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NOTES
ON
MARKETING MANAGEMENT
(NOTES FOR MBA)
Prepared by:-
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Pushpinder Jit Sharma
(Lect. RIMT-IMCT)
LECTURE 1 - IN-PRACTICE MARKETING MANANGEMENT
Marketing Wars of Customer’s Share of Wallet:A look around the market and the media can convince anybody that the marketer is interested only in influencing the customer for retaining his market share. In July 2000, the TV channel Star Plus launched “Kaun Banega Crorepati” (KBC) –mega quiz program anchored by the famous film star Amitabh Bachchan – at the prime time of 9.00 p.m. and pushed its daily news programme meant for that timeslot, to another lesser watched channel, Star World. The programme rewarded the participants for correct answers to questions posed by the Quiz Master. The rewards went up to a maximum of Rs. 1 Crore (Rupees 10 Million). The showOffered participants a choice of possible answers to each question and was promoted as a programmed where general knowledge and luck could make any individual a crorepati. In no time KBC became a roaring success, Restaurants, cinema houses and markets were deserted at 9.00 p.m. as Indian families stayed home to watch KBC. They gasped, held their breath and cheered or jeered as the participants responded to Amitabh’s questions. Zee TV, the most significant competitor to Star Plus, launched a rival quiz programmed hosted by another Indian film star, Anupam Kher, Sawal Das Crore Ka. The prize money was set at ten times that of KBC in an attempt to lure back lost viewers and advertising revenues. Sony, another television channel, started yet another version of this programmer with well known movie star, Govinda. This programme was called Chhappar Phad Ke, that is, unlimited booty at your doorstep. But both programmes failed to enthuse the customer. Local Cable channels, too, begin similar programmers. The success of KBC led Star Plus to reintroduce it in 2005 as KBC2 after almost two years of break. This war for consumers is not just restricted to television channels. If extends to all products and service categories. For example, various incentives are being offered on buying air ticket (AirSahara, Jet, Spice Jet), lubricants (Bharat Petroleum) and even clothes and candies. Some more aggressive marketers are now taking advantage of the toll-free phone facilities allowed in the country since 1998. Companies like Colgate-Palmolive, Hindustan Lever, Reckitt Benckiser, Reliance, Dabur, Godrej and GE are today taking advantages of this facility. Like his/her Western or American counterpart, the Indian consumer canals dial a toll-free number 1600 for answers to all queries. Thus, Indian marketers seem to understand that the era of the consumer is nowhere and that the marketer will have to now continuously strive to gain his/her Acceptance.
“Selling Is Not Marketing Selling Is Only the Tip Of TheMarketing Ice Berg”Therefore marketing can be defined as“Marketing is a process to serve the Mkt.”People are market
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But all the people are not market”---- Marketing is everywhere>Formally OR Informally,>People and Organizations engage in a vast number of activities that could beCalled Marketing.
It is embedded in everything we do from the clothes we wear, to the Web sites weClock on, to the ads we see.---- Marketing is Tricky --> Why?Because Marketing Managers must make Major decisions such as:-> What features to decision into a new product?> What price to offer Customers?> Where to sell the Product?> How much to spend upon adv. or sales?Therefore based upon the above quoted questions related to the marketing pretextMarketing can be defined as follows:-
“Marketing Deals with Identifying & Meeting Human & Social Needs”Or
“Meeting Needs Profitably”From this definition Social & Managerial aspect of Marketing can beDistinguished.
Social Definition of Marketing:“Marketing is a process of delivering higher standard of life”Managerial Definition of Marketing:“Marketing is a process to know & understand the customer so well that theProduct OR services fit him & sell it”--- Peter Ducker
What Is Marketing Management Or Scope Of Marketing?“Marketing Management is an art & Science of Choosing Target Marketing &Greeting, Keeping & Growing Customers through:---->Creating--->Delivering--->Communicating the Superior Customers.
What is marketed?Marketing People are Involved in Marketing 10 types of entities:I. Goods.II. ServicesIII. EventsIV. ExperiencesV. Persons (Celebrity Marketing)VI. PlacesVII. Properties
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VIII. Organizations (Corporate Identity)IX. InformationX. Ideas (Haath Se Haath Milao, Pyar Ke Phool Khilao Campaign)Marketers are skilled in stimulating demand for company’s product aMarketer is someone who seeks a response from other party--->Calledprospects.For The Market Eight Demand Steps Are Possible:1. Negative Demand: - Consumer Dislike the product and may even pay a price to avoid it.2. Nonexistent Demand: - Consumer May be unaware about the products.3. Latent Demand: - Consumer have strong needs that cannot be satisfied by an existing product.4. Delaying Demand: Consumer begs in to buy product less frequently.5. Irregular Demand: - Consumer Purchases in Particular season.6. Full Demand: - Consumers are adequately buying all products put into market place. 7. Over Full Demand: - Demand is Predication supply.8. Unwholesome Demand;Marketing In Modern ContextWhat Is Market?Traditionally a Market was a Physical PlaceWhere Buyer & Sellers gathered to buy & sell goods.A Simple Marketing system has following components
CommunicationMoneyInformationModern Day Markets
Difference Between Various Terms:Market Places: - It is Physical as when you shop in store.Market Space: - It is digital when you stop on Inter Market.Meta Market: - A cluster of Complementary Products & Services that are closelyrelating in the minds of customer.How & Why Marketing Is Changing:Marketer Side On Consumer Sidea) Changing Technology a) Substantial Increase in buying powerb) Globalization b) a greater variety of available goods & service c) Deregulation service c) A great amount of Info.d) Privatization d) a greater case in interacting & placing ordere) Customer Empowerment e) an ability to compare notes on Product f) Customization g) Heightened Competition Serviceh) Industry convergence
Marketing Orientation Concepts
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The Production Concept:It holds that consumer will prefer product that are widely available & inexpensivetherefore this conceptAims At Achieving.High Production Low CostEfficiency
The Product Concept:It holds that consumer will favor those products that offer the most quality, performance & innovative features: Managers Focusing On Making superiorProducts & improving them one time.The Selling Concept:It holds that consumers & business, if left alone will ordinarily not buy enough ofOrganizations Product. The organization must, therefore undertake an aggressiveselling & Promotion efforts.The Marketing Concepts :It holds that in order to active success the company than its competitions shouldfocus on creating, delivering, communicating superior customer value to its chose& target Market. It is based upon the development, design & implementation ofmarketing programs, processes & Activities that recognizes their breadth & interdepended It Recognizes that
“Every Thing Matters”
Marketing & Selling Orientations
Relationship MarketingThe Relationship Marketing Process Emphasizes on continuous InterrelationBetween the firm & the customer. These interaction lead to firms acquiringAccurate, timely & relevant information from the customer, which helps inCreating a differentiated or customized offer for each customer which, In turnLeads to higher customer loyalty.A Relationship marketer understands a customer’s lifetime value (LTV)This gets enhanced over a period of time. For Example: - Would you like toShop in store which offers you the needy designed computer at low price butDoes not help you fix it neither offer you after services or you shop in & storeWho’s owner not only offers you the best but help you understand theFunctioning part of the gadget.So it’s simple the relationship marketing is emergingThe Marketing MixThe concept of Marketing Mix involves a deliberate and careful choice ofOrganization, product, Price Promotion & Place, Strategies & Policies.SELLINGMARKETINGPRODUCTCUSTOMERAGGRESSIVESELLING ANDSALES
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PROMOTIONINTEGRATEDMKT PLANTHROUGH FOURP MODELMAXIMIZE PROFITSTHROUGH SALESMAXIMIZATIONMAXIMIZE PROFITSTHORUGHCONSUMER &RELATIONSHIPMarketing MixProduct Price Promotion PlaceProduct Variety List price Sales promotionChannelsQuality Discount Advertising CoverageDesign Allowances Sales ForceAssortmentFeatures Payment Period Public Relations LocationsBrand Name Credit Items Direct Marketing InventoryPacking TransportSizeServicesWarrantiesReturnsMarketing Mix in Practice:McDonald’s in IndiaThe US food chain is best known for its* Burgers* Fries* Service StandardsIt has standardized the entire operation, right through:* Order taking to delivery.* The ambience of the outlet* The hygiene of furniture & interior.When McDonald entered in Indian Market it understood that to survive it hadTo be responsive to Indian sensitivities.Therefore McDonald Followed For the Indian MarketDONT’S DO’S1. Beef & Pork Burgers & Fish 2. Costly product for non-veggies3. Upper class & Rich customers 2. Allo Tikki & BurgerFor veggies3. Man Target was children4. Affordability for an Avg.Middle class.5. Selective in choosing locations.This is the only food chain that though not making profits at the time but has
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Capacity to succeed in the future.A View on Holistic MarketingMarketing Senior OtherDepartment Manager DepartmentCommunicationProduct &ServicesChannelsINTERNAL MARKEINGSOCIALYRESPONSIBLEMAKETINGHOLISTICMARKETINGINTEGREATEDMARKETINGRELATIONSHIP MARKETINGEthicsEnvironmentLegal CommunityCustomer Channel PartnerFundamental Marketing Concepts
1. Needs, Wants & Demandsa) Stated Needsb) Real Needsc) Unstated Needsd) Delight Needse) Secret Needs
2. Target Markets, Positioning & SegmentationOn the basis of Psychographic, Demographic & Behavioral aspects3. Offering and Brands4. Value & satisfaction:Offering will be successful if it delivers values & satisfaction to targetBuyer.5. Marketing Channels6. Supply Chain7. Competition8. Marketing Environment
Marketing EnvironmentTask Environment Broad EnvironmentsTask EnvironmentCompany Supplies Distribution Dealers Techno Env. EconomicPhysical Social & Cultural Env.Demographic
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Environment
Marketing Management Task1. Developing Marketing Strategies & Plans2. Capturing Marketing Insight Marketing, Info System, and Marketing Research System.3. Connecting With Customers4. Building Strong Brands: (Positioning Strategy)5. Shaping the Marketing offering (Product Features e.g. quality & packing)6. Delivering Value (Channel activity)7. Communicating Value (Promotion & Activity)8. Creating Long Term Growth.ConclusionIn order to define the term marketing traditional & modern definitions areEvident where as traditional definition focuses upon the needs (creation &Fulfillment), while the modern definition serves the purpose in a proper wayIn order to get into the nerves of marketing it explains that marketing is bothArt as well as science. The modern day marketing entails lots of activities likeTargeting, positioning, segmenting the market Therefore marketing can beDefined as the process of serving the market, People are market, but all thePeople are not market.
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CONSUMER BEHAVIOUR-THE CONCEPT
Indian Airlines (IA) has continuously been losing its passenger traffic on all sectors to
the private airlines. The management and employees of Indian Airlines blame
politicians and unethical Civil Aviation disallowed these airlines from advertising
their light schedules on the plea that they were charted as air taxis and not as airlines.
The international Airport Authority of India (IAAI) and the practices (like offering
free one-way fare on a confirmed return ticket) adopted by private airlines. Private
airlines have also had their share of problems from the establishment, like when the
Ministry of National Airport Authority of India (NAAI), who respectively manage the
international and domestic airports in the country have provide to these airlines, the
most neglected and badly maintained areas to operate from. For example, in Mumbai
these airlines operate from the old airport terminal which at one stage was used by
Indian Airlines for its Boeing and Fokker or Avroflights.
Today Indian Airlines operates its flights from the new terminal which has better
amenities than the one used by private airlines. Despite all this, Indian Airlines
average occupancy on most flights has fallen from more than 100 percent to just about
40 percent in some routes.
While all private airlines occupancy has gone up, Customers don’t care whether flight
schedules are published or not and where the aircraft is parked on the apron. What
they want is timely departures, friendly and courteous in-flight and ground services,
friendly and courteous in and ground service, prompt delivery of baggage, no bumpy
landings, and good overall service.
And that is what these private airlines have given to the customer. No wonder than
that when one of the first and now closed Damania Airlines flight from Bombay
landed at Goa on July 23, 1993, the passengers cheered the airlines. The flight,
needless to say, had almost 100 percent occupancy.
But the same was not true for the Indian Airlines flights. Delayed flights, strikes,
indifferent staff, and corrupt practices have made the traveler turn away from Indian
Airlines towards these new private airlines.
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Jet Airways has today emerged as India’s best domestic airline. The reasons are rooted
in its decision to continuously improve its product on the basis of customer feedback
which the airline crew actively seeks from passengers. It is this understanding that
enabled Jet Airways to launch a more attractive frequent flyers programme-Jet
Privilege Programme-than others in the industry.
It is a four tier dynamic programme, with benefits differing according to the kind of
membership. The customer earns regards on each flight on Jet Airways as also on
using the services of Jet’s partners. This programme, based on customer feedback, is
reckoned as one of the best in the industry. The airline has taken its customer
preference policy further by offering customized to passengers. All these and the
continuous effort to and satisfy the customer has Jet Airways the first choice of air
passengers in India.
Another instance of a failure, on Amount of not understanding customer was the
launch of flavored milk by Aarey in Mumbai in the 1970s, under the brand name”
Aarey”. The dairy positioned the product as a nourishing drink, rich in protein and
vitamins. In its initial campaign it talked about pasteurized milk. The product failed.
A research, subsequently initiated, showed that the customer was not looking for a
nutrition or health drink. The research also showed that most beverage companied
targeted their product at the youth/adolescent segment and positioned it as a ‘fun
drink’. This segment did not perceive Aarey’s flavored milk as a fun drink, a thirst
quencher, or a soft drink. Armed with this data, the dairy renamed the product as,
Energy and repositioned at as a fun, thirst-quenching, and nourishing health drink.
Soon sales started picking up but today it has expanded its capacity, set up another
dairy, and is providing know how to other dairies in developing countries.
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CONSUMER BEHAVIOUR
Meaning & Definition
In the topic consumer behavior it will be examined
Why
What
How of behavior
The marketers needs to focus on the “How” and “ Why” of the total experience
consumers have with products & services. Firms that choose not to understand their
customers’ purchasing behavior often loose out.
An excellently shaped & designed product may fail just because the customer does not
identify themselves with it.
Example:-
One of the leading Electrical appliances. Company made out its strategy around
customers’ experience at the dealer outlet. Hence the strategy was on the following.
a) Developing dealer outlet.
b) Enhancing dealer productivity
c) Enhancing dealer loyalty.
But if failed to understand other dimensions like
Service
Price performance relationship.
Brand image
Therefore company was a failed on the basis of said factors. One thing also needs to
be understood that large surveys are no guaranty of having of discovered the Truth’.
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Quantity of data does not guarantee quality. What is needed is a deep understanding of
customer Behavior. In order to have a better understanding of the consumer,
Gerald Zaltman urges marketers to avoid the following six traps.
1. Consumer is rational & thinks in a Linear Manner.
2. Consumer can explain their thought and behavior.
3. Culture and society have no relationship to consumer’s thoughts &
feelings.
4. Consumer thinks in words.
5. Consumer memories are sharp.
6. Consumers can be motivated to believe and internalize messages the
way the marketer desires.
CONSUMER MIND: A BLACK BOX
Sometimes responding the Way the marketer wants and on other occasions just
refusing to buy the product from the some marketer.
For this reason, the Buyer’s mind has been termed as a black Box.
The marketer provides stimuli but he is uncertain of the buyer’s response.
This stimulus is a combination of the following.
Product
Brand name
Color
Style
Packaging
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Intangible services
Merchandizing
Shelf display
Advertising & publicity
Distribution & so forth
Consumer Black Box can be illustrated as follows.
stimulus
(company
controlled)
Product
Price
Advertising
Sales
promotion
Display
Distribution
(social)
Word
of Mouth
Reference
Group
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Response
BUY
y
Don’t BUY
Consumer mind is black box
HOW THE INTEREST IS INFLUENCING CONSUMER BEHAVIOUR
The internet has become a household name in India. This can be attributed to the
growth of private internet subscriber (ISP) market in India. Offering Cyber Voyage at
more and more competitive prices. Internet in India is now one of the most vital
medium for information entertainment & communication.
According to the India internet log Book 2000, India Has over 1.8 Million subscriber
and more than 5.5 million users and it is estimated to reach at 50 million. And
following is the distribution of internet users.
Large Business 41%
Home 18%
Govt 12%
Small/med. Business 19%
Edu/Research insts. 10%
Purpose of the net used
Usage % of online population.
E-mail 98%
Web Browsing 93%
Online chat 59%
FIP/Data Transfer. 55%
Mailing list 49%
Electronic Commerce. 6.50%
The internet has created awareness among eh Indian consumers about Global quality and performance parameters that they can get at an affordable price.
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One of the sector where the change by internet is visible is the Banking sector where new generation banks like HDFC, ICICI leading the nationalized Banks.
Banks are offering the following facilities.
Net banking
ATM transactions
Tele Banking
Other services on the net.
Besides Banking facilities like online chats have increasingly sealed customer
communities which have in a way become pressure groups.
It is in this context that the internet is a great leveler and facilitator that builds
relationship between buyers & sellers.
WHAT DOES THE CUSTOMER BUY
To most of us, there appears to be an obvious answer to this question product or
services. But one can categories then into two groups.
a) High Involvement Product.
b) Low involvement Product.
For example: Selection of a car is a high involvement decision as a car represents the
customer’s personality, Toilet soap is a low involvement product.
High Involvement Product
These have the following characteristics.
1. High Price:- TV is high involvement product as compare to POCKET
TRONSI STOR.
2. Complex Features:- Complex feature of the product reputing the customer
to spend more time on familiarizing & internalizing them.
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3. Large Differences between Alternatives: Customer perceives major
difference between Indian, Japanese or American Cars. They evaluate
accordingly.
4. High perceived risk: Customer perceives high Risk using the product.
5. Reflect self-concept of Buyer. : Customer Buy product & services That
reflects This self concepts.
Low Involvement Products.
