Marketing Management


Published on

Marketing Management

Published in: Education, Business, Career
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • This video is about Marketing FundamentalsThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from Steven R Van Hook
  • This video is about 7 p’s of MarketingThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from Life cycle performance
  • Video on Marketing strategy by Philip kotlerThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from London business forum
  • Video on Consumer behaviourThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from Anonymous
  • Video on Consumer purchase decision processThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from McGrill university –SameerMathur
  • Video on Customer Relationship Management.This video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from SUGARCRM
  • Video on Market ResearchThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from Anonymous
  • Video on Segmentation, targeting & positioningThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from Mgrewal/Levy
  • Video on Product strategiesThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from Learn Marketing
  • Video on Product Life CycleThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from Mgrewal/Levy
  • Video on PositioningThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from Anonymous
  • Video on BCG matrixThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from Mcgill University-Sameermathur
  • Video on What is Branding???This video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from video by Ekutsko, David, Robert jones & Peter
  • Video on What is Brand strategy???This video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from video by Gavin Wedell
  • Video on Marketing ChannelsThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from video by SameerMathur
  • Video on What is Management of Salesforce.This video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from video by Michael S ConKlin
  • Marketing Management

    1. 1. Marketing management
    2. 2. CONTENT Chapters Pg no.1. Introduction to marketing management 4-122. Marketing environment 13-303. Marketing planning & control 31-414. MIS & MR 42-585. Consumer Behavior 59-726. Segmentation & targeting 73-92 2
    3. 3. Chapters7. Product & brand management 93-1608. Marketing distribution channel 161-1859. Marketing Communication & sales 186-238 promotion10. Pricing 239-247 3
    4. 4. Definition of Marketing Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals. – American Marketing Association Marketing is the performance of business activities that direct the flow of goods and services from the producer to the consumer. 4
    5. 5.  What is Marketing Management? Marketing management is the practical application of marketing techniques. It is the analysis, planning, implementation and control of programs designed to create, build, and maintain mutually beneficial exchanges with target markets. The marketing manager has the task of influencing the level, timing, and composition of demand in way that will achieve organizational objectives. 5
    6. 6. What is a Market? All businesses operate in “markets”. But what is a market? And how can it be defined?Market defined: A market is the set of all actual and potential buyers of a product or service. This definition suggests that a market is the total value and/or volume of products that satisfy the same customer need. A public place where goods and services are traded purchased and sold. It is important to be careful about how a market is defined. The following key marketing processes rely on a relevant market definition:- Measuring market share- Measuring market size and growth- Specifying target customers- Identifying relevant competitors- Formulating a marketing strategy 6
    7. 7. There are five competing concepts under which business and other organizations can conduct their marketing activity: THE PRODUCTION CONCEPT The customers will favor those products that are widely available and low in cost. Management in production –oriented organizations concentrates on achieving high production efficiency and a wide distribution coverage. THE PRODUCT CONCEPT The customers will favor those products that are widely available and low in cost that offer the most quality, performance, and features. Management in product –oriented organizations concentrates on making good products and improving them over the time.Marketing Myopia: A short-sighted and inward looking approach to marketing that focuses on the needs of the company instead of defining the company and its products in terms of the customers needs and wants. It results in the failure to see and adjust to the rapid changes in their markets. 7
    8. 8.  3. THE SELLING CONCEPT The customers, if left alone, will ordinarily not buy enough of Organization’s products. The organization must therefore undertake an aggressive selling and promotion effort. 4. THE MARKETING CONCEPT The key to achieving organizational goals consists in determining the needs and wants of the target markets and delivering the desired satisfactions more effectively and efficiently than competitors. 5. THE SOCIETAL MARKETING CONCEPT The organizations’ task is to determine the needs, wants and interests of the target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves and enhances the consumers and the society’s well being. 8
    9. 9. 9
    10. 10. 7 p’s of marketing Product - what you are selling Price - how much you are charging for your product Promotion - how you tell people about your offer i.e. your product and price. Place - how people can buy your product. People Process Physical Environment 10
    11. 11. Marketing Environment 13
    12. 12. Marketing Environment All the actors and forces influencing the company’s ability to transact business effectively with it’s target market. Includes:  Microenvironment - forces close to the company that affect its ability to serve its customers.  Macro environment - larger societal forces that affect the whole microenvironment. 14
    13. 13. The Marketing Environment Demographic Company Cultural Economic Publics Suppliers Company Competitors Customers Political Natural Intermediaries Technological 15
    14. 14. The Microenvironment Company Publics Forces Affecting a Suppliers Company’s Ability to Serve CustomersCompetitors Intermediaries Customers 16
    15. 15. The Company’s Microenvironment  Company’s Internal Environment- functional areas such as top management, finance, and manufacturing, etc.  Suppliers - provide the resources needed to produce goods and services.  Marketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers. 17
    16. 16. The Company’s Microenvironment  Customers - five types of markets that purchase a company’s goods and services.  Competitors - those who serve a target market with similar products and services.  Publics - any group that perceives itself having an interest in a company’s ability to achieve its objectives. 18
    17. 17. Customer Markets International Consumer Markets Markets Company Government Business Markets Markets Reseller Markets 19
    18. 18. The Macroenvironment Demographic Cultural Forces that Shape Economic Opportunities and Pose Threats to a Company Political Natural Technological 20
