Marketing Strategy 3 0

Product Pricing
STPD Branding IMC

Promotion
Competitive Strategies
Place
Environment Strategic Frameworks
Marketing Strategies
Dr Amit Rangnekar
www.dramitrangnekar.com amitrangnekar@gmail.com
Marketing Strategy 3.0 (MBA Notes)- Dr Amit Rangnekar 2
Check out these Notes and Case Studies at www.dramitrangnekar.com
Marketing Strategy – Mumbai University / NMIMS University Assessment -100 marks
Course Content
1. Marketing strategy - Overview
2. Pillars of Marketing - STPD strategies
3. Market situation strategy - Leaders, challengers, followers, nichers
4. Competition analysis - Porter's 5 forces model for competitive environment,
Benchmarking exercise, understanding competitive moves and postures
5. Sustainable competitive advantage - Porter's generic strategies
6. Portfolio models - BCG and GE McKinsey matrix
7. New product strategies - Innovation, Market entry, Product line extension
8. Communications strategy - Managing communications mix for products, brands
9. Advertising using and sales promotion strategy - campaigns
10. Brand building - FMCG, Consumer durables & Services cases
11. Distribution strategy- Designing of channel systems, Managing multichannel systems
12. Pricing strategy- Value pricing, Optimisation of pricing
13. Marketing Planning - Introduction, growth and mature markets. Pruning of products;
Reference material
Books 1. Strategic Market Management 3e David Aaker
2. Strategic Marketing (West & Ford)
3. Mktg Mgt (Kotler, Keller, Koshy, Jha 13e)
4. Market driven strategy (George Day)
5. Marketing as Strategy (Nirmalya Kumar)
6. Marketing Strategy (Ferrell 4e/ Walker 2e),
7. Marketing Strategy - Boyd. Walker and Larreche
Notes www.dramitrangnekar.com
Cases Library, Harvard, ICFAI, Praxis, Business- Today / India / World, CIM
Daily ET, Brand Equity, Hindu-Business Line, Business Std- Strategist,
www.dramitrangnekar.com ,
Websites Knowledge@Wharton, Insead, Brands Asia, Mckinsey Quarterly, Economist,
Forbes, Business Week, Harvard Business School / Review, www.cim.co.uk ,
www.knowthis.com , www.marketingpower.com,
www.etstrategicmarketing.com, www.brandrepublic.com
Table of Contents
No Subject Topics/s Cases from Pg

1 Strategy Overview, Environment, Industry, Faze 3, McDonald 5
Marketing Plan Competitors, Customers India launch
2 Marketing Strategy STPD Moov, Bisleri 12
3 Strategy Porters Generic, Specific 18
Frameworks strategies, BCG Matrix, GE-
McKinsey Matrix, Ansoff Matrix,
Value Chain Model
4 Competitive Leader, challengers, followers, Auto Industry, 22
Strategies nichers Thai Beer
5 Product Development, mix, range Tata Nano 26
6 Integrated Promotion, Advertising Taj Hotels, 33
Marketing Cadbury
Communication
7 Brand Management Identity, Image, Positioning, Chic Shampoo, 37
Portfolio extensions Harley Davidson
8 Distribution Channel length Dabbawallas, 43
Flipkart
9 Pricing Approaches, strategies Pricing strategies 45
10 Immersive Reading Competitive strategies 48
Notes adapted through readings, cases and notes from- Harvard Business School/
Review, Ivey, Stanford, Kellogg, MIT Sloan, LBS, Insead, Wharton, Emory; publications
by Porter, Kotler, Keller, Kapferer, Nirmalya Kumar & Mckinsey; Economic Times,
Indian and international business magazines, and the internet. Garnished with my own
experience, insights & knowledge.
About the Author
Dr Amit Rangnekar, MBA (Marketing) and PhD (Business

Strategy) from NMIMS, Mumbai, has over 2 decades of
progressively responsible pharma industry experience with
Centaur Pharmaceuticals. In 2006 Dr Rangnekar was
awarded a 10 nation scholarship to Europe by the
Government of Denmark to complete his doctoral research.
His co-authored book "Cases in Indian Management" was
launched in Mumbai, Dubai and London in 2008.
Embarking onto teaching as a hobby in 2003, Dr Rangnekar is a visiting faculty at

Mumbai's leading B-Schools. His repertoire of insightful notes and compelling case
studies have added value to over 7,500 MBA students. He shares his thoughts and
knowledge with a global audience through his immensely popular website and blog,
which have together clocked over 800,000 hits.
Dr Rangnekar has presented on various business case studies on marketing, branding

and business strategy, at B-schools and corporates across India and Europe. He has been
a part of global leadership programmes of numerous Fortune 100 companies in Europe
and Asia. He is an external guide for two PhD research scholars.
Co-ordinates Email amitrangnekar@gmail.com , amit@dramitrangnekar.com
Visit www.dramitrangnekar.com … the homepage for MBA students worldwide
Home What's New MBA Notes Case Study PPTs Knowledge Publications Contact Me
 Concise class notes on marketing, branding and strategic management

 Researched Case studies in power point presentation (ppt)
 Tips on PhD, Pharma and deliverables
 Various publications of the author
 Insights into pharmaceutical industry
1 Marketing Strategy Overview
Situation
analysis
External factors Internal factors
Consumers Resources
Competitors Capabilities
Environment Skills
SWOT Analysis- assess the internal / external environment a firm operates in

Strengths (Internal) Weaknesses (Internal)
USP's, capabilities, competitive advantage, Proposition, capabilities gaps,
resources, experience, knowledge, data, presence, strength, reputation,
financials, marketing, reach, communication, reach, financials, vulnerabilities,
service, legacy innovation, location, geography, timescales, deadlines, pressures,
price, value, IT quality, accreditations, supply chain, morale, attrition,
processes, systems, culture, values, behaviour, commitment, leadership, processes
management, reputation, & systems, management,
Opportunities (External) Threats (External)
Market / business / NPD, NMD, industry phase PEST, competitive intentions, market
and potential, competitor vulnerabilities, global demand, contracts and partners,
influences, demographics or lifestyle trends, sustaining capacities, finances &
technology, innovation, niches, verticals / capabilities, obstacles,
horizontals, geographies, new contracts, insurmountable weaknesses,
research, partnerships, distribution, volumes, industry cycles,
production, economies, season, influences seasonality
Strategic fit- effective match and management of environmental opportunities and

threats with organisational strengths and weaknesses
Strategic Groups- Set of firms with similar strategic dimensions & using similar
strategies. Intra strategic group firm competition greater than inter. More heterogeneity
in performance of firms within strategic groups. Eg Cars, PC, Airlines, segmented by
sensitivity to price, quality, technology & service
The Environment
The external business environment
PESTLE analysis
Political Economic
Environmental, legislative, regulatory, Economy, global trends, taxes, levies, FDI, interest,
policy, stability, initiative, lobbies, war and inflation, unemployment, GDP, Stocks, forex, climate,
conflict, pressure groups, unions market, trade cycles, industry specific factors
Sociocultural Technological
Demographics, lifestyles, social mobility, Competing & emerging technologies, R&D, costs and
educational levels, Attitudes, opinions, capacities, PLC, solutions, innovation, information,
beliefs, buyer behaviour, ethnic & religious communication, IPR, licensing, disruption
factors
Legal Environmental
Legislative structures, anti-trust laws, trade Sustainability, green issues, energy, natural factors
policies, employment legislation, exit laws,
foreign trade regulations
Industry Environment Analysis/ industry attractiveness (Porter’s 5 Forces model)
1) Threat of New Entrants: Entry Barriers

 Economies of scale- Marginal efficiency improvement, as firm incrementally
increases in size
 Product differentiation- Unique products, Customer loyalty, competitive prices
 Capital requirements- Physical facilities, Inventories, Marketing activities, capital
 Switching Costs-One-time costs customers incur when buying from different
suppliers. Costs-new equipment, retraining employees
 Access to Distribution Channels- Stocking or shelf space, price breaks
 Cost Disadvantages- No- scale, proprietary technology, access to raw materials,
markets
 Government policy- Licensing and permit requirements, deregulation of industries
Expected retaliation- Responses by existing competitors may depend on a firm’s
present stake in the industry (available business options)
2) Bargaining Power of Suppliers (increases when):

 Suppliers are large and few in number
 Suitable substitute products are not available
 Individual buyers are not large customers of suppliers and there are many of
them
 Suppliers’ goods are critical to buyers’ marketplace success
 Suppliers’ products create high switching costs.
 Suppliers pose a threat to integrate forward into buyers’ industry
3) Bargaining Power of Buyers (increases when):
 Buyers are large and few in number
 Buyers purchase a large portion of an industry’s total output
 Buyers’ purchases are a significant portion of a supplier’s annual revenues
 Buyers can switch to another product without incurring high switching costs
 Buyers pose threat to integrate backward into the sellers’ industry
4) Threat of Substitute Products (increases when):

 Buyers face few switching costs
 The substitute product’s price is lower
 Substitute product’s quality & performance >= existing product
 Differentiated industry products, valued by customers, reduce this threat
5) Intensity of Rivalry among Competitors (increases when):

 There are numerous or equally balanced competitors
 Industry growth slows or declines
 There are high fixed costs or high storage costs
 There is a lack of differentiation opportunities or low switching costs
 When the strategic stakes are high
 When high exit barriers prevent competitors from leaving the industry
Analysing Industry
 Structure- Consolidated (Auto, Telecom)/ fragmented (Restaurants, Laundry)
 Competition- Monopoly (Railways, Gillette, Amul) / duopoly (Pepsi-Coke, Boeing-
Airbus)/ oligopoly (Pharma, Steel, Auto, Telecom)
 Market structure- Leader, challenger, followers, nicher (LCFN)
 Lines- Broad (Electronics, Auto)/ narrow (Steel, Telecom, Hotels)
Analysing Competition
 Satisfy same / similar needs- Segments served
 Direct / indirect - Eg Coke- direct Pepsi, indirect Bottled water, juice, beer
 What products do they offer? Brands, categories dependence?
 What channels do they use? What pricing strategies have they pursued?
 Their management and financial resources?
 What are their objectives? What are their core competencies?
 What alliances are they pursuing, and for what purpose?
 Their success in the marketplace? Share of market /voice /mind /heart?
Competition
Category Need fulfilled Brand Competitors Product Competitors Generic Competitors
Basic Market products similar Compete in same class, Market different products
requirement customer features, but features, benefits to solve same problem,
benefits & price & price differ in satisfy same basic need
Beverages Refreshment Coke, Pepsi Tea, Nimbu Pani Regular water

Thums Up Mineral water
Chocolates Dessert/ Dairy Milk, 5Star Mithai, Namkeens Aniseed/Saunf Candy, Sugar
snack Celebrations Ice creams, Fruits
Films Entertainment PVR Single screen TV, Shopping
Fame Adlabs Drama theatre Reading, Internet
Cars Transportation Maruti, Hyundai, Tata Small/Big cars, SUVs Taxi, Auto, BEST, train, Walk
Analysing customers
 Who are the customers, segments
 What do they buy, where do they buy, when do they buy, how frequently do they buy
 How do they choose, how do they use, why do they prefer a product
 How do they respond to marketing programs
 Long term value of customers
Strategy
1. Directing action towards desire outcome
2. A plan of action to gain a competitive advantage over rivals
3. Deliberately choose different set of activities to deliver a unique mix of value- Porter
Marketing
 Entire business from the point of view of the customer- Drucker
 Identify, create, manage demand to provide value to a customer for a profit -Kotler
 The right product, in the right place, at the right time, at the right price.-Adcock
 Concept- Satisfaction of customer & their needs, focus of business activities. IBM
 Philosophy- Owned by everyone from within the organization
Marketing strategy answers 2 questions

 Why should our customers buy our product
 Which customer needs do our products fulfill more effectively than competitors
 Nokia not the 1st mover but No.1 by giving customers what they desired
 Sony & Apple don’t rely on MR, create new categories through innovation
 Google search effective due to a simple, uncluttered & efficient approach
 Differentiation by- price, reach, delivery, design, service, technology, etc but it should
be valuable & meaningful to customers. Eg Hybrid cars, solar mobiles
How marketing strategy relates to corporate and business level strategies

Corporate level Business/es to be in Set strategic corporate goals,
Business level Gain competitive advantage SBU goals, develop broad strategy
Functional level Attain marketing goals Marketing strategy implementation
Product level Implement tactics Marketing mix
How marketing relates to strategy

