Marketing guide for MBA Students_FMS Delhi

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Marketing guide for MBA Students_FMS Delhi

  1. 1. F a c u l t y o f M a n a g e m e n t S t u d i e s , D e l h i 2012 Marketing Guide for Summer Placement Contributed By Batch of 2011 & 2012 Compiled By, Sukesh Chandra Gain
  2. 2. 1. Marketing vs Selling: Marketing: Marketing is an integrated communications-based process through which individuals and communities are informed or persuaded that existing and newly-identified needs and wants may be satisfied by the products and services of others. Marketing creates the atmosphere to make it easy for sales to happen. Eg. ITC launched Fiama. Here are some marketing activities:  Handling incoming inquiries  Asking your current customers for referrals for more business  Networking and building relationships  Advertising and public relations. Direct mail and e-newsletters  Special promotional events  Merchandising and merchandise selection  Holding sales, offering preferred customer bonuses  Getting articles published. Blogging  Doing cold calls to set appointments  Market research, customer surveys  Branding, creating your sales message  Design and creation of collateral materials  Building and maintaining your web site, blog, Facebook page, Twitter  Market planning and strategizing Selling: Selling includes the activities that get customers to make a purchase. Selling is closing sales that make you money. Eg An insurance agent trying to sell insurance, a salesperson selling encyclopedias door to door A few things included in selling are: presenting, answering questions, making suggestions, doing proposals or estimates, addressing concerns, negotiating. And most important, asking for the sale. Then completing the sales agreement, etc The Difference: The selling concept takes an inside-out perspective. It starts with the factory, focuses on the company’s existing products, and calls for heavy selling and promoting to produce profitable sales. The marketing concept takes an outside-in perspective. It starts with a well-defined market, focuses on customer needs, coordinates all the activities that will affect customers, and produces profits through creating customer satisfaction. Thus, you could say that: – Marketing is money OUT the door. – Selling is money IN the door. A few major differences: Marketing Selling Customer focused Product focused Product is designed as per customer needs Revenue is generated from the product sold. Profit through customer satisfaction Profit through sales maximization Emphasis on product planning and developing as per customer needs Emphasis on selling the already produced products
  3. 3. 2. STP Segmentation is the process of grouping people or organizations within a market according to similar needs, characteristics, or behaviour. “ Dividing the market into groups” • an entire market rarely has the same tastes and preferences Targeting is the actual selection of the segment you want to serve the target market is the group of people or organizations whose needs a product is specifically designed to satisfy Positioning is the use of marketing to enable people to form a mental image of your product in their minds (relative to other products) (Contributed by Sukesh Gain - 2012)
  4. 4. 3. 4 P’s and 7 P’s Marketing Mix Product A tangible object or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units. Intangible products are often service based like the tourism industry & the hotel industry or codes-based products like cellphone load and credits. Typical examples of a mass produced tangible object are the motor car and the disposable razor. A less obvious but ubiquitous mass produced service is a computer operating system. Methods used to improve differentiate the product or increase sales or target sales more effectively or to gain competitive advantage - Extension Strategies - New Editions - Improvements - Changed packaging - Technology - Specialized Versions 3 Levels of Product For many a product is simply the tangible, phsysical entity that they may be buying or selling. You buy a new car and that's the product - simple! Or maybe not. When you buy a car, is the product more complex than you first thought? In order to actively explore the nature of a product further, lets consider it as three different products - the CORE product, the ACTUAL product, and finally the AUGMENTED product.
  5. 5. These are known as the 'Three Levels of a Product.' So what is the difference between the three products, or more precisely 'levels?' Three Levels of a Product The CORE product is NOT the tangible, physical product. You can't touch it. That's because the core product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit is convenience i.e. the ease at which you can go where you like, when you want to. Another core benefit is speed since you can travel around relatively quickly. The ACTUAL product is the tangible, physical product. You can get some use out of it. Again with the car example, it is the vehicle that you test drive, buy and then collect. The AUGMENTED product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car's manufacture, and any after-sales service. Product Life Cycle and Customer Life Cycle are also important tools for studying the product. Price
  6. 6. Price: The price is the amount a customer pays for the product. It is determined by a number of factors including market share, competition, material costs, product identity and the customer's perceived value of the product. The business may increase or decrease the price of product if other stores have the same product. There are many ways to price a product. Let's have a look at some of them and try to understand the best policy/strategy in various situations. Premium Pricing. Use a high price where there is a uniqueness about the product or service. This approach is used where a a substantial competitive advantage exists. Such high prices are charge for luxuries such as Cunard Cruises, Savoy Hotel rooms, and Concorde flights. Penetration Pricing. The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV. Economy Pricing. This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc. Price Skimming. Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented. Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise. However there are other
  7. 7. important approaches to pricing. Psychological Pricing. This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example 'price point perspective' 99 cents not one dollar. Product Line Pricing. Where there is a range of product or services the pricing reflect the benefits of parts of the range. For example car washes. Basic wash could be $2, wash and wax $4, and the whole package $6. Optional Product Pricing. Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras' increase the overall price of the product or service. For example airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other. Captive Product Pricing Where products have complements, companies will charge a premium price where the consumer is captured. For example a razor manufacturer will charge a low price and recoup its margin (and more) from the sale of the only design of blades which fit the razor. Product Bundle Pricing. Here sellers combine several products in the same package. This also serves to move old stock. Videos and CDs are often sold using the bundle approach. Promotional Pricing. Pricing to promote a product is a very common application. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free). Geographical Pricing. Geographical pricing is evident where there are variations in price in different parts of the world. For example rarity value, or where shipping costs increase price. Value Pricing. This approach is used where external factors such as recession or increased competition force companies to provide 'value' products and services to retain sales e.g. value meals at McDonalds. Cost Plus – Cost-plus pricing is a pricing method used by companies. It is used primarily because it is easy to calculate and requires little information. There are several varieties, but the common thread in all of them is that one first calculates the cost of the product, then includes an additional amount to represent profit. Cost-plus pricing is often used on government contracts, and has been criticized as promoting wasteful expenditures. The method determines the price of a product or service that uses direct costs, indirect costs,
  8. 8. and fixed costs whether related to the production and sale of the product or service or not. These costs are converted to per unit costs for the product and then a predetermined percentage of these costs is added to provide a profit margin. Loss Leader – Loss leader or leader is a product sold at a low price (at cost or below cost) to stimulate other, profitable sales. It is a kind of sales promotion, in other words marketing concentrating on a pricing strategy. The price can even be so low that the product is sold at a loss. A loss leader is often a popular article. Sometimes leader is now used as a synonym for loss leader and means any popular article, in other words one sold at a normal price Place A channel of distribution comprises a set of institutions which perform all of the activities utilised to move a product and its title from production to consumption. Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer. There are six basic 'channel' decisions:  Do we use direct or indirect channels? (e.g. 'direct' to a consumer, 'indirect' via a wholesaler).  Single or multiple channels.  Cumulative length of the multiple channels.  Types of intermediary.  Number of intermediaries at each level (e.g. how many retailers in Southern Spain).  Which companies as intermediaries to avoid 'intrachannel conflict' (i.e. infighting between local distributors). Selection Consideration - how do we decide upon a distributor? Market segment - the distributor must be familiar with your target consumer and segment.