    19. 19. The Company’sMacroenvironment  Demographic - monitors population in terms of age, sex, race, occupation, location and other statistics.  Economic - factors that affect consumer buying power and patterns.(income, inflation, recession, interest rate, exchange rate)  Natural - natural resources needed as inputs by marketers or that are affected by marketing activities. 21
    20. 20. Economic Environment Economic Changes Development Key in Income Economic Concerns for Marketers Changes in Consumer Spending Patterns 22
    21. 21. NaturalEnvironment More Government Intervention Factors AffectingHigher Pollution the Shortages of Levels Natural Raw Material Environment Increased Costs of Energy 23
    22. 22. The Company’sMacroenvironment  Technological - forces that create new product and market opportunities.  Political - laws, agencies and groups that influence or limit marketing actions.  Cultural - forces that affect a society’s basic values, perceptions, preferences, and behaviors. 24
    23. 23. Technological Environment Rapid Pace of High R & D Change Budgets Issues in the Technological Environment Focus on Minor Increased Improvements Regulation 25
    24. 24. Political Environment Increased Changing Legislation Key Enforcement Trends in the Political Environment Greater Concern for Ethics 26
    25. 25. Cultural Environment Of Oneself Of Of the Universe Views Others That Express Of Values Of Nature Organizations Of Society 27
    26. 26. Strategic planning Strategic planning is an organizations process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. In order to determine the direction of the organization, it is necessary to understand its current position and the possible avenues through which it can pursue a particular course of action. Generally, strategic planning deals with at least one of three key questions. "What do we do?" "For whom do we do it?" "How do we excel?" It consist of the process of developing strategies to reach a defined objective. SP provides direction to a company or give specific direction in such areas- Financial strategies- HR/OD strategies- IT deployments- Developments projects- Marketing strategy 28
    27. 27. Why strategic plan fail Failure to define end states (objectives) correctly. Incompletes SWOT analysis with respect to the desired end state(s). Lack of creativity in identifying possible strategies 29
    28. 28. Limitations of strategic planning Commitment Control PR Objectivity Politics 30
    29. 29. Marketing planning & control 31
    30. 30.  Process of marketing planning- Business mission- Purpose- Strategy- Standards & behaviors- Company values- Marketing audit- SWOT Analysis 32
    31. 31. Marketing process Marketing objectivesStrategic options for increasing sales volume- Market penetration- Market expansion- Product development- Market development- Entry into new marketsStrategic options for improving profitability- Reduce costs- Rationalize operations: segment rationalization, product line pruning, distribution rationalization- Increasing prices 33
    32. 32. Ansoff matrix 34
    33. 33.  Core strategy: how business objectives can be established- Target markets- Competitor targets- Competitive advantage- Tests of an effective core strategyMarketing mix decisions 35
    34. 34. Implementation & control Developing strategies:• Market expansion• Winning market shareFrontal attack: Challengers attacks the main market of the market leader by launching a product with a similar or superior marketing mix.Flanking attack: Attack the enemy at its weak points or blind spots i.e. its flanks Ideal for challenger who does not have sufficient resources 36
    35. 35. Encirclement attack: Attack the enemy at many fronts at the same time Ideal for challenger having superior resources e.g. Seiko attacked on fashion, features, user preferences and anything that might interest the consumerBypass attack: By diversifying into unrelated products or markets neglected by the leader Could overtake the leader by using new technologiesGuerilla attack: unpredictable price discounts, sales promotions or heavy advertising 37
    36. 36. 38
    37. 37.  Merger & acquisitions Forming strategic allianceHold objective:- Strategic focus• Monitoring the competition• Confronting the competition 1. Position defense: - Not easily copied - Brand & reputation provides strong defense - Mercedes was using a position defense strategy until Toyota launched a frontal attack with its Lexus. - coco-cola being a leader protected its position by entering in TEA, coffee. 39
    38. 38. 2. Flanking defense:- You strengthen your flank.- In business terms, this involves the introduction of new products, product lines, or brands, the defensive re- positioning of existing products, or additional promotional activity in a market niche. It requires market segmentation and/or product differentiation.- You protect against potential loss of market share in a segment by strengthening your competitive position there. 40
    39. 39. 3. Preemptive defenseAttack firstCounter offensive defenseEncircle the attacker: defender launches a brand to compete directly against the attacker’s brand.Mobile defense:- This involves constantly shifting resources and developing new strategies and tactics.- A mobile defense is intended to create a moving target that is hard to successfully attack.- In business this would entail introducing new products, introducing replacement products, modifying existing products, changing market segments, changing target markets, repositioning products, or changing promotional focus.- This defense requires a very flexible organization with strong marketing, entrepreneurial, product development, and marketing research skills.Strategic withdrawal 41
    40. 40. Consumer Behavior 42
    41. 41. Consumer Behavior Consumer behavior is the study of when, why, how, and where people do or do not buy product. Consumer behavior involves the psychological processes that consumers go through in recognizing needs,- finding ways to solve these needs, making purchase decisions (e.g., whether or not to purchase a product and, if so, which brand and where),- interpret information, make plans, and implement these plans (e.g., by engaging in comparison shopping or actually purchasing a product). 43
    42. 42.  The buyer- Initiator- Influencer- Payer- Decider- Buyer- User 45
    43. 43. Buyer characteristics Age & life cycle Occupation Economic situation Habit Lifestyle Personality & self-concept Psychological factors 46
    44. 44. Consumer decision Process 47
    45. 45. 1. Recognition of the need e.g. a new PC2. Choice of involvement level (time and effort justified)3. Identification of alternatives e.g. Dell, HP4. Evaluation of alternatives i.e. price, customer service, software support, printer/scanner package5. Decision - choice made6. Action e.g. buy Acer model from croma7. Post-purchase behaviour i.e. use, breakdowns, etc 49
    46. 46. Buying situation Extended problem solving- Spend huge amount of time & effort, information search, close examination of alternatives, high involvement, Limited problem solving: price, low involvement. Habitual problem solving 50
    47. 47. Determinants of consumerbehavior Internal factor1. Perception- Selective attention- Selective distortion- Selective retention2. Learning1. Classical conditioning2. Operant conditioning: reinforcement3. Cognitive learning: without reinforcement (involves communication of benefits)4. Modeling / vicarious learning- Learning from others (involves copying others) 51
