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Biyani's Think Tank

Concept based notes

Marketing Management
BBA

Tanvi Jain
Dept. of Commerce & Management
Biyani Girls College, Jaipur

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Published by :

Think Tanks
Biyani Group of Colleges

Concept & Copyright :

Biyani Shikshan Samiti


Sector-3, Vidhyadhar Nagar,
Jaipur-302 023 (Rajasthan)
Ph : 0141-2338371, 2338591-95 Fax : 0141-2338007
E-mail : acad@biyanicolleges.org
Website :www.gurukpo.com; www.biyanicolleges.org

Edition : 2012

While every effort is taken to avoid errors or omissions in this Publication, any mistake or
omission that may have crept in is not intentional. It may be taken note of that neither the
publisher nor the author will be responsible for any damage or loss of any kind arising to
anyone in any manner on account of such errors and omissions.

Leaser Type Setted by :


Biyani College Printing Department

Marketing Management

Preface

am glad to present this book, especially designed to serve the needs of the

students. The book has been written keeping in mind the general weakness in
understanding the fundamental concepts of the topics. The book is self-explanatory and
adopts the Teach Yourself style. It is based on question-answer pattern. The language
of book is quite easy and understandable based on scientific approach.
Any further improvement in the contents of the book by making corrections,
omission and inclusion is keen to be achieved based on suggestions from the readers
for which the author shall be obliged.
I acknowledge special thanks to Mr. Rajeev Biyani, Chairman & Dr. Sanjay Biyani,
Director (Acad.) Biyani Group of Colleges, who are the backbones and main concept
provider and also have been constant source of motivation throughout this endeavour.
They played an active role in coordinating the various stages of this endeavour and
spearheaded the publishing work.
I look forward to receiving valuable suggestions from professors of various
educational institutions, other faculty members and students for improvement of the
quality of the book. The reader may feel free to send in their comments and suggestions
to the under mentioned address.

Tanvi Jain

Syllabus

Marketing Management

Unit-1

Introduction

Q.1

Define Marketing. What are its nature & scope?

Ans.: Marketing is an ongoing process of defining, anticipating and creating customer


needs and wants, and of organizing all the resources of the enterprise to satisfy
customer demand at the desirable profit to the firm and also benefits to the
customer.
It is the system of integrated business activities designed to develop strategies
and plans ( marketing mix) to the satisfaction of customer wants of selected
market segments or targets
According to American Marketing Association, Marketing is an
organizational function & a set of processes for creating, communicating &
delivering value to the customers & for managing customer relations in ways
that benefit the organization & the stake holders.
Marketing deals with identifying & meeting human & social needs or it can be
defined as meeting needs profitably.
Nature of Marketing :
Marketing is developmental in nature.
Development of marketing is parallel to the development of civilization.
Growing society has diversified demand for various products and services. This
provides golden opportunities to different marketers to cater the needs of

customers for varied products and services. Therefore, nature of marketing has
been termed as developmental.
Marketing is dynamic in nature
Marketing is a continous process thereby making it dynamic in nature. Three
factors play an important role in this regard. First, the Research and
Development (R & D) wing of the marketer and second, the changing consumer
behaviour and the last is science and technology.
Marketing is responsive in nature
The marketer should adjust its entire marketing operations according to the
changed consumer behaviour and changing technology.
Marketing is innovative and creative
Every successful marketer does enough work to find out new ways and means to
promote the sales of its products and services.
Scope of Marketing:
Scope of Marketing is very wide. In it, large numbers of diverse subject areas are
included which incorporates consumer behaviour, pricing, purchasing, sales
management, product management, marketing communication, Comparative
marketing, social marketing, the productivity of marketing systems, role of
marketing in economic development, packaging, channels of distribution,
marketing research, societal issues in marketing, retailing, wholesaling, the social
responsibility of marketing, international marketing, commodity marketing etc.
Q.2

Explain the Importance/Significance of Marketing ?

Ans : Importance/Significance of Marketing:


As far as significance of marketing is concerned, it may be said that the
marketing may be highly helpful in maintaining economic stability and better
standards of life. The markets have now become global and highly competitive
and they are fast expanding. In these markets, the demand for product fluctuates
widely in view of the availability of substitutes, changes in incomes, tastes, styles
etc.

Marketing Management

Marketing is highly useful for the society as


a) Marketing facilitates in providing employment to large number of people. As
marketing activities increases, number of persons getting job through marketing
is also increased.
b) It delivers better standards of living through providing new goods and services
to the society. For this, the advertiment and sales promotion is used to inform
people about goods and services.
c) It helps in saving the economy from depression. If there is no marketing of goods
or slow efforts are made, the situation of depression may be emerged.
d) Marketing also helps in increasing national income. When different types of
goods are produced on the basis of customers need, it increases total goods and
services of a country and the result of it is increase in national income.
e) It helps in reducing the distribution costs. Thus goods and srvices are available at
reasonable price to consumers.
f) Marketing provides optimum use of vast and varied natural resources of the
country. These resources are used in producing variety of products and service.
g) It provides financial resources to the central, states and locaol governments in the
form of various taxes. These governments with the help of these resources can
undertake various special measures of social welfare for weaker sections of
society in particular and for all citizens in general.
h) Marketing companies through the exports provide valuable foreign excvhange to
the central government.
Marketing is also useful or beneficial for a firm. The benefits imparted by the
marketing, to the firms are :
a) It enables the companies to earn profits.
b) It enables the firm to decide on what, where and when to produce or sell. Thus it
helps in decision making and planning.
c) It also serves as source and channel of new ideas.
d) Marketing is helpful in distributions also.

e) It helps in gaining information about changing market trends, customers needs


and requirements and their tastes.
Q.3

Discuss some of the important features of marketing?

Ans: The various features of the marketing are:


a) It is a business activity. Basic objective of every marketing firm is to earn profit
by selling products or services to customers. The purpose of any marketing
activity is to earn profit except non profit organizations.
b) Marketing is a total system. It has its own environment. Marketing environment
in which firm operates may be further divided into two parts i.e. external and
Internal< are interrelated and interdependent in nature.
c) Marketing is a managerial activity. It involves planning, organizing, co
ordination, motivation and control.
d) Marketing activities cover the four Ps planning, pricimg, promotion and
physical distribution of the products and services.
e) Subject matter of the marketing includes products and services and ideas.
f) Consumer wants satisfaction is the key factor and sole objective in marketing.
g) The goals of marketing operations are not confined to the present customers, but
it keeps in mind the prospective customers also.
h) Marketing is universal in nature. By and large, marketing operations are
applicable to every organization whether it is commercial, non profit
organization, political, social, cultural or educational organization.
i) Marketing is both an art and a science. In the highly competitve environment it
is really an art to sell the companys products and services effectively. Also
marketing requires methods and operations which are needed to be supported
ny the cause and effect relationship.
j) Marketing is a creation of utilities. The manufacturers create form utiltiy by
converting raw material into finished goods. Channel of distribution create time
utility by the warehousing function. Retailers create title utility by selling the
products to ultimate consumers and users.
k) It is an ongoing or dynamic process involving several interacting and
interrealted activities. Every marketing firm redesign its marketing mix policies
and strategies, keeping in view the changed scenario.

Marketing Management

l) It is a matching process. It is both consumer oriented and company oriented.


m) It is a viewpoint, which looks at the entire business process as a highly integrated
effort to discover, create, arouse and satisfy consumer needs.
Q.4 Discuss the difference between market and marketing?
Ans: Market
A market is any space within which trade takes place between buyers and sellers
for a well defined product. This space can be a produce market, a shop,
internationally between countries or over the internet.
Market is a collection of buyers and sellers.
It is also thought to be a set of individuals or institutions that have similar needs
that can be met by a particular product. For example, the housing market is a
collection of buyers and sellers of residential real estate, and automobile market
includes buyers and sellers of automotive transportation. A market is, therefore,
the set of all actual and potential buyers of a market offer..
Marketing,
Marketing is all those activities that facilitate trade. These include activities that
identify consumers needs such as market research and those activities that
satisfy consumers needs e.g., packaging and distribution. Marketing activities
therefore support the marketing of goods and services.
It is an organisational function and a set of processes that work in tandem to
serve the market effectively, efficiently and profitably.
Q.5

What are some fundamental marketing concept?


OR
Discuss the 5 marketing management philosophies.

Ans.: The various fundamental concepts are :(1) Barter System : It is a method of exchange by which goods or services are
directly exchanged for other goods or services without using a medium of
exchange, such as money. In ancient times when money was not invented
trade as a whole was on barter system. In term of marketing it holds the
concept that the exchange of a product or services between seller & buyer is
the central idea for marketing.

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(2)

Production Concept : The production concept is one of the oldest concepts


in business. It also refers to the "supply creates its own demand"
philosophy which says that the sale of items will increase automatically
with an increase in production and distribution facilities It holds that
consumers will prefer products that are widely available & inexpensive.
Thus, manager of production oriented business concentrate on achieving
high production efficiency, low cost & mass distribution.
Eg. Haier in China take advantage of the countrys huge
inexpensive labor pool to dominate the market, to manufacture PC &
domestic appliances.

(3) Product Concept : This concept holds that consumers will prefer those
products that are high in quality, performance or innovative features.
Managers in these organization focus on making superior products &
improving them. Some of the important tactics for attracting customers
include the design, packaging and effective distribution channels of a
product. Sometimes, this concept leads to marketing myopia or other
problems when an organization overlooks the importance of other substitutes
available in the industry.
(4)

Selling Concepts : This concept focuses on aggressively promoting &


pushing its products, it cannot expect its products to get picked up
automatically by the customer. The purpose is basically to sell more stuff
to more people, in order to make more profits.
Eg. Coca Cola

(5)

Marketing Concept : The marketing concept emerged in the mid 1950s.


The business generally shifted from a product centered, make & sell
philosophy, to a customer centered, sense & respond philosophy. The
job is not to find the right customers for your product, but to find right
products for your customers. The marketing concept holds that the key to
achieving organizational goals consist of the company being more
effective than competitors in creating, delivering & communicating
superior customers value. This concept puts the customers at both the
beginning & the end of the business cycle.

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Distinguishing Features of the Marketing Concept :


(i)

Consumer Orientation : The purpose of any business is to create a


customer. It is the customer who determines what a business is-

(ii)

Integrated Management with Marketing as the Fulcrum :


Integrated management means that all the different functions of a
business must be tightly integrated with one another. This is
essential because every function has a bearing on the consumers &
the aim is to see that all the functions make a favourable impact on
the consumer.

(iii)

Consumers Satisfaction : The marketing concept emphasizes that it


is not enough if a firm has consumer orientation, it is essential that
with such an orientation, it should lead to consumer satisfaction.

(iv)

Realization of all Organizational Goals, Including Profits : The


firm should not forget its own interests. It treats consumer
satisfaction as the pathway to the attainment of goals of the
organization.
In short the marketing concept essentially represents a shift in
orientation.
From production orientation to marketing orientation.
From product orientation to customers orientation.
From supply orientation to demand orientation.
From sales orientation to satisfaction orientation
From internal orientation to external orientation.

(6)

Social Marketing Concept : This concept holds understanding broader


concerns & the ethical, environmental & legal & social context of
marketing activities & programs. The cause & effects of marketing extend
beyond the company & the consumes to society as a whole. Social
responsibility also requires that marketers carefully consider the role that
they are playing & could play in terms of social welfare.

(7)

Holistic Marketing Concept : This concept is based on the development,


design & implementation of marketing programs, processes & activities
that recognizes their breadth. Holistic concept realizes that everything

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matters with marketing. Four components of Holistic marketing are as


follows:
Marketing
Department

Senior
Other
Communication Products & Channels
Management Department
Services

Integrated
Marketing

Internal
Marketing

HOLISTIC
MKTG.

Social responsible
Marketing
Relationship
Marketing
Ethics Environment
Q.6

Legal

Community

Customer Channel Partners

Differentiate between selling & marketing concept.

Ans.:
S.No.

Selling

1.

Selling is product oriented

2.

Seller is the centre


business universe

Marketing
Marketing
oriented.
of

is

customer

Buyer is the centre of the


business universe

Marketing Management

3.

Emphasis is on product.

Emphasis is on customers
want.

4.

Views Business as a goods


producing process

Views
businesses
as
a
customer satisfying process.

In it, management is sales


volume oriented

Here management is, profit


cum customer satisfaction
oriented.

6.

It starts with the seller and is


preoccupied all time with
the needs of the seller

It starts with the buyer and


focuses constantly on the
needs of the buyers

It is based on push approach

It is based on pull approach

Seeks to quickly convert


products into cash

Seeks to convert customer


needs into products.

9.

Sellers motives dominate


marketing communication

Marketing communicatiion is
looked upon as the tool for
communicating
the
benefits/satisfactions
provided by the product.

5.

Q.7

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How business & marketing are changing in India?

Ans.: Earlier business and marketing has very limited significance in the Indian
economy, but with the advent of LPG era in 1991 the scenario of business and
marketing changed. Now the market place isnt what is used to be earlier. It has
new behaviours, new opportunities & new challenges. These changes are due to
the following reasons:
(i)

Changing Technology The digital revolution has created an information


age. The information age promises to lead to more accurate levels of
production more targeted communications & more relevant pricing.
Todays business is carried on over electronic networks, internal external
& the Internet.

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(ii)

Globalization Technological advances in transportation shipping &


communication have made it easier for companies to market in other
countries & easier for consumers to buy products & services from
marketers in other countries

(iii)

Deregulation Many countries have deregulation industries to create


greater competition. In India, the domestic airline industry have been
growing very rapidly after deregulations.

(iv)

Privatization Many countries have converted public companies to


private ownership & management to increase their efficiency.

(v)

Customer Empowerment Customers increasingly expect higher quality


& service. They want more convenience. They can obtain extensive
product information from the Internet & other sources.

(vi)

Customization The company is able to produce individually


differentiated goods whether ordered in person on the phone or online.
The company also has the capacity to interact with each customer
personally.

(vii)

Heightened Competition Brand manufactures are facing intensive


competition from domestic & foreign brands which is resulting in rising
promotion costs & shrinking profit margins.

(viii) Industry Convergence Industry boundaries are blurring at an incredible


rate as companies are recognizing that new opportunitys lie at the
intersection of two or more industries. Eg: Pharmaceutical companies are
now adding biogenetic research capacities in order to formulate new
drugs, new cosmetics, new foods.

Marketing Management

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Case Study
Growing trends of E- mandis
Its time for consumers good old subziwallah to make way for the e- veggie vendors.
With the changing time, consumers needs and requirements are also changing. So to
stay in market and to hold your market space it has become essential for the
conventional vendors to update themselves as per the changing demands of time. One
example of this conversion from traditional vendors to techno vendors is
www.freshetarian.com.
www.freshetarian.in , a city based online portal, where you can order all the basic
grocery items, from toiletries to fresh fruits and vegetables. All thanks to the growing
demands of the corporate sector on Jaipurites, several e commerce ventures have
develped a loyal clientele in the city. These e mandis have proved to be very convenient
for corporate employees as it has proved itself to be a hassel free shopping.
These e sabzi or e grocery shopping saves time, fuel and everything is delivered at your
door step. And to make shopping more easier, they offer the options of both card
payment and COD. The other advantage of these online portals are that they help the
consumers in keeping the track of their monthly expenditures on grocery. Since these
portals let consumers to place their orders anytime, they tend to buy lesser amount of
grocery items at a time and that helps in avoiding wastage.
This new e commerce platform follows the warehouse system and caters to both
corporate and retail audiences. They also follow a minimum dilevery criteria for
example : Minimum 50 rs order is required for fruits and veggies and 200rs for other
grocery items.
So, next time when you make your list of routine grocey items, you dont have to march
to the supermarket with your list, just log on to these kinds of e sabzi mandis from the
comfort of your living room.
Questions :
Q.1 What are the problems faced by conventional/traditional vendors?
Q.2
How e vendors has proved themselves better to consumers in comparison to
traditional vendors?
Q.3 How can you relate the concept of selling to marketing in context of this case
study?

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Multiple Choice Questions


1) Marketing is
a) A science
b) An art
c) Both
d) None of the above
2) Marketing myopia is a result of
a) Production concept
b) Product concept
c) Marketing concept
d) None of the above
3) Nature of marketing is
a) Dynamic and developmental
b) Responsive
c) Innovative and creative
d) All of the above
e) None of the above
4) The four Ps of marketing activity are :
a) Product, price, place and promotion
b) Product, purchase, price and people
c) People, process, place and pricing
d) None of the above
5) Push Strategy falls under which concept of marketing?
a) Selling Concept
b) Marketing Concept
c) Social Marketing concept

Marketing Management

d) None of the above


6) In terms of marketing, what are the key customer markets?
a) Resource markets
b) Business markets
c) Non profit and governmental markets
d) b& c both
e) All of the above

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Unit 2

Market Segmentation

Q.1

Describe the concept of market segmentation?

