Marketing Management

MARKETING MANAGEMENT
(MBA SEM II)

Prof. Shashank Divekar

PRODUCT

A product is anything that can be offered to satisfy a need or want.
Offering and solution are synonyms to the product in marketing
context.

A ‘Product’ is a good or service that most closely meets
the requirements of a particular market and yields enough
profit to justify its continued existence.

A good, idea, method, information, object or service created
as a result of a process and serves a need or satisfies a want.

A product is more than a mere physical object, it has a
personality of its own. Products carry certain meanings with
them and project certain distinct images.

THREE LEVELS OF A PRODUCT

AUGMENTED PRODUCT

ACTUAL PRODUCT

CORE
PRODUCT

THREE LEVELS OF A PRODUCT
CORE PRODUCT : This is the most basic level and simply looks at
what people set out to buy and what core benefits or services are
being offered to the buyers.

ACTUAL PRODUCT : The aim of this level is to design a product with
features which will attract and persuade buyers into preferring this
product over competitors/ alternatives. These features may involve
quality level, design and appearance, performance features,
styling, branding and packaging.

AUGMENTED PRODUCT : At this level additional, non-tangible
benefits are added to the product. Competition at this level is
based around delivery, after-sales service, installation, help-lines,
warranties, etc..

Different Levels of Product
• Generic Product Unbranded and undifferentiated commodity,
such as rice, bread, flour or cloth.

• Branded Product Product carrying a well-known name which gives
it respectability, and acceptance in the market.
• Differentiated Product with certain unique features and offerings
Product which sets it apart from the competitors.

• Customised Product Product which is designed/ developed as per the
customer’s specific requirements/ requests.

• Augmented Product Product with improvements made voluntarily by
the manufacturer to enhance its value.

• Potential Product Product of the future, with all possible
improvements and finesse in the given economic
and competitive conditions.

Product Line and Product Mix :

A group of related products constitute a product line.

A product mix is the complete set of all products offered for sale
by a company.

Product Mix is 4-Dimensional :

• Width
• Depth
• Length
• Consistency

Product Line and Product Mix :
Width refers to how many different product lines the company
carries (eg. HUL has different product lines such as Personal Care,
Food Products, Oral Care, Fabric Care etc.)
Depth refers to the number of product items offered under each
product-line. It indicates the variants offered in each product-line
(Eg. ‘Real’ fruit juice is sold in 3 sizes and 7 flavours. Thus, the
depth is 3X7=21)
Length refers to the total number of items in the mix. The average
length can be arrived at by dividing the total length by the number
of lines.
Consistency refers to the close relationship of various product
lines either to their end-use or to production requirements or
distribution channels etc.

PRODUCT LIFE CYCLE

Product Life Cycle is similar to a biological life cycle. Every product
goes through four major stages in its life :

1. Introduction

2. Growth

3. Maturity

4. Decline

PRODUCT LIFE CYCLE

PRODUCT LIFE CYCLE

PRODUCT DEVELOPMENT stage begins when a company finds and
develops a new product idea. The product undergoes a lot of changes
and modifications, involving a lot of time and expenditure.
Product development goes through various stages such as idea
generation, idea screening, concept development and testing,
business analysis, beta testing and market testing, technical
implementation, commercialization, etc.
INTRODUCTION phase involves the product launch, with a view to
have maximum impact in the market. This period too involves a lot of
expenditure mostly on promotion and advertising. Pricing and
distribution are the most crucial aspects during this phase.

PRODUCT LIFE CYCLE

INTRODUCTION Contd…

Properly defining the target audience, customer and distributor
feedbacks, impact of the marketing mix on the sales etc. during the
Introduction phase determine the long-term performance of the
product in the markets.

GROWTH phase is when the product takes off on its own. The
company shifts its focus from launch and promotion to growth in
market share. Product is modified and re-positioned if required
according to the market feedback.
This period is the time to develop efficiencies and improve product
availability and service.

PRODUCT LIFE CYCLE

MATURITY Phase is when the market becomes saturated with
variations of the basic product. In this phase the sales growth is at
the expense of someone else’s business. This period is the period of
highest returns possible, from the product.

