Professional Documents
Culture Documents
Marketing Management
BBA
Tanvi Jain
Dept. of Commerce & Management
Biyani Girls College, Jaipur
2
Published by :
Think Tanks
Biyani Group of Colleges
Edition : 2012
While every effort is taken to avoid errors or omissions in this Publication, any mistake or
omission that may have crept in is not intentional. It may be taken note of that neither the
publisher nor the author will be responsible for any damage or loss of any kind arising to
anyone in any manner on account of such errors and omissions.
Preface
I am glad to present this book, especially designed to serve the needs of the
students. The book has been written keeping in mind the general weakness in
understanding the fundamental concepts of the topics. The book is self-explanatory and
adopts the “Teach Yourself” style. It is based on question-answer pattern. The language
of book is quite easy and understandable based on scientific approach.
Any further improvement in the contents of the book by making corrections,
omission and inclusion is keen to be achieved based on suggestions from the readers
for which the author shall be obliged.
I acknowledge special thanks to Mr. Rajeev Biyani, Chairman & Dr. Sanjay Biyani,
Director (Acad.) Biyani Group of Colleges, who are the backbones and main concept
provider and also have been constant source of motivation throughout this endeavour.
They played an active role in coordinating the various stages of this endeavour and
spearheaded the publishing work.
I look forward to receiving valuable suggestions from professors of various
educational institutions, other faculty members and students for improvement of the
quality of the book. The reader may feel free to send in their comments and suggestions
to the under mentioned address.
Tanvi Jain
4
Syllabus
Marketing Management 5
Unit-1
Introduction
Nature of Marketing :
customers for varied products and services. Therefore, nature of marketing has
been termed as developmental.
Scope of Marketing:
Scope of Marketing is very wide. In it, large numbers of diverse subject areas are
included which incorporates consumer behaviour, pricing, purchasing, sales
management, product management, marketing communication, Comparative
marketing, social marketing, the productivity of marketing systems, role of
marketing in economic development, packaging, channels of distribution,
marketing research, societal issues in marketing, retailing, wholesaling, the social
responsibility of marketing, international marketing, commodity marketing etc.
Marketing is also useful or beneficial for a firm. The benefits imparted by the
marketing, to the firms are :
a) It enables the companies to earn profits.
b) It enables the firm to decide on what, where and when to produce or sell. Thus it
helps in decision making and planning.
c) It also serves as source and channel of new ideas.
d) Marketing is helpful in distributions also.
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(2) Production Concept : The production concept is one of the oldest concepts
in business. It also refers to the "supply creates its own demand"
philosophy which says that the sale of items will increase automatically
with an increase in production and distribution facilities It holds that
consumers will prefer products that are widely available & inexpensive.
Thus, manager of production oriented business concentrate on achieving
high production efficiency, low cost & mass distribution.
Eg. Haier in China take advantage of the country‘s huge
inexpensive labor pool to dominate the market, to manufacture PC &
domestic appliances.
(3) Product Concept : This concept holds that consumers will prefer those
products that are high in quality, performance or innovative features.
Managers in these organization focus on making superior products &
improving them. Some of the important tactics for attracting customers
include the design, packaging and effective distribution channels of a
product. Sometimes, this concept leads to marketing myopia or other
problems when an organization overlooks the importance of other substitutes
available in the industry.
Internal Integrated
Marketing Marketing
HOLISTIC
MKTG.
Social responsible
Marketing
Relationship
Marketing
Case Study
Growing trends of E- mandis
Its time for consumers good old subziwallah to make way for the e- veggie vendors.
With the changing time, consumers needs and requirements are also changing. So to
stay in market and to hold your market space it has become essential for the
conventional vendors to update themselves as per the changing demands of time. One
example of this conversion from traditional vendors to techno vendors is
www.freshetarian.com.
www.freshetarian.in , a city based online portal, where you can order all the basic
grocery items, from toiletries to fresh fruits and vegetables. All thanks to the growing
demands of the corporate sector on Jaipurites, several e commerce ventures have
develped a loyal clientele in the city. These e mandis have proved to be very convenient
for corporate employees as it has proved itself to be a hassel free shopping.
These e sabzi or e grocery shopping saves time, fuel and everything is delivered at your
door step. And to make shopping more easier, they offer the options of both card
payment and COD. The other advantage of these online portals are that they help the
consumers in keeping the track of their monthly expenditures on grocery. Since these
portals let consumers to place their orders anytime, they tend to buy lesser amount of
grocery items at a time and that helps in avoiding wastage.
This new e commerce platform follows the warehouse system and caters to both
corporate and retail audiences. They also follow a minimum dilevery criteria – for
example : Minimum 50 rs order is required for fruits and veggies and 200rs for other
grocery items.
So, next time when you make your list of routine grocey items, you don‘t have to march
to the supermarket with your list, just log on to these kinds of e sabzi mandis from the
comfort of your living room.
Questions :
Q.1 What are the problems faced by conventional/traditional vendors?
Q.2 How e vendors has proved themselves better to consumers in comparison to
traditional vendors?
Q.3 How can you relate the concept of ―selling to marketing‖ in context of this case
study?
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3) Nature of marketing is
a) Dynamic and developmental
b) Responsive
c) Innovative and creative
d) All of the above
e) None of the above
Unit 2
Market Segmentation
Q.2 Define the term market segmentation? What is the benefit of segmenting the
markets?
OR
What do you mean by the term “Market Segmentation”? What is the need of
segmenting the market?
Ans.: The process of defining and subdividing a large heterogeneous market into
homogenous segments which have clearly identifiable characteristics having
similar needs, wants, or demand characteristics. Its objective is
to design a marketing mix that precisely matches
the expectations of customers in the targeted segment.
Geographic Segmentation
Region
City
Marketing Management 21
this availability of infrastructure like roads & electricity make the task of
geographic segmentation important.
For most products, penetration levels in rural areas are lower than in
urban areas. E.g.: Haats & mandis serve important roles in the exchange of
goods & services in rural areas.
(ii) Demographic Segmentation : In demographic segmentation, the market
is divided into groups on the basis of variables such as age, family size,
family life cycle, gender, income occupation, education religion, race
generation, nationality & social class.
Age & Life Cycle Stage : Consumer wants & abilities change with
age. E.g.: Hindustan Uni Level introduced Pears soap in pink
colour specially for children. Johnson & Johnson Baby Powder &
Talcum Powder are classic examples of products for infants &
children. Television channels in India indicate the segmentation
based on age & life cycle. There are channels like Aastha &
Sanskaar target which towards the old generation, cartoon
network, Disney are channels for children etc.
Gender : Men & women have different behavioral orientation.
Gender differentiation has been long applied to product categories
such as clothing, cosmetics & magazines. Eg: Axe deodorant is
positioned as a masculine product. Park avenue from Raymond is
positioned as masculine brand. Honda Pleasure is a brand
specifically designed for women in the scooter segment.
Income : Income segmentation is a long standing practice in a
variety of products & services as it determines the ability of
consumers to participate in market exchange process. Thus it is also
a basic segmentation variable. Eg: Nirma Washing Powder, was
launched as the lowest priced detergent in India primarily targeted
at middle income group.
Generation : Each generation is profoundly influenced by the time
in which it grows- the music, movies, politics and defining events
of that generation.
Social Class : Social class has a strong influence on preference in
cars, clothing, home , furnishings, leisure activities, reading habits,
retailers etc.
Marketing Management 23
Innovator. These consumers are on the leading edge of change, have the
highest incomes, and such high self-esteem and abundant resources that
they can induldge in any or all self-orientations. They are successful,
sophisticated, active. Image is important to them as an expression of taste,
independence, and character. Their consumer choices are directed toward
the "finer things in life." Purchases often reflect cultivated tastes for
relatively upscale, niche oriented products and services.