Ans: It is a fact that the need and requirements of each segment of the market vary in
terms of price, quality and other features of the product and services. Besides, no
marketer can produce a single product for all the customers in particular
category. Thus, the right thing to do is market segmentation. i.e making
marketing efforts in such a way that they are directed at a specific segment or
group of people.
The idea behind segmentation is to identify different types of buyers based on
their behaviours and identify them so that it would be easy for the firm in
marketing their products and services. The concept of segmentation and
targeting is based on the fact that markets are heterogeneous. No two buyers of
the product are identical in all respects. However, large groups of buyers have
some common characteristics which lead to identical buying and it is this group
which constitutes a market segment. Segmentation enables the marketers to give
better attention to the selection of customers and offer an appropriate marketing
mix for each chosen market, or a group of buyers having homogeneous demand.
In broader sense, market segmentation can be defined as the process of taking
the total heterogeneous market for the product and dividing it into sub markets
or segments, each of which tends to be homogeneous in all major aspects. It is a
method for achieving maximum market response by recognizing differences in
the response characteristics of various parts of the market. Thus we can say that
it is a consumer oriented philosophy.

Marketing Management

Q.2

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Define the term market segmentation? What is the benefit of segmenting the
markets?
OR

What do you mean by the term Market Segmentation? What is the need of
segmenting the market?
Ans.: The process of defining and subdividing a large heterogeneous market into
homogenous segments which have clearly identifiable characteristics having
similar needs, wants, or demand characteristics. Its objective is
to design a marketing mix that precisely matches
the expectations of customers in the targeted segment.
Four basic factors that affect market segmentation are
(1) clear identification of the segment,
(2) measurability of its effective size,
(3) its accessibility through promotional efforts, and
(4) its appropriateness to the policies and resources of the company.
The four basic market segmentation-strategies are based on
(a) Behavioral differences
(b) Demographic differences,
(c) Psychographic differences, and
(d) Geographical differences

Benefits of segmenting the market are :


(1)

It helps the marketer in facilitating proper choice of target market :


Segmentation helps in distinguishing one customer group from another &
thereby unables him to decide which segment should form his target
market.

(2)

It facilitates the marketer in taping of the Market: Segmentation also


enables the marketer to crystallize the needs of the target buyers i.e it
helps in finding the hidden needs of customers thereby making the
required improvements in existing products. It also helps him to generate
an accurate predication of the likely responses from each segment of the

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target buyers as important feedback distinguishe successes quickly and


indicates requirements for product modifications to fit consumer needs
Eg. Ford Strategy Through segmentation car manufacturers have gained
useful insights on the product features to be provided to different
segments of car buyers.
(3)

It makes the Marketing Effort More Efficient & Economic :


Segmentation makes the marketing effort more efficient & economic. It
ensures that the marketing effort is concentrated on well defined &
carefully chooses segments. After all, no firm can normally afford to attack
& tap the entire market.

(4)

Helps the company in differentiating their products and services from


other available substitutes

(5)

It helps the company to avoid unprofitable markets.

(6)

Optimize the use of resources, with more efficiency and less waste,
particularly when marketing resources are limited.

(7)

Helps achieve the specialization required in product, distribution,


promotion & pricing for matching the customer group & develop
marketing offers.

Therefore, to compete more effectively, many companies go for target marketing


which can establish & communicate the distinctive benefits of the companys
market offering. This process is called as market segmentation.
Q.3

How can a company divide a market into segments?


OR
What are the basic market segmentation strategies?

Ans.: Market can be segmented using several relevant basis, they are :Geographic Segmentation
Region
City

Marketing Management

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Rural, Semi urban, Urban


Demographic Segmentation
Age
Family Size
Gender
Income
Occupation
Education
Socio Economic
Classification
Psychographic
Segmentation
Lifestyle
Personality
Behavioural Segmentation
Occasions
Benefits
User Status
User Rate
Loyalty Status
Readiness Stage
Attitude towards product
(i)

Geographic Segmentation : Geographic segmentation calls for dividing


the market into different geographical units such as nations, regions,
countries, cities or neighborhood. One of the major geographic
segmentation in India is the division of rural & urban areas. In addition to

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this availability of infrastructure like roads & electricity make the task of
geographic segmentation important.
For most products, penetration levels in rural areas are lower than in
urban areas. E.g.: Haats & mandis serve important roles in the exchange of
goods & services in rural areas.
(ii)

Demographic Segmentation : In demographic segmentation, the market


is divided into groups on the basis of variables such as age, family size,
family life cycle, gender, income occupation, education religion, race
generation, nationality & social class.
Age & Life Cycle Stage : Consumer wants & abilities change with
age. E.g.: Hindustan Uni Level introduced Pears soap in pink
colour specially for children. Johnson & Johnson Baby Powder &
Talcum Powder are classic examples of products for infants &
children. Television channels in India indicate the segmentation
based on age & life cycle. There are channels like Aastha &
Sanskaar target which towards the old generation, cartoon
network, Disney are channels for children etc.
Gender : Men & women have different behavioral orientation.
Gender differentiation has been long applied to product categories
such as clothing, cosmetics & magazines. Eg: Axe deodorant is
positioned as a masculine product. Park avenue from Raymond is
positioned as masculine brand. Honda Pleasure is a brand
specifically designed for women in the scooter segment.
Income : Income segmentation is a long standing practice in a
variety of products & services as it determines the ability of
consumers to participate in market exchange process. Thus it is also
a basic segmentation variable. Eg: Nirma Washing Powder, was
launched as the lowest priced detergent in India primarily targeted
at middle income group.
Generation : Each generation is profoundly influenced by the time
in which it grows- the music, movies, politics and defining events
of that generation.
Social Class : Social class has a strong influence on preference in
cars, clothing, home , furnishings, leisure activities, reading habits,
retailers etc.

Marketing Management

(iii)

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Psychographic Segmentation : In psychographic segmentation, elements


like personality traits, attitude lifestyle & value system form the base.

SRI Consulting Business Intelligences VALS (Value, Aattitude, Lifestyle)


framework is one of the most popular commercially available classification
system based on psychographic measurements. The main dimensions of the
VALS framework are primary motivation (the horizontal dimension) and
resources (the vertical dimension). The vertical dimension segments people
based on the degree to which they are innovative and have resources such as
income, education, self-confidence, intelligence, leadership skills, and energy.
The horizontal dimension represents primary motivations and includes three
distinct types:
Consumers driven by knowledge and principles are motivated primarily by
ideals. These consumers include groups called Thinkers and Believers.
Consumers driven by demonstrating success to their peers are motivated
primarily by achievement. These consumers include groups referred to as
Achievers and Strivers.
Consumers driven by a desire for social or physical activity, variety, and risk
taking are motivated primarily by self-expression. These consumers include the
groups known as Experiencers and Makers.

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Innovator. These consumers are on the leading edge of change, have the
highest incomes, and such high self-esteem and abundant resources that
they can induldge in any or all self-orientations. They are successful,
sophisticated, active. Image is important to them as an expression of taste,
independence, and character. Their consumer choices are directed toward
the "finer things in life." Purchases often reflect cultivated tastes for
relatively upscale, niche oriented products and services.
Thinkers. These consumers are the high-resource group of those who are
motivated by ideals. They are mature, satisfied, reflective people who are
responsible, well-educated professionals. They value order, knowledge
and responsibility. Their leisure activities center on their homes, but they
are well informed about what goes on in the world and are open to new
ideas and social change. They have high incomes but are practical
consumers and rational decision makers. Thus they favour durability,
functionality and value in products.

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Believers. These consumers are the low-resource group of those who are
motivated by ideals. They are conservative, conventional, traditional and
predictable consumers with concrete beliefs. They favor familiar products
and established brands. Their lives are centered on family, community,
and the nation. They have modest incomes.
Achievers. These consumers are the high-resource group of those who are
motivated by achievement. They are successful work-oriented people who
get their satisfaction from their jobs and families. They are politically
conservative and respect authority and the status quo. They favor
established premium products and services that demonstrate success to
their peers.
Strivers. These consumers are the low-resource group of those who are
motivated by achievements. They are trendy and fun loving but have
fewer economic, social, and psychological resources. Style is extremely
important to them as they strive to emulate people they admire.
Experiencers. These consumers are the high-resource group of those who
seek variety and excitement. They are the young and enthusiastic. They
have a lot of energy, which they pour into fashion, entertainment and
socializing. They are avid and impulsive consumers, spending heavily on
clothing, fast-foods, music, and other youthful favorites, with particular
emphasis on new products and services.
Makers. These consumers are the low-resource group of those who are
motivated by self-expression. They are practical people who value selfsufficiency. They are focused on the familiar-family, work, and physical
recreation-and have little interest in the broader world. As consumers, they
appreciate practical and functional products.
Survivors. These consumers have the lowest incomes. They have too few
resources to be included in any consumer self-orientation. They are elderly,
passive people who are concerned about change. They tend to be brand-loyal
consumers.

(iv)

Behavioural Segmentation : Markets can be segmented on the basis of


buyer behaviour as well. The primary idea in buyer behaviour is that
different customer groups expect different benefits from the same product
& accordingly they will be different in their motives in owning it.

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In buyer behavior based segmentation also, several buying variables are


taken into consideration while segmenting the consumers under this kind
of segmentation. These behavioral variable are :
Buying on occasions Occassions can be defined in terms of the time of day, week,
month, year or in terms of other well defined temporal aspects of a consumers life.
Buying on occasions is the first form of behavioral segmentation. Products such as
chocolates and premium foods will sell on festivals. Similarly, confectioneries will
sell when there is a party. Thus these products are generally targeted by behavioral
segmentation.
The best example of targeting buying on occasions is Hallmark cards greeting
cards for all occasions. The primary targeting of hallmark was that be it any
occasion, you will find the right kind of card for you. Thus you have the perfect
option to express yourself.
Benefits sought Buyers can also be classified according to the benefits they
seek. Many product categories offer different products targeted at people who
seek different set of benefits. Hair shampoos , for example, offer benefits such as
basic cleaning of hairs, conditioning, medicinal properties, split ends solutions,
anti dandruff and many other benefits.
Since benefits that consumer seek from the same product or service category
vary, this segmentation approach is very useful in identifying market
opportunities and deciding on the value proposition to offer.
Loyalty There are two ways to grow a business. First is to acquire new
customers and second is to retain your existing customers. The more loyal your
customer is to you, the more your customer base will increase. Thats one more
kind of behavior which marketers target. Buyers can be divided into four groups
according to brand loyalty status:
o Hard Core Loyal consumers who buy only one brand all the time
o Split Loyal Consumers who are loyal to two or three brands.
o Shifting Loyal consumers who shift loyalty from one brand to another
o Switchers Consumers who show no loyalty to any brand.
User status and usage rate Under this behavioral segmentation the consumers
can be segmented into two broad categories
o User Status

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Non user
Ex user
Potential user
First time user
Regular user
o Usage Rate
Light
Medium
Heavy
Lets take the example of beauty parlors or personal care. There are some customers who
use a lot of personal care products whereas others do not use personal care products
much. Thus depending on their usage the customers can be targeted.
Buyer Readiness Stage : It groups individuals according to their readiness to
purchase the product. This segmentation model is particularly useful in
formulating and monitoring the marketing communication strategies employed
to move consumers towards purchase of a product or brand. Some consumer
may be unaware about the product, some are aware, some are informed, some
are interested, some desire the product and some may intend to buy this all
helps in designing the marketing programs.
Attitude: Five attitude groups can be found in market enthusiastic, positive,
indifferent, negative and hostile. For making a product or its communication
stategy or its marketing strategy, it is important to analyse and evaluate the
attitude of target consumers too.
Q.4

What are the different levels of market segmentation?

Ans.: The starting point for discussing segmentation is mass marketing. In mass
marketing, the seller engages in mass production, mass distribution & mass
promotion of one product for all buyer. Eg: Henry ford offered the model T-ford
in one color i.e. black.
The argument for mass marketing is that it creates the largest potential market,
which leads to lower cost, which in turn can lead to lower prices and higher
margins. However, proliferation of advertising media & distribution channel is
making it difficult and increasingly expensive to reach a mass audience.

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Therefore more companies are turning to micro marketing at one of four levels:
segments, niches, local & individual.
Segment Marketing : A market segment consist of a group of customers who
share a similar set of needs & wants. Eg: We can distinguish between car buyers
who are primarily seeking low cost basic transportation, seeking a luxurious
driving experience & those seeking driving thrills & performance.
But we should not get confuse in between segment & sector . A car company
might say that it will target young, middle income car buyers. The problem is
that young, middle income car buyers will differ about what they want in a car.
Some may want a low cost car while others will want an expensive car. Young
middle car buyers are a sector, not a segment.
The marketer does not create the segments, the marketers task is to identify the
segments & decide one which to target. Segment marketing offers key benefits
over mass marketing as the company can design better price & deliver the
product or service to satisfy the target market.
Niche Marketing : A niche is a narrowly defined customer group seeking a
distinctive mix of benefits. Marketers usually identify niches by dividing a
segment into sub segments. The customers in the niche have distinctive sets of
needs, they will pay a premium to the firm that best satisfies their needs, the
niche is not likely to attract other competitors & the niche has size, profit &
growth potential.
Eg : (i) Ezee, the liquid detergent from godrej is a fabric washing product for
woolen clothes
(iii)

Crack and ointment for pain is another product with niche focus. This
product is primarily targeted at women for prevention of cracked heels.

(iv)

Itch guard, focuses on niche requirement of treating itching sensation

(v)

Television channels particularly focusing on religion & spirituality.

(vi)

Matrimonial websites like www.shadi.com. Niche Marketers understand


their customer needs so well that customer is willing to pay a premium &
as marketing efficiency increases niches that were too small, becomes
more profitable.

Local Marketing : Target marketing is leading to marketing programs tailored to


the needs & wants of local customers groups. Many banks in India have

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specialized branches that cater to the needs of corporate customer. The in city
courier companies in many cities specialize in delivering packets on the same
day.
The marketing activities concentrate on getting as close and personally relevant
to the individual customers as possible.
Customization : The ultimate level of segmentations leads to one to one
marketing. Todays customers are taking more individual initiative in
determining what & how to buy. They log on to the internet, look up
information, evaluates the product /service & in many cases, design the product
they want. Companies sees it more efficient as the marketers can achieve more
precision & effectiveness by addressing individual needs.
Q.5

Discuss the attributes of effective segmentation criteria?

Ans: Market segments must rate favorably on 5 key criterias:


1.
Substantial The segment should be sizeable enough to make the
firm profitable.
2.
Measurable The segment should be such that all its measurable
characteristics like market size, purchasing power, demand can be
found out.
3.
Accessible The segment should be such that the product can
reach and serve the segment via distribution channels and the
promotions can reach them via proper media.
4.
Differential All the segments should be different than each other
and should not overlap. If they do, they should come under one
segment. That is if more than one segments respond similarly to
one kind of marketing mix, they should grouped under one
segment.
5.
Actionable The segments should be such that effective marketing
programs can be implemented.
Q.6)

Discuss the strategies for market targeting?


OR

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Discuss the ways of evaluating & selecting a market segments?


OR
Explain different targeting strategies which may be helpful in evaluating &
selecting the market segment?
Ans: In evaluating different market segments, every firm considers two factors :
a) The segments overall attractiveness
b) The companys objectives and resources
Once the company has evaluated all market segment, it then goes for target
market selection. The five patterns/strategies of target market selection are :
a)
b)
c)
d)
e)

Single segment concentration


Selective Specialization
Product Specialization
Market Specialization
Full market coverage

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a) A single segment strategy involves the firm choosing its single preferred market
segment and targeting it with a single marketing mix, aimed at serving the
segment as well as possible. This is generally chosen by a smaller firm, or one
which has only located one attractive market segment.
Example: Speciality Hospitals focus on specific therapeutic areas such as cancer
care, heart care, neonatal care etc.
b) A selective specialization occurs when a firm targets its products at a variety of
different segments using different marketing mixes. Often the product
characteristics may be different across different segments; however it may be
only the marketing and promotional details that are different across the
segments
c) A product specialisation strategy occurs when a firm possesses a particularly
attractive product, and hence tailors it to a variety of feasible market segments.
d) A market specialization strategy involves a firm which finds one market
segment very attractive, and hence that segment a variety of different products.

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This is often done by a firm to fill up a segment, and hence discourage any
competitors from entering.
e) Full market coverage occurs when a firm tries to serve all segments in an entire
market. This does not always imply a mass market strategy; instead a firm can
offer a variety of marketing mixes to every major segment in a market. This is
what many supermarket chains have attempted with their value, standard and
premium ranges.
Another strategy whose use is increasing is individual marketing, in which the
marketing mix is tailored on an individual consumer basis. While in the past
impractical, individual marketing is becoming more viable thanks to advances in
technology.
Q.7)

Discuss the concept of product positioning. Also explain its process.

Ans:

Positioning is what the customer believes about your product's value, features,
and benefits; it is a comparison to the other available alternatives offered by the
competition. These beliefs tend to based on customer experiences and evidence,
rather than awareness created by advertising or promotion.
Positioning is what the customer believes and not what the provider wants them
to believe. Positioning can change due the counter measures taken at the
competition. Managing your product positioning requires that you know your
customer and that you understand your competition; generally, this is the job of
market research not just what the enterpreneur thinks is true.