  9. 9. Changes during the product life cycle - different channels can be exploited at different points in the PLC e.g. Foldaway scooters are now available everywhere. Once they were sold via a few specific stores. Producer - distributor fit - Is there a match between their polices, strategies, image, and yours? Look for 'synergy'. Qualification assessment - establish the experience and track record of your intermediary. Training - How much training and support will your distributor require? Promotion Another one of the 4P's is 'promotion'. This includes all of the tools available to the marketer for 'marketing communication'. As with Neil H.Borden's marketing mix, marketing communications has its own 'promotions mix.' Think of it like a cake mix, the basic ingredients are always the same. However if you vary the amounts of one of the ingredients, the final outcome is different. It is the same with promotions. You can 'integrate' different aspects of the promotions mix to deliver a unique campaign. The elements of the promotions mix are: * Personal Selling. * Sales Promotion. * Public Relations. * Direct Mail. * Trade Fairs and Exhibitions. * Advertising. * Sponsorship. The elements of the promotions mix are integrated to form a coherent campaign. As with all forms of communication. The message from the marketer follows the 'communications process' as illustrated above. For example, a radio advert is made for a car manufacturer. The car manufacturer (sender) pays for a specific advert with contains a message specific to a target audience (encoding). It is transmitted during a set of commercials from a radio station (Message
  10. 10. / media). The message is decoded by a car radio (decoding) and the target consumer interprets the message (receiver). He or she might visit a dealership or seek further information from a web site (Response). The consumer might buy a car or express an interest or dislike (feedback). This information will inform future elements of an integrated promotional campaign. Perhaps a direct mail campaign would push the consumer to the point of purchase. Noise represen thousands of marketing communications that a consumer is exposed to everyday, all competing for attention. The Promotions Mix. Let us look at the individual components of the promotions mix in more detail. Remember all of the elements are 'integrated' to form a specific communications campaign. 1. Personal Selling. Personal Selling is an effective way to manage personal customer relationships. The sales person acts on behalf of the organization. They tend to be well trained in the approaches and techniques of personal selling. However sales people are very expensive and should only be used where there is a genuine return on investment. For example salesmen are often used to sell cars or home improvements where the margin is high. 2. Sales Promotion. Sales promotion tend to be thought of as being all promotions apart from advertising, personal selling, and public relations. For example the BOGOF promotion, or Buy One Get One Free. Others include couponing, money-off promotions, competitions, free accessories (such as free blades with a new razor), introductory offers (such as buy digital TV and get free installation), and so on. Each sales promotion should be carefully costed and compared with the next best alternative. 3. Public Relations (PR). Public Relations is defined as 'the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics' (Institute of Public Relations). It is relatively cheap, but certainly not cheap. Successful strategies tend to be long- term and plan for all eventualities. All airlines exploit PR; just watch what happens when there is a disaster. The pre-planned PR machine clicks in very quickly with a very effective rehearsed plan. 4. Direct Mail. Direct mail is very highly focussed upon targeting consumers based upon a database. As with all marketing, the potential consumer is 'defined' based upon a series of attributes and similarities. Creative agencies work with marketers to design a highly focussed communication in the form of a mailing. The mail is sent out to the potential consumers and responses are carefully monitored. For example, if you are marketing medical text books, you would use a database of doctors' surgeries as the basis of your mail shot. 5. Trade Fairs and Exhibitions. Such approaches are very good for making new contacts and renewing old ones. Companies will seldom sell much at such events. The purpose is to increase awareness and to encourage trial. They offer the opportunity for companies to meet with both the trade and the consumer. Expo
  11. 11. has recently finish in Germany with the next one planned for Japan in 2005, despite a recent decline in interest in such events. 6. Advertising. Advertising is a 'paid for' communication. It is used to develop attitudes, create awareness, and transmit information in order to gain a response from the target market. There are many advertising 'media' such as newspapers (local, national, free, trade), magazines and journals, television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus sides). 7. Sponsorship. Sponsorship is where an organization pays to be associated with a particular event, cause or image. Companies will sponsor sports events such as the Olympics or Formula One. The attributes of the event are then associated with the sponsoring organization. The elements of the promotional mix are then integrated to form a unique, but coherent campaign. Extended marketing mix In the 1980s Booms and Bitner included three additional 'Ps' to accommodate trends towards a service or knowledge based economy:  People  Process  Physical Evidence What is significant about services are the relative dominance of intangible attributes in the make-up of the “service product”. Services are a special kind of product. They may require special understanding and special marketing efforts. The need for the extension is due to the high degree of direct contact between the providers and the customers, the highly visible nature of the service process, and the simultaneity of the production and consumption. While it is possible to discuss people, physical evidence and process within the original-Ps framework (for example people can be considered part of the product offering) the extension allows a more thorough analysis of the marketing ingredients necessary for successful services marketing.
  12. 12. People People are the most important element of any service or experience. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are altered to meet the 'individual needs' of the person consuming it. Most of us can think of a situation where the personal service offered by individuals has made or tainted a tour, vacation or restaurant meal. Remember, people buy from people that they like, so the attitude, skills and appearance of all staff need to be first class. Some ways in which people add value to an experience, as a part of the marketing mix are - training, personal selling and customer service. Process Process is another element of the extended marketing mix, or 7P's.There are a number of perceptions of the concept of process within the business and marketing literature. Some see processes as a means to achieve an outcome, for example - to achieve a 30% market share a company implements a marketing planning process. Another view is that marketing has a number of processes that integrate together to create an overall marketing process, for example - telemarketing and Internet marketing can be integrated. A further view is that marketing processes are used to control the marketing mix, i.e. processes that measure the achievement marketing objectives. All views are understandable, but not particularly customer focused.
  13. 13. For the purposes of the marketing mix, process is an element of service that sees the customer experiencing an organization’s offering. It's best viewed as something that your customer participates in at different points in time. Here are some examples to help your build a picture of marketing process, from the customer's point of view. Example - Going on a cruise - from the moment that you arrive at the dockside, you are greeted; your baggage is taken to your room. You have two weeks of services from restaurants and evening entertainment, to casinos and shopping. Finally, you arrive at your destination, and your baggage is delivered to you. This is a highly focused marketing process. Physical Evidence Physical evidence is the material part of a service. Strictly speaking there are no physical attributes to a service, so a consumer tends to rely on material cues. There are many examples of physical evidence, including some of the following:  Packaging.  Internet/web pages.  Paperwork (such as invoices, tickets and despatch notes).  Brochures.  Furnishings.  Signage (such as those on aircraft and vehicles).  Uniforms.  Business cards.  The building itself (such as prestigious offices or scenic headquarters).
  14. 14.  Mailboxes and many others . A sporting event is packed full of physical evidence. Your tickets have your team's logos printed on them, and players are wearing uniforms. The stadium itself could be impressive and have an electrifying atmosphere. You travelled there and parked quickly nearby, and your seats are comfortable and close to restrooms and store. All you need now is for your team to win! Some organizations depend heavily upon physical evidence as a means of marketing communications, for example tourism attractions and resorts (e.g. Disney World), parcel and mail services (e.g. UPS trucks), and large banks and insurance companies (e.g. Lloyds of London). (Contributed by 2011) 4 PS OF MARKETING/ 7PS: EXTENDED MARKETING MIX Product Decisions The term "product" refers to tangible, physical products as well as services. Here are some examples of the product decisions to be made: >Product Variety >Quality > Design > Features > Brand name > Functionality > Styling > Returns > Safety > Packaging > Repairs and Support > Warranty > Accessories and services > Price Decisions Some examples of pricing decisions to be made include: > Pricing strategy (skim, penetration, etc.) > Suggested retail price/List price > Volume discounts and wholesale pricing > Cash and early payment discounts > Allowances > Credit Terms and Payment period > Seasonal pricing > Bundling > Price flexibility > Price discrimination Distribution (Place) Decisions Distribution is about getting the products to the customer. Some examples of distribution decisions include: > Distribution channels > Market coverage (inclusive, selective, or exclusive distribution) > Assortments > Locations > Specific channel members > Inventory management > Warehousing > Distribution centers > Order processing > Transportation > Reverse logistics Promotion Decisions In the context of the marketing mix, promotion represents the various aspects of marketing communication, that is, the communication of information about the product with the goal of generating a positive customer response. Marketing communication decisions include: > Promotional strategy (push, pull, etc.) > Advertising > Personal selling & sales force > Sales promotions > Public relations & publicity > Marketing communications budget > Direct marketing The 7-Ps or Extended Marketing Mix of Booms and Bitner is a Marketing Strategy tool that expands the number of controllable variables from the four in the original Marketing Mix Model to seven. The Traditional Marketing Mix model was primarily directed and useful for tangible products. The 7-Ps model is more useful for services industries and arguably also for knowledge-intensive
  15. 15. environments. The additional 3 Ps are: People An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organisation wants to obtain a form of competitive advantage. Consumers make judgments and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, aptititude, and service knowledge to provide the service that consumers are paying for. Process Refers to the systems used to assist the organisation in delivering the service. E.g at McDs u get a burger in 2 min. What was the process that allowed you to obtain an efficient service delivery? Banks that send out Credit Cards automatically when their customers old one has expired again require an efficient process to identify expiry dates and renewal. An efficient service that replaces old credit cards will foster consumer loyalty and confidence in the company. Physical Evidence Where is the service being delivered? Physical Evidence is the element of the service mix which allows the consumer again to make judgments on the organisation. If you walk into a restaurant your expectations are of a clean, friendly environment. On an aircraft if you travel first class you expect enough room to be able to lay down! Physical evidence is an essential ingredient of the service mix, consumers will make perceptions based on their sight of the service provision which will have an impact on the organisations perceptual plan of the service. We must remember that the 4p/7p are from the sellers point of view. From the buyers point of view we have: Solution: How can I solve my problem? Information: Where can I get information from? Value: What is my total sacrifice to get the solution? Access: Where can I find it? In fact recently the 4 Cs of marketing have come up which along with the 4ps address a broad range of marketing issues. You can read about them here: http://www.scs.unr.edu/~khalilah/eMarketing.pdf (Contributed by Aastha Chawla - 2012) 4. Types of Entry Strategies, Specific Attack Strategies Pioneers Late arrivals Early movers Follow this link: Everything is mentioned. (http://www.public.iastate.edu/~sjwong/pdf540/leader_follower_strategy.pdf) 5. Penetration Pricing and Price Skimming Penetration pricing is the pricing technique of setting a relatively low initial entry price, often lower than the eventual market price, to attract new customers. The strategy works on the expectation that customers will switch to the new brand because of the lower price.
