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CHAPTER 1 - INTRODUCTION
1.1

WHAT IS MARKETING MIX?

The term "marketing mix" became popularized after Neil H. Borden

published his 1964 article, The Concept of the Marketing Mix. Borden
began using the term in his teaching in the late 1940's after James
Culliton had described the marketing manager as a "mixer of ingredients".

In general, the marketing mix is a business tool used in marketing and

by marketers. The marketing mix is often crucial when determining a
product or brand's offer, and is often associated with the four P's: price,
product, promotion, and place.

1.2

PRODUCT

The first thing you need, if you want to start a business, is a product.
Therefore Product is also the first variable in the marketing mix.
Product decisions are the first decisions you need to take before
making any marketing plan. A product can be divided into three parts.

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The core product, the augmented product and the tertiary product.
Before deciding on the product component there are some questions
which you need to ask yourself.

What product are you selling?

What would be the quality of your product?

Which features are different from the market?

What is the USP of the product?

Whether the product will be branded as sub brand or completely

new?

What are the secondary products which can be sold along with
primary (Warranty, services)
Based on these questions, several product decisions have to be made.
These product decisions will in turn affect the other variables of the
marketing mix. For example You launch a car with is to have the
highest quality. Thus the pricing, promotions and placing would have to
be altered accordingly. Thus as long as you dont know your product,
you cannot decide any other variable of the marketing mix. However, if
the product features are not fitting in the marketing mix, you can alter
the product such that it finds a place for itself in the marketing mix.

1.3

PRICING

Pricing of a product depends on a lot of different variables and hence it

is constantly updated. Major consideration in pricing is the costing of
the product, the advertising and marketing expenses, any price
fluctuations in the market, distribution costs etc. Many of these factors
can change separately. Thus the pricing has to be such that it can bear
the brunt of changes for a certain period of time. However, if all these
variables change, then the pricing of a product has to be increased and
decreased accordingly.

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Along with the above factors, there are also other things which have to
be taken in consideration when deciding on a pricing strategy.
Competition can be the best example. Similarly, pricing also affects the
targeting and positioning of a product. Pricing is used for sales
promotions in the form of trade discounts. Thus based on these factors
there are several pricing strategies, one of which is implemented for
the marketing mix.

1.4

PLACE

Place refers to the distribution channel of a product. If a product is a

consumer product, it needs to be available as far and wide as possible.
On the other hand, if the product is a Premium consumer product, it
will be available only in select stores. Similarly, if the product is a
business product, you need a team who interacts with businesses and
makes the product available to them. Thus the place where the product
is distributed depends on the product and pricing decisions, as well as
any STP decisions taken by a firm.
Distribution has a huge affect on the profitability of a product. Consider
a FMCG company which has national distribution for its product. An
increase in petrol rates by 10 RS will in fact bring about drastic
changes in the profitability of the company. Thus supply chain and
logistics decisions are considered as very important costing decisions
of the firm. The firm needs to have a full proof logistics and supply
chain plan for its distribution.

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1.5

PROMOTIONS

Promotions in the marketing mix include the complete integrated

marketing communications which in turn includes ATL and BTL
advertising as well as sales promotions. Promotions are dependent a lot
on the product and pricing decision. What is the budget for marketing
and advertising? What stage is the product in? If the product is
completely new in the market, it needs brand / product awareness
promotions, whereas if the product is already existing then it will need
brand recall promotions.
Promotions also decide the segmentation targeting and positioning of
the product. The right kind of promotions affects all the other three
variables the product, price and place. If the promotions are effective,
you might have to increase distribution points, you might get to
increase the price because of the rising brand equity of the product,
and the profitability might support you in launching even more
products. However, the budget required for extensive promotions is
also high. Promotion is considered as marketing expenses and the
same needs to be taken in consideration while deciding the costing of
the product.

Marketing mix (4 Ps) was more useful in early 19s when production
concept ws in and physical products were in larger proportion. Today,
with latest marketing concepts, marketing environment has become
more intergrated. So, in order to extend the usefulness of marketing
mix, some authors introduced a fifth P and then seven Ps (People,
Packaging, and Process). But the foundation of Marketing Mix still
stands on the basic 4Ps.

