Chapter 6

In the Marketplace
 Market place is large and so complex that it is not
comprehensible, predictable or even remotely controllable
 Market place whether real or virtual is intensely based on
human relations, which are complex and interlinked
 Marketing, the buying and selling of goods is the essence of
business
 Only after market research can a product be positioned for
sale in the market vis-à-vis the competitors products
 Logistics such as supply and distribution are the real nitty-
gritty of marketing
 Marketing is business in action and ethics is its judge
 What means are used to position, price and advertise the
products makes ethical reckoning
Product Positioning and Competing
 To let your customers know what you sell is the essence of
business
 What means you employ to achieve your goal is the concern
of business ethics
 Lot of competitors are there in a free market vying for the
same market segment
 Introducing the same product into the same segment is very
hard, and for that managers use various strategies to position
products
 This can cause two fold problems first the competitors and
second the customers
Product Manager

 It is the responsibility of the product manager to research,

select, develop, place and promote the company’s product
 He has to deal with all the problems that arise from the
customers
 He/she has to carefully study the target market, the
competitors and the strategies to be adopted to place the
products
 The ethical examination consists of the means used in these
strategies to achieve the end, that is the sale
Finding Favourable Product Position

 Product management by Dabur India is a good example

 It is completely indigenous and has developed and placed
products in the market that have won accolades from the
customers
 It rediscover the ancient science of ayurveda and has
innovated to give relevant and highly valued products to the
Indian customer
 Its authenticity has helped it to expand its business outside
the country
Competition to Affirm Leading Position
 The four Ps of marketing – product, price, place and
promotion – determine how a company is going to position its
product in the market
 Following are some of the attributes required to position a
product successfully among the competitors
a. Relative cost
b. Availability
c. Quality
d. Service
e. Performance
f. Durability
g. Name recognition
 All of the above can be applied to Dabur products
 With its efficient supply chain it can score over other
competitors in saving costs
 Its market penetrability is very extensive and products are
available not only in pharmacies but also in grocery stores
 Customer satisfaction is very well taken care of
 Scores on quality, service and performance have been excellent
 Earned a name for itself by supplying good and healthy
products
 With acquisition of Fem Care Pharma, Dabur is now a well-
established leader in India’s bleach creams and soap market
Product Differentiation

 Dabur’s competitors too have products which are ayurveda

based, but it has been able to differentiate its products in
packaging and labelling and advertising
 Being in business for over a century, it has a loyal following
 Product differentiation with few changes made results in
creating a special identity, which becomes the ultimate selling
proposition
 Dabur’s USP is its dedication to healthcare through
ayurveda, which is India’s oldest natural science of medicine
Packaging, Labelling and Launching

 Packaging products is a big business

 It involves vast scientific applications and technology, since
products are in all forms of substance that is liquid, solid and
gas
 Packaging is an art because the customer views the
packaging first and the marketer’s priority for the appearance
of the product is very high
 Package designing is a highly creative and technical activity
 Lately, the aspect of environmentally friendly packaging has
taken the centre stage
 Following are some of the objectives of packaging and their
ethical relevance
1. Container – physical necessity that most contents need a
suitable container. Every product is packed so that it can be
stored, transported, exhibited and sold
Ethics: packaging is appropriate and does not cause
leakage or waste, or lead to chemical reactions such as
found in plastic or metal packaging, or any other harm to
the customer

2. Physical protection – packaging provides physical protection

from shock, vibration, temperature and compression
Ethics: that packaging is not haphazard, causing damage to
the product and robbing the customer of an authentic product
3. Barrier protection – to keep product in its original condition,
clean and fresh measures in packaging are take so that it is
free from moisture, oxidization and other factors that can affect
the product quality adversely. Vacuum packaging of food stuffs,
tamper-free packs and closures for pharmaceutical products
are examples
Ethics : if extreme care is not taken, a product could pose a
threat to the health, safety and well-being of the customer

4. Agglomeration – small products such as sachets, stationary

products like erasers, pencils etc. are bulk packed
Ethics : that the products in bulk pack do not miscount, thus
causing loss to the stockist or the distributors
5. Portion Control - Immediate container of the product is a
natural vessel for the quantity. Soaps are wrapped and the
liquids are bottled
Ethics: packaging has become deceptive – large packs are
made to suggest greater quantity, intriguingly designed to
unduly attract customers

