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Marketing

Some misconceptions

A] Marketing is the other name of Sales B] To place the product in the market C] To meet customers and sell the product D] Sales is the most important aspect of Marketing

So what is Marketing
The definition to design, produce a product that satisfies customers need profitably understanding and respond to customers need customer is now becoming the co-producer of products and services. The producer can take the product up to a certain level in the value chain, from there it is the buyer who customize it to his/her requirement. (a tv can be source of entertainment, a 2nd tv, a showpiece or a special event TV)

(Macdonalds have self service systems, wherein customer not only collect their food trays, they also clean their table) (Asian paints lets it customers decide their preferred shades through its outlets)

Customer is the focal point


Customers want their brand producers to take care of one end of value chain and not spread it thin its resources Sales is transaction based maximizing profit at the shortest possible period. Maximizing is to create customer, serve them build relationship through long term period, thereby maximizing profit [Ambassador>Maruti]

Need, Want, Demand


Need is a basic human requirement like food, shelter, cloths, survival Want are the needs directed at specific product/service short comings as perceived by user Demand when a want is accompanied by customers ability to pay for it, it becomes demand

the challenge for a marketer is to convert needs to wants and finally to demand want-------Want ------new product ------Product------ offer Offer Want and offer will never meet

Exchange and transaction


Exchange is the act of obtaining a object which one needs, by offering some other objects in return Transaction is the process of exchange when two parties reach an agreement on the terms of exchange, it becomes transaction

Marketing Concepts
A] Production concepts till 30s Ford T B] Product concept till 50s post war C] Selling concept 60s70s D] Marketing concept 70s 90s E] Customer concept 90s 00s F] social marketing -- 00s10s G] Value driven concept 00 ---

Inside out selling


Factory product sales promotion profit

Outside in marketing
Mkt. --- need integrated Mktg. --customer satisfaction and profit

Societal Marketing Concept - SCM believes that organization should determine need, want and interest of Target Market deliver superior value to improve consumer and societys well being. It calls to balance 3 areas profit, wants and societys interest. Human welfare

Value driven marketing


Example drinking and driving dont mix

say no to dowry

Value driven marketing concepts Objectives of corporate make the world a better place How New wave technology How Corporate sees the market Whole human mind with mind, heart and spirit

Value driven marketing


Key marketing concept values Marketing guidelines for companies- Corporate mission, vision, and values Value propositions Functional, Emotional, and spiritual Interaction with consumers Many to many collaboration

Value driven marketing


How VDM was influenced A] Twitter growth 1298%[between 08 09] Blogging and Twittering has reached Corporate eg.- IBM employees are encouraged to start own blogs and talk of IBM [within guidelines] [GE has a Tweet squad a young group who teaches older employees to use social media to spread GE story] The reach of social sites is 1753 times of Tv+press in USA/JAPAN/Europe

The marketing process


Analyze the market Select the target market Develop marketing mix Manage the marketing effort

4ps 7ps -- ++
Product Price ]promotion Place + people Process Physical evidence

Marketing Segmentation
Market has various types of people They prefer various brands in each product category As they have various tangible and intangible needs Marketer in keeping with his organisations objectives, select the market that best suits the organization Customers can be grouped geographically, demographically, psycho graphically or behavior factors

Target marketing
Target marketing is process of evaluating each segments attractiveness and selecting one or more segments to position its product. A company with limited resources may decide to serve only one or two special segments or market niche. While big firms may decide to offer a complete range of products to serve all segments of society

Developing marketing mix


Marketing mix is a set of controllable tactical marketing tools blended to produce the response it wants in the target market

Intended positioning areas


Product variety, quality, design, features,

brand name, packaging, services Price -- list price, discounts, allowances, payment periods, credit terms.. Promotion advertising, personal selling sales promotion, public relations Place channels, coverage, assortment location, inventory, transportation

4p vs. 4c

4p Product Price Place Promotion vs. 4c [consumersview] customer solution customer cost convenience communication

Marketing Environment
Scanning environment a companys marketing environment consists of actors outside and forces outside marketing that affect managements ability to build and maintain successful relationship with target customers Environment scanning is a continuous and important activity for any marketing company as it changes constantly This activity comprises of gathering, filtering, analyzing information that may effect companys business.

