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  1. 1. Marketing concepts (focus on FMCG products )
  2. 2. Agenda <ul><li>Overall concepts of marketing </li></ul><ul><li>Marketing mix concepts </li></ul><ul><ul><li>Marketing mix -1 product </li></ul></ul><ul><ul><li>Marketing mix -2 price </li></ul></ul><ul><ul><li>Marketing mix -3 promotion </li></ul></ul><ul><ul><li>Marketing mix -4 place </li></ul></ul><ul><li>BEP concept ( Break even ) </li></ul><ul><li>Case study brief 10 minutes </li></ul><ul><li>Case study clarifications / assumptions – 15 minutes </li></ul><ul><li>Case study analysis discussions </li></ul><ul><ul><li>Team 1 presentation </li></ul></ul><ul><ul><li>Team 2 </li></ul></ul><ul><ul><li>Team 3 </li></ul></ul><ul><ul><li>Team 4 </li></ul></ul><ul><li>Debate and discussions </li></ul><ul><li>Final discussions and possible solutions </li></ul>
  3. 3. Strategic marketing planning <ul><li>What is the organization’s main activity? How will it reach its goals? </li></ul>The Marketing Plan The process of anticipating future events and determining strategies to achieve organizational objectives in the future.
  4. 4. Why Write a Marketing Plan? <ul><li>Provides a basis for comparison of actual and expected performance </li></ul><ul><li>Provides clearly stated activities to work toward common goals </li></ul><ul><li>Serves as a reference for the success of future activities </li></ul>Marketing Plan
  5. 5. Marketing planning process Market analysis Consumer analysis Start Distribution Channel Competitor analysis Evaluate the economics Develop marketing Mix Go back and revise
  6. 6. Steps to achieve objective Marketing Strategy Product Promotion Distribution Price Marketing Mix Objective Comp / market Analysis Situation or SWOT Analysis Target Market Strategy Implementation Evaluation Control
  7. 7. Marketing Objectives <ul><li>Realistic </li></ul><ul><li>Measurable </li></ul><ul><li>Time specific </li></ul><ul><li>Consistent with Organization’s Priorities </li></ul>Marketing Objectives Must Be: “ Our objective is to increase market share by 40% and to obtain customer satisfaction ratings of at least 90% in 2001 .”
  8. 8. Marketing Plan Objectives <ul><li>Communicate marketing management philosophies </li></ul><ul><li>Provide direction </li></ul><ul><li>Serve as motivators </li></ul><ul><li>Clarify thinking </li></ul><ul><li>Provide basis for control </li></ul>
  9. 9. SWOT Analysis Identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T)
  10. 10. SWOT Analysis ©South-Western College Publishing S W O T Things the company does well. Things the company does not do well. Conditions in the external environment that favor strengths. Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness. Internal External
  11. 11. SWOT Analysis <ul><li>Production Costs </li></ul><ul><li>Marketing Skills </li></ul><ul><li>Employee Capabilities </li></ul><ul><li>Financial Resources </li></ul><ul><li>Available Technology </li></ul><ul><li>Company/Brand Image </li></ul>Strengths and Weaknesses INTERNAL
  12. 12. SWOT Analysis Opportunities and Threats EXTERNAL <ul><li>Social </li></ul><ul><li>Demographic </li></ul><ul><li>Economic </li></ul><ul><li>Technological </li></ul><ul><li>Political/Legal </li></ul><ul><li>Competitive </li></ul>
  13. 13. Environmental Scanning Collection and interpretation of information about forces, events and relationships in the external environment that may affect the future of the organization or the marketing plan implementation.
