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the conception, pricing and promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organization goals”. Core concepts of marketing: a. Needs, wants and demands: Need is the basic human requirement, can be food, air, water, clothing etc. Wants are needs directed to specific objects to satisfy the need. Need is hunger, want is if the person specifically wants idli or paniyaram or pizza. Demands are wants for specific products backed by an ability to pay. b. Product or offering: it is anything that can satisfy a need or a want. The major types of basic offering are – goods, ,services, experiences, events, persons, places, properties, organizations, information and ideas. c. Value and satisfaction: value is defined as a ratio between what the customer gets and what he gives. The customer gets benefits like functional benefit and emotional benefit and assumes cost like monetary cost, time cost, energy cost, and psychic cost. d. Exchange and transaction: it involves obtaining a desired product from someone offering something in return. For this to happen, the following five conditions must be met – (i) There are at least two parties (ii) Each party has something that might be of value to the other party. (iii) Each party is capable of communication and delivery. (iv)Each party is free to accept or reject the exchange offer. (v) Each party believes it is appropriate or desirable to deal with the other party. e. Marketing channels: Following are the marketing channels used by a company: • Communication channel: to deliver and receive message. • Distribution channel: to display or deliver the physical products. • Selling channels: to effect transactions with potential buyers. f. Supply chain: this describes a longer chain stretching from raw materials to components to final products that are carried to final buyers. g. Marketing mix: it is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. These are the four P’s – Product, Price, Promotion and Place. Evolution of marketing: a. The production concept: • It holds that the consumers will prefer products that are widely available and inexpensive. • manufacturer concentrates on achieving higher production efficiency, low cost and mass distribution. b. The product concept: • It holds that the consumer will favor those products that offer the most quality, performance or innovative features. • Manufacturer concentrates on making superior products. • They assume the buyers admire well made products. • They do not take into account buyer’s needs, or customer inputs and they rarely examine competitor products, • This leads to “marketing myopia”. a. The selling concept: a. It holds that consumers and businesses if left alone, will not ordinarily buy enough of the organization’s product and hence the organization must take aggressive selling efforts. b. There is heavy reliance on promotional efforts. 1
c. It is practiced most often for unsought goods like insurance and encyclopedias. d. It is also practiced for fund raising and whenever there is over capacity. b. The marketing concept: • It holds that the key to achieving organizational goals consists of the company being more effective than the competitor in creating, delivering and communicating customer value to its chosen target markets. • This concept rests on four pillars – target market, customer needs, integrated marketing and profitability. Selling 1. Emphasis is on the product. 2. Company first makes the product and then figures how to sell it. 3. Management is sales volume oriented. 4. Planning is short term oriented, in terms of today’s products and markets. 5. Needs of sellers are stressed
Difference between marketing and selling: Marketing 1. emphasis is on customer wants 2. Company first determines wants and then figures out how to make and deliver a product to satisfy those wants. 3. Management is profit oriented. 4. Planning is long term oriented in terms of new products, tomorrow’s market and future growth. 5. Wants of buyers are stressed.
Macro features in the marketing environment: 1. Demographic environment: The statistical study of human population and its distribution is called demography. It is of special interest to marketing executives because of people constitute markets. India has more than a billion consumers. Life expectancy is more than 62 years thanks to improved health standards, lower infant mortality, fall in birth rates and the growth in medical facilities. Literacy : • The nation's average literacy rate is 52.11% as per 1991 census. • Male literacy - 63.86%, Female literacy - 39.42% • There is a seven fold increase in the number of literates. • India has a 2.5 million strong pool of engineers, scientists and technically educated persons. Geographic distribution of consumers :• Out of the billion consumers in India, 30% only fall in urban centers and rest 70% come in rural areas. • Even in the urban centers, the concentration is more in the metres. Striking diversity in language, religion and social customs: Religious diversity : • The seven major religions are Hinduism, Islam, Christianity, Sikhism, Buddhism, Jainism and Zorashrtrian. • In these religions, there are other sects and sub sects, castes and sub castes. • The culture and customs and traditions all vary according to this diversity. Linguistic diversity : • There are 16 major languages specified in the Indian constitution as national languages. • Apart from this, there are hundreds of dialects. • This linguistic diversity is a major challenge to any national marketer. Diversity in dress, food habits: • Each religious community has its own style of dressing, ornaments, foods etc. 2
Diversity in literacy level: There is wide disparity in literacy level like 90% in Kerala, 63% in T. N. 41% in U P And 38% in Bihar and Rajasthan. Diversity in density of population : The density varies from 766 sq km in West Bengal to 8 sq km in Arunachal Pradesh, 747n in Kerala, 402 in Bihar, 377 in U P, 372 in T. N., 100 in Rajasthan, 77 in Himachal Pradesh, 64 in Manipur, 60 in Meghalaya, 47 in Nagaland 45 in Sikkim. 2. Economic Environment: Markets require purchasing power as well as people. The people must have money to spend and be willing to spend it. Thus, the economic environment is a significant force that affects the marketing activities of about any organization. The available purchasing power depends on current income, prices, savings debts and credit availability.. Income distribution ; Nations vary greatly in level of income and distribution and industrial structure. The following are the different categories in it:-a Subsistence Economies:• Majority of people engage in simple agriculture. • They consume most of the output • They barter the rest for other simple goods and services. • There is very few opportunities for marketers. b. Raw material exporting economies : • These economies are rich in one or more natural resources but poor in other respects. • Much of their revenue comes from exporting these resources. c. Industrializing economies : • Here manufacturing accounts for 10 to 20% of the GDP. E.g. India. • Industrialization results in increase in imports of raw materials etc and decrease in import of finished goods. • It creates a new rich class and a small but growing middle class, both demanding new types of goods. d. Industrialized economies: • They are major exporters of manufactured goods and investment funds. • They buy manufactured goods from one another and also export them to other types of economies in exchange for raw materials and semi finished goods. Income distribution pattern: a Very low income b. Mostly low income c. Very low, very high incomes ' d. Low, medium, high incomes e. Mostly medium incomes The economic status of Indian consumer can be classified into the following three groups :-a The Affluent group : • They form a negligible minority. • They can afford pompous consumption of high order but do not form a demand base for companies to depend on them. b. The middle class : • This class constitutes the largest segment of consumers of manufactured goods in the country. c. The Poor:• Their size is also large but purchasing power is low. Stages of business cycle : The traditional business cycle goes through four stages : Prosperity, Recession, Depression and Recovery. Marketing executives need to know which stage of the business cycle the economy currently is in, because a company usually operates its marketing system quite differently during each economic stage. Inflation :- Inflation is a rise in the price of goods and services. When prices rise at a faster rate than personal incomes, consumer buying power declines. Managing a marketing program becomes challenging when inflation is high especially regarding pricing and cost control. Consumer spends less because their power of buying declines but sometimes they spend more 3
E. lasers etc 2. . • The members of this class are better educated and exposed to the lifestyle of rich. These factors are a company's suppliers. teachers and also govt staff both in the center as well as states. lifestyle changes. electric mixers and grinders. stimulate markets and industries not related to the new technology. robotics and material sciences. • They often spend more than what they earn at any given point in time to cope with their new social image. social values. Technological breakthroughs affect the market in three ways :1. • Breakdown of joint family system : there is a rise in nuclear families. pressure cookers. premium brands of toiletries and cosmetics has gone up. 4.In India. 3. With respect to India. • Synthetic fabrics. Increased regulation of technological change : When new products are coming on it becomes mandatory for the govt to regulate the products and make laws so that unsafe products are kept away from the market etc .E. • Their expenditure on non food items. ready made garments.USA has the highest R & D budget followed by Japan. . • The rise in the middle class is due to the increasing number of industrial units with increased number of engineers. fans.The time between introduction and peak production is shortening considerably. .music systems. calculators affected slide rules.g. Varying R& D budgets : . • Working class women : is also increasing. gas stoves and other modem household appliances have become essential items. Technological environment: One of the most dramatic forces shaping people's lives is technology. in fields of biotechnology. E. autos hurt rail road etc. the major change on the social scenario is the middle class explosion. furniture. managers. .With the advent of new technology. t v crippled radio and movies. c. developing and launching new products.g.. market and its marketing intermediaries. t v.g. . most of the companies have their own R & D dept but the focus mostly is on imitating competitor product or making slight changes rather than creating or innovating new products altogether. a sizeable portion of doctors. 3.Many of today's common products like computers.g convenience goods provide time for additional activities. Interest rates : This is another economic factor that influence marketing program. every new technology is a force for " creative destruction".The time lag between new ideas and their successful implementation is decreasing rapidly. Though they are generally uncontrollable but they can be influenced more than the external macro factors. d. digital watches etc were not available 40 years ago.fearing that the prices will be still high tomorrow. Social Environment: The social and cultural forces are changing much more quickly than it used to like. radically alter or virtually destroy existing industries e.Marketers must be aware of these regulations when proposing. There is a new life style among the middle class requiring several time saving conveniences. stereo . solid state electronics.All this has a substantial impact on shopping behavior and marketing performance. Accelerating pace of technological change : . b. beliefs etc. the challenge will be to develop the affordable version. The marketer should monitor the following trends in technology : a. Xerography hurt carbon paper. 4 . When interest rates are high people post pond their long term purchases such as housing. Start entirely new industries such as computers. . Unlimited opportunities for innovation : Scientists are working upon a whole range of new technologies . Micro factors in the Marketing Environment: There are three external factors that are a part of company's marketing system.
variable and perishable products.consumer goods . For business purpose. E.its R & D strength . There are two type of intermediaries : a. Other non marketing forces are -company's location . warehousing and financing etc. b. goods or services are offered for sale and transfer of ownership occurs. various facilitating organizations that provide such services as transportation. Durability and tangibility: Products are classified into three groups. the margins are less and advertising is heavy.durability & tangibility . Thus people who supply goods or services that is required to produce a product becomes important. They require more personal selling and service. Refrigerator. a. command a higher margin and require more seller guarantees. the firms we call middlemen . Unit II PRODUCT FEATURES Product classification: The products are classified on the basis of – . Non durable goods: these are tangible goods consumed in one or few uses. financial and personnel activities. Customer does not feel like putting extra efforts to buy them and is ready to 5 .wholesalers and retailers b. II.g. Suppliers : A product cannot be sold if it cannot be made or bought. market is defined as people or organizations with wants (needs) to satisfy. Convenience goods: These are the goods that the customer usually purchases frequently. Thus suppliers also form a part of its marketing system. proper finance should be available.g. haircut. money to spend and the willingness to spend it. immediately and with minimum efforts. Marketing intermediaries : These are independent business organizations that directly aid the flow of goods and services between a marketing organization and its market. They are made available in many locations.image in the public eye. it has to be seen whether the existing production capabilities can be used or not or otherwise if a new plant needs to be set up. Durable goods: These are tangible goods that normally survive many uses. Consumer goods: Consumer goods are further classified into the following : a. Organization's internal environment: These include a firm's production. E. these intermediaries operate between a company and its suppliers. Services: These are intangible.g if a new brand of soap needs to be introduced. c. E. They are consumed quickly and purchased frequently. according to durability and tangibility. inseparable.The market: A market may be defined as a place where buyer and seller meet. They are also called channels of distributions.industrial goods I. Shortages may arise if cooperative relationship is not maintained with the suppliers. supplier credibility and adaptability. They require more quality control.
Consistency: it refers to how closely related the various product lines are in end use. they are not part of the finished product. depth and consistency: Width: It refers to how many product lines the company carries. Depth: it refers to how many variants are offered for each product in the line. It includes goods that are found in their natural state. c. # emergency goods – these are purchased when a need is urgent. paste etc Length: it refers to the total number of items in the product mix. E. They are generally divided into the following categories: a. length. bar soap. E.g. Fabricating materials and parts: They become part of the finished product after being processed to some extent.accept one of the many brands available.g. grocery # impulse goods – they are purchased without any proper planning. Specialty goods: these are the goods with unique characteristics or brand identification for which a sufficient number of buyers are willing to make a special purchasing effort. e. fork lift trucks etc.g. E.g. zipper in clothing. Any company’s product mix has width. E. PRODUCT MIX: It is the set of all those products and items that a particular seller offers for sale. prices and sometimes style in several stores before making a purchase. d. flour being part of a bread. chocolates. magazines. Operating supplies: these are those goods that aid in an organization’s operations without becoming part of the finished product. small power tools. Raw materials: These are the goods that are processes and become part of another finished product. The difference between raw materials and fabricating materials is that raw materials are not at all processed whereas fabricating materials are somewhat processed. These goods have low unit price and are not bulky.g. E. blast furnace etc. E. minerals or agricultural products such as cotton. cars d. Installations or capital items: these are the manufactured products that are an organization’s major. Industrial goods : Industrial goods are classified in terms of how they enter the production process and their relative costliness.g. Insurance III. large generators. E.g. egg etc b. fruits or livestock like chicken.g. E.g. Fabricating parts are assembled with no further change in their form. e. production requirements. Unsought goods: Consumers usually do not know about such product and they must be made aware about the product to buy it. c. distribution channel or some other way. Accessory equipments: these are tangible products that have substantial value and are used in an organization’s operations.g. stationary items etc. expensive and long lived equipments. E. E. Shopping goods: These are the goods for which consumers want to compare quality. detergents.g. E. The process of searching and comparing continues as long as the customer believes that the potential benefits from a better purchase more than offset the additional time and effort spent in shopping. umbrella during rainy season. They are further divided into – # staples – consumer purchases this on regular basis.g. furniture. BRAND: 6 . E. clothing etc. b.g lubricating oil.
g. • • • • • Benefits: if one of the product fails. Responsibility attached with branding – to promote and maintain consistent quality of output. its overall image will not be tarnished The firm can search the best name for each product. b. Blanket family name: All the products carry the same name. Difficulty to differentiate – e. Individual names: It means individual name for all the products. raw materials Should suggest something about the product. Sony. term. sign or symbol or a combination of them intended to identify the goods or services of one seller or group of sellers to differentiate them from those of competitors. Assurance that a minimum level of quality will be provided Reduces price comparison Adds prestige to otherwise ordinary commodities. Lakme. Separate family name for all product lines: Different family names are invented for different quality lines within the same product class. Capable of registration & legal protection. Easy to pronounce. Elle 7 . spell and remember. Initial awareness is easily achieved due to manufacturer’s image c. Reasons for branding: • • • • • • • • • • • • • • Easy to identify goods and services. nails.A brand is a name. it will not affect other products. Maggi. To see whether the brand name chosen already exists or resembles some existing ones. E. particularly benefits & uses. E. Reasons for not branding: Essential/desirable characteristics of a brand name: Challenges to branding: Brand Equity: It denotes the value a brand name adds to the product.g.g. To decide whether to brand or not Selecting a good brand name as more and more new products are coming but the words available are fixed. If the company wants to introduce low quality products. Distinctive Should be adaptable to new products when they may be added to product line. Reebok etc Brand name decision: a. Bajaj etc Benefits: Development cost is less as no money needs to be spent on name research or for heavy advertising for brand recognition.g. E.
appearance and dependability of the package. Innovation opportunity in packaging – brings benefits to customers and profits to producers. Brand extension: Using the existing brand name to launch new products in other categories. E. toffees etc c. Changing the packaging: This may be done in order to – 8 . Multiple packaging: This is the practice of placing several units of the same product in one container. E. Companies may also introduce brand variants which are specific brand lines supplied to specific retailers or distribution channels. the company can come up with a new brand name. The company may be trying to establish different features or appeals to different buying motives. Helps in building company and brand image. The company name legitimizes and the individual name individualizes the product. Honda etc 3. Bajaj Kawasaki. Be part of a company’s consumer marketing program – for identification by consumers.d. Packaging is a business function. 4. To act as a “five second” commercial for the product. It also helps in increasing the sale. Company trade name combined with individual product name: Some manufacturers tie their company name to an individual brand name for each product. Line extension: Existing brand name extended to new sizes or flavors in the existing product category. To face competition. Purpose/Importance of packaging: • • • • • • • • • • To protect the product on its way to the consumer. Packaging strategies: a.g. Provide protection after the product is purchased to the time it is consumed. Kotak Mahindra PACKAGING: A package is the actual container or wrapper. Multi Brands: A company can also introduce additional brands in the same category. Retailers prefer products with attractive package.g towels. Kinetic Honda. Be part of the company’s trade marketing program – to meet the needs of wholesalers and retailers. Co Brand: Two or more well known brands are combined in an offer. b. Rising consumer affluence is making people willing to pay extra for convenience. Packaging the product line: A company has to decide whether to develop a family resemblance when packaging related products. It includes the activities of designing and producing container for a product. 5. Family packaging uses either highly similar packaging for all products or packages with a common and clearly noticeable feature.g. Tata. E. New brand: If none of the existing brand names suit a new product. 2. Brand strategy decision: A company can choose the following five strategies: 1.
