IGNOU MBA MS-06 Solved Assignment 2011

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IGNOU MBA MS-06 Solved Assignment 2011

Course Code : MS - 06
Course Title : Marketing for Managers
Assignment Code : MS-06/SEM - I /2011
Coverage : All Blocks
Note: Answer all the questions and send them to the Coordinator of the Study Centre you are
attached with.
1 a) Discuss the distinguishing characteristics of services which make them different from
tangible goods. What are the implications of theses characteristics in marketing of services?
Solution: Services are said to have four key characteristics which impact on marketing programmes.
• Intangibility
• Inseparability
• Heterogeneity variability
• Perish ability (simultaneous production/consumption)
• Intangibility
Services are said to be intangible - they cannot be seen or tasted, for example. This can causelack
of confidence on the part of the consumer As was apparent earlier, in considering pricingand
services marketing, it is often difficult for the consumer to measure service value andquality. To
overcome this, consumers tend to look for evidence of quality and otherattributes, for example in
the decor and surroundings of the beauty salon, or from thequalifications and professional
standing of the consultant.
• Inseparability
Services are produced and consumed at the same time, unlike goods which may bemanufactured,
then stored for later distribution. This means that the service provider becomesan integral part of
the service itself. The waitress in the restaurant, or the cashier in the bank,is an inseparable part of
the service offering. The client also participates to some extent in theservice, and can affect the
outcome of the service. People can be part of the service itself, andthis can be an advantage for
services marketers.
• Heterogeneity Invariability
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Because a service is produced and consumed simultaneously, and because individual peoplemake
up part of the service offering, it can be argued that a service is always unique; it onlyexists once,
and is never exactly repeated. This can give rise to concern about service qualityand uniformity
issues. Personnel training and careful monitoring of customer satisfaction andfeedback can help
to maintain high standards.
• Perishability
Services are perishable; they cannot be stored. Therefore an empty seat on a plane, for example,
is a lost opportunity forever. Restaurants are now charging for reservations which are not kept,
charges may be made for missed appointments at the dental clinic. Perishability does not pose too
much of a problem when demand for a service is steady, but in times of unusually high or low
demand service organisations can have severe difficulties.
THE SERVICES MARKETING MIX

Another way to begin addressing the challenges of services marketing is to think cre-
atively about the marketing mix-through an expanded marketing mix for services.
Traditional marketing Mix

One of the most basic concepts in marketing is the marketing mix, defined as the elements an
organization controls that can be used to satisfy or communicate with customers. The traditional
marketing mix is composed of the four P's: product, price, place(distribution), and promotion. 16 These
elements appear as core decision variables in any marketing text or marketing plan. The notion of a mix
implies that all of the variables are interrelated and depend on each other to some extent. Further, the
marketing mix philosophy implies that there is an optimal mix of the four factors for a given market
segment at a given point in time.
Key strategy decision areas for each of the four P's are captured in the first fourc olumns-in
Table 1-3. Careful management of project, place, Promotion and price will clearly also be essential to the
successful marketing of services. However, the strategies for the four P's require some modifications
when applied to services. For example, traditionally promotion is thought of as involving decisions
related to sales, advertising, sales promotions, and publicity. In services, these factors arc also important,
but because services - are produced and consumed simultaneously, service delivery people (such as
clerks, ticket-takers, nurses, phone personnel) are involved in "real-time" promotion of the service "even
if their jobs are typically defined in terms of the operational function they perform. Pricing also becomes
very complex in services where "unit costs" needed to calculate prices may be difficult to determine, and
where the customer frequently uses price as a cue to quality.
Expanded mix for services
Because services are usually produced an consumed simultaneously, customers are oftenpresent in the
firm's factory, interact directly with the firm's personnel, and are actuallypart of the service production
process. Also, because services are intangible customerswill often be 100kiIlg for any tangible cue to help
them understand the nature of theservice experience. These facts have led services marketers to conclude
that they can useadditional variables to communicate with and satisfy their customers. For example, in
thehotel industry .
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THE SERVICES MARKETING TRIANGLE

The services marketing triangle (Figure 1-5) shows the three interlinked groups that work together to
develop, promote, and deliver services. These key players are labeled on the points of the triangle: the
company (or SBU or department or "management"), the customers, and the providers (whoever it is that
actually deliver the service to customers).
Between these three points on the triangle, there are three types of marketing that must be successfully
carried out for a service to succeed: external, internal, and interactivemarketing.12 All these activities
revolve around making and keeping promise’s to customers. For services, all three types of marketing
activities are essential for building and maintaining relationships with customers. Each is now discussed
in more detail.
External Marketing: Making Promises

Through its external marketing efforts, a company makes promises to its customers regarding what they
can expect and how it will be delivered. Traditional marketing activities such as advertising, sales; special
promotions, and pricing facilitate this type of marketing. But for services, other factors also communicate
the promise to customers. The service employees, the design and decor of the facility, and the service
process itself also communicate and help to set customer expectations. Service guarantees and two-way
communication (especially in situations where promises can be negotiated and expectations can be
managed on an individual basis) are additional ways of communicating service promises. Unless
consistent and realistic promises are set via all of these external communication vehicles, a customer
relationship will be off to a shaky beginning. Further, if there-is a tendency to over promise, the
relationship may also be off to a weak beginning.
Interactive marketing: Keeping Promises

External marketing is just the beginning for services marketers: Promises made must be kept.
Keeping promises, or interactive marketing, is the second type of marketing activity captured by the
triangle-and is the most critical from the customer's point of view. Service promises are most often kept
or broken by the employees of the firm or by third-party providers, most often in real time. Sometimes
service promises are even delivered through technology, as discussed a bit later. Interactive marketing
occurs in the moment of truth when the customer interacts with the organization and the service is
produced and consumed. Interestingly, promises are kept or broken and the reliability of service is tested
every time the customer interacts with the organization.
Internal Marketing :Enabling Promises

A third form of marketing, internal marketing, takes place through the enabling of promises. In order for
providers and service systems to deliver on the promises made, they must have the skills, abilities, tools,
and motivation to deliver. In other words, they must be enabled. These essential services marketing
activity has become known as internal marketing. Promises are easy to make, but unless providers are
recruited, trained, provided with tools and appropriate internal systems, and rewarded for good service,
the promises may not be kept. Internal marketing also hinges on the assumption that employee
satisfaction and customer satisfaction are inextricably linked.
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Aligning the sides of the Triangle
In a triangle, all three sides are essential to complete the whole. For services all three marketing activities,
represented by the sides of the triangle, are critical to success; without one of the sides'-in place, the
triangle, or the total marketing effort, cannot be optimally supported. Each side represents significant
challenges, and as we proceed through the text we will find approaches and strategies for dealing with all
three.
FedEx Corporation is an example of a company that has all sides of the triangle well aligned. 13 With
respect to external marketing, FedEx is a master. They understand their customers, do extensive market
research (2,400 customer survey’s per quarter), measure customer satisfaction daily (through their service
quality indicator, or SQI), and listen to customers. Promises are communicated effectively to the
marketplace through await-winning advertising messages and consistent statements by their people.
Interactive marketing-keeping promises-is at the heart of FedEx's strategy. The book-length

"Manager's Guide," given to every FedEx manager, states that "Each customer contact is a moment of
truth that conveys an image of Federal Express." A shared goal within the company is that every one of
these service encounters be flawless from the customer's point of view. The folks that deliver FedEx's
premises directly (drivers, front-line telephone people, business logistics consultants) all know -that 100
percent success in interactive marketing is the goal.
FedEx also knows that 100 percent success is not possible unless all of these providers are
enabled to provide quality service through technology, rewards, support systems, and empowerment.
Open communication with employees is another key to successfully rallying them around new initiatives
and opportunities aimed at building business. As a result of its support and fair treatment of employees,
employee loyalty at FedEx is very high, and promises to customers can be kept.
Technology and the Services Marketing Triangle
With the impact of technology on all dimensions of service and service delivery, it has been suggested
that the services triangle be expanded to explicitly include-technology-turning the triangle into a pyramid,
as shown in Figure 1-6.14 The pyramid suggests that interactive marketing can be the result of customers,
providers, and technology (or some subset of the three) interacting in real time to produce the service. It
also suggests that management has the responsibility to facilitate not only the delivery of service through
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human providers, but also the delivery through technology. Finally, the pyramid suggests that customers
will, at times, interact only with technology and
Providers customers
Figures 1-6 The services triangle and technology.
Therefore will need skills, abilities, and motivation to receive services in that manner.
Issues of customer satisfaction with technology-delivered services are also implied.
Returning to our FedEx example, we see further clues to FedEx's success through their integration of
technology into the services triangle. IS Via its POWERS HIP software and Internet access, FedEx is
working with its customers to provide them access to FedEx order-taking, package-tracking, information-
storing, and billing systems. The goal is to have all customers online by the year 2000. In this way, FedEx
customers receive quality service, when they want it, and are able to customize the service on their own.
FedEx sees limitless possibilities for improving customer service and providing new services to
customers via technology.
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b) What do you understand from Segmentation, Targeting and Positioning (STP) strategies?
Solution : MARKET SEGMENTATION , TARGETING AND POSITIONING
MARKET SEGMENTATION
INTRODUCTION: - The market for any product is normally made up of several

segments. A ‘market’ after all is the aggregate of consumers of a given product.
And, consumer (the end user), who makes a market, are of varying characteristics and buying behavior.
There are different factors contributing for varying mind set of consumers. It is thus natural that many
differing segments occur within a market.
In order to capture this heterogeneous market for any product, marketers usually divide or disintegrate the
market into a number of sub-markets/segments and the process is known as market segmentation.
Thus we can say that market segmentation is the segmentation of markets into homogenous groups of
customers, each of them reacting differently to promotion, communication, pricing and other variables of
the marketing mix. Market segments should be formed in that way that difference between buyers within
each segment is as small as possible. Thus, every segment can be addressed with an individually targeted
marketing mix.
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The importance of market segmentation results from the fact that the buyers of a product or a service are
no homogenous group. Actually, every buyer has individual needs, preferences, resources and behaviors.
Since it is virtually impossible to cater for every customer’s individual characteristics, marketers group
customers to market segments by variables they have in common. These common characteristics allow
developing a standardized marketing mix for all customers in this segment.
Through segmentation, the marketer can look at the differences among the customer groups and decide on
appropriate strategies/offers for each group. This is precisely why some marketing gurus/experts have
described segmentation as a strategy of dividing the markets for conquering them.
MARKETING STRATEGY AND MARKET SEGMENTATION: - When it