1. Does not Reflect Buyer’s self-concept
2. Alternatives within the same product class are similar.
3. Frequent Brand Switching Behavior.
4. Buying situation.
Buyer Motivations
Economic factors Psychological Factors
Economic Factors.
The Assumption in the Economic version of the Buyer Behavior is that the
lowest priced product will sell as its marginal utility will always be higher than
others.
The economic model can explain human behavior to a limited extent only because
humans are not always rational beings & they think rationally or never is the
information on alternatives complete. Brand communicating a different image through
technology, Features, Packaging.
But in Today’s world there is hardly any differentiation in two Brands.
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Psychological Factors.
There are three major psychological factors.
a) Motivation
b) Learning
c) Perception
A) Motivation:
The earliest explanations of human motivation were provided by the well known
psychoanalyst ‘Sigmund Freud’ but after that so many motivation therein are there.
Like
1. Hierarchy of Needs theory
It explains Esteem is a learned psychological need while security is a learned
physiological need.
2. Hertzberg’s Two Factor Theory
According to it there are motivators & Hygiene factors in every work situation.
The motivator’s peoples individual toward excellence.
3. MC Cleland’s theory of Achievement motivation.
According to this theory there are three motives that drive human beings to higher
performance, need for belonging power & achievement.
B) Learning Theory:
One of the importer dimensions of human behavior is learning. This learning could
be conditioned or could be the result of trial and error.
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Theory of Cognitive Dissonance .
Cognitive dissonance is generally a feature of high involvement buying situation.
The higher the involvement the higher the dissonance.
c) Perceptions
We line today in an over communicated society, There are
Companies, Individuals, social ORG & Government demanding our attention. There
is a Advertising blaze but none of us sell or hear everything that is being
communicated to us by the advertiser.
Behavioral science describes that human beings sel or hears only what they want or
anticipate.
This is then called perception. There are three different dimensions that after human
being are perceptions. These Are
A) Selective attention.
b) Selective distortion.
c) Selective Retention.
Roles in consumer Decision making
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a) INITIATOR: This is a person who sows the seed in consumer’s mind to buy a product. This can be child spouse, parent, Friend, Deer.
b) INFLUENCER : This is a person within or outside the immediate family of the customer who influences the decision process.
c) Decider : This is a person who actually takes the decision d) Buyer: This is the person who actually buys the product.
THE CONSUMER DECISION MAKING PROCESS
For High Involvement Products.
STEP I STEP II STEP III STEP IV STEP V
Example:
Person requires criteria Alternatives available
To travel 30km for buying
Daily
There for
He is looking for
A car a) safety A) Honda City
A Bike b) Fuel efficiency B) Corolla
A scooter. c) After scale service C) Ford
d) Driving comfort
e) Financing
Low involvement Product
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Need Recognition
Or
Problem
Development
Of Decision criteria
Search
For
Evaluation
Of Results
Decision
INFLUENCE ON BOYER BEHAVIOUR
Buyer decision is strongly influenced by two following variables.
1. Cultural Influences.
Culture refers to values, ideas, attitudes and other meaningful symbols created by
people to shape human behavior transmitted from one generation to the other.
Some of the attitudes and behavior influenced by culture are:-
Sense of self & space
Communication & language
Dress & appearance.
Food & feeding habits.
Value & norms.
Values:
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Problem/need
Recognition
Evaluation
Of
Decision
Values are shaped beliefs or group norms internalized by individuals are developed
through the process of socialization & acculturation
Following are the five consumption.
Values that customer look for in any product or services
a) Functional value b) Conditional value c) Social value d) Emotional value e) Knowledge value.
2) Social Influences
Reference group, which implies peers, relative neighbors and friends influences a min’s behavior.
Opinion Leadership Opinion leader ship is the process through which a person/Group influences the action, views & attitude of others. Opinion leaders in any society could be any Celebrities-film, sports, social, corporate.
Experts-professional
Common man
Executive/employee
Spokesperson/ salesman
3) Demographic influences A customer’s age
Sex
Marital status
Income
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Values of society
Family Religious
Institution
Educational
Institute
Early
Lifetime
Peers
Occupation
Geographic location effects.
Consumption pattern. From this point of view we have
Child market
Youth market
Teenage market
Adult market
Old people market
4) Self concept The self image could be an individual’s own perceived image and actual image based on how others perceive the individual.
5) psychographic variables
a) Life style:Life style refers to the beliefs, attitudes, interests and opinion that an individual has about him, his family and the world.
b) Personality
Personality refers to psychological characteristics of individuals that lead them to relatively consistent and enduring responses to their environment.
Following are the tools to study buyer behavior
1. surveys 2. project techniques3. Fours group discussions.
Conclusion
Buyer behavior differs across product groups hence the consumer products can be categorized into high involvement & low involvement products & services the buyer is motivated by economic & psychological factors Economic Factors involve understanding the marginal utility theory, while the psychological factors involves knowing motives like affiliation, Esteem, self actualization, power & achievement.
The modern day marketing strategies of companies are based upon understanding these motives. Buyer decisions are also strongly influenced by variables like culture & social factors, personal factors like demographics, self concept & life style.
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Management Information System –The Concept
The 2004 general elections in India will be remembered as one that proved psychologists, researchers, and pollsters wrong. After winning three out of four state elections, the NDA-led government advanced the general elections from September 2004 to April-May 2004. India Today, a leading magazine, had, in 2003, predicted the NDA’s victory and the BJP (Bharatiya Janta party) emerging victorious with about 300 seats in Parliament.
Most survey carried out by different media organizations predicted a landslide victory for the NDA government and the BJP. It also predicted decimation of the Congress Party led by Mrs. Sonia Gandhi, Fuelled with such results, the NDA mounted one of the most expensive promotional campaigns, “ India Shining”, at a cost of around Rs 300 crore. The Congress, on the other hand, launched a campaign, “India Whining”, at a cost of just Rs 80 crore.
However, as the first phase of polling ended, exit polls reduced the victory margin to about 60 percent, and by the time all three phases were over, it was clear that the NDA would barely make it. But the actual results stumped all. The NDA was defeated, the BJP marginalized, and a Congress-led coalition emerged victorious. The same happened in the subsequent elections in Maharastra.
What happened? Where did poll surveys and psychologists go wrong? We went around trying to understand the causes of the defeat and some common factors emerged. One was that most voters never expressed their real intent. By now, most of them had become professional respondents. Almost all of them knew the questions and the methodology. Second, there were issues like white collar unemployment in urban areas, failure of crops and suicide by farmers, increased corruption and exploitation by the NDA government and resistance to polarization of society. Even in the urban areas, concerns were voiced on unemployment and growth sans employment.
The pollsters and also the NDA failed to see these issues. While the NDA and BJP leaders did not waste a minute to deride the Congress in the media, Mrs. Sonia Gandhi continued on her road show connecting to the common man empathizing with his plight, and assuring of better days if voted to power. She talked about growth with social equity.
Market researchers failed to see this tsunami which was striking the Indian electorate, who were least. Concerned about her foreign origin. Thus, to be meaningful, research has to be planned in a more systematic and meaningful manner. The researcher has to be alive to the context and the community in which the research has to be carried out.
Likewise, in 1985, Parle Exports decided to assess the effectiveness of the advertising campaign of their three leading brands, Thums Up, Limca, and Gold Spot. It was thought that high recall was the correct measure of advertising and marketing effectiveness and so, initially, the task was to assess the number of consumers correctly recalling the ad campaigns of these three brands.
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However, when the researcher interacted with the top management of the company, the brief was modified to include an assessment of positioning of the three brands in the target market and to suggest changes, if any, in their positioning. The research, done in the summer of 1985, concluded that Gold Spot’s positioning in the child market was weak. The brand’s positioning was confused with that of competitors. Also, the child did not perceive the purchase and consumption of Gold Spot to be “fun”. (Incidentally, in 1985 the advertising campaign was aimed at positioning Gold Spot as a fun drink in the child market with punch line “Fun means Gold Spotting”).
To the child, fun was imitating his or her parents and elder brother or sister, who was the role models. Hence, riding a powerful motorbike or roller coaster or dressing up like dad or mum was perceived to be exciting activities by the child. Based on these findings, Gold Spot was repositioned in the summer of 1986 and targeted at the adolescent market with the fun and excitement theme. The campaign’s punch line was now, the all-famous “Gold Spot. The Zing Thing.”, showing young college boys and girls in different situations in a canteen, on a date, swimming, and so forth. This strategic repositioning based on MR helped Gold Spot emerge as a winner in the orange flavored soft drink segment.
Management Information System
Meaning & Definition
In Modern Business environment to carry out their Analysis, Planning, implementation &’ controlling responsibilities, Marketing Managers need a Marketing information system.
The role of the MIS is to assess the Managers’ information needs, develop the needed information & distribute that information in the timely manner.
A MIS consists of people, Equipment & procedures to gather, sort, analyze, evaluate & distributor needed, timely & accurate information to marketing decision makers.
DEVELOPING THE MIS & ITS COMPONENTS.
How the following components A marketing INFO system
a) Internal company recordb) Marketing intelligent activities c) Marketing research
a) INTERNAL COMPANY RECORD
Marketing managers reply on internal reports so that they can Spot opportunities & threats. Internal company Record consists of the following statements.
1) Orders to Payment cycle.
2) Sales information system.
3) Price lists & quotation
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4) Costs of the products manufactured
5) Inventory Level
6) Accounts Receivable
7) Accounts Payables.
By analyzing this information they con Jump to important conclusion & it helps & enable then to take decisions timely. Today most of the date in the companies is computerized. The information provided by these internal data can be used for observing.
Customer preferences
Customer loyalty.
Competitor activities.
Competitor activities.
New product in the market.
For these purposes most companies have today created a data base management system in which has two components.
1. Data warehouse 2.Data Retrieval System.
Specifically Data Base Marketing can assist in
a) Identification of most & least profitable customers. b) Identification of attractive market segments.c) Evaluation of sales territory. d) Identification of new market opportunities.
Data base marketing can help customize. The marketing efforts.
Companies like shoppers’ shop. Citi Bank, jet airways, Drange, BPL & several other consumer products, automobile & industrial product companies are today employing the approach to effectively reach their customer.
Using its own in house technology for example wells Fargo has developed the ability to track & analyze every bank transaction made by its to million retail customers- whether at ATMs Bank Branches or online when. When transaction data are combined with personal information, wellfs Fargo can come up with targeted offerings to coincide with a customer’s life-changing extent.
As a result compared with the industry average of 2.2 products per customer, wells Fargo sell 4.
Analyzing the macro environment (Marketing Research)
Success full companies recognize & respond profitably to unmet needs & trends. The recognition of these unmet needs & such as cure of cancer.
Chemical cures for mental diseases
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Desalinization of sea water.
Non fattening tasty & nutritious food. Etc.
MACRO ENVIRONMENT
FAD TREND MEGATRENDZ
FAD: A FAD is unpredictable, short lined & without social economic & Political significance. For example: - Pepsi Blue & Paupers.
TRENDZ A TREND is a direction or sequence of events that has some momentum & durability.TRENDZ are more Predictable & durable then fads. A TREND reveals the shape of the future & Provides many opportunities.
For example: - marketer of health food.
Megatrendz: It can be described as large social, Economical, Political & technological changes. That are show to form & once in place, they influence us for some Time. Between & ten years or more.
For example:-some companies sell portable” Electronic books” but then may not be a sufficient number of people instead in reading a book on computer or willing to pay the required price.
This is why market research is necessary to determine an opportunity’s Profit Potential.
b) THE MARKETING INTELLIGENCE SYSTEM:
A marketing intelligence system is a set of procedures & sources manger use to obtain everyday information about developments in the marketing environment.
Marketing managers collect marketing intelligence by following ways.
- By reading Books, Newspapers & Trade publications
- Talking to customers, suppliers & trade publications
- Meeting with other company managers.
Steps to improve the quality of its marketing intelligence.
1. A company can train & motivate the sales force to spot and report new developments.
2. A company can motivate distributors, retailers & other intermediaries to pass along important intelligence.
3. A company can network externally.
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4. A company can set up a customer advisory panel. 5. A company can take advantage of government data resources. 6. A company can purchase information from outside suppliers. 7. A company can use online customer feed back systems to collect competitive
intelligence. Demographic Environment
Demographic Trends are highly reliable for the short & intermediate run. The main demographic forces that marketers monitor is population,
Size & grow with rate of population in cities regions & nations
Age distribution & Ethnic mix. Education Level Household patterns Regional characteristics Movements of population
On the basis of Age mix population can be subscribed into six groups.
Pre school School age teen’s young adult’s middle
Children children 25 to 40 40 to 65
Economic Environment
Market requires purchasing power as well as people; the available purchasing power in economy depends upon many factors such as:
Income distribution
Savings, Debt and Credit Availability
Outsourcing & Free Trade
Social culture Environment
Society shapes the beliefs, values & norms. That largely defines these tastes & Preferences. People absorb, almost unconsciously social culture environment contains.
Views of the people as themselves Views of the other people Views of organizations. Views of society Views of nature
Each society contains subcultures, groups with shared values emerging from their special life experiences or circumstances. Member of subculture share common belief preferences & behaviors.
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Natural Environment
There is a great concern about the deterioration of the natural
Environment is a major global concern. In many world cities, air water & noise pollution have reached dangerous level.
Marketers need to be aware of the threats & opportunities associated with four trends in the natural environment.
Shortage of Raw material Increased energy cost s. Anti pollution pressures. Changing role of governments.
Technological Environments
Every new Technology is a force for “creative destruction” Television hurt the news papers. Xerography hurt the carbon paper business. CD & DVD players hurt video cassette player & cinema.
The marketer should monitor the following trends in technology.
The pace of change The opportunities for innovation Varying research & development budgets. Increased regulation of technological change
Political & Legal Environment
Marketing decisions are strongly affected `by developments in the political & Legal environment. This environment is composed of laws, Governments agencies, Pressure Groups.
Two major TRENDZ Deal with This
Increased in Business Legislation Growth of special Interest Groups.
Capturing Marketing Insights -In Practice
Aging Boomers.
As baby boomers grow older, their impact on consumer spending can hardly be overstated. That’s because unlike previous generations, boomers are deciding to delay the aging process and will continue to earn and spend as they age.
Delayed Retirement.
Baby boomers have delayed every life stage transition such as getting married and having children. So it’s highly likely that they will also delay their retirement. Between 2000 and 2010, the Bureau of Labor Statistics forecasts a 33 percent increase in the number of people ages 65 to 74 in the workforce.
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The Changing Nature of Work
More than half of all U.S. workers are employed in management, in professional or related occupations, or in a sales or other office-based position.
Greater Educational Attainment-Especially Among Women:
With so many jobs requiring intellectual skills, the number of high school graduates attending college is rising. While men and women are equally likely to graduate from high school, women are more likely to attend college. The long term implication of this trend is that people with a college education will have higher lifetime incomes, and there should be an increase in women’s earning power.
Labor Shortages.
Although more service workers are needed in suburban areas, fewer people can afford to live there. Suburban locales will turn to service automation or a greater reliance on immigrant labor.
Increased Immigration.
Based on Census 2000, the Census Bureau estimated that 40 percent of the nation’s population growth was due to immigration. As our citizens age, the population growth for newborns will be outpaced by the growth due to immigration.
Rising Hispanic Influence.
Already the largest minority group in the United States, with 35 million people, the Hispanic population is projected by the Census Bureau to increase 35 percent in this decade. Though Hispanic households represented only 9 percents of U.S. household in 2000, they accounted for 20 percent of the 4 million children born is this country that year.
Shifting Birth Trends.
These are represented by three mini trends:
(1) The increasing incidence of births by older women 35 and older- who have higher spending power,
(2) The deciding number of births by teenagers, and
(3) The rising diver sing among young children, about two-thirds of women of child basing age are non-Hispanic whites, but they accounted for less than half (43.5%) of births in 2000.
Widening Geographic Differences.
This trend has two elements. There is an increasing demographic difference between case suburbs, and rural areas, along with a rise in distinctive regional consumer markets. For example, the very low population growth. New England has led to a median age of 37.1 in that region compared to a median age of 32.3 in Texas or 33.3 in California. New Hispanic whites make up 84 percent of total population in the England but only 53 percent of population in the west.
Changing Age Structure.
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In the future the differences in the between one age cohort and the next will be much smaller than the next decade there is likely to be only a slight change 1 percent or less annually, in the number of consumers in each cohort younger than 35.
Worldwide Population Growth
The World Population is showing explosive growth: It totaled 6.1 billion in 2000 and will exactly. 9 billion by the year 2025. Here is an interesting picture.
If the world were a village of 1,000 people, it would consist of 520 women and 480 men, 330 children, and 60 people over age 65, 10 college graduates and 335 illiterate adults. The village would contain 52 North Americans, 55 Russians, 84 Latin Americans, 95 East and West Europeans, 124 Africans, and 584 Asians Communication would be difficult because 165 people would speak Mandarin in English, 83 Hindi/Urdu 64 Spanish, 58 Spanish, 58 Russian, and 37 Arabic, and the rest would speak one of over 200 other languages. There would be 329 Christians, 178 Moslems, 132 Hindus, 62 Buddhists 3 Jews, 167 nonreligious, 45 atheists, and 86 others.
The population explosion has been a source of major concern. Unchecked population growth and consumption could eventually result in insufficient food supply, depletion of minerals, overcrowding, pollution, and an overall deterioration in the quality of life. Population growth is highest in countries and communities that can least afford the less developed regions of the world currently account for 76 percent of the world population are growing at 2 percent per year, whereas the population in the more developed countries growing at only 0.6 percent per year. In developing countries, the death rate has been falling as a result of modern medicine, but the birthrate has remained fairly stable. Clothing, and educating children, while also providing a rising standard of living, is impossible in these countries.
