MODULE II

SESSION 1 & 2
SMITU MALHOTRA
EVALUATION
 Assignments/case discussion – Group 20%
 Endterm – Individual 30%
MARKETING MIX
WHAT IS MARKETING MIX

 A COMBINATION OF DETAILED STRATEGIES,TACTICS, OPERATIONAL

POLICIES , TECHINUQUES AND ACTIVITIES TO WHICH RESOURCES MAY BE
ALLOCATED SUCH THAT COMPANIES MARKETING OBJECTIVES ARE
ACHIEVED.

5
THE ELEMENTS OF MARKETING MIX

 PRODUCT
 PRICE
 PLACE
 PROMOTION

6
PRODUCT

 PRODUCT MIX
 PRODUCT CONCEPT
 NEW PRODUCT DEVELOPMENT
 PRODUCT LIFE CYCLE DECISIONS
 BRANDING

7
PRICE

 MANUFACTURER VS RETAILER PRICES

 PRICING OBJECTIVES
 PRICING STRATEGIES
 SKIMMING VS PENENTRATION PRICING

8
PROMOTION

 ADVERTISING
 SALES PROMOTION
 DIRECT MARKETING
 PERSONAL SELLING
 PUBLIC RELATIONS
 DIGITAL MARKETING

9
PLACE

 CHANNEL LENGTH
 CHANNEL BREADTH
 CHANNEL MEMBER MANAGEMENT

10
INTERDEPENDENCE

 WITHIN EACH CATEGORY

 BETWEEN CATEGORIES

11
PRODUCT DOMINANT

 SONY.
 ROLLS ROYCE.
 iPHONE
 TOYOTA HYBRID CAR

12
PRICING DOMINANT

 NIRMA.
 THE “GREY MARKET”.
 LOW COST AIRLINES.
 BAZAAR KOLKATTA / V2

13
PROMOTION DOMINANT

 COOL DRINKS.
 MAGGI KETCHUP.
 CHOCOLATES.
 ICE CREAMS

14
PLACE DOMINANT

 UNILEVER.
 ITC.
 ASIAN PAINTS.

15
HOW THEY WORK TOGETHER

 THE FOUR VARIABLES MARKETER CAN USE IN DIFFERENT COMBINATIONS

TO CREATE CUSTOMER VALUE.

16
 MARKETING MIX HAS TO BE ALIGNED WITH THE NEEDS OF THE TARGET
MARKET.

17
 Marketing Strategy Planning Process

Narrowing down to focused strategy with screening criteria

Customers

Segmentation Product Place

S. & Targeting
W. Target
Company
O. Market
T. Differentiation
& Positioning Price Promo

Competitors

External Market Environment

CRITIQUE

 Internal Orientation
 Lack of Interactivity
New Character of the 4P’s
 The virtual value chain is changing the nature of the 4P’s and
transforms them by adding new dimensions. Businesses still make
their strategic marketing decisions based on the 4P Marketing Mix.
 - Product: new options for customised information
 - Place: no time and location restrictions, direct delivery
 -Price: price discrimination and customisation, price transparency
 - Promotion: action-oriented promotional activities are possible,
promotional flexibility

 Source :Bhatt and Emdad 2001

PRODUCT MANAGEMENT
THIS SECTION

 PRODUCT CLASSIFICATION
 PRODUCT MIX
 TOTAL PRODUCT CONCEPT
 NEW PRODUCTS

22
CONCEPT OF A PRODUCT

 PEOPLE DON’T BUY PRODUCTS – THEY BUY THE EXPECTATION OF A BENEFIT

…………Levitt

23
 1
What is a Product?

