mb0046

Q.1 Marketing involves satisfaction of consumer needs’. Elucidate the statement.

What is Marketing?

Simply seen marketing is a set of business activities that facilitate movement of goods and services from producers to consumers. It is an ongoing process of 1. Discovering and translating consumer needs into products and services, 2. Creating demands for them, serving the customer and his demand through a marketing programme of promotion and 3. Distribution to fulfill the company’s marketing goals in a competitive environment.

It is evident that the customer, needs and wants are very important aspects of marketing as of today. Customer focus is the very essence of marketing.

In this era of rapid changes, it is marketing which keeps the business in close contact with its economic, political, social and technological environment, as it informs the business of events and changes that take place in the environment.

American Marketing Association (AMA) offers the following definition of Marketing. (AMA 2004)

Definition: Marketing is an organization function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stake holders.

The Chartered Institute of Marketing defines Marketing as:

Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements, profitably.

Having understood what a Market is and what is Marketing, we will now look at what is an exchange and also the exchange process.

1.3 The Exchange Process

Today’s marketing system has evolved from the time of a simple barter of goods through the stage of a money economy to today’s complex marketing. Throughout all these stages, exchanges have been taking place. In small town and villages there were artisans such as carpenters, weavers, potters blacksmiths, barbers and others such service providers who produced goods and services not only for their own consumption but also for exchanging with others what they could not produce but needed. This was barter system of exchange. For a transaction to take place between two parties, it was necessary that there be needs and wants on both sides. The development of money came to act as a common medium, and the exchange process became very easy and convenient. Fig.1.1. below shows the exchange process under money economy in which products and services flow to the market from the producers and sellers and money, the value of the products and services, flow from the buyers to the sellers.

Figure 1.1

Thus, exchange is an act of obtaining a desired product or service from someone by offering something in return. This exchange process will continue as long as human society exists because satisfying one’s needs is the basic instinct of human beings and no one can produce everything that he /she needs. For an exchange process to take place, between two or more parties, few conditions have to be met. They are:

1. Each party has something that could be of value to other party.

2. Each party has desire, willingness and ability to exchange.

3. Each party is capable of communicating and delivering.

4. Each party has the freedom to accept or reject the offer.

Q.2 Conduct a SWOT analysis for any one automobile brand of your choice. How will this analysis help in planning marketing strategies for the brand?

SWOT Analysis - Tata Motors Limited

The company began in 1945 and has produced more than 4 million vehicles. Tata Motors Limited is the largest car producer in India. It manufactures commercial and passenger vehicles, and employs in excess of 23,000 people. This SWOT analysis is about Tata Motors.

Strengths

The internationalization strategy so far has been to keep local managers in new acquisitions, and to only transplant a couple of senior managers from India into the new market. The benefit is that Tata has been able to exchange expertise. For example after the Daewoo acquisition the Indian company leaned work discipline and how to get the final product 'right first time.'The company has a strategy in place for the next stage of its expansion. Not only is it focusing upon new products and acquisitions, but it also has a programmed of intensive management development in place in order to establish its leaders for tomorrow.The company has had a successful alliance with Italian mass producer Fiat since 2006. This has enhanced the product portfolio for Tata and Fiat in terms of production and knowledge exchange. For example, the Fiat Palio Style was launched by Tata in 2007, and the companies have an agreement to build a pick-up targeted at Central and South America.

Weaknesses

The company's passenger car products are based upon 3rd and 4th generation platforms, which put Tata Motors Limited at a disadvantage with competing car manufacturers.Despite buying the Jaguar and Land Rover brands (see opportunities below); Tata has not got a foothold in the luxury car segment in its domestic, Indian market. Is the brand associated with commercial vehicles and low-cost passenger cars to the extent that it has isolated itself from lucrative segments in a more aspiring India?One weakness which is often not recognized is that in English the word 'tat' means rubbish. Would the brand sensitive British consumer ever buy into such a brand? Maybe not, but they would buy into Fiat, Jaguar and Land Rover (see opportunities and strengths).

Opportunities

In the summer of 2008 Tata Motor's announced that it had successfully purchased the Land Rover and Jaguar brands from Ford Motors for UK £2.3 million. Two of the World's luxury car brand have been added to its portfolio of brands, and will undoubtedly off the company the chance to market vehicles in the luxury segments.Tata Motors Limited acquired Daewoo Motor's Commercial vehicle business in 2004 for around USD $16 million.Nano is the cheapest car in the World - retailing at little more than a motorbike. Whilst the World is getting ready for greener alternatives to gas-guzzlers, is the Nano the answer in terms of concept or brand? Incidentally, the new Land Rover and Jaguar models will cost up to 85 times more than a standard Nano!The new global track platform is about to be launched from its Korean (previously Daewoo) plant. Again, at a time when the World is looking for environmentally friendly transport alternatives, is now the right time to move into this segment? The answer to this question (and the one above) is that new and emerging industrial nations such as India, South Korea and China will have a thirst for low-cost passenger and commercial vehicles. These are the opportunities. However the company has put in place a very proactive Corporate Social Responsibility (CSR) committee to address potential strategies that will make is operations more sustainable.The range of Super Milo fuel efficient buses are powered by super-efficient, eco-friendly engines. The bus has optional organic clutch with booster assist and better air intakes that will reduce fuel consumption by up to 10%.

