Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
MARKETING CONCEPT
MODULE 1 (3 Hours)
Introduction: Nature and scope of Marketing, Evolution, Various Marketing
orientations, Marketing Vs Selling concept, Consumer Need, Wants and
Demand concepts.
DEFNITION
The Marketing concept is a point of view on business. It enumerates that any business is
essentially a need satisfying process. It also enunciates that all the goals of the
organization including profit be realized three customer orientation. Integrated
management action and generation of customer satisfaction.
CONCEPTS OF MARKETING.
C
E
O
X
N
C
C
H
E
A
P
N
T
G
S
E
THE EXCHANGE CONCEPT
The exchange concept of marketing, as the very name indicates ,holds that the exchange
of a product between the seller & the buyer is the central idea of marketing. While
exchange does form a significant part of marketing as a mere exchange process would
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Some service organizations also operate on production concept. Many medical & dental
practices are organized on assembly-line principles, as are some government agencies.
Although this mgt orientation can handle many cases per hour, it is open to charges of
impersonal and poor-quality service.
MARKETING MANAGEMENT
that the co. has a whole battery of effective selling and promotion tools to stimulate more
buying.
The selling concept is practiced most aggressively with unsought goods, goods
that buyers normally do not think of buying, such as insurance, encyclopedias, and
funeral plots. It is also practiced in non-profit area by fund raisers, college admission
offices, & political parties.
This concept emerged in mid-1950 and challenged the preceding concepts. The
MARKETING concept was born out of the awareness that marketing starts with
determination of consumer wants & ends with the satisfaction of those wants. The
concept puts the customer at both the beginning and the end of business. It stipulates that
the company should be organized totally around the marketing function, anticipating,
stimulating & meeting customers requirements.
The concept rests on the realization that a business cannot succeed by supplying
products and services that ae not properly designed to serve their needs. Every depart. &
every worker and every manager will THINK CUSTOMER &ACT CUSTOMER.
Evidently, the concept represent a radically new approach to business.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Societal
marketing
blends
social,
company
and
customers
wants.
The Societal Marketing Concept. This concept holds that the organizations task is to
determine the needs, wants, and interests of target markets and to deliver the desired
satisfactions more effectively and efficiently than competitors (this is the original
Marketing Concept). Additionally, it holds that this all must be done in a way that
preserves or enhances the consumers and the societys well-being.
Unfortunately, satisfying customers short-term needs may not be compatible with
societys needs. For instance, your customers may prefer large automobiles, disposable
diapers, hamburgers, no-deposit bottles, etc. Society is better off if we drive small cars,
use cloth diapers, and eat soy burgers. Should a firm worry about its customers shortterm
needs,
or
consider
what
is
best
for
society?.
The modern time is the time of information, peoples are more aware of sensitive
issues which the earlier generations did not know, like shortage of resources, health
issues,
environmental
deterioration.
And the reason of this well learned society is ubiquity of information, through the means
of electronic media and print media, and internet now is playing very important part in
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
providing up to date information at the rate of just one click. So this generation have
developed the ability to judge any marketing strategy, whether it is correct or not?
The societal marketing concept calls upon marketers to build social & ethical
considerations into their mktg practices. They must balance and juggle the often
conflicting criteria of company profits, consumer want satisfaction, & public interest.
This orientation arose as some questioned whether the Marketing Concept is an
appropriate philosophy in an age of environmental deterioration, resource shortages,
explosive population growth, world hunger and poverty, and neglected social services.
Are companies that do an excellent job of satisfying consumer wants necessarily acting in
the best long-run interests of consumers and society?
The marketing concept possibily sidesteps the potential conflicts among consumer
wants, consumer interests, and long-run societal welfare.:
:
EXAMPLE:
The fast-food hamburger industry offers tasty but unhealthy food. The hamburgers have a
high fat content, and the restaurants promote fries and pies, two products high in starch
and fat. The products are wrapped in convenient packaging, which leads to much waste.
In satisfying consumer wants, these restaurants may be hurting consumer health and
causing environmental problems.
MARKETING MANAGEMENT
mainly exurbs voted Republican. Exurbs are too far from urban areas to be considered
suburbs
but
too
large
to
be
considered
rural.
Even libraries have started using marketing. Libraries are being defined as a place to find
information, not only books. (If they define themselves solely as a place to borrow books
they are suffering from marketing myopia.) This is why libraries have numerous
computers and wireless networks so that anyone with a laptop can access the Internet.
Libraries also have DVDs since they are almost as important as books. Incidentally, there
is a revolution in the area of book publishing, a new kind of book is the eBook.
Libraries are also places where young children whose mothers work can do their
homework after school.
Colleges are also using sophisticated marketing tools to attract students. This is
becoming a hot area since colleges find themselves competing for students. Research
shows that students choose schools based on reputation, convenience, and course
offerings. Hospitals are also becoming marketing-oriented. Patient satisfaction is
becoming very important to hospitals. Customer satisfaction is very important in
marketing (indeed, that is what the marketing concept is all about). Today, hospitals and
colleges are learning about the importance of satisfying patients and students,
respectively. Do you think this college has done a good job satisfying you?
Can marketing help a church expand its membership? Read "The Soul of the New
Exurb" by Jonathan Mahler (New York Times Magazine, March 27, 2005, pp. 30-50) to
learn how Pastor Lee McFarland built a mega-church (weekly attendance of 2,000+) in
the exurb of Surprise, Arizona; weekly attendance is 5,000. Before building the church,
McFarland did some marketing research and asked only two questions: "What's your
favorite radio station?" "Why do you think people don't go to church?" What he found
was that the people living in Surprise liked rock music; they did not go to church because
they did not own fancy clothing, did not like to be asked for money, and felt that the
church sermons they heard in the past were not relevant to their lives. His church has no
crosses or other religious icons; no stained glass and it looks like a mall. Krispy Kreme
doughnuts are served ($16,000 a year spent on the doughnuts), the dress code is lax, and
Pastor McFarland wears a T-shirt and jeans. Half of each service is devoted to Christian
rock. McFarland's "sermons" deal with what he calls "successful principles of living."
People are attracted to the church for various reasons including aerobics classes, child
care, counseling, financial planning, etc. Radiant has small groups for all kinds of
people: widows, divorced, etc. This is known as getting people in through the side door
(going to church for Sunday sermon = front door). Small groups allow people to share
their pains and hopes. Outdoor advertisement for the church: "Isn't It Time You Laughed
Again?" with a picture of happy family.
The church has a branch of Celebrate Recovery, a Christian program for recovering
addicts that is similar to the 12-step program of Alcoholics Anonymous. Recovering
addicts can feel comfortable talking about their Christian beliefs at the Celebrate
Recovery meetings.
CASE STUDY
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
PROBLEM
STATEMENT
:
In order for McDonalds to reach its goal of "par excellence", it must use the full meaning
and definition of marketing. Marketing is giving the target market what they want, when
and where they want it, at a price they are willing to pay for it.
REFLECTION
/
OPINION
For McDonalds to achieve its "par excellence", they must focus on the fact that there is
an ever changing market and that the wants and needs of consumers are constantly
changing. Since McDonalds has been around for forty-one years, it is safe to say that
they are the father of the fast food industry and that they have set an example for others to
follow.
When Ray Kroc bought the first McDonalds in 1955, he focused on what people wanted.
With this focus came the utilization of Mr. Krocs theory of QSC ( quality, service, and
cleanliness
).
QSC successfully got McDonalds off the ground, but as times changed, the company
saw many more market segments and opportunities. In the 1970s and 1980s once again
McDonalds lead the way in the fast food industry. The changes we saw included, for
example, the fact that women were now a major part of the work force and dual income
families were becoming a more common occurrence. McDonalds became a mastermind
of marketing toward specific markets by pioneering ideas such as breakfast menus,
healthier choices and alternatives, and "adult" foods. McDonalds has truly evolved into a
world power by paying attention to the needs and wants of the changing market and
adjusting
to
these
needs.
LINKING
THEORY
:
Ray Kroc saw early on what needed to be done. He changed what was at one time a
product orientation, into a marketing orientation. Back in 1955, this was still a new type
of management. From the beginning, Kroc was already in the forefront of marketing.
Marketing orientation focuses on the customer and what they want in a product, rather
than product orientation which focuses on the product itself. McDonalds has taken every
aspect of marketing orientation and utilized the philosophy to its fullest. McDonalds has
focused in on the customer needs and wants, sometimes even putting the ideas into the
consumers mind before they even knew what they wanted or expected. McDonalds
could deliver! They have done extensive market analysis and product development based
on this analysis. They have packaged their food and priced it exactly to the market
segment
which
they
have
targeted.
Showing McDonalds innovations in marketing even further, is its early adaptation of
societal marketing. Societal marketing takes into account the overall concerns of the
target market, the environment, for example. McDonalds got rid of their one time
innovative styrofoam packaging and replaced it with more environmentally sound paper
packaging. They stress the fact that they are environmentally aware, by reminding us not
to litter, etc., on their various forms of packaging. Another example if societal marketing
is the Ronald McDonald House. This is probably McDonalds largest community service
project. It demonstrates the way that McDonalds is willing to give something back to the
very communities that support the company. These examples as well as the various
events that McDonalds promotes, such as the Olympic Games, puts their name
worldwide. This makes it difficult for us ever to forget of the existence of McDonalds.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
EXAMPLE-2
PATAGONIA world-class climber yvon chouinard founded Patagonia in 1966 by selling
rock climbing hardware from the trunk of his car. By the time the company changed its
focus to selling soft goods & apparel in mid-1970, Patagonia was committed to two main
goals: providing the highest quality gear for outdoor enthusiasts, & implement[ing]
solutions to the environmental crisis. The co. gave an earth tax of one percent of sales or
ten percent of pre tax profits (whichever is greater) to activists who take radical and
strategic steps to protect habitat, wilderness, & biodiversity. however, as Patagonia
expanded, many aspects of its operations contributed to the environmental pollution the
company worked so hard to counter. After an internal study in 1990s the company
sought to use materials & fabrics that would minimize its impact on the environment,
such as synchilla fleece made from recycled plastic bottles and the 100 percent organic
cotton used in every cotton product. The corporate culture avidly supports activism, as
evidenced by a company program through which employees receive pay to work up to
two months in an organization. Patagonia sent 70 of its 900 employees abroad on such
trips in 1999.
Patagonia is practicing a form of the societal marketing concept called cause-related
marketing.
EXAMPLE-3
A FAST FOOD restaurant offers tasty but unhealthy food. These foods have fat content &
the restaurant promotes fried stuff. These are high in fat. The products are wrapped in
convenient packaging. In satisfying consumer wants, these restaurants may be hurting the
consumer health.
MARKETING MANAGEMENT
Concepts
Customized marketing
o Segments
o Niche
o Customized
e.g., Schwinn Bicycles, Bank Services
Concepts
Relationship Marketing
o The product is all you get
o We provide a hotline if you want to reach us
o We want to create continuous value for you
MARKETING MANAGEMENT
MARKETING
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
DISTRIBUTION OF CHANNELS
INTRODUCTION
Of the four elements of marketing mix viz., product, price, promotion and
distribution, distribution [i.e., the channels of distribution and physical distribution] is the
most important element. The success or failure of a firm depends largely upon the
efficiency of distribution
CHANNELS OF DISTRIBUTION
MEANING
The term channel is derived from the French word canal meaning artificial
water way for transportation or irrigation so, channel of distribution refers to the pathway,
path or route taken by goods as they flow or move from the point of production to the
point of consumption or use.
In the words of Prof. W. Stanton channel of distribution is the route taken by the
goods as they move from the producer to the ultimate consumer or industrial user
According to Philip kotler every producer seeks to link together the set of
marketing intermediaries that best fulfill the firms objective. This set of marketing
intermediaries is called the marketing channel [also trade channel or channel of
distribution]
ROLES OF CHANNELS OF DISTRIBUTION
Distribution channel have a distinctive role in the successful implementation of
marketing plans and strategies. These channels perform the following marketing function
in the machinery of distribution.
1. The searching out of buyer and seller [contacting]
2. Matching goods to the requirements of the market [merchandising]
3. Offering products in the form of assortments or packages
4. Persuading and influencing the prospective buyer to favour a certain product
and its maker [personal selling / sales promotion]
5. Implementing pricing strategies in such a manner that would be acceptable to
the buyers and ensure effective distribution
6. Looking after all physical distribution functions
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MARKETING MANAGEMENT
HORIZONTAL CONFLICT
Horizontal conflict occurs among firms on the same level of distribution.
Basically horizontal conflict is a form of business competition. It may occur
among:
o Middlemen of the same type: Mary vale hardware (an independent
retailer) Versus Freds Friendly Hardware (another independent retailer)
o Different types of middlemen on the same level Freds Friendly Hardware
(an independent retailer) Versus Lowes points area (a single department in
a store within a giant chain
A primary sources of horizontal conflict is scrambled merchandising, in
which middlemen diversify by adding product lines not traditionally
carried by their type of business
VERTICAL CONFLICT
Vertical conflict typically occurs between producer and wholesaler or
between producer and retailer
PRODUCER VERSUS WHOLESALER
A producer and a wholesaler may disagree about aspects of their
relationship
Why do conflicts arise? Basically, manufacturers and wholesalers have
differing point of view on the one hand, manufacturers think that wholesalers neither
promote products aggressively nor hold sufficient inventories
On the other hand, wholesalers believe that producers either expect too
much, such as requiring an extensive inventory of the product, or do not understand the
wholesalers primary obligation to customers.
To bypass wholesalers, a producer has two alternatives
o Sell directly to consumer: producers may employ door to door, mailorder, or online selling. They may also establish their own distribution
centers in various areas or even their own retail store in major markets
o Sell directly to retailers: under certain market and product condition,
selling directly to retailers is feasible and advisable. An ideal retail market
for this option consists of retailers that buy large quantities of a limited
line of products
To avoid being bypassed in channels, wholesalers need to improve their
competition position
o Improve internal performance: many wholesalers have modernized
their operations. Functional, single-story warehouse have been built
outside congested down town areas and mechanized materialshandling equipment has been installed
o Provide management assistance to customers: wholesalers have
realized that improving customers operation benefits all parties. Thus
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MARKETING MANAGEMENT
MARKETING MANAGEMENT
With the adaptation of the marketing concept the consumer became the focal point of the
business
Basically companys sale each period come from 2 group: new customers and repeat
customers. It always costs more to attract new customers than to retain current customers.
E.g. Motorcycle Company Harley- Davidson has created a club (the Harley owners
group) for bike owners. It offers more than 650000 members insurance, travel planning,
roadside emergency service, free safety lessons, etc.
INTEGRATED MANAGEMENT ACTION
Integrated management action simply means that all the different management functions
in the business must be tightly integrated with one another, keeping marketing as the
pivot.
All the activities should lead to a favorable impact on the consumer and for this to
happen, all functional areas of the business have to be properly aligned with marketing.
In organization that do not practice integrated management the different functions/depts.
of the organization are preoccupied with the optimization of their specific activities often
at the cost of optimization of the overall result.
In organizations that practice integrated management marketing, the management insists
on absolute coordination of all company actions keeping marketing customer as the
focus.
E.g. Sony, Honda.
CONSUMER SATISFACTION
The marketing concept believes that it is not enough if a firm has customer orientation it
is essential that such an orientation lead to consumer satisfaction.
The concept believes that it is not enough if a firm markets its products successfully in
the short run. It must keep growing, keeping consumer satisfaction as the foundation of
its growth.
The concept effectively contracts the temptations of short sighted management attitudes
by its emphasis on consumer satisfaction.
E.g.
REALISING ORGANISATIONAL GOALS
If a firm has succeeded in generating customer satisfaction, if basically implies that a
firm has given a quality product and company has offered competitive price and prompt
service.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Only when these factors act and interact, complementary and supporting one another, will
a product with all the attendant features necessary to satisfy the consumers emerge.
MARKETING CONCEPT
DEFNITION
The Marketing concept is a point of view on business. It enumerates that any business is
essentially a need satisfying process. It also enunciates that all the goals of the
organization including profit be realized three customer orientation. Integrated
management action and generation of customer satisfaction.
Low price, better quality and ready stocks at convenient locations are some of the
benefits that accuse to the customers.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
He can chose, he can bargain, he can complain and the complaint will be attended to.
He can buy on cash or on credit or on installments. He can even return it material if he is
not satisfied with it.
If a guarantee that only products that are required by the consumers are produced there by
it ensures that the countrys economic resources are channelized in the right direction.
If acts as a change agent and a value adder is society.
It makes economic planning more meaningful and more relevant to the life of the people.
It creates good entrepreneurs and managers in the society and also improves the standard
of living.
IMPORTANCE OF MARKETING:
CREATING UTILITY:
A Customer purchases a product because it provides satisfaction. The want
satisfying power is called its utility. it comes in many forms. It is through marketing that
much of a products utility is created. There are different kinds of utilities:Form utility:
R.M Converted to Finished product. Understand customers
Requirements Form utility is primarily associate with production- the physical or
chemical changes that make a product more valuable.
Eg: Lumber is made into furniture is an example of form utility.
Place Utility
Channel Distribution Physical Distribution Customer As per customers Requirement
Place utility exists when a product is readily accessible to potential customers. An auction
on the net can increase the number of buyers and sellers, but once products are purchased
they still have to be delivered quickly and in condition. Physically moving a purchased
item to a successful bidder in an essential element of its value.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Time Utility
Warehouse making available goods customer When needed As per customers
Requirement
Person Utility:
Marketer Established Contact Customer Understand Customers Requirements
Exchange Utility
Seller Transfer Goods to Buyer as per Customers Requirement
MARKETING FUNCTIONS
The scope of marketing is very wide. A number of functions are inherent in any
marketing on the basis of various utilities like (in II) time and place utility and (III)
possession utility.
I
FUNCTION
OF EXCHANGE
1.Buying Function
2.Assembly Function
3.Selling Function.