  16. 16. Penetration pricing is most commonly associated with a marketing objective of increasing market share or sales volume, rather than to make profit in the short term Suitable for elastic demand . The advantages of penetration pricing This can take the competition by surprise, not giving them time to react It can create goodwill among the early adopters Discourages the entry of competitors. Low prices act as a barrier to entry Eg. Reliance mobile Price skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time Price skimming is sometimes referred to as riding down the demand curve. The objective of a price skimming strategy is to capture the consumer surplus. If this is done successfully, then theoretically no customer will pay less for the product than the maximum they are willing to pay. In practice, it is almost impossible for a firm to capture all of this surplus. Examples: Playstation, DVDs, etc. (Contributed by Nihar Sai Reddy – 2012) 6. Promotion Mix Marketers have at their disposal four major methods of promotion. Taken together these comprise the promotion mix. In this section a basic definition of each method is offered while in the next section a comparison of each method based on the characteristics of promotion is presented.  Advertising – Involves non-personal, mostly paid promotions often using mass media outlets to deliver the marketer’s message. While historically advertising has involved one- way communication with little feedback opportunity for the customer experiencing the advertisement, the advent of computer technology and, in particular, the Internet has increased the options that allow customers to provide quick feedback.  Sales Promotion – Involves the use of special short-term techniques, often in the form of incentives, to encourage customers to respond or undertake some activity. For instance, the use of retail coupons with expiration dates requires customers to act while the incentive is still valid.  Public Relations – Also referred to as publicity, this type of promotion uses third-party sources, and particularly the news media, to offer a favorable mention of the marketer’s company or product without direct payment to the publisher of the information.  Personal Selling – As the name implies, this form of promotion involves personal contact between company representatives and those who have a role in purchase decisions (e.g., make the decision, such as consumers, or have an influence on a decision, such as members of a company buying center). Often this occurs face-to-face or via telephone, though newer technologies allow this to occur online via video conferencing or text chat.
  17. 17. 7. Concept of Customer Derived Value Marketing is about meeting the needs of your targeted market, but also providing them with a value. This value is determined when subtracting the benefits a customer gets from the product with the customer costs he does to get it. 8. Al Ries and Jack Z Trout on Positioning A product's position is how potential buyers see the product. Positioning is expressed relative to the position of competitors. The term was coined in 1969 by Al Ries and Jack Trout in the paper "Positioning" is a game people play in today’s me-too market place" in the publication Industrial Marketing. It was then expanded into their ground-breaking first book, "Positioning: The Battle for Your Mind". Positioning is something (perception) that happens in the minds of the target market. It is the aggregate perception the market has of a particular company, product or service in relation to their perceptions of the competitors in the same category. It will happen whether or not a company's management is proactive, reactive or passive about the on-going process of evolving a position. But a company can positively influence the perceptions through enlightened strategic actions. In marketing, positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. It is the 'relative competitive comparison' their product occupies in a given market as perceived by the target market. Re-positioning involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market. De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product, in the collective minds of the target market. Costs Psychic Energy Time Monetary Total Value Image Personnel Services Product Total
  18. 18. The Process of Positioning Generally, the product positioning process involves:  Defining the market in which the product or brand will compete (who the relevant buyers are)  Identifying the attributes (also called dimensions) that define the product 'space'  Collecting information from a sample of customers about their perceptions of each product on the relevant attributes  Determine each product's share of mind  Determine each product's current location in the product space  Determine the target market's preferred combination of attributes (referred to as an ideal vector)  Examine the fit between: o The position of your product o The position of the ideal vector  Position. The process is similar for positioning your company's services. Services, however, don't have the physical attributes of products - that is, we can't feel them or touch them or show nice product pictures. So you need to ask first your customers and then yourself, what value do clients get from my services? How are they better off from doing business with me? Also ask: is there a characteristic that makes my services different? Write out the value customers derive and the attributes your services offer to create the first draft of your positioning.
  19. 19. 9. BCG Matrix MARKET SHARE & MARKET GROWTH 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. The higher your market share, the higher proportion of the market you control. The Boston Matrix assumes that if you enjoy a high market share you will normally be making money (this assumption is based on the idea that you will have been in the market long enough to have learned how to be profitable, and will be enjoying scale economies that give you an advantage). Market growth is used as a measure of a market's attractiveness. Markets experiencing high growth are ones where the total market is expanding, which should provide the opportunity for businesses to make more money, even if their market share remains stable. Dogs: Low Market Share / Low Market Growth In these areas, your market presence is weak, so it's going to take a lot of hard work to get noticed. Also, you won't enjoy the scale economies of the larger players, so it's going to be difficult to make a profit. Cash Cows: High Market Share / Low Market Growth Here, you're well-established, so it's easy to get attention and exploit new opportunities. Profits and cash generation should be high. Because of low growth investments needed shd be low. Cash cows are stars of yesterday n the foundation of the company. Stars: High Market Share / High Market Growth Use large amounts of cash, they are the leaders in business so they should produce large
  20. 20. amounts of cash as well. These are fantastic opportunities, and you should work hard to realize them. Question Marks (Problem Child): Low Market Share / High Market Growth These are the opportunities no one knows what to do with. They aren't generating much revenue right now because you don't have a large market share. But, they are in high growth markets so the potential to make money is there. Question Marks might become Stars and eventual Cash Cows, but they could just as easily absorb effort with little return. These opportunities need serious thought as to whether increased investment is warranted. BCG MATRIX FOR ITC STAR Hotels Paperboards/Packaging Agri business ? FMCGs and others CASH COWS FMCG-cigarettes DOG - (Contributed by 2011) 10. Ansoff Matrix: The Ansoff Product-Market Growth Matrix is a marketing tool created by Igor Ansoff and first published in his article "Strategies for Diversification" in the Harvard Business Review (1957). The matrix allows marketers to consider ways to grow the business via existing and/or new products, in existing and/or new markets – there are four possible product/market combinations. Ansoff Matrix Existing Products New Products Existing Markets Market Penetration Product Development New Markets Market Development Diversification
  21. 21. Ansoff's matrix provides four different growth strategies:  Market Penetration - the firm seeks to achieve growth with existing products in their current market segments, aiming to increase its market share.  Market Development - the firm seeks growth by targeting its existing products to new market segments.  Product Development - the firms develops new products targeted to its existing market segments.  Diversification - the firm grows by diversifying into new businesses by developing new products for new markets. The matrix illustrates, in particular, that the element of risk increases the further the strategy moves away from known quantities - the existing product and the existing market. Thus, product development (requiring, in effect, a new product) and market extension (a new market) typically involve a greater risk than `penetration' (existing product and existing market); and diversification (new product and new market) generally carries the greatest risk of all. In his original work, which did not use the matrix form, Igor Ansoff stressed that the diversification strategy stood apart from the other three. While the latter are usually followed with the same technical, financial, and merchandising resources which are used for the original product line, diversification usually requires new skills, new techniques, and new facilities. As a result it almost invariably leads to physical and organizational changes in the structure of the business which represent a distinct break with past business experience. For this reason, most marketing activity revolves around penetration. The market penetration strategy is the least risky since it leverages many of the firm's existing resources and capabilities. In a growing market, simply maintaining market share will result in growth, and there may exist opportunities to increase market share if competitors reach capacity limits. However, market penetration has limits, and once the market approaches saturation another strategy must be pursued if the firm is to continue to grow. Market penetration Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets. Market penetration seeks to achieve four main objectives:  Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling  Secure dominance of growth markets  Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors  Increase usage by existing customers – for example by introducing loyalty schemes A market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good
  22. 22. information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research. Market development Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets. There are many possible ways of approaching this strategy, including: • New geographical markets; for example exporting the product to a new country • New product dimensions or packaging: for example • New distribution channels • Different pricing policies to attract different customers or create new market segments Product development Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets. Diversification Diversification is the name given to the growth strategy where a business markets new products in new markets. This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience. For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks.  Market penetration (existing markets, existing products): Market penetration occurs when a company enters/penetrates a market with current products. The best way to achieve this is by gaining competitors' customers (part of their market share). Other ways include attracting non-users of your product or convincing current clients to use more of your product/service, with advertising or other promotions. Market penetration is the least risky way for a company to grow.  Product development (existing markets, new products): A firm with a market for its current products might embark on a strategy of developing other products catering to the same market (although these new products need not be new to the market; the point is that the product is new to the company). For example, McDonald's is always within the fast-food industry, but frequently markets new burgers. Frequently, when a firm creates new products, it can gain new customers for these products. Hence, new product development can be a crucial business development strategy for firms to stay competitive.  Market development (new markets, existing products): An established product in the marketplace can be tweaked or targeted to a different customer segment, as a strategy to earn more revenue for the firm. For example, Lucozade was first marketed for sick