CONCLUSION
Information is critical for a firm’s survival & competitive EDGE. In well Managed Firms one can find the following systems in place.
a) Marketing research systems. b) Marketing intelligence systems.c) Marketing information systems.
It is critical for each firm to evolve its own data Base of else it will not be competitive & may lose to others. For the purpose of collecting & storing information. (IT) information TECHNOLOGY can be useful in the form of data base marketing & data ware house.
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MARKET SEGENTATION & TARGETING
The decade of the 1980s must have been memorable one for Hindustan Lever Ltd. (HLL). In a typical David and Gcl war, two giant and undisputed market leaders in consumer non durables in India suffered a humiliation at the hands of new and small firms Nirma Chemicals. Nirma washing power became a national brand soon after 1982, when Indian television went commercial and started color telecast.
The product immediately caught the fancy for the middle income customer who was finding it difficult to make both ends meet with his limited monthly income Nirma was the lowest priced branded washing powder available in Grocery and cooperative stores. The middle class housewife was more than satisfied as she now had a lower option available. Nirma also had an impact on upper middle income and higher income families who used it for washing their inexpensive clothes and initially, HLL responded by launching sales promotion campaigns on surf by offering a bucket at a subsidized price or premium brands of Toilet soap with every kilogram of Surf.
These schemes, however did not halt the decline of Surf. HLL then launched a head on attack on Nirma. They came up with an advertising commercial comparing 1 kg Surf with 1 kg of low priced yellow washing powder and showed that Surf washed more clothes than the low priced yellow washing powder-and hence it was economical to buy Surf.
The commercial did not bring in any substantial results. It was at this time (around 1984) that HLL decided to take a fresh look at the market. Research conducted throughout the country revealed that different Income groups of consumers had varying expectations from detergents or washing powders. It also showed that different types of fabrics.
For example, yellow colored powder. Also, middle class families used the blue Rin bar or the white Lux flakes for washing their expensive clothes. Research further indicated that blue or white colored detergent powders were bought by middle to higher income group people, and these colors were also associated with washing clothes clean, In fact, the housewife was known to add “blue” to her laundry to give that extra whiteness to white clothes. Interestingly, green was also the color that was perceived to clean extra-dirty clothes.
Armed with this research on color perceptions and income groups. HLL launched the Sunlight (yellow), Wheel (green), Rin (blue), and Surf Ultra (white) detergent powders for different market segments. This strategy of segmenting the markets, understanding its needs, and then evolving marketing mix to suit segment’s needs helped HLL win back part of its lost market. In fact, Nirma made all other consumer product companies sit up and take a fresh look at their markets.
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It announced, for many, a beginning of an era of low priced products for a highly price sensitive Indian market, and to others, the end of a mass marketing era. Niche marketing and segmental marketing were ushered in by firms like Titan Watches, Cambridge and Chirag Din shirts and trousers, T-series music and audio cassettes, and their like. The market was indeed changing and demanding new response from companies. The latter part of the 1980s and early 1990s has taught the firms a lesson-“one cannot be everything to everyone; but one can be everything to a select few”. This is the basis of segmentation.
MARKET SEGMENTATION AND TARGETING THE MARKET
THE CONCEPT
WHAT IS MARKET SEGEMTATION?
“Market Segmentation is the process of dividing a heterogeneous market into homogeneous sub units”.
For Example:
In India market consist of Billion customers for Toiletries & General Products but not all the customers look or Go for the same products, same features & buy for the same reason. According to census data in India.65% of the men & 45% of the woman are literate. Therefore based upon this data keeping it in view companies need to decide should they make out Products for Men or Women or for both.
Another criterion for the Segmentation is that 74% of the Total population in India still lives in villages. Therefore companies also take it into sight.
Should they launch their product in Urban Market or in Rural Market?
To succeed, firm needs to appreciate that the market is heterogeneous and marketer must also identify similarities among different groups of customers.
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MARKET SEGMENTATION AND BRAND POSITIONING
IN INDIAN PASSANGER CAR INDUSTRY
NEED FOR THE SEGMENTATION
A successful marketer knows that all elements of Marketing Mix are imitable. Scooter or later or later competition will catch up & it will become promotion & Price war.
To be able to over come this Threat from competition, successful Marketers always segment their markets position themselves in a segment.
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MARUTI
800 CC
Esteems
SWIFT, GETZ
Chevrolet
optra sonata
LEXUS, BMW, BENS
COROLLA,
HONDA ,CIVIC
INDIGO CORSA
SANTRO
ZEN ALTO
LUXURY
MIDDLE
SIZE
ECONOMY
BASIS FOR SEGMENTATION OF THE MARKET
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CUSTOMER BASED SEGMENTATION
PRODUCT BASED
SEGMENTATION
CUSTOMER BASED SEGMENTATION
Psychograph
ic variables
COMPETITION RELATED SEGMENTATION
CUSTOMER BASED SEGMENTATION
PRODUCT USE SITUATIONS
BENEFITS
SEGMENITATI
ON
HARD CORE LOYALS
SOFT
CORE
LOAYL
DECISIION CRITERIA
SWITCHES
CONSUMPTION
a) CUSTOMERS BASED SEGMENTATION
Geographic Location of customer
Geographically based segmentation helps the Firm in planning its Marketing offer as well as its distribution function.
For examples:-
Urban<---->Rural Market
Metro<--->Non Metro Market
District<--->Mofussil<---->Block markets
It’s believed that Rural Markets are different from Urban Markets and hence product, Promotion, Pricing & Distribution needs to be different for the different markets.
b) Segmentation On The Basis Of Demographic Characteristics
Demographic factors like: AGE, EDUCATION, INCOME, OCCUPATION, SEX, FAMILY, SIZE & MATCH Status are used singly or in combination to segment the markets.
AGE: - Based on Age one can have.
a) Infants Market (Newly Born-14 ear)
b) Child Market (1-12 Years)
c) Teens Market (13-19 Years)
d) Youth Market (20-25 years)
e) Middle Aged Market (36-50 Years)
f) Senior Market (50)
INCOME: On the Basis of the Income, The Marketers can be Segments
As being:-
a) Low Income
b) Low Middle Income
c) Middle Income
d) Upper Middle Income
e) Higher Income
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GENDER: - On the basis of gender Market can be segments in the form of male & female market. The Cosmetic & Beauty Industry is taking this Basis in the view of Men’s active. Fair & Lovely are some examples.
The Indian Women (Age & Value System)
Bolder, Rebel
Fashionable, Outgoing, Consumerist
“I am I”
* Anxious about future
* “Kahan gaye wo din” (Nostalgia)
* Self Indulgent
* Guilty of Luxury & spending on self
* Discomfort with Vulgarity
OCCUPATION: On the Basis of Occupation.
a) Market for Professionals
b) Market for Industrialist
c) Market for Households.
EDUCATION: - On the basis of Education Indian Market can be
Segmented of
a) Illiterates
b) Literates
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THE TEENS & THE
TOORVITIES
THE MID AGE CRISES
FIFTIES & BEYOND
c) High School Educated
d) University Educated
THE SOLID ECONOMIC PYRAMID OF THE INDIAN POPULATION
MARKETING TO YOUNG INDIAN-A CASE STUDY
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a1
Q
a2
B1 & B2 40% qualified graduates & occupation
C (19.5%)
Skilled worker clerks etc.
E1 & E2 (32%) unskilled Labor
D (22.4%) Occupation Profile win SSC
Graduate, white collar worker & Professionals
Music and youth go hand in hand. It was this generalization, based on observations that made AKIO Morita, the legendary chairman of Sony Corporation, launches the Walkman. Television channels and Internet thus dedicated channels to music for the young for favor of times. Television channels [V], MTV and Napster Country Music on the Net and Planet M-the music store for the youth-are the symbols of today’s youth. Channel [V] was launched as a young western music channel. Soon it was over taken by MTV which reflected the Indian Youth’s tastes better. MTV bought in the language that young people used in common conversation. A combination of English and Hindi, nicknamed “Hinglish”. Is the lingua franca of MTV? It introduced Hindi music and reveled in making fun of itself. Today’s youth are more causal and willing to take shots at themselves. In 1999, Channel [V] decided to fight back by positioning itself as a youth channel and dumping its previous music channel image.
The channel announced 21 new programmes, 19 of which were non-music. The new programmes were targeted at the Indian youth who believed in substance rather style alone. According to the in-house research of Channel [V], the youth of India was less swayed by music than their parents feared. The youth think about relationship, career, sex, AIDS, and politics. This market was looking for information which no channel provided; the youth had matured in terms of tastes.
These findings made Channel [V] reduce its music component to 50-60 percent. The balance was programmes dedicated to information on career, fashion, “cool” gadgets, and so forth. With this revamp, [V] aims to keep the wandering young such hooked. Accordingly it reoriented its programming to three segments-teen, mainstreams, and the young adult. This classification was based on prime time for these three sub-segments the youth market. The rationale for determining prime time these segments was:
* The youth had no control over what the family watches during the family prime time
(7.00 p.m. to 10.00 p.m.)
* The 13-19 years old watched TV either pre-school or immediately after that (i.e. 7-10 am and 4-7 pm)
* The young adult watched TV after 10:00 p.m.
Backed with this research, [V] decided to market itself on ground, and online. On ground, it decided to organize every enter into tie ups with other brands and music stores like M (the music store with a youth image promoted by the Times India Group) and with ‘Cachet with the youth’ merchants Online, it created a portal www.vindia.com.
[V] Also decided to continuously track track the youth market cause this is the fastest changing market segment. To keep tune with the market, the marketer has to take timely course reactions in the nature of a new vignette, show, or nay creation expression. Both research and adaptation are investment-direction plans. MTV’s research budget is reported to
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be at leading FMVG brands. This research helps MTV gauge brand’s strength and also that of their VJs.
B) Psychographic Variables
Often it has been seen that two customers with the same demographic characteristics may act in an entirely different manner. This is called Psychographic variables which effects the decision of the Marketing & which sets the Basis for the Segmentation.
The title with company for example has segmentation its Market for Timex & titan Quartz high priced watches on the basis of Psychographic variables.
C) Buyer Readiness
Buyer Readings is the another Criteria for segmenting. The Market at any given time buyer are at different stops of readiness:
There are unaware buyers
* People who are aware but not interested.
* People who are interested & desirous.
* People who will buy lastly or positively.
2. PRODUCT RELATED SEGMENTATION
a) Product use situations
Different customers may use the same Product in different situations.
Rasna for example: is used in different situations like a Party, Unexpected Guests, and A drink at the working day.
OR instance
A customer may buy a sports watch for sporting activities & jeweled watch for party wear.
b) Benefit Segmentation
Here the Marketer identifies benefits that a customer look for when buying a Product.
For example: A Watch
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Where customer may buy for Functional purposes, durability as a Gift, An Accessory or Jewellery Item.
c) Consumption
Consumption has also been the Basis for Segmenting Beverages (Tea, Coffee, Soft Drinks) liquor’s cigarette market OR the following Segment.
a) Heavy users
b) Moderate Users
c) Light Users
d) Decision Criteria
Another Basis for Segmentation is Decision criteria customers may buy a product on the following criteria.
a) Price
b) Perceived quality of Product/Services
c) Services offered by the firm
d) Technology
Some of the customers may be price sensitive or some may be quality sensitive.
3. COMPETITION BASED SEGMENTATION
a) Hard Core Loyal
Hard core loyal are those customers who continue to buy the same product over & over again,. Newspaper Readers, Cigarette smokers, tea drinks are some hard core consumer groups.
b) SOFT CORE LOYALS
Those who are loyal Two or Three brands in a product group for examples: A House wife LUX, LUX, LUX, CINTHOL, CINTHOL, CINTHOL & PEARS, PEARS, LUX in her nine shopping cycle.
c) Switches
Those customers who never stick to a brand.
They may switch for variety or for a special deal.
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HOW TO SEGMENT THE MARKET
There are three stages of Market segmentation.
1. Survey Stage:
This is divided into Two Parts.
(I) Fours group discussions and in depth interviews with a view to getting insight
Into customer motivation, attitude & behaviors.
(Ii) Based upon this insight developed a questionnaire & collect data on :
* Priority Ratings
* Rating of Different Brands
* Product usage pattern.
* Response to wards product category.
* Demographic, Psychographic of Respondents.
2. Analysis Stage
After collecting the data, it is analyzed factor analysis. This is used to identify factors
That differentiates customers groups.
3. Profiling Stage
In this stage each cluster is profited in Terms of demographics, Psychographics, Media habits, attitude & behavior & consumption habits.
The marketer can give each segment a name based on distinguished characteristics.
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TARGETING STRATEGIES
After segmenting the market Firm now has to choose its marketing strategic
These are as below:
Standardization Differentiation Focus
The firm usages same Here the firm differentiate Focus is
Communication pricing & its product to suit different combination of
Distribution strategy segment needs. Standardization
for example: For Example &
differentiation
Coke & Pepsi Airlines & diffentiate core strategy
who usages same its product into remarks the same
flavor, Ads & ---First class but differentiations
packaging in ---Business Class made to take specific
different geographical ---Economy class customer group
Areas requirements.
POISTIONING
Gaining competitive advantage through differentiation is the key to survival today.
The differentiation could be along or all of following lines.
a) Product
b) Service
c) Channel
d) Price
e) People
f) Image
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Differentiation on account of Product is the most basic & common approach to positioning.
Domino’s Pizza has taken the service route to position its Pizzas in the Market it guarantees delivery at customers and within 30 minutes of receiving the order In its strategy firm takes channel image, location, expertise & performance like deal computer & Amway.
Price is another : Basis for competitive differentiation :
NIRMA, T-Series & Many other regional brands are positioned on this basis.
Irrespective of are, Firm needs to consider the following in Promoting differentiation
a) Superior
b) Communicable
c) Pre-emptive
d) Affordable
e) Profitable to the company.
CONCLUSION
Market segmentation helps the firm to get customer focused.
There is different Basis that can be used to segment the Customer Market. The requirement for the effective segmentation are:-
-----> Accessibility
-----> Measure ability
------> Viability
------> Degree of Competition
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POSITIONING-IN PRACTICE
Positioning-The Introduction
Positioning is the perception or the image that customer have of the company and its products. It is the customer’s benefits about the company’s product being of say high quality or low price or durable etc.
This perception is the stimulus of customer’s attitude and behavior towards company’s product. Customer’s positive perception will drive the business of the company and negative perceptions will sink it.
It is dangerous and ridiculous to allow customers to develop their own perception about the company. It sis the responsibility of the company to manage its customers perception. A company should vary clearly decide the perceptions that it wants its customers to have about the company and its products, and work consciously and delight to create that image in customers mind.
Every fact and act of the company shapes customers perceptions directly or indirectly. A company should evaluate its every activity in terms of its role in creating positive customer perception.
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Meaning and definition
In the words of Ries and Trout.
“Positioning starts with a product, a service, a company, an institution or even a person. Positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect.”
Elements of Positioning:
1. Target market:
Where does the company want to compete? The company has to select the segment to which it will offer its products. It is very tempting to select the largest segment or the most profitable segment. The company should process special competencies and resource to serve its target market.
2. Undifferential Targeting:
A company using an undifferential targeting strategy essentially adopts a mass-market philosophy. It views the market as a single unified big market with no segments. The company uses one marketing mix for the entire market. The company assumes that individual customers have similar needs that can be met with a common marketing mix.
3. Multi Segments Targeting:
A company following multi segment targeting strategy serves two or more well defined segments and develops a distinct marketing mix for each on of them. Separate brands are developed to serves each of the segments by most companies following this strategy.
4. Differential Advantage:
How does the company want to compete? The company has to provide answer to “Why would a customer of the target market want to buy my product and not those of competitors?” A company which is able to furnish an unambiguous answer has a clear positioning strategy.
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5. Communicating the differential advantage to customers:
A company may have created the appropriate offering for its target market but its customers should know that it has. Most companies are content with using advertisement to convert their positioning.
6. Distribution differentiation:
Distribution differentiation arises by making the buy situation more convenient for customers. Different target market will require different activities to make the buying situation more convenient for them. Customers hard pressed for time have welcomed introduction of automated teller machines. But some customers would still prefer to visit the bank to conduct transactions which can easily be carried out through the ATMs.
7. Price differentiation: Price differentiation involves estimating the price sensitivity of the target market and offering relevant values on the basis of such estimation. A target market can be totally price insensititive and desire value of the highest order.
DIFFERENTATION IN THE STEPS OF THE CONSUMPTION CHAIN
The first step is to map the customer’s experience with the product or the service.
The company should perform this exercise for each customer segment. The company will have to brainstorm how it can differentiate itself at each of the encounters it has with its customers.
The customer has to be aware of his needs before hr thinks of satisfying them. A company has to creative at this step. A toothpaste manufacturer can pack the last few milligrams of the paste in the tube in a color different from the rest of the paste. Jars of food-items and even other items like paints can have prominently displayed “buy now” at the lower part.
The customer will engage in a search process before buying howsoever limited or extensive it may be depending upon the product or the service he is buying. The company has to facilitate this search process. When a customer is buying a chocolate the search process may entail just having a glance at all the jars containing different brands in the retail outlet.
The company has an opportunity to differentiate itself by making it convenient for the customer to buy the product. A company may accept the customers order on phone or send a salesperson to place an order. In case of routine purchase a company may obviate
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the necessity of placing an order by monitoring the inventory of the buyer and sending replenishments automatically.
The product or the service delivery can be managed in such a manner so as to provide real value to the customer. The promised time of delivery should always be adhered to. The company should arrange for the delivery of amount in the type of packaging and to the destination prescribed by the customer.
Installation can be a major problem especially with complicated equipments. The company should assume full responsibility for installation and commissioning of the equipment. The company should ensure help to customers in running the equipment in the beginning.