II
FUNCTION OF
PHYSICAL
DISTRIBUTION
1.Transporation
2.Inventory Management
3.Ware Housing
4.Material Handling
III
FUNCTION
OF FACILITIES
1.Financing
2.Risk Taking
3.Standardization
4.After Sales Service
(I)
FUNCTIONS OF EXCHANGE
a) BUYING FUNCTION:
A Manufacturer is required to buy raw material for production purposes
similarly a wholesaler has to buy good from manufacturer for selling it to
retailer. A retailer sell the goods to the customers. The function to buying
has to be done at various levels. Buying involves transfer of ownership
form seller to buyer.
b) ASSEMBLY FUNCTION:
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Goods purchased form various sources and assembled at one place to suit
the requirement of the buyer.
c) Selling Function:
Selling function involves sales of goods from seller to buyer. Selling
function is very important to all organizations due to the fact the selling
has to be done against severe competition.
II FUNCTION OF PHYSICAL DISTRIBUTION:
a. TRANSPORATION:
This include mode of transport selection of transporter or carrier freight consideration
like freight paid or to pay routing, scheduling, processing claim in case of transit
damage etc.,
b. INVENTROY MANAGEMENT:
This includes:
1. Short term fore casting
2. Product size and location of warehouse
3. Just in time
4. Push or pull strategy adoption.
5.
c. WARE HOUSING:
The following functions are included:
1. Space requirement
2. Suitability of location
3. Layout design
4. Physical arrangement
d. MATERIAL HANDING:
This includes:
1. Equipment Selection
2. Equipment Replacement
3. Storage methods
4. Receipts and issue (F I F I or L I F O )
III FUNCTIONS OF FACILITIES:
a. FINANCING :
This means extending credit facilities during selling. It an organization has to do
this. It must have adequate working capital. Marketer has to plan.
a. Short term finance
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
5. Promotion etc.,
1.Product Planning:
A Product planning is something which is a business offers to customers. Hence
product planning, product improvement, product development, product diversification are
all parts of product management, profitability depends on product mix planning. Product
planning involves adding dropping a modifying a product. Sometimes product line
planning may have to be undertaken by marketer.
2. PACKAGING:
Provides protection and improves aesthetic appeal. This enable the marketer to sell more.
The two important aspects of packaging are:
a. Labeling
b. Branding
3. PRICING:
Pricing is nothing but the value of the product in terms of money. It is the amount paid by
the buyer to the seller. Profitability is decided by the price. Marketer need to formulated
pricing strategies.
4. MARKET RESEARCH :
Market research involves systematic gathering recording and analyzing of data about
relating to the marketing of goods and services.
However different authors describe marketing function in different ways. Above we have
mentioned one of those methods. Another way of classification of marketing function is
as follows Mc.Garrv.
Classified marketing function in to 6 categories.
a. Contractual: Buyers Sellers are brought together for marketing transaction.
b. Merchandizing: This is concerned with making products acceptable to the market.
c. Pricing :
d. Propaganda: Buyers are informed about the activities of organizations.
e. Physical distribution: Consisting of transportation storage etc.,
f. Termination: This is the end of marketing activity.
MARKETING MANAGEMENT
INTRODUCTION :
The word MARKETING is originated from the Latin noun
MORCATUS, which means A place where business is conducted. It is a place
where buyers and sellers meet, and exchange goods and services for money.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Evolution of Marketing:
The stage of Barter:
Agriculturists and craftsmen were the main producers of this era.
After meeting his own requirements the sulphur were disposed in their immediate
neighbors.
There was no elaborate distribution system as the habits and needs of the people and
the prevailing technology did not demand such a system.
Marketing under those conditions meant a task of producing the basic necessities of
life and exchanging them with known consumer groups in the immediate
neighborhood. This represented the stage of barter in the evolution of marketing.
This stage brought about changes in the physical and economic environment of
man.
Mass production became the order of the day and variety of low-priced goods
became available in abundance.
The industrial revolution also generated the income revolution that sustained the
mass production and mass distribution unleashed by the industrial revolution.
The ever increasing number and size of the producing firms generated the
phenomenon of competition, which was not known in the agriculture and handicrafts
economy or in the early stage of Industrial Evolution.
The main task of the industrial firms was disposal or distribution of whatever they
produced. In the subsequent stage, meeting competition became the chief issue.
The situation demanded a conscious effort to face the competitors and the firms
had to ensure that their products were accepted in preference to those of their
competitors.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
New industrial concerns sprang up rapidly and a great variety of new products and
services strengthened the consumer market.
Consumer had abundant choices and consumer began to occupy a place of unique
importance.
The businessmen who got consumers who are well educated and endowed with a
good discretionary income realized that it was not enough if they made a onetime sale
of their products to the consumers.
They had to make available their products at a price that was advantageous to
the consumer. They also had to ensure that complaint from the consumer about the
product was attended to promptly and if required after sales servicing had to be
provided and that led to the emergence of marketing.
MARKETING MIX
In marketing Planning we use marketing information to assess the situation. We have
to select specific marketing targets in the form of market segments. For each segment
or sub division of the market we have formulate a combination of a number of
devices or types of marketing activities that are integrated into single marketing
programme to reach a particular target or market segment. The combination of these
marketing methods or devices is known as the marketing mix.
A successful marketing strategy must have a marketing mix as well as a target
market for whom the marketing mix is prepared. The elements or variables that make up
a marketing mix are only four:
1. Decisions on product or service.
2. Decisions on price.
3. Decisions on promotion.
4. Decisions on distribution.
These four Ingredients are closely interrelated.
In the simplest manner, the basic marketing mix is the blending of four inputs or sub
mixes which form the core of the marketing system.
1. Product Mix
2. Price Mix
3. Distribution Mix
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
4. Promotion Mix.
The outputs are optimum productivity and satisfaction.
PRODUCT MIX
1. BRAND
2. COLOUR
3. STYLE
4. DESIGN
5. PRODUCT LINE
6. PACKAGE
7. WARRANTY
8. SERVICE
PRICE MIX
1. PRICING STRATEGY
2. PRICING POLICY
3. BASIC PRICE
4. TERMS OF CREDIT
5. DICOUNTS
6. ALLOWANCES
MARKETING STRATEGY
MARKETING MIX
FOCUSSED ON
TRAGET MARKET
PROMOTION MIX
1. PERSONAL SELLING
2. ADVERTISING
3. PUBLICITY
4. SALES PROMOTION
a) DELERS AIDS
b)CONSUMBER AIDS
PLACE MIX
DISTRIBUTION
CHANNELS
1. WHOLESALERS
2. RETAILERS
3. MERCANTILE AGENTS
PHYSICAL DISTRIBUTION
1. TRANSPORT
2. WARE HOUSING
3. INVENTORY
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
ADVERTISING
DISTRIBUTION
SALES FORCE
CHANNELS
PUBLIC
RELATIONS
DIRECT MAIL
TELE MARKETING
AND INTERNET
The above figure shows the company preparing an offering mix of Products, Services,
Prices and utilizing a Promotion Mix of Sales Promotion, Advertising, Sales Force,
Public Relations, Direct Mail, Tele Marketing and Internet to teach the trade channels and
the target customers.
Robert Louterborn suggested that the sellers four Ps correspond to the customers
four Cs
FOUR Ps
FOUR Cs
Product
Price
Place
Promotion
Customer Solution
Customer Cost
Convenience
Communication.
PRODUCT MIX
A Product Mix (also called Product Assortment) is the set of all products and
items that a particular seller offers for sales.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
The word Product Mix is used to describe the assortment of different product
types that a company produces and markets. The Product line is the number of
brands or related Products in each Products type.
Example: Have four major Product Lines: Detergents, Toothpastes, Soaps. For each
line there are a number of brands and the number of different brands represents the
length of Product Line and the numbers of different lines represents the width of the
Product Mix.
HINDUSTAN LEVER LTD., has a Product Line consisting of Soaps, Detergents,
Cosmetics etc.,
PHILIPS has a wide range in audio systems and home appliances.
BRANDS :
A brand is a name, term, sign, symbol or design or a combination of Thom,
intended to identity the goods or services of one seller or group of sellers and to
differentiate Thom form those of competitors.
PACKAGE :
Includes the activities of designing and producing the container for a product. The
container is called the package and it might include up to three levels of material,
Old Spice after shave lotion is in a bottle that is in a cardboard box that is in a
corrugated box (shipping Package) containing six dozen of Old Spice.
Example : MAURTHI UDYOG LTD MARUTHI 1000
MARUTHI UDYOG LTD., has a product Maruthi 1000 designed to have the
following attributes.
Superior Road Grip
Added Safety
Luxurious Interiors
Eco Friendly
PRICE MIX :
Price is an important consideration in buying decisions price also denotes Quality
in the consumers mind a Psychological factor. For same products, when many
identical brands are competing with each other for consumer preference, the price
may be important influencing factor price is the basic vehicle for telling the
consumer about the value and associated conditions of a particular product.
Price is an important element of marketing mix. It may be defined as the value of
product attributes expressed in monetary terms, which a consumer pays or
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Pricing Objectives
Demand for a Product or Services
Competition
Profitability
Distribution channels
Example: 1. Price of PEUGEOT 309 The Premier Peugeot Limited plans to use the
market based pricing where it well exploit the market fully aiming at charging a price
that will be close to Maruthis 1000, which is priced at Rs: 4 lakhs approximately. The
company plans to attack the market of Maruthis 1000 by an after of a better product
for a little more.
2. Price of ACCENT The Hyundai Motor Company plans to follow the market
penetration pricing, initially pricing the car at lower or same price to attract a larger
number of customer, preferably permanent ones. It plans to offer of something more
for the same price.
Price of ACCENT Rs: 5 lakhs.
PLACE MIX :
The marketer has the responsibility of making his product available near the place
of consumption so that the consumers can easily buy it. If the brand preferred by
the consumer is not easily available at the convenient lactation, he may buy some
other brand. Thus a marketer has to ensure that his product is available to the
target consumers whatever required. There are two major areas in place mix:
1. Marketing channels
2. Physical distribution
It is true that channel decisions affect other marketing mix elements, and
involve a relatively long-term commitment of resources. It may take a marketer
year to build up relations with the intermediaries and sometimes these are
contractual. As we know, intermediaries are independent organizations and
therefore, their needs must be taken into account while evaluating carious channel
alternatives. In fact, the success of a companys marketing effort depends to a
larger extent on the soundness of its distribution network, physical distribution
involves transportation, warehousing, material handling and bulk packaging
among others, same of theses activities will also be performed between the
various links in the channel in order to get the optimum results. For many years,
physical distribution was a neglected area of marketing management, but now
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Example :1. OPELASTRA Car in India. The tools and media used.
The company will use various strategic tools and media to
tap the potential customers and keep the current ones.
Advertising in print media (newspapers, Magazines and
dailies), using tele media like Television, Videotapes and
also through outdoor advertising are a few of the tools used
by the company besides other like exhibits and fairs,
demonstration etc.,
The company has a database of 20,000 likely buyers to
whom direct mailers have been sent.
The company has also conducted Car Clinics for over
two months to gauge the customers response in an effort to
balance quality and price.
Example :2. Hyundai Motor Company Car in India.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
INTEGRATED MARKETING:
When all the companys departments work together to serve the customers
interests the result is integrated marketing.
Integrated marketing takes places on two levels.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
First, the various marketing functions- sales force, advertising, customer service,
product management, marketing research must work together too often the sales
force thinks product managers set prices or ` sale quotas :too high, or the
advertising campaigns. All these marketing functions must be coordinated form
the customers print of view.
Second: marketing must be embraced by the other departments; they must also
think customer marketing is far too important to be left only to the marketing
department. Marketing is not a department so much as a company wide
orientation. Xerox goes so far as to include in every job description an
explanation know that customer attitudes are affected by Xerox billing accuracy
and promptness in returning calls.
The various marketing functions like sales, advertising, customer service, market
research must work together. Secondly other departments like manufacturing,
engineering, all departments must work together. Sometimes engineer complains
that sales/marketing people are always protecting the customer and not thinking
of companys interest, he went on to blast customer for asking for too much,
this feeling should be removed, if we have to practice integrated marketing. In
fact todays marketing concepts shown in the diagram.
CUSTOMERS
FORNT LINE PEOPLE
MIDDLE MANAGEMENT
TOP AMANGEMENT
Modern Customer
oriented organization chart.
At the top are customer, next in level are the frontline people who meet and
satisfy the customer. Under them are the middle managers, whose job is to
support the front line people to serve to customers.
NEEDS
Needs are basic satisfaction of human beings. Food , clothing, shelter etc are the
basic needs of human needs
MEANING OF MARKET
A market is a physical place where buyer and sellers gathered to exchange
goods
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MEANING OF MARKETING
Marketing is a social and managerial process by which individuals and groups attain
what they need and want through creating, offering and exchanging products of value
with others
A System of interacting business activities designed to plan, price, promote and
distribute want, satisfying products and services to present and potential customers.
Marketing is the performance of business activities that directs the flow of goods and
services form the producer to the consumer.
Marketing is designed to bring about desired exchange with target audiences for purpose
of mutual gain.
MARKETING MANAGEMENT
Marketing is typically seen as the flash of creating promoting, and delivering goods and
services to consumers and businesses. In fact marketing people are involved in marketing
types of entities goods services, experiences, event, person, places. Properties,
organization information and ideas.
1. Goods : physical goods constitute the bulk of most countries production and
marketing effort in developing nations, goods- particularly food, commodities
clothing and housing are the mainstay of the economy.
2. Services: At economies advance a growing proportion of their activities are
focused on production of services. The US economy today consists of a 10-30
services to good mix. Service include the work of airlines, hotels can rental firms,
barbers and beauticians, maintenance and repair people, dog kennels and dog
therapists, as well as professionals working with in or for companies, such as
accounts lawyers, engineers, doctors, software programmers and management
consultants.
3. Experiences: by orchestrating several services and goods, one can create, stage,
and market experiences. There is a market for different experiences, such as
spending a week at a base ball camp playing with some retired baseball greats,
playing to conduct the Chicago symphony orchestra for five minutes, or climbing
mount Everest.
4. Events: Marketers promote time based events such as the Olympics, company
anniversaries, major trade shows, sports events, and artistic performances, there is
a whole profession of meetings planners who work out the details of an event and
stage it to come off perfectly.
5. Persons: Celebrity marketing has become a major business. Years ago some one
seeking same would hire a press agent to plant stories in newspapers and
magazines. Today artists, musicians, CEOs, physicians high profile lawyers and
financiers, and other professionals are drawing help from celebrity marketers.
6. Places : cities, states, regions, whole nations compete actively to attract tourists,
factories, lump any head quarters and new residents. Ireland has performed as an
outstanding place marketer, having attracted more than 500 companies to locate
their plants in Ireland.
7. Properties : Properties are intangible rights of ownership of either real property or
financial property. Properties are brought and sold, and this occasions a marketing
effort.
8. Organizations: Organizations actively work to build a strong, favorable image in
the mind of their publics. We see corporate identity ads by companies seeking
more public recognition. Philips puts out ads with the tag line lets make things
better. Universities, museum and performing arts organization all lays plans to
boost their public image to compete more successfully for audiences and funds.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
WANTS: WANTS are desires for specific satisfiers of these deeper needs.
For example: if a person needs a vehical to travel to his office he can go for two wheelers,
but if he specifically buys a car or a FOUR WHEELER that becomes a want.
DEMAND: DEMANDS are wants for specific products that are backed up by an ability
& willingness to by them.
For example: .
PUSH AND PULL STRATEGY: (Kotler)
In managing its intermediaries, the firm must decide how much effort to devote to push
versus pull marketing. A Push strategy involves that manufacturer using its sales force
and trade promotion money to induce intermediaries to carry, promote and sell the
product to end users. Push strategy is appropriate where there is low brand loyalty in a
category, brand choice is made in the store, the product is an impulse item, and product
benefits are well understood.
A pull strategy involves the manufacturer using advertising and promotion to induce
consumers to ask intermediaries for the product, thus inducing the intermediaries to order
it. Pull strategy is appropriate when there is high brand loyalty and high involvement in
the category, when people perceive differences between brands, and when people choose
the brand before they go to the store. Companies in the same industry may differ in their
emphasis on push or pull.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
P r om o t i o n - p u s h a n d p u l l s t r a t e g i e s
"Push or Pull"?
Marketing theory distinguishes between two main kinds of promotional strategy - "push"
and "pull".
PUSH:
A push promotional strategy makes use of a company's sales force and trade promotion
activities to create consumer demand for a product.
The producer promotes the product to wholesalers, the wholesalers promote it to retailers,
and the retailers promote it to consumers.
A good example of "push" selling is mobile phones, where the major handset
manufacturers such as Nokia promote their products via retailers such as Carphone
Warehouse. Personal selling and trade promotions are often the most effective
promotional tools for companies such as Nokia - for example offering subsidies on the
handsets to encourage retailers to sell higher volumes.
A "push" strategy tries to sell directly to the consumer, bypassing other distribution
channels (e.g. selling insurance or holidays directly). With this type of strategy, consumer
promotions and advertising are the most likely promotional tools.
PULL:
A pull selling strategy is one that requires high spending on advertising and consumer
promotion to build up consumer demand for a product.
If the strategy is successful, consumers will ask their retailers for the product, the retailers
will ask the wholesalers, and the wholesalers will ask the producers.
A good example of a pull is the heavy advertising and promotion of children's toys
mainly on television. Consider the recent BBC promotional campaign for its new preschool programme the Fimbles. Aimed at two to four-year-olds, 130 episodes of
Fimbles have been made and are featured everyday on digital children's channel
CBeebies and BBC2.
As part of the promotional campaign, the BBC has agreed a deal with toy maker FisherPrice to market products based on the show, which it hopes will emulate the popularity of
the Tweenies. Under the terms of the deal, Fisher-Price will develop, manufacture and
distribute a range of Fimbles products including soft, plastic and electronic learning toys
for the UK and Ireland.
