Name : Amna Mir

Subject : Principles of Marketing (8407)

Student ID : 0000105768

ASSIGNMENT NO.1
Q. 1 How is strategic planning carried out at the corporate, division and business unit
levels?
a.1 - Corporate or Company headquarters establish the framework by preparing statements of
mission, policy, strategy, and goals, within which the divisions and business units prepare their
plans. Some corporations give their business units a lot of freedom to set their own sales and
profit goals and strategies. Others set goals for their business units but let them develop their own
strategies. Still others set the goals and participate in developing individual business unit
strategies. All corporate headquarters undertake four planning activities:
1. Defining the corporate mission. 2. Establishing strategic business units. 3. Assigning resources
to each SBU. 4. Assessing growth opportunities
Defining the Corporate Mission:
An organization exists to accomplish something to make cars, lend money, and provide a night’s
lodging, and so on. Its specific mission or purpose is usually clear when the business starts. Over
time the mission may change, to take advantage of new opportunities or respond to new market
conditions. Amazon.com changed its mission from being the world’s largest online bookstore to
aspiring to become the world’s largest online store. eBay changed its mission from running online
auctions for collectors to running online auctions covering all kinds of goods. To define its
mission, a company should address Peter Drucker’s classic questions. What is our business? Who
is the customer? What is of value to the customer? What will our business be? These simple-
sounding questions are among the most difficult a company will ever have to answer. Successful
companies continuously raise these questions and answer them thoughtfully and thoroughly. A
company must redefine its mission if that mission has lost credibility or no longer defines as
optimal course for growth. Organizations develop mission statements to share with managers,
employees, and (in many cases) customers. A clear, thoughtful mission statement provides
employees with a shared sense of purpose, direction, and opportunity. The statement guides
geographically dispersed employees to work independently and yet collectively toward realizing
the organization’s goals.
Good mission statements have three major characteristics. First, they focus on a limited number
of goals. The statements, we want to produce the highest-quality products, offer the most service,
achieve the widest distribution, and sell at the lowest prices claims too much. Second, mission
statements stress the company’s major policies and values. They narrow the range of individual
discretion so that employees act consistently on important issues. Third, they, define the major
competitive spheres within which the company will operate.
Defining the Business Companies
Companies often define their businesses in terms of products. They are in the auto business? or
the clothing business? Market definitions of a business are superior to product definitions. A
business must be viewed as a customer-satisfying process, not a goods-producing process.
Products are transient; basic needs and customer groups endure forever. Transportation is a need:
the horse and carriage, the automobile, the railroad, the airline, and the truck are products that
meet the need.
Companies must redefine their business in terms of needs, not products. Pitney-Bowes Inc., an
old-line manufacturer of postage meters, is in the process of doing just that. With old-fashioned
paper mail under siege, Pitney “Bowes, a U.S. company, can no longer afford to be defined by its
main product, even though it currently holds 80% of the domestic market and 62% of the global
market. The company is redefining itself as a leading service provider in the much larger mail and
document management industry. With its wealth of engineers, cryptographers, and even
workplace anthropologists, as well as 2,300 patents and several labs, Pitney-Bowes is well
positioned to help companies organize their communications. In a new series of ads in business
publications such as Fortune, Pitney “Bowes is spreading the word about its new mission. For
instance, one ad boasts that we can generate remarkable changes across your entire business,
including a sizeable increase in profits? A business can be defined in terms of three dimensions:
customer groups, customer needs, and technology. Consider a small company that defines its
business as designing incandescent lighting systems for television studios. Its customers group is
television studios; the customer need is lighting; and the technology is incandescent lighting. The
company might want to expand. It could make lighting for other customer groups, such as homes,
factories, and offices; or it could supply other services needed by television studios, such as
heating, ventilation, or air conditioning. It could design other lighting technologies for television
studios, such as infrared or ultraviolet lighting.

