Marketing management Lecture_SEM II.pptx

MARKETING MANAGEMENT

CO1 For a given marketing objective of a company the student manager will be able to develop a suitable marketing mix.

MODULE I Introduction: Concept, nature, scope and importance of marketing; Marketing concept and its evolution; Marketing mix; Marketing environment – macro and micro components and their impact on marketing decisions; Market segmentation and positioning

CO2 For a given product the student managers will be able toapply the three steps of target marketing: market segmentation, target marketing, and market positioning

MODULE II Product Decisions: Concept of a product; Classification of products; levels of product, Major product decisions; Product line strategies and product mix strategies; Product life cycle – strategic implications; New product development and consumer adoption process. Packaging and labelling.

CO3 For various stages in the life cycle of the product the student managers will be able to recommend a suitable pricing strategy.

MODULE III Pricing Decisions: Pricing objectives, Factors affecting price determination; Pricing policies methods and strategies, Initiating and responding to price change

CO4 For a given company the student managers will be able to evaluate different distribution channel options and their suitability for the company’s product.

MODULE IV Distribution Channels and Physical Distribution Decisions: Nature, functions, and types of distribution channels; Distribution channel intermediaries; Channel management decisions; Retailing and wholesaling

CO5 For a given promotional objective of a company the student manager should be able to develop a suitable promotion mix (advertising, sales promotion, public relations, personal selling, and direct marketing etc.) for the product.

MODULE V Promotion Decisions: Communication Process; Promotion mix – advertising, personal selling, sales promotion, publicity and public relations; Determining advertising budget; Copy designing and testing; Media selection; Advertising effectiveness; Sales promotion –tools and techniques.

Introduction to -

What is Marketing…?? Selling? Advertising? Promotions? Making products available in stores? Maintaining inventories? All of the above, plus much more!

Marketing = ? Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services to create exchanges that satisfy individual and organizational goals American Marketing Association

Marketing = ? Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

Scope – What do we market Goods Services Events Experiences Personalities Place Organizations Properties Information Ideas and concepts

Core Concepts of Marketing Based on : Needs, Wants, Desires / demand Products, Utility, Value & Satisfaction Exchange, Transactions & Relationships Markets, Marketing & Marketers.

In order to understand Marketing let us begin with the Marketing Triangle Customers Competition Company

Who is a Customer ?? Anyone who is in the market looking at a product / service for attention, acquisition, use or consumption that satisfies a want or a need CUSTOMER IS . . . . .

Customer – CUSTOMER has needs, wants, demands and desires Understanding these needs is starting point of the entire marketing These needs, wants …… arise within a framework or an ecosystem Understanding both the needs and the ecosystem is the starting point of a long term relationship

Customers - Problem Solution As a priority , we must bring to our customers “ WHAT THEY NEED ” We must be in a position to UNDERSTAND their problems Or in a new situation to give them a chance to AVOID the problems

The Difference Between Marketing and Selling Marketing is the process of determining customer wants and then developing a product to satisfy that need and still yield a satisfactory profit. It is externally focused. Selling is producing a product and then trying to persuade customers to purchase it -- in effect, trying to alter consumer demand. It is internally focused.

Some industries and organizations remain at the production-orientation stage. PRODUCTION ORIENTATION PRODUCTION ORIENTATION SALES ORIENTATION Other industries and organizations have progressed only to the sales-orientation stage. Many industries and organizations have progressed to the marketing-orientation stage. PRODUCTION ORIENTATION SALES ORIENTATION MARKETING ORIENTATION Late 1800s Early 1930s Mid-1950s 1900s Stages in the Evolution of Marketing Service Orientation 2008

Driving Factors That Influence Marketing Activities Marketing and the Exchange do not occur in a vacuum. Although an organization’s marketing focuses on assessing and satisfying consumer needs, other people, groups and forces interact to shape the organization's marketing actions

Needs - state of felt deprivation for basic items such as food clothing and shelter. What Motivates a Consumer to Take Action?

Wants - form that a human need takes as shaped by culture and individual personality.

Wants “Demand” Buying Power Demands - human wants backed by buying power.

Products(Goods) - anything that can be offered to a market for attention, acquisition, use or consumption and that might satisfy a need or want. Examples : persons, places, organizations, activities, and ideas. Services - activities or benefits offered for sale that are essentially intangible and don’t result in the ownership of anything. Examples : banking, airlines, haircuts, spy services and hotels. What Will Satisfy Consumer’s Needs and Wants?

Marketing Philosophies The production concept The product concept The selling concept The marketing concept The societal marketing concept

The Production Concept The production concept holds that consumers will prefers products that are widely available and inexpensive . The Product Concept The product concept holds that consumers will favor those products that offer the most quality, performance, or innovative features.

The Selling Concept The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization ’ s products. The organization must, therefore, undertake an aggressive selling and promotion effort The marketing concept The marketing concept holds that the key to achieving its organizational goals consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its chosen target markets

The Societal Marketing Concept The societal marketing concept holds that the organization ’ s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in a way that preserves or enhances the consumer ’ s and the society ’ s well-being.

The Marketing Mix These are the tools of marketing management employed by marketers. They are areas where marketing managers need to make decisions. These decisions affect the nature of the offering or package of benefits that the organisation offers to customers. The tools are commonly known as the 4P’s or 7P’s.

The Marketing Mix The term “mix” is used to explain the point that at any one time the marketer will select a set of tools from the marketing toolbox or the marketing mix in specific proportions to solve specific problems – in the same way one selects spanners and other tools for a specific job OR ingredients to bake a particular type of cake.

What are the tools? Product Price Place (Distribution) Promotion People Process Physical evidence

Product The combination of goods and services the firm offers to the target market Quality Features Options Brand name Packaging Sizes Services Warranties Returns

Price The price consumers are willing to pay, which includes – Discount Allowances Payment period Credit terms

Place (Distribution) The company’s activities that make the product available to the target market. Which includes: Channel of distribution Coverage Locations Inventory Transport

Promotion (Communication) The activities that promote and communicate the merits of the overall product. Advertising Personal selling Sales promotion Public relations Direct Marketing

The Seven P’s Booms and Bitner extended the traditional 4P (McCarthy) framework to seven to reflect a predominantly service economy Extended mix: People Process Physical evidence

People The attitudes of staff Training of staff Internal relations The observable behaviour of staff The level of service-mindedness in the organisation The consistency of appearance of staff The accessibility of people

Process The manner in which the service is delivered Degree of customer contact Quality control standards Quality assurance Payment methods (degree of convenience) Queuing systems for customers Waiting times

Physical Evidence - ambience The “environment” or atmosphere in which the service is delivered Buildings Furnishings/décor Layout Goods associated with the service e.g. carrier bags, tickets, brochures etc. All the above can help shape customers’ perceptions of the service.

New Concepts in Marketing Relationship Marketing E-business Database marketing

Customer Relationship Management The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

Customer Perceived Value Customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.

Customer Satisfaction Dependent on the product’s perceived performance relative to a buyer’s expectations.

Loyalty & Retention Financial Benefits Social Benefits Structural Ties Focus on profitable customers

Partner Relationship Marketing Partners inside the firm All employees customer focused Teams coordinate efforts toward customers Partners outside the firm Supply chain management Strategic alliances

Emerging Challenges Nonprofit Marketing New Marketing Landscape & Information Technology Ethical Concerns Globalization Changing World Economy New Marketing Challenges

Reverse marketing Reverse Marketing is the concept of making the customer seek the firm rather than marketers seeking the customer. Usually, this is done through traditional means of advertising, such as television advertisements print magazine advertisements and online media Reverse marketing works mainly on the basis of the Law of Attraction offering the product.

While marketing mainly deals with finding the right set of customers and targeting them, Reverse marketing deals with strategies that would make the customer find the company

MARKETING ENVIRONMENT AND PLANNING

Marketing Environment: The actors, factors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationship with target customers.

Includes: Microenvironment: actors close to the company that affect its ability to serve its customers. Macroenvironment: larger societal forces that affect the microenvironment. Considered to be beyond the control of the organization. Marketing Environment

Actors of the Microenvironment

Company’s Internal Environment: Marketing managers must work with all departments of a company All Departments have an impact on the marketing department’s plans and actions The Company’s Microenvironment

Suppliers: Provide resources needed to produce goods and services. Important link in the “value delivery system.” Most marketers treat suppliers like partners. The Company’s Microenvironment

The Company’s Microenvironment Marketing Intermediaries: Help the company to promote, sell, and distribute its goods to final buyers Resellers Physical distribution firms Marketing services agencies Financial intermediaries

5 Types of Customers Consumer markets Business markets (B to B) Reseller markets Government markets International markets

Competitors Must understand competitor’s strengths Must differentiate firm’s products and offerings from those of competitors Competitive strategies should emphasize firm’s distinctive competitive advantage in marketplace

Public Financial public Media public Government public Citizen – action public Local Public General public Internal public

The Company’s Macroenvironment

Demographic Environment Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics Demographics change over time and companies must keep up with them

Economic Environment The economic environment consists of factors that affect consumer purchasing power and spending patterns It is not enough to have people, the people must have buying power

Natural Environment The natural environment consists of natural resources required by marketers or affected by marketing activities Anyone involved in tourism is responsible for protecting the environment and ensuring sustainability

Technological Environment The hospitality industry is greatly affected by changes in technology The Internet, computerized systems, key cards, etc. It has released blessings of highly computerized systems on one side and curses like nuclear missiles, chemical weapons on other side. Our attitude towards technology depends on whether we are more impressed with its wonders or its blunders

Political Environment The political environment is made up of laws, government agencies, and pressure groups that influence and limit the activities of various organizations and individuals in society

Cultural Environment The cultural environment includes institutions, sub culture and other forces that affect society’s basic values, perceptions, preferences, and behaviors

Market Segmenting, Targeting and Positioning

What are Markets? Market: people or institutions with sufficient purchasing power, authority, and willingness to buy.

Requirements of a Markets Need Ability Willingness Authority +

Types of Markets Consumer Market

Types of Markets Organizational or Business-to-Business Market

Role of Market Segmentation Market Segmentation: division of the total market into smaller, relatively homogeneous groups Why?

Why segment? Most efficient Most effective One Mass Market Many Groups of One

Markets have a variety of product needs and preferences. Marketers can better define customer needs. Decision makers can define objectives and allocate resources more accurately. The Importance of Market Segmentation

No Market Segmentation

Segmented by Gender

Segmented by Age

Definition Market Segmentation: Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

Criteria for Segmentation Substantiality Identifiability Measurability Accessibility Responsiveness Segment must be large enough to warrant a special marketing mix. Segments must be identifiable and their size measurable. Members of targeted segments must be reachable with marketing mix. Unless segment responds to a marketing mix differently, no separate treatment is needed.

Bases for Segmenting Consumer Markets Occasions, Benefits, Uses, Behavioral Geographic Region, City or Metro Size, Density, Climate Demographic Age, Gender, Family size and Life cycle, Occupation, or Income ... Lifestyle or Personality Psychographic

Customer Location Customer type Industry Size Organization Structure Purchase criteria Transaction conditions Buying situation Usage rate Purchase procedure Bases for Segmenting Business Markets

Stages in Developing Market Segmentation Strategies

Targeting Market Segments To select target segments, the firm must consider: The segment’s potential sales volume and profits. Competition currently selling to the segments. The firm’s abilities and objectives.

Strategies for Selecting Target Markets Concentrated Strategy Undifferentiated Strategy Multisegment Strategy

Undifferentiated Targeting Strategy Marketing approach that views the market as one big market with no individual segments and thus requires a single marketing mix.

Undifferentiated Targeting Strategy Advantages : Potential savings on production and marketing costs Disadvantages : Unimaginative product offerings Company is more susceptible to competition

Concentrated Targeting Strategy A strategy used to select one segment of a market for targeting marketing efforts. Niche One segment of a market.

Concentrated Targeting Strategy Advantages : Concentration of resources Meets narrowly defined segment Small firms can compete Strong positioning Disadvantages : Segments too small, or changing Large competitors may market to niche segment

Multisegment Targeting Strategy A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each.

Advantages : Greater financial success Economies of scale Disadvantages : High costs Cannibalization Multisegment Targeting Strategy

Cannibalization Situation that occurs when sales of a new product cut into sales of a firm’s existing products.

POSITIONING POSITIONING POSITIONING POSITIONING POSITIONING POSITIONING POSITIONING POSITIONING POSITIONING POSITIONING

POSITIONING When you think safe buses, Volvo often comes to mind. When you want medicine for cough and cold, you probably think of Crocin cold n’ Flu. If you are looking for healthy cooking oil, you probably think of Safola. These products have well defined positions in the minds of consumer

POSITIONING Positioning: The place the product occupies in consumers’ minds relative to competing products. Defined by consumers on the basis of important attributes Involves implanting the brands unique benefits and differentiation in consumer’s mind.

POSITIONING Positioning: Tide is positioned as powerful, all purpose detergent. Godrej Easy is positioned as a gentle detergent for woolen clothes. Ford Focus positioned on economy; Mercedes on luxury; and BMW on performance.

Two basic ways of positioning: Functionally positioned brands emphasize the features and benefits. Expressive positioned brands emphasize ego, social and satisfactions that a brand can bring.

More sub – categories of positioning: POSITION STRATEGY Functional Product features Price quality Use Expressive Users Benefit Heritage

Positioning Repositioning: When a firm wants to shift consumer opinions about an existing brand. Positioning: Designing a marketing program, including the product mix, that is consistent with how the company wants its products or services to be perceived.

Repositioning Strategy Change the tangible attributes and then communicate the new product to the same market. Change the way a product is communicated to the original market. Change the target market and deliver the same product. Change both the product (attributes) and the target market.

MODULE II

Product Decisions

What is a Product? Product: bundle of physical, service, and symbolic attributes designed to enhance buyers’ want satisfaction

Characteristics that distinguish services from goods: Intangibility Inseparability Perishability Difficulty of standardization

Classifying Goods and Services for Consumer and Business Markets Consumer products : products destined for use by ultimate consumers Business (or B2B) products : those that contribute directly or indirectly to the output of other products for resale Also called industrial or organizational products

TYPES OF CONSUMER PRODUCTS: Convenience Goods These are goods which consumers generally purchase frequently without making an effort or as a habit. The purchase is almost spontaneous and the person has already a predetermined brand in mind. These convenience goods include soaps, newspapers, toothpastes, toiletries, cigarettes, etc. Often convenience goods are bought impulsively or spontaneously. For example, when a person goes shopping around and sees a product which attracts his eyes, he buys it on impulse. Such goods are not purchased on regular basis.

Convenience product : good or service that consumers want to purchase frequently, immediately, and with minimal effort Impulse goods and services are purchased on the spur of the moment. Staples are convenience goods and services that consumers constantly replenish to maintain a ready inventory. Emergency goods and services are bought in response to unexpected and urgent needs.

Shopping Goods These are goods which are purchased after going around shops and comparing the different alternatives offered by different manufacturers and retailers. In this case, emphasis on quality, price, fashion, style, etc. are of great importance. A common example, in the Indian context, would be the purchase of sarees by ladies. Generally, ladies go looking around from shop to shop before they make their final selection. Hence, the expression `shopping' goods. These also include durables such as furniture and refrigerators. That is why a large variety of goods offered at a retail outlet increases sales of this type of goods. A manufacturer should also attempt to have his product properly displayed and offered at most retail outlets.

Shopping product : good or service purchased only after the customer compares competing offerings from competing vendors on the characteristics such as price, quality, style, and color etc. Typically cost more than convenience purchases. Include tangible items. Shopper lacks complete information and gathers information during the buying process.

Durable Goods These are goods which are `durable' or which last for some time. Examples of such goods would be electric irons, refrigerators, television sets, etc. This type of product requires more selling effort from the salesman. The question of after sales service and repairs is also of importance as ‘selling points' or ‘benefits' which the customer would like to have. Therefore, in case of refrigerators, the number of years of guarantee, particularly for the compressor, is an important consideration when a consumer makes his final selection.

Non-durable Goods These are goods which get depleted on consumption. For example a bottle of soft drink is consumed at once on one occasion within a matter of minutes. Soap obviously takes a little longer. However, in both these cases, the goods are consumed very fast. The advantage of these goods is that they are purchased very often and therefore there are many repeat purchases once the customer is satisfied with one product. Therefore, one must ensure quality and appropriateness of price. These are the products that have to be advertised heavily, with a view to inducing people to try them out, and thus, build up brand preference and brand loyalty.

Services Services are specially mentioned here (although they do not constitute products) because it is generally thought that marketing is related to products alone. It should be remembered that marketing ideas and practices are equally applicable to services with slight adaptations in certain decisional areas. Services in content are different from products. For example, courts offer a service. So are hospitals, the fire department, the police and the post office. These are not products in the normal sense and yet it is very important for each of these institutions to have an appropriate image. The police are often criticised; the fire departments generally praised; the post office criticised for delays; the hospitals perhaps criticised for negligence and exorbitant rates and so on. It is obvious that controlling the quality of service is important for building its image.

Specialty product : good or service with unique characteristics that cause the buyer to value it and make a special effort to obtain it Unsought product : good or service marketed to consumers who may not yet recognized in the need for it

Installation : major capital investment by a business buyer that typically involves expensive and relatively long-lived products, such as a new factory or piece of heavy machinery Accessory equipment : capital product, usually less expensive and shorter-lived that insulation, such as a laptop computer Component parts and materials : finished business products that become parts of buying firms’ final products, such as spark plugs for new cars Types of Business Products

Raw materials : business product, such as a farm product (wheat, cotton, soybeans) or natural product (coal, lumber, iron ore) that become part of a final product Supplies : products that represent regular expenses necessary to carry out a firm’s daily operations but are not part of the final product. Supplies are sometimes called MRO items MRO item : part of business supplies categorized as m aintenance items, r epair items, or o perating supplies such as light bulbs, nuts and bolts used in repairing equipment, or pencils

Business services : intangible product purchased to facilitate a firm’s production and operating processes such as financial services, leasing of vehicles, legal advice and consulting

Product Levels The Five Product Levels model provides a way to show the different levels of need customers have for a product. These needs range from core needs to psychological needs. At each product level, more customer value is added.

1. Core Product This is the basic product and the focus is on the purpose for which the product is intended. For example, a warm coat will protect you from the cold and the rain. The more important benefits the product provides, the more that customers need the product. A key element is the uniqueness of the core product. This will benefit the product positioning within a market and effect the possible competition. 2. Generic Product This represents all the qualities of the product. For a warm coat this is about fit, material, rain repellent ability, high-quality fasteners, etc.

3. Expected Product This is about all aspects the consumer expects to get when they purchase a product. That coat should be really warm and protect from the weather and the wind and be comfortable when riding a bicycle. 4. Augmented Product The Augmented Product refers to all additional factors which sets the product apart from that of the competition. And this particularly involves brand identity and image. Is that warm coat in style, its colour trendy and made by a well-known fashion brand? But also factors like service, warranty and good value for money play a major role in this. The goal is to deliver something that is beyond an expected product. It’s the translation of the desire that is converted into reality.

5. Potential Product This is about augmentations and transformations that the product may undergo in the future. For example, a warm coat that is made of a fabric that is as thin as paper and therefore light as a feather that allows rain to automatically slide down.

Five Product Levels Example: Coca-Cola It can be easy to see how the Five Product Levels apply to the hotel industry, but what about a company like Coca-Cola? Let’s examine what each level might be for this company: 1. Core Benefit The core benefit of Coca-Cola is to quench a thirst. 2. Generic Product The generic product is a burnt vanilla smelling, black, carbonated, and sweetened fizzy drink.

3. Expected Product The expected product is that the customer’s Coca-Cola is cold. If this isn’t the case then expectations won’t be met and the drink will not taste its best in the mind of the customer. 4. Augmented Product Coca-Cola’s augmented product is that it offers Diet-Coke. How does Coca-Cola exceed customers expectations with this product? By offering all the great taste of Coca-Cola, but with zero calories. 5. Potential Product One way in which Coca-Cola delights customers is by running competitions. The prizes in these competitions are often things that, “money can’t buy”, such as celebrity experiences. To continue to delight customers over time the competition prizes change frequently.

What is Product Planning? (cont.) Product Mix: All the different products that a company makes or sells. Product Line: A group of closely related products manufactured or sold by a business. Product Item: A specific model, brand, or size of a product within a product line. Product Width: The number of different product lines a business manufactures or sells. Product Depth: The number of product items in a product line.

A well defined product plan allows a business to: Create sales opportunities. Design appropriate marketing programs. Develop effective advertising campaigns. Coordinate the product mix offered to customers. Add new products. Delete older products that no longer appeal to customers What is Product Planning? (cont.)

4 P’s of the PRODUCT MIX PRICE PRODUCT PLACE PROMOTION

PRODUCT MIX = all the types of products a company makes or sells. The particular assortment of goods and services that a business offers to meet the needs of its market(s) and its company goals.

Product Mix and Product Line PRODUCT MIX The set of all products offered for sale by a company PRODUCT LINE A broad group of products for similar uses and with similar characteristics

Product Mix Includes all the different products that a company makes or sells.

Identify ways in which product lines can be organized. Product Line = group of closely related products manufactured by a business Product Item = specific model, brand, or size of a product within a line Ex: P&G has over 250 products within 21 product lines Dish care is a product line Cascade, Dawn, Joy, & Ivory are product items

Describe product mix dimensions. Some companies have different brands for different markets Coca-Cola has different drinks for sparkling beverages, water, juice, performance, coffee, tea, and international flavors.

Product Line A group of closely related products manufactured and/or sold by a business.

Product Item A specific model, brand, or size of a product within a product line.

DIMENSIONS WIDTH = number of product lines carried by a company. NARROW = offering a limited number of product lines BROAD = many different product lines carried DEPTH = number of products and the assortment of sizes, colors, and models offered in a product line SHALLOW = limited variety within a product line DEEP = extensive variety within a product line

BREADTH The number of product lines carried Product Mix DEPTH Variety of sizes, colors, models within a product line PRODUCT MIX

Product Width Oral Care Blades & Razors Personal Care Batteries Appliances Width of the Gillette Product Mix The number of different product lines a business manufactures or sells.

Product Depth Oral Care Blades & Razors Personal Care Batteries Appliances The number of product items offered within each product line.

NARROW PRODUCT MIX = Limited product lines carried, typically very specialized. A description of the width of a business's product mix offering a limited number of product lines .

Broad Product Mix = Many different product lines carried . A description of the width of a business's product mix offering many product lines.

Shallow Product Mix = Limited variety within a product line . A description of the depth of a business's product mix offering few items in the product line.

Deep Product Mix = Extensive variety within a product line. A description of the depth of a business's product mix offering a great many items in the product line.

Identify reasons that a business would offer a narrow product mix . Product Width – number of different product lines CONTRACTING - Pruning weak brands can strengthen the remaining brands in the line. Ease on management Cost effective Simplicity Consistency

Identify reasons that a business would offer a broad product mix. Product Width – number of different product lines EXPANDING Reach all markets Competitive advantage Ex: Red Lobster specializes in seafood, but offers chicken and steak to broaden their product mix.

Identify reasons that a business would offer a deep product mix. Product Depth – number of items offered within each product line EXPANDING Variety Quantity Ex: Kohl’s carries various quantities of sizes, colors, & styles of Levi Jeans.

Identify reasons that a business would offer a shallow product mix. Product Depth – number of items offered within each product line CONTRACTING Cost effective Satisfy small markets Ex: Only 2 chicken items on Red Lobster’s menu.

A company’s assortment of product lines and individual offerings Product Width --the number of product lines offered. Product Depth --variations in each product that a firm markets in its mix. The Product Mix

Product Mix Decisions A firm may lengthen or widen its product mix A Company may decide to add variations that will attract new users A product may be pruned or altered, and new product may extend the product life cycle Line extension : introduction of a new product that is closely related to other products in the firm’s existing line

Product Deletion Decisions Product lines must sometimes be pruned and marginal products eliminated This decision is typically faced during the late maturity and early declined stages of the product life cycle An unprofitable item may be continued in order to provide a complete line for customers

Product Life Cycle Introduction stage Growth stage Saturation/ Maturity stage Decline stage

New-Product Overview New products drive sales and profit growth. New products may gain market share from competitors. New Product Failure Rate May Be 80%

Types of New Products New to the World Products New Category Entries Additions to Product Lines Product Improvements Repositionings

Sources of New Products External Sourcing Collaborative Venture Internal Development

New-Product Development New-product thinking should be an on-going effort Top-level support is vital Someone should be “in charge” of the effort Firm should constantly generate new ideas, then narrow down to the best opportunities with clearly specified screening criteria Need a well organized new-product development process Involvement of cross-functional teams helps in the screening process and avoids problems and surprises later

New-Product Development Process Idea Generation Idea Screening Concept Development & Testing Business Analysis Test Marketing Commercialization Prototype Development

THE NEW-PRODUCT PROCESS- Idea Generation Customer and Supplier Suggestions Employee and Co-Worker Suggestions Research and Development Breakthroughs Competitive Products

THE NEW-PRODUCT PROCESS- Screening and Evaluation The first filter in the product development process, which eliminates ideas that are inconsistent with the organization’s new-product strategy or are inappropriate for some other reason.

THE NEW-PRODUCT PROCESS- Business Analysis if positive, build a prototype Considerations in Business Analysis Stage Demand Cost Sales Profitability

THE NEW-PRODUCT PROCESS-Development “Failure Analysis” Safety Tests Marketing strategy Packaging, branding, labeling Manufacturing feasibility Final government approvals if needed

THE NEW-PRODUCT PROCESS- Test Marketing The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation.

THE NEW-PRODUCT PROCESS- Commercialization Speed as a Factor in New-Product Success Ramp Up and Regional Rollouts Product Positioning is marketing’s job here Most expensive stage

Packaging and Labeling

Packaging The package = physical container or wrapping for a product It is an integral part of product planning and promotion 10% of the retail price is spent on developing, designing, and producing just the package Companies sometimes change packaging to update their image and reach a new market

Going Back to the Original

Functions of Packaging 1. Promoting and Selling the Product 2. Defining Product Identity 3. Providing Information 4. Expressing Customer Needs 5. Ensure Safe Use 6. Protecting the Product The Keys to Product Packaging

1. Promoting and Selling the Product Attractive, colorful, and visually appealing packages have promotional value A well designed package is a powerful selling device because it helps the product stand out from its competitors

1. Promoting and Selling the Product Mixed Bundling – packaging different products or services together Usually the bundle price is cheaper than buying them individually Price Bundling – two or more similar products are placed on sale for one package price

2. Defining Product Identity Packaging is sometimes used to promote an image such as prestige, convenience, or status Can be a crucial part of the marketing strategy, particularly in advertising

3. Providing Information Gives customer useful information on: directions for using the product its contents product guarantees nutritional value potential hazards

4. Expressing Customer Needs When designing packages, companies analyze customer lifestyles and create packaging that meets their needs for size and convenience Packages often come in various sizes Family size Single serving

5. Ensure Safe Use Proper packaging helps to eliminate potential injuries or misuse of a product Formerly glass containers are now plastic Childproof caps Tamper resistant packages Blisterpacks – packages with preformed plastic molds surrounding individual items arranged on a backing

6. Protecting the Product Must protect during shipping, storage, and display Prevent or discourage from tampering Prevent shoplifting Protect against breakage and spoilage

Air To Spare Do you ever get frustrated when you buy something and the package if filled with more air than product? Air To Spare

Packaging TRENDS Aseptic Packaging –technology that keeps foods fresh without refrigeration for extended periods Usually used to package food products canning bottling

Packaging TRENDS Environmental Packaging – recycled material, less plastic, and safer for the environment Sun Chips Ditching New Bag

Packaging TRENDS Cause Packaging – promote social and political causes May be totally unrelated to the product

labeling Label – an identification tag, wrapper, seal, or imprinted message that is attached to a product or its package Main function is to inform customers about a product’s contents and give directions for use Protects businesses from legal liability if someone if injured while using the product

Three Kinds of Labels Brand Label – gives brand name and trademark or logo Descriptive Label – give information about product use, construction, care, performance, and other features Grade Label – states the quality of a product

Does it really mean it’s healthy? Food Label Fight

MODULE III

PRICING DECISIONS

Contents: What is Price Importance of price to marketers Factors to consider when setting prices Marketing Objectives that Affect Pricing Decisions Marketing Mix Variables that Affect Pricing Decisions Types of Cost Factors that Affect Pricing Decisions Factors Affecting Pricing Decisions Pricing Methods Pricing strategies for new products New product launch pricing strategies Price-Adjustment Strategies Initiating and Responding to Price Changes Steps in Price Planning

Price Definition: The amount of money charged for a product.

Importance of price to marketers Price is a key element in the marketing mix because: Directly -Price relates directly to the generation of total revenue -Price is also the only marketing mix element that generates revenue, others are costs Indirectly -Price can be a major determinant of the quantity of goods sold -Price also influences total costs through its impact on quantity sold Symbolically -Price has a psychological impact on customers -By raising price the quality of the product can be emphasised -By lowering price marketers can emphasis a bargain

Internal Factors Pricing Decisions External Factors Factors to consider when setting prices

Marketing Objectives Marketing-Mix Strategy Costs Organizational Considerations Internal Factors Affecting Pricing Decisions

Marketing Objectives Current Profit Maximization Choose the Price that Produces the Maximum Current Profit, Cash Flow or ROI. Market Share Leadership Low as Possible Prices to Become the Market Share Leader. Product Quality Leadership High Prices to Cover Higher Quality and Guest Service Levels Marketing Objectives that Affect Pricing Decisions Survival Low Prices to Cover Variable Costs and Some Fixed Costs to Stay in Business.

Marketing-Mix Strategy Product Design Distribution Promotion Non-Price Factors Companies Will Consider Price Along With All the Other Marketing-Mix Elements When Developing the Marketing Program. Price Must be Coordinated With: Marketing Mix Variables that Affect Pricing Decisions

Total Costs Sum of the Fixed and Variable Costs for a Given Level of Production Variable Costs Costs that vary directly with the level of production. Raw materials Fixed Costs (Overhead) Costs that does not vary with sales or production levels. Executive Salaries Rent Types of Cost Factors that Affect Pricing Decisions

Cost per unit 1 2 3 4 SRAC LRAC Quantity Produced per Day 1,000 2,000 3,000 4,000 Cost Per Unit at Different Levels of Production Per Period Costs Considerations

Market and Demand Competitors’ Costs, Prices, and Offers Other External Factors Economic Conditions Reseller Needs Government Actions Social Concerns External Factors Affecting Pricing Decisions

Pure Competition Many Buyers and Sellers Who Have Little Affect on the Price. Monopolistic Competition Many Buyers and Sellers Trading Over a Range of Prices. Oligopolistic Competition Few Sellers Each Sensitive to Other’s Pricing/ Marketing Strategies Pure Monopoly Single Seller Different Types of Markets The Market and Demand Factors that Affect Pricing Decisions

Price Quantity Demanded per Period A. Inelastic Demand - Demand Hardly Changes With a Small Change in Price. P 2 P 1 Q 1 Q 2 Price Quantity Demanded per Period P’ 2 P’ 1 Q 1 Q 2 B. Elastic Demand - Demand Changes Greatly With a Small Change in Price. Demand Curves

Minimizes Price Competition Perceived Fairness to Both Buyers and Sellers Sellers Are More Certain About Costs Than Demand Adding a Standard Markup to the Cost of the Product What is Cost-Plus Pricing and Why is it Popular?

200 400 600 800 1,000 1,200 10 20 30 40 50 Total Revenue Total Cost Fixed Cost Target Profit (200,000) Sales Volume in Units (thousands) Cost in Rs (thousands) Tries to Determine the Price at Which a Firm Will Break Even or Make a Target Profit Breakeven Analysis or Target Profit Pricing

Pricing Methods Cost-based pricing - prices set mainly on the basis of cost (fixed & variable overheads) Competition-based pricing - pricing a product or service at a price comparable with that charged by the competition (this could be slightly higher or lower than the competition) Customer-based pricing - relies on the perceived value and how much customers are prepared to pay for the product or service

Two generic pricing strategies for new products Skimming Policy Price skimming involves charging a relatively high price for a short time where a new, innovative, or much-improved product is launched onto a market A major disadvantage is that it encourages new entrants Penetration Policy Penetration pricing involves the setting of lower, rather than higher prices in order to achieve a large, if not dominant market share. This strategy is most often used in businesses wishing to enter a new market or build on a relatively small market share. A successful penetration pricing strategy may lead to large sales volumes/market shares and therefore lower costs per unit.

Promotion Rapid skimming Slow skimming Rapid penetration Slow penetration Low High Price High Low New product launch strategy

New product launch pricing strategies Rapid Skimming strategy - tends to combine high price and high promotion expenditure. High prices is used to create high revenue, while high promotion used for product awareness & knowledge Slow skimming strategy - tends to combine high prices with low level of promotion expenditure - High prices means high revenue but promotion is left to mainly word-of-mouth Rapid penetration strategy - tends to combine low prices with high promotional expenditure - aims to gain market share rapidly Slow penetration strategy - tends to combine low prices with low promotional expenditure - mainly used by Own-label brands

Price Adjustment Strategies Discount & Allowance Reducing Prices to Reward Customer Responses such as Paying Early or Promoting the Product. Segmented Adjusting Prices to Allow for Differences in Customers, Products, or Locations. Cash Discount Quantity Discount Functional Discount Seasonal Discount Customer Product Form Location Time Trade-In Allowance Price-Adjustment Strategies

Adjusting Prices for Psychological Effect. Price Used as a Quality Indicator. Temporarily Reducing Prices to Increase Short-Run Sales. i.e. Loss Leaders, Special-Events Adjusting Prices to Account for the Geographic Location of Customers. i.e. FOB-Origin, Uniform-Delivered, Zone Pricing, Basing-Point, & Freight-Absorption. Psychological Pricing Promotional Pricing Geographical Pricing International Pricing Price-Adjustment Strategies Adjusting Prices for International Markets. Price Depends on Costs, Consumers, Economic Conditions & Other Factors.

Price-Adjustment Strategies Hold Current Price; Continue to Monitor Competitor’s Price. Reduce Price Raise Perceived Quality Improve Quality & Increase Price Launch Low-Price “Fighting Brand” Has Competitor Cut Price? Will Lower Price Negatively Affect Our Market Share & Profits? Can/ Should Effective Action be Taken? Yes No No No

Initiating Price Increases Competitor Reactions to Price Changes Initiating Price Cuts Buyer Reactions to Price Changes Price Changes Initiating and Responding to Price Changes

Developing a pricing Objective (s) Steps in Price Planning Estimating demand Determining costs Evaluating the pricing environment Choosing a pricing strategy Selecting the final price

Case study:- Developing a Pricing Strategy for Clinic All Clear Clinic All Clear is a leading Hair Care brand in India. Hair care as a category is growing very fast in India and its growth is comparable to other FMCG categories in India. HUL plans to marginally alter the positioning of All Clear to attract a wider consumer base. The brand will, however, strictly remain within the antidandruff segment. For this, the prices were altered and newer segments were sought to widen the customer net. Lever is, however, keeping the price of All Clear sachets as they are. As analysts at research house ICICI say, HUL had taken a bigger price cut in shampoo realization by offering 8 ml Clinic Plus sachets at Re 1, a 50% mark down. This had brought it on par with low priced brands such as Chik by CavinKare. But this meager repositioning with price differential will not do for Indian market. They need to come out with a suitable product strategy. The Vice President (Personal Care) is evaluating a possible option for developing a suitable pricing strategy for Clinic All Clear Brand in Indian market. Suggest a suitable option to Vice President.

MODULE IV

Distribution Strategy

What is a Marketing Channel? This is a set of interdependent organizations involved in the process of making a product or service available for use or consumption

Basic Channels of Distribution Manufacturers/products Agents/brokers Wholesalers/distributors Retailers Retailers Consumers and organizational end users

Distribution-Scope Strategies Exclusive Distribution Limiting the distribution to only one intermediary in the territory Intensive distribution Distribute from as many outlets as possible to provide location convenience Selective distribution Appoint several but not all retailers

Example of Exclusive Distribution LEICA was officially appointed Jebsen & Jebsen Marketing as the exclusive distributor for Singapore, Malaysia, Thailand, Indonesia and Brunei A main factor in choosing J&J was its expertise in “high-quality technical products on the consumer market.” Source: Smartinvestor, Singapore Ed. June 2000

Exclusive Distribution: Advantages Maximize control over service level/output Enhance product’s image & allow higher markups Promotes dealers loyalty, better forecasting, better inventory and merchandising control Restricts resellers from carrying competing brands

Exclusive Distribution: Disadvantages Betting on one dealer in each market Only suitable for high price, high margin, and low volume products

Example of Intensive Distribution Newspapers Most fast moving consumer goods you see in the newsstand Photo processing shops

Advantages: Increased sales, wider customer recognition, and impulse buying Disadvantages: Characteristically low price and low-margin products that require a fast turnover Difficult to control large number of retailers Intensive Distribution

Example of Selective Distribution Daewoo have 2 distributors in Singapore “Starsauto, part of a larger Indonesian group, represents Daewoo’s traditional line of sedans. Homegrown family-owned JTA Motors market Daewoo’s offroad vehicles like the Musso and Korando, and an upmarket model called the Chairman. (Source: BT, Motoring, Feb4/1999)

Selective Distribution Advantages: Better market coverage than exclusive distribution More control and less cost than intensive distribution Concentrate effort on few productive outlets Selected firms capable of carrying full product line and provide the required service

Selective Distribution (cont’d) Disadvantages: May not cover the market adequately Difficult to select dealers (retailers) that can match your requirement and goals

Multiple-Channel Strategy Using two or more different channels to distribute goods and services Why? Permits optimal access to each market segment Increase market coverage, lower channel cost and provide more customized selling What to look out for? More channels usually means more conflict and control problems

Complementary Channels Each channel handles a product or segment that is different or non-competing e.g. Toyota Lexus MPH online portals Magazine distributions

Competitive Channels The same product is sold through two different and competing channels e.g. Non-prescriptive drugs Electronic goods Why? To increase sales What to look out for? Over extending yourself Dealers’ resentment Control problems

Modifying Distribution Strategies Modify when the following changes occur: Consumer markets and buying habits Customer needs Competitor’s perspectives Relative importance of outlet types Manufacturer’s financial strength Sales volume level of existing products, and The marketing mix

Channel-Control Strategy Vertical Marketing System (VMS) Also known as centrally coordinated, professionally managed and centrally programmed network systems The emerging trend in ASPAC replacing existing conventional marketing channels Classified into corporate, administered and contractual VMS

Channel-Control Strategy (cont’d) Horizontal Marketing System Two or more unrelated companies putting together resources to exploit a marketing opportunity Adler called this symbiotic marketing (HBR Nov-Dec86) Example: In Japan, small companies form HMS in the form of Yugoka

E-Commerce: Online Distribution The success depends on the characteristics of the consumers in the market in terms of their disposition to e-commerce and surfing habits e.g. South Korea has the most dynamic Internet surfers in Asia. They spend the least time—28 seconds—on a web page before moving on Australian surfers were the “stickiest”, clocking one minute per page (Source: March 2001 figures from Nielsen/NetRatings Globel Index)

The Future: M-Commerce Mobile commerce is going to be the next revenue stream once the killer mobile-application is rolled out The penetration of mobile data services is low in ASPAC (1%) compared to the Western Europe (23%), Japan (21%) and the US (7%) (Source: ARC Group, 2000) Japan’s NTT DoCoMo's recently launched i-Mode, a data communications service rather like Wap, and signed up several million customers (Source: Intelligent Enterprise Asia, July 2001)

Intermediaries involved in this process Agents – acting on behalf of buyer or seller but do not take title of the goods Facilitators – transporters, C&Fs, banks, ad agencies

Advantages of a distribution system Key external resource Takes years to build Significant corporate commitment to a large no. of firms Commitment to a set of policies that nourishes long term relationships

Why would a manufacturer not like to do his own distribution? Lacks the financial resources to do direct marketing Cannot have the infrastructure to make the product widely available and near the customer Trading profits could be less than manufacturing profits

Manufactures typically produce a large quantity of a limited variety of goods Consumers usually desire a small quantity of a wide variety of goods

If all manufacturers tried to reach all consumers M1 M2 M3 C1 C2 C3

If they tried to go through an intermediary M1 M2 M3 D1 C2 C1 C3

Channel functions Gathers information on customers, competitors and other external market data Develop and disseminate persuasive communication to stimulate purchases Agreement on price and other terms so that transfer of ownership can be effected Placing orders with manufacturers

Channel functions (cont’d) Acquire funds to finance inventories and credit in the market Assume responsibility of all risks of the trade Successive storage and movement of products Helps buyers in getting their payments through with the banks Oversee actual transfer of ownership

Channels can be Forward Backward

Channel Alternatives Types of available business intermediaries No. of intermediaries needed Terms and responsibilities of each channel member

Types of intermediaries Distributors Wholesalers Retailers Department stores

What kind of distribution? Exclusive Selective Intensive

Terms and Responsibilities Rights and responsibilities are drawn up Territorial rights are fixed Pricing policies and conditions of sales are fixed

Evaluating alternatives Economic Control Adaptive

Channel management Selecting channel members Training channel members Motivating channel members

Managing channel members Coercive Reward Legitimate Expert Referent

Channel modification With time channels need to change along with product as it get older in the PLC Introduction – boutiques,company showrooms Growth – chain stores, departmental stores Maturity – Mass merchandisers Decline – ‘sales stores’, discount stores

Adding channels Advantages Increased market coverage Lower channel costs More customised selling Disadvantages Increases selling costs Increases channel control Breeds channel conflict

Roles of individual channel member firms Insiders Strivers Complementers Transients Outside innovators

Channel conflict Interest of different business interests do not necessarily coincide Conflicts can occur at various levels vertical horizontal multichannel

Conflict causes Goal incompatibility Differences in perception Great dependence

Market Logistics Involves the planning, implementing and controlling the physical flows of materials and final goods from point of origin to points of use to meet customer requirements at a profit. It involves materials management, distribution systems and IT systems interlinked with one another

Logistics objective Getting the right goods at the right place at the right time for the least cost ‘ the last frontier for cost economies’.

Market Logistics decisions Order processing Warehousing Inventory Transportation

Inventory vs Service levels inventory cost Service level 100% Reorder point should balance the risks of stockouts against costs of overstocking Company needs to balance ordering costs vs inventory carrying costs

Logistics vs. Sales Objectives can be conflicting Conflict resolution can be done by trading off costs vis -a- vis customer satisfaction

Retailing and Wholesaling

Starbucks Hear Music Coffeehouse

What is Retailing? All the activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use. Retailers - businesses whose sales come primarily from retailing. Retailers can be classified as: Store retailers such as Home Depot, Sears, Walmart Nonstore retailers such as the mail, telephone, and Internet.

Classification of Retail Stores Amount of Service Self-Service, Limited-Service and Full-Service Retailers Product Line Length and Breadth of the Product Assortment Relative Prices Pricing Structure that is Used by the Retailer Retail Organizations Independent, Corporate, or Contractual Ownership Organization

Classification By Product Line Specialty Stores Department Stores Supermarkets Convenience Stores Superstores Category Killers Narrow Product Line, Deep Assortment Wide Variety of Product Lines i.e. Clothing, Home Furnishings, & Household Items Wide Variety of Food, Laundry, & Household Products Limited Line of High-Turnover Convenience Goods Large Assortment of Routinely Purchased Food & Nonfood Products, Plus Services Giant Specialty Store that Carries a Very Deep Assortment of a Particular Line Hypermarkets Huge Superstores Store Type Length and Breadth of Product Assortment

Department Store Model: Strong Retail Brand Approach

Department Store Model: The Showcase Store

Classification By Retail Organization Corporate Chains Retailer Cooperatives Voluntary Chains Franchise Organizations Merchandising Conglomerates Retail Organizations

III- Corporate Retail Organizations Features of corporate retailing: Greater purchasing power Achieve economies of scale Wider brand recognition Better trained employees

III- Corporate Retail Organizations Major Types: Corporate chain store Two or more outlets commonly owned and controlled, selling similar lines of merchandise, buy in large volumes at lower price, highly skilled employees. Voluntary chain. - It is wholesaler-sponsored group of independent retailers who have bulk buying and have common merchandise. Retailer cooperative. Independent retailers who set up a central buying organization and conduct joint promotion efforts

Consumer cooperative A retail firm owned by its customers who elect a group to manage it and receive patronage dividends. Franchise organization Contractual association between franchiser (manufacturers, wholesalers, service organizations) and franchisee who are authorized to use the brand name. McDonalds …. Merchandize conglomerate Several diversified retailing lines under central ownership with integration in management and distribution.

Characteristics of Direct Marketing Key Characteristics of Direct Marketing Immediate Orders Response Measurement Targeted Individuals Privacy Customized Offer Continuous Relationship Higher Response Testing

Types of NonStore Retailing Direct Marketing Direct Selling Automatic Vending Catalogs & Direct Mail TV Shopping Shows Online Shopping Home & Office Parties Nonstore Retailing Accounts for More Than 14% of All Consumer Purchases, and May Account for 33% of All Sales by 2000.

Retailer Marketing Decisions Retailer Marketing Mix Retailer Strategy Target Market Retail Store Positioning Product and Service Assortment Prices Promotion Place (Location)

Click to add title Retailer’s Product Assortment and Services Decisions Product Assortment Decisions Width and Depth of Assortment Quality of Products Product Differentiation Strategies Services Mix Key Tool of Nonprice Competition for Setting One Store Apart From Another. Store’s Atmosphere Physical Layout “Feel” That Suits the Target Market and Moves Customers to Buy

Retailer Services Mix Prepurchase services Postpurchase services Ancillary services

Click to add title Retailer’s Price, Promotion, and Place Decisions Promotion Decisions Using Advertising, Personal Selling, Sales Promotion and Public Relations to Reach Customers. Place Decisions Shopping Centers, Central Business Districts, Power Centers, or Outlet Malls. Location! Price Decisions Target Market Product & Services Assortment Competition

Location Decision General business districts Regional shopping centers Community shopping centers Strip malls Location within a larger store

Indicators of Sales Effectiveness Number of people passing by % who enter store % of those who buy Average amount spent per sale

Wall Mart’s Factors of Success: Listen to the customers. Treat employees as partners. Big sign reading (Satisfaction guaranteed), (we sell for less). Customers often welcome by greeter Low price and speed stock replenishment. Expanded their stories outside of US

New Retail Forms and Shortening Retail Lifecycles The Future of Retailing Growth of Nonstore Retailing Increasing Intertype Competition Rise of Megaretailers Growing Importance of Retail Technology Global Expansion of Major Retailers

Trends in Retailing New retail forms has been emerged. New retailers are facing shorter life span, they are rapidly copied and lose novelty. It is familiar in our areas. Growth of non store retailing. Competition is increasing between different types of stores, like Discount stores, Catalog showrooms, Department stores. All are competing the same customers. All retailers now moving to one of 2 poles, either mass merchandiser, or as specialty retailer. Super power retailers emerging.

Trends in Retailing cont. Department stores - one stop shopping convenience. Gradually they gave up to Malls where customers can find every thing. Technology became critical, Retailers using computers to manage better Inventory, Ordering, etc.. Retailers with unique formats and strong positioning are moving to other countries, Like McDonalds. 18% of US retailers moved out, 40% of Europeans, and 31% of Far East.

What is Wholesaling? All the activities involved in selling goods and services to those buying for resale or business use. Wholesaler - those firms engaged primarily in wholesaling activity .

Why are Wholesalers Used? Wholesaler Functions Management Services & Advice Selling and Promoting Market Information Buying and Assortment Building Risk Bearing Bulk Breaking Transporting Financing Warehousing Wholesalers are Often Better at Performing One or More of the Following Channel Functions:

Types of Wholesalers Merchant Wholesaler Independently Owned Business that Takes Title to the Merchandise it Handles. Manufacturers’ Sales Branches and Offices Wholesaling by Sellers or Buyers Themselves Rather Than Through Independent Wholesalers. Brokers/ Agents They Don’t Take Title to the Goods, and They Perform Only a Few Functions.

Wholesaler Marketing Decisions Wholesaler Marketing Mix Wholesaler Strategy Target Market Retail Store Positioning Product and Service Assortment Prices Promotion Place (Location)

Trends in Wholesaling Wholesaling Developments to Consider Must Learn to Compete Effectively Over Wider and More Diverse Areas Increasing Consolidations Will Reduce Number of Wholesalers Surviving Wholesalers Will Grow Larger Through Acquisitions and Mergers Vertical Integration Will Remain Strong Global Expansion

MODULE V

PROMOTION DECISIONS

COMMUNICATION an act or instance of transmitting; a verbal or written message; a process by which information is exchanged between individuals through a common system of symbols, signs, or behavior; also : exchange of information; a technique for expressing ideas effectively (as in speech); the technology of the transmission of information (as by print or telecommunication)

MARKETING COMMUNICATIONS A process by which product information is transmitted to the target audience PRODUCT INFORMATION TARGET AUDIENCE

MarCom : MAIN OBJECTIVES INFORMING Product Launch phase Explanations of Product’s features & benefits REMAINDING Product Sales Growth phase Competitive positioning PURSUADING Product Maturity phase Applies to consumers’ memory (brand specific) TARGET AUDIENCE

MarCom Mix Communication Program Advertising PR Sales Promotions Event Marketing POS materials Merchandising Sponsorship Product placement New Media Internet Mobile Communications

BASIC INSTRUMENTS OF PROMOTION MIX ADVERTISING SALES PROMOTION PR DIRECT MARKETING EXHIBITIONS PERSONAL SELLING SPONSORSHIP PACKAGING POS MATERIALS WORD-IN-MOUTH INTERNET PRODUCT PLACEMENT

Communication Process SENDER MESSAGE RECIEVER encoding Channel MESSAGE decoding Barriers or Noise FEEDBACK RESPONSE

EVOLUTION OF MARKETING COMMUNICATIONS CONCEPTS MARKET MEDIA & COMMUNICATIONS CONSUMERS shift from mass marketing and product oriented concepts (1950-60) to specialized products

FOCUS ON CONSUMER DATA BASED MARKETING INTERACTIVE COMMUNICATIONS MEASURED RESULTS

Push & Pull Strategy push strategy directs communication efforts at channel members many products, such as business products, are promoted with a push strategy, involving personal selling and use of trade promotions pull strategy directs promotion at the end consumer most consumer products would rely more heavily on a pull strategy where promotion is directed at the consumer to stimulate demand

Producer Wholesaler Retailer Consumer PUSH STRATEGY Producer Wholesaler Retailer Consumer Product flow Communication effort PULL STRATEGY

PRINCIPLES OF EFFECTIVE MARKETING COMMUNICATIONS WHO? WHERE? WHAT? HOW MUCH? FORM – CHANNEL – PERIOD OF TIME WHAT WAS IT? Identifying the Target Audience Choice of Communication Channel Message Budget Communication program design Monitoring & Evaluation

Choice of communication channel CHANNELS PERSONAL NON PERSONAL EXPERT SOCIAL EVENTS ATMOSPHERE MEDIA PRINT BROADCAST NETWORK ELECTRONIC DISPLAY

PROMOTION MIX Promotion : The communication with customers about products and services to create demand and encourage purchases.

Promotion may be done locally, regionally, nationally, or internationally. The goal of promotion is to communicate with the largest target audience possible. Promotion helps to attract new customers, increase sales to existing customers, and stimulate brand name recognition.

Promotion should be designed to… Create an awareness and understanding of companies and/or products and to introduce new products, inform consumers or changing prices, and explain new services. Convince consumers about the benefits or using certain products or patronizing particular businesses. Remind consumers where to purchase certain products, to encourage purchases, and to stimulate additional purchases.

MARKETING MIX PRODUCT Product characteristics , options, assortment, brand name, packaging, quantity, factory guarantee PLACE Different types of distribution channels, density of the distribution system, trade relation mix (policy of margins, terms of delivery, etc), merchandising advice PRICE List price, usual terms of payment, usual discounts, terms of credit, long-term saving campaigns PROMOTION Advertising Sales promotion Personal selling PR

Promotional activities affect how customers view a company. Deceptive or misleading promotion practices can harm a business.

Promotional mix: The combination of all types of communication used by a business to inform, persuade, or remind consumers about a company and/or its products.

Promotional mix elements Advertising Personal selling Publicity Public relations Sales promotion

Advertising Any PAID form of NONPERSONAL presentation of ideas, goods, or services made by an IDENTIFIED SPONSOR.

Advertising Types of Advertising Institutional Advertising Advocacy advertising Comparative Advertising Never use comparative advertising if you are the market leader Cooperative Advertising (vertical) Competitive Advertising

Advertising Advertising objectives Awareness Reminder to use Change attitudes about use of the product Change perceptions of importance of brand attributes

Advertising Advertising objectives Attitude reinforcement Product-line or corporate image building Obtain a direct response Process Account sale representative Account manager Creative

Advertising Process Traffic Media planning Evaluation CPM = cost of ad x 1000/circulation Rating = program audience/total audience

Advertising Evaluation Reach - percentage of the target audience that will be exposed to the message Frequency - average number of times a member of the target audience is exposed to the message Gross Rating points - reach percentage x number of exposures

Advertising Evaluation Recognition tests Recall tests Theater tests

Personal selling PERSONALIZED, TWO-WAY COMMUNICATION with a customer in the process of exchanging merchandise for money or credit.

Personal Selling Major form of promotion Very expensive because it requires individuals to make contact with potential customers Designed to complete the sale once a customer has been attracted to a business by advertising, visual merchandising, publicity/public relations, or special events

Publicity NEWSWORTHY INFORMATION about a company, product, or person placed in the media AT NO CHARGE with the purpose of creating a desired image.

PUBLICITY Free Carried by mass media. Mass media are those instruments of communication designed to reach the mass of the people. Must be newsworthy to earn media space and time Must be timely, have local interest, and appeal to medium’s audience Seems more credible to consumers than advertising Company has little control over content of message or how it is presented to the public Can have a good or bad result Helps make styles, manufacturers, retailers, trends, or designers better known to the public

A written news story sent as publicity to a newspaper or magazine. Used to create public awareness of store openings, civic events at store locations, or announce employee promotions Used to create a positive image and awareness about a company, designer, or product PRESS RELEASE

Promotional information packages that contain press releases and photographs. Help create awareness of products or designers’ latest fashions and apparel items Serve as free advertising for the business if pictures are published by the media PRESS KITS

Activities designed to build positive relations with the customers, employees, and the community. Participation in community programs Effective PR can help build a positive image for a company, but cannot cover up bad news. PUBLIC RELATIONS

Sales Promotion About 25% of each promotional dollar is spent on sales promotion Short-term results Objectives Inquiries - free gifts, mail-in coupon for information, catalog offers, exhibits Trial - coupons, free samples, contests, premiums, demonstrations

Sales Promotion Objectives Repurchase - on-pack coupons, mail-in rebates Traffic building - special sales, weekly specials, entertainment events, retailer coupons Increase rate of purchase - multipacks, special price on twos

Sales Promotion Objectives Inventory building - return allowances, slotting allowances Promotional support - reusable display cases, sales contests, merchandise allowances

Sales Promotion Evaluation Redemption rates Acquisition rates Displacement rates Conversion rates Stock-up rates Product-line effects

ADVERTISING SALES PROMOTION PUBLIC RELATION PERSONAL SELLING DIRECT MARKETING Print and broadcast ads Contests, games Press kits, lotteries sales Catalogs , Presentations Packing- outer Packing inserts sampling speeches gifts seminars Sales meetings incentive programs Mailings, telemarketing Motion picture Fairs and trade Annual reports shows Fairs and trade shows Electronic shopping Brochures and booklets exhibits Charitable donations TV shopping publications Posters and leaflets demonstrations Sponsorships Community relations Directories reprints of ads Billboards Display signs, Trade-in allowances, trading stamps Lobbying POP, AV mat Symbols , logos Tie-ins Identity media

Visual merchandising Entices customers to enter the store Enhances store image Effectively presents the merchandise that the store has to offer Shows customers how to wear and accessorize merchandise Attractive and appealing physical display of merchandise combined with effective store layout and décor.

Special events Promotional activities designed to increase customer traffic, sell goods, and improve company image. Fashion shows Trunk shows Special sales Celebrity appearances

Coordinating the promotional mix elements Most businesses rely on more than one form of promotion to achieve promotional goals. The promotional mix is based on product characteristics and the existing market for the product. The promotional mix changes over time, just as products and consumers change.

Coordinating the promotional mix elements (cont.) Each promotional activity should be designed to complement the other types of promotion being used by the business. National advertising should be coordinated with local promotional activities. Sales staff should be informed of promotional activities taking place.

Budget Decisions

Major Decisions in Advertising

Budget Decisions Establishing the budget Budgeting approaches Allocating the budget

Budgeting Approaches Top-down budgeting Bottom-up budgeting

Top-Down Budgeting Top Management Sets the Spending Limit The Promotion Budget Is Set to Stay Within the Spending Limit

Top-Down Budgeting Arbitrary allocation The affordable method Historical Method Percentage of Sales Competitive parity Return on investment (ROI)

The Affordable Method It is used when a company allocates whatever is left over to advertising. It is common among small firms and certain non-marketing-driven large firms. Companies using this approach don’t value advertising as a strategic imperative. Logic: we can’t be hurt with this method. Weakness: it often does not allocate enough money.

Historical Method Historical information is the source for this common budgeting method. The inflation rate and other marketplace factors can be used to adjust the advertising amount. This method, though easy to calculate, has little to do with reaching advertising objectives.

Percentage-of-Sales Method It compares the total sales with the total advertising budget during the previous year or the average of several years to compute a percentage. Two steps Step 1: past advertising dollars/past sales = % of sales. Step 2: % of sales X next year’s sales forecast = new advertising budget.

Percentage-of-Sales Method Based on (future or past) sales dollar or unit product cost Method 1: Straight Percentage of Sales 2007 Total dollar sales Straight % of sales at 10% $1,000,000 $100,000 2008 Advertising budget $100,000 Method 2: Percentage of Unit Cost 2007 Cost per bottle to manufacturer Unit cost allocated to advertising $4 $1 2008 Forecasted sales, 100,000 units 2008 Advertising budget (100,000*$1) $100,000

Percentage-of-Sales Method Pros Financially safe Reasonable limits Stable

Percentage-of-Sales Method Cons Reverse the cause-and-effect relationship between advertising and sales. Stable? Misallocation Difficult to employ for new product introductions. Sales↓ → Advertising budget↓

Competitive-Parity Method This method uses competitors’ budgets as benchmarks and relates the amount invested in advertising to the product’s share of market. Logic: share of media voice → share of consumer mind → share of market. Share of media voice: the advertiser’s media presence. The actual relationship above depends to a great extent on factors such as the creativity of the message and the amount of clutter in the marketplace.

Competitors’ Advertising Outlays Do Not Always Hurt

Competitive-Parity Method Pros Take advantage of the collective wisdom of the industry Spending what competitors spend helps prevent promotion wars. Cons Companies differ greatly. There is no evidence that budgets based on competitive parity prevent promotion wars. (Prisoners’ Dilemma)

Return on Investment (ROI) In this method, advertising and promotions are considered investment, like plant and equipment. Thus, the budgetary appropriation leads to certain returns. ROI has received a great deal of attention by practitioners over the past few years, with many still disagreeing as to how it should be measured. Figure 7-18 While the ROI method looks good on paper, the reality is that it is rarely possible to assess the returns provided by the promotional effort – at least as long as sales continue to be the basis for evaluation.

COPY DESIGNING AND COPY TESTING

Media Selection Choosing the best media for the instructional message

Teachers of the 21 st Century

Students of the 21 st Century Today’s digital kids think of information and communications technology (ICT) as something akin to oxygen. They expect it. It’s what they breathe, and it’s how they live. They use ICT to meet, play, date, and learn. It’s an integral part of their social life. It’s how they acknowledge each other and form their personal identities.

Traditional Learning 21 st Century Learning Schooling Lifelong Learning Knowing (factual knowledge based learning) Understanding Broadcast/ Teacher centred / Transmission model/passive learning Constructivist / student centred L/ information exchange/ active learning Single sense stimulation / single media Multi-sensory stimulation / multimedia Traditional Content / isolated, artificial context Contemporary Content/ real world, authentic context Learning Tech Skills / individual work/ Developing 21 st Century Skills / collaborative work / critical thinking

Instructional Media – The Basics Instructional media carry messages with an instructional purpose. The design of the message and the quality of teacher-learner interactions, not the medium, are what influences learning effectiveness No one medium is capable of presenting all the required learning stimuli, so use a multimedia approach.

Types of Instructional Media Audio Audio/Visual visual Tactile/ Kinaesthetic Teacher’s voice Audio cassettes Audio CDs Radio video multimedia CDs DVDs PowerPoint Internet chalkboards white boards flannel boards magnetic boards objects / models pictures charts / diagrams photographs text OH transparencies slides / silent films working models equipment simulators interactive software

Advantages and Disadvantages of the Media Audio Audio/Visual visual Tactile/ Kinaesthetic Advantages Inexpensive Easy to create Easy to duplicate Very Accessible Disadvantages May not be interactive No visual stimulus Advantages Very effective for introducing, summarizing and reviewing concepts Can be used as a motivational tool meets needs of students with different learning styles Complex or abstract concepts can be illustrated Disadvantages Passive learning may take place if not interactive Advantages Individualized learning Motivational Interactive Great for children who need concrete representations Provides hands-on, real life experiences

Factors Affecting Media Selection There are many media selection models and approaches (e.g. Romiszowski) The basis of media selection models are the factors affecting media choice. These factors include…

Factors Affecting Media Selection instructional method type of learning task (objectives) subject matter and required student performance learner characteristics (learning style, skills) target population – location, size teachers’ attitudes/preferences, skills etc. physical attributes of the media (sensory channels) teaching space, lighting, facilities (physical environment) practical constraints – economic (money) and administrative time , what’s available

When Should I Select ? listening skills differentiation of sounds stimulation of the imagination re-telling Music or music appreciation Caution risk of misinterpretation difficult for young children Audio Teacher’s voice Audio cassettes Audio CDs Radio

When Should I Select ? demonstration problem solving contrived experiences (realism and immediacy) To present information Caution Excess stimuli can hinder Audio and visual channels should be mutually supportive. They should not compete. Visual & chalkboards white boards flannel boards magnetic boards objects / models pictures charts / diagrams photographs text OH transparencies slides / silent films Audio/Visual video television multimedia CDs DVDs PowerPoint Internet Next

Convergence of technologies Driving this convergence is the powerful discovery that all information – sound, pictures, data – can be converted into digital format (ones and zeroes) and reincarnated intact somewhere else. Computer technologies facilitate the combination of different media.

And Finally… Media can become effective learning resources if what is selected is relevant to the task , and provides experiences which are different from other available material.

Measuring advertising effectiveness. Most of the managers believe that the advertisement directly affects the sales volume and hence they evaluate the effectiveness of the advertising campaign by the increase in the sales volume. There are two types of measures: Direct measures Indirect measures.

Direct Measures of Advertising Effectiveness. These measures establish a relationship between advertising and sales. A comparison of sales of two periods of time or two markets may be done and the comparative changes may be noted. The following are some of the methods that are generally used in the measurements.

Historical Sales Method. Effectiveness of past advertising may be obtained by measuring the relationship between the advertising expenditure and the total sales of the product. A multiple regression analysis of advertising expenditure and sales over several time periods may be calculated.

Experimental Control. A casual relationship between advertising and sales is established in this method. One experimental approach to measuring the sales effectiveness of advertising is test marketing . Before-after with Control Group Design: Before the advertisement is shown, sales figures are measured and after the exposure to the advertisements, sales figures are measured. The effect of advertising campaign, can then, be measured by subtracting the amount of post campaign figure of sale from the pre campaign sale figures in test cities. The control group is also present here to neutralize the effects of extraneous factors.

Multivariable Experimental Designs: Multivariable designs Produce explanations to the success and failures of the campaign and are, therefore used by some very large firm because of their diagnostic value. For any single medium, eight possible geographic areas have been exposed and eight have not been exposed. Thus, in this experimental model it is possible to evaluate how each individual medium behaves alone and in all possible combinations with other media.

Indirect Measures of Advertising Effectiveness Factors such as customer awareness or attitude or customer recall of advertising message affect the sales or profits or goals of the business indirectly. They are measured in indirect ways here . Exposure to Advertisement: The advertiser is concerned about the number of target audiences who see or hear the organization message set in the advertisement. Without exposure, advertisement is bound to failure. It is also known as reach and frequency factors.

Attention or Recall of Advertising Message Content: Under this measure, a recall of the message content among a specified group or groups or prospective customers is measured within 24 hours of the exposure of the advertisement. Attention value is the chief quality of the advertising copy the advertisements cannot be said to be effective unless they attract the attention of the target consumers. There are two methods for evaluating the attention getting value of the advertisements. One is pre-test and the other is post-test. Brand Awareness: The marketers who rely heavily on advertising often appraise its effectiveness by measuring the customer’s awareness about the particular product or brand. The assumption of this type of measure is that there is a direct relationship between the advertisements and the awareness.

Comprehension: Consumers here are asked to comprehend the message of advertisements. Various tests like recall tests, asking questions etc. are used to measure comprehension.  Attitude Change: The results of attitude changes are important because of advertisements are measured in terms of attitudes among groups exposed to advertising communication.  Action: The action of purchasing or behaviour towards purchasing is measured because of the advertisements here.

