Marketing All

Marketing
Sanjeev Varshney
What is Marketing?
Marketing is an organizational
function and a set of processes for
creating, capturing*,
communicating, and delivering
value to customers and for
managing customer relationships
in ways that benefit the
organization and its stakeholders.
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Central Function to Marketing:
Exchange
At Least Two Parties
Something of Value
Conditions for
Communication and Delivery
Exchange
Freedom to Accept or Reject
Desire to Deal with Other

Party
Exchange
• Exchange may not take place even if

conditions are met.
• An agreement must be reached.
• Marketing occurs even if exchange
does not take place.
Is there an Exchange in Public Services. If Yes/NO can

we apply Principles of Marketing in Marketing Public
Services and Ideas.
Marketing is NOT
Simply about buyers and

sellers exchanging money
for goods and services
Simply about making

a profit
Value
• The fundamental purpose

of marketing is to create
value for both the firm and
customer.
• Value is in essence what
you get for what you give
up.

Customer Value & Benefits
• What is Customer Value

(CV)?
– CV =Benefits – Cost
Product Customer
• What are Customer Benefits Value
Benefits?
Service
Benefits Price &
Other
• Benefits= Functional Costs
Brand
benefits + Emotional Benefits
Benefits
Value Perception Grid
Cycle Time People

Quality
Responsiveness
Products Access Sales officer
QA Delivery Other Customers
Technical
Competency Documentation
Sales
Contact officer
Personnel
Communication Commissioning Other Customers
Courtesy
Credibility Contact Personnel
Courtesy
Value to Customer
Price
Reliability
Project Cost
Guarantees
Cost of Operation
Contractual Safeguards
Cost of Maintenance
Training
Cost of ownership Performance

Value-Based Marketing
• Firms must offer customers something in

excess of that being offered by the
competitors.
• Firms must understand how each aspect
of their product/service creates value for
customers.
Discussion question
What do you think are the key features of
your company’s offering that create value?
How Firms Compete on the Basis of
Value
• Constantly changing
consumers
perceptions
• Firms must
constantly monitor
the marketplace in
order to create value

Becoming Value Driven: Balancing
Benefits and Cost
• Understand key
benefits
• Focus on key
benefits
• Eliminate cost of
less strategic
benefits

The Value Chain
• The market-sensing process

• The new-offering realization process
• The customer acquisition process
• The customer relationship management
process
• The fulfillment management process
Exercise
• From your experience of interaction with various
companies, draw a value map (flow chart) of all
the activities carried out by that company on day
to day basis for effective functioning of the
company.
• Now think of an activity which can be eliminated
without jeopardizing the quality of output and
effectiveness of the entire process. Also think
how this deletion will add value to its consumers.
Time 10 min
Becoming Value Driven: Sharing
Information
Information technology such

as
Customer Relationship
Management (CRM) programs
are increasingly used by
marketers to ensure that data
is transmitted throughout the
firm.

Becoming Value Driven: Building
Relationships With Customers
• Take a long term view of customer relationship

• Provide Customer Satisfaction
• Provide Customer Experience
• Use data to assist in maintaining the relationship

Building Relationships
 Customer-oriented personnel
 Every employee represents the firm in the eyes of
the customer.
 Employee training programs
 Empowered employees
 Employees are given more authority to solve
customer problems on the spot.
 Teamwork
 Emphasizing cooperation over competition
while helping a customer.
Understand Build Empower Customer Engage with

Customer systems Employees Satisfaction the Customer
Expectations
Trust
• Make Promise
• Enable Promise Relationships
• Keep a Promise
18
Crux of Building Relationship in today’s time is
Customer engagement and creating right customer
experience every time (On all touch points)
What do you Need to build right customer

experience & Customer engagement ?
Understanding of Customer Journey Map and

Customer expectations
19
the customer.
 Teamwork
20
Marketing Helps Create Value
Production-oriented era Market-oriented era
Sales-oriented era Societal Marketing

Orientation

Market Orientation
 Focusing on customer wants and needs to
distinguish products from competitors’ offerings
 Integrating all the organization’s activities to

satisfy these wants
 Achieving the organization’s long-term goals by

satisfying customer wants and needs legally and
responsibly
Achieving a Marketing
Orientation
 Obtain information about customers,
competitors, and markets
 Examine the information from a total

business perspective
 Determine how to deliver superior

customer value
 Implement actions to provide value

to customers
Think of your previous company/any other company and then
comment whether company has Market Orientation or not and If yes
why do you feel so and If no why do you feel so ?
Societal Marketing Orientation
An organization exists not only to satisfy customer

wants but also to preserve or enhance individuals’
and society’s long-term best interests.
For example:
• Less toxic products
• More durable products
• Products with reusable or recyclable
materials
Can we have some examples from India. Are Indian

consumers ready for this orientation ?
Marketing’s Core Aspects
Satisfying Customer Needs and Wants
How does a company

address the diverse needs
and wants of consumers for
dental care products?
Exercise 1
• In your groups think of a company and
how has it addressed the diverse needs
and wants of its customers. Needs should
be in similar category.
Time: 5 min
Marketing Requires Product, Price, Place, and
Promotion Decisions
Goods
Services Money
Idea
Product
Time
Energy
Promotion 4P’s Price
Place
3 more P’s for Services Marketing
• People
• Process
• Physical evidence
Why is Marketing Important?
Pervasive
Through out the Enriches
organization Society
Makes Life Easier Importance Can be

and Provides of Marketing Entrepreneurial
Employment
Pervasive Expands Firm’s

Across the Global
Supply Chain Presence

Understanding Consumers
Session 2 & 3
Sanjeev Varshney
Understanding Consumer
Behavior
consumers make
purchase decisions
Consumer
behavior = HOW
consumers use and

dispose of product
Exercise
• Each one of you write a story around a

recent purchase you have made. The
story should have:
– A beginning
– Body
– Ending
– What influenced you etc etc.
Time : 5 min
Note: Please bring this story everyday with you for next
two classes
Type of Product or Service
Specialty Goods/ Services
Shopping Good/Services
Convenience Goods/Services
Types of Buying Decisions

The Consumer Decision Process
Need Recognition
Preferred
Present State
Status
Marketing helps consumers recognize

an imbalance between present status
and preferred state.
2
Need Recognition
Functional needs
Psychological needs

Continuum of Consumer Buying
Decisions
Routine Limited Extensive
Involvement Low Low to High

Moderate
Time Short Short to Long
Moderate
Cost Low Low to High
Moderate
Information Internal Only Mostly Internal Internal and
Search External
Number of One Few Many
Alternatives
Stimulus
Stimulus
Any unit of input affecting

one or more of the five senses:
•sight
•smell
•taste
•touch
•hearing
Search for Information
I know…
• Internal Search for

Information
• External Search for

Information

Factors Affecting Consumers’
Search Process
Perceived Perceived
Benefits Costs
Discussion question
What is the difference in search time between the following: A wedding gift
for a) coworker, b) your brother, c) your best friend?

External
Information Searches
Need Less Need More
Information Information
Less Risk More Risk

More knowledge Less knowledge
More product experience Less product experience
Low level of interest High level of interest
Confidence in decision Lack of confidence
Evaluation of Alternatives: Attribute
Sets
Universal Set
Retrieval Set
Evoked Set
Choice
Actual or Perceived Risk
Financial risk
Performance
risk
Psychological
risk
Evaluation of Alternatives:
Evaluate Criteria
Evaluative
Criteria
Determinant
Attributes
Discussion question
What are some of the features of a vacation that would be in your
evaluative criteria?

Evaluation of Alternatives:
Decision Heuristics
?
Price
Product
Presentation
Brand
Postpurchase:
Customer Satisfaction
Customer contact
Encourage feedback
Provide money back guarantee
Build realistic expectations
Demonstrate correct product use

Cognitive Dissonance
Cognitive
Dissonance
Inner tension that a
consumer experiences
after recognizing an
inconsistency between
behavior and values or
opinions.
Postpurchase: Dissonance
• Firm’s attempt to reduce

dissonance by reinforcing
the decision
• Thank you letters,
congratulations letters,
quality ratings
Discussion question
What other ways do firms
reinforce purchase decisions?

Factors Influencing the Consumer
Decision Process
Social
Factors
Consumer
Situational Marketing Mix
Decision
Factors Elements
Process
Psychological
Factors
Socio-Cultural Factors
• Social Factors
– Reference group
– Family
– Opinion Leaders
• Cultural Factors
Components of Culture
Values
Language
Myths
Customs
Rituals
Laws
Material artifacts
Subculture
Subculture
A homogeneous group
of people who share
elements of the overall
culture as well as cultural
elements unique to their
own group.
Social Class
Social Class
A group of people in a society

who are considered nearly equal
in status or community esteem,
who regularly socialize among
themselves both formally and
informally, and who share
behavioral norms.
Social Class Measurements
Occupation
Income
Education
Wealth
Other Variables
Social Class in India: SEC(Socio-economic class) Classification

• Uses Education level and Occupation for classification in Urban India
• Uses education level and Kind of House in Rural India
The Impact of
Social Class on Marketing
 Indicates which medium to use for

advertising
 Helps determine the best distribution for

products
Social Influences
Reference
Groups
Opinion
Leaders
Family
Members
Influences of
Reference Groups
 They serve as information sources and
influence perceptions.
 They affect an individual’s aspiration levels.
 Their norms either constrain or stimulate

consumer behavior.
Do reference groups exist on Social Media and if Yes, what

role do they play?
The Nature of Reference Group
Influence
• Informational: when an individual uses
behavior and opinions of reference group
members as potentially useful bits of
information
• Normative: when an individual fulfills
group expectations to gain a direct reward
or to avoid a sanction
• Identification: when individuals have
internalized the group’s values and norms
Situations and Influence: Example
Opinion Leaders…
…are the first to try new products

and services out of pure curiosity.
…can be challenging to locate.
Marketers are increasingly using

blogs, social networking, and other
online media to determine and attract
opinion leaders.
How will you identify Opinion Leaders on Social Media

(Twitter, Facebook) ?
Opinion Leaders
• Opinion Leaders:
– Greater Involvement with the product
– Enhanced knowledge and experience with the
product category
– Function primarily through interpersonal
communication & observation
– More gregarious than others
– Expertise & Sociability
• Market Mavens
Social Factors: Family
Decision makers Influencers

Household Influences
on Consumption Decisions
HLC/Occupational Category Matrix
Executive/ Administra Technical/S Crafts Unskilled/m
elite tive/profes ales/Clerical anual
professional sional
Single
Young
married
Full nest I
Full nest II
Empty Nest
I
Empty Nest
II
Single Old
Family
Purchase Process Roles in the Family
• Initiators
• Influencers
• Decision Makers
• Purchasers
• Consumers
Household Decision-Making Process
for Children’s Products
Individual Influences
Personality
Age
Gender Self-Concept
Life Cycle
Lifestyle
Age and Family Life Cycle Stage
• Consumer tastes in food, clothing,

cars, furniture, and recreation are
often age related.
• Marketers define target markets

according to life cycle stages such as
“young singles” or “young married with
children.”
Personality, Self-Concept, and
Lifestyle
• Personality combines psychological

makeup and environmental forces.
• Human behavior depends largely on
self-concept.
• Self-concept combines ideal self-image
and real self-image.
Dimensions of a Consumer’s Self-
Concept
Exercise
• How does a tattoo

affect one’s self-
concept and become
part of one’s extended
self?
• Will one or multiple
visible tattoos become
the norm for younger
consumers over the
next 10 years?
Extended Self
Self + Possessions
 Think of products that explain your self.

 Identify one single product in your
possession which you feel contribute to
yours self concept and has become part of
your extended self.
Interaction of Self-Concept
and Brand Image
Life Style
• How a Person Lives or how one enacts

his or her self concept
• Determined by:
– Past experiences
– Innate experiences
– Current situation
Measurement of Lifestyle
• Can be used as a general
measure, but most
• Lifestyle Studies
commonly used to measure
– Attitudes a specific product or activity.
– Values
– Activities and Interests • General lifestyles can be
– Demographics used to discover new
product opportunities.
– Media Patterns
– Usage Rates • Specific lifestyle analysis
may help reposition existing
brands.
Dimensions of Brand Personality
Psychological Factors

Perception
Selective Consumer notices certain stimuli

Exposure and ignores others
Consumer changes or distorts

Selective
information that conflicts
Distortion
with feelings or beliefs
Consumer remembers only
Selective
that information that
Retention
supports personal beliefs
Marketing Implications
of Perception
 Important attributes
 Price
 Brand names
 Quality and reliability
 Threshold level of perception
 Product or repositioning changes
 Foreign consumer perception
 Subliminal perception
Motivation
Maslow’s
Hierarchy
of Needs
A method of classifying human
needs and motivations into five
categories in ascending order of
importance.
Motivation Theory and Marketing
Strategy
• Discovering Purchase Motives

• Marketing Strategies Based on Multiple
Motives
• Marketing Strategies Based on
Motivation Conflict
Latent and Manifest Motives
Motivation Research Techniques
Write a Story Around this Picture
Story should have a

• Beginning,
• Body and
• An End
Also describe the

characters in your
story.
Most Ads appeal to Multiple Motives
Types of Learning
An experience changes
Experiential
behavior
Not learned through direct

