MBA II Semester Marketing Mangaement

8/2/2019 MBA II Semester Marketing Mangaement

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Master of Business Administration

MBA II Semester

MB0046Marketing Management

Assignment Set- 1

Q.1 Discuss the different marketing concepts with its merits and drawbacks.

Ans.

The Marketing Concept

After World War II, the variety of products increased and hard selling no longer could be reliedupon to generate sales. With increased discretionary income, customers could afford to beselective and buy only those products that precisely met their changing needs, and these needswere not immediately obvious. The key questions became:

What do customers want? Can we develop it while they still want it? How can we keep our customers satisfied?

In response to these discerning customers, firms began to adopt the marketing concept, whichinvolves:

Focusing on customer needs before developing the product Aligning all functions of the company to focus on those needs Realizing a profit by successfully satisfying customer needs over the long-term

When firms first began to adopt the marketing concept, they typically set up separate marketingdepartments whose objective it was to satisfy customer needs. Often these departments were

sales departments with expanded responsibilities. While this expanded sales department structurecan be found in some companies today, many firms have structured themselves into marketingorganizations having a company-wide customer focus. Since the entire organization exists tosatisfy customer needs, nobody can neglect a customer issue by declaring it a "marketingproblem" - everybody must be concerned with customer satisfaction.


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The marketing concept relies upon marketing research to define market segments, their size, andtheir needs. To satisfy those needs, the marketing team makes decisions about the controllableparameters of the marketing mix.

Marketing concepts with its merits and drawbacks.

There are certain fundamental concepts and tasks which one needs to know to fully understandthe marketing function. These concepts provide foundation for a marketing orientation and tomanage the marketing function.

1. Needs and Wants

The marketers task lies in satisfying human needs and wants through the exchange process. It is

alleged that marketing creates needs and makes people buy things they do not actually need. Inreality, marketing or marketers do not create needs, but they create wants. Some needs are

the basic human requirements of food, clothing, shelter, water and air. There are other needssuch as social needs, esteem needs etc.

When we desire certain specific objects or items to fulfill these needs, they are called wants. Thisdifference between wants and needs is not the same as understood in the subject matter ofeconomics. The marketer identifies the need which may lie unexpressed by the customer.

2. Demand

Human wants are unlimited, but their resources are limited. When a want for an object is backedor supported by buying ability, willingness to spend and desire to acquire a product / service, itbecomes a potential demand. The task of assessing or estimating demand is very crucial for amarketer. He should understand the relationship of the demand for his product with its price.Demand forecasting is essential for allocation of resources in a company. This is the reason whymarketers segment consumers on the basis of their earning capacity. The income of the consumerindicates the potential to buy.

3. Product and Services

Product is a generic term used to describe what is being offered by a seller or marketer. It may

be a good, a service or idea, which can be marketed by offering a set of benefits it offers tocustomers to satisfy their needs.

A product can be defined as anything that can be offered to market to satisfy a need or want.Today, many types of entities such as goods, services, experiences, events, persons, places andideas are being marketed.
http://www.netmba.com/marketing/mix/http://www.netmba.com/marketing/mix/


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4. Target Market

Very few products can satisfy everyone in the market. Therefore, marketers divide the marketinto distinct groups of buyers who have similar preferences. These groups are called segmentswith their own specific demographic, psychographic and behavioral characteristics. The marketer

decides as to which of these segment or segments offer highest opportunity for his company. Foreach of these target markets, the firm develops a product / service suited to their needs.

TATA group has recently designed an economy car called NANO which is priced around Rs. 1

Lakhs. The target market for this car is all aspirants who dream of owning a car but cannot affordcars, which are currently available for minimum Rs. 2.5 Lakhs. A Target Market is the group ofpeople at whom a marketer targets his marketing efforts to sell his goods and services.

5. Marketing Management

Marketing Management which is also the title of this course refers to all the activities which the

marketing managers, executives and personnel have to undertake to carry out the marketingfunction of the firm.

It involves (i) analyzing the market opportunities by undertaking consumer needs and changestaking place in the marketing environment, (ii) planning the marketing activities, and (iii)implementing marketing plans and settings control mechanism to ensure smooth and successfulaccomplishment of the organizations goals. Marketing Management is a critical function,especially in highly competitive markets. It provides competitive edge to an organization throughstrategic analysis and planning.

6. Values and Satisfaction

Value is primarily a function of quality, service and cost. Value increases with increase in qualityand service and decreases with increase in cost. Value is an important marketing concept and thetask of marketing is to identify, create, communicate, deliver and monitor customer value.

Customers generally experience satisfaction when the performance level meets minimumperformance expectations of a product or service. When the performance as perceived exceedsthe expected performance level, the customer will be not just satisfied, but delighted. Thuscustomer satisfaction or delight with respect to a product or service encourages customers tocome back and repurchase the product or service in future. Satisfied customers can be an asset tothe marketing company over a period of time, as they will spread favorable word-of-mouth

information or opinions.


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Q.2 a) What are the features and objectives of marketing research?b) Give a note on psychoanalytic model of consumer behaviour?

Ans.

Features of Marketing Research

1. It is a systematic processIt has to be carried out in a stepwise and systematic manner and thewhole process needs to be planned with a clear objective.

2. It should be objectiveIt is important that the methods employed and interpretations areobjective. The research should not be carried out to establish an opinion nor should it beintentionally suited towards predetermined results.

3. It is multi-disciplinaryMarketing Research draws concepts from other disciplines such asStatistics for obtaining reliable data and from Economics, Psychology and sociology for betterunderstanding of buyers.

Objectives of Marketing Research

Marketing Research may be conducted for different purposes. Based on how organizations useMarketing Research, objectives of Marketing Research can be summarized as follows:

1. To understand why customers buy a product

2. To forecast the probable volume of future sales or expected market share

3. To assess competitive strengths and strategies

4. To evaluate the effectiveness of marketing action already taken

5. To assess customer satisfaction of companys products/services

Note on psychoanalytic model of consumer behaviour

The Psychoanalytical Model:

The psychoanalytical model draws from Freudian Psychology. According to this model, theindividual consumer has a complex set of deep-seated motives which drive him towards certainbuying decisions. The buyer has a private world with all his hidden fears, suppressed desires and


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totally subjective longings. His buying action can be influenced by appealing to these desires andlongings. The psychoanalytical theory is attributed to the work of eminent psychologist SigmundFreud. Freud introduced personality as a motivating force in human behavior. According to thistheory, the mental framework of a human being is composed of three elements, namely,

1. The id or the instinctive, pleasure-seeking element. It is the reservoir of the instinctiveimpulses that a man is born with and whose processes are entirely subconscious. It includes theaggressive, destructive and sexual impulses of man.

2. The superego or the internal filter that presents to the individual the behavioral expectations ofsociety. It develops out of the id, dominates the ego and represents the inhibitions of instinctwhich is characteristic of man. It represents the moral and ethical elements, the conscience.

3. The ego or the control device that maintains a balance between the id and the superego. It isthe most superficial portion of the id. It is modified by the influence of the outside world. Itsprocesses are entirely conscious because it is concerned with the perception of the outside world.

The basic theme of the theory is the belief that a person is unable to satisfy all his needs withinthe bounds of society. Consequently, such unsatisfied needs create tension within an individualwhich have to be repressed. Such repressed tension is always said to exist in the sub-consciousand continues to influence consumer behavior.

Q. 3 Silver Line Manufacturers produce several varieties of automobile components. They

have 3 to 5 suppliers who supply materials regularly. Recently, procurement manager of

Silver Line discussed in the meeting that they have to look out for new suppliers since they

would be expanding their business operations to many places. How do you think SilverLine have to go about this situation?

Ans.

Procurement is the acquisition of goods or services. It is favorable that the goods/services areappropriate and that they are procured at the best possible cost to meet the needs of the purchaserin terms of quality and quantity, time, and location. Corporations and public bodies often defineprocesses intended to promote fair and open competition for their business while minimizingexposure to fraud and collusion.