  23. 23. children and then rebranded to target athletes. This is a good example of developing a new market for an existing product. Again, the market need not be new in itself, the point is that the market is new to the company.  Diversification (new markets, new products): Virgin Cola, Virgin Megastores, Virgin Airlines, Virgin Telecommunications are examples of new products created by the Virgin Group of UK, to leverage the Virgin brand. This resulted in the company entering new markets where it had no presence before. (Contributed by Aastha Chawla – 2012; 2011) 11. Opportunity and Threat Matrix 12. McKinsey 7-S Framework The McKinsey 7-S model was named after a consulting company, McKinsey and Company. The McKinsey model is a model that describes 7 factors that determine how one can holistically and effectively organize a company. It is basically a Value Based Management Model. It consists of seven factors. Together these factors determine the way in which a corporation operates. The seven factors of McKinsey 7-S model are -  Shared values, originally termed superordinate goals, refers to the significant meanings or guiding concepts that organisational members share---shared beliefs and attitudes--- what the org stands for and what it believes in  Structure is defined as the skeleton of the organisation or the organisational chart---the way in which the organization’s units relate to each other---centralized, functional divisions (top down), decentralized, matrix etc  Strategy is the plan or course of action in allocating resources to achieve identified goals over time---environment, competition, customers  Systems are the routine processes and procedures followed within the organisation--- financial systems, recruiting, promotion and performance appraisal systems, information systems  Staff is described in terms of personnel categories within the organisation  Skills variable refers to the capabilities of the staff within the organisation as a whole  Style is the way in which key managers behave in achieving organisational goals--- cultural style of the organisation
  24. 24. Advantages of using this framework  diagnostic tool for understanding organizations that are ineffective  guides organizational change  combines rational and hard elements with emotional and soft elements  managers must act on all Ss in parallel and all Ss are interrelated It is basically used to audit companies based on the 7-Ss For instance, if we want to study a company post merger we would do the following: 1) Assess the current situation for each of the 7-S for 2) Decide on what is the desired situation 3) Focus on strategy and business plan (costs, benefits, migration, communication, risks etc) to go from step 1 to step 2 Trivia: The 7-S framework was first mentioned in the “The Art of Japanese Mgmt” by Richard Pascale and Anthony Athos in 1981. They had been investigating how the Japanese industry had been so successful. At around the same time Tom Peters and Robert Waterman were exploring what made a company excellent. They all came up with the 7-S model in1978 and was taken up as a basic tool by McKinsey (Contributed by Rima Chakravarty - 2012) 13. B2B, B2C, C2C Marketing Customer to Customer (C2C) MARKETING Customer 2 Customer or the commonly used acronym C2C is a new marketing mantra for Indian firms and the foreign multinationals. Customer to Customer (C2C) markets are innovative ways to allow customers to interact with each other. In customer to customer markets the business facilitates an environment where customers can sell these goods and or services to each other. The quality of a product is vital for the continued success of a business. A terrific marketing strategy might bring a customer to your
  25. 25. door, but if the product you deliver fails to satisfy, they will never return. And worse, the best advertising of all, word-of-mouth, will turn against you. Now let's define what is - Customer 2 Customer and Word Of Mouth. Customer 2 Customer as defined by Philip Kotler: "Customer 2 Customer includes all activities involving interaction between consumers. Customer 2 Customer activities include auctions between consumers that are facilitated by firms such as e-bay, personal, classified ads, ad games etc." Word of Mouth as defined by Philip Kotler: "Personal communication about a product between target buyers and neighbours, friends, family members and associates." Let's understand the real meaning of Customer 2 Customer and Word of Mouth through an illustration. This illustration mainly focuses on the success behind Toyota Qualis. Toyota Qualis is a car that has a tag of a taxi, than that of a personal or a private car. And one of the sole reasons behind the huge volume of sales is its taxi tag. Now how did they get this taxi tag? It all happened because of the word of mouth – the best medium of advertisement. Private taxis are the most roughly-driven cars and if these drivers swear by a car, then it's the best ad for its reliability and toughness. How were they able to win over these drivers? They won over them because they delighted them. Delighted them means - they were able to provide delight to their customers by understanding their specific personal interests, anticipating their needs, exceeding their expectations, and making every moment and aspect of the relationship a pleasant - or better yet, an exhilarating - experience. This illustration proves only one aspect of Customer 2 Customer i.e. Word of mouth. Now coming to the second aspect, i.e. C2C's role in consumer decision making: Often we find that in a consumer decision process several individuals get involved. Each of them plays an influencing role. At times, more than one role may be played by an individual. These roles are: 1. Initiator This is the person who sows the seed in a prospective customer's mind to buy the product. This person may be a part of the customer's family like spouse or parents. Alternatively the person may be a friend, a relative, a colleague or even the sales person. 2. Influencer Influencer is a person within or outside the immediate family of the customer who influences the decision process. The individual perceived as an influencer is also perceived as an expert. In consumer durable sale the dealer plays an influencing role. 3. Decider He is the person who actually takes the decision. In a joint family often it's the head of the family or the elders in the family who take a decision. But in nuclear and single families and with
  26. 26. the increase in the literacy among women and number of working couples, one finds more often than not, decisions are joint. Husband, wife and even the entire family taking the decision, particularly on major purchases, is quite common in urban and metro areas. The decider/s considers both economic and non-economic parameters before selecting a brand. It is important to note that the people who play these roles seek different values in the product or service. The perception of the value is to a large extent influenced by their prior experience of others, media reports and the marketing cues created by the firm. These values, which may also be referred to as, market value is the potential of a product or service to satisfy customer's needs and wants. The most common and widely used example of C2C marketing is Ebay. Ebay provides sellers a platform to freely hawk their goods as well as interact with customers. These sellers themselves are non-business individuals. A real-life example is auctions, where sellers, who were initially customers themselves, sell goods that they have bought to other individual customers. Business to consumer (B2C) marketing B2C marketing is one of the most popularly used strategies for effective market communication and profitable business building. Business to consumer marketing is when a business markets products to a consumer market. A consumer is a buyer of products that are not business related. B2C products include goods and services such as food, clothes, cars, houses, phone services, credit repair services, etc. A B2C sale is to an individual. That individual may be influenced by other factors such as family members or friends, but ultimately it’s a single person that pulls out their wallet. B2C features a large target market, single step buying process and shorter sales cycle. Repetition and imagery create its brand identity. B2C focuses on merchandising and point of buying activities including coupons, displays and store fronts. Basically any business that offers a retail product to the public comes under this type. In B2C markets, the brand encourages the shopper to purchase, remain loyal and potentially pay a higher price. It is one of the many marketing campaigns that business houses can use for publicizing their goods and services. For this the company can hire people who can reach out to the general public as company representatives. These representatives can address customers at public places, such as shopping malls or districts and make them aware about company’s products and services by distributing flyers containing company’s information or by handing over various forms of promotional materials. The company’s representatives also undertake door to door marketing to promote company products or services. All these factors make B2C marketing one of the most effective modes of communication. B2C marketing also involves advertising through newspapers, television and radio for better communication. These modes provide the companies with better consumer marketing strategies that can be worked upon to build a bigger market for the products and services and thus achieve a profitable goal. The B2C internet marketing is one of the most advanced consumer marketing strategies that revolutionized the business world. It not only helps in developing a direct contact between the consumer and business house but also allows the businessman to advertise and sell his
  27. 27. products and services in an easy manner. Now a days with the advent of Internet, a businessman can make use of various online advertising strategies which help to cater to wider section of potential market globally. Online advertising strategies such as PPC and Podcast are counted among the most effective promotion campaigning for any business. These advertisements can be displayed on various search sites so that they are viewed by many people at the same time. Making aware of company’s offerings via websites also helps the business house to successfully cater the potential audience. Also, the online shopping facility provided through the websites make the customers in availing the facilities and buying the products without wasting any time and extra money to visit any physical store for making a desirable purchase. It is not enough to just establish a business; the business should also flourish and produce profit. To meet the objective, various strategies are used for good publicity. Among various business market strategies, B2B marketing i.e. business to business marketing and B2C marketing i.e. business to consumer marketing are being constantly talked about. A constant debate over the two has created a B2B vs. B2C marketing situation in the business world. Though the purpose of both is same i.e. business development and to generate profits but their approaches are different. While B2B deals with transactions between two businesses, B2C marketing strategy helps the business house in directly targeting the customers. Examples  A family is at home on a Sunday night and is watching television. An advertisement appears that advertises home delivered pizza. The family decides to order a pizza.  Walking down a supermarket aisle, a single man aged in his early 30's sees a hair care product that claims to reduce dandruff. He pick's the product and adds it to his shopping cart.  A pensioner visits her local shopping mall. She purchases a number of items including her favourite brand of tea. She has bought the same brand of tea for the last 18 years. Business-to-Business (B2B) Marketing Business to Business marketing is the practice of individuals or organizations (commercial businesses, governments and institutions) facilitating the sale of their products or services to other companies or organizations that in turn resell them, use them as components in products or services they offer, or use them to support their operations. This is also known as Industrial marketing. In B2B, the customers can be: 1) Companies that consume products or services eg. automakers, who buy gauges to put in their cars 2) government agencies – this includes centre, state and local governments 3) institutions - schools, hospitals and nursing homes, churches and charities
