BBA-Principles of Marketing1.pdf

BBA-Principles of Marketing
At MIT WPU
By
Dr Ravindra G Kulkarni

1. Introduction to Marketing
•Introduction to Marketing – Definitions, Concept,
Objectives
•Functions of marketing
•Evolution of Marketing
•Difference between Traditional Marketing and Modern
Marketing
•Relevance of Marketing in dynamic economy,
•Marketing Manager: Role, Duties and Responsibilities
Principles of Marketing- MIT WPU presentation for academic purpose only
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•Marketing Manager:
•Must be a business & marketing leader
•Understanding of traditional and emerging marketing
•Excellent communication skills
•Ability to think creatively and innovatively
•Budget-management skills and proficiency
•Professional judgment and discretion (experience)
•Analytical skills to forecast and identify trends and
challenges
•Familiarity with the latest trends, technologies and
methodologies in graphic design, web design,
production, etc.
•Networking skills (customers/ channels/ peers)
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•Marketing Manager: Roles & responsibilities
•Developing, implementing and executing strategic
marketing plans for an entire organization
•Sometimes it may be one manager handles some
lines of business and brands within an organization
•Develop pricing strategies for products and services
•Attract potential customers and retain existing ones.
•Work with executives to determine budgets and
targets
•Guidance and direction team of marketing executives
for profitability and results
•Lead and coordinate marketing, creative,
communications or digital team
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•Marketing Manager: Roles & responsibilities
•Oversee all marketing campaigns & collaborate with
ad agencies
•Lead and coordinate branding activities
•Ensure the company is communicating the right
messaging to attract prospective customers and retain
existing ones, and create positive company image
•Represent marketing team to cross-functional
groups- product management, sales, client support
•Updating and reporting senior leadership on the
progress of marketing activities
•Lead market research for maintaining marketing
information system
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2. Marketing Environment
•Environment:
•Situation/ atmosphere in which a company operates
•It influences the people/ firms in it (India/ China)
•Marketing environment forces top-level management’s
ability to develop and maintain successful relationships
with its target customers.
•It is the task of the marketing-oriented organisation to
link the resources of the organisation to the requirements
of customers.
•Kotler- marketing environment is made up of the sectors
and forces outside the firm’s marketing function which
infringe upon (disobey) the ability of marketing of
marketing management to develop and maintain a
successful relationship with the firm’s target audience
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•Environment:
•Marketing firm operates within an unpredictable and
dynamic external environment.
•Marketing environment: combination of Internal factors and
the External factors
•Internal- can be controlled and in immediate
surroundings of the company/ firm
•The internal environment is also known as the micro/
operating/ business environment
•Customers, shareholders, intermediaries, employees,
competitors & distributors
•These are specific to the said business or organisation
and affect its operations on a short-term basis.
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•Environment:
•External- organisation has little control over them and
the environment is away from the company/ firm
•Demographical, cultural, social, legal and political,
economic, natural and technological environment
•External environment is also known as- Macro/
general/ remote environment
•Macro environment refers to the general environment
that originates outside the organization and affects the
business operations indirectly
•Macro environment factors affect the operations of
not just an organisation but all other players too in the
same industry
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•Environment: ever changing…
•Macro
•Demographic- human populations in terms of size,
density, location, age, gender, race, occupation
• Social and cultural- tells the tastes/ beliefs, purchasing
behaviour and priorities of consumers
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•Environment:
•Macro
•Political & legal environment: consists of laws (Consumer
Protection Act, Intellectual Property Rights, FEMA-
exchange mgt act, Labour Laws) government policies/
schemes (Women Entrepreneurship, Minority facilities,
Tax benefits, Export- import policies, trade benefits)
•Economic environment: implies income distribution, level
of saving, debt & credit available to consumers, current
income, prices, savings, the circulation of money
•Technological environment: technology changes are
shortening day by day hence introduction of new products
has become a normal phenomenon of the marketplace.
Huge impact of computers, internet, teleshopping, TV,
mobile phones, Video conferencing/ online meetings...
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•Environment:
•Macro
•Ecological (Nature): industries have exploited nature-
•air, water and natural resources (oil/ soil/ coal etc)
polluted/ overused or becoming scarce.
•Global warming/ floods/ typhoons/ increased water
level at sea/ wild fires at jungle
• Micro
•Company: company’s own mission, vision, policies, goals,
corporate structure, decision making, and culture
•HR, finance, production, purchase, quality,
distribution, services, R&D, brands, images,
shareholders
• Suppliers: raw material and bought out items provided in
time, with quality, right quantity, at right price
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•Environment:
•Micro
•Customers: King in the value chain and reason of being in
business for a company
• Satisfaction of need/ want/desire/ preferences, so
understanding customer is key to marketing success
•Provides revenue to the company
•With loyalty builds brands for company if quality,
competitive price consistent delivery is maintained
•Peter Drucker says: there is only one valid definition
of the business is “to create a customer”
•More important is to retain existing customer
• Intermediaries: distribution channel- render important
services in the free flow of goods between organisations
and their target markets which is an indispensable role
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•Environment:
•Micro
•Competitor: the makers of competing brands/ products
and the makers of substitute brands/ products (Red Label
Tea & society tea- competitors; Brue coffee substitute
product)
•Constantly watch competitors for their quality, price,
distribution, promotional ads/ schemes or any
advantage over our product and counter that
•Publics: groups in a society that influence firm's decision
making or any action (not in direct relation to the firm)
•Financial public (RBI), media public (competitor’s
agency), government public, citizen action public, local
public (influential group), general public &
international public (opinion makers)
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•Environment: Features
•Sum total of all factors external and internal
•Includes factors and forces like customers, competitors,
suppliers, government and social, cultural, political,
technological and legal conditions, ecological concerns
•Dynamic in nature, it keeps on changing
•The changes are unpredictable, difficult to predict the
exact nature of future happenings and the changes in
economic and social environment.
Business environment differs from place to place, region
to region and country to country.
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•Why study Marketing Environment:
•To know the prevailing events and trends, observe which
are favourable/ unfavourable
•To figure out the opportunities and threats in the market
•To project how each factor of the environment will be at
a future point of time
•To gauge the scope of various opportunities and ascertain
which of these may be more favourable, take action
accordingly
•Prepare company to take precautions against threats
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2.Concept of STP
•Segmentation, Targeting & Positioning:
•Basic tools used by the marketers
•Each customer has
•different needs, wants and desires
•different background, education level, experiences
•So Firm needs to offer products/ services/ brands that match
the needs of different groups of customers or segments
•Segmentation: Breaking the heterogeneous market into
homogeneous segments by using one or more attributes
•Targeting: Selecting the segments of the market that can be
targeted- approached by company for selling product/ brand
•Positioning: Creating a distinctive image of product/ service/
brand in the mind of consumers
•Positioning is not what you do to a product; it is what you do
to the mind of a prospect. – Ries and Trout (1972)
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2.Concept of STP
•Segmentation, Targeting & Positioning:
•STP is favoured by marketers because:
• Today markets have matured (info about buyer/ seller
readily available, compliances/ laws are in place)
•Greater diversity in customer needs
•Ability to reach specialized or niche segments
•Marketers are increasingly segmenting markets and
identifying attractive segments (i.e. who to focus on and
why?), in order to identify new business opportunities
• Then they develop suitable positioning and communications
strategies (i.e. what message to communicate)
• Finally effectively allocate resources to key marketing
activities (i.e. how much should we spend and where?)
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2.Concept of STP
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HE= Higher Education
STP of a Higher Educational Institute

