MBA (IT) Program: Project Appraisal

Assignment No: 1

Submitted by: Muhammad Suleman Hasib Registration No: 1452-411012

Submitted to: Saud Rauf

Q. No. 1: Describe Formulation and assessment of marketing concepts? The formulation of marketing concept is determined by external and internal conditions:

External Conditions Society, value system, tradition, business situation, environment, market analysis (segments)

Internal Conditions Business philosophy, objectives, strategies, means, strategic position, firm potential

The marketing concept has a strategic and an operative dimension; it comprises marketing strategies as well as the means of their implementation. The marketing strategy is determined by the strategic objectives, as reflected in the overall business philosophy, being understood as a set of basic principles governing business conduct. In small and medium-sized enterprises, unlike in large ones, the business philosophy is dominated by the personal values and attitudes of the entrepreneur. 1. Marketing Objectives They are a part of the hierarchically structured business principles and objectives of a firm, which are determined by its strategic orientation. Basically, two strategic orientations prevail, which may be characterized as innovative and conservative. Innovative orientation aims at introducing new products or developing new markets. Starting a new business requires a good measure of innovative orientation. Conservative orientation aims at increasing sales of products that have been on the market for some time with little or on modifications. Growth-oriented marketing objectives may entail aggressive marketing with a pronounced tendency to enter new markets or the diversification of production by adding new products. Sales may increase at the expense of a competitor or owing to an expanding market. An opportunity study at the subsectoral level should identify and evaluate typically feasible marketing objectives. It is not sufficient to state targets for sales, turnover or profits in general terms. Rather, the marketing objectives also need to concern themselves with product image, establishment of a brand name, training of a sales force and presence and visibility in the market. 2. Marketing Strategies Enterprises can pursue different marketing strategies at the same time, but for different products and markets. The definition, description and evaluation of market segments on the basis of marketing research should lead to the identification of alternative product strategies can then be recommended for individual projects.

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Present old products

Adaptation

Changes of product

Related Products

New Products

Present old Markets Market Expansion Related Markets New future markets

Market Penetration

Product development

Market Development

Diversification

Source: H. J Ansoff, A model of diversification, Management Science, 1958, p, 392 The above figure illustrates basic product strategies. On market side, the degree of diversification depends on the familiarity of potential customers with products or services, if they are already available and established in the market. On the products side, the degree of product diversification depends on the novelty of the products or services being marketed. The greatest degree of diversification would be represented by the production and marketing of new product not yet produced or offered in any market. 3. Product Policy It should be based on a given project idea and the related market analysis. At the subsectoral level, however, alternative product strategies need to assessed for different market segments. Product policy also comprises permanent product development and research, including the development of new products as may be required with a view to the life cycles of both products and markets. The shorter the lifecycle of the product, more the product development is necessary in the case of fashion goods. Studies at subsectoral level may indicate the need to establish product development units within an enterprise. For many small companies, however, this is bound to exceed their financial capabilities. They may therefore wish to undertake product development on a recurring rather than a permanent basis and to cooperate with other companies or research institutions. Alternatively, product policy entails searching for new products and acquiring production licenses for them.

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4. Price policy and conditions of payment Price policy is an important marketing instrument. It consists of setting the price and determining terms of payment. Prices are normally set within a range founded by required const coverage and the limits set by the market. Product pricing is closely related to the number of units sold. The relationship between potential sales volume and price is expressed in terms of price elasticity. High price elasticity means that consumers react strongly to price changes. According to the Manual on the Preparation of Industrial Feasibility Studies, whenever practicable, marketing research at the subsectoral level related to prices 5. Communication and distribution Communication and distribution strategies are in many respects closely connected. The main purpose of a communication strategy is to assure, organize and maintain the flow of information between and enterprise and its customers, sales agents and competitors. Distribution strategies are assessed at subsectoral level should address the following issues: a. b. c. d. e. Where will the product to r service be offered? Will the product be offered at one place only or at different places? Will it be necessary to have sales department with travelling salesmen? Will company salesmen or independent agents sell the products and visit customers? Is it necessary to establish a network of branch officer or can existing distribution channels be used? f. Will the outside selling function be restricted to selected retailers or will wholesalers be used? g. Will cooperation with independent intermediaries have a contractual basis? h. Will the product be marketed through intermediaries or directly to consumers?

6. Marketing organization Marketing activities entail not only the application of marketing instruments but also the institution of organizational measures, such as the installation of a marketing management system and a sales department as well as the assignment of duties necessary to carry out the planned activities. As in many other functional areas of an enterprise, some of these activities man be undertaken by outside experts or consultants. The identification and description of outside expertise is connected to personnel, especially the recruitment and training of a sales force. 7. Marketing budget Marketing costs are estimated on the basis of measures and activities proposed under the marketing concept. An opportunity study does not usually contain detailed cost projections: at this stage of the analysis, the most that should be done is to access the costs of alternative marketing concepts that would be typical in a subsector. Such and assessment should contain

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enough information to allow reliable cost projections for individual projects to b prepared later on. The marketing cost schedule differentiates between two kinds of costs: Marketing costs that are a port of the startup cost of a project, including for instance, the costs of organizational measures, of training personnel, of pre-production marketing and of startup promotion. Running expenses varying with the number of production units sold.

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