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MARKETING MANAGEMENTADL-02
ASSIGNMENT A
Q1. Define Marketing. Distinguish between Selling and Marketing.
What are the four Components of Marketing Mix? Briefly explain.
Ans1. Marketing must be understood not in the sold sense of
making a sale selling but in the new sense of satisfying customer
needs.
We define Marketing as a social and managerial process by which
individuals and groups obtain what they need and want through
creating and exchanging products and value with others. To explain
this definition, we examine the following important terms: needs,
wants, and demands; products; value and satisfaction; exchange;
transactions, and relationships; and markets.
Difference Selling and Marketing
SELLING MARKETINGSelling starts with the seller, and is
preoccupied all the time with the needs of the seller.
Marketing starts with the buyer and focuses constantly on the
needs of the buyer.
Seller is the center of the business world. Buyer is the center
of the business world.Emphasis is on the saleable surplus available
with the concern.
Emphasis is on the identification of the market opportunity.
Seeks to quickly convert product into cash. Seeks to convert
customers needs into product.
Concerns itself with the trick and techniques of getting the
customer to part with their cash for the product available with the
salesman.
Emphasizes on fulfilling the needs of the customer.
View business as a good producing process.
View business as a customer satisfaction process.
Overemphasizes the exchange aspect without caring for the values
satisfaction inherent in the exchange.
Concerns itself primarily and truly with the value satisfaction
that should flow to the customer from the exchange.
Sellers preference dominates the formulation of the Marketing
Mix.
Buyer determines the shape Marketing Mix should take.
Emphasis is on somehow selling; there is no coordination between
the different functions of the total marketing task.
Emphasis is on the integrated marketing; an integrated strategy
covering the product, promotion, pricing, and distribution.
The firm makes the product first and then figures out how to
sell it and make profit.
The firm makes total product offering that will match and
satisfy the identified needs of the customer.
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MARKETING MIX
The four elements product, distribution, promotion, and pricing
constitute the marketing mix of the firm. The marketing mix is the
sole vehicle for creating and delivering customer value.
It can be easily seen that all activities and programs, which a
marketer designs and carries out in his effort at winning
customers, relate to one or the other of the above four elements
product, distribution, promotion and pricing. It can also be seen
that in each of these elements, there are several sub-elements. For
example, packaging is one of the sub-elements of product and
warehousing is one of the sub-elements of distribution.
The Four Ps of Marketing
It was James Culliton, a noted marketing expert, who coined the
expression marketing mix and described the marketing manager as a
mixer of ingredients. To quote him, The marketing man is a decider
and an artist a mixer of ingredients, who, sometimes follows a
recipe developed by others and sometimes prepares his own recipe.
And, sometimes he adapts his recipe to the ingredients that are
readily available and sometimes invents some new ingredients, or,
experiment with ingredients as no one else has tried before.
Marketing Mix/Four Ps of Marketing
Product: Product design, features, brand name, models, style,
appearance.Product quality.Warranty.Package: Design type, material,
size, appearance and labeling.Service: Pre-sale and after-sale,
service standards, service charges.
Place: Channels of distribution: Channel design, types of
intermediaries, location of outlets, channel remuneration,
dealer-principal relations, etc.Physical distribution:
Transportation, warehousing, inventory levels, order processing,
etc.
Price:Pricing policies, margins, discounts and rebates.Terms of
delivery, payment terms, credit terms and installment purchase
facilities.Resale price maintenance.
Promotion:Personal selling: Selling expertise, size of sales
force and quality of sales force.Advertising: Media mix, vehicles,
programmes.Sales promotion.Publicity and public relations.
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Q2. How would you price a new product (say a Mixi)? What options
would you employ to generate quick revenue?
Ans2. As there are no precedents for new products, there are no
trends to indicate how the market will react to different levels of
pricing. Even in the matter of demand, often only some sketchy
information is available in respect of new products.
There are two broad methods of pricing demand-based and
competition-based pricing. Neither of them suits a new product.
Demand-based pricing is out of question for such products, as
adequate data is not available in respect of these products.
Competition-based pricing is also out of question, because the
product is pioneer and competition will only be a later phenomenon,
when me-too products enter the scene. The next alternative to be
considered is cost plus pricing. Here too, there is difficulty in
respect of new products. In several cases, the actual costs of new
products are difficult to measure. Allocation of overheads to the
new product, for example, is done usually on the basis of untested
assumptions. Similarly, R&D expenses would have been shared by
several new product ideas and apportioning it to a particular
product may become difficult. Even if the cost of the new product
can be accurately measured, cost plus pricing or breakeven pricing
cannot be straightaway adopted because no information is available
regarding the marketability/possible sales volume of the product.
In fact, such imponderables have prompted marketing experts to
comment that new product pricing has to be done in a vacuum.
Obviously, new product pricing cannot be a matter of formula.
The subject needs a special approach. Basically, the pricing here
should evolve out of:
1. The firms requirements in going for the new product2. The
extent of newness of the product (i.e. the nature of the
product)
Firms Requirements in Pursuing the New Product
The firms requirement in going for new products can be one of
the following: To be a real innovator and to earn the rewards
associated with innovation To exploit a market need that is coming
to the fore To expand the product mix to ensure steady growth over
the long term
There are companies the have a thirst for innovation. Usually,
they are also very ambitious in the matter of rewards. They are
prepared to shoulder the risks associated with product innovations,
as they know that without undertaking such risks, they cannot gain
big rewards. New product development is second nature of such
companies and they are constantly at this game.
The second category of companies goes in for a new product, when
they spotted a felt need for it in the market.