Product
is
the “heart” of
Marketing
Mix
Price Promotion

Place (Distribution) 24
 Core

Basic Product
Expected

Augmented

Potential

Product Hierarchy Levels –Theodore Levitt

Product Levels

Customer Value Hierarchy

 Core benefit: the benefit the customer buys
 Basic product: provides the core benefit
 Expected product: attributes that customers
normally expect with the product
 Augmented product: features / benefits
beyond what is expected
 Potential product: anything possible for the
future to satisfy the customer
PRODUCT CLASSIFICATION

27
PRODUCT: CLASSIFICATION

Degree of Tangibility/Durability
 Nondurable good -- an item consumed in one or a few
uses.
 Durable good -- one that usually lasts for an extended
number of uses.
Type of User
 Consumer goods -- products purchased by the
ultimate consumer.
 Industrial goods -- products used in the production of
other products for ultimate consumers.
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Five Factors influencing Decisions

1. Level of consumer involvement

2. Length of time to make decision

3. Cost of good or service

4. Degree of information search

5. Number of alternatives considered

29
Types of Consumer Products

Convenience
Convenience AArelatively
relativelyinexpensive
inexpensiveitem
itemthat
that
Product merits
meritslittle
littleshopping
shoppingeffort.
effort.
Product
AAproduct
productthat
thatrequires
requirescomparison
comparison
Shopping
Shopping shopping,
shopping,because
becauseititis
isusually
usuallymore
more
Product
Product expensive
expensiveand
andfound
foundininfewer
fewerstores.
stores.

Specialty AAparticular
particularitem
itemthat
thatconsumers
consumers
Specialty search
searchextensively
extensivelyfor
forand
andare
are
Product
Product reluctant
reluctantto
toaccept
acceptsubstitutes.
substitutes.

Unsought AAproduct
productunknown
unknowntotothe
thepotential
potential
Unsought buyer
buyeror
oraaknown
knownproduct
productthat
thatthe
the
Product
Product buyer
buyerdoes
doesnot
notactively
activelyseek.
seek.
30
CONCEPT OF PRODUCT MIX
CONCEPT OF PRODUCT MIX

 PRODUCT LINE
 PRODUCT WIDTH
 PRODUCT DEPTH

32
 33
Depth
Depth -- number
number of
of
versions
versions of
of each
each
product
product
Product
Product MixMix -- Length
Length -- total
total
all
all the
the product
product number
number of of items
items
lines
lines offered
offered within
within the
the lines
lines
Consistency
Width
Width -- number
number of
of
different
different product
product
lines
lines
PRODUCT MIX
PRODUCT MIX DECISIONS

 UPWARD LINE STRETCH

 DOWNWARD LINE STRETCH
 LINE FILLING

34
ANSOFFS MATRIX
NEW PRODUCTS
 WHAT IS A NEW PRODUCT ?
39
 ITC SUNFEAST BISCUITS

DRIVERLESS CARS ,
INNOVATIONS
THAT HAVE
CHANGED OUR
LIVES

41
Products that have changed how we play

1900 Kodak Brownie camera

1948 Polaroid camera

1976 JVC video recorder

1982 Phillips/Sony CD player

42
Products that have changed how we work

1900 Paper clip

1959 Xerox photocopier

1966 Xerox fax machine

1971 Intel microprocessor

1980 3M Post-it Notes

1984 Apple Macintosh

43
Products that have changed how we
travel
1903 Harley-Davidson motorcycle

1908 Ford Model T

1936 DC – 3

1950s Skateboard

1957 Boeing 707

44
Products that have changed our health
and grooming

1903 Safety razors

1921 Johnson & Johnson Band-Aid

1928 Penicillin

1931 Tampax tampon

1960 Searle birth control pill

1968 Eli Lilly Prozac

45
Products that have changed our homes

1907 Vacuum cleaner

1918 Frigidaire refrigerator

1928 Home air conditioner

1942 Permacel duct tape

1946 Tupperware

1967 Amana microwave oven

46
Products that have changed the way we
communicate

1921 RCA radio

1935 RCA television

1939 The paperback book

1991 World Wide Web 47

Products that have changed our clothing
1913 Zipper

1914 Bra

1936 Bass penny loafer

1939 Nylons

1954 Velcro

1959 Lycra

1961 P & G Pampers

48
new innovations since 2000

https://www.wonderslist.com/10-greatest-inventions-of-last-decade/
https://www.entrepreneur.com/slideshow/295841
CHARACTERSTICS OF A WINNING PRODUCT ?
HOW QUICKLY CONSUMERS ADOPT IT
STEPS IN DEVELOPING NEW PRODUCTS