The company should agree to be paid in the way the customer wants to pay unless it is illegal or determined to its interest. A company can differentiate itself when the customer has to pay regular installments for long periods.
The way a product can be stored provides another opportunity for differentiation. The storage mechanism should match with the physical surrounding of the customer. The storage mechanism should also ensure ease of talking out the product for use.
The way a company arranges to get its customer’s product repaired or replaced can also be differentiating factor. The company should not let its customer worry about the malfunctioning of the company’s product and its effect on the company and his business.
If for any reason the customer wants to return the product, it should not turn into a nightmare for him with nobody accepting the product initially. And later when somebody picks up the courage to accept the returned product there may be inordinate delays in getting his money back.
And finally the company should design its product in such a way as to make it convenient for the customer to dispose it off and even earn something out of it.
Any time at any stage of the product’s use should a customer require help the company should always be forthcoming? If nothing else the company can at least differentiate itself by being nice and courteous and offering to help in any way the company could.
A CASE STUDY ON CLINIC PLUS SHAMPOO
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SYNCHRONIZATION OF THE MARKETING MIX
All the four elements of the marketing mix for a target market should reinforce each other and contribute positively to company’s value proposition for the target market. The correct process to get its marketing mix right is that the company decides its positioning and sets each element of the marketing mix to conform to its positioning.
Most companies start with fixing their marketing mix elements individually and only much later in their evolution do they consciously think about positioning. A company manufacturers a high quality product prices it high employs the best advertising agency which makes an effective ad, but is not able to sign up capable retailers because the product is new. Customers get conflicting signals from the shoddy retail stores and always look to bargain for a lower price.
CRITERIA FOR SUCCESFULL POSITIONING
CLARITY: The positioning idea must be clear in terms of both target and differential advantage. The target should be clearly demarcated and identifiable in terms of demographic or geographic parameters or a combination of both. Each target market of the company should be different from the other.
CONSISTENCY: Confusion will rise if changes in positioning planks occur frequently. For instance if a company position on quality of service in one year, and then next year it changes its positioning to superior product performance, the consumer would not know what to expect from the offering of the company.
CREDIBILITY: The differential advantage must be credible to customers. Credibility means believability and trustworthiness. Positioning is a promise made to customer. The customer must believe that the company will deliver what is promises and is capable of delivering the promise.
COMPETITIVENESS: The differential advantage should offer something of value to the customer which the competition is failing to supply. The company should be able to develop or acquire distinct set of resource and processes.
SINE QUA NON OF POSITIONING: Positioning is not an abstract art. It is important for firm to understand and implement few fundamental do’s and dint’s to attain successful positioning.
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o The positioning of a corporate or a brand should be clear and precise.
o A company cannot hope to reach out to entire market with one positioning
appeal.o The product or service should be sent apart from what competitors are
offering.o Positioning should address the felt needs of the customer.
o Positioning appeals should be specific.
o The company should also be able to deliver what it promises to the customer
as its success depends on its credibility.DILUTION OF POSITIONING
An effective positioning ties a company’s product to a segment. The product is suitable for customers of the target market but is singularly unsuitable for customers of other segments.
Unless there is lack of effective competition, a strongly positioned product would appeal only to a limited number of customers because it will have the benefits that the target market requires in an exaggerated form, while other would hardly be provided the product. In an ideal situation, there would be plethora of strongly positioned products each serving a small set of customers.
REPOSITIONING
Repositioning involves changing target markets or the differential advantage or both. There are four generic repositioning strategies.
Same product and target market, changes in image of product: the product may be acceptable in functional terms but fails because it lacks the required image. The communication emanating from the company is overhauled. The advertising message is changed. The contexts and the structure of the contexts in which the customers come into contact with the company are changed to reflect the new image.
Product repositioning
The product is modified to make it more acceptable to its present target market. Customers’ requirements may have changed and the product has to be modified to be able to serve the new needs effectively. The company may have acquired new resources and competencies enabling it modify the product so that it serves the target market better.
Intangible repositioning
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The Company targets different market segments with the same product. The company is able to locate a segment which has requirements similar to the requirements of the segments it is serving. The company retains its value position and offers it to new segments.
Tangible repositioning
Both product and target market are changed. A company may decide to move up or down a market by introducing a new range of products to meet the needs of the new target customers.
THE PARTING IDEA……..
Positioning is essentially the creation of an offering that is distinctive from the offering of competitor, and is meaningful to customers.
The positioning of a company dictates all the elements of it marketing mix. The marketing mix is used to implement positioning.
Differential advantage can be achieved by distinctive product offering tailoring a different distribution strategy and on the basis of image services or personnel.
The positioning strategy can be successful only if it is unambiguously communicated to the intended target audience; it is consistent, meaningful, credible, and distinctive.
Conclusion
Many marketers wish to promote only one product benefit, thus they create unique selling proposition for positioning their product by offering double benefit offer, triple benefit positioning.
Positioning can be described as a process of making the prospects aware of the product, the benefits and the unique selling proposition associated with it.
Following can be the criteria for the successful positioning.
Clarity
Consistency
Credibility
Competitiveness.
But marketers have to be very very careful while positioning their products into the market.
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PRODUCT MANAGEMENT-IN PRACTICE
PRODUCT MANGEMENT-AN INTRODUCTION
Product is the most important element in the market mix. Product provides the functional requirements sought by consumers. Customers primarily get interested in dealing with the company because they feel that its products are capable of serving their needs.
A company’s best people and systems should be devoted to developing producing and making products available to customers.
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BUSINESS PRODUCT AND CONSUMER PRODUCT
Products can be defined as either business or consumer products depending on the buyers intentions. Business products are used to manufacture other goods or services to facilitate an organization’s. Consumer products are brought to satisfy an individual’s personal wants.
Type of consumer products
a. Convenience Product:Convenience goods are inexpensive products that require little shopping effort. Customers do not shop extensively for such a product. Customers buy convenience products regularly without much planning. Customers are aware of brand names of popular convenience products. These products are very intensively distributes. Soft drinks chocolates deodorants are common convenience products. These products are also called fast moving consumer goods.
b. Shopping Products: Shopping goods are more expensive than convenience products are found in fewer retail stores. Customer buys these products only after comparing several brands or stores on style feature price and benefits. Customers expend time and efforts to select the right product for themselves.
c. Specialty Product: Specialty products are those for which customers have strong brand preferences and are very fussy about them. They will travel long distances to locate their favorite brand or outlet.
d. Unsought Products: Unsought products are unknown to the potential customers or they are known products that customers do not actively seek
.Case Study of Kurkure
TECHNOLOGY PRODUTS
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Products are embedded with increasing amount of technology. Products like personal computers and mobile phones are supposed to make customers more efficient entertain them and connect them with others.
Contro-Chaos: Many technology products are supposed to bring order to the lives of customers. But they have the capability to disrupt everyday routines. A family dinner can be ruined by malfunction in an oven’s automatic timer; a corporate presentation can be disrupted by the equipment’s malfunctioning.
Freedom-Enslavement:Products that promise freedom to the customer also put new restriction on them. The availability of the voice mail lets customers be in a meeting without being disturbed, but makes them feel obligated to constantly check messages and respond to them.
New-Obsolete:Some products have cutting edge technologies embedded in them but owners of such products always have the fear that their products will be rendered obsolete by the introduction of a more advanced model.
Intelligence-Stupidity: Customers feels smarter when they use sophisticated products to solve complex problems, But they also feels stupid because they find it difficult to master the new technology or because they lose old skills.
Efficiency-Inefficiency: Customers are able to do certain tasks faster but are not saving time as they have to do time consuming new chores that the new product imposes on them.
Fulfilling needs-Creating new needs: Many technology products create new needs even as they serve others. A customer may be able to make a beautiful report using color printer but he will have to spend ours to get the fonts and colors just right.
Assimilation-Isolation:Many technologies connect customers among themselves either by creating direct communication links or providing shared experiences. But these technologies also become a substitute for face-to-face meeting and other social activities the
Engagements-Disengagements:A technology may enable an activity to be done faster but the customer does not feel sufficient engaged in the activity and the technology may suck the fun element from the activity. Cooks find microwave useful in speeding up cooking but they do not find the new method of cooking fulfilling.
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COMMODITY PRODUCTS
Commodity products are hard to differentiate. Reducing risk in such products can help supplies in differentiating their products and charging a premium from the customer.
Marketers have tough time selling products which do not lend themselves to being easily differentiated. Companies resort to price-cutting to be able to sell such commodity products.
CUSTOMIZED PRODUCTS
Companies should understand that customers do not want more choices: They are more bothered about obtaining exactly what they want which they often do not get even when they have many choices.
In mass marketing or segmented marketing, the company designs an average product that a large number of customers would like to some extent. This is a product in which choice of large multitude of customers have been compromised. This product is not perfectly suited for even a single customer but is adequately suitable for a large number of customers.
A company will need to have a learning relationship with the customer. It means that the company should be aware of changing customer needs, and accordingly keep on tailoring its offering.
PRODUCT AND BRAND
A product is anything which is capable of satisfying customer’s needs. When a company looks at what the customer is buying, it is essentially a service whether the means is tangible or intangible.
Marketers develop their products into brands which help to create a unique position in the minds of customers. Brands help customers distinguish between products from different companies. Brand superiority leads to high sales, the ability to charge price premiums, and the power to resist distribution power.
Branding is the process by which companies distinguish their product offering from those of the competition. By developing a distinctive name, packaging and design a brand is created. By developing an individual identity for a product, branding permits customers to develop associations with the company’s product and purchase decisions. Branding affects and shapes customer perceptions about the company’s product.
PRODUCT LINE AND PRODUCT MIX
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A product item is a specific version of a product that is designed as a distinct offering from a company. Most often a company brands each of its product items. Mach 3 is a product item from Gillette.
A product line is a group of product items or brand that is closely related in terms of their functions and benefits they provide. Companies like Unilever have many product lines. Personal care products and packages foods are two product lines of Unilever. Gillette’s product lines include blades and razors toiletries and writing instruments.
The depth of a product line is the number of product items or brands it contains. Gillette’s razor and blade product line include brands like MACH 3, Sensor, Trac III, Astra etc.
A product mix is the total set of brands marketed by the company. The width of product mix is the number of product lines that a company offers. Companies increase the width of their product mix to spread their risk across many product lines rather than depend on one or few of them. They also widen their product mix to capitalize on their established brand equity.
PRODUCT MIX MODIFICATION
A company’s product mix is never static. Customer’s preferences change new customer segment emerges and company’s competencies and priorities change. All these changes warrant a change in a company’s product mix.
o LINE EXTENSION: When a company adds a similar item to an existing product line
with the same brand name it is called line extension.o MIX EXTENSION: New product line is added to the company’s present assortment.
The new line may be related or unrelated to the current product.o TRADING UP: A company adds a higher priced product to a product line to ass
prestige to the line and attract a broader market.o TRADING DOEN: A company adds lower priced product to its product line. The
company wants to attract customers who cannot afford the original higher pieced products or who find the current products too expensive.
o PRODUCT MIX CONTRACTION: Product mix contraction is achieved either by
eliminating an entire product line or eliminating a few product items or brands from within a line.
o REPOSITIONING: Repositioning involves changing customers perceptions of a
brand. It involves changing the product’s attributes and communication to the customer.
o PRODUCT MODIFICATION: Product modification will involve changing the
quality level of the product items to make it more appropriate for the target market.
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o PLANNED OBSOLESCENCE: This is the practice of modifying products so that
those that have already been sold become obsolete before they actually need replacement.
MANAGING PRODUCT LINE AND BRANDS OVER TIME PRODUCT LIFE CYCLE (PLC)
A PRODUCT IS BELIVED TO GO through definite life stages, in the same manner as living organism do. They are first introduced in the market and customers accept the product if they find it serving their needs. Sales grow rapidly. Finally everyone who needs the product acquires it and sales plateau. At some stage, either the need that the product was satisfying cases to exist, or a different solution to the need emerges. Customers stop buying the product and eventually the product ceases to exist.
o STAGES OF PLC: The PLC is flexible and can be applied to both brands and product
lines. The traditional PLC has four stages- Introduction, Growth, Maturity and Decline
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Sale
s an
d Pr
ofit
Sales Curve
Profit Curve
DeclineMaturityGrowth
Introduction Time Period
Introduction:
The product is introduced in the market. Product’s sales growth is low because customers are not aware of the product and even when they become aware of the availability of the product, they are not sure the product will be useful to them.
Growth :
Growth is the period of faster sales and profit growth due to rapid market acceptance and repeat purchase. Customers become aware of the product and are convinced that the product is useful to them.
Maturity :
In this stage all the customers who could have brought the product have already brought the product, resulting in a saturated market.
Decline :
Sales and profit decline as new technologies or changes in consumer tastes work to reduce demand for the product.
STRATEGIES AT VARIOUS STAGES OF PLC
Introduction:
The Company builds sales by expanding market for the product. It creates product awareness so that customers become aware of the generic product benefits. Customers are suspicious of the product’s benefits and are not sure if it will serve their needs. Heavy expenditure on advertising and personal selling is essential.
Growth:
Customers are aware of the product at this stage and are convinced that it serves their needs. Customers understand the generic benefits of the product and the company now builds sales and market share by building brand preferences.
Maturity:
The market does not grow in this stage. The company should hold on to profit and market share rather than embark on costly competitive challenges.
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Decline :
A company should anticipate the impending decline in sales. The biggest hurdle in adoption of suitable strategies for the decline stage is marketers’ false belief that it is not coming or at least will not come soon.
PRODUCT STRATEGIES FOR GROWTH
ANSOFF’S MATRIX5:
The growth strategies :
Attempt increased penetration in the existing market with the existing products. Brand building is one method. Existing customers may become more brand loyal, new customers may buy the brand; existing users may use the product more often and in greater quantity.
Product development : Improve present products or develop new products for current markets. By improving style, performance and comfort, the aim is to higher sales among its present market.
Market development :
Current products are solid in new markets. The company may move into new geographic markets or move into new market segments.
Diversification:
New products are developed for new markets. This is risky. But if there is synergy between existing and new products this strategy is likely to work.
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Market Penetration
Product Development
Market
DevelopmentDiversification
Products
Existing New
Existing
New
Mar
kets
Conclusion
Product and branding decision are the core part of marketing management strategies. The implication of these strategies has the vital impact on the targeted segments. This has the overall proposition of the marketing program of the organization.
Branding is concerned about choosing the right name in right perspective and right phase of the market.
A good marketer has the ability to judge the mood of the market and brand their product or services accordingly
----------------------
Basics of BrandName Development.
1. Ultimately every product gets a name . . . a number, a code, something,
So Why not give it a good name: a name that helps get and keep
Customers.
2. Do not use the product or service category’s the brand name. For
Example,
“High Resolution television” or “low-cal ice cream” is not brand names;
They Are modifiers of a brand name?
3. Don’t name the product with an acronym, especially an acronym that is
An abbreviation for internal jargon.
4. Whether you “like” or dislike the brand name is not a criteria for
Choosing the Name. Brand naming is not a popularity contest among
Managers.
5. Brand names don’t have to mean something. Examples: Kodak, Advil,
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Exxon.
6. The primary criteria for a brand name are the product’s positioning.
Positioning is, in itself, an intellectual marketing exercise of the highest
Order. Many marketing industry. Companies, particularly advertising
Agencies, do not really understand the concept of Positioning. Beware
Of Descriptions of product features masquerading as positioning.
Statements. Positioning starts with an understanding of your target
Segment; and knowing your customer’s perception of competitive
Substitutes.
7. Consequently, when judging whether proposed brand name is “on or
Off Strategy “You are really judging the name against a very carefully
Constructed and customer tested Positioning statement.
8. Brand names that link the product to a product category or benefit set
Are Good.
Examples:
Pampers, Loctite, Reflexite, Sealed Air, Timex, Buffering.
Business-to-business marketers, start-up companies, and even
Technology- Based companies are more and more realizing what
Consumer packaged Goods companies have known since 1900: brand
Names are important; so important they are often a company’s most
Valuable intellectual asset.
However, many companies do not have the resident brand name
Development
Expertise required doing a good job on this important strategic issue.
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All too often, companies “name” their products based on internal
Schemes (such as Numbering systems) or on acronyms that shorthand
Some company jargon.
Here are a few guidelines to use when conceptualizing and naming
New Products and services:
9. Brand names should be memorable, pronounceable, and legally
Available and Readable.
10. Sometimes a brand name that is nontraditional for a product category
Or Industry will stand out and reduce the cost of creating awareness.
Examples:
Apple Computer, Boone’s Farm Wine, Yahoo!
11. A good brand name will not sell a bad product. But a good product
With lots of marketing support can build a so-so brand name into a
Franchise.
12. Always test a brand name for negatives. Certain words trigger
Unexpected Customer Negatives. The wrong word could trigger
Confusion, distaste, or Anti-use sentiments.
For example,
A proposed brand name,
“Stick-it”, for a glue pencil caused some prospective customers to
Think of Needles,
Stabbing and less-than-polite street talk. The proposed brand name,
“Pop Tails”, for a soda flavored alcoholic beverage confused
Customers. They didn’t know if the Product was a soda pop or a
Mixed cocktail.
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PRICING STRATEGY-IN PRACTICE
PRICING STRATEGY- METHODS OF PRICING
Cost oriented pricing:
One of the methods of pricing a product is on the basis of its cost. The company can either set the price on the basis of the total cost of the product, or on the basis of its variable cost.
Full cost pricing:
Variable and fixed cost per unit is added and the desired profit margin is added to the total cost. This price is true for a given volume of sales/output.
Direct Cost Pricing:
The desired profit margin is added to the direct cost to obtain a price. Price does not cover full costs, and the company would be making a loss.
Competitor Oriented Pricing:
Another method of pricing a product is on the basis of the competition’s price. A company can operate at the same price level if its products are undifferentiated. It may adopt a more aggressive stance by lowering its price to win bids, or to get a larger market share.