Q. 2 How marketing information system helps organizations to compete in the contemporary

scenario? Support your answer with suitable example.
a.2 MIS enables the identification of emerging market segments, and the monitoring of the
market environment for changes in consumer behaviour, competitor activities, new technologies,
economic conditions and governmental policies at the time of using market research and market
intelligence. It majorly deals with the input (i.e., gathering appropriate internal and external data),
generating useful information out of it (with the help of the various marketing information system
components) and then communicating the outcome so acquired to the decision-makers.
Characteristics The marketing information system is presently used by all kinds of organizations
to attain a competitive edge and success in their business. Let us now understand its multiple
features to grab a clear understanding of the concept:

Computer-Based System: In the marketing information system, all the information is gathered,
analyzed and communicated through a computer device, and the useful marketing information
is stored in microfilms.
Quick, Selective and Accurate Information: The organization can maintain relevant marketing
database through marketing information system which can be immediately and accurately
accessed anytime.

Easy Accessibility: The information maintained with the help of the marketing information
system can be easily viewed and utilized through a computer system.

Inter-related Components: In marketing decisions and communication, all the four components
are inter-linked, i.e., the information provided by one element is useful for the functioning of
the other aspects. These interconnected components include internal report, marketing
research, marketing intelligence and marketing decision support system.

Since every piece of information involves some opportunity cost as well as a real cost. It is
essential to wisely select the subject or area requiring the application of a marketing information
system and deciding a suitable metrics, accordingly. Next comes the collection of required data as
per the selected metrics from various internal sources (books of accounts, a sales record, sales
reports and analytics) and external sources (customer surveys, economic or financial metrics,
social media insights and competitor results). Then, the gathered data needs to be organized and
plotted systematically on a graph to facilitate comparative analysis, future prediction and
interpretation. The fourth step is to communicate the graphical information to the various
departments for a better interpretation and analysis of the available data and the determination of
multiple alternatives (decisions) as per organizational goals. The last step is to decide the best
possible course of action of the marketing metrics and applying it to the business to enhance the
marketing results.

Q. 3 Organizations focus to sell their product to different segments of the market and to cater the
requirement of the customers the whole market is divided into small segments. You are advised
to identify and explain various approaches utilized for segregating the market to meet
organizational objectives.
a.3 At its core, market segmentation is the practice of dividing your target market into
approachable groups. Market segmentation creates subsets of a market based on demographics,
needs, priorities, common interests, and other psychographic or behavioral criteria used to better
understand the target audience. By understanding your market segments, you can leverage this
targeting in product, sales, and marketing strategies. Market segments can power your product
development cycles by informing how you create product offerings for different segments like
men vs. women or high income vs. low income.

Geographic Segmentation

Geographic segmentation means segmenting markets by region of the country, city or county
size, market density, or climate. Market density is the number of people or businesses within a
certain area. Many companies segment their markets geographically to meet regional
preferences and buying habits. Pizza Hut, for instance, gives easterners extra cheese, westerners
more ingredients, and midwesterners both. Both Ford and Chevrolet sell more pickup trucks and
truck parts in the middle of the country than on either coast. The well-defined “pickup truck
belt” runs from the upper Midwest south through Texas and the Gulf states. Ford “owns” the
northern half of this truck belt and Chevrolet the southern half.

Psychographic Segmentation

Race, income, occupation, and other demographic variables help in developing strategies but
often do not paint the entire picture of consumer needs. Demographics provide basic data that
can be observed about individuals, but psychographics provide vital information that is often
much more useful in crafting the marketing message. Demographics provide the skeleton, but
psychographics add meat to the bones. Psychographic segmentation is market segmentation by
personality or lifestyle. People with common activities, interests, and opinions are grouped
together and given a “lifestyle name.” For example, HarleyDavidson divides its customers into
seven lifestyle segments, from “cocky misfits” who are most likely to be arrogant troublemakers,
to “laid-back camper types” committed to cycling and nature, to “classy capitalists” who have
wealth and privilege. Two different managers could be described by demographics as male,
managers, 35 years old, with $80,000 per year income. A marketer who just saw the
demographics might create one advertisement to reach both of them. However, if the marketer
knew that one of the managers was president of his homeowner’s association and captain of a
rugby league team and the other manager was a holder of opera season tickets and president of
the Friends of the Public Library, the messages might be designed very differently in order to be
more successful.

