Marketing Strategy

Marketing Strategies
1. BCG Matrix has become integral part of business strategy for investment, Joint venture, franchising and market entry in any part of the world. Apply this concept in any one of the following Indian companies for making strategic decision for survival and growth. i) ii) iii) Videocon International Dabur Ltd. Tata Motors.

ANS: BCG’s Portfolio Analysis is based on the premise that majority of the companies carry out multiple business activities in a number of different product-market segments. Together these different businesses form the Business Portfolio, which can be characterized by two parameters: 1) Company’s relative market share for the business, representing the firms competitive positions; and 2) The overall growth rate of that business. The BCG model proposes that for each business activity within the corporate portfolio, a separate strategy must be developed depending on its location in a two-by two-portfolio matrix of high and low segments on each of the above-mentioned axes. Relative Market Share is stressed on the assumption that the relative competitive position of the company would determine the rate at which the business generates cash. An organization with a higher relative share of the market compared to its competitors will have higher profit margins and therefore higher cash flows. Relative Market Share is defined as the market share of the relevant business divided by the market share of its largest competitor. Thus, if Company X has 10 per cent, Company Y has 20 per cent, and Company Z has 60 per cent share of the market, then X’s Relative Market Share is 1/6m, Y’s Relative Market Share is 1/3, and Z’s Relative Market Share 60/20 = 3. Company Z has Company Y as its leading competitor, whereas Companies X and Y have Company Z as their lead competitor. The selection of the Rate of Growth of the associated industry is based on the Understanding that an industrial segment with high growth rate would facilitate expansion of the operations of the participating company. It will also be relatively

Marketing Strategy easier for the company to increase its market share, and have profitable investment opportunities. High growth rate business provides opportunities to plough back earned cash into the business and further enhance the return on investment. The fast growing business, however, demands more cash to finance its growth. If an industrial sector is not growing, it would be more difficult for the participating Company to have profitable investments in that sector. In a slow growth business, increase in the market share of a company would generally come from corresponding reduction in the competitors’ market share. The BCG matrix classifies the business activities along the vertical axis according to the ‘Business Growth Rate” (meaning growth of the market for the product), and the ‘Relative Market Share’ along the horizontal axis. The two axes are divided into Low and High sectors, so that the BCG matrix is divided into four quadrants Implementation and Control Businesses falling into each of these quadrants are classified with broadly different strategic categories, as explained below: Cash Cows The businesses with low growth rate and high market share are classified in this Quadrant. High market share leads to high generation of cash and profits. The low rate of growth of the business implies that the cash demand for the business would be low. Thus, Cash Cows normally generate large cash surpluses. Cows can be ‘milked’ for cash to help to provide cash required for running other diverse operations of the company. Cash Cows provide the financial base for the company. These businesses have superior market position and invariably low costs. But, in terms of their future potential, one must keep in mind that these are mature businesses with low growth rate. Dogs If the business growth rate is low and the company’s relative market share is also low, the business is classified as DOG. The low market share normally also means poor profits. As the growth rate is also low, attempts to increase market share would demand prohibitive investments. Thus, the cash required to maintain a competitive position often exceeds the cash generated, and there is a net negative cash flow.

Marketing Strategy

Under such circumstances, the strategic solution is to either liquidate, or if possible Evaluation of Strategy harvest or divest the DOG business.

Question Marks

Marketing Strategy Like Dogs, Question Marks are businesses with low market share but the businesses have a high growth rate. Because of their high growth, the cash requirement is high, but due to their low market share, the cash generated is also low. As the business growth rate is high, one strategic option is to invest more to gain market share, pushing from low share to high. The Question Mark business then moves to a STAR (discussed later) quadrant, and subsequently has the potential to become cash low, when the business growth rate reduces to a lower level. Another strategic option is when the company cannot improve its low competitive position (represented by low market share). The management may then decide to divest the Question Mark business. These businesses are called Question Marks because they raise the question as to whether more money should be invested in them to improve their relative market share and profitability, or they should be divested and dropped from the portfolio. Stars Businesses, which have high growth rate and high market share, are called Stars. Such businesses generate as well as use large amounts of cash. The Stars generate high profits and represent the best investment opportunities for growth. The best strategy regarding Stars is to make the necessary investments and consolidate the company’s high relative competitive position. Methodology for Building BCG Matrix The Boston Consulting Group suggests the following step-by-step procedure to develop the business portfolio matrix and identify the appropriate strategies for different businesses. Classify various activities of the company into different business segments or Strategic Business Units (SBUs). For each business segment determine the growth rate of the market. This is later plotted on a linear scale. Compile the assets employed for each business segment and determine the relative size of the business within the company. Estimate the relative market shares for the different business segments. This is generally plotted on a logarithmic scale.

and develops a visual display of the company’s market involvement. Question Mark and Star businesses. But. Thus. Any surplus cash left with the company may be used for selected Question Mark businesses to gain market share for them. but avoid over-investing. (The sales to asset ratio is generally stable over time across industries). The surplus cash generated by Cash Cows should be invested first in Star businesses. The BCG Growth-share matrix links the industry growth characteristic with the company’s competitive strength (market share).Marketing Strategy Plot the position of each business on a matrix of business growth rate and relative market share. to maintain their relative competitive position. QUESTION Less More Funds needed to invest selectively to improve competitive position . may be considered for divestment. so milk and deploy 2. The Dogs are generally considered as the weak segments of the company with limited or now new investments allocated to them. STAR More More Build competitive position and grow 3. The underlying logic is that investment is required for growth while maintaining or building market share. The general strategy of a company with diverse portfolio is to maintain its competitive position in the Cash Cows. a strong competitive business in an industry with low growth rate will provide surplus cash for deployment elsewhere in the Corporation. growth uses cash whereas market competitive strength is a potential source of cash. COW More Less Funds available. if they are not self-sufficient. Implementation and Control Those businesses with low market share. while doing so. corresponding to Cash Cow. Cash Positions of Various Businesses Type Source Use 1. Strategic Implications Most companies will have different segments scattered across the four quadrants of BCG matrix. and which cannot adequately be funded. Dog. DOG Less More Divest and redeploy proceeds 4. thereby indirectly indicating current resource deployment.

Marketing Strategy EXAMPLE: Dabur India Ltd. sausages that is not doing well.sanifresh. Personal care and Food products.etc . odopic.etc Cash cows: Dabur home care product range is in maturity stage which includes odomos.odonil. Pudin Hara G. Dabur Chyawanprash. Hajmola & Real. Busine ss growth rate Bhringraj hair oil. Dabur India Limited is the fourth largest FMCG Company in India with interests in Health care. today Dabur has a turnover of Rs. Building on a legacy of quality and experience for over 100 years. Dabur international range is in infancy stage as their exports are still not much and the revenue from domestic market is far higher than international Dog: Dabur food portfolio consists of packaged fruit juices. Hajmola. This includes Chyavanprash. Active blood purifier. Star: Relative market shareQuestion mark: Dabur health care range is in growth stage. Vatika. cooking pastes.2396 crore with powerful brands like Dabur Amla.

Difficulty in Determining Market Share There is a heavy dependence on the market share of a business as an indicator of its competitive strength. the market for helicopters may encompass all types of helicopters. and the firm’s competitive position may not be reflected in its market share. or only heavy helicopters or only heavy military helicopters. Some other sophisticated approaches have been evolved to overcome such limitations. These organizations relying on high-quality goods. national or an even regional base. Dogs are to be liquidated or divested. with medium pricing and judicious expenditure on R& D and marketing.Marketing Strategy Limitations of BCG Matrix The Growth-share BCG Matrix has certain limitations and weak points which must be kept in mind while using portfolio analysis for developing strategic alternatives. Predicting Profitability from Growth and Market Share BCG analysis assumes that profits depend on growth and market share. the well managed Dog businesses can also become good cash generators. Consideration for Experience Curve Synergy Evaluation of Strategy In the BCG approach. useful experiences and skills can be acquired by operating low-profit Dog businesses which may help in lowering the costs of Star or Cash Cow businesses. These are now briefly discussed. There have been specific research studies. within the framework of the overall corporation. - Disregard for Human Aspect . Furthermore. from geographical point of view the market may be defined on worldwide. which illustrate that. In case of complex and interdependent industries. businesses in each of the different quadrants are viewed independently for strategic purposes. But. it may also be quite difficult to determine the market share based on the sales turnover of the final product only. can still provide impressive return on investment of above 20 per cent. The attractiveness of an industry may be different from its simple growth rate. Thus. And this may contribute to higher corporate profits. The calculation of market share is strongly influenced by the way the business activity and the total market are defined. For instance.

Follower strategy 9. Differentiation 5.Marketing Strategy The BCG analysis. BCG analysis could throw up strategic options which may or may not be easy to implement. PLC and Strategic decision 7. POSITIONING can be defined as an objective measurement of perceptions that buyers are likely to hold about a product with reference to other similar alternative market offerings & it determines whether a firm’s profitability is above or below average. Segmentation 4. Leader strategy 10. They may deem the divestiture as a threat to their livelihood or security. 2. Similarly. Positioning gives firm a COMPETITIVE ADVANTAGE in terms of PRICE and PRODUCT QUALITY. Cost Leadership 3. Explain with examples: 1. Niche market strategy 8. the workers of a Dog business which has been decided to be divested may react strongly against changes in the ownership. Generic strategy 2. Cash generated within a business unit may come to be symbolically associated with the power of the concerned manager. Thus. Brand equity i) GENERIC STRATEGY: ANS: The root of generic strategy is POSITIONING. . As such managing a Cash Cow business may be reluctant to part with the surplus cash generated by his unit. while considering different businesses does not take into consideration the human aspects of running an organization. Positioning 6. It also helps to generate ROI> average returns of industry even in bad times. Challenger strategy 11.

Appropriate technology • Cycle time is low . 1. Characteristics of cost leader: 1. which carves out a key result area imparting success to business 1.Marketing Strategy Firms deliver competitive advantage by being in Very broad market very narrow market Cost Differentiator Focus Leader Competitive Advantage Broad segment Competitive Scope Narrow Segment Cost Leadership Cost Focus Differentiated Leadership Differentiated focus NICHE Niche is an USP. COST LEADERSHIP: A firm is a low cost producer. EOS (scale) + EOS(scope) Economies of scale can be achieved when production cost decreases as volume of production increases.

