Marketing Strategy Notes Prof Arijit B 21102014

Marketing Strategy Overview
Marketing
Entire business from the point of view of the customer.
Identify, create, manage demand to provide value to a customer for a profit.
The right product, in the right place, at the right time, at the right price.
Satisfaction of customer and their needs, focus of business activities.
Owned by everyone from within the organization.
Strategy: Performing different activities from rivals or performing similar activities in different
ways. (Porter)
How marketing relates to strategy?
Business activities aligned with business strategy achieve corporate objectives.
Marketing firms link to customers and competitors, shapes strategy.
E.g. Amuls corporate goal - to be worlds largest food brand is implemented by marketing
plans and tactics (global availability, effective communication, value price, products and
service to delight customers) should evolve around that goal. Amul can augment with new
brands, segments and categories with business potential where Amul can deliver on its
capabilities.
Marketing Strategy answer 2 questions
Why should our customers buy our product?
Which customer needs do our products fulfil more effectively than competitors?
Differentiation by price, reach, delivery, design, service, technology etc; should be valuable
and meaningful to customers.
5Cs of Marketing Strategy (for Situation Analysis)
1. Company (product line, image, technology, experience, culture, goals, channels)
2. Customers (segments, size, growth, frequency, trends, decision making process, benefits
sought)
3. Competitors (actual/potential, direct/indirect, products, positioning, market shares, strengths,
weaknesses)
4. Collaborators (distributors, suppliers, alliances)
5. Climate/Context (PESTLE)
Strategic Management Process
Prof. Arijit Bhattacharya

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Strategic Management Framework
4As of Marketing (Sheth & Sisodia)

Acceptability, Affordability, Accessibility, Awareness
The 4A framework derives from a customer-value perspective based on the four distinct roles
that customers play in the market: seekers, selectors, payers and users. For a marketing
campaign to succeed, it must achieve high marks on all four As, using a blend of marketing
and non-marketing resources. The 4A framework helps companies create value for customers
by identifying exactly what they want and need, as well as by uncovering new wants and
needs. (For example, none of us knew we needed an iPad until Apple created it.) That
means not only ensuring that customers are aware of the product, but also ensuring that the
product is affordable, accessible and acceptable to them.
Marketing strategy defines
Target segment (size, demographics, and psychographics)?
How should the product be positioned to appeal to the market (primary benefit)?
How should the product be branded?
Product potential (sales, market share, profit estimates)?
Situation: External factors and internal factors
External factors: Consumers, Competitors, Environment
Internal factors: Resources, Capabilities, Skills
Different levels of strategy making in organization
Corporate level
Business(es) to be in
Business level
Set strategic corporate goals

Defining corporate mission, Establishing SBUs
Assigning resources to SBUs, Assessing growth
opportunities
Gain competitive advantage. SBU goals, develop broad strategy
Functional level
Attain marketing goals.
Marketing strategy implementation
Product level
Implement tactics.
Marketing mix
Analysing Industry
Industry Structure: Consolidated (auto, telecom) or Fragmented (restaurants, laundry)
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Level of Competition: Monopoly (Indian railways), Duopoly (Pepsi-Coke, Boeing-Airbus),

Oligopoly (pharmaceutical, auto, telecom, steel)
Market structure: Leader, Challenger, Followers, Nichers
Product Lines: Broad (electronics, auto), Narrow (steel, telecom, hotels)
Analysing Competition
Does the product/product line satisfy same/similar needs? (Segments served)
Whore are the direct/Indirect competition? (Coke-Pepsi: Direct competition: other cola
brands; indirect competition: fruit juice, bottled water)
What products do competitors offers? (Brands, categories)
What channels of distribution do they use?
What pricing strategies do they use?
Competitors management and financial resources?
Competitors objectives, core competencies?
What alliances are they pursuing and for what purpose?
Competitors success in the marketplace? (Share of market/voice/mind/heart)
Analysing Customers
Who are the customers, segments?
What do they buy, where do they buy, when do they buy, how frequently do they buy?
How do they choose, how do they use, why do they prefer a product?
How do they respond to marketing programs?
Long term value of customers.
SWOT analysis
It assesses the internal/external environment a firm operates in.
Strengths (Internal)
Weaknesses (Internal)
USP, capabilities, competitive advantage,
Propostion, capabilities gaps, presence,
resources, experience, knowledge, data,
reputation, reach, financials, vulnerabilities,
financials, marketing, reach, communication, timescales, deadlines, pressures, supply
service, legacy, innovation, location,
chain, morale, attrition, commitment,
geography, price, value, IT quality,
leadership, processes and systems,
accreditations, processes, systems, culture,
management
values, behaviour, management, reputation
Opportunities (External)
Threats (External)
Market, business, new product development, PEST, competitive intentions, market
new market development, industry phase and demand, contracts and partners, sustaining
potential, competitor vulnerabilities,
capacities, finances and capabilities,
demographics/lifestyle trends, technology,
obstacles, industry cycles, seasonality
innovation, niches, verticals/horizontals,
geographies, new contracts, research,
partnerships, distribution, volumes,
production, economies, season, influences.
Environment: Internal, Micro, Macro
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Internal (Change management): 8Ms (Men, Material, Money, Minutes, Markets, Machines,
Methods, Mind)
Micro (Direct impact): 6Cs(Components, Corporate, Channel, Communication, Customer,
Competition)
Macro (Out of direct control): PESTLE (Political, Economic, Sociocultural, Technological,
Legal, Environmental)
PESTLE Analysis
Political
Environmental, legislative, regulatory,
policy, stability, lobbies, war and conflict,
pressure groups, unions
Sociocultural
Demographics, lifestyles, social mobility,
educational levels, attitudes, opinions,
beliefs, buyer behaviour, ethnic and religious
factors
Legal
Legislative structures, trade policies,
employment legislation, exit laws, foreign
trade regulations
Economic
Economy, global trends, taxes, levies, FDI,
interest, inflation, unemployment, GDP,
stocks, forex, climate, market, trade cycle,
industry specific factors
Technological
Competing and emerging technologies, R&D
costs and capacities, PLC, solutions,
innovation, information, communication,
IPR, licensing
Environmental
Sustainability, green issues, energy, natural
factors
Marketing Plan
A campaign that aims to fulfil a companys market strategy.
What will the company do in case of new product development and supporting older ones?
Timing of sales and promotional activities, pricing intentions and distribution efforts.
How will the plan be controlled and the results measured.
Executive Summary
Table of contents
Situation analysis
Assessment of market opportunity
Financial goals
Marketing goals
Summary of companys marketing strategy
Objectives and implementation Plan

Data, environment, SWOT, gaps
Statement of target market segments
Customer and needs assessment
Competitive challenges to firm and products
Incremental revenue improvements
Expected profits
Units sales/market share
Identify target market
Product positioning, distribution, pricing
Specific actions to achieve goals sales
force, customer rebates, ad campaign etc.
Monthly marketing budget

Monthly sales forecast (units and value)
Periodic plans monitor, review, action
Implementing the Plan via the Marketing Mix
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Identify target customer segments.

Address customers through marketing mix-4Ps.
Marketing Plan Summary
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STPD Analysis
Concept
Segmentation
Identify different needs and groups in the
market.
Targeting
Target markets it can satisfy in a superior
way.
Positioning
Occupy distinct place in customers mind.
Differentiation
Communicate valuable and meaningful
differences.
Example (Moov)
Pain segment
Back pain segment within the pain segment

Relief from backaches aah se aha tak
Lamitube, non-staining, effective in back
pain
Segmentation
Where to compete?
Divide market into distinct groups (distinct needs, characteristics, behaviors).
Basis competence, resources, potential (Segment size and growth, firms objectives and
resources).

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Types of Segmentation
Geographic
location/country, region, state,city (urban/semi-urban/rural), climate, city
Demographic
gender, age, education, income, occupation, family size, family life cycle,
generation, social class, religion, nationality, culture, sub-culture gender
Psychographic needs and motivation, perception, personality, attitude, involvement

lifestyle (Activities: works, hobbies, sports, social events, entertainment;
Interests: home/family, job, community, recreation, food habit: Opinions:
social issues, politics, education, culture, business, economics, past,
present future)
decision roles (initiator, influencer, decider, buyer, user),
Behavioural
awareness/buying readiness (aware, ever tried, recent trial, occasional
user, regular user, most often used), benefits sought, buying occasions,
buying frequency, loyalty status (hard core, split, shifting, switchers),
usage rate, shopping orientation
Targeting
Which product for which market?

