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Chapter # Managing the Marketing Efforts

Topic: 1 Competitive Forces: Michael Porter has identified five forces that determine the intrinsic long-run attractiveness of a market or market segment. The threats of these forces pose are as follows: 1. Threat of intense segment rivalry: A segment is unattractive if it already contains numerous strong or aggressive competitors. Its even more unattractive if its stable or declining. These conditions will lead frequent price wars, advertising battles and new-product introductions and will make it expensive to compete. The cellular phone market has seen force competition due to segment rivalry. Threat of new entrants: The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new firms can enter the industry and poorly performing firms can easily exit. When both entry and exit barriers are high, profit potential is high but firms face more risk because poorer performing firms stay in and fight it out. When both entry and exit barriers are low, firms easily enter and leave the industry and the returns are stable and low. The worst case is when entry barrriers are low and exit barriers are high. Here firms enter during good times but find it hard to leave during bad times.

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Threat of substitute products: A segment is unattractive when there are actual potential substitutes for the product. Substitutes place a limit on prices and on profits. Threat of buyers growing bargaining power: A segment is unattractive if buyers posses strong or growing bargaining power. Bargaining power grows when they become more concentrated or organized, when the product represents a significant fraction of the buyers costs, when the product is undifferentiated, when buyers switching costs are low, when buyers are price sensitive because of low profits or when they can integrate upstream. To protect themselves, sellers might select buyers who have the least power to negotiate or switch suppliers. A better defense of developing superior offers that strong buyers cannot refuse. Threat of suppliers growing bargaining power: A segment is unattractive if the companys suppliers are able to raise prices or reduce quantity supplied. The best defenses are to build win-win relationship with suppliers or use multiple supply sources.

Topic: 2 Types of Market: 1. Pure Monopoly: A market structure in which one firm sells a unique product into which entry is blocked in which the single firm has considerable control over product price and in which nonprice competition may or may not be found. For example gas, electric, water, cable TV, and local telephone service companies, are often pure monopolies Oligopoly: A market structure in which a few firms sell either a standardized or differentiated product into which entry is difficult in which the firm has limited control over product price because of mutual interdependence (except when there is collusion among firms) and in which there is typically nonprice competition. Examples include many industrial products such as steel and large consumer durables such as appliances, the top cigarettes and beer companies. There are two types of oligopoly market such as pure oligopoly and differentiated oligopoly. Monopolistic Competition: A market structure in which many firms sell a differentiated product into which entry is relatively easy in which the firm has some control over its product price and in which there is considerable nonprice competition. Examples are grocery stores and gas stations. Pure/ Perfect Competition: A market structure in which a very large number of firms sell a standardized product into which entry is very easy in which the individual seller has no control over the product price and in which there is no nonprice competition; a market characterized by a very large number of buyers and sellers. Examples : Agricultural products such as potatoes and wheat

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Topic: 3 What are the Major Entry Barriers?

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Economies of Scale: Economies of scale refer to declines in unit costs of a product (or operation or function that goes into producing a product) as the absolute volume per period increases. Economies of scale deter entry by forcing the entrant to come in at large scale and risk strong reaction from existing firms or come in at a small scale and accept a cost disadvantage, both undesirable options. Scale economies can be present in nearly every function of a business, including manufacturing, purchasing, research and development, marketing, service network, sales force utilization, and distribution. Product Differentiation: Product differentiation means that established firms have brand identification and customer loyalties, which stem from past advertising, customer service, product differences, or simply being first into the industry. Differentiation creates a barrier to entry by forcing entrants to spend heavily to overcome existing customer loyalties. This effort usually involves start-up losses and often takes an extended period of time. Product differentiation is perhaps the most important entry barrier in baby care products, over-the-counter drugs, cosmetics, investment banking, and public accounting. Capital Requirements: The need to invest large financial resources in order to compete creates a barrier to entry, particularly if the capital is required for risky or unrecoverable up-front advertising or research and development (R&D). Capital may be necessary not only for production facilities but also for things like customer credit, inventories, or covering start-up losses. Switching Costs: A barrier to entry is created by the presence of switching costs, that is, one-time costs facing the buyer of switching from one supplier's product to another's. Switching costs may include employee retraining costs, cost of new ancillary equipment, cost and time in testing or qualifying a new source, need for technical help as a result of reliance on seller engineering aid, product redesign, or even psychic costs of severing a relationship. If these switching costs are high, then new entrants must offer a major improvement in cost or performance in order for the buyer to switch from an incumbent. Access to Distribution Channels: A barrier to entry can be created by the new entrant's need to secure distribution for its product. To the extent that logical distribution channels for the product have already been served by established firms, the new firm must persuade the channels to accept its product through price breaks, cooperative advertising allowances, and the like, which reduce profits. Government Policy: The last major source of entry barriers is government policy. Government can limit or even foreclose entry into industries with such controls as licensing requirements and limits on access to raw materials. Regulated industries like trucking, railroads, liquor retailing, and freight forwarding are obvious examples. Cost structure should also be analyzed. If cost of operation is very high, the firm cant get competitive advantages. Degree of vertical integration Degree of globalization.

