Marketing Management

Prof. Rajesh Panda

SIBM, Pune.
09/13/10 1
 What is Management
• Management is a practice of utilizing all available
resources to obtain a desired result.
• Management is necessary because
– A desired result must be established
– Someone must be delegated, or assume the authority,
to obtain, organize, guide, and direct those resources
toward the desired result.
– Someone must "manage" the entire process.

09/13/10 2
 Mission Vision and Goal Setting

09/13/10 3
 Vision
• A Vision is a description of the business as
you want it to be---'a mental image
produced by the imagination'. It involves
seeing the optimal future for the business,
and vividly describing this vision. The
description might include HOW things will
be, WHERE, WHO with, WHAT you'll be
doing and HOW you'll feel.
09/13/10 4
 Mission

A Mission is the definition of the 'special assignment'

being undertaken by the business.

Mission statement defines the company’s major

competitive scopes:

• Industry scope
• Products and applications
scope
• Competence scope

Illustration-vision and mission

09/13/10 5
 Goal setting
Establishing short- or long-term objectives,
usually incorporating deadlines and
quantifiable measures
• SMART goals
• Goal Congruence
• Organizational goal vs. Individual goal and
department Goal

09/13/10 6
 Marketing Defined
“Marketing is the process of planning and
executing the conception, pricing,
promotion, and distribution of ideas,
goods, and services to create exchanges
that satisfy individual and organizational
objectives.”
Arthasastra-Defining Business

09/13/10 7
 Sales vs. Marketing
Production concept and Product Concept

Starting
point Focus Means Ends

Existing Selling and Profits through

Factory products promotion sales volume

The selling concept

Target Customer Integrated Profits through

needs marketing customer
market satisfaction
09/13/10 8
The marketing concept
 Who is a Customer ?
• Stake Holder
• Prospect
– Understanding Need, Want and Demand
• Customer
– Initiator The person who first suggests or thinks of the idea of buying a particular product or service
– Buyer The person who concludes the transaction
– Influencer A person whose view or advice influences the buying decision
– Decider The individual with the power and/or financial authority to make the ultimate choice regarding which product to buy
• Client
• Advisor (WOM)

09/13/10 9
• Globalization
Changing Customer
– BRIC Report
– GDP Structure
– Demographic dividend
• Exposed to different Cultures
• Exposed to different brands and products
• Revolution in IT
• Revolution in media
• Emergence of Nuclear families
• Children and younger mass as deciders
• Changing consumer behavior (Lifestyle)
• Higher expectations in terms of better service, higher
compliance
09/13/10 10
 Satisfied Customer and Growth
• Satisfaction: Difference between perceived value and performance
• Shifting loyalty
• Increased Variety seeking behavior

• Satisfied customer is the key to profitability

• Profitability and Growth comes from
– Increasing Market share
– Increasing the allocation to the defined product range
– Diversification
• Focus on core competency

09/13/10 11
 Customer Delivered Value
Product
Product value
value
Services
Services value
value Total
Total
customer
customer
Personnel
Personnel value
value value
value
Image
Image value
value Customer
Customer
delivered
delivered
Monetary
Monetary cost
cost value
value

Time
Time cost
cost Total
Total
customer
customer
Energy
Energy cost
cost cost
cost
Psychic
Psychic cost
cost
09/13/10 12
 B2B Costomer
Movie

09/13/10 13
Based on the movie “ Customer Service” answer the
followings:

1. How is a service different from a product?

2. What is customer life time value? What is the

significance of this from marketing point of view?

3. Customer retention is critical for growth, discuss.

4. One must move from customer satisfaction to customer

delight. Explain.

09/13/10 14
 Core Concepts
• Corporate strategic planning
• Divisional Strategy
• Product Strategy

09/13/10 15
 Nature of Strategic Planning
• Strategic planning requires actions in three key
areas
• Strategic planning takes place at the corporate,
division, business unit and product levels
• Marketing plans operate at strategic and
tactical levels

09/13/10 16
 Corporate
Strategic Planning
• Planning activities include:
– Defining the Corporate Mission
– Establishing Strategic Business Units (SBUs),
and Assigning Resources to SBUs
– Planning New Businesses, Downsizing Older
Businesses

09/13/10 17
 The Boston Consulting Group’s
Growth-Share Matrix
20%- Stars Question marks
Market growth rate

4
?2 ?
18%-
16%- 3 1
14%-
12%- 5 ?