Thinkers. These consumers are the high-resource group of those who are
motivated by ideals. They are mature, satisfied, reflective people who are
responsible, well-educated professionals. They value order, knowledge
and responsibility. Their leisure activities center on their homes, but they
are well informed about what goes on in the world and are open to new
ideas and social change. They have high incomes but are practical
consumers and rational decision makers. Thus they favour durability,
functionality and value in products.
Marketing Management 25
Believers. These consumers are the low-resource group of those who are
motivated by ideals. They are conservative, conventional, traditional and
predictable consumers with concrete beliefs. They favor familiar products
and established brands. Their lives are centered on family, community,
and the nation. They have modest incomes.
Achievers. These consumers are the high-resource group of those who are
motivated by achievement. They are successful work-oriented people who
get their satisfaction from their jobs and families. They are politically
conservative and respect authority and the status quo. They favor
established premium products and services that demonstrate success to
their peers.
Strivers. These consumers are the low-resource group of those who are
motivated by achievements. They are trendy and fun loving but have
fewer economic, social, and psychological resources. Style is extremely
important to them as they strive to emulate people they admire.
Experiencers. These consumers are the high-resource group of those who
seek variety and excitement. They are the young and enthusiastic. They
have a lot of energy, which they pour into fashion, entertainment and
socializing. They are avid and impulsive consumers, spending heavily on
clothing, fast-foods, music, and other youthful favorites, with particular
emphasis on new products and services.
Makers. These consumers are the low-resource group of those who are
motivated by self-expression. They are practical people who value self-
sufficiency. They are focused on the familiar-family, work, and physical
recreation-and have little interest in the broader world. As consumers, they
appreciate practical and functional products.
Survivors. These consumers have the lowest incomes. They have too few
resources to be included in any consumer self-orientation. They are elderly,
passive people who are concerned about change. They tend to be brand-loyal
consumers.
Buying on occasions – Occassions can be defined in terms of the time of day, week,
month, year or in terms of other well defined temporal aspects of a consumer‘s life.
Buying on occasions is the first form of behavioral segmentation. Products such as
chocolates and premium foods will sell on festivals. Similarly, confectioneries will
sell when there is a party. Thus these products are generally targeted by behavioral
segmentation.
The best example of targeting buying on occasions is Hallmark cards – greeting
cards for all occasions. The primary targeting of hallmark was that be it any
occasion, you will find the right kind of card for you. Thus you have the perfect
option to express yourself.
Benefits sought – Buyers can also be classified according to the benefits they
seek. Many product categories offer different products targeted at people who
seek different set of benefits. Hair shampoos , for example, offer benefits such as
basic cleaning of hairs, conditioning, medicinal properties, split ends solutions,
anti dandruff and many other benefits.
Since benefits that consumer seek from the same product or service category
vary, this segmentation approach is very useful in identifying market
opportunities and deciding on the value proposition to offer.
Loyalty – There are two ways to grow a business. First is to acquire new
customers and second is to retain your existing customers. The more loyal your
customer is to you, the more your customer base will increase. That‘s one more
kind of behavior which marketers target. Buyers can be divided into four groups
according to brand loyalty status:
o Hard Core Loyal – consumers who buy only one brand all the time
o Split Loyal – Consumers who are loyal to two or three brands.
o Shifting Loyal – consumers who shift loyalty from one brand to another
o Switchers – Consumers who show no loyalty to any brand.
User status and usage rate – Under this behavioral segmentation the consumers
can be segmented into two broad categories
o User Status
Marketing Management 27
Non user
Ex user
Potential user
First time user
Regular user
o Usage Rate
Light
Medium
Heavy
Lets take the example of beauty parlors or personal care. There are some customers who
use a lot of personal care products whereas others do not use personal care products
much. Thus depending on their usage the customers can be targeted.
Therefore more companies are turning to micro marketing at one of four levels:
segments, niches, local & individual.
Segment Marketing : A market segment consist of a group of customers who
share a similar set of needs & wants. Eg: We can distinguish between car buyers
who are primarily seeking low cost basic transportation, seeking a luxurious
driving experience & those seeking driving thrills & performance.
But we should not get confuse in between segment & sector . A car company
might say that it will target young, middle income car buyers. The problem is
that young, middle income car buyers will differ about what they want in a car.
Some may want a low cost car while others will want an expensive car. Young
middle car buyers are a sector, not a segment.
The marketer does not create the segments, the marketers task is to identify the
segments & decide one which to target. Segment marketing offers key benefits
over mass marketing as the company can design better price & deliver the
product or service to satisfy the target market.
Niche Marketing : A niche is a narrowly defined customer group seeking a
distinctive mix of benefits. Marketers usually identify niches by dividing a
segment into sub segments. The customers in the niche have distinctive sets of
needs, they will pay a premium to the firm that best satisfies their needs, the
niche is not likely to attract other competitors & the niche has size, profit &
growth potential.
Eg : (i) Ezee, the liquid detergent from godrej is a fabric washing product for
woolen clothes
(iii) Crack and ointment for pain is another product with niche focus. This
product is primarily targeted at women for prevention of cracked heels.
(iv) Itch guard, focuses on niche requirement of treating itching sensation
(v) Television channels particularly focusing on religion & spirituality.
(vi) Matrimonial websites like www.shadi.com. Niche Marketers understand
their customer needs so well that customer is willing to pay a premium &
as marketing efficiency increases niches that were too small, becomes
more profitable.
Local Marketing : Target marketing is leading to marketing programs tailored to
the needs & wants of local customers groups. Many banks in India have
Marketing Management 29
specialized branches that cater to the needs of corporate customer. The ―in city‖
courier companies in many cities specialize in delivering packets on the same
day.
The marketing activities concentrate on getting as close and personally relevant
to the individual customers as possible.
Customization : The ultimate level of segmentations leads to one to one
marketing. Today‘s customers are taking more individual initiative in
determining what & how to buy. They log on to the internet, look up
information, evaluates the product /service & in many cases, design the product
they want. Companies sees it more efficient as the marketers can achieve more
precision & effectiveness by addressing individual needs.
OR
30
OR
Ans: In evaluating different market segments, every firm considers two factors :
Once the company has evaluated all market segment, it then goes for target
market selection. The five patterns/strategies of target market selection are :
a) A single segment strategy involves the firm choosing its single preferred market
segment and targeting it with a single marketing mix, aimed at serving the
segment as well as possible. This is generally chosen by a smaller firm, or one
which has only located one attractive market segment.
Example: Speciality Hospitals focus on specific therapeutic areas such as cancer
care, heart care, neonatal care etc.
b) A selective specialization occurs when a firm targets its products at a variety of
different segments using different marketing mixes. Often the product
characteristics may be different across different segments; however it may be
only the marketing and promotional details that are different across the
segments
c) A product specialisation strategy occurs when a firm possesses a particularly
attractive product, and hence tailors it to a variety of feasible market segments.
d) A market specialization strategy involves a firm which finds one market
segment very attractive, and hence that segment a variety of different products.
32
This is often done by a firm to fill up a segment, and hence discourage any
competitors from entering.
e) Full market coverage occurs when a firm tries to serve all segments in an entire
market. This does not always imply a mass market strategy; instead a firm can
offer a variety of marketing mixes to every major segment in a market. This is
what many supermarket chains have attempted with their value, standard and
premium ranges.
Q.7) Discuss the concept of “product positioning”. Also explain its process.
