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Prof.Jeetendra G Haldankar – IMCOST, Thane
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Meaning Of Marketing
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Prof.Jeetendra G Haldankar – IMCOST, Thane
Definitions Of Marketing
What are the major ways in which we can grow our business.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
Garments
Jewellery
Understanding Environment
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Prof.Jeetendra G Haldankar – IMCOST, Thane
The decade of 1980s saw many Titan Industries losing their competitive advantage to
relatively new entrants. For e.g. Hindustan motors & premier Automobiles lost their pre-
eminent position in the Indian market to Maruti Udyog’s Maruti 800, Titan watches
shook the giant HMT watches, for some time Hindustan Lever’s Surf was cornered by
Nirma, Television giants like Nelco, Crown, Bush, Weston etc lost out to absolutely new
firms like Onida & Videocon. All these cases point out the sensitivity of external
environments so analysis of external environment is absolutely essential, which are
explained below:
70% of Indian market is a young market consisting of people up to the age of 15-
40 years. As youth form a large population, it is natural for firms to develop their
products & promotions for this young group. Pepsi promised to be the drink for
the younger generation, bikes like Kawasaki Bajaj, Hero Honda, Yahama, Scooty
etc have grabbed this opportunity. Even readymade garment industry is also not
left behind.
20% is Teenage group - 6 months-10 years – Baby food items, garments, toys
etc.
10% is old age group – 45-70 years– Financial products, real estate, tours &
travels, Exercising accessories, fitness clubs (yoga, meditation) etc.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
• Today, consumers want to spend more time & money on leisure, this has meant a
boom in the travel & tourism industries.
• Similarly consumers today is not willing to postpone his needs for tomorrow. He
buys goods on credit, this has meant a in boom in credit card utilization, housing
finance companies, auto finance & so on.
• Young generation is always on an hunt to raise income level instead of cutting
down expenses.
5] Competition: - Demands for product or services is also affected by the nature &
intensity of competition in the market. While analyzing the competition, ‘Michael
Poter’, in his book on ‘Competitive Advantage & Competitive Strategy’, mentions
that a firm should extend its competitive analysis to include substitute’s products besides
scanning competitors. Applied strategies:
• Fight for market share – product development (modifications), sales promotion
measures.
• Market Expansion – Look out for new markets.
• Mergers and acquisitions.
• Product withdrawal.
Example – Fight for market share:
The Apollo Tyres, a major player in tyre industries started its production in Baroda
in 1989 & went into the manufacturing of Truck, Bus & Car tyres. Later on its
operation started in Peramber, near Kochi & the sale of Apollo Tyres went up to
Rs.1414 crore in 1997-98. However its sales drop to Rs.1365 crore in 1998-99.
This was obvious as MRF a number one player in the segment i.e. car, bus & truck
tyres made huge investment in publicity & quality which gave them an upper leap.
Meanwhile Birla tyres which has a presence in 32 countries apart from domestic
market has come out with novel ideas of brand building, they have proposed life
insurance coverage for truck drivers on the purchase of its tyres, it has signed an
agreement with ICICI Bank to offer 2 lakh life insurance benefit to the truck
drivers on the purchase of every pair of tyres.
Currently Indian Tyre industries are reeling under the recession or is tottering as
many foreign players such as Bridgestone, Pirelli, Michelin etc have already set up
outlets in Indian market & there is tough competition.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
7] Government Policies: - Government all over the world is an important aspect of the
economy. India has a history of controlled economy with the government deciding the
rules of the game, be it the extent of foreign private investment or goods to be exported or
imported. Regulations in advertising, like ban on advertisement of specific products like
cigarettes, pan masalas (Betel Powders), liquor etc impose many problems for the
manufacturers.
• For this the company needs to not only understand these policies but also the
political philosophy & maintain healthy relationship with operating government
departments.
• In addition government charges taxes, provides subsidies in export, subsidies for
opening manufacturing unit in rural areas etc., these regulations sometimes might
be favorable, if industries adjust it marketing strategies accordingly and get the
benefit.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
1] Product: - Product is any article, which a manufacturer desires to sell in the open
market. A product has capacity to satisfy human wants, which creates demand &
facilitates marketing.
> Product mix includes various components directly related to the product itself like
style, shape, design, colour, quantity, packaging, labeling, brand name, trademark,
guarantees & warranties, special features, product servicing etc.
Managing product component involves product planning & development -
durability, quality, varied features (more than one) etc of the product are
important from the marketing point of view.
Product should be adjusted as per consumer needs & preference, technological
developments, & competitors marketing strategies.
Such adjustment are possible by product innovation, product modification or
product improvement i.e. improving its qualities & features, promotional offers
and so on.
Other Elements:
Branding:
Branding is a commonly used trade practice by manufacturers of consumer & industrial
goods. Branding means giving an attractive name or symbol to the product by which it
gets identified in the market & remembered by traders & consumers. Branding is an
identification mark put on the product that identifies the product of a particular
manufacturer & distinguishes it from the competitor’s product. Branding gives separate
identity to a product; it popularizes a product & builds product honesty or loyalty among
customers. For e.g. lux is one of the popular brand name given by Hindustan lever ltd,
which is a product of honesty. In a multi product company like Godrej, Bajaj, Reliance,
Tata, Birla, Kirloskar etc., brand name & brand development work is handled by brand
manager who is assisted by other executives like marketing manager & R&D manager.
