Q.1 Explain the following: a) Product mix dimensions b) Product line strategies Ans.

: a) Product mix dimensions

Product mix: The number of product lines and items offered by marketer to the consumers A companys product mix has four different dimensions. They are product mix width, product mix length, product mix depth and product mix consistency. The following (Table 8.4) shows the product mix of Jyothy Laboratories.

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Product mix width: The total number of product lines that company offers to the consumers. For example, Jyothy Laboratories product mix has six lines. Hence the width is 6 Product mix length: The total number of items that company carries within its product line. For example, Jyothy Laboratories fabric care division has three items

Product mix length: The total number of items that company carries within its product line. For example, Jyothy Laboratories fabric care division has three

items

Product line depth: The number of versions offered of each product in the line. For example, Jyothy Laboratories Jeeva Natural is offered in three versions i.e. Coconut Milk with Milk Protein, Coconut Milk with Jasmine and Coconut Milk with Kasturi Manjal, and is presented in 75gm packs. Product mix consistency: If companys product lines usage, production and marketing are related, then product mix is consistent, else it is unrelated. In the case of Jyothy Laboratories, all six product lines are FMCGs. Hence it is having consistent product mix. But ITC Companys cigarette and cloth product lines are totally unrelated.

b) Product line strategies

Product line: The group of related products which uses same marketing efforts to reach the consumer. The product line identifies profitable and unprofitable products and helps in allocation of resources according to that. The product line understanding helps the marketer to take line extension, line pruning and line filling strategies of the company. Pidilite Industries, the adhesives and chemical company, have the following group of related products (or product lines) in consumer and business markets. Consumer market. 1. Adhesives and sealants. 2. Art materials and stationeries. 3. Construction chemicals. 4. Automotive chemicals 5. Fabric care Business market 1. Industrial adhesives. 2. Textile chemicals. 3. Organic pigment powders. 4. Industrial resins and 5. Leather chemicals. Product Line Decisions: The major product line decisions are

a. Product line length b. Product line stretching c. Product line filling d. Product line pruning a. Product line length: The number of items in the product line is called the product line length. Company should decide whether it requires longer chain or shorter length. The decision depends upon the objective of the company, competitive environment and profitability. If the chain is short company can add new products and if it is lengthy company can reduce the number of products. For example, Pidilites adhesives and sealants line has following 11 items in the product line. Hence the length of product line is 11

Q.2 a) Assess the factors that are involved in setting up a distribution channel. [6 marks] b) Give a note on Retailing. a) Factors that are involved in setting up a distribution channel.
1. Understanding the customer profile: Purchasing habits differ from individual to individual. Individuals who face shortage of time would like to purchase on the net (direct channel) and those who have abundant time would like to go through the shopping experience. Some of them would like to have variety of goods, while others want unique or specialized products. Hence marketers should understand who are his customers? How do they purchase and how often they purchase? For example, customers dont like to travel half a kilometer to purchase a shampoo sachet, but they dont mind travelling two kilometers while purchasing durable goods. 2. Determine the objectives on which channel is to be developed. a. Reach: Company would like to make the goods available in most of the retail outlets. So it, will adopt intensive distribution channel. b. Profitability: Company wants to reduce the cost in the channels and enhance their profitability. It will restructure the channel to optimum level so that it can reduce the cost and increase the profit. c. Differentiation: Company positions their products differently. When most of the industry players follow conventional system, company goes with new format of channels. For example, all computer manufacturers were adopting dealer-retailer channel to sell their products, but Dell started selling its product on the internet. 3. Identify type of channel members: Once the objectives are set on the basis of companys policies, it will analyze which types of channels are most suitable. Merchants, agents and resellers are some intermediaries involved in the distribution. Merchants are those who buy the product, take title and resell the merchandise. Agents will find the customers, negotiate with them, but do not take the title of the product. Facilitators are the people who aid the distribution but do not negotiate or take the title of the product. 4. Determining intensity of distribution: Intensity of distribution means how many middlemen will be used at the wholesale and retail levels in a particular territory. If the number of intermediaries is more, then the cost of the channel will increase. However, if the number of intermediaries is less, then company will not be able to meet all target customers. Therefore company should adopt optimum number of intermediaries. On the basis of how many intermediaries are required, company can adopt any one of the following strategies.

