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Marketing is a social process by which individuals and groups obtain what they need and want
through creating, offering and freely exchanging products and services of value with others.
Marketing Strategy
* Development of Product / Service
* Stimulation of Demand
* Determination of Price
* Make up of Channels to reach Customers
Prospect is a person who has a set of needs and wants which can be met by the offer of the
Marketer.
Needs represents the basic requirement of human. They represent lack of a thing, an
inadequacy or a gap. One has needs like hunger, thirst, shelter, friendship, status etc
Wants are description of tangible and intangible products and services, which satisfy human
needs. A thirsty person wants tap water or mineral water or soft drink.
Demand is willingness to buy, supported by ability to pay. Buying intentions and disposable
income together help determine demand.
Market is a place where sellers and buyers meet and exchange products or services for money
and mutual benefit.
Competition denotes the existence of actual and potential rival companies, which manufacture
perfect or close substitute product offerings to attract customers.
Exchange is process of give and take -transacting. Transactions are negotiated. Negotiation is a
process of sorting out differences and arriving acceptable to both parties.
Goals of Marketing
1. Profitability * Sales Revenue Maximization * Cost Minimization
2. Growth * Sales Growth Maximization * Product Development * Market Penetration * Market
Development
* Diversification
3. Market Standing * Innovation * Market Leadership * Customer Satisfaction
4. Image * Brand Image * Company Image
Marketing Trends
* Opening of Indian Economy to Foreign Companies
Marketing Issues
1. Changing Consumption Patterns
2. Changing Consumer Psychographics
3. Markets in Transition(conversion of markets from small to big markets)
4. Market Fragmentation & Saturation
5. Inter-category Competition
6. Value Conscious Consumption
7. Offering Value for Money Proposition
8. Branding / De branding & Customization
1. Reengineering :
2. Bench Marking :
4. Out-sourcing :
5. E-commerce
6. Alliances
To : Partnership teams
7. Supply Chain :
8. Marketing
From : Transaction Marketing, long range commercial relationship with focus on satisfaction
To : Relationship Marketing, long range socio-commercial relationship with focus on delight and
welfare
9. Markets
Marketers in Action
Relationship Marketing
The reasons for Organization Existence is
1. To generate New Customers
2. Retain Existing Customers
• Relationship Marketing
Objectives are :
Relationships built up with every one in Value Chain - Consumers, Suppliers and Vendors
results in Delivering Customer Value and Satisfaction.
CRM Definition - Managing Relationships with Channel Partners, helping them reach out the
End Consumer.
• Demand Management
Marketing is primarily Demand Management. To meet the objectives of the company
marketers have to influence three aspects of demand.
*Nature of Demand*Level of Demand *Timing of Demand
Nature of Demand
1. Latent Demand
Consumers may have a hidden desire to possess a product that satisfies a need, which cannot be
satisfied with the existing products.
Examples : low priced, fuel-efficient cars, painless surgery, overnight complexion changing skin
creams
2. Unwholesome Demand
Consumers are not hundred percent, health and social welfare oriented.
They consume alcohol, smoke cigarettes.
De-marketing campaigns are necessary to reduce the consumption.
Social Marketing is to be employed to educate people on important social issues and create right
social citizenship.
Levels of Demand
1. Negative Demand
When consumers develop negative attitudes and beliefs about a product, the demand will be
negative.
Examples : Family Planning, Vaccinations, Literacy Campaigns, Tooth paste
This requires Conversion Marketing.
2. No Demand
There will be no demand for a product when people cannot afford to buy the product or when
people are not aware of or convinced about product benefits.
Examples : Products like Digital TV, Fax machines, Air Conditioners have no demand in rural areas.
They cannot afford such products.
Company need to do Stimulational Marketing or Developmental Marketing.
3. Full Demand
Organizations face the situation of full or overfull demand.
Examples : Cinema Halls on the day of release of a new movie, Entertainment Parks on Sundays,
Leading Doctors, Lawyers, MBA programs of IIMs, Government Hospitals.
Use Queuing / Reservation for cope the demand without dissatisfying the customer.
Timing of Demand
1. Regular Demand
Even, steady, or regular demand for a product. Products like toiletries, cosmetics, beverages have
steady demand. They do not vary significantly in different seasons. Need to adopt aggressive
marketing strategies, heavy promotions, intensive distribution, and product development.
2. Irregular Demand
Some products may have demand, which varies seasonally. Demand for fans and A/Cs are
seasonal. In such a cases, off-season discounts are offered to produce regular demand. These
efforts are also called Synchro-Marketing. It aims at matching supply and demand according to
variations over time.
Evolution of Marketing
In the evolutionary stages of marketing one finds the transformation from
1. Production Concept
The emphasis is on production of goods and services and distributing them at lower price. This is
based on “Supply creates its own demand”. The high volume - low price philosophy succeeds when,
*Consumers are interested in product availability, as there was no supply
so far
*Consumers are looking for low-priced products since they cannot afford to buy the existing
products.
Example : Low-priced Nirma Detergent Powder for middle and low income group expanded the
market and high volume of production became essential.
2. Product Concept
This centers around Quality.
Quality Sells - make unique products and lead the market.
This will yield results, when
*Consumers are interested in quality and features, like buying the best
*Consumers can afford high prices and are willing to pay for quality.
Product failures takes place when products are designed, without real understanding of the needs.
The undue concentration on the product rather than the need is referred to as “Marketing Myopia”
Case of Promise Tooti-Frooti flavored Toothpaste Just-for-kids. Soaps and cosmetics was available
for kids but not toothpaste. Segment is very small for kids less than 2%. Toothpaste is a family
product. Tooti-frooti flavor may make children eat it than use it for brushing teeth.
Quality or distinctiveness are essential, but are to be related to the needs of the market.
3. Selling Concept
Here focus is on motivation. People are inertia by nature; they tend to postpone things. To make
them active, motivation is needed. Here it is one sided, helping the seller. It is unmindful of buyer’s
needs. It advocates the use of persuasion and pressure to make people buy. As such, it may create
post-purchase dissatisfaction among buyers.
Eureka Forbes promoted its vacuum cleaners by door-to-door selling (direct marketing). The sales
person demonstrated of how it works and sold them. After some time most of the housewives
found it less useful for floor cleaning which is a daily routine and slowly it found a place in store
room.
4. Marketing Concept
This embraces all activities of the enterprise and focuses on matching the “Offer” with “Needs” to
secure the desired satisfaction among customers and “Targeted Profits” to the Organization.
Market Focus : Market segment is clearly identified as the low income segment comprising hard
working people, who are price sensitive
Consumer Orientation : HLL has identified consumer needs like health consciousness and
achievement orientation.
Coordinated Marketing : The need to deliver customer satisfaction by each employee and activity
is an important of marketing concept. Consumer is central, and all work together to sense, serve
and satisfy the customer. Small viable units is the answer for this.
5. Societal Concept
This is broadened version of marketing concept. Besides customer, it also included society in its
focus. Consumer satisfaction with welfare of society is the concern of marketers. These two aspects
always conflict many a time.
Customers prefer harmful products like cigarettes and alcohol. Marketers should de-market to
promote welfare. Customers prefer “use and throw” products. But they cause environmental
pollution.
