Concepts in Marketing

1. Production Concept D>>S Sole Supplier Many Customers

2. 3.

Product Concept D>S Many Suppliers Few Customers Undifferentiated Products

Selling Concept Products, even good ones, don't necessarily sell themselves. Customers must be convinced to buy products. D<<S

4.

Marketing Concept

Philosophy of conducting business would be one of filling the identified needs of its customers, rather than bending the will of the customer to fit the needs of the company.

5. Societal Concept Marketers should take care of themselves, the customers and also the society. Ex: Selling Banned substance takes care of Seller, Customer but NOT SOCIETY!!!

6.

Ecological Concept

Marketers should be responsible towards ecology and environment. 7. Holistic Concept

The Ansoff Model

The Ansoff Matrix was first published in the Harvard Business Review in 1957, and has given generations of marketers and business leaders a quick and simple way of thinking about growth. Sometimes called the Product/Market Expansion Grid, the matrix (see Figure 1 below) shows four ways that businesses can grow, and helps people think about the risks associated with each option.

The Matrix essentially shows the risk that a particular strategy will expose you to, the idea being that each time you move into a new quadrant (horizontally or vertically) you increase risk. The Corporate Ansoff Matrix Looking at it from a business perspective, the low risk option is to stay with your existing product in your existing market: you know the product works, and the market holds few surprises for you. However, you expose yourself to a whole new level of risk by either moving into a new market with an existing product, or developing a new product for an existing market. The new market may turn out to have radically different needs and dynamics than you thought, and the new product may just not be commercially successful. And by moving two quadrants and targeting a new market with a new product, you increase your risk to yet another level! Personal Ansoff Looking at this idea from a personal perspective, just staying where you are is often a low risk option. Switching to a new role in the same company or industry, or changing to a similar job in a new industry is a high-risk option. And switching to a new role in a new industry has an even higher level of risk!

Tip 1: Interpret this according to your circumstances. For example, an accountant may find it easy to switch from one industry to another. But a salesman doing this may lose contacts that would take years to rebuild. Tip 2: Don't be too scared by risk if you manage it correctly (for example, by researching carefully, making contingency plans, building appropriate skills, and suchlike), then it can be well worth taking quite large risks. The table below helps you think about how you might classify different approaches. Market Development Here, youre targeting new markets, or new areas of the market. Youre trying to sell more of the same things to different people. Here you might: Target different geographical markets at home or abroad. Use different sales channels, such as online or direct sales if you are currently selling through the trade.

Diversification This strategy is risky: Theres often little scope for using existing expertise or for achieving economies of scale, because you are trying to sell completely different products or services to different customers The main advantage of diversification is that, should one business suffer from adverse circumstances, the other may not be affected.

Target different groups of people, perhaps with different age groups, genders or demographic profiles from your normal customers.

Market Penetration With this approach, youre trying to sell more of the same things to the same people. Here you might: Advertise, to encourage more people within your existing market to choose your product, or to use more of it. Introduce a loyalty scheme. Launch price or other special offer promotions. Increase your sales force activities. Buy a competitor company (particularly in mature markets).

Product Development Here, youre selling more things to the same people. Here you might: Extend your product by producing different variants, or packaging existing products it in new ways. Develop related products or services (for example, a domestic plumbing company might add a tiling service after all, if customers who want a new kitchen plumbed in are quite likely to need tiling as well!) In a service industry, shorten your time to market, or improve customer service or quality.

2. Manage risk appropriately. For example, if you're switching from one quadrant to another, make sure that: You research the move carefully. You build the capabilities needed to succeed in the new quadrant. You've got plenty of resources to cover a possible lean period while you're learning how to sell the new product, and are learning what makes the new market tick. You have firstly thought through what you have to do if things don't work out, and that failure won't "break" you.

Porter's Five Forces Model

Assessing the Balance of Power in a Business Situation Why use the tool? The Porters Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position youre looking to move into. With a clear understanding of where power lies, you can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of your planning toolkit. Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However it can be very illuminating when used to understand the balance of power in other situations. How to use the tool: Five Forces Analysis assumes that there are five important forces that determine competitive power in a situation. These are:1. Supplier Power: Here you assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are. 2. Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, they are often able to dictate terms to you. 3. Competitive Rivalry: What is important here is the number and capability of your competitors if you have many competitors, and they offer equally attractive products and services, then youll most likely have little power in the situation. If suppliers and buyers dont get a good deal from you, theyll go elsewhere. On the other hand, if no-one else can do what you do, then you can often have tremendous strength. 4. Threat of Substitution: This is affected by the ability of your customers to find a different way of doing what you do for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. If substitution is easy and substitution is viable, then this weakens your power. 5. Threat of New Entry : Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors canquickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it . To use the tool to understand your situation, look at each of these forces one-by-one.

Brainstorm the relevant factors for your market or situation, and then check against the factors listed for the force in the diagram above. Then mark the key factors on a diagram like the one above, and summarize the size and scale of the forceon the diagram. An easy way of doing this is to use, for example, a single + sign for a force moderately inyour favor, or --" for a force strongly against you (you can see this in the example below). Then look at the situation you find using this analysis and think through how it affects you. Bear in mind that few situations are perfect; however use this as a framework for thinking through what you could change toincrease your power with respect to each force. To use the tool to understand your situation, look at each of these forces one-by-one. Brainstorm the relevant factors for your market or situation, and then check against the factors listed for the force. Then mark the key factors on a diagram like the one above, and summarize the size and scale of the forceon the diagram. An easy way of doing this is to use, for example, a single + sign for a force moderately inyour favor, or --" for a force strongly against you (you can see this in the example below). Then look at the situation you find using this analysis and think through how it affects you. Bear in mind that few situations are perfect; however use this as a framework for thinking through what you could change toincrease your power with respect to each force.