Generally companies make marketing strategy that aims to make a brand occupy a
distinct position, relative to competing brands in the mind of the customer.
Companies can apply this strategy either by
emphasizing the distinguishing features of their brand (what it is, what it does
and how, etc.) or
they may try to create a suitable image (inexpensive or premium, utilitarian or
luxurious, entry-level or high-end, etc.) through advertising.
Marketers manage product positioning by focusing their marketing activities on a
positioning strategy. Pricing, promotion, channels of distribution, and advertising

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all are geared to maximize the chosen positioning strategy. Once a brand is
positioned, it is very difficult to reposition it without destroying its credibility.
Product positioning can be of two types :
1. Re-positioning involves changing the identity of a product, relative to the
identity of competing products, in the collective minds of the target market.
2. De-positioning involves attempting to change the identity of competing
products, relative to the identity of your own product, in the collective minds of
the target market.
Product positioning process
Generally, the product positioning process involves:
1. Defining the market in which the product or brand will compete (who the
relevant buyers are)
2. Identifying the attributes (also called dimensions) that define the product 'space'
3. Collecting information from a sample of customers about their perceptions of
each product on the relevant attributes
4. Determine each product's share of mind.
5. Determine each product's current location in the product space
6. Determine the target market's preferred combination of attributes (referred to as
an ideal vector)
7. Examine the fit between: The position of your product and the position of the
ideal vector
Q.8

Discuss the major product positioning strategies?

Ans: Positioning strategy, in general, can be expressed as applications of defining a


product and brand to customers and obtaining a specific location against
competitors in consumers mind. In marketing management, positioning
strategies have a significant place because it is only the perception in consumers
mind which is exposed by continuous communication efforts, that defines a
brand and makes it different.
Generally, there are six basic strategies for product positioning:

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1. By attribute or benefit- This is the most frequently used positioning strategy. It


focuses upon the characteristics of the product or customer benefits. For
motorbikes, some are emphasizing on fuel economy, some on power, looks and
other stress on their durability. Hero Cycles Ltd. positions first, emphasizing
durability and style for its cycle.. For toothpaste, it might be the mint taste or
tartar control.
Many a times we have noticed that a product is positioned along two or more
product characterstics at the same time. For eg : In case of toothpaste market,
most toothpaste insists on freshness and cavity fighter as the product
characteristics. It is always tempting to try to position along several product
characteristics.
2. By use or application- Basically this type of positioning by use represents a
second or third position for the brand, such type of positioning is done
deliberately to expand the brands market. If a company introduces any new uses
of a product that will automatically expand the brands market. For eg: Nescafe
Coffee for many years positioned itself as a winter product and advertised
mainly in winter but the introduction of cold coffee has developed a positioned
strategy for summer months also.
3. By user- This positioning strategy is used by companies when its main
consideration is well defined target consumers. For eg : Blackberry Mobile
phones. A company has positioned its phones especially for business class and
executive professionals. The company has designed its products features in such
a way so that it can support and meet all the requirements of the working
professional class users.
4. By product or service class- In some product class we have to make sure critical
positioning decisions. For eg. Freeze dried coffee needed to positions itself with
respect to regular and instant coffee.
5. By competitor- In this type of positioning, company try to position its product
while taking the reference of its competitors. It can be done in either of two ways
:

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Against a Competitor: Positioning your product directly against a


competitors typically requires a specific product superiority claim. A
memorable example is Avis Rental Cars Were #2. We try harder.
Away from a Competitor: Positioning yourself as the opposite of your
competitor can help you get attention in a market
6.

By price or quality- Lets take an example and understand this approach.


Suppose we have to go and buy a pair of jeans, as soon as we enter in the
shop we will find different range of jeans from different brands and of
different price range. Consumers have a mind set that if a product is cheap as
compared to other competitors products then it would be of lower quality or
vice versa. But it is not true always. Now customers are more smart and are
more knowledge full. Marketers now need to position their products in
smarter way providing best deal offers. Nut it is upto the marketer that what
it focuses on more price or quality.

7. Based on cultural Symbols In todays world it has become essential for


marketers to identify the cultural aspects of their consumers. Many
companies use cultural symbols to differentiate their brands from that of
competitors. Eg . The Maharaja logo of Air India, represent the traditional
way of welcoming guests in India.

Case Study
India is also known as the Queen of Spices. It has always attracted the world with her
exotic masalas. The mystique of Indian spices magnetises the whole world to India.
'The lure of the unknown', which repeatedly brought visitors to the Spice Land, is the
presence of nature's rich elements in those fresh and highly aromatic spices.
Ramdev Food Products Pvt Ltd, was amongst the first few companies in India to
venture into branded spices. The company grew from a small flour mill to a big concern
with a decent product mix within a short span. The company had also made its
presence felt in the international market but they have preserved the same values in all
their products ever since they started as a small unit in 1965, in Ahmedabad, India. A
small step became a giant leap in no time.

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Ramdev Food Products Pvt Ltd had been following a duel branding strategy for
catering in the global market. Within the country, it had been competing with big time
players like MDH, Badshah and Eastern through continuous innovations in packaging,
excellent quality and a strong distribution network. The company had also gone for
diversification, thereby enriching its product portfolio.
Ramdev have positioned themselves very beautifully in consumers mind not only at
national level but also at international level. They have been able to do so because of
their commitment that helped them to keep their promise of purity and freshness in all
their products for all these years.
They work on the philosophy of 'reaching a customer's heart through quality' which
has enabled them to spread the rich Indian heritage to millions of homes all over the
globe. And that's their pride. Indian food. The Indian way.

Questions
Q.1)

What level of market segmentation has Ramdev involved in? Explain

Q.2)

On what basis Ramdev can segment their consumer market? Suggest

Q.3)

On what grounds Ramdev can evaluate and select their market


segments?

Q.4)

What all strategies Ramdev can use to position their products in


consumer market? Suggest

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Multiple Choice Questions


1 When a company idebtifies the parts of the market it can serve best and most
profitably, it is practicing ______
a>Market Targetting
b>Differentiation
c>Mass Marketing
d>Segmenting
e>Concentrated Marketing
2 Markets can be segmented into group of nonusers, ex-users, potential users, firsttime users, and regular users of a product. This method of segmentation is called
________.
a>Benefit
b> Usage rate
c> Usage status
d> Loyalty status
e> Behavior
3 International Drilling Company segments its foreign markets by their overall level
of economic development. This firm segments on what basis?
a> Legal factors
b> Cultural factors
c> Economic factors
d> Political factors
e> Geographic factors
4 Developing a strong position within several market segments creates more total
sales than ___________ marketing across all segments
a> Individual
b> Niche
c> Target
d> Differentiated
e> Undifferentiated

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5 The _________________ process is the process of evaluating each market segments


attractiveness and selecting one or more segments to enter
a> Market Segmentation
b> Market differentiation
c> Market targeting
d> Market positioning
6 If a market were to be reduced from a very large market to a very small or
customized one, what would be the second step or level of this reduction process
a> Mass market
b> Micro market
c> Segment market
d> Niche market
7 Which of the following would be a benefit of segment marketing with respect to
mass marketing?
a> It allows a company to conduct local and individualized marketing to attract
customers.
b> It offers smaller companies the opportunity to compete by focusing on
overlooked markets
c> It creates the largest potential market
d> The company can market more effectively by fine tuning its products, prices and
programs to the needs of carefully designed segments
8 If an automobile company through its segmentation process were to focus on
specialized subsegments of the SUV market, such as standard SUVs and luxury
SUVs, ___________ would be the probable segmentation process being followed.
a> Micro marketing
b> Segment marketing
c> Niche marketing
d> Macro marketing
9 As described described in the text, compulsive, gregarious, authoritarian, and
ambitious would all be: _________________ descriptions found in psychographic
market segments.
a> Lifestyle
b> Social class

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c> Generation
d> Personality
10 If a marketer were to divide a market into groups based on consumer knowledge,
attitude, use, or response to a product, the marketer would be using which of the
following segmentation forms?
a> Loyalty and use segmentation
b> Behvioral Segmentation
c> Psychographic Segmentation
d> Occasion segmentation
11

To be useful, market segment must be:


a> Gender specific
b> Internet oriented and have access to the Web
c> Style conscious
d> Measurable

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40

Unit 3

Product and Price Decision


Q.1

What do you mean by the term product mix? Discuss its concept. What are
the basis of product classification?

Ans : In marketing, a product is anything that can be offered to a market that might
satisfy a want or need. The product concept proposes that consumers will prefer
products that have better quality, performance and features as opposed to a
normal product. The concept is truly applicable in some niches such as
electronics and mobile handsets.
Product mix, also known as product assortment, refers to a combination of
products manufactured or traded by the same business house. An organization
creates many products and, of course, sells them. So, the product mix is
everything organization sells. Product mix is a combination of products
manufactured or traded by the same business house to reinforce their presence in
the market, increase market share and increase the turnover for more
profitability.
A product line is a group of products within the product mix that are closely
related, either because they function in a similar manner, are sold to the same
customer groups, are marketed through the same types of outlets, or fall within
given price ranges. For example, all the courses a university offers constitute its
product mix; courses in the marketing department constitute a product line; and
the basic marketing course is a product item.

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Dimensions of the product mix


1. The length of a product mix - the total number of items that company carries
within its product line.
2. Width of the product mix-An organization creates a number of product lines.
The total number of theirs product line is called product mix width.
3. Depth of product Mix The number of versions and variants offered for each
product in the line.
4. Consistency of the product Mix : It refers to how closely related the various
product lines are in their usage, production, distribution and marketing or in
some other way.
Normally the product mix is within the synergy of other products for a medium
size organization. However large groups of Industries may have diversified
products within core competency. Hindustan Unilever, Godrej, Reliance in India
are some of the examples.
Product Mix of HUL
The width of the HUL Product mix:
The width of the product mix refers to the number of different product line the
company carries :
Personal wash, Laundry, Skin care, Oral care, Deodorants, Colour cosmetics,
Ayurvedic personal and health care, Shampoo, Tea, Coffee, Foods ,Ice cream
Width = 12

The length of the HUL Product mix:


The Length of the product mix refers to the total number of items in the product
mix.
E.g:
Personal wash: Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears, Rexona
Laundry: Surf excel, Rin, Wheel
Skin care: Fair & Lovely, Ponds, Vaseline, Aviance
Oral care: Pepsodent, Close up
Deodorants: Axe, Rexona
Colour cosmetics: Lakme

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Ayurvedic personal and health care: Ayush


Shampoo: Sunsilk, Clinic
Tea: Broke bond, Lipton.
Coffee: Bru
Foods: Kissan, Annapurna, Knorr
Ice cream: Kwality walls
The Depth of the HUL Product mix:
The depth of the product mix refers to the number of variants of each product
offered in the line
E.g: If close up toothpaste comes in three formulation and in three sizes, close up
has a depth of 9 = (3*3)
Products can be broadly classified on the 2 major basis. The classification criteria
is as follows :I.

On basis of durability and tangibility


i.
Non durable goods These are perishable goods and are tangible
goods that are normally consumed in one or a few uses. These type
of goods are consumed rapidly in a short period of time and are
purchased frequently. Eg. Cold drinks, Shampoos etc. These kinds
of goods require heavy advertising to induce trial and build
preference, easily availability at all locations and have small
markups.
ii.
Durable goods Durable goods are tangible goods that normally
survive very long in use. Examples include TV, fridge, car,
computer, and others. In general, these types of goods require
personal selling and service more than perishable goods, offering
greater benefits and need more seller guarantee / warranty. They
also command a higher margin
iii.
Services Services are intangible, inseparable, variable and
perishable products. They normally require more quality control,
supplier credibility and adaptability. Eg. Beauty salon services,
legal services, education services.

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II.

43

On basis of use
Consumer Goods These goods are made for the use of ultimate
consumers. They are in such a form that they can be used without
commercial processing. These goods are for personal and non
business use and for household purpose.
i.

ii.

Convenience Goods - Goods that have generally high


frequency of purchase (often purchased), take the time soon,
and requires only minimal effort (very small) in comparison
and purchase. These goods have low price and are affected
least by the fashion. Examples include cigarettes, soap,
toothpaste, batteries, candy, letters and news. Convenience
products themselves can be further grouped into three
categories, namely, staples, impulse goods and goods
emergencies.
a. Staple is consumer goods purchased on a regular
basis or periodically, such as soap and toothpaste.
b. Impulse goods are goods that are purchased without
prior planning or research effort. Example candy,
chocolate, magazines.
c. Emergency goods are goods purchased if the
consumer feels the need is urgent, such as medicines,
umbrellas and raincoats during the rainy season.
Shopping Goods Goods, that the consumer, in the
process of selection and purchase, characteristically
compares on criteria such as price, quality, and model of
each item. It can be further divided as :
i. Homogeneous shopping goods are goods that
the consumer is considered similar in quality
but different enough in price. Example,
purchase of television, washing machine etc.
ii. Heterogeneous shopping goods are goods that
have
heterogeneous
appearance
and
characteristics (features) and are considered
more important than the price aspect. For

44

iii.

iv.

example, for household goods, furniture and


clothing.
Speciality Goods - Specialist shops are goods which have
unique characteristics and / or brand identification for
which a group of consumers willing to make a special
purchasing effort. Eg. Lamborghini cars, the clothes
designed by famous designers (eg Christian Dior and
Versace etc..
Unsought Goods - Unsouqht goods are goods that are not
known to consumers or is already known, but are not
generally thought of buying it. There are two types of
unsouqht goods
a. Unsought regular products are goods that actually
exists and is known to consumers, but did not buy it.
For example, free life insurance, tombstones,
cemetery.
b. Unsought New products are products that customers
totally new and totally unknown. This article is the
result of innovation and development of new
products, so that many consumers do not know.

Industrial goods classification Industrial goods are products that companies


purchase to make other products, which they then sell. Some are used directly in
the production of the products for resale, and some are used indirectly. Unlike
consumer goods, industrial goods are classified on the basis of their use rather
than customer buying habits.
o Installations Installations are major capital items that are typically used
directly in the production of goods. Some installations, such as conveyor
systems, robotics equipment are designed and built for specialized
situations. Other installations, such as stamping machines, large
commercial ovens, are built to a standard design but can be modified to
meet individual requirements. The purchase of installations requires
extensive research and careful decision making on the part of the buyer.
Manufacturers of installations can make their availability known through
advertising. However, actual sale of installations requires the technical
knowledge and assistance that can best be provided by personal selling.

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o Accessory Equipment Goods that fall into the subcategory of accessory


equipment are capital items that are less expensive and have shorter lives
than installations. These are used to aid the production operations of an
industrial user. Examples include hand tools, computers, desk calculators,
and forklifts. Marketing companies engaged in the production of
accessory equipments should use dual distribution policy direct
distribution to major buyers and indirect distribution to small buyers.
o Raw Materials Raw materials are products that are purchased in their raw
state for the purpose of processing them into consumer or industrial
goods. Examples are iron ore, crude oil, diamonds, copper, timber, wheat,
and leather. Some (e.g., wheat) may be converted directly into another
consumer product (cereal). Others (e.g., timber) may be converted into an
intermediate product (lumber) to be resold for use in another industry
(construction). Raw materials can also be categorized as
Farm products They are supplied by producers, who turn them
over to marketing intermediaries, who provide assembly, grading,
storage, transportation and selling services. Eg. Wheat, cotton,
fruits and vegetables etc
Natural products They are limited in supply so long term supply
contracts are common. They usually have great bulk and low unit
value and must be moved from producer to user. Eg. Crude
petroleum, iron ore etc
o Fabricated Parts and Materials Fabricated parts are items that are
purchased to be placed in the final product without further processing.
Fabricated materials, on the other hand, require additional processing
before being placed in the end product. Automakers use such fabricated
parts as batteries, sun roofs, windshields, and spark plugs. They also use
several fabricated materials, including steel and upholstery fabric. As a
matter of fact, many industries actually buy more fabricated items than
raw materials. Here again, personal selling is a key component in the
marketing strategy.
o Operating Supplies. They contribute indirectly to the production of final
products or to the administration of the production process. Supplies
include computer paper, light bulbs, lubrication oil, cleaning supplies, and
office supplies. Buyers of industrial supplies do not spend a great deal of
time on their purchasing decisions unless they are ordering large

46

quantities. As a result, companies marketing supplies place their emphasis


on advertising particularly in the form of catalogs.

Q.2 Discuss product line decisions.


Ans: Important and complex decisions are made at the product line level, which tend
to determine the length of a companys product mix. The number and the types
of products, which comprise a product line, are the result of decisions at this
particular level. Decisions at the product-line level imply either
The extension of the line through the addition of new products (for example,
Coca-Cola with lemon, Baileys with coffee), or
The contraction of the line through the elimination of products, or the
replacement of existing products with new and improved ones.
The products that are added, eliminated or replaced in the product line might be
either versions of exist-ing products, models, sizes and the like or product
types that make up the product line.
In particular, product line extension can be made in two forms
1. Line stretching occurs when the company stretches its product line beyond its
current range. In this respect, when a company serves the upper market, it can
stretch its line downward by offering a new product in a lower price/quality (for
example, Mercedes Benz in cooperation with Swatch launched Smart). By
contrast, companies that serve the lower end of the market can make an upward
stretch of their line by offering a new product in a higher price/quality (for
example, Toyota introduced Lexus).
Alternatively, when a company targets its products in the middle market, it can
stretch its line both ways.
2. Line filling occurs when new products are added to a companys present line for
reasons like establishing an image of a full-line company, taking advantage of
excess capacity, filling gaps in the market and discouraging competitive actions.
For instance, there are various Kinder chocolate products in the market, such as
Kinder Milk Chocolate, Kinder Bueno, Kinder Delice, Kinder Chocolate Eggs and
Kinder Happy Hippo. Keeping both products in the companys portfolio can be
quite successful, as long as they are targeted to different segments and do not
result in customer confusion and product cannibalization.