It includes monitoring the changes and forecasting the

future of each factor


Meaning and concepts Marketing environment is composed of micro and macro environment Micro environment a] The company b] Suppliers c] Intermediaries d] Customers e] Competitors f] Public Macro environment a] Demographic b] Economic c] Natural forces d] technological e] Political f] Legal g] Cultural

Cultural Societys perception, values, preferences and behaviors. Culture is the unified result of factors like religion, language, education, upbringing. Persistence of core cultural values These are very deep rooted and do not change easily, e.g.- ethnocentrism affinity towards local made products and aversion to foreign made foreign made products

Shifts in secondary cultural values these values are more amenable to change and can be influenced, molded and easily -- filmstar, models, celebrities effect on hairstyle, dresses, fashion, mannerism and even life style

Indian marketing environment


Rapid changes is taking our lifestyle from traditional to western style In 1991 new economic policy announced covered Industrial licensing, foreign investment and foreign technology agreements, MRTP act and Public sector With flood of FDI sweeping the share market and investing areas, the inflow of additional disposable income has attracted world producers hence brand choice in every segment including service sector has increased manifold

Changing Demographic structure


income,pa million household % growth

[01-02prices] Deprived <90,000 Aspires 90 200000 m. Class 2l 10,00,000 Rich 1crore Total

2001 02 731 221 58 4 1014

09- 10 618 405 153 20 1195

01-02 09-10 71.9 51.5 21.9 33.9 5.7 12.8 0.4 1.7 100 100

% -2.1 7.8 12.9 21 2.1

India is a young market with average age around 27, where China is a old people market with average age around 59 60. 60% of Indians are in the age group of 20 40 year

Advertising Media explosion


buy now -- pay later Credit card business is over Rs.18,000 crore per year and growing at a frantic pace. Rural Market catching up with 74cr. potential buyers. 41% of Indian middle class is in rural area with 58% of Indias disposable income Emergence of organized retailing

Marketing Research
Marketing Research is a systematic design, collection, analysis and reporting of data relevant to a specific marketing situation facing an organization MR plays a very important role in marketing mgmt. to assess market potential, market share, customer satisfaction, purchase behavior, measure effectiveness of pricing, product, promotion, distribution activities. Before a decision is taken, marketing normally checks out the environment to ensure right decision is taken

Market segment, market, the need


Competitive analysis sales, positioning, audit, trends Channel decision a] sources of information 1] syndicated services ORG, Thomson index, The Hindu survey, Chamber of Commerce and Industry etc. b] MKIS marketing information system shop audit, sales report, trend/taste change reports [show diagram] MKIS provides only information based on which decision is taken c] DSS computer software based system, based on data fed. DSS provides decision, appropriate answers to a situation

d] Research projects are designed for specific primary answers while secondary findings that comes with it are additional outputs Examples - 1. Wills cigarette 2. Vespa positioning 3. Coke rural Aamir Khan

MR methods
Data collection Data comes from both primary or secondary sources What is secondary data? What is primary data? Primary data collection includes observation, survey commissioned, experiments and analysis of given situation, Research tools used for primary data collection are questionnaires, audio tapes, video tapes, CCTV, internets.

Most common method is interview and focus group methods. Questions can be open ended, close ended [yes/no, agree/disagree] Actual data collection Analysis, interpretation of data Report preparation/ writing - introduction of the problem and specifics Design of MR Methodology collection of data Analysis findings Report writing

Application areas of MR
Consumer research behavior profile, motivation, satisfaction, brand switching etc. Market demand size, potential, profile, market share, segments, demand survey, sales forecast Product/ brand research new product, product life cycle, usage pattern, satisfaction level, suggestions Distribution research channel, reach, TA reach . Price research comparison, customers perception . Advertising research Sales methods research new sales program, sales problems, territory analysis, effectiveness of sales team, target fixing ..