In the third category, the compulsion for going in for a new
product comes out of the companys desire to keep expanding its
product mix. The company does not want to limit itself with
existing product/product lines. Such a company will nurture a new
product idea that fits in with the basic requirement of product mix
expansion. Such companies are generally more conservative in their
approach to new product development relative to the other two
categories. Their policy is one of limited risk. They will take up
only those product ideas that, in their estimate, are sure to fetch
commercial success.
Extent of Newness of the Product
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The extent of newness and the nature of the new product is the
second major feature that will influence the pricing strategy. We
can think of several types of new products. Given below is a sample
list of the possibilities:
A totally new item (new to the world) A new item to a particular
society A new item to the particular firm A new item to the
particular firm, in the particular market segment A low value item
for the customer A high value item for the customer A low priority
item for the customer A high priority item for the customer A
luxury product A convenience product A product that can meet a
currently felt need A product that will serve a created desire
The nature of the product combined with the firms requirement in
going for the product should guide the pricing strategy. For
example, when a company in the category of innovators and leaders
brings out a new luxury product, intended for the affluent
consumer, serving a created desire, it can fix the price quite
high. The company knows that its product is not very price
sensitive. On the other extreme, if a company with the compulsion
of expanding its product mix goes in for a new product, say a
convenience product meant for the medium class consumer, it will do
well to keep the price low, with the goal of attracting trial
purchase and gradually building up the market for the product. It
may take care to see that the costs are covered, but it is not
eager to take home a big profit from the new product through a high
price. It may opt to earn the required profit through bigger
volumes at lower prices.This leads us to the two broad strategy
alternatives available in new product pricing. They are:
Skimming pricing Penetration pricing
Skimming pricing
In skimming pricing, the new product is priced high and the
cream of the market is skimmed by concentrating on those segments
that are not price sensitive. Such high prices will fetch the firm
substantial initial incomes, which it can plough for the further
market development and promotion. Through this method, the firm
also recovers a substantial portion of its development cost. Later
on, the firm may bring down the prices, when it enters mass
markets, which are more price sensitive. Skimming pricing, however,
cannot be employed if the product cannot command the patronage of
an affluent, non-price sensitive, market segment.
The skimming strategy can prove ideal for really new and
distinctive products on account of the following factors:
The quantity of the product that can be sold is less affected by
price in the early stages, especially when the product has some
novelty.
In skimming, the product is tapping only segments, which in
case, do not bother much about price. And, such tapping will not be
possible at a later stage in the life cycle.
By skimming, the product is fetching big funds, which could be
used for market development.The skimming pricing can be a way to
feel and figure out the demand for the product. And, by
starting at a high price, it is always possible to come down
later, when the situation warrants.
Penetration Pricing
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The skimming strategy cannot suit all new product contexts. When
the new product is likely to be highly price sensitive and when
there is no elite market for it, penetration pricing will be the
option. As the very name implies, the intention in this strategy is
to penetrate a broad market through low prices. The income is
generated by sales spread over large markets; the large volume
facilitates substantial economies in unit cost of production and
marketing; and the cycle can continue. The strategy helps to
establish the product in the market.
In brief, penetration pricing becomes the choice for the new
product, when the product-market characteristics are:
The quantity of product that can be sold is highly sensitive to
price, even in the early stages of introduction.There is no elite
market for the product; there is no such segment, which is willing
to pay any price to possess the product.The product is likely to
encounter heavy competition immediately after introduction.Large
volume of sales is required even in the initial stages to ensure
economy in production and distribution.
Between these two divergent price options, there will obviously
be several intermediate positions depending on the firms
compulsions and the new products characteristics discussed
earlier.
Cost Data in Respect of New Products
An understanding of new product costing is essential at this
juncture. Whether the new product pricing is done on cost plus
basis or not, it is essential for the firm to have relevant data
about the costs of the new product. Quite often, companies mess up
the cost working in respect of new products because such costs are
often difficult to estimate. Costing of a new product is a
particularly tricky affair for an ongoing multi-product company.
The company has to use judgment more than techniques in allocating
the overheads.
Q3. Define Consumer Behavior and describe its relation in
purchase decision-making.
Ans3. Consumer behavior: To understand the buyer behavior and to
create a consumer out of him, through this understanding, is the
purpose of buyer behavior study. Marketing scholars and
practitioners have spent enormous time and effort on this subject
though the subject has been analyzed from different angles and
under different premises it still remains a complex one.All major
sciences like economics, psychology, sociology, anthropology etc
have influenced buyer behavior studies. Influence on the buyer
behavior:
Economic environment: - Economics describe man as a rational
buyer and view the market as a collection of homogeneous buyers.
Under the given set of conditions, all buyers behave in the similar
fashions and every buying decision is a logical process with the
ultimate intention of obtaining the optimum value for the memory
spent. Price is regarded as a strongest motivation for the economic
man. The economic mans behavior in short is a rational one.
Demographic Environment- The following demographic head put its
impact on marketing strategy and consumer behavior
a. Size & growth rate of population
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b. Age distributionc. Education Leveld. Household Patternse.
Regional Characteristicf. g. Mexico is a country with a very young
population and rapid population growth. Japan on
other hand having world oldest population so in these countries
importance of high production is given to product like milk,
diapers, and schools supplies, toys in Mexico and adult product in
Japan.
Cultural environment: - Every culture, every religion and every
language group dictates its own unique pattern of social conduct.
Within each religion, there may be orthodox groups and cosmopolitan
groups. In dress, food habits or marriage in almost all matters of
the individual life religion and culture exercise an influence on
the individual, though the intensity may vary from society to
society. The dos and donts listed by the religion and culture
impacts the individual lifestyle and buying behavior.
Q4. Marketing is a process; explain with suitable examples and a
flow chart the concept of Marketing process.
Ans4. Marketing process: Marketing process consists of: -1.