How to reconcile these opposing view points? A marketer strikes a balance between them
depending upon the situation and one’s own ethical values.
Consumer Buying Behavior
Consumer Behaviour
The basic model applicable to all Consumers
Socio-cultural factors
Culture : Buying decisions which are influenced by social customs, traditions, beliefs. Social
norms influence directly individuals.
Groups : Humans, being social animals form groups and develop behaviours.
Primary Group > Family, Friends, Neighbours
Secondary Group > Offices, Self Help, Political (Opinion Groups)
Family : Important Consumer Buying Organization. Decision maker is head of the family.
Role & Status : Every person is a member of more than one group or organization. Role refers
to the behaviour expected of the individual in the group.
Status refers to the place given to the person by the group because of his position and
achievements.
Sociability : Exposure to other people and the interactions they have.
Technological Factors
New / Innovative Technology has an impact on the occupations and life styles of people.
Economic Factors
Poverty Levels, Income Levels,
Per capita consumption
Political Factors
Development Plans, Employment Program,
IT Policy
Stimuli
Internal : Originates from self
* feel need for food (natural phenomena)
* for elegant dressing on observing friends / other around you (social comparison)
External : By Market Offer & Environment which induce a consumer to think about purchasing a
product
2. Occupation
The goods and services bought by the individual is influenced by the occupation
3. Economic Situation
The purchasing power of an individual is the prime consideration and income sensitivity of goods
and services will result in viable market offer in the form of low priced pack sizes, installment
payments / discounts etc
4. Life-style
It is person’s pattern of living determined by activities, interests and opinions of people.
Activities - work, hobbies, social events
Interests - food, fashion, family, recreation
Opinions - about self, society, government, business
Perception : is the process by which people select, organize and interpret information to form
meaningful picture of the object / product.
Selection Attention - people pay attention to things that they consider of value
Selection Distortion - people interpret information to support what they already believe
Selection Retention - people remember what, in their view, is supportive to the beliefs and
attitudes
Motivation
An inner urge that moves or prompts an action.
Maslow’s Need Hierarchy Theory of Motivation.
Basic, Productivity, Social, Esteem, Self Actualization Needs
• Effective Marketing Decisions are based on information in market place rather than intuitions
or hunches.
• Marketing Intelligence
Market Response*
DSS - a coordinated collection of data, systems, tools,and techniques with necessary software &
computer hardware
Market Research
• Market Research is defined as the “Objective and Systematic Process” of obtaining,
analyzing and reporting of data (or information) for decision making in marketing.
• “Objective and Systematic Process” is that market research which should not be
influenced by personal views and considerations.
The first step is to identify the marketing problem or opportunity accurately, and define the
objectives of marketing research.
“Research Brief” gives the background information about the problem and how the findings of
marketing research will be useful for making decisions to solve the problem. Normally through this
there is an agreement between the Marketing Manager and the Researcher about the Problem and
the Research Objectives.
• 1. Information Type
Prepare a list of information required from Research Objectives.
For example one of the research objectives is to obtain Competitors Information, the list should
include : List of Competitors,
Their Market Share, Whether they are Local, National or MNC’s, Whether they will be any new
competitors in future,
Major Competitors strength, weaknesses, objectives, marketing strategies, pricing policies and
prices.
• 2. Sources of Data
Secondary Data consists of information that exists somewhere and was collected earlier for
some purpose. Its advantages are ready availability and at low cost. Its disadvantages are that data
may be outdated, inaccurate or incomplete.
Commercial Data are the marketing information offered by some market research organizations
(referred as syndicated research) to select clients on payments basis.
(a) Observational - people and their behaviour are observed and the information is recorded,
without asking questions.
(b) Exploratory - when the problem is not clearly defined or little information is available about
the problem, exploratory research methods such as focus groups and indepth-interviews are used
to gain insight into the problem
(c) Survey - descriptive study (ie describing the way the things are) or Survey Method is used by
interviewing or asking questions to people who are believed to possess desired information. It
measures magnitude of people’s knowledge, attitudes and buying behaviour.
(d) Experimental - purpose of experimental research is to measure cause and effect relationship
by setting up a controlled situation.
The primary data collection method is through Survey Research - Awareness, Attitudes and
Buying Behaviour of Customers.
In Survey Method Four Different Possibilities of Data Collection takes place
*Structured and Direct Interview
*Unstructured and Direct Interviews
*Structured and Indirect form of Interviews
*Unstructured and Indirect form of Interviews
“Delphi Technique”
This gets repeated 3 to 4 Rounds until Consensus Opinion is reached
Used to get answers to difficult problems of forecasting future trends on external environmental
factors such as Economic, Technological and Political. Selection of Experts is very Important.
*Unstructured and Indirect form of Interviews
“Focus Group Interview”
Group of 6 to 10 Invitees spend few hours with a skilled Moderator to discuss a given Problem
Meeting held in Pleasant Surroundings
Discussion held in Relaxed and Informal Manner
Skilled Moderator Focuses on Problem and leads Discussion
Discussion recorded through Note Taking - Audio – Video.
Recordings are examined subsequently to Understand Attitudes, Opinions, and Buying Behaviour
of Present and Potential Customers.
Obtain Preliminary Information (Exploratory) before undertaking a large scale market survey
For generating Hypothesis
Examining New Product Concepts
Generating Ideas for Improving Existing Products
4. Sampling Plan
Sample is a Part of Population (or Universe) which is selected to obtain the Necessary
Information.
A Universe consists of all the items (or objects) under consideration in a research project, and
depends on the research objective.
Researcher decides on how many people (firms) should be selected from the population for
survey. Use of mathematical formulas in determining the Sample Size.
The decision on how study objects are selected. Good Sampling Scheme / Procedure
characteristics are :
*It should be truly representative sample
*It should result in small sampling error
*It should consider the cost and time available for research
*It should enable results of the sample study to be applicable for the population with a reasonable
level of confidence
All study Objects (members) of population have equal chance of selection in the sample
Population is segmented into several homogeneous groups (or stratas) and then a sample is
selected from each group at random
Large population is divided into small clusters (or geographical areas). Then randomly
selection of a sample of few areas (or clusters) is done and again a few members from each area
are chosen at random or census conducted.
4. Systematic Sampling
First, study object is selected randomly and then remaining units (or Objects) are selected at
a fixed interval, which is calculated by formula : Population divided by Sample Size
Non-probability Sampling
1. Convenience Sampling
Sample is selected based on convenience of location or cooperation of study objects
2. Judgement Sampling
Based on past studies (or experience), the researcher uses judgement in selecting a sample
3. Quota Sampling
Based on prior knowledge of population, the researcher first defines categories or groups, and then
interviews a fixed number (or quota) of people in each category, based on convenience or
judgement.
Methods of Contact
1. Personal Interviews - most widely used when the sample size is relatively small. This is most
expensive, time consuming, needs more planning and supervision and is also is subject to
interviewer’s biases.
2. Telephone Interviews - useful if interviews are short and not too personal.
It is quicker and response rate is high and expenses are lower than personal interviews but gaining
access to respondents is bit difficult.
3. Mail Surveys
Wording and structure of collecting data is important because contact is impersonal and replies can
be ambiguous or omitted. Problem is low response rate but low in cost.
