Like all processes, the marketing process also has many stages. At each stage of the process, markets:

Deliver value through all elements of the marketing mix. Process, physical evidence and people enhance services.

Feedback can be taken and the mix can be altered. Customers are retained, and other services or products are extended and marketed

to them. The process itself can be tailored to the needs of different individuals,

experiencing a similar service at the same time.

Processes essentially have inputs, throughputs and outputs (or outcomes). Marketing adds value to each of the stages.

1.2 Marketing Plans

Successful performance of organisations, whether in Private or in the Government or Non-Profit sector critically depends on impressing and retaining their target audience (customers or beneficieries, as the case may be) by providing better value than the competing offers or options available to the target audience? The choice of which kind of target audience to serve and how to create value for them in an ever changing environment needs to be ascertained. This involves choice of technologies/methodologies (in a broad sense) and performance (competitive) strategies

As the environment changes, the organisations (including business organisations) must adapt to maintain strategic fit between their capabilities and the marketplace. The process by which the organisations (especially business organisations) analyse the environment, decide upon a course of action and implement those decisions is called marketing planning and the document that contains the essence of the marketing planning process is called the marketing plan.

Marketing plans are vital to marketing success. They help to focus the mind of companies and marketing teams on the process of marketing i.e. what is going to be achieved and how we intend to do it. There are many approaches to marketing plans. The key stages of the plan are covered under the popular acronym AOSTC.

ANALYSISOBJECTIVESSTRATEGIESTACTICSCONTROLS

1.21 Stage One - Situation Analysis (and Marketing Audit). Marketing environment

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Laws and regulations Politics The current state of technology Economic conditions Sociocultural aspects Demand trends Media availability Stakeholder interests Marketing plans and campaigns of competitors Internal factors such as your own experience and resource availability

The tools for internal/external audit (covered later in the course): SWOT PEST Porter's Five Forces Marketing Environment

1.22 Stage Two - Set marketing objectives

Objectives should seek to answer the question 'Where do we want to go?'. The purposes

of objectives include:

To enable a company to control its marketing plan.

To help to motivate individuals and teams to reach a common goal.

To provide an agreed, consistent focus for all functions of an organization.

All objectives should be SMART i.e. Specific, Measurable, Achievable, Realistic, and

Timed.

SMART objectives: Specific - Be precise about what you are going to achieve. Measurable - Quantify you objectives. Achievable - Are you attempting too much? Realistic - Do you have the resource to make the objective happen (men, money,

machines, materials, and minutes)? Timed - State when you will achieve the objective (within a month? By February

2010?).

If you don't make your objective SMART, it will be too vague and will not be realized. Remember that the rest of the plan hinges on the objective(s). If it is not correct, the plan may fail.

Some examples of SMART objectives follow:

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1. Profitability Objectives

To achieve a 20% return on capital employed by March 2008

2. Market Share Objectives

To gain 25% of the market for wrist watches by September 2009

3. Promotional Objectives

To increase awareness of the Genetically Modified (GM) Crop in farmers of Gujarat

from 12% to 25% by June 2009.

To increase trial of Brand X soap from 2% to 5% of our target group by January

2008.

4. Objectives for Survival

To survive the current phase of anti-GM crop phase.

5. Objectives for Growth

To increase the size of our Indian operation from US$20 billion in 2007 to US$40

billion in 2010.

6. Objectives for Branding

To make Coca Cola as the preferred brand of 21-28 year olds in India by February

2008.

There are many examples of objectives. Be careful not to confuse objectives with goals

and aims. Goals and aims tend to be more vague and focus on the longer-term. They will

not be SMART. However, many objectives start off as aims or goals and therefore they

are of equal importance.

1.23 Stage Three - Describe your target market

Which segment? How will we target the segment? How should we position within the segment?

Why this segment and not a different one? (This will focus the mind).

Define the segment in terms of demographics and lifestyle. Show how you intend to 'position' your product or service within that segment. Use other tools to assist in strategic marketing decisions such as Boston Matrix, Ansoff's Matrix, Bowman’s Strategy Clock, Porter's Competitive Strategies, etc.

1.24 Stage Four - Marketing Tactics

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Convert the strategy into the marketing mix (also known as the 4Ps). These are your marketing tactics.

Price: Will you cost plus, skim, match the competition or penetrate the market? Place: Will you market direct, use agents or distributors, etc? Product: Sold individually, as part of a bundle, in bulk, etc? Promotion: Which media will you use? E.g. sponsorship, radio advertising, sales

force, point-of-sale, etc? Think of the mix elements as the ingredients of a 'fertilizer mix'. You have nitrogenous, potassic, phosphoric along with micronutrient based elements. However, if you alter the amount of each ingredient, you will influence the type of mix that you finish with.

1.25 Stage Five - Marketing Controls

Remember that there is no planning without control. Control is vital. Start-up costs Monthly budgets Sales figure Market share data Consider the cycle of control

Finally, write a short summary (or synopsis) which is placed at the front of the plan. This will help others to get acquainted with the plan without having to spend time reading it all. Place all supporting information into an appendix at the back of the plan.

1.3 Marketing Audit: How to conduct a marketing audit

The marketing audit is a fundamental part of the marketing planning process. It is conducted not only at the beginning of the process, but also at a series of points during the implementation of the plan. The marketing audit considers both internal and external influences on marketing planning, as well as a review of the plan itself.

There are a number of tools and audits that can be used, for example SWOT analysis for the internal environment, as well as the external environment. Other examples include PEST and Five Forces Analysis, which focus solely on the external environment.

In many ways the marketing audit clarifies opportunities and threats, and allows the marketing manager to make alterations to the plan if necessary.

We will cover the basics of the marketing audit, and introduce a marketing audit checklist. The checklist is designed to answer the question, what is the current marketing situation? Let’s consider the marketing audit under three key headings:

The Internal Marketing Environment The External Marketing Environment A Review of Our Current Marketing Plan

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1.31 The Internal Marketing Environment.

What resources do we have at hand? (i.e. The FIVE 'M's): MEN (Labor/Labour) MONEY (Finances) MACHINERY (Equipment) MINUTES (Time) MATERIALS (Factors of Production)

How is our marketing team organised? How efficient is our marketing team? How effective is our marketing team? How does our marketing team interface with other organisations and internal

functions? How effective are we at Customer Relationship Management (CRM)? What is the state of our marketing planning process? Is our marketing planning information current and accurate? What is the current state of New Product Development? (Product) How profitable is our product portfolio? (Product) Are we pricing in the right way? (Price) How effective and efficient is distribution? (Place) Are we getting our marketing communications right? (Promotion) Do we have the right people facing our customers? (People) How effective are our customer facing processes? (Process) What is the state of our business's physical evidence? (Physical Evidence)

1.32 The External Marketing Environment.

As a market orientated organisation, we must start by asking - What is the nature of our 'customer?' Such as:

Their needs and how we satisfy them Their buyer decision process and consumer behaviour Their perception of our brand, and loyalty to it The nature of segmentation, targeting and positioning in our markets What customers 'value' and how we provide that 'value?'

What is the nature of competition in our target markets? Our competitors' level of profitability Their number/concentration The relative strengths and weaknesses of competition The marketing plans and strategies of our competition

What is the cultural nature of the environment(s)? Beliefs and religions. The standards and average levels of education.