The Value Chain

The term Value Chain was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage. Porter distinguishes between primary activities and support activities. Primary activities are directly concerned with the creation or delivery of a product or service. They can be grouped into five main areas: inbound logistics, operations, outbound logistics, marketing and sales, and service. Each of these primary activities is linked to support activities which help to improve their effectiveness or efficiency. There are four main areas of support activities: procurement, technology development (including R&D), human resource management, and infrastructure (systems for planning, finance, quality, information management etc.). The basic model of Porters Value Chain is as follows:

The term Margin implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. In other words, the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain.

BCG Matrix

The Boston Consulting Group (BCG) Matrix is a simple tool to assess a companys position in terms of its product range. It helps a company think about its products and services and make decisions about which it should keep, which it should let go and which it should invest in further. Question Marks Question marks are products that grow rapidly and as a result consume large amounts of cash, but because they have low market shares they dont generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If it doesnt become a market leader it will become a dog when market growth declines. Question marks need to be analysed carefully to determine if they are worth the investment required to grow market share. Dogs Dogs have a low market share and a low growth rate and neither generate nor consume a large amount of cash. However, dogs are cash traps because of the money tied up in a business that has little potential. Such businesses are candidates for divestiture. Stars Stars generate large sums of cash because of their strong relative market share, but also consume large amounts of cash because of their high growth rate. So the cash being spent and brought in approximately nets out. If a star can maintain its large market share it will become a cash cow when the market growth rate declines. Cash Cows As leaders in a mature market, cash cows exhibit a return on assets that is greater than the market growth rate so they generate more cash than they consume. These units should be milked extracting the profits and investing as little as possible. They provide the cash required to turn question marks into market leaders.

The GE 9 cell matrix

Description of the model The General Electric Company, with the aid of the Boston Consulting Group and McKinsey and Company, pioneered the nine cell strategic business screen illustrated here. The circle on the matrix represents your enterprise. Both axes are divided into three segments, yielding nine cells. The nine cells are grouped into three zones:

The Green Zone consists of the three cells in the upper left corner. If your enterprise falls in this zone you are in a favorable position with relatively attractive growth opportunities. This indicates a "green light" to invest in this product/service. The Yellow Zone consists of the three diagonal cells from the lower left to the upper right. A position in the yellow zone is viewed as having medium attractiveness. Management must therefore exercise caution when making additional investments in this product/service. The suggested strategy is to seek to maintain share rather than growing or reducing share. The Red Zone consists of the three cells in the lower right corner. A position in the red zone is not attractive. The suggested strategy is that management should begin to make plans to exit the industry.

Characterize your enterprise The vertical axis represents the industry attractiveness. The expert system will position your enterprise on the chart based upon your description of: bargaining power of the buyers bargaining power of the suppliers internal rivalry the threat of new entrants the threat of substitutes

The horizontal axis represents the firm's competitive strength or ability to compete in the industry. It includes an analysis of: the value and quality of the offering market share staying power experience

You can trace through the supporting analysis and its conclusions, adjusting your input until you are satisfied your description accurately characterizes your enterprise.

Analysis of Your Enterprise Position High Attractiveness Strong Competitive Position The strategy advice for this cell is to invest for growth. Consider the following strategies:
provide maximum investment diversify consolidate your position to focus your resources accept moderate near-term profits to build share

High Attractiveness Average Competitive Position The strategy advice for this cell is to invest for growth. Consider the following strategies:
build selectively on strength define the implications of challenging for market leadership fill weaknesses to avoid vulnerability

High Attractiveness Weak Competitive Position The strategy advice for this cell is to opportunistically invest for earnings. However, if you can't strengthen your enterprise you should exit the market. Consider the following strategies:
ride with the market growth seek niches or specialization seek an opportunity to increase strength through acquisition

Medium Attractiveness Strong Competitive Position The strategy advice for this cell is to selectively invest for growth. Consider th e following strategies:
invest heavily in selected segments,

Medium Attractiveness Average Competitive Position The strategy advice for this cell is to selectively invest for earnings. Consider the following strategies:
segment the market to find a more attractive position

Medium Attractiveness Weak Compe titive Position The strategy advice for this cell is to preserve for harvest. Consider the following strategies:
act to preserve or boost cash flow as you exit the business seek an opportunistic sale seek a way to increase your strengths

establish a ceiling for the market share you wish to achieve ?seek a ttra cti ve new segmen ts to apply strengths

make contingency plans to protect your vulnerable position

Low Attractiveness Strong Competitive Position The strategy advice for this cell is to selectively invest for earnings. Consider the following strategies:
defend strengths shift resources to attractive segments ?examine ways to revitalize the industry

Low Attractiveness Average Competitive Position The strategy advice for this cell is to restructure, harvest or divest. Consider the following strategies:
make only essential commitments prepare to divest shift resources to a more attractive segment

Low Attractiveness Weak Competitive Position The advice for this cell is to harvest or divest. You should exit the market or prune the product line.

Segmenting-Targeting-Positioning

Segmenting Find segmentation base or variables in broad market Group customers with similar needs into separate segments Prepare segment profile.(Geographical, Demographical, Physiological & Behavioral

Targeting Compare segments for relative attractiveness

Positioning List all F.A.B Features, Applications and Benefits sought by the selected TMS Create USP and find the UBP.

Select the attractive segment matching companys competence to offer DA over rivals Prepare Brand Segment Strategy

Communicate to the buyer

Positioning strategy:
The choice of TMS, which determines where the business competes and choice of differential advantage which it wants to project over its competitor It deals not with how the product is but how the company wants its target customers to perceive it.