Analyzing marketing opportunities.2. Developing marketing
strategies.3. Planning marketing programs
The strategic plan defines the overall mission and objectives.
Within each business unit, marketing plays an important role in
helping to accomplish the overall strategic objective. Marketing
strategy is the complete and unbeatable plan, designed specifically
for attaining the marketing objective of the firm wants to achieve;
the marketing strategy provides a design for achieving them.
Marketing process includes:
1. What product to serve : Before entering into the field of
marketing one has to decide what product it has to offer to the
customer. On the basis of this only further marketing strategies
will be based upon.
2. What market segments to serve: The business unit has to
clarify that what market segments it will serve and what product
offers it will make. In other words it has to state its product
market scope. Strategy should decide whom to serve and whom to
exclude.E.g. when ICICI bank commenced its activities, it decided
to serve exclusively the urban markets of India. It sets up offices
in the major cities of India. It also decided to offer value added
banking products. Its target market consisted of corporate and High
Net Worth Individuals. It chooses not to target the rural
market.
3. Whom to compete and whom to avoid: The firm has to reckon who
the major players in the industry Are & and against whom and in
what segment it will compete. It also has to decide which players
it would choose to ignore.
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e.g. when the US car major Ford, entered in the Indian car
market, Maruti was the dominant player here, with its Maruti 800
model holding a 70% share. Ford decided to cultivate a higher
priced, semi luxury segments, with models like Ford Ikon. Ford was
thus opting to compete with the players like GM. GM was operating
in the semi luxury segments like Opel Astra & Opel Corsa. Ford
chose not to compete with Maruti in the small compact car segments.
So whom to compete with and whom to avoid is vital pat of marketing
process.
4. On what differentiation strength to compete: The next issue
is: On what distinctive capability will the firm compete in its
industry? This involves determining the price strategy, product
quality; development of the product superiority, making the product
accessible by the target customer at the right time and at the
right place. Whenever the product is needed it should be readily
available. In the absence of such strategy the product will loose
its market. 5. Create customer awareness: This is another important
step of marketing process whereby a customer should me made aware
about the use of the product. This is important for the customer to
know because if a customer uses a product for which it is not meant
for, he will never be satisfied. A customer should be educated for
the same.
e.g. Maruti 800 is a small segment car of MARUTI UDYOG, which is
holding a sort of monopoly
in the Indian Auto Industry. A customer purchases the mentioned
model of Maruti and instead of using the car for transporting the
passengers, he used as a carriage vehicle and with in 3 months he
came complaining about the product performance, and then he was
told that this car is a passenger car & it is not supposed to
be used for the purpose of transporting the luggage.
6. Transfer Of Ownership : Marketing is not complete without any
sale, i.e. transfer of ownership. Once an ownership is transferred
then the process is complete. The customer will not realize the
taste of using the goods until and unless the owner ship of the
product is transferred to him.
7. Follow up & Feedback : once a product is put to use the,
and the customer was told the use of the product properly. Then it
becomes necessary to take a regular feedback and make a regular
follow up with the customer . This will help the concern to make
the necessary improvements in the product, as suggested by the
customer to suit the requirements of the consumer. Also this
technique will help the concern the process of relationship
maintenance of the concern with the prospective buyers. Here if the
consumer is satisfied, his references will fetch more business for
the concern, which may result in the volume of sales.
Q5. Write Short Notes:
1. Marketing Concept.2. Consumer Buying Motives.3. Marker up
price.
Ans5.
1. The Marketing Concept: The foregoing discussions on the
difference between selling and marketing, leads us to the marketing
concept. The marketing concept was born out of the awareness that a
business should with the determination of consumer wants and end
with satisfaction of those wants. The concept puts the consumer at
both the beginning and the end of the business cycle. It
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stipulates that any business should be organized around
marketing function and its task should be one of anticipating,
stipulating and meeting consumers requirements. The customer, not
the corporation, has to be the center of the business universe. A
business cannot succeed by supplying products and services that are
not designed to serve the needs of the customers. As Drucker says,
the essence here is that the entire business has to be seen from
the point of view of the customer. In a company practicing this
concept, all departments will recognize that their actions have a
profound impact on the companys ability to create and retain a
customer. Every department and every worker and manager will think
customer and act customer.A Shift in Orientation
In short, the marketing concept essentially represents a shift
in orientation:
From production orientation to marketing orientation From
product orientation to customer orientation From supply orientation
to demand orientation From sales orientation to satisfaction
orientation From internal orientation to external orientation
It is obvious that the marketing concept represents a radically
distinct approach to business. It is the most advanced of all ideas
on marketing that have emerged through the years. Only the
marketing concept is capable of keeping the organization free from
marketing myopia; all other ideas guiding marketing, viz., the
exchange concept, the product concept and sales concept give rise
marketing myopia of one form or the other.
2. Consumer Buying Motives: Buying motive is all the induced
desires and considerations, which include a buyer to purchase a
given product. To a great extent the buying motive of a customer
depends upon the purchasing power of the customer.3. Marker up
price: Mark-up pricing refers to the pricing method in which the
selling price of the product is fixed by adding a margin to its
cost price. The mark-ups may vary depending on the nature of the
product and the market. Usually, the higher the value of the
product (unit cost of the product) the larger is the mark-up and
vice-versa. Again, the slower the turn around of the product, the
larger is the mark-up and vice-versa.
Mark-up pricing proceeds on the assumption that demand cannot be
known accurately, but costs are known. A reasonable mark-up is
added to the costs. And the price as well as the mark-up is
adjusted by trial and error. The objective is to maximize profits
in the short and medium run without sales being sacrificed due to
excessive price. Usually, distributive trade and marketing firms,
who do not have any manufacturing of their own, prefer this pricing
method.
