Marketing Compendium

For GD-PI Mentorship 2017

Compiled by Team MarQuity, MDI Gurgaon

 Marketing Concepts

MARKETING
Marketing is about identifying and meeting human and social needs. In simple terms, it is meeting needs
profitably.

Formal definition as per The American Marketing Association: Marketing is an art and science of choosing target
markets and getting, keeping and growing customers through creating, offering and freely exchanging products
and services of value with others.

When Google recognized people needed to more effectively and efficiently access
information on the internet, it created the powerful search engine we know of today.

Sony recognized the need for playing your own music on the go and addressed it by
launching the first small sized portable cassette player — Sony Walkman.

Jeff Bezos identified the need for people to shop from the convenience of their home
and addressed it by setting up Amazon.

Marketing V/S Selling

Selling Marketing
Focuses on the needs of the seller Focuses on the needs of the buyer

Company first manufactures the product and Company first determines customer’s needs and wants
persuades customer that the product fulfils and then decides out how to deliver a product to satisfy
his/her needs these wants

Management is sales volume oriented Management is profit oriented

Planning is long- run — oriented in today’s products

Planning is short-run — oriented in terms of
and terms of new products, tomorrow’s markets
today’s products and markets
and future growth

Emphasis is on the product Emphasis on consumer needs wants

Depends on marketing to generate leads Depends on sales to close leads

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What is marketed?
Marketers market the following 10 types of entities:

Goods
Physical products like Milk, Soap, Shirts, TVs, Phones, Heavy machines, Cars, Rockets, etc.

Services
Provided by Courier, Lawyers, Bankers, Barbers, Engineers, Doctors, Hospitality providers

Events
Like speeches, trade shows, performances, celebrations, sport events like Olympics, etc.

Experiences
Customized travel and holiday packages; establishments like Disney Magic Kingdom, etc.

Persons
Artists, Athletes, Musicians, High Profile lawyers, Financiers, CEOs and other professionals

Places
Cities, regions and countries compete to attract tourists and investors (“Incredible India”)

Properties
Commercial, residential spaces - real property; stocks, bonds, etc. - financial (intangible)

Organizations
Museums, performing arts, corporations and non-profits - to boost their public images

Information
Information gathered and distributed by the likes of Thomson Reuters, Gartner Reports

Ideas
Concepts and ideas are marketed; e.g.: VC pitches, Campaigns like “Don’t drink and drive”

These entities could be marketed in different ways to different target audiences. Choosing the best methods
forms the challenge for marketing managers

NEEDS, WANTS, DEMANDS & DESIRE

Needs
 Needs are basic human requirements
 It is state of felt deprivation for basic human requirements such as for air, food, water clothing and shelter.
Humans also have strong needs for recreation, education and entertainment
 Generally, the products which fall under the needs category of products do not require a push. Instead the
customer buys it themselves
Wants

I need to clean myself

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 Wants are need satisfiers. Needs become wants when directed to specific objects to satisfy the need
 Wants are shaped by society
E.g. want for food in India could be roti and the same want in the US could be for a sandwich
 Thus wants are not mandatory part of life. You DONT need a good smelling soap. But you will definitely use
it because it is your want

I want a soap that also smells good

Demands and Desires

 Demands are wants backed by consumer purchasing power i.e. wants for specific products backed by an
ability to pay for them
 Companies must measure not only how many people want their product but how many are willing and able
to buy it
 Desire is the basic difference between wants and demands. A customer may desire something but he may
not be able to fulfil it

Because of budget constraint my demand is Lux soap Types

If I had more money my desire would be Dove’s bathing bar
of
Needs
Needs are classified into 5 types based on how conscious and articulate consumers are. Let us take an example of
need for ‘buying a phone’ to illustrate the 5 types of needs.

Type of Need Characteristic of the Need Example

Stated Need Explicitly stated by consumer “I want an inexpensive smart phone”
Real Need The underlying utility the consumer ‘A phone whose operating cost over
needs, irrespective of what is stated lifetime, not just initial cost, is low”

Unstated Need Not stated, but expected to be present Good service, presence of accessories
(“hygiene” factors)
Delight Need Not stated or really expected, but would If the phone comes with external docks,
delight the consumer if provided additional warranty, expensive cases

Secret Need Not stated, but factors that would Admiration and envy from friends and
improve perception of the consumer, as peers, which would make the consumer
the owner of the product feel good about themselves

Focusing only on stated needs might not lead to required customer satisfaction. Some of these needs may not be
known to the consumers themselves and if the brand can help the customer with what they want by focussing on
all these needs, the marketing method would be greatly successful

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WHAT IS CONSUMER BEHAVIOUR?

Consumer behaviour is the study of how individuals, groups, and organizations SELECT, BUY, USE and DISPOSE
OFF goods, services, ideas, or experiences to satisfy their needs and wants.

A consumer’s buying behaviour is influenced by cultural, social and personal factors with cultural factors exerting
the broadest and deepest influence.

SEGMENTATION, TARGETING & POSITIONING

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Segmentation
It is the process of defining and subdividing a large homogenous market into clearly identifiable segments having
similar needs, wants, or demand characteristics i.e. dividing a whole into parts based on various criteria like
geography, demography, behaviour, gender, personality etc.