 Business activities align with business
strategy- achieve corporate objectives
 Marketing- firm’s link to customers &
competitors, shapes strategy
 Eg Amul’s corporate goal- to be
‘world’s largest food brand’
 Marketing plans & tactics (global
availability, effective communication,
value price, products & service to
delight customers) should evolve
around that goal.
 Amul can augment with new brands,
segments & categories with business
potential where Amul can deliver on its
capabilities.
Marketing strategy defines

 The target segment- size, demographics, psychographics
 How should the product be positioned to appeal to the market- primary benefit
 How should the product be branded-
 Product potential- sales, market share, profit estimates
Ferrari’s marketing strategy

 Target (Luxury sports car)
 Position to appeal to that market (Speed, design, performance)
 Branding- identify and differentiate product from competitors (Prancing Horse logo,
formula 1,brand communication)
Illustration- PC market Strategic marketing environment

 Launch- 1970s, small segment- technologists & mathematicians
 Apple improved, simplified use, software widened use
 1980s- IBM further widened use, sales growth exponential, new competitors
 Desktops at work & home, replacements, peripherals
 1990s- Internet but PC maturity, customer & price resistance, declining profits
 2000- Commoditisation, shakeout, HP- M&A Compaq, IBM sold PC biz- Lenovo
 Faster processors, flatter screens, converged PCs and all in one printers, laptops
Marketing Plan- “Plan your work, and work your plan”

 A campaign that aims to fulfill a company’s market strategy
 What will the company do in NPL and supporting older ones
 Timing of its sales and promotional activities, pricing intentions & distribution efforts
 How will the plan be controlled and the results measured.
Executive summary Objectives and implementation plan

Table of contents
Situation analysis Data, environment, SWOT, gaps
Focused assessment of the Statement of target market segments
market opportunity Customer and needs assessment
Competitive challenges to firm & products
Financial goals Incremental revenue improvements
Expected profits
Marketing goals Unit sales or market share
Summary of the company’s Identify target market
marketing strategy Product position, distribution & pricing
Specific actions to achieve goals- sales force, customer
rebates, national ad campaign, direct mail etc
Monthly marketing budget
Monthly sales forecast (units & value)
Periodic plans- monitor, review & action
Implementing the plan via the Marketing Mix

• Identify target customer segments
• Address customers through marketing mix- 4Ps (Refer section on marketing mix )
• Best plans, resources, skills and effective implementation- no guarantee of success as
• Lower demand, technology, new launches by competitors, high inputs and promotion
Controlling Plan Implementation (HBS)
Marketing Plan Summary
2 Marketing Strategy
STPD- (Segmentation, Targeting, Positioning, Differentiation)
Concept Short definition Example Moov
Segmentation Identify different needs & Where to compete Pain segment
groups in the market
Targeting Target markets it can Which product for Back pain segment within the
satisfy in a superior way which market pain segment
Positioning Occupy distinct place in Locating brand in Relief from back aches “Aah
customer’s mind customer’s mind se aha tak”
Differentiation Communicate valuable & How to compete Lamitube, non staining,
meaningful differences effective in back pain
Segmentation
• Where to compete
• Divide market into distinct groups with distinct needs, characteristics, or behaviors
• Basis- competence, resources, potential (Features, service, convenience, quality)
Evaluate segment attractiveness

 Segment size and growth, own objectives and resources
 Structural Attractiveness- Level of competition, substitutes, buyers/supplier power
Requirements for effective segmentation

 Measurable- Size, purchasing power, and profile of segment
 Accessible- Can be reached and served
 Substantial- Large and profitable enough to serve
 Differentiable- Respond differently
 Actionable- Effective programs can be developed
Principles of market segmentation (Palmer & Miller 2004, Industrial Mktg Mgt, 33(8), pp 779-85)
Market segments (Size, access, differentiated)
Who buys- Customer characteristics What is bought, why- Customer behaviour
Hard Soft Objective Subjective
Demo/geographic Psychographic Behavioural
AEGIS VALS Usage Benefits
Price sensitivity, promo Perceptions,
response, loyalty, repeats preference trade-offs
Segmentation matrix- Taj Hotels

Segments Features
Full service Hotels Palaces Spas Resorts Wildlife lodges Self service
Luxury Premium Taj Hotels & Palaces Taj Exotica
Luxury Vivanta by Taj Taj Safaris
Premium Gateway
Mid-market
Budget Ginger
Types of segmentation
4 types- geographic, demographic, psychographic, behavioural- ideal is to integrate, mix
Factors (examples) Example
Country, area, region, climate • Coke-Chota-Rural, Bada –Urban
• Sweaters in HP, Kashmir
Geographic
• McDonalds menu adaptation in India

• Honda City- different models globally
• ITC Ashirwad atta diferrent blends NEWS
• India food habits- North wheat, South rice
• Age (Hospitals, cycles, , toys) • LIC, Hinduja hospital
• Education • Schools
Demographic
• Income (Garments, car, soaps) • Toyota- Lexus, Camry, Corolla

• Sex (Perfumes, hospital) • Gillette
• Religion, nationality • Beef/Pork, Halal, Kosher foods
• Marital status, family size, family life • Mature 1945+, Baby boomers 1965+,
cycle, generation, ocupation Generation X 1976+, Generation Y 1994+
• Social class- middle/lower/ upper • DINK, ORCHID, YUP, WHOP
• Benefits sought (costs, service, • Nano, Taj, Titan, Nokia
quality)
• • Clubs, Art, Wine Harley Davidson owners
Psychographic
Lifestyle, VALS (Values, attitudes,

lifestyle)
• Personality, culture, social, religion • Woodlands-rugged/extrovert
• AIO- what interests them, view • Niche magazines - food, fashion, car,
• Activities- Work, Hobby, Shopping electronics, CRM
• Interests- Family, fashion, food
• Opinions- Self, PEST
• Occasions • Greeting cards, tour operators, weddings
• Personality based • Blackberry addicts
• Benefit segmentation • Maggi convenience, Maruti service, value
• Attitude (+ve/-ve, hostile) • User (1st time, regular)
• Convenience (EMI, Home Delivery) • Usage (light, heavy consumption)
• Readiness (Informed, interested, • Loyalty (HML, switchers) Titan- edge for
Behavioural
aware) formal, fastrack for casual, Raga for ethnic;

Bisleri pack sizes
• By occasions, product usage, benefits
sought, brand loyalty
• Occasions-
• User Status - Non-Users Vs Current Users
(Credit Cards, bikes)
• Usage Rate- Heavy Users Vs. Light Users
(beers)
Exercise
1. Outline a segmentation matrix for mobiles (users v features)
2. Sports Shoes Market (Exercise) Which segments should Nike, Adidas & Reebok target
Targeting
 Which product for which market
 Measure segment attractiveness, select target segments
 Set of buyers sharing common needs or characteristics that a company decides to serve
• Targeting factors- resources, competence, degree of product variability, PLC stage,
competitors’ strategies
Targeting choices (Derek F Abell, 1980)
Targeting strategy
Strategy What it means Example Illustration
Mass marketing Target Amul Butter,

marketing mix Parle G, Coke
towards the
entire market,
not specific to
any segment
Differentiated Target different UB group
marketing marketing mixes whisky,
(segmented) towards Cadbury
different chocolates,
segments HUL
Market Concentrating Ferrari-

concentration mix on any one luxury sports
segment of the cars, Nirma
market economy
detergents,
Big Bazaar
Niche Target small Travel agents
Marketing market segment focused only
with specific, on Shirdi, HP,
specialized Nepal
marketing mix Sports shops,
Florists
Positioning
 Locate brand in the customer’s mind
 Design firm’s offering & image to occupy distinct place in target customer’s mind
 Represent a distinctive big idea in the mind of the target market
Positioning types Positioning anomalies

 Attribute-Longevity-Since 1904  Under-Fridge-PUF
 Benefit- Sea view, service, speed  Over- Casio start @ Rs 500, perceived
 Use-ICICI- Fast A/c opening expensive earlier
 User-Louis Philipe-Upper crust  Confused- Top Ramen Noodles-‘Smooth’
 Category- Big small car-Indica  Doubtful- Tall promises-Teak plantations, Ponzi
 Quality-Benz-Future of the schemes
automobile  Value-Budget Hotels, Maruti
Positioning strategies
Single Camry-Touch Perfection
Double Tavera-Comfortable family car
Triple Liquidity, safety, returns-MFs
Multiple- same A chocolate-based health drink- Central positioning- nutrition, Active
product to various people- Energy, Elderly- Dietary supplement, Pregnant ladies-
segments with intact essential supplement, Kids- Growth & nutrition, Executives- revitalize
central positioning
Crafting the brand positioning

Positioning requires determining a competitive frame of reference, which defines
associations that consumers use to evaluate directly/ broadly competing brands, as under:
Frame of reference What it means Example iPad
Identify target market Which brand for which market Enthusiasts, innovators
Understand consumer Considerations in choosing brands- Price insensitive, must-
behavior attitudes, preferences have, advocacy,
Nature of competition Intensity, dominance, PLC, differentiation CE/ technology firms
Points-of-parity (POP) Associations consumers view essential to Midway
be credible, common category traits, Laptop/mobile, touch
conditions necessary but not sufficient for
brand choice
screen, phone, net,
1GB ram, handy
Points-of-difference Associations, attributes, benefits Apple, apps, design,
(POD) consumers associate, positively evaluate gaming
& believe they cannot find to the same
extent with others
Reason to believe (RTB) Consistency, legacy, trust, reputation
Innovation,
performance
iPad positioning should include POD+ RTB
Design 32GB Safari

Apple Face Time
Apps 5MP Cam
Gaming Weight iPod iOS HD Video
Exercise- POPs & PODs for Apple i-Phone 4s

Exercise- How Should Maruti position itself with respect to the Tata Nano?
Perceptual mapping
 Brands 'mapped' together on 'positioning map', compared across parameters
 Identify weak/strong/absent competitive positions
 Price v range for Mumbai super stores, distinguish by competitive offerings
 Gaps regarded as opportunities for positioning/repositioning/launch
Price
ShoppersStop
BigBazaar
LifeStyle
Runwal Giants
High Crossroad Range
Low Globus ApnaBazar
Akbarallys
High Low
Exercise: Walmart’s India entry strategy based on above perceptual map
Positions that firms have successfully claimed in India

Beauty Lux Range Croma, Titan Reach ITC, HUL, GSK
Premium Bose, Benz Youth Pepsi, Nike Kids McDonalds
Thanda Coke Fever Crocin Economy Big Bazaar
Generic Cadbury/Xerox Innovation Apple, Intel Value Maruti, Flipkart
Delivery Dabbawallas Macho Enfield Tourism Goa, Kerala,
Service Maruti Performance Nokia, Titan Search Google
Fast food VadaPav, Udipi Salesmen EurekaForbes Headache Saridon/Anacin
HUL- Axe and Rexona, (both HUL), operate in the same segment- deos. Rexona targets
working population, positioned against body odour, Axe targets youth, positioned on
seduction. Both contain a similar formula, target the same segment, but use completely
different communication strategies, do not cannibalise.
P&G Positioning: distinct positions, even in same segments (Aaker & Joakimsthaler)
Brand Segment Position
Head & Shoulders Shampoos Anti-Dandruff
Pert Plus Shampoos Conditioner + shampoo
Pantene Shampoos Healthy + shiny hair
Ariel Detergent High Tech Detergent
Tide Detergent Tough cleaning
Cheer Detergent All-temperature cleaning
Bold Detergent Fabric softener
Differentiation
 How to compete (STP undertaken to help differentiate)
 Add meaningful & valuable differences to distinguish offering from competitor’s
 Differentiation Criteria- important, distinct, superior, preemptive, affordable
 By form / features- Coke bottle shape, Heinz thick ketchup, iPhone 4s- Siri
 Differentiated on why customers buy- perception of PQRSTUV, usage and experience
 Brands differentiate on irrelevant features/benefits- many mobile phones features
hardly used, newer management book editions- bigger & costlier, not always better
 Identify tangible differences -conscious, rational benefits like PQRSTUV-,
Performance (Titan), Quality (Apple), Rate (Big Bazaar), Range (Cadbury), Service
(Maruti), Technology (Intel), Utility (Swiss knife), Value (Titan), Convenience (Maggi)
 Intangible Benefits - emotional, sub-conscious benefits a brand owns- Status (Benz,
BMW), Prestige (Mont Blanc, Rolex)- most important leverage for brand dominance,
unique (Sony, Apple), sustainable benefits (Amul, Toyota low cost)
Differential variables
Brand Performance, features, form, conformance, reliability, style, design, quality
Service Delivery, ease of ordering & installation, customer training
People Competence, credibility, reliability, responsiveness, communication
Channel Coverage, expertise, cost effectiveness, performance
Image Symbol, colour, slogan, ambience, atmosphere
Exercise- i-phone 4s
 Key success factor? STPD?
 Where is iphone vulnerable? Economical competitors, imitators, technology
 What should it watch out for? Changing preferences, value, new trends
Key improvement areas? Price, promotion, features, customer service