 IDEA GENERATION
 PRODUCT CONCEPTION
 SCREENING
 BUSINESS ANALYSIS
 TECHNICAL DEVELOPMENT
 MARKET TESTING
 COMMERCIALISATION

52
Managing New Product Development:
Ideas
Idea Generation
From customers, scientists, competitors, employees,
distribution channel members, top management…
From inventors, consultants, patent lawyers,
advertising persons, market research, universities, laboratories…

Idea Screening
Ideas usually sorted into three groups:
promising, marginal & rejects
Drop error versus Go error
Product Failures

 Absolute: loses money, sales do not cover

variable costs
 Partial: loses money but sales cover variable
+ some fixed costs
 Relative: profit less than target rate of return
Managing New Product Development:
Concept to Strategy
 Concept development: end user, value proposition /
primary benefit, usage situations…
hence competition… brand & positioning
 Concept testing: involves symbolic / physical testing
with sample of target segment
 Issues: believability, need levels, gaps, perceived
values, purchase intentions, occasions, frequency etc
 Conjoint analysis for understanding customers’ value
perceptions of varying levels of product attributes
Development of Marketing Strategy

1. Target market, size, structure, behaviour;

positioning; sales, market shares, profit goals
2. Price, distribution strategy, marketing budget

3. Long term sales, profits, marketing mix etc

Business Analysis

How attractive is the business proposal?

 Estimating total sales: sum of first-time, repeat
sales & replacements
 Different categories (consumables, durables,
one-time) call for different approaches
 Estimating costs & profits; break-even analysis
and risk analysis (optimistic, pessimistic and
most likely) scenarios for each variable
Development  Commercialization

 Producing a working prototype – commercially

feasible product
 Desired consumer attributes (from research) 
engineering attributes
 α and ß testing (rank order, paired comparison,
monadic rating methods)
 Market testing

 Commercialization
When & Where
 Pioneer: ‘first mover advantage’ re customers,
distribution channels etc
 Parallel entry: coincide with competitor’s entry,
greater ‘noise level’ to attract prospects
 Late entry: saves costs of market development,
faults & shortcomings can be avoided, market
responses & size can be gauged
 Where: local or regional, national or global
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 WHEN A NEW PRODUCT IS LAUNCHED – ATTENTION TURNS TO MANAGING IT
THROUGH ITS LIFE CYCLE .
PRODUCT LIFE CYCLE
What is Product Life Cycle (PLC) ?

PLC shows the stages that products go through

from development to withdrawal from the
market .It is based on the biological life cycle.
Product Life Cycle

 Applicableto Product Category but can also be

applied to brands
 Each product may have a different life cycle
 Contributes to strategic marketing planning
 Mayhelp the firm to identify when a product needs
support, redesign, reinvigorating, withdrawal, etc.
 May help in new product development planning
 May help in forecasting and managing cash flow
 PLC – Graphical Depiction

Sales
Development Introduction Growth Maturity Decline

Time
 PLC – Development Stage
New ideas/possible inventions
 Market analysis – is it wanted? Can it be produced at a profit? Who is it
likely to be aimed at?