Topic: 4 Identifying Competitors: We can examine competition from both an industry and a market pint of view. An industry is a group of firms that offer a product or class of products that are close substitutes for one another. Marketers classify industries according to number of sellers, degree of product differentiation, presence or absence of entry, mobility and exit barriers, cost structure, degree of vertical integration and degree of globalization. Using the market approach, we define competitors as companies that satisfy the same customer need. For example, a customer who buys a word-processing package really wants must ability- a need that can also satisfied by pencils, pens or typewriters. Marketers must overcome marketing myopia and stop defining competition in traditional category and industry terms. The market concept of competition reveals a broader set of actual and potential competitors that competition defined in just product category terms. Rayport suggests profiling a companys direct and indirect competitors by mapping the buyers steps in obtaining and using the product. This type of analysis highlights both the opportunities and the challenges a company faces. Topic 5 Analyzing Competitors: Once a company identifies its primary competitors, it must ascertain their strategies, objectives, strengths and weaknesses.

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Strategies: A group of firms following the same strategy in a given target market it called a strategic group.

The company develops the chat and discovers four strategic groups based on product quality and level of vertical integration. Group A has one competitor, group B has three, group C has four and group D has two. Important insights emerge from this exercise. First, the height of the barriers differs for each group. Second, if the company successfully enters a group, the members of that group become its key competitors. 1. Objectives: Many factors shape a competitors objectives including size, history, current management and financial situation. If the competitor is a division of a larger company, it is important to know whether the parent company is running it for growth, profits or milking it. Strengths and Weaknesses: A company needs to gather information about each competitors strengths and weaknesses.

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Competitors Customer Awaren ess Product Quality Product Availabil ity Technical Assistance Selling Staff A E E P P G B G G E G E C F P G F F Note: E = Excellent, G = Good, F = Fair, P = Poor Table shows the results of a company survey that asked customers to rate its three competitors A, B and C on five attributes. Competitor A turns out to be well known and respected for producing high quality products sold by good sales force but is poor at providing product availability and technical assistance. Competitor B is good across the broad and excellent in product availability and sales force. Competitor C rates poor to fair on most attributes. This result suggests that the company could attack competitor A on product availability and technical assistance and competitor C on almost anything but should not attack B, which has no glaring weakness. In general, a company should monitor three variables when analyzing competitors: Share of market: The competitors share of the target market.

Share of mind: The percentage of customers who named the competitor in responding to the statement, Name the first company that comes to mind in this industry. Share of heart: The percentage of customers who named the competitor in responding to the statement, Name the company from which you would prefer to buy the product. Topic: 6 Selecting Competitors: After the company has conducted customer value analysis and examined its competitors carefully, it can focus its attack on one of the following classes of competitors: 1. Strong versus Weak: Most companies aim their shots at weak competitors because this requires fewer resources per share point gained. Yet the firm should also compete with strong competitors to keep with the best. Even strong competitors have some weakness. Close versus Distant: Most companies compete with competitors that resemble them the most. Coca-Cola recognizes that its number one competitor is tap water not Pepsi. Museums now worry about them parks and mails. Good versus Bad: Every industry contains good and bad competitors. Good competitors play by the industrys rules, they set prices in reasonable relationship to costs and they favor a healthy industry. Bad competitors try to buy share rather than earn it, they take large risks, they invest in overcapacity and they upset industrial equilibrium. A company may find it necessary to attack its bad competitors to reduce or end their dysfunctional practices.