Types of label: • • • • • • • A brand label: simply the brand alone will be written on the product or the package. Keep perishables fresh up to 5 months without refrigeration. performance and/or other features. Criticism of packaging: • • • • • Packaging depletes natural resources – if it is not recycled or biodegraded Packaging is too expensive Some forms of plastic packaging & aerosol cans are causing health hazards. A descriptive label – gives objective information about the product’s use. (d) Improvements and revision for existing product: provide improved performance or greater perceived value. Aseptic container made of lamination of paper.correct a poor feature in an existing package . construction. A grade label – identify the product’s judged quality.. Functions of a label: Identifies the product or brand Grade the product Describe the product Promote the product NEW PRODUCT DEVELOPMENT: Every company must develop new products. aluminum foils and plastic ( tetra pack ).take advantage of a new development in packaging . There are some legal requirements also. It is not bio degradable. It costs about ½ of that of cans and 1/3 of bottles. Recent developments in Packaging: 1. Allen and Hamilton identified 6 categories of new products. 2. Sachet Packaging LABELLING: A label is that part of a product that carries information about the product and the seller. Booz. (e) Repositioning: existing products targeted to new market segments 9 . (a) New to the world product (b) New product line: product is new for the company but an established market is there (c) Addition to existing product line: products that supplement a company’s existing product line. Packaging is deceptive Used and discarded packaging contributes significantly to solid waste problem. A label may be a part of the package or it may be a tag attached to the product. New product development shapes the company’s future.less expensive to design an attractive package than going for heavy advertising campaign. care.
price. distribution strategy and marketing budget etc for the first year. A system must be designed for stimulating new ideas within the organization and acknowledging and reviewing them properly and promptly. it moves to R&D or engineering department to be developed into a physical product. Product development: If the product concept passes the business test. 7. This in turn depends upon whether the product is a one time purchase or infrequently purchases or frequently purchased. advertising or market research agencies etc. the new product manager must develop a preliminary market strategy for introducing the new product which should include – the target market size. suppliers. Testing of the products: There are two types of tests – a. cost and profit projections. Idea generation: New product development starts with new ideas. Marketing strategy development: After testing. Beta testing – testing is done with a set of customers & their feedback taken. Alpha testing – done within the firm to see how it performs b. Care must be taken to avoid the following two types of errors: Go error – permitting a poor idea to further processing and Drop error – dropping an otherwise good idea. Along with the product’s functional characteristics the lab scientists must also communicate the product’s psychological aspects through physical cues. The sources for new ideas can be company employees. Those who don’t buy the new product are given free samples and feedback taken. customers. The target customer requirements is translated into a working prototype by a set of methods known as QFD or Quality Function Deployment wherein the list of customer attributes are converted into engineering attributes. 4. It is used to measure consumer preferences for alternative product concepts. the product is decorated with a brand name and packaging. Market testing: After the management becomes satisfied with the functional and psychological performance of the product.(f) Cost reduction : provide similar performance at lower price/cost. Idea screening: New product ideas are evaluated to determine which one wants further study. the company should know the sales. . Business analysis: To evaluate the proposal’s business attractiveness. They do this by – . Conjoint analysis is a method for deriving the utility values that consumers attach to varying levels of product attributes. This is once again divided into two categories a. # Simulated test marketing – 30 to 40 qualified shoppers are invited to a shop for purchasing any goods after showing them the screening of ads which contains the ad for the new product also. 2.Estimating cost and profits 6. it goes for market testing. universities. Concept testing involves presenting the product concept to appropriate target consumers and getting their reactions. inventors. 5. Consumer goods market testing – can be done by # Sales wave research – initial trial is provided for free of cost and later the same product along with competitor’s product is provided at a reduced price to see how many purchase this brand. structure. Concept development and testing: Attractive ideas must be refined into testable product concepts. Steps in new product development: 1. A product concept is an elaborated version of the idea expressed in meaningful consumer terms. marginal and rejects. planned product positioning. behavior. 3.Estimating total sales = first time sales + replacement sales + repeat sales. The ideas are sorted out into three categories – promising. 10 .
Late entering – entering after the competitors Where or geographic strategy: the company must decide whether to launch the product in a single locality. several regions or the national market. Commercialization: The factors that are to be considered for commercialization are – When or timing .# Controlled test marketing: a market research agency conducts the test marketing for the product in selected cities. opinion leaders. a region. Parallel entry – entering along with competitors c. First entry – entering before competitors b.e. 11 . 8. Business goods market testing – this also undergoes Alpha testing and Beta testing. To whom or target market prospect: the company must target its product to early adopters. developing a master chart showing the simultaneous and sequential activities that must take place to launch the product and the estimated time for each activity. Other methods are introducing the new product at a trade show or testing by means of displaying at the distributor or dealer’s display room. b. heavy users and those who can be reached at a low cost. How or introductory market strategy: to coordinate the many activities included in a new product launch. management can use network planning technique such as critical path scheduling i. # Test marketing: full blown test marketing is conducted in selected cities.here they can adopt the following strategies – a.
financial.Idea Gen erati on = wor th of idea Idea screeni ng = match with compan y’s objectiv es Concept testing = to test customer acceptanc e Marketi ng strategy = afforda ble plan Busines s analysis = profitab ility Product develop ment Mark et testin g com mer ciali zati on Shoul d we send idea back Is it possible to modify marketin g program DROP NEW PRODUCT DEVELOPMENT PRODUCT LIFE CYCLE Concept: It means the product has the following four things – a. most PLC’s curves are portrayed as bell shaped. Introduction: Characteristics 12 . The four stages are – introduction. opportunities and problems to the seller. Products have a limited life. purchasing and human resource strategies in each stage of their life cycle. manufacturing. a. A life cycle can be graphed by plotting aggregate sales volume for a product category over time usually years. growth. Product require different marketing. b. maturity and decline.. each posing different challenges. Product sale passes through distinct stages. Profits rise and fall at different stages of PLC d. c.
low promotion. Strategy to be adopted: promotion Low Price high low Slow Skimming high rapid skimming Slow rapid Penetration penetration a. Slow skimming: High price and low promotion Market is limited in size and aware of the product.A period of slow sales growth as the product is just introduced in the market. c. b. Buyers are willing to pay the high price. d. • • • • Low price. high promotion. Rapid penetration: Low price. Growth stage: Characteristics : A period of rapid market acceptance and substantial profit improvement. No potential competition. Rapid skimming: • • • • • • • • • • • launching the new product at a high price and promotion this is done when a large segment is unaware of the product and they are eager to buy when they know about it. Buyers are price sensitive Strong potential competition. Price sensitive Some potential competition. Profits are non existent because of heavy expenses incurred in the product introduction. Strategy: 13 . slow penetration: b. unaware of the product. There is a chance for potential competition. Market is large aware of the product. Market is large.
Add new models and flanker products( products of different size and flavors) Enter new market segments . accessories etc Price – price cut. durability. Strategy: • • Increasing the firm’s investment ( to dominate the market or strengthen its competitive position). weight. Maturity stage: Characteristics: A period of slow down in sales growth because the product has achieved acceptance by most potential buyers. more technical assistance. materials. # Product modification: # Marketing mix modification d. Profits stabilize or decline because of increased competition. Increasing number of users – convert non users. c.• • • • • • Improve product quality. . time. easier credit terms. change message or copy. Quality improvement – increases the product’s functional performance. Maintaining the firm’s investment level until the uncertainties about the industry are resolved 14 . speed or taste Its called a “plus launch” or “bigger” or “stronger” etc Feature improvement – adding new features such as size. frequency etc. new distribution channels etc Advertising – increase ad expense. Decline stage: Characteristics: The period when sales show a downward drift & profits erode.media mix. Strategy: # Market modification: • • • • • • • • • • • • The company tries to increase the volume by increasing the number of users and usage. Shift from product awareness advertising to product preference advertising. add new product features & improve styling. special offers. more outlets. early purchase discount etc Distribution – more display. or use more per occasion or invent new uses. coupons. warranties etc Personal selling – number & quality of sales force. more credit etc. reliability. rebates. sales incentives. Sales promotion – trade deals. Increase distribution coverage and enter new distribution channel. Lower prices to attract the next layer of price sensitive buyers. enter new market segment or win competitor’s consumers Increasing usage – use more frequently. revision of sales territories etc Services – speed up delivery.
a standard mark up is added to the product’s cost. Sales oriented goals: The pricing goal in this case may be to either increasing the sale or maintain or increase market share.• • • Decreasing the firm’s investment level selectively by dropping unprofitable customer groups while simultaneously strengthening the firm’s investment in lucrative niches. Profit oriented goals: Profit goals may be set for the short or long. suppose for a pen manufacturer – Variable cost per unit = Rs 10/Fixed cost per unit = Rs 3. Status quo goals: This is the most aggressive of all the pricing goals. If the demand is high. Harvesting the firm’s investment to recover cash quickly. It may be either one of the following two: (i) Stabilizing prices (ii) Meeting competition Different pricing policies: 1. Divesting the business quickly by disposing off its assets as advantageously as follows. Value pricing 4. target rate of return on investment pricing 2. E. c. to cover anticipated operating expenses and provide a desired profit for the period. Cost and demand based pricing: this takes into consideration both the demand factor as well as the cost of production. E. b. Sealed bid pricing Different types of pricing method: 1. Demand based pricing: the price is fixed on the basis of demand.g. (ii) Maximize profits: This is one of the most followed objectives. the price is determined on the basis of cost of production plus an additional margin of cost.g. 00. Cost based pricing: In this method. Competitor based pricing: Here the pricing is based on what the competitor is pricing or is expected to price. A company may select one or two profit oriented goals for its pricing policy: (i) Achieve a target return: A firm may price its product to achieve a target rate of return – a specified percentage return on its sale or on its investment. mark up pricing. (i) Increase sales volume: If the objective is to achieve rapid growth in sales. Pricing objectives: Following can be the pricing objectives for any given company: a. E. If profits become high in a particular industry then it will attract more capital which will increase the supply and hence lower the profit origin. If the demand is low. E. 000 Manufacturer’s unit cost = variable cost + fixed cost Unit sales 15 .g. price will be high. the company may put lower prices for the product or may adopt some other aggressive pricing strategy. Meaning of price: Price is the amount of money and/or other items with utility needed to acquire a product. (ii) Maintain or increase market share: The companies lower the prices if they want to maintain or increase the market share. the price is low. Perceived value pricing 3. E. Mark up pricing: In this method. An additional amount is added to the cost of the product called a mark up.g.g Going rate pricing.000/Expected unit sales = 50.
gift articles. 4. usually the leader sets the price and accordingly others also set.000.000 = Rs 20/this target will be realized only if the sales reach 50. slow moving items.000 50. Perceived value pricing: The price is based on the perception of the value not the seller cost. E.00. 6. Going rate pricing: The firm bases its price on the competitors.2 * 1. The individual firms do not charge on the basis of their cost or their demand. Suppose the pen manufacturer has invested 1 million rupees and wants to earn a 20% rate of return. paper etc where the product is standardized. it accepts 16 . They use other marketing mix elements such as advertising and sales promotion activities to create an enhanced image of the product.g. The firm wants to win a contract and that normally requires submitting a lower price bid at the same time price cannot be set lower than the cost. 5.000 50. Value pricing is not about lowering the price but reengineering the company’s operation to become a low cost producer without sacrificing quality or profit.e. Pricing strategies: a. items with high storage and handling costs. 2. as the key to price.= 10 + 3. The mode of payment may be Barter – exchange of goods of equal worth or compensation – part payment in cash and part payment in the form of goods or buy back arrangement – i.2 = Rs 20/Profit per unit = 20 – 16 = Rs 4/Mark ups are higher on seasonal items. if the company is supplying technical know how to one country. Target return pricing: The firm determines the price that would yield its target rate of return on investment ( ROI ). Value pricing says that the price should represent a high value offer to the customer. Geographical pricing: Here different prices are set for different markets situated at different locations based on the transportation and shipping costs.000 units. In industries like steel. Sealed bid pricing: The firm bases its price on the expectation of how competitors will price rather than on a rigid relation to their firm’s cost or demand. Then: Target return price = unit cost + desired return * invested capital Unit sales = 16 + 0. 3. specialty items.000 = Rs 16/suppose mark up is 20% then mark up price = unit cost 1 – desired return on sales = 16 1 – 0. Value pricing: Here a fairly low price is charged for a high quality offering.
the captive product will cost more. liquid soap or bar soap. then sell at a lower price. perfumes • Location pricing: e. E. In such cases. • Two part pricing: it consists of a fixed fee + variable fee depending on usage.to 1500/. automobiles arrange for low interest financing so that people do not have to take the botheration of arranging loans etc. E. shirt costing from 800/. Objectives of distribution management: • Convenience of consumers to get the product • Choice of selection of goods • Minimum incidence of breakage or damage during transportation • Optimal distribution cost • Effective and sincere promotional activity. telephone connection. the by products should be priced on their value. • Special event pricing: establish special prices during special season like Deepawali etc • Cash rebates: some discounts are given if the product is purchased during a specified time period. • Longer payment terms: helps in lowering monthly installments. CHANNELS OF DISTRIBUTION: Distribution management: It is concerned with the activities involved in transferring goods from producers or manufacturers to the ultimate buyers or consumers. Promotional pricing: • Loss leader pricing: the prices of well known brands are lowered to stimulate store traffic.g.g. Product mix pricing: following are the different ways of product mix pricing: • Product line pricing: the companies usually produce a product range not a single product and thus have the same product in a range.g. camera. theatres • Time pricing: e.. • Effective display and storage of goods • Effective location of godown and warehouses Various activities in distribution channels : 17 . b.g.g. • Low interest financing: e.g.from the same manufacturer. • Optional feature pricing: many companies offer a basic product and other optional features for which the customer has to pay extra for only those features which the customers are opting. Discriminatory pricing: this is the practice of selling the same product to different customers at different prices. d. The discrimination can be on the following bases: • Customer segment pricing: different customer groups charged differently. • By product pricing: the production of certain products like petroleum leads to production of by products like Vaseline.g. museums. razors. E. E. E.g. • Psychological discounting: set an artificial high price.500 => 350/c. • Product bundling pricing: sellers often bundle their product and features at a set price.g. E. The main or basic product will cost less.the goods back produced in that company or offset – entire payment in cash but a part of the payment has to be spent in that country itself. • Captive product pricing: some products require the use of ancillary or captive products. • Image pricing: same product priced differently on the basis of difference in pricing. E. thus lowering the monthly expense for people. children charged half in buses. airlines etc.g hotels. train etc • Product form pricing: different versions of the product are priced differently.
