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MS 204 Marketing Management
MBA II Semester
Dr. Vibhuti Tripathi
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Quota System, production driven market
Liberalized Economy
Demand driven market; Informed and Demanding Customers
Focus on: Value Creation, Relationships, Retention,
company and customer interface, integrated marketing
programs
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Defining Marketing
Term Market originates from Latin Word Marcatus,
Physical place where business is conducted
Has wider implications
Customers
Stake Holders
Business Partners
Competitors
William J. stanton: A total system of interacting business
activities designed to plan, promote and distribute
want-satisfying products and services.
American Marketing Association: The performance of
business activities that direct the flow of goods andservices through producers to consumers or users.
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Philip Kotler: A social and managerial process by which
individuals and groups obtain what they need and want
through creating, offering and exchanging products ofvalue with others.
Marketing is a process by which companies create value
for customers and build strong Customer Relationships in
order to capture valuefrom customers in return.
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Marketing:
Attempt is made to convert societal needs into profitable
Opportunities. In the process activities involved create time,
place and possession utilities. And a Value Proposition
Sales:
An activity which involves order taking and delivery of
Products. In the process it builds goodwill, generates
Demand and does problem solving
Advertising:
Paid form of non personal communication of goods / services
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VALUE
A Ratio between what a customer gets and what he gives.
Perceived tangible and intangible benefits offered by the
products / services and its cost to the customers.
Customer Value Triad, QSP
Value
Quality(Product, Features, Ingredients, Service Components)
Service
(After Sales, Embedded, Extra EffortsPrice
(Low, Competitive)
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Customers Reflects in the perceived tangible and intangible
benefits offered by the product and its cost to
the customers.
Company Reflects in the cost of the product/ services and
the revenue generated in the selling process.
Value = Benefits / Costs
Benefits: Functional + Emotional
Costs: Monetary + Time + Energy + Psychic
Raise Benefits at same price
Reduce Cost at same benefits
Raise benefits reduce costs
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Marketing is not only facilitating selling of a product but also
creation of demand.
Needs: State of felt deprivation. Physical, Social and
Individual Needs.
Physical: Basic to Survival
Social: Desire to Belong
Individual: Self Expression
Wants: Needs directed towards specific satisfiers.
Shaped by ones cultural influence, individual personality and the society.
Demand: Wants + Purchasing Power.
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Maslows Hierarchy of Needs
Physiological
Safety
Social
Esteem
Self
Actualisation
McDonalds
Peter England
Canteen
Local Brand
Companies focus on wants and loose sight of needs and
purchasing power
Radial Tyres Ply Tyres
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Market Segmentation and Target Market
Marketers can not satisfy everyone in the market.
Marketers start by dividing the market.
Market Segment: consists of a group of customers who share
a similar set of wants.
Or fall into similar demographic, psychographic or behavioral
patterns.
Target Market: Lucrative for conducting business; resources
and company objectives.
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Marketing Process1. Analyse and understand Markets and Prospective Customers needs and wants. (Market
Segmentation, Target Marketing)
2. Design a customer driven marketing strategy with the goal of acquiring, retaining and
growing target customers.(Differentiation and Positioning; Marketing Mix)
3. Create a strategy delivering superior value.
4. Build profitable customer relationships and creating customer delight.
5. Reap the rewards.
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Differentiation: Developing unique differences with the
intent to influence demand.
Positioning: Tailoring a product's image and presentation
to appeal to a selected market segment.
Marketing Mix; includes a combination of tools like;
Product,
Packaging,
Price,
Channels of distribution,
Advertising,
Promotion and
Personal selling
to pursue the marketing objective of the company and
fulfilling needs and wants of the customers.
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Tools of Marketing Mix
McCarthy classified the marketing mix tools into four broad categories; 4 Ps of Marketing
1. Product: Variety, Quality, Features, Packaging, Sizes,Warranty, Guarantee
2. Price: MRP, Discounts, Allowances, Payment Options,
Credit Terms
3. Place: Channels, Coverage, Locations, Inventory,Transportation
4. Promotion: Sales Promotion, Advertising, Public
Relations
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Robert Lauterborn suggested 4 Cs
4 Ps Correspond to the Customers 4 Cs
Product Customer SolutionPrice Customer Cost
Place Convenience
Promotion Communication
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7 Ps of Marketing Mix or Extended Marketing Mix
Coined by Booms and Bitner, more useful for services industry .
3 Additional Tools:
5. People: All people directly involved in the
consumption of services. Consultant, Employees,
Management and Customers.
6. Process: Procedures, Mechanisms and Flow of Activities by which
services are rendered and consumed.