a. Intensive distribution: A strategy in which company stocks goods in more number of outlets. The intention is to make the goods available near to the customer. For example, you can find Parle-G glucose biscuits available in almost all the retail outlets in rural and urban areas. b. Selective distribution: A strategy in which company stocks goods in limited number of retail outlets. For example, televisions are sold only in selected retail outlets. TVs cannot be sold like toothpaste. Onida TVs are available in electronic retail shops like Viveks, Girias, Next, E-zone etc c. Exclusive distribution: In this type of channel format, marketer gives only a limited number of dealers the exclusive right to distribute its products in their territories. For example, a Kaya skin care solution of Marico is marketed through exclusive distribution. 5. Assigning the responsibilities to channel members. Company should define the territory in which the channel member should operate, at what price he should sell, services he should perform, and how he should sell. 6. Selecting the criteria to evaluate the channel member: Company may have different types of channel alternatives. It would like to choose any one of the alternatives, which meets its objectives. Channels can be evaluated in the design phase by the method called SCPCA. a. Sales(S): The ability of each channel member to generate the sales for company in a given period. b. Cost(C): How much cost each channel alternative incurs? Which one of the alternatives provides the optimum solution? c. Profitability (P): Various channel alternatives available to the company and their profitability shall be compared. Channel with better profitability shall be selected. d. Control (C): Every company would like to have better control over its channel members. Alternative channels can be evaluated on the basis of how much control each channel member desires. And how much control the company is willing to provide. e. Adaptability (A): Marketing is a dynamic world. Competition exerts pressure on companies to relook at their practices and supply chain continuously. The channel alternatives should be flexible enough to meet the changing requirements. Whichever channel alternative meets such objectives shall be selected.

b)

Give

note

on

Retailing.

Retail sector has witnessed tremendous growth in the last few years. The major factors which drive the retail boom are change in consumer profile and demographics, increase in the number of international brands available in the Indian market, economic implications of the government, increasing urbanization, credit availability, improvement in the infrastructure, increasing investments in technology and real estate. The Indian retail market, which is the fifth largest retail destination globally, according to industry estimates is estimated to grow from US$ 330 billion in 2007 to US$ 427 billion by 2010 and US$ 637 billion by 2015. Simultaneously, organized retail which presently accounts for 4 per cent of the total market is likely to increase its share to 22 per cent by 2010. As per Associated Chambers of Commerce and Industry of India (ASSOCHAM), the overall retail market is expected to grow by 36%. The organized sector is expected to register growth amounting to Rs 150 billion by 2008. Retail is amongst the fastest growing sectors in the country and India ranks 1st, ahead of Russia, in terms of emerging markets potential in retail. Characteristics of retailing i. Direct interaction with customers. Retailer is the final link between company and customer. Retailer understands the need of the customer and provides the proper solution to him. For example, neighborhood grocery store person knows his customer profile better. He reminds the customer of what to purchase and provides credit. ii. Purchased in small quantity: Customer purchases small quantity of merchandise at the retail store. Even if customer purchases less quantity he will purchase it frequently. This has led to better relationship between customer and retailer. iii. Tool of marketing communication: Companies use retailer location for point of purchase displays. They also encourage retailer to promote the products through word of mouth communication.

