MB0030: MARKETING MANAGEMENT

ASSIGNMENT SET 2

1. Write a short note on product life cycle.

Ans: -The product which is introduced into the market will undergo some modifications over
the period. Its sales also fluctuate. Therefore marketer is interested in finding out How sales
changes over period? And what strategies best suits at that point? A product life cycle can be
graphed by plotting aggregate sales volume for a product category over time. Generally the
curve resembles bell shaped curve but it is not the only one type of curve. We can obtain style,
fashion or fad style of product life cycles also.

Product life cycle (bell shaped curve): According to this type of cycle a product passes
through five stages:

1. Product development stage: In this stage company identifies the viable idea and develops it.
Sales in this stage are zero but require huge research and development budget. Therefore
company incurs losses at this stage.

2. Introduction stage: Company introduces the product into the market. As the product is new
to the market, awareness is usually very low. Here company adopts heavy sales promotion and
product awareness programs. The cost of product is very high and a sale is very low. At this
juncture company charges high price to the customer.

3. Growth stage: Company gets experience over the period and now tries to get the maximum
market share (take first mover advantage). Sales will grow rapidly resulting in lesser cost and
better profit. Company reduces the price of the product and offers varieties and values in it. It
focuses on building better distribution network and pushes the product through it. Therefore
company needs less sales promotion. Number of competitors will grow and it forces company to
keep tab on them.

4. Maturity stage:
a. Peak sales.
b. Low cost per customer.
c. High profits.
d. Competition based pricing
e. Communicating the product differentiation to consumer.
f. Improving supply chain efficiency.
g. Defend the market share
h. Industry experiences the consolidation.

5. Decline stage: In this stage, product sales and profit declines. Company should phase out
weak items from their product mix. The advertisement budget of the company also comes
down.

2. Explain various categories of brand sponsorship with example.

Ans:- Brand manager have four options of sponsoring the brand. They are:

1. Manufacturer brand: The brand owned by manufacturer and promoted either directly
or indirectly. This type of strategy is followed from years. Pillsbury atta is the manufacturer
brand. In the below image you can see the Pillsbury is launching the Punjabi atta in the market.
2. Private brands are also called as store brands. These brands bearing the store name or
store selected vendor name. Basic ingredients of private labels are:

1. It must be a unit package: It is difficult to assign a Private Label character to, say rice sold
loose from a 100 kg bag. Even though it may enhance consumer loyalty for whatever reason, it
does not qualify as a Private Label product.

2. Relabeling: The unit pack must bear only the brand name of the particular store or any other
party the store may choose for its Private Label programme. Private labels will enhance the
category profitability; increase the negotiation power of the retailer and better value creates
better consumer loyalty. All retailers cannot go for the private labeling. Private labels can be
introduced if and only if

a. The consumer is not getting the tangible value.

b. The retailer is not making the enough returns from the sale of the branded goods.

Emerging issues in private labelling:

a. The private label strategy is effective, profitable and reality.

b. The retailer must understand the price, quality and willingness to pay.
c. The retailer must have a sufficiently large base of loyal customers in the store before
introducing the private label.
d. The focus must be on consumer need and not any private agenda of the retailers
e. There must be stringent system for the private label production. Quality control is a must
since there is no else to blame.
f. Private label must work to fill- in gaps in the category and not target the brand leader
g. Smart manufacturers may take a private label initiative of the retailer seriously and avoid
value gaps in the categories as an impediment to growing private labels.

3. Brand licensing: It is the legal authorization by the trademarked brand owner to allow
another company to use its brand for a fee. For example, Hugo boss, Tommy Hilfiger, Lovable,
Lacoste, and Nike are some of the textile brands those licensed their brands in the Indian
market. The major benefits of brand licensing are low cost, free publicity and revenue from
royalty fees. Brand licensing also suffers from serious limitations like lack of manufacturing
control, and licensing arrangements may fail.

