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1. 16-05-2023
Dr.S.Arunkumar-VITAP
Place; Distribution channel Management; Channel functions and strategy;
Channel structure; Channel behaviour and organisation; Channel
management decisions; Process of supply chain management; Distribution
channel and strategy
MODULE – 7
Dr.S.Arunkumar-VITAP
Course Outcomes
Bloom’s Taxonomy
Level
Description
Course
Outcome
Evaluate (5)
Defining distribution channels and explaining its strategy with case
examples
PO3/PEO2
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• Sets of interdependent organizations participating in the process of
making a product or service available for use or consumption
• Intermediaries: merchants, agents, and facilitators
Marketing Channels and Value Networks
Marketing channels
Marketing channel System
•The particular set of marketing channels a firm employs
•Push vs. pull strategy
Multichannel marketing
• Using two or more marketing channels to reach customer segments in
one market area
• Omnichannel marketing
• Integrated marketing channel system
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Marketing Channels and Value Networks
Value Networks
• A system of partnerships and alliances that a firm creates to
source, augment and deliver its offerings
• Demand chain planning-The company should first think of the target market,
however, and then design the supply chain backward from that point.
• https://www.retailgear.com/value-network
• Oracle relies on 15 million developers—the largest developer
community in the world.
• Apple Developer—where folks create iPhone apps for the Apple
operating system—has 275,000 registered iOS members.
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• Disney sells its videos through multiple channels:
• movie rental merchants such as Netflix and Redbox,
• Disney Stores (now owned and run by The Children’s Place),
• retail stores such as Best Buy, online retailers such as
Disney’s own online stores and Amazon.com,
• and the Disney Club catalog and other catalog sellers.
• This variety affords Disney maximum market coverage and
enables it to offer its videos at a number of price points.
Disney
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• Managing a value network means making increasing investments in information
technology (IT) and software.
• Firms have introduced supply chain management (SCM) software and invited
such software firms as SAP and Oracle to design comprehensive enterprise
resource planning (ERP) systems to manage cash flow, manufacturing, human
resources, purchasing, and other major functions within a unified framework.
They hope to breakup departmental silos—in which each department acts only in
its own self-interest—and carry out core business Processes more seamlessly.
• Marketers, for their part, have traditionally focused on the side of the value
network that looks toward the customer, adopting customer relationship
management (CRM) software and practices. In the future, they will increasingly
participate in and influence their companies’ upstream activities and become
network managers, not just product and customer managers.
Managing Value network
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• Coach Coach markets a high-end line of luxury handbags, briefcases, luggage, and accessories. In its
2013 fiscal year 10-K, the company describes its multichannel global distribution model as follows:
“Coach products are available in image-enhancing locations globally wherever our consumer chooses to
shop including: retail stores and factory outlets, directly operated shop-in-shops, online, and department
and specialty stores. This allows Coach to maintain a dynamic balance as results do not depend solely
on the performance of a single channel or geographic area.”
• The North America segment consists of direct-to-consumer and indirect channels and includes sales to
consumers through 351 company-operated retail stores, including the Internet, and sales to wholesale
customers and distributors. Coach began as a U.S. wholesaler and still sells to 1,000 U.S. department-
store locations, such as Macy’s (including Bloomingdale’s), Dillard’s, Nordstrom, Saks Fifth Avenue, and
Lord & Taylor, often within a tightly controlled shop-within-a-shop, as well as on some of those retailer’s
Web sites. This segment represented approximately 69 percent of the company’s total net sales in fiscal
2013.
• The International segment sells to consumers online and through company-operated stores in Japan and
mainland China, Hong Kong, Macau, Singapore, Taiwan, Malaysia, and Korea and to wholesale
customers and distributors. Coach also has store-in-store offerings in Japan and China inside major
department stores. The International segment represented approximately 31 percent of total net sales in
fiscal 2013. Finally, Coach has licensing relationships with Movado (watches), Jimlar (footwear), and
Marchon (eyewear). These licensed products are sometimes sold in other channels such as jewelry
stores, high-end shoe stores, and optical retailers as Coach continues to broaden its meaning from a
“bag brand” to a whole lifestyle brand.
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• Companies are increasingly employing digital distribution strategies, selling
directly online to customers or through e-merchants who have their own Web
sites. In doing so, these companies are seeking to achieve Omnichannel
marketing, in which multiple channels work seamlessly together and match each
target customer’s preferred ways of doing business, delivering the right product
information and customer service regardless of whether customers are online, in
the store, or on the phone.
• Omnichannel marketing is the integration and cooperation of the
various channels organizations use to interact with consumers, with
the goal of creating a consistent brand experience. This includes
physical (e.g. stores) and digital channels (e.g. websites)
Omnichannel
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Marketing Channels and Value Networks
Channel functions and flows
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• Some of these functions (storage and movement, title, and
communications) constitute a forward flow of activity from the
company to the customer;
• others (ordering and payment) constitute a backward flow
from customers to the company.
• Still others (information, negotiation, finance, and risk taking)
occur in both directions.
• A manufacturer selling a physical product and services might
require three channels: a sales channel, a delivery channel, and
a service channel.
Channel Functions and Flows
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Consumer/Industrial Marketing Channel Levels
Marketing Channels and Value Networks
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• 1.Analyzing customer needs and wants
• 2.Establishing objectives and constraints
• 3.Identifying major channel alternatives
• Types of intermediaries (Intensive, Selective, Exclusive)
• Number of intermediaries
• Terms/responsibilities of channel members
• 4.Evaluating major channel alternatives
• Economic criteria
• Control and adaptive criteria
Channel-Design Decisions
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•Consumers may choose the channels they prefer
based on price, product assortment, and convenience
as well as their own shopping goals (economic, social,
or experiential).
•Channel segmentation exists, and marketers must be
aware that different consumers have different needs
during the purchase process.
•Even the same consumer, though, may choose
different channels for different reasons.
1.Analyzing Customer Needs and Wants
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1.Desired lot size—The number of units the channel permits a typical customer to purchase on one occasion.
In buying cars for its fleet, Hertz prefers a channel from which it can buy a large lot size; a household wants a
channel that permits a lot size of one.
2. Waiting and delivery time—The average time customers wait for receipt of goods. Customers increasingly
prefer faster delivery channels.
3. Spatial convenience—The degree to which the marketing channel makes it easy for customers to purchase the
product. Toyota offers greater spatial convenience than Lexus because there are more Toyota dealers, helping
customers save on transportation and search costs in buying and repairing an automobile.
4. Product variety—The assortment provided by the marketing channel. Normally, customers prefer a greater
assortment because more choices increase the chance of finding what they need, though too many choices can
sometimes create a negative effect.
5. Service backup—Add-on services (credit, delivery, installation, repairs) provided by the channel. The more
service backup, the greater the benefit provided by the channel.
Channels produce five service outputs:
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• Bulky products, such as building materials, require channels that minimize the
shipping distance and the amount of handling.
• Nonstandard products such as custom built machinery are sold directly by sales
representatives.
• Products requiring installation or maintenance services, such as heating and
cooling systems, are usually sold and maintained by the company or by
franchised dealers.
• High-unit-value products such as generators and turbines are often sold
through a company sales force rather than intermediaries.
• Marketers must adapt their channel objectives to the larger environment.
2.Channel objectives vary with product characteristics
& environment
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• Exclusive distribution severely limits the number of intermediaries. It’s appropriate when the producer wants to
ensure more knowledgeable and dedicated efforts by the resellers, and it often requires a closer partnership with
them.
• Exclusive distribution is used for new automobiles, some major appliances, and some women’s apparel brands.
Exclusive distribution often includes exclusive dealing arrangements, especially in markets increasingly driven by
price. When the legendary Italian designer label Gucci found its image severely tarnished by overexposure from
licensing and discount stores, it decided to end contracts with third-party suppliers, control its distribution, and
open its own stores to bring back some of the luster.
• Selective distribution relies on only some of the intermediaries willing to carry a particular product. Whether
established or new, the company does not need to worry about having too many outlets; it can gain adequate
market coverage with more control and less cost than intensive distribution.
• Intensive distribution places the goods or services in as many outlets as possible. This strategy serves well for
snack foods, soft drinks, newspapers, candies, and gum—products consumers buy frequently or in a variety of
locations. Convenience stores such as 7-Eleven and Circle K and gas-station outlets like ExxonMobil’s On the Run
survive by providing simple location and time convenience.
3. Identifying major channel alternatives
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• Price policy calls for the producer to establish a price list and schedule of discounts and allowances that
intermediaries see as equitable and sufficient.
• Conditions of sale refers to payment terms and producer guarantees. Most producers grant cash discounts
to distributors for early payment. They might also offer a guarantee against defective merchandise or price
declines, creating an incentive to buy larger quantities.
• Distributors’ territorial rights define the distributors’ territories and the terms under which the producer
will enfranchise other distributors. Distributors normally expect to receive full credit for all sales in their territory,
whether or not they did the selling.
• Mutual services and responsibilities must be carefully spelled out, especially in franchised and exclusive agency
channels. McDonald’s provides franchisees with a building, promotional support, a record-keeping
system, training, and general administrative and technical assistance. In turn, franchisees are expected to
satisfy company standards for the physical facilities, cooperate with new promotional programs, furnish requested
information, and buy supplies from specified vendors, as well as pay monthly franchisee fees.
Terms and Responsibilities of Channel Members
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• Each channel alternative needs to be evaluated against economic,
control, and adaptive criteria.
4. Evaluating Major Channel Alternatives
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• Control and Adaptive Criteria Using a sales agency can pose a control
problem.