Conceptual
experience
Learning Theories and Involvement
Exercise
• Read these words- Time: 15 sec
– Sholay
– Zanjeer
– Agnipath
– Baghban
– Paa
– Viruddh
– Deewar
– Abhimaan
– Mard
– Cheene kam
• Now try to recall these words: Time: 20 sec
The Psychology of Learning (Tony
Buzan)
• The human brain primarily remembers the following:
– Items from the beginning of the learning period (the
primacy effect)
– Items from the end of the learning period (the recency
effect)
– Any items associated with things or patterns already
stored, or linked to other aspects of what is being learned
– Any items which are emphasized as being in some way
outstanding or unique
– Any items which appeal particularly strongly to any of the
five senses
– Those items which are of particular interest to the person
Increasing Retrieval
• Avoid competing Advertising

• Strengthen Initial Learning
• Reduce Similarity to Competing Ads
• Provide External Retrieval Cues
• Spacing
Memory
• Sensory Meaning
• Semantic Meaning (symbolic associations)
• Episodic Memories
• Schematic Memory
Sensory Short Term Long Term
Memory Memory Memory
Attention Elaborative
Rehearsal
Schematic Memory
Beliefs and Attitudes
An organized pattern of
knowledge that an individual
Belief
holds as true about his or her
world.
A learned tendency to respond

Attitude consistently toward a given
object.
Process of Attitude Formation
Theory of Reasoned Action
• Behavioral Intentions are based on a combination of the
attitude toward a specific behaviour:
– Purchasing a brand
– Social or normative beliefs about the appropriateness
of behaviour
– Motivation to comply with the normative beliefs
Situational Factors

The Nature of Situational Influence
• Communication Situation
– What you hear
• Purchase Situation
– When and Where
• Usage Situation
– How
• Disposition Situation
– What now
Five Classes of Situational Influence
1. Physical surroundings include geographical and

institutional location, decor, sounds, aromas, lighting,
weather, and visible configurations of merchandise or other
material surrounding the stimulus object.
2. Social surroundings considers examples like other
persons present, their characteristics, their apparent roles,
and interpersonal interactions occurring.
3. Temporal perspective may be specified in units
ranging from time of day to seasons of the year.
4. Task definition includes an intent or requirement to
select, shop for, or obtain information about a general or
specific purchase.
5. Antecedent states are momentary moods or
momentary conditions
Variables in Store Choice Behaviour
• Individual characteristics
– Perceived risk (social cost, financial cost, time cost,
efforts cost)
– Shopping orientation (utilitarian/recreational)
• Market characteristics
• Retailer characteristics
– Outlet image
– Retailer brands
– Retail advertising
– Outlet location and size
Summary:
Understanding Consumer Behaviour
• Most decisions a Consumer Make are
emotional and not rational and hence
important to hit his/her emotional mind
• For this it is important to understand why a
consumer wants to buy the product and
hence what will influence him.
• Important to get the consumer insight
• Then create an imagery to sell the product
and create associations
Marketing Strategy
Sanjeev Varshney
Strategic Planning is…
the managerial process of creating
and maintaining a fit between the
organization’s objectives and
resources and the evolving market
opportunities.
The GOAL of strategic planning is long-term

profitability and growth.
1
The Strategic Marketing Planning
Process
Steps in developing the strategic marketing plan

Step 1:
Sustainable Competitive Advantage
Discussion question
What do you think are the keys to
McDonald’s sustainable advantage?

Competitive Advantage
Identify Sources of Competitive advantage
Cost
Types of Product/Service
Competitive Differentiation
Advantage
Niche
Cost Competitive Advantage
 Obtain inexpensive raw materials

 Create efficient scale of plant operations
 Design products for ease of manufacture
 Control overhead costs
 Avoid marginal customers
Sources of Cost Reduction
Experience Curves Product Design
Efficient Labor Reengineering
No-frills Products Production Innovations
New Service
Government Subsidies
Delivery Methods
Examples of Product/Service
Differentiators
 Brand names
 Strong dealer network
 Product reliability
 Image
 Service
Niche Competitive Advantage
 Used by small companies with limited resources
 May be used in a limited geographic market

Sources of Sustainable
Competitive Advantage
Patents
Copyrights
Locations
Equipment
Technology
Skills and
Assets Customer Service
of an
Organization Promotion
Step Two: Conduct a Situation
Analysis Using SWOT
2. Situation Analysis

Step Three: Identifying and Evaluating
Opportunities Using STP
Segmentation
Targeting
Positioning

Step Four: Implement Marketing Mix
and Allocate Resources

Allocating Resources

What Business NTPC is into?
• The company is well on its way to becoming
‘an Integrated Power Major’, having entered
– Hydro Power,
– Coal Mining,
– Power Trading,
– Equipment Manufacturing and
– Power Distribution.
– Ash Utilisation business.
– Power Consulting
Becoming Value Driven: Integrating
The Power Chain
How developing an Integrated chain (Backward & Forward

Integration) is adding value to the customer and to the
company ?
Step Five: Evaluate Performance and
Make Adjustments

Marketing Strategies & Marketing
Profitability
• Net Marketing Contribution:
Average
Market * Market Channel Percent Marketing
* Selling * * -
Demand Share Discount Margin Budget
price
Increase
Growth Grow Lower Increase Improve
Average
Market market Channel Profit Marketing
Selling
Demand Share Costs Margin Efficiency
price
Growth Strategies

Ansoff’s Opportunity Matrix
Market Increase market share among
Penetration existing customers
Market Attract new customers to

Development existing products
Product Create new products for

Development present markets
Introduce new products

Diversification into new markets
Can we have Examples here ?

Portfolio Matrix Strategies
Build
Hold
Harvest
Divest
Portfolio Matrix for a Large Computer
Manufacturer
Market attractiveness
High
Cautiously Invest Invest/Grow Invest/Grow

Medium
Harvest/Divest Cautiously Invest Invest/Grow
Harvest/Divest Harvest/Divest Cautiously Invest

Low
Low Medium High
Business Position 3
Effective Strategic Planning
Identify several
techniques that help
make strategic
planning effective
Techniques for Effective Strategic
Planning
Continual Management
Creativity
attention commitment
Effective
Strategic
Planning
Bridging Gap between Strategic &
Tactical Planning
Strategic Planning
• Strategic Planning for the Total Company
• Strategic Marketing Planning
• Sales Force Strategy
Sales Forecast
• At Corporate level
• Regional Level
• Territory level
Developing Sales Forecast
• Types of sales Forecast
– Product level
– Time Period
– Geographic area
– Channel wise
– Account wise
– Matrix forecasts
Magic Matrix
Product1 Product2 Product3 Spares
T1 T2
Dealer R1
1 R2
R3
Dealer
2
Dealer
3
Total
Factors Influencing the sales Forecast
• Marketing plans
• Conditions within the Industry
• Market Conditions
• General Business Conditions
Develop sales Budget
• Methods for Developing Sales Budget
– Percentage of Sales Method
– Objective & Task Method
• Types of Sales Budget

– The Selling Expense Budget
– The Administrative Budget
Effective Performance
• Match sales Budget with Sales Targets
• This should be futuristic in Nature and not
backward looking
Framework for Marketing Planning
Company Objective Marketing Goal Sales Force Goal
Increase market share Intensify market efforts in a. Enter new geographic
from 8% to 20% in domestic markets to markets and sell to new
two years increase sales volume by customers
300 crore next year b. Cover existing geographic
markets more aggressively
Marketing Strategy Sales force Sales Force Tactics

(Sales Force Goal) strategy
Enter New markets Build long term, 1. Stress missionary selling in sales
customer training and supervision
relations 2. Stress salary element in
compensation plan
Sell aggressively in Increase sales 1. Conduct more sales contests
existing markets force 2. Stress commission feature in pay
motivation plan
3. Increase field supervision
Assignment
• In your groups carry out Marketing planning for
the following problems:
1. Akzonobel (Dulux Paints) wants to increase its
market share from 8% to 12% in 2 years time
2. Coca cola India wants to increase its overall
revenue by 12%
3. Madura fashion & Lifestyle wants to become a
6500 crore company from current 2600 crore
company by 2015.
Market Segmentation &
Positioning
Sanjeev Varshney
What is Segmentation & Why
we have to segment the
market?
Market segmentation is the process of
dividing the total market for a good or
service into several smaller, internally
homogeneous groups.
• Segmentation is necessary because

customers in a market have:
– Differences in buying habits.
– Differences in the way the good or service
is used.
– Different motives for buying.
Market segmentation allows
managers to:
• Visualize their prospective customers in designing

a marketing mix.
• Concentrate their resources on only one or a few
market segments.
Segmentation Targeting
Positioning Process

Step 1: Establish Overall
Strategy or Objectives
Consistent with Derived from mission

mission statement and current state

Some Mission Statements/
Identify Segments they are focusing upon
• Danone Group: The Danone Group believes that economic
progress and social progress go hand in hand. Its mission is to help
people grow, live better and get more out of life by providing them
with better food, a wider variety of flavors and more healthful
pleasures.
• Britannia’s Mission: "Swasth Khao Tan Man Jagao" (Eat Healthy,
Think Better). To re-position directly so as to address this new trend
by promising the new generation a healthy and nutritious alternative
- that is also delightful and tasty.
• Blue Dart Express Ltd: To be the best and set the pace in the
express air and integrated transportation and distribution industry,
with a business and human conscience.
We commit to develop, reward and recognise our people who,
through high quality and professional service, and use of
sophisticated technology, will meet and exceed customer and
stakeholder expectations profitably."
HUL
• We meet everyday needs for nutrition, hygiene and personal care
with brands that help people feel good, look good and get more out
of life.
The four pillars of our vision set out the long term direction for the
company – where we want to go and how we are going to get there:
We work to create a better future every day
– We help people feel good, look good and get more out of life with
brands and services that are good for them and good for others.
– We will inspire people to take small everyday actions that can add up to
a big difference for the world.
– We will develop new ways of doing business with the aim of doubling
the size of our company while reducing our environmental impact.
– We've always believed in the power of our brands to improve the quality
of people’s lives and in doing the right thing. As our business grows, so
do our responsibilities. We recognise that global challenges such as
climate change concern us all. Considering the wider impact of our
actions is embedded in our values and is a fundamental part of who we
are.
Segmentation Strategy

Step 2: Describe Segments
Segmentation Method Sample Segments
Geographic Continents: N America, Asia, Europe,

Africa
Within India: North, west, south etc.
Demographic Age, gender, income, Cohort, household
type
Psychographic VALS (Innovators, thinkers, achievers,
experiencers, believers, strivers, makers
and survivors)
Benefits Convenience, economy, prestige
Geo-demographic Urban, established, sophisticated town
houses, affluent retirees
Loyalty Not loyal, somewhat loyal, completely loyal
Usage Rate Heavy, Moderate & Lower (Praedo’ Law
80/20 principle)
Behavioral Segmentation
Decision Roles Behavioral Variables
• Initiator • Occasions
• Influencer • Benefits
• Decider • User Status
• Buyer • Usage Rate
• User • Buyer-Readiness
• Loyalty Status
• Attitude
Life Style Based Segmentation
• Cosmetic Life Style Segments of UK women
– Self aware: (concerned about appearance, fashion and exercise)
– Fashion directed: concerned about fashion and appearance, not
about exercise and sport
– Green Goddesses: concerned about sport and fitness, less
about appearance
– Unconcerned: neutral attitude to health and appearance
– Conscience-stricken: no time for self-realiaztion, busy with family
responsibilities
– Dowdies: indifferent to fashion, cool on exercise, and dress for
comfort.
Behavioral Segmentation/
Product Basket Analysis
• What is the link between:
– Working men who buy Allen Solly shirts also buy Barbie dolls
– Men who buy premium whisky can be offered: Hot wheel cars as
gifts
Jim Tim Ram Shyam Seema
Goodday Tiger Biscuit Tiger Biscuit Goodday Goodday
Kissan Jam Kissan Jam Kissan jam
Britannia Britannia
cheese cheese
Brown bread White big White bread Brown bread White bread
bread small pack
Diet Coke Coke Diet Coke Coke
Low fat Amul butter Amul Butter Low fat Amul butter
Margarine family pack margarine
Tropicana Tropicana Tropicana Tropicana
Mixed fruit orange juice juice juice
juice
Segmenting for Business Markets
Demographic
Operating Variable
Purchasing Approaches
Situational Factors
Personal
Characteristics
Using Multiple Segmentation
Methods
• Start with One method of segmentation
• Introduce other method at this stage to have
better understanding of the segment
• This can be used to establish better marketing
mix for the group
Example:
Young: 15-35
Urban & Cosmopolitan:
Lets see an Example
Step 3: Evaluate Segment
Attractiveness
Substantial
Reachable
Identifiable
Segment
Attractiveness
Profitable Responsive

Identifiable
• Who is in their market?
• Are the segments unique?
• Does each segment require a unique marketing
mix?
Discussion question
When would these women all be in the same segment? When would
they be in different segments?

Substantial
• Size matters
• Too small and it

is insignificant
• Not profitable

Reachable
Persuasive communication Distribution
What types of Media influence the way you shop

Responsive
Customers must:
• React positively to
firm’s offering
• Move toward the firms
products/services
• Accept the firm’s
value proposition
Discussion question
Nike is very successful at selling sports related goods. Would
consumers accept personal care products from Nike? Why or why not?

Profitable
Segment profitability = Segment size
x Segment adoption percentage
x Purchase behavior
x Profit margin percentage
– Fixed costs,
where
Segment size = Number of people in the segment
Segment adoption percentage = Percentage of customers in the segment
who are likely to adopt the product
Purchase behavior = Purchase price x number of times the customer
would buy the product/service during a given
time period.
Profit margin percentage = ((Selling price – variable costs) ÷ selling price).

Fixed costs = Fixed costs (e.g., advertising expenditure).
Step 4: Selecting a Target Market
Meet Mr. D Shivakumar , marketing
manager for Pepsico India
• Has to choose a new target market
for the firms growth
• Both the consumers class pictured
below are potential
• How does he choose?