2.Concept of STP
•STP Benefits:
•Enhancing a company’s competitive position
•Focusing the marketing strategies like targeted advertising,
new product development, brand differentiation
•Coke’s Diet Coke brand (also called Coca-Cola Lite) was
regarded as ‘girly’/‘feminine’ by male consumers. Company
developed a new product, branded Coke Zero, targeting the
health-conscious male segment of the soft drinks market.
•Examining and identifying growth opportunities
•Identification of new customers, growth segments, or new
product uses in the market via STP
•More effective & efficient usage of company resources
•Targeted market segments promises the greatest return
on marketing investment
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2.Concept of STP
•Defn.: Market Segmentation
•Market segmentation can be defined as the process
of dividing a market into distinct subsets of consumers
with common needs or characteristics and selecting
one or more segments to target with a distinct
marketing mix.
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2.Concept of STP
•Segmentation Characteristics:
•Identifiable
•Division of market into segments with common need by
using the demographic, lifestyle, and other factors. These
factors= bases for segmentation
•Example, in demographic segmentation marketers use
gender, age, ethnicity to segment the market
•Sizeable
•A profitable segment should have enough number of
consumers. A segment can be identifiable but may not be
sizeable.
•Example, division based on education and wish to target
female consumer having PhD degree in a village setup.
This segment is identifiable but may not sizeable in a
particular territory.
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2.Concept of STP
•Stable and growing
•Marketers look for the segments those are stable and
growing in nature.
•Example, number of the customer using e-retailing will
grow very fast in the coming decade.
•Reachable
•A segment can be have above all but if it needs to be
reachable, meaning marketer can communicate with
customers effectively and economically
•Example, hill area of India has no access to media, so no
means of communication/ distribution in that area
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2.Concept of STP
•Congruent with marketer objective and resources
•Marketers may not be willing to target each and every
segment, even if the segments qualify preceding criteria.
•Example, Earlier Mahindra’s target market was not
Scooter segment as it was not in congruence with the
Mahindra’s objective. Now they changed strategy &
marketing objectives, and launched Mahindra Gusto in
Scooter segment
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2.Concept of STP
•Essentials of effective Market Segmentation:
•Measurable
•In many consumer markets measurement is generally a
relatively straightforward exercise as data is published. In
B2B markets, it’s difficult due to lack of specific published
data.
•The data mainly needed in terms of revenues and
profitability
•Accessible
•A segment which is sizeable and potentially profitable
must have financial capable of buying the product/
services or company should be in a position to access in-
house expertise, to service the customers thus to exploit
the potential of the market
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2.Concept of STP
•Essentials of effective Market Segmentation:
•Substantial
•If the strategist is to justify the development of a
segment, the exercise must be cost-effective. The size and
value of the segment is, therefore, an important
determinant of this decision. Size is relative term, since
what may be too small for one organization may be big for
other.
•Unique: it can be distinguished from other market segments
Appropriate: To the organization’s objectives and resources
•Stable: So that its behaviour in the future can be predicted
with a sufficient degree of confidence.
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2.Concept of STP
•Types of Consumer Market Segmentation: (bases)
•Geographical Segmentation
•It is one of the oldest and simplest methods of dividing
the customer market on the basis of the geographical
location of the customers.
•Example, lifestyle products sell very well in big cities than
in small towns. People living in rural and urban region of
the country have different purchasing or buying habits.
Therefore services or product has to be designed keeping
in mind the different preferences of each customer group.
•Demographic Segmentation
•It is dividing the customer market on the basis of several
variables such as age, sex, gender, occupation, income,
education, marital status, family life cycle, community,
social status, nationality etc.
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2.Concept of STP
•Types of Market Segmentation: (bases)
•Demographic Segmentation
•Example buying behaviour of car, beauty products,
mobile phones, cards, apparels, are hugely influenced by
their demographics.
•Psychographic Segmentation
•It is dividing the customer market on the basis
personality, lifestyles, attitudes and habits of an individual.
•Personality= traits such as introvert, extrovert ambitious
•Lifestyles= how a persons lives his life and spends money
•Example, person having a lavish lifestyle may consider
having an air conditioner in every room as a need,
whereas a person living in the same city but having a
conservative lifestyle may consider it as a luxury.
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2.Concept of STP
•Types of Market Segmentation: (bases)
•Behavioural Segmentation