Elements of Branding
1] Simplicity: - A good Brand should be simple, brief & easy to pronounce, which gives
convenience to traders & consumers. For e.g. Bata, Woodland, Adidas, Nike, Lee cooper
etc are popular shoe brands as they are simple & brief.
3] Impressive: - A good brand should be impressive & appealing in words which quickly
attracts customers attention for e.g. Bullet (motorcycle), Sharp & Crown (Television),
Whirpool (refregerator, washing machine), Escort (car), Ikon (car) etc.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
washing machine, Ambuja or Birla cement, MRF or CEAT tyre, Reynolds or Parker pen
etc. They all have an independent status in the market.
6] Collaboration Brands: - When two giant & reputed companies of different countries
joint hands to carry business jointly it is termed as collaboration brand for e.g. Maruti-
Suzuki, Ind-Suzuki, Kinetic-Honda etc.
7] Typical Numbers: - Some manufacturing companies give typical numbers to their
products for branding purpose for e.g. 555 Cigarette, 501 bar soap, Vicks Action 500,
Vicks Formula 44 etc.
8] Slogans: - Many companies use slogans for the purpose of branding for e.g. Onida –
Neighbour Envy Owners Pride, Titan – The Changing Face of Time, Bata – The world at
your feet, Raymond – A Complete man, L’oreal- Because I’m worth it, Videocon – Bring
home the leader, Phillips – Lets make things better etc.
9] Mascots: - Mascot are symbols used to provide brand name for the product for e.g.
Amul Butter – A girl Child holding a sandwich in her hand, MRF – A man holding truck
tyre in his hand, Ceat – A Running Rino, Asain paints – Gatu, Kelvinator – Penguin, Air
India – Maharaja etc.
Packaging
Packaging may be defined as all activities of designing & producing a container or
wrapper for a product. Packaging is concerned with covering of product properly for
safety & easy handling. It means arranging goods in tins, bottles, bags, boxes etc of
convenient sizes so as to enable the dealers & buyers to handle then easily &
conveniently. In fact, every article needs proper cover or package before it reaches the
consumer for final use. Packaging is therefore an important marketing activity. Different
goods needs different types of packaging for e.g. Gunny bags – Food grains, cement,
Paper bags – Small quantity for food grains, Wooden Containers – Machinery, Crockery,
Cardboard Containers – Cigarettes, Match box, Tin Containers – Paints, oils, Plastic
Containers for Detergents, Thermocol – Television, Glassware, Polythene – Milk, Oil &
so on.
Elements of Packaging
1] Protection: - Protection of goods from damage or loss is the basic purpose of
packaging. The container selected should give protection to goods from breakage,
leakage & spoilage of any kind.
2] Attractiveness: - A package should be attractive, impressive & decent. Generally
different colours & designs are used to make the packaging attractive. Sometimes printed
mater or picture on the package makes it attractive. However one must be careful while
selecting colour combination & artistic decoration on the package. A good package
attracts the attention of consumers & induces them to purchase the article i.e. it acts as a
selling tool or sales promotion technique.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
3] Economy: - A good package should be economical i.e. the cost of packaging should
be reasonable. Manufactures must make every possible effort to reduce the packaging
cost. The packaging should not be so costly that it increases the selling price of the
article.
4] Convenience: - Packages should be easy to handle & carry. A package should be
adjusted to the shape & size of the product. It should be neither too bulky nor too light it
must suit the needs of consumers. For e.g. a small family may buy one-kilogram pack
while bigger family may need a bigger pack.
5] Durable & Distinctive: - A good package should give protection to the product over a
long period. For e.g. Chinaware is used to store pickles as it can be preserved for a longer
time. Similarly a good package needs its independent identity i.e. a customer should be
able to identify a specific package from the packages of identical products of competitors.
6] Reusable: - The package should be so designed that it can be used even after the
product is consumed. For e.g. plastic jars, Bottles, & Cardboard boxes are used for
packaging consumer goods, which has re-use value. Products such as Bournvita, Boost,
Tea, etc., are offered in refill packs, which are convenient for storing household articles.
Maturity
Growth
Decline
Intro
duct Withdrawal
ion
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Prof.Jeetendra G Haldankar – IMCOST, Thane
1] Introduction Stage: - Introductory stage is the first stage in the life cycle of a product,
where the product is just introduced in the market for the first time.
• Profit during this stage may not be high due to low sales volume.
• Heavy expenditure on advertisement. Advertising should be more informative
&educative.
• The pricing strategy needs to be adjusted properly.
• Consumers will purchase the product on trail basis; it is also necessary to remove
deficiencies in the product so that the product slowly gets popularity.
• Product quality is very important during the introductory stage as failure during
trail period may lead to long-term rejection of the product by consumers.
2] Growth: - Growth is the second stage in product life cycle where consumers & traders
accept the product. The market demand for the product increases & the size of the market
grows, sales turnover increases, profit form sales also increases, support from consumers
in spite of competition. For this sales promotion measures at consumer level & dealer
level are introduced. Advertising is also made extensively so as to have customers for the
product; dealers are encouraged to repeat orders.
3] Maturity: - Maturity is the third stage in the product life cycle when sales turnover
reaches to the highest level. The demand reaches to a saturation stage during the maturity
stage.
• Along with this there is keen competition in the market & this brings pressure on
prices.
• The marketing expenditure goes on increasing & this brings down the margin of
profit.
• Additional expenditure is also necessary for product modification, improvement,
and development.
• Along with this special sales promotion measures are necessary in order to
stimulate demand & face market competition.
