Marketing

Marketing Orientation
COMPANY ORIENTATION TOWARDS MARKETPLACE
1. PRODUCTION - EASY AVAILABILITY AND LOW COST 2. PRODUCT - SUPERIOR PRODUCTS, INNOVATIVE FEATURES
3. SELLING - AGGRESSIVE SELLING & PROMOTION

4. MARKETING / CUSTOMER - FOCUS ON CUSTOMER 5. SOCIETAL MARKETING - CUSTOMER & SOCIETY
HOLISTIC MARKETING DIMENSIONS

Senior Marketing Department Management
Other
Departments
Communications
Product & Services
Channels
Internal Marketing
Integrated Marketing
Holistic Marketing Socially Responsible Marketing
Integrated Marketing
Ethics Environment
Legal
Community
Customers
Channel
Partners
SELLING V/S MARKETING
SELLING STARTING POINT PRODUCT
MARKETING CUSTOMER NEEDS
MEANS
AGGRESSIVE SELLING & PROMOTION
SUPERFLUOUS SELLING
ENDS
PROFITS THRU SALES VOLUME
PROFITABILITY THROUGH CUSTOMER SATISFACTION
PILLARS OF MARKETING / CUSTOMER ORIENTATION
1. CLEAR DEFINITION OF TARGET MARKET (DEMOGRAPHICS, PSYCHOGRAPHICS, MEDIAGRAPHICS, GEOGRAPHICS)

2. PERFECT UNDERSTANDING OF CUSTOMER NEEDS 3. INTEGRATE / COORDINATE ALL ACTIVITIES (INTER & INTRA DEPT)
4. PROFITABILITY THROUGH CUSTOMER SATISFACTION
THUS CUSTOMER ORIENTATION MEANS

1. OBSESSED WITH CUSTOMER & AWARE OF COMPETITOR 2. MONITOR UNFULFILLED NEEDS CONTINUOUSLY THROUGH RESEARCH. 3. FUTURISTIC - MARKETING EXPENDITURE AN INVESTMENT 4. MARKETING CULTURE - CUSTOMER OVERRIDES ORGANISATIONAL INTERESTS 5. SPEED IN RESPONSE TO CUSTOMERS PROBLEMS 6. CONSISTENCY IN DELIVERY OF VALUES, SATISFACTION 7. CUSTOMER RETENTION STRATEGIES 8. MASS CUSTOMIZATION 9. INTERACTIVE AND CUSTOMER FRIENDLY DELIVERY SYSTEMS 10. LOOKING AT CONSUMPTION SYSTEM RATHER THAN PRODUCT FOR AUGMENTATION 11. ALL DEPARTMENTS THINK CUSTOMER 12. CUSTOMER SATISFACTION - GOAL & MARKETING TOOL
WHAT IS MARKETING
ALL ACTIVITIES DESIGNED TO GENERATE AND FACILITATE EXCHANGE OF PRODUCTS AND VALUES INTENDED TO SATISFY HUMAN NEEDS AND WANTS. MARKETING MANAGEMENT IS THE PROCESS OF PLANNING AND EXECUTING THE CONCEPTION, PRICING, PROMOTION, AND DISTRIBUTION OF IDEAS, GOODS, AND SERVICES TO CREATE EXCHANGE THAT SATISFY INDIVIDUAL AND ORGANIZATIONAL GOALS.
MARKETERS TASK
DEMAND MANAGEMENT (Level, Timing & Composition) STATES OF DEMAND NEGATIVE - Redesign Mix NO DEMAND Connect Benefits to Need LATENT Measure FALLING Creative Remarketing IRREGULAR - Use Synchro Marketing FULL Maintain OVERFULL Use Selective Demarketing UNWHOLESOME Use Laws, Fear, Price Hike, Reduced Availability
CORE CONCEPTS OF MARKETING
NEEDS Deprivation of basic satisfaction WANTS specific satisfiers of need DEMAND-wants backed by ability and willingness to buy PRODUCTS- anything( Physical good, service,person, idea0 that can satisfy a need or want UTILITY & VALUE &-SATISFACTION EXCHANGE-A value creating process TRANSACTION-Trade of values between parties RELATIONSHIPS-relationship marketing V/s transaction marketing
MARKETS-all potential customers
MARKETING
PRODUCTS
SERVICES
PERSONS
PLACES
ACTIVITIES
IDEAS
The Four P Components of the Marketing Mix
Marketing Mix
Target market Product Product variety Quality Design Features Brand name Packaging Price Promotion Sizes List Price Sales promotion Services Discounts Advertising Warranties Allowances Sales force Returns Payment period Public relations Credit terms Direct marketing
Place Channels Coverage Assortments Locations Inventory Transport
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MARKETING MIX - 7 PS
PRODUCT PRICE PLACE PROMOTION PEOPLE
PACE (PROCESS)
PROOF OF PERFORMANCE
CHOICE OF MARKETING MIX DEPENDS ON TARGET MARKET & POSITIONING
Expanded Marketing Mix For Product/Service

Product Physical good features Quality level Services Packaging sizes Warranties Branding variety Design ,style Place Channel type coverage Intermediaries Outlet locations Transportation Storage Promotion - Promotion blend - Salespeople Number Selection Training Incentives - Advertising Targets Media types Types of ads Copy thrust - Sales promotion - Publicity -direct mktg Price Flexibility Price level CreditTerms Differentiation Payment period Discounts Allowance
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People
- Employees Recruiting Training Motivation Rewards Teamwork - Customers Education Training
Physical evidence
Facility design Equipment Signage Employees dress - Other tangibles Reports Business cards Statements Guarantees
Process
- Flow of activities Standardized Customized - Number of steps Simple Complex - Customer involvement
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RESPONSIVE V/S CREATIVE MARKETER
1. STATED NEED - PRODUCT DEMANDED E.g. INEXPENSIVE CAR 2. REAL NEED - FUNCTIONAL BENEFIT DESIRED E.g. LOW MAINTENANCE COST
3. UNSTATED NEED - EXPECTATION FROM COMPANY E.g. DEALER SERVICE

4. DELIGHT NEED-Eg COMPLIMENTARY GIFT 5. SECRET NEED - EMOTIONAL BENEFIT - E.g. SEEN BY OTHERS AS VALUE ORIENTED BUYER
CUSTOMER SATISFACTION V/S DELIGHT

PERCEIVED PERFORMANCE = EXPECTATIONS OK / SATISFIED
PERCEIVED PERFORMANCE
< EXPECTATIONS
DISSATISFIED/ UNHAPPY
PERCEIVED PERFORMANCE
> EXPECTATIONS
DELIGHTED
DELIGHTED CUSTOMERS HAVE EMOTIONAL AFFINITY WITH BRAND & HENCE LOYALTY. EXPECTATIONS BASED ON PAST BUYING EXPERIENCE, ADVERTISEMENTS, FRIENDS, COMPETITORS EXPECTATIONS, PRICE, BENCHMARKING. EXPECTATIONS DIFFER BASED ON PRODUCT, CUSTOMER.
Tools to track customer satisfaction

Complaint and suggestion systems Customer satisfaction surveys Ghost shopping lost customer analysis
Cautions to be exercised in C.S. surveys Definition in detail Manipulation by customers and managers
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The Customer-Development Process

Suspects
Prospects
Disqualified Prospects
First-time customers Repeat customers
Clients Inactive of Ex-customers Members
Advocates
Partners
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DEFINING CUSTOMER VALUE
EXCELLENT PRODUCT IS OF NO USE IF IT FAILS TO MEET CUSTOMER NEEDS. A COMPANY SHOULD BE SKILLED IN MARKET ENGINEERING NOT JUST PRODUCT ENGINEERING.
CUSTOMER DELIVERED VALUE
CUSTOMER DELIVERED VALUE is the difference between total customer value and total customer cost. TOTAL CUSTOMER VALUE is the bundle of benefits customers expect from a given product or service. TOTAL CUSTOMER COST is the bundle of costs customers expect to incur in evaluating, obtaining, and using the product or service.
CUSTOMER DELIVERED VALUE
PRODUCT SERVICE PERSONNEL IMAGE CUSTOMER DELIVERED VALUE MONETARY VALUE TIME COST ENERGY COST PSYCHIC COST TOTAL CUSTOMER COST TOTAL CUSTOMER VALUE
DELIVERING CUSTOMER VALUE
1. MICHAEL PORTERS GENERIC VALUE CHAIN

2. BENCHMARK AGAINST COMPETITION 3. VALUE CHAIN OF SUPPLIERS, DISTRIBUTORS, CUSTOMERS TO CREATE SUPERIOR VALUE-DELIVERY NETWORK
GENERIC VALUE CHAIN

PRIMARY ACTIVITIES Inbound Logistics Operations Outbound Logistics Marketing and Sales Service SUPPORT ACTIVITIES Procurement Technology development Human resource Management Firm Infrastructure
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CORE BUSINESS PROCESS
1. NEW PRODUCT REALIZATION PROCESS

2. INVENTORY MANAGEMENT PROCESS 3. ORDER TO REMITTANCE PROCESS 4 CUSTOMER SERVICE PROCESS
5
6 7
MARKET SENSING PROCESS

CUSTOMER ACQUISITION PROCESS CUSTOMER RELATIONSHIP MANAGEMENT PROCESS
CUSTOMER VALUE BUILDING APPROACHES - BERRY & PARASHURAMAN
1. ADDING FINANCIAL BENEFITS-FREQUENCY MARKETING PROGRAMS AND CLUBS

2. ADDING SOCIAL BENEFITS-INDIUALIZING AND PERSONALIZING RELATIONSHIPS 3. ADDING STRUCTURAL TIES-SUPPLY CUSTOMERS WITH SPECIAL EQUIPMENT OR COMPUTER LINKAGESTHAT HELP CUSTOMERS MANAGE THEIR ORDERS,PAYROLL, INVENTORY ETC
CUSTOMER RELATIONSHIP BUILDING
BASIC MARKETING Simply Sell

REACTIVE MARKETING Sell & encourage customer to call if any Questions, comments or complaints. ACCOUNTABLE MARKETING Salesman phones after sale
PROACTIVE MARKETING Salesperson contacts from time to time with suggestions about improved product uses or new products
PARTNERSHIP MARKETING Company works continuously with customer to discover ways to effect customer savings or help customer perform better.
LEVELS OF RELATIONSHIP MARKETING

HIGH MARGIN MEDIUM MARGIN LOW MARGIN
Many customers/ distributors Medium number of customers/ distributors
Accountable
Reactive
Basic or reactive Reactive
Proactive
Accountable
Few customers / distributors
Partnership
Proactive
Accountable
LIFE TIME VALUE OF CUSTOMER
1. Lost customer revenue

2. Lost opportunity revenue 3. Customer replacement costs
COST OF ACQUISITION
1. COST OF AVERAGE SALES CALL (SALARY, COMMISSION, BENEFITS, EXPENSES)
TOTAL COST TOTAL SALES CALLS
2. AVERAGE NUMBER OF SALES CALLS TO CONVERT AVERAGE PROSPECT TO CUSTOMER
TOTAL SALES CALLS TOTAL NO. OF NEW CUSTOMERS
3. COST OF ATTRACTING NEW CUSTOMER = 2 X 1
Service Encounters or Moments of Truth Service encounters are the building blocks of service quality & satisfaction - Every experience with product, service or person which allows customer to judge/ form impressions about the quality of service is a moment of truth. - It takes 10 good moments of truth to wipe one bad moment of truth. - Disney Corporation 74 service encounters in amusement park. Marriott Hotels - 4 of the top 5 factors come into play in first 10 minutes of guests stay. Types of service encounters- remote, phone, face to face. - In remote - tangible evidence & technical quality important. - In phone- process quality - In face to face - customer also play role.
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CUSTOMER / PRODUCT PROFITABILITY ANALYSIS

Customers C1 C2 + C3 + Highly profitable product Profitable product + High-profit customer Mixed-bag customer Losing customer Losing product Mixed bag product
P1
P2 P3 P4
+ +
Products
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Sample Marketing Metrics
I. External Awareness Market share (volume or value) Relative price (market share value/volume) Number of complaints (level of dissatisfaction) Customer satisfaction Distribution/availability Total number of customers Perceived quality/esteem Loyalty/retention Relative perceived quality
II. Internal Awareness of goals Commitment to goals Active innovation support Resource adequacy Staffing/skill levels Desire to learn Willingness to change Freedom to fail Autonomy Relative employee satisfaction
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Sample Customer-Performance Scorecard Measures
Percentage of new customers to average number of customers.

Percentage of lost customers to average number of customers.
Percentage of win-back customers to average number of customers. Percentage of customers falling into very dissatisfied, dissatisfied, neutral, satisfied, and very satisfied categories. Percentage of customers who say they would repurchase the product. Percentage of customers who say they would recommend the product to others. Percentage of target market customers who have brand awareness or recall. Percentage of customers who say that the companys product is the most preferred in its category. Percentage of customers who correctly identify the brands intended positioning and differentiation. Average perception of companys product quality relative to chief competitor. Average perception of companys service quality relative to chief competitor.
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STRATEGIC PLANNING
STRATEGIC PLANNING
MARKET-ORIENTED STRATEGIC PLANNING - is the managerial process of developing and maintaining a viable fit between the organizaitons objectives, skills, and resources and its changing market opportunities. The aim of strategic planning is to shape and reshape the companys business and products so that they yield target profits and growth.
Thus strategic planning is concerned with 1. 2. 3. Treating business as an investment portfolio. Building game plan for each business based on industry position opportunity, resources, mission, objectives. Future potential and not just current potential.
SEE APPENDIX 18 (THE STRATEGIC PLANNING, IMPLEMENTATION, AND CONTROL PROCESS)

Planning
Corporate planning
Implementing Organizing
Controlling Measuring Results
Division planning
Diagnosing results
Business planning
Implementing Taking corrective action
Product planning
CORPORATE & DIVISION STRATEGIC PLANNING
DEFINING THE CORPORATE MISSION

ESTABLISHING STRATEGIC BUSINESS UNITS (SBUS) ASSIGNING RESOURCES TO EACH SBU PLANNING NEW BUSINESSES
DEFINING THE CORPORATE MISSION
Shaped by History, current preferences of owners and management, market environment, resources, distinctive competences. Provides sense of purpose, direction, and opportunity.
Good mission statements, limited number of goals and values and major competitive scopes.
Provides direction for 10 12 years.
ESTABLISH STRATEGIC BUSINESS UNITS AND ASSIGN RESOURCES

Assigning resources by evaluating by using analytical tools for classifying its
businesses by profit potential. 1. Boston Consulting Group Model 2. General Electric Model
Boston Consulting Group Model
20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0
Stars
Question Marks
Cash Cow
Dogs
Relative Market Share
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BCGs GROWTH SHARE MATRIX
1.
An unbalanced portfolio would have too many dogs or question marks and/or too few stars and cash cows.
2.
BUILD for stars

HOLD - strong cash cows HARVEST weak cash cows, question marks, dogs. DIVEST dogs, question marks.
3.
SBUs - change their position in the growth-share matrix.
GENERAL ELECTRIC MODEL
Each business is rated in terms of two major dimensions, market attractiveness and business strength. 1. MARKET ATTRACTIVENESS Overall market size,,mkt growth rate,profit margin,competitive intensity,inflationary vulnerability.,technological requiremnets,environmental impact..
2.
STRENGTH OF SBU / FIRM = Market share,share growth,product quality,brand reputation,distribution network,promotion effectiveness,production capacity,productive effeciency,R&D performance,managerial personnel,
Each of these factors is assigned weights and business is measured of 5 point scale.
(a)
Classification
BUSINESS STRENGTH Strong

5.00 Hydraulic pumps Joints Aerospace fittings
Medium
Weak
3.67
Clutches Flexible Fuel Pumps
2.33
diaphragms
1.00 5.00
Relief values
3.67
2.33
1.00
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(B) Strategies
BUSINESS STRENGTH PROTECT POSITION
Invest to grow at maximum digestible rate. Concentrate effort on maintaining strength. BUILD SELECTIVELY Invest heavily in most attractive segments. Build up ability to counter competition. Emphasize productivity by raising productivity. INVEST TO BUILD Challenge for leadership. Build selectively on strengths. Reinforce vulnerable areas
SELECTIVITY / MANAG FOR EARNING
BUILD SELECTIVELY Specialize around limited strength. Seek ways to overcome weaknesses. Withdraw if indications of sustainable growth are lacking.
LIMITED EXPANSION Protect existing program. OR HARVEST Concentrate investments Look for ways to expand without high risk;otherwise, in segments where profitability is good and minimize investment and risks are relatively low. rationalize operations.
MANAGE FOR EARNINGS
PROTECT AND REFOCUS Manage for current earnings. Concentrate on attractive segments. Defend strength.
Strong
Protect position in most profitable segments. Upgrade product line. Minimize investment. Medium
DIVEST Sell at time that will maximize cash value. Cut fixed costs and avoid investment meanwhile.
Weak
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CORPORATE NEW BUSINESS PLAN
When gap between future desired sales and projected sales, then three options. 1. INTENSIVE GROWTH current business 2. INTEGRATIVE GROWTH build or acquire businesses related to the companys current businesses. 3. DIVERSIFICATION GROWTH opportunities in unrelated business.
GROWTH STRATEGIES
INTENSIVE GROWTH (Ansoffs Product / Market Expansion Grid ) INTEGRATIVE GROWTH Backward, Forward, Horizontal DIVERSIFICATION GROWTH Concentric (Same technology / Marketing synergy), Horizontal (Appeals to current customers), Conglomerate (No relationship to the companys current technology, products, or markets).
Current Product
New Product
Current Markets
1. Market- penetration strategy
3. Productdevelopment strategy
New Markets
2. Marketdevelopment strategy
(Diversification Strategy)
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THE BUSINESS STRATEGIC PLANNING PROCESS
1. 2. 3.
BUSINESS MISSION SWOT ANALYSIS GOAL FORMULATION
4.
5. 6. 7.
STRATEGY FORMULATION
PROGRAM FORMULATION IMPLEMENTATION FEEDBACK AND CONTROL
OPPORTUNITY AND THREAT
A MARKETING OPPORTUNITY - is an area of buyer need in which a company can perform profitably. OPPORTUNITIES - can be classified according to their attractiveness and their success probability.
AN ENVIRONMENTAL THREAT - is a challenge posed by an unfavorable trend or development that would lead, in the absence of defensive marketing action, to deterioration in sales or profit. Threats should be classified according to their seriousness and probability of occurrence.
CHECKLIST FOR STRENGTHS / WEAKNESSES ANALYSIS

Importance of factor(High ,Medium , Low) and performance rating (Major/minor strengh,Neutral,,Major/Minor weakness)on dimensions in
Marketing Company reputation,marketshare,product/service quality,pricing/distribution/advtg/salesforce/innovation effectiveness,geog coverage Finance-cost/availability of capital,cash folw/,financial stability
Manufacturiing-facilities,economies of scale,capacity,mfg skill ,dedicated workforce

Organization-visionary leadership,dedicated employees,entrepreneurial orientation,flexible/responsive
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GOAL FORMULATION
OBJECTIVES MUST BE HIERARCHICAL

QUANTITATIVE REALISTIC CONSISTENT
STRATEGY FORMULATION
MICHAEL PORTERS THREE GENERIC STRATEGIES
OVERALL COST LEADERSHIP firms should be good at engineering, purchasing, manufacturing and distribution.
DIFFERENTIATION on key customer benefit area e.g. services, quality, style, technology. FOCUS on narrow market segment and pursue either cost leadership or differentiation. CLEAR STRATEGY IMPORTANT - Dont be middle of the roaders Firms pursuing same strategy in same to market constitute strategic group.
STRATEGIC ALTERNATIVES
Long -term profits
Growth in sales or market share
Efficiency, short-run profits
Market Development
Market Penetration
New segments
Convert nonusers
Decrease inputs Reduce costs Improve asset utilization
Increase outputs Increase price Improve 53 sales mix
Existing Customers
Competitors customers
New product developments
PROGRAM FORMULATION AND IMPLEMENTATION, FEEDBACK & CONTROL
PROGRAM FORMULATION - Develop programs in line with strategy e.g. Technology leadership strengths R&D, gather technological intelligence, develop leading edge products, train technical sales force, develops ads to communicate technology leadership. IMPLEMENTATION The McKinsey 7-S Framework(Hardwarestrategy,structure,systems and Software-Style, Staff, Skills, Shared Values) FEEDBACK & CONTROL - Need to review and revise implementation, programs, strategies, or even objectives.
MARKETING PROCESS
Involves 1. 2. 3. 4. Analysing Marketing Opportunities Developing marketing strategies (Differentiating and positioning) Developing marketing programs (Marketing mix) Managing marketing effort through
- Annual plan control (Achievement of sales, profits and other goods).

