying process.

Business buying behavior is the buying behavior of organizations that buy goods and

services for use in the production of other products and services, for using the products

in operational non-core operation like photocopier for office management or for the

purpose of reselling or renting them to others at a profit.

Business Buying Units

Business buying decisions are most likely to be made by a committee or group of people

than wholly by an individual. In an organization purchase ‘decision making unit’ there

are various center of powers which influences and finally guides the decision making.

According to Webster and Wind there are six units in a Business buying unit - :

1. Users – the individuals most likely to be the final user of the products. They are the

one who initiate the buying process; in fact they are the need recognizers.

2. Influencers – As most of the decision in an organization is made by committee or

purchase department, some people acts as influencers in the group for example if for

the atomization of office communication the company have to install the latest devices

the user may place the need for voice recorders or some other device but the IT

department will influence which one to buy as they have the responsibility to decide in

broader view of overall organization technology policy. Once the IT department gives

the product specification and process, the Purchase department will evaluate the

sellers.

3. Decision Makers – the decision makers are the one who took the final decision of

what should be purchased and from where it should be purchased.

4. Approvers – once the decision makers took their decision it goes to the approving

authority. For example if the purchase department finalized what is purchased and from

whom it purchased, the order will go to finance department for approval.

5. Buyers – As the finance department approves the decision the purchase department

can go ahead and purchase the communication device.

6. Gate-keepers – these members control the access to persons in DMU for example

secretaries manage the work flow of purchase department head so how successful a

company is at selling can sometimes depend how fast the secretary process your file for

perusal.

The above decision making units not necessarily have to be separate units’ in fact they

can very well overlap too. For example the IT department can be user and influencer

while purchasing an information technology product.

Business Buying Behavior Process

Business or industrial buying behavior process is basically divided in 7 steps which are as

follows,

• Problem Recognition

• General Need Description

• Product Specification

• Supplier Search

• Proposal Solution

• Supplier Selection

• Order Routine Specification

• Performance Review

1. Problem Recognition

The buying process starts with a company realizing it has a need for a product or service. A sales person can proactively identify a prospect's needs by analyzing an aspect of the company and recommending a purchase. For example, if a company's current computer software can no longer meet regulatory requirements, a salesperson could suggest new software be explored.

What is needed should be clearly described so that a company can make the best decision about what product or solution will fulfill its needs. For computer software, the key features and functions such as reports needed are described.

Someone recognizes that the organization has a need that can be solved by purchasing a good or service. Users often drive this stage. In the case of the electronic textbook, it could be, for example, the professor assigned to teach the online course. However, it could be the dean or chairman of the department in which the course is taught.

Business marketers can stimulate problems recognition by direct mail, telemarketing and calling on prospects.

In our case a company wants to purchase computers for a company itself.

2. General need description / Product specification

Next, the buying center, or group of people brought together to help make the buying decision, work to put some parameters around what needs to be purchased. In other words, they describe what they believe is needed, the features it should have, how much of it is needed, where, and so on. For more technical or complex products the buyer will define the product’s technical specifications. Users and influencers come into play here.

In this stage company will decide that which types of computer they want to purchase. They will make whole list for it.

For ex. For whom they want to purchase computers, which kind of computers will need, which software they want to install in it etc.

3. Supplier Search

The buyer now conducts a supplier search to find the best vendors. The buyer can

compile a small list of qualified suppliers by reviewing trade directories, doing a

computer search, or phoning other companies for recommendations. Today, more and

more companies are turning to the Internet to find suppliers. For marketers, this has

leveled the playing field—smaller suppliers have the same advantages as larger ones

and can be listed in the same online catalogs for a nominal fee: The newer the buying

task, and the more complex and costly the item, the greater the amount of time the

buyer will spend searching for suppliers. The supplier's task is to get listed in major

directories and build a good reputation in the marketplace. Salespeople should watch

for companies in the process of searching for suppliers and make certain that their firm

is considered.