Maruti 4. Differentiation could be product specific. . durability. Nirma 3. Carrier air conditioners 2. Parle gluco Biscuit 2. Product differentiation – It is a process of generating uniqueness in features by providing special and specific values customer don not mind to pay a premium price. Effective process control 5. after sale service. spare parts or may be any other marketing parameter. Assess ability to raw material 3. Cost leadership should not be at the cost of quality.Marketing Strategy • • • Accuracy is great Scraps and wastages are low Precision is high 2. distribution. Cost leader should have • • Parity in price Proximity in value 6. DIFFERENTIATOR: A firm adopting differentiator strategy maintains its uniqueness in the features offered which the buyers assumes to have specific and special value and do not mind to pay premium. EXAMPLES: 1. Effective production system 4.

a focused strategy takes advantage of sub-optimization by broadly targeted competitors who may underperforming in meeting the need of particular segments or may be over performing in maintaining their shares and sales in other segments at higher costs. Park Avenue 2. . EXAMPLES: 1.Niches can be low cost focus .Cost focus exploits the differentiation in the cost in some segment and differentiator focus exploits the special needs of customer in same segment. Savlon antiseptic 3. Pepsodent Germicheck 3. . A firm can sustain differentiation and have competitive edge if premium price exceeds the extra cost incurred in being unique. Oxyrich 4. benefits desired by customers.thus.Marketing Strategy A differentiated product must have parity in areas other than differentiation and proximity in value. Cost focus EXAMPLES: 1. Sterling properties . FOCUS It evolves deliberately limiting potential sales volume by adopting concentrated segmentation approach through which firm’s select some target market segment or achieve competitive advantage although it may not posses same advantage in entire market.

engineering. Toyota Lexus 3. They need less skill in marketing. STUCK IN THE MIDDLE A firm that engages in each of the generic strategy but fails to achieve any one of them is stuck in the middle and in the long run will be a below average performer. ii) COST LEADERSHIP The business works hard to achieve the lowest production and distribution cost so that it can priced lower than its competitors and win a large market share. The problem with this strategy is that other firms will usually compete with still lower costs and hurt he firm that rested its whole future on cost. LOWEST FARE. manufacturing and physical distribution.Marketing Strategy 2. Irani Chai 2. Club Mahindra 4. Firms pursuing this strategy must be good at purchasing. Chamak Differentiated focus EXAMPLES: 1. EXAMPLE: In online travel industry. is pursuing low cost strategy iii) SEGMENTATION . Wada pao 3.

psychographic and behavioral differences among buyers. They identify and profile distinct group of buyers who might prefer or require varying products and services mixes by examining demographic. Geographic. loyalty status. specific applications. personality 4. gender.t is divided into two direct sales divisions: one sell to consumers and small businesses. Arvind EYE care system. etc 3. Demographic. size of order 4. Situational factors. city 2. occupation. family size.Marketing Strategy a marketer can rarely satisfy everyone in a market. company size. etc Segmenting business markets 1. Therefore he divides the market into segments. Operating variables. Demographic. a group of institutions offering world class eye care to poor strata of the society 2. Psychographic.user Personal characteristics.buyer. power structure.industry. income.urgency. DELL. purchasing criteria 3. attitude. Segmenting consumer markets 1.Age.Region. education. loyalty EXAMPLES 1. Behavioral. usage rate. another manages the company’s corporate accounts iv) Differentiation The business concentrates on achieving superior performance in an important customer benefit area valued by a large part of the market. The firms cultivate those strengths that will contribute t their . location 2.

Lexus.guaranteed overnight delivery 2. Travelocity is performing a differentiation strategy by offering the most comprehensive range of services to the travelers.quality Points-of-parity: these are the associations that are not necessarily unique to the brand but may in fact be shared with others.performance 3. EXAMPLES: 1.Marketing Strategy intended differentiation. the firm seeking quality leadership for example. These are viewed as essentials for a legitimate and credible product offering. and believed that they could not find the same extent with a competitive brand EXAMPLES: 1. inspect them carefully and effectively communicate their quality. Nike. must make products with the best components pt them together expertly. FedEx. EXAMPLES: 1. EXAMPLES: . positively evaluated. This. MOOV-it was launched as a balm for relieving joint pains in older people but subsequently it was repositioned as “backache specialist” Points-of-difference: these are the attributes or benefits consumers strongly associate with the brand. v) POSITIONING Positioning is an act of designing the company’s offering and image to occupy a distinct place in the mind of the target market to maximize the potential benefit to the firm.

it is the same for a product. after a long period as an adult the plant begins to shrink and die out (decline). it goes into decline and is eventually withdrawn. In theory. eventually the market stabilizes and the product becomes mature. purchasing in each life cycle stage. it shoots out leaves and puts down roots as it becomes an adult (maturity). it begins to sprout (growth). Dettol and Savlon 2. each posing different challenges. To say that a product has a life is to asset 4 things: Product have a limited life Product sales pass through distinct phases. opportunities and problems to the seller Products rise and fall at the different stages of PLC Products require different marketing. For example. financial.Marketing Strategy 1. . After a period of development it is introduced or launched into the market. vi) PLC AND STRTEGIC DECISION Product Life Cycle (PLC) is based upon the biological life cycle. a seed is planted (introduction). then after a period of time the product is overtaken by development and the introduction of superior competitors. Prudent mint mouthwash and Listerine with a strong medical taste. it gains more and more customers as it grows. manufacturing.

competitive manufacturers watch for acceptance/segment growth losses demand has to be created customers have to be prompted to try the product 2.a period of slow sales growth. Introduction. cost high sales volume low no/little competition . Growth.a period of rapid market acceptance and substantial profit improvement costs reduced due to economies of scale and sales volume increases significantly profitability public awareness . profits are non-existent because of heave expenses on product launch.Marketing Strategy 1.

most products fail in the introduction phase. as each player seeks to differentiate from competition with "how much product" is offered Industrial profits go down 4. Costs are very low as you are well established in market & no need for publicity. profitability diminish profit becomes more a challenge of production/distribution efficiency than increased sales However. Decline.Marketing Strategy competition begins to increase with a few new players in establishing market prices to maximize market share 3. Profits stabilize or decline because of increase competition. Maturity. costs become counter-optimal sales volume decline or stabilize prices. sales volume peaks increase in competitive offerings prices tend to drop due to the proliferation of competing products brand differentiation.a slowdown in sales because the product have achieved acceptance by most of the buyers. Others have very cyclical maturity phases where declines see the product promoted to regain customers. feature diversification.sales show a downward drift and profits erode. .

Profits can be improved by reducing marketing spend and cost cutting.Marketing Strategy Strategies for the differing stages of the Product Life Cycle Introduction The need for immediate profit is not a pressure. Not all products go through each stage. Producers begin to leave the market due to poor margins. Some go from introduction to decline. . Market share tends to stabilize. Advertising spend is high and focuses upon building brand. joint ventures and take each other over. At this point the market reaches saturation. The length of each stage varies enormously. Limited numbers of product are available in few channels of distribution. Growth Competitors are attracted into the market with very similar offerings. a skimming price strategy is employed. For example more innovative products are introduced or consumer tastes have changed. If the product has no or few competitors. Price wars and intense competition occur. Products become more profitable and companies form alliances. Maturity Those products that survive the earlier stages tend to spend longest in this phase. The product is promoted to create awareness. Decline At this point there is a downturn in the market. There is intense price-cutting and many more products are withdrawn from the market. Problems with Product Life Cycle In reality very few products follow such a prescriptive cycle. Promotion becomes more widespread and uses a greater variety of media. for example from maturity to decline by price-cutting. It is not easy to tell which stage the product is in. The decisions of marketers can change the stage. Sales grow at a decreasing rate and then stabilize. Producers attempt to differentiate products and brands are key to this.

service quality is often comparable and price sensitivity runs high. an ointment from Paras pharmaceuticals it is targeted to women for prevention and treatment of cracked heels 2. homogeneous product industries such as steel. .the counterfeiter duplicates the leader’s products and packaging and sells it on the black market or through disreputable dealers. image differentiation are low. profit and growth potential. Marketers usually identify niches by dividing segments into sub segments. a liquid detergent from Godrej is a fabric washing product for woolen cloths 3. Ezee. • Segments are fairly small and normally attract only one or two competitors. ayurvedic medicines viii) FOLLOWER STRATEGY The follower can achieve high profits. Himalaya. Four broad strategies are identified: 1.Marketing Strategy vii) NICHE MARKET STRATEGY A niche is a narrowly defined customer group seeking a distinctive mix of benefits. as it did not bear any of the innovation expenses. EXAMPLES: 1. The opportunities for product differentiation. fertilizers. The niche gains certain economies through specialization and the niche has size. An attractive niche is characterized as follows: • • • The customers have distinct set of needs They will pay a premium to a firm that best satisfies their needs. Crack. Counterfeiter. Patterns of “conscious parallelism” are common in capital intensive.

3) preemptive defense: attack before your enemy attacks b. b. b.5) mobile defense: the leader stretches its domain over new territories that can serve as future centers for defense and offense through market broadening.Marketing Strategy EXAMPLE: a. Cloner. Imitator. a. Adapter. ix) LEADER STARGEGY The leader should adopt the following strategies to maintain its share and sales.the imitator something from the leader but maintains differentiation in terms of packaging. name and packaging with slight variations. advertising.the adapter takes the leader’s products and improves them.1) position defense: building superior brand power and making the brand almost impregnable.the cloner emulates the leader’s products. 3. Expanding the total market: The dominant firm must gain new users. many music record companies b. . distribution effectiveness and cost cutting.4) counteroffensive defense: can meet the attacker frontally or hits his flank or launch a pincer movement. b. Defending the market share The leader leads by developing new products and customer services .2) flank defense: serve as an invasion base for counterattack b. 4. new uses and usage of its products. b. pricing or location. Apple computer and Rolex have been plagued with counterfeiter problem 2.

3. Brand loyalty . intermittent attacks to harass and demoralize the opponent and eventually secure permanent footholds. Guerrilla warfare: waging small.Marketing Strategy c. 3. price and distribution. Expanding market share Market leader can improve their profitability by increasing market share. It can attack he firms of its own size that are underfinanced. Encirclement attack: attempt to capture a wide slice of the enemy’s territory through ‘blitz” 4. Google 1. local firms Strategies: 1. Bypass attack: bypassing the enemy and attacking easier markets to broaden one’s resources base 5. Brand name awareness b). Brand Equity is an Asset in terms of: a). 2. It can attack small . Frontal attack: attacker matches its opponent’s products. advertising. xi) BRAND EQUITY It is a set of assets (and liabilities) linked to a brand’s name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firm’s customers. 2. It can attack the market leader. Flank attack: it can geographic or segmental. x) CHALLENGER STARTEGY Examples: LG. Perceived quality c).

c. Brand associations The management of brand equity involves investment to create and enhance these assets.Marketing Strategy d). recall. it is important to be sensitive to the ways in which strong brands create value a. • b. ranging from recognition. It is simply to retain customers than to attract new ones. to perceived quality. familiarity. Brand loyalty • It is a key consideration when placing a value on a brand that is to be bought or sold. • Also the impact of brand loyalty on marketing costs is substantial. dominant recall. Brand Associations It can be achieved by . It is linked to and often drives other aspects of how a brand is perceived. In order to manage brand equity and brand building activities effectively. The strongest brands are managed not for general awareness but strategic awareness. because a highly loyal customer base can generate predictable sales. Perceived quality It is a brand association which is a brand asset for the following reasons: • Among all brand associations. Brand awareness • • It refers to the strength of a brand’s presence in the mind of the consumer. Each brand equity asset creates value. d. • • Perceived quality is often a major strategic thrust of a business. Brand Awareness is measured according to the different ways in which consumers remember a brand. only perceived quality has been shown to drive financial performance.