•It is dividing the market on the basis of the
individual’s knowledge about the product and the
usage of the product.
•The customer can be segmented into those who
know about the product, those who don’t know about
the product, Ex users, Potential users, Current Users
First time users, etc.
•Example, an athlete may prefer to buy running shoes
to participate in marathon race and a non-athlete
person may buy it just because he likes the shoes
(light/medium user).
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3. Meaning and Composition of Marketing Mix
•Marketing Mix- A mixture of several ideas and plans
followed by a marketing representative, to promote a
particular product or brand.
•Several concepts and ideas combined together to
formulate final strategies helpful in making a brand
popular amongst the masses form marketing mix.
•A marketing mix includes multiple areas of focus as part
of a comprehensive marketing plan.
•Marketing mix refers to a classification by E. Jerome
McCarthy's, that starts as the four Ps: product, price,
placement, and promotion (1960)
•The different elements of a marketing mix work in
conjunction with one another.
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2. Market Segmentation
•The Business Market Segmentation bases:
•Customer demographics (industry, company size):
•Industry: What geographical areas to focus
•Company Size: What size companies to focus on
•Location: Which location to focus on
•Operating characteristics:
•Technology: What customer technologies to focus on
•User/nonuser status: focus on heavy/ medium/ or
light users or nonusers
•Customer capabilities: focus on customers needing
many services or few services
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•Purchasing approaches:
•Purchasing function: focus on companies with highly
centralized or decentralized purchasing organizations
•Power structure: focus on companies that are
engineering/ financially or marketing dominated
•Nature of existing relationship: focus on companies
with strong relationships/ focus the most desirable
companies
•General purchase policies: focus on companies that
prefer leasing/ Service contracts/ Systems purchases/
Sealed biding
•Purchasing criteria: focus on companies that are
seeking quality/ Service/ Price
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•Situational factors:
•Urgency: focus on companies that need quick
delivery
•Specific application: focus on certain applications of
our product rather than all applications
•Size of order: focus on large or small orders
•Personal characteristics:
•Buyer-seller similarity: focus on companies whose
people and values are similar to ours
•Attitudes toward risk: focus on risk-taking or risk-
avoiding customers
•Loyalty: focus on companies that show high loyalty to
their suppliers
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•Target marketing is the entire process of identifying the
segments of the market, targeting one or more that are
suitable and position in the market is a way that will
attract the potential buyers from the selected target
segments.
1. Identify the bases for segmenting the market: as seen
in earlier slides as segmentation
2. Develop profiles of resulting segments: as seen in
earlier slides as segmentation
•Targeting is the 2nd step of target marketing where
marketers evaluate each market segment’s attractiveness
& select best segments in the market to enter
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•In evaluating different market segments, look at factors:
•Segment size and growth: Analyze current segment
sales, growth rates, and expected profitability
•Segment structural attractiveness: Level of
competition, Substitute products, Power of buyers,
and Powerful suppliers
•Company objectives and resources: Examine
company skills & resources needed to succeed in that
segment. Offer superior value & gain advantages over
competitors.
•After evaluating different segments, the company must
decide which and how many segments it will target. The
target market consists of buyers sharing common needs
or characteristics that the company decides to serve.
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3. Develop measures of segment attractiveness
•Brands must measure what makes segments
attractive to target. This could be the potential sales
numbers, lack of competition, number of buyers,
growth opportunity.
4. Select the target segment(s)
•Based on the product or service type, brands need to
select one or more segments to target that will ensure
most sales and help the company to grow.
•The third step is market positioning. Beyond deciding
which segments of the market it will target, the company
must decide what positions it wants to occupy in those
segments.
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5. Develop the positioning for each target segment:
•For all selected target segments, a brand needs to
define the attributes that consumers care about.
•A product’s position is the way the product is defined
by consumers on important attributes.
•The place the product occupies in consumers’ minds
relative to competing products.
6. Develop a marketing mix for each target segment
•Positioning involves implanting the brand’s unique
benefits and differentiation in customers’ minds
•Positioning is setting the brand’s marketing mix in a
way that attracts customers more than the
competition.
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•Levels of Segmentation:
•Buyers have different and unique needs and wants
•Every buyer is potentially a separate market.
