MB0030 - Marketing Management - Completed

8/9/2019 MB0030 - Marketing Management - Completed

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MARKETING MANAGEMENT

MB0030

SET2MBA 2ndSEM

Name Mohammed Roohul Ameen

Roll Number

Learning Center SMU Riyadh (02543)

Subject Marketing Management

Date of Submission 28 Feb 2010

Assignment Number MB0030


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Mohammed Roohul Ameen Roll Number:Assignment MBA 2nd Semester Subject: MB0030

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1.Write a short note on product life cycle.

The Product Life Cycle model can help analyzing Product and Industry Maturity Stages.

Any Business is constantly seeking ways to grow future cash flows by maximizing revenue

from the sale of products and services. Cash Flow allows a company to maintain viability,

invest in new product development and improve its workforce; all in an effort to acquire

additional market share and become a leader in its respective industry.

A consistent and sustainable cash flow (revenue) stream from product sales is the key to

any long-term investment, and the best way to attain a stable revenue stream is a Cash

Cow product, leading products that command a large market share in mature markets.

Also, product life cycles are becoming shorter and shorter and many products in mature

industries are revitalized by product differentiation and market segmentation.

Organizations increasingly reassess product life cycle costs and revenues as the time

available to sell a product and recover the investment in it shrinks.

Even as product life cycles shrink, the operating life of many products is lengthening. For

example, the operating life of some durable goods, such as automobiles and appliances,

has increased substantially. This leads the companies that produce these products to take

their market life and service life into account when planning. Increasingly, companies are

attempting to optimize life cycle revenue and profits through the consideration of product

warranties, spare parts, and the ability to upgrade existing products.

It's clear the concept of life cycle stages has a significant impact upon business strategy

and performance. The Product Life Cycle method identifies the distinct stages affecting

sales of a product, from the product's inception until its retirement.

In many ways The Product Life Cycle is based upon the biological life cycle. For example, a

seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts

down roots as it becomes an adult (maturity); after a long period as an adult the plant

begins to shrink and die out (decline).

In theory it's the same for a product. After a period of development it is introduced or

launched into the market; it gains more and more customers as it grows; eventually the

market stabilizes and the product becomes mature; then after a period of time the

product is overtaken by development and the introduction of superior competitors, it goes

into decline and is eventually withdrawn.

However, most products fail in the introduction phase. Others have very cyclical maturity

phases where declines see the product promoted to regain customers.


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In the Introduction stage, the product is introduced to the market through a focused and

intense marketing effort designed to establish a clear identity and promote maximum

awareness. Many trial or impulse purchases will occur at this stage. Next, consumer

interest will bring about the Growth stage, distinguished by increasing sales and the

emergence of competitors. The Growth stage is also characterized by sustaining marketing

activities on the vendor's side, with customers engaged in repeat purchase behavior

patterns. Arrival of the product's Maturity stage is evident when competitors begin to

leave the market, sales velocity is dramatically reduced, and sales volume reaches a steady

state. At this point in time, mostly loyal customers purchase the product. Continuous

decline in sales signals entry into the Decline stage. The lingering effects of competition,

unfavorable economic conditions, new fashion trends, etc, often explain the decline in

sales.

Several variations of the industry life cycle model have been developed to address the

development of the product, market, and/ or industry. Although the models are similar,

they differ as to the number and names of the stages. Here are some major ones:

1973: Fox: precommercialization - introduction - growth - maturity - decline. 1974: Wasson: market development - rapid growth - competitive turbulence -

saturation/maturitydecline

1984: Anderson & Zeithaml: introduction - growth - maturity decline 1998: Hill and Jones: embryonic - growth - shakeout - maturity - decline


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Other Product Life cycles:

1) Style: A style is a basic and distinctive mode of expression that appears in the fieldof human behavior. For example, style appears in homes, art and clothing, once the

style invented, it will be there for longer period.

2) Fashion: Currently accepted or popular style in a given field for example, cargojeans are now fashion with the college going students.

3) Fad: A fashion that enters quickly is adopted with great zeal, peaks early, anddeclines very fast. For example, when the pager was introduced, everybody

wanted to have the product. But when people find mobile as alternatives, the

demand for the product when down drastically.


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2. Explain various categories of brand sponsorship with example.

SW1P 2BY

Service The meaning of brand

Brands are a means of differentiating a companys products and services from those of its

competitors. There is plenty of evidence to prove that customers will pay a substantial price

premium for a good brand and remain loyal to that brand. It is important, therefore, to

understand what brands are and why they are important.

The Meaning of Brand Sponsorship

To sponsor something is to support an event, activity, person, or organization financially orthrough the provision of products or services. A sponsor is the individual or group that provides

the support, similar to a benefactor.

Sponsorship is a cash and/or in-kind fee paid to a property (typically in sports, arts,

entertainment or causes) in return for access to the exploitable commercial potential associated

with that property. For example, a corporate entity may provide equipment for a famous

athlete or sports team in exchange for brand recognition. The sponsor earns popularity this way

while the sponsored can earn a lot of money. A particular form of specialized brand sponsorship

where a brand sponsors an unusual event or pastime that then becomes synonymous with that

brand (to the point where future brands may be excluded from participation) is known as'aboutsponsorship'. This provides a strong walled-garden sponsorship relationship between

particular events and the brand.