Market segmentation
Market segmentation is the process of dividing the market into distinct sub groups with distinct needs, characteristics, behavior, who might require separate products or marketing mix Marketing segmentation is the 1st phase of the 3 phase marketing strategy Need for market segmentation to match the product offer fully or almost fully one needs to identify a homogeneous group of people in a cluster and prepare to offer its product highlighting their problem and the solution through the product

Steps to segmentation
1] Identify the TA/TAs 2] Tailor - made a product for them 3] Offer the product through a marketing program tailored for them 4] Either differentiate the product offering or use the designing, packaging or service to convey 5] Focus on the TA/TAs 6] Build up relationship for a long term association The shot gun approach vs. the Rifle approach

examples
Maruti approach Vodafone approach Horlicks approach

Segmenting Consumer markets


1. Geographical Woolen clothes for North India, dhotis for south India 2. Demographic age, sex, Education, Income cosmetics, Fridge 3. Psychographic lifestyle, social class, personality, -Titan, Fast track, Suiting 4. Behavioral Knowledge, attitude, response to a product Bettle, Golf, BMW, Merc 5. Occasion TOI Marriage season, Puja offers 6. Benefits salt in tooth paste, tall boy-wagon R

Segmenting industrial market


1. Operating variables Technology, user, non user, status 2. Purchase approach centralized, decentralized, purchase power structure, purchase policies, criteria 3. Situational factors urgency, specific application, size of order 4. Personal characteristics buyer seller similarity, attitude towards risk, loyalty 5. The decision maker user, recommender, approver, filer, decider, payer As in consumer segment buying behavior and benefits provide the best basis for segmentation in ind. market

Essentials of effective segmentation


Measurability size, purchase power, age, income, and size of each group Accessibility reach, service grip Sustainability period till which company can sustain Action ability effective programs for attracting and serving the segments

Benefits of segmentation
Benefits a powerful form of segmentation is to group a set of buyers according to the benefit they seek from the product e.g. detergents cleaning, economy, bleaching, fabric softening, smell (strong, medium, light, fresh) User status non user, ex users, potential users, first time users, regular users User rate light, medium, heavy users User loyalty loyal to brands, stores, companies [segmentation according to the degree of loyalty]

Contd.

Multiple/hybrid segmentation companies often begin by segmenting using single base and than gradually spreading the offer to other bases -- example Jagatjits Viva [now sold to Horlicks] Starting with geographic segmentation spreading to mother, doctor

Target Marketing
Market segmentation reveals the opportunities to which group is most easier and profitable. It is carried out at different levels a] undifferentiated marketing also called mass mktg. b] differentiated marketing segmented mktg. c] concentrated marketing niche mktg. d] micro marketing local and individual mktg. differentiated marketing operates in several market segments design separate offers Resort Marketing for honeymooners, marriage, sales meet, leisure

Concentrated marketing Shanaz Hussein offers facial, bridal makeup, specific skin tone application, training

Micro marketing customisation and offer special computers for school children, Banquet hall with special smokers corner, Barbie doll customised

Strategy
Strategy is a broad view/idea focused at the outcome without any specific path defined Marketing strategy is based on STP Segmentation, targeting, Positioning Plan is more specific set of steps to achieve the objective defined in the strategic plan Positioning is the act of designing the companys offer and image to occupy a distinctive place in the mind of target group. The end result of positioning is the successful creation of a customer focused value proposition, or a reason why?