• Agents may concentrate on the customers who buy the most, not
necessarily those who buy the manufacturer’s goods.
• They might not master the technical details of the company’s product
or handle its promotion materials effectively.
• To develop a channel, members must commit to each other for a
specified period of time. Yet these commitments invariably reduce
the producer’s ability to respond to change and uncertainty. The
producer needs channel structures and policies that provide high
adaptability.
Control and Adaptive Criteria
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Channel Management Decisions
Marketing Channels and Value Networks
Selecting
channel
members
Selecting
channel
members
Training
channel
members
Training
channel
members
Evaluating
channel
members
Evaluating
channel
members
Modifying
channel
design
Modifying
channel
design
Channel
modification
decisions
Channel
modification
decisions
Global Channel
considerations
Global Channel
considerations
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• To customers, the channels are the company. Consider the negative
impression customers would get of McDonald’s, Shell Oil, or Mercedes-
Benz if one or more of their outlets or dealers consistently appeared
dirty, inefficient, or unpleasant.
• To facilitate channel member selection, producers should determine
what characteristics distinguish the better intermediaries—
• Number of years in business,
• Other product lines carried,
• Growth and profit record,
• Financial strength,
• Cooperativeness,
• And service reputation.
1.Selecting Channel Members
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• A company needs to view its intermediaries the same way it views its end users. It should determine their
needs and wants and tailor its channel offering to provide them with superior value.
• Carefully implemented training, market research, and other capability-building programs can motivate and
• improve intermediaries’ performance.
• The company must constantly communicate that intermediaries are crucial partners in a joint effort to
satisfy end users of the product.
2.Training and Motivating Channel Members
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• Channel Partnerships More sophisticated companies try to forge a long-term partnership with distributors.
• The manufacturer clearly communicates what it wants from its distributors in the way of market coverage, inventory levels,
marketing development, account solicitation, technical advice and services, and marketing information and may introduce a
compensation plan for adhering to the policies.
• To streamline the supply chain and cut costs, many manufacturers and retailers have adopted efficient consumer
• response (ECR) practices to organize their relationships in three areas:
• (1) demand-side management, or collaborative practices to stimulate consumer demand by promoting joint marketing and
sales activities,
• (2) supply-side management, or collaborative practices to optimize supply (with a focus on joint logistics and supply
• chain activities), and
• (3) enablers and integrators, or collaborative information technology and process improvement tools to support joint
activities that reduce operational problems, allow greater standardization, and so on.
• Research has shown that although ECR has a positive impact on manufacturers’ economic performance and capability
development, manufacturers may also feel they are inequitably sharing the burdens of adopting it and not getting as much
as they deserve from retailers.
Channel Partnerships
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Producers must periodically evaluate
intermediaries’ performance against such
standards
•as sales-quota attainment,
•average inventory levels,
•customer delivery time,
•treatment of damaged and lost goods, and
•Cooperation in promotional and training
programs.
3.Evaluating Channel Members
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• Modifying Channel Design and Arrangements
• No channel strategy remains effective over the whole
product life cycle. In competitive markets with low entry
barriers, the optimal channel structure will inevitably change
over time.
• New technologies have created digital channels undreamed
of years ago.
• The change could mean adding or dropping individual
market channels or channel members or developing a totally
new way to sell goods
Modifying Channel Design and Arrangements
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The Strategic Importance
of the Supply Chain
Supply-chain management is the
integration of the activities that procure
materials and services, transform them
into intermediate goods and the final
product, and deliver them to customers
Competition is no longer between
companies; it is between supply chains
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SCM vs Traditional Purchasing
• Traditional purchasing focuses on initial cost; SCM focuses on total
cost of ownership
• Traditional purchasing tries to negotiate the price that is best for the
purchaser; SCM focuses on negotiating a price that is best for the
entire supply chain.
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A Supply Chain
Figure 11.1
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Supply Chain Flows
Initial supplier Ultimate customer
Information Flow
Material Flow
There must be a good inter-organizational information
provide the required information flow.
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Supply Chain Focus
• Traditional purchasing focuses on the flow of goods and information
from the immediate supplier and immediate customer; SCM focuses
on the flow of goods and information from initial supplier to ultimate
customer.
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BCG Matrix
BOSTON CONSULTING GROUP (BCG) MATRIX is developed by
BRUCE HENDERSON of the BOSTON CONSULTING
GROUP IN THE EARLY 1970’s.
According to this technique, businesses or products are classified as
low or high performers depending upon their market growth rate and
relative market share.
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Relative Market Share
and Market Growth
To understand the Boston Matrix you need to
understand how market share and market growth
interrelate.
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MARKET SHARE
• Market share is the percentage of the total market that is being serviced by your
company, measured either in revenue terms or unit volume terms.
• RELATIVE MARKET SHARE
• RMS = Business unit sales this year
Leading rival sales this year
• The higher your market share, the higher proportion of the market you control.
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MARKET GROWTH
RATE
• Market growth is used as a measure of a market’s attractiveness.
• MGR = Individual sales - individual sales
this year last year
Individual sales last year
• Markets experiencing high growth are ones where the total market share
available is expanding, and there’s plenty of opportunity for everyone to make
money.
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THE BCG GROWTH-SHARE
MATRIX
• It is a portfolio planning model which is based on the observation that a
company’s business units can be classified in to four categories:
Stars
Question marks
Cash cows
Dogs
• It is based on the combination of market growth and market share relative to the
next best competitor.
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STARS
High 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.
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CASH COWS Low 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.
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DOGS
Low 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.
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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.
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WHY BCG MATRIX ?
To assess :
Profiles of products/businesses
The cash demands of products
The development cycles of products
Resource allocation and divestment decisions
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MAIN STEPS OF BCG MATRIX
• Identifying and dividing a company into SBU.
• Assessing and comparing the prospects of each SBU according to two
criteria :
1. SBU’S relative market share.
2. Growth rate OF SBU’S industry.
• Classifying the SBU’S on the basis of BCG matrix.
• Developing strategic objectives for each SBU.
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BCG MATRIX WITH CASH FLOW
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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.
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LIMITATIONS
• BCG MATRIX uses only two dimensions, Relative market share and
market growth rate.
• Problems of getting data on market share and market growth.
• High market share does not mean profits all the time.
• Business with low market share can be profitable too.
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External Analysis: The
Identification of Industry
Opportunities and Threats
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The Environment
• Macro-environment
• Trends and events that affect all firms (albeit in different ways)
• Micro-environment
• Trends and events that affect a particular firm or set of firms
• Traditional focus on industry analysis
• E.g. airline industry, computer industry, banking industry
• Issues in determining the boundary of an industry
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Sectors, industries, segments…
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The Five Forces Model
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Potential Competitors
• New entrants into an industry threaten incumbent companies.
• Barriers to entry:
• Brand loyalty
• Absolute cost advantages
• Economies of scale
• Switching costs
• Government regulation
• Entry barriers reduce the threat
of new and additional competition.
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Rivalry Among Established Companies
• The intensity of competitive rivalry in an industry
arises from:
• Industry’s competitive structure.
• Demand (growth or decline) conditions in industry.
• Height of industry exit barriers
• Investment in specialized assets
• High fixed costs of exit
• Emotional attachments to an industry
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The Bargaining Power of Buyers
• Buyers are most powerful when:
• There are many small sellers and few large buyers.
• Buyers purchase in large quantities.
• A single buyer is a large customer to a firm.
• Buyers can switch suppliers at low cost.
• Buyers purchase from multiple sellers at once.
• Buyers can easily vertically integrate to compete with suppliers.
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The Bargaining Power of Suppliers
• Suppliers have bargaining power when:
• Their products have few substitutes and are important to buyers.
• The buyer’s industry is not an important customer to the supplier.
• Differentiation makes it costly for buyers to switch suppliers.
• Suppliers can vertically integrate forward to compete with buyers and buyers can’t
integrate backward to supply their own needs.
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Substitute Products
• The competitive threat of substitute products
increases as they come closer to serving similar
customer needs.
Close
Far
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The implications of five forces model
• It makes it possible to diagnose the competitive
forces and characterize the position of a company.
• To a large extent, the forces influences the rules of
the game of the competitors and the strategies
which are potentially available.
• To an extent, it determines the profit potential of
the industry.
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A Sixth Force: Complementors
• Complementors:
• Companies whose products are sold in tandem with another
company’s products.
• Increased supply of a complementary product collaterally
increases demand for the primary product.
• Concept of co-opetition
• Example:
• Faster CPU chips fuel sales
of personal computers.
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Exercise
• In groups of 3-5, perform a five forces model on an industry with
which you are familiar
• Is it an attractive industry?
• Why/why not?
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The Role of the Macroenvironment
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Macroenvironment
• Macroeconomic: e.g. growth rate of the economy, interest rates,
currency exchange rates, and inflation rates
• Technological: e.g. Internet
• Social: Greater health consciousness (e.g. diet)
• Demographic: General aging of population in U.S. and some
other countries
• Political: e.g. change of the administration
• Legal: e.g. Anti-Trust
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Macro environment factors:
PESTLE analysis
Q: What does ‘pestle’ stand for?
►POLITICAL
►ECONOMICAL
►SOCIO-ECONOMICAL
►TECHNOLOGICAL
►LEGAL
►ENVIRONMENTAL
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Managing Mass
Communications:
Advertising, Sales
Promotions, Events
and Experiences, and
Public Relations
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Learning Objectives
1. What steps are required in developing an
advertising program?
2. How should marketers choose advertising media
and measure their effectiveness?
3. How should sales promotion decisions be made?
4. What are the guidelines for effective brand-building
events and experiences?