2 Functions of retailing i. Sorting: Retailers arrange the items in proper order so that customer can easily identify the goods or services that he needs. ii. Breaking bulk: The process of unpacking big packets into small packets. Retailer will perform this function as customer may not be able to purchase large quantity of goods and services. iii. Holding stock: Retailer works as storage facility to organizations. Retailer holds inventory to meet the day to day needs of consumer. iv. Channels of communication: Retailer promotes the company product through word of mouth communication. The retailer location is also used for point of purchase display. v. Transportation: Retailer undertakes door delivery order in case of durable goods. This feature is now adopted by the small grocery stores also. + 3 Type of retailing A. Store retailing: The mode of retailing where a store is essential in a particular location to do business. Store retailing can be performed in different formats. They are 1) Specialty store: The stores carry large amount of merchandise but in limited product lines like Textile store or furniture store. For example, Tanishq, jewelery retail store. 2) Department store: In this retail format, apparel, home furnishing and consumables goods and services are sold. Each of the formats is considered as a different department and managed in the retail store. For example, Shoppers Stop of Raheja group. 3) Supermarkets: According to Philip Kotler supermarkets are a relatively large, low cost, low margin, high volume, self service operation designed to serve the consumers total needs for food and household products. For example, Food World of RPG group. 4) Convenience store: These stores are very near to customer residence; usually carry or hold day to day products of high turnover at premium price. For example, Reliance Fresh 5) Discount store: These stores sell products at low prices with low margin. The store achieves their profit by generating high volumes. Subhiksha, a south India based retailer follows this format. 6) Off price retailers: This type of retailer buys the goods at less than wholesale prices. These products are sold at lesser than retail prices. For example, factory outlets in Marathahalli, Bangalore. 7) Super stores: These are very large stores where customer can purchase food and non food products. The super store includes category killers that carry large merchandise in a particular category. For example, Nalli sarees which carries a large variety of sarees in their stores. Another type of super store format which exists in India is Hypermarkets. These retail outlets have huge space and carry large merchandise. For example, Reliance Mart in Ahmedabad. B. Non store retailing: The mode of retailing where a company uses electronic media or direct selling medium to sell their products. For example, direct selling, Telemarketing, Automatic vending, online retailing and direct marketing.

Q. 3 Geo Ad Agency has many corporates as their clients. Due to lack of resources, it is planning to cut down work and reject certain clients. Further, they want to establish a concrete system in communication development and ad structure. What would be your advice to Geo Ad agency in this aspect?

Preparing target customer profile Effective marketing communication starts with identifying the target customer to whom the communication is developed. In this stage company prepares target customer profile. Target customer profile

Identifying promotion objectives Target customer profile provides inputs about his/her readiness to purchase the product. Customer may be in any of the six stages of hierarchy of effects. The six stages are awareness, knowledge, liking, preference, conviction and purchase. Every company will like to bring their customers to the purchase stage from other five stages. Therefore it creates different promotion program at different stage. To make it clearer, Company first creates awareness about the product, educate them about the advantages, induce them to choose the brand, stimulates and monitors that customer purchases the product. a. Awareness: Marketer creates the new range of products. Awareness level for these products is very low. Intention of the advertisement is to create awareness about these new products. In the following example of Reeboks play dry technology garments, it focuses to create awareness among the target audience. Look at the message copy of print advertisement.

