part of 25 keys to sales & marketing, an

audio portable MBA course, which has

been developed by New York Times
publishing, with the contribution of some
of the best known business academicians
and practitioners of the contemporary
world. This is only a reproduced graphical
version of the same with no commercial
motive. It has been developed for better
self learning and for assistance to the
large community of several business
practitioners & students, who are in
constant pursuit for quality stuff on-line.
- Saurabh
To find more stuff on business & marketing, visit –
www.saurabhpassion.blogspot.com
 Key – 11

How to generate repeat

purchases?
 Major concern of marketers –

– Repurchase behavior
– Development of brand loyalty
 From strategic point of view, how can one encourage
repurchase behavior & brand loyalty???

 Dealing with post-purchase dissatisfaction.

 Incentive schemes on repurchase
 Dealing with post-purchase
dissatisfaction - 1
(Reason of consumer dissatisfaction)
Cognitive dissonance – How often it happens that after
purchasing an expensive product, instead of feeling
satisfied and good about ourselves, we spend time debating
if we made the right choice!

This is called Cognitive dissonance and is linked to the

Cognition (thought), that is dissonant (clashing).

Cognitive dissonance occurs for things that are expensive &

important and where the alternate, un chosen purchase
choices are attractive.
 How to resolve the Cognitive Dissonance in
Consumers?

A creative marketer knows that when a purchase is

particularly involved & costly, dissonance is typically
present and consumer will likely engage in a post
purchase information search about chosen and un
chosen alternatives.

However, instead of allowing the consumer to seek

information, information that supports the
purchase decision should be provided, by the
marketer.
 Dealing with post-purchase
dissatisfaction - 2 (An effective use of
Incentives)
Another way to increase repurchase & brand
loyalty is through marketing incentives.
(Reward customers for frequent purchases)

Many companies reward

customers in form of points
that accumulate after every
purchase. These points can be
cashed in for free merchandise,
once certain levels are
reached.
Reward customers in form
of cash discount / cash
back, on repeat frequent
purchases.
 Key – 12
(Establishing a brand name is a key strategic advantage)

Power of a brand name –

Brand distinguishes a product from the

competition & enables the marketer
to build an image.
 Advantages of a brand name –

– A brand can become associated with specific attributes. (e.g. Volvo is

known for safety & Mercedes Benz is for craftsmanship);

– Brand name can be used to launch new products (Marlbro used their
cowboy image to come out with rugged clothing)

– Brand name also insulates the customer from price sensitivity on

behalf of the consumer. i.e. because of the brand’s reputation,
consumers may be more hesitant to switch to another brand, given a
price increase. Especially if brand loyalty has developed.

– Brand identification in the market also helps shelf placement & other
distribution advantages to the customers.
 Components that make an effective brand
name –

An effective brand name should achieve

many different objectives –

– It should suggest something about the product’s

benefits. The brand name is always described as
supplying the consumer with a chunk of information
about the product. It is helpful if that information
contains a description of that product.
– Brand name should be easy to pronounce and
remember. Hence, shorter names are better.
 Focusing on Company Name Vs. Brand
Name
In general it is the strategy of companies to promote Company Name as
the brand name, instead of the product name as the brand name.

Logic behind this is that Company name is strong & is distinguishable in

and out of itself.

Those companies who pursue individual brand names believe that the
product should develop an image of its own. (i.e. if something negative
happens to the company, there is less of a likelihood of the negativity
being spread down to the level of the brand.) (this helped P & G’s
product sales when the rumor of their being associated with a devil
worshiping sect brought them a bad name, but their products still sold
because of their own brand identity.)
 Key – 13
(The inherent advantage of the pioneer brand)
– Pioneer brands are remembered best amongst alternative brands.

– Pioneer brand’s product features are perceived as more novel & attention
drawing for the consumer.

– It sets expectations about the product class. It becomes a category prototype to

which all other brands are compared.

– Pioneer brands as first in the markets can take the best position in the market.

– This best position of the pioneer brand creates a barrier for the entry to other
existing brands.

– If people experience the pioneer brand first and like it, there is a strong
likelihood that they stay with the brand, resulting in continued brand loyalty.

– It is important to note that in a given product class, only 1 brand can be the
pioneer brand. All other brands are by definition, the followers.
 2 laws that support the pioneer advantage –

Many companies promote the idea that they were the 1st in the
product class or they invented the product class. It is because
identifying the second brand in a category or product class is not
easy.

– Law of leadership - It is better to be first than

to be better.