5. How can companies exploit the potential of public
relations?
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Developing and Managing an Advertising Program
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Developing and Managing an Advertising Program
• Setting the advertising objectives
• Deciding on the advertising budget
• Developing the advertising campaign
• Choosing media
• Evaluating advertising effectiveness
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Setting the
Advertising Objectives
Informative
Persuasive
Reminder
Reinforcement
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Deciding on the Advertising Budget
Stage in the product life cycle
Market share and consumer base
Competition and clutter
Advertising frequency
Product substitutability
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Deciding on the Advertising Budget
• Advertising elasticity
• Concave or S-shaped
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Developing the Advertising Campaign
• Message generation and
evaluation
• Positioning of an ad—what it
attempts to convey about the
brand
• Creative brief
• Open sourcing/crowdsourcing
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Developing the Advertising Campaign
• Creative development and execution
• Advertising medium (television, print, and radio
advertising media)
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Developing the Advertising Campaign
• Television ads
Vividly demonstrates product attributes
Persuasively explains consumer benefits
Portrays usage imagery/brand
personality
Product/brand can be overlooked
Creates clutter
Easy to ignore or forget ads
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Developing the Advertising Campaign
• Print ads
Provide detailed product information
Flexibility in design and placement
Can be fairly passive
Newspapers popular for local ads
In steady decline
Poor reproduction quality
Short shelf life
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Developing the Advertising Campaign
• Print ad evaluation criteria
• Is the message clear at a glance?
• Is the benefit in the headline?
• Does the illustration support the headline?
• Does the first line of the copy support or explain the
headline and illustration?
• Is the ad easy to read and follow?
• Is the product easily identified?
• Is the brand or sponsor clearly identified?
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Developing the Advertising Campaign
• Radio ads
Occurs in the car and out of home
Main advantage is flexibility
Ads are relatively inexpensive
Can be schedule to air quickly
Effective when run in morning
Can be extremely creative
Can tap into the listener’s imagination
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Developing the Advertising Campaign
• Legal and social issues
• Advertisers must not make false claims
• Must not use false demonstrations
• Must not create ads with the capacity to deceive
• Must avoid bait-and-switch advertising
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Choosing Media
• Reach, frequency, and impact
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Choosing Media
• Total number of exposures
(E)
• Gross Rating Points (GRP):
E = R X F
• Weighted number of
exposures (WE)
• WE = R X F X I
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Choosing Media
• Choosing among major media types
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Choosing Media
• Place advertising options
Billboards
Public spaces
Product placement
Point of Purchase
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Choosing Media
• Evaluating alternate media
• Need to demonstrate reach/effectiveness
• Selecting specific media vehicles
• Media planner must choose most cost-effective
vehicles and must estimate audience size,
composition, media cost, and cost per thousand
persons reached
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Choosing Media
• Selecting media timing and allocation
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Choosing Media
• Selecting media timing and allocation
Continuity
Concentrated
Flighting
Pulsing
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Evaluating Advertising Effectiveness
• Communication-effect research
• In-home tests, trailer tests, theater
tests, on-air tests
• Sales-effect research
• Historical approach
• Experimental data
23. 16-05-2023
Dr.S.Arunkumar-VITAP
Sales Promotion
• A collection of incentive tools, mostly short term, designed to
stimulate quicker or greater purchase of particular products or
services by consumers or the trade
Dr.S.Arunkumar-VITAP
Sales Promotion
• Establishing objectives
• For consumers, retailers, and the sale force
Dr.S.Arunkumar-VITAP
Sales Promotion
• Selecting consumer promotion tools
Dr.S.Arunkumar-VITAP
Sales Promotion
• Selecting trade promotion tools
• Forward buying and diverting retailers
24. 16-05-2023
Dr.S.Arunkumar-VITAP
Sales Promotion
• Selecting business and sales force promotion tools
Dr.S.Arunkumar-VITAP
Sales Promotion
• Developing the program
Incentive size Conditions
Duration
Distribution
vehicle
Timing
Total sales
promotion
budget
Dr.S.Arunkumar-VITAP
Sales Promotion
• Implementing and evaluating the program
Lead time
Sell-in time
Sales/scanner data
Consumer surveys
Experiments
Dr.S.Arunkumar-VITAP
Events and Experiences
• Events objectives
1. To identify with a target market or lifestyle
2. To increase salience of company/product name
3. To create/reinforce key brand image associations
4. To enhance corporate image
5. To create experiences and evoke feelings
6. To express commitment to the community or on
social issues
7. To entertain key clients or reward employees
8. To permit merchandising/promotional opportunities
25. 16-05-2023
Dr.S.Arunkumar-VITAP
Events and Experiences
• Major sponsorship decisions
• Choosing events
• Designing sponsorship
programs
• Measuring sponsorship
activities
Dr.S.Arunkumar-VITAP
Measuring
Sponsorship Programs
• Measure outcomes, not
outputs
• Define/benchmark objectives
on front end
• Measure return for each
objective
• Measure behavior
• Apply assumptions/ratios
used by other departments
• Measure results of emotional
connections
• Identify group norms
• Include cost savings in ROI
calculations
• Slice the data
• Capture normative data
Dr.S.Arunkumar-VITAP
Events and Experiences
• Creating experiences
• Experiential marketing
Dr.S.Arunkumar-VITAP
Public Relations
• PR department functions
• Press relations
• Product publicity
• Corporate communications
• Lobbying
• Counseling
26. 16-05-2023
Dr.S.Arunkumar-VITAP
Public Relations
• Marketing public relations (MPR) tasks
Launching
new products
Repositioning
mature
products
Building
interest in
product
Influencing
target groups
Defending
problem
products
Building
corporate image
Dr.S.Arunkumar-VITAP
Public Relations
• Major decisions in marketing
PR
• Establishing objectives
• Choosing messages and
vehicles
• Implementing the plan
• Evaluating results
Dr.S.Arunkumar-VITAP
Public Relations
Dr.S.Arunkumar-VITAP
27. Instructor’s Visual Index Kotler/Armstrong
Chapter 9: New Product Development and
Product Life-Cycle Strategies
9-1
VSB
VSB
New Product Development
and
Product Life-Cycle Strategies
PRINCIPLES OF MARKETING
9-2
Causes of New Product Failures
Causes of New Product Failures
• Overestimation of Market Size
• Product Design Problems
• Product Incorrectly Positioned, Priced or
Advertised
• Costs of Product Development
• Competitive Actions
• To create successful new products, the
company must:
– understand it’s customers, markets and
competitors
– develop products that deliver superior value to
customers.
9-3
New Product Development
Process
New Product Development
Process
• Idea Generation and Screening
• Concept Development and Testing
• Marketing Strategy
• Business Analysis
• Product Development
• Test Marketing
• Commercialization
9-4
New Product Development Process
Step 1. Idea Generation
New Product Development Process
Step 1. Idea Generation
Systematic Search for New Product
Ideas
Internal sources
Customers
Competitors
Distributors
Suppliers
28. Instructor’s Visual Index Kotler/Armstrong
Chapter 9: New Product Development and
Product Life-Cycle Strategies
9-5
• Process to spot good ideas and drop
poor ones
• Criteria
– Market Size
– Product Price
– Development Time & Costs
– Manufacturing Costs
– Rate of Return
New Product Development Process
Step 2. Idea Screening
New Product Development Process
Step 2. Idea Screening
9-6
New Product Development Process
Step 3. Concept Development & Testing
New Product Development Process
Step 3. Concept Development & Testing
1. Develop Product Ideas into
Alternative
Product Concepts
2. Concept Testing - Test the
Product Concepts with Groups
of Target Customers
3. Choose the Best One
9-7
New Product Development Process
Step 4. Marketing Strategy Development
New Product Development Process
Step 4. Marketing Strategy Development
Part Two - Short-Term:
Product’s Planned Price
Distribution
Marketing Budget
Part Two - Short-Term:
Product’s Planned Price
Distribution
Marketing Budget
Part Three - Long-Term:
Sales & Profit Goals
Marketing Mix Strategy
Part Three - Long-Term:
Sales & Profit Goals
Marketing Mix Strategy
Marketing Strategy Statement Formulation
Part One - Overall:
Target Market
Planned Product Positioning
Sales & Profit Goals
Market Share
Part One - Overall:
Target Market
Planned Product Positioning
Sales & Profit Goals
Market Share
9-8
New Product Development Process
Step 5. Business Analysis
Step 6. Product Development
New Product Development Process
Step 5. Business Analysis
Step 6. Product Development
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives
If Yes, Move to
Product Development
If No, Eliminate
Product Concept
29. Instructor’s Visual Index Kotler/Armstrong
Chapter 9: New Product Development and
Product Life-Cycle Strategies
9-9
New Product Development Process
Step 7. Test Marketing
New Product Development Process
Step 7. Test Marketing
Standard
Test Market
Full marketing campaign
in a small number of
representative cities.
Standard
Test Market
Full marketing campaign
in a small number of
representative cities.
Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
consumers.
Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
consumers.
Controlled
Test Market
A few stores that have
agreed to carry new
products for a fee.
Controlled
Test Market
A few stores that have
agreed to carry new
products for a fee.