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Product cannibalization can be caused when a new product introduced by a


company in the market takes sales out of an existing company product.
Companys product-line policy is closely related to the companys design policy.
The formulation of a design policy may aim at:
Giving attention to innovation, high quality and reliable performance, to allow
each product in the line to be differentiated from its competitors.
Making the products compatible with the needs, emotional and rational, of the
customer.
Achieving variety reduction of the range of product types in the line, and a
simplification of the design and construction, to secure reduction in overheads
and inventories.
Replacing expensive materials and those production processes requiring skilled
labour to bring about savings in production costs.
Q.3

What are the various tasks in product line appraisal?

Ans.:

Company objectives influence product line length. One objective is to create a


product line to induce up selling. Thus, maruti would like to move customers up
from maruti 800 to Alto to Zen. Thus, increasing the line length adds more &
more products / brands to the line to capture new marketing opportunities.
Eg. Videocon offers wide range of products such as refrigerators, washing
machines, televisions, microwave, & air conditioners under different brand
names to cater the needs of entry level, middle level & premium segments. Line
stretching & line filling Two ways of increasing line length:
Line Stretching : Line stretching is a measure firms undertake frequently in
product mgmt. The aim is to enter a new price slot & a new market segment.
Stretching occurs in two ways(i)

Stretching up

(ii)

Stretching down

48

At times, a company which has initially taken its position in the high price slot,
stretches the line downwards by offering products in the same line for the lower
end markets. This is called stretching down. Eg. Kodak introduced Kodak fun
time film to counter lower priced brands.
In some other instance, a company which has initially positioned its products for
the lower end markets, decides to make higher priced offers for the top slots.
This is called stretching up. Many markets have spawned surprising upscale
segments starbucks in coffee. Toyatas lexus, Hondas acura.
Two Way Stretch : Companies serving the middle market might decide to stretch
their line in both directions. Texas instruments introduced its first calculators in
the medium price medium quality end of the market. Gradually it added
calculators at the lower end taking market share from Bowmar & at the higher
end to complete with Hewlett Packard.
Line Filling : In line filling the firm introduces more items to the line to plug
certain gaps in its current range of offers to plug holes to keep out competitors.
Line filling is overdone if it results in confusion of consumer. The company
needs to differentiate each item in the consumers mind.
Eg. Videocon has several product lines & room air conditioners is one of them.
Videocon entered the market for air conditioners with just two or three models,
but later on introduced dozens of models.
Line Modernization Featuring & Pruning : Product lines need to be
modernized. Companies plan improvements to encourage customer migration to
higher valued, higher priced items. Companies like Microsoft & Oracle introduce
more advanced versions of their products. This is product modernization. Line
pruning is the opposite of line stretching. Here a consumers decision is taken to
reduce the no. of items in the line, the company is trying to save cost maximizes
efficiency in production.

Marketing Management

Q.4

49

What do you mean by Individual product decisions?

Ans: Individual product decisions focuses on the important decisions related to the
development and marketing of individual products and services. Companies
have
to
develop
strategies
for
the
items
of
their
product
lines. These decisions are about product attributes, branding, packaging,
labeling, and product support services. The below things are related in
individual product decisions. Marketers make individual product decisions for
each product including:
1.
2.
3.
4.
5.

product attributes decisions,


brand,
packaging,
labeling, and
product-support services decisions.
a. Product attributes decisions are the first task to define the product's
benefits for developing a product. These benefits are communicated and
delivered by product attribued such as quality, features, style and design.
The below factors are related with the product attributes decision.
i.
Product Quality: It is the ability of a product to perform its functions.
Product quality has two dimensionslevel and consistency. It includes
the product's overall durability, reliability, precision, case of operation
and repair and other value attributes.
ii.
Product features: A company product should offer varying features. The
company can create higher models by adding more features. A company
can identify new features and decide which ones to add to its product. A
company should periodically survey buyers who have used the product
and can come up with a rich list of new feature ideas. Features are a
competitive tool for differentiating the company's product from
competitor's products.
iii.
Product style and design: Another way to add customer value is through
distinctive product style and design. Good style and design can attract
attention, improve product performance, cut production costs, and give
the product a strong competitive advantage in the target market.
Products design is an elusive blend of form and function, quality and

50

style, art and engineering.


b. A brand is a way to identify and differentiate goods and services through
use of a name, term, sign, symbol, distinctive design element or
combination of these that identifies the maker or seller of a product or
service resulting in long-term value known as brand equity.
c. The product package and labeling are also important elements in the
product decision mix. Packaging is the activities of designing and
producing the container or wrapper for a product. Labels may range from
simple tags attached to products to complex graphics that are part of the
package. At the very least, the label identifies the product or brand. It
might also give descriptive information to describe several things about
the product ( like - who made it, where it was made, when it was made, its
contents, how it is to be used and how to use it safety.)
Both packaging and labeling, carry brand equity through appearance and
affect product performance with functionality.
d. The level of product-support services provided can also have a major
effect on the appeal of the product to a potential buyer. Customer service
is another element of product strategy. A company's offer to the
marketplace usually includes some services, which can be a minor or a
major part of the total offer. Product support servicesservices that
augment actual products. More and more companies are using product
support services as a major tool in gaining competitive advantage.
A company should design its product and support services to profitably
meet the needs of target customers. The company should assess the value
of various support services to customer and the costs of providing these
services. It can then develop a package of services that will both delight
customers and yield profits to the company.
Q.5

Define brand? What is the concept of branding? Discuss in detail.


OR
Discuss the concept of branding

Ans: A brand is a name, term, sign, symbol, or design, or a combination of these that
identifies the maker or seller of a product or service from other sellers in market.

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51

Consumers view a brand as an important part of a product, and branding can


add value to a product. For example, most consumers would perceive a bottle of
Dior perfume as a high-quality, expensive product. But the same perfume in an
unmarked bottle would likely be viewed and considered as lower in quality,
even if the fragrance were identical.
Branding has become so strong that today hardly anything goes unbranded.
Role /Importance of branding
a. Brands helps in identification of product and company
b. Brands help in effectively differentiating one company products from other
companys products
c. Branding helps in creating brand loyalty among consumers in long run
perspective.
d. It provides a base for advertising.
e. Brands also tell the buyer something about product quality. Buyers who always
buy the same brand know that they will get the same features, benefits, and
quality each time they buy.
f. The brand name becomes the basis on which a whole story can be built about a
product's special qualities.
g. The seller's brand name and trademark provide legal protection for unique
product features that otherwise might be copied by competitors.
h. Branding helps in effective and efficient evaluation and measurement of market
share
i. Brands helps in creating brand personification within the minds of consumers.
j. Branding also helps in creating an image of a company.
k. It also helps in market segmentation. The marketing company may cater
different products under same brand name to serve different market segments.
l. Branding is one way to attract new customers
Features/characterstics of good brand name:
Selecting a brand name is an important step. The brand name should be carefully
chosen since a good name can add greatly to a products success. Desirable
qualities of a good brand name include:
1). It should suggest something about the products benefits and qualities.
2). It should be easy to pronounce, spell,recognize, and remember.

52

3). It should be unique and distinctive.


4). It should translate easily into foreign languages.
5). It should be capable of registration and legal protection. Once chosen, the
brand name
must be protected.
6.) It should be sufficiently versatile to be applicable to new products of the
future.
Q.6

Discuss product life cycle, its significance?

Ans.: A product passes through distinct stages during its life & is called product life
cycle. The PLC is normally presented as a sales curve spanning the products
course from introduction to exit. The PLC concept says that each stage in the
cycle is characterized by a typical marketer behaviour & each stage leads to a
distinctive marketing strategy.
A product passes through 4 stages :
(a)

Introduction

(b)

Growth

(c)

Maturity

(d)

Decline

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53

(i) Introduction Stage : After successful test marketing of a product and making
all the required modifications in the product a marketing company
introduces the product in the market. At this stage a product is in
introductory stage of PLC which requires a focused and intense marketing
efforts to establish a clear identity and promote maximum awareness. Main
features of this stage are:
(a) At this stage, there may not be a ready market for the product so sales
remain low and limited.
(b) Profit seems a remote possibility. Thus no profits or marginal profits
are earned by the company.
(c) Demand has to be created & developed. Consumers have to be
prompted to try out the product therby encouraging many trial and
impulse purchases.
(d) One of the crucial decisions to be taken in this stage is the pricing
strategy to be adopted either market skimming or market penetration.
(ii) Growth Stage : During the market growth stage, demand for the product
increases & size of market grows. It is a period of rapid market acceptance
and substantial profit improvements. Both sales & profits goes up. But by the
time the marketer settles down with his product, competitors may enter the
scene with similar or slightly improved versions. During this stage, the goal is
to gain consumer preference and increase sales. Marketer follows competition
oriented pricing, because the total market is being shared among many firms.
Main features of this stage are:
(a) Rapid increase in sales of product.
(b) Wide acceptance of product by consumers
(c) Maximum profits to the consumers
(d) Entry of competitors
(iii) Maturity Stage : In the maturity stage, the demand tends to reach a
saturation point & there is enough supply from competitive sources. Price
competition becomes intense & exploits the brand loyalty. The marketer try
out product & packaging modification, & various promotional deals & make
special offers to new market segments so that his sales volume do not shrink.
Main features of this stage are:

54

(a) Increased competition


(b) Stable sales
(c) Declining profit
(d) Increased promotional expenditures
(iv) Decline Stage : In the decline stage, sales begin to fall. The demand for the
product shrinks, probably due to new & functionally advanced products,
becoming available in the market. The prices & margins get depressed, total
sales & profits diminish. But some firms at this stage may try to link up the
sales of these products with some other premium products they have
developed & thus try to stretch the life of the decline product.
(a) Decline in sales at fast speed
(b) Increasing losses
Thus, PLC concept helps & is used as a tool in formulating& implementing
marketing strategy.
It facilitates pre planning the product launch.
Facilitates prolonging the profitable phase.
Helps in monitoring sales results over e period of time
Facilitates investment decisions on products.
Facilitates choice of appropriate entry strategy.
Facilitates choice of the right time to exit.
Provides useful clues for managing customers.
Q.7

Discuss in details the strategies of PLC.

Ans: Marketing Strategies : Introduction Stage And the pioneer Advantage


(a) The company should try to reduce the time span of this stage as at this
stage company has to bear heavy burden of promotional expenditures
(b) If a company is introducing any new innovative product in the market
then it should try to keep its price high. This high pricing for innovative
products should be done.

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55

(c) Well settlement and establishment of channels of distribution should be


done.
(d) Use all the suitable promotional tools as per the product requirements so
as to make a space in consumers mind.
Marketing Strategies : Growth Stage
(a) In case of entry of competitors, a firm should reduce its prices
(b) Improve the product quality and ads new product features and improved
styling.
(c) Add new models and flanker products (i.e products of different sizes,
flavors etc)
(d) Enter new market segments.
(e) A company should have an effective and efficient supply chain
management by increasing distribution coverage and entering new
distribution channels.
(f) Lower prices to attract next layer of price sensitive buyers.
(g) Company should come up with new uses or needs of the existing product.
(h) Shifts from product awareness advertising to product preference
advertising
Marketing Strategies : Maturity and Saturation Stage
(a) Product alteration and modification : It can be done by quality
improvements (by increasing the products functional performanc new
and improved products) , feature improvements (by adding new features
that expand the products performance, versatility, safety or convenience)
or style improvement (by increasing products esthetic appeal).
(b) Market modification : It can be done by expanding the number of brand
users by converting non users, by entering new market segments, by
winning competitors customers
(c) Differential Advantage Strategy : Firm may use this by creating some
unique features in its product.
(d) Re positioning of Brand : A firm may also reposition its brand in order to
maintain its market space. This strategy also helps in re gaining its market
position.
(e) Marketing program modifications can also be used to stimulate sales.

56

Marketing Strategies : Decline Stage


(a) Selective Distribution : Company should switch its distribution level from
extensive distribution to selective distribution.
(b) Establish a system for identifying weak areas. Appoint a product review
committee with representatives from marketing, R & D, manufacturing
and finance.
(c) Increase the firms investment to dominate the market or strengthen its
competitive position OR maintain the firms investment level until the
uncertainties about the industry are resolved OR decrease the firms
investment level selectively, by dropping unprofitable customers group
while simultaneously strengthing the firms investment in lucrative
niches.
(d) Divesting the business quickly by disposing of its assets as
advantageously as possible.
Q.8

What are the various stages in New Product Development.


OR
Explain the steps in NPD process.

Ans.: The various stages in NPD are :(1)

Generating New Product Ideas : New product ideas may come from
customers, dealers, in company sources including the market research
group & external research organization. Customers problems are the
most fertile ground for the generation of new product ideas. In a variety of
product, ranging from shampoos to computers, company workforce,
market research staff, R&D staff & salesmen are also sources of new
product ideas. Market research group are a particularly useful sources.
They conduct frequent studies on the consumers, products, competition
etc. These studies often reveal product gaps- gaps between existing
supply of products.
Gravity techniques like brainstorming & synectics are also
product idea generation. In brainstorming, a small group of
encouraged to come up with ideas on a specified problem. In
the real problems is initially kept away from the group & only

used for
people is
synectics,
a broader

Marketing Management

57

framework is given to them. Sometimes new product ideas come out just
as a matter of happening.
Eg. Portable stereo cassette player of Sony of Japan.
(2)

Idea Screening : In this stage, various new products ideas are put under
rigorous screening by evaluation committees. Answers are sought like:
It there a felt need for the new product? It is an improvement over the
new product? etc.

(3)

Concept Testing : Concept testing is different from market test / test


marketing. What is tested at this stage is the product concept itself,
whether the prospective customers understand the product ideas, whether
they are receptive forwards the ideas; whether they actually need a
product. This exercise helps the firm to thrash out much of the vagueness
associated with the new product idea. Concept testing is of special
importance when a totally new product in contrast to a mee too product
is being planned for introduction.

(4)

Business / Market Analysis : This stage is of vital importance because


several important decisions regarding the project are undertaken based on
the analysis done at this stage.
This stage will decide whether from the financial & marketing point of
view, the project is worth proceeding with. Investment analysis &
profitability analysis of the project under difference assumptions are made
at this stage.

(5)

Estimating the Demand for New Product : Firms usually take up


estimating the demand for the new product as a part of business analysis
/ market analysis. There are 2 methods to estimate demand of new
products :(a) Substitution method
(b) End use method
In substitution method, the demand for the existing product is forecasted
using standard forecasting method. Based on that, an idea of the demand
for the new product is gained. Analysis will show which products &
market are open for substitution by the new product. The estimated

58

demand for the existing product can serve as the maximum limit for the
demand for the new product.
In, end use method, products that have an altogether new end use do
come to the marketer once in a while. The only way to assess the demand
for such products is to define the end use of the new product & to locate
the potential customers for it. The aggregate of potential customers in each
use category is taken as the potential demand in that category. By adding
the demand in the various use categories, one can get an indication of the
total potential demand for the new product. This is to be taken as the
upper limit of potential. In this method, the forecaster has to be
particularly cautious in defining the end use for the product.

Q.9

(6)

Actual Development of the Product : In this stage, the firm develops the
product as such. In the actual development, production & marketing
departments are actively involved besides R & D.

(7)

Market Test : Now, the new product has to be tried out in selected market
segments. Market test is essentially a risk control tool. It is experimental
marketing at minimum cost & risk. When firms decide on a full scale
manufacturing & marketing of the product on the basis of the results of
the experiment, it helps avoid costly business errors.

(8)

Test Marketing : In test marketing, the new product, with the support of
the chosen marketing mix is actually launched & marketed in few selected
cities / towns / territories. Test marketing needs careful handling. Care is
required in the first place in selecting the test markets. Test marketing is
also a time consuming process, it has to be carried out for a fairly long
duration in order to obtain a reliable indications. Eg. HUL introduced
organics, but failed.

(9)

Commercialization : At this stage, the company takes the decision to go in


for large scale manufacturing & marketing of the product. At this stage
the company fully commits itself to commercialize the new product with
the required investment in manufacturing & marketing.

What are the main decision areas in packaging?


OR

Marketing Management

59

Packaging & labeling is an important part of product management? Elaborate?


OR
Illustrate the main decision areas in packaging & labeling.
Ans.: Packaging is defined as all the activities of designing& producing the container
for a product. In modern days packaging has become an important part of
product management. With competition increasing marketers are turning to
innovative packaging to establish a distinctive edge. This is especially so in the
marketing of consumer products like processed foods, soft drinks, toiletries,
cosmetics & other personal care products. The following are the main decision
areas in packaging.
(a)

Package Materials

(b)

Package Aesthetics

(c)

Package Size & Convenience

(a)

Package Materials : Changing trends - from wood to paper & plastics In


the earlier days, wood was the main material Paperboard cartons, paper
bags, have become popular forms of packaging for a variety of products
from groceries to garments. Metal containers are an excellent packaging
medium for processed goods, fruits, vegetables, oil, paint etc. Aluminum
foil, packaging are used in products like tea, coffee & spices.
Plastics, the New Packaging Material : Plastics as a group are now
dominating the packaging field in India. Popular brands like Tata Tea,
Nescafe, Dalda, Amul Milk chocolates have gone for plastic packaging.
They have several merits likes water proof & moisture proof 2) capacity to
provide resistance to sun exposure 3) light weight 4) Thermal stability 5)
attractiveness & transparency.
Tetra Packs : Frooti, Slice, Amuls buttermilk, Fruit Juices like real have
gone for tetra packs.