In this phase, introduction of new brands/ models in the same
product category, frequent changes in pricing and discount policies
etc. are the common strategies.

DECLINE phase arrives when the sales begin dropping over
consecutive periods and all efforts to revive the product fail. This is
the time to start withdrawal of the product from the market.

PRODUCT LIFE CYCLE MANAGEMENT
PLM or Product Life cycle Management is a process or system used to
manage the data and design process associated with the life of a
product from its conception and envisioning through its
manufacture, to its retirement and disposal.
PLM manages data, people, business processes, manufacturing
processes, and anything else pertaining to a product. A PLM system
acts as a central information hub for everyone associated with a
given product, so a well-managed PLM system can streamline
product development and facilitate easier communication among
those working on/with a product.
PLM integrates people, data, processes and business systems and
provides a product information backbone for companies and their
extended enterprise. PLM systems help organizations in coping with
the increasing complexity and engineering challenges of developing
new products for the global competitive markets.

PRODUCT LIFE CYCLE MANAGEMENT

Product Lifecycle Management (PLM) is an approach of integrated and
cross-company administration and control of all product-related
processes and data across the whole product lifecycle following the
extended logistic chain – from construction and production via sales
through to disassembly and recycling

Product Lifecycle Management is an extensive concept to effective and
efficient configuration of the product lifecycle.

Based on the entirety of all product information, which is incurred
across the whole supply chain and spread over several partners,
processes, methods, and tools are provided in order to make the
relevant information available at the right time, quality, and at the
right place.

NEW PRODUCT DEVELOPMENT
Types of New Products :

1. New-to-the-world : Products that create an entirely new market.
2. New product lines : New products that take a company into an
established market for the first time.
3. Additions to the existing product lines
4. Improvements or revisions of existing products : Improved
technology/ performance, greater perceived value and
replacement of existing products
5. Re-positioning : Existing products that are target to new
segments or new markets
6. Cost Reductions : New products that provide similar
performance at lower cost.

WHY DEVELOP NEW PRODUCTS ?

1. To expand product portfolio
2. To Replace declining products
3. To create stars and cash-cows for the future
4. Take advantage of new technology
5. Maintain/ Increase market share
6. To keep up with competition
7. To maintain competitive advantage
8. To fill a gap in the market
9. To attract new customers


STAGES IN NEW PRODUCT DEVELOPMENT :

1. Assessment of current product portfolio

2. Assessment of opportunities and threats

3. Determine the type of product that fits in with the
corporate strategy

4. Idea generation

5. Idea Screening

Contd.


STAGES IN NEW PRODUCT DEVELOPMENT :

6. Concept Development & Testing

7. Business Analysis

8. Product Development

9. Test Marketing

10. Commercialisation

PRODUCT PORTFOLIO ANALYSIS :
A product portfolio is the range of products a firm produces.
Product portfolio analysis is the study of each of a company's products
in an attempt to improve market performance. The Important
functions include :
1. Filling in the product line
2. Product modernization
3. Product featuring
4. Product pruning

Product portfolio management involves the following tasks :
• Pointing out growths in the market and improvements made
• Analyzing failures and successes
• Setting goals and targets
• Sales strategies
• Identifying gaps leading to drop in market share or profits

BRAND :
A Brand is a name, term, sign, symbol or design, or a
combination of them intended to identify the goods and
services of one seller or group of sellers and to differentiate
them from those of other sellers.
- American Marketing Association
A brand is a combination of your thoughts + feelings about your
experiences with it. A brand creates a positive sentiment among
the target audience. A brand is used to distinguish a product
from others in the market. The objectives that a good brand will
achieve include:
• Confirming credibility of the product/ manufacturer
• Connect with the target market emotionally
• Motivate the buyer
• Consolidate user loyalty

The word ‘Brand’ is derived from the Old Norse brandr meaning
"to burn." It refers to the practice of producers burning their
mark (or brand) onto their products.
Product and the manufacturer offer features and benefits that
consumers want and need, but it’s the BRAND that makes those
features and benefits recognizable and preferred. Those
features and benefits are extensions of the brand.
A brand conveys upto 6 levels of meaning :
1. Attributes
2. Benefits
3. Values
4. Culture
5. Personality
6. User

The first branding strategy decision is whether to develop a
brand name for the product. Assuming a firm decides to brand
its products or services, it must then choose the brand names.
Four general strategies options are often used :
• Individual Name (P&G)
• Corporate Name (Tata)
• Independent Family Name (Aditya Birla)
• Combination - Corporate family name + Individual
product name (Kellogs, Honda, Sony, HP)
Proper branding can result in higher sales of not only one
product, but on other products associated with that brand.
The art of creating and maintaining a brand is called brand
management. Careful brand management seeks to make the
product or services relevant to the target audience.