One level: • Manufacturer => mail order => user • Manufacturer door to door salesman user • Manufacturer manufacturer’s showroom user • Manufacturer retailer user 3. Product characteristics: • If the product risk and product value is high.• • • • • Physical flow – flow of goods from one party to other. Market characteristics: • If there is requirement for high level of service. the distribution channel is short. • Help in merchandizing: by displaying the products. • They act as change agents or generate demand: especially in the field of agriculture. Role and importance of distribution channels: • Information : the channels provide information about the market and competitors to the seller. manufacturing capacity. • Financing: they provide working capital to the manufacturer in the form of advance payments and deposits etc. • Title: they take the ownership for the goods once they come into their possession thereby reducing the risk of the manufacturer. Advertising communication flow – the members have to make themselves known. Payment flow – flow of money from one party to other. • Supply products in require assortment: the same middlemen operates as middlemen to so many manufacturers thus providing the products in assortment for the customer. • Price stability: they absorb the increase in price sometimes due to high intra middlemen competition thus resulting in price stability. Two level: • Manufacturer wholesaler retailer user 4. • Channels provide salesmanship: middlemen also have their own salesman who also canvass for orders. • Promotion: they also undertake some promotion activities for their shop as well as the goods. 18 . Communication flow – flow of requirement of goods from one party to other. marketing mix etc influence the distribution decision. the distribution channel will be short. Company characteristics: • Company’s long term objectives. Patterns of distribution channels: 1. Title flow – transference of ownership of goods from one party to other. 3. they increase awareness about the product. Four level: • Manufacturer marketer stockist/ distributor wholesaler retailer user • Manufacturer sole selling agent stockist/ distributor wholesaler retailer user Factors determining the length of the channel or factors affecting the distribution system: 1. Zero level • Manufacturer --> User 2. • Provide distributional efficiency: they bring together the makers and buyers effectively. 2. Three level: • Manufacturer stockist/distributor wholesaler retailer user 5. the distribution channel is short. financial resources. • If the product is perishable in nature.
Advertising decisions – setting advertising objectives. storage. promotion & handling negotiations. promotion. Media | 5. designer wear. motivating sales force. selection of communication channels. Response | Major communication functions 19 . • Good working relationship is established with the channel members. major domestic appliances etc. • E. credit inventory & service policies. deciding promotion mix and measuring results. Middlemen characteristics: • The kind of distribution channel also depends on middlemen’s aptitude for service. • Optimum market coverage & more control is possible here with lesser cost. Selective distribution: • This is the middle path approach to distribution. • The firm also hopes to get the benefit of aggressive selling by such outlets Unit III Communication process – steps in the development of effective communication. 2. advertising budget. size. Exclusive distribution: • Here the firm distributes its products through just one or two outlets in the market who exclusively deal in it and not all competing brands. deciding on the message. 6. technological and infrastructural developments etc also affect the distribution decisions of the firm. Environmental characteristics: • The govt policy. Communication process: Communication is the verbal or non verbal transmission of information between someone wanting to express an idea and someone else expected or expecting to get that idea. 3. Decoding | 7. designing message. Encoding | 6. • By giving exclusive distribution rights. • This practice is usually in products and brands that seek high prestigious image. the manufacturer hopes to have control over the intermediaries price. personal selling principles. Message | Major communication tools 4. Intensive distribution: • This alternative involves all the possible outlets to distribute the product. strategy. Sender --| 2. compensation. state of the economy. • Here. Receiver | Major parties in the communication process 3. credit etc 5. • The same product will be available from a small tea stall to a five star restaurant. media mix. the distribution channel is short.• If the product is standardized in nature. • This approach helps the manufacturing firm to focus its selling effort on a few outlet. statutory provisions. designing the sales force. Managing the sales force. There are 9 fundamental elements in any effective communication process: 1. training. • If the product is bulky in nature.g. objective. Intensity of competition: • Some firms adopt intensive distribution strategy & are indifferent to multiple brand outlet. recruiting. evaluating effectiveness Sales management & personal selling. the firm selects some outlets to distribute the product.g. soft drinks. 4. the distribution channel is long. • E. Identifying major distribution alternatives: 1.
Selective distortion: Receivers will hear what fits into their belief system. sender encoding message media decoding receiver noise feedback response Communication model Sometimes the receiver does not receive the intended message because of the following reasons: a. • The information the sending source wants to share must first be encoded into a transmittable form • Once the message has been transmitted through some common channel. Identify the target audience 2. Feedback | 9. • All the above stages are affected by noise. Selective attention: People are bombarded by thousands of commercial messages a day of which hardly an 80 are consciously noted and about 12 provoke some reaction. belief or faith. there is some change in the receiver’s knowledge. interesting and should be repeated to get the main points across.8. Factors influencing the effectiveness of a communication as given by Fiske and Hartley: • Greater the monopoly of the source over the receiver. high status. • The expertise. Steps in the development of effective communication: 1. As a result. beliefs and disposition. As a result. Thus. clear. the receiver formulates a response. If the receiver’s initial attitude towards the message is positive and he or she rehearses support arguments. • Communication effects are greatest if the message is consistent with the receiver’s existing opinions. b. the symbol must be decoded or given meaning by the receiver. objectivity or likeability of the source effects the effectiveness of the communication considerably. receiver often add things to the message that is not there and do not notice other things that are there. • Communication can produce effective shifts on peripheral issues. • The response serves as a feedback telling the sender whether the message was received & how it was perceived by the recipient. Noise - random and competing messages that interfere with the intended communication. Select the communication channels 20 . • If the message has been transmitted successfully. Determine the communication objectives 3. which do not lie at the recipient’s value system. c. Selective retention: People will retain in their long term memory only a small fraction of the messages that reach them. Design the message 4. the communication should be simple. • The social context group or reference group will mediate the communication and influence whether or not the communication is accepted. greater the receiver’s change or affect in favor of the source. the message is likely to be accepted & have high recall.
Potential buyers .evaluation scale – ( good – bad ) .5.potency scale . Manage the integrated marketing communication process. 2. Measure the results 8. impressions a person holds regarding an object. Identify the target audience: The target audience will include: . Establish the total communication budget 6.General public Image analysis: A major part of audience analysis is assessing the current image of the company. Reducing the set of relevant dimensions: The number of dimensions should be kept small in order to avoid respondent fatigue. ideas. Developing a set of relevant dimensions: The researcher asks people to identify the dimensions they would use in thinking about the object. its products and its competitors. Averaging the results 5. 1. 4. Administering the instrument to a sample of respondents: The respondents are asked to rate one object at a time. There are 3 types of scale . Image is the set of beliefs.Particular public .Groups .Individuals . Checking on the image variance 2.Deciders or influencers . Image analysis is done by First step Familiarity scale Measure the target audience’s knowledge about the object using the following scale: Never heard of Heard of know a little know a fair amount know very well Second step Favorability scale To measure the feelings towards the product Very unfavorable somewhat unfavorable indifferent somewhat favorable very favorable Another tool is semantic differential: It involves the following steps: 1. Determining the communication objectives: The communication objective of any company can be understood by any of the following four models: Stages AIDA model Hierarchy of effects Innovation Adoption Communication Model model model --------------------------------------------------------------------------------------------------------------------------------Cognitive attention awareness awareness exposure stage knowledge reception cognitive response -------------------------------------------------------------------------------------------------------------------------------------Affective Stage interest liking 21 interest attitude .activity scale – ( Active – passive) 3.( strong – weak ) .Current users . Decide on the communication mix 7.
rather than artificially increasing it. the ad for diamonds .What to say ( message content ) . Ego Appeal :.g. Vim bar 4. e. An emotional appeal would be more effective for first case and logical for the second case. Star Appeals and Testimonials :-The public fascination for sports superstars and entertainers is the foundation of celebrity endorsement advertisement.Desire preference Conviction evaluation intention Behavior stage action purchase trial adoption behavior 3.g. so it works without embarrassing the audience. 22 .Most consumers are open to their ego appeals whether the appeal relates to their physical appearance. Price or value appeal :-It tells the customer that they will get more than what they are spending. intellect. However appeals to fear have to be managed carefully. theme. On the other hand ad for industrial diamonds will talk of performance and features. discussing the benefits they got from it.How to say it symbolically ( message format ) . Quality Appeal :-An appeal to quality includes guarantee for say 20 years or telling the product history. On the other hand. Extreme appeals to fear can anger the audience or even cause them to block the message completely. E. There are two types of appeals: a. Fear or Anger Appeal :-Extreme cases of emotional appeals are those based on fear or anger. in which real users of the product celebrities or not make the sales pitch by showing the product in use. idea or USP. e. features or the ability to solve the problems. Sachin Tendulkar in Boosts ad. reducing somebody's fear or anxiety. (ii)Emotional Appeal :-It aims for the buyers heart." diamonds are forever ". LIC's fire insurance policy. keeping the price and the product same but convincing the people the product is worth the charge. Rational appeal b. It tries to sell the products on the basis of performance. 3.How to say it logically ( message structure ) . Raymonds . It tries to sell product on the basis of satisfaction that comes from purchasing and then either owning or giving the product as a gift.g.g.since 1925. the L'oreal ad featuring Miss World Diana Hyden where she admits the product is expensive but says " I am worth it"She is appealing to the egos of the potential buyers to think the same of themselves. or keeping the price same but offering more.g. There can be lot of other appeals also :1. The ad draws commitment between the product and the need for love commitment and emotional security. sense of humor or any other real or imaginary personal quality. E. A related appeal is testimonials. The presumed pull of the star appeal is that people like to identify with their favorite stars and will therefore be positively influenced by a star's appearance in the ad. The ego appeal has to happen in private. DeBeers ad . 5. 2. Design the message: Formulating the message requires solving four problems: . lowering the price and making them aware of the new price. and not the advertiser. For e. It is a powerful advertising because the core message comes from satisfied customers. e. An appeal to quality works only if the product possesses the right level of quality e.one for diamond rings and the other for industrial diamonds.Who should say it ( message source ) Message content: Here the management searches for appeal. can be effective.g.g. Emotional appeal (i)Logical Appeals or Rational Appeals :-It aims for the buyers head.
E. 23 . CD ROM. The factors that underlie the source’s credibility are – • Expertise.6.e the order in which the arguments are presented. friendship. strongest argument can be presented in the last. Novelty appeal: Whenever the ad uses some creative thinking or imaginative thinking to show something unusual to promote the product. video disks. In case of TV – all the above + body language have to be planned ( facial expressions. ears. Message structure: The message can have one sided presentation – that is praising a product or it can have two sided arguments – that also mentions shortcomings. 8. It can be further divided into • Advocate channels – Company salespeople contacting buyers in the target market • Expert channels – independent experts making statements to target buyers • Social channels – neighbors. friends. over the telephone or through emails. qualities and vocalizations. The strongest argument can be presented first if the idea is to catch the attention of the audience. luxury hotels using elegant chandeliers • Events – these are occurrences designed to communicate particular messages to target audience. sales force size 4. emotions. Sales force structure. person to audience. magazines.e. TV). copy. web page) and display media ( bill boards. smell. its called sensory appeal i. sign posters. videotapes. Sales force objectives and strategy 2. dress. In case of a captive audience. 3. family members & associates talking to target buyers. Non personal communication channels: It includes media. Finally the order of presentation is also important i. posture. Sales force compensation. For radio – they have to choose words. eyes.the specialized knowledge the communicator possesses • Trustworthiness – how objective and honest the source is • Likeability – describes the source’s attractiveness 4.g. Message format: The communicator has to decide on headline. etc) • Atmosphere – these are the packaged environment that create or reinforce the buyer’s leanings towards product purchase.e the ad should use a beautiful scenery or melodious music etc 7. Establishing the total marketing communication budget: DESIGNING THE SALES FORCE: Designing the sales force involves the following activities: 1. feelings etc to portray the message. hair style etc) Message source: Message delivered by an attractive or popular source achieve higher attention & recall. Social appeal: these kind of ads use love. electronic media ( audio tapes. face to face. broadcast media ( radio. Sensory appeal: Whenever the advertiser chooses to make an ad that appeals to any of our five senses i. voice. atmosphere and events:• Media – print media ( newspaper. its called novelty appeal. touch or taste. Selecting the communication channels: Communication channels are of 2 types: (i) Personal (ii) Non personal Personal Communication channels: It involves two or more persons communicating directly with each other. 5. direct mail). illustration and color. gestures.
• Seminar selling: A company team conducts an educational seminar for the customer company about the state of the art developments. 3. • Communicating – information about the company’s product and services. A direct sales force consists of full time or part time paid employees who exclusively work for the company. a variable amount. that is the salary will satisfy the rep’s need for income stability. Sales force objectives and strategy: Companies need to define the specific objectives they want their sales force to achieve. Determine the level and components of an effective compensation plan. rendering technical assistance. answering objections and closing sales • Servicing – providing various services to the customers – consulting on problems.a sales representative discusses issues with a prospect or customer in person or over the phone. • Conference selling: The sales personnel brings company resource people to discuss a major opportunity or problem. • Information gathering – conducting market research & doing intelligence work • Allocating – deciding which customer will get scarce products during product shortages.e. how much for established products and how much on new. Sales force strategy: The sales force must be deployed strategically so that they call on the right customer at the right time and in the right way. The fixed amount. For that. arranging finance. 2. The company should decide how much time should be spent on current customers and how much on new. expense allowances and benefits. e. • Selling – approaching. b. Customers are grouped into size classes according to annual sales volume. This includes inside sales personnel – conduct business from the office using the telephone and receive visits from prospective buyers and field sales personnel who travel and visit customers. Desirable call frequencies are established for each class. The components are – a fixed amount. 4. Sales force compensation: The company must develop an attractive compensation package to attract and retain a top class sales force. Sales force size: Once the company establishes the number of customers it wants to reach. It can adopt any of the following: • Sales representative to buyer:. expediting delivery etc. The benefits such as 24 . There are five steps in doing this: a. The sales job also varies as per state of economy – i. The expenses allowances covers the expense incurred in traveling.1. The number of sales representatives needed is determined by dividing the total annual calls required by the average annual calls made by a sales representative. d. bonus or profit sharing stimulates and rewards greater efforts. which might be commissions. product shortage and product abundance. • Sales representative to buyer group: Sales personnel gets to know as many members of the buyer group as possible. Company can decide to use a direct or contractual sales force. The average number of calls a sales representative can make a year is determined. it can use a workload approach to establish sales force size. in sales call per year. The level must be somewhat in alliance to what is being given by the competitors in the same field. • Sales team to buyer group: A company sales team works closely with the members of the buyer group. b. presenting. The sales representative has a variety of tasks to perform like – • Prospecting – searching for prospects or leads • Targeting – deciding how to allocate their time among prospects and customers. lodging. The variable amount. it must – a. The number of accounts in each size class is multiplied by the corresponding call frequency to arrive at the total work load. dining and entertaining. c.