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The evolving lifestyles of our target consumers. The nature of consumerism in our target markets.

What is the demography of our consumers? Such as average age, levels of population, gender make up, and so on. How does technology play a part?

The level of adoption of mobile and Internet technologies. The way in which goods are manufactured. Information systems. Marketing communications uses of technology and media.

What is the economic condition of our markets? Levels of average disposable income. Taxation policy in the target market. Economic indicators such as inflation levels, interest rates, exchange rates and

unemployment.

Is the political and legal landscape changing in any way? Laws, for example, copyright and patents. Levels of regulation such as quotas or tariffs. Labour/labor laws such as minimum wage legislation.

1.33 A Review of Our Current Marketing Plan What are our current objectives for marketing? What are our current marketing strategies? How do we apply the marketing mix? (Including factors covered above in (a)) Is the marketing process being controlled effectively? Are we achieving our marketing budget? Are we realising our SMART objectives? Is our marketing team implementing the marketing plan effectively? Levels of staffing. Staff training and development. Experience and learning.

What is our market share? (Total sales/trends/sales by product or customer or channel) Are we achieving financial targets? (Profit and margins/ liquidity and cash flow/ debt: equity ratio/ using financial ratio analysis)

1.4 Marketing Control

Measuring and monitoring the marketing planning process

There is no planning without control. Marketing control is the process of monitoring the proposed plans as they proceed and adjusting where necessary. If an objective states where you want to be and the plan sets out a road map to your destination, then control tells you if you are on the right route or if you have arrived at your destination.

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Figure 1.2: The marketing control process

Control involves measurement, evaluation, and monitoring. Resources are scarce and costly so it is important to control marketing plans. Control involves setting standards. The marketing manager will than compare actual progress against the standards. Corrective action (if any) is then taken. If corrective action is taken, an investigation will also need to be undertaken to establish precisely why the difference occurred.

There are many approaches to control: Market share analysis Sales analysis Quality controls Budgets Ratio analysis Marketing research Marketing information systems (MkIS) Feedback from customers satisfaction surveys Cash flow statements Customer Relationship Management (CRM) systems Sales per thousand customers, per factory, by segment. Location of buyers and potential buyers Activities of competitors to aspects of your plan Distributor support Performance of any promotional activities Market reaction/acceptance to pricing polices Service levels

. . . . And many other methods of monitoring and measurement.

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1.5 Internal Marketing

Internal marketing is an important 'implementation' tool. It aids communication and helps us to overcome any resistance to change. It informs and involves all staff in new initiatives and strategies. It is simple to construct, especially if you are familiar with traditional principles of marketing.

If not, it would be valuable to spend some time considering marketing plans. Internal marketing obeys the same rules as, and has a similar structure to, external marketing. The main differences are that your customers are staff and colleagues from your own organization.

Figure 1.3: Internal marketing process

1.51 Managing the implementation of internal marketing

You have seen that the process of marketing follows a familiar pattern for which we use the acronym AOSTC - Analysis, Objectives, Strategies, Tactics, and Control.

Let's have a look a closer look at the practicalities of internal marketing.

Figure 1.3: Detailed Internal marketing process

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At this stage internal marketing meets traditional 'change management.' Firstly you should identify your internal customers. As with your external customers, they will have their own buyer behavior, or way of 'buying into' the changes which you are charged to implement. The similarities in differing groups of internal customers allow you to segment them. As Jobber (1995) explains, you can target three different segments namely 'supporters,' neutral,' and finally 'opposers.' Each group requires a slightly different internal marketing mix in order that your internal marketing objectives can be achieved.

For example, if the change was that a seeds marketing company was to relocate closer to its market, you could target 'supporters within the organisation' with a tailor-made relocation video explaining about the advantages (personal as well as professional) in the new location; 'neutral' internal customers could be targeted with incentives such as pay increases; and 'opposers' could be coerced, or forced to accept the change regardless.

1.52 How do we plan for a change program? Always make sure that you have thought through your approach before starting

the implementation. Make sure that you have created a cultural climate that is willing to accept

change. Appoint a change agent, or champion for change that will help to ease your

changes through. Audit the skills and capabilities of your team. Train and develop as necessary. Your team must be built around you with the objective as the focus for all of you. The change must be correctly marketed to your target audience as per the

approach illustrated above. Decide what the change will be. Give it boundaries. Decide upon the plan. Work out a realistic budget and stick to it. Try to anticipate the arguments against change, and decide how to counteract

them positively.

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Segmentation, Targeting and Positioning

4.0 Introduction to segmentation, targeting and positioning

The organisations of today and of the future will have to identify, select,

attract, nurture and retain their market. They may have to do whatever it

takes to keep their target audience/customers hooked on to their offerings.

Different pack sizes, different formulations, different colours and perfumes,

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each aimed at catering to a sharply defined category of people in the market.

No longer are the companies depending on the philosophy that consumers are

human beings with little or no differences in aspirations, preferences, actions

and consequences. In reality they are dividing the markets into attractive

segments to reach them efficiently, serve them effectively and achieve results

economically. Selecting and attracting markets involves three key decisions

viz., segmenting, targeting and positioning.

To get a product or service to the right person or company, a marketer

would firstly segment the market, then target a single segment or series of

segments, and finally position within the segment(s).

4.1 Segmentation

Segmentation is essentially the identification of subsets of buyers within a

market who share similar needs and who demonstrate similar buyer behavior.

The world is made up of billions of buyers with their own sets of needs and

behaviour. Segmentation aims to match groups of purchasers with the same set

of needs and buyer behaviour. Such a group is known as a 'segment'. Think of

your market as an orange, with a series of connected but distinctive segments,

each with their own profile.

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Segmentation is a form of critical evaluation rather than a prescribed process

or system, and hence no two markets are defined and segmented in the same

way. However there are a number of underpinning criteria that assist us with

segmentation:

Is the segment viable? Can we make a profit from it?

Is the segment accessible? How easy is it for us to get into the segment?

Is the segment measurable? Can we obtain realistic data to consider its potential?

The are many ways that a segment can be considered. For example, the auto

market could be segmented by: driver age, engine size, model type, cost, and

so on. However the more general bases include:

Geograpical Segmentation:

The variables considered while segmenting a market geographically include

zones/regions, states, districts, cities/towns/villages by size, density, climate and culture.

Demographic Segmentation:

In this case the markets are divided based on the variables such as age, life cycle, gender,

family size, income, occupation, education, religion and nationality, etc.

Psychographic Segmentation:

While geographic and demographic basis of segmentation offer an operational view of

the markets, the actual dynamics of the purchase can be assessed and marketing offer can

be designed only on the basis of psychographics of the people. Social class, lifestyle and

personality are the psychographic variables that can be used for segmentation.

In many parts of Punjab, the farmers have gone in for their second or even third tractor

and that too of large capacity even when their plot sizes warrant an ownership of a single,

small capacity tractor. The more than required multiplicity and the bigness of the tractors

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is due to the tendency of emulating their neighbours or of reading a positive word about

their economic stature in the community.

A company will evaluate each segment based upon potential business success.

Opportunities will depend upon factors such as: the potential growth of the segment the

state of competitive rivalry within the segment, how much profit the segment will deliver,

how big the segment is, how the segment fits with the current direction of the company

and its vision.

