Unit III


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Unit III

  1. 1. Product: A product is anything which is capable of satisfying customer needs. When a customer looks at what the customer is buying, it is essentially a service whether the means is tangible or intangible. Product Mix: This is the total set of brands marketed by a company. The width of product mix is the number of product lines that a company offers. Companies increase the width of their product mix to spread their risk across many product lines rather than depend on one or a few of them. They also widen their product mix to capitalize on their established brand equity. Product line: This is a group of product items or brands that are closely related in terms of their functions and benefits they provide. Managing brands and product lines are key elements of the product strategy. Product Mix Modifications: A company’s product mix is never static. Customers’ preferences change, new customer segments emerge, and company’s competencies and priorities change. All these changes warrant a change in a company’s product mix. CONTD…….
  2. 2. Product Mix expansion: Product mix expansion is achieved by increasing the depth within a particular product line, i.e. new brands or variants of existing brands are added to the product line and/or by increasing the number of product lines. Line Extension: When a company adds a similar item to an existing product line with the same brand name it is called line extension. A company resorts to line extension to appeal to more market segments by offering a wide range of options of flavours, colour, size, etc. for a particular product. Mix Extension: New product lines are added to the company’s present assortment. The new lines may be related or not related to the current product. The company can use one of the existing brand names or may give an entirely new name to the new product lines. When the company uses one of its existing brands to offer a new product line, it is called brand extension. Trading up: A company adds a higher priced product to a product line to add prestige to the line and attract a broader market. The company hopes that the new product prestige will help the sale of lower priced products. CONTD…….
  3. 3. Trading Down: A company adds a lower priced product to its product line. The company wants to attract customers who cannot afford the original lower priced products or who find the current products too expensive. Product mix Contractions: Product mix contraction is achieved either by eliminating an entire product line or eliminating a few product items or brands from within a line. The idea is to weed out low-profit and unprofitable product items or product lines and earn higher profits from fewer products. Repositioning: This involves changing customers’ perception of a brand. It involves changing the product’s attributes and communication to the customer. Product Modification: Product modification will involve changing the quality levels of the product item to make it more appropriate for the target market, functional modifications to reflect changing customer requirements and to incorporate latest technologies, and style modification to appeal to customers’ emerging aesthetic concerns. Planned obsolescence: This is the practice of modifying products so that those that have already been sold become obsolete before they actually need replacement. The modified product is substantially different and better than the earlier versions, and customers who possess the earlier versions feel disadvantaged or unfashionable.
  4. 4. <ul><li>Managing Product Lines and Brands over time – Product Life Cycle (PLC): </li></ul><ul><li>A product is believed to go through definite life stages. The different stages in a product life cycle are: </li></ul><ul><li>1. Market introduction stage: </li></ul><ul><li>costs are high </li></ul><ul><li>slow sales volumes to start </li></ul><ul><li>little or no competition - competitive manufacturers watch for acceptance/segment growth losses </li></ul><ul><li>demand has to be created </li></ul><ul><li>customers have to be prompted to try the product </li></ul><ul><li>makes no money at this stage </li></ul><ul><li>2. Growth stage: </li></ul><ul><li>costs reduced due to economies of scale </li></ul><ul><li>sales volume increases significantly </li></ul><ul><li>profitability begins to rise </li></ul><ul><li>public awareness increases </li></ul><ul><li>competition begins to increase with a few new players in establishing market </li></ul><ul><li>increased competition leads to price decreases </li></ul>