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2.1 MCDONALDS INDIA:

The McDonald's Corporation is the world's largest chain of hamburger fast
food restaurants, serving around 68 million customers daily in 119
countries across 35,000 outlets. Headquartered in the United States, the
company began in 1940 as a barbecue restaurant operated by Richard
and Maurice McDonald. In 1948, they reorganized their business as a
hamburger stand using production line principles. Businessman Ray Kroc
joined the company as a franchise agent in 1955. He subsequently
purchased the chain from the McDonald brothers and oversaw its
worldwide growth.
A McDonald's restaurant is operated by a franchisee, an affiliate, or the
actual corporation itself. The McDonald's Corporation revenues come from
the rent, royalties, and fees paid by the franchisees, as well as sales in
company-operated restaurants. In 2012, the company had annual
revenues of $27.5 billion and profits of $5.5 billion. According to a 2012
BBC report, McDonald's is the world's second largest private employer
behind Wal-Martwith 1.9 million employees, 1.5 million of whom work for
franchises.
McDonald's primarily sells hamburgers, cheeseburgers, chicken, French
fries, breakfast items, soft drinks, milkshakes, and desserts. In response to
changing consumer tastes, the company has expanded its menu to
include salads, fish, wraps, smoothies, fruit and seasoned fries.
In India, McDonald's has two Indian entrepreneurs: Amit Jatia, Vice
Chairman, Hardcastle Restaurants Pvt. Ltd, which has been awarded a
Development Licensee status by McDonald's Corporation, U.S.A,
spearheads McDonald's operations in West & South India, while
McDonald's restaurants in North & East India is managed by Vikram
Bakshi's Connaught Plaza Restaurants Private Limited, which is still a Joint
Venture with McDonald's Corporation. For Hardcastle Restaurants Pvt. Ltd
('HRPL'), the transition to a Development Licensee implies a higher level

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of commitment by McDonald's Corporation as it enhances its trust in the

local partner. McDonald's ensures that the evolution to a Development
Licensee takes place only after the financial strength, viability, profitability
and long - term sustainability of the business is assured. Celebrating over
15 years of leadership in food service retailing in India, McDonald's India
now has a network of over 250 restaurants across the country. McDonald's
India is a leader in the food retail space, with a presence of more than 250
restaurants serving more than 6.5 lakh customers daily in India.
McDonald's India and HRPL in particular has an aggressive expansion plan
- including market expansion, new customer outreach formats and menu
expansion. With HRPL becoming a Development Licensee in the year
2010, there are strong and robust commitments to investments,
expansion and growth. By 2014, HRPL plans to double the number of
restaurants it currently has.
HRPL is expanding its reach by expanding the portfolio and access points
with formats like from kiosks; drive thrus, web-delivery and petrol pumps
in addition to the restaurants.
The McDonald's Corporation is the world's largest chain of hamburger fast
food restaurants, serving around 68 million customers daily in 119
countries across 35,000 outlets. Headquartered in the United States, the
company began in 1940 as a barbecue restaurant operated by Richard
and Maurice McDonald. In 1948, they reorganized their business as a
hamburger stand using production line principles. Businessman Ray Kroc
joined the company as a franchise agent in 1955. He subsequently
purchased the chain from the McDonald brothers and oversaw its
worldwide growth.
A McDonald's restaurant is operated by a franchisee, an affiliate, or the
actual corporation itself. The McDonald's Corporation revenues come from
the rent, royalties, and fees paid by the franchisees, as well as sales in
company-operated restaurants. In 2012, the company had annual
revenues of $27.5 billion and profits of $5.5 billion. According to a 2012

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BBC report, McDonald's is the world's second largest private employer

behind Wal-Martwith 1.9 million employees, 1.5 million of whom work for
franchises.
McDonald's primarily sells hamburgers, cheeseburgers, chicken, French
fries, breakfast items, soft drinks, milkshakes, and desserts. In response to
changing consumer tastes, the company has expanded its menu to
include salads, fish, wraps, smoothies, fruit and seasoned fries.