  14. 14. Strategic Windows Market Penetration Market Development Product Development Diversification Increase market share among existing customers Attract new customers to existing products Introduce new products into new markets Create new products for present markets
  15. 15. Strategic Alternatives Market Penetration Increase market share among existing customers. Market Development Attract new customers to existing products Diversification Introduce new products into new markets. Product Development Create new products for present markets
  16. 16. Strategic Opportunity Matrix Present Product New Product New Market Market Penetration Market Development Product Development Diversification Present Market
  17. 17. Selecting a Strategic Alternative Common Tools Philosophy Market Share Profitability Goals Portfolio Matrix $
  18. 18. BCG Portfolio Matrix High growth Market leaders Require cash Low growth High market share High cash flow Low growth Low market share Minimal cash flow High growth Low market share Need cash Poor profit margins $ 6 MARKET SHARE DOMINANCE HIGH LOW MARKET GROWTH RATE LOW HIGH
  19. 19. Portfolio Matrix Eg Laptop Computer (STAR) Palmtop (PROBLEM CHILD) Now bundled with mobiles Personal Computer (CASH COW) Mainframe Computer (DOG) MARKET GROWTH RATE LOW HIGH MARKET SHARE DOMINANCE HIGH LOW
  20. 20. Strategies for Resource Allocation Build Hold Harvest Divest Provide financial resources if SBU (Problem Child) has potential to be a Star. Preserve market share if SBU is a successful Cash Cow. Use cash flow for other SBUs. Increase short-term cash return. Appropriate for all SBUs except Stars. Get rid of SBUs with low shares in low-growth markets.
  21. 21. Target Market Strategy <ul><li>Segment the market based on groups with similar characteristics </li></ul><ul><li>Analyze the market based on attractiveness of market segments </li></ul><ul><li>Select one or more target markets </li></ul>
  22. 22. Marketing Mix: The “Four Ps” Price Promotion Place Product
  23. 23. Product Strategies Product <ul><li>The starting point of the “4 Ps” </li></ul><ul><li>Includes physical unit, package, warranty, service, brand, image, and value </li></ul>
  24. 24. Distribution (Place) Strategies Place <ul><li>Product availability where and when customers want them. </li></ul><ul><li>Involves all activities from raw materials to finished products </li></ul>
  25. 25. Promotion Strategies Promotion <ul><li>Role is to bring about exchanges with target markets </li></ul><ul><li>Includes integration of personal selling, advertising, sales promotion, and public relations </li></ul>
  26. 26. Pricing Strategies Price <ul><li>The most flexible of the “4 Ps” </li></ul><ul><li>Price X Units Sold = Total Revenue </li></ul>
  27. 27. Learning Objective Explain why implementation, evaluation, and control of the marketing plan are necessary.
  28. 28. Following Up the Marketing Plan <ul><li>Implementation </li></ul><ul><li>Evaluation </li></ul><ul><li>Control </li></ul><ul><ul><li>Marketing Audit </li></ul></ul><ul><ul><ul><li>Comprehensive </li></ul></ul></ul><ul><ul><ul><li>Systematic </li></ul></ul></ul><ul><ul><ul><li>Independent </li></ul></ul></ul><ul><ul><ul><li>Periodic </li></ul></ul></ul>
  29. 29. Marketing mix – Product Promotion Product is the “heart” of Marketing Mix Place (Distribution) Price
  30. 30. Types of products Unsought Products Specialty Products Shopping Products Convenience Products Consumer Products Business Products PRODUCTS
  31. 31. Types of consumer products Convenience Product Shopping Product Specialty Product Unsought Product A relatively inexpensive item that merits little shopping effort. A product that requires comparison shopping, because it is usually more expensive and found in fewer stores. A particular item that consumers search extensively for and are reluctant to accept substitutes. A product unknown to the potential buyer or a known product that the buyer does not actively seek.
  32. 32. Types of consumer products Specialty Products Convenience Products Shopping Products Unsought Products
  33. 33. Product items ,lines and mix Product Item Product Line Product Mix A specific version of a product that can be designated as a distinct offering among an organization’s products. A group of closely-related product items. All products that an organization sells.