Going Rate Pricing:
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There is no product differentiation, i.e., there is some sort of perfect competition. All companies charge the same price and smaller players follow the price set by market leaders.
Competetitive Bidding :
The usual process involves drawing up a detailed specification for a product and putting out for tender.
Marketing Oriented Pricing
Prices should be in line with marketing strategy. Price should be linked to positioning, strategic objectives, promotions, distribution and product benefits. Pricing decision is dependent upon other earlier decisions in the marketing planning process. For new products, price will depend upon positioning strategy and for existing products price will be affected by strategic objectives.
Pricing new Products:
i) Positioning strategy: For a new product there is an array of potential target markets. For calculators they include engineers and scientists, bankers and accountants and general public.
ii) A combination of high price and high promotion expenditure is called rapid skimming strategy.
The high price provides high margins and heavy promotion causes high level of product awareness and knowledge. A slow skimming strategy combines high price with low level of promotional expenditure.
iii) It is important to understand the characteristics of market segments that can bear high prices. The segment should place a high value on the product which means that its differential advantages are substantial.
iv) Low price is used when it is the only feasible alternative.
Product may have no differential advantage, customers are not rich and pay for themselves, have little pressure to buy and have many suppliers to choose from.
V Price sensitivity of customers may change over time.
When products are novel, customers and willing to buy them at higher prices because it serves their unique requirements or provides them self-esteem.
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Price Existing Products
Strategic objectives for each product will have major bearing on pricing strategy. For example if a company wants to develop a premium brand it will price its products higher, but if it wants to capture market the mass market it will have to price its products lower.
o Build objective: The Company wants to increase its market share. In price sensitive
markets, the company has to price lower than competition.o Hold objectives: The Company wants to maintain its market share and profits. The
company’s pricing policies are essentially reactionary in nature.o Harvest: The Company is focused on increasing its revenues. It wants to maintain or
raise profits even if sales fall.
VALUE TO THE CUSTOMER
Price should be accurately keyed to the value to the customer. The more value that a product gives compared to competition, the higher the price that can be changed. If customers perceive to be higher than the value that they receive from the product, they switch over to competitors products. If the prices are lower than the perceived value of customers, the company is losing out on profits that have accrued by charging higher prices.
Buy Response Method:
A company asks customers if they would be willing to buy at varying price levels. Up to ten prices are chosen within the range usual for the product.
Trade-off Analysis :
Product profiles consisting of product features and prices are described, and respondents are asked to name their preferred profiles.
Experimentation:
Experimentation pricing research places a product on sale at different locations with varying prices. In controlled store experiments a number of stores are paid to vary the price level of the product under test.
Economic Value t Customer (EVC) Analysis:
Experimentation is more useful in consumer product. EVC analysis is used for industrial products.
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FACTORS INFLUNCING PRICING DECISIONS
PRICE-QUALITY RELATIONSHIP
PRODUCT LINE PRICING
EXPLICABILITY
COMPETITION
NEGOTIATING MARGINS
EFFECT ON DISTRIBUTORS AND RETAILERS
POLITICAL FACTORS
EARNING VERY HIGH PROFITS
CHARGING VERY LOW PRICES
CONSUMPTION AND PRICING
Consumption of the offering is important to retain customers and to generate positive word of mouth about satisfaction. Pricing methods must be adjusted accordingly. Following are the guidelines would be helpful.
o To build a long term relationship with customers, it is important that they consume
the product that they have bought. The extent to which customers use paid for products determines whether they will buy the product again or not.
o Customers feel compelled to use products that they have paid for to avoid feeling that
they have wasted their money. Most customers would use a less effective service or product more when they have paid a higher price, than use a more effective product or service that they have brought for a lower price.
o Consumption is driven by perceived cost rather than the actual cost. A $10 cash
transaction feels of different magnitude that a $ 100 cash transaction.
o Payments that occur at or near the time of consumption increases attention to a
product’s cost, increasing the likelihood of its consumption. But payments either long before or long after the actual purchase reduce the attention to a product’s cost and decrease the likelihood of its being used.
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o Companies bundle prices to hide the cost of individual components. Price building
influences consumption. It is easier to identify and account for the cost of an individual product in an unbundled transaction than within a bundled transaction.
PRICE SENSITIVITY
Companies can reduce price sensitivity of customers and have more scope for maneuvering their pricing strategies.
Price sensitivity of customers will determine the latitude that a company will have in increasing its price. A company should know the price sensitivity of its customers and the factors affecting it.
A customer is price sensitive if he is bearing the cost as opposed to a third party. The customer is also fewer prices sensitive if he does not have to make the payments upfront. Allowing customers to pay later may make the customer less fixated on the price.
A customer is also price sensitive if the cost of the item represents a substantial percentage of a customer’s total expenditure. The choice of the target market becomes very important.
If the buyer is not the end user and he sells his end product in a competitive market, price pressure from further down a distribution channel ripples back up through the chain. For instance one steel producer was able to obtain good margins by selling a component by buyers who then produced specially items for end users.
The customers are more likely to be price sensitive if he is able to judge quality without using price as an indicator. A customer’s price sensitivity will be more also if the product is one for which it is easy to make comparisons.
A customer will be price sensitive if he can easily sop around and assess the relative performance and price of alternatives. Advance in information technology will enable customers to increase their awareness of prices and access to alternative options.
A customer will be price sensitive if he can take the time he needs to locate and assess alternatives. For instance, in an emergency the speed of delivery will be crucial. Price will not be the primary factor determining the purchase.
A customer will be price sensitive if he can switch from one supplier to another without incurring additional costs.
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INITIATING PRICE CHANGES
Circumstances under which price can be raised: Marketing research may reveal that customers place a higher value on products than is reflected in its price. A price increase is not likely to turn away customers as they will still find the company’s offer attractive.
Circumstances under which price may be cut: Marketing research discovers that the price is higher compared to value customers place on the product.
Proactive Price Cut: A company cuts price to preempt competitive entry into a market. It incurs short term profit sacrifices but immediately reduces the attractiveness of the market to the potential entrant.
Tactics Price Change:
i) The company increases or decreases price by the full amount in one go. When a company raises price substantially at one instance, it avoids prolonging the pain of price increase over a long period but raises the visibility of price rise to customers
ii) When a company reduces price in one go the decline in price is noticed by customers and they may now find the new price level attractive and may purchase almost immediately.
iii) A company increases its price by small amount in stages. Customers do not notice and continues to buy. Customers do expect prices to go up incrementally, so a small price hike does not alarm them.
iv) Staged price reduction id done when the amount necessary to simulate sales is unclear. Small cuts are made till desired effect on sales is achieved. The company is able to avoid unnecessary reduction in price.
v) An escalator clause in contract allows the supplier to stipulate price increase in line with a specified index, like increase in material cost.
vi) Price unbundling allows each element in the offering to be separately priced and sold in such a way that total price is raised.
vii) The company maintained the list price but offers required discounts to customers. When the list price is lowered, customers who otherwise would have been willing to pay higher price also pay the decreased price.
viii) A company can decrease price without a direct fall in price. Price bundling can lower prices. For instance, a company sells television with repair warranty.
ix) Discount terms can be made more attractive by increasing the percentage or lowering qualifying levels.
x) Introduce a low price fighter brand to counter a cut price competitor while keeping the price premium ness of the main brand intact.
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Estimating competitor Reaction:
o Price rise that no competitor follows may turn customers away to competitor
offering.
o A company’s reactions to another company’s price moves are dependent on its
strategic objectives.
o If price is raised in response to rise in inflation, competitions is like to follow
than if price is raised because because of harvest objective of a firm.
o If competitions have excess capacity, a price cut will be matched.
o A price rise is likely to be followed if competitions are faced with excess
demand. Competitors reaction can also be judged by looking at their price
reactions to previous price changes.
Reacting to Competitors Price Changes:
When to follows Competitors Price moves : Competitive price increases are more likely to be
followed when they are due to general rising cost levels or industry wide excess demand, or
when customers are relatively price insensitive, which means that followers will not gain
much by not increasing the price.
When to Ignore a Competitor’s Price Move: Price rise are likely to be ignored when costs are
stable or falling, as there are no cost pressure. In situations of execs supply, a price rise will
make the interior less competitive especially if customers are price sensitive and price rise
can go unchallenged.
PRICE WARS
o The company may choose to reveal its strategic intentions to its competitors without
responding to the price cut in any other manner.
o The company may choose to compete strictly on non-price based measures.
o It is important to remember that there is life after price wars for brands.
o The company may selectively respond to such price cuts to avoid an all out war.
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Case Study-Price War
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DISTRIBUTION - THE CONCEPT
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DISTRIBUTION
FUNCTIONS OF CHANNEL INTERMEDIATES
Reconciling the needs of producers and customers.
Channel intermediaries serve several specialized functions that enable manufacturers to make their goods available to their consumers at the right place at the right time. The function that a channel performs depends on the sophistication of customer needs and existing level of technologies.
Improve efficiency by reducing the number of transaction and creating bulk for transportation.
Improve accessibility.
Providing specialist services.
TYPES OF DISTRIBUTION CHANNELSCONSUMER CHANNELS
Manufacturer to Consumer.
Manufacturer to Retailer to Consumer.
Manufacturer to Wholesaler to Retailer to Consumer.
Manufacturer to Agent to Wholesaler to Retailer to Consumer.
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Producer
Producer
Producer
Producer
AGENT Wholesaler Retailer
Consumer
Consumer
Consumer
Consumer
Retailer
RetailerWholesaler
INDUSTRIAL CHANNELS
Manufacturer to Industrial Customers.
Manufacturer to Agent to Industrial Customers.
Manufacturer to Distributor to Industrial Customers.
Manufacturer to Agent to Distributor to Industrial Customers.
SERVICE CHANNELS
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Producer
Producer
Producer
Producer
AGENT
Industrial Customer
Distributor
AGENTIndustrial Customer
Industrial Customer
Industrial Customer
Distributor
Service Provider
Consumer or Industrial Customer
AGENTConsumer or Industrial
CustomerService
Provider
Service Provider to Consumer or Industrial Customer.
Service Provider to Agent to Consumer or Industrial Customer.
Service Provider Via Internet to Consumer or Industrial Customer.
CHANNELS STRATEGY
Channel strategy decision involve
(1) The selection of most effective distribution channel,
(2) The appropriate level of distribution intensity and
(3) Degree of channel integration.
Channel Selection:
A company has to consider many factors related to the market and customers, its own situation, the product, and the competitive enjoinment. All these factors have a strong bearing on the type of distribution channel selected. A company should be very deliberate in deciding upon a distribution channel as it is expensive, cumbersome, and can invite litigations to dismantle a distribution channel once it is established because interests of independent intermediaries are involved.
Marketing Factors:
Buyers’ experience may dictate that the product be sold in a certain way. The willingness of channel intermediaries to market a product also influences channel
decisions. The profit margin demanded by wholesalers and retailers and the commission rates
expected by sales agents also effect their attractiveness as a channel intermediary. The location and geographic concentration of customers also affects channel
selection.
Manufacturer Factors:
Manufacturer may lack the financial and managerial resources to take on channel operation.
A wide mix of product may make direct distribution cost effective. The use of independent channel intermediaries reduces manufacturer control.
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Product Factors:
Large and complex products are often supplied direct to customers. Perishable products require short channel to supply the customer with fresh stock.
Product Factors:
If competition controls traditional channels of distribution, for instance, through exclusive dealership arrangements, a salesforce may be required to sell directly, or a manufacturer controlled or owned distribution network may be set up.
Distribution intensity:
Deciding the number of outlets in a region or for a population i.e. the intensity of outlets is critical decision. If the number of outlets is more than required, the cost of serving a customer goes up. If the number of outlets is less than required, customers will face difficulty in accessing the outlets and they may buy an alternate brand or product or forgo purchase altogether. There are three options for a company.
1. Intensive Distribution: It provides maximum coverage of the market by using all available outlets. With many mass market products such as citrates, food and confectionaries, sales are direct function of the number of outlets penetrated.
2. Selective Distribution: For products like electronics goods and home appliances, manufacturers use a limited number of outlets in a geographical area. Best outlets are selected, and a close working relationship is built with these outlets. Sales staffs in such stores have to be trained and motivated. Retail outlets and industrial distributors like this arrangement as it reduces competition amongst them.
3. Exclusive Distribution: Only one wholesaler, retailer or industrial distributor is used in a geographical area. Auto dealer are an example.
CHANNEL MANAGEMENT:
The manufacturer has to select the intermediaries who will carry his products. The chosen intermediaries have to be trained in specific areas like the working of the product being carried, art of selling, in merchandising, and in other areas depending on the requirement of the business.
SELECTION
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IDENTIFYING SOURCES
DEVLOPING SELECTION CRITERIA
MOTIVATION
TRAINING
EVALUATION
MANAGING CONFLICT
Sources of Channel Conflict:
Differences in goal Differences in desired product lines Multiple distribution channels Inadequacies in performance of channel members and manufacturers
WHOLESALE
A wholesaler is an organization that serves as an intermediary between manufacturer and retailer to facilitate the transfer of products, or the exchange of title to those products, or an organization that sells products to manufacturers or institutions that resell the products. The functions of a wholesaler are:
Bulk breaking functions Bulk accumulating function Selling function Assorting function Buying function Service function Credit function Risk taking function
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PHYSICAL DISTRIBUTION
The aim of physical distribution is to provide intermediaries and customers with the right products, in the right quantities, in the right locations, at the right time.
Effective physical distribution saves cost and improves customer service levels. Cost saving can be achieved by reducing inventory levels, using cheaper forms of transport and shipping in bulk.
Physical distribution management concerns the balance between cost reduction and meeting customer service requirements. Trade offs are often necessary, for instance, low inventory and slow, cheaper transportation methods reduce cost but lower customer service levels and satisfaction as well.
Analyzing the market in terms of customer service needs and price sensitivity will reveal two segments.
RETAILING
Retailing is the set of activities related to the sale of products and services to the ultimate customer. Companies carry out market research to know customers attitude towards their products but the customers real intent are displayed only during the process of buying in retail stores. A company can develop insights into the behavior of its customers as they shop in the retail store. But most retail stores are not owned by the companies whose items are sold in them. Retailers have huge amount of information about customer behavior but all this information is not passed on faithfully to the companies. A retailer’s prime affinity and locality is towards the customers of his store, and not to the companies whose goods he sells. Companies either needs to have more leverage with the retailers or own some retail stores themselves to be able to know their customers better.
TYPES OF RETAIL FORMATS
Department stores: a department store has many departments or selections, each carrying a different product line.
Specialty Store: These stores target their merchandise to specific target markets. The store specializes in a given type of merchandise like children’s clothing, men’s clothing, sporting goods, etc.
Supermarkets: Supermarkets are large, departmentalized, self-service stores that specialize in food and some non-food items. Supermarkets are facing declining sales because dual-income families are eating out more.
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Convenience Stores: Convenience stores are miniature supermarkets, carrying only a limits line of high-turnover convenience goods.
Discount Stores: a discount store competes on the basis of low prices, high turnover, and high volume. There are to types of discounters.
RETAIL MARKETING STRATEGIES
Retail Positioning: This involves choice of target market and differential advantage. Targeting allows retailers to tailor the marketing mix which includes product assortment, service levels, stores locations, prices and promotions, to the needs of their chosen customer segments.
Store Location: Convenience is an important criterion for many shoppers, and so store locations major bearing on sale performance.
Product Assortment and Services: Retailers have to decide upon breadth of their products assortment and its depth. A store may decide to widen its product assortment from food, drinks and toiletries to include clothes and toys.
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Price: Some retailers focus on price as their differential advantage. This requires strict cost control and massive buying power.
Promotion: Retail promotion includes advertising, public relations and publicity, and sales promotion. The goal is to position the store in consumer’s minds.
Store Atmosphere: This is created by the design, color and layout of a store. Both exteriors and interior designs affect atmospheres
WHOLESALING
Wholesaling includes all the activities involved in selling goods or service to those who buy for resale or business use. Wholesaling excludes manufacturers and farmers because they are engaged primarily in production, and it excludes retailers. Wholesalers differ from retailers in a number of ways. First wholesaler pays less attention to promotion, atmosphere, and location because they are dealing with business customers rather than final consumers. Second wholesale transactions are usually larger than retail transactions, and wholesalers usually cover a larger trade area than retailers. Third the government deals with wholesaler and retailers differently in terms of legal regulation and taxes.
Selling and promoting
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Buying and assortment building
Bulk breaking
Warehousing
Transportation
Financing
Risk bearing
Market information
WHOLESALER MARKETING DECISIONS
Wholesaler distribution have faced mounting pressures in recent years from new source of competition, demanding customers, new technologies, and more direct buying programs by large industrial, institutional and retail buyers. They have had to develop appropriate strategic responses. One major drive has been to increase asset productivity by managing their inventories and receivables better. They also have had to improve their strategic decisions on target markets, product assortment and services, price, promotion, and place.
Merchant wholesaler:
Independently owned business that take title to the merchandise they handle.
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Full-service wholesaler:
Carry stock maintain a sales force offer credit make delivers provide management assistance.
Limited-service wholesaler:
Cash and carry wholesaler sells a limited line of fast-moving goods to small retailers for cash.
Brokers and agents:
Facilities buying and selling on commission of 2 to 6 percent of the selling price limited functions gernally specialized by product line or customer type.
Manufacturers’ and retailers’ branches and offices:
Wholesaling operations conducted by sellers or buyers themselves rather than through independent wholesalers.
Specialized wholesaler:
Agricultural assembler’s petroleum bulk plants and terminals.