In 2001, BBC Worldwide (the commercial division of the BBC) achieved sales of 90m
from its children's brands and properties last year. The demand created from broadcasting
of the Fimbles and a major advertising campaign is likely to pull demand from children
and encourage retailers to stock Fimbles toys in the stores for Christmas 2002.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Promotion
To sell an offering you must effectively promote and advertise it. There are two basic
promotion strategies, PUSH and PULL.
The PUSH STRATEGY maximizes the use of all available channels of
distribution to "push" the offering into the marketplace. This usually requires
generous discounts to achieve the objective of giving the channels incentive to
promote the offering, thus minimizing your need for advertising.
The PULL STRATEGY requires direct interface with the end user of the offering.
Use of channels of distribution is minimized during the first stages of promotion
and a major commitment to advertising is required. The objective is to "pull" the
prospects into the various channel outlets creating a demand the channels cannot
ignore.
Using Push-Pull Strategy In Public Relations
Push-Pull Strategy is not a new concept; it's been around for a while. Its two components
- Push Strategy and Pull Strategy - can be utilized either exclusively or in combination,
and it is probably more useful to discuss each separately, because Push-Pull simply is the
combination of the two. Although often thought of as marketing tools, Both push and pull
principles fit very well into the public relations model and are used in strategic campaigns
to determine the efficacy of persuasive methods.
One of the earliest definitions of public relations I learned was, "Public relations is doing
good things and talking about it." You could say that Pull Strategy has "doing good
things" at its heart, and that Pull Strategy is more concerned with the "talking about it"
element.
PULL STRATEGY involves talking directly to your primary audience with the express
purpose of persuading them to take a specific action favorable to your organization. It
depends on your organization's ability to "pull" the target audience into the fold, and is
most powerful when you have developed a solid reputation as a leader in the field.
In other words, an organization's strength and exemplary actions are used to attract
supporters.
Consistent, exemplary action leads to people trusting your organization. This earned trust
boosts your credibility, and when people can believe you, this in turn solidifies your
company's reputation in society. And, it is this reputation that serves as your operational
foundation and determines the image that people have of you. I call this the Action-Image
Continuum.
All of this smoothes the way for acceptance of your message and your calls for support.
In short, exemplary action pulls your potential supporters toward you and makes it easier
to persuade them to take action on your behalf. A good example would be a member of
your organization personally taking a potential member by the hand and walking him or
her through the recruitment process.
PUSH STRATEGY uses the benefiting organization's communications channels and
influencing audiences to convince potential supporters that it's in their best interest to join
your organization or support its causes.
You generally will be communicating with a large group of potential supporters, and will
choose from a gamut of communications tools in Push Strategy. It's everything from
brochures to direct mail, from newsletters to phone calls, from speeches to exhibits, from
email to websites.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Basically, the purpose of push is to get the word out about your organization or cause.
However, you must give something of value to the audience - something that will push
them, that will nudge them toward you, that will position them to be enlightened by your
organization's good name and image, that will break through the inertia and get them to
do something on your behalf. That something of value could be entertainment,
knowledge, expertise, "how to" or "did you know" tips, perhaps even samples.
PUSH-PULL STRATEGY is a combination of the two strategies - planning and timing
your "pull" initiatives with your "push" initiatives. You use persuasive methods directly
with your primary audience (pull), while at the same time, you utilize existing or new
targeted communications tools (push).
A good example of "push-pull" would be a college-level pre-professional organization
whose members are often "lost in the cracks" before they join the sponsoring professional
association. The pre-professional organization can "talk up" and "push" professional
membership until their faces turn blue, but once their members leave the fold (graduate),
it then becomes the responsibility of the sponsoring association to latch on to them and
"pull" them into the professional group.
Question: What are marketers talking about when they say Push vs. Pull?
Answer: "Push" tactics are typically promotions directed at re-sellers or other members
of the distribution channel. Again, there are different types, including training
programs, trade allowances, cooperative advertising, and the provision of
point-of-purchase displays. These are intended to provide incentives to the
channel to "push" a firms product toward the customer.
A "Pull" strategy is usually advertising directed at the end consumer. It works
to increase end demand, thus "pulling" a product through the distribution
channel.
Push-Pull strategy
.
The business terms push and pull originated in the marketing and advertising world, but
are also applicable in the world of electronic content and supply chain management. The
push/pull relationship is that between a product or piece of information and who is
moving it. A customer "pulls" things towards themselves, while a producer "pushes"
things toward customers.
Content
In a "push" system the consumer does not request the product to be developed; it is
"pushed at" the end-user by promotion. An example of this is a perfume product. Women
do not request to smell a fragrance they never smelled before; it is simply "pushed" at
them, through the right advertisement.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
In a "pull" system the consumer requests the product and "pulls" it through the delivery
channel. An example of this is the car manufacturing company Toyota. Toyota only
produces cars when they have been ordered by the customers.
Supply chains
With a push-based supply chain, products are pushed through the channel, from the
production side up to the retailer. The manufacturer sets production at a level in accord
with historical ordering patterns from retailers. It takes longer for a push-based supply
chain to changes in demand, which can result in overstocking or bottlenecks and delays
(the bullwhip effect), unacceptable service levels and product obsolescence.
In a pull-based supply chain, production and distribution are demand driven so that they
are coordinated with actual customer orders, rather than forecasted demand.
A supply chain is almost always a combination of both push and pull, where the interface
between the push-based stages and the pull-based stages is known as the push-pull
boundary. An example of this would be Dell's build to order supply chain. Inventory
levels of individual components are determined by forecasting general demand, but final
assembly is in response to a specific customer request. The push-pull boundary would
then be at the beginning of the assembly line. At this point on the supply chain timeline, it
is typically coordinated through a buffer inventory.
Push Then Pull Marketing
Marketing is like rowing. You pull hard on the oars to go forward, then lift them out of
the water and push them back to finish the stroke and get ready for the next pull. Once
you've got the sequence of the stroke right, you and your boat slip forward through the
water and build speed and momentum. If you push when you should be pulling, the boat
goes backwards, or, even worse, you lose your balance and fall into the bottom of the
boat.
One of the biggest mistakes people make in marketing their services is to simply PUSH
information about their services and themselves out to prospects and hope that this will
result in attracting prospects. Unless you are already a household name and in such
demand that your phone is ringing off the hook, this approach rarely attracts the numbers
of new clients you want. The result is that most marketing falls into the bottom of the
boat instead of propelling your business forward.
An alternative to the typical push and hope approach to marketing is to PULL prospects
in and then in the context of a growing relationship, PUSH useful information out to
them. If you want prospects to remember your firm when they have a need for your
services, start by attracting their interest.
Generate interest by focusing on what your potential clients want and the problems
they need solved. Use this client centered marketing strategy to pull prospects in so you
can push your expertise out to them. Give them ideas they can apply instead of
information about credentials, or past clients. Like rowing your boat, you won't move
very far unless you repeat the sequence again and again.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Are you pulling prospects in or just pushing your information out? Review your
marketing materials to see if you have the sequence right. Take a look at your web site,
brochures, newsletters, correspondence and proposals.
PULL
TACTICS
'Client'
Centered
Do your marketing materials
1.
Begin with a clear identification of the niche market(s) you work with?
2.
Lead with client problems and concerns?
3.
Use the two elements above to create a picture that your target market can identify
with?
4.
Provide useful ideas that your target market can use and that demonstrates your
expertise?
PUSH
TACTICS
'You'
Centered
Do your marketing materials
1.
Focus on you, your services and staff?
2.
Focus on glowing testimonials and your client list?
Which works best? Both. The challenge is getting the emphasis and order right. The pull
then push marketing sequence that works to move your business forward involves the
following:
1.
Create resources that pull prospects to you and your firm
2.
Get prospects to give you their contact information (Most firms let over 99% of
the people who see their information go away and never follow up)
3.
Push useful information out to self-selected prospects on a regular basis.
(Remember the majority of buyers won't make a purchase until they've had a
minimum of 5-6 contacts with your firm.)
When your prospects have a compelling need, they will turn to the firm that they've had
regular communication with, know and trust. At some point prospects will want more
details about your services, credentials and testimonials. But this is often the last
information you need to provide.
Use the pull then push strategy to get your marketing moving. You'll be amazed as you
watch both your prospect and client lists grow and your business gains momentum.
SERVICE MARKETING:
Definition:
Services are defined as identifiable, intangible, activities that are the main object
of a designed to provide want-satisfaction to customers.
For marketing purposes, services are separated into two categories:
Services that are main purpose or object of transaction.
Eg: You rent a car from enterprise. The company makes a car available (A
tangible good). But what you are purchasing is accessibility to transportation.
Because you are buying the use of the car, not the car itself, this is a service
transaction.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Service that support or facilitate the sale of good or any other service.
Eg: When you rent a car from enterprise, you can also obtain collision
insurance, the use of a cellular phone, and an electronic navigational device. These
are called supplementary or support services because you obtain them only in
conjunction with renting a car.
NATURE AND IMPORTANCE OF SERVICES:
Services are the major source of employment more than 80% of the non-farm
labor force is employed in service industries. The industries in which job
growth will be the fastest are data and information and management,
institutional and in home health care education and financial services.
The services account for over one half of consumer expenditures is
impressive, but is still grossly understates the economic importance of
services. And hence spending for business services. And hence spending for
business services will continue to grow.
As commerce has become increasingly complex and competitive , managers
have found that calling on specialized service providers is effective and
efficient. This is resulting in many tasks formerly performed by regular
employees, from research and training to advertising and distribution are
increasingly being Outsourced to specialists.
SCOPE OF SERVICES
Scope of services can be recognized both for Profit and non business services
organizations for profit services firms sell to consumers or other business with profitable
operations as a primary goal. This category is classified by industry:
_ Housing & other structures: Rental of offices, warehouses, hotels, motels, apartments,
houses & firms
_ Household operations: House maintenance & repairs, security, landscaping &
household cleaning
_ Recreation & Entertainment: Theatres, Spectator sports, amusement parks,
participating sports, restaurant meals & resorts.
_ Personal care: Laundry, dry cleaning, spas
_ Medical & Health care: Physical & Mental medicinal services, dental, nursing,
Physiotherapy
_ Private Education: Vocational schools, nursery schools, continuing education
programs
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Intangibility
Inseparability
Heteroginity
Perishability
INTANGIBILITY
As services are intangible, it is impossible for prospective customers to sample- feel, see,
hear, taste or smell i.e a service before the buy it. Four promotional strategies that may
be used to suggest service benefits & reduce the effort of intangibility are:
-
Visualization
eg. Carnival cruise lines depicts benefits of cruises
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Association
eg. Connecting service with tangible goods. Prudential Insurance suggests
stability & security with its rock of Gibralter. Merrill Lynch
Physical representation
Eg. American Express uses colour gold or platinum for the credit card services
to symbolize wealth & prestige.
Documentation
There are 2 forms of documentation:
i) Past performance
eg. A hospital can document its past performance by pointing out in its ads how many
babies have been born & cared for in its obstetrics department.
ii) Future capability
eg. A hospital chooses to stress its capability by highlighting the specialized
equipment it has if an emergency arise during the delivery of a baby.
Websites are a vulnerable tool in reducing the intangibility of a service. They make it
possible for marketers to present extensive information, use animation & sound & answer
a site visitors specific questions via e-mail.
Eg. Royal Carribbean Cruise line.
Inseparability
Services cannot be separated from the seller of the service. Many services are
created , dispensed and consumed simultaneously .
Eg: Dentists create and dispense almost all their services at the same time
and they require the presence of the consumer for the services.
Service Inseparability means that service providers are involved concurrently in
the production and marketing efforts.
Eg: One physician can treat only so many medical patients in a day.
From a marketing standpoint inseparability limits distribution. It frequently means
that direct sale is the only possible channel of distribution and an individual
sellers services can be sold only when direct contact is possible.
An exception in this feature is some services are sold by a person wois
representing the creator-seller.
Eg: Travel agent , insurance broker etc.
HETEROGENITY
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MARKETING
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Volume growth.
CONCEPTS OF MARKETING.
C
E
O
X
N
C
C
H
E
A
P
N
T
G
S
E
THE EXCHANGE CONCEPT
The exchange concept of marketing, as the very name indicates ,holds that the exchange
of a product between the seller & the buyer is the central idea of marketing. While
exchange does form a significant part of marketing as a mere exchange process would
amount to a gross undermining of the essence of marketing. A proper scrutiny of the
marketing process would readily reveal that marketing is much broader than exchange.
Exchange, at best, covers the distribution aspect and the price mechanism involved in
marketing. The important aspects of marketing, such as concern for customer, generation
of value satisfaction creative selling & integrated action for serving the customer, get
completely overshadowed in the exchange concept of marketing.
THE PRODUCTION CONCEPT
It is one of the oldest concepts of business. The production concept holds that consumers
will prefer products that are widely available and inexpensive. Managers of productionoriented businesses concentrate on achieving high production efficiency, low costs, massdistribution. They assume that consumers are primarily interested in product availability
and low prices. This orientation makes sense in developing countries, where consumers
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
are more interested in obtaining the product than in its features. It is also used when a
company wants to expand the market.
Some service organizations also operate on production concept. Many medical &
dental practices are organized on assembly-line principles, as are some government
agencies. Although this mgt orientation can handle many cases per hour, it is open to
charges of impersonal and poor-quality service.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
The concept rests on the realization that a business cannot succeed by supplying
products and services that ae not properly designed to serve their needs. Every depart. &
every worker and every manager will THINK CUSTOMER &ACT CUSTOMER.
Evidently, the concept represent a radically new approach to business.
Marketing concept represents essentially a change in orientation on the part of mgt
towards business.
The marketing concept rests on four pillars:
1. Target market- EX:TERRA LYCOS
2. Customer needs-EX:NOKIA & SONY ERRICSON
3. Integrated marketing4. Profitability-EX:DISNEY, WALL-MART
THE CUSTOMER CONCEPT
The ability of a company to deal with customers one at a time has become practical as a
result of advances in factory customization, computers, the internet, & database mktg
software. In this concept the companies hope to achieve profitable growth through
capturing a larger share of each customers expenditures by building high customer
loyalty & focusing on customer lifetime value. The required information collection
hardware, and software may exceed payout. It works for best co. that normally collect a
great deal of individual customer information, carry a lot of products that can be crosssold, carry products that need periodic replacement or upgrading, & selling products of
high value.
THE SOCIETAL MARKETING CONCEPT
It holds that the organizations task is to determine the needs , wants, & interests of target
markets & deliver the desired satisfaction more effectively & efficiently than competitors
in a way that preserves or enhances the consumers & societys well-being.
The societal marketing concept calls upon marketers to build social & ethical
considerations into their mktg practices. They must balance and juggle the often
conflicting criteria of company profits, consumer want satisfaction, & public interest.
EX: PATAGONIA, BEN &JERRYS
Module 2
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MODULE 2 (2 Hours)
Understanding the market environment: Assess the impact of micro and
macro environment.
Services: Importance, distinctive characteristics of services, service mix
(2 Hours)
Marketing Environment
MARKETING ENVIRONMENT
MICRO ENVIRONMENT
MACRO ENVIRONMENT
SUPPLIE
DEMOGRA
MARKET
SOCIO-
RS
INTERME
DIARIES
MARKET/
DEMAND
PHIC
CULTURAL
ECONOMI
C
POLITICAL
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Customer
Life style
Customer
behavior
Marketing activities
Impact on firms
marketing decision
Examination of competitive marketing forces
Potential entrants
Threat from new customers
Industry competitors
Substitutes
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
To know where the environment is heading; to observe and size up the relevant
events and trends in the environment.
To discern which events and trends are favorable from the standpoint of the firm,
and which are unfavorable; to figure out the opportunities and threats hidden in
the environmental events and trends.
To assess the scope of various opportunities and shortlist those that can favorably
impact the business.
To help secure the right fit between the environment and the business unit, which
is the crux of marketing; to help the business unit respond with matching product-
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
It is realized now by all the marketers that environment provides opportunities and
threats. The company should be able to identify the significant changes in the macro
environment. Modern marketers believe that environmental scanning would provide a
continuous link between he company and consumers. A marketer has to design his
marketing strategy based on current marketing environment.
Ex:- auto sector, telecom sector information technology sector any change in the
environment in likely to affect the business.
Television giants like Weston, Nalco, and Bush lost their market to Samsung, Sansui,
videocon etc..
Hindustan motors and premier automobiles lost their prominent position in the Indian
market to maruthi udyogs during 80s.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
By analyzing the information got by the internal reports on orders, sales, prices, costs,
inventory levels, receivables, payables and so on the marketing managers can sport
important opportunities and problems. The order-to-payment cycle-orders are sent by
sales representatives, dealers and customers to the firm.
The sales department prepares invoices and transmits copies to various departments. The
shipped items are accompanied by shipping and billing documents that are sent to various
others departments. Internet and extranet improve the speed, accuracy and efficiency of
the order-to-payment cycle. Customers favour firms that can timely deliver items. The
sales representatives and customers fax or e-mail their orders. The computerized
warehouses quickly fill these orders. The billing department sends out invoices as quick
as possible.
Sales information systems : - The managing of inventory is very important in this system.
The marketing managers need timely and accurate reports on current sales. Interpretation
of the data by company should be carefully done to prevent wrong signaling.
Technological gadgets are revolutionizing the sales information systems and allowing
representatives to have up-to-the second information.
These data are then warehoused by the companies and make them easily accessible to
decision makers.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Data mining is done by skilled analysts in sophisticated statistical methods that garner
fresh insights into neglected segments.
THE MARKETING INTELLIGENCE SYSTEM
When the internal records supply results data, the marketing intelligence system supplies
happenings data. It is a set of procedures and sources managers use to obtain everyday
information about developments in marketing environment. This is done by reading
books, newspapers, trade publications, talking to customers, suppliers and distributors.