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Topic: 7 Selecting Customers: Firms must evaluate its customer base and think about which customers its willing to lose and which it wants to retain. One way to divide up the customer base is in terms of whether a customer is valuable and vulnerable, creating a grid of four segments. Each segment suggests different competitive activities. Vulnerable Not Vulnerable Valuable These customers are profitable but not completely happy with the company. Find out and address their sources of vulnerability to retain them. These customers are loyal and profitable. Dont take them for granted but maintain margins and reap the benefits of their satisfaction. Not Valuable These customers are likely to defect. Let them go or even encourage their departure. These unprofitable customers are happy. Try to make them valuable or vulnerabl e. Topic: 8 Competitive Strategies for Market Leader: We can gain further insight by classifying firms by the roles they play in the target market: leader, challenger, follower or nicher. Suppose a market is occupied by the firms. Forty percent of the market is in the bands of a market leader, another 30% is in the hands of a market challenger, another 20% is in the hands of a market follower, a firm that is willing to maintain its market share and rock the boat. That remaining 10% is in the hands of market nichers, firms that serve small market segments not being served by larger firms. Market Leader Market Challenger Market Follower Market Nichers 40% 30% 20% 10% Many industries contain one firm that is the acknowledged market leader. This firm has the largest market share in the relevant product market and usually leads the other firms in price changes, new-product introductions, distribution coverage and promotional intensity.

Although market leaders assume well-known brands are distinctive in consumers mind unless a dominant firm enjoys a legal monopoly, it must maintain constant vigilance. A product innovation may come along and hurt the leader, a competitor might unexpectedly find a fresh new marketing angle or commit to a major marketing investments or the leader might find its cost structure spiraling upward. Topic: 9 Various Types of Defense Strategy: 1. Position Defense: Position defense involves building superior brand power and making be brand almost impregnable. For example, Nescafe has defended its position against several attacking brands using this strategy. Flank Defense: Although position defense is important, the market leader should also erect outputs to protect a weak front or possible serve as an invasion base for counterattack. Preemptive Defense: A more aggressive maneuver is to attack before the enemy starts its offense. A company can launch a preemptive defense in several ways. It can wage guerilla action across the market or it can try to achieve grand market envelopment. Counteroffensive Defense: When attacked, most market leaders will respond with a counterattack. In a counteroffensive, the leader can meet the attacker frontally or hit its flank or launch a pincer movement. An effective counteroffensive is to invade the attackers main territory so that it will have to deploy resources to defend it. Mobile Defense: In mobile defense, the leader stretches its domain over new territories that can serve as future centers for defense and offense through market broadening and market diversification. Contraction Defense: Large companies sometimes must recognize that they can no longer defend all their territory. The best course of action then appears to be planned contraction. It means giving up weaker territory and reassigning resources to stronger territories.

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Topic: 10 Expanding Market Share: A company should consider four factors before pursuing increased market share: 1. The possibility of Provoking Antitrust Action: Jealous competitors are likely to cry monopoly if a dominant firm makes further inroads. This risk in risk would diminish the attractiveness of pushing market share gains too far. Economic Cost: The cost of gaining further market share might exceed the value. And the costs of legal work, public relations and lobbying rise with market share. Pushing for higher share is less justified when there are few scale or experience economic, unattractive market segments exist, buyers want multiple sources of supply and barriers are high. Pushing the Wrong Marketing Activities: Companies successfully gaining share typically outperform competitors in three areas: new-product activity, relative product quality, and marketing expenditures. On the other hand, companies that attempt to increase market share by cutting prices more deeply than competitors typically dont achieve significant gains because enough rivals meet the prices cuts and others offer others values so buyers dont switch. The Effect of Increased Market Share on Actual and Perceived Quality: Too many customers can put a strain on the firms sources, hunting product value and service delivery. Customers may also infer that bigger is not better and assume that growth will lead to a deterioration of quality. If exclusivity is a key brand benefit, existing customers may resent additional new customers.

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Topic: 11 Premier Performance Strategy: It is the blend of high quality, reliability and durability. 1. 2. 3. 4. It It It It includes extensive and efficient distributions system. arranges some training and discussion programs. provides superior and modern services to customers. uses bull line strategy.

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It arranges financing programs with bank for helping customers to buy its equipments. It uses research findings to assess customers position.

