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1. Write a short note on “Product Life Cycle”
Sales &
Profits
Sales
Profits
The product which is introduced into the market will undergo some
0 modifications over the period. Its sales also fluctuate. Therefore marketer Time
Growth
is interested in finding out how sales also fluctuate over a period and
Decline
what strategies are best suited atMaturity
Product Dev.
that point. A product life cycle can be
Introduction
graphed
Stage by plotting aggregate sales volume for a product category over
Product Dev.
Losses -
time.
Investments
StageGenerally the curve resembles bell shaped curve but it is not the
only one type of curve. We can obtain style, fashion or fad style of
product life cycles also.
Sales
Style
Fad
Fashion
ii. Introduction Stage: Company introduces the product into the market.
As the product is new to the market, awareness is usually very low.
Here company adopts heavy sales promotion and product awareness
programs. The cost of product is very high and sales are very low. At
this junction the company charges high price to the customer.
iii. Growth Stage: Company gets experience over the period and now tries
to get the maximum market share; sales will grow rapidly resulting in
lesser cost and better profit. Company reduces the price of the product
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and offers varieties and values in it. It focuses on building better
distribution network and pushes the product through it. Number of
competitors will grow and it forces company to keep a tab on them.
v. Decline Stage: In this stage, product sales and profit decline. Company
should phase out weak items from their product mix. The
advertisement budget of the company also comes down.
Brand managers have four points of sponsoring the brand. They are
a. Manufacturer brand
b. Private brand
c. Licensing
d. Co-branding
a. Manufacturer brand:
The brand owned by manufacturer and promoted either directly or
indirectly. This type of strategy has been followed for many years.
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Pilsbury atta is a manufacturer brand. In the image below you can see
that pilsbury is launching the Punjabi atta in the market.
b. Private brand:
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 loose from 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 there party the store may choose for its label
programme.
a. Brand licensing:
It is the legal authorization by the trademarked brand owner to allow
another company to use its brand for a fee. For example, Hugo Boss,
Tommy Hilfiger, Lacoste, and Nike are some of the textile brands those
licensed their brands in the Indian market. The major benefits of brand
licensing are low cost, free publicity and revenue from royalty fees.
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Brand licensing also suffers from serious limitations like lack of
manufacturing control, and failure of licensing arrangements.
b. Co-Branding:
According to Kotler, co-branding is the practice of using the
established brand names of two different companies on the same
product. For example, ICICI and HPCL came together to sell ICICI-
HPCL petro cards to the customer. Here card is the co-branding
between the two companies. Co- branding helps ICICI to utilize their
financial resources well. It adds another banking facility to the bank
while HPCL can lock the customer from buying the petroleum products
from competitors. HPCL also gets the benefit of financial power which
it doesn’t have. Both companies promote these products. Hence they
can leverage brand image and can reduce the cost. All companies will
not get benefit from co-branding. Some times company may lose the
brand image if the product fails.
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d. By-product pricing is determining the price for by-products in order to
make the main product’s price more attractive. For example, LT
overseas manufactures of Dawaat basmati rice, found that processing
of rice results 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.
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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.
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 globalisation 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 rationalisation 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. The
end 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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– Water transport: This is the slowest but most cost effective mode of
transportation. It can carry wide varieties of goods but it can reach
only limited places. The mode is usually suited for bulky, low value
non perishable goods.
Objectives:
To plan, develop, execute and evaluate coordinated communications
with organisations’ stakeholders.
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Communication Development Process:
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ventilation system that dries away perspiration in action. Working
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
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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.
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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 will develop desire towards the product.
• Action: Strong desires should be turned into action. Hence company
should provide the advantages of purchasing of the product in their
communication messages.
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Fevicol – humor Wheel- love.
The negative emotions like fear guilt and shame are also used in the
advertisement to attract the customer.
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Lakme brilliance- Quality products.
Dabur Amla – value appeal ( long Hair)
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3. Color Print, TV, outdoor, online
12.Scent Product
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Print advertisement Message format:
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promote their products. 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.
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. 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 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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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.
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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:
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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 product—
in 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 Pepsi’s 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.
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, railways stations, cinema etc.
• At-home- the rest 20% of the market compromises of the soft drink
purchased for consumption 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 fall in 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 the types of flavors available, namely:
○ Orange
○ Cloudy Lime
○ Clear Lime
○ Mango
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i. Orange flavor based soft drinks constitute around 17% of the
market. The segment is largely dominated 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 coca cola 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 players launching 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 directly competes 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 consumer’s 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.
Market Share (in %):
Brand Name Market Share (in %) Market Share (in %)
Pepsi 41 49
Coca Cola 57 48
Consumer Habits And Practice:
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♦ Soft drinks come under the category of products purchased in
impulse. Though the market is 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 and also to plain bottled water due to lower
price and ready availability.
♦ Consumers purchase soft drinks primarily to quench thirst.
Therefore people traveling and not 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 main consumers 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 is high 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. Hence the market is price sensitive.
♦ Due to the high cost of soft drinks, a lot of times consumers prefer
beverages like tea, coffee or other drinks like sherbet and
squashes.
♦ Per capita consumption in India is among lowest in the world at 5
bottles per annum compared 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 are higher in rural areas
Cola Wars:
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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 both companies 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 the long 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.
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Marketers use for main variables when segmenting the total market:
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