5] Withdrawal: - In this stage the firm comes to the conclusion that production &
marketing of the product are no more profitable. The only alternative is to withdraw the
product from the market.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
• The firm may introduce a new product & slowly withdraw the existing product,
which is not more popular in the market.
• It is a type of retreat (to go back) of the product from the market after enjoying
prestigious position over a long period.
The concept of product life cycle offers guidance to companies in their marketing
decision-making. The firm can try to exploit the life cycle by looking for new product
developments, innovations, modification or finding out new markets to extend the life
cycle of the product. In general, however, product life cycles are getting shorter due to
rapid changes in technology, which makes a product obsolete within a short period. This
is a new trend developed along with globalization, liberalization & rapid developments in
the filed of science & technology.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
Because introducing new products on a consistent basis is important to the future success
of many organizations, marketers in charge of product decisions often follow set
procedures for bringing products to market.
In this section we present a 7-step process comprising the key elements of new product
development. While some companies may not follow a deliberate step-by-step approach,
the steps are useful in showing the information input and decision making that must be
done in order to successfully develop new products.
The first step of new product development requires gathering ideas to be evaluated as
potential product options. For many companies idea generation is an ongoing process
with contributions from inside and outside the organization. Many market research
techniques are used to encourage ideas including:
Step 2. SCREENING
In Step 2 the ideas generated in Step 1 are critically evaluated by company personnel to
isolate the most attractive options. Depending on the number of ideas, screening may be
done in rounds with the:
First round involving company executives judging the feasibility of ideas while
successive rounds may utilize more advanced research techniques.
As the ideas are whittled down to a few attractive options, rough estimates are
made of an idea’s potential in terms of sales, production costs, profit potential,
and competitors’ response if the product is introduced.
Acceptable ideas move on to the next step.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
With a few ideas in hand the marketer now attempts to obtain initial feedback
from customers, distributors and its own employees. Generally, focus groups are
convened where the ideas are presented to a group, often in the form of concept
board presentations (i.e., storyboards) and not in actual working form.
During focus groups marketer seeks information that may include: likes and
dislike of the concept; level of interest in purchasing the product; frequency of
purchase (used to help forecast demand); and price points to determine how much
customers are willing to spend to acquire the product.
Need – Do customers find a strong perceived need for the benefit offered.
Trust – Do they believe that the new product has the benefits claimed?
At this point in the new product development process the marketer has reduced a
potentially large number of ideas down to one or two options.
Now in Step 4 the process becomes very dependent on market research as efforts
are made to analyze the viability of the product ideas. (Note, in many cases the
product has not been produced and still remains only an idea.).
The key objective at this stage is to obtain useful forecasts of market size (e.g.,
overall demand), operational costs (e.g., production costs) and financial
projections (e.g., sales and profits).
Additionally, the organization must determine if the product will fit within the
company’s overall mission and strategy. Much effort is directed at both internal
research, such as discussions with production and purchasing personnel, and
external marketing research, such as customer and distributor surveys, and
competitor analysis.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
Ideas passing through business analysis are given serious consideration for
development. Companies direct their research and development teams to construct
an initial design or prototype of the idea.
Marketers also begin to construct a marketing plan for the product. Once the
prototype is ready the marketer seeks customer input. However, unlike the
concept testing stage where customers were only exposed to the idea, in this step
the customer gets to experience the real product as well as other aspects of the
marketing mix, such as advertising, pricing, and distribution options (e.g., retail
store, direct from company, etc.).
Favorable customer reaction helps solidify the marketer’s decision to introduce
the product and also provides other valuable information such as estimated
purchase rates and understanding how the product will be used by the customer.
Reaction that is less favorable may suggest the need for adjustments to elements
of the marketing mix.
Once these are made the marketer may again have the customer test the product.
In addition to gaining customer feedback, this step is used to gauge the feasibility
of large-scale, cost effective production for manufactured products.
Products surviving to Step 6 are ready to be tested as real products. In some cases
the marketer accepts what was learned from concept testing and skips over market
testing to launch the idea as a fully marketed product. But other companies may
seek more input from a larger group before moving to commercialization.
The most common type of market testing makes the product available to a
selective small segment of the target market (e.g., one city), which is exposed to
the full marketing effort as they would be to any product they could purchase. In
some cases, especially with consumer products sold at retail stores, the marketer
must work hard to get the product into the test market by convincing distributors
to agree to purchase and place the product on their store shelves.
In more controlled test markets distributors may be paid a fee if they agree to
place the product on their shelves to allow for testing.
Finally, there are several high-tech approaches to market testing including virtual
reality and computer simulations.
With virtual reality testing customers are exposed to a computer-projected
environment, such as a store, and are asked to locate and select products.
With computer simulations customers may not be directly involved at all.
Instead certain variables are entered into a sophisticated computer
program and estimates of a target market’s response are calculated.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
Step 7. COMMERCIALIZATION
> Firstly it describes attributes or features that only the brand itself possesses or no
claim of the features is currently being made by any other competing brand. for e.g.
recently ‘Colgate’ presented its Tooth brush by saying that our tooth brush not cleans
teeth but its unique bristles are soft on teeth and its movable angle can clean teeth from
all sides.
> Secondly when the brand is similar to its competitive brands with no difference in the
features then the job of marketer becomes difficult to present the product in unique style
with exclusive themes for e.g. Again Colgate company has launched one more category
brand called Colgate Total where 12 doctors are shown solving 12 different problems
associated with teeth, now it means this new Colgate protects your teeth from 12 different
teeth problems.