?
10%-
8%- Cash cow Dogs
6%- 8
4%-
2%- 6 7
0
10x 4x 2x 1.5x 1x .5x .4x .3x .2x .1x
09/13/10 18
Relative market share
SBU Turn Turn over of the market Industry Market
over(00,000R leader/ next biggest size(00,000Rs.) Growth
s.) competitor(00,000Rs.) rate(%)

Mangalore 112 298 1200 6

Fertilizers ltd.

Tubes India 23 459 742 17

Turriya 12 121 540 30
Information
Systems
Food Retails 67 98 900 35
Ltd
Safe finance 98 88 789 25
Ltd.
Hindustan 23 12 139 12
Sugar
Jaguar Steel 125
09/13/10
121 2100 8 19
 The Strategic-Planning Gap

Desired
sales
Diversification growth
Strategic-
planning
Integrative growth gap
Intensive growth
Sales
Current
portfolio

0 5 10
09/13/10 20
Time (years)
Three Intensive Growth Strategies: Ansoff’s
Product/Market Expansion Grid
Current New
products products

1. Market- 3. Product-
Current penetration development
markets strategy strategy

New 2. Market- (Diversification

markets development
strategy strategy)

09/13/10 21
 Business Strategic Planning
Planning Involves Eight Steps:
• Business Mission • Strategy Formulation
• SWOT Analysis: Internal • Program Formulation
• SWOT Analysis: External • Implementation
• • Feedback and Control
Goal Formulation

09/13/10 22
 Strategic Business Planning
SWOT Analysis • Monitoring key forces
for trends
• Opportunities and • For each trend, conduct
threats stemming from
an MOA - Marketing
the external
environment Opportunity Analysis
• Internal strengths and
weaknesses

09/13/10 23
 Strategic Business Planning
SWOT Analysis • Brand awareness,
image, reputation
• Opportunities and • Distribution, pricing,
threats stemming from customer loyalty,
the external product benefits
environment • Finance, R&D,
• Internal strengths and manufacturing
weaknesses

09/13/10 24
 Product strategy
• Marketing Mix
• Product: provides customer solution.
• Price: represents the customer’s cost.
• Place: customer convenience is key.
• Promotion: communicates with customer.
• Segmentation, Targeting and Positioning
• Product life cycle

09/13/10 25
 Marketing Mix

09/13/10 26
 Case: Richer Sounds

09/13/10 27
 The Marketing Triangle
Company
(Management)

Internal External
Marketing Marketing
enabling setting
promises promises

Employees Interactive Marketing Customers

keeping promises

09/13/10 28
 Case: Brand Reengineering

09/13/10 29
 Consumer Behavior
• The field of Consumer Behavior:
“studies how individuals, groups, and
organizations select, buy, use, and
dispose of goods, services, ideas, or
experiences to satisfy their needs and
desires.”

09/13/10 30
 How and Why Consumers Buy
• Buying behavior is influenced by:
– Cultural factors
– Social factors
– Personal factors
– Psychological factors

09/13/10 31
 How and Why Consumers Buy
Influence Factors • Exert broadest and
deepest influence
• Cultural • Culture
• Social • Subculture
• Personal • Social classes
• Psychological

09/13/10 32
 How and Why Consumers Buy
Influence Factors • Reference groups
– Membership
• Primary vs. secondary
• Cultural – Aspirational vs. dissociative
• Social • Family
• Personal • Social roles and statuses
• Psychological

09/13/10 33
 How and Why Consumers Buy
• Age
Influence Factors
• Stage in life cycle
• Occupation
• Cultural
• Economic circumstances
• Social • Lifestyle
• Personal • Personality
• Psychological • Self-concept

09/13/10 34
 How and Why Consumers Buy
Influence Factors • Motivation
• Perception
• Cultural • Learning
• Social • Beliefs
• Personal • Attitudes
• Psychological

09/13/10 35
 Maslow’s Hierarchy
of Needs

5. Self-
actualization
(self-development
and realization)

4. Esteem needs
(self-esteem, recognition)
3. Social needs
(sense of belonging, love)
2. Safety needs
(security, protection)

1. Psychological needs
09/13/10 (food, water, shelter) 36
 Consumer Buying Decision Process

• In addition to understanding how these

factors influence consumers, marketers
must identify and understand:
– Who makes the buying decision
– The types of buying decisions
– The stages in the buying process

09/13/10 37
 Consumer Buying Decision Process

Understand • Initiator
• Influencer
• Buying roles • Decider
• Buying behavior • Buyer
• Buying decision process • User