Some Other Variables for
Segment Attractiveness
Market Growth Competitive Market Access
Intensity
•Market Size • Number of • Customers

•Growth Rate Companies Familiarity
•Market Potential •Ease of entry •Channel Access
•Substitutes •Company fit
Guidelines in selecting a
target market:
• Target markets should be compatible with the
organization’s goals and images.
• The market opportunity must match the
company’s resources.
• The company should seek markets that will
generate profits.
• Markets should be sought where the number and
size of competitors are minimal.
Target Market Selection
• Single –segment
concentration
• Selective Lets have
examples
specialization for each
• Product specialization one of
• Market specialization them
• Full market coverage

Step 5: Identify and Develop
Positioning Strategy
• Put a Product in a certain position, or
place , in the minds of prospective buyers.
• Positioning strategy is used to distinguish
their firms offerings from those of
competitors
• It is used to create promotions that
communicate the desired position.
Segment Story Boards for
Segment Strategies
Investment Investment Investment
Program A Program B Program C
How to beat inflation Special Help for Safe Investment
and Higher taxes Women with Special solutions that Pay
Money Problems good income
Key Benefits Key Benefits Key Benefits

•Capital appreciation •Growth appreciation •Safety
•Minimal Taxation •Safety •Income
Products: Products: Products:

•Growth Stocks •Growth Mutual •Utility Stocks
•Municipal Bonds Funds •High Grade bonds
•Growth Funds •Blue-chip stocks •High dividend stocks
•High grade bonds
Changing Positioning
Gift Item Sweet
Snack
Kid
Adult/Youth
Each time the positioning is changed the target segment is different. Even the
method of segmentation has changed.
Can you identify story boards for each one of them.
Possible approaches of
Positioning
• Attributes Attributes, India Gate
• Price/ Quality Price/ Quality, Excellence
• Competitors Airtel, Tide, Ariel
• Application Oat Meal ads (Food vs Diet)
• Product User Parker pens
• Product Class BMW “ The Ultimate Driving Machine”
Lets have Examples for each one of them

Positioning Strategy
Salient
Attributes
Positioning
Value Symbols
Strategy
Competition
Lets Review these ads of Airtel
• What is the Value here ?
• What are the salient attributes focused
upon?
• What is the symbol ?
• What is the symbol now?
Symbol
Can be used as
a positioning
tool
What commercial symbol are salient to you? Do you feel positively or

negatively towards these firms based on their commercial symbol
Positioning Strategies
1. Determine consumers’ perceptions and evaluations

of the product or service in relation to competitors’.
2. Identify competitors’ positions.
3. Determine consumer preferences.
4. Select the position.
5. Monitor the positioning strategy.

Perceptual Maps

Assignment
• London Dairy Ice-cream is planning its launch in Indian
market. Carry out segmentation, targeting and
positioning exercise for it.
• DANONE is Launching Yoghurt in Indian market. Carry
out segmentation, targeting and positioning exercise for
it.
• Jyothy Laboratories is launching Safe & Soft mosquito
repellant cream. Carry out segmentation, targeting and
positioning exercise for it.
Collect All Possible Data to substantiate

your strategy
Market &
Marketing Environment Analysis
Sanjeev Varshney
Strategic Planning Process
1. Define the business mission
2. Conduct a situation audit:

Market attractiveness analysis
Competitor analysis
Self-analysis
3. Identify strategic opportunities
4. Evaluate strategic alternatives
5. Establish specific objectives and allocate resources
6. Develop a channel mix to implement strategy
7. Evaluate performance and make adjustments

Market Analysis
MARKET COMPETITIVE ENVIRONMENTAL ANALYSIS OF

FACTORS FACTORS FACTORS STRENGTHS &
WEAKNESSES
Size Barriers to entry Technology Management
Bargaining power of Economic capabilities
Growth
vendors Regulatory Financial resources
Seasonality Locations
Business cycles Competitive rivalry Social
Operations
Threat of superior Merchandise
new formats Store Management
Customer loyalty
A Marketing Environment Analysis Framework

Socio-cultural Factors
Attitudes
Values
Lifestyle
Cultural Norms
Demographic Factors
People are the basis for any market
• Demographic characteristics relate to buyer
behavior
• Demographic cohorts have their own
needs, values, and consumption patterns.
What should you look for:
1. Population growth
2. Population composition
3. Population Distribution
4. Household structure
5. Household/Individual consumption patterns etc
Some of the Data Banks we can Use: NCAER reports, BBDO Data, India
Census
Economic Factors
Consumers’
Income
Purchasing
Power
Inflation
Recession
Income
Distribution
Technological Development :
Research
Pure research that aims to
confirm an existing theory or to
Basic Research learn more about a concept
phenomenon.
An attempt to develop new or

improved products
Applied Research
Technology Acceptance Rate: Diffusion

of Innovation
Political and Legal Factors
Laws and Regulations Protect:
 New technology : Patent Laws

 Society
 Businesses
 Consumers
Some of the Laws You should be concerned about:

1. Competition Bill
2. Food and Regulation Act
3. Rules for FDI
4. Etc.
Competitive Factors
How many competitors?

Control
How big are competitors?
How interdependent is
the industry?
8
Competitive Factors
Competition for Global Competition
Market Share
and Profits • More foreign firms
are entering Indian
market.
• Firms must work
harder to maintain • Foreign firms in
profits and market India now compete
share. on product quality.
8
Case in Point: IKEA
• In your groups carry out Market Environment
Analysis for entry of IKEA in Indian market and
develop your strategy to succeed in the
market.
Time: 20 min
Situation Analysis Using SWOT
2. Situation Analysis

SWOT Analysis : Example of a
Refrigerator company
Variables Remarks Threat/ What needs to Company’s
Opportunity be done ? Internal
Capability
Rules Easy entry Threat as new Lobby with Weakness
regarding player can government to (company
entry of enter change the does not have
foreign players policy the capability)
Interest rates Easy Opportunity- Encash on Strength (can
availability of this enhances Demand utilise
loans at the purchasing unutilized
cheaper rates power of the capacity)
consumers
Status of Acceptance of Oppurtunity Encash on Strength (use
women women taking Demand company’s
up brand image)
employment
Assignment : Carry out SWOT analysis for IKEA coming to
Indian Market
Variables I can use for SWOT analysis
• Politico-legal variables
• Economic variables
• Socio-cultural variables
• Technological variables
• Natural factors
• Infrastructure variables
• Consumer behaviour
• Competition
• Suppliers
• Channel Environment
• Communication environment
Market Potential Analysis & Marketing
Planning
Potential Analysis
• Population figures
– Demographic trends (Age, gender, Literacy, occupation, family size,
product possessions etc.)
• Economic Development trends
– Farm holding
– Cropping patterns
– Infrastructural development
– Market development
• Socio-cultural Changes
– Festivals
– Social structures
• Purchasing Patterns:
– Kind of houses
– Kind of cars
– Household consumer durables
Profiling the Customer
• Profile the customer in terms of following:
– Ability to buy
– Willingness to buy
– Market conditions
Market Potential Vs Sales Potential
Market
Potential
Sales
Potential
Universe
Estimating Market & Sales Potential
• Customer analysis is the starting point
– Who buys the product
– Who uses the product
– What is the profile (demographics, lifestyle etc.)
– What are the buying habits
• Identify the Market Factor
• Survey of Buyer Intention
• Test markets
Demand forecasting entails estimating
sales of a product during some future
time period.
• A sales forecast is an estimate or probable sales for one company’s
brand of the product during a stated time period in a specific market
segment and assuming the use of a predetermined marketing plan.
– It is based on a specific marketing plan.
– It can be expressed in dollars or product units.
– It is best prepared after market potential and sales potential have
been estimated.
– It typically covers a 1-year period.
– Marketing goals and broad strategies must be established before a
sales forecast is made.
– Once it is made, it becomes a key controlling factor in all
operational planning throughout the company.
Predictions of market demand may be based on techniques
ranging from guesses to statistical models.
Common methods include:
• Market-factor analysis—demand for a product is assumed to be related to
the behavior of certain sales activity.
• Survey of buyer intentions—a sample of current or potential customers are
asked how much of a particular product they would buy at a given price
during a specified future time period.
• Test marketing—a firm markets its product in a limited geographic area,
measures sales, and then projects the company’s sales over a larger area.
• Past sales and trend analysis—a flat percentage increase is applied to the
volume achieved last year or to the average volume of the past few years.
• Sales-force composite—a bottom-up method consisting of collecting
estimates of sales for the future period from all salespeople.
• Executive judgment—obtaining opinions regarding future sales volume
from one or more executives.
Market Factor Index
• Example:
Buying Power Index = (5I+2P+3R)/10
I: Percentage of Disposable personal
income in the area
P: Percentage of Indian population in the
area
R: Percentage of Indian retail sales in the
area
Estimating Market Potential: Exercise
• In your groups discuss and come out with
method/s to go about estimating market
potential for following products:
– AC’s (window/split) in Kolkata
– Men formal and casual wear in mid-end category
(Rs. 800-Rs 1500).
Time: 10 min
Product , New Product
Development & Brand
Management
Sanjeev Varshney
Product
Set of tangible
and intangible
attributes May be a good,
service, place,
person, or idea
Want-satisfaction
in the form
of benefits
Product
More Than a Set of Attributes
A Product is
much more than
a set of physical
attributes
Classification of Goods
Consumer Goods
•Shopping Goods
•Convenience goods
•Specialty goods
Business Goods
•Raw material
•Fabricating goods
•Installations
•Accessory equipments
•Operating supplies
Importance of Product Innovation
Requirement
for growth
“Innovate or Die”
High failure rates

No differentiation,
Does not deliver on promise,
Poor value
Innovation and Value
New
products
add value to
the firm
Benefits of
Satisfy the new products
changing Diversify
needs of firm’s risk
consumers

What is a “New” Product?
Really Significantly
innovative different
Imitative
New Product Introductions
• Pioneers or breakthroughs
• First movers

Diffusion of Innovation

Using the Diffusion of
Innovation Theory
Compatibility
Factors
Relative Affecting
Observability
Advantage Product
Diffusion
Trialability

Stages in the New Product
Development Process
Identify
the Business Prototyp
Idea Screenin Commer
strategic Analysis: e Market
role of the
Generati g of cializatio
Concept Develop Tests
new on Ideas n
testing ment
products
•Product uniqueness •Proposed target

•Availability of raw market
material
•Financial
•Product compatibility
•Existing Facilities
Requirements
•Present Capabilities •Technical
requirements
Idea Generation
Internal R&D
Customer R&D
Input Consortia
Sources of Ideas
Brainstorming Licensing
Competitors
Products

Product Development
1. Prototype
2. Alpha testing
3. Beta testing

New Product Marketing Mix
Promotion
Timing New Product Place
Price

Evaluation of Results
Satisfaction of
financial requirements
Satisfaction of
Customer acceptance
technical requirements

Producer’s Criteria
for New Products
Adequate Satisfy key
market financial
demand criteria
Compatible Fit
with company’s
environmental marketing
standards structure
Middleman’s Criteria
for New Products
Good
relationship Compatible
with distribution
producer policies,
practices
Satisfy key
financial
criteria
Organizing for Product
Innovation
TYPES OF ORGANIZATIONS
Product-planning Committee
New-product department or team
Brand manager
SHIFTING ARRANGEMENTS
Product Life Cycle

Stages in the Product Life
Cycle
Introduction Growth Maturity Decline
Sales Low Rising Peak Declining
Profits Negative or Rapidly rising Peak to Declining

Low declining
Typical Innovators Early Late majority Laggards

Consumers Adopters and
early majority
Competitors One or few Few but High no of Low number
(number of increasing competitors of
firms and and competitors
products) competitive and products
products

The Shape of the Product Life
Cycle
Theoretically they
are bell shaped
but in reality they
can take many
shapes.

Extending Product Life Cycle
1. Increasing Frequency of Use
2. Increasing the number of users
3. Finding new uses
4. Changing pack sizes, Labels or product
quality

Strategies Based on the Product
Life Cycle: Some Caveats
1. Managers do not know exactly what
shape each product’s life cycle will take
so there is no way to know precisely
what stage they are in.
2. Misdiagnosing what stage the product is
in can lead to managers falling into a
self-fulfilling prophecy.

Product Positioning, Marketing
effort & Market Share
Product Price Product Sales Physical
Differentiation Breadth force distribution
Retailing &
Market Product Marketing Merchandising
Share = Position X Effort

Customer
support
New Service Brand Media Sales

products Quality image Advertising Promotion
Different Levels of Product Benefits
(Laddering)
Augmented
Expected or Potential Product
Generic or Core product Enhanced or Service
Product or Service or Service Products (True insights)
(Must) (Satisfiers) or Services
(Delights)
The Rings Model of Product/Service Attributes (Levitt)

Product Mix & Line :
Dabur Strategy
Oral Hair Home Food Health Digestives Baby
Care Care Care
Red Dabur Hair Odomos Real Health Hajmola Dabur
Toothpaste Oil Odonil Real supplments Pudin hara Lal Tail
Binaca Vatika Hair Odopic active Natural Hingoli Dabur
Toothebrush oil Sani fresh Coolers Cures Anardana Baby
Lal Dant Vatika Hommad Digestives Olive oil
Manjan Shampoo e Dabur
Babool Anmol Lemone Janma
Meswak Shampoo ez Ghuti
Promise Anmol Hair Capsica
Oil
Colgate-Palmolive Product Assortment

Product Mix Strategies
• Positioning the Product
– In Relation to a Competitor
– By Price and Quality
• Product-Mix Expansion
– Line Extension
– Mix Extension
• Altering of Existing Products
– Product Alteration
– Packaging Alteration
Product Mix Strategies (Con’t.)
 Product-Mix Contraction
– Thinner/Shorter
– Concentration on Fewer Lines
 Trading Up/Trading Down
– Trading up: Adding a higher-priced product to a line to attract a
higher-income market and improve the sales of existing lower-
priced products.
– Trading down: Adding a lower-priced item to a line of prestige
products to encourage purchases from people who cannot afford
the higher-priced product, but want the status.
Why Would a Company want to increase its product mix breadth?