Many companies want their logo on sponsored equipment in return. Formula One teams for

many years relied heavily on the income from tobacco advertising, reflected in the sponsorship

liveries of the teams. Other types of sponsorships revolve around companies paying for parts of

television broadcasts and sporting events which bear their name. For example college bowl

games now contain the name of their sponsor.

Different types of Brand Sponsorships

Manufacturer's brand

Merchandise bearing a manufacturer's brand name, rather than a private label brand. The

marketing effort of a manufacturer's brand is to attract customers loyal to the manufacturer's

name. For example, many successful clothing designers, operating on this principle, have

licensed their manufacturer's brand name outside the clothing category to include cosmetics,

perfumes,and even jewelry.


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Private label

Brand sponsored by a wholesaler, retailer, dealer, or merchant, as distinguished from a brand

bearing the name of a manufacturer or producer; also called private brand. Manufacturers use

either their own name, that of a middleman, or a combination of both when they are marketingtheir products. Private labeling occurs when middlemen, usually large retailers or wholesalers,

develop their own brand. Since manufacturers' (producers') brands have large advertising

expenditures built into their cost, a private labeler is able to buy the same goods at a lower cost

and thus sell them at a lower price and/or at a better profit margin.

In addition, private labelers have more control over pricing and are able to advantageously

display their own brands for maximum impact. For example, a grocery store can quickly reduce

the price of its own private-label brand in order to meet or beat a competitor's price. Or the

grocery store can create a special point-of-purchase advertising display and/or give its brand

predominant shelf space in order to boost sales. Private-label brands are usually priced lowerthan comparable manufacturers' brands and therefore appeal to bargain-conscious consumers.

An example of a private-label brand would be a supermarket product bearing a store label with

a product's name.

These are also called store brands. These brands bear the store name or store selected vendor

name. Basic ingredients of private labels are:

It must be a unit package: It is difficult to assign a private label character to say, rice sold loosefrom a 100 kg bag. Even though it may enhance consumer loyalty for whatever reason, it does

not qualify as a private label product.

Relabeling: The unit pack must bear only the brand name of the particular store or any thereparty the store may choose for its label programme.

Private labels will enhance the category profitability, increase the negotiation power oof the

retailer and better value creates better consumer loyalty.

Private labels can be introduced if and only if,

The consumer is not getting the tangible value. The retailer is not making enough returns from the sale of the branded goods.

Distributor brand

Brand name owned by a retailer, wholesaler, or other distributor rather than by a

manufacturer. For example: Kenmore is a Sears brand; Jane Parker, an A&P brand. All private

label merchandise is sold as a distributor brand.


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National brand

Brand name used by a manufacturer whenever that product is sold. National brand marketing

requires greater advertising expenditure on the part of the manufacturer to compete with

lower priced private label brands. If consumer preference for the national brand is strong, then

pricing can be high enough to support the additional advertising and provide the desired profitmargin.

National brands are often perceived to be of higher quality and can therefore demand a

premium price. Many national brands are now experiencing a loss of market share to private

label brands as a result of the narrowing quality gap.

For example a product distributed, sold, and known nationally, as contrasted with a store brand

or generic product. Levi's is a national brand for jeans, whereas Gap does not manufacture

jeans, but its stores sell jeans under their own private label.


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3. Explain the product mix pricing strategies with example

A Little introduction about Pricing Objectives

The firm's pricing objectives must be identified in order to determine the optimal pricing.

Common objectives include the following:

Current profit maximization - seeks to maximize current profit, taking into accountrevenue and costs. Current profit maximization may not be the best objective if it results

in lower long-term profits.

Current revenue maximization - seeks to maximize current revenue with no regard toprofit margins. The underlying objective often is to maximize long-term profits by

increasing market share and lowering costs.

Maximize quantity - seeks to maximize the number of units sold or the number ofcustomers served in order to decrease long-term costs as predicted by the experience

curve.

Maximize profit margin - attempts to maximize the unit profit margin, recognizing thatquantities will be low.

Quality leadership - use price to signal high quality in an attempt to position the productas the quality leader.

Partial cost recovery - an organization that has other revenue sources may seek onlypartial cost recovery.

Survival - in situations such as market decline and overcapacity, the goal may be toselect a price that will cover costs and permit the firm to remain in the market. In this

case, survival may take a priority over profits, so this objective is considered temporary.

Status quo - the firm may seek price stabilization in order to avoid price wars andmaintain a moderate but stable level of profit.

For new products, the pricing objective often is either to maximize profit margin or to maximize

quantity (market share). To meet these objectives, skim pricing and penetration pricing strategies

often are employed. Joel Dean discussed these pricing policies in his classic HBR article entitled,

Pricing Policies for New Products.

Skim pricing attempts to "skim the cream" off the top of the market by setting a high price andselling to those customers who are less price sensitive. Skimming is a strategy used to pursue the

objective of profit margin maximization.

Skimming is most appropriate when:

Demand is expected to be relatively inelastic; that is, the customers are not highly pricesensitive.

Large cost savings are not expected at high volumes, or it is difficult to predict the costsavings that would be achieved at high volume.

The company does not have the resources to finance the large capital expendituresnecessary for high volume production with initially low profit margins.


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Penetration pricing pursues the objective of quantity maximization by means of a low price. It is

most appropriate when:

Demand is expected to be highly elastic; that is, customers are price sensitive and thequantity demanded will increase significantly as price declines.