09/13/10 38
 Consumer Buying Decision Process
• Complex buying behavior
Understand
• Dissonance-reducing buying
behavior
• Buying roles • Habitual buying behavior
• Buying behavior • Variety-seeking buying
• Buying decision process behavior

09/13/10 39
 Consumer Buying Decision Process

Understand • Problem recognition

• Information search
• Buying roles • Evaluation of alternatives
• Buying behavior • Purchase decision
• Postpurchase behavior
• Buying decision process

09/13/10 40
 Consumer Buying Decision Process

• Postpurchase Behavior:
– Consumers’ expectations are compared to
performance
– Postpurchase satisfaction influences future
behavior
• Purchasing behavior
• Word-of-mouth communications

09/13/10 41
 Communication Shopping Usage

• One of the last marketing mediums that consumers are willing to be marketed from
• An environment where they really want to touch, experience our brands, compare & contrast :
does this brand meet my need ?
• The ‘moment of truth’ for consumers to exercise their belief in our brand message…if we are
relevant

09/13/10 42
 Building Brands Through Customers

Advertisements should make a shopper pick up your brand.. But in reality does
this happen??

The answer is a BIG NO..

Unless your product “stand-out” at the Point of Purchase, the shopper tends to
pick up brands which he/she finds fit.

The point of purchase is the culmination of the following three elements:

•Channel Strategy – aimed at the customer(retailer)
•Brand Strategy – aimed at the consumer
•Category Strategy – aimed at the shopper

09/13/10 43
 Consumer Buying Decision Process

• Marketers should attempt to influence and monitor

postpurchase behavior
– Postpurchase communications reduce dissonance,
returns, and order cancellations
– Talk with customers to discover new uses for existing
products
– Investigate methods of product disposal

09/13/10 44
 Strong Customer Bonds
Keys to Success • Frequency programs
• Club memberships
• Adding Financial Benefits
• Adding Social Benefits
• Adding Structural Ties

09/13/10 45
 Strong Customer Bonds
Keys to Success • Personalize customer
relationships
• Adding Financial Benefits
• Adding Social Benefits
• Adding Structural Ties

09/13/10 46
 Strong Customer Bonds
Keys to Success • Create long-term
contracts
• Adding Financial Benefits • Charge less for ongoing
• Adding Social Benefits purchases
• Adding Structural Tie • Link product to long-
term service

09/13/10 47
 20 – 80 – 30 Rule

20 20% of your customers

80 Generate 80% of your profit

3 Half of your profit is lost

serving the bottom 30%
0 of your customer base
09/13/10 48
 STP

09/13/10 49
 Target Marketing
• Target marketing requires marketers to take three
major steps:
– Market segmentation: Identifying and profiling distinct groups of
buyers who differ in their needs and preferences.
– Market targeting: Selecting one or more market segments to enter.
– Market positioning: Establishing and communicating the key
distinctive benefit(s) of the company’s market offering to each
target.

09/13/10 50
 Using Market Segmentation
• Mass marketing is losing popularity
• Micromarketing can be undertaken at four levels:
– Segment marketing
– Niche marketing
– Local marketing
– Individual marketing

09/13/10 51
 Segmenting Consumer Markets
Bases for • Nation or country
Segmentation • State or region
• City or metro size
• Geographic • Density
• Demographic • Climate
• Psychographic
• Behavioral

09/13/10 52
 Segmenting Consumer Markets
• Age, race, gender
Bases for • Income, education
Segmentation • Family size
• Family life cycle
• Geographic • Occupation
• Demographic • Religion, nationality
• Psychographic • Generation
• Behavioral • Social class

09/13/10 53
 Segmenting Consumer Markets
Bases for • Lifestyle
Segmentation – Activities
– Interests
• Geographic – Opinions
• Demographic • Personality
• Psychographic • Core values
• Behavioral

09/13/10 54
 Segmenting Consumer Markets
Bases for • Occasions
Segmentation • Benefits
• User status
• Geographic • Usage rate
• Demographic • Loyalty status
• Psychographic • Buyer-readiness
• Behavioral • Attitude

09/13/10 55
 Using Market Segmentation
• Useful market segments share certain
characteristics:
– Measurable
– Substantial
– Accessible
– Differentiable
– Actionable

09/13/10 56
 Segmenting Business Markets
• Rackman and Vincentis proposed a segmentation
scheme that classifies business buyers into three
groups:
– Price-oriented customers: best served via transactional
selling
– Solution-oriented customers: best served by means of
consultative selling
– Strategic-value customers: best served by means of
enterprise selling

09/13/10 57
 Market Targeting Strategies
• Evaluating and selecting market segments requires
assessing the segment’s overall attractiveness in
light of company’s objectives and resources.
• Five patterns of target market selection can then be
considered.