At this stage, the people involved in the buying process seek out information about the

products they are looking for and the vendors that can supply them. Most buyers look

online first to find vendors and products, then attend industry trade shows and

conventions and telephone or e-mail the suppliers with whom they have relationships.

The buyers might also consult trade magazines, the blogs of industry experts, and

perhaps attend Webinars conducted by vendors or visit their facilities. Purchasing

agents often play a key role when it comes to deciding which vendors are the most

qualified.

Company that purchases over the internet are stimulating electronics market places in

several forms:

Catalogue sites

Vertical markets

Pure play auction sites

Spot markets

Private exchange

Barter markets

Buying alliances

Set up direct extranet links to major suppliers

Form buying alliances

Set up company buying sites

4. Proposal Solicitation

In the proposal solicitation stage of the business buying process, the buyer invites

qualified suppliers to submit proposals. In response, some suppliers will send only a

catalog or a salesperson. However, when the item is complex or expensive, the buyer

will usually require detailed written proposals or formal presentations from each

potential supplier.

Business marketers must be skilled in researching, writing, and presenting proposals in

response to buyer proposal solicitations. Proposals should be marketing documents, not

just technical documents. Presentations should inspire confidence and should make the

marketer's company stand out from the competition.

In our case company get more than 20 proposals by different companies and agents like

Dell, HP and Sony etc.

5. Supplier Selection

The members of the buying center now review the proposals and select a supplier or

suppliers. During supplier selection, the buying center often will draw up a list of the

desired supplier attributes and their relative importance. In one survey, purchasing

executives listed the following attributes as most important in influencing the

relationship between supplier and customer: quality products and services, on-time

delivery, ethical corporate behavior, honest communication, and competitive prices.

Other important factors include repair and servicing capabilities, technical aid and

advice, geographic location, performance history, and reputation. The members of the

buying center will rate suppliers against these attributes and identify the best suppliers.

As part of the buyer selection process, buying centers must decide how many suppliers

to use.

There is even a trend toward single sourcing, using one supplier. With single sourcing

there is only one supplier to handle and it is easier to control newsprint inventories.

Using one source not only can translate into more consistent product performance, but

it also allows press rooms to configure themselves for one particular kind of newsprint

rather than changing presses for papers with different attributes. Many companies,

however, are still reluctant to use single sourcing. They fear that they may become too

dependent on the single supplier or that the single-source supplier may become too

comfortable in the relationship and lose its competitive edge. Some marketers have

developed programs that address these concerns.

The choice and importance of different attributes varies with the type of buying

situation. Delivery reliability, price and supplier reputation are important for routine

order products. For procedural-problem products, such as a computer, the three most

important attributes are technical services, supplier flexibility and product reliability.

A for Sony, B for HP and C for Dell.

Total Score:

For Company A: 0.30(4) + 0.20 (3) + 0.30 (1) + 0.10 (2) + 0.10 (4) = 2.9

For Company B: 0.30(1) + 0.20 (4) + 0.30 (2) + 0.10 (4) + 0.10 (3) = 2.4

For Company C: 0.30(4) + 0.20 (3) + 0.30 (3) + 0.10 (1) + 0.10 (2) = 3.0

After doing analysis about attributes of different companies, the order will be given to

the most suitable company.

In our case, conclusion is that company C i.e. Dell is selected as a best company and an

order will be provided to them.

Attributes Importance

Weight

Rating Scale

Poor (1) Fair (2) Good (3) Excellent (4)

Price 0.30 B

A,C

Technical Services

0.20

A,C B

Product Reliability

0.30 A B C

Service Reliability

0.10 C A

B

Supplier Flexibility

0.10

C B A

6. Order-Routine Specification

After selecting suppliers, the buyer negotiates the final order, listing the technical

specifications; the quantity needed, the expected time of delivery, return policies,

warranties, and so on. Many industrial buyers lease heavy equipment such as machinery

and trucks. The lesser often ends up with a larger net income and the chance to sell to

customers that could not afford outright purchase.

The selected vendor provides the item purchased and assists with installation if it is

required. In the case of computer software, implementation can include user training,

conversion from old software to new software, customization of the software and

preparation of user documentation.