Benefit Segmentation

Benefit segmentation is based on what a product will do rather than on consumer characteristics.
For years Crest toothpaste was targeted toward consumers concerned with preventing cavities.
Recently, Crest subdivided its market. It now offers regular Crest, Crest Tartar Control for people
who want to prevent cavities and tartar buildup, Crest for kids with sparkles that taste like bubble
gum, and another Crest that prevents gum disease. Another toothpaste, Topol, targets people who
want whiter teeth—teeth without coffee, tea, or tobacco stains. Sensodyne toothpaste is aimed at
people with highly sensitive teeth.

Volume Segmentation

The fifth main type of segmentation is volume segmentation, which is based on the amount of the
product purchased. Just about every product has heavy, moderate, and light users, as well as
nonusers. Heavy users often account for a very large portion of a product’s sales. Thus, a firm
might want to target its marketing mix to the heavy-user segment. For example, in the fast-food
industry, the heavy user (a young, single male) accounts for only one in five fast-food patrons.
Yet this heavy user makes over 60 percent of all visits to fast-food restaurants.

Business Market Segmentation

 Business markets are segmented differently than consumer markets. Business markets may
segment based on geography, volume, and benefits, just as consumer markets are. However,
organizations might also segment based on use of the product (such as a petrochemical company
having one market segment for purchasers who use polyethylene for instrumentation panels and
one for purchasers who use polyethylene for car seats), characteristics of purchasing function
(such as purchasing committees, purchasing managers, or purchasing departments), size of the
client (one segment for large customers who have different needs than smaller customers), or
industry (such as segmenting food systems into restaurants or government agencies such as
schools or military bases), as well as other considerations related to characteristics of business
customers. The five basic forms of segmentation are demographic (population statistics),
geographic (location), psychographic (personality or lifestyle), benefit (product features), and
volume (amount purchased).

 Market segmentation seeks to identify targeted groups of consumers to tailor products and
branding in a way that is attractive to the group.

 Markets can be segmented in several ways such as geographically, demographically, or

behaviorally.

 Market segmentation helps companies minimize risk by figuring out which products are the
most likely to earn a share of a target market and the best ways to market and deliver those
products to the market.

 With risk minimized and clarity about the marketing and delivery of a product heightened, a
company can then focus its resources on efforts likely to be the most profitable.

 Market segmentation can also increase a company's demographic reach and may help the
company discover products or services they hadn't previously considered.

Q. 4 Explain 05 stages of product life cycle (Draw table if necessary). Also draw diagram of
product life cycle. Enlist 08 stages of new product development process.

A4 Stage 1:
Idea Generation There are several creativity techniques that have been developed by
psychologists and marketing researchers to help individuals and groups generate creative ideas.
Among the more popular techniques are brainstorming, morphological analysis and forced
relationships.

 Brainstorming involves a group of six to ten people in an intensive session focusing on a

specific problem. The purpose is to generate as many ideas as possible no matter how wild they
are. An important requirement of brainstorming is that no negative comments should be made
about the suggestions during the idea generation stage in order to maximize the number of ideas.

 Morphological analysis means looking at a problem and its components and then finding
connections and solutions. For example, a firm researching the construction of an electronic car
would consider aspects relating to fuel source, power transmission, body shape and surface
contact.
Stage 2: Screening Ideas
The second stage involves scanning ideas to eliminate those that are unlikely to prove
appropriate or successful. Potential success depends upon three factors: namely, the idea’s
compatibility with the firm’s corporate strategy, the potential demand for the product and the
firm’s capability to exploit the product opportunity. Many organizations use a semi-formal
weighting procedure to establish the relative importance of screening criteria. This produces a
score for each idea, allowing them to be compared with one another. Table 8.4 contains criteria
that might be applied for screening assessment purposes. In this case idea No. 1 scores better than
the other two.
Given that numerical scores are based on management judgements, a great deal of care is required
when assessing ideas, particularly those ideas that lie on the borderline between accept and reject.

Stage 3: Concept Testing

This can be achieved only if the product features and benefits can be explained to potential
customers. It is important to distinguish between a product idea and its positioning concept.
Testing alternative positioning concepts for the product is essential in the NPD process. It
involves presenting alternative benefit propositions to different potential target markets.
Managers then research the following:

 Communicability. Do consumers understand the benefit being offered?

 Believability. Do they believe that the product has the benefits claimed?

 Need. Do they need the benefit being offered?

