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TERM 1
Learning and
Development Marketing
Council, CAC
ii) Analyze possible strategic options Evaluate Target Markets & Positioning Options
iii) Implementation Apply marketing mix decisions (4 Ps) Product, Price, Promotion, and Place
ii) If yes, then what variables allow one to segment the market, can those variables be described and
quantified
iii) Does it have the potential to create value for the business?
v) Is the segmentation scheme compatible with companys resource base and capabilities?
B.2 Targeting-
B.3 Positioning- includes identification & communication of positioning concepts for each target segment.
1) Geographic Segmentation- based on region, climate etc (consumer); and region, market, HQ, branch
etc (business)
2) Demographic Segmentation- based on age, gender, family size, income, education etc (consumer); and
industry, assets, sales, no of employees etc (business)
3) Psychographic Segmentation- based on personality, lifestyle, and media habits etc (consumer); and
corporate culture, power structure etc (business)
4) Behavioral Segmentation- based on benefits, brand loyalty, usage rate and frequency etc (consumer);
and applications, existing relationships, urgency, size of order etc (business)
i) Focused approach promotes quality of the service and instills efficiency in the delivery system
iii) Facilitates strong acquaintance and long term relationship with the customer
ii) Very broad focus (multiple segments) result into increased costs of R&D, Production, Logistics &
Marketing
Hence a good segment based strategy should be formulated so that it offers at least one of two benefits-
either increased sales or higher prices
- This may happen due to increase in advertising budget, purchase/ acquisition of new machine, R&D etc
- This may happen because of increased marginal cost, higher distributor margin, price cut etc.
- New Break Even volume = (Old Contribution / New Contribution) x Old Volume
Awareness stage (consumer know about the product through advertising, word of mouth, product review,
expert opinion etc) consideration stage (priority list made through screening) evaluation stage
(evaluation of various existing alternatives) choice stage (product trial) Decision stage (satisfaction
with the product and repeat purchase, loyalty).
According to Bass Model different categories of people react differently to a new product. Based on
timing of their adoption of a new product they are categorized as Innovators (2.5%), Early Adopters
(13.5%), Early Majority (34%), Late Majority (34%) and Laggards (16%)
F. Market sizing: - is the process of estimating market potential. It is done using either Macro (Top-Down)
approach- based on historical trends
Or Micro (Bottom-Up) approach- based on collection of actual data and thorough cost-benefit analysis
G. Lifetime Value of the Customer (LTVC):- it is the estimation of customer worth to the company and
hence indicates what the company should be willing to spend to acquire, retain or lose a customer.
t=1
St, Ct, Pt and r are revenue, cost, retention rate and discount rate respectively. It helps in determining
factors that influence LTVC and hence invite better resource allocation decisions.
Gyaan Kosh Term 1 MKTG Learning & Development Council, CAC
G. 1 Why LTVC?
(i) Inputs into the value of an acquisition (Citibanks purchase of AT&Ts Universal Card)
(ii) Customer Management
(iii) Grocery Retailers (value of loyalty programs)
(iv) Pharmaceutical Cos. (for chronic ailment products)
(v) Durables (Razor Blade, Printer Toner)
H. Cross merchandising: - is the concept aimed at encouraging customers to shop a greater part of the
store by linking a low traffic product category with a high traffic category product.
Model Application
Share of voice (SOV) indicates what percent of the total communications spend in the market is for my
companys brand/product.
Share of market (SOM) indicates what percent of total sales (volume or money) is for my brand/ product.
High value of Peckham Ratio indicates overspending vis--vis product quality and acceptance amongst
consumers.
Gyaan Kosh Term 1 MKTG Learning & Development Council, CAC
Expand the total market by finding new users or new uses of the product; Expand the total market by
encouraging more usage on each use.
K. Brand Management
A brand is a bundle of associations which brings value to both; the firm and the customers. Brand is a
complete business in itself and the most important driver of companys success. However, for sustaining
success each firm needs to conceptualize its brand structure for various product ranges. Brand
relationship spectrum (House of Brands, Endorsed Brands, Sub-brands and Branded House) provides
adequate framework for such decision. A diligent branding initiative helps firm in launching & positioning
new products, differentiating it from competitors products and often helps redefine the product category
and industry structure. Brands; among other things, can be built on design, emotional appeal,
performance, trust, personality, ambience etc. brand value is expressed commonly in terms of Brand
Equity
L. Pricing strategies
Most important objective of marketing is to extract value from the customers via effective pricing
strategy
Two strategies commonly used in pricing decisions are cost based pricing and value based pricing
Most popular because managers have better idea of their cost structure than the value of their product
& services
Appropriate when many people inside the organization are involved in setting prices
Too much cost orientation invites inefficiency and leads to failure to capitalize (extract its true worth)
on market changes
Not aligned with different customer segments
Calculate Value-in-Use
Simulating buying experiences
De-compositional approach: Conjoint
Estimating Brand Equity
L.4 Reference Price The level of price (of either competing product or a substitute/alternative product)
that a customer can use as a reference point when evaluating the price of a new product before deciding
on whether to purchase or not.
M. Channels of distribution
Channels facilitate the timely flow and availability of goods & services from the producer to the end
customers. The length or depth of a channel refers to the number of links in a channel. The width or
intensity of a channel refers to the number of points where the product or service is available e.g.
extensive vs. selective distribution. Channel width decision depends upon several factors including
positioning, purchase behavior, customer loyalty, coverage, perceived risk and channel control. Channel
structure refers to the number of alternative channels used by a manufacturer.
Push strategy is used when the seller relies on the channel member to influence consumer preferences.
Channel members enjoy greater power in this case.