TARGET MARKET
PRODUCT ASSORTMENT AND SERVICES
PRICE DECISION
PROMOTION DECISION
PLACE DECISION
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PROMOTION MIX – THE CONCEPT
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INTEGRATED MARKETING COMMUNICATION
Marketing Communication: Most companies erroneously focus almost exclusively on advertising to convey their messages. But there are companies like body shop, which have been able to build strong brands and garner large market shares without any advertising. They have used other methods of communications like publicity, sponsorship, and word of mouth promotion convey heir brands ideas.
The Purpose of Communication: The task of communication is not to get one’s ideas across to the other party. The real purpose of communication is to elicit the desired response from the target audience. Eloquence, sophistication and suave demeanor is pleasing to the communicator himself, but serves absolutely no purpose in changing attitude and behavior of the target audience.
The Process of Communication: Customers go through a complex chain of mental events from the time they see or hear an advertisement until they decide to make or not make a purchase. For marketing communication to succeed, two process must take place in the customer’s mind.
Consumer Psyche: How he Perceives Message:
People are hardwired to fight for survival. People are naturally competitive. Does not distraction cloud the main message? People want to feel engaged.
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Sales Promotion:
Sales promotions are incentives to consumers or trade that are designed to simulate purchase. A customer has to be made to believe that he is getting more values for the money he is spending than he would have otherwise got if the sales promotion was not in operation. Sales promotion schemes serve to signal the arrival of a time period in which customers will get the value that they were getting earlier by spending less. In typical consumer promotions, companies reduce the price for a limited period, or offer more quantity for the same price, or offer extra items or gifts or prizes with the purchase.
Growth of Sales Promotion: Consumers have increased impulse purchasing due their rising income and proliferation of products. The retail response to greater consumer impulse purchasing is to demand more sales promotion from manufacturers to push their brand. Customer’s propensity to purchase on impulse receives further impetus when they see an item on sales.
Sales promotion used to be employed by fringe players to get some market share from established players because they could not afford to advertise in the mass media. The established companies did not retaliate because they believed that it would devalue their
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brand and also because they believed that their customers were too much of gentleman to fall prey to such manipulations.
But the customers did trade loyalties for lower prices and howsoever much it dislikes the ides, the established companies had to retaliate by offering their own sales promotion schemes. Sales promotions are becoming respectable because of their use by market leaders and increasing professionalism of the promotional offers.
Effects of Sales Promotion: Sales promotion is used to provide short, sharp impetus to sales. In this sense it is a short term tactical device. Sales promotion boosts the sales during the promotion period because of the incentive effects.
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Sales
Prior to Promotion
Promotion Period
Short-run Post
promotion period
Long-run Post
promotion period
Time
1
2
3
1 = Positive Effect
2 = No Effect
3 = Negative Effect
Major Sales Promotion Techniques:
Consumer Promotion:
Money Off Bonus packs Premiums
o Free in or On pack gifts
o Free in the mail offers
Free samples Coupons Competitions Draws
Trade Promotion:
Price discount Free goods Competition Allowances
Sales Promotion Objectives:
Fast Sales Boost Encourage Trial Encourage Repeat Purchase Stimulate Purchase of Larger Stock Gain Distribution and Shelf Space
Public Relations and Publicity:
Marketers primarily focus on customers and distributors but needs and interests of other groups such as those of employees, shareholders, local community. Media, government and pressure groups are also important.
Public relations are the management of relationships and communication to establish goodwill and mutual understanding between an organization and its publics. Public relations is more wide ranging than marketing which primarily focuses on markets, distribution channels and customers.
Function of Public Relations:
Facilities company’s Overall Operations Aids Promotion Helps in Tracking Social and Environmental Issues Ensures that Customers are Treated Well Helps in Attracting and Retaining Talented Employees
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Stakeholders Give it Benefit of Doubt Develops Reputation as a Good Supplier and Customer Politicians and Public Officials are Favorably Inclined Responds Effectively to Negative Publicity
Publicity:
Tasks of DepartmentCharacteristics of Publicity:
Credible message No media cost Loss of control of content Loss of control of timing
WORD OF MOUTH PROMOTION
ENGENDER WORD-OF- MOUTH PROMOTION:
Do not leave it to chance. Every marketer understands the power of customers talking well and excitedly about the product or a service. When a customer talks about a product and recommends it to other customers, he is more credible as he is not perceived to have any vested interests in promoting the product. And a customer is always willing to talk when he finds a product or service exciting enough to talk about. Word-of-mouth promotion has become an increasingly potent force because customers are now able to connect with large number of fellow customers instantly and simultaneously with the help of new technologies.
When designers conceive and design a product or service their focus is on satisfying the need of the customers is it functional or anything else.
Not all customers of a product or service talk with the same passion or equality profusely.
Customers will talk more if they have the product and believe that everyone cannot have it.
Celebrity endorsement is not creating the buzz it could, because customers consider them high-profile models without any interest or involvement in the product.
Ranking by credible agencies and experts draw attention of customers. Customers may
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MARKETING MIX
Marketing mix is the combination of elements that you will use to market your product. There are four elements: Product, Place, Price and Promotion. They are called the four Ps of the marketing mix.
1.
Some people think that the four Ps are old fashionable and propose a new paradigm: The four Cs! Product becomes customer needs; Place becomes convenience, price is replaced by cost to the user, promotion becomes communication. It looks like a joke but the Cs is more customer-oriented.
PRODUCT
A good product makes its marketing by itself because it gives benefits to the customer. We can expect that you have right now a clear idea about the benefits your product can offer.
Suppose now that the competitors products offer the same benefits, same quality, same price. You have then to differentiate your product with design, features, packaging, services, warranties, return and so on. In general, differentiation is mainly related to:
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1. The design: it can be a decisive advantage but it changes with fads. For example, a fun board must offer a good and fashionable design adapted to young people.
2. -The packaging: It must provides a better appearance and a convenient use. In food business, products often differ only by packaging.
3. -The safety: It does not concern fun board but it matters very much for products used by kids.
4. -The "green": A friendly product to environment gets an advantage among some segments.
5. In business to business and for expensive items, the best mean of differentiation are warranties, return policy, maintenance service, time payments and financial and insurance services linked to the product.
6. External readings
PLACE-DISTRIBUTION
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.
-Definition: 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.
In fact, instead of "place" it would be better to use the word "distribution" but the MBA lingo uses "place" to memorize the 4 Ps of the marketing mix!
Important Warning:
The place is not where is located your business but where your customers are. For a retailer it is the same but for a boat producer located in Philippines the real place is the entire world.
Do not confuse positioning and place. Here place means the real physical position of the customer in a geographic area or along a distribution channel.
It exists today, with the internet, more channels than in the past but basically, you have to consider three main distribution channels:
1. -Selling to the customers: Whether you sell by yourself ( as retailer) whether you employ a sales force, you are in these cases in front of the final customer. There are not intermediaries between you and him. Unfortunately, except for the retailer business, this situation is far to be the general case.
2. -Selling to the retailers: For example, you manufacture the fun boards and you sell them to the Arizona retailers. This practice could be a bit complicated.
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3. -Selling to the wholesalers: There are maybe four or five sport articles wholesalers in Arizona. You sell your fun boards to these big men. On turn the wholesalers sell the fun boards to the retailers which finally sell to their customers.
4. In the case of Pacific Boat which manufactures its boats in Philippines for customers located in the USA or in Europe, there is not alternative ways. It must sell through some big import export corporate's. Pacific boat has not any contact with its final customers but of course it must know exactly their profile. If the product does not fit to the profile of the final customer, the wholesaler will not buy it.
5. As you can see, the choice of your distribution channel heavily depends on your product and place in the productive process. If you are in coal mining, do not expect to sell some coal buckets to the final consumer!
6. The next drawing summarizes the different possible channels: You are represented by the black square, the wholesaler by the maroon one, the retailer by the yellow and the customer by the green!
2.
Real life example:
A commodity is a product such as crude oil, coal, rice, wheat, sugar, copper and so on: Mainly primary products and raw materials. In a commodity market, the products have very few distinguished characteristics.
They are traded in few places like Chicago and London. In the rice market, there are maybe six or seven big traders for the entire world in front of some hundred millions of little producers grouped in cooperatives or primary marketing boards.
The big traders know each other very well and most of the bargain relies on trust.
Nevertheless, inside a type of channel, you keep the possibility to choose between the different wholesalers and retailers. You have to choose the best. It means that your choice must focus on two major facts: the margin and the image.
32-The margin
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You have already gotten an idea about the price which should fit to the customer profile. Let's suppose this price is $100. It is the retail price: the price paid by the final customer.
PRICE
Price means the pricing strategy you will use. You have already fixed, as an hypothesis a customer price fitted to your customer profile but you will have now to bargain it with the wholesalers and retailers. Do not be foolish: They know better the market than you and you have to listen their advices.
Pricing strategies
In fact, you have to choose between three strategies:
1. -Competitive pricing: If your product is sold at the lowest price regarding all your competitors, you are practicing competitive pricing. Sometimes, competitive pricing is essential. For instance, when the products are basically the same, this strategy will usually succeed.
2. Remember that the success of competitive pricing strategy depends on achieving high volume and low costs. If your prices are lower than your costs, you are going straight to bankruptcy! To avoid such a mistake, you have to take notice of the break even ratio that you will find below.
3. -Cost-plus-profit: It means that you add the profit you need to your cost. It is also called cost-orientated strategy and is mainly used by the big contractor of public works. The authority may have access to the costing data and should like to check if the profit added to the cost is not too high.
4. In fact, this strategy is only good for a business whom the customers are public collectivities or government agencies.
5. -Value pricing: It means that you base your prices on the value you deliver to customers. For example, when a new technology has a very large success, you can charge high prices to the customer. This practice is also called skimming. It is easy when you are in the introductory phase of the product life cycle.
6. Value pricing is also common in luxury items. Sometimes, the higher the price, the more you sell: Fashionable clothing or restaurants for snob people. Of course value pricing is limited by the price elasticity as you have already learnt in Economics.
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3.
PROMOTION
Advertising, public relations and so on are included in promotion and consequently in the 4Ps. Sometimes, packaging becomes a fifth P. As promotion is closely linked to the sales, I will mention here the most common features about the sale strategy.
-Definition: The function of promotion is to affect the customer behavior in order to close a sale.
Of course, it must be consistent with the buying process described in the consumer analysis.
Promotion includes mainly three topics: advertisement, public relations, and sales promotions.
-Advertisement:
4. It takes many forms: TV, radio, internet, newspapers, yellow pages, and so on. You have to take notice about three important notions:
Reach is the percentage of the target market which is affected by your advertisement. For example, if you advertise on radio you must know how many people belonging to your segment can be affected.
Frequency is the number of time a person is exposed to your message. It is said that a person must be exposed seven times to the message before to be aware of it. Reach*frequency gives the gross rating point. You have to evaluate it before any advertisement campaign.
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Message: Sometimes, it is called a creative. Anyway, the message must: get attraction, capture interest, create desire and finally require action that is to say close the sale.
Sales promotion:
It includes fair trades, coupons, discounts and are linked to the sales strategy.
SALES STRATEGY
1. Sales bring in the money. Salesmen are directly exposed to the pressure of finding prospects, making deals, beating competition and bringing money.
2. You have first to learn some definitions used by the MBA lingo:
3. 61-Definitions:
4. A lead is a person who has been identified as a prospect.
5. A prospect is a potential customer.
6. An account is a customer that often buys from the company.
7. A national account is a very big customer
8. An order taking: the customer asks for a product and the vendor sells it. It's usual way to sell candy, soda or to sell tickets for theater.
9. On the contrary, active selling involves locating customers and persuading them to buy.
10. Inside sales refers to selling done mainly by phone or by internet. Outside sales involves getting appointment to meet customers at their home. Home cold calling means to phone people you do not know. Hard sell means to use of high pressures upon the prospect.
11. We have then to distinguish the sale process and the sale organization.
12. 62-The sales process:
13. It depends heavily on the buying process. It includes prospecting and persuading.
14. Prospecting involves finding the leads and presenting the product. After making contact, the salesman must show that the product solves a customer's problem. He must also answer two questions :
15. - Has the prospect a need or an interest in the product ?16. - Does the prospect have the money to buy the product ?
17. If the prospect does not meet these criteria, you have better to move on to the next prospect !
18. Persuading and authority are often necessary to close a sale. The salesman's approach is often to rise questions in order to lead the prospect to a logical conclusion : I must buy now.
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19. 63-The sale organization:
20. The two major issues are to recruit salesmen or to organize a franchising or or multi-level market
21. If you recruit the salesmen:
22. -You should determine the size of the sales force: It must cover the customer segment. A poor coverage is an invitation to competitors. Remember the production possibility frontier to determine your maximum sales force.
23. -You should also determine the alignment of the sales force:
24. Alignment by territory divides the market into geographical areas such as counties or cities and specializes each salesman in an area.
25. Alignment by product specializes each salesman in a product
26. Alignment by customer specializes each salesman in a customer (it means that the customer must be a national account).
27. You can also combine the three alignments.28. -You should finally determinate how to motivate the sale force: Sales people can be
compensated by commissions, salary or salary plus commission. For a starting business it's more convenient to pay only commissions
29. If you organize a multi level marketing: Salesmen becomes independent distributors. They operate as contractors. They are encouraged by your company to recruit other distributors. In return, they receive a percentage commission on the sales of their recruits.
30. There are two benefits from multi-level marketing :You get a large sale force without the expense of full time employees and the distributors work very hard to improve their income.
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5.
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CRM (customer relationship management)
definition -
What is CRM (customer relationship management)?CRM (customer relationship management) is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. For example, an enterprise might build a database about its customers that described relationships in sufficient detail so that management, salespeople, people providing service, and perhaps the customer directly could access information, match customer needs with product plans and offerings, remind customers of service requirements, know what other products a customer had purchased, and so forth.
According to one industry view, CRM consists of:
Helping an enterprise to enable its marketing departments to identify and target their best customers, manage marketing campaigns and generate quality leads for the sales team.
Assisting the organization to improve telesales, account, and sales management by optimizing information shared by multiple employees, and streamlining existing processes (for example, taking orders using mobile devices)
Allowing the formation of individualized relationships with customers, with the aim of improving customer satisfaction and maximizing profits; identifying the most profitable customers and providing them the highest level of service.
Providing employees with the information and processes necessary to know their customers, understand and identify customer needs and effectively build relationships between the company, its customer base, and distribution partners.
Many organizations turn to CRM software to help them manage their customer relationships. CRM technology is offered on-premise, on-demand or through Software as a Service (SaaS) CRM, depending on the vendor. Recently, mobile CRM and the open source CRM software model have also become more popular.
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What is Strategic Marketing Planning?
Every CEO and marketing executive periodically faces urgent strategic marketing challenges that can affect the future of the company for many years. Frequently these decisions are made without having an opportunity to study the situation and make the best possible decision.
Making spur of the moment strategic decisions reduces the likelihood that these decisions are the best.
A better approach is to perform an annual comprehensive review of markets and opportunities, then make long-term strategic decisions without the distractions of day-to-day marketing and sales activities. Daily decisions then fit into the company's overall strategic marketing goals.
It's important for a strategic marketing planning process to look at the company from the customer's point of view by asking questions that have a long time horizon, such as:
What needs or problems cause customers to consider buying from our company? What improvements in the customer's personal or business life can we enable or
improve?
Which customer market segments are attracted to our company or products?
Which customer motivations or values lead people to decide to purchase our products?
What changes or trends in our customer base are affecting their general interest or attraction to products like ours?
Strategic vs. Tactical Marketing Plans
What makes a strategic marketing plan different from a more tactical marketing communications plan? The key difference is the focus on meshing overall customer situations with your overall company direction.
For business-to-business marketers, this means combining industry sector segmentation and product use with other factors related to purchase decisions. These include the purchase criteria and decision motivations that affect large, enterprise size purchases.
For example, the trend toward increased use of outsourcing to both domestic and global vendors creates markets for those suppliers. However, those vendors need to have a strategic marketing vision in order to see these new markets early enough to take advantage of the opportunity.
For consumer marketers, this means using geographic and demographic segmentation, as well as psychographic segmentation (i.e., values, attitudes, lifestyles), and product usage motivations.
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For example, the aging population bubble creates a general increase in demand for a wide range of products. It also creates market niches that are large enough to make product development and marketing worthwhile.
The same shifts can also reduce demand for other products. These long term shifts in markets are frequently misinterpreted as short-term competitive pressures or fluctuations in the economy. Instead of increasing advertising or sales efforts, it might be better to abandon a declining market.
Without a strategic marketing plan a company could waste resources or miss an opportunity.
What's the cost of missing an opportunity? Of course, it's impossible to know at the time the opportunity is missed, but years later it will become clear when a competitor opens a new factory or enters a new market -- and their revenue grows faster than their competitors.
In other words, the annual cost of a strategic marketing plan review is miniscule compared to the revenue, market share, and profitability it can generate.
Developing the Strategic Marketing Plan
The strategic marketing plan process typically has three stages:
1. Segment the market Geographic
Demographic
Psychographic
Behavior
2. Profile the market segments
Revenue potential
Market share potential
Profitability potential
3. Develop a market segment marketing strategy
Market leader or product line extension
Mass marketing or targeted marketing
Direct or indirect sales
After analyzing market segments, customer interests, and the purchase process, it's time to create the strategic marketing plan. The strategic marketing plan document usually includes:
Situational Analysis - Where is the company now?a. Market Characteristics
b. Key Success Factors
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c. Competition and Product Comparisons
d. Technology Considerations
e. Legal Environment
f. Social Environment
g. Problems and Opportunities
Marketing Objectives - Where does management want the company to go?
a. Product Profile
b. Target Market
c. Target Volume in Dollars and/or Units
Marketing Strategies - What should the company do to achieve its objectives?
a. Product Strategy
b. Pricing Strategy
c. Promotion Strategy
d. Distribution Strategy
e. Marketing Strategy Projection
How to Use a Strategic Marketing Plan
Once a company's executive team has approved the strategic marketing plan it's time to take the next step -- create the tactical marketing programs and projects needed to implement the plan.