 Need gap. If a need exists, is it perceived as being satisfied by existing providers?

 Perceived value. Do customers perceive the new product as offering value for money?

 Usage. How would the customers use the product and how often? (Doyle, 1994)

Stage 4: Business Analysis

The fourth stage of NPD requires the product concept to be specified in greater detail so that
production, marketing and finance projections can be made. A marketing assessment will be the
starting point. This will include:

 Description of target markets.

 Forecast of sales volume.

 Indication of product positioning.

 Judgement of likely competitor reactions

.  Calculation of potential sales losses from existing products as customers switch to the new
product (known as cannibalization

Stage 5: Product Development

This stage requires close co-operation between the different functional areas of the firm. The
development experts will be leading the design of the product; manufacturing will be seeking to
achieve low-cost production; marketing and distribution will be aiming to achieve the correct
marketing mix, sales and logistics. Tests with potential consumers should evaluate functional
performance, efficiency, safety and apparent benefit. For consumer goods, pack tests should
check ease of use, performance and product image. Research can be conducted to test advertising
effectiveness and consumer attitudes towards projected pricing levels.

Stage 6: Test Marketing

This test marketing stage provides information on the likelihood of the target market buying the
product, trade response to the product and product performance compared with competition. Such
information enables the firm to modify the product where necessary. A standard test market is
commonly used for testing FMCGs. It should correspond, as far as possible, to a scaled-down
version of an intended national market, in terms of distribution structure, media availability,
competitor activity and the target market profile

Q. 5 How does price affect the value of the organization’s products or services? What are the
primary factors to consider in pricing?
A5 Factors which also influence pricing decisions are: the nature and structure of the
competition; the product life cycle (PLC); the legal considerations. Each of these will be
discussed in greater detail. A marketer needs to know competitors’ prices so that the firm can
adjust its own prices accordingly. This does not mean that a company will necessarily match
competitors’ prices; it may set its prices above or below theirs.

The nature and structure of competition :

When adjusting prices, marketers must anticipate how competitors might respond. Organizations
operating in an unregulated monopoly can set whatever prices the market will bear. However, the
company may avoid pricing the product at the highest possible level for fear of inviting
government regulation or because it wants to penetrate the market by using a lower price. If the
monopoly is regulated it normally has less pricing flexibility; the regulatory body lets it set prices
that generate a reasonable, but not excessive, return. A government-owned monopoly may price
products below cost to make them accessible to people who otherwise could not afford them.
Oligopoly takes place when only a few sellers operate and there are high barriers to competitive
entry. The motor, mainframe computer, telecommunications and steel industries are examples of
oligopolies. A firm in such an industry can raise its price, hoping that competitors can do the
same. When an organization cuts its price to gain a competitive edge, other firms are likely to
follow suit. In this way, very little is gained through price cuts in an oligopolistic market
structure.
A market structure characterized by monopolistic competition means numerous sellers with
differentiated product offerings. The products are differentiated by physical characteristics,
features, quality and brand images. The distinguishing characteristics of its product may allow a
company to set a different price from its competitors. Sellers try to develop differentiated offers
for different customer segments and, in addition to price, freely use branding, advertising and
personal selling to set their prices apart.

Legal considerations

In many markets the pricing policies of large companies and particularly those of MNCs are a
controversial issue, with some governments, especially those in the Third World, viewing MNC
strategies as unduly manipulative and against consumer interest. This has resulted in various
forms of price legislation, often in the form of anti-monopoly rules in an attempt to protect small
companies, domestic manufacturers and consumers from large firms.
A second area of concern for governments which has also led to the emergence of legislation is
that of price dumping whereby an international firm uses its revenues from one market to
subsidise abnormally low prices in another. Often the consequences of dumping have proved
disastrous for indigenous manufacturers. At one time or another dumping has affected the steel
industry, textile manufacturers, electronics companies and agricultural machinery manufacturers.
It has also occurred in the agricultural industry as when the EU has been accused by Brazil, in
particular, of dumping sugar on the international market, although this issue is being addressed
with the proposed reduction in subsidies given to EU producers. In transnational institutions like
the EU, actions affecting trade between member countries are subject to EU laws that take
precedence over domestic laws.