9-10
Product Life Cycle
Product Life Cycle
Time
Product
Develop-
ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/
Investments ($)
Sales and
Profits ($)
9-11
Introduction Stage of the
PLC
Introduction Stage of the
PLC
Sales
Sales
Costs
Costs
Profits
Profits
Marketing Objectives
Marketing Objectives
Product
Product
Price
Price
Low sales
Low sales
High cost per customer
High cost per customer
Negative
Negative
Create product awareness
and trial
Create product awareness
and trial
Offer a basic product
Offer a basic product
Use cost-plus
Use cost-plus
Distribution
Distribution Build selective distribution
Build selective distribution
Advertising
Advertising Build product awareness among
early adopters and dealers
Build product awareness among
early adopters and dealers
9-12
Growth Stage of the PLC
Growth Stage of the PLC
Sales
Sales
Costs
Costs
Profits
Profits
Marketing Objectives
Marketing Objectives
Product
Product
Price
Price
Rapidly rising sales
Rapidly rising sales
Average cost per customer
Average cost per customer
Rising profits
Rising profits
Maximize market share
Maximize market share
Offer product extensions,
service, warranty
Offer product extensions,
service, warranty
Price to penetrate market
Price to penetrate market
Distribution
Distribution Build intensive distribution
Build intensive distribution
Advertising
Advertising Build awareness and interest in
the mass market
Build awareness and interest in
the mass market
30. Instructor’s Visual Index Kotler/Armstrong
Chapter 9: New Product Development and
Product Life-Cycle Strategies
9-13
Maturity Stage of the PLC
Maturity Stage of the PLC
Sales
Sales
Costs
Costs
Profits
Profits
Marketing Objectives
Marketing Objectives
Product
Product
Price
Price
Peak sales
Peak sales
Low cost per customer
Low cost per customer
High profits
High profits
Maximize profit while defending
market share
Maximize profit while defending
market share
Diversify brand and models
Diversify brand and models
Price to match or best
competitors
Price to match or best
competitors
Distribution
Distribution Build more intensive distribution
Build more intensive distribution
Advertising
Advertising Stress brand differences and
benefits
Stress brand differences and
benefits
9-14
Decline Stage of the PLC
Decline Stage of the PLC
Sales
Sales
Costs
Costs
Profits
Profits
Marketing Objectives
Marketing Objectives
Product
Product
Price
Price
Declining sales
Declining sales
Low cost per customer
Low cost per customer
Declining profits
Declining profits
Reduce expenditure and milk the
brand
Reduce expenditure and milk the
brand
Phase out weak items
Phase out weak items
Cut price
Cut price
Distribution
Distribution Go selective: phase out
unprofitable outlets
Go selective: phase out
unprofitable outlets
Advertising
Advertising Reduce to level needed to retain
hard-core loyal customers
Reduce to level needed to retain
hard-core loyal customers
31. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Creating value
Product Decisions
Module 2
Dr. Anitha Nallasivam
What are we going to Discuss?
•Setting product strategy - product characteristics,
classification, differentiation, design.
•Designing and managing services – nature of services,
characteristics of service, new service realities, Service
quality.
•New product options, challenges.
•New product development process.
• Types of consumer Products; Product line and mixes; Product levels; Product life cycle; New product and
service development process
Module 2
Dr. Anitha Nallasivam
Course Outcomes
Bloom’s
Taxonomy Level
Description
Course
Outcome
Sl.
No.
Apply (3)
Examine product decisions for creating customer value.
CO2
2.
Module 2
Dr. Anitha Nallasivam
Setting Product Strategy
What is a Product?
• Anything that can be offered to a market to satisfy a want or need, which include
• Physical goods
• Services
• Experiences
• Events
• Persons
• Places
• Properties
• Organizations
• Information
• Ideas
Product Characteristics and Classifications
32. 16-05-2023
Module 2
Dr. Anitha Nallasivam
• This is also called the Value Triangle (Triad)
• Where the Product Attractiveness is directly impacted by
Product Features & Quality, Price and Services Mix &
Service Quality
Setting Product Strategy
Components Of The Market Offering
Module 2
Dr. Anitha Nallasivam
• https://youtu.be/phY1-45WlXU
• https://youtu.be/lqT_dPApj9U
• https://youtu.be/-cvv1oC-ZaM
• https://www.jumeirah.com
Module 2
Dr. Anitha Nallasivam
Product Levels: The Customer-Value Hierarchy
1. The fundamental level is the Core benefit, the service
or benefit the customer is really buying.
2. The second level is a Basic product.
3. At the third level we have Expected product, a set of
attributes and conditions buyers Normally expect when
they purchase this product.
4. The fourth level is Augmented product that exceeds
customer expectations.
5. At the fifth level stands the Potential product, which
encompasses all the possible augmentations and
transformations
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Product Classifications
Marketers classify products on the basis of
• Durability & Tangibility
• Usage (Consumer or Industrial).
Each type has an appropriate marketing-mix strategy
Setting Product Strategy
Durability &
Tangibility
Non Durable
Goods
Durable
Goods
Services
Usage
Consumer
Goods
Industrial
Goods
33. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Consumer Goods Classifications
• The consumer usually purchases Convenience goods
frequently, immediately, and with minimal effort.
• Shopping goods are those the consumer characteristically
compares on such bases as suitability, quality, price, and
style.
• Specialty goods have unique characteristics or brand
identification for which enough buyers are willing to make a
special purchasing effort.
• Unsought goods are those the consumer does not know
about or does not normally think of buying.
Product Classifications – Based on Usage
Setting Product Strategy
Convenience
Convenience
Shopping
Shopping
Specialty
Specialty
Unsought
Unsought
Module 2
Dr. Anitha Nallasivam
•Wide-screen TV
•Eggs
•A new car
•Charity donations
•A mobile phone
•Computer games
•Newspaper
•Hot coffee
•A tennis racquet
•Jewelry
•Life insurance
•Luggage
•A haircut
•Can of soup
•Textbooks
•Clothing
•Soft drink (soda)
•Flowers (as a gift)
•Furniture
Module 2
Dr. Anitha Nallasivam
• Materials and parts are
goods that enter the
manufacturer’s product
completely.
Industrial Goods Classifications
Product Classifications – Based on Usage
Setting Product Strategy
Materials and parts
Materials and parts
Capital items
Capital items
Supplies and
business services
Supplies and
business services
Raw Materials
Manufactured
Materials & Parts
Farm Products
Natural Products
Component
Materials
Component Parts
Installations
Equipments
• Capital items are long-
lasting goods that
facilitate developing or
managing the finished
product
• Supplies and business
services are short-term
goods & services for
developing or managing
the finished product.
Maintenance &
Repair Items
Operating Supplies
Business Advisory
Services
Module 2
Dr. Anitha Nallasivam
To be branded and sold, products must be differentiated from each others with a separate
identity. Many products can be differentiated in the following ways:
Product Differentiation
Setting Product Strategy
• Form
• Features
• Performance quality
• Conformance quality
• Durability
• Reliability
• Reparability
• Style
• Customization
34. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Service Differentiation
Setting Product Strategy
• Ordering ease
• Service Delivery
• Installation
• Customer training
• Customer consulting
• Maintenance and repair
• Returns
Module 2
Dr. Anitha Nallasivam
• The totality of features that affect the way a product looks, feels, and functions to a consumer
• As competition intensifies, design offers a potent way to differentiate and position a company’s products
and services.
Design
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Design offers functional and aesthetic benefits and appeals to both our rational
and emotional sides.
• Is emotionally powerful
• Transmits brand meaning/positioning
• Is important with durable goods
• Makes brand experiences rewarding
• Can transform an entire enterprise
• Facilitates manufacturing/distribution
• Can take on various approaches
Design
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
• Design is often an important aspect of
luxury products, though these products
also face some unique issues.
• They are the purest examples of the role
of branding because the brand and its
image creates enormous value and
wealth.
• A luxury shopper must feel he or she is
getting something truly special.
• Thus the common denominators of luxury
brands are
• Quality
• Uniqueness
• Craftsmanship
• Heritage
• Authenticity
• History
Luxury Brands
Setting Product Strategy
35. 16-05-2023
Module 2
Dr. Anitha Nallasivam
1. Maintaining a premium image for luxury brands is crucial; controlling that image is thus a
priority
2. Luxury branding typically includes the creation of many intangible brand associations and an
aspirational image.
3. All aspects of the marketing program for luxury brands must be aligned to ensure high-quality
products and services and pleasurable purchase and consumption experiences.
4. Besides brand names, other brand elements—logos, symbols, packaging, signage—can be
important drivers of brand equity for luxury products.
5. Secondary associations from linked personalities, events, countries, and other entities can
boost luxury-brand equity as well.
6. Luxury brands must carefully control distribution via a selective channel strategy.
7. Luxury brands must employ a premium pricing strategy, with strong quality cues and few
discounts and markdowns.
8. Brand architecture for luxury brands must be managed carefully.
9. Competition for luxury brands must be defined broadly because it often comes from other
categories.
10. Luxury brands must legally protect all trademarks and aggressively combat counterfeits.
Marketing Luxury Brands
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
• Environmental issues are also playing an increasingly important role in product design and
manufacturing
• Many firms are considering ways to reduce the negative environmental consequences of
conducting business, and some are changing the manufacture of their products or the
ingredients that go into them.
Environmental Issues
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Product Hierarchy
Setting Product Strategy
1. Need
family
1. Need
family
2. Product
family
2. Product
family
3. Product
class
3. Product
class
4. Product
line
4. Product
line
5. Product
type
5. Product
type
6. Item
6. Item
Module 2
Dr. Anitha Nallasivam
Product System & Mixes
Setting Product Strategy
• Product system
• Product mix/assortment
A product system is a group of
diverse but related items that
function in a compatible manner.
A product mix (also called a
product assortment) is the set of
all products and items a particular
seller offers for sale. A product mix
consists of various product lines.
