MARKETING MANAGEMENT(MBA SEM II)Prof. Shashank Divekar
MARKETING MANAGEMENTPRODUCTA product is anything that can be offered to satisfy a need or want.Offering and solution are synonyms to the product in marketingcontext.A ‘Product’ is a good or service that most closely meetsthe requirements of a particular market and yields enoughprofit to justify its continued existence.A good, idea, method, information, object or service createdas a result of a process and serves a need or satisfies a want.A product is more than a mere physical object, it has apersonality of its own. Products carry certain meanings withthem and project certain distinct images.
MARKETING MANAGEMENTTHREE LEVELS OF A PRODUCT AUGMENTED PRODUCT ACTUAL PRODUCT CORE PRODUCT
MARKETING MANAGEMENT THREE LEVELS OF A PRODUCTCORE PRODUCT : This is the most basic level and simply looks atwhat people set out to buy and what core benefits or services arebeing offered to the buyers.ACTUAL PRODUCT : The aim of this level is to design a product withfeatures which will attract and persuade buyers into preferring thisproduct over competitors/ alternatives. These features may involvequality level, design and appearance, performance features,styling, branding and packaging.AUGMENTED PRODUCT : At this level additional, non-tangiblebenefits are added to the product. Competition at this level isbased around delivery, after-sales service, installation, help-lines,warranties, etc..
MARKETING MANAGEMENT Different Levels of Product• Generic Product Unbranded and undifferentiated commodity, such as rice, bread, flour or cloth.• Branded Product Product carrying a well-known name which gives it respectability, and acceptance in the market.• Differentiated Product with certain unique features and offerings Product which sets it apart from the competitors.• Customised Product Product which is designed/ developed as per the customer’s specific requirements/ requests.• Augmented Product Product with improvements made voluntarily by the manufacturer to enhance its value.• Potential Product Product of the future, with all possible improvements and finesse in the given economic and competitive conditions.
MARKETING MANAGEMENTProduct Line and Product Mix :A group of related products constitute a product line.A product mix is the complete set of all products offered for saleby a company.Product Mix is 4-Dimensional : • Width • Depth • Length • Consistency
MARKETING MANAGEMENTProduct Line and Product Mix :Width refers to how many different product lines the companycarries (eg. HUL has different product lines such as Personal Care,Food Products, Oral Care, Fabric Care etc.)Depth refers to the number of product items offered under eachproduct-line. It indicates the variants offered in each product-line(Eg. ‘Real’ fruit juice is sold in 3 sizes and 7 flavours. Thus, thedepth is 3X7=21)Length refers to the total number of items in the mix. The averagelength can be arrived at by dividing the total length by the numberof lines.Consistency refers to the close relationship of various productlines either to their end-use or to production requirements ordistribution channels etc.
MARKETING MANAGEMENT PRODUCT LIFE CYCLEProduct Life Cycle is similar to a biological life cycle. Every productgoes through four major stages in its life : 1. Introduction 2. Growth 3. Maturity 4. Decline
MARKETING MANAGEMENT PRODUCT LIFE CYCLEPRODUCT DEVELOPMENT stage begins when a company finds anddevelops a new product idea. The product undergoes a lot of changesand modifications, involving a lot of time and expenditure.Product development goes through various stages such as ideageneration, idea screening, concept development and testing,business analysis, beta testing and market testing, technicalimplementation, commercialization, etc.INTRODUCTION phase involves the product launch, with a view tohave maximum impact in the market. This period too involves a lot ofexpenditure mostly on promotion and advertising. Pricing anddistribution are the most crucial aspects during this phase.
MARKETING MANAGEMENT PRODUCT LIFE CYCLEINTRODUCTION Contd…Properly defining the target audience, customer and distributorfeedbacks, impact of the marketing mix on the sales etc. during theIntroduction phase determine the long-term performance of theproduct in the markets.GROWTH phase is when the product takes off on its own. Thecompany shifts its focus from launch and promotion to growth inmarket share. Product is modified and re-positioned if requiredaccording to the market feedback.This period is the time to develop efficiencies and improve productavailability and service.