These tactical programs usually include:
Product Development Plan Marketing Communications Plan
Sales Development Plan
Customer Service Plan
Benefiting from a Strategic Marketing Plan
The top-down process of developing a strategic marketing plan helps insure that all tactical marketing programs support the company's goals and objectives, as well as convey a consistent message to customers.
This approach improves company efficiency in all areas, which helps improve revenue and market share growth, and minimizes expenses -- all of which lead to higher profitability.
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How Cliff Allen can help develop your strategic marketing plan
With over 25-years of strategic marketing experience, and helping companies implement both traditional and online marketing and sales programs, Cliff Allen brings a valuable perspective to developing strategic marketing plans and programs.
Cliff can lead your strategic planning team, or assist senior management, throughout the entire strategic marketing plan process. He can help you:
Research customer attitudes toward your company, your product category, and your competition.
Evaluate the attractiveness of potential target markets
Determine the competitive strengths and weaknesses of your company and your competitors
Develop marketing communications and sales development strategies for each target market
Design the metrics to measure performance
Green marketingDefinition:
What is green marketing? Green marketing refers to the process of selling products and/or services based on their environmental benefits. Such a product or service may be environmentally friendly in itself or produced and/or packaged in an environmentally friendly way.
The obvious assumption of green marketing is that potential consumers will view a product or service's "greenness" as a benefit and base their buying decision accordingly. The not-so-obvious assumption of green marketing is that consumers will be willing to pay more for green products than they would for a less-green comparable alternative product - an assumption that, in my opinion, has not been proven conclusively.
While green marketing is growing greatly as increasing numbers of consumers are willing to back their environmental consciousnesses with their dollars, it can be dangerous. The public tends to be skeptical of green claims to begin with and companies can seriously damage their brands and their sales if a green claim is discovered to be false or contradicted by a company's other products or practices. Presenting a product or service as green when it's not is called greenwashing.
viral marketing
Definition
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Marketing phenomenon that facilitates and encourages people to pass along a marketing message.
Information
Viral marketing depends on a high pass-along rate from person to person. If a large percentage of recipients forward something to a large number of friends, the overall growth snowballs very quickly. If the pass-along numbers get too low, the overall growth quickly fizzles.
At the height of B2C it seemed as if every startup had a viral component to its strategy, or at least claimed to have one. However, relatively few marketing viruses achieve success on a scale similar to Hotmail, widely cited as the first example of viral marketing.
Social Marketing
Social marketing is the planning and implementation of programs designed to bring about social change using concepts from commercial marketing.
Among the important marketing concepts are:
The ultimate objective of marketing is to influence action; Action is undertaken whenever target audiences believe that the benefits they receive
will be greater than the costs they incur;
Programs to influence action will be more effective if they are based on an understanding of the target audience's own perceptions of the proposed exchange;
Target audiences are seldom uniform in their perceptions and/or likely responses to marketing efforts and so should be partitioned into segments;
Marketing efforts must incorporate all of the "4 Ps," i.e.:
o Create an enticing "Product" (i.e., the package of benefits associated with the desired action);
o Minimize the "Price" the target audience believes it must pay in the exchange;
o Make the exchange and its opportunities available in "Places" that reach the audience and fit its lifestyles;
o Promote the exchange opportunity with creativity and through channels and tactics that maximize desired responses;
Recommended behaviors always have competition which must be understood and addressed;
The marketplace is constantly changing and so program effects must be regularly monitored and management must be prepared to rapidly alter strategies and tactics.
These key concepts can be abbreviated as follows:
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Action is the objective
The target audience is the focus
The exchange is critical
Segment markets
Use all four Ps
Analyze and beware of competition
Monitor and be flexible
What is Social Marketing?
The health communications field has been rapidly changing over the past two decades. It has evolved from a one-dimensional reliance on public service announcements to a more sophisticated approach which draws from successful techniques used by commercial marketers, termed "social marketing." Rather than dictating the way that information is to be conveyed from the top-down, public health professionals are learning to listen to the needs and desires of the target audience themselves, and building the program from there. This focus on the "consumer" involves in-depth research and constant re-evaluation of every aspect of the program. In fact, research and evaluation together form the very cornerstone of the social marketing process.
Social marketing was "born" as a discipline in the 1970s, when Philip Kotler and Gerald Zaltman realized that the same marketing principles that were being used to sell products to consumers could be used to "sell" ideas, attitudes and behaviors. Kotler and Andreasen define social marketing as "differing from other areas of marketing only with respect to the objectives of the marketer and his or her organization. Social marketing seeks to influence social behaviors not to benefit the marketer, but to benefit the target audience and the general society." This technique has been used extensively in international health programs, especially for contraceptives and oral rehydration therapy (ORT), and is being used with more frequency in the United States for such diverse topics as drug abuse, heart disease and organ donation.
Like commercial marketing, the primary focus is on the consumer--on learning what people want and need rather than trying to persuade them to buy what we happen to be producing. Marketing talks to the consumer, not about the product. The planning process takes this consumer focus into account by addressing the elements of the "marketing mix." This refers to decisions about 1) the conception of a Product, 2) Price, 3) distribution (Place), and 4) Promotion. These are often called the "Four Ps" of marketing. Social marketing also adds a few more "P's." At the end is an example of the marketing mix.
Product
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The social marketing "product" is not necessarily a physical offering. A continuum of products exists, ranging from tangible, physical products (e.g., condoms), to services (e.g., medical exams), practices (e.g., breastfeeding, ORT or eating a heart-healthy diet) and finally, more intangible ideas (e.g., environmental protection). In order to have a viable product, people must first perceive that they have a genuine problem, and that the product offering is a good solution for that problem. The role of research here is to discover the consumers' perceptions of the problem and the product, and to determine how important they feel it is to take action against the problem.
Price
"Price" refers to what the consumer must do in order to obtain the social marketing product. This cost may be monetary, or it may instead require the consumer to give up intangibles, such as time or effort, or to risk embarrassment and disapproval. If the costs outweigh the benefits for an individual, the perceived value of the offering will be low and it will be unlikely to be adopted. However, if the benefits are perceived as greater than their costs, chances of trial and adoption of the product is much greater.
In setting the price, particularly for a physical product, such as contraceptives, there are many issues to consider. If the product is priced too low, or provided free of charge, the consumer may perceive it as being low in quality. On the other hand, if the price is too high, some will not be able to afford it. Social marketers must balance these considerations, and often end up charging at least a nominal fee to increase perceptions of quality and to confer a sense of "dignity" to the transaction. These perceptions of costs and benefits can be determined through research, and used in positioning the product.
Place
"Place" describes the way that the product reaches the consumer. For a tangible product, this refers to the distribution system--including the warehouse, trucks, sales force, retail outlets where it is sold, or places where it is given out for free. For an intangible product, place is less clear-cut, but refers to decisions about the channels through which consumers are reached with information or training. This may include doctors' offices, shopping malls, mass media vehicles or in-home demonstrations. Another element of place is deciding how to ensure accessibility of the offering and quality of the service delivery. By determining the activities and habits of the target audience, as well as their experience and satisfaction with the existing delivery system, researchers can pinpoint the most ideal means of distribution for the offering.
Promotion
Finally, the last "P" is promotion. Because of its visibility, this element is often mistakenly thought of as comprising the whole of social marketing. However, as can be seen by the previous discussion, it is only one piece. Promotion consists of the integrated use of advertising, public relations, promotions, media advocacy, personal selling and entertainment vehicles. The focus is on creating and sustaining demand for the product. Public service announcements or paid ads are one way, but there are other methods such as coupons, media events, editorials, "Tupperware"-style parties or in-store displays. Research is crucial to determine the most effective and efficient vehicles to reach the target audience and increase
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demand. The primary research findings themselves can also be used to gain publicity for the program at media events and in news stories.
Additional Social Marketing "P's"
Publics--Social marketers often have many different audiences that their program has to address in order to be successful. "Publics" refers to both the external and internal groups involved in the program. External publics include the target audience, secondary audiences, policymakers, and gatekeepers, while the internal publics are those who are involved in some way with either approval or implementation of the program.
Partnership--Social and health issues are often so complex that one agency can't make a dent by itself. You need to team up with other organizations in the community to really be effective. You need to figure out which organizations have similar goals to yours--not necessarily the same goals--and identify ways you can work together.
Policy--Social marketing programs can do well in motivating individual behavior change, but that is difficult to sustain unless the environment they're in supports that change for the long run. Often, policy change is needed, and media advocacy programs can be an effective complement to a social marketing program.
Purse Strings--Most organizations that develop social marketing programs operate through funds provided by sources such as foundations, governmental grants or donations. This adds another dimension to the strategy development-namely, where will you get the money to create your program?
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eMarketing
Marketing has pretty much been around forever in one form or another. Since the day when humans first started trading whatever it was that they first traded, marketing was there. Marketing was the stories they used to convince other humans to trade. Humans have come a long way since then, (Well, we like to think we have) and marketing has too.
The methods of marketing have changed and improved, and we've become a lot more efficient at telling our stories and getting our marketing messages out there. eMarketing is the product of the meeting between modern communication technologies and the age-old marketing principles that humans have always applied.
That said, the specifics are reasonably complex and are best handled piece by piece. So we’ve decided to break it all down and tackle the parts one at a time. This week we’ll be looking at the "what" and "why" of eMarketing, outlining the benefits and pointing out how it differs from traditional marketing methods.
By the end of the series we're pretty sure you'll have everything you need to tell better marketing stories.
Very simply put, eMarketing or electronic marketing refers to the application of marketing principles and techniques via electronic media and more specifically the Internet. The terms eMarketing, Internet marketing and online marketing, are frequently interchanged, and can often be considered synonymous.
eMarketing is the process of marketing a brand using the Internet. It includes both direct response marketing and indirect marketing elements and uses a range of technologies to help connect businesses to their customers.
By such a definition, eMarketing encompasses all the activities a business conducts via the worldwide web with the aim of attracting new business, retaining current business and developing its brand identity.
Why is it important?
When implemented correctly, the return on investment (ROI) from eMarketing can far exceed that of traditional marketing strategies.
Whether you're a "bricks and mortar" business or a concern operating purely online, the Internet is a force that cannot be ignored. It can be a means to reach literally millions of people every year. It's at the forefront of a redefinition of way businesses interact with their customers.
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Global Marketing
A company that takes on a wider scope in their business coverage conquers the global market especially if it has established a competitive advantage in the industry. However, not everything works the same way as how business successfully operates in the domestic field.
Some companies fail in going global because of the false assumption that the approaches that work in their country goes true in the international aspect. So, these businesses embark on the same product, same marketing campaigns and even the brand names and packaging. Failure to consider the diversities and differences in culture and other factors may cause the breakdown of the business.
Having a standardized or uniform marketing strategy for both local or domestic and international market will only be effective if adequate market research is conducted. An international business must find out whether certain strategies for global marketing are also effective to the larger market.
Global marketing is not a breakthrough or something that is revolutionary; it is an evolutionary process. Not all companies can afford to become global but definitely all global or international companies started out as domestic-only businesses.
Evolution of Global Marketing
Global companies progress in their marketing plans in various phases. It starts out with domestic marketing. A business that promotes and advertises its products within national boundaries only competes with companies of similar marketing scope. The creation of products and services are intended for the home market and does not consider the possibility of making it available and beneficial to larger markets. Domestic marketers do not put emphasis on the market changes inthe global setting. Instead, they are more focused on how they can create a competitive advantage against other companies in the home market.
From the domestic marketing approach, a company starts exporting to the foreign market. This phase is called export marketing. Once exporting process is becoming a success, certain factors would push the company to expand and put up offices outside the country in order to facilitate a more convenient business setting. However, marketing mix decisions are made according to the various target markets of each country.
Companies go up the ladder at a multi-national setting and would want to take advantage of the economies of scale. Marketing research, development, production, and marketing strategies are conducted on regional levels but not across regions.
A company that is considered a global marketer sees the world as a one large market. Marketing decisions are made to be uniform across foreign branches or offices.
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Global Marketing Mix
As an organization advances from each level of marketing to become global in scope, there are four important marketing mixes that should be considered: product, price, placement, and promotion.
A global business is able to manufacture a single product or offer the same service to the global market with minimal adjustments of certain elements. Coca-Cola, for example, has uniform packaging in various countries. But a country can opt to use its native language on the bottle.
In the different markets, price is not constant and uniform. But the price changes are brought about by many factors such as cost of product development, cost of materials and delivery, and other factors that affect pricing.
Placement is the distribution of the product which greatly depends on the competition and the product’s position in the global market.
The aspect of marketing that entails adequate budget is promotion or product and service advertising. Companies take on integrated marketing to make cost-effective but effective advertising campaigns.
Advantages and Disadvantages of Global Marketing
Global marketing can be both beneficial and disadvantageous to the global companies. Beneficially, the expansion of the market worldwide is a huge plus. Because it is global, a business maintains consistency in brand image and name for global brand recognition. Moreover, marketing practices are uniform which contribute to a lower cost and expenses in marketing and advertising. Business relationships are also established in a more global aspect. Lastly,a company is able to benefit from the economies of scale in both production and distribution.
On the other hand, there are disadvantages with global marketing, too. But these are more of the differences of various aspects considering that the business is now global. Differences in the administrative procedures and product placement can occur. Customers have different and changeable preferences that lead to diversity in customer responses. However, these differences may be addressed by the many ways and techniquesa company can integrate.
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Case study
buyer behaviour - case study: influence of children on buyer behaviour
Research suggests that children are exerting more influence over family buying decisions. What are the implications of this for retailers, brands and marketers?
Children are an important part of the family buying process. But what roles do they play?
Marketing theory suggests five main roles in a family buying process:
- Initiator- Influencer- Decider- Buyer- User
Which roles do children play in addition to the obvious one – “the user”
Children certainly influence family buying decisions from cars to holidays. They are also the buyers of the future. Provide children with Penguin bars and McVitie's may be able to hold on to the adult due to brand awareness and brand loyalty formed at such an early age.
But how should businesses market to children? Are there conflicts with being seen to specifically target the child audience – can it alienate parents?
Products have to appeal to the conflicting agendas of child and parent, while fighting off increasing competition. A marketer of children’s foods was recently quoted as follows:
"Ten years ago children wouldn't have given a damn about cheese. It used to be just Dairylea, but now children's dairy products encompass everything from cheese to yogurts, and fromage frais. Our brands also face more intense competition than ever and it's not just from other chocolate biscuits - it's from products such as Dairylea Dunkers and Fruit Winders. These things didn't exist before."
Marketers also have to recognise that children are moving into new markets. Children as young as seven buy DVD's, and no teenage lifestyle is complete without a mobile phone. This has a knock-on effect. For example, the money children spend on mobile phone cards reduces the money they spend on snacks.
Marketers also need to be sensitive to the peculiarities of children-related markets. It may be tempting to use a daring marketing campaign to make a product stand out. But a poorly thought-through campaign could result in the product and/or brand being attacked by ethical campaigners, outraged mothers, educationalists, health and safety organisations and others.
A good example of how things can go wrong is Sunny Delight. Sunny Delight enjoyed boom sales after its initial launch. However, the drink's popularity crashed when the media realised
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that it was sold from chiller cabinets purely as a marketing ploy to make it seem fresh and, therefore, healthy. The actual product formulation was far from healthy.
Retailers face a challenge to display products in a way that attracts children. Promotional displays have to be able to handle child usage (or abuse) and capture a child’s imagination and attention.Disney has a reputation as being particularly good at interactive promotional marketing. Many children also prefer Woolworth's to supermarkets because of features such as pick 'n' mix sweets. The Early Learning Centre succeeds by creating a playground which allows children to play with toys rather than leaving them wrapped in plastic.
case study: managing product portfolios- nappies
Falling birth rates are putting pressure on nappy brands - how can brand manufacturers respond?
Introduction
Pampers and Huggies - the two biggest brands in the UK nappy market - are trying to increase sales at a time when the UK's birth rate is declining.
The demand for nappies is a "derived demand" - it derives from the needs of parents with children aged from birth up to three. A changes in the number of children requiring nappies is, therefore, potentially significant.
Pampers (owned by Proctor and Gamble “P&G”) and Huggies (owned by Kimberley-Clark) dominate the UK nappy market.
According to Mintel, Pampers and Huggies together accounted for 90 per cent of the UK market by value in 2001.
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Falling birth rates
The number of children aged four and under in the UK fell by 5.1 per cent between 1997 and 2001. Over the same period, sales of disposable nappy sales fell by 19 per cent, from £457m to £370m.
The UK birth rate is predicted to fall by a further 3.5 per cent in 2002, meaning that 23,000 fewer babies are expected to be born in 2002 than in 2001. What effect does this have on the product strategy for these two market leaders?
Brands respond with product innovation and brand extensions
One response to falling demand has been a significant amount of new product innovation and product re-launches.
The Pampers and Huggies brands are also being extended beyond nappies into all aspects of baby care.
P&G recently announced a re-launch of its Pampers Baby Dry range. The re-launch was backed by a £5m advertising and marketing campaign in an effort to put pressure on Huggies' Freedoms nappy range. This initiative was announced just a month after the £6.8m re-launch of Huggies' parent and baby club.
In August 2002, P&G launched a Pampers baby wipes range, called Kandoo. This is marketed as a transitional tool for three-to-five year olds as they progress from nappies to the toilet.
The Pampers brand has also been extended into:
• Disposable bibs called Bibsters• Packaged face-and-hand wipes called Wipesters, and• Sunscreen lotions on a wipe – called Sunnies
P&G has also agreed a licensing deal to make Pampers Clean 'n' Play, a cleaning fluid that can be sprayed and has licensed the Pampers brand to a clothing company to make baby pyjamas and blankets.