4.2 Targeting

Targeting is the second stage of the SEGMENT-"Target"-POSITION

(STP) process. After the market has been separated into its segments, the

marketer will select a segment or series of segments and 'target' it/them.

Resources and effort will be targeted at the segment.

4.21 Evaluation of Segments

The organisation can use the following criteria for evaluating segments:

1. Profitability

The company needs to collect relevant information about sales volume,

distribution costs promotion costs, sales revenues and profit margins. This

data would help the calculation of profits obtainable from each segment.

2. Attractiveness

Marketers must know whether there is a need to design skill development

programmes for its employees to serve its markets. The most attractive

segment for a company is the one having the closest fit with the size and

the nature of the organisation.

3. Growth Rate

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It is not only important to have current profitability for determining

attractiveness of a segment but it is also important that the segment has

high profit potential and is growing rapidly towards achieving its potential.

4. Company Objectives

The segments selected by the company to target must be in close alignment

with the objectives of the company.

5. Limitations and Constraints

A company must examine the boundaries within which it has to operate

especially with reference to the social and cultural norms and mores, the

regulatory framework, Government policies, the general quality and

quantity of human resources in its location, etc. The segments chosen must

be accessible within the given limitations.

4.22 Segment Coverage

Organisations can have any of the three alternative strategies to suit their

segmentation approaches.

1. Concentrated Strategy

This involves catering to a single segment with a single product. In other word,

the marketer targets a single product offering at a single segment in a market

with many segments. For example, Rolls Royce Car is a high value product

aimed specifically at very rich people who also have fine taste and are

respected in the society.

Concentrated Strategy

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2. Undifferentiated Strategy

The marketer could ignore the differences in the segments, and choose to aim a

single product at all segments i.e. the whole market. This is typical in 'mass

marketing' or where differentiation is less important than cost. An example of

this is the approach taken by budget airlines such as Air Deccan in India, Air

Asia in South East Asia, Easyjet in Europe etc.

Undifferentiated St rategy

2. Differentiated Strategy

Finally, there is a multi-segment approach. Here a marketer will target a

variety of different segments with a series of differentiated products. This is

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typical in the automobile industry. Here there are a variety of products such as

diesel, four-wheel-drive, sports saloons, and so on.

4.3 Positioning

The third and final part of the SEGMENT - TARGET - POSITION

(STP) process is 'positioning.' Positioning is undoubtedly one of the simplest

and most useful tools to marketers. After segmenting a market and then

targeting a consumer, you would proceed to position a product within that

market.

Remember this important point. Positioning is all about 'perception'. As

perception differs from person to person, so do the results of the positioning

map e.g what you perceive as quality, value for money, etc, is different to my

perception. However, there will be similarities.

Positioning involves three tasks:

Identifying the differences of the offer vis-à-vis competitors’ offers.

Selecting the differences that have greater competitive advantage

Communicating such advantages effectively to the target audience.

The marketing offer may be differentiated along the following lines:

Product

Services

People, or

Image

Products or services are 'mapped' together on a 'positioning map'. This allows

them to be compared and contrasted in relation to each other. This is the main

strength of this tool. Marketers decide upon a competitive position which

enables them to distinguish their own products from the offerings of their

competition (hence the term positioning strategy).

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Take a look at the basic positioning map template below:

The marketer would draw out the map and decide upon a label for each axis.

They could be price (variable one) and quality (variable two), or Comfort

(variable one) and price (variable two). The individual products are then

mapped out next to each other. Any gaps could be regarded as possible areas

for new products.

The term 'positioning' refers to the consumer's perception of a product or

service in relation to its competitors. You need to ask yourself, what is the

position of the product in the mind of the consumer?

Trout and Ries suggest a six-step question framework for successful

positioning:

1. What position do you currently own?

2. What position do you want to own?

3. Whom do you have to defeat to own the position you want?

4. Do you have the resources to do it?

5. Can you persist until you get there?

6. Are your tactics supporting the positioning objective you set?

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Look at the example below using the auto market.

Product: Skoda Octavia, Hyundai Sonata, Maruti Baleno, Honda City, Hyundai

Santro, Maruti Wagon R and Maruti 800.

Positioning Map for Cars

The seven products are plotted upon the positioning map. It can be concluded

that products tend to bunch in the high price/low economy(fast) sector and also

in the low price/high economy sector. There is an opportunity in the low price/

low economy (fast) sector. Maybe Hyundai or Maruti could consider

introducing a low cost sport saloon. However, remember that it is all down to

the perception of the individual.

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Product, Brand and Innovation Management

5.0 Introduction to Product Management

The most common decisions that Marketing Manager has to take pertain to

product strategy. The multi-product firms are faced with challenges and they

do exercise choices in the product arena to gain a competitive advantage. It is

through continuous re-jigging of product mixes that a company improves its

performance in the marketplace.

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5.1 Three Levels of a Product

For many people, a product is simply the tangible, physical entity that

they may be buying or selling. You buy a new tractor and that's the product -

simple! In marketing, we do not consider it so simple. When one buys a

tractor, is the product more complex than one first thought? In order to actively

explore the nature of a product further, let’s consider it as three different

products - the CORE product, the ACTUAL product, and finally the

AUGMENTED product.

These are known as the 'Three Levels of a Product.' Let us see what is the

difference between the three products, or more precisely 'levels?'

The CORE product is NOT the tangible, physical product. You can't touch it.

That's because the core product is the BENEFIT of the product that makes it

valuable to you. So with the tractor example, the benefit is productivity i.e. the

ease with which the farming operations can be performed. Another core benefit

is the transportation since you can carry farm produce and construction

material around relatively quickly.

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The ACTUAL product is the tangible, physical product. You can get some use

out of it. Again with the tractor example, it is the vehicle that you test drive,

buy and then collect.

The AUGMENTED product is the non-physical part of the product. It usually

consists of lots of added value, for which you may or may not pay a premium.

So when you buy a tractor, part of the augmented product would be the

warranty, the customer service support offered by the tractor manufacture, and

any after-sales service.

Another marketing tool for evaluating PRODUCT is the Product Life Cycle

(PLC).

5.2 The Product Life Cycle (PLC)

The Product Life Cycle (PLC) is based upon the biological life cycle.

For example, a seed is planted (introduction); it begins to sprout (growth); it

shoots out leaves and puts down roots as it becomes an adult (maturity); after a

long period as an adult the plant begins to shrink and die out (decline).

In theory it is the same for a product. After a period of development it is

introduced or launched into the market; it gains more and more customers as it

grows; eventually the market stabilises and the product becomes mature; then

after a period of time the product is overtaken by development and the

introduction of superior competitors, it goes into decline and is eventually

withdrawn.

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However, most products fail in the introduction phase. Others have very

cyclical maturity phases where declines see the product promoted to regain

customers.

5.11 Strategies for the differing stages of the Product Life Cycle.

Introduction

The need for immediate profit is not a pressure. The product is promoted to

create awareness. If the product has no or few competitors, a skimming price

strategy is employed. Limited numbers of product are available in few

channels of distribution.

Growth

Competitors are attracted into the market with very similar offerings. Products

become more profitable and companies form alliances, joint ventures and take

each other over. Advertising spend is high and focuses upon building brand.

Market share tends to stabilise.