•So a seller might design a separate marketing program
for each buyer.
•Some companies serve buyers individually, many others
face larger number of smaller buyers and do not find
complete segmentation. Thus market segmentation can
be dividing into:
•Mass Marketing
•Segment Marketing
•Niche Marketing
•Micro Marketing
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1. Mass Marketing
•Mass marketing is to produce the same product for
all the customers. In this segments producer act for
•Mass production/ Mass distribution/ Mass
Promotion
•Mass marketing creates markets, which helps to
minimize the cost and the is price low
•It is not possible to produce one product and serve
different group of customers.
•Mass media played an important role in creating
good image about segmentation market and bad
image of mass marketing
2. Segmented Marketing: we have seen earlier
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3. Niche Marketing:
•Market, where segment is divided into sub segments
•Niche gives a good opportunity to small companies
to allocate their resource by serving niches, which are
overlooked by large companies.
4. Micro Marketing
•Micro-marketing adopts products and marketing
programs to match the taste of specific localities and
individuals.
•Micro Marketing can be divide in to Local Marketing
and Individual Marketing.
•Local Marketing
•Adopting brand and promotion to the wants and
needs of local customers like cities, specific stores.
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•Local Marketing
•It increases manufacturing and marketing cost by reducing
economies of scale.
•Individual Marketing
•Adopting products and marketing programs to the needs
of individual customers.
•Through mass communication prevalence individual
marketing was locally ignored, but new technologies
powerful computers, all have combined to foster mass
customization.
•Long tail Marketing: the strategy of selling large amounts
of popular products + low amounts of niche products or
services in niche markets. The theory is that the combined
profit from low demand product sales will be similar to
that of the popular products. Example, Amazon & Netflix
provide retailing + long tail as micro finance & insurance
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•Market Potential & Market Share:
•Market potential= calculating the total sales of a product or
service that is offered in a market (all competitors included)
•Size of the customer volume (customer base) and the
demand generated by them
•This denotes optimal outcome of the market
•Marketing research team can provide the data of possible
sales (no. of units) in the market (market potential by
numbers)
•Market potential (by value)= market size (sales in no of
units) x unit price
•Example, if our product is say a car battery and average
battery life is 3 years, then potential market is the no. of
cars beyond 3 to 6 years (market potential by numbers).
•Potential is for all competing brands
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•Market Potential & Market Share:
•Market Share: is the percentage of total sales, achieved by a
brand/ company for a specified time period.
•Formula: brand’s sales/ total sales (for a period)
•It is a key indicator of a brand’s success
•It denotes brand’s competitiveness in the market
•Brand with the biggest market share = market leader
•When market share increases there can be-
•Higher profit margin
•Decline in purchases-to-sales ratio
•Decline in marketing costs as a percentage of sales
•Higher quality
•Higher priced products
•Creates dominant position in the market
•Indicates the market trends towards your brand’s
technology
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•Value Proposition & Unique Selling Proposition
•Both mostly used as synonym along with Unique Value
Proposition
•A statement clearly identifying the benefits of product/
brand, it will deliver to its customers.
•A well-written value proposition differentiates the
product/ brand in the market
•It creates good image in the mind space of target
audience
•Example, ‘a user friendly software’, ‘life is Good’, ‘Hamara
Bajaj’, ‘Amul Doodh Peeta Hai India’
•Value proposition is the full mix of benefits or economic
value which it promises to deliver to the customers
•Example, ‘Value for money’, ‘To help grow business
better’, ‘Always Ahead’
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•Value Proposition & Unique Selling Proposition
•Answer below to create VP/ USP/UVP
•What product/service do you offer?
•Who is your target customer?
•What problem does your product solve for your
customer?
•How does your product or service benefit your customer?
•Apple’s UVP: Three fundamental value propositions-
•Apple's brand leverage the ‘Think Different’ motto
•Reliable tech devices for mass markets
•Emphasize more and more privacy to differentiate itself
from other tech giants (from2019)
•Amazon's three value propositions: low price, fast delivery,
and a wide selection of products
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•Product
•This represents an item or service designed to satisfy
customer needs and wants.
•To effectively market a product or service, it's
important to identify what differentiates it from
competing products or services.
•Price
•The sale price of the product reflects what
consumers are willing to pay for it.
•One needs to consider costs related to marketing,
R&D, manufacturing, and distribution known as cost-
based pricing.
•Pricing based primarily on consumers' perceived
quality or value is known as value-based pricing.