09/13/10 58
 Market Targeting Strategies

Patterns of Target Market Selection

• Single-segment • Product
concentration specialization
• Selective • Market
specialization specialization

Full market coverage

09/13/10 59
 Market Targeting Strategies
• Targeting multiple segments may result in cost
economies
• Supersegment targeting may be appropriate

09/13/10 60
 PLC

09/13/10 61
Sales & profits

Introduction Growth Maturity Decline

Time
09/13/10 62
 Stages of the Product Life Cycle

PLC Stages • Low sales

• High costs per
• Introduction customer
• Growth • Negative profits
• Innovator customers
• Maturity
• Few competitors
• Decline

09/13/10 63
 Stages of the Product Life Cycle

PLC Stages • Rising sales

• Average costs
• Introduction • Rising profits
• Growth • Early adopters
• customers
Maturity
• Growing competition
• Decline

09/13/10 64
 Stages of the Product Life Cycle

PLC Stages • Peak sales

• Low costs
• Introduction • High profits
• Growth • Middle majority
• customers
Maturity
• Stable/declining
• Decline competition

09/13/10 65
 Stages of the Product Life Cycle

PLC Stages • Declining sales

• Low costs
• Introduction • Declining profits
• Growth • Laggard customers
• Maturity • Declining competition
• Decline

09/13/10 66
 Objectives and Strategies for the
Product Life Cycle
• Objective: to create awareness
PLC Stages and trial
• Offer a basic product
• Introduction • Price at cost-plus
• • Selective distribution
Growth
• Awareness – dealers and early
• Maturity adopters
• Decline • Induce trial via heavy sales
promotion

09/13/10 67
 Objectives and Strategies for the
Product Life Cycle
• Objective: maximize market
PLC Stages share
• Offer service, product
extensions, warranty
• Introduction • Price to penetrate
• Growth • Intensive distribution
• Awareness and interest – mass
• Maturity market
• Decline • Reduce promotions due to heavy
demand

09/13/10 68
 Objectives and Strategies for the
Product Life Cycle
• Objective: maximize profit while
PLC Stages defending market share
• Diversify brands/items
• Price to match or beat competition
• Introduction • Intensive distribution
• Growth • Stress brand differences and
benefits
• Maturity • Increase promotions to encourage
switching
• Decline

09/13/10 69
 Objectives and Strategies for the
Product Life Cycle
• Objective: reduce costs and milk
PLC Stages the brand
• Phase out weak models
• Introduction • Cut price
• Selective distribution
• Growth • Reduce advertising to levels needed
to retain hard-core loyalists
• Maturity • Reduce promotions to minimal
• Decline levels

09/13/10 70
 Product

09/13/10 71
 What is a Product?

• Goods • Places
• Services • Properties
• Experiences • Organizations
• Events • Information
• Persons • Ideas

09/13/10 72
 The Product and Product Mix
• The customer value hierarchy:
– Core benefit
– Basic product
– Expected product
– Augmented product
– Potential product

09/13/10 73
 The Product and Product Mix
• Nondurable
Product – Tangible
Classifications – Rapidly consumed
– Example: Milk
• Durable
• Durability and – Tangible
tangibility – Lasts a long time
– Example: Oven
• Consumer goods • Services
• Industrial goods – Intangible
– Example: Tax preparation

09/13/10 74
 The Product and Product Mix
Product • Classified by shopping
Classifications habits:
– Convenience goods
• Durability and – Shopping goods
tangibility – Specialty goods
• Consumer goods – Unsought goods
• Industrial goods

09/13/10 75
 The Product and Product Mix
• Materials and parts
Product – Farm products
– Natural products
Classifications – Component materials
– Component parts
• Durability and • Capital items
– Installations
tangibility – Equipment
• Consumer goods • Supplies and business services
– Maintenance and repair
• Industrial goods – Advisory services

09/13/10 76
 The Product and Product Mix
• Product mix dimensions:
– Width: number of product lines
– Length: total number of items in mix
– Depth: number of product variants
– Consistency: degree to which product lines are
related

09/13/10 77
 Product-Line Decisions
• Product-Line Analysis
• Product-Line Length
• Line stretching

09/13/10 78
 Brand Decisions
• The AMA definition of a brand:
“A name, term, sign, symbol, or design, or
a combination of these, intended to
identify the goods or services of one
seller or group of sellers and to
differentiate them from the competition.”