The buyer now prepares an order-routine specification. It includes the final order with

the chosen supplier or suppliers and lists items such as technical specifications, quantity

needed, expected time of delivery, return policies, and warranties.

7. Performance Review

In this stage, the buyer reviews supplier performance. The buyer may contact users and

ask them to rate their satisfaction. The performance review may lead the buyer to

continue, modify, or drop the arrangement. The seller's job is to monitor the same

factors used by the buyer to make sure that the seller is giving the expected satisfaction.

We have described the stages that typically would occur in a new-task buying situation.

The stage model provides a simple view of the business buying decision process. The

actual process is usually much more complex.

In the modified rebuy or straight rebuy situation, some of these stages would be

compressed or bypassed. Each organization buys in its own way, and each buying

situation has unique requirements. Different buying center participants may be involved

at different stages of the process. Although certain buying process steps usually do

occur, buyers do not always follow them in the same order, and they may add other

steps. Often, buyers will repeat certain stages of the process.

Marketing Mix

The basic task of marketing is the delivery of product(s) to consumers so that their

needs are fulfilled and organizational objectives are also achieved. This involves several

important decisions, e.g. deciding about the product or products which should be

offered for sale, price of the product, markets where products may sell and the means

of communication with the consumer for the sale of the product. All these decisions

form part of marketing-mix. In this lesson we shall study about the concept of marketing

mix, its components and the relationship among various components of marketing mix.

The process of marketing or distribution of goods requires particular attention of

management of business because production has no relevance unless products are sold.

Marketing mix, simply stated, is the process of designing and integrating various

elements of marketing in such a way as to ensure the achievement of enterprise

objectives. The elements of marketing mix have been classified under four heads -

product, price, place and promotion. That is why marketing mix is said to be a

combination of 4 P’s. Decisions relating to the product include product designing,

packaging and labeling and varieties of the product. Decision on ‘Price’ is very important

because sales depend to a large extent on product pricing. Whether uniform price will

be charged or different prices will be charged for the same product in different markets

are examples of decision pertaining to the price of the product. The third important

element is ‘place’, which refers to decision regarding the market where products will be

offered for sale. ‘Promotion’ involves decisions bearing on the ways and means of

increasing sales. Different tools or methods may be adopted for this purpose. The

relative importance to be attached to the various methods is decided while

concentrating on the element of ‘promotion’ in marketing mix. Lastly, the marketing

manager has to take into account the impact of external factors like consumer behavior,

competitors’ strategy, and Government policy on each element of marketing mix.

In short, marketing mix involves decisions regarding products to the made available, the

price to be charged for the same, and the incentives to be provided to the consumers in

the markets where products would be made available for sale. These decisions are

taken keeping in view the influence of marketing forces outside the organization.

ELECTOLUX comes with new marketing mix strategy that includes,

Product

Price

Place

Promise instead of Promotion.

Product

Product refers to a physical product or a service or an idea which a consumer needs and

for which he is ready to pay. Physical products include tangible goods like grocery items,

garments etc. Services are intangible products which are offered and purchased by

consumers. Services may involve also an innovative idea on any aspect of operation.

When an organization introduces a product into a market they must ask themselves a

number of questions.

1. Who is the product aimed at?

2. What benefit will customers expect?

3. How does the firm plan to position the product within the market?

4. What differential advantage will the product offer over their competitors?

We must remember that Marketing is fundamentally about providing the correct bundle

of benefits to the end user, hence the saying ‘Marketing is not about providing

products or services it is essentially about providing changing benefits to the changing

needs and demands of the customer’.

Dust remover

With blowing power

After sales services, warrantee

From a life cycle analysis, they can know that their greatest potential to positively

impact the environment is to improve efficiency of products during use. That is why

Electrolux main focus is developing and promoting the most water- and energy-efficient

products.

Today’s consumers want appliances that are safe and efficient, that do not contain

hazardous materials, have low noise levels and are produced under good working

conditions. We aim to meet, and exceed, these expectations.

