Coverage in MM-1

Marketing Plan Marketing Environment Buyer Behavior

Consumer Buying Business Buying

Review of MM1

Rural Marketing Product

New Product Development Product Strategy

Branding
Brand Positioning and Equity

Pricing Services Marketing

Marketing Evolution
Started as branch of applied economics
Study of Distribution Channels

Marketing Evolution
Shift in Marketing Focus
Commodity Focus
Farm products, goods, services, minerals

Became a management discipline

Engineering increase in sales

Institutional Focus
Manufacturers, wholesalers, retailers

Functional Focus

Applied behavioral science

Concerned with understanding of buyer and seller systems involved in marketing of goods and services

Buying, selling, storing, moving

Managerial Focus
Planning, analysis, control

Social Focus
Market efficiency, value, quality, social impact

Core Concept of Marketing Transaction

Exchange of values between two parties Things of Value
Not limited to goods, services and money Include other resources
Time, energy, feeling Examples of such transactions
Watching a cricket match: exchanging time for entertainment

Core Concept of Marketing Producing desired responses in free individuals by judicious creation and offering of values Concept of Value is central to marketing
Marketer is trying to get value from market by offering value to it (exchange)
Value is completely subjective

Marketer must understand market in order to be effective in creating value

What is Marketing?

What is Marketing?

Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders
American Marketing Association

CCDVTP
Philip Kotler

What is value?
Sum of perceived tangible and intangible benefits and costs to customers Customer Value Triad
Quality, Service and Price (qsp) Value is directly proportional to Service and Quality Inversely proportional to Price

How Marketers Create Value? Marketer creates value in four ways

Design the offering more attractively
Configuration

Put attractive terms on the offering

Valuation

Add symbolic significance to the offering

Symbolization

Make it easier for the market to obtain offering

Facilitation

Offering
Value Proposition: Product, Services, Experiences and Information

Concept of Marketing Mix Marketing executive a Mixer of Ingredients

List of marketing mix of manufacturers
Product Planning Pricing Branding Channels of distribution Personal selling Advertising Promotions Packaging Servicing Physical handling Fact finding and analysis

Concept of Marketing Mix - 4 Ps of Marketing Marketing is specifically concerned with how goods (or services) and transactions are
created
Product

valued
Price

facilitated
Place

stimulated
promotion

Seven Core Processes in Marketing

Sensing Value
Bringing customer insight into the organization Understanding opportunities and threats in the environment

Defining Value
Converting insights into value propositions that is compelling for customers

Realizing Value
Conversion of value proposition to an offering that is relevant and compelling to customers

Delivering Value
Taking the offering to the marketplace thru distribution channels and partnerships

Distribution Channels

Sharing Value
Figuring out appropriate pricing mechanisms and revenue streams and being able to recapture some the value you have created

Communicating Value
Articulating what your value proposition is, positioning, building brands (IMC)

Sustaining Value
Continuous improvement of customer experience Relationship marketing

Introduction How do you make your product available to consumer?

Moving Storing Merchandising

Introduction
Distribution cost as proportion of overall cost of the product to customer
A significant percentage of the price paid for the product by the customer is cost of getting that product to customer Estimating exact cost of distribution is difficult at best Route(s) to Market is critical and difficult !!

Does it matter where you are sold? Is it an important decision?

Introduction
Most producers do not sell their goods directly to the final users
between them stands a set of intermediaries performing a variety of functions.

Distribution Concepts Distribution

The act of spreading or apportioning

These intermediaries constitute a marketing channel

trade channel or distribution channel

Channel
Any distinct part of distribution system through which a supplier reaches a customer

Objective of the Marketing Channel

Make it easier and easier for the customer to buy your product Not only serve the market but also create market

Distribution Channel
A mechanism through which products are directed to customer either through intermediaries or direct

Marketing Channel - Definition

Marketing Channel - Definition

Set of interdependent organizations involved in the process of making a product (or service) available for use or consumption An organized network (system) of agencies and institutions which, in combination, perform all the functions required to link producers with end customers to accomplish the marketing task

A set of institutions necessary to transfer the title to goods and to move goods from the point of production to the point of consumption and, as such, which consists of all the institutions and all the marketing activities in the marketing process
American Marketing Association

Key Points in the Definition Organized Network Systems view Interdependent Agencies Makes products/services available to consumer Links producers to end users and vice-a-versa Transfer of title of goods Movement of goods

Marketing Channel Economic Utility Perspective

Channel is an orchestrated network that produces value for consumer by creating economic utilities
Form, possession, time and place

Form Utility
Bulk Breaking Lot Sizing

Place Utility

Place of Convenience

Time Utility

Possession Utility Transfer of Ownership to Consumer

Permanent

Convenient Time
When customer wants to buy

As in standard goods

Temporary
Car Rental

Dimensions, Determinants and Bridging Activities

Dimensions
1 Place

Different Views on Marketing Channels

Supply chain view
forward to markets Physical linear flows

Determinants
Geographical Distance

Key Bridging Activities

Transport

Demand chain view

2 Time Production and Transport Storing

Backwards from customer Starts with the customer as focal point Providing solutions and not just goods

Quantity

Quality

No. of buyers and sellers, volume of flows and transactions Standardization and Classification

Collection and Distribution

Processing, sorting, assorting and screening

Value Network
A system of partnerships and alliances that a firm creates to source, augment and deliver its offers.

Route to market affects

Product Differentiation
Dell vs. Others in personal computer industry

Route to market affects

Access
Coca Cola

Pepsi

Route to market affects Brand Image

Maruti
Service Network

Route to market affects Pricing of products

based on type of channel

Eureka Forbes
Maintenance services

Online is usually cheaper than boutiques

Type of Channel Members

Type of Channel Members Agents

Merchants
Take title to Resell merchandise Examples
Retailers Wholesalers

Do not take title to goods Search customers Negotiate Examples

Property Brokers Sales Agents

Type of Channel Members Facilitators

Neither take title to nor negotiate Support overall distribution process Examples
Banks shared warehouses transport companies

Why Channels?
Why would a producer delegate some of the selling job to intermediaries?
Delegation means relinquishing some control over how and to whom the products are sold

What do Producers gain by using intermediaries? How do intermediaries add value to a product? The question is not whether various channel functions needs to be performed but rather, who is to perform them?

Why producers appoint intermediaries?

Why producers appoint intermediaries? In some cases, direct sales is simply is not feasible

Many producers lack the financial resources to carry out direct marketing Producers who do establish their own channels can often earn a greater return by increasing investment in their main business

Examples: Soap, pens, matchbox etc.