3 Strategic frameworks
Various business level strategic frameworks to gain competitive advantage
Framework Purpose
1 Ansoff Product-market growth matrix Product-market growth strategies
2 BCG Growth Share Matrix Market growth-relative market helps in portfolio
planning, recommending strategy
3 GE Matrix/ Business Screen Analyse current portfolio, determine businesses to
invest/protect/harvest/divest/
4 Porter Value Chain analysis Understand value generating parts of the operations
to create competitive advantage
5 Porter Generic business strategies Generic sources of competitive advantage
6 Kellogg Specific business strategies Strategies to gain competitive advantage
7 Mckinsey 7S model Successful strategy implementation
1 Ansoff’s product-market growth matrix (HI Ansoff 1957)

Offers product-market growth strategies that set the direction for the business strategy
Existing product New product

Market penetration Product development
• Increase share of customer spending • Product modification, new features
• Increase MS, use, frequency, quantity • Different quality levels
Existing • Non-users to users • New products, line extensions
market • Maruti- Rural India penetration • Maruti- Ritz, Swift
• Titan- Sonata • Titan-Edge, Automatic
• Apple- iPod/iPhone variants • Apple- iPad
Market development Diversification
• New markets • Build
• New distribution channels • Buy- M&A
• New geographical areas • Ally- JV
New
• Integration, Diversification
market • Maruti- Exports • Maruti- Driving schools
• Titan- Exports • Titan- Fastrack, Eye+
• Apple- Emerging markets • Apple- Retail, TV
2 BCG Matrix- Growth Share Matrix Matrix, 25%

Relative Market Share
1968 (Tata SBU, Parle Biscuits)

 Link market growth and relative market share to
Star 4
Question mark
3 1
?
Market Growth
determine prospects for various SBU/ brands. 5 2

Helps to plan portfolio, recommend strategy 10%
 Question Mark -Low share of high growth
6
market, consume resources, generate little- 7
8
weigh risk/rewards
 Stars- Leaders, high share of high growth Cash Cow Dog
0%
10x 1x 0.1x
market, high promotion costs, generate high income, invest

 Cash cows- Leader, high share of low growth market, generate cash, low investment,
ex-stars, economies, profits, fund others, milk
 Dogs-Low share of low growth market, no cash generation, consume cash, rid, divest
 Portfolio balance critical, reduce dogs, milk cash cows build stars
 Limitations- Profitability, trends, environment, SBU sensitivities not considered
3 GE Matrix/Growth Share Matrix/Business Screen

Helps analyse portfolio, determine which businesses should receive more/less
Strong Medium Weak
investment and which should be divested.
4
High
 Market Attractiveness v Business
Market Attrac tiveness

3
strengths
 Optimal business portfolio to fit firm Medium
strengths, exploit attractive 2
industries/markets
Low
 Circle is SBU, Circle size= industry/ market
1
size, pie size = SBU market share 4 3 2 1
 Arrows= growth of SBU/industry Business Strength
 SBU's to invest, build, harvest, divest? Invest/Grow Selec tivity/Earnings Harvest/Divest
 Forecast for N3-5Y- strategy, competition, PLC, technology, policy, incorporate in

length & direction of arrows
Strategies for SBU in various quadrants

Business strength
(Resources, competencies, brands, MS, customer loyalty, cost structures,
distribution, access to finances, raw material, technology, innovation)
Market attractiveness High Medium Low
(Market size, growth,
Strong Invest Invest Protect
profitability, pricing
freedom, rivalry, risks v Medium Invest Protect Harvest
returns, differentiation,
segments, channels) Weak Protect Harvest Divest
Implementation of portfolio analysis

 Identify drivers important to overall strategy, assign relative importance weights
 Score SBU's each driver, Multiply weights times scores for each SBU, Interpret results
Market Attractiveness: size, growth, profits, potential, differentiation rivalry
Business Strength: Assets, competence, brands, MS, growth, loyalty, margin, technology
/ innovation, distribution, capacity, financial resources, cost structure
 GE Matrix v BCG- 3*3 grid, allows more sophistication, broader
 Limitations- Core competencies not represented, SBU Interactions not considered
Exercise- For a diversified conglomerate, outline SBU strategies by plotting GE matrix
4 Value Chain analysis (Porter)

Template that allows firm to
understand parts of its operations that
create value (margin) & those that do
not. Analyse specific inter-related
activities through which firm can create
competitive advantage.
 Understand cost position
 Benchmark activities against
competitors to match/ improve
efficiencies, or outsource
 Facilitate implementation of a
chosen business-level strategy
 Primary activities- goal is to create
competitive advantage
 Support activities- facilitate or
support primary activities to create competitive advantage
5 Generic Business Strategies- Porter

Sources of competitive advantage-Cost leadership, Differentiation, Focus
Competitive Advantage- A sustainable competitive advantage gained by offering
customers greater value and benefits through better PQRSTUV & people
Competitive advantage
Competitive scope
Cost Leadership
Broad
Overall cost Differentiation
 Cost leader low price- competitive leadership
advantage lowest cost, ‘no frills’- Amul
 Low cost not always low price- Toyota-
Narrow
Cost Differentiation
high quality, lower costs, better margins focus focus
Differentiation Low Cost High Cost

 Intense Competition, brand clutter - 25000 pharma firms, 4 cars in 1983, 400 2011
 Spoilt for choice- 4 car models 1983, 14 in 1993, 83 in 2003, 400+ in 2012
 Select 1/more vacant differentiated needs, position firm to meet criteria-Domino’s
 Differentiators- PQRSTUV, design, delivery, reach, delight
 Competitive advantage in a broad range of market / industry segments
 Differentiated goods/services satisfying needs- sustainable competitive advantage
 Specific targeting, price insentive, value focus- high prices & margins- Apple, Intel
 Innovation and improvement important
 Competitive advantage with additional costs, but increased revenue will offset
Differentiation Focus or Niche strategy

 Specialise within just 1/ more small market segments with different customer needs
 Competitors target broader customers group, existing brands not meeting demand
 Tour Operators- Nepal or HP or South only, Glaxo- Pharmaceuticals
 Niche- Specialization by narrow segment / market / industry, but small, specialist

niches disappear in long term- often used by smaller firms- Florist, Sports shop
 Cost focus – Difficult to achieve if industry depends on economies of scale- telecom
 Eg Country Level -Strategic Differentiation
China India
Hard Infrastructure- Soft Infrastructure-
Ports,Roads,Power, Mfrg Software, ITES, Auto, Biotech
Factory of the World Back End
Government support Entrepreneurship
6 Specific Business Strategies (Kellogg)

Strategies employed by firms to gain competitive advantage
Exercise: Identify specific strategies of SBU in a conglomerate / brands in a portfolio
Grow larger GE, RIL, Pfizer

Downsize Avon, Sara Lee, Tata’s in 1990s, Merck 1996
Diversify into new markets Walmart, Amul, Pepsi
Dominate a niche Ferrari, Dabbawallas
Outsource production process IKEA, Nike, Airtel
Integrate production process Armani, Tiffany, D&G
Be cost leader even if quality is sacrificed Nano, Kia
Be quality leader even if costs increase BMW, Samsung, 4 Seasons
Drive rivals from the market Microsoft, Essel Propack
Co-operate with rivals Sony, BMS, Pfizer
Innovate Apple, Intel
Imitate Nokia, Indian pharma industry
7 Mckinsey 7-S Framework- Successful strategy implementation if all 7 elements

present
 Strategy, Structure, Systems-hardware, others software
 Shared values- What firm stands for, shared
beliefs & attitudes
 Strategy- Operational Plans to reach identified
goals. Environment, competition, customers
 Structure-How the SBUs relate to each other
 System-Procedures, processes-
financial/hr/mktg/mis
 Staff- Able people, well trained
 Style- Common way of thinking & behaving eg
smiles
4 Competitive Strategies
Identify competitive position wrt self, role played by market leader, challenger, follower,
nicher, plan and implement strategies to gain competitive advantage, attain objectives.
Sustainable competitive advantage (SCA)

 Competitive advantage is necessary to compete, but sustainable competitive
advantage helps consistently command above average returns
 Understanding competitive position helps erect barriers against competition
 Eg SCA Singapore Airlines (SIA)- best in-flight service, others improved service,
SIA added modern fleet, improved- ground service, in-cabin entertainment,
comfort levels
 SCA Amul- procures 97L litres milk daily from 27L farmers. Strong backward
linkage and scale gives Amul cost leadership in milk processing which ensures
low penetrative prices, infeasible for competitors to match. Amul leverages its
milk proficiencies to related areas- spray, butter, cheese, ice cream, dahi, etc.
 SCA Apple- transforms industries with innovative convergence products, closed
ecosystem and design, command premium price
Competitive strategies- used by firms to gain advantage over competition

 Market dominance- Leader(Nokia), challenger(Samsung), follower (Sony), nicher (HTC)
 Innovation strategies – Based on NPD, technology & business innovation. Three types:
Pioneers, Close followers and Late followers
 Growth strategies – Organic and Inorganic, Integration (Horizontal & vertical),
Diversification or conglomeration, M&A, Alliances, Strategic acquisitions.
 Warfare based- Offensive, defensive, flanking, guerilla
Competitive Strategies Typologies Examples

Market dominance strategies- Leader Nokia
based on player’s dominance / share Challenger Samsung, Apple
of the industry
Follower Sony, LG
Counterfeiter Fake mobiles
Cloner Karbon, Lemon
Imitator Nokia, Micromax
Adaptor LG, Sony
Nicher HTC, Blackberry
Innovation strategies Pioneers Apple, Intel
Ascertain firms rate of NPD, business Late followers Nokia
innovation, cutting edge technology
Close followers HTC
Intensive growth strategy Market penetration Maruti in rural India
Ansoff’s Growth Matrix- New market Devt Maruti SE Asia exports
existing and new- products v New product Devt Swift, SX4, Ritz
markets. Eg Maruti
Diversification Driving schools, financials
Marketing Warfare strategies

 Combination (defensive + offensive) strategies- to protect/ grow/ attack
 Key- leadership, motivation, intelligence gathering, strategies, logistics, and
communications (Defensive, Offensive, Flanking, Guerilla)
Strategy Action Illustrations

Defensive Warfare Block strong competitive moves. Consolidate, Apple, HUL, Amul
(Market Leader) NPL, reach, brand building, grow the market
Offensive Warfare Attack leader’s weakness, narrower the better. Moov, Maruti,
(# 2/3 with resources to Skilled used of resources Hero Honda
challenge leader)
Flanking Warfare Open new uncontested area, near leader’s Toyota- Lexus,
(# 4-6 with resources to position, tactical surprise key, persevere. Intel-Celeron,
pursue flanking in that Leader may also flank. Ability to create, Rolex-Tudor, HUL-
market segment) maintain separate category critical Wheel
Guerilla Warfare (Small Hit and run strategy. Identify small segment Bean bags, Ghari
players with low that can be defended, agility key.
resources
Market dominance – Measure of the strength of a brand, service or firm relative to

competitive offerings, expressed in MS, reach and number of players. Monopoly,
duopoly, oligopoly, fragmentation, consolidation, concentration.
Market Leader’s strategies:

 Expand market by- new users, new uses, more usage
 Protect MS by- adopting defense strategies
 Strategy depends on- is it worth fighting for, competence, defensive strength, choices
Strategy What it means