Energy-efficiency, speed, simplicity and individual solutions are some of the needs

identified by Electrolux through interviews and home visits to users of household

appliances. Consumer insight is at the core of all product development at Electrolux, and

in 2010 a large number of households were visited worldwide.

Green range of appliances

Through the green products ranges, each business sector within Electrolux is innovating

and promoting a product offering that is water- and energy-efficient, with climate smart

features. The products’ contribution to sales is reported annually.

Electrolux raises the bar for products qualifying for the range on a yearly basis. Although

locally defined to meet each market need and regulatory demands, the series is based

on environmental parameters defined by the Group.

These products’ contribution to sales is also reported annually. Sales of our green ranges

accounted for 21% of sold units in 2009 and 30% of gross profit. In the Nordic region,

the share of net sales has increased by 10% during 2009, indicating that growth in the

market for efficient products continues.

Price

Pricing is one of the most important elements of the marketing mix, as it is the only mix,

which generates a turnover for the organization. The remaining 3p’s are the variable

cost for the organization. It costs to produce and design a product; it costs to distribute

a product and costs to promote it. Price must support these elements of the mix. Pricing

is difficult and must reflect supply and demand relationship. Pricing a product too high

or too low could mean a loss of sales for the organization. Pricing should take into

account the following factors:

1. Fixed and variable costs.

2. Competition

3. Company objectives

4. Proposed positioning strategies.

5. Target group and willingness to pay.

An organization can adopt a number of pricing strategies. The pricing strategies are

based much on what objectives the company has set itself to achieve.

Electrolux is a name most North American and European homeowners recognize.

Since the early 1900s, this company has been providing all kinds of useful home

appliances, including vacuum cleaners. In fact, the company’s founder, a man named

Axel Wenner-Gren, commissioned the creation of the world’s first household vacuum

cleaner, the Lux 1, in 1912.

Today, vacuums carrying the Electrolux, Eureka, and Sanitaire brand names are all

owned by Electrolux, giving them broad coverage in most major markets around the

world.

One of the most popular Electrolux vacuum cleaners is the EL5010A Aptitude Bagged

Upright. Priced in the $250-$350 range, it’s within the budgets of most homeowners,

and it has some interesting features.

As you’ll see, however, it also has a few problems that should be taken into

consideration as you evaluate its overall worth.

Finally, the price for this Electrolux vacuum cleaner is good. $250-$350 is not too much

to ask for a machine with these impressive features. There are less expensive uprights

that also boast strong motors, wide cleaning paths, and advanced filtration systems, but

this model’s brush roller speed controls and lifetime HEPA filter set it apart from most

others in this price range.

Place

A strong global brand, attractive design and innovative products provide Electrolux with

the competitive edge to increase sales and capture market shares. The Electrolux brand

is now positioned in the profitable premium segment throughout the world.

A crucial decision in any marketing mix is to correctly identify the distribution channels.

The question “how to reach the customer" must always be in your mind.

The place is where you can expect to find your customer and consequently, where the

sale is realized. Knowing this place, you have to look for a distribution channel in order

to reach your customer.

Although figures vary widely from product to product, roughly a fifth of the cost of a

product goes on getting it to the customer. 'Place' is concerned with various methods of

transporting and storing goods, and then making them available for the customer.

Getting the right product to the right place at the right time involves the distribution

system. The choice of distribution method will depend on a variety of circumstances. It

will be more convenient for some manufacturers to sell to wholesalers who then sell to

retailers, while others will prefer to sell directly to retailers or customers.

The marketing distribution channel of ELECTROLUX is as below:

ELECTROLUX

(Manufacturer)

Contry Distributors

State Distributors

Dealers Retailers Customers

ELECTROLUX has a strong market share in selling of consumer durable items in Europe

and East African Countries, North America, Latin America with Asian countries.

Promotion

The promotion (Promotional Mix) is one out of four basic instruments of marketing that

has the purpose to inform about other instruments of marketing mix and to contribute

to sales increase on the long term. The promotional mix always serving to specific goal.