Maturity

Those products that survive the earlier stages tend to spend longest in this

phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to

differentiate products and brands are key to this. Price wars and intense

competition occur. At this point the market reaches saturation. Producers begin

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to leave the market due to poor margins. Promotion becomes more widespread

and uses a greater variety of media.

Decline

At this point there is a downturn in the market. For example more innovative

products are introduced or consumer tastes have changed. There is intense

price-cutting and many more products are withdrawn from the market. Profits

can be improved by reducing marketing spend and cost cutting.

5.12 Problems with Product Life Cycle.

In reality very few products follow such a prescriptive cycle. The length of

each stage varies enormously. The decisions of marketers can change the stage,

for example from maturity to decline by price-cutting. Not all products go

through each stage. Some go from introduction to decline. It is not easy to tell

which stage the product is in. Remember that PLC is like all other tools. Use it

to inform your gut feeling.

5.2 Diffusion of Innovation

In modern businesses, innovation is the name of the game. Whether it is

products or distribution channels or advertising, the field of marketing is agog

with innovation.

As new products are placed in the market, buyers show different degrees of

readiness to adopt them.

5.21 The Adoption Process

The Adoption Process (also known as the Diffusion of Innovation) is

more than forty years old. It was first described by Bourne (1959), so it has

stood the test of time and remained an important marketing tool ever since. It

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describes the behaviour of consumers as they purchase new products and

services. The individual categories of innovator, early adopters, early

majority, late majority and laggards are described below.

Innovators are the first to adopt and display behaviour that demonstrates that

they likely to want to be ahead, and to be the first to own new products, well

before the average consumer. They are often not taken seriously by their peers.

The often buy products that do not make it through the early stages of the

Product Life Cycle (PLC).

Early adoptors are also quick to buy new products and services, and so are

key opinion leaders with their neighbours and friends as they tend to be

amongst the first to get hold of items or services.

The early majority looks to the innovators and early majority to see if a new

product or idea works and begins to stand the test of time. They stand back and

watch the experiences of others. Then there is a surge of mass purchases.

The late majority tends to purchase the product later than the average person.

They are slower to catch on to the popularity of new products, services, ideas,

or solutions. There is still mass consumption, but it begins to end.

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Finally, laggards tend to very late to take on board new products and include

those that never actually adopt at all. Here there is little to be made from these

consumers.

There are a number of examples of products that have gone through the

adoption process. They include wrist watches, chemical fertilisers, chemical

pesticides, formal banking, crop insurance, kisan credit card and now

modern-day retail format. Initially only a small group of younger or

informed, well off people bought into these products. Opinion leaders or the

early adoptors then buy the product and tend to be a target for marketing

companies wishing to gain an early foot hold. The early majority is slightly

ahead of the average, and follow. Then the late majority buys into the product,

followed by any laggards. New adoption process or curves begin all the time.

Who knows what will happen with solid state technology or Internet purchases

of media?

5.3 Product Strategy

Product strategy helps in achievement of marketing goals by facilitating

improved decisions with respect to products, product line and product mix.

Product strategy covers within its scope, decisions at three levels:

Product Mix

Product line and

Product item

The typologies of decisions that are taken with respect to each level are

mentioned as follows:

Level Product strategy typology

Product Mix Width extension- New Product lines

Length extension- New Product items

Depth extension- New Product variants

Product Line Stretching- Upward, downward, both ways

Line pruning, line modernisation

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Product Item Quality, features, design, brand and package

Augmentations

5.4 Introduction to Brands

5.41 Brands and Branding.

Branding is a strategy that is used by marketers. ‘Pickton and

Broderick’ describe branding as Strategy to differentiate products and

companies, and to build economic value for both the consumer and the brand

owner. Brand occupies space in the perception of the consumer, and is what

results from the totality of what the consumer takes into consideration before

making a purchase decision.

So branding is a strategy, and brand is what has meaning to the consumer.

There are some other terms used in branding. Brand Equity is the addition of

the brand's attributes including reputation, symbols, associations and names.

Then the financial expression of the elements of brand equity is called Brand

Value.

There are a number of interpretations of the term brand. They are

summarized as follows:

A brand is simply a logo e.g. McDonald's Golden Arches.

A brand is a legal instrument, existing in a similar way to a patent or copyright.

A brand is a company e.g. Coca-Cola.

A brand is shorthand - not as straightforward. Here a brand that is perceived as

having benefits in the mind of the consumer is recognised and acts as a shortcut to

circumvent large chunks of information. So when searching for a product or

service in less familiar surroundings you will conduct an information search. A

recognised brand will help you reach a decision more conveniently.

A brand is a risk reducer. The brand reassures you when in unfamiliar territory.

A brand is positioning. It is situated in relation to other brands in the mind of the

consumer as better, worse, quicker, slower, etc.

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A brand is a personality, beyond function e.g. Apple's iPod versus just any MP3

player.

A brand is a cluster of values e.g. Google is reliable, ethical, invaluable,

innovative and so on.

A brand is a vision. Here managers aspire to see a brand with a cluster of values.

In this context vision is similar to goal or mission.

A brand is added value, where the consumer sees value in a brand over and above

its competition e.g. ICICI over Dena Bank, and Maruti over ‘Ambassador’ -

despite similarities.

A brand is an identity that includes all sorts of components; depending on the

brand e.g. ‘TATA’ encapsulates ethics, environmentalism and political beliefs.

A brand is an image where the consumer perceives a brand as representing a

particular reality e.g. MRF Tyres are tough.

A brand is a relationship where the consumer reflects upon him or herself through

the experience of consuming a product or service.

Pricing Strategy

6.0 Introduction

Price is the most obvious representation of the value that the marketer wants the

consumer to perceive. To a significant extent, a high price does convey a ‘premium’

image and a low price does communicate an image of brand for ‘mass consumption’. The

significance of pricing has increased with the technology of manufacturing and marketing

becoming easily available at almost the same price to the competitors and also, the

information of competitors’ offerings becoming easily available to the consumers. The

segments becoming more numerous and smaller and markets becoming saturated have all

contributed to make the price competition extremely intense. The lack of pace at which

new ideas of value-addition are implemented by the marketers has led to heightened

degree of price competition.

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A price can be expressed in monetary and non-monetary terms. Many words are used as

surrogates of price: Commission, fee, rate, charges, salary, rent, wages, dividend, and

interest. A price contains all the terms of purchase: discounts, packing, handling and

shipping charges, credit charges and other forms of interest and late payment penalties.

Prices are quantitative, unambiguous and unidimensional, whereas other characteristics

like quality, image, customer service, promotion and similar factors are qualitative,

ambiguous and multi-dimensional. It provides a basis of not only economic comparison

but also social comparison.

6.1 Pricing decision framework

The pricing decision requires consideration of at least four factors:

1. Pricing situations- identification of situations that require pricing

decisions

2. Influences that govern a pricing decision

3. Choice of the appropriate approach to pricing- cost plus, what the

market can bear and competition driven

4. Selecting the method of price determination

(i) Pricing Situations

a. Product- Stages of Product Life Cycle (PLC)

b. Competition levels- high and low

c. Stage of evolution of Consumer

d. Stage of evolution of Consumer

e. Type of customer

f. Product portfolio- one, many or few products

g. Target location

h. Types of channels and profile of channel members

(ii) Pricing Influences

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The internal influences on pricing decision are cost architecture, product

portfolio and marketing strategy. The external influences are- demand (price

elasticity of demand), competition, channels, politico-legal system.