    48. 48. 3. Motivation4. Belief & attitude5. Lifestyle6. Life cycle 52
    49. 49.  External factor1. Culture2. Social class3. Reference group 53
    50. 50. Emotional engagement with customer Show the care- Emphasis on retaining customer not acquiring customer Treat customer with dignity Show that company trusts its customers. 54
    51. 51. Customer relationship management Implemented strategy for managing a company’s interactions with customers, clients and sales prospects The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. Customer relationship management describes a company-wide business strategy including customer- interface departments as well as other departments. 55
    52. 52. Relationship marketingDefinition Marketing activities that are aimed at developing and managing trusting and long-term relationships with larger customers. In relationship marketing, customer profile, buying patterns, and history of contacts are maintained in a sales database, and an account executive is assigned to one or more major customers to fulfill their needs and maintain the relationship. 57
    53. 53.  Four important steps in implementing one-to-one marketing- Identifying the customers- Differentiating the customers- Interacting the customers- Customizing the company’s behaviour 58
    54. 54. Management Information System & Marketing Research 59
    55. 55. MIS A management information system (MIS) is a system or process that provides information needed to manage organizations effectively. An MIS is a planned system of the collecting, processing, storing and disseminating data in the form of information needed to carry out the functions of management. It is the data bank useful to marketing executives 60
    56. 56.  Comprise of 4 elements- Internal continuous data- Internal ad-hoc data- Environmental scanning- MR 61
    57. 57. Features Continuously operated process Operates with speed & accuracy Needs co-operation of departments & executives Facilitates prompt & correct decision-making Future oriented 62
    58. 58. Functions Assembling information Processing of information Analyzing the data collected Storing of data collected Evaluating Disseminating Updating 63
    59. 59. Marketing Research Research means detailed, systematic & comprehensive study of problem Marketing research is the systematic gathering, recording, and analysis of data about issues relating to marketing products and services Task of marketing research is to provide management with relevant, accurate, reliable, valid, and current information Accurate decision making 64
    60. 60. Types of MR Ad-hoc research Continuous research interview- Consumer panels- Retail audit- Television viewership panel 65
    61. 61. Process Initial contact Research brief Research proposal Types of research method Designing sample design Data collection Pilot stage Data Preparation and Analysis Report Preparation and Presentation 66
    62. 62. Research proposal Defines what marketing agencies promises to do for its client & how much it will cost. Should be written to avoid misunderstanding Includes survey method, type of sample, sample size, collection & analysis of data, when reports will be produced & how much the research will cost. Agency clearly states what is going to do & why, who is going to do & when Doubt should be clarified 67
    63. 63.  Types of research method- Exploratory research: secondary research, qualitative research(focus groups, depth interview, consultation with experts, observation- Descriptive research: describe customers belief, attitudes, recall of advertisements & knowledge about its content- Experimental research 68
    64. 64.  Designing sample design- Sampling process- Sample size- Sample selection- Probability sampling1.Simple random sampling2.Stratified3.Cluster- Non probability sampling1.Convenience sampling2.Judgement sampling3.Quota sampling 69
    65. 65. Data collection Survey method- Face to face interview- Telephone interview- Mail surveys Questionnaire design- Types of questions- Ordering of topics- Taking care of wording in questions- Layout- Scaling 70
    66. 66.  Pilot stage Data Preparation and Analysis Report Preparation/writing and Presentation. 71
    67. 67. 72
    68. 68. Segmentation & Targeting 73
    69. 69. STP Segmentation: dividing market into distinct group of buyers- Customer in one group should:Buy the product for the same purposeBuy & use the product in the same way.Purpose: 1. Target market selection 2. Tailored marketing mix 3. Differentiation Targeting: evaluating various segments & selecting how many & which one to target. Positioning :it is the act of finding a place in the minds of the consumers & locating the brand therein 74
    70. 70. S-T-P 75
    71. 71. Segmenting Breaking down a diverse market of people into smaller, homogeneous groups Segments should be measurable, sizeable, and reachable After segmenting → target a specific segment (focus your campaign on that group) → positioning 76
    72. 72. 77
    73. 73. 78
    74. 74. 79
    75. 75. Example:Titan Watches Arrives in three broad Segments The Rich The Middle The LowerTitan Brings out a Wide Range of Offer to Serve the Different Value SegmentsFor the Gold lovers: Titan offered to this segment an all gold watch- the Aurum and Royal lines.For the More than One Segments: Titan made those who wanted more than one watches into a separate segment ad tempted them by offering a wide range of models. It offered them matched one’s dress and occasions.For the youth /the outdoor lovers: Titan viewed them as a lifestyle segment and offered them the fast track. 80
    76. 76. For Designer Segment: Titan also adopted the designer segment and offered them all designer and hand assembled watches, the Euro collection, designed by European designers.For the Children Titan adopted children – those between 6 to 14 years as o separate segment ( Dash for Kids) For Women Seeking Fashion within the Middle-income Group: Titan offered the Raga Range for this segment which was meant exclusively for women. 81
    77. 77. Factors influencing MS Better marketing performance Better services to consumers Appropriate price fixation Designing the products Helps Identify Less Satisfied Segments and Concentrate on Them 82
    78. 78. Basis for segmenting consumer marketsGeographical: Nations, states, regions or citiesE.g.: Southern are found of coffee and north Indians like Tea, . People down south use talc excessivelyDemographic: Age, gender, family size and life cycle, or incomeAge: It is essentially a case of age based segmentation of a market.Example: Amul has segmented his product in different age group For kids: Amul kool, chocolate milk, Nutramul energy drink. For Youth: Amul cool kafe. For women’s and older people: Amul calci+, Amul Shakti energy drink 83
    79. 79. Gender:Example: Adidas targets women in India German shoe maker Adidas is trying to develop the women segment in India for its products. Emami segmented its product in gender Women’s: Naturally fair Men: Fair and handsome 84