MARKETING MANAGEMENT PRODUCT LIFE CYCLEMATURITY Phase is when the market becomes saturated withvariations of the basic product. In this phase the sales growth is atthe expense of someone else’s business. This period is the period ofhighest returns possible, from the product.In this phase, introduction of new brands/ models in the sameproduct category, frequent changes in pricing and discount policiesetc. are the common strategies.DECLINE phase arrives when the sales begin dropping overconsecutive periods and all efforts to revive the product fail. This isthe time to start withdrawal of the product from the market.
MARKETING MANAGEMENT PRODUCT LIFE CYCLE MANAGEMENTPLM or Product Life cycle Management is a process or system used tomanage the data and design process associated with the life of aproduct from its conception and envisioning through itsmanufacture, to its retirement and disposal.PLM manages data, people, business processes, manufacturingprocesses, and anything else pertaining to a product. A PLM systemacts as a central information hub for everyone associated with agiven product, so a well-managed PLM system can streamlineproduct development and facilitate easier communication amongthose working on/with a product.PLM integrates people, data, processes and business systems andprovides a product information backbone for companies and theirextended enterprise. PLM systems help organizations in coping withthe increasing complexity and engineering challenges of developingnew products for the global competitive markets.
MARKETING MANAGEMENT PRODUCT LIFE CYCLE MANAGEMENTProduct Lifecycle Management (PLM) is an approach of integrated andcross-company administration and control of all product-relatedprocesses and data across the whole product lifecycle following theextended logistic chain – from construction and production via salesthrough to disassembly and recyclingProduct Lifecycle Management is an extensive concept to effective andefficient configuration of the product lifecycle.Based on the entirety of all product information, which is incurredacross the whole supply chain and spread over several partners,processes, methods, and tools are provided in order to make therelevant information available at the right time, quality, and at theright place.
MARKETING MANAGEMENT NEW PRODUCT DEVELOPMENTTypes of New Products :1. New-to-the-world : Products that create an entirely new market.2. New product lines : New products that take a company into an established market for the first time.3. Additions to the existing product lines4. Improvements or revisions of existing products : Improved technology/ performance, greater perceived value and replacement of existing products5. Re-positioning : Existing products that are target to new segments or new markets6. Cost Reductions : New products that provide similar performance at lower cost.
MARKETING MANAGEMENT WHY DEVELOP NEW PRODUCTS ?1. To expand product portfolio2. To Replace declining products3. To create stars and cash-cows for the future4. Take advantage of new technology5. Maintain/ Increase market share6. To keep up with competition7. To maintain competitive advantage8. To fill a gap in the market9. To attract new customers
MARKETING MANAGEMENTSTAGES IN NEW PRODUCT DEVELOPMENT :1. Assessment of current product portfolio2. Assessment of opportunities and threats3. Determine the type of product that fits in with the corporate strategy4. Idea generation5. Idea Screening Contd.
MARKETING MANAGEMENTSTAGES IN NEW PRODUCT DEVELOPMENT :6. Concept Development & Testing7. Business Analysis8. Product Development9. Test Marketing10. Commercialisation
MARKETING MANAGEMENTPRODUCT PORTFOLIO ANALYSIS :A product portfolio is the range of products a firm produces.Product portfolio analysis is the study of each of a companys productsin an attempt to improve market performance. The Importantfunctions include : 1. Filling in the product line 2. Product modernization 3. Product featuring 4. Product pruningProduct portfolio management involves the following tasks :• Pointing out growths in the market and improvements made• Analyzing failures and successes• Setting goals and targets• Sales strategies• Identifying gaps leading to drop in market share or profits
MARKETING MANAGEMENTBRAND :A Brand is a name, term, sign, symbol or design, or acombination of them intended to identify the goods andservices of one seller or group of sellers and to differentiatethem from those of other sellers. - American Marketing AssociationA brand is a combination of your thoughts + feelings about yourexperiences with it. A brand creates a positive sentiment amongthe target audience. A brand is used to distinguish a productfrom others in the market. The objectives that a good brand willachieve include: • Confirming credibility of the product/ manufacturer • Connect with the target market emotionally • Motivate the buyer • Consolidate user loyalty
MARKETING MANAGEMENTThe word ‘Brand’ is derived from the Old Norse brandr meaning"to burn." It refers to the practice of producers burning theirmark (or brand) onto their products.Product and the manufacturer offer features and benefits thatconsumers want and need, but it’s the BRAND that makes thosefeatures and benefits recognizable and preferred. Thosefeatures and benefits are extensions of the brand.A brand conveys upto 6 levels of meaning : 1. Attributes 2. Benefits 3. Values 4. Culture 5. Personality 6. User
MARKETING MANAGEMENTThe first branding strategy decision is whether to develop abrand name for the product. Assuming a firm decides to brandits products or services, it must then choose the brand names.Four general strategies options are often used : • Individual Name (P&G) • Corporate Name (Tata) • Independent Family Name (Aditya Birla) • Combination - Corporate family name + Individual product name (Kellogs, Honda, Sony, HP)Proper branding can result in higher sales of not only oneproduct, but on other products associated with that brand.The art of creating and maintaining a brand is called brandmanagement. Careful brand management seeks to make theproduct or services relevant to the target audience.