Threats

Other competing car manufacturers have been in the passenger car business for 40, 50 or more years. Therefore Tata Motors Limited has to catch up in terms of quality and lean production.Sustainability and environmentalism could mean extra costs for this low-cost producer. This could impact its underpinning competitive advantage. Obviously, as Tata globalizes and buys into other brands this problem could be alleviated.Since the company has focused upon the commercial and small vehicle segments, it has left itself open to competition from overseas companies for the emerging Indian luxury segments. For example ICICI bank and DaimlerChrysler have invested in a new Pune-based plant which will build 5000 new Mercedes-Benz per annum. Other players developing luxury cars targeted at the Indian market include Ford, Honda and Toyota. In fact the entire Indian market has become a target for other global competitors including Maruti Udyog, General Motors, Ford and others.Rising prices in the global economy could pose a threat to Tata Motors Limited on a couple of fronts. The price of steel and aluminum is increasing putting pressure on the costs of production. Many of Tata's products run on Diesel fuel which is becoming expensive globally and within its traditional home market.

Q.3 Explain in brief the process involved in personal selling.

Personal Selling

Involves the communication technique in which sales people build the personal relationship with customers to generate the value for the organization.

The value may be sales and benefits to the customer. The value may not be only financial gains, but it may be providing the information to customer. For example, Medical representatives of CIPLA provide the information to doctors and they don’t actually sell the medicine to them.

Nature of Personal Selling

Personal selling has experienced a paradigm shift. There was a time when sales jobs were perceived to be low. The emergence of modern corporations and rise of new India is in dire need of professional selling. Nowadays it is not mere selling. It is using professional skills to have a long term relationship with the customers to generate the value continuously. This has resulted in the growth of professional sales force. Even companies that believed in marketing through channels entered into personal selling. For example, Hindustan Unilever Limited (HUL) which is having retail and wholesale channels, recently entered into the network marketing. There are various types of sales jobs used to sell the product of the organizations.

They are:

1. Delivering: The job of sales executive is to make the products reach to the customer destination. For example, a sales person working for transport or Courier Company has to make the goods reach the customer places.

2. Inside order taker: Sales executives in the retail stores like Subhiksha help the customer in identifying the product. The person in the hotel takes the order and serves better.

3. Outside order: These are field executives who go to the customer place and get the order.

4. Missionary selling: Sales executives provide the information and promote the company products like for example- medical representatives.

5. Sales executives: In this position, the sales executive is technical expert and works with nontechnical sales executives to provide assistance on technical information sought by the customer.

Personal Selling Approaches

1. Stimulus response selling: In this approach, sales person provides the stimulus and expects the response from the buyer. This process will continue till purchase decision has been made. For example, salesperson will tell the customer that the price offer for a particular product is available for only 2 days and then might wait for the customer to accept the offer within 2 days.

2. Need satisfaction selling: In this approach, sales executive identifies the need of the product in the customer and confirms it. He provides the various offerings to the customer to choose and continues this process till the purchase has been made. For example, if a customer is looking for specific features in a product, then salesperson will show him the products having those features and will suggest to him variety of options to choose from.

3. Problem solving selling: This approach is used when the customer faces the purchasing problem. In this approach, sales executive defines the problem of the customer, generates the alternative solution and evaluates them. Then he works with the particular solution till the customer purchase. For example, when customer is not sure about the type of brand he wants or the kind of features he needs in the product, then the salesperson will tell him about other particular brands available or in the second case, will identify his product needs first and then suggest products having those features that will fulfill his needs.

Situations when personal selling is favorable

1. The price of the product is high, technical in nature and needs demonstration.

2. The product is in the introductory stage of the product life cycle.

3. Organization does not have enough money for advertisement campaigns.

4. Product can be customized and

5. Market is concentrated.

Q.4 Describe the stages of business buying process.

Steps in Business Buying Process

Figure 6.1

Stage 1: Problem recognition

1. Problem can be identified from either internal stimuli or external stimuli. Company would like to launch new product hence it searches for the suppliers who can supply the material and equipments required for the new product. A large printing company may find that it can set up an exclusive design section as a profit center. For this it may want high end design software and systems. It is possible that the system requirement s can only be provided by Apple Macintosh.

2. External stimuli like trade show, conference also helps the company to identify the problem.

Stage 2: Need description:

After finalizing the problem, companies will define need description. The need description includes

1. Characteristics and quantity of the needed item.

2. For the complex products team assessment is required.

3. The required items are assessed on the basis of reliability, durability, price, and other attributes needed in the item.

Stage 3: Product specification:

Organizations develop detailed product specification with value analysis. In the value Analysis Company analyzes the components and their production process. Here emphasis is given to find the alternative methods of producing the components and finding the optimum method that suits the company.

Stage 4: Supplier search

The buyer now tries to identify the most appropriate suppliers. The buyer can examine trade directories, do a computer search, phone other companies for recommendations, watch trade advertisements, and attend trade shows. The supplier’s task is to get listed in major business directories, develop a strong advertising and promotion program, and build a good reputation in the marketplace. Suppliers who lack the required production capacity or suffer from a poor reputation will be rejected. Those who qualify may be visited to examine their manufacturing facilities and meet their personnel. Qualified suppliers are shortlisted for further process.

Stage 5: Proposal solicitation

The buyer will now invite qualified suppliers to submit proposals. Some suppliers will send only a catalog or a sales representative. Where the item is complex or expensive, the buyer requires a detailed written proposal from each qualified supplier. The buyer will invite qualified suppliers to make formal presentations.