Strategic planning
Strategic planning requires that company assets [resources] be managed to maximise financial returns through the selection of a viable business in accordance with the changing environment. One very important component of strategic planning is the establishment of the product/market scope of a business Example of strategic planning, planning, positioning and repositioning

Nano
Year 2005 06 Objective To provide a 4 wheeler to Indias 2 wheeler owning families Strategy a small vehicle for nucleus families -- at affordable price of below 1lakh -- a safe vehicle that also uplifts status planning -- Cut cost of basic car by 1/3rd to meet 1l bar -- Plan each component at 1/3rd of normal price -- Reduce components wherever possible -- Reduce weight, drag > less petrol consumption -- rework on design to decrease save on metals

Strategic planning mass produce to reduce unit cost -- overhaul logistic planning -- overhaul channel planning -- overhaul supplier planning
Market segmentation and brand positioning Indian car market Merc,BMW optra, Sonata, Ford - Figo mid family size SUVs, Ikon

Indigo, i10,i20,spark,maruti Economy

Entry level nano, 800, alto

Examples of positioning
Company target Karnataka state Tourism mig- bengal Gitanjali Umig Bengal Jewelers benefits price one state Premium many worlds tradition meets contemporary VALUES Many world one voyage RIVAAZ- top of line jewellery

TMC
AVIS Car rental Raj Travels

Bengal mass
businessman

emotional
easy deal normal

mig

easy travel

normal

maa, mati, manush we are number 2, we try harder buy a holiday not a headache

Positioning
it starts with a product, a piece of merchandize, a
service, a company, an institution or even a personbut positioning is not what you do to a product. It is what you do to the mind of a prospect. You position /place the product in the mind of the prospect. There are 3 strategic alternatives a] strengthen the current position as in the mind of consumer b] Grab an unoccupied position [e.g. a classic positioning of AVIS, a rental car company we are no. 2, so we try harder] -- TMC maa, mati, manush, Raj travel buy a holiday, not a headache

c] reposition the product in the mind e.g. Rasna from childrens drink to child and parents drunk -- pappu pass ho gaya from children to youth to celebrity -- Nano from poor mans car to youth groups first car

BRAND POSITIONING STRATEGIES


CBBE customer based brand equity model recommends 4 steps-: Define proper brand identity Create a appropriate brand meaning Elicit positive brand response Build brand customer relationship

Crafted/Desired positioning
Trustworthy, Honest, Admirable Authentic, Reliable, Likable, Popular Unique, Service oriented, Innovative Relevant

Positioning Manmohan Singh


Learned intellectual Leading Economist Mature and a thinker Right choice to further liberalisation Not a true politician in real sense Respected and no nonsense attitude Has a vision - where he wants take India

He has chalked a mission path [before] What was not stated 1. He will help build up an intellectual face of his party 2. His appointment will stop attack on his leader 3. He will be acceptable to all factions Build up, 1. Extensive use of propaganda machinery 2. Extensive coverage by friendly media

Foreign Media were used to publish as many reports available from UN These were fed to Indian media in phases after suitable positive changes and edit The success of Narasimha Govt.s economic plans were highlighted comparing Chandrasekher govt.s failure NDA Govts shortcomings were highlighted but no failure of economic policy was mentioned

Positioning NANO
Vision To provide a VEHICLE to Indian 2 wheeler owners Co. Objective Provide a affordable car for family use in city condition Business Objective a] Price around 1lac b] Target married 2wheeler owner c] To become global market leader d] Self financing mass production, small margin play in volume e] Speedy implementation will ensure head - start

Marketing Plan- Nano


Decide brand name Decide whether display of product is necessary Decide distribution channel Decide after-sales service providers Decide booking procedure (1.37cr. 2w owners 37% married) How many applicant can apply What is the cut off of applicant nos. Target --1st family car

Corporate level strategy


SWOT analysis Product planning a product is a thing that can be offered to a market for attention, acquisition, use or consumption that satisfies a need or a want Levels of product core benefit basic product expected product augmented product potential product

Product planning
all differentiation, positioning and competition take place at augmentation level. The new competition is not between what companies produce but between what they add to the factory output, like packaging, service advertising, customer advice, financing, delivery arrangement, warranty and other aspects that people value

Product mix decisions


Product mix decisions mix width, mix length, depth, and consistency. Width number of product length Length total number of items per product lines Depth brands in each line Consistency refers to how closely related the various product lines are, in end use, production and distribution Product differentiation form, feature, style, durability, service performance quality, repairability, durability