How strong is the position of buyers. 2.Marketing Strategy • • • • • • Being different Slogans. Jingles Symbol exposure Event sponsorship Brand extension Repetition 3. Entry of competitors. especially made cheaper. How easy or difficult is it for new entrants to start competing. Bargaining power of buyers. Rivalry among the existing players. Do many potential suppliers exist or only few potential suppliers. Discuss how performance can be improved by adopting both concepts? Ans: The Five Forces model of Porter is an Outside-in business unit strategy tool that is used to make an analysis of the attractiveness (value) of an industry structure. Threat of substitutes. Can they work together in ordering large volumes. The five-force model combined with value chain will help achieve better performance in today’s competitive world. Sometimes a sixth competitive force is added: . Bargaining power of suppliers. How easy can a product or service be substituted. Does a strong competition between the existing players exist? Is one player very dominant or are all equal in strength and size. The Competitive Forces analysis is made by the identification of five fundamental competitive forces: 1. How strong is the position of sellers. 3. monopoly? 5. which barriers do exist. 4.

Access to industry distribution channels. Threat of new entrants depends on: • • • • Economies of scale. . Customer switching costs. Porter's model is particularly strong in thinking Outside in.Marketing Strategy 6. Capital / investment requirements. It has proven its usefulness on numerous occasions. Porter's Competitive Forces model is probably one of the most often used business strategy tools. Government.

Marketing Strategy • • • • Access to technology. Is it easy to change to another product? Bargaining power of suppliers depends on: • • • • Concentration of suppliers. Role of quality and service. Switching costs. Brand loyalty. • • • • Buyers do not threaten to integrate backwards into supply. Government regulations. Can new entrants get subsidies? Threat of substitutes depends on: • • • • Quality. Are customers loyal? The likelihood of retaliation from existing industry players. Are there a few dominant buyers and many sellers in the industry? • Differentiation. The relative price and performance of substitutes. Is the brand of the supplier strong? Profitability of suppliers. Are products standardized? . The costs of switching to substitutes. Is a substitute better? Buyers' willingness to substitute. The industry is not a key customer group to the suppliers. Are there many buyers and few dominant suppliers? Branding. Are suppliers forced to raise prices? Suppliers threaten to integrate forward into the industry (for example: brand manufacturers threatening to set up their own retail outlets). Is it easy for suppliers to find new customers? Bargaining Power of Buyers depends on: • Concentration of buyers.

Marketing Strategy • • • • Profitability of buyers. Strengths of the Five Competitive Forces Model: Benefits • The model is a strong tool for competitive analysis at industry level. When barriers to leaving an industry are high.g. • The structure of industry costs. Are buyers forced to be tough? Role of quality and service. Strategic objectives. Is it easy for buyers to switch their supplier? Intensity of Rivalry depends on: • The structure of competition. steel. If competitors pursue aggressive growth strategies. Industries where products are commodities (e. Compare: PEST Analysis • It provides useful input for performing a SWOT Analysis. If competitors are merely "milking" profits in a mature industry. . Rivalry will be more intense if there are many small or equally sized competitors. Industries with high fixed costs encourage competitors to manufacture at full capacity by cutting prices if needed. Rivalry is reduced when buyers have high switching costs. Threat of backward and forward integration into the industry. • • Switching costs. rivalry will be more intense. the degree of rivalry is typically low. coal) typically have greater rivalry. Limitation of Porter's Five Forces model • Care should be taken when using this model for the following: do not underestimate or underemphasize the importance of the (existing) strengths of the organization (Inside-out strategy). Switching costs. rivalry will be less if an industry has a clear market leader. competitors tend to exhibit greater rivalry. • Exit barriers. • Degree of product differentiation.

Competitors) 1.own vs. It does not cope with synergies and interdependencies within the portfolio of large corporations. • From a more theoretical perspective. the model does not address the possibility that an industry could be attractive because certain companies are in it. Support activities: .Marketing Strategy • The model was designed for analyzing individual business analyze competitive position within the industry ( compare value chain . dynamic or emergent approaches to strategy formulation. systemic and radical change require more flexible. • Some people claim that environments which are characterized by rapid. See: Disruptive Innovation • Sometimes it may be possible to create completely new markets instead of selecting from existing ones VALUE CHAIN • • • Tool for identifying ways in which value could be created/enhanced by a firm Used for competitor analysis .

pricing. Positioning and Differentiation) for marketing in Indian business environment taking examples of: a) LG LCD TV b) Sony MP3 Analyze all the four concepts.General management.Machining.own vs. Targeting.recruiting.highest Examine cost & performance Value chain .organizations . VALUE CREATION .Purchasing of raw materials.FUNCTION • • Performance of each department Coordination of activities within a department 4. training. development Technology development . promotion. finance. strategic planning HRM . supplies 4 support activities occur through all primary activities Primary activities: Inbound logistics . . competitors delivered value 4. Explain the concept of STPD (Segmentation. accounting. • • • • • Firm Infrastructure .Installation.raw material handling & warehousing Operations . channel relations Services . assembling.R&D. machines. repair. BUSINESS PROCESS • • • • • Value creating & value delivering process Locate activities which would add value Customers patronage .Advertising.Warehousing & distribution of finished product Marketing & Sales . parts 3. Product & process improvement Procurement . testing Outbound logistics .Marketing Strategy • • • • • 2.

e. causes of differentiation may be functional aspects of the product or service. This involves differentiating it from competitors' products as well as one's own product offerings. to make it more attractive to a particular target market. These segments are homogeneous within (i. people in the segment are similar to each other in their buying behavior or parts thereof). Differentiation is a source of competitive advantage. they can be merely a difference in packaging or an advertising theme. The term unique selling proposition refers to advertising to communicate a product's differentiation.  Differences in quality which are usually accompanied by differences in price  Differences in functional features or design  Ignorance of buyers regarding the essential characteristics and qualities of goods they are purchasing  Sales promotion activities of sellers and. Because of this intra-group similarity. or the resulting list of differences. hence. Product differentiation (also known simply as "differentiation") is the process of distinguishing the differences of a product or offering from others. which include the requirement that the products of competing firms should be perfect substitutes. advertising  Differences in availability (e. The physical product need not change. the changes themselves are not differentiation. This is derived from the recognition that the total market is often made up of submarkets (called 'segments').e. successful product differentiation leads to monopolistic competition and is inconsistent with the conditions for perfect competition. Marketing textbooks are firm on the point that any differentiation must be valued by buyers.g. in particular. This is done in order to demonstrate the unique aspects of your product and create a sense of value. The major sources of product differentiation are as follows. or who buys it. .Marketing Strategy The process of grouping a market (i. timing and location). they are likely to respond somewhat similarly to a given marketing strategy. how it is distributed and marketed. Marketing or product differentiation is the process of describing the differences between products or services. customers) into smaller subgroups. In economics. but it could. Although research in a niche market may result in changing your product in order to improve differentiation. The brand differences are usually minor. Differentiation is due to buyers perceiving a difference.

Differentiation primarily impacts performance through reducing directness of competition: As the product becomes more different. however. this is a gross simplification. distribution strategy. Most people would say that the implication of differentiation is the possibility of charging a price premium. A successful product differentiation strategy will move your product from competing based primarily on price to competing on non-price factors (such as product characteristics. or promotional variables). categorization becomes more difficult and hence draws fewer comparisons with its competition. they will be less sensitive to aspects of competing offers. Differentiation makes customers in a given segment have a lower sensitivity to other features (non-price) of the product. . price may not be one of these aspects. If customers value the firm's offer.Marketing Strategy The objective of differentiation is to develop a position that potential customers see as unique.

A company may have a cost advantage due to low cost distribution. Marketing & Sales becomes more important than anything else does. . Different stages of PLC: 1.Marketing Strategy 5. sell and to simply exploit the ID customers. marketing and supporting its products. since it performs many discrete activities like designing. Each of these activities can contribute to a firm’s relative cost and create basis for differentiation. Explain the concept of “Value Chain” in different stages of PLC with example. Superior sales force utilization and Value Engineered Superior Product Design. How can value chain be inter-linked with SCM and CRM? ANS: Value Chain is a basic discrete building block of competitive advantage in a firm operating in competitive scenarios. Thus in the first part of the PLC. This implies that the task is to create the market for your product and also make the product available to the customers. Infancy: The main idea in this stage is to develop the product such that it results in generation of higher sales. The value chain for the Industry could include: Competitive advantage of firm cannot be looking at a firm in isolation. This means concentrate on the exclusive distribution of the products. producing. No errors and the company should do things right on the first time. A constant emphasis on to promote the product.

medium & hard and worked well on the distribution. However there was a confusion of the communication aspect and they over promised and under delivered.Marketing Strategy The marketing & sales acts as a cost saver for the coming stage of PLC because the company is spending today for tomorrow. The delivery of a mix of products and services to the end customer will mobilize different economic factors. Growth: The customers who tried our product in the infancy stage have a high probability to repeat the purchase in the growth stage. The concept has been extended beyond individual organizations. today very well known as. Thus. each managing its own value chain. the company should not forget to take care of the activities done in the previous stage. it would act as a cost saver. the sales increase largely. thus making all the three available to all the customers. Promise launched the angular toothbrush in all the three types i. keep doing the activities and work on the strategies rightly. which was not offered. inbound logistics plays a vital role. Supply Chain Management. by any of the competitors. It is in this stage of the PLC that one must develop strong relationship with the suppliers. Moreover. Thus. Decline: While moving on from one stage to another. In this stage. and SCM. The industry wide synchronized interactions of those local value chains create an extended value chain. If inbound logistics is done in an efficient manner. Entry point of Value Chain is Inbound Logistics. This will further result in no additional spending in the next stages of PLC. Example: Binacas came up with an Angular Toothbrush. 2. sometimes . soft. 3. it of paramount importance to make the product available for Sale to the customers thus making operational efficiency & productivity very important 4. Maturity: In this stage of Maturity. It can apply to whole supply chains and distribution networks.e. At this time. there are many new trials as well.

