MARKETING MANAGEMENT Global Perspective Indian Context Fifth EditionMcGraw Hill Education (India) Private Limited Published by MeCiraw Hill Eduction (hi) Private Limited 24, Grosn Park Extension Now Del 110016 Marketing Management, Se Copyright © V§ Ramatwany and § Namakamari, 1990, 1995, 20¢2, 2009, 2013 All ghts reserved. No par ofthis publication may be reproduced or datnbuted in any form or by any means, elesonis, ‘mechanioa,phtocopying coring cr otherwise or atred in a datibeeorrtovaleyst will the prior writen permis Son of the publshes. The rogram lings if ans) may be ealered, stored and executed in a computer system, but they may ‘ot be reproduesd fr publication Tis ition canbe export from Inia only by the publishers, MeGeaw Hill Eéucation (Inia) Pvate Limited ISBN-13:978-1.25.0926416 ISBN-10-|-25-902681-8 Vice Presiden and Managing Director: jay Shukla ‘ead—HisherFlucaton Palishing al Marking: Vb82 Mofajon ‘Senle Publishing Manager—B&E/HSSL: Tapas K Maj Dy. Manager (Sponsoring: Hema K Jha tral Researcher: Si Dua Manager (Eaton Servlcen Hema Ratan Senioe Production Manager: Manohar Lal Senior Proueten Executive: Atl Gupta Asitant General Marager—Higher Eateation Marketing: Vijay Sarath ‘Assiant Iyoduct Matager: Dass Sachteva Junie Produet Specialist Megha Mehre ‘Snir Griphic Desigter (Cover Design): Mesnu Raghav General Manage—Production: Ruiender P Ghansla Maniger—Production: Rei Kumar Tnivematin contained in thi work hasbeen cblainad by te Auhors and McGraw Hl cation (da) romouresbsboved to berelible. However, nether MeGraw Hill Eduation (nda) noritsaushrs guarantee the accuracy of completeness ny infeemation published herein, and nether MeGraw Fill Education (India) nor ts aubors shal be respnsieforany enor, fomiksions, of damages arin oof we of hs information, This wrk published with the understanding tht MeGraw Hill dwcation Iada) and its ahorsare supplvng infomation bet are not atempting to ender enginoering of eer pofessional services If such erices re reqied the asistance of an apopmate professional should be sah “Typeset at The Compesers, 260, CA Apt, Faschim Vir, New Dethi 110063 and pinted at Cover Printer: Sana Printer DZALCRAOLZLACBrief Contents Foreword to the First Edition vii Preface ix @—— Part 1: Marxetine Nees 4 Re-cAUIBRATION 1. Marketing Needs Re-calibration: Recognising Value-delivery as ‘Marketing's Central Task z 2, Fundamentals of Marketing—Revisited 20 3. Value Philosophy of Marketing 40 @— — Pair 2: Mankerine Environment—Gtoeat ano INDIAN 4. Analysing the Marketing Environment mn 5. Global Marketing Environment 92 6. Marketing Environment of India and the Marketing Challenges ant @—— Pan 3: Deverorinc Markenine Stratecy AND Maaerinc PLans 7. Strategic Planning at Corporate Level and Marketing Planning at Business Level 133 8. Formulating Marketing Strategy 164 9. Marketing Strategy—Varied Approaches 192 10. Analysing Industry and Competition 210 11, Building Competitive Advantage 233 G@— — Parr 4: Anatysinc Consumers ano Sttectine Markers 12. Consumer Behaviour and Buying-Decision Process 25113. The Indian Consumer and the Consumer Market of India 14, Market Segmentation and Targeting with Value Orientation @—@ Pit 5: Creatine Vaiue-Propuct MANaceMENT 415, Product Management—The Fundamentals 16. Differentiating and Positioning the Market Offering 17. Managing Brands and Brand Equity 18. Creating Value through Innovation and New Products @—— Pa 6: Dativerinnc Vatue—Manacine Distaiution 419, Distribution Logistics and Supply Chain Management 20. Designing and Managing Marketing Channels 21. Retailing—Perspective of the Retailer/Retail Chain 22. Direct and Online Marketing —— Pat 7: Captunina ano Communicatine Vatue— PriciNc AND PRoMoTION 23. Pricing to Capture Value 24. Integrated Marketing Communications 25, Managing Advertising 26. Personal Selling and Sales Management 27. Customer Relationship Management. @— Pat 8: Surportine ano ContROLUNG THE Marketine Errort 28. Conducting Marketing Research and Forecasting Demand 29, Marketing Control @—@ Parr 9 Sreciat Ficus is Marketine 30, Marketing of Services 31, Rural Marketing in India—Potential, Challenges and Strategies 280 307 335 364 390 419 445 459 495, 517 547 568 585 611 630 653 681 695, 719 Brief ContentsDetailed Contents Foreword to the First Edition vii Preface ix G@—— Patt 1: Maaxerine Neeos a Re-causration 1. Marketing Needs Re-calibration: Recognising Value-delivery as Marketing's Central Task 3 The Contextual Seuing + The Global Financial and Economie Crises of Recent Years # The Corporates Get into a Crisis 4 Business Model of Wall Sweet Tumbles and Iconic Institutions Move Towards Bankruptcy 5 Banks, Fls, and CorporatesMyopic Management Practices 5 The Very ‘Practice of Management’ Subyerted 5 Failure of Corporate Governance 6 Absence of Concern for the Customer 6 Comporate Managements Come Under Anack 6 Value-Destroying Actions Instead of Value-Creating Ones 6 A Failure of Marketing, as Well 7 Marketing Ignored its Accountability to Customers 7 Marketing also Comes under Atack 8 ‘Auack from Top Managements 9 Auack from Customers 10 Atack from Society 12 Marketing has Disempowered Itself 12 Marketers Harbour their Own Dissatisfactions 12 Marketing's Predicament Today 12 Marketing Par Seis Not the Villain 12 Ignoring ‘Valuedelivery to Customer’—Cause of Marketing's Trouble 13 The Case of Toyota 13 Mini Case I.1: Toyota, the World's Mightiest Carmaker Fall into the Ditch 13, How Come Marketing Neglected ‘Value Delivery’ 15 Detailed ContentsExcessively Freoccupied with the 4P Framework 16 Attending More to ‘Downstream’ and Les to ‘Upstream’ Marketing 16 Relying on Gimmicks and Quick Fixes 17 Clinging Excessively to Segmentation Approach—Neglecting the Individual Needs 17 Making Exaggerated Product Promises 18 Resorting to Excessive, ValueEroding Outsourcing 18) A New Philosophy has Become Imperative for Marketing 18) ‘The New Philosophy must Recognise that Value-Delivery is Marketing’s Central Task 18) Exercise 18 Fundamentals of Marketing—Revisited 20 Understanding Marketing Management 21 Marketing—An Ommipresent Entity 27 Does Marketing Mean Selling? 27 Does Marketing Mean Advertising? 27 Does Marketing Mean Distribution? 2 Marketing has heen Described in Different Ways Using Different Routes. 20 Understanding Marketing through Select Definitions 23 Understanding Marketing by Checking—What Does It Do" 23 Dither in Vogue 26 The Exchange Concept 26 ‘The Production oncept 26 ‘The Product Goncept. 27 Marketing Myopia 27 ‘The Collapse of Kodak—A Case of Marketing Myopia 27 Mini Case 2.1: How Product Concept and Marketing Myopia Killed Kodek 27 ‘The Sales Concept 30 ‘The Marketing Concept 30 ‘The Diflerence hetween Selling and Marketing 30 Levitt and Drucker on the Difference between Selling and Marketing 3 Value in Marketing: Levitt and Drucker on How Marketing Diflers from Selling 32 How Does the Marketing Goncept Conceive Marketing? 32 Broadening of Marketing 33 ‘The Broadening will Help Tackle Some of the Criticisms Societal Marketing Concept. 34 Arguments and Counter Arguments 34 Concepts of Marketi inst Marketing 32 Ethics in Marketing 34 ‘Value in Marketing: Lowering Ethical Standards while Gathering Customer Data—Google 36 Corporate Social Responsibility 36 Green Marketing 37 It is “Difference in Orientation” That Separates One Concept from the Other 37 The Need for a New Philosophy of Marketing 37 The Value-philosophy of Marketing 38 Exercise 39 Value Philosophy of Marketing 40 Understanding the Value Philosophy 47 An Orientation Centred on Value Delivery to the Consumer 42 Detailed ContentsDelivering Value is the beall and endall of Marketing 42 Tenets of the Value Philosophy 47 Meaning of Value in the Marketing Context—The Concept of Customer Value 4! It is ‘Benefits’ that Translate into ‘Value’ 41 In Marketing, All ‘Valie" is Just ‘Perceived Value’ 43 ‘The Challenge Lies in Fulfilling the Buyer's Initially Perceived Value 4 Value has to be De-coupled from Price # Components of Customer Value #4 Value in Marketing: Value Delivery Does Not Mean the Product has to be Offered at a Lower Price: Case of Titan Eye+ 45 Value can be Created and Delivered in Ever So Many Ways 46 Value can be Greated by Changing the Product Form 16 Value can be Greated through Service 47 Value can be Greated through Customisation and Personalisation 47 For Greating Value, One Need not Invent a Product 47 Mini Case 3.1: Starbucks Delivers Unique Vai through Superior Experience 48 Time can be a Major Value to Many 50 speed too can be a Major Value 50 Components of Customer Cost 50 ‘The Customer Decides What Valu ‘The Firm Delivers tt 50 Value is What Customer Considers Vakic 52 Whether to be ‘Customer Driven’ or ‘Customer Driving’? 