7. Physical Evidence: Communication, Performance and Experience of
existing customers, ambience
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Scope and Functions of Marketing
Functions of Research:
Marketing Research
Product Planning and Development
Functions of Exchange:
Buying and Assembling
Selling
Functions of Physical Treatment:
Standardization, Branding
Packaging
Storage and Transportation
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Functions of Facilitating :
Salesmanship
Advertising
Pricing
Financing
Insurance
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Company Orientations and Philosophy
towards market place
Production Concept: Prevailed during Industrial Revolution
Assumptions:
Consumers will prefer products that are widely available and
Inexpensive.and
Consumers are primarily interested in product availability and
low prices.
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Product Concept:
Assumption:
Consumers will favour those products that offer the most quality, performance or innovative
features .
Selling Concept:
Companies not only produce the product but also try to convince
customers to buy them.
Assumptions:
If consumers are left alone they will ordinarily not buy enough
of Organization's products. and
Consumer typically show buying dis-interest or resistance and
must be coaxed into buying.
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Marketing Concept:
Matching a companys capabilities with customers wants.
Make and-sell to Sense-and-respond
Assumption:
Key to achieve its organisational goals consists of a company being more effective than
competitors.
Customer is the King.
You are the Boss.
Putting people first.
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Marketing Concept contd.
Involves:
Customer Orientation.
Integration and unification of company operations.
Focus:
Customer is important.
Profit goals will be reached through satisfied customers.
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Holistic Marketing Concept:
Organizations keep in mind all the aspects of:
- Relationship Marketing: Building mutually satisfying long-term
relationships.
- Integrated Marketing: all departments work together to serve
the customers interest
- Internal Marketing: recruiting, motivating and retaining staffwho want to serve customers well.
- Social Responsibility: focus on delivering desired satisfaction
effectively and efficiently that competitors, at same time preserving consumers
and societys well being.
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Analysing Marketing Environment:
Marketing Environment
External Internal
- Company Image
- Location
Macro Micro - R&D Capability
Economic Conditions - Customers -Financial Capability Political and Legal
Demographic - Intermediaries -Human Resource
Competition - Suppliers -ProductionFacilities Technology
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Economic Conditions:
Business Cycle
Purchasing Power of Customers
Inflation
Interest Rates
Prosperity
Recession
Depression
Recovery
Business Cycle
Competitive Environment:
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Competitive Environment:
Identify Competitive Advantage
1. What is the basis of present advantage?
2. Can these advantages be sustained?
Threat of New Entrants
Bargaining Power of BuyersThreat of Substitute
Bargaining Power of Suppliers
Competitive
Environment
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Technology:
Technological breakthroughs can affect markets:
By starting new industries;
By radically altering or virtually eliminating
existing industries;
By stimulating markets and industries not related
to new technology;
Accelerating pace of technological changes
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Legal and Governmental Factors:
Political Leadership
Stability of Government
Rules and Regulations
Monetary and Fiscal Policies
Patents, IPR, MRTP
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Analysing External Micro- Environment:
Customers:
- Needs
- Purchasing power- Buying Behaviour
Suppliers:
- Raw Materials / Finished Goods
- Cooperative Relationships
Intermediaries:
- Value Creation; facilitating organisations
- Channels of distribution
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Analysing Internal Environment:
Company Image;
Location;
Production Facility;
R & D Capability;
Financial Resource;
Human Resource;
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Demographic and Socio-Cultural Factors:
Age Structure (composition of population Age-wise)
Gender Distribution
Life Expectancy Population Density
Household Size (Family Size)
Marital Status
Income and wealth distribution
Employment Education
Occupation
Value System
Consumption Patterns and attitudes
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Changing Gender Roles: Related to family Jobs Recreation Buying Behaviour
A Premium on Time: Paucity of time Attitude towards gaining more free time Convenience
Physical Fitness and Health;
Geographical Shift in Population;
Strategies: Product DevelopmentDistribution ArrangementsPricing PoliciesPromotion
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Analysing Consumer Markets and Buying Behaviour
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Every Marketing Activity starts and ends with consumers.
Marketers Identify decision makers.
It is important to know :
who are the people that consume the product
play a role in buying decisions
why they take certain decisions
when they buy
where they buy
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Customers
Disposition
to Buy
Needs/ Wants Beliefs
Buying Without
Wanting
Buying Without
Deciding
Deciding Before Buying
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Influencers on Consumers Buying Behaviour:
1. Cultural Factors; Culture, Sub-culture, Social Class
Culture: Peoples shared customs, beliefs, values that are generated from generation to
generation.
Sub-culture: smaller groups within cultural framework with common life experiences and
situations.