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ASSIGNMENT B
Q1. It is often said that middlemen are unnecessary, they cause
price inflation. Do you agree to this statement, explain with
suitable examples.
Ans1. Manufacturers normally use intermediaries for taking their
products to the users. The intermediaries bear a variety of names.
List below presents a list of the commonly used names:
Types of Marketing Intermediaries Sole-selling agent Marketer
C&F agents (CFAs) Redistribution stockist
Stockist/Distributor/Wholesaler Semi-wholesaler Retailer/dealer
Broker Franchisees Authorized representatives Commission agents
Jobbers
All such intermediaries constitute the marketing channel. The
manufacturers branch offices, depots, warehouses and showrooms too
form part of the marketing channel. Where the firm uses
institutional channels like chain stores, super markets, etc., they
too form part of the marketing channel of the firm.
Channels play a pivotal role in marketing; they perform a number
of vital distribution functions. Their importance emanates from the
functions performed by them.
Firms rely on the marketing channels for generating customer
satisfaction and for achieving differentiation over competitors.
Channels are thus a vital source of competitive advantage for the
firm.
Channels Acquire Their Importance by Their Functions
The foregoing elaborations not only explain the importance of
marketing channels, but also clarify the fact that the channels
acquire their importance by virtue of the functions they
perform.
Channel Functions cannot be EliminatedSometimes, firms tend to
think that channels could be easily dispensed with and that the
firm
would be better off doing so. The firms assume that by
eliminating the channels, they can eliminate the channel costs.
This is erroneous thinking. The inherent assumption in this
thinking is that by eliminating the channels, they can escape the
functions that the channels perform. The fact is that even where
channels are eliminated, the channel functions as such are not
eliminated; they are merely
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transferred from the channels to the manufacturer; and the costs
thereof are also just transferred, not eliminated.
Sometimes, the firms assume that while channels as a whole
cannot be eliminated, a particular tier in the channel can be
readily eliminated and the firm would be ipso facto better off with
such elimination. Here too, if the assumption is based on the logic
that with the elimination of the particular tier, the functions
performed by that tier can be eliminated, then the firm will soon
realize that it has committed a mistake. For here too, the
alternative arrangement may not eliminate the functions performed
by that particular tier. What is likely to happen is a transfer of
the functions from the given tier to another one in the channel,
backward or forward. So, it will be wrong to assume that the
elimination of the tier will ipso facto result in savings to the
firm. It depends on the circumstances.
Channels/middlemen are no parasites: The problem arises due to
confusion in thinking. The firms concerned might be viewing
channels as mere middlemen, with a negative connotation attached to
the term. And, they might consider the channels as parasites. No
wonder then, they think that they would be better off by dispensing
with the channel, in part or full. It needs to be emphasized that
channels/middlemen are no parasites. They are an essential and
valuable part of the firms marketing activity. Manufacturers use
them as there is economic sense in doing so, and all things
considered, using them improves distribution efficiency.
There is not to suggest that under no circumstances can a tier
in the channel be eliminated and that there would be no advantage
at all in doing so. In some cases, it certainly is sensible to
eliminate one particular tier in the channel and the firm might be
better off doing so. It has to be conceded that there are always
alternative methods of performing a set of channel functions and a
firm may be better off by following one method in preference to
another. But, it depends on the circumstances of the case. The firm
has to analyze and find out whether the concerned distribution
functions are performed more cost-effectively by eliminating the
tier and shifting the functions backward or forward to another tier
in the channel, or by keeping the tier alive. As a general rule, it
can be said that where the number of tiers are far too many, the
elimination of a tier would be advantageous.
The test question: The test question is: Are the functions
duplicated in wasteful manner? Sometimes, duplication of channel
functions does take place in a channel system; the same function
being performed by more than one tier. Firms often presume that in
such cases, it is beneficial to dispense with one of the tiers.
This is again incorrect thinking. Duplication of functions by
different tiers need not automatically imply inefficiency, or
waste. In many cases, such duplication may be essential for
achieving the desired service level in distribution. For example,
inventories may have to be kept at different levels/tiers of the
channel so that the flow of products is smooth and customers get
the products at the time and place of their choice. In such cases,
duplication is essential and beneficial. The firm, therefore, has
to find out whether duplication is wasteful. If it serves the
interests of the firm, it is not wasteful. So based on the facts of
the case, the firm should find out how costs are reduced,
efficiency increased and waste eliminated.
Q2. Define Promotion; explain with suitable examples the 4 type
of promotions adopted by consumer product industry.
Ans2. Sales Promotion is another important component of the
marketing communications mix. It is essentially a direct and
immediate inducement. It adds extra value to the product and hence
prompts the dealer/consumer to buy the product.
The Committee on Definitions of the American Marketing
Association defines Sales Promotion as:
In a specific sense, Sales Promotion includes those sales
activities that supplement both personal selling and advertising,
and coordinate them and make them effective, such as displays,
shows, demonstrations and other non-recurrent selling efforts not
in the ordinary routine.
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IMPORTANCE OF SALES PROMOTION
In a competitive market, sales promotion comes handy to a
marketer, to solve several of his short-term hurdles. Short term
because, the impact sales promotion measures are not that durable
and lasting like the results obtained through advertising and
personal selling. Sales promotion, by and large, is understood and
practiced as a catalyst, and a supporting facility to advertising
and personal selling.
Types of promotions adopted by consumer product industry:
Premiums and Free Offers
Aristocrat luggage: Aristocrat molded luggage gave an attractive
offer. It ran a nationwide campaign to publicize the offer.
Aristocrat announced:
If you buy an Aristocrat within the next week, you get a Philips
2 Band transistor worth Rs 266 free !
And the advertisement set the time limit for the offer:Its only
for a week, starting today.