Why would it want to decrease it?
Adopting Product Breadth to Meet
Changing Consumer Demand
How do firms decide which products to add or subtract

from their product mix?
Product Line Substitution Effect
From - To Core Brand Multi-grain Reduced

Fat
Core Brand X 10% 25%
Multi-grain 5% X 20%
Reduced Fat 10% 5% X
Product Line extension add to the

sales & profit of the Product Line
Product Line Scale Effects
• Scaling effect in terms of fixed
manufacturing expenses
• Leveraging fixed Marketing Expenses
associated with sales & distribution
Net Marketing Contribution = Sales Revenue X % GP – Marketing exp
Marketing ROS: Net Marketing Contribution/Sales X 100%
Marketing ROI: Net Marketing Contribution/Marketing expenses X 100%

Or
Marketing ROI = Marketing ROS/Marketing expenses X 100%
Product Scale Effects
Core Flanker Flanker Product Line
Brand Brand 1 Brand 2
Primary Demand
Net Volume
WP/ p.u.
VC/p.u.
Margin/p.u.
TC (Total Contri)
MO (Manf Overhead)
GP (Gross Profit)
FME (Fixed mrk Exp)
VBE (Variable brand exp)
TME (Total Mrk exp)
NMC (Net Mrk Contri)
Marketing ROS (%)
Marketing ROI (%)
"Products are made in the
factory, but brands are created
in the mind."
Walter Landor
What Makes a Brand?
URLs
Brand
name
Logos and
Branding symbols
Jingles
Slogans Characters

Value of Branding for the Customer and
the Marketer

Brands
Reasons for not branding
No promotion
Do not need consistent quality
Product can not be

physically differentiated
Brand Equity
CRM
Brand Programs:
Perceived Are they able
to create
Value Brand
Associations
Brand Brand
Awareness Brand Equity Association
Brand
Loyalty

Measuring Brand Equity
• Brand Audits: Consumer Focused
exercise
• Brand Tracking
• Brand Valuation
Brand Brand
Asset - Liability = Brand
Score Score Equity
Brand Asset Score Card
Brand Rltv Very Below Avera Above Very Brand
assets Imp Low avg ge (50) Avg High Assets
(0) (25) (75) (100) Score
BA 20% X 20
EC 10% X 5
BL 20% X 15
PLE 30% X 15
PP 20% X 10
OBA 100% 65
BA – Brand Awareness
EC- Emotional Connectedness
BL – Brand Loyalty
PLE – Product Line extensions
PP – Price Premium
Brand Liabilities Score Card
Brand Rltv Very Below Avera Above Very Brand
Liabilit Imp Low avg ge (50) Avg High Assets
ies (0) (25) (75) (100) Score
CD 20% X 4
PF 10% X 4
QP 20% X 10
PRSI 30% X 0
NA 20% X 4
OBL 100% 22
CD- Customer Dissatisfaction
PF – Product failures
QP – Questionable Practices
PRSI – Poor Record on Social issues
NA – Negative Associations
Brand Loyalty
• Brand Recognition
• Brand Preference
• Brand Insistence (Luxury Products like
Rolex Watches etc)
Protecting a Brand Name
Product
counterfeiting
Generic usage
Xerox
Branding Strategies
Manufacturer
Brand
or National Generic
Brand
Ownership
Store or
Private
Label

Naming Brands and Product
Lines
Corporate or Brand
Individual
Family Brand Names
Corporate
& Product
Line Brand
Examples for Each

Brand Extension
Name well
established
Boost sales Brand known

of the core Benefits of for high
brand using quality
same brand
name
Synergy Marketing
among costs
the products are lower

Brand Dilution
Evaluate consumer
Evaluate the fit between
perceptions of the
the product class
attributes of the core brand
of the core brand
and seek out extensions
and the extension.
with similar attributes.
Refrain from Is the brand

extending the brand extension distanced
name to too many enough from the
products. core brand?

Brand Repositioning
 New design
 New message
 New faces
 New audience
 New image
 New packaging
 New uses
Identify a Brand that needs repositioning. How would you

reposition the brand

Packaging
• Primary package
• Secondary package
Example: of Packaging that has helped the brand
successful

Packaging Strategies
Packaging the product line
Multiple packaging
Changing the packaging

Using Packaging to Create Value
How can firms use packaging to create value for

customers and the firm?

Pricing
Sanjeev Varshney
Price is a Signal
 Prices can be both

too high and too low
 Price too low may
signal poor quality
 Price set too high
might signal low value

The 5 C’s of Pricing
Customers Costs
Value
Company
Objectives Competition
Channel
Members

1st C: Company Objectives
Profit Achieve a target return — pricing product to achieve a
oriented specified percentage return on sales or investment.
Maximize profits — followed by the most companies
Sales Increase sales volume.

Oriented Maintain or increase market share.
Competitor To discourage more competitors from entering the

Oriented market
Customer Target a market segment of consumers who highly

Oriented value a particular product benefit and set prices
relatively high (referred to as premium pricing)

2nd C: Customers

3rd C: Costs
 Variable Costs
– Vary with production
volume
 Fixed Costs
– Unaffected by production
volume
 Total Cost
– Sum of variable and fixed
costs

4th C: Competition
• Oligopoly
• Monopoly
• Pure

5th C: Channel Members
 Manufacturers, wholesalers and retailers can

have different perspectives on pricing strategies
 Manufactures must protect against gray market
transactions

Pricing Strategies
Pricing
Cost Based Value Based
Strategies
Competition
Based

Value-Based Methods
Setting prices that

focus on the overall
value of the product
Consumer perceptions
Question: How would you estimate

the value of the product ?
Value Thermometer
True Economic Value= Cost of Next Best Alternative + Value of

performance
Differential
Some other Pricing Methods
 Perceived Value Pricing
 Performance based pricing (Conjoint
analysis)
 Life Cycle based Pricing or Value in Use
Pricing
Psychological Factors Affecting Value-
Based Pricing Strategies
Reference
pricing
Psychology Everyday low

Price-quality
pricing pricing
relationship
strategies (EDLP)
Odd prices

The Price-Quality Relationship
Lacking experience,
consumers use price as
an indicator of quality
Products/brands that
consumers have little
knowledge about, price
becomes crucial
Discussion question
Whine ranges in price from under Rs. 200 a
bottle to over Rs. 2000 a bottle. How do you
know which to choose?

Possible Consumer Reference
Price
 “Fair Price” (what consumer feel the product should
cost)
 Typical Price
 Last price paid
 Upper- bound price (reservation price or the
maximum most consumer would pay)
 Lower-bound price (lower threshold price or the
minimum most consumer would pay)
 Historical competitor prices
 Expected future price
 Usual discounted price
New Product Pricing
Price skimming
Penetration Pricing

Market Entry Strategies
 Market-Skimming Pricing - suitable if:
– Product has desirable distinctive features
– Demand is fairly inelastic
– Product is protected from competition
 Market-Penetration Pricing - suitable if:
– A large mass market exists for the product
– Demand is highly elastic
– Economies of scale are possible
– Fierce competition exists or can be expected
soon
Pricing Tactics
Pricing strategy Pricing tactics

Business to Business Pricing Tactics
and Discounts
Seasonal Cash
Discounts Discounts
Pricing Tactics &

Discounts
Uniform
Delivered Allowances
vs.
Zone Pricing
Quantity
Discounts

Pricing Tactics Aimed at Consumers
Price
lining
Pricing Tactics
for
Consumers
Leader Price
pricing bundling

Consumer Price Reductions
Markdowns
Coupons Consumer Price Quantity

and rebates Reductions discounts for
consumers
Seasonal
discounts

SELECT PRICING OBJECTIVE
SELECT METHOD OF DETERMINING THE BASE PRICE:
Cost-plus Price based on Price set in

pricing both demand relation to
and costs market alone
DESIGN APPROPRIATE STRATEGIES:
Price vs. nonprice Freight payments Leader pricing

competition One price vs. Everyday low vs.
Skimming vs. flexible price high-low pricing
penetration Psychological pricing Resale price
Discounts and allowances maintenance
Distribution & Sales force
Management
Sanjeev Varshney
Go-to-Market Strategy
• A game plan for reaching and serving the right
customers in the right markets, through the right
channel, with the right products and the right value
proposition.
Purpose is to create a powerful, winning total
customer experience that will:
• Attract, win and retain the most desirable customers
• While driving high sales and market share growth
• At the lowest possible cost
Ingredients of a Winning GO-
TO-MARKET Strategy
• Selection of right market
• Understand your customer (customer
insight)
• Selection of right Channel
• Right product with right value proposition
Overall-An Integrated Multi-Channel Model

Ten-Commandments of Go-to-
Market Strategy
• Start with customer
• Aggressive use of low cost channels will have a dramatic impact on
profits
• How you sell has to fit with what you are selling
• There is always a tradeoff between market coverage and control
• Not every go-to-market strategy has an E in it
• Getting channel cooperation is more important than preventing
channel conflict.
• You cannot be everywhere at all times for every customer
• The business model has to be sound for a go-to-market strategy to
succeed
• It takes time for new channels to become productive. Patience is
necessary
• To win big a go-to-market strategy has to be innovative and different
Channel Members
• Distributors or Stockists
• Carrying & Forwarding agent
• Wholesalers
• Dealers/Retailers
• Brokers
Classification of Channel Members
Title of Goods Titles of Goods Not

Transferred Transferred
Redistributors Distributors Carrying & Forwarding

Agent
Selling to End Retailer Agent

Consumers
Why do we need Distribution
Channels ?
Demand Side Supply Side

Channel
Factors Factors
Role of the Marketing Channel
(manufacturers viewpoint)
• Offers manpower and physical facilities
• Provides personal selling, advertising and
display to aid in selling
• Interprets consumer demand and transfers this
information back
• Breaks the bulk
• Offers storage
• Shares risk of the manufacturer
• Information provider of all other sought
Role of Channel (consumers view
point)
• Product decision
• Brand decision
– Consideration set formation
– Information search
– Evaluation of alternatives
• Purchase
– Form utility
– Time utility
– Place utility
– Possession utility
Functions to be performed
• Prospecting
• Promoting
• Bulk breaking & assortment
• Service
• Feedback
Information Flows

Consumer Decision Process & the
Role of Channel
Decision Process The role the channel can play
Picking/Impulse Displaying the brand ensuring visibility
Variety seeking Brand enters the consideration set through the

process of recognition (merchandising & display)
Habit Supplement the buyers evaluation through testimonial

based POP advertising
Sub-contracting Increase the credibility by acquiring technical skills
Extended problem Brand enters the consideration set and also help in
solving information search and evaluation by increasing the
credibility by acquiring technical knowledge
Framework for Designing the
Channel Objective
Variables Dimensions of the Channel
Objective, which is likely to be
influenced
Consumer Role of the channel in decision
making
Positioning Type of outlet
Company norms Minimum standards
Market orientation Middlemen service norms (push

vs pull)
Exercise
• A company is planning to launch a new
product. There are no substitutes available in
the market. What should be the distribution
objective
• A company is entering into a already crowded
market but with some enhanced features. What
should be the distribution objective
• A company is entering into a product which is in
growth stage. Company has developed a new
cheaper production technology than the
competitor and thereby plans to launch the
product at a price lower than the competitor.
What should be the distribution objective.
Designing a Distribution Channel
WELL-
DESIGNED
DISTRIBUTION
Specify CHANNEL
Select Determine
the role of Choose
type of appropriate
distribution specific
distribu- intensity
within the channel
tion of distri-
marketing members
channel bution
mix
Process of Identifying the Distribution
Objective
• What is the corporate objective
• What is the Marketing Objective
• What is the Brand Positioning
• What is the sales objective
• What is the distribution objective
Examples:
HUL
of life.
are.
Framework for Channel Design
& Implementation
Channel Implementation
Channel Design Process:
Process:
Channel
Segmentation: Channel
Power: Identify
Recognise and respond to target Conflict: Identify
sources for all
customers service output actual and
channel
demands potential sources
members
Channel Structure: What, who

and how many of them?
Degree of Commitment:
Manage/ Defuse Conflict:
Distribution alliance? &
Ownership ?
Gap analysis: What to change? Goal: Channel Coordination