Set of buyers sharing common needs or characteristics that a firm decide to serve.
Measure segment attractiveness, select target segments.
Factors to target resources, competence, degree of product variability, PLC stage,
competitors strategies.
Targeting choices
Viability of a segment
Measurable total size, purchasing power, segmentation variables

Accessible reachable
Substantial large and profitable enough to serve; has growth potential
Differentiable segments respond differently to marketing mix

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Actionable effective marketing programs can be designed
Targeting Strategies
Mass marketing
Target marketing mix towards the entire market, not specific to any
segment.
Target different marketing mixes towards different segments.
Differentiated/
Segmented marketing
Market concentration Concentrating mix on any one segment of the market.
Target small market segment with specific, specialized marketing mix.
Niche marketing
Positioning
Designing an offer so that it occupies a distinct and valued place in the minds of the target
customer. (Kotler)
What to position?: product attributes (LED, LCD tv), benefits/problem solutions (toothpaste,
shampoo), use, product user (J&J baby products), product usage (Moov), specific use
(greeting cards), services (Maruti service station), price, distribution (Dell), competitor
(Savlon vs. Dettol), quality (Sony, Apple)
Positioning strategies
o Desirable to customer, deliverable by the company, differentiating from competitors.
o Single (USP)/multiple (same product to various segments with intact central
positioning e.g. Horlicks: central positioning- nutrition, active people- energy, elderly
dietary supplement, pregnant women essential supplement, kids growth and
nutrition, executives revitalize)
o Point-of-parity (POP) attributes/benefits that are not unique but shared with other
brands.
o Points-of-Difference (POD) attributes or benefits that consumers believe they could
not find in a competitive brand.
Perceptual Mapping
Brands mapped together on positioning map compared across parameters.

Identify weak/strong/absent competitive positions.
Gaps regarded as opportunities for positioning/repositioning/launch.

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Differentiation
How to compete?
The process of adding meaningful and valued differences to distinguish the companys
offering from the competition.
A firm can differentiate along 5 dimensions:
o Product (Himalaya)
o Service (Caterpillar, Maruti)
o Personnel (Singapore Airlines)
o Channel (Eureka Forbes)
o Image (Louis Philippe; Upper Crust)
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Competitive Strategies
Competitive Advantage: A companys ability to perform in one or more ways that

competitors cannot or will not match.
Competitor centred firm
-focus on competitor activities (reach, prices,
new services)
-formulate competitive reactions (increase
ad/promo spends, price cuts)
-alert firm, market focused
Customer centred firm

-focus on customer development
-reach, satisfy quality segment, avoid price
cuts
-identify opportunities, target customer and
emerging needs better with respect to
resources and goals
Market Structure - Leader, Challenger, Follower, Nicher
Company and Competitor focus

Pushes boundaries
Stays within boundaries
Market Scope Strategy

Single Market Strategy
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Company focused
Leader
Nicher
Multi Market Strategy
Competitor focused
Challenger
Follower
Total Market Strategy

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-concentrate efforts on single

segment
-avoid competition with
established firms
Market Entry Strategy

First in Strategy
Enter market with others
-willing and able to take risks
-technological competence
-strive to stay ahead
-heavy promotion
-create primary demand
Market Leaders Strategies
-serve several distinct markets

-avoid confrontation with firms
serving entire market.
-serve entire spectrum of the

market
-selling differentiated products
(and marketing mix) to
different market segments
-top management commitment,
strong financial position
Early Entry Strategy

Enter market just after the
leader
-superior marketing strategy
backed by ample resources
-strong commitment to
challenge market leader
Laggard Entry Strategy

Enter market at end of
growth/maturity phase as:
-Imitator (me-too product)
-Initiator
Market leader has largest market share but to retain dominance, the leader looks for ways to expand
total market demand, and to increase its share.
I. Expand total market demand
Expand market by:
o Find new users (convert non users, find new market segment, other countries)
o New uses (Du Pont nylon: parachute>apparel>tyres>seat belts>carpeting)
o Encourage new usage (one finger tip to Moov ki maalish using ten fingers)
II. Defense Strategies Protect current market share
1. Position defense Occupying the most desirable market space in the minds of the consumers
by setting up barriers to market entry around a product, brand, product line, market segment
etc. (Google brand extensions: search engine>Internet Service Co.).
2. Mobile defense The leader stretches its domain over new territories through market
broadening (petroleum co.>oil>coal>nuclear>hydroelectric) and market diversification (ITC:
cigarette>FMCG and food).
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3. Flanking defense Market leader tries to protect an unguarded or weakly guarded front
(market).
o Product Flanking: Different combinations of core product at different size and price,
to cover as many market segments as possible. (Nirma Wheel; Intel introduced
Celeron take on cheaper Taiwanese chips)
4. Contraction defense: Withdraw from the most vulnerable segments and redirect resources to
those that are more defendable. (Tata group sold TOMCO, Lakme Ltd to HUL).
5. Pre-emptive defense Detect potential attacks and attack the enemies first.
o Product/brand proliferation to signal not to attack (SBI: a network of 17,000 branches
and 43,515 ATMs )
o Vaporware (Microsoft Xenix O/S)
6. Counter-offensive defense Responding to competitors head-on attack by identifying the
attackers weakness and then launch a counter attack (Colgates response to Oral B
toothpaste launch, 2013)
III. Expand Market Share
Market Challengers strategies
Market Challenger strong, dominant player who follows an aggressive strategy to gain
market share.
Types:
1. Frontal attack Match opponents 4Ps. Success difficult unless sufficient resources,
staying power or clear distinctive advantagesTypes: Pure frontal, limited frontal, price
based, R&D based(Coke-Pepsi, Ujala-Robin Blue, Nirma-Surf).
2. Flanking attack Challenger attacks the leader at its weak point or blind spot.
Flanks
o Geographical flanking: by spotting underperforming areas of the leader.
o Segmented flanking: Challenger attacks market segment/area of technology
neglected by the leader. (Canon attacked market leader Xerox in small
photocopier segment).
3. Encirclement attack Involves surrounding a competitor with several brands and
forcing it to defend itself on many fronts at the same time.
o Product encirclement: Introducing products with many different qualities,
styles and features that overwhelm the competitors product line (Seikos
global strategy: 2300 models worldwide and 400 for US market).
4. Bypass attack Bypassing the leader to attack easier markets.
o Diversifying into unrelated products(Pepsis entered bottled water (Aquafina)
and juice (Tropicana) to bypass Coca-Cola).
o Diversifying into new geographical markets (Regional brands)
5. Guerrilla attack Small, intermittent hit-and-run attacks by a challenger to harass
and destabilize the defender. (1996 Cricket World Cup; Pepsis campaign: Nothing
official About ittocounter Coke, the official sponsor)
Drastic short-term price cuts (especially during a competitors product
testing/launch)
Sudden and intensive bursts of advertising
Product comparison

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Damaging PR activity
Geographically concentrated campaigns
Follower Strategies
Follower strong, not dominant, content to stay there, safe, low risk player
Counterfeiter
Cloner
Imitator
Adapter
Copies leaders product and packages and sells it on the black market. e.g.
pirated music/ movie CDs; Rolex, Mont Blanc duplicates
Copies the leaders products as it is as well as name, packaging with slight
variations (RadoRada, Gucci-Gucca)
Copies some things from leader but differentiated on packaging, advertising,
pricing or location (Tata Sky Videocon)
Takes leaders products and adapts or improves them (Moov introduced non
messy creams thus improving upon Iodex)
Nicher Strategies
Specialises in small profitable sub-segments (niches), not served by/unattractive to larger

firms. Expand and protect them.
Focus on profit margins rather than revenue/market share.
Niche Specialist
End user
Vertical level
Customer size
Specific customer
Geographic
Product/product line
Product feature
Job-shop
Quality-price
Service
Channel
Firm Specialization
Serve one type of end user
Vertical level of production-distribution value chain
Focus on selling to small/medium/large customers
Limit selling to one/few customers
Limit selling to locality/region/area
Carry/produce only one product/product line
Produce certain product types/features.
Customise products for individual customers
Focus on high/low quality ends
Offer one/more service(s) not available from competition
Serves only one channel of distribution
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COMPETITON ANALYSIS
Porters 5 Forces Model (Industry Attractiveness Analysis)

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1) Threat of New Entrants

Threat of entry depends on
o Height of entry barriers
o Reaction new entrant can expect from existing players.
Entry barriers
o Advantages that incumbents have relative to new entrants
Supply-side economies of scale
Demand-side benefits of scale
Customer switching costs
Capital requirements
Incumbency advantages independent of size
Unequal access to distribution channels
Restrictive government policy
Expected retaliation
2) Bargaining Power of Suppliers
A supplier group is powerful if:
o Supplier group is more concentrated than the industry it sells to.
o Supplier group does not depend heavily on the industry for its revenues.
o Industry players face switching costs in changing suppliers.
o Offer products that are differentiated.
o No substitute for what the supplier groups provides.
3) Bargaining Power of Buyers
A supplier group is powerful if:
o There are few buyers or large volume buyers.
o Industry products are standardized or undifferentiated.
o Buyers face few switching costs in changing vendors.
o Buyers can integrate backward and produce industrys product themselves.
4) Threat of Substitutes
The threat of a substitute is high if:
o Substitute offers an attractive price-performance trade-off to the industrys product.
o Buyers cost of switching to the substitute is low.
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5) Rivalry Among Existing Competitors

Intensity of rivalry is high if:
o Competitors are many or are roughly equal in size.
o Industry growth is slow.
o Exit barriers are high.
o Rivals are highly committed to the business and have aspirations for leadership.
Porters Value Chain
Benchmarking:Process of improving performance by continuously identifying,

understanding and adapting outstanding practices found inside and outside the organization.
Benchmark with:
o Competitors (to know your deficits with respect to competition)
o A partner.
o Another area of the same firm.
o Best-practice companies
o Unrelated industry or company
Benchmarked performance measures
o Financial Ratios (ROA, ROI)
o Productivity Ratios (use of resources)
o Consumer related Results (C-Sat)
o Operating Results (Cycle time, waste reduction, lead time)
o HR measures (E-Sat, absenteeism, turnover)
o Quality measures (reject rate)
o Market Share Data
Benchmarking using Porters Value Chain can enhance performance.
o Profits depend on how well firms execute these activities in the value chain.
o Firms that excel in a value chain activity is said to have a competitive advantage.
o Competitive advantage is gained through cost advantage.
Reducing cost of individual value chain activities
Reconfiguring the value chain
Primary Activities
o Inbound Logistics

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Receiving and warehousing of raw materials.