- Profitability control (Analysis of profitability of products, customers, trade channels and order sizes, Marketing profitability analysis and marketing efficiency studies).
- Strategic control (Appropriateness of companies marketing strategy to market conclusions through marketers audit).
A GOOD MARKETING STRATEGY
CO-ORDINATES FUNCTIONAL AREAS OF ORGANISATION ALLOCATES RESOURCES EFFICIENTLY HELPS PRODUCT ATTAIN MARKET POSITION COMPETITIVE
OBJECTIVES OF MARKETING PLAN
TO, 1. 2. 3. Define current situation facing the product (and how we got there) Define problems and Opportunities Establish objectives
4.
5. 6. 7.
Define strategies and programs necessary to achieve objectives

Pinpoint responsibility to achieve Encourage careful and disciplined thinking Establish customer-competitor orientation
CONTENTS OF A MARKETING PLAN

I. II. Executive summary and table of contents Current marketing situation Presents a brief over of the proposed plan Presents relevant background data on the market, product, competition, distribution, and macro-environment. Identifies the main opportunities/threats, strengths/weaknesses, and issues facing the product line. Defines the plans financial and marketing goals in terms of sales volume, market share, and profit Presents the broad marketing approach that will be used to achieve the plans objectives. Presents the special marketing programs designed to achieve the business objectives. Forecasts the plans expected financial outcomes. Indicates how the plan will be monitored
III.
Opportunity and issue analysis
IV.
Objectives
V. VI. VII. VIII.
Marketing strategy Action programs Projected profit-and-loss statement Controls
FREQUENT MISTAKES IN PLANNING PROCESS
1. 2. 3.
Speed of planning Amount of data collections Who does the planning
4.
5. 6. 7. 8. 9.
Structure
Length of plan Frequency of planning Number of courses of action considered Who sees the plan Insufficient senior management leadership
10. Tying compensation to efforts
MARKETING ENVIRONMENT
MARKETING ENVIRONMENT ANALYSIS
OUTSIDE - IN VIEW TO TRACK TRENDS, OPPORTUNITIES & THREATS FOLLOWED BY MARKET RESEARCH TO DETERMINE AN OPPORTUNITYS PROFIT POTENTIAL.
OPPORTUNITIES CAN BE CLASSIFIED ON ATTRACTIVENESS & SUCCESS PROBABILITY (COMPETITIVE ADVANTAGE).

THREATS ARE CLASSIFIED ON BASIS OF SERIOUSNESS & PROBABILITY OF OCCURRENCE.
CHECKLIST FOR STRENGTHS / WEAKNESSES ANALYSIS

Importance of factor and performance rating on dimensions in
Marketing Company reputation,marketshare,product/service quality,pricing/distribution/advtg/salesforce/innovation effectiveness,geog coverage Finance-cost/availability of capital,cash flow/,financial stability Manufacturing-facilities,economies of scale,capacity,mfg skill ,dedicated workforce Organization-visionary leadership,dedicated employees,entrepreneurial orientation,flexible/responsive
I. MAJOR FACTORS - (MACROENVIRONMENT)
A) DEMOGRAPHIC - (BREAKUP & CHANGES IN AGE, INCOME, SEX, EDUCATION, URBAN-RURAL, LIFE EXPECTANCY, OCCUPATION, PERSONS PER HOUSEHOLD).
B) SOCIO / CULTURAL - (FAMILY STRUCTURE, DECISION-MAKING, PESTERPOWER VALUES LIFESTYLES).

C) TECHNO LOGICAL - (CREATIVE DESTRUCTION, IMPACT ON PRODUCT, PACKAGING, ADVERTISING).
D) POLITICAL / LEGAL - (LAWS TO PREVENT UNFAIR COMPETITION, CONSUMERS & SOCIETY).

E) ECONOMIC - (PER CAPITA INCOME, CREDIT AVAILABILITY, SAVINGS, STAGE OF BUS CYCLE). F) PHYSICAL - (GOVTAL INTERVENTION, NEW OPPORTUNITIES).
II.
ACTORS - (MICROENVIRONMENT)
A) COMPANY B) SUPPLIERS C) MARKETING INTERMEDIARIES
D) CUSTOMERS
E) COMPETITORS F) PUBLIC - ASCI, CONSUMER ACTION GROUP
A Socioeconomic Classification (SEC) Matrix India (Urban) Occupation School up to Illiterate

Unskilled workers Skilled workers Petty traders Shop owners Businessmen/ Industrialists with number of employees: *None *1-10 *10 + Self-employed/ Professionals Clerical/ Salesmen Supervisory D D C C B2 B1 A2 D D D C B2 B1 B1 D C B1 D C B2 B1 D B2 B2 A2 D B1 B1 A2 B2 A2 A2 A1 B1 A2 A1 A1 A2 A1 A1 A1 A1 E2 E2 E2 D
Education School 5-9 Years

E1 D D C
SSC/HSC NonSSC/HSC
D C C B2
Graduate/ Postgraduate (General)

D B2 B2 A2
Graduate/ Postgraduate (Professional)

D B2 B2 A2
4 Years
E2 E1 D D
Graduate
D C C B1
level
Officers/ ExecutivesJunior Officers/ Executives Middle/Senior B1 B1 B1 B1 A2 A1 A1 C C C B2 B1 A2 A2
65
B Socioeconomic Classification (SEC) India (Rural)

Education Type of House
Pucca
Semi-Pucca
Illiterate Below SSC SSC/HSC
R R4A 4 R3A A
R2 R1 R1
R4A R3B R3A R2 R2
K u c v
Kuccha
R4B R4A R3B R3B R3A
Some college, Not Graduate

Graduate/Postgraduate (General) General/Postgraduate (Professional)
R1
R2
R3A
66
Socioeconomic Distribution of Class-Wise Households
Socioeconomic class Urban A1 A2 B1 B2 C D E1 E2 Social(Urban) Rural R1 R2 R3 R4 Subtotal (Rural) Total (Urban + Rural)**
(** Estimated number of households (in thousands) = 198,457
% of Households
1.0 1.8 2.5 2.4 6.1 6.6 3.0 5.0 28.4
2.6 8.0 26.7 34.3 71.6 100 67
(Source: Adapted from The Marketing White book, 2005, pp. 54 [Based on IRS 2003 2004]
Estimated Number of Indian Households by Income Groups 1999-2000 Households (millions) Income Groups (Annual Household Income Rupees at 1999 2000 prices) Up to 40,000 (low) 40,001 -80,000 (lower middle) 80,000-1,20,000 (middle) 1,20,000 1,60,000
Urban
8.2 (16.0) 16.7 (32.5) 11.8 (23.0) 6.9 (13.5) 7.7 (15.0) 51.3 (100)
Rural
56.0 (44.7) 43.7 (34.8) 15.5 (12.3) 5.6 (4.5) 4.5 (3.7) 125.3 (100)
Total
64.2 (36.3) 60.4 (34.2) 27.3 (15.5) 12.5 (7.1) 12.2 (6.9) 176.6 (100) 68
(upper middle)
Above 1,60,000 (high) Total
Projected Age Distribution of Population

Year-wise Population (million) Age Group 0-4 15-59 2001 366 (35.6) 598 (58.2) 60+ 65 (6.3) Total 1,027 (100) 2006 2011 2016
362
(32.5) 673 (60.4) 78 (7.0) 1,114 (100)
355
(29.7) 747 (62.5) 94 (7.9) 1,194 (100)
343
(27.1) 811 (64.0) 113 (8.9) 1,268 (100)
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TYPES OF COMPETITION
1. BRAND COMPETITOR - PEPSI / COKE

2. FORM COMPETITOR - COLA / LIME / ORANGE 3. GENERIC / CATEGORY - SOFT DRINKS / CONCENTRATES / SYRUPS 4. DESIRE / BUDGET - SPENDS ON DRINK / FOOD
COMPETITION - WHAT DO YOU NEED TO KNOW
1. WHAT ARE THEIR CURRENT / FUTURE OBJECTIVES - GROW, HOLD, HARVEST, DIVEST.
2. WHAT ARE THEIR CURRENT / FUTURE STRATEGY. 3. WHAT ARE THEIR STRENGTHS / WEAKNESS 4. WHAT ARE THE REACTION PATTERNS
HOW STRONG THEY ARE
ASSESSING COMPETITIORS STRENGTHS / WEAKNESS
1. BOTH CORPORATE & BRAND LEVEL 2. ANY INVALID ASSUMPTIONS 3. SHARE OF MARKET, MIND, HEART 4. SATISFACTION / DISSATISFACTION AREA
CONSUMER BEHAVIOUR
7 Os FRAMEWORK
WHO BUYS - OCCUPANT
WHAT DOES HE BUY - OBJECT

WHY DOES HE BUY - OBJECTIVE WHEN DOES HE BUY - OCCASION WHERE DOES HE BUY - OUTLET HOW DOES HE BUY - OPERATIONS WHO ARE INVOLVED - ORGANISATION
MODEL OF BUYER BEHAVIOUR
Buyers characteristics Marketing stimuli Product Price Place Promotion Other stimuli Economic Technological Political Cultural
Buyers Decision Process
Cultural Social Personal Psychological
Buying roles Buying types Buying Stages
Buyers decisions Product choice Brand choice Dealer choice Purchase timing Purchase amount
Factors influencing behavior
PERSONAL
CULTURAL
SOCIAL
REFERENCE
AGE AND LIFE CYCLE STAGE OCCUPATION ECONOMIC CIRCUMSTANCES LIFESTYLE PERSONALITY AND SELFCONCEPT
PSYCHOLOGICAL MOTIVATION
PERCEPTION LEARNING BELIEFS AND ATTITUDES
CULTURE SUBCULTURE
GROUP FAMILY ROLES AND STATUSES
BUYER
SOCIAL CLASS
BUYING ROLES
INITIATOR
INFLUENCER
DECIDER PURCHASER USER
BUYING BEHAVIOUR TYPES
High Involvement
Low Involvement
Difference between brands perceived B
COMPLEX
VARIETY SEEKING
WB
DISSONANCE Difference REDUCING between brands not perceived B P New B
HABITUAL
WB
STAGES OF BUYING DECISION PROCESS
PROBLEM RECOGNITION
INFORMATION SEARCH Criteria, Alternatives EVALUATION OF ALTERNATIVES PURCHASE DECISION
POSTPURCHASE BEHAVIOUR
INFORMATION SEARCH SOURCES
PERSONAL SOURCES
COMMERCIAL SOURCES
PUBLIC SOURCES
EXPERIENTIAL SOURCES
SUCCESSIVE SETS INVOLVED IN CONSUMER DECISION MAKING
TOTAL SET
AWARENESS SET
CONSIDERATION SET
CHOICE SET
PURCHASE DECISION
POST-PURCHASE BEHAVIOUR
Profiling the Customer Buying Decision Process
1) 2)
3)
4)
Introspective method Marketers think how they would act if they were consumers Retrospective method Ask consumers who have bought to recall the event Prospective method Ask prospective consumers who plan to buy to think aloud. Prescriptive method Ask consumers ideal way.
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ALTERNATIVE EVALUATIVE TECHNIQUES
COMPENSATORY MODEL EXPECTANCY VALUE MODEL IDEAL BRAND MODEL
NON-COMPENSATORY MODEL
CONJUNCTIVE MODEL
DISJUNCTIVE MODEL LEXI COGRAPHIC MODEL
EXPECTANCY VALUE MODEL OF CONSUMER CHOICE

CAR
ENGINE CAPACITY WTS. 0.4
ATTRIBUTES
EXTERIORS PRICE MILEAGE PERCEIVED VALUES
0.2
0.3
0.1
FORD ESCORT OPEL ASTRA HONDA CITY CIELO
10 8 6 4
8 9 10 6
6 6 8 5
8 6 9 5
8.2 7.4 7.7 4.8
STRATEGIES FOR MARKETERS
MODIFY THE BRAND REAL REPOSITIONING

ALTER BELIEFS ABOUT THE BRAND PSYCHOLOGICAL REPOSITIONING ALTER BELIEFS ABOUT COMPETITORS BRAND COMPETITIVE DEPOSITIONING
ALTER IMPORTANCE WEIGHTS

CALL ATTENTION TO NEGLECTED ATTRIBUTES SHIFT BUYERS IDEALS
PERCEIVED RISK
FINANCIAL
PHYSICAL
SOCIAL
PERSONAL
Organizational Buying Behavior
87
Organizational buying behaviour

Organizational Buying is the decision-making process by which
formal organizations establish the need for purchased products and services and identify , evaluate, and choose among alternative brands and suppliers. Organizations could be corporate, manufacturing firms,Service firms, Institutional & Government markets.
Business Market V/S Consumer Market

1. Fewer buyers 2. Larger buyers 3. Close supplier-customer relationship - Customization 4. Geographically oriented buyers 5. Derived demand -business marketer must closely monitor buying patterns of ultimate consumers. 6. Inelastic demand - in short run as producer cannot make quick changes in production methods, also small percentage of items total cost. 7. Fluctuating demand - given 10% increase in consumer demand can cause 200% increase in business demand. 8. Professional purchasing - Policies, constraints, requirements. 9. Several buying influences - buying committees 10. Direct purchasing 11. Leasing - e.g. Heavy construction equipment, computers, etc. 12. Reciprocity - Chemical manufacturer & Paper manufacturer
Buying Situations
1. Straight rebuy - recorder on routine basis automatic recording system from approved list of suppliers. Insuppliers & outsuppliers strategy. 2. Modified rebuy - modifying in product specifications. Prices, delivery requirements or other terms. 3. New
task - Buying for first time
* Greater cost or risk, more the decision participants & greater the information gathering. * Missionary sales force used by marketer * Mass media in awareness stage, stage sales people in interest stage & technical sources in evaluation stage.
Participants in Business Buying Process

Straight rebuy & modified rebuy situations- purchasing agent important. New buy- engineering or other departments. Purchasing agent dominate in selecting suppliers.
Buying roles in Buying centre

1. Initiators - Users or others. 2. Users - Users may initiate & help define product requirements. 3. Influencers - help define specifications & provide information for evaluating alternatives technical personnel. 4. Decider - decide on product requirements & suppliers.
5. Approver - authorize actions of decider buyer.

6. Buyer - formal authority to select suppliers, negotiate. 7. Gatekeeper - Prevent sellers or info reaching buying center. e.g. - purchasing agents, telephone, operators, receptionists.
Major influences on Industrial Buying Behaviour

Business buyers responds both to economic & personal factors. Personal (treatment etc)when similarity in supplier offers.
ENVIRONMENTAL Level of demand Economic outlook Interest rate Rate of technological change Political and regulatory developments competitive developments Social responsibility concerns
ORGANIZATIONAL Objectives Policies Procedures
INTERPERSONAL
INDIVIDUAL
Interest Authority Status Empathy Persuasiveness Age Income Education Job position Personality Risk attitudes Culture
BUSINESS BUYER
Organizational Structures
Systems
Trends in Organizational Buying

1. Purchase department upgrading 2. Centralized purchasing - in multidivisional companies 3. Decentralized purchasing for small ticket items. 4. Long-term contracts 5. Purchasing performance evaluation & rewards hence pressure put on suppliers. 6. Just- in-time 7. Single sourcing & early supplier involvement.
Purchasing / Procurement Process (Buy Phases)

1.
2.
3. 4. 5. 6.
Problem recognition - as a result of internal or external stimuli General need description - items general characteristics, attributes &
quantity.
Product specification- Technical specifications. Supplier search - buyer can examine trade directories, computer search, trade
shows, advertisements, recommendations of others.
Proposal solicitation - Buyer invites qualified suppliers to submit proposal,

make presentations.
Supplier selection - based on important factors e.g. product reliability,

technical service, price, supplier flexibility, reputation.
7.
8.
Routine order specification - Trend especially in MRO items is

blanket contract/ stockless purchase plan.
Performance review
Buying stages in buying classes

BUYCLASSES NEW TASK 1. Problem recognition 2. General need description 3. Product specification 4. Supplier search 5. Proposal solicitation 6. Supplier selection 7. Order-routine specification 8. Performance review Yes Yes Yes Yes Yes Yes Yes Yes MODIFIED REBUY Maybe Maybe Yes Maybe Maybe Maybe Maybe Yes STRAIGHT REBUY No No Yes No No No No Yes
BUYPHASES
Vendor analysis
An example of vendor Analysis Rating scale
ATTRIBUTES IMPORTANCE WEIGHTS (1) POOR (2) FAIR (3) GOOD (4) EXCELLENT
Price Supplier reputation Product reliability Service reliability Supplier flexibility
.30 .20 .30 .10 .10
X
X X X X
Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5
COMPETITION
98
PORTERS MODEL
Threat of new entrants Intensity of Competitive rivalry Bargaining power of buyers Bargaining power of suppliers Threat of substitutes
99
Five Forces Determining Segment Structural Attractiveness
Potential entrants (Threat of mobility)
Suppliers (Supplier power)
Industry competitors (Segment rivalry)
Buyers (Buyer power)
Substitutes (Threat of substitutes)
100
Identifying Competition
A. Industry Concept of Competition Group of firms that offer a class of products that are close substitutes classified on basis of I. Number of sellers & degree of differentiation a) Pure monopoly b) Oligopoly Pure oligopoly (oil, steel) & differentiated oligopoly (auto, computers) c) Monopolistic competition restaurants d) Pure competition stock market II. Entry, mobility & exit barriers.
101
Identifying Competition Contd of Slide .
III. Cost structure shapes strategic conduct e.g. steelmaking involves heavy manufacturing & raw material costs IV. Degree of vertical integration V. Degree of globalization some industries are highly local (babycare) others are global (e.g. oil, cameras) B. Market Concept of competition Brand/Form/Category/Desire
102
COMPETITION WHAT DO YOU NEED TO KNOW