3. Executive Summary
6. Research Methodology
9. Appendix 10.Bibliography
Consumer vs Industrial Market Research
1. Sources of Data
Con More reliance on primary data
Indl More reliance on secondary data
2. Research Method
Con Survey - Observational / Experimental
Indl Survey - Exploratory - Expert Opinion
3. Researcher
Con General Orientation
Indl Technical Orientation
4. Sample Size
Con Large sample due to large universe and individual / house hold buyers are geographically
dispersed
Indl Small sample due to small universe(or Population) and concentration of buyers
5. Respondents
Con Simple as individuals or households users are generally the buyers
Indl More difficult, as buying decisions are made by several members of buying committee and
not purchase executives only
6. Respondents cooperation / accessibility
Con Less difficult to obtain data, accessibility is easy
Indl More difficult due to time constraint and accessibility is limited to working time
Market Segmentation, Targeting & Positioning
Selecting and attracting markets involves three key decisions
Segmenting, Targeting and Positioning
àSegmentation is the process of dividing or categorizing market into different groups based on
one or more variables
àTargeting is selecting the market segments, which can be served efficiently and profitably. It
is deciding on market coverage strategies.
àPositioning is a market attraction strategy, which involves placing the product or brand in the
minds of the customers in the target market.
The various steps involved in the market coverage and attraction process are:
Decision : * Segmentation
Action :
Decision : * Targeting
Action :
Decision : * Positioning
Action :
Segmentation
Segmentation is a process of dividing a heterogeneous market into homogeneous sub-units.
The division is based on the premise that different people have different preferences.
Degrees of Segmentation
If Segmentation is considered as a process with two polar points from zero to complete, four
distinct segmentation approaches are identifiable
Marketing Evolving
Mass Marketing
* Product Focus * Anonymous * Few Campaigns * Wide Reach * Little or No
Research * Short Term
Segment Marketing
* Group Focussed * General Category Profiles * More Campaigns * Smaller Reach *
Based on Segment Analysis of Demographics * Short Term
Niche Marketing
A niche is a very small group with a distinctive set of traits, who seek a special combination of
benefits. Niche Marketing identifies special sub-groups within larger segments and offers different
products and services.
Relationship Marketing
* Customer-Focussed * Targeted to Individuals * Many Campaigns * Discreet Reach * Based
on Detailed Customer Behavior and Profiles * Long Term
Basis of Segmentation
There is no one way of Segmenting the Market. A Marketer may look for one or more variables
àGeographic
àDemographic
àPsychographic
àBehavioral
1. Geographic Segmentation
2. Demographic Segmentation
Age Segment :
Children Age 6 to 12 years Products : Toothpaste, Confectionery, Sports Cycle, Story Books,
Magazines
Typical Brands : Peposodent, Nutrine, Britannia, Parle, BSA, Hero, Amar Chitra Katha
Age Segment :
Teens Age 13 to 19 years Products : Toothpaste, Face Cream, Shoes, Bikes, Soft Drinks
Typical Brands : Close-up, Fair & Lovely, Nike, Hero Honda, Coke, Pepsi, Thumps up
Age Segment :
Age Segment :
e. Income : Income level influences the purchase decisions relating to quantity and quality.
f. Occupation : Needs vary based on occupation.
Doctor needs Medicines, Syringes, Needles, Stethoscope, BP Kit etc.Student needs Stationery
items.
g. Education : This provides knowledge and skills. It improves the thinking process and
facilitates understanding of issues more clearly and at higher plane.
h. Religion : It provides a code of life and links the visible real world, with the invisible world of
death. Each prescribes the way to worship god, through lighted lamps, incense sticks, camphor,
candles, bells, perfumes, white caps etc
3. Psychographic Segmentation :
Geographic & Demographic Segmentations provide a physical view of the markets, the true
dynamics of purchase can be assessed & marketing offer can be designed only on basis
of Psychographics of people.
Markets are divided into different segments based on three variables :
*Social Class *Life-style and *Personality
Social Class
* Caste is one of the divisions of class system in India along with wealth.
1.Upper - Upper
2.Lower - Upper
3.Upper - Middle
4.Lower - Middle
5.Upper - Lower
6.Lower - Lower
Lets look at the Characteristics and Preferences of each of the social classes.
1. Upper - Upper :
Characteristics àSocial elite, wealth inherited, well known family background, ascribed status,
small in number, reference group for others
Preferences àJewellery, antiques, farmhouses, vacations, luxury products at high prices.
2. Lower - Upper :
CharacteristicsàSocial elite, wealth earned, educated and professional, active in social and civic
affairs, aspire and associate with upper-upper stratum.
PreferencesàStatus symbols - cars, homes, expensive school, exhibition products, art pieces etc.
3. Upper - Middle :
CharacteristicsàCarrer oriented, dependant on education and hard work, dual career families, seek
comfort, ambitious.
PreferencesàQuality life products and entertainment, good interior decoration, vacation.
4. Lower - Middle :
CharacteristicsàAvergae paid employees, small businessmen, college background, fashion
oriented but traditional, dual career families
PreferencesàBetter life products, nice homes, nice furniture, decent school, occasional vacations,
travel and tours, regular and economical entertainment.
5. Upper - Lower :
CharacteristicsàAbove poverty line - Depend on loans and advances, hand to mouth, dual career
families, traditional, strong family ties, school education.
PreferencesàEconomy products, instalment and credit buying, low priced popular brands and local
unbranded products.
6. Lower - Lower :
CharacteristicsàBelow poverty line, daily incomes, low per capita income, poor health and hygiene,
dependence on petty loans and charity.
PreferencesàLocal Unbranded products, daily purchases, cheap varieties, buy seconds or collect
thrown out clothes, food etc.
Life Style
2. Chameleons Characteristics
3. Traditionalists Characteristics
Personality
*Personality refers to the set of psychological and physical characteristics of an individual that
determine the individual behavior
*These characteristics are unique making individuals different from one another
*Personality can be defined with the help of characteristics like
àSelf confidence
àSociability
àAdaptability
àAssertiveness
àAutonomy
àCreativity
àSensitivity and so on
For example :
* A person with social nature and creative zeal is likely to prefer picnics, parties, photography.
* Marketers offer restaurants with good food and ambience, picnic spots, concessional membership
cards, cameras, photo films, processing labs etc to satisfy their requirements.
* Consumers buy those products or brands where the perceived personality of which match or fit
with their self-perceived personality
Behavioral Segmentation
Behavior of consumers is a better guide to segment the markets. To understand the behaviors we
need to raise following questions.
àWhen do people buy? Occasions
àWhy do people buy? Benefits sought
1. Occasions
*Festivals
*Events
*Important Dates
*Anniversaries etc
2. Benefits Sought
Varies from consumer to consumer. Consumer may buy a Car seeking one or more of following
benefits
*Status symbol *Sense of fulfillment
*Convenience of transport
*Economy in commuting
Based on the benefits sought, consumers are grouped and positioning is effectively done to pull the
consumers to buy.
3. User Status
Consumers can be categorized as follows based on their user status with the corresponding
marketer actions
User Status **Ex-user àStopped Using
Marketers Action Appreciate them and advice them on usage. Assure service.
>>Evidently each category of users is to be treated as a separate segment and marketing offer
should be designed to suit each one of them.