Ways to position:

By attribute By benefit By use or application By user By competitor By product category by quality and price
Developing a positioning strategy: A) Select target market segments:

Identify the broad market

identify bases for segmentation

develop profiles of segments

measure segments attractiveness

B)

Create a differential advantage

Identify benefits sought

USP:

Measure competitor positioning

Create reason for preference

Unique selling point: An attribute to tout as No.1 Common No.1 positions - Best Quality, Lowest Price, Safest, Best Service, Best Value, fastest, Most Customized, Most Convenient, Most Advanced Technology Steps in developing value proposition statement: 1. Co name? and Product name? 2. 2. What is target customer profile In Geographic, Demographic, Psychographic including life style and Techno-savviness parameters?

3. One unique benefit that is distinctly different from others? Other normal benefits? 4. What is customers perception of Benefit to price ratio? Expressed asToo high a price for the benefit?--Moderately high price for the benefit?Just right price for the benefit?Moderately low price for the benefit 5. Make a value proposition statementAn artistic statement, compact, unambiguous and easily understoodNeither too long nor too short- but covering the salient aspects of all the above 4 points 6. Eg: Good Day biscuits 7. Good day biscuits by Britannia are a popular, healthy and tasty everyday treat for consumers of all ages which spreads cheer amongst the people, creates an atmosphere of shared joy in the nation and provides good value for money.

Repositioning Strategy

Positioning in this map determines the value for the customer. Value to be provided based on how the company is entering/targeting the market. Eg: New entrant- Right value position

7 repositioning options 1. 2. 3. 4. 5. 6. 7. Introduce new brands Change existing brands Alter beliefs about brands Alter beliefs about competing brands Alter attributes importance Introduce new or neglected attributes Find new market segment

4 positioning errors to avoid 1. 2. 3. 4. Under positioning Over positioning Confused positioning Doubtful positioning

Ps of marketing
1. 2. 3. 4. 5. 6. 7. 8. Product Price Place Promotion Pace (by Peter F. drucker) Physical Evidence People Process

Product:
It need not be tangible it can be in the form of Physical good (durable goods like jewellery & non-durables like soaps , food products) Services telecomm networks Experience movies, entertainment Events, properties, information (consultancy) or ideas.

Products can be differentiated in Form: shapes, sizes, colour, different packaging Features: eg dove differentiates itself from other soap by adding moisturising milk thus conveying its a moisturiser and not just soap Customization- eg dell Performance Quality eq BMW Durability eg nokia handsets being most durable Reliability- eg people are willing to pay more for fruits and vegetables available in Natures Basket knowing that they keep genuine organic food products Style eg Harley Davidson motorcycles Design particularly important in marketing retail services, apparels etc. Note: In case of services ordering ease, delivery time, installation, customer training, etc can be points of differentiation

Product Strategies:

A companys product mix has certain width, length, depth and consistency Width of product mix refers to how many different product lines the company carries, length refers to total no. of items in the mix, depth refers to no. of variants each product offers, consistency of product refers to how closely related the various product lines in terms of their end use, raw materials, production techniques, distribution channel etc
Product mix width personal care Lux lifebuoy Product line length liril breeze dove pears laundry skin care hair care oral care surf rin wheel Ponds vaseline fair & lovely sunsilk clinic plus closeup deo axe rexona

Eg HUL Product Mix width Strategy Merits: Even if one product doesnt do well, the others come for the rescue Economies of scale Large loyal customer base Prevent Competitive entry in market

Demerits: If mix width is too wide, company often fall short of resources Product Mix consistency Strategy high degree of closeness in raw materials, technology used, packing material, employee skills eg Himalaya, P&G ; low degree eg ITC, Tata Merits: Synergy is nigh, cost is low, resources are shared, provides competitive advantage Demerits: Sometimes firms have to say No to a particular product line which is inconsistent even if these lines may have huge growth opportunities. Product line length Strategy: It can be done in 3 ways 1. Down market stretch- eg ITC launching high end stationery product brand named papercraft, and later bringing mid-low priced classmate 2. Up market stretch- eg tata motors from economy segment going to premium by launching SX4 3. Two way stretch eg titan going for Raga and fast track. Merits: it will provide market coverage thus economies of scale and large loyal customer base Demerits: if line is too long customer may get confused and there will be cannibalisation Product Depth Strategy: eg lux has 2 forms (solid and liquid), 6 packing size,5 fragrances ie 2*6*5 would be the product depth Merits: helps in meeting the needs of sub segment Demerits: if product depth is too high, a lot of cost will be spent in keeping the inventory

**Product life cycle

8 steps of New product development

1. 2. 3. 4. 5. 6. 7. 8. Market Analysis [STP & idea generation] Idea screening Concept development & testing Market strategy formation Business analysis Prototypes development & testing [lab testing] Test market Commercial launch

**Marketing communication strategies based on Consumer buying behaviour

Complex buying behavior eg purchase of house High value brand or product Requires extensive collection of data Based on facts and figures Comparison Analysis and Choice

Post Purchase Discomfort Reduction Buying Behavior eg tanishq Expensive product purchase Infrequent buying and less experience of product High buyer involvement in purchase Perception of high-risk purchase Few perceived differences in brands Reassurance by using some leadership advantage

Variety Seeking Buying Behavior eg lays chips Individual likes to shop around and experiment with different products Low consumer involvement in purchase SignificaAnt perceived brand differences Consumers willing to try diversity of brands for variety and to avoid boredom

Habitual Buying Behavior eg surf excel Low consumer involvement in buying Consumer buys a product out of habit Buying of cheap frequently purchased items Few significant brand differences Considerable brand loyalty based on high customer satisfaction with previous purchases of the brand Little perceived difference between available offerings and no other incentive

Extensive Problem Solving Buying situations which require considerable effort because the buyer has had no previous experience with the product or suppliers; also called Extensive Decision Making Message must feature performance and economic benefits Full and detailed information.

