Principles of Corporate Marketing PDF

Principles Of Corporate Marketing
PRINCIPLES OF CORPORATE MARKETING
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QUESTION 1
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1. a) What is BCG growth – share matrix
If we are working with a product portfolio we have a range of tools at our

disposal to determine how each one or a group of the products are doing. We
could consider using the Product Life Cycle but if we need a current “snap
shot” of how the products are doing we would benefit more from using the
Boston Consulting Group Share Matrix.
Back in 1968 a clever person from Boston Consulting Group, Bruce Henderson,
created this chart below to help organisations with the task of analysing their
product line or portfolio.
The matrix assess products on two dimensions. The first dimension looks at
the products general level of growth within its market. The second dimension
then measures the product’s market share relative to the largest competitor in
the industry. Analysing products in this way provides a useful insight into the
likely opportunities and problems with a particular product.
Products are classified into four distinct groups, Stars, Cash Cows, Problem
Child (Question Mark) and Dog.
A completed matrix can be used to assess the strength of our organisation

and its product portfolio. Organisations would ideally like to have a good mix
of cash cows and stars. There are four assumptions that underpin the Boston
Consulting Group Matrix:
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i. If you want to gain market share you will need to invest in a

competitive package, especially through investment in marketing
ii. Market share gains have the potential to generate a cash surplus due
to the effect of economies of scale.
iii. The maturity stage of the product life cycle is where any cash surplus is
most likely to be generated
iv. The best opportunities to build a strong market position usually occur
during a market’s growth period.
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1. b) Explain the following.
i. STAR (high share and high growth)
Star products all have rapid growth and dominant market share. This
means that star products can be seen as market leading products.
These products will need a lot of investment to retain their position, to
support further growth as well as to maintain its lead over competing
products. This being said, star products will also be generating a lot of
income due to the strength they have in the market. The main problem
for product portfolio managers it to judge whether the market is going
to continue to grow or whether it will go down. Star product can
become Cash Cows as the market growth starts to decline if they keep
their high market share.
ii. Cash Cows (high share, low growth)
Cash cows don’t need the same level of support as before. This is due
to less competitive pressures with a low growth market and they
usually enjoy a dominant position that has been generated from
economies of scale. Cash cows are still generating a significant level of
income but is not costing the organisation much to maintain. These
products can be “milked” to fund Star products.
iii. Dog (low share, low growth)
Product classified as dogs always have a weak market share in a low

growth market. These products are very likely making a loss or a very
low profit at best. These products can be a big drain on management
time and resources. The question for managers are whether the
investment currently being spent on keeping these products alive,
could be spent on making something that would be more profitable.
The answer to this question is usually yes.
iv. Problem Child/Question Mark (low share, high growth)
Also sometime referred to as Question Marks, these products prove to

be tricky ones for product managers. These products are in a high
growth market but does not seem to have a high share of the market.
The could be reason for this such as a very new product to the market.
If this is not the case, then some questions need to be asked. What is
the organisation doing wrong? What is competitors doing right? It
could be that these products just need more investment behind them
to become Stars.
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QUESTION 2
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2. With reference to your company explain the following.
i. Marketing Environment
Marketing Environment concerns the influences or variables of the external

and internal environment of a firm that controls the marketing management’s
capability to construct and preserve the flourishing relationships with the
consumer.
According to Philip Kotler, “A company’s marketing environment consists of

the internal factors & forces, which affect the company’s ability to develop &
maintain successful transactions & relationships with the company’s target
customers.”
An assortment of environmental forces affects a company’s marketing

arrangement. A few of them are governable while others are unmanageable. It
is the task of the marketing manager to modify the company’s policies
together with the shifting environment. Macro and micro environment
comprise the structure of the marketing environment.
Overall Market Environment
The overall Marketing environment is the snowballing form of the aspects that
encapsulate inside themselves the capability of a firm to bond with the
customers and in addition, the strength of the product as a driver of
development to the firm. The macro environment consisting of wider societal
authorities, and the micro environment which incorporates the influences
related to a company, together form the general marketing environment of a
company.
The marketing environment is comprised of the following two key factors:
a. Micro - factors inside the firm

b. Macro - factors linked to economic, social, cultural aspects etc.
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ii. Micro Environment
Micro Environment is included the force that are close to the company that can
affects its ability to serve and decision-making. It comprise all those organizations
and individuals who directly affect the activities of a company. All factors which
impact directly on a firm and activities to a particular market.
Normally the micro environment does not affect all the companies in an industry in
the same way, because the size, capacity, capability and strategies are different. For
example, the raw material suppliers are giving more concessions to large sized
companies. However, they may not give the same concessions to small companies.
Like the same, the competitors do not mind about the rival company if it is compared
to the small, but he will be very much conscious if the rival him is large. Sometimes
micro environment of the various firms in an industry is almost the same. In such a
case, response of these firms to their micro environment may differ as each firm will
attempt to achieve a higher success level. The general micro environment factors are:
1. Competitors:
The competitive environment consists of certain basic things which every firm
has to take note of. No company, howsoever large it may be, enjoys
monopoly. In the original business world a company encounters various forms
of competition. The most common competition which a company’s product
now faces is from differentiated products of other companies.
For example, in the Colour Television Market, Philips TV faces competition

from other companies like Videocon, Onida, BPL and others. This type of
competition is called brand competition. It is found in all durable product
markets.
The consumer wants to purchase a two-wheeler, the next question in his mind
is with gear or without gear, 100 cc or more than that, self starter or kick
starter, etc. This type is otherwise known as ‘Product form competition’.
Philip Kotler is of the opinion that the best way for a company to grasp the
full range of its competition is to take the viewpoint of a buyer. What does a
buyer thinks about that which eventually leads to purchasing something? So,
tracing of the consumer mind set will help to retain the market share for all
the firms.
2. Customers:
According to Peter. F. Drucker, “There is only one valid definition of business

purpose, that is to create a customer.” The business enterprises aim to earn
profit through serving the customer demand. It now thinks more in terms of
profitable sale rather than more sales volume for its sake. Today marketing of
a firm begins and also ends with the customers.
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Now a days, a business firm to be successful, must find customers for its
products. This is the reason the customers thus constitute the most important
element in the micro environment of business. Products sales depend mainly
on the degree of consumer satisfaction.
In fact, this is a reason that gives more importance to customer satisfaction