Procurement systems

Another common procurement issue is the timing of purchases. Just-in-time is a system of timingthe purchases of consumables so as to keep inventory costs low. Just-in-time is commonly usedby Japanese companies but widely adopted by many global manufacturers from the 1990sonwards. Typically a framework agreement setting terms and price is created between a supplierand purchaser, and specific orders are then called-offas required.
http://en.wikipedia.org/wiki/Total_cost_of_ownershiphttp://en.wikipedia.org/wiki/Just-in-time_%28business%29http://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/w/index.php?title=Call-off_contract&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Call-off_contract&action=edit&redlink=1http://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Just-in-time_%28business%29http://en.wikipedia.org/wiki/Total_cost_of_ownership


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Procurement process

Procurement may also involve a bidding process i.e.,Tendering. A company may want topurchase a given product or service. If the cost for that product/service is over the threshold thathas been established (e.g.: Company X policy: "any product/service desired that is over $1,000

requires a bidding process"), depending on policy or legal requirements, Company X is requiredto state the product/service desired and make the contract open to the bidding process. CompanyX may have ten submitters that state the cost of the product/service they are willing to provide.Then, Company X will usually select the lowest bidder. If the lowest bidder is deemedincompetent to provide the desired product/service, Company X will then select the submitterwho has the next best price, and is competent to provide the product/service. In the EuropeanUnion there are strict rules on procurement processes that must be followed by public bodies,with contract value thresholds dictating what processes should be observed (relating toadvertising the contract, the actual process etc.).

Procurement steps

Procurement life cycle in modern businesses usually consists of seven steps:

Information gathering: If the potential customer does not already have an establishedrelationship with sales/ marketing functions of suppliers of needed products and services(P/S), it is necessary to search for suppliers who can satisfy the requirements.

Supplier contact: When one or more suitable suppliers have been identified, requests forquotation, requests for proposals, requests for information or requests for tender may beadvertised, or direct contact may be made with the suppliers.

Background review: References for product/service quality are consulted, and anyrequirements for follow-up services including installation, maintenance, and warranty are

investigated. Samples of the P/S being considered may be examined, or trials undertaken. Negotiation: Negotiations are undertaken, and price, availability, and customization

possibilities are established. Delivery schedules are negotiated, and a contract to acquirethe P/S is completed.

Fulfillment: Supplier preparation, expediting, shipment, delivery, and payment for theP/S are completed, based on contract terms. Installation and training may also beincluded.

Consumption, maintenance, and disposal: During this phase, the company evaluatesthe performance of the P/S and any accompanying service support, as they are consumed.

Renewal: When the P/S has been consumed or disposed of, the contract expires, or theproduct or service is to be re-ordered, company experience with the P/S is reviewed. Ifthe P/S is to be re-ordered, the company determines whether to consider other suppliersor to continue with the same supplier.

Additional Step - Tender Notification: Some institutions choose to use a notificationservice in order to raise the competition for the chosen opportunity. These systems caneither be direct from their e-tendering software, or as a re-packaged notification from anexternal notification company.
http://en.wikipedia.org/wiki/Biddinghttp://en.wikipedia.org/wiki/Request_for_quotationhttp://en.wikipedia.org/wiki/Request_for_quotationhttp://en.wikipedia.org/wiki/Request_for_proposalhttp://en.wikipedia.org/wiki/Request_for_informationhttp://en.wikipedia.org/wiki/Request_for_tenderhttp://en.wikipedia.org/wiki/Warrantyhttp://en.wikipedia.org/wiki/Negotiationhttp://en.wikipedia.org/wiki/Expeditinghttp://en.wikipedia.org/wiki/Tender_Notificationhttp://en.wikipedia.org/wiki/Tender_Notificationhttp://en.wikipedia.org/wiki/Tender_Notificationhttp://en.wikipedia.org/wiki/Tender_Notificationhttp://en.wikipedia.org/wiki/Expeditinghttp://en.wikipedia.org/wiki/Negotiationhttp://en.wikipedia.org/wiki/Warrantyhttp://en.wikipedia.org/wiki/Request_for_tenderhttp://en.wikipedia.org/wiki/Request_for_informationhttp://en.wikipedia.org/wiki/Request_for_proposalhttp://en.wikipedia.org/wiki/Request_for_quotationhttp://en.wikipedia.org/wiki/Request_for_quotationhttp://en.wikipedia.org/wiki/Bidding


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Procurement performance

In July 2011, Ardent Partners published a research report that presented a comprehensive,

industry-wide view into what is happening in the world of procurement today by drawing on theexperience, performance, and perspective of nearly 250 Chief Procurement Officers and otherprocurement executives. The report includes the main procurement performance and operationalbenchmarks that procurement leaders use to gauge the success of their organizations. This reportfound that the average procurement department manages 60.6% of total enterprise spend. Thismeasure commonly called "spend under management" refers to the percentage of total enterprisespend (which includes all direct, indirect, and services spend) that a procurement organizationmanages or influences. The average procurement department also achieved an annual savings of6.7% in the last reporting cycle, sourced 52.6% of its addressable spend, and has a contractcompliance rate of 62.6%.

Public procurement

Public procurement generally is an important sector of the economy. In Europe, publicprocurement accounts for 16.3% of the Community GDP.

Green public procurement

In Green public procurement (GPP), contracting authorities and entities take environmentalissues into account when tendering for goods or services. The goal is to reduce the impact of theprocurement on human health and the environment.

In the European Union, the Commission has adopted its Communication on public procurementfor a better environment, where proposes a political target of 50 % Green public procurement tobe reached by the Member States by the year 2010.

Alternative procurement procedures

There are several alternatives to tendering which are available in formal procurement. Onesystem which has gained increasing momentum in the construction industry and amongdeveloping economies in the Selection in planning process which enables project developers andequipment purchasers to make significant changes to their requirements with relative ease. TheSIP process also enables vendors and contractors to respond with greater accuracy and

competitiveness as a result of the generally longer lead times they are afforded.

ROSMA is a procurement acronym created by ATkearney.{Procurement Solutions Division} Itstands for Return on Supply Management Assets and endeavors to quantify not onlyprocurement but every piece of the procurement process including strategic resourcemanagement.
http://en.wikipedia.org/wiki/GDPhttp://en.wikipedia.org/w/index.php?title=Contracting_authority&action=edit&redlink=1http://en.wikipedia.org/wiki/Entitieshttp://en.wikipedia.org/wiki/Selection_in_planninghttp://en.wikipedia.org/wiki/A_T_Kearneyhttp://www.atkearneypas.com/rosma/http://www.atkearneypas.com/images/solutions/rosma-chart.jpghttp://www.atkearneypas.com/images/solutions/rosma-chart.jpghttp://www.atkearneypas.com/images/solutions/rosma-chart.jpghttp://www.atkearneypas.com/images/solutions/rosma-chart.jpghttp://www.atkearneypas.com/rosma/http://en.wikipedia.org/wiki/A_T_Kearneyhttp://en.wikipedia.org/wiki/Selection_in_planninghttp://en.wikipedia.org/wiki/Entitieshttp://en.wikipedia.org/w/index.php?title=Contracting_authority&action=edit&redlink=1http://en.wikipedia.org/wiki/GDP


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Q.4 Briefly explain the bases for segmenting consumer markets along with examples. Do

you think these bases are required for market segmentation? Why?

Ans.

Bases for segmenting consumer markets

So far, we've examined two ways in which markets can be segmented using benefit andconsumption rate segmentation bases. There are many other ways in which markets can besegmented. In deed, let's shift gears a little bit and talk in general terms about the possible waysin which markets can be segmented. This discussion allows us to explore the range ofsegmentation basis that are available to marketing managers. There are major categories ofsegmentation bases from which managers can select:

Geographic bases allows us to segment a market that is spread over a large geographic area intosub-markets that cover smaller geographic areas. Geographic segmentation usually involvesdividing up geographic markets by using existing political boundaries, natural climatic zones, orpopulation boundaries.

Demographic segmentation occurs when one or more demographic traits are employed to dividea market. Typical demographic traits that are used include age, gender, race, ethnicity, maritalstatus, family size and stage of the family life cycle.

Social class segmentation employs a combination of demographic traits that are commonlybelieved to reflect membership in different social class strata. Occupation, education, andincome are the primary demographic traits that reflect social class membership.

Psychographic segmentation bases divide markets based on differences in lifestyles ordifferences in personality traits. Lifestyle segmentation is one of the most popular and effectiveways to create segments for consumer products.