Distribution of raw materials to manufacturing and operations.
o Operations
Process of transforming inputs into finished goods and services.
o Outbound logistics
Warehousing of finished goods.
Distribution of those finished goods to customers or retail stores.
o Marketing and Sales
Identification of customer needs.
Deploying product into marketplace.
Process of selling to customers.
o Service
Supporting customers after they buy products and services.
o Support Activities
Supporting customers after they buy products and services.
Support Activities
o Procurement
Purchasing of raw materials and inputs needed to create the product.
o Technology Development
Technology developments that support value chain activities.
o Human Resource Management
Activities associated with recruiting, training, hiring and compensation.
o Firm Infrastructure
Legal team, accounting department, PR, quality department etc.
Porters Generic Business Strategies
Source of competitive advantage Cost Leadership, Differentiation and Focus.

Cost Leadership Strategy
A firm offers products and services having the same utility/quality features as competitors products
and services/substitute products and services; but the price/cost lower than them.
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When to adopt:
Competition is based purely on price factor.
No significant differentiation in product/service features.
Customer loyalty very low; brand switching.
How to be a Cost Leader
A firm can lower its cost on the basis of economy of scale.
High capacity utilization
By going through vertical integration which is relevant for value creation.
A firm can save cost by standardizing its products and product-producing activities.
Investment in cost-saving technologies may help a firm to minimise its cost.
Benefits
Developing competitive advantage and achieving large market share.
The firm is comparatively more protected from the impact of downward trend in the industry.
The firm can bear the pressures put by suppliers in the form of increasing prices of their
supplies as well as customers in the form of bargaining for lower product price.
Cost advantage acts as an entry barrier
Drawbacks
It can be sustained only if barriers exist that prevent competitors from achieving the same low
cost.
Severe cost reduction may dilute customer focus and customer interests may be ignored,
Customers requiring extra features and ready to pay higher price are lost.
Differentiation Strategy
Differentiation strategy is the act of designing a set of meaningful differences to distinguish

the companys offerings from competitors offerings.
Suitable in following market conditions:
o Market size is large enough to accommodate various firms using differentiation
strategy.
o Customer needs and preferences are diversified so that the market can be segmented
into different groups.
o If a firm makes attempts for creating value through differentiation, and charges higher
prices, customers should be willing to pay for this value creation.
o The nature of products/services is such that the customers develop brand loyalty.
Benefits
It can create a captive market for a company
High brand loyalty refrains new entrants in the market.
Customer group is not able to put pressure on the firm to lower down prices
In case of bargains for higher prices for supplies, the firm can offset this price increase by
increase in product/service prices because of brand loyalty

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Drawbacks
Has to make huge promotional efforts. It may not be a strong base to prevent the entry of new
entrants.
If many firms start differentiation in any industry price becomes an ultimate decision factor.
The features not desired and not valued by customers do not create response or brand loyalty.
So differentiation becomes meaningless,
Failure to communicate the benefits of differentiation or the intrinsic differentiating features
themselves to customers may lead to failure of this strategy.
Focus Strategy
In a focus strategy, firms focus on meeting the needs of a unique market segment in the best
possible way.
A focus strategy is a niche strategy.
Conditions:
The firm should have ingenuity to look for something out of ordinary and a sharp eye for
identifying niches,
Niche segment should be unique so that only specialized features could satisfy it,
Special features should be so distinct that common customers do not expect them to fulfill
Niche segment should be sufficiently profitable & having growth potential
The firm should be able to create loyalty of customers on the basis of acknowledged
superiority to serve them. It should also be able to create new niches.
Benefits
Firm is protected from competition to the extent that other firms operating in broader markets
do not pose competitive rivalry.
Customer Loyalty.
Prevent new entrants.
Drawbacks
Cost structures of firms are higher.
Differentiators with comparatively lower cost can penetrate in the niche markets.
Niche markets turn to be attractive in many cases for the cost leaders and differentiators due
to technological development.
Stuck in the Middle
To be successful in long-term, a firm must select only one of these three generic strategies.
With more than one generic strategy, the firm will be stuck in the middle and will not
achieve competitive advantage. [Jet Airlines positioning was confusing to the customers due
to multiple branding (Jetlite, Jet Airways, Jet Konnect) who found it difficult to understand
what Jet stands for a full-service career or a low cost airline.]
Portfolio Models
BCG Growth-Share Matrix
Link market growth and relative market share to determine prospects for various SBU/brands. Helps
to plan portfolio, recommend strategy.
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Question mark
Low share of high growth market
Consume resources, generate little
Carefully weigh risk and rewards
Stars
Leaders. High share of high growth market.
High promotion costs, generate high income.
Invest
Cash Cows
Leader. High share of low growth market.
Ex-star. Generate cash, low investment. Fund others.
Milk
Dogs
Low share of low growth market.
No cash generation, consume cash.
Divest
Limitations
Too simplistic; ignores trend, environment.
GE Matrix
A nine-cell (3 X 3) matrix used to perform business portfolio analysis as a step in the

strategic planning process.
Helps analyse portfolio, determine which businesses should receive more/less investment and
which should be divested.
Market Attractivenessis measured by - Market Size, Market Growth Rate, Demand
variability, Industry Profitability, Competitive Rivalry, Global Opportunities, Entry and exit
barriers, Capital requirement, Macro environmental Factors (PEST)
Business Unit Strengthis measured by - Market Share, Distribution Channel Access,
Financial Resources, R&D Capability, Brand equity, Production Capacity, Knowledge of
customer and market, relative cost position

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Grow - strong business units in attractive industries, average business units in attractive
industries, and strong business units in average industries.
Hold - average businesses in average industries, strong businesses in weak industries, and
weak business in attractive industries
Harvest [A strategic management decision to reduce the investment in a business entity
(division, product line, product or item) in the hope of cutting costs and/or improving cash
flow]- weak business units in unattractive industries, average business units in unattractive
industries, and weak business units in average industries.
Limitations core competencies not represented, SBU interactions not considered.
McKinsey 7S Framework
Successful strategy implementation if all 7 elements present.
Strategy - Ways to achieve competitive advantage (refer Porters generic strategies).

Structure - Ways in which task and people are specialized and divided, and authority is
distributed (functional structure, divisional structure).
Systems - Formal processes and procedures to manage the organization (planning, budgeting,
performance measurement, reward, information, distribution etc.).
Staffing - People, their background and competencies (recruitment, selection, training,
employee development).

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Skills - Distinctive competencies in the organization (People, Management Practices,

Technologies).
Style - Leadership style of top management and overall operating style of organization
(norms, how people work, how they interact with each other and customers).
Shared Values - Core values shared in the organization and serve as guiding principles of
what is important.
Using the 7-S Model - All seven variables are interconnected. To make progress in one,
adjustments need to be made in others.
Porters Diamond Model To Study Competitive Advantage of Nations
Factors of production - Inputs need to be in an industry labour, land, natural resources,

capital, infrastructure, educated workforce.
Demand conditions - Nature and size of domestic buyers needs.
Related and supporting industries - Suppliers, ancillary industries.
Firm strategy, structure and rivalry - Cooperative and competitive systems.
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PRODUCT STRATEGIES
What is Product? A product can be defined as a collection of physical, service and symbolic
attributes which yield satisfaction or benefits to a user or buyer.
Product Levels
Core benefit
Basic product
Service/benefit customer is really

buying.
Turn core benefit into a basic
product.
Set of attributes and conditions

buyers normally expect when they
purchase the product.
Augmented product That exceeds customer expectations.
Expected product

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A hotel guest ins buying rest and

sleep.
Hotel room includes a bed,
bathroom, towels, desk, dresser and
closet.
Hotel guest expect a clean bed,
fresh towels, working lamps, and a
relative degree of quiet.
Brand positioning and competition
take place at this level.
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Potential product
New ways to satisfy customers or

differentiate offering.
Product Hierarchy
Need Family: Security
Product family: Savings and income
Product class: Financial instruments
Product line: Life insurance
Product type: Term life insurance
Item (SKU/product variant): Prudential renewable term life insurance
Product mix/assortments: Set of all products and items a particular seller offers for sale.
Product Mix Decisions:Decisions on the product mix (the number of product lines and items in
each line) that the company may offer (single/multiple products)
New Product Development (NPD)
Why New Product Development?
Changing customer needs (Diet Coke, Saffola)

New segment entry (Maruti Ertega)
Changing market needs (Scooters to Bikes)
Successful brand/line extensions (Maggi)
Competitive success (Krackjack 50:50, Marie)
New technology (iPod, iPad, TV)
Product lifecycle (MS Office, Play Station, iPhone)
Portfolio/Business alignment (RIM)
Environmental changes (Music downloads)
New-to-the-World Products
Incrementally Altered Products
-High risk, infrequent, costlier

-Envision market, create demand, educate market
-electric lighting, antibiotics, microwave, credit
card, heart pacemaker, GPS
-Improvement in existing product.