PLC
PRODUCT LIFE CYCLE

is the life of a product from

its introduction to its death From here several strategies for marketing becomes very important

BRAND LIFE CYCLE


Introduction, Growth, Maturity, Decline

ASBM, BigBazar, Horlicks, Scooters

The brand development period not included

A BRAND RESIDES IN THE MINDS OF THE CONSUMERS

Marketing to Indian women

self sacrificing
is it good value for money? Defer consumption, socially conservative I am equal I am I I want quality no vulgarism in fashion & TV programs

Luxury seekers Fashion conscious Bold, outgoing Statement makers

SELF DENIAL BEHAVIOR

Pleasure seeking behavior


BOLD, REBEL, FASHIONABLE OUTGOING CONSUMERIST I AM I TEENS AND TEWENTIES

ANXIOUS ABOUT
FUTURE KAHA GAYE WHO DEEN [nostalgic] self indulgent THE MIDAGE CRISIS

GUILTY OF LUXURY AND SPENDING ON SELF DISCOMFORT WITH VULGARITY 50S +

KIDS SECTION
Pastor power, age group 1 14 account for 1/3rd population. They influence and exert pressure for particular brands in all socio economic class. [SEC] Biscuits 71 Burgers and Pizzas 59 Fruit juice 52 % of kids who influence what FMCG brands their family would buy

Selecting the positioning platform - Differentiation and beyond A] Superior B] communicable can be communicated in clear and distinctive term C] pre-emptive before anybody else claims it D] affordable customer can afford it F] profitable - G] premium superior enough to charge a higher price e.g. JET air H] value for money superior and better at a low price spark cars i] parity on par in quality at competitive price

Corporate level strategies


strategy is a broad view focused at the outcome without any specific path defined plan is more specific set of steps to achieve the objective defined in the strategic plan Strategic planning requires that company assets [resources] be managed to maximise financial returns through the selection of a viable business in accordance with the changing environment. One very important component of strategic planning is the establishment of the product/market scope of a business Example of strategic planning, planning, positioning, and repositioning . [vodofone]

Strategic planning tools


The basic issue of strategic planning is resource allocation and prioritization. The question to be asked which product to get how much. Does it deserve what it gets. Does it need additional inputs, resources? Why or why not? Growth is a fundamental issue for a organisation to survive. To plan for growth both product and the market deserve in depth analysis, like SWOT, growth matrix, BCG matrix.

BCG matrix Boston Consulting Groups share matrix


20
16 14 12 10 8 8 8 8 8

4 5 3

1 2

BCG matrix
Star hi growth leaders with hi profits Cash cow hi market share -- low growth very profitable Question mark rapid growth low m/share poor profit Dogs -- low growth -- low m/share static market

Dogs can grow, if focused Or -- cut investment Or -- sell the product Or -- kill the product

mapping
attributes quality

basic need

price

Marketing plans
5 step process -- analyze -- the market -- develop marketing objective -- formulate the strategy -- preparation program and budget -- control procedures

Analyse the market -- SWOT


Strengths Technology skills Leading brands Distribution channel Loyal customer/CRM Quality of product/service Economics of scale Professional mgmt. Weakness absence of important skills weak brands illogical distribution low customer retention unreliable product/service sub scale Unprofessional mgmt.