Major Channels of
Distribution
• For distribution of consumer goods, five different
types of channels are widely used.
• Business goods are normally distributed through
four major types of channels.
• There are only two common channels of
distribution for services.
• Some producers are not content to use only a
single distribution channel and use multiple
channels.
• Multiple channels can aggravate middlemen
and cause conflicts in the channels.
Multiple Distribution
Channels
• Some firms choose to use two or more
channels of distribution
• They are used when:
– the same product is sold to business &
consumer markets
– the producer has unrelated products
– the buyers are of different sizes
– geographic concentration differs across parts
of the market
Factors Affecting Choice of
Channels
• Market Considerations
– Type of market
– Number of potential customers
– Geographic concentration of the market
– Order size
• Product Considerations
– Unit Value
– Perishability
– Technical nature
Channels (Con’t.)
• Middlemen Considerations
– Services provided by middlemen
– Availability of desired middlemen
– Producer’s and middleman’s policies
• Company Considerations
– Desire for channel control
– Services provided by seller
– Ability of management
– Financial resources
Marketing Channels &
Customer Value
• Product benefits (Quality, assortment &
form)
• Service Benefits (after sales service,
availability & delivery, transaction
services)
• Image benefits
• Company benefits
• Cost efficiency
• Competitive advantage
Determining Intensity of
Distribution
• A firm must decide on the appropriate
intensity of distribution for its product.
• Intensity is actually a continuum, but three
categories are normally used:
– Intensive
– Selective
– Exclusive
Conflict and Control in
Channels
• Channel conflict exists when one channel
member perceives another to be acting in
a way that prevents the first member from
achieving its distribution objectives.
– Horizontal Conflict
• Middlemen of the same type
• Different types of middlemen on the same level
– Vertical Conflict
• Producer versus wholesaler
• Producer versus retailer
Who Controls Channels?
• Sources of power in distribution channels

– Expertise
– Rewards
– Sanctions
• A channel viewed as a partnership
– Collaborative planning
– Relationship marketing
Some of the criteria's to appraise
Channel members
• Sales Performance (against targets)
• Servicing
• Financial Discipline
• Inventory Maintenance (no more a very
imp criteria)
• Personal Commitment & involvement
• Adherence to norms (infrastructure and
people) and reporting structure
Channel Evaluation: Concept
• Includes both
– Financial Performance measures
– Contribution to consumers demand
Dimensions of channel
performance measures
• Effectiveness
– Delivery (how the channel meet demands)
– Stimulation (how well it stimulates latent demand)
• Efficiency
– Productivity (measure of physical efficiency)
– Profitability (measure of financial efficiency)
• Equity
– Service to problem ridden market or disadvantged
market
Profitability Analysis
NMC =
Volume X [ End user price X (1-%channel
cost)-COG]-Marketing Expenses
• Direct channels have higher margin per

unit but incurred higher marketing
expenses
• Indirect channels have a lower margin per
unit but lower marketing expenses
Supply Chain Management
Affects Marketing
• Fulfilling delivery
promises
• Meeting customer
expectations
• Reliant on an
efficient supply
chain

Sales Management
Scope of Sales Management
• Personal Selling (industrial as well direct)
• Channel Sales Force management
Roles of a Sales Manager
• Playing a strategic role
• Working as a member of the corporate team
• Working as a Team Leader
• A supervisor and a motivator
• Managing multiple sales channels
• Build Buyer-seller relationships through technology
• Managing Information
Role of Sales Force
Sales Force
Brand
Management
Retailer
Shopper Consumer
(one who involves (one who identifies
in the act of the need
purchase and
buys
and decides
about the product)
Shopper may or may not consume the product

Emerging Trends in Sales Management
• Global Perspective
• Technology Revolution
• CRM
• Sales force Diversity
• Team selling approach
• Managing Multi-channels
• Partner Relationship Management
• Ethical and social issues
• Data analytics
• Sales Professionalism
Need for Change
• Increase the base of the customer and
build relationships
• Tap the Potential of the sales person
• Improve the level of engagement of the
sales person
Operational Decisions in Sales
Management
• Sales Force Recruitment
• Territory Design
• Target Setting
• Sales force Motivation
• Managing the Channel
• Performance Evaluation and designing the career
path
• Training and developing the sales force
Personal Selling as Promotion
Flexible Goal is
sale
Focused Costly
Difficult to
Minimize
attract quality
waste
people
Personal Selling and Marketing
Strategy
• Can customize the message
for a specific buyer
• Assists in creating strong
supply chain relationships
• Increased customer loyalty
through relationship selling
• Gather research input from
customers
• Crucial to the success of
CRM
When Personal Selling is Used
PRODUCT
MARKET Value not apparent
High unit cost
Concentrated:
Technical
Geographically
Requires demonstration
In few industries Fitted to customer’s need
In several Introductory stage
large customers of the Product Life Cycle

The Value Added by Personal
Selling
Salespeople educate and

provide advice
Salespeople save time

and simplify buying

Changing Patterns in Personal
Selling
Selling Systems
Centers Selling
Global
Sales Teams
Selling
Relationship
Selling Telemarketing
Internet
Automation
Selling
Aligning the Personal Selling Process
with the B2B Buying Process

Staffing and Operating a Sales
Force
Recruitment & Selection
Market
Potential Assimilation
Estimation
Training
Work Load
Analysis Motivation
Compensation
Man Power
Supervision
Planning
Performance Evaluation
Recruiting and Selecting
Salespeople
• Personality
• Optimism
• Resilience
• Self-motivation
• Empathy

Sales Training
• All sales people benefit
from training about:
– Selling and negotiation
techniques
– Products and service
knowledge
– Technologies used in
the selling process
– Time and territory
management
– Company policies and
procedures
Motivating and Compensating
Salespeople
Financial rewards Nonfinancial rewards

PLC & Compensation
• Introduction: A large fixed salary plus large
variable component
• Growth: A large fixed salary plus small
variable component
• Maturity: A small fixed salary plus large
variable component
• Decline: A large fixed component plus very
large variable component
Discuss the Issues

Evaluating Salespeople
• Tied to the
reward structure
• Evaluation
measures can
be either
objective or
subjective

Some of the Common Evaluation
Criteria
• Quantitative
– Sales volume
– Debtors control
– Territory development
• New outlets
• Length and breadth of goods in each outlet
– Promotion/ Publicity
– Market Feedback
• Qualitative
– Adherence to company norms, reporting etc.
– Relationship with dealers
– Innovativeness, sincerity and diligence
Framework for Identifying the Evaluation
Criteria
Market Search Experience Credence

Condition attributes (eg: attributes (eg: attributes (eg:
(Product Life non durables) durables) Services)
Cycle)
Introductory Displays Demonstration Trials, and
organised number of calls
Growth Phase New retail outlets New service Number of calls

(Low opened and Sales outlets
competition)
Maturity phase Market share Sales Customer base

(high
competition)
Distribution & Sales force
Management
Sanjeev Varshney
Go-to-Market Strategy
• A game plan for reaching and serving the right
customers in the right markets, through the right
channel, with the right products and the right value
proposition.
Purpose is to create a powerful, winning total
customer experience that will:
• Attract, win and retain the most desirable customers
• While driving high sales and market share growth
• At the lowest possible cost
Ingredients of a Winning GO-
TO-MARKET Strategy
• Selection of right market
• Understand your customer (customer
insight)
• Selection of right Channel
• Right product with right value proposition
Overall-An Integrated Multi-Channel Model

Ten-Commandments of Go-to-
Market Strategy
• Start with customer
• Aggressive use of low cost channels will have a dramatic impact on
profits
• How you sell has to fit with what you are selling
• There is always a tradeoff between market coverage and control
• Not every go-to-market strategy has an E in it
• Getting channel cooperation is more important than preventing
channel conflict.
• You cannot be everywhere at all times for every customer
• The business model has to be sound for a go-to-market strategy to
succeed
• It takes time for new channels to become productive. Patience is
necessary
• To win big a go-to-market strategy has to be innovative and different
Channel Members
• Distributors or Stockists
• Carrying & Forwarding agent
• Wholesalers
• Dealers/Retailers
• Brokers
Classification of Channel Members
Title of Goods Titles of Goods Not

Transferred Transferred
Redistributors Distributors Carrying & Forwarding

Agent
Selling to End Retailer Agent

Consumers
Why do we need Distribution
Channels ?
Demand Side Supply Side

Channel
Factors Factors
Role of the Marketing Channel
(manufacturers viewpoint)
• Offers manpower and physical facilities
• Provides personal selling, advertising and
display to aid in selling
• Interprets consumer demand and transfers this
information back
• Breaks the bulk
• Offers storage
• Shares risk of the manufacturer
• Information provider of all other sought
Role of Channel (consumers view
point)
• Product decision
• Brand decision
– Consideration set formation
– Information search
– Evaluation of alternatives
• Purchase
– Form utility
– Time utility
– Place utility
– Possession utility
Functions to be performed
• Prospecting
• Promoting
• Bulk breaking & assortment
• Service
• Feedback
Information Flows

Consumer Decision Process & the
Role of Channel
Decision Process The role the channel can play
Picking/Impulse Displaying the brand ensuring visibility
Variety seeking Brand enters the consideration set through the

process of recognition (merchandising & display)
Habit Supplement the buyers evaluation through testimonial

based POP advertising
Sub-contracting Increase the credibility by acquiring technical skills
Extended problem Brand enters the consideration set and also help in
solving information search and evaluation by increasing the
credibility by acquiring technical knowledge
Framework for Designing the
Channel Objective
Variables Dimensions of the Channel
Objective, which is likely to be
influenced
Consumer Role of the channel in decision
making
Positioning Type of outlet
Company norms Minimum standards
Market orientation Middlemen service norms (push

vs pull)
Exercise
• A company is planning to launch a new
product. There are no substitutes available in
the market. What should be the distribution
objective
• A company is entering into a already crowded
market but with some enhanced features. What
should be the distribution objective
• A company is entering into a product which is in
growth stage. Company has developed a new
cheaper production technology than the
competitor and thereby plans to launch the
product at a price lower than the competitor.
What should be the distribution objective.
Designing a Distribution Channel
WELL-
DESIGNED
DISTRIBUTION
Specify CHANNEL
Select Determine
the role of Choose
type of appropriate
distribution specific
distribu- intensity
within the channel
tion of distri-
marketing members
channel bution
mix
Process of Identifying the Distribution
Objective
• What is the corporate objective
• What is the Marketing Objective
• What is the Brand Positioning
• What is the sales objective
• What is the distribution objective
Examples:
HUL
of life.
are.
Framework for Channel Design
& Implementation
Channel Implementation
Channel Design Process:
Process:
Channel
Segmentation: Channel
Power: Identify
Recognise and respond to target Conflict: Identify
sources for all
customers service output actual and
channel
demands potential sources
members
Channel Structure: What, who

and how many of them?
Degree of Commitment:
Manage/ Defuse Conflict:
Distribution alliance? &
Ownership ?
Gap analysis: What to change? Goal: Channel Coordination

Major Channels of
Distribution
• For distribution of consumer goods, five different
types of channels are widely used.
• Business goods are normally distributed through
four major types of channels.
• There are only two common channels of
distribution for services.
• Some producers are not content to use only a
single distribution channel and use multiple
channels.
• Multiple channels can aggravate middlemen
and cause conflicts in the channels.
Multiple Distribution
Channels
• Some firms choose to use two or more
channels of distribution
• They are used when:
– the same product is sold to business &
consumer markets
– the producer has unrelated products
– the buyers are of different sizes
– geographic concentration differs across parts
of the market
Channels
• Market Considerations
– Type of market
– Number of potential customers
– Geographic concentration of the market
– Order size
• Product Considerations
– Unit Value
– Perishability
– Technical nature
Channels (Con’t.)
• Middlemen Considerations
– Services provided by middlemen
– Availability of desired middlemen
– Producer’s and middleman’s policies
• Company Considerations
– Desire for channel control
– Services provided by seller
– Ability of management
– Financial resources
Marketing Channels &
Customer Value
• Product benefits (Quality, assortment &
form)
• Service Benefits (after sales service,
availability & delivery, transaction
services)
• Image benefits
• Company benefits
• Cost efficiency
• Competitive advantage
Determining Intensity of
Distribution
• A firm must decide on the appropriate
intensity of distribution for its product.
• Intensity is actually a continuum, but three
categories are normally used:
– Intensive
– Selective
– Exclusive
Conflict and Control in
Channels
• Channel conflict exists when one channel
member perceives another to be acting in
a way that prevents the first member from
achieving its distribution objectives.
– Horizontal Conflict
• Middlemen of the same type
• Different types of middlemen on the same level
– Vertical Conflict
• Producer versus wholesaler
• Producer versus retailer
Who Controls Channels?
• Sources of power in distribution channels

– Expertise
– Rewards
– Sanctions
• A channel viewed as a partnership
– Collaborative planning
– Relationship marketing
Some of the criteria's to appraise
Channel members
• Sales Performance (against targets)
• Servicing
• Financial Discipline
• Inventory Maintenance (no more a very
imp criteria)
• Personal Commitment & involvement
• Adherence to norms (infrastructure and
people) and reporting structure
Channel Evaluation: Concept
• Includes both
– Financial Performance measures
– Contribution to consumers demand
Dimensions of channel
performance measures
• Effectiveness
– Delivery (how the channel meet demands)
– Stimulation (how well it stimulates latent demand)
• Efficiency
– Productivity (measure of physical efficiency)
– Profitability (measure of financial efficiency)
• Equity
– Service to problem ridden market or disadvantged
market
Profitability Analysis
NMC =
Volume X [ End user price X (1-%channel
cost)-COG]-Marketing Expenses
• Direct channels have higher margin per

unit but incurred higher marketing
expenses
• Indirect channels have a lower margin per
unit but lower marketing expenses
Supply Chain Management
Affects Marketing
• Fulfilling delivery
promises
• Meeting customer
expectations
• Reliant on an
efficient supply
chain

Sales Management
Scope of Sales Management
• Personal Selling (industrial as well direct)
• Channel Sales Force management
Roles of a Sales Manager
• Playing a strategic role
• Working as a member of the corporate team
• Working as a Team Leader
• A supervisor and a motivator
• Managing multiple sales channels
• Build Buyer-seller relationships through technology
• Managing Information
Role of Sales Force
Sales Force
Brand
Management
Retailer
Shopper Consumer
(one who involves (one who identifies
in the act of the need
purchase and
buys
and decides
about the product)
Shopper may or may not consume the product