-Low risk, more frequent, less costly
-Listen to existing market, accommodate current
demand
- Intels Pentium IV (improvement over Pentium
III but has same basic technology), MS Office,
Apple iPhone
Identifying New Product Opportunities
Unarticulated needs
Articulated needs
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Served
No
Yes
Unserved
No
No
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New Product Development (NPD) Stages
Product Innovation:
A modified version of an existing product range
A new model in the existing product range
A new product outside the existing range but in a similar field of technology
A totally new product in a new field of technology.
Product Line: A group of products within a product class that are closely related because they
perform similar function, are sold to the same customer groups, are marketed through the same
channels, or fall within given price ranges. (opposite of product bundling).
Width of a product mix: Number of different product lines the company carries.
Length of a product mix: Total number of items in a product line.
Depth of a product mix: How many variants are offered of each product in the line?
Consistency of a product mix: How closely related the various product lines are in end use,
production requirements, distribution channels, or some other way. (HUL: consistent-all
consumer goods; less consistent-functions)
Product Line extensions:When a company introduces additional items in the same product category
under the same brand name such as new flavors, forms, colors, added ingredients, package sizes.
This is as opposed to brand extension which is a new product in a totally different product category.
(Bisleri available in different product sizes: 500 ml, 1 lt, 5 lt etc).
Product extensions: Versions of the same parent product that serve a segment of the target market
and increase the variety of an offering. (Coke > Diet Coke)
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Expanding/Trimming the Product line
Upgrade customers Maruti 800>Wagon R

Cross-sell HP: PC and printers;
Line-stretch When a company lengthens its product line beyond its current range, whether
down-market, up-market, or both ways.
o Popular (Titan), mass (Sonata), premium (Xylys), youth (Fastrack), ethnic (Raga)
Line fill A firm can lengthen its product line by adding more items within the present
range.
Line prune reduce unwarranted/unprofitable (Maruti Gypsy)
Major Product Line Strategies
Expansion of Product Mix

Contraction of Product Mix
Alteration of Existing Products
Development of New Uses for Existing Products
Trading Up (adding higher priced product) and Trading Down (adding a low priced product)
o LG Sampoorna
Product Differentiation (based on quality, design, brand, packaging) and Market
Segmentation (to cater to different demands)
Other strategies related to Product

Packaging (and Labelling): 5th P
o Promotional value, functional components, aesthetic components
Warranties and guarantees
After sales service
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BRANDING STRATEGIES
Brand:a name, term, sign, symbol, or design, or a combination of them, intended to identify the
goods or services of one seller or group of sellers and to differentiate them from those of
competitors. (Kotler)
Brand comprises of: Tangible attributes, Product, Packaging, Labeling, Attributes, Functional
benefits, Intangible attributes, Quality, Emotional benefits,Values, Culture, Image
Branding
Creating differences between products.

Mental structure that clarifies decision making
o Who the product is
o What the product does
o Why consumers should care
Disney: Family, fun, entertainment. Apple Innovation. Google Simplicity.

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Branding Strategy: A plan for the systematic development of a brand to enable it to meet objectives
rooted in the brand's vision and driven by the principles of differentiation and sustained consumer
appeal.
Brands Positioning:The place in the consumers mind that the brand owns the benefit the
marketer wantscustomers to think of when they think of the brand. (Disney: Fun. Family.
Entertainment.)
Brand Building
Involves all the activities (Product development, Packaging, Advertising, Promotion, ales and
distribution) that are necessary to nurture a brand into a healthy cash flow stream after
launch.
Factors to consider before creating a brand
Choosing a brand name

o What does the brand name mean? (Considerations: product benefits, product quality,
names easy to remember, recognize, pronounce; distinctiveness, should not indicate
poor meanings in other markets or languages)
What associations / performance / expectations does it evoke?
Managing customer brand contact to meet and exceed expectations
Brand Equity: The added value endowed on products and services. It may be reflected in the way
consumers think, feel and act with respect to the brand, as well as in the prices, market share, and
profitability the brand commands. (Kotler)
When a commodity becomes a brand, it is said to have equity

A brand can command premium in the market
What happens when brands have high equity?
More leverage with the trade

Charge a premium on their product
Can have more brand extensions
Defense against price competition
Improved perception of product performance.
Greater brand loyalty (Brand loyalty Pyramid: Brand Switchers>Satisfied Buyer>Committed
Buyers)
Building Brand Equity
Distinguishing it from others value proposition (broad positioning, specific positioning,

value positioning)
Brand promise must match brand delivery
Choosing brand elements

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Brand Ambassadors:Giving a face and personality to the brand that is expected to be rubbed
off from the brand ambassador.
Designing holistic marketing activities
Leveraging Secondary associations
o Create brand equity by linking the brand to other information in memory that conveys
meaning to consumers.
Brand Equity Model: Brand Resonance Pyramid (Kotler)
Measuring Brand Equity: Brand Value Chain (Kotler)
o Brand audit
o Brand-tracking studies
Critical Factors of Brand Building (David Jobber)
Quality :core benefit
Positioning : clear and unique
Repositioning :Gatorade: sports drink to lifestyle beverage
Well blended communication :Use of IMC: awareness, brand personality, reinforcing the
perception)
5. Being first in the market :before completion enters
6. Long-term perspective :invest in the brand long-term for awareness, communicating brand
message, loyalty programs
7. Internal marketing: Stakeholders should understand brand pillars and positioning
1.
2.
3.
4.

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Branding Strategies
Product branding: give each individual product an exclusive brand name. for the company
to evaluate brand performance but major drawbacks are product cannibalization if consumers
cannot differentiate clearly among product brands and involves higher advertising and
promotion budget.
Product line branding: The products appear under the same brand name and possess the
same basic identity but with slightly different competencies
Product-range branding: Compared to product-line branding, product-range branded
products carry out the basically the same functions but at different performance levels like
various cars in the Mercedes S, E, C and A class and Intels Pentium and Celeron ranges of
microprocessors.
Corporate branding: The companypromotes its name as the main brand name. Sometimes
called umbrella branding. e.g. IBM, Sony, Tata.
Brand extension: Using an existing brand name to promote a product in a different category
(Park Avenue Shirts, Shaving cream, Jeans, Belts, Perfumes).
o Sub-brand:When marketers combine a new brand with an existing brand (Adobe
Acrobat software)
o Line extension
o Category extension
Product-Market Matrix
New Product
Old Product
Old Market
Market Development
Brand extension
Line extension
Market Penetration
Flanker brands
Co-branding
New Market
Diversification
Brand extension
Product Development
Co-branding
Ingredient branding
Product Line-Brand Matrix

New Brand
Name
Old Brand
Name
Existing Product Line

Flanker Brand
New Product Line

Diversification
Line Extension
Brand Extension
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Pricing Strategies
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What a customer must give up in exchange for a product or service.

Customers interested in value of product/service, not costs.
Commodities are differentiated by price, quality.
Brands command premium.
Setting the Price

1. Selecting Pricing Objective
a) Survival
b) Maximum current profit
c) Maximum market share
d) Maximum market skimming
e) Product-quality leadership
f) Other objectives
2. Determining Demand
a. Price sensitivity
b. Price elasticity of demand
3. Estimating Costs
a. Types of costs and levels of production
b. Accumulated production
4. Analysing Competitors Costs, Prices and Offers
a. Competitor
b. Financial situation
c. Recent sales
d. Customer loyalty
e. Corporate objectives
i. Market share objective
ii. Profit-maximization objective
5. Selecting a Pricing Method
a. Markup Pricing
i. A standard markup to products cost.
b. Target-Return Pricing
i. That yields firms target rate of ROI. (Acer)
c. Perceived-Value Pricing (Meru Cabs)
i. Deliver more unique value that competitor and to demonstrate this to
prospective buyers.
d. Value Pricing
i. Reengineering companys operations to become a low-cost producer without
sacrificing quality (e.g. IKEA, Walmarts EDLP)
e. Going-Rate Pricing
i. Price largely based on competitors prices.
f. Auction-Type Pricing
i. Online marketplaces
ii. Reverse auction
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1. Suppliers submit online lowest price they are willing to be paid

(Pfizer)
6. Selecting the Final Price
a. Impact of other marketing activities
b. Company pricing policies
i. Cancellation charge, sms/ATM charge of banks
c. Gain-and-risk-sharing pricing
d. Impact of price on other parties
Reference Prices
Fair Price (what consumers feel the product should cost)

Typical Price
Last Price Paid
Maximum price most consumers would pay
Minimum price most consumers would pay
Historical competitor price
Expected future price
Usual discounted price
Adapting the Price