b. Knowledge: In this stage target audience dont have complete knowledge of the product. Marketer explains the product in detail and its advantages to the target customers. Following advertisement of Parry Neutraceuticals explains the advantages of beta carotenes. c Liking: Promotion is used to convert knowledgeable audience into likeable category. Marketer uses celebrities to create interest in the product. For example, Reid and Taylor highlight their product quality in the advertisement by using Amitabh Bachhan a film actor. d Preference: Creating differentiation in the market place so that customer identifies it over the rival brands. Big bazaar advertisement with tag line is se sasta aur achcha kahin nahi or nobody sells cheaper and better is alluring the customer by telling them what differentiation they can bring. e. Conviction: customer may have preference over the product but he/she still not able to decide. In this situation, marketer develops the messages in such a way that it provides platform for him to decide. For example, Tata indigo, requests its customer to go for test drive and experience the truth. Customer may be convinced about indigo but not developed the conviction. Look at the words used in the copy. f. Purchase: Sometimes customers have strong desire to buy the product but due to affordability or any other environmental factor, they are not able to purchase. In this situation, marketer uses promotional schemes particularly reduced price schemes to attract the customer. Company also comes out with communication programs for repeat buyers and loyal customers. Designing a message After deciding the communication objectives, Marketer turns to develop right message which should create attention, interest, desire or action (AIDA) by the customer. Before deciding what should be there in the message, we will have to understand AIDA model in detail. The main objective of any message is to meet the AIDA model although the message framed will be subject to product type/category, ad budget and creativity skills of individuals. AIDA model: Attention: The marketing communication should generate attention towards the product. In this stage customer is having the need; organization should provide solution from their communication. For example, when advertisers use a popular film star or a celebrity to romote a perfume brand or even a soap or a toothpaste, it will immediately catch the audiences attention. Interest: Once the customer provides enough attention towards the communication, organization should stimulate it to create interest. For example, if celebrities are used to endorse products, audience must be curious enough to know what they are saying about that particular product. Desire: The interest created should be forced in the customer mind so that he will develop desire towards the product. For example, when people have seen the ad and show interest, next thing would be to create a desire for that product. People should have the willingness to buy the product and unless they dont desire it, they will not be eager to buy the same. Action: Strong desires should be turned into action. Hence company should provide the advantages of purchasing of the product in their communication messages. For example, it is very difficult for the Insurance companies to grab the attention of people towards insurance products, create interest and desire as to make a person buy the same. So, its a challenge to the marketer to develop such a message that immediately gets the attention and make a person to go for it. For example, it is easy to catch peoples attention towards ice-creams so that they will have interest and desire to taste it and eventually buy it. Deciding the message content Message content must have any one of the following appeals Emotional appeal: Positive emotional appeal or negative emotional appeals are strong tools used to intensify the purchasing activity of the customer. Positive emotions like love, pride, joy and humor are used in the message. Following are the advertisement where such attributes of

positive emotions used. The negative emotions like fear guilt and shame are also used in the advertisement to attract the customer. Rational appeals: Rational appeals highlight on the desired benefits about the products. They highlight quality, economy value or performance of the product. Moral appeal: These are concerned towards public health or environment or social responsibility. For example, Shell lubricants show its commitment towards environment in their advertisements. Message format : In this section we will discuss how message should look and stimulate the interest. Selecting the channels of communications The communicator may use company sales people, reference groups, blogs, RSS, webinar, online communities and social networking sites to promote their products. These media are called as personal communication channels. The word of mouth campaigns, buzz marketing and viral marketing are some examples of personal communication channels. Selecting the message source Messages communicated by the celebrities and proper sources have high credibility among the target consumers. Many companies use well known actors and actresses, cricket players, and even cartoon characters to promote their advertisements. Colgate- Palmolive well known FMCG company used Indian Dental Associations (IDA) recommendation to promote their toothpaste. As we have seen earlier Rahul Dravid, Amitabh Bachan and Karishma Kapoor are used as sources for Reebok, Reid and Tayolr, and Dabur Amla respectively. Companies should be very careful about the selection of the sources. If the product character does not match with sources, then product will fail in the market. Recently Pepsi dropped its sources Rahul Dravid and Sourav Ganguly and selected Rohit Sharma for the promotion campaigns. Target Customer Feedback The communicator collects the feedback on the promotion campaign to assess how many of target customers are able to see, hear or read the message. This stage helps communicator to understand how many of target customers actually able to recall the message? And among them how many of them really purchased it. Some companies go further and ask the customer to provide suggestion to improve the promotion campaign. Q.4 Discuss the objectives of training and training programme along with its significance [10 marks ] Objectives of Training : The objectives are summed up below: 1. To facilitate the salespersons to acquire the techniques and principles of salesmanship, process of sales, canvassing etc. 2. To bring down the labor turnover in the sales force. 3. To facilitate better sales performance. 4. To improve the relations with the customers. 5. To increase the efficiency of sales personnel. 6. To keep the salesperson informed about the products, market, competitors etc., to face different situations. 7. To lower the selling expense so as to increase the profits. 8. To maintain sound relations between employer and employee. 9. To develop better knowledge, and the ways and means to resist all undesirable situations. 10. To motivate the consumers more effectively. Significance of Training : The present era of marketing world is full of stiff and cut-throat competition. The world is dynamic and not static. Customers are more benefit-oriented. Producers, in order to meet the ever-changing demands of the consumers, produce new products, new devices, and products with multiple uses and so on. Thus, training or repeated