Intermediaries normally achieve superior efficiency in making goods widely available and accessible to target markets
Through their contacts, experiences, specialization, and scale of operations

Functions A marketing channel performs the work of moving goods from producers to consumers. It overcomes the time, place, and possession gaps that separate goods and services from those who need and want them
Members of the marketing channel perform a number of key functions
forward flow of activity backward flow of activity both ways

Functions Typical functions of a traditional channel member

Gather information Develop and disseminate persuasive communications Reach agreements on price and terms Acquire funds to finance inventories Assume risks Provide for storage Provide for buyers payment of their bills Oversee actual transfer of ownership

Functions All channel functions have three things in common

They use up scarce resources They can often be performed better though specialization They can be shifted among channel members
Cannot be eliminated

Functions A manufacturer selling a physical product might require Four channels

1. A sales channel 2. A delivery channel 3. A service channel 4. Reverse Channel

Marketing Channel Flows

Reverse Channel Flows Channels normally describe a forward movement of products from source to user Reverse-flow channels are important in the following cases
To reuse products or containers To refurbish products for resale To recycle products To dispose of products and packaging To recall

Channel Levels
Major Participants in the Marketing Channel

Producers & Manufacturers

Intermediaries

Final Users

The producer and the final consumer are part of every channel A zero-level channel
also called a direct-marketing channel a manufacturer selling directly to the final consumer contains one selling intermediary contains two intermediaries
wholesaler and a retailer

Wholesale Retail Intermediaries Intermediaries

Consumers

Industries

A one-level channel

A two-level channel

Commercial Channel

Target Markets

Levels - Consumer Marketing Channels

Levels - Industrial Marketing Channels

Push Strategy in Channel Context

Pull Strategy Channel Context

Push strategy involves the manufacturer using its sales force and trade promotion money to induce intermediaries to carry, promote, and sell the product to end user

Pull strategy involves the manufacturer using advertising and promotion to induce consumers to ask intermediaries for the product, thus inducing the intermediaries to order it

Push vs. Pull Strategy Decision

Push strategy is appropriate where
there is low brand loyalty in a category brand choice is made in the stores the product is an impulse item product benefits are well understood

Push vs. Pull Strategy Decision

Pull strategy is appropriate when

there is high brand loyalty and high involvement in the category people perceive differences between brands people choose the brand before they go to the store

A combination of Push and Pull is the best strategy

Channel Development A new firm typically starts as a local operation selling in a limited market, using existing intermediaries If the firm is successful, it might branch into new markets and use different channels in different markets
International markets pose distinct challenges Customers shopping habits can vary by countries The channel system evolves as a function of local opportunities and conditions

Hybrid Channels Simultaneous use of two or more channels Companies that manage hybrid channels must make sure these channels work well together and match each target customers preferred ways of doing business

Hybrid Channels Customers expectations from channel integration

The ability to order a product online and pick it up at a convenient retail location The ability to return an online ordered product to a nearby store of the retailer The right to receive discounts based on total online and off-line purchases.

Consumer Behavior & Marketing Channels

Different consumers have different needs during the purchase process The same consumer may choose to use different channels for different functions in making a purchase

Consumer Behavior & Marketing Channels

Buyer Categories
Habitual shopper
Purchase from the same place in same manner over time

Consumer Behavior & Marketing Channels

Buyer Categories
Variety-loving shoppers
Gather information in many channel, take advantage of high touch services buy in favorite channel regardless of price

High value deal seekers

Know their needs Channel surf a great deal before buying at the lowest possible price

High-involvement shoppers
Gather information in all channels make their purchase in low cost channel take advantage of high touch channel customer support

Consumer Behavior & Marketing Channels

Type of shoppers and their store preferences
Service/quality customers
Variety and performance of products Service provided by the store

Distribution Channels in India

Price/value customers
Concerned about spending money wisely

Affinity customers
Stores that suited people like themselves or the members of groups they aspire to join

Challenges Country of Retailers

12 Million+ retailers

Indian Rural Markets The Myth

Huge geographical dispersion, uneconomical to serve
India's 6,27,000 villages, poor connectivity and so on

What are the challenges ?

Infrastructure
Logistics cost is more than 13% of GDP Cold chains not available Public Distribution system is inefficient

The Reality
Through the 3000-odd town and 5000 wholesale assembly markets (with a lot of overlap) and about 25,000+ 'haats/shandies', penetration into rural areas facilitated through the wholesaler, semi-wholesaler retailer, 'arhatia' and itinerant merchant network is quite efficient and effective

Remote rural areas Unorganized and Fragmented system

Taxonomy of Indian Consumer & Channel

Channel Decisions
Mysore Banglore

Typical rural market

Rural market buying power

Objective To understand

Channel Design

Analyze customer needs

Channel Design

Establish channel objectives

Channel Management

How?
Theory & Examples
Dabur Story

Identify major channel alternatives Evaluate major channel alternatives

Decision Areas in Marketing Channels

Place Objectives

Channel Design & Modification

Type of Channel

Desired Customer Service Level

Direct

Indirect

Lot Size Delivery Time Spatial Convenience Product Variety Service Backup

Degree of market exposure desired (Intensive, Selective, Exclusive)

Type of Middlemen or Facilitators Needed

How to Manage Channel Relationships

Channel Modifications

Channel Modifications In competitive markets with low entry barriers, the optimal channel structure inevitably changes over time Change can be in form of:
Adding or dropping individual channel members Adding or dropping particular market channels Developing a totally new way to sell goods

Distribution channels become outdated

a gap arises between the existing distribution system and the ideal system that would satisfy target customers needs and desires Most marketing channels will not remain effective over the whole product life cycle

Channel Modification It becomes necessary when

the distribution channel is not working as planned consumer-buying patterns change new competition arises Innovative/new distribution channels emerge the product moves into the later stages in the product life cycle

Kalyan Pharma Ltd.

Objectives for Distribution System Improving Customer Service Bringing down cost of distribution Special Concerns
Order processing time Stock levels at different points in distribution system
Finished goods stores, regional depots, distributors

Changes in Distribution System at KPL

1972: Sole selling agency
Exclusive sole selling agent for distribution
Distributed all company products at commission of 15%

Agent developed 30 branches located in important cities

1979: Regional Marketing Companies

Strengthening presence in secondary and tertiary markets in four zones Distribution taken over by KPL
Distribution from the company branch to the retailers

Promoting products to doctors and retailers given to regional marketing company Companys own branches (42 in number) served as stock points as well as offices for regional marketing companies

Changes in Distribution System at KPL

1979-87: Introduction of wholesalers
DPCO (drug price control order) led to reduction in retailer margins
Retailers became reluctant to deal directly with company

Changes in Distribution System at KPL 1987-1991

In 1987, brought down number of branches from 42 to 21
Bringing down cost of distribution

Company started giving credit and annual sales target based rebates Wholesalers were appointed around 2000
Expected to provide credit Reduced companys efforts on invoicing and order processing

KRDs (Stock Points) in each state

Stocks to be dispatched from KRD to branches Most KRD were in same location as branch with enhanced warehousing infrastructure Disadvantages of KRD
Higher cost of distribution Poor customer service 60 of managers time at branch was spent on distribution and collection
Sale promotion was neglected

Wholesalers neither equipped nor willing to promote products led to higher book debts and high costs of distribution KPL did away with regional marketing companies and took the marketing/sales staff under its direct control

KPL Distribution - Pre 1991

Changes in Distribution System at KPL 1991

Factory

KRD

Distributing Branches

Cutting down number of branches resulted in poorer service and higher cost of distribution A new link (Distributors) were added to system
Service to customers (wholesalers) Reducing accounts receivables Improving sales and profitability

Wholesalers
GoodsFlow InformationFlow

Physical flow
Retailers/Doctors

Factory KRD Distributors Wholesalers Branches cut off from physical distribution Better service to wholesalers

Changes in Distribution System at KPL 1991

April 1991, KPL had 40 distributors in total New distribution system comprising of distributors resulted in
Reduced inventory levels at different links Book debts went down from 90 days to 7 days
Increased profitability

KPL Distribution in 1991

FGStoresatFactory KRD Branch

Distributors

Stockist/ Wholesaler

Distribution manpower at KPL reduced from 600 to 200 Customer service improved
Fast order processing

InstitutionalBuyers Retailer
GoodsFlow OrderInformationFlow

Theoretical Connect How the distribution channels evolve over time

Modifications to a channel depending on
need of the market objectives of the company

Sales and Distribution

Illustration of Pharmaceutical Industry

Physical distribution
Inventory, Order processing, Warehousing and IT

Introduction
Pharmaceutical marketing
Role of MR
meet doctors, chemists and stockiest as per company norms try to influence prescription pattern of doctors in favor of their brands

Role of Distributors and/or Wholesalers

Direct to Pharmacy
Number of interactions?

a specialized field

Medical Representatives (MR) assigned to defined territories form the backbone of entire marketing and sales effort

Via Distributor
Number of interactions and transactions routine?