Ans: Positioning is what the customer believes about your product's value, features,
and benefits; it is a comparison to the other available alternatives offered by the
competition. These beliefs tend to based on customer experiences and evidence,
rather than awareness created by advertising or promotion.
Positioning is what the customer believes and not what the provider wants them
to believe. Positioning can change due the counter measures taken at the
competition. Managing your product positioning requires that you know your
customer and that you understand your competition; generally, this is the job of
market research not just what the enterpreneur thinks is true.
Generally companies make marketing strategy that aims to make a brand occupy a
distinct position, relative to competing brands in the mind of the customer.
Companies can apply this strategy either by
emphasizing the distinguishing features of their brand (what it is, what it does
and how, etc.) or
they may try to create a suitable image (inexpensive or premium, utilitarian or
luxurious, entry-level or high-end, etc.) through advertising.
all are geared to maximize the chosen positioning strategy. Once a brand is
positioned, it is very difficult to reposition it without destroying its credibility.
1. Defining the market in which the product or brand will compete (who the
relevant buyers are)
2. Identifying the attributes (also called dimensions) that define the product 'space'
3. Collecting information from a sample of customers about their perceptions of
each product on the relevant attributes
4. Determine each product's share of mind.
5. Determine each product's current location in the product space
6. Determine the target market's preferred combination of attributes (referred to as
an ideal vector)
7. Examine the fit between: The position of your product and the position of the
ideal vector
4. By product or service class- In some product class we have to make sure critical
positioning decisions. For eg. Freeze dried coffee needed to positions itself with
respect to regular and instant coffee.
Case Study
India is also known as ―the Queen of Spices‖. It has always attracted the world with her
exotic masalas. The mystique of Indian spices magnetises the whole world to India.
'The lure of the unknown', which repeatedly brought visitors to the Spice Land, is the
presence of nature's rich elements in those fresh and highly aromatic spices.
Ramdev Food Products Pvt Ltd, was amongst the first few companies in India to
venture into branded spices. The company grew from a small flour mill to a big concern
with a decent product mix within a short span. The company had also made its
presence felt in the international market but they have preserved the same values in all
their products ever since they started as a small unit in 1965, in Ahmedabad, India. A
small step became a giant leap in no time.
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Ramdev Food Products Pvt Ltd had been following a duel branding strategy for
catering in the global market. Within the country, it had been competing with big time
players like MDH, Badshah and Eastern through continuous innovations in packaging,
excellent quality and a strong distribution network. The company had also gone for
diversification, thereby enriching its product portfolio.
Ramdev have positioned themselves very beautifully in consumers mind not only at
national level but also at international level. They have been able to do so because of
their commitment that helped them to keep their promise of purity and freshness in all
their products for all these years.
They work on the philosophy of 'reaching a customer's heart through quality' which
has enabled them to spread the rich Indian heritage to millions of homes all over the
globe. And that's their pride. Indian food. The Indian way.
Questions
Q.1) What level of market segmentation has Ramdev involved in? Explain
Q.2) On what basis ―Ramdev‖ can segment their consumer market? Suggest
Q.3) On what grounds ―Ramdev‖ can evaluate and select their market
segments?
Q.4) What all strategies ―Ramdev‖ can use to position their products in
consumer market? Suggest
Marketing Management 37
2 Markets can be segmented into group of nonusers, ex-users, potential users, first-
time users, and regular users of a product. This method of segmentation is called
________.
a>Benefit
b> Usage rate
c> Usage status
d> Loyalty status
e> Behavior
3 International Drilling Company segments its foreign markets by their overall level
of economic development. This firm segments on what basis?
a> Legal factors
b> Cultural factors
c> Economic factors
d> Political factors
e> Geographic factors
4 Developing a strong position within several market segments creates more total
sales than ___________ marketing across all segments
a> Individual
b> Niche
c> Target
d> Differentiated
e> Undifferentiated
38
c> Generation
d> Personality
Unit 3
Q.1 What do you mean by the term „product mix‟? Discuss its concept. What are
the basis of product classification?
Ans : In marketing, a product is anything that can be offered to a market that might
satisfy a want or need. The product concept proposes that consumers will prefer
products that have better quality, performance and features as opposed to a
normal product. The concept is truly applicable in some niches such as
electronics and mobile handsets.
A product line is a group of products within the product mix that are closely
related, either because they function in a similar manner, are sold to the same
customer groups, are marketed through the same types of outlets, or fall within
given price ranges. For example, all the courses a university offers constitute its
product mix; courses in the marketing department constitute a product line; and
the basic marketing course is a product item.
Marketing Management 41
1. The length of a product mix - the total number of items that company carries
within its product line.
2. Width of the product mix-An organization creates a number of product lines.
The total number of theirs product line is called product mix width.
3. Depth of product Mix – The number of versions and variants offered for each
product in the line.
4. Consistency of the product Mix : It refers to how closely related the various
product lines are in their usage, production, distribution and marketing or in
some other way.
Normally the product mix is within the synergy of other products for a medium
size organization. However large groups of Industries may have diversified
products within core competency. Hindustan Unilever, Godrej, Reliance in India
are some of the examples.
Products can be broadly classified on the 2 major basis. The classification criteria
is as follows :-
I. On basis of durability and tangibility
i. Non durable goods – These are perishable goods and are tangible
goods that are normally consumed in one or a few uses. These type
of goods are consumed rapidly in a short period of time and are
purchased frequently. Eg. Cold drinks, Shampoos etc. These kinds
of goods require heavy advertising to induce trial and build
preference, easily availability at all locations and have small
markups.
ii. Durable goods – Durable goods are tangible goods that normally
survive very long in use. Examples include TV, fridge, car,
computer, and others. In general, these types of goods require
personal selling and service more than perishable goods, offering
greater benefits and need more seller guarantee / warranty. They
also command a higher margin
iii. Services – Services are intangible, inseparable, variable and
perishable products. They normally require more quality control,
supplier credibility and adaptability. Eg. Beauty salon services,
legal services, education services.
Marketing Management 43
At times, a company which has initially taken its position in the high price slot,
stretches the line downwards by offering products in the same line for the lower
end markets. This is called stretching down. Eg. Kodak introduced Kodak fun
time film to counter lower priced brands.
In some other instance, a company which has initially positioned its products for
the lower end markets, decides to make higher priced offers for the top slots.
This is called stretching up. Many markets have spawned surprising upscale
segments starbucks in coffee. Toyata‘s lexus, Honda‘s acura.
Two Way Stretch : Companies serving the middle market might decide to stretch
their line in both directions. Texas instruments introduced its first calculators in
the medium price medium quality end of the market. Gradually it added
calculators at the lower end taking market share from Bowmar & at the higher
end to complete with Hewlett Packard.
Line Filling : In line filling the firm introduces more items to the line to plug
certain gaps in its current range of offers to plug holes to keep out competitors.
Line filling is overdone if it results in confusion of consumer. The company
needs to differentiate each item in the consumer‘s mind.
Eg. Videocon has several product lines & room air conditioners is one of them.
Videocon entered the market for air conditioners with just two or three models,
but later on introduced dozens of models.
Line Modernization Featuring & Pruning : Product lines need to be
modernized. Companies plan improvements to encourage customer migration to
higher valued, higher priced items. Companies like Microsoft & Oracle introduce
more advanced versions of their products. This is product modernization. Line
pruning is the opposite of line stretching. Here a consumers decision is taken to
reduce the no. of items in the line, the company is trying to save cost maximizes
efficiency in production.
Marketing Management 49
Ans: Individual product decisions focuses on the important decisions related to the
development and marketing of individual products and services. Companies
have to develop strategies for the items of their product
lines. These decisions are about product attributes, branding, packaging,
labeling, and product support services. The below things are related in
individual product decisions. Marketers make individual product decisions for
each product including:
a. Product attributes decisions are the first task to define the product's
benefits for developing a product. These benefits are communicated and
delivered by product attribued such as quality, features, style and design.