Growth strategy Example Moov
New users New segments Housewife to physically active
adults
New uses More occasions to use Back pain to all pain
More usage Increase frequency/ quantum 1 finger to ‘Moov ki maalish’
Defense strategy
Position Create fortress defense, least Nokia created too many segments
Defense successful to defend, lost in major segments
Mobile Broaden market, diversify, redefine Google search to You tube,
Defense business, competitive focus android, chrome
Flanking Secondary markets (flanks) Intel Pentium + Celeron, Toyota
Defense vulnerable, prone to attack Lexus, HUL Wheel v Nirma
Contraction Divest vulnerable segments, 1990s Tata divested pharma, oil,
Defense contract, redirect resources to soap to focus on steel, motors, IT,

defendable ones hotels
Pre-emptive Attack before attack, intent Nokia, Cadbury, Titan- in every
Defense retaliatory, proliferation segment
Counter- Respond to competitors’ head-on HUL STING op to counter Nirma
Offensive attack, identify weakness and
Defense launch counter attack
Market challenger’s strategies

Market challenger- strong, not dominant but follows an aggressive strategy to gain MS
 Attack- market leader, major players, smaller vulnerable firms
 NPL, price discounts / reduction, line extensions, intense promotions
 Improve service and distribution, cost reductions
Strategy What it means Example

Success difficult unless sufficient Samsung Galaxy v iPhone/
Frontal attack
resources, staying power or clear iPad
distinctive advantage(s)
Attack leaders weak points/ blind Nirma detergent @ Rs 3/kg
Flank attack
spots/ flanks, attacked HUL Surf Rs 13/kg
for challenger with inferior
resources
Attack the enemy on many fronts at VW India entry with full
Encirclement
the same time, for challenger with range, Samsung
attack
superior resources
Diversifying into uncontested space, ITC Pasta entry before
Bypass attack
unrelated products or markets Maggi, Kinetic Honda, Tata
neglected by the leader, Nano in low cost car
segment
Launch small, intermittent hit-and- Local airlines- strategic
Guerrilla attack
run attacks to harass and destabilize promos to attack national
the leader carriers
Follower strategies
Follower- strong, not dominant, content to stay there, safe, low risk player
 No head-on battle with market leader, develop parallel strategies
 Plays on accepted norms in best practices, R&D, risks and costs- low failure rates
 “Innovative Imitation”- as profitable as a product innovation strategy” T Levitt HBR
 Create distinct advantages—tweak, location, services, EMI, Design- Hyundai
 Product innovation—Sony, Product-imitation- Nokia
Strategy What it means Example

Counterfeiter (illegal) Pass off as original Duplicates MB pens, Rolex
Cloner Similar improvised products IBM PC, iPhone clones
Imitator Nokia No 1 without innovation
Adapter Car makers- imitate design
elements of each other
Nicher strategies
Nicher- Specialise in small profitable sub segments (niches), not served by/ unattractive
to larger firms- Belkin, Transcend- IT accessories, Tour operators- Shirdi/Nepal, Florists
 Profit margins emphasized rather than revenue or market share
 Competitive advantage gained through effectiveness rather than efficiency
 Successes- High value added industries/ market high margin high end products
 Nichers create niches, expand and protect them- Mobiles, Moov
 Nike constantly created new niches--cycling, walking, hiking, cheerleading, etc
Niche specialist Firm specialization

End user Serve one type of end use customer
Vertical level Vertical level of production-distribution value chain
Customer size Focus on selling to small, medium or large customers
Specific customer Limit selling to one/few customers
Geographic Limit selling to locality, region, area
Product / product line Carry/ produce only one product/ product line
Product feature Produce certain product types/ features
Job-shop Customise products for individual customers
Quality-price Focus on high/low quality ends
Service Offer one/ more service/s not available from competition
Channel Serves only one channel of distribution
Marketing strategies (Auto industry perspective)

Competitive strategies
Market dominance (Competition based)
Leader Maruti
Challenger Hyundai, Tata
Follower GM, VW, Toyota,
Nicher Ford
Innovation (NPD, NDS, Tech)
Pioneers Maruti, Santro
Close followers Hyundai, Tata, GM
Late followers VW, Toyota, Ford
Growth strategies
Organic Maruti
Inorganic Tata-JLR/Daewoo, MM-Ssangyong, VW, BMW
Integration Vertical M&M
Horizontal Tata, M&M, VW
Diversification Related Maruti- True value, finance; M&M- Kinetic, Reva
Unrelated Hyundai- Aerospace, M&M-IT, Holidays
M&A MM-Ssangyong, VW, BMW
Strategic M&A Tata- JLR, Tata- Daewoo trucks
Strategic alliances Tata-Fiat, GM-SAIC, Fiat diesel engines
Warfare strategies
Warfare Strategy Illustrations
Defensive (Leader) Block competitive moves Maruti- NPL, range, reach, brand
Offensive (# 2/3) Exploit leader’s weakness Hyundai compact-mid size range
Flanking (# 4-6/leader) Uncontested space Kizashi, Eon, Vento, Brio
Guerilla (Small player) Hit and run strategy
Defensive / Offensive Marketing war Strategies

Pre-emptive strike Attack before attacked Maruti- Full range and reach
Position Defense Erect fortifications Maruti- Sensitive price points, NPL
Mobile defense Change positions swiftly Psychographic segmentation
Counter-offensive Attack attacker Drop prices, promotion, cost leader
Strategic withdrawal Retreat and regroup Withdraw Esteem, Baleno, Zen, NPL
Flank positioning Strengthen flanks Maruti in premium
Deterrence Keep competitors out Maruti- small cars, penetration, reach
Frontal Attack Confront head-on Hyundai / Tata compacts v Maruti
Encirclement Envelop rivals position VW with full range, M&M in SUV
Leapfrog Don’t confront, bypass Tata Nano new segment
Flanking Play in unimportant areas Toyota / GM / VW/ Ford economy
Guerilla Low resources, hit & run
5 Product
“We lead the public with new products than ask them what products they want. They
don’t know what’s possible, but we do. So instead of doing a lot of market research, we
try to create a market for a product by educating them” (Akio Morita, Sony)
 Product- offered to satisfy a want or need- features, quality, services mix and price.
 Product differentiation- Choice of form, features, performance quality, conformance
quality, durability, reliability, repairability, and style. PQRSTUV
 Services differentiation- Ordering ease, delivery installation, customer training,
customer consulting, maintenance and repair
 Convenience items purchased frequently, immediately, with minimum effort.
 Capital goods last long and are purchased infrequently by consumers.
 Commodities- where physical differentiation is difficult
Exercise- 3 brands performing at exceptional levels despite intense competition
Product Strategy-Coordinate product mix/lines, brands, packaging & labeling- decisions
Product Levels: The Customer Value Hierarchy

To plan market offering, marketer considers 5 product levels that encompass the
augmentations & transformations the product ultimately undergoes. Each level adds
more customer value, the 5 levels constitute a customer value hierarchy.
Product What it means Marketers Job Hotel ITC
Levels Customer Hotels
Core Product bought Provide benefits Place to sleep
Basic Benefits Turn benefit to product Bed, bath, Budget-
closet Fortune
Expected Attributes & Minimum buyer expectations, Clean bed & 5-Star-
conditions price, convenience, location- toilets, peace Welcome
important (EM)
Aug- Exceed Augmented benefits become Satellite TV, Super deluxe -
mented expectations expected benefits, Tea machine, ITC
competitors step in- Internet
important (developed
markets)
Potential New ways to Anticipate & innovate Customised Welcom
satisfy/differentiate service Heritage
Palaces, forts
Exercise- Select 1 convenience & 1 capital good, compare & contrast consumers value
hierarchy.
Product Mix - HUL Portfolio- Consumer Product-Mix Width

 Product line- group of brands closely related by functions & benefits- Dell PC, Nokia
mobiles
 Product mix- total set of brands marketed by a firm, may contain product lines
 Width- product mix lines - HP PCs, Laptops, Printers within home & business segments
 HUL 11 lines (Personal wash, laundry, skin care…….)
 Length- total number of items in the mix- 25, average length is 25/11 = 2
 Depth- Variants of each product in the line- Lux has 4 fragrances and 2 sizes, so 8
 Deciding which product lines to grow, maintain, harvest, and divest?
Home & Personal care Foods
Deodorants
cosmetics
Ice cream
Oral care
Skin care
Hair care
Personal
Laundry
Colour
Coffee
Foods
wash
Tea
Product Lux Surf Fair & Sunsilk Pepso- Axe Lakme BB Bru Kissan Kwality
line Lifebuoy Exc lovely Natural dent Rexona Lipton Knorr Walls
Liril el Ponds Clinic Close Anna-
Length Hamam Rin Up purna
Breeze Wh
Dove eel
Pears
Rexona
Product line strategy

 Upgrade customers - Maruti 800, Alto, Zen , Wagon R
 Cross-sell- HP printers, PC & Laptops, Godrej- Washing machine, TV, fridge,
microwave, AC
 Line-stretch- popular(Titan), mass(Sonata), premium(Xylys), youth (Fastrack), ethnic
(Raga)
 Line fill- Maruti variants AX, LX, VX; I-Pod- nano, shuffle, classic, 80/40/20/8/4gb
 Line prune- Reduce unwanted / unprofitable- Maruti Gypsy
Packaging and labeling- The 5th P, part of product strategy

Packaging- 3 levels: Primary, Secondary, Shipper, Insert
 Promotional value- packaging is buyer’s 1st product encounter- can turn on or off
 Functional components- protection in transportation & storage, usage, convenience,
ease of use, storage, convey usage information & instructions
 Aesthetic components- Design, size, shape, material, color, text, graphics- harmonize
Labeling- Identifying product or brand, grading, describing the product, adhering to

regulatory requirements, promote through attractive graphics.
Warranties & Guarantees- Expected product performance level by manufacturer,
reduces buyer’s perceived risk, if not so well-known product has superior quality.
New Product Development (NPD)

 NPD- risky unless based on market segmentation and understanding of customers
 NPD is first and then you figure out how to market, it usually leads to disaster
 Challenge- similar products, effective substitutes, choice, high promotion
New Products Types – Breakthrough or incrementally altered products

Breakthrough Incremental
 New to the world performance features  Improvement in existing product
 Huge advances in performance  Derivative of existing platform
 Dramatic cost reduction  Exploits existing forms / technology
Higher risk Lower risk
Infrequent More frequent
Costlier Less costly
Targets new /existing markets Targets existing/ adjacent markets
Marketer’s responsibility
 Envision market  Listen to existing market
 Create demand  Accommodate current demand
 Educate market
Change basis of industry competition: Intel’s Pentium IV computer chip- incremental
• Electric lighting, antibiotics, microwave, improvement over Pentium III as they share same
credit card, transistor, heart pacemaker, fundamental technology
hip and knee replacements, GPS  Incorporated design improvements that
enhanced chip performance
 Windows, MS Office, Play station
Exercise: Course of NPD in your industry over L10Y- what changed the basis of
competition, what were the real breakthroughs, which were only incremental? What are
the new technologies / products lined up, how will they affect your company and
competitors when launched, in terms of sales and profitability?
Identifying new product opportunities
Exercise: For an industry of your choice, identify the

unexplored opportunities in every quadrant, and
Unexplored
Opportunities identify the players who operate in each quadrant.
New product development (NPD) Stages

 Idea generation- Employees, Sales force, Trade, Competitors, Customers
 Idea screening- Feasible, Workable, Practical
 Concept development and testing- Feedback from target audience
 Marketing strategy- Mix (4Ps), STPD, Targets, Projections, Geographies
 Product development- Final touches & Mfrg
 Test Marketing- Geography or Segment
 Commercialisation- National / Global launch
Why new product development (NPD)

 Changing customer needs – Diet Coke, Saffola
 New Segment Entry- Maruti SX4
 Changing market needs- Scooters to Bikes
 Own successes- Brand / line extensions- Maggi
 Competitive Successes- Krackjack- 50:50, Marie
 New Capabilities- UB Group
 New Concepts- Suzuki Swift, Tata Ace / 1L Car
 New technology- I-Pod, I-Phone, TV
 Product lifecycle- MS Office, Play Station 1,2,3
 Portfolio / Business realignment- Reliance Mobile
 Environmental changes- Music downloads
Source: Harvard Business Review
Product decisions
Design: As the USP- ipod, iphone,ipad
Quality: Consistent with other elements of the marketing mix. Bose speakers
Pricing: A premium pricing strategy should reflect quality or value. Benz
Features: Additional features to enhance benefit offered to target market? Nokia
Branding: Power of instant sales, trust, quality, reliability, loyalty base, differentiation
Brand value of Microsoft > GDP of Pakistan.
Does your perception change for Nike sneakers with/ without the swoosh or nike logo?
Cannibalisation- Breakthrough and incremental innovations may cannibalize some part

of the existing business. Eg Honda Civic hybrid-power vehicle, attracted eco-friendly or
fuel economy (or both) buyers, who may have otherwise purchased Honda Civic, Accord
or City. Moov sachets may tap the traveler segment and entice trial but may cannibalise
Moov economy pack Wisest to move forward with new-product ideas & accept
cannibalisation, else competitors will.
Extending Product Lines into New Segments