Type

Public

Traded as

NYSE: MCD
Dow Jones Industrial Average Component
S&P 500 Component

Industry

Restaurants

Founded

May 15, 1940 in San Bernardino, California;

McDonald's Corporation, April 15, 1955 in Des
Plaines, Illinois

Founders

Richard and Maurice McDonald and Ray Kroc

Headquart

Oak Brook, Illinois, U.S.

ers
Number of

35,000+ worldwide

locations
Area

Worldwide

served
Products

Fast food
(hamburgers chicken french fries soft
drinks coffee milkshakes salads desserts
breakfast)

Revenue

US$ 28.1057 billion (2013)

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Number of

US$ 27.567 billion (2012)

440,000

employees

2.2 MARKETING MIX OF MCDONALDS INDIA:

The marketing mix of Mcdonalds consists of the various elements in the
marketing mix which forms the core of a companys marketing system
and hence helps to achieve marketing objectives. The marketing mix of
Mcdonalds discusses the 4ps of the leading burger chain across India
offering the tastiest burgers and french fries.

Product:
McDonalds places considerable emphasis on developing a menu which
customers want. Market research establishes exactly what this is.
However, customers requirements change over time. In order to meet
these changes, McDonalds has introduced new products and phased out
old ones, and will continue to do so. Care is taken not to adversely affect
the sales of one choice by introducing a new choice, which will cannibalise
sales from the existing one (trade off). McDonalds knows that items on its
menu will vary in popularity. Their ability to generate profits will vary at
different points in their cycle. In India McDonalds has a diversified product
range focussing more on the vegetarian products as most consumers in
India are primarily vegetarian. The happy meal for the children is a great
seller among others.

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Price:
The customers perception of value is an important determinant of the
price charged. Customers draw their own mental picture of what a product
is worth. A product is more than a physical item; it also has psychological
connotations for the customer. The danger of using low price as a
marketing tool is that the customer may feel that quality is being
compromised. It is important when deciding on price to be fully aware of
the brand and its integrity.
In India McDonalds classifies its products into 2 categories namely the
branded affordability (BA) and branded core value products (BCV). The
BCV products mainly include the McVeggie and McChicken burgers that
cost Rs 50-60 and the BA products include McAloo tikki and Chicken
McGrill burgers which cost Rs20-3 This has been done to satisfy
consumers which different price perceptions.

Promotion:
The promotions aspect of the marketing mix covers all types of marketing
communications One of the methods employed is advertising, Advertising
is conducted on TV, radio, in cinema, online, using poster sites and in the
press for example in newspapers and magazines. Other promotional
methods include sales promotions, point of sale display, merchandising,
direct mail, loyalty schemes, door drops, etc. The skill in marketing
communications is to develop a campaign which uses several of these
methods in a way that provides the most effective results. For example,
TV advertising makes people aware of a food item and press advertising
provides more detail. This may be supported by in-store promotions to get

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people to try the product and a collectable promotional device to

encourage them to keep on buying the item.
At McDonalds the prime focus is on targeting children. In happy meals too
which are targeted at children small toys are given along with the meal.
Apart from this, various schemes for winning prices by way of lucky draws
and also scratch cards are given when an order is placed on the various
mean combos.

Place:
Place, as an element of the marketing mix, is not just about the physical
location

or

distribution

points

for

products.

It

encompasses

the

management of a range of processes involved in bringing products to the

end consumer. McDonalds outlets are very evenly spread throughout the
cities making them very accessible. Drive in and drive through options
make McDonalds products further convenient to the consumers.

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3.1 PEPSI INDIA:

Pepsi is a carbonated soft drink that is produced and manufactured by
PepsiCo. Created and developed in 1893 and introduced as Brad's Drink, it
was renamed as Pepsi-Cola on August 28, 1898, then to Pepsi in 1961,
and in select areas of North America, "Pepsi-Cola Made with Real Sugar"
as of 2014.