These goals can be public informing, demand increasing, product differentiation, and

product value increasing or sales stabilizing. Usually the promotion is targeting more

than one goal.

Promotion is the process of communication between the company that sells the product

and the potential customer, with the purpose of influencing the attitudes and behavior.

There are specific promotional tool that are supporting chosen promotional goal. The

promotional mix represents a combination of different promotional tools. The basic

elements of promotional mix are Advertising, Public Relationship, Personal Sales and

Sales Promotion.

Advertising is communication with current and potential customers and consumers,

done through paid mass media. The channels of communication can be TV, radio,

Internet, billboards, etc.

Public Relationship (PR) is communication toward public, but is turned more to

reputation and image of the company, than to its products. The PR activity can be a

press conference, TV interview with company representative, press article about

donation of the company to charity or about latest environmental project.

Focus on PR and the Internet

Marketing is coordinated globally and across product categories to increase its impact

and penetration. Concentration on the Electrolux brand enables more effective use of

resources. At first hand, the focus is on cost-effective campaigns with a high degree of

PR and Internet utilization.

The majority of the customers who buy Electrolux products visit the Group’s websites

during the purchasing process, thus making the websites one of the most important

tools for convincing customers. Therefore, Electrolux develops Internet solutions that

are well conceived, stimulating and innovative and that support the consumer through

the purchasing process, from start to finish. In 2010, the Group rolled out completely

new websites all across Europe, which will assist in strengthening the brand and

increasing sales in conjunction with future product launches.

Promotional Activities in India

ELECTROLUX is doing many promotional activities in India which represents that they

are more consumer related, i.e.

Participates in general and product specific international trade fairs

Facilitates short term training courses on International Marketing

Acts as a forum for representation of the trade related issues and acts as a liaison

between the exporting community and the government, policy planners, quasi

government organizations

They are making sense in customers by,

By communicating and changing quality perception

By proper communication in Indian language

By target changing perception

By understanding cultural and social values

By providing what customer want

By promoting products with Indian models and actors

By associating themselves with India

By promoting Indian sports team

By talking about a normal Indian

By developing rural-specific products

By giving Indian words for brands

By acquiring Indian brands

By effective media communication

By adopting localized way of distributing

By associating themselves with Indian celebrities

They are more focusing in maintaining personal relations with customers through

different activities like sending greeting cards to their customers on different

occasions like Christmas etc.

Electrolux Annual Report 2010 awarded third

best in the world

Electrolux Annual Report 2010 is called a “top-notch reporting appliance” and rates it

third best of 1,500 international annual reports. This is the fourth year in a row

Electrolux has placed among the top three best annual reports in the world.

“A dialogue between the former and the new CEOs, the World of Electrolux spread,

product and cost elements of strategy, exchange rate exposure and transaction effects

mapped make it a top-notch reporting appliance,” writes the Report Watch team of the

Electrolux Annual Report 2010.

The survey is often regarded as the most comprehensive, international and

authoritative survey on annual reports. This year, around 1,500 annual reports were

included in the ranking. When conducting the evaluation, Report Watch takes a

representative cross section of annual reports based on the relative importance of stock

markets, aiming at industrial and geographic diversity.

The Electrolux Annual Report 2010 is published in two sections. The first part is a

comprehensive overview of the Group strategy and business model. The second part

provides the full-year financial statements and other financial information, as well as the

Electrolux Sustainability Report.

References and Sources:

http://en.wikipedia.org/wiki/Marketing_mix

http://group.electrolux.com/en/

http://en.wikipedia.org/wiki/Electrolux

http://www.scribd.com/doc/6037268/Customer-Buying-Behavior

http://group.electrolux.com/en/electrolux-annual-report-2010-awarded-third-best-

in-the-world-11734/

http://www.it.iitb.ac.in/~deepak/deepak/courses/eco/ppt/Rural%20Marketing.pdf

http://annualreports.electrolux.com/2010/en/#3

http://group.electrolux.com/en/strategy-502/

http://group.electrolux.com/en/history-2010-2011-11290/#