  28. 28. 4) resellers - wholesalers, brokers and industrial distributors A B2B sale is to an organization. B2B describes commerce transactions between businesses, such as between manufacturer and a wholesaler, or between a wholesaler and a retailer. The volume of B2B transactions is much higher than the volume of B2C transactions. The main reason is that in any supply chain, there will be many B2B transactions, e.g. involving subcomponent or raw materials, and only on B2C transaction, i.e. the finished good’s sale to customer. B2B Marketing is driven purely on the basis of fewer, but larger, customers. It is very necessary to be able to customize offering based on the buyer’s needs. Some B2B Marketing Strategies:  B2B Branding – Closely align corporate brands, divisional brands and product/service brands and to apply brand standards to material often considered informal such as email and other correspondence.  Product – cost-saving or revenue-producing benefits of products/services should factor throughout product development and marketing cycle.  People – Usually, the target market for business products are smaller and have more specialized needs. Thus, there can be multiple influencers on purchase decision, and these need to be marketed to as well.  Pricing – Business markets can pay premium prices if the pricing and payment terms are structured well. This is particularly true in the case of a strong brand.  Promotion – Specific trade shows, analysts, publications, blogs and retail/wholesale outlets tend to be fairly common to each industry/product area. In essence, with proper knowledge of your industry/product, the promo strategy almost writes itself.  Place -- The importance of a knowledgeable, experienced and effective direct (inside or outside) sales force is often critical in the business market. If you sell through distribution channels also, the number and type of sales forces can vary tremendously and your success as a marketer is highly dependent on their success. Business Marketing vs. Consumer Marketing Although on the surface the differences between business and consumer marketing may seem obvious, there are more subtle distinctions between the two with substantial ramifications. Dwyer and Tanner (2006) note that business marketing generally entails shorter and more direct channels of distribution. While consumer marketing is aimed at large demographic groups through mass media and retailers, the negotiation process between the buyer and seller is more personal in business marketing. According to Hutt and Speh (2004), most business marketers commit only a small part of their promotional budgets to advertising, and that is usually through direct mail efforts and trade journals. While that advertising is limited, it often helps the business marketer set up successful sales calls. Marketing to a business trying to make a profit (Business-to-Business marketing) as opposed to an individual for personal use (Business-to-Consumer, or B2C marketing) is similar in terms of
  29. 29. the fundamental principles of marketing. In B2C, B2B and B2G marketing situations, the marketer must always:  successfully match the product/service strengths with the needs of a definable target market;  position and price to align the product/service with its market, often an intricate balance; and  Communicate and sell it in the fashion that demonstrates its value effectively to the target market. (Contributed by Nazia Asad – 2012; 2011) 14. Basics of Media Planning 15. Below the Line Initiatives (10 examples) What is BTL, compare & contrast BTL with ATL? BTL – Below the Line. All advertising by means other than the five major media - the press, television, radio, cinema and outdoors; below-the-line advertising employs a variety of methods - direct mail, sponsorship, merchandising, trade shows, exhibitions, sales literature and catalogues, and so on. Below the line promotions are becoming increasingly important within the communications mix of many companies, not only those involved in FMCG products, but also for industrial goods. With the increasing pressure on the marketing team to achieve communication objectives more efficiently in a limited budget, there has been a need to find out more effective and cost efficient ways to communicate with the target markets. This has led to a shift from the regular media based advertising. Below the Line uses less conventional methods than the usual specific channels of advertising to promote products, services, etc. than Above the Line strategies. These may include activities such as direct mail, public relations and sales promotions for which a fee is agreed upon and charged up front. Below the line advertising typically focuses on direct means of communication, most commonly direct mail and e-mail, often using highly targeted lists of names to maximize response rates. Above the line is much more effective when the target group is very large and difficult to define. But if the target group is limited and specific, it is always advisable to use BTL promotions for efficiency and cost-effectiveness. Examples  Most of the educational institutes like Career Launcher, Time and PT are holding informative workshops and free tests for students which give a direct interaction of these institutes with the target customer, and hence, a suitable platform to sell themselves.
  30. 30.  Sales counters, beauty advisors, and dealer aids such as shade cards etc. – LAKME  Search, email and online advertising  Price Promotion o A discount to the normal selling price of a product, or o More of the product at the normal price (1) ING Vysya Bank also launched a social responsibility campaign, which started on the Internet and moved to on-ground. It launched a website, www.kidzzbank.com, to educate children about the importance of saving money and investing. Later, the initiative was taken to underprivileged children in South India.
  31. 31. (2) ICICI Prudential Life Insurance recently launched a rural activation programme, called Pragati Ki Anokhi Paathshala (PKAP), to inform the parents residing in the rural areas of the country about how to plan their children's education better. Through the campaign, the insurance player seeks to inform its target consumers about its education insurance plans. (3) Dabur India ran a school activation campaign in 500 schools across 21 cities to look for Super Champs, promising to pay their entire school fees for a year. The primary objective of the activity is to create awareness and drive consumer engagement for Dabur Chyawanprash and Dabur Chyawan Junior, a newly launched malted drink. (4) HomeStop(of shoppers stop ), decided to launch its regular exchange offer scheme under which customers can bring in their old furniture (which in turn will be donated to charity by HomeStop) and avail of attractive discounts and offers on new furniture in return
  32. 32. (5) Most of the educational institutes like Career Launcher, Time and PT are holding informative workshops and free tests for students which give a direct interaction of these institutes with the target customer, and hence, a suitable platform to sell themselves. (6) Pepsi organized an inter-school cricket event for 425 schools across 14 cities which did wonders for the company by promoting the brand amongst the right target customer for almost no cost. (7) Another interesting BTL promotion was by NIKE, an athlete dressed up in Nike sportswear could be seen jogging on an elevated treadmill for the whole day on National Highway 8, Delhi. (8) Most of the pharmacy companies do BTL promotion by getting shelf-space through doctors to display their products or by giving away free calcium tablets again through doctors, knowing that for a patient a personal advise from a doctor would hold more value as compared to a commercial advertisement (9) Media companies like Hindustan Times are holding weekly events throughout the country in which companies can put up their stalls, display banners and posters, and arrange for some fun activities. (10) Ring-tones and music-videos on cell phones are helping the entertainment industry to promote a music video or a movie for dirt-cheap rate as compared to media promotion (11) The Dove Evolution Campaign (12)‘Igen’ – A cigarette brand was build through below the line marketing efforts. The brand of cigarette was promoted through organizing parties for the BPO employees on weekly basis and collecting their database and then making the cigarette available at their door steps, the exercise was continued for quite a few months and a strong database and customer base was developed for the brand among the BPO employees. (13)The tea brand from Hindustan Unilever (HUL), Lipton, is riding on its ‘Stay Sharp’ proposition. The brand has taken an online jigsaw activity on-ground in Delhi. The activity is being managed by Ogilvy Action, which had managed the on-ground promotions for the website earlier. The ‘Stay Sharp’ campaign conveys that Theanine (an ingredient present in Lipton Yellow Label tea) helps clear minds and stay sharp and focused. (14) (Example from the Non Traditional Marketing Workshop) The Scotch Brite Fountain
  33. 33. (15) The membership cards given by stores like Westside, Shoppers’ Stop, Lifestyle etc., which give a certain incentive on every purchase from the store. (16) Max New York Life (MNYL) Insurance launched a 'Wheel of Fortune' game in all Spencer's retail stores across Delhi to enhance its lead generation exercise (17) Hewlett Packard (HP) created 'Experience Zones' in airports to promote its newly launched Elite Books with corporates & executives (18) Tata Tea, in a campaign for encouraging people to vote, centred its communication round a website www.jaagore.com. The site was used to get voter registrations through a campaign that comprised a TV commercial, OOH and on-ground activation in colleges and offices. (19) GM's Chevrolet Spark organised a BTL activity 'Jeevan mein umang, Spark ke sang' to promote the newly priced Spark in small towns & cities. (20) CavinKare's Chic Shampoo too launched a school campaign 'Choo Lo Sitharon Ko' to educate school going girls. (21) In the media space, Sab TV, the comedy channel from MSM India, devised an interesting route to reach media planners and buyers during the launch of Bhootwala Serial, India's first horror comedy. Breaking the clutter, promoters dressed in scary ghostly costumes went across all agencies like Zenith Optimedia, Lodestar, Lintas Media Group, Starcom, Madison, Maxus, Mindshare and Mindshare Fulcrum. (23) Nokia's Take Back campaign, an e-waste recycling programme. As part of this initiative, Nokia will encourage people to dispose of mobile handsets in an ecologically friendly manner. For this Nokia has set up recycling bins across its priority dealers & care centres. (Contributed by 2011)
  34. 34. 16. Brand Equity A brand is a name or symbol used to identify the source of a product. When developing a new product, branding is an important decision. The brand can add significant value when it is well recognized and has positive associations in the mind of the consumer. This concept is referred to as brand equity. There are at least three perspectives from which to view brand equity:  Financial - One way to measure brand equity is to determine the price premium that a brand commands over a generic product. For example, if consumers are willing to pay $100 more for a branded television over the same unbranded television, this premium provides important information about the value of the brand. However, expenses such as promotional costs must be taken into account when using this method to measure brand equity.  Brand extensions - A successful brand can be used as a platform to launch related products. The benefits of brand extensions are the leveraging of existing brand awareness thus reducing advertising expenditures, and a lower risk from the perspective of the consumer. Furthermore, appropriate brand extensions can enhance the core brand. However, the value of brand extensions is more difficult to quantify than are direct financial measures of brand equity.  Consumer-based - A strong brand increases the consumer's attitude strength toward the product associated with the brand. Attitude strength is built by experience with a product. This importance of actual experience by the customer implies that trial samples are more effective than advertising in the early stages of building a strong brand. The consumer's awareness and associations lead to perceived quality, inferred attributes, and eventually, brand loyalty. Strong brand equity provides the following benefits:  Facilitates a more predictable income stream.  Increases cash flow by increasing market share, reducing promotional costs, and allowing premium pricing.  Brand equity is an asset that can be sold or leased. However, brand equity is not always positive in value. Some brands acquire a bad reputation that results in negative brand equity. Negative brand equity can be measured by surveys in which consumers indicate that a discount is needed to purchase the brand over a generic product.