09/13/10 79
 Brand Decisions
• Brand identity decisions include:
– Name
– Logo
– Colors
– Tagline
– Symbol
• Consumer experiences create brand bonding, brand
advertising does not.

09/13/10 80
 Brand Decisions
• Marketers should attempt to create or facilitate
awareness, acceptability, preference, and loyalty
among consumers.
• Valuable and powerful brands enjoy high levels of
brand loyalty.

09/13/10 81
 Brand Decisions
• Brand equity refers to the positive differential effect
that a brand name has on customers.
• Brand equity:
– is related to many factors.
– allows for reduced marketing costs.
– is a major contributor to customer equity.

09/13/10 82
 Brand Decisions
• Advantages of branding:
Key Challenges – Facilitates order processing
– Trademark protection
• To brand or not – Aids in segmentation
• Brand sponsor – Enhances corporate image
• Brand name – Branded goods are desired by
retailers and distributors
• Brand strategy
• Brand repositioning

09/13/10 83
 Brand Decisions
Key Challenges • Options include:
– Manufacturer (national)
• To brand or not brand
• Brand sponsor – Distributor (reseller,
store, house, private)
• Brand name brand
• Brand strategy – Licensing the brand name
• Brand repositioning

09/13/10 84
 Brand Decisions
• Strong brand names:
Key Challenges – Suggest benefits
– Suggest product qualities
• To brand or not – Are easy to say, recognize, and
• Brand sponsor remember
• Brand name – Are distinctive
– Should not carry poor
• Brand strategy meanings in other languages
• Brand repositioning

09/13/10 85
 Brand Decisions
Key Challenges • Line extensions
• Brand extensions
• To brand or not
• Multibrands
• Brand sponsor • Co-branding
• Brand name
• Brand strategy
• Brand repositioning

09/13/10 86
 Brand Decisions
• A brand report card can be
Key Challenges used to audit a brand’s
strengths and weaknesses.
• To brand or not
• Changes in preferences or
• Brand sponsor the presence of a new
• Brand name competitor may indicate a
• Brand strategy need for brand repositioning.
• Brand repositioning
• Case-Santoor

09/13/10 87
 “Branding is about creating
the right experiences,
associations & impressions…”

“…by knowing where customers are

moving & staying ahead of them!”
09/13/10 88
 What is a brand?
Brand
=
Reputation
How others perceive us

+ Behaviour Performance
Identity +

What we believe in How we act and What we do and how

What we stand for behave we deliver it

Our personality & The relationships we The value we deliver

how we express it form and experiences
people have of us

09/13/10 89
Branding is a consequence of- MR, Product development,
Product differentiation, Market segmentation, Positioning,
Pricing, Advertising etc.

Brand image is a consequence of Positioning

Brand identity comes out of product differentiation
Brand equity= brand asset- (cost of branding, cost of
invested capital)
Brand equity is built up upon all the marketing and
branding effort that you put.

09/13/10 90
 Products Brands

Emotional/Functional
Functional
Conceptual, Perceived
Concrete, Rational
Describes “What” &
Describes “What” “Who”

Generic Unique, Distinct

Limited life span Unlimited life span

Transaction oriented Relationship oriented

Can’t be copied
Easy to copy
09/13/10 91
“APPLE OPPOSES”
WHAT FEELING
“IBM SOLVES” DOES YOUR
BRAND EVOKES??
“NIKE EXHORTS”

“VIRGIN ENLIGHTENS”

“SONY DREAMS”

“BENETTON PROTESTS”

BRANDS ARE NOT NOUNS BUT VERBS

09/13/10 92
 HOW DOES YOUR BRAND

“ SMELL, TASTE, TOUCH, HEAR & FEEL” ??

09/13/10 93
 You can’t miss the Singapore Experience

-Signature Smell –Perfume, hot towels

-Signature Look- Colours, Interiors, Hostess

-Signature Voice: Scripted Welcome Messages

09/13/10 94
09/13/10 95
 STRATEGIC SHIFT

09/13/10 96
 HOW??
360° BRAND EXPERIENCE BRAND WHEEL

PRE
POST PURCHASE
PURCHASE EXPERIENCES
EXPERIENCES

AT THE TIME OF
PURCHASE
EXPRERINCES

09/13/10 97
 360° BRAND EXPERIENCE BRAND WHEEL

Loyalty
Advertising
Prog Direct Mail
Newsletters
Coupons &
Incentives
PRE
Customer
Service POST PURCHASE
PURCHASE EXPERIENCES
Deals &
EXPERIENCES Promotions