Producers or Intermediaries May Be Channel Captains

Push vs. Pull System

Acute Therapy Area Chronic Therapy Area

Current Distribution System

Current Distribution System

Prices and Margin at different levels of distribution
CFA Stockists or Distributors Retailers

Decision Areas in Marketing Channels

Place Objectives

Type of Channel

Desired Customer Service Level

Channel Decisions
Direct Indirect

Lot Size Delivery Time Spatial Convenience Product Variety Service Backup

Degree of market exposure desired (Intensive, Selective, Exclusive)

Type of Middlemen or Facilitators Needed

How to Manage Channel Relationships

Continued

Channel Design

Channel Design & Modification

Analyze customer needs Establish channel objectives Identify major channel alternatives Evaluate major channel alternatives

Channel Design Channel Service Outputs Understanding and Segmenting the market
Lot size Waiting/delivery time Spatial convenience

Channel Design Establishing Objectives and Constraints

Channel institutions should arrange their functional tasks to minimize total channel costs and still provide desired levels of service outputs Planners can identify several market segments that want different service levels

Product variety Service backup

Channel Design
Establishing Objectives and Constraints

Identifying Major Channel Alternatives

Each channel has unique strengths as well as weaknesses Most companies use a mix of channels Each channel (hopefully) reaches a different segment of buyers and delivers the right products to each at the least cost

Channel objectives vary with product/market characteristics Channel design must take into account the strengths and weaknesses of different types of intermediaries Legal regulations and restrictions also affect channel design

Identifying Major Channel Alternatives A channel alternative is described by three elements:

The types of available business intermediaries

Identifying Major Channel Alternatives Types of Intermediaries

A firm needs to identify the types of intermediaries available to carry on its channel work A Real Estate Company
Its own branch offices Property brokers

Types of intermediaries
The number of intermediaries needed.

Number of intermediaries
The terms and responsibilities of each channel member

Terms and responsibilities

Identifying Major Channel Alternatives Sometimes a company chooses an unconventional channel because of the difficulty, cost, or ineffectiveness of working with the dominant channel
The advantage is that the company will encounter less competition during the initial move into this channel
Eureka Forbes took a different route to market
Why?

Identifying Major Channel Alternatives Number of Intermediaries Exclusive Selective Intensive

Amway/Tupperware went into network marketing

What is the benefit of MLM?

Identifying Major Channel Alternatives Terms and Responsibilities of Channel Members

determine the rights and responsibilities of participating channel members

Evaluating the Major Alternatives Economic Criteria

Different channels produce a different level of sales, service and costs Align customers and channels to maximize demand at the lowest overall cost Replace high-cost channels with low-cost channels as long as the value added per sale is sufficient

The main elements in the trade-relations mix are

Price policy Conditions of sale Distributors territorial rights Mutual services and responsibilities

Value-Adds vs. Costs

Evaluating the Major Alternatives Control and Adaptive Criteria

Commitment
leads to a decrease in the producers ability to respond to a changing marketplace

In volatile markets
the producer needs channel structures and policies that provide high adaptability

Asset specificity, relational investments and dilemma of flexibility vs. relationship

Inventory Classification Techniques ABC

Based on Usage Value

You must control the end-outlets in order to increase your sales. Controlling end-outlets is costly, but not controlling them is even more costly. If you lose a prospective buyer, he is not likely to comeback

Not volume

FSN
FMG/SMG/NMG

Movement or Velocity

VED
Criticality (Vital-Essential-Desirable)

Order Size and Frequency Effect of Order Size and Frequency

On inventory level in Synnex Distribution Chain Service Level
Stock out and availability

Why consumers buy online?

TheInternet
StepsinBuyingDecision
Recognitionofneed Definitionofproductneeded Developspecifications Searchfortheproduct Analyzeoffers Evaluate Select Thesestepsnow beingdonemoreand moreontheInternet

Why Consumers Buy Online Communication

Marketer to Consumer Consumer to Marketer Consumer to Consumer
Blogs, Social Networking

Multichannel Marketing

Multichannel Marketing

eCommerce

The blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in the traditional marketplace

E-commerce
the company or site offers to transact or facilitate the selling of products and services online pure-click companies and brick-and-click companies

M-Commerce

Multichannel Marketing

Multichannel Marketing

Dual Distribution Multichannel Retailing Multichannel Marketing

Implementation of Multichannel Marketing

Transactional Website
Channel Conflicts

Promotional Website

Multi Channel - Example

Internet Book Retailer Independent Book Retailer Electronics Superstore Chain Book Store Chain

Multi-channel Companies can gain three important benefits

Increased market coverage
Final Consumer

Publisher of Computer (Specialty) Books

General Book Wholesaler

Computer Supplies and Accessories Specialty Wholesaler

Lower channel cost

Not always!

More customized selling

Direct Sale from Publisher Website

Problems of cooperation, control and conflict

Channel-Management Decisions
Selecting channel members Training channel members

Channel Management Decisions

Motivating channel members Evaluating and Controlling channel members Modifying channel members

Selection of Channel Members General Criteria

Number of years in business Other lines carried Growth and profit records Financial strength Cooperativeness Service reputation

Selection of Channel Members If the intermediaries are sales agents

Number and character of other lines carried Size and quality of the sales force

If the intermediaries are department stores that want exclusive distribution

Locations Future growth potential Type of clientele

Training and Motivating Channel Members

Evaluating Channel Members

Benchmarks or Performance Standards
sales quota attainment average inventory levels customer delivery times treatment of damaged and lost goods cooperation in promotional and training programs counseled retrained motivated terminated

understand their needs and wants provide training programs and market research programs to improve their performance communicate its view that the intermediaries are partners in a joint effort to satisfy end users of the product

Under performers can be

Channel Conflict

Types of Conflict
Vertical channel conflict
conflict between different levels within the same channel.

Channel conflict
when one channel members actions prevents the channel from achieving its goal

Horizontal channel conflict

conflict between members at the same level within the channel.