Limited Problem Solving eg reva electric car Purchaser has had some previous experience but is unfamiliar with suppliers, product options, prices, etc A choice process involving a moderate degree of cognitive and behavioral effort A purchase involves some degree of conscious information searching and analysis Involves moderately high priced goods which are not purchased too frequently Emphasis on USP of a product

Routine Problem Solving eg clinic all clear removing dandruff A buying situation in which the buyer has had considerable past experience Also called Automatic Response Behavior or Habitual Response Behavior Habit is determinant Various Discounts given

Image buying behavior eg rolex Expensive products Products represents personality and lifestyle Status symbol Promotional strategy emphasizes on rich lifestyle of consumer

sensual buying behavior eg axe deodorants Desire for pleasure Convey pleasure sensually Ex: Perfumes, Exotic Scotch, fair and lovely. Impulsive buying behavior eg Chocolates Seeing is buying Spontaneous See and Buy decisions Communication must use creative idea to attract customers through display, posters Less emphasis on factual information

Branding Strategies
These 4 brand strategies arise because of 2 choices that a Brand Manager has; 1. Product Category a. Existing i.e. new product is developed in existing line b. New i.e. new product is developed in new line 2. Use of Brand Name a. Existing i.e. a new product has a name with a prefix or suffix of existing name b. New i.e. new product can choose a completely new name

New
1. Line Extension Strategy New product in existing product category using existing brand name. Success of mother company rubs off to the children and growth is very fast for the children. Example Lux launched Lux International. Product category was soap which was already existing and use of the existing brand name Lux. 2. Brand Extension Strategy New product in new product category using existing brand name. Success of mother company rubs off to the children and growth is very fast for the children. Example Lux Shampoo, Lux Handwash named after Lux Soap. Product category was new i.e. shampoo and handwash but use of already existing brand name Lux.

3. Multi Brand Strategy New product in existing product category using new brand name. Used when all different brands in similar category have dissimilar images and are meant to address different purposes. Example Pears, Dove, Lux. 4. New Unique Brand New product in new product category using new brand name. Example Lux Soap, Knoor Soup, Kwality Walls icecream of HUL

2nd P of Marketing- Price

It is most important because of the following reasons: 1. 2. 3. 4. It determines demand elasticity of the product in market. Determines the perceived quality of product(high price, high quality). Determines the value of product perceived in the minds of the consumer. Indirectly determines the cost/unit of producing and marketing a product.

3 Important pricing strategies are: Skimming : in this strategy set the price high and to catch up with the needs of small segment at the top end of the market who seek higher quality product and willing to pay proportionately higher price for it. Penetration: Here the target is middle and low segment and is highly price sensitive. Price is fixed so attractively low that a large proportion of the market is deeply and quickly penetrated to get a large volume of sales. Hybrid : skimming the whole market layer by layer over a period of time by offering the same high quality product at lower prices. Setting the pricing policy: A 6 step procedure:1. Selecting the pricing objective: Five major objectives are survival, maximum current profit, maximum market share, maximum market skimming and product quality relationship. 2. Determining demand: Here demand has to be estimated using the price sensitivity and by various methods such as surveys, price experiments and statistical analysis. Marketers need to know how responsive, or elastic, the demand would be to a change in price(price elasticity). 3. Estimating Costs: The company wants to charge a price that covers its cost of producing, distributing and selling the product, including a fair return for its effort and risk. 4. Analyzing competitors costs, prices and offers: if the firms offer contains features not offered by the nearest competitor, it should evaluate their worth to the customer and add that value to the competitors price and vice versa. 5. Selecting a pricing method: Markup Pricing: in this a standard markup is added to the products cost. It works only if the marked-up price actually brings in the expected level of sales. Target Return Pricing: the firm determines the price that would yield its target rate of ROI. Perceived Value Pricing: Companies base their price on the customers perceived value. Perceived value is made up of buyers image of the product performance, the channel deliverables, the warranty worthiness and suppliers reputation. The key is to deliver more value than the competitor and to demonstrate this to prospective buyers. Value Pricing: It basically deals with complete reengineering the companys operations to become a low-cost producer without sacrificing quality, to attract a large number of value- conscious customers. An

important type of value pricing is ELDP(Everyday low pricing) in which a constant low price is charged with little or no price promotions and special sales. Going- Rate Pricing: in this the firm charges its price largely on competitors prices, either same, more or less. Auction- Type Pricing: because of internet, this is becoming popular. Major types are: English Auctions( 1 seller and many buyers), Dutch Auctions( one seller and many buyers or one buyer and many sellers), Sealed- bid auctions( suppliers can submit only 1 bid and cannot know the other bids). 6. Selecting the Final Price: The final price must take into account the brands quality and advertising, companys pricing policies, gain and risk sharing pricing and the impact of price on other parties. Comparison of value pricing method with perceived value method: In both the methods, company employees are challenged to create additional value and pass on part of the benefit to customers. In perceived value, value is created by forming a completely new innovative product with more features and applications whereas in value pricing, value is created in the supply chain management and reducing the cost of production. In perceived value, due to increase in quality and benefits, the Selling Price of the product increases whereas in value pricing the cost decreases and hence the Selling Price also decreases.

3rd P of marketing place

Following questions need to be considered 1. Where do buyers look for your product or service? 2. If they look in a store, what kind? A specialist boutique or in a supermarket, or both? Or online? Or direct via a catalogue? 3. How can you access the right distribution channel? 4. Do you need to use a sales force? Or attend trade fairs? Or make online submissions? Or send samples to catalogue companies? 5. What do competitors do? And how can you learn that and /or differentiate? 6. In case of shop how ambience would be? What Does Kotler Say? Place: - Refers to how the product gets to the buyer; for instance, point-of-sale assignment or retailing. This third P has furthermore at times been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which division (young adults, families, business citizens), etc. also referring to how the surroundings in which the product is sold in can influence sales. Place is in regards to distribution, location and methods of getting the product to the customer. This includes the location of your business, shop front, distributors, logistics and the potential use of the internet to sell products directly to consumers. Internet and the Third P: Today when internet has made it to every urban household the whole concept of place has changed drastically. Today there is no need to sell a product in a store and hence there is no need to worry about where the store needs to be placed. Just have a national website and you will be sorted. However promoting the website as per the target market is a tough task. After all if you are selling products for old people, then you cannot promote your product on matrimony website, Isnt it?