Why do we need segmentation?

Because we can’t satisfy everyone’s needs with the same product!

Identifying people based on their needs helped us find people with square heads who might need a square cap
across all age groups. People of the same age group or gender may or may not have the same needs.

Let’s take the example of sunglasses market and see one way of segmenting it on the basis of benefits sought:

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Targeting
 Targeting is the actual selection of the segment you want to serve. The target market is the group of people
or organizations whose needs the product is specifically designed to satisfy and are most likely to buy your
product
 Target market is select on the basis of segment attractiveness

Let us look at our previous example of segmentation and find which company targeted which segment:

A few other examples of segmentation and targeting:

1. GSKCH has segmented the consumers based on age and targeted each segment with specific products

GSK has chosen to target all segments because of the available resources. When the budget is limited you might
choose a single segment to target that is the most profitable.

2. HUL segments its customers into income groups and targets them with specific products

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Positioning
Positioning is the use of marketing to enable people to form an image of your product in their minds (relative to
other products).

Elements of positioning:

1. Target Audience: For whom the product is intended

2. Points of Parity (POP): Attributes similar to other products in the category. Points of parity are important
because customers expect basic offerings from a category. POPs are also often used to nullify the
advantage (POD) that the competitor might have over you. For example:
Apple introduced the fingerprint scanner to unlock device in the iPhone models. This was a POD
until Samsung and all other manufacturers used the same technology to make it into a POP, thus
nullifying Apple’s unique POD

3. Points of Difference (POD): Attributes that differentiates the products from others in the category. The
more the number of PODs the better the positioning. PODs should satisfy the following three criteria
a. It should be desired by the customer
b. It should be sustainable by the producer

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c. It should be different from the competitor’s offerings

BRAND PERSONALITIES
Brand Personality: Specific mix of human traits that we can attribute to a particular brand

The theory is that consumers are more likely to choose brands with which they can associate their own
personalities. Following are the 5 common traits of various brands:

Some marketers carefully orchestrate brand experiences to express brand personalities. For example, Axe, the
popular deodorant, caters to consumers who want others to view them as attractive and appealing.

These traits may vary depending on the socio-economic factors in different geographies with different people.

For example, in countries like Japan and Spain, traits like “peacefulness” and “passion” replace some traits like
“ruggedness” which might not be culturally relevant in those countries.

THE 4 Ps – MARKETING MIX

The marketing mix helps you define the marketing elements for creating a successful marketing strategy.

The model can be used to help you decide how to take a new offer to market by helping you define your marketing
options in terms of product, place, price and promotion. It can also be used to test your existing marketing
strategy to optimize the impact with the target market.

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Product
A product is anything (either be a tangible good or intangible service) that fulfils needs or wants of a customer.

It’s imperative that you have a clear grasp of exactly what your product is and what makes it unique before you
can successfully market it. Questions for the marketer:

 What does the customer want from the product/service? What needs does it satisfy?
 What features does it have to meet these needs?
 Are there any features you've missed out?
 Are you including costly features that the customer won't actually use?
 How and where will the customer use it?
 What does it look like? How will customers experience it?
 What size(s), colour(s), and so on, should it be?
 What is it to be called?
 How is it branded?
 How is it differentiated versus your competitors?

Products provide benefits, and it is for these benefits that they are bought by customers. These benefits may be
classified into three types:

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Place
Place is not just about the physical locations or distribution points for products. It encompasses the management
of a range of processes involved in bringing products to the end consumer.

Questions to decide the place for a product:

 Where is the customer most likely to buy?

 Which SKU (Stock Keeping Unit) to choose?
 Where do buyers look for your product or service?
 If they look in a store, what kind? A specialist boutique or in a supermarket, or both? Or online? Or direct, via
a catalogue?
 How can you access the right distribution channels?
 Do you need to use a sales force? Or attend trade fairs? Or make online submissions? Or send samples to
catalogue companies?
 What do your competitors do, and how can you learn from that and/or differentiate?

Go-to-Market Strategy
A go-to-market strategy (GTM strategy) is an action plan that specifies how a company will reach customers
and achieve competitive advantage. The purpose of a GTM strategy is to provide a blueprint for delivering a
product or service to the end customer, taking into account such factors as pricing and distribution. A GTM
strategy is somewhat similar to a business plan, although the latter is broader in scope and considers such
factors as funding.

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Price
Price is a mechanism to appropriate the value from the customer. Simply put, it’s what the customer pays for the
value he/she gets from the product.

 What is the value of the product or service to the buyer?

 Are there established price points for products or services in this area?
 Is the customer price sensitive? Will a small decrease in price gain you extra market share? Or will a small
increase be indiscernible, and so gain you extra profit margin?
 What discounts should be offered to trade customers, or to other specific segments of your market?
 How will your price compare with your competitors?
Price determination will impact profit margins, supply and demand, marketing strategies and market share. “Cost
is a fact; Price is a policy decision!”

Example: iPhone’s pricing decision for the next iPhone model, say iPhone 7, would be made:

Reference Price:
Price of iPhone 6
or Galaxy S7

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Consumer-Perceived Value (CPV)

CPV is the difference between the perceived customer evaluation of all the benefits and costs of the offering
and the perceived alternatives.