Channel coordination
when channel members are brought together to advance the goals of the channel, as opposed to their own potentially incompatible goals

Multi-channel conflict
when the manufacturer has established two or more channels that sell to the same market when the members of one channel get a lower price or work with a lower margin

Causes of Channel Conflict

Managing Channel Conflict

Adoption of super-ordinate goals Exchange persons between two or more channel levels Co-optation
an effort by one organization to win the support of the leaders of another organization by including them in advisory councils, and the like

goal incompatibility unclear roles and rights differences in perception

Joint membership in and between trade associations Diplomacy Mediation Arbitration Lawsuits

Managing Channel Conflict Channel Power

the ability to alter channel members behavior

Channel Integration Vertical Marketing System (VMS)

the producer, wholesaler(s), and retailer(s) acting as a unified system One channel member, the channel captain, owns the others, franchises them, or has so much power that they all cooperate VMSs achieve economies through
Size Bargaining power The elimination of duplicated services

Types of power used to motivate channel members and elicit cooperation

Objectively Observable
Coercive power Reward power Legitimate power Expert power Referent power

Subjective in Nature

Channel Integration
Three types of VMS
Corporate VMS
combines successive stages of production and distribution under single ownership

Channel Integration Contractual VMS

Wholesaler-sponsored voluntary chains Retailer cooperatives Franchise organizations
manufacturer-sponsored retailer franchise. manufacturer-sponsored wholesaler franchise. service-firm-sponsored retailer franchise

Administered VMS
coordinates successive stages of production and distribution through the size and power of one of the members
Manufacturers of a dominant brand are able to secure strong trade cooperation and support from resellers

Contractual VMS
independent firms at different levels of production and distribution integrating their programs on a contractual basis to obtain more economies or sales impact than they could achieve alone

Vertical Marketing Systems

Typeofchannel Characteristics
Traditional
Administered Contractual Corporate

Channel Integration

Verticalmarketingsystems

Horizontal Marketing Systems

two or more unrelated companies put together resources or programs to exploit an emerging marketing opportunity

Amountofcooperation

Littleor none None

Someto good Economic powerand leadership General Electric

Fairlygood togood Contracts

Complete One company ownership

Controlmaintainedby

Examples

Typicalinde pendents

McDonalds

Florsheim

Rural Distribution

Rural Distribution

Traditional Channels for Reaching Out to Rural Customers Haats Mandis Melas

Rural Distribution

Innovative Distribution Channels for Rural Markets

Hub and Spoke (Dabur, Reliance World etc.) Mobile shops and offices Linkage with community based organizations (SHGs, NGOs, and cooperatives)

Retailing & Wholesaling

RETAILING

Levels of Service

Retailing includes all the activities involved in selling goods or services directly to final consumers for personal non-business use Retailer
any business enterprise whose sales volume comes primarily from retailing. Any organization selling to the final consumerno matter how or where they are sold

Retailers can position themselves as offering one of four levels of service:

Self-service Self-selection Limited service Full service

Wheel of Retailing

Non-store retailing Non-store retailing has been growing much faster than store retailing Direct selling Automatic vending Direct marketing Buying service

Retailing vs etailing Advantages over etailing

Products that consumers can actually see, touch, and test Real-life customer service No delivery lag time Provide a shopping experience
In-store entertainment

Private Labels A private label

also called reseller, store, house, or distributor brands is developed by retailers and wholesalers 50 percent is the natural limit for carrying private brands because:
Consumers prefer certain national brands Many product categories are not feasible or attractive on a private-brand basis

Why Private Labels ?

They are more profitable than national brands Retailers develop exclusive store brands to differentiate themselves from competitors

Experts Belief

Private Labels Growing power of store brands

Consumers are more price-sensitive. They are noting the better quality of the private-label brand Reduction in brand equity caused by a reduced advertising by national brand The endless stream of brand extensions and line extensions has blurred brand identity and led to a confusing amount of product proliferation

Generics Unbranded, plainly packaged, less expensive versions of common products.

offer standard or lower quality
at a price that may be as much as 20 to 40 percent lower than nationally advertised brands 10 to 20 percent lower than private label brands The lower price of generics is made possible by lowerquality ingredients, lower-cost labeling and packaging, and minimal promotion

WHOLESALING

Wholesalers vs. Retailers Pay less attention to promotion, atmosphere, and location Mostly deal with business customers Transactions are usually larger Cover a larger trade area The government deals with them differently in terms of legal regulations and taxes

Includes all the activities involved in selling goods and services to those who buy for resale or business use

WHOLESALING Wholesalers are more efficient in performing the following functions

Selling and promoting Buying and assortment building Bulk breaking Warehousing Transportation Financing Risk bearing Market information Management services and counseling

MARKET LOGISTICS

Involves planning the infrastructure to meet demand, then implementing and controlling the physical flows of materials and final goods from points of origin to points of use, to meet customer requirements at a profit

MARKET LOGISTICS The total cost of market logistics can amount to 30 to 40 percent of the products cost
Lower market-logistics cost will permit lower prices A well-planned market-logistics program can be a potent tool in competitive marketing.

MARKET LOGISTICS Each possible market-logistic system will lead to the following costs: M = T+FW+VW+S
Where M = total market-logistic cost of proposed system Where T = total freight cost of proposed system Where FW = total fixed warehouse cost of proposed system Where VW = total variable warehouse costs (including inventory) Where S = total cost of lost sales due to average delivery delay under proposed system

MARKET LOGISTICS Role of Market Logistics

Deciding on the companys value proposition to its customers Deciding on the best channel design and network strategy for reaching the customers Developing operational excellence in sales forecasting, warehouse management, transportation management, and materials management Implementing the solution with the best information systems, equipment, policies, and procedures

MARKET LOGISTICS Supply Chain Management (SCM) Perspective

Supply chain management starts before the physical distribution and helps in
Procuring the right products Converting them efficiently into finished products Dispatching them to their final destinations Identifying superior suppliers and distributors and improving their productivity

Market-Logistics Decisions Four major decisions must be made with regard to market logistics:
Order Processing
How should orders be handled?

Market-Logistics Decisions Order Processing

the order-to-payment cycle
That is the elapsed time between an orders receipt, delivery, and payment Most companies today are trying to shorten the order-topayment cycle The longer this cycle takes the lower the customers satisfaction and the lower the companys profits.

Warehousing
Where should stocks be located?

Inventory
How much stock should be held?

Transportation
How should goods be shipped?

Market-Logistics Decisions Warehousing

Every company has to store finished goods until they are sold
production and consumption cycles rarely match

Market-Logistics Decisions Inventory

Inventory decision making involves knowing
when to order? & how much to order?

Storage function helps smooth discrepancies between production and quantities desired by the market Number of inventory stocking locations
goods can be delivered to customers more quickly higher warehousing and inventory costs

The optimal order quantity can be determined by observing how order-processing costs and inventorycarrying costs sum up at different order levels

Determining Optimal Order Quantity

Market-Logistics Decisions

Inventory Classification
Companies are reducing their inventory costs by treating inventory items differently
They are positioning inventory items according to risk and opportunity They are also keeping slow-moving items in a central location while keeping faster moving items closer to customers

Inventory Classification Techniques ABC

Based on Usage Value
Not volume

Market-Logistics Decisions Transportation

Transportation Choices affect
product pricing on-time delivery performance the conditions of the goods upon arrival

FSN
FMG/SMG/NMG

Movement or Velocity

VED
Criticality (Vital-Essential-Desirable)

All these affects customer satisfaction

Market-Logistics Decisions Transportation Factors

Speed Frequency Dependability Capability Availability Traceability Cost

Market-Logistics Decisions Combination of Two Modes of Transportation

Piggyback
rail and trucks

Fishyback
water and trucks

Trainship
water and rail

Airtruck
air and trucks

Integrated Logistics Systems (ILS)

Viral Marketing What is Viral Marketing?