• Sales representatives should understand field procedures and responsibilities. placing job ads or using employment agencies. and careful call planners. pension. make them more willing to perform non selling activities and give them less incentive to overstock customers. c. that is what are the traits that must be looked in a sales candidate: Following are the traits identified by many people: 1. following are the qualities in super achievers – risk taking. A popular rule favors making 70% of the compensation fixed and 30% variable Types of compensation systems: a.paid vacations. knowledgeable and helpful. life insurance etc provide security and job satisfaction. Selection procedure may include – • Written test • Interview • Group discussion • Medical tests • Reference • Interview of spouse. provide more motivation. MANAGING THE SALES FORCE : Managing the sales force includes the following: • Recruiting and selecting • Training • Supervising • Motivating Recruiting and selecting To select a good sales force. The techniques or methods used for training are – 25 . Robert McMurry added the following traits – high level of energy. Combination: it provides the benefits of both the plans at same time reduces the disadvantages. According to a study by Charles Garfield about superacheivers. first the company must develop the selection criteria. 2. powerful sense of mission. • Sales representatives should know the company products. • Sales representatives should know to make effective presentations. The Training Program goals are – • Sales representatives should know and identify the company. a well established habit of the industry and a state of mind that regards each obstacle.honest. reliable. abounding self confidence. • Sales representatives should know customer and competitor characteristics. own employees. care for the customer. The sources for right candidates can be – educational institutions. Straight salary: it provides sales representatives with a secure income. b. Straight commission: it attracts sales representatives with higher sales performance. require less supervision and control selling costs. it must recruit. 3. accident and sickness benefits. Training sales representatives : It is necessary to provide the new sales representatives with enough training before they go to the field so that they are well prepared in handling the customers. According to a survey of customers. After the management develops the selection criteria. objection or resistance as a challenge. problem solving bent. successful sales representatives have the following quality. a chronic hunger for money.
Lecturing. Supplementary motivators: Periodic sales meetings provide a social occasion. Customer oriented approach: trains sales personnel in problem solving of the customer. sales quotas are set which will usually be higher than sales forecast to encourage managers and sales personnel to perform at their best level. video tapes. selling effort or activity and product type. personal growth and sense of accomplishment. • Sales managers must be able to convince sales personnel that the rewards for better performance are worth the extra efforts. a chance to meet and talk with other company employees and a chance to put forth the feelings. The major steps involved in any effective sales process are as follows: Prospecting and qualifying | Pre approach | Approach 26 . For this there are two basic approaches: a. c. b. education and motivation. Principles of personal selling: The principles of personal selling are professionalism. negotiation and relationship network. There are three schools of quota setting: a. the greater his/her efforts. Ford and Walker gave a model which says that the higher the sales personnel’s motivation. Sales contests spur the sales force to a special selling effort above than the average or what is normally expected. greater rewards will lead to greater satisfaction and greater satisfaction will reinforce motivation. Sales oriented approach: trains the person in age old high pressure techniques. CD – ROMS. greater performance will lead to greater rewards. This model thus implies the following: • Sales managers must be able to convince sales personnel that they can sell more by working harder or by training them to work smarter. It can be set on rupee value. The contest period should not be announced in advance otherwise sometimes sales people defer their regular selling activities. It assumes that high quotas spur extra efforts. Modest quota school: Set quotas that majority of the sales force can achieve. a break form routine. cassette tapes. On the basis of sales forecast. It assumes that sales force will accept the quota as fair. Greater efforts will lead to greater performance. Motivating sales representatives: Churchill. Sales meetings are an important tool for communication. followed by promotion. Supervising sales representatives: This is done by establishing norms for customer calls. margin. role playing. Sales quotas: Sales quotas prescribe what the sales representative must or should sell during the year. The person learns how to listen and question in order to identify customer needs and come up with sound product solutions. The importance of various rewards with respect to motivation follows the following order – highest is pay. b. norms for prospect calls and to see whether the sales time is used efficiently. I. achieve them and gain confidence. sensitivity training. Variable quota school: it says that individual differences among sales representatives warrant high quota for some & modest quota for others. programmed learning and films on selling. Compensation is often tied to the degree of quota fulfillment. unit volume. High quota school: Quotas are set more than what most of the reps achieve but that are attainable. Professionalism: Companies are concentrating more and more in conducting sales training program so that the sales personnel transforms from a passive order taker to an active order getter.
The leads are categorized as hot prospects and warm prospects and cool prospects.ROMS. The source of identifying prospects are – • Examining data sources ( CD. terms and actions. b. newspaper. pictures. internet. The opening line should be positive followed by key questions and active listening to understand the buyers need. The sales personnel should set call objectives like – to qualify the prospects. It is based on the stimulus – response thinking that the buyer is passive and can be moved to purchase by the use of right stimulus. service and social benefits delivered by the offering Value : describes the summative worth of the offering Companies have developed three different styles of sales presentation. Canned approach: a memorized sales talk covering the main points. Prospecting and qualifying: The first step in selling is to identify and qualify prospects. 3. Presentation can be improved by using aids such as demonstration aids. to gather information and making an immediate sales. 2. 5. mail etc These sources are then qualified by contacting them by mail or phone to assess their level of interest and financial capacity. Interest. The sales personnel uses Features. Sales personnel should also decide on the best approach – personal visit or a phone call or a letter and the best timing. Formulated approach: also based on stimulus – response thinking but first identifies the buyer’s needs and buyer’s buying style and then uses a formulated approach for this type of buyer. Need satisfaction approach: starts with the search of a customer’s real need by encouraging the customer to do most of the talking. Advantages. words. show courtesy and attention to buyers and avoid distracting mannerisms. Benefits : describe the economic. product samples and computer based simulations.: a. audio and video cassettes. 4. Approach: The sales personnel should know how to greet the customers. directories ) in search of names • Putting up a booth at tradeshows to encourage drop by’s • Inviting current customers to suggest names of prospects • Cultivating other referral sources like suppliers. Overcoming objections: Customers pose objections and show the following resistance: 27 . booklets. Pre approach: The sales personnel should learn as much as possible about the prospects. c. technical. movies. Advantages : describe why the features provide advantages. Desire and Action. Features: describes the physical characteristics. Presentation and demonstration: The sales personnel details the product to the buyer following the AIDA formula of Attention. flip charts. Benefits and Value ( FABV ) approach. Hot prospects are turned over to sales personnel and warm prospects to telemarketing units. dealers etc • Contacting organizations and associations to which prospects belong • Using telephone. slides. Previously this was the job of the sales personnel but now mostly the companies do it and pass on to sales personnel.| Presentation and demonstration | Overcoming objections | Closing | Follow up and maintenance Major steps in effective selling 1. The sales personnel has to plan an overall sales strategy for the account.
Formulating a negotiation strategy: A negotiation strategy is a commitment to an overall approach that has a good chance of achieving the negotiators objectives. This approach avoids a situation in which one side must yield to the position of the other. Relationship Marketing: More companies are emphasizing on relationship marketing. ( Unit completed ) UNIT IV STP Marketing: 28 . reluctance to give up something. take customers to dinner and make useful suggestions about their business. Sales personnel need to win the order without making deep concessions that will hurt profitability. know their problems and be ready to serve them in a number of ways. dislike of making decisions and neurotic attitude towards money. Focus on interest. Follow up and maintenance: This is necessary if the sales personnel wants to ensure customer satisfaction & repeat business. ask the buyer to clarify their objections. • Offer specific inducements such as special price. delivery schedule. They should monitor key accounts. Active listening to opposing arguments and addressing the problems in response improve the chance of reaching a satisfactory conclusion. Sales personnel working with key customers must do more than call when they think customer might be ready to place orders. preference for established sources or brands. deny the validity of the objection or turn the objection into a reason for buying. Negotiation: Marketing is concerned with exchange of activities & the manner in which the terms of exchange are established. It is based on the premise that important accounts need focused and continuous attention. The two parties need to reach agreement on the price and the other terms of sale. unpleasant associations created by the sales personnel. II. 6. an extra quantity or a token gift. To handle these objections – sales personnel has to maintain a positive approach. not position: by focusing on interests.a. Insist on objective criteria: insist that the agreement reach fair objective criteria independent of either side’s position. Immediately after the closing. purchase terms and other matters that are important to the customers. 7. The principled – Negotiation approach to bargaining: a. The sales personnel should make a follow up call when the initial order is received to make sure there is proper installation. They should call or visit at other times. b. Invent options for mutual gains: Looking for options that offer mutual gains help identify shared interests. Closing:’ Sales personnel can use one of the several closing techniques – • Can ask for order • Recapitulate the points of agreement • Offer to help the secretary write up the order • Ask whether the buyer wants A or B. Psychological resistance: resistance to interference. the negotiators are more likely to find a mutually agreeable means of achieving common interests. apathy. b. d. instruction and servicing. • Indicate what the buyer will loose if order is not placed now. Separate the people from the problem: each party must understand the other side’s viewpoint and the level of emotion with which they hold it. c. certain product or company characteristics. Logical resistance: objections to the price. pre determined ideas. III. the sales personnel should inform the customer about necessary details on delivery time.
purchasing power. buying attitudes or buying habits. The company should provide flexible offering providing a naked solution common to all and options that are additional features for which the customer should pay extra if they opt for it. It helps in spotting out relatively less satisfied segments and uncovered segments. Niche marketers understand their customer’s need well. MARKET SEGMENTATION: It is the process of disaggregating the total market for a given product into a number of sub-markets. Segment marketing: it consists of a large identifiable group within a market with similar wants. Targeting and Positioning Segmentation: identify and profile distinct groups of buyers who might require separate product or marketing mixes. luxury or safety. E. so the customers are ready to pay the premium The customers in the niche have a distinctive set of needs. Segmentation Approach: The segmentation can be practiced at any of the following levels: a. Marketing efforts become more efficient and economical. 29 Characteristics of an attractive niche: . Benefits of market segmentation: • • • • • • • Market segmentation helps the marketing man to distinguish one customer group from another in the given market. the distribution mix. STP stands for Segmentation. It enables him to decide which segment of the market should form his target market. It helps to assess how far the existing offers in the market from competitors match the need of the customer segment. Niches are identified by dividing a segment into subordinates segments or by defining a group seeking a distinctive mix of benefits. The product mix.g. Assumptions: • • • Segments attract large number of competitors but niches attract only one or two. car manufacturers can concentrate on any one segment of the following car buyers – basic transportation.. b. Niche marketing: A niche is more narrowly defined group typically a small market whose needs are not well served. Targeting – select one or more market segments to enter Positioning – establish and communicate the product’s key distinctive benefits in the market.Since a company cannot serve all the customers in a broad market such as computers and soft drinks. The heterogeneous market is broken up in the process into a number of relatively homogeneous markets. geographical location. high performance. the company needs to identify the market segments that it can serve more effectively. It helps to develop the marketing program on a predictable and reliable basis. the promotion mix and the pricing policy that suits the particular customer group can be easily achieved. Assumptions: • • Each segment’s buyers are quite similar in wants and needs yet no two buyers are alike.
each positioned in a different segment. National advertising is a waste as it fails to address local needs. b.e. Local marketing: Tailoring the products according to the needs & wants of a local customer group ( trading areas. Apply cluster analysis to create a specified number of maximally different segments. competitor would enter and introduce brands in other segment. Business to business marketing today is customized. Step two : Analysis stage: Apply Factor analysis to remove highly correlated variables. profit and growth potential. neighborhoods etc). Step three: Profiling stage: Each cluster is profiled in terms of its distinguishing attitudes. Each segment is given a name based on its dominant characteristics. three different patterns of segmentation emerge: a. c. Prepare a questionnaire and collect data on attributes and their importance ratings. 30 . d.. c. attitudes and behavior.• • • • They are ready to pay a premium to the firms that best satisfy their needs. Clustered preference: these are called the natural market segments. logistics. Patterns of market segmentation: If the customers are asked to rank different product attributes. It might position in the largest market segment ( concentrated marketing ). Brand awareness and ratings Product usage patterns Attitude towards the product category Demographics. in that a manufacturer will customize the offer. If the first firm develops only one brand. Homogenous preference: all the customers want roughly the same preference in the product attributes mentioned. Individual marketing: this is the ultimate level of marketing. There is no chance for much competition. demographics. i. psychographics and media patterns. It might develop several brands. geographic. 3. according to this approach. Nicher gains certain economies through specialization. behavior. psychographic and mediagraphic 2. Niche has size. Step one: Survey stage: • • • • • • • • Conduct an exploratory interview to gain insight into consumer’s motivation. customized or one to one marketing. Procedure of market segmentation: There are 3 steps in the process of identifying market segments: 1. It means the existing brands will be similar and cluster around the middle scale of both the attributes. The first firm in this market may position themselves in the centre appealing to all the groups. communications and financial terms for each major account. Diffused preference: customers may show great variation in their preferences for the mentioned product attributes.
Market segmentation must be redone periodically because market segments change. European. psychographic etc b. rural and climatic characteristics of the area. suburban. sex. middle. Consumer characteristics – geographic. Consumer responses ( behavioral ) – benefits sought. southern etc Demographic segmentation: Segmentation is based on the following parameters – * Age – under 6. district. 3-4. rural Climate: northern. education and geographical aspects etc. The variables in this are – * Occasion – regular. middle income group. female * Income – high income group. first time user. authoritarian. regular user.compulsive. Usually. low Psychographic segmentation: (Lifestyles and attitudes) Variables such as personality types. measurable and profitable. degree. clerical etc * Education – under school.based on population size it can be divided into different classes Density: urban. use occasions or brands Geographic segmentation: Segmentation is based on region. lifestyles and value systems form the basis of psychographic segmentation. For segmentation to be useful the segments must be relevant. country. accessible. low income group. Region: City or metro size . 31 . economy. Methods/ Bases of market segmentation: Markets can be segmented using several relevant bases. the variables are divided into two broad categories: a. ex user. 5 + etc * Gender – male. technical. Jain etc * Nationality – Indian. 6 – 11. Buddhist. * Lifestyle * Personality . demographic. They can be based on the various characteristics of the customers such as age. It facilitates the selection of people who en masse react in a particular manner to a particular emotional appeal & share common behavioral patterns or buyers. proprietor. Muslim. +2. Christian. potential user. urban. sizeable. ambitious Behavioral segmentation: The basis for this segmentation is that different customer groups expect different benefits from the same product and as such their motivation in owning it and their behavior in buying it will be different. gregarious. African. metric. service. speed * User status – non user. 12 – 19 etc * Family size – 1 -2. Sikh. managerial. etc * Religion – Hindu. American etc * Social class – high. The company can operate in one or few or all geographic areas but pay attention to local variations. state. special * Benefits – quality. * Occupation – professional.