WHO ARE OUR COMPETITORS - IDENTIFY & SELECT WHAT ARE THEIR OBJECTIVES WHAT ARE THEIR STRATEGIES
WHAT ARE THEIR STRENGTHS & WEAKNESSES

WHAT ARE THEIR REACTION PATTERNS
103
IDENTIFYING COMPETITION
CORRECT DEFINITION IMPORTANT TO MARKET PLANNING & STRATEGY KEY QUESTION IS DEGREE EXTENT BALANCE BETWEEN TOO MANY & TOO FEW NOT EASY AS EMERGING COMPETITION WRONG DEFINITION LEADS TO a) MARKETING MYOPIA b) AMBIGUITY IN MARKET RELATED STATISTICS
104
IDENTIFYING COMPETITORS
I. INDUSTRY CONCEPT OF COMPETITION II. MARKET CONCEPT OF COMPETITION
105
INDUSTRY CONCEPT OF COMPETITION

1)Number of sellers and degree of differentiation a)Pure Monopoly b)Oligopoly- a small no. of large firms Pure eg oil,steel Or Differentiated automobiles,refrigerators c)Monopolistic competitionMany competitors and differentiated eg restaurants,beauty parlors d)Pure competition eg stock market 2)Entry,Mobility,exit barriers 3)Cost structure 4)Degrree of vertical integration 5)Degree of Globalisation
106
Market concept of competition

Stimulates long run strategic market planning Key to identify is mapping product/market grid Opens eyes to broader set of actual & potential competitors a) Brand b) Product form competition c) Category / Generic / Industry Competition d) Desire / Budget
107
COMPETITIVE LEVEL & TASKS

Competitive Level
Brand (inward oriented)
Product Managers task

Convince customers brand is better than others in product form
Product Form (inward)
Convince product form is best in the category
Generic / Category
(Outward)
Convince product category is best to satisfy need
Desire / Budget
Convince Generic need / benefit is best way to spend discretionary income
108
METHODS FOR DETERMINING COMPETITORS

I. PREDETERMINED CATEGORIES - ORG
II. MANAGERIAL JUDGEMENT
III. CUSTOMER BASED MEASURES a) PURCHASE DATA FOR BRAND SWITCHING MATRIX b) CROSS ELASTICITY OF DD c) CONSUMER JUDGEMENTS c.1. JUDGED OVERALL SIMILARITY c.2. SIMILARITY OF CONSIDERATION SET c.3. PRODUCT DELETION SET c.4. SUBSTITUTION IN USE
109
BRAND SWITCHING MATRIX

TIME (++1)
A
A TIME t B .6 .2
B .2 .3 .3 .1 0
C
.2 .4
D
0 .1
E
0 0
C
D E
.2
0 .1
.5
.1 0
0
.5 .4
0
.3 .5
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FIGURE 3.13: METHODS VERSUS COMPETITION LEVELS AND INFORMATION REQUIRED

Level of Competition Approach Typical Data Sources
Brand Product Generic Budget Primary Secondary
Form
Existing definitions Technology substitution Managerial judgment Customer behavior based: Brand switching X X X X X X X X X X X X X X
Interpurchase times
Cross-elasticities
X
X
X
X X
X
X
111
FIGURE 3.13: METHODS VERSUS COMPETITION LEVELS AND INFORMATION REQUIRED

Level of Competition Approach Typical Data Sources
Brand Product Generic Budget Primary Secondary
Form
Customer evaluation based: Overall similarity X X X X X X X X
Similarity of consideration X sets Product deletion X
Substitution in use
Note: An X indicates that either the method is useful for determining competition at that level or it employs data of a certain type.
112
IDENTIFYING COMPETITORS STRATEGIES

A group of firms following same strategy in given target market is called a strategic group. Dimensions include level of technological sophistication,geographicalscope, manufacturing methods,marketing strategies etc
113
ASSESSING COMPETITORS CURRENT STRATEGY
1. TARGET MARKET 2. CORE MARKETING STRATEGY a) POSITIONING b) DIFFERENTIAL ADVANTAGE 3. MARKETING MIX
114
ASSESSING COMPETITORS CURRENT OBJECTIVES

growth v/s hold v/s harvest v/s divest.
Short term v/s long term profits, satisfycing v/s maximizing profits, cash flow,,market sharegrowth,,technological/,service /cost leadership objectives shaped by size, history, management perspective, financial situation, place in larger organisation
objectives can be assessed
a) from strategy
b) geographical home of parent c) ownership of firm - private / public/ government
115
ASSESSING COMPETITORS STRENGTHS & WEAKNESSES

1. THROUGH - SECONDARY DATA - PERSONAL EXPERIENCE - PRIMARY SOURCES (CUSTOMERS, SUPPLIERS, DEALERS) 2. ANALYSIS SHOULD BE FOR BOTH CORPORATE & BRAND LEVELS 3. ANY INVALID ASSUMPTIONS THAT COMPETITOR IS MAKING 4. SHARE OF MARKET, MIND, HEART
5. SATISFACTION / DISSATISFACTION AREA

6. COMPARISION VIS-A-VIS OUR BRAND
116
ESTIMATING COMPETITORS REACTION PATTERNS
DEPENDS ON
a) IMPORTANCE OF BUSINESS OR PRODUCT

b) HOW COMMITTED IS THE COMPETITOR (PHILOSOPHY, MIND-SET)
c) AGGRESSIVENESS OF MANAGERS
117
ESTIMATING COMPETITORS REACTION PATTERNS
TYPES OF COMPETITORS
LAID BACK
SELECTIVE TIGER STOCHASTIC
118
DESIGNING COMPETITOR
INTELLIGENCE SYSTEM
1. COSTLY SIGNALS
2. CHEAP TALK SIGNALS
PRODUCT MANAGER MUST COLLECT BOTH TYPES OF INFORMATION BUT BE WARY OF (2)
119
SOURCES OF INFORMATION OF COMPETITORS
I.
SECONDARY
II. PRIMARY III. OTHERS
IV. UNETHICAL
120
SELECTING COMPETITION
1. LEVEL 2. SELECTING COMPETITOR FOCUS CHOOSING WHO TO COMPETE HAS IMPLICATIONS ON PERFORMING STDS (MARKET SHARE) & COMPETITIVE STRATEGY DEPENDS ON a) TIME HORIZON
b) STAGE OF PLC
c) RATE OF CHANGE OF TECHNOLOGY
121
SELECTING COMPETITORS TO ATTACK & AVOID
1. STRONG V/S WEAK COMPETITORS 2. CLOSE V/S DISTANT 3. GOOD V/S BAD
122
BALANCING CUSTOMER & COMPETITOR ORIENTATION
123
COMPETITIVE POSITIONS
DOMINANT-Controls behavior of other competitors ,wide choice of strategic options
STRONG-can take independent actions and maintain its long term position
FAVOURABLE-exploitable strength and above average opportunity to improve position TENABLE-exists at sufferance of dominant company and has lesser than average opportunity to improve position WEAK-poor performance.must change or exit NON-VIABLE-poor performance and no opportunity for improvement
124
MARKET LEADER STRATEGIES
I.
EXPANDING TOTAL MARKET
II.
DEFENDING MARKET SHARE
III EXPANDING MARKET SHARE
125
Market- Leader Strategies Expanding Total Market

NEW USERS : Non-users or competitors users (Market penetration) Different segments (New Market Strategy)
Geographical segments (Geographical Expansion Strategy)

NEW USES :For example Vaseline as lubricant. Skin ointment, healing agent, hair dressing. MORE USAGE :Shampoo
126
MARKET LEADER DEFENSIVE STRATEGIES

Through continuous innovation, increasing competitive effectiveness and value to customers.
a) POSITION DEFENSE not enough today. e.g. Coke has also diversified. b) FLANK DEFENSE Erect outposts to protect a weak front or serve as an invasion base for counter attacking. E.g. Asian Paints Tractors. c) PREEMPTIVE DEFENSE Launch attack before enemy starts offense across market with many models.
127
Market Leader Defensive Strategies

d) COUNTER OFFENSIVE DEFENSE e.g. HLL reaction to Tide. e) MOBILE DEFENSE Stretch Domain over new territories through market broadening i.e. shifting focus from current product to generic need E.g. Bank to insurance, Mutual Funds etc. Aquafina & Kinley f) CONTRACTION DEFENCE- Recognising that there is no sense to spread too thin. (Strategic withdrawal)
128
EXPANDING MARKET SHARE

Increased market share above 40% earns ROI of 38.5%,more than 3 times that of those firms with shares under 10%
But important to consider 3 factors Provoking monopolist action Economic costholdout customers Wrong marketing mix
129
MARKET CHALLENGER STRATEGIES
Firms that occupy 2nd,3rd or lower ranks are called runner ups. These firms can either attack leader and make aggressive bid for further market share( market challenger ) or play ball and not rock boat ( market follower)
130
Market challenger strategies

1. Can attack Market leader- high risk-high payoff.Makes good sense if false leader 2. Can attack firms of own size that are not doing well or are under financed.
3. Small and regional firms

131
FRONTAL ATTACK-attacking opponents strength rather than weakness.Matching opponent on product,advertising,price with 3:1 advantage otherwise cant succeed MODIFIED FRONTAL ATTACK-Match leaders offer on all and beat on price FLANK ATTACK-Blind spots. Flank attack can be geog or segmental eg Nirma. Much more likely to succeed than frontal attack
132
ENCIRCLEMENT ATTACK-Comprehensive Blitz attack on front,sides rear.Offer everything opponent offers and more BYPASS ATTACK-is an indirect assault strategy.like diversifying into unrelated products,new geographical markets and leapfrogging into new technology GUERRILLA ATTACK-waging small intermittent attacks. Harass , Demoralise eg price cuts, promotional blitz,legal action
133
MARKET FOLLOWER STRATEGIES
Company prefers to follow than to challenge.

1. COUNTERFEITER
2. CLONER-The cloner emulates the leaders products,distribution, advertising etc Sudar dust
3. IMITATOR-copies some things of leader but maintains differentiation on packaging, advertising, pricing etc 4. ADAPTER adapts or improves leaders product. Can become future challenger E.g. Japanese firms
134
MARKET NICHER STRATEGIES
SPECIALIZATION- Customer, geographic product line, MULTIPLE NICHING BETTER THAN SINGLE NICHING
135
MARKETING ROLES NICHE SPECIALIST ROLES

The key idea in successful nichemanship is specialization. Here are some possible niche roles: End user specialist:
Vertical-level specialist:
Customer-size specialist: Specific-customer specialist: Geographic specialist: Product or product line specialist: Product - feature specialist: Job shop specialist: Quality price specialist: Service specialist: Channel specialist: 136
SEGMENTATION, TARGETING & POSITIONING
Levels of Market Segmentation
1) 2) 3) 4)
Segment Marketing Niche Marketing Local Marketing Customerization or segments of one or customized marketing or one to one marketing.
138
Steps in the Segmentation Process

Description 1. Need-Based Segmentation Group customers into segments based on similar needs and benefits sought by customer in solving a particular consumption problem. 2. Segment Identification For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable). Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, access), determine the overall attractiveness segment. Determine segment profitability. For each segment, create a value proposition and product-price positioning strategy based on segments unique customer needs and Create segment storyboards to test the attractiveness of each segments positioning strategy. Expand segment positioning strategy to include all aspects of the marketing mix: product, price, 139 and place.
3.
Segment Attractiveness and market of each
4. 5.
Segment Profitability Segment Positioning that characteristics.
6. 7.
Segment Acid Test Marketing-Mix Strategy promotion
REQUIREMENTS FOR EFFECTIVE MARKET SEGMENTATION
RELEVANT MEASURABLE SUBSTANTIAL ACCESSIBLE ACTIONABLE
STEPS IN SEGMENTATION
1. IDENTIFY BASES OF SEGMENTATION

2. PROFILING
BASIS FOR SEGMENTING CONSUMER MARKETS

I. CONSUMER CHARACTERISTICS 1. GEOGRAPHIC (REGION, URBAN-RURAL) 2. DEMOGRAPHIC (AGE, SEX, OCCUPATION, INCOME, EDUCATION, FAMILY LIFE CYCLE, FAMILY SIZE). 3. PSYCHOGRAPHICS (SOCIAL CLASS, LIFESTYLE, PERSONALITY) II. CONSUMER RESPONSES 1. BENEFITS SOUGHT
2. OCCASIONS
3. USAGE RATE (HEAVY, MEDIUM, LIGHT) 4. USER STATUS (EX, CURRENT, NON, POTENTIAL, REGULAR, 1ST TIME) 5. LOYALTY STATUS (HARDCORE, SOFT CORE, SHIFTING, SWITCHERS) 6. BUYER READINESS (UNAWARE, AWARE, INFORMED, INTERESTED) 7. ATTITUDE TO PRODUCT (ENTHUSIASTIC, POSITIVE, INDIFFERENT, NEGATIVE, HOSTILE).
MAJOR SEGMENTATION VARIABLES FOR BUSINESS MARKETS

DEMOGRAPHIC 1. Industry : which industries should we serve? 2. Company size: What size companies should we serve? 3. Location: Which geographical areas should we serve ? OPERATING VARIABLES 4.Technology : What customer technologies should we focus on? 5. User / customer status: Should we serve heavy users, medium users, light users, or nonusers? 6. Customer capabilities: Should we serve customers needing many or few services? PURCHASING APPROACHES 7. Purchasing -function organization : Should we serve companies with highly centralized or decentralized purchasing organizations? 8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so forth? 9. Nature of existing relationships: Should we serve companies with which we have strong relationships or simply go after the most desirable companies? 10. General purchase policies: Should we serve companies that prefer leasing? Service contracts? Systems purchases? Sealed bidding? 11. Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?
MAJOR SEGMENTATION VARIABLES FOR BUSINESS MARKETS SITUATIONAL FACTORS 12. Urgency: Should we serve companies that need quick and sudden delivery or service? 13. Specific application: Should we focus on certain applications of our product rather than all applications? 14. Size of order: Should we focus on large or small orders?
PERSONAL CHARACTERISTICS 15. Buyer-seller similarity: Should we serve companies whose people and values are similar to ours? 16. Attitudes toward risk: Should we serve risk- taking or risk-avoiding customers? 17. Loyalty: Should we serve companies that show high loyalty to their suppliers?
STEPS IN MARKET TARGETING
1. DEVELOP MEASURE OF SEGMENT ATTRACTIVENESS AND EVALUATE.

2. SELECT TARGET SEGMENTS.
BASIS FOR EVALUATION & SELECTION OF TARGET SEGMENTS
1. SIZE 2. GROWTH 3. STRUCTURAL ATTRACTIVENESS (PORTERS MODEL) 4. OBJECTIVES & RESOURCES 5. ECONOMIES OF SCOPE
PATTERNS OF TARGET MARKET SELECTION
1. SINGLE SEGMENT CONCENTRATION 2. MARKET SPECIALISATION 3. PRODUCT SPECIALISATION 4. SELECTIVE SPECIALISATION 5. FULL MARKET COVERAGE
ALTERNATIVE TARGETING STRATEGIES
COS MARKETING MIX
WHOLE MARKET
UNDIFFERENTIATED MARKETING
MARKETING MIX 1 M M 2
SEGMENT 1 SEGMENT 2
SEGMENT 3
DIFFERENTIATED MARKETING
SEGMENT 1 MARKETING MIX SEGMENT 2 SEGMENT 3 CONCENTRATED MARKETS
Additional Considerations 1) 2) 3) 4) Segment by segment invasion plans mega marketing to counter blocked markets Updating segmentation schemes market partitioning Ethical choice of Target markets Counter segmentation.
149
DIFFERENTIATION & POSITIONING
DIFFERENTIATION IS THE ACT OF DESIGNING A SET OF MEANING DIFFERENCES TO DISTINGUISH THE COMPANYS OFFERS FROM COMPETITORS OFFERS. POSITIONING IS THE ACT OF DESIGNING COMPANYS OFFER AND IMAGE SO THAT IT OCCUPIES A DISTINCT AND VALUED PLACE IN THE TARGET CUSTOMERS MIND.
Developing a Positioning Strategy
Involves: 1) Defining the Target Market 2) Competitive frame of reference 3) Points of Parity & Points of Difference
151
Choosing POPs & PODs

POP are driven by needs of category membership (to create category POPs) & need to negate competitors PODs ( to create competitive POPs). Consumer desirability criteria for PODs. 1) Relevance e.g. tallest hotel (irrelevant)
2)
3)
Distinctive
Believable & credible
152
Choosing POPs & PODs Contd. Of slide

Deliverability criteria 1) 2) Feasibility in terms of resources,image of company Communicability Verifiable evidence or proof points need to be created e.g. zpto Sustainability enduring
3)
Marketers must decide at which level (s) to anchor brands PODs At lowest level are brand attributes, then brand benefits & at top are brand values.
153
EFFECTIVE POSITIONING REQUIRES
1. DETERMINING IMPORTANT DIMENSIONS

2. ASSESSING IDEAL POSITIONS 3. ASSESSING CURRENT POSITION OCCUPIED BY COMPETITORS
STEPS IN POSITIONING
1. DEVELOP ALTERNATIVE POSITIONING CONCEPTS

2. SELECT POSITIONING STRATEGY 3. SIGNAL THROUGH MARKETING MIX
Positioning Strategy
1. 2. 3. 4. 5. 6. 7. 8. ATTRIBUTE for e.g. clinic with zpto BENEFIT USE/ APPLICATION USER COMPETITOR LEADERSHIP quality , technology, service PRODUCT CATEGORY DISASSOCIATION EXCLUSIVE CLUB
156
POSITIONING STRATEGY TO BE AVOIDED
1. UNDERPOSITIONING - VAGUE IDEA

2. OVERPOSITIONING - TOO NARROW AN IMAGE 3. CONFUSED POSITIONING 4. DOUBTFUL POSITIONING
PRODUCT REPOSITIONING
1. CHANGING TARGET CONSUMER PROFILE 2. COMPETITOR TOO CLOSE 3. INCREASE MARKET - E.g. CADBURY 4. COMMUNICATE TECHNOLOGICAL ADVANCEMENT / UPGRADATION IN THE PRODUCT - E.g. SURF. 5. CHANGING CUSTOMER NEED.
158
DIFFERENTIATION VARIABLES
PRODUCT Features Performance Conformance Durability Reliability Reparability Style Design
SERVICES Ordering ease Delivery Installation Customer training Customer consulting Maintenance and repair Miscellaneous
PERSONNEL Competence Courtesy Credibility Reliability Responsiveness communication
CHANNEL Coverage Expertise Performance
IMAGE Symbol Written and audiovisual media Atmosphere Events
MEASURING CUSTOMER EFFECTIVENESS VALUE - METHOD FOR COMPETITIVE ADVANTAGE SELECTION

FEATURE COMPANY COST (1) CUSTOMER VALUE (2) CUSTOMER EFFECTIVENESS (3 = 2/ 1)
Rear window defrosting Cruise control Automatic transmission
$100 600 800
$200 600 2400
2 1 3
160
Methods for competitive - Advantage selection