Pepsi

Type

Cola

Manufacturer

PepsiCo

Country of

United States

origin
Introduced

1893; 122 years ago (as Brad's

Drink)
1898 (as PEPSI-Cola)
1961 (as PEPSI)
2008 (as pepsi)[1]

Color

Caramel E-150d

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3.2 MARKETING MIX OF PEPSI:

The second largest soft drink player in the world, Pepsi has implemented
several smart strategies in the last decade to improve its turnover and
profits. Pepsicos expansion in snacks like Lays, Quaker oats, Cheetos and
Kurkure have given them an edge over Coca cola. Although Coca cola is
still the number one selling brand, Pepsi has reduced their dependency on
Soft drinks by expanding their product mix.

Product:
There are 2 main product types in which Pepsi is present in India.
Beverages
Soft drinks 7up, Dukes, Mirinda, Mountain dew, Nimbooz, Pepsi, Slice,
Tropicana,
Mineral / Bottled water Aquafina
Sports Drink Gatorade
Food Products
Snacks Cheetos, Kurkure, Lays, Lehar, Uncle chipps
Breakfast Quaker oats

Thus, Pepsi, unlike its major competitor Coca cola, has expanded in the
breakfast as well as snacks segment. Coca cola on the other hand is
present only in the beverages section. The advantage of Pepsis snacks
segment is that brands like Lays, Kurkure and Cheetos are in great
demand. Quaker oats which is a recent addition is also increasing in
demand. Thus the turnover resulting from the Food products is helping the
bottom line of the company.

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Price:
Pepsi is in an industry which is dominated by the two biggies Coca cola
and Pepsi. Thus the pricing of Pepsi is competitive. In a war between Coca
cola and pepsi, neither of the brands can win if they enter a price war.
This is because the cost of manufacturing and transportation is huge.
Thus, these companies are likely to enter a brand war rather than enter a
price war.
Pepsi is known to give promotional discounts as well as discounts on bulk
buying. For customers, as the container size rises, the discounts also rise.
Thus a 2 litre bottle of Pepsi will be relatively cheaper per 100ml as
compared to a 250 ml pack. For distributors, the discount is based on the
quantity as well as the payment terms. The better the payment terms or
the higher the quantity, the more is the discount given thereby keeping
the distributor motivated.
However, Pepsi has to lower its price for the top retailers and bulk buyers.
For example Indian retailers like Big Bazaar, Reliance fresh, as well as
hypercity are bulk buyers. Similarly fast food chains like Mcdonalds, KFC
are also bulk buyers. These bulk buyers negotiate with the soft drink
brands on the basis of price and sell their products in huge quantities.
Thus, pepsi has to drop prices in these places which affect the operating
margin of the brand. The margins of the company are better through the
distributors and lesser through bulk buyers. However, the sales of the
company are higher to bulk buyers as compared to distributors.

Place:
Pepsi has a huge distribution network in India. It has to be huge because
the brand needs to be present in every nook and corner of the country to

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increase its sales. The primary mode of distribution is through distributors

who in turn give it to retailers, restaurants, and convenience stores. The
secondary mode of distribution is directly through the company to bulk
buyers and major retailers who buy directly from the company.
Thus distribution channel is as follows
1) Company > Distributor > Small retailers / Small buyers > End customer
2) Company > Bulk buyers > End customer
As cost is saved in the 2nd example, companies are able to give better
margins to Bulk buyers. The major challenge in distribution is the cost of
bottling as well as the cost of transportation.
Bottling of Pepsi is done at bottling plants. In India, Pepsi has 36 bottling
plants out of which 13 are franchisees whereas 23 are company owned.
The soft drink once packed is moved to the company warehouse from
where it goes to distributors and bulk buyers.
Several of pepsis soft drink distributors themselves might act as
distributors of Kurkure, Lays and other snacks products as the distribution
is through the same channel. The products are also sold from the same
convenience store. Thus, it makes sense if the distributor of the soft drink
is given the authority to distribute snacks as well. However, in some
cases, the distributor of soft drink might be separate from that of Snacks.