Advertising etc Differentiated marketing: the firm operates in several market segments and designs different programs for each segment. distribution and promotion.g. E. Marketing Research. But there is a high risk in that if a competitor comes and gets a major chunk of the market. (ii) Selective specialization: here the firm selects a number of segments. regular buyers. small scale buyers. The firm enjoys operating economies through specializing its production. the company gains a strong knowledge of the segment’s needs and achieves a strong market presence. (iv) Market specialization: here the firm concentrates on serving many needs of a particular customer group. better defined target groups. (v) Full market coverage: here the firm attempts to serve all customer groups with all the products they might need. Following are the steps in the process of market targeting: a. inventory. The variables are – bulk buyers.g. informed. • Focus is on: a basic buyer need not on difference among buyers.g. Advantages: the narrow product line minimizes cost of R&D. Through product specialization. medium. one time buyers. absolute * Readiness stage – unaware. Xerox machine. intending to buy * Attitude towards the product – enthusiastic. Undifferentiated marketing: using the same product to all the segments. HLL (iii) Product specialization: the firm in this case specializes in making a certain product and then sells it to different segments. the firm builds a strong reputation in the specific product area. the firm looses its sole way of earning. transportation. hospitals. each objectively attractive and appropriate. The whole market can be covered by undifferentiated or differentiated marketing. L’oreal – premium cosmetics only. E. scale economies and low risk (ii) the company’s objectives and resources b. medium. Evaluating the market segments: the different market segments identified are evaluated on the basis of the following two parameters – (i) the overall attractiveness of the segment – size.g. aware. profitability. By doing this. R&D labs. govt hospitals etc. strong. indifferent. interested. E. hostile Volume segmentation: The quantity or the potential quantity of purchase is the base for segmentation. microscope – may be sold to school. There may be little or no synergy among the segments but each segment promises to be a money maker. Multi attribute segmentation ( Geo clustering ): Marketers these days combine several variables in an effort to identify smaller. E. The downside risk is that the product may be supplanted by an entirely new technology. One of the developments in this area is called geoclustering and it yields richer description of consumers and neighborhoods than traditional demographics. colleges. TARGETING: It is the process of fixing one’s target market. Following costs increase in this case: 32 .* Usage rate – light. pharmaceutical companies. • Makes a marketing program that will appeal to a broad no of buyers • Relies on mass distribution and mass advertising. Selecting the market segments: (i) Single segment concentration: the company decides to cater to one particular segment. The firm has the advantage of diversifying the firm’s risk. heavy * Loyalty status – none. growth. desirous. positive.
g. Coca Cola – the world’s largest soft drink company. In such a situation. • Competitor positioning: the product claims to be better than a competitor’s product 33 . Segment’s interrelationship and super segment: a company carrying a fixed cost ( sales force. Strengthen the current position: e. Super segment: a set of segments sharing some exploitable similarity. Segment by segment invasion: a company enters a segment at a time without revealing its total expansion plan. minorities. Many marketers advocate promoting only one central benefit. The competitor must not know to what segment the firm will move next. Double benefit positioning becomes necessary if two or more firm claim to be the best on the same attribute. d. b. Inter segment cooperation: segment managers may be appointed with sufficient authority & responsibility for building their segment’s business. c.g. The company should avoid the following positioning errors: a. It is hard for a competitor to claim them. • User positioning: position as best for some user group. store outlet ) can add products to absorb and share some cost. Over positioning: buyers may have too narrow an image of the brand c.g. children. the well known products hold a distinctive position in the consumer’s mind. the competitor has four strategic alternatives: a. the world’s largest or biggest etc • Benefit positioning: position as a leader in a certain benefit • Use or application: position as best for some use or application. To depose or repose competition: here the company is directly taking on the competitor and trying to either remove them or reposition them. Seven uu capitalized on not being a cola drink by advertising itself as the uncola. d. How many differences to promote? The company has to decide how many differences to promote. Doubtful positioning: buyers may find it hard to believe the brand claims in view of the product’s features. Under positioning : the customers have just a vague idea of the product b. price or manufacturer. The issue here is not who is targeted but how and for what? b. Ethical choice of market targets: e.• Product modification cost • Manufacturing cost • Administrative cost – to develop separate marketing plans for separate products • Inventory cost • Production cost Other considerations in targeting are: a. The exclusive club strategy: a company can promote itself as one of the leading firms. It is hard for another firm to take this position.g. Positioning according to Ries & Trout: According to them. Rosser Reaves coined the term USP or Unique Selling Proposition. E. POSITIONING : Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the target market’s mind. Whenever a company uses more benefits it faces the risk of disbelief. Grab an unoccupied position c. The sales force will sell additional products and a fast food outlet can have additional things in their menu. better breath and whiter teeth. Confused positioning: buyers become confused if the company makes too many claims or changes the brand positioning frequently d. The word positioning was popularized by two advertising executives Al Ries and JackTrout. Positioning strategies: • Attribute positioning: promoting the product on the basis of size or attributes. E. Triple benefit positioning SmithKline Beecham successfully promoted three benefits in its tooth paste Aqua Fresh – anticavity.
• Product category positioning: position as leader in a certain category • Quality or price positioning: position as offering the best value Communicating the Company’ positioning: Whatever attribute a company chooses to position its product. • Delivery: how well the product is delivered to the customer i. 15 years back. accuracy and care attending the delivery process. size etc (ii) Features: the company can offer varying features. The customer has to pay extra for each additional feature opted for. To the customer it is the one that is pleasant to look at and easy to open. The customers are usually ready to pay extra for a stylish looking product. install. • Installation: the work done to make a product operational in its planned location. Product Differentiation: Product can be differentiated on the following aspects – (i) Form: e. advertising and promotion. (vii) Repair ability: this is the measure of the ease of fixing a product when it malfunctions or fails. use. Robert of Harvard. E. (ix) Design: According to Prof. the competition was on price. size. the speed. Differentiation: It is the act of designing a set of meaningful differences to distinguish the company’s offering from the competitor’s offering. i. today its on quality and tomorrow it will be on design. i. coating etc. shape. The designer has to take into account all these factors. • Maintenance and repair: it describes the service program for helping the customer to keep the purchased product in good working conditions. it must choose the physical signs and cues that people normally use to judge that attribute. buyers of heavy equipment expect good installation service.high price symbols high quality. (vi) Reliability: this is the measure of the probability that product will not malfunction or fail within a specified time period.. Such people posses the following six characteristics: a. (iii) Performance quality: the level at which the product’s primary characteristics operate. average or superior (iv) Conformance quality: this tells the degree to which all the products are identical & meet the promised specification. low. • Customer training: training the customer’s employees to use the vendor’s equipment properly and efficiently.g. distribution. repair and dispose of. To the company a well designed product is the one that is easy to manufacture and distribute.e. E. the product is differentiated on the basis of difference in shape.e. characteristics that supplement the basic product like automobiles.g. (viii) Style: this tells about the product’s look and feel to the buyer. Following can be the basis for differentiation: a. (v) Durability: this is the measure of the product’s expected operating life under stressful or natural conditions. Competence – possess the required skill and knowledge 34 . high. • Customer consulting : the data information system and advising services that the sellers offer to the buyer. Aspirin – dosage. Quality. Services differentiation: • Ordering ease: how easy it is for the customer to place an order with the company.e. Personnel differentiation: Companies gain a strong competitive advantage through having better trained people. the way of packaging.g.
35 . Courtesy friendly. sales.quick Communication. prices. trade publications. meeting company managers etc. Atmosphere: the way the physical layout of the company is designed also affects its image d. Train and motivate sales force to spot and report new developments. Role of MkIS: • To assess the manager’s information need • To develop the needed information • To distribute the information in a timely fashion.g apple for Apple computers b. Marketing Intelligence system: It is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment. Sources of marketing intelligence: Marketing intelligence can be obtained through various sources like books. c. f. equipment and procedures to gather. suppliers and distributors. MARKETING INFORMATION SYSTEM: A marketing information system (MkIS) consists of people. whereas marketing intelligence supplies happening data. brochures. Sales representatives have to access information about prospects and customers & provide immediate feedback & sales reports. ads. talking to customers. catalogues etc c.b. Symbols: images can be amplified by strong symbols e. analyze. Shipped items are accompanied by shipping and billing documents that are sent to various departments. respectful and considerate Credibility . Internal record system: Important opportunities and problems can be spotted by analyzing internal reports on orders. Sales information system: Marketing managers need up to the minute report on current sales. Image differentiation: This is on the basis of the following: a.make an effort to understand the customer and communicate clearly Channel differentiation: This is the differentiation on the basis they design distribution channels coverage. The order to payment cycle: This is the core of the internal record system. Out of stock items are back ordered. payables etc. sort. The sales department prepares the invoice and sends to various departments. a. annual reports. II. New software for sales force automation called salesCTRL is helping a lot. Media: the chosen image must appear in media. e. timely and accurate information to the marketing decision makers. evaluate and distribute needed. The internal records supply results data. costs.perform consistently and accurately Responsiveness . Orders are dispatched to the firm. The components of MkIS are – • Internal records system • Marketing intelligence activities • Marketing research system • Marketing decision support system (MDSS) I. newspapers. receivables.trustworthy Reliability . expertise and performance. inventory levels. d. Events: by sponsoring certain events the company enhances its image. Steps to improve the quality of marketing intelligence: a. b.
Once the researcher identifies two or more problems or opportunities. Nielson’s & Company. Each stage consists of sub activities to be performed and decisions that need to be made. with the help of a no. coding. stockholder’s meetings.The first step in the marketing research process is a clear definition of the problem. setting research objectives and methodology and selecting sample. It may not be clearly seen and some efforts are required to explore them. 1. Problem definition :. Choosing a less important problem will lead to wastage of limited resources. namely. Unnoticed opportunities :.these are quite apparent and manifest themselves e. Motivate distributors. 3. interpreting and reporting the findings to find a justified solution to the problem. Some companies establish a marketing information center to collect & circulate marketing intelligence. Can purchase information from outside suppliers such as A. A researcher has to proceed systematically in the already planned direction. tabulating.this indicates the potential growth in certain of marketing. collecting competitor ads etc d. The staffs scan the internet and major publications. decline in sales will lead to demoralization of the sales staff. In general there are five major activities that collectively serve to define the marketing research procedure. Set up a customer advisory panel made up of representative customers or the company’s largest customers or its most outspoken or sophisticated customers. if the wrong problem is defined or if the uses of the research are not made clear then the research results may prove useless to the manager.they are not so apparent. It should be done carefully. Purchase competitor product to learn about their products. III. C. decline in sales Latent difficulties :. 5. overt difficulties 2. of steps in a sequence. A complete problem definition must specify the following :36 . trade shows. f. attending open houses. evaluating. 2. After a problem has been chosen. Marketing research process: Marketing research cannot be conducted abruptly. but if not checked. Problem definition Research design Field work Data analysis and interpretation Report presentation.g. the next step is to formulate the problem clearly and precisely. e. The problem which would give maximum value to the research should be selected.b.g. If the problem is stated vaguely. editing. unnoticed opportunities Overt difficulties:. Marketing Research system: Definition of marketing research is –it is a systematic and objective process of identifying problems. retailers and other intermediaries to pass along important company intelligence c. analyzing. collecting. he is concerned with the selection of the problem. In order to identify the research problem three categories of symptomatic situations should be studied. latent difficulties 3. abstract relevant news and disseminates a news bulletin to marketing managers. 4. examining their importance to his organization. will soon become evident e. These essential five steps are :1.
In the above example. Its not well structured. It is the basic framework which provides guidelines for the rest of the research process. A careful formulation of research problem would :a.its well structured and generally is a study on the characteristics of a certain group such as age sex.. or. 1. 2.e. i.. Characteristic of interest :. Environmental conditions :. Research design :.This means the individuals or objects whose characteristics are to be measured. e. The problem definition in marketing research is a step towards identifying and structuring of the managements question.30 Jan 90 or Jan 90 are the time boundaries. The problem defined should always specify more than one variable. the researcher has to gather data afresh for the specific study. It may also spell out possibilities of change in the environment so that the results of the research should not become irrelevant. d. causal research :. descriptive research :. specify the precise scope of the problem c. if the management is interested in knowing how the units respond to change in prices.which have been gathered for some purpose and are already available in the firms internal records Primary :. b. Hypothesis development :. The universe has to be defined clearly. makes research meaningful and economical d. There are three methods to do it :37 . personality traits etc.A hypothesis is a proposition which the researcher wants to verify. research instrument and sampling plan.Once the problem is defined. Research design provides with a clear set of research objectives and specifies the method of data collection and data analysis. If it is not sufficient then the researcher has to collect primary data. and it may have to be changed by the end of the investigation. Delhi stores is the space boundary in the first example and Delhi metropolitan area is the space boundary in the second example. One objective of research is to select among the possible hypothesis and to test them empirically with the help of statistical tools. exploratory research :.its just a preliminary investigation using secondary data. Often there may be several hypothesis-specified or implied. Women’s dress buyers in Delhi stores in 30 Jan 1990.does not exist beforehand. The problem definition must spell out the environment for which the company wants research results. characteristics of interest can be style and color preference. in the above example the universe is women dress buyers whereas in the second example the universe is the women living in Delhi metropolitan area. avoid confusions e.when researcher wants to know the cause and effect among two variables he goes for causal research.g. Unit of analysis :. This will lead us to focus attention on the nature of relationship amongst the universe characteristics. There are three thpes of research design :1.This includes both the results that are of concern to the management and the variables that are to be tested for their relationship to the result.there are two types of data:Secondary :.Data collection method :. help in providing a sense of direction to the staff b. 3.This aspect indicates the uniqueness or generality of the problem. indicate the limitations of research.g. buying behavior. women living in Delhi metropolitan area shopping for one or more dresses in Jan 90. Time and space boundaries :. It is always better if the researcher first studies the secondary data because time and money can be saved if secondary data is first searched and used for the study. the problem definition should include the prices to be researched. educational level . for e. This aspect identifies the focus of the problem. occupation etc. the next step is research design. income.a. c.
The common problem faced during field work are :1. 38 . compensated. All these problems can be minimized or eliminated if the field force is carefully selected.. sampling unit :. (ii) no. 3. The analysis can be conducted by using simple statistical tools like percentages. and form of the questions. sampling size :. Respondent bias :. Experimentation :. This is a must when a huge amount of data is collected on the research project. This is the most expensive step in the entire research process.who to be surveyed b. yield the most satisfactory results in a research work. Refusal to cooperate :.If the researcher is using observation or experimentation method the research instruments will be cameras. Take 3 markets. and tabulated for the purpose of analyzing them. Sampling Plan :. coded. 10 % of the universe. though costly. charts.It is the most commonly and widely used method. Sampling procedure :. tape recorders. In survey methods the questionnaire is the most frequently used and yields the most satisfactory results. controlled.g. (iv) sequence of the questions. Observation :. Not at home :.how to conduct the survey ? sampling procedure depends upon the research objective that has been set on the onset. The researcher must develop a good rapport and encourage them to give accurate information.. 4. The analysis is basically aimed at giving inference of association or differences between the various variables present in the research. Research Instruments:. A wide range of valuable information can be gathered using this method which the other two methods are not capable of yielding. pictures so that the data may be cross tabulated to produce useful relationships among the variables involved. trained. for e. d. 3. evaluated and maintained. tally sheets etc.The data are first edited.how to approach the selected units ? The sampling unit can be contacted through telephones. 2.The people whom the researcher wants to contact may not be at home during his visit.how many units to be surveyed? The researcher has to select a relevant fraction of the population which is a representative of the entire population or universe. VCRs.i. While preparing the questionnaire. Delhi. mail or personal interview. c. averages and measures of dispersion or through graphs.Field work is the actual collection of data.e. Chennai and vary the advertising expenditure and study the sales after a stipulated period of time. Personal interviews. There can be chance between probability and non probability sampling and it depends upon the nature of the research project and accuracy demanded that whether the probability or non probability sampling is better. Mails and personal interview are the commonly used methods. (iii) wordings of the question. Mumbai. The researcher then either chooses the next home or comes back again. Field Work :. great care must be taken regarding (i) the type of the questions to be asked.The experimentation method emphasizes the creation of a controlled environment where some variables are allowed to vary and the cause and effect relationship is studied. 2. Interviewer bias :. Contact method :. Data Analysis :.In this method either we can directly mix up with the respondents by telling them the purpose of the study or we can do observation by indirectly mixing up with the respondents without telling them about the purpose of the investigation.A sampling plan consists of :a.The interviewer himself may introduce different type of bias because of his dishonesty. Survey :.1.The respondent may not provide with the desired cooperation. Kirloskar diesel engines sales decline due to advertising effectiveness.Respondents may give biased or misleading information.