Discounts, Price Off
Hawkins: Hawkins pressure cookers have come up with several
sales promotion programmes during the last few years. In one of
their programmes, Hawkins announced an attractive price
reduction:
Up to Rs 150 off on a new Hawkins in exchange for any old
pressure cooker.And the advertisement specified that the offer was
open only up to a particular date.
Installment Offers
Washotex: Washotex washing machines came up with pay 20 percent
now, take home Washotex scheme. The consumers were offered the
facility of paying the balance in 24 equal monthly
installments.
Exchange Schemes, Money Back Offers
Akai exchange scheme: Indias No. 1 CTV Akai 53 cm Is Now
Available For A Shocking Rs. 5900.Heres how:
Bring in your old 51 cm color TV (in proper working condition)
with remote.Take home the Akai: For Rs 5900 in exchange.
Q3. The right marketing mix can be adopted only after
segmentation. Elucidate with examples the basis of segmentation as
applied in Television Marketing.
Ans3.Market SegmentationThe division of a market into different
homogeneous groups of consumers is known as market segmentation.
Rather than offer the same marketing mix to vastly different
customers, market segmentation makes it possible for firms to
tailor the marketing mix for specific target markets, thus
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better satisfying customer needs. Not all elements of the
marketing mix are necessarily changed from one segment to the next.
For example, in some cases only the promotional campaigns would
differ.A market segment should be: measurable, accessible by
communication and distribution channels different in its response
to a marketing mix durable (not changing too quickly) substantial
enough to be profitable. A market can be segmented by various
bases, and industrial markets are segmented somewhat differently
from consumer markets, as described below.
Consumer Market Segmentation
A basis for segmentation is a factor that varies among groups
within a market, but that is consistent within groups. One can
identify four primary bases on which to segment a consumer
market:Geographic segmentation is based on regional variables such
as region, climate, population density, and population growth rate.
Demographic segmentation is based on variables such as age, gender,
ethnicity, education, occupation, income, and family status.Psycho
graphic segmentation is based on variables such as values,
attitudes, and lifestyle.Behavioral segmentation is based on
variables such as usage rate and patterns, price sensitivity, brand
loyalty, and benefits sought.The optimal bases on which to segment
the market depend on the particular situation and are determined by
marketing research, market trends, and managerial judgment.
Business Market Segmentation
While many of the consumer market segmentation bases can be
applied to businesses and organizations, the different nature of
business markets often leads to segmentation on the following
bases:Geographic segmentation - based on regional variables such as
customer concentration, regional industrial growth rate, and
international macroeconomic factors.Customer type - based on
factors such as the size of the organization, its industry,
position in the value chain, etc.Buyer behavior - based on factors
such as loyalty to suppliers, usage patterns, and order size.
Profiling the Segments
The identified market segments are summarized by profiles, often
given a descriptive name. From these profiles, the attractiveness
of each segment can be evaluated and a target market segment
selected.
Q4. What do you understand by branding? Is quality important
than branding?
Ans4. A brand is defined as a name, term, symbol, design, or a
combination of them, which is intended to identify the goods and
services of one seller and to differentiate them from those of
competitors. A trademark is a brand that has been given legal
protection, thus ensuring its use exclusively by one seller.
Trademark is a legal term, while brand is a marketing term.
In marketing, the brand name is a major selling tool and one of
the most important components of the total product personality. We
are, in fact, living in an age of brands. The intensive brand
promotion undertaken by marketers of various products have made
consumers extremely brand-conscious. These days no consumer asks
for just toothpaste. He specifically asks for Colgate, or Close-Up,
or some other brand. No woman asks for bath soap, she wants her
brand. Similarly, a woman who wants a steel cupboard may ask for
Godrej, without even thinking about several other brands of
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cupboards that are available. The brand name is the mantle the
product puts on. The brand image, developed through advertising and
other promotional measures, creates strong brand awareness and
loyalty among consumers. Corporations spend long years, lot of
money and effort to build brands. A good brand is an invaluable
asset for the owner.
It is an accepted fact that a firm cannot attain a good and
lasting reputation through marketing flair alone, only through
quality products, can it attain such reputation. Product quality is
a vital area as it decides the fate of the firm in the marketplace.
Several firms have established themselves as business leaders
through the quality of their products. Strict control on product
quality and insistence on zero-defect products have made their
products globally accepted.
A successful product strategy will undoubtedly need reliable,
well-engineered quality products. Marketing has to set the quality
standards for the firms products. Constantly verifying these
standards and upgrading them in tune with the needs and growing
sophistication of the market is a crucial task in product
management.
In fact, product quality has become a very significant plank for
product differentiation.
List below explain the basic dos an organization has to follow
in order to ensure product quality: The firm should have a policy
on quality. It should make clear to every level in the
organization its aims and objectives on the quality front. Honda
of Japan writes down its policy thus: Buy no bad parts, make no bad
parts, ship no bad
parts. The firm should develop the product design that can
deliver an error-free product. It should identify the competitors
standards of quality and aim at excelling them. The international
specifications on quality for the given product have to be reckoned
with. The firm should find out the customers tolerance level on the
quality front. Keeping these factors in view, the firm has to
decide its quality standards, develop detailed
product specifications and made these standards known to design,
production, engineering, quality control and marketing groups.
It should enforce these standards. While launching new products,
the firm has to ensure that they are not rushed to the market
without proper quality tests. MRF claims its tyres are tested
under the tough Himalyan terrains as well as in the worst rural
tracks of India.
In the case of durables, samples under use for a long time
should be studied; used samples throw light on the
quality/operational problems the product has undergone.
Independent quality assurance groups should oversee the design,
engineering and production and testing stages.