51 1s Value-Philosophy Practical? 51 Value Philosophy—Main Tenets 31 Value in Marketing: Marketing—Collective Responsibilty of Everyone in the Company 54 ‘The Value Delivery Process—Goncept to Action 55 Steps in the Value Delivery Task 56 1. Selecting the Value to be Offered 56 Value in Marketing: Value-Delivery by Virgin Atlantic 57 2. Creating the Value 58 Selecting and Greating, Value—Examples 58 Value in Marketing: Toyota Puts Value in the Etios. 59 3. Delivering the Value 60 ‘Value in Marketing: “Give the Customer What He Warts'—McDonald’s Goes for a “Veg-Only! Outlet in Vaishno Devi 60 Value in Marketing: How Firms Add Value to thelr Offers 6! 4, Capturing Value Back for the Firm from the Market 61 5. Communicating the oe Value in Marketing: Communicating the Value—Example of Maruti Udyog 63 6. Enhancing the Value 63 Value Delivery Rests Heavily on Upstream Marketing of Requires Marketing Men to Become CrossFunctional 64 Requires Creativity, Innovation and Customer Insights 65 The Need to Keep Moving Up in Value Delivery 63 Value Innovation 66 (CoGreating Value along with Customers 66 Value Co-Creation—Examples 66 Value in Marketing: Co-Creation of Value Along with Customers 67 Value-Philosophy Gan Rescue Marketing 67 Execise 68 Detailed Contents@— — Pat 2: Maakerine Envinonment—GLowaL AND INDIAN 4. Analysing the Marketing Environment n Grasp of Environment, the Foundation for Implementing Value Philosophy 72 ‘To Know What Value to be Delivered, to Whom, and How, the Firm Has to Probe the Environment 72 ‘Tasks Involved in Environment Analysis 77 ‘Components of Environment to be Analysed 74 1. Megi/Macro Environment 74 ‘Technology Environment 74 Value in Marketing: Finding Your Way with the Map on Your Mobile Phone 77 Value in Marketing: Milion Apps and Stil Counting: India cn Apps-stores Bandwagon 78 Economic Environment 78 Socio-Caltural Environment 79 Political Environment 80 Legal Environment/Business Legislation 80 ‘The Regulatory Environment 80 Demographic/Consumer Environment 81 Government Policies $2 Natural Environment 82 Green Marketing 82 Green Economy 82 ‘Vai in Marketing: Volkswagen Innovation for Improved Fuet-efticency and Reduced Emissions 87 Impact of Globalisation 84 Value in Marketing: FMCG Companies in India Prepare Contingency Plans for a Weak Monsoon 94 TL Environment That is Specific tthe Firm 85 Market/Demand 85 ‘The Consumer 86 Consumer Tastes and Preferences Fhactuate—Necd for Perpetval Analysis 86 ‘Value in Marketing: How Maruti Lockout Triggered Problems to its Suppliers 87 Industry and Gompetition 7 Government Policies Specific to the Industry 87 Supplier Related Factors 88 Value in Marketing: The “Great Firewall” Drives Gmail Away from Mainland China 98 Trade Environment/Distribuion Factors 89 Influence of Society upon Businesses 89 Value in Marketing: CSE Gives Junk Ratings fo Many Fast-Food Chains and Packaged Food Brands in india 90 Techniques Used in Environment Analysis 90 Insights Gained irom Environment Must Govern Strategy 91 Exercise 91 Global Marketing Environment. 92 Global Environment—Some General Aspects 97 ‘The World is Facing Disconunulty 93 \Value in Marketing: Macro Trends that will Govern Future of Consumer Markets — Euromonitor 94 Detailed ContentsThe Global Economy 9 Status of Global Eeonomy Today 94 ‘The US Takes a Heawy Beating 96 A New Equilibrium in Global Economy, Balance of Power Shifting to Asia 96 Value in Marketing: Emerging Economies Increase their Share in Global GDP 97 A Declining Westand a Rising Eat 98 Global Demographics 99 Contemporary Trends in Global Demographics 99 Value in Marketing: Seven Billion and Counting 100 Consumer Environment 101 Global Consumer Market Keeps Expanding and More People Keep Joining the Consuming Class 101 Value in Marketing: Excessive Dependence of Modern Society on Technology: The Techno Intoxication’ 10) Some Qualitative Aspects of the Global Gonsumer Market 102 Techno Intoxication Overtakes Consumer Communities 102 Advent of the New iGen, Teensand Tweens 102 Value in Marketing: The Age of Technology Entanglement 102 Value in Marketing: How Do Today's Tweens Interact with Brands 103 Spread of Consumer Democracy 103 Technology Environment 104 Value in Marketing: Death of the E-mail 105 Competition Environment 106 The Very Meaning of ‘Competition’ Changes 106 Value in Marketing: Outside-the-Industry Competition for PCs irom Mobile Phone and Other Devices 107 Competition Becomes More of a Problem as Brand Loyalties Shrink 107 Value in Marketing: Coming from Outside the Industry, Apple Hacked the Music Market from Sony 108 Value in Marketing: Search Engine Google Gives Competition to Microsoft in OS 108 Being Globally Competitive—A Mast for All as Market Arena Goes Global 109 Glocat—thne New Realty 109 Global Sourcing 109 An Environment Full of Ghallenges 2s Well as Opportunities 110 Exercise 110 6. Marketing Environment of India and the Marketing Challenges 141 The India Growth Story, 1990-2008 112 ‘The Transformation of India's Economy, Industry and Business 112 Value in Marketing: India's GDR, Per Capita Income, Savings and Capital Formation— ASnapshot 113 2008 to 2012—The Decline in the Growth Story 113. Canses Behind the Slowdown 114 Value in Marketing: The Decline in India Growth Story—2008-|2_ 114 Some Revival Signs since 2013115 Value in Marketing: The Main Cause behind the Slowdown since 2008 1/5 Government Initiatives by End of 2012 Give Hopes on Further Reforms 116 Marketing Environment of India as of 2018—Fact Sheet 116 India's Consumer Market Expanding and Getting More Dynamic 116 Growth in FMCG 118 Rural Market, the Game Changer 119 Detailed ContentsGrowth in Retail, Especially Modern Format Stores (MFS) 121 Services Secinr 121 Marketing Communications Scene Also Gets into Action Mode 121 Value in Marketing: Growing TV Audience and Growing Digitisation 122 Growth of IT/eGommerce 122 Value in Marketing: Groweh of e-commerce—Online Bookstores Become a Force in India 122 ‘The Challenges Posed by the Current Marketing Environment 123 1, Meeting the Fxacting Demands of ‘The New Consumer’ 123 2, Pressure on Margins: Profits Impacted Even When Top Linesare Realised 124 3, Erosion of Brands; Brands Lose Their Pricing Power 124 4, Competition Fast Erases the Firm’s Advantages; Competing Becomes Harder 125 5. The Need tw he Extensive as well as Intenshe in Disribution and Retailing 125 6, Communicating One-to-One and Simultaneously One to Billion 126 7. Marketing in a Recession 126 India Growth Story Will he a Continuing One 127 A New Consuming Class is Emerging 128 Growth Story Can be Recaptured by Addressing the Domestic Problems 128 Macracconomic Corrections and Further Reforms will KickStart Growth 128 For the Country's Marketers, the Time for Next Phase of Markitingis Here 129 Exercise 129 Pant 3: Devetorinc Maakerinc STRATEGY AND Markerine Plans ‘Strategic Planning at Corporate Level and Marketing Planning at Business Level 133 ‘To Grasp Marketing Planning, Start with Corporate Strategic Planning 134 De-mystifying Suategic Planning and Strategy 134 Suategic Planning and Value-Philosophy of Marketing 134 ‘Value in Marketing: Stuations