Thus business marketers must be skilled in researching, writing and presenting proposals. Their proposals should be marketing documents, not just technical documents. Their oral presentations should inspire confidence. They should position their company’s capabilities and resources so that they stand but from the competition.

Stage 6: Supplier selection

This stage is also known as vendor selection. During this stage companies will prepare the checklist. Weightages are assigned against each checklist point and evaluated. Some of the important attributes those commonly found in the vendor evaluations are

a. Quality

b. Delivery

c. Communication

d. Competitive prices.

e. Servicing

f. Technical advice

g. Performance history

h. Reputation

Stage 7: Order routine specifications:

The buyer now negotiates the final order with the chosen supplier(s), listing the technical specifications; the quantity needed, the expected time of delivery, return policies, warranties and so on. In case of MRO items (Maintenance, Repair and Operating items), buyers are increasingly moving towards blanket contracts rather than periodic purchase orders. Writing a new purchase order each time stock is needed, is expensive. Nor does the buyer want to write fewer and larger purchase orders because that means carrying more inventories. A blanket contract establishes a long-term relationship where the supplier promises to re-supply the buyer as needed on agreed

price terms over a specified period of time. The stock is held by the seller, hence the name stockless purchase plan. The buyer’s computer automatically sends an order to the seller when stock is needed. This locks the supplier with the buyer and makes it difficult for out-suppliers to break in unless the buyer becomes dissatisfied with the in-supplier’s prices, quality or service.

Stage 8: Performance review

In this stage organization review the performance of the suppliers. This will help it to decide whether to continue with existing suppliers or should search for the new vendor.

These eight stages are very much essential for new task but not necessary for straight re-buy or modified re-buy. To know which stages are important in the new task, a straight re-buy or modified re-buy we will study Buy- grid Model

Buy Grid model

Buy grid model is developed to understand the business buying process in three different business buying situations:

Table 6.2

Q.5 Why is rural market important? What should marketers keep in mind when catering to this market?

Rural Marketing

In a rapidly changing scenario, marketers have to continuously explore new markets and ways of serving them. In India, enterprises are discovering the potential of a huge rural population to drive business. Prof C K Prahlad, had aptly summed up the potential as ‘fortune at the bottom of the pyramid’ in a pathbraking book of the same name. Rural marketing is not something akin to globalization. It is not the modification of urban marketing strategies to suit the rural market. On the other hand it is developing products to meet the needs of the rural sector and reaching it across as per the specific characteristics of the rural environment. In case of a detergent, it is producing one which will suit the rural environment (considering that the dirt and grime is different, clothing alternatives are different, availability of water and number of times of washing is different and so on); packaging and pricing which will be akin to their requirement and alternative ways for which the detergent may be put to use. For example Hindustan Lever found that its detergent was being used for washing the cattle.

Why is the rural market so important today?

The following table will give you some idea about the emergence of the rural market which marketers may ignore at their own peril.

Why is rural marketing different?

This has to be understood in the light of the 4Ps or 7Ps of marketing. Imagine that you are trying to establish a Coffee Café Day Outlet in a remote village in Maharashtra. Will that be viable proposition? Yet there may be consumers for coffee in the rural sector too. The offering has to suit the sector. Similarly an ice cream parlor may not be a workable idea in a village or a cluster of villages if there is no electricity connection there. The ice cream cart vendor is a better idea. Keeping these situations in perspective, one can draw some inferences why rural marketing is different.

1. Accessibility and mobility: This applies both for the supplier and the consumer. The movement of the people is restricted by the lack of surface roads and the mode of transport. There are restrictions by way of visibility during night.

2. Average income level of consumers: The average wage earners are characterized by lower per capita income and disposable income in comparison to the urban.

3. Geographical distances: The living quarters are separated more than they are in the urban areas. The cluster of villages is also segregated by distances.

4. Literacy level: On an average the literacy level in the rural sector is lower in comparison to the urban sector.

There could be several other issues which are specific to the rural sector. These may force marketers to take a different approach for the entire marketing process or at least some of them as against the urban sector.

Q.6 Explain the core concepts of marketing. Define service and explain its relevance in modern society

Core Concepts of Marketing

There are certain fundamental concepts and tasks which one needs to know to fully understand the marketing function. These concepts provide foundation for a marketing orientation and to manage the marketing function.

1. Needs and Wants

The marketer’s task lies in satisfying human needs and wants through the exchange process. It is alleged that “marketing creates needs” and makes people buy things they do not actually need. In reality, marketing or marketers do not create “needs”, but they create “wants”. Some needs are the basic human requirements of food, clothing, shelter, water and air. There are other needs such as social needs, esteem needs etc. When we desire certain specific objects or items to fulfill these needs, they are called wants. For example, when a person is hungry, he can satisfy his hunger by taking a simple meal at home. Instead, if he wants to eat a Pizza or a Hamburger or a 5-Star Hotel meal, it is not a ‘need’ but a ‘want’. This difference between wants and needs is not the same as

understood in the subject matter of ‘economics’. The marketer identifies the need which may lie unexpressed by the customer.

The task of a marketer is to influence our wants rather than needs. He does so along with other influential factors such as socio-cultural forces and institutions such as family, religion, and different reference groups.

Marketers, suggest to consumers that a particular car would satisfy the person’s need for esteem. They do not create the need for esteem, but try to point out how a particular product would satisfy that need.