Geographical Pricing
Pricing products to different customers in different locations and countries.
Price Discounts and Allowances
Discount, Quantity discount, Functional discount, Seasonal discount, Allowance.
Promotional Pricing
loss-leader, special event, special customer, cash rebates, low-interest financing,
longer payment terms, warranties and service contracts, psychological discounting.
Differentiated Pricing
Price discrimination: customer-segment, product form, image, channel, location, time.
Yield pricing (airline, hospitality business)
Initiating and Responding to Price Changes
Initiating Price Cuts
Excess plant capacity, market domination
Possible traps: low-quality, fragile-market-share, shallow-pockets, price-war
Initiating Price Increases
Cost inflation, overdemand
Delayed quotation, Escalator clauses, Unbundling, Reduction of discounts
Responding to Competitors Price Changes
Nirma-Surf, AMD-Intel
Pricing Strategies
Penetration: setting a low price for a new product to gain market share.
Skimming: Setting a high price for a new product. Used when competitive advantage not
sustainable.
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Premium: Use of high price where there is uniqueness about the product/service. Used when
substantial competitive advantage exists.
Economy: No frills low price.
Discriminatory pricing: customer segment, product-form, location, time
Psychological pricing: When the marketer wants the consumer to respond on an emotional,
rather than rational basis.
Geographical pricing: Where there are variations in different parts of the country or world.
Promotional pricing: To promote a product for a short period (BOGOF)
Product Line Pricing: Where there is a range of product or services the pricing reflect the
benefits of parts of the range.
Product Bundle Pricing: Sellers combine several products in the same package.
Reasons for price cuts Excess capacity, price competition
Reasons for price increase Cost inflation, overdemand
Alternative approaches that avoid increasing prices

Reduce amount of product instead of raising the price.
Substituting less-expensive materials or ingredients.
Reducing/removing product feature.
Reducing/removing product services (e.g. installation, free delivery)
Using less-expensive packaging material/larger package sizes.
Reduce number of sizes and models offered.
Creating new economy brands.
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DISTRIBUTION STRATEGIES
Distribution (Place)
Set of institutions performing activities to move product from production to consumption.
Functions: Order processing, warehousing, inventory, transportation, collections
Ensures: Availability, visibility, movement, feedback
Width: Trade coverage
Reach: Customer coverage
Depth: Brand coverage
Growing impact of convergence (internet, mobile, retail)
Amazon (convenience, 24/7, greater selection, reviews), Dell (skipping trade channels,
capture customer information, made to order manufacturing reduce costs, product available
24/7)
Channel Decisions
How to effectively reach target segment.
Intensive distribution (all retail outlets)
Selective distribution (key outlets)
Exclusive distribution (sole rights)
Direct/indirect channels
Single/multiple channels
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Length of channel
Types of intermediaries
Number of intermediaries at each level
Inter/Intra channel conflict
Complementary (each channel handles non-competing product/segment)
Competitive (two different and competing channels sell the same product)
Marketing Channels
Moves goods from producers to consumers.

Forward flow (company>customer): storage and movement, title, communications
Backward flow (customers>company): ordering and payment
Both directions: information, negotiation, finance, risk taking
The Supply Chain of a Manufacturing Company
Channel Functions and Flows
Channel-Design Decisions
Analysing customer needs and wants
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o Lot size
o Waiting and delivery time
o Spatial convenience
o Product variety
o Service backup
Establishing objectives and constraints
Identifying major channel alternatives
o Types of intermediaries
o Number of intermediaries
o Terms and responsibilities of channel members
Evaluating major channel alternatives
o Economic criteria
o Control and adaptive criteria
Channel Management Decision
Selecting channel members

Training and motivating channel members
o Channel power (coercive, reward, legitimate, expert, referent)
o Channel partnerships
Evaluating channel members
Modifying channel design and arrangements
o Channel evolution
Channel modification decisions
Global channel considerations
Channel Conflict
Horizontal Channel conflict: Conflict with firms at the same level of the channel.
Vertical Channel conflict: Conflict at different levels e.g. between wholesaler and retailer.
Multichannel conflict:Apple sells smartphones through brick-and-mortar shops and through
e-retailers.
Channel Integration and Systems
Conventional marketing channel: Made up of independent producers, wholesalers, and

retailers with separate businesses trying to maximize their individual profits even at the
expense of the entire channel.
Vertical Marketing Systems (VMS): A distribution channel structure in which producers,
wholesalers and retailers act as a unified system. One channel member owns the others, has
contract with them, or has so much power that they cooperate. Types:
o Corporate VMS: Successive stages of production and distribution are owned by a
single entity (channel leader) achieved through forward and backward integration.
(Breweries, Petrol stations, Coke-Parle)

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o Contractual VMS: A VMS in which independent firms at different levels join

contractually to create efficiencies and economies of scale that could not be achieved
alone.Types:
Wholesaler-sponsored voluntary groups: small grocery stores agree to form a
chain to achieve economies with which to compete against corporate chains
(Apna Bazar)
Retailer-sponsored
Franchise system: Fast food chains
o Administered VMS: A dominant firm within the channel system, such as the
manufacturer, wholesaler or retailer, coordinated the flow of goods by virtue of its
market power.Manufacturers of top brands can obtain strong trade cooperation and
support from resellers. Channel leaders that have enough money and resources to
control the direction of the channel. They have more control than any other channel
member (Microsoft, Nike).
Horizontal Marketing Systems
o A channel arrangement in which two or more companies at one level join together to
follow a new marketing opportunity.
o Coke and McDonalds, PSO and Pizza Hut
Channel Design Model:
The model involves six basic steps:

List the factors that could potentially influence the direct/indirect decision. Each factor must
be evaluated carefully in terms of the firms industry position and competitive strategy.
Pick out the factors that will have the most impact on the channel design decision. No factor
with a dominant impact should be left out. For example, assume that the following four
factors have been identified as having particular significance; market concentration, customer
service level, asset specificity, and availability of working capital.
Decide how each factor identified is related to the attractiveness of a direct or an indirect
channel. For example, market concentration reflects the size distribution of the firms
customers as well as their geographical dispersion. Therefore, the more concentrated the
market, the more desirable the direct channel because of the lower costs of serving that
market (high = direct; low = indirect). Customer service level is made up of at least three
factors: delivery time, lot size, and product availability. The more customer service required
by customers, the less desirable is the direct channel (high = indirect; low = direct). The
direct channel is more desirable, at least under conditions of high uncertainty in the
environment, with a high level of asset specificity (high = direct; low = indirect). Finally, the
greater the availability of working capital, the more likely it is that a manufacturer can afford
and consider a direct channel (high = direct; low = indirect). Note that a high level on a
factor does not always correspond to a direct channel.
Create a matrix based on the key factors to consider the interactions among key factors. If
only two factors are being considered, a two-by-two matrix of four cells would result. For
three factors, a three-by-three matrix of nine cells would result.

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Decide (for each cell in the matrix) whether a direct channel, an indirect channel or a
combination of both a direct and an indirect channel is most appropriate, considering the
factors involved. Combination channels are becoming more common in business practice,
especially in industrial markets.
For each product or service in question, locate the corresponding cell in the box model. The
prediction in this cell is the one that should be followed or at least the one that should be most
seriously considered by the firm.
Distribution Scope Strategy:Selecting Distribution Intensity: The number of intermediaries or

outlets through which a manufacturer distributes its goods.
o Intensive distribution Firms products in nearly every available outlet.
o Selective distribution Limited number of retailers to distribute its product lines.
o Exclusive distribution Limits market coverage in a specific geographical area
Channel-Structure Strategy: The channel-structure strategy refers to the number of intermediaries
that may be employed in moving goods from manufacturers to customers.
Channel Levels

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Selection of Suitable Distribution Policies \based on the Relationship between Type of Product
and Type of Store
Shopping store/
Convenience good
SShoppingstore/
Shopping good
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The customer is indifferent to the

brand of product he or she buys
but shops different stores to secure
better retail service and/or retail
price.
Intensive
The customer makes comparisons

among both retail controlled
factors and factors associated with
Intensive
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the product (brand).

The consumer has a strong
preference as to product brand but
shops a number of stores to secure
the best retail service and/or price
for this brand.
Selective/
Exclusive
Specialtystore/
Convenience good
The consumer prefers to trade at a

specific store but is indifferent to
the brand of product purchased.
Selective/
Exclusive
Specialty store /
Shopping good
The consumer prefers to trade at a

certain store but is uncertain as to
which product he or she wishes to
buy and examines the stores
assortment for the best purchase.
Selective/
Exclusive
SSShopping Store /
Specialty good
Criteria for choosing Channel Partners:
Financial Strength of Prospective Channel Partner : revenue, P& L statement , balance sheet
etc.
Sales Strength : no. of salesmen and their technical competency
Product Lines: 1) Competitive products, 2) Compatible products 3) Complementary products.
Reputation: 1) leadership 2) Well Established 3) Level of expertise.
Market coverage: Geographic coverage, outlets per market area.
Sales Performance.
Advertising & Sales promotion programs.
Ordering & Payment Procedures.
Willingness to share data: a) customers b) Inventory c) sales figures.
Installation & Repair services.
Multiple-Channel Strategy:
The multiple-channel strategy refers to a situation in which two or more different channels are
employed to distribute goods and services.
Complementary Channels: Complementary channels exist when each channel handles a

different non-competing product or non-competing market segment. An important reason to
promote complementary channels is to reach market segments that cannot otherwise be
served. (Orpat Calculators with Stationery, Orpat Clocks thru Watch shops in the same
place.)
Competitive Channels: Competitive channels exist when the same product is sold through
two different and competing channels. Two franchises could be issued to the same dealer,

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but they are normally issued to separate dealers. Competition between dealers holding
separate franchises is both possible and encouraged. (Amul Ice creams are sold in competing
retail channels)
Channel Modification Strategy: Firm to periodically review and modify its channel
arrangements. Modification becomes necessary when:
The distribution channel is not performing.