Promotion Overview
Promotion is the coordination of all seller-initiated efforts to set-up channels of information and persuasion to sell goods and services or to promote an idea. (Belch and Belch)Promotional Mix includes advertising, sales promotion, public relations/publicity, personal selling, plus direct marketing and Internet/interactive media. Direct marketing is direct mail, mail order catalogues, database marketing, direct selling, telemarketing, and direct response ads through direct mail, the Internet, and various media. (Belch and Belch) The communication element includes personal and non-personal communication activities. communicate the merits of the overall product, which include: Activities that

Personal Selling/ Sales Force Advertising--Mass or non-personal selling: TV, radio, magazines, newspaper, outdoor/out of-home (OOH), online Advertising is structured and composed of non-personal communication of information, usually paid for and usually persuasive in nature, about products (goods, services) and ideas by identified sponsors through various media. Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. Marketing, IMC, Advertising, Promotion, Media and More Ads can be a cost-effective way to disseminate messages, whether to build a brand preference or to educate people. Sales Promotion--Trade deals, samples, coupons, premiums, tie-ins, p-o-p, displays, sweepstakes, allowances, trade shows, sales rep contests, events/experiences and more. Collateral Materials--Booklets, catalogues, brochures, films, sales kits, promotional products and annual reports. Direct Marketing (also referred to as Action or Direct Response Advertising)--online, direct mail, database management, catalogues, telemarketing, and direct-response ads. Includes Interactive/Internet/web Events and Experiences Public Relations--press releases, publicity. Securing editorial space, as opposed to paid space--usually in print, electronic or Internet media. Promote or hype a product, service, idea, place, person or organization, internal communication, lobbying. PR involves a variety of programs designed to promote or protect a companys image/reputation or individual products.

Marketing communications mix (or promotion mix) The specific mix of advertising, personal selling, sales promotion, and public relations a company uses to pursue its advertising and marketing objectives.

A companys total marketing communications mix, or promotion mix, consists of the specific blend of advertising, personal selling, sales promotion, and public rela- tions tools that the company uses to pursue its advertising and marketing objec- tives. The five major types of promotion are:2 Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. Personal selling: Personal presentation by the firms sales force to make sales and build customer relationships. Sales promotion: Short-term incentives to encourage the purchase or sale of a product or service. Public relations: Building good relations with the companys publics by obtain- ing favourable publicity, building up a good corporate image, and handling or heading off unfavourable rumours, stories, and events. Direct marketing: Direct communications with carefully targeted individual consumers to obtain an immediate responsethe use of mail, telephone, fax, e-mail, and other non-personal tools to communicate directly with specific con- sumers or to solicit a direct response.

Advertising Any paid form of non personal presentation and promotion of ideas, goods, or services by an identified sponsor. Personal selling Personal presentation by the firms sales force to make sales and build customer relationships. Sales promotion Short-term incentives to encourage purchase or sale of a product or service. Public relations Building good relations with the companys publics by obtaining favourable publicity, building up a good corporate image, and handling or heading off unfavourable rumours, stories, and events. Direct marketing Direct communications with carefully targeted individuals to obtain an immediate response.

Each type of promotion has its own tools. Advertising includes print, broad- cast, outdoor, and other forms. Personal selling includes sales presentations, trade shows, and incentive programs. Sales promotion includes point-of-purchase dis- plays, premiums, discounts, coupons, specialty advertising, and demonstrations. Direct marketing includes catalogues, telemarketing, fax transmissions, and the Internet. Thanks to technological breakthroughs, marketers can now communicate through traditional media (newspapers, radio, telephone, and television), as well as its newer forms (fax machines, cellular phones, pagers, and computers). These new technologies have encouraged more companies to move from mass commu- nication to more targeted communication and one-on-one dialogue. At the same time, communication goes beyond these specific promotion tools. The products design, its price, the shape and colour of its package, and the stores that sell itall communicate something to buyers. Thus, although the promotion mix is the companys primary communication activity, the entire marketing mix promotion and product, price, and placemust be coordinated for greatest com- munication impact.

FIGURE 132 Elements in the communication process

A Vi e w o f t h e C o m m u n i c a t i o n P r o c e s s IMC involves identifying the target audience and shaping Sender: The party sending the message to another partyhere, Hewlett-Packard. Encoding: The process of putting thought into symbolic formHPs advertising agency assembles words and illustrations into an advertisement that will convey the intended message. Message: The set of symbols that the sender transmitsthe actual HP multi- function machine ad. Media: The communication channels thr ough which the message moves from sender to receiverin this case, the specific magazines that HP selects. Decoding: The process by which the receiver as- signs meaning to the symbols encoded by the sendera consumer reads the HP multifunction machine ad and interprets the words and illustrations it contains. Receiver: The party receiving the message sent by another partythe home office or business customer who reads the HP multifunction ma- chine ad. Response: The reactions of the receiver after be- ing exposed to the messageany of hundreds of possible responses, such as the consumer is more aware of the attributes of HP multifunction machines, actually buys an HP multifunction ma- chine, or does nothing. Feedback: The part of the receiver s response communicated back to the senderHP research shows that consumers are struck by and remem- ber the ad, or consumers write or call HP praising or criticizing the ad or HPs products. Noise: The unplanned static or distortion during the communication process, which results in the receivers getting a different message than the one the sender sentthe consumer is distracted while reading the magazine and misses the HP ad or its key points. S t ep s i n D e ve l o p i n g E f f e c t i v e C o m m u n i c a t i o n We now examine the steps in developing an effective integrated communications and promotion program. The marketing communicator must: identify the target audi- ence; determine the response sought; choose a message; choose the media through which to send the message; select the message source; and collect feedback. I d e n t i f y i n g t h e Ta r g e t A u d i e n c e A marketing communicator starts with a clear target audience potential buyers or current users, those who make the buying it. The audience may be individuals, groups, special publics, audience will affect the communicators decisions on what will it will be said, where it will be said, and who will say it. D e t e rm i n i ng t h e D e s i r ed R e s p o n s e in mind. The audi- ence may be deci- sion or those who influence or the general public. The target be said, how it will be said, when