surveys. Now every business firm set-up systems to regularly watch customer
attitude and customer satisfaction, because today it is universally accepted
that the satisfaction of customers is the base for company’s success. Normally
the customers are not in a same group, they are individuals, business
enterprises, institutions and government.
From the company’s point of view it is always better to have customer from
various groups and legions for that easily sustains demand for the company’s
product.
3. Suppliers:
Regarding the suppliers, the organisation can think of availing the required
material or labour according to its manufacturing programme. It can adopt
such a purchase policy which gives bargaining power to the organisation.
According to Michael Porter, “the relationship between suppliers and the firm
epitomises a power equation between them. This equation is based on the
industry conditions and the extent to which each of them is dependent on the
other.”
Suppliers are either individuals or business houses. They combined together;

provide resources that are needed by the company. Now the company
necessarily should go for developing specifications, searching for potential
suppliers, identifying and analysing the suppliers and thereafter choose those
suppliers who offer best mix of quality, delivery reliability, credit, warranties
and obviously low cost.
The development in the supplier’s environment has a substantial impact on

the operations of the company. In recent trends companies can lower their
supply cost and increase their product quality.
4. Public:
Literally word ‘public’ refers to people in general. According to Philip Kotler,

“A public is any group that has an actual or potential interest in or impact on
a company’s ability to achieve its objectives.” The environmentalists,
consumer protection groups, media persons and local people are some of the
well-known examples of publics.
The company has a duty to satisfy the people at large along with competitors
and the consumers. It is an exercise which has a larger impact on the well-
being of the company for tomorrow s stay and growth. Create goodwill
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among public, help to get a favourable response for a company. Kotler in this
regard has viewed that.
“Companies must put their primary energy into effectively managing their
relationships with their customers, distributors and suppliers. Their overall
success will be affected by how other publics in the society view their activity.
Companies would be wise to spend time monitoring all their public
understanding their needs and opinions and dealing with then constructively.”
In the modern business public have assumed important role and their
presence in the micro environment of business.
5. Marketing Intermediaries:
Market intermediaries are either individuals or business houses who come to

the aid of the company in promoting, selling and distributing the goods to
the ultimate consumers. They are Middlemen (wholesalers, retailers and
agents), distributing agencies, market service agencies and financial
institutions. Most of the companies find, it is too difficult to reach the
consumers. In such a cases the agents and distribution firms help to reach the
product to the consumer.
Any type of intermediary the company must take into active consideration,
the following aspects:
(i) The company has also to constantly review the performance of both
middlemen and others helping its efforts periodically. If necessary, it
may take recourse to replacement of those who no longer perform at
the expected level.
(ii) Middlemen come into being to help overcome the discrepancies in

quantities place, time, assortment and possession that would
otherwise exist in a given condition.
(iii) It is advantageous and also efficient to work through the established

Marketing channels instead of creating one and thus going for
experiments.
(iv) The manufacturer has to decide the most cost-effective method of

intermediaries to reach the product to consumer that will help to
increase the profit.
6. Workers and Their Union:
As per the production function theory, the labour gets more importance. He is
also one of the pillars of the company. The organised labours is highly
secured their position compare to unorganised workers So, the workers now
prefer to join labour unions which invariably resort to collective bargaining
and thereby makes them less vulnerable to employer’s exploitation.
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On the other hand, Trade Unions are a major component of a modern

business. Trade Union of workers is an organisation formed by workers to
protect their interests, improve their working conditions etc.
All Trade Unions have objectives or goals to achieve, which are contained in
their constitution, and each has its own strategy to reach those goals Trade
Unions are now considered a sub-system, which seeks to serve the specific
sub-group’ s interest (i.e. workers’) and also considers itself a part of the
organisation.
From the point of view of the company, industrial relation is more important
to improve the company, otherwise conflict between labour and management
leads to Sick Unit.
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iii. Macro Environment
The Macro environment is the uncontrollable factor of the company. For this reason,
it has to structure its policies in the limits set by these factors. Macro-environment on
the whole deals with the demographic, economic, technological, natural, socio-
cultural and politico-legal environment aspects of the markets. Let us now look into
these elements in detail.
1. Demography
It is characterized as the factual investigation of the human populace & its

dissemination. This is a standout amongst the most impacting variables, in
light of the fact that it manages the individuals who structure the business. An
organization ought to study the populace, its conveyance, age structure, and
so forth before choosing its strategy of marketing. Each faction of populace
acts in a different way, relying on a range of factors, for example, age, status,
and so on. If these variables are measured, a company can manufacture only
those products which suit the necessity of the buyers. In this respect, it is said
that, ‘to comprehend the business sector you must comprehend its
demography’.
2. Economic Environment
Economic components are general monetary value, investment rates,

exchange rates, inflation rate, fiscal strategies, balance of payments and so
forth. An organization can effectively offer its products just when individuals
have enough cash to spend. The financial environment influences a
customer’s buying behaviour either by expanding his disposable income or by
decreasing it. Eg: During inflation, the money value decreases. Thus, it is
troublesome for them to buy more products. The income of the customer
should likewise be considered. Eg: In a business sector where both wife &
husband work, their acquiring power will be more. Consequently,
organizations may offer their products effortlessly.
3. Physical Environment
These components incorporate the climate, atmosphere, environmental

change, accessibility of water, accessibility of raw materials and so on. A
company has to implement its policies contained by the restrictions set by
nature. A man can enhance the nature, however, can’t find an option for it.
Nature offers resources, however, in a restricted way. The product manager
has to use it proficiently. Companies must discover the best mix of production
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for the purpose of productive usage of the accessible assets. Else, they may
confront intense deficiency of resources.
4. Technological Factors
Technological variables incorporate the innovative work, robotization,

development of web and other communication innovations, innovation
inducements and barriers to technology. From the consumer’s perspective,
change in innovation implies change in the living standard. In this respect, it is
said that, ‘Technologies figure a person’s Life’.
Each new innovation creates another business & another group of clients.
Another innovation enhances our way of life & in the meantime creates
numerous issues. Eg: Invention of different purchaser comforts like washing
machines, blenders, and so forth have brought about enhancement in our
way of lifestyle yet it has made serious issues like shortage of power, similarly,
innovation in autos has enhanced transportation, however, it has brought
about the issues like air & noise contamination, more accidents etc. In plain
words, following are the effects of technological aspects on the market:
 Creation of new desires