Large decreases in cost are expected as cumulative volume increases. The product is of the nature of something that can gain mass appeal fairly quickly. There is a threat of impending competition.

As the product lifecycle progresses, there likely will be changes in the demand curve and costs. As

such, the pricing policy should be reevaluated over time.

The pricing objective depends on many factors including production cost, existence of economies of

scale, barriers to entry, product differentiation, rate of product diffusion, the firm's resources, and

the product's anticipated price elasticity of demand.

Mix Pricing Strategies

Premium Pricing

Use a high price where there is uniqueness about the product or service. This approach is used

where a a substantial competitive advantage exists. Such high prices are charge for luxuries such as

Cunard Cruises, Savoy Hotel rooms, and Concorde flights.Product Line Pricing

Where there is a range of product or services the pricing reflect the benefits of parts of the range.

For example car washes. Basic wash could be Rs 100, wash and wax Rs 200, and the whole package

Rs 300.


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Also for example of Nokia mobile phones Nokia 1110 is priced at Rs 1349, Nokia 7610 is priced @Rs

6249 and Nokia E90 is priced @ 35499. All the three products cater to the different segments- low,

medium and high income group respectively. The three levels of differentiation create three prices

points in the mind of consumer. The task of marketer is to establish the perceived quality among

the three segments. If the consumers do not find much difference between the three brands,

he/she may opt for low end products.

Optional product pricing

Companies will attempt to increase the amount customer spend once they start to buy. Optional

'extras' increase the overall price of the product or service. For example airlines will charge for

optional extras such as guaranteeing a window seat or reserving a row of seats next to each other

this strategy is used to set the price of optional accessory products along with a main product. For

example Maruti Suzuki will not add the accessories like body cover, slide molding, rear under body

etc., to its product swift but all these are optional. Customer has to pay different prices as for

different accessories as add-ons. Organizations separate these products from main products so that

customer should not perceive products are costly. Once the customer comes to the show room,

organization explains the advantages of buying these additional accessories.

Captive product pricingWhere products have complements, companies will charge a premium price where the consumer is

captured. For example a razor manufacturer will charge a low price and recoup its margin (and

more) from the sale of the only design of blades which fit the razor. This strategy is setting a price

for a product that must be used along with a main product. For example, Gillette sells low priced

razors but makes money with replacement cartridges.

By-product pricing

A pricing method used in situations where a saleable by-product results in the manufacturing

process. If the by-product has little value, and is costly to dispose of, it will probably not affect the

pricing of the main product; if, on the other hand, the by-product has significant value, the

manufacturer may derive a competitive advantage by charging a lower price for its main product. is

determining the price for by-products in order to make the main products price more attractive.

For example, LT overseas manufactures of Dawaat basmati rice, found that processing of riceresults in two by-products (rice husk and rice bran oil). If the company sells husk and bran oil to the

other consumers, then company is adopting by-product pricing.

Product Bundle Pricing

Here sellers combine several products in the same package. This also serves to move old stock.

Videos and CDs are often sold using the bundle approach.


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Promotional Pricing

Pricing to promote a product is a very common application. There are many examples of

promotional pricing including approaches such as BOGOF (Buy One Get One Free).

Geographical Pricing

Geographical pricing is evident where there are variations in price in different parts of the world.For example rarity value, or where shipping costs increase price.

Value Pricing

This approach is used where external factors such as recession or increased competition force

companies to provide 'value' products and services to retain sales e.g. value meals at McDonalds.Mix Pricing Methods

To set the specific price level that achieves their pricing objectives, managers may make use of

several pricing methods. These methods include:

Cost-plus pricing - set the price at the production cost plus a certain profit margin. Target return pricing - set the price to achieve a target return-on-investment. Value-based pricing - base the price on the effective value to the customer relative to

alternative products.

Psychological pricing - base the price on factors such as signals of product quality, popularprice points, and what the consumer perceives to be fair.

In addition to setting the price level, managers have the opportunity to design innovative pricing

models that better meet the needs of both the firm and its customers. For example, software

traditionally was purchased as a product in which customers made a one-time payment and then

owned a perpetual license to the software. Many software suppliers have changed their pricing to a

subscription model in which the customer subscribes for a set period of time, such as one year.

Afterwards, the subscription must be renewed or the software no longer will function. This model

offers stability to both the supplier and the customer since it reduces the large swings in software

investment cycles.

Price Discounts

The normally quoted price to end users is known as the list price. This price usually is discounted fordistribution channel members and some end users. There are several types of discounts, as

outlined below.

Quantity discount - offered to customers who purchase in large quantities. Cumulative quantity discount - a discount that increases as the cumulative quantity

increases. Cumulative discounts may be offered to resellers who purchase large quantities

over time but who do not wish to place large individual orders.


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Seasonal discount - based on the time that the purchase is made and designed to reduceseasonal variation in sales. For example, the travel industry offers much lower off-season

rates. Such discounts do not have to be based on time of the year; they also can be based on

day of the week or time of the day, such as pricing offered by long distance and wireless

service providers.

Cash discount - extended to customers who pay their bill before a specified date. Trade discount - a functional discount offered to channel members for performing their

roles. For example, a trade discount may be offered to a small retailer who may not

purchase in quantity but nonetheless performs the important retail function.

Promotional discount - a short-term discounted price offered to stimulate sales.


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4. What are various logistics functions? Describe in brief.