Product
Mix
Product
Mix
Width
Width
Length
Length
Depth
Depth
Consistency
Consistency
36. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Product mix
Product mix dimensions
help define a company’s
product strategy
By adding new
product lines and
widening its mix, it
can add to its
reputation
By Lengthening its
existing product line
it can become a full
line company
Finally build focus
by delivering on
consistency
By adding depth it
can add
robustness to the
line
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Product line
Setting Product Strategy
A product line is a group of products that are closely related as they
function in the same manner, are sold to the same consumer groups,
marketed through the same type of outlets or fall within the given
price ranges
Module 2
Dr. Anitha Nallasivam
Product mix width refers to the number of different
product lines the company carries. In the case of Ponds
the width would be
Width of the Product Mix
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Setting Product Strategy
37. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Products
A Segment Cars B Segment Cars C Segment Cars D Segment Cars MUV SUV
Module 2
Dr. Anitha Nallasivam
Product mix length refers to the total number of items
carried, by a company, within its product line
Length of the Product Mix
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Products
A Segment Cars B Segment Cars C Segment Cars D Segment Cars MUV SUV
Module 2
Dr. Anitha Nallasivam
Product mix depth refers to the number of versions
offered of each product in the line
Depth of the Product Mix
Setting Product Strategy
38. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Cleansing
White Beauty Daily Spot-less
Lightening Facial Foam
White Beauty Tan removal
facial scrub
White Beauty Peel Off Instant
Brightening Mask
White Beauty Naturals spot-
less Lightening Facial Foam
Pimple Clear White Facial
Wash
Pure White Deep Cleansing
Facial Foam
Flawless White Deep
Whitening Facial Foam
Gold Radiance Boosting
Cleansing Mousse
Age Miracle Cell ReGEN™
Facial Foam
POND'S Daily Facewash
Whitening
Flawless White Deep
Whitening Facial Foam
Flawless White Visible Lightening
Day Cream SPF18 PA++
Pond's Flawless White Visible
Lightening Lotion
Flawless White Re-Brightening
Night Treatment
White Beauty Daily Spot-less
Lightening Facial Foam
White Beauty Tan removal
facial scrub
White Beauty Peel Off Instant
Brightening Mask
White Beauty Daily Spot-less
Lightening Cream
White Beauty BB+ Fairness
Cream SPF 30 PA++
White Beauty Naturals spot-
less Lightening Cream
Anti-Aging
Gold Radiance Boosting
Cleansing Mousse
Gold Radiance Precious Youth
Serum
Gold Radiance Youth Reviving
Eye Cream
Gold Radiance Youthful Night
Repair
Gold Radiance Youthful Glow
Day Cream
Gold Radiance ultra rich Day
Cream
Gold Radiance ultra rich Serum
Gold Radiance ultra rich Night
Treatment Capsules
Age Miracle Intensive Cell
ReGEN™ Serum
Age Miracle Cell ReGEN™ Day
Cream SPF 15 PA++
Swift
Petrol
LXI
VXI
ZXI
Diesel
LDI
VDI
ZDI
Module 2
Dr. Anitha Nallasivam
Consistency of the product mix refers to how closely
related are the various product lines in end use,
production requirements, distribution channel or any
other way
Consistency of the Product Mix
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Food Products
Products
Pesticides Chemicals Baby Care
Module 2
Dr. Anitha Nallasivam
Product Line Analysis
• Sales and profits
Setting Product Strategy
39. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Product line - Operations
Setting Product Strategy
• Line stretching
• Down-market stretch
• Up-market stretch
• Two-way stretch
• Line filling
• Line modernization
• Line featuring
• Line pruning
Module 2
Dr. Anitha Nallasivam
Product Line
• A product line is a group of related products all marketed under a single brand
name that is sold by the same company. Companies sell multiple product lines
under their various brand names, seeking to distinguish them from each other for
better usability for consumers.
Module 2
Dr. Anitha Nallasivam
Cleansing Products
White Beauty Daily Spot-less
Lightening Facial Foam
White Beauty Tan removal
facial scrub
White Beauty Peel Off Instant
Brightening Mask
White Beauty Naturals spot-
less Lightening Facial Foam
Pimple Clear White Facial
Wash
Pure White Deep Cleansing
Facial Foam
Flawless White Deep
Whitening Facial Foam
Gold Radiance Boosting
Cleansing Mousse
Age Miracle Cell ReGEN™
Facial Foam
POND'S Daily Face wash
Product
line
Module 2
Dr. Anitha Nallasivam
Product line stretching occurs when a company lengthens the
product line beyond a current range. Company can stretch the line
downwards, upwards or both ways
Product Line Stretching
Setting Product Strategy
40. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Downward Stretch
Upward Stretch
Two-Way
Stretch
Module 2
Dr. Anitha Nallasivam
An alternative to product line stretching is product line
filling – adding more items within the present range of
the line
Done for several reasons – Extra profits, satisfying
dealers, using excess capacity, plugging holes in
consumer needs.
Product Line Filling
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam Module 2
Dr. Anitha Nallasivam
41. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Product Line Modernization
Product lines regularly need to be modernized.
• It can be done by introducing new products or improving the existing
products
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Product Line Featuring
• Certain items in a product line are given special promotional attention,
either to boost interest (at the lower end of the line) or image (at the upper
end)
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Product Line Pruning
• Reducing the depth of a product line by deleting less profitable offerings
in a particular product category.
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Product Mix Pricing
The firm searches for a set of prices that maximizes profits on the total mix
Setting Product Strategy
Product line pricing
• Companies normally
develop product
lines rather than
single products
• So they introduce
price steps
Optional-feature
pricing
• Many companies
offer optional
products, features,
and services with
their main Product
Captive-product
pricing
• Some products
require the use of
ancillary or captive
products
42. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Setting Product Strategy
Two-part pricing
• Service firms engage in
two-part pricing,
consisting of a fixed fee
plus a variable usage
fee
By-product pricing
• The production of
certain goods often
yields by-products that
should be priced on
their value
Product-bundling
pricing
• When a firm offers its
products only as a
bundle.
• Charging less for the
bundle than Individual
items price.
Product Mix Pricing
Module 2
Dr. Anitha Nallasivam
• Two or more well-known brands are combined into a joint product or marketed
together in some fashion
Setting Product Strategy
Co-Branding
• Same-Company
• Joint-Venture
• Multiple-Sponsor
• Retail
Module 2
Dr. Anitha Nallasivam
• For host products whose brands are not that strong, ingredient brands can
provide differentiation and important signals of quality.
• Self-branded ingredients that companies advertise and even trademark of
ingredients of popular brands if any.
Setting Product Strategy
Ingredient Branding
Module 2
Dr. Anitha Nallasivam
Packaging https://youtu.be/S_NlSSNGQvE
Involves designing & producing
wrapper or container for a product. It
also includes the primary and
secondary cartons
It can include the tertiary or shipping
carton. The work packaging also
encompasses labelling and printed
information appearing or with the
packaging
Role of packaging has evolved
from containing or protecting
the product to attracting
attention, describing the product
to making the sale
Innovative packaging can deliver a
huge advantage to the product over
other offerings. Most FMCG
companies are making huge
investments in packaging research
and design which grab more
attention
Setting Product Strategy
43. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Packaging
Setting Product Strategy
Used as a marketing tool
• Self-service
• Consumer affluence
• Company and brand image
• Innovation opportunity
Used as a marketing tool
• Self-service
• Consumer affluence
• Company and brand image
• Innovation opportunity
Packaging objectives
• Identify the brand
• Convey descriptive and
persuasive information
• Facilitate product
transportation and protection
• Assist at-home storage
• Aid product consumption
Packaging objectives
• Identify the brand
• Convey descriptive and
persuasive information
• Facilitate product
transportation and protection
• Assist at-home storage
• Aid product consumption
Module 2
Dr. Anitha Nallasivam
Packaging
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
The Colour Wheel of Branding & Packaging
Packaging
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Labeling
Labels range from simple
tags attached to products
or complex graphics that
are part of the packaging
design
Labels help identify the
product
They tell several things
about the product i.e.
where, when, how was it
made.
Finally labels promote the
products through graphics
By law, labels are also
expected to give
information to the
consumer on unit pricing,
open dating and
nutritional labeling
Setting Product Strategy
44. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Labeling
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Labeling
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Warranties and Guarantees
• Warranties
• Formal statements of expected product performance by the manufacturer
• Guarantees
• Promise of general or complete satisfaction
Setting Product Strategy
Module 2
Dr. Anitha Nallasivam
Designing and Managing Services
45. 16-05-2023
Module 2
Dr. Anitha Nallasivam
What is a Service?
Designing and Managing Services
Any act or performance one party can offer to another that is
essentially intangible and does not result in the ownership of
anything
Categories of Service Mix
• A pure tangible good
• A tangible good with accompanying services
• A hybrid
• A major service with accompanying minor goods
• A pure service
Module 2
Dr. Anitha Nallasivam
Services Marketing Mix – Extended Marketing Mix for Services
Designing and Managing Services
7 Ps of Services
Marketing
7 Ps of Services
Marketing
4Ps of Traditional
Marketing:
Product
Price
Place
Promotion
4Ps of Traditional
Marketing:
Product
Price
Place
Promotion
People
- Employees
• Recruitment
• Training
• Motivation
• Rewards
• Teamwork
- Customer
• Education
• Training
People
- Employees
• Recruitment
• Training
• Motivation
• Rewards
• Teamwork
- Customer
• Education
• Training
Physical Evidence
- Facility design
- Signage
- Other tangibles
- Employee dress
Physical Evidence
- Facility design
- Signage
- Other tangibles
- Employee dress
Process
- Flow of activities
• Standardized
• Customized
- Number of steps
• Simple
• Complex
- Customer involvement
Process
- Flow of activities
• Standardized
• Customized
- Number of steps
• Simple
• Complex
- Customer involvement
Module 2
Dr. Anitha Nallasivam
All human actors who play a part in service delivery
and thus influence the buyer’s perceptions :
namely, the firm’s personnel, the customer, and
other customers in the service environment.