 Creation of new industries
 May wipe out old industries
 May augment the expenditure of R&D.
5. Social & Cultural Factors
The vast majority of us buy in light of the impact of cultural & social elements.
The lifestyle, qualities, convictions, and so on is dead set besides everything
else by the society in which we live. Every society has its own culture. Culture
is a blend of different variables which are exchanged from more established
eras & which are gained. Our conduct is guided by our way of life, family,
instructive foundations, dialects, and so on. Social components are the
cultural and social viewpoints, which incorporate health cognizance, the
growth rate of population, age distribution, career approach and the
importance of security.
The society is a mix of different groups with diverse cultures & subcultures.
Every society has its own conduct. The marketing manager of a company
must study the society in which he works. Eg: In India, we have distinctive
cultural groups like Kashmiris, Punjabis, Assamese, and so forth. The manager
of marketing of a company ought to observe these distinctions before
finalizing the marketing schemes.
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QUESTION 3
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3. Explain the 5 stages in the buyer decision process with suitable examples.
The Buyer or Consumer Decision (Making) Process is the method used by marketers to
identify and track the decision making process of a customer journey from start to finish.
It is broken down into 5 individual stages as mention in the illustration bellow.
To demonstrate this stages, we will using with the decision making journey surrounding
some rather sorry looking trainers as for example.
1. Problem Recognition (I need new trainers)
The first stage of the process is working out what exactly our or the customer needs.
The customer feels like something is missing and needs to address it to get back to
feeling normal. If we can determine when our target demographic develops these
needs or wants, it would be an ideal time to advertise to them.
Know that the trigger for all purchases is a need or a problem that the shopper tries
to satisfy or solve quickly.
Where it concerns this recognition, Guided Selling acts as an efficient prospector,

uncovering latent consumer needs just waiting to rise to the surface.
In our case we noticed our running trainers were looking a little worse for wear and
we acknowledged the need for a new pair of shoe.
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2. Information search (What trainers are out there?)
Now that the need has been recognized, the consumer seeks information to help
fulfil that need. The amateur photographer, will want to compare and contrast
products, as well as their features. This stage has the highest potential of frustrating
and overwhelming potential customers, if they can’t find the right product or solution
or feel unable to make a choice. Also, at any time these consumers can get bogged
down by a very real phenomenon called choice overload.
This is also define as the search stage of the process. One that is continually changing
from old fashioned shopping around to the new shop front which is Google (other
search engines are available - apparently). Information is not only gathered about
stuff and on things but from people via recommendations and through previous
experiences we may have had with various products.
In this stage a customer is beginning to think about risk management. A customer

might make a pro’s vs. con’s list to help make their decision. People often don’t want
to regret making a decision so extra time being put into managing risk may be worth
it.
In our case we googled trainer reviews, and searches such as “what is the best trainer
for dirt running?” among other searches as well as remembering that we didn’t like
Gola or Dunlop shoes and had a nasty experience with a pair of Filas in the 90’s.
3. Evaluation of Alternatives (Do I need trainers and if so which ones?)
Now that consumers have harvested all their data, they’ll set about evaluating the
alternatives in order to make the best decision. Two considerations will come into
play during this stage: objective characteristics of the alternative choices as well as
the subjective characteristics. For example, subjective issues with a specific camera
feature, reported by fellow consumers.
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This is the time when questions start being asked. Is this really the right product for
me do? Do I need a different product? If the answers are either “No it’s not right” or
“yes I need a different product” then stage 2 may recommence. The stage 3 to 2
transition may happen several times before stage 4 has been reached.
Once the customer has determined what will satisfy their want or need they will
begin to seek out the best deal. This may be based on price, quality, or other factors
that are important to them. Customers read many reviews and compare prices,
ultimately choosing the one that satisfies most of their parameters.
In line with our example we started questioning if we actually needed running shoes:
are there alternatives out there? Were our original trainers that bad? The answers
were Yes/Yes but none I liked/Yes they really were. So the process was able to
continue.
4. Purchase (Buying the trainers)
The customer has now decided based on the knowledge gathered what to purchase
and where to purchase what they desire.
At this stage a customer has either assessed all the facts and come to a logical
conclusion, made a decision based on emotional connections/experiences or
succumbed to advertising/marketing campaigns, or most likely a combination of all
of these has occurred.
In our customer journey we purchased some rather nice Asics runners as we had a
wonderful experience with them previously, they were well priced on the market and
the marketing around Asics trainers has always linked them to being the best option
for “real athletic trainers”. The positioning of the product also lent itself to where they
were purchased, a sport shop rather than a shoe shop.
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5. Post Purchase satisfaction or dissatisfaction (Were they the right trainers for
us?)
The review stage is a key stage for the company and for the customer likewise. Did
the product deliver on the promises of the marketing/advertising campaigns? Did the
product match or exceed expectations?
If a customer finds that the product has matched or exceeded the promises made
and their own expectations they will potentially become a brand ambassador
influencing other potential customers in their stage 2 of their next customer journey,
boosting the chances of your product being purchased again. The same can be said
for negative feedback which, if inserted at stage 2, can halt a potential customer’s
journey towards your product.
To finish our customer journey – we very much like the trainers we have chosen – we
would recommend them to a friend, and on purchasing our next set of trainers would
probably make a similar brand or product choice. Our satisfaction has made us a
brand ambassador for the company who created our wonderful trainers (unless they
want to send us a free pair after this article….Size 9 thank you).
So there is the Consumer Decision Making Process in stages with the story of our last
trainer purchase thrown in to boot (no pun intended).
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QUESTION 4
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4. a) Explain the following.
i. Marketing Segmentation
Market segmentation is one of the most efficient tools for marketers to cater
to their target group. It makes it easier for them to personalize their
campaigns, focus on what’s necessary, and to group similar consumers to
target a specific audience in a cost-effective manner. Market segmentation is
being used by marketers since late 1900’s. Simple though it may be, it is of
vital use to forming any marketing plan
Market Segmentation is a process of dividing the market of potential

customers into different groups and segments on the basis of certain
characteristics. The member of these groups share similar characteristics and
usually have one or more than one aspect common among them.
There are many reasons as to why market segmentation is done. One of the
major reasons marketers segment market is because they can create custom
marketing mix for each segment and cater them accordingly.
The concept of market segmentation was coined by Wendell R. Smith who in

his article “Product Differentiation and Market Segmentation as Alternative
Marketing Strategies” observed “many examples of segmentation” in 1956.
Present-day market segmentation exists basically to solve one major problem
of marketers; more conversions. More conversion is possible through
personalized marketing campaigns which require marketers to segment
market and draft better product and communication strategies according to
needs of the segment.
Segmenting is dividing a group into subgroups according to some set ‘basis’.