Customer-Perceived Value = Total Customer Benefit – Total Customer Cost

Total Customer Benefit is the perceived monetary value of the bundle of economic, functional and
psychological benefits customers expect from a given market offering because of the product, service, people
and image.

Total customer cost is the complete packet or fees a customer expects to pay in the researching, buying, obtaining
and maintaining of a given product or service including monetary, time, energy, and psychological costs.

Total
Product Services Personnel Image
Customer
Benefit Benefit Benefit Benefit
Customer- Benefit
perceived
value
Total
Monetary Energy Psychologi
Customer Time Cost
Cost Cost cal Cost
Cost

Can you think of the factors that you considered while deciding to buy your last smart phone?

Promotion
Promotion looks at the many ways marketing agencies disseminate relevant product information to
consumers and differentiate a particular product or service.

Promotion includes elements like: advertising, public relations, social media marketing, email marketing, search
engine marketing, video marketing and more. Promotion includes:

 Where and when can you get across your marketing messages to your target market?
 Will you reach your audience by advertising online, in the press, or on TV, or radio, or on billboards? By
using direct marketing mailshot? Through PR? On the Internet?
 When is the best time to promote? Is there seasonality in the market? Are there any wider environmental
issues that suggest or dictate the timing of your market launch, or the timing of subsequent promotions?
 How do your competitors do their promotions? And how does that influence your choice of promotional
activity?

Example of 4Ps
Product: Nivea’s Creams

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Product range starting

from Nivea Crème to
deodorants, skin care,
lotions, etc.

Push vs Pull Marketing

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Pull Push
Advertisements: Radio, TV, Print Ad, Online Sales promotion: Trade promotions - buy one get
one free
Consumer Promotion: 30% extra Pricing offers: Get 1000 Rs. Off on purchase above
Rs. 10000
PR & Publicity: Non-paid, online blogs, press Personal: Face to face sales push
releases, etc.
Events and Experiences: mall activations Direct to consumer: Tele marketing

7Ps EXTENDED MARKETING MIX

Apart from the above mentioned Ps of marketing, there are 3 other Ps which are mostly relevant in Services
Marketing. These additional 3Ps, along with the original ones, make up the Extended Mix.

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People
People are the most important element of any service or experience. Services tend to be produced and consumed
at the same moment, and aspects of the customer experience are altered to meet the 'individual needs' of the
person consuming it.

Customers buy from people they like, so the attitude, skills and appearance of all staff need to be first class. Some
ways in which people add value to an experience as part of the marketing mix are: training, personal selling and
customer service.

Most of us can think of a situation where the personal service offered by individuals has made or tainted
a tour, vacation or restaurant meal.

Process
For the purposes of the marketing mix, process is an element of service that sees the customer experiencing an
organization’s offering. It's best viewed as something that your customer participates in at different points in time.
Here are some examples to help your build a picture of marketing process, from the customer's point of view.

Processes are important to deliver a quality service. Services being intangible, processes become all the more
crucial to ensure standards are met with. Efficient process ensures that the service is perceived as being
dependable by the target segment.

Example: Going on a cruise - from the moment that you arrive at the dockside, you are greeted and
your baggage is taken to your room. You have two weeks of services from restaurants and evening
entertainment, to casinos and shopping. Finally, you arrive at your destination, and your baggage is
delivered to you. This is a highly focused marketing process

Physical Evidence
Physical evidence is the material part of a service. Strictly speaking there are no physical attributes to a service,
so a consumer tends to rely on material cues. There are many examples of physical evidence, including some of
the following:

 Packaging
 Internet/web pages
 Paperwork (such as invoices, tickets and dispatch notes)
 Brochures
 Furnishings
 Signage (such as those on aircraft and vehicles)
 Uniforms
 Business cards
 The building itself (such as prestigious offices or scenic headquarters)
 Mailboxes and many others

Some organizations depend heavily upon physical evidence as a means of marketing communications, for example
tourism attractions and resorts (e.g. Disney World), parcel and mail services (e.g. UPS trucks), and large banks and
insurance companies (e.g. Lloyds of London)

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Consider yourself in a hotel or a restaurant. Though the actual service might be food, the tangible
physical environment around it plays a major factor in your satisfaction. The environment has to be
ambient, the tables need to be clean and the cutlery needs to be inviting to eat, or else you will not be
fully satisfied.

PRODUCT v/s BRAND

A packet of chips is a product and Lay’s is a brand. Soap is a product and Dove is a brand

A brand sets a company’s products apart from competition. It’s the perception of the product in the minds of
the consumers. Brand is the company’s definition of what they have to offer. The Brand has a personality and
refers to the promise that the company makes to their customers.

Few differences between the two

 Companies Make Products and Consumers Make Brands

A product is made by a company and can be purchased by a consumer in exchange for money while brands are
built through consumer perceptions, expectations, and experiences with all products or services under a brand
umbrella

 Products Can Be Copied and Replaced but Brands Are Unique

A product can be copied by competitors anytime.