Promotions
One of the strongest reason Pepsi retains its brand image is its
promotions. Pepsi targets mainly youngsters through various Brand
ambassadors. In India, the brand ambassadors have been the best
celebrities as well as sports person of the country including Sachin
tendulkar, M S Dhoni, Amitabh Bacchan, Ranbir kapoor and others.

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Mountain dew has a message of Darr ke age jeet hai which is again
focused on adventure sports thereby targeting youngsters. Snacks like
Kurkure and Lays target different segments. Kurkure is known to target
household

snacks

and

middle

aged

group

whereas

Lays

targets

youngsters and the party mood. Gatorade targets only sports as it is a

sports drink. And Quaker oats, which are a recent launch as compared to
the other products, targets breakfast with a bit of masala.
Pepsi uses all the media channels for its promotions. Along with ATL, pepsi
is also present in BTL marketing. Furthermore, along with traditional
media channels, Pepsi also uses trade promotions and sales promotions at
point of purchase. Discounts and packaging are always being bundled to
give the best combination and value to the customer to increase
purchases as well as the brand equity.
The bottomline is that Pepsi cannot exist without the proper promotions.
This is because Pepsi belongs in the FMCG market, and in FMCG, you
either perform or perish. The FMCG market is one of the toughest markets
for businesses. However, Pepsi is not only surviving, but it is thriving in
the FMCG market.

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4.1 AMUL:
Amul is an Indian dairy cooperative, based at Anand in the state of
Gujarat, India. The word amul () is derived from the Sanskrit word
amulya (), meaning rare, valuable. The co-operative was initially
referred to as Anand Milk Federation Union limited hence the name AMUL.
Formed in 1946, it is a brand managed by a cooperative body, the Gujarat
Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is
jointly owned by 3 million milk producers in Gujarat. Amul spurred India's
White Revolution, which made the country the world's largest producer of
milk and milk products. In the process Amul became the largest food
brand in India and has ventured into markets overseas.
Dr Verghese Kurien, founder-chairman of the GCMMF for more than 30
years (19732006), is credited with the success of Amul.
Amul (Anand Milk Union Limited)

Type

Cooperative

Industry

Dairy/FMCG

Founded

1946

Headquarters

Anand, Gujarat, India

Key people

Chairman, Gujarat Co-operative

Milk Marketing Federation Ltd.
(GCMMF)

Revenue

US$3.1 billion (201314)

Number of

750 employees of Marketing

employees

Arm. However, real pool consist

of 3 million milk producer
members

Slogan

The Taste of India

4.2 MARKETING MIX OF AMUL:

Amul

is

definitely

an

Amoolya

brand.

Amoolya

in

Sanskrit

means something which is invaluable or priceless. With a presence in

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almost every product which can be made by milk, Amul has won over
hearts along with market share to become a highly valued brand with an
Indian origin. Amul was formed because of a revolt of dairy farmers. And
today, Amul is a brand against which companies want to compete and
come on top but the same is not being allowed by the smart minds in
Amul. The reason Amul is such a strong brand is because of the marketing
mix of Amul. Here is an in depth analysis of the Marketing mix of Amul.

Product:
Amul has a very very strong product portfolio. Amul product portfolio is
comprised mainly of Dairy products. Amul butter, Amul cheese and Amul
ice cream are cash cows for Amul as they have the major market share in
their product category. Amul ice cream is amongst the top 10 ice cream
brands of India.
Amul milk, Amul Paneer and Amul Dahi consumption is on the rise. In fact
Amul milk has 26% of market share in the packaged milk segment. The
only disappointing performance is seen in Amul Chocolates which are a
burden for Amul and lot of push is required for the sales of the same. This
is because the chocolate market has established players like Parle, Dairy
milk and others.
The Amul family tree has the following brands Amul Milk, Amul bread
spreads, Amul Cheese, Amul Milk, Amul kool and its variants, Amul pro,
Amul ice cream, Amul Paneer, Amul Dahi, Amul Ghee, Amul Milk powders,
Amul Nutramul, Amul mithai range, Amul mithai mate, Amul chocolates,
Amul butter milk. Thus the product portfolio of Amul considering its dairy
origins is astounding. Amul has various competitors based on different
products. In ice cream it is Vadilal, Dinshaws and Havmor. In butter and
milk there is mother dairy, Britannia and others. However, no competitor
has such a vast dairy based product portfolio as Amul. This is the major

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reason that Amul has a sustainable competitive advantage over its

competitors.