training is essential to keep the salesmen, with up-to-date knowledge, in respect of new or developed goods. Training gives scope for improvement. Q5. Management of Sai Systems Pvt. Ltd. has decided to enter international marketing scenario. What methods are applicable to the company to enter international markets and what should be the approach? [10 marks ] Methods applicable to Management of Sai Systems Pvt. Ltd to enter international markets Once the market is found to be attractive, companies should decide how to enter this market. Companies can enter the international market by adopting any one of the following strategies. They are a. Exporting b. Licensing c. Contract manufacturing d. Management contract e. Joint ownership f. Direct investment Exporting is the technique of selling the goods produced in the domestic country in a foreign country with some modifications. For example, Gokaldas textiles export the cloth to different countries from India. Exporting may be indirect or direct. In case of indirect exporting, company works with independent international marketing intermediaries. This is cost effective and less risky too. Direct exporting is the technique in which organization exports the goods on its own by taking all the risks. Maruti Udyog Limited, Indias leading car manufacturer exports its cars on its own. Company can also set up overseas branches to sell their products. Adani Exports, another leading exporter from India has international office in Singapore . Licensing : According to Philip Kotler, licensing is a method of entering a foreign market in which the company enters into an agreement with a license in the foreign market, offering the right to use a manufacturing process, trademark, patent, or other item of value for a fee or royalty. For example, Torrent Pharmaceuticals has license to sell the cardiovascular drugs of Chinese manufacturer Tasly. Licensing may cause some problems to the parent company. Licensee may violate the agreement and can use the technology of the parent company. Contract manufacturing : Company enters the international market with a tie up between manufacturer to produce the product or the service. For example, Gigabyte Technology has contract manufacturing agreement with D- link India to produce and sell their mother boards. Another significant manufacturer is TVS Electronics; it produces key boards in its own name as well as for other companies too. Management contracting : In this case, a company enters the international market by providing the know-how of the product to the domestic manufacturer. The capital, marketing and other activities are carried out by the local manufacturer, hence it is less risky too. Joint ownership: A form of joint venture in which an international company invests equally with a domestic manufacturer. Therefore it also has equal right in the controlling operations. For example, Barbara, a lingerie manufacturer has joint venture with Gokaldas Images in India. Direct Investment: In this method of international market entry, Company invests in manufacturing or assembling. The company may enjoy the low cost advantages of that country. Many manufacturing firms invested directly in the Chinese market to get its low cost advantage. Some governments provide incentives and tax benefits to the company which manufactures the product in their country. There is government restriction in some countries to opt only for direct investment, as it produces the jobs to the local people. This mode also depends on the country attractiveness. It may become risky if the market matures or unstable government exists.