These bases range from age, gender, etc. to psychographic factors
like attitude, interest, values, etc.
ii. Target Marketing
When it comes to marketing, if you’re trying to talk to everybody, you’re

going to have a difficult time reaching anybody. Vague and generic messages
are far less likely to resonate with audiences than specific, direct
communication – which is why targeting in marketing is so important.
Targeting in marketing is a strategy that breaks a large market into smaller

segments to concentrate on a specific group of customers within that
audience. It defines a segment of customers based on their unique
characteristics and focuses solely on serving them.
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Instead of trying to reach an entire market, a brand uses target marketing to

put their energy into connecting with a specific, defined group within that
market.
The types of target markets are often segmented by characteristics such as:
 Demographics: age, gender, education, marital status, race, religion,

etc.
 Psychographics: values, beliefs, interests, personality, lifestyle, etc.
 Business Industry: business industry or vertical
 Geographic Areas: neighbourhood, area code, city, region, country,
etc.
Targeting in marketing is important because it’s a part of a holistic marketing

strategy. It impacts advertising, as well as customer experience, branding, and
business operations. When your company focuses on target market
segmentation, you can do the following:
Speak directly to a defined audience. Marketing messages resonate more

deeply with audiences when readers can relate directly to the information.
Brands that have a large, varied market of customers often struggle with
creating marketing campaigns that speak directly to their audience. Because
their viewers are very different, few slogans or stories can resonate with each
person on a personal level. Through target marketing, you can alleviate this
problem and focus on crafting messages for one specific audience.
Attract and convert high-quality leads. When you speak directly to the
people you want to target, you are more likely to attract the right people.
Your marketing will more effectively reach the people most likely to want to
do business with you. When you connect with the right people, you are then
more likely to get high-quality, qualified leads that will turn into paying
customers.
Differentiate your brand from competitors. When you stop trying to speak
to every customer in your market and start focusing on a smaller segment of
that audience, you also start to stand out from competitors in your industry.
When customers can clearly identify with your brand and your unique selling
propositions, they will choose you over a competitor that isn’t specifically
speaking to or targeting them. You can use your positioning in marketing to
make your brand more well-known and unique.
Build deeper customer loyalty. The ability to stand out from competitors by
reaching your customers on a more personal, human level also creates
longer-lasting relationships. When customers identify with your brand and
feel like you are an advocate for their specific perspectives and needs, they
will likely be more loyal to your brand and continue to do business with you
over a longer period of time.
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Improve products and services. Knowing your customers more intimately

also helps you look at your products and services in a new way. When you
have a deep understanding of your target audience, you can put yourself in
their shoes and see how you can improve your offerings. You can see what
features you can add to better serve your customers.
Stay focused. Finally, the benefit of using targeting in marketing is that it also
serves to help your brand and team. Target marketing allows you to get more
specific about your marketing strategies, initiatives, and direction of your
brand. It helps you clarify your vision and get everyone in the organization on
the same page. You have more direction when it comes to shaping upcoming
plans for both marketing and the business as a whole. A focused approach
helps you fully optimize your resources, time, and budget.
iii. Market Position
A market position is the space captured by an established brand, product or

service in a crowded market. It is the answer to the question "why do
customers buy our product?" Market position is defined in terms of customer
needs, customer perceptions and the competitive advantages of a firm. The
following are common types of market position.
Brand Identity - The mission, vision, concepts, visual symbols, ethics, culture,
reputation and legacy of a brand. People buy what inspires them.
Brand Recognition -How well your brand is known. People will often buy
what they recognize.
Customers - Relationships with customers. For example, a restaurant that has

impressed thousands of customers over the years that enjoys repeat business
and high ratings online.
Price - Your prices. Price is one of the strongest types of competition. In many
industries, customers typically purchase the lowest price item that meets a
minimum level of quality.
Features - The capabilities and performance of your products and services.
Quality - The value of your products and services including intangible

elements such as experience and reliability.
Channels - Reaching your customers. Customers often buy from the most
convenient location or from the salesperson who reaches out to them first.
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4. b) List and explain 4 bases for segmenting consumer markets.
Customer segmentation also consumer segmentation or client segmentation is

unavoidable when companies want to reach the target markets. Customer
Segmentation strategy enables marketing managers to stretch budgets and achieve
the desired goals by reaching the most relevant groups to become leads. Niche
marketing enables marketers to craft and deliver messages specifically for the target
audience. This process will connect markers to the target customers, influence and
develop relationship and the message will resonate the customers.
There are different ways to segment a market which enables marketers to reach the
target consumers for their products and services. In business-to-consumer marketing,
there are different marketing segmentation variables.
a. Age
b. Gender
c. Education
d. Social Class
e. Life Style
f. Marital status
On the other hand, business-to-business marketing, there are different ways to

segment customers that is
a. Industry
b. Company size
c. Technology
d. Loyalty
e. Nature of existing relationship
Market Segmentation allows marketers to reach their target audience by 4 ways to

segment customer base into demographic, geographic, psychographic and
behavioural segmentation.
Demographic Segmentation
Demographic segmentation is a marketing strategy that segment the market based

on Age, Gender, Family Life Cycle, income, Occupation and Education. Demographic
segmentation is easy to implement and very useful. Victoria's Secret lingeries
company will focus on females i.e. gender-based demographics or Luxury car
manufactures will choose household income level more than $150,000. A bookseller
may shape a message that resonates to students.
Demographic segmentation is fair enough when marketers approaching multiple

segments at a time. For example, a Fashion Magazine target Asian (Geographic)
females (Demographic) who are working (Psychographic) because they consider the
women a sales lead.
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Focusing different customer segmentation at a time empower marketers to reach the

targeted market where the conversion rate is very high. It will certainly increase
marketing efforts put and money spent.
Geographic Segmentation
Geographic segmentation is a strategy where companies target audience based on