4. Usage Rate
5. Loyalty Status
A market can also be segmented on the basis of consumer loyalty to brands, stores, and
companies.
Companies design marketing actions based on loyalty status.
6. Place
Products are promoted by developing an understanding of the place where the potential buyers
congregate mostly and prefer to buy the products.
Shopping malls / haats - melas àretail spaces promoting several products
Category - I : Products are of immediate use to the family or things which tend to be
instrumental in supplementing the income in these households
Category - II : Products consists of a combination of the products that ease the households,
work-strain and act as a source of entertainment
Category - III : Products show a combination of classy products that fulfill the above needs
Transistor,
Pressure Cooker /
Sewing Machine
Refrigerator,
Color TV,
VCR, VCP,
Washing Machine
Categorization is used as a guideline to target the next customer, who move from category to
category.
Market Targeting & Positioning
Selecting and attracting markets involves three key decisions
Segmenting, Targeting and Positioning
àSegmentation is the process of dividing or categorizing market into different groups based on
one or more variables
àTargeting is selecting the market segments, which can be served efficiently and profitably. It
is deciding on market coverage strategies.
àPositioning is a market attraction strategy, which involves placing the product or brand in the
minds of the customers in the target market.
Targeting
àSegmentation is the process of identifying and establishing alternative market segments
àNext Step, Targeting involves evaluating the various segments and selecting how many and
which ones to target.
1. Evaluation of Segments
In evaluating market segments a company has to first identify the criteria for evaluation. The
following criteria may be applied to determine the attractiveness of segments.
b. àAttractiveness :
*Small and New Companies may lack the skills, experience and resources neede to serve the larger
segments
*Some segments may be less attractive when there is already more competition.
c. àGrowth Rate :
*A segment’s attractiveness depends not only on its current profitability but also future prospects.
*Growth Rate of the Segment is in reference to
>Growth in Population
>Rise in Purchasing Power
>Increase in preference for the use products
d. àCompany Objectives :
*Company should evaluate the segment opportunity with reference to their
>Short Term Objectives
>Long Term Objectives
e. àLimitations :
*Company should examine whether the entry into segments is acceptable to the society and
government.
*If entry provokes unnecessary criticism, the Company may have to struggle hard to explain its
stand and safe guard its image.
2. Selection of Segments
Selection of the Segment(s) can be made by rating the alternative segments on a predetermined
scale in respect of the criteria we have discussed earlier.
Segments are ranked based on the scores obtained and be considered for selection. Those with
high scores will be accepted and others will be kept aside for future considerations.
3. Coverage of Segments
Organizations have three alternative coverage strategies to suit their segmentation approaches.
Segmen- Type of Coverage tation Marketing Strategy
Zero Mass Undifferentiated
Substantial Segment Differentiated Selective Niche Concentrated
àUndifferentiated Strategy
This marketing strategy focuses on “What is Common” among the consumers and tries to employ
it in its design of its marketing offer.
àDifferentiated Strategy
This marketing strategy investigates and identifies differences between segments and tries to
match the market offer to the desires and expectations of each segment. The results of such
exercise would be
*Strong identification of the company in the product category
*More costs but higher sales. Hence more profits. *More loyal customers
àConcentrated Strategy
This marketing strategy directs all marketing efforts towards one selected segment. It facilitates
specialization in serving the segment and achieving higher level of consumer satisfaction, delight
and loyalty. This has some risks in course of time, such as
*Preference of consumers may change, and
*Large companies may become competitors seeing the success of this company
à Differentiated Strategy is to be chosen, when company resources are large, product variability
is more, and product life-cycle is in growth stage in the market, that has high variability
Positioning
Positioning is the act of finding a place in the minds of consumers and locating the brand therein.
Companies have to plan positions that give their products the necessary advantage in the target
markets.
àProduct Differentiation
Products can be differentiated on attributes like shape, size, color, quality, composition, and
performance. Functional differences signify ease in process and benefits of use.
àService Differentiation
Services may be differentiated in respect of delivery, installation, and maintenance. Long warranty
periods, free service coupons, service at phone call distance, 24/7 service, emergency care etc. are
examples.
àPeople
*People, who come in contact with users, may quite often influence the decision of consumers.
*In this era of Relationship Marketing, differentiation by people is worth considering.
*Service Organizations like Hospitals, Schools, Banks, Road Transport, and Telecommunication,
require people who serve with smile and are efficient.
*Service Organizations mainly emphasize on competence of their people.
àImage
*The image of a brand or company may win the consumer, even though the product is very much
similar to a competitive one.
*Image is built by advertisements, symbols, signs, colors, logos, atmosphere of organization, and
social activities.
*Images may be related to attributes such as quality, high tech, ethical etc.
1.Identification of attributes, which can give competitive advantage. Attributes can be for
example, Quality, Service, Technology, and Economy.
2.Use of a rating scale. Say, 10 point scale.
3.Rating the attributes on the five criteria viz., attractive, Distinctive, Preemptive, Affordable and
Communicable
4.Then, developing a comparative table of Competitive Advantages to arrive at an appropriate
decision
From above, Economy Position has a clear advantage than Service aspect. The other two
differences are strengths of competitors. Hence positioning on Economy will benefit the company.
Communicating
Once the company has chosen the differences, it has to chose as appropriate communication
strategy to reach the consumers.
• Competition
What is Competition?
Competition denotes the existence of actual and potential rival companies, which manufacture or
produce perfect or close substitutes product offerings to attract consumers.
Types of Competition
1. Generic Competition : Every product is in competition with every other product. Eg All
durables and consumables
2. Form Competition : A product is in competition with different products offering similar
benefits. Eg All vehicles , 4, 2 Wheelers
The company’s basic Marketing Strategy is influenced by the nature and type of Competition it
faces.
The key questions need to be addressed are
*Who are our Competitors? - Know your Competitor.
*What are their strengths & weaknesses?
*What are their strategies?
*What are our Counter Strategies?
Whether one has to consider Brand Competition, Industry Competition or Generic Competition?
Industry Competition is right consideration when analyzed with Brands in Competition.
“Product - Market Fit” analysis is useful in mapping the locations of Competitors with their brands in
different market segments.
For each Competitor, based on above information gathered, ratings are given like Excellent,
Good, Average, Poor, Very Poor on points based on 3 to 5 years historical data rather than
snapshot, current year study of Competitor.