Topic: 12 Strategies Followed by the Market: 1. Frontal Attack: In a pure frontal attack, the attacker matches its opponents product, advertising, price and distribution. The principle of force says that the side with the greater resources will win. A modified frontal attack such as cutting price, can work if the market leader doesnt retaliate and if the competitor convinces the market that its product is equal to the leaders. Flank Attack: An enemys weak sports are natural targets. A flank attack can be directed along two strategic dimensions such as geographic and segmental. In a geographic attack, the challenger spots areas where the opponents are underperforming. The other flanking strategy is to serve uncovered market needs. Encirclement Attack: The encirclement maneuver is an attempt to capture a wide slice of the enemys territory through blitz. It means launching a grand offensive on several fronts. Encirclement makes sense when the challenger commands superior resources and believes a swift encirclement will break the opponents will. Bypass Attack: The most indirect assault strategy is bypassing the enemy altogether and attacking easier markets to broaden the firms resource base. This strategy offers three lines of approach:

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Diversifying into unrelated products, Diversifying into new geographical markets and Leapfrogging into new technologies to supplant existing products.

Topic: 13 Components of Challenger Strategy: 1. Price discount Low price goods: Various elements need to be controlled effectively and marketing cost should be reduced. Value price goods and services: Price is reasonable and quality is highly satisfactory. Introduce Prestige Goods: Company should try to attack customers who are highly concerned about quality. Product Proliferation: Company should bring variety in product line. Product Innovation: For innovating new product sufficient investment is essential in R&D and technology. Improved Products: Certain re-innovative may be made. Distribution innovation Promotion

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Topic: 14 Market Follower Strategy: The follower must define a growth path, but one that doesnt invite competitive retaliation. They follow four broad strategies: 1. 2. 3. Counterfeiter: The counterfeiter duplicates the leaders product and packages and sells it on the black market or through disreputable dealers. Cloner: The cloner emulates the leaders product, name, and packaging with slight variations. Imitator: The imitator copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing or location. The leader doesnt mind the imitator as long as the imitator doesnt attack the leader aggressively. Adapter: The adapter takes the leaders products and adapts or improves them. The adapter may choose to sell to different markets but often it grows into the future challenger as many Japanese firms have done after improving products developed elsewhere.

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Topic: 15 Nicher Strategy: The key idea in successful nichemanship is specialization. Here are some possible niche roles: 1. End-use Specialist: The firm specializes in serving one type of end-use customer. For example, a valueadded reseller customizes the computer hardware and software for specific customer segments and earns a price premium in the process. 2. Vertical-level Specialist: The firm specializes at some vertical level of the production-distribution value chain. A copper firm may concentrate on producing rap copper, copper components or finished copper products. 3. Specific-customer Specialist: The firm limits its selling to one or a few customers. Many firms sell their entire output to a single company such as Sears or General Motors. 4. Geographic Specialist: The firm sells only in certain locally. region or area of the world. 5. Product or Product-line specialist: The firm carries or produces only one product line or product. A manufacturer may produce only lenses for microscopes. 6. Product-features Specialist: The firm specializes in producing a certain type of product or product features. 7. Job-shop Specialist: The firm customizes its products for individual customers. 8. Quality-price Specialist: The firm operates at the low or high quality ends of the market. 9. Service Specialist: The firm offers one or more services not available from other firms. 10. Channel Specialist: The firm specializes in serving only one channel of distribution.

Topic: 16 Balancing Customer and Competitor Orientations: 1. Competitor-Centered Companies: A competitor-centered company is one that spends most its time tracking competitors moves and market shares and trying to find strategies to counter them. This approach has some pluses and minuses. On the positive side, the company develops a fighter orientation, watches for weakness in its own position and searches out competitors weakness. On the negative side, company becomes too reactive. Rather than carrying out its own customer relationship strategy, it bases its own moves on competitors moves. As a result, it may end up simply matching or extending industry practices rather than seeking innovative new ways to create more value for customers. Customer-Centered Company: A customer-centered company, by contrast, focuses more on customer development in designing its strategies. Clearly, the customer-centered company is in a better position to identify new opportunities and set long-run strategies that make sense. By watching customer needs evolve, it can decide what customer groups and what emerging needs are the most important to serve. Then it can concentrate its resources on delivering superior value to target customers. In practice, todays companies must be market-centered companies, watching both their customers and their competitors. But they must not lot competitor watching blind them to customer focusing.