Brand Strategy Decisions


Brand positioning attributes, benefits, beliefs and values Brand name selection selection, protection Brand sponsorship Manufacturers brand Private brands Licensed Co - Branding

Brand development
Brand Extensions Lifebuoy soap, Lifebuoy plus, Lifebuoy liquid, [each product is positioned for different segment] -Amul butter, Amul milk, Amul ghee, Amul cheese, Amul cheese spread, ice cream, chocolates Line Extension Surf, Surf Ultra, Surf Excel, surf international excel, Colgate tooth powder, paste, Gel, Herbal, Calciguard, Colgate Total Multi brands HUL Dove, Pears, Liril, Hamam, / HUL tooth paste Close up, Pepsodent Co-branding ICICI-AirIndia credit card, HDFC Indian Oil credit card, Maruti Citi Bank credit card

Purpose of Packaging
PROTECTION EASE IN HANDLING LAST APPEAL Protection unit packaging, group packaging, shipping packaging or bulk packaging Ease of handling size, to fit the normal Indian shelf, handling while on transit, separators or shock absorbers Inner carton, outer cartons, Shipping packaging Last shelf appeal bright, easy to read, color appeal, stand up cartons/pouches

Consumer behavior

understanding buyer behavior is the stimulus response


buyers characteristics cultural social
personal psychological

Marketing other Stimuli stimuli Product economic Price technolo gical Place political
Promo-tion cultural

buyers decision process problem recog- nition information search evaluation of alternatives purchase decision post purchase behavior

buyers decision product choice brand choice dealer choice purchase timing purchase amount

Factors influencing Buyers decision


1] Cultural factors Culture is the fundamental determinant of a persons wants and behavior. Each culture consists of smaller subcultures that provide more specific identification and socialisation for their members. Subculture include nationalities, religions, racial groups and geographic regions. Human societies exhibit social stratification like caste system that takes the form of social class. Social classes reflect not only income but also education, occupation even area of residence. They have different media preferences, life style and other factors

Social factors reference groups, family, peers, neighbors, friends, social roles and statuses influence consumers behavior. consumer group opinion leaders subcultures

INDIVIDUAL

reference group

family friends, social class Other cultures own culture

Opinion leaders celebrity, film stars, social or corporate personalities Experts -- dealer, employee, common man, executives, salesman, spokesperson Opinion leaders fulfill a number of needs of opinion receivers. They provide information on new products or new usage They reduce the risk of opinion seekers by providing first hand information of a needed product/service Today celebrities act as Brand Ambassadors. The purpose of doing so is to communicate brand brand values as they are perceived to be in possession of the product.

factors
Life style with individual growth, brand users habits, influence, class change. Therefore, attitude, perception, interest, beliefs, taste changes. Research has shown that even though two person may share common demographic characteristics, the two may differ significantly in their life styles. Life style portrays the whole person interacting with his or her external environment .

Self concept
Each of us has a self image. The self image is based on the person we see as role model. We act and behave like them since we think we are them. Marketers of today study the self concept of buyers and accordingly design product, packaging and advertising campaigns to reinforce this concept. E.g. Dinesh Suiting, Raymonds suiting, Citi Bank credit card, Hero Honda bike - Dhoni

Classification of product
Consumer non durable,

Consumer durable Industrial products Consumer products are products bought by final end consumer for his/her use soap, clothes, TV .. Non durable has a limited life and should be consumed early tooth paste, soap, tea, coffee .. Durables are long life products and are less frequently bought motor car, TV, fridge, pump sets Industrial products are those that are produced for another industry, -- cement, tyres,

Further classification non durable or convenience products match box, bread, newspaper . Shopping products less frequently purchased after carefully comparing on suitability, quality, price, style etc. furniture, appliances, hotel or airline services

Product Development Process


Idea generation idea screening Concept development marketing strategy Business analysis Product development Test marketing LAUNCH

BRAND EQUITY concept and measures

6 BRAND ELEMENTS TO BUILD BRAND EQUITY


Memorability hi - recall Meaningfulness identify with the product Likeability visually, fun, interesting Transferability globally acceptable Adaptability modification to modernity Protectability legally protected

MEMORABILITY
We remember only what we want to remember or what we like Long association helps memorability We remember functional benefits of a brand We remember emotional benefits We remember specific mnemonic or treatment

MEANINGFULNESS
The brand must induce a sense of identification process A car means different things to different people, but a brand must have 1 or 2 attributes that the consumer will swear by Brand loyalty stems out of this identification process