Once successful, companies extend their product lines to create derivative (incremental)
products that address adjacent markets. Power of the brand name reduces the risk of
these product-line extensions (but may devalue the brand).
Horizontal product-line extensions seek to appeal to different customer tastes (Coke,

Diet Coke, Vanilla Coke) while Vertical lines aim to offer a product for every pocket or
for different levels of need (Ms Office Home/Professional Edition). In most cases
horizontal and vertical extensions are based on incremental development.
Eg Vertical- GM product-line concept pioneer- Aimed to satisfy buyers in every

economic stage of life, with Chevrolet brand for the first-time buyer of modest means-
and moving progressively upscale with Pontiac, Buick, Oldsmobile, and Cadillac. Buyers
would trade up to fancier and more expensive GM brands with growing affluence.
Horizontal- Each GM division extended horizontally with Chevrolet-trucks, vans, SUVs.
Product platform- Key to success (HBS)

Product platform (Meyer & Lehnerd)
is “a set of subsystems & interfaces
that form a common structure from
which a stream of derivative products
can be efficiently developed and
produced.” Robust platforms help in
incremental or derivative products for
specific market segments at
reasonable cost.
Apple iPod- vertical & horizontal product-line extensions to control meaningful

segments with unique products before rivals can gain traction.
Swatch- successful product family

based on a common platform- simple,
inexpensive to manufacture, and
capable of supporting endless external
variations. Product platforms based on
design elegance and manufacturability
give companies low-cost opportunities
to customize products for different
market segments. The platform of
common elements can merged with
unique elements to create a product for
a particular market segment.
Black & Decker in the early 1970s,

created a platform of electric motor and controls on which it based dozens of consumer
power tools: electric drills, sanders, saws, grinders etc. This gave B&D cost leadership,
reduced complexity in operations, cut inventories, helped them take on cheaper
variants and gained leadership.
Technology lifecycle-
New products are launched at short
intervals to tide over technological
obsolescence eg Nokia mobiles
have short lifecycles so multiple
models are launches in similar
segments in short timer frames
Product Scope Strategy Product Design New Product Strategy

Strategy
 Perspectives of product mix-  Degree of standardization  NPL to previous line/ new use/s/rs
 single-product  standard product  improve/modify product
 multiple products  customized product  Pproduct imitation
 system-of-products strategy  modified standard product  product innovation.
 Single product: product  Standard product: increase  Key-

development focus, avoid economies of scale  corporate aspirations toward NPL
obsolescence, be technology  Customized product: compete  organizational openness to
leader against mass producers of creativity
 Multiple products: standardized products through  environmental favour toward
complement brand portfolio product-design flexibility creativity
System of products: closely  Standard product with  screening method for new ideas
understand customer needs modifications: combine  evaluation process
& product uses benefits of 2 strategies above
6 Integrated Marketing Communication (Promotion)
 Promotion= Marketing communication

 Objective- communication activities to ensure customers know your offerings, have
favorable impression of them, and buy- sale, trial, awareness, remind, reassure
 Retention Levels -Reading10%, Listening20%, Audio-Visual70%; Sight, Sound,
Motion effective. Integrate individual promotion mix components for effective
communication
Promo Tools / Mix (SPPASM DT)

Sales Personal PR Advtg Sponsor MLM Direct Trade
Promotion Selling ship Fair/Expo
Contests Presentation Inserts Advts Events Network, Database Demos
Coupons Samples Press kit Hoardings Period Residual Mailers, Brochures
Low Demo Seminars Banners Theme Income CRM Tech-Info
finance Commission Catalogue
 Personal Selling- (Car, Insurance)- Effective but expensive way to manage personal
customer relationships (Medical Rep)
 Sales Promotion –(Akai / Aiwa/ Sansui)- Incentive to buy, ensures trial, D2C through
trade BOGOF, Coupons, Discounts, Contests, Trial
 Public Relations (PR)- (Political parties / Top Companies/ IPO)- Subtle inserts used in
image building, firefighting - impact if managed well, long term economy
 Direct (Credit card / insurance company mailers)- Targeted communication- database
update, response, multiple use-2% response. Contest mailers, EMI, transfer of credit,
catalogues, CRM
 Trade Fairs and Exhibitions (Print / Auto / Pharma / IT Expo)-Trade, product display /
demonstration / awareness / trial, recent decline due to Internet
 Advertising- ‘Paid for’ communication, Difficult to measure ad impact (Amul bylines
excellent, sales impact?), Helps develop attitudes /create awareness/ communicate
message, elicit response
 Type of Ads- FRESHEN-Fear, Rational, Emotional, Social, Humour, Ethical, Negative
 Media-Print- Newspapers/ magazines/ journals (local, national, trade, speciality) /
pamplets
 Electronic- TV/ radio Virtual- Internet, mobiles Outdoor–Hoardings/ Banners/
Kiosks/Transport (Bus, Train, Taxi, Vans) Captive – Theatres, Train compartments,
Cable TV
 Sponsorship- Organisation pays to associate with an event/cause-Sahara- Indian
Cricket /Hockey/ Olympics. Event attributes associate with sponsor-Pepsi:Youth,
Sahara:Patriotism
 Multi-Level Marketing (HerbalLife, Amway)- Network, Residual Income, Flexi-timings,
Initiators earn maximum, financial schemes -suspect
 Promotion Mix Strategy- ICICI
Promotional Spend Methods- (Half my ad-spend’s wasted, which half? Wanamaker)

 Affordable –Amount decided on supposed affordability, ignores promo needs
 % of Sales- Anticipated sales, not by opportunities, promo-spend varies, % basis
arbitrary
 Competitive parity- Share of voice, Assumes competitive spend-collective industry
wisdom- debatable, Own opportunities/strengths/reputation not considered- IIPM
highest print spender
 Objectives & Task Method- Define objectives/tasks, allocate spend, difficult to
implement
Pull v/s Push: Push (Sales force + Trade promotion), Pull (Advertising +Consumer
promotion) - traditionally HLL-Push and P&G-Pull strategy worldwide
Integrated Marketing Communication (IMC)

Strategic process to produce a consistent brand message at each customer touch point.
Use multiple communication modes to foster awareness of product / services by
informing people about features and benefits, and moving them to make a purchase.
Challenges are:
 Communication clutter (Urban Indian adult exposed to 1000 messages daily)
 Creating awareness in targeted customers
 Producing consistent brand message at each consumer touch point
 Bringing them to the point of interest and confidence
 Making them reach for their wallets to make a purchase
The Marketing communication process (AKIPIS): To influence customer to make a

purchase. Eg Proposed Mumbai-Ahmedabad express train will cover 500 km in 3 hours.
1. Create awareness: People will rarely buy a product/ service they are not aware of.
Critical to communicate service with the targeted customer (print media).
2. Provide knowledge: Inform product/ service features, what it does. Describe train
amenities & schedule: comfortable seating, wi-fi, food, laptops & mobiles charging
outlets, adjustable lights, convenient morning and evening schedules.
3. Create favourable impression: People buy benefits not features- things that solve a
nagging problem /help save money /provide value. Communicate key benefits- city
centre to city centre comfortable travel, allows them to work productively in the trip.
4. Attain a preferred position in the customer’s mind: Customers thinking- express
provides value, no airport hassles/ cramped seats/ security checks/ delays- preferred.
5. Create a purchase intention: If earlier steps are targeted and communicated well,
the prospect will consider this alternative the next time.
6. Make the sale: Prospect travels by the express, becomes a customer.
Alternatively, use market research to classify targeted customers as Unaware of product
Above the line (ATL) & Below the line (BTL) communication
Metaphorical, horizontal line drawn by ad planners, to differentiate ATL (mainstream
media- Cinema, outdoor, press, radio, TV) that allow agency commission and and those
that don’t- BTL (Sales promotion, direct mail, expo, packaging, PoS material, PR,
merchandise, sponsorship)
Advertising Copy Strategy

• Design ad content to transmit clear product message to target by eliminating "noise"
• Credible source, balance of argument, message appeal - rational, emotional, humour
• Celebrity, model, expert, animation, text to picturise ads
Cost per thousand (CPT)

 Cost of ad to reach 1000 people in a particular target group, common audience base
 TV- normalized at 10/30 seconds, Print- 60/100cc, similarly for radio, digital, OOH
 Help effectively rate/value/compare across/within media, transparent
 Top end car maker mulls 1 ad in mainline daily v 6 months campaign in a car magazine
 Daily CPT- Rs 800-1000, Magazine Rs1600; Wastage- daily 80%, magazine 0%
 100% CPT premium worth in magazine, but hidden with 6000 Rs/cc & Rs 1.5L/page
 Media owners to monetize low rating programmes (0.2 TRP), buy audiences not
ratings
 Shift towards, price to value, newspapers rate card sanctity v TV channels
opportunism
Challenge: Optimal marketing resource allocation, communication vehicles to cover all

consumer touch points systematically and consistently.
(Communication vehicles- Dolan, IMC, HBS 2000)
Selecting right communication vehicle:-Customers at various stages of purchasing

process, essential to use IMC.
Eg Silky hair due to shampoo effectively conveyed on TV ad than print ad, but air travel
schedules better conveyed through print ad. For highly targeted audience, product
should convey technical information, or explain usage, then personal selling or internet
are best. If marketing premium specialised product with limited appeal, direct database
marketing may be the best and avoid waste.
The 6Ms
Market: Mission Message Media Money Measurement
The customer- Communication Communication to Which, how Budget How do you
trade/consumer, objective- Consumers- features & many media measure the
target awareness, benefits vehicles to use, impact
communication positioning, Trade- margins, terms, plan, schedule
accordingly purchase coverage
Advertising v Public Relations (http://advertising.about.com/od/careersource/a/10advpr.htm)

Concept Advertising Public Relations
1 Paid Space or Ad space is paid for, we know exactly Intent is free publicity for company- news
Free Coverage when ad will be on air / published conferences, press releases, free media
exposure for company and its products/services
2 Creative Control Creative control on ad content, surely gets No control over how and when media presents
Vs. No Control published your information, not obliged to publish
3 Shelf Life Can repeat ads as long as budget allows. Press release maybe published once only
Longer shelf life than press release
4 Consumers Guarded response to an ad A third-party article can create credibility
5 Creativity Blatant Subtle
6 Objective Awareness, trial, sales Image building, fire fighting
Exercise: Select a brand, outline the IMC strategy across the 6Ms. Which media mix
would you choose, why? How will you schedule the media, how long will the campaign
run? What are the goals and objectives of your campaign, how will you measure them?
7 Brand
 “Promise” Harish Bijoor, “Strategic Asset” Nirmalya Kumar

- Accenture- Accent on the future, Viagra-Vitality of Niagara
 Collection of associations or perceptions about a product, service, or firm
 Brand= Functional, Economic & Emotional Value Propositions- Deepak Jain
 Branding – Endows the product with the power of a brand
 "Buildings age & dilapidate, machines wear out, people die, but brands live on”Aaker
• “A name, term, sign, symbol or design, or a combination, intended to identify goods /
services and to differentiate them from those of competitors” Kotler
• “A mixture of tangible and intangible attributes symbolised in a trademark, which, if
properly managed, creates influence and generates value” Interbrand
 US Brand leaders in the 1930s- J&J, Heinz, Colgate, Disney, Coke- leaders even today
 Brands command premium, high margins, better availability & wide customer loyalty
 Brand value- created by augmenting a core product with distinctive values to
distinguish it from the competition.
 Products deliver series of core benefits to consumers (Watches- time) but consumers
pay a premium for added value which enables a brand to differentiate itself from the
competition. This helps a customer choose or prefer the brand. Mercedes, Sony.
Company’s brand decision making: To Brand or Not to Brand?