When Amazon launched the Kindle e-reader device, it didn’t take long
for competitors to come out with their own branded versions of an e-
reader product. However, each brand had a different consumer
perception.

Similarly, a product can be replaced with a competitor’s product if consumers believe the two products offer the
same features and benefits. Products with low emotional involvement are typically easily replaced.

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Do you really care what brand of macaroni you buy?

 Products Can Become Obsolete but Brands Can Be Timeless

Ambassador car is obsolete but the brand lives on

The Enfield rifle is obsolete but the brand Royal Enfield is well known for
its motorcycles

PRODUCT MIX – LENGTH, DEPTH

Product Mix
The complete set of all products that a company offers to the market is called as the Product mix of the company.
For example, the below picture shows the complete product mix of Proctor and Gamble:

Product Line
A product line is a group of products within the product mix that are closely related,
either because they function in a similar manner, are sold to the same customer groups,
are marketed through the same types of outlets or fall within given price ranges.

Example: For HUL Soaps is one product line.

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Product Line Breadth

The breadth (or width) of the product mix consists of all the product lines that the company has to offer to its
customers. If we take P&G, for example, the breadth of the major product lines would consist of hair products,
oral care, soaps and detergents, baby care, and personal care. This means that the product mix breadth is five.

Product Line Depth

The number of products in a product line refers to its product line depth. The depth of product blend refers to
how many variants are obtainable of each product in the line. For example, since Lux comes in 4 type of scents
(exotic flower petals & almond oil, jojoba oil, and milk cream, fruit extracts and honey and sandal saffron in milk
cream), it contains a depth of 4.

Length of The Product Mix

It refers to the whole number of items in the mix. For example, ABC Company may have two product lines and
five brands within each product line. Thus, ABC's product mix length would be ten.

Product Mix Consistency

It pertains to how closely related product lines are to one another------in terms of use, production and distribution.
A company's product mix may be consistent in distribution but vastly different in use. For example, a small
company may sell its health bars and health magazine in retail stores. However, one product is edible and the
other is not.

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PRODUCT LIFE CYCLE

PLC describes the various stages that a product goes through from the time it was initially thought of until it is
finally removed from the market.

Product Development Stage: This is the stage where the product is conceived and developed. This stage
is characterized by high R&D costs and losses in the form of manufacturing costs.

Introduction Stage: This is the stage where products are introduced to the market. This stage is
characterised by high marketing costs since the company invests a lot in creating awareness for the
product. Sales growth is slow in this stage due to which the company experiences huge losses during this
period. Due to the inability to continuously sustain losses, the failure at this stage is the highest.

Oculus Rift is a virtual reality headset developed and manufactured by Oculus

VR. It has integrated video, audio and sensor systems that create a virtual 3D space
in front of the eyes, when the user wears it over their head. It is currently spending
a lot on marketing to create awareness and create traction.

Growth Stage: This stage is marked by a sharp increase in sales and the product becomes profitable in
this stage. Company spends on marketing to strengthen market share and capture market share. This

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stage also experiences competition from new entrants who now see value in entering the segment. This
stage also experiences the highest profits.

Tesla electric cars are currently in the growth stage

Blue Ray Players: With advanced technology delivering the very best viewing
experience, Blue Ray equipment is currently enjoying the steady increase in sales
that’s typical of the Growth Stage

Maturity Stage: This stage sees stagnation in profits and the sales after growing for a certain period start
going down. Companies often spend a lot on innovation and promotions to sustain this stage as long as
possible. This is also a stage that is characterised by strong competition since the segment is now an
established one. A product might be in this stage for months or for decades.

Smart phones are currently in this stage coming out with innovative solutions on a
regular basis to sustain the maturity stage

Decline Stage: This is the stage when players start moving out of the segment because it has been
replaced by better and more lucrative alternatives. Companies reduce their marketing spends and do
not invest in innovations and the product sells by itself. The sales in this stage continuously decrease
until the product goes obsolete

Desktop computers are currently in the decline stage with a decreasing market
every year and little to no innovation

MARKETPLACE VS INVENTORY MODEL

Marketplace Model

Marketplace model of e-commerce refers to providing an information technology platform by an e-commerce

entity on a digital and electronic network to act as a facilitator between buyer and seller.

Marketplaces are platforms that enable a large, fragmented base of buyers and sellers to discover price and
transact with one another in an environment that is efficient, transparent and trusted.

The main feature of the market place model is that the e-commerce firm like Flipkart, Snapdeal, Amazon etc. will
be providing a platform for customers to interact with a selected number of sellers. When an individual is
purchasing a product from Flipkart, he will be actually buying it from a registered seller in Flipkart. The product is
not directly sold by Flipkart. Here, Flipkart is just a website platform where a consumer meets a seller. Inventory,
stock management, logistics etc. are not supposed to be actively done by the ecommerce firm.

Inventory Model

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Inventory model of ecommerce means an ecommerce activity where inventory of goods and services is owned by
e-commerce entity and is sold to the consumers directly.

The main feature of inventory model is that the customer buys the product from the ecommerce firm. He manages
an inventory (stock of products), interfaces with customers, runs logistics and involves in every aspects of the
business.

Alibaba of China is following the inventory model.