Logistics

"Logistics means having the right thing, at the right place, at the right time."

Logistics is defined as a business planning framework for the management of material, service,

information and capital flows. It includes the increasingly complex information, communication

and control systems required in today's business environment.

Wikipedia says Logistics is the management of the flow of goods, information and other

resources, including energy and people, between the point of origin and the point of

consumption in order to meet the requirements of consumers (frequently, and originally,

military organizations). Logistics involves the integration of information, transportation,

inventory and warehousing. Logistics is a channel of the supply chain which adds the value of

time and place utility. Today the complexity of production logistics can be modeled, analyzed,

visualized and optimized by plant simulation software.

Transportation is the movement of people and goods from one location to another. Transport

is performed by modes, such as air, rail, road, water, cable, pipeline and space. The field can be

divided into infrastructure, vehicles, and operations.

Infrastructure consists of the fixed installations necessary for transport, and may be roads,

railways, airways, waterways, canals and pipelines, and terminals such as airports, railway

stations, bus stations, warehouses, trucking terminals, refueling depots (including fueling docks

and fuel stations), and seaports. Terminals may both be used for interchange of passengers and

cargo, and for maintenance.


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Vehicles traveling on these networks may include automobiles, bicycles, buses, trains, trucks,

people, helicopters, and aircraft. Operations deal with the way the vehicles are operated, and

the procedures set for this purpose including financing, legalities and policies. In the transport

industry, operations and ownership of infrastructure can be either public or private, depending

on the country and mode.

Passenger transport may be public, where operators provide scheduled services, or private.

Freight transport has become focused on containerization, although bulk transport is used forlarge volumes of durable items. Transport plays an important part in economic growth and

globalization, but most types cause air pollution and use large amounts of land. While it is

heavily subsidized by governments, good planning of transport is essential to make traffic flow,

and restrain urban sprawl.

Inventory is a list for goods and materials, or those goods and materials themselves, held

available in stock by a business. In accounting inventory is considered an asset.

Inventory management is primarily about specifying the size and placement of stocked goods.

Inventory management is required at different locations within a facility or within multiple

locations of a supply network to protect the regular and planned course of production against

the random disturbance of running out of materials or goods. The scope of inventory

management also concerns the fine lines between replenishment lead time, carrying costs of

inventory, asset management, inventory forecasting, inventory valuation, inventory visibility,

future inventory price forecasting, physical inventory, available physical space for inventory,

quality management, replenishment, returns and defective goods and demand forecasting.

Warehousing Goods produced at the factory may not be consumed simultaneously. Therefore

companies need to store the goods. Companies able to use proper warehousing facilities

enhance their operation efficiency. Warehousing can also be used as a hub where goods come

to the facility and cross docked.

Warehouses are used by manufacturers, importers, exporters, wholesalers, transport

businesses, customs, etc. They are usually large plain buildings in industrial areas of cities and

towns. They usually have loading docks to load and unload goods from trucks. Sometimes

warehouses load and unload goods directly from railways, airports, or seaports. They often

have cranes and forklifts for moving goods, which are usually placed on ISO standard palletsloaded into pallet racks.

Traditional warehousing has declined since the last decades of the 20th century, with the

gradual introduction of Just In Time (JIT) techniques. The JIT system promotes product delivery

directly from suppliers to consumer without the use of warehouses. However, with the gradual

implementation of offshore outsourcing and off shoring in about the same time period, the

distance between the manufacturer and the retailer (or the parts manufacturer and the

industrial plant) grew considerably in many domains, necessitating at least one warehouse per

country or per region in any typical supply chain for a given range of products.


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Recent retailing trends have led to the development of warehouse-style retail stores. These

high-ceiling buildings display retail goods on tall, heavy duty industrial racks rather than

conventional retail shelving. Typically, items ready for sale are on the bottom of the racks, and

crated or palletized inventory is in the upper rack. Essentially, the same building serves as both

warehouse and retail store.

Large exporters/manufacturers use warehouses as distribution points for developing retail

outlets in a particular region or country. This concept reduces end cost to the consumer andenhances the production sale ratio.

The internet has had an influence on warehouses. Internet-based stores do not require physical

retail space, but still require warehouses to store goods. This kind of warehouse fills many small

orders directly from end customers rather than fewer orders of many items from stores.

Having a large and complex supply chain containing many warehouses can be costly. It may be

beneficial for a company to have one large warehouse per continent, typically located centrally

to transportation. At these continental hubs, goods may be customized for different countries.

For example, goods get a price ticket in the language of the destination country. Small, in-

warehouse adjustments to goods are called value added services.

Case Study

Below is an example of how Barista, a coffee chain supply used the services of Safe Express

(Logistics Company) to improve their competitiveness.

Safe express is right on time with the mocha and crackers. ItsJust in Time Managementensuresminimal inventory for the Barista chain of coffee bars. Both parties are involved in a win-win

situation.

Barista, one of the famous outlets for coffee and snacks in the Indian sub-continent, is a good

example of transparency in supply chain management operations. For newly established Barista

outlets in India; it was very difficult to maintain he supply across all the cities. Hence it has

taken Safe Express as third party logistics partner to supply each Barista outlet in Indian cities

with different ingredients for that just right coffee cup. Just In Time [JIT], this will leave Barista

absolutely free of any investment and recurring costs for the logistics and warehouse

management.