After defining the target audience, the marketing communicator must decide what response is desired. In most cases, the final response is purchase. But purchase is the result of a long process of consumer decision making. The target audience may be in any of six buyer readiness stages, the stages that consumers typically pass through on their way to making a purchase. These stages are awareness, knowl- edge, liking, preference, conviction, and purchase (see Figure 13-3). The market- ing communicator needs to know where the target audience is now and to what stage it needs to be moved. The marketing communicators target market may be totally unaware of the product, know only its name, or know little about it. The communicator must first build awareness and knowledge. When Nissan introduced its Infiniti auto- mobile line, it began with an extensive teaser advertising campaign to create name familiarity. Initial ads for the Infiniti created curiosity and awareness by showing the cars name but not the car. Later ads created knowledge by informing potential buyers of the cars high quality and many innovative features. Assuming target consumers know the product, how do they feel about it? Once potential buyers know about the Infiniti, Nissans marketers want to move them through successively

stronger stages of feelings toward the car. These stages include liking (feeling favourable about the Infiniti), preference (preferring Infiniti to other car brands), and conviction (believing that Infiniti is the best car for them). Infiniti marketers can use a combination of the promotion mix tools to create pos- itive feelings and conviction. Advertising extols the Infinitis advantages over com- peting brands. Press releases and other public relations activities stress the cars innovative features and performance. Dealer salespeople tell buyers about options, value for the price, and after-sale service. Finally, some members of the target market might be convinced about the prod- uct, but not quite get around to making the purchase. Potential Infiniti buyers may decide to wait for more information or for the economy to improve. The communicator must lead these consumers to take the final step. Actions may include offering special promotional prices, rebates, or premiums. Salespeople may call or write to selected customers, inviting them to visit the dealership for a special showing. D e s i g n i n g a M e s s ag e Having def ined the desired audience response, the communicator turns to devel- oping an effective message. Ideally, the message should get attention, hold interest, arouse desire, and obtain action (a framework known as the AIDA model ). In practice, few messages take the consumer all the way from awareness to purchase, but the AIDA framework suggests the qualities of a good message. In putting together the message, the marketing communicator must solve three problems: what to say (message content), how to say it logically (message struc- ture), and how to say it symbolically (message format). C h o o s in g M e d i a The communicator now must select channels of communication. There are two broad types of communication channels personal and non-personal. P er s on a l Co m m u ni ca t ion Ch annel s In personal communication channels, two or more people communicate directly with each other. They can communicate face to face, over the telephone, or even through the mail or e-mail. Personal communication channels are effective because they allow for personal addressing and feedback. The company controls some personal communication channels directly; com- pany salespeople, for example, contact buyers in the target market. But other per- sonal communications about the product may reach buyers through channels not directly controlled by the company. These may be independent experts consumer advocates, consumer buying guides, and others making statements to target buy- ers. Or they may be neighbours, friends, family members, and associates talking to target buyers. This last channel, known as word-of-mouth influence, has con- siderable effect in many product areas. Personal influence carries great weight for products that are expensive, risky, or highly visible. For example, buyers of automobiles, home decor, and fashion often go beyond massmedia sources to seek the opinions of knowledgeable people. N on - P er so n a l Co m m u nic a tio n Chan nel s Non-personal communication channels are media that carry messages without per- sonal contact or feedback. They include major media, atmospheres, and events. Major media include print media (newspapers, magazines, direct mail); broadcast media (radio, television); and display media (billboards, signs, posters). Atmospheres are designed environments that create or reinforce the buyers leanings toward buying a product. S e l e c t i n g t h e M e s s ag e S o u r c e In either personal or non-personal communication, the messages impact on the tar- get audience is affected by how the audience views the communicator. Messages delivered by highly credible sources are more persuasive. Therefore, marketers hire celebrity endorsers well-known athletes, actors, and even cartoon charactersto deliver their messages.