MARKETING MANAGEMENT“PACKAGING includes all the activities of designing andproducing the container for a product." -Philip KotlerThe intended purpose of the packaging is to make a productreadily sellable as well as to protect it against damage andprevent it from deterioration while storing.Packaging plays an important role as a medium in themarketing mix, in promotion campaigns, as a pricing criterion,in defining the character of new products, as a setter of trendsand as an instrument to create brand identity and shelf impactin all product groups.Product packaging can play an important role in the success orfailure of the sales of the product.
MARKETING MANAGEMENTFactors in Packaging Decisions • Protection & Safety • Visibility • Attractiveness • Promotion • Positioning • Differentiation • Communication • Added Value
MARKETING MANAGEMENTPRICEPrice is the amount of money or goods for which a thing isbought or sold.Price is the marketing variable that can be changed mostquickly, perhaps in response to a competitor price change.Price supports the other elements of the marketing mix.Pricing decision takes into account the following factors : 1. Fixed and Variable Costs 2. Competition 3. Company objectives 4. Positioning strategies 5. Target group, willingness and ability to pay
MARKETING MANAGEMENTPricing Objectives : Common objectives include the following – • Maximise Current Revenue • Maximise Current Profit • Maximise Volumes • Quality Leadership • Partial Cost Recovery • Survival • Status QuoThe pricing objectives depend on many factors such as marketconditions, production cost, economies of scale, barriers toentry, product differentiation, rate of product diffusion, thefirm’s resources and the product’s anticipated price elasticityof demand.
MARKETING MANAGEMENTPRICING STRATEGIESAn organisation can adopt a number of pricing strategies.The pricing strategies are based much on what objectivesthe company has set itself to achieve. Penetration Pricing Optional Pricing Premium Pricing Competitive Pricing Value Pricing Bundle Pricing Skimming Pricing
MARKETING MANAGEMENT Price-Setting Process :1. Decide the price objectives a. Survival b. Profit Maximisation c. Higher Market Share d. Counter Competition e. Status Quo2. Assessment of Demand a. Check Demand Elasticity b. Check Demand Curve3. Cost Estimate4. Competitors/ Market Price5. Select Final Price
MARKETING MANAGEMENTPricing Methods1. Cost-Plus Pricing : Set the price at production cost plus a certain profit margin. This does not take into account competition, customer affordability or long-term business interests.2. Target Return Pricing : Set the price with a view to obtain a certain return on investment.3. Value-based Pricing : Base the price on the effective value to the customer relative to alternative products in the market.4. Psychological Pricing Base the price on what the customer perceives to be fair, based on quality, delivery and performance.
MARKETING MANAGEMENT Cost-Based V/s Value-Based PricingCost-based PricingProduct Cost Price Value CustomerValue-based PricingCustomer Value Price Cost Product
MARKETING MANAGEMENTPLACEPlace is concerned with various methods of transporting andstoring goods, and then making them available for the customer.Place is also known as channel, distribution or intermediary. It isthe mechanism through which goods and/or services are movedfrom the manufacturer/ service provider to the user orconsumer.‘Place’ refers to how an organisation will distribute the productor service they are offering to the end user. The organisationmust distribute the product to the user at the right place at theright time.Efficient and effective distribution is important if theorganisation is to meet its overall marketing objectives
MARKETING MANAGEMENT Channels of Distribution Manufacturer/ Producer WholesalerManufacturer’s Manufacturer’s Retailer Chain Stores Branch Offices Consumer
MARKETING MANAGEMENT TYPICAL CHANNELS OF DISTRIBUTION C.O.D For Consumer Goods & Services :Manufacturer C UManufacturer Retailer S T O MManufacturer Wholesaler Retailer E RManufacturer Agent
MARKETING MANAGEMENTDistribution goes hand-in-hand with positioning and sales strategies. Patterns of Distribution Intensive Distribution : This strategy is used to ensure that the product is made available in as many outlets as possible so that the consumers should be able to obtain the product wherever he goes. Used commonly to distribute low priced or impulse purchase products eg. chocolates, soft drinks, soap etc.. Selective Distribution : In this case the company wishes to make its product available only at specific outlets, carefully selected for the purpose. Such strategy is adopted for products which are positioned as ‘lifestyle’ products and therefore ‘special’. Selective distribution is common with products such as computers, televisions and household appliances.
