MARKETING

MODULE 2

By mPower, the Marketing Interest Group of IIMK

The definition of Marketing that many marketers learn as they start out in the industry
is:

Putting the right product in the right place, at the right price, at the right time.

MARKETING MIX

The term "marketing-mix," was first coined by Neil Borden, the president of the
American Marketing Association in 1953. It is still used today to make important
decisions that lead to the execution of a marketing plan. The various approaches that
are used have evolved over time, especially with the increased use of technology.
The marketing mix applies to both goods and services. For goods, it is often referred
to as 4 Ps which includes product, prize, place, promotion. However, for services it is
referred to as 7 Ps which includes the 4 Ps of goods along with people, process and
physical evidence.
Marketing Mix for Goods

1. Product
A product is seen as an item that satisfies what a consumer needs or wants. It is a
tangible good or an intangible service. There is a value that needs to be created via
the product for the consumers. A simple needle is an example of a product that adds
the value of sewing to the consumer. A product can add value in multiple ways for
different target consumers. A less obvious but ubiquitous mass produced service is a
computer operating system. Here are some examples of the product decisions to be
made:
Variety

Design

Brand name

Features

Quality

Safety

Packaging

Services

2. Price
Pricing strategy is important for companies who wish to achieve success by finding
the price point where they can maximize sales and profits. Companies may use a
variety of pricing strategies, depending on their own unique marketing goals and
objectives. Some of the considerations to be made include:

List price

Discounts

Allowance

Payment period

Credit terms
 Some of the pricing strategies are as follows:
1) Premium Pricing: This strategy establishes a price higher than the
competitors. It's a strategy that can be effectively used when there is
something unique about the product or when the product is first to market and
the business has a distinct competitive advantage
2) Penetration Pricing: A penetration pricing strategy is designed to capture
market share by entering the market with a low price relative to the
competition to attract buyers. The idea is that the business will be able to raise
awareness and get people to try the product
3) Economy Pricing: Economy pricing is a familiar pricing strategy for
organizations that include Wal-Mart, whose brand is based on this strategy.
Companies take a very basic, low-cost approach to marketing; nothing fancy,
just the bare minimum to keep prices low and attract a specific segment of the
market that is very price sensitive
4) Price Skimming: Businesses that have a significant competitive advantage
can enter the market with a price skimming strategy designed to gain
maximum revenue advantage before other competitors begin offering similar
products or product alternatives
5) Psychological Pricing: Psychological pricing strategy is commonly used by
marketers in the prices they establish for their products. For instance, Rs99 is
psychologically "less" in the minds of consumers than Rs100. It's a minor
distinction that can make a big difference

3. Place (Distribution)
Place is the point where products are made available to customers. A business has
to decide on the most cost-effective way to make their products easily available to
customers. This involves selecting the best channel of distribution. The following
decisions have to be made:

Channels

Coverage
 Assortments

Locations

Inventory

Transportation

Logistics

Developing new or improved channels of distribution can increase sales and allow a
firm to grow. Potential methods of distribution are as follows:

1) Retailers: Persuading shops to stock products means customers can buy items

locally. However, using a middle man means lower profit margins for the producer

2) Producers can opt to distribute using a wholesaler who buys in bulk and
resells smaller quantities to retailers or consumers. This again means lower
profit margins for the manufacturer.
3) Telesales and mail order: Direct communication allows a business to get
products to customers without using a high street retailer. This is an example
of direct selling.
4) Internet selling or e-commerce: Online selling is an increasingly popular
method of distribution and allows small firms a low cost method of marketing
their products overseas. A business website can be both a method of
distribution and promotion

4. Promotion
Promotion refers to the methods used by a business to make customers aware of its
product. Advertising is just one of the means a business can use to create publicity.
Businesses create an overall promotional mix by putting together a combination of
the following strategies:
 Advertising: Where a business pays for messages about itself in mass media
such as television or newspapers. Advertising is non-personal and is also called
above-the- line promotion. Advertising can be categorised into informative
advertising (telling consumers about a product on TV or radio), persuasive
advertising (aimed at our emotions and trying to get us to buy their product) and
corporate advertising (promoting the entire company rather than specific
products. Disney is one such firm that employs corporate advertising)

Sales promotions: which encourage customers to buy now rather than later. For
example, 'Buy One Get One Free', point of sale displays, 2-for-1 offers, free gifts,
samples, coupons or competitions. Sales promotions can be divided into two
categories: into the pipeline promotions (aimed at wholesalers) and out of the
pipeline promotions (aimed at customers)

Personal selling: using face-to-face communication, eg. employing a sales

person or agent to make direct contact with customers

Direct marketing: takes place when firms make contact with individual consumers
using tactics such as junk mail shots and weekly special offer mails.

There is no one right promotional mix for all firms. The combination of promotional
elements selected takes into account the size of the market and available resources.
Large businesses have the resources to use national advertising. Small firms with
limited resources and a local market may instead opt for leaflet drops to promote their
activities.