An integrated logistics system (ILS) includes materials management, material flow systems, and physical distribution, aided by information technology

WOMM
Origin of Viral Marketing

Connected Marketing Role of Internet

Viral Marketing

Mass Marketing One-to-Many

Many-to-Many Social Network Marketing

The use of electronic media, alone or in conjunction with other media, to generate the distribution of an idea/message within an active network of consumers
One-to-One W3 Marketing

Myn friend etworko s/asso f ciates

Yournetworkof friends/associates

Theirnetworkof friends/associates

Models of Media Influence (Source: Marsden)

Media Mix

Conventional Media vs. Internet

What will be the future?

Introduction

Promotion is communicating with potential customer

Personal selling is one of the most effective way

Personal Selling

Personal Selling is often a companys largest single operating expense

What is Personal Selling?

What is Personal Selling? Personal selling allows the marketer or seller to

Personal presentation by the firms sales force for the purpose of making sales and building customer relationships. Personal selling is paid personal communication that attempts to inform customers and persuade them to purchase products or services

communicate directly with the prospect or customer and listen to his or her concerns answer specific questions provide additional information inform persuade sometimes even recommend other products or services

What is Personal Selling? Personal Selling

Is it a Marketing Channel? Is it part of Promotion and/or Communication? What was Eureka Forbes doing with Direct Sales Model?

Strategy Planning for Personal Selling

Target Market

Product

Place

Promotion

Price

Personal Selling

Mass Selling

Sales Promotion

Number and type of salespersons needed

Sales Technology Support

Selection and Training Procedure

Personal Selling Techniques

Compensation and Motivation Approach

Designing a Sales Force

Sales force objectives Sales force strategy Sales force structure Sales force size Compensation

Marketing Communications

Marketing Communications

Marketing Communications

Marketing communications are the means by which firms attempt to inform, persuade, and remind consumers, directly or indirectly, about the products and brands they sell.

Inform, Persuade and Remind

Directly or Indirectly

Marketing Communications Mix

Advertising Direct marketing
Interactive marketing Word-of-mouth / Word-ofweb marketing

Marketing communications represent the voice of the brand and are a means by which it can establish a dialogue and build relationships with consumers.

Sales promotion Events and experiences Public relations and

Personal selling publicity

Communication Platforms
Advertising Print and broadcast ads Packaging inserts Motion pictures Brochures and booklets Posters Billboards POP displays Logos Videotapes Sales Promotion Contests, games, sweepstakes Premiums Sampling Trade shows, exhibits Coupons Rebates Entertainment Continuity programs

Communication Platforms Events/ Experiences

Sports Entertainment Festivals Arts Causes Factory tours Company museums Street activities

Public Relations
Press kits Speeches Seminars Annual reports Charitable donations Publications Community relations Lobbying Identity media Company magazine

Communication Platforms Personal Selling

Sales presentations Sales meetings Incentive programs Samples Fairs and trade shows

How advertising and promotions work?

Direct Marketing
Catalogs Mailings Telemarketing Electronic shopping TV shopping Fax mail E-mail Voice mail Blogs Websites

How advertising and promotions work?

Communication Process Models

Macro Model
Parties
Sender Receiver Message Media

Micro Model
Consumers specific response to communications The buyer passes through
Cognitive (learn) stage Affective (feel) stage Behavioral (do) stage

Tools

Functions
Encoding Decoding Response Feedback

learn-feel-do
High involvement high differentiation

do-feel-learn
High involvement low differentiation

learn-do-feel
Low involvement low differentiation

Noise

Elements in the Communications Process

key factors in effective communication

Senders must know what audiences they want to reach and what response they want to get They must encode their messages so that the target audience can decode them They must transmit the message through media that reaches the target audience Develop feedback channels to monitor the responses

Field of Experience

Communication Process & Perception Perception depends on

the physical stimuli

Senders field

Receivers field

the stimuli in relation to the surrounding field The conditions within the individual

Communication Process & Perception The key point is that perception can vary widely among individuals exposed to the same reality

Communication Process & Perception

People can emerge with different perceptions of the same object because of three perceptual processes

Selective attention In marketing, perceptions are more important than the reality
it is perceptions that will affect consumers actual behavior

Selective distortion

Selective retention

Selective Attention It has been estimated that the average person may be exposed to over 1,500 ads or brand communications a day
A person cannot possibly attend to all of these stimuli Selective attention means that marketers have to work hard to attract consumers notice

Selective Attention People are more likely to notice stimuli

that relate to a current need
A person who is motivated to buy a computer will notice computer ads; he or she will be less likely to notice DVD ads

that they anticipate

more likely to notice computers than radios in a computers store

whose deviations are large in relation to the normal size of the stimuli
more likely to notice an ad offering $100 off the list price of a computer than one offering $5 off

The real challenge is to explain which stimuli people will notice

which is unexpected
Sudden offers

Selective Distortion

Selective Distortion & Strong Brands

Selective distortion can work to the advantage of marketers with strong brands when consumers distort neutral or ambiguous brand information to make it more positive
Food may seem to taste better An automobile may seem to drive more smoothly

Even noticed stimuli do not always come across in the way the senders intended Selective distortion
the tendency to interpret information in a way that will fit our preconceptions Consumers will often distort information to be consistent with prior brand and product beliefs

When tasting both on a blind basis

Consumers were found to be equally split in their preference for Diet Coke versus Diet Pepsi

When tasting the branded versions

Consumers preferred Diet Coke by 65% and Diet Pepsi by only 23%, with the remainder seeing no difference

Selective Retention People fail to register much information to which they are exposed in memory, but tend to retain information that supports their attitudes and beliefs Because of selective retention people are likely to remember good points about a product they like and forget good points about competing product

Selective Retention

Selective retention also works to the advantage of strong brands It explains why marketers need to use repetition in sending messages to their target market
to make sure their message is not overlooked

Micro Models Communication

Response Hierarchy Models

It is necessary to explore the possibilities people have for

thinking feeling behaving

towards the various products and services in their lives

How advertising and promotions work? This isnt easy because we are all capable of being
logical and illogical objective and subjective obvious and subtle

Theories of Advertising Effectiveness

Economic
a rational consumer who consciously considers functional costutility information in a purchase decision

Responsive
a habitual consumer conditioned to thoughtlessly buy through rote, stimulus-response learning

Psychological
an unpredictable consumer who buys compulsively under the influence of unconscious thoughts and indirect emotions

all of this simultaneously

Social
a compliant consumer who continually adjusts purchases to satisfy cultural and group needs for conformity

Economic theory
Consumers act in their own financial self-interest
They look for maximum utility at the lowest cost Rational, methodical calculation

Responsive theory Consumers are lazy and want to buy with minimum effort
They develop habits through stimulus-response learning

Consumers must have functional information to make a decision This old, much-revered theory most often applies to commodity items

The process is non-rational and automatic as repetition builds and then reinforces buying activity for routine products Information serves a reminder/exposure, rather than thoughtful, purpose

Psychological theory Explains consumer behavior as ego involvement

the personality must be defended or promoted essentially unpredictable, undeliberate and latent

Social theory Describes consumers as basically imitative

People watch what others buy and comply/adjust to get along or be inconspicuous

It is an emotional, insecure behavior

Group role, prestige, status and vanity concerns are involved

Implicit product attitudes are more important than functional benefits for the selective products that touch people so deeply

Opinion leaders and word-of-mouth communication are important for the visible products affected

Involvement a continuum of consumer interest in products and services

On the high side are those that are important in money cost, ego support, social value or newness
they involve more risk, require paying more attention to the decision and demand greater use of information