Social Class: relatively homogeneous and enduring divisions in a society.
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2. Social Factors; Reference Groups, Family, Roles and \
Status.
Reference Groups: Small Social Groups to which an individual belongs or aspires to belong.
Membership Groups; Primary and Secondary
Aspirational Groups
Dissociative Groups
Opinion Leaders;
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Family : Persons related by blood, marriage or adoption who
reside together.
Family is a major influencer on buying behaviour.
Consumption Roles:
Influencers;
Deciders;
Buyers;
Users;
Maintainers;
Involvement and roles vary by products.
Stages in Family Life cycle:
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Stages in Family Life cycle:
1. Bachelor Stage
2. Newly Married Couples
3. Full Nest I (Young, married, with child)
4. Full Nest II (Older, married, with children
5. Full Nest III (Older, married, with dependent children)
6. Empty Nest I (Older, married, with no children living with them)
7. Solitary Survivor
At each stage of Family Life Cycle a person behaves differently; consumption patterns are
also shaped up accordingly.
Roles and Status: A person enters and exists different roles and status throughout the life
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Roles and Status: A person enters and exists different roles and status throughout the life.
3. Personal Factors: Age and Life Cycle Stage, Occupation,
Economic Situation, Lifestyle, Personality.
Age and Life Cycle Stage: Preferences to purchase goods and
Render services vary over the life time.
Occupation: Occupation influences consumption patterns.
Economic Situation: Product Choice is greatly affected by
economic circumstances like:
Spendable income (stability, time duration, level),
savings,
credit availability
Personal IncomeFamily Income
Consumer Credit
Lifestyle: a persons pattern of living in the world reflected in
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Lifestyle:a person s pattern of living in the world reflected in
activities, interests, opinions.
Personality:individuals distinguishing psychological
Characteristics;
self confidence, dominance, sociability, adaptability.
Brand Personality:
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4. Psychological factors: Motivation, Perception, Learning and
Beliefs and Attitude.
Motivation: is a drive, which propels a person towards achieving his goals.
A need becomes a motive when sufficiently backed with intensity
Why do People Shop?
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Freuds Theory:Psychological forces shaping up peoples behavior are largely unconscious and
that a person can not fully understand his or her own motivation.
Some consumers resist prune (dried plum) because prunes are wrinkled looking and remindof old age.
Maslows Theory: People satisfy their most important needs first. The needs are placed in a
hierarchical order.
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Herzbergs Two Factor Theory:Satisfiers and Dissatisfiers.
The absence of dissatisfiers is not enough for a person to be
motivated to purchase there must be presence of satisfiers to
motivate a purchase.
A marketer should avoid the presence of dissatisfiers and
absence of satisfiers.
Presence of a good packaging style would not act as satisfier or
the motivation for purchase.
At the same a shabby packaging may lead to dissatisfaction.
Quality or the utility could be a satisfier
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Perception: is the process by which an individual selects,organizes and interprets information inputs to create a
meaningful picture.
Perceptions can vary widely among individuals exposed to same situation,
Three perceptual processes;
1. Selective Exposure-select inputs to be exposed to our awareness.
2. Selective Distortion-Changing/twisting current received information, inconsistent
with beliefs.
3. Selective Attention-
4. Selective Retention-Remember inputs that support beliefs, forgets those that
don't.
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Learning: involves changes in an individuals behavior arising
from experience.
Learning is a continuous process,
Consumers can be made to learn the desired behaviour.
Beliefs and Attitudes: are developed by doing and learning.
Marketers are interested in understanding beliefs that consumers
have the product, and try to change negative beliefs.
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Buying Decision Process
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When making a decision to buy a product from many competing
products/brands, a consumer unknowingly passes through a fewstages of the decision process.
The consumer does not pass through all the stages before
purchasing a product.
Need Arousal is the first stage of a buying decision process.
The need for a given product is activated by internal and external
stimuli.
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Need/Want Recognition
Deciding there is, in fact, a need or a want to be filled.
Information Search
Trying to determine what's available.
Evaluation
Eliminating products/services/companies
and deciding who's best.
PurchaseActually buying your product/service
Post Purchase Behaviour
Re-evaluate: Cognitive Dissonance
Personal, Commercial,
Experimental
Stimuli: Internal
External
Steps Between Evaluation and Purchase Decision
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Evaluation of
Alternatives
Purchase Intention
Attitudes of Others Unanticipated situational
Factors
Evaluation of
Alternatives
Steps Between Evaluation and Purchase Decision
1. Intensity of Others Attitudes
2. Motivation to comply
Purchase sub decisions:
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Purchase sub-decisions:
Brand Decision
Vendor Decision
Quantity Decision
Timing Decision
Payment Methods
Types of Buying Behaviours
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yp y g
Consumers would demonstrate different buying behaviour
based on;
Involvement
Nature of Products
Toothpaste / Brush / Soap etc.
