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Marketing concepts

(focus on FMCG products )


Agenda
Overall concepts of marketing
Marketing mix concepts
Marketing mix -1 product
Marketing mix -2 price
Marketing mix -3 promotion
Marketing mix -4 place
BEP concept ( Break even )
Case study brief 10 minutes
Case study clarifications / assumptions 15 minutes
Case study analysis discussions
Team 1 presentation
Team 2
Team 3
Team 4
Debate and discussions
Final discussions and possible solutions




Strategic marketing planning

What is the organizations main activity?
How will it reach its goals?
The Marketing Plan
The process of anticipating future events
and determining strategies to achieve
organizational objectives in the future.
Why Write a Marketing Plan?
Provides a basis for comparison of actual
and expected performance

Provides clearly stated activities to work
toward common goals

Serves as a reference for the
success of future activities
Marketing planning process
Market analysis
Consumer analysis
Start
Distribution Channel
Competitor analysis Evaluate the economics
Develop marketing Mix
Go back and revise
Steps to achieve objective
Marketing Strategy
Product
Promotion
Distribution
Price
Marketing Mix
Objective
Comp / market
Analysis
Situation or
SWOT Analysis
Target Market
Strategy
Implementation
Evaluation
Control
Marketing Objectives
Marketing Objectives Must Be:

Realistic

Measurable

Time specific

Consistent with
Organizations Priorities

Our objective is to
increase market
share by 40% and to
obtain customer
satisfaction ratings of
at least 90% in 2001.
Marketing Plan Objectives
Communicate marketing
management philosophies

Provide direction

Serve as motivators

Clarify thinking

Provide basis for control

SWOT Analysis
Identifying
internal strengths (S)
and weaknesses (W)
and also examining
external opportunities (O) and
threats (T)
SWOT Analysis
South-Western College Publishing
S
W
O
T
Things the company does well.
Things the company does not do well.
Conditions in the external environment
that favor strengths.
Conditions in the external environment
that do not relate to existing strengths
or favor areas of current weakness.
Internal
External
SWOT Analysis
Production Costs
Marketing Skills
Employee Capabilities
Financial Resources
Available Technology
Company/Brand Image
Strengths and Weaknesses
INTERNAL
SWOT Analysis
Opportunities and Threats
EXTERNAL
Social

Demographic

Economic
Technological

Political/Legal

Competitive
Environmental Scanning
Collection and interpretation of
information about forces, events
and relationships in the external
environment that may affect the
future of the organization or the
marketing plan implementation.
Strategic Windows
Market
Penetration
Market
Development
Product
Development
Diversification
Increase market share among
existing customers
Attract new customers to
existing products
Introduce new products
into new markets
Create new products for
present markets
Strategic Alternatives
Market
Penetration
Increase market share among
existing customers.
Market
Development
Attract new customers
to existing products
Diversification
Introduce new products
into new markets.
Product
Development
Create new products
for present markets
Strategic Opportunity Matrix
Present Product New Product
New
Market
Market
Penetration
Market
Development
Product
Development
Diversification
Present
Market
Selecting a Strategic Alternative
Common Tools Philosophy

Market Share
Profitability
Portfolio Matrix



$
BCG Portfolio Matrix
MARKET SHARE DOMINANCE
HIGH LOW
M
A
R
K
E
T

G
R
O
W
T
H

R
A
T
E



L
O
W













H
I
G
H


High growth
Market leaders
Require cash


Low growth
High market share
High cash flow


Low growth
Low market share
Minimal cash flow

High growth
Low market share
Need cash
Poor profit margins
$
6
Portfolio Matrix Eg
Laptop
Computer
(STAR)
Palmtop
(PROBLEM
CHILD)
Now bundled with mobiles
Personal
Computer
(CASH COW)
Mainframe
Computer
(DOG)
M
A
R
K
E
T

G
R
O
W
T
H

R
A
T
E



L
O
W


















H
I
G
H

MARKET SHARE DOMINANCE
HIGH LOW
Strategies for Resource
Allocation
Build
Hold
Harvest
Divest
Provide financial resources if SBU
(Problem Child) has potential to be a Star.
Preserve market share if SBU is a successful
Cash Cow. Use cash flow for other SBUs.
Increase short-term cash return.
Appropriate for all SBUs except Stars.
Get rid of SBUs with low shares in
low-growth markets.
Target Market Strategy
Segment the market based on
groups with similar characteristics