“PACKAGING includes all the activities of designing and
producing the container for a product."
-Philip Kotler
The intended purpose of the packaging is to make a product
readily sellable as well as to protect it against damage and
prevent it from deterioration while storing.
Packaging plays an important role as a medium in the
marketing mix, in promotion campaigns, as a pricing criterion,
in defining the character of new products, as a setter of trends
and as an instrument to create brand identity and shelf impact
in all product groups.
Product packaging can play an important role in the success or
failure of the sales of the product.


Factors in Packaging Decisions

• Protection & Safety
• Visibility
• Attractiveness
• Promotion
• Positioning
• Differentiation
• Communication
• Added Value

PRICE
Price is the amount of money or goods for which a thing is
bought or sold.
Price is the marketing variable that can be changed most
quickly, perhaps in response to a competitor price change.
Price supports the other elements of the marketing mix.

Pricing decision takes into account the following factors :
1. Fixed and Variable Costs
2. Competition
3. Company objectives
4. Positioning strategies
5. Target group, willingness and ability to pay


Pricing Objectives : Common objectives include the following –
• Maximise Current Revenue
• Maximise Current Profit
• Maximise Volumes
• Quality Leadership
• Partial Cost Recovery
• Survival
• Status Quo
The pricing objectives depend on many factors such as market
conditions, production cost, economies of scale, barriers to
entry, product differentiation, rate of product diffusion, the
firm’s resources and the product’s anticipated price elasticity
of demand.


PRICING STRATEGIES

An organisation can adopt a number of pricing strategies.
The pricing strategies are based much on what objectives
the company has set itself to achieve.

 Penetration Pricing
 Optional Pricing
 Premium Pricing
 Competitive Pricing
 Value Pricing
 Bundle Pricing
 Skimming Pricing

Price-Setting Process :
1. Decide the price objectives
a. Survival
b. Profit Maximisation
c. Higher Market Share
d. Counter Competition
e. Status Quo
2. Assessment of Demand
a. Check Demand Elasticity
b. Check Demand Curve
3. Cost Estimate
4. Competitors/ Market Price
5. Select Final Price

Pricing Methods
1. Cost-Plus Pricing :
Set the price at production cost plus a certain profit
margin. This does not take into account competition,
customer affordability or long-term business interests.
2. Target Return Pricing :
Set the price with a view to obtain a certain return on
investment.
3. Value-based Pricing :
Base the price on the effective value to the customer
relative to alternative products in the market.
4. Psychological Pricing
Base the price on what the customer perceives to be fair,
based on quality, delivery and performance.


Cost-Based V/s Value-Based Pricing
Cost-based Pricing
Product Cost Price Value Customer

Value-based Pricing

Customer Value Price Cost Product

PLACE
'Place' is concerned with various methods of transporting and
storing goods, and then making them available for the customer.
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.
‘Place’ refers to how an organisation will distribute the product
or service they are offering to the end user. The organisation
must distribute the product to the user at the right place at the
right time.
Efficient and effective distribution is important if the
organisation is to meet its overall marketing objectives


Channels of Distribution

Manufacturer/ Producer

Wholesaler

Manufacturer’s Manufacturer’s
Retailer
Chain Stores Branch Offices

Consumer

TYPICAL CHANNELS OF DISTRIBUTION
C.O.D For Consumer Goods & Services :

Manufacturer
C
U
Manufacturer Retailer S
T
O
M
Manufacturer Wholesaler Retailer
E
R
Manufacturer Agent

Distribution goes hand-in-hand with positioning and sales strategies.
Patterns of Distribution
Intensive Distribution :
This strategy is used to ensure that the product is made
available in as many outlets as possible so that the
consumers should be able to obtain the product wherever
he goes. Used commonly to distribute low priced or impulse
purchase products eg. chocolates, soft drinks, soap etc..
Selective Distribution :
In this case the company wishes to make its product available
only at specific outlets, carefully selected for the purpose.
Such strategy is adopted for products which are positioned as
‘lifestyle’ products and therefore ‘special’. Selective
distribution is common with products such as computers,
televisions and household appliances.