LIKEABILITY
Depending on the personality traits a brand appeal differently to different person A beverage to a child is compulsion, to a mother necessity/ assurance, to a teenager relief, but all likes it at different degree An insurance policy to GenX is tax saving, to a middle aged it is investment, to a old age consumer it is assurance

Brand Equity- price


Called the dollar metric measure % of consumer who moved because of a price increase showed brand switching and loyalty pattern Eg.- Intel asks what discounts customer needs to switch and/or what premium will they pay for a PC that has Intel processor

Brand Equity CONJOINT Analysis - Consumer make choices between product profiles and attributes and their relative importance With just 2 variables-brand and price simulated purchase choice in combination consumers loyalty and brand sacrifice becomes apparent

BRAND EQUITY MEASUREMENT You cant manage what you cannot measure.
Components of a Brand Equity measurement system -1*-- take into account Unaided brand awareness, especially first recall Remembered/ recalled brand experience Knowledge of Brand promise Brands position in the purchase consideration set Brands delivery against key benefits ( mapping benefit importance) Open ended question How is my brand different from brand YY Emotional connection Price sensitivity Relative accessibility

Specific Brand Equity Measures Brand awareness brands in top of mind awareness Brand Preference -- which brand or no preference Usage which is mostly used Accessibility Widely available and easy to find Brand Value Quality perception, value perception price sensitivity Relevant Differentiation which meets needs most why, Emotional connection like a family friend, important and never disappointed Loyalty share of requirements, state last 10 purchaseswhen satisfaction level, repurchase intern, may recommend,

MEASUREMENT SYSTEM-1*
Brand Awareness level recall level Brand Association perceived attributes Brand Attitudes satisfaction level Brand Attachment loyalty/addiction Brand Activity - involvement

MEASUREMENT -2
Advertising spending level No. of outlets +/ Brand Asset Valuator [rating of brand strength] BAV stature esteem and stature in consumers mind SALES STOCK PRICE

Marketing strategy at different PLC stages


Introduction stage a period of slow growth. Profits non existent, because of heavy expenses in introduction. Promotional expenses are at the highest cause To inform maximum number of potential customers To induce maximum trail purchase Secure distribution in maximum retail outlets For a new pioneering innovative product although it may be highly rewarding, it is very risky and extremely expensive. Because customers have to be educated and forced to try. But it is much less risky if one is entering after the pioneer, since Customers are already educated They are looking for a better alternate A set of people ready to by such product so one should enter only if a better product can be offered.

1. 2. 3.

PLC - STAGES
GROWTH STAGE the product is on a rapid sales growth path. Early adaptors and additional customers have started buying. Prices fall as new competitions are appearing. Promotional activity continuous at same level; but sales being much higher, there is welcome decline in promotional expenditure : sales ratio, profits start coming Profits increase, as promotion cost is spread over a large volume and unit manufacturing cost also falls faster than price decline Company improves product quality, adds new features and improves styling New models are introduced rapidly, so the flanker products (different sizes and flavors) appear to protect main product

PLC stages
Advertising moves from awareness advertising to product -preference advertising ( with long term positioning) MATURITY STAGE -- Rate of growth starts slowing down Product enters stage of relative maturity which is longer than previous stages. This stage is divided into 3 phases growth, stable, decaying No new market or distribution channel, markets saturates Growth now depends on population growth and replacement demand as potential customers have all tried the product Production now has over capacity because sales slowdown, competition becomes fierce

PLC stages
Advertising, Sales promotion, trade promotion increases Deals are worked out for Private brands and a shake out begins Weak competition and weak brands withdraw from market Only giant brands, that are quality leader or price leader or service leader remains Companies abandons weak brands and concentrate on profitable brands At the advent of decaying stage advertising or promotions are reduced if not totally withdrawn. Modification is tried, new usage, all tried

PLC stage
Decline stage In the beginning it is slow, almost unnoticeable, but with time the downward journey picks up speed. Most management still believes [because of emotional reasons] the sales will improve with economy improving. Or if the marketing strategy is reworked/revised Or if the product is improved The brand may decline for many reasons like shift in consumers taste, better/new technology product appears, increase in international brand in market, new age consumer etc.. To handle an aged product number of task and decisions comes up A] quite withdrawal B] to continue to sell