Analyze the market based on
attractiveness of market segments

Select one or more target markets

Price
Marketing Mix: The Four Ps
Promotion
Place
Product
Product Strategies
Product
The starting point of the
4 Ps

Includes physical unit,
package, warranty,
service, brand, image,
and value
Distribution (Place) Strategies
Place
Product availability where
and when customers
want them.

Involves all activities from
raw materials to finished
products
Promotion Strategies
Promotion
Role is to bring about
exchanges with target
markets

Includes integration of
personal selling,
advertising, sales
promotion, and public
relations
Pricing Strategies
Price
The most flexible of the
4 Ps

Price X Units Sold = Total
Revenue
Learning Objective
Explain why implementation, evaluation,
and control of the
marketing plan are necessary.
Following Up the Marketing
Plan
Implementation

Evaluation

Control
Marketing Audit
Comprehensive
Systematic
Independent
Periodic
Marketing mix Product
Promotion
Product
is
the heart of
Marketing
Mix
Place (Distribution)
Price
Types of products
Unsought
Products
Specialty
Products
Shopping
Products
Convenience
Products
Consumer
Products
Business
Products
PRODUCTS
Types of consumer products
Convenience
Product
Shopping
Product
Specialty
Product
Unsought
Product
A relatively inexpensive item that
merits little shopping effort.
A product that requires comparison
shopping, because it is usually more
expensive and found in fewer stores.
A particular item that consumers
search extensively for and are
reluctant to accept substitutes.
A product unknown to the potential
buyer or a known product that the
buyer does not actively seek.
Types of consumer products
Specialty
Products
Convenience
Products
Shopping
Products
Unsought
Products
Product items ,lines and mix
Product Item
Product Line
Product Mix
A specific version of a product
that can be designated as a
distinct offering among an
organizations products.
A group of closely-related
product items.
All products that an
organization sells.
Product items ,lines and mix eg
Gillette
Blades and Writing
razors Toiletries instruments Lighters

Mach 3 Series Paper Mate Cricket
Sensor Adorn Flair S.T. Dupont
Trac II Toni
Atra Right Guard
Swivel Silkience
Double-Edge Soft and Dri
Lady Gillette Foamy
Super Speed Dry Look
Twin Injector Dry Idea
Techmatic Brush Plus



Width of the product mix
D
e
p
t
h

o
f

t
h
e

p
r
o
d
u
c
t

l
i
n
e
s

Advantages of product lines
Equivalent Quality
Efficient Sales and
Distribution
Standardized
Components
Package Uniformity
Advertising Economies
Why Form
Product Lines?
Product mix width
Diversifies risk
Capitalizes on established reputations
The number of product lines
an organization offers.
Product mix depth
Attracts buyers with different preferences
Increases sales/profits by further
market segmentation
Capitalizes on economies of scale
Evens out seasonal sales patterns

The number of product items
in a product line.
Consumer Marketing Channels
Wholesaler Stockist Retailer Consumer

Consumer
Retailer Consumer

Manufacturer
0-level channel
Wholesaler Retailer Consumer

Mfg
2-level channel
Mfg
3-level channel
1-level channel
Manufacturer
Analysis Framework
Product Market
Customer
Analysis
Consumers
Competitor
Analysis
Competing
Firms
Company Analysis
Marketing Analysis
Product
Price
Promotion
Distribution
Setting the Promotional Mix
Figure 14.4
14 - 40
Multichannel
Distribution System
Figure 12.4
12 - 41
The Relationship Between Analysis
Planning Implementation and Control
Figure 2.6

2 - 42
Sales Promotion Tactics
Consumer-directed
Samples
Coupons
Cash refund offers
Price offs
Premiums
Prizes
Patronage rewards
Free trials
Tie-in promotions
Trade-directed
Price offs
Allowances
Free goods
Sales contests
Trade shows
Specialty advertising
Types of Industrial customers
Commercial
Industrial Distributors
OEMs
Users
Govt
Public sector ( BHEL. STU etc )
Govt ( Army , Electrectricy boards etc )
Institutional/Co-operatives(eg CSD
canteen)
Public institutions( Govt hospitals )
Private ( Colleges etc )