The JIT operations aided by weather forecasting are fully carried out by third party logistics

providers. Safe express looks after the distribution and inventory requirement of Barista outlets

operating from its mother warehouse further supports three regional warehouses in Bangalore,

Mumbai and Kolkata. With new outlet opening in every 10 days, Barista expects to have 175

coffee bars by 2003.


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A typical Barista outlet world is 1000 sq.ft store with seats around a table. The inventory space

is zero percent and a set amount of supplies ranging from paper cups to coffee beans are

replenished on daily basis. The efficiency of supply chain, in such a case becomes a critical issue

and hence requires the best of logistics management. The four warehouses cater to the supplies

for the outlets in the respective cities as well as the whole of the regions outlets.

The safe express strategy focuses on reducing the product response time thereby ensuring that

the customers demand is met at right place at the right cost. Any supply chain strategy has to

dovetail with the business strategy. As globalization catches up, outsourcing is getting more and

more popular as a business strategy. 3PL is a proven practice worldwide and is gaining

acceptance in India as well. At the same time, 3PL partner must prove credentials by way of

ensuring cost rationalization as a measure of his performance.

Further safe express has the capability to suggest business models, packing parameters,

reduction of logistics costs, as a value to its customers. Safe express is streamlining its

warehouse management too by developing innovative software and web tracking facility. Theend result is the completely web compatible solution for cargo and warehouse management.

Safe express has also offered Barista a completely web based waybill tracking system for online

delivery tracking of consignments. Sae express has also pioneered in Radio Trunking

technology along with V Sat links for monitoring route vehicles and intra-city runs through a

global positioning system.


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5. What is IMC? Describe the communication development process in brief.

Integrated Marketing Communications is a term used to describe a holistic approach to

marketing communication. It aims to ensure consistency of message and the complementary

use of media. The concept includes online and offline marketing channels. Online marketing

channels include any e-marketing campaigns or programs, from search engine optimization

(SEO), pay-per-click, and affiliate, and email, banner to latest web related channels for webinar,

blog, micro-blogging, RSS, podcast, and Internet TV. Offline marketing channels are traditional

print (newspaper, magazine), mail order, public relations, industry relations, billboard, radio,

and television. A company develops its integrated marketing communication program, using all

the elements of the marketing mix (product, price, place, and promotion).

Integrated marketing communication is integration of all marketing tools, approaches, and

resources within a company which maximizes impact on consumer mind and which results into

maximum profit at minimum cost. Generally marketing starts from "Marketing Mix". Promotion

is one element of Marketing Mix. Promotional activities include Advertising (by using different

medium), sales promotion (sales and trades promotion), and personal selling activities. It also

includes internet marketing, sponsorship marketing, direct marketing, database marketing and

public relations. And integration of all these promotional tools along with other components of

marketing mix to gain edge over competitor is called Integrated Marketing Communication.


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Communication Development Process

Preparing Target Customer Profile:

Effective marketing communication starts with identifying the target customer to whom the

communication is to be developed. In this stage company prepares target consumer profile.

Example: Company - Exide Industries

Company: Exide industries.

Copy: Help, whenever wherever your car battery is in trouble we will be there, just dial the bat

mobile number of your city and we will be right there to bring your car back to life because we

love cars.

Target customer profile:

Customer characteristics Description

Type of customer Individual

Income Upper middle class and upper class.

Media exposure Print ( English magazines, dailies and journals)

occupation Salaried or business class.

Need of the product OEM of a car

Preparing target customerprofile

Identifying Promotion objectives

Designing a Message

Selecting Channels of communication

Selecting the Message source

Target customer feedback


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Identifying promotion objectives: Target customer profile provides inputs about his/her

readiness to purchase the product. Customer may be in any of the six stages of hierarchy of

effects. The six stages are awareness, knowledge, liking, preference, conviction and purchase.

Every company likes to bring their customer to purchase stage from other five stages. Therefore

it create different promotion program at different stage. To make it clearer, Company firstcreates awareness about the product, educate them about the advantages, induce them to

choose the brand, stimulates and monitor that customer purchases the product.

a. Awareness: Marketer creates the new range of products. Awareness level for these

products is very low. Intention of the advertisement is to create awareness about these

new products. In the following example of Reebok play dry technology garments, it

focuses to create awareness among the target audience. Look at the message copy of

print advertisement.

b. Knowledge: In this stage target audience dont have complete knowledge of the

product. Marketer explains the product in detail and its advantages to the target

customers.

c. Liking: Promotion is used to convert knowledgeable audience into likeable category.

Marketer uses celebrities to create interest in the product. For example, Reid and Taylor

highlight their product quality in the advertisement by using Amitabh Bachhan a film

actor.

d. Preference:Creating differentiation in the market place so that customer identifies it

over the rival brands. Big bazaar advertisement with tag line is se sasta aur achcha

kahin nahi or nobody sells cheaper and better is alluring the customer by telling them

what differentiation they can bring.

e. Conviction: customer may have preference over the product but he/she still not able

to decide. In this situation, marketer develops the messages in such a way that it

provides platform for him to decide. For example, Tata indigo, requests its customer to

go for test drive and experience the truth. Customer may be convinced about indigo but

not developed the conviction. Look at the words used in the copy.

f. Purchase: Sometimes customers are having strong desire to buy the product but due

to affordability or any other environmental character, they are not able to purchase. In

this situation, marketer uses promotional schemes particularly reduced price schemes to

attract the customer. Company also comes out with communication programs for repeat

purchasers and loyal customers.