(b)

Package Aesthetics : For enhancing the sales appeal of the package, more
& more attention is new being given to package. For Eg. Doy soap with
different animal structures. For the first time in the soap category, the
customer could see the shapes, colour & appearance of the product.

60

(c)

Package Size & Convenience :


Eg.
(i)

Ponds cold cream & Bryl cream In tubes

(ii)

Application conveyance of Harpic.

(iii)

The cold drink cans.

(iv)

Economy packs

(v)

Sachets

(vi)

Reusable containers

(viii) Refill packs.


Labeling : Sellers must label products. The label may be a simple tag
attached to the product or an elaborately designed graphic. The label
might carry the brand name or a great deal of information. Labels identify
the product or the brand. Eg. The name frooti is stamped on Mango Juice.
The label might grade the product, they might describe the product, who
made it, where it was made when it was made, expiry date, what it
contains, how it is to be used. Finally the label should promote the
product through graphics. It is mandatory to print MRP on all packaged
products.
Q.10 Explain the following terms or write short notes on :
(a)

Brand Equity

(b)

Product Differentiation

(c)

Product Mix

(d)

Product Planning

Ans.: (a)

Brand Equity : David Aakar defines brand equity as the unique set of
brand assets & liabilities that is linked to a brand. According to Aakar,
brand equity is the net result of al the investment of effort that a marketer
puts into building a band. It is made up of :User ship of the brand
Consumers loyalty

Marketing Management

61

Perceived quality
Positive symbols & favorable associations around the brand. Brand
equity also adds to the bottom line on a long term basis. For, when
a brand has high brand equity, it means that consumers are willing
to pay a premium for the brand & its extensions. The values of
brands owned by firms, like HLL, ITC, & the IT majors like Infosys
& wipro are many times their total assets.
Brand equity can be measured & quantified. Through it is an asset,
traditionally, brand equity has been omitted from the balance sheets
because of its intangibility. Criteria such as market share, market ranking,
brand stability & track record, stability of product category,
internationally market trends, advertising & promotional support & legal
protection are used for measuring brand equity.
(b)

Product Differentiation : Product differentiation & product positioning


are central themes in the marketing strategy. Product differentiation is one
of the basic routes to marketing strategy. The major attraction & the major
benefit in resorting to differentiation is that it takes the firm away from a
total price based competition. Products can be differentiated on the basis
of a number of different product or service dimensions such as product
features, performance, conformance durability, reliability, style & design.
Besides these specific concerns, on more general positioning for brands is
as best quality. The strategic planning studied the impact of higher
relative product & found a significantly positive correlation between
relative product based on differentiation.
(i)

Close up with get Colgate, the leader in the industry was


compelled to copy this differentiation as its market share fill at the
hands of new brand.

(ii)

Vatika with herbal ingredients.

(iii)

TTK prestige with Teflon.

(iv)

Titan matches (differentiation based on product design.

(v)

Ray Ban (Differentiation on the basis of glass).

62

There are two conditions for differentiation to exceed :-

(c)

(i)

differentiation should be perceptible

(ii)

Should be rooted in competitive advantage

Product Mix : A product mix is the set of all products & items a particular
seller offers for sale. A product mix consist of various product line. A
companys product mix has a certain width, length, depth & consistency.
Eg. These concepts are illustrated through an example of Hindustan
Unibuer Ltd. (HUL).
The width of a product mix refers to how many different products lines
the company carries. The length of the product mix refers to the total
number of items in the mix. This is obtained by dividing the total length
(25) by the number of lines (11) or an average product length of less than
3.
The depth of product mix refers to how many variants are offered of each
product in the line. Since lux comes in 4 scents (exotic flower petals &
jojoba oil, almond oil & milk cream, fruit extracts & honey & sandal
saffron in milk cream), it has a depth of 8. The consistency of the product
mix refers to how closely related the various product liens are.
Product Mix Width

Deo.
Axe

Rexeno

Personal Laundry
Wash

Skin
Care

Hair
Care

Oral Care

Sun
Silk

Peposodent

Lux

Suf
Excel

Fair &
Lovely

Lifebuoy

Rim

Ponds Clinic

Liril

Wheel

Hamam
Breeze
Dove

Close Up

Colour Coffee
Cosmetic
Lakme

Bru

Foods
Kissan

Knors
Annpurna

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63

Pears
Rexona
Product
Line
length
Product mix width & product line length of HUL.
(d)

Product Planning : To carry out the responsibilities, marketing managers


follow a marketing process & the product managers come up with a
marketing plan for individual product lines, brands, channels or customer
groups. Each product level must develop a marketing plan for achieving
its goals. A marketing plan is a written document that summarizes what
the marketer has learned about the market place & indicates how the firm
plans to reach its marketing objectives. It is one of the most important
outputs of the marketing process. Marketing plans & product planning
are becoming more customer & competitor oriented & is becoming a
continuous process to respond to rapidly occurring & changing market
conditions.

Contents of Marketing Plans :


(a)

Executive Summary & Table of Contents : The marketing plan should


open with a brief summary of the main goals & recommendations. A table
of contents outlines the rest of the plan & all the supporting & operational
details.

(b)

Situation Analysis : This section presents relevant background data on


sales, costs the market, competitors & various forces in the macro
environment. All this information is used to carry out SWOT Analysis.

(c)

Marketing Strategy : Here, the product manager defines the mission &
marketing & financial objectives. The manager also defines those groups
& needs that the market offerings are intended to satisfy. The manager

64

then establishes the product lines competitive positioning which will


inform the game plan to accomplish the plans objectives.
(d)

Financial Projections : Financial projections include a sales forecast, an


expense forecast & a break even analysis on the revenue side, the
projections show the forecasted sales volume by month & product
category. On the expense side, the projections show the expected costs of
marketing.

(e)

Implementation Control : This section outlines the controls for


monitoring & adjusting implementation of the plan. Typically the goals &
budgets are spelled out for each month or quarter so management can
review each periods result & take corrective actions as needed.

Q.11 Illustrate briefly the concept of pricing & the factors that influence pricing.
Ans.: Price is all around us. We pay rent for our apartment, tuition for our education,
airline, railways, buses charge you a fare, local bank charge interest for the
money a fee to your doctor etc. Thus price is not just a number on a tag or an
item.
Traditionally, price has been the major determinant of a buyers choice & is the
only element in the marketing mix that generates revenue. Pricing acquires its
importance on account of yet another factor. It is a highly risky decision area &
mistakes in pricing seriously affects the firm, its profits, growth & future.
Factors Influencing Pricing : There are internal as well as external factors that
affect pricing :Internal Factors :
(i)

Corporate & marketing objectives of the firm.

(ii)

The image sought by the firm through pricing

(iii)

The characteristic of the product

(iv)

Price elasticity of demand of the product.

(v)

Stage of product in its life cycle.

(vi)

Use pattern & turnaround rate of the product.

Marketing Management

(vii)

Cost of manufacturing & marketing

(viii) Extent of differentiation practiced


(ix)

Other elements of the marketing mix & their interaction with pricing

(x)

Composition of the product line of the firm.

External Factors :
(i)

Market characteristics (relative to demand, customer & competition)

(ii)

Buyer behaviour in respect of the product

(iii)

Bargaining power of major customers

(iv)

Bargaining power of major suppliers

(v)

Competitors pricing policy

(vi)

Government controls / regulation on pricing

(vii)

Other relevant legal aspects

(viii) Societal consideration.


Q.12 What objectives does a firm seek in pricing?
OR
Identify the various pricing objectives.
Ans.: A business firm will have a number of objectives in the area of pricing. These
objectives can be short term or long term or primary objectives :(i)

Profit maximization in the short term.

(ii)

Profit optimization in the long term.

(iii)

A minimum return on investment

(iv)

A minimum return on sales turnover.

(v)

Achieving a particular sales volume.

(vi)

Achieving a particular market share.

(vii)

Deeper penetration of the market.

(viii) Entering new markets.

65

66

(ix)

Target project on the entire product line.

(x)

Keeping competition out, or keeping it under check.

(xi)

Keeping parity with competition.

(xii)

Fast turn around & early cash recovery.

(xiii) Stabilizing price & margins in the market.


(xiv) Providing the commodities at prices affordable by weaker section.
(xv)

Providing the commodities at prices that will stimulate economic


development.

Q.13 What are the various routes taken by the firm in fixing the prices?
OR
What are the various methods of pricing?
OR
Explain the different pricing strategies.
Ans.: There are several methods of pricing & they can be grouped into few broad
categories :(1)

Cost Based Pricing

(2)

Demand Based Pricing

(3)

Competition Oriented Pricing

(4)

Value Pricing

(5)

Product Line Oriented Pricing

(6)

Tender Pricing

(7)

Affordability Based Pricing

(8)

Differentiated Pricing.

(1)

Cost Based Pricing : Under the cost based pricing, different methods used
are :Mark Up Pricing
Absorption Cost Pricing

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67

Target Rate of Return Pricing


Marginal Cost Pricing
Mark Up Pricing : It refers to the pricing methods in which the selling
price of the product is fixed by adding a margin to its cost price. The mark
ups may vary depending on the nature of the product & the market.
Usually, the higher the value of the product, the larger is the mark up.
Again, the slower the turnaround of the product, the larger is the mark
up. Mark-up pricing proceeds on the assumption that demand cannot be
known accurately, but costs are known.
Absorption Cost Pricing : ACP rests on the estimated unit cost of the
product at the normal level of production & sales. The method uses
standard costing techniques & works out the variable & fixed costs
involved in manufacturing, selling & administering the product. By
adding the costs of 3 operations, we get the total costs. The selling price of
the product is arrived by adding the required margin towards profit to
such total costs. The main merit of this method is that as long as the
market can absorb the production at the determined price, the firm is
assured of its profits without any risk & the main demerit is that the
method simply assumes price to be a function of cost alone & this method
becomes ineffective.
Target Rate of Return Pricing : It is similar to absorption cost pricing. The
rate of return pricing uses a rational approach to arrive at the mark up. It
is arrived in such a way that the ROI criteria of the firm is met in the
process. But this process amounts to an improvement over absorption
costing since it uses a rational basis for arriving at the mark up. Second,
since the rate of return on the funds employed is a function of mark up as
well as turnaround of capital employed, rate of return pricing constantly
reminds the firm that there are 2 routes for profits- improvement in the
capital turnover & increase in the mark up. The main limitation of the
method is that the rate of return is linked to the level of production & sales
assumed.
Marginal Cost Pricing : It aims at maximizing the contribution towards
fixed costs. Marginal costs include all the direct variable costs of the
product. In marginal cost pricing, these direct variable costs are fully
realized. In addition, a portion of the fixed costs is also realized under

68

competitive market conditions marginal cost pricing is more useful.


Moreover, when a firm has a number of product lines marginal cost
pricing is useful. This method is also useful in quoting for competitive
tenders & in export marketing.
On the demerits side, marginal costing makes certain assumptions,
regarding cost & revenue behaviours which can turn out to be incorrect in
some cases. Moreover, while marginal costing rests on a two fold
classification of cost into fixed costs & variable costs, in reality there can be
a third class of costs The Semi variable costs.
(2)

Demand Based Pricing : The following methods belong to the category of


demand / market based pricing :What the Traffic can Bear Pricing
Skimming Pricing
Penetration Pricing
What the Traffic can Bear Pricing : The seller takes the maximum price
that the customers are willing to pay for the product under the given
circumstances. This method is used more by retail traders than by
manufacturing firms. This method brings high profits in the short term.
But in the long run it is not a safe concept, chances of errors in judgment
are very high.
Skimming Pricing : This method aims at high price & high profits in the
early stage of marketing the product. It profitably taps the opportunity for
selling at high prices to those segments of the market, which do not bother
much about the price. This method is very useful in the pricing of new
products, especially those that have a luxury or specialty elements.
Penetration Pricing : Penetration pricing seeks to achieve greater market
penetration through relatively low price. This method is also useful in
pricing of new products under certain circumstances. For eg. when the
new product is capable of bringing in large volume of sales, but it is not a
luxury item & there is no affluent / price insensitive segment, the firm can
choose the penetration pricing & make large size sales at a reasonable
price before competitors enter the market with a similar product.

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69

Penetration pricing in such cases will help the firm have a good coverage
of the market & keep competition out for some time.
In all demand based pricing methods, the price elasticity of demand is
taken into account directly or indirectly. Price elasticity of demand refers
to the relative sensitivity of demand for a product to changes in its price in
other words how significantly the sales of the product are affected when
price is changed. If an increase or decrease in the price of the product
results in significant decrease or increase the product is said to be price
elastic conversely, if price change does not significantly affect the sales
volume, a product is said to be price inelastic.
(3)

Competition Oriented Pricing : In a competitive economy, competitive


oriented pricing methods are common. The methods in this category rest
on the principle of competitive parity in the matter of pricing. Three
policy options are available to the firm under this pricing method :Premium Pricing
Discount Pricing
Parity Pricing
Premium pricing means pricing above the level adopted by competitors.
Discount pricing means pricing below such level & parity pricing means
matching competitors pricing.

(4)

Value Pricing : Value pricing is a modern innovative & distinctive


method of pricing. Value pricing rests on the premise that the purpose of
pricing is not to recover costs, but to capture the value of the product
perceived by the customer. Analysis will readily show that the following
scenario are possible with the cost value price chain.
Value > Price > Costs
Price > Value > Costs
Price > Costs > Value
Price > Value > Costs
Under Scenario :

70

(i)

Marketer recovers his costs through price, but fails to recover the
value of his product.

(ii)

He recovers his costs as well as the value.

(iii)

The value that he passes on to the customer is still lesser.

(iv)

He matches the value & price & wins customer loyalty & since the
value created is larger then his costs, he ensures his profits.

(5)

Product Line Pricing : When a firm markets a variety of products grouped


into suitable product lines, a special possibility in pricing arises. As the
product in a given product line are related to each other, sales of one
influence that of the others. They also have interrelated costs of
manufacturing & distribution. It can fix the prices of the different product
in such a manner that the product line as a whole is priced optimally,
resulting in optimal sales of all the products put together & optimal total
profits from the line.

(6)

Tender Pricing : Business firms are often required to fix the prices of their
products on a tender basis. It is more applicable to industrial products &
products purchased by Institutional customers. Such customers usually go
by competitive bidding through sealed tenders. They seek the best price
consistent with the minimum quality specification & thus bag the order.

(7)

Affordability Based Pricing : The affordability based pricing is relevant in


respect of essential commodities, which meet the basic needs of all
sections of people. Idea here is to set prices in such a way that all sections
of the population are in a position to buy & consume the products to the
required extent.

(8)

Differentiated pricing - Some firms charge different prices for the same
product in different zones/ areas of the market. Sometimes, the
differentiation in pricing is made on the basis of customer class rather
than marketing territory.

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71

Q.14 Discuss briefly the steps involved in pricing procedure.


Ans.: The term pricing procedure refers to the actual process /mechanics of working
out the price. The steps involved in the pricing procedure will vary depending
on the pricing objectives & pricing methods chosen by the firm. The general steps
of pricing procedure are:
(i)

Identify the target customer segments & draw up their profiles.

(ii)

Decide the market position & price image that the firm desires for the
brand.

(iii)

Determine the extent of price elasticity of demand of the product & the
extent of price sensitivity of target customer groups.

(iv)

Take into account the life cycle stage of the product. Analyze competitions
prices.

(v)

Analyze, other environmental factors.

(vi)

Choose the pricing methods to be adopted taking all the above factors into
account.

(vii)

Select the final price.

(viii) Periodically review the pricing method as well as procedure.

Case Study
Vespa is an Italian brand of scooter manufactured by Piaggio. The name means wasp
in Italian.
The Vespa has evolved from a single model motor scooter manufactured in 1946 by
Piaggio & Co. S.p.A. of Pontedera, Italyto a full line of scooters and one of seven
companies today owned by Piaggionow Europe's largest manufacturer of twowheeled vehicles and the world's fourth largest motorcycle manufacturer by unit sales.
Vespas history in India

72

Folks from the era of Bajaj Chetak and LML Vespa will have a dj vu because both
these models took inspiration from the original Vespas styling. Vespa produced
scooters in partnership with Bajaj Auto in the 1960s but that ended in 1971 as Indira
Gandhis privatization programs came into place. In the 1980s, Vespa partnered with
LML Motors in India to produce the famous P series scooters. This partnership ended in
1999 because of an irresolvable dispute.
Piaggio is very optimistic about its re-entry in India. The company expects that its sales
in India will cross its global sales across various markets within 2-3 years..
However, deeper pockets are not the only thing 21st century India is now armed with.
Today aesthetics and brand value also hold importance in the minds of the urban
Indian who knows the deep rooted meaning of retro, vintage and lineage when it comes
to cars and bikes, and in this case, scooters. Vespa seems to understand that there is no
such thing as a premium market for scooters in India, yet.

Whats special about the Vespa?