4. Co- Branding: According to Kotler co- branding is ‘the practice of using the established
brand names of two different companies on the same product’. For example, ICICI and HPCL
came together to sell ICICI-HPCL petro cards to the customer. Here card is the co- branding
between the two companies. Co- branding helps ICICI to utilize their financial resources well. It
adds another banking facility to the bank while HPCL can lock the customer from buying the
petroleum products from competitors. HPCL also gets the benefit of financial power which it
doesn’t have. Both companies promote these products. Hence they can leverage brand image
and can reduce the cost. All companies will not get benefit from co-branding. Some times
company may lose the brand image if the product fails.

3. Explain the product mix pricing strategies with example.

Ans: - Product Mix Pricing Strategies

1. Product Line pricing: strategy of setting the price for entire product line. Marketer
differentiate the price according to the range of products i.e. suppose the company is having
three products in low, middle and high end segment and prices the three products say Rs 10 Rs
20 and Rs 30 respectively.

For example of Nokia mobile phones Nokia 1110 is priced @ Rs 1349, Nokia 7610priced @ Rs
6249 and Nokia E90 priced @ Rs 34599. All the three products cater to the different segments
Low, middle and high income group respectively. The three levels of differentiation create three
price points in the mind of consumer. The task of marketer is to establish the perceived quality
among the three segments. If the customers do not find much difference between the three
brands, he/she may opt for low end products.

2 Optional Product pricing strategy is used to set the price of optional or accessory products
along with a main product.

Maruti Suzuki will not add above accessories to its product Swift but all these are optional
customer has to pay different prices as mentioned in the picture for different products.
Organizations separate these products from main product so that customer should not perceive
products are costly. Once the customer comes to the show room, organization explains the
advantages of buying these products.

3. Captive product pricing: Setting a price for a product that must be used along with a main
product. For example, Gillette sells low priced razors but make money on the replacement
cartridges.

4. By product pricing is determining the price for by products in order to make the main
products price more attractive. For example, L.T. Overseas manufacturers of Dawaat basmati
rice, found that processing of rice results in two by products i.e. rice husk and rice brain oil. If
the company sells husk and brain oil to other consumers, then company

5. Product bundle pricing is offering companies several products together at the reduced price.
This strategy helps companies to generate more volume, get rid of the unused products and
attract the price conscious consumer. This also helps in locking the customer from purchasing
the competitors products. For example, Anchor toothpaste and brush are offered together at
lower prices.

4. What are various logistics functions? Describe in brief.

Ans:- The Major logistics functions are:

a. Warehousing: Goods produced at the factory may not be consumed simultaneously.

Therefore companies need to store the goods. Companies able to use proper warehousing
facilities enhanced their operation efficiency. Warehousing can also be used as hub where goods
come to the facility and cross docked. Now days many companies are assigning this work to
specialized players in ware housing. Hence warehousing itself grew like separate industry.
Below is an example of how Barista a coffee chain company used the services of safe express
(Logistics Company) to improve their competitiveness.

b. Inventory management: Organizations need to store the goods required for day to day
operation. They cannot store high inventory as stock piles up and cost also increases. They are
not sure of demand fluctuation and its impact on the inventory, so they do not want take risk by
carrying little inventory. For example, safe express which provides inventory solution to Barista
replenishes the goods on daily basis so that barista can maintain zero inventory space in their
outlets.
c. Transportation: The goods need to be carried from one place to another. Transporters
ship the goods from supplier location to factory and from factory till customer. They use
different modes to perform the function. The different modes are

i. Air transportation: This mode of transportation is used to transport perishable goods. The
dominant characteristics of this mode are quick delivery, premium pricing and limited quantity
transportation.

ii. Water transportation: this is the slowest but cost efficient mode of transportation. It can carry
wide varieties of goods but it can reach only limited places. This mode is usually suited for
bulky, low value non perishable goods.

iii. Surface transportation: This mode is again divided as highway transportation and rail
transportation. It can carry wide variety of assortments. In case of rail transportation it can
carry bulky products while in highway transportation it is of high value goods.

iv. Pipelines: this mode is excellent in meeting delivery schedules as it is having fewer obstacles.
The drawback of this type of transportation mode is it carries very limited variety of products
and cover very limited geographic space. The cost of the transportation is very low. The most
suitable products for this mode are oil, natural gas and slurred products.

v. Internet carriers: This mode is used to carry digital products from producer to consumer via
satellite able modem or telephone wires. Software companies, education institutions etc are
very few to name, who are using this mode of transport.