The quality of marketing intelligence can be improved by the following steps.
Company can train and motivate sales force to spot and report new developments.
Company can motivate distributors, retailers and other intermediaries to ass along
important intelligence.
There are companies that circulate the marketing intelligence. The staff scans the internet
and major publications, abstract relevant news and disseminates a news bulletin to
marketing managers. If collects and files relevant news and disseminates the information
and assists managers in evaluating new information.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
ENVIRONMENTAL
FACTORS
SPECIFIC
CONCERNED/MICRO ENVIRONMENT
TO
THE
BUSINESS
This implies the factors and forces in the immediate environment, which influence the
companys ability to serve its market. These forces are related to a specific enterprise to
form part of its total marketing system.
Suppliers
Suppliers are either individuals or business houses. They combined together
provide resources that are needed by the company. Now the company necessarily should
go for the developing specifications, searching the potential suppliers, identifying and
analyzing the suppliers who offer best mix of quality, delivery, reliability, credit,
warranties and obviously low cost. The developments in the suppliers environment have
a substantial impact on the marketing operations of the company since supply planning
has become more important and scientific in recent years. To the extend the companies
can lower thrir supply costs and increase their product quality, they in natural course can
gain a competitive advantage in the market. Price trend need constant check and careful
scrubbing shortages have to be fully monitored and plans should have to be made to
avoid the grip of supply shortages on marketing sfforts regarding advertising, marketing,
research, sales, training and marketing consultancy the marketing marketing managers
are sole decisions makers.
Market intermediaries
Middlemen come into being help overcome the discrepancies in the quantities,
place time, assortment and possession that would other wise exist in a given condition.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
According to the firm, what is the basic need the product serves?
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Brand loyalty
Personality traits/attitudes.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Demographic environment
Since business depends on people, it is obvious that demographics is a major
element to be studied in environment analysis. As a matter of fact, several factors reacting
to population, such as size, growth rate, age distribution, religious composition and
literacy levels, need to be studied. Aspects such as composition of workforce, household
patterns, regional characteristics, population shifts, etc., also need to be studied, as they
all are part of the demographic environment.
Socio-cultural environment
Socio-cultural environment is another important component of the mega
environment. Culture, traditions, beliefs, values and lifestyles of the people in a given
society constitute the socio- cultural environment. These elements decide to a large
extent, what the people will consume and how they will buy.
Culture: Culture is the combined result of factors like religion, language, education and
upbringing. In any society, some cultural values are deep-rooted; they do not change
easily and are termed core cultural values. There are also values and practices, which
constitute secondary cultural values; they are more amenable to change and can be
moulded and manipulated relatively more easily. Meaningful information on the
consumption habits, lifestyles and buying behaviour of the people can be obtained
through a survey of the socio-cultural environment. Cultural shifts carry with them
marketing opportunities as well as the threats. That is why, close monitoring of the
cultural environment becomes important.
Social class: Social class is one important concept in socio-cultural environment. Any
society is composed of different social classes. A social class is determined by income,
occupation, location of residence, etc., of its members. Each class has its own standards
with respect to lifestyle, behaviour, etc., they are known as the class values or class
norms.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Economic environment
Economic environment is a vital component of mega environment. The factors to be
considered under economic environment are listed below:
Rate of growth of the economy, rate of growth of each sector of the economy.
Agriculture
Industry
Consumer goods
Capital goods
Services
Infrastructure
Imports
Exports
Inflation rate.
Exchange rates.
Tax rates.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Changing position of women: The changing position of women in the society is a case
in point. In India, the position of women, especially in the growing middle class
segment of the population, is indeed changing fast. From the role of a simple housewife,
she is now being transformed into an educated employed member, sharing the
responsibilities of the home with the man.
In an environmental survey, therefore, one actually looks for such shifts taking place,
since they can end up as opportunities or threats for the firm.
Some facts on the economic environment of India: If we continue with the example of
India. The Indian economy has been witnessing good growth in recent years, 6 percent
plus on an average. The year 19998-99 saw the growth rate accelerating to 6.8 percent
from 5 percent in 1997-98.it grew by approximately 6 percent in 1999-2000.Indias per
capita income, however to be low. Industrial growth was 6.2 per cent in 1999-2000.
Political environment
Political environment too is a major component of the mega environment for an
industrial/business firm. In fact, economic environment is often a by-product of the
political environment, since economic and industrial policies followed by a nation greatly
depend on its political environment. Moreover, developments on the political front keep
affecting the economy all the time; industrial growth depends to a great extent on the
political environment; legislations regulating business are also often a product of the
political configuration.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Natural resources: Business firms depend on natural resources. The extent to which the
country/region under reference is endowed with these resources has an impact on the
functioning of the firm. A raw material is one major part of these resources and firms are
concerned with their availability.
Ecology: Firms are also concerned with ecology. In modern times, all societies are very
much concerned about ecology, especially about issues like environmental pollution,
protection of wild life and ocean wealth.
MARKETING MANAGEMENT
Corporate affairs
Consumer protection
Employee protection
Sectoral protection
MARKETING MANAGEMENT
We can say with some confidence that the marketplace isnt what it used to be. It is
radically different as a result of major, sometimes interlinking societal forces that have
created new behaviors, new opportunities, and new challenges:
Changing Technology:
The digital revolution has created an Information Age. The Industrial Age
was characterized by mass production and mass consumption, stores stuffed with
inventory, ads everywhere, and rampant discounting. The Information age promises to
lead to more accurate levels of production, more targeted communications, and more
relevant pricing. Moreover, much of todays business is carried on over electronic
networks: intranet, extranets, and the internet.
Globalization:
Technological advances in transportation, shipping, and communication
have made it easier for companies to market in other countries and easier for consumers
to buy products and services from marketers in other countries.
Deregulation:
Many countries have deregulated industries to create greater competition
and growth opportunities. In the United States, long-distance telephone companies can
now complete in local markets and local phone companies can now offer long distance.
Similarly, electrical can now enter other local markets.
MARKETING MANAGEMENT
The forces are not on just getting the customer but to retain the customer.
Transaction Marketing
Relationship Marketing
To get the best benefit from relationship marketing there should focus should be:
Build downstream relationship with customer by delivering value
Build upstream relationship through supply chain
Focus the organization and work towards brand loyalty
MARKETING RESEARCH
Introduction
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MARKETING RESEARCH
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Marketers especially business to business marketers and service marketers like hotels,
banks and airlines normally try to know their customers individually. They develop a list
of their prospects/customers and gather all essential details about them their profits,
lifestyle, requirements and buying habits. They call this a customer database. We saw
the basics of customer database in this topic. Below example shows how the Hyatt
Regency Hotel reaches out to its patrons on an individual basic, using a customer
database.
With customer database Hyatt Regency Reaches out to specific categories of patrons.
World over, the hotel industry is a large uses of database marketing.
In India too, some large hotels have been using this techniques.
The Hyatt regency hotel in Delhi is one example
Through its customer database, the Hyatt has been able to reach specific
categories of people such as administration executives and travel manager of large
organizations, who normally play a key role in hotel reservations.
The Hyatt customer database contains lists of patrons classified suitably.
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
ANALYZE THE
INFORMATION
PRESENT THE
INFORMATION
MARKETING MANAGEMENT
g) How many new customers can be attracted to purchase the product and how?
Importance of marketing information:
Marketing information acts as the eyes and ears of an organization. The importance of
marketing information to marketing can be compared with the importance of military
intelligence to the defense of a country.
Its importance arises from the following factors or reasons:
1) Under the present system of mass production in anticipation of demand, the
production of the right type of goods in the right quantity is possible only when
the producer knows the exact requirement of the customers.
2) In the modern marketing system, there is a long chain of intermediaries between
the primary producer and the final consumer.
3) The demand of the customers, their tastes, preferences, fashions etc are ever
changing. So to know the changes in the tastes and preferences of the consumers,
marketing information is important.
4) Marketing information creates confidence in the minds of the producers to meet
any challenging situation or condition in the market.
5) Marketing information contributes to the efficiency of marketing by reducing
waste and minimizing the costs involved in marketing.
6) It helps the producer to asses the strength and weakness of the competition and
make suitable changes in his marketing techniques to force the competition.
7) By minimizing marketing risks, marketing information makes market financing
easier.
8) By increasing the efficiency of marketing activities, marketing information
contributes to the success of not only the individual business, but also helps the
community as a whole.
9) Marketing information is of at most importance in the distribution of goods.
Meaning of marketing information system:
In the words of Samuel V Smith, a marketing information system is an interacting,
continuing, future oriented structure of people, equipment and procedures designed to
generate and process an information flow to aid managerial decision making in a
companys marketing program
According to Philip Kotler, marketing information system is a structured, interacting,
complex of persons, machines, and procedures designed to generate an orderly flow of
information collected from both intra and extra firm sources for the use as the basic for
decision making in specified responsibility areas of marketing management
As the computers became common business tools in the early 1960s firms were able to
collect, store and manipulate larger amounts of data to aid marketing decision makers.
Out of this capability developed the marketing information system (MKIS) an on going,
organized procedure to generate, analyze, disseminate, store, and retrieve information for
use in making marketing decision.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MKIS
SYSTEM AND PROCEDURES FOR DATA:
MARKETING MANAGER
COLLECTION
ANALYZING
STORAGE
R
DISSEMINATON
MARKETING MANAGEMENT
A well designed MKIS can provide a continuous flow of this type of information for
decision making.
An MKIS is of obvious value in a large company, where information is likely to get lost
or distorted as it becomes widely dispersed.
How well can MKIS functions depend on three factors:
THE SCOPE AND OBJECTIVES OF MARKETING RESEARCH:1) Marketing research is used in the formulation of all marketing plans, policies,
programs and procedures.
2) It is employed for control and evolution of these plans, policies, etcWhen they are
brought in to the practice.
3) It is used in reducing and minimizing all marketing costs, particularly selling,
advertising, promotion and distribution costs.
4) Marketing problems demanding best solution through marketing research can be
classified under three heads:
a) problems relating to the product it self; product includes branding, packaging
and labeling and services.
b) Problems relating to consumer markets.
c) Problems relating to each phase of the entire marketing process
5) Programmes of marketing research incidentally provide insurance cover for the
survival and growth of the business in a dynamic economy.
6) Marketing management through marketing research can bring about the sale of right
product (brand and package) through right channels to right customers at right places and
at right prices by evolving right plans, policies and programs with the help of right
personnel.
7) The main objective of marketing research is to enable manufactures to make goods
acceptable and saleable and to see that they reach the market more easily, quickly,
cheaply and profitably without sacrificing consumer interest.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MODULE 4 (7 Hours)
Product decisions: Concept, product hierarchy, diffusion process, New
product development, Product Life cycle, Product mix strategies. Concept of
Branding, Brand perception, Brand equity,
Packaging / Labeling: Packaging as a marketing tool, requirement of good
packaging, Role of labeling in packaging (2 Hours)
4- PRODUCT PLANNING AND DEVELOPMENT
The Meaning Of Product
The product is a set of basic attributes assembled in an identifiable form or the
product is a bundle of all kinds of satisfaction of both material and non-material kinds
ranging from economic utilities to satisfaction of a social-psycho-logical nature or A
product is a set of tangible and intangible attributes.
A product supplies two kinds of utility:1) Economic utility
2) Supplementary utility in the form of social psychological
benefits.
We treat each brand as a separate product. For example the two internet service
providers. America online and MSN are different products, the brand name suggests a
product difference to the consumer and this brings the concept of want salts faction in to
the definition.
PRODUCT CONCEPT
The product is the most tangible and important single component of the marketing
programme. The product policy and strategy is the cornerstone of a marketing mix. Good
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
products are key to market success. Product decision are taken first by the marketers and
these decisions are central to all other marketing decisions such as price, promotion and
distribution. Product is the vehicle by which a company provides consumer satisfactions.
It is the engine that pull the rest of the marketing programme.
The product concept has 3 dimensions:1) Managerial Dimension :It covers the core specifications or physical attributes, related services, brand, package,
product life cycle, and product planning and development. The product offering must
balance with consumer citizen needs and desires. Product planning and development can
assure normal rate of return on investment and continuous growth of the enterprise.
2) Consumer Dimension
To the consumer a product is actually a group of symbols or meanings. People buy this
not only for what they can do, but also for what they mean. Each symbol communicates
certain information. Product represents both utility and non-utility aspects i.e., tangible
and intangible things. A relevant product is one that is perceived by the consumer as per
intentions of the marketer. Consumer accepts product as bundle of satisfaction rather than
as physical things.
3) Social Dimension:To the society salutary and desirable products are always welcome as they fulfill the
expectations of social welfare and social interest. Salutary product yield long-run
advantages but may not have immediate appeal. Desirable products offer both benefits
immediate satisfaction and long-run consumer welfare. Society dislikes the products
which only give immediate satisfaction but which sacrifice social interests in long-runmarketers have to fulfill the following social responsibilities while offering the products
to consumer.
1. Conversation & best use of natural resources, 2. Safety to users, 3. long-run
satisfaction of consumers. 4. Quality of life concern for better environment 5. Fulfillment
of Govt. regulations relating to composition, packaging, labeling, promotion & pricing of
many products 6. Ecomarked products would be environment friendly.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Managerial View
Point
1.
2.
3.
4.
5.
6.
7.
BASIC PROPERTIES
INDICATING WHAT
THE PRODUCT IS,
SERVICE, AN IDEA.
SERVICES OFFERED.
PACKAGE
BRAND
PRODUCT LIFE
CYCLE
PRODUCT
PLANNING AND
DEVELOPMENT
PRODUCT MIX
1.
2. SOCIALLY RESPONSIBLE
PRODUCT INNOVATION
PRODUCT
CONCEPT
1.
MANAGER
3.
4.
5.
1.
2.
3.
4.
A GROUP OF
SYMBOLS
EACH SYMBOL
COMMUNICATES
INFORMATION
PERCEPTION OF
CAUSES AND
MEANING GIVEN TO
THOSE CAUSES
FAVORABLE
PERCEPTION LEADS
TO PURCHASE OF THE
PRODUCT
RELEVENT PRODUCT
GIVES MATERIAL
SATISFACTION,
PSYCHO-SOCIAL
SATISFACTION
SAFETY TO USERS
CLAIM ON THE USE OF RESOURCES
RELAIABLE PRODUCT INFORMATION
IMPACT ON ENVIRONMENT
(freedom from pollution)
MARKETING MANAGEMENT
The depth product mix refers to how many variants are offered to each product in
the line.
The consistency of the product mix refers to how closely related the various line
are in end use.
Production requirements, distribution channels, or some other way.
These four dimension of the product mix provides the handles for defining the companys
product strategy.
Product mix planning is largely the responsibility of the companys strategic
planners. They must assess, with information supplied by the company marketers, which
product lines to grow, maintain, harvest and divest.
PRODUCT HIERARCHY
Product hierarchies stitch from basic needs to particular items that satisfy these needs.
There are 7 levels.
1. Need family:
2. Product family
:
All the product classes that can satisfy a core
need with reasonable effectiveness.
3. Product class
product
4. Product line :
A group of products within a product class that
are closely related because they function in a
similar manner or are sold to the same
customer groups or are marketed through the
types of outlets or fall within given price
5. Product type
6. Brand
7. Item
:
Those items within a product line that share
one of several possible forms of the products.
:
The name associated with one or more items
in the product line that is used to identify the
source or character of the item.
:
A distinct unit within a brand or product line
that is distinguishable by size, price,
appearance, or some other attribute.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
family
same
ranges.
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
BRANDING
Branding strategy indicates how firm choose to use branding as an integral part of
its overall marketing strategy. Branding is the best means to capture and retain the
customer demand in a competitive market.
A brand is a name, term, sign, symbol or design or a combination of them.
Intended to identify the goods or services of one seller or group of sellers and to
differentiate them from those of competitors. A brand is a signature ion a constantly
renewed, creative process. A product is what the company makes. Branding is the
practice of giving a specified name to a product or group of products from one seller.
TYPES OF BRANDS
1. Individual brand name
Each product has a special and unique brand name, such as surf, aspro etc. The
manufacturer has to promote each individual brand in the market separately.
2. Family brand name
This method of branding assumes that end uses of all products under a family
brand are similar and the products are not dissimilar. Family brand name enables
creation of strong shelf display.
3. Umbrella Brand
We may have for all products the name of the company or the manufacturer.
When a group of products are given the same brand name, it becomes a case of
umbrella brand.
4. Combination Device
Each product has an individual name but it also has the umbrella band to indicate
the business house producing the product.
5. Private or middle mans brands:
Sometimes, some manufacturers leave their products for branding by the
distributors/retail chains as per the letters choice. Such brands are called middle
mans brand.
PACKAGING:
Packaging may be defined as the general group of activities in the planning of a product.
These activities concentrate on formulating a design of the package and producing an
appropriate and attractive container or wrapper for a product of packaging is the activities
of designing and producing the container or wrapper for a product. The container or
wrapper is called the package. The packaging concept defines what the package should
basically be or do for the particular product. Package design itself can act as a registered
brand. But packing is merely a physical action and provides a handling convenience.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Packaging must also convey a required product image. Packaging is a market necessity.
The public does not want just the product. They want explanation, assurance,
encouragement. Confident and praise. Packaging also needs to harmonize with consumer
usage. Package is an invaluable aid to delusion making by the customers the package is
important information we to many buyers.
Packaging completes the sales cycle triggered by advertising, and secures a
meaningful market share. Marketing management prefers a package with is attractive,
simple to produce easy to store, easy to handle, convenient for display and involves
minimum marketing cost. Packaging decorates and beautifies the product so as to lead the
consumer impulsive buying. Packaging itself is a device of sales promotion.
LABELLING
The label may be a simple tag attached to the product or an elaborately designed
graphic that is part of the package. Packaging, branding and labeling go together and
constitute an integral part of product. It gives verbal ingormn about the product and the
seller.