    80. 80. Psychographic: Social class, lifestyle or personalityExample: Café Coffee DayThey choose lifestyle oriented, urban consumers as target with youth.Behavioral: Benefit sought: - Quality / economy / service / look etc of the product. Example: Nestle has found a separate segment atta noodles as distinct from the maida noodles. Usage rate: - Heavy user / moderate user / light user of a product. User status: - Regular / potential / first time user / irregular /occasional. Loyalty to brand: - Hard core loyal / split loyal / shifting / switches. Occasion: - Holidays and occasion stimulate customer to purchase products. Attitude toward offering: - Enthusiastic / positive attitude / negative attitude / indifferent / hostile. Example: Shampoos, soap and all FMCG products buying behavior segmentation is used. 85
    81. 81. Segmenting organisational market: Macro segmentation- Organisational size- Industry- Geographical segmentation Micro segmentation- Choice criteria- Decision making unit structure(DMU)- Decision making process- Buy class- Purchasing organisation 86
    82. 82. Evaluating MS Segment size Price sensitivity Nature of competition New entrant Competitive differentiation Political issues Environmental issues 87
    83. 83. Targeting. What is target?. This is the real goal/objective in market that marketer want to reach. What percent of the population uses the product at all? What percent uses your brand? How does that compare to competing brands? Which media reach the users of this category? 88
    84. 84. Targetingo Evaluation:- Profitability of the segment- Attractiveness- Growth rate- Company objective- Limitationso Selection: rating the alternatives 89
    85. 85. Market Targeting Organization Differentiated Marketing The organization pursues several different market segments simultaneously Market 4-90
    86. 86. Market Targeting Organization Concentrated Marketing The organization focuses on a single market segment Market 4-91
    87. 87.  Undifferentiated market-Mass marketing- One Product – One Market – One Marketing (Plan or Program). 92
    88. 88. Product & brand management 93
    89. 89. Product & brand management Marketing Tools Marketing Challenge Product Acceptability Price Affordability Place Availability Promotion Awareness 94
    90. 90. 95
    91. 91.  FMCGs:• Foods, beverages, cosmetics, footwear etc.- Major players: HLL, Dabur, Marico, colgate-Palmolive, Nirma & Godrej. Consumer durables:• Home appliances, automobiles, watches, furniture etc.- Major players: Usha, Bajaj, philips, titan, godrej, videocon, onida etc. Agricultural goods:• seeds., fertilizers, pesticides, tractors, animal feed, poultry & fishery equipments- Major players: DCM shriram, mahindra & mahindra, eicher & escorts Services:• Telecomm, transport, healthcare, banking, ins, education, mobile services- LIC, SBI, BSNL, ITC’s etc. 96
    92. 92. PLC 98
    93. 93. Stage Characteristics 1.costs are very high 2.slow sales volumes to start 3.little or no competition1. Market introduction stage 4.demand has to be created 5.customers have to be prompted to try the product 6.makes no money at this stage 1.sales volume increases significantly 2.profitability begins to rise 3.public awareness increases2. Growth stage 4.competition begins to increase with a few new players in establishing market 5.increased competition leads to price decreases 1.costs are lowered as a result of production volumes increasing 2.sales volume peaks and market saturation is reached 3.increase in competitors entering the market3. Maturity stage 4.prices tend to drop due to the proliferation of competing products 5.brand differentiation and feature diversification is emphasized to maintain or increase market share 6.Industrial profits go down 1.costs become counter-optimal 2.sales volume decline4. Saturation and decline stage 3.prices, profitability diminish 4.profit becomes more a challenge of production/distribution efficiency than increased sales 99
    94. 94. Classification of products Business product & consumer product Types of consumer productConvenience product- Frequently purchased- Less planning- Without comparison- Low price- Eg- milk, sweet, emergency products, toothpaste. 101
    95. 95.  Shopping product- Comparision of products- Less frequently purchased- Purchase requires intensive research- Complex & time consuming- Consideration of price & quality- Eg: Appliances & clothing- Goods are expensive Specialty product Unsought product Technology product Commodity product Customized product 102
    96. 96. Product mix Product mix Product item Product line Depth of the product line 103
    97. 97. 104
    98. 98. 105
    99. 99. 106
    100. 100. The width of the HUL Product mix: The width of the product mix refers to the number of different product line the company carriesE.g: Personal washLaundrySkin careOral careDeodorantsColour cosmeticsAyurvedic personal and health care 107
    101. 101.  ShampooTeaCoffeeFoodsIce creamWidth = 12 108
    102. 102. The lenght of the HUL Product mix: The Length of the product mix refers to the total number of items in the product mix.E.g: Personal wash: Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears, RexonaLaundry: Surf excel, Rin, WheelSkin care: Fair & Lovely, Ponds, Vaseline, AvianceOral care: Pepsodent, Close upDeodorants: Axe, RexonaColour cosmetics: LakmeAyurvedic personal and health care: Ayush 109
    103. 103.  Shampoo: Sunsilk, ClinicTea: Broke bond, Lipton.Coffee: BruFoods: Kissan, Annapurna, KnorrIce cream: Kwality wallsWidth = 30 110
    104. 104. The Depth of the HUL Product mix: The depth of the product mix refers to the number of variants of each product offered in the lineE.g: If close up toothpaste comes in three formulation and in three sizes, close up has a depth of 9 (3*3) 111
    105. 105. Product mix modifications Product mix expansion Line extention Mix extention Trading up Trading down Product mix contraction Repositioning Product modification Planned obsolescence 112
    106. 106. Positioning Communicating the differential advantage to customers Identifying the differences of the offer with the competitors offer Selecting the differences that have greater competitive advantage:- Attractiveness- Distinctiveness- Affordability Communicating such advantages effectively to the target audience. 113
    107. 107.  By attributes By benefits By price/quality By usage or application By competitorsEg:- Dove soap- high moisturizer content- Surf-quality & nirma- economy- Maruti car- fuel efficiency- Lux soap – beauty soap 114
    108. 108.  Successful positioning- Clarity- Consistency- Credibility- Competitiveness 116
    109. 109. Differentiation Product differentiation Promotional differentiation Distribution differentiation Price differentiation Differentiation in consumption 117
    110. 110. New product development 118
    111. 111.  Innovations- Discontinuous innovation- Continuous innovation- Dynamically continuous 119
    112. 112. NPD process Idea Generation is often called the "fuzzy front end" of the NPD process Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, Weaknesses, Opportunities & Threats), Market and consumer trends, companys R&D department, competitors, focus groups, employees, salespeople, trade shows, (searching for user patterns and habits) may also be used to get an insight into new product lines or product features. Lots of ideas are being generated about the new. Brainstorming technique is used. 120
    113. 113.  Idea Screening The object is to eliminate unsound concepts prior to devoting resources to them. The screeners should ask several questions:  Will the customer in the target market benefit from the product?  What is the current or expected competitive pressure for the product idea?  What are the industry sales and market trends the product idea is based on?  Is it technically feasible to manufacture the product?  Will the product be profitable when manufactured and delivered to the customer at the target price? 121