The firm should also ensure vendor quality. Since raw materials,
accessories and components decide the ultimate quality of a
finished product, quality control has to be ensured at vendor
level.
Quality has a cost; but it pays back: Many progressive firms
have moved up to the zero defect level in their products because
they know that the rewards coming through the quality route are
lasting and substantial. At the other extreme, there are many
companies who believe that the cost of ensuring quality is too high
and they allow wide relaxations on the quality front. Lessons from
the market reveal that these companies base their arguments on the
wrong economics. Quality assurance has a cost, but it is a cost
that can be realized back in terms of long-term business prosperity
and goodwill.
Q5. How will you go about describing a Marketing Plan for a
consumer product? Explain with the help of Marketing Plan
Process.
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Ans5. Marketing Plan Outline
I. Executive SummaryA high-level summary of the marketing
plan.
II. The ChallengeBrief description of product to be marketed and
associated goals, such as sales figures and strategic goals.
III. Situation AnalysisCompany Analysis Goals Focus Culture
Strengths Weaknesses Market share Customer Analysis Number Type
Value drivers Decision process Concentration of customer base for
particular products Competitor Analysis Market position Strengths
Weaknesses Market shares Collaborators Subsidiaries, joint
ventures, and distributors, etc. ClimateMacro-environmental PEST
analysis: Political and legal environment Economic environment
Social and cultural environment Technological environment SWOT
AnalysisA SWOT analysis of the business environment can be
performed by organizing the environmental factors as follows: The
firm's internal attributes can be classed as strengths and
weaknesses. The external environment presents opportunities and
threats.
IV. Market SegmentationPresent a description of the market
segmentation as follows:Segment 1
Description Percent of sales What they want How they use product
Support requirements
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How to reach them Price sensitivity
V. Alternative Marketing StrategiesList and discuss the
alternatives that were considered before arriving at the
recommended strategy. Alternatives might include discontinuing a
product, re-branding, positioning as a premium or value product,
etc.
VI. Selected Marketing StrategyDiscuss why the strategy was
selected, then the marketing mix decisions (4 P's) of product,
price, place (distribution), and promotion.ProductThe product
decisions should consider the product's advantages and how they
will be leveraged. Product decisions should include: Brand name
Quality Scope of product line Warranty Packaging PriceDiscuss
pricing strategy, expected volume, and decisions for the following
pricing variables: List price Discounts Bundling Payment terms and
financing options Leasing options Distribution (Place)Decision
variables include: Distribution channels, such as direct, retail,
distributors & intermediates
Motivating the channel - for example, distributor margins
Criteria for evaluating distributors
Locations Logistics, including transportation, warehousing, and
order fulfillment Promotion Advertising, including how much and
which media. Public relations Promotional programs Budget;
determine break-even point for any additional spending Projected
results of the promotional programs
VII. Short & Long-Term ProjectionsThe selected strategy's
immediate effects, expected long-term results, and any special
actions required to achieve them. This section may include
forecasts of revenues and expenses as well as the results of a
break-even analysis.
Case study
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Q1. Critically evaluate the communication strategy of Good
Knight with reference to the facts given in the case.
Ans1. The common Strategy followed by the company is very
aggressive and appealing. The brand name of chosen by the company
reflects the product benefit. The product name good night
verbalizes the reason to buy the product to the consumer. This name
not only tells the benefits of product, but also this name is
commonly practice in most Indian language. The word good night is
commonly spoken in all Indian family so its mass appealing. The
company chooses the daily newspaper to show their ads. The ads were
printed on newspaper like The Tomes of India, Malayalam Manorama
Sunday Midday etc. Which were biggest and best selling newspaper in
India In this way their ads reach to the target audience very
rapidly and quickly. So we can conclude that there common strategy
was very aggressive and mass appealing.
Q2. At the time of this case preparation, Good Knight was
probably the only product in the EMD with mat category. As new
international competition, with known brands entering the market,
what changes, if any, would you suggest in the marketing
communication strategy of Good Knight?
Ans2. As new international competition has come into the market,
I would like to give some suggestion to the company in order to
boost sales and increase the profit and market share. Following are
the few suggestion: -
1. In order to capture larger market share, the company should
incase ads promotion on T.V, Radio and Newspapers etc. 2. Nation
wide promotion of the product should be done in order to get larger
target audience.
3. Rural marketing should be done because now many if the
villages get the electricity.
4. As marketing is a creative field, so company should keep
changing their ads and bring more creative touch in ads. This will
keep the consumer interest alive.
5. Company should offer more discount scheme to the customer
like replacement of the old/non-working EMD machine.
ASSIGNMENT C
Q1. d. Understanding the needs of consumers and delivering
them.Q2. b. Selling at break even cost.Q3. d. Idea generation.Q4.
c. Synergistically related activities which must be closely
coordinated.Q5. a. Maximizing customer satisfaction. Q6. a. Is one
who is user of product.Q7. a. Product differentiation.Q8. a.
Product lives around the 4 stages of cycle.Q9. b. The opinion of
experts is sought.Q10. b. Setting a price above competitive
price.Q11. TrueQ12. FalseQ13. False
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Q14. FalseQ15. TrueQ16. FalseQ17. TrueQ18. TrueQ19. FalseQ20.
True
Q21. List 5 stages in consumer decision-making process.
Ans21. Researchers have identified eight stages in consumer
decision-making process: Problem Recognition (Need Recognition)
Awareness Comprehension (Evaluation) Attitude Legitimization Trial
Adoption Post-Purchase Behavior
Q22. Write a simple definition for marketing and selling.
Ans22. Marketing refers to understanding the needs of the
consumer and delivering them. Marketing views the entire business
as consisting of a tightly integrated effort to discover, create,
arouse and satisfy customer needs.