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Designing a message: After deciding the communication objectives, Marketer turns to develop

right message which should create attention, interest, desire or action (AIDA) by the customer.

Before deciding what should be there in the message, we will understand AIDA model in detail.

1. AIDA model: Attention: The marketing communication should generate attention towards the

product. In this stage customer is having the need; organization should provide solution

from their communication.

Interest: Once the customer provides enough attention towards the communication,organization should stimulate it to create interest.

Desire: The interest created should be forced in the customer mind so that he willdevelop desire towards the product.

Action: Strong desires should be turned into action. Hence company should provide theadvantages of purchasing of the product in their communication messages.

Deciding the message content:

Message content must have any one of the following appeals

Emotional appeal: Positive emotional appeal or negative emotional appeals are strongtools used to intensify the purchasing activity of the customer. Positive emotions like

love, pride, joy and humor are used in the message.


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Constituents of message format:

Characteristics Suitable media.

Headline Print, Outdoor, Online

1. CopyPrint, TV, outdoor, online

2. IllustrationPrint, TV, Outdoor, online

3. ColorPrint, TV, outdoor, online

4. PicturesPrint, Outdoor, online

5. Message sizePrint, TV, Outdoor

6. ShapePrint, Outdoor, Online

7. WordsPrint, TV, Product, Outdoor

8. SoundsRadio, TV, Online, Outdoor

9. VoiceRadio, TV, Online

10.Body languageTV, Online

11.Texture Product, Print, Online

12.ScentProduct

13.Distinctive formatsPrint, Online, Outdoor

Selecting the channels of communications

The communicator may use company sales people, reference groups, blogs, RSS, webinar,

online communities and social networking sites to promote their products. The word of mouthcampaigns buzz marketing and viral marketing are some examples of personal communication

channels.

Word of mouth communication: the personal communication between customers and their

reference groups about the product


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Buzz marketing: The marketing technique in which organizations create opinion leaders (people

whose opinion are sought by others) and spread the product information to others.

For example,Gmail Google did no marketing, they spent no money. They created scarcity by

giving out Gmail accounts only to a handful of power users. Other users who aspired to be like

these power users lusted for a Gmail account and this manifested itself in their bidding for

Gmail invites on eBay. Demand was created by limited supply; the cachet of having a Gmail

account caused the word of mouth, rather than any marketing activities by Google.

Viral marketing: The marketing technique of using social networks on the internet to create the

brand image.

Viral marketing is a phenomenon that facilitates and encourages people to send messages to

others voluntarily viral promotions may take the form of video clips, interactive Flash games,

images, or even text messages. For example, Cadburys Dairy Milk 2007 Gorilla advert was

heavily popularized on YouTube and Face book.

Selecting the message source

Messages communicated by the celebrities and proper sources have high credibility among the

target consumers. Many companies use well known actors and actresses, cricket players, and

even cartoon characters to promote their advertisements. Colgate- Palmolive well known FMCG

company used Indian Dental Associations (IDA) recommendation to promote their toothpaste.

If the product character does not match with sources, then product will fail in the market.

Target Customer Feedback

The communicator collects the feedback on the promotion campaign to assess how many of

target customer able to see, hear or read the message. This stage helps communicator to

understand how many of target customers actually able to recall the message? And among

them how many of them really purchased it. Some companies go further and ask the customer

to provide suggestion to improve the promotion campaign.


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6. What are alternative approaches to marketing while going international?StudyPepsis international marketing strategy.

Although some would stem the foreign invasion through protective legislation, protectionism in

the long run only raises living costs and protects inefficient domestic firms (national controls).

The right answer is that companies must learn how to enter foreign markets and increase their

global competitiveness. Firms that do venture abroad find the international marketplace far

different from the domestic one. Market sizes, buyer behavior and marketing practices all vary,

meaning that international marketers must carefully evaluate all market segments in which they

expect to compete.

Whether to compete globally is a strategic decision (strategic intent) that will fundamentally

affect the firm, including its operations and its management.

a) Following customers abroad (customer satisfaction)b) Exploiting different economic growth rates (gaining scale and scope)c) Exploiting product life cycle differences (technology)d) Pursuing potential abroad

Moreover, there can be several reasons to be mentioned including comparative advantage,

economic trends, demographic conditions, competition at home, the stage in the product life

cycle, tax structures and peace. To succeed in global marketing companies need to lookcarefully at their geographic expansion. To some extent, a firm makes a conscious decision

about its extent of globalization by choosing a posture that may range from entirely domestic

without any international involvement (domestic focus) to a global reach where the company

devotes its entire marketing strategy to global competition. In the development of an

international marketing strategy, the firm may decide to be domestic-only, home-country, host-

country or regional/global-oriented.

The orientation towards the market varies from company to company. Each one adopts

different approaches on the basis of their expertise or strength of the company. Some

companies adapt same product for all the markets while others differentiate for each country.The three alternate approaches used in international marketing are.

a. Domestic market extension approach: Companies adopt this strategy thinksinternational markets are secondary to its domestic markets.

b. Multi domestic market orientation: In the international market each company has itsuniqueness. Their preference varies. The consumer profile is different from domestic

market. Companies develop different market plans for such markets. For example, in

France, men use more cosmetics than women, whereas in India women use more

cosmetics than me. A company should change the product positioning differently.

c. Global Market orientation: Company thinks that product needs are universal in natureirrespective of country where they work. Company tries to standardise their product and


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services. For example, Walkman is same across the world. The product information

brochure contains explanation in different languages of different countries. The final

product is same in all the countries.