1 Competitive Advantages 4 2 3 Company Competitor Importance of Standing Standing Improving Standing (H-M-L)* 5 6 Affordability Competitors and speed Ability to (H-M-L) Improve standing (H-M-L)
7 Recommend ed Action
Technology Cost Quality Service
8 6 8 4
8 8 6 3
L H L H
L M L H
M M L L
Hold Monitor Monitor Invest
* H = High; M = Medium; L= Low
161
PRODUCT & BRANDING
5 LEVELS OF PRODUCT
1. CORE BENEFIT 2. BASIC PRODUCT - FEATURES, BENEFITS, DESIGN & STYLE, PACKAGING, BRAND NAME. 3. EXPECTED PRODUCT - CREATES NO PREFERENCE
4. AUGMENTED PRODUCT - TOTAL CONSUMPTION SYSTEM

5. POTENTIAL PRODUCT THE 5 LEVELS CONSTITUTE CUSTOMER VALUE HIERARCHY WITH EACH LEVEL ADDING MORE CUSTOMER VALUE.
CLASSIFICATION OF PRODUCTS-CONSUMER GOODS

DURABILITY & TANGIBILITY 1. 2. 3. NON-DURABLE GOODS tangible, consumed in few uses. Many locations, small mark up, heavy advertising. DURABLE GOODS personal selling, guarantees, higher margin. SERVICES intangible, variable, credibility of supplier very important.
SHOPPING HABITS
4.
5. 6. 7.
CONVENIENCE GOODS staples, impulse & emergency goods

SHOPPING GOODS comparison shopping .Homogenous & heterogenous strategies differ. SPECIALITY GOODS goods with unique characteristics and or brand identification.Location should be advertised. UNSOUGHT GOODS advertising and personal selling.
Classification Of Products
Most goods
Easy to evaluate
Most services
Difficult to evaluate
High in search qualities
High in experience qualities
High in credence qualities
The Product Hierarchy
1) Need family thirst 2) Product family All product classes that serve a core need with reasonable effectiveness Non-alcoholic beverages, alcoholic beverages 3) Product class A group of products within a product family having certain functional coherence e.g. Aerated soft drinks
166
4) Product line A group of products within a product class that are closely related because they perform a similar function, are sold to same customer groups, are marketed through same outlets or channels or fall within price ranges. Soft drink 5) Product type share same form. Cola drink. 6) Item (SKU or variant) Coke 300 ml.
The Product Hierarchy Contd of Slide .
167
Product systems & Mixes A product system is a group of diverse but related items that function in a compatible manner. A product mix (product assortment is set of all products & items a particular seller offers for sale. A product mix has width, length, depth & consistency.
168
PRODUCT LINE DECISIONS
1. PRODUCT LINE ANALYSIS A. PRODUCT LINE SALES & PROFITS B. PRODUCT LINE MARKET PROFILE - PRODUCT MAPPING C. PRODUCT LINE LENGTH - UPWARD / DOWNWARD / TWO WAY STRETCH D. LINE MODERNIZATION E. LINE FEATURING F. LINE PRUNING
BRAND
A BRAND IS ESSENTIALLY A SELLERS PROMISE TO CONSISTENTLY DELIVER A SPECIFIC SET OF FEATURES, BENEFITS AND SERVICES TO BUYERS.A BRAND IS ABOUT INTANGIBLE AND TANGIBLE ASSOCIATIONS
Brand
A brand is a product or service that is differentiated on dimensions functional, rational, tangible (brand performance) and/or symbolic, emotional, intangible (what brand represents).
171
BRANDING DECISIONS
1.
BRAND OR NOT Advantages of branding easy processing, legal protection, brand loyalty, segmentation ,corporate image. Also distributors and consumer s prefer brands.
2.
3.
SPONSOR Manufacturer / Distributor / Licensed

BRAND NAME Individual / Blanket / Separate family / Co. + Individual. Company names legitimizes and individual name individualizes BRANDING STRATEGY Line extensions (success rate higher), Brand extensions (risk of brand dilution test association), Multi-brands, New brands, Co brands (also called dual branding). REPOSITIONING shifting customer preferences or competitor too close.
4.
5.
Devising a Branding Strategy

4 General Strategies: 1) 2) 3) 4) Individual names or house of brands Blanket family names or branded house Separate family names Corporate name + individual product name.
173
Devising a Branding Strategy Contd of Slide .
- Brand extension line extensions & category extensions - Parent brand & sub brand - Brand line consists of all products original as well as line and category extensions sold under a particular brand. - Brand mix (or brand assortment) is the set of all brand lines that a particular seller makes available to buyers. - Licensed brands, co-branding, ingredient branding.
174
ESSENTIALS OF A GOOD BRAND NAME
1. 2. 3. 4. 5.
Easy to pronounce, spell and remember. Suggest about benefits, quality, use or action. Unique, distinctive. Versatile can be added to new products / global reach. Registered and protected.
BRAND NAME TESTS
A. ASSOCIATION TEST B. LEARNING TESTS (PRONOUNCABILITY) C. MEMORY D. PREFERENCE E. GLOBAL REACH
PACKAGING TESTS
1. ENGINEERING 2. VISUAL 3. DEALER & CONSUMER TESTS
BRAND - MEANING
1. ATTRIBUTES 2. BENEFITS - FUNCTIONAL & EMOTIONAL 3. VALUE 4. CULTURE 5. PERSONALITY 6. USER
DEEP V/S SHALLOW BRAND
BRAND ASSOCIATIONS Product attributes

Intangibles
Country/geographic area Customer benefits
Competitors
Brand-name and symbol
Relative price
Product class
Use/application
Lifestyle/personality
Celebrity/person
User/customer
HOW VALUES AFFECT BRAND CHOICE
FUNCTIONAL VALUE
CONDITIONAL VALUE
SOCIAL VALUE
BRAND CHOICE
EMOTIONAL VALUE
EPISTEMIC VALUE
BRAND EQUITY (DAVID AAKER)
1. BRAND AWARENESS 2. PERCEIVED BRAND QUALITY AND FUNCTIONALITY 3. POSITIVE BRAND MENTAL & EMOTIONAL ASSOCIATIONS 4. BRAND LOYALTY 5. OTHER ASSETS - PATENTS, TRADEMARKS ,CHANNEL RELATIONSHIPS
ATTITUDE TOWARDS BRAND
1. CUSTOMER WILL CHANGE BRAND FOR PRICE REASONS 2. CUSTOMER IS SATISFIED - NO REASON TO CHANGE 3. CUSTOMER IS SATISFIED & WOULD INCUR COSTS BY CHANGING BRAND 4. CUSTOMER VALUES THE BRAND AND SEES IT AS A FRIEND 5. CUSTOMER IS DEVOTED TO BRAND.
BRAND EQUITY IS RELATED TO 3, 4, 5.
IMPORTANCE OF PROPER PACKAGING
1. 2.
PROTECTION ADVERTISING VALUE
3.
4. 5. 6. 7.
CONVENIENCE TO CONSUMERS
BENEFIT TO RETAILERS AFTER-USE VALUE IDENTIFICATION INFORMATION
182
FACTORS TO BE CONSIDERED FOR PACKAGE DESIGNING
1.
LANGUAGE
2.
3. 4. 5. 6. 7. 8.
COLOUR
SIZE CLIMATE NATURE OF THE PRODUCT LENGTH OF DISTRIBUTION CHANNEL ACCEPTED NORMS METHOD OF TRANSPORT USED
9.
TRENDS IN PACKAGING
10. COST-BENEFIT ANALYSIS
183
PACKAGING
1. 2.
PRIMARY SECONDARY
3.
SHIPPING
DECISIONS 1. 2. 3. The first task is to establish packaging concept. What packaging should be or do. e.g. protection, novel dispensing method, visibility. Decision on packing elements Tests engineering tests, visual tests, dealer tests and consumer tests.
4.
Labeling identify, describe and promote.
184
Introduction to Services
185
Services Characteristics V/s Goods

Goods
Tangible
Services
Intangible
Resulting implications
- Services cannot be inventoried. - Patented. - Readily displayed or communicated. - Pricing is difficult. - Service delivery and customer satisfaction depend on employee actions. - Service quality depends on uncontrollable factors - Customers & employees affect the service outcome.
Standardized
Heterogeneous
Production separate from consumption Nonperishable
Simultaneous production and consumption
Perishable
- Difficult to synchronize supply and demand with services. - Services cannot be returned or resold.
186
The services triangle and technology

Company
Internal Marketing
Enabling promises
External Marketing
Making promises
Technology
Providers
Interactive Marketing
Keeping promises
Customers
187
Expanded Marketing Mix For Services

Product Physical good features Quality level Accessories Packaging Warranties Product lines Branding Place Channel type Exposure Intermediaries Outlet locations Promotion Price Flexibility Price level Terms Differentiation Discounts Allowance
- Promotion blend - Salespeople Number Selection Training Transportation Incentives Storage - Advertising Managing channels Targets Media types Types of ads Copy thrust - Sales promotion - Publicity
188
People
- Employees Recruiting Training Motivation Rewards Teamwork - Customers Education Training
Physical evidence
Facility design Equipment Signage Employees dress - Other tangibles Reports Business cards Statements Guarantees
Process
- Flow of activities Standardized Customized - Number of steps Simple Complex - Customer involvement
189
Consumer Behaviour in Services
190
Continuum of evaluation for different types of products
Most goods
Easy to evaluate
Most services
Difficult to evaluate
High in search qualities
High in experience qualities
High in credence qualities
Consumer decision making and evaluation of services
Information Search
Use of personal sources

Perceived risk high
Evaluation of Alternatives Evoked set smaller
Culture Language
Values and customs Material culture * Aesthetics
Purchase and Consumption
Emotion & mood

Service provision as drama Service roles and expected scripts Compatibility of customers
Postpurchase Evaluation Attribution of dissatisfaction to self & less complaints Innovation diffusion slow Brand loyalty high due to more search costs
192
Gaps Model of Service Quality
193
Gaps Model of Service Quality
Customer Expected Service Customer Gap Perceived Service
Company Gap 1
Service Delivery Gap 3 Gap 4
External Communications to customers
Customer-driven service designs and standards

Gap 2 Company perceptions of consumer expectations
194
The provider gaps are the underlying causes behind the customer gap:
Gap 1 -- Not knowing what customers expect. Gap 2 -- Not selecting the right service designs and standards. Gap 3 -- Not delivering to service standards. Gap 4 -- Not matching performance to promises.
195
Customer Expectations of Service
196
Customer Expectations of Service - The Zone of Tolerance
Desired Service Expectations
Zone of Tolerance
Adequate Service Expectations

197
1.
Desired service want. Adequate service accept; Predicted service likely to get.
which reflects what customers
2.
what customers are willing to
3.
what customers believe they are
198
- Zone of tolerance is range in which customers do not notice service performance. - A customers desired service expectation is same for all service providers within a category e.g. Service expectations from fast food restaurants V/s fine dine restaurants. - Adequate service expectation level varies for different firms within a category. - Zone of tolerance expands or contracts for a customer from time to time. E.g. Customer hard pressed for time will have narrow zone of tolerance. - Zone of tolerance varies for different customers. - Zone of tolerance varies for service dimensions. E.g. unreliability will be least tolerated. - Zone of tolerance varies for first time & recovery service.
199
Nature and determinants of customer expectations of service

Enduring Service Intensifiers * Derived expectations from others (customers) family * Personal Service Philosophies of your own trained standards. Explicit Service promises * Advertising * Personal Selling * contracts * Other communications Implicit Service Promises * Tangibles * Price Expected Service Desired Service Zone of Tolerance Word of Mouth * Personal * Expert (Consumer Reports, publicity, Consultants, surrogates)
Personal Needs
Transitory Service Intensifiers * Emergencies * Service problems earlier Perceived Service Alternatives Self- Perceived Service Role e.g. articulate customer Situational Factors * Bad weather * Catastrophe * Random overdemand
Past Experience Across Industries
Adequate Service
Predicted Service
200
Gap 5 Perceived Service
Customer Perceptions of Service
201
Customer perceptions of quality and customer satisfaction

Situational Factors
Reliability Responsiveness Assurance Empathy Tangibles
Service Quality
Product Quality
Customer Satisfaction
Price
Personal Factors - emotions, attributions for service success or failure, 202 Perceptions of equity or fairness
* Service quality is a focused evaluation that reflects the customers perception of specific dimensions of service: reliability, responsiveness, assurance, empathy, tangibles. Satisfaction, on the other hand, is more inclusive: it is influenced by perceptions of service quality, product quality, and price as well as situational factors and personal factors.
* Satisfaction is the customers evaluation of a product or service in terms of whether that product or service has met their needs and expectations.
203
Service Quality Dimensions Reliability : Ability to perform the promised service dependably and accurately. Responsiveness: Willingness to help customers , solves problems and provide prompt service, be flexible. Assurance : Employees knowledge and courtesy and their ability to inspire trust and confidence. Empathy: Caring individualized attention given to customers. Tangibles: Appearance of physical facilities, equipment, personnel and written materials. Sometimes customers will use all of the dimensions to determine service quality perceptions, at other times not. For example,in a remote encounter such as an encounter with an ATM, empathy is not likely to be a relevant dimension.
204
Perceived Performance V/s Expectations

Perceived Performance > expectations delight Perceived Performance = expectations Happy / Ok/ Satisfied Perceived Performance < expectations unhappy/disgusted/ dissatisfied
Improving performance & hence perceptions is virtually impossible in basics/ core/ technical elements. Hence process is where one can play around.
205
Service quality perceptions
Technical Outcome quality
Process quality
- When technical quality cannot be evaluated accurately (e.g. Professors, doctors,) customers form impressions, of service including technical quality from own shorthand cues.
206
Service Encounters or Moments of Truth service encounters are the building blocks of service quality & satisfaction - Every experience with product, service or person which allows customer to judge/ form impressions about the quality of service is a moment of truth. - It takes 10 good moments of truth to wipe one bad moment of truth. - Disney Corporation 74 service encounters in amusement park. Marriott Hotels - 4 of the top 5 factors come into play in first 10 minutes of guests stay. Types of service encounters- remote, phone, face to face. - In remote - tangible evidence & technical quality important. - In phone- process quality - In face to face - customer also play role.
207
Marketing Information System
208

Helps develop &manage information necessary to conduct marketing activities.
MARKETING INFORMATION
MARKETING INFORMATION SYSTEMS

INTERNAL REPORTS SYSTEM MARKETING RESEARCH SYSTEM
MARKETING INFORMATION
MARKETING MANAGERS Analysis
Macro environment Target market Marketing channels Competition Public
Planning Implementation Control

MARKETING INTELLIGENCE SYSTEM ANALYTICAL MARKETING SYSTEM
MARKETING DECISIONS & COMMUNICATIONS

Internal Records System (result data) - Order to payment cycle (invoices, bills), sales reporting system (sales reports, call reports). Marketing intelligence system(happening data)* Newspapers, trade publications, talking to customers, suppliers, distributors, trade show, analyzing products & ads. talking to competitors, employees, syndicated reports (ORG). *Need to train sales representatives & motivate distributors & retailers. Marketing research - formal study of specific problem / situation. Marketing decision support systems - Statistical tools, models & optimization routines.
SCOPE OF MARKETING RESEARCH 1. NEW PRODUCTS - Concept testing,Brand name generation,& testing,Product testing,packaging tests, Test-marketing, Market feasibility. 2. 3. PRODUCT RESEARCH - Competitive - product studies, SALES & MARKET - Market potential, Market characteristics, Market share analysis, Sales analysis, Distribution channel studies.
4. PROMOTION - Copy research, Media research, Ad effectiveness, sales promotion effectiveness.,public image studies, sales force effectiveness 5. BUSINESS & CORPORATE RESEARCH - Business trend studies,, International scope studies, Internal employees studies, Operations research, Location studies etc. 6. 7. 8. CORPORATE RESPONSIBILITY - Ecological studies, Values PRICING-Competitive pricing analysis,price elasticity BUYING BEHAVIOUR-Brand preference, attitude,product satisfaction,purchase behaviour,purchase intentions,brand awareness,segmentation studies
THE RESEARCH PROCESS
I.
DEFINE THE PROBLEM - not too broad or narrow, watch for symptoms.
II. RESEARCH OBJECTIVES - measurable and specific (except exploratory) III. RESEARCH DESIGN APPROACHES A) EXPLORATORY
B) DESCRIPTIVE
C) CAUSAL
CONCLUSIVE
IV. DEVELOP RESEARCH PLAN A) DATA SOURCES SECONDARY CENSUS
PRIMARY
SAMPLE UNIT SAMPLING FRAME SAMPLE SIZE SAMPLING PROCEDURE A) PROBABILITY B) NON-PROBABILITY
SAMPLE
B) SAMPLING PLAN
THE RESEARCH PROCESS
E) CONTACT METHODS
-MAIL,TELEPHONE,PERSONAL(ARRANGED,INTERCEPT)
COLLECT INFORMATION-Problems of not at

home,non co-operation,biased,dishonest answers or fudging vi) DATA ANALYSIS vii) REPORT & PRESENTATION
Sampling procedures
A) PROBABILITY SAMPLING : 1. Simple Random Sampling : random selection through lottery without replacement. Unrestricted random sampling is with replacement. 2. Systematic Sampling : involved a system of selecting every nth item in sampling frame after 1st name / unit is selected at random. 3. Random Route sampling: used for sampling households, shops etc. An address is selected at random & every nth address is selected therefrom. 4. Stratified Random Sampling: Population is divided into mutually exclusive groups & within each group, units are selected through random methods. 5. Cluster (Area) sampling: The area to be surveyed is broken into smaller areas. A few of these areas are then selected by random methods. Every unit or some units randomly selected may be interviewed in these selected areas.
SAMPLING PROCEDURES
B) NON - PROBABILITY SAMPLING used when a) Probability sampling not feasible because population not known or no suitable sampling frame. b) Random sampling too costly & time consuming. c) When information is exploratory in nature.
SAMPLING PROCEDURES
B) Non probability sample: 1. Convenience sample: The researcher selects the easiest population members from which to obtain information. 2 Judgement sample: The researcher uses his/ her judgement to select population members who are good prospects for accurate information. 3. Quota sample: The researcher decides on prescribed no. of people in each category (age, gender, income) & then finds & interviews.
Contact Methods
Contact Methods
TELEPHONE - Quick
- Interview should be short.
- Cannot be personal. - Not strictly representative. - Screening of calls. - Non-verbal cues missing.
MAIL
- Poor response
PERSONAL
- Most versatile - Non- verbal cues -Costly - Bias - Cold calls to prevent mall intercept interviews.
rate - No chance of clarification
QUESTIONNAIRE
Open - ended (Useful in exploratory research)
Close - ended (Easy to interpret and tabulate)
1. Completely unstructured 2. Word association 3. Sentence completion
1. Dichotomous (2 choice) 2. Multiple choice (3 or more) 3. Likert scale 5 point scale of agreedisagree 4. Semantic Differential 5. Importance Scale 6. Monadic Rating
4. Story completion
5. Picture completion 6. Thematic apperception test (TAT)
7.
Intention to buy scale
QUESTIONNAIRE
Most common instrument must be carefully developed, tested and debugged before they are administered on a large scale. Each question should contribute to research objectives. Logical sequence
Wording / Styling Simple, direct, and unbiased.

Not too long. Lead question should be interesting. Sensitive questions at the end and give range.
A QUESTIONABLE QUESTIONNAIRE
1. What is your total income to the nearest dollar. 2. Are you an occasional or frequent flyer. 3. Do you like this restaurant? 4. How many ads did you see on TV last week?
5. What are the most salient factors in buying a car ?