comes to marketing strategies, most people spontaneously think about the 4P(Product, Price, Place,
Promotion) – maybe extended by three more Ps for marketing services (People, Processes, Physical
Evidence).
Market segmentation and the identification of target markets, however, are an important element of each
marketing strategy. They are the basis for determining any particular marketing mix. Basic steps in
marketing strategy are as follows:
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Market segmentation is resorted to for achieving certain practical purpose. For example, it has to be
useful in developing and implementing effective and practical marketing programmes. For this to happen,
the segments arrived at must meet certain criteria such:-
a. Identifiable: The differentiating attributes of the segments must be measurable so that they can
be identified.
b. Accessible: The segments must be reachable through communication and distribution channels.
c. Sizeable: The segments should be sufficiently large to justify the resources required to target
them. A very small segment may not serve commercial exploitation.
d. Profitable: - There is no use in locating segments that are sizeable but not profitable.
e. Unique needs: To justify separate offerings, the segments must respond differently to the
different marketing mixes.
f. Durable: The segments should be relatively stable to minimize the cost of frequent changes.
g. Measurable: The potential of the segments as well as the effect of a specific marketing mix on
them should be measurable.
h. Compatible: - Segments must be compatible with firm’s resources and capabilities.
• REASONS FOR MARKET SEGMENTATION
Segmentation is the basis for developing targeted and effective marketing plans. Furthermore, analysis of
market segments enables decisions about intensity of marketing activities in particular segments.
A segment-orientated marketing approach generally offers a range of advantages for both, businesses and
customers.
1. Facilitates proper choice of target marketing:-

marketing:
Segmentation helps the marketers to distinguish one customer group from another within a given market
and thereby enables him to decide which segment should form his target market.
2. Higher Profits: -
It is often difficult to increase prices for the whole market. Nevertheless, it is possible to develop
premium segments in which customers accept a higher price level. Such segments could be distinguished
from the mass market by features like additional services, exclusive points of sale, product variations and
the like. A typical segment-based price variation is by region. The generally higher price level in big
cities is evidence for this. When differentiating prices by segments, organizations have to take care that
there is no chance for cannibalization between high-priced products with high margins and budget offers
in different segments. This risk is the higher, the less distinguished the segments are.
3. Facilitates tapping of the market, adapting the offer to the target:-Segmentation

target:- also enables the
marketer to crystallize the needs of target buyers. It also helps him to generate an accurate prediction
of the likely responses from each segment of the target buyer. Moreover, when buyers are handled
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after careful segmentation, the responses for each segment will be homogeneous. This in turn, will
help the marketer develop marketing offer/programmers that most suited to each groups. He can
achieve specialization that is required in product, distribution, promotion and pricing for matching
the particular customer group and develop offers and appeals for the segmented group.
Example of Ford: - Ford has gained useful insights through segmentation and adapted its offer to
suit the Indian target market. For the Indian segment Ford made some changes in its cars in
comparison to their European version. Modifications such as: -
a. Higher ground clearance to make the car compatible to the rougher road surface in India.
b. Stiffer rear springs to enable negotiating the ubiquitous potholes on Indian roads.
c. Changes in cooling requirement, with greater airflow to the rear.
d. Higher resistance to dust.
e. Compatibility of engine with the quality of fuel available in India.
f. Location of horn buttons on the steering wheel. As Indian motorists use horn far more frequently than
the European where the horns are located on the lever.
4. Stimulating Innovation: -
An undifferentiated marketing strategy that targets at all customers in the total market necessarily
reduces customers’ preferences to the smallest common basis. Segmentations provide information
about smaller units in the total market that share particular needs. Only the identification of these
needs enables a planned development of new or improved products that better meet the wishes of
these customer groups. If a product meets and exceeds a customer’s expectations by adding superior
value, the customers normally is willing to pay a higher price for that product. Thus, profit margins
and profitability of the innovating organizations increase.
5. Makes the marketing effort more efficient and economic: - Segmentation ensures that the
marketing effort is concentrated on well defined and carefully chosen segments. After all, the
resources of any firm are limited and no firm can normally afford to attack and tap the entire market
without any delimitation whatsoever. It would benefit the firm if the efforts were concentrated on
segments that are more profitable and productive ones.
Segmentation also helps the marketer assess as to what extend existing offer from competitors match
the needs of different customer segments. The marketer can thus identify the relatively less satisfied
segments and succeed by concentrating on them and satisfying their needs.
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6. Benefits the customer as well: -
Segmentation brings benefits not only to the marketer, but to the customer as well. When
segmentation attains higher levels of sophistication and perfection, customers and companies can
conveniently settle down with each other, as at such a stage, they can safely rely on each other’s
discrimination. The firm can anticipate the wants of the customers and the customers can anticipate
the capabilities of the firm.
7. Sustainable customer relationships in all phases of customer life cycle: - Customers change their
preferences and patterns of behavior over time. Organizations that serve different segments along a
customer’s life cycle can guide their customers from stage to stage by always offering them a special
solution for their particular needs. For example, many car manufacturers offer a product range that
caters for the needs of all phases of a customer life cycle: first car for early teens, fun-car for young
professionals, family car for young families, etc. Skin care cosmetics brands often offer special series
for babies, teens, normal skin, and elder skin.
8. Targeted communication: -
It is necessary to communicate in a segment-specific way even if product features and brand identity
are identical in all market segments. Such a targeted communications allows to stress those criteria
that are most relevant for each particular segment (e.g. price vs. reliability vs. prestige).
9. Higher market Shares: -
In contrast to an undifferentiated marketing strategy, segmentation supports the development of niche

strategies. Thus marketing activities can be targeted at highly attractive market segments in the
beginning. Market leadership in selected segments improves the competitive position of the whole
organization in its relationship with suppliers, channel partners and customers. It strengthens the
brand and ensures profitability. On that basis, organizations have better chances to increase their
market shares in the overall market.
MARKET TARGETING
INTRODUCTION: - There was a time when finding the best customers was like throwing darts in the
dark. Target marketing changed all that...Today's savvy marketers know that finding their best prospects
and customers hinges on well thought out targeted marketing strategies.
Defining a target market requires market segmentation, the process of pulling apart the entire market as a
whole and separating it into manageable, disparate units based on demographics. Target market is a
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business term meaning the market segment to which a particular good or service is marketed. It is mainly
defined by age, gender, geography, socio-economic grouping, or any other combination of demographics.
It is generally studied and mapped by an organization through lists and reports containing demographic
information that may have an effect on the marketing of key products or services.
Target Marketing involves breaking a market into segments and then concentrating your marketing
efforts on one or a few key segments. Target marketing can be the key to a small business’s success.
The beauty of target marketing is that it makes the promotion, pricing and distribution of your products
and/or services easier and more cost-effective. Target marketing provides a focus to all of your marketing
activities.
Market targeting simply means choosing one’s target market. It needs to be clarified at the onset that
marketing targeting is not synonymous with market segmentation. Segmentation is actually the prelude to
target market selection. One has to carry out several tasks beside segmentation before choosing the target
market.
Through segmentation, a firm divides the market into many segments. But all these segments need not
form its target market. Target market signifies only those segments that it wants to adopt as its market. A
selection is thus involved in it.
In choosing target market, a firm basically carries out an evaluation of the various segments and selects
those segments that are most appropriate to it. As we know that the segments must be relevant, accessible,
sizable and profitable. The evaluation of the different segments has to be actually based on these criteria
and only on the basis of such an evaluation should the target segments be selected.
• PROCESS OF CHOOSING THE TARGET MARKET
The process of choosing the target Market are:-
 Choosing the target market is related to, but not synonymous with, market segmentation.
 Segmentation is the means or the tool; choosing the target market is the purpose.
 Segmentation can also be viewed as the prelude to target market selection.
 Choosing the target market usually follows multi-level segmentation using different bases.
 Choosing the target market involves several other tasks in addition to segmentation.
 Looking at each segment as a distinct marketing opportunity.
 Evaluating the worth of each segment (sales/profit potential).
 Evaluating whether the segment is:
 Distinguishable.
 Measurable.
 Sizable.
 Accessible.
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 Growing.
 Profitable.
 Compatible with the firm’s resources.
 Examining whether it is better to choose the whole market, or the only a few segment, and deciding
which ones should be chosen.
 Looking for segments, which are relatively less satisfied by the current offers in the market from
competing brands.
 Checking out if the firm has the differential advantage / distinctive capability for serving the
selected segments.
 Evaluating the firm’s resources and checking whether it is possible to put in the marketing
programmes required for capturing the spotted segments with those resources.
 Finally selecting those segments that are most appropriate for the firm.
FACTORS TO BE CONSIDERED WHILE TARGET MARKET SELECTION
Target marketing tailors a marketing mix for one or more segments identified by market segmentation.
Target marketing contrasts with mass marketing, which offers a single product to the entire market.
Two important factors to consider when selecting a target market segment are the attractiveness of the
segment and the fit between the segment and the firm's objectives, resources, and capabilities.
capabilities
TARGET MARKET STRATEGIES
There are several different target-market strategies that may be followed. Targeting strategies usually can
be categorized as one of the following:
• Single-segment strategy - Also known as a concentrated strategy. One market segment (not the
entire market) is served with one marketing mix. A single-segment approach often is the strategy
of choice for smaller companies with limited resources.
• Selective specialization-
specialization This is a multiple-segment strategy, also known as a differentiated
strategy. Different marketing mixes are offered to different segments. The product itself may or
may not be different - in many cases only the promotional message or distribution channels vary.
• Product specialization-
specialization The firm specializes in a particular product and tailors it to different
market segments.
• Market specialization-
specialization The firm specializes in serving a particular market segment and offers
that segment an array of different products.
• Full market coverage - The firm attempts to serve the entire market. This coverage can be
achieved by means of either a mass market strategy in which a single undifferentiated marketing
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mix is offered to the entire market, or by a differentiated strategy in which a separate marketing
mix is offered to each segment
The following diagrams show examples of the five market selection patterns given three market
segments S1, S2, and S3, and three products P1, P2, and P3.
Single Selective Product Market Full Market

Segment Specialization Specialization Specialization Coverage
S1 S2 S3 S1 S2 S3 S1 S2 S3 S1 S2 S3 S1 S2 S3
P1 P1 P1 P1 P1
P2 P2 P2 P2 P2
P3 P3 P3 P3 P3
A firm that is seeking to enter a market and grow should first target the most attractive segment that
matches its capabilities. Once it gains a foothold, it can expand by pursuing a product specialization
strategy, tailoring the product for different segments, or by pursuing a market
specialization strategy and offering new products to its existing market segment.
Choosing the target market is a part of marketing strategy formulation, the other two parts being
positioning and marketing mix formulation. Without right targeting, the firm cannot formulate an
effective strategy. It is through careful segmentation and targeting that firm pick up right group of
consumers. Also, it is through this process that the firm gain vital knowledge about the need and buying
behaviour of the consumer in each segment and the differences between one segment and the other. And,
it is by using this knowledge that the firm develops marketing programmes that match the specific
requirement of different segments. In other words, segmentation and targeting help the firm not only the
characteristics of each of the segments but also the ‘distinctive excellence’ that is required for catering to
the specific needs of the consumers in each of them.
Another strategy whose use is increasing is individual marketing, in which the marketing mix is tailored
on an individual consumer basis. While in the past impractical, individual marketing is becoming more
viable thanks to advances in technology.
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• DECISIONS INVOLVED IN TARGETING STRATEGY INCLUDE:-