Services Marketing Mix – People
Module 2
Dr. Anitha Nallasivam
The environment in which the service is
delivered and where the firm and customer
interact, and any tangible components that
facilitate performance or communication of
the service…including reports, business cards,
statements etc.
Services Marketing Mix – Physical Evidence
46. 16-05-2023
Module 2
Dr. Anitha Nallasivam
The actual procedures, mechanisms,
and flow of activities by which the
service is delivered – the service
delivery and operating systems.
Services Marketing Mix – Processes
Module 2
Dr. Anitha Nallasivam
Designing and Managing Services
Service distinctions
• Equipment or people-based
• Different processes of delivery
• Some need client’s presence
• Meets personal or business need
• Differs in objectives and ownership
Goods - Services Continuum
Characteristics of Services
Intangibility
Intangibility
Inseparability
Inseparability
Variability
Variability
Perishability
Perishability
Module 2
Dr. Anitha Nallasivam
Designing and Managing Services
Characteristics of Services - Intangibility
• Services cannot be touched or smelled.
• The title of ownership of the service will not be transferred from Service provider to the
consumer
Physical evidence and presentation tools:
• Place
• People
• Equipment
• Communication material
• Symbols
• Price
Module 2
Dr. Anitha Nallasivam
Designing and Managing Services
Characteristics of Services - Intangibility
47. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Designing and Managing Services
Characteristics of Services - Inseparability
• Services are typically produced and consumed simultaneously
• In most cases services and the consumer cannot be separated
Module 2
Dr. Anitha Nallasivam
Designing and Managing Services
Characteristics of Services – Variability / Heterogeneity
• The Services delivery and experience many be highly Variable or different to different
people
• The quality of services depends on who provides them, when and where and to whom
Module 2
Dr. Anitha Nallasivam
Designing and Managing Services
Characteristics of Services – Perishability
• Services cannot be stored, It has to be produced and consumed simultaneously
On demand side
• Differential pricing
• Nonpeak demand
• Complementary services
• Reservation services
On supply side
• Part-time employees
• Peak-time efficiency routines
• Increased consumer participation
• Shared services
• Facilities for future expansion
Strategies to match demand & supply
Module 2
Dr. Anitha Nallasivam
Blueprint for Overnight Hotel Stay
Designing and Managing Services
Services Blueprinting
These are visual displays of the
service process by
simultaneously depicting the
• Process of service delivery
• Points of customer contact
• Roles of customers and
employees
• The visible elements of the
service
It is a schema of the process flow of a service delivery system
48. 16-05-2023
Module 2
Dr. Anitha Nallasivam
New Services Realities
• A shifting customer relationship
• Customer empowerment &
coproduction
• Satisfying employees as well as
customers
Designing and Managing Services
Module 2
Dr. Anitha Nallasivam
Achieving Excellence In Services Marketing
Designing and Managing Services
Module 2
Dr. Anitha Nallasivam
• Technology and service delivery
• The Internet allows for true
interactivity, customer-specific and
situational personalization, and real-
time adjustments of the firm’s offerings
Designing and Managing Services
Achieving Excellence In Services Marketing
Module 2
Dr. Anitha Nallasivam
Differentiating Services
• Primary and secondary service options
• Innovation with services
Designing and Managing Services
49. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Managing Service Quality
Customer switching behavior factors
Pricing
Inconvenience
Core service failure
Service encounter failures
Response to service failure
Competition
Ethical problems
Involuntary switching
Designing and Managing Services
Module 2
Dr. Anitha Nallasivam
Service-Quality Model (SERVQUAL Model)
Designing and Managing Services
Module 2
Dr. Anitha Nallasivam
Improving Service Quality
• Listening
• Reliability
• Basic service
• Service design
• Recovery
• Surprising customers
• Fair play
• Teamwork
• Employee research
• Servant leadership
Designing and Managing Services
Module 2
Dr. Anitha Nallasivam
SERVQUAL scale
Designing and Managing Services
50. 16-05-2023
Module 2
Dr. Anitha Nallasivam
Incorporating Self-Service Technologies
• SSTs can:
• Make transactions more accurate
• Make transactions more convenient
• Make transactions faster
• Reduce costs
Designing and Managing Services
Module 2
Dr. Anitha Nallasivam
Introducing New Market Offerings
Module 2
Dr. Anitha Nallasivam
Introducing New Market Offerings
New-Product Options
• Buy other companies
• Buy patents from other
companies
• Buy a license or franchise from
another company
• New-to-the-world items
• Improvise existing products
New-Product Failure
• Fragmented markets
• Social, economic, and government
constraints
• Development costs
• Capital shortages
• Shorter development time
• Poor launch timing
• Shorter PLCs
• Lack of organizational support
Module 2
Dr. Anitha Nallasivam
1. Idea Generation
2. Idea Screening
3. Concept Development & Testing
4. Marketing Strategy Development
5. Business Analysis
6. Product Development
7. Market Testing
8. Commercialization
Stages in New Product Development Process
1. Idea Generation
• Interacting with others
• Creativity Techniques
• Attribute Listening
• Forced Relationships
• Morphological Analysis
• Reverse Assumption Analysis
• New Contexts
• Mind Mapping
2. Idea Screening
The company can monitor and revise its estimate of the product’s overall
probability of success, using the following formula:
51. 16-05-2023
Module 2
Dr. Anitha Nallasivam
3. Concept Development & Testing
• Concept Development
• Category, Brand concepts
• Concept Testing
• Communicability & Believability
• Need Level
• Gap Level
• Perceived Value
• Purchase Intention
• User Targets, Purchase Occasion, Frequency
• Conjoint Analysis
4 & 5. Marketing Strategy & Business Analysis
• Marketing Strategy Development
• Business Analysis
• Estimating Total Sales
• Estimating Costs & Profits
• Breakeven, Risk Analysis
6. Product Development
• Physical Prototypes
• Customer Tests
• The Rank Order Method
• The Paired Comparison Method
• The Monadic Rating Method
(Comparison Rating Scale)
Module 2
Dr. Anitha Nallasivam
7. Market Testing
• Consumer Goods Market testing
• Sales Wave Research
• Simulated Test Marketing
• Controlled Test Marketing
• Test Markets Selection
• How many test cities?
• Which cities?
• What information?
• What action to take?
• Business Goods Market Testing
8. Commercialization
• When : Timing
• First, Parallel & Late entries
• Where : Geographic Strategy
• To Whom: Target Market Prospects
• How: Introductory Market Strategies
• Critical Path Scheduling
Module 2
Dr. Anitha Nallasivam
Thank You
End of Module - 2
52. 16-05-2023
Demographic Segmentation
• Age: Kids-Fruit Rolls, Tiger & Treat Matured People-Good Day, Cream
Cracker
• Youth– Little Hearts, Cream Biscuits
• Income: Lower Income Group- Tiger, Marie
• Higher Income Group-Good day, Nutri-Choice
• Gender: For both Male & Female
Behavioral Segmentation
• Benefits-For Health Benefits; All Nutri Products, Tea Time Snack Biscuits
&Sujie Toast
• User Status– Little Heart Biscuit & Time Pass for Lovers.
• Usage Rate-Marie Gold is for High Usage Rate Customers.
• Occasion- Snack Biscuit, Fruit Rolls for occasion purposes
53. 16-05-2023
Psychographic Segmentation
• Britannia has adopted itself according to the convenience and lifestyle
of the Indian consumers so Britannia came up with a different and
new product line.
Niche Segmentation
• Britannia Slice Cakes and Britannia good day are designed for the
people who actually also wants some food characteristics in a biscuit.
Different cream biscuits are also made for the people who love to
have a biscuit with cream.
TARGET MARKETS
• Britannia Tiger-Low Price & Low Income Group
• Britannia 50-50-Tea Snack & Kids
• Britannia Marie Gold-Biscuit & Family Size.
• Britannia Good Day- Higher Income Group
• Treat Fruit Rollz-Children, during celebration & Occasion time.
55. 16-05-2023
Positioning Example
• The direct-broadcast satellite service provider DirecTV faces competition from classic cable companies
(Comcast), from other direct broadcast satellite service providers (Dish), and from providers of alternate
ways to watch television digitally (Hulu, Netflix, and Amazon). DirecTV’s positioning reflects its combination
of features not easily matched by any competitor. Three pillars of that positioning are captured by its claims
to “state-of-the-art technology, unmatched programming, and industry leading customer service.” The
company puts much emphasis on its sports packages, its wide array of HD channels, and its broadcast
platform for enabling customers to access programming on home TVs, laptops, tablets, and cell phones.
DirecTV has made a strategic targeting shift to focus on “high quality” subscribers: loyal customers who
purchase premium services, pay their bills on time, and rarely call to complain.
POSITIONING
•
• TIGER: Positioning is done for modern mother.
• LITTLE HEARTS: : Positioning is to be a snacks.
• GOOD DAY: Positioning is as everyday biscuits which bring happiness
in every ones lives.
• MARIE GOLD: Positioning as a tea time biscuits with proteins.
Developing and Establishing a Brand Positioning
• All marketing strategy is built on segmentation, targeting, and
positioning.
• A company discovers different needs and groups of consumers in the
marketplace, targets those it can satisfy in a superior way, and then
positions its offerings so the target market recognizes its distinctive
offerings.