6. Do you think it is right for the government to ban common salt and deprive a lot of people of jobs ?
Characteristics of good Marketing Research

Scientific method
Creativity
Multiple methods Value & cost of information Look at background - Classic failure of coke. Dont look at problem in isolation. Dont give in to temptations of giving management what they want to hear.
Emerging Trends in Marketing
223
Emerging Trends in Marketing

Markets 1. Cause related marketing - Social cause, (P & G) ecological cause (Orchid Hotels). 2. Ambush Marketing (Coke 1996 world cup official sponsor, Reebok Atlanta Olympics 1996). 3. Viral Marketing - hotmail 4. Mousetrapping - (on internet) 5. Guerilla marketing - (unconventional & creative attention grabbing techniques). E.g. Burger king used McDonalds Ronald. 6. Buzz marketing - By revealing only partial information. (JJKN). 7. Glocalization - McDonalds, Coca-Cola, L & G Sampoorna, Nokia 1100. 8. Permission marketing (Seth Godin) 9. Experience Marketing - Sonys CD stores,Parryware experiencentres, Shoppers Stop 10. Collaborative Marketing - design (DC car ) Pricing (Zodiac grill) segmentation (Dell) 11.Lifestyle marketing - adopt promotional activity to customers lifestyle. E.g. Cellphones. 12. Ethical marketing - Pfizer, J & J Tylenol
Customer Management : 1. Relationship management - Jet airways flying returns,Shoppers stop First Citizens Club. 2. Affinity group & online communities. Product & Branding : 1. Mass customization - e.g. Scorpio, Asian Paints, Dell. 2. Umbrella Branding Pricing : 1. Target pricing 2. Announcing price upfront Packaging : 1. Sachet marketing Distribution : 1. Non- traditional methods - Multilevel (Avon , Oriflame ),Party plan (Tupperware)
Advertising, Media, sales promotion: 1. In film advertising - Baghban, Castaway (Fedex) 2. Surrogate advertising. 3. Comparative advertising. 4. Use of new, unconventional media, below the line media. (e.g.. Surf Vans). 5. Increase in sales promotion. 6. Using colours & sensory methods - e.g. Blue (Cool), Red (Hot).
PRICING
PRICING
I. CONSISTENT WITH TARGET MARKET & POSITIONING A) PRICE - DETERMINED BY OBJECTIVES - SURVIVAL, PROFIT OR MARKET SHARE OR SIGNALLING LEADERSHIP. B) METHOD - COST BASED V/S CUSTOMER BASED V/S COMPETITOR BASED. C) UNDERSTAND CUSTOMER PRICE SENSITIVITY (PRICE ELASTICITY OF DEMAND) D) OTHER FACTORS
Setting the Price

Selecting the pricing objective
Determining demand
Estimating Costs
Analyzing competitors costs, prices and offers Selecting a pricing method Selecting the final price
6 MAJOR PRICING OBJECTIVES

SURVIVAL MAXIMUM CURRENT PROFIT MAXIMUM CURRENT REVENUE MAXIMUM MARKET SHARE(penetration pricing) MAXIMUM MARKET SKIMMIMG PRODUCT QUALITY LEADERSHIP ANY OTHER - SOCIAL OBLIGATIONS ETC.
Determining Demand
- Each price will have a different level of demand - Demand curve captures affect of alternative prices on resulting demand - Higher the price, lower the demand (except in prestige goods) - Price band width - Price Sensitivity factors - Estimating demand curves through a) Statistical analysis (longitudinal or cross sectional past data b) Price experiments c) Surveys of purchase intentions - Price elasticity of demand & price indifference band.
231
ESTIMATING PRICE SENSITIVITY

NAGLE HAS IDENTIFIED FOLLOWING FACTORS FOR LESS SENSITIVITY 1. UNIQUE VALUE EFFECT 2. SUBSTITUTION AWARENESS 3. DIFFICULT COMPARISION Eg. CARPETS, DOCTORS 4. TOTAL EXPENDITURE EFFECT (VIS-A-VIS INCOME) Eg. SALT 5. END COST EFFECT - PRODUCT SMALL PART OF END PRODUCT 6. SHARED COST EFFECT 7. SUNK INVESTMENT - PRODUCT USED IN CONJUNCTION WITH ASSETS PREVIOUSLY BOUGHT 8. PRICE - QUALITY EFFECT 9. INVENTORY EFFECT - CANNOT STORE PRODUCT
IF DEMAND ELASTIC, LOWER PRICE
Factors Leading to Less Price Sensitivity
The product is more distinctive. Buyers are less aware of substitutes. Buyers cannot easily compare the quality of substitutes. The expenditure is a smaller part of the buyers total income. The expenditure is small compared to the total cost of the end product. Part of the cost is borne by another party.
The product is used in conjunction with assets previously bought.

The product is assumed to have more quality, prestige, or exclusiveness. Buyers cannot store the product.
T
233
Estimating Costs - Types of costs (variable, fixed/overhead, total costs, average cost - Accumulated production leads to experience or learning curve - Activity Based Cost accounting - Target Costing.
234
Selecting the Pricing Method

Markup pricing Target return pricing Perceived value pricing Value pricing Going rate pricing Sealed bid pricing
Selecting the Final Price

Psychological pricing
Influence of other marketing mix elements on price

Company pricing policy Impact of price on other parties
Pricing
Consumer Psychology & Pricing
1) 2) 3)
Price threshold low & higher (Price bands) Reference price Price quality inferences
4)
Price cues odd end pricing.
237
Adapting the Price

I. Geographical pricing
II. Pricing discounts & allowance III. Promotional pricing IV. Discriminatory pricing V. Product mix pricing
Adapting the Price

I. Geographical pricing
II. Price Discounts & allowances - Cash discounts, Quantity discounts, functional discounts, seasonal discounts, allowances(trade in allowances,promotional allowances).
Adapting the price

III. Promotional Pricing 1. Loss leader pricing 2. Special event pricing 3. Low interest financing 4. Larger payment terms 5. Warrantees & service contract 6. Psychological discounting - e.g. Rs. 1000/- earlier now Rs. 800. 7. Rebates
IV. Discriminatory Pricing

1. 2. 3. 4. 5. 6. V. 1.. 2. 3. 4. 5. 6. Customer segments Product form Image Location Time - e.g. Where yield is important. Channel Pricing Product mix pricing Product line pricing Optional feature pricing Captive product pricing Two parts pricing - (Fixed + Variable) e.g. telephone operators Byproduct pricing Product bundling pricing
PRICING TERMINOLOGY
VALUE PRICING - GIVING MORE VALUE IN RELATIONSHIP TO PRICE PAID. PENETRATION PRICING - CHARGING LOWER PRICE TO GAIN MARKET SHARE. SKIMMING PRICING - CHARGING AS HIGH AS POSSIBLE TO GET FIRST LAYER OF CUSTOMERS AND THEN PROGRESSIVELY LOOK DOWNWARDS. TARGET COSTING - DETERMINE PRICE AT WHICH PRODUCT MUST SELL GIVEN ITS APPEAL AND COMPETITION AND THEN WORK BACKWARDS.
PENETRATION
SKIMMING
1. WHEN PROFITS POSSIBLE THROUGH VOLUMES
1. HIGH PRICE-PERCEIVED QUALITY RELATIONSHIP
2. PRICE-SENSITIVE MARKET
3. 4. HIGH COMPETITION COST IS MORE FIXED THAN VARIABLE
2. PRICE INSENSITIVITY
3. COMPETITION IMMINENT 4. COST IS MORE VARIABLE THAN FIXED.
MEASURING PERCEIVED VALUE
I.
PV
>
PRICE
>
V COST
MAY BE DELIBERATE II. PRICE > PV > VC
REDUCE PRICE OR INCREASE PERCEIVED VALUE III. PRICE > VC > PV
FAILURE SCENARIO
IV. OPTIMAL IS PRICE = PV > VC
METHODS FOR CALCULATING PERCEIVED VALUE
1. DIRECT PRICE RATING METHOD WHAT PRICE WILL YOU PAY FOR C IF A IS RS. 90/2. DIRECT PERCEIVED VALUE RATING METHOD GIVE MARKS OUT OF 100 TO A B C. IF PRICE OF A IS 90. WHAT SHOULD BE PRICE OF C.
3. DIAGNOSTIC METHOD
PRODUCT ATTRIBUTES IMP A B C
METHODS FOR CALCULATING PERCEIVED VALUE
4. ECONOMIC VALUE TO CUSTOMER

REFERENCE PRODUCT A NEW PRODUCT Y (SAME AS X) NEW PRODUCT Z WITH INCREMENTAL
FEATURES
PURCHASE PRICE STARTUP COSTS POST PURCHASE COSTS 300 200 500 1000 600* 100 300 1000 700* 200 400 1300
OTHER FACTORS
1. PRICE AS INDICATOR OF QUALITY 2. BUYERS HAVE REFERENCING PRICING IN MIND - FAIR PRICE, PRICE BANDWIDTH. 3. PSYCHOLOGICAL PRICING BARRIER 4. ODD END PRICING SHOULD BE AVOIDED IF HIGH PRICE IMAGE IMPORTANT. 5. HOW IMPORTANT IS PRICE TO INDIA IN PURCHASE DECISION_-JUST ASKING CUSTOMERS THROUGH SURVEYS IS NOT ENOUGH (CONJOINT ANALYSIS BETTER).
INITIATING PRICE CHANGES

INITIATING PRICE CUT INITIATING PRICE INCREASE
REASONS
1. Excess capacity - Might trigger a price war 2. Declining market share
REASONS
1. Expected improved profitability 2. Cost Inflation 3. Overdemand
3.
4.
Drive to dominate through lower costs

Economic recession
Risks - Low Quality trap - Fragile Market Share trap. Buyer loyalty is not ensured - Shallow pocket trap. Reserves are less. Staying power is less.
BETTER METHOD THAN INCREASING PRICE (ESPECIALLY PRICE SENSITIVE MARKET)
1. Shrink amount of product 2. Substitute less expensive materials 3. Reduce or remove product features / services 4. Less expensive packaging or promoting larger pack sizes. 5. Reducing number of models / sizes 6. Creating new economic brands
REACTIONS TO PRICE CHANGES

CUSTOMERS REACTIONS COMPETITORS REACTIONS
TO PRICE CUT 1. Product might be faulty
2. Not selling well

3. Financial trouble. Company may go out of business. 4. Prices may fall further. Hence wait. 5. Quality is reduced 6. New model TO PRICE INCREASE 1. Item is hot 2. Item has good value 3. Seller is greedy
Competitor will react when few firms, product homogeneous, buyers highly informed. It is important to estimate the competitors likely reactions before affecting a price change.
The factors to be considered are :
1. Competitors Financial Position

2. Competitors Sales and Capacity, Customer loyalty 3. Competitors Corporate Objectives Market Share - Likely to match p/c
Profit Maximisation - Likely to improve Quality & Sales Efforts

4. Customer Loyalty
RESPONDING TO COMPETITORS PRICE CHANGES

Analyse the problem on the following lines: Why was the price reduced? Is it permanent? How are other competitors likely to respond? What will happen to companys market share and profits if it does not respond? Response varies with situation - importance of product in Cos portfolio, stage of PLC, markets price sensitivity, behaviour of costs with volume. It is better to anticipate than to react. Nonhomogeneous product Market Factors
Homogeneous-product Market Little choice but to match price cut However, price increase need not be matched. Ultimately competitors will be forced to reduce.
Price
Quality
Realiability
Service
Strength of these factors may desensitize buyers to price changes
RESPONDING TO COMPETITORS PRICE CHANGES
Reactions: 1. Maintain Price when Not likely to lose market share Might regain market later Would lose too much profit if price reduced 2. Raise perceived quality while maintaining price 3. Reduce Price when Costs fall with volume Market is price sensitive Difficult to rebuild market share later 4. Increase price aned improve quality 5. Launch lower price fighter line
PRICE-REACTION PROGRAM FOR MEETING A COMPETITORS PRICE CUT

HAS COMPETITOR CUT HIS PRICE? YES NO IS THE PRICE LIKELY TO HURT PRESENT YES SALES? NO IS IT LIKELY TO BE PERMANENT PRICE CUT? HOW MUCH HAS THE PRICE BEEN CUT? NO HOLD THE PRICE AT PRESENT LEVELCONTINUE TO WATCH COMPETITORS PRICE.
YES
BY < 2% INCLUDE DISCOUNT COUPON FOR THE NEXT PURCHASE
BY 2-4% DROP PRICE BY HALF OF THE COMPETITORS PRICE CUT
BY > 4% DROP PRICE TO COMPETITORS PRICE
DISTRIBUTION
DISTRIBUTION
A COMPANY LAUNCHING A PRODUCT NEEDS 1. SALES CHANNEL (TALKING ABOUT PRODUCT) 2. DELIVERY CHANNEL (HOME DELIVERY, INSTALLATION) 3. SERVICE CHANNEL THE 3 NEED NOT BE SAME.
Marketing Channels
M
No of contracts = 9
M
No. of contracts = 3
Marketing Channels customer marketing channels

Manufacturer Consumer
Eureka Forbes
Manufacturer
Retailer
Consumer
Medicines
Manufacturer
Wholesaler
Retailer
Consumer
Bombay Dyeing
Marketing Channels Industrial marketing channels

Manufacturer Industrial Consumer
ABB
Manufacturer
Industrial distributor
Industrial Consumer
Bombay Dyeing
Manufacturer
Manufacturers sales branch
Industrial distributor
Industrial Consumer
Car spares
Marketing Channels & Value Networks

Marketing channel/trade channel/distribution channel are set of intermediaries involved in process of making product or service available for use or consumption. Merchants (wholesalers, retailers) Agents (Brokers, sales agents, manufacturers representatives) Facilitators (transportation companies, independent warehouses, banks, insurance companies) In Managing its intermediaries, a firm must decide how much effort to devote to push vs. pull strategies.
259
Channel Development
- Hybrid channels - Value networks for superior value delivery - Channel functions (information, stimulate purchase, financing, risk-sharing, storage, breaking down, time, place, possession gaps) - The question is not whether various channel functions need to be performed (they must be) but rather, who is to perform them - 5 marketing flows in the marketing channel are physical flow, title flow, payment flow, information flow, promotion flow.
260
The Hybrid Grid

Lead Qualifying Post sales Account
Generation
Internet National account management
sales
Presales
Close of sale service
management
Direct sales
C
U
V E N D
Direct mail Telemarketing
S T O M E R
O Retail stores R
Distributors Dealers and valueadded resellers Advertising
Multichannel architecture optimizes coverage, customization, & control while minimizing cost & conflict.
261
CHANNEL LEVELS
EACH INTERMEDIARY WHO BRINGS PRODUCT AND ITS TITLE CLOSER TO BUYER CONSITUTES CHANNEL LEVEL. ZERO CHANNEL(Direct marketing channel) - Door to door ,home
parties, mail order, telemarketing, TV selling,,internet selling manufacturer stores.

ONE LEVEL TWO LEVEL
THREE LEVEL
CHANNEL DESIGN DECISIONS
Decide what is ideal, feasible, available

I. CHANNEL DESIGN IN TUNE WITH MARKETING OBJECTIVES.
II. CUSTOMERS DESIRED SERVICE OUTPUT LEVELS - Eg. CONVENIENCE, WAITING AND DELIVERY TIME,FASTER SERVICE, PRODUCT VARIETY, SMALL LOT SIZE ETC.
ESTABLISH CHANNEL CONSTRAINTS A. PRODUCT CHARACTERISTICS - PERISHABLE, NONSTANDARDISED, BULKY. B. S/W OF DIFFERENT INTERMEDIARIES C. COMPETITORS CHANNEL
D. COMPANYS STRENGTH & RESOURCES.

E. ENVIRONMENTAL CONDITIONS - Eg. IN RECESSION, SHORTER CHANNEL & WITHOUT NON-ESSENTIAL SERVICES.
IDENTIFYING MAJOR CHANNEL ALTERNATIVES
A. TYPES OF INTERMEDIARIES - Eg. CELL PHONES. SEARCH FOR INNOVATIVE CHANNEL BECAUSE LESS DOMINANCE.
B. NO. OF INTERMEDIARIES - EXCLUSIVE V/S SELECTIVE V/S INTENSIVE.

C. TERMS & RESPONSIBILITIES OF CHANNEL MEMBERS - E.g. TERRITORIAL RIGHTS, MUTUAL SERVICES & RESPONSIBILITIES.
(Franchisees)
EVALUATING CHANNEL ALTERNATIVES
I. ECONOMIC - AGENT FOR SMALLER FIRMS, LOW VOLUME TERRITORIES.Each channel alternative will produce a different level of sales and costs.eg internet vsSalesforce.Company will try to switch their customers to low cost channels asumimg no loss of sales or deterioration of service quality. II. CONTROL - LESS ON AGENT. III. ADAPTIVE
CHANNEL MANAGEMENT DECISIONS
I. SELECTING CHANNEL MEMBERS - NO. OF YEARS, OTHER LINES CARRIED, REPUTATION, CO-OPERATIVENESS, GROWTH AND PROFIT RECORD. II. MOTIVATING - THROUGH TRAINING, SUPERVISION & SHARING INFORMATION. - Using
power (coercive,reward, legitimate, expert & referent power) to get co-operation.