    114. 114.  Concept Development and Testing Develop the marketing and engineering details Testing the Concept by asking a sample of prospective customers what they think of the idea. 122
    115. 115. Business Analysis Estimate demand Estimate likely selling price based upon competition and customer feedback Estimate sales volume based upon size of market Estimate profitability and break-even point 123
    116. 116.  Actual development Test marketing Commercialization 124
    117. 117. Adoption process Innovators Early adopters Early majorities Late majorities Laggards 125
    118. 118. Adopter category Definition Innovators are the first individuals to adopt an innovation. Innovators are willing to take risks, youngest in age, have the highest social class, have great financial lucidity, very social and have closestInnovators contact to scientific sources and interaction with other innovators. Risk tolerance has them adopting technologies which may ultimately fail. Financial resources help absorb these failures This is the second fastest category of individuals who adopt an innovation. These individuals have the highest degree of opinion leadership among the other adopter categories. Early adopters are typically younger in age, have a higher social status,Early Adopters have more financial lucidity, advanced education, and are more socially forward than late adopters. More discrete in adoption choices than innovators. Realize judicious choice of adoption will help them maintain central communication position 126
    119. 119. Individuals in this category adopt an innovation after a varying degree of time. This time of adoption is significantly longer than the innovatorsEarly Majority and early adopters. Early Majority tend to be slower in the adoption process, have above average social status, contact with early adopters, and seldom hold positions of opinion leadership in a system Individuals in this category will adopt an innovation after the average member of the society. These individuals approach an innovation with a high degree of skepticism and after the majority of society has adopted theLate Majority innovation. Late Majority are typically skeptical about an innovation, have below average social status, very little financial lucidity, in contact with others in late majority and early majority, very little opinion leadership. 127
    120. 120. Individuals in this category are the last to adopt an innovation. Unlike some of the previous categories, individuals in thisLaggards category show little to no opinion leadership. Be oldest of all other adopters, in contact with only family and close friends, very little to no opinion leadership. 128
    121. 121. Boston consulting group 129
    122. 122.  The BCG matrix method is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. To ensure long-term value creation, a company should have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash. It has 2 dimensions: market share and market growth. The basic idea behind it is that the bigger the market share a product has or the faster the products market grows the better it is for the company. 130
    123. 123. WHY BCG MATRIX ?To assess : Profiles of products/businesses The cash demands of products The development cycles of products Resource allocation and divestment decisions 131
    124. 124. QUESTION MARKS High growth , Low market share Most businesses start of as question marks. They will absorb great amounts of cash if the market share remains unchanged, (low). Why question marks? Question marks have potential to become star and eventually cash cow but can also become a dog. Investments should be high for question marks. have the worst cash characteristics of all, because high demands and low returns due to low market share if nothing is done to change the market share, question marks will simply absorb great amounts of cash and later, as the growth stops, a dog. either invest heavily or sell off or invest nothing and generate whatever cash it can. Increase market share or deliver cash. 132
    125. 125. STARSHigh growth, High market share  Stars are leaders in business.  They also require heavy investment, to maintain its large market share.  It leads to large amount of cash consumption and cash generation.  Attempts should be made to hold the market share otherwise the star will become a CASH COW.  use large amounts of cash and are leaders in the business so they should also generate large amounts of cash. 133
    126. 126. CASH COWSLow growth , High market share They are foundation of the company and often the stars of yesterday. They generate more cash than required. They extract the profits by investing as little cash as possible They are located in an industry that is mature, not growing or declining. profits and cash generation should be high , and because of the low growth, investments needed should be low. Keep profits high Foundation of a company 134
    127. 127. DOGSLow growth, Low market share  Dogs are the cash traps.  Dogs do not have potential to bring in much cash.  Number of dogs in the company should be minimized.  Business is situated at a declining stage.  Avoid and minimize the number of dogs in a company. 135
    128. 128. BCG MATRIX WITH CASH FLOW 136
    129. 129. BENEFITS BCG MATRIX is simple and easy to understand. It helps you to quickly and simply screen the opportunities open to you, and helps you think about how you can make the most of them. It is used to identify how corporate cash resources can best be used to maximize a company’s future growth and profitability. 137
    130. 130.  The GE / McKinsey matrix is similar to the BCG growth- share matrix in that it maps strategic business units on a grid of the industry and the SBUs position in the industry. The GE matrix however, attempts to improve upon the BCG matrix in the following two ways: The GE matrix generalizes the axes as "Industry Attractiveness" and "Business Unit Strength" whereas the BCG matrix uses the market growth rate as a proxy for industry attractiveness and relative market share as a proxy for the strength of the business unit. The GE matrix has nine cells vs. four cells in the BCG matrix. 139
    131. 131. 140
    132. 132. Product strategies for growthAnsoff matrix 141
    133. 133. PackingPackaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use.1. Protecting products: protect from breakage, evaporation, spillage, spoilage, light, heat, cold etc.2. Promoting products3. Facilitating storage, use & convenience:- Wholesaler prefers packages that are easy to ship, store & stock on shelves.1. Facilitating recycling & reducing environmental damage. 142
    134. 134.  Small packs: shampoos, soap, eatables Combi- packs: johnson & johnson, shampoo See-through packs & sachets Primary package: to hold products e.g:bottles Sec pckge:to hold primary pckge eg:cardboard box Shipping pckge: eg: corrugated box 143
    135. 135. LabellingThe objective of labeling is to guarantee that consumers have access to complete information on the content and composition of products, in order to protect their health and their interests.Also, for buyers understanding about nature of the product its distinctive features, its composition & performance. Brand label Descriptive label Grade label 144
