Spring 2012, MBA-2nd Semester

FEBRUARY 2012 Master of Business Administration (MBA) Semester 2 MB0046 Marketing Management (4 Credits) (Book ID: B1135) Assignment Set- 1

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Q.1 Explain the various stages involved in new product development New product development (NPD) is the term used to describe the complete process of bringing a new product to market. A product is a set of benefits offered for exchange and can be tangible (that is, something physical you can touch) or intangible (like a service, experience, or belief). There are two parallel paths involved in the NPD process: one involves the idea generation, product design and detail engineering; the other involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain or grow their market share STAGES ARE: 1. Idea Generation is often called the "fuzzy front end" of the NPD process

Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, Weaknesses, Opportunities & Threats), Market and consumer trends, company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features. Lots of ideas are being generated about the new product. Out of these ideas many ideas are being implemented. The ideas use to generate in many forms and their generating places are also various. Many reasons are responsible for generation of an idea. Idea Generation or Brainstorming of new product, service, or store concepts - idea generation techniques can begin when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening Phase (shown in the next development step). The object is to eliminate unsound concepts prior to devoting resources to them. The screeners should ask several questions:

2. Idea Screening

Will the customer in the target market benefit from the product? What is the size and growth forecasts of the market segment/target market? What is the current or expected competitive pressure for the product idea? What are the industry sales and market trends the product idea is based on?
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Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and delivered to the customer at the target price?

3. Concept Development and Testing

Develop the marketing and engineering details

Investigate intellectual property issues and search patent data bases Who is the target market and who is the decision maker in the purchasing process? What product features must the product incorporate? What benefits will the product provide? How will consumers react to the product? How will the product be produced most cost effectively? Prove feasibility through virtual computer aided rendering, and rapid prototyping What will it cost to produce it?

Testing the Concept by asking a sample of prospective customers what they think of the idea. Usually via Choice Modelling. Estimate likely selling price based upon competition and customer feedback Estimate sales volume based upon size of market and such tools as the FourtWoodlock equation Estimate profitability and break-even point Produce a physical prototype or mock-up Test the product (and its packaging) in typical usage situations Conduct focus group customer interviews or introduce at trade show Make adjustments where necessary Produce an initial run of the product and sell it in a test market area to determine customer acceptance New program initiation Finalize Quality management system Resource estimation Requirement publication
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4. Business Analysis

5. Beta Testing and Market Testing

6. Technical Implementation

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Publish technical communications such as data sheets Engineering operations planning Department scheduling Supplier collaboration Logistics plan Resource plan publication Program review and monitoring Contingencies - what-if planning Launch the product Produce and place advertisements and other promotions Fill the distribution pipeline with product Critical path analysis is most useful at this stage Impact of new product on the entire product portfolio Value Analysis (internal & external) Competition and alternative competitive technologies Differing value segments (price, value, and need) Product Costs (fixed & variable) Forecast of unit volumes, revenue, and profit

7. Commercialization (often considered post-NPD)

8. New Product Pricing

Q.2 Discuss the importance of SWOT analysis to develop effective marketing mix. A tool used by organisations to help the firm establish its Strengths, Weaknesses, Opportunities and Threats (SWOT). A SWOT analysis is used as a framework to help the firm develop its overall corporate, marketing, or product strategies. Note:Strengths and Weaknesses are internal factors which are controllable by the organisation. Opportunities & threats are external factors which are uncontrollable by the organisation.

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Strength examples could include:

A strong brand name. Market share. Good reputation. Expertise and skill.

Weaknesses could include:

Low or no market share. No brand loyalty. Lack of experience.

Opportunities could include:

A growing market. Increased consumer spending. Selling internationally. Changes in society beneficial to your company.

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Threats could include:

Competitors Government policy eg taxation, laws. Changes in society not beneficial to your company.

A SWOT analysis is an excellent tool to use if the organisation wants to take a step back and assess the situation they are in. Issues raised from the analysis are then used to assist the organisation in developing their marketing mix strategy. A SWOT analysis must form the part of any prudent marketing strategy.

Q.3 Briefly explain the major external and uncontrollable factors that influence an organization decision making, performance and strategies Major external and uncontrollable factors that influence an organisation's decision making, and affect its performance and strategies, factors outside and enterprises control. These factors include the economic, demographics, legal, political, and social conditions, technological changes, and natural forces.