C o l l e c t i n g Fe e d b a c k After sending the message, the communicator must research its effect on the tar- get audience. This involves asking the target audience members whether they remember the message, how many times they saw it, what points they recall, how they felt about the message, and their past and present attitudes toward the prod- uct and company. The communicator also wants to measure behaviour resulting from the messagehow many people bought a product, talked to others about it, or visited the store. Feedback on marketing communications may suggest changes in the promotion program or in the product offer itself. For example, when the new Boston Market restaurant chain enters new market areas, it uses television advertising and coupons in newspaper inserts to inform area consumers about the restaurant and to lure them in. S e t t i n g t h e To t a l P r o m o t i o n B u d g e t a n d M i x We have examined the steps in planning and sending communications to a target audience. But how does the company decide on the total promotion budget and its division among the major promotional tools to create the promotion mix? We now look at these questions. S e t t i n g t h e To t a l P r o m o t i o n B u d g e t One of the hardest marketing decisions facing a company is how much to spend on promotion. John Wanamaker, the department-store magnate, once said: I know that half of my advertising is wasted, but I dont know which half. I spent $2 mil- lion for advertising, and I dont know if that is half enough or twice too much. Therefore, it is not surprising that industries and companies vary widely in how much they spend on promotion. Promotion spending may be 20 to 30 percent of sales in the cosmetics industry and only two or three percent in the industrial machinery industry. Within any industry, both low and high spenders can be found. How does a company decide on its promotion budget? We look at four com- mon methods used to set the total budget for advertising: the affordable method, the percentage-of-sales method, the competitive-parity method, and the objective- and-task method.14 A f f o r d abl e Me tho d Some companies use the affordable method: They set the promotion budget at the level they think the company can afford. Small businesses often use this method, reasoning that the company cannot spend more on advertising than it has. They start with total revenues, deduct operating expenses and capital outlays, and then devote some portion of the remaining funds to advertising. Unfortunately, this method of setting budgets completely ignores the effects of promotion on sales. It tends to place advertising last among spending priorities, even in situations in which advertising is critical to the firms success. It leads to an uncertain annual promotion budget, which makes long-range market planning difficult. Although the affordable method can result in overspending on advertis- ing, it more often results in under spending. P e rcent age - o f -S a l e s Me tho d Other companies use the percentage-of-sales method, setting their promotion bud- get at a certain percentage of current or forecasted sales. Or they budget a per- centage of the unit sales price. The percentage-of-sales method has a number of advantages. First, using this method means that promotion spending is likely to vary with what the company can afford. It also helps management think about the relationship between promotion spending, selling price, and profit per unit. Finally, it supposedly creates competitive stability because competing firms tend to spend about the same percentage of their sales on promotion. Despite these claimed advantages, however, the percentage-of-sales method has little to justify it. It wrongly views sales as the cause of promotion rather than as the result. A study in this area found good correlation between investments in advertising and the strength of the brands concernedbut it turned out to be effect and cause, not cause and effect. The strongest brands had the highest sales and could afford the biggest investments in advertising!15 The budget is based on availability of funds rather than on opportunities. It may prevent the increased

spending sometimes needed to turn around falling sales. Because the budget varies with year-toyear sales, long-range planning is difficult. Finally, the method does not provide any basis for choosing a specific percentage, except what has been done in the past or what competitors are doing. C o mp e t i t ive - Pa ri ty M eth od Still other companies use the competitive-parity method, setting their promotion budgets to match competitors outlays. They monitor competitors advertising or get industry promotion spending estimates from publications or trade associations, and then set their budgets based on the industry average. Two arguments support this method. First, competitors budgets represent the collective wisdom of the industry. Second, spending what competitors spend helps prevent promotion wars. Unfortunately, neither argument is valid. There are no grounds for believing that the competition has a better idea of what a company should be spending on promotion than does the company itself. Companies differ greatly, and each has its own special promotion needs. Finally, there is no evidence that budgets based on competitive parity prevent promotion wars. O b j e c tive - an d - Ta s k Me tho d The most logical budget setting method is the objective-and-task method, whereby the company sets its promotion budget based on what it wants to accomplish with promotion. This budgeting method entails defining specific promotion objectives; determining the tasks needed to achieve these objectives; and estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget. The objective-and-task method forces management to spell out its assumptions about the relationship between dollars spent and promotion results. But it is also the most difficult method to use. It is often hard to determine which specific tasks will achieve specific objectives. For example, suppose Sony wants 95 percent awareness for its latest camcorder model during the six-month introductory period. What specific advertising messages and media schedules should Sony use to attain this objective? How much would these messages and media schedules cost? Sony management must consider such questions, even though they are hard to answer.

S e t t i n g t h e O v e r a l l P r o m o t i o n Mi x The company now must divide the total promotion budget among the major pro- motion tools advertising, personal selling, sales promotion, and public relations. It must blend the promotion tools carefully into a coordinated promotion mix. Companies within the same industry differ greatly in the design of their promo- tion mixes. For example, Avon spends most of its promotion funds on personal selling and direct marketing, whereas Revlon spends heavily on consumer advertising. T h e N a t ur e o f E ac h P r o mo ti o n Too l Each promotion tooladvertising, personal selling, sales promotion, public rela- tions, and direct marketinghas unique characteristics and costs. Marketers must understand these characteristics in selecting their tools. Ad v ertising. Advertising can reach masses of geographically dispersed buyers at a low cost per exposure and enables the seller to repeat a message many times. Television advertising, for example, reaches huge audiences. On an average day, 77 percent of Canadians view television at least once. This viewership may be split between Canadian national networks (19.5%), French networks (17.7%), Cana- dian Global and independents (17.6%), and US conventional and superstations (17.4%). More than 127 million North Americans tune in to the Super Bowl, and about 78 million people watched at least part of the past Academy Awards broad- cast. If you want to get to the mass audience, says a media services executive, Broadcast TV is where you have to be. He adds, For anybody introducing any- thing who has to lasso an audience in a hurrya new product, a new campaign, a new