MARKETING MANAGEMENT Patterns of Distribution Contd.Exclusive Distribution :This strategy is used for products which are exclusive andidentified as ‘status symbols’. Only one outlet in a city maykeep the product.The product is usually highly priced, and requires theintermediary to place much detail in its sale. An example ofwould be the sale of vehicles through exclusive dealers.Besides, exclusive company showrooms may also be countedin this category.
MARKETING MANAGEMENT WHOLESALINGBuying of goods in large quantities from producers andselling the same in small quantities to retailers is termed aswholesale trade and the person who carries on wholesaletrade is called the "Wholesaler".Wholesaling involves sale and distribution of goods to usersother than end consumers.Wholesaling involves selling merchandise to retailers, otherwholesalers and merchants, or to industrial, commercial andinstitutional users.Wholesaling often occurs when large quantities of goods arere-assembled, sorted, then repackaged, and distributed insmaller lots, at a cost significantly lower than the averageretail price.
MARKETING MANAGEMENT IMPORTANCE OF WHOLESALING1. Providing retailers access to various products.2. Providing suppliers/ manufacturers access to markets.3. Providing stocking and warehousing services.4. Value-addition to the distribution process by participating in promotion, financing, payment collection and market intelligence.5. Sometimes wholesalers also share part of the business risks.
MARKETING MANAGEMENT RETAILERAny business entity selling products and services to end-consumers is ‘retailing’.Retailing includes all activities involved in selling and/ orrenting consumer products and services directly toultimate consumers for their personal or homeconsumption.A retailer purchases goods or products in large quantitiesdirectly from manufacturers or through a wholesaler, andsells in smaller quantities to the consumer for a profit.Retailing can be done in either fixed locations, mobileoutlets or online.
MARKETING MANAGEMENT Functions of Retailing :1. Breaking Bulk2. Sorting and categorising of goods3. Offer advise and guidance to help customers make the right choices.4. Holding stock5. Credit services6. Training and after-sales service to end-users
MARKETING MANAGEMENT Importance of Retailing1. Retailing creates time, place and possession utility.2. Makes available a wide variety of goods available to consumers.3. Plays a valuable role in creating a product and brand image.4. Retailer is a vital communication link between the manufacturer and the end-user.5. Personalised service and customising as and when required.
MARKETING MANAGEMENT FRANCHISINGFranchising is a business model in which A parent companyallows entrepreneurs to use a successful companysstrategies, techniques and trademarks; in exchange, thefranchisee pays an initial fee and royalties based on revenues.The parent company also provides the franchisee withsupport, including advertising and training, as part of thefranchising agreement.Arrangement where one party (the franchiser) grantsanother party (the franchisee) the right to use its trademarkor trade-name as well as certain business systems andprocesses, to produce and market a good or service accordingto certain specifications.
MARKETING MANAGEMENT Advantages of franchisingTo the franchisee :1. Immediate name recognition2. Tried, tested and successful products/ offerings3. Standard building design/ décor4. Detailed techniques in running and promoting the business5. Training of employees6. Ongoing help in promoting and upgrading the products7. Lower financial risk and smaller gestation period due to an established brand and goodwill.
MARKETING MANAGEMENT Advantages of franchisingTo the franchisor :1. Capitalised expansion : Rather than investing own or borrowed funds and human efforts for expansion, franchising facilitates faster expansion with the franchisee’s funds.2. Brand development : The faster multi-unit expansion serves to supplement and expand the brand geographically.3. Economies of scale : Larger volumes generated by multi- unit expansion results in higher volumes of purchases and leverage with suppliers and vendors.4. Continuing revenue streams : Continuing royalty serves as a steady cash inflow.