    136. 136. 145
    137. 137. Branding Brand as a "name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers. Strength of brand is directly proportional to to the expectation of the customer about it.Good brand should be:- Distinctive- Easy to pronounce- Easy to recognize & remember 146
    138. 138. What a good brand does?  Strengthens employees loyalty  Attracts clients/customers  Keeps current relationships strong  Builds confidence  Builds feelings of security and trust  Creates a memorable, positive experience 147
    139. 139. Brand attributes Brand Attributes portray a company’s brand characteristics. Brand attributes are a bundle of features that highlight the physical and personality aspects of the brand. Brand attributes help in creating brand identity. Brand provide benefits that customer desire. 149
    140. 140.  Relevancy Consistency Proper positioning Sustainable Uniqueness Appealing 150
    141. 141.  Types of brands- Manufacturer brands- Own label/distributor/store brands 151
    142. 142.  Brand building- Quality- Positioning- Repositioning: occurs when a brand tries to change its market position to reflect a change in consumer’s tastes, often required when a brand has become tired- Well balanced communication: All elements of the promotional mix need to be used to develop and sustain customer perceptions- Being first- Long term perspective- Internal marketing 152
    143. 143. Brand name strategies Choosing a brand name:- Should evoke positive associations- Easy to pronounce & remember- Suggest product benefit, be distinctive- Name should be chosen with lot of foresight- Should have definate plans while name associating with product. Family brand name:- Goodwill-benefits to all brands- Advertisement of one brand helps promotion ofall brands Individual brand name Combination of brand name 153
    144. 144. Brand equity The value & power of the brand that determnies its worth Brand loyalty + brand image Eg: wills, HH, LG, Bata, Bisleri, xerox, dabur, Amul, godrej. Elements comprises of:- Awareness- Brand associations: anything that connected to the customers memory about the brand is an association.- Percieved quality- Brand loyalty- Other proprietary brand assets 154
    145. 145. Advantages Consumer purchase branded products with confidence Develop loyalty Enjoy pride of using special brand Willing to accept new product of the same brand. 155
    146. 146.  Leveraging brand equityBrand extension: introduce new product in same product line with that popular brand.- Eg: Nirma washing powder-nirma soap, dettol antiseptic-soapLine extension: surf ultra, surf excel, surf excelmatic.- Colgate dental cream-colgate gel, colgate calcigaurd, colgate total, colgate sentitive, colgate herbal & cogate cibaca colgate.Brand stretching/vertical extensions 156
    147. 147.  Lookalikes Spell-alikes Duplicates 157
    148. 148. Original Product Fake Product Dairy Milk Kit Kat Coffee Bite Mango Bite Polo Vicks Daily Milk Kir Kat Coffee Toffee Mango ripe and mango bits Rolo Vibex 158
    149. 149. 159
    150. 150. 160
    151. 151. 161
    152. 152.  It is the delivery of goods at the right time & at the right place to the consumers The means by which products and services get from producer to consumer and where they can be accessed by the consumer The more places to buy the product and the easier it is made to buy it, the better for the business (and the consumer?) Channel selected should be convenient, economical & suitable for the distribution of specific product. 162
    153. 153.  Includes:- Types of intermediaries available- Transportation, inventory & warehousing- Physical distribution- Dealer relationship- Marketing channel 163
    154. 154. Direct Distribution Indirect Distribution Manufacturer Manufacturer Retailer Consumer Consumer 165
    156. 156. Functions of channel intermediaries Reconciling the needs of producers & consumers Improve efficiency by reducing the number of transactions & creating bulk for transportation. Improved accessibility Providing specialist services 167
    157. 157. Channel design1. Channel selection:- Marketing factors- Manufacturer factors- Product factors- Competitive factors2. Distribution intensity- Intensive distribution- Selective distribution- Exclusive distribution 168
    158. 158.  Channel integration- Conventional marketing channel- Franchising- Channel ownership 169
    159. 159.  Hybrid distribution system In cases where a marketer utilizes more than one distribution design the marketer is following a multi-channel or hybrid distribution system.  As we discussed, Starbucks follows this approach as their distribution design includes using a direct retail system by selling in company-owned stores, a direct marketing system by selling via direct mail, and a single-party selling system by selling through grocery stores (they also use other distribution systems). The multi-channel approach expands distribution and allows the marketer to reach a wider market, however, as we discussed under Channel Relationships, the marketer must be careful with this approach due to the potential for channel conflict. 170
    160. 160. Channel management Selection- Identifying sources Developing selection criteria- Motivation(understanding the needs)- Training(knowledge about product)- Evaluation- Managing conflictSources of channel conflict- Differences in goals- Differences in desired product lines- Multiple distribution channels- Inadequacies in performances of channel members & manufacturer 171
    161. 161.  Avoiding & resolving conflict- Developing a partnership approach- Training in conflict handling- Improved performance- Channel ownership 172
    162. 162. Selecting channel members Which characteristics are important?  Years in business  Lines carried  Growth and profit record  Cooperativeness and reputation  Type of customer  Location 173
    163. 163. Elements of the physical distribution system Order processing Customer service Inventory control Warehousing Transportation mode Material handling 174
    164. 164.  Transportation problem Warehousing problems Communication problems Higher cost & administrative problems Greater dependence on dealers Non – availability of dealers Poor viability of retail outlet Inadequate bank facilities Inadequate credit facilities from banks 175
    165. 165. Retailing 176
    166. 166. Retailing Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mall, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler and then sells smaller quantities to the end-user 177
    167. 167. Type of retail formats Department stores Hypermarkets Convenience stores Shopping malls Plus size stores Discount stores Full-line discounters/mass merchandisers Specialty stores/ category killers 178
    168. 168. Theories of retailing The wheel of retailing Retail accordion Retail life cycle 179
    169. 169. Retail marketing strategies Retail positioning Store location Product assortment & services Price Promotion Store atmosphere 180
    170. 170. Forms of Non-store Retailing High Direct selling Tele- marketingActive customer On-line retailinginvolvement Television home shopping Direct mail and catalogs Automatic vending Low Low Active retailer involvement High 181