How successful is this brand extension strategy with customers? Do product re-launches and extensions mean anything to customers? Are they confused by the proliferation of products carrying a familiar brand name so strongly associated with one product – disposable nappies?
One baby product buyer at a leading supermarket chain dismisses the Pampers Baby Dry re-launch, questioning how adding "new" in front of the brand name will drive sales. He says:
"With increasing competition, manufacturers are tweaking their existing products to create some sort of interest, in a market that is falling in both value and volume. Such revamps mean little to shoppers and only end up confusing them."
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Advertising executives feel that nappy brands may expose themselves to ridicule if they are over-extended:
"The fear is that Pampers and Huggies could soon become commoditised and hence devalued. Consumers today can see when manufacturers are trying to milk brands, and they could lose their credibility. There is only so much that you can do with a nappy brand - you can improve on the absorbency, breathability, feel and fit. I cannot see any nappy brand being extended into baby food. Even extending it into clothing may not work, because clothes are all about aspirations."
Brands must also be careful not to extend into products that have the potential to seriously damage brand value.
One example is the launch in 1999 of Pampers Care Mats. The Care Mats were disposable mats on which infants could be placed while changing their nappies or to protect toddlers against bed-wetting.Less than six months after the launch, P&G was forced to label the mats with a safety warning after fears were raised that they could suffocate young babies.
Skeptics feel that new product and variant launches in the nappy sector are often simply a means for companies to gain a temporary edge over rivals.
Whether all the new product development and brand re-launching will help to expand the sector in the long term is open to question.
case study - examples of re-branding
Introduction
The following mini-cases provide examples of businesses that have taken a decision to re-brand an existing product in an attempt to boost sales or reposition the brand in the eyes of the customer:
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Sunny Delight re-launches with SClub
Procter & Gamble (P&G) has signed up pop group SClub (formerly S Club 7) for a £2m summer promotion for fruit drink brand Sunny Delight. The partnership with SClub is the cornerstone of a £12m Sunny Delight re-launch in 2002. It is the first celebrity tie-up for the brand.
Buyers who save eight labels from Sunny Delight products will be able to send off for an exclusive SClub CD. The CD includes a new track called Hey Kitty, taken from the next SClub album, and also features interviews with the band recorded for Sunny Delight on the set of the SClub television programme.
The promotion will be supported by a TV advertising campaign also featuring SClub, and an SMS text messaging campaign.
Why has P&G needed to re-launch Sunny Delight? P&G were required to reformulate Sunny Delight after a 35 per cent drop in sales following comments from the Food Commission over the effect of the brand on children's health and criticism that the product was packaged to look like a fruit juice.
The new Sunny Delight will be available in four sugar-free flavours and its packaging has been redesigned.
Lego axes sub-brands by re-branding its entire product range
Lego is re-branding its entire product range and introducing a new slogan to simplify what the Lego brand stands for. Lego says that in the past, consumers have been confused by the different sub-brands, such as Lego Technic, Duplo and Primo, and not realised that they were all part of the Lego group.
From the start of 2003 all products will be grouped under four new categories:
• Explore• Make & Create• Stories & Action• Next
Each of these new categories will be represented by their own set of colours.
The new product structure replaces the previous branding structure which largely categorised Lego products by target age range.
At the same time, a new slogan called "Play on", will come into effect, replacing "Just Imagine". It is meant to represent the five values behind Lego: creativity, imagination, learning, fun and quality.
Lego also plans to open a chain of branded retail stores, beginning with one in Cologne and a second in Milton Keynes.
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AA re-brands to emphasise the width of its product range
The AA (formerly the Automobile Association) has announced that it intends to spend £22million on re-branding aimed at emphasising the width of its product range.
In an effort to be seen as more than just an emergency breakdown service, the AA wants to re-position itself as a multi-product business.
As part of the re-launch, a £12m advertising campaign will using the strap line"Just ask". The advertising campaign will explain to consumers that the AA provides 160 different products and services, including insurance, car servicing, maps and travel books.
The new “Just Ask” strap line will be carried on all the AA's communication, including its web site, membership cards and direct mail.
The positioning will encourage the cross-selling of AA products, and the company's call centres have been given technology to enable them to sell and answer customer queries on all AA products.
The AA’s previous strap line was "To our members we're the fourth emergency service."
Coca-Cola to re-brand 'diet' fizzy drinks
Coca-Cola in the UK is poised to change the brand names of Diet Fanta and Diet Dr Pepper to Fanta Light and Dr Pepper Light.
The company is also launching a Fanta Icy Lemon Light variant in the UK before the end of the year, which observers believe could be the springboard for the change.
The re-branding is designed to bring Coca-Cola’s UK product range in line with branding across the rest of Europe. However, Diet Coke is expected to retain its name as significant money has been invested in establishing the brand since its UK launch in 1983.
Coca-Cola spent more than £4m on Diet Coke in the year to June 2002 (Source: Nielsen Media Research). The brand is called Coca-Cola Light in France, Belgium and other European countries. Coca-Cola brands Lilt and Sprite already have "light"-branded variants in the UK.
A sales promotion was launched for the Diet Coke brand in August featuring an instant-win, top prize of £100,000. All Diet Coke bottles are coloured silver for the campaign and it has been supported with outdoor and press advertising.
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case study: growth from new product development - the household cleaning market
New product development is the key to achieving growth in the household cleaning market
Introduction
A recent survey by Taylor Nelson Sofres (TNS) Superpanel (a leading market researcher) on sales of household cleaning products in the UK suggests that the sector has expanded by seven per cent since August 2001.
In the 12 months to August 2002, more than £233m was spent on household cleaning products in the UK.
TNS found that growth has largely been driven by new product developments and innovations in the market, with new products such as single-use, multi-purpose cleaning wipes having a significant impact.
Market analysis
What are the leading brands and products in the UIK household cleaning market?
Flash (owned by Proctor and Gamble) remains the most popular cleaning product in the UK, with a market share of 23 per cent.
Flash is followed by Cif (owned by Unilever) with a 15 per cent market share. Third is Mr Muscle (owned by SC Johnson) with ten per cent.
However, since July 2000, the top-three brands have all lost market share to competitors such as Dettox and Domestos.
Over a two-year period from July 2000 to July 2002, Dettox's sales grew by 35 per cent and Domestos' by 43 per cent - significantly outperforming the overall growth of the market.
Brands dominate own-label products
The household cleaning market is dominated by branded products which together account for 80 per cent of UK sales.
However, own-label brands (owned by supermarkets such as Tesco, Sainsbury's and Asda) are also popular, providing basic cleaning products at more affordable prices.
Research into market pricing indicates that the average price of a branded cleaning product is £1.32 - almost 40 per cent more than own-label products, which on average cost just 97p.
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While the price of cleaning products has remained relatively stable in recent years, leading brands such as Flash and Domestos have actually become cheaper. TNS Superpanel believes that this decrease may reflect an attempt to reduce the price gap between branded and own-label products, creating a more competitive market as a greater range of products becomes available.
Product segments
Traditional cleaning products such as creams, sprays and liquids continue to be the most popular cleaners, particularly with certain customer segments such as the over-65s and lower-income households.
However, new cleaning wipes are increasingly popular. In terms of demographic segmentation, cleaning wipes are most commonly used by 27 to 34-year-olds and are also popular with households with one or two children. This may be because in such households, adults have less time available to spend on cleaning.
Although the introduction of household cleaning wipes has resulted in small declines in the market shares of cream cleaners, powders and mousses, wipes are generally bought as part of a repertoire of cleaning products. About 70 per cent of buyers of cleaning wipes also buy liquids and sprays.
As a quick and easy cleaning option, consumers are tending to use wipes in addition, rather than an alternative, to other cleaning products.
Since July 2000, Cif, Dettox, Windolene and Pledge have all introduced wipes to their product portfolios. Cleaning wipes now account for 17 per cent of the household cleaning market by value and sales grew by 188 per cent in the two years to July 2002.
Flash remains the leading brand for cleaning wipes, but has experienced a significant decline in market share - from 76 per cent in the 12 months to July 2000, to 28 per cent in the 12 months to July 2002 as new brands have penetrated the market. Flash's range of anti-bacterial wipes have shown a similar decline in market share (from 80 per cent share in 2000 to 47 per cent in 2002).
Although Flash and Domestos were previously the two biggest players in the cleaning wipes market, the influx of new products has resulted in a significant loss of market share for both of these brands.
Manufacturers, then, have begun to recognise the need for choice and diversity in the market by introducing new and innovative products. Time is at a premium for many customers, because of increasingly demanding lifestyles, and so interest in products which are less labour-intensive and reduce cleaning times is high.
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marketing strategies - case study: uk snack food market
Changing lifestyles create growth opportunities in the snack food market
Introduction
The decline of formal lunchtime eating is creating new market segments and strong growth in the snack food market.
Research suggests that more of us eat lunch at our desks and spend all night playing computer games. The snack market is enjoying strong growth due to a range of new products that are positioned to exploit these changing lifestyles.
It has been apparent for some years that increasing time pressures on consumers have been the main force behind a shift away from traditional mealtimes. Meal consumption is now fragmented into:
• More frequent and smaller "meals" (the term “grazing” is often used to describe this behaviour)• Taken in more diverse locations
Datamonitor's new report, “Hand-held Snacks”, examines the UK hand-held savoury snacks sector. It reveals that "on-the-go" eating and snacking are on the increase.
On-the-go consumption can be split into three key categories:
• On-the-move• Multitasking (for example, eating while working), and• Leisure
Hand-held snacks are well suited for consumption in all three situations and there is high consumer demand. As more consumers take to eating while engaged in other activities, such as office work, playing computer games or commuting, hand-held snacks are ideally poised to exploit this trend.
Datamonitor's research finds that consumer choice in the hand-held snack sector has increased, with a proliferation of flavours and variety, and more substantial snacks.
Segmentation
The report examines product launches across six segments of retail hand-held snacks: filled bread; pastry-wrapped; unwrapped; pizza snacks; snack kits and others.
The filled bread segment has experienced a very high level of new product development over the past 18 months, as sandwich-type snacks continue to enjoy high popularity. The main innovation trends are exotic alternatives and "big eat" options.
Exotic alternatives to traditional sandwiches - wraps, ciabattas, pittas, and fold-overs - have become increasingly popular in recent years. Traditional sliced bread is making way for more
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"exciting" breads, in order to raise the profile of the sandwich and appeal to consumers' adventurous tastes. Many of these new breads are stronger, both structurally and in flavour, than sliced bread and allow for more filling and the combination of unusual ingredients.
There has been strong innovation in more substantial filled bread products, aimed at people with heartier appetites. Many of these "big eat" sandwiches are aimed at the male population, which has a higher level of sandwich consumption than females. Such products include deep-fill sandwiches and thick-cut sandwiches, such as Sainsbury's "The Big One", which makes a bold claim to be "the UK's biggest pre-packed supermarket sandwich". Many big eat innovations contain bacon, egg, sausage or other meats, and some have specific lunch themes.
Pastry-wrapped snacks witnessed the second highest levels of innovation, according to the report. Ginsters have been prominent in developing the pastry slice, and other manufacturers in the UK have been attempting to benefit from its success.
Unwrapped snacks, usually meat or cheese sticks such as Peperami, and "other" snacks, which fit into none of the other sectors and include products such as scotch eggs and filled potato skins, have also diversified (it is now possible to buy scotch egg bars among other things).
Emerging trend for healthy eating
A significant emerging trend in the pizza snack market has been the introduction of "low-fat" and "healthier" versions. These snacks appeal both to parents concerned about children's health and to weight-conscious adults.
Datamonitor's analysis of new product trends finds that snack kits have changed comparatively little recently. However, as an emerging sector it is dynamic and the fast growth of certain brands, such as Kraft's Lunchables, demonstrates its growth potential. Snack kit trends have focused on two main product types - lunchbox packs for children and dipping products.
The success of Lunchables can be attributed to the high interactivity of the product for its mainly young consumers. Such interaction allows children to be responsible for their own meal, while parents feel satisfied that their children are eating nutritious food. The fact that packs include games or puzzles ensures that the concept is a firm favourite with children.
Dipping is the other main trend in the snack kit sector, with a variety of products available. The element of fun has been central to the popularity of the dipping snacks, especially among children. The idea of dipping food and mixing flavours is more interesting than a simple home-made sandwich or a piece of fruit.
Analysis of hand-held snack product development has shown this sector to be very dynamic and as more food manufacturers enter the market it is no longer simply enough to launch "convenient savoury snacks". Consumers demand additional benefits - such as health and interesting tastes and textures - beyond fulfilling basic nutritional needs. By offering these extra benefits manufacturers will be able to expand the appeal of hand-held snacks to a broader consumer base.
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market segmentation - case study - overseas holidays
Introduction
The UK leisure travel industry is a large, highly fragmented and competitive market. In total, UK consumers take almost 110 million holiday trips each year. Of these, some 36 million trips are overseas (“Overseas Holidays”) – a market worth £16 billion.
Segmenting the market
The Overseas Holiday market can be segmented in several ways:
Transportation
The key distinction being between holidays involving an element of air travel (“Air-inclusive Tours” or “AIT”) and holidays involving other means of transport (Non-AIT”). The most significant type of Non-AIT transportation is “Self-Drive”, particularly to France, Italy and Ireland.
Destination
The most popular overseas destinations for UK holiday makers are Spain, France, North America, and Greece. By definition, many of these destinations require air travel as part of the holiday experience, with self-drive only being a practical option for certain Western and Northern European destinations. However, a wide range of holiday experience is possible in any of the above countries.
Accommodation
Holiday accommodation varies enormously. It can be hotel-based (with a range of catering options), in apartments, villas, holiday home properties, mobile homes, tents, boats and other categories.
Flexibility and Customer Management
Customers may prefer holidays with a high degree of independence and flexibility, with little if any involvement during the holiday from the tour operator. At the other end of the spectrum, many holidays are based around an escorted, fixed itinerary where the tour operator controls and manages most of the holiday experience.
Activity
A number of holidays are designed around offering a particular type of activity such as scuba diving, walking or skiing. Such holidays can also offer expert tuition as part of the package or alternatively be designed for well-experienced participants.
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Duration
Most holidays tend to be taken for either 7 or 14 nights. However, according to the International Passenger Survey , the fastest growing segment by holiday duration is for holidays taken for between one and three nights i.e. weekend and short break holidays.
Price and Quality
As in any consumer market, operators position holiday products in a range of prices from unbranded, discounted holidays priced at less than £99 to luxury, all-inclusive and highly bespoke itinerary holidays in excess of £10,000 per passenger.
The majority of Overseas Holidays taken by UK consumers involve taking either a scheduled or charter flight to their chosen destination and so fall into the AIT category. Within the broad AIT classification, there will be a plethora of different destinations, accommodation types as well as varying degrees of customer management. All of this translates into a continuum of holidays covering a broad range of price points.
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PROBABLE QUESTION DEVELOPMENT BANK FOR MBA
MARKETING MANAGEMNT
SHORT NOTES
1. What is market and marketing?2. What do you mean by integrated marketing concept?3. How do marketer’s assist the customers during research and valuation stage of their purchase
decision process?4. How is marketing research relevant to a mgmt educational institute?5. What is direct marketing?6. What is promotional mix?7. Suggest various alternatives channels for marketing a combine harvester by a medium firm.8. Differentiate consumerism and consumerist culture.9. Write briefly on the ideal design of marketing information system?10. Define Marketing Task?11. Define Packaging?12. Define Task force?13. Explain differentiation and positioning?14. Define pricing strategy?15. Describe Marketing communication process.16. What do you mean by physical distribution?17. which is the right channel for any company?18. Define objectives of pricing.19. Define Marketing mix?20. What are the purposes of labeling?21. What are the functions performed by retailer?22. What is meant by product mix?23. what is skimming strategy?24. Describe constituents of physical distribution system.25. Feature of Good Packaging?26. Define Targeting?27. What is Selling Concept?28. What factors should be kept in mind while branding a product?29. Define modern concept of marketing?30. Described components of marketing information system?31. What is product mix?32. What do you mean by Channel Design?33. What are the functions of wholesaler?34. Featuers of good brand name?35. Define physical distribution?36. What is segmentation?
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LONG NOTES
1. what was the role played by different people around you influencing the first time purchase of the following?
(a) Two Wheeler(b) winter jacket(c) watch(d) book(fiction)
2. What do u mean by consumer adoption process?3. Exp.PLC of a high technology product like mobile phone.4. Write a note on nature and types of marketing channels.5. What are the factors affecting pricing decisions?6. What do you mean by new product development? Explain the stages.7. Define MM? what are the important functions to be performed by marketing manager in the
era of globalization?8. Describe in detail marketing system and marketing environment.9. Write down the following.
(a) Concept and component of marketing information system(b) buying process.
10. What are the important factors influencing promotion decisions?11. Write down the following :
(a) Channel design and channel mgmt decisions.(b) Nature and type of marketing channels.
12. Describe the following:13. Market segmentation and targeting.14. Method and factor affecting pricing Decisions.
15. Outline the major tasks a marketing manager has to perform in a business organization. Explain the steps involved in marketing planning
16. Highlight the important elements of the marketing environment, Which an 17. organization should monitor.explain with e.g18. Highlight the purpose of segmentation. Describe the various basis of segmentation you would
recommend to segment Indian market.19. Outline the marketing process. Describe the various components of marketing environment in
India.20. Describe the various stages of product life cycle. Outline the various marketing strategies
associated with each product Life cycle Stage.21. What are the objectives of pricing? Discuss the various alternative pricing stratigies.22. Describe the major decisions associated with sales force mgmt.23. Describe the mktg communication process outline the various elements of the promotion mix24. Write note on :
(a) New product Development (b) Factor influencing consumer behaviour
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