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Chapter # Marketing Control


Topic: 17 Control: Management process starts with planning and ends with control and compliance with standards. It refers to a process consisting of certain techniques which ensure smooth conduct of operations. Topic: 18 Control System: Certain control techniques are: 1. 2. 3. Inventory Control: ABC and SQ method. Quality Control: Control chart and sampling etc Production Control: Flow control, order control and batch control (for standardize goods).

There are five steps in control system such as: 1. 2. 3. 4. 5. Setting standards Recording Comparing Analyzing variances Corrective action

Topic: 19 Marketing Control System: Marketing control system comprised of certain control techniques. These are: 1. Annual Control System: This control system is handled by top and mid level management. The purpose is to examine the planned results are being achieved. It finds different targets such as sales, market share and revenue. It uses following approaches:

Sales analysis Market share analysis Financial analysis

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Profitability Control: It is undertaken by marketing controller. It uses certain well established techniques. Different aspects of profitability should judge. Efficiency Control: It is handled by line executives, advisors and marketing controller. The objective is to evaluate efficiency. Efficiency will be judged by the activities of sales force, advertising, promotion and distribution. Strategic Control: It is handled by top management and marketing auditor. It tries to analyze whether the company exploit marketing opportunity through its competitors. To judge overall effectiveness following are essential:

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Marketing effectiveness rating instrument Marketing audit undertaken by outside marketing consultancy firms. Marketing excellence report. Introducing benchmarking Ethical and social responsibility

Topic: 20 Importance of Marketing Control: 1. 2. 3. 4. 5. 6. 7. Ensure the marketing goals. Measure and evaluate the marketing activities. Take corrective action Minimize the gap between goals and performance. Profitability control Strategic control Performance diagnosis

Topic: 21 Benefits of Sound Control System: 1. 2. 3. 4. 5. 6. It helps to implement marketing plans, policies and strategies effectively. Company can attain targeted marketing performance by removing the bottlenecks. Marketing control can help to identify the reasons for poor marketing performance which enables marketing management to take appropriate remedial methods. Marketing control facilitates in assessing efficient advertising, sales, promotion and product management which are major determinates of overall marketing managerial efficiency. Customer orientation and social welfare can be better ensured by marketing control. Marketing control assists improving the organization performance through qualitative changes in marketing system.

Topic: 22 Problems of Marketing Control and how these Problems can overcome? 1. Annual Plan Control: Annual plan control ensures the company achieves the sales, profits and other goals established in its annual plan. Performance in respect of sales, market share, marketing expense, customer attitudes and financial performance etc. Under this control system the targets covering various marketing performance established. Then actual marketing performance is identified by comparing actual performance with target performance. There are four types of needed marketing control inadequate control procedures.

First, management sets monthly or quarterly goals. Second, management monitors its performance in the marketplace. Third, management determines the causes of serious performance deviations. Fourth, management takes corrective action to close gaps between goals and performance.

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Profitability Control System: It refers to that control system by which companys profitability earn through the contribution of different products, territories, customer groups and trends. Ths control system is comprised of three steps:

Identify the functional expenditure Assign functional expense to channel. Prepare profit and loss statement for each channel. Under profitability control, profitability performance in respect to various products, intermediaries and territories. Customers size or order size will be identified and remedial step will be evaluated and in case of adverse profitability performance the cause will be identified and remedial step will be initiated. The responsibility of profitability control is performance by marketing controller who is responsible for examining whether the company is making or loosing money. We know that, profitability is an important measurement of organization performance. If a company is able to attain satisfactory profitability. Performance it can survive and thrive in the marketing more easily. Thats why this control system is used by most companies as a vital measure of performance. 1. Efficiency Control System: By efficiency control we mean a control system which is responsible for judging the efficiency level of a company in respect of sales force efficiency, advertising efficiency, sales promotion and distribution efficiency. The term efficiency is used to signify the relationship between marketing input and output. If more result can be attained by providing specified marketing efforts, marketing system can be regarded as efficient. The various components of marketing efficiency are appraised by using certain criteria. These are stated below: Sales Force Efficiency: The sales force is judged through applying the following indicators:

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per day average number of calls per salesperson average sales call time per contact. Average revenue per sales cal Average cost per sales call Entertainment cost per sales call Percentage of orders per hundred sales calls Number of new customer per period Number of lost customer per period Sales force cost as a percentage of total sales. 1. Advertising Efficiency: The indicator of advertising efficiency are the following:

Advertising cost per thousand target buyers reached by media vehicle or instrument Percentage of audience

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Strategic Control: Strategic control is that type of control which aims at examine whether the company is persuade its best opportunity with respect to market, products and channel by using its core competencies.