certain aspects of the internal processing of materials into finished goods. Strategic • Strategic network optimization. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. Porter terms this larger interconnected system of value chains the "value system. while reducing management control of daily logistics operations. the firm distribution channels. a manufacturer might require its parts suppliers to be located nearby its assembly plant to minimize the cost of transportation. and so on). Strategic partnership with suppliers. and the firm's buyers (and presumably extended to the buyers of their products. and then the movement of finished goods out of the organization toward the end-consumer. and size of warehouses. direct shipping. distribution centres and facilities. The purpose of supply chain management is to improve trust and collaboration among supply chain partners. distributors. Less control and more supply chain partners led to the creation of supply chain management concepts. including the number. they have reduced their ownership of raw materials sources and distribution channels. creating communication channels for critical information and operational improvements such as cross docking. Capturing the value generated along the chain is the new approach taken by many management strategists. and third-party logistics. • • Product design coordination. so that new and existing products can be optimally integrated into the supply chain. Supply chain management is a cross-functional approach to manage the movement of raw materials into an organization. and customers. thus improving inventory visibility and improving inventory velocity.Marketing Strategy global in extent." A value system includes the value chains of a firm's supplier (and their suppliers all the way back). the firm itself. location. For example. the firms may try to bypass the intermediaries creating new business models. The effect is to increase the number of organizations involved in satisfying customer demand. or in other ways create improvements in its value system. load management . As organizations strive to focus on core competencies and becoming more flexible. By exploiting the upstream and downstream information flowing along the value chain.

distribution centers. and other customers • Customer relationship management (CRM) is a term applied to processes implemented by a company to handle its contact with its customers. routes. including the consumption of materials and flow of finished goods. CRM software is used to support these processes. including frequency. including all nodes in the supply chain. Order promising. manufacturing facilities. location. Operational • • • • • • • Daily production and distribution planning. Production operations. Outbound operations. including current inventory and forecast demand. coordinating the demand forecast of all customers and sharing the forecast with all suppliers. Information in the system can be accessed . Tactical • • • • • • • Sourcing contracts and other purchasing decisions. including contracting. Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. and planning process definition. Demand planning and forecasting. scheduling. and contracting. storing information on current and prospective customers. to support supply chain operations. Production decisions. Inventory decisions. Production scheduling for each manufacturing facility in the supply chain (minute by minute). including quantity. and quality of inventory. Inbound operations.Marketing Strategy • • • Information Technology infrastructure. Transportation strategy. including transportation from suppliers and receiving inventory. including all suppliers. Milestone payments Focus on customer demand. in collaboration with all suppliers. accounting for all constraints in the supply chain. including all fulfilment activities and transportation to customers. Sourcing planning. Where-to-make and what-to-make-or-buy decisions Aligning overall organizational strategy with supply strategy.

up-selling Analysing customer behaviour in order to make decisions relating to products and services (e. such as sales. professional development. performance management. financial forecasting and customer profitability analysis) • Analytical CRM generally makes heavy use of data mining. While the term is generally used to refer to a software-based approach to handling customer relationships. product development) Management information system (e. What pricing objectives are open to “Kingfisher Airlines”? Suggest pricing strategy. Details on any customer contacts can also be stored in the system.Marketing Strategy and entered by employees in different departments.g. pricing. and take full advantage of the information systems. marketing. provide input.g. Discuss this statement in the context of factors affecting pricing decisions. human resource development. most CRM software vendors stress that a successful CRM strategy requires a holistic approach. Pricing objectives Pricing Objectives: 1) Profit oriented objectives (ROI) 2) Volume oriented objectives (Market share) 3) Competition orientation Potential Pricing Objectives: . “Pricing is a key issue in competitive markets”.g. ANS: Factors affecting Pricing strategies: 1. The rationale behind this approach is to improve services provided directly to customers and to use the information in the system for targeted marketing and sales purposes. cross-selling. Analytical CRM analyzes customer data for a variety of purposes: • • • Designing and executing targeted marketing campaigns Designing and executing campaigns. and compensation. 6. customer service. e. training. CRM initiatives often fail because implementation was limited to software installation without providing the appropriate motivations for employees to learn. customer acquisition.

Marketing Strategy 2.impact on Pricing: Major cost components are: . 2) To get certain target market segments of IBM PC. to achieve all in 18 months. (Switch from IBM to Apple ) 3) To encourage retailers to store and make strong efforts to sell Apple Computers.Variable cost It leads to three possibilities. Maintain loyalty 11. Building brand and company image. • • • Ratio between Fixed and Variable cost Economies of Scale Firms cost structure vis-à-vis competitors cost structure. lower the price. Cost. Discourage new entrants 9. Maximize short run profits 4. . Desensitize customers to price 7. If the fixed cost is high then increased sales volumes are required. Maintain price-leadership arrangement 8. 2. Stabilize market 6. Growth 5.Fixed cost . Example: Apple Computers pricing objectives 1) To make the product affordable and give value for money to college students. Maximum long-run profits 3. Speedy exit of marginal firms 10. In that case charge high price initially and once Break even is achieved.

3. Expected pricing retaliation. 7. Information on competitor’s special companies. Sale at high price until break-even is achieved. do marginal change (lower) the price it will add to earnings (High turnover). Timing of competitor’s price changes and initiating factors. 5. 6. Demand: . Estimates of competitors. Economies of Scale: We can afford to sell at lower price and gain higher market share. 4. 8. 3. Published competitive price lists and advertising. Competitive industry – Takes into consideration 1) Capital intensiveness 2) Technology know-how 3) Break even and economies of scale 4) Marketing experience. Competitive reaction to price moves in the past. Cost. Assumptions about competitors pricing / marketing objectives. Financial reports of competitors. 9.Fixed and Variable. Product differentiation is practiced.Follow the leader’s style of leading firm adopts cost plus method. Competitive product line comparison. Company needs to have following information about competitors: 1. If variable cost is high then. Competition: Monopoly – No issues Oligopoly . and then reduce the price. 4.Marketing Strategy EXAMPLE: Airlines have 65% cost fixed. Cost Structure vis-à-vis competitors: If cost structure is lower-one can offer competitive price to gain market share. 2. Manage cost – structure at low level.

7) Customer behavior in general. This acquisition would make Jet Airways India's largest airline with an almost 45% market share. in December 2005.. the Jet-Sahara combine brought down their airfares to compete against KINGFISHER AIRLINES. In February 2006. . 4) Benefits that product provides. For instance. and Bangalore). In January 2006. GoAir started offering 10.000 free air tickets on four new routes (Hyderabad. 5) Price of substitute products. When price lowered by 5% sales increased by 12% and lowered by 10%. Established players like Jet Airways (India) Ltd. Jet Airways was also expected to gain control of Sahara's 22 parking bays spread across many domestic airports. Chennai. Jet Airways announced that it would acquire Air Sahara (Sahara) for US$ 500 million. (Jet Airways) too looked to consolidate their market positions. Jaipur. and LCCs like Air Deccan and SpiceJet. 8) Segments in the market. Price inelasticity of demand Law of Demand – Survey of 30 items has shown that when price increased by 10% sales decreased by 25% and 5% increase led to 13% decrease.Marketing Strategy Demand is based on following considerations: 1) Ability of customers to buy 2) Willingness to buy 3) Necessity of customer to buy the product. Price = Material + Labour + Overhead + Other expenses + Cost of emotional benefits + Margin Kingfisher Airline: Pricing Strategy New low cost carriers (LCCs) like SpiceJet and GoAir entered the market after KINGFISHER AIRLINES's launch and they started an all-out price war by slashing down on fares. 6) Potential market for the products. Sales increased by 26%.

As per the pricing policy of Kingfisher Airlines. 7. Kingfisher Airline targeted the growing middle class segment that was net savvy. it would not be positioned as a low cost carrier as passengers would attribute the features of low cost carriers like low quality of service. Using Porter’s Generic strategies model analyze options open to various players in two wheelers industry. young and upwardly mobile. Fares were above those of LCCs but lower than the economy class fares of Jet. the basic pricing strategy followed by Kingfisher Airlines is Penetration Pricing by offering a good service to the middle class segment at a reasonable cost. which combines the experience of business class with economy. to Kingfisher Airline as well. Main Aspects of Porter’s Five Forces Analysis The competitive forces model identified five forces. Kingfisher Airline has a single class. etc. Kingfisher Airline is positioned extremely differently. KINGFISHER AIRLINES was also the only airline in India to address its passengers as 'guests'. Thus. As Porter's 5 Forces analysis deals with factors outside an industry that influence the nature of competition within it. and Indigo Airline. delayed flight timings. The Low Cost Carriers faced a bloodbath while seeking to convert the railway passenger into airline passenger. Sahara.. Kingfisher Airline also allowed multiple fare options and auctioning of tickets on all traffic routes.. and so the industry’s likely profitability is conducted in Porter’s five forces model. Kingfisher falls into a good service and low cost airlines..Marketing Strategy Recently Kingfisher & Jet Airways made an alliance to mainly cut cost. Hence. These include the following: . which would impact on an organization’s behavior in a competitive market. Having a single class freed up more space and legroom for passengers when compared to normal economy class seats. with a propensity to spend. A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace. the forces inside the industry (microenvironment) that influence the way in which firms compete. the airline was called a budget airline and not a Low Cost Carrier.

Understanding the nature of each of these forces gives organizations the necessary insights to enable them to formulate the appropriate strategies to be successful in their market Force 1: The Degree of Rivalry The intensity of rivalry. • The threat of substitute products becoming available in the market. The threat of new entrants is usually based on the market entry barriers. The other key players in the two-wheeler industry are Kinetic Motor Company Ltd (KMCL). the two-wheeler industry bounced back with a 25% increase in volume sales in February 1995. LML Ltd (LML). • The impact of the suppliers on the sellers. Yamaha Motors India Ltd (Yamaha).Marketing Strategy • The rivalry between existing sellers in the market. Bajaj Auto Ltd (Bajaj Auto) and TVS Motor Company Ltd (TVS). There are many two-wheeler manufacturers in India. Major players in the 2-wheeler industry are Hero Honda Motors Ltd (HHML). Competitors in the two-wheeler industry: After facing its worst recession during the early 1990s. Majestic Auto Ltd (Majestic Auto). Kinetic Engineering Ltd (KEL). Force 2: The Threat of Entry Both potential and existing competitors influence average industry profitability. The scooters are considered as family vehicles. helps determine the extent to which the value created by an industry will be dissipated through head-to-head competition. The entry barriers are high in two-wheeler . Royal Enfield Ltd (REL) and Honda Motorcycle & Scooter India (P) Ltd (HMSI). which is the most obvious of the five forces in an industry. • The power exerted by the customers in the market. • The potential threat of new sellers entering the market.