Labeling has social significance consumer criticion centers round charge of false.
Misleading and defective packaging and labeling. Labels give helpful information on the
following.
1. Brand name, 2. Name & address of producer 3. Weight, measure, count, 4.
Ingredients by percentages where possible 5. Directions for the proper use of the
product. 6. Cautionary measures concerning the product & it use, 7. Special care of the
product. 8. Recipes on food products 9. Nutritional guidelines, 10. Date of packing &
date of expiry. 11. Retail price & 12. Unit for comparison.
Consumer want grade labeling to be made compulsory. The label should also help in
unit-price comparison.
Labelling system must enable consumers to determine quality and compare
products. Misleading labels will invite prospective & penalty.
On the whole, consumers welcome informative labels.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
BUSINESS
ANALYSIS
SCREENING OF
NEW IDEAS
PRODUCT
DEVELOPMENT
PROGRAMME
TEST
MARKETING
CONCEPT DEVELOP
MENT & TESTING
COMMERCIALISATI
ON & EVALUATION
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Can the existing production and marketing organizations handle the product? Or
does it need extra expertise in production and marketing front?
The more attractive looking ideas pass on to the concept testing stage.
4. BUSINESS ANALYSIS :
Business analysis is the next stage. This stage is of special importance in the new product
development process, because several vital decisions regarding the project are taken
based on the analysis done at this stage. This stage will decide whether from the financial
and marketing point of view, the project is worth proceeding with. Investment analysis
and profitability analaysis of the project under different assumptions are made at this
stage. The projects over all impact on the corporations financial position with and
without the new product are estimated and compared.
Business analysis is a combination of Marketing research, cost benefit analysis
and assessment of competition. We have demand analysis, lost analysis and profitability
analysis. Business analysis will prove the economic prospects of the new product
concept. It will also prove roundness and viability of the selected product concept from
business view point. Now we can proceed to concentrate on product development
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Growth
Maturity
S
A
L
E
Decline
Sales
Loss /
TIME
MARKETING MANAGEMENT
One of the crucial decisions to be taken in this stage is the pricing strategy to be
adopted. Discussing the strategy options in respect of the new product, no past data or
comparisons are available and the firm normally opts for one of the following strategies:
i)
Market Skimming ii) Market penetration.
The market skimming strategy involves high prices, taking advantage of early entry and
the relative novelty of the product in the market introduction state.
ii)
Penetration pricing involves low prices, with a view to having a good Market
coverage & eventually a mass Market for the product. It also aims at keeping the
competition out.
Another crucial are demanding attention at this stage is Mkt development &
promotion. As mentioned earlier, this is the stage when demand has to be created and
developed. The firm has to invest heavily in promotion & wait for the reward.
2) GROWTH STAGE:In this stage, customers have become aware of the product and its benefits, and
usage is growing. It is now in the interest of the innovating firm to achieve repaid market
access and penetration to se itself apart from the competition. Therefore firms wish to
accomplish maximum sales acceleration and constant incremental improvements
afterward. During this stage, supplies often have to increase plant capacity and run
promotional campaigns to consolidate and extend their share of the new market. These
actions require and extend their share of the new market. These actions requires
substantial investments, which usually absorb most profit. As a result, this part of the life
cycle may demand further net investment. Because of the increasing volume, prices
usually drop. Attracted by the growth in the Mkt, further competitions may enter, but
direct price competition tends not to be a major favour. This growth in sales, of customers
and of supplies can be explosive. The emphasis on promotion of the brand at this stage
way well be to establish consumer attitude toward the product. Marketing and
distribution efficiency become decisive favour at this stage.
3) MATURITY STAGE :No product or market can grow forever, eventually all the significant uses will
have been developed . The sales curve will flatten, and the market or product will have
reached a maturity. In the Mkt Maturity stage, demand tends to reach a saturation point.
And, there is enough supply from several competing sources. Dealers may dictate Terms
to the various competing firms. Price competition becomes intense and the pioneer tries
to distinguish his brand by substantial product differentiation and exploits the brand
loyalty he has built up. The pioneer feels compelled to communicate directly with the
consumers, since by now, dealers, have become multi-brand dealers. The pioneer may
try out product and packaging modifications & promotional deals & make special offers
to new Mkt Segments so that his sales volume do not shrink. Long term & short term
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
marketing plans are implemented to profitably prolong the maturity stage, because the
pioneer may try out product & packaging modifications & promotional deals & make
special offers to new Mkt segments so that his sales volume do not shirnk. Long-term
and short term marketing stage, because the pioneer knows that if this is not prolonged,
it could be easily lead in to the stage of Mkt delaine. Relatively low prices, increased
Marketing costs, keener competition and lesser profits characterize this stage.
4. DECLINE STAGE:In the dealine stage, sales being to fall. The demand for the product shrinks,
probably due to new & functionally advanced products becoming available in the Mkt.
Or the Mkt becoming apathetic to the product. In any case, prices & margins get
depressed; total sales and profit diminish. Some firms at this stage may try to link up the
sale of these producer with some other premium products they have developed and thus
try to stretch the life for the dealing product. Firms do perceive at this stage the
impending totally dealing product. Firms do perceive at this stage the impending total
dealine and prepare for the gradual phasing out of the product. Successful firms quite
often keep new producer ready in queue to fill the vaccum created by the dealine of
existing products.
CONCEPTS OF PLC HELPS MARKETING STRATEGY FORMULATION :
1.
2.
3.
4.
5.
6.
MARKETING MANAGEMENT
The following are the strategic routes available to a firm for extending the
profitable stage of the life cycle of a product:
PRODUCTS:-
EXIT :
The PLC concept can even help in deciding the right time to exit from a Mkt &
minimize the damage and costs of exit.
6. PROVIDES USEFUL CLUES FOR MANAGING CUSTOMERS :
Customer experience with the company changes as the product passes through
its PLC. As such, the PLC concept can be a useful tool in Managing customer. As a
product mover through the various phases of its life cycle, the consumer also moves on
the path o his experience in respect of the product. Though this change is reflected in the
product. Though this change is reflected in the shifts in the demand for the product
through the PLC stager. The marketing man will gain a great deal if he knows what
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
actually happens to the consumer during this process. The change in the experience level
of the consumer has some implication for the Co-consumer relationship and
consequently knowledge of this change will help effective of customers.
MARKETING MANAGEMENT
MODULE-5
PRICING DECISIONS
MODULE 5 (4 Hours)
Pricing decisions: Pricing concepts for establishing value, Impact of Five
Cs on pricing, Pricing strategies-Value based, Cost based, Market based,
Competitor based, New product pricing,
Pricing
Meaning of price is the amount of money and or other items with utility needed to
acquire a product. Recall that utility in an attribute with the potential to satisfy wants
MICAL J ETZEL,
WILLIAM J STAMTON,
BRUCE J WACKER
Price is probably the single most important decision in marketing in price. This is partly
because price is generally believed to have an important or impact on sales volumes. If
the price is too high and the market is competitive, sales may be correspondingly
reduced. Indeed many economists would see price as the main determinants of sales
volume. On the other hand, many of the more sophisticated marketers have found ways to
reduce the impact of price and sometimes have managed to increase sales by raising the
price.
Pricing is undoubtedly a vital decision area in marketing. Price is the only element in the
marketing mix of a firm that generates revenue. This helps to determine the profitability
of the business.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Importance of pricing
Price is significant in our economy in the consumers mind, and in an individual firm.
Price is the only element in the marketing mix of a firm that generates revenue. All else
generate the cost.
Price and sales volume together decide the revenue of any business. As sales volume
itself is dependent to a considerable extent on price, the latter becomes key to the revenue
of the business.
Price is also the most important determinant of the profitability of the business. The
importance of pricing as follows in those fields.
In the economy
A products price influences wages, rent, interest and profits, price is a basic regulator of
the economic system because it influences the allocation of the factors of production.
Labour, land and capital.
High wages attract labour, high interest rates attract capital and so on. As an allocator of
resources, price determines what will be produced (supply) and who will get the goods
and services produced. (Demanded).
Criticism of the American system of reasonably free enterprise and in turn, public
demand for added restraints on the system often triggered by negative reactions to prices
or pricing policies.
To reduce the risk of government intervention, business needs to establish prices in a
manner and at a level that consumers and government officials consider socially
responsible.
MARKETING MANAGEMENT
person.
When we say a product has ample value, we dont necessarily mean it is
inexpensive or has a very low price, rather, good value indicates that a particular product
has the kinds and amounts of potential benefits such as quality, image purchase
convenience consumers expect at a particular price level.
In the individual firm
A products price is a major determinant of the market demand for it. Through prices,
money comes into an organization. Thus price affects a firms competitive position,
revenues and net profit.
According to Mckinsey consultant pricing is extremely important because small
changes in price can translate into huge improvements in profitability. In fact in a study
of 1000 companies the Mckinsey firm found that a 1% increase in price would improve
profits by 7% assuming no change in sales volume.
Pricing objectives
Profit Oriented Goals:Profit goals may be set for short or long term .A company select me of two profit oriented
goals for its pricing policy.
(a) ACHIEVE A TARGET RETURN:
A firm may price its product to achieve a target return a specified percentage return on its
sales or on its investments .Many retailers and wholesalers use a target return on sales as
a pricing objectives for short periods such as a year or a fashion season. they add an
amount to the cost of the product ,called a markup to cover anticipated operating expense
and provide a desired profit for the period.
Achieving a target return on investment is measured in relation to a firms networth (its
assets minus its liabilities). This pricing goal is often selected by the leading firm in an
industry .Target return pricing is used by industry leaders. Because they can set their
pricing goal more independently of competition than smaller firms in the industry.
(b)MAXIMISE PROFIT:The pricing objectives of making as much money as possible is probably followed more
than any other goal. the trouble with this goal is that to some people ,profit maximization
has an ugly cannotation ,suggesting profiteering high prices and monopoly where prices
are unduly high and entry into the field is severely limited ,public criticism can be
expected .If market conditions and public operations do not bring about reasonable prices
government may intervene.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
In both economic theory and business practice ,however ,these is nothing wrong with
profit maximization .Theoreotically , if profits become high in an industry because supply
is short in relation to demand new capital will be attracted to increase production
capacity .This will increase supply and eventually reduce profits .In the market place it is
difficult to find many situations where profitering has existed over an extended period of
time.
Substitute products are available .Purchase are postponable and competition can increase
to keep prices at a reasonable level.
A profit maximization goal is likely to be for more beneficial to a company if it is
pursued over the long terms .To do this ,however ,firms may have to accept modest
profits or even losses over the short term.
For example :- a company a new geographical market or introducing a new product
frequently does best by initially setting low prices to build a large clientele repeat the
firm to maximize its profits over the long term .
The goal should be to maximize profits on total output rather than on each single product
. In fact, a company may maximize total profit by setting law relatively unprofitable
prices on some products in order to stimulate sales of others.
SALES ORIENTED GOALS:In some companies , management s pricing is focused on sales volume or the pricing
goal may be to increase sales volume or to maintain or increase the firms market share.
(a) INCREASE SALES /VOLUME:This pricing goal of increasing sales volume is typically adopted to a achieve rapid
growth or to discourage other firms from entering a market .The goal is usually stated as
percentage increase in sales volume over some period ,say, one year or three years.
Management may seek higher sales revenues by discounting or by some other aggressive
pricing strategy occasionally companies are willing to incur a loss in the short run to
expand sales volume or meet sales objectives. clothing stores run end of season sales and
to dealers after rebates and below market loan rates new cars many vacation slots .such
as golf courses and resorts reduce prices during off season to increase sales volume.
MAINTAIN /INCREASE MARKET SHARE:In some companies ,both large and small the pricing objectives is to maintain or increase
market share.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MARKETING MANAGEMENT
MARKETING MANAGEMENT
expensive men's suits, for example, are purchased at $750, not $749.95.
Leader pricing and unfair practices acts.
Many firms primarily retailers temporarily cut prices on a few items to attract the
customers. This strategy is called leaders pricing. The items on which prices are cut are
termed leaders; if the leader is priced below the stores cost, its a loss leader.
Leader should be well - known, heavily advertised products that are purchased
frequently. For example, for a while, Amazon.com cut the base price of currently popular
books of 50%. As stated in one article, Amazon may be able to treat best - selling books
as loss leaders that attract customers into its online stores where they can be tempted by
other merchandise that isnt priced so cheaply. But to improve profit margins, Amazon
and other book sellers eventually scaled back the discount on the best sellers. Unfair trade
practices act sometimes called unfair sales act to regulate leader price. Typically these
laws prohibit retailer or whole seller from selling an item below invoice cost plus some
stipulated amount varying from state to state.
According to this law reduce retailers freedom to set prices going a step further,
the purpose of a business isto make a project on the total enterprice, not necessarily on
each transaction. Thus unfair practises acts limit retailor ability to determine how best to
generate profits. Also, the minimum prices stipulated by these laws may result in higher
prices which hurts consumers pocket books. In some states those laws have been declared
unconstitutional.
High low pricing and everyday low pricing.
Many retailer specially super markets and department stores that wants to engage in
price competition rely on high low pricing. This strategy entails between regular and sale
prices. On the most visible products offered by a retail firm. Frequent price reductions are
combined with aggressive promotion to convey an image of very low price. By starting
with relatively high prices, retailers can boost their projects through sales to the segment
of shoppers that really wants the product and is not very price sensitive. Then prices can
be cut by various amounts from the basis of quantities of remaining inventory for various
products. Practices of high - low pricing is common; in fact, according to one study,
over 60 % of transactions in department stores involved bale(i.e; lower than original)
prices.
given the need to change prices frequently, high low pricing can be costly. It also
may cause some consumers to not purchase at regular prices, but always wait for reduced
prices. Further the concern is that most transactions are made at decreased prices, which
means that the so called low prices are normal rather than real bargains.
For a retailer that intends to compete on the basis of price, the alternative to highlow pricing is every day low pricing. Basically, everyday low pricing involves
consistently low prices and few if any temporary price reduction. This strategy is featured
by some large discounters, such as wal-mart and family dollar, warehouse clubs.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Their are several reasons for EDLP. Retailers expect that it will improve their
profit margins because. The average sales price will be higher than would be the case
with high-low pricing. Further, retailers can point to their use of ELDP. When negotiating
lower purchase prices from suppliers and operating expenses should be licensed, with
profit boosted.
Because of lower level of advertising.
Which is better EDLP or high low pricing? A controlled expected compared the
effects of the two pricing strategies on 26 product categories in a chain of 86
grocery stores . EDLP increased sales where as high low pricing resulted in slightly
lower volume .
Most important profits fell 18% with EDLP but jumped almost with high-low pricing
unaware of or ignoring this research , numerous firms rely on everyday low pricing.
RESALE PRICE MAINTENANCE .
Some manufacturers want to control the prices at which middlemen resell their
products ; this is termed as resale price maintenance .manufacturer seeks to do this to
protect the brands image.
Publicity ,they state that their control of prices . and avoidance of discounted prices
provides middlemen with ample profit margins . In turns consumers should be able to
expect sales help and other services when they buy the manufacturers products from
middleman , critics , however , clam that control over prices leads to inflated prices and
examine profit .
One way in which producers can gain a bit of control and perhaps provide guidance to
retailers is with a suggested list price . This price is set by a manufacturers at a level that
provides retailers with their normal markups .To illustrate a producers sells to, say a
hardware store a certain product for $9.95 , which would furnish the store with its
normal markup of 40% of selling price .This is only a suggested retail price, retailer
have the right to sell the product for less or more than the suggested price.
Other manufacturers try even harder to control their products retail prices. A
manufactures may even threaten to stop shipment of products to retailers that prices
products substantially below suggested list prices.
Is it legal to act aggressively in order to control retail prices?
The price controls were prohibited by the federal consumer Goods Pricing Act of
1975.According to this law , a producer no longer can set resale and impose them on
resellers.
pricing strategies - penetration pricing
Penetration pricing involves the setting of lower, rather than higher prices in order to
achieve a large, if not dominant market share.
This strategy is most often used businesses wishing to enter a new market or build on a
relatively small market share.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
This will only be possible where demand for the product is believed to be highly elastic,
i.e. demand is price-sensitive and either new buyers will be attracted, or existing buyers
will buy more of the product as a result of a low price.
A successful penetration pricing strategy may lead to large sales volumes/market shares
and therefore lower costs per unit. The effects of economies of both scale and experience
lead to lower production costs, which justify the use of penetration pricing strategies to
gain market share. Penetration strategies are often used by businesses that need to use up
spare resources (e.g. factory capacity).
A penetration pricing strategy may also promote complimentary and captive products.
The main product may be priced with a low mark-up to attract sales (it may even be a
loss-leader). Customers are then sold accessories (which often only fit the manufacturers
main product) which are sold at higher mark-ups.
Before implementing a penetration pricing strategy, a supplier must be certain that it has
the production and distribution capabilities to meet the anticipated increase in demand.
The most obvious potential disadvantage of implementing a penetration pricing strategy
is the likelihood of competing suppliers following suit by reducing their prices also, thus
nullifying any advantage of the reduced price (if prices are sufficiently differentiated the
impact of this disadvantage may be diminished).
A second potential disadvantage is the impact of the reduced price on the image of the
offering, particularly where buyers associate price with quality.
pricing strategies - skimming
The practice of price skimming involves charging a relatively high price for a short time
where a new, innovative, or much-improved product is launched onto a market.
The objective with skimming is to skim off customers who are willing to pay more to
have the product sooner; prices are lowered later when demand from the early adopters
falls.
The success of a price-skimming strategy is largely dependent on the inelasticity of
demand for the product either by the market as a whole, or by certain market segments.
High prices can be enjoyed in the short term where demand is relatively inelastic. In the
short term the supplier benefits from monopoly profits, but as profitability increases,
competing suppliers are likely to be attracted to the market (depending on the barriers to
entry in the market) and the price will fall as competition increases.