There are tons of scooters in the Indian market available at affordable and reasonable
prices. Then why would someone pay a 15-25% premium to buy the Vespa? The answer
is simple.
Vespa is a brand that resembles the 60s, vintage style, class and a design that has stood
the test of time. Just like sporting a vintage styled Louis Vuitton suitcase is fashionable,
riding this Italian wasp (Vespa means wasp in Italian) is all about oozing style and
sophistication a quality uniquely associated with everything Italian.
Features of Vespa at a glance
LX 125 is the name of the Vespa model in India and it has a 125 cc gearless
engine with variomatic transmission, trailing link front suspension, drum brakes
and a unique single monocoque chassis.
It has been tailored to be extremely fuel efficient. Vespa claims a fuel efficiency of
60 kmpl.

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73

The under-seat storage is large enough to fit a helmet and the glove box too has
multiple storage units.
The frame of the scooter is made of very light metal, making it very easy to twist
and turn the scooter to maneuver it in Indian traffic jams.
The price of vespa has been decided at rs 66,651
Why India now?
Vespa LX 125 specifically adapted for Indians
The key for all the foreign players to be successful in India is to show high levels of
product adaptation to demographical taste. Maruti Suzuki went out of the way and
designed its latest offering, Ertiga, in Japan, keeping Indian consumers in mind. Piaggio
too, is leaving no stone unturned and has made a changes to the original European
design to appeal India Inc.
The shape of the seat has been changed to the needs of Indian women who prefer
to saddle sideways while riding pillion on scooters.
Keeping the Indian women happy, the LX 125 also has a slimmer body because
Vespa thought itd go well with the side-sitting position of the woman pillion
rider.
Considering that Indian women may wear saris while riding a scooter, the
footboard has been lowered for more leg space.
Considering Indian traffic, a louder horn has been given to the LX 125.
Considering Indian driving conditions, Vespa has also tweaked the distance
between the surface of the road to the engine of its scooter. Vespa claims that this
modification will reduce the chances of damages due to bumps and pavements.
The rear wheel ergonomics have been redesigned to make it easier for riders to
change their tires in case of a puncture.
Questions?
Q.1 According to the product classification, Vespa LX 125 can be categorized under
what all criteria. Explain
Q.2 Discuss the individual product decisions in terms of Vespa?
Q.3 Where will you place Vespa in PLC. Suggest the related appropriate strategies?

74

Multiple Choice Questions


1 Cosumer products are purchased for personal consumption and classification is
based upon consumer shopping habits. Which of the following is not defined as a
cosumer product?
a> Supplies and services
b> Speciality products
c> Unsought goods
d> Shopping products
e> Convenience products
2 Which of the following benefits is not communicated and delivered by tangible
product attributes?
a> Design
b> Effectiveness of product
c> Style
d> Features
e> Quality class
3

What is defined as the product mix width?


a> Number of different variants of a product
b> Defined by the number of product lines offered
c> Total number of product items
d> None of the above

The total number of items that the company carries within its product lines refers
to the ___________ of the product mix.
a.
width
b.
depth
c.
length
d.
consistency

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75

____________________ are products bought by individuals and organizations for


further processing or for use in conducting a business.
a.
Consumer products
b.
Services
c.
Industrial products
d.
Specialty products

All of the following would be ways to segment within the category of


psychographic segmentation EXCEPT:
a.
social class.
b.
occupation.
c.
lifestyle.
d.
personality.

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Unit 4

Promotion and Physical Distribution


Decision
Q.1 Describe the concept of promotional mix?
Ans : It is not enough for a business to have good products sold at attractive prices. To
generate sales and profits, the benefits of products have to be communicated to
customers. In marketing, this is commonly known as "promotion".
A business' total marketing communications programme is called the
"promotional mix" and consists of a blend of advertising, personal selling, sales
promotion and public relations tools. We describe the four key elements of the
promotional mix in more detail.
These promotional efforts are of
1
Direct face to face communication
2.

two

general

types

involving:

Indirect communication through some mass medium, such as television,


newspapers, radio, etc.

Sometimes a mixture of personal/direct and non personal/indirect promotion is


used as we use in the sales promotion. Industrial buyer will not decide to
purchase equipments on the basis of advertisements or direct mail. Personal
selling is preferred in this case. On the other hand a customer buying toothpaste
or hair oil will have less contact with the company sales person and will be
influenced more by advertisements.

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77

To get better response from the target customers, you have to adopt all the
different components of the promotion mix. However, it should be noted that the
elements of the promotion mix must be coordinated and integrated so that they
reinforce and complement each other to create a blend that helps in achieving the
promotional objectives of the organization.
Q.2

What are the components/elements of promotion mix?


Ans There are seven main elements in a promotional mix. They are:

1.

Advertising - Advertising can be referred to as any paid form of non-personal


communication of ideas or products through mass media. It is done through non
personal channels or media. Print advertisements, advertisements in Television,
Radio, Billboard, cinemas, brouchers and Catalogs, Direct mails, In-store display,
motion pictures, emails, banner ads, web pages, posters are some of the examples
of advertising. Advertising is intended to persuade and to inform. The two basic
aspects of advertising are the message (what you want your communication to
say) and the medium (how you get your message across)

2.

Personal Selling - This is a process by which a person persuade the buyer to


accept a product or a point of view or convince the buyer to take specific course
of action through face to face contact. It is an oral communication with potential
buyers of a product with the intention of making a sale. Target audience may
vary from product to product and situation to situation. In other words personal
selling is a person to person process by which the seller learns about the
prospective buyer's wants and seeks to satisfy them by making a sale. Examples:
Sales Meetings, sales presentations, sales training and incentive programs for
intermediary sales people, samples and telemarketing etc. It can be of face-toface or through telephone contact.

3.

Publicity: The communication of a product, brand or business by placing


information about it in the media without paying for the time or media space
directly is an activity which is referred to as publicity. Publicity can be about an
organization, its products, policies, actions, personnel etc. It can originate with
the media or the marketer, and is published or broadcast at no charge for media
space and time. Examples: Charitable contributions, speeches, issue advertising,
and seminars. Publicity can be favourable (positive) or unfavourable (Negative).

78

The message carried out through publicity is in the hands of media and not
controlled by the organization/firm.
4.

Sales promotion - is any activity that offers an incentive for a limited period to
obtain a desired response from the target audience or intermediaries which
includes wholesalers and retailers. It stimulate consumer demand, market
demand and improve product availability. Examples: Contests, product
samples, Coupons, sweepstakes, rebates, tie-ins, self-liquidating premiums, trade
shows, trade-ins, and exhibitions.

Corporate image - It is important to create a good image in the sight of general


public as the Image of an organization is a crucial point in marketing. If the
reputation of a company is bad, consumers are less willing to buy a product from
this company as they would have been, if the company had a good image.

Exhibitions: Exhibitions provide a chance to try the product by the customers. It


is an avenue for the producers to get an instant response from the potential
consumers of the products.

Direct Marketing is reaching the customer without using the traditional


channels of advertising such as radio, newspaper, television etc. This type of
marketing reach the targeted consumers with techniques such as promotional
letters, street advertising, catalogue distribution, fliers etc.

Q.3

What are the advantages and disadvantages of each element of the promotion
mix?

Ans: Advantages and Disadvantages of Each Element of the Promotional Mix


Mix
Element

Advantages

Advertising Good for building awareness


Effective at reaching a wide
audience
Repetition of main brand and

Disadvantages
Impersonal - cannot answer all
a customer's questions
Not good at getting customers
to make a final purchasing
decision

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79

product positioning helps build


customer trust
Personal
Selling

Highly interactive - lots of


communication between the
buyer and seller

Costly - employing a sales


force has many hidden costs in
addition to wages

Excellent for communicating


complex / detailed product
information and features

Not suitable if there are


thousands of important buyers

Relationships can be built up important if closing the sale


make take a long time
Sales
Promotion

Public
Relations

Can stimulate quick increases


in sales by targeting
promotional incentives on
particular products

If used over the long-term,


customers may get used to the
effect

Good short term tactical tool

Too much promotion may


damage the brand image

Often seen as more "credible" since the message seems to be


coming from a third party (e.g.
magazine, newspaper)

Risk of losing control - cannot


always control what other
people write or say about your
product

Cheap way of reaching many


customers - if the publicity is
achieved through the right
media

Q.4

What are the various functions performed by marketing channels?

Ans.:

The various functions performed by marketing channels are:(i)

Facilitate selling by being physically close the customers.

80

(ii)

Provide distributional efficiency by bridging the manufacturer with the


user, efficiently & economically.

(iii)

Break the bulk & cater to the tiny requirements of buyers.

(iv)

Assemble products into assortments to meet buyers needs, match


segments of supply with segments of demand.

(v)

Look after a part of physical distribution/ marketing logistics.

(vi)

Share the financial burden of the principle, provide deposits, finance the
stock till they are sold to the ultimate consumers

(vii)

Provide salesmanship.

(viii) Provide pre sale & after sale service.


(ix)

Assist sales promotion.

(x)

Assist in introducing new products.

(xi)

Assist in developing sales forecast/ sales plan for the territory.

(xii)

Provide market intelligence & feedback.

(xiii) Maintain records


(xiv) Take care of liaison requirement.
(xv)
Q.6

Help diffuse innovation among consumers.

What are the various objectives & components functions of physical


distribution / marketing logistics?

Ans.: Physical distribution is the process of delivering the product to the marketing
channels & consumer. It encompasses the various activities involved in the
physical flow of the product from the producers to the consumers. Marketing
logistics is somewhat larger in scope compared to physical distribution. It covers
physical distribution plus a part of the task of marketing channels. Marketing
logistic bring in greater value addition in the delivery chain beyond
transportation or distribution.
Objectives of Physical Distribution / Marketing Logistics :

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81

1)

Confers Place & Time Utility on Products : It is physical distribution that


confers place utility & time utility to a product by making it available to
the user at the right place & at the right time. Thereby it maximizes the
chance to sell the product & strengthen the companys competitive
position.

2)

Where Production Locations & Markets are Distant Physical


Distribution Becomes More Crucial : At some points, the point of
production might be far away from the markets for the product. In such
cases, the product has to be marketed over an extended territory, it has to
be transported over long distances, then there physical distribution
becomes crucial.

3)

Helps Build Clientele : It is physical distribution that determines the


customers service level to a large extent, as a result, it serves as a vital tool
in building market for the product.

4)

A Promising Area for Cost Reduction : Physical distribution is a fertile


area for cost savings over the years in most businesses. Physical
distribution costs have grown into a sizeable chunk of the total costs &
now ranks second amongst all cost elements.

5)

Ensures the physical flow of the product from the producer to the
consumer. Without this flow, marketing cannot take place.

Component Functions of Physical Distribution / Marketing Logistics : The


component functions of physical distribution are :Planning the overall physical distribution system
In plant warehousing
Field warehousing
Transportation
Receiving
Handling

82

Secondary transportation, secondary handling & sub distribution


Inventory management at each level of the chain
Order processing
Accounting / record keeping
Communication
The three major functions are :(a)

Transportation

(b)

Warehousing

(c)

Inventory Management

(a)

Transportation
on :-

Transportation

management

involves

How much to move?


When to move?
Where to move?
By what mode or combination of modes to move?
Main Tasks in Transportation Management :
Assessment of the transportation requirement.
Choosing the mix of transport modes.
Deciding the routing.
Development of operational plans.
Implementation / review.
Control of transportation costs.
(b)

Warehousing :
Role & Importance of Warehousing :

decision

Marketing Management

83

Like transportation, warehousing vests the products with time


utility & place utility.
In the case of some commodities, warehousing is needed on a
larger scale.
In some cases sub distribution realities necessitate extra storage.
Storage reduces the need for instant transportation, which is often
difficult & costly.
Storage is a competitive advantage, as with better storage, better
servicing of the channel & consumer is possible Storage also helps
in balancing demand & supply & in stabilizing prices.
(c)

Inventory Management : Inventory management is the third major


component of physical distribution task. The major elements of inventory
cost :Interests on capital tied up in the inventory
Warehouse rent
Staff salaries
Insurance
Rates & taxes
Stationary
Postage & communication charges
Administrative overheads.
Costs & handling, unloading & stocking
Loss due to damage & deterioration
Cost of order processing

Q.7

Briefly explain the concept of marketing channels, their types?

84

OR
What are the different levels of channels?
Ans.: Most producers do not sell their goods directly to the final users, between them
stand a set of intermediaries performing a variety of functions. These
intermediaries constitute a marketing channel. Marketing channels are sets of
independent organization involved in the process of making a product or service
available for use of consumption. They are set of pathways a product or service
follows after production, culminating in purchase & use by the final end user.
Types of Marketing Channels :
1

Sole selling agent

Retailer / dealer

Marketer

Broker

C & F agents

Franchises

Redistribution stockiest

10

Authorized representatives

Distributor / Wholesaler

11

Commission agents

Semi wholesaler

12

Jobbers

1)

Sole Selling Agent / Marketer : When a manufacturer prefers to stay out


of the marketing & distribution task, he appoints a suitable agency as his
sole selling agent. A sole selling agent is usually large marketing
intermediary with large resources & extensive territory of operation. He
will be having his own network of distributors / stockiest / wholesales &
retailers. He takes care of most of the marketing & distribution functions
on behalf of the manufacturer.

2)

CFAs : In many cases, manufacturer employ carrying & forwarding


agents, often referred to as CFAs . The CFAs can be described as special
category wholesalers. They, supply stocks on behalf of the manufacturer
to the wholesale sector or the retail sector. Their function is distribution.
Their distinguishing characteristics is that they do not resell products.

3)

Wholesaler / Stockiest / Distributor : A wholesaler is also a large operator


but not on a level comparable with a marketer or sole selling agent in size,

Marketing Management

85

resources & territory of operation. The wholesaler operates under the


marketer sole selling agent. A wholesalers buys the product in large
quantities & resells the goods in sizeable lots to other intermediaries down
the line, such as semi-wholesalers, & retailers. The wholesalers do not sell
to the ultimate consumer. Wholesalers add value by performing a number
of vital marketing functions. Stock holdings & sub distribution are the
main functions of wholesalers. They also perform functions like
promotion, financing, collection of accounts receivable.

Q.8

4)

Semi Wholesalers : Semi wholesalers are intermediaries why buy


products either from producers or wholesalers in bulk, break the bulk, &
resell the goods to retailers. Semi wholesalers also perform the various
wholesaling functions that are part of the distribution process. In some
cases, they may also perform the retailing functions.

5)

Retailer / Dealers : Retailers sell to the household / ultimate consumers.


They are at the bottom of the distribution heirchy, working under
wholesalers / stockiest / distributors / semi wholesalers. The retailers are
also sometimes referred to as dealers. They operate is a relatively smaller
territory or at a specific location.

What are the various functions performed by marketing channels?

Ans.: The various functions performed by marketing channels are:(i)

Facilitate selling by being physically close the customers.

(ii)

Provide distributional efficiency by bridging the manufacturer with the


user, efficiently & economically.

(iii)

Break the bulk & cater to the tiny requirements of buyers.

(iv)

Assemble products into assortments to meet buyers needs, match


segments of supply with segments of demand.

(v)

Look after a part of physical distribution/ marketing logistics.

86

(vi)

Share the financial burden of the principle, provide deposits, finance the
stock till they are sold to the ultimate consumers

(vii)

Provide salesmanship.

(viii) Provide pre sale & after sale service.

Q.9

(ix)

Assist sales promotion.

(x)

Assist in introducing new products.

(xi)

Assist in developing sales forecast/ sales plan for the territory.

What is the contemporary channel scenario in India?


OR
What is the scene of physical scenario in Indian context?

Ans.:

The contemporary channel scenario in India involves :


Conventions whole sale-retail trade continue to dominate the scene,
through formats like supermarkets, retail chains & shopping malls are
making a mark.
Image of channels undergoes a change.
Profiles of distributors too undergo a change.
Trade margins escalate as costs of distribution keep growing.
Expectations of the distributors also change.
Distributors are becoming choosy.
IT greatly influences the way marketing channels operate.
Firms go in for different kinds of non traditional cannels arrangement.
a)

Outsourcing of marketing logistics

b)

Exclusive retailing

c)

Exclusive dealers without franchising arrangements

d)

Exclusive retailing through showrooms

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87

Firms go in for non store retailing methods


a)

Director selling / home selling

b)

Network marketing

c)

Consumer fairs

Firms go in for direct marketing

d)

a)

Catalogue marketing

b)

Direct mail marketing

c)
Tele marketing
Online marketing

Case Study
Parle Products has been India's largest manufacturer of biscuits and confectionery for
almost 80 years. Makers of the world's largest selling biscuit, Parle-G, and a host of
other very popular brands, the Parle name symbolizes quality, nutrition and great taste.
With a reach spanning even to the remotest villages of India, the company has
definitely come a very long way since its inception.
Available Anywhere
Today, the great strength of Parle Products is the extremely widespread distribution
network. Even at the remotest places, you can buy Parle biscuits and sweets from the
local grocer. It has taken years to create this extensive network. Parles sales force
started with one salesman in Bombay and some agents in few other cities. Gradually,
Parle Products expanded. Soon sweets and biscuits were being sent by rail to Calcutta,
Delhi, Karachi, Madras and other major cities. As production increased, distribution
was amplified. Full time salesmen were appointed in different areas. Currently, Parle
Products has over 33, 00,000 distribution outlets.
The Parle G Distribution Network
Intensive Distribution
Parle uses Intensive Distribution for Parle G. This is the ideal strategy for the market
leader

88

The Channel Members of the Distribution Network of Parle


The Parle distribution network for biscuits has essentially four levels as enlisted below:
Parle Depots
Wholesalers and Distributers
Carry Forward Agents (if required)
Retailers

The Channel Members and Logistics


Parle has nearly 1500 wholesalers, catering to 425000 retail outlets directly or indirectly
and a two hundred strong dedicated field force services. Additionally, there are 31
depots and many Carry and Forward agents supplying goods to the wide distribution
network. Parle has level 1, level 2, level 3 distribution channels levels.
Level 1:
Availability of Parle G biscuits at all departmental stores across the length and breadth
of the country.
Level 2:
Since it's an FMCG product this channel exists for customers scattered throughout the
country.
Level 3:
Mass consumption and suitable for National and International coverage. For e.g. Parle's
international operations consist of serving markets in the Middle East, Africa, South
America, Sri Lanka, Australia and North America for which the 3 level distribution
channel exists.