Force 3: The Threat of Substitutes The threat that substitute products pose to an industry's profitability depends on the relative price-toperformance ratios of the different types of products or services to which customers can turn to satisfy the same basic need. The most important determinants of buyer power are the size and the concentration of customers. The threat of substitution is also affected by switching costs – that is. fixed equipment and working capital would be tremendously high. the costs in areas such as retraining. Two wheelers can be substituted by comfort and luxurious cars. local trains etc. • Cost of entry: The initial investment in machinery. Force 4: Buyer Power Buyer power is one of the two horizontal forces that influence the appropriation of the value created by an industry . • Economies of scale: here in this two-wheeler industry economies of scale is required to cater to vast target group and to be cost effective at the same time. It also happens that the players may find the distribution member is too expensive.Marketing Strategy industry. Other factors are the extent to which the buyers are informed and the concentration or differentiation of the competitors. It also involves:   Two wheelers can have cost effective substitutes like bus. retooling and redesigning that are incurred when a customer switches to a different type of product or service. So the new entrant needs to produce in huge quantities which wont be possible at the initial stage for a small players. • The new entrant needs to have good contacts and relationships with the industry people before entering. the entrant needs to have ‘deep pockets’ to absorb the initial losses. • Distribution channels: The entrant needs to have a good distribution network to reach the target group but it happens many a times that the distribution channel members do not entertain new players. .

and budget. you must first have a plan. If the entrant has already existing good brand image then the supplier is not much. so the bargaining power of the customer is high. . the options available to the customers are many. advertising strategies creative and media.  High power of brands. therefore the option available to the customer is also high. Force 5: Supplier Power Supplier power is a mirror image of the buyer power. This plan has many facets. because it should appeal to the needs of the customers or else customer wont revert to the offering and it could be a big failure. the bargaining power of supplier is less. As a result. The ability to charge customers different prices in line with differences in the value created for each of those buyers usually indicates that the market is characterized by high supplier power and at the same time by low buyer power.  So the entrant has to be careful while making the offering. But in order to do that. including your marketing goal. Bargaining power of suppliers exists in the following situations:  The switching costs are high.  Advertising is a way to get your message to your desired audience. implementation. 8.Marketing Strategy  Since the number of players and models available in the market is very high. the analysis of supplier power typically focuses first on the relative size and concentration of suppliers relative to industry participants and second on the degree of differentiation in the inputs supplied. Describe the process of developing an advertising strategy for a new brand of “Mobile phone” and discuss the importance of creating the advertising message that has linkages with marking goals and consumers readiness to accept the product with some examples. evaluation. Switching from one supplier to another is easy hence.

What do you want to say? After narrowing target audience. MMS.we are aiming at around 35 mn in the 1st year and 55 in the second year. In order to determine your target market segmentation and targeting is done. A mobile phone that has • • • All the desired features (e. • • • Location – Our target group will be primarily from urban environment.g. SMS. But our advertising would be made with the youths on the target. Basically at this stage positioning is done.3 lacs p. This is called the creative process or strategy. All the metropolitan. Building advertising strategy The first four questions to ask are: • • • • Whom are you trying to reach? What do you want to say to them? How.Marketing Strategy Marketing goal: . begin the process of deciding what it is you want the consumer to know or think about you.a.India’s subscriber base is around 200mn. Bluetooth etc). Age – No specific age bar because our mobile phone would be for all age groups. when and where are you going to reach them? Why have you chosen the steps you have selected? Whom are you trying to reach? Determine your target market. tier I and tier II cities will be targeted. a status symbol value/quality proposition . Income – consumer must make Rs.

to 10p. we should use advertising media that would reach our target audience through • • • • • • • • • Newspaper Handouts or Flyers Radio Magazines TV Outdoor. How and when to you reach the target audience? Since our target audience is located in urban areas.m. Developing Your Creative Strategy In its simplest spend on the television media will be around 10 crores. your creative strategy needs three things: Ads will target people of all age groups from 15 to 55. such as billboards Special promotions or packages Partnering with any service provider(like nokia and reliance) Internet Marketing Television Television is a powerful medium because it communicates with both sight and sound. The duration of the ad will be around 60 secs at the prime time from 8p. and persuade them that this cell phone is a complete package providing all the features with style and elegance at affordable prices. Where. Colors and MTV. Zee TV.Marketing Strategy • Comparatively reasonable.m. We would place your advertisement spots on the most viewed channels like Star TV. Radio .

Advertising of a product runs throughout the year. we would go for radio 93.Marketing Strategy For radio advertising. develops ad copy and produces artwork. The budget would be approximately around 6 crores.m. Magazine The magazines would be ‘CHIP’ and ‘think digit’.5 fm.24 crores.the budget would be approximately 4 crores. creates the ad. How to time the advertising? Pulsing schedule . bus queue shelters and pole kiosks and in ambient media mall murals will be used. Newspaper: Newspapers are an important local medium with excellent reach potential. Outdoor The most cost-effective advertising vehicle is outdoor . Outdoor media vehicle selected are billboards. Because of the daily publication of most papers. and produces the ad? The responsibility for actually carrying out the advertising program can be handled in one of four ways: TYPE OF AGENCY Full-service agency SERVICES PROVIDED Research. the slots for it will be of 45 secs and the frequency will be around 4 in a week and the timing will be from 6p. Hindustan times on the day before the launch. and it is a flexible alternative. when demand and seasonal factors are unimportant. The visibility of this medium is good reinforcement for products. The display duration will be around one month will a budget of 1. to 8 p. Who purchases the media. . we place an ad in the DNA. selects and purchases media.m.

To reach aprrox 35 mn subscribers an advertising budget of around 24 crores would be required. Thus. Let’s begin by understanding what competitive position is: Positioning is an objective measurement of perception (subjective). Porter called the generic strategies "Cost Leadership" (no frills). but production costs as well. that buyers are likely to hold about the product with respect to other similar alternative market offering and it determines whether the firm’s profitability is above or below the industry average. and to organizations of all sizes. They were first set out by Michael Porter in 1985 in his book Competitive Advantage: Creating and Sustaining Superior much to spend to reach your objective. market challengers. 9. And don’t forget. followers and nichers in soap industry. Discuss this statement in relation to strategies of market leaders. .Marketing Strategy What will this cost? Your budget will determine when and where you can advertise. your budget doesn’t just include media costs. There are four basic ways to determine what your budget should be. the following model as developed by Michael Porter is apt here Porter's Generic Strategies Choosing Your Route to Competitive Advantage They can be applied to products or services in all industries. Task Objective Method . “Strategic options open to a company is largely dependent on their competitive position and stages at which they are”. Competitor Frameworks: These frameworks focus on competitor factors to derive strategy.

and a way of sustainably cutting costs below those of other competitors. . These are shown in Figure 1 below. materials. while charging industry-average prices. facilities). A low cost base (labor. Companies that are successful in achieving Cost Leadership usually have: • • • Access to the capital needed to invest in technology that will bring costs down. He then subdivided the Focus strategy into two parts: "Cost Focus" and "Differentiation Focus". There are two main ways of achieving this within a Cost Leadership strategy: • • Increasing profits by reducing costs. while still making a reasonable profit on each sale because you've reduced costs. developing the "edge" that gets you the sale and takes it away from your competitors.Marketing Strategy "Differentiation" (creating uniquely desirable products and services) and "Focus" (offering a specialized service in a niche market). Increasing market share through charging lower prices. Very efficient logistics. The Cost Leadership Strategy Porter's generic strategies are ways of gaining competitive advantage .in other words.

from here we can move on to the application of this strategy to the market leaders. develop uniquely low cost or well-specified products for the market.Marketing Strategy The greatest risk in pursuing a Cost Leadership strategy is that these sources of cost reduction are not unique to you. The ability to deliver high-quality products or services. by understanding the dynamics of that market and the unique needs of customers in it. It's simply not enough to focus on only one market segment because your organization is too small to serve a broader market So. or nicher. Effective sales and marketing. follower. Market Leader Strategies: The market leader generally leads the other firms in price changes. followers and nichers in soap industry Kotler classifies firms by the role they play in the target market: leader. and that other competitors copy your cost reduction strategies The Differentiation Strategy Differentiation involves making your products or services different from and more attractive those of your competitors. challenger. the key to making a success of a generic Focus strategy is to ensure that you are adding something extra as a result of serving only that market niche. new-product introductions. development and innovation. so that the market understands the benefits offered by the differentiated offerings. organizations need: • • • Good research. and promotional intensity. distribution coverage. The market leader must maintain a constant vigilance as other firms keep challenging its strength or trying to take . To make a success of a generic Differentiation strategy. But whether you use Cost Focus or Differentiation Focus. market challengers. The Focus Strategy Companies that use Focus strategies well concentrate on particular niche markets and.

Marketing Strategy advantage of its weaknesses. the imitator. Example: Nirma… PLC Stage: Decline Market Follower Strategies: Followers tend not to want to steal others’ customers. etc. Therefore the follower must keep its manufacturing costs low and its product quality and service high. (2) to protect its current market share through good defensive and offense actions. The strategic objective of most challengers is to increase their market shares. Smaller firms normally avoid competing with larger firms by targeting small markets of little or no interest to the larger firms. An aggressor can choose to attack the market leader. to attack firms of its own size that are not doing the job or are under-financed. which takes the leader’s products and adapts and often improves them. pricing. Following does not mean the firm is passive or a carbon copy of the leader. The nicher ends up knowing the target customer group so . and the adapter. The follower is a major target of attack by challengers. The specific strategies are: the cloner. Follower market shares show a high stability. but instead they present similar offers to buyers. dominant firms must find ways (1) to expand total market demand. which lives parasitically off the leader. which copies some things from the leader but maintains differentiation in terms of packaging advertising. Each follower tries to bring distinctive advantages to its target market. or attack small local and regional firms that are not doing the job or are under-financed. usually by copying the leader. and/or (3) try to increase its market share further. Lifebuoy Skinguard… PLC Stage: Growth Market Nicher Strategies: An alternative to being a follower in a large market is to be a leader in a small market or niche. bypass attack. The attack strategies include frontal attack. To remain number one. even if market size remains constant Example: LUX … PLC Stage: Maturity Market Challenger Strategies: Challengers can attack the leader and other competitors in an aggressive bid for further market share. Example: Breeze. flank attack. encirclement attack. and guerilla attack. Firms with low shares of the total market can be highly profitable through small niching.