The below factors are related with the product attributes decision.
i. Product Quality: It is the ability of a product to perform its functions.
Product quality has two dimensions—level and consistency. It includes
the product's overall durability, reliability, precision, case of operation
and repair and other value attributes.
ii. Product features: A company product should offer varying features. The
company can create higher models by adding more features. A company
can identify new features and decide which ones to add to its product. A
company should periodically survey buyers who have used the product
and can come up with a rich list of new feature ideas. Features are a
competitive tool for differentiating the company's product from
competitor's products.
iii. Product style and design: Another way to add customer value is through
distinctive product style and design. Good style and design can attract
attention, improve product performance, cut production costs, and give
the product a strong competitive advantage in the target market.
Product‘s design is an elusive blend of form and function, quality and
50
Ans: A brand is a name, term, sign, symbol, or design, or a combination of these that
identifies the maker or seller of a product or service from other sellers in market.
Marketing Management 51
Selecting a brand name is an important step. The brand name should be carefully
chosen since a good name can add greatly to a product‘s success. Desirable
qualities of a good brand name include:
1). It should suggest something about the product‘s benefits and qualities.
2). It should be easy to pronounce, spell,recognize, and remember.
52
(i) Introduction Stage : After successful test marketing of a product and making
all the required modifications in the product a marketing company
introduces the product in the market. At this stage a product is in
introductory stage of PLC which requires a focused and intense marketing
efforts to establish a clear identity and promote maximum awareness. Main
features of this stage are:
(a) At this stage, there may not be a ready market for the product so sales
remain low and limited.
(b) Profit seems a remote possibility. Thus no profits or marginal profits
are earned by the company.
(c) Demand has to be created & developed. Consumers have to be
prompted to try out the product therby encouraging many trial and
impulse purchases.
(d) One of the crucial decisions to be taken in this stage is the pricing
strategy to be adopted either market skimming or market penetration.
(ii) Growth Stage : During the market growth stage, demand for the product
increases & size of market grows. It is a period of rapid market acceptance
and substantial profit improvements. Both sales & profits goes up. But by the
time the marketer settles down with his product, competitors may enter the
scene with similar or slightly improved versions. During this stage, the goal is
to gain consumer preference and increase sales. Marketer follows competition
oriented pricing, because the total market is being shared among many firms.
Main features of this stage are:
(a) Rapid increase in sales of product.
(b) Wide acceptance of product by consumers
(c) Maximum profits to the consumers
(d) Entry of competitors
(iii) Maturity Stage : In the maturity stage, the demand tends to reach a
saturation point & there is enough supply from competitive sources. Price
competition becomes intense & exploits the brand loyalty. The marketer try
out product & packaging modification, & various promotional deals & make
special offers to new market segments so that his sales volume do not shrink.
Main features of this stage are:
54
(iv) Decline Stage : In the decline stage, sales begin to fall. The demand for the
product shrinks, probably due to new & functionally advanced products,
becoming available in the market. The prices & margins get depressed, total
sales & profits diminish. But some firms at this stage may try to link up the
sales of these products with some other premium products they have
developed & thus try to stretch the life of the decline product.
(a) Decline in sales at fast speed
(b) Increasing losses
Thus, PLC concept helps & is used as a tool in formulating& implementing
marketing strategy.
It facilitates pre planning the product launch.
Facilitates prolonging the profitable phase.
Helps in monitoring sales results over e period of time
Facilitates investment decisions on products.
Facilitates choice of appropriate entry strategy.
Facilitates choice of the right time to exit.
Provides useful clues for managing customers.
framework is given to them. Sometimes new product ideas come out just
as a matter of happening.
Eg. Portable stereo cassette player of Sony of Japan.
(2) Idea Screening : In this stage, various new products ideas are put under
rigorous screening by evaluation committees. Answers are sought like:
It there a felt need for the new product? It is an improvement over the
new product? etc.
(3) Concept Testing : Concept testing is different from market test / test
marketing. What is tested at this stage is the product concept itself,
whether the prospective customers understand the product ideas, whether
they are receptive forwards the ideas; whether they actually need a
product. This exercise helps the firm to thrash out much of the vagueness
associated with the new product idea. Concept testing is of special
importance when a totally new product in contrast to a ―mee too‖ product
– is being planned for introduction.
(4) Business / Market Analysis : This stage is of vital importance because
several important decisions regarding the project are undertaken based on
the analysis done at this stage.
This stage will decide whether from the financial & marketing point of
view, the project is worth proceeding with. Investment analysis &
profitability analysis of the project under difference assumptions are made
at this stage.
(5) Estimating the Demand for New Product : Firms usually take up
estimating the demand for the new product as a part of business analysis
/ market analysis. There are 2 methods to estimate demand of new
products :-
(a) Substitution method
(b) End use method
In substitution method, the demand for the existing product is forecasted
using standard forecasting method. Based on that, an idea of the demand
for the new product is gained. Analysis will show which products &
market are open for substitution by the new product. The estimated
58
demand for the existing product can serve as the maximum limit for the
demand for the new product.
In, end use method, products that have an altogether new end use do
come to the marketer once in a while. The only way to assess the demand
for such products is to define the end use of the new product & to locate
the potential customers for it. The aggregate of potential customers in each
use category is taken as the potential demand in that category. By adding
the demand in the various use categories, one can get an indication of the
total potential demand for the new product. This is to be taken as the
upper limit of potential. In this method, the forecaster has to be
particularly cautious in defining the end use for the product.
(6) Actual Development of the Product : In this stage, the firm develops the
product as such. In the actual development, production & marketing
departments are actively involved besides R & D.
(7) Market Test : Now, the new product has to be tried out in selected market
segments. Market test is essentially a risk control tool. It is experimental
marketing at minimum cost & risk. When firms decide on a full scale
manufacturing & marketing of the product on the basis of the results of
the experiment, it helps avoid costly business errors.
(8) Test Marketing : In test marketing, the new product, with the support of
the chosen marketing mix is actually launched & marketed in few selected
cities / towns / territories. Test marketing needs careful handling. Care is
required in the first place in selecting the test markets. Test marketing is
also a time consuming process, it has to be carried out for a fairly long
duration in order to obtain a reliable indications. Eg. HUL introduced
organics, but failed.
(9) Commercialization : At this stage, the company takes the decision to go in
for large scale manufacturing & marketing of the product. At this stage
the company fully commits itself to commercialize the new product with
the required investment in manufacturing & marketing.
Q.9 What are the main decision areas in packaging?
OR
Marketing Management 59
Perceived quality
Positive symbols & favorable associations around the brand. Brand
equity also adds to the bottom line on a long term basis. For, when
a brand has high brand equity, it means that consumers are willing
to pay a premium for the brand & its extensions. The values of
brands owned by firms, like HLL, ITC, & the IT majors like Infosys
& wipro are many times their total assets.
Brand equity can be measured & quantified. Through it is an asset,
traditionally, brand equity has been omitted from the balance sheets
because of its intangibility. Criteria such as market share, market ranking,
brand stability & track record, stability of product category,
internationally market trends, advertising & promotional support & legal
protection are used for measuring brand equity.
(b) Product Differentiation : Product differentiation & product positioning
are central themes in the marketing strategy. Product differentiation is one
of the basic routes to marketing strategy. The major attraction & the major
benefit in resorting to differentiation is that it takes the firm away from a
total price based competition. Products can be differentiated on the basis
of a number of different product or service dimensions such as product
features, performance, conformance durability, reliability, style & design.