Conclusion and recommendations. data collection method and instrument used. e. d. f. with adjacent territories and compact territories. The standard format follows the following sequence :a. Discriminant analysis: classifies objects or persons into two or more groups. data tables not directly related with the study . details of samples and validation. GEOLINE: A model to help in designing the sales territories with equal work load. PROMOTER: evaluated sales promotion by determining base line g. b. Marketing Decision support system(MDSS) A MDSS is a coordinated collection of data. d. the findings must be presented in the form of a systematically typed printed report. Queuing model: shows waiting time and queue length in any system. Multiple regression: estimates a best fitting equation to show how the value of a dependant variable varies with changing values of the independent value. c. Report Preparation :. Conjoint analysis: to rank preferences for different offers f. Actual analysis and interpretation of data. adoption etc 39 . New product pre test: estimates functional relationship between buyer state of awareness. f. Bibliography. c. MARKOV process model: shows the probability of moving from a current to any future state. DETAILER: To help in deciding which products to detail to the customer. j. pricing etc b. Preface. Multidimensional scaling: produce perceptual maps of competitive products or brands in a multi dimensional space of attributes. summary and recommendations of research based on the statistical analysis and inferences drawn. MEDIAC: helps in deciding which media to buy for a year. Title page.After the collected data is analysed and interpreted. d. scheme of analysis and interpretation of data. limitations and scope. Table of contents. CALLPLAN: helps sales representatives to decide on the number of calls including the prospects and customers and also including the traveling time. systems. tools and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action. b. Models: a. Research methodology – this includes research design. The conclusion. IV. e. field work. Cluster analysis: separates objects into a specified number of mutually exclusive groups e. Appendices :.Finally meaning of the data may be extracted from the analysis thus conducted. h. Statement of objectives and hypothesis. c. i. Following are some statistical tools used: a. ADCAD: recommends the type of advertising appeal that should be used for the product. Foreword. k.copies of forms used. g. Findings. Following are some models used by marketing mgrs: a. Factor analysis: determines the few underlying dimensions of a larger set of inter correlated variables. c. trial. BRANDAID: A flexible marketing mix model focused on consumer packaged goods with sub models for advertising. sampling plan. b.
private foundations. The process continues until a consensus is reached. Production etc. Mathematical program: find values that will optimize the objective function c. Big firms have corporate economists who do this job. personal income. Differential calculus: finding the maximum or minimum value along a well behaved function. each member is asked to provide an estimation of future sales. The experts are informed about the average or typical opinion. 40 . d. Company demand: the company’s estimated share of market demand at alternative levels of company marketing effort in a given time period. govt or trade agencies etc. GDP is the value of all the goods and services produced within a country in a given year. Preparing a forecast for general economic conditions: this is measured by GDP or Gross Domestic Product of any country. Jury of executive opinion: There is a panel or committee charged with the development of sales forecast. Sales. 2. Other measures are BSE/ NSE indexes of common stock prices. Delphi technique: This technique was developed by the Rand Corporation. volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. The experts prepare individual anonymous forecasts that are compiled and returned for a second round of projections. 3. The experts are kept apart in order to ensure independence of opinions. The opinions are then pooled and analyzed at a group meeting. Advertising. b. Statistical decision theory: determine course of action that produces the maximum expected value. Sales people forecast their expected sales & these forecasts are then combined to prepare a composite forecast. FORECASTING MARKET DEMAND: Market: a market is a set of all actual and potential buyers of a market offer Market demand: it is the total. The experts are often leading authorities from universities. The members have to provide a justification for their estimates. 3. A group of experts are assembled to make long term projections on issues such as the future direction of business condition. advertising expenditure etc Optimization routines: a. personal consumption etc 2. The committee consists of people from varied department like Marketing Research. Projecting the Company and product sales: there are many qualitative and quantitative techniques to do this which are as described below: Qualitative techniques: 1. Heuristics: uses a set of rules of thumb that shorten the time or work required to find a reasonably good solution in a complex system. e.d. There are 3 steps in sales forecasting procedure: 1. Preparing a forecast of industry sales: Small firms usually do not go for preparing the industry forecast. Sales force composite or Poll of sales force opinion: This kind of forecast is arrived at by combining sales person’s estimates of expected sales for their territories. Game theory: determine course of action that will minimize the decision makers maximum loss. Sales response models: estimates functional relationship between one or more marketing variables like sales force size. technology new product development etc.
Quantitative techniques: 1.g a = 0. Factor listing: In this method the factors affecting sales and their specific impact in the forecast period are identified. This method may use simple recording of customer responses or application of advance sampling and probability concepts. e. Projection of past sales: In this method the sales forecast for the coming year is arrived at by either keeping the figure same as that of current year or adding a set percentage to the current sales. Exponential smoothing: This is a modification of time series analysis or in other words a weighted average time series analysis technique. Survey of Buyer’s intention: This method is used if there are limited number and well defined buyers as in case of industrial goods. Time series analysis: it is based on the business cycle theory and involves the construction and interpretation of business cycle.g. Continuity extrapolation: This technique attempts to project the last increment of sales change into the future.3 this year sale = 320 41 . The forecasting equation is represented as: Next year’s sale = a(this year’s sale) + (1. The positive and negative sales factors are then summed up and the differences in the sum is added or subtracted from current sales to arrive at the sales forecast figure. 5.4. This can be done on money value basis or percentage basis. A balance sheet showing positive and negative influences on sales is set up based on the factors identified. Actual sale of recent period is weighted more heavily than the average sale of earlier periods. The process involves isolating and measuring four chief types of sales variation: # long term trends (T ) # cyclical changes ( C ) # Seasonal variations ( S ) # Irregular fluctuations ( I ) Sales is given as Sales = T * C * S * I The problem of uneven sales pattern can be accounted with a special type of moving average technique usually called as “Box – Jenkins model” 4.a ) (this year’s forecast) e. next year sale = this year sale * this year sale last year’s sale 2. The forecasters have to quantify the reasoning behind their judgment. e.g If last year sale is 290 million and this year 310 million then the increment is 20 million so for next year 310 + 20 = 330 million. 3.
Marketing planning and strategies – Marketing planning process – Stages – The nature and contents of marketing plan ( introductory aspects ) Marketing strategies for – Leaders. Stage II: Sales Department with Ancillary Marketing Functions: As the company expands. Challengers.g.7 * 350 = 341 5.3 * 320 + 0. For e. for Global markets. It will have to advertise its name and product in that area. The Sales Vice President may hire a Marketing Research Manager and Advertising Manager and/may be a Marketing Director for these activities. if the company wants to start its operation in a new market it should learn about the customer needs and market potential. There are companies which may be in any one of the following six stages: Stage I: Simple Sales Department: Small companies typically have a Sales Vice President who manages a sales force and also do some selling. Strategic control. Niche marketers. It involves fitting an equation that explains sales fluctuations in terms of related and generally causal variables. Then by putting value for each independent variable sales are forecast. 6. The basis formula is Y = a + bX Where. Efficiency control. When more than one variable is considered it is called multi regression and the equation is Y = a + b1X1 + b2X2 + … + bnXn Where X1. X2 etc are the independent variables. Econometric models: It uses a set of equations to represent a set of relationships among sales and different demand determining independent variables. Regression and correlation analysis: It is the simplest mathematical forecasting model. These variable values are substituted by other values considered likely during the period to be forecasted and the corresponding sales value is derived at. they hire help from outside. Marketing profitability analysis. Marketing control – Annual plan control – sales analysis.this year forecast = 350 then next year forecast = 0. Y = the dependent variable (sale ) X = the independent variable a = the Y intercept value ( the value of Y when X = 0 ) b = the average increment of sales change. Followers. ( unit completed ) Unit V Organization of marketing function and control strategies: Marketing organization and implementation – Evolution – Ways of organizing the marketing department – Marketing relations with other department. market share analysis. 42 . The Evolution of the Marketing Department: Marketing departments have evolved through six stages. it needs to enlarge or add certain functions. Whenever they need any marketing research or advertising. Profitability control.
sales promotion and consumer service. spend time in planning. Stage VI: Process and Outcome based Company: Most companies are now focusing on the key processes rather than on the rigid department structure. Thus they are now identifying the fundamental business processes like New product development or customer acquisition and retention and are appointing process leaders who manage cross disciplinary teams. It consists of functional specialists reporting to a Marketing Vice President who coordinates their activities.Stage III: Separate Marketing Department: The continued growth will require the company to invest in marketing research. Stage V: Effective Marketing Company: When all the employees realize that their jobs are created by the customers. try to understand each buyer. Ways of Organizing the Marketing Department: The marketing department may be organized by function. Sales people rely on street experience. Stage IV: Modern Marketing Department: Although the sales and marketing department should work together. Both of them try to undermine the importance of each other. think short term and try to meet their sales quotas. try to identify and understand market segments. Functional Organization: This is the most common form of marketing organization. think long term & aim to produce profit and gains in market share. products or customer markets. the company becomes an effective marketer. Now the sales & marketing department have become separate functions working closely together. This will necessitate the creation of a separate marketing department headed by a Marketing Vice President who reports along with the Sales Vice President to the President or Executive Vice President. the CEO may place the Marketing activities under the Sales Vice President or place everything under the Marketing Vice President including the sales force. Disadvantages: • Loose its effect when the products and market increase • It leads to inadequate planning for specific products and markets • Each functional group competes with other groups to gain budget and status. If there is too much friction. advertising. New product development. 43 . a. geographic area. Advantages: • It is simple for administrative purposes. spend time in face to face selling. mostly their relationships are strained & undergo frictions. The marketing manager rely on marketing research. This is the basis of a modern marketing department headed by a Sales and Marketing Vice President with managers reporting from every marketing function including sales management.
It serves as another layer of the management. Advantages: • Data from retail store scanners allow instant trafficking of product sales. c. 44 . • They are burdened with great amount of paperwork. • Retailers also prefer local programs aimed at consumers in their cities and neighborhoods. • The product manager can react more quickly to a market problem. programs and campaigns. • Stimulating support for the product among the sales force and distribution • Gathering continuous intelligence on the product’s performance. • It is costly • Brand managers are involved with the brand for a short period of time which leads to short term marketing plans. • Preparing the annual plan and sales forecast. • Working with the advertising and merchandizing agencies to develop advertising copy. customer and dealer attitudes and new problems and opportunities • Initiating product improvements to meet changing market needs. Advantages: • The product manager can concentrate on developing cost effective marketing mix for the product. Basic tasks of the Product Manager: • Developing a long range and competitive strategy for the product. • Product managers become expert in their products but they do not get functional expertise. the product managers are not given sufficient authority to carry out their responsibilities effectively. it can organize its sales force along geographic lines. Suggestions to make product management system work better: • Clearly demarcate the limits of the role and responsibility of the product manager. Geographic organization: If a company is operating in a national market. • The smaller brands are not neglected. The National sales manager may supervise 4 Regional sales managers. Branchising: it means empowering the company’s district or local offices to operate more like franchises. Product or Brand Management Organization: Companies manufacturing a variety of products & brands establish product or brand management organization. who each supervise 6 Zonal sales managers who in turn supervise 8 District Sales managers who supervise 10 salesman.Marketing Vice President Marketing Administration Manager Advertising & sales promotion Manager Sales Manager Marketing Research Manager New Products Manager b. helping companies pinpoint local problems and opportunities. Disadvantages: • Many a times. A product management organization makes senses if the products are quite different or if the sheer number of products make it difficult for the functional organization to handle.
The Product Manager is the leader and deals with other managers to gain their cooperation. sales administration services & miscellaneous services are performed by the corporate marketing system. They develop long range and annual plans for their markets. DuPont. Market managers are staff ( not line ) people with duties similar to that of a Product manager. e. • Establish a system of measuring the results consistent with the product manager’s responsibilities. they can/should retain at corporate HQ. a market management organization is desirable. Performance is judged by their market’s growth and profitability. Market Management Organization: When customers fall into different user groups with distinct buying preferences and practices. Advantages: Marketing activities are organized to meet the distinct needs of the customer group. Now they have to decide what services.g. Dilemma: • How to organize the sales force – on the basis of product or market? • Who should set the price – the product manager or the market manager. A market manager supervises several market managers. f. The company has separate product managers for rayon. they often convert their larger product or market group into separate divisions. The Associate Product Manager assists in these works and does some paper work. nylon. The alternatives are: • No corporate marketing: each division has its own marketing team. (ii) Horizontal Product team: Product Manager and several specialists from marketing and other functions together constitute the horizontal product team. Corporate divisional organization: When the companies have too many products and too many markets. Marketing Relations with other departments: 1. Research and Development: 45 • . sales promotion services. orlon etc & separate market managers for men’s wear. furnishings and industrial markets. The Product Assistant carries out most of the paper work & routine analysis. An alternative approach to establish product teams: (i) Vertical Product team: Product manager. (iii) Triangular Product team: Product Manager and two specialized Product assistants who take care of Marketing Research and other marketing communications form the Triangular product team. E. Marketing research services.Build a strategy development and review process to provide a framework for the product manager’s operation. • Moderate corporate marketing: the company may have a skeletal marketing staff at the corporate performing the following functions: • Assisting top management with overall opportunity evaluation. Product Management/Market Management Organization: Companies that produce many products in many market adopt this kind of organization that is the matrix kind of organization. Associate Product Manager and Product Assistant together form a vertical product team. • Providing divisions with consulting assistance on request. • Helping divisions that have little or no marketing • Promoting the marketing concept throughout the company • Strong corporate marketing: advertising services. • Take into account the potential areas of conflict between the functional specialists and the product managers. They must analyze where their market is going and what new products the company can offer. d.
3. sales promotion and sales force without being able to prove how much revenue these expenditures will bring. Marketing driven companies go out of its way to satisfy customers. 5. poor quality control and poor customer service. • Encourage R & D’s participation into the selling period. “Marketers know the value of everything & the cost of nothing” Marketing people claim. narrow product line and high volume production. the operation department includes the front desk people. who work together through the project’s life. Marketers often turn in inaccurate sales forecast. following a clear procedure. • Assign each new project to the functional teams including a R & D person and a marketing person. 4. Finance: Marketing executives ask for substantial budgets for advertising. Marketers have little understanding of this & they keep on complaining about insufficient capacity. Engineering: Engineering department is responsible for designing new products. they are forced to purchase many items in small quantities rather than purchasing few items in large quantities. the following alternatives can be used – • Sponsor joint seminars to build understanding and respect for each other’s goals. Manufacturing: Manufacturing people are responsible for the smooth running of a company. Finance people claim. delays in production. Marketing and operation must work well together because the marketing people go and promise about service levels that the operations people have to keep up. The term “operation” is used for industries that create and provide services. E. Purchasing: Purchase executives are responsible for obtaining materials and components in the right quantities & quality at the lowest possible cost. But usually. When marketing executives push for many models in a product line. They come in conflict with the marketing department when the marketing people demand several models with product features requiring custom rather than standard components. manufacturing process simplification and cost economy. waiters and waitresses. these two departments have contradictory approaches. new production process & they are interested in achieving technical competence. Operations: The term “manufacturing” is used for industries making physical products. Manufacturing driven companies assure smooth production at low cost.g. 6. Companies need to develop a balanced orientation in which manufacturing and marketing jointly determine what is in the company’s best interest. “Finance people know the cost of everything & the value of nothing” 46 . recommend features that are difficult to manufacture and promise more factory service than reasonable. To facilitate better coordination. in case of hotels. including involvement in preparing technical manuals.The success of any company depends on the number of successful new products that are brought in by the company. For this good coordination is required between the company’s R & D & Marketing department. participating in trade shows etc. working styles and problems. 2. Sales campaign calling for quick production build up are kept to a minimum. For instance: R & D has scientific and technical staff who are more fascinated in solving complex technical problems and not much bothered about the immediate sales pay off whereas marketing people are business minded with more understanding of the market and want new products with promotable sales features. The company prefers simple products. Finance people think that marketing people do not spend enough time relating the expenditures to results. • Work out conflicts by going to higher management. doormen.