Consumer buying patterns change.
The market expands.
New competition arises.
Innovative distribution channels emerge.
The product moves into later stage in the product life cycle.
No marketing channel will remain effective over the whole product life cycle. Early buyers
might be willing to pay for high value-added channels, but later buyers will switch to lowercost channels.
Small office copiers were first sold by manufacturers direct sales forces, later through office
equipment dealers, still later through mass-merchandisers, and now by mail-order firms and
internet marketers.
Introductory stage - Radically new products or fashions tend to enter the market through
specialist channels (such as boutiques) that spot trends and attract early adopters.
Rapid growth stage - As interest grows, higher-volume channels appear (dedicated chains,
department stores) that offer services but not as many as the previous channels.
Maturity stage - As growth slows, some competitors move their product into lower-cost
channels (mass-merchandisers).
Decline stage - As decline begins, even lower-cost channels emerge (mail-order houses, offprice discounters).
Channel Integration: Firms have to build this activity in their Channel ActivitiesBenefits: When
managed properly the synergy at the marketplace provides a high competitive advantage and smooth
flow of information, goods and services
Factors for Integrating Channels:a) Connectivity: ensures real time flow of information on
activities of the channels. b) Community: Ensure a common vision and a shared set of objectives
with the channel members. c) Collaboration: Recognize Mutual interdependence. Promote shared
understanding beyond contractual obligations.
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COMMUNICATIONS MIX STRATEGIES
Modern marketing is more than developing a good product, pricing it attractively, and making it
accessible to target customers.
Companies must communicate with present and potential stakeholders and with the general public.
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Promotional Objectives
Improve long-run performance

o Store-image and positioning
o Public service
Improve short-run performance
o Attract new customers
From existing trade area
Expand trade area
o Increase existing customer patronage
Promotional Strategies
Push Strategies:Companies promote the product to members of the marketing channel, not
to end users.
Pull Strategies:Promote a product by generating consumer demand for it, primarily through
advertising and sales promotion appeals.
Promotional Mix
Combination of Personal and Non-Personal selling techniques designed to achieve

promotional objectives.
o Non-Personal Selling: Advertising, sales promotion, public relations, and
sponsorships.
o Personal Selling: Interpersonal promotional process involving a sellers face-to-face
presentation to a prospective buyer.
Marketing Communications Mix

1. Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or
services by an identified sponsor viaprint media, broadcast media, network media, electronic
media, display media
2. Sales promotion:A variety of short-term incentives to encourage trial or purchase of a
product or service to draw stronger and quicker buyer response, highlight product offers,
boost sagging sales (samples, coupons, cash refund offers, contests, sweepstakes, free trials
etc).
3. Events: Company-sponsored activities and programs designed to create daily or special
brand-related interactions with consumers, including sports, arts, entertainment and cause
events as well as less formal activities (Idea Filmfare awards).
4. Public relations and publicity:Variety of programs directed to promote or protect a
companys image or its individual product communications (Press kits, speeches, seminars,
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annual reports, charitable donations, publications, community relations, company magazine,

advertorials)
5. Direct marketing:Use of mail, telephone, e-mail, or Internet to communicate with or solicit
response or dialogue form specific customers and prospects.
6. Interactive marketing: Online activities and programs designed to engage customers or
prospects and directly or indirectly raise awareness, improve image, or elicit sales of products
and services.
7. Word-of-mouth marketing: People-to-people oral, written, or electronic communications
that relate to the merits or experiences of purchasing or using products or services.
8. Personal selling:Face-to-face interaction with one or more prospective purchasers for the
purpose of making presentations, answering questions, and procuring orders.
Steps in Developing Effective Communications

1.
2.
3.
4.
5.
6.
7.
Identify target audience.

Determine objectives.
Design communications.
Select channels.
Establish budget.
Decide on media mix.
Manage Integrated Marketing Communication (IMC).
Determine Communication Objectives
Category need
Brand awareness
o Brand recall
o Brand recognition
Brand attitude
o Negative oriented (problem removal/avoidance)
o Positively oriented (sensory gratification, social approval)
Brand purchase intention
Designing the Communications
Solving three issues

o What to say (message strategy)
o How to say it (creative strategy)
o Who should say it (message source)

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Selecting Communication Channels
Personal Communications Channels

o Advocate
o Expert
o Social channels
Non-personal (Mass) Communications Channels
Advertising, sales promotions, events, PRs
Communication budget
Affordable method
% of sales method
Competitive-Parity method
Objective and task method
o Market share goal
o Market that should be reached
Covert the aware prospects into triers and then into loyal users.
Deciding Media Mix
Type of product market

o Consumer, business markets
Buyer-readiness stage
Product life-cycle stage
Measuring Communication Results
Recognition or recall of the message

How they feel about the message
Previous and current attitudes toward the product and the company.
Managing the IMC Process
a planning process designed to assure that all brand contacts received by a customer or
prospect for a product, service, or organization are relevant to that person and consistent
over time. (AMA)
A 360-degree view of consumers.
o Fragmenting of mass markets in many minimarkets.
o Proliferation of new types of media.
Growing sophistication of consumers.
Five Ms of Advertising
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Determining Advertising Objectives
Does the advertising aim at immediate sales?

Does the advertising aim at near-term sales?
Does the advertising aim at building a long-range consumer franchise?
Does the advertising aim at helping increase sales?
Does the advertising aim at some specific step that leads to a sale?
How important are supplementary benefits of advertising?
Should the advertising impart information needed to consummate sales and build customer
satisfaction?
Should advertising build confidence and goodwill for the corporation?
What kind of images does the company wish to build?
Media Selection
Type of product market

o Consumer, business markets
Buyer-readiness stage
Product life-cycle stage
Coverage maximum number of consumers in the retailers target market
Reach actual total number of target customers who come into contact with the ad message
Frequency average number of times each person who is reached is exposed to the ad during
a given time period
Sales Promotion
A variety of short-term incentives to encourage trial or purchase of a product or service

including
o consumer promotions
o trade promotions
o business and sales force promotions
To
o draw stronger and quicker buyer response

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o highlight product offers

o boost sagging sales
Events:Company-sponsored activities and programs designed to create daily or special brand-related
interactions with consumers, including sports, arts, entertainment and cause events as well as less
formal activities (Idea Filmfare, Standard Chartered Mumbai Marathon).
Public Relations and Publicity: Variety of programs directed to promote or protect a companys
image or its individual product communications. (Press kits, speeches, seminars, annual reports,
charitable donations, publications, community relations, company magazine, advertorials.)
Direct Marketing: Use of mail, telephone, e-mail, or Internet to communicate with or solicit
response or dialogue form specific customers and prospects.
Interactive Marketing: Online activities and programs designed to engage customers or prospects
and directly or indirectly raise awareness, improve image, or elicit sales of products and services.
o Internet Advertising: A form of marketing and advertising which used the Internet to
deliver promotional messages to consumers. Types: email marketing (directly
marketing a commercial message to a group of people using email), search engine
marketing (involves the promotion of websites by increasing their visibility in search
engine results pagesthrough optimization and advertising), social media marketing
(gaining website traffic/attention through social media sites), display advertising (pop
up, banner), and mobile advertising. Benefits: wide coverage, low cost, easy
measurement of advertising effectiveness which helps in fine-tuning the
communication, wide variety (audio, video) of interactive messages, easier to target a
segment based on their online profile. Concerns: Viewer fatigue, ad blocking
software, spam, click fraud, privacy concerns (tracking cookies).
Word-of-Mouth Marketing: People-to-people oral, written, or electronic communications that
relate to the merits or experiences of purchasing or using products or services.
Personal Selling: Face-to-face interaction with one or more prospective purchasers for the purpose
of making presentations, answering questions, and procuring orders.
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Marketing Strategies at Different Stages of Product Life Cycle (PLC)