  35. 35. Building and Managing Brand Equity In his 1989 paper, Managing Brand Equity, Peter H. Farquhar outlined the following three stages that are required in order to build a strong brand: 1. Introduction - introduce a quality product with the strategy of using the brand as a platform from which to launch future products. A positive evaluation by the consumer is important. 2. Elaboration - make the brand easy to remember and develop repeat usage. There should be accessible brand attitude, that is, the consumer should easily remember his or her positive evaluation of the brand. 3. Fortification - the brand should carry a consistent image over time to reinforce its place in the consumer's mind and develop a special relationship with the consumer. Brand extensions can further fortify the brand, but only with related products having a perceived fit in the mind of the consumer. Alternative Means to Brand Equity Building brand equity requires a significant effort, and some companies use alternative means of achieving the benefits of a strong brand. For example, brand equity can be borrowed by extending the brand name to a line of products in the same product category or even to other categories. In some cases, especially when there is a perceptual connection between the products, such extensions are successful. In other cases, the extensions are unsuccessful and can dilute the original brand equity. Brand equity also can be "bought" by licensing the use of a strong brand for a new product. As in line extensions by the same company, the success of brand licensing is not guaranteed and must be analyzed carefully for appropriateness. Managing Multi Brands Different companies have opted for different brand strategies for multiple products. These strategies are:  Single brand identity - a separate brand for each product. For example, in laundry detergents Procter & Gamble offers uniquely positioned brands such as Tide, Cheer, Bold, etc.  Umbrella - all products under the same brand. For example, Sony offers many different product categories under its brand.  Multi-brand categories - Different brands for different product categories. Campbell Soup Company uses Campbell's for soups, Pepperidge Farm for baked goods, and V8 for juices.
  36. 36.  Family of names - Different brands having a common name stem. Nestle uses Nescafe, Nesquik, and Nestea for beverages. Brand equity is an important factor in multi-product branding strategies. 17. Brand Rituals (10 examples) Brand ritual is the performance of an act by the consumers as defined by the brand (Owners). These days brand rituals are a common strategy adopted by marketers. Some rituals become a part of our behavior over time. Few examples are as follows: 1. Close up:- The HA-HA thing which we do by holding our palm in front of our mouth to check the fresh breath 2. Kitkat:- Push the chocolate out of the paper wrap. Pull your thumb across the lines between the chocolate bars. Break it. Unwrap and eat... 3. Pepsi My can:- The way they hold the can in the ads to ask the viewers to do the same... 4. Tequila Shots:- The trademark way of consuming tequila. 5. Bru Cappuccino:- Sip, Lick... Ummm..!! Denoted how to enjoy the cool drink and the coffee froth. 6. Wrigley's Chiklets:- Shake the box of chewing gums 2 make that chik-chik noise… 7. Boomer:- the bubble that everyone started making while chewing the gum…. 8. Corona Beer:- Consume the beer with a slice of lemon… 9. Horlicks:- Epang Opang Jhapang. Try and make a chocolate shake with Horlicks by using their freebie and this technique. 10. Fair & Lovely:- One of the ads showed the viewers to apply the cream on the face and massage it in the shape of eight. (Contributed by 2011) 18. Brand Rivalry (10 examples) 1. (Heinz)Complan vs (GSK)Horlicks Complan has never been an aggressive player compared to the market leader Horlicks . This explains the reason why such a powerful brand is languishing in a distant position of 15% market share compared to the 60 % share of Horlicks. While Horlicks has been breaking new grounds with a series of variants aiming at the entire family segment, Complan was lying low all these years. The major happening for this brand in 2008 was the launch of the new flavor Kesari Badam . In the promotional front, the brand was in a low key mode continuing with the extension of its earlier campaign focusing on EXTRA growth. Article: http://www.mouthshut.com/diary/fecjmqtqm/COMPLAN-vs-HORLICKS Ad: www.youtube.com/watch?v=LcbLBJSTtQg
  37. 37. http://www.youtube.com/watch?v=MbCjODnZCVk 2. (Nestle) Munch vs (Cadbury) Dairy Milk Fighting with advertisements is not new in the Indian consumer market. First we saw two cola companies making ads against each others, then came two hot beverage products doing this and now its the turn for the chocolates - Dairy Milk vs Nestle Munch. Article: http://vettyofficer.blogspot.com/2009/08/dairy-milk-vs-nestle-munch-ad-war.html http://themanmeetsabharwalblog.com/?tag=dairy-milk 3. (Coca Cola) Sprite vs (Pepsi) Mountain Dew Sprite came up with an ad hitting on mountain dew’s jingle. Ad: http://www.youtube.com/watch?v=QRIwkKF2cm8 4. Pepsi vs Coca Cola - Pepsi's 'Nothing Official About It' campaign in World Cup 96 after Coca Cola became the official sponsor. One of its effects was the stringent anti-ambush marketing laws that cricketers had to sign in 2002 5. Nestle Munch v/s Cadbury Dairy Milk: Cadbury as it always comes up with ads showing new reasons to celebrate, by showing in the retro style people celebrating their payment on the 1st day of month through Dairy Milk. Nestle Munch which is the biggest rival of dairy Milk hit it with an ad campaign showing that Munch can be eaten on any day & there needn't be any specific day for which it should wait. 6. Kotex v/s whisper: Whisper has the highest market share in the product segment & Kotex attacking the no. 1 brand came up with the ad campaign which showed, don't whisper be loud. This was to directly attack the Whisper Brand. 7. HUL v/s Eureka Forbes: Eureka Forbes making mockery of the Pureit Mascot, ie the guy in the yellow raincoat. There is a case filed by HUL regarding the same in the high court. Other rivalries are- Sony vs Nintendo AMD vs INTEL Huggies vs Pampers Energizer vs Duracell Mcdonalds vs Burger King USA CCD vs barista Ford vs GM BMW vs Mercedes Benz (Contributed by 2011) 19. Buyer Decision Process Research suggests that customers go through a five-stage decision-making process in any purchase. This is summarized in the diagram below:
  38. 38. This model is important for anyone making marketing decisions. It forces the marketer to consider the whole buying process rather than just the purchase decision (when it may be too late for a business to influence the choice!) The model implies that customers pass through all stages in every purchase. However, in more routine purchases, customers often skip or reverse some of the stages. For example, a student buying a favorite hamburger would recognize the need (hunger) and go right to the purchase decision, skipping information search and evaluation. However, the model is very useful when it comes to understanding any purchase that requires some thought and deliberation. The buying process starts with need recognition. At this stage, the buyer recognizes a problem or need (e.g. I am hungry, we need a new sofa, I have a headache) or responds to a marketing stimulus (e.g. you pass Starbucks and are attracted by the aroma of coffee and chocolate muffins). An “aroused” customer then needs to decide how much information (if any) is required. If the need is strong and there is a product or service that meets the need close to hand, then a purchase decision is likely to be made there and then. If not, then the process of information search begins. A customer can obtain information from several sources: Personal sources: family, friends, neighbors etc Commercial sources: advertising; salespeople; retailers; dealers; packaging; point-of-sale displays Public sources: newspapers, radio, television, consumer organizations; specialist magazines Experiential sources: handling, examining, using the product The usefulness and influence of these sources of information will vary by product and by customer. Research suggests that customers value and respect personal sources more than commercial sources (the influence of “word of mouth”). The challenge for the marketing team is to identify which information sources are most influential in their target markets. In the evaluation stage, the customer must choose between the alternative brands, products and services. How does the customer use the information obtained? An important determinant of the extent of evaluation is whether the customer feels “involved” in the product. By involvement, we mean the degree of perceived relevance and personal importance that accompanies the choice. Where a purchase is “highly involving”, the customer is likely to carry out extensive evaluation. High-involvement purchases include those involving high expenditure or personal risk – for example buying a house, a car or making investments. Low involvement purchases (e.g. buying a soft drink, choosing some breakfast cereals in the supermarket) have very simple evaluation processes. Why should a marketer need to understand the customer evaluation process? The answer lies in the kind of information that the marketing team needs to provide customers
  39. 39. in different buying situations. In high-involvement decisions, the marketer needs to provide a good deal of information about the positive consequences of buying. The sales force may need to stress the important attributes of the product, the advantages compared with the competition; and maybe even encourage “trial” or “sampling” of the product in the hope of securing the sale. Post-purchase evaluation - Cognitive Dissonance The final stage is the post-purchase evaluation of the decision. It is common for customers to experience concerns after making a purchase decision. This arises from a concept that is known as “cognitive dissonance”. The customer, having bought a product, may feel that an alternative would have been preferable. In these circumstances that customer will not repurchase immediately, but is likely to switch brands next time. To manage the post-purchase stage, it is the job of the marketing team to persuade the potential customer that the product will satisfy his or her needs. Then after having made a purchase, the customer should be encouraged that he or she has made the right decision. (Contributed by 2011) 20. Cause related marketing Cause marketing or cause-related marketing refers to a type of marketing involving the cooperative efforts of a "for profit" business and a non-profit organization for mutual benefit. The term is sometimes used more broadly and generally to refer to any type of marketing effort for social and other charitable causes, including in-house marketing efforts by non-profit organizations. Cause marketing differs from corporate giving (philanthropy) as the latter generally involves a specific donation that is tax deductible, while cause marketing is a marketing relationship generally not based on a donation. The creation of the term "cause-related marketing" is attributed to American Express, and it was coined to describe efforts to support locally based charitable causes in a way that also promoted business. The term was then used to describe the marketing campaign led by American Express in 1983 for the Statue of Liberty Restoration project.[6] A penny for each use of the American Express card, and a dollar for each new card issued was given to the Statue of Liberty renovation program. Over a four-month period, $2 million was raised for Lady Liberty, transaction activity jumped 28 percent and the concept that doing good was good for business, was born. (Wikipedia) Attracting and Retaining Customers: Companies that have engaged in Cause –Related Marketing report that those efforts help attract and build long- term relationships with customer. For Example, affinity credit cards, in which a nonprofit organization benefits each time a consumer, uses the card to make a purchase, help credit card companies develop longterm relationships with consumers. • Market Differentiation: For many companies, Cause- Related Marketing has helped them to create an alternative and distinctive approach to brand advertising. CRM can help companies distinguish themselves from their peers by offering the consumer the opportunity to contribute to something more then the company’s bottom line. National and International brands can better identify with their local markets by linking themselves with community organizations, or with regional or nongovernmental organizations.