Besides these specific concerns, on more general positioning for brands is
as ―best quality‖. The strategic planning studied the impact of higher
relative product & found a significantly positive correlation between
relative product based on differentiation.
(i) Close up with get – Colgate, the leader in the industry was
compelled to copy this differentiation as its market share fill at the
hands of new brand.
(ii) Vatika with herbal ingredients.
(iii) TTK prestige with Teflon.
(iv) Titan matches (differentiation based on product design.
(v) Ray Ban (Differentiation on the basis of glass).
62
Pears
Rexona
Product
Line
length
Product mix width & product line length of HUL.
(c) Marketing Strategy : Here, the product manager defines the mission &
marketing & financial objectives. The manager also defines those groups
& needs that the market offerings are intended to satisfy. The manager
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Q.13 What are the various routes taken by the firm in fixing the prices?
OR
What are the various methods of pricing?
OR
Explain the different pricing strategies.
Ans.: There are several methods of pricing & they can be grouped into few broad
categories :-
(1) Cost Based Pricing
(2) Demand Based Pricing
(3) Competition Oriented Pricing
(4) Value Pricing
(5) Product Line Oriented Pricing
(6) Tender Pricing
(7) Affordability Based Pricing
(8) Differentiated Pricing.
(1) Cost Based Pricing : Under the cost based pricing, different methods used
are :-
Mark Up Pricing
Absorption Cost Pricing
Marketing Management 67
Penetration pricing in such cases will help the firm have a good coverage
of the market & keep competition out for some time.
In all demand based pricing methods, the price elasticity of demand is
taken into account directly or indirectly. Price elasticity of demand refers
to the relative sensitivity of demand for a product to changes in its price in
other words how significantly the sales of the product are affected when
price is changed. If an increase or decrease in the price of the product
results in significant decrease or increase the product is said to be price
elastic conversely, if price change does not significantly affect the sales
volume, a product is said to be price inelastic.
(3) Competition Oriented Pricing : In a competitive economy, competitive
oriented pricing methods are common. The methods in this category rest
on the principle of competitive parity in the matter of pricing. Three
policy options are available to the firm under this pricing method :-
Premium Pricing
Discount Pricing
Parity Pricing
Premium pricing means pricing above the level adopted by competitors.
Discount pricing means pricing below such level & parity pricing means
matching competitors pricing.
(4) Value Pricing : Value pricing is a modern innovative & distinctive
method of pricing. Value pricing rests on the premise that the purpose of
pricing is not to recover costs, but to capture the value of the product
perceived by the customer. Analysis will readily show that the following
scenario are possible with the cost value price chain.
Value > Price > Costs
Price > Value > Costs
Price > Costs > Value
Price > Value > Costs
Under Scenario :
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(i) Marketer recovers his costs through price, but fails to recover the
value of his product.
(ii) He recovers his costs as well as the value.
(iii) The value that he passes on to the customer is still lesser.
(iv) He matches the value & price & wins customer loyalty & since the
value created is larger then his costs, he ensures his profits.
(5) Product Line Pricing : When a firm markets a variety of products grouped
into suitable product lines, a special possibility in pricing arises. As the
product in a given product line are related to each other, sales of one
influence that of the others. They also have interrelated costs of
manufacturing & distribution. It can fix the prices of the different product
in such a manner that the product line as a whole is priced optimally,
resulting in optimal sales of all the products put together & optimal total
profits from the line.
(6) Tender Pricing : Business firms are often required to fix the prices of their
products on a tender basis. It is more applicable to industrial products &
products purchased by Institutional customers. Such customers usually go
by competitive bidding through sealed tenders. They seek the best price
consistent with the minimum quality specification & thus bag the order.
(7) Affordability Based Pricing : The affordability based pricing is relevant in
respect of essential commodities, which meet the basic needs of all
sections of people. Idea here is to set prices in such a way that all sections
of the population are in a position to buy & consume the products to the
required extent.
(8) Differentiated pricing - Some firms charge different prices for the same
product in different zones/ areas of the market. Sometimes, the
differentiation in pricing is made on the basis of customer class rather
than marketing territory.
Marketing Management 71
Case Study
Vespa is an Italian brand of scooter manufactured by Piaggio. The name means wasp
in Italian.
The Vespa has evolved from a single model motor scooter manufactured in 1946 by
Piaggio & Co. S.p.A. of Pontedera, Italy—to a full line of scooters and one of seven
companies today owned by Piaggio—now Europe's largest manufacturer of two-
wheeled vehicles and the world's fourth largest motorcycle manufacturer by unit sales.
Folks from the era of Bajaj Chetak and LML Vespa will have a déjà vu because both
these models took inspiration from the original Vespa‘s styling. Vespa produced
scooters in partnership with Bajaj Auto in the 1960s but that ended in 1971 as Indira
Gandhi‘s privatization programs came into place. In the 1980s, Vespa partnered with
LML Motors in India to produce the famous P series scooters. This partnership ended in
1999 because of an irresolvable dispute.
Piaggio is very optimistic about its re-entry in India. The company expects that its sales
in India will cross its global sales across various markets within 2-3 years..
However, deeper pockets are not the only thing 21st century India is now armed with.
Today aesthetics and brand value also hold importance in the minds of the urban
Indian who knows the deep rooted meaning of retro, vintage and lineage when it comes
to cars and bikes, and in this case, scooters. Vespa seems to understand that there is no
such thing as a premium market for scooters in India, yet.
There are tons of scooters in the Indian market available at affordable and reasonable
prices. Then why would someone pay a 15-25% premium to buy the Vespa? The answer
is simple.
Vespa is a brand that resembles the 60s, vintage style, class and a design that has stood
the test of time. Just like sporting a vintage styled Louis Vuitton suitcase is fashionable,
riding this Italian wasp (Vespa means wasp in Italian) is all about oozing style and
sophistication – a quality uniquely associated with everything Italian.
LX 125 is the name of the Vespa model in India and it has a 125 cc gearless
engine with variomatic transmission, trailing link front suspension, drum brakes
and a unique single monocoque chassis.
It has been tailored to be extremely fuel efficient. Vespa claims a fuel efficiency of
60 kmpl.
Marketing Management 73
The under-seat storage is large enough to fit a helmet and the glove box too has
multiple storage units.
The frame of the scooter is made of very light metal, making it very easy to twist
and turn the scooter to maneuver it in Indian traffic jams.
The price of vespa has been decided at rs 66,651
The key for all the foreign players to be successful in India is to show high levels of
product adaptation to demographical taste. Maruti Suzuki went out of the way and
designed its latest offering, Ertiga, in Japan, keeping Indian consumers in mind. Piaggio
too, is leaving no stone unturned and has made a changes to the original European
design to appeal India Inc.
The shape of the seat has been changed to the needs of Indian women who prefer
to saddle sideways while riding pillion on scooters.
Keeping the Indian women happy, the LX 125 also has a slimmer body because
Vespa thought it‘d go well with the side-sitting position of the woman pillion
rider.
Considering that Indian women may wear saris while riding a scooter, the
footboard has been lowered for more leg space.
Considering Indian traffic, a louder horn has been given to the LX 125.
Considering Indian driving conditions, Vespa has also tweaked the distance
between the surface of the road to the engine of its scooter. Vespa claims that this
modification will reduce the chances of damages due to bumps and pavements.
The rear wheel ergonomics have been redesigned to make it easier for riders to
change their tires in case of a puncture.
Questions?
Q.1 According to the product classification, Vespa LX 125 can be categorized under
what all criteria. Explain
Q.2 Discuss the individual product decisions in terms of Vespa?