Modified Response Hierarchy Learn-Feel-Do

Does not necessarily occur in sequential path Sequence can change

Low involvement decisions are at the other extreme

they arouse little consumer interest or infor-mation handling because the risk is small and effort can be reduced accordingly

Alternative Response Hierarchies: Three-Orders Model

Topical Involvement High
(Learning model) Cognitive

Strong vs. Weak theories of Advertising

Joness Strong Theory of Advertising
Consumers are passive Ad can persuade & generate repeat purchase behavior

Low

High
Affective (Low Involvement model) Cognitive

Ehrenbergs Weak Theory of Advertising

Consumers are active problem solvers

Perceived Product Differentiation

Conative

(Dissonance attribution model) Conative

Conative

Driven by habit to make a purchase

Affective

Low

Affective

Awareness-Trial-Reinforcement framework (ATR)

Cognitive

Steps in Developing Effective Communications

Identify target audience Determine objectives Design communications Select channels Establish budget Decide on Communication mix Measure results/ manage IMC

Identify Target Audience

Who are they? Potential buyers of the companys products Current users, deciders, or influencers Individuals, groups, or particular publics General public

Decisions based on target audience What to say How to say it When to say it Where to say it To whom to say it

Steps in Developing Effective Communications

Identify target audience Determine objectives Design communications Select channels Establish budget Decide on Communication mix Measure results/ manage IMC

Communications Objectives

Category Need

Brand Awareness

Brand Attitude

Purchase Intention

Category Need Communication objective of establishing a category need

Establishing a product or service category as necessary to remove or satisfy a perceived discrepancy between a current motivational state and a desired emotional state Used for new-to-the-world products

Brand Awareness Ability of identify (recognize or recall) the brand within the category in sufficient detail to make a purchase Brand Recognition vs. Brand Recall
Recall is important outside the store
Planned purchases

Recognition is important inside the store

Impulse items

Brand Attitude Evaluating the brand with respect to its perceived ability to meet a currently relevant need. Relevant brand need can be
Negatively Oriented
Problem removal, problem avoidance, incomplete satisfaction and normal depletion

Brand Purchase Intention Self instructions to purchase the brand or to take purchase related action
Encouraging consumers to make a mental commitment to buy Sales Promotions often help in this
BOGOF

Positively Oriented
Sensory gratification, intellectual stimulation or social approval

Consumer States for Two Brands

Steps in Developing Effective Communications

Identify target audience Determine objectives Design communications Select channels Establish budget Decide on Communication mix Measure results/ manage IMC

Design Communications
What to Say?
Message Strategy

Design Communications Message

What to Say?
Message Strategy

How to Say?
Creative Strategy

Themes

Appeals

Ideas

Who should Say?

Message Source

Brand Positioning
Point of Parity OR Point of Difference

Creativity Creative Strategy

how a message is being expressed

Design Communications Creativity

Information Appeal
Product benefits or attributes Assumes rational processing on part of consumer

content of the message itself

Problem solving, product demonstration, product comparison, testimonials

Information Appeal

Transformational Appeals

Three types of informational appeals

Conclusion drawing One-versus-two-sided arguments Order of argument presentations
Non-product-related benefit or image
What kind of person uses a brand? What kind of experience results from using the brand?

Design Communications Which Appeals?

Negative appeals
Fear Guilt Shame

Points-of-difference (PODs) Attributes or benefits consumers strongly associate with a brand, positively evaluate and believe they could not find to the same extent with a competing brand
points where you are claiming superiority or exclusiveness over other products in the category

Positive appeals
Humor Love Pride Joy

Points-of-parity (POPs) Associations that are not necessarily unique to the brand but may be shared by other brands
where you can at least match the competitors claimed benefits they may usually not be the reason to choose a brand, but their absence can certainly be a reason to drop a brand

Herzbergs Theory

Two Factory Theory

Motivation
PoD

Hygiene
PoP

Borrowed Interest
Motivational or borrowed interest devices are often employed to attract consumer attention and raise their involvement with an ad
Borrowed interest advertising
firms borrow consumers interest in something outside the company is a way for companies to ride on the success/appeal of larger events,
Example: Olympics, presidents birthday, a steep rise in gas prices, Valentines day promotion.

Borrowed Interest You dont need to borrow any interest if you communicate the things that buyers are interested in hearing Archie's advertising valentines day gifts during February
borrowed interest?

Break Through the Clutter

Break Through the Clutter With so many advertisers vying for the attention of consumers in so many places

A challenge in arriving at the best creative strategy

figuring out how to break through the clutter to attract the attention of the consumerbut still be able to deliver the intended message

How can any particular message get noticed? How to fight advertising glut?
Get noticed amidst the glut by adding to it adjusting spending levels to market conditions Use innovative media ideas Make breakthrough creative

Design Communications Message Source Spokespersons credibility Factors underlining credibility

Expertise Trustworthiness Likeability

Design Communications Message Source

Congruity
Positive attitude towards source and product communicators can use their good image to reduce some negative feelings toward a brand but in the process might lose some esteem with the audience

Steps in Developing Effective Communications

Identify target audience Determine objectives Design communications Select channels Establish budget Decide on Communication mix Measure results/ manage IMC

Communication Channels

Personal
two or more persons communicating directly face-toface, person to audience, over the telephone, or through e-mail Products
Expensive, risky, infrequently purchase, indicate status or taste

Communication Channels
Steps to stimulate personal influence channels
Create opinion leaders Work through community influentials Develop word-of-mouth referral Establish an electronic forum Use viral marketing Use influential or believable people in testimonial advertising Develop advertising that has high conversation value.

Non-Personal Communication Channels Communications directed to more than one person

Media Sales promotions Events and experiences Public relations

Non-Personal Communication Channels Media

print, broadcast, network, electronic, and display

Events and Experiences The lasting effects of events on brand awareness, knowledge, or preference will depend upon
the quality of the product the event itself, and its execution

Sales Promotion
consumer promotions, trade promotions, and business and sales-force promotion

Events and Experiences

sports, arts, entertainment, and cause events

Public Relations
directed internally or externally to consumers, other firms, media, and government

Communicating to the Rural Audience

Large variations
language culture

Steps in Developing Effective Communications

Identify target audience Determine objectives Design communications Select channels Establish budget Decide on Communication mix Measure results/ manage IMC

Campaigns have to be tailor made for product and region Product demonstrations
haats, mandis, and melas (fairs)

TV and print media do not reach all villages and all customers Wall paintings and signboards are very popular Folk theatre, magic shows and puppet shows are also used as a media vehicle

Communication Budget

Objective-and-Task Method
Establish the market share goal Determine the percentage that should be reached Determine the percentage of aware prospects that should be persuaded to try the brand Determine the number of advertising impressions per 1% trial rate Determine the number of gross rating points that would have to be purchased Determine the necessary advertising budget on the basis of the average cost of buying a GRP

Affordable Percentage-of-Sales Competitive Parity Objective-and-Task

FMCG Ad Spend

Steps in Developing Effective Communications

Identify target audience Determine objectives Design communications Select channels Establish budget Decide on Communication mix Measure results/ manage IMC