(iii) Pricing Approaches

The marketers overcome the pricing dilemmas by relying on

cost, competition and demand as the basis for formulation of their pricing

approaches.

(iv) Pricing Methods

Finally, the marketer has to settle for a pricing method from among

a. Cost based- Cost plus or Mark Up, Marginal Cost or contribution,

Target return, Payback method and/or learning curve

b. Demand based- Differential pricing, perceived value pricing,

psychological pricing and value based pricing

c. Competition based- Leader pricing, Competitive pricing, Follow

the leader, Sealed bid pricing.

The pricing method finally followed can be a combination of the above. Let's have a look

at some of them and try to understand the best policy/strategy in various situations.

6.3 Pricing Sensitivity

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Price sensitivity of customers determines the extent of freedom that the companies will

have in changing the price of its offering. An organization must know the price

sensitivity of its customers and the factors that influence the prices. The thumb rules

related to the price sensitivity are as follows:

1. A customer’s price sensitivity is high if it is he who is individually

bearing the cost.

2. A customer is less price sensitive when he buys on credit/instalment

rather than cash payment.

3. A customer is more price sensitive when the item that he is buying

consumes a significant percentage of his expenditure/income/available

money.

4. A customer is more price sensitive when he has to resell the product in

a competitive market.

5. The customer is likely to be more price sensitive if he is

knowledgeable about the product category or the brand in question.

6. The customer is likely to be more price sensitive if he can easily shop

around and gather information about alternatives and competing brands.

7. The customer is likely to be more price sensitive if he has enough time

to make the purchase.

8. The customer is likely to be more price sensitive if he can change

brands/ suppliers easily without incurring an additional cost.

6.4 Concluding thoughts

Initial prices of any product must be established after analysing the

cost structure of the company, gauging the costs of the competitors, and

understanding the value propositions desired by the customers in the

intended market. Pricing is a dynamic decision and must undergo changes as

the business situation changes.

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Pricing is a strategic decision and can be used to signal many things to

the customers and the competitors. However, in real life, the pricing is done

by almost anyone, right from accounts clerk in some companies to the CEO

in others. Formal pricing department has not emerged for companies cutting

across sectors and industries.

Each business development has an implication for the pricing strategy

of the firm. For example, technological advancement of a product or

packaging, promotional expenditure, distribution coverage, etc. impact the

final prices at which the products are sold to the consumers. Therefore, the

pricing should never be done in an ad-hoc manner but flow from strategic

decisions of the company.

Distribution and Retailing

7.0 Introduction

This refers to one of the major Ps of marketing, viz. Place.

Product and service distribution and retailing has developed into a highly

specialised activity. However, with the changing dynamics of availability of

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new technologies as well as need to be available timely even in ever new places

has resulted in a virtual revolution in distribution channel design and

management.

7.1 Place, distribution, channel, or intermediary.

A channel of distribution comprises a set of institutions which perform

all of the activities utilised to move a product and its title from production to

consumption.

- Bucklin - Theory of Distribution Channel Structure (1966)

Channel, distribution, or intermediary is the mechanism through which goods

and/or services are moved from the manufacturer/service provider to the user

or consumer.

7.2 Functions of channel intermediaries

1. Satisfying the needs of producers and consumers at the same time: Channel

intermediaries perform several specialised functions that enable manufacturers to

make their goods available to their consumers at the right place and at the right

time. Manufacturers produce a large quantity (for capturing economies of scale)

of limited range of products whereas customers usually want only a limited

quantity of wide range of goods. Channel members reconcile these conflicting

situations. A related function is breaking bulk. A wholesaler buys large quantities

from a manufacturer and then sells smaller quantities to retailers.

2. Improve efficiency of the marketing transactions: The channel members improve

the efficiency of the entire chain by reducing the number of transactions and by

creating a bulk for transportation.

3. Improved Accessibility: The physical distances and the gap between the time of

production and time of purchase is bridged by the channel intermediary.

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4. Providing Specialist Services: Channel intermediaries have expertise in areas such

as selling, servicing and installation. Producers can specialise in manufacturing

and allow distributors to these functions.

7.3 Six basic 'channel' decisions

1. Do we use direct or indirect channels? (e.g. 'direct' to a consumer, 'indirect' via a

wholesaler)?

2. Do we use Single or multiple channels?

3. What should be the cumulative length of the multiple channels?

4. Which types of intermediary (see later) should we use?

5. What should be the number of intermediaries at each level in a geographical area

(e.g. how many retailers in Southern India)?

6. Who should we choose as intermediaries to avoid 'intrachannel conflict' (i.e.

infighting between local distributors)?

7.4 Types of Channel Intermediaries

There are many types of intermediaries such as wholesalers, agents, retailers, the Internet,

overseas distributors, direct marketing (from manufacturer to user without an

intermediary), and many others. The main modes of distribution are looked at in more

detail in the following paragraphs:

1. Wholesalers

Wholesalers break down 'bulk' into smaller packages for resale by a retailer. They buy

from producers and resell to retailers. They take ownership or 'title' to goods whereas

agents do not take the title. They provide storage facilities. For example, mango farmers

sell their produce even before it is fully ripe to a wholesaler who stores it, lets it ripen and

eventually resells to a retailer. Wholesalers often reduce the physical contact cost

between the producer and consumer e.g. customer service costs, or sales force costs. A

wholesaler often takes on some of the marketing responsibilities. Many produce their

own brochures and use their own telesales operations.

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2. Agents

Agents are used in international as well as domestic markets. An agent typically secures an order

for a producer and takes a commission. They do not tend to take title to the goods. This means

that capital is not tied up in goods. However, a 'stockist agent' holds consignment stock (i.e. will

store the stock, but the title will remain with the producer. This approach is used where goods

need to get into a market soon after the order is placed e.g. foodstuffs). Agents can be very

expensive to train. They are difficult to keep control of due to the physical distances

involved. They are difficult to motivate.

3. Retailers

Retailers have a much stronger personal relationship with the consumer. The retailer will

hold several other brands and products. A consumer will expect to be exposed to many

products. Retailers will often offer credit to the customer e.g. travel agents, the local

grocer, etc. Products and services are promoted and merchandised by the retailer. The

retailer will give the final selling price to the product. Retailers often have a strong 'brand'

themselves e.g. McDonald and WalMart in the USA, and Big Bazar and Reliance Retail

in India. The retailer is a primary point of contact with the end-customer. By virtue of

their position in the distribution chain, they are a source of credibility and trust, their

views about products and brands are believed to be true by customers especially in

markets where product/brand awareness levels are low. Traditionally, the retailers were

relationship marketers. He caters to a set of buyers with whom his relationship may

extend for several years and even through generations. Retailer is the main source of

point of sale information and opinion. He can be used to bring about change in tastes and

preferences of the customers.

4. Weekly markets, Bazaars, Haats and Shandies

The haats or the weekly markets are the oldest outlets to purchase household goods and

for trade. The shopkeepers have pre-assigned places to sell their wares in these markets.

A typical markets are usually in a large open space (or on the roadside pavements) with

adequate space for product display. These markets offer convenience of a on-stop

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shopping option. These markets are also attractive whether in Bangalore or in Bangkok in

the sense that besides shopping, these also offer entertainment. It is a place to find all

kinds of bargains mostly in a vast array of product categories.