Based on above analysis Competitors can be classified as follows :
1. Based on ability to engage in and sustain competition - Strong & Weak
2. Based on % of Market Share - Close and Distance held by a Competitor
Competitive Positions
3. Market Follower - Distant / Weak Competitor whose is content in following Leaders and
Challengers
4. Market Nicher - Independent, Non-fighter, who carves his niche for peaceful and profitable
specialized operations
1. Growth Strategies
Grow Strong, Become Invincible
Market Penetration
Encourage Current Customers to use more
Encourage Other Customers to Switch
Encourage Non-users to Use
Market Development
Identify New Market Segments and Cultivate
Product Development
Introduce New Features
Introduce New Products
Growth Strategies
Diversification
Concentric
Both Marketing & Technology Synergy
New Products related to Current Customers
Horizontal
Only Marketing Synergy, New Technology
Products related to Current Customers
Conglomerate
New Marketing & Technology
Unrelated to Current Customers
2. Offensive
Attack Strategies of Company
Frontal
Head on Collision with Opponent
Match the Competitor’s Offer
Flank
Search for Gaps and Conquer
Target Offer to Uncover Market Needs or
Uncover Market Areas or Both
Encirclement : Launch an Offensive from All Directions - Front, Rear and Sides
Match Each and Every Offer of Competitor or Offer More
By Pass : Leave the Strong Spots of Enemy and Attack Vulnerable Spots
Diversify into Un-related Products
New Geographical Markets
Adopt New Technologies to Support Existing Ones
Guerilla
Small and Intermittent Attacks on Different Territories of Opponent
Price Cuts and Intense Promotional Bursts in Small, Isolated, Weakly Defended Markets and
Litigation
3.Defensive Strategies
Develop Protection Against Attack
Position Defense
Add Different Products to Survive
Improve Existing Product Features
Lower Price if Market is Un-segmented
If Segmented, Price Low in Vulnerable and Price High in Less Vulnerable Segments
Drop Marginal Retailers, Fortify Distribution & Reduce Costs
Spend more on sales Promotion and Less on Awareness Building
Flank Defense
Line Filling
Develop Complete Product-Line, Leave No Gaps
Product Line Stretch Upward, Downward and Two-way
Preemptive Defense
Launch the Product much before the Competitor can do
Line Modernization
Counter Offensive Defensive :Cause Delay or Postpone Introduction of Competitor’s Product and
Gain Time, Identify Weak Position and Attack It
Mobile Defense : Growth Strategies
Contraction Defense : Product Line Pruning Strategies, With-drawl from Products and Markets
which Lack Competitive Strength, De-segmentation or Concentration Strategy
Strategic Marketing involves Four Situations which use approaches to Planning and
Implementation
1. Competition Oriented
Gaining Victory Over Competing Firms
Already Discussed
2. Market Oriented
Operating Through Market Life Cycle
3. Product Oriented
Evolving Strategies Through Product Life Cycle
4. Consumer Oriented
Tracking Customers, Their Value Expectations and Satisfaction
2.Market Oriented
A Market in the Process of Evolution passes through the following Stages
*Market Crystallization (Niche Single and /or Multiple Niches, Mass Market)
*Market Expansion (No Serious Competition)
*Market Fragmentation (Intense Competition)
*Market Consolidation (New Products)
*Market Dissolution ( Technology / Product Obsolete, Divestment)
3. Product Oriented
Stages in PLC
Introduction
Basic Product, Cost Plus Pricing,
Selective Distribution,
Informative Ads, Heavy Sales Promotion
Growth
Product Extension, Services and Warranty Offer
Penetration Pricing, Intensive Distribution
Persuasive Ads, Moderate Sales Promotion
Maturity
Diversify Brands, Competitive Pricing
Intensive Distribution, Comparative Ads, Moderate Sales Promotion
Decline
Phase out Weak Items, Lower Price
Selective Distribution, Reminder Ads, Minimal Sales Promotion
4. Consumer Oriented
To Keep Track of Customer’s Value Expectations and Satisfaction
Customer Needs
* Stated Needs (Articulated)
* Real Needs (Exactly what customer is looking for. May have a Gap between What one says and
What one wants)
* Unstated Needs (Expected not Stated)
* Delight Needs (Desire for surprise benefits not anticipated)
* Secret Needs (Hidden)
Customer Value
Value Delivered is the difference Between Benefits and Costs
Indicates the Worthiness of a Product
Buyers Evaluate based on Perceived Value of the Products
High Low
Customer Orientation
Technology
Obsession to make Best Product
Market
High Pressure Selling
Innovative (Most Desirable)
Develop New Products to meet Consumer Needs
Imitative
Selling Copy Cats / Fakes
High Low
Customer Orientation
Indifferent
Do not bother for Sales or Customer Needs
Pull
Attracts Customers by Relationships. Does not Pressurize to Buy.
Push
Pressurize Customers to Buy whatever their needs be
Problem Solving (Most Preferred)
Selling Solutions and Not Products
3. Customer vs Competition Orientation
Low High
Customer Orientation
Porter, Michael E
Buyer Cartels on price, quality and delivery results in influence in Costs and Investments.
Powerful Buyers bargain for better services which will cost more for Producer.
The more specialised the offering the more bargaining power for Supplier.The limited in number of
Suppliers the more bargaining power.
• Sizing up the “Competition Proper” is not enough; all forces Shaping Competition must be
sized up.
“Value Chain” approach in Competitor Analysis Porter, Michael E.
Value Chain is basically a tool for identifying ways in which value could be created/ enhanced by a
Firm.
Firms can use the concept for assessing the competitive position within the Industry, by comparing
their own value with those of their competitors.
Basis : Every firm is a collection of activities and can be disaggregated in terms of activities Porter
identifies nine distinct activities as the ones which create value in a firm; they would, of course,
create cost as well. Five Primary and Four Support Activities.
•
Four Support Activities
1. Firm’s Infrastructure
2. Human Resources
4. Procurement
Primary Activities
* The Primary and Support Activities together generate a vast matrix of value- creating activities in
the Firm.
* This matrix of value-creating activities along with their interacting effects, constitutes the Value
Chain of the Firm
* Value creation depends on the each departments performance as well the coordination of all
departments in a Firm. Value Chain also covers the coordination aspect.
* All Business Process is basically a Value-creating and value delivering process. Buyers patronise
the Firm that offers the highest delivered value.
* Hence, the name of the game is to locate the activities in which value could be created, and
create maximum possible in each of them.
* Firm examines the costs and performance in its Value Chain – the total value chain as well as in
each link in the chain vis a vis Competitors.
Product Classification
Tangibility yes no
Seperability yes no
Ownership yes no
Purpose
Type
User
Products
Purpose : Consumption
User : Households
animal feed
Type : Consumables
Type : Durables
Three categories
1. Convenience Goods
2. Shopping Goods
3. Specialty Goods
4. Convenience Goods
Buying Place : Provision stores, Departmental store, Super market, Maals, Pan shop,
2. Shopping Goods :
3. Specialty Goods
Cheaper Products - Low Quality and Low Price. Perform core function but lack certain attributes,
which make them use less comfortable, less pleasant, less desirable Nirma washing powder
Economy Products - with all necessary functional features but no fancy features. Its price &
quality are fairly reasonable. Mopeds
Goods for conspicuous consumption. Being high quality, high priced goods, they are known as
Premium Goods and Prestige Goods.
* Cheap Goods : Nirma Washing Powder - packaging poor, powder spills, cheap, when mixed
with water burning sensation in skin / palms
* Economy Goods : necessary functional features and no fancy features (no frills)- money savers
Needs Gratified. Moped, TV without remote, TV B/W with limited channels
* Premium Goods : Products which appeal to ego of the buyer. These are goods of conspicuous
consumption. High Quality, High Price, Premium Goods & Prestige
Goods. Jewellery, Dresses (designer wear), high priced cosmetics, perfumes, toiletries, Cars,
Bunglows.
* Imitations
Poor Imitator : Produces deception goods, spurious, fakes, copy cats.
Dupes gullible customer by offering products have close resemblance's with Original. Quality very
poor.