Characteristics
Sales
Costs
Introduction
Low sales
High cost/customer

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Growth
Rapidly rising sales.
Average
cost/customer
Maturity
Peak sales.
Low cost/customer
Decline
Declining sales.
Low cost/customer
40
Profits
Customers
Competitors
Negative
Innovators
Few
Rising
Early adopters
Growing
Marketing Objectives
Product
awareness,trial
Maximise market
share market
modification
Strategies
Product
Basic product
Price
Cost-plus
Product flanking
quality, feature, style,
, service, warranty
Penetration
Distribution
Selective
Communication
Awareness, trial
early adopters,
dealers
Intensive coverage,
channels
Preference, loyalty
mass market
High
Middle Majority
Stable, begins to
decline
Maximize profit
while defending share
Declining
Laggards
Declining
Diversify brands,
models
Phase out weak

products
Match/best
competitors
More intensive
Cut price
Brand differences ,
benefits brand
switching
Reduce cost, milk

brand
Selective; phase out

unprofitable
Minimum hard core
loyals
Introduction Stage
Profits negative/low
High promotional expenditure
o To inform potential customers, induce product trial and ensure availability
Market pioneer (inventor, product/market pioneer) - can be rewarding, but risky and
expensive
o Advantages: strong brand recall, establishes brand attributes of product class,
economies of scale, technological leadership, patents and ownership of scarce assets.
o Weaknesses: Crude new products, high product-development costs, lack of resources,
improper positioning, an idea before its time, managerial incompetence or
complacency.
Coming later makes sense with superior technology, quality or brand strength.
Growth Stage
Rapid climb in sales; customer base grows
Profits increase; costs fall due to volumes
New competitors enter market attracted by opportunities.
Price maintained or fall slightly.
Companies maintain/increase promotional expenditures
o To educate market, take on competition
Strategies to sustain rapid market growth
o Add new product feature; improve quality, style.
o Add new models, flanker products, enter new market segments.
o Increase distribution coverage, enter new distribution channels.
o Shift from product-awareness advertising to product- preference advertising.
o Lower prices to attract the next layer of price-sensitive buyers.
o Trade-off between high market share and high current profits.
o Invest in product improvement, promotion and distribution to capture a dominant
position.
o Fortress defense, Flanker brands, Niche strategy
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Maturity Stage
Growth declines. Could be a long stage.
Sales growth rate starts to decline.
Flat sales due to market saturation.
Sales decline, customers begin to switch.
Sales slowdown triggers industry overcapacity, intensifies competition.
Industry consolidation; few dominant firms, many niche players; profits through volumes.
o Key issue: be in the big 3 or niche
Abandon weaker products; concentrate more on more profitable and new products.
Market Modification
o Expand mature brand market by driving sales volume growth (=no. of users x usage
rate/user)
o Expand numbers of brand users
Converting nonusers, entering new market segments, competitors consumers,
convincing current users to increase brand use.
Product Modification
o Modifying product characteristics through quality, feature, style improvement.
o Quality improvement (to increase functional performance/ease of use)
o New features (to expand products performance, versatility, safety, convenience)
o Style improvement (to increase aesthetic appeal)
o Build image as an innovator; loyalty of market segments that value these features.
Strategic choices in Mature Markets
Expand Number of Users
Increase Usage Rates Among Users
Convert nonusers.
Have consumers use the product on more

occasions.
Enter new market segments.
Have consumers use more of the product on

each occasion.
Attract competitors customers.
Have consumers use the product in new ways.
A critical marketing objective for a firm in a mature market is to maintain the loyalty of
existing customers.
To accomplish that goal, firms must pursue improvements in the perceived value those
customers receive from their offerings either by differentiating themselves on the basis of
superior qualityor service, by lowering costs and prices, or both.
Threats and opportunities in a mature market: shifts in customer needs and preferences,
product substitutes, increased raw material costs, change in government regulations, entry of
low-cost producers, M&A
Differentiation of product offering
o Product quality features, performance, durability, brand name, reliability,
serviceability
o Service quality reduce 5 Service Gaps

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Low-cost position (no-frills product, innovative product design, cheaper raw materials,
innovative production processes, low-cost distribution, reductions in overhead)
Strategies for Extending Volume Growth

o Increased penetration strategy
Targeting nonusers
Develop and sell integrated systems that help improve the basic products
performance/ease of use.
Offering services that improve its performance/ease of use for the potential
customer.
Expanding distribution/developing more convenient and accessible channels
o Extended Use Strategy
Increasing frequency of use
Developing new and more varied ways to use the product
o Market Expansion Strategy
New/underdeveloped domestic geographic markets
Identify and develop entirely new customer/application segments
Domestic market expansion through Private Labels for large retailers.
o Global Market Expansion
Firms with leading position in mature domestic markets, less-developed
markets in foreign countries
Decline Stage
Sales decline
o Technology advances; consumer tastes and competition shift.
Over capacity, increase price cuts, profit erosion
o Firms may withdraw from market or reduce number of products offered.
Firms stop, increase or maintain investment.
Drop unprofitable customer groups, strengthen investment in lucrative niches.
Harvest firms investment to recover cash quickly.
Divest the business.
Strategy depends on industry attractiveness and firms competitive strength.
Rejuvenating mature product, often by adding value to original product.
Strategies of Declining Markets
Condition of demand technological advances produce substitutes of higher quality or

lower cost, demographic shifts, change in needs, tastes or lifestyles, cost of
inputs/complementary products
Exit barriers higher exit barrier less attractive market
Intensity of Future Competitive Rivalry size and bargaining power of customers,
switching cost (substitutes, alternative suppliers)
Divestment/Liquidation quick divestment may not be possible if high exit barriers.
Harvesting strategy to generate cash quickly by maximizing cash flow over a relatively
short term
Involves avoiding any additional investment in the business, greatly reducing operating
expenses,
raising prices

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Maintenance strategy firm continues to pursue the same strategy that brought it success
during the markets mature stage. Often results in reduced margins and profit in the short
term.
Niche Strategy may be viable if one/more substantial segments will either remain as stable
pockets of demand/decay slowly.
Extending the Product Life Cycle:
Market Modificationo Increase frequency of use by present customers

o Add new users
o Find new uses
Product Modification
o Change product quality or packaging (CD player > iTune download, Potato Chip
flavours, Digital sound at theatres)
Marketing During Economic Downturn/Recession
Explore the upside and positive payback of an increased investment

o May take advantage of an appealing new product, a weakened rival, development of a
neglected target market
Get Closer to customers
o Fine-tune marketing program and capitalized on new insights.
Review budget allocations
o Closely review how much and in what ways to spend money
Increase and communicate value of the brands offer (financial, logistical, psychological
benefits compared with competition)
Fine-tune brand and product offerings
o Right products to right consumers in the right places and times.
Product Pruning:Discontinuation of a product or brand in response to declining demand or

insufficient financial returns. Product pruning enables the marketer to dedicate its resources to
its best products or brands. The marketer must first evaluate whether a product or marketing mix
modification could revive demand for the ailing product. A product may be pruned gradually by
discontinuing all promotion expenditures and milking the market for any remaining demand.The
declining product may also be sold to a competitor or sold in limited quantities to a market
segment with self-sustaining demand.There is a tendency for product lines to lengthen over time.
Hence a review must be carried out regularly. This review is what is termed as product line
pruning.
Harvesting Strategy: A strategic management decision to reduce the investment in a business
entity (division, product line, product or item) in the hope of cutting costs and/or improving cash
flow.A deliberate decision to cut back expenditure of all kinds on a particular product (usually in
the decline stage of its life cycle) in order to maximize profit from it, even if in doing so it
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continues to lose market share. Harvesting strategy has been popularized by the Boston
Consulting Group in its application to what is termed 'dogs'.
*********************************************************************************
Grand Strategy
Also called Corporate Strategy. Involves analysis of internal and external environment.
Corporate strategy is used to identity: businesses/industries that the company should compete in,
value creation activities that the company should perform in those businesses, method to enter or
leave businesses or industries in order to maximize its long-run profitability.
Types:
1. Stability strategy
2. Growth strategy
3. Retrenchment strategy
4. Combination strategy
Stability strategy
A firm attempts to maintain its status-quo with existing levels of efforts and is satisfied with
incremental growth by marginally changing its business.
Continuing to serve the same customers by offering the same product/service, maintaining
market share, and sustaining the organizations Return on Investment.
Growth strategy
An organization plans to achieve the increased level of objective that is much higher than its
past achievement level.
o To increase profit, sales, or market share.
o To reduce cost/unit.
o To increase in performance objectives.
Because of :
o new entrants in the field.
o higher input cost, obsolescence in plant and machine
o opportunity of Economy of Scale.
o competitive advantage
I. Concentric/Intensive Growth Strategies
Investing resources to expand firms present business.
Doing more what we are already doing and where we are best at doing.
Types:
o Market penetration: existing products existing market through greater marketing
efforts
o Market development: existing product new markets (geography, segment)
o Product development: improved/new products (innovation) - existing market
o

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Ansoffs product-market growth matrix: The purpose of this matrix is to help managers consider
how to grow their business through existing/new products or in existing/new markets which involve
differing degrees of risk.
Existing product
Existing Market penetration
market -increase market share by increasing
use/frequency/quantity; convert nonusers to users (Maruti rural India
penetration, Titan: launch of Sonata,)
New
market
Market development
-new markets, new distribution
channels, new geographic areas (Maruti
export, Titan export, Apple
emerging market)
New product
Product development
-product modification, new features,
different quality levels, new products,
line extensions
(Maruti Ritz, Swift, Titan Edge,
Automatic, Apple iPad)
Diversification
-build, buy (M&A), Ally (JV)
(Maruti Car> Driving Schools, Titan >
Fastrack> Titan Eye+)
II. Vertical Integration Growth Strategy

In addition to present activities, along the line of value addition stages (from raw material
stage to production and ultimately distribution of goods to customers), so as to gain
ownership or increased control and thereby expand the business.
Expanding operations backward into an industry that produces inputs for the company or
forward into an industry that distributes the companys products.
Types:
o Backward integration: Company expands its operations into an industry that produces
inputs to the companys products) e.g. a) manufacturer of detergent bought soda ash
(raw material for detergent) producing company. b) Starbucks has bought coffee bean
producing firms. c) Amul ice-cream has control over its milk supply through dairy
cooperatives.
o Forward integration: Company expands into an industry that uses,
distributes, or sells the companys products. E.g. a) Reliance sells fruits, vegetables
directly procured from farmers through its Reliance Fresh stores. B) Raymonds, a
manufacturer of textiles,sells through its company owned exclusive stores.
II. Horizontal Integration Growth Strategy
It is the process of acquiring or merging with competitors or another company in the same
industry value chain, leading to industry consolidation.
Examples: a) Exxon with Mobile (oil production, refining and distribution)c) Disney merging
with Pixar (movie production) d) Daimler Benz and Chrysler merger (car developing,
manufacturing and retailing)
Benefits:growth of the company in size, reduce competition, achieve economies of scale
(hence lower costs), access new markets, increased product differentiation
Problems: merging different company cultures, in case of hostile takeover high turnover,
overestimating benefits and underestimating problems)
Differences Between Vertical and Horizontal Integrations