Commodity- Basic product, difficult to physically differentiate in minds of consumers
Customer’s brand decision making (Buying a Shirt upto Rs 1000)

Brands
Unknown Known
Manzoni, Louis Phillipe, Van Heusen, Arrow, Color Plus, Peter England, Dockers, Charagh Din,
Pedroni, Oxemberg, Indian Terrain, Zodiac, Austin Reed, Allen Solly, JohnPlayer, Armani, M&S, Wills
Zegna, LS, Park Avenue,
Acceptable Unacceptable Indifferent Overlooked

Louis Phillipe, Van Heusen, Arrow, Cambridge, Peter Allen Solly, CD, Armani, M&S, Wills,
Austin Reed, JohnPlayer, England, Oxemberg Dockers, Indian Zodiac, Color Plus,
Terrain Arrow
Purchased Not Purchased

Van Heusen Louis Phillipe, Arrow, Austin Reed, JohnPlayer
Exercise:
Create a customer’s brand decision making model and a company’s brand decision
making model for accompany and a category, similar to the illustrations above
Brand Ladder (How does a brand get into the customer’s mind)
Promise- Value
proposition offered
to customers, choice
 Affinity- Belief in
the brand, brand
differentials
evident
 Brand Bonding-
Perceived as
delivering on
promise
 Loyalty- Positive
differential effect
driving customer
brand preference
over identical
competitive brands, willing to pay more /wait/go places if unavailable
 Brand Equity- Financial value to firm, includes sum total of factors besides sales
 Promotional strategies revolve around brand purchase stages
Brand Positioning
(Refer page 15 under STPD for crafting the positioning)
 Brand Positioning- Design firm’s
offer & image to occupy distinct
place in the customer’s mind
 Brand identity- how company aims
to identify or position itself/product
 Brand Image- how customer
perceives the brand.
 Brand credibility- how well brand
delivers on its promise Moov-
Backaches
 Positioning = combining internal
(brand identity+ image) + outward
brand expressions (guarantees, service, performance & packaging)
Branding strategy
Key components of a branding strategy are brand extensions and brand portfolios
through individual names, blanket family names, separate family names for all products,
corporate name combined with individual product names
Branding Levels
Product branding (P&G- concept of product management pioneers- Tide)
 Stand alone product with own brand name & resources, focus, company absent
 Unique value, personality, identity, positioning, sustainable competitive advantage
 Rationale- product should stand on its own
 Brand performance evaluation, value, resource allocation possible
 If brand flops, does not affect company name (Tanishq watches vis-à-vis Titan)
 Expensive, as advertising & promotion costs cannot be shared
Corporate branding (Umbrella/ monolithic branding- Nokia, Sony LCD TV/Cameras)
 Corporate name is the brand, products as alpha numerics, no distinctive brand
 Product derives strength of corporate brand values & positioning, saves promo spend
 Builds corporate brand strength & financial value -Service / Hi-Tech industries
 "I have always believed that the company name is the life of an enterprise. It carries
responsibility and guarantees the quality of the product..." Akio Morita, Sony
House or endorsement branding
 Corporate name placed alongside product brand name- Cadbury’s Dairy Milk
 Allows brand identity/positioning, strength from corporate brand values, economies
in advertising/ promotion, prominence to corporate brand can vary, product failure
can damage parental brand
 Helps NPL, otherwise difficult in mature markets sans credible corporate
endorsement
Brand Extension
Product category
Old New
Line extension Category extension
Brand name
New SKU, features, flavours, Use successful & established brand names to
promo economies- Mirinda introduce new product or enter new or existing
Old
lime, Rasna mango, Pepsi 1.5L areas - Gillette Sensor, Junior Horlicks.
Sub brand New brand
Combine existing + new brand Entering new segment or category with a new
(Gillette Sensor Excel, Ford Ikon brand, or even to flank competitor (Maruti
New
Flair, Kellogg Frosties K) Ritz, Tata Nano, Nokia N97)
If executed properly, brand extensions broaden & clarify brand meaning (Google,
Airtel). If executed improperly or straying from central brand proposition, they dilute or
confuse brand meaning (Coke). Brand extensions increase sales by new segment entry
(Moov N&S) but may weaken the brand core or even cannibalise sales (Moov Sachets).
 Multi Branding: Introduce more brands in same segment/category. Kellogg’s

Cereals/Frosties/ Crispies; Titan-Fastrack, Raga, Edge, Nebula, Regalia, Xylys
 Ingredient branding- Create equity for materials, components, parts contained within
other brands- Intel inside, Dolby theatre system, Nirlep Tawa with Teflon coating
 Parent brand- Existing brand which gives birth to a brand extension- Gillette, Tata
 Family brand- When the parent brand is already associated with multiple products
through brand extensions. Cadbury 5 Star, Fruit & Nut
 Umbrella brand- All brands in portfolio carry corporate name- Amul- Butter, Cheese
Brand extensions categories:

 Line extension- parent brand used for new product to target new market segment
within product category served by the parent brand – Maggi Noodle SKUs, Lux
fragrances
 Category extension- parent brand used to enter a different product category from that
currently served by parent brand- Kingfisher Airlines, Amul Ice creams or even
Saffola- leveraging the cardiac friendly theme.
 Brand line- All products- original, line & category extensions, sold under a particular
brand- Godrej, Videocon, Heinz
 Brand mix (or brand assortment)- set of all brand lines that a particular seller makes
available to buyers – HUL- Close-up, Pepsodent
 Branded variant- brand lines supplied to specific retailers / distribution channels-

Pharma franchisee
 Licensed product- where brand name is licensed to other manufacturers who actually
make the product-Disney
Co-branding (Hutch-Britannia, Citibank-Club Mahindra, ICICI-HP, Coke-McDonalds)
 2 brands of different companies together in the same campaign / communication
 Why: complimentary customer base/ segment, value-add, promotional cost-saving
 Key - brand / customer fit, symbiosis, brand personality/values, SoM, SoV
 Avoid- brand devaluation, brand eclipse in promotion
Brand Portfolio- Set of all brands/lines a firm offers to buyers in a particular category.
 Multiple brands increase shelf presence, attract variety seeking consumers, help new
market entry & yield economies of scale in advertising, sales & distribution
 Portfolio maximises brand equity & market coverage, minimises brand overlap
 Differentiation appeals to a sizeable segment, justify marketing and production costs
 Critical- Portfolio monitoring & pruning of weak and unprofitable brands
 Maruti- 800, Alto, A-Star, Estilo, Wagon-R, Ritz, Swift, Desire, etc & their variants
Brands roles in a brand portfolio:

 Flankers- Fighter brands are positioned wrt competitor brands so that major &
profitable flagship brands retain desired positioning. Fighter brands are neither so
attractive as to cannibalise own brands nor cheaply designed to reflect poorly on the
brand portfolio. Celeron and Intel, Toyota & Lexus, I Pod range- nano, shuffle etc
 Cash Cows- Brands are retained as they manage to hold on to a sufficient number of
customers & maintain their profitability with virtually no marketing support. Parle G
 Low-End Entry-Level- Role of a relatively low-price brand in the portfolio often to
attract customers to the brand franchise. Gucci accessories, Sony Vaio lower end
 High-End Prestige- Role of a relatively high-priced brand in the brand family often is
to add prestige and credibility to the entire portfolio. Mont Blanc Pens
Brand Personality
 Created by applying human personality traits & characteristics to a brand to appeal to

a consumer's mind. Like human relationships, as brands grow, emotional dimension
dominates. Consumers attracted easily to brand values like dependability (LIC), trust
(Tata), honesty (Peter England), reliability (Titan), safety (Volvo), fun (Disney)
 Define audience, needs /wants /likes, build consumer personality profile, create
brand personality to match- ensures greater willingness to buy / deeper brand
loyalty – Levis
 Profiling approach reinforces self-concept of consumers/ aspirations-Niche brands
 Brand identity- add personality, set of values, perceptions and brand aspirations… all
the pieces converging. Swoosh replacing the brand name, Nike
 Brand image- Sum total of consumer perceptions, firms fit perceptions to
communication- Swatch- Trendy, Nokia- Value
 Corporate identity- Visual aspects/image of firm's presence-eg logo, collaterals-Tata
 Brand repositioning- customer preferences change- Petrol pumps, typical to vibrant
Brand Equity
• The differential in the customer’s mind which leads to preferring Brand A over B
• Brand worth/value- Levis Jeans sans logo or Nike sneakers without the swoosh?
• Nurtured and built over years through sustained performance and promotion to a
loyal customer base by providing value- Parle-G, Mangola, Microsoft , Apple
• Key factors- Quality, Awareness, Associations, Assets, Loyalty
Brand Salience
• Brand’s ability to be recalled (come to mind) by customers in a purchase situation
• Propensity of a brand to be thought of or noticed in buying situations (Coburn)
• Print ads more effective than TV. If print ads added to TV, then increase in brand
salience, enhanced memorability of communication & strengthening of brand values.
People multi task while watching TV but are not distracted while reading - INS 2004
• Advertising helps change consumer attitudes toward brand & influences market
share by increasing brand salience, with limited impact on brand image (Lisette 1998)
Customer loyalty ladder

Intent- Convert sale into long term customer relationship
Surveys- Retain customers, attracting new customers costs 6 times
more
 Suspect- Potential customer, exposed to your communication
 Prospect- Potential customer, interested in your promotion
 Customers- Purchasers of your product / service
 Clients- Those who return to re/purchase
 Advocates- Convinced/happy customers who promote brand to
others
Exercise: Illustrate customer brand decision making, mental map, frame of reference
with POP/POD, to craft the position, economic, emotional and functional value
propositions and execute the brand identity
8 Distribution (Place)
Place (Distribution/ channel/ intermediary)
 Set of institutions performing activities to move product from production to
consumption-Bucklin
 Retail store, distributor network, e-commerce web site or a direct mail catalogue
 Functions- Order Processing, Warehousing, Inventory, Transportation, Collections
 Ensures- Availability, visibility (Dikhta hai voh bikta hai), movement, feedback
 Width- Trade coverage, Reach- Customer coverage, Depth- Brand coverage
 Growing impact of convergence- internet, mobile, retail revolution
 Critical- offer product where and when customers want
 Companies use many channels to connect/ transact business with customers. Eg
Books use many paths to reach customers without causing conflicts between
channels.
 Eg
Amazon.com
made books &
other items
conveniently
available to
customers on
the net 24/7,
book-buyers
did not have
to visit Source- Dolan, HBS, 2000
bookstores or browse through hundreds of books. Amazon offered convenience,
faster alternative, greater selection and reviews
 Eg Dell’s strategic decision to sell PCs directly to customers by skipping trade channels
allowed Dell to- capture customer information missed in other forms of distribution,
make customers configure own PC, reduce costs by made-to-order manufacturing,
make product available 24/7- key differentiating factors in a product class where
competing products are very similar.
Channel Intermediaries
1-Level 2-Level 3-Level 4-Level 5-Level
Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer
C&F C&F
Stockist Stockist
Retailer Retailer Retailer
Consumer Consumer Consumer Consumer Consumer
Industrial, IT IT Hardware Retail /Malls Garments Pharma /FMCG
 Distributors (C&F)- Bulk to smaller packs, handle major area, supply to stockists
 Wholesalers (Stockists)- Resell to retailers, storage, coverage essential
 Others- Commission agents, co-operatives, indentors (imports), agents (magazines)
 Retailers- Strong customer influence, consumption/ purchase pattern insight, service
 Speciality (Sports), supermarket (Big Bazaar), convenience (Kirana), factory outlets,
warehouses, direct sellers (Encyclopedia), vending machine (Tea), co-operatives (Apna
Bazar, Grahak Peths, Societies), chain stores (Monginis)
 Internet (Services)- Channel margins and inventory costs major savings- passed on,
hence economical, death of distance, geographically disperse market, niche products
reach wider audience, low entry barriers, display variety & functionality, interactive,
cash on delivery, popular – Flipkart, Infibeam-Books, Electronics, travel, tourism
 3rd Party Logistics ( AirFreight, GATI)- Tremendous scope
Channel Decisions
 How to effectively reach target segment
 Exclusive distribution (sole rights)
 Intensive distribution (all retail outlets)
 Selective distribution (key outlets )
 Direct or indirect channels / Single or multiple channels
 Length of channel
 Types of intermediaries / Number of intermediaries at each level
 Which intermediaries? Avoid intrachannel conflict- Nike
 Use 2/+ different distribution channels
 Complementary (each channel handles non-competing product/ segment)
 Competitive (2 different and competing channels sell the same product)
Exercise: X company uses which ‘place’ in its marketing plans? Are these effective in
satisfying customers and generating sales and profits, or could new channels be added?
Price and distribution strategies