Calling for Strategic Planning 135 Facilitates Value Delivery by Attending to the ‘Upstream’ Marketing Activities 135 Nature, Importance, and Scope of Strategic Planning 135 ‘Turbulence in Environment Necessitates Strategic Perspective 135 How Does Strategic Planning Help the Firm? 136 Concerns of Stategic Planning 137 ‘Tasks Involved in Suategic Planning 137 Value in Marketing: Examples of Mission Statements 138 Clarifying the Mission 138 Defining the Business 138 Surveying the Environment 139 Internal Appraisal of the Firm 139 Analytical Models Used in Appraising Businesses 140 Setting Corporate Objectives 143 Detailed ContentsFormulating the Corporate Suategy 143 Marketing Planning 144 Concerns of Marketing Planning 145 Difference between Corporate Level Planning and Business Level Marketing Planning 145 Value in Marketing: ITC’s Corporate Level Planning and Business Level Marketing Planning 146 Mint Case 7.1: How ITC has been Planning and Achieving Growth [47 ‘Tasks Involved in Markering Planning 150 Analysing the Environment Specific to the Business 150 Internal Appraisal of the Unit 151 Valus in Marketing: Internal Appraisal and Strategic Course Correction Coca-Cola 155 Setting the Marketing Objectives 155 Marketing Objectives Take the Gue from Corporate Objectives 155 Companies Go by Varying Priorities while Setting Marketing Objectives 157 Formulating the Marketing Strategy 158 Developing the Marketing Plan 138 Value in Marketing: Marketing Plan lustration—Lifebuoy 159 Developing Detailed, Function-Wise, Plans and Programmes 160 Installing the Meirics/Formats for Evaluation 161 Exercise 163 8. Formulating Marketing Strategy 164 Value in Marketing: Tata Nano: Stuck in Low Gear 165 The Significance of Marketing Siritegy 166 ‘The Instrument for Value Delivery 166 The Instrument for Realising all the Marketing Objectives 166 What Market Segments to Serve? What Products to Offer? 168 Who are My Competitors? Whom to Compete? Whom to Avoid? 168 ‘The Growth Path: Market Penetration, Market Development, or Product Development 169 Value in Marketing: Firms Take Different Paths to Growth—Examples 169 ‘On What Differentiation Strength to Compete 169 ‘On What Competitive Advantages will the Fight be Based? 169 What are the Resources? How Will They be Used in the Marketing Programmes? 170 Formulating the Marketing Strategy 170 ‘The STP Plus Marketing Mix’ Approach 170 LSTP 170 Value in Marketing: Choosing the Target Market (Market Targeting) 171 . Assembling the Marketing Mix 172 Fundamentals of Marketing Mix 173 ‘The Toolkit for Delivering Value 173 Marketing Mix Represents the Firm's Market Offer 173 How to Assemble the Marketing Mix 174 Value in Marketing: Alternative Marketing Mix Propositions—Example of Lifebuoy 176 Marketing Mix Cannot be Static; Needs Shuffling as Required 178 Value in Marketing: Dell Modifies its Marketing Mx co Mee a New Situation 179 How HUL Handles the Marketing Mix Elements Flexibly 180 Marketing Mix has to be Fixed Separate for Each Brand 180 Detailed ContensMarketing Mix is the Visible Part of Marketing Strategy 180 Assembling and Managing the Marketing Mix the Main Task in Marketing 187 Discussion on Marketing Mix Spread through the Entire Text 181 “STP plus Marketing Mix’ Sums Up Marketing Suategy 181 Value in Marketing: Marketing Strategy Statement in Terme of STP Plus Marketing Mix—Tata Nano 182 Marketing Strategy has to be Reviewed When Required 182 All Marketing Strategies are Either Price or Differentiation-Oriemted 132 ‘Three-fold and Two-fold Categorisation of Competitive Marketing Strategies 182 Price-Oriented Marketing Strategy 183 Price Route Requires Gost Leadership 183 Firms Must have Voted for Gost Leadership Right at the Start 183 Differentiation-Oriented Marketing Swategy 184 Differentiation Helps a Firm Move Away from Price Competition 185 Gonditions for Success of Marketing Suategy 135 Marketing Strategy of Reliance Textiles for Vimal 186 Mini Case 8.1: Marketing Strategy of Reliance Textiles for Vimal 187 Marketing Strategy Must Result in an Executable Marketing Plan 190 Exercise 190 Marketing Strategy—Varied Approaches 192 tion Based — All Marketing Have Just One Purpose, Viz. Value Delivery 193 Within Differentiation Based Suategies, Varied Approaches Possible 193 Differentiation Strategies with Emphasis on Product 194 Mini Case 9.1: Recapturing Market by Augmenting the Productbrand—Godre} Appliances 194 ‘Value in Marketing: Ujala and Rin—Differentiation Strategies in the Fabric Blues Category 196 \Value in Marketing: Differentiating on Pack Size—Firms Capture New Segments with Chotte-Size 197 ‘Value in Marketing: The Reverse of the Sacheu/Chotta-size Strategy—Many Firms ‘Opt for Large Packs to Serve Price Sensitive Buyers 198 Differentiation Oriented Suategies with Emphasis on Distibution 198 Ditferentiation Oriented Suategy with Emphasis on Promotion 198 ‘Value in Marketing: Differentistion with Emphasis on Distribution ITC's e-Choupal 199 Selling an Image/Status Than a Product 200 ‘Value in Marketing: Differentiation Oriented Strategy on Promotion—Example of Coca-Cola 200 ‘Value in Marketing: Differentiating Based on Retailing and Promotion as a Combination 20/ Price-oriented Strategy 202 ‘Tata Motors’ Nano—A Price-orlented Marketing Strategy 202 Price-oriented Stategy—Example of Ghari Detergent 202 ‘Value in Marketing: Tata Motors Revamps the Marketing Strategy for Nano 203 ‘Value in Marketing: Succeeding through Price-oriented Strategy—Example of Ghari Detergent 204 ‘Value in Marketing: Price-oriented Approach—Companies Cultivate the Paanch (5 Price Point) 205 ‘The Downside of Price-oriented Suategy 206 LegiesPrice Based or Differe Detailed ContentsValue in Marketing: Mobile Handset Makers Realise the Limitations of Price-orlented Strategy and Stare Developing Brands 206 Carrying Strategies from the Developing World to the Developed World 207 Value in Marketing: Carrying Strategies from the Markets of the Developing World to ‘Those of the Developed World 207 Price and Differentiation Routes Need Not be Mutually Exelusive 208 Exercise 208 10. Analysing Industry and Competition 210 Importance of Industry and Competition Analysis 2/7 1. Without Industry and Competition Anabsis, the Groundwork for Strategy Formulation Will Remain Incomplete 221 2. Helps Size up Industry Attractiveness and Firm's Competitive Position, Two Central Ideas in Competitive Suategy 217 4. Helps Foster Competitive Advantage and thereby Deliver Superior Value to Customers 2/3 4, Strategy and Competitive Advantage Impact Mutually; Industry Analysis Helpsin Forging Both 213 Grasping Industry Siruciure and Competition in an Industry 213 Mini Case 10.1: How Industry Structure and Competition is Evolving in E-Books 2/3 A Framework for Analysing Industry and Competition 216 Analysing Industry 226 1. General Features/Rasic Facis of the Industry 276 IL Industry Environment (Industry Settings) 217 ML, Industry Structure 217 ‘Miri Case 10.2: Entry of Daimler-Benz Alters the Dynamics of India’s Fuck Industry 2/9 The Rule of Threein, Industry Structure 227 Value in Marketing: In Many Industries, the Rule of Three Govern the: Industry Structure 22) W. Industry Attractiveness 227 Value in Marketing: In Many Industries, the Pioneer Keeps Guiding the Industry Structure 222 IndustryStructure and Competition Together Determine Indusiry-Auractiveness and Profitability 222 V.Indusiry Performance 222 Vi. Industry Practices 223 VIL. Emerging Trends/Likely Future Patterns in the Industry 223 Analysing Compe 227 Forces Shaping Competition in an Industry: Competition has to be Grasped in the Larger Sense 223 AIl the Forces Shape Competition have to be Sized Up 227 Mins Case 10.3: New Entrants Offer Competition to Maggi in India’s Noodles Market 226 Inclustry-Competition Analysis Leads the Firm to its Competitive Strategy 229 Exercize 232 11. Building Competitive Advantage 233 CAMA Requisite for Delivering Value 234 Bestows the