2. Demand

Human wants are unlimited, but their resources are limited. When a want for an object is backed or supported by buying ability, willingness to spend and desire to acquire a product / service, it becomes a potential demand. The task of assessing or estimating demand is very crucial for a marketer. He should understand the relationship of the demand for his product with its price. Demand forecasting is essential for allocation of resources in a company. This is the reason why marketers segment consumers on the basis of their earning capacity. The income of the consumer indicates the potential to buy.

3. Product and Services

‘Product is a generic term used to describe what is being offered by a seller or marketer. It may be a good, a service or idea, which can be marketed by offering a set of benefits it offers to customers to satisfy their needs. However, there is a distinction between products and services. When we say ‘product’, we mean a physical or a tangible product such as a tooth paste, a refrigerator or a mobile phone, whereas ‘service’ refers to an act, performance, a benefit and indicates intangibility and absence of ownership or possession. Services can include banking service, hospitality service, airlines service, health service, entertainment service etc. Thus, a product can be defined as anything that can be offered to market to satisfy a need or want. Today, many types of entities such as goods, services, experiences, events, persons, places and ideas are being marketed.

4. Target Market

Very few products can satisfy everyone in the market. Therefore, marketers divide the market into distinct groups of buyers who have similar preferences. These groups are called segments with their own specific demographic, psychographic and behavioral characteristics. The marketer decides as to which of these segment or segments offer highest opportunity for his company. For each of these target markets, the firm develops a product / service suited to their needs. TATA group has recently designed an economy car called ‘NANO’ which is priced around Rs. 1 Lakh. The target market for this car is all aspirants who dream of owning a car but cannot afford cars, which are currently available for minimum Rs. 2.5 Lakh. A Target Market is the group of people at whom a marketer targets his marketing efforts to sell his goods and services.

5. Marketing Management

Marketing Management which is also the title of this course refers to all the activities which the marketing managers, executives and personnel have to undertake to carry out the marketing function of the firm. It involves (i) analyzing the market opportunities by undertaking consumer needs and changes taking place in the marketing environment, (ii) planning the marketing activities, and (iii) implementing marketing plans and settings control mechanism to ensure smooth and successful accomplishment

of the organizations goals. Marketing Management is a critical function, especially in highly competitive markets. It provides competitive edge to an organization through strategic analysis and planning.

6. Values and Satisfaction

In developed and developing economies, consumers have several products or brands to choose to satisfy his/her need. Consumers’ perceptions about value which they can expect from different products or services depend upon several factors. Sources that build the customer expectations include, own experience with products, friends, family members, consumers’ reports and marketing communications. Customer value is the difference between total benefits received and total costs incurred by him in acquiring the product or services. The types of benefits could be product’s functional value, or its brand related image value and any accompanying service value. The types of costs a customer can incur may be monetary cost and energy cost.

Value is primarily a function of quality, service and cost. Value increases with increase in quality and service and decreases with increase in cost. Value is an important marketing concept and the task of marketing is to identify, create, communicate, deliver and monitor customer value.

Customers generally experience satisfaction when the performance level meets minimum performance expectations of a product or service. When the performance as perceived exceeds the expected performance level, the customer will be not just satisfied, but delighted. Thus customer satisfaction or delight with respect to a product or service encourages customers to come back and repurchase the product or service in future. Satisfied customers can be an asset to the marketing company over a period of time, as they will spread favorable word-of-mouth information or opinions.

Q.1 Explain the various steps involved in the design of a distribution channel.

Decisions involved in setting up a Channel

Marketers should consider various factors before deciding the particular type of channel. It may be organizational or competitive factors. The type of goods to be transported and stored will decide the length and intensity of channel. To decide on the particular channels, marketer will have to take into account the following factors.

1. Understanding the customer profile: Purchasing habits differ from individual to individual. Individuals who face shortage of time would like to purchase on the net (direct channel) and those who have abundant time would like to go through the shopping experience. Some of them would like to have variety of goods, while others want unique or specialized products. Hence marketers should understand who are his customers? How do they purchase and how often they purchase? For example, customers don’t like to travel half a kilometer to purchase a shampoo sachet, but they don’t mind travelling two kilometers while purchasing durable goods.

2. Determine the objectives on which channel is to be developed.

a. Reach: Company would like to make the goods available in most of the retail outlets. So it, will adopt intensive distribution channel.

b. Profitability: Company wants to reduce the cost in the channels and enhance their profitability. It will restructure the channel to optimum level so that it can reduce the cost and increase the profit.

c. Differentiation: Company positions their products differently. When most of the industry players follow conventional system, company goes with new format of channels. For example, all computer manufacturers were adopting dealer-retailer channel to sell their products, but Dell started selling its product on the internet.

3. Identify type of channel members: Once the objectives are set on the basis of company’s policies, it will analyze which types of channels are most suitable. Merchants, agents and resellers are some intermediaries involved in the distribution. Merchants are those who buy the product, take title and resell the merchandise. Agents will find the customers, negotiate with them, but do not take the title of the product. Facilitators are the people who aid the distribution but do not negotiate or take the title of the product.