Break-Even Analysis and Target Profit Pricing

General Pricing Approaches
Fixed Costs
Total Costs
Revenues
Sales Volume in Thousands of Units
Thousands
of Rs
0 10 20 30 40
1000

800

600

400

200
Break-even
point
Target Profit Rs??
Quantity To Be Sold To
Meet Target Profit
Industrial Product Marketing
Capital goods

Auto
Componants
Material and
parts/Industrial
consubales
Supply and
services
Installation/Heavy.
Accessories.
Plant &building.

OEM
After market
STU
Raw material.( steel etc )
Accessories (acids, oils etc ).
Componants (semi finished parts ,TV tubes )
Semi finished goods .
Packaging
Legal servises
Sales tax services
Stationary
Used in Production process Enter the finished product
Goods and services to
support the operations
Retailer
Mechanics/
Influencers
Fleetowner Car /2 wh owner
Individual truck
owner
Pull strategy
Push Strategy
Company
Distribution Channel
Market Dynamics ( spark plug)
SWOT analysis of strengths, weaknesses,
opportunities,and threats.
Porters model of five strategic forces
affecting industry competition.
Typical Promotional schemes( Auto trade )
Mechanic schemes (cash coupon , point coupon )
Retailer schemes
Push strategy schemes ( gifts , 1 free in 12 , periodily complete
target )
Ghost buyer
POP display
Distributor schemes
Turn over disc
% increase over last yr
MSR
POP wall painting
Advertisement

Case study cont (Mico soft belly)
Distributors/stockist only interested to push out product
Distrubutors/stockist nil interest on product
Retailer neutral in Mico / Comp A
Mechanics have better Quality perception of Mico due to
higher price and older name
Nil promotional schemes for trade channel and
mechanics
No sales force visits


Facts
A typical retailer sells 500 plugs pm
A typical mechanic fits 10 plugs per day ( 6 cars service
or 15 two wheeler )
Influencing factor
Mechanic has 50% say in choice of brand and rest on consumer
Retailer has 30% say
Customer has 20% say
Each sales person of distributor costs Rs 5k pm
Each company A sales person costs Rs 20k pm

Auto Componants Vehicle type segmentation
CV/LCV Car/SUV
Tractor Stationary
engines
2/3 wheelers
Auto Componants Market usage segmentation
OEM
(20%) NIL
contribution
Repl market
(70%) 90%
contribution
STU/Govt
Nil
Fleet owners
Nil
Export
(10%) 10%
contribution

2 wh
4 wh
OES Rep
After Market ( Repl Market ) 4 Ps
Price Product
Promotion Place
OEM status
Non OEM
Premium
( OEM brand)
Standard
Economy
Publicity
Advertising
Schemes
Special discounts


Regional Distributors State
Distributors
Town Stockist/Wholesalers
Main Dealers
Retailers
Fleetowners
OES


Fast consumable
Price Product
Promotion Place
CV/LCV
Car
Tractor
Premium
( OEM brand)
Standard
Economy
Publicity
Advertising
Schemes
Special discounts
Coupons


Regional Distributors State
Distributors
Town Stockist/Wholesalers
Main Dealers
Retailers
Fleetowners
OES