Capability for Superior Value Delivery 234 Detailed ContentsGAMA Requisite for Executing Suategy 234 Relationship among Value Delivery, Swrategy, and CA 235 GA helps Capture ‘Above Industry-Average’” Rate of Return 235 CA Enables Converting “Good Products” into “Successful Products” 235 GAMIts Nature and Significance 236 A Superior Position Relative to Competition in Some Relevant Attribute 236 Sources of Competitive Advantage (CA Factors) 237, Any GA, Finally Manifests as Either—a ‘Gost’ or a ‘Differentiation’ Advantage 238 Diagnosing and Appraising the Firm’s CA 238 S-W Analysis and I&C Analysis together Lead to Diagnosing CA 238 How do Firms Build GAP 240 Firms Utilise Suategy for Building CA 20 Firms Build CA Using a Variety of Routesand Tools 240 Using Value Chain Analysis in Identifying and Building GA 242 Benchmarking—A ‘The Goncept of Gore Competence 245 Building Durable GAs Requires Unique Capability 245 Critical Comments on Care Competence Idea 247 Exercise 247 Pat 4: Anatysine Consumers ano Seectinc Makers 12. Consumer Behaviour and Buying-Decision Process 251 Grasping Consumer Behaviour, Integral to Practising Value Philosophy of Marketing 252 Knowing Consumer-Behaviour Helps the Marketer in the Value-Delivery Task 252 \Value in Marketing: What Goes on in a Buyer's Mind, to Begin with, in aBuying Situation 253 Decoding Consumer Behaviour—A Complex Ballgame 253 Consumer, a Riddle or Enigma; Consumer Behaviour, a Theorem without Proof 253 Understanding Consumer Behaviour in a Step-byStep Way 254 What Goes en in a Buying Decision? How Does the Buying Decision Finally Come Up? 254 ‘The Two Sets of Factors Influencing Consumer Behaviour and Buying Decision Making 254 (A) Consumerspecific Factors Influencing Buy 1, Personal Factors 255 2. Cultural Factors 256 ‘Value in Marketing: Culture Manifests through Several Elements 258 3, Social Factors 258 4, Information Reaching the Consumer from Various Sources 259 (B) The Peychclogical Processes Underlying Consumer Behasiour 260 ‘The Motivation Process 260 ‘The Perception Process. 261 ‘The Learning Process 262 ‘The Memory Process 262 Consumer Characteristics and Psychological Processes Interact and Generate the Buying Decision 263 Behaviour 255 Detailed ContentsNeuromarketing and Brain Science Open a New Window to BuyerBehaviour 263 Neuromarketing is Concerned with Consumer Research 263 Buying Motives 26¢ Product Motives and Patronage Motives 264 Marketing Significance of Buying Motives 265 Spoting Trends in Consumer Bebaviour Correctly and Early 266 Mini Case 12.1: Spottng Consumer Behaviour Trends Correctly: UG Electronics 266 Is Buying Process More Rational or Irrational (Emotional)? 268 Buying Habits Shopping Behaviour 268 Buying Habits Shopping Behaviour Vary Depending on the ‘Type of Goods 268 Value in Marketing: ls the Buying-decision Process More Rational or More Emotional 269 Buying Habits Vary Depending on Consumer Characteristics 270 Buying Habits Vary Depending on Purchase Situations 270 Buying Habits Vary Depending on the Technology and Social Media to which the Consumers Get Used 270 Stages the Consumer Goes Through in Buying Decision 270 Consumers’ Choice Criteria in Arriving at Buying Decision 272 Buying Behaviour has a Linkage to Buying Situations 272 High-Involvement and Low-Involvement Buying Situations 272 New Products Adoption and Diffusion of Innovations 273 Modifying Gonsumer Behaviour a Gomplex Task 274 Value in Marketing: Modifying Consumer Behaviour, a Time Consuming Task— Example of ConveniencelFast Foods in india 274 Participants in Buying Decisionsand Their Roles 275 Consumer Decision Process Presented in a Nutshell 275 Buying Behaviour of Business Buyers and Features of Business Markets 276 Business Buyers 276 Features of Buying Behaviour in Business Markets/ Organisational-Buying 277 Exercise 279 13. The Indian Consumer and the Consumer Market of India 280 Why a Separate Discussion on Indian Consumer? 287 (2) Consumer Behaviour Needs Culture-Specitfic and Counnyy-Specific Treatment 28 ‘An India Specific Text has to Provide a Detailed Discussion on Indian Consumer 281 Mini Case 13.1: MNCs Realised the Hard Way the Need to Study the Incian Consumer Specifically 282 Consumer India: General Features 284 Demographics 284 Economic Condition/Income/Purchasing Power 285 Culture Profile 285 Urbanisation 287 Constructive Discontentment 287 Detailed ContentsClassifying ‘Consumer India’ 287 Several of the Classifications have been of Little Use for Marketing 288 Socioeconomic Classification of Indian Consumers (SEC System) 289 Tests of a Useful Classification of Consumers 291 Classification of Indian Consumers by Income 292 NCAER Classification Based on Income 291 McKinsey Classification Based on Income 291 Socioeconomic Classification (SEC) vs. Income Classification 291 MecKinsey’s Five-Fold Classification Based on Income 292 McKinsey's Classification is a Modification of NCAER's Seven-fold Classification 292 ‘The Traditional Fourfold Clas Matching the McKins Fourfold One 293 ‘Value in Marketing: McKinsey Classification of Indian Consumer into Five Economic. Classes 293 India’s Consumer Market and Consumption Basket 294 What Do We Mean by Consumer Market and Consumption Basha? 294 Size of India's Consumer Market Category-wise 295 In Addition to Growth in Consumption, Favourable Shift in Consumption Pattern too 295 How Would Indians’ Income and Spending Grow between 2 and 20257 295 How Would Consumption by Each Income Class Grow by 2015 and 2025? 295 Value in Marketing: How Would Indians’ Income and Spending Grow Between 2005 and 2025? 296 Category Wise Spen 256 Indian Gonsumer Profiles 298 The Rural Consumer 298 ‘The Urhan Consumer 298 The Rich/Global Indians. 298 The Middle Class 299 By 2025, It Will Have 583 Million Consumers, Making India a Truly “Middle Glass Country’ 299 ‘The Changing Profile of the Midille Class 299 ‘Value in Marketing: Premiumisation by the Middle Class 300 The Urban Middle Class Youth—ihe “Kool” Generation 300 Value in Marketing: Urban Middle-class Youth Becomes a Powerful Segment of Consumer india 301 Value in Marketing: Tapping the “Kool” Generation—the Urban Middle Class ‘Youth Market 302 “Marketing to the Youth Needs a Special Approach 304 The Lower Income Section 304 In this Section, Different Product Categories Compete for the Same Consumer Rupee 305 The Poor or the BoP/BPL Section 305 The Indian Gonsumer, in the Grip of Big Change 306 Exercise 306 ication 293 Classification with the Traditional Detailed Contents14, Market Segmentation and Targeting with Value Orientation 307 ‘What Does Market Segmentation Mean? 308 Segmentation Groups the Heterogeneous Consumers into Homogeneous Sub-units 308 After Segmentation, Consumers will Vary ‘Across’ Segments, but Be Homogencous ‘Within’ 308 It is the Consumers Who are Segmented, Not Product or Price 308 Why Segment the Market? 308 How about Unsegmented Marketing? 3/0 Unsegmented Marketing is Low on Rewards, High on Risks 310 Advantage of STP Approach Will Be Missed in Unsegmented Marketing 310 Markets Can Be Segmented Using Several Bases 310 Segmenting with Value Orientation 317 Takes Segmentation to a Higher Level 317 Mini Case 14.1: Value Segmenting—Titan Watches Carves out Many Distinct Segments 312 How to Locate the Differing Value Needs? 