  40. 40. • Out reach to Niche Markets: Partnering with nonprofit organizations can help a company to connect with specific demographic or geographic markets. For Example, Ford Motor Company successfully positioned itself among a formerly disengaged target market – Women. In addition to its Substantial financial and in – kind donations to Race events, The Ford Division of the Ford Motor Company has issued thousands of public service announcements in an effort to both communicate a critical health message to women and to enfold them into its brand identity. (Cause Related Marketing A Conceptual Paradigm) Examples in Indian context: 1. Tata Salt, the pioneers and undisputed leaders in the packaged and iodized Salt Category, reiterated its commitment to the cause of educating underprivileged children and announced its Desh Ko Arpan Programme. The Desh Ko Arpan Programme, Tata Chemicals Limited Contributes 10 paise for every kilo of Tata Salt, sold during specific periods, to the education of underprivileged children. Child Relief and You (CRY) has been chosen as partners. The money raised was Rs 33 lakhs in a period of one month. The money raised will support six child – development initiatives across the country, namely:  Lok Shakti Vikas Sansthan, Barmer, Rajasthan  Jabala, Kolkata, West Bengal  The Good Shepherd Society, Chennai, Tamil Nadu  Gramya, Nalgonda, Andhra Pradesh  The community Services Guild, Namakkal, Tamilnadu  Rachana Society for Social Reconstruction, Pune Maharashtra. 2. P&G’s Shikha campaign Every time you choose to buy a large pack of Tide, Ariel, Pantene, H&S, Rejoice, Vicks VapoRub, Whisper, Gillette Mach 3 Turbo, Gillette series, Oral B, Duracell or Pampers, P&G promises to contribute are helping thousands of underprivileged children across India to access their right to education. Minimum contribution from P&G to Shiksha, irrespective of sales will be Rs. 1 crore. Shiksha enabled the education of 33052 children in 435 communities in 2006 More info: 1. http://www.brandchannel.com/papers_review.asp?sp_id=583 2. http://dspace.iimk.ac.in/bitstream/2259/367/1/215-218.pdf 3. http://www.pg-india.com/hp/shiksha07.pdf (Contributed by Nupur Jain - 2012)
  41. 41. 21. Customer relationship management  Main aim: customer retention and customer satisfaction Example: We have to make list of the customers, these serve as the target lists. Strategy should be:  Save money by not marketing to those who are less likely to respond.  Make money by making relevant offers to those who need, or want or can afford or products.  We build relationship with our best customers, resulting in higher loyalty, retention, referral, spending rate and profits It is a process or methodology used to learn more about customers' needs and behaviours in order to develop stronger relationships with them. CRM helps businesses use technology and human resources to gain insight into the behaviour of customers and the value of those customers. According to industry view, CRM consists of:  Helping an enterprise to enable its marketing departments to identify and target their best customers, manage marketing campaigns and generate quality leads for the sales team.
  42. 42.  Assisting the organization to improve telesales, account, and sales management by optimizing information shared by multiple employees, and streamlining existing processes (for example, taking orders using mobile devices)  Allowing the formation of individualized relationships with customers, with the aim of improving customer satisfaction and maximizing profits; identifying the most profitable customers and providing them the highest level of service.  Providing employees with the information and processes necessary to know their customers, understand and identify customer needs and effectively build relationships between the company, its customer base, and distribution partners. (Contributed by Venkat Sujit Samrat – 2012; 2011) 22. Customer relationship Marketing Customer Relationship Marketing (Basics)  Focuses on retaining existing Customers to create long-term value to the firm  DOES NOT FOCUS on targeting new customers/acquisition of new clients  It costs four-to-six times more to convert a customer than it does to retain one  Directly linked to enhancing the levels of Customer Satisfaction  It can be applied when there are competitive product alternatives for customers to choose from and also when there is an ongoing & periodic desire for the product or service.  Primary Objectives: o Reduce Customer Turn-over/ Increase Customer Retention o Increase Customer Loyalty o Increase Customer Satisfaction o Increasing switching barriers (especially when there are many competitors offering similar products/services)  It relies upon the communication and acquisition of consumer requirements solely from existing customers in a mutually beneficial exchange so as to create value.  Usually facilitated by Customer Relationship Management systems (software systems that facilitate tracking and analyzing customer's preferences purchasing behavior, activities, tastes, likes, dislikes, and complaints, etc.)
