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
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
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