Emerging Trends in Sales Management
• Global Perspective
• Technology Revolution
• CRM
• Sales force Diversity
• Team selling approach
• Managing Multi-channels
• Partner Relationship Management
• Ethical and social issues
• Data analytics
• Sales Professionalism
Need for Change
• Increase the base of the customer and
build relationships
• Tap the Potential of the sales person
• Improve the level of engagement of the
sales person
Operational Decisions in Sales
Management
• Sales Force Recruitment
• Territory Design
• Target Setting
• Sales force Motivation
• Managing the Channel
• Performance Evaluation and designing the career
path
• Training and developing the sales force
Personal Selling as Promotion
Flexible Goal is
sale
Focused Costly
Difficult to
Minimize
attract quality
waste
people
Personal Selling and Marketing
Strategy
• Can customize the message
for a specific buyer
• Assists in creating strong
supply chain relationships
• Increased customer loyalty
through relationship selling
• Gather research input from
customers
• Crucial to the success of
CRM
When Personal Selling is Used
PRODUCT
MARKET Value not apparent
High unit cost
Concentrated:
Technical
Geographically
Requires demonstration
In few industries Fitted to customer’s need
In several Introductory stage
large customers of the Product Life Cycle

The Value Added by Personal
Selling
Salespeople educate and

provide advice
Salespeople save time

and simplify buying

Selling
Selling Systems
Centers Selling
Global
Sales Teams
Selling
Relationship
Selling Telemarketing
Internet
Automation
Selling
Aligning the Personal Selling Process
with the B2B Buying Process

Staffing and Operating a Sales
Force
Recruitment & Selection
Market
Potential Assimilation
Estimation
Training
Work Load
Analysis Motivation
Compensation
Man Power
Supervision
Planning
Performance Evaluation
Recruiting and Selecting
Salespeople
• Personality
• Optimism
• Resilience
• Self-motivation
• Empathy

Sales Training
• All sales people benefit
from training about:
techniques
knowledge
– Technologies used in
the selling process
management
procedures
Salespeople

PLC & Compensation
variable component
• Growth: A large fixed salary plus small
variable component
variable component
Discuss the Issues

• Tied to the
reward structure
• Evaluation
measures can
be either
objective or
subjective

Some of the Common Evaluation
Criteria
• Quantitative
– Sales volume
– Debtors control
• New outlets
– Market Feedback
• Qualitative
Criteria

Cycle)

competition)

(high
competition)
Integrated Marketing
Communications
Sanjeev Varshney
Balbir Pasha Campaign
Campaign Roll Out
Creation of an Icon
Creating a Buzz
Response to the Campaign
Indicators to Success
• Increased risk perception among those
exposed to the campaign (17%-43%)
• Increased Tendency to discuss HIV/AIDS
with others (50% discussed)
• Increase in number of people accessing
HIV/AIDS prevention products and
services (retail sales tripled and so does
no of calls of helpline no’s, increase in
usage last time)
Why was Balbir Pasha
Campaign Successful?
• Consumer Insight
• Building of intrigue
• Optimal media mix
• Link with the on-ground activities
• Infiltration into popular Culture
• Hard hitting messages
Balbir Pasha Campaign
• Principle of the Campaign:
– Targeting
– Integration
– Information
• Campaign Objectives
– Attitudinal Change
– Changing Social Norms
– Behavioral Change
Promotion and Marketing
Promotion is the element in an organization’s marketing
mix that serves to inform, persuade, and remind the
market regarding the organization and/or its products.
– It includes all the means by which a company communicates
directly with potential customers.
– It is an attempt to influence feelings, beliefs, or behavior.
– It is an attempt to shift the demand curve for a firm’s goods or
services
Shifting Demand for a Product
Demand goal Demand goal

with promotion with promotion
Price
Price
Demand Demand
without without
promotion promotion
Quantity Quantity
b. Changing the shape
a. A shift in the demand
(or elasticity)
curve to the right.
of the demand curve.
The Promotional Campaign
• A campaign theme is the promotional
appeal dressed up in a distinctive,
attention-getting form that expresses the
product’s benefits.
• The promotional elements are coordinated
in a strategy called integrated marketing
communications.
• A complete campaign includes the
evaluation of results against objectives.
Communication
• Integrated Marketing Communication
(IMC) is a strategic business process used
to plan, develop, execute and evaluate
coordinated communication with an
organization’s publics.
• The IMC approach takes an audience
perspective when planning and
coordinating the organization’s
communication activities
Communications
Communication channel
Elements of the IMC
• Awareness of target audience’s information sources.
• Understanding of what the audience knows and believes
that relates to the desired response.
• Use of a mix of promotional tools, each with specific
objectives, linked to a common goal.
• Coordinating personal selling, advertising, sales
promotion, and public relations to communicate
continuous flow of information.
The AIDA Model
Objectives of IMC
• Provide Information
• Increase Demand
• Differentiate the product
• Accentuate the Products value
• Stabilize sales
Lets have examples for each

Lagged Effect
• Advertising does not

always have an
immediate impact
• Multiple exposures
are often necessary
• It is difficult to
determine which
exposure led to
purchase
Promotion Methods
• Personal selling: The direct presentation of a product to a prospective
customer by a representative of the selling organization.
• Advertising: A paid-for type of impersonal mass communication in
which the sponsor is clearly identified.
• Sales promotion: Demand-stimulating activity designed to supplement
advertising and facilitate personal selling.
• Public relations: A planned communication effort by an organization to
contribute to generally favorable attitudes and opinions toward an
organization and its products.
• Publicity: A special form of public relations that involves news stories
about an organization or its products.
• Guerilla Marketing: Uses unconventional, innovative, and low cost
techniques to attract consumers attention
• Social media : A B2c as well as C2C form of promotion using tings like
Facebook, Instagram, twitter, Pinterest etc.
• Online media: digital marketing using website, banners, content
marketing etc.
Electronic Media
Corporate blogs
Online games
Text messaging

Designing the Promotional
Mix
When designing the promotional mix, five things should be
considered:
• The Target Audience
– Push vs. Pull strategies
• The Promotional Objective
– Hierarchy of Effects
• The Nature of the Product
– Unit value, Customization, Pre/Post-sale service
• Stage in the Product’s Life Cycle
• Funds Available for Promotion
Marketing Communications
& Customer Response Action
(90%)
Index Intentions
(68%)
16%
Comprehend NA (10%)
(77%) 2%
Awareness No Intentions (32%)
(54%) 8%
Exposure Do not Comprehend (37%)

8%
(63%)
No awareness of exposure (23%)

29%
No exposure (37%)
37%
Customer Response Index (CRI) = (% Exposed) X (% Aware) X

(%Comprehend) X (% Not Interested)
Push & Pull
Promotional Strategies
PUSH STRATEGY
Producer Wholesaler Retailer Consumer
PULL STRATEGY
Producer Wholesaler Retailer Consumer
Product Promotion effort

flow
Push-Pull Communications &
Customer Response
Customer Response
Customer Pull Customer Push
Customer Customer Market Distributor

Preference: loyalty: Coverage: push:
•Awareness •Commitment •Availability •Merchandising
•Attraction •Effectiveness •Stockouts •Marketing
effort
Customer Pull Customer Push

Communications Communications
Communications Mix
The Promotion Budget
There are four common approaches to
promotion budgeting:
• Percent of Sales
• All Available Funds
• Following the Competition
• By Task or Objective
Measuring Success
Frequency
Reach
Gross rating points

Online Measurements
Web tracking
software
Online couponing
Online referring

What is Advertising?
• Advertising includes all activities involved in

presenting to a group a nonpersonal, sponsor-
identified, paid-for message about a product or
organization.
• Expenditures on personal selling surpass

advertising expenditures at manufacturer,
wholesale, and retail levels.
Types of Advertising
• Consumer and Business-to-Business
Advertising
• Primary-Demand and Selective-Demand
Advertising
• Product and Institutional Advertising
Steps in Planning an Ad
Campaign

Advertising Objectives
Inform Remind
Persuade

Selection of Media Involves
Assessing:
• Objectives of the ad.
• Audience coverage.
• Requirements of the message.
• Time and location of the buying decision.
• Media cost.
• Media characteristics.
Newspapers Radio
Television Yellow Pages
Direct Mail Magazines
Out-of-Home Media Interactive Media
Advertising Schedule
– Continuous
– Pulsing
– Flighting
Assess Impact
Pretesting
Tracking
Posttesting

Categories of Sales
Promotion:
• Trade promotions, directed to members of
the distribution channel.
• Consumer promotions, aimed at
consumers.
• Sales man promotion
Popularity of Sales Promotion
is Due to:
• It can produce short-term results.
• Competitors are using sales promotions.
• Sales promotions are attractive to price-
conscious consumers.
• Retail salesmanship is often low quality.
A Review
• Disadvantages:
– If used in markets of high brand similarity can produce a high sales
response in the short run but little permanent gain in market share
– Can lead to stock pilation by consumers/trade partners followed by post
promotion dip.
• Advantages:
– Attract brand switchers who are primarily looking for low price, good
value or premiums
– Increases the repurchase rate of occasional users
– Enable manufacturers to adjust to short-term variations in supply and
demand.
– Enable manf. to test how high a list price they can charge, because they
can always discount it.
– Induce trials
– Helps in stock clearance
– Consumers themselves enjoy some satisfaction from being smart
shoppers when they enjoy advantage of price specials.
Selecting Consumer Promotion
Tools
• Factors to be considered:
– Type of market
– Sales promotion objectives
– Competitive conditions
– Tools cost effectiveness
• Can be classified as:

– Franchisee-building
• Free samples, frequency awards, coupons
– Non-franchisee building
• Price off-packs
• Consumer premiums not related to a product
• Contest and sweepstakes
• Refund offers
• Trade allowances
Sales promotion & Advertising
• A Research study
– Price promotion alone produced 15%
increase in sales volume
– but when combined with advertising sales
volume increased by 19%
– When combined with feature advertising &
POP sales volume increased by 24%
Trade Promotion
• As per a research study around 47% of
the promotion pie is taken up by trade
promotion tools and only 28% goes to
consumer promotion.
Current environment with Regard
to Trade Promotions
• Larger bargaining power of retailers with
increasing size
• Greater competition
Company’s sales force and its brand managers are often at odds over
trade promotion
Sales force asks for more trade promotion money to push the product on
retailers shelf, where as brand manager wants money for consumer
promotion and advertising
Some Other Costs
• Promotion might decrease Long term
brand loyalty
• Inevitable distributed to wrong consumers
• Costs of special production runs, extra
sales force effort and handling
requirements
• Irritant to retailers: who may ask extra
trade allowances or refuse to cooperate
PLC versus Sales Promotion
Activity
Product Life Cycle Phase
Growth Mature Decline

Trade Med Low Low
Sales Promotion Activity
Shows
Training High Med Low
Premiums Med High High
Website High Low Low
POP Med High Med
Displays
Rebates Low Med High
Distribution Objective & Sales
Promotion
PLC Stage Distribution Sales Promotion
Objective
New product Trial Consumer promotion + Trade
launch Promotion
Growth Stage Market Trade promotion
expansion
Maturity Availability Trade promotion + Consumer
promotion
Decline Availability Trade promotion
Reintroducing a Trial + Trade promotion + Consumer

product Availability Promotion
CRM Based Promotions
• Identify consumer segments on usage
patterns
• Classify them into categories
• Profile the consumer
• Make offers accordingly to increase share
of wallet
• Important that you calculate Customer Life
time value (CLTV)
Primary forms of Online
Marketing
• Organic Search Marketing (SEO)
• Paid Search Marketing (PPC)
• Social Media Marketing (SMM)
• Email marketing
• Blog Marketing
Principles of Online Marketing
• Publish
• Target
• Engage
• Communicate and do not Advertise
Sanjeev Varshney
Planning
Analyze Implementation Evaluation
situation Organize Compare
Set goals Staff performance
with goals
Select strategies Direct
& tactics
People
Process Technology
 Functional Organization
 Geographic
 Product-or Brand management Organization
 Market Management Organization
 Matrix Management organization
Which One will you use where ?