5. Melas and Fairs

Melas and Fairs offer are mostly associated with religio-cultural occasions and in that

sense they have a very long past. Their historical moorings and the consequent familiarity

of the customers makes them a happy huning grund for marketers of all kinds. The

participation in melas varies from a few thousand to many lakhs of people. The large

melas in India, e.g. the Kumbh do actually attract some of the largest number of people n

the world at a single place. These melas offer a large number of opportunities to sell, both

for manufactured goods as well as agricultural produce. The melas need little pre-

publicity because their regularity over large number of years has ensured for them a

permanent place in the calendar of different places. The timing of most of the fairs is

around the time when the target population is in a mood to celebrate and indulge in. It can

be Christmas, Diwali, Baisakhi or Pongal. In India, most fairs are held around the harvest

time. The mood is festive and the pocket is full, a ripe combination to make a sale.

Some of the famous melas and fairs in India are Kumbh (Allahabad, Ujjain, Nasik and

Haridwar), Pushkar (near Ajmer), Dussehra (Kullu), Cattle fair (Sonepur-Bihar), Makar

Villaku (Kerala), Great Carnival (Goa), etc. According to IMRB, there are more than 800

melas of more than a reasonable size that are held every year in India. The number of

melas of smaller size may run into thousands.

6. Unofficial Channels

The un-served or under-served areas, certain unofficial channels develop. For example, in

the Indian villages, one has seen the mechanics doubling up as retailers for two-wheeler

automobiles like motorcycles. The local grocer performing the role of a chemist by

stocking and selling certain Over-the-counter drugs.

7. Petrol Pumps and Convenios

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The petrol, diesel and gas dispensing (petrol pumps or petrol bunks) stations have

become multi-purpose outlets. The Kisan Seva Kendras (Indian Oil Corporation Ltd.) or

the convenios (of other petrol marketing companies) are serving as outlets for a wide

variety of products ranging from packaged food to frozen food to snacks to magazines

and books to music and movie CDs to agricultural inputs. This is a new channel and is

frequented by people who are passing through the petrol/diesel dispensing station.

8. NGOs

NGOs and other civil society organisations have emerged as a possible channels of

distribution specially for products or markets that otherwise have certain diffiuties

associated with them. NGOs command a certain degree of respect and influence among

the target audience and the targeted beneficieries. Companies and NGOs have been able

to forge win-win relationships wherein the companies take advantage of the grassroots

level infrastructure of the NGOs as well as the positive image that they carry. NGOs on

the other hand have been able to make a variety of products reach their targted

beneficieries and have also used the expertise as well as exposure to the markets to sell

the produce of their beneficieries into distant markets. In this process, employment has

got generated for local residents.

9. Modern format retailers

In the recent years the retailers have grown in size. Growth in retailer size means that it

has become economic for manufacturers to supply directly to retailers rather than through

wholesalers. Supermarket chains and corporate retailers exercise considerable power over

manufacturers because of their enormous buying capabilities. Wal Mart uses its

enormous retail sales to pressurize manufacturers to supply products at frequent intervals

directly to their store at concessional prices.

There are many types of retail formats like discount stores, supermarkets, convenience

stores and department stores, etc. These retail store formats vary from each other on the

basis of their product assortment (product depth and width), price and location. Retail

store formats can be classified on the basis of the number of products sold by the retailer

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and the range of products in each category. Speciality Stores, Category Killers,

Departmental Stores and Hypermarkets are some such divisions.

What is common to all the modern store formats is that they emphasize on improving the

‘Total Customer Experience’ and for this the deploy modern methods of customer

tracking, supply chain management, merchandise planning, etc. The modern retail

formats are challenging the dominance of traditional channels and in many developing

countries this conflict has assumed violent proportions.

10. Internet

Internet marketing is also referred to as cyber-marketing. It is the latest in the series of

direct retailing innovations like catalogue marketing, special-interest mail order,

telemarketing and television shopping. Internet is becoming and important channel much

faster than any other channel. The Internet has a geographically dispersed market. The

main benefit of the Internet is that niche products reach a wider audience. There are low

barriers to entry as set up costs are low. Use e-commerce technology (for payment,

shopping software, etc). There is a paradigm shift in commerce and consumption which

benefits distribution via the Internet. However, certain problems remain in shopping via

the internet- the areas of low internet penetration are insulated from any internet

marketing effort, there are very few codified rules for shopping in cyberspace-this leads

to problems in enforcing commitments, the delivery systems for goods bought over the

internet still remains a major issue, logistics have to improve if internet marketing has to

dominate, many a times the customers may like to touch, feel and experience a product

before buying it, internet marketing presupposes familiarity with working on the

computers- it may not be true in certain geographies. However, the world of business

seems to believe that internet marketing will keep growing at a rapid rate in the coming

years. Rediff shopping, Indiatimes shopping, e-bay, Amazon, etc. are some of the major

players in the internet marketing space.

7.5 Channel Integration

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There is no standard rule for the degree or the extent of integration that is

appropriate for a channel. It varies widely, depending on industries and

geographies. The manufacturer can own the channel as part of forward integration,

e.g. LG’s company showrooms or Bata’s company owned outlets. On the other

hand the channel might be comprising of members who are quite independent and

totally beyond the control of the manufacturer.

7.51 Conventional Marketing Channels

The independence of channel intermediaries means that the manufacturer has little or no

control over them. The traditional marketing channels occasionally witness hard

bargaining and channel conflicts, e.g. the retailer may want to display brand A on the

shop front counter whereas the manufacturer of brand B may want him to display brand

B at the same place and with increased prominence. Though the channel intermediary

may want to appropriate the role of customer-contact to itself, the manufacturer has to

ensure that he stays in touch with customers. The relationship between the manufacturer

and the intermediaries is governed by the balance of power between the two parties. A

manufacturer who dominates the market through its size and strong brands may exercise

considerable power over intermediaries though they are independent. However, with the

emergence of retail chains the balance has shifted. Now, retail chains like Big Bazar,

Reliance Fresh, Spencer’s, etc. enjoy enormous powers because of their ability to buy in

large quantities and to attract large number of customer footfalls.

7.52 Franchising

A franchise is a legal contract in which the manufacturer or the producer and the

intermediary agree to each member’s rights and obligations. The intermediary

receives marketing, managerial, technical and financial services from the producer

in return for a fee. Franchise operations give the manufacturer a certain degree of

control because the agreement provide for a certain level of formal coordination

and integration of marketing and distribution activities between the manufacturer

and intermediaries. Franchising occurs at four levels:

i. Manufacturer and retailer- Car Showrooms

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ii. Manufacturer and wholesaler- Coca Cola and Pepsi

iii. Wholesaler and retailer- Computer Hardware, Share issues market,

insurance

iv. Retailer and retailer- Benneton, McDonald’s, Insurance products

In franchising, it is important that the profit and responsibility sharing is equitable for a

long-term sustainable relationship.

7.53 Channel Ownership

Total control over distributor activities comes with channel ownership by the

manufacturer or an intermediary. The forward integration by owning the sales

outlets lets the channel leader control the purchasing, production and marketing

activities of these outlets. In particular, control over purchasing means a captive

outlet for your products. However, the advantage of control has to be weighed

against the high price of acquisition and the danger that the move into retailing will

spread their managerial resources too thinly.