  34. 34. Product items ,lines and mix eg Gillette Blades and Writing razors Toiletries instruments Lighters Mach 3 Series Paper Mate Cricket Sensor Adorn Flair S.T. Dupont Trac II Toni Atra Right Guard Swivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry Look Twin Injector Dry Idea Techmatic Brush Plus Width of the product mix Depth of the product lines
  35. 35. Advantages of product lines Equivalent Quality Efficient Sales and Distribution Standardized Components Package Uniformity Advertising Economies Why Form Product Lines?
  36. 36. Product mix width <ul><li>Diversifies risk </li></ul><ul><li>Capitalizes on established reputations </li></ul>The number of product lines an organization offers.
  37. 37. Product mix depth <ul><li>Attracts buyers with different preferences </li></ul><ul><li>Increases sales/profits by further market segmentation </li></ul><ul><li>Capitalizes on economies of scale </li></ul><ul><li>Evens out seasonal sales patterns </li></ul>The number of product items in a product line.
  38. 38. Consumer Marketing Channels Wholesaler Stockist Retailer Consumer     Consumer Retailer Consumer  Manufacturer 0-level channel Wholesaler Retailer Consumer   Mfg 2-level channel Mfg 3-level channel 1-level channel Manufacturer
  39. 39. Analysis Framework Product Market Company Analysis Marketing Analysis Product Price Promotion Distribution Customer Analysis Consumers Competitor Analysis Competing Firms
  40. 40. Setting the Promotional Mix Figure 14.4 14 -
  41. 41. Multichannel Distribution System Figure 12.4 12 -
  42. 42. The Relationship Between Analysis Planning Implementation and Control Figure 2.6 2 -
  43. 43. Sales Promotion Tactics <ul><li>Consumer-directed </li></ul><ul><li>Samples </li></ul><ul><li>Coupons </li></ul><ul><li>Cash refund offers </li></ul><ul><li>Price offs </li></ul><ul><li>Premiums </li></ul><ul><li>Prizes </li></ul><ul><li>Patronage rewards </li></ul><ul><li>Free trials </li></ul><ul><li>Tie-in promotions </li></ul><ul><li>Trade-directed </li></ul><ul><li>Price offs </li></ul><ul><li>Allowances </li></ul><ul><li>Free goods </li></ul><ul><li>Sales contests </li></ul><ul><li>Trade shows </li></ul><ul><li>Specialty advertising </li></ul>
  44. 44. Types of Industrial customers <ul><li>Commercial </li></ul><ul><ul><li>Industrial Distributors </li></ul></ul><ul><ul><li>OEMs </li></ul></ul><ul><ul><li>Users </li></ul></ul><ul><li>Govt </li></ul><ul><ul><li>Public sector ( BHEL. STU etc ) </li></ul></ul><ul><ul><li>Govt ( Army , Electrectricy boards etc ) </li></ul></ul><ul><li>Institutional/Co-operatives(eg CSD canteen) </li></ul><ul><ul><li>Public institutions( Govt hospitals ) </li></ul></ul><ul><ul><li>Private ( Colleges etc ) </li></ul></ul>
  45. 45. <ul><li>Break-Even Analysis and Target Profit Pricing </li></ul>General Pricing Approaches Fixed Costs Total Costs Revenues Sales Volume in Thousands of Units Thousands of Rs 0 10 20 30 40 1000 800 600 400 200 Break-even point Target Profit Rs?? Quantity To Be Sold To Meet Target Profit
  46. 46. Industrial Product Marketing Installation/Heavy. Accessories. Plant &building. OEM After market STU Raw material.( steel etc ) Accessories (acids, oils etc ). Componants (semi finished parts ,TV tubes ) Semi finished goods . Packaging Legal servises Sales tax services Stationary Capital goods Auto Componants Material and parts/Industrial consubales Supply and services Used in Production process Enter the finished product Goods and services to support the operations
  47. 47. Retailer Mechanics/ Influencers Fleetowner Car /2 wh owner Individual truck owner Pull strategy Push Strategy Company Distribution Channel Market Dynamics ( spark plug)
  48. 48. SWOT analysis of strengths, weaknesses, opportunities,and threats.
  49. 49. Porter’s model of five strategic forces affecting industry competition.