country (United States or China) region (West South Central) metro-size (over or
under 60,000) and climate (northern, southern). This segmentation may broader
enough and narrow as well from a country to a street.
Geographic segmentation is equally important for both large and small businesses.
Small business owners can take advantages of by pointing targeted audience. They
will need a small advertising budget to reach the target customers. For example, a
small fast food “Chicken Delicious” may use flyers, banners within the location.
Psychographic Segmentation
Psychographic segmentation divides customer base into less tangible segment

groups such as personality, lifestyle, interest, social class and values. Every customer
has unique psychographic characteristics. This segmentation is difficult to implement
as compared to both demographic and geographic segmentation.
Marketers need a comprehensive research to segment the market based on

psychographics. They may interview customers to find their likes and dislikes. Don’t
need to shy, ask the questions to know insight who really are your buyers. Dealing
mass population, survey might be a good way to gather data in order to implement
psychographic segmentation successfully.
Behavioural Segmentation
Behavioural segmentation divides consumers on the basis of their behaviour, attitude

towards product and service, loyalty, occasion, usage rate, readiness and liking. In
marketing, management markers tend to in-depth study the consumer behaviour.
Before taking a purchase-decision there are several factors affect the consumer
behaviour. The consumer decision is based on his behaviour and marketers target
exact behavioural segmentation.
There are different ways to use behavioural segmentation. For example, take hotel
industry may focus target customer on New Year as it is a moment of outdoor
celebration.
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Market Segmentation
By Behaviour By Demographics By Geography By Psychographics
 Benefits  Age/generation  Region  Activities

sought  Income (continent,  Interests
from the  Gender country, state,  Opinions
product  Family life neighbourhood)  Values
 How often cycle  Size of city or  Attitudes
the product  Ethnicity town  Lifestyles
is used  Family size  Population
(usage rate)  Occupation density
 Usage  Education  Climate
situation  Nationality
(daily use,  Religion
holiday  Social class
use, etc.)
 Buyer’s
status and
loyalty to
product
(nonuser,
potential
user, first-
time users,
regular
user)
25
QUESTION 5
26
5. List and explain with examples, the following:
i. Convenience Product
A convenience product is a product that makes life easier for customers. People are
often strongly motivated to reduce effort. As such, business models based on
providing conveniences are extremely common. The following are examples of basic
types of convenience product.
Labour Saving Device - A machine that automates work that was previously manual.
For example, a washing machine replaces the labour of scrubbing clothing.
Location - Putting things closer to the customer such as a neighbourhood cafe or

convenience store.
Delivery - Delivering products and services to the customer's door.
Portability - Making things smaller so that they can be carried around.
Usability - Products and services that are easy to use. For example, an ecommerce
site that makes a great variety of products easier to find and order.
Time Saving - Precooked meals and other products that consume less time than
traditional alternatives.
Packaging - Packaging that is easy to use such as a reseal able package of cheese.
Automation - Automating things that were previously manual such as a self-driving

car.
Services - Services are often designed to make things as easy for the customer as
possible. For example, a hotel concierge who helps a customer reserve a restaurant.
Self Service - Automating elements of customer service. For example, a kiosk that
reduces lines for services such as tickets.
Managed Services - Managing a process for a customer. For example, a software

product that manages things like security and capacity for the customer.
ii. Shopping Product
Shopping Product are those consumer goods which the customer in the process or
selection and purchase characteristically compares on such bases as suitability,
quality, price and styles. Shopping Product may be considered to be those
commodities whose selection is of such importance that buyers devote considerable
time to their selection. Such products are purchased only after a comparison of
several products. Quality, style, suitability and price are the common bases of
comparison.
27
Shopping Product have also been defined as those goods for which the probable
gain from making price and quality comparisons is thought to be large relative to the
consumer’s appraisal of the searching cost in terms of time, money and effort. When
a large number of buyers find it worthwhile to look around for a particular product,
then we are dealing with a shopping product.
In another way, shopping product are sort of product that involve shoppers’ research
and comparison among different brands. There are two explicit sorts of shopping
product i.e. homogeneous and heterogeneous. Homogeneous product are thought
by consumers as very similar in nature and the final buy is usually takes place on the
lowest price. Examples of this sort of shopping product may be home appliances,
such as washing machines, hair dryers, or a refrigerator.
Examples of shopping product:
Examples of shopping goods typically include women’s apparel, furniture, jewellery,

rugs, millinery, television, radio, costly watches, fashionable shoes, cars, refrigerator,
musical instruments, piece goods, dishwashers, automobiles, men’s suits and
women’s high-priced sarees like banarasi, zamdani, shiffon, lehenga, kanchipuram
etc. Even some inexpensive items are sometimes seen as shopping goods. Many
consumers treat butter, coffee and some other food items as shopping goods. They
carefully read food store advertising for the prices of these items and then shop at
those stores which offer the lowest price.
iii. Specialty Product
Marketing trends change over time, and are different, depending on the market
segment you are trying to attract. When it comes to fulfilling a very specific need for
a demographic, specialty products could be the solution to drive more sales in the
door. Specialty products have unique features and characteristics, as they are
designed as a unique solution for a designated market group.
Upgrading Another Brand
Some companies exclusively sell specialty products that upgrade other products in
the market. For example, you could sell high-end rims for cars. You aren't selling cars
and perhaps you deal with several car brands, but you are giving consumers an
opportunity to upgrade and customize their own automobile. Specialty products in
this capacity are marketed to appeal to consumers' desire to individualize what they
already have. Cell phone accessories made by third-parties are another specialty
product designed to upgrade other brands' products.
Becoming a Luxury Brand
Many luxury products are purchased because high-end consumers are interested in
the features and functionality of the product as well as the social image. A
homeowner in an affluent neighbourhood might only shop for a Wolf oven range
28
and a Sub-Zero refrigerator. These are high-end luxury appliances that meet
performance standards and luxury branding. These brands are out of the price range
for most consumers, however, and are therefore considered specialty products.
Marketing high-end lines require targeting those who can afford the brand.
Specialty Items Mixed With Standard Products
Some places have specialty products within a family brand of products. Go into a
watch store. There are watches for sale that cost a mere $30. Take a look at the
specialty watches that may have an altimeter for pilots, and GPS tracking for an
outdoorsman. There could also be expensive luxury watches in the same brand. This
marketing model brings in customers from many demographics. Marketing specialty
products in this capacity involves educating customers about the difference between
different specialty products to help them find the best solution for their need.
Lifestyle Branding
Lifestyle branding is a method in which a marketer will take a company vision and
then market that vision to a specific lifestyle. For example, the food industry has
taken specialty foods to new levels. You can grocery shop for food items based on
organic, vegan or decadent desserts. The goal of lifestyle branding merged with
specialty products is appealing to the lifestyle choices a person makes. It educates
the consumer about the exceptionalism of the brand. In the food industry, this is seen
in organic food labelling that talks about free-range, no pesticides or no antibiotics
branding. Whether this item is found in a restaurant or in a grocery store, this targets
a niche in the market.
iv. Unsought Product
An unsought product is a product that is difficult to sell because it has no demand.