Car / Bike
Apparels
Complex and expensive purchases are likely to involve more
buyer deliberation and more participants.
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Ones who know exactly what they want.
Visitors who some what know what they want.
The window shoppers,
Non-Prospects
Different types of Buyers.
T f B i B h i
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Complex Buying
Behaviour
Variety Seeking
BuyingBehaviour
Dissonance
ReducingBuyingBehaviour
Habitual BuyingBehaviour
Significant Differences
Between Brands
Few DifferencesBetween Brands
High InvolvementLow Involvement
Types of Buying Behaviours
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Complex Buying Behaviour: Highly self expressive products, Learning Process, infrequent
purchases
Dissonance Reducing Buying Behaviour: anxiety or conflict of pre or post purchase decision.
Habitual Buying Behaviour: frequently purchased, Brand familiarity, no strong attitude
towards a brand.
Variety Seeking Buying Behaviour: frequent brand switching, breaking the monotony.
Factors Likely to Increase Pre-Purchase Search
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Factors Likely to Increase Pre Purchase Search
Product Factors:
Long inter-purchase time
Frequent changes in product styling
Frequent price changes Volume Purchase
High Price
Many Alternatives
Much Variation in features
Situational Factors:
First Time Purchase
No Past Experience
Unsatisfactory past experience
Purchase for gift
Product is socially visible
Many sources of conflicting information
Socio Cultural EnvironmentFirms Marketing Efforts
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Socio Cultural Environment
1. Family
2. Informal Sources
3. Non Commercial Sources
4. Social Class, Culture
g
1. Product
2. Promotion
3. Price
4. Channels of Distribution
Psychological Field
Motivation
Perception
Learning, Personality
Experiences
Need Recognition
Pre Purchase Search
Evaluation of Alternatives
Post Purchase Evaluation
Purchase
Trial
Repeat Purchase
INPUT
OUTPUT
P
R
O
C
ES
S
New Product Adoption Process
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Awareness
Interest
Evaluation
Trial
Adoption
Categories of Adopters
1. Innovators
2. Early Adopters
3. Early Majority
4. Late Majority
5. Laggards
Market Segmentation
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Market Segmentation
A company can not serve all customers in a category.
Customers differ widely in terms of
Perception Values
Preferences
Buying habits
Potential Market;
A company has different alternatives to cater; according to their products or objectives.
Mass Marketing;
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Mass Marketing;
A company appeals to a broad range of consumers through a single basic marketing
program.
Companies consider large potential markets.
Assumptions;
1. People have similar characteristics and wants for a product category.
2. One Marketing Mix Strategy will satisfy them.
3. People do have different characteristics and wants but it is not worth to develop
separate marketing mix.
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The elements of the marketing mix do not change for
different consumers, all elements are developed for all
consumers.
Major objective is to maximize sales
Single Marketing Mix Strategy consists of:
1 Pricing strategy1 Promotional program aimed at everybody
1 Type of product with little/no variation
1 Distribution system aimed at entire market
Maruti 800 in 1980s, News Papers etc.
Pure Mass Marketing approach is dying rapidly because ;
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g pp y g p y ;
Intense Competition
Much Aware Customer
Technological Up-gradations
Process
Information
Companies are turning to micro marketing by adopting
different approaches based on Segmentation, Target
Identification and Positioning.
Market Segmentation: Process of identifying smaller groups
of people that exist within a larger market.
Market Segment : consists of a group of customers who
share a similar set of wants, tastes and preferences.
Homogeneity (A marketer does not create segment.)
Effective Segments are;
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Effective Segments are;
Measurable;
Accessible;
Substantial;
Actionable;
Differentiable;
The purpose is to design a Marketing Mix that more
precisely matches the needs of individuals in a selected
market segment.
Approaches to build Market Segment:
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Homogeneous Demand- uniform, everyone demands the product for the same
reason
Diffused Demand- Product differentiation more costly and more difficult tocommunicate.
Cosmetic market, need to offer hundreds of shades of lipstick.
Firms try to modify consumer demand to develop clusters of at least a moderate
size.
Clustered Demand- consumer demand classified in 2 or more identifiable
clusters.
Automobiles: luxury, Sporty, Spacious
Process of Market Segmentation
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Analyse the needs of customers
Analyse the characteristics of consumers
Dis-integrate the viable, profitable, lucrative segments
Formulate different market mix for different segments
Feedback of various segments
Select the higher potential segments
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Market Segmentation Strategies
Concentration Strategy:
A single market segment with one Marketing Mix.