BRAND EXTENSION
Brand extensions fall into two general categories:

Disadvantages of brand extension:

 Brand dilution: It occurs when consumers start thinking less of the brand. If a firm launches extensions
consumers find inappropriate, they may question the brand integrity or become confused or even
frustrated.
 Brand confusion: Line extensions may cause the brand name to be less strongly identified with one product
E.g. By getting into powdered milk, soups and beverages, Cadbury ran the risk of losing its more specific
meaning as a chocolate and candy brand
 Damage to parent brand: Product failures can sometimes impact brand equity if the extension is seen as
very similar to the parent brand
E.g. Criticism for Audi 5000 also spilled over to the 4000 model

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 Cannibalization: Consumers may switch to extensions from parent-brand offerings, hence cannibalizing the
brand sales

Coca Cola introduced Minute Maid to compete with its own soft drinks business for 'throat share'.
Wheel and Surf Excel are detergent powder brands from HUL. These companies target different
segments when they introduce these products, but cannibalization might happen when consumers
buy across segments.

BCG MATRIX
The BCG matrix uses the criteria of market growth rate and market share to analyse business units and allocate
financial resources. While originally developed as a model for resource allocation among the various business
units in a corporation, the growth-share matrix also can be used for resource allocation among products within a
single business unit. This helps the company allocate resources and is used as an analytical tool in brand
marketing, product management, strategic management, and portfolio analysis.

BCG matrix has four cells, with the horizontal axis representing relative market share and the vertical axis denoting
market growth rate. The mid-point of relative market share is set at 1.0.

This framework assumes:

1. An increase in relative market share will result in an increase in the generation of cash. This assumption often is true
because of the experience curve; increased relative market share implies that the firm is moving forward on the
experience curve relative to its competitors, thus developing a cost advantage i.e. as a result of 'economies of scale'
earnings will grow faster the higher the share.
2. A growing market requires investment in assets to increase capacity and therefore results in the
consumption of cash. Thus the position of a business on the growth-share matrix provides an indication of its
cash generation and its cash consumption.

It was reasoned that the cash required by rapidly growing business units could be obtained from the firm's other
business units that were at a more mature stage and generating significant cash. By investing to become the

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market share leader in a rapidly growing market, the business unit could move along the experience curve and
develop a cost advantage. From this reasoning, the BCG Growth-Share Matrix was born.

The four categories are:

1. Dogs (Low market share, Low growth prospects)
 Dogs have low market share and a low growth rate and thus neither generate nor consume a large
amount of cash
 They are cash traps because of the money tied up in a business that has little potential
 Such businesses are candidates for divestiture
2. Question marks (Low market share, High growth prospects)
 Question marks are growing rapidly and thus consume large amounts of cash, but because they have low
market shares they do not generate much cash. The result is a large net cash consumption
 They have the potential to gain market share and become a star, and eventually a cash cow when the
market growth slows
 If the question mark does not succeed in becoming the market leader, then after perhaps years of cash
consumption it will degenerate into a dog when the market growth declines
 Question marks must be analysed carefully in order to determine whether they are worth the investment
required to grow market share
 Companies are advised to invest in question marks if the product has potential for growth, or to sell if it
does not.

3. Stars (High market share, High growth prospects)

 The business units or products that have the best market share and generate the most cash are
considered stars
 Monopolies and first-to-market products are frequently termed stars
 However, because of their high growth rate, stars also consume large amounts of cash. This generally
results in the same amount of money coming in that is going out
 Stars can eventually become cash cows if they sustain their success until a time when the market growth
rate declines
 Companies are advised to invest in stars.

4. Cash Cows (High market share, Low growth prospects)

 Cash cows are the leaders in the marketplace and generate more cash than they consume
 Cash cows provide the cash required to turn question marks into market leaders, to cover the
administrative costs of the company, to fund research and development, to service the corporate debt,
and to pay dividends to shareholders
 Companies are advised to invest in cash cows to maintain the current level of productivity, or to "milk"
the gains passively

Under the growth-share matrix model, as an industry matures and its growth rate declines, a business unit will
become either a cash cow or a dog, determined solely by whether it had become the market leader during the
period of high growth.

Disadvantages:

 The model uses only two dimensions (i.e. growth and share) to assess competitive position, others are ignored

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 More focus on balancing cash flows rather than other interdependencies

 More emphasis on cost leadership rather than differentiation as a source of competitive advantage
 A high market share does not necessarily lead to profitability at all times
 Assumes that each business unit is independent of the others. In some cases, a business unit that is a "dog"
may be helping other business units gain a competitive advantage

Below is Nestle’s current BCG Matrix for a selection of their brands. For detailed explanation refer this

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ANSOFF MATRIX
The Ansoff Growth Matrix is a tool that helps business decide their product and market growth strategy. The
purpose of this matrix is to help managers consider how to grow their business through existing or new products
or in existing or new markets. The matrix shows four strategies you can use to grow. It also helps you analyse
the risks associated with each one. The idea is that, each time you move into a new quadrant (horizontally or
vertically), risk increases.