Patterns of Distribution Contd.
Exclusive Distribution :
This strategy is used for products which are exclusive and
identified as ‘status symbols’. Only one outlet in a city may
keep the product.

The product is usually highly priced, and requires the
intermediary to place much detail in its sale. An example of
would be the sale of vehicles through exclusive dealers.
Besides, exclusive company showrooms may also be counted
in this category.

WHOLESALING
Buying of goods in large quantities from producers and
selling the same in small quantities to retailers is termed as
wholesale trade and the person who carries on wholesale
trade is called the "Wholesaler".

Wholesaling involves sale and distribution of goods to users
other than end consumers.
Wholesaling involves selling merchandise to retailers, other
wholesalers and merchants, or to industrial, commercial and
institutional users.
Wholesaling often occurs when large quantities of goods are
re-assembled, sorted, then repackaged, and distributed in
smaller lots, at a cost significantly lower than the average
retail price.


IMPORTANCE OF WHOLESALING
1. Providing retailers access to various products.

2. Providing suppliers/ manufacturers access to
markets.

3. Providing stocking and warehousing services.

4. Value-addition to the distribution process by
participating in promotion, financing, payment
collection and market intelligence.

5. Sometimes wholesalers also share part of the
business risks.

RETAILER
Any business entity selling products and services to end-
consumers is ‘retailing’.
Retailing includes all activities involved in selling and/ or
renting consumer products and services directly to
ultimate consumers for their personal or home
consumption.
A retailer purchases goods or products in large quantities
directly from manufacturers or through a wholesaler, and
sells in smaller quantities to the consumer for a profit.

Retailing can be done in either fixed locations, mobile
outlets or online.

Functions of Retailing :
1. Breaking Bulk

2. Sorting and categorising of goods

3. Offer advise and guidance to help customers
make the right choices.

4. Holding stock

5. Credit services

6. Training and after-sales service to end-users

Importance of Retailing
1. Retailing creates time, place and possession utility.

2. Makes available a wide variety of goods available to
consumers.

3. Plays a valuable role in creating a product and brand
image.

4. Retailer is a vital communication link between the
manufacturer and the end-user.

5. Personalised service and customising as and when
required.

FRANCHISING
Franchising is a business model in which A parent company
allows entrepreneurs to use a successful company's
strategies, techniques and trademarks; in exchange, the
franchisee pays an initial fee and royalties based on revenues.

The parent company also provides the franchisee with
support, including advertising and training, as part of the
franchising agreement.

Arrangement where one party (the franchiser) grants
another party (the franchisee) the right to use its trademark
or trade-name as well as certain business systems and
processes, to produce and market a good or service according
to certain specifications.

Advantages of franchising
To the franchisee :
1. Immediate name recognition
2. Tried, tested and successful products/ offerings
3. Standard building design/ décor
4. Detailed techniques in running and promoting the business
5. Training of employees
6. Ongoing help in promoting and upgrading the products
7. Lower financial risk and smaller gestation period due to an
established brand and goodwill.

Advantages of franchising
To the franchisor :
1. Capitalised expansion : Rather than investing own or
borrowed funds and human efforts for expansion,
franchising facilitates faster expansion with the
franchisee’s funds.
2. Brand development : The faster multi-unit expansion
serves to supplement and expand the brand
geographically.
3. Economies of scale : Larger volumes generated by multi-
unit expansion results in higher volumes of purchases
and leverage with suppliers and vendors.
4. Continuing revenue streams : Continuing royalty serves
as a steady cash inflow.