Product
Performance AT THE TIME OF
PURCHASE
EXPRERINCE Packaging

Sales
Person P.O.P
Store &
09/13/10 Shelf Display 98
Placements
 Positioning and differentiating

09/13/10 99
 Positioning and Differentiation
• Two views of positioning:
– Ries and Trout: products are positioned in the
mind of prospect
– Treacy and Wiersema: positioning via value
disciplines
• Product leader firm
• Operationally excellent firm
• Customer intimate firm

09/13/10 100
 Positioning and Differentiation
• Positioning statements:
– To (target group and need) our (brand) is (concept) that
(point-of-difference)
• Example: To young, active soft-drink consumers who have little
time for sleep, Mountain Dew is the soft drink that gives you
more energy than any other brand because it has the highest
level of caffeine.

09/13/10 101
 Positioning and Differentiation
• Differentiated products feature meaningful and
valuable differences that distinguish the company’s
offering from the competition.
• Differences are stronger when they are important,
distinctive, superior, preemptive, affordable, and
profitable.

09/13/10 102
 Positioning and Differentiation
Product Differentiation Tools
• Form • Reliability
• Features • Repairability
• Performance • Style
• Conformance • Design
• Durability

09/13/10 103
 Positioning and Differentiation
Services Differentiation Tools
• Ordering ease • Customer consulting
• Delivery • Maintenance and
• Installation repair
• Customer training • Miscellaneous

09/13/10 104
 Positioning and Differentiation
Personnel Differentiation Tools
• Competence • Reliability
• Courtesy • Responsiveness
• Credibility • Communication

09/13/10 105
 Positioning and Differentiation
Channel Differentiation Tools
• Coverage • Performance
• Expertise

Image Differentiation Tools

• Symbols • Atmosphere
• Media • Events
09/13/10 106
 Very satisfied
Excitement

Performance

Did not Did it well

do it well Basic

09/13/10 Very dissatisfied 107

 What is their positioning?
• Ikea
• Sony
• Panasonic

09/13/10 108
 Santoor : A Case of Mistaken
Identity

09/13/10 109
 Santoor : A Case of Mistaken
Identity
• Launched as a ‘Sandal + Turmeric’ soap by Wipro in 1986
• Attractively priced and a good product offering
• Conceived as an affordable soap with the goodness of
Sandal
• Till then sandal seen as a high value ingredient only
available in Mysore Sandal soap
• Vicco making a success of sandal + turmeric cream

09/13/10 110
 Santoor : Phase I Promotion
• Advertised as a ‘sandal + turmeric’ soap
• Offering “age old beauty secrets of India”
• Price flagged off at the end
• Traditional imagery of woman in sari, temple,
sandal paste

09/13/10 111
 Santoor : Phase I Results
• Brand attracted decent volumes : 2,500
tonnes
• Got a core group of ‘Value oriented’
consumers to try and remain with the brand
• But growth stopped in Year 2
• No new users coming into brand !

09/13/10 112
 Santoor : The Challenge
• Need to retain the traditional users
• Need to rapidly attract new users
• Need to provide image values that will
build the brand for future growth

09/13/10 113
 Santoor : The Brand
Interrogation
• Sandal and turmeric traditional beauty aids in India
• What are their roles in skin care?
• Searched literature for finding how sandal and
turmeric are useful for beauty care
• The Secret: Skin Care
– Both are great skin care aids
– In fact help reduce wrinkles and impart a youthful
glow

09/13/10 114
 Santoor : The Ingredient Vs The
Benefit
• Santoor selling ingredients to a set of believers
• But not many knew of the benefits the brand
and its ingredients offered
• Why not move away from ‘ingredient’ based
advertising to ‘benefit’ based advertising?
• What if the core users moved away thinking the
brand has changed?
09/13/10 115
 Santoor : Finding the Balance
• New advertising needed to present the brand in
a new light to attract new users
• But old users should not get alienated either!
• The answer : Benefit based advertising rooted
in the ingredients
• “Santoor cares for your skin because it
contains the goodness of sandal and turmeric”
09/13/10 116
 Santoor : Skincare to Younger
Looking Skin
• Skin care, too broad an offer
• Narrowed down to younger looking skin
– Based on product interrogation
• Delivering the younger looking skin story
– “Mistaken identity”
– A common occurrence
– Based on a consumer insight
09/13/10 117
 Santoor : The Growth Path

• New advertising broke in 1989 - the brand sales

have climbed consistently over the last years
• Santoor has outperformed the market constantly
• Built a brand without
– Mega media budgets
– High-power sales force
– Major technological innovations
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• What should be Santoor’s moves now in building a strong brand?