The main objective of employing a price-skimming strategy is, therefore, to benefit from
high short-term profits (due to the newness of the product) and from effective market
segmentation.
There are several advantages of price skimming
Where a highly innovative product is launched, research and development costs are
likely to be high, as are the costs of introducing the product to the market via promotion,
advertising etc. In such cases, the practice of price-skimming allows for some return on
the set-up costs
By charging high prices initially, a company can build a high-quality image for its
product. Charging initial high prices allows the firm the luxury of reducing them when
the threat of competition arrives. By contrast, a lower initial price would be difficult to
increase without risking the loss of sales volume
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Skimming can be an effective strategy in segmenting the market. A firm can divide the
market into a number of segments and reduce the price at different stages in each, thus
acquiring maximum profit from each segment
Where a product is distributed via dealers, the practice of price-skimming is very
popular, since high prices for the supplier are translated into high mark-ups for the dealer
For conspicuous or prestige goods, the practice of price skimming can be particularly
successful, since the buyer tends to be more prestige conscious than price conscious.
Similarly, where the quality differences between competing brands is perceived to be
large, or for offerings where such differences are not easily judged, the skimming strategy
can work well. An example of the latter would be for the manufacturers of designerlabel clothing.
Reactive and Proactive Changes:After as initial prices is set a number of situations may prompt a firm to change its price.
As costs increase , for instance, management may decide that raising price is preferable
to maintaining price and either cutting quality or prompting the product aggressively .
Accordingly to a pricing consultant ,its wise to raise price gradually and with little tem
fare. Temporary price cuts may be used to sell excess inventory or to introduce a new
product .Also if a company market share is deciding because a strong competition its
executive may react initially by reducing price. Decreasing price makes then most sense
when enough new customers are attracted to offset .The smaller profit margin per sale.
nevertheless , for many products a better long-term alternative to a price reduction is
improving the overall marketing program .
Any firm can safely assume that its competitors will change their price-soon or later.
Consequently ,every firm should have guidelines on how it will react .If a competitors
looses price, a short delay in reacting probably will not be perilous however if a
competing firm reduces price, a prompt response normally is required to avoid losing
customer.
FLAT-RATE PRICING:
A variation of the one-price strategy, received from attention lately.
under such an arrangement , a purchaser pays a stipulated single price and then can
consume a little or as much of the product desired. An example of highly successful flatrate pricing is the single admission feet charged by the Walt Disney co. at its amusement
parks. Some years ago, America online switched to a flat rate of $19.95 per month for
unlimited time online. Flat - rate pricing should be used only for products with a low
managerial cost and as one writer states for which there is limit to demand.
SINGLE-PRICE STRATEGY:
Is an extreme variation of the one-price strategy. Not only one all
customers charged the same price, but al items sold by the firm carry a single price. This
approach, which originated many decades ago, involves offering frugal shoppers a variety
of merchandise ranging from grocery items to cosmetics at a single price.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Price war:A price was may begin when one firm decreases its price in an effort to increase its sales
volume and or market share. The battle is on if other firms retaliate ,reducing price on
their competing producers .Additional price decrease by the original price cutter and or
its competitors .
Status Quo goals
Two closely related goals stabilizing price and meeting competition are the least
aggressive of all pricing goals. They are intended simply to maintain the firms current
situation that is the status quo with either of these goals, a firm seeks to avoid price
competition.
Price stabilization often is the goal in industries where
The product is highly standardized
One large firm such as Phelps dodges in the copper industry. Historically acted as a
leader in setting their prices. Smaller firms in these industries tend to follow the leader
when setting their prices.
What is the reason for such pricing behaviour?
A price cut by anyone firm is likely to be matched by all other firms in order to remain
competitive, therefore no individual firm gains but all may be suffer smaller profit, a
price boost is unlikely to be matched, but price boosting firm faces a differential
disadvantage, because other elements of a standardized product such as gasoline as
perceived to be fairly similar. Even in industries where there are no price leaders,
countless firms deliberately price their products so meet the prevailing market price.
FACTORS INFLUENCING PRICING
INTERNAL FACTORS
# corporate and marketing objectives of the firm.
# the image sought by the firm through pricing.
# the characteristics of the product
# the price elasticity of demand of the product
# the stage of the product in its life cycle
# use pattern and turn around rae of the product
# costs of manufacturing and marketing
# extent of distinctiveness of the product and extent of differentiation practised.
# other elements of the marketing mix of the firm and their interaction with pricing.
# composition of the product line of the firm.
EXTERNAL FACTORS
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MODULE 6
MODULE 6 (6 Hours)
Distribution decisions: Meaning, Purpose, Channel alternatives available to
the marketing manager, Factors affecting channel choice, Channel design and
Channel Management decision, Channel conflict, Distribution system,
Multilevel Marketing (Network Marketing)
CHANNELS OF DISTRIBUTION
INTRODUCTION
Of the four elements of marketing mix viz., product, price, promotion and
distribution, distribution [i.e., the channels of distribution and physical distribution] is the
most important element. The success or failure of a firm depends largely upon the
efficiency of distribution
CHANNELS OF DISTRIBUTION
MEANING
The term channel is derived from the French word canal meaning artificial
water way for transportation or irrigation so, channel of distribution refers to the pathway,
path or route taken by goods as they flow or move from the point of production to the
point of consumption or use.
In the words of Prof. W. Stanton channel of distribution is the route taken by the
goods as they move from the producer to the ultimate consumer or industrial user
According to Philip kotler every producer seeks to link together the set of
marketing intermediaries that best fulfill the firms objective. This set of marketing
intermediaries is called the marketing channel [also trade channel or channel of
distribution]
ROLES OF CHANNELS OF DISTRIBUTION
Distribution channel have a distinctive role in the successful implementation of
marketing plans and strategies. These channels perform the following marketing function
in the machinery of distribution.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
CHANNEL CHOICE:-
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
M
A
R
K
E
T
M
IC
DO
DM
LP
EE
T
T
O
R
C
O
M
P
A
N
Y
P
R
O
D
U
C
T
The other factors are:PRODUCT For perishable goods speedy movement needs shorter channel or
route of distribution. For durable and standardized goods longer and diversified
channel may be necessary.
MARKETING MANAGEMENT
COMPANY The companys size determines the size determines the size of the
Market, size of its larger accounts and its ability to get middlemens co-operation.
A big firm may have shorter channel. The companys product mix influences the
pattern of channels.
MARKETING MANAGEMENT
MIDDLEMEN CHARACTERISTICS
PRODUCT CHARACTERISTICS:
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
1. Market considerations:
a.
b.
c.
d.
2. Product considerations
a. Unit value
b. Perish ability
c. Technical nature
3. Middlemen considerations
a. Services provided by middlemen
b. Availability of desired middlemen
c. Producers and middlemens policies
4. Company considerations
a. Desire for channel control
b. Service provided by seller
c. Financial resources.
DESIGNING DISTRIBUTION CHANNELS:A company wants a distribution channel that not only meets customers
need but also provides a differential advantage. To design channels that
satisfy customer and outdo competition an organized approach is required.
We suggest a sequence of four decisions.
- specify theories of distribution.
- select the type of channel.
- determine intensity of distribution
- choose specific channel members.
DESIGNING A CHANNEL SYSTEM:We have seen that a firm can take its product to the user in more ways
than one. It can use different types of intermediaries; it can also structure its
channel in different ways.
FOR EXAMPLE, it can have a single tier or a two tier or a three tier
channel structure.
1. FORMULATING THE CHANNEL OBJECTIVES:
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MARKETING MANAGEMENT
EVALUATION OF THE DISTRIBUTION ENVIRONMENT:While selecting the channel design, the firm should also take into
account the distribution environment obtaining in the country/territory. It
should evaluate the vital features of the distribution environment and ensure
that the proposed channel design is compatible with them.
3. EVALUATION OF COMPETITORS CHANNEL DESIGN:The firm should also study the competitors channel patterns before
deciding its channel design. While the firm may not necessarily follow the
competitors in channel design, it should analyze the plus and minus of the
channel pattern adopted by each of its major competitors.
4. MATCHING THE CHANNEL DESIGN TO COMPANY
RESOURCES:- Choice of channel is also governed by the resources
available with the organization.
a. FIRMS WITH LIMITED RESOURCES SETTLE FOR
CONVENTIONAL CHANNEL:Firms with limited resources and small volume of business will
normally find it difficult and uneconomical to opt for own channels. For
such firms, establishing branch showrooms/depots/ retail outlet of their
own will result in a high cost unit of distribution, which they cannot
afford.
b. FIRMS WITH LARGER RESOURCES HAVE ORE OPTIONS:Firms with larger resources and larger marketing operations can go
in for varied distribution channels. Intact, in INDIA, in several
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
CHOOSING THE CHANNEL INTENSITY:While two firms may go for the same channel design, they may
need different intensities. It depends on the position of the firm- its
objectives and strategies, its sales, profits, and market coverage, present and
projected, and its resources.
e. CHOOSING THE NUMBER OF TIERS CORRECTLY:The second decision concerns the number of tiers. How many tiers
should the channel have this issue is related in a way to channel intensity. in
a majority of cases, the choice will be between single tiers and two tiers,
while in a few cases, firms may find it necessary to going for a three tier
channel. When a firm opts for a sole selling agency or marketer the latter
will have their own channel arrangement and the tiers that operate under
them automatically become a part of the firms channel.
f.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
AN EYE ON THE FUTURE IS ESSENTIAL:Once a channel structure is created and channel members are put
in place and channel compensations are streamlined, it will be difficult for
the firm to exit from that structure and put a alternative in its place.
i.
ONE UNIFIED SYSTEM:The firm has to handle wholesaling, retailing and other forms of
selling as one unified system and not as separate entities. The linkage among
them in the tears of functions, costs and efficiency being quite strong,
looking at them as independent entities will lead to sub-optimization of the
channel management task as a whole.
j. BUILDING CHANNEL SYSTEM BY BOTTOM UP METHOD:
The purpose of having marketing channels is to serve channel
customer needs effectively. This means that the prime task in channel
design is to determine the type of retailers who are best suited to serve
customer needs in the specific context and develop the distribution
DIRECT MARKETING
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MARKETING MANAGEMENT
DM Compresses the steps in the Marketing Process:Direct Marketing tackles all the component tasks of marketing, such as
customer identification /demand generation, product adaptation, packaging
modification, distribution, price negotiation, marketing communication, and
sales promotion in an integrated and compressed manner. It eliminated all
intermediaries and handles the consumer directly and in one action. It also
reaches the product to the customer directly.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
[D] DM Scores over mass marketing on many courts:DM scores over mass marketing significance as it confess many unique benefits.
Helps Achieve Excellence in Product and services:Direct marketing is better placed for offering products and services of
excellence. Several marketing scholars and practitioners are of the views that mass
marketing has so conditioned the consumers as to be satisfied with unsatisfactory
products and has restricted even their expectations. Direct marketing is a welcome
way-out in the respect.
Facilities sharper segmentation and Targeting:Direct marketing also supports accurate segmentation and targeting of the
market, which inform facilitates formulation of more fine-tuned marketing strategies.
MARKETING MANAGEMENT
In many cases, channel costs/retail margins now amount to 50% and more of
total marketing costs. As a result conventional mass marketing is becoming a costly
method of selling products. It also saves costs of credit to wholesalers and retailers. As
the products are sold by passing the conventional ware-house-depot-distributor-retailer
rigmarole, the hassles are also less.
DM also saves advertising costs, which may account for up to 30% of total
marketing costs. It also ensures more effective communication compared to mass
advertising routes. Advertising addresses consumers and mares and does not demand
immediate attention. DM is better focused and also demands immediate attention.
Developments in IT have also lowered the overall cost- per-contact. DM has thus
become more attractive now from the cost angle.
Benefits the consumers too:Besides conferring so many benefits on the marketer, direct marketing brings
substantial benefits to the consumers too. It enables consumers to shop at their homes. It
saves their time and they see it as convenient and hassles-free.
In short, DM is a potent technique of marketing and over the years, its scope
popularity has been increasing and costs falling
(E)
MARKETING MANAGEMENT
Careful and close targeting of markets/prospects:Close targeting is an equally important requisite. DMs potential is not realized,
when it is not targeted closely. In fact, the ultimate aim in direct marketing is to target the
customers on an individual basis.
Service guarantee and product warranty:Direct marketing proves particularly effective when it is backed by service
guarantee. Like- wise, a good warranty too improves its effectiveness. Consumer should
feel free to return the product if it falls short of their expectations.
Backroom logistics:The backroom logistics should be perfect. For example, once the response start
flowing in, there must be a mechanism for attending to them promptly. Also, there should
be, also a systematic follow-up. Reminded mailers should also go out promptly wherever
applicable. Fast delivery of the product is the most vital part of backroom logistics.
An eye for details:An eye for details is essential here. For example, case should be taken in
designing the mailer. The outside envelope, the sale letter, the reply form and the reply
envelope all must be developed carefully. Also, the response to enquiries should be swift.
Sustained effort:Finally, it must be said that to derive full benefit out of direct marketing, it must
be adopted as on integral part of the marketing Endeavour, direct marketing is not so
effective when it is carried out as a one-shot effort.
(F)Forms of direct marketing:Direct marketing has several forms. The major ones are listed. DM has so many
forms essentially because it incorporates a variety of media. Catalogue marketer use the
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
catalogue as the tool. All these marketing methods basically do the same thing, they
gather customer names and sell their products direct to them.
The newer tools actually permit more effective and more sophisticated
direct marketing.
Mail order marketing (MOM) catalogue marketing, also known as mail order
business (MOB), is one of the well-established methods of direct marketing. Since many
mail order marketers. Since many mail order marketers use catalogue for communication
with the consumer, this form of marketing is often referred to as catalogue marketing.
First mail order company:First Mail Order Company has been focusing on customers in the smaller cities,
people who have the money but do not have the access to products.
Anjali textiles:Mail order marketing is resorted to even in products like textiles, anjali mills,
Bangalore, for example, has been marketing a substantial part of its sarees through mail
order. The sales take place as per mail orders placed by the customers.
Other example:-
Mother care, India, another MOB, has set its target on mothers who buy items
meant for kids. Jewelers, Surat diamond is also doing same MOB.
Direct mail marketing (DMM) is similar to MOM. Usually, when a trading house
markets various products by mail order, we refers to it as MOM or MOB and when a
manufactures markets his products by the same method, we refer to it as DMM.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
HLL using DM for Denim aftershave:HLL had relied on direct mail to a sizeable extent in marketing its aftershave
brand, denim. The target was the members of elite clubs in the metros. Each prospect was
mailed a three- color brouch are with a scratch n sniff coating as a sample.
Campaigns by datamatics direct:We had mentioned earlier that datamatics direct is one of the leading independent
direct marketing outfits in India. It relies heavily on direct mail
Datamatics campaign for ANZ bank:To cite one example, datamatic direct did a direct mail campaign for ANZ banks
loan on equity shares. Business reply cards formed part of the mail to elicit orders from
customers.
Datamatic campaign for LUX soap:In another direct mail campaign, datamatics focused on HLLs LUX soap. The
direct mail communication stated that mail orders received through the enclosed business
reply card would receive prompt attention and the item on order would be delivered at the
doorsteps of the customers and cash could be paid on delivery.
MIDDLE MEN
LEVELS OF DISTRIBUSTION
1. MANUFACTURE
2
MANUFACTURE
MANUFACTURE
MANUFACTURE
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
CUSTOMER
WHOLESALER
AGENT
RETAILER
WHOLESALER
AGENT
RETAILER
CONSUMER
RETAILER
CONSUMER
CONSUMER
MARKETING MANAGEMENT
MARKETING MANAGEMENT
WHOLESALERS
Wholesalers are individuals or business firms who will sell products to be used
primarily for resale or for industrial use. The wholesaler is a bulk purchaser with the
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
object of resale to retailers or other traders after breaking down his Bulk in smaller
quantities.
CHARACTERISTICS:
The main characteristics of a wholesaler are:
1. He is a merchant middleman.
2. He is a middleman or intermediary between the manufacturers or producers and
the retailers.
3. A true wholesaler acts neither as a manufacturer nor as a retailer, but merely acts
as an intermediary between the manufacturers and retailers.
4. He generally deals in one or a few classes of goods related to one another.
5. As he specializes in one or a few classes of goods. He is considered to be an
expert in the class or classes of goods in which he deals.
TYPES:
On the basis of their function, wholesaler be divided into three categories. There
are:
1. Manufacturer wholesaler: A manufacturer wholesaler is one who combines
manufacturing activities along with the wholesale business. He may sell not only
his own goods (i.e., the goods manufactured by his). But also the goods to other
manufactures (i.e., the goods of other manufactures bought by him in bulk for the
purpose of resale)
2. Retailer wholesaler: A retailer wholesaler is one who combines his wholesale
business with retail business. He buys goods in large quantities from the
manufactures and sells them not to the retailers, but to the ultimate consumers
directly through his own shops.
3. Wholesalers Proper or Merchant Wholesalers: Is one who concentrates only
on the wholesaling business (i.e., buys goods in large quantities from the
manufactures and resells them is small quantities to the retailers)
The wholesalers may be sub divided into two categories. They are:
i.
Service wholesalers: Service wholesalers are those wholesalers who
perform all the marketing functions and render to the manufactures
and retailers all the services expected of them.
ii.
Limited Function Wholesalers: Limited function wholesalers are those
wholesalers who perform only a few of the marketing functions of the
wholesalers.
The service wholesalers may be further subdivided into different categories either: a)
On the basis of the degree of specialization,
b) On the basis of the territory covered by them.
FUNCTIONS:
A wholesaler performs a number of functions. His main functions are:
1. Linking: A wholesaler links the manufacturers with the retailers. In other words,
the goods produced by the producers are distributed to the retailers through the
wholesaler.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
ii.
iii.
2. Executive section:
The executive section is concerned with buying, selling, credit, advertising,
warehousing and dispatching. It is sub-divided into:
i.
ii.
iii.