 Product Development and refinement

 Test Marketing – possibly local/regional

 Analysis of test marketing results and amendment of product/production

process

 Preparations for launch – publicity, marketing campaign

 E.g. Driverless cars
PLC – Introduction Stage
-High cost/low sales

-Profits Unlikely

Product - One or few products , relatively undifferentiated

Price – Generally High (Market Skimming) but in some cases mkt. penetration
pricing may be used to gain rapid mkt. share.
Place – is selective and scattered.
Promotion – aimed at building brand awareness.Samples and trial incentives
are given to induce early adopters. Resellers are convinced to carry the
product.
 High budget
 Target campaign at specific audience?
 E.g – Hybrid cars / Electric cars
PLC – Growth Stage
 Increased consumer awareness
 Sales rise
 Costs Decline – Economies of Scale
 Profits may be made
 Focus on Heightened Advertising
 Competitors enter market
 Monitor market – competitors reaction?

Product – New product features and packaging may be introduced

Price – Maintained at a high level if demand is high or reduced to
capture more customers
Place – Distribution is more intensive and trade discounts are minimal if
resellers show interest in the product.
Promotion – Increased advertising to consolidate and build brand
preference
 E.g – Smartphones
PLC – Maturity Stage
- Sales reach peak and are fairly stable
 Cost of supporting the product declines
 Profits are high
 Sales plateau and growth is marginal
 Market share may be high
 Competition likely to be greater
 Advertising & Promotion – Judicious
 Differentiation is the key
 Monitor market – Protect Market share

Product – is further differentiated to distinguish from competition.

Price – Price reduction likely to meet competition.
Place – New channels and incentives to resellers to retain shelf space
Promotion – Focus on building brand loyalty and incentives to switch from
competition
E.G –Normal mobile phones
 PLC – Maturity/Saturation Stage
Saturation:
 Market is flooded with competition and similar products
 Necessity to develop new strategies becomes more pressing:
 Searching out new markets:
 Linking to changing fashions
 Seeking new or exploiting market segments (Maruti 800-Alto)
 Linking to joint ventures – media/music, etc.

 Developing new uses

 Focus on adapting the product
 Re-packaging or format
 Improving the standard or quality
 Developing the product range
PLC – Decline Stage
Decline and Withdrawal:
 Product outlives/outgrows its usefulness/value
 Fashions change
 Technology changes
 Sales / Profits decline
 Cost of supporting starts to rise too far
 Decision to withdraw may be dependent on availability of new
products and whether fashions/trends will come around again?
Product – Reduce number of products in the product line .Rejuvenate
Product.
Price – may be maintained to serve niche segment or lowered to
liquidate inventory/milk brand.
Place – Selective
Promotion – Lowered
E.g. – Post offices ? / Greeting Cards
 PLC & Profits

Sales/Profits PLC and Profits

PLC

Profits

Time
Losses
Break Even
Extending the PLC

Two things that can be done :-

1.Market Modification
 Increase freq. of use (tooth paste)
 Add New User (Shampoo Satchet)
 Find New Uses (postcard-TVC )
2.Product Modification
 Change Product Quality or packaging (Renovation-
detergent with “extra power” or “dirt busters”)(FM-Radio)
 PLC – Extension Strategies

Sales

Effects of Extension
Strategies

Time
Length of Cycle Stages

 Products move through the cycle at different speeds

 Some products move very fast because they are new

and have no competition so the intro stage is short,
and they go direct to growth stage.

 Due to technology and globalization the introduction

stage is getting very short

 some cycles more quickly to maturity, then have

many product modifications so the decline stage
drags on and on
Product Life Cycle Considerations in
Marketing Strategy
 Understand that profits have a predictable pattern
 in the early stages, focus is on product information
 in the later stages, focus is on brand promotion
 use market segmentation in maturity stage to maintain strong core
customer basis
 Adopter Categories

Early Late
majority majority
34% 34%

Early
adopters
Laggards
13.5%
16%

Innovators 2.5%
THE CHANGES
Reshaping of Business – from Pipeline to Platforms

 Pipeline  Platform
 Resource control  Resource Orchestration
 Internal Optimization  External Interactions
 Focus on Consumer  Focus on Ecosystem

 E.g Traditional Businesses  E.g – Amazon

 Hotels  Facebook
 Taxi  Google
 Brick and Mortar Retail  Uber
 AirBnB