6. Convenience – In distribution, the handling, storing, display

and sale packaging is most convenient
Ethics: That some designers and packers may not lose sight of
the purpose of packaging. There is an outcry by customers that
packaging has become extravagant and has lost its practical
purpose
Ethical and Sustainable Packaging
 Due to high levels of environmental campaigning, there is an
increased awareness for ethical and sustainable packaging
 Governments, non-government agencies are working for
environmentally friendly packaging by promoting bio-
degradable materials for packaging
 Sustainable packaging is developing into a standard format
of packaging, mainly due to consumer consciousness, which
is supported by the press, TV and other opinion-shaping
media
 Recycling, use of lightweight and efficient materials and
above all biodegradability have facilitated the cause of ethical
packaging
 More and more new corporations are adopting the new
culture of sustainability as their corporate social responsibility
Pricing
 The most imp among the four Ps (product, promotion, place and
price) is the price
 Economic forces of the demand and supply play a great role in
the determination of the price
 Marketers – manufacturers, advertisers, distributors, retailers
have a stake in the pricing, but the ultimate stakeholder is the
customer who withholds the money until he/she buys
 To make consumers part with money, marketers create
ingenious plans and strategies
 Marketers use different tools to entice the customer – cognitive
tools to convince with reason, emotional tools to appeal to
feelings, psychological to exploit human behaviour, fear to warn
that prices will go up, promoting quality for a higher price,
making captive to monopoly and a myriad other ways
 Price plays a big role in the free market ethos and hence the
human judgement as to the fairness of this interaction is
inevitable
Objectives of Pricing
 Competitive pricing – competitive pricing strategy would be to
follow the market leader closely and find other ways and
means to attract customers. Offering better quality than that
of competitor for the same quantity and price, engaging in
creative marketing etc.
Ethics : the strategies adopted to re-enforce better quality
should be fair and not harmful to the customers
 Prestige pricing – the company may have the objective to
establish as a higher end, through a limited supply of its
products, to enhance its reputation for up-market users
Some car brands such as Lamborghini and Rolls Royce
have such pricing objectives
Ethics : these exclusive customers will have exclusive
problems against the product and may feel that they have not
got value for their money
 Profitability pricing – the company has a set stock formula:
profits equal revenue minus expenses, this is the most
reasonable way to function in the market
Marketer is supposed to sell more to bring maximum profits.
Hence fair price and high volumes determine good revenues
Such marketers are very careful as to what is going on in the
market and act or react accordingly
Ethics : the ethical crux is whether the marketer is working
under the rules of fair competition, and that the marketer does
not undermine competitors or exploit customers
 Volume pricing – marketer adopts the sale maximization
principle and hence resorts to volume pricing, i.e. depends on
the volume of the sale by pricing the units to the lowest possible
scale. Such strategy is possible where production and sale can
be done on a mass scale such as building materials, mobile
phones, computers, food products etc.
Ethics: supermarkets in the retail sector are an example of
volume turn-over revenue earners. Problems crop up when
individual entrepreneurs and petty businesses come in the firing
line of supermarkets, forcing them to close shop
Pricing Strategies
 Pricing strategies are the actual plans carried out to fix the price
and market the product.
 Penetration pricing strategies - in order to make a quick
impression in the market, the marketer promotes the product
with considerable discount and other freebees. Once the market
stabilizes, the freebees are slowly withdrawn and the price is
settled to a mean
Ethics : such behaviour of the marketer can generate a price
war, unfair comparisons in publicity, imperceptible volume
reduction in the individual units for the same constant prices etc.
 Price Skimming – it consists of gradually lowering the prices for
the same product or service. The marketer plunges in the
market with quite a high price and is able to persuade the
customers willing to pay at this rate. When the costs are fairly
covered, the price is reduced and more customers who can
afford to buy are brought in. this is further repeated with more
downward pricing till very large volumes are sold. Thus,
methodically, profits are skimmed from all sections of customers
Ethics : ethical problem arises if such a strategy is adopted to
eventually wipe out competitors and develop monopolistic
tendencies
Competitive Pricing - marketers are watchful of competitors
changing their price bar codes. They are conscious that
customers are always quite discerning and keep changing
their habits
 Ethics : marketers narrow the gap with the competitors and
split the market. The marketer adopts price shadowing,
whereby the marketer closely follow the competition without
rising the price, to wean away customers. Once the customer
switch loyalty favourably, the option of further lowering the
price to take away all the customers from the competitors is
available. As long as the competitors feel it is fair and the
customers are not exploited, it can remain ethically correct
however it is difficult to say when the scales will tip, and in
most cases the result in the end has been price volatility and
customer despair
 Price Shading – his happens when manufacturers allow
distributors a free hand in allowing discounts to customers
and also when the demand is high and the manufacturer
have the requisite supply
Ethics: a constant escalation of demand may cause a glut in
the market. Due to other factors such as seasonal change,
catastrophes or some scandal markets can take an
unpredictable turn and cause losses to distributors who
depended on the profits from large volume sales
 Seasonal pricing – FMCGs such as woollen products, air
conditioners, summer wears and fashions fetch higher prices
in their season of demand. Marketers offer lesser price and
greater discounts at the end of season or out of season
Ethics: season’s clearance is very often an excuse to clear
inventory and make place for new products
Term Pricing – business booms because of various credit
facilities and schemes of instalment payments available
Marketers give incentives with higher discounts to those who
immediately purchase and pay in full
Large industrial buyers profit more from this than individual
customers
 Segment pricing – the marketer after a careful study, targets a
particular segment of the market, such as senior citizens or
students or children, by giving discounts or freebees as
incentive
Ethics : this turns out to be quite deceptive. On the one hand the
company projects itself as socially responsible whereas, on the
other hand, makes large profits
 Volume pricing – when the company wants to encourage
volume sales then it offers its buyers a scheme, that it, the
larger the volume of purchase the greater is the discount on
price
Ethics : creating the demand where it actually does not exist
may not have profitable long term objectives. If the motive of the
company is to dump its goods, the consequences could be
disastrous