Brand Extentions

Advertising

Promotions

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 Packaging and Labeling
• Packaging includes:
– The primary package
– The secondary package
– The shipping package
• Many factors have influenced the increased
use of packaging as a marketing tool.

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 Packaging and Labeling
• Developing an effective package:
– Determine the packaging concept
– Determine key package elements
– Testing:
• Engineering tests
• Visual tests
• Dealer tests
• Consumer tests

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 Packaging and Labeling
• Labeling functions:
– Identifies the product or brand
– May identify product grade
– May describe the product
– May promote the product
• Legal restrictions impact packaging for
many products.

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 Pricing

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 Setting the Price
Pricing Procedure
• Select pricing objective • Survival
• Determine demand • Maximize current profits
• Estimate costs
• Maximize market share
• Analyze competition
– Penetration strategy
• Select pricing method
•
• Market skimming
Select final price
– Skimming strategy

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 Setting the Price
Pricing Procedure • Understand factors that
affect price sensitivity
• Select pricing objective • Estimate demand curves
• Determine demand • Understand price elasticity
• Estimate costs of demand
• Analyze competition – Elasticity
• Select pricing method – Inelasticty
• Select final price

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 Setting the Price
Pricing Procedure • Types of costs and levels of
production must be considered
• Select pricing objective • Accumulated production leads to
• Determine demand cost reduction via the experience
curve
• Estimate costs
• Differentiated marketing offers
• Analyze competition
create different cost levels
• Select pricing method
• Select final price

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 Setting the Price
• Key Pricing Terms:
– Fixed costs: do not vary directly with changes in level
of production
– Variable costs: vary with production
– Total costs: sum of fixed and variable costs a given
level of production
– Average cost: cost per unit at a given level of
production

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 Setting the Price
Pricing Procedure • Firms must analyze the
competition with respect to:
• Select pricing objective – Costs
• – Prices
Determine demand
– Possible price reactions
• Estimate costs
• Pricing decisions are also
• Analyze competition
influenced by quality of offering
• Select pricing method relative to competition
• Select final price

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 Setting the Price
Pricing Procedure • Select method:
– Markup pricing
• Select pricing objective – Target-return pricing
• Determine demand – Perceived-value pricing
– Value pricing
• Estimate costs
– Going-rate pricing
• Analyze competition
• Select pricing method
• Select final price

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 Penetration Pricing
• Price set to ‘penetrate the market’
• ‘Low’ price to secure high volumes
• Typical in mass market products – chocolate bars,
food stuffs, household goods, etc.
• Suitable for products with long anticipated life
cycles
• May be useful if launching into a new market

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 Market Skimming
• High price, Low volumes
• Skim the profit from the market
• Suitable for products that have
short life cycles or which will
face competition at some point
in the future (e.g. after a patent
runs out)
• Examples include: Playstation,
jewellery, digital technology,
Plasma Screens: Currently at new DVDs, etc.
high prices but for how long?
Title: Thin-shaped television. Copyright: Getty Images,
available from Education Image Gallery.

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 Value Pricing
• Price set in accordance
with customer perceptions
about the value of the
product/service.
• Examples include status
products/exclusive
products
Companies may be able to
set prices according to
perceived value.
Title: BMW At The Frankfurt Auto Show. Copyright:
Getty Images, available from Education Image Gallery.

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 Loss Leader
• Goods/services deliberately sold below cost
to encourage sales elsewhere
• Promotes cross selling
• Purchases of other items more than covers
‘loss’ on item sold
• e.g. ‘Free’ mobile phone when taking on
contract package
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 Psychological Pricing
• Used to play on consumer perceptions
• Classic example - £9.99 instead of £10.99!
• Links with value pricing – high value goods
priced according to what consumers
THINK should be the price

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 Going Rate (Price Leadership)
• In case of price leader, rivals have difficulty in competing
on price – too high and they lose market share, too low and
the price leader would match price and force smaller rival
out of market
• May follow pricing leads of rivals especially where those
rivals have a clear dominance of market share
• Where competition is limited, ‘going rate’ pricing may be
applicable – banks, petrol, supermarkets, electrical goods –
find very similar prices in all outlets