Public Relations (PR) is a promotional technique used to gain media coverage. It is

free and is generated through events, activities or news-worthy stories. Having
celebrities opening a new store is a common PR activity, as is supporting a charity or
community venture which generates positive publicity for an organization.
Marketing Mix for Services
The service marketing mix is also known as an extended marketing mix and is an
integral part of a service blueprint design. The service marketing mix consists of 7 Ps
as compared to the 4 Ps of a product marketing mix. Simply said, the service
marketing mix assumes the service as a product itself. However it adds 3 more Ps
which are required for optimum service delivery. The extended service marketing mix
places 3 further Ps which include People, Process and Physical evidence. All of
these factors are necessary for optimum service delivery.

People
People are a defining factor in a service delivery process, since a service is
inseparable from the person providing it. Thus, a restaurant is known as much for its
food as for the service provided by its staff. The same is true of banks and
department stores. Consequently, customer service training for staff has become a
top priority for many organizations today.

Process
The process of service delivery is crucial since it ensures that the same standard of
service is repeatedly delivered to the customers. Therefore, most companies have a
service blue print which provides the details of the service delivery process, often
going down to even defining the service script and the greeting phrases to be used
by the service staff.

Physical Evidence
Since services are intangible in nature most service providers strive to incorporate
certain tangible elements into their offering to enhance customer experience. Thus,
there are hair salons that have well designed waiting areas often with magazines and
plush sofas for patrons to read and relax while they await their turn. Similarly,
restaurants invest heavily in their interior design and decorations to offer a tangible
and unique experience to their guests.
ANSOFF MATRIX

To portray alternative corporate growth strategies, Igor Ansoff presented a

matrix that focused on the firm's present and potential products and markets
(customers). By considering ways to grow via existing products and new products,
and in existing markets and new markets, there are four possible product-market
combinations. Ansoff's matrix is shown below:

Market Penetration:
The firm seeks to achieve growth with existing products in their current market
segments, aiming to increase its market share. The market penetration strategy is the
least risky since it leverages many of the firm's existing resources and capabilities. In
a growing market, simply maintaining market share will result in growth, and there
may exist opportunities to increase market share if competitors reach capacity limits.
However, market penetration has limits, and once the market approaches saturation
another strategy must be pursued if the firm is to continue to grow.
Market Development
The firm seeks growth by targeting its existing products to new market segments.
Market development options include the pursuit of additional market segments or
geographical regions. The development of new markets for the product may be a
good strategy if the firm's core competencies are related more to the specific product
than to its experience with a specific market segment. Because the firm is expanding
into a new market, a market development strategy typically has more risk than a
market penetration strategy.

Product Development
The firm develops new products targeted to its existing market segments. A product
development strategy may be appropriate if the firm's strengths are related to its
specific customers rather than to the specific product itself. In this situation, it can
leverage its strengths by developing a new product targeted to its existing customers.
Similar to the case of new market development, new product development carries
more risk than simply attempting to increase market share.

Diversification
The firm grows by diversifying into new businesses by developing new products
for new markets. Diversification is the most risky of the four growth strategies
since it requires both product and market development and may be outside the
core competencies of the firm. In fact, this quadrant of the matrix has been
referred to by some as the "suicide cell". However, diversification may be a
reasonable choice if the high risk is compensated by the chance of a high rate of
return. Other advantages of diversification include the potential to gain a foothold
in an attractive industry and the reduction of overall business portfolio risk.
 Assignment:2
Question 1
Pick up one of the ongoing marketing campaigns which have caught your interest.
Analyze it critically. In your analysis make sure you cover aspects such as the
current market scenario, demand for the product, competitors, salient points of the
campaign etc.
Question 2
Many marketing gurus are of the opinion that the modern consumer is a beast of a
different breed. They are informed, educated and demand innovation and quality from
all their purchases. Social media and online discussion platforms ensure that there
are no secrets when it comes to product performance.
In this context, is it justified for companies to invest a substantial part of their
resources into marketing and advertising activities? Wouldnt it be a more prudent
move to invest their time and resources in product development and other R&D
activities which would give them a tangible upper-hand over competitors? Justify your
answer with clear reasons and examples.
Question 3
Brand image is made over decades and is one of the most valued asset of any
company. We observe a change in brand image and the associated marketing
campaign of multiple products as time goes by. Choose one product and explain
how its marketing and advertising campaigns have evolved over the years. Is there a
change in the brand image which you observe which changed with time?
A few sample products you can take up are (this is only indicative, you may use
any other suitable example as you see fit):
1. Lifebuoy Soap
2. Marlboro Cigarette
3. Titan Watches
4. Dettol
5. Diary Milk Chocolate
Question 4
Negative Publicity is an oxymoron Do you agree to this statement? Justify your
response in light of some of the negative campaigns which some firms initiated or
were subjected to.
Question 5
(All characters and conversations depicted in this question are
entirely fictitious. Any similarity to actual events or persons, living or dead, is
purely coincidental)
Sravanthi: 90% of world markets are business to business.
Mukta: But global companies such as P&G, Unilever, Colgate-Palmolive and many
others focus so much on the business to consumer market.
Sravanthi: I know. It seems odd. Why would anyone want to focus on the smaller
piece of the pie?
Think about Muktas statement. Do you think she is missing a point? What would
be your response to the question which Sravanthi raised?