Channel Dynamics
Parle has a multi-channel marketing system since it uses more than two marketing
channels to reach all its customer segments.
Parle Distribution Strategy

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The Distributors
Trade Marketing
The company is organizing various Total Quality Management initiatives and
workshops. Here various counseling measures are undertaken by the company to
improve the overall working of the distribution network.
The Retailers
Trade schemes:
these are undertaken by the company only for the hard selling items e.g. Biscuits
and Snacks etc. for these the company raises the margins by 2%, also schemes
like good packaging in case of butter and cheese is undertaken by the company.
However this is only a short-terminitiative to push the products of the company.
Glow boards:
the company puts up glow boards at the retailer and pays the major portion of
the cost.
Schedule of the salesmen:
they provide the retails with this schedule so the retailers can pre estimate the
quantities of the various products needed.
Infrastructure facilitation:
the company facilitates the retailers to buy beautiful stalls by formulating an easy
payment program and a commitment to buy back the equipment at a reasonable
price when the value of the equipment has depreciated.
Questions :Q.1 What makes Parle a king of distribution?
Q.2
How do Parle managed to penetrate deep into the remotest places in Indian
market?

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Multiple Choice Questions


1

If a company's objective were to reach masses of buyers that were geographically


dispersed at a low cost per exposure, the company would likely choose which of
the following promotion forms?
a.
Advertising
b.
Personal selling
c.
Public relations
d.
Sales promotion

Rolls Royce uses which of the following distribution formats?


a.
Intensive distribution
b.
Exclusive distribution
c.
Selective distribution
d.
Open distribution

A set of interdependent organizations involved in the process of making a


product or service available for use or consumption by the consumer or business
user is called a(n):
a.
retailer.
b.
wholesaler.
c.
distribution channel.
d.
logistics

If your company were to make a product such as a suit of clothes and sold that
product to a retailer, your company would have sold to the ___________ market.
a.
reseller
b.
business
c.
government
d.
service

If your company were to make light bulbs to be used in photocopiers, you would
most likely be selling to a ________________ market.

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a.
b.
c.
d.

reseller
business
government
service

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Unit 5

Marketing Research & Control


Q.1

What is marketing research? State its need & importance in the marketing
scenario?
OR
Define marketing research. What is its need & importance?

Ans.: Marketing Research is the systematic, objective & exhaustive search for & study
of the facts relating to any problem in the field of marketing.
Or
Marketing Research is systematic problem analysis, model building & fact
finding for the purpose of decision making & control in the marketing of goods
& services.
OR
Marketing Research is the systematic gathering, recording & analysis of data
about problems relating to the marketing of goods & services.
Marketing research plays an equally important role in marketing management
and uses marketing information as its input, it simultaneously generates more of
it as output.
Need of Marketing Research
There may be many reasons for carrying out market research. It may be carried out
to find out
the likes and dislikes of the customers,
the marketing environment and economic conditions
appropriate price for the product,
how many people might buy the product.

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finding the profile of the customers,


the places they buy
about competitors
changes in product ranges and;
the promotion techniques which might be most effective.
What kind of products move in market, how they move and why
What is the purpose of marketing research
Marketing research can help a business do one or more of the following:
Gain a more detailed understanding of consumers tastes and needs
marketing research can help firms to discover consumers opinions on a huge
range of issues, e.g., views on products prices, packaging, recent advertising
campaigns
Understanding how customers perceive your market positioning relative to
competitors.
Determining the viability of a new market for your company to enter.
Estimating market size/share/adoption rate for investment or business
planning.
Identifying new product/service opportunities and value-added offerings.
Determining the most effective marketing/advertising channels to support your
business.
Risk management - identifying what risks pose the greatest threat to your
business.
Understanding what customers expect of you and how well you are delivering.
Identifying your most profitable customer segments and how to protect them.
Developing the right price points/identifying bundling opportunities.
Forecast future trends marketing research can not only provide information
regarding the current state of the market but it can also be used to anticipate
future customer needs. Firms can then make the necessary adjustments to their
product portfolios and levels of output in order to remain successful.
Q.2

What are the limitations of MR?

Ans: Budgetary constraints Gathering and processing of data can be very


expensive. Huge cost is involved in MR as collection and processing of data can

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be costly. Many firms do not have the proficiency to carry wide surveys for
collecting primary data, and might not also able to hire specialized market
experts and research agencies to collect primary data. Thus, in that case, they go
for obtaining secondary data that is cheaper to obtain but it cannot be always
correctified upto the mark.
Time constraints MR faces time constraint. The firms are required to maintain
a balance between the requirement for having a broader perspective of customer
needs and the need for quick decision making so as to have competitive
advantage, in order to maintain or improve their position in the market
MR is not a complete solution to any marketing issue as there are many
dominant variables between research conclusions and market response.
Reliability of the data the value of any research findings depend critically on
the accuracy of the data collected. MR is not free from bias. The results of MR
are very vague as it is carried out on consumers, suppliers, intermediaries, etc.
who are humans who have a tendency to behave artificially when they know
that they are being observed.
Many business executives and researchers have ambiguity about the research
problem and its objectives. They have limited experience of the notion of the
decision-making process. This leads to carelessness in research and researchers
are not able to do anything real.
Legal & ethical constraints the Data Protection Act (1998) is a good example of
a law that has a number of implications for market researchers collecting and
holding personal data. For instance, researchers must ensure that the data they
obtain is kept secure, is only used for lawful purposes and is only kept for as
long as it is necessary. It must be made clear as to why data is being collected
and the consent of participants must be obtained. In addition to this, there are a
number of guidelines, laid down by such organisations as the Market Research
Society, that, although not legally binding, encourage organisations to behave
ethically when dealing with members of the public.
Q.3

Briefly explain the applications of marketing research?

Ans: Pricing Research

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The objective of this research is broad. Its goal is to find out the price
expectations of consumers, their reactions and responses to different price levels
of product to ascertain elasticity of demand. It also deals with pricing research
and pricing strategy decision. It focuses on finding best business optimum priceproduct-feature configurations in the context of market positioning
opportunities. Both qualitative and quantitative pricing research tools are used.
Product Research
MR may be used in the area of product planning and development. It helps us
To evaluate new product ideas
To evaluate the need of consumers need and requirements
To evaluate the need of change and modifications in existing product
To test the product positioning and product acceptance etc
Product market research serves several goals as it comprises the research,
analysis, evaluation of product in terms of its design, features, quality, product
lines etc
Distribution Research
As the name itself says, the distribution research is all related to the distribution
management of a firm . It helps in examining, evaluating, determining the
various distribution channels, its accessibility, its availability, relative
effectiveness of various distribution channels, assessment of intermediaries
support etc
Concept Testing
Concept testing research evaluates advertising concepts, ad theme concepts and
appeals, new product concepts, pricing, brand concepts, brand names, and
positioning strategy concepts. We select techniques -- qualitative and
quantitative -- to both develop concepts, refine, and screen to assess market
potential.

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Positioning Research
It requires understanding the market positioning concept, current and potential
markets, and the process needed to generate brand name impact. It offers
experienced market positioning and creative branding research capabilities to
define and go-to-market with a high-impact positioning strategy.
Customer Satisfaction Research
This research is basically focused upon the concerns related to customer
satisfaction. Normally customer expectations rise overtime as advances in
technology takes place. Also in many categories technology advancements boost
the consumer consciousness. This all requires a need of market research to find
what the customers expectations are? And what are customers current need and
requirements?
Branding Research
Branding decisions drive branding marketing research strategy. Corporate,
product and advertising brand development is a mix of creativity and marketing
information to uncover brand positioning opportunities in cluttered market
spaces.
Brand Equity Research
Brand equity research measures the breadth and depth of brand power in your
target markets. We use both standard and custom tailored brand equity survey
measurements. A key to research design is the goal of a brand equity
measurement study.
Advertising Research
Advertising research can be done to determine specific advertising goals and the
stage of ad development, or campaign. It can be used to determine and examine
various important elements of advertising copy e.g basic theme, ideas, appeals,
headline, conviction value, attention value etc. Broad range of advertising
research techniques include ad recall surveys, message and theme salience and

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impact measures, buying motivation and association with the ad message or


positioning theme.
Market Segmentation
Market segmentation research maintains focus and delivers needed marketing
information in today's moving economy where new markets and new product
categories emerge and traditional market segments fade away. Often market
segmentation process starts with qualitative research to the range and breadth of
customers, followed by quantitative research using appropriate multivariate
analysis (cluster, k-means factor, etc) to define meaningful segments.
Sales Analysis
It is basically used to find out the sales potential of companys product and
evalution of sales performance. Sales research and analysis may also cover
research, analysis and evaluation of formulation of sales territories,
measurement of sales performance of personnels in terms of volume and profits,
revision of sales territories, evalution of sales method etc
Marketing Environment Research
It is one of the most important areas of marketing research. Its basic purpose is to
assess and determine, examine and evaluate the environment fitness of the firm.
It takes into consideration all the internal and external, macro & micro factors of
environment into consideration.

Q.4

Briefly explain the steps in marketing research process.

Ans.: Marketing Research process involves 6 steps :(1)

Define the Problem & Research Objectives : Problem should not be


defined either too broadly or too narrowly. Clarity on the following helps
define the problem appropriately.
(i)

What is to be researched?

(ii)

Why it is to be researched?

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The end product of this exercise has to be a clear definition of the problem
& research objectives.
(2)

Develop the Research Plan : The second stage of marketing research


requires developing the most efficient plan for gathering the needed
information. This involves decision on the data sources research
approaches, research instruments, sampling plan & contact methods.
Data Sources : The research can gather secondary data, primary data.
Secondary data are data which already exist somewhere. Primary data are
data freshly gathered for a specific purpose or for a specific research
project.
Research Approaches : Primary data can be collected in 5 ways Through
observation, focus group, surveys, behavioral data, experimental research.
(i)

Observation Research : By observing the relevant actors & settings.

(ii)

Focus Group Research : A focus group is a gathering of 6-10 people


who are invited to spend a few hours with a skilled moderator to
discuss a product service, organisation. The moderator starts with a
broad question & help the group move through various aspects of
the entity being discussed. The moderator keeps the discussion
focused on the relevant theme. Discussion is recorded using an
audiotape or videotapes.

(iii)

Survey Research : Companies undertake surveys to learn about


peoples beliefs & preference & satisfaction.

(iv)

Behavioural Data Customers actual purchases reflect preferences


& are normally more reliable than memory based statements.

(v)

Experimental Research : The purpose is to capture cause & effect


relationships by eliminating competing explanations of the
observed findings, to the extent that the design & execution of the
experiment eliminate alternative hypothesis that might explain the
results.

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Research Instruments : Marketing researchers have a choice of three main


research instruments in collecting primary data: Questionnaires,
qualitative measures & mechanical devices.
A questionnaire consist of a set of questions presented to respondents.
Questionnaires need to be carefully developed & tested before they are
administered on a large scale. Quantitative devices consists of i)
Shadowing Behaviour mapping, consumer journey, Camera journals,
extreme user Interviews, story telling, unfocused groups.
Mechanical devices consist of galvanometers aroused by exposure to a
specific ad or picture. They are used occasionally in marketing.
Sampling Plan : After deciding on the research approach & instruments,
the marketing researcher must design a sampling plan. This counts for 3
decisions : (i)

Sampling Unit : Who is to be surveyed?

(ii)

Sample Size : How many people should be surveyed?

(iii)

Sampling Procedure : How should the respondents be chosen?

Contact Methods : Once the sampling plan has been determined, the
marketing researcher must decide how the subject should be contacted;
through mail, questionnaire, telephonic interview, personal interview,
online interview.
(3)

Collect the Information The data collection phase of marketing research


is generally the most expensive & the most prone to error. In case of
surveys. 4 major problems arise some respondents will not be at home &
must b e contacted again. Other respondents will refuse to cooperate. Still
others will give biased answers. So, getting the right respondents is
critical.

(4)

Analyze the Information : The next step is to extract findings from the
collected data. The researcher tabulates the data & develops frequency

100

distributions. The researchers will also apply some advances statistical


techniques.

Q.5

(5)

Present the Findings : The researcher should present findings that are
relevant to the major marketing decisions.

(6)

Make the Decision : Research findings only provide additional


information & insights to the managers. Depending on their confidence in
the findings, managers decide to use it, discard etc. or carry out more
research.

Elaborate the various techniques of MR.


OR
What are the major techniques of MR?

Ans.: Panel Research : Panel Research is a research technique similar to the survey.
Panel research uses the same sample over & over again for collecting the
information. The researcher interviews or otherwise gathers data from the same
people constituting the panel. A panel refers to a sample of respondents, who
may be individuals, households, retail shops or firms from whom information is
collected about their buying behaviour. The panel members maintain a diary &
note down details of purchases advertisement exposures, shopping patterns and
features that the researchers is interested in.
Types of Panel :
(a)

Consumer Panels : Here the market researcher maintains a panel of


consumers & receives responses from them at periodic intervals. The
panel is continuous in the sense that the researcher collects the responses
from the same set of sample units on a continuing basis at specified
intervals. This information is used by the researcher for assessing different
aspects. HLL is one of the largest consumer research programmes in the
world.

(b)

Retail Panel : A permanent sample of retail shops is maintained to supply


information periodically on aspects such as how much these retail shops

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101

purchases during the period, how much stock they hold, sales levels of
difference brands, price trends etc. This techniques is called as Inventory
& Purchase audit.
(c)

Advertising Audience Panels : It consist of persons getting exposed to


advertising in the various media such as readers of publications, TV
viewers, & radio listeners. The main purpose is to gather valuable
information for media planning. The panel members keep recording the
programs viewed by them.

Advantages :
(i)

Changes taking place over time in buyer behavour can be monitored


through panels.

(ii)

Relationship between changes in buyer behaviour & changes in the


marketing mix can also be analyzed.

Disadvantages :
(i)

Panel requires a greater degree of cooperation between the panel & the
researcher.

Market Survey : Market survey is one of the widely used MR techniques. It is a


method of collecting marketing information required for a given marketing
research assignment. It is used when the required data is not available with the
company interval records as well as external published sources.
Steps Involved in Market Survey :
(a)

Planning the Survey


Problem definition
Relation of survey method
Sampling
Questionnaire development

102

Pilot survey
(b)

Field Work
Selection of investigators
Collection of data

(c)

Processing
Processing of data
Tabulating

(d)

Analysis & Interpretation


Editing
Interpretation data
Statistical Analysis

(e)

Report Making
Summarizing findings & recommendations
Report writing

Other MR Techniques :
(1)

Multi Dimensional Scaling : MDS is used to graphically portray


consumer evaluation of products / brands. It has been developed with
inputs from mathematics & psychology. The techniques takes consumer
judgments of perceptions & preferences & builds geometric
representations or maps in which brands that are Judged to be similar get
plotted near each other in the geometric space. The map helps the
researcher to understand how a given brand is perceived.

(2)

Conjoint Analysis : It is used to measure consumer preference for


alternate product ideas & product attribute combinations. It measures the
joint effect of two or more independent variables or strategy options like
price, package, colour, brand name etc.

Marketing Management

Q.6

103

What are the different tools of control in marketing?

Ans: Marketing controls help monitor progress toward goals for customer satisfaction
with products and services, prices, and delivery.
These are: Annual plan control; Profitability control; Efficiency control and
Strategic control, which are described briefly as under:
1. Annual plan control:
Annual plan control is the monitoring of current marketing efforts and results to
ensure that the annual sales and the profit goals are achieved. Annual plan control
signifies continuous ongoing performance verification against the annual plan and
taking the necessary corrective actions. It is the responsibility of the top and middle
management and the purpose is to examine whether planned results are being
achieved in terms of sales, profits, costs, finance, attitudes of participants in
marketing operations.
Sales analysis: It refers to detailed study of sales performance undertaken to
develop a comprehensive understanding of its multi-dimensional aspects and its
overall behavioral pattern. The purpose of sales analysis is to trace and
understand sales pattern over a period of time, compare it with the target
pattern, analyze variations, if any, and prescribe the corrective action warranted.
Such a sales analysis may be total sales or directed into regions, products and
customers. Break-up analysis is undertaken to ascertain whether the 80-20 rule
applies; if it doesnt then the management is to redirect the sales efforts region
product and customer wise to adhere to 80-20 principle.
Market share analysis: Market share analysis is the study of firms sales in
relation to its competitor or competitors performance; rather it is to ascertain the
percentage share of the firm in the industrys sales. The purpose is to identify the
companys hold or the status in the industry vis--vis its competitors and to
determine whether it has attained the target market share both in segregate and
break-up aspects like products, regions and the customers. If used in
combination with sales analysis, market share analysis should reveal certain
useful clues regarding the firms marketing performance.