Consumer shopping behavior patterns include such things as the type of store shopped in, timingof purchases (i.e. time of day, week, or year), how much of a product is purchased on a givenvisit to the store, and how often the individual frequents a particular type of retail establishmentor shopping mall.

Product consumption behaviors include product consumption or usage rates base (as discussedearlier). Other segmentation bases included in this category are product usage occasion, productuse versus non-use, and loyalties to specific brands.

Segmenting markets according to consumer predispositions essentially entails creating segmentsbased on differences in consumers' wants, needs, and attitudes. We talked at length aboutcreating market segments based on differences in consumers' wants and needs (i.e. creatingbenefit segments). Sometimes it is useful to segment markets based on how knowledgeable


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people are of a particular product category, or whether they've experienced problems withspecific products or brands. And, finally, we also include consumers' media viewing habits inthis category. When segmenting markets using this latter base, we are looking for differences inthe types of media consumers prefer i.e. preferences for specific television shows, radio stations,magazines, newspapers, and the like.

Segments Based on Consumption Behaviors

There are multiple ways that we can segment a market based on differences is consumptionpatterns or behaviors. We've already looked at creating segments based on usage rates with ourhealth club segmentation study. Additional behaviors that are excellent candidates forsegmenting markets include product usage occasion, product user status, and brand loyaltystatus.

Product Usage Occasion

When creating market segments based on product usage occasion, the emphasis is onidentifying different circumstances or occasions under which the product is used. The sameproduct may be used on different occasions or under different circumstances by different people.As a result, opportunities exist for segmenting markets based on such differences in 'usageoccasions.' For example, airlines have segmented their market into usage occasion segmentsconsisting of people flying for business purposes (business flyers), vacation flyers, and peopleflying primarily for family reasons. Each segment represents a different usage occasion and eachis targeted with different pricing and promotional strategies. Frequent-flyer programs are gearedto business travelers to encourage airline loyalty. Super-low fares tied to advanced booking are

used to attract vacation travelers and people flying primarily for family reasons. Cooperativepromotional programs with travel agencies, destination resorts, and cruise-lines are commonlyemployed to provide reduced rates in travel markets.

Food products markets also are commonly segmented by usage occasion. For example, orangejuice has traditionally been promoted as a breakfast drink. In an attempt to build additionaldemand for orange juice, the orange-grower's trade associations promote the consumption oforange juice at other times of the day. Orange juice is promoted as an afternoon snack or as a'pick-me-up.' Appropriately, the theme was "its not just for breakfastanymore." Coke has done basically the same thing. We all are aware that colas(e.g. Coke and Pepsi) are consumed during morning hours as a substitute for

coffee. Most colas have a fairly high caffeine content and can give you thesame caffeine boost as does coffee as an aid to waking up. This is aparticularly attractive alternative for folks that do not like the taste of coffee.Coke, of course, has long recognized this and offers a promotional campaignto its local bottlers called "Coke in the Morning." Pepsi has experimented witha dedicated product geared to this usage occasion segment. The product wasbranded as Pepsi AM during test market. The product was a very potent


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version of Pepsi laced with extra caffeine and sugar.

Product User Status

Marketers employing this segmentation base attempt to identify differences between non-users,

potential users, regular users, ex-users, and first-time users of products. Larger firms withsubstantial market share often target non-users or potential users in an attempt to stimulateprimary demand for the product category. Smaller firms, in contrast, target regular users in anattempt to encourage brand switching. Marketers try to differentiate between users and non-users of product categories when consumer characteristics are tied to the need for the productitself rather than to the use of different brands. For example, consumers' characteristicsassociated with drinking decaffeinated coffee and using analgesic pain relievers may correlatemost highly with the characteristics of the product category, rather than reflect the specificdifferences between brands.

Brand Loyalty Status

Firms can learn a lot by analyzing the loyalty patterns of customers in markets. By finding thecharacteristics of loyal and non-loyal customers for their brand and those of major competitors,firms can find ways to keep their customers loyal and attract non-loyal customers away fromcompetitors. Brand loyalty often is defined based solely on consumers' patterns of repeatpurchase behavior. For example, consumers buying the same brand five times in a row have beendefined as brand loyaltyor as the proportion of total purchases within a given product categorydevoted to the most frequently purchased brand. A problem with such definitions is that repeatpurchase patterns may reflect only a spurious loyalty with little attitudinal attachment to thebrand. Such spuriously loyal consumers can easily be induced to switch to other brands viabetter prices, coupons, point-of-sale visibility and incentives.

Segments Based on Consumer Predispositions

Markets can be segmented based on differences in consumers' wants, needs, and attitudes. We'vealready examined in our health club study the value inherent in creating 'benefit segments' thatfocus on different wants and needs held by consumers in each segment. Additionalpredispositions also can lead to meaningful segmentation schemes. Markets can be segmentedbased on how knowledgeable people are of a particular product category. Different promotionalprograms may be required to communicate with those who know little about the product versusthose who don't.

Sometimes marketers may want to differentiate between customers who have experiencedspecific types of problems with products or brands versus those who have not. It is possible thatcustomers who frequently encounter problems of specific types may have a common set ofcharacteristics that can suggest how the problem should be addressed.

Segmenting markets based on consumers' media viewing habits may reveal consistentdifferences in the types of media consumers prefer (i.e. preferences for specific television shows,radio stations, magazines, and newspapers) and how these differences vary with key customer


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demographic and psychographic traits. This information then can be used to more effectivelytarget advertising and other communications to customer groups.

Q.5 Mention the forces in micro and macro environment that are likely to influence an

organizations working and functions. Is environmental scanning necessary for allorganizations?

Ans.

Forces in micro and macro environment

The micro-environment

The term micro-environment denotes those elements over which the marketing firm has controlor which it can use in order to gain information that will better help it in its marketing operations.

In other words, these are elements that can be manipulated, or used to glean information, in orderto provide fuller satisfaction to the companys customers. The objective of marketing philosophyis to make profits through satisfying customers. This is accomplished through the manipulationof the variables over which a company has control in such a way as to optimise this objective.The variables are what Neil Borden has termed the marketing mix which is a combination of all

the ingredients in a recipe that is designed to prove most attractive to customers. In this case

the ingredients are individual elements that marketing can manipulate into the most appropriatemix. E Jerome McCarthy further dubbed the variables that the company can control in order toreach its target market the four Ps. Each of these is discussed in detail in later chapters, but a

brief discussion now follows upon each of these elements of the marketing mix together with anexplanation of how they fit into the overall notion of marketing.

Product and price are obvious, but perhaps place and promotion need more explanation.

Place, it is felt, might better be termed placement because it comprises two distinct elements.

The first element is channels of distribution that is the outlets and methods through which acompanys goods or services are sold. Thus a channel can be certain types of retail outlet or itcan be salespeople selling a companys industrial products through say a channel which

comprises buyers in the chemical industry. The other part of place refers to logistics that relatesto the physical warehousing and transportation of goods from the manufacturer to the endcustomer. Thus, placement might be a better descriptor as it refers to the placing of goods orservices from the supplier to the customer. In fact, place has its own individual mix which istermed the distribution mix.

Promotionalso has its individual mix that is called the promotional mix. This comprisesadvertising, selling and sales promotion. In fact promotion is a misnomer, because in advertisingagency circles the mention of promotion usually means sales promotion. Some writers are now

separating selling away from promotion and calling it people because it is too important an

element of marketing to be lumped in with promotion, although in reality it is still promotion(through word of mouth). This fifth P (people) are those who contact customers on a regular


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basis with the objective of ultimately gaining orders and these people comprise the sales force.We can thus see that selling is a component part of overall marketing. There are two more Ps forservice marketing, but these are dealt with later.

Model of the process of marketing

This more complex model better explains what we are now beginning to understand aboutmarketing. The bottom line represents the elements of the marketing mix over which a companyhas control. These elements are manipulated in such a way as to best suit customers needs and

tastes and this represents an operational flow where things have to be done in order to arrive atthe optimum marketing mix. Remember that there are sub-mixes within the individual elementsof the marketing mix. This bottom line also equates to the earlier notion of the four Ps, or ratherthe five Ps, as personal selling has been separated from promotion and becomes people.