Ansoff's matrix provides four different growth strategies:

Market Penetration

 This involves increasing market share within existing market segments. This can be achieved by selling more
products/services to established customers or by finding new customers within existing markets.
 In Market Penetration, the risk involved in its marketing strategies is usually the least since the products are
already familiar to the consumers and so is the established market.
 Another way in which market penetration can be increased is by coming up with various initiatives that will
encourage increased usage of the product.

A good example is the usage of toothpaste. Research has shown that the toothbrush head influences
the amount of toothpaste that one will use. Thus if the head of the toothbrush is bigger it will mean
that more toothpaste will be used thus promoting the usage of the toothpaste and eventually leading
to more purchase of the toothpaste

Product Development

 This involves developing new products for existing markets. Product development involves thinking about
how new products can meet customer needs more closely and outperform the products of competitors
 Product development can differ from the introduction of a new product in an existing market or it can involve
the modification of an existing product

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 By modifying the product one would probably change its outlook or presentation, increase the
products performance or quality. By doing so, it can appeal more to the already existing market
 It is slightly riskier, because you're introducing a new product into your existing market

Market Development

 This strategy entails finding new markets for existing products. Market research and further segmentation of
markets helps to identify new groups of customers
 This strategy assumes that the existing markets have been fully exploited thus the need to venture into new
markets
 There are various approaches to this strategy, which include: New geographical markets, new distribution
channels, new product packaging, and different pricing policies

Diversification

 This involves moving new products into new markets at the same time
 It is the riskiest strategy among the others as it involves two unknowns, new products being created and the
business does not know the development problems that may occur in the process. Additionally, you're
introducing a new, unproven product into an entirely new market that you may not fully understand
 There are two types of diversification
- Related diversification: This means that the business remains in the same industry in which it is
familiar with.

A cake manufacturer diversifies into a fresh juice manufacturer. This diversification is in the same
industry which is the food industry

- Unrelated diversification: In this, there are usually no previous industry relations or market
experiences. One can diversify from a food industry to a mechanical industry for instance

Richard Branson took advantage of the virgin brand and diversified into various fields such as
entertainment, air and rail travel foods etc.

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Below is Ansoff Matrix applied to McDonald’s

BUSINESS MODELS
B2B Model (Business 2 Business)
It is a type of commerce transaction that exists between businesses, such as those involving a manufacturer and
wholesaler, or a wholesaler and a retailer. Business to business refers to business that is conducted between
companies, rather than between a company and individual consumers. For instance, the tires, batteries,
electronics, hoses and door locks may be manufactured elsewhere and sold directly to the automobile
manufacturer.

B2C Model (Business 2 Customer)

Business or transactions conducted directly between a company and consumers who are the end-users of its
products or services. While most companies that sell directly to consumers can be referred to as B2C companies,
the term became immensely popular during the dotcom boom of the late 1990s, when it was used mainly to refer
to online retailers, as well as other companies that sold products and services to consumers through the Internet.

C2C Model (Customer 2 Customer)

A type of business model that facilitates interaction between customers. Customer to customer businesses
provides individuals with a place to converse, exchange and interact with other people. Many C2C businesses
have online operations. Online auctions and classifieds such as Ebay and Craig's List are examples of very
successful customer to customer business models. These sites don't look to directly sell goods to their members,
instead the customers are exchanging with other customers.

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PORTER’S FIVE FORCES

The five forces model looks at five specific factors that help determine whether or not a business can be profitable,
based on other businesses in the industry.

"Understanding the competitive forces, and their underlying causes, reveals the roots of an industry's current
profitability while providing a framework for anticipating and influencing competition (and profitability) over time"

The five forces are:

Supplier power
 An assessment of how easy it is for suppliers to drive up prices.
 This is driven by the:
- Number of suppliers of each essential input
- Uniqueness of their product or service
- Relative size and strength of the supplier
- Cost of switching from one supplier to another

In the jewellery sector, diamond suppliers often hold the power and can set prices, withhold supply and
restrict sales

Buyer power
 An assessment of how easy it is for buyers to drive prices down.
 This is driven by the:
- Number of buyers in the market
- Importance of each individual buyer to the organization
- Cost to the buyer of switching from one supplier to another
 If a business has just a few powerful buyers, they are often able to dictate terms

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An example is the grocery sector since supermarkets tend to retain power over suppliers due to volume and
price of contracts. They dictate terms, set prices and can possibly end agreements at any time


Competitive rivalry
 The main driver is the number and capability of competitors in the market.
 Many competitors, offering undifferentiated products and services, will reduce market attractiveness
 These include Estate agents, web design and office stationary. Many competitors often buy on price.

Threat of substitution
 Where close substitute products exist in a market, it increases the likelihood of customers switching to
alternatives in response to price increases.
 This reduces both the power of suppliers and the attractiveness of the market.
 The substitute to all services is DIY. 