Strategic marketing control makes a critical review of overall marketing goals and effectiveness. This type of control is exercised by top management and marketing auditor. In strategic marketing control various marketing control approaches are used. These are marketing effectiveness review, marketing audit, marketing excellence review and ethical social responsibility review. In marketing effectiveness review the marketing control tries to understand to what extent marketing orientation is present in the marketing operation of a firm and this attributes include customer philosophy, integrated marketing organization, adequate marketing information, strategic orientation and operational efficiency. Customer philosophy emphasizes on serving customers according to their needs.

Various marketing activities such as sales, product marketing development, conducting marketing research and information collection all these phases must be integrated effectively. Adequate marketing information is needed to make proper marketing decision. Collect information which is very relevant. There are possible opportunities in marketing so company hunts these opportunities. Sales force efficiency, distribution, advertising and promotional efficiency should be effective. Topic: 23 Approaches use the Strategic Marketing Control:

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Marketing Audit: A marketing audit is a comprehensive, systematic, independent and periodic examination of a companys or business units marketing environment, objectives, strategies and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the companys marketing performance. Lets examine the marketing audits four characteristics:

Comprehensive: The marketing audit covers all the major marketing activities of a business not just few troubles spots. It would be a called a functional audit if it covered only the sales force, pricing or some other activity. A comprehensive marketing audit usually is more effective in locating the real source of problems. Systematic: The marketing audit is an orderly examination of the organizations macro and micro marketing environment, marketing objectives and strategies, marketing system and specific activities. Independent: Marketers can conduct a marketing audit in sex ways: self-audit, audit from across, audit from above, company auditing office, company task-force audit and outside audit. Periodic: A periodic marketing audit can benefit companies in good health as well as those in trouble.

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Marketing Excellence Review: Management can place a checkmark to indicate its perception of where the business stands. The profile that results from this marketing excellence review exposes weaknesses and strengths, high lighting where the company might make changes to become a truly outstanding player in the marketplace. Ethical and Social Responsibility Review: Marketing control should be used strategy. Company should introduce code of conduct.

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Topic: 24 Problems involved in Marketing Control: 1. 2. 3. 4. 5. 6. 7. Lack of skills in executing marketing programs Improper setting of marketing objectives and strengths Changing nature of macro environment Ineffective marketing control system Poor strategic marketing control Lack of integration among the activities of marketing Absence of preventing control

Topic: 25 Major Marketing Weaknesses: 1. The company is not sufficient market focused. There are certain symptoms to identify this problem. These are:

Poor identification of market segment Poor prioritization of market segment Poor service to the customer No training program to crate customer culture

No incentive to treat customers Solution: Company should perform marketing activities systematically such as: Set target market Develop the strategy on the needs of this target market Training should be provided. Customer consciousness should be developed through out the organization. The companys agent should also ensure customer satisfaction. 1. The company does not fully understand target customers:

Symptoms: Latest survey of customers does not take Customers are not buying product because of negative attitude towards company Solution: Responsibility is to conduct latest market survey 1. Company needs to better define and monitor the competitors.

Symptoms: Exposed and hidden competitors cant identify properly. Solution: Need appropriate information collection system. Marketing research system and marketing intelligence system should operate side by side. 1. Finding new opportunities

Solution: Make exhaustive environmental analysis. 1. 2. Companies marketing planning process is deficient. it needs proper tactics and software for planning. Product and service policies need title entity. Policies are guidelines used by managers. If policies are not included in policy manual. It cant guide managers properly.

Solution: Effective product policy should be identified and evaluated time to time. 1. 2. 3. Companys brand building Company is not organized for effective and efficient marketing. Efficiency is related with input-output that means productivity. The company has not made maximum use of technology. Company can use DSS which is the blend of hardware and software.