Player/s Strategy Example
Market Leader  Distribution in place  Pepsi
 Price main weapon  Chic shampoo, Nirma
 Premium price  Apple
 Variety of options  Nokia
Market  Focus on flanks  Samsung- touch, smart phones
Challenger  Direct or indirect attack  Micromax- cheap smart phones
Market  ‘Cloning’  Sony- smart phones
Follower  Set lower prices  Karbon, Lemon smart phones
Market Niche  Stay with markets  Blackberry
 Add niches  HTC
 Premium price  Vertu
 Selective distribution
9 Price
 Fit between crucial financial component- cost & marketing component -value
 Price is what a buyer must give up in exchange for a product or service
 Money charged for a product / service, perishable advantage, unless cost leader
 Only revenue generating part of the mix, flexible tactic
 Customers interested in value product provides, not costs
 Price decisions- price point, list price, discounts, payment period, etc
 Commodities differentiated by price, quality, brand commands premium
 Objectives: sales, profits, MS, ROI, competitive position, demand, costs, survival
 Center-stage in marketing wars, Inter-firm rivalry-Mobile Industry
 Prices- rate, commission, fee, tuition, rent, premium, fare, salary, toll, interest,
retainer, wage, tax etc
Pricing Approaches
Based on Strategies Examples Characteristics
Cost Cost plus (markup) Retail Margins known, prices can be high
Break even Pharma, FMCG Large volumes
Competitor Going rate Banks, petrol, Wide choice, no differentiation,

competition- price/service/ reach-
Sealed bids Tenders
Competitive Pepsi, Coke
Cartelling Tyre, Mobile
Customer - Penetration pricing Parle G, Amul Low entry price, attract, switch, MS,
willing to increase later, markets with little
pay differentiation, price elastic demand
Price skimming High end consumer Price insensitive innovators, early

electronics adopters,reduce prices with
competitors entry
Loss leader Factory outlets, Biannual Price perceived < cost price, attract
sales at malls new/ brand xp seeking customers,
cross sell, up sell, bulk buyers
Predatory pricing Dominant FMCG, Retail Prices < rival costs, out of business
Psychological pricing Bata, Mobile service Rs 100< 99 perception, break
Perceived Value Lifestyle, Clubs, Luxury
Auctions EBay
Value Buffett, McDonalds
Pricing Strategies
 Penetration- HQLP- NPL, Entry, Attract, Ensure trial- Amul
 Premium- HQHP-Sustainable advantage- Bose Speakers, Benz
 Economy- Functionality & Value-, Nirma, Supermarkets-own brand
 Skimming- LQHP-Significant advantage, unsustainable-Reliance Mobile
 Rip-Off- Medium quality, very high price - Pricey Hotels/ Restaurants
 1,5,9-coexist in same market till buyers insist on quality, price, value
 2,3,6- ways to attack 1,5,9 as 2 = HQMP, 3=HQLP,6=MQLP
 4,7,8 overpricing wrt quality-customers feel ‘taken’, bad oral publicity, avoid
Pricing Strategy Matrix Price

High Medium Low
Quality High 1-Premium 2-HighValue 3-Penetration
(Quality is only Medium 4-Over-charging 5-Medium Value 6-Good Value
indicative)
Low 7-RipOff / 8 False Economy 9-Economy
Skimming
Prestige pricing- Create perception of quality /exclusivity in consumers minds by setting
high price. Many consumers judge quality by price, reasonable price connotes
acceptable quality, exorbitant price adds an aura of excellence & exclusivity. Packaging
& advertising reinforce this perception. Cosmetics, Clubs, High end mobiles.
Bait & Hook pricing- Initial low price but high price for replacement or peripherals-
Gillette & Print cartridges. Generic replacement possible so disruptive innovation can
win, or warn customers of void warranties if replacement used.
Exercise- Using the Pricing Strategy Matrix

1. Identify pricing strategies of a firm with a large brand portfolio
2. Pricing strategy of competitors within a product category / industry
Other Pricing Strategies

 Psychological- Bata, Mobile Airtime Tariffs
 Geographical- Medicines / Electronics across countries or Urban/Rural-Electronics
 Promotional –Extensive usage, if successful-copied, if unsuccessful-financial drain
 Loss Leader- Factory outlets
 Special Discounts / Rebates - BOGOF, % Off, Sale
 Financing- EMIs, Low interest rates
 Warranties/ AMCs- Extended warranties, TVs-Onida 4 year warranty, Free AMC
 Psychological Discounting- Prices slashed 399 to 199, Baazee
 Old for New- New for Old at discounts- Exchange offers-Van Heusen, TVs
 Value –Superstores-Big Bazaar
 Price point-Cadburys-Re1 toRs 500, Nokia, Maruti
Maruti pricing strategy (hypothetical prices for illustration)

Prices in lakhs
2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5
Alto LX LXI VX AX
AStar LX LXI VX AX
Estilo LX LXI VX AX
Wagon R LX LXI VX AX
Ritz LX LXI VX AX
Swift LX LXI VX AX
Desire LX LXI VX AX
Plan to buy a car costing around Rs 4 lakhs, you may look at a range between Rs 3-5
lakhs. Maruti offers 6 models and 17 variants in this range, covers all sensitive price
points, offers wide range. Customer ends up buying higher model/ its lower version
Discriminatory- Same brand/service, 2 prices

 Customer segment- Student discounts
 Product form- Ketchup-100gm-20, 250gm-45, 500gm-75
 Image- Taj- Palace (Premium), Resorts (Lifestyle), Hotels (Business), Indione (Budget)
 Location-Theatres-Stall-50, Balcony-75, Dress Circle-100, Stadium-Pavilion, stands
 Time- Seasonal-Cheaper/costlier during season, happy hours, bakeries-25% off after 8
Product Mix-Profitable brands take care of others in the portfolio

 Product line- All segments full range- Maruti- Rs 2-8 Lacs at every 25000 interval
 Optional feature pricing-Ford Ikon-Insurance+ Deck+ Central Lock + Auto Cop free
 Captive product- Cameras / Razors cheaper but consumables –Film / Blades costly
 2-Part- Esselworld- admission + rides, Airtime + SMS/VMS/STD
 By-product- Lubricants with petrol
 Product bundling- Season tickets, Time share
Internet- Cheapest-No layers, Transaction cost for buyer/seller minimum, auctions,
bargains, visibility
Other ways to ‘increase’ prices without increasing price

Revise discount structure Premium for urgent orders
Change minimum order size or shipper Interest on overdue outstandings / penalty
clause
Charge for delivery/ services/ Produce less of low margin models
installation
10 Immersive Reading on Competitive Strategies

Of market leader, followers, nichers and challengers
Marketing strategy-
Integrates an organization's marketing goals and policies into a cohesive marketing plan
to achieve marketing objectives. Dynamic and interactive. Eg economy pricing to attract
consumers, establish relationship, move products up the value chain
Market-Leader Strategies
 Market leader has largest market share in but to remain dominant, the leader looks
for ways to expand total market demand, and to increase its share
 Many industries have 1 major player Micro3 soft (software) & McDonald's (fast food),
who has large market share, usually leads in price changes, NPL, reach and
promotional intensity
 But competitive product innovations can hurt the leader- Samsung colour phones
and Sony camera phones hurt Motorola
 Leader may spend conservatively while challenger spends liberally- Aircel, or may
misjudge competition and get left behind- HMT, Air India
 Dominant firm may look old-fashioned against newer, peppier rivals- Samsung v Sony
1 Find ways to expand total market demand

 Moov as the market leader is looking at new ways to increase use, users and usage
 Started by focusing on back pain when others focused on general pain, targeted the
middle class Indian house wife who influences the family and is the decision maker
 Moov focused on the physically active adults in the family and launched different
packs and extensions to penetrate every social strata (more users), now they are
targeting various pain segments (more uses) and advocating ‘moov ki maalish’so that
10 fingers are used instead of 1 finger tip (more usage)
 Moov introduced different price points (economy pack and sachet) to entice trials in
newer segments & geographies, thus increased quantity and frequency of
consumption
 Moov introduced Neck & Shoulder, to targeting new generation who are afflicted
with these problems as they are heavy users of desk tops and laptops.
2 Protect current market share through good defensive and offensive actions
 Nokia India controls over 40% of the handsets markets and constantly defends
against formidable rivals through continuous incremental innovation by launching
new offerings, increasing reach, occupying sensitive price points, offering the widest
range, and delivering value in their products.
 In the lower and medium markets Nokia has covered every sub-segment and flank
and defends aggressively
 Considering Nokia’s solid base, competitors are focused and strong in niches where
Nokia is not big, like PDA (HTC), entertainment (Sony), mail (Blackberry) and high end
(IPhone) phones which have high profits, price insensitivity but lower volumes.
 Nokia is introducing models in these segments as its loyal customers trade up
 Nokia enjoys a cost advantage due to sheer volumes of making 10 lakh phones daily
globally, and its prices reflect the value that customers see in Nokia
 Nokia is the global leader as it is No. 1 in China and India which are high growth, high
volume markets.
Defending Market Share

Dominant firm uses 6 defense strategies
1. Position defense
Build superior brand power, make brand almost impregnable. Samsung and LG have
invested heavily in promotion but captured more of Motorola’s and Sony’s share than
Nokia’s
2. Flank defense
Intel opened up a new flank by introducing Celeron to take on cheaper Taiwanese
competition and AMDat 30% higher prices, and also increased the price of next gen
chips like core 2 duo to create a new category, thereby protecting both fronts and
increasing their customer base. Pepsi takes Coke head on in India through
advertisements but Coke uses Thums Up ads to take on Pepsi.
3. Preemptive defense
Maruti wants to introduce a stripped down version of its 800 model so as to take on
Tata’s Nano. Before IPhone entered India officially, many IPhone killers were already in
the market, other competitors spread canards that Nano plant is depriving farmers of
their land and that Nano would pollute India.
4. Counteroffensive defense
When attacked, most leaders counterattack, either by invading the attacker's main
market or by using its economic or political clout. Toyota is a cost leader as compared to
GM in the US and enjoys a clear 20% cost advantage per car which it uses to gain clear
price advantage. Before the launch of Britannia Butter in the Indian market, Amul gave a
bonus offer scheme of 1free pack on purchase of 10 packs of half kg Amul Butter. This
ensured that all the refrigerator shelves of all 6 lakhs retailers across India having cold
storage facilities were mysteriously full thus depriving Britannia of crucial shelf space.
5. Mobile defense
Amul has leveraged its milk supply proficiencies to diversify into milk related segments
where it has a distinct cost advantage which it turns into a price advantage. It leverages
its cold chain leadership to ensure stocking of Amul butter, cheese, milk and ice creams
into retailer refrigerators.
6. Contraction defense
Most leading pharma companies diversified into related and unrelated areas in the
1960s and 1970s, but when pharma remained most profitable in the 1990s as compared
to the other industries, they divested to remain focused on pharma. Pfizer divested
consumer and foods business, GSK divested consumer business, Novartis hived off its
chemicals business, Merck divested its medical insurance business, and Roche divested
its vitamins business. This planned contraction helped concentrate mass at pivotal
pharma positions. Pepsi divested Yum foods (Pizza Hut, Taco Bell and Burger King) to
focus on beverages.
Expanding Market Share

 Companies gain share by outperforming competitors in areas: new-product activity,
relative product quality, and marketing expenditures- Nokia
 Companies resorting to deeper price cuts than competition typically do not achieve
significant gains, as rivals meet the price cuts and others offer other values to ensure
that buyers do not switch. Koutons
Other Competitive Strategies