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•Placement/ Place
•It is important to consider areas of distribution
depending upon the type of product sold.
•Basic consumer products, like pen, papers, are
readily available in many stores while premium
consumer products, are available only in select stores
•Today place can be a physical store or online, or both.
•Promotion
•Marketing campaigns are called a promotional mix.
•Activities include advertising, sales promotion,
personal selling, and public relations within a budget
assigned to the marketing mix.
•Companies relay messages for target audience to
create good image about the product/ service/ brand
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•Defn.: According to Philip Kotler, ‘marketing mix is the
mixture of controllable marketing variable that the firm
uses to pursue the sought level of sales in the target
market’
•Characteristics/Features/Nature of Marketing Mix:
1. Marketing mix is the crux of marketing process:
•Marketing mix involves many crucial decisions
relating to each element of the mix. The impact of the
mix will be the best when proper weightage is
assigned to each element and they are integrated so
that the combined effect leads to the best results.
2. Marketing mix has to be reviewed constantly in
order to meet the changing requirements:
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•The marketing manager has to constantly review the
mix and conditions of the market and make necessary
changes in the marketing mix according to market.
3. Changes in external environment necessitate
alterations in the mix:
•Changes keep on taking place in the external
environment. Customers’ tastes and preferences
change very fast. Brand loyalty and purchasing power
also change over a period. The marketing manager
has to carry out market analysis constantly to make
necessary changes in the marketing mix.
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4. Changes taking place within the firm also
necessitate changes in marketing mix:
•Changes within the firm may take place due to
technological changes, changes in the product line or
changes in the size and scale of operation.
•Such changes need similar changes in marketing mix
5. Applicable to business/ non-business organization:
•Marketing mix is applicable to business organizations
and to non-business organizations, such as clubs and
educational institutions to provide the right courses
(product), charge the right fees (price), promote the
institution and the courses, and provide the courses at
the right place.
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6. Helps to achieve organizational goals:
•An application of an appropriate marketing mix helps
to achieve organizational goals such as profits and
market share.
7. Concentrates on customers:
A thorough understanding of the customer is common
to all the four elements. The focus point of marketing
mix is the customer, and the marketing mix is
expected to provide maximum customer satisfaction.
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•Product Mix:
•Product variety
•Quality
•Design
•Features
•Brand name
•Packaging
•Sizes
•Services
•Warranties
•Returns
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• Concept of Product:
•Bundle of utilities and has characteristics
•Associated with services sometimes
•Consumer buys satisfaction in form of product
•Product physical product+ brand+ package+ label+
reputation of producer to retailers+ related services
•Product= tangible and intangible attributes
•Defns:
•Philip Kotler- a product is anything that can be offered to a market
for attention, acquisition, use or consumption that might satisfy a
want or a need
•Peter Benette- a product may be an idea, a physical entity or a
service or any combination of the three. It exists for the purpose of
exchange for the satisfaction of individual and organizational
objectives
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• Characteristics of Product: Intrinsic/ Extrinsic
•Intrinsic characteristics- related to the physical
aspects of a product
•Colour, flavour, form, appearance, size, shape,
texture
•For a car size/ appearance; while for tea its taste,
flavor, packaging
•Extrinsic attributes- related to the product, but not in
the physical part of this one
•Brand image/name, performance quality, price,
country of origin, packaging, durability, reliability,
serviceability
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• Characteristics of Product: Intrinsic/ Extrinsic
•Both intrinsic and extrinsic influence the consumer in the
product evaluation by reminding them about previous
knowledge and experience with the product
•Consumers become more aware of Extrinsic over time
•Intrinsic do not provide the consumer with useful
information as Consumer:
•does not have capability to evaluate the product
•does not have enough time to evaluate the product
•So, extrinsic characteristics become quality indicators
•The first purchase of a consumer is influenced heavily by
extrinsic characteristics
•Extrinsic features allow the product to adapt to changing
consumer needs without the manufacturer making any
changes to the product itself
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•Product Life cycle:
•All products have life, though they vary too much
•Products go thru life stages like living organisms= lifecycle
•Product Lifecycle is a bell shape curve
•The stages:
•Introduction
•Growth
•Maturity
•Decline
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Introductory
Stage
Growth
Stage
Maturity
Stage
Decline Stage
Total
Market
Sales
Time