    171. 171. Key to Retail Positioning For a store to be successfully positioned, it must have an identity which has some advantages over competitors, and at the same time are recognized and valued by consumers. 182
    172. 172. The Retailing Mix The retailing mix includes: 1. Goods and services 2. Physical distribution 3. Communications tactics chosen by a store. 183
    173. 173. The Retailing Mix Store location Distribution centers Warehousing Transportation Handling goods Packing Variety and assortment Sales assistance Personal selling Consumers Customer services Advertising Pricing Credit Window displays Guarantees and Internal displays exchanges Public relations Alterations and Store layout adjustments Catalogs Store image and atmosphere Telephone sales Parking Delivery 184
    174. 174. Wholesaling Bulk-breaking functions Bulk accumulating function Selling function Assorting function Buying function Service function Credit function Risk taking function 185
    175. 175. Marketing communication & SP 186
    176. 176. Communication process 187
    177. 177. Communication source is the marketer or public policy maker receiver is the consumer message is the content medium is the channel used to convey the content consumers talk too: feedback noise disrupts the communication 188
    178. 178. Purposes of Marketing Communications  It not only informs, but is also used to differentiate the seller’s products/services  To have desired response from the target audience.  the marketing communications strategy of a firm must be coordinated and linked with concepts such as target segments, positioning, differentiation, and image requires a closely coordinated approach  Informs, persuades and reminds  Is part of the marketing mix  Includes all the means by which a company communicates directly with potential customers.  Attempts to influence feelings, beliefs, or behaviour18 - 189
    179. 179. Integrated marketingcommunications Advertising  television, radio, magazines, newspapers, place-based Direct response  mail, telemarketing, catalogs, direct selling, home shopping, on-line Publicity  television, magazine, newspapers Personal selling 190
    180. 180. Marketing Communication Methods  Personal selling: The direct presentation of a product to a prospective customer by a representative of the selling organization.  Advertising: A paid, impersonal mass communication with a clearly-identified sponsor.  Sales promotion: Demand-stimulating activity designed to supplement advertising and facilitate personal selling.18 - 191
    181. 181. More Methods  Public relations: A planned communication effort by an organization to contribute to generally favourable attitudes and opinions toward an organization and its products.  Publicity: A special form of public relations that involves news stories about an organization or its products.18 - 192
    182. 182. Advertising Public RelationsPromotional Mix Sales Promotion Personal Selling Direct Mail Internet/ E-commerce 193
    183. 183.  Strategies to make the consumer aware of the existence of a product or service NOT just advertisingMedia mix Newspaper & magazines TV Cinema Radio POPs Outdoors Harikatha Grp meetings Audio visual vans 194
    184. 184.  Puppetry Folk theatre Demo Stalls & melas Wall paintings Use of logos & symbols Focus on reference grp Use of IT 195
    185. 185. Sponsorship Objectives- Gaining publicity- Fostering favorable brand & company associations- Improving community relations- Creating promotional expenditure Selection- What the company wants to achieve from the sponsorship deal- Personality of the event should match the desired brand image- Target market- Risk Evaluation 196
    186. 186.  Exhibition- Objectives 1. An opportunity to reach an audience 2. Create awareness & develop relationship 3. Provides product demonstrations 4. Determine & stimulate needs of customers 5. Gathers competitive intelligence 6. Introduce a new product 7. Recruit dealers & distributors 8. Improve company image 9. Deal with service & other customer problems 10. Make a sale 197
    187. 187. Word of mouth Word of mouth, or viva voce, is the passing of information from person to person by oral communication. Storytelling is the oldest form of word-of-mouth communication where one person tells others of something, whether a real event or something made up 198
    188. 188. Advertising Advertising is paid non personal communication from an identified sponsor using mass media to persuade or influence an audience. Setting Advertising Objectives Setting the Advertising Budget Developing Advertising Strategy Creating the Advertising Message Selecting Advertising Media Evaluating Advertising Effectiveness and Return on Advertising Investment 199
    189. 189. Advertising Setting Advertising Objectives An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific time
    190. 190. Advertising Setting Advertising ObjectivesInformative advertising is used when introducing a new product category; the objective is to build primary demandComparative advertising directly or indirectly compares the brand with one or more other brandsReminder advertising is important with mature products to help maintain customer relationships and keep customers thinking about the productReinforcement advertising: to assure current purchaser that their choice is right
    191. 191. Define advertising objectives Position the offering- Product characteristics & customer benefits- Price-quality- Product use- Product class- Competition Create awareness Stimulate trial Remind & reinforce Provide support for sales force Correcting misconceptions 202
    192. 192. Advertising Setting the Advertising BudgetProduct life-cycle stage New products require larger budgets Mature brands require lower budgetsMarket share Building or taking market share requires larger budgets Markets with heavy competition or high advertising clutter require larger budgets Undifferentiated brands require larger budgets
    193. 193.  Establish the advertising spend- %age of sales method: Advtg budget is specified %age of current /expectd sales revenue.- Affordability method- Matching competition- Objective & task method Message decisions:- Print ad- TV commercials 204
    194. 194. Advertising Developing Advertising StrategyAdvertising strategy is the strategy by which the company accomplishes its advertising objectives and consists of: Creating advertising messages Selecting advertising media
    195. 195. Advertising Creating the Advertising MessageAdvertisements need to break through the clutter: Gain attention Communicate wellAdvertisements need to be better planned, more imaginative, more entertaining, and more rewarding to consumers
    196. 196. Advertising Creating the Advertising Message Message strategy Creative concept Message execution
    197. 197. Advertising Creating the Advertising MessageMessage strategy is the general message that will be communicated to consumers Identifies consumer benefitsCreative concept is the idea that will bring the message strategy to life and guide specific appeals to be used in an advertising campaignCharacteristics of the appeals include: Meaningful Believable Distinctive
    198. 198. Advertising Creating the Advertising Message Message execution is when the advertiser turns the big idea into an actual ad execution that will capture the target market’s attention and interest. The creative team must find the best approach, style, tone, words, and format for executing the message.