6. 9. Hire strong marketing talents: the company should have a strong Marketing Vice President who not only manages the marketing department but also gets respect from other Vice Presidents. sales forecast and should be made accountable for their performance. 2. Convince the senior management team of the need to become customer focused: the CEO may personally emphasize on strong customer commitment. order sizes and so on. individual products. channels. Get outside help and guidance: take the help of consultancy firms. Identification of company level: to identify whether the problem is at the marketing function level or marketing program level or marketing policy level. Marketing Organization: Its not easy for any organization to start “think customer” overnight or change from sales driven or product centric to become a customer centered or market driven organization. b. 10. The following steps can be taken by the CEO to create a market or customer focused company: 1. they will reject any project that will incur cost. Four sets of skill are identified by Bonoma for implementing marketing programs: a. 47 . R&D. Marketers dislike the way accountants allocate fixed cost burdens in different product lines. 4. Shift from a department focus to process-outcome focus: the company should appoint process leaders & cross disciplinary teams to reengineer and implement the key process that have been identified. 8.The solution is giving more financial training to marketing and more marketing training to financial people. They dislike the special deals sales people make with customers because they require special accounting procedures. Install a modern marketing planning system: the manager should analyze the marketing environment. Develop strong in house marketing training programs: the company should design well crafted marketing training programs that should include all the corporate as well as divisional employees working in all cadres. 7. Marketers in contrast. 5. Finance and HR. Consider reorganizing from a product centered to a market centered company: it means the company should focus on its individual market and customer segment and coordinate the planning and providing of the products needed by each segment and major customer. manufacturing. Accounting: Accountants see marketing people as lax in providing sales reports on time. opportunities. They think marketers will sell anything to anyone. the Vice President’s of sales. competitive trends and prepare marketing strategies. territories. Credit: Credit officers evaluate potential customer’s credit standing and deny or limit credit to the more doubtful ones. including those from whom payment is doubtful. Diagnostic skills: it finds the reason for poor implementation. Marketing implementation: It is the process that turns marketing plans into action assignments and ensures that such assignments are executed in a manner that accomplishes the plan’s stated objectives. They want accountants to prepare special reports on sales and profitability by segment. often feel that credit standards are too high. 3. 7. Change the company’s reward measurement system: if the finance and purchase department are rewarded for minimizing the cost. Establish an annual marketing excellence recognition program: business units that think they have developed extraordinary marketing program should submit a description of their plans and results. Appoint a senior marketing officer & a marketing task force: the task force should include the CEO. important customers. These should be reviewed and rewarded at a special ceremony. 8.
c. Implementation skills: to implement the program successfully, allocating skills for budgeting resources is required, Organizing skills to develop an effective organization and interactive skills to motivate others. d. Evaluation skills: monitoring skills to evaluate the results of marketing actions. Marketing control: Type of control 1. Annual plan control Prime responsibility Top management Middle management Purpose of control To examine whether the planned results are being achieved Approaches • Sales analysis • Market-share analysis • Marketing expense-to-sales analysis • Financial analysis • Market-based scorecard analysis Profitability by • Product • Territory • Customer • Segment • Trade channel • Order size Efficiency of • Sales force • Advertising • Sales promotion • Distribution • Marketingeffectiveness review • Marketing audit • Marketing excellence review • Company ethical and social responsibility review
2. Profitability control
To examine where the company is making and losing money
3. Efficiency control
Line and staff management Marketing controller
To evaluate and improve the spending efficiency and impact of marketing expenditures To examine whether the company is pursuing its best opportunities in markets, products and channels
4. Strategic control
Top management Marketing auditor
1. Annual plan control: Purpose: To ensure that the company achieves the sales, profit and other goals established in its annual plan. The control process consists of four steps: a. Goal setting: the management sets monthly or quarterly goals b. Performance measurement: monitoring the performance in the market place c. Performance diagnosis: determines the course of serious performance deviations 48
d. Corrective action: take corrective action to close the gaps between goals and performance. Five tools to check on plan performance: • Sales analysis • Market-share analysis • Marketing expense-to-sales analysis • Financial analysis • Market-based scorecard analysis a. Sales analysis: It consists of measuring and evaluating actual sales in relation to sales goals. Two specific tools are used in sales analysis: (i) Sales variance analysis: it measures the relative contribution of different factors to a gap in sales performance. Suppose the annual plan called for selling 4000 units in the 1st quarter at Re 1/- unit. At the quarter end only 3000 units were sold at Rs 0.80 for a total revenue of Rs 2,400/-. The sales performance variance is Rs 1600/- or 40% of expected sales. Now it has to be seen how much of the variance is due to price decline and how much of the variance is due to volume decline? Variance due to price decline = Rs[ 1.00 – 0.8 ] [ 3000 ] = 600 = 37.5% Variance due to volume decline = Re 1.00 [ 4000 – 3000 ] = 1000 = 62.5% Total 1600 100% Almost 2/3 of variance is due to failure to achieve the volume target. The company should look closely at why it failed to achieve the expected sales volume. (ii) Micro sales analysis: it looks at specific products, territories and sales organization forth that failed to produce the expected sales. Suppose the company sells in three territories and expected sales were 1500 units, 500 units and 2000 units respectively. The actual sales were 1400, 525 and 1075. thus for territory 1 it is 7% decline, territory 2 it is 5% improvement and territory 3 it is 46% shortfall. So territory 3 is causing most of the trouble. The sales Vice President can check into territory 3 to see what explains the poor performance. b. Market- share analysis: By analyzing the sales, the company comes to know only about the individual sales but not the comparison with the competitors. For this purpose, the management needs to track down its market share. Ways of measuring market share: (i) Overall market share: the percentage of company sales to the total market sales. (ii) Served market share: the percentage of company sales to its served market. Served market is all the buyers who are able and willing to buy its product. (iii) Relative market share: it is expressed as the market share in relation to its largest competitor. However a company cannot conclude about its general health just on the basis of market share analysis because• The assumption that the outside forces affect all companies in the same way is often not true. • The assumption that a company’s performance should be judged against the average performance of all companies is not always valid. • If a new firm enters the industry, then every existing firm’s market share might fall. • Sometimes a market share decline is deliberately engineered to improve market share • Market share can fluctuate for many minor reasons also. c. Marketing expense to sales analysis The marketing expense to sales ration contains the following components – sales force to sale, advertising to sale, sales promotion to sale, marketing research to sale and sales administration to sales. These ratios should be monitored and fluctuations outside the normal range are cause for concern. d. Financial analysis: 49
Financial analysis is used to find identify the factors that affect the company’s rate of return on net worth. The return on net worth is the product of two ratios – the company’s return on assets and its financial leverage. The return on assets is a product of two ratios, the profit margin and the asset turnover. e. Market – based scorecard analysis: Companies use two types of scorecards – - customer performance scorecard - stakeholder performance scorecard a customer performance scorecard shows how well the company is doing year after year on such customer based measures as • New customers • Dissatisfied customers • Lost customers • Target market awareness • Target market preference • Relative product quality • Relative service quality Using the stakeholder performance scorecard, the company tracks down the satisfaction of its stakeholders like – employees, suppliers, banks, distributors, retailers, stockholders etc 2. Profitability control: Following are the steps in profitability analysis: a. Identifying functional expenses: the first task in profitability analysis is to measure how much expenses have been incurred in different activities. E.g. the activities are selling, advertising, packing & delivering, billing & collecting etc. if the total salary expense is Rs 1, 00,000/- it has to be seen how much each activity has incurred. If the total rent happens to be Rs 10,000/- it has to be allocated to advertising, packing & delivering, billing, but it can not be put for selling as selling is an outdoor activity. b. Assigning functional expenses to marketing entities: the next task is to measure how much functional expense was associated with selling through each type of channels. E.g. how many advertisement for each one of them & packing and delivering on the basis of number of orders received from each one of them. c. Preparing a profit and loss account: a profit and loss statement ahs to be prepared for each type of channel. First the cost of goods sold has to be deducted from the sales which gives the gross margin. From the gross margin, the various expenses have to be deducted which will give the net profit or loss for each of the entity. Determining corrective action: Based on the above, the company has to take a corrective action like dropping or continuing a loss making entity. But marketing profitability analysis indicates the relative profitability of different channels, products or territories but does not prove that the best course of action is to drop the un profitable marketing entity. Direct v/s full costing: the cost can be divided into the following categories: a. Direct cost: these costs can be assigned directly to the proper marketing activities. E.g. sales commission, advertising expenses, traveling expenses etc b. Traceable common cost: these costs can be assigned indirectly only. E.g. rent c. Non traceable common cost: these costs are the ones whose allocation to the marketing entity is highly arbitrary. E.g “ corporate image” expenditure. It is difficult to tell which entity benefited how much out of it. Some companies will include everything while they are allocating the cost, i.e., the direct, traceable and non traceable cost. Such a practice is called full costing. 50
Strategic control: The company should keep on monitoring the marketing effectiveness review. Some companies have established a marketing controller position to improve marketing efficiency.g. Usually a sales increase is followed by distribution inefficiency as the required stock will not be there to meet the increase in sales. how well the marketing department works with other departments? How well the New product development is organized? (iii)Adequate marketing information: when were the latest marketing research activities conducted? How well does the management knows the sales potential. • Percentage of orders per 100 sales call • Number of new customer per period • Number of lost customers per period • Sales force cost as a percentage of total sales. marketing audit. suppliers etc during planning stage ? (ii) Integrated marketing orientation: e. advertising.g is the company customer oriented ? does the company take the point of view of its customer. a. Sales force efficiency: The key indicators of efficiency for sales force are: • Average number of calls per sales person per day • Average sales call time per contact • Average revenue per sales call • Average cost per sales call • Entertainment cost per sales call. marketing excellence review and ethical social responsibility reviews: The marketing effectiveness review: A company’s or division’s marketing effectiveness is reflected in the degree to which it exhibits the five major attributes of a marketing orientation: (i) Customer philosophy: e. d. who noted. profitability of different segment etc (iv) strategic orientation: what is the extent of formal marketing planning? How impressive is the current marketing strategy etc? 51 . b. sales promotion and distribution in connection with these marketing entities. • Consumer’s opinion on the ad’s content & effectiveness • Before and after measures of attitude towards the product • Number of inquiries stimulated by the ad • Cost per inquiry c. 4. Distribution efficiency: management needs to economize in inventory control. Advertising efficiency: Following statistics are collected to know about the advertising efficiency: • Advertising cost per thousand target buyers reached by media vehicle • Percentage of audience. Efficiency control: Suppose from the profitability analysis it is found that the company is earning poor profit in certain product or territory it has to see are their any other efficient ways to manage the sales force. warehouse location and transportation modes. This stock deficiency will lead to sales decrease and the cycle continues. Sales promotion efficiency: The parameters here are: • Percentage of sales sold on deal • Display cost per sales rupee • Percentage of coupon redeemed • Number of inquiries resulting from a demo.3. saw or associated & read most of each print ad.
discrimination etc To raise the social responsibility of companies. independent & periodic examination of a company’s or a business unit’s marketing environment. Systematic: it is an orderly examination of the company’s macro & micro marketing environment. downsizing older business (i) Define the corporate mission 52 . if it is studying only the troublesome areas. marketing objectives and strategies. (iii) Individual marketers must practice a “social conscience” in their specific dealings with customers and various stakeholders MARKETING PLANNING: Corporate and divisional strategic planning: Following are the four planning activities undertaken in any corporate head quarter: (i) Define the corporate mission (ii) Establishing strategic business unit (iii) Assigning resource to each SBU (iv) Planning new business. objectives. systematic. marketing systems and specific activities. They should keep away from practices like: • Bribery or stealing trade secrets • False and deceptive advertising • Exclusive dealing and tying agreements • No proper quality and safety of products • Warranties and patent protection • Inaccurate labeling • Price fixing. it will become functional audit and not marketing audit. Poor Good Excellent mass market oriented segment oriented niche oriented average product quality better than average legendary price driven quality driven value driven stockholder driven stakeholder driven societally driven The ethical and social responsibility review: The company needs to follow high standards of business and marketing conduct. It should not be initiated whenever there is a problem in the company. good and excellent. audit from across.the company has to keep on asking questions like this in order to know about its effectiveness. not just the trouble spots. strategies and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance. the following three things must happen: (i) Society must use the law to define the responsibility & practices of the company ( illegal. e. build a company tradition of ethical behavior. company auditing office.g. The company has to review that the practices followed by it comes under what rating and accordingly the excellence of the company is reviewed. Characteristics: Comprehensive: covers all the marketing activities. Periodic: Periodic: marketing audit should be conducted periodically. The marketing audit: A marketing audit is a comprehensive. anti social or anticompetitive ) (ii) Companies must adopt and disseminate a written code of ethics. Independent: a marketing audit can be conducted in six ways – self audit. company’s task force audit and outsider audit. audit from above. The marketing excellence review: The various business practices are rated as poor.
e an “impossible dream” where the company wants to reach ultilmately.industry scope. Star: • If the question mark business becomes successful. direction and opportunity. it becomes a star. as the company has to keep on spending to keep with high market growth and fight off competition. they focus on limited number of goals b. A proper mission statement provides employees with a shared sense of purpose. • A star is a market leader in a high growth market. The growth share matrix is divided into four cells. 3. (ii) Establishing strategic business units: Any business unit can be called SBU if it has the following three criteria: • It is a single business or collection of related businesses that can be planned separately from the rest of the company. Question mark Star Question Mark Cash cow Dog These are the businesses that operate in high growth market The relative market share is low. The position of the circle represents the current position of the firm and the size of the circle is kept proportionate to the present size of the firm. employees and customers. • A star may not necessarily produce positive cash flow.Organizations develop mission statement to share with managers. • It has its own set of competitors. The term “question mark” is given because the company ahs to think hard whether to keep on investing money or not. market segment. (iii) Assigning resources to each SBU: Following are the two approaches for this: a. If the growth % is more than 10% it is considered as high growth. vertical scope. There should also be a vision statement i. • If the company has too many businesses in this category. competence. each indicating a different type of business. The company has to invest a lot of money in plant. product and application scope. 2. they define the major competitive scope. equipment and personnel. Three essential characteristics of mission: a. 1. mission statement stress the major policies and values that the company wants to honor c. it may be problematic. Cash cows: 53 • • • • • . • It has a manager who is responsible for strategic planning & profit performance and who controls most of the factors affecting profit. Most of the company’s start as question mark as they enter into a market where there is a leader already. geographical scope. the different business units must be evaluated on the basis of their relative market share and percentage of growth. Boston Consulting group approach: According to this approach.
star. Hold: the objective here is to preserve the market share.business strength marketing attractiveness Business strength: the indicators of business strength are market share. annual market growth rate. competitive intensity. inflationary vulnerability. • The company uses its cash cow business to pay its bills & support its other business. not replacing worn out plant equipments. but they keep track of what is happening over a time period. 4. productive efficiency etc Market attractiveness: overall market size. brand reputation. product quality. The company do not only monitor what is its present position. Dogs: • These are the weak businesses. 4. historical profit margin. Appropriate for dogs and question marks who are not performing. Divest: The objective is to sell the business & use the resource elsewhere. Build: here the company tries to increase the market share even at the cost of foregoing short term earnings. • The company has to decide whether to hold these businesses or to divest. productive capacity. promotional effectiveness. the manager has to propose a new strategy to get that trajectory. the company has to adopt the following strategies: 1. it enjoys economies of scale and higher profit margin. The company goes for cost retrenchment – eliminate R&D expenditure.e. growth. If a SBU is not following the expected trajectory of question mark. distribution network. 3. cash cow and dog. Once the company finds out what is the position of its strategic business unit’s i. 2. energy requirements etc.When a company’s market growth rate falls to less than 10%. • A cash cow produces a lot of cash for the company • The company doesn’t have to spend on expansion as the market growth rate has slowed down. • Since it is the market leader. not replacing sales people. Harvest: the objective is to increase the short term cash flow regardless of long term effects. whether it is a question mark or a star or a cash cow or a dog. Can be used for question mark and dogs. b. Appropriate for question marks in order to make them stars. It is appropriate for cash cows. The General Electric model: GE pioneered a model which has the following two parameters – . • 54 . • They have low market share and low growth rates. reducing advertisement expenditure etc. technological requirement. the star becomes a cash cow if it still has the largest relative market share.
downsizing old business: Whenever there is reduction in the company’s present business. • Market development strategy: the company tries to capture new markets with the old product. • Forward integration: company acquires some profitable wholesalers or retailers. These new products can be new features in the existing product. This can be done by attracting or focusing on new customer segment or using some new distribution channel or moving to a new geographic area. different quality levels or altogether new product. • Horizontal integration: the company acquires some competitors if there is no legal restriction. it has to start looking for new growth opportunities. a.Protect Position Build Selectively invest to build selectivity manage for Earnings manage for earnings build selectively limited expansion or harvest divest Protect And refocus iv. c. • Market penetration strategy: the company tries to increase the sale within its current market with the current products. backward or horizontal integration • Backward integration: the company acquires one or more suppliers of raw materials or parts. This can be done by increasing the usage by current customers. • Product development strategy: the company tries to come up with new product. Diversification growth: 55 . b. by converting non users and by converting competitor’s customers. Intensive growth: Current New product Market Penetration Strategy Market Development Strategy Product Development Strategy Diversification The company can try the following four combination by mixing current and new product in current and new markets. Planning new business. These opportunities can be a growth within its current business ( intensive growth ) or it can be by acquiring new business in a related field ( integrative growth ) or it can be an altogether new area ( diversification). Integrative growth: The sale or profit can also be increased by forward.