> Thirdly the same product is presented with different unique ideas for e.g. Cadbury
made sequential ads like in one ad it says Gift a Cadbury to someone you love, next was
Cadbury celebrations for special occasions like Raksha Bandhan, Diwali festivals, ‘Pappu
Pass Hogaya’ ,Miss Palampur which says – ‘Kuch Mitha Hojaye’ (entering into rural
market).
> Fourthly the product sometime contains unique features but they do not get
highlighted For ‘Alkem Pharmaceuticals’, a Mumbai-based Company that manufactures
‘Burnol’ the burns treatment cream, faced a problem in consumers repeating their
purchase infrequently, but later on they presented the ad by saying it not only works on
burns but also on cuts and wounds.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
b) Selling: - Selling refers to sales volume. Whatever claims are being made by the
advertiser must be authentic to convince the audience or reader that they will certainly
benefit after the purchase. The marketer should always remember that customers go for
the product only if it satisfies their need and not because of a brand name or a celebrity
has endorsed the product attributes.
Self-Actualization
Needs
Egoistic Needs
Social Needs
Safety & Security Needs
Physiological Needs
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Prof.Jeetendra G Haldankar – IMCOST, Thane
1] Freedom From Fear: - Fear is a negative motive, but is very powerful, this is the
most basic feeling which every human being has in his mind.For e.g. a person secures
insurance policy for safety of him & his dependents, fear of getting bald prompts
prospective buyer to purchase hair oil.
2] Desire Economy: - Saving money is a universal desire. Every customer likes his
money worth, they want to save money to accomplish there other desires or needs i.e.
customer will go round the shops in making a purchase deal to save money by purchasing
goods which is having reasonable price.
3] Fashion: - Fancy cloths, cosmetics, perfumes, ornaments, stylish watches, cell phones
etc are in great demand on account of desire to attract opposite sex. Women’s spend
much thought, time & money on their appearance. Similarly customers like to be
recognized as an important person i.e. every one is motivated by the desire to show his or
her superiority & be with current fashion trends.
4] Love for others: - This motive plays an important role where parents purchase
varieties of fancy garments, toys for their children’s. A bachelor about to get married will
purchase numerous household appliances. Similarly a husband purchases attractive gifts
for his wife.
5] Physical Well being: - Once a person get near to the age of 50 physical problems
starts bothering him & to get rid of these problems they go for low calories food or
constantly visit doctors or physicians. This motive has made the sale of edible oil like
suffola, dabur chawanprash, life saving drugs etc.
6] Comfort & Convenience: - In this age of stress full life people like easy going
without much exertion. Hence this motive may be well exploited for selling luxury
products like cars, vaccum cleaners, electronic dish washers, heater, air conditioners,
water cooler etc.
Effective Market Se
1] Geographic Segme 18
Prof.Jeetendra G Haldankar – IMCOST, Thane
2] Demographic Segm
age of the customer
occupation, education
segmentation of marke
3] Psychographic
variables such as so
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Prof.Jeetendra G Haldankar – IMCOST, Thane
4] Behaviouristic Seg
attitudes & responses t
colours can play in inf
Proper Product Positioning:
Product Positioning means identifying a market niche (place) for a brand, product or
service utilizing traditional marketing placement strategies (i.e. price, promotion,
distribution, packaging, and competition).
It was then expanded into their ground-breaking first book, "Positioning: The Battle for
Your Mind," in which they define Positioning as "an organized system for finding a
window in the mind.
Effective Promotion
The promotional mix within the marketing mix includes advertising, sales promotion
& personal selling. Product promotion means making the product popular among the
consumers & raising its sales through suitable measures. The aim is to attract consumers
& to capture the market for the product & every manufacturer is interested in sales
promotion as his profit is directly related to the sales volume or sales turnover. Sales
promotion supports advertising & personal selling as suitable measures are used to
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Prof.Jeetendra G Haldankar – IMCOST, Thane
achieve sales targets, for facing competition & also attracting customers towards the
product. Sales promotion campaign is necessary due to the availability of wide variety of
identical products in the market.
• Over the counter premium - Here, the manufacturing company provides gift
articles like plastic jar, toothbrush, diary, pen etc to consumers through dealers. In
order to inform the customers about the gift, an advertisement is given in the
newspaper & also in television. Through suitable advertisement the consumers are
induced to demand the product, which has free gift article offer along with it. For
e.g. One Plastic mug free with each 500 gram of Glucon-D, one toothbrush free
with 150gram of Pepsodent toothpaste & so on.
• Banded Premium - In this method the article is offered as premium in banded
form with the regular product package, which is visible. Sometimes two products
of the same manufacturing company are banded together one of which serves as a
premium or gift. For e.g. Vicco Laboratories offers its two products namely
Vajradanti & Turmeric together at an attractive price where one product is a gift.
• In-Pack Premium - In order to ensure that the premium or gift goes directly to
the ultimate consumers, in-pack premium method is introduced. In this method
article is kept inside the package of the product & the message regarding the same
is printed on the package. For e.g. Bournvita tin contains a plastic jar inside the
container or a measuring glass or steel spoon is kept inside the package.