Segment A
Segment B
Segment D
Segment C
Marketing
Mix
Multi-segment strategy
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Segment A
Segment B
Segment D
Segment C
Marketing
Mix
Marketing
Mix
Marketing
Mix
Multi-segment strategy
2 or more segments are sought with a Marketing Mix for each
segment, different marketing plan for each segment.
Bases for segmenting Markets.
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Two Broader groups of variables used by companies.
Consumer Characteristics: Geographic,
Demographic and Psychographic.
Different attitudes of professionals and
workers for a product.
Looking at customer responses to benefits, use
occasion or brands.
May examine whether people who want
quality in buying a product differ in their geographic,
demographic and psychographic makeup.
Major Segmentation Variables
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Geographic: Companies can operate in one or few
geographic areas, or
operate in all areas with separate Marketing Mix Regionally. Cities, Regions
Retailers, Fast Food Chains, Tyres
Demographic: most popular basis. Easier to measure.
Age, Gender, Income, Family Size, Education, Occupationetc.
Psychographic: refers to as lifestyle analysis.
Behavioural: buyers are divided on the basis of their
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knowledgeattitudeuseresponse to a product.
Occasions: Life events, transitions, festivals
Benefits: people vary in the benefits they seek from thesame product
User Status: non users, ex-users, potential users, first time
UsersUsage Rate: light, medium and heavy usage.
Loyalty Status: Hard core, split, shifting, switchers.
Attractiveness of a Market Segment
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Size of the segment
Growth Rate of the segment
Competition in the segment
Brand Loyalty of existing customers
Required market share to break even
Whether the company can offer superior value to thecustomers
Impact of catering to the specific segment on companiesimage
Access to distribution channels
Identifying Target Markets.
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y g g
A company can adopt alternative Targeting Strategies.
Alternative Strategies
Broad CoverageNarrow Coverage
Undifferentiated Marketing
Differentiated Marketing
Micro Marketing
Single Segment Concentration / Concentrated Strategy:
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Selecting a single segment and one marketing mix.
Choice of Smaller companies with limited resources.
M1 M2 M3 M4
P1
P 2
P3
Selective Specialisation Strategy / Differentiated Strategy:
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Multiple segments catered.
Different Marketing Mix to different segments.
Product itself may or may not be different.
Some of the Marketing Mix Tools may vary.
M1 M2 M3 M4
P1
P 2
P3
Product Specialisation:
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Company Specialising in a single product.
Company builds up strong reputation.
M1 M2 M3 M4
P1
P 2
P3
Market Specialisation:
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Serving many needs of particular segment groups.
M1 M2 M3 M4
P1
P 2
P3
Full Market Coverage:
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A company attempts to serve the entire market,
Single undifferentiated marketing strategy, or
Separate marketing mix for each segment.
M1 M2 M3 M4
P1
P 2
P3
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Playing the Ponies, The Strategist, Business Standard, Tuesday,
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8 January 2008
Survey conducted to assess the launch of a Brand and Re-
branding strategies.
Parameters used
Visibility
Media Pressure Sales/ Market Share
Likeability of advertisements
Parent Company
Promotional Activities
POP Displays Performance of Similar Brands
Word of Mouth
Consumer insight-based strategy
Three most successful brands;
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BINGO, VODAFONE, AXIS BANK
ITC Foods
Looked for opportunity in packaged snacks
category
16% Market share across the country
Leveraging Synergies
Distribution Network
Sourcing From Farmers
High Decibel Advertisement
Market Survey to find out the snacking habits
f I di C
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of Indian Consumers
They were looking for excitement in snacks.
Product Development; Chefs in ITC hotel weregiven the task
Varied Falvours with twists; Chatkila Nimbu
Achar, Bindas Masti Chaas,
Target Group; Youngsters in 16-30 age groups
They are more experimental
Advertising Targeted at youth, based on
disconnected humour
ITC dominated media of every kind, with good creative along
with good product.
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g p
web site: www.bingeonbingo.com with offers, games,
downloads and mobile games.
On television 10 to 15 spots per channel per day, 20 spots on
radio channels, 1000 outdoor hoardings.
Huge brand recall would ensure repeat purchase.
4 lakh large racks to display the brand at all points of sale.
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Positioning
Positioning: is the act of designing the companys offering
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g g g p y g
and image to occupy a distinctive place in the mind of the
target market.
End result of positioning is the successful creation of acustomer Value Proposition.
Product Positioning Vs. Brand Positioning.
Steps Involved in Positioning Task ?