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Social and demographic environment is concerned with society as a whole; it covers health, media, education, minorities, women, organised labour, legal system and demographics. The biggest challenge to firms is the society's changing demands. Health As defined by World Health Organization (WHO), it is a "State of complete physical, mental, and social well being, and not merely the absence of disease or infirmity". Health is a dynamic condition resulting from a body's constant adjustment and adaptation in response to stresses and changes in the environment for maintaining an inner equilibrium called homeostasis. My aim is not to discuss health but the impact it has on organisations. Example on how changes in social environment can affect a business Extract from bbccouk 'It's our human right to smoke' By Tom Warren BBC News, Birmingham Takings at Stechford Working Men's Club have slumped by 20,000 since the smoking ban came into force. Just before July last year members at the long established Birmingham club began working hard to improve the venue to try to retain trade from smokers. They painted the walls, laid new carpets and installed a partially covered smoking shelter equipped with heaters. But since new smoking laws came into force across England, smokers have deserted the club in droves, preferring to light up at home. 'Desperate' situation. Treasurer Ray Guest, who has been a member for 23 years, said nothing had prepared the club for the huge drop in trade which he blames directly on the ban ban. Media Communication channels through which news, entertainment, education, data, or promotional messages are disseminated. Media includes every broadcasting and narrowcasting medium such as newspapers, magazines, TV, radio, billboards, direct mail, telephone, fax, and internet.

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Media usage

Media (the plural of "medium") is a term referring to those organized means of dissemination of fact, opinion, entertainment, and other information, such as newspapers, magazines, out-of-home advertising, cinema films, radio, television, the World Wide Web, books, CDs, DVDs, videocassettes, video games and other forms of publishing. Literacy The traditional definition of literacy is considered to be the ability to read and write, (basic literacy) or the ability to use language to read, write, listen, and speak. In modern contexts, is more of a (functional literacy), the word refers to reading and writing at a level adequate for communication, or at a level that lets one understand and communicate ideas in a literate society, so as to take part in that society. The United Nations Educational, Scientific and Cultural Organization (UNESCO) has drafted the following definition: "Literacy is the ability to identify, understand, interpret, create, communicate and compute, using printed and written materials associated with varying contexts. Literacy involves a continuous learning to enable an individual to achieve his or her goals, to develop his or her knowledge and potential, and to participate fully in the wider society". Basically, someone who is well educated in one language and go to work at another country, cant communicate in the language of a host county, is functionally illiterate. For example In UK, there are many educated and experienced people from Eastern European countries like Poland, Czech Republic but cant speak English, as a result they end up doing menial jobs. Knowledge capital The introduction of the term is explained and justified by the unique characteristics of knowledge. Unlike physical labour (and the other factors of production), knowledge is: Expandable and self generating with use: as doctors get more experience; their knowledge base will increase, as will their endowment of human capital. The economics of scarcity is replaced by the economics of self generation. Transportable and shareable: knowledge is easily moved and shared. This transfer does not prevent its use by the original holder. However, the transfer of knowledge may reduce its scarcity value to its original possessor.

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Human capital refers to the stock of productive skills and technical knowledge embodied in labour. Labour competences are what make a nation more competitive and innovative.

Q.4 Discuss the potential benefits associated with MIS. According to Kenneth C. Laudon and Jane Price Laudon in their book Management Information Systems: A Contemporary Perspective, an information system is "a set of procedures that collects (or retrieves), processes, stores, and disseminates information to support decision making and control." In most cases, information systems are formal, computer based systems that play an integral role in organizations. Although information systems are computer based, it is important to note that any old computer or software program is not necessarily an information system. "Electronic computers and related software programs are the technical foundation, the tools and materials, of modern information systems, " Laudon wrote. "Understanding information systems, however, requires one to understand the problems they are designed to solve, the architectural and design solutions, and the organizational processes that lead to these solutions."