4. Determining intensity of distribution: Intensity of distribution means how many middlemen will be used at the wholesale and retail levels in a particular territory. If the number of intermediaries is more, then the cost of the channel will increase. However, if the number of intermediaries is less, then company will not be able to meet all target customers. Therefore company should adopt optimum number of intermediaries. On the basis of how many intermediaries are required, company can adopt any one of the following strategies.

a. Intensive distribution: A strategy in which company stocks goods in more number of outlets. The intention is to make the goods available near to the customer. For example, you can find Parle-G glucose biscuits available in almost all the retail outlets in rural and urban areas.

b. Selective distribution: A strategy in which company stocks goods in limited number of retail outlets. For example, televisions are sold only in selected retail outlets. TVs cannot be sold like toothpaste. Onida TVs are available in electronic retail shops like Viveks, Girias, Next, E-zone etc…

c. Exclusive distribution: In this type of channel format, marketer gives only a limited number of dealers the exclusive right to distribute its products in their territories. For example, a Kaya skin care solution of Marico is marketed through exclusive distribution.

5. Assigning the responsibilities to channel members. Company should define the territory in which the channel member should operate, at what price he should sell, services he should perform, and how he should sell.

6. Selecting the criteria to evaluate the channel member: Company may have different types of channel alternatives. It would like to choose any one of the alternatives, which meets its objectives. Channels can be evaluated in the design phase by the method called SCPCA.

a. Sales(S): The ability of each channel member to generate the sales for company in a given period.

b. Cost(C): How much cost each channel alternative incurs? Which one of the alternatives provides the optimum solution?

c. Profitability (P): Various channel alternatives available to the company and their profitability shall be compared. Channel with better profitability shall be selected.

d. Control (C): Every company would like to have better control over its channel members. Alternative channels can be evaluated on the basis of how much control each channel member desires. And how much control the company is willing to provide.

e. Adaptability (A): Marketing is a dynamic world. Competition exerts pressure on companies to relook at their practices and supply chain continuously. The channel alternatives should be flexible enough to meet the changing requirements. Whichever channel alternative meets such objectives shall be selected.

Q.2 Will the pricing and product policy of a multinational firm be different in a developed and an underdeveloped country? Justify your answer.

International marketing can be defined as marketing of goods and services outside the firm’s home country. International marketing has the following two forms of marketing: • ? Multinational marketing. ? Global marketing. Multinational marketing is very complex as a firm engages in marketing operations in many countries. In multinational marketing, a firm visualizes different countries as one market and build their brand or service according to the business environment of the foreign countries. Global marketing indicates the integrated and coordinated marketing activities across many different markets. Taking into account the various conditions on which markets vary and depend, appropriate marketing strategies should be devised and adopted. Like, some countries prevent foreign firms from entering into its market space through protective legislation. Protectionism on the long run results in inefficiency of local firms as it is inept towards competition from foreign firms and other technological advancements. It also increases the living costs and protects inefficient domestic firms. The decision of a firm to compete internationally is strategic; it will have an effect on the firm, including its management and operations locally. The decision of a firm to compete in foreign markets has many reasons. Some firms go abroad as the result of potential opportunities to exploit the market and to grow globally. And for some it is a policy driven decision to globalize and to take advantage by pressurizing competitors. 1. Segmentation Firms that serve global markets can be segregated into several clusters based on their similarities. Each such cluster is termed as a segment. Segmentation helps the firms to serve the markets in an improved way. Markets can be segmented into nine categories, but the most common method of segmentation is on the basis of individual characteristics, which include the behavioral, psychographic, and demographic segmentations. The basis of behavioral segmentation is the general behavioral aspects of the customers. Demographic segmentation considers the factors like age, culture, income, education and gender. Psychographic segmentation takes into account: beliefs, values, attitudes, personalities, opinions, lifestyles and so on.

2. Market positioning The next step in the marketing process is, the firms should position their product in the global market. Product positioning is the process of creating a favorable image of the product against the competitor’s products. In global markets product positioning is categorized as high-tech or high–touch positioning. The classification of high-tech and high-touch products. One challenge that firms face is to make a trade-off between adjusting their products to the specific demands of a country and gaining advantage of standardization such as the maintenance of a consistent global brand image and cost savings.

3. International product policy Some thinkers of the industry tend to draw a distinction between conventional products and services, stressing on service characteristics such as heterogeneity, inseparability from consumption, intangibility, and perish ability. Typically, products are composed of some service component like, documentation, a warranty, and distribution. These service components are an integral part of the product and its positioning. Thus, it is important to consider the findings of marketing research and determine customer’s desires, motives, and expectations in buying a product. Firms have a choice in marketing their products across markets. Many a times, firms opt for a strategy which involves customization, through which the firm

introduces a unique product in each country, believing that tastes differ so much between countries that it is necessary to create a new product for each market. Standardization proposes the marketing of one global product, with the belief that the same product can be sold in different countries without significant changes. Finally, in most cases firms will go for some kind of adaptation. Here, when moving a product between markets minor modifications are made to the product.

4. International pricing decisions Pricing is the process of ascertaining the value for the product or service that will be offered for sale. In international markets, making pricing decisions is entangled in difficulties as it involves trade barriers, multiple currencies, additional cost considerations, and longer distribution channels. Before establishing the prices, the firm must know its target market well because when the firm is clear about the market it is serving, then it can determine the price appropriately. The pricing policy must be consistent with the firms overall objectives. Some common pricing objectives are: profit, return on investment, survival, market share, status quo, and product quality. The strategies for international pricing can be classified into the following three types:•

Market penetration: It is the technique of selling a new product at a lower price than the current market price. Market holding: It is a strategy to maintain buy orders in order to maintain stability in a downward trend.• Market skimming: It is a pricing strategy where price of the goods are set high initially to skim the revenue from the market layer by layer. The factors that influence pricing decisions are inflation, devaluation and revaluation, nature of product or industry and competitive behavior, market demand, and transfer pricing.