  5. 5. <ul><li>3. Maturity stage: </li></ul><ul><li>Costs are lowered as a result of production volumes increasing and experience curve effects </li></ul><ul><li>sales volume peaks and market saturation is reached </li></ul><ul><li>increase in competitors entering the market </li></ul><ul><li>prices tend to drop due to the proliferation of competing products </li></ul><ul><li>brand differentiation and feature diversification is emphasized to maintain or increase market share </li></ul><ul><li>Industrial profits go down </li></ul><ul><li>4. Saturation and decline stage </li></ul><ul><li>costs become counter-optimal </li></ul><ul><li>sales volume decline or stabilize </li></ul><ul><li>prices, profitability diminish </li></ul><ul><li>profit becomes more a challenge of production/distribution efficiency than increased sales </li></ul>
  6. 6. Stages of Product Life Cycle (PLC):
  7. 7. MEDIA AND ENTERTAINMENT <ul><li>According to a report by FICCI and Pricewaterhouse Coopers, the Indian entertainment and media industry is poised to become INR one trillion (INR 100,000 crore) industry by 2011. The industry is estimated to be worth INR 43,700 crore currently . </li></ul><ul><li>Television Industry </li></ul><ul><li>The television industry recorded a growth of 18 per cent over the previous year and is estimated at Rs. 226 billion in 2007. </li></ul>
  8. 8. About MTV <ul><li>MTV Networks is Viacom Inc. brand. Viacom 18 Media Pvt. Ltd. is a 50/50 joint venture operation in India between Viacom Inc. comprising brands like BET, MTV Networks and Paramount Pictures and the Network18 Group comprising brands like CNBC TV18, CNBC Awaaz, Newswire18, moneycontrol.com, CNN-IBN, IBN 7, Homeshop18 etc </li></ul><ul><li>Viacom 18 Media Pvt. Ltd. includes the vibrant youth brand - MTV, the fastest growing kids channel - Nick, India's only International Music & Lifestyle channel - Vh1, Studio18, a new-age motion picture brand that produces, acquires and distributes Hindi films and also launched the Hindi General Entertainment channel – COLORS. </li></ul>
  9. 9. MTV – Music Television <ul><li>MTV was launched in 1996 and now its India's leading multimedia youth platform and a part of Viacom18 </li></ul><ul><li>Product : offering them an exciting mix of music and non-music programming (Bollywood, adventure, music, humor, technology, food, fashion and style), and www.mtvindia.com online portal </li></ul><ul><li>Known for its unique properties (MTV Style Awards, MTV Youth Icon and MTV Roadies among others), the channel has today become a preferred destination for advertisers to reach out to Indian youth. </li></ul><ul><li>Place : MTV India today reaches out to over 30 million households in India. Globally, MTV reaches out to over 500 million households across 170 territories.  </li></ul><ul><li>Price : Free to air , earning through advertisements and endorsements, Online portal etc </li></ul><ul><li>Promotion : Online E- marketing, Through all channel partners, with their parent brand, Holding, Multiplex etc </li></ul>
  10. 10. MTV – Music Television <ul><li>Online Audiences : With over 585,000 hyperactive users www.mtvindia.com is the popular youth online hangout. </li></ul><ul><li>Segmentation : caters to the interests and passions of 15-34 year olds </li></ul>
  11. 11. About the show: MTV Roadies <ul><li>Roadies is a reality show where you’ll get to test your brawn and wits, until there are none left. The rules of the game are simple – there are NO rules. A group of Roadies start the journey together but only one will finish it. The journey is full of arduous tasks and friends you wish you never met. </li></ul><ul><li>Host: VJ Rannvijay Tasks to survive on Roadies: Money task Immunity task Advantage task Bike task The meanest part of the show -‘Vote outs’. Every episode, one or more Roadies get voted out. This leads to a lot of drama, politics, strategy, etc. as Roadies team up and figure out who to vote against, who is voting against whom and who are expected to vote against them. </li></ul>
  12. 12. The BCG matrix product portfolio method <ul><li>Where you feel we should keep MTV roadies from the portfolio of MTV shows </li></ul>
  13. 13. Porter Five Forces Analysis <ul><li>Industry Competitors : Bindass, Colors, V Tv, 9xM, etc </li></ul><ul><li>Suppliers : Vjs, Hosts, Archies Gallery </li></ul><ul><li>Buyers : Viewers, Hero Honda, Idea, Airtel, Archies </li></ul><ul><li>Substitutes : Internet, Newspapers, Radio, Magazines </li></ul><ul><li>Industry Competitors : Bindass, Colors, V Tv, 9xM, etc </li></ul><ul><li>Potential Entrants : Other entertainment channels News Channels, Cartoon Network, Action Movie Channels </li></ul>