Q.3 Where will you place Vespa in PLC. Suggest the related appropriate strategies?
74
4 The total number of items that the company carries within its product lines refers
to the ___________ of the product mix.
a. width
b. depth
c. length
d. consistency
Marketing Management 75
Unit – 4
To get better response from the target customers, you have to adopt all the
different components of the promotion mix. However, it should be noted that the
elements of the promotion mix must be coordinated and integrated so that they
reinforce and complement each other to create a blend that helps in achieving the
promotional objectives of the organization.
The message carried out through publicity is in the hands of media and not
controlled by the organization/firm.
4. Sales promotion - is any activity that offers an incentive for a limited period to
obtain a desired response from the target audience or intermediaries which
includes wholesalers and retailers. It stimulate consumer demand, market
demand and improve product availability. Examples: Contests, product
samples, Coupons, sweepstakes, rebates, tie-ins, self-liquidating premiums, trade
shows, trade-ins, and exhibitions.
Q.3 What are the advantages and disadvantages of each element of the promotion
mix?
Q.6 What are the various objectives & components functions of physical
distribution / marketing logistics?
Ans.: Physical distribution is the process of delivering the product to the marketing
channels & consumer. It encompasses the various activities involved in the
physical flow of the product from the producers to the consumers. Marketing
logistics is somewhat larger in scope compared to physical distribution. It covers
physical distribution plus a part of the task of marketing channels. Marketing
logistic bring in greater value addition in the delivery chain beyond
transportation or distribution.
Objectives of Physical Distribution / Marketing Logistics :
Marketing Management 81
OR
What are the different levels of channels?
Ans.: Most producers do not sell their goods directly to the final users, between them
stand a set of intermediaries performing a variety of functions. These
intermediaries constitute a marketing channel. Marketing channels are sets of
independent organization involved in the process of making a product or service
available for use of consumption. They are set of pathways a product or service
follows after production, culminating in purchase & use by the final end user.
Types of Marketing Channels :
1 Sole selling agent 7 Retailer / dealer
2 Marketer 8 Broker
3 C & F agents 9 Franchises
4 Redistribution stockiest 10 Authorized representatives
5 Distributor / Wholesaler 11 Commission agents
6 Semi wholesaler 12 Jobbers
1) Sole Selling Agent / Marketer : When a manufacturer prefers to stay out
of the marketing & distribution task, he appoints a suitable agency as his
sole selling agent. A sole selling agent is usually large marketing
intermediary with large resources & extensive territory of operation. He
will be having his own network of distributors / stockiest / wholesales &
retailers. He takes care of most of the marketing & distribution functions
on behalf of the manufacturer.
(vi) Share the financial burden of the principle, provide deposits, finance the
stock till they are sold to the ultimate consumers
(vii) Provide salesmanship.
(viii) Provide pre sale & after sale service.
(ix) Assist sales promotion.
(x) Assist in introducing new products.
(xi) Assist in developing sales forecast/ sales plan for the territory.
Case Study
Parle Products has been India's largest manufacturer of biscuits and confectionery for
almost 80 years. Makers of the world's largest selling biscuit, Parle-G, and a host of
other very popular brands, the Parle name symbolizes quality, nutrition and great taste.
With a reach spanning even to the remotest villages of India, the company has
definitely come a very long way since its inception.
Available Anywhere
Today, the great strength of Parle Products is the extremely widespread distribution
network. Even at the remotest places, you can buy Parle biscuits and sweets from the
local grocer. It has taken years to create this extensive network. Parle‘s sales force
started with one salesman in Bombay and some agents in few other cities. Gradually,
Parle Products expanded. Soon sweets and biscuits were being sent by rail to Calcutta,
Delhi, Karachi, Madras and other major cities. As production increased, distribution
was amplified. Full time salesmen were appointed in different areas. Currently, Parle
Products has over 33, 00,000 distribution outlets.
Intensive Distribution
Parle uses Intensive Distribution for Parle G. This is the ideal strategy for the market
leader
88
Level 1:
Availability of Parle G biscuits at all departmental stores across the length and breadth
of the country.
Level 2:
Since it's an FMCG product this channel exists for customers scattered throughout the
country.
Level 3:
Mass consumption and suitable for National and International coverage. For e.g. Parle's
international operations consist of serving markets in the Middle East, Africa, South
America, Sri Lanka, Australia and North America for which the 3 level distribution
channel exists.
Channel Dynamics
Parle has a multi-channel marketing system since it uses more than two marketing
channels to reach all its customer segments.
The Distributors
Trade Marketing
Questions :-
Q.1 What makes Parle a king of distribution?
Q.2 How do Parle managed to penetrate deep into the remotest places in Indian
market?
90
4 If your company were to make a product such as a suit of clothes and sold that
product to a retailer, your company would have sold to the ___________ market.
a. reseller
b. business
c. government
d. service
5 If your company were to make light bulbs to be used in photocopiers, you would
most likely be selling to a ________________ market.
Marketing Management 91
a. reseller
b. business
c. government
d. service
92
Unit 5
Q.1 What is marketing research? State its need & importance in the marketing
scenario?
OR
Define marketing research. What is its need & importance?
Ans.: Marketing Research is the systematic, objective & exhaustive search for & study
of the facts relating to any problem in the field of marketing.
Or
Marketing Research is systematic problem analysis, model building & fact
finding for the purpose of decision making & control in the marketing of goods
& services.
OR
Marketing Research is the systematic gathering, recording & analysis of data
about problems relating to the marketing of goods & services.
Marketing research plays an equally important role in marketing management
and uses marketing information as its input, it simultaneously generates more of
it as output.
There may be many reasons for carrying out market research. It may be carried out
to find out
be costly. Many firms do not have the proficiency to carry wide surveys for
collecting primary data, and might not also able to hire specialized market
experts and research agencies to collect primary data. Thus, in that case, they go
for obtaining secondary data that is cheaper to obtain but it cannot be always
correctified upto the mark.
Time constraints – MR faces time constraint. The firms are required to maintain
a balance between the requirement for having a broader perspective of customer
needs and the need for quick decision making so as to have competitive
advantage, in order to maintain or improve their position in the market
Reliability of the data – the value of any research findings depend critically on
the accuracy of the data collected. MR is not free from bias. The results of MR
are very vague as it is carried out on consumers, suppliers, intermediaries, etc.
who are humans who have a tendency to behave artificially when they know
that they are being observed.
Many business executives and researchers have ambiguity about the research
problem and it‘s objectives. They have limited experience of the notion of the
decision-making process. This leads to carelessness in research and researchers
are not able to do anything real.
Legal & ethical constraints – the Data Protection Act (1998) is a good example of
a law that has a number of implications for market researchers collecting and
holding personal data. For instance, researchers must ensure that the data they
obtain is kept secure, is only used for lawful purposes and is only kept for as
long as it is necessary. It must be made clear as to why data is being collected
and the consent of participants must be obtained. In addition to this, there are a
number of guidelines, laid down by such organisations as the Market Research
Society, that, although not legally binding, encourage organisations to behave
ethically when dealing with members of the public.
The objective of this research is broad. Its goal is to find out the price
expectations of consumers, their reactions and responses to different price levels
of product to ascertain elasticity of demand. It also deals with pricing research
and pricing strategy decision. It focuses on finding best business optimum price-
product-feature configurations in the context of market positioning
opportunities. Both qualitative and quantitative pricing research tools are used.
Product Research
Distribution Research
As the name itself says, the distribution research is all related to the distribution
management of a firm . It helps in examining, evaluating, determining the
various distribution channels, its accessibility, its availability, relative
effectiveness of various distribution channels, assessment of intermediaries
support etc
Concept Testing
Positioning Research
Branding Research
Brand equity research measures the breadth and depth of brand power in your
target markets. We use both standard and custom tailored brand equity survey
measurements. A key to research design is the goal of a brand equity
measurement study.