INCLUDE
 which segments to targeting.

 how many products to offer.
 which products to offer in which segments.
• TARGETING STRATEGY DECISIONS ARE INFLUENCED BY:
 Market maturity.
 Diversity of buyers' needs and preferences.
 Strength of the competition.
 The volume of sales required for profitability.
profitability
 DECIDING THE SIZE OF TARGET MARKET
After selecting the target market it is important for marketers to decide the size of the target
market. Is the target market large enough to sustain a business which will provide products or
services to them? A target market has to be of at least a minimum size to be viable. Suppose a
firm chooses food processing and food packaging as its target market. In fact, they might be too
large, and it might be wise to find a niche within those target markets. Therefore, the firm must
then focus on a particular type of food market, such as a food production firm who wants to
package its products for selling. Thus by targeting its product for its targeted market, the firm can
decide its size on the basis of it.
POSITIONING
INTRODUCTION: - Positioning is a concept in marketing which was first popularized by Al Ries and
Jack Trout in their bestseller book “Positioning
Positioning - a battle for your mind".
mind According to them ‘Positioning
is what you do to mind of the prospect’. They iterate that any brand is valued by the perception it carries
in the prospect or customer's mind. Each brand has thus to be 'Positioned' in a particular class or segment.
Example: Mercedes is positioned for luxury segment, Volvo is positioned for safety.
The position of a product is the sum of those attributes normally ascribed to it by the consumers – its
standing, its quality, the type of people who use it, its strengths, its weaknesses, any other unusual or
memorable characteristics it may possess, its price and the value it represents.
Although there are different definitions of Positioning, probably the most common is: "A product's
position is how potential buyers see the product", and is expressed relative to the position of competitors.
Positioning is a platform for the brand. It facilitates the brand to get through to the mind of the target
consumer.
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The position of the brand has thus to be carefully maintained and managed. Example: when Malboro cut
down its prices, its sales dropped immediately, as it began being associated with the generic segment.
Watches like Rolex are positioned as luxury segment watches, thus they being one of the most expensive
have become a symbol for accomplishment in life. If Rolex reduces its prices, it loses its perceived image
and hence is in danger of losing its customers. This differs slightly from the context in which the term
was first published in 1969 by Al Ries and Jack Trout in the paper "Positioning" is a game people play
in today’s me-too market place" in the publication
Industrial Marketing, in which the case is made that the typical consumer is overwhelmed with unwanted
advertising, and has a natural tendency to discard all information that does not immediately find a
comfortable (and empty) slot in the consumers mind. It was then expanded into their ground-breaking
first book, "Positioning:
Positioning: The Battle for Your Mind",
Mind in which they define Positioning as "an organized
system for finding a window in the mind. It is based on the concept that communication can only take
place at the right time and under the right circumstances."
POSITIONING CONCEPTS:- Generally, there are three types of positioning concepts:
• Functional positions
 Solve problems.
 Provide benefits to customers.
 Get favorable perception by investors (stock profile) and lenders.
• Symbolic positions
 Self-image enhancement.
 Ego identification.
 Belongingness and social meaningfulness.
 Affective fulfillment.
• Experiential positions
 Provide sensory stimulation.

 Provide cognitive stimulation.
• APPROACHES OF POSITIONING :-
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The main positioning strategy is to either developing or reinforcing a particular image for the brand in the
mind of the customer. The main approaches to positioning strategy are:-
• Customer benefits approach.
• The price-quality approach.
• The use or application approach.
• The product user approach.
• The product class approach.
• The cultural symbol approach.
• The competitor approach.
1 . Customer benefit approach:

approach -
This is an important positioning strategy. It involves putting the brand above competitors, based on
specific brand attributes and customer benefit. In the automobiles sector we can see many car
manufacturer give emphasis on different technical aspects such as fuel efficiency, safety, engine
performance, power windows etc. Generally marketers identify positioning in respect of product
characteristics that have been ignored by the competitor. Often we can see that firms attempts to
position their brands along with two or more characteristic simultaneously, this is done to give an
extra edge to the product from its rival and also helps increase the
product’s life cycle. Thus a single product can solve many problem is the main theme behind the
product. Example:: Procter & Gamble’s Head & shoulder shampoo functions as anti dandruff
and anti hairfall shampoo.
shampoo
2 . Price quality approach: -
Sometimes brands attempts to offer more in term of service, feature, quality, or performance.
Manufacturer of such brands charge higher prices partly to cover the cost and partly to
communicate the fact that they are of high quality. In fact in the same product category there are
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brands, through comparable in qualities, which appeal on the basis of price. For example brands
like Rado and Timex use quality and price positioning technique respectively. Rado competes for
quality and Timex competes for price. It is difficult to use both quality and price positioning
together
because there is a risk that high quality-low price positioning technique may infer the image of the
product in the mind of the consumer.
3 . The use and application approach: - In this strategy the product is positioned with a use or
application approach. For example: - Largest Mobile manufacturer in the world Nokia positioned
its few variant of N-series mobiles as music phones with enhanced memory and multimedia
capabilities.
4 . The product user approach:- In this approach, the brand identifies and determines the target
segement for which the product will be positioned. Many brand uses a model or a celebrity to
position their product. The expectation are that a model or a celebrity is likely to influence the
product’s image by reflecting their own image to it. For example:- Dabur Chyvanprash is
positioned for all age groups.
5 . The product class approach:- This approach is use so that the brand is associated with a particular
product category. This is generally used when a category is too crowded. For example:- HLL has
positioned Dove toilet soap as a cleansing cream product for young womwn with dry skin and its is
positioned as a premium segment toilet soap.
6 . The cultural symbol approach:- The positioning strategy is based on deeply entrenched cultural
symbol. The use of cultural symbol can help to differentiate the brand from competitors brands. For
example:- The positioning technique of Marlboro cigarettes use the image of typical American
cowboy .
7 . The competitor approach:- Many brands use competitor as a dominant plank in their campaign.
These brands are positioned following its competitor. This is an offensive strategy.
• DIFFERENT POSITIONING PLANKS / BASES:- Different types of positioning planks /bases

are used by the marketers are:-
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1. Economy:- Product positioned toward a particular segment keeping in mind it economy.Example-

Maruti 800, Tata Nano, Nirma detergent powder etc are positioned for the economy segment
2. Benefit:- Product positioned with some beneficial features. Example-Colgate

Colgate total, Clinic plus
etc.
3. Gender:-
Gender: Product positioned for a particular segment. Example- Scooty Pep, Titan Raga.
Raga
4. Luxury and exclusiveness:- Product or services positioned toward luxury segment. Example-Taj
Taj
group of hotel, Mercedes Benz E-class etc.
5. Fashion for elite class:- Product positioned for fashionable elite class or member of the society,
who always want to stay ahead in term of fashion and demands exclusive products only. Example
Peter England, Van Heusen, Raymond etc. etc
6. Technology and value added features:- Positioning of a product according to its technological
advancement and value added features. Example:- Microsoft’s positioning of its recent
operating system Windows Vista as the advanced operating system, Sony with various
elecronic goods, LG etc
• POSITIONING PLANNING
Positions are described by variables and within parameters that are important to the customers. Common
examples are price, supporting services, quality, reliability, and value for money. Often, customers
position a product in relation to a brand or product that is especially visible to them. This could be the
market leader or any other offer with a high media exposure and an above average marketing budget.
Therefore, it is advisable to use in-depth market research to determine relevant parameters in order to
understand how customers rate different products and marketing variables.
The number of relevant parameters is normally low. Most often, they can be described with a two- or
three-dimensional matrix. This tool to visually depict customers’ perceptions of a product and its position
is called perceptual mapping.
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Normally, most suppliers in a market or in a market segment will be positioned along the diagonal. This
diagonal is called the Value-Equivalence-Line (VEL), since value and price are balanced there.
In our example, product A is positioned unfavourably. It is too expensive for the mass market and its
quality is not good enough for the premium segment. In general, there are the following strategies for
repositioning; however, their feasibility will depend on the particular situation.
• Change the relation of price and quality for the existing brand; e.g. product relaunch with
improved characteristics
• Change the relation of price and quality by introducing a new brand; e.g. introduction of clone
under a ‘cheap’ brand or a retailers own brand
• Alter believes about the brand; e.g. image campaign, creation of a ‘hype’
• Alter believes about competitive brands; e.g. comparing advertisements
• Alter customers’ rankings of important factors; e.g. focus on additional features and
characteristics (example: car manufacturers focus on very different product characteristics in their
commercials, for instance security, fuel consumption, image, luxury interior, fun)
• Introduction of new or neglected attributes; e.g. product relaunch with new features that are new
for the whole market segment.
When planning such activities it is critical to think about possible reactions of competitors. A shift of a
product into a more favourable position in the price-quality-map above the diagonal (e.g. into position B)
will normally lead to in shift of market shares in favour of this product. Competitors could react with a
reduction of general price level, thus moving the VEL to the left. Product B would lose its superior
position.
Moreover, it is advisable to keep in mind that customer and their individual preferences of a price-quality-
combination are not distributed equally along the VEL. Neglecting the distribution of customers could
lead to the following problems:
• Positioning in a segment with very few potential customers (e.g. positioning in a middle-segment
in a market where customers prefer either the budget-product or the premium product)
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• Positioning in a too low or too high price-value-combination (segments a and b in our example).
This product does not appeal to a large proportion of the market, since customers either expect a
higher quality (a) or are not willing to pay that high price.
• STEPS FOR POSITIONING A PRODUCT
Dibb et al recommend the following steps for determining and implementing the positioning of a product.
Although they focus on new product development, these steps are applicable to a relaunch with new
features or for a repositioning of an existing product too.
1 . Define the segments in a particular market.

2 . Decide which segments to target.
3 . Understand what the target consumers expect and believe to be the most important considerations
when deciding on the purchase.
4. Develop a product (or products) that cater specifically for these needs and expectations.
5. Evaluate the positioning and images, as perceived by the target customers, of competing products in
the selected market segments.
6. Evaluate the market leader’s position; leading brand that occupies a special position in the consumer‘s
mind (cadbury’s
(cadbury’s in chocolates); other brands have to necessary relate themselves in some wayto the
leaders position; they cannot ignore the position of the leader, nor wish it away.
7. Select an image that sets the product apart from the competing products, thus ensuring that the
chosen image matches the aspirations of the target customers.
8. Inform target customers about the product (promotion).
2 a) How does Marketing Research aid Marketing Managers in decision making . Discuss with suitable
examples.
Solution : "Marketing research does not make decisions and it does not guarantee success". Marketing
managers may seek advice from marketing research specialists, and indeed it is important that research
reports should specify alternative courses of action and the probability of success, where possible, of
these alternatives. However, it is marketing managers who make the final marketing decision and not the
researcher. The second observation, that marketing research does not guarantee success, is simply a
recognition of the environment within which marketing takes place. In the fields of science and
engineering researchers are often working with deterministic models of the world where y = f(x). That is,
x is a necessary and sufficient condition for y to occur. For instance, an increase in pressure is usually
necessary and sufficient to bring about a rise in air temperature. In the social sciences, and this includes
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marketing and marketing research, the phenomenon under investigation rarely, if ever, lends itself to
deterministic modelling. Consider the marketing problem of determining how much to spend on
promotion in order to achieve a given market share. The link between promotional expenditure and sales
is not so direct as that between pressure and temperature. There are a great many more intervening
variables, including: the media used, the effectiveness of the promotional message, the length and
frequency of the campaign, not to mention the many dimensions of the product, price and distribution.
Marketing researchers work with probabilistic models of the form:
y = f(x1)..(fx2)...f(xn)...
This reflects the fact that in order for a target market share to be reached some promotion (amount
unknown) is necessarybut will not be sufficient, on its own, to achieve the target. Y is a function of a
number of variables and the interactions between them. The model is further complicated by the fact that
these interactions are themselves often not understood. It is for these reasons that marketing researchers
cannot guarantee that decisions based on their information will always prove 'successful'. Rather the best
that a competent researcher and a well designed study will be able to offer is a reduction in the amount of
uncertainty surrounding the decision.
A definition of marketing research
Green and Tull1 have defined marketing research as follows:
"Marketing research is the systematic and objective search for, and analysis of, information relevant to the
identification and solution of any problem in the field of marketing."
The key words in this definition are; systematic, objective and analysis. Marketing research seeks to set
about its task in a systematic and objective fashion. This means that a detailed and carefully designed
research plan is developed in which each stage of the research is specified. Such a research plan is only
considered adequate if it specifies: the research problem in concise and precise terms, the information
necessary to address the problem, the methods to be employed in gathering the information and the
analytical techniques to be used to interpret it.
Maintaining objectivity in marketing research is essential if marketing management is to have sufficient

confidence in its results to be prepared to take risky decisions based upon those results. To this end, as far
as possible, marketing researchers employ the scientific method. The characteristics of the scientific
method are that it translates personal prejudices, notions and opinions into explicit propositions (or
hypotheses). These are tested empirically. At the same time alternative explanations of the event or
phenomena of interest are given equal consideration.
Not many years ago an agricultural engineering company developed an improved rice milling machine.
The machine was introduced into Thailand where existing rice milling machines were of a design which
resulted in a high percentage of brokens (broken kernels). The new rice mill produced a negligible
percentage of brokens. Intuitively a successful product would be predicted, launched with hardly any
need for marketing research when the new mill had such obvious advantages over existing products. The
agricultural engineering company went through the expensive and time-consuming process of importing
the machine into Thailand. They set up extensive distribution and servicing facilities only to be surprised
when the mill failed to gain acceptance. In Thailand, smallholders take their rice to a miller.
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Since they do not have sufficient cash to pay for milling their rice they get paid in 'brokens'. The miller
then sells the 'brokens' for animal feed. The more effective milling machine simply did not fit into the
Thai rice processing system. The company's assessment of the market was hardly objective. They saw the
'brokens' as a problem which their product solved. The prospective customer did not see it as a problem at
all.
The third of the key terms in the definition given a little earlier was analytical. The marketing researcher's
task goes beyond the collecting of data. He/she must also interpret the data in terms of what the it means
to the organisation which commissioned the research. Knowing that 60% of those interviewed thought
that product A was superior to product B is, in itself, of little value. The organisation needs to know the
alternative ways it can respond to this data. Data is equivalent to the raw materials of manufacturing; it
has to be converted into information before it becomes useful in decision making. The process of
convening data into information is achieved through analysis.
Although the need for precision and thoroughness in marketing research has been stressed here, it is to be
remembered that, in practice, there is a perpetual conflict between the demands of expediency and the
search for truth. The reality is that management is frequently under pressure to make timely decisions.
Therefore management often seeks answers through marketing research in the shortest time possible and,
moreover, at minimum cost. On such occasions its methods tend to be less theoretically rigorous and its
analysis more superficial.
The market research brief
Marketing research can be concerned with any of a variety of aspects of the market: the product, sales,
buyer behaviour, promotion, distribution, pricing, packaging, etc. Since the researcher cannot investigate
everything about a market, he/she must be selective. The question remains as to how the researcher
decides where to focus the study, and to what depth each issue should be investigated. The answer should
lie in a document called the research brief. The research design is a set of guidelines given to the
researcher by the person(s) who have commissioned the research and/or the individual(s) who are to make
use of the results in their decision making. The brief must inform the researcher which aspects of the
market are particularly important. In particular, the research brief should include:
· the purpose of the research

· the objectives stated in a clear, concise, attainable, measurable and quantifiable way
· a time horizon
· a resource allocation, including the budget and facilities
· a reporting period.
Each of these components of the brief is explained in a little more detail in the section that follows.
The purpose of the research
It is not at all unusual for marketing managers to neglect to tell the researcher the precise purpose of the
research. They often do not appreciate the need to do so. Instead, they simply state what they think they
need to know. This is not quite the same thing. To appreciate the difference consider the case of the
marketing research agency which was contacted by the International Coffee Organisation (ICO) and
asked to carry out a survey of young people in the age group 15-24. They wanted information on the
coffee drinking habits of these young people: how much coffee they drank, at what times of day, with
meals or between meals, instant or ground coffee, which other beverages they preferred and so on. In
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response, the research organisation developed a set of wide-ranging proposals which included taking a
large random sample of young people.
In fact much of the information was interesting rather than important. Important information is that
information which directly assists in making decisions and the ICO had not told the research company the
purpose of the research. The initial reason for the study had been a suspicion, on the part of the ICO, that
an increasing percentage of young people were consuming beverages other than coffee, particularly soft
drinks, and simply never developed the coffee drinking habit. Had this been explained to the research
company then it is likely that their proposals would have been radically different. To begin with, the
sample would have been composed of 15-24 year old non-coffee drinkers rather than a random sample of
all 15-24 year olds. Second, the focus would have been non-coffee drinking habits rather than coffee
drinking habits.
Unless the purpose of the research is stated in unambiguous terms it is difficult for the marketing
researcher to translate the decision-maker's problem into a research problem and study design.
Clear, concise, attainable, measurable and quantifiable objectives
Suppose that the marketing manager states that he needs to know the potential market for a new product
his/her organisation has been developing. At first glance this might appear to meet all of the requirements
of being clear, concise, attainable, measurable and quantifiable. In practice it would possibly meet only
one of these criteria, i.e. it is concise!
Here is another case to be considered. A small engineering firm had purchased a prototype tree-lifter from
a private research company. This machine was suitable for lifting semi-mature trees, complete with root-
ball intact, and transplanting such trees in another location. It was thought to have potential in certain
types of tree nurseries and plantations.
The problem with the objective is that the marketing manager needs to know the potential market for the
new tree-lifter is that it is not attainable. One could find out how many tree-lifters were currently being
sold but this is not the same as the objective set by the marketing manager. The market potential for any
new brand is a function of at least 4 things, as shown in Figure 1.1.
Figure 1.1 The components of market potential
It was possible to test customer reaction to the concept of the new tree-lifter by showing pictures, line
drawings and by supplying product specifications to prospective buyers. However, since the company had
not decided their pricing policy an important element could not be tested. In large measure, it was also
possible to gauge the likely reaction from competitors. The researchers began by looking at the basis of
competition to determine whether it was on price, product quality or unique product features. The
researchers were able to look at precedents. They examined the pattern of response on past occasions
when one or other of those companies already in the market had launched a new product. An audit of the
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environment was undertaken too, but the missing component was the company's' own plans for exploiting
the market. Since the company had no involvement in the agricultural engineering sector, prior to
acquiring the rights to the tree-lifter, they had no agreements with distributors, no idea of which, if any, of
the distributors would be prepared to stock their product; they had no salesmen trained in selling into this
industry and so on. The product's potential depended very much on such initiatives.
The solution would have been to undertake a study which would have described the market in detail in
terms of customers, competitors and the environment. The company could then have put a marketing plan
together and conducted a follow-up study to test their propositions out on the marketplace.
The need to set a time horizon for marketing research
Inevitably there are deadlines which the marketing research activity must fit and these must be stated
clearly at the outset of the research. As was said earlier, because of time pressures, management is often
seeking quick answers from marketing research. If the researcher is aware of the time constraints then this
will become an overriding factor when he/she plans the research design. He or she is likely to put forward
a design which is less elegant, and gives rise to less precise information but delivers the results on
schedule.
A resource allocation, including the budget and facilities
There are essentially two approaches to establishing the resource allocation to a particular marketing
research exercise. Management can start with the problem and work out how much it will cost to solve it.
Alternatively, they can decide how much the management can afford to spend, at the time, and seek the
best answer they can for the time, money and manpower allocated. In practice the decision-makers prefer
the latter approach and the researchers the former. In the end, some kind of compromise develops. The
researcher rarely gets all of what he/she judges is required to reach a satisfactory conclusion but if the
research proposal is well thought out and persuasively presented some concessions can be obtained.
Whichever the approach to resource allocation adopted, it is imperative that the researcher is aware of the
financial and other constraints within which he/she must complete the work.
A reporting period
The researcher must also know from the outset of the study the points in time when interim reports are
required, if any, and the deadline for the final report. The form of interim reports should also be specified
at the outset, whether verbal or written, and whether presentations are to be made to a group (nature and
size of the group) or an individual.
In addition there are several characteristics of a good research brief and these are that it:
· means the same thing to all concerned
· does not ask for irrelevant information
· defines the relevant populations to be measured
· identifies the correct variables to be measured
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· specifies the degree of accuracy really needed within the main results
· specifies an order of priorities when the sample has to be broken down for the purposes of analysing
data for subgroups, and
· does not pre-judge the selection of research techniques and procedures.
The research proposal
Having received the research brief, the researcher responds with a research proposal. This is a document
which develops after having given careful consideration to the contents of the research brief. The research
proposal sets out the research design and the procedures to be followed. The eight steps are set out in
figure 1.2. These are only briefly discussed here since the remainder of this textbook consists of a detailed
explanation of each step.
Figure 1.2 The research design
Step 1: Problem definition
The point has already been made that the decision-maker should clearly communicate the purpose of the
research to the marketing researcher but it is often the case that the objectives are not fully explained to
the individual carrying out the study. Decision-makers seldom work out their objectives fully or, if they
have, they are not willing to fully disclose them. In theory, responsibility for ensuring that the research
proceeds along clearly defined lines rests with the decision-maker. In many instances the researcher has
to take the initiative.
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In situations, in which the researcher senses that the decision-maker is either unwilling or unable to fully
articulate the objectives then he/she will have to pursue an indirect line of questioning. One approach is to
take the problem statement supplied by the decision-maker and to break this down into key components
and/or terms and to explore these with the decision-maker. For example, the decision-maker could be
asked what he has in mind when he uses the term market potential. This is a legitimate question since the
researcher is charged with the responsibility to develop a research design which will provide the right
kind of information. Another approach is to focus the discussions with the person commissioning the
research on the decisions which would be made given alternative findings which the study might come up
with. This process frequently proves of great value to the decision-maker in that it helps him think
through the objectives and perhaps select the most important of the objectives.
Whilst seeking to clarify the objectives of the research it is usually worthwhile having discussions with
other levels of management who have some understanding of the marketing problem and/or the
surrounding issues. Other helpful procedures include brainstorming, reviews of research on related
problems and researching secondary sources of information as well as studying competitive products.
Kerlinger2 suggests that a well-defined marketing research problem tends to have three common
characteristics as shown in figure 1.3.
Step 2: Hypothesis generation
Whilst it is true that the purpose of research is to address some question, nonetheless one does not test
research questions directly. For example, there may be interest in answering the question: "Does a
person's level of education have any bearing upon whether or not he/she adopts new products?" Or, "Does
a person's age bear any relation to brand loyalty behaviour?". Research questions are too broad to be
directly testable. Instead, the question is reduced to one or more hypotheses implied by these questions.
Figure 1.3 Characteristics of a sound definition of the research problem
A hypothesis is a conjectural statement regarding the relation between two or more variables. There are
two key characteristics which all hypotheses must have: they must be statements of the relationship
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between variables and they must carry clear implications for testing the stated relations. These
characteristics imply that it is relationships, rather than variables, which are tested; the hypotheses specify
how the variables are related and that these are measurable or potentially measurable. Statements lacking
any or all of these characteristics are not research hypotheses. For example, consider the following
hypothesis:
"Red meat consumption increases as real disposable incomes increase."
This is a relation stated between one variable, "red meat consumption", and another variable, "disposable
incomes". Moreover, both variables are potentially measurable. The criteria have been met. However for
the purposes of statistical testing it is more usual to find hypotheses stated in the so-called null form, e.g.
"There is no relationship between red meat consumption and the level of disposable incomes."
Consider a second hypothesis:
"There is no relationship between a farmer's educational level and his degree of innovativeness with
respect to new farming technologies."
Again there is a clear statement of the relationship being investigated but there are question marks over
the measurability with respect to at least one of the variables i.e. "...a farmer's degree of innovativeness."
We may also encounter difficulties in agreeing an appropriate measure of the other variable, i.e. "level of
education". If these problems can be resolved then we may indeed have a hypothesis.
Hypotheses are central to progress in research. They will direct the researcher's efforts by forcing him/her
to concentrate on gathering the facts which will enable the hypotheses to be tested. The point has been
made that it is all too easy when conducting research to collect "interesting data" as opposed to "important
data". Data and questions which enable researchers to test explicit hypotheses are important. The rest are
merely interesting.
There is a second advantage of stating hypotheses, namely that implicit notions or explanations for events
become explicit and this often leads to modifications of these explanations, even before data is collected.
On occasion a given hypotheses may be too broad to be tested. However, other testable hypotheses may
be deduced from it. A problem really cannot be solved unless it is reduced to hypothesis form, because a
problem is a question, usually of a broad nature, and is not directly testable.
Step 3: Decision on type of study
Marketing research can be carried out on one of three levels: exploratory, descriptive or causal.
Figure 1.4 Three types of marketing research study
Exploratory research: The chief purpose of exploratory research is to reach a better understanding of the
research problem. This includes helping to identify the variables which should be measured within the
study. When there is little understanding of the topic it is impossible to formulate hypotheses without
some exploratory studies. For example, crop residues such a straw are high in lignin (a wood-like
substance) and low in nutrients. This makes them a poor animal feed since the lignin acts against
digestibility and the low nutrient content means poor food value. However, if treated in a strong alkali,
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plus a little heat, the lignin breaks down and the nutrient content increases. A company was established to
exploit this technology and did so successfully for 4 seasons. After this period sales began to slow down.
Three other manufacturers had entered the market by this time. The company, Animal Feed Systems, did
not know whether the whole industry had slowed down or if only their product was suffering. Nor did
they know if the problem was temporary in that perhaps the market comprised of "early adopters" had
been saturated but it was only a matter of time before other farmers began to buy their systems when they
saw how well they worked. It was also possible that if a problem did exist it could lie in any one of a
number of areas: animal populations might be declining, distributors may not be promoting the product
aggressively, customers may be experiencing difficulties in getting the chemicals, and so on and on.
This is a good example of a situation where insufficient knowledge prevented the development of clear
objectives, since the problem could not be articulated with any precision and therefore research of an
exploratory nature was required. Such research can take the form of literature searches, informal personal
interviews with distributors and users/non-users of the product and/or focus group interviews with
farmers and/or distributors.
Exploratory research is intended to help researchers formulate a problem in such a way that it can be
researched and suggest testable hypotheses.
Descriptive research: As the name suggests, descriptive research is concerned with describing market
characteristics and/or marketing mix characteristics. Typically, a descriptive study specifies the number
and size of market segments, the alternative ways in which products are currently distributed, listing and
comparison of the attributes and features of competitive products, etc.
This type of study can involve the description of the extent of association between variables. For
example, the researcher may observe that there is an association between the geographical location of
consumers and their tendency to consume red meat. Note that the researcher is able to describe the
relationship rather than explain it. Nonetheless if the relationship between the two is fairly stable this
descriptive information may be sufficient for the purposes of prediction. The researcher may, for
example, be able to predict how fast the per capita consumption of red meat is likely to rise over a given
time period.
The principal difference between exploratory and descriptive research is that, in the case of the latter,
specific research questions have been formulated before the research is undertaken. When descriptive
research is conducted the researcher must already know a great deal about the research problem, perhaps
because of a prior exploratory study, and is in a position to clearly define what he/she wants to measure
and how to do it.
Causal research: Causal research deals with the "why" questions. That is, there are occasions when the
researcher will want to know why a change in one variable brings about a change in another. If he/she can
understand the causes of the effects observed then our ability to predict and control such events is
increased.
In summary then there are three distinct types of marketing research study: exploratory, descriptive and
causal. The purpose of each is summarised in figure 1.4. In some cases, a research programme will be of
one kind or another, but in other instances these three typologies will represent phases within a single
marketing research investigation.
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Step 4: Decision on data collection method
The next set of decisions concerns the method(s) of data gathering to be employed. The main methods of
data collection are secondary data searches, observation, the survey, experimentation and consumer
panels. Each of these topics is dealt with later on, so they are simply noted here.
Figure 1.5 Data collection methods
Step 5: Development of an analysis plan
Those new to marketing research often intuitively believe that decisions about the techniques of analysis
to be used can be left until after the data has been collected. Such an approach is ill-advised. Before
interviews are conducted the following checklist should be applied:
· Is it known how each and every question is to be analysed? (e.g. which univariate or bivariate
descriptive statistics, tests of association, parametric or nonparametric hypotheses tests, or multivariate
methods are to be used?)
· Does the researcher have a sufficiently sound grasp of these techniques to apply them with confidence
and to explain them to the decision-maker who commissioned the study?
· Does the researcher have the means to perform these calculations? (e.g. access to a computer which has
an analysis program which he/she is familiar with? Or, if the calculations have to be performed manually,
is there sufficient time to complete them and then to check them?)
· If a computer program is to be used at the data analysis stage, have the questions been properly coded?
· Have the questions been scaled correctly for the chosen statistical technique? (e.g. a t-test cannot be used
on data which is only ranked)
There is little point in spending time and money on collecting data which subsequently is not or cannot be
analysed. Therefore consideration has to be given to issues such as these before the fieldwork is
undertaken.
Step 6: Data collection
At this stage the researcher is ready to go into the field and collect data. The various issues relating to data
collection constitute the main body of the text and therefore, are not dwelt upon here.
Step 7: Analysis of data
The word 'analysis' has two component parts, the prefix 'ana' meaning 'above' and the Greek root 'lysis'
meaning 'to break up or dissolve'. Thus data analysis can be described as:
"...a process of resolving data into its constituent components, to reveal its characteristic elements and
structure."
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Where the data is quantitative there are three determinants of the appropriate statistical tools for the
purposes of analysis. These are the number of samples to be compared, whether the samples being
compared are independent of one another and the level of data measurement.
Suppose a fruit juice processor wishes to test the acceptability of a new drink based on a novel
combination of tropical fruit juices. There are several alternative research designs which might be
employed, each involving different numbers of samples.
Test Comparing sales in a test market and the market share of the product it is targeted Number of
A to replace. samples = 1
Test Comparing the responses of a sample of regular drinkers of fruit juices to those of Number of
B a sample of non-fruit juice drinkers to a trial formulation. samples = 2
Test Comparing the responses of samples of heavy, moderate and infrequent fruit juice Number of
C drinkers to a trial formulation. samples = 3
The next consideration is whether the samples being compared are dependent (i.e. related) or independent
of one another (i.e. unrelated). Samples are said to be dependent, or related, when the measurement taken
from one sample in no way affects the measurement taken from another sample. Take for example the
outline of test B above. The measurement of the responses of fruit juice drinkers to the trial formulation in
no way affects or influences the responses of the sample of non-fruit juice drinkers. Therefore, the
samples are independent of one another. Suppose however a sample were given two formulations of fruit
juice to taste. That is, the same individuals are asked first to taste formulation X and then to taste
formulation Y. The researcher would have two sets of sample results, i.e. responses to product X and
responses to product Y. In this case, the samples would be considered dependent or related to one
another. This is because the individual will make a comparison of the two products and his/her response
to one formulation is likely to affect his/her reaction or evaluation of the other product.
The third factor to be considered is the levels of measurement of the data being used. Data can be
nominal, ordinal, interval or ratio scaled. Table 1.1 summarises the mathematical properties of each of
these levels of measurement.
Once the marketing researcher knows how many samples are to be compared, whether these samples are
related or unrelated to one another and the level of measurement then the selection of the appropriate
statistical test is easily made. To illustrate the importance of understanding these connections consider the
following simple, but common, question in marketing research. In many instances the age of respondents
will be of interest. This question might be asked in either of the two following ways:
Please indicate to which of the following age categories you belong
(a)
15-21 years ___

22 - 30 years ___
Over 30 years ___
(b)
How old are you? ___ Years
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Table 1.1 Levels of measurement
Measurement Measurement Level Examples Mathematical properties

scale
Nominal Frequency counts Producing grading categories Confined to a small number of
tests using the mode and
frequency
Ordinal Ranking of items Placing brands of cooking oil Wide range of nonparametric
in order of preference tests which test for order
Interval Relative differences of Scoring products on a 10 Wide range of parametric tests
magnitude between items point scale of like/dislike
Ratio Absolute differences of Stating how much better one All arithmetic operations
magnitude product is than another in
absolute terms.
Choosing format (a) would give rise to nominal (or categorical) data and format (b) would yield ratio
scaled data. These are at opposite ends of the hierarchy of levels of measurement. If by accident or design
format (a) were chosen then the analyst would have only a very small set of statistical tests that could be
applied and these are not very powerful in the sense that they are limited to showing association between
variables and could not be used to establish cause-and-effect. Format (b), on the other hand, since it gives
the analyst ratio data, allows all statistical tests to be used including the more powerful parametric tests
whereby cause-and-effect can be established, where it exists. Thus a simple change in the wording of a
question can have a fundamental effect upon the nature of the data generated. Figure 1.6 provides a useful
guide to making that final selection.
Figure 1.6 Selecting statistical tests
The individual responsible for commissioning the research may be unfamiliar with the technicalities of
statistical tests but he/she should at least be aware that the number of samples, their dependence or
independence and the levels of measurement does affect how the data can be analysed. Those who submit
marketing research proposals involving quantitative data should demonstrate an awareness of the factors
that determine the mode of analysis and a capability to undertake such analysis.
Marketing researchers have to plan ahead for the analysis stage. It often happens that data processing
begins whilst the data gathering is still underway. Whether the data is to be analysed manually or through
the use of a computer program, data can be coded, cleaned (i.e. errors removed) and the proposed
analytical tests tried out to ensure that they are effective before all of the data has been collected.
Another important aspect relates to logistics planning. This includes ensuring that once the task of
preparing the data for analysis has begun there is a steady and uninterrupted flow of completed data forms
or questionnaires back from the field interviewers to the data processors. Otherwise the whole exercise
becomes increasingly inefficient. A second logistical issue concerns any plan to build up a picture of the
pattern of responses as the data comes flowing in. This may require careful planning of the sequencing of
fieldwork. For instance, suppose that research was being undertaken within a particular agricultural
region with a view to establishing the size, number and type of milling enterprises which had established
themselves in rural areas following market liberalisation. It may be that the West of the district under
study mainly wheat is grown whilst in the East it is maize which is the major crop. It would make sense to
coordinate the fieldwork with data analysis so that the interim picture was of either wheat or maize
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milling since the two are likely to differ in terms of the type of mill used (e.g. hammer versus plate mills)
as well as screen sizes and end use (e.g. the proportions prepared for animal versus human food).
Step 8: Drawing conclusions and making recommendations
The final chapter of this textbook is devoted to the topic of report writing. However, it is perhaps worth
noting that the end products of marketing research are conclusions and recommendations. With respect to
the marketing planning function, marketing research helps to identify potential threats and opportunities,
generates alternative courses of action, provides information to enable marketing managers to evaluate
those alternatives and advises on the implementation of the alternatives.
Too often marketing research reports chiefly comprise a lengthy series of tables of statistics accompanied
by a few brief comments which verbally describe what is already self-evident from the tables. Without
interpretation, data remains of potential, as opposed to actual use. When conclusions are drawn from raw
data and when recommendations are made then data is converted into information. It is information which
management needs to reduce the inherent risks and uncertainties in management decision making.
b) What is the type of packaging you would adopt in the following cases and why:
(i) Sea Food Exports
(ii) Premium Basmati Rice
(iii) Unisex Perfume
Solution : It needs to be done by your self.
3a) Discuss the main objectives of Sales Promotion. Identify some sales promotions methods directed at
consumers, which can be used by a soap manufacturer?
• Solution : Sales promotion is a tool used to achieve most of the five major promotional
objectives discussed Building Product Awareness – Several sales promotion techniques are highly
effective in exposing customers to products for the first time and can serve as key promotional
components in the early stages of new product introduction. Additionally, as part of the effort to
build product awareness, several sales promotion techniques possess the added advantage of
capturing customer information at the time of exposure to the promotion. In this way sales
promotion can act as an effective customer information gathering tool (i.e., sales lead generation),
which can then be used as part of follow-up marketing efforts.
• Creating Interest – Marketers find that sales promotions are very effective in creating
interest in a product. In fact, creating interest is often considered the most important use of sales
promotion. In the retail industry an appealing sales promotions can significantly increase
customer traffic to retail outlets. Internet marketers can use similar approaches to bolster the
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number of website visitors. Another important way to create interest is to move customers to
experience a product. Several sales promotion techniques offer the opportunity for customers to
try products for free or at low cost.
• Providing Information – Generally sales promotion techniques are designed to move
customers to some action and are rarely simply informational in nature. However, some sales
promotions do offer customers access to product information. For instance, a promotion may
allow customers to try a fee-based online service for free for several days. This free access may
include receiving product information via email.
• Stimulating Demand – Next to building initial product awareness, the most important use
of sales promotion is to build demand by convincing customers to make a purchase. Special
promotions, especially those that lower the cost of ownership to the customer (e.g., price
reduction), can be employed to stimulate sales.
Reinforcing the Brand – Once customers have made a purchase sales promotion can be used to
both encourage additional purchasing and also as a reward for purchase loyalty (see loyalty
programs below). Many companies, including airlines and retail stores, reward good or
“preferred” customers with special promotions, such as email “special deals” and surprise
price reductions at the cash register.
Classification of Sales Promotion
Sales promotion can be classified based on the primary target audience to whom the promotion is
directed. These include:
• Consumer Market Directed - Possibly the most well-known methods of sales promotion are those
intended to appeal to the final consumer. Consumers are exposed to sales promotions nearly every
day and as discussed later, many buyers are conditioned to look for sales promotions prior to
making purchase decisions.
• Trade Market Directed – Marketers use sales promotions to target all customers including
partners within their channel of distribution. Trade promotions are initially used to entice channel
members to carry a marketer’s products and, once products are stocked, marketers utilize
promotions to strengthen the channel relationship.
• Business-to-Business Market Directed – A small, but important, sub-set of sales promotions are
targeted to the business-to-business market. While these promotions may not carry the glamour
associated with consumer or trade promotions, B-to-B promotions are used in many industries.
Sales Promotion Trends: Customers Expectations
Marketers who employ sales promotion as a key component in their promotional strategy should be aware
of how the climate for these types of promotions is changing. For instance, the onslaught of sales
promotion activity over the last several decades has eroded the value of the short-term requirement to act
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on sales promotions. Many customers are conditioned to expect a promotion at the time of purchase
otherwise they may withhold or even alter their purchase if a promotion is not present. For instance, food
shoppers are inundated on a weekly basis with such a wide variety of sales promotions that their loyalty
to certain products has been replaced by their loyalty to current value items (i.e., products with a sales
promotion). For marketers the challenge is to balance the advantages short-term promotions offer versus
the potential to erode loyalty to the product.
********** utilizing the information cited for sales promotions and your own views, prepare
answer for next part i.e. sales promotion design for a soap manufacturer.
b) What is a brand? What distinct advantages do companies get from branding? Illustrate.
Solution : A brand is the identity of a specific product, service, or business. A brand can take many forms,
including a name, sign, symbol, color combination or slogan. The wordbrand began simply as a way to
tell one person's cattle from another by means of a hot iron stamp. A legally protected brand name is
called a trademark. The word brand has continued to evolve to encompass identity - it affects the
personality of a product, company or service.
A concept brand is a brand that is associated with an abstract concept, like breast cancer
awareness or environmentalism, rather than a specific product, service, or business. A commodity
brand is a brand associated with a commodity. Got milk? is an example of a commodity brand.
In the automotive industry, brands were originally called marques, and marque is still often used as a
synonym for brand in reference to motor vehicles.
Brand is the personality that identifies a product, service or company (name, term, sign, symbol, or
design, or combination of them) and how it relates to key constituencies: Customers, Staff, Partners,
Investors etc.
Some people distinguish the psychological aspect, brand associations like thoughts, feelings, perceptions,
images, experiences, beliefs, attitudes, and so on that become linked to the brand, of a brand from the
experiential aspect.
The experiential aspect consists of the sum of all points of contact with the brand and is known as
the brand experience. The psychological aspect, sometimes referred to as the brand image, is a
symbolic construct created within the minds of people, consisting of all the information and expectations
associated with a product, service or the company(ies) providing them.
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People engaged in branding seek to develop or align the expectations behind the brand experience,
creating the impression that a brand associated with a product or service has certain qualities or
characteristics that make it special or unique. A brand is therefore one of the most valuable elements in
an advertising theme, as it demonstrates what the brand owner is able to offer in the marketplace. The art
of creating and maintaining a brand is called brand management. Orientation of the whole organization
towards its brand is called brand orientation.
Careful brand management seeks to make the product or services relevant to the target audience. Brands
should be seen as more than the difference between the actual cost of a product and its selling price - they
represent the sum of all valuable qualities of a product to the consumer. There are many intangibles
involved in business, intangibles left wholly from the income statement and balance sheet which
determine how a business is perceived. The learned skill of a knowledge worker, the type of mental
working, the type of stitch: all may be without an 'accounting cost' but for those who truly know the
product, for it is these people the company should wish to find and keep, the difference is incomparable.
A brand which is widely known in the marketplace acquires brand recognition. When brand recognition
builds up to a point where a brand enjoys a critical mass of positive sentiment in the marketplace, it is
said to have achieved brand franchise. One goal in brand recognition is the identification of a brand
without the name of the company present. For example, Disney has been successful at branding with their
particular script font (originally created for Walt Disney's "signature" logo), which it used in the logo
for go.com.
Consumers may look on branding as an important value added aspect of products or services, as it often
serves to denote a certain attractive quality or characteristic (see also brand promise). From the
perspective of brand owners, branded products or services also command higher prices. Where two
products resemble each other, but one of the products has no associated branding (such as a generic,
store-branded product), people may often select the more expensive branded product on the basis of the
quality of the brand or the reputation of the brand owner.
4 a) Why does the marketing mix change as the product moves through its life cycle? How would you
expect the mix to change for a novel home vacuum cleaning kit moves through the product life
cycle?
Solution : All products and services have certain life cycles. The life cycle refers to the period
from the product’s first launch into the market until its final withdrawal and it is split
up in phases. During this period significant changes are made in the way that the
product is behaving into the market i.e. its reflection in respect of sales to the
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company that introduced it into the market. Since an increase in profits is the major
goal of a company that introduces a product into a market, the product’s life cycle
management is very important. Some companies use strategic planning and others
follow the basic rules of the different life cycle phase that are analyzed later.
The understanding of a product’s life cycle, can help a company to understand and
realize when it is time to introduce and withdraw a product from a market, its position
in the market compared to competitors, and the product’s success or failure.
For a company to fully understand the above and successfully manage a product’s life
cycle, needs to develop strategies and methodologies, some of which are discussed
later on.
PRODUCT LIFE CYCLE MODEL DESCRIPTION
The product’s life cycle - period usually consists of five major steps or phases:
Product development, Product introduction, Product growth, Product maturity and
finally Product decline. These phases exist and are applicable to all products or
services from a certain make of automobile to a multimillion-dollar lithography tool
to a one-cent capacitor. These phases can be split up into smaller ones depending on
the product and must be considered when a new product is to be introduced into a
market since they dictate the product’s sales performance.
1. PRODUCT DEVELOPMENT PHASE
Product development phase begins when a company finds and develops a new product
idea. This involves translating various pieces of information and incorporating them
into a new product. A product is usually undergoing several changes involving a lot of
money and time during development, before it is exposed to target customers via test
markets. Those products that survive the test market are then introduced into a real
marketplace and the introduction phase of the product begins. During the product development phase,
sales are zero and revenues are negative. It is the time of
spending with absolute no return.
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2. INTRODUCTION PHASE
The introduction phase of a product includes the product launch with its requirements
to getting it launch in such a way so that it will have maximum impact at the moment
of sale. A good example of such a launch is the launch of “Windows XP” by
Microsoft Corporation.
This period can be described as a money sinkhole compared to the maturity phase of a
product. Large expenditure on promotion and advertising is common, and quick but
costly service requirements are introduced. A company must be prepared to spent a lot
of money and get only a small proportion of that back. In this phase distribution
arrangements are introduced. Having the product in every counter is very important
and is regarded as an impossible challenge. Some companies avoid this stress by
hiring external contractors or outsourcing the entire distribution arrangement. This has
the benefit of testing an important marketing tool such as outsourcing.
Pricing is something else for a company to consider during this phase. Product pricing
usually follows one or two well structured strategies. Early customers will pay a lot
for something new and this will help a bit to minimize that sinkhole that was
mentioned earlier. Later the pricing policy should be more aggressive so that the
product can become competitive. Another strategy is that of a pre-set price believed to
be the right one to maximize sales. This however demands a very good knowledge of
the market and of what a customer is willing to pay for a newly introduced product.
A successful product introduction phase may also result from actions taken by the
company prior to the introduction of the product to the market. These actions are
included in the formulation of the marketing strategy. This is accomplished during
product development by the use of market research. Customer requirements on
design, pricing, servicing and packaging are invaluable to the formation of a product
design. A customer can tell a company what features of the product are appealing and
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what are the characteristics that should not appear on the product. He will describe the ways of how the
product will become handy and useful. So in this way a company
will know before its product is introduced to a market what to expect from the
customers and competitors. A marketing mix may also help in terms of defining the
targeted audience during promotion and advertising of the product in the introduction
phase.
3. GROWTH PHASE
The growth phase offers the satisfaction of seeing the product take-off in the
marketplace. This is the appropriate timing to focus on increasing the market share. If
the product has been introduced first into the market, (introduction into a “virgin”
market or into an existing market) then it is in a position to gain market share
relatively easily. A new growing market alerts the competition’s attention.
The company must show all the products offerings and try to differentiate them from
the competitors ones. A frequent modification process of the product is an effective
policy to discourage competitors from gaining market share by copying or offering
similar products. Other barriers are licenses and copyrights, product complexity and
low availability of product components.
Promotion and advertising continues, but not in the extent that was in the introductory
phase and it is oriented to the task of market leadership and not in raising product
awareness. A good practice is the use of external promotional contractors.
This period is the time to develop efficiencies and improve product availability and
service. Cost efficiency and time-to-market and pricing and discount policy are major
factors in gaining customer confidence. Good coverage in all marketplaces is
worthwhile goal throughout the growth phase.
Managing the growth stage is essential. Companies sometimes are consuming much
more effort into the production process, overestimating their market position.
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Accurate estimations in forecasting customer needs will provide essential input into production planning
process. It is pointless to increase customer expectations and
product demand without having arranged for relative production capacity. A company
must not make the mistake of over committing. This will result into losing customers
not finding the product “on the self”.
4. MATURITY PHASE
When the market becomes saturated with variations of the basic product, and all
competitors are represented in terms of an alternative product, the maturity phase
arrives. In this phase market share growth is at the expense of someone else’s
business, rather than the growth of the market itself. This period is the period of the
highest returns from the product. A company that has achieved its market share goal
enjoys the most profitable period, while a company that falls behind its market share
goal, must reconsider its marketing positioning into the marketplace.
During this period new brands are introduced even when they compete with the
company’s existing product and model changes are more frequent (product, brand,
model). This is the time to extend the product’s life.
Pricing and discount policies are often changed in relation to the competition policies
i.e. pricing moves up and down accordingly with the competitors one and sales and
coupons are introduced in the case of consumer products. Promotion and advertising
relocates from the scope of getting new customers, to the scope of product
differentiation in terms of quality and reliability.
The battle of distribution continues using multi distribution channels
A successful .
product maturity phase is extended beyond anyone’s timely expectations. A good
example of this is “Tide” washing powder, which has grown old, and it is still
growing.
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4 . DECLINE PHASE
The decision for withdrawing a product seems to be a complex task and there a lot of
issues to be resolved before with decide to move it out of the market. Dilemmas such
as maintenance, spare part availability, service competitions reaction in filling the
market gap are some issues that increase the complexity of the decision process to
withdraw a product from the market. Often companies retain a high price policy for
the declining products that increase the profit margin and gradually discourage the
“few” loyal remaining customers from buying it. Such an example is telegraph
submission over facsimile or email. Dr. M. Avlonitis from the Economic University
of Athens has developed a methodology, rather complex one that takes under
consideration all the attributes and the subsequences of product withdrawal process.
Sometimes it is difficult for a company to conceptualize the decline signals of a
product. Usually a product decline is accompanied with a decline of market sales. Its
recognition is sometimes hard to be realized, since marketing departments are usually
too optimistic due to big product success coming from the maturity phase.
This is the time to start withdrawing variations of the product from the market that are
weak in their market position. This must be done carefully since it is not often
apparent which product variation brings in the revenues.
The prices must be kept competitive and promotion should be pulled back at a level
that will make the product presence visible and at the same time retain the “loyal”
customer. Distribution is narrowed. The basic channel is should be kept efficient but
alternative channels should be abandoned. For an example, a 0800 telephone line with
shipment by a reliable delivery company, paid by the customer is worth keeping.
PART 2: ANALYSIS OF PRODUCT LIFE CYCLE MODEL
There are some major product life cycle management techniques that can be used to
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optimize a product’s revenues in respect to its position into a market and its life cycle.
These techniques are mainly marketing or management strategies that are used by
most companies worldwide and include the know-how of product upgrade,
replacement and termination. To comprehend these strategies one must first make a
theoretical analysis of the model of product life cycle.
In the mid 70’s the model of product life cycle described in “Part 1”, was under heavy
criticism by numerous authors. The reasons behind this criticism are described
bellow:
a. The shift changes in the demand of a product along a period of time makes the
distinction of the product life cycle phase very difficult, the duration of those almost
impossible to predict and the level of sales of the product somewhat in the realm of
the imagination.
b. There are many products that do not follow the usual shape of the product life cycle
graph as shown in fig. 1
c. The product life cycle does not entirely depend on time as shown in fig. 1. It also
depends on other parameters such as management policy, company strategic decisions
and market trends. These parameters are difficult to be pinpointed and so are not
included in the product life cycle as described in “Part 1”.
The model of product life cycle also depends on the particular product. There would
be different models and so different marketing approaches. There are basically three
different types of products: a product class (such as a cars), a product form (such as a
station wagon, coupe, family car etc of a particular industry) and a product brand of
that particular industry (such as Ford Escort). The life cycle of the product class
reflects changes in market trend and lasts longer than the life cycle of the product form or brand. In
the other hand the life cycle of a product form or brand reflects the
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competitiveness of a company (i.e. sales, profits) and therefore follows more closely
the product life cycle model.
Nevertheless, a product manager must know how to recognize which phase of its life
cycle is a product, regardless of the problems in the model discussed above. To do
that a good method is the one, suggested by Donald Clifford in 1965, which follows.
• Collection of information about the product’s behavior over at least a period of
3 – 5 years (information will include price, units sold, profit margins, return of
investment – ROI, market share and value).
• Analysis of competitor short-term strategies (analysis of new products
emerging into the market and competitor announced plans about production
increase, plant upgrade and product promotion).
• Analysis of number of competitors in respect of market share.
• Collection of information of the life cycle of similar products that will help to
estimate the life cycle of a new product.
• Estimation of sales volume for 3 – 5 years from product launch.
• Estimation of the total costs compared to the total sales for 3 – 5 years after
product launch (development, production, promotion costs). The estimate
should be in the range of 4:1 in the beginning to 7:1 at the stage where the
product reaches maturity.
PART 3: PRODUCT LIFE CYCLE TECHNIQUE EXAMPLE : PRODUCT
CANNIBALISM
Product cannibalization occurs when a company decides to replace an existing
product and introduce a new one in its place, regardless of its position in the market
(i.e. the product’s life cycle phase does not come into account). This is due to newly
introduced technologies and it is most common in high tech companies. As all things
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in life there is negative and positive cannibalization.
In the normal case of cannibalization, an improved version of a product replaces an
existing product as the existing product reaches its sales peak in the market. The new
product is sold at a high price to sustain the sales, as the old product approaches the
end of its life cycle. Nevertheless there are times that companies have introduced a
new version of a product, when the existing product is only start to grow. In this way
the company sustain peak sales all the time and does not wait for the existing product
to enter its maturity phase. The trick in cannibalization is to know when and why to
implement it, since bad, late or early cannibalization can lead to bad results for a
company sales. 1. UNFAVORABLE CANNIBALIZATION
Cannibalization should be approached cautiously when there are hints that it may
have an unfavorable economic effect to the company, such as lower sales and profits,
higher technical skills and great retooling. The causes of such economic problems are
given bellow.
• The new product contributes less to profit than the old one: When the new
product is sold at a lower price, with a resulting lower profit than the old one,
then it does not sufficiently increase the company’s market share or market
size.
• The economics of the new product might not be favorable: Technology
changes can force a product to be cannibalized by a completely new one. But in some cases the loss
of profits due to the cannibalization is too great. For
example a company that produced ready business forms in paper was forced to
change into electronic forms for use in personal computers. Although the
resulting software was a success and yield great profits, the sales of the paper
forms declined so fast that the combined profit from both products, compared
to the profits if the company did not cannibalize the original product showed a
great loss in profits.
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• The new product requires significant retooling: When a new product requires a
different manufacturing process, profit is lower due to the investment in that
process and due to the write-offs linked to retooling the old manufacturing
process.
• The new product has greater risks: The new product may be profitable but it
may have greater risks than the old one. A company cannot cannibalize its
market share using a failed or failing product. This can happen in high-tech
companies that do not understand enough of a new technology so that to turn it
into a successful and working product. As a result a unreliable product
emerges and replaces a reliable one, that can increase service costs and as a
result decrease expected profits.
2. OFFENSIVE CANNIBALIZATION STRATEGIES
Cannibalization favors the attacker and always hurts the market leader. For companies
that are trying to gain market share or establish themselves into a market,
cannibalization is the way to do it
Also cannibalization is a good way to defend .
market share or size. A usual practice is the market leader to wait and do not
cannibalize a product unless it has to. It is thought that a company should acquire and
develop a new technology that will produce a newer and better product than an
existing one and then wait. Then as competitors surface and attack market share,
cannibalization of a product is ripe. Then and only then quick introduction of a new
product into the market will deter competition, increase profits and keep market share.
But this strategy does not always work since delays will allow the competition to grab
a substantial piece of the market before the market leader can react.
3. DEFENSIVE CANNIBALIZATION STRATEGIES
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Controlled cannibalization can be a good way to repel attackers as deforesting can
repel fire. A market leader has many defensive cannibalization strategies that are
discussed bellow.
• Cannibalize before competitors do: Cannibalization of a company’s product(s)
before a competitor does, is a defensive strategy to keep the competitor of
being successful. Timing is the key in this strategy. Do it too soon and profits
will drop, do it to late and market share is gone.
• Introduction of cannibalization as a means of keeping technology edge over
competition: A good strategy is for a company, that is the market leader, to
cannibalize its products as competitors start to catch up in terms of technology
advancements. (For example “Intel Corporation” cannibalized its 8088
processor in favor of the 80286 after 2 ½ years, the 80286 in favor of the 386
after 3 years, the 386 in favor of the 486 after 4 years, the 486 in favor with
the Pentium after another 4 ½ and so on). So the market leader dictates the
pace and length of a product’s life cycle. (In the case on Intel the replacement
of 486 to Pentium took so long because competitors had not been able to catch
up).
• Management of cannibalization rate through pricing: When cannibalization of
a product is decided, the rate at which this will happen depends on pricing.
The price of the new product should be at a level that encourages a particular
mix of sales of the old and new product. If the price of the new product is
lower than the price of the old then cannibalization rate slows down. If the
opposite happens then the cannibalization rate is increased. Higher prices in
new products can reflect their superiority over the old ones.
• Minimization of cannibalization by introducing of the new product to certain
market segments: Some market segments are less vulnerable to
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cannibalization to others. This is because there is more or less to lose or gain
for each of them. By choosing the right segment to perform the
cannibalization of a product a company can gain benefits without loses and
acquire experience on product behavior
PART 4: PRODUCT LIFE CYCLE IN RESPECT TO THE TECHNOLOGY
LIFE CYCLE
As a new technology matures so is the product or service that uses this technology.
The change that occurs during a technology life cycle has a unique reflection on the
customers and so on the product life cycle.
In the early days of a new technology, early adopters and technology enthusiasts drive
a market since they demand just technology. This drive and demand is translated as
the introduction phase of a new product by many companies. As technology grows
old, customers become more conservative and demand quick solutions and
convenience. In this case a product usually enters in the realm of its growth and as
time passes its maturity.
PART 5: USE OF PRODUCT MANAGEMENT FOR SUCCESSFUL
PRODUCT LIFE CYCLE
Product management is a middle level management function that can be used to
manage a products life cycle and enables a company to take all the decisions needed
during each phase of a product’s life cycle. The moment of introduction and of
withdrawal of a product is defined by the use of product management by a Product
Manager.
A Product Manager exists for three basic reasons. For starters he manages the
revenue, profits, forecasting, marketing and developing activities related to a product
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during its life cycle. Secondly, since to win a market requires deep understanding of
the customer, he identifies unfulfilled customer needs and so he makes the decision
for the development of certain products that match the customers and so the markets
needs. Finally he provides directions to internal organization of the company since he
can be the eyes and ears of the products path during its life cycle.
To improve a product success during each of its phase of its life cycle (development -
introduction – growth – maturity – decline), a product manager must uphold the
following three fundamentals.
• Understand how product management works: When responsible for a given
new product, a product manager is required to know about the product, the
market, the customers and the competitors, so that he van give directions that
will lead to a successful product. He must be capable of managing the
manufacturing line as well as the marketing of the product. When the product
manager has no specific authority over those that are involved in a new
product, he needs to gather the resources required for the organization to meet
product goals. He needs to know where to look and how to get the necessary
expertise for the success of the product.
• Maintain a product / market balance: The product manager as the person that
will make a new product to work, needs to understand and have a strong grasp
of the needs of the customer / market and therefore make the right decisions
on market introduction, product life cycle and product cannibalization. To
achieve the above he must balance the needs of the customers with the
company’s capabilities. Also he needs to balance product goals with company
objectives. The way a product’s success is measured depends on where the
product is in its life cycle. So the product manager must understand the
strategic company direction and translate that into product strategy and
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product life cycle position.
• Consider product management as a discipline: Managing a product must not
be taken as a part time job or function. It requires continuous monitoring and
review. Having said that, it is not clear why many companies do not consider
product management as a discipline. The answer lies in the fact that product
management is not taught as engineering or accounting i.e. does not have
formalized training.
b) What is cyber marketing? What are the prospects and problems faced by the buyer in using this
method? Discuss the limitations of cyber marketing.
Solution : Cyber marketing term became very popular when computers started getting used in marketing
extensively. Earlier, computers were used more for storing, processing and reporting of various marketing
related information. But, with the entry of Internet the online data handling possibilities have vitually
exploded the use of computer. This application has multiplied the use of computers at consumer’s homes
faster than among the organizations. This fact has helped marketers substantially to look into cyner
marketing. As a result, cyber marketing today is also seen more as Internet based marketing rather that
just computer based marketing. Howner, for out purpose, we shall define cyber marketing as that part of
marketing which involves extensive use of computers, especially the internet.
Cyber marketing profitably reinforces the concepts of marketing with the power of internet. Thus, it
strengthens the existing delivery of marketing outputs and also ipens newer avenues of marketing which
were not possible to achieve before the arrival of internet. For example, a marketer today can keep track
of millions of customers simultaneously, segment them online, offer customized products to individual
customers, fix different prices, provide varying contents and styles of information and deliver the
products through appropriate modes of distribution to each of these customers. The details of such
transactions and the characteristics of each of these customers can be stored for their dynamic utilization
in future marketing opportunities with the customers. These possibilities were only the dreams of earlier
marketers.
It is clear that cyber marketing takes slightly different shape as compared to conventional marketing. In
order to understand this we shall now look at the individual areas of cyber marketing:
• Customer profiling, segmentation and targeting
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• Product planning
• Branding
• Pricing decisions
• Advertising and sales promotions
• Distribution
• Marketing research
The various limitations/pitfalls of cyber marketing
Cyber marketing, despite its tremendous advantages, has yet to overcome many of the associated
problems. Some of these problems are in-built with the technology of internet and some others are
contextual for the environment in which cyber marketing is applied.
a) Limits to digitization
The key advantage of internet are achieved by converting marketing contents into digitized form.
Therefore, the remainder part which is notdigitisable virtually lies outside the domain of cyber
marketing. This part remain in the “brick and mortar” domain of marketing as contrasted to the
“click and view” part of marketing.
b) Shopping experience
Customers are quite used to the “touch and feel” experience of shopping. Internet based shopping is,
therefore, finding some consumer resistance. Advantage of cyber shopping and the practice over time are
trying to integrate the traditional “touch and feel” and “click and view” modes of marketing.
c) Security isuues
While shopping on internet, customers often have to share sensitive information related to their personal
as well as their financial matters. While the marketers are trying to make these sharing of informations
and details much more secure against the possible misuse the customers are not fully convinced about
these security arrangements.
d) Internet access density
Although more than 600 million people were reported to be online they still account for only less than 1
% of the total population of the world. This population of online is not only very low; it is also very
asymmetrically distributed. As a result, only certain skewed segments of the market can be tapped
through cyber marketing today. Customer used to freebies: as explained earler, the development of cyber
marketing is characterized by intensive promotions of substantial values. As a result, cyber customers
have started expecting freebies before responding to cyber marketer’s cues of any kind. However, as the
freebies offers are gradually diminishing now this problem is getting reduced on its own over time.
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e) Dot.com bust
The sudden emergence of internet power and its cyber marketing possibiliteies gave rise to great hypes
about their commercial opportunities. Many half baked business models were deployed to capitalize on
this wave. In fact, the market got cluttered with innumerous so called “dot.com” companies. When the
bottom of most of these dot.com companies was removed the pendulum of market interests swings to the
other extreme. Many marketers and customers have become shy of using any of the cyber marketing
tools. The time has come to rectify this disbalance and evolve the business models which incorporate
internet power more realistically.
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IGNOU MBA MS-06 Solved Assignment 2011

Course Title : Marketing for Managers

Assignment Code : MS-06/SEM - I /2011

Coverage : All Blocks

THE SERVICES MARKETING MIX

Traditional marketing Mix

THE SERVICES MARKETING TRIANGLE

External Marketing: Making Promises

Interactive marketing: Keeping Promises

Internal Marketing :Enabling Promises

Aligning the sides of the Triangle

Interactive marketing-keeping promises-is at the heart of FedEx's strategy. The book-length

Solution : MARKET SEGMENTATION , TARGETING AND POSITIONING

INTRODUCTION: - The market for any product is normally made up of several

MARKETING STRATEGY AND MARKET SEGMENTATION: - When it

1. Facilitates proper choice of target marketing:-

3. Facilitates tapping of the market, adapting the offer to the target:-Segmentation

c. Changes in cooling requirement, with greater airflow to the rear.

d. Higher resistance to dust.

e. Compatibility of engine with the quality of fuel available in India.

6. Benefits the customer as well: -

9. Higher market Shares: -

In contrast to an undifferentiated marketing strategy, segmentation supports the development of niche

• PROCESS OF CHOOSING THE TARGET MARKET

The process of choosing the target Market are:-

FACTORS TO BE CONSIDERED WHILE TARGET MARKET SELECTION

TARGET MARKET STRATEGIES

Single Selective Product Market Full Market

• DECISIONS INVOLVED IN TARGETING STRATEGY INCLUDE:-

 which segments to targeting.

• TARGETING STRATEGY DECISIONS ARE INFLUENCED BY:

POSITIONING CONCEPTS:- Generally, there are three types of positioning concepts:

 Provide sensory stimulation.

• Customer benefits approach.

• The price-quality approach.

• The use or application approach.

• The product user approach.

• The product class approach.

• The cultural symbol approach.

• The competitor approach.

1 . Customer benefit approach:

2 . Price quality approach: -

• DIFFERENT POSITIONING PLANKS / BASES:- Different types of positioning planks /bases

1. Economy:- Product positioned toward a particular segment keeping in mind it economy.Example-

2. Benefit:- Product positioned with some beneficial features. Example-Colgate

• Alter believes about competitive brands; e.g. comparing advertisements

• STEPS FOR POSITIONING A PRODUCT

1 . Define the segments in a particular market.

8. Inform target customers about the product (promotion).

A definition of marketing research

Green and Tull1 have defined marketing research as follows:

Maintaining objectivity in marketing research is essential if marketing management is to have sufficient

The market research brief

· the purpose of the research

The purpose of the research

Clear, concise, attainable, measurable and quantifiable objectives

Figure 1.1 The components of market potential

The need to set a time horizon for marketing research

A resource allocation, including the budget and facilities

· means the same thing to all concerned

· does not ask for irrelevant information

· defines the relevant populations to be measured