– Law of category – If you are not the first in a

category, than set up a new category that
you can be 1st in.
 How can the pioneer brand advantage
be maintained overtime???

Considering that the unique feature of being a pioneer brand in

a particular product class is not replicable, it is important that
this unique characteristic/standing is emphasized in all
marketing communication.
– Let consumers know it. Don’t let them forget it.
(Emphasizing this in advertising or in packaging)

–(Words like – World’s first/pioneer/the original/only/etc.)

Does it mean that the follower brands are
in no position to compete at all???

Does it mean that their existence can not

be justifiable & hence profitable???

NO…..
IT IS NOT SO!
 How can the follower brand
compete???
– Various examples in the history show that brands, who once
pioneered a product class or a category are no more the pioneers
in that category / or are not existent at all.

– Position against other followers and not directly against the

pioneer. Follower brands should be distinct and should be
positioned away from the pioneer. (If follower brand is positioned
too close to the pioneer, it is overshadowed.)

– Better strategy would be to segment the market. Copy a

differentiated entrant rather than the pioneer. It allows the late
entrance to develop a degree of prominence, reduce their price
sensitivity, & increase the price sensitivity of the pioneer.
 How can the follower brand
compete???
– Emphasize new ness - One of the greatest perceptual
weakness that the consumer has for the pioneer brand
is that because the pioneer came early than all other
brands in the market, it may not be up-to-date in the
latest technological developments in the product class.

So, follower brand should position itself by emphasizing

its quality of being new or latest in the market & hence
more attuned to the consumer preferences.

(A reasonable positioning of the follower brand can be

new & improved, over the pioneer competition)
 How can the follower brand
compete???
– Be a fast follower - Enter the market quickly after the
pioneer. The shorter the time period when the pioneer brand
is alone in the market, less is the pioneer advantage. It is
imperative that follower brands enter the market as soon as
possible, after the pioneer does.

– Market leadership is also an advantage attainable by a

follower brand. Consumer perceptions of market leader is
sometimes more favorable than the pioneer brand. Market
leader is distinguishable and unique. (Inference of consumer
is that if you sell more than the competition, you must be
better.)
 Key – 15
Can new products give new life to a
company?

UNDERSTANDING
P R O D U C T S
& THEIR
L I F E C Y C L E.
 Product Life Cycle
Product life cycle is shrinking at a rate, which is
faster than at any time in the history.
A very short Timeline of the product life cycle

Maturity D
e
c
Growth l
i
Introduction n
e

Product development
 Understanding the Product Life Cycle –
Many competitors have now entered the
market. Profits reach peak & now begin to
decline. Investments must be made to advertise
& retain in the competitive environment.
Maturity
Period of market expansion & acceptance. It
is at the latter part of this stage that profits
begin to turn +ve as sales may increase at
Growth breakneck speed.
Sales growth is very slow, as market takes
time to understand the product & realize its
presence; Development costs are too high &
Introduction profits are very less.

In this stage most ideas are created; more

than 95% of ideas are killed before they see
Product development the light of day;
Understanding the Product Life
Cycle –

D Sales & Profits both start

E
C
decreasing because of
L
I
Market Saturation &
N new, better products.
E
 Shrinkage of product life cycle –
– As the time from product development to decline decreases, the
pressure to introduce new products increase.

– There is a very narrow time period in the product life cycle,

when the company earns profit (from latter part of growth to the
early part of maturity).

– Therefore, when that period shrinks, there is pressure to introduce

new products, which begin there journey in the product life cycle,
hitting the sweet spot, where they make profits.

– It is not easy to continually introduce new & improved products

and convince the consumers that such products are needed or
wanted. Hence because the product life cycle is shrinking, the
marketing in the business environment has become more
competitive than it ever was.
 Why new products often fail &
how to minimize the risk?
– Lack of marketing research & knowledge of
the right questions to ask.
– Market may be overestimated
– Competitors may present a difficult
challenge
– Price was too low or too high
– Product positioning may be incorrect
 How can one cut down the failure rate of
new products?

– Extensive marketing research & a continual effort to know

the desires and product benefits sought by the consumers.

– Avoid new product decisions as a function of sample size

of one. (Who decides on account of gut feel). It is the
target market/prospects who should wave the green flag.

– Creative approaches to new product development also

increases the success rate.
 Key – 16
Issues relating to an effective product
strategy –
– Creative marketers think creatively, not only for today but also
for tomorrow.

– Should we consider stretching or shrinking our product line?