• Price Deals - In the price deal, a special cash discount is allowed for a definite
period. Such cash discount is allowed on many consumer products like soap, tea
packets, cosmetics, stainless steel utensils & other durables. It is usually offered
when new products are brought in market for sale.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
[B] At Dealers Level: - Dealer level promotion means encouraging dealers i.e.
wholesalers & retailers to take more interest in promoting sales of a specific product of a
specific manufacturer. This may come in the form of special concessions, discounts, gifts
etc, as sales promotion at the dealer is necessary because maximum goods are marketed
through them. Sales promotion measures at the dealer level are:
• Sales Conference - The manufacturer periodically arranges sales conference of
dealers of specific territories where sales can be maximum. All dealers are invited
& provided accommodation & other comforts at company’s cost. In the
conference, the dealers are given information about company’s products, new
products likely to be introduced, new sales promotion schemes for the dealers &
so on. The difficulties of dealers discussed in order to solve them to the
satisfaction of dealers. Such conference promotes cordial relations between the
company & its dealers. Personal contact is established & some gifts are offered to
dealers for attending the conference & showing interest in company’s invitation.
• Supply of Sales Literature - The manufacturer may supply sales literature in
adequate quantities to all dealers. Such literature provides detailed information to
consumers & facilitates quick turnover. The dealers are also given product
samples, display materials (danglers), carton packages, show cards etc free of
charge. Even demonstrations are arranged in retail shops for promoting sales.
• Attractive Terms for Sales Promotion - The manufacturing company offers
attractive commission, which encourages dealers to stock more quantity & make
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Prof.Jeetendra G Haldankar – IMCOST, Thane
special efforts for sales promotion i.e. the dealers buy in bulk & do their best to
promote sales.
• Provision of suitable packages - A dealer needs specific type (quantity wise) of
packages as per the demand of his local customers. The manufacturers should
provide suitable package regularly to facilitate sales. In addition, the dealer should
be offered quantity discount for e.g. a soap manufacturer might offer 14 soaps
against purchase of one dozen soap cake rack. This encourages dealers to order
for more quantity.
• Offering Gifts - Some companies offer attractive gifts to dealers selling their
product with special interest. These gifts may be Colour Television, Wrist Watch,
Fan, Refrigerator, washing machine, imported furniture, gold coin etc. It is
usually provided when dealers place big order.
Pricing Methods
1] Cost Plus Pricing: - Cost plus pricing is one simple & popular method of pricing.
Such cost includes the cost of raw materials, cost of production, cost of packaging, cost
of distribution, selling cost, taxes & certain percentage is added to this cost & the price
per unit is fixed.
2] Follow the Leader Pricing: - Under follow the leader pricing small manufacturers in
one line of marketing adjust their pricing policy as per the pricing policy of a leading
manufacturer. For e.g. in soap manufacturing Hindustan Lever is a leading manufacturer
& other manufacturers in the same product line adjust their prices in accordance with the
price charged by the leading manufacturers.
3] Skimming the Cream Pricing Policy: - Skimming the cream pricing policy is one
popular pricing policy where manufacturers charges very high price in the initial period
when the product is new, attractive, required by many customers & with no other
substitute product. The product will be priced high when first introduce in the market &
gradually the price will be brought down as per the market situation. Skimming pricing is
appropriate in case of fashionable goods introduced for the first time in the market.
4] Market Capturing Pricing: - Market capturing pricing policy is exactly opposite to
skimming the cream pricing policy, where low price is charged initially in order to create
demand & capture the market. An attempt is being made to create popularity for the
product among consumers through initial low price.
5] Below Cost Pricing: - In below cost pricing, the manufacturers fixes the price which
is actually lower than the production cost. It is a protective pricing policy, as the purpose
is not to make profit but to reduce the loss to the minimum possible extent. For e.g. a
trader may sell perishable goods at below cost pricing level or producer sell a product
below cost if the same has become outdated, even defective goods like shoes, garments
etc are sold at below cost pricing to sell off available stock & reduce the chances of huge
loss.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
6] Target Oriented Pricing: - In target oriented pricing the manufacturers first fixes his
target of expected profit from the sale of a particular commodity over a particular period
& fixes the price after due consideration of market demand. This method of pricing is
used on certain occasions by wholesalers & retailers, they decide the expected rate of
return & adjust the prices accordingly. Target oriented pricing is rather difficult & even
dangerous in a highly competitive markets as price must be fixed after considering
prevailing market environment & not merely as per the profit target decided.
7] Customers Ability to Pay: - The sale of products also depends upon the customers
ability to pay & the price needs to be fixed as per his ability to pay & not necessarily as
per the cost of production. This pricing is useful in case of personal services for e.g.
advocates charge fees as per the ability of their clients. Similarly Electricity Company
fixes different rates for domestic & industrial users of electricity.
8] Psychological Pricing: - Psychological pricing is based on the consumer believe that
he is paying less than what actually he should. Such policy is suitable in case of
consumer goods for e.g. price fixed may be like Rs.29.90 or Rs.499.50 or Rs.99.05. The
buyer gets a feeling that he paying less than Rs.30 or Rs.500. However actual payment is
nearing Rs.500. Bata Shoe Company, Asian Sky Shop is known for psychological
pricing.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
The launch of Nokia 1100 in late 2003 was major milestone on Nokia’s road to market
leadership in India. Nokia became a success story in India starting from a point where
almost 80% of handsets were sold in the market.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
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Prof.Jeetendra G Haldankar – IMCOST, Thane
Dogs - Dogs have low market share and a low growth rate and thus neither generate nor
consume a large amount of cash. However, dogs are cash traps because of the money tied
up in a business that has little potential. Dogs are businesses with low market share in
low-growth markets. These are often cash cows that have lost their market share or
question marks the company has elected not to develop. The recommended strategy
for these businesses is to dispose of them for whatever revenue they will generate
and reinvest the money in more attractive businesses.
Question marks - Question marks are growing rapidly and thus consume large amounts
of cash, but because they have low market shares they do not generate much cash. The
result is a large net cash comsumption. A question mark (also known as a "problem
child") has the potential to gain market share and become a star, and eventually a cash
cow when the market growth slows. If the question mark does not succeed in becoming
the market leader, then after perhaps years of cash consumption it will degenerate into a
dog when the market growth declines. Question marks must be analyzed carefully in
order to determine whether they are worth the investment required to grow market share.
The typical starting point for a new business is as a question mark. If the product is
new, it has no market share, but the predicted growth rate is good. What typically
happens in an organization is that management is faced with a number of these
types of products but with too few resources to develop all of them. Thus, the
strategic decision-maker must determine which of the products to attempt to
develop into commercially viable products and which ones to drop from
consideration. Question marks are cash users in the organization. Early in their life,
they contribute no revenues and require expenditures for market research, test
marketing, and advertising to build consumer awareness.
Stars - Stars generate large amounts of cash because of their strong relative market share,
but also consume large amounts of cash because of their high growth rate; therefore the
cash in each direction approximately nets out. If a star can maintain its large market
share, it will become a cash cow when the market growth rate declines. The portfolio of a
diversified company always should have stars that will become the next cash cows and
ensure future cash generation. If the correct decision is made and the product selected
achieves a high market share, it becomes a BCG matrix star. Stars have high
market share in high-growth markets. Stars generate large cash flows for the
business, but also require large infusions of money to sustain their growth. Stars are
often the targets of large expenditures for advertising and research and
development to improve the product and to enable it to establish a dominant
position in the industry.
Cash cows - As leaders in a mature market, cash cows exhibit a return on assets that is
greater than the market growth rate, and thus generate more cash than they consume.
Such business units should be "milked", extracting the profits and investing as little cash
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Prof.Jeetendra G Haldankar – IMCOST, Thane
as possible. Cash cows provide the cash required to turn question marks into market
leaders, to cover the administrative costs of the company, to fund research and
development, to service the corporate debt, and to pay dividends to shareholders. Because
the cash cow generates a relatively stable cash flow, its value can be determined with
reasonable accuracy by calculating the present value of its cash stream using a discounted
cash flow analysis. Cash cows are business units that have high market share in a
low-growth market. These are often products in the maturity stage of the product
life cycle. They are usually well-established products with wide consumer
acceptance, so sales revenues are usually high. The strategy for such products is to
invest little money into maintaining the product and divert the large profits
generated into products with more long-term earnings potential, i.e., question
marks and stars.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
Industrial Marketing
• Buyers: They for the demand side of the market. They include all the
organizations that buy goods and services to aid the in producing other goods
and services. They are categorized into four groups.
o Commercial Enterprises – Original equipment manufacturers and users
like Maruti Udog, TVS, Amara Raja Batteries, Bharat Aeronautics,
Telephone Industries etc.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
2] Products and Services: The wide variety and services may be categorized as follows:
• Installations/Major Equipments – Very expensive large machines or other tools
like blast furnace. Drilling machine, cranes etc.
• Accessories or Minor Equipments – Less expensive small machines like lathes,
fractional horsepower motors, computers, photocopiers etc.
• Raw Materials – The basic inputs to production – natural state products like iron
ore, bauxite and agricultural products like sugar cane, fruits etc.
• Processed Materials – They become part of the finished product after some
processing. Example steel bars, leather, plywood, wires etc.
• Component Parts – They directly become part of the finished product. Example
batteries, compressors, motors etc.
• Operating Supplies – Items that are necessary for the production and
administrative operations like paints, soaps, machine oils, greases, stationary,
CD/DVD, Pendrive etc.
• Services – These are support activities like sanitary services, security,
consultancy, warehousing etc.
3] Exchange Process: The key element in the marketing process is exchange. Exchange
transactions in the industrial market consist of:
• Product or service exchange- Product with its attributes like quality, size and
services is exchanged for a proce.
• Information exchange – Technical details and cost-benefit computations, service
support assurances, payment and delivery terms are exchanged for evaluation
and selection of the product.
• Financial exchange – It involves granting credit and conversion of currency from
one unit to another.
• Social exchange – It involves building interpersonal relationships and trust
between buyer and seller.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
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Prof.Jeetendra G Haldankar – IMCOST, Thane
Buyer behaviour in industrial marketing refers o both mental and physical responses of
organizational buyers to the marketing and environment stimuli.
Webster & Win (1972) defined organizational buying as – “the decision making process
by which formal organizations establish the need for purchase of products and services,
and identify, evaluate, and change among alternative brands and suppliers”.
In
Buyer behaviour
physical response
environment stim
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Prof.Jeetendra G Haldankar – IMCOST, Thane
1] Buyers: Who constitutes the industrial market? The major types of industrial
customers in industrial market are:
(a) Commercial Enterprises – Includes manufactures, mining companies,
construction firms, and enterprises engaged in farming, forestry and fishing. Logical
classification of commercial enterprises is Original equipment manufactures (OEMS)
and users.
o OEMS – Those firms which buy products of those firms to incorporate
into products that they manufacture for example IBM buys chips from
Intel and incorporates them in its computers.
o Users – When a commercial enterprise purchase industrial products or
services to support its manufacturing process or facilitate the operation of
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Prof.Jeetendra G Haldankar – IMCOST, Thane
3] Buying Center: The size and composition of buying center will vary for different
classes of products. More decision participants are involved in buying a Blast Furnace
than buying a drilling machine Research suggest that general buying centers are:
(a) Marketing – The starting point in purchasing decision os marketability of the
product i.e. will the purchase of equipment or materials or parts enhance product
acceptance.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
(b) Manufacturing – Since manufacturing is the major user, the feedback given by the
production department on the performance of the supplier’s s a key influencer in the
selection and retention of suppliers.
(c) Research & Development – Involved in development of products and processes.
They play a significant role in setting broad specifications for products, process, material
and parts.
(d) Top management – Involves in establishing policies and procedures for example
purchase of heavy vessel requiring large investment and having major consequences on
the firm’s operations invites the top management.
(e) Purchase department – They actively involved in - Selection of suppliers,
selection of an order routine and performance feedback.
4] Buying Motives: The buying motives may be to provide quality products, to build
substitute chain of suppliers (to save money or better bargain), to provide quality
services, to earn huge profits, to build in goodwill in the market etc.
5] Buying Situations:
• Straight Rebuy
• recurring (buying all the time) the same thing
• Modified Rebuy
• regular buying, but with some re-evaluation to think about things each time
• New Task / First-time Buying
• this takes a lot of effort on the part of the buyers to consider many aspects
6] Outlets:
Direct purchase is common in industrial markets. This method is used when buying
expensive or bulk items. Accordingly, installation products are purchased directly.
Accessories may be purchased either directly or through distributors. The remaining
category of products is generally purchased from middlemen.
7] Buying Process – The industrial product buying phases can be categorized as:
(a) Problem Recognition: Internally the recognition may originate when products
become outdated, equipments breaks down, existing materials are less productive,
purchase department sees better opportunities. Externally, the buyer may get innovative
ideas after attending a trade show or an exhibition or fro the efforts of a marketer.
(b) General Need Description: Once the problem has surfaced, the organizational
members will proceed to determine the general characteristics and quantity of the needed
item. The firm will seek answer to such questions as:
(i) What performance specifications need to be met?
(ii) What are the applications requirements?
(iii) What type of goods and services should be considered?
(iv) What quantities will be needed?
(c) Supplier Search – The buyer now tries to identify the most appropriate
vendors from:
(i) Previous Purchase Records.
(ii) Register of visited sales person.
(iii) Outside Purchase Managers.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
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Prof.Jeetendra G Haldankar – IMCOST, Thane
• M.R helps in accurate decision making as regards to the production & marketing
of goods & services.
• M.R is also useful in studying & solving different marketing problems faced by a
marketing firm.
• M.R helps in detailed & systematic study of a problem or a situation relating to
consumers, product, market competition, sales promotions etc, which are
collected & analyzed to solve the marketing related problems quickly, correctly &
systematically.
• Marketing research is a specialized activity. Naturally, an expert with necessary
qualifications, qualities, experience, maturity, knowledge of business &
marketing, mathematics, statistics, good communication & drafting skills & an
analytical mind is needed to conduct marketing research effectively.
• Looking at the complexities it is always desirable to appoint competent research
organization for high quality & result oriented research work because such
organization conducts research actively systematically & within specified time
limit. In short, many benefits are available when marketing research work is
assigned to a competent researcher or research agency.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
7] Brand Research: - Brand is the name given to a product for easy identification. Brand
research relates to brand positioning, measures for raising brand popularity for existing
brands, raising brand loyalty, creating brand names and so on.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
means understanding the problem in an exact manner. It is said that ‘a problem well put
is half solved". The following activities are important in this regard:
Determine the decision’s maker’s purpose for the research - To know what kind
of information and for what. For example if the sales all falling then Why are
sales dripping down and what should be done to check it.
Understand the complete problem situation - What is lacking or requires
improvement and related variables. For example is fall in sales due to poor
product, high price, poor salesmanship or customer unwillingness.
Identify and separate out measurable symptoms within the problem. For example
fall in sales may be only a symptom and por salesmanship can be the real
problem.
Determine the appropriate unit of analysis i.e. sales people, sales supervisor etc.
Determine the relevant variables. For example poor salesmanship is the problem
the relevant variables may be knowledge & skills of salesmen, role clarity,
supervision, motivational levels etc.
2] Identifying Data Sources: - Data required for research can be either primary
(observation, focus groups, surveys and experiments) or secondary (information that has
been already been collected). The main sources of secondary data collection are:
Official publications of local, state and central government such as – Census of
India, Annual Bulletin of Import & Exports Statistics, Monthly studies of selected
industries, Economic Survey, National Sample Survey Reports Etc.
Trade and Economic publications like Economic and Political Weekly, Indian
Economic Journal, etc.
Annual Report on Currency And Finance, Monthly Bulletin of Reserve Bank of
India etc.
Official publications of international bodies like IMF, UNO, World Bank etc.
Market reports and trade bulletins publised by stock exchange, trader
associations, large business houses, Indian Chamber of Commerce etc.
Unpublished data such as firms accounts books showing data about sales, profits
and loses etc.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
4] Collecting Data: - Data are collected as per the method selected for data collection. If
mail survey method is selected, questionnaire will be sent by post to respondents. If
personal interview method is selected, interviews are arranged through trained
interviewers for data collection. Adequate attention should be given to the selection &
training of field staff (interviewers). Data collection should be quick & data collected
should be reliable, adequate & complete in all respects.
Methods of Data Collection
1] Mail Survey: - Mail survey means collection of required data through mail i.e. post.
Here, the questionnaire along with details of the survey & instructions regarding
supplying information are sent by post to selected respondents with a request to complete
& return the same by post. Completed questionnaires are checked, tabulated & analyzed
for drawing conclusions & recommendations. Mail survey is necessary when the area to
be covered is large & personal contact with the respondents is not possible.
2] Telephone Survey: - In telephone survey, a brief interview of the respondent is taken
on telephone. The respondent is contacted on phone with previous appointment &
questions are asked on the subject mater of survey. It is a quick method of survey & wide
area can be covered without traveling to distant places.
3] Personal Interview: - In personal interview there is a face-to-face interaction between
the respondent & the interviewer. The interviewer uses questionnaires as the base &
collects the required information from the respondents through conversation. The
answers given by the respondents are recorded in the space provided in the questionnaire
itself. Additional information if supplied is also noted by the interviewer. For effective
response the interviewer needs proper education & training. He should ask the questions
properly & encourage the respondent to supply more information.
4] Consumer Panels: - In Consumer Panel the opinions & reactions of consumers are
collected without formal interviews. In panel a group of consumers are selected for the
purpose of survey. Such selection is usually on the basis of age, economic status, likes &
dislikes etc., of consumers. The members of consumer panels are are provided with
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Prof.Jeetendra G Haldankar – IMCOST, Thane
dairies & asked to record regularly their purchases. These dairies are collected after a
period of one month.
5] Observation: - Observation method observes the behaviour of consumers at the
market place, where consumers are not given any idea that they are being observed &
information are collected. The observer silently, but minutely observes the consumers &
notes the points, which are used as data for drawing conclusions. Even mechanical
devices such as video cameras are installed in big departmental stores & shopping malls
to observe the behaviour, reactions & responses of the consumers.
6] Experimentation Method: - Experimentation can be undertaken under laboratory or
under field setting. Products can be tested in the laboratories whereas in field experiments
few customers are called at a convenient place may be near the market place, they will be
offered a product for use & their reactions will be judged & noted down. Now a days this
technique is very well used by television advertisement showing live product
demonstration used by customers at there home places for e.g. Harpic Toilet Cleaning
Liquid
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Prof.Jeetendra G Haldankar – IMCOST, Thane
Simple random sampling: is a method of probability sampling in which every unit has
an equal chance of being selected. Random numbers can be obtained by printed tables of
Random numbers or spreadsheets e.g. 1,3,5,7,9,11.
Probabili
selected companies. He first picks his starting number, 5. Then the researcher picks his
interval, 8. The members of his sample will be individuals 5, 13, 21, 29, 37, 45, 53, 61,
69, 77, 85, 97.
• Simple r 42
Prof.Jeetendra G Haldankar – IMCOST, Thane
Cluster sampling: Sometimes the biggest problem with sampling is being able to reach
your targets, having spread out over a large geographic area is a common experience.
Even when you have selected a cluster, you are unlikely to be able to access everyone in
that cluster. The practical answer is to select a significant samples in each cluster. For
example if you are going to interview leather industries vallet manufacturers, wrist wath
belt manufacturers, shoes companies, then you should do this in the same weekday in
each cluster (you would, after all, likely get different results).
Judgment Sampling
Used when you want a quick sample. Use your own judgment to select what seems like
an appropriate sample.
Example
A TV researcher wants a quick sample of opinions about a political
announcement. They stop what seems like a reasonable cross-section of people in
the street to get their views.
For instance, if a researcher wants to find out what it takes for women Managers
to make it to the top, the only people who can give first hand information are the
women’s who have risen to the positions of presidents, vice presidents and
important top-level executives in industries.
You probably have be experienced in research methods before you can make a fair
judgment about the right sample.
Judgment sampling is often a last-resort method that may be used when there is no time
to do a proper study.
Quota Sampling: This type of sampling ensures that certain groups are adequately
represented in the study through the assignment of a quota. Generally the quota fixed for
each subgroup is based on the total numbers of each group in the population.
Decide how many people you need to sample and then use whatever methods you can to
access the desired sample size.
Example
A researcher in the high street wants 100 opinions about a new style of cheese. He sets up
a stall and canvasses passers-by until he has got 100 people to taste the cheese and
completes the questionnaire.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
Repeat this method of requesting referrals until you have studied enough people.
Example
A researcher is studying environmental engineers but can only find five. He then asks
these engineers if they know any more. They give him several further referrals, who in
turn provide additional contacts. In this way, he manages to contact sufficient engineers.
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Prof.Jeetendra G Haldankar – IMCOST, Thane
5] Organizing Data Collected: - The completed questionnaires are not directly useful
for drawing conclusions. This raw data needs proper processing for drawing conclusions
for which scrutiny of data, editing, classification of data, tabulation are required which
integrates the information in a compact manner.
6] Data Analysis & Interpretation: - This step in research process consists for
analyzing the data & interpreting the results. Conclusions are drawn only after analysis &
interpretation of data such conclusions are useful for suggesting remedial measures.
Electronic data processing equipment can be used for the analysis of large volume of data
quickly & accurately.
8] Presentation: - In this stage the researcher will submit his research report to the
sponsoring organization or the appointing authority. The decision-makers will study the
report minutely & find out the desirability of execution of the recommendations made.
The researcher normally submits his research report to the top-level management of the
company. He may make oral presentation of the report & also submit a written document
i.e. research report. The final decision on the research report is to be taken by the
appointing authority. If the report is accepted, follow-up steps for execution of the
recommendations will be taken & if rejected, then the whole report will be filed & no
action will be taken.
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