Customer
Interactive
External
Marketing
Marketing
Company Employees
Internal
Marketing
Environment
Philosophy Goals
Comprehensive
review and evaluation
Performance of the marketing function Strategies
in an organization
Financial Organization
Resources Human Structure
Resources
Heading Rating (1- Comment
7)/Metrics
Environment (Political,
Economical, Legal,
cultural etc.)
Goals
Strategies
Organizational Structure
Human Resources
Financial resources
Performance
Philosophy
 Marketing Performance Indicators
 Market Share
 Sales Turnover
 Market Reach
 Salesman Performance
 No of calls
 Conversion ratio
 Leads (Hot , Warm & Cold)
 Inventory turnover (Average value of stock & stock
turnover)
 Credit performance
 Line fill ratio
 Case fill ratio
 Inventory shrinkage/sales
 Market penetration
 Product Basket Analysis (Average Basket Size & Bill Value)
The 80-20 Principle
Reasons for Misdirected Effort
Total sales and costs are too general
Inadequate cost information
Lack of reliable standards

Annual plan control
Profitability control
Efficiency control
Strategic control
 Sales analysis
 Market share analysis
 Sales-to-expense ratios
 Financial analysis
 Market-based scorecard analysis
 Step 1: Identify functional expenses
 Step 2: Assign functional expenses to
marketing entities
 Step 3: Prepare a profit-and-loss statement for
each marketing entity
Ledger Expenses
Activity Costs Activity Costs

by by
Product Market
Direct Costs
Allocating Costs
Indirect Costs
Full Cost Contribution

Margin
Territories Products
Customer Classes Order Sizes

 Customer Satisfaction Analysis
 The Lifetime Value of a Customer analysis
 Percentage of service requests fulfilled.
 Percentage of service requests fulfilled on time.
 Number of billing errors
 Some more
Period Cash Flow Present Value Present Value
of CF
0 - 51,000 1 -51000
1 30000 0.909 27300
2 42000 0.826 34700
3 44000 0.751 33000
4 49000 0.683 33500
5 55000 0.621 34200
111700
Calculate Net Present Value of Individual Customers

and then grade them accordingly to find out the
profitable and non-profitable customers
Client Year 1 Year 2 Year 3 Year 4 Total
A -50000 9090 12390 11270 -17250
B -50000 13640 49560 52570 25770
C -90000 13640 49560 67590 80790
Can we discuss the relative

performance of these 3
customers
 Net Marketing Contribution:
 Sales Revenues * Percent Gross Profit- Marketing
expenses
 Marketing ROS:
 Gross Profit (% of sales)- marketing Expenses (% of
Sales)
 Marketing ROI:
 Marketing ROS/Marketing expenses (% of Sales)
Sales
Marketing
Revenue
ROS (24%)
($125)
Gross Profit
($ 48.5)
Percent
Margin Net Marketing
(38.8%) Contribution
($30)
Marketing Marketing Net profit

Expenses ROI (before
($18.5) (162%) Taxes) $10
Other
Expenses
($20)
 Annual Plan Control:
 Sales analysis, Market Share analysis, Sales-to-
expense ratios and financial analysis
 Profitability Control:
 Profit and loss statement for each marketing entity
 Efficiency Control:
 Customer satisfaction analysis, NPS, CLTV, service
status etc.
 Strategic Control:
 Net marketing contribution, Marketing ROS,
Marketing ROI
Measurement Process Metrics Result Metrics
Perspective (during ) (end)
Internal •Product defects •Sales revenues
Company Metrics •Late deliveries •Percent Gross
•Late payments Profit
•Inventory •Net profit before
Turnover tax
•Return on assets
External •Customer •Relative market
Marketing Awareness share
Metrics •Customer •Market share
satisfaction •Customer
•Perceived Retention
performance •Revenue per
•Intent to customer
repurchase
 Market Growth Strategy (new customers)
 Market Share strategy
 Customer Revenue Strategy
 Cost Reduction Strategy
 Advertising strategy
 Channel Strategy
 Net Marketing Contribution:
Average
Market * Market Channel Percent Marketing
* Selling * * -
Demand Share Discount Margin Budget
price
Increase
Growth Grow Lower Increase Improve
Average
Market market Channel Profit Marketing
Selling
Demand Share Costs Margin Efficiency
price
Financial Performance Metric s
•Profit & Profitability Return Metrics
•Cost & Productivity Metrics
•Asset Management Metrics
Marketing Profitability Metrics

•Net Marketing Contribution
•Marketing Profitability ROS
•Marketing Profitability ROI
Marketing Performance Metrics

•Market performance Metrics
•Customer Performance Metrics
•Competitiveness Performance Metrics
Market –Based Management

•Market –Oriented Best practices
•Market-Based Strategies
•Marketing Behaviors & Leadership
Situation
Analysis
Marketing
Adjust,
Strategy MS,
MB &
PO
Performance
Plan
Performance Performance
Review Gap
 Designing Organizational Processes and
systems with a focus on Consumer.
 The bigger question to ask is who is at the
centre of the organisation and business.
 Why are we in Business ? Or what is the
Purpose of Business ?
 To provide good service to customers
 Happy customer brings in long term
profitability & Long term sustainability
 A happy customer is key to Stakeholder
Happiness
 Helps develop society at large
Empower Encouraging
Frontline Right
behaviour
Design the Engaging

experience Supporting
Operations
Understandin Metrics that

g your Matter
Customer
Customer Feedback drives

Customer
Focused continuous
Centricity
Leadership improvement
Executive
Process & Design

Leadership
Operational leadership
Frontline Service Delivery

 Understand your segment and customer’s
needs and wants
 Design a customer centric marketing strategy
 Create an integrated marketing program which
will deliver value
 Initiate and build profitable relationships and
delight your customers
 Deliver superior value to customers and derive
profits and return from business
Objectives
What do you want to change ?
Strategy
Internal Marketing
Execution/Implementation
Persuasion Negotiation
Politics Tactics
Evaluation
What have you achieved ?
How have your achieved ?
Internal Customers
Internal Market
Segmentation
Target Group 1 Target Group 2 Target Group 3

(supporters) (Neutral) (Opposers)
How do you handle each one of

them ?
 IM functioning as a continual internal 'upskilling'
process.
 Alignment of the organization’s purpose with
employee behavior.
 Employees internalizing the core values of the
organization.
 Motivation, reframing and empowerment of employee
attitude.
 Inside-out management approach.
 Retaining a positive customer experience throughout
the business objectives
Marketing of Services
Prof. Sanjeev Varshney

Definition of Services
Identifiable, intangible activities
that are the main object

of a transaction
designed to provide
want-satisfaction to customers
Supplementary Services
support the sales

of a good or service
Service
By providing good
customer service,
firms add value to
their products and
services.

Goods-Services Continuum
Services Marketing Differs from
Product Marketing
Inseparable
Factors
Affecting
Intangible Variable
Product
Diffusion
Perishable

Managing Service Quality
Quality is defined by the customer
Expectations How work was

of the customer Compared to performed
Help Measure Service quality

formulate expectation at or above
expectations level expectation
Providing Great Service:
The Gaps Model
Service Gap
Customer Mgmt Standards Customer Retailer

Expectation perceptions of specifying Actual service perception of Communicatio
for service customer service to be Delivered service ns about
Quality expectations delivered quality service quality
Knowledge Standards Communi

Delivery
Gap gap cations
Gap
Gap

Understanding Customer
Expectations
Expectations are based on knowledge and experience
Expectations vary according to type of service
Expectations vary depending on the situation

Evaluating Service Quality
• Reliability: The ability to perform the service
dependably and accurately
• Responsiveness: The willingness to help customers
and provide prompt service
• Assurance: The knowledge of and courtesy by
employees and their ability to convey trust and
confidence
• Empathy: The caring, individualized attention provided
to customers
• Tangibles: The appearance of physical facilities,
equipment, personnel and communication materials
The Delivery Gap: Delivering
Service Quality
Empowering Reduce Use of

Employees Delivery Gaps Technology
Provide
Support
& Incentives

The Communications Gap:
Communicating the Service
Promise
• Manage customer
expectations
• Promise only what
you can deliver
• Communicate service
expectations

Service Recovery
Increase Resolving
Listening to
Service Problems
Customers
Recovery Quickly
Providing a
Fair Solution

Relationship Marketing
The Shift from Transaction-Based Marketing
to Relationship Marketing
• Transaction-based marketing
– Buyer and Seller exchanges characterized by limited
communications and little or no ongoing relationship
between the parties
• Relationship marketing
– Development and maintenance of long-term, cost-
effective relationships with individual customers,
suppliers, employees, and other partners for mutual
benefit
Building Relationships With Customers
• Take a long term view of customer relationships

• Use data to assist in maintaining the relationship
500
Understand Build Empower Customer Engage with

Customer systems Employees Satisfaction the Customer
Expectations
Trust
• Make Promise
• Enable Promise Relationships
• Keep a Promise
501
the customer.
 Teamwork
502
Crux of Building Relationship in today’s time is
Customer engagement and creating right customer
experience every time (On all touch points)
What do you Need to build right customer

experience & Customer engagement ?
Understanding of Customer Journey Map and

Customer expectations
503
The progression of economic value
from Commodities to Experience
Differentiated Stage
Experience
Deliver
Competitive Service
Position
Make
Goods
Extract
Undifferentiated Commodities
Market Premium
Pricing
Designing memorable experience
• Theme the experience

• Harmonize impressions with positive cues
• Eliminate negative cues
• Mix in memorabilia
• Engage all five senses
Key to Relationship Marketing
• Internal marketing
– Managerial actions that help all members of
the organization understand and accept their
respective roles in implementing a marketing
strategy
• Employee satisfaction
Basic Foundations of Relationship
Marketing
• Making promises
• Enabling Promises
• Keeping Promises
The Relationship Marketing Continuum
• First Level: Focus on Price
• Second Level: Social Interactions
• Third Level: Interdependent Partnerships

Three Levels of Relationship
Marketing
Characteristic Level 1 Level 2 Level 3
Primary bond Financial Social Structural
Degree of Low Medium Medium to high
customization
Potential for Low Moderate High
sustained
competitive
advantage
Examples American Airlines’ Harley-Davidson’s Federal Express’

AAdvantage Harley Owners PowerShip
program Group (HOG) program
Evaluating Customer Relationship Programs
• Lifetime value of
Assessing
customer: the revenues Costs &
and intangible benefits that Benefits
a customer brings to the
seller over an average
lifetime, less the amount of
Measure- Structuring
money which must be spent ment & Relationships
to acquire, market to, and Evaluation
service the customer
Relationship Marketing :
Database Marketing
• Record consumer transactions and behaviour
• Observe trends and classify customers into
groups
• Select the best customers or groups (remember
80:20 principle)
• Calculate the life time value of their business
• Create a meaningful dialogue that builds a
genuine loyalty
• Use this to increase share of wallet/bill
value/cross-sell and up-sell or even increase
Positive word of mouth and frequency of visit
Components of CRM Framework
• Operational CRM
– Involves front office customer touch points and
focuses on capturing information
– Back end of this plugs into ERP systems and supply
chain management software
• Analytical CRM
– Works on data collected from operational CRM to
understand consumer behavior better
– Involves data warehousing and data mining
• Collaborative CRM
– Facilitates interactions between customers and
companies and between members of the company
Benefits of CRM
• Helps to manage customer expectations
– Increasing affluence
– Greater awareness
– Customer diversity
• Better technological advances
• Reduces organizations dependence on
periodic surveys to gather data
• Service Benefits of CRM: most customers
do not complaint
5% increase in retention had impacts as high as 95% on the
net present value delivered by customers
Repeat customers generate twice as much gross income as
new customers
Goals of CRM
• Build long term and profitable relationships
with chosen customers
• Getting closer to those customers at every
point of contact with them.
So develop a learning relationship by the

iterative process
THE CRM Strategy
• CRM aims at integrating the front end customer facing
systems with the back-end systems
• Involves top management along with all functional
areas.
• Looks for customer oriented solution
• Requires change management
• Generally done via means of implementation team
drawn from all the functional areas.
• Important to involve team motivation and training.
Purpose of CRM Technology
• Provides a single point contact to its
customers
• This contact retains past information and
uses it for future interaction
• Also provides interface for
– sales force automation,
– customer service and support and
– campaign management
CRM & Sales force
Management
Sales force
Management
CRM
Customer Campaign
management management
Introduction – Customer Journey
Map (CJM)
 Visual or graphic interpretation of the overall story from an
customer’s perspective.
 Mapping out the total customer experience

 Across all touchpoints
 Between the customer and the organization, from initial contact,
through purchasing, after sales support, and hopefully onto
renewal / repurchase.
 CJM maps the experience that:

 The customer would like to receive
 You want to provide to the customer
 The Gaps
 Opportunities for improvement across journey
Benefits – Customer Journey Map
 Helps you better understand your customers.
 Identifying operational inefficiencies at various
touchpoints.
 Opportunities for Digital Transformation.
 Customer Service > Customer Satisfaction > Customer
loyalty
Personas Timeline
Components Touchpoints Channels
Moments
Emotions of Truth
How to build a Customer Journey
Map
• Step 1: Identify the "personas“.
• Different Personas Different Profiles
Persona Specific Needs

Business Travelers In-flight Wi-Fi
Leisure Travelers Travel advisory websites
Family Travelers In-flight kids
entertainment
Special Needs Travelers Aisle Seat, Wheelchair
• Step 2: Identify the different stages when a customer interacts with the airlines
• Step 3: Plot the expectations customers have of airlines at each of the touch points in the
journey map.
How to build a Customer Journey
Map (Contd…)
Step 4 Step 5 Step 6 Step 7 Step 8 Step 9