Chapter # Social Responsibility of Marketing Management


Topic: 26 Social Criticism of Marketing: Though marketing activities are spread over on the mens born to death but there is criticism of marketing activities. Following pints tell about the criticism of marketing. 1. 2. Marketings impact on Individual Consumers: High Price: Many critics charge that marketing system causes prices to be higher than they would be under more sensible systems. They point to three factors:

High Cost of Distribution: A long charge is that greedy intermediaries mark up prices beyond that the value of their services. Critics charge that there are too many intermediaries, that intermediaries are inefficient. As a result distribution cost mush and consumers pay for these excessive costs in the form of higher prices. Higher Advertising and Promotion Costs: Modern marketing is also caused of pushing up prices to finance heavy advertising and sales promotion. Critics charge that promotion adds only psychological value to the product rather than functional value. Excessive Markups: Critics also charge that some companies mark up goods excessively.

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Deceptive Practices: Marketers are sometimes accused of deceptive practices that lead consumers to believe they will get more value than they actually do. Deceptive practices fall into three groups:

Deceptive Pricing: Deceptive pricing includes practices such as falsely advertising factory or wholesale prices or a large price reduction from a phony high retail list price. Deceptive Promotion: Deceptive promotion includes practices such as overstating the products features or performance, luring the customer to the store for a bargain that is our of stock or running rigged contests. Deceptive packaging: Deceptive packaging includes exaggerating package contents through subtle design, not filling the package to the top, using misleading labeling or describing size in misleading terms.

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High Pressure Selling: Sales people are sometimes accused of high pressure selling that persuades people to buy goods they had no thought of buying. It often said those encyclopedias, insurance, real state, cars and jewelry are sold not bought. Salespeople are trained to deliver smooth, canned talks to entice purchase. Shoddy or Unsafe Products: Another critic is that products lack the needed quality. One of the major complaints is that products are not made well and services not performed well. Poor Service to Disadvantaged Consumers: The presence of large national chain stores in low-income neighborhoods made a big difference in keeping prices down. They also are doing redlining a type or economic discrimination in which major chain retailers avoid placing stores in disadvantaged neighborhoods. Marketing Impact on Society as a Whole: False Wants and too much Materialism: Critics have charged that the marketing system usages too much interest in material possession. People are judged by what they own rather than by who they are. Too few Social Goods: Business has been accused of overselling private goods at the expense of public goods. As a private goods increase they require more public services that are usually not forthcoming. Cultural Pollution: Critics charge the marketing system with creating cultural pollution. Our senses are being constantly assaulted by advertising. Marketer answer the charges of Commercial Noise with these argument. Too much Political Power: Another criticism is that business wields too much political power. Advertisers are accused of holding too much power over the mass media, limiting there freedom to independently and objectively. Marketings Impact on other Business: Acquisitions of Competitors: Many companies are acquisitions of competitors by expanding their business. Marketing practices that create barriers to entry: Giant companys patent, much promotional activities and understanding between supplier and dealer so other company cant enter into the market. Unfair competitive Marketing Practices: There is complaint against the many company perform activity which are destruct the other company.

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Topic: 27 Citizen and Public Actions to Regulate Marketing: 1. Consumerism: An organized movement of citizens and government agencies to improve the right and power of buyers in relation to sellers.

Traditional sellers rights include: The right to introduce any product is any size and size, provided it is not hazardous to personal health or safety or if it is to include proper warning and controls. The right to charge any price for the product provided no discrimination exists among similar kinds of buyers. The right to spend any amount to promote the product provided it is not defiend as unfair competition The right to use any product message provided it is not misleading or dishonest in ccontent or execution. The right to use any buying incentive, schemes provided they are not unfair or misleading. Traditional buyers rights include: The right to buy a product that is offered for sale. The right to expect the product to be safe The right to expect the product to perform as claimed. The right to be well informed about important aspects of the product. The right to be protected against questionable products and marketing practices. The right to influence products and marketing practices in ways that will improve the quality of life.

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Environmentalism: Environmentalism is an organized movement of concerned citizens, businesses and government agencies to protect and improve peoples living environment. Environmentalists are not against marketing and consumption, they simply want people and organizations to operate with more care for the environment. Public Actions to regulate the Marketing: The task is to translate these laws into the language those marketing executives understand as they make decisions about competitive relations, products, prices, promotion and channel of distribution.