5. What is IMC? Describe the communication development process in brief.

Ans:-Integrated Marketing communication is “a planning process designed to assure that all
brand contacts received by a customer or prospect for a product, service, or organization are
relevant to that person and consistent over time.”

Communication development process: The Communication Development Process consists of

the following steps:

1. Preparing target customer profile: Effective marketing communication starts with

identifying the target customer to whom the communication is developed. In this stage
company prepares target.

2. Identifying promotion objectives: Target customer profile provides inputs about

his/her readiness to purchase the product. Customer may be in any of the six stages of
hierarchy of effects. The six stages are awareness, knowledge, liking, preference, conviction and
purchase. Every company likes to bring their customer to purchase stage from other five stages.
Therefore it create different promotion program at different stage. To make it clearer, Company
first creates awareness about the product, educate them about the advantages, induce them to
choose the brand, stimulates and monitor that customer purchases the product.

3. Designing a message: After deciding the communication objectives, Marketer turns to

develop right message which should create attention, interest, desire or action (AIDA) by the
customer.

4. Selecting the channels of communications: The communicator may use company

sales people, reference groups, blogs, RSS, webinar, online communities and social networking
sites to promote their products. These media are called as personal communication channels.
The word of mouth campaigns buzz marketing and viral marketing are some examples of
personal communication channels.

5. Selecting the message source: Messages communicated by the celebrities and proper
sources have high credibility among the target consumers. Many companies use well known
actors and actresses, cricket players, and even cartoon characters to promote their
advertisements. Colgate- Palmolive well known FMCG company used Indian Dental
Association’s (IDA) recommendation to promote their toothpaste. As we have seen earlier Rahul
Dravid, Amitabh Bachhan and Karishma Kapoor are used as sources for Reebok, Reid and
Tayolr, and Dabur Amla respectively. Companies should be very careful about the selection of
the sources. If the product character does not match with sources, then product will fail in the
market. Recently Pepsi dropped its sources Rahul Dravid and Sourav Ganguly and selected
Rohit Sharma for the promotion campaigns.

6. Target Customer Feedback: The communicator collects the feedback on the promotion
campaign to assess how many of target customer able to see, hear or read the message. This
stage helps communicator to understand how many of target customers actually able to recall
the message? And among them how many of them really purchased it. Some companies go
further and ask the customer to provide suggestion to improve the promotion campaign.

6. What are alternative approaches to marketing while going international?

Study Pepsi’s international marketing strategy.
Ans: - The orientation towards the market varies with a company to company. Each one adopts
different approaches on the basis of their expertise or strength of the company. Some
companies adapt same product for all the markets while others differentiate to each countries.
In this context we would like to know what are the common approaches adopted by the
company in the international marketing. The three common approaches used in the
international market are:

Domestic market extension approach: Companies that adopt this strategy thinks
international markets are secondary to its domestic markets.

Multi domestic market orientation: In the international market each country has its
uniqueness. Their preference varies. The Consumer profile is different from domestic operation.
Companies develop different market plans for such markets. For example, In France men use
more cosmetics than the women where as in India women use more cosmetics than men. A
cosmetics company should change the product positioning differently.

Global market orientation: In this approach company thinks that products’ needs are
universal in nature irrespective of country they work. Here company tries to standardize their
products or services. For example, Sony walkman is same across the world. The product
information brochure contains explanation in different languages of different countries. The
final product is same in all the countries.