•Product Life Cycle:
•Product’s life is limited
•Product sales pass thru different volume and
implications
•Profits vary at different life cycles
•Products need different strategies at different stages
•Customers also have different responses to this product/
technology
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•Customer adopting new technologies
•Not everyone will immediately adopt a disruptive idea despite
obvious benefits
•Innovators (2.5%) – first individuals to adopt an innovation.
Innovators are willing to take risks, youngest in age, have the
highest social class.
•Early Adopters (13.5%) –second fastest category of adopters;
They have highest degree of opinion leadership among the
other adopter categories.
•Early Majority (34%) – They adopt an innovation after a
significantly longer than the above. They have above average
social status contact with early adopters
•Late Majority (34%) – They adopt an innovation after the
average member of the society, with skepticism and have
below average social status, very little financial lucidity
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•Customer adopting new technologies
•Laggards (16%) – They are the last to adopt an innovation.
Unlike some of the previous categories, individuals in this
category show little to no opinion leadership. These individuals
typically have an opposition to change-agents and tend to be
advanced in age. Laggards typically tend to be focused on
“traditions”, likely to have lowest social status, lowest financial
fluidity
29-09-22 59

•Product Life cycle: Stages
29-09-22 60
Introduction Growth Maturity Decline
Sales Low Rapid growth Slow growth Declining
Profits Losses Increasing Decreasing Low
Competition Little Increasing Fierce Changing
Stage Objective Marketing Strategy
Introduction Awareness & trial Communicate benefits
Growth Usage of Brand Specific brand communication,
Lower prices, expand distribution
Maturity Maintain Market share
Extend life Cycle
Sales promotion, drop price,
expand distribution, new users,
new version of product
Decline Decide what to do Maintain, Invest/ Divest

