ms 204 marketing management (2)

8/2/2019 MS 204 Marketing Management (2)

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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.
http://www.bingeonbingo.com/http://www.bingeonbingo.com/


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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 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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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


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


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


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

ms 204 marketing management (2)

Documents