5. International advertising International advertising is usually associated with using the same brand name all over the world. However, a firm can use different brand names for historic reasons. The acquisition of local firms by global players has resulted in a number of local brands. A firm may find it unfavorable to change those names as these local brands have their own distinctive market. Therefore, the company may want to come-up with a certain advertising approach or theme that has been developed as a result of extensive global customer research. Global advertising themes are advisable for marketing across the world with customers having similar tastes. The purpose of international advertising is to reach and communicate to target audiences in more than one country. The target audience differs from country to country in terms of the response towards humor or emotional appeals, perception or interpretation of symbols and stimuli and level of literacy. Standardization is required for products by some firms. Standardization helps to achieve economies of scale and a consistent image can be established across markets. Standardization also assists in utilizing creative talent across markets, and facilitates good ideas to be transplanted from one market to other. International advertising can be thought of as communication process that transpires in multiple cultures that vary in terms of communication styles, values, and consumption patterns. International advertising is a business activity and not just a communication process. It involves advertisers and advertising agencies that create ads and buy media in different countries. International advertising is also reckoned as a major force that mirrors both social values, and propagates certain values worldwide. 6. International promotion and distribution Distribution of goods from manufacturer to the end user is an important aspect of business. Companies have their own ways of distribution. Some companies directly perform the distribution service by contacting others whereas a few companies take help from other companies who perform the distribution services. The distribution services include:• The purchase of goods.• The assembly of an attractive assortment of goods.• Holding stocks.• Promoting sale of goods to the customer.• The physical move

Q.3 Explain the consumer decision making process

Consumer Buying Decision Process

After discussing the factors those influence the buying behavior, now, we will discuss the consumer decision making process. Consumer passes through five different stages while purchasing the product.

Figure 5.4

1. Need recognition: customer posses two type of stimuli’ at this juncture. One is driven by the internal stimuli and another is external stimuli. The examples of internal stimuli are customer’s desire, attitude or perception and external stimuli are advertising etc. From both stimuli customers understand the need for the product. Here marketer should understand what customers needs have that drew customers towards the product and should highlight those in the communication strategy.

2. Information search: In this stage customer wants to find out the information about the product, place, price and point of purchase. Customer collects the information from different sources like

a. Personal sources: Family, friends and neighbors

b. Commercial sources: Advertising, sales people, dealers, packaging and displays.

c. Public sources: mass media and consumer rating agencies.

d. Experiential sources: Demonstration, examining the product.

In this stage marketer should give detailed information about the product. The communication should highlight the attributes and advantages of the product in this stage so that he created the positive image about the product.

3. Evaluation of alternatives: After collecting the information, consumers arrive at some conclusion about the product. In this stage he will compare different brands on set parameters which he or she thinks required in the product. The evaluation process varies from person to person. In general Indian consumer evaluate on the following parameters

a. Price

b. Features

c. Availability

d. Quality

e. Durability

At this stage marketer should provide comparative advertisements to evaluate the different brands. The advertisement should be different for different segments and highlight the attribute according to the segment.

4. Purchase decision

In this stage consumer buy the most preferred brand. In India affordability plays an important role at this stage. Organizations’ bring many varieties of the products to cater to the needs of customers.

5. Post purchase behavior

After purchasing the product the consumer will experience some level of satisfaction and dissatisfaction. The consumer will also engage in post purchase actions and product uses of interest to the marketer. The marketer’s job does not end when the product is bought but continues into the post purchase period. Customer would like to see the performance of the product as he perceived before purchase. If the performance of the product is not as he expected then he develops dissatisfactions. Marketer should keep an eye on how consumer uses and disposes the product. In some durable goods Indian consumer want resale value also. Many automobile brands that were not able to get resale value lost their market positions.

Q.4 What is integrated marketing communication? Explain the integration marketing communication development process.

Integrated Marketing Communications (IMC)

According to The American Marketing Association, Integrated Marketing communication is “a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time.”

Communication Development Process

12.3.1 Preparing target customer profile

Effective marketing communication starts with identifying the target customer to whom the communication is developed. In this stage company prepares target customer profile.

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 r 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

12.3.2 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 will like to bring their customers to the purchase stage from other five stages. Therefore it creates different promotion program at different stage. To make it clearer, Company first creates awareness about the product, educate them about the advantages, induce them to choose the brand, stimulates and monitors 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’s play dry technology garments, it focuses to create awareness among the target audience. Look at the message copy of print advertisement.

Copy: Dravid does this simply by sporting his Reebok Play Dry apparel. These fabrics have been designed with a special moisture ventilation system that dries away perspiration in action. It works effectively by pushing moisture away from the skin to the outer layer of the fabric for evaporation. So if you want to stay cool all summer, just do what the hottest players do. Walk into the nearest Reebok Store.

b. Knowledge: In this stage target audience don’t have complete knowledge of the product. Marketer explains the product in detail and its advantages to the target customers. Following advertisement of Parry Neutraceuticals explains the advantages of beta carotenes.

Company:

Parry Neutraceuticals

Copy: You know these are good for you, Natural beta carotene and other carotenoids like it, are the natural pigments found in orange, yellow, red and some green fruits and vegetables. They’re some of the biggest reasons why fruits and veggies are good for you. They help prevent the worst things that can happen to you – cancer, heart disease, diabetes, arthritis, cataract and even ageing. The age-related or ‘degenerative’ diseases begin with repeated damage to cells, which adds up over time. The biggest cause of damage to cells is a common process called oxidation. Carotenoids help prevent oxidation damage because they’re some of nature’s best anti-oxidants. But to get enough natural beta carotene and other carotenoids, you need to eat 5 servings of fruits and 5 servings of vegetables every day or just one soft gel of Parry’s Natural Beta Carotene. It is a mixture of natural carotenoids that comes from Dunaliella salina, one of nature’s best sources of carotenoids

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.