Firms that are not market leaders in an industry are still quite significant (Vodafone,
Hyundai) and can attack the leader and other competitors in an aggressive bid for
further market share (market challengers) or follow the leader (market followers).
Market-Challenger Strategies
 Challenger attacks the leader and other rivals in an aggressive bid for more share,
choosing from 5 types of general attack and then selecting specific attack strategies
 Market challenger must define its strategic objective- say increase market share, and
then decide whom to attack
 Taking the leader on can be risky but highly beneficial, targeting underperforming
firms of similar size with aging products could be less risky but with lower pay offs,
and taking on local and regional firms may not lead to higher share
 Given clear opponents & objectives, 5 general market-challenger attack options are:
1. Frontal attack-Match opponent's 4Ps. Pepsi v Coke
2. Flank attack
 Flank attacks favoured by smaller challenger s with fewer resources and more likely
to succeed than frontal attacks, could also be by . Nirma v HUL
 Challenger attacks rivals weaker geographies or areas where rival is
underperforming. Britannia butter in East India.
 Or flank to serve uncovered market needs, Japanese carmakers focus on small fuel-
efficient cars in the US.
Strategic Choices for Challengers in Growth Markets
3. Encirclement attack
Manoeuver to capture a wide slice of the enemy's territory through a "blitz"-launching
a grand offensive on several fronts- Aircel launch
4. Bypass attack
Indirect strategy to bypass enemy and attack easier markets to broaden resource base.
Involves diversifying into unrelated products or diversifying into new geographies or
leapfrogging into new technologies to supplant existing brands. Pepsi bought Tropicana
& Quaker Oats (Gatorade) to bypass Coca-Cola, IPhone bypassed other mobile phones .
5. Guerilla warfare
Smaller challenger using small, intermittent attacks using conventional and
unconventional means of attack, like selective price cuts, intense promotional
campaigns
without risking the higher cost and provocation of a frontal attack. Bean bags phone
number painted on under construction buildings,
Market-Follower Strategies
 Follower is a runner-up firm willing to maintain its market share and not rock the
boat; it can play the role of counterfeiter, doner, imitator, or adapter.
Product imitation can be as profitable as strategy of product innovation, where the

leader invests in developing the new product, distributing it, and educating the market-
all of which may result in market leadership. But a brand like Moov can improve on the
leader’s brand (Iodex) and make high profits as it had not borne any of the innovation
and development costs. In larger industries (steel, chemicals) where few opportunities
exist for product, service and image differentiation, but there is price sensitivity, most
firms make similar offers to buyers, usually by copying the leader. Normally follower
may not always be a rewarding path.
 Counteifeiter- duplicating leader's product and package, selling it on the black market
– Rolex, Mont Blanc duplicates
 Cloner-Emulating leader's products, name, and packaging with slight variations-
Vicks, Vaseline clones
 Imitator- introduces brands similar to leaders by copying some of the things but
maintaining differentiation of packaging, advertising, pricing- Branded generic drugs
 Adapter- adapting or improving upon leader's products, Moov introduced non messy
creams scoring over Iodex
Market-Nicher Strategies
 Market nicher specializes in small segments not served by larger firms
A nicher or a market niche leader could be an alternative to being a follower in a large

market. But niches can weaken/expand, so smaller firms avoid competing with larger
firms by occupying small but profitable markets of little or no interest to larger firms. Eg
Logitech specialized in computer mouse niche, expanded to peripherals- headsets,
keyboards and Webcams. Dabbawallas niched into home cooked meal delivery but
sustained as their rates deter others (couriers/logistics) from expanding into this space.
Company and Competitor focus

Company focused Competition focused
Pushes boundaries Leader Challenger
Stays within boundaries Nicher Follower
Customer and Competitor Orientations

Competitor centered company Customer focused firm
 Focus on competitor activities-  Focus on customer development (market growth 4%, quality-
(reach, prices, new services) sensitive segment
 Formulate competitive reactions  @ 8%; deal-prone customer segment grows fast, but such
(increase ad/promo spends, price customers not loyal

cuts)  Reach & satisfy quality segment, avoid price cuts
 Alert firm, market focused  Identify opportunities, target customer & emerging needs
better wrt resources & goals
Market Scope Strategy

Single Market Strategy Multi Market Strategy Total Market Strategy
Concentrate efforts on single Serve several distinct markets Serve entire spectrum of the
segment market
Serve market wholeheartedly Careful selection of segments Selling differentiated products to
despite initial difficulties to serve different market segments
Avoid competition with Avoid confrontation with firms Use marketing mix combinations
established firms serving entire market. in different segments
Top management commitment
to embrace entire market
Strong financial position
Market Entry Strategy

First In Strategy Early Entry Strategy Laggard Entry Strategy
Enter market before others Enter market in quick Enter market at end of growth/ maturity
succession after the leader phase as
 Willing + able to take risks  Superior marketing  Imitator (me-too product) -
 Technological competence strategy Ample resources production capability, MR ability
 Strive to stay ahead  Strong commitment to  Initiator (unconventional strategies) -
 Heavy promotion challenge market leader with ability to generate creative
 Create primary demand marketing strategies
 Carefully evaluate strengths
Marketing Strategies:
Introduction Stage
 Profits -ve/ low, high promotional expenditure, to inform potential consumers, induce
product trial and ensure availability
 Market pioneer- first can be rewarding, but risky & expensive
 Coming later makes sense if with superior technology, quality, or brand strength.
 Speeding up innovation time essential in an era of shortening PLC and obsolescence
Pioneer Advantage (inventor, product pioneer or market pioneer)

 Strong brand name recall, establishes brand attributes of product class, economies of
scale, technological leadership, patents & ownership of scarce assets.
 Pioneer weaknesses: crude new products, high product-development costs, lack of
resources, improper positioning, an idea before its time, managerial incompetence or
complacency
Growth Stage
 Rapid sales climb, consumer base growth

 New competitors enter, attracted by the opportunities
 Prices maintained or fall slightly
 Companies maintain / increase promotional expenditures, educate market, take on
competition, profits increase, costs fall due to volumes
Strategies to sustain rapid market growth

 Improve quality, add new product features, improve styling
 Add new models, flanker products, enter new market segments
 Increase distribution coverage and enter new distribution channels.
 Shift from product-awareness advertising to product-preference advertising
 Lower prices to attract the next layer of price-sensitive buyers
 Trade-off between high market share and high current profits. Invest in product
improvement, promotion, and distribution, to capture a dominant position.
Maturity Stage
 Growth declines, longer stage, marketing mature products key challenge, 3 phases:
 Growth, sales growth rate starts to decline
 Stable, flat sales due to market saturation
 Decaying maturity, sales decline, customers begin to switch
 Sales slowdown creates industry overcapacity, intensifies competition
 Industry consolidation, few dominant firms, many nichers, profits through volumes
 Key issue- be in the “big 3” or niche
 Abandon weaker products, concentrate on more profitable & new products
Market Modification
Expand mature brand market by driving sales volume = no. of users x usage rate/user
 Expand number of brands users by converting nonusers, expand number of brand
users by entering new market segments
 Convert competitors’ customers
 Convincing current users to increase brand use, users, usage
Product Modification
Modifying product characteristics through quality, feature or style improvement
 Quality improvement aims at increasing product’s functional performance
 New features to expand product’s performance, versatility, safety, or convenience
 Build image as an innovator, win loyalty of market segments that value these features
 Feature style improvement may only increase product’s aesthetic appeal.
Marketing Strategies: Decline Stage

 Sales decline- technology advance, shifts in consumer tastes & competition
 Over capacity, increased price-cutting, and profit erosion- firms may withdraw from
the market or reduce number of products offered
 Stop, increase or maintain investment

 Drop unprofitable customer groups, strengthen investment in lucrative niches
 Harvest firm’s investment to recover cash quickly
 Divest the business
 Strategy depends on industry attractiveness & company’s competitive strength
 Rejuvenating mature product, often by adding value to original product
Defensive marketing protect competitive advantages Nokia with full range, NPL
warfare strategy Pre-emptive strike - Attack before Nokia in lowest range
used to defend you are attacked
competitive advantages; Position Defense - Erect Nokia range at sensitive price points
generally used by leader, fortifications
major players to reduce Mobile defense - Constantly Nokia psychographic segmentation
risk/effects of attack, and change positions
strengthen position Counter-offensive - When Nokia set up Indian manufacturing
attacked, launch counter-offensive unit to tap economies of scale and
at attacker’s weak point compete with all players
Strategic withdrawal - Retreat and Smart phones unsuccessful,
regroup to live & fight another day competing in other segments
Flank positioning - Strengthen your Nokia E series in smart phones, N
flank series in entertainment phones, 1100
for economy phones
Deterrence strategy- convince Reliance in plastics
competitors to keep out of your
markets. Win the battle in the
minds of the enemy.
Offensive marketing Attack competitive advantages Pepsodent v Colgate
warfare strategy- Frontal Attack – Confront direct Pepsi v Coke, Surf/ Rin v Ariel
secure competitive head-on
advantage, generally used Encirclement- Envelop opponents Micromax, Google
by challengers to position
target leader and Leapfrog strategy - Avoid HTC, Blackberry
significant players confrontation, bypassing enemy or
competitive forces
Operate in areas of little Intel Celeron,
Flanking marketing
importance to competitor, by Kingfisher Red
warfare strategy leader to take on low price players
or trade up, or by challenger to
take on leader.
Introduce new brand in same /
similar segment to compete with
competitor, to protect main brand
and attack competitor’s flank
Guerilla marketing Use limited resources to attack, Bean bags,
warfare strategy then retreat, hide, attack, never
face to face and with unusual
campaigns)

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Product Pricing

STPD Branding IMC

Check out these Notes and Case Studies at www.dramitrangnekar.com

Marketing Strategy – Mumbai University / NMIMS University Assessment -100 marks

No Subject Topics/s Cases from Pg

About the Author

Dr Amit Rangnekar, MBA (Marketing) and PhD (Business

Embarking onto teaching as a hobby in 2003, Dr Rangnekar is a visiting faculty at

Dr Rangnekar has presented on various business case studies on marketing, branding

Co-ordinates Email amitrangnekar@gmail.com , amit@dramitrangnekar.com

Visit www.dramitrangnekar.com … the homepage for MBA students worldwide

 Concise class notes on marketing, branding and strategic management

1 Marketing Strategy Overview

SWOT Analysis- assess the internal / external environment a firm operates in

Strategic fit- effective match and management of environmental opportunities and

The external business environment

Industry Environment Analysis/ industry attractiveness (Porter’s 5 Forces model)

1) Threat of New Entrants: Entry Barriers

2) Bargaining Power of Suppliers (increases when):

4) Threat of Substitute Products (increases when):

5) Intensity of Rivalry among Competitors (increases when):

Category Need fulfilled Brand Competitors Product Competitors Generic Competitors

Beverages Refreshment Coke, Pepsi Tea, Nimbu Pani Regular water

Marketing strategy answers 2 questions

How marketing strategy relates to corporate and business level strategies

How marketing relates to strategy

Marketing strategy defines

Ferrari’s marketing strategy

Illustration- PC market Strategic marketing environment

Marketing Plan- “Plan your work, and work your plan”

Executive summary Objectives and implementation plan

Implementing the plan via the Marketing Mix

Controlling Plan Implementation (HBS)

Marketing Plan Summary

Evaluate segment attractiveness

Requirements for effective segmentation

Segmentation matrix- Taj Hotels

• McDonalds menu adaptation in India

• Income (Garments, car, soaps) • Toyota- Lexus, Camry, Corolla

Lifestyle, VALS (Values, attitudes,

aware) formal, fastrack for casual, Raga for ethnic;

Targeting choices (Derek F Abell, 1980)

Mass marketing Target Amul Butter,

Market Concentrating Ferrari-

Positioning types Positioning anomalies

Crafting the brand positioning

Design 32GB Safari

Apps 5MP Cam

Gaming Weight iPod iOS HD Video

Exercise- POPs & PODs for Apple i-Phone 4s

Exercise: Walmart’s India entry strategy based on above perceptual map

Positions that firms have successfully claimed in India

Key improvement areas? Price, promotion, features, customer service

1 Ansoff’s product-market growth matrix (HI Ansoff 1957)

Existing product New product

2 BCG Matrix- Growth Share Matrix Matrix, 25%

1968 (Tata SBU, Parle Biscuits)

determine prospects for various SBU/ brands. 5 2

market, high promotion costs, generate high income, invest

3 GE Matrix/Growth Share Matrix/Business Screen

Market Attrac tiveness

 SBU's to invest, build, harvest, divest? Invest/Grow Selec tivity/Earnings Harvest/Divest

 Forecast for N3-5Y- strategy, competition, PLC, technology, policy, incorporate in