10. The key idea is specialization. Example: Dove… PLC Stage: Between Maturity and Decline. The nicher receives high margins in contrast to the high volume of the mass marketer. expand niches. ANS: Product Strategies: . Discuss this statement in relation to “product strategies with reference to product features and quality”. “Quality of product is determined by the customers in the market and in the factory”. and protect niches.Marketing Strategy well that it can meet their needs better than other firms casually selling to this niche could. Nichers need to create niches.

2) Product Re-positioning Strategy Reasons for Repositioning: a. .” Therefore. New and attractive segments : Example: 1. what it is and how customers should evaluate it. and mild. the product should be placed . strong. A mistake is made in original positioning. Kingfisher v/s Haywards 2) Vicks Vapourub v/s Tiger Balm 3) Calcium Sandoz for women & children. Process of Positioning: Example: 1) Beer: Light.Right communication should be planned.The product should be designed to match the segment.In right segment . Babool Toothpaste c.To receive favorable reception . b. bitter. Example: Kinetic Scooter. Shampoo Sachets 2. Maggi Noodles. Vicks Vaporub.Marketing Strategy 1) Product Positioning Strategy “Positioning tells what the product stands for. FMCG products for rural markets 3. Changing Customers Preferences : .

’ Examples: 1. ‘This happens in India in the product range where clear segmentation of market is not possible.Marketing Strategy Examples: 1) Cadbury Chocolates 2) Hair oil brands 3) Two wheelers for rural segments 4) Atlas Cycles. Detergent soaps and powders. Bath soap 3. 2. Companies try to do: Upward stretch Downward stretch .’ 3) Product-Overlap Strategy Product overlap strategy refers to a situation where a company decides to compete against its own brand. Examples: 1) Coca Cola • • • Tanda Matlab Sir utake piyo Safe drinks ‘Purpose is to increase Market share and profitability. To compete with new entrants. Luggage / Bag markets. d.

Proctor & Gamble Food line companies – Pizzas. Oral cavity products Oncology products . Own brands Contract Mfg. Peter England Shirts 4) Product-Scope Strategy a) Single product b) Multiple product c) System product 1) Single Product: One Brand Company selling to various segments. Emcure b. Amul Dairy products It helps to grow faster and better and risk is evenly divided. Examples: Medical insurance. ii. ii. and Own brands d. Contract Mfg. 3) Systems of Product: Offering a system of products relates to providing a product mix that is having very close consistency with each other. iii. Blue Cross c. Vitamin-C.Marketing Strategy Both way stretch Examples: a. Examples: i. Godrej Soap – Contract Mfg. Cheese etc. Pan Parag. 2) Multi-Brand Strategy: Offering two or more products Examples: i.

Standard products b. Customized products c. Example: Coca Cola Lux Lifeboy Customized Product: 1) Products made to order. iv. Military division. Range of cardiac product Range of car accessories. Standard product with modification Standard Product: 1) Leads to similar experience to all customers. Example: Dell Computers 2) Can charge premium for customization.Marketing Strategy iii. GE. Hardwares. v. Standard products with modification: . IBM – Softwares. 5) Product-Design Strategy a. 2) Better cost benefits. [ECS and Learning curve] 3) Standard distribution channels can be used. Example: Dell Computers. Maintenance. 3) Suitable for small companies.

cosmetics.g. 2) Line simplification e. textile business. HLL. 3) Features are customized. 5) Poor profit with business strengths. GRL. 4) Entry into declining phase.g. Nagpur. electricity. and CD Player etc 6) Product-Elimination Strategy Reasons for elimination strategy 1) Low profitability 2) Stagnant sales volume 3) Risk of technology obsolescence. 3) Total Line Divestment e. 7) New Product Strategy 1) Product Modification / Improvement . 2) Core product is standardized. Empress Mill. Options available are: 1) Harvesting e. Example: Car – Power breaks.g. Noga. Color.Marketing Strategy 1) Compromise between above two. Tape. Tata. Air conditioning.Radio business.

replacing the old way of need satisfaction. Customer Service Strategy c. Refrigerators. Quality Strategy b. Washing Machines. PC’s etc Product Imitation: Me too products Indian pharma industry Indian chemical industry Product Innovation: New innovation. good service and timely delivery in right amount”. Quality Strategy: . Examples: Baggi – Car Tape – VCR – VCD – DVD Fountain pen – Ball pen etc.Marketing Strategy 2) Product Imitation 3) Product Innovation Product Modification / Improvement: To introduce a new version of improved versions of product are achieved by adding new features to products. Examples: TV. US & German’s are the leading country in this business. 8) Value-Marketing Strategy a. Time Based Strategy “Today customers are demanding combination of product Quality.

BSES etc. Leapfrogging – Coming from behind and going ahead. Washing Machines Pulling ahead – Giving more than competitors. it is marketing strategy that leads to differentiation among the products”. Videocon. MTNL. Catching up – Filling the gap E. TV Models. Six Sigma Administrative approval area Teamwork “Speed”. MARKETING STRATEGY A marketing strategy is a process that allows an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. MSEB. 11 “Basically all products are the same.g. Service.e. Dominos Pizza. Support beyond his / her experience.g. E. “Courtesies way”. E. Time Based Strategy: Response Time Delivery Time E. Explain with suitable examples. PRODUCT DIFFERENTIATION . Japanese cars. “Empathy”.Marketing Strategy Quality is defined by customer and not by in-house quality control department / internal evaluations. Microwaves.g.g. Ultimate objective of quality should be to delight the customers in every possible way i. A marketing strategy should be centered around the key concept that customer satisfaction is the main goal.

This approach allows you to think beyond the tangible “product” entity and consider what the consumer is actually buying and their reasoning behind that purchase. such as installation. guarantees. If your target market sees your product as different from the competitors'. to validating an identity. and packaging. warranties. they market offerings. The objective of a marketing strategy is to develop a position that potential customers will see as unique. brand. to make it more attractive to a particular target market. you will have more flexibility in developing your marketing mix. Differentiation is a source of competitive advantage Marketing or product differentiation is the process of describing the differences between products or services. tangible and intangible. from peace of mind. plus any related services. It also includes intangible benefits.Marketing Strategy Product differentiation (differentiation) is the process of distinguishing the differences of a product or offering from others. or organization “Successful companies don’t market products.” An offering encompasses the benefits or satisfaction provided to your target markets. . you must understand its benefits from the buyer’s perspective. To successfully market your product. distribution strategy. This involves differentiating it from competitors' products as well as one's own product offerings. or promotional variables). to showing off to the neighbors. or the resulting list of differences in order to demonstrate the unique aspects of your product and create a sense of value for the customer so as to make it more attractive to the target market. as customers view these products as unique or superior A successful product differentiation strategy will move your product from competing based primarily on price to competing on non-price factors (such as product characteristics. Your offering includes a tangible product or service. In marketing. Successful product differentiation creates a competitive advantage for the seller. positioning is the technique by which marketers try to create an image or identity in the minds of their target market for its product.

In a larger sense. The end result of positioning is the creation of a market-focused value proposition. While a company can create many differences. and to enhance development of new products or services. a simple clear statement of why the target market should buy the product. Your marketing strategy should address what types of customers you seek. and how your offerings meet their needs. A difference is worth establishing when the benefit exceeds the cost. Preemptive: The difference cannot be easily copied by competitors. a difference is worth establishing to the extent that it satisfies the following criteria. Affordable: The buyer can afford to pay the higher price Profitable: The Company will make profit by introducing the difference. It is the act of designing the company's offering and identity (that will create a planned image) so that they occupy a meaningful and distinct competitive position in the target customer's minds. can be valuable for analyzing consumers’ alternatives. an organization’s offerings are a part of who they are as a business.Marketing Strategy Focusing on the offering. what the buyers need. More generally. Important: the difference delivers a highly valued benefit to a sufficient number of buyers. POSITIONING Positioning is the result of differentiation decisions. . It should also describe how your offering is communicated and what value it holds for the consumer. each difference created has a cost as well as consumer benefit. Superior: The difference is superior to the ways obtaining the same benefit. Communicable: The difference is communicable and visible to the buyers. to better identify unmet needs and wants of your target markets. rather than on the actual product or service itself. Distinctive: the difference either isn't offered by others or is offered in a more distinctive way by the company.

Value proposition . GE / McKinsey Matrix In consulting engagements with General Electric in the 1970's. Price . 2) Dominos Pizza Promise to deliver the Pizza anywhere within 30 min 3) McDonald’s Zero Defect Quality. most durable wagon in which your family can ride. This business screen became known as the GE/McKinsey Matrix and is shown below: GE / McKinsey Matrix Business Unit Strength High Medium Low . Explain the relationship between industry attractiveness and competitive strength quoting an Indian example.The safest.Durability and Safety.Marketing Strategy Example: 1) Volvo (station wagon) Target customer-Safety conscious upscale families Benefit .20% premium. Standardization 12. McKinsey & Company developed a nine-cell portfolio matrix as a tool for screening GE's large portfolio of strategic business units (SBU).

Factors that Affect Market Attractiveness Whilst any assessment of market attractiveness is necessarily subjective. attempts to improve upon the BCG matrix in the following two ways: • The GE matrix generalizes the axes as "Industry Attractiveness" and "Business Unit Strength" whereas the BCG matrix uses the market growth rate as a proxy for industry attractiveness and relative market share as a proxy for the strength of the business unit. These are listed below: .Marketing Strategy High Medium Low The GE / McKinsey matrix is similar to the BCG growth-share matrix in that it maps strategic business units on a grid of the industry and the SBU's position in the industry. and multiplying that value by a weighting factor. there are several factors which can help determine attractiveness. The result is a quantitative measure of industry attractiveness and the business unit's relative performance in that industry.Market growth . Industry attractiveness and business unit strength are calculated by first identifying criteria for each. four cells in the BCG matrix. The GE matrix however.Market Size . • The GE matrix has nine cells vs. determining the value of each parameter in the criteria.