7.6 Selection of a distributor

Market segment - the distributor must be familiar with your target consumer and

segment.

Changes during the product life cycle - different channels can be exploited at

different points in the Product Life Cycle (PLC).

Producer - distributor fit - Is there a match between their policies, strategies,

image, and yours? Look for 'synergy'.

Qualification assessment - establish the experience and track record of your

intermediary.

How much training and support will your distributor require?

7.7 Managing Channel Conflict

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Various members of the distribution channel have different goals. These goals may be at

variance with each other and may be divergent. The goal divergence becomes a source of

conflict when one member of the distribution channel perceives that some other member

is preventing the first member from achieving its goals. The intensity of conflict can vary

from minor disagreements to major disputes leading to severance of relationships.

The sources of channel conflict can be differences in goals, differences in desired product

lines, existence of multiple distribution channels and inadequacies in performance from

any quarter. Some methods of avoiding the channel conflicts are- developing a

partnership approach, training your staff in effective negotiations and conflict handling,

proper division of territories among channel members, occasional coercion and lastly and

most importantly, improving individual performance.

Integrated Marketing Communication

Introduction to Marketing Communication

Marketing communications is a subset of the overall subject area known as

marketing. Marketing has a marketing mix that is made of price, place, promotion,

product (know as the four Ps), that includes people, processes and physical evidence,

when marketing services (known as the seven Ps).

How does marketing communications fit in? Marketing communications is 'promotion'

from the marketing mix.

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Why are marketing communications 'integrated?' Integrated means combined or

amalgamate, or put simply the jigsaw pieces that together make a complete picture. This

is so that a single message is conveyed by all marketing communications. Different

messages confuse your customers and damage brands. So if a TV advertisement carries a

particular logo, images and message, then all newspaper advertisements and point-of-sale

materials should carry the same logo, images or message, or one that fits the same theme.

Coca-Cola uses its familiar red and white logos and retains themes of togetherness and

enjoyment throughout its marketing communications.

Marketing communications has a mix. Elements of the mix are blended in different

quantities in a campaign. The marketing communications mix includes many different

elements, and the following list is by no means conclusive. It is recognised that there is

some cross over between individual elements (e.g. Is donating books and school bags to

children in a village school, by asking shoppers to purchase a particular brand of

detergent, public relations or sales promotion?)

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Here are the key of the marketing communications mix.

1. Personal Selling

2. Sales Promotion

3. Public Relations (and publicity)

4. Direct Marketing

5. Trade Fairs and Exhibitions

6. Advertising (above and below the line)

7. Sponsorship

8. Packaging

9. Merchandising (and point-of-sale)

10. E-Marketing (and Internet promotions)

Integrated marketing communications means that the elements of the communications

mix are 'integrated' into a coherent whole. This is known as the marketing

communications mix, and forms the basis of a marketing communications campaign.

The elements of the marketing communication mix are integrated to form a coherent

campaign. As with all forms of communication, the message from the marketer follows

the 'communications process' as illustrated above. For example, a radio advertisement is

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made for a tractor manufacturer. The tractor manufacturer (sender) pays for a specific

advertisement which contains a message specific to a target audience (encoding). It is

transmitted during a set of commercials from a radio station (Message / media).

The message is decoded by a radio (decoding) and the target consumer interprets the

message (receiver). He or she might visit a dealership or seek further information from a

web site (Response). The consumer might buy a tractor or express an interest or dislike

(feedback). This information will inform future elements of an integrated promotional

campaign. Perhaps a direct mail campaign would push the consumer to the point of

purchase. Noise represents the thousands of marketing communications that a consumer

is exposed to everyday, all competing for attention.

8.1 Components of the Promotion (Marketing Communication) Mix

Let us look at the individual components of the promotions mix in more detail.

Remember all of the elements are 'integrated' to form a specific communications

campaign.

8.11 Personal Selling.

Personal Selling is an effective way to manage personal customer relationships. The sales

person acts on behalf of the organization. They tend to be well trained in the approaches

and techniques of personal selling. However sales people are very expensive and should

only be used where there is a genuine return on investment. For example, salesmen are

often used to sell those models of motorcycles or brand of pesticides where the margin is

high.

8.12 Sales Promotion

Sales promotion tends to be thought of as being all promotions apart from advertising,

personal selling, and public relations. For example, the BOGOF promotion, or ‘Buy One

Get One Free’ is very common. Others include couponing, money-off promotions,

competitions, free accessories (such as free blades with a new razor), introductory offers

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(such as buy digital TV and get free installation), and so on. The cost of sales promotion

should be carefully estimated and compared with the next best alternative.

8.13 Public Relations (PR)

Public Relations is defined as 'the deliberate, planned and sustained effort to establish

and maintain mutual understanding between an organization and its publics' (Institute of

Public Relations). It is relatively an inexpensive way of reaching out. Successful

strategies tend to be long-term and plan for all eventualities. Most companies exploit PR;

just watch what happens when there is a controversy regarding their products or business

practices. The pre-planned PR machine clicks in very quickly with a very effective

rehearsed plan.

8.14 Direct Mail

Direct mail is very highly focussed upon targeting consumers based upon a database. As

with all marketing, the potential consumer is 'defined' based upon a series of attributes

and similarities. Creative agencies work with marketers to design a highly focussed

communication in the form of a mailing. The mail is sent out to the potential consumers

and responses are carefully monitored. For example, if you are marketing fertilisers, you

would use a database of progressive farmers as the basis of your mail shot.

8.15 Trade Fairs and Exhibitions

Such approaches are very good for making new contacts and renewing old ones.

Companies will seldom sell much at such events. The purpose is to increase awareness

and to encourage trial. They offer the opportunity for companies to meet with both the

trade and the consumer. Kisan Melas, Gram-Shilp Melas, and even the religious and

seasonal fairs have a permanent place in the lives of villagers. These occasions are

excellent opportunities for marketers to establish a connection with the target customers

in rural areas.

8.16 Advertising

There are many advertising 'media' such as newspapers (local, national, free, trade),

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magazines and journals, television (local, national, terrestrial, satellite) cinema, outdoor

advertising (such as posters, bus sides).

8.17 Sponsorship

Sponsorship is where an organization pays to be associated with a particular event, cause

or image. Companies will sponsor sports events such as local sports competition in

villages, Bullock Cart or bicycle race or even Olympics. The attributes of the event are

then associated with the sponsoring organization.

The elements of the promotional mix are then integrated to form a unique, but coherent

campaign

8.18 The fundamentals of Advertising

Advertising is an important element of the marketing communications mix. Put

simply, advertising directs a message at large numbers of people with a single

communication. It is a mass medium.

Advertising has a number of benefits for the advertiser. The advertiser has control over

the message. The advertisement and its message, to an extent, would be designed to the

specifications of the advertiser. So the advertiser can focus its message at a huge number

of potential consumers in a single hit, at a relatively low cost per head. Advertising is

quick relative to other elements of the marketing communications mix (for example

personal selling, where an entire sales force would need to be briefed - or even recruited).

Therefore an advertiser has the opportunity to communicate with all (or many of) its

target audience simultaneously.

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Table 8.1

Advertising Media

Outdoor (Posters or

transport)

New Media Mobile

devices

New Media Internet -

websites and search

engines

Newspapers (Local and

National) Television Magazines

Radio Cinema Others . . .