The top line represents an information flow from the market to the firm. Data is collectedthrough discussions and interviews with customers on and informal and formal basis. A whole

range of techniques is available for this process and this is collectively termed marketingresearch. A more advanced strategic model that incorporates marketing research is embodied in amarketing information system (MkIS) and this is dealt with in a later lecture. In addition, data iscollected from customers in relation to their likely future purchases and this is known as salesforecasting. Another raft of techniques is available for the subject of sales forecasting which liesat the very heart of marketing and business planning.

Thus we begin to see how marketing orientation works. Customers are the starting point andsales forecasting and marketing research determine their likely requirements and tastes. Thisinformation is processed internally within the organization and products and promotionalmessages are devised to suit customers needs, to allay their purchasing fears and to reinforce

their expectations. Goods and services are supplied as and when required in the quantities neededand when they are requested - not later and not earlier. This latter point is reinforced, becausemodern marketing dictates that customers demand their goods as needed and this lies at the baseof the latest notion of just-in-time manufacturing which relates to raw materials andcomponents. This is covered later in the text and it has tremendous implications for modernmarketing.

The place of marketing in the modern organization

At a more traditional level, marketing is often found alongside other major functions withinbusiness and Figure 4 illustrates this relationship. This organisation chart does not, of course,refer to all business organisations and to a large extent it is the ideal theoretical structure.

Companies tend to evolve and develop in a non-textbook manner, and in practice many differentorganisation charts can be found as a result of all kinds of illogicalities that defy modernmanagement thinking. Such illogical functions might well exist because of the forcefulpersonality of a head of department, whose department has assumed a position of power withinan organisation through his or her own personal disposition, and there is no managerialjustification for putting it in such a position of power in line management. An example could bethe material control department that might report direct to the managing director rather than


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being a sub-function within the purchasing department. Another example, quite commonlyfound, is a situation where a sales director can be found in the line alongside a marketingdirector. In such a situation, it might be a forceful sales director in a sales driven organisationwho will not assume the responsibility for marketing, but who is too powerful to put into asubordinate position under marketing.

The proximate macro-environment

The term macro-environment denotes all forces and agencies external to the marketing firmitself. Some of these forces and agencies will be closer to the operation of the firm than others,e.g. a firms suppliers, agents, distributors and other distributive intermediaries and competingfirms. These closer external constituents are often collectively referred to as the firms

proximate macro-environment to distinguish them from the wider external forces found, forexample, in the legal, cultural, economic and technological sub-environments.

This consists of people, organizations and forces within the firms immediate external

environment. Of particular importance to marketing firms are the sub-environments of suppliers,competitors and distributors (intermediaries). These sub-environments can each have asignificant effect upon the marketing firm.

The supplier environment

This consists of other business firms or individuals who provide the marketing firm with rawmaterials, product constituents, services or, in the case of retailing firms, possibly the finishedgoods themselves. Firms, whether they be retailers or manufacturers, will often depend onnumerous suppliers. The buyer/supplier relationship is one of mutual economic interdependence,both parties relying on the other for their commercial well-being. Although both parties are

seeking stability and security from their relationship, factors in the supplier environment aresubject to change, such as industrial disputes which will affect delivery of materials to the buyingcompany, or a sudden increase in raw material prices which forces suppliers to raise their prices.Whatever the product or service being purchased by the marketing firm, unexpecteddevelopments in the supplier environment can have an immediate and potentially serious effecton the firms commercial operations. Because of this, marketing management, by means of the

marketing intelligence component of its marketing information system, should continuallymonitor changes and potential changes in the supplier environment and have contingency plansready to deal with potentially adverse developments.

The distributive environment

Much reliance is placed on marketing intermediaries such as wholesalers, factors, agents anddistributors to ensure that their products reach the final consumer. To a casual observer, it mayseem that the conventional method of distribution in any particular industry is relatively static.This is because changes in the distributive environment occur relatively slowly, and there istherefore a danger of marketing firms failing to appreciate the commercial significance ofcumulative change. Existing channels may be declining in popularity over time, while newchannels may be developing unnoticed by the marketing firm. Nowhere has this creeping


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change been more apparent over recent years in the UK and other parts of the world than in theretailing of fast moving consumer goods (fmcg). In the 1960s well over half of all fmcg retailtrade was accounted for in the independent sector plus a further large proportion to the Co-operative Societies. Nowadays, the sector represented by the larger food multiples has well inexcess of this proportion.

The competitive environment

Management must be alert to the potential threat of other companies marketing similar andsubstitute product whether they are of domestic or foreign origin. In some industries there maybe numerous world-wide manufacturers posing a potential competitive threat and in others theremay only be a few. Whatever the type, size and composition of the industry, it is essential thatmarketing management has a full understanding of competitive forces. Companies need toestablish exactly who their competitors are and the benefits they are offering to the market.Armed with this knowledge, the company will have a greater opportunity to compete effectively.

The wider macro-environment

Changes in the wider macro-environment may not be as close to the marketing firms day-to-dayoperations, but they are just as important. The main factors making up these wider macro-environmental forces fall into four groups.

1. Political and legal factors2. Economic factors3. Social and cultural factors4. Technological factors

(Often referred to as the PEST factors in the marketing analytical context, a useful aide-memoire, although in some texts it is sometimes referred to as STEP). To this is sometimesadded Competitive factors and although PEST analysis relates to a specific organizationCompetitive factors tend to be subsumed under Economic factors. Such a PEST analysis

means listing all possible points that may affect the organization under review under each of theP.E.S.T. headings. Recently, some texts have added L (standing for legal) and E (standing for

environmental) to this classification, making the acronym PESTLE. Even more recently, somewriters have incorporated yet another E (standing for ecological) with the new acronym

STEEPLE.

The political and legal environment

To many companies, domestic political considerations are likely to be of prime concern.However, firms involved in international operations are faced with the additional dimension ofinternational political developments. Many firms export and may have joint ventures orsubsidiary companies abroad. In many countries, particularly those in the so-called ThirdWorld or more latterly termed Developing Nations, the domestic political and economic

situation is usually less stable than in the UK. Marketing firms operating in such volatileconditions clearly have to monitor the local political situation very carefully.


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Many of the legal, economic and social developments, in our own society and in others, are thedirect result of political decisions put into practice, for example the privatization of stateindustries or the control of inflation.

In summary, whatever industry the marketing firm is involved in, changes in the political and

legal environments at both the domestic and international levels can affect the company andtherefore needs to be fully understood.

Other macro-environmental factors

The macro-environmental factors discussed are not intended to be an exhaustive list, but merelyto demonstrate the main areas of environmental change. Other sub-environments may beimportant to marketing management, for example, in some countries the religious environmentmay pose an important source of opportunities and threats for firms. In the UK, demographicchanges are considered important by a number of firms.

In general, the UK population has been stable at approximately 56 million for a number of years,but the birth rate is falling, while people are living longer. Firms that produce goods and servicessuitable for babies and small children (e.g. Mothercare) have seen their traditional marketsremain static or decline slightly. Such companies have tended to diversify, offering productstargeted at older age groups. A larger older sector of the population offers opportunities for firmsto produce goods and services to satisfy their particular needs. The over-55 age group is themodern marketers current major opportunity. In all advanced economies such as the Australia,

UK and USA it is this age group that has the largest disposable income, and special products andservices such as holidays and pension-related financial services are being marketed to this sector.

Summary

The companys micro-environment has been discussed in terms of variables over which it hascontrol relevant to the marketing mix. This led to a description of marketing and its various sub-divisions including information from the market-place in terms of forecasting and marketingresearch. Marketing was then looked at alongside other business functions and its place in linemanagement was noted.

The companys proximate macro-environment was then examined under supplier, distributiveand competitive environment environments and finally the wider macro-environment wasexamined under the headings: political and legal, economic, socio-cultural and technologicalenvironments.

This can best be summed up by looking what has been covered in terms of a number of layers inthe environment from customers, to marketing and resources of the company, to theorganisations proximate macro-environment and finally to its wider macro-environment.


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Q.6 Consider the company, Maruthi Udyog Limited. Elaborate on the companys

marketing mix and give examples related to the 4 Ps.

Ans.