  14. 14. Marketing strategy of Roadies 6.0 <ul><li>Aditya Swamy, vice-president, marketing, MTV India </li></ul><ul><li>Spearheading this campaign was Orkut (voted by MTV as the Youth Icon for 2008) </li></ul><ul><li>Count of members on both these sites together has surpassed two lakhs </li></ul><ul><li>The next step was to introduce the Roadies Battleground </li></ul><ul><li>Through this Orkut application, the idea was to not only introduce a new twist in the scheme of things but to also generate word-of mouth publicity among youth. </li></ul><ul><li>Added to this effort were other things such as Orkut themes, initiating discussions, blogs etc. MTV also tied up with Zapak to introduce micro gaming sites. Another major way to spread the buzz was by uploading viral videos. Behind-the-camera action, uncut scenes, cheat codes etc were made available on social networking sites to keep the youth involved with the show </li></ul>
  15. 15. IDEA Mobile Roadie Challenge <ul><li>Pradeep Shrivastava, chief marketing officer, IDEA Cellular </li></ul><ul><li>IDEA Mobile Roadie Challenge' is a VAS contest devised on the lines of MTV Roadies, and is hosted in the voice of Raghu Ram </li></ul><ul><li>The IDEA subscriber who walks away with the title of 'Mobile Roadie' would also get a cash prize of Rs. 1 Lac, while 9 other finalists would win a cash prize of Rs. 5,000 each. </li></ul><ul><li>IDEA subscribers now have an opportunity to live the Roadies' experience, virtually. The mobile version of the game offers interesting tasks, which are similar to the tasks given to the Roadies' contestants on the TV show </li></ul><ul><li>Just 49 rupees is the subscription fee for one month </li></ul>
  16. 16. Marketing Strategy <ul><li>Hierarchy of goals and objectives </li></ul><ul><li>Porter’s Economic Theory of Profits </li></ul><ul><ul><li>Barriers to Entry </li></ul></ul><ul><ul><li>Competition </li></ul></ul><ul><ul><li>Substitutes </li></ul></ul><ul><ul><li>Customers </li></ul></ul><ul><ul><li>Suppliers </li></ul></ul>
  17. 17. Marketing Strategy Contd… <ul><li>Generic Marketing Strategies </li></ul><ul><ul><li>Cost Leadership </li></ul></ul><ul><ul><ul><li>Lower costs of production and distribution </li></ul></ul></ul><ul><ul><li>Differentiation </li></ul></ul><ul><ul><ul><li>Unique product or brand </li></ul></ul></ul><ul><ul><li>Focus </li></ul></ul><ul><ul><ul><li>Focus on customer needs in a few segments </li></ul></ul></ul>
  18. 18. Marketing Strategy Contd… <ul><li>What business are you in? </li></ul><ul><li>Statement of marketing strategy </li></ul><ul><li>Mission statement </li></ul><ul><li>Indicates product, market scope </li></ul><ul><li>Shows growth factor </li></ul><ul><li>Shows differential advantage </li></ul><ul><li>Shows management orientation </li></ul>
  19. 19. <ul><li>General Electric Market Attractiveness – Competitive position Matrix. </li></ul><ul><li>Market Attractiveness Criteria: Instead of market growth alone, a range of criteria are used such as market size, strength of competition, market growth rate, profit potential, social, political and legal factors. </li></ul><ul><li>Competitive Strength Criteria: Instead of using only market share, a no. of factors are used such as potential to develop a differential advantage, opportunities to develop cost advantages, reputation, distribution capabilities. </li></ul><ul><li>Weighing the Criteria: Management decides as to which criteria are applicable for their products. Management would agree on a weighing criteria for each set of criteria. Then each factor is scored out of 10 to reflect how each product rates on that factor. Each score is multiplied by the factor weight and summed to obtain overall market attractiveness and competitive strength scores for each product. </li></ul>Product Mix Strategies
  20. 20. <ul><li>Product Market Growth Strategies </li></ul><ul><li>Ansoff’s Matrix </li></ul>Market Penetration (increase usage) Markets Products Old Old New New Product Development (new uses) Market Development (new users) Diversification (new users, new uses)
  21. 21. <ul><li>Boston Consulting Group Strategy </li></ul><ul><ul><li>Relative Market Share </li></ul></ul><ul><ul><li>Market Growth Rate </li></ul></ul><ul><ul><li>Problems with BCG Approach </li></ul></ul><ul><ul><ul><li>Difficult to estimate relative market share in rapidly growing markets </li></ul></ul></ul>
  22. 22. <ul><li>BCG Matrix </li></ul>Stars Some cash use Future cash cow Cash Cows Generate cash for ?, Stars Dogs Low or no cash use When to divest ? High cash use ? Is to build or not Relative Market Share 10x 1.5x .1x (log scale) Market Growth Rate 22% 10% 0%
  23. 23. <ul><li>Market Leader Strategies </li></ul><ul><ul><li>Increase Size of Total Market </li></ul></ul><ul><ul><ul><li>Product-Market Growth Strategies </li></ul></ul></ul><ul><ul><li>Protect Market Share </li></ul></ul><ul><ul><ul><li>Fortification </li></ul></ul></ul><ul><ul><ul><ul><li>Assortment of brands, sizes </li></ul></ul></ul></ul><ul><ul><ul><li>Innovation </li></ul></ul></ul><ul><ul><ul><ul><li>Best defense is a good offense </li></ul></ul></ul></ul><ul><ul><ul><li>Counteroffensive </li></ul></ul></ul>