Copy: Business class travel, now with power dressing, presenting the stylish new Tata Indigo. Make a powerful style statement on the roads with the new Tata Indigo. The fascia is accentuated by dual chamber headlamps and more pronounced chrome-lined grille, while sill valance covers, chrome insert door rub rails and dual tone ORVMs add a sporty touch to the overall elegance of the car. The rear sports a chiseled body-hugging bumper, new tail

lamps and chrome surround registration plate garnish. The interiors turn beige for the full range, and the new cockpit topped off by the 3-spoke steering wheel carries forward the classic modernity of the exteriors. The best-selling sedan just got better. Take a test drive today. And discover power dressing on Wheels. Spoil yourself.

f. Purchase: Sometimes customers have strong desire to buy the product but due to affordability or any other environmental factor, 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 buyers and loyal customers.

12.3.3 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 have to understand AIDA model in detail. The main objective of any message is to meet the AIDA model although the message framed will be subject to product type/category, ad budget and creativity skills of individuals.

I. 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. For example, when advertisers use a popular film star or a celebrity to promote a perfume brand or even a soap or a toothpaste, it will immediately catch the audience’s attention.

· Interest: Once the customer provides enough attention towards the communication, organization should stimulate it to create interest. For example, if celebrities are used to endorse products, audience must be curious enough to know what they are saying about that particular product.

· Desire: The interest created should be forced in the customer mind so that he will develop desire towards the product. For example, when people have seen the ad and show interest, next thing would be to create a desire for that product. People should have the willingness to buy the product and unless they don’t desire it, they will not be eager to buy the same.

· Action: Strong desires should be turned into action. Hence company should provide the advantages of purchasing of the product in their communication messages. For example, it is very difficult for the Insurance companies to grab the attention of people towards insurance products, create interest and desire as to make a person buy the same. So, it’s a challenge to the marketer to develop such a message that immediately gets the attention and make a person to go for it. For example, it is easy to catch people’s attention towards ice-creams so that they will have interest and desire to taste it and eventually buy it.

II. Deciding the message content.

Message content must have any one of the following appeals

· Emotional appeal: Positive emotional appeal or negative emotional appeals are strong tools used to intensify the purchasing activity of the customer. Positive emotions like love, pride, joy and humor are used in the message. Following are the advertisement where such attributes of positive emotions used.

www.makemytrip.com- Joy

BMW fastest saloon car in the world- pride

Fevicol – humor Wheel- love.

The negative emotions like fear guilt and shame are also used in the advertisement to attract the customer.

ICICI prudential- fear. NIIT- if you are not studying at

NIIT you are missing something- guilt

Rexona deodorant – shame.

· Rational appeals highlight on the desired benefits about the products. They highlight quality, economy value or performance of the product.

Dabur Amla – value appeal ( long Hair)

Lakme brilliance- Quality products.

Reliance India mobile- performance( works even in flood situations)

Reliance Infocom- Like the first three, the mobile phone must come to me as a necessity and not as a luxury- economy

· Moral appeal: These are concerned towards public health or environment or social responsibility. For example, Shell lubricants show its commitment towards environment in their advertisements.

III. Message format: In this section we will discuss how message should look and stimulate the interest.

Constituents of message format:

Characteristics Suitable media.

1. Headline Print, Outdoor, Online

2. Copy Print, TV, outdoor, online

3. Illustration Print, TV, Outdoor, online

4. Color Print, TV, outdoor, online

5. Pictures Print, Outdoor, online

6. Message size Print, TV, Outdoor

7. Shape Print, Outdoor, Online

8. Words Print, TV, Product, Outdoor

9. Sounds Radio, TV, Online, Outdoor

10. Voice Radio, TV, Online

11. Body language TV, Online

12. Texture Product, Print, Online

13. Scent Product

14. Distinctive formats Print, Online, Outdoor

Print advertisement Message format:

Colors used: Saffron, Yellow, Red, Watermark brown, Black, Brown.

Size: 3.5inch breadth* 4.2 inch length

Shape: Rectangle

Words: Straight out of the pack and into your mouth, that’s the usual style of eating Haldiram’s Namkeen. But now, there’s a whole new way of doing it! A blend of our delicious namkeen with a dash of imagination, presented in a list of yummy recipes, just for you. But where do you get these Recipe Remixes? Just write to us at the address given below and we’ll send you a Recipe Remix booklet, absolutely free! What’s more, you can also try these recipes at most of the Haldiram’s outlets. So, get your own booklet and start whipping up your remixes in your kitchen itself or simply visit us at our outlets. But wait, there’s more! You can even create your own recipes and send it to us. Who knows your recipe could win you a gift voucher of up to Rs. 2500/-*. Not only that, your winning recipe could also feature in our next Haldiram’s Recipe Remix booklet. So, get those recipes started and let the good times begin!