• By building customer advantages, companies can deliver high
customer value and satisfaction, which lead to high repeat purchases
and ultimately to high company profitability.
58. 16 -0 5 -2 0 2 3
1
Dr Arunkumar
Sivakumar
Faculty
VSB
Marketing
MGT2014 – Fundamentals of Marketing Management
Introduction to marketing and Marketing Process;
Importance and scope of marketing;
Core concepts of marketing;
Company orientation towards market place;
4Ps of Marketing;
Marketing and Sales – definitions and differences.
59. 16 -0 5 -2 0 2 3
2
Introduction to
Marketing
The Need for Engineers/Technologists to learn Marketing
• Essential aspect of marketing for engineers – The Product
• Core job of an engineer – Designing and creating new
products and services
• Marketing helps engineers and technologists to create
better products
• Marketing aids engineers to establish products that meet
the needs of customers
What is Marketing ?
Philip Kotler defines marketing as “the science and art of
exploring, creating, and delivering value to satisfy the needs of
a target market at a profit
- Marketing identifies unfulfilled needs and desires
- Marketing defines, measures and quantifies the size of the
identified market and the profit potential
60. 16 -0 5 -2 0 2 3
3
1. Why is marketing important?
2. What is the scope of marketing?
3. What are some core marketing concepts?
4. What forces are defining the new marketing realities?
5. What new capabilities have these forces given consumers and
companies?
6. What does a holistic marketing philosophy include?
7. What tasks are necessary for successful marketing management?
Objectives of the Marketing Course Objectives of the Marketing Course
• Develop the participants basic analytical skills
• Emphasize on conceptual abilities and substantive knowledge
in the field of marketing management
• Achieve objectives by helping the participants undergo
meaningful exercises in decision making of real life marketing
situations
•Financial success often depends on marketing ability
Successful marketing builds demand for products and
services, which, in turn, creates jobs
•Marketing builds strong brands and a loyal customer base,
intangible assets that contribute heavily to the value of a firm
The Value of Marketing The Value of Marketing
1. Finance, operations, accounting, and other business functions won’t
really matter without sufficient demand for products and services so
the firm can make a profit. Thus, financial success often depends on
marketing ability
2. Marketing’s value extends to society as a whole. It has helped
introduce new or enhanced products that ease or enrich people’s lives
3. Successful marketing builds demand for products and services, which,
in turn, creates jobs
4. By contributing to the bottom line, successful marketing also allows
firms to more fully engage in socially responsible activities
61. 16 -0 5 -2 0 2 3
4
Marketing is about identifying and meeting human and social
needs.
AMA’s formal definition: Marketing is the activity, set of
institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for
customers, clients, partners, and society at large.
Scope of Marketing
•Goods
•Services
•Events
•Experiences
•Persons
What is Marketed?
•Places
•Properties
•Organizations
•Information
•Ideas
What is Marketed?
• A marketer is someone who seeks a response—
attention, a purchase, a vote, a donation—from another
party, called the prospect
Who Markets?
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5
Core Marketing Concepts – Needs/Wants/ Demands
•Needs are the basic human requirements such as for air, food, water, clothing, and
shelter Humans also have strong needs for recreation, education, and entertainment.
•These needs become wants when directed to specific objects that might satisfy the
need
•Our wants are shaped by our society
•Demands are wants for specific products backed by an ability to pay; Many people
want a Mercedes; only a few can buy one
•Companies must measure not only how many people want their product, but also how
many are willing and able to buy it
We can distinguish five types of needs:
1. Stated needs (The customer wants an inexpensive car)
2. Real needs (The customer wants a car whose operating cost, not initial price, is low)
3. Unstated needs (The customer expects good service from the dealer)
4. Delight needs (The customer would like the dealer to include an onboard GPS system)
5. Secret needs (The customer wants friends to see him or her as a savvy consumer)
Apple worked hard to shape consumer perceptions of them
To gain an edge, companies must help customers learn what they want
Core Marketing Concepts – Types of Needs
•Negative (Dental work)
•Nonexistent (Family Planning)
•Latent (Latent demand is basically a type of demand that the consumer realizes it later onwards)
•Declining
•Irregular
•Unwholesome(the customer should not desire the product, yet the customer wants the
product badly. Best example of unwholesome demand are cigarettes, alcohol, pirated movies)
•Full (The products have the same demand all over the year. For example, medicines always have full demand).
•Overfull (Price of Product goes up during festival seasons).
Eight – Demand States Essential Concepts of Marketing
65. 16 -0 5 -2 0 2 3
8
The Selling Concept
The selling concept holds that consumers and businesses, if left alone, won’t buy
enough of the organization’s products
It is practiced most aggressively with unsought goods—goods buyers don’t normally
think of buying such as insurance and cemetery plots—and when firms with
overcapacity aim to sell what they make, rather than make what the market wants
Marketing based on hard selling is risky. It assumes customers coaxed into buying a
product not only won’t return or bad-mouth it or complain to consumer organizations
but might even buy it again
Company Orientation toward the Marketplace
The Marketing Concept
The marketing concept emerged in the mid-1950s as a customer-centered, sense-and-
respond philosophy
The job is to find not the right customers for your products, but the right products for
your customers
Dell doesn’t prepare a PC or laptop for its target market. Rather, it provides product
platforms on which each person customizes the features he or she desires in the
machine
The marketing concept holds that the key to achieving organizational goals is being
more effective than competitors in creating, delivering, and communicating superior
customer value to your target markets
Company Orientation toward the Marketplace
Holistic Marketing Dimensions
•Target markets
•Positioning
•Segmentation
Core Marketing Concepts
69. 16 -0 5 -2 0 2 3
12
Marketing Mix – External Web links
https://www.davechaffey.com/digital-marketing-glossary/e-marketing-mix/
https://www.smartinsights.com/marketing-planning/marketing-models/how-to-use-
the-7ps-marketing-mix/
https://www.intotheminds.com/blog/en/marketing-mix/
https://www.feedough.com/marketing-mix-4ps-7ps-of-marketing/
https://www.intotheminds.com/blog/en/marketing-mix/
Please go through below external web links for better understanding of Marketing Mix
Marketing continued to Module 2
70. BUSINESS ENVIRONMENT
UNIT 1
Environment Economic and non-economic environments Inter relation between economic
environments Business and society; Professionals - Business ethics Business culture
Social responsibility of business Social Audit.
There are to factors which affects the operation of the business. These can also be
classified into two categories. Internal factors and external factors.
INTERNAL FACTORS
The internal factors are generally regarded as controllable factors because the company has
control over these factors. It can alter or modify such factors as its personnel, physical
facilities, organisation and functional means, such as marketing mix, to suit the environment.
EXTERNAL FACTORS
The external factors, as on the other hand beyond the control of a company. The external or
environmental factors such as the economic factors, socio- cultural factors, government and
legal factors, demographic factors, geo-physical- factors etc.., are therefore generally regarded
as uncontrollable factors.
Some of the factors external factors have a direct and intimate impact on the firm (like the
suppliers and distributors of the firm). These factors are classified as micro environment also
known as task environment and operating environment. There are other external factors which
affect an industry very generally such as industrial policy, demographic factors etc.
They constitute what is called Macro Environment/ General Environment or Remote
Environment.
We can consider the business environment at three levels.
Internal Environment.
External Environment.
Micro Environment/ Task Environment /Operating Environment.
Macro environment/ General Environment /Remote Environment.
Business environment is studying of external environment which affects the business
operation and adaptability of those factors.
INTERNAL ENVIRONMENT
The important internals factors which have a bearing on the strategy and other decision are;
1. VALUE SYSTEM
The value system of the founders has important bearing on the choice of business. The
mission and objectives of the organisation, business policies and practices.
Ex. Infosys views its employees as its resources oyees as one of
its stated objectives. It provides innovative compensation and benefit packages.
2. MISSION AND OBJECTIVES
The business domain of the company, priorities, direction of development, business
philosophy business policy etc are guided by the mission and objectives of the company.
Ex : Ranbaxy thrust in to the foreign markets and development have been driven by its
to become a research based international pharma ceutical coy.
3. MANAGEMENT STRUCTURE AND NATURE
The organisational structure the composition of
Board of directors, extent of professionals of management etc are important factors
influencing business decision. Some management structures and styles delay decision making
while some others facilitate quick decision making.
71. 4. INTERNAL POWER RELATIONSHIP
Factors like the amount of support the top management enjoys from different levels of
employees, Shareholders and Board of directors have important influence on the decision and
their implementation.
5. HUMAN RESOURCES
The characteristics of the human resources like skill quality, morale, commitment, attitude
etc., could contribute to the strength and weakness of the organisation, Some organisation find
it difficult to carry out restructuring or modernisation because of resistance by employees
whereas they are smoothly done in some others.
6.COMPANY IMAGE AND BRAND EQUITY:
The image of the company maters while raising finance, forming joint venture or other
alliance, soliciting marketing, intermediaries, entering purchases, sales contracts, launching
new products etc, Brand equity is also relevant in several of these cases.
7.MISCELLANOUS FACTORS
I Physical assets and facilities
II R& D technological Capabilities.
III Marketing resources and
IV Financial factors.
EXTERNAL ENVIRONMENT
(I) Micro environment
The micro environment consists of actors in the company immediate environment that effect
the performance of the company. These include the supplier marketing intermediate
competitor customer and the public.