Steps Involved in Positioning Task:
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1. Identifying Competitive advantage
2. Choosing right competitive advantage
3. Selecting an overall Positioning Strategy
4. Developing a positioning statement
5. Communicating and delivering chosen positioning.
1. Identifying Competitive Advantage
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a. Product; Features; Performance; Durability; Reliability; Reparability; Style; Design; Quality
b. Service; Delivery; After Sales Services; Customer Care; Installation;
c. People; Competence; Courtesy; Credibility; Responsiveness; Communication.
d. Image;
e. Channels; coverage, expertise, performance
2. Choosing right competitive advantage
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How many differences to choose?
USP Unique Selling Proposition
More differentiators; useful in intense competition
Which differences to promote?
Criteria to select differences;
1. Importance
2. Distinctive3. Superior
4. Communicable
5. Preemptive
6. Affordable
7. Profitable
3. Selecting an overall strategy
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MarginalProposition
More
More
Same Less
Same
Less
Price
Benefits
Loosing
Proposition
LoosingProposition
LoosingProposition
4. Developing a Positioning Statement
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Reflected in;
Need Recognition:
Target Segment:
Solution:
Concept:
Differentiation:
5. Communicating and delivering the chosen position
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QUALITY COMPETITIVE VALUE
More
More
Same
Same
Less
Less
Attribute Positioning : features
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Attribute Positioning : features
Benefit Positioning: benefits
Competitor Positioning: better than competitor
Product Category Positioning: leader in certain product
category
Quality and Price Positioning: emphasizing quality or price
Beliefs / Value Positioning:
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Single Benefit Positioning: rare to find in intense
competition
Double Benefit Positioning: more distinctive
Triple Benefits Positioning: challenging to communicate
and convince; COUNTER SEGMENTED
Why Repositioning ?
1. Under Positioning: Vague idea about the brand.
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Pepsi in Vanilla Flavour
2. Over Positioning: Narrow image of the brand.
Tanishque
3. Confused Positioning: Confused image in the mind of
customers.
Maruti Versaand Maruti Omni VAN
4. Doubtful Positioning: hard to believe the brand claims.
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Product
P d t
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Product
A product is anything that might satisfy a want or need,whether it is a
Goods Service Event Person
Business or Organization
ExperienceCombination
The Good/Service Continuum
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Pure
TangibleGoods
Tangible Goods
withaccompanying
Service
Services with
accompanyingMinor Goods
Pure
Services
Soap
Automobile
With Repair
Services
Airline Trip
With
Accompanying
Snacks
Financial
Consultant
Experience, a new dimension added to product and services
Levels of Goods and Services
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Convenience Products
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Convenience Products
Bought Frequently
Low Priced
Many Purchase Locations
Includes:
Staple goods
Impulse Goods
Emergency Goods
Shopping Products
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Shopping Products
Bought Less Frequently
Information Search
Fewer Purchase Locations
Compare for
Suitability
Quality Price and
Style
Specialty Products
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Specialty Products
Special Purchase Efforts
Unique Characteristics
Brand Identification
Few Purchase Locations
Unsought Products
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Unsought Products
New Innovations
Products consumers dont want to think about
Require much advertising and personal selling.
Industrial Products
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Materials and Parts:
Raw Material Manufacture Material
Parts
Supplies and services:
Installations Operating Supplies
Repair and maintenance items
Organizations, Places and Ideas
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Space Selling
Event Marketing
Social Advertising
Concept Selling
Destination Selling
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Product Life Cycles
and the Boston Matrix
Product Life Cycles and the Boston Matrix
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Product Life Cycles and the Boston Matrix
Product Life Cycle shows the stages that productsgo through from development to withdrawal fromthe market
Product Portfolio the range of products a companyhas in development or available for consumers at anyone time
Managing product portfolio is important for cashflow
Product Life Cycle (PLC):E h d t h diff t lif l
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Each product may have a different life cycle
PLC determines revenue earned
Contributes to strategic marketing planning
May help the firm to identify when a product needssupport, redesign, reinvigorating, withdrawal, etc.
May help in new product development planning
May help in forecasting and managing cash flow
The Stages of the Product Life Cycle:
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The Stages of the Product Life Cycle:
Development
Introduction/Launch Growth
Maturity
Saturation
Decline
Withdrawal
The Development Stage:
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Initial Ideas possibly large number
May come from any of the following Market research identifies gaps in the market
Monitoring competitors
Planned research and development (R&D)
Luck or intuition stumble across ideas?
Creative thinking inventions, hunches?
Futures thinking what will people be using/wanting/needing5,10,20 years hence?
Product Development: Stages
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New ideas/possible inventions
Market analysis is it wanted? Can it be produced at a profit?Who is it likelyto be aimed at?