– Companies like Honda & Toyota stretched their product lines by

introducing a new broad range of cars (luxury also) for the ever
changing requirements of their customers over a period of 25
years.

– Should downward stretch be adopted? (Companies may look

towards the downward stretch because of severe competition on
the higher side.) - this is also something that can bring down the
reputation / position of a good brand.
Issues relating to an effective product
strategy –

– Another problem allowing stretches is that introduction

of new product may eat into the sales of an existing
product.

– Existing dealers may also not be willing to handle the

new products, that give rise to new problems that never
existed before.
 Brand extensions –
What situations contribute to their success???
– The idea behind a brand extension strategy is that the customer will
accept the new product because he is already acquainted with a
well set brand name.

– Such a strategy becomes questionable when the consumer cannot

relate the original product with the new one.

– The key to a successful brand extension is the link established

between the original product and the extension in the consumer’s
kind.

– They may not have the same function. Linkage is a broader concept
than just product function.
 Key – 17

Pricing...

...a tricky
affair!
 Why pricing is important?
– Out of the 4Ps (Product/price/position/place), only PRICE is the P that
generates REVENUE.
All the other 3Ps are costs.

– Hence, having the right price for the target markets very essential.
(Pricing too high may cause your business to stop generating sales;
Pricing too low may cause your company to deflate its image.

– Pricing as a cue for the consumer – Many people judge quality through
price of the product. This price-quality has shown to be strongest when
the consumer lacks product experience, the purchase is considered to be
risky; & when there is little basis for making direct product
comparisons.

– Pricing stand as an indicator of quality for a product in which quality is

often nebulous
 Pricing Strategies

COST ORIENTED
Or

DEMAND ORIENTED
 COST ORIENTED
STRATEGIES
Very tricky because…
Variable factors changes as a function of the
number of units sold, & the number of units
sold is often a function of price.
 DEMAND ORENTED
STRATEGIES
It focuses on buyer’s perception of value instead of the
seller’s level of cost.

Hence, if the consumer perceives that a product is of

significantly higher quality than the largest competitor,
than the product can have a significantly higher price
than the competition.

Key is to quantify the quality advantage of the product

versus the competition.
 Key – 18
Effective ways to promote your product
Promotion is not just traditional advertising, but is much
wider in scope.

Actually, Promotion is an umbrella concept comprising –

ADVRTISING, PERSONAL SELLING, SALES
PROMOTION & PUBLIC RELATIONS.
Elements of Promotion –
ADVERTISING –
Any paid form of non personal presentation of
goods & services by an identified sponsor.

Comes in many forms like –

TELEVISION, INTERNET, PRINT,
BILLBOARD, DIRECT MAIL, etc.
 Personal Selling
This form of promotion involves –
interpersonal relationships
between customers & potential
sellers through sales people.

If Advertising gains attention,

Personal Selling is required to
close the deal.
 Sales Promotion
This form of promotion involves
short term incentives to encourage
the purchase of goods & services.

E.g.
Coupons, Free gifts, etc. with
purchase.
 Public Relations
PR can be a very effective promotional tool
as it is not taken in cynical light by the
prospective customer, as is the case
with Advertising.

Goal is to create good relations with one’s

various publics. By obtaining a favorable
publicity to enhance image or bring
attention to the product or service.
Goals of Promotion

Selling
a
product?
 Stages, before a sale of a
product can occur

BEHAVIORAL STAGE This is the final stage that results in

Stage - 3 action or purchase.

AFFECTIVE STAGE Develop a liking or preference for

Stage - 2 the product.

In this stage, one must be made

COGNITIVE STAGE aware of one’s product or service.
Stage - 1
 Promotional Strategy For Each Stage.

The most effective promotional strategy differs for each

stage.

To influence action or purchase is

BEHAVIORAL STAGE best done through personal selling &
Stage - 3 some forms of advertising.

Liking or preference for a product

AFFECTIVE STAGE is best developed through
Stage - 2
comparative advertising & personal
selling.
To create awareness, sales promotion,
COGNITIVE STAGE public relations & advertising are
Stage - 1 useful.
 3 Critical steps in any promotional
evaluation program
With the steps outlined below, the marketing manager can plan a
promotional strategy tailored exactly to the target market.

3 Determine which
2 Determine how many
people are at the
people on which it
is most important to
1 Determine what
steps are most moment on what steps. reach.
critical in a
particular case. i.e.
What the steps
leading to purchase STEP - 3
are for most
consumers.
STEP - 2
STEP - 1