Advertising Research
Advertising research can be done to determine specific advertising goals and the
stage of ad development, or campaign. It can be used to determine and examine
various important elements of advertising copy e.g basic theme, ideas, appeals,
headline, conviction value, attention value etc. Broad range of advertising
research techniques include ad recall surveys, message and theme salience and
Marketing Management 97
Market Segmentation
Sales Analysis
It is basically used to find out the sales potential of company‘s product and
evalution of sales performance. Sales research and analysis may also cover
research, analysis and evaluation of – formulation of sales territories,
measurement of sales performance of personnels in terms of volume and profits,
revision of sales territories, evalution of sales method etc
It is one of the most important areas of marketing research. Its basic purpose is to
assess and determine, examine and evaluate the environment fitness of the firm.
It takes into consideration all the internal and external, macro & micro factors of
environment into consideration.
The end product of this exercise has to be a clear definition of the problem
& research objectives.
(2) Develop the Research Plan : The second stage of marketing research
requires developing the most efficient plan for gathering the needed
information. This involves decision on the data sources research
approaches, research instruments, sampling plan & contact methods.
Data Sources : The research can gather secondary data, primary data.
Secondary data are data which already exist somewhere. Primary data are
data freshly gathered for a specific purpose or for a specific research
project.
Research Approaches : Primary data can be collected in 5 ways – Through
observation, focus group, surveys, behavioral data, experimental research.
(i) Observation Research : By observing the relevant actors & settings.
(ii) Focus Group Research : A focus group is a gathering of 6-10 people
who are invited to spend a few hours with a skilled moderator to
discuss a product service, organisation. The moderator starts with a
broad question & help the group move through various aspects of
the entity being discussed. The moderator keeps the discussion
focused on the relevant theme. Discussion is recorded using an
audiotape or videotapes.
(iii) Survey Research : Companies undertake surveys to learn about
people‘s beliefs & preference & satisfaction.
(iv) Behavioural Data – Customers actual purchases reflect preferences
& are normally more reliable than memory based statements.
(v) Experimental Research : The purpose is to capture cause & effect
relationships by eliminating competing explanations of the
observed findings, to the extent that the design & execution of the
experiment eliminate alternative hypothesis that might explain the
results.
Marketing Management 99
purchases during the period, how much stock they hold, sales levels of
difference brands, price trends etc. This techniques is called as Inventory
& Purchase audit.
(c) Advertising Audience Panels : It consist of persons getting exposed to
advertising in the various media such as readers of publications, TV
viewers, & radio listeners. The main purpose is to gather valuable
information for media planning. The panel members keep recording the
programs viewed by them.
Advantages :
(i) Changes taking place over time in buyer behavour can be monitored
through panels.
(ii) Relationship between changes in buyer behaviour & changes in the
marketing mix can also be analyzed.
Disadvantages :
(i) Panel requires a greater degree of cooperation between the panel & the
researcher.
Market Survey : Market survey is one of the widely used MR techniques. It is a
method of collecting marketing information required for a given marketing
research assignment. It is used when the required data is not available with the
company interval records as well as external published sources.
Steps Involved in Market Survey :
(a) Planning the Survey
Problem definition
Relation of survey method
Sampling
Questionnaire development
102
Pilot survey
(b) Field Work
Selection of investigators
Collection of data
(c) Processing
Processing of data
Tabulating
(d) Analysis & Interpretation
Editing
Interpretation data
Statistical Analysis
(e) Report Making
Summarizing findings & recommendations
Report writing
Other MR Techniques :
(1) Multi Dimensional Scaling : MDS is used to graphically portray
consumer evaluation of products / brands. It has been developed with
inputs from mathematics & psychology. The techniques takes consumer
judgments of perceptions & preferences & builds geometric
representations or maps in which brands that are Judged to be similar get
plotted near each other in the geometric space. The map helps the
researcher to understand how a given brand is perceived.
(2) Conjoint Analysis : It is used to measure consumer preference for
alternate product ideas & product attribute combinations. It measures the
joint effect of two or more independent variables or strategy options like
price, package, colour, brand name etc.
Marketing Management 103
Ans: Marketing controls help monitor progress toward goals for customer satisfaction
with products and services, prices, and delivery.
These are: Annual plan control; Profitability control; Efficiency control and
Strategic control, which are described briefly as under:
Annual plan control is the monitoring of current marketing efforts and results to
ensure that the annual sales and the profit goals are achieved. Annual plan control
signifies continuous ongoing performance verification against the annual plan and
taking the necessary corrective actions. It is the responsibility of the top and middle
management and the purpose is to examine whether planned results are being
achieved in terms of sales, profits, costs, finance, attitudes of participants in
marketing operations.
Market share analysis: Market share analysis is the study of firm‘s sales in
relation to its competitor or competitor‘s performance; rather it is to ascertain the
percentage share of the firm in the industry‘s sales. The purpose is to identify the
company‘s hold or the status in the industry vis-à-vis its competitors and to
determine whether it has attained the target market share both in segregate and
break-up aspects like products, regions and the customers. If used in
combination with sales analysis, market share analysis should reveal certain
useful clues regarding the firm‘s marketing performance.
104
Higher the rate or the number of times better is the inventory management.
However, very high turnover also means stock-out situation and lost sales.
Marketing Management 105
This ratio is one that measures the relationship between the credit sales and the
average receivables or the sundry debtors out-standing during the accounting
period. In fact, it warrants calculation of two ratios as under:
2. Profitability control:
Profitability control or profit analysis refers to the study of profit generated and
contribution made to it by different products, regions and the customers.
Profitability control is to determine the actual profitability of the firm‘s products,
territories, market segments and trade channels. Profitability control is exercised
to examine where the company is - making and losing the money. All marketing
companies should measure the profitability of their products, territories,
customer groups, trade channels and order sizes, in addition to annual plan
control. This profitability control information is so vital to the management that
106
3. Efficiency control:
Efficiency control is the task of improving the efficiency of such marketing activities
as personal selling, advertising, sales-promotion and distribution. Efficiency control
is undertaken to evaluate and improve the spending efficiency and impact of
marketing expenditures on the marketing operations. The responsibility rests with
the marketing controller and marketing departmental line and staff people. There is
close relationship between profitability and efficiency. Poor profits mean less
efficient management of sales-force, advertising, sales-promotion and physical
distribution It also means that the firm is to hunt out more efficient ways and means
to manage these entities These performing entities are to be assessed as to their
efficiency; there will be, therefore, four such areas for efficiency control as outlined
below.
Sales efficiency: The sales manager at each level – regional, district and area – is
expected to keep track of the key indicators of the sales-force efficiency in their
territory like, average number of calls per salesman per day – calls time per
contact – revenue per sales call – cost per sales call-entertainment cost per sales
call – percentage of orders per 100 calls – number of new customers per period –
number of lost customers per period – and sales-force cost as a percentage of
total sales. Such efficiency investigation paves the way for possible
improvements in specific areas.
Advertising efficiency: Effort should be made to keep tract of the outcome of the
advertising. These indicators are: Average cost per thousand target buyers
reached by the media category and media vehicle – consumer opinions on the
advertisement content and efficiency or effectiveness – pre and post attitude
towards product-number of enquiries stimulated by the ad and the cost per
enquiry. Ad efficiency can be improved by better product positioning, defining
ad objectives, pre and post testing of message, use of computer guidance for ad
media selection and the like.