Nimba buoy
Colgate Pepsodent College
Nirma Wheel Neerbha, Nima,
Nilima
Fair & Lovely Fairever Friends & lovely
This refers to Long Range Competitive Plan Involving decisions on Product Items, Product Lines
and Product Mixes to make proper utilization of Resources and achieve Marketing Goals
Through Good Intelligence anticipate competitive moves and launch new products.
Through Effective Product Strategy attack, flank competition, defend and wage guerilla war fare.
Product Strategies
Level
Strategy
Product Item
Product Mix
Product Lines
* Product Line is a group of closely related products priced within a range and distributed
through same channels to the same customer group.
* Product Length - it refers to the total number of items in line
* Product Depth - it is total number of variants to Product Items
* Line Stretching :
Downward : adding lower end items
Upward : adding high end items
Both ways : adding items at both higher and lower ends
• Line Pruning
Product lines tend to lengthen over time. Some are stretched rationally, some emotionally. Some
dead wood to accumulate. It is weeded out periodically based on contribution they yield.
Some Product Lines are
* Traffic Builders - which attract customers but generate marginal income
* Bread Winners - which generate major share of incomes
* Parasites - which incur losses and depend on Bread Winners
Line Modernization
Technological Developments change the products and their quality. Modernization decisions are
taken on following aspects.
Timing : * Conversion readiness of consumers from old to new products
* Competitor moves
* Profitability levels of existing product lines
Approach : Change total or piece meal, cash flow, surprise competitors / imitators
Product are Transient, but basic needs of the customers remain same
Need-Product Relationships
* Core Product
The product that provides the important form utility and ensures performance of basic functions.
* Tangible Product
When psychological needs are satisfied in physical terms, product concept becomes visible and
operational.
5. Branding
Packaging
Level
Purpose Package
Package Characteristics
Determinants
Different Sizes
Different Colours
2. Easy to Carry, Easy to Use and Easy to Dispense
Tetra packs – Soft Drinks, Milks
Polythene Covers – Dairy Milk
3. Good to Store
Food grade plastics / glass bottles.
Beverages – Bournvita, Boost, Horlicks, Edible Oils (saffola)
4. Attractive to Re-use
Good to store bottles are often reusable
5. Easy to Evaluate
Product Quality, Product use Information, Life period of Product.All evaluated through labeling,
through sight / smell
Packaging Strategies
* Easy to use
The above leads to Product Innovations which is a major component of Product Policy – which
leads to
First time and expected to create new markets - Polarized Instant Camera
New Products that contribute to existing Product Lines of the company. Variations of Product
include - Size, Flavor, Color, packaging. Improved Life Buoy, Chota Coke)
These Products usually improve the perceived value of existing products and replace them
Introducing new products that provide the same benefits at a lower cost
*Product Managers
*Product Committees
2. Idea Screening
4. Product Development
5. Test Marketing
6. Commercialization
1. Idea Generation :
2. Idea Screening :
* Degree to which new product can cannibalize the sales of existing products
PURPOSE : Reduce the number of Ideas to a manageable few for further attention for
development
àTo understand what attributes & benefits a customer is looking for in a product
b. Sales Estimation
4. Product Development
àPositioning Strategy
àProduction Requirement
Proto-types
àCustomer Preferences
5. Testing Marketing
6. Commercialization
Brand Management
• Brand Management
** Branding
Marketing relies on Branding to give Products / Services an Identity, Personality, Image, Equity and
Attractiveness.
** Brand Concept
Brand is Name, Term, Sign, Symbol, Design or Colouring or a Combination of them, which help
identify Seller’s Products and Differentiates them from those of Competitors.
• Examples
Branding Policy
3. Brand Equity
* Brand Equity Concept replaces the Old Term “Good Will”
* Its an Identification Factor that helps Promote Distinctiveness
Brand Sponsoring
* The development of Retail Chains / Malls, Super Markets provides the opportunity to leave
Branding to Distributors.
* Consumers prefer National Brands. Identified as Quality Products.
Brand Identity
Name What?
1.Should each product be given a Brand Name?
2.Should Each Group of Products be named with a Family Brand Name? Or all Products?
3.Should Company Trade Name be associated with Brand Name?
Merits
* Image of the Company not effected by failure of one brand
* Free to introduce low quality products without any adverse impact on the high quality products in
the line
Demerits
* Development Costs is incurred for each brand separately and together results in High Costs
Multi-Product Group Companies may choose to name different groups with different family brand
names
Examples
Raymonds : Raymonds for Textiles, Park Avenue for Ready-mades, shoes and toiletries
Merits * Helps promote a group of products. Hence development costs are less.
* Failure of a product will have a limited negative impact on its group only
* Different groups need different psychological associations.
* Different Brand names help evoke different and appropriate responses.
Demerits
* Individual Items will have sufficient Brand Power and Recognition.
Blanket Family Name
Namely all the Products of a Company with one Name - Family Brand Name
Examples
Usha : Fans, Sewing Machines, Industrial Pumps
Nirma : Detergents, Toothpaste, Soap
Colgate : Dental Cream, Toothbrushes
• Name How?
•
Effective Brand Names
Characteristics Walkman
& Functions Cease fire
of Products
Brand Strategies
1.Brand Extension
2.Multi-Branding
3.Co-Branding
4.Brand Equity
1. Brand Extension
Types of Extensions
Image Related
Parent Brand name is given to the product items in a different Product-Line.
Here, the common factor is Customer Group. The related needs of the customer groups will be
satisfied by these product items. The image of the parent product and its emotional benefits can be
transferred to the Brand Extensions.
Unrelated
There is not even one common factor between the parent brand and the extension. It is entirely a
different product line requiring a different marketing strategy catering to different customer
groups.
• Examples
2. Multi-Branding
A Company may introduce several brands in a Product-Line with different features to appeal to
different categories in the same customer group. Many FMCG Companies follow this Strategy
Benefits
Flanking of the major brand
Occupying more shelf space of retailers
Gaining more profits
Disadvantages
* Each brand may have a small market share
* Cannibalization of some brands of the Company
* High development costs as many brands are to be developed
• Examples
Company : HLL
Product Group : Soaps
Multi Brands : Lifebuoy, Liril, Lux
Company : Godrej
Product Group : Soaps
Multi Brands : Cinthol, Ganga, Marvel, Fair glow
3. Co-Branding
Offer one brand with another brand of same company or another company.
Examples
IBM & Compaq buy chips from Intel. Advertise Intel Inside.
Reliance markets its Pillow - SlumbRel - with Dupont Fibres highlighted
Cell & Milton advertise their thermoware saying “We use SAIL Steel”
Kelvinator Refrigerator comes with ‘Blue Star” Thermostat
4. Brand Equity
When Brands are effectively managed they acquire “Value” and become “Assets” with “Good-
Will”
“Brand Equity is a set of assets (and liabilities) linked to a brand’s name and symbol that adds
to (or subtracts from) the value provided by a product or service to a firm and / or that firm’s
customers.”