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 Destroyer/Predatory Pricing
• Deliberate price
cutting or offer of
‘free gifts/products’ to
force rivals (normally
smaller and weaker)
Microsoft – have been accused of predatory
out of business or
pricing strategies in offering ‘free’ software as
part of their operating system – Internet
prevent new entrants
Explorer and Windows Media Player - forcing
competitors like Netscape and Real Player out • Anti-competitive and
of the market.
illegal if it can be
Title: Bill Gates speaks at UNIX convention. Copyright:
Getty Images, available from Education Image Gallery.
proved
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 Marginal Cost Pricing
• Marginal cost – the cost of producing ONE extra or ONE
fewer item of production
• MC pricing – allows flexibility
• Particularly relevant in transport where fixed costs may be
relatively high
• Allows variable pricing structure – e.g. on a flight from
Mumbai to Delhi – providing the cost of the extra
passenger is covered, the price could be varied a good deal
to attract customers and fill the aircraft

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 Contribution Pricing
• Contribution = Selling Price – Variable (direct
costs)
• Prices set to ensure coverage of variable
costs and a ‘contribution’ to the fixed costs
• Similar in principle to marginal cost pricing
• Break-Even analysis might be useful in
such circumstances

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 Target Pricing
• Setting price to ‘target’ a specified profit
level
• Estimates of the cost and potential revenue
at different prices, and thus the break-even
have to be made, to determine the mark-up
• Mark-up = Profit/Cost x 100

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 Cost-Plus Pricing
• Calculation of the average cost (AC) plus a
mark up
• AC = Total Cost/Output

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 Captive-Product Pricing

– Pricing products that must be used with the

main product
• High margins are often set for supplies
– Services: two-part pricing strategy
• Fixed fee plus a variable usage rate

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 Setting the Price
Pricing Procedure • Requires consideration of
additional factors:
• Select pricing objective – Psychological pricing
• – Gain-and-risk-sharing pricing
Determine demand
– Influence of other marketing
• Estimate costs
mix variables
• Analyze competition – Company pricing policies
• Select pricing method – Impact of price on other parties
• Select final price

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 Adapting the Price

Price Discounts and Allowances:

• Seasonal discounts
• Promotion allowances
• Trade-in allowances
• Cash discounts
• Quantity discounts

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 Adapting the Price

Promotional Pricing Tactics:

• Loss-leader pricing • Longer payment terms
• Special-event • Warranties and service
pricing contracts
• Cash rebates • Psychological
• Low-interest discounting
financing

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 Differential pricing helps when-

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 Place

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 Channels
• Distributor
• Dealer
• Retailer
• C&F
• Stockist

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 Factory

C&F Agent
(2-3%) Wholesaler

Stockist/ Retailers
Distributor (4-6%) -Small
- Upcountry

Retailers
(8-12%)

Typical FMCG Distribution Structure (Margin)

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 Issues
• Proper selection of Dealers or distributors
• Growing power of retailers
• POP influence
• Data collection and demand forecasting

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 Integrated Marketing
Communication

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 Marketing Communications
Communications Platforms
• Advertising
• Sales Promotion

• Personal selling

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 Sales Promotion
Major Consumer-Promotion Tools
Samples
•
•
Coupons • Free trials
Cash refunds (rebates)
•
•
Premiums • Product warranties
Prizes (contests, sweepstakes, games)
•
•
Patronage awards • Tie-in promotions
• Cross-promotions
• Point-of-purchase displays and
demonstrations

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 Public Relations
• Public relations activities promote or protect the
image of a firm or product
• Public relations functions:
– Press relations
– Product publicity
– Corporate communications
– Lobbying
– Counseling

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 Public Relations
• Marketing Public Relations (MPR)
– Plays an important role in
• New product launches
• Repositioning of mature brand
• Building interest in product category
• Influencing specific target groups
• Defending products with public problems
• Building the corporate image

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 Public Relations

Major Public Relations Tools

• Speeches
• Public-service activities
• Identity media

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 Direct Marketing
• Direct marketing uses consumer-direct channels to
reach and deliver offerings to consumers without
intermediaries.
• Direct marketing is growing and offers consumers
key benefits.
• Firms are recognizing the importance of integrated
direct marketing efforts.

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 Direct Marketing

Major Direct Marketing Tools

Face-to-face selling
•
•
Direct mail
Catalog marketing
• Direct-response
•
•
Telemarketing
TV marketing
• Kiosk marketing
• E-marketing

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 Indian culture
• Frugality- Relaince(99 paisa per min)
• Hierchy- Hyundai Accent
• Tangible value- McDonalds
• Face 1st -Ponds
• Self respect- HDFC

• Kids first
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 Marketing-sub topics
• Market forecasting
• Sales force management
• Retailing
• Rural Marketing
• Innovations in marketing-Videos
• Basics of market research
• Mathematical metrics in Marketing

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