.
iv.
v.
vi.
RETAILERS
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Retailing is a trading activity directly related to the sale of goods or services to the
ultimate customer or consumer for personal, non-business use. A retailer is the last
middleman in the machinery of distribution and he is responsible to satisfy recurrent
wants of consumers.
Retail selling is a trade of varied goods in small quantities to the final consumer.
There are 3 distinguishing features of retail trade. The retailer deals in small quantities
and his business is usually local in character. Secondly retail trade always shows
tendency towards variety as it has to satisfy innumerable wants of consumers. Thirdly, a
retailer, by operating near about the residential areas of consumer, sells his wares directly
to consumers. Manufactured goods are worthless until they pass Acid test of retail
distribution. The retailer alone can offer safe and reliable goods to customers.
RETAILER
(Middlemen in distribution)
Buying for consumers
1. Anticipating wants
2. Breaking of bulk
3. Transport and warehousing
4. Financing
5. Product guarantees
6. Repairs & Installation.
MARKETING MANAGEMENT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
H C
O
RN
ZL
O
OH
NC
A
N
C
I
I
TT
L
NA
N
F
N L
E
C L
T
MARKETING MANAGEMENT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
PHYSICAL DISTRIBUTION
MARKETING MANAGEMENT
MODULE 7 (8 Hours)
Marketing communication: Concept of communication mix, communication objectives,
steps in developing effective communication, stages in designing message, Advertising:
Message content, Structure, Source, Advertising Budget, Measuring effectiveness of Ad.
Hierarchy of effects in advertising Promotion: Promotion mix, kinds of promotion, Tools and
Techniques of sales promotion, Push-pull strategies of promotion.
Personal selling: Concept, Features, Functions, Steps involved in Personal Selling
Publicity / public relation: Meaning, Objective, Merits/Demerits.
Direct Marketing: Meaning, Features, Functions, Merits/Demerits, Role of media in DM
Basic concepts of e-commerce, e-business, e-marketing, m-Commerce, marketing.
PROMOTION
Introduction:
Promotion is a form of communication with an additional element of persuasion to accept
ideas, products, and services and hence persuasive communication becomes the heart of
promotion, the third element of marketing mix. In essence, promotion is the spark plug of our
marketing mix and an important marketing strategy. People must know that right product at
the right place is available at the right price. It is said that in a competitive market without
promotion nothing can be sold.
In marketing effective communication is absolutely necessary even though you have a superb
product, best package and also you offer a fair price.
PROMOTION:
It is the process of marketing communication to inform, persuade, remind and influence
consumer or users in favor of your product or service. Promotion has three specific purposes.
It communicates marketing information to customers, users and resellers .Promotion
persuades and convinces the buyer and influences his or her behavior to take the desired
action.
It is defined as the coordinated self initiated efforts to establish channels of information and
persuasion to facilitate or foster the sale of goods or services, or the acceptance of ideas or
points of view. It is a form of non price competition.
Integrated marketing communication
Introduction:
Marketers have a variety of promotional tools at there disposals. So make effective use of
them, a companies personal selling, advertising and often promotional activities should form a
co-ordinates promotional program within its total marketing plan. However these activities are
fragmented in many firms within potentially damaging consequences. For ex: advertising
directions and sales force managers may come into conflict over resources, or the sales forces
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
may not be adequately informed about the defects of a particular sales promotion effort. These
would not happen if the elements comprising promotion were part of an integrated
manufacturing communication (IMC) effort, a strategic business process used to plan,
develop, execute, and evaluate co-ordinates communication with and organization public.
IMC begins with a strategic planning effort designed to co-ordinate promotion with product
planning, pricing and distribution the other marketing mix elements. Promotion is influenced
for instances by how distinctive a product is and whether its planed price is above or below
competition.
IMC Elements:
1)
2)
3)
4)
Organizations that have adopted an IMC philosophy tend to share several characteristics,
notably:
An awareness of the target of the audiences information sources as well as there media habits
and preferences.
An understanding of what the audience knows and believes that relates to the desired
response.
The use of a mix of promotional tools, each with specific objectives but all linked to a
common over all goal.
A carefully timed, continuous flow of information adopted to the audience information needs.
PROMOTION AND MARKETING:
From a marketing perspective promotion is intended to further the objectives of an
organization.. It makes use of various tools to perform three essential promotional rolesinforming, persuading and reminding target audiences. The relative importance of these roles
depends on the circumstances faced by the firm.
The most useful product will be a failure of no one knows it exists, so the first task of
promotion is to inform. Beyond simply being aware of a product or brand, customers must
understand what benefits it provides, how it works, and how to get it. These are just a few
examples of information provides channel members and consumers. In electronic appliance
industry for example, Palm uses advertising to educate the market about the operation and
features of each new generation of handhelds. In another instance, when a small Canadian
firm was facing with consumers who could not understand its toy called X-zylo, a gyroscopic
cylinder that can be thrown 100 yards, the inventor informed the retailers and consumers
about it with demonstrations at fairs, in company parking lots and on school playing fields.
Another purpose of promotion is persuasion. Intense competition among firms puts
tremendous pressure on the promotional programs of sellers. In an economy with an abundant
supply of products, consumers have many alternatives of satisfying even basic physiological
needs. As a result, persuasive promotion is essential. Campbell Soup Co. has been marketing
condensed soup for over 100 years, and accounts for 80% of all soup sales in US. It is one of
the most recognized brands and packages in the country. Studies show that virtually every
household has some Campbells Soup in the pantry. Yet the firm spends over $100 million a
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
year advertising soup. Partly, because it regularly introduces new flavors but more important,
because its primary products are condensed soups that require some minimal preparation and
as one industry analyst quipped, If your under 70 years old you buy ready-to-serve soup.
Thus Campbells faced with intense competition from alternative easier-to-prepare foods, uses
promotion to persuade soup buyers.
Consumers also must be reminded about a products availability and its potential to satisfy.
Sellers bombard the market place with thousands of messages every day in hopes of attracting
new consumers and establishing markets for new products. Given the intense competition
Promotion as an personal and impersonal effort by a seller or the sellers representative to
inform persuade or remind a target audience.
PROMOTION METHOD:Promotion to whomever it is directed is an attempt to influence. There are
four form of promotion:(I) Personal Selling
(ii) Sales Management
(iii) Sales Promotion
(iv) Publicity and Public Relation
(i)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
APPROACH
PRESENTATION
AND
DOCUMENTATION
HANDLING
OBJECTION
CLOSING
FOLLOW-UP
MARKETING MANAGEMENT
Before calling on a prospect the sales person should learn as much as possible about
the organization (what is needs, who is involved in buying) and its buyers(their
characteristics and buying styles). This step is known as the pre approach.
The sales person should all objectives, which may be to qualify the prospects, to
gather information, or to make immediate sales. Another task is to divide on the best
approach, which might be a personal visit, a phone call or a letter. The best timing
should be considered carefully because many prospects are busiest at certain times.
Finally, the sales person should give thought to an overall sales strategy for the
account.
Approach:-During the approach step, the sales person should know how to meet and
greet the buyer and to get the relationship off to a good start. This involves the sales
person appearance, opening lines and follow up remarks. The opening line should be
positive. The opening might be followed by some key questions to learn more about
the customers needs or by showing a display or sample to attract the buyers
attention and curiosity.
Presentation and Demonstration:-During the presentation step of selling process,
the sales person tells the product story to the buyer, showing how the product will
make or save money. The sales person describes the product features and
concentrates on presenting customers benefits. Using a need satisfaction approach,
the sales person starts with a search for the customers need by getting the customers
to do most of the talking.
Sales presentation can be improved with demonstrations aids, such as booklets,
flipcharts, slides, video tapes, video disks and product samples if buyers can see or
handle the product, they will better remember its features and benefits.
Handling Objections:-Customer always have objections during the presentation or
when asked to place an order. The problem can be either logical or physiological and
objections are often unspoken. In handling objections, the sales person should use a
positive approach, sick out hidden objection, asked the buyer to clarify any
objections, take objections as opportunity to provide more information and turn the
objection into reason for buying. Every sales person need training and skills of
handling objections.
Closing:-After handling the prospects objections, the sales person now tries to close
the sell. Some sales people do not get around to closing or do not handle it well.
They may lack confidence, fail guilty about asking for the order, or fail to recognize
the rig ht movement to close the sell. Sales people should know how to recognize
closing signals from the buyer, including physical actions, comments and questions.
Follow Up:-The last step in the selling process follow up is essential to store
customer satisfaction and repeat business. Right after closing, the sales person
should complete any details on delivery time, purchase terms, and other matters. The
sales person then should schedule a follow up call when the initial order is received
to make sure there is proper installation, instruction and servicing.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MARKETING MANAGEMENT
MARKETING MANAGEMENT
account, and sometimes lose large orders they have worked hard to obtain. Most
people, more over, require incentives, such as financial gain or social recognition, to
operate at full capacity.
Sales Quotas
Many companies set sales quotas prescribing what reps should sell during the year.
Quotas can be set on dollar sales, unit volume, margin, selling effort or activity, and
product type. After setting quotas, management often ties salesperson compensation
to degree of quota fulfillment. Sales quotas are developed from the annual marketing
plan..
Supplementary Motivators
Companies use additional motivators to stimulate sales force effort. One motivator is
the periodic sales meeting, a social occasion that also serves as an important tool for
education, communication, and motivation. Many companies sponsor sales contests
to spur the sales force to a special selling effort above what is normally expected.
Evaluating Sales Representatives
Sources of Information
Management can obtain information about reps in several ways, including sales
reports, personal observation, customer letters and complaints, customer surveys,
and conversations with other sales representatives. These reports provide raw data
from which sales managers can extract key indicators of sales performance:
(1) Average number of sales calls per rep per day,
(2) Average sales call time per contact,
(3) Average revenue per sales call,
(4) Average cost per sales call,
(5) Entertainment cost per sales call,
(6) Percentage of orders per hundred sales calls,
(7) Number of new customers per period,
(8) Number of lost customers per period, and
(9) Sales force cost as a percentage of total sales.
Sales Management:It is defined as The overall management of sales and it refers to only a special application
of the process of management as a whole.
Marketing stresses the importance of satisfying customers needs and wants through process
of exchange. Marketing occurs virtually in every aspect of life. Sales management plays an
important role in marketing, especially for firms business to business market. Personal
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
selling is the most frequently used promotion technique in business markets and management
of the sales force is an important quality component of any selling effort.
MARKETING
SELLING
CORPORATE
OBJECTIVE IS TO
INCREASE MARKET
SHARE
OBJECTIVE IS TO
INCREASE PROFIT
STARTEGY IS TO
PENETRATE MARKET
OBJECTIVE IS TO
INCREASE SHARE
STRATEGY IS
SELECTED PROFIT TO
SELECTED CUSTOMER
STARTEGY
TACTICS
TACTIC TO PENETRATE
TO GROUP OF STORE
MANAGERS
Advertising :
It is non personal communication paid for by a clearly identified sponsor promotion ideas,
organization or product. The term advertising originates from the Latin advert that means to
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
turn sound. Advertising thus denotes the means employed to draw attention to any object or
purpose. In the marketing context, advertising has been defined as any paid form of
presentation and promotion of ideas, goods or services by an identified sponsor. Through an
advertisement, the advertiser intends to spread his ideas about his product offering among his
customer and prospects.
Then they can make five critical decisions, known as the five Ms:
Mission:
What are the advertising objectives?
Money:
How much can be spent?
Message:
What message should be sent?
Media:
What media should be used?
Measurement: How should the results be evaluated?
FEATURES
1. It is a unique means of non-personal or mass communication announcing the sales of
goods or services. It can help to introduce a new product quickly.
2. The advertising is non-personal salesmanship performing similar functions like
personal salesmanship. It is a silent but forceful salesmanship. It helps to presale a
product.
3. It is an openly sponsored sales message regarding any product or service, i.e. the
sponsor can be identified.
4. It is a paid communication- part for by the sponsor (advertisers) to the media owner
(seller of advertising space or time)
5. advertising message can be addressed to numerous persons at a time they may be
readers, listeners, viewers collectively called audience of advertisement.
FACTORS
INFLUENCING
ADVERTISEMENT
THE
MEDIA
SELECTION
IN
MARKETING MANAGEMENT
even national and other large-market media can be targeted at small, specialized
market segments.
3. Requirement of the message: The medium should fit the message. For e.g.,
magazines provide high-visual reproduction that attract attention along with printed
messages that can be carefully read and evaluated. As a result, they are well suited to
business-to-business advertising.
4. Time and location of the buying decision: If the objective is to stimulate a
purchase, the medium should reach prospective customer when and where they are
about to make their buying decisions.
5. Media cost: The cost of each medium should be considered in relation to the amount
of funds available to pay for it and its reach or circulation.
THE RECENT TRENDS IN ADVERTISING MEDIA ARE:
Medias
Advantages
disadvantages:
Newspapers
Television
Direct mail
Radio
Mass use; high geographic and
demographic selectivity; low cost
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Outdoor
Limited
audience
creative
limitations
Yellow Pages
Newsletters
Brochures
Flexibility;
dramatize
messages
Telephone
Relative
high
volunteers
are used
Internet
full
control;
can
selectivity;
cost
unless
Sales Promotions:
It is sponsor- funded, demand stimulating activity designed to supplement advertising and
facilitated personal selling it frequently consist of a temporary incentive to increase a sale or
purchase. Many sales promotions are directed at consumers the premium occurred by fastfood outlets in conjunction with popular movies are examples.
It is an important instrument in marketing the lubricate the market efforts. Sales promotion
is a bridge or a connecting link covering the gap between advertising and personal
salesmanship, the two wings of promotion.
The Objectives of Sales Promotion are:
1)
2)
3)
4)
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Trade-directed
Price offs
Allowances
Free goods
Sales contests
Spiffs
Trade shows
Specialty advertising
MARKETING MANAGEMENT
MARKETING MANAGEMENT
Create superior product, service, and experience for the target market.
Organize and make accessible a database of information on individual customer needs,
preference, contract, purchase frequency and satisfaction
Make it easy for customers to reach appropriate company. Personal and express their needs,
perceptions and complains
Run award programs recognizing outstanding employees.
However there are three main basic tools to forming customers bonds
(i)
Adding Financial Benefits.
(ii)
Adding Social Benefits.
(iii)
Adding Structural Ties.
(i)
Adding Financial Benefits:- in the financial benefits that company can offer two programs
(a) Frequency Programs
(b) Club Marketing Programs
(a) Frequency Programs:- Frequency programs are design to provide rewards to customers
who buy frequently and substantial amounts. Frequency market is an acknowledgement of the
fact that 20% of the companies customers might accounts for 80% of its business.
Typically, the first company to
introduce an frequency program gains the most benefit specially if competitors are slow to
respond. After competitors respond frequency programs can become a financial burden to all
the offering companies but some companies are more efficient or creating in managing.
(b) Club Marketing Programs:Many companies have created club marketing
program(CMP) to bond customers closer to the company. Club membership can be open to
everyone, who purchases a product or service or it can be limited to an affinity group of those
willing to pay a small fees.
Although open club are good for building a database or snagging customers from
competitors, limited membership club are more powerful long term loyalty builders.
These clubs attracts and keep those customers who are responsible
for the largest portion of business.
(ii)
Adding Social Benefits:- Company personal work on increasing social want with customers
by individualizing and personalizing the customer relationship.
In essence, thoughtful companies turn their customer into
clients. Hence they draw some distinction.
Customers may be nameless to the institutions: clients cant be nameless.
Customers are served as part of the mass or as a part of larger segments: clients are served on
an individual basic.
Customers are served by anyone who happens to be available: clients are served by the
professional assign to them.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
(iii)
Adding Structural Ties:The company may supply customers with special equipment or computer linkagers that helps
to customers manage orders, payroll and inventory
Hence there are some sequential for collecting structural ties with the customer. The marketer
aims should be to increase the consumers proclivity to repurchase the companies brand, his
suggestion as follows:
Create long-Term Contract:- A news paper subscription replace the need to buy a news
paper each day. A 20 year mortgage replaces the need to re-borrow the money each year.
Charge a lower Price to Consumers who buy larger supplier:- Offer lower prices to people
who agreed to be supplied regularly with a certain brand of tooth paste, detergent or beer.
Turn the product into a long-term service:- Some of the examples clears the point, DaimlerChrysler is considering selling miles of reliable transportation instead of car, with the
consumer able to order different car at different time, such as a station wagon for shopping
and convertible for the weekend
1.
Value Equity :- Value equity the customer objective assessment of the utility of an offering
based on perception of its benefits relative to its cast, the cabdriver of value equity are quality
price and convenience.
Each industry has to define the specific factors underlying each sub driver in order to find
program to improve value equity.
For Example:- An airlines passenger might define quality as seat width. A hotel guest might
define quality as room size.
Value equity makes the biggest contribution to customer equity when product are
differentiated and when they are more complex and need to be evaluated.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
2. Brand Equity :- Brand equity is the customer subjective and intangible assessment of the
brand, above and beyond its objectively perceived value the sub drivers of brand equity are
customer brand awareness, customer attitude towards the brand and customer perception of
brand ethic, brand equity is more important than the other driver of customer equity where
product are less differentiated and have more emotional impact.
3. Relationship Equity:- Relationship Equity is the customer tendency to stick with the
brand, above and beyond include loyalty program, special recognition and treatment program,
community building program.
Relationship equity is especially important where personal relationship count for a lot and
where customer tend to continue with suppliers out of habit or inertia.
STEPS OF ATTRACTING AND KEEPING CUSTOMERS
SUSPECT
PROSPECT
DISQUALIFIED
PROSPECT
FIRST TIME
CUSTOMER
REPEAT
CUSTOMERS
CLIENTS
MEMBERS
ADVOCATE
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
PATRNERS
INTERACTIVE
OR
EX-CUSTOMER
MARKETING MANAGEMENT
The starting point is everyone who might conceivably buy the product or service. From
these co-determine the most likely prospect, which it hopes to convert into first time
customers and then into repeat customers, and clients people whom the company boy very
specially and knowledgeable. Then next changes is to turn clients into member by starting a
membership programs that offers benefits to customers who join, and then into advocates,
customers who enthusiastically recommend the company and its product and service to others.