Product Development and refinement
Test Marketing possibly local/regional
Analysis of test marketing results and amendment ofproduct/production process
Preparations for launch publicity, marketing campaign
Introduction/Launch:
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Advertising and promotion campaigns
Target campaign at specific audience?
Monitor initial sales
Maximise publicity
High cost/low sales
Length of time type of product
Growth:
Increased consumer awareness
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Increased consumer awareness
Sales rise
Revenues increase
Costs - fixed costs/variable costs, profits may be made
Monitor market competitors reaction?
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Product Life Cycles and the Boston Matrix
Maturity:
Sales reach peak
Cost of supporting the product declines
Ratio of revenue to cost high
Sales growth likely to be low
Market share may be high
Competition likely to be greater
Price elasticity of demand?
Monitor market changes/amendments/newstrategies?
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Saturation:
New entrants likely to mean market is flooded
Necessity to develop new strategies becomes more pressing:
Searching out new markets: Linking to changing fashions
Seeking new or exploiting market segments
Linking to joint ventures media/music, etc.
Developing new uses
Focus on adapting the product
Re-packaging or format
Improving the standard or quality
Developing the product range
Decline and Withdrawal:
Product outlives/outgrows its usefulness/value
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Product outlives/outgrows its usefulness/value
Fashions change
Technology changes
Sales decline
Cost of supporting starts to rise too far
Decision to withdraw may be dependent on availability of newproducts and whether fashions/trends will come around again
P d t Lif C l
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Product Life Cycles
Sales
Time
Development Introduction Growth Maturity Saturation Decline
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Product Life Cycles
Sales
Time
Effects of Extension
Strategies
PLC and Profits
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Sales/Profits
Time
PLC
Losses
Break Even
Profits
The Boston Matrix
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The Boston Matrix
The Boston Matrix: A means of analysing the product portfolio and informing
decision making about possible marketing strategies
Developed by the Boston Consulting Group a business
strategy and marketing consultancy in 1968
Links growth rate, market share and cash flow
The Boston Matrix
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The Boston Matrix
Classifies Products into four simple categories:
Stars products in markets experiencing high
growth rates with a high or increasing share of
the market- Potential for high revenue growth
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The Boston Matrix
Cash Cows:
High market share
Low growth markets
maturity stage of PLC
Low cost support
High cash revenue
positive cash flows
The Boston Matrix
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The Boston Matrix
Dogs: Products in a low growth
market
Have low or declining market
share (decline stage of PLC)
Associated with negative cash
flow
May require large sums of
money to support
The Boston Matrix
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The Boston Matrix
Question Mark:- Products having a low
market share in a highgrowth market
- Need large amount ofmoney to develop them
- May produce negative cashflow
- Potential for the future?
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The Boston Matrix
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Implications: Dogs:
Are they worth persevering ?
How much are they costing?
Could they be revived in some way?
How much would it cost to continue
to support such products?
How much would it cost to removefrom the market? Question
MarkStars
Dogs Cash CowsMarket Growth
Market Share
The Boston Matrix
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Implications: Question Mark:
What are the chances of these products securing a
holdin the market?
How much will it cost to promote them to a
stronger position?
Is it worth it? QuestionMark
Stars
Dogs Cash CowsMarket Growth
Market Share
The Boston Matrix
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Implications: Stars:
Huge potential
May have been expensive to develop
Worth spending money to promote
Consider the extent of their product life cycle in
decision makingQuestionMark
Stars
Dogs Cash CowsMarket Growth
Market Share
The Boston Matrix
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Implications: Cash Cows:
Cheap to promote
Generate large amounts of cash
use for further R&D? Costs of developing and promoting
have largely gone
Need to monitor their performance
the long term? At the maturity stage of the PLC?QuestionMark
Stars
Dogs Cash CowsMarket Growth
Market Share
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The Product Life Cycle and the Boston Matrix
Sales
Time
A B C
D
The productportfolio fourproducts in the
portfolio
(1) (2) (3)
Developing and Marketing a Product
Important Considerations
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Product Attributes:
Branding:
Packaging and Labeling:
Product Support Services:
Developing a Product or Service Involves Defining
The benefits it will offer:
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ProductQuality
Product
Features
Product
Style &
Design
Ability to perform its core functions;
levels & consistency
Differentiates the product from
Competitors
Process of designing products style
& design
Product Support Services
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1. After Sales Services
2. Distribution
3. Customer Care
Marketer must periodically asses the;
The value of current services to obtain new ideas
The cost of providing the services
Customer Delight and Company Profits
Branding ???