  50. 50. Typical Promotional schemes( Auto trade ) <ul><li>Mechanic schemes (cash coupon , point coupon ) </li></ul><ul><li>Retailer schemes </li></ul><ul><ul><li>Push strategy schemes ( gifts , 1 free in 12 , periodily complete target ) </li></ul></ul><ul><ul><li>Ghost buyer </li></ul></ul><ul><ul><li>POP display </li></ul></ul><ul><li>Distributor schemes </li></ul><ul><ul><li>Turn over disc </li></ul></ul><ul><ul><li>% increase over last yr </li></ul></ul><ul><ul><li>MSR </li></ul></ul><ul><li>POP wall painting </li></ul><ul><li>Advertisement </li></ul>
  51. 51. Case study cont (Mico “soft belly”) <ul><li>Distributors/stockist only interested to push out product </li></ul><ul><li>Distrubutors/stockist nil interest on product </li></ul><ul><li>Retailer neutral in Mico / Comp A </li></ul><ul><li>Mechanics have better Quality perception of Mico due to higher price and older name </li></ul><ul><li>Nil promotional schemes for trade channel and mechanics </li></ul><ul><li>No sales force visits </li></ul>
  52. 52. Facts <ul><li>A typical retailer sells 500 plugs pm </li></ul><ul><li>A typical mechanic fits 10 plugs per day ( 6 cars service or 15 two wheeler ) </li></ul><ul><li>Influencing factor </li></ul><ul><ul><li>Mechanic has 50% say in choice of brand and rest on consumer </li></ul></ul><ul><ul><li>Retailer has 30% say </li></ul></ul><ul><ul><li>Customer has 20% say </li></ul></ul><ul><li>Each sales person of distributor costs Rs 5k pm </li></ul><ul><li>Each company A sales person costs Rs 20k pm </li></ul>
  53. 53. Auto Componants Vehicle type segmentation CV/LCV Car/SUV Tractor Stationary engines 2/3 wheelers
  54. 54. Auto Componants Market “usage” segmentation OEM (20%) NIL contribution Repl market (70%) 90% contribution STU/Govt Nil Fleet owners Nil Export (10%) 10% contribution 2 wh 4 wh OES Rep
  55. 55. After Market ( Repl Market ) 4 P’s Price Product Promotion Place OEM status Non OEM Premium ( OEM brand) Standard Economy Publicity Advertising Schemes Special discounts Regional Distributors State Distributors Town Stockist/Wholesalers Main Dealers Retailers Fleetowners OES
  56. 56. Fast consumable Price Product Promotion Place CV/LCV Car Tractor Premium ( OEM brand) Standard Economy Publicity Advertising Schemes Special discounts Coupons Regional Distributors State Distributors Town Stockist/Wholesalers Main Dealers Retailers Fleetowners OES Fast moving Auto Componant( Filters ) Forecasting
  57. 57. Case study spark plug
  58. 58. Case study questions for class <ul><li>Company A wishes to have a more robust non risky business plan in view of </li></ul><ul><ul><li>Total Mkt. dominated by B that anytime of their choosing they can kill competition by reducing price. If so why is it not doing ?? </li></ul></ul><ul><ul><li>Company A cannot increase sales force due to very precarious profits </li></ul></ul><ul><ul><li>“ A “ looking for a strategy </li></ul></ul><ul><ul><li>“ A “ getting beaten up by distributors who are demanding more credit or more margin . What is to be done ?? </li></ul></ul><ul><li>Any possibility to reduce cost of production ?? </li></ul><ul><li>Any advertisement ?? Cant afford right now . How to do focussed adv which is cost effective </li></ul><ul><li>Present 3 distributors in each state who has approx 200 retailers being serviced </li></ul><ul><li>Should there be diff distributor for diff segments </li></ul><ul><li>Mkt startegy should it be diff for Car or 2 wh segments?? </li></ul>