Selling merely concerns itself with the tricks and techniques of
getting the customers to exchange their cash for the companys
products; it does not bother about the value satisfaction that the
exchange is all about.
Q23. List out 5 benefits of advertising a product.
Ans23. Benefits of advertising: Generating awareness Reminding
buyers to buy Changing attitudes about the use of the product form
Changing perceptions about the importance of brand attributes
Changing beliefs about brands Reinforcing attitudes Building
corporate and product-line image Obtaining a direct response
Q24. Give 5 examples (each) of consumer, consumer durables and
industrial products.
Ans24.Consumers:
Innovators Early adopters Early majority
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Late majority Laggards
Consumer durables: Television Refrigerator Air conditioner
Washing machine VCD Player
Industrial products: Petrol Diesel Kerosene Explosives Certain
industrial chemicals
Q25. List out 5 functions performed by whole sellers in consumer
product industry.
Ans25. A wholesaler buys the product in large quantities, and
resells the goods in sizable lots to other intermediaries down the
line, such as semi-wholesalers and retailers. Normally a wholesaler
does not sell directly to consumers, the exception being
institutional buyers who prefer their requirements from wholesalers
rather than retailers. In fact, the distinguishing feature of
wholesalers is that they do not sell to the ultimate consumers for
personal consumption. Even when they sell to institutional buyers
who are the ultimate consumers, the sale is not for personal
consumption of an individual/household consumer. Wholesalers
generally specialize: some specialize by type of product, some by
industry and some by markets. The rationale for their existence is
their cost-effective operation in buying goods in large quantities
and reselling them to other intermediaries in smaller, yet sizable
lots.Wholesalers add value by performing a number of vital
marketing functions. Stock holding and sub-distribution are the
main functions of the wholesaler. They also perform functions like
promotion, financing, and collection of accounts receivables and
provision of market feedback. They serve principals as well as
retailers under them. In some cases, they also assume a part of the
risk associated with product failures, price changes and bad debts.
Wholesalers basically belong to two types: agent wholesalers and
merchant wholesalers. Usually merchant wholesalers participate in
all the flows that characterize the distribution process while
agent wholesalers do so only in some of the flows.
Q27. Give 5 examples of Family brands in consumer products.
Ans27. Surf, Ponds, Lux, Taj Mahal tea, Colgate.
Q28. List out the 5 stages in new product development.
Ans28. Stages in new product development: Generating new product
idea Idea screening Concept testing Business/market analysis Actual
product development Market test
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Commercialization
Q29. Give 5 reasons why new products fail.
Ans29. Reasons for product failure: -1: - Faulty product Idea.2:
- Distribution Problem.3: - Unrealistic pricing.4: - Week
promotional activity.5: - Poor quality Product.6: - Strong designed
strategy of the competitor.
Q30. What are the four stages in Product Life Cycle?
Ans30. Four stages in Product Life Cycle: Market pioneering
stage Market growth stage Market maturity stage Market decline
stage
Differentiate between the following:
Q31. Product diversification and Product differentiation
Ans31. Product Diversification: Product Diversification means
increasing the product line length. Most firms start with just one
product line and one or two products in that line. Over the years,
the line grows, as the firm keeps adding more and more
products/brands to the line to capture new marketing opportunities.
More product lines also enter the scene, as the firm decides to
expand to more new businesses. It is a direct outcome of the
long-term corporate growth strategy of the firm handled at the
corporate level. Line stretching is a measure firms undertake
frequently in product management. The aim is to enter a new price
slot and a new market segment, which is not covered by the existing
offers of the firm.
Product Differentiation: The differentiation route to strategy
revolves around aspects other than price. It works on the principle
that a firm can make its own offer distinctive from all competing
offers and win through the distinctiveness. And, a firm adopting
such route can price its product on the perceived value of the
attributes of the offer and not necessarily on competition-parity
basis. The differentiation route is a more dynamic and powerful
route in competitive strategy. Most business battles are fought on
the strength of differentiation rather than price. The major
temptation as well as benefit in differentiation strategy is that
it allows a firm to move away from the disadvantages of a wholly
price-based fight. In other words, differentiation allows a firm
the flexibility for fighting on the non-price front, on the other
strength of the uniqueness and specialty of its offer.
Differentiation, therefore, is a crucial option for a firm in its
search for a rewarding competitive strategy.
Q32. Marketing and Selling.
Ans32.
SELLING MARKETING
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Selling starts with the seller, and is preoccupied all the time
with the needs of the seller.
Marketing starts with the buyer and focuses constantly on the
needs of the buyer.
Seller is the center of the business world. Buyer is the center
of the business world.Emphasis is on the saleable surplus available
with the concern.
Emphasis is on the identification of the market opportunity.
Seeks to quickly convert product into cash. Seeks to convert
customers needs into product.
Concerns itself with the trick and techniques of getting the
customer to part with their cash for the product available with the
salesman.
Emphasizes on fulfilling the needs of the customer.
View business as a good producing process.
View business as a customer satisfaction process.
Overemphasizes the exchange aspect without caring for the values
satisfaction inherent in the exchange.
Concerns itself primarily and truly with the value satisfaction
that should flow to the customer from the exchange.
Sellers preference dominates the formulation of the Marketing
Mix.
Buyer determines the shape Marketing Mix should take.
Emphasis is on somehow selling; there is no coordination between
the different functions of the total marketing task.
Emphasis is on the integrated marketing; an integrated strategy
covering the product, promotion, pricing, and distribution.
The firm makes the product first and then figures out how to
sell it and make profit.
The firm makes total product offering that will match and
satisfy the identified needs of the customer.
Q33. Penetration Price and Skimming Price.