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III. Diversification strategy

Entry into a business which is new to an organization
Why?
o Reduce dependency on a single business line.
o In a better position to sustain growth across business cycles.
Factors to judge before diversifying:
o Attractiveness (Porters 5 Forces), synergy, cost of entry etc.
Mode of diversification:
o Acquisition, Joint Venture V, internal new venture (start-up)
Types:
o Related/Concentric Diversification
Diversifying into business whose value chains has strategic fits with the
value chain of the present business.
Any backward (control over inputs) orforward (control over supplier and
distribution)integration.
o Unrelated/Conglomerate Diversification
Into non-core businesses with no strategic fit. Firms pursuing unrelated
diversification are often called as conglomerates.
ITC: tobacco>hotels>paper and packaging>agri-business>non-cigarette
business (packaged foods, personal care, education and stationery, apparel)
Reliance Industries: Petrochemicals and Textiles (core)> Power generation >
Fertilisers >Telecom>Retail
IV. External Growth Strategy
Merger/Amalgamation strategy
When two or more companies combines into one company
Merger through Absorption - combination of two or more companies into an existing
company. All companies except one lose their identity.
o e.g. Tata Fertilisers Ltd by Tata Chemicals Ltd (TCL), Tata Oil Mills Ltd (TOMCO)
by Hindustan Lever Ltd. (HUL)
Merger through Consolidation a combination of two or more companies into a new
company. All companies are dissolved to form a new company.
o e.g. Hindustan Computers Ltd + Hindustan Instruments Ltd + Indian Software Co.
Ltd + Indian Reprographic Ltd = Hindustan Computers Ltd (HCL)
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Why fail? Lack of human itegration. Mismanagement of cultural issues. Lack of

communication. (e.g.Daimler-Chrysler)
Types:
o Horizontal merger: Merger of direct competitors. Goods are substitutes. Lipton India
+Brook bond Brook Bond Lipton Indian Ltd.
o Vertical merger: Merger between two firms at different stages of the production
process. Goods are complements. Involves a customer and a company or a supplier
and company merging (Pixar and Disney)
o Concentricmerger Two firms from different but adjacent industries merge. e.g.
Citigroups acquisition of Travellers Insurance. (both in financial services industry
but different product lines)
o Conglomerate merger Merger of two companies, which do sell any related products
or cater to any related markets.
Pure conglomerate merger firms with nothing in common. (Tata-Sky)
Mixed conglomerate merger firms that are looking for product extensions or
market extensions.
Market-extension merger combination of two companies that sell
same products in different markets. (Dells Alienware Gaming
Laptops)
Product- extension merger Combination of firms that deal in
products that are related to each other and operate in the same market.
Companies which sell different products of a related category. (Blades
and Pencils)
Acquisition/Takeover /Buyout (Co. A + Co. B=Co. A)

Acquiring effective control byone company over assets/management of another company
without any combination of companies.(Tata Steel-Corus)
Takeover A corporate action where an acquiring company makes a bid for a company to be
acquired. If the target company is publicly traded, the acquiring company will make an offer
for the outstanding shares. (Microsoft took over Skype in 2011)
Types
o Friendly takeover acquisition of the target company through negotiations between
the existing promoters and prospective investors.
o Hostile takeover If the board rejects the offer, but the bidder continues to pursue it
or the bidder makes the offer without informing the board beforehand. (HP taking
over COMPAQ)
Strategic Alliance
An agreement for cooperation among two or more independent firms to work together toward
common objectives. (Star Alliance)
Types of Strategic Alliance
o Equity strategic alliance
o Non-equity strategic alliance
o Outsourcing
o Global strategic alliance
o Affiliate marketing (Amazon)
o Technology licensing (contractual arrangement trademarks, IPRs)
o Product licensing
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o
o
o
o
Distributors
R&D
Franchising
Join venture
It means that two or more companies combine to form a new company by
equity participation and sharing of resources like finance, managerial talents,
technology etc., so as to create new entity distinct from its parents(TataStarbucks)
Retrenchment/Renewal Strategies
It is a defensive strategy in which a firm having declining performance decides to improve its
performance through contraction in this activities i.e. reducing the scope of its business by
total or partial withdrawal from present business.
o focusing on functional improvement with special emphasis on cost reduction or
o reducing the number of functions it performs, by being a captive firm or
o reducing the no. of products, markets, customer functions etc. or
o liquidation of business (as a last alternative) or
o combinations of above.
I. Turnaround strategy
It is also known as cutback strategy hold the present business and cut the costs
Actions taken:
o Change in the product mix
o Selling of assets which are not useful for long time or in future also to generate cash.
o Closing down plants & divisions which are not rewarding.
o Replacement of obsolete machinery
o Focus on specific products and customers and improved marketing, etc
II. Divestment Strategy
In divestment strategy the organization decides to get out of certain businesses and sells off
units or divisions.
Actions taken:
o Outright sale of unit to another company for which the divested unit is a strategic fit.
o Leveraged buyout- a companys shareholder are bought out by companys
management and other private investors using borrowed funds
o Spin off i.e. creating a new co. financially and managerially independent one from
parent company and retaining or not retaining partial ownership by distribution of
shares of new company to shareholders of parent company.
III. Liquidation strategy
It is one in which a firm closes down & sells its entire business at a fair price on the basis of
tangible assets, management good will & also intangible assets and invests the realization
somewhere else or distributes among debtors and members when
Taken when
o Business cant be revived and its retaining value is less than its selling.
o Business is in peak form (value, but future is quite uncertain, having no direction,
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o Business has accumulated losses and some other organization offers higher price to
get tax benefits,
o Liquidation value is more than discounted present value of future flow of income etc.
Combination strategy
A combination of different strategies stability, growth, retrenchment in various forms.
Possible combinations of strategies:
o Stability in some businesses and growth in other businesses
o Stability in some businesses and retrenchment in other businesses
o Growth in some businesses and retrenchment in other businesses
o Stability, growth and retrenchment in different businesses
Reasons:
o Different products in different product life cycle
o Business cycle
o When the number of businesses in an organization has gone beyond the optimum
number
Grand Strategy Matrix
***************************************************************************

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Marketing Strategy Overview

Prof. Arijit Bhattacharya

Strategic Management Framework

4As of Marketing (Sheth & Sisodia)

Set strategic corporate goals

Attain marketing goals.

Marketing strategy implementation

Level of Competition: Monopoly (Indian railways), Duopoly (Pepsi-Coke, Boeing-Airbus),

Objectives and implementation Plan

Monthly marketing budget

Identify target customer segments.

Marketing Plan Summary

Back pain segment within the pain segment

Prof. Arijit Bhattacharya

location/country, region, state,city (urban/semi-urban/rural), climate, city

Psychographic needs and motivation, perception, personality, attitude, involvement

Which product for which market?

Measurable total size, purchasing power, segmentation variables

Prof. Arijit Bhattacharya

Actionable effective marketing programs can be designed

Brands mapped together on positioning map compared across parameters.

Prof. Arijit Bhattacharya

Competitive Advantage: A companys ability to perform in one or more ways that

Customer centred firm

Market Structure - Leader, Challenger, Follower, Nicher

Company and Competitor focus

Market Scope Strategy

Multi Market Strategy

Total Market Strategy

-concentrate efforts on single

Market Entry Strategy

-serve several distinct markets

-serve entire spectrum of the

Early Entry Strategy

Laggard Entry Strategy

Market Challengers strategies

Prof. Arijit Bhattacharya

Specialises in small profitable sub-segments (niches), not served by/unattractive to larger

Porters 5 Forces Model (Industry Attractiveness Analysis)

Prof. Arijit Bhattacharya

1) Threat of New Entrants

5) Rivalry Among Existing Competitors

Porters Value Chain

Benchmarking:Process of improving performance by continuously identifying,

Prof. Arijit Bhattacharya

Receiving and warehousing of raw materials.

Porters Generic Business Strategies

Source of competitive advantage Cost Leadership, Differentiation and Focus.

Differentiation strategy is the act of designing a set of meaningful differences to distinguish

Prof. Arijit Bhattacharya

A nine-cell (3 X 3) matrix used to perform business portfolio analysis as a step in the

Prof. Arijit Bhattacharya

Strategy - Ways to achieve competitive advantage (refer Porters generic strategies).

Prof. Arijit Bhattacharya

Skills - Distinctive competencies in the organization (People, Management Practices,

Porters Diamond Model To Study Competitive Advantage of Nations

Factors of production - Inputs need to be in an industry labour, land, natural resources,

Service/benefit customer is really

Set of attributes and conditions

Prof. Arijit Bhattacharya

A hotel guest ins buying rest and

New ways to satisfy customers or

Changing customer needs (Diet Coke, Saffola)