An MIS provides the following advantages. 1. It Facilitates planning : MIS improves the quality of plants by providing relevant information for sound decision making . Due to increase in the size and complexity of organizations, managers have lost personal contact with the scene of operations. 2. In Minimizes information overload : MIS change the larger amount of data in to summarized form and there by avoids the confusion which may arise when managers are flooded with detailed facts. 3. MIS Encourages Decentralization : Decentralization of authority is possibly when there is a system for monitoring operations at lower levels. MIS is successfully used for measuring performance and making necessary change in the organizational plans and procedures. 4. It brings Co-ordination : MIS facilities integration of specialized activities by keeping each department aware of the problem and requirements of other departments. It connects all decision centers in the organization. 5. It makes control easier : MIS serves as a link between managerial planning and control. It improves the ability of management to evaluate and improve performance . The used computers has increased the data processing and storage capabilities and reduced the cost . 6. MIS assembles, process , stores , Retrieves , evaluates and Disseminates the information .
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Q.5 Describe five interdependent levels of basic human needs (motivators) as propounded by Abraham Maslow Management > Maslow's Hierarchy Maslow's Hierarchy of Needs

If motivation is driven by the existence of unsatisfied needs, then it is worthwhile for a manager to understand which needs are the more important for individual employees. In this regard, Abraham Maslow developed a model in which basic, low-level needs such as physiological requirements and safety must be satisfied before higher-level needs such as self-fulfillment are pursued. In this hierarchical model, when a need is mostly satisfied it no longer motivates and the next higher need takes its place. Maslow's hierarchy of needs is shown in the following diagram:

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Maslow's Hierarchy of Needs

Self-Actualization

Esteem Needs

Social Needs

Safety Needs

Physiological Needs

Physiological Needs Physiological needs are those required to sustain life, such as:

air water nourishment sleep

According to Maslow's theory, if such needs are not satisfied then one's motivation will arise from the quest to satisfy them. Higher needs such as social needs and esteem are not felt until one has met the needs basic to one's bodily functioning.

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Safety Once physiological needs are met, one's attention turns to safety and security in order to be free from the threat of physical and emotional harm. Such needs might be fulfilled by:

Living in a safe area Medical insurance Job security Financial reserves

According to Maslow's hierarchy, if a person feels that he or she is in harm's way, higher needs will not receive much attention. Social Needs Once a person has met the lower level physiological and safety needs, higher level needs become important, the first of which are social needs. Social needs are those related to interaction with other people and may include:

Need for friends Need for belonging Need to give and receive love

Esteem Once a person feels a sense of "belonging", the need to feel important arises. Esteem needs may be classified as internal or external. Internal esteem needs are those related to self-esteem such as self respect and achievement. External esteem needs are those such as social status and recognition. Some esteem needs are:

Self-respect Achievement Attention Recognition Reputation

Maslow later refined his model to include a level between esteem needs and self-actualization: the need for knowledge and aesthetics. Self-Actualization Self-actualization is the summit of Maslow's hierarchy of needs. It is the quest of reaching one's full potential as a person. Unlike lower level needs, this need is never fully satisfied; as one grows psychologically there are always new opportunities to continue to grow.
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Self-actualized people tend to have needs such as:

Truth Justice Wisdom Meaning

Self-actualized persons have frequent occurrences of peak experiences, which are energized moments of profound happiness and harmony. According to Maslow, only a small percentage of the population reaches the level of self-actualization.

Q.6 List the important differences between Consumer market and business markets. Business Marketing is the practice of individuals, or organizations, including commercial businesses, governments and institutions, facilitating the sale of their products or services to other companies or organizations that in turn resell them, use them as components in products or services they offer, or use them to support their operations. Also known as industrial marketing, business marketing is also called business-to-business marketing, or B2B marketing, for short. (Note that while marketing to government entities shares some of the same dynamics of organizational marketing, B2G Marketing is meaningfully different.) Business marketing vs. Consumer marketing Although on the surface the differences between business and consumer marketing may seem obvious, there are more subtle distinctions between the two with substantial ramifications. Dwyer and Tanner (2006) note that business marketing generally entails shorter and more direct channels of distribution. While consumer marketing is aimed at large demographic groups through mass media and retailers, the negotiation process between the buyer and seller is more personal in business marketing. According to Hutt and Speh (2001), most business marketers commit only a small part of their promotional budgets to advertising, and that is usually through direct mail efforts and trade journals. While that advertising is limited, it often helps the business marketer set up successful sales calls. Marketing to a business trying to make a profit (Business-to-Business marketing) as opposed to an individual for personal use (Business-to-Consumer, or B2C marketing) is similar in terms of the fundamental principals of marketing. In B2C, B2B and B2G marketing situations, the marketer must always: successfully match the product/service strengths with the needs of a definable target market; position and price to align the product/service with its market, often an intricate balance; and communicate and sell it in the fashion that demonstrates its value effectively to the target market.