MARKETING MANAGEMENT Direct MarketingDirect Marketing is an interactive system of marketing whichuses one or more advertising media to effect a measurableresponse and/ or transaction at any location.Direct Marketing is a low cost, efficient alternative for reachingthe customers through lower costs of media, also using digitaltechnology like internet, email and web sites.Direct Marketers communicate directly with customers, oftenon a one-to-one, interactive basis to build and cultivate longlasting customer relationships.Direct Marketing is also referred to as Interactive Marketingor Database Marketing, because it is expected to be a two-waycommunication with the customer or prospect and it isdatabase driven.
MARKETING MANAGEMENTDirect Marketing ProcessSET MARKETING OBJECTIVES IDENTIFY TARGET MARKETS COMMUNICATE THE OFFER TEST RESPONSE MEASURE SUCCESS & EVALUATE
MARKETING MANAGEMENTUnique features of Direct Marketing1. Uses customer database and insights into customer data2. Targets smaller groups or individual customers3. Is highly interactive4. Tailor offers as per individual needs5. Offers promoted through personalised communications6. Can be timed to reach prospects at the right moment7. Provides customers a ready access to wealth of information8. Provides the customers a convenient, easy-to-use and private way of interacting with the sellers
MARKETING MANAGEMENTAdvertisingAdvertising is a form of communication that typically attemptsto persuade potential customers to purchase or to consumemore of a particular brand of product or service.Any paid form of non-personal presentation of ideas, goods andservices by an identified sponsor -American Marketing AssociationDescription or presentation of a product, service, idea ororganization in order to induce individuals to buy, support orapprove of it.Advertising.. Attempts to inform and persuade a large number ofpeople with a single communication. - Kenneth A. Longman
MARKETING MANAGEMENTMarketing Communication Mix :• Advertising• Sales Promotion – Short-term direct inducements to encourage sales.• Publicity – Putting commercially significant news in media to create a favorable image.• Personal Selling – Salesman interacting orally with buyers as sales presentations.• Public Relations – Creating a favorable image of the organisation in the eyes of the public, Govt., shareholders etc.
MARKETING MANAGEMENTSales PromotionSales promotion includes several communications activitiesthat attempt to provide added value or incentives toconsumers, wholesalers, retailers, or other organizationalcustomers to stimulate immediate sales.These efforts can attempt to stimulate product interest,trial, or purchase.Examples of devices used in sales promotion includecoupons, samples, premiums, point-of-purchase (POP)displays, contests, rebates, and sweepstakesSales Promotion is used to introduce new product, clear outinventories, attract traffic, and to lift sales temporarily.
MARKETING MANAGEMENTSales Promotion consists of : Consumer promotion (Free samples, free trials, loyalty rewards, discount coupons, cash paybacks, prizes, special prices etc. Trade Promotion (Special prices to retailers, advertising and display allowances to retailers, free goods, longer credit periods etc. Business & Sales Force Promotions (Trade shows & conventions, sales contests, awards, trophies etc.)
MARKETING MANAGEMENTPublic RelationsPR is the process or activity which aims at building awarenessand a favourable image for a person, organisation and/ or itsproducts, by managing the flow of information to the public.PR dept of a company performs the following functions :1. Closely monitors the numerous media channels for public comments about the company.2. Managing crises that threaten a company’s image or reputation.3. Builds goodwill for the organisation through community, philanthropic and other special programs and events.
MARKETING MANAGEMENTExtended P’s of Marketing • People • Process • Physical EvidencePeople :‘People’ is one of the elements of service marketing mix.People include customers and service personnel. When thesetwo interact, service encounter takes place. Customer servicelies at the heart of modern service industries.People are one of the few elements of the service thatcustomers can see and interact with. In case of servicemarketing, people can make or break an organization.
MARKETING MANAGEMENTExtended P’s of MarketingProcesses :‘Process’ is the way of undertaking transaction, supplyinginformation and providing service in a way acceptable to thecustomer and effective to the organisation.Process defines speed, accuracy and satisfaction to thecustomer. It implies that everybody in the organisation knowswhat to do and how to do it.Physical EvidencePhysical evidence is about where the service is being deliveredfrom. This element of the marketing mix will distinguish acompany from its competitors. It is one tangible element thatadds to customer experience in services sector (Layout,cleanliness, décor, comfort, atmosphere etc.)