Most products have a regular stream of demand as customers are familiar with them
and they fulfil customer needs. Unsought products have little or no demand as
customers don't know about them or have no desire to buy them. The following are
common types of unsought product.
Risk - Products such as a disaster preparation kit that people only buy to mitigate
risk. These products can be difficult to sell but then suddenly be in high demand due
to a disaster or changes in risk perception.
Adversity - Things that people only buy when something bad happens such as a
coffin.
Innovation - A product that is an order of magnitude better than alternatives on the

market that is initially difficult to sell because people are unfamiliar with it. Typically
demand picks up as people gain appreciation for its value and word spreads.
29
False Innovation - A product that designers believe is innovative that doesn't truly
improve on existing designs. Such a product has no natural demand and lacks a
feasible value proposition. As such, it is extremely difficult to sell.
30
QUESTION 6
31
6. Explain the 8 stages in the new product development process.
New Product development is a journey. It’s the road which leads to the actual
product and then the actual product to the market. Every product goes through a
number of stages before being introduced in the market.
1. Idea Generation
The first stage of the New Product Development is the idea generation. Ideas
come from everywhere, can be of any form, and can be numerous. This stage
involves creating a large pool of ideas from various sources, which include
 Internal sources – many companies give incentives to their employees to

come up with workable ideas.
 SWOT analysis – Company may review its strength, weakness,
opportunities and threats and come up with a good feasible idea.
 Market research – Companies constantly reviews the changing needs,
wants, and trends in the market.
 Customers – Sometimes reviews and feedbacks from the customers or
even their ideas can help companies generate new product ideas.
32
 Competition – Competitors SWOT analysis can help the company

generate ideas.
2. Idea Screening
Ideas can be many, but good ideas are few. This second step of new product
development involves finding those good and feasible ideas and discarding
those which aren’t. Many factors play a part here, these include –
 Company’s strength,
 Company’s weakness,
 Customer needs,
 Ongoing trends,
 Expected ROI,
 Affordability, etc.
3. Concept Development & Testing
The third step of the new product development includes concept

development and testing. A concept is a detailed strategy or blueprint version
of the idea. Basically, when an idea is developed in every aspect so as to make
it presentable, it is called a concept.
All the ideas that pass the screening stage are turned into concepts for testing
purpose. You wouldn’t want to launch a product without its concept being
tested.
The concept is now brought to the target market. Some selected customers
from the target group are chosen to test the concept. Information is provided
to them to help them visualize the product. It is followed by questions from
both sides. Business tries to know what the customer feels about the concept.
Does the product fulfil customer’s need or want? Will they buy it when it’s
actually launched?
Their feedback helps the business to develop the concept further.
4. Business Strategy Analysis & Development
The testing results help the business in coming up with the final concept to be
developed into a product.
Now that the business has a finalized concept, it’s time for it to analyse and
decide the marketing, branding, and other business strategies that will be
used. Estimated product profitability, marketing mix, and other product
strategies are decided for the product.
33
Other important analytics includes
 Competition of the product

 Costs involved
 Pricing strategies
 Breakeven point, etc.
5. Product Development
Once all the strategies are approved, the product concept is transformed into
an actual tangible product. This development stage of new product
development results in building up of a prototype or a limited production
model. All the branding and other strategies decided previously are tested
and applied in this stage.
6. Test Marketing
Unlike concept testing, the prototype is introduced for research and feedback
in the test marketing phase. Customer’s feedback are taken and further
changes, if required, are made to the product. This process is of utmost
importance as it validates the whole concept and makes the company ready
for the launch.
7. Commercialization
The product is ready, so should be the marketing strategies. The marketing

mix is now put to use. The final decisions are to be made. Markets are decided
for the product to launch in. This stage involves briefing different departments
about the duties and targets. Every minor and major decision is made before
the final introduction stage of the new product development.
8. Introduction
This stage involves the final introduction of the product in the market. This
stage is the initial stage of the actual product life cycle.
Most new products are introduced with introductory pricing, in which final
prices are nailed down after consumers have ‘gotten in’. In this final stage,
you’ll gauge overall value relevant to Cost of Goods Sold, making sure internal
costs aren’t overshadowing new product profits. You continuously
differentiate consumer needs as your products age, forecast profits and
improve delivery process whether physical, or digital, products are being
perpetuated.
34
QUESTION 7
35
7. Explain the following with examples.
i. Market skimming pricing
The first new product pricing strategies is called price-skimming. It is also referred to
as market-skimming pricing. Price-skimming (or market-skimming) calls for setting a
high price for a new product to skim maximum revenues layer by layer from those
segments willing to pay the high price. This means that the company lowers the price
stepwise to skim maximum profit from each segment. As a result of this new product
pricing strategy, the company makes fewer but more profitable sales.
Many companies inventing new products set high initial prices in order to skim
revenues layer by layer from the market. An example for a company using this new
product pricing strategy is Apple. When it introduced the first iPhone, its initial price
was rather high for a phone. The phones were, consequently, only purchased by
customers who really wanted the new gadget and could afford to pay a high price for
it. After this segment had been skimmed for six months, Apple dropped the price
considerably to attract new buyers. Within a year, prices were dropped again. This
way, the company skimmed off the maximum amount of revenue from the various
segments of the market.
However, this new product pricing strategy does not work in all cases. Price-
skimming makes sense only under certain conditions. The product’s quality and
image must support the high initial price, and enough buyers must want the product
at that price. Also, the costs of producing smaller must not be so high that they
overshadow the advantage of charging more. And finally, competitors should not be
in sight – if they are able to enter the market easily and undercut the high price,
price-skimming does not work.
ii. Market penetration pricing
The opposite new product pricing strategy of price skimming is market-penetration