Ans33. Skimming Price: In skimming pricing, the new product is
priced high and the cream of the market is skimmed by concentrating
on those segments that are not price sensitive. Such high price
will fetch the firm substantial initial incomes, which it can
plough in for further market development and promotion. Through
this method, the firm also recovers a substantial potion of its
development cost. Later on, the firm may bring down the prices,
when it enters mass markets, which are more price-sensitive.
Skimming pricing, however, cannot be employed if the product cannot
command the patronage of an affluent, non-price sensitive,
market-segment.
Penetration Price: The skimming strategy cannot suit all new
product contexts. When the new product is likely to be highly price
sensitive and when there is no elite market for it, penetration
pricing will be the option. As the very name implies, the intention
in this strategy is to penetrate a broad market through low prices.
The income is generated by sales spread over large markets; the
large volumes facilitate substantial economies in unit cost of
production and marketing; and the cycle can continue. The strategy
helps to establish the product in the market.
Q34. Individual Consumer and Industrial Consumer.
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Ans34. Individual Consumer: Individual consumer buys things for
his own personal and family consumption.
Industrial Consumer: Industrial buyer is a commercial buyer who
buys things for manufacturing other products, or for reselling, or
for use in the running of his enterprise.
Q35. Vertical Marketing and Horizontal Marketing.
Ans35.Horizontal Marketing Definition: When two companies
producing different products jointly market their products.
Sometimes horizontal marketing is referred to as symbiotic
marketing.
Vertical MarketingVertical marketing focuses on developing
solutions to user problems within specific industries. In contrast,
horizontal marketing provides generic one-size-fits-all
offerings.
Q36. Packaging and Packing.
Ans36. Packaging: The package is another important component of
total product personality, especially in consumer products. The
package performs two essential roles: (i) Giving protection to the
product, (ii) Adding to its aesthetic and sales
appeal.Traditionally, packaging was intended to protect the product
to prevent deterioration enroute, and to facilitate handling at the
various points of distribution. In later years, packaging also
became a major tool in the promotion of the product. The material
of the package, the color, the shape and size of the package, its
finish, the labeling on it, the possibilities of reuse, etc., came
to be utilized in building the total sales appeal of the product.
The power off good packaging in promoting on-the-spot purchases is
found to be very substantial.
Q37. Individual Brand and Family Brand.
Ans37. Individual Brand: In Individual Branding each product of
the company is given an independent brand name.
Criteria for selecting a brand name:
INDIVIDUAL BRANDING
1. The brand name selected should be easy to pronounce.2. It
should be easy to read and understand.3. Appropriate for the
product: Most companies select the brand name, which communicate
the
functions\some key attributes of the product. To cite a few
examples, When Wipro Systems offered a software program on
astrology, the name chosen was Jyotishi. Shinex was the name chosen
for an instant polish. The paint for the wooden furniture was given
the name as Touchwood. The first portable music player was given
the name as Walkman.
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4. The brand name so allotted to the product should be easy to
remember so that it remains in the mind of the customer while
making the purchase.5. The brand name selected should be most
descriptive in nature. Many a times the manufacturer tries to
choose a brand name that communicate the specialty of the product.
E.g. GMs Opel, Fords Ikon, Suzuki Zen are the names to communicate
the specialty of the respective brands. The name TAJ given to the
Hotel chain of Indian Hotels is an attempt to recapture and reflect
the Mughal Splendor.
Family Brand: When a group of products are given the same brand
name, it becomes a case of family brand. Family brand does not mean
that entire product mix of the company should go under a single
brand name. A company may resort to different branding approaches
for different product lines.
Criteria for selecting a brand name:
FAMILY BRAND
1. Different products of the companies marketed under one brand
name are given a family or umbrella brand.
2. This sort of brand does not mean the entire product mix of
the company should go under the single brand name.
3. A company may approach to different branding approach to
different product lines. When a group of products are given the
same brand name, it becomes a case of Family brand or Umbrella
brand.
4. E.g. AMUL it is an umbrella / family brand name for one line
of product for the company.5. DHARA is an umbrella brand for the
seven types of oil marketed by the a company: Dhara
Mustard oil, Dhara groundnut oil, Dhara sunflower oil etc.
Q38. Personal Selling and Missionary Selling.
Ans38. Personal Selling: Personal selling is unique as it is a
face-to-face transaction between a salesman and a prospective
customer. Evidently, a well-trained and competitive spirited
salesman can be an effective communication medium. His knowledge
about the product, the degree of his familiarity with the customer,
whether he is handling a new customer or an established customer,
the degree of his involvement in the company he is representing,
the level of his motivation and his own convictions about the
quality and performance standards of the product will be the
determining factors in his role as a communicator.
Q40. Full Cost Pricing and Marginal Cost Pricing.
Ans40. Full Cost Pricing: Absorption cost pricing or full cost
pricing rests on the estimate unit cost of the product at the
normal level of production and sales. The method uses standard
costing techniques and works out the variable and fixed costs
involved in manufacturing, selling and administering the product.
By adding the cost of these three operations, we get the total
cost. Adding the required margin towards profit to such total costs
arrives at the selling price of the product. This method is also
known as full cost pricing since it envisages the realization of
full costs from each unit sold.
Marginal Cost Pricing: Marginal cost pricing aims at maximizing
the contribution towards fixed costs. Marginal costs include all
the direct variable costs of the product. In marginal cost pricing,
these direct variable costs are fully realized. In addition, a
portion of the fixed costs is also realized. The
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main difference between absorption cost pricing and marginal
cost pricing is that the latter gives the flexibility not to cover
a portion of the fixed costs depending on the market situation. It
also gives the flexibility to recover a larger share of the fixed
costs from certain customers, or a certain segment of the business
and a smaller share from the others.