316 Segmentation Methods Using Conventional Bases 316 Geographic Segmentation 316 Demographic Segmentation 317 Value in Marketing: Babies Constitute a Distinct Consumer Segment 317 Value in Marketing: Tweens Constitute a Distnct Consumer Segment 318 Value in Marketing: Marketers Need to eat The Woman Consumer’ as Distinct as Well as an Important Segment 319 Value in Marketing: What Women Want When They Shop 320 Segmentation on Socio-Cultural Factors 720 Poychographic Segmentation 32] Value in Marketing: Coffee Cafés Thrive on Lifestyle Segments 322 Behavioural Segmentation or Buyer Behaviour Segmentation 322 ‘Benefit’ Segmentation 323 Volume Segmentation 324 Multi-Level Segmentation: A Market Can and Must be Segmented Using Several Bases 325 Social Media and Search Sites can be Used in Segmenting 325 ‘Tasks Involved in Segmentation 326 Segments Arrived at Must be Effective 326 Market Gridding 326 Choosing the Target Market (Market Targeting) 327 Market Selection 327 A Good Blend of Different Segments Coming Out of Deep Segmentation Has It Merits 327 Evaluation of the Segments 328 Segmentation of Business Buyers 729 Market Targeting, an Integral Part of Marketing Strategy 329 ‘Value in Marketing: Wrong Targeting Renders Strategy Inefiective: Even MINCs Seem to Err in Targeting 330 Exercise 330 Detailed Contents@—— Part 5: Creatine VaLue-Probuct MANAGEMENT 15. Product Management—The Fundamentals 335 Introduction 336 Offering Value the Purpose, Product the Tool 336 Apt Value Selection Crucial to Product Succes 336 Product Strategy Emanates from Corporate Strategy 337 A Product can Auain Different Levels—Generic to Potential 337 ‘The Generic Product 337 The Branded Product 337 ‘The Diflerentiated Product 338 ‘The Customised Product 338 ‘The Augmented Product 338 ‘The Potential Product 338 Value in Marketing: Examples of Product Augmentation 339 Products Evolve Over Time and Attain Higher Levels 339 ‘At Each Level, More Differentiation and Value is Added to the Product 339 Main Tasks in Product Management 340 What isa Product? What are its Components? 340 jit has a Personality 340 ‘A Product is more dhan a Physical E Components of a Product 347 Product Features vs, Product Benefits 342 The Brand Name 342 The Logo 342 The Package 343 These Components Alone do not Decide the Total Personality of the Product 343 Classification of Products into Select Types 343 Consumer Products and Business Products 343 Product Type Impacts Marketing Straiegy 344 Product Mix and Product Line 344 Product Mix/Product LineHUL 345 Appraisal of Product Lines, Products and Brands 345 Product Line Appraisal—HUL 346 Appraisal Leads to Strengthening the Product Lines 346 Value in Marketing: Product Line Apprasal by HUL —ilustration (24 Quarter 2012) 347 1, Lengthening the Product Lines 347 Value in Marketing: Stretching Down and Stretching Up—Few Examples 348 2. Deepening the Product lines 330 3. Line Pruning 350 Value in Marketing: P&G's Attempts at Line Pruning 351 Resolving Product Conflicts within a Product Line 35 Product Line and Pricing Strategy 352 Product Line Appraisal, a NonStop Task 352 Decisions on Packaging 352 Innovations in Packaging 392 Managing Product Quality 355 Managing the PLG of the Product/Brand 355 ‘Value in Marketing: Some Recent Instances of Severe Lapses on Product Quality 355 Detailed ContentsThe Four Distines Stages in PLG 356 PLC Operates at Three Levels 359 Mini Case 15.1: Managing a Brand's PLC—the Case of ITC-Scistors 359 Exercise 363 16. Differentiating and Positioning the Market Offering 364 Gaining Distinction and Adding Value the Purpose, Differentiation the Route 363 What is Differentiation? 365 What does Differentiation do? How des it Help the Firm? 365 ‘The Path to Strategie Marketing 365 Helps the Fim Fight on NomPriee Plank 365 Firms Need Strong Brands, Differentiation Builds Them 366 Differentiation can Lead to New Product-Categories and Propel Growth 366 Differentiation can be Achieved through Several Elements, Product Lends Maximum Scope for it 366 Product Lends Maximum Seope for Differs Produet Dilferentiation 367 1, Product Ingredients/Formula 367 2. Functional Features/Additional Features 368 3. Design/Stpling 369 4. Customer Expeticnce Associated with the Product 369 Mini Case 16.1: Differentiating on Customer Experience—The New Generavon Coffee Calés 370 5. Product Quality/Technology 373 6. Service/Customer Care 377 7 Packaging 374 & Prestige/Status 374 Q.tmage 575 10, Sentiments/Belief 375 The Task is to Locate and Provide Product Disinet 373 Conditions for Differentiation to Become Eflective 376 Commitment to Building the Brand 376 The Differentiation should he Pervepuble to the Users and be Perceived as Intended 376 he Differentiation Should Add Value to the User 375 ‘The Promise must be Delivered 376 ion 367 tributes that will Render the ‘The Differentiation should be Rooted in the Firm's Compet ‘The Differentiation must have the Back-up of Innovation 377 An Eye must be Kept on the Cost of Creating the Differentiation 377 Ics Differentiation that Builds Brands, Later Brand Itself Becomes a Differentiator 377 Postioning 328 What is Positioning? 378 Differentiation and Positioning are Related 578 Some Definitions of Positioning 378 Why is Positioning Imporiant? A Product cannot be Everything to Everyone 378 Positioning Connects Product Offering with Target Market 379 ‘Through Positioning, the Brand /Product Seeks a Locus in the Consumer's Mind 379 Advantage 377 Detailed ContentsThe Tasks in Positioning 380 1. Deciding the Locus: In Consumers’ Mind, Where to Lodge your Brand? 380 Analysing Competitors’ Positioning: Is there a Gap Somewhere? 389 Fixing the Postioning Plank 381 suring the Infrastructure /Competitive Advantages for Delivering the Promise 381 5. Developing the Value Proposition 381 Home Depor's Value Proposition 381 Value in Marketing: Value Proposition by Southwest Airlines 382 6, Communicating the Value Proposition to Target Consumers 382 7. Monitoring How the Positioning is Faring in the Market 382 Value in Marketing: Positioning of Hyundsi-Santro 382 8, Repositioning the Offer, if Required 383 Product Pesitioning and Brand Positioning 384 Issues in Product Posidoning (Choosing the Product Gategory) 384 Issues in Brand Positioning 384 Perceptual Mapping for Studving Positioning Possbilities 385 Mini Case 16,2: Product Fositioning and Brand Positicning—Maruti Omni 385 Repositioning 386 ‘Value in Marketing: Brand Repositioning—Few tllustrations 387 Repositioning of Gomplan 387 Value in Marketing: Repositioning of Complan 388 Exercise 388 17, Managing Brands and Brand Equity 390 Role and Significance of Brands 391 What isa Brand? 391 A Major Asset of the Firm 397 Brand Carries the Value Promised to the Customer 397 Value in Marketing: Market Value of Top Ten Brands of the World (2012) 392 Brands Offer Strategic Leverage t the Firm 393 Characteristics of Sirong, Successful Brands 393 Categorisation of Brands Based on the Specific Value They Offer 393 Tasks Involved in Developing and Managing Brands 394 Creating Differentiation, Developing Value Proposition and Positioning 395 Selecting the Brand Elements—Brand Name, Logo, Slogan 395 Selecting the Brand Name 395 Value in Marketing: What's in a Name? 396 Different Approaches in Selecting Brand Names 396 ‘Value in Marketing: Examples of Brand Names—Technology Products 397 Selecting the Logo 397 Slogan 398 Value in Markering: Asian Paint’s Dilemma with Gattu—to Abandon, to Stay with or toModify 398 Optionsin Branding 399 Umbrella Brand 400 Monitoring the Brand’s Performance, Positioning, and Investment Requirement 401 Is the Brand Moving to Its Promised Positioning? 402 Keeping the Brand Live, Contemporary, and Relevant 402 Brand Extension 402 Detailed ContentsIypes of Brand Extensions 402 Value in Marketing: Colgate's Line Extensions 402 Value in Marketing: How Lifebuoy’s Line Extensions Were Conceived 404 Value in Marketing: ‘Within the Category’ Brand Extensions of Dettol and Vicks Vaporub 405 Requisites of Success of Brand Extension 406 Risk/Disadvantages of Brand Extensions 407 Brand Rejuvenation 407 Brand Relaunch 468 Brand Proliferation 408 Brand Acquisition 409 Assessing the PLC Related Needs and Modi Protecting and Maintaining the Brand’s Quality Reputation 410 Brand Audit: Periodical Analysis of the Brand's Potential and Gonsumer Perceptions 410 Monitoring the Brand—Methodologies and Models 410 Brand Portfolio Rationalisation/Restructure 410 ‘Value in Marketing: Methodologies/Models for Analysing Performance and Consumer Perceptions of Brands 41 Undersanding Brand Equity #1 Value in Marketing: All Brands are Not Necessarily Profitable, Hence Brand Rotionalisaton 412 Auemptsat Defining Brand Equity #12 Despite Limitations of Measurement, Firms Do Take Brand Equity Seriously 413 New Demands on the Brand Manager 413 Miri Case 17.