Plot the Identify how Document Analyze the Use the Involve your
customers’ your service your potential insights you customers.
needs and or product customers' opportunitie gain to list Validate the
activities at meets emotional s for specific Map
each of the customer’s response at customer actions you
touch points expectation every step service will take to
in the s. of their improvemen make these
journey journey with ts. improvemen
map. you. ts and
innovate.
Customer Journey Map for Airlines
domain
Exercise: Customer Journey Map
• Each group picks up a service and draws
Customer journey map.
• Can you link it to selling competencies
Marketing Domains & HR Issues
Sanjeev Varshney
Some of the Issues
• Services Marketing & Relationship Marketing
• International/Global Marketing
• Sales Force Management
• Development of Channel Partners
• B2B Marketing
Services Marketing
HR issues in Services Sector
• What is the crux of Customer satisfaction ?
• How many to hire (capacity problem for effective and
efficient servicing) and of what quality(competencies)?
• What process to follow (what is the right process to prove
good quality service?
• How to standardize functioning of employees
(Benchmarking)
• How to train and on what to train the employees?
• How to control and check for performance and working of
employees?
• Empowerment to what extent ?
• Motivation and Reward
What is Relationship Marketing ?
Comparing Transaction-Based Marketing and
Relationship Marketing Strategies
HR Issues in Relationship Marketing
• How to separate personal and professional
relationship
• Rewards mechanism
• Developing interpersonal skills
• Process orientation
• New Business development
• Use of technology
International Marketing
Factors Affecting International Trade
Consumer
Technology
Preferences
Marketing Trade
Capability Barriers
Subsidized
Tax Structure
Industries
Strategic Planning for
International Marketing
Global
Strategy
Regional
Strategy
Local
Strategy
Structures for Operating
in Foreign Markets
Exporting
Contract
Directly, or Joint Wholly
Company Licensing Manufactur
through Ventures & Owned
Sales Foreign ing by MNC’s
Import- Strategic Subsidiarie
Branches Producers Foreign
Export Alliances s
producers
Middlemen
Low High
Involvement Involvement
Abroad Abroad
Designing the Marketing Mix
Market Research
Product
Planning
Advertising
Pricing
Distribution Systems
International Product & Communication
Strategies
Product
Do Not Change Adapt product Develop
Co Product New product
m
m Do Not Change Straight Product
Communications extensions Adaptation
un
Product
ica Invention
tio Adapt Communication Dual
ns Communications Adaptation Adaptation
Organizational Issues in International
Markets
• Issue of centralization versus decentralization
in terms of marketing strategy and policies
• Roles and responsibilities of sales and
marketing people working at different level
• Reporting structures
• Issues of coordination and control
• Localization vs. Globalization
Sales Force Management
HR issues in Sales Force Management
• Selection & Recruitment
• Training
• Territory management
• Target setting
• Motivation and Compensation
• Evaluation
• Coaching and Mentoring –Development plans
Recruiting and Selecting Salespeople
• Personality
• Optimism
• Resilience
• Self-motivation
• Empathy

Sales Training
• All sales people benefit from
training about:
techniques
knowledge
– Technologies used in the
selling process
management
procedures
Designing Sales Training Programs
• Some of the Common objectives;
– Increase sales productivity
– Increase sales, profit or both
– Improve customer relations
– Introduce new products, markets and promotional programs
– Improve sales force morale
– Better negotiation skills
– Better channel partner management
– Improve team work
– Train the trainer
• Common sales training methods
– Class room
– Behavioral learning (role-plays etc)
– Self learning modules (online as well books, CD Rom etc.)
– On the job training
Framework for Sales Training Evaluation
Outcome to What to measure How to measure When to
Measure measure
Reactions Training objective Questionnaires After the training
achieved Interviews
Training worthwhile
Learning Knowledge Tests After the training
Skills Interview tests
Attitude Before-after
Behaviour Change of Observation After training,
behaviour Self-assessment after some regular
interval
Results Sales Company data After training,
Profits Managerial quarterly, yearly
Customer judgement etc.
satisfaction Market survey
Role of a supervisor
Most likely Easier to
Resolve
Others/ Outside Change Situation/
Influence Influence
Knowledge and Provide Training

Skills
Motivation Redesign Task
Personality Counsel to Change

Behaviour
Aptitude Re-evaluate Person
Difficult
Least Likely to Resolve
Territory Management : Methods for deciding
sales territories
• Break-down method
– Based on sales forecast
• Geographic territory allocation
• Workload basis of territory allocation
– Number of accounts
– Sales call frequency needed
– Sales call time
– Distance covered
– Market conditions
Issues Involved with territory design
• Low coverage
– Less time to motivate the channel members
– Less time to handle customer complaints
– Less time to carry out training and development exercises
– Difficulty in meeting targets
• Excess coverage
– Over control
– Low targets-so underutilization of resources and capabilities
– General grievance
Territory allocation & PLC
• Introductory phase: Geographic method
• Growth Phase: Break Down Method
• Maturity Phase: Work load basis
Managing Territorial Coverage
• Routing
– Daily routes to be designed taking number and kind of clients on
such routes into account
• Scheduling
– Days and frequency for covering these routes/customers
• Productivity
• Effective coverage
• Time Management
– Coverage as well as
– effectiveness
Salespeople

Monetary Incentives
• Fixed Salary
• Fixed salary plus Bonus
• Variable salary
– Commission based system
– Slab system
Objective of compensation
components
S.No. Component Objective
1 Salary • Motivate effort on non-selling activities
• Adjust for differences in territory potential
• Reward experience and competence
2 Commissions • Motivate a high level of selling effort

• Encourage sales success
3 Bonuses • Direct effort towards Strategic objectives
• Provide additional rewards for top
performers
• Encourage sales success
4 Sales Contests • Stimulate additional effort targeted at

specific short term objectives
5 Benefits • Satisfy sales people security needs
• Match competitive offers
Caselet 1
• A Company is in the business of biscuits and snacks. It has a wide range of
products and has been adding atleast 1-2 new products each year. However,
in the process sale of its oldest and the largest selling brand xyz has
stagnated. Research reports reveal that this stagnation is due to the lost
interest of the sales man in the product and the pressure and incentives for
every new launch. This brand of the company comprises 18% of the
companies turnover and is the market leader in the category. Therefore
management has fixed following incentive plan for its salesforce to boost
the sale of its oldest products:
For meeting the overall monthly sales targets: 0.1% of total sales made by
the salesman
For selling xyz brand more than the designated targets (this month targets
were also fixed for this brand by taking average of the last one year): 0.2%
of extra sales made for this product over and above the average
Questions:
1. what do you expect would be the result of this incentive plan
2. What are the expected consequences
3. What is wrong with this incentive plan
Case Let 2
• Suggest a Sales Incentive plan for Star Sky Ltd. A company in the business
of selling satellite TV connections. Product is new to India. There is only
one competitor in the market, Box TV operating since last 2 years. Star
Sky has been launched only 6 months ago. Most of the market today is
dominated by Cable people. Rates being charged vary across markets and
the reception quality being given by them is bad.
Product Costs has following components:
Set-top box charges: Rs. 3000/-
Installation charges: Rs. 1000/-
Monthly rental: Rs 300/-
Immediate objective of the company is market penetration and increasing

the number of such connections many fold
Framework for Planning Motivational Schemes
Type of Selling
Address Vocational Esteem
Functioning of the Job
Improve work culture Targets & Territories
Rewards from the job
Monetary Reward Career Prospects

Proportion of Salary
S.No. Condition Lower Higher
1 Importance of Sales persons skills considerable Slight
2 Reputation of sales person’s company Little known Well known
3 Company’s reliance on advertising and other little Much
sales promotion activities
4 Competitive advantage of product little Much
5 Importance of providing customer service slight Considerable
6 Significance of total sales volume as a greater Lesser
primary selling objective
7 Incidence of technical or team selling little much
8 Importance of factors beyond the control of slight considerable

salesperson
Generalized Framework for Compensation
Package
Sales Response Market No market

function development Development
(product type/ required required
market
conditions
Sales is an High competition 50% fixed and 25% fixed and
individual 50% slab system 75% variable
activity
Medium 75% fixed and 50% fixed and
Competition 25% bonus 50% variable
Low Competition Fixed Fixed
Sales is a group Fixed plus Fixed

activity productivity based
bonus
PLC & Compensation
variable component
• Growth: A large fixed salary plus small variable
component
variable component
Discuss the Issues

Additional Issues in Managing Sales
force reward system
• Sales contests
• Equal pay
• Team compensation
• Global considerations
• Changing the reward system
• Tied to the
reward structure
• Evaluation
measures can be
either objective
or subjective

Criteria for Performance Evaluation
Behaviour-based Outcome-based
perspective perspective
Behavioral Results
Sales person
performance
Professional
Profitability
development
Question is what to use when ? Or else what

kind of mix we should have ?
Some of the Common Evaluation Criteria
• Quantitative
– Sales volume
– Debtors control
• New outlets
– Market Feedback
• Qualitative
Common Ratios used to evaluate sales
people
• Expense ratio
• Account development and servicing ratio
• Call activity or productivity
Sales = Days worked X Calls X Orders X Sales

-------------- --------------- -------------
Days worked Calls Orders
Sales = Days worked X Call rate X Batting average X Average order size
Common Output Indicators Used in Indian Industry

Target achieved Range sold
Total coverage Credit control
Effective coverage Average order size
Criteria

Cycle)

competition)

(high
competition)
Model of Sales Force Evaluation
Sales person
satisfaction
Salesperson
Motivation
Expected
performance
Sales person
skill/ aptitude Performance Reward
Perceived Evaluation allocation
Task difficulty Performance
-economic
condition Outcome Sales
Behaviour
Unexpected
Events
Input Variables Stage I Stage II Stage III

Channel Partners Management
Channel Partners Management
• Focus on relationship marketing
• Focus on building capabilities
• Focus on Value Chain
Some of the Developments
• Collaborative Planning
• Recruitment of sales people
• Sales People Management
• Performance Evaluation
• Maintaining Infrastructure
• Enhancing Capabilities
• Managing attrition
• Documentation of Process
Resource management at Partner level
• Who controls HR processes and systems at
distributor level ?
• Sales force management at Distributor/ dealer
level
• Means of compensating distributor sales
force (In-particular minimum guarantee
clause)
• Reporting structures
• High attrition at distributor level
B2 B Marketing/Marketing of
Professional Services
What Business You are Into
You are in the business of creating

Value for your customer and for your
Organization
Business in a Professional Firm
Effective Marketing of Professional
Services
What do you Need for Effective Marketing of Professional
Services ?
Relationship
Knowledge Reputation
Competence
•Convincing
•Multiplication
clients to •People Business:
of successful
outsource Creation of a
projects
certain tasks personal level
•Use of the
•Identifying •Continuity of
strong networks
new service contact persons
between clients
needs
Different Level of Marketing In
Professional Firms
• Contact Marketing
• Credibility Marketing
• Corporate Level Marketing
Knowledge Management for Better
Client Service
Industry (Profession)
Organization
(Professional Service
Firm)
Technical Individual
Profession) Knowledge
Knowledge
about Customers
Knowledge Management for Client
Servicing
Standardisation Individualisation
Codification Options of Strategic Personalisation

KM
People to Document KM approach Person to Person
Explicit Knowledge Type of Knowledge Implicit Knowledge
Very High Leveraging Knowledge Small
Exploitation Focus of Org. Learning Exploitation

Aspects in Organisational Procurement
• Multi-personality: The involvement of several
people in the selection process
• Rationality: The attempt to actively generate an
objective general view by systematically gathering
information
• Multi-organization: Involvement of third
organizations – like banks or professionals
– in the procurement decision
• Interaction: Regular and intensive contact for the
exchange of information and agreement on
common and performance objectives
Rules in Organisational Procurement
• High degree of insecurity in connection with
the procurement decision has to be reduced.
• The way professionals understand an issue is
also of major importance, since it helps to
offer a tailor-made approach to tackle a
specific client problem.
• Close connection of the service with the
implementing professional.
Marketing Tools
• First Team Activities (Seminars, publications in
professional journals and own market
research)
• Second String (Networking with potential
recommenders, newsletters and voluntary
work)
• Clutching on Straws (Direct Mail cold call etc.)
• Its all about reputation management
(personal and corporate)
Issues
• Transference of Trust
• Lack of Networking competence among staff
I have employed people who have been sent out to get those referral bases in. Some
of them can't do it. Some of them don't want to do it. Yet they are really good at
seeing clients, but they don't want to take it that step further and go out and
actively get work.
• Hesitancy of Owner Managers to let go
I'm going through a period of frustration at the moment, because
on the one hand I'm the sort of person that likes to be involved
at all levels, but when you pass on responsibility and delegate to
other people, you have to let go ... I'm really delegating job
satisfaction.
• Reluctance of staff in taking up networking responsibilities
• Need to match staff to clients/customers
Networking
• “The concept of networking as an informal,
everyone-does-it, almost as a human need
that you find in all relations and on all levels,
that is the relationships that we build on”.
• “Networking is not always a conscious
decision it sometimes happen, 70% of the
time, subconsciously. You do network; you
network all the time. You may not do it
consciously.”
Essence of Marketing
Engagement
All the Best
sanjeev varshney@xlri.ac.in

Marketing All

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Marketing All

Uploaded by

Copyright:

Available Formats

Marketing

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

At Least Two Parties

Freedom to Accept or Reject

Desire to Deal with Other

• Exchange may not take place even if

Is there an Exchange in Public Services. If Yes/NO can

Simply about buyers and

Simply about making

• The fundamental purpose

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

• What is Customer Value

Cycle Time People

Cost of ownership Performance

• Firms must offer customers something in

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

• The market-sensing process

Information technology such

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

• Take a long term view of customer relationship

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Understand Build Empower Customer Engage with

• Enable Promise Relationships

What do you Need to build right customer

Understanding of Customer Journey Map and

Production-oriented era Market-oriented era

Sales-oriented era Societal Marketing

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Integrating all the organization’s activities to

 Achieving the organization’s long-term goals by

 Examine the information from a total

 Determine how to deliver superior

 Implement actions to provide value

An organization exists not only to satisfy customer

Can we have some examples from India. Are Indian

How does a company

Promotion 4P’s Price

Makes Life Easier Importance Can be

Pervasive Expands Firm’s

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

consumers use and

• Each one of you write a story around a

Specialty Goods/ Services

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Marketing helps consumers recognize

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Involvement Low Low to High

Any unit of input affecting

• Internal Search for

• External Search for

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Less Risk More Risk

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

• Firm’s attempt to reduce

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

A group of people in a society

Social Class in India: SEC(Socio-economic class) Classification

 Indicates which medium to use for

 Helps determine the best distribution for

 They affect an individual’s aspiration levels.

 Their norms either constrain or stimulate