    199. 199. Advertising format: Humorous ad Slice of life Testimonial ad Ad that compare Providing solutions Reason to buy product Emotions Testimonial with celebrities Cartoons Musicals
    200. 200. Advertising Creating the Advertising Message Execution Styles Slice of life Lifestyle Fantasy Mood or Personality Musical image symbol Testimonial Technical Scientific or expertise evidence endorsement
    201. 201. Advertising Creating the Advertising MessageMessage execution also includes: Tone  Positive or negative Attention-getting words Format  Illustration  Headline  Copy
    202. 202. Advertising Selecting Advertising MediaMajor steps include: Deciding on reach—frequency—impact Selecting media vehicles Deciding on media timing
    203. 203. Advertising Selecting Advertising MediaReach is a measure of the percentage of people in the target market who are exposed to the ad campaign during a given period of timeFrequency is a measure of how many times the average person in the target market is exposed to the messageImpact is the qualitative value of a message exposure through a given medium
    204. 204. Advertising Selecting Advertising MediaSelecting media vehicles involves decisions presenting the media effectively and efficiently to the target customer and must consider the message’s: Impact Effectiveness Cost
    205. 205. Advertising Evaluating Advertising Effectiveness and Return on Advertising InvestmentReachFrequencyImpactCommunication effects indicate whether the ad and media are communicating the ad message well and should be tested before or after the ad runsSales and profit effects compare past sales and profits with past expenditures or through experiments
    206. 206. Advertising Other Advertising Considerations Organizing for advertising  Agency versus in-house The advertising agency Advertisers hire independent agencies to plan and implement part or all of their advertising efforts. This working is known as agency -client partnership
    207. 207. Advertiser uses agency because : It believes that the agency will be more efficient Strategic and creative expertise Media knowledge Large advertisers participate in the advertising process either through their advertising departments or through their in house agencies 218
    208. 208. AdvertisingOrganization • Internal advertising department In house agency Research /planning Creative development Media Production 219
    209. 209. AdvertisingOrganization Advertising department External agencies Full service agency Media specialist Vendors 220
    210. 210.  Agency selection procedure Agency payment system 221
    211. 211. Public RelationsPublic relations department functions include: Press relations or press agency Product publicity Public affairs Lobbying Corporate advertising Publications Investor relations Charitable donations
    212. 212. Public RelationsPress relations or press agency involves the creation and placing of newsworthy information to attract attention to a person, product, or serviceProduct publicity involves publicizing specific productsPublic affairs involves building and maintaining national or local community relations
    213. 213. Public RelationsLobbying involves building and maintaining relations with legislators and government officials to influence legislation and regulationInvestor relations involves maintaining relationships with shareholders and others in the financial communityDevelopment involves public relations with donors or members of nonprofit organizations to gain financial or volunteer support
    214. 214. Public Relations The Role and Impact of Public Relations Lower cost than advertising Stronger impact on public awareness than advertising
    215. 215. Functions of PR Facilitates company’s overall operations Aids promotion Helps in tackling social & environmental issues Ensures that customers are treated well Helps in attracting & retaining talented employees Stakeholders give it benefit of doubt Develops reputation as a goos suppliers & customer
    216. 216.  Publicity is the deliberate attempt to manage the publics perception of a subject. The subjects of publicity include people (for example, politicians and performing artists), goods and services, organizations of all kinds, and works of art or entertainment. Characteristics:- No media cost- Loss of control of publication- Loss of control of content- Loss of control of timing
    217. 217. Sales promotions Consumer promotions- Money off- Bonus pack- PremiumsFree in /on pack giftsFree in the mail offers- Free samples- Coupons- Draws Trade promotions- Price discounts- Free goods- Competition- Allowances
    218. 218.  Objectives- Fast sales boost- Encourage trial- Encourage repeat purchase- Gain distribution
    219. 219. The sales management process 231 Slide 20-38
    220. 220. Sales force management Personal selling Types of PS:- Order taker(inside, delivery, outside)- Order getterNew business sales peopleOrganisational sales people(selling jobs)Consumer sales people( cars, insurance)Technical support sales peopleMerchandisers(advice on displays, implement SP etc)
    221. 221. Functions Prospecting- Existing customers- Trade directories- Enquiry- The press- Cold calling Maintaining customer records & feedback Providing service Handling complaints Relationship management 233
    222. 222. Selling process Prospecting & qualifying Pre approach Presentation and demonstration Overcoming objections Closing Follow-up & maintenance 234
    223. 223.  Formulation of sales strategy- Call rates- Percentage of calls on existing & potential accounts- Discount policy- Improving customer relationship 235
    224. 224.  3 major factor of salesman- Personality- Product knowledge- Psychology of people 236
    225. 225. Personal selling Consumers mind go through following phases:AIDAS model Designing sales force- Setting sales goals- Sales strategy- Sales force composition- Sales force size- Compensation / rewards:(salary, commission, salary +commission) 238
    226. 226.  Managing sales force- Recruitment of sales staff:• Preparation of JD• Identification of sources of requirement & methods of communication• Design of application form• Interview• Supplementary selection aids- Training the sales staff- Directing the operation of the sales staff- Motivating- Evaluation 239
    227. 227. Objectives Profit maximization Target return on investment Market share Sales maximization 241
    228. 228. Factors affecting pricing decisions Price-quality relationship: price strongly influence quality perception Product line pricing: launch cut-price fighter brand Explicability: justify the price they are charging Competition:- First level : offer technically similar products- Second level: dissimilar product serving same problem in same way- Third level: product serving problem in dissimilar way. Negotiating margins: customer expects price reductions Earning very high profits Charging very low prices 242
    229. 229. Pricing methodsCost-oriented pricing: Cost-plus pricing is the simplest pricing method. The firm calculates the cost of producing the product and adds on a percentage (profit) to that price to give the selling price. This method although simple has two flaws; it takes no account of demand and there is no way of determining if potential customers will purchase the product at the calculated price. This appears in two forms, Full cost pricing which takes into consideration both variable and fixed costs and adds a % markup. The other is Direct cost pricing which is variable costs plus a % markup, the latter is only used in periods of high competition as this method usually leads to a loss in the long run.- Target return 243
    230. 230.  Marketing oriented pricing- Pricing new product (skimming & penetration strategies):- Pricing existing products• Build objective- the company wants to build market share• Hold objective- the company wants to maintain MS• Harvest-focused on increasing revenue 244
    231. 231.  Competitor oriented pricing- Going rate Going with same competitors pricing- Competitive bidding Value to the customer- Buy response method- Trade off analysis- Experimentation 245
    232. 232. Pricing strategiesInitiating price changes Circumstances under which price can be raised- When customers are giving good value- When company’s offer attractive Circumstances under which price may be cut- Reduce price to increase volume Proactive price cut- To Preempt competitive entry into a market. 246
    233. 233.  Reacting to competitors price changesWhen to follow a competitor’s price moves• Rising cost level, industry excess demand, when customer are relatively price sensitive,When to ignore to a competitors price move• When costs are stable, when customer are price sensitive price rise can go unchallenged Price wars:Price war is a term used in economic sector to indicate a state of intense competitive rivalry accompanied by a multi-lateral series of price reduction.One competitor will lower its price, then others will lower their prices to match. If one of them reduces their price again, a new round of reductions starts.In the short term, price wars are good for consumers, who can take advantage of lower prices. Often they are not good for the companies involved. The lower prices reduce profit margins and can threaten their survival. Pricing cues:Sale sign announces the discount to the customer9 at the end denotes to bargainCustomer do not remember prices. 247
    234. 234. 248