1. SUPPLIERS
An important force in the micro environment of a company is the suppliers (i.e) those
who supply the inputs like raw materials and components to the company (the
importance of reliable source / source of supply to the smooth functioning of business
is obvious)
AVERAGE STOCK
IN INDIA intergenious 3-4 month Imported 9 month
IN JAPAN Few hours two week
2. CUSTOMERS
The major task of the business creates and sustain customers (a company may have
different categories of the customers like individuals, households, industries and other
institutions. For an example the customer of a tyre company may include individuals
auto mobile owners, automobile manufactures, public sector transport in undertakings
and other operators. Depending on a single customer is often to risky because it may
place the company in a poor bargaining position, apart from the risk if losing business
consequent to the winding up of business by the customers.
3. Competitors:
A firm competitor includes not only the other firms which market the same or
similar products but also those who compete for the discretionary income of the
from other tyre manufacturers but also from two-wheelers, refrigerators, cooking
ranges stereo sets and so on from firms offering saving and investment schemes like
banks, UTI.
4. Marketing intermediaries:
These are vital links between the company and the final consumers. A dislocation
or disturbance of the link, or wrong choice of the link may cost the company very
heavily. Retail chemist and druggists and India once decide to boycott the products of
a leading company and company have been in trouble.
72. 5. Financiers:
Another important micro environment factor is the financiers of the company.
Besides the financing capabilities, their policies and strategies, attitudes, ability to
provide non-financial assistance etc, are very important.
6. Public:
A company may encounter certain public in its environment. Media publics citizens
actions publics and local publics are some examples.
(II) MACRO ENVIRONMENT
The macro environment consists of
1. Economic environment.
2. Non-economic environment.
1.Economic environment:
Business fortunes and strategies are influenced by the economic characteristics and
economic policy dimensions. The economic environment includes
1. The structure and nature of economy.
The structure of the economy (i.e,) primary mostly agriculture. Secondary
industrial and territory sectors, large, medium, small and tiny sectors is the
company, and their linkages, integrations with the world economy etc. are
important to business. Because these factors indicate the prospects for different
types of business, certain factors which affects the business etc, for example if an
company is highly integrated with the global economy.
The nature of the economy is nothing but the classification of the
economics is on the basis of per capital income. Accordingly, these are broadly
classified low income, middle income, high income economies.
The difference in the income and development levels have important
implicates for business.
(II) ECONOMIC CONDITIONS:
The followings are some of the economic conditions of the country which affects the
operations of the business.
1. Income levels.
2. Distribution of income.
3. GDP trends.
4. Sectoral growth trend.
5. Demand and supply trends.
6. Price trends.
7. Foreign exchange reserve position.
8. Global economic trends.
(III) ECONOMIC POLICIES:
There are several economic policies which can have a very great impact on
business. Important economic policies are,
1. INDUSTRIAL POLICY
It can even define the scope and role of different sectors like private, public,
joint and co- operative, or large, medium and small industries. Choice of
technology, scale of operations, product risk and so on.
2 TRADE POLICY:
It can signified affect the fortunes of the firm
For examples restrictive import policies are a policy of producing the
home industry may greatly help the import competing industries, while a
literalisation of the import policy may create difficulties for such industries.
3 FOREIGN EXCHANGE POLICY
Exchange rate policy and the policy irrespective of cross border movement
of capital are important for business.
4. FOREIGN INVESTMET AND TECHNOLOGY POLICY:
Liberal foreign investment and technology policy will increase domestic
competition would put many domestic firms on account of foreign competition
in problems. But at the same times it would benefit many domestic firms by
permitting global sourcing of capital and technology by increasing in the
quantity and quality of domestic supply of many goods and security etc.,
73. 5. FISCAL POLICY
Government ive of public expenditure and revenue
can have significant impact on the business. Example: Taxation policy.
6. MONETARY POLICY
The central bank by its policy towards the cost and availability of credit,
can significantly influence the savings investments and consumer spending in the economy.
Ex. a one percentage point reduction the cash ratio or statutory reserve ratio (SLR) will
significant increase the loanable funds with the commercial banking system and vice versa.
NON- ECONOMIC ENVIRONMENT:
1. POLITICAL AND GOVERNMENT ENVIRONMENT
The political environment includes factors such as characteristics and policies of the
political parties, the nature of the constitution and government system and the government
environment encompasses the economic and business policies and regulations
Ex. congrass government 1950 - - socialistic pattern of society nationalisation pubic
sector domination
1991 narasimroa government
Important economic policies such as industrial policies, policy towards foreign capital
and technology, fiscal policy and export import policy are often political decision.
Many political decisions have serious economic and business implication. The
economic policy of the ruling party is very important. In the past communist and other leftists
favoured state capitalism and were against private capital, particularly foreign.
CLASSIFICATION OF FUNCTION OF STATE
Functions of state varies from basic minimum requirement to active participation in
several other sectors.
BASIC FUNCTION
These include the pure public goods such as the provisions of property rights macro
economic stability, control of infectious disease, safe water, roads and protection of the
destitute.
INTERMEDIATE FUNCTION
These includes matters such as it management of extent abilities (e.g.) pollution,
regulation of monopoly and the provision of social insurance.
ACTIVIST FUNCTION;
These includes measures to stabilized and promote markets and redistribute assets or
income.
The government plays an important role in almost every national economy of the world.
The government normally play four important rules in an economy.
Regulation
Promotion
Entrepreneurship
Planning
REGULATION ROLE
Regulation may cover a wide spectrum extending from entry into a business through the
contact of a business to final results of the business and also a exist. Regulation is very
important for a proper function of market economy.
ENTREPRENURAL ROLE
Direct participation of government in business was very common particularly a socialist
and developing countries reason include ideological and dearth of private entrepreneurship and
capital.
PLANNING ROLE
The national necessity for proper utilisation of scarce resources and priortisation of
development objectives and ideological resources have made this an important role of
governments in the developing and socialist countries.
74. PROMOTIONAL ROLE
This is also a more important in developing countries than in developed because speedy
development of the industry and commerce and the economy requires the development of the
infrastructure including facilitating organisation.
BUSINESS ETHICS
The term business ethics refers to system of moral principal and rules of conduct applied
to business that these showed be business ethics means that the business should be conducted
according to the self recognized moral standards business being a social organ shall not conduct
itself in a way determenental to the interest of socially under there business sector itself.
Important ethical principals that a business should follow
1. Do not deceive or cheat customer by selling substandard or defective products, by under
measurement or by any other means
2. Do nor resort to hoarding, breach marketing or profiteering
3. do not destroy or distort competition
4. Ensure sincerity and accuracy in advertising, labelling, packaging.
5. Do not tarnish the image competitors by unfair practice.
6. Make accurate business available to all authorities.
7. Pay taxes and discharge other obligations promptly.
8.
common determent.
9. Refrain from secret kick bags or payoffs to customers.
10. Ensure payment of fair wages and fair treatment of employees
PROFESSIONALISATION :
The growth management education and training has contributed to the growing
professionalisation.
Professionalisation of a business management means that the business should be managed
by men.
1. Who have formally acquired the specialised and skill for management.
2. Who have authority and freedom to take the right decision.
3. Who have know ideological basis in the discharge of function.
4. Who decisions and actions are guided by certain ethical consideration.
SOCIAL RESPONSIBILITY OF BUSINESS
There is no uniformity of opinion as to what constitutes social responsibility of business.
Generally accepted responsibility of the business to different section of the society are
described below
(I) Responsibility to shareholders:
The responsibility of a company to its shareholders who are the owners is indeed a
primary one.
1. To safeguard the capital of the shareholders and to provide a reasonable dividend. The
company should earn sufficient profit and should build up adequate reserve.
2. If the company fails to cope with the changes in a changing and dynamic world. Its
position will be shaken and the shareholders interest will be affected. By innovation
and growth the company should consolidated and improve to position and help
strengthen the share prices.
3. The business has ensure the image of the company.
(II) responsibility to employees:
1. The payment of fair wages.
2. The provisions of the best possible working condition.
3. The establishment of fair work standard and norms.
4. The provision of labour welfare facilities to the extended possible and desirable.
5. Arrangements for proper training and education of the workers.
6. Reasonable chances and proper system for accomplishment and promotion.
7. Proper recognition, appreciation, encouragement of special skills and capabilities
of the workers.
(III) responsibility to consumers:
1. To improve the efficiency of the functioning of the business so as to
a)
b) Improve quality and
c) Smoothen the distribution system to the consumers.
(IV) responsibility to the community
1. Taking appropriate steps to prevent environmental pollution and to preserve
the ecological balances
2. Rehabilitating the population dispeaced by the operation of the business if
any
75. 3. Taking steps to conserve scarce resources and developing alternatives
where ever possible
4. Improving the efficiency of the business operations
5. Contributing to research and development
6. Development of backward areas
7. Promotion of an cillarisation and small scale industries
8. Making possible contribution to furthering social cawes like the promotion
of education and population control
SOCIAL AUDIT
Social audit is a tool for evaluate how satisfactory a company has discharged its
social responsibilities. Social audit enables the public as well as the company to
evaluate the social performance of the company.
SOCIAL AUDIT INVOLVES:
1. Identification of the firm activities having potential social impact
2. Assessment and evaluation of the social cost and social benefits of such
activities
3. Measurement of the social cost and benefit
4. Reporting that is presenting in a proper format and manner the social
performance of the firm
OBJECTIVES AND BENEFITS OF SOCIAL AUDIT
1. The basic objective of social audit is to evaluate the social dimensions of
the performance of the company
2. Another principal objective which factor the objectives mentioned above is
to take necessary to improve the social performance of the company on the
basis of the feedback provided by the social audit.
3. Social audit increases the public visibility of the organisation
4. If the social audit reveals a socially commendable performance of the
company, it will help boost the public image of the company.