III. EVALUATING CHANNEL MEMBERSagainst standards as sales qouta attainment,avg inventory levels,customer delivery time,treatment of damaged or lost goods,cooperation in training and promotional programs.. IV. MODIFYING CHANNEL ARRANGEMENTSdue to ineffectiveness, consumer buying pattern changes,market expands,new competition areises,innovative distribution channels emerge,product life cycle.
Channel dynamics
A conventional marketing channel comprises an independent producer, wholesaler(s), and retailer(s). Each is a separate business entity seeking to maximize its own profits,even if this goal reduces profit for the system as a whole. A vertical marketing system (VMS), by contrast, comprises the producer, wholesaler(s), and retailer(s) acting as a unified system. One channel member owns the others or franchises them or has so much power that they all cooperate. The vertical marketing system can be dominated by the producer, the wholesaler, or the retailer.
I.
Vertical marketing Systems
1. Corporate VMS - combines successive stages of product & distribution under single ownership. I.e. vertical integration. 2. Administered VMS - Co-ordinates successive stages of production & distribution through size & power of one of the members . E.g. HLL commands high level of cooperation from reseller in terms of shelf-space, displays etc. 3. Contractual VMS - consists of independent firms at different levels of production and distribution integrating their programs on a contractual basis to obtain more economies and /or sales impact than they could achieve alone. E.g. retailer co-operative, franchise organizations.
I. Horizontal Marketing Systems - In which two or more unrelated companies put together resources or programs to exploit on emerging marketing opportunity ( called symbiotic marketing). E.g. SBI & Management.
III. Multichannel Marketing Systems - Occurs when a single firm uses two or more marketing channels to reach one or more customer segments.
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Channel Conflict
Types of conflict
1. Vertical channel conflict 2. Horizontal channel conflict 3. Multichannel conflict
Causes of channel conflict

Goal incompatibility - dealers want short-term profits while company wants long-term customer satisfaction. Unclear roles & rights. Differences in perception - of market, customer needs, economic outlook e.g. company optimistic, dealer pessimistic).
Intermediaries great dependence on manufacturer.
Lack of financial resources for direct marketing. Not feasible / practical. Channel members add time, place, possession, form utility. Thus it is not whether various channel functions need to be performed but rather who is to perform them. Key Functions Information Promotion Ordering Financing Risk taking Physical possession Payment Title
Why are marketing intermediaries used & why not direct marketing
INTRODUCTION TO INTEGRATED MARKETING COMMUNICATIONS
And Yet Another by AAAA

a concept of marketing communications planning that recognizes the added value of a comprehensive plan that evaluates the strategic roles of a variety of communications disciplines-for example, general advertising, direct response, sales promotion and public relations-and combines these disciplines to provide clarity, consistency, and maximum communications impact through the seamless integration of discrete messages
Thus IMC can help us deliver

Different media for same message: Consistency over time: Lux Different message over different audience: Fair & Lovely- Urban Vs Rural areas Same message in different languages: Coke
WHY IMC?
Market: Cluttered More competition: Less Buyers Media Exposure is very high Media Fragmentation: Many TV Channels and even more newspapers and weekly newsmagazines Lifestyle change: Malls and Cafes Technology Email, net, mobile, SMS easy access to information for customer
AND..
Shrinking budgets and demand for accountability And acceptance by marketing managers that Advertising specialization is important
Sales Promotion Public Relations
IMC
Direct Marketing Event Marketing
Internet Marketing
MARKETING COMMUNICATIONS MIX
ALSO CALLED PROMOTION MIX CONSISTS OF 1. 2. 3. 4. 5. 6. 7. ADVERTISING SALES PROMOTION PUBLIC RELATIONS AND PUBLICITY PERSONAL SELLING DIRECT MARKETING MERCHANDISING EVENT SPONSORSHIP
8.
9.
PRODUCT DESIGN
ONLINE ADVERTISING
10. WORD OF MOUTH RECOMMENDATION
COMMON COMMUNICATION PLATFORMS

ADVERTISING
Print and broadcast ads Packagingouter Packaging inserts Motion pictures Brochures & booklets Posters and leaflets Directories Reprints of ads Billboards Display signs Point-of-purchase displays Audio-visual material Symbols and logos Videotapes
SALES PROMOTION
Contests, games, sweepstakes, lotteries Premiums and gifts Sampling Fairs & trade shows Exhibits Demonstrations Coupons Rebates Low-interest financing Entertainment Trade-in allowances Continuity programs Tie-ins
PUBLIC RELATIONS
Press kits Speeches Seminars Annual reports Charitable donations Sponsorships Publications Community relations Lobbying Identity media Company magazine Events
PERSONAL SELLING
Sales presentations Sales meetings Incentive programs Samples Fairs and trade shows
DIRECT MARKETING
Catalogs Mailings Telemarketing Electronic shopping TV shopping Fax mail E-mail Voice mail
ELEMENTS OF COMMUNICATION PROCESS--MACROMODEL

SENDER Encoding Message Media Decoding RECEIVER
Noise
Feedback
Response
DEVELOPING EFFECTIVE COMMUNICATIONS
1. 2.
UNDERSTAND COMMUNICATION PROCESS UNDERSTAND CONCEPTS OF SELECTIVE ATTENTION, DISTORTION, RETENTION
DEVELOPING EFFECTIVE COMMUNICATIONS IDENTIFY TARGET AUDIENCE affects what to say, how to say, when, where and to whom to say. SITUATION ANALYSIS & DETERMINE COMMUNICATION OBJECTIVES DESIGNING THE MESSAGE SELECT THE COMMUNICATION CHANNELS ESTABLISH TOTAL PROMOTION BUDGET
DECIDE ON PROMOTION MIX

MEASURE PROMOTION RESULTS
Determining Communications Objectives
1) Category need (for new to the world products) 2) Brand awareness recognition & recall 3) Brand attitude 4) Brand purchase intention.
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MICRO MODEL OF CONSUMER RESPONSES 1) 2) 3) Learn-feel-do (Cognitive affective responsive). When high involvement & high differentiation Do-feel-learn high involvement & low perceived difference Learn-do-feel When low involvement& low perceived difference
284
Consumer Response Models

Models AIDA Stages Modela Hierarchy-of-Effects Innovation-Adoption Modelb Awareness Cognitive Stage Knowledge Liking Interest Preference Desire Conviction Evaluation Trial Action Purchase Adoption 285 Behavior Intention Attitude Cognitive response Attention Awareness Modelc Communications Modeld Exposure Reception
Interest Affective Stage
Behavior Stage
Message Issues
What to say ? ( Message Content ) Message appealsInformational(rational),Transfomational appeals(sensory,social,ego satisfaction); message strategy will look at one of 3appeals in context of product-in-use ,results of use or incidental to use experience. negative positive appeals.Borrowed interest technique like babies,puppies,celebrity,popular music,provocative sex appeals. How to say it logically? ( Message Structure )-order of presentation(strongest first or last);,one sidedor two sided, Conclusion Drawing How to say it symbolically? ( Message Format ) Who should say it? ( Message Source ) Celebrity, expert, Common man. Expertise,trustworthiness,likeability.
Success Factors
Nature of Message: striking, eye catching, Audiences interpretation of it Environment in which it is received: eg. 20% off in recession would be more effective. Words, pictures, sounds, colours may have different meanings to different people Eg: Black; in urban areas- sophisticated, in rural areas- death
SELECTING COMMUNICATION CHANNELS
1. 2.
PERSONAL CHANNELS Advocate channel (salespersons) expert channel (independent) social channel (neighbors, friends etc.) NON-PERSONAL CHANNELS Media, atmospheres and events,.
ESTABLISH TOTAL PROMOTION BUDGET

1. 2. 3. AFFORDABLE METHOD UNIT OF SALES OR CASE RATE METHOD PERCENTAGE OF SALES METHOD
4.
5. 6.
COMPETITIVE PARITY METHOD spend as much as competition

SHARE OF VOICE METHOD OBJECTIVE & TASK METHOD
7.
8. 9.
EMPIRICAL METHOD
QUANTITATIVE MATHEMATICAL MODEL INVESTMENT SPENDING
10. PECKHAMS METHOD - For new products spend twice, For established products same share or less
PROMOTIONAL TOOLS
UNDERSTANDING UNIQUE CHARACTERISTICS AND COSTS OF EACH 1. ADVERTISING Strategic and long term, most economical form of consumer contact, transforms products into brands. Persuasive, expressive public presentation hence perceived as legitimate but impersonal . SALES PROMOTION Short term, tactical Creates quick response but not effective in building long-run brand preference. PUBLIC RELATIONS & PUBLICITY High credibility, dramatization, catch buyers off guard. PERSONAL SELLING Useful in later stages but long-term cost commitment. DIRECT MARKETING Customized, interactive, secrecy. MERCHANDISING or Point of Purchase activity for traffic building in outlets especially self-service outlets
2.
3. 4. 5. 6.
PROMOTIONAL TOOLS
7. 8.
EVENT SPONSORSHIP should be relevant target audience,involving. PRODUCT DESIGN and packaging and brand name acts as silent salesmen.
9.
ONLINE ADVERTISING internet users few, but interactive.
10. WORD OF MOUTH recommendations need to be stimulated through proper identification of opinion leaders
DECIDING ON PROMOTION MIX
FACTORS a) TYPE OF PRODUCT MARKET business v/s consumer markets Buyer readiness stage
b) Push v/s Pull strategy c)
d) Product lifecycle stage
Methods of obtaining Feedback

Effectiveness tests Circulation reach Steps in persuasion process Exposure/presentation
Listener, reader, viewer recognition Recall. Checklists Brand attitudes, purchase intent Recall over time
Inventory, pop consumer panel
Attention
Comprehension
Message acceptance/ yielding Retention

Purchase behaviour
FCB Planning Model

Thinking
High Involvement
Feeling
1. Informative 2. Affective (thinker) (feeler) Car, house, Jewelry, furnishings, cosmetics, new products motorcycles Low 3. Habit 4. Self satisfaction Involvement Formation (doer) (reactor) Food, household items Cigarettes, liquor, candy
How integrated is your IMC Program

1) 2) 3) Coverage & overlap Contribution to awareness, image, attitude, induce sales Commonality consistency & cohesiveness of common associations Complementarity different associations Versatility Cost.
4) 5) 6)
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ADVERTISING, MEDIA & SALES PROMOTION
DEVELOPING & MANAGING AN ADVERTISING PROGRAM
MISSION-Sales goals,advertising objectives MONEY MESSAGE MEDIA
MEASUREMENT
Ideal ad campaign
The ideal ad campaign would ensure that: 1) The right consumer is exposed to the right message at the right place and at the right time. 2) The ad causes the consumer to pay attention to the ad but does not distract from the intended message. 3) The ad properly reflects the consumers level of understanding about the product and the brand. 4) The ad correctly positions the brand in terms of desirable and deliverable points-of-difference and points-of-parity. 5) The ad motivates consumers to consider purchase of the brand. 6) The ad creates strong brand associations with all of these stored communication effects so that they can have an impact when consumers are considering making a 298 purchase.
Creative Strategy
POSSIBLE ADVERTISING OBJECTIVES
1. 2. 3. 4.
INFORMATIVE ADVERTISING used in pioneering stage to build primary demand. PERSUASIVE ADVERTISING important in competitive stage, to build selective demand. Comparative advertising. REMINDER ADVERTISING for mature products REINFORCEMENT ADVERTISING for assurance.
POSSIBLE ADVERTISING OBJECTIVES

TO INFORM Telling the market about a new product Suggesting new uses for a product Informing the market of a price change Explaining how the product works Describing available services Correcting false impressions Reducing buyers fears Building a company image
TO PERSUADE Building brand preference Persuading buyers to purchase now Encouraging switching to the brand Persuading buyers to receive a sales Changing buyers perception of product call attributes TO REMIND Reminding buyers that the product may Keeping it in buyers minds during be needed in the near future off-seasons Reminding buyers where to buy it Maintaining its top-of-mind awareness
DECIDING ON ADVERTISING BUDGET
FACTORS 1. 2. STAGE IN PRODUCT LIFECYCLE MARKET SHARE AND CONSUMER BASE
3.
4. 5.
COMPETITION AND CLUTTER

ADVERTISING FREQUENCY REQUIRED PRODUCT SUBSTITUTABILITY-less differentiated or commodity like products
CHOOSING ADVERTISING MESSAGE
A. MESSAGE CONSTRUCTION - (CONTENT)-CREATIVE BRIEF Benefit Promise Or Unique Selling Proposition Should Be Believable, Desirable And Exclusive And Supported By A Reason Why Benefit Promise Is Strategic In Nature And Should Not Change Unless Change In Product Formulation, Marketing Strategy, Or Changing Consumer Needs / Wants. Should Appear In Headline
CHOOSING ADVERTISING MESSAGE
B. MESSAGE EXECUTION a. b. c. d. e. APPEALS rational( comparative vs Competitive) emotional(positive,negative) moral TONE positive, humour ? WORDS FORMAT placement of elements, typography (press) background, colour, arresting key frame (TV). STRUCTURE conclusion drawing, one sided v/s two sided argument, order of presentation
Verbal Vs. Visual Messages

When verbal information is low in imagery value, use of pictures increases both immediate and delayed recall. When verbal information is high in imagery value addition of pictures does not increase recall.
Promotional Executions
The way the promotional appeal is presented
Can be executed in multiple ways through multiple media & promotional elements Straight sell Technical expertise Scientific Evidence Demonstration Comparison
Direct or indirect
Testimonial
Authority, celebrity, peer
Slice of life Life style Animation Personality symbol Fantasy Dramatization Mood or Image Musical
Source Factors
Credibility: Extent to which the recipient sees the source as having relevant knowledge, skill or experience Trustworthy- the source to give unbiased, objective information. Likeability Disadvantages Overshadowing the product Overexposure of the celebrity
ADVERTISING COPY STRATEGY

(CREATIVE BRIEF)
SHOULD BE TRUE TO OVERALLPOSITIONING OF PRODUCT SHOULD BE WRITTEN POSITIONING SHOULD BE CLEAR, COMPETITIVE, CORRECT FOR PRODUCT & TARGET MARKET, NONGENERIC, BELIEVABLE
GOOD COPY STRATEGY
HAS FOUR PARTS 1. WHAT ADVERTISING AIMS TO CONVEY - CENTRAL PROMISE
2. FACTS TO SUPPORT
3. CUSTOMER ADDRESSED 4. TONE & ATMOSPHERE
SUPPORT
1. PRODUCT ITSELF - INGREDIANTS - REAL OR PERCEIVED
2. PEOPLE WHO MAKE IT

3. PACKAGING 4. WAY IT IS SOLD
5. ACTUAL CONSUMER REPORTS

6. PEOPLE WHO BUY IT 7. REGION 8. OPINION OF INDEPENDENT JUDGES
RECOGNISING GOOD ADVERTISING

1. STRATEGIC FIT WITH POSITIONING 2. DISTINCTIVE / EXCLUSIVE 3. COMPETITIVE 4. NON-GENERIC
5. PROVOCATIVE
6. CONTENT MORE IMPORTANT THAN STYLE 7. BOING FACTOR 8. BELIEVABLE LOGIC 9. VISUAL / VERBAL COHERENCE 10. CONSUMER EMPATHY
MEDIA BRIEF
TARGET AUDIENCE
ADVERTISING
REACH V/S FREQUENCY MEDIA HABITS OF TARGET AUDIENCE
TIMING OF CAMPAIGN
REGIONAL WEIGHTS SHARE OF VOICE DESIRED IN EACH MARKET CREATIVE REQUIREMENTS - MINIMUM SIZE OR LENGTH OF TIME
JUDGING MEDIA PLANS
1. AGREED TARGET AUDIENCE
2. AGREED ADVERTISING MESSAGE

3. MEDIA DECISIONS
AGREED TARGET AUDIENCE
QUESTIONS TO ASK
1. CAPTIVE SALES OR CONQUEST SALES 2. DEMOGRAPHIC CHARACTERISTICS
3. REGIONAL CHARACTERISTICS
4. PSYCHOLOGICAL CHARACTERISTICS
Media Planning
Brand and Category Analysis

Category Development Index
Percentage of product category total sales in CDI = market Percentage of total Indian population in market
X 100
Brand and Category Analysis

Brand Development Index Percentage of brand sales in market to total Indian BDI = sales Percentage of total India population in market
X 100
BDI and CDI

Help the product manager achieve focus in locating geographical regions that require focus These figures help in test marketing of new products and in testing advertisements
MEDIA PLANNING & STRATEGY
1. Deciding On Reach, Frequency & Impact 2. Choosing Among Major Media Types 3. Selecting Specific Media Vehicles 4. Deciding On Media Timing 5. Deciding On Geographical Media Allocation
DECIDING ON REACH, FREQUENCY & IMPACT
REACH ( R ): The number of different persons or households exposed to a particular media schedule at least once during a specified time period.
FREQUENCY (F): The number of times within the specified time period that an average person or household is exposed to the message. IMPACT (I): The qualitative value of an exposure through a given medium (thus a food ad in Good Housekeeping would have a higher impact than in the Police Gazette).
Reach x Frequency = Gross Rating Points
Reach and Frequency

Reach of One Program Reach of Two Program
Total market audience reached
Total market audience reached
Duplicated Reach of Both
Unduplicated Reach of Both
Total reached with both shows
Total reach less duplicate
Graph of Effective Reach

25%
Ineffective Reach Effective Reach Ineffective Reach
Percentage Reach
20% 15% 10% 5% 0% 0 5 10 15
Exposures
REACH V/S FREQUENCY
REACH
FREQUENCY
Launching new products Launching new extensions Infrequently purchase brands Undefined target market
Strong competitors Complex story High consumer resistance Frequent purchase cycle High forgetting rate
Marketing Factors Important to Determining Frequency

Brand history
Brand share Brand loyalty Purchase cycles Usage cycle
Competitive share of voice

Target group
Creative Factors In Determining Frequency

Message complexity Message uniqueness New vs. continuing campaigns Image versus product sell Message variation Wearout Advertising units
Media Factors Important to Determining Frequency

Clutter
Editorial environment Attentiveness Scheduling Number of media used Repeat Exposures
CHOOSING AMONG MAJOR MEDIA TYPES
FACTORS 1. TARGET AUDIENCE MEDIA HABITS
2. PRODUCT
3. MESSAGE
4. COST
CHOOSING AMONG MAJOR MEDIA TYPES
1. TV Best for Demonstration Purpose

2. NEWSPAPER best for launch announcements, authoritative medium.
3. MAGAZINES can segment audiences, long life span, pass on readership but periodic hence advertising impactless.
4. RADIO good reminder medium 5. CINEMA South and smaller towns 6. OUTDOOR geographically selective medium
7. OTHERS neon signs, matchbox covers, wall paintings, tamashas
Profiles of Major Media Types

Medium
Newspapers Television
Advantages
Flexibility; timeliness; good local market coverage; broad acceptance; high believability Combines sight, sound, and motion; appealing to the senses; high attention; high reach Audience selectivity; flexibility; no ad competition within the same medium; personalization
Limitations
Short life; poor reproduction quality; small pass-along audience. High absolute cost; high clutter; fleeting exposure; less audience selectivity Relatively high cost; junk mail image
Direct Mail
Radio
Mass use; high geographic and demographic selectivity; low cost
Audio presentation only; lower attention than television; nonstandardized rate structures; fleeting exposure
Magazines
High geographic and demographic selectivity; cre-
Long ad purchase lead time; some waste cir-
dibility and prestige; high-quality reproduction; long

life; good pass-along readership Outdoor Flexibility; high repeat exposure; low cost; low competition Yellow pages Excellent local coverage; high believability; wide reach; low cost Newsletters Very high selectivity; full control; interactive opportunities; relative low costs Brochures Telephone Internet Flexibility; full control; can dramatize messages Many users; opportunity to give a personal touch High selectivity; interactive possibilities; relatively low cost
culation; no guarantee of position
Limited audience selectivity; creative limitations High competition; long and purchase lead time; create limitations Costs could run away
Overproduction could lead to runaway costs Relative high cost unless volunteers are used
329 Relatively new media with a low number of

users in some countries
Other media Types

1) Place advertising (also called out of home advertising) Billboards, public spaces (movies, airlines, lounges, classrooms, sports arenas, transit ads, street furniture-bus shelters, kiosks) Product placement e.g. infilm advertisements, advertorials, infomercials, branded entertainment Points of purchase.
2) 3)
330
SELECTING SPECIFIC MEDIA VEHICLES
DEPENDS ON In PRINT circulation, effective audience, effective ad-exposed audience which affects cost per thousand criterion.
In TV effective audience, TRP, QRP
1) 2) 3) 4)
Selecting Specific Vehicles Circulation Audience, because of pass-on readership Effective audience Effective ad exposed audience Cost per thousand should be adjusted for audience quality & audience attention probability & editorial quality & ad placement policies
332
Determining Relative Cost of Media

CPM (cost per thousand)
Cost of ad space/time = Circulation/Audience x1000
CPRP (cost per rating point) Cost of commercial time = Program rating
DECIDING ON MEDIA TIMING

