Marketing plans and policies

Strategic Mgt

1. IGU MEERPUR  REWARI SUBJECT: STRATEGIC MANAGEMENT

2. TOPIC : MARKETING PLAN AND POLICIES IN STRATEGY MANAGEMENT    SUBMITTED TO : DR. PINKI MAM SUBMITTED BY : PRIYA RANI ​ ROLL NO.           :       59 ​                Mcom . 2 YEAR ​ SEMESTER         :        4th ​ ​

3. MARKETING PLAN AND POLICIES IN STRATEGY MANAGEMENT

4.  Marketing Plans and Policies Marketing plans and policies have to formulated and implemented on the basis of the four PS of the marketing mix i.e., product, pricing. place (distribution) and promotion.  However. the major policy decisions involved in marketing area vary to a great length as are  Its evolving nature. In the early 960s. four Ps, . eg. product price. place, and promotion, were considered the core areas of marketing. There have been additions of position, packaging, and people. as the boundaries of marketing spread beyond telling to encompass more of the organisation Watler vieira an expert in marketing, vies that "four P's are really talking from inside the manufacturers office looking inward." In his opinion. there are other sets of letters that may better outline the new marketing, He suggests four Cs: customer, cost, convenience and communication, Helping the C-sighted marketing will be four Rs: relevance. resources, relationship, and return. These are all evolving issue. From strategy

5. Product Product includes goods and services that may be offered by an organisation to its customers. The   organisation may offer a single product item, or a product line or mix of different products. A product  item satisfies a particular need, eg. dress material or saree in textile product. Product line is a group of products in a product class are closely related because they function in a similar manner or sold to the same customer groups or are marketed through the same types of outlets or fall within given price i ranges, eg. suitings , shirtings , sarees, and dress materials in textile products. A product mix is the set of all products and items that a particular onganisation makes available to the buyers, eg. Reliance offers textile products, fibre intermediates, polymers, and chemicals. The major issues for policy decisions for products are product mix, market segmentation, product positioning, and branding. (I) Product Mix —The choice of product mix depends on the strategy itself by which the organisation defines its business. The product mix that an organisation may offer should aim at meeting three possible objectives improving profitability  securing stability in the face of sales variability, and raising the growth rate of sales. Product mix decision has two dimensions: ( i ) product mix breadth which refers to how many different product lines. the oganisation carries, and (ii) product mix length which refers to the total number of items in its product mix. Decision in this regard depends on the organisation's definition of its business, i nature of competition, organisational capabilities, and appetite for growth.  The organisation should make provision to prune the product line and items therein specially when the width or length is very high: it should add if the new product item is likely to strengthen i the existing product mix. For example, Hindustan Unilever has decided to prune is dairy products and animal feeds: at the same time. it is going to add new products within the overall l product lines. Market Segmentation -Market segmentation refers to the act of dividing a market into distinct groups of buyers who might require separate product and/or marketing mixes. Segmentation can be done on the basis of such variables as socio-economic characteristics of buyer groups age, Income, sex, education, occupation, family size, etc.) or geographic basis (location), or industrial categories (industrial products), or buyer behaviour (motive, personality, brand loyalty, i usage rate, etc.). Market 

6. segmentation is necessary as an  organisation  cannot serve the needs of entire market. Market segmentation helps the  organisation  to concentrate its efforts on target market, as each segment needs a specific product in terms of its quality and price  Product Positioning - Product positioning refers to offering of a product in a manner that customers perceive it to be distinct from other competing products. A product can be differentiated from other competing products on the basis of product characteristics-features, i performance, conformance, durability, reliability, style, design, on the basis of services provided With the product - delivery, installation, customer training, consulting service, repair, warranty and the  organisation's image. An organistion may have options to have different combinations of these factors depending on the nature of product, market forces, and its own capabilities. i (iv) Branding-Brand is a name. term, sign, symbol, or design, or a combination of these, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors. Attaching a brand name to a product helps the customers to identifies the product easily besides it helps the organisation to rationalise its marketing efforts. Policy decision regarding branding revolves around three aspects : ( i ) decision to sell the product with or without brand, (ii) types of brand to be selected. and (iii) brand extension.

7.  The first issue relates to the decision about having a brand or not. Usually, the organisations in commodity business do not require brand name because of lack of product diffrentiation based brand such as petro -products, steel, generic pharmaceutical products, etc. In consumer product, and certain industrial products, brand's name is important. Therefore, the question is: What types of brand names should be selected, Ideally speaking, a brand should be easily recognisable , distinct, and must convey some meaning. In this context, the organisations have a number of alternatives  (I) brand may be selected on the basis of the name of the organisation itself of substance, Nirma Limited has Nima brand of laundry soaps, toilet soaps, and detergents. Two other versions of corporate names can be used he splitting the corporate names such as Colgate Palmolive India Limited uses Colgate for its products-toothpaste, toothpowder, and toothbrush and Palmolive for shaving cream, soaps, etc. orb suffixing or prefixing the corporate name with the product such as Reliance us firs two or three let of its name for its various products like Recon' for polysters. (ii) If the brand name is not chosen based on the corporate name; sometimes, it is not possible because of large number of brands, e.g. Hindustan Uniliver has 10 brands; the brand name chosen should convey meaning specific to the product. There are several examples  for this: Hindustan Unilever markets its staple foods-—rice, alt, atta , etc. in the name of Annapura , is name of a Hindu goddess famous for satiating all types of food needs; Balsara sells its oral care product in the names of Babool , Meshwak , etc. which are specific ingredients of toothpastes based on ancient mode of keeping teeth and gums clean and healthy.  The last issue relating to brand name is brand extension, that is, a particular brand is used as the prime with some prefixes or suffixes like Rin and Rin Shakti, Lifebuoy and Life buoy Pus, Lifebuoy Gold, and so on. The basic advantage of this policy is that extended brands get quicker response  prime brand is well established one.  Pricing Price denotes the money that customers pay in exchange for goods and services. Price is important both for the organisations as well as for customers. For the organisations , price determines the quantum of returns for their efforts; for the customers, it is the vale assigned to the satisfaction of needs. Therefore, the price should be beneficial to both. However, what price is to be charged depends on a variety of factors, though returns and value are the prime factors. Pricing policy involves (I) how should a price fixed for a product for the first lime and in how and when should there be changes in price?

8. Price Fixation —A company may have different range of price choices ranging from no option to price fixation to extremely favourable price fixation option so as to have maximum returns. These are the extreme ends; for most of the companies, options lie in between. There may be  some situations in which the companies have to adhere to externally imposed prices, or exampie of petro -product prices are fixed by the Government under its administered price scheme. In some other areas, mark-up prices may be determined such as pharmaceuticals. Barring such cases, the companies have to adopt product prices depending on the situations and such Situational variables may be value for money, competitors prices, and cost plus price. Let us discuss how these variables affect the determination of price.  Value for Money -The price of the product must match its value which customers attach to it. Every customer wants to have greater value from the product than what he spends or ii Though this concept is quite theoretical but helps in price determination. For example  Hindustan Unilever, which is a trend-setter in consumer products, adopts the maximum of price fixation. "Check what the consumer needs and what price he is willing to pay then deduct the expected profit, and target your cost."

9. 2. Competitors price —Price of the product may be fixed on the basis of what competitors are charging for similar product, as the base for matching product value and its price if similar product has already been in existence in the market. However, a company may have three  options in this context : ( i ) fixation of higher than competitors price if the product can be positioned to be of better quality. eg. Gillette India Limited has fixed higher price of its blades and shaving razors as compared to its competitor-Malhotra Shaving Products, (ii) fixation of lower price than the competitors price for the product perceived to be similar for market penetration. i.e. price of Top Ramen's noodles of Marico Industries was  lower than its competing brand Maggi noodles of Nestle: ii-fixation of price similar to the competitors price: however. this may not result in any advantage to the company if it is not able to differentiate its product on non-price basis like quality, service, etc.  3.  Cost Plus Price -Cost plus price policy indicates that final price would be cost of production of the product plus desired level of profit. Usually, this pattern is more commonly adopted unless external forces compel to do otherwise. This type of pricing policy is more appropriate for unique jobs or contracts where cost of production cannot be estimated much in advance;  captive-companies supply parts/components to assemblers, and companies operating in monopoly or near-monopoly situation . Price Revision -There may be a need for price change over the period of time because of the changes in any factors affecting price. There may be upward revision or downward revision of price. Iet us see the situations under which a price change in either direction is required. Upward Revision The extent to which there would he upward price revision depends on the forces which affect price fixation. If the company is in a position to pass on total impact of increased cost of inputs and taxes, the new price will be revised to that extent. However, if it is not possible to pass the total impact, the new price would be based price plus addition of part of costs and taxes.  Downward Revision - Downward revision required when the company is not able to sell its product at the predetermined price. Such a situation may arise if- i ) there is excess capacity creation or there is slack demand because of recession in a particular industry, more particularly in commodity products; (ii) the market leader has reduced its price either to eliminate the competition or its cost structure has become more favourable ,; (iii) there has been any invention which reduces the cost of production substantially.

10. Place (Distribution) After the decision about the product and its price has been made. the question are as to how the product will reach to its ultimate user directly from the producer to the customer, or through a series of middlemen. This involves the decision about distribution or marketing channels. Policy of marketing channels involves. ( i ) identification of channels,  (ii) evaluation of these channels  (iii) selection  these channels.

11. ldentification of Channel. , Usually, a product flows from the producer to ultimate customer int following ways: Producer __________________________________________________________________________ Customer Producer ______________________   Retailer_____________________________________________ Customer Producer ____________________      Whole saler ____________Retailer ________________________Customer Producer_____________________ Wholesaler ____________   Jobber __________Retailer________ Customer Producer-Custome r-In this zero-level marketing channel (also called direct marketing) the producer sells directly to the customer like the companies offering various services such a banking. courier. telecommunication, electricity, etc.. companies manufacturing parts/ components for supplying to original equipment manufacturing companies; doing mail-order business; and so on. This system reduces the cost of product distribution. However, his can  be adopted in many cases specially when the customers are dispersed geographically.  Producer-Retailer-customer -It is one-level channel. In this channel, the product is first supplied to retailers from where customers get the supplies, like small scale producers supply or retailers  who in turn, sell to customers: companies which can market through selected retailers stores  can adopt this, e.g. automobile manufacturers: etc. In non-automobile sectors many companies  have preferred this, eg. bata India for marketing its shoes and Reliance for marketing its  fabrics Many consumer-product companies have adopted the practice of marketing through defence canteens as one-level channel besides adopting Iwo-level channel. Though this one. i level channel is costlier than the zero-level, it covers much wider market.  Poducer -wholesaler-Retailer-Customer  - it is a two-level channel in which the product flows  through two intermediaries-wholesaler and retailer. This channel is mostly adopted by the companies operating in the field of consumer products, both durables and non-durables. Producer wholesaler-jobber-Retailer-Customer —It is three-level distribution channel with  introduction of jobber in between wholesaler and retailer. A jobber may be in the form of semi wholesaler who procures products in substantial quantity and supplies to retailers. This practice is quite prevalent in pharmaceutical business in which a retailer cannot afford to lift minimum prescribed quantity of a variety of medicines and, therefore. prefers supplies from such jobs.

12. Evaluation of Channel -Once the alternative marketing channels are identified, the company has to evaluate which channel fits its strategy implementation. Evaluation of suitability or unsuitabilty of a channel may be based on three criteria: economic, control, and adaptive.  1/ Economic Criteria -A desirable marketing channel is one which involves minimum cost per unit of sale so that the company keeps its distribution cost at the minimum.  2/  Control Criteria  -Since intermediaries in the marketing channel are independent, the producer has to take into account the controllability of these intermediaries. A better channel is one which offers such controllability. 3/ Adaptive Criteria- The channel should provide flexibility so that changes can be brought whenever the situations so demand. Inflexibility may have a costly proposition. Channel Selection —Selection of marketing channels by a company is determined by a variety of factors such as location of customers, product characteristics, organisational capabilities, etc. However the impact of these factors in choosing the marketing channels should be evaluated in terms of evaluative criteria discussed earlier. Location of Customers -If the customers for the product are few or located at few places and purchase the product in high volume, it is better to have zero-level channel as it saves distribution costs, Product characteristics -Bulky products with low unit value require lesser middlemen in order to avoid the cost of handling at different points, eg. heavy chemicals, building materials, etc. Products of high unit value are sold either directly by the producers or there may be one-level channel, eg. computers, air-conditioners, precision instruments, etc. Products of high technical value are also sold directly, eg. industrial machinery, aircraft, etc. In these cases, because of high unit value, cost of deployment of company 's sales would be very insignificant as compared to total sales revenues. Perishable products having shelf-life are marketed either by zero-level or one-level marketing channel., c &. milk.

13. Organisational capabilities —these are more particularly in terms of its product mix and financial areas, affect the choice of a marketing channel, and also the control the particular companies can exercise on chain of distribution. For instance. Hindustan Unilever has a wide product mix, adopts two level channel with wide control on middlemen. Financial capabilities also affect the choice of channel, for instance. Reliance has planned to have a chain of departmental stores.  costing about  crore to market its petroleum products and other products. Promotion Promotion consists of activities through which a company communicates to its potential customers  about itself and its products and to induce them to buy the products. local activities related to promotion are known as promotion mix The various activities involved are advertising. sales promotion, and personal selling. There are basically two issues involved in promotion deciding promotion mix and deciding budget for these activities. However, both these issues are interrelated. Promotion Mix- Promotion mix is a set of controllable variables that a company can use to influence the buyers response. Though each element of the promotion mix tries to communicate and influence prospective buyers, their mechanism is different.  Advertising —Advertising is a non-personal communication to customers and consists of print media newspapers, magazines, direct mail), broadcast media (radio, television),electronic media audiotape, video tape, video disc), and display media (billboards, signs, posters) Through advertising. a company may communicate with large number of customers at the same time. This is more relevant when the customers are located dispersely and personal communication with them is not possible. Therefore. advertising is quite helpful for those companies which produce and sell branded products meant for wide geographical area, eg. consumer products.

14. Sales Promotion -Sales promotion includes those activities which are aimed at reaching the customers either at office or at home product, or offer free samples : and or coupons indicting the discount available to the holders. These activities are undertaken either to make the customers aware about the product features or to have personal persuasion for inducing to buy the products, eg. promotion of vacuum cleaner or water purifier through this method. Sales promotion may also be undertaken through display of the product at the retail stores, or temporary price reduction, or giving incentives to middlemen like wholesalers and retailers, organising contests, etc. Personal Selling -Personal selling is effected through the personal contact with one or more  prospective buyers are more relevant when the product is expensive and purchased infrequently. water purifier, vacuum cleaner, etc. or when the product is newly introduced in the market, & certain brands of consumer convenient products.