Segmentation . retail.Market profitability . direct.Overall risk of returns in the industry .Access to financial and other investment resources Business Unit Strength The horizontal axis of the GE / McKinsey matrix is the strength of the business unit. wholesale Factors that Affect Competitive Strength .Distribution strength .Relative brand strength .Relative cost position (cost structure compared with competitors) .Strength of assets and competencies .g.Customer loyalty .Marketing Strategy .Opportunity to differentiate products and services .Market share . Some factors that can be used to determine business unit strength include: • • • • • • Market share Growth in market share Brand equity Distribution channel access Production capacity Profit margins relative to competitors The business unit strength index can be calculated by multiplying the estimated value of each factor by the factor's weighting.Record of technological or other innovation . .Competitive intensity / rivalry .Distribution structure (e.Pricing trends . as done for industry attractiveness.

with the information conveyed as follows: • • • Market size is represented by the size of the circle. and weak business units in average industries. average business units in unattractive industries. The following is an example of such a representation: The shading of the above circle indicates a 38% market share for the strategic business unit. or harvest a strategic business unit based on its position on the matrix as follows: • Grow strong business units in attractive industries. and that the business unit is in an industry that is projected to become more attractive. The tip of the arrow indicates the future position of the center point of the circle. • • . average business units in attractive industries. Harvest weak business units in unattractive industries. and weak business in attractive industries. Strategic Implications Resource allocation recommendations can be made to grow. hold. The arrow in the upward left direction indicates that the business unit is projected to gain strength relative to competitors. strong businesses in weak industries. The expected future position of the circle is portrayed by means of an arrow.Marketing Strategy Plotting the Information Each business unit can be portrayed as a circle plotted on the matrix. Market share is shown by using the circle as a pie chart. Hold average businesses in average industries. and strong business units in average industries.

So for example.e. Rather than serving as the primary tool for resource allocation. it still presents a somewhat limited view by not considering interactions among the business units and by neglecting to address the core competencies leading to value creation. we would use Porters model to help us find out about: 1) Competitive Rivalry 2) Power of suppliers 3) Power of buyers 4) Threats of substitutes 5) Threat of new entrants. For example. These factors are discussed below in detail: Competitive Rivalry A starting point to analyzing the industry is to look at competitive rivalry. hence it is common sense and practical to find out about these factors before you enter the industry. within the harvest group the firm would be inclined to quickly divest itself of a weak business in an unattractive industry. a sixth force is added i. Generally competitive rivalry will be high if: . If it is easy for customers to move to substitute products for example from coke to water then again rivalry will be high.Marketing Strategy There are strategy variations within these three groups. If entry to an industry is easy then competitive rivalry will likely to be high. The Five Forces model of Porter Porters fives forces model is an excellent model to use to make an analysis of the attractiveness (value) of an industry structure. if we were entering the PC industry. portfolio matrices are better suited to displaying a quick synopsis of the strategic business units. Sometimes. The above five main factors are key factors that influence industry performance. While the GE business screen represents an improvement over the more simple BCG growthshare matrix. Government. whereas it might perform a phased harvest of an average business unit in the same industry.

If competitors are merely ‘milking’ profits in a mature industry. Power of suppliers Suppliers are also essential for the success of an organization. Bargaining power of suppliers comes from: • If they are the only supplier or one of few suppliers who supply that particular raw material. the rivalry will be high. • Exit barriers: It is costly to leave the industry hence they fight to just stay in. rivalry will be more intense. • Strategic Objectives: If competitors pursue aggressive growth strategies. Suppliers do have power. the degree of rivalry is typically low. • If it costly for the organization to move from one supplier to another (known also as switching cost) •If the brand of the supplier is very strong •Suppliers threaten to integrate forward into the industry (for eg. • Structure of competition: If competitors are approximately the same size of each other the rivalry will be greater. Brand manufacturers threatening to set up their own retail outlets) •Buyers do not threaten to integrate backward into supply •The industry is not a key customer group to the suppliers •Role of quality and service • If there is no other substitute for their product. Raw materials are needed to complete the finish product of the organization. Power of buyers . • Switching Costs: Rivalry is reduced if buyers have high switching costs.Marketing Strategy • Degree of product differentiation: If there is little differentiation between the products sold between customers.

Threat of substitutes Are there alternative products that customers can purchase over your product that offer the same benefit for the same or less price? The threat of substitute is high when: • Price of that substitute product falls. This happens when: • There is little differentiation over the product and substitutes can be found easily. • Buyers are willing to substitute. • Switching to another product is not costly. • It is easy for consumers to switch from one substitute product to another. Threat of new entrant The threat of a new organization entering the industry is high when it is easy for an organization to enter the industry i. • Customers are sensitive to price. •There are few dominant buyers and many sellers in the industry. entry barriers are low. Threat of new entrants depends on: •Economies of scale •Capital/ Investment requirements •Customer switching costs •Access to industry distribution channels .Marketing Strategy Buyers or customers can exert influence and control over an industry in certain circumstances.e. • Performance of that substitute becomes better.

would they have access to suppliers. . how quickly they can achieve economy of scales. would government legislation prevent them or encourage them to enter the industry.Marketing Strategy •Access to technology •Brand loyalty •The likelihood of retaliation from existing industry players •Government regulations An organization will look at how loyal customers are to existing products.

there are around 200 players in the market (even though most are regional). only Miracle and Steelgrip brands have launched advertisements. On the whole. Including the unorganized sector. Paramount. The product types are used for packaging. Among the smaller players. As of now. Anchor. Morgan. Price warring occurs in the segment among the organized sector. Wonder and Deer. firms frequently enter and leave the market and thus returns are stable and low. protection. Advertising battles are not a current phenomenon. Fourpillar Corporation. Sanghi.). though are liable to play a major part in the future. A multi-brand market exists. medical.a.Marketing Strategy Both these models help us to understand the relationship between industry attractiveness and competitive strength EXAMPLES PVC insulation Tapes PORTER’S FIVE FORCES ANALYSIS THREAT OF INTENSE SEGMENT RIVALRY The adhesive tape industry consists of the major players Pidilite (acquired Bhor Industries). though fluctuations are infrequent as most large players stick to their respective price bands to maintain premium imagery. the market exhibits the qualities of an oligopoly. mounting. Insulation tapes have a market size of Rs. Asia Chemicals and Tesa. stationery or cellotapes). Chetna Polypack. Kapton etc. with distinct rungs differentiable by price and quality. but essentially curtail the larger players. Steelgrip. THREAT OF NEW ENTRANTS Entry and exit barriers do exist. Miracle. These are made of PVC. The industry is experiencing decreased margins on production and faces the threat of cheap imports (especially from China). 600 Crores and is growing at 10% p. The major brands in the PVC insulation tapes segment are Magic. both within the last to years. There are a large number of buyers and sellers with distinct . Polyester. All-India market size is Rs. insulation. 40 Crores (approx. Teflon.

the lack of legal implementation (given the large number of unorganised players) negates this. it is imperative that a comprehensive analysis be done of the consumer. Within the specific segment. industrial buying takes place on established quality parameters and supplier relationships. Handle wrapping. THREAT OF SUBSTITUTE PRODUCT There is no distinct brand preference. State Transports Electrical wiring :   o Protecting electrical conductors from corrosion Electrical wire insulation o Edge protection. Mobility barriers exist only in terms of distribution chain setup and building relationships with the retailers. The threat of substitutability exists in the generic category from packaging and cellotapes for household use. as final household consumption is minimal and most use is by electricians and auto-mechanics. Most retailers’ stock select multiple brands but tend to push specific preferred brands (based usually on their margins on different brands). With non-industrial buyers. ‘quality’ tapes may be substituted by local tapes. prices need to be monitored closely. Automobile. given that prices do not increase significantly. However. as the consumer is price-sensitive to an extent. State Electricity boards. Buyers may be divided into the various segments based on their use. The threats are of advanced technology which may sway the market. this may be ignored.Marketing Strategy market leaders. as due to largely undifferentiated brands and non-existence of brand loyalty. Pipe joining . Thus. the corporates being brand and quality conscious. Future entry barriers could be patents and licensing requirements. THREAT OF BUYER’S GROWING BARGAINING POWER The main differentiator in the PVC electrical insulation tapes market is the buyers and their consumption patterns. Telecom. thus substitutability by lower rung players is not a threat. However. Defence services. PVC insulation tape is essentially used in the following o Sectors : Electrical. The brand is rarely demanded at time of purchase. as the consumer typically asks for ‘PVC tape’ or ‘electric tape’.

the product may be sold to the retailers and then onward through seller-push or to the end consumer (the electricians. MRF followed suit in 1946. However. Supply of the inputs is essentially in the open market and specific parameters for supply to this industry are negligible. Paper Core. The product is used as a part of the manufacturing process of industrial buyers. as it does not form a large portion of input cost. o With respect to non-industrial buyers. and is restricted to the few organised players in the market. Long-term relationships also ensure that frequent variations do not take place and affect the input costs. as it is a routine product (standardised. Synthetic Rubber. Since then. The players in the industry retain the option of multiple supply sources and thus organisation and concentration on the part of certain suppliers does not affect the market price. Plastic Resins. The end user is rarely the decider or even the influencer in this case. . Antioxidants. the Indian tyre industry has grown rapidly. with low value and cost and little risk). Moreover. Supplier’s bargaining power does not form a significant threat as suppliers are not in a position to leverage their status and raise prices or reduce quantity supplied. Master Batches etc. Example 2 Structure of Industry Background The origin of the Indian Tyre Industry dates back to 1926 when Dunlop Rubber Limited set up the first tyre company in West Bengal. thus reducing supplier differentiation and negotiating power. is taken on a case-by-case basis. and the cost of switching suppliers is not significantly high.Marketing Strategy Industrial purchase follows the B2B model. Primers. THREAT OF SUPPLIER’S GROWING BARGAINING POWER The raw materials require in the manufacturing process are PVC Films.) in an attempt to generate demand-pull. auto mechanics etc. which are the prime focus of competition. and the purchase department acts as the key-point of contact which is wooed by the salespeople. the suppliers are not of a colluding nature. buying usually follows a ‘straight rebuy’ pattern and is based on salesperson-customer relationships.

4. with the top eight companies accounting for more than 80% of the total production of tyres. In fact. Bargaining Power of the Buyers: High The OEMs have total control Bargaining Power of the Suppliers: High over prices. However. Transportation industry has experienced 10% growth rate year after year with an absolute level of 870 billion ton freight. Inter Firm Rivalry: Low The tyre industry consumes nearly 50% of the natural rubber produced in the country.Marketing Strategy Transportation industry and tyre industry go hand in hand as the two are interdependent. Motorcycle. Market Characteristics Demand Demand for tyres can be classified in terms of: Type: Bus and Truck. A similar plant producing radial tyres costs Rs. The price of natural rubber is controlled by Rubber Control Board and the domestic prices of natural rubber have registered a significant increase in recent times.000 passenger car tyres were imported. The tyre industry in India is fairly concentrated. Passenger Car. It is a highly capital intensive industry. road accounts for over 85% of all freight movement in India. Scooter. the OEMs faced with declining profitability have also reduced the number of component suppliers to make the supply chain more efficient. With an extensive road network of 3. over 1. 8. Tractor Market: OEM. Export Environment Analysis . Threat of Substitutes: Low but Increasing During the FY2002. the import of tyres is likely to increase.10.000 and Rs.000 million. 5. A plant with an annual capacity of 1. Replacement.2 million km.Porter's Model Entry Barriers: High the entry barriers are high for the tyre industry.000 million. This constitutes over 2% of total radial passenger car tyre production in the country.5 million cross-ply tyres costs between Rs. with the reduction of peak custom duty. .