  43. 43.  It is empirically proven that a 5% improvement in customer retention can cause an increase in profitability of between 25 and 85 percent.  One of the advantages of retaining customers is that these long-term customers may initiate free word of mouth promotions and referrals, which is one of the most cost- effective campaigns that a product can get.  Customers that stay with you tend to be satisfied with the relationship and are less likely to switch to competitors, making it difficult for competitors to enter the market or gain market share.  Customer retention efforts involve considerations such as the following: 1. Customer valuation - describes how to value customers and categorize them according to their financial and strategic value so that companies can decide where to invest for deeper relationships and which relationships need to be served differently or even terminated. 2. Customer retention measurement - This is simply the percentage of customers at the beginning of the year that are still customers by the end of the year. In accordance with this statistic, an increase in retention rate from 80% to 90% is associated with a doubling of the average life of a customer relationship from 5 to 10 years. This ratio can be used to make comparisons between products, between market segments, and over time. 3. Determine reasons for defection - Look for the root causes, not mere symptoms. This involves probing for details when talking to former customers. Other techniques include the analysis of customers' complaints and competitive benchmarking. 4. Develop and implement a corrective plan - This could involve actions to improve employee practices, using benchmarking to determine best corrective practices, visible endorsement of top management, adjustments to the company's reward and recognition systems, and the use of "recovery teams" to eliminate the causes of defections (Contributed 2011) 23. Different Pricing Strategies PRICING STRATEGIES The pricing strategy for a new product should be developed so that the desired impact on the market is achieved while the emergence of competition is discouraged. Pricing strategies are as many as there are market scenarios. Thus, it is best to start defining the most commonly used strategies, illustrated with examples where they can be found. 1. Penetration pricing: Price set to ‘penetrate the market’
  44. 44.  ‘Low’ price to secure high volumes  Typical in mass market products – chocolate bars, food stuffs, household goods, etc.  Suitable for products with long anticipated life cycles  May be useful if launching into a new market Eg. Reliance mobile 2. Market Skimming :  High price, Low volumes  Skim the profit from the market  Suitable for products that have short life cycles or which will face competition at some point in the future (e.g. after a patent runs out) Examples: Playstation, DVDs, etc. 1. Value pricing:  Price set in accordance with customer perceptions about the value of the product/service  Eg. bottled water like Bisleri, Skin care products like Olay 2. Loss leader:  Goods/services deliberately sold below cost to encourage sales elsewhere  Typical in supermarkets, e.g. at Christmas, selling bottles of gin at £3 in the hope that people will be attracted to the store and buy other things  Purchases of other items more than covers ‘loss’ on item sold  Example: ‘Free’ mobile phone when taking on contract package, modem along with internet connection. 3. Psychology pricing:  Used to play on consumer perceptions  Classic example – Rs 999 instead of Rs 1000!  Links with value pricing – high value goods priced according to what consumers THINK should be the price  Example: dollar store (everything is priced at Rs99) 4. Going Rate (Price Leadership):  In case of price leader, rivals have difficulty in competing on price  too high: they lose market share,  too low: the price leader would match price and force smaller rival out of market  May follow pricing leads of rivals especially where those rivals have a clear dominance of market share  Where competition is limited, ‘going rate’ pricing may be applicable  eg banks, petrol, supermarkets, electrical goods – find very similar prices in all outlets 5. Tender Pricing:  Many contracts awarded on a tender basis  Firm (or firms) submit their price for carrying out the work  Purchaser then chooses which represents best value  Mostly done in secret Eg. Defence vehicle contracts, Delhi Metro Rail project 6. Price Discrimination:  Charging a different price for the same good/service in different markets
  45. 45.  Requires each market to be impenetrable  Requires different price elasticity of demand in each market  Eg: Airlines, dell (online & store prices diff for the same model) 7. Destroyer/Predatory Pricing:  Deliberate price cutting or offer of ‘free gifts/products’ to force rivals (normally smaller and weaker) out of business or prevent new entrants  Anti-competitive and illegal if it can be proved  Eg: Rs 500 mobile phone by Reliance 8. Absorption/Full Cost Pricing:  Full Cost Pricing – attempting to set price to cover both fixed and variable costs  Absorption Cost Pricing – Price set to ‘absorb’ some of the fixed costs of production Eg. Autocomponents ( fixed cost of tools+ variable material cost) 9. Marginal Cost Pricing:  Marginal cost – the cost of producing ONE extra or ONE fewer item of production  MC pricing – allows flexibility  Particularly relevant in transport where fixed costs may be relatively high  Allows variable pricing structure – e.g. on a flight from London to New York – providing the cost of the extra passenger is covered, the price could be varied a good deal to attract customers and fill the aircraft 10. Contribution Pricing:  Contribution = Selling Price – Variable (direct costs)  Prices set to ensure coverage of variable costs and a ‘contribution’ to the fixed costs  Similar in principle to marginal cost pricing  Break-even analysis might be useful in such circumstances 11. Target Pricing:  Setting price to ‘target’ a specified profit level  Estimates of the cost and potential revenue at different prices, and thus the break-even have to be made, to determine the mark-up  Mark-up = Profit/Cost x 100 Eg. Real Estate 12. Cost-Plus Pricing:  Calculation of the average cost (AC) plus a mark up  AC = Total Cost/Output (Contributed by 2011) 24. Positioning & Differentiation Positioning: Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market. A good brand positioning strategy will lead to clarifying the brands essence, the goals it helps consumers achieve and it does it in a unique
  46. 46. way. Positioning requires the marketer to clearly communicate the similarities and differences between brands. Determining a positioning strategy requires establishing a ‘frame of reference’ by identifying the target market and the competition and identifying the ideal points of parity and points of difference brand associations. Frame of reference is the framework used by the consumers to make sense of the product in question. Humans understand and remember new things by linking it to existing (known) objects. Frame of reference is that evaluative criterion which is used by consumers to make a better understanding of the product/services. Frame of reference also explains the context in which consumers tend to evaluate /place the product. For example, the frame of reference used to evaluate Frooti is that it is a mango drink. Coca Cola = Cola, Ace = Mini Truck, Dettol = Antiseptic etc. If Frooti launches an Apple Drink, the consumers will find it difficult to accept the product since it is out of the frame of reference used to evaluate/understand Frooti. Since consumers use a frame of reference in understanding a product, the concept has a very important place in the positioning of the product. Once the frame of reference is identified, the marketer will position the product in line with the frame of reference. In case of products that lack a frame of reference, marketers should create a frame of reference for the consumers. The concept of Points of Parity helps marketers to place the product in line with the consumer's frame of reference. Points of parity are those associations that are not necessarily unique to the brand but may in fact be shared with other brands. There are two forms of Points of Parity - Category POP and Competitive POP. Category POPs are those associations that consumers view as being necessary to be a legitimate and credible offering with a certain product or service category. Competitive POP are those associations designed to negate competitor's Points of Parity. For example, hand sanitizer is a new category and consumers are not aware of such a category. So when a brand is being launched in such a new category, brand managers should first establish a category POP. For that, the consumers should be made aware of such a category. Right now marketers are using infomercials to educate the consumers about hand sanitizer, its advantages and uses. Once the frame of reference is established, then the brand should be placed in the category. Usually marketers use packaging, product form and labels to establish category points of parity. Competitor POP is where marketers tell the consumers that their brand have all the properties/qualities of their competing brands. For example Lifebuoy soap will establish competitive POP with Dettol soap by claiming that it has germ killing qualities and vice versa. These strategies will fail if the marketers did not understand the frame of reference used by consumers in evaluating the product. This lack of understanding can lead to positioning failures that eventually lead to product failure. Some examples of positioning: Dominoes – Hot pizza delivered within 30 mins Monaco smart chips – healthy snack Lays - convenient snack, Bingo - different tastes Aliva - health + taste Hippo is being positioned as a hunger- killer. The brand wants to be a guilt-free snack for hunger moments. Interesting ad positioning hippo
  47. 47. http://www.youtube.com/watch?v=6ku0HkfGsbs&feature=player_embedded Differentiation The market is flooded with similar products and offerings which has created a huge clutter of brands and products. It is essential for a marketer to be able to differentiate his product to break through the clutter. Differentiation based on product features has become a difficult task with competitors taking no time in copying /adopting that feature. Differentiations based on incremental product improvements /features have become difficult to develop and sustain in the market. Methods of differentiation: 1) Invest in R&D India is an R&D and product development hub for most of the MNCs but seldom Indian marketers were able to create breakthrough products for the Indian market. Tata Nano has shown the world what Indian minds can do when inspired. The market is moving in a direction where only those brands will succeed who can innovate. 2) Protect the Differentiation An important determinant of a successful differentiation is the brand’s ability to protect the differentiation. Smart brands use ingredient branding to protect their key differentiators. Ingredient branding is where a particular product feature or an ingredient is branded by the company. There are two kinds of ingredient brands. a) Where the ingredient is owned by another company. Intel is a pioneer in ingredient branding. Intel has built ingredient brands like Pentium, Celeron and Atom etc. b) Where the feature/ingredient is owned by the company itself. Bajaj has a powerful ingredient brand DTSI (which is also a patented technology) which it now uses for all of its two wheeler brands. 3) Connect to a Relevant Need Creating a sustainable differentiation is possible only when brands become customer focused. When products become standardized, it is important for marketers to create differentiation focusing on consumer needs.
  48. 48. ‘Brand laddering’ is a strategy that can be used by marketers to create differentiation on a need rather than on a product feature (attribute to value). Raymond is a brand that has created a space for itself by effectively laddering up to a customer need (Complete Man). The benefit of such a strategy is that competitors will find it difficult to copy the differentiation since it is based on an intangible attribute. The brand has created a unique powerful image which is sustainable over time. 4) Long Term Vision through Brand Charter It is important for marketers to create a brand charter which will spell out the long term vision for the brands, its differentiation and positioning platforms, guidelines and strategies. Such a brand charter will guide the future brand managers to create tactics which are in line with the overall brand vision. If a brand chose to create intangible differentiation opportunities, there has to be a consistency in the brand’s positioning and differentiation strategies. Brand Charter will help bring consistency which will in turn facilitate create a sustainable differentiation. Types of Differentiation: Personnel Differentiation: By using better trained employees. Singapore airlines are well regarded because of its flight attendants. Channel Differentiation: By efficiently and effectively designing distribution channels coverage, expertise and performance. Eureka Forbes water purifiers and vacuum cleaners gained popularity due to their differentiated positioning through their direct to home channel. Examples: The Himalaya drug company differentiates itself by using ayurvedic ingredients. Product Positioning: - In marketing, positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. It is the 'relative competitive comparison' their product occupies in a given market as perceived by the target market. Positioning means determining and communicating the central benefit of the product in the minds of target buyers. For example, a car manufacturer might target buyers for whom safety is a major concern. The company "positions" its cars as the safest vehicles that customers can buy. Positioning starts with a product. A piece of merchandise, a service, a company, an institution, or even a person. But positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect. Brands usually position themselves using certain parameters. These parameters highlight the most relevant features of its product and the image, the brands wishes to portray to its consumers. How to write a positioning statement:- For [target end user]

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