pricing. Instead of setting a high initial price to skim off each segment, market-
penetration pricing refers to setting a low price for a new product to penetrate the
market quickly and deeply. Thereby, a large number of buyers and a large market
share are won, but at the expense of profitability. The high sales volume leads to
falling costs, which allows companies to cut their prices even further.
Market-penetration pricing is also applied by many companies. An example is the

giant Swedish furniture retailer Ikea. By introducing products at very low prices, a
large number of buyers is attracted, making Ikea the biggest furniture retailer
worldwide. Although the low prices make each sale less profitable, the high volume
results in lower costs and allows Ikea to maintain a healthy profit margin.
In order for this new product pricing strategy to work, several conditions must be
met. The market must be highly price sensitive so that a low price generates more
36
market growth and attracts a large number of buyers. Also, production and
distribution costs must decrease as sales volume increases. In other words,
economies of scale must be possible. And finally, the low price must ensure that
competition is kept out of the market, and the company using penetration pricing
must maintain its low-price position. Otherwise, the price advantage will only be of a
temporary nature.
iii. Retailing
Retailing is the sale of goods to end users, not for resale, but for use and
consumption by the purchaser.
Retailing involves the sale of merchandise from a single point of purchase directly to
a customer who intends to use that product. The single point of purchase could be a
brick-and-mortar retail store, an Internet shopping website, a catalogue, or even a
mobile phone.
The retailing transaction is at the end of the chain. Manufacturers sell large quantities
of products to retailers, and retailers attempt to sell those same quantities of
products to consumers.
iv. Wholesaling
Wholesalers sell in large bulk quantities, without worrying about many of the aspects
of retailing that consumers expect like visual merchandising. Wholesalers do not want
to deal with a large number of end-user customers. Rather, their goal is to sell large
quantities to a small number of retailing companies.
The big difference between wholesaling and retailing is in the price. The retailing
price is always more than the wholesale price. The reason for this is because the
added cost of selling merchandise to end-user customers—labour, rent, advertising,
etc.—is factored into the pricing of the merchandise. The wholesaler doesn’t have to
deal with such expenses, which allows him to sell goods at a lower cost.
v. Advertising
Advertising is the action of calling public attention to an idea, good, or service

through paid announcements by an identified sponsor.
According to Kotler – Advertising is any paid form of non-personal presentation &

promotion of ideas, goods, or services by an identified sponsor.
According to Advertising Association of the UK – Advertising is any communication,

usually paid-for, specifically intended to inform and/or influence one or more people.
37
A simpler (and modern) definition of advertising can be – A paid communication

message intended to inform people about something or to influence them to buy or
try something.
There are 3 main objectives of advertising. These are:
To Inform - Advertisements are used to increase the brand awareness and

brand exposure in the target market. Informing the potential customers about
the brand and its products is the first step towards attaining business goals.
To Persuade - Persuading customers to perform a particular task is a

prominent objective of advertising. The tasks may involve buying or trying the
products and services offered, to from a brand image, develop a favourable
attitude towards the brand etc.
To Remind - Another objective of advertising is to reinforce the brand

message and to reassure the existing and potential customers about the
brand vision. Advertising helps the brand to maintain top of mind awareness
and to avoid competitors stealing the customers. This also helps in the word
of mouth marketing.
Other objectives of advertising are subsets of these three objectives. These subsets
are:
 Brand Building
 Increasing Sales
 Creating Demand
 Engagement
 Expanding Customer Base
 Changing Customers’ attitudes, etc.
Importance Of Advertising
 To The Customers
Convenience: Targeted informative advertisements make the customer’s

decision making process easier as they get to know what suits their
requirements and budget.
Awareness: Advertising educates the customers about different products

available in the market and their features. This knowledge helps the
customers compare different products and choose the best product for them.
Better Quality: Only brands advertise themselves and their products. There
are no advertisements of unbranded products. This ensures better quality to
the customers as no brand wants to waste money on false advertising.
 To The Business
38
Awareness: Advertising increases the brand and product awareness among

the people belonging to the target market.
Brand Image: Clever advertising helps the business to form the desired brand
image and brand personality in the minds of the customers.
Product Differentiation: Advertising helps the business to differentiate its

product from those of competitors’ and communicate its features and
advantages to the target audience.
Increases Goodwill: Advertising reiterates brand vision and increases the

goodwill of the brand among its customers.
Value For Money: Advertising delivers the message to a wide audience and
tends to be value for money when compared to other elements of promotion
mix.
Advantages Of Advertising
Reduces Per Unit Cost: The wide appeal of advertisements increases the
demand of the product which benefits the organization as it capitalizes on the
economies of scale.
Helps In Brand Building: Advertisements work effectively in brand building.

Brands who advertise are preferred over those which doesn’t.
Helps In Launching New Product: Launching a new product is easy when it

is backed by an advertisement.
Boosts Up Existing Customers’ Confidence In The Brand: Advertisements

boosts up existing customers’ confidence in the brand as they get a feeling of
pride when they see an advertisement of the product or the brand they use.
Helps In Reducing Customer Turnover: Strategic advertisements of new

offers and better service helps reduce customer turnover.
Attracts New Customers: Attractive advertisements helps the brand in

gaining new customers and expanding business.
Educates The Customers: Advertisements inform the customers about

different products existing in the market and also educates them in what they
should look for in an apt product.
vi. Sales Promotion
Sales promotion is the process of persuading a potential customer to buy the

product. Sales promotion is designed to be used as a short-term tactic to boost sales
– it is rarely suitable as a method of building long-term customer loyalty.
39
Some sales promotions are aimed at consumers. Others are targeted at

intermediaries and at the firm's sales force.
When undertaking a sales promotion, there are several factors that a business must
take into account:
o What does the promotion cost – will the resulting sales boost justify the
investment?
o Is the sales promotion consistent with the brand image? A promotion that
heavily discounts a product with a premium price might do some long-term
damage to a brand
o Will the sales promotion attract customers who will continue to buy the
product once the promotion ends, or will it simply attract those customers
who are always on the look-out for a bargain?
There are many methods of sales promotion, including:
o Money off coupons – customers receive coupons, or cut coupons out of