Branding Strategy: Building Strong Brands
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Brand: a name, term, sign, symbol or design OR a combination of all these.
Intended to identify the goods or services of seller.
Differentiate from competitors.
Legal Protection for product
Classification of Brands
Individual Brands: Separate brand names are used For different items
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Individual Brands: Separate brand names are used For different itemsby a single company
Attract various segments.
These brands have distinct images and appeals andmarketed differently
Family / Blanket
Brands :
One brand name is used for two or more individual
products.Family branding is more effective for specialisedcompanies
Positive fall out on other products.
Generic Brands : Buyers refer the type of product they want by
producers brand name.
Dangerous for the company.
Private Labels: Retailers are creating their own brands.
Hindustan Unilever Limited
INDIVIDUAL BRANDS
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Home and Personal Care Category:
Lux Dove Liril
Surf Excel Wheel Rin
Fair & Lovely Ponds Vaseline
Sunsilk ClinicPepsodent Closeup
Axe Rexona
Lakme
Ayush
D b I di Li i d
FAMILY / BLANKET BRANDS
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Dabur India Limited :
Quality Ayurvedic and nature-based Health care, Personal Care, Food Products
Health Care: Chyawanprash, Glucose D, Hajmola, Pudin hara,
Dabur Lal Tail, Shankh Pushpi etc.
Personal Care: Amla Hair Oil, Vatika hair oil, Vatika Face Pack,
Dabur Lal Toothpaste and Dant Manjan, Babool, Meswak.
Food Products: Real Juices, Coolers, Homemade
GENERIC BRANDS
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DALDA, SURF, NIRMA, XEROX
PRIVATE LABELS
KORYA, Tasty Treat, Star and Sitara : BIG BAZAR
Life, Kashish and Vittorio Fratini : SHOPPERS STOP
Brand Equity ???
Brand Equity
In a market where products are similar, branding can have a
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large effect on the price that customers will pay.
Brands add value to a basic product or service.
Brand equity is an intangible asset that depends on
associations made by the consumer.
Negative Brand Equity:
Implications:
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Implications:
Financial - One way to measure brand equity is to
determine the price premium that a brand commands over
a competitor.
Facilitates a more predictable income stream.
Increases cash flow by increasing market share, reducingpromotional costs, and allowing premium pricing.
Brand extensions - A successful brand can be used as a
platform to launch related products.
Leveraging of existing brand awareness
Consumer based A strong brand increases the consumer attitude toward the product
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Consumer-based - A strong brand increases the consumer attitude toward the product
associated with the brand.
Brand equity is an asset that can be sold or leased.
Brand Development
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Four Options for developing a brand.
LineExtension
BrandExtension
Multi
Brands
New
Brands
Existing New
Existing
New
Product Categories
Brand
Brand
Line Extension: introducing additional items in a given product category under same brandname.
1. Low cost, low risk
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,
2. Consumers desire for variety
3. use excess capacity
4. command more shelf space
Brand Extension: using successful brand name to introduce new or modified products in a
new category.
1. Instant Recognition
2. Saves costs
Multi Brands: introducing new brands or additional brands in the same category.
1. Catering to different segments and motives
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2. Each brand may obtain only a small market share none may be very
profitable
3. Resources are spread up
New Brands: Company may create a new brand in a new product category.
Product Line Decisions:
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The group of related company products that are similar in their target markets, pricing, and
distribution channels
Decisions Involve:
Product Line Length:
Line Stretching: going beyond current range
Downward or upward Stretching can be done.
Product Line Filling: adding more items within present range
Product Mix Dimensions:
Product Mix Width: Number of different product lines a company offers.
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Product Mix Length: Total number of items a company carries within its product line.
Product Mix Depth: Number of versions offered in each product in line.
Product Mix Decisions
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Managing the Brand
1. Brands Positioning must be continuously communicated.
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2. Developing Brand Experience (Managing the touch points)
3. Building a Brand asset Management Team
4. Re-orientation towards customer centric approach
5. Encouraging Intermediaries in Brand Building
6. Periodical Audit of Brands Strengths and Weaknesses
7. Re-branding if necessary
Packaging: involves designing and producing container or wrapper for a product.
Functions:
Contain
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Contain
Safety .
Primary Container
Secondary
Container
Shipping Package
Main purposes to packaging:
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Utilitarian
Implement Strategy
To Increase Profit
Packaging is an important tool in Marketing Mix
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Steps in Developing a good package:
Packaging Concept
Develop specific elements of package
Elements must support products position
and marketing strategy.
Labels ???
Labeling :
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Printed information appearing on or with the package
Performs certain functions:
Identifies product or brand
Describes several things about the product
Promotes the product through attractive
graphics