|: Managing Brands—the Case of HUL 414 Exercise 418 18. Creating Value through Innovation and New Products 419 Value Delivery t9 Customers Needs Innovation and New Products 420 The Glow Linkage between Value and Innovation 420 ovation is Fundamental and New Product an Outcome of Innovation 20 Innovations Need Not Result in a New Product in All Cases 420 A New Product, However, Invariably Needs Innovation 421 Innovation—Wide Spectrum, Many Possibilities and Many Gradations 421 Example of "Fairness Cream for Men” from Emami 421 Innovation Must Be Scen from the Customer's Perspective 421 Value in Marketing: Emami's Launch of “Fair & Handsome” for Men 421 Role and Significance of New Product Development 422 Why New Products? 427 New Products Needed for Larger, Faster and Sustained Growth 423 New Products Needed for Filling the Firm's Suategic Panning Gap #23 Marketing has a Key Role in Introducing New Produas #24 Marketing hos to Determine the Value the New Product Would Carry Shape it Accordingly 25 Classification of New Products 425 Inuinsically New Products, the Forte of Big Firms 425 ‘The Present Bra Witnesses the Arsival of Many Intrinsically New Products 425 Jing Marketing Strotegies 110 ind Detailed ContentsMini Case 18.1: The ‘Steve Jobs Magic’ im Product Innovation 426 Stages in New Product Development 429 Generating New Product Ideas 429 Value in Marketing: The ‘Walkman’ Story 431 Innovation Networking for Getting New Product Ideas and for Cuting Down the Developmenteycle Time 431 Idea Screening 432 ‘Value in Marketing: How P&G Generates Product Ideas 432 Concept Development and Testing 433 Business/Market Analysis 433 Estimating the Demand for a New Product 434 Actual Development of the New Product 435 Market Test 435 Commercialisation 435 Pricing Strategy for New Products 436 Innovation Diflusion and New Product Adoption 436 Innovators, Early Adopters, Early Majority, Late Majority and Laggards 436 ‘The Diffusion Process 437 New Product Failure 437 Why Do New Products Fail So Often? 437 Conditions for New Product Success 438 To Go for an Intrinsically New Product, on Just an Improved Product? To be a Pioneer, ora Follower? 439 ‘The Critical Success Factors 440 Frugal Innovation 440 Value in Marketing: The Role of Jugaad in Innovation 44 Frugal Engineering 42 Jugead 442 Exercive 442 —— Part 6: Dativerinc Vatue—Manacine Distrisution 19. Distribution Logistics and Supply Chain Management 445 Distribution Arrangements must be Viewed 2s a Value-nework for Passing Value to Customers 46 Supply Chain Management 446 Distinction between Distribution Logistics (Physical Distribution) and Supply Chain Management 446 Firms Compete in the Marketplace through Their Supply Chains, Not Their Products/Brands Alone 446 ‘Value in Markecing: Apple's Strength in Supply Chain Management 447 Sustainability of Supply Chains 448 The Supply Chain Must Accommodate Fully the Needs of Product Distribution #48 Distribution Logistics (Physical Distribution) 448 Pivotal Role in Value Delivery 48 Helps Build Clientele 449 A Fertile Area for Gost Reduction #49 Becomes More Vital and Difficult Task Where Productionpoint and Market are Distanced 449 ind Detailed Contents‘Component Functions/Tasks in Distibution Logistics 430 Designing a Disribution Logistics System 450 Articulating Distribution Objectives and Prescribing the Minimum Service Level in Product Delivery 450 Finding out What the Customers and Channels Want in Product Delivery 450 Finding Out What the Competitors Do 450 Optimising the Costs and Tackling the Cost-Service Tussle 451 Providing for Flexibility in the Sysiem 454 Transportation 451 ‘Main Tasks in Transportation Management 452 Regional Assembling to Cut Transportation Costs #52 Firms also Gross-brand their Products and Go for Product Exchange (53 Containerisation 453 Warehousing 453 Role and Importance of Warehousing 453 Designing a Warchousing System 453, Determining the Location and Size of the Warehouses 454 Improving Warehousing Elfectiveness 494 Subgituting Warehouses by Distribution Centers 454 Inventory Management 455 Elements of Inventory Costs 455 Inventory Gosts Keep Rising in Present Times 455 Steps in Managing Inventory 455 Deciding the Optimum Inventory, the Crux 455 Order Quantity 436 Manage Distribution Logistics with a ‘Systems Approach’ 457 Being Interrelated, Logistics Functions Need Integrated Handling 457 ‘Ousourcing of Distribution Logistics 58 Advent of Total LogisicsService Providers 458 Exercise 458 20. Designing and Managing Marketing Channels 459 What do we Mean by Matketing Channel? 460 Channels, a Vital Part of the ‘Value-Newwork’ on Distibution 460 Distribution to be Conceived as a Network of ‘Value-flows’ instead of channelflows’ 460 the Visible Part of the Value-network 460 How does a Channel Play a Role in Value-delivery? 460 Functions Performed by the Channels 462 Overall, the Channels Provide Diswibution Efficiency 462 Channel ‘Level’, Channel ‘Length’ and Channel ‘Member 4¢2 Paverns of Channel Arrangements and Types of Intermediaries 463 Samsung Electronies—an OftBeat Handling of Channel Arrangement 463 ‘Types and Characteristics of Intermediaries 463 Wholesaling and Retailing, the wo Broad Functions 463 Value in Marketing: Samsung Electronics —a Case of off Beat Channel Arrangement 464 Types of Intermediaries, Not to he Confused with Types of Reualing Formats 465 Designing a Channel System 465 A few Basic Considerations while Designing the Channel System 465 Value in Marketing: Realities ro be Keptin View While Deciding the Channel Pattern 466 Detailed ContentsSteps Invoked in Designing a Channel System 466 1. Formulating the Channel Objectives 466 ‘Value in Marketing: Channel Design is Linked to Channel Objectives—Examples 467 2, Identifying the Channel Functions, the Ones of Pricrity for the Firm 468 Matching the Channel Design to Castomer Necds/Characteristics 468 Linking the Channel Design to Product Characteristics 468 Evaluating the Distribution Environment, Including Legal Aspects 470 Evaluating Competitor's Channel Designs 470 Matching the Channel Design with Company Resources and Company Context 470 8, Evaluating the Shortlisted Alternatives and Selecting the Best 471 9. Choosing the ChanneHntensity—Number of Levels and Number of Members 472 ‘Value in Marketing: P&G and Nestle Learnt the Hard Way that HUL Channel Intensity ‘all Not Suit Them 474 Channel Design has Bearing on Other Marketing Decisions 474 Multi-channel Model Becomes the Preferred Option 474 Vertical Marketing Systems (VMS) 47 Horizontal Marketing Systems (HMS) 476 Wholesaling, Retailing and other Channel Activities mast be Handled as One Unified System 476 ating, Administering and Managing ihe Channel 476 ting; andl Managing the Retail Network 476 Recognising the Pivotal Position of the Individual Retailer in the Channel Design 476 Choosing the Retail Intensity 477 Selection and Recruitment of the Retailers 477 ‘The Right Candidates mnst be Drawn into as the Company's Dealers/Retailers 477 Managing the Dealers 478 Fixing the Trade Relations Mix between the Firm and the Dealers 479 Servicing and Administering the Dealers 478 Dealer Motivation 180 Securing Shelf Space and Merchandising Support from Dealers 481 Performance Appraisal of Dealers #81 Cr ‘Training and Development of Dealers 482 Resolving Channel Conflicts and Ensuring Channel Cooperation 482 Companies go for Different Alternatives in Retailing Formats 482 Companies go for Exclusive Retailing of Different Forms 482 Franchising #85 Value in Marketing: Franchising Benefits Both the Franchiser and the Franchisee 486 Firms Embrace Non-Store Retailing of Different Forms 487 Firms Embrace Direct Marketing of Different