The marketing mix is a business tool used in marketing products. The marketing mix is oftencrucial when determining a product or brand's unique selling point (the unique quality thatdifferentiates a product from its competitors), and is often synonymous with the 'four Ps': 'price','product', 'promotion', and 'place'. However, in recent times, the 'four Ps' have been expanded tothe 'seven Ps' with the addition of 'process', 'physical evidence' and 'people'.

The term "marketing mix" was coined in 1953 by Neil Borden in his American MarketingAssociation presidential address. However, this was actually a reformulation of an earlier idea byhis associate, James Culliton, who in 1948 described the role of the marketing manager as a"mixer of ingredients", who sometimes follows recipes prepared by others, sometimes prepares

his own recipe as he goes along, sometimes adapts a recipe from immediately availableingredients, and at other times invents new ingredients no one else has tried.

The term became popular in the article written by Neil Borden called The Concept of the

Marketing Mix. He started teaching the term after he learned about it with an associate.

The prominent marketer, E. Jerome McCarthy, proposed a Four 'P's classification in 1960,which has since been widely used by marketers throughout the world. Since consumerismappeared, Four 'C's theory has been born to Japan and the United States late in the 1970s.

Four 'P's

The 'four Ps' consist of the following:

Product - A product is seen as an item that satisfies what a consumer needs or wants. It isa tangible good or an intangible service. Intangible products are service based like thetourism industry & the hotel industry or codes-based products like cellphone load andcredits. Tangible products are those that can be felt physically. Typical examples ofmass-produced, tangible objects are the motor car and the disposable razor. A lessobvious but ubiquitous mass produced service is a computer operating system.[1]

Every product is subject to a life-cycle including a growth phase followed by a maturity

phase and finally an eventual period of decline as sales falls. Marketers must do careful

research on how long the life cycle of the product they are marketing is likely to be and

focus their attention on different challenges that arise as the product moves through each

stage.
http://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Seven_Pshttp://en.wikipedia.org/wiki/American_Marketing_Associationhttp://en.wikipedia.org/wiki/American_Marketing_Associationhttp://en.wikipedia.org/wiki/E._Jerome_McCarthyhttp://en.wikipedia.org/wiki/Consumerismhttp://en.wikipedia.org/wiki/Product_%28business%29http://en.wikipedia.org/wiki/Tourism_industryhttp://en.wikipedia.org/wiki/Hotel_industryhttp://en.wikipedia.org/wiki/Motor_carhttp://en.wikipedia.org/wiki/Razorhttp://en.wikipedia.org/wiki/Computer_operating_systemhttp://en.wikipedia.org/wiki/Marketing_mix#cite_note-Business_for_Higher_Awards-0http://en.wikipedia.org/wiki/Marketing_mix#cite_note-Business_for_Higher_Awards-0http://en.wikipedia.org/wiki/Marketing_mix#cite_note-Business_for_Higher_Awards-0http://en.wikipedia.org/wiki/Product_life-cycle_theoryhttp://en.wikipedia.org/wiki/Product_life-cycle_theoryhttp://en.wikipedia.org/wiki/Marketing_mix#cite_note-Business_for_Higher_Awards-0http://en.wikipedia.org/wiki/Computer_operating_systemhttp://en.wikipedia.org/wiki/Razorhttp://en.wikipedia.org/wiki/Motor_carhttp://en.wikipedia.org/wiki/Hotel_industryhttp://en.wikipedia.org/wiki/Tourism_industryhttp://en.wikipedia.org/wiki/Product_%28business%29http://en.wikipedia.org/wiki/Consumerismhttp://en.wikipedia.org/wiki/E._Jerome_McCarthyhttp://en.wikipedia.org/wiki/American_Marketing_Associationhttp://en.wikipedia.org/wiki/American_Marketing_Associationhttp://en.wikipedia.org/wiki/Seven_Pshttp://en.wikipedia.org/wiki/Marketing


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The marketer must also consider the product mix. Marketers can expand the current

product mix by increasing a certain product line's depth or by increase the number of

product lines. Marketers should consider how to position the product, how to exploit the

brand, how to exploit the company's resources and how to configure the product mix so

that each product complements the other. The marketer must also consider product

development strategies.

PriceThe price is the amount a customer pays for the product. The price is veryimportant as it determines the company's profit and hence, survival. Adjusting the pricehas a profound impact on the marketing strategy, and depending on the price elasticity ofthe product, often, it will affect the demand and sales as well. The marketer should set aprice that complements the other elements of the marketing mix.

When setting a price, the marketer must be aware of the customer perceived value for the

product. Three basic pricing strategies are: market skimming pricing, marketing

penetration pricing and neutral pricing. The 'reference value' (where the consumer refersto the prices of competing products) and the 'differential value' (the consumer's view of

this product's attributes versus the attributes of other products) must be taken into

account.

Promotion - represents all of the methods of communication that a marketer may use toprovide information to different parties about the product. Promotion comprises elementssuch as: advertising, public relations, personal selling and sales promotion.

Advertising covers any communication that is paid for, from cinema commercials, radio

and Internet advertisements through print media and billboards. Public relations is where

the communication is not directly paid for and includes press releases, sponsorship deals,

exhibitions, conferences, seminars or trade fairs and events. Word-of-mouth is any

apparently informal communication about the product by ordinary individuals, satisfied

customers or people specifically engaged to create word of mouth momentum. Sales staff

often plays an important role in word of mouth and public relations (see 'product' above).

Place - refers to providing the product at a place which is convenient for consumers toaccess. Place is synonymous with distribution. Various strategies such as intensivedistribution, selective distribution, exclusive distribution and franchising can be used bythe marketer to complement the other aspects of the marketing mix.
http://en.wikipedia.org/wiki/Product_lininghttp://en.wikipedia.org/wiki/Pricinghttp://en.wikipedia.org/wiki/Price_elasticityhttp://en.wikipedia.org/wiki/Demandhttp://en.wikipedia.org/wiki/Customer_perceived_valuehttp://en.wikipedia.org/wiki/Market_skimminghttp://en.wikipedia.org/wiki/Penetration_pricinghttp://en.wikipedia.org/w/index.php?title=Neutral_pricing&action=edit&redlink=1http://en.wikipedia.org/wiki/Promotion_%28marketing%29http://en.wikipedia.org/wiki/Advertisinghttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Personal_sellinghttp://en.wikipedia.org/wiki/Sales_promotionhttp://en.wikipedia.org/wiki/Word_of_mouthhttp://en.wikipedia.org/wiki/Product_placementhttp://en.wikipedia.org/wiki/Distribution_%28business%29http://en.wikipedia.org/wiki/Distribution_%28business%29#Type_of_marketing_channelhttp://en.wikipedia.org/wiki/Franchisinghttp://en.wikipedia.org/wiki/Franchisinghttp://en.wikipedia.org/wiki/Distribution_%28business%29#Type_of_marketing_channelhttp://en.wikipedia.org/wiki/Distribution_%28business%29http://en.wikipedia.org/wiki/Product_placementhttp://en.wikipedia.org/wiki/Word_of_mouthhttp://en.wikipedia.org/wiki/Sales_promotionhttp://en.wikipedia.org/wiki/Personal_sellinghttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Advertisinghttp://en.wikipedia.org/wiki/Promotion_%28marketing%29http://en.wikipedia.org/w/index.php?title=Neutral_pricing&action=edit&redlink=1http://en.wikipedia.org/wiki/Penetration_pricinghttp://en.wikipedia.org/wiki/Market_skimminghttp://en.wikipedia.org/wiki/Customer_perceived_valuehttp://en.wikipedia.org/wiki/Demandhttp://en.wikipedia.org/wiki/Price_elasticityhttp://en.wikipedia.org/wiki/Pricinghttp://en.wikipedia.org/wiki/Product_lining


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4 Ps of marketing

Marketing decision variables are those variables under the firm's control that can affect the levelof demand for the firm's products. They are distinguished from environmental and competitiveaction variables that are not totally and directly under the firm's control.

The four marketing decision variables are:

Price variables

Allowances and deals Distribution and retailer mark-ups Discount structure

Product variables

Quality Models and sizes Packaging Brands Service

Promotion variables

Advertising Sales promotion Personal selling Publicity

Place variables

Channels of distribution Outlet location Sales territories

Warehousing system


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Set 2

Q1: Explain the following: a) Product mix dimensions b) Product line strategies.

Ans:

Product mix dimensions

The number of product lines and items offered by marketer to the consumers.

A companys product mix has fourdifferent dimensions. They are product mix width, productmix length, and product mix depth and product mix consistency.

1. Product mix width: The total number of product lines that company offers to theconsumers.

2. Product mix length: The total number of items that company carries within its productline.

3. Product line depth: The number of versions offered of each product in the line.4. Product mix consistency: If companys product lines usage, production and marketing are

related, then product mix is consistent, else it is unrelated.

Product Line Strategies

Product line: The group of related products which uses same marketing efforts to reach theconsumer.

The product line identifies profitable and unprofitable products and helps in allocation ofresources according to that. The product line understanding helps the marketer to take lineextension, line pruning and line filling strategies of the company.Pidilite Industries, the adhesives and chemical company, have the following group of relatedproducts (or product lines) in consumer and business markets.

Consumer market.

1. Adhesives and sealants.2. Art materials and stationeries.3. Construction chemicals.4. Automotive chemicals5. Fabric care


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Business market

1. Industrial adhesives.2. Textile chemicals.

3. Organic pigment powders.4. Industrial resins and5. Leather chemicals.

Product Line Decisions:The major product line decisions area. Product line lengthb. Product line stretchingc. Product line fillingd. Product line pruning

a. Product line length: The number of items in the product line is called the product line length.Company should decide whether it requires longer chain or shorter length. The decision dependsupon the objective of the company, competitive environment and profitability. If the chain isshort company can add new products and if it is lengthy company can reduce the number ofproducts. For example, Pidilites adhesives and sealants line has following 11 items in the

product line. Hence the length of product line is 11

b. Product line stretching: Company lengthens its product line either by stretching upwards ordownwards or both ways. Line stretching decision depends on three situations -

Company which operates in high end market may come up with mid class or low classtargeted products.

1. White Glue 2. Paper Glue

3. Glue Stick 4. Instant Adhesive

5. Epoxy Putty 6. Epoxy Adhesive

7. PVC Insulation Tape 8. Silicone Sealants

9. Contact Glue 10. All Purpose Glue

11. Maintenance Spray


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The company which operates in lower end of market may come up with high end marketproducts.

If the company operates in mid segment and comes out with low end product as well ashigh end product then it is stretching both ways.

c. Product line filling: Adding more items in the present product line. For example, in the year2000 Maruti Suzuki launched Alto. This product was between Maruti 800 and Maruti Zen. Herecompany was trying to fill the gap existing in the segment by introducing ALTO, i.e. line filling.

d. Product line pruning: Removing the unprofitable products from the product line. ToyotaKirloskar phased out their well known brand Quails when they thought the brand was not addingvalue to the product line.

Q2: a) Assess the factors that are involved in setting up a distribution channel. b) Give anote on Retailing.

.Ans:

Assess the factors that are involved in setting up a distribution channel

Marketers should consider various factors before deciding the particular type of channel. It maybe organizational or competitive factors. The type of goods to be transported and stored willdecide the length and intensity of channel. To decide on the particular channels, marketer willhave to take into account the following factors.

1. Understanding the customer profile

Purchasing habits differ from individual to individual. Individuals who face shortage of time

would like to purchase on the net (direct channel) and those who have abundant time would like

to go through the shopping experience. Some of them would like to have variety of goods, while

others want unique or specialized products. Hence marketers should understand who are his

customers? How do they purchase and how often they purchase? For example, customers dont

like to travel half a kilometre to purchase a shampoo sachet, but they dont mind travelling two

kilometres while purchasing durable goods.

2. Determine the objectives on which channel is to be developed

a. Reach: Company would like to make the goods available in most of the retail outlets. So it,

will adopt intensive distribution channel.


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b. Profitability: Company wants to reduce the cost in the channels and enhance their profitability.

It will restructure the channel to optimum level so that it can reduce the cost and increase the

profit.

c. Differentiation: Company positions their products differently. When most of the industry

players follow conventional system, company goes with new format of channels. For example,all computer manufacturers were adopting dealer-retailer channel to sell their products, but Dell

started selling its product on the internet.

3. Identify type of channel members:

Once the objectives are set on the basis of companys policies, it will analyze which types of

channels are most suitable. Merchants, agents and resellers are some intermediaries involved in

the distribution. Merchants are those who buy the product, take title and resell the merchandise.

Agents will find the customers, negotiate with them, but do not take the title of the product.

Facilitators are the people who aid the distribution but do not negotiate or take the title of the

product.

4. Determining intensity of distribution:

Intensity of distribution means how many middlemen will be used at the wholesale and retail

levels in a particular territory. If the number of intermediaries is more, then the cost of the

channel will increase. However, if the number of intermediaries is less, then company will not be

able to meet all target customers. Therefore company should adopt optimum number of

intermediaries. On the basis of how many intermediaries are required, company can adopt any

one of the following strategies.

a. Intensive distribution: A strategy in which company stocks goods in more number of outlets.

The intention is to make the goods available near to the customer. For example, you can find

Parle-G glucose biscuits available in almost all the retail outlets in rural and urban areas.

b. Selective distribution: A strategy in which company stocks goods in limited number of retail

outlets. For example, televisions are sold only in selected retail outlets. TVs cannot be sold like

toothpaste. Onida TVs are available in electronic retail shops like Viveks, Girias, Next, E-zoneetc

c. Exclusive distribution: In this type of channel format, marketer gives only a limited number of

dealers the exclusive right to distribute its products in their territories. For example, a Kaya skin

care solution of Marico is marketed through exclusive distribution.


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5. Assigning the responsibilities to channel members.

Company should define the territory in which the channel member should operate, at what price

he should sell, services he should perform, and how he should sell.

6. Selecting the criteria to evaluate the channel member:

Company may have different types of channel alternatives. It would like to choose any one of the

alternatives, which meets its objectives. Channels can be evaluated in the design phase by the

method called SCPCA.

Sales(S): The ability of each channel member to generate the sales for company in agiven period.

Cost(C):How much cost each channel alternative incurs? Which one of the alternativesprovides the optimum solution?

Profitability (P): Various channel alternatives available to the company and theirprofitability shall be compared. Channel with better profitability shall be selected.

Control (C): Every company would like to have better control over its channel members.Alternative channels can be evaluated on the basis of how much control each channelmember desires. And how much control the company is willing to provide.

Adaptability (A): Marketing is a dynamic world. Competition exerts pressure oncompanies to relook at their practices and supply chain continuously. The channelalternatives should be flexible enough to meet the changing requirements. Whicheverchannel alternative meets such objectives shall be selected.

Give a note on Retailing:-

Retail sector has witnessed tremendous growth in the last few years. The major factors which

drive the retail boom are change in consumer profile and demographics, increase in the number

of international brands available in the Indian market, economic implications of the government,

increasing urbanization, credit availability, improvement in the infrastructure, increasing

investments in technology and real estate. The Indian retail market, which is the fifth largest

retail destination globally, according to industry estimates is estimated to grow from US$ 330

billion in 2007 to US$ 427 billion by 2010 and US$ 637 billion by 2015. Simultaneously,

organized retail which presently accounts for 4 per cent of the total market is likely to increase

its share to 22 per cent by 2010.


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As per Associated Chambers of Commerce and Industry of India (ASSOCHAM), the overall

retail market is expected to grow by 36%. The organized sector is expected to register growth

amounting to Rs 150 billion by 2008. Retail is amongst the fastest growing sectors in the country

and India ranks 1st, ahead of Russia, in terms of emerging markets potential in retail.

Characteristics of retailing

Direct interaction with customers. Retailer is the final link between company andcustomer. Retailer understands the need of the customer and provides the proper solution

to him. For example, neighbourhood grocery store person knows his customer profile

better. He reminds the customer of what to purchase and provides credit.

Purchased in small quantity: Customer purchases small quantity of merchandise at theretail store. Even if customer purchases less quantity he will purchase it frequently. This

has led to better relationship between customer and retailer.

Tool of marketing communication: Companies use retailer location for point of purchasedisplays. They also encourage retailer to promote the products through word of mouth

communication.

Functions of retailing

Sorting: Retailers arrange the items in proper order so that customer can easily identifythe goods or services that he needs.

Breaking bulk: The process of unpacking big packets into small packets. Retailer willperform this function as customer may not be able to purchase large quantity of goods

and services.

Holding stock: Retailer works as storage facility to organizations. Retailer holdsinventory to meet the day to day needs of consumer.

Channels of communication: Retailer promotes the company product through word ofmouth communication. The retailer location is also used for point of purchase display.

Transportation: Retailer undertakes door delivery order in case of durable goods. Thisfeature is now adopted by the small grocery stores also.


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Type of retailing

A. Store retailing: The mode of retailing where a store is essential in a particular location to do

business. Store retailing can be performed in different formats. They are

1. Specialty store: The stores carry large amount of merchandise but in limited productlines like Textile store or furniture store. For example, Tanishq, jewelery retail store.

2. Department store: In this retail format, apparel, home furnishing and consumablesgoods and services are sold. Each of the formats is considered as a different department

and managed in the retail store. For example, Shoppers Stop of Raheja group.

3. Supermarkets: According to Philip Kotler supermarkets are a relatively large, low cost,low margin, high volume, self service operation designed to serve the consumers total

needs for food and household products. For example, Food World of RPG group.

4. Convenience store: These stores are very near to customer residence; usually carry orhold day to day products of high turnover at premium price. For example, Reliance Fresh

5. Discount store: These stores sell products at low prices with low margin. The storeachieves their profit by generating high volumes. Subhiksha, a south India based retailer

follows this format.

6. Off price retailers: This type of retailer buys the goods at less than wholesale prices.These products are sold at lesser than retail prices. For example, factory outlets in

Marathahalli, Bangalore.

7.

Super stores: These are very large stores where customer can purchase food and nonfood products. The super store includes category killers that carry large merchandise in a

particular category. For example, Nalli sarees which carries a large variety of sarees in

their stores. Another type of super store format which exists in India is Hypermarkets.

These retail outlets have huge space and carry large merchandise. For example, Reliance

Mart in Ahmadabad.

B. Non store retailing:

The mode of retailing where a company uses electronic media or direct selling medium to sell

their products. For example, direct selling, Telemarketing, Automatic vending, online retailing

and direct marketing.


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Q3: Geo Ad Agency has many corporate as their clients. Due to lack of resources, it is

planning to cut down work and reject certain clients. Further, they want to establish a

concrete system in communication development and ad structure. What would be your

advice to Geo Ad agency in this aspect?

Ans:

Geo Ad Agency can follow following points to establish a concrete system in

communication development.

These points also help Geo Ad agency to sustain their clients:

Preparing target customer profile:

Effective communication starts with identifying the target customer to whom the communicationis developed. In this stage company prepares target customer profile.

Identifying promotion objectives:

Target customer profile provides inputs about his/her readiness to purchase the product.Customer may be in any of the six stages of hierarchy of effects. The six stages are awareness,knowledge, liking, preference, conviction and purchase. Every company will like to bring theircustomers to the purchase stage from other five stages. Therefore it creates different promotionprogram at different stage. To make it clearer, Company first creates awareness about theproduct, educate them about the advantages, induce them to choose the brand, stimulates and

monitors that customer purchases the product.

Designing a message:

After deciding the communication objectives, Marketer turns to develop right message whichshould create attention, interest, desire or action (AIDA) by the customer. Before deciding whatshould be there in the message, we will have to understand AIDA model in detail. The mainobjective of any message is to meet the AIDA model although the message framed will besubject to product type/category, ad budget and creativity skills of individuals.

I. AIDA model:

1. Attention: The marketing communication should generate attention towards the product.In this stage customer is having the need; organization should provide solution from theircommunication. For example, when advertisers use a popular film star or a celebrity topromote a perfume brand or even a soap or a toothpaste, it will immediately catch theaudiences attention.


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2. Interest: Once the customer provides enough attention towards the communication,

organization should stimulate it to create interest. For example, if celebrities are used toendorse products, audience must be curious enough to know what they are saying aboutthat particular product.

3. Desire: The interest created should be forced in the customer mind so that he willdevelop desire towards the product. For example, when people have seen the ad and showinterest, next thing would be to create a desire for that product. People should have thewillingness to buy the product and unless they dont desire it, they will not be eager tobuy the same.

4. Action: Strong desires should be turned into action. Hence company should provide theadvantages of purchasing of the product in their communication messages. For example,it is very difficult for the Insurance companies to grab the attention of people towardsinsurance products, create interest and desire as to make a person buy the same. So, its a

challenge to the marketer to develop such a message that immediately gets the attentionand make a person to go for it. For example, it is easy to catch peoples attention towardsice-creams so that they will have interest and desire to taste it and eventually buy it.

II. Deciding the message content.

Message content must have any one of the following appeals

1. Emotional appeal: Positive emotional appeal or negative emotional appeals are strongtools used to intensify the purchasing activity of the customer. Positive emotions likelove, pride, joy and humour are used in the message

2. The negative emotions like fear guilt and shame are also used in the advertisement toattract the customer.

3. Rational appeals highlight on the desired benefits about the products. They highlightquality, economy value or performance of the product.

4. Moral appeal: These are concerned towards public health or environment or socialresponsibility. For example, Shell lubricants show its commitment towards environmentin their advertisements.


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III. Message format:

The Right Message Format for the Right Marketing Strategy should follow. Depending on

message marketing is naturally going to have to change. Shorter messages require different types

of advertisements than longer ones.

Selecting the channels of communications

The communicator may use company sales people, reference groups, blogs, RSS, webinar,online communities and social networking sites to promote their products. These media arecalled as personal communication channels. The word of mouth campaigns buzz marketing andviral marketing are some examples of personal communication channels.

Selecting the message source

Messages communicated by the celebrities and proper sources have high credibility among thetarget consumers. Many companies use well known actors and actresses, cricket players, andeven cartoon characters to promote their advertisements.

Target Customer Feedback

The communicator collects the feedback on the promotion campaign to assess how many oftarget customers are able to see, hear or read the message. This stage helps communicator tounderstand how many of target customers actually able to recall the message? And among themhow many of them really purchased it. Some companies go further and ask the customer toprovide suggestion to improve the promotion campaign.

Q4: Discuss the objectives of training and training programme along with its significance.

Answer:

Training

Training is a continuation of selection. Having selected the salesmen, there are two options. Theycan be sent to the field directly with samples, order books etc., and/or they can be sent fortraining programme. Some people think that salesmanship is born, but there are no bornsalesmen like there are no born doctors, lawyer, engineers, teachers etc. However, all thesepeople need training to call them qualified, and so also is the case with salespersons. A personmay have interest in the profession. Thiess interest can be fully developed, through propertraining. One attains perfection, self-development etc., through training.

Training means the process of perfecting the salespersons for their work. Training programmesare organized procedures or methods through which knowledge as well as skill, for a definite


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purpose, is acquired. By training, one can increase knowledge in a particular field. Thesalesmanship is not born but can be made effective through training.

Significance of Training: The present era of marketing world is full of stiff and cut-throatcompetition. The world is dynamic and not static. Customers are more benefit-oriented.

Producers, in order to meet the ever-changing demands of the consumers, produce new products,new devices, and products with multiple uses and so on. Thus, training or repeated training isessential to keep the salesmen, with up-to-date knowledge, in respect of new or developed goods.Training gives scope for improvement.

Objectives of Training:

The objectives are summed up below:

1. To facilitate the salespersons to acquire the techniques and principles of salesmanship,process of sales, canvassing etc.

2. To bring down the labor turnover in the sales force.3. To facilitate better sales performance.4. To improve the relations with the customers.5. To increase the efficiency of sales personnel.6. To keep the salesperson informed about the products, market, competitors etc., to face

different situations.

7. To lower the selling expense so as to increase the profits.8. To maintain sound relations between employer and employee.9. To develop better knowledge, and the ways and means to resist all undesirable situations.

Training Programme

A firm should chalk out a programme for sales training. The training is based on the nature of thejob and the products to be sold. A planned training programme should function with thefollowing ideas or principles, often referred to as ACMEE.

A: Aim of TrainingC: Content of TrainingM: Method of TrainingE: Execution of TrainingE: Evaluation.


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1. Aim of Training: The whole idea behind the training is to make a recruit a good salesperson.

2. Content of Training: No hard and fast rules can be laid down as to the contents of training.The content of the training programme relates to the subject-matter of training.

3. Method of TrainingFor imparting training to the salespersons, different methods are being used. Broadly, thesemethods may be divided into two:

4. Execution of TrainingOnce sales person done with training he/she should send to actual market to sale the project. A

periodic evolution is required to observe of sales persons performance, based on that it can be

decided if sales parson needs more training.

5. Evaluation of Training

Having trained the salespersons, the marketing manager must evaluate the usefulness oreffectiveness of training, individually and collectively on the basis of the performance of thesales personnel. Money, effort and time have been spent on training. Therefore, it is natural toexpect returns. Evaluation can be made on the basis of performance of sales executive in termsof sales volume, sales profitability, order-size, expenses etc., between, before and after trainingperiods.

Q5 : Management of Sai Systems Pvt. Ltd. has decided to enter international marketing

scenario. What methods are applicable to the company to enter international markets and

what should be the approach?

Ans:

Sai Systems Pvt. Ltd. should follow an International Market Entry Strategies:

To enter international marketing Sai Systems Pvt. Ltd. know the answers for some basicquestions like

a. In how many countries would the company like to operate?

b. What are the types of countries it plans to enter?

Thats why companies evaluate each country against the market size, market growth, and cost ofdoing business, competitive advantage and risk level.Once the market is found to be attractive, Sai Systems Pvt. Ltd. should decide how to enter thismarket. Sai Systems Pvt. Ltd. can enter the international market by adopting any one of thefollowing strategies.


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They area. Exportingb. Licensingc. Contract manufacturingd. Management contract

e. Joint ownershipf. Direct investment

Exporting is the technique of selling the goods produced in the domestic country in a foreigncountry with some modifications. For example, Gokaldas textiles export the cloth to differentcountries from India. Exporting may be indirect or direct. In case of indirect exporting, companyworks with independent international marketing intermediaries. This is cost effective and lessrisky too. Direct exporting is the technique in which organization exports the goods on its ownby taking all the risks. Maruti Udyog Limited, Indias leading car manufacturer exports its carson its own. Company can also set up overseas branches to sell their products. Adani Exports,another leading exporter from India has international office in Singapore.

Licensing: According to Philip Kotler, licensing is a method of entering a foreign market inwhich the company enters into an agreement with a license in the foreign market, offering theright to use a manufacturing process, trademark, patent, or other item of value for a fee orroyalty. For example, Torrent Pharmaceuticals has license to sell the cardiovascular drugs ofChinese manufacturer Tasly. Licensing may cause some problems to the parent company.Licensee may violate the agreement and can use the technology of the parent company.

Contract manufacturing: Company enters the international market with a tie up betweenmanufacturer to produce the product or the service. For example, Gigabyte Technology hascontract manufacturing agreement with D- link India to produce and sell their mother boards.

Management contracting: In this case, a company enters the international market by providingthe knowhow of the product to the domestic manufacturer. The capital, marketing and otheractivities are carried out by the local manufacturer.

Joint ownership: A form of joint venture in which an international company invests equally witha domestic manufacturer. Therefore it also has equal right in the controlling operations. Forexample, Barbara, a lingerie manufacturer has joint venture with Gokaldas Images in India.

Direct Investment: In this method of international market entry, Company invests inmanufacturing or assembling. The company may enjoy the low cost advantages of that country.Many manufacturing firms invested directly in the Chinese market to get its low cost advantage.Some governments provide incentives and tax benefits to the company which manufactures theproduct in their country.

Approaches to International Marketing

The three common approaches used in the international market are -


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a. Domestic market extension approach.b. Multi domestic market orientation.c. Global market orientation.

Domestic market extension approach: Companies that adopt this strategy think international

markets are secondary to its domestic markets. For example, HSBC advertises its bankingservices with a tag line the worlds local bank.Multi domestic market orientation: In the international market each country has its uniqueness.Their preference varies. The consumer profile is different from domestic operation. Companiesdevelop different market plans for such markets. For example, in France, men use morecosmetics than the women, whereas in India women use more cosmetics than men. A cosmeticscompany should change the product positioning differently.Global market orientation: In this approach, company thinks that products needs are universal innature irrespective of country where they work. Here company tries to standardize their productsor services. For example, Sony Walkman is same across the world. The product informationbrochure contains explanation in different languages of different countries. The final product is

same in all the countries.

Q6 : a) Give a note on Product mix pricing strategies. b) What is Brand development? How

is it done?

Ans:

Note on Product mix pricing strategies

The product mix is the collection of products and services that a company chooses to offer itsmarket. When the product is a part of product-mix, there are five kinds of strategies involved

1. Product Line pricing:

Strategy of setting the price for entire product line. Marketer differentiates the price according tothe range of products, i.e. suppose the company is having three products in low, middle and highend segment and prices the three products say at Rs 10 Rs 20 and Rs 30 respectively.

The three levels of differentiation create three price points in the mind of consumer. The task ofmarketer is to establish the perceived quality among the three segments. If the customers do notfind much difference between the three brands, he/she may opt for low end products.

2. Optional Product pricing:

This strategy is used to set the price of optional or accessory products along with a main product.


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Organizations separate these products from main product so that customer should not perceiveproducts are costly. Once the customer comes to the show room, organization explains theadvantages of buying these accessory products.

3. Captive product pricing:

Setting a price for a product that must be used along with a main product. For example, Gillettesells low priced razors but make money on the replacement cartridges.

4.By-product pricing:

It is determining the price for by-products in order to make the main products price moreattractive. For example, L.T. Overseas, manufacturers of Dawaat basmati rice, found thatprocessing of rice results in two by-products i.e. rice husk and rice brain oil. If the company sellshusk and brain oil to other consumers, then company is adopting by-product pricing.

5. Product bundle pricing:

It is offering companies several products together as a bundle at the reduced price. This strategyhelps companies to generate more volume, get rid of the unused products and attract the priceconscious consumer. This also helps in locking the customer from purchasing the competitors

products. For example, Anchor toothpaste and brush are offered together at lower prices.

Brand development

Company can develop the brand on the basis of product category and brand name. Some of thedifferent strategies adopted by companies to develop the brands are as follows:

1. Line extension: Company uses its well known brand name to introduce additional items in agiven product category such as new forms, flavours, ingredients or package sizes.

For example, Karnataka Milk Federation, uses its top brand name Nandini, to introduce newitems like toned milk, full cream milk , curd and milk powder.It is less risky and requires fewer investments to introduce the product. In the above exampleNandini used the extension to meet the excess capacity that it has. The milk procurement wasmore than the demand from the customer. Hence it started producing the milk powder. But allthe products introduced need not to be successful in the market. In case of KMF, Nandini icecreams didnt click in the market. Another risk of line extension is brand cannibalization, i.e.companys brand/items compete with each other.

2. Brand extension: A strategy in which company uses one of its familiar brand names for newproduct categorys items. For example, United Breweries (UB) Limited group used its flagshipbrand Kingfisher to different categories. Kingfisher was originally a beer brand extended toairlines.


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Brand extension gives instant recognition to the brand. In the above example, people requiredvery little time to know Kingfisher airline brand, because parent brand was very well known.Brand extension may hurt the parent brand reputation in the market if it fails.

3. Multi brands: The technique of introducing the product or items in existing product category

with a new brand name.For example, Hindustan Unilever uses different brand names for their home and personal carecategory. The above example shows us that HUL have Breeze, Dove, Liril, Lux, Lifebuoy andPears in the bath soap segment itself. It helps the company to come out with new features in theproduct or product category. Organizations adopt this strategy to avoid brand cannibalization inthe given category. The major disadvantage of this strategy is that none of the brands will enjoymajor market share and result in lesser profitability.

4. New brands: The strategy indicates coming out with new brands for new category products.In this strategy, company believes that existing brands cannot be extended to the new category.The new brand strategy requires huge resources to build it. The new category, if it already has

some brands of other companies, investment requirement will go up. For example, HindustanUnilever launched Pure-It in the water purifier category. The category and brand are new to thecompany.

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MBA II Semester Marketing Mangaement