• Brand Management
1. Brand Personality
Like a person, Brand is a psychological being having an appearance, emotional feelings and
rational behaviour. Brand Personality can be described at three levels
Sensory, Emotional, Rational
• Examples
Brand : Onida
Sensory : Ugly Male Devil
Emotional : Greed, Irritation
Rational : Quality
Image : Hi-Tech
Brand : Lux
Sensory : Beautiful, Feminine
Emotional : Aspiration & Achievement
Rational : Soft, High Quality
Image : Star with Charisma
* The Interaction of a Consumer with the Brand at three levels produces Image, which may
reflect Attractiveness, Trustworthiness and Expertise.
* Brand Personality creates impressions in the minds of people. The impression left by the Brand in
the minds of the people is known as “Brand Image”. The Purchase Behaviour is influenced by Brand
Image.
Protecting Brand Identity is through Semiotics - the study of signs, symbols and their
interpretation.
* Most FMCG Good’s protect brand identity through this.
Concept of Pricing
Significance of Pricing
* Functional Significance -
a. Economic Reason : Defines target market. Fixation of Price.
b. Technical Reason :
Recent Trends
Recent Trends which lead to pricing playing a significant role as an element in Marketing Mix
decision.
1. Market Fragmentation :
Based on the Income Classes, NCAER categories Indian Consumers into 5 Categories, Multi-tiered
consuming classes.
2. Market Saturation :
Indian Urban Markets are well penetrated for all FCMG and White Goods.
In Rural Markets products like TV’s, shampoos, toothpaste well penetrated in high income rural
group. In fact in mass consumption goods like washing powder, Penetration ahs increased to
unbelievable levels. Pricing plays a very important role in such saturated markets.
3. Inter-Category Competition : Market is flooded with several types of goods perplexing the
mind of the consumers. Cell phones and Air time are both now very cheap than before.
Computers are available cheap and in easy installments.
4. Value Conscious Consumption : The profusion of consumer offers and price wars have
taught the Indian consumers that he can bargain with the marketers. When there is a choice ,
consumer is choosing the best brand with best value delivery
5. Offering Value for Money Proposition
6. Branding / Debranding and Customisation
Trends
Hungry Saturated
Less More
Fragmented Fragmented
* Consumer
2. Sales : Gain Market Share, Growth in absolute sales, Growth in market share, Maintain Sales
Volume, Minimum sales necessary to survive.
3. Competition : Meet or prevent competition (Market Leader) Destroy Competition (Lower Price -
Block entry of new firm)
4. Development : Gain Market Share (Expanding existing markets, stimulating non users /
encouraging to buy, enter new markets - new launch)
a. PLC stages : Introduction, Growth, Maturity and Decline. PLC Short - Long.
b. Competition -High or Low
c. Consumer types - Gullible or Discerning?
d. Product level promotion -Item or Product Mix
e. Distribution Geography - local area or wide area
f. Motivating channel members
What do you think are the factors which influence pricing decision process?
* Leader Pricing : Some Product Items may be Priced Low , to Attract Customers and to
Generate more overall Demand for Other Items.
* Competitive Pricing : It is Reactive. It matches the Market Prices of Competitors.
Products are Price at the Same Level or Below Prices of Leading Competitors.
Sealed Bid Pricing :
In Indl Marketing / B 2 B Marketing, Open /Closed bids are invited. Firms quote their Price based
on ( Probability ) What Competitor would quote.
3. Demand-Based Approach :
* Discrimination/ Differential/ Variable/ Flexible : Products are sold at two or more prices
based on Customer Segment, Product-form, Image, Location and Time.
* Perceived -value : Based on Perceived Value of each component of the Product, the Price is
Estimated and Employed.
* Psychological :
Based on Attitudes of Consumers on Quality - Price Relationship ( High Price
means High Quality)
Odd Prices (which Conveys the notion of Discount or Bargain)
Reference Prices (a Price on an Average considered right for a Product)
* Value : Prices which will generate Value Satisfaction to the Consumers - Regular Prices on all
Days but Lower Prices during Special Promotion Periods.
* Quality Conscious
* Value Conscious
* Price Conscious.
Life Style :
* Price Consciousness : Higher the price conscious and more prices variations within the
category of Products, P-Q Relationship is stronger. Eg : HLL has Surf Excel at top end in the Fabric
Wash Category, Rin Powder / Bar in Mid –Price Segment and Blue Wheel Powder at Lower End
Segment.
* Need Compulsion : Certain Products more in Services that fill certain needs will have strong P-
Q Relationship. Eg : Reputed Surgeon charge premium rates for their services as their services are
viewed essential.
* Place of Availability : Within the same product category, P-Q Relationship is stronger for the
brands sold to the premium market. Egs : Doctor’s services in a Corporate Hospital, Mineral Water
in an a Restaurant.
* Social Consciousness : Publicly consumed products like Shirts / Shoes etc have a strong P-Q
Relationship than privately consumed products like toothpaste etc.
* Location Pricing : The same products are priced different at different locations though the
cost of offering at each location is same.
Egs : In Theatres, seats are priced differently based on location.
* Time Pricing : Prices are varied by day or season. Egs : Museums / Zoo’s / Parks charge higher
on Sundays & Holidays.
Hill Resorts charge higher in Summer and Lower in other Seasons.
Perceived Value Pricing : Companies add features to their products with a view to enhancing
their Customer’s Perceived Value. For each of the features, which enhance convenience, durability,
reliability, attractiveness etc of the Product, the Company fixes prices to be charged and adds tem
to the product price to arrive at the Final Price.
Psychology Pricing
* Reference Pricing : Products are priced Higher which have Celebrity Endorsements, Products
placed along with classy products.
* Image Pricing : Effective in case of ego-sensitive products like Cars, Sunglasses, Cameras etc.
People Buy Expensive ones as Price acts as signal of Quality.
Eg : Bata
Value pricing :
Skimming vs Penetration
* Some Marketers goal is to create low price appeal for their Products and Services. But what
happens is that the result of one retaliating price slashing after another is often a precipitous
decline in Industry Profits.
* Price War can create economically devastating and psychologically debilitating situations that
can take an extraordinary toll on individual, company and industry profitability.
* No matter who wins, the combatants all seem to end up worse off than before they joined the
battle. And yet, Price Wars are becoming increasing common and uncommonly fierce.
* Price Wars are becoming more common because Managers tend to view a Price Change as an
easy, quick and reversible action.
* Virtually every competitive move is based on Price, every counter measure is a Retaliatory Price
Cut.
* Most Managers will be involved in a Price War at some point in their careers. Every price cut is
potentially the first salvo, and some discounts routinely lead to retaliatory price cuts that then
escalates into full blown Price War.
* Price War starts because somebody thinks price in a certain market is high
* The largest driver of Price Cuts and resulting in Price War is Excess Capacity
* When reviving idle plants / service by stimulating demand through lower prices / price war
* Low variable costs due to economies of scale and technology
* Up-gradation tempting business to cut prices
Intelligent Analysis that leads to accurate diagnosis is more than half the cure.
* Contributor Issues - Other players in the industry whose self interest - profiles may affect the
outcome of Price War
Once the four areas are examined carefully it will automatically result in actual quite a few
different options.
* Make sure your competitors understand the rationale behind your pricing policies.
* Make sure your competitors know your costs are low. This effectively warns them about potential
consequences of a price war. It some times pays to reveal your cost advantage.
* A business that has relatively low variable costs enjoy an enviable advantage in price war with
competitor with higher variable costs. * But low cost
companies should carefully consider strategic positions before they start or join a price war.