•Why Value Proposition?
•It helps customer to understand what is offered to them
•Customers know how product/ service benefits them and
are their best available option.
•This entire understanding leads to customer buying the
product/ service, i.e. Customer engagement
•Brand promise and value proposition
•They are similar but not same
•They state why a consumer would choose the brand over
its competition.
•Value proposition focuses on product features
•Brand promise speaks to the long term meaning of a
brand
•Features may change, but the promise remains there
28-09-22 61

•Product simplification/ elimination/ diversification:
•Consumer choice changes over time
•Brand/ Product has to meet the changed needs and
wants of the target market else it will be outdated
•Example, Nokia continued with its ‘symbian’ OS while
majority consumers preferred ‘android’ and ‘apple’
operating systems, hence Nokia lost the market share
•Product simplification or Product contraction refers to
discontinuation of a certain product from a range of
products (product mix) by an organisation to thin out the
product line.
•Product diversification happens when a new product is
added to the product mix of an organisation.
28-09-22 62

•Product elimination is withdrawal of a product from the
market. Thus, product simplification is achieved by
product elimination or termination.
•Product simplification and product diversification are
opposite to each other.
•Product diversification is done in two ways – by adding a
product to an existing product line and by creating an
additional product line.
•It is done to ensure that the firm doesn’t rely completely
on existing products or product lines.
•Example, Samsung and Micromax added laptops to the
existing range of electronic items which is adding a new
product to its product line.
28-09-22 63