Fast moving Auto Componant( Filters )
Forecasting
Case study spark plug
Costing
inv inv in lakh deprecaition/ int
land 100
bldg 200 2.5% 5
plant /machine 800 10.0% 80
85
interest 1100 9% 99
Qty qty
Present mild aggressive heavy aggressive startegy
qty in lakh 150 200 250
raw / outsourced material 18.5 2,775 18 3,600 17.5 4,375
direct mfg cost 8 8.00 1,200 8.00 1,600 8.00 2,000
indirect cost 300 2.00 300 1.50 300 1.20 300
- - -
deprecaition 0.57 85 0.43 85 0.34 85
int 0.66 99 0.50 99 0.40 99
selling/ mkt cost cost 200 1.33 200 1.00 200 0.80 200
promotional scheme 0.00 - 1.64 328 2.82 705
total cost 31.06 4,659 31.06 6,212 31.06 7,764
sell price to distribeter 33.5 5,025 33.50 6,700 33.5 8,375
profit 2.44 366 2.44 488 2.44 611
328 705
promotional scheme value lakh which is pull and push
lakh
missionary sales person 40x0.60 24 ??
distributer gift scheme 2% 200 ??
retailer gift scheme 50 ??
ghost scheme 10 ??
Point of purchase gift scheme 50 ??
mechanic sceme 0.5 125 ??
sales person scheme 100 ??
missionary sales man commision 40 ??
599
Case study questions for class
Company A wishes to have a more robust non
risky business plan in view of
Total Mkt. dominated by B that anytime of their choosing they can kill
competition by reducing price. If so why is it not doing ??
Company A cannot increase sales force due to very precarious profits
A looking for a strategy
A getting beaten up by distributors who are demanding more credit or
more margin . What is to be done ??
Any possibility to reduce cost of production ??
Any advertisement ?? Cant afford right now . How to do focussed
adv which is cost effective
Present 3 distributors in each state who has approx 200 retailers
being serviced
Should there be diff distributor for diff segments
Mkt startegy should it be diff for Car or 2 wh segments??
Case Study ( Spark Plugs )
Market players ( Mico , A)
Market Share
Present promotion Mico /A
Present distribution channel ( Place )
Present product features ( commodity)
Sales force
Credit policy
Mico Push only strategy
Pricing ( next slide )
Company me too push strategy
Company precarious profit situation / sales vol
Present Production cost higher due to lower sales vol . Will reduce by Rs
0.50 if sales grow
No special product features diffrentiation
Analysis Framework
Product Market
Customer
Analysis
Consumers
Competitor
Analysis
Competing
Firms
Company Analysis
Marketing Analysis
Product
Price
Promotion
Distribution
Start the solution
with Kotler
suggested startegy
The Marketing Mix
Figure 2.5
2 - 61
Diversification
Market Penetration Market Development
Product Development
Existing Markets New Markets
N
e
w

P
r
o
d
u
c
t
s

Ansoffs Matrix (Product/Market Matrix)
Diversification -
related or unrelated
E.g. Realignments
of the marketing
mix
E.g. Geographical
expansion
Same outlets and
sales strategy
- new product
Existing Markets New Markets
N
e
w

P
r
o
d
u
c
t
s

Ansoffs Matrix (Product/Market Matrix)
Figure 14.6 Break-Even Chart
PLC and Boston matrix
Tools of the Mix
Figure 14.1
14 - 66
Solutions and various actions A
can take ( Product mix strategy )
Expand range by taking similar product ( same channel )
and trading under own brand name
This reduces dependance on one product
Distributes fixed mkt expense on higher turnover ( reduce fixed
cost in product X )
Come up with USP ( tech which gives some percieved
benefit ) on X to show differentiation
Solutions and various actions A
can take ( Price mix strategy )
Rearrange pricing to force more profit to
retailer
Solutions and various actions A
can take ( Promotion mix pull
strategy )
Retailer
Increase his profit ( mark down of printed price )
Increase interest by gift schemes on completion of
target
3 month complete and take Titan watch ( Rs 500 ) on 40 boxes
After 3 months increase sales by 25% and take a super gift
Complete yearly target and go to 2 nights holiday trip for wife ( involve family so
that once committed to wife stays )
Mechanic
Increase interest by gift schemes on every plug /
Transister free after 200 plugs

Solutions and various actions A can
take ( Place mix push & pull strategy
)
Retailer
Increase his profit ( mark down of printed price )
Increase interest by gift schemes on completion of
target
3 month complete and take Titan watch ( Rs 500 ) on 40 boxes
After 3 months increase sales by 25% and take a super gift
Complete yearly target and go to 2 nights holiday trip for wife ( involve family so
that once committed to wife stays )
Mechanic
Increase interest by gift schemes on every plug /
Transister free after 200 plugs

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