Price:
Amul has a strategy of low cost pricing. Some may call it penetrative
pricing. But penetrative pricing strategy is used when the market has a
high level of competition and a player wants to establish itself in the
market by giving low prices. However, in the case of Amul, when Amul
started, there were no national players and the dairy market was
unorganized. During the introduction stage itself, Amul had a vision to
provide their products to end customers at the best affordable rates. And
the same vision is in place even today.
Today also, you will find that Amul butter, milk and cheese are available at
affordable prices keeping in mind the end customers. You may call these
products costly, but the cost has nothing to do with Amuls strategy.
Remember that transportation costs as well as storage and distribution
costs are very high in FMCG. Thus, as the cost of transportation, storage
and distribution has increased over the years, so has the cost of Amul
products gone up. But considering their value for the average India
consumer, these products are still priced at an affordable rate.

Place:
Amul has a massive distribution network because its ice creams, milk,
butter and cheese is found practically everywhere. As it is a FMCG
product, Amul follows the methodology of breaking the bulk. The initial

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factory output is in bulk. Later on this bulk becomes smaller and smaller
and finally one individual slab of butter or scoop of ice cream is sold at the
retail place.
There are two different channels through which Distribution happens in
Amul. One is the procurement channel which is responsible for collection
of Milk through dairy co operatives. The other is the distribution channel
which is responsible for distributing the finalized product to the end
customers.
In the procurement channel, the milk is individually delivered from farmers
to the co operatives. The co operatives then collect all this milk and send
the bulk to the manufacturing facility. At the manufacturing facility, the
milk is used to manufacture the finalised products.
In the distribution channel, there are carrying and forwarding agents,
distributors, dealers and retailers involved. There are also Amul shoppes
which sell all products in the Amul product portfolio. The distribution is as
follows.
Amul >> Carrying and forwarding agent >> Distributor >> Dealer /
Retailer / Amul Shoppe >> Customer
Amul >> Modern retail
Thus there is a lot of transportation involved for all of Amuls products.
However, the distribution channel of Amul ensures that the products reach
every nook and corner of India.
Promotions:
Amul is responsible for one of the most unique and longest running
outdoor campaign as well as one of the most known outdoor advertising
characters The Amul girl. We would like to take this opportunity to
specially thank Mr Eustace fernandes, the creative brain behind the sweet
girl. But we should know by now that the Amul girl is hardly sweet or cute.

P a g e | 20

She is known to be the naughtiest advertising girl ever. Amul hoardings

mainly feature the current news and are used to take a tongue in cheek
viewpoint at current happenings. However, each advertisement hits the
nail on the head.
The promotions of Amul are mainly for butter but for all the other products
there is hardly any promotions. During the launch of products, Amul is
known to go ATL and advertise milk, butter etc. The Smita Patil ad wherein
Smita patil is shown as a village milk collector is one of the most famous
ads for Amul. But overall, the main advertisement is BTL through
outdoor, trade promotions, discount schemes and sales promotions.
The major reason for Amuls absence in hardcore advertising is that Amul
does not want to give away margins in advertising its products. As
per Amul, their maximum budget for advertising is 1% of the turnover.
Above and beyond that will directly affect the cost of the product. And the
major reason for Amuls strong presence in the market is its excellent
quality combined with the affordable price. Thus, overall promotions will
always be low for Amul except for the outdoor advertising of Amul butter.
This concludes the marketing mix of Amul. The bottom line is that we love
that an Indian brand like Amul has reached such staggering heights and
that we are a part of the time when such a white revolution took place.