Pricing
Objectives of pricing decisions i] profit maximization ii] profit optimization in the long run iii] Assured minimum ROI or sales turnover Iv] Ensure a specified sales volume or market share V] Maintain price leadership or price parity with competition

Factors influencing Pricing Decisions


INTERNAL factors Marketing Objectives Market leadership, skimming, current profit maximization, survival, -- accordingly set a low, average or high price Cost this is the base level for price decisions. All its cost have to be recovered and gives a rate of return. Companies with lower cost charges lower price, which gives larger sales volume and spread out profit. Fixed and variable as well as total cost are kept in focus while price is taken EXTERNAL factors the market and demand Most product prices are decided by markets ability to pay. Price Demand relationship vary according to the market i.e. pure competition, monopolistic competition, oligopolistic competition or pure monopoly

Competition
Competitions costs, price, reaction also influence pricing decisions. Pricing Strategy cost based pricing, Demand based pricing, Competition oriented pricing, Value pricing, Affordability pricing, Differentiated pricing and Psychological pricing Value pricing based on the assumption that the objective of pricing is not to recover costs, but to realize the value of the product perceived by the customers. Differentiated pricing different prices are charged for same product in different market segments or zones. Psychological pricing buying decisions are influenced by different factors like psychological satisfaction of not paying more. Hence instead of Rs.300 for a Bata pair of Shoes, the price quoted is Rs. 299/-

Pricing
Demand based pricing Common methods are What the market can bear let them pay so skimming, penetration pricing are adopted. PRODUCT LINE PRICING Prices of different products are fixed in such a way that the product line as a whole is priced optimally which will result in optimal sales of all products put together and optimum total profit from the line. This method is also known as the product line promotion method of pricing. [all size TV pricing] Affordability based pricing the pricing is done in such a way that all segments of the total market can afford to buy and consume the products as per their need. Here price is set independent of costs involved and in some cases govt.s price subsidy is involved [fertilizer]

Steps in pricing procedure


Steps to decide the price using one or more combinations of methods Identify the customer segment and prepare their profiles Market position and brand image Price elasticity PLC brands current position Competitors price Environmental factors Pricing method to be adopted Penetration pricing P&G Arial pricing a case study

Distribution role and importance


Effective and well managed channels provide sound competitive advantage to companies. Very few companies sell their product directly to customers. Instead, majority uses marketing channels or intermediaries to move their products from factory to market. Marketing channels transform bulk assortment received from factory into small assortments needed by the customers. Intermediaries buy large quantities from manufacturers, break them down into smaller lots and broader assortments to match supply and demand.

Functions of channels
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Provide market information Promotion Contact point reduction Bulk breaking Supply in assortment Price negotiation Physical distribution Risk taking Financing selling

Channel level
Zero level manufacturer -- customer [Bata] One level manufacturer retailer -- customer [all bread, milk] Two level manufacturer -- producer wholesaler consumer [toys] Three level producer distributor dealer retailer customer [all FMCG] Industrial products direct marketing channel B2B One level manufacturer industrial distributor industrial user [cement/steel/] Two level manufacturer branch office ind. Distributor -- user

Intermediaries
1. 2. 3. For intensive distribution stocking at different places [large, medium, small towns] FMCG Exclusive distribution limited dealers with exclusive right for a select area car dealer Selective distribution more than one but not all TV, Fridge for adequate cover, good control, less cost

Channel decision
Objectives 1] what is to be achieved -- target market, 2] efficient and effective distribution 3] product to be made available at shortest possible point 4] uninterrupted supply 5] prompt customer service. MARKETING OBJECTIVE DECIDES CHANNEL OBJECTIVES this in turn determine channel design Ureka Forbes, HUL, P&G Network marketing selling to chain of stores, Malls --