Reasons to measure advertisement effectiveness. Increase efficiency of advertising in general. Determining if objectives are achieved. Avoid costly mistakes. Evaluate alternative strategies . Reasons not to measure effectiveness. Cost of measurement. Problems with research. Lack of time. Disagreement about what to test. Objections of creative personnel.

Sales Promotion- Tools and Techniques Generally, there are two major groups that offer sales promotion (our concern focuses on business activities) — manufacturers and retailers . When promotional deals are announced directly by manufacturers, these are termed as ‘manufacturer promotions’ and may be directed toward the consumers or the trade, or both these groups . Promotions offered by retailers to increase store traffic or sales, etc., are called ‘retailer promotions’ (also called as store promotions), and are offered only to customers or end- users.

Price-cuts, coupons, rebates, bonus packs, exchange offers, financing programmes, etc. are examples of price appeals. The appeals of interest category include premiums, contests and sweepstakes, and free samples, etc. Sales promotions directed at the trade and sales force date back earlier than consumer promotions. Promotions are powerful competitive tools for getting new products in re-seller stores, inducing consumer trial, gaining shelf space and motivating salespersons and re-sellers.

Sales Promotions — Tools and Techniques Price deals (price-off, price-cut, cents-off, denote the same thing ) Bonus-packs (price-pack) Refunds and rebates (both terms are used interchangeably ) Coupons Contests sweepstakes - Premiums -In-packs , on-packs, -near packs and container premiums Free-in-mail premiums Self-liquidating premiums Sampling Continuity plans Trade coupons Trade allowances and deals Exchange offers Displays, trade fairs, exhibitions and event sponsorship.

Price Deals Price deals are probably the most commonly used promotional techniques. A price deal for customers means a reduction in the price of the promoted product which means that the customer saves money on purchase. Such a deal is designed to stimulate customers to try a new product, to encourage new users to try an existing product, or to encourage customers to continue product patronage, increase purchase quantity, purchase multiple units, and accelerate usage rate, etc. Such deals are suitable when brand loyalty is low, product category is considered a commodity and price is the primary consideration of the customers.

Price Discounts Price discounts (also called cents-off deals) are communicated to the consumers through advertising, at the point-of-purchase, by listing the reduced price on the package or signs near the product or window display, or by the sales people. Such discounts may appear in newspapers, magazines and television advertisements. Similar discounts are often advertised by retailers in the local media (called feature advertising) and by manufacturers in national print and audio-visual media.

Price-pack Deals Price-packs are also called value-packs. These may take any of the two forms, bonus pack and banded pack. In case of bonus pack offer, an additional quantity of the same product is offered free when the standard pack size of the product is purchased at the regular price . This type of deal is often seen in case of laundry products, food products and personal care products, etc. Banded pack offer, when two or more units of a product are sold at a reduced price compared to the regular price The products are generally banded together physically. Another variation of this technique is “buy-one-take-one-free”, or some similar offer (it could be “same for less” or “more for the same”).

Consumer Sales Promotion The specific consumer oriented sales promotion are following: Consumer contests: Some pitches are to be made to promote the brand of the product. For example Britannia use a pitch line tin-tin- tin-tin. Consumer Premium: The extra offers deals with the shake of the organization, discount on the product, offering extra benefits along with the product, future purchase behaviour. Trading stumps: It is deal with the future offering of the product. What extra advantages given to the particular product in compare to other competitor . Subsidised sampling offers: Final product reach into the hand of consumer with the help of retailer, mall, store home delivery or through mail . Price of offers: The consumer deals with different offers time-to-time which influence the consumer to purchase the product. It deals with the concept of larger and bigger quantity.

Refunds and Rebates The terms ‘refund’ and ‘rebate’ are used as meaning the same thing. Long ago, the term rebate was made popular by the automobile industry in developed countries . There is a subtle difference between these two terms. The Random House Dictionary defines a refund as repayment of money, and a rebate as a return of part of the original payment for some service or merchandise . This means that a refund is repayment of total money paid for purchase, while the rebate represents repayment of only part of the money paid for purchase. However , both these terms are used interchangeably in the real world of marketing. Refund offers can induce excitement in consumers at relatively low cost.

Coupons Coupons can be considered as certificates offered by retailers or manufacturers that entitle the owner to some stated savings or claim the specified thing. Coupons bear a date of expiry and cannot be redeemed after the cut off date. Offer of a coupon is a very versatile technique and can be used to achieve many different sales promotion objectives. Distribution of Coupons Direct to Consumer Media Distributed Product-Distributed Coupons can be used to Serve many Objectives To Encourage Product or Service Trial To Encourage Brand Switching To Encourage Repeat Purchase To Supplement Print Media Advertising To Use Price Discrimination

Contests and Sweepstakes A sweepstake is a random drawing and is sometimes called a chance contest. This too may or may not involve the purchase of any product or service . A lottery prize is decided on the basis of chance and requires a “consideration” for entry that may be proof-of-purchase of ticket or a product. According to the American Association of Advertising Agencies, “A contest is an event that invites the customer to apply skill to solve or complete a special problem”. The same agency says, “A sweepstake does not call for the application of skill on the part of the consumer. Winners are determined by a drawing from all entry forms. In other words, prizes are awarded on the basis of chance”. Often, a combination of contest and sweepstakes is employed in some promotions. Among all the sales promotional devices, probably the most exciting and highly rewarding are the contests and sweepstakes.

Premiums A premium (gift) is a reward given to the consumer for performing a particular act, generally purchasing a product or service. The premium may be free or available to the consumer by paying a price well below the regular market price. There are many varieties of premiums which are sometimes referred to as direct premiums and mail premiums. Direct premiums are used to reward the customers immediately at the time of purchase, and mail premiums require the customers to take some action, such as mailing the proof of multiple purchases to the marketer. After the receipt of the proof, the marketer sends the premium to the consumer.

Free-in-Mail Premiums Free-in-mail premiums are unique because the promotion objectives may be quite different. In-mail premiums do not provide an immediate reward at the time of purchase, as do the premiums already discussed. Consumers have to take some action to claim the premium, such as sending the proof of a single or multiple purchases and wait for some period of time for the delivery of the premium through mail or courier. A premium that serves as “dealer-loader” is a premium that is kept as display in the store and after the promotion is over, this “dealer-loader” is given to the store manager/owner free. The purpose is to reward the dealer for stocking the promoted product.

MARKETING RESEARCH

Marketing Research is the function which provides the necessary information about the consumer to the marketer. In the process, an organisation can identify new opportunities in the market; evaluate and monitor marketing actions; and in general, evolve better marketing progamme to serve the interests of the consumer. Thus marketing research acts as the link between the consumer and the marketer.

Definition Marketing research is a systematic collection and analysis of information that is ultimately used in evolving some marketing decisions.

SCOPE OF THE MARKETING RESEARCH FUNCTION Marketing Research is carried out to assess the impact of past marketing actions. Some research is done to understand the competitive, technological, social, economic cultural, political or legal environments of the market. Another way of looking at the function of marketing research is to look at the particular decision area where research results are used.

Sales Analysis Much research is done in the following areas which are broadly referred as sales analysis , • Measurement of market potential/demand projection Determination of market characteristics; Market share estimation ; Studies of business trends.

In fact, some of the more detailed studies to be carried out under the broad ambit of sales analysis could be as follows, The types of consumers that constitute the potential market The size and location of the market; The growth and. concentration of the market over certain period of time, The competitive picture for the product; The major strategies of leading competitors with respect to price, offerings distribution etc. The purchase habits of key market segments ; What is the pattern of pre-purchase deliberations made by the consumers' ? Who are involved in the decision making? What are the roles of different members in the decision making ? How does the product fit into the consumer' s life styles? (Operation if it is an industrial product); Do consumers prefer to buy some particular brands'? (i.e. Assess the degree of brand loyalty

Sales Methods and Policies Marketing research studies are also conducted with a view to evaluate the effectiveness of present distribution system. Such studies are used in establishing or revising sales territories.. They are also helpful in establishment of sales quotas, design of territory boundary, compensation to sales force, physical distribution and distribution cost analysis etc. Marketing research is also done to assess the effectiveness of different promotional activities such as premiums, deals, coupons, sampling etc.

Product Management Every marketer tries to formally or informally utilize information to manage the existing and new products. It examines market feedback about competitive product offerings. Also, some companies make use of marketing research to form market segments through choice of alternative bases. Companies also carry out different research studies to assess consumer feedback to new products and their likely potential. Of late, in India many consumer products have been launched after making rigorous amount of research. Moreover, researches have enabled to diagnose how consumers perceive various brands of a product. Such studies have enabled the companies to position their brands.

Advertising Research Media research Three National Readership Sunveys (NRS) have so far been conducted in India. These studies have basically estimated the readership of leading newspapers. The last NRS has also assessed qualitatively, readers feedback on the editorial content. Moreover, some marketing research have evaluated the relative effectiveness of different media in specific product fields, and in context of achieving specific tasks such as creating brand awareness or a particular product benefit . Copy research: Advertising agencies have been regularly engaged in this activity where they test out alternative copy designs by obtaining the feedback from to consumers.

Corporate Research Social values research: Knowledge, attitude and practices on family planning, anti-dowry, smoking, drinking etc. Political studies: In recent times marketing studies have been conducted to ascertain the public opinion about the election results . Customer service studies: Many banks and large industrial houses have resorted to marketing research to know the consumers' changing need for service and possible grievances about existing operations.

Syndicated Research Several research agencies collect and tabulate marketing information on a continuing 'basis. Reports are sent periodically (Weekly, monthly or quarterly) to clients who are paid subscribers. Such services are found specially useful in t 'lie spheres of movement of consumer goods through retail outlets (ORG Retail Audit), incidence of disease and use of branded drugs (MARL- prescription audit), Television Program viewing (the Television Rating Points), Newspaper & Magazine readership (NRS - discussed earlier under media research), assessment of market potential of a city with population one lakh and above (Thompson Indices), study of nation's attitudes and psychographics (PSNAP and IMRB' slife style research on the cigarette market).

Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization. Marketing Research

Steps in the marketing research process Defining the problem and research objectives Developing the research plan Implementing the plan Interpreting and reporting the findings Marketing Research

Defining the Problem and Research Objectives Types of objectives: Exploratory research Descriptive research Causal research Marketing Research

Defining the Problem and Research Objectives Exploratory research is the gathering of preliminary information that will help to define the problem and suggest hypotheses. Descriptive research is to describe things such as market potential for a product or the demographics and attitudes of consumers who buy the product. Causal research is to test hypotheses about cause-and-effect relationships. Marketing Research

Developing the Research Plan The research plan Outlines sources of existing data Spells out the specific research approaches, contact methods, sampling plans, and instruments that researchers will use to gather data Marketing Research

Developing the Research Plan The research plan is a written proposal that includes: Management problem Research objectives Information needed How the results will help management decisions Budget Marketing Research

Developing the Research Plan Secondary data consists of information that already exists somewhere, having been collected for another purpose Primary data consists of information gathered for the special research plan Marketing Research

+ Advantages: Speed Cost Provides data that a company cannot collect on its own Gathering Secondary Data Marketing Research – Disadvantages: Availability Relevance Accuracy Impartial

Primary Data Collection Research approaches Contact methods Sampling plan Research instruments Marketing Research

Research Approaches Observational research involves gathering primary data by observing relevant people, actions, and situations. Ethnographic research involves sending trained observers to watch and interact with consumers in their natural environment. Marketing Research

Research Approaches Survey research is the most widely used method and is best for descriptive information—knowledge, attitudes, preferences, and buying behavior. Flexible People can be unable or unwilling to answer Gives misleading or pleasing answers Privacy concerns Marketing Research

Research Approaches Experimental research is best for gathering causal information Tries to explain cause-and-effect relationships. Marketing Research

Contact Methods Mail questionnaires Collect large amounts of information Low cost Less bias with no interviewer present Lack of flexibility Low response rate Lack of control of sample Marketing Research

Contact Methods Telephone interviewing Collects information quickly More flexible than mail questionnaires Interviewers can explain difficult questions Higher response rates than mail questionnaires Interviewers communicate directly with respondents Higher cost than mail questionnaires Potential interviewer bias Marketing Research

Contact Methods Mail, telephone, and personal interviewing Personal interviewing Individual interviewing Group interviewing Marketing Research

Contact Methods Personal interviewing Individual interviewing Involves talking with people at home or the office, on the street, or in shopping malls Flexible More expensive than telephone interviews Group interviewing or focus group interviewing Involves inviting 6 to 10 people to talk with a trained moderator Marketing Research

Contact Methods Online marketing research Internet surveys Online panels Online experiments Online focus groups Marketing Research

Contact Methods Online marketing research Low cost Speed to administer Fast results Good for hard-to-reach groups Hard to control who’s in the sample Lack of interaction Privacy concerns Marketing Research

Sampling Plan A sample is a segment of the population selected for marketing research to represent the population as a whole. Who is to be surveyed? How many people should be surveyed? How should the people be chosen? Marketing Research

Marketing Research Sampling Plan Probability samples: Each population member has a known chance of being included in the sample. Non-probability samples: Used when probability sampling costs too much or takes too much time.

Marketing Research Research Instruments Questionnaires Mechanical devices

Marketing Research Research Instruments Questionnaires Most common Administered in person, by phone, or online Flexible Open-end questions Closed-end questions

Marketing Research Research Instruments Closed-end questions include all the possible answers, and subjects are to make choices among them. Provides answers that are easier to interpret and tabulate Open-end questions allows respondents to answer in their own words. Useful in exploratory research

Implementing the Research Plan Collecting data Processing the information Analyzing the information Issues to consider: What if respondents refuse to cooperate? What if respondents give biased answers? What if interviewer makes mistakes or takes shortcuts? Marketing Research

Social, ethical and legal issues in Marketing Social and ethical issues . Marketing receives much criticism. Some of this criticism is justified; much is not. Social critics claim that certain practices of marketing hurt customers or society. Consumers have many concerns about how well marketing and businesses, as a whole, serve their interests. Consumer advocates, government agencies and other critics have accused marketing of harming consumers through high prices, deceptive practices, high-pressure selling, shoddy or unsafe products, planned obsolescence and poor service to disadvantage consumers.

High Prices. High cost of distribution. A long-standing charge is that greedy intermediaries mark up prices beyond the value of their services. Critics charge either that there are too many intermediaries, or that intermediaries are inefficient and poorly run, provide unnecessary or duplicate services, and practice poor management and planning. As a result, distribution costs too much and consumers pay for these excessive costs in the form of higher prices. High advertising and promotion cost: Modern marketing is also accused of pushing up prices because of heavy advertising and sales promotion. Excessive profits per units. Some companies mark up goods excessively. Thus, profits several times are much higher than even the total cost of products.

High Pressure Selling . Salespeople are sometimes accused of high-pressure selling that persuades people to buy products they had no thought of buying. It is often said that insurance, banking services, encyclopaedias etc. are sold, not bought. Salespeople are trained to deliver smooth talks to lure purchase. They sell hard because commissions and sales contests promise big prizes to those who sell the most . Shoddy or Unsafe products. Products lack the quality they should have. One complaint is that products are not made well. Such complaints have been lodged against goods and services ranging from atom Provide proper narration by sales people. It is alleged to the marketing practices that sales people don’t provide proper narration to the consumers and direct on a path whether right or wrong for exchange, food items to home decors.

Planned Obsolescence Some producers follow a programme of planned obsolescence, causing their products to become obsolete before they need replacement . Poor Service to Disadvantaged Consumers . The urban poor often have to shop in smaller stores that carry interior goods and charge higher prices. Marketing's eye on profits also means that disadvantaged consumers are not viable segments to target. The high-income consumer is the preferred target . Materialism. Marketing urges too much concern in material possessions. People are judged by what they own rather than by what they are. To be considered successful, people must own a smart mobile or apartment in a prime residential site, expensive cars and the branded exclusive clothes . Too Few Social Goods . Marketing has been accused of overselling private goods at the expense of public goods. As private goods increase, they require more public services that are usually not forthcoming. More automobiles means requirements of more parking places.

Cultural hazards. Critics charge the marketing system with creating cultural merging and confusions. Our senses are being assaulted constantly by advertising. Commercials interrupt serious programmes; pages of ads obscure printed matter; billboards mar beautiful scenery. These interruptions continuously pollute people's minds with messages of materialism, power etc .. Hazards of capitalism. Marketing of any products today is a part of capitalistic view of the society. It deals with concentration of wealth and power to few. Because of these, social divisions become clear and conflicts and agitations come to forefront. So, critics of capitalism also criticize marketing.

Legal issues in marketing Legislation and marketing Legislation affecting business around the world has increased steadily over the years. For example The European Commission has a framework of laws covering the issues for the nations of the EU that are Competitive behavior 2 . Product standards 3. Product liability and 4 . Commercial transactions Similarly , the India- our country has many laws covering issues that are 1. Competition 2 . Fair trade practices 3 . Environmental protection 4 . Product safety 5 . Truth in advertising 6 . Packaging and labelling and 7. Pricing

Major laws affecting marketing in India. Consumer protection act 1986. The companies act 1956. The contract act 1872. The negotiable instruments act 1881. The monopolies and restrictive trade practices act 1969. The competition act 2002. The essential commodities act 1955. The environment ( protection ) act 1986.

Marketing of Services

INTERNATIONAL MARKETING

INTERNATIONAL MARKETING What is marketing? International Marketing (IM) International Marketing Plan Epilogue

What is MARKETING ? The marketing is ; science and art of valuation, creation and presentation for achieving a certain profit to ensure the needs of a target market.

INTERNATIONAL MARKETING (IM) • IM or global marketing refers to marketing carried out by companies overseas or across national borderlines. • At its simple level, IM involves the firm in marketing one or more marketing mix decisions across national boundaries. At its complex level, it involves the firm in establishing manufacturing facilities overseas and coordinating marketing strategies across the globe.

INTERNATIONAL MARKETING (IM) • IM is the performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit. • The application of marketing orientation and marketing capabilities to international business.

For a successful marketing, we have to ; ● set the balance of price and profitability ● provide the most value ● take aim at our product or service ● be a well-established brand in business life ● D I FFERENT I ATE

INTERNATIONAL MARKETING PLAN a) VISION AND MISSION What is our business? Who is our customer? What are the consumers’ values? What do we want? What are the benefits to be provided? What are our expectations?

INTERNATIONAL MARKETING PLAN b) GOALS OF COMPANY Which position the company wants to get involved in business life What the company wants to achieve within a certain period e.g. numerically things; goal of giro , percentile ratio…

INTERNATIONAL MARKETING PLAN c) RESEARCH OF MARKET (INTERNAL/EXTERNAL) Environmental analysis for foreign markets

INTERNATIONAL MARKETING PLAN POLITICAL ENVIRONMENT Effects of type of government Level of stability Political vulnerability Types of likely risks Attitudes toward foreign products/ foreign investment Forces of nationalism

INTERNATIONAL MARKETING PLAN SOCIAL AND CULTURAL ENVIRONMENTS Effects of language(s), religion(s), education Effects of social structure, institutions, roles, mobility, changes Effects of values, attitudes Attitudes toward change Role of consumption

INTERNATIONAL MARKETING PLAN BUSINESS AND TECHNOLOGICAL ENVIRONMENTS Types and size of businesses Rules for business conduct Role of businesses in society Level of technology used Ability to absorb technological changes

INTERNATIONAL MARKETING PLAN LEGAL ENVIRONMENT Type of legal system Effects of regulations Possibilities of regulatory changes Protection for property rights Use of arbitration Preferences for local businesses

INTERNATIONAL MARKETING PLAN ECONOMIC ENVIRONMENT Balance of payment trends Strength/weakness of currency Participation in economic cooperation agreements Trade barriers Barriers to market entry Financial risks and local economic trends

INTERNATIONAL MARKETING PLAN PHYSICAL AND DEMOGRAPHIC ENVIRONMENTS Population trends Effects of climate Physical barriers to transportation/communication

INTERNATIONAL MARKETING PLAN COMPETITIVE ENVIRONMENT Local or international competitors Intensity of competition Nature of competition (price or non - price) Relationships and interaction with competitors

INTERNATIONAL MARKETING PLAN We can support research of market with; questionnaires selection of sample interviews works in field and in the office

INTERNATIONAL MARKETING PLAN d) THE SWOT ANALYSIS STRENGTHS WEAKNESSES OPPORTUNITIES THREATS OK NO GO UPHILL BATTLE ADAPT IMPROVE THE INTERNAL POTENTIAL THE EXTERNAL POTENTIAL

INTERNATIONAL MARKETING PLAN e) SELECTION OF MARKETS FILTER 1 FILTER 2 FILTER 3 FILTER 4 Macro Level Research General Market Relating to the Product Micro Level Research Target Markets

INTERNATIONAL MARKETING PLAN f) MARKET SEGMENTATION If you offer a product for all units, it means that some consumers will not be satisfied in full and resources would be wasted. With market segmentation, product-market match provided better.

Cyber marketing

1. b Relationship Marketing basis - building and maintaining long term relationship between buyers and sellers based on trust and commitment elements - similar to personal relationships shared values, trust, mutual respect, mutual benefit, frequent communications, honest feedback, cooperation, flexibility, understanding, relationship commitment

1. b Relationship Marketing emphasis keeping existing customers forming and maintaining strong long-term ties social (friendship) economic ( joint investment) technical ( joint product development) basis communications, consultancy, conflict resolution, value added services, coordinated responsibilities, long term relationships

1. c Levels of Relationship Marketing One financial bond, customer marketing orientation, low degree of service customization, low potential for sustained competitive differentiation

1. c Levels of Relationship Marketing Two social bond client marketing orientation medium degree of service customization medium potential for sustained competitive differentiation

1. c Levels of Relationship Marketing Three structural bond client marketing orientation medium to high degree of service customization, high potential for sustained competitive differentiation

1. d Implications of Relationship Marketing opportunity costs Distributor Decision Making Product Decision Making Pricing Decision Making Promotion Decision Making

2. Evaluating the use of Relationship Marketing Strategy Advantages and Disadvantages When transactional and relationship marketing are best used lost-for-good customers always-a-share customers

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