moviethe networks are still the biggest show in town.16 Beyond its reach, large-scale advertising says something positive about the sellers size, popularity, and success. Because of advertisings public nature, con- sumers tend to view advertised products as more legitimate. Advertising is also very expressive. It allows the company to dramatize its products through the artful use of visuals, print, sound, and colour. On the one hand, advertising can be used to build a long-term image for a product (such as Coca-Cola ads). On the other hand, advertising can trigger quick sales (such as Sears weekend sale ads). Advertising also has shortcomings. Although it reaches many people quickly, advertising is impersonal and cannot be as persuasive as company salespeople. For the most part, advertising can carry on only a one-way communication with the audience, and the audience does not feel that it must pay attention or respond. In addition, advertising can be very costly. Although some advertising forms, such as newspaper and radio advertising, can be done on small budgets, other forms, such as network TV advertising, require very large budgets. P ersonal Selling.Personal selling is the most effective tool at certain stages of the buying process, particularly in building up buyers preferences, convictions, and actions. Compared to advertising, personal selling has several unique qualities. It involves personal interaction between two or more people, so each person can observe the others needs and characteristics and make quick adjustments. Personal selling also allows all kinds of relationships to develop, rang- ing from a matter-of-fact selling relationship to a deep personal friendship. The effective salesperson keeps the cus- tomers interests at heart to build a long-term relationship. Finally, with personal selling, the buyer usually feels a greater need to listen and respond, even if the response is a polite no thank you. These qualities come at a cost, however. A sales force requires a longer-term commitment than does advertising: A company can turn on and off its advertising, but it is hard to change the size of a sales force. Personal selling is also the companys most expensive promotion tool, costing industrial companies an average of over $275 per sales call.17 Sales Pr omotion. Sales promotion includes a wide assortment of tools, includ- ing coupons, contests, cents-off deals, and premiums such as buy 10 products, and get one free. These attract consumer attention and provide information that may lead to a purchase. They offer strong incentives to purchase by providing inducements or contributions that give additional value to consumers. And sales promotions invite and reward quick response. Where advertising says, Buy our product, sales promotion says, Buy it now. Companies use sales promotion tools to create a stronger and quicker response. Sales promotion can be used to dramatize product offers and to boost sagging sales. Sales promotion effects are usually short lived, however, and are not effective in building long-run brand preference. Public Rela tions. Public relations offers several benefits. It is very believable: news stories, features, and events seem more real and believable to readers than ads do. Public relations also can reach many prospects who avoid salespeople and advertisements the message gets to the buyers as news rather than as a sales- directed communication. And, like advertising, public relations can dramatize a company or product. Marketers tend to underuse public relations or to use it as an afterthought. Yet a well-planned public relations campaign used with other pro- motion mix elements can be very effective and economical. Direct Mark eting. The many forms of direct marketing direct mail, telemarketing, electronic marketing, online marketing, and othersshare four distinctive characteristics. Direct marketing is non-public: The message is normally addressed to a specific person. Direct marketing is also immediate and customized: Messages can be prepared very quickly and can be tailored to appeal to specific consumers. Finally, direct marketing is interactive: It allows a dialogue between the marketer and consumer, and messages can be altered depending on the consumers response. Therefore, direct marketing is well suited to highly targeted marketing efforts and to building one-on-one customer relationships.

P r om ot i o n Mi x S tr a t egie s Marketers can choose from two basic promotion mix strategies push promotion or pull promotion. Figure 13-4 contrasts the two strategies. A push strategy involves pushing the product through distribution channels to final consumers. The producer directs its marketing activities (primarily personal selling and trade promotion) toward channel members to induce them to carry the product and to promote it to final consumers. Using a pull strategy, the producer directs its mar- keting activities (primarily advertising and consumer promotion) toward final consumers to induce them to buy the product. If the pull strategy is effective, con- sumers then will demand the product from channel members, who will in turn demand it from producers. Thus, under a pull strategy, consumer demand pulls the product through the channels. Some small industrial goods companies use only push strategies; some direct- marketing companies use only pull. Most large companies use some combination of both. For example, Frito-Lay uses mass-media advertising to pull its products, and a large sales force and trade promotions to push its products through the channels. In recent years, consumer goods companies have been decreasing the pull portions of their promotion mixes in favour of more push. Companies consider many factors when developing their promotion mix strate- gies, including type of product-market and the product life cycle stage. For exam- ple, the importance of different promotion tools varies between consumer and busi ness markets. Consumer goods companies usually pull more, putting more of their funds into advertising, followed by sales promotion, personal selling, and then public relations. In contrast, business-to-business marketers tend to push more, putting more of their funds into personal selling, followed by sales promotion, advertising, and public relations. In general, personal selling is used more heavily with expensive and risky goods and in markets with fewer and larger sellers. The effects of different promotion tools also vary with stages of the product life cycle. In the introduction stage, advertising and public relations are good for producing high awareness, sales promotion is useful in promoting early trial, and personal selling must be used to get the trade to carry the product. In the growth stage, advertising and public relations continue to be powerful influences, whereas sales promotion can be reduced because fewer incentives are needed. In the mature stage, sales promotion again becomes important relative to advertising: Buyers know the brands, and advertising is needed only to remind them of the product. In the decline stage, advertising is kept at a reminder level, public relations is dropped, and salespeople give the product only a little attention; however, sales promotion might continue to be strong.

I n t e gr a t in g t h e P r o m o t i o n M i x Having set the promotion budget and mix, the company must take steps to see that all of the promotion mix elements are smoothly integrated. This is a check- list for integrating the firms marketing communications.18 Analyze trendsinternal and externalthat can affect your companys ability to do business: Look for areas where communications can help the most. Deter- mine the strengths and weaknesses

of each communications function. Develop a combination of promotional tactics based on these strengths and weaknesses. Audit the pockets of communications spending throughout the organization: Itemize the communications budgets and tasks and consolidate these into a sin- gle budgeting process. Reassess all communications expenditures by product, promotional tool, stage of the life cycle, and observed effect. Identify all contact points for the company and its brands: Work to ensure that communications at each point are consistent with your overall communications strategy and that your communications efforts are occurring when, where, and how your customers want them. Team up in communications planning: Engage all communications functions in joint planning. Include customers, suppliers, and other stakeholders at every stage of communications planning. Create compatible themes, tones, and quality across all communications media: Make sure each element carries your unique primary messages and selling points. This consistency achieves greater impact and prevents the unnecessary duplication of work across functions. Create performance measures that are shared by all communications elements: Develop systems to evaluate the combined impact of all communications activities. Appoint a director responsible for the companys persuasive communications ef- forts: This move encourages efficiency by centralizing planning and creating shared performance measures.

By Junior Team Smark!!