  59. 59. Case Study ( Spark Plugs ) <ul><li>Market players ( Mico , A) </li></ul><ul><li>Market Share </li></ul><ul><li>Present promotion Mico /A </li></ul><ul><li>Present distribution channel ( Place ) </li></ul><ul><li>Present product features ( commodity) </li></ul><ul><li>Sales force </li></ul><ul><li>Credit policy </li></ul><ul><li>Mico “Push” only strategy </li></ul><ul><li>Pricing ( next slide ) </li></ul><ul><li>Company “me too” push strategy </li></ul><ul><li>Company precarious profit situation / sales vol </li></ul><ul><li>Present Production cost higher due to lower sales vol . Will reduce by Rs 0.50 if sales grow </li></ul><ul><li>No special product features diffrentiation </li></ul>
  60. 60. Analysis Framework Product Market Company Analysis Marketing Analysis Product Price Promotion Distribution Start the solution with Kotler suggested startegy Customer Analysis Consumers Competitor Analysis Competing Firms
  61. 61. The Marketing Mix Figure 2.5 2 -
  62. 62. Diversification Market Penetration Market Development Product Development Existing Markets New Markets Existing Products New Products Ansoff’s Matrix (Product/Market Matrix)
  63. 63. Diversification - related or unrelated E.g. Realignments of the marketing mix E.g. Geographical expansion Same outlets and sales strategy - new product Existing Markets New Markets Existing Products New Products Ansoff’s Matrix (Product/Market Matrix)
  64. 64. Figure 14.6 Break-Even Chart
  65. 65. PLC and Boston matrix
  66. 66. Tools of the Mix Figure 14.1 14 -
  67. 67. Solutions and various actions A can take ( “Product” mix strategy ) <ul><li>Expand range by taking similar product ( same channel ) and trading under own brand name </li></ul><ul><ul><li>This reduces dependance on one product </li></ul></ul><ul><ul><li>Distributes fixed mkt expense on higher turnover ( reduce fixed cost in product X ) </li></ul></ul><ul><li>Come up with USP ( tech which gives some percieved benefit ) on X to show differentiation </li></ul>
  68. 68. Solutions and various actions A can take ( “Price” mix strategy ) <ul><li>Rearrange pricing to force more profit to retailer </li></ul>
  69. 69. Solutions and various actions A can take ( “Promotion ” mix pull strategy ) <ul><li>Retailer </li></ul><ul><ul><li>Increase his profit ( mark down of printed price ) </li></ul></ul><ul><ul><li>Increase interest by gift schemes on completion of target </li></ul></ul><ul><ul><ul><ul><li>3 month complete and take Titan watch ( Rs 500 ) on 40 boxes </li></ul></ul></ul></ul><ul><ul><ul><ul><li>After 3 months increase sales by 25% and take a super gift </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Complete yearly target and go to 2 nights holiday trip for wife ( involve family so that once committed to wife stays ) </li></ul></ul></ul></ul><ul><li>Mechanic </li></ul><ul><ul><li>Increase interest by gift schemes on every plug / </li></ul></ul><ul><ul><ul><ul><li>Transister free after 200 plugs </li></ul></ul></ul></ul>
  70. 70. Solutions and various actions A can take ( “Place ” mix push & pull strategy ) <ul><li>Retailer </li></ul><ul><ul><li>Increase his profit ( mark down of printed price ) </li></ul></ul><ul><ul><li>Increase interest by gift schemes on completion of target </li></ul></ul><ul><ul><ul><ul><li>3 month complete and take Titan watch ( Rs 500 ) on 40 boxes </li></ul></ul></ul></ul><ul><ul><ul><ul><li>After 3 months increase sales by 25% and take a super gift </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Complete yearly target and go to 2 nights holiday trip for wife ( involve family so that once committed to wife stays ) </li></ul></ul></ul></ul><ul><li>Mechanic </li></ul><ul><ul><li>Increase interest by gift schemes on every plug / </li></ul></ul><ul><ul><ul><ul><li>Transister free after 200 plugs </li></ul></ul></ul></ul>

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