Hairdressing or writing a will. Focus is on expertise, customer service or added value


Threat of new entry
 Profitable markets attract new entrants, which erodes profitability.
 Unless incumbents have strong and durable barriers to entry, for example, patents, economies of scale,
capital requirements or government policies, then profitability will decline to a competitive rate


An example is web design, as there are independents in every location. This is an easy market to enter with few
requirements, other than skills, initiative and relevant hardware and software. This does mean there are many
new entrants

Porter’s 5 Forces Analysis for The Two-Wheeler Automotive Industry in India
1. Rivalry Among Existing Competitors: High

There is a lot of competition in the 2 wheeler industry with each competitor being an established company rolling
out competing products on a continuous basis. Companies have to constantly innovate to make profits and
distinguish themselves from the other brands. In terms of market concentration, data shows that the market has
a monopolistic nature with Hero Motor Corp and Honda accounting for 65% market share. There is a lot of
competition when it comes down to individual product lines especially in the lower cc segments with Hero
Splendor and Honda active challenged by Suzuki Access and TVS Moped.
The rivalry is further heightened by the fact that switching cost for a customer is very low as most customers can
ride all types of 2 wheelers in a particular segment.

2. Threat of Substitutes: Low

The threat of substitutes is mild in the case of 2 wheeler industry as no alternative mode of transportation can
provide the same or similar level of convenience and comfort that is provided by two wheelers in a crowed and
busy country like India. A personal vehicle is important in India and considering the fuel efficiency and price
point of two wheelers, the threat of substitute is really low.

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3. Threat of New Entrants: Low

It is not very easy to enter the automobile industry due to the heavy investments and the influence of strong
brands on customers. The market is comprised of big brands who have won customer loyalty over time with not
just their two wheelers but quality products across the automobile industry with prime examples being Honda
and Suzuki. The threat of a new entrant is low in this market with well-established players. This is the prime
reason that new players have seldom entered the market and even when they did, there was very little share of
the market in store for them.

4. Bargaining Power of Buyers: High

Buyers usually buy a 2 wheeler based on its fuel efficiency, price, design and social status. Most of the
innovation in this field is customer centric since the customer can very easily switch to a competitor’s product.
Honda has been the forerunner in fuel efficient engines and has also struck the right chord with its well-
balanced design. It will need to continue doing that with the consumers in mind to keep being a leader in this
segment.

5. Bargaining Power of Suppliers: Low

The number of players in this market is few as compared to the number of suppliers. These suppliers heavily
depend on a few or a single company for supplying their products. This means that suppliers have very little say
and influence in the automobile industry.

FMCG DISTRIBUTION NETWORK

The typical chain for a grocery store FMCG product will be:

 Manufacturing plant ---> Company Ware House ---> Regional Ware House ---> Regional Stockist ---> Super
Stockist ---> Stockist ---> Distributor ---> Retailer
 Main Godown ---> C&F Agents/Super Stockist ---> Distributors as per the territories ---> Wholesalers/Retailers

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BRAND POSITIONING – MONITORING COMPETITION

Brand positioning requires an organizational commitment. It is not something that is constantly changed. At the
same time, it is important to regularly monitor the desirability, deliverability and differentiability of the brand’s
POPs and PODs in the marketplace to understand how the positioning might have to evolve or rarely replaced.
When analyzing potential threats posed to the brand positioning by competitors three high level variables are
useful:

BRAND EQUITY
Brand Equity is the value premium that a company realizes from a product with a recognizable name as compared
to its generic equivalent. Companies can create brand equity for their products by making them memorable, easily
recognizable and superior in quality and reliability. Mass marketing campaigns can also help to create brand
equity.

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The additional money that consumers are willing to spend to buy Coca Cola rather than the store
brand of drink is an example of brand equity.

COMPETITIVE ADVANTAGE
The theory was proposed by Michael Porter in 1985. Competitive advantage occurs when an organization acquires
or develops an attribute or a combination of attributes that allow it to outperform its competitors. It is the ability
to perform at a higher level than others in the same market or industry. There are four strategies that can be
followed to achieve a competitive advantage.

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DIGITAL MARKETING
Digital marketing is an umbrella term for the marketing of products or services using digital technologies, mainly
on the Internet, but also including mobile phones, display advertising, and any other digital medium that may or
may not require the internet.

A few of the major activities of digital marketing are as follows:

 Search Engine Optimization (SEO): The process of affecting the visibility of a website or webpage’s in a search
engine’s organic results.

If you sell burgers online, the success of your business will largely depend on how quickly can one locate
the link to your website when they google ‘burgers’ or related terms.

 Search Engine Marketing: This involves the promotion of websites by increasing their visibility in search
engine results pages (SERPs) primarily through paid advertising. Advertisers are charged ny a pay per click
(PPC) model where they pay a pre decided amount every time someone clicks on the advertisement.

The ads you see on top of your search results when searching for something on Google

The SPACE (refer figure above) defines the type of digital marketing. Some examples of space are:

 Search results from engines like Google and Bing

 YouTube
 Websites especially ecommerce website
 Social Media
 Gaming platforms like Xbox and PSP

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EXPERIENTIAL MARKETING
Experiential marketing is a grassroots marketing tactic that not only communicates features and benefits but also
connects a product or services with unique and interesting experiences. The idea is not to sell something but to
demonstrate how a brand can enrich a customer’s life. It encourages two-way interaction and direct physical
immersion into a brand.

Compared to mass media campaigns, experiential events tend to communicate on a much more personal level,
generate a deeper level of emotional engagement, and result in better conversion rates, all at relatively low cost.
Experiential marketing activities can range from high profile invite only events to tasters at a local farmer's market.