Forms 487 Mini Case 20.1: Channel Strategy—Titan Watches 488 Contemporary Channel/Retailing Scene in Indie—Manufacturer’s Perspective 407 Power Equation among the Distribution ‘Triumvirate Shifts in nour of the Lower Levels #91 ‘Trade Margins Escalate as Costs of Distibution Keep Growing 492 Conventional Wholesale-Retail Trade Continues as the Mainstay 492 Detailed ContentsFirms have to Deal with Large Super Markets and Retail Chains, Coughing up Huge Margins 493 Firms Need to Measure the Effectiveness of their Retailing 493 An Exacting and Continuous Task 493 Retiling—from the Perspective of the Retailer 193 Exercise 494 21. Retailing—Perspective of the Retailer/Retail Chain 495 Retailing Means Performing the Whole Gamut of Marketing Activities 495 Retail has to Embrace the Value Philosophy of Marketing 496 Retail has to Graduate from ‘Selling’ to ‘Marketing’ 496 Activities Involved in Retaiting—the Retailing Mix 196 Value in Marketing: Retail Must Graduate from ‘Selling’ to ‘Marketing’ and Go by the Value Philesophy 497 Choosing Store Location #97 Generating Customer Insights 498 Value in Marketing: Selecting Store Location—Pantaloon Retail 498 Merchandising and Category Management 499 Supply Chain Management—Sourcing/Vendor Parnership/Buying 499 Positioning of the Store; and Building it aya Brand 590 tore Management 300 Visual Merchandising 507 Sales Promotion 501 Value in Marketing: There is Arcas Well as Science in Managing a Rewail Store 502 Developing Private Labels/Store Brands 502 Value in Marketing: To Discount. or Not. How Much and When—the Dilemma of the Retail Chains 503 omer Relations Management (CRM) in Retail 503 Providing Customer Service and Generating Customer Satisfaction 504 Achieving the Needed Efficiencies in the Retail Operations 504 Retail is Detail 505 Reuiling in India—ihe Contemporary Scene 303 India's Retail Sector as a Whole Keeps Enlarging 505 Modern Retail also Grows, But at a Lower Rate than Had Been Projected 506 Shopping Trends Indicate Reasonable Potential for Modern Retail— Nielsen Dan 506 Modern Retail Comes in a Multitude of Formats 506 Value in Marketing: Shopping Trends Indicate Reasonable Potential for Modern Retail— Nielsen Dara 507 Spread of Modern Retail (MFS) in Recent Years 509 spread of Retail Chains 310 Shopping Malls. 5/0 Retail Chains in India Develop Private Labels/Store Brands 517 Retailing of Services 511 Key Drivers of the Spread of Retail, Modem Retail in Particular 511 FDI in Multiband Rewil and Expectation of Entry of Global Retail Majors 512 Value in Marketing: FDI in Muls-Brand Retail and Expectation of Entry of Global Retail Majors 512 Miri Case 21.1: IKEA’ Encry into India as a Single-Brand Global Retail Chain 5/3 Role of Technology in Reiailing 514 Detailed ContentsThe Outlook for Renaling in India 515 Exercise 515 22. Direct and Online Marketing 517 Dircet Marketing—Nature and Seope 528 Difference between Comentional Marketing and DM 518) Difference between DM and Nonstore Retailing 518 Difference between DM and Direct Selling 319 ‘The Ways in which DM Scores Over Mast Marketing 519 DM Enables Customisation, Personalisation and Delivering Tailormade Solutions 579 DM Offers the Right Setuing for Co-erea Customers 520 n of Value slong with Direct Marketing is Precision Marketing 520 ‘Value in Marketing: Focusing on One Consumer and Her Experience at a Time— Views of CK Prahalad and MS Krishnan 521 DM, Better Placed to Achieve Excellence in Products and Services 521 Facilitates Relations Building with Customers and Up-selling and Croseselling to them 527 More Costeffective 522 DM can be Measured Better than Mass Marketing 523 ‘A Versatile Form of Marketing Enabling Sclectvity in Treating Customers 527 Benefits the Gonsumers Too 523 Implementation Issues in Divect Marketing 523 Comprehensive, Reliable and Updated Customer Database 523 Careful and Close Targeting of Market/Prospeets 524 Product Warrany and Service Guarantee 524 Backroom Logistics 524 DM may Use Mass Media, Especially Soctal Media for a Supportive Role 524 Forms of Direct Marketing 524 ‘Mail Order Marketing/Catalogue Marketing 525 Direct Mail Marketing and Direct Response Marketing 323 Telemarketing 526 ‘Teleshopping/Home Shopping 526 Marketing through Mobile Phone 326 Direct Selling and MulsicLevel Marketing 5 Direct Selling and Home Selling are One and the Same 527 Direct Selling in India 527 Mini Case 22.1: Amway's Direct Selingin India 528 Value in Marketing: HUUs Direct Selling Venture forthe Aviance Line 531 Multi-Level Marketing (MLM) 531 Viral Marketing, Buzz Marketing and Word of Mouth 335, Online Marketing 533 Advantages of Online Marketing 534 Growth of Online Marketing—Worldwide and India 534 Worldwide Position 534 ‘Value in Marketing: China's e-commerce Giant—the Alibaba Phenemenon 535 Indian Scene 535 ‘Tasks in Establishing a Web Marketing Faclliy 536 Preparation 537 ‘The Need for a Strategy ind a Business Phan 537 Detailed ContentsValue in Marketing: Indian Online Stores—Flipkart.com Makes a Mark 537 Setting Up the IT Infiastmucture 538 Setting Up an Electronic Storefront 338 Geting High Traffic by Making the Site Interesting 539 Specialisuion-Product Magnets and Customer Magnets 542 Securing Mlliates 541 Web Portals 541 Online Communication 941 ‘Value in Marketing: Advantages of “the Mobile’ While Going for Online Marketing 542 Putting in Place @ System for Delivery of Product 542 M-commerce—the Mobile Will Pawer Online Marketing 542 Value in Marketing: Power of the Mobile in Online Marketing — eBay's Resurrection through PayPal 543 Pricing in Online Marketing 543 Online Marketing is Fuelled by Social Media 543 Exercise 544 @— Part 7: Carturine ano Communicating Vawue— PriciNG AND ProMorion 23. Pricing to Capture Value 547 Capturing Value, the Purpose of Pricing 548 Pricing Becomes a Difficult Task as itis Required to Qu: Offered 548 Role and Imponance of Pricing 548 Factors Influencing Pricing 548 Pricing Objectives 549 Pricing Objectives/‘ ify the Value tegies Flow from Marketing Objectives/ Strategies Examples of TCS and Infosys 549 Firms Seek a Mix of Objectives from Pricing 550 Pricing Methods/Pricing Suategies 550 Broad Categories of Pricing Methods 550 Pricing to Capture Value 556 Value in Marketing: Pricing to Capture Value—tllutraton of Apple 556 Price Must Totally Reflect Value 556 Essence of Pricing to Value 557 Pricing to Value is the Winning Approach 557 Different Approaches can Work in Pricing to Capture Value 358 Value in Marketing: Innovations in Pricing to Capture Value—Sachets, EMI and. Pay as You Use 559 Other Routes to ‘Pricing to Capture Value’ 560 The Pitfall in ‘Not Capturing Value through Pricing’ 560 New Products Pricing 560 Difficulties Firms Face in New Product Pricing 561 Pricing Should Evolve Out of Requirements of the Extent of Newness of the Product 561 Managing Pricing Needs Organisational Infraswucture 563 Pricing in an Economic Downturn 563 Pricing Procedure 563 Terms of Sale 563 and dhe Detailed Contents24. ‘Value in Marketing: Managing Pricing: the Need for Infrastructure, Targets and Goals 54? ‘Value in Marketing: Pricing in an Economic Downturn 564 Proactive Approach in Pricing 565 Exercise 566 Integrated Marketing Communications 568 Meaning and Importance of Marketing Communications Promotes the Productoffer and Conveys its Value-props Target Market 569 Marketing Communications, a Larger Goncept than Promotion 569 Why Integrated Marketing Communications? 