Topic: 28 Business Actions toward Socially Responsible Marketing: 1. Enlightened Marketing: Enlightened marketing is marketing philosophy holding that a companys marketing should support the best long-run performance of marketing system. It consists of five principles:

a Consumer Oriented Marketing: The philosophy of enlightened marketing that holds that the company should view and organize its marketing activities from the consumers point of view. b Innovative Marketing: A principle of enlightened marketing that requires that a company seek real product and marketing improvements. c Value Marketing: A principle of enlightened marketing that holds that a company should put most of its resources into value-building marketing investments. d Sense of Mission Marketing: A principle of enlightened marketing that holds that a company should define its mission in broad social terms rather than narrow product terms. e Social Marketing: A principle of enlightened marketing that a company should make marketing decision by considering consumers want, the companys requirements, consumers long-run interests and societys long-run interest. A socially oriented marketer wants to design following types of products: Deficient Product: Products that have neither immediate appeal nor long-run benefits. Pleasing Product: Product that gives high immediate satisfaction but may hurt consumers in the long run. Salutary Product: Product that has low appeal but may benefit consumers in long run. Desirable Product: Products that give both high immediate satisfaction and high long run benefits. 2 Marketing Ethics: Increasingly, companies are responding to the need to provide company policies and guidelines to help their managers deal with questions of marketing ethics. Of course even the best guidelines cannot resolve all the difficult ethical decisions that individuals and firms must make. But there are some principles that marketers can choose among. One principle states that such issues should be decided by the free market and legal system. A second, and more enlightened principle puts responsibility not in the system but in the hands of individual companies and mangers. Each firm and marketing manager must work out a philosophy of socially responsible and ethical behavior. Under the societal marketing concept, managers must look beyond what is legal and allowable and develop standards based on personal integrity, corporate conscience and long-term consumer welfare. Because business standards and practices vary form country to country, the issue of ethics poses special challenges for international marketers. The growing consensus among todays marketers is that it is important to make a commitment to a common set of shared standards worldwide. Topic: 29 Norms: Norms are established standards of conduct that are expected and maintained by society and or professional organizations. Norms fall into two categories: 1 Marketers must do no harm. This means doing work for which they are appropriately trained or experienced so that they can actively add value to their organizations and customers. It also means adhering to all applicable laws and regulations and embodying high ethical standards in the choices they make. 2 Marketers must foster trust in the marketing system. This means that products are appropriate for their intended and promoted uses. It requires that marketing communications about goods and services are not intentionally deceptive or misleading. It suggests building relationships that provide for the equitable adjustment and or redress of customer grievances.

Topic: 30 Ethical Values: Values represent the collective conception of what people find desirable, important and morally proper. Marketers must embrace, communicate and practice the fundamental ethical values that will improve consumer confidence in the integrity of the marketing exchange system. These basic values are intentionally aspirational and include: 1 Honesty: To be truthful and forthright in our dealings with customers and stakeholders. We will tell the truth in all situation and at all times We will offer products of value that do what we claim in our communications. We will honor to our explicit and implicit commitments and promises. 2 Responsibility: To accept the consequences of our marketing decisions and strategies. We will make strenuous efforts to serve the needs of our customers. We will avoid using coercion with all stakeholders. We will acknowledge the social obligations to stakeholders. 3 Fairness: To try balance justly the needs of the buyer with the interests of the seller. We will represent our products in a clear way in selling, advertising and other forms of communication. We will reject manipulations and sales tactics that harm customer trust. We will not engage in price fixing, predatory pricing tactics 4 Respect: To acknowledge the basic human dignity of all stakeholders. We will value individual differences even as we avoid stereotyping customers We will listen to needs of our customers We will make a special effort to understand suppliers, distributors and intermediaries. 5 Openness: To create transparency in our marketing operations. We will strive to communicate clearly with all our constituencies. We will accept constructive criticism from our customers and other stakeholders. We will explain significant product or service risks. 6 Citizenship: To fulfill the economic, legal philanthropic and societal responsibilities that serve stakeholders in a strategic manner. We will strive to protect the natural environment in the execution of marketing campaigns. We will work to contribute to the overall betterment of marketing and its reputation. We will encourage supply chain members to ensure that trade is fair for all participants.

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