newspapers or a products packaging that enables them to buy the product
next time at a reduced price
o Competitions – buying the product will allow the customer to take part in a
chance to win a prize
o Discount vouchers – a voucher (like a money off coupon)
o Free gifts – a free product when buy another product
o Point of sale materials – e.g. posters, display stands – ways of presenting the
product in its best way or show the customer that the product is there.
o Loyalty cards – e.g. Nectar and Air Miles; where customers earn points for
buying certain goods or shopping at certain retailers – that can later be
exchanged for money, goods or other offers
o Loyalty cards have recently become an important form of sales promotion.
They encourage the customer to return to the retailer by giving them
discounts based on the spending from a previous visit. Loyalty cards can
offset the discounts they offer by making more sales and persuading the
customer to come back. They also provide information about the shopping
habits of customers – where do they shop, when and what do they buy? This
is very valuable marketing research and can be used in the planning process
for new and existing products.
The main advantages and disadvantages of sales promotion are:
40
vii. Public Relation
Public relations is the process of managing an organization's communications to

stakeholders and the media. This is typically seen as a basic corporate function that
supports governance, management, stakeholder relations and compliance. Public
relations is also used in the marketing of the brands and products. The following are
illustrative examples of public relations.
Investor Relations - Publishing quarterly reports, press releases and regulatory

disclosures. Responding to analyst, media and investor inquiries.
Government Relations - Communication with the government in areas that are

compliance sensitive or that represent a regulatory risk.
Community Relations - Supporting programs of sustainability and community

engagement. Managing communications with communities and non-profits.
Media Relations - Establishing and managing relationships with media organizations

and individuals. Generating publicity by acting as a source for media content.
Media Production - Producing content such as promotional videos to achieve

communication goals in areas such as investor relations or brand awareness.
Customer Relations - Working with customer service to manage customer feedback

and address customer inquiries and concerns. Engaging customers such as lead users
to feed product improvement and innovation.
Marketing Communications - Leveraging communication channels and media

relationships to generate demand for products and brand awareness.
Influencers - Managing relationships with influential individuals in your industry.
Social Media - Managing social media communication channels to engage the

public in a way that reflects well on your reputation and brand.
41
Internal Communications - Supporting teams such as executives and human

resources in communicating important messages to employees.
Industry Events - Orchestrating participation in industry events to generate publicity

and establish industry and media relationships.
Crisis Communications - Leveraging an organization's communication channels and

media relationships to support crisis management.
viii. Personal Selling
Personal selling is the use of a sales force to promote and sell a product using social
interactions such as face-to-face and social media conversations. It is the primary way
to sell products and services in many industries and is particularly common in high
value business-to-business sales.
The process of personal selling is often viewed as a sales pipeline that includes steps
such as lead identification, lead qualification, customer contact, needs analysis,
proposal, quote, close and customer relationship management.
ix. Push Strategy
A push promotional strategy involves taking the product directly to the customer via
whatever means, ensuring the customer is aware of your brand at the point of
purchase. It’s “Taking the product to the customer”
Examples of push tactics
 Trade show promotions to encourage retailer demand

 Direct selling to customers in showrooms or face to face
 Negotiation with retailers to stock your product
 Efficient supply chain allowing retailers an efficient supply
 Packaging design to encourage purchase
 Point of sale displays
x. Pull Strategy
A pull strategy involves motivating customers to seek out your brand in an active
process. It’s “Getting the customer to come to you”
Examples of pull tactics
 Advertising and mass media promotion

 Word of mouth referrals
 Customer relationship management
 Sales promotions and discounts.
42

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Principles Of Corporate Marketing

PRINCIPLES OF CORPORATE MARKETING

1. a) What is BCG growth – share matrix

If we are working with a product portfolio we have a range of tools at our

A completed matrix can be used to assess the strength of our organisation

i. If you want to gain market share you will need to invest in a

1. b) Explain the following.

i. STAR (high share and high growth)

ii. Cash Cows (high share, low growth)

iii. Dog (low share, low growth)

Product classified as dogs always have a weak market share in a low

iv. Problem Child/Question Mark (low share, high growth)

Also sometime referred to as Question Marks, these products prove to

2. With reference to your company explain the following.

Marketing Environment concerns the influences or variables of the external

According to Philip Kotler, “A company’s marketing environment consists of

An assortment of environmental forces affects a company’s marketing

Overall Market Environment

The marketing environment is comprised of the following two key factors:

a. Micro - factors inside the firm

ii. Micro Environment

For example, in the Colour Television Market, Philips TV faces competition

According to Peter. F. Drucker, “There is only one valid definition of business

In fact, this is a reason that gives more importance to customer satisfaction

Suppliers are either individuals or business houses. They combined together;

The development in the supplier’s environment has a substantial impact on

Literally word ‘public’ refers to people in general. According to Philip Kotler,

Market intermediaries are either individuals or business houses who come to

(ii) Middlemen come into being to help overcome the discrepancies in

(iii) It is advantageous and also efficient to work through the established

(iv) The manufacturer has to decide the most cost-effective method of

6. Workers and Their Union:

On the other hand, Trade Unions are a major component of a modern

iii. Macro Environment

It is characterized as the factual investigation of the human populace & its

Economic components are general monetary value, investment rates,

These components incorporate the climate, atmosphere, environmental

Technological variables incorporate the innovative work, robotization,

 Creation of new desires

5. Social & Cultural Factors

1. Problem Recognition (I need new trainers)

Where it concerns this recognition, Guided Selling acts as an efficient prospector,

2. Information search (What trainers are out there?)

In this stage a customer is beginning to think about risk management. A customer

3. Evaluation of Alternatives (Do I need trainers and if so which ones?)

4. Purchase (Buying the trainers)

4. a) Explain the following.

Market Segmentation is a process of dividing the market of potential

The concept of market segmentation was coined by Wendell R. Smith who in

Segmenting is dividing a group into subgroups according to some set ‘basis’.

ii. Target Marketing

When it comes to marketing, if you’re trying to talk to everybody, you’re

Targeting in marketing is a strategy that breaks a large market into smaller

Instead of trying to reach an entire market, a brand uses target marketing to

 Demographics: age, gender, education, marital status, race, religion,

Targeting in marketing is important because it’s a part of a holistic marketing

Speak directly to a defined audience. Marketing messages resonate more

Improve products and services. Knowing your customers more intimately

iii. Market Position

A market position is the space captured by an established brand, product or

Customers - Relationships with customers. For example, a restaurant that has

Features - The capabilities and performance of your products and services.

Quality - The value of your products and services including intangible