•Mahindra and Mahindra who have their core business of
making Tractors and four wheelers started a new product
line by getting into two wheeler manufacturing like
motorbikes and scooters.
•When Simplification & diversification takes place:
•Some products are not doing good, eat away profits
earned by other products & are for very loyal
customers
•Some products are profitable but the management
thinks that their resources can be utilised more
efficiently to make more profits.
•Product elimination is complete withdrawal of a product
from the market. Example, ZEN/ 800 models of Maruti
28-09-22 64

• Evaluation of a product’s performance by categories-
1) Performance – sales, market share, costs involved
in manufacturing, promotion and profit made
2) Product line/mix – if the product elimination will
have impact on the sale or other products (product
mix), brand, and customer needs. Example,
pharmaceutical companies ensure elimination won’t
affect market need
3) Customer need – ability/ inability of the product to
satisfy the need of the customer.
4) Operations – impact on manufacturing activity,
marketing, resources, management’s and employee’s
time, support activities line servicing & maintenance
28-09-22 65

• Evaluation of a product’s performance by categories-
5) Distributors and Suppliers – how the product
elimination will impact the profits and relationships
with suppliers and distributors.
6) Competitors – will the product elimination give
advantage to competitors
•Advantages of Product Simplification –
1) Cost reduction
2) Better brand image
3) Effectiveness in overall activities
4) Increase in profits
5) Better relations with distributors
6) Market control
28-09-22 66

•Advantages of product diversification –
1) Increase customer base
2) Efficiency and effectiveness in the organisation
3) Brand awareness into new markets
4) Brand advantage
5) Increase consumer standards
28-09-22 67

•New product development:
•Innovative- first time introduced, 5G
•Addition to product line- addition of 2 wheeler by
M&M
•Addition to existing product line- LXI/ VXI/ DXI to Alto
•Improving/ revision of existing product- added GPS to
car
•Repositioning- Omni as multi utility vehicle
•Cost reduction- basic vanilla product
29-09-22 68

•New product development: Process
•Idea generation
•Idea screening
•Concept development & testing
•Marketing strategy development
•Business analysis
•Product development
•Market testing
•Commercialization
29-09-22 69

•Idea generation
•Continuous and systematic process
•Internal
•R&D
•Employees
•External
•Customers
•Suppliers
•Competitors
•Distributors
•Opinion makers
•Idea screening
•Filter workable/ non-workable ideas (financial/
marketing wise/ technically/ company’s goals
29-09-22 70

•Idea screening
•Divide into promising / marginal/ rejected idea
•Avoid
•Good idea dropped
•Bad idea promoted
•Concept development & testing
•A detailed version of idea which is meaningful to
customer
•Who uses the product
•What benefit it gives to consumer
•When & how the product will be consumed
29-09-22 71

•Marketing strategy development
•Understand customer
•Analyze the market
•Analyze the competitor
•Research distribution channels
•Define marketing mix
•Analyze financials
•Review and revise
•Business analysis
•Decide if the product is beneficial from marketing
and financial point of view
•Work on pricing w.r.t. customers/ competitors
•Analyze BEP/ profitability then move to next step
29-09-22 72

•Product development
•Till now product existed on paper/ drawing
•Create working prototype
•Test the prototype
•Conduct focus group tests of customers
•Make improvements
•Market testing
•Create the product from branding point of view
•Put product to actual sell
•Analyze the market response
•Prepare for Commercialization
29-09-22 73

•Commercialization
•Decide when to launch (timing)
•Where to launch (geographic strategy)
•To whom (target market)
•What way to launch (market strategy)
•Following a process fro NPD helps a company in:
•Maximum customer satisfaction
•Good quality product
•Fills the gap in the market
•Helps company to replace a declining product
•Helps company to use new technology
•Helps company grow market share
29-09-22 74

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