* Lower costs often tempt a business to cut its prices, but doing so can diminish consumers
perceptions of quality and may trigger an unprofitable price war.
2. Fight it out :
* Alert Customers to Risk. More specifically the risk of poor quality. * Emphasize other
negative consequences.
* Seek help or appeal to Contributors to weigh on competitive situation. * Appeal to
Customers, Vendors, Channel Partners, Sales Reps and other like minded players.
3. Retreat :
On rare occasions, discretion is the better part of valor.
Other issues :
Price leadership
Price cartels
Regulators
Marketing Channels(Distribution or Trade) & Marketing Logistics (Physical Distribution)
6. Selling Who?
From : Agents, Companies, Consumers
* Dependable Delivery
* Information
* Variety
* Liberal Credit
@Selection of Channel
*Motivating Middleman
=>Partnership Concept - Dealership Agreement
Objective >> lower total cost
For mutual benefit>> increase value for channel
Efficient Delivery
*Creates value for customers & savings in costs
*Better Customer Service
*Creates a Competitive Advantage-Companies with superior logistics performance gained higher
percentage of Customer Loyalty
JIT System
*Delivery at Right Time
*Delivery at Exact Quantity as required by Customer
*Perfect Quality as No Inspection
Tasks or Activities
*Transportation
*Warehousing - to make available when needed
*Inventory Control - to make available Right Product Mix
*Packaging & Labeling - for protection and identity
*Material Handling - Speed of Loading and Unloading
1. Government Policy
4. Consumer
• Some Shocks
3. Rural Consumers on the other hand, Middle Income Rural Consumers are not settling for
cheap TV and scooters as they were expected to.
4. FMCG Manufacturing Growth Rate of 15% was taken for granted upto 1998 and there after is
less than 5%. The story of Consumer Durables is not much better either.
• Marketing Issues
1. Changing Consumption Patterns
3. Markets in Transition
4. Market Fragmentation
5. Market Saturation
6. Inter-category Competition
Marketing Issues
1. Changing Consumption Patterns
The average Indian spent at the compounded growth rate of 9.7% (!991-92 to 2001-02). Huge
increase in per capita consumption is due to two factors, namely - Growth in Volumes and Higher
Prices.
Spending on traditional / main categories like Food, Beverages and Tobacco is decreasing and
spending on other categories expanding, zooming ahead.
Consumer is Changing.
The New Values and Attitudes that drive Kids, Teens, Youth, Women and Families is also
changing.
* Kids freedom to do what I want ? 72% feel Very Important
* Being Popular amongst friends 81% feel very important
4. Market Fragmentation
Consumer India is Fragmented by 5 Consuming Classes (Socio Economic Classification) and Two
distinct Generations Pre and Post Liberlisation
1. Very Rich (Benefit Maximisers)
2. The Consuming (Cost Benefit Maximisers)
3. The Climbers (Cash Constrained Benefit Seekers)
4. The Aspirants ( New Entrants into Consumption)
5. The Destitute ( Hand to Mouth Existence)
5. Market Saturation
Indian Urban Markets are well penetrated for all FCMG and White Goods.
In Rural Markets products like TV’s, shampoos, toothpaste well penetrated in high income rural
group. In fact in mass consumption goods like washing powder, penetration has increased to
unbelievable levels. Pricing is plays a very important role in such saturated markets.
• 6. Inter-category Competition
Market is flooded with several types of goods perplexing the mind of the consumers.
* Cell phones and Air time are both now very cheap than before.
The profusion of consumer offers and Price Wars have taught the Indian Consumers that he can
bargain with the Marketers. When there is a choice , Consumer is choosing the best brand with best
value delivery
Consumer is looking for offers on Value for Money Proposition through Brands / De branding
(price discounts) and Customization
• Emerging Markets
1. What distinguishing features will characterize the marketing function and in particular
marketing strategy in changing times?
2. How will a market-driven, customer-oriented firm be organized?
The answers to the formidable questions were taking shape in the last decade or more through a
continuous string of momentous events.
• Emerging Markets & Momentous Events
1. Intensifying Competition
2. Changing Market Behaviour, along with new flexible manufacturing techniques, convinced
even the most sceptical executives about the vast opportunities and competitive advantages of
creating specialized products and services targeted to dissimilar groups based on age, income,
education, occupation, race, ethinic and cultural characteristics.
3. Shifting Life Styles influenced marketers to focus on how different groups live, spend, and
act – all of which were being highlighted by the media and influenced by diverse political,
economic, cultural and social movements.
4. Shortening Product Life Cycles due to the proliferation of new products and the continuing
flow of dazzling new and affordable technology convinced executives to probe for emerging or
previously unserved market egments. In turn, these circumstances triggered even greater efforts to
push for faster-cheaper-smaller-better products.
3. Create Alliances
5. Apply Technology
1. Focus on The Customer - the ability to translate the outside-in approach into reality means
permitting your core customers to decide your strategy. The essential concept is that they know
more about what they need you.
2. Build Networks - the new information technology allows links among customers, suppliers,
business partners and employees. The continuous multi-directional flow of information and
activities move in harmony from product concept to delivery of a wanted product to a customer
and effective business model that allows you to be far more virtual with customers and suppliers.
3. Create Alliances - in the current stream of organizational and marketing strategy, alliances
and other forms of partnering are key to success.
5. Apply Technology - Using the internet as an integral part of the marketing impacts directly
on the traditional functions of the sales and customer service.
6. Closing
3. Training *Aims or Objectives à Company, Product, Market Information, Sales Policies, Selling
Techniques
5. Developing – Growth
Sales Organization
Four Types of Sales Organizations
1. Geographical / Territorial
Team Selling with Relationship Marketing is a major strategy used to secure consistently good
business.
• Marketing Planning
a. Situational Analysis
e. Action Plan
f. Marketing Budget
h. Contingency Plan
a. Allocating (MMM)
b. Monitoring (MIS)
c. Organizing (OB)
1. Situational Analysis :
*Market Situation àIncludes data on Market Size, Growth, Sales, Market Share, Current Share,
Future Projections of Total Market and each Target Market Segment. Includes Target Customer
Needs, Buying Behavior.
*Competitive Situation :
Consists of Identifying, Ranking Market Share, Objectives & Strategies, Strengths & Weaknesses
and Reaction Patterns of Major Competitors
*Product Situation :
Includes data on Sales, Unit Prices, Profits (or Contributions) for each major Product Item in the
Product Line and across Product Mixes.
*Macro-Environmental Situation :
Identifying factors Economic, Political, Legal and Forecasting Future Trends and Impact on
Product
• Issue Analysis àDetermining major issues faced by firm, based on Situational & SWOT
Analysis.
Determine Sales, Market Share, Profits considering Environmental & Issue Analysis done earlier
4. Marketing Strategies :
*Selection of Target Market Segments
5. Action Plan :
Each Marketing Strategy element is broken down to specific actions to answer. WHO will take the
specific action, and at WHAT Cost?
6. Marketing Budget :
*Building Revenue thru Forecasted Sales àIn Units àAverage Unit Price àSales Revenue
*Control includes periodic review of actual performance against goals and taking corrective
actions if required.
8. Contingency Plan :