Sales-promotion efficiency: In order to improve sales-promotion efficiency, the
manager in charge should record the costs and sales impact of each sales-
promotion device. He is expected to keep track of percentage of coupons
Marketing Management 107
4. Strategic control: Strategic control is the crucial task of making sure that the
company‘s marketing objectives, strategies and systems are optimally adapted to the
current and forecasted marketing environment. Strategies control refers to the in-
depth study undertaken to examine whether the company is pursuing its best
opportunities with respect to markets, products and channels. Such an investigation
is a must because marketing is an area where rapid obsolescence of objectives,
policies, strategies and programmes is a regular possibility. In effort, it is a crucial
review of overall marketing effectiveness.
The tools of strategic control are two namely, marketing effectiveness rating review and
marketing audit.
The marketing effectiveness rating review: Perhaps the most difficult task in
marketing area is the assessing of marketing effectiveness. Marketing
effectiveness is situational; there is no guarantee that good results are the
outcome of excellent marketing management for change in management may
throw good results into equally bad or worse. The marketing effectiveness of a
firm is reflected in the degree to which it exhibits the major attributes of a
marketing orientation; customer philosophy integrated marketing organization -
adequate marketing information – strategic orientation and overall optimal
efficiency. Therefore to measure the marketing effectiveness, one should measure
these five attributes. Experts have devised a ―Marketing Effectiveness Rating
Instrument‖ based on the above five attributes. It contains three questions in
each attribute area and three possible answers to be ticked by the managers of
marketing and other divisions of the firm. The total scores are then summarised
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in six points ranking ranging between ‗one‘ to ‗superior‘ with intermediate ranks
as ‗poor‘, ‗fair, ‗good‘, and ‗very good‘.
Marketing Audit: The marketing audit is a fundamental part of the marketing
planning process. It is conducted not only at the beginning of the process, but
also at a series of points during the implementation of the plan. The marketing
audit considers both internal and external influences on marketing planning, as
well as a review of the plan itself.
There are a number of tools and audits that can be used, for example SWOT analysis
for the internal environment, as well as the external environment. Other examples
include PEST and Five Forces Analyses, which focus solely on the external
environment.
In many ways the marketing audit clarifies opportunities and threats, and allows the
marketing manager to make alterations to the plan if necessary.
Case Study
Cherry International (CI) is led by Rajan Cherian, a mechanical engineer from BITS
Pilani, with over 20 years of marketing experience in dealing with Government and
Private Sector in India. He gained 11 years experience in a Multinational Company in
India, deploying marketing strategies with various mining, material handling and
chemical industries. Later he started his own marketing company in India before
migrating to Australia in 1992. The thing that sets Rajan Cherian apart from most other
export consultants is that he will travel to India and work on your behalf - just as if he
were your employee! Whether it is to check out the background to a Tender application,
or dig out information about companies- he'll work with you to achieve success. He will
assist you and your staff to ensure a positive interaction with your representatives and
customers in India.
A key to success in India is finding the right partner to import and distribute your
product/service or locally manufacture your products there.
These are the range of services available but if you want something different, CI feels
pleased to explore the possibilities.
A. Market Research
tele-research
detailed market research report (industrial market research specialisation)
market visits
B. Business Strategy
C. Marketing Services
Cherry International was contracted to provide these services and the products
were launched after importing typical items for a trade exhibition. The launch was
designed to provide extensive press coverage both in the print and visual media. It
also included organising a Road Show across India for those in the industry. The
entire show went off with great aplomb and was judged a complete success by the
Managing Director of the Australian Company. (It required CI giving television
news information in Hindi language!)
The product was suitably classified for import purposes and imported for
Seed marketing. Over the course of time, suitable distributors were found
and shortly 7 distributors were appointed. The market was trained in the
usage of the product and today these products are being regularly
imported and distributed throughout the country. In addition to all this,
suitable advertising and direct marketing plans were worked out and they
have been well received in the market.
Questions
Q.1 How ―Cherry International‖ has helped the international export houses to
introduce them in India?
Q.2 How the services being offered by CI has helped the companies in research and
development?
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1 Marketing information system are built upon the gathering, sorting, analyses and
evaluation and distribution of information and are comprised of which of the
following?
a> People
b> Intelligence activities
c> Computer Programmes
d> Research procedures
e> All of the above
2 Primary data is information that is collected for various reasons. Primary data is
not obtained from which source?
a> Secondary data
b> Online data
c> Specific purpose data
d> All of the above
e> None of the above
3 Gathering information helps to identify trends and issues related to which of the
following areas?
1) Current customers.
2) Potential customers.
3) Competitors.
4) Environmental factors.
5) Marketing mix developments.
a> 1,2
b> 1,2,3 and 4
c> 1,2,3
d> All of the above
Marketing Management 113
6 In 1985, the Coca-Cola Company made a classic marketing blunder with its
deletion of its popular Coca-Cola product and introduction of what it called
New Coke. Analysts now believe that most of the company's problems
resulted from poor marketing research. As the public demanded their "old
Coke" back, the company relented and reintroduced Coca-Cola Classic (which
has regained and surpassed its former position) while New Coke owns only
0.1 percent of the market. Which of the following marketing research mistakes
did Coca-Cola make?
a. They did not investigate pricing correctly and priced the product too high.
b. They did not investigate dealer reaction and had inadequate distribution.
c. They defined their marketing research problem too narrowly.
d. They failed to account for the Pepsi Challenge taste test in their marketing
efforts.
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Key Terms
Marketer: A person who indentifies the needs and requirements of the consumer,
produces goods and services according to consumers‘ requirements and needs and then
sells them through marketing on behalf of a company.
Prospects: A prospect is a potential customer or sales lead who has actively expresses
his or her interest in the product or service.
Market Targeting : Target Marketing involves breaking a market into segments and
then the selection of a particular market sector toward which all marketing effort is
directed and concentrated
Niche Marketing/Micro Marketing : Niche market is the subset of the market wherein
the firm concentrates all its marketing efforts on a small but specific and well defined
segment of the population. Niches do not 'exist' but are 'created' by identifying needs,
wants, and requirements that are being addressed poorly or not at all by other firms,
and developing and delivering goods or services to satisfy them. For eg, sports channels
like STAR Sports, ESPN, STAR Cricket, and Fox target a niche of sports lovers.
Product Mix : Product mix refers to the whole range of products and services that a
company offers to its customers. It is also known as product assortment.
Product Line : A company creates a group of products, which have many common
main characteristics. In other words, A product line is a set of related products sold by a
single company.
Product Depth : It refers to the number of varieties of each product within each product
line.
Example : product line is something like Hindustan Uniliver have different products
like soaps, shampoos, etc, product width is when we see its soap category they have
various soaps....and when we take product depth it means taking certain soap
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characterstics such as in what quantity its packs are available, available fragrances
within each soap category etc.
Product Consistency: It refers to the relationship between all products in their final
destination of product lines within an organization.
Line stretching: Line stretching occurs when a company lengthens its product line
beyond its current range.
Line filling: "Line filling is the type of product line extension to introduce new version
of existing product in the market."
Brand reinforcement: Activity associated with getting consumers who have tried a
particular brands to become repeat purchasers and with attracting new users, Brand
reinforcement is a key objective of the growth stage of the product‘s life cycle.
Brand revitalization : When a brand begins to lose its market share, its parent company
has to face the decision of harvesting the brand or revitalizing it before it fades from
store shelves and consumers‘ minds. Thus, it is a strategy to recapture lost sources of
brand equity and identify and establish new sources of brand equity. This may include
product modification or brand repositioning.
Reference price : A pricing strategy in which a product is sold at a price just below its
main competing brand to make it look more attractive in terms of price.
Reference Books