104

Marketing expense to sales analysis: It is also known as marketing expense


analysis. The firm is to make sure that the managers are not .spending more than
the set limits on marketing expenses to achieve the sales goals. There can be
preset marketing expense to sales ratio and the component expense ratios. Thus,
a firm may have 25 percent marketing expenses to sales ratio. It is made up of
components: sales-force expenses to sales ratio say 12 percent; sales promotion
expenses to sales say 3 percent; marketing research expenses to sales say 1
percent; and sales administration expenses to sales say 3 percent. During the plan
period, the actual expenses and sales are to be compared with those of planned
and the deviations are to be noted, causes are to be found and remedial measures
are to be prescribed for correcting the situation. For this purpose, control charts
could be used. Control of costs means control of profitability, indirectly.
Financial analysis: Marketing organizations are interested in not just building
up sales but finding and applying profitable strategies through financial analysis.
It is also known as ratio analysis. Ratio analysis is the process of determining and
interpreting the numerical relationship between two variables. A ratio is a
statistical yardstick to measure the relationship between two variables expressed
either as a quotient or a percentage. Financial analysis or ratio analysis reveals
the nature of the kinship between two marketing variables that are strategic from
control point of view. Following are some of the significant ratios that are
relevant to the marketers.
o Gross profit ratio: This profitability ratio measures the relationship
between the sales and the net sales. It speaks of the efficiency of marketing
operations. It is expressed as :(Gross Profit / Net sales) 100
Higher the ratio or the percentage, more effective is the management of
marketing operations.
o

Inventory turnover ratio: It is the ratio measuring the relationship


between finished goods inventory and the sales. It signifies the frequency
with which inventory is turned over or sold.

It is expressed as: Cost of Goods Sold / Average Inventry Or Sales / Closing


Inventory
Higher the rate or the number of times better is the inventory management.
However, very high turnover also means stock-out situation and lost sales.

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105

Receivable turnover ratio:

This ratio is one that measures the relationship between the credit sales and the
average receivables or the sundry debtors out-standing during the accounting
period. In fact, it warrants calculation of two ratios as under:
Customer attitude tracking: Customer attitude tracking is a qualitative measure
of market share changes. It is a system that monitors the attitudes of customers,
dealers and other participants in marketing efforts. Constant monitoring of
customer preferences and satisfaction provide early warnings to the
management to take early action. There are three major customer attitude
tracking systems namely,
o
o
o

complaint suggestion system,


customer panels and
customer surveys.

Complaint suggestion system is to record, analyse and respond to written and


oral complaints from the customers. This is the finest way of knowing consumer
reactions to company products and services.
Customer panel consists of customers who have agreed to communicate their
attitudes periodically through personal and impersonal means.
Customer surveys are the surveys conducted periodically by encouraging the
customers to answer the questionnaires sent to them; these questions may be on
friendliness of staff, quality of service rendered and the like.
2. Profitability control:
Profitability control or profit analysis refers to the study of profit generated and
contribution made to it by different products, regions and the customers.
Profitability control is to determine the actual profitability of the firms products,
territories, market segments and trade channels. Profitability control is exercised
to examine where the company is - making and losing the money. All marketing
companies should measure the profitability of their products, territories,
customer groups, trade channels and order sizes, in addition to annual plan
control. This profitability control information is so vital to the management that

106

it is possible to take discerning decisions on expansion, contraction or suspension


of marketing activities.
3. Efficiency control:
Efficiency control is the task of improving the efficiency of such marketing activities
as personal selling, advertising, sales-promotion and distribution. Efficiency control
is undertaken to evaluate and improve the spending efficiency and impact of
marketing expenditures on the marketing operations. The responsibility rests with
the marketing controller and marketing departmental line and staff people. There is
close relationship between profitability and efficiency. Poor profits mean less
efficient management of sales-force, advertising, sales-promotion and physical
distribution It also means that the firm is to hunt out more efficient ways and means
to manage these entities These performing entities are to be assessed as to their
efficiency; there will be, therefore, four such areas for efficiency control as outlined
below.
Sales efficiency: The sales manager at each level regional, district and area is
expected to keep track of the key indicators of the sales-force efficiency in their
territory like, average number of calls per salesman per day calls time per
contact revenue per sales call cost per sales call-entertainment cost per sales
call percentage of orders per 100 calls number of new customers per period
number of lost customers per period and sales-force cost as a percentage of
total sales. Such efficiency investigation paves the way for possible
improvements in specific areas.
Advertising efficiency: Effort should be made to keep tract of the outcome of the
advertising. These indicators are: Average cost per thousand target buyers
reached by the media category and media vehicle consumer opinions on the
advertisement content and efficiency or effectiveness pre and post attitude
towards product-number of enquiries stimulated by the ad and the cost per
enquiry. Ad efficiency can be improved by better product positioning, defining
ad objectives, pre and post testing of message, use of computer guidance for ad
media selection and the like.
Sales-promotion efficiency: In order to improve sales-promotion efficiency, the
manager in charge should record the costs and sales impact of each salespromotion device. He is expected to keep track of percentage of coupons

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107

redeemed and the number of inquiries resulting from a demonstration. This


helps in arriving at most cost efficient promotions.
Distribution efficiency: Physical distribution economies are equally important.
Good many mathematical models are designed to bring about improvement in
inventory control, warehouse locations and transportation modes. Finally, total
cost approach has been recommended to really enjoy the economies in
distribution costs. Some of the distribution efficiency indicators are : market
reach of the channel member as measured by the number of customer served by
it, cost per channel member, expenses on stock, warehousing and transportation
to total sale.
4. Strategic control: Strategic control is the crucial task of making sure that the
companys marketing objectives, strategies and systems are optimally adapted to the
current and forecasted marketing environment. Strategies control refers to the indepth study undertaken to examine whether the company is pursuing its best
opportunities with respect to markets, products and channels. Such an investigation
is a must because marketing is an area where rapid obsolescence of objectives,
policies, strategies and programmes is a regular possibility. In effort, it is a crucial
review of overall marketing effectiveness.
The tools of strategic control are two namely, marketing effectiveness rating review and
marketing audit.
The marketing effectiveness rating review: Perhaps the most difficult task in
marketing area is the assessing of marketing effectiveness. Marketing
effectiveness is situational; there is no guarantee that good results are the
outcome of excellent marketing management for change in management may
throw good results into equally bad or worse. The marketing effectiveness of a
firm is reflected in the degree to which it exhibits the major attributes of a
marketing orientation; customer philosophy integrated marketing organization adequate marketing information strategic orientation and overall optimal
efficiency. Therefore to measure the marketing effectiveness, one should measure
these five attributes. Experts have devised a Marketing Effectiveness Rating
Instrument based on the above five attributes. It contains three questions in
each attribute area and three possible answers to be ticked by the managers of
marketing and other divisions of the firm. The total scores are then summarised

108

in six points ranking ranging between one to superior with intermediate ranks
as poor, fair, good, and very good.
Marketing Audit: The marketing audit is a fundamental part of the marketing
planning process. It is conducted not only at the beginning of the process, but
also at a series of points during the implementation of the plan. The marketing
audit considers both internal and external influences on marketing planning, as
well as a review of the plan itself.
There are a number of tools and audits that can be used, for example SWOT analysis
for the internal environment, as well as the external environment. Other examples
include PEST and Five Forces Analyses, which focus solely on the external
environment.
In many ways the marketing audit clarifies opportunities and threats, and allows the
marketing manager to make alterations to the plan if necessary.

Case Study
Cherry International (CI) is led by Rajan Cherian, a mechanical engineer from BITS
Pilani, with over 20 years of marketing experience in dealing with Government and
Private Sector in India. He gained 11 years experience in a Multinational Company in
India, deploying marketing strategies with various mining, material handling and
chemical industries. Later he started his own marketing company in India before
migrating to Australia in 1992. The thing that sets Rajan Cherian apart from most other
export consultants is that he will travel to India and work on your behalf - just as if he
were your employee! Whether it is to check out the background to a Tender application,
or dig out information about companies- he'll work with you to achieve success. He will
assist you and your staff to ensure a positive interaction with your representatives and
customers in India.
He speaks/understands 6 Indian languages (which helps in unravelling both the
social norms and what is really being said in discussions!).
He has extensively travelled to all parts of India, from Mumbai (the financial
centre) in the West, to Calcutta (the no-hurry centre) in the East, to Delhi (the fast
buck centre) in the North, to Chennai (the slow-waking centre) in the South.

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Depending on the level of involvement required, CI would continue to provide support


services or hand over the project for the client to execute it - all in complete
confidentiality. CI knows how to make India work for you - as it has for others
Cherry International has an extensive network of contacts in India with business
associates operating in most of the major Indian cities.
A key to success in India is finding the right partner to import and distribute your
product/service or locally manufacture your products there.
These are the range of services available but if you want something different, CI feels
pleased to explore the possibilities.

A. Market Research
tele-research
detailed market research report (industrial market research specialisation)
market visits
B. Business Strategy
entry strategy: pricing/packaging/promotion
state of the industry
industry terms and conditions/ payment methods
competitors activities
competing technologies
customs and import requirements
legal implications/requirements
C. Marketing Services
finding distributors/ wholesalers/agents
advertising
telemarketing and direct marketing
test/seed marketing
Global Tender notices

110

D. Other Practical services


high quality design and printing literature
web page design
assistance in sales negotiations
assistance in meeting legal and statutory obligations
assistance in finalising collaborations/technology transfer/joint ventures
site location for factory/office
manpower recruitment
sourcing of product and services
exhibition management services
An Australian company having a unique technology wanted to introduce their
products into the Indian market. This was a new product in the Indian market
scenario.
Cherry International was contracted to provide these services and the products
were launched after importing typical items for a trade exhibition. The launch was
designed to provide extensive press coverage both in the print and visual media. It
also included organising a Road Show across India for those in the industry. The
entire show went off with great aplomb and was judged a complete success by the
Managing Director of the Australian Company. (It required CI giving television
news information in Hindi language!)
The product was suitably classified for import purposes and imported for
Seed marketing. Over the course of time, suitable distributors were found
and shortly 7 distributors were appointed. The market was trained in the
usage of the product and today these products are being regularly
imported and distributed throughout the country. In addition to all this,
suitable advertising and direct marketing plans were worked out and they
have been well received in the market.
Today the company is planning to purchase land to set up a factory and
handle total operations on their own. CI continues to offer valuable
assistance and work with the client.

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Questions
Q.1 How Cherry International has helped the international export houses to
introduce them in India?
Q.2 How the services being offered by CI has helped the companies in research and
development?

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Multiple Choice Questions


1 Marketing information system are built upon the gathering, sorting, analyses and
evaluation and distribution of information and are comprised of which of the
following?
a> People
b> Intelligence activities
c> Computer Programmes
d> Research procedures
e> All of the above
2 Primary data is information that is collected for various reasons. Primary data is
not obtained from which source?
a> Secondary data
b> Online data
c> Specific purpose data
d> All of the above
e> None of the above
3 Gathering information helps to identify trends and issues related to which of the
following areas?
1) Current customers.
2) Potential customers.
3) Competitors.
4) Environmental factors.
5) Marketing mix developments.
a> 1,2
b> 1,2,3 and 4
c> 1,2,3
d> All of the above

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When a marketing research organization chooses a segment of the population `


that represents the population as a whole, they have chosen a _______________.
a.
group
b.
bi-variant population
c.
sample
d.
market target

In 1985, the Coca-Cola Company made a classic marketing blunder with its
deletion of its popular Coca-Cola product and introduction of what it called
New Coke. Analysts now believe that most of the company's problems
resulted from poor marketing research. As the public demanded their "old
Coke" back, the company relented and reintroduced Coca-Cola Classic (which
has regained and surpassed its former position) while New Coke owns only
0.1 percent of the market. Which of the following marketing research mistakes
did Coca-Cola make?
a.
They did not investigate pricing correctly and priced the product too high.
b.
They did not investigate dealer reaction and had inadequate distribution.
c.
They defined their marketing research problem too narrowly.
d.
They failed to account for the Pepsi Challenge taste test in their marketing
efforts.

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Key Terms
Market: In terms of marketing, market refers to the group of consumers or
organizations or both at any place that is interested in the product, has the resources to
purchase the product, and is permitted by law and other regulations to acquire the
product.
Marketing: Marketing is a management process which comprises of any activity or set of
institutions, and processes through which goods and services move from producers or
sellers concept to the consumer or buyer.
Marketing Management: Marketing management can be defined as a business
discipline focussing on the practical implications of marketing tools and techniques and
the management of a firm's marketing activities and resources.
Marketer: A person who indentifies the needs and requirements of the consumer,
produces goods and services according to consumers requirements and needs and then
sells them through marketing on behalf of a company.
Prospects: A prospect is a potential customer or sales lead who has actively expresses
his or her interest in the product or service.
Marketing Myopia: A companys short-sighted, temporary, narrow minded and
inward looking approach while marketing their products. In other words, when a firm
changes its marketing focus from customer to its product or the company itself, it is also
called myopia.
Market Segmentation : The process of defining and subdividing a large hetrogenous
market into clearly identifiable homogenous segments of prospective buyers having
similar needs, requirements, wants or demand characteristics

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Market Targeting : Target Marketing involves breaking a market into segments and
then the selection of a particular market sector toward which all marketing effort is
directed and concentrated
Target Market : A target market is a segment of consumers having similar needs,
requirements, wants, or demand characteristics and have been identified through
research to be the most likely to buy a particular product.
Mass Marketing/Undifferentiated Marketing : Mass marketing is a market coverage
strategy in which an entire market is served with one basic marketing strategy utilizing
mass distribution and mass media thereby ignoring all market segment differences.
Niche Marketing/Micro Marketing : Niche market is the subset of the market wherein
the firm concentrates all its marketing efforts on a small but specific and well defined
segment of the population. Niches do not 'exist' but are 'created' by identifying needs,
wants, and requirements that are being addressed poorly or not at all by other firms,
and developing and delivering goods or services to satisfy them. For eg, sports channels
like STAR Sports, ESPN, STAR Cricket, and Fox target a niche of sports lovers.
Product Mix : Product mix refers to the whole range of products and services that a
company offers to its customers. It is also known as product assortment.
Product Line : A company creates a group of products, which have many common
main characteristics. In other words, A product line is a set of related products sold by a
single company.
Product Length: Numer of products within a product line is considered as product
length
Product Width : Number of product lines a company offers.
Product Depth : It refers to the number of varieties of each product within each product
line.
Example : product line is something like Hindustan Uniliver have different products
like soaps, shampoos, etc, product width is when we see its soap category they have
various soaps....and when we take product depth it means taking certain soap

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characterstics such as in what quantity its packs are available, available fragrances
within each soap category etc.
Product Consistency: It refers to the relationship between all products in their final
destination of product lines within an organization.
Product differentiation : Differentiation is a process to make a product more attractive
by contrasting its unique qualities with other competing products. It is a marketing
process that showcases the differences between products. Product differentiation helps
in creating a competitive advantage for the seller, as customers view these products as
unique or superior.
Line stretching: Line stretching occurs when a company lengthens its product line
beyond its current range.
Line filling: "Line filling is the type of product line extension to introduce new version
of existing product in the market."
Brand reinforcement: Activity associated with getting consumers who have tried a
particular brands to become repeat purchasers and with attracting new users, Brand
reinforcement is a key objective of the growth stage of the products life cycle.
Brand revitalization : When a brand begins to lose its market share, its parent company
has to face the decision of harvesting the brand or revitalizing it before it fades from
store shelves and consumers minds. Thus, it is a strategy to recapture lost sources of
brand equity and identify and establish new sources of brand equity. This may include
product modification or brand repositioning.
Brand extensions / Brand stretching : Brand extension is a marketing strategy in
which a firm launches a new product by using an existing well developed brand name.
Marketing a product with a well-developed image uses the same brand name in a
different product category. This new category to which the brand is extended can be
related or unrelated to the existing product categories Example - Nikes brand core
product is shoes. But it is now extended to sunglasses, soccer balls, basketballs, and golf
equipments. An existing brand that gives rise to a brand extension is referred to as
parent brand

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Reference price : A pricing strategy in which a product is sold at a price just below its
main competing brand to make it look more attractive in terms of price.

Marketing Research : The process of systematic gathering, recording, analyzing and


interpreting of data about a market, product or service and about the past, present and potential
customers for the product or service.
Marketing Audit : It is a comprehensive, systematic, periodic evaluation of marketing
capabilities. It is strategic tool used to examines the goals, policies, and strategies of the
marketing function as well as the methods of the organization and the personnel who
carry out the goals, policies, and strategies of the marketing function.
Quota sampling
A sampling method of conducting research by gathering
representative data from a group which has been formed on basis of age, sex, social
class etc.
Sample: It is a subset of a population representing the all major characteristics of the
population.
Report: A document containing information which is related to a specific subject
organized in a narrative, graphic, or tabular form. Serves the purpose of providing
information for decision making and follow up actions

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Reference Books
Marketing Management by Kotler, Keller and Jha South Asian perspective
13th Edition
Marketing Management by Ramaswamy and Namakumari 3rd Edition
Marketing Management by Kothari, Mehta and Sharma