Pepsis International Marketing strategy:

In 1965, PepsiCo, Inc. was founded by Donald M. Kendall, president and chief executive officer of

Pepsi-Cola and Herman W. Lay, chairman and chief executive officer of Frito-Lay, through the

merger of the two companies. Caleb Bradham, a New Bern, N.C. pharmacist, created Pepsi-Cola in

the late 1890s.

At the international level, PepsiCo International has been focusing more on India where the

consumption of soft drinks is expected to increase many-fold which is only three ounces per person

now as compared to 200 ounces in Europe and over 300 ounces in North America. But, at the same

time it is not realized that there is a vast difference between the purchasing power of an average

Indian and North American as it takes an Indian 1.5 hours of work to be able to buy a bottle of Pepsi

whereas for an North American, it takes less than 5 minutes.

No single foreign investment project has been the center of much attention and controversy in the

late 1980s and early 1990s as the Pepsi Co project in India.

International Marketing Strategies:

For a business to be successful with its marketing activities, it will need to: undertakea "situational analysis", including a SWOT analysis. A business must continually

identify and take advantage of opportunities if it is to retain a competitive advantage

over its rivals or competitors. This will also involve continual improvement in the

organization and operations of the business and the development of a marketing

plan.

Identify the target markets that the business wants to pursue. This is where abusiness distinguishes between the different groups that make up the market. This

can be done on demographic (e.g. age and sex), geographic location or

psychographics (consumer behavior) variables.

Develop a marketing mix appropriate to the target markets. Put a marketing management system in place to collect data on items such as the

marketing strategies or product sales so that informed decisions can be made about

future marketing activities.


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Types of Products: Non-alcoholic soft drink beverage market can be divided into fruit drinks and

soft drinks. Soft drinks can be further divided into carbonated and non-carbonated drinks. Cola,

lemon and oranges are carbonated drinks while mango drinks come under non-carbonated

category. The soft drinks market till early 1990s was in hands of domestic players like thumps

up, Limca etc but with opening up of economy and coming of MNC players Pepsi and Coke the

market has come totally under their control. While worldwide Coke is the leader in carbonated

drinks market in India it is Pepsi which scores over Coke but this difference is fast decreasing

(courtesy huge ad-spending by both the players).

Pepsi entered Indian market in 1991 coke re-entered (After they were thrown out in 1977, by

the then central government) in 1993.Carbonated soft drinks major Pepsi India is now putting

together a cocktail to take a bigger slice of the fruit juice market. Close on the heels of the

launch of its global lemon drink Twist in an Indian avatar as Pepsi Aha, Pepsi, once again, is all

set to roll out another global productin a localized version. Come June 2002, and Pepsi will

roll out the blends of its international fruit drink Twister in the country, albeit, with a difference.

In India, Twister blends will be launched as mixed fruit cocktails under Pepsis existing juice

brand Slice. Pepsi spokesperson, when contacted, confirmed the launch but said the products

will be launched on an experimental basis for three to four months beginning June 2002.

However, confirmed sources said that the product has been test-launched and is ready for a

formal launch in June. Globally, the proposed Slice fruit blends exist under Twister brand and

are available in over 10 flavors and in various packaging options. The company had at one time

contemplated bringing Twister in its original self to India but the plan was later shelved.

Internally we have been debating whether to go ahead with Twister or keep Slice as a mother

brand for juices, the Pepsi spokesperson said.


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Market Segmentation:

The soft drink markets can be segmented on the basis of place of consumption or on the basis of

type of products. The segmentation on the basis of place of consumption divides the market into

two parts: -

On-premise-80% of the consumption of soft drinks is on premise i.e. restaurants, railwaysstations, cinema etc.

At-home- the rest 20% of the market compromises of the soft drink purchased forconsumption at home.

The market can also be segmented on the basis of types of products into cola products and non-

cola products.

Cola products account for nearly 61-62% of the total soft drinks market. The brands that fallin this category are Pepsi, Coca-Cola, Thumps Up, and diet coke, Diet Pepsi etc.

Non-cola segment which constitutes 36% can be divided into 4 categories based on thetypes of flavors available, namely:

o Orangeo Cloudy Limeo

Clear Limeo Mango

i. Orangeflavor based soft drinks constitute around 17% of the market. The segment is largelydominated by national brands like Fanta of Coca Cola and Mirinda Orange of PepsiCo, which

collectively form15% of the market rest of the market is in hands of smaller brands like

Crush (earlier of Cadbury Schweppes and now of coca Cola), Gold Spot etc.

ii. Cloudy Lime flavor constitutes 14% of the market and is largely dominated by Limca of cocacola and Mirinda Lemon of PepsiCo. Limca is the market leader with around 70-75% of the

market followed by Mirinda Lemon.

iii. Clear Lime: this segment of the market witnessed good growth initially with all the playerslaunching their brands in the segment. But now the growth in the segment has slowed

down. The brands available in this segment are 7 Up of Pepsi, Sprite of Coca Cola and

Canada Dry (earlier of Cadbury Schweppes and now of Coca cola). The segment constitutes

3% of the total soft drinks market.

iv. Mango: this flavor segment constitutes 2% of the total soft drinks market and it directlycompetes with mango based fruit drinks like Frooti. The leading brands in this segment are:

Maaza of Coca Cola, Mangola (Earlier of Dukes now of PepsiCo) and Slice of PepsiCo.