Characteristics of The Marketing Communications Mix Advertising

Pervasiveness Amplified expressiveness/dramatization Impersonality

Characteristics of The Marketing Communications Mix Word-of-Mouth Marketing

Credible Personal Timely

Public Relations and Publicity

High credibility Dramatization

Direct Marketing
Customized Up-to-date Interactive

Sales Promotion
Attention/Communication Incentive Invitation

Events and Experiences

Relevant
Personal involvement

Personal Selling
Personal interaction Response Cultivation of relationships

Involving
Active engagement

Implicit
Soft/indirect selling

Factors in Setting Communications Mix

Type of product market
B-to-B vs. B-to-C Complexity, risk, price

Major Media Types Newspapers Television Direct mail Radio Magazines Outdoor Yellow Pages Newsletters Brochures Telephone Internet

Buyer readiness stage

Awareness, Comprehension, Conviction, Order, Reorder

Product life cycle stage

Introduction
Advertising, Events and Experiences, PR Personal Selling; Direct Marketing and SP

Growth
Word of Mouth

Maturity
All

Decline
SP

Choosing Among Major Media Types

Cost Effectiveness by Buyer Readiness Stage

Target audience and media habits Product characteristics Message characteristics Cost

Promotional Tools and Purchase Decision Stages

Two Step Process Integration of Channels Mass communications affect personal attitudes toward behavior through a two-step process
Ideas flow from mass media to opinion leaders Opinion leaders to the less media-involved population groups

Models of Media Influence (Source: Marsden)

Models of Media Influence The influence of mass media on public opinion is not as direct, powerful, and automatic as supposed
It is mediated by opinion leaders People interact primarily with their own social groups and acquire ideas from opinion leaders in their group

Hence, mass communicators should

direct messages specifically to opinion leaders, and let opinion leaders carry the message to others

Deciding On Media Timing and Allocation

The macro-scheduling problem
scheduling the advertising in relation to seasons and the business cycle

Factors Affecting Timing Patterns Buyer turnover

the higher this rate, the more continuous the advertising should be

Purchase frequency Micro-scheduling problem

allocating advertising expenditures within a short period to obtain maximum impact

the higher the purchase frequency, the more continuous the advertising should be

Forgetting rate
the higher the forgetting rate, the more continuous the advertising should be

Media Schedule Patterns The advertiser has to choose among

Continuity Concentration Flighting Pulsing

Classification of Advertising Timing Patterns

Media Selection Finding the most cost-effective media to deliver the desired number and type of exposures to the target audience Deciding on
Reach Frequency Impact

Reach
Launching new products Flanker brands Extensions of well-known brands Infrequently purchased goods Going after an undefined target market

Frequency
There are strong competitors A complex story to tell High consumer resistance A frequent-purchase cycle

Readership and Circulation

Relationship Among Trial, Awareness, and the Exposure Function

Selecting Specific Vehicles

Most cost-effective vehicles within each chosen media type Estimates of
Audience size
Circulation Audience Effective audience Effective ad-exposed audience

The relationship between reach, frequency, and impact is captured in the following concepts:
Total number of exposures (E) is reach times the average frequency: E=RxF
Also called GRP (Gross Rating Points)

Weighted number of exposures (WE) is the reach times average frequency times average impact: WE = R x F x I

Composition
Audience Profile (E.g. Magazines have reader profiles)

Media cost
cost per thousand persons reached by a vehicle

Steps in Developing Effective Communications

Identify target audience Determine objectives Design communications Select channels Establish budget Decide on Communication mix Measure results/ manage IMC

How advertising and promotions work?

It is necessary to explore the possibilities people have for

thinking feeling behaving

towards the various products and services in their lives

How advertising and promotions work? This isnt easy because we are all capable of being
logical and illogical objective and subjective obvious and subtle

Consumer & Sales Effect Research Communication-Effect Research

Consumer feedback method
asks consumers for their reactions to a proposed ad

Portfolio tests
ask consumers to view or listen to a portfolio of advertisements, then consumers are asked to recall all the ads and their contents

Laboratory tests
uses equipment to measure physiological reactions to an ad

all of this simultaneously

Sales-Effect Research

Measuring Sales Impact of Advertising

Consumer States for Two Brands

Advertising What is Advertising?

Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor
Half of ad dollars are wasted.. The problem is we dont know which half ?

Can be a cost-effective way to disseminate message

to build a brand preference
or

to educate people

Advertising Five Ms of Advertising

Advertising An advertising goal

specific communication task and achievement level to be accomplished with a specific audience in a specific period of time

Advertising Objectives

Advertising Classification of Advertising Objectives

Informative advertising

Persuasive advertising

Informative Advertising
to create brand awareness knowledge of new products new features of existing products

Reminder advertising

Reinforcement advertising

Persuasive Advertising
to create liking, preference, conviction, and purchase of a product or service

Advertising Classification of Advertising Objectives

Reminder Advertising
to stimulate repeat purchase of products and services

Advertising Advertising Spend (Budget)?

Are you spending the right amount? treated as a current expense

Reinforcement Advertising
to convince purchasers that they made the right choice

an investment in building brand equity

Advertising Budget Factors to Consider Stage in the product life cycle Market share and consumer base Competition and clutter Advertising frequency Product substitutability

Television
Advantages Reaches broad spectrum of consumers Low cost per exposure High cost of production Ability to demonstrate product use Ability to portray image and brand personality High cost of placement Lack of attention by viewers Disadvantages Brief Clutter

Print Ads
Advantages Detailed product information Ability to communicate user imagery Flexibility Ability to segment Disadvantages Passive medium Clutter Unable to demonstrate product use

How to Evaluate Print Advertisements Is the message clear at a glance? Can you quickly tell what the advertisement is all about? Is the benefit in the headline? Does the illustration support the headline? Does the first line of the copy support or explain the headline and illustration? Is the ad easy to read and follow? Is the product easily identified? Is the brand or sponsor clearly identified?

Advertising Radio Ads

Radios main advantage is flexibility:
Stations are very targeted Ads are relatively inexpensive to produce and place Short closing allow for quick response

Actual and Projected Growth of Indian Radio Industry

Disadvantages
The lack of visual images Relatively passive nature of the consumer processing that results

Online Promotional Opportunities

Websites Microsites
an individual web page or cluster of pages which are meant to function as an auxiliary supplement to a primary website

Sponsorships Online communities Email Mobile marketing Internet-specific ads and videos

Internet

Search ads & Display ads Interstitials

web page advertisements that are displayed before or after an expected content page

Alternative Advertising Options Place Advertising

Place Advertising Examples

- Billboards - Public places - Product placement - Point-of-purchase

Creative and unexpected ad placement to grab consumers attention

Reaching people in other environments, such as where they

Work Play Shop

PUBLIC RELATIONS Public relations (PR) involves a variety of programs designed to promote or protect a companys image or its individual products
A public is any group that has an actual or potential interest in or impact on a companys ability to achieve its objectives

Public Relations

Tasks Aided by Public Relations Launching new products Repositioning a mature product Building interest in a product category Influencing specific target groups Defending products that have encountered public problems Building the corporate image in a way that reflects favorable on products

Public Relations Functions Press relations Product publicity Corporate communications Lobbying Counseling

Major Tools in Marketing PR Publications Events Sponsorships News Speeches Public Service Activities Identity Media

Decisions in Marketing PR

Establish objectives Choose messages Choose vehicles Implement Evaluate results

What is Direct Marketing?