Direct Marketing
Direct Marketing is an interactive system of marketing which
uses one or more advertising media to effect a measurable
response and/ or transaction at any location.
Direct Marketing is a low cost, efficient alternative for reaching
the customers through lower costs of media, also using digital
technology like internet, email and web sites.
Direct Marketers communicate directly with customers, often
on a one-to-one, interactive basis to build and cultivate long
lasting customer relationships.
Direct Marketing is also referred to as Interactive Marketing
or Database Marketing, because it is expected to be a two-way
communication with the customer or prospect and it is
database driven.

Direct Marketing Process

SET MARKETING OBJECTIVES

IDENTIFY TARGET MARKETS

COMMUNICATE THE OFFER

TEST RESPONSE

MEASURE SUCCESS &
EVALUATE


Unique features of Direct Marketing
1. Uses customer database and insights into customer data
2. Targets smaller groups or individual customers
3. Is highly interactive
4. Tailor offers as per individual needs
5. Offers promoted through personalised communications
6. Can be timed to reach prospects at the right moment
7. Provides customers a ready access to wealth of information
8. Provides the customers a convenient, easy-to-use and private
way of interacting with the sellers

Advertising
Advertising is a form of communication that typically attempts
to persuade potential customers to purchase or to consume
more of a particular brand of product or service.
Any paid form of non-personal presentation of ideas, goods and
services by an identified sponsor
-American Marketing Association
Description or presentation of a product, service, idea or
organization in order to induce individuals to buy, support or
approve of it.
Advertising.. Attempts to inform and persuade a large number of
people with a single communication.
- Kenneth A. Longman

Marketing Communication Mix :
• Advertising

• Sales Promotion – Short-term direct inducements to
encourage sales.

• Publicity – Putting commercially significant news in media to
create a favorable image.

• Personal Selling – Salesman interacting orally with buyers
as sales presentations.

• Public Relations – Creating a favorable image of the
organisation in the eyes of the public, Govt., shareholders etc.

Sales Promotion
Sales promotion includes several communications activities
that attempt to provide added value or incentives to
consumers, wholesalers, retailers, or other organizational
customers to stimulate immediate sales.
These efforts can attempt to stimulate product interest,
trial, or purchase.

Examples of devices used in sales promotion include
coupons, samples, premiums, point-of-purchase (POP)
displays, contests, rebates, and sweepstakes

Sales Promotion is used to introduce new product, clear out
inventories, attract traffic, and to lift sales temporarily.


Sales Promotion consists of :
 Consumer promotion (Free samples, free trials,
loyalty rewards, discount coupons, cash paybacks,
prizes, special prices etc.

 Trade Promotion (Special prices to retailers,
advertising and display allowances to retailers,
free goods, longer credit periods etc.

 Business & Sales Force Promotions (Trade shows &
conventions, sales contests, awards, trophies etc.)

Public Relations
PR is the process or activity which aims at building awareness
and a favourable image for a person, organisation and/ or its
products, by managing the flow of information to the public.
PR dept of a company performs the following functions :

1. Closely monitors the numerous media channels for public
comments about the company.
2. Managing crises that threaten a company’s image or
reputation.
3. Builds goodwill for the organisation through community,
philanthropic and other special programs and events.

Extended P’s of Marketing

• People
• Process
• Physical Evidence

People :
‘People’ is one of the elements of service marketing mix.
People include customers and service personnel. When these
two interact, service encounter takes place. Customer service
lies at the heart of modern service industries.
People are one of the few elements of the service that
customers can see and interact with. In case of service
marketing, people can make or break an organization.

Extended P’s of Marketing
Processes :
‘Process’ is the way of undertaking transaction, supplying
information and providing service in a way acceptable to the
customer and effective to the organisation.
Process defines speed, accuracy and satisfaction to the
customer. It implies that everybody in the organisation knows
what to do and how to do it.
Physical Evidence
Physical evidence is about where the service is being delivered
from. This element of the marketing mix will distinguish a
company from its competitors. It is one tangible element that
adds to customer experience in services sector (Layout,
cleanliness, décor, comfort, atmosphere etc.)

Marketing Management

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (6)

Similar to Marketing Management

Similar to Marketing Management (20)

Recently uploaded

Recently uploaded (20)

Marketing Management