Market Characteristics:

The soft drink market is highly skewed in terms of place of consumption, in terms of regional

distribution & soft drink flavors as well as in terms of SKUs.While 80% of the consumption is

impulse based outside home 20% comes from consumption at home. This trend is slowly changing

with increase in occasion led sales.. Another peculiar feature of the market is that of positioning

and targeting of various brands. While Cola brand of Coke is targeted at teen-agers nd is positioned

as refreshment for mind and body. Its Thumps Up brand is targeted at people in age group of 20-

29year positioned as thing for adventure-loving, successful and macho person. Fanta is targeted

at consumers in pre-teen age group and is positioned as fun thing. Sprite is targeted towards

teenagers positioned to convince them to follow their instincts and not to fall for false pretence.

Maaza is positioned as family drink while diet coke is targeted towards health and figures conscious

people especially teenage girls.


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Market Share (in %):

Brand Name Market Share (in %) Market Share (in %)

Pepsi 41 49

Coca Cola 57 48

Consumer Habits and Practice:

Soft drinks come under the category of products purchased in impulse. Though the marketis marred by brand loyalty the purchase decision itself is a low involvement decision. This

attitude of impulse buying is slowly changing to occasion-led buying and also to some extent

to consumption through home refrigeration particularly in urban areas.

The market is slowly moving from non alcoholic carbonated drinks to fruit based drinks andalso to plain bottled water due to lower price and ready availability.

Consumers purchase soft drinks primarily to quench thirst. Therefore people traveling andnot having access to hygienic water reach out for soft drink. This accounts for a large part of

the sales.

Brand awareness plays a crucial role in purchase decisions. Consumers prefer convenient and economy products. Availability in the chilled form affects the purchase decision. This has made both the

companies to push its sales and to increase its retail distribution by offering Visi Coolers to

retailers.

While there is no aversion to consumption of soft drinks by any age group, the mainconsumers of this market are people in the age group of 30 and below.

Product differentiation is very low, as all the products taste the same. But brand loyalty ishigh in the case of kids and people in the age group of 20-30 yrs.

Consumers are sensitive to the outlay where the purchase of beverages is concerned. Hencethe market is price sensitive.

Due to the high cost of soft drinks, a lot of times consumers prefer beverages like tea, coffeeor other drinks like sherbet and squashes.

Per capita consumption in India is among lowest in the world at 5 bottles per annumcompared to 80 bottles in Thailand and 800 bottles in USA.

While 75% of the PET bottle consumption is in urban areas the 200ml bottles sales arehigher in rural areas


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Cold Wars: Before the first bottle of Pepsi hit the shelves, local soft drink manufacturers increased

the size of their bottles by 25% without raising costs. The new battleground for the cola wars is in

the developing markets of Eastern Europe (Russia, Romania, The Czech Republic, Hungary, and

Poland), Mexico, China, Saudi Arabia, and India. With Coca-Cola's and Pepsi's investments in these

countries, not only will they increase their sales worldwide, but they will also help to build up these

economies. These long-term commitments by bothcompanies will raise the level of competition and

efficiency, and at the same time, bring value to the

distribution and production systems of these countries.

Many issues need to be overcome before a company can

begin to produce its goods in a foreign country. These

issues include political, social, economic, operational, and

environmental topics, which must be addressed. When

companies like Coca-Cola and Pepsi effectively analyze and

solve these problems to everyone's liking, new foreign

markets can translate into lucrative opportunities in thelong run.

The ongoing cola war between global rivals Pepsi and Coca-Cola has taken a weird twist in India

with the former dragging the latter to court. The charge: Coca-Cola has snatched employees,

bottlers, and agents, all of whom are bound to Pepsi by a contract.

Pepsi has charged Coke with having entered into a conspiracy to disrupt its business operations by

inducing key employees and associates to break existing contracts illegally.

Pepsi has sought a permanent injunction and an ex parte order against coke, restraining it fromtaking away Pepsi's employees and business associates. Pepsi has also reserved the right to seek

financial damages from Coke at a later date if necessary.

The total market is normally too large and fragmented to be viable target for a firm's marketing

efforts. Therefore, a business will select a target market-a group of customers with similar

characteristics who currently, or who may in the future, purchase the product. two broad

approaches can be adopted when selecting a target market: the total approach or the market

segmentation approach.

Total market approach-applies when a firm targets the total market for a

particular product. The firm develops a single marketing mix and directs it at the entire market forthe product. This means there is one type of product with little or no variation, one promotional

program aimed at everyone, one price, and one distribution system used to reach all the

customers.


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Market segmentation approach:

It occurs when the total market is subdivided into groups of people who share one or more

common characteristics.

Marketers use for main variables when segmenting the total market:

Demographic- age, gender, ethnicity, income, occupation, education level,religion, family size and social class Geographic- urban/suburban/rural location, region, climate, landform Product related- regular use, first-time use, brand loyalty, price sensitivity, end

use

Psycho graphic- personality, motives, lifestyles

MB0030 - Marketing Management - Completed

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