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MB0046 SET 2

Q.1 What do you mean by marketing functions? Briefly explain the important marketing functions. The delivery of goods and services from producers to their ultimate consumers or users includes many different activities. These different activities are known as marketing functions. Different thinkers have described these functions in different ways. Some of the most important functions of marketing are briefly discussed below:

Marketing Research and Information Management:

Marketers need to take decisions scientifically. Marketing research function is concerned with gathering, analyzing and interpreting data in a systematic and scientific manner. The types of market information could be analysis of market size and characteristics, consumer tastes and preferences and changes in them from time to time, channels of distribution and communication and their effectiveness, economic, social, political and technological environment and changes therein. A company can procure such information from specialized market research agencies, government or can decide to collect themselves. Advertising and Sales Promotion:

Advertising is a mass media tool used to inform, persuade or remind customers about products or services. It is an impersonal form of communication targeted at a chosen group through paid space or time. Sales Promotion is a short-term incentive given to customers or intermediaries to promote sales. It supplements advertising and personal selling and can be used at the time of launching a new product or even during its maturity period. Product Planning and Management:

A Marketer should identify the needs and wants of consumers, develop suitable products / services and make them available. Marketer is also required to maintain the product and its variations in size, weight, package and price range according to the changing needs and requirements of his customers. Information available through Market Research helps product management in taking appropriate decisions while planning the marketing efforts.
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Selling:

This function of marketing is concerned with transferring of products to the customer. An important part of this function is organizing sales force and managing their activities. Sales force management includes recruitment, training, supervision, compensation and evaluation of salesmen. They need to be assigned targets and territories where they can operate. The salesmen interact with prospective purchasers face-to-face in order to sell the goods. The purchaser may be end customer or an intermediary, such as a retailer or a dealer. Physical Distribution:

Moving and handling of products from factory to consumers come under this function. Order processing, inventory, management, warehousing and transportation are the key activities in the physical distribution system. Pricing:

This is perhaps the most important decision taken by marketer, as it is the only revenue fetching function and success and failure of the product may depend upon this decision. Therefore, the decision regarding how much to charge should be taken such that the price is acceptable to the prospective buyers and at the same time fetches profits for the company. While deciding on the price, the factors to be considered are competition, competitive prices, companys marketing policy, government policy, and the buying capacity of target market etc.

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Q.2 Define the term Brand Equity ? Discuss the components of Brand Equity.

Brand equity is set of assets linked to a brands name and symbol that adds value to the product or service and/or that firms customer. Components of brand equity:

Brand Loyalty: Is consumer's commitment to repurchase the brand and can be demonstrated by repeated buying of a product or service or other positive behaviors such as word of mouth advocacy. True brand loyalty implies that the consumer is willing, occasionally at least, to put aside their own desires in the interest of the brand. This will help organization to reduce the promotion cost. For example, many girls in India use only Ponds products, though competitors products like Fa, Spinz, Cuticura, and Mysore Sandal are present in the market and vice versa.

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Brand Awareness: The number of customers exposed to the brand name. Higher the brand awareness, higher will be the brand equity. Organizations put all the effort in the introduction stage of the product to create awareness among the customers. For example, Xerox Company has huge brand awareness since photocopier machines were introduced by this company and even today photocopies are referred as Xerox copies.

Perceived Quality: The customer perception about the actual quality level of the product. For example, when a customer purchases Levis jeans he knows that it indicates quality even though there are several cheaper brands of jeans available in the market.

Brand Associations: The attribute of the brand that customer associates with his/ her belief. A person may associate the brand for power, strength or protectiveness. For example, a customer may associate Nike brand not just for sports shoes but also any accessory associated with sports. So, for him, Nike represents sports.

Q.3 Why are marketing channels indispensable? List the functions of marketing channels.

Marketing channels are a set of independent organizations comprising of the marketing intermediaries who are involved in the distribution of the goods or services from the factory to the consumption points at the right time or even before the time. Functions of marketing channels: Helps in Physical distribution: Transporting goods and storing them in the assigned warehouses or godowns. Promotes Communication: Marketing intermediaries promote the companys products. Here channel member provides the information regarding the products and pushes it to the customers.

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Provides Information: Retailers and wholesalers collect the information or feedbacks from the customers and provide the same to the company or manufacturer. Plays a key role in Title transforming: Marketing intermediaries purchase the goods from the company and transform the title of goods or ownership to the next channel intermediary or customer. Supports Relationship management: Here marketing intermediaries try to understand the needs of consumers, try to match his needs and satisfy them.