The ultimate challenge to turn advocate into partners.
Some customers inevitably became inactive or drop out. The challenge is to
reactivated dissatisfied customers through win back strategy. It is often earlier to re-attract excustomers than to find new ones.
HOW MUCH SHOULD A COMPANY INVERST IN BUILDING LOYALTY SO THAT
THE COST DO NOT EXCEED THE GAINS !
The level of investment vary with the level of customer as prospect to customers and
last as partner hence they are:RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
BASIC MARKETING
REACTIVE MARKETING
ACCOUNTABLE MARKETING
PROACTIVE MARKETING
PARTNERSHIP MARKETING
Basic Marketing:- The sales person simply seller the product.
Reactive Marketing:- The sales person tells the product and encourage the customer to call if
the question, comments and complaints.
Accountable Marketing:- The sales person called the customer to check whether the product
is making expectation. The sales person also as/is the customer for any product or service
improvement, suggestions, and any specific disappointments.
Proactive marketing:- The co-works continuous with its large customers to help improve
there performance.
Partnership marketing:- The co-works continuous with its large customers to help improve
there performance.
Most Co. practice only basic marketing when there markets contain many customers and
there unit profit margin are small. In the market with few customers and high profit margins,
most sellers will move towards partnership marketing.
RELATIONSHIP MARKETING
What is relationship marketing ?
Is the process of creating, maintaining and enhancing strong, value laden relationship with
customers and stake holders.
Relationship marketing is an integrated effort to identified, maintain and build a network
with individuals customers and to continuously strengthen the network for the benefit of both
the sides, through interactive, individualized and value added contracts over a long period of
time.
THE RELATIONSHIP MARKETING FOCUSES ON
(i)
(ii)
(iii)
MARKETING MANAGEMENT
To create customer satisfaction, companies, and must manage there value chain as well as the
whole value delivery system in a customer centered way. The companys goal is not only to
get customer, but even more importantly to retain customers.
The relationship marketing is concerned with working, developing, and enhancing
relationship with the relationship market within the organization and building substantial
external relationship with the supplier referred source, influence markets and recruitments
market.
CUSTOMER RELATIONSHIP MARKETING
Customer relationship marketing provides the key to retaining customers and evolve
providing financial and social benefits as well as structural ties to the customers.
Companies must decide how much relationship marketing to invest in different market
segments and individual customers, from such levels as basic, reactive, accountable,
proactive, and full partnership. Much depends on estimating customer life time value against
the cost stream required to attract and retain these customers.
MODULE 8 (6 Hours)
Marketing Planning: Meaning, Concepts of Marketing plan, Steps involved in planning.
Marketing Organisation: Evolution of Modern Marketing department,
Factors influencing the size of the marketing organisation, various types of
marketing structures/organisation
Marketing Audit: Meaning, Features of marketing audit, various
components of marketing audit.
Concept Of Marketing Planning.
The exact length and layout will vary from company to company; a marketing
plan usually contains the sections. Smaller business may create shorter less formal
marketing plans, where as corporate frequently require highly structure marketing plans.
To guide implantation effectively, every part of the plan must be described in
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
considerable detail. Sometime a company will post its marketing plan on an internal
website, which allows managers and employees in different location to consult specific
sections and collaborate on additions.
1. Executive summary.
This section summarizes the main goals recommendations and points as an
overview
for senior manager who must read and approve the marketing plan.
2. current marketing situation.
marketing managers discuss the overall market identity the market
segments they will target and provide information about the company
current situation.
Market description.
By description the targeted segments in detail marketers provide contest
for the marketing strategies and detailed action programs discussed later in
the plan.
Product review.
The product review should summarize the main features for all of the
company products. the information may be organized by product line by
type of customer by market by order of product introduction.
Competitive review.
Markets list the most important channels provide an overview of each
channel arrangement and mention any new developments or trends.
3. Strengths weaknesses opportunities and threat analysis.
Strengths: strengths are internal capabilities that can
help the
company reach its objectives.
Weakness. Weaknesses are internal elements that may interfere with the companys
ability achieve its objectives.
Opportunities. Opportunities are external elements that the elements that he company
may be able to exploit to its advantages.
Threats. Threats are current or emerging external element that may possibly challenge
the companys performance
4. Objectives and Issues :The companys objectives should be defined in specific terms so management an
measure progress and if needed, take corrective action to stay on track. This section
describes any major issues that might affect the companys marketing strategies and
implementation.
5. Marketing strategy :It is based on a positioning of product differentiation.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
6. Action programs.
Action programs should be coordinated with the resources and activities of other
department including production finance, purchasing etc.
7. Budgets :Budget serve two main purposes :- To project profitiability and to help
managers plan for expenditures, scheduling and operations related to each
programe.
7. Controls:Control help management measures results alter the plan is implemented and
identify any problem or performance variations that need corrective action.
WHAT IS SCOPE OF STRATEGIC MARKETING PLANNING?
To transform marketing strategy into marketing programs, marketing mangers must
make basic decision on marketing expenditure, marketing mix and marketing alloction.
1. Positioning :A positioning built on meaningful differences, supported by appropriate
strategy and implementation, can help the company build competitive advantage.
2. Product strategy :Summarize the broad logic that will guide decisions made about the
marketing mix in the period covered by the plan.
3. Pricing strategy :- Attracting desirable channel partners and taking market share.
4. Distribution strategy :- Channel strategy is to use selective distribution through
well-known stores and online retailers.
5. Marketing communication strategy :By integrating all messages in all media, we will enforce the brand name and
the main points of product differentiation, especially our exclusive voice- recognition
features.
6. Marketing Research :- To support development, implementation and evaluation of
strategies and action programs,
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Research internal attitudes towards products and service vs. the market's
perception.
Marketing
Advertising
Develop a new creative platform for our corporate image or advertising campaign.
Design
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Write and publish a book, booklet, or special tape to promote our product/service.
Public Relations
Determine how to get good case histories and user stories written and published.
Direct/Database Marketing
Follow-up
Determine how to make all our marketing communications more responsive and
accountable.
New Media
Marketing
through
the
Internet.
STEP TWO: Provide a rough estimate of your budget for marketing, creative and
media.
Have the following items (either previous or current) ready for review:
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Strategic plans
Research reports
Trade information
Trade associations
Staff experience
Use of colors
Category sale:
Average sales:
Promotions
Samples of all past promotions and advertising (last two years minimum).
Competition
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Other
Other economic, environmental or trend issues that may affect your business.
Reasonable and probable growth for this year and the next four years (i.e. as a
percentage increase/decrease from the previous year).
The issues or tasks you do now that you wish to outsource to an agency like One
Vision Ltd.
Future plans and goals for expansion, revenue growth, and timing for these goals.
Reading unsolicited letters from customers to gauge their real likes and dislikes.
Reading newspapers, trade journals, financial and economic reports (of yours and
related industries).
Asking receptionists, sales reps and other staff what they know.
Putting together a marketing intelligence file, filling it with articles, and using it
for future reference in business plans.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
TO SUM UP: A marketing audit reviews your marketing, creative and media efforts,
puts them in perspective with your current target market and shows opportunities to
realign your strategies so you can get more effective results from your marketing dollars.
What are the Elements of a Systematic Marketing Audit?
Part One: The Marketing Environment Review
A. Markets
What are the present and expected future size and characteristics of each market
or market segment?
B. Customers
How do customers and the public rate your company in relation to its
competition?
C. Competitors
D. Macro-environment
GENERAL: What are the main developments with respect to demographics, economy,
technology, government and culture that will affect your organizations situation?
SPECIFIC: Economic-Demographic
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
What does your company expect in the way of inflation, material shortages,
unemployment and credit availability in the short and long run?
What effect will forecasted trends in the size, age distribution, and regional
distribution of population have on your business?
Technology
What major changes are occurring in product/process technology that will affect
you? How?
What are the major generic substitutes that might replace this product?
Political-Legal
What laws are being proposed that may affect marketing strategy?
Social-Cultural
What attitude does the public have about businesses like yours and products such
as the ones your company makes?
What changes are occurring in consumer lifestyles and values that affect your
company's
target
markets
and
marketing
methods?
What are your organizations overall long-term and short-term objectives? What
are your marketing objectives?
Are these objectives stated in a clear order of priority and in a form that allows
planning and measurement of achievement?
Are the marketing objectives reasonable for your organization, given its
competitive position, resources and opportunities?
Program/Strategy
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Is it likely to succeed?
Is your organization allocating enough (or too many) resources to accomplish the
marketing tasks?
Are your marketing resources allocated to the major elements of the marketing
mix (i.e. product quality, personal selling/contact, promotion and distribution) in
the best way possible?
Implementation
Does your organisation carry out periodic studies to determine the contribution
and effectiveness of various marketing activities?
Organisation
Does your organisation have a high-level marketing officer to analyse, plan and
implement the marketing work of your organisation?
Does
staff
understand
and
practice
the
marketing
concept?
MARKETING MANAGEMENT
What is the general state of health of each product and the product mix as a
whole?
Prices
To what extent are prices set on cost, demand, and/or competitive criteria?
Does your organisation use temporary price promotions and, if so, how effective
are they?
Distribution
Are there alternative methods of distributing your product that would result in
more service or less cost?
Does your organisation give adequate service, along with the product, to
customers?
What are the efficiency levels and growth potentials of the different trade
channels?
Personal Selling
Is
your
sales
force
large
enough?
Is it organised along the best lines of specialisation (territory, market, product)?
Does the sales force show high morale, ability, and effectiveness?
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Are the procedures adequate for setting quotas and evaluating performance?
Advertising
Publicity
Sales Promotion
Does your organisation use sales promotions and, if so, are they well conceived?
Marketing Audit.
How to conduct a 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.
This lesson considers the basics of the marketing audit, and introduces a marketing audit
checklist. The checklist is designed to answer the question, what is the current marketing
situation? Lets consider the marketing audit under three key headings:
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
MEN (Labor/Labour).
MONEY (Finances).
MACHINERY (Equipment).
MINUTES (Time).
How does our marketing team interface with other organisations and internal
functions?
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Their number/concentration.
What is the demography of our consumers? Such as average age, levels of population,
gender make up, and so on. How does technology play a part?
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Information systems.
Economic indicators such as inflation levels, interest rates, exchange rates and
unemployment.
How do we apply the marketing mix? (Including factors covered above in (a))
Levels of staffing.
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Leaders are proactive. They make change happen instead of reacting to change. The
future requires corporate leadership with the skills to integrate many unexpected and
seemingly diverse events into its planning. Every organization must plan for change in
order to reach its ultimate goal. Effective planning helps an organization adapt to change
by identifying opportunities and avoiding problems. It sets the direction for the other
functions of management and for teamwork. Planning improves decision-making. All
levels of management engage in planning.
What is Strategic Planning?
Strategic planning produces fundamental decisions and actions that shape and guide what
an organization is, what it does, and why it does it. It requires broad-scale information
gathering, an exploration of alternatives, and an emphasis on the future implications of
present decisions. Top level managers engage chiefly in strategic planning or long range
planning. They answer such questions as "What is the purpose of this organization?"
"What does this organization have to do in the future to remain competitive?" Top level
managers clarify the mission of the organization and set its goals. The output needed by
top management for long range planning is summary reports about finances, operations,
and the external environment.
Strategic planning is the process of developing and analyzing the organization's mission,
overall goals, general strategies, and allocating resources. A strategy is a course of action
created to achieve a long-term goal. The time length for strategies is arbitrary, but is
probably two, three, or perhaps as many as five years. It is generally determined by how
far in the future the organization is committing its resources. Goals focus on desired
changes. They are the ends that the organization strives to attain. Traditionally strategic
planning has been done annually. However, many companies are doing away with annual
business plans altogether and moving to a system of continuous planning, to permit
quicker response to changing conditions. Thus, the strategic plan involves adapting the
organization to take advantage of opportunities in its constantly changing environment.
Chunka Mui and Larry Downes in Unleashing the Killer App: Digital Strategies for
Market Dominance (Harvard Business School Press, 1998) suggest that strategic
planning will be replaced by "digital strategy." They make the argument that business
change originates with technology -- particularly with new computer-based products and
services that transform industries, the way American Airlines' SABRE system
transformed travel. Top management must formulate digital strategies (software and
digitally delivered services) that not only support business but also actually dictate how
business is done.
The planning process is rational and amenable to the scientific approach to problem
solving. It consists of a logical and orderly series of steps. Strategic planning sets the
stage for the rest of the organization's planning. The tasks of the strategic planning
process include:
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Define the mission. A mission is the purpose of the organization. It is why the
organization exists. Thus, planning begins with clearly defining the mission of the
organization. The mission statement is broad, yet clear and concise, summarizing what
the organization does. It directs the organization, as well as all of its major functions and
operations, to its best opportunities. Then, it leads to supporting tactical and operational
plans, which, in turn leads to supporting objectives. A mission statement should be short no more than a single sentence. It should be easily understood and every employee
should be able to recite it from memory. An explicit mission guides employees to work
independently and yet collectively toward the realization of the organization's potential.
The mission statement may be accompanied by an overarching statement of philosophy
or strategic purpose intended to convey a vision for the future and an awareness of
challenges from a top-level perspective
WHAT IS SWOT ANALYSIS?
Conduct a situation or SWOT analysis by assessing strengths and weaknesses and
identifying opportunities and threats. A situation or SWOT (Strengths, Weaknesses,
Opportunities, Threats) analysis is critical to the creation of any strategic plan. The
SWOT analysis begins with a scan of the external environment. Organizations must
examine their situation in order to seek opportunities and monitor threats. Sources of
information include customers (internal and external), suppliers, governments (local,
state, federal, international), professional or trade associations (conventions and
exhibitions), journals and reports (scientific, professional, and trade).
SWOT is the assumptions and facts on which a plan will be based. Analyzing strengths
and weaknesses comprises the internal assessment of the organization. Assess the
strengths of the organization. What makes the organization distinctive? (How efficient is
our manufacturing? How skilled is our workforce? What is our market share? What
financing is available? Do we have a superior reputation?) Assess the weaknesses of the
organization. What are the vulnerable areas of the organization that could be exploited?
(Are our facilities outdated? Is research and development adequate? Are our technologies
obsolete?) What does the competition do well?
Analyzing opportunities and threats comprises the external assessment of the
environment. Identify opportunities. In which areas is the competition not meeting
customer needs? (What are the possible new markets? What is the strength of the
economy? Are our rivals weak? What are the emerging technologies? Is there a
possibility of growth of existing market?) Identify threats. In which areas does the
competition meet customer needs more effectively? (Are there new competitors? Is there
a shortage of resources? Are market tastes changing? What are the new regulations? What
substitute products exist?) The best strategy is one that fits the organization's strengths to
opportunities in the environment.
The SWOT analysis is used as a baseline for future improvement, as well as gap analysis.
Comparing the organization to external benchmarks (the best practices) is used to assess
current capabilities. Benchmarking systematically compares performance measures such
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Tactical planning deals primarily with the implementation phase of the planning
process
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Tactical planning is usually tightly integrated with the annual budget process
Project budgets
Project reviews
Monthly reports
Annual reports
Project plans
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
The RFC may result in consensus decisions but it does not guarantee that outcome
if the alternative implementation options are many and the preferable solution not
so obvious
Structure of an RFC
Executive summary
If possible (i.e., a reasonable consensus exists within the project team) a proposed
course of action, including timeframe and budget
Implementation Plan
For information updates, electronic updates are most efficient; when issues need
to be resolved, a meeting is usually more effective
Annual Reports
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Should be keyed into the annual capital and operating budget plans
Monthly reports
Should be part of the normal work process and not busy work
Monthly summary should note any outstanding issues that require management
attention
MARKETING MANAGEMENT
employees and identifying needs for staff and resources to meet future changes.
Resources include employees, information, capital, facilities, machinery, equipment,
supplies, and finances.
Operational plans include policies, procedures, methods, and rules. The terms themselves
imply different degrees of scope. A policy is a general statement designed to guide
employees' actions in recurring situations. It establishes broad limits, provides direction,
but permits some initiative and discretion on the part of the supervisor. Thus, policies are
guidelines. A procedure is a sequence of steps or operations describing how to carry out
an activity and usually involves a group. It is more specific than a policy and establishes
a customary way of handling a recurring activity. Thus, less discretion on the part of the
supervisor is permissible in its application. An example of a procedure is the sequence of
steps in routing of parts. A method sets up the manner and sequence of accomplishing a
recurring, individual task. Almost no discretion is allowed. An example of a method is the
steps in cashing a check. A rule is an established guide for conduct. Rules include
definite things to do and not to do. There are no exceptions to the rules. An example of a
rule is "No Smoking."
Monitor the plan. A systematic method of monitoring the environment must be adopted
to continuously improve the strategic planning process. To develop an environmental
monitoring procedure, short-term standards for key variables that will tend to validate the
long-range estimates must be established. Although favorable long-range values have
been estimated, short-term guidelines are needed to indicate if the plan is unfolding as
hoped. Next, criteria must be set up to decide when the strategy must be changed.
Feedback is encouraged and incorporated to determine if goals and objectives are
feasible. This review is used for the next planning cycle and review.
Introduction
Weekly meetings are often used to coordinate efforts and review progress
Structure
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
Additional periodic meetings are often required to coordinate efforts with other
units (i.e., the systems group should meet with the user services group on a
regular basis)
The worst face-to-face meetings are those where everyone simply makes
announcements and disseminates information (that can be accomplished more
effectively electronically)
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT
MARKETING MANAGEMENT
RAGHAVENDRA.K.A
Asst. Professor
SJBIT