559 ‘The Marketing Communication Mix 570 ‘The New Media and the Challengesin Tapping Them 570 ‘The Marketer is in an Unfamiliar Terrain Today on the Communications Front 570 Communicating in a Seamless Environment 570 The Need to Communicate One-io-One and Simultaneously OnestoBillion 57! Social Networking Sites—the Rage of the Times 57 Benefits of the New Media Acknowledged, but Dearth of Expertise ad Methodologies Hamper Harnessing Them 572 Despite the Problems, Shift to the New Media is Already Taking Place 372 Communicating for Customer Engagement, Not Just Message Transmission 372 Marketing Communication through Product Cues 573 Value in Marketing: Take Your Communication Multi-Channel—Your Customers Have Many Different Personas 573 Physical Feawres of th punieate 574 Value in Marketing: Colour Communicates. Big Mac Changes Colour 575 ‘The Procuct Sends Out Multi-Pronged Messages 576 Markesing Gommunication through Price ues 376 Price Canveys Something More Than the Price 576 Price-Quality Equation 376 Price-Status Equation 576 Price, an Indicator of Technological Superiority 576 Consumers’ Concept of ‘a Reasonable Price’ 976 Place Too Plays Vital Role in Marketing Communications 577 The Store Image 57 Store Level Merchandising 577 Store, a Communication Instrument and an Influencer of Sales 577 Store Choice is the Outcome of Store Image 377 Value in Marketing: Marketing Communication by Engaging Customers and Giving ‘Them Some Unique Service 578 Promotion as a Constituent of Marketing Com Sales Promotion 579 Sales Promotion too Offers Value and Communicates Value 579 Sales Promotion Differs from Advertising 579 ‘The Sunge in Sales Promotion in Recent Years 379 Why do Marketers so Heavily Resort to Sales Promotion? 579 ‘Value in Marketing: The Innumerable Buying Lures Seen in the Marketplace 580 Product Com nications 578 Detailed Contents‘The Two Main Gomponents—Trade and Consumer Promotion 580 ‘The Downside of Sales Promotion 580 Value in Marketing: Examples of Consumer Contests 58/ Publicity 587 Publicity—A Potent Tool of Communication 587 PR (Public Relations) 582 Sponsorship of Events and Event Management 582 Value in Marketing: Events—Pepst Sponsors IPL 2013 582 Events Business to Grow 50 per cent in Two Years 583 Exescise 584 25. Managing Advertising 585 Advertising has Vital Role in the Value Delivery Process 586 Nature and Importance of Advertising 586 Advertising Rests on Proper Grasp of Consumer Behaviour 586 Persuasion and Attitude-Comversion are Main Concerns of Advertising 586 Factors in an ‘Ad’ that Accomplish Persuasion and Atitude-Conversion 587 1. The Source /Endorser/Presenter of the Message 587 2. The Messige 589 Value in Marketing: Ads Using Rational Appeal—Apple Computer 590 Comparative Advertising (Brand-to-Brand Comparisons) 590 Emotional Appeals 590 Humour Appeals 59 Fear Appeals 591 Maln Decision Areas in Advertising 592 Deciding the Advertising Objectives 592 Advertising Objectives can be Set Around Four Broad Themes 593 Linkage between Buying-Process Models and Advertising Objectives 593 Deciding the Advertising Budget 504 Deciding the Copy 594 Developing the Copy 595 Gopy Decisions are Linkeil to Advertising Objectives, Budget and Media Choice 5% Deciding the Media 5% Value in Marketing: Traditional Meda—A Brief 597 ‘The Traditional Media 597 New Media—the Internet, Mobile and Related Platforms 598 Social Networking Sites—The New Advertising Highway 598 Valuo in Marketing: How Companies are Using the Social Networking Sites to Promote their Products 598 Value in Marketing: Second Life, 3D Digital Market Place for Marketers and Advertisers 599 Mobile Phone, the Small Screen Becoming the Big Medium 600 Value in Marketing: Sunsilk Gang of Girls Hair Club 601 Considerations in Media Selection 602 Media Selection—Traditional Media Impact of the Media 603 Media Selection—Online Media—Assessing Media Characteristics 604 With the NewAge Media, Advertising can Go Far Beyond Mere Communication and Add Value to the Offer 605 Assessing Media Chamcteristics 603 Detailed Contents26. ‘Value in Marketing: A Systematic Approach Would Help Companies in Tapping Secial Media 606 The ad Agency's Changing Role 606 Companies Demand Better Results from Advertising 606 ‘The Agencies will have to Adapt 607 Building a Great Brand through Advertising 607 Mini Case 25.1: intel Inside—Advertising Bulds 2 Great Brand 607 Exercise 609 Personal Selling and Sales Management 611 Communicating Value and Achieving Sales, the Gentral Role of Personal Selling 612 Carries Out the Communication Task in a Unique Way 612 Nature, Significance and Scope of Personal Selling 6/2 ‘The Essence of Personal Selling 613 Problem Solving, the Central Task; Attitude, the Key Trait Needed 613 The Personal Selling Process 613 Prospecting 614 Preapproach 614 Approach 6/4 Sales Presentation 614 Negotiation 615 Postsale Service 615 Sales Management—Managing the Personal Selling Effort 616 Tasks Performed by Sales Management 616 Determining Personal Selling Objectives 617 Formulating Sales Policies 617 Structuring the Sales Force 617 Decid Designing Sales Territories 618 Fixing Sales Quotas/Targets 619 Greating the Sales Force—Selection, Recruitment and Induction 919 Managing the Sales Force 620 Value in Marketing: Empathy & Ego Drive Make a Good Salesman 62 ‘Value in Marketing: IfYou Ware to De-motivate Your Sales Force, You Might “Ty One of These Compensation Plans... 622 Motivating the Sales Force 623 Morale Building 624 Sales Supervision/Goaching/Tersitory Managen A Sales Manager has to be a Good Captain 625 Sales Force Automation 625 Performance Appraistl of Sales Force 623 Sales Communication and Reporting 625 Sales Control and Sales Coordination 626 Training the Sales Foree 627 ‘To Sum Up, what Makes a Good Sales Manager? 629 Exercise 629 1g Sales Force Size 617 ean 27. Customer Relationship Management 630 What is CRM? 631 A Response as Well as a Necessity of the Times 631 Detailed ContentsAsan Idea, CRM is Not New; as a Technology-Based Tool, Itisa New Development 631 RM js not the Same as Direct Marketing (DM) 632 RM Performs Several Tasks, Brings Several Benefits 632 Converts Buyers into Profitable Customers, Builds Relations and Retains Them as Customers for Life 632 Actsas a Radar on all Developments on the Consumer Front 633 Enables Sharper Gustomer Selection/Targeting 634 Presents Single and 360 degree View of the Customer Across Products and Channels 634 Supports Gross Selling and Up Selling to Existing Customers 644 Helps Customisation, Personalisation and One-to-One Marketing on Mass Scale 634 Manages Customer Interaction and Customer Service 635 Helps Focus on Profit and Avoids Misslignment beaveen Revenue and Profit 635 Helps Manage Customers as Assets, and Apply the ROI Idea to Them 636 Serves asa Sustainable Competitive Advantage 636 Loyalty Programmes, Relationship Marketingand CRM 636 Customer Lifetime Value (CLY)—An Important Gencept in Customer Management 637 Designing and Operating a GRM Programme 639 Customer Database 638 Customer Database has to be Comprehensive, Up-to-date and Functional 639 ‘The Information Gathered Needs to be Integrated 039 ‘The Four Components of a CRM Programme 640 1. The Conceptual Component 640 The Operational Component 647 3. The Analytical Component (ACRM) 647 4. The Collaborative Component 642 CRM Helps Gustomer Selection and Order Selection 64 The Significance of Customer Selection 647 Mentifying Segments of Gustomer who will Staunchly Support the Gompany’s Product 644 The Significance of Order Selection O44 Managing the Relationships with the Selected Customers, the Main Task 644 Value in Marketing: Classifying the Customers Based on How Staunchly they Will Support the Company's Product 645 Measuring Customer Satisfaction 615 Should the Firm Handle its CRM Directly or Outsource it? 615 Avoiding Common Pitfalls in Implementing CRM 646 Mistaking GRM as the Substitute for Good Marketing Management 647 Failure to Appreciate the Dynamic Namre of Marketing 647 Preoccupation with Gathering of Data and Neglect of iis Application 647 Failure to Follow Up the Feedback from Customers 647 Reluctance to Share the Data on Customers with All Staff 647 Ignoring the Need for Efficient, Trained, Wellsnotivated Employees 647 Value in Marketing: Customer Trust—How to Butd it, Sustain it, and Regainit, fost 648 Failure to Appreciate that the Scope for GRM Varies Over Businesses 649 Detailed Contents