• Speculative: both opportunities and threats are high. the threats are analyzed on the basis of high or low probability of occurrence as well as the seriousness. Downsizing older business: The older businesses have to be pruned. weakness. SWOT analysis: the overall evaluation of a company’s strength. the company tries to go for diversification. threats are low. E.g along with leather shoe. Accordingly. the company can market leather belts ( to the same customer ) • Conglomerate diversification: here the new business does not have any relation to company’s existing market. sports shoe being manufactured by a leather shoe manufacturer.g leather goods manufacturer starting textile business. E. opportunities and threats is called SWOT analysis. the business can be categorized into the following 4 categories: • Ideal: opportunities are high. • Mature: opportunities as well as threats are low. • Troubled: opportunities are low. threats are high. to deterioration in sales or profits. harvested or divested in order to release needed resource & reduce costs.If there are good business opportunities outside the current business. Threat: it is a challenge posed by an unfavorable trend or development that would lead in the absence of defensive marketing action. Business mission: each business unit needs to define its specific mission within the broader company mission. customer or technology.g. E. BUSINESS STRATEGIC PLANNING: The business unit strategic planning process consists of the following steps: 1. 56 . • Horizontal diversification: the product acquired is new but it can be marketed for the same set of customers. External environment analysis: Opportunities: it is an area of buyer need in which a company can perform profitably. The opportunity is analyzed on the basis of high or low success probability as well as attractiveness. 2. • Concentric diversification: the company acquires a new product but the company can have technological or marketing synergies with the existing product line.
cash flow 13. dedicated employees 21. The various parameters are ranked as major strength. Company reputation 2. ability to produce on time Organization: 19. major weakness or minor weakness and also their importance is measured as high. economies of scale 16. distribution effeciveness 9. able.Internal environment analysis: The company has to analyze various parameters in different departments like marketing. pricing effectiveness 8. entrepreneurial 57 . medium or low. promotional effectiveness 10. financial stability Manufacturing 14. customer satisfaction 4. neutral. cost of availability of cash 12. minor strength. finance. facilities 15. Area major minor neutral major minor high med low Strength strength weakness weakness Marketing 1. service quality 7. capacity 17. market share 3. visionary. manufacturing and the organization as a whole. dedicated workforce 18. product quality 6. sales force effectiveness Finance 11. capable leadership 20. customer retention 5.
• The company can try to be a style leader. Overall cost leadership: • The business tries to reduce the cost so that it can lower its price than its competitor and win a large market share.g. technological intelligence etc. 6. Following can be the strategic alliances: • Product or service alliance: one company licenses the other to produce its product or two companies jointly market their complementary products. • Pricing collaboration: one or more companies join in a special pricing collaboration. • Promotional alliance: one company agrees to carry a promotion for another company’s product or service. Differentiation: • The business concentrates on achieving superior performance in an important customer benefit area valued by a large customer segment. Goals are used to describe the objectives that are specific with respect to magnitude and time. Focus: The business tries to focus on one or more narrow market segment and try to pursue either cost leadership or differentiation in this segment. it has to strengthen its R&D department. manufacturing and physical distribution. • It’s a dangerous strategy to pursue as other firms may emerge with still lower costs. The strategies can be basically divided into three generic types: a. flexible or responsive.g. system. hotel and rental car companies. skill and style. service leader or technology leader but it cannot be all at the same time. • Consistent: the objective must be consistent. Hutch and Kodak.g. b. e. purchasing. quality leader. E. c. • Logistics alliance: one company offers logistical services for another company’s products. • Quantitatively: the objective must be stated in concrete figures sales organization that it can be assessed. E. it should not be from wishful thinking.g.g.. 4. shared values. it can proceed to develop specific goals for the planning period. 5.orientation 22. one pharma company may supply another surgical company’s product to the same customers. Implementation: Mckinsey and company has given a 7S framework that the best managed companies exhibit namely strategy. The objectives must follow the following four criteria: • Hierarchy: the objectives must be arranged in hierarchy. staff. it is not possible to maximize both sales and profit. if the company decides to be a technological leader. E. structure. E. Goal formulation: once the company has performed a SWOT analysis. • They need less skill in marketing.g instead of just saying increase in sales. Strategic formulation: goals indicate what the SBU wants to achieve. it should be stated as 10% increase in sales or likewise. E. strategy is a game plan to achieve that. Strategic alliance: Since the companies cannot be efficient in all the parameters. • Firms pursuing this strategy must be good at engineering. they enter into strategic alliance with others who may be highly efficient in an area where this company is not. 3. the supporting program must be worked out. Program formulation: once the principal strategies are developed. with the most important at the top and the least important at the bottom. 58 . • Realistic: the objective should be realistic based on some research or facts.
• The company has to decide how to allocate the total marketing budget into various tools. profits. Planning marketing programs: • Establish the marketing budget. price. Managing the marketing effort: • The final step is organizing the marketing resources and then implementing and controlling the marketing plan. Choosing the value: segmentation. it is called value delivery sequence and this sequence consists of three phases – a. Once the market opportunities are analyzed. Executive summary and table of contents: a brief summary of the plan’s main goals and recommendations. thus. advertise/promotion. The traditional view assumes that the company knows what to make and that the market will buy enough units to produce more profits for the company. procure. or challenger or follower or nicher. distribution and service. the firm makes a product and then tries to sell it. The modern view places marketing at the beginning of the planning process. • The company also has to undertake control activities like annual plan control. marketing comes in the second half of the value delivery process. THE MARKETING PROCESS: According to the traditional view. Developing marketing strategies: • The company should develop its positioning strategy (before launch). Analyzing market opportunities: • The company has to scan its macro and micro environment. 2. The nature and contents of a marketing plan: a. • The allocation has also to be decided on the basis of product. According to this view. So the process is design the product. b. • Small companies may have one person carrying out all the marketing functions. b. c. • After launch.7. brand manager etc. cost. 59 . designing marketing strategies. profitability and strategic control. sell. Current marketing situation: this section presents relevant background data on sales. service development. The environment can be fairly stable or change slowly in a fairly predictable manner or change rapidly in a major and unpredictable manner. According to this view. planning marketing programs and organizing. marketing research. researching and selecting target markets. the market.e. competitors etc. making and distributing. Steps in the planning process: The marketing process consists of analyzing marketing opportunities. sales manager. the product strategy will need modification at the different stages in the PLC. 3. sales people. pricing. the market should be segmented and targeted. sales promotion and advertising. Feedback and control: the firm needs to track the results and monitor new development after implementing the program as there will be new developments in the internal and external environment. • The strategy will also differ depending on whether the company is the market leader. targeting and positioning. Big firms may have different marketing specialists i. make. promotion and place. 4. Providing the value: product development. advertising personnel. • Understand the consumer and business market. implementing & controlling the marketing effort. Communicating the value: through sales force. price. 1.
E. 60 . More usage: the third strategy is to convince the people to use the product more per use occasion. Opportunities and issue analysis: after summarizing the current situation. Defend its current market share: Even when the leader is trying to expand. distribution effectiveness and cost cutting.g. Objectives: after summarizing the issues. the plan’s financial and marketing objectives are specified. shampoo. the market leader stands to gain the maximum. This should be in concurrence with the purchasing and manufacturing department as well as with the sales manager. • Mobile defense: here the leader enters new territories that can serve as future centers for defense and offense. Action program: each marketing strategy is elaborated as what will be done? When will it be done? Who will do it? How much will it cost? g.e. This increases the company’s strength and value to customers. It means giving up weaker territories & assigning the resources to strong territories. • Preemptive defense: here the leader attacks even before the enemy start its offense. New uses: the market can also be expanded by discovering and promoting new uses for the product. distribution coverage and promotional intensity. Following can be the defensive strategies: • Position defense: this is the basic defense strategy – building a concrete wall around one’s current position. h. e. The new users can be from market penetration strategy. new market segment strategy or geographical expansion strategy. sometimes it is foreign. threats and strength/weakness are identified. New product developments. The leader can adopt the strategy of market broadening i.e shifting the focus from the current product to underlying generic need. the market leader has to adopt the following three strategies – • Expand the total market demand • Defend its current market share • Increase its market share a. it starts planned contraction or strategic withdrawal. The market can be expanded by looking for new users. new uses and more usage of its products. Broadly speaking. Ambassador vs Maruti. New users: the potential buyers who are unaware of the product or are not buying because of price or lack of certain features. • Contraction defense: if the situation becomes such that it is no longer possible for the company to defend all its territories. E. the opportunities.g. entering into unrelated industry.g. E. Controls: indicates how the plan will be monitored. Else the leader can adopt the strategy of market diversification i. cold drinks being promoted as a drink for guests too. Marketing strategy: the broad marketing strategy or “game plan” is outlined. But it does not mean leaders should put all their resources in protecting the current product alone. MARKET LEADER STRATEGIES: Market leader: • Has the largest market share • Leads the other firms in price changes. • Flank defense: the market leader should also defend its weak front or possibly make it an invasion base for counterattack. Sometimes the competitor is domestic. it should continuously keep on defending its current market share against rival businesses. f.c. Expand the total market demand When the total market expands. Projected profit and loss statement: forecast the plans expected financial outcomes. It can start attacking many competitors at a time or develop its market in a grand manner or decrease its price. b. The constructive response is – continuous innovation – developing new products and customer services. d.
It works well if the market leader does not retaliate by cutting the price. • Flanking strategy also identifies shift in market segments that develop gaps then rushing in to fill in the gap and develop them into strong segments. Guerilla attack: it consists of waging small. the buyers are price sensitive and the leader will not cut the price. (ii) Cheaper goods – average or low quality products are provided at a lower price.c. c. They are large enough in themselves & they can adopt any one of the following two strategies – attack the leader ( challenger) or follow the leader (follower) Defining the strategic objective & opponents: The main objective behind attacking another firm is to increase one’s own market share. The challenger must decide whom to attack: • It can attack the market leader: it involves high risk but potentially high pay off strategy and makes good sense if the leader is not serving the market well. • It can attack firms of its own size that are not doing the job properly and are underfinanced: these firms may have aging products. • It can attack small. all the resources of the leader are deployed there and then the challenger can launch the real attack at the side or rear. E. price and distribution. It is appropriate provided the challenger commands superior resources and believes a swift encirclement will break the opponent’s will. the challenger spots areas where the leader is under performing. • A flank attack can also be directed along two strategic dimensions – geographic and segmental. • The company should not use the wrong marketing mix strategy in order to increase their market share. • It should watch the cost incurred in increasing the market share. (ii) diversifying into new geographic markets. Frontal attack: the attacker matches the opponent’s product. (iv) Product proliferation – provide a larger product variety. d. advertising.g Pepsi and Coke. b. local & regional firms: Choosing the general attack strategy: a. 61 . When the challenger attacks the leader at its strong point. Modified frontal attack: cutting the price vis-à-vis the competitors. prices will be high & the customer will not be satisfied. The attacks can be in the form of price cuts. (v) Product innovation – provide product improvements or breakthroughs. Bypass attack: this is an indirect assault strategy. In geographic. e. Normally it is practiced by smaller firms. Choosing a specific attack strategy: (i) Price discount – the company offers a lower price than the leader provided the company is able to convince the customers that the products and/or services are comparable. (iii) Prestige goods – higher quality products are provided at a higher price. MARKET CHALLENGER STRATEGIES: The firms that occupy second. Flank attack: this means attacking the weak front because the opponent’s defense will be the strongest at its strong point. • Another flanking strategy is to serve uncovered market needs. intermittent attacks to harass & demoralize the opponent and eventually secure permanent footholds. third or lower ranks are the challengers. The following three approaches can be there – (i) diversifying into unrelated products. The company should consider three factors before pursuing increased market share strategy in order to ensure that increase in market share results in corresponding increase in profitability: • It should not provoke antitrust action by the competitors. It means by passing the enemy and attacking easier markets to broaden one’s resource base. Encirclement attack: here the attacker launches a grand offensive on several fronts. (iii) or leapfrogging into new technologies to supplant existing products. intense promotional blitzes and occasional legal actions. Expanding market share: Market leaders can improve their profitability by increasing their market share.
advertising. Such companies offer high value. pricing and so on. These firms have low market share of the total market but are highly profitable through smart niching. MARKET FOLLOWER STRATEGIES: The market leader goes for product innovation and bears the expense of developing a new product. They are called nichers. Safari – Safar • Imitator: they copy something from the leader but maintain differentiation in terms of packaging. • Adaptor: the adaptor takes the leader’s product and adapts or improves them. some companies prefer to be a leader in a small market.g.g. E. • Quality – price specialist – these firms operate either at the low end or high end of quality. • Channel specialist STRATEGIES FOR THE GLOBAL MARKET: The companies which are marketing to different countries can follow any of the following three strategies: a. MARKET NICHER STRATEGIES: Instead of being a follower in a large market. • Vertical level specialist • Customer size specialist – usually they serve small size customers who are ignored by the majors. A “glocal” strategy: it standardizes certain core elements and localizes other elements. A multinational strategy: here the world is treated as a portfolio of national opportunities. E. region or area. This is appropriate when the forces for global integration are strong and forces for national responsiveness are weak. • Product feature specialist – specialize in producing a certain type of product feature. • Job shop specialist – customizes the product for individual customer.(vi) (vii) (viii) (ix) Improved services Distribution innovation Manufacturing cost reduction Intensive advertising promotion. The returns for all this expense are the market leadership. • Cloner: here they copy the leader’s product. electronic goods. achieve lower manufacturing costs and shape a strong corporate culture and vision. 62 . It cannot overtake the market leader by doing this but it can make substantial profit since it did not bear any of the innovation expense. The adaptor may choose to sell to different markets but they often grow into future challengers. • Service specialist – offer services that other firms do not. name and packaging with slight variations. The follower usually imitates the product or improves on the existing product. This is appropriate when the forces for global integration are weak and forces for national responsiveness are strong. • Product or product line specialist – produces and carries only one product or product line. charge a premium price. Global strategy: this strategy treats the world as a single market. Unilever c. Following are the strategies followed by a market follower: • Counterfeiter: they duplicate the leader’s product and packaging and sell it on the black market through disreputable dealers. • Specific customer specialist – selling to one or very few customers. E. The strategy makes sense for industries where each nation requires some adaptation of its equipments but the providing company can also standardize some of the core components.g. b. Following specialization roles can be played by the nicher: • End user specialist – serving one type of end user segment. • Geographic specialist – selling only in a certain locality. educating the market and distributing the product.
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