Approaches to International Marketing The orientation towards the market varies from company to company. Each one adopts different approaches on the basis of their expertise or strength of the company. Some companies adopt same product for all the markets while others differentiate for each country. In this context, we would like to know what are the common approaches adopted by the company in international marketing. The three common approaches used in the international market are a. Domestic market extension approach. b. Multi domestic market orientation. c. Global market orientation. Domestic market extension approach: Companies that adopt this strategy think international markets are secondary to its domestic markets. For example, HSBC advertises its banking services with a tag line the worlds local bank. Multi domestic market orientation: In the international market each country has its uniqueness. Their preference varies. The consumer profile is different from domestic operation. Companies develop different market plans for such markets. For example, in France, men use more cosmetics than the women, whereas in India women use more cosmetics than men. A cosmetics company should change the product positioning differently. Global market orientation: In this approach, company thinks that products needs are universal in nature irrespective of country where they work. Here company tries to standardize their products or services. For example, Sony Walkman is same across the world. The product information brochure contains explanation in different languages of different countries. The final product is same in all the countries. Q6. a) Give a note on Product mix pricing strategies . [5 marks ] b) What is Brand development? How is it done? [5 marks ] a) Product Mix Pricing Strategies 1. Product Line pricing : Strategy of setting the price for entire product line. Marketer differentiates the price according to the range of products, i.e. suppose the company is having three products in low, middle and high end segment and prices the three products say at Rs 10 Rs 20 and Rs 30 respectively. In the above example of Nokia mobile phones Nokia 1110 is priced @ Rs 1349, Nokia 7610 priced @ Rs 6249 and Nokia E90 priced @ Rs 34599. All the three products cater to the different segments - low, middle and high income group respectively. The three levels of differentiation create three price points in the mind of consumer. The task of marketer is to establish the perceived quality among the three segments. If the customers do not find much difference between the three brands, he/she may opt for low end products. 2. Optional Prduct pricing : this strategy is used to set the price of optional or accessory products along with a main product. Maruti Suzuki will not add above accessories to its product Swift but all these are optional. Customer has to pay different prices as mentioned in the picture for different products. Organizations separate these products from main product so that customer should not perceive products are costly. Once the customer comes to the show room, organization explains the advantages of buying these accessory products. 3. Captive product pricing: Setting a price for a product that must be used along with a main product. For example, Gillette sells low priced razors but make money on the replacement cartridges. 4. By-product pricing: It is determining the price for by-products in order to make the main products price more attractive. For example, L.T. Overseas, manufacturers of Dawaat basmati rice, found that processing of rice results in two by-products i.e. rice husk and rice brain oil. If the company sells husk and brain oil to other consumers, then company is adopting by-product pricing.

5. Product bundle pricing : It is offering companies several products together as a bundle at the reduced price. This strategy helps companies to generate more volume, get rid of the unused products and attract the price conscious consumer. This also helps in locking the customer from purchasing the competitors products. For example, Anchor toothpaste and brush are offered together at lower prices. b) B rand Development Company can develop the brand on the basis of product category and brand name. Some of the different strategies adopted by companies to develop the brands are as follows:

1. Line extension: Company uses its well known brand name to introduce additional items in a given product category such as new forms, flavors, ingredients or package sizes. For example, Karnataka Milk Federation, uses its top brand name Nandini, to introduce new items like toned milk, full cream milk , curd and milk powder. It is less risky and requires fewer investments to introduce the product. In the above example Nandini used the extension to meet the excess capacity that it has. The milk procurement was more than the demand from the customer. Hence it started producing the milk powder. But all the products introduced need not to be successful in the market. In case of KMF, Nandini ice creams didnt click in the market. Another risk of line extension is brand cannibalization, i.e. companys brand/items compete with each other. 2. Brand extension: A strategy in which company uses one of its familiar brand names for new product categorys items. For example, United Breweries (UB) Limited group used its flagship brand Kingfisher to different categories. Kingfisher was originally a beer brand extended to airlines. Brand extension gives instant recognition to the brand. In the above example, people required very little time to know Kingfisher airline brand, because parent brand was very well known. Brand extension may hurt the parent brand reputation in the market if it fails. 3. Multi brands : The technique of introducing the product or items in existing product category with a new brand name. For example, Hindustan Unilever uses different brand names for their home and personal care category. The above example shows us that HUL have Breeze, Dove, Liril, Lux, Lifebuoy and Pears in the bath soap segment itself. It helps the company to come out with new features in the product or product category. Organizations adopt this strategy to avoid brand cannibalization in the given category. The major disadvantage of this strategy is that none of the brands will enjoy major market share and result in lesser profitability. In case of Hindustan Unilever, company had more than 100 brands and was forced to reduce it to 30 power brands. Other brands were not adding enough profit for the company. 4. New brands : The strategy indicates coming out with new brands for new category products. In this strategy, company believes that existing brands cannot be extended to the new category. The new brand strategy requires huge resources to build it. The new category, if it already has some brands of other companies, investment requirement will go up. For example, Hindustan Unilever launched Pure-It in the water purifier category. The category and brand are new to the company.