Coca-Cola is famous for conducting such experiential events through various

campaigns like the one on friendship day:

Lipton found a creative way to show that its iced tea cools you down. See the ad
here
Experiential marketing builds customer relationships for the long term. It can be used to:

 Build relationships
 Raise awareness
 Increase loyalty
 Encourage product trial
 Create memories
 Stimulate positive word of mouth
 Verify the target audience

It is also to be noted that experiential marketing generally cannot be used for brand awareness on a large scale
or communicate with people who prefer less intrusive marketing messages.

SOCIAL MEDIA MARKETING

Social media marketing refers to the process of gaining website traffic or attention through social media sites like
Facebook, Twitter, Instagram etc. Social media marketing programs usually centre on efforts to create content
that attracts attention and encourages readers to share it with their social networks. This form of marketing is
driven by word- of-mouth, meaning it results in earned media rather than paid media.

Through social networking sites, companies can interact with individual followers. This personal interaction can
instil a feeling of loyalty into followers and potential customers. Also, by choosing whom to follow on these sites,
products can reach a very narrow target audience achieving higher return on marketing investments.

Unilever owned Sunsilk launched a one-of-its-kind campaign called ‘The Straight Hair
Experiment’ during the season of winter chills and dry frizzy hair. Sunsilk involved bloggers and
its Facebook community with the idea of sourcing crazy hair straightening ideas with a blogging
contest and had integrated the campaign with Facebook and Twitter as well

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GUERRILLA MARKETING
Guerrilla Marketing is an advertising strategy that focuses on low-cost unconventional marketing tactics that yield
maximum results. The original term was coined by Jay Conrad Levinson in his 1984 book ‘Guerrilla Advertising’.
The term guerrilla marketing was inspired by guerrilla warfare which is a form of irregular warfare and relates to
the small tactic strategies used by armed civilians. Many of these tactics includes ambushes, sabotage, raids and
elements of surprise. Much like guerrilla warfare, guerrilla marketing uses the same sort of tactics in the marketing
industry. Guerrilla marketing is about taking the consumer by surprise, make an indelible impression and create
copious amounts of social buzz. Guerrilla marketing is said to make a far more valuable impression with consumers
in comparison to more traditional forms of advertising and marketing. This is due to the fact that most guerrilla
marketing campaigns aim to strike the consumer at a more personal and memorable level. Guerrilla marketing
originally was a concept aimed towards small businesses with a small budget, but this didn’t stop big businesses
from adopting the same ideology. Larger companies have been using unconventional marketing to complement
their advertising campaigns. Some marketers argue that when big businesses utilize guerrilla marketing tactics, it
isn’t true guerrilla. Bigger companies have much larger budgets and their brands are usually already well
established

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SURROGATE MARKETING
Surrogate marketing, uses the marketing campaign of a brand or product, to convey a message which is related
to another brand or product. This is done due to various reasons. Primary reason is to circumvent the ban on
advertising for a particular type of product(s).
For example, advertising for alcoholic beverages and cigarettes are banned in India. However, such brands
advertise through other products like mineral water or music CDS

Surrogate marketing may also be used in cases where the use of a product is linked to a service. In such cases, the
service is advertised widely, and the service provider uses only the product in question.

For Example, Custom Fitness Tracker Apps of brands like Nike and Under Armour may be advertised. But,
without a Nike Shoe or a UA pad, the app can’t function anyway. So, it would be surrogate marketing for the
products through the app service
Surrogate advertising is widely prevalent in India, due to bans imposed on advertising alcoholic and tobacco
products. This is how marketing campaigns of companies changed after ban in India:

Trends before Ban in advertising

 “Wills” a cigarette brand of ITC, used to sponsor the Indian Cricket Team/Matches
 Tennis Tournaments were sponsored by “Gold Flake”, another cigarette brand
 “Manikchand”, manufacturers of ghutka, sponsored the Filmfare Awards for a considerably number of years

Advertising post imposition of Ban

However, after the imposition of a ban on advertising for liquor/tobacco and related products, brands are
increasingly using surrogates for advertising. Here are a few examples

BRAND SURROGATE
Seagrams Music
McDowells Water and Soda
Bagpiper Water, Soda, and Music
Red and White Bravery Awards
Bacardi Music
Kingfisher Water and Calendars
Wills Lifestyle Apparels, Accessories
Smirnoff, Aristrocrat Apple Juice

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FADS, TRENDS AND MEGATRENDS

Fad is unpredictable, short-lived and without social economic and political significance. A company can cash in on
fads but getting it right requires luck and right timing.

Pet Rock – A rock was the ideal pet. The fad lasted 6 months and the
owner became a millionaire
Other examples - Crocs, Pokemon Go gifts and toys, YOLO

Trend is a direction of sequence of events with more momentum, predictability and durability as compared to a
fad.

Blackberry Messenger (BBM), KBC, Fitness Bands

Megatrend is a large social, economic, political, and technological change that is slow to form, and once in place,
influences us for some time – between 7 and 10 years or longer.

Facebook, Whatsapp, E-commerce

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