8.30 Fundamentals of Sales Promotion

As stated earlier, Sales promotion is any initiative undertaken by an organisation to

promote an increase in sales, usage or trial of a product or service (i.e. initiatives that are

not covered by the other elements of the marketing communications or promotions mix).

Sales promotions are varied. Often they are original and creative, and hence a

comprehensive list of all available techniques is virtually impossible (since original sales

promotions are launched daily!). Here are some examples of popular sales promotions

activities:

(a) Buy-One-Get-One-Free (BOGOF) - which is an example of a self-liquidating

promotion. For example if a loaf of bread is priced at Rs. 10, and costs Rs. 2 to

manufacture, if you sell two for Rs. 10, you are still in profit - especially if there is a

corresponding increase in sales. This is known as a PREMIUM sales promotion tactic.

(b) Customer Relationship Management (CRM) incentives such as bonus points or

money-off coupons. There are many examples of CRM, from banks to petroleum and

diesel marketing companies as well as restaurants.

(c) New media - Websites and mobile phones that support a sales promotion.

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(d) Merchandising additions such as dump bins, point-of-sale materials and product

demonstrations.

(e) Free gifts e.g. many tea companies give a glass or cup-saucers with packets of tea.

(f) Discounted prices e.g. Budget airline such as SpiceJet and GoAir, e-mail their

customers with the latest low-price deals once new flights are released, or additional

destinations are announced.

(g) Joint promotions between brands owned by a company, or with another company's

brands. For example fast food restaurants like McDonalds often run sales promotions

where toys, relating to a specific movie release, are given away with promoted meals.

(h)  Free samples (also known as sampling) e.g. tasting of food and drink at sampling

points in supermarkets. For example, Amul routinely puts up kiosks and stalls to enable

the customers to taste their new flavours of flavoured milk, sweets as well as milk

beverages like Cold Coffee.

(i) Vouchers and coupons, often seen in newspapers and magazines, on packs.

(j) Competitions and prize draws, in newspapers, magazines, on the TV and radio, on

The Internet, and on packs.

(k) Cause-related and fair-trade products that raise money for charities, and the less

well off farmers and producers, are becoming more popular.

(l) Finance deals - for example, 0% finance over 3 years on selected vehicles.

Many of the examples above are focused upon consumers. Don't forget that promotions

can be aimed at wholesales and distributors as well. These are known as Trade Sales

Promotions. Examples here might include joint promotions between a manufacturer and

a distributor, sales promotion leaflets and other materials (such as T-shirts), and

incentives for distributor sales people and their retail clients.

8.40 Fundamentals of Direct Marketing

Direct marketing is a channel-free approach to distribution and/or marketing

communications. So a company may have a strategy of dealing with its customers

'directly,' for example banks (such as State Bank of India) have no channel intermediaries

i.e. distributors, retailers or wholesalers. Therefore - 'direct' in the sense that the deal is

done directly between the manufacturer/ service provider and the customer.

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As mentioned above, 'direct' also in the sense that marketing communications are targeted

at consumers by the manufacturers. For example, a brand that uses channels of

distribution would target marketing communications at wholesalers/distributors, retailers,

and consumers, or a blend of all three. On the other hand, a direct marketing company

could focus upon communicating directly with its customers. Direct marketing and direct

mail are often confused - although direct mail is a direct marketing tool.

There are a number of direct marketing media other than direct mail. These include (and

are by no means limited to):

Inserts in newspapers and magazines

Customer care lines (telemarketing)

Catalogues

Coupons

Door drops

TV and radio advertisements with free phone numbers or per-minute-charging.

. . . and finally - and most importantly - The Internet and New Media.

SMS marketing

The Internet and New Media (e.g. mobile phones or PDAs) are perfect for direct

marketing. Consumers have never had so many sources of supply, and suppliers have

never had access to so many markets. There is even room for even niche marketers.

Many companies use direct marketing, and a current example of its use, as part of a

business model, is the way in which it is used by low-cost airlines. There is no

intermediary or agent, customers book tickets directly with the airlines over The Internet.

Airlines capture data that can be used for marketing research or a loyalty scheme.

Information can be processed quickly, and then categorise it into complex relational

databases.

Then, for example, special offers or new flights destinations can be communicated

directly to customers using e-mail campaigns. Data is not only collected on markets and

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segments, but also on individuals and their individual buyer behaviour. Companies such

as Amazon are wholesalers of books (i.e. they do not write or publish them) - so they use

Customer Relationship Management and marketing communications targeted directly at

individual customers - which is another, slightly different example of direct marketing.

8.50 Fundamentals of Public Relations(PR)

Public Relations (PR) is a single, broad concept that includes any purposeful

communications between an organisation and its publics that aim to generate goodwill.

Publics, put simply, are its stakeholders. PR is proactive and future orientated, and has

the goal of building and maintaining a positive perception of an organisation in the mind

of its publics. This is often referred to as goodwill.

Even though it is difficult to see the difference between marketing communications and

PR since there is a lot of crossover. This makes it a tricky concept to learn. Added to this

is the fact that PR is often expensive, and not free, as some definitions would have you

believe. PR agencies are not cheap. Below are some of the approaches that are often

considered under the PR banner.

1. Interviews and photo-calls

It is important that company executives are available to generate goodwill for their

organisation. Many undertake training in how to deal with the media, and how to behave

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in front of a camera. There are many key industrial figures that proactively deal with the

media in a positive way for example, Sunil Mittal of Bharati Telecom Group or Anil

Ambani of Anil Dhirubhai Ambani group.

Interviews with the business or mass media often allow a company to put its own

perspective on matters that could be misleading if simply left to dwell untended in the

public domain.

2. Speeches, presentations and speech writing

Key figures from within an organisation will write speeches to be delivered at corporate

events, public awards and industry gatherings. PR company officials in liaison with

company managers often write speeches and design corporate presentations. They are

part of the planned and coherent strategy to build goodwill with publics. Presentations

can be designed and pre-prepared by PR companies, ultimately to be delivered by

company executives.

3. Corporate literature e.g. financial reports

Corporate literature includes financial reports, in-house magazines, brochures,

catalogues, price lists and any other piece of corporate derived literature. They

communicate with a variety of publics. For example, financial reports will be of great

interest to investors and the stock market, since they give all sorts of indicators of the

health of a business. A company Chief Executive Officer CEO will often write the

forward to an annual financial report where he or she has the opportunity to put a

business case to the reader. This is all part of Public Relations.

8.60 Fundamentals of Personal Selling

Personal selling occurs where an individual salesperson sells a product, service or

solution to a client. Salespeople match the benefits of their offering to the specific needs

of a client. Today, personal selling involves the development of longstanding client

relationships. In comparison to other marketing communications tools such as

advertising, personal selling tends to:

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Use fewer resources, pricing is often negotiated.

Products tend to be fairly complex (e.g. financial services or new cars).

There is some contact between buyer and seller after the sale so that an ongoing

relationship is built.

Client/prospects need specific information.

The purchase tends to involve large sums of money.

There are exceptions of course, but most personal selling takes place in this way.

Personal selling involves a selling process that is summarised in the following Five Stage

Personal Selling Process. The five stages are:

1. Prospecting,

2. Making first contact,

3. The sales call,

4. Objection handling,

5. Closing the sale

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