Selecting the channels of communications

v The communicator may use company sales people, reference groups, blogs, RSS, webinar, online communities and social networking sites to promote their products. These media are called as personal communication channels. The word of mouth campaigns, 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

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, Cadbury’s Dairy Milk 2007 Gorilla advert was heavily popularized on YouTube and Face book.

v The communicators are using mass media like print (Newspaper, magazine, journals) Broadcast (radio, television) Outdoor (hoardings, Bill board posters) and online (e-mail, communities, groups, websites) to communicate their product attributes.

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 Association’s (IDA) recommendation to promote their toothpaste. As we have seen earlier Rahul Dravid, Amitabh Bachan and Karishma Kapoor are used as sources for Reebok, Reid and Tayolr, and Dabur Amla respectively. Companies should be very careful about the selection of the sources. If the product character does not match with sources, then product will fail in the market. Recently Pepsi dropped its sources Rahul Dravid and Sourav Ganguly and selected Rohit Sharma for the promotion campaigns.

Target Customer Feedback

The communicator collects the feedback on the promotion campaign to assess how many of target customers are 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.

Q.5 Explain the types of advertisements and characteristics of major media.

Introduction to Advertising

Please remember we already discussed definition of advertisement in the promotion mix concepts at the beginning of this unit. In this section we will discuss different types of advertisement and four important decisions management takes in developing advertisement program.

Types of advertisements

Institutional advertising: The objectives of advertisements are to enhance the image of the company rather than selling the product. For example, Wipro uses ‘Applying Thought’ for all its businesses thus promoting the company.

Product advertising: The objective of this type of advertisement is to communicate about the product attributes to the target customer. Product advertising is further classified into three types. They are

1. Pioneer advertising: This mode of advertisements is used to create awareness and demand in the initial stage of the product life cycle. For example, TATA Docomo advertised initially as to why a person should pay for the unused minutes when talks may last for seconds.

2. Competitive advertisements: This type of advertisement is used to highlight the differentiation of organization’s product. This method is usually used in the growth phase of product life cycle. For example, Detergents like Ariel, Surf and Tide constantly differentiate their product features from each other.

3. Comparative advertisements: This type of advertisements highlight on the comparing company’s communication message with competitors product information. This method is used when the competition is very high or sales are sluggish. For example, soft drinks like Pepsi and Coca-cola at some point were involved in comparative advertising.

Characteristics of major media

I. Broad cast media

Radio

1. Provides up to date information

2. Reaches the local audience effectively

3. After FM revolution this is one of the fastest growing media.

Television

1. Expensive medium

2. Products can be well explained and demonstrated.

3. It provides wide geographic coverage

4. Image creation is difficult in this medium because of spontaneity.

5. Wide number of media vehicle creates the problem for media planners.

II. Print media

Newspapers

1. Continue to dominate local markets

2. Retail and classified advertisement are key

3. Important advantages include flexibility and community prestige

4. Newspapers offer powerful merchandising services like promotional and research support

Magazines

1. Divided into two broad categories of consumer magazines and business magazines

2. These categories are also subdivided into monthly publications and weekly publications

3. Specialty advertisements can be promoted through this media.

III. Outdoor Advertising

1. Includes billboards, painted bulletins or displays, and electric boards

2. The oldest and simplest media business

3. Effective in the high traffic areas.

4. Environmentalists oppose this type of advertisement.

IV. Online advertising

1. Contains characteristics of both print and broadcast media

2. Enhances two-way communication and encourages audience participation

3. Example of this media is e- mail.

V. Other Advertising Media

1. Transit advertisement: advertisements placed on the buses and moving vehicles.

2. Movie advertising: Inserting the advertisement inside the movie

3. In flight commercials: advertisements placed in the airplanes.

4. Using yellow pages and pamphlets to advertise the product.

Q.6 What are the advantages of branding? What value does the organization and customers get out of the branding process?

Advantages of Branding

1. Helps in identifying the goods and services.

2. It stimulates the purchase decision of the consumer.

3. It helps in creating customer loyalty.

4. It helps the company to maintain the leadership position in the market( if they are already market leader).

· Consistency: you may have noticed that ‘TATA’ has represented a consistent ‘attribute’ of durability in whichever product they offer to the public. Consistency can relate to any activity of the company with reference to the product/s it offers. ‘Lifebuoy’ has always meant long lasting and healthy soap. The cigarette ‘Goldflake King’ has maintained a consistent feeling of honey-smoothness and color in its packets. In order to meet the standards of consistency, a company has to ensure that this is delivered in the entire production process which eventually will lead to the product delivering the feel of consistency. A Coffee Café Day outlet is recognized by the consistency in its color scheme of its interiors and exteriors, as well as the menu on offer, to a large extent.

· Security: Normally, whenever we as consumers ask for a branded product, we are confident that it will meet some of our expectations. We feel secure that it will not be risky or that the term ‘by chance’ is not attached to the product. If we buy a consumable item from ‘Khadi Gram Udyog’ we feel that it would be safe from the health point of view. Similarly if we think of buying a branded garment from ‘Allen Solley’ we are convinced that the colors will not fade, the stitching will be strong and so on. The elimination or reduction of risk from the mind of the customer and providing a feeling of security, is one of the purposes of a brand.

· Offering functional and emotional attributes: Marketers have used both the functional attributes and emotional attributes while undertaking the branding exercise. A brand can assume a personality of its own like Raymond has the personality of a ‘sauve gentleman’. The personality may be projected by the way the message is communicated or by a brand ambassador. Vishawanathan Anand has given NIIT a personality of ‘high intellect’. There are several studies to find out what does a brand signify. It is not necessary that an advertisement for a product or service may always carry the brand message.