Marketing Strategy

13. Suggest the distribution strategy for marketing following products in urban and rural markets of India. iv) v) vi) vii) viii) Bath soap for human beings Bath soap for dogs / pets Toothpaste Washing machine Mobile phone (Handset)

DISTRIBUTION - CHANNEL STRATEGY Distribution Intensity There are three broad options - intensive, selective and exclusive distribution: Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g. cigarettes, beer). Intensive distribution is usually required where customers have a range of acceptable brands to choose from. In other words, if one brand is not available, a customer will simply choose another. Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g. training) on them. Selective distribution works best when consumers are prepared to "shop around" - in other words - they have a preference for a particular brand or price and will search out the outlets that supply.

Marketing Strategy Exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area.

Distribution strategy for Bath soap for human beings Urban and Rural:
Eg: HLL - Toilet Soaps As the marketing channels of the company are already established I would try to increase the penetration in the rural sector to the extreme remote areas which are not touched till now. I would try to reduce the delivery time of the products by choosing and increasing the strategic locations of warehouses. I would also track the distribution path of the wholesalers in small cities through marketing team and would establish a platform or team at a zonal level for all the wholesalers and would try to take their feedback on the market developments. These kinds of congregations could also increase the brand loyalty in the wholesalers and they would be motivated to push HLL products.

Distribution strategy for Bath soap for dogs and pets Urban and Rural:
The strategy would be to develop the marketing channels as strong and penetrated as that of HLL. The national coverage would be dealt with by increasing the company's warehouses and creating C&F agents in the smaller cities. Rural penetration on the lines of competitor would be better strategy. Emphasis would also be on increasing wholesale dealer in small towns and tehsils who can cover the nearby villages. In this context my strategy would be to provide the wholesalers a scheme for buy delivery vans by funding 50% of the price of delivery vans and rest to be paid by wholesalers in installments. The number of distribution van would again depend upon the distribution path covered by each individual wholesaler, the number of villages nearby a small town and certain demographic factors.

Marketing Strategy

Distribution strategy for Toothpaste Urban and Rural:
Rural: I would try to increase product penetration to rural population as by 2006-07 the rural population who is rich and consuming class would be 209Mn which is not much lesser than urban rich and consuming population of 253Mn people. I would try to increase the wholesalers to smaller towns and would track the distribution path so that they are covering all the village areas around the towns. Urban: Toothpaste is a FMCG item and has almost 100% demands in the urban areas and hence the distribution strategy to be adopted here would be the one of exclusive distribution as we want to cover the maximum possible portion of India.

Distribution strategy for Washing Machine Urban and Rural:
The type of distribution system would be largely related to the marketing strategy of the company. Looking at the company as a general manufacturer of consumer goods the most likely system would be one of "selective distribution." In selective distribution the company would target their products to specific outlets where their products would best fit. Other types of distribution would be "intensive distribution" where the company would try to sell their products to as many different outlets as possible and "exclusive distribution" whereby the company would look to a very limited number of outlets that would most likely specialize in a specific niche. "Selective distribution" falls in between these two types.

Marketing Strategy

Distribution strategy for Mobile Phones Urban and Rural:
In the urban areas prominently we would use exclusive distribution strategy. The goods would be made available to the entire India through use of all the channels as explained earlier. The rural areas again we would be using our own agents to sell and also the handsets would be made available in the haats and the melas in the rural areas as that is where the major buying of the products by the customers takes place. Hence our main strategy would be to use: Extensive distribution: For cheap handsets in urban and rural areas Intensive: For the average and little more expensive ones Exclusive: For the most premium ones that wouldn’t be afforded by all

14. “Product Mix” strategies are essential for a multi-product company”. If so, apply the concept of product mix strategies to enhance the competitive advantage of P&G? Product Mix The product mix is the set of all products offered for sale by a company. • A product mix has two dimensions: • Breadth - the number of product lines carried. • Depth - the variety of sizes, colours, and models offered within each product line. Major product-mix strategies: • Positioning, expansion, alteration, contraction, trading up and trading down

already makes Pampers) Trading Up and Trading Down • Trading up: Adding a higher-priced product to a line to attract a higher-income market and improve the sales of existing lower-priced products. unrelated product (Swiss Army watch) • Different brand. unrelated product (Pepsi & KFC) • Different brand. related product (P&G adds Luvs diapers. but want the status Other Product Mix Strategies . • Trading down: Adding a lower-priced item to a line of prestige products to encourage purchases from people who cannot afford the higher-priced product.Marketing Strategy Product Mix Strategies Positioning the Product • In Relation to a Competitor • In Relation to a Product Class or Attribute • In Relation to a Target Market • By Price and Quality Product-Mix Expansion • Line Extension • Mix Extension Expanding the Product Mix Mix-extension strategies include: • Same brand. related product (Tim Horton coffeemaker) • Same brand.

Compare and contrast between “Competitive Advantage and Competitive Strategy”? How one can achieve ‘Sustainable competitive advantage’? Taking a company of your choice in automobile industry. and new uses. Tide. Duncan. but all have different brands like Crest. • P&G Product Mix Width and Depth P&G has an array of detergent brands under its patronage. Lemon & Strawberry as well as having a ZPTO factor in it which makes a USP of H & S and positioning it as one of the best brands in the Anti Dandruff Shampoo market. All these factors act as a competitive advantage for Proctor & Gamble. this works as an advantage to the parent company. the sales of Tide had compensated the net sales of P&G in the detergent segment. The competitive advantage model of Porter learns that competitive strategy is about taking offensive or defensive action to create a defendable position in an industry. H & S differentiates itself from its close competitor Clinic All Clear AntiDandruff Shampoo in the sense that it is available in different varieties like Menthol. Hines. Despite the disadvantages & disregarding the cannibalization of brands. illustrate how this company can develop competitive advantage? COMPETITIVE ADVANTAGE Competitive advantage is a position a firm occupies against its competitors. A strategic decision to face external competition does not eat up the company's overall market share. Even while the market of Ariel fell.Marketing Strategy • Alteration of Existing Products: • Improve an established product with new design. • Dump unprofitable or indistinct brands. in order to cope . Procter & Gamble's Head & shoulders is considered among the top brands in Indian AntiDandruff Shampoos. 15. • Pruning to reduce similar brands. new package. Charmin. • Product-Mix Contraction: • Eliminate an entire line or reduce assortment within it. and Ariel etc.

The fundamental basis of above average profitability in the long run is sustainable competitive advantage. cost focus and differentiation focus. The primary factors of competitive advantage are innovation. the basis of above average performance within an industry is sustainable competitive advantage. reputation and relationships COMPETITIVE STRATEGY A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. They are collectively known as positional advantages because they denote the firm's position in its industry as a leader in either superior services or cost. The focus strategy has two variants. and focus. There are two basic types of competitive advantage a firm can possess: low cost or differentiation. . There are two types of CA • • Cost leadership Differentiation Cost advantage occurs when a firm delivers the same services as its competitors but at a lower cost. lead to three generic strategies for achieving above average performance in an industry: cost leadership.Marketing Strategy successfully with competitive forces and generate superior return on investment. differentiation. The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them. Differentiation advantage occurs when a firm delivers greater services for the same price of its competitors. According to Porter.

The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of . A low cost producer must find and exploit all sources of cost advantage. It is rewarded for its uniqueness with a premium price. a firm sets out to become the low cost producer in its industry. proprietary technology. They may include the pursuit of economies of scale. and uniquely positions itself to meet those needs. If a firm can achieve and sustain overall cost leadership. 2. 3. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others. while in (b) Differentiation focus a firm seeks differentiation in its target segment. then it will be an above average performer in its industry. It selects one or more attributes that many buyers in an industry perceive as important. (a) In cost focus a firm seeks a cost advantage in its target segment. The sources of cost advantage are varied and depend on the structure of the industry. Both variants of the focus strategy rest on differences between a focuser's target segment and other segments in the industry. preferential access to raw materials and other factors. a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. provided it can command prices at or near the industry average. The focus strategy has two variants. Focus The generic strategy of focus rests on the choice of a narrow competitive scope within an industry. Differentiation In a differentiation strategy.Marketing Strategy 1. Cost Leadership In cost leadership.

It is an advantage that enables business to survive against its competition over a long period of time. while differentiation focus exploits the special needs of buyers in certain segments. India. Tata motors have extensive backward and forward linkages and it is strongly interwoven with machine tools and metals sectors. There are favorable Government polices and regulations to boost the auto industry. India has a large auto component industry noted for its world-class capabilities. . according to the Resource-based View theory. The OICA ranked it as the world's 20th largest automaker. SUSTAINABLE COMPETITIVE ADVANTAGE A firm possesses a sustainable competitive advantage when its value-creating processes and position have not been able to be duplicated or imitated by other firms.Marketing Strategy other industry segments. Cost focus exploits differences in cost behaviour in some segments. There is huge demand in domestic markets due to infrastructure developments and Tata Motors is able to leverage its knowledge of Indian market. EXAMPLE: Tata Motors Limited is a multinational corporation headquartered in Mumbai. The goal of much of business strategy is to achieve a sustainable competitive advantage. There is definite cost advantage as labor cost is 8-9 percent of sales as against 30-35 percent of sales in developed economies. It is India's largest passenger automobile and commercial vehicle manufacturing company. Tata Group's strong expertise in the IT based engineering solution for products and process integration has helped Tata Motors. in the creation of above normal (or supernormal) rents in the long run. based on figures for 2006 Tata Motors have some distinct advantages in comparison to other multi-national competitors. Sustainable competitive advantage results. and one of the world's largest manufacturers of commercial vehicles. Sustainable competitive advantage allows the maintenance and improvement of the enterprise's competitive position in the market. It is part of the Tata Group.

Tata's trucks have long been reputed for their unmatched performance.Marketing Strategy In India. Tata Motors have also received huge demand from the international market as well. which makes the vehicle a very comfortable option to travel through. and technological advancements that are the flag bearers in their production activities in India. quality. and environmental care. It is still operating in the niche market of high-end buses Tata Motors would become the cost leaders soon after the launch of Tata Nano. Its competitive advantage is its high technology. . The demand of Nano would be immense due to the wide spread middle-income population in India. build. it has focused on providing economical transport solutions in consonance with its values of safety. So much so that it was already made its competitors struggle on deciding how to beat them with their one-lakh wonder.