Depends on buyer turnover, purchasing frequency forgetting rate Macroscheduling problem Microscheduling problem CONTINUITY CONCENTRATION spending all in one period FLIGHTING advertising followed by hiatus then second flight PULSING continuous advertising at low weight level reinforced periodically by waves of heavier activity.
CONTINUITY V/S BURSTS
CONTINUITY
FREQUENT PURCHASE PATTERN HIGH LEVEL OF IMPULSE BUYING EXPANDING MARKET NO BUDGET CONSTRAINTS
BURSTS
INFREQUENT PURCHASE PATTERN
STRONG LOYALTY TO BRAND

HEAVY LAUNCH WEIGHT BUDGET LIMITATIONS
TIMING DEPENDS ON
BUYER TURNOVER PURCHASE FREQUENCY FORGETTING RATE
Classification of Advertising Timing Patterns

Level (1) (2) Rising (3) Falling (4) Alternating
Concentrated
( 4 )
Continuous
Number of Intermittent Messages per Month Month Factors to be considered are buyer turnover, purchase frequency & forgetting rate. 337
EVALUATING ADVERTISING EFFECTIVENESS

1) a) 1. 2. 3. 4. 5. 6. COMMUNICATION EFFECT RESEARCH called Copy testing is done before it is put in media & after it is printed or broadcast. 3 major methods of pretesting Consumer feedback method asks consumers for their reactions to a proposed ad. They respond to questions such as these: What is the main message you get from this ad? What do you think they want you to know, believe, or do? How likely is it that this ad will influence you to undertake the action? What works well in the ad and what works poorly? How does the ad make you feel? Where the best place to reach you with this message? Where would you be most likely to notice it and pay attention to it? Where are you when you make decisions about this action?
338
Evaluating advertising effectiveness Contd of Slide .

b) Portfolio tests ask
consumers to view or listen to a portfolio of advertisements. Consumers are then asked to recall all the ads and their content, aided or unaided by the interviewer. Recall level indicates an ads ability to stand out and to have its message understood and remembered.
c) Laboratory tests use equipment to measure physiological reactions heartbeat, blood pressure, pupil dilation, galvanic skin response, perspiration to an ad; or consumers may be asked to turn a knob to indicate their moment-to-moment liking or interest while viewing sequenced material. These tests measure attention-getting power but reveal nothing about impact on beliefs, attitudes or intentions.
339
Evaluating advertising effectiveness Contd of Slide .
2) Sales effect Research share of expenditure v/s share of voice v/s share of mind v/s share of heart v/s share of market Measurement through historical approach or experimental data.
340
Advertising Research Techniques
For Print Ads. Starch and Gallup & Robinson, Inc., are two widely used print pretesting services. Test ads are placed in magazines, which are then circulated to consumers. These consumers are contacted later and interviewed. Recall and recognition tests are used to determine advertising effectiveness. For Broadcast Ads. In-home tests: A video tape is taken or downloaded into the homes of target consumers, who then view the commercials. Trailer tests: In a trailer in a shopping center, shoppers are shown the products and given an opportunity to select a series of brands. They then view commercials and are given coupons to be used in the shopping center. Redemption rates indicate commercials influence on purchase behavior. Theater tests: Consumers are invited to a theater to view a potential new television series along with some commercials. Before the show begins, consumers indicate preferred categories; after the viewing, consumers again choose preferred brands. Preference changes measure the commercials persuasive power. On-air tests: Respondents are recruited to watch a program on a regular TV channel during the test commercial or are selected based on their having viewed the program. They are asked questions about commercial recall.
341
SALES PROMOTION
SALES PROMOTION
SALES PROMOTION CONSISTS OF A DIVERSE COLLECTION OF INCENTIVE TOOLS, MOSTLY SHORT-TERM, DESIGNED TO STIMULATE QUICKER AND / OR GREATER PURCHASE OF A PARTICULAR PRODUCT BY CONSUMERS OR TRADE.
WHILE ADVERTISING OFFERS A REASON TO BUY, SALES PROMOTION OFFERS AN INCENTIVE TO BUY.
REASON FOR SALES PROMOTION INCREASE
1. MANY BRANDS & SEEN AS SIMILAR

2. COMPETITION USES IT 3. CONSUMERS MORE PRICE ORIENTED 4. TRADE DEMANDS MORE DEALS
5. ADVERTISING EFFICIENCY HAS DECLINED

6. MEDIA CLUTTER
WHY SALES PROMOTION POPULAR
1. SALES PROMOTION PRODUCE RESULTS

2. SALES PROMOTION PRODUCE RESULTS QUICKLY 3. SALES PROMOTION IS ALWAYS WELCOMED BY ALL - CONSUMERS, TRADE, SALESFORCE 4. SALES PROMOTION IS RELATIVELY EASY & INEXPENSIVE TO IMPLEMENT 5. MOST PRODUCT MANAGERS ARE UNDER GREAT PRESSURE TO INCREASE THEIR CURRENT SALES 6. SMALL SHARE FIRMS FIND IT ADVANTAGEOUS TO USE SALES PROMOTION AS CANNOT AFFORD TO MATCH MARKET LEADERS LARGE ADVERTISING BUDGETS & CANNOT OBTAIN SHELF SPACE
PROBLEMS OF SALES PROMOTION
1. SALES PROMOTION TEND TO ORIENT MARKETING MANAGERS TOWARDS THE SHORT-TERM

2. OVERUSE RESULTS IN ERODING ATTITUDES TOWARDS BRAND 3. SALES PROMOTION OFTEN ATTRACT BRAND SWITCHERS AND NOT LOYALISTS OF OTHER BRANDS. 4. SALES PROMOTION USED IN MARKETS OF HIGH BRAND SIMILARITY, PRODUCE A HIGH SALES RESPONSE IN SHORT RUN BUT LITTLE PERMANENT GAIN IN MARKET SHARE IN MARKETS OF HIGH BRAND DISSIMILARITY, SALES PROMOTION CAN ALTER MARKET SHARES PERMANENTLY.
5.
SALES PROMOTION TOOLS
UNDERSTAND WHAT EACH TYPE OF SALES PROMOTION TOOL CAN OR CANNOT DO.
CONSUMER FRANCHISE BUILDING TOOLS WHICH REINFORCE THE CONSUMERS BRAND UNDERSTANDING THROUGH IMPARTING SELLING MESSAGE ALONG WITH DEALS ARE BETTER E.g. PREMIUMS RELATED TO PRODUCT, FREE SAMPLES ETC. TRADE PROMOTIONS - LOOK FOR PROOF OF PERFORMANCE & PREVENT FORWARD BUYING OR DIVERTING. LOOK FOR CREATIVE EDGE.
Segmentation, targeting and positioning

Must know STP before sales promotion coz
No promotion is directed towards every customer Buyers have different reasons to buy different products No sense in directing sales promotion for loyal customers and regular users
Whom to target the Sales Promotion to ?

Segment on basis of Loyalty
Loyal Customers Competitive Loyals Switchers Price buyers Non Users
Target Market for All Promotion Based Activities
MAJOR DECISIONS IN SALES PROMOTION

1. ESTABLISH SALES PROMOTION OBJECTIVES 2. SELECT SALES PROMOTION TOOLS - CONSUMER, TRADE, SALESFORCE, BUSINESS
3. DEVELOPING SALES PROMOTION

A. SIZE OF INCENTIVE B. CONDITIONS FOR PARTICIPATION C. DURATION D. DISTRIBUTION VEHICLE E. TIMING F. BUDGET
4. PRETEST PROGRAM
5. IMPLEMENT 6. EVALUATE SALES PROMOTION RESULTS THROUGH SALES DATA, CONSUMER SURVEYS & EXPERIMENTS.
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CONSUMERS
OBJECTIVES OF SALES PROMOTION
1. TO INTRODUCE NEW PRODUCT & GENERATE TRIAL.

GATHER INFORMATION. MAKE IT EASY TO REDUCE PROCESS. 2. TO ATTRACT NEW CUSTOMERS 3. TO INDUCE PRESENT CUSTOMERS TO BUY MORE 4. TO HELP FIRM REMAIN COMPETITIVE 5. TO INCREASE OFF SEASON SALES
6. TO REWARD LOYAL CUSTOMERS

7. BUILD LONG - TERM RELATIONSHIP. RETAILERS 1. PERSUADE RETAILERS TO CARRY NEW ITEMS 2. PERSUADE RETAILERS TO CARRY HIGHER LEVEL OF INVENTORY 3. OFF SETTING COMPETITIVE PROMOTIONS 4. INDUCE RETAILERS TO PROMOTE BRAND BY FEATURING DISPLAY 5. STIMULATE RETAILERS TO PUSH THE PRODUCT
OBJECTIVES OF SALES PROMOTION
SALESFORCE 1. ENCOURAGING SUPPORT FOR NEW PRODUCT 2. ENCOURAGING MORE PROSPECTING
3. STIMULATING OFF SEASON SALES
TYPES OF SALES PROMOTION
CONSUMER PROMOTION - SAMPLES, COUPONS, PRICE OFFS, PREMIUMS PATRONAGE REWARDS, FREE TRIALS, PRIZES, TIE-IN PROMOTIONS, CROSS PROMOTIONS, POINT OF PURCHASE DISPLAYS, DEMONSTRATIONS.
TRADE PROMOTION - PRICE OFFS, ADVERTISING & DISPLAY ALLOWANCES, FREE GOODS
BUSINESS PROMOTION - TRADE SHOWS, FAIRS, CONVENTIONS, SPECIALITY ADVERTISING
SALES FORCE PROMOTION - CONTESTS
Sales Promotion Tools

Samples Coupons Cash refund offers or rebates Price packs Premium Gifts Prizes contests sweepstakes Patronage awards
354
Samples
Offer free amount of product or service Might be delivered
Door to door Mail Pick up in a store Attached to product
A very expensive way

355
Coupons
Help in stimulating sales of mature brand Should provide at least 15-20 % saving to the customer
356
Cash Refund / Rebates

Provide a price reduction after purchase rather than at the shop Proof of purchase necessary
357
Price Packs
Savings off the regular price of a product Maybe through
Reduced price pack Banded pack
Are often more effective than coupons
358
Premiums - Gifts
Merchandise is offered free or at low cost as incentive to purchase a product Self liquidating premium is an item sold below its normal price to consumers who request it Maybe a
Near Pack On-Pack In-Pack With-pack
359
Prizes Contests - Sweepstakes

Prize offers to win an expensive gift when you purchase the product Contests require the submission of an entry like a jingle or a slogan Sweepstakes require you to put in your name in the lucky draw Gain a lot more attention than coupons or small premiums
360
Tie-in Promotions
Involve two or more brands or companies that team up on coupons, refunds and contests to increase their pulling power Sales force of two companies push promotions to retailers thus giving strong thrust
361
Trade Promotion Tools

Price-Off
Straight discount off the list price on each case purchased during a stated time period
Allowance
An amount offered to display prominently the wares
Free goods
Extra cases of merchandise to intermediaries who buy a certain size
362
Business Promotions
Trade Shows and Conventions
Sales Contests Specialty Advertising
363
SALES PROMOTION - DEVELOPING THE SALES PROMOTION PROGRAMME

1. CERTAIN MINIMUM INCENTIVE NECESSARY FOR PROMOTION TO SUCCEED. A HIGHER INCENTIVE LEVEL WILL PRODUCE MORE SALES RESPONSE BUT AT DIMINISHING RATE. 2. 3. DURATION OF PROMOTION - NOT TOO SHORT (NO ONE KNOWS) OR TOO LONG (LOSES ITS ACT NOW FORCE). OPTIMAL FREQUENCY 3 WEEKS PER QUARTER AND OPTIMAL DURATION - LENGTH OF AVERAGE PURCHASE CYCLE.
4.
5.
EACH DISTRIBUTION VEHICLE INVOLVES DIFFERENT REACH, COST, IMPACT.

TOTAL SALES PROMOTION BUDGET INCLUDES ADMINISTRATIVE COST (PRINTING, MAILING & PROMOTING THE DEAL) & INCENTIVE COST ( COST OF PREMIUM OR PRICE OFF) MULTIPLIED BY EXPECTED NUMBER OF UNITS THAT WILL BE SOLD ON THE DEAL.
FOR CONSUMER PROMOTION TO SUCCEED
1. VALUE OF INCENTIVE SHOULD BE PROPORTIONATE TO MAIN PRODUCT.
2. GIFT SHOULD PREFERABLY NOT BE EASILY AVAILABLE IN THE MARKET.

3. INCENTIVE SHOULD BE A QUALITY PRODUCT. 4. THE INCENTIVE SHOULD BE OF INTEREST TO THE CONSUMER OF THE MAIN PRODUCT. 5. INCENTIVE SHOULD HAVE INDEPENDENT VALUE. 6. ADDITION OF FREE GIFT MUST NOT FORCE THE CUSTOMER TO SPEND MORE ON THE MAIN PRODUCT.
Pretesting Sales Promotion

Design on experience but conduct pretests Testing is inexpensive and fast Rank or rate promotion offers Restrict the promotion to a geographical test area only
366
Must decide the lead time and sales time Lead time
Implementing and Controlling the Sales Promotion Program
Prepare design, approval of package modifications material to be mailed or distributed, advtg, POP material and the like Notoifcation of field sales personnel, establishing allocations for distributors, purchase and printing of premiums, inventory mgmt, and eventual distribution to retailer
Sell-in Time
Begins with promotional launch Ends when 95% of deal merchandise is in hands of consumers
367
Measuring Effectiveness
Sales Data Consumer Surveys Experiments
368
Challenges in Sales Promotions

Consumer franchise building V/S nonfranchise building Forward buying Diverting in non deal regions Inability to police effectively Wrong billing Irritation of retailers
369
Direct Marketing or Direct Response Marketing
Direct Mail, Catalogs, telemarketing, interactive TV, Kiosks, Web sites & mobile devices.
370
Direct - Mail Marketing
Has passed through a number of stages: 1) Carpet Bombing 2) Database marketing 3) Interactive marketing 4) Real-time personalized marketing 5) Lifetime Value marketing.
371
Direct Mail Marketing

Objectives order response rate of 20% is considered good 2) Target Market & Prospects identified by R-FM formula (recency, frequency & monetary amount). Better lists include both demographic & psychographic information 3) Offer elements the product, the offer, the medium, the distribution method & the creative strategy 4) Testing elements for impact on awareness, intention to buy, purchase, word of mouth 5) Measuring campaign success: Lifetime value. 1)
372
Telemarketing a) b) c) d) Inbound and outbound 4 types of telemarketing Telesales Telecoverage nurture key account relationships Teleprospecting Customer service & technical support
373
Sales force
6 types: 1) Deliverer 2) Order taker 3) Missionary e.g. medical representative 4) Technician 5) Demand creator e.g. Water purifier 6) Solution vendor.
374
Designing the Sales force

1) 2) 3) Sales force Objectives & Strategy Prospecting, targeting, communicating, selling, servicing, info gathering, allocating during shortages. Sales force structure product based or market based or territorial structure Sales force size Workload approach e.g. if 1000 A a/cs & 2000 B a/cs & A a/cs B a/c requires 36 calls/yr &12 calls/yr respectively, then total sales calls needed to be made are 60000. Suppose average representative can make 1000 calls/yr then 60 full-time sales representatives are needed. Sales force compensation fixed, variable, expense & benefits. Hence compensation plans are straight salary, straight commission & combination of salary & commission fixed more when high ratio of non selling to selling duties & when selling task is technically complex & involves teamwork. Variable more when sales are cyclical & depend on individual initiative. Combination plans are used by 3/4th of companies & other strategic goals like gross profitability, customer satisfaction, customer retention.
375
4)
5)
Managing the sales force 1) Recruiting & selecting representatives selection criteria, sources, procedure 2) Training & supervising sales representatives technical & non-technical 3) Sales Representative productivitya) Norms for prospect calls vs. current customers b) Using sales time efficiently time & duty analysis. Inside sales people back up (technical support, sales assistants, telemarketers)
376
Managing the sales force Contd of slide .
4)
5) -
Motivating Sales force Research found that reward with highest value was pay followed by promotion, personal growth & sense of accomplishment. Least valued rewards were liking & respect, security & recognition. Motivating through quotos Evaluating sales representatives Sales reports, customer letter & complaints, call reports Key indicators of sales performance e.g. average. no. of sales calls per day.
377
Principles of personal selling

The six steps: 1) Prospecting & qualifying 2) Preapproach 3) Presentation & demonstration AIDA; Features Advantages Benefits Value (FABV) approach 4) Objection Handling logical resistance & psychological resistance 5) Closing recognising the signs 6) Follow-up & maintenance
378
PRODUCT LIFE CYCLE
379
PLC PHASES
1. INTRODUCTION 2. GROWTH
3. MATURITY
4. DECLINE
380
PRODUCT LIFE CYCLE

THE LAUNCH PHASE
DEFINING THE POSITIONING;

ACHIEVING WHOLESALE DISTRIBUTION; ACHIEVING RETAIL DISTRIBUTION; AROUSING CONSUMER AWARENESS; ATTRACTING CONSUMER TRIAL;
CONVERTING CONSUMERS TO THE PRODUCT; AND

ACHIEVING BUYING CONTINUITY
381
FOUR INTRODUCTORY MARKETING STRATEGIES

Promotion High High Rapidskimming strategy Rapidpenetration strategy Low Slowskimming strategy Slowpenetration strategy
Low
382
PRODUCT LIFE CYCLE

THE GROWTH PHASE INCREASING THE USER BASE;
EXPANDING DISTRIBUTION;
EXPANDING SHELF FACINGS; INCREASING PURCHASE FREQUENCY;
SHIFT FROM PRODUCT AWARENESS ADVERTISING TO BRAND PREFERENCE ADVERTISING;

LOWER PRICES TO ATTRACT NEW LAYER OF PRICE SENSITIVE BUYERS ENSURING ADEQUATE INVENTORIES AT WHOLESALE AND RETAIL LEVELS; AND
EXPLORING LINE EXTENSIONS
383
MATURITY PHASE
1. GROWTH MATURITY - SALES GROWTH RATE DECLINE, LAGGARDS

2. STABLE MATURITY - SALES FLATTEN; SALES GOVERNED BY POPULATION GROWTH & REPLACEMENT DEMAND 3. DECAYING MATURITY - ABSOLUTE LEVEL OF SALES STARTS TO DECLINE, CUSTOMERS SWITCHING TO OTHER PRODUCTS
384
PRODUCT LIFE CYCLE
THE MATURITY PHASE RETAINING CURRENT USERS; ATTRACTING NEW USERS; RETAINING DISTRIBUTION;
OPTIMISING PRODUCT LINE AND PACKAGING; AND

OPTIMISING PRODUCT COSTS
385
MATURITY PHASE
1. MARKET MODIFICATION VOLUME = NO. OF BRAND USERS X USAGE PER USER a) INCREASING USERS CONVERT NON-USERS ENTER NEW MARKET SEGMENTS SNATCH COMPETITORS CUSTOMERS b) INCREASING USAGE MORE FREQUENT USE MORE USAGE PER OCCASION NEW AND MORE VARIED USES 2. PRODUCT MODIFICATION 3. MARKETING MIX MODIFICATION
386
PRODUCT LIFE CYCLE
REJUVENATION DEVELOP AND QUALIFY MAJOR PRODUCT IMPROVEMENT; REPOSITION PRODUCT VIA ADVERTISING; ACHIEVE NEW DISTRIBUTION OUTLETS; ACHIEVE CONSUMER TRIAL AND CONVICTION; AND ATTRACT NEW USERS AND NEW USES.
387
PRODUCT LIFE CYCLE
DECLINE PHASE
RETARDING ATTRITION IN USER BASE;