Q.4.Explain the different methods which allows a media planner to decide budget allocation.

Media vehicle selection, number of insertions and message structure depend on the budget allotted for the communication program. A popular channel may charge more for advertisement but organization gets better viewership. A newspaper having high circulation charges premium for the advertisement but all the organization may not have enough budgets to support such campaign. Hence marketer would like to decide what is the budget for the communication program? And how shall it be allotted optimally? There are four different methods on which a media planner decides the allocation of advertisement budget.

Affordable method: This method is used by small companies who dont have enough communication budgets. In this method company allots the fixed amount for the communication program. The advantage of this method is company can have better control over the spending on the communication. The disadvantage is if sales require higher communication effort, company is not in a position to allocate the budget.

Percentage of sales method: In this method company allots the budget on the basis of total sales forecasted. This is the simplest method. Marketer can have better control over the budget and also have flexibility to allocate the budget.
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Follow the Competitor method: The Company sets its promotion budget on the basis of competitors advertising effort. Here company closely monitors the developments of the competitors communication program and study the industry trends in communication budget prior to setting up communication budget.

Objective and task method: The procedure involved in estimating the advertisement budget by this method are First, Objectives are set for the communication programs. Second, identifying the task to be performed to achieve the objective and third, estimating the cost of achieving these objectives.

Q.5 Define the term direct marketing Explain the different methods adopted for direct marketing When the company or organization is involved in marketing activities (usually selling products) without the use of any intervening media or channel, then it is called as Direct Marketing. The company directly sells its products to the final consumer and the consumer is expected to respond immediately or at the earliest. Direct marketing is sometimes called as B2C marketing for example, direct factory shoe sale. Following are the methods of Direct Marketing:

Direct mail: It is the most common method used in direct marketing, it involves sending postal mails to the consumers address and consumers maybe randomly chosen or specifically selected as targets. For example, credit card applications forms sent by banks, travel guides or manuals sent by tour operators, free trial packs of products sent by companies, subscriptions offers for magazines etc.

Telephone marketing: Telephone marketing is used to sell the product directly to consumer. The growth of BPOs in India fuelled the development of telephone marketing. In the case of BPOs, two types of verticals exist. They are inbound call center and outbound call center. In case of inbound call
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center, customer is given a toll free number for enquiry and executives try to sell the product to such customers. In out bound call center employees call the customers and sell the products. The expansion of Indian telecommunication industry and its cheapest tariffs in the world attracted domestic sellers to use this type of channel.

Catalogue marketing: According to Philip Kotler, catalogue marketing is direct marketing through print, video or electronic catalogues that are mailed to select customers, made available in stores or presented online. The growth of catalogue marketing in India is in a nascent stage. The notable example in this type of marketing worldwide is J.C. Penny.

Kiosk marketing: Organizations spreads the information and keep ordering machines called kiosks in the shopping malls and other places. For example, Ambi Pur a perfume company recently organized a kiosk related marketing campaign in the Nirmal life style Mumbai. Company used inflatable as shown in the pictures to attract the small boys. Parents who came along with their children stopped at Kiosk and got the information from the company. The objective of campaign was to create awareness about the product among the target customers.

Online marketing: Marketing the organizations product on the virtual medium using the company websites as selling point or ordering point for the consumers. Sometimes companies use e-mails to offer their products and make a sale to the prospective consumers or even existing consumers.

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Q.6 List the important differences between International marketing and Domestic marketing.

International marketing is defined as The performance of business activities designed to plan, price, promote and direct the companys flow of goods and services to consumers or users in more than one nation for a profit. A company that wants to sell their product in other than domestic market should understand the environmental factors, consumer behavior, market forces and other characters relevant to the international market. After understanding the definition, several questions may arise in your mind like why marketer should go to the international market? And what is the difference between international marketing and domestic marketing? As we discussed in the introduction part, companies enter into the international market to tap the potential, to support the customer requirements or to avoid the unprofitable domestic market. The differences between domestic marketing and international marketing are listed below:

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Characteristics Culture Data accessibility Data reliability Control Consumer preferences Product mix Business operation Currency exposure

International Marketing Multi culture Very difficult Very Low Difficult Vary from country to country Adaptability required More than one country Required

Domestic Marketing Single culture and in some cases multi culture Easy High Relatively easy Vary in small extent Standardization required Home country only Required only if there is importing

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