Direct marketing is the use of consumer-direct channels to reach and deliver goods and services to customers without using market middlemen

Dire c

t Ma

rket ing

Permits target market selectivity Can be personalized Is flexible Allows for early testing and response measurement

Direct Marketing Channels

Telemarketing

Constructing a Direct-Mail Campaign Establish objectives Select target prospects

Other direct response Develop offer elements Test elements Direct mail Catalogs Execute Measure success

RFM - Selecting Prospects

Recency Recency

Frequency Frequency

Monetary value Monetary value

Events & Experiences

Introduction A phenomenon or any observable occurrence that has a beginning and an end i.e. it occurs in a specific time period It also means some type of gathering
Ceremonies, exhibitions, performances, festivals, media events, parties, competition, convention (meeting) etc

Events and Experiences Involvement of Brand in events and experiences can broaden and deepen its relationship in consumers lives
Becoming part of a special and more personally relevant moment in consumers lives affecting consumers brand attitudes and beliefs Atmospheres or packaged environments create or reinforce leaning toward product purchase

Involvement of customer
Creates experiences and feelings about products or brands

Why marketers sponsor events ?

To identify with a particular target market or life style To increase awareness of company or product name To create or reinforce consumer perceptions of key brand image associations To enhance corporate image dimensions To create experiences and evoke feelings To express commitment to the community or on social issues To entertain key clients or reward key employees To permit merchandising or promotional opportunities

Major Sponsorship Decisions

Choosing Events

Designing Sponsorship Programs

Evaluating Sponsorship Activities

Choosing an Event An Ideal Event

Audience closely matches target market Event generates media attention Event is unique with few sponsors Event lends itself to ancillary activities Event enhances brand image of sponsor

Sales Promotion

Introduction

Salespromotionandpackaginghelpmoveprospects Salespromotionandpackaginghelpmoveprospects andcustomersthroughthedecisionprocessstartedby andcustomersthroughthedecisionprocessstartedby otherMCfunctions otherMCfunctions

What is Sales Promotion? Sales promotions consist of a collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade Includes tools for
Consumer promotion Trade promotion Sales-force promotion

AwarenessInterest
PublicRelations DirectMarketing Website

DesireAction
SalesPromotionPackaging

What is Sales Promotion?

The media and non-media marketing pressure applied for a predetermined, limited period of time at the level of consumer, retailer, or wholesaler in order to stimulate trial, increase consumer demand, or improve product availability
American Marketing Association

Types of Sales Promotion

ConsumerPromotion
Theuseofincentivesto Theuseofincentivesto motivateendusersto motivateendusersto purchaseabrandand purchaseabrandand thuspressureretailersto thuspressureretailersto stockthatbrand stockthatbrand
Usedbymarketersaspart Usedbymarketersaspart ofapullstrategy ofapullstrategy

TradePromotion
Theuseofincentivesto Theuseofincentivesto motivatethebuyingand motivatethebuyingand resellingofproducts resellingofproducts
Usedaspartofapush Usedaspartofapush strategy strategy

Types of SP. . . .
What do we want the consumers and trade to do?
Manufacturer
TradePromotions Push Push

Trade

Buy More Buy Now

Pull

Customer
CustomerPromotion RetailerPromotion

Major Sales Promotion Decisions

Establish objectives Select tools Develop program Pretest Implement and control Evaluate results

Sales promotions objectives Objectives can be classified into three different categories
Consumers Retailers or Intermediaries Sales Force

Considerations in Developing a Sales Promotion

Short term impact
Sales

Types of Buyers
Loyals
Buy a particular brand on a more or less consistent basis

Long term effect on the brand

Brand equity Profitability

Competitive loyals
People who are loyal to the competing brand

Switchers
Purchase of various brands in one category

Competitive reaction
Retaliatory promotions

Price buyers Non Users

Quick fix?

Results that are needed .

Loyals
Reinforce behavior Increase consumption Change buying timing

Sales Promotion Tools

Manufactures promotions
rebates and gifts

Retailer promotions
price cuts, feature advertising, coupons, contests, premiums

Competitive Loyals
Break loyalty Encourage brand switching

Consumer franchise-building promotions

build brand equity while moving product

Switchers
Persuade to buy the right brand more often

Trade-promotion tools
award money/incentive to the trade

Price
Value added to make price less important

Sales-force-promotion tools
used to gather business leads, impress, and reward customers, and motivate the sales force to greater effort

Non users
Create awareness, create category worth

Franchise-Building and Non-franchise Building Promotions

Consumer Franchise Building Promotions Promotional activities that communicate distinctive brand attributes and contribute to the development and reinforcement of brand identity. Examples: free samples, in-store demonstrations and service materials like recipes Consumer non-Franchise Building Promotions Promotional activities that are basically intended to generate immediate sales, or shorten the buying decision process rather than implanting unique and important ideas about the brand in the consumers mind. Examples: price-offs, coupons and free gifts

Franchise-Building and Non-franchise Building Promotions

CFB promotions
communicate distinctive brand attributes reinforce brand identity encourage repeat purchase and brand loyalty convert consumers to loyal customers

Non-FB promotions
accelerate purchase decision process generate immediate increase in sales borrow customers from other brands

Franchise-Building and Non-franchise Building Promotions

Developing the Program Factors to be considered

The size of the incentive The conditions for participation The duration of the promotion The distribution vehicle The timing of the promotion The total sales-promotion budget

CFB activities affect sales for about 4 years Non-CFB activities affect sales for 1 year or less When you spend too much on non-CFB relative to CFB, profits decline within 2 years

Pre-testing To determine if
the tools are appropriate the incentive size optimal the presentation method efficient

Implement and Control Prepare implementation and control plans for each individual promotion that cover lead-time and sell-in time lead-time
the time necessary to prepare the program prior to launching it

sell-in time
begins with the promotional launch and ends when the merchandise is in the hands of consumers

Evaluation Can be evaluated using three methods

Sales data Consumer survey Experiments

Advertising versus Sales Promotion Above the Line vs. Below the Line Advertising to sales promotion ratio
The ratios of advertising expenditure to that of sales promotion in developed countries is around 30:70 Although focus on advertising is higher, a trend of preference for Sales Promotion over advertising is visible in developing countries as well What are the Reasons ??

Evaluate the effect on brand image/loyalty

Impact of displays/featuring
Average sales increase with a 10% price cut = 20% Increase with 10% price cut AND ad feature = 78% Increase with 10% price cut AND display = 105% Increase with all three = 203%

Why the Growth???

Instant results Faster implementation Measurable Relatively easy and inexpensive

 Conceptualize IMC in terms of All Contacts

Integrated Marketing Communications (IMC)

between customer & brand

What is IMC ?
IMC is a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communication programs with consumers, customers, prospects employees and other relevant external and internal audiences.
ThegoalofIMCistogenerate shorttermfinancialreturns andbuildlongtermbrand value.

What is IMC? It is concept of marketing communications planning that recognizes the added value of a comprehensive plan
Such a plan evaluates the strategic role of a variety of communications disciplines for example, general advertising, direct response, sales promotion, and public relations and combines these disciplines to provide clarity, consistency, and maximum impact through the seamless integration of messages

Reasons for Growing Importance of IMC

From
Media advertising Media advertising Mass media Mass media Manufacturer dominance Manufacturer dominance General focus General focus Low agency accountability Low agency accountability Traditional compensation Traditional compensation Limited Internet availability Limited Internet availability

IMC to Build Brand Equity

Toward
Multiple forms of communication Multiple forms of communication Specialized media Specialized media Retailer dominance Retailer dominance Data-based marketing Data-based marketing Greater agency accountability Greater agency accountability
Performance-based compensation Performance-based compensation

Widespread Internet availability Widespread Internet availability