ATTRACTING BARGAIN BUYERS; RESTRICTING PRODUCT LINE;
REDUCING PRODUCT COSTS;

RETARDING DISTRIBUTION LOSSES; MAXIMISING IMMEDIATE PROFITS
388
PRODUCT LIFE CYCLE
THE NEW PRODUCT / ESTABLISHED PRODUCT DISTINCTION
FOR THE NEW PRODUCT:
ASCERTAIN THAT YOU REALLY HAVE A VIABLE PRODUCT

BEFORE YOU START MARKETING IT; CONCENTRATE EFFORTS ON DEVELOPING EFFECTIVE POSITIONING AND ADVERTISING THAT REFLECTS THAT POSITIONING OPTIMALLY; WITH THE TRADE, AIM AT DISTRIBUTION BEFORE ANYTHING ELSE; CLEARLY ESTABLISH THE PRICE LEVEL THAT YOU WANT.
389
PRODUCT LIFE CYCLE

THE NEW PRODUCT / ESTABLISHED PRODUCT DISTINCTION FOR THE ESTABLISHED PRODUCT:
DO NOT WANTONLY CHANGE POSITIONING OR ADVERTISING

UNLESS YOU HAVE REAL EVIDENCE THAT THEY ARE FUNDAMENTALLY WRONG; ENSURE YOUR PRODUCT HAS SUFFICIENT SUPERIORITY TO THE COMPETITION TO MAKE IT VIABLE IN THE MARKET; CONCENTRATE AS A FIRST PRIORITY ON HOLDING THE VOLUME YOU HAVE INHERITED AND THE USER BASE THAT HAS BEEN BUILT UP; SEEK TO FIND EXPANSION POSSIBILITIES FOR NEW VOLUME NEW USERS, NEW TRADE OUTLETS, VOLUME PACKS AND PROMOTIONS; UNDERSTAND AND RESPECT THE PRODUCTS AND THE BRANDS 390 HERITAGE.
PRODUCT LIFE CYCLE STRATEGIES (SEE APPENDIX NO.6)
S a l e s
Introduction Growth Maturity Decline
Time
391
PRODUCT LIFE CYCLE STRATEGIES

Characteristics Sales Low sales Rapidly rising sales Peak sales Declining sales
Costs
High cost per customer
Average cost per customer Rising profits Early adopters Growing number
Low cost per customer High profits
Low cost per customer Declining profits
Profits
Negative Innovators Few
Customers Competitors
Middle majority Stable number beginning to decline
Laggards Declining number
Marketing Objectives Create product awareness and trial Maximize market share Maximize profit while defending market share Reduce expenditure and 392 milk the brand
Strategies
Product Offer product Offer a basic product extensions, service, warranty Price to penetrate market Diversify brands and models Phase out weak items Cut price
Price
Charge cost-plus
Price to match or Best competitors
Distribution
Build selective Distribution
Build intensive distribution
Build more intensive Distribution
Go selective: Phase out unprofitable Outlets

Reduce to level Needed to retain Hard-core loyals
Advertising
Build product awareness among early adopters and dealers
Build awareness and interest in the mass Market
Stress brand differences and Benefits
Sales Promotion
Reduce to take Use heavy sales advantage of heavy promotion to entice consumer demand trial
Increase to encourage Brand switching
Reduce to minimal level

393
NEW PRODUCTS DEVELOPMENT
394
WHY DO NEW PRODUCTS FAIL-CHALLENGES
1. PUSHING A FAVORITE IDEA THROUGH INSPITE OF NEGATIVE MARKET RESEARCH FINDINGS
2. IDEA IS GOOD BUT MARKET SIZE IS OVERESTIMATED

3. ACTUAL PRODUCT NOT WELL DESIGNED 4. INCORRECT POSITIONING
5. INEFFECTIVE ADVERTISING
6. OVERPRICED 7. DEVELOPMENT COSTS HIGHER THAN EXPECTED
8. COMPETITORS FIGHT BACK HARDER THAN EXPECTED

9. SHORTAGE OF NEW PRODUCT IDEAS 10. FRAGMENTED MARKETS
395
WHY DO NEW PRODUCTS FAIL
11. SOCIAL & GOVERNMENTAL CONSTRAINTS 12. COSTLINESS OF NEW PRODUCT DEVELOPMENT PROCESS 13. CAPITAL SHORTAGES 14. FASTER DEVELOPMENT TIME 15. SHORTER PLC
396
STAGES IN NEW PRODUCT DEVELOPMENT PROCESS

1. IDEA GENERATION
2. IDEA SCREENING
3. CONCEPT DEVELOPMENT & TESTING 4. MARKETING STRATEGY DEVELOPMENT 5. BUSINESS ANALYSIS 6. PRODUCT DEVELOPMENT
7. MARKET TESTING
8. COMMERCIALISATION
397
IDEA GENERATION TECHNIQUES
1. ATTRIBUTE LISTING
2. FORCED RELATIONSHIPS
3. MORPHOLOGICAL ANALYSIS 4. NEED / PROBLEM IDENTIFICATION
5. BRAINSTORMING
6. SYNECTICS
398
Creative techniques for new ideas

Attribute listing List attributes of an object e.g. screw driver then modify each e.g. wooden handle with plastic etc. 2) Forced relationships List several ideas & consider each one in relation to each other e.g. TV, Computer, DVD player 3) Morphological analysis Start with a problem such as getting something from one place to another via a powered vehicle. Now think of dimensions such as type of platform (cart, chair, sling, bed); the medium (air, water, rails, road) & power source (electric, magnetic wind, solar) 4) Reverse assumption analysis List all normal assumptions about an entity & then reverse them. e.g. Instead of assuming that a restaurant has menus, charges for food, serves food, reverse each assumption
1)
399
Creative techniques for new ideas Contd of slide . New contexts Take familiar processes such as people helping services & put them into new context e.g. Instead of hotel guests going to the front desk to check in, greet them at curb-side & use wireless device to register them 6) Mind mapping Start with a thought & all thoughts such as car, Mercedes, Germany. Perhaps a whole new idea will materialize. 7) Lateral marketing Combines two product- concepts or ideas to create a new offering e.g. Cyber cafs = caf + internet Sony Walleman = audio + portable. 5)
400
Idea screening Company must avoid two types of errors: 1) A drop error 2) A go error absolute product failure, partial product failure (fixed costs not fully covered); relative product failure (yields profit less than companys target rate of return)
401
Idea screening
As the idea moves through development, the company will constantly need to revise its estimate of the products overall probability of success, using the following formula:
Overall
probability of = success
Probability
of technical completion X
Probability of
commercialization given technical completion X
Probability of
economic success given commercialization
For example, if the three probabilities are estimated as .50, .65, and .74, respectively, the overall probability of success is .24. The company then has to judge whether this probability is high enough to warrant continued development.
402
IDEA SCREENING
EVALUATING A MARKET OPPORTUNITY IN TERMS OF COMPANYS OBJECTIVES & RESOURCES I. COMPATIBILITY WITH COMPANY OBJECTIVES PROFIT OBJECTIVE SALES VOLUME OBJECTIVE SALES GROWTH OBJECTIVE
CUSTOMER GOODWILL OBJECTIVE

II. COMPATIBILITY WITH COMPANY RESOURCES NECESSARY CAPITAL PRODUCTION KNOW-HOW MARKETING KNOW-HOW DISTRIBUTION CAPABILITY
403
PRODUCT-IDEA RATING DEVICE

PRODUCT SUCCESS REQUIREMENTS (1) (2) (3 = 1 X 2) PRODUCT RATING
RELATIVE PRODUCT WEIGHT SCORE
Unique or superior product High performance-to-cost ratio High marketing dollar support Lack of strong competition Total
.40 .30 .20 .10 1.00
.8 .6 .7 .5
.32 .18 .14 .05 .69*
*Rating scale : .00 - .30 poor; .31 - .60 fair; .61 - .80 good. Minimum acceptance rate: .61.
404
CONCEPT DEVELOPMENT AND TESTING
A product idea is a possible product that a company might offer to the market
A product concept is an elaborated version of the idea expressed in meaningful consumer terms-target market,,key benefit,occasion,etc
405
CONCEPT DEVELOPMENT
Any product idea can be turned into several products concepts . A company can form several concepts: Concept 1: An instant breakfast drink for adults for nutrition Concept 2: tasty snack drink for children for midday refreshment Concept 3: Health supplement for elderly for late evening Each of these concepts represents a category concept - that is , each positions the idea within a category.It is the category concept, that defines the products competition. Product- positioning map - can be utilized in communicating and promoting the concept to the market. Brand-positioning map - the product concept has to be turned into a brand concept.
406
PRODUCT DIMENSIONS TO TEST AT CONCEPT STAGE
1. CLARITY
2. BELIEVABILITY
3. NEED LEVEL NEED GAP SCORE
4. GAP LEVEL - BETWEEN NEW PRODUCT AND EXISTING PRODUCTS 5. PERCEIVED VALUE 6. PURCHASE INTENTION 7. PERCEIVED USAGE-WHO,WHEN AND HOW OFTEN
407
MARKETING STRATEGY DEVELOPMENT

Target markets size, structure,and behavior; the planned product positioning; and the sales, market share, and profit goals sought in the first few years. The products planned price, distribution strategy, and marketing budget for the first year. The long-run sales and profit goals and marketing-mix strategy over time.
408
BUSINESS ANALYSIS
A. B. Estimating Total Sales - First time sales, replacement sales, repeat sales. Estimating Costs and Profits Year 0
1. Sales revenue 2. Cost of goods sold 3. Gross margin
4. Development costs 5. Marketing costs 6. Allocated overhead 7. Gross contribution 8. Supplementary contribution 9. Net contribution 10. Discounted contribution (15%) 11. Cumulative discounted cash flow
Projected five-year cash-Flow Statement (In Thousand Of Dollars)

Year 1 Year 2 Year 3 Year 4 Year 5
409
Financial measures to evaluate the merit of a new-product proposal.
Break Even Analysis: How many units need to be sold or how many years to break even Risk Analysis: Here three estimates (optimistic, pessimistic, and most likely) are obtained for each uncertain variable affecting profitability under an assumed marketing environment and marketing strategy for the planning period.
410
PRODUCT DEVELOPMENT
Large jump in investment. The R & D department will develop one or more physical versions of the product concept. Design required functional characteristics & to communicate its psychological aspects through physical cues. The functional tests are conducted under laboratory and field conditions to make sure that the product performs for safety & effectiveness.(ALPHA TESTING) Consumer Testing(BETA TESTING) includes bringing consumers into a laboratory to giving them samples Inhome product placement tests.
411
Techniques for measuring consumer preferences: The most three most common are simple ranking, paired comparisons, and ranking scales. The simple- rank- order method ask the consumer to rank the three items in order of preference. It is difficult to use this method when there are are many objects to be evaluated. The paired-comparison method calls for presenting pairs of items to the consumer, then asking which one is preferred in each pair. The monadic -rating method asks the consumer to rate his or her liking of each product on a scale. This rating yields more information than the order methods.even know the qualitative levels of her preference for each.
412
MARKET TESTING
. CONSUMER GOODS MARKET TESTINGa. SALES WAVE RESEARCH Pre-selected consumers are offered companys & competitors products three to five times. Secrecy maintained but distribution issues can not be checked. b. SIMULATED TEST MARKETING Pre-selected consumers are given money, exposed to ads. Invited to stores,& purchase behavior observed. Ads effectiveness checked. c. CONTROLLED TEST MARKETING Panel of stores carry new products. Checks advertising, promotion. But, does not provide information how to sell to trade and also secrecy loss.
d. TEST MARKETS Ultimate way to test a new consumer product.

413
TEST MARKETS
1. HOW MANY TEST CITIES 2 to 6 cities.larger number if regional differences, different marketing strategies, possible loss, possible interference by competitors. 2. WHICH CITIES Not over tested, good media coverage, representative sample, average competitor activity. 3. LENGTH OF TEST Depends on repeat purchase rate. Period should be cut down if competitors are rushing to the market. 4. WHAT INFORMATION Store audit, consumer panels ( switching rates), buyer survey (Consumer attitude, usage , satisfaction). 5. WHAT ACTION TO TAKE Depends on trial & repurchase 414 rates.
BUSINESS GOODS MARKET TESTING

. BUSINESS GOODS MARKET TESTING
a. ALPHA TESTING In company testing to measure & improve product performance, reliability & operating cost. b. BETA TESTING Inviting potential adaptors to conduct confidential testing at site.Gives clues on problems of safety, servicing, usage & need for training. Also can observe value equipment adds to customer operations as a clue to pricing.
c. TRADE SHOWS Secrecy loss.

d. DISTRIBUTOR & DEALER DISPLAY e. TEST MARKETING
415
COMMERCIALISATION
1. TIMING First entry : ( first mover advantages but must be debugged) , parallel entry, late entry. 2. GEOGRAPHICAL STRATEGY Planned market roll out necessary. 3. TARGET MARKET PROSPECTS Prime prospects. (early adopters, heavy users, opinion leaders, reached at a low cost) 4. INTRODUCTORY MARKET STRATEGY
416
DIFFUSION OF INNOVATION
Exposure to Innovation
Innovation Characteristics
Consumer- Dependent Relative Advantage Compatibility Perceived Risk Complexity Effect on Adoption of Other Innovations Consumer -Independent Trialability Divisibility Reversibility Realization Communicability Form of Innovation
Exposure to Innovation
Consumer Characteristics
psychological Variables Perception Motivation Personality Value Orientation Beliefs Attitudes Previous Innovative Experience Demographics Age Education Income
Propagation Mechanisms
Types Marketer- Controlled vs. Nonmarketer controlled Personal Vs. Impersonal Characteristics Credibility Clarity Source Similarity Informativeness
No
Innovation Resistance No Yes Is Innovation Amenable to Modification ? Yes
Modification
417
Adoption
Rejection
Innovators
2.5%
Early Adopters 13.5%
Early Majority 34%
Late Majority 34%
Laggards 16%
Percentage of Adopters by Category Sequence

418
Adopter Categories
ADOPTER CATEGORY DESCRIPTION RELATIVE PERCENTAGE POPULATION WITHIN THE THAT EVENTUALLY ADOPTS
2.5%
Innovators
Venturesome - very eager to try new Ideas acceptable if risk is daring; more cosmopolite social relationships; communicates with other innovators. Respect - more integrated into the local social system; the persons to check with before adopting a new idea; category contains greatest number of opinion leaders; are role models. deliberate - adopt new ideas just prior to the average time; seldom hold leadership positions; deliberate for some time before adopting.
Early Adopters
13.5%
Early Majority
34.0
Late Majority
Skeptical- adopt new ideas just after the average time; adopting may be both an economic necessity and a reaction to peer pressures;innovations approached cautiously.
Traditional - the last people to adopt an innovation; most localite in outlook; oriented to the past; suspicious of the new.
34.0
Laggards
16.0
419
100.0%
MULTIPLE FACTOR BUYING POWER INDEX

Step 1. Specific customer profile in terms of factors. E.g. Demographic > 30 years Economic MHI > 20,000 Step 2. For each market, calculate percentage of each factor V/s total e.g. Demographic % = Markets men > 30 years All India men> 30 years Step 3. Determine importance weight of each factor Demographic = 40% Economic = 60% Step 4. BPI of a market = 0.4 X Demographic % + 0.6 X Economic %
420
CATEGORY DEVELOPMENT INDEX

ESTIMATED SALES (BASED ON ACTUAL BPI) SALES
BPI NATIONAL MUMBAI
CDI
100
2,00,000
2,00,000
14
28,000
56,000
200
BANGALORE
14,000
42,000
300
DELHI
10,000
10,000
100
CALCUTTA
2,000
1,000
50
421
BRAND DEVELOPMENT INDEX

SAY FIRM A HAS A MARKET SHARE OF 15% = 30,000 ESTIMATED SALES (BASED ON ACTUAL SALES BPI) 60,000 30,000 8,400
BPI
NATIONAL MUMBAI 100
BDI
-
14
4,200
200
BANGALORE
2,100
4,200
200
DELHI
1,500
2,250
150
CALCUTTA
300
300
100
422
Forecasting & Demand Measurement
Demand can be measured at 6 product levels (item, form, line, company sales, industry sales, all sales), 5 space levels (customer, territory, region, country, global) & 3 time levels (short-term, medium & long-term).
423
Market can be defined as. a) Potential market = interest in a market offer. b) Available market = interest + income + access. c) Qualified available market = interest + income + access + qualifications (beer 21 yrs.) d) Target market = part of qualified available market that company decides to pursue. e) Penetrated market These definitions are a useful tool for market planning.
424
Market Demand
Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment. (e.g. recession V/s prosperity) under a defined marketing program. Hence, market demand is a function.
Market minimum (base sales) & market potential (upper limit).
425
Market sensitivity of demand (expansible market V/s non-expansible market)
Organizations selling in non-expansible market must accept the market size (level of primary demand for product class) & direct effort to winning larger market share (selective demand).
Market penetration index (current level of market demand vis--vis potential demand level) & companys share penetration index (current market share vis--vis potential market share). Market forecast is market demand corresponding to one level of industry marketing expenditure.
426
Company Demand
Company demand is companys estimated share of market demand at alternative levels of company marketing effort in a given time period. This depends on size & effectiveness of marketing expenditure relative to competitors.
Company sales forecast is expected level of company sales based on chosen marketing plan and an assumed marketing environment.
427
Sales quota is sales goal set for a product line, company division or sales representative. Sales quota higher than sales forecast.
Sales budget is conservative estimate used for current purchasing, production & cash flow decisions.
Company sales potential is maximum company demand as company marketing effort increases relative to competition. This will always be less than market potential.
428
Estimating Current Demand
1)
a)
Total Market Potential

Total Market Potential = Potential No. of Buyers X Average Quality purchased by a buyer X Price Chain Method Potential for sweetened milk for urban adults = Urban population above 18 years X Personal discretionary income (urban) per capita X Average percentage of discretionary income spent on food X Average percentage of amount spent on food that is spent on beverages X Average percentage of amount spent on beverages that is spent on dairy beverages X Expected percentage of amount spent on dairy beverages that will be spent on sweetened milk.
429
b)
2)
Market Buildup Method Identify all potential buyers in each market & estimating their potential purchases (based on some norm e.g. lathes per hundred employees or per Rs. 1 million sales). Multiple-factor Index Method can use existing market indices or develop own market indices based on assumptions. RK Swamy BBDO Guide for urban markets uses 18 variables. MICA Rural Market Ratings for rural markets uses 6 variables. Developing own market indices.
3) a)
b)
430
MULTIPLE FACTOR BUYING POWER INDEX

Step 1. Specific customer profile in terms of factors. E.g. Demographic > 30 years Economic MHI > 20,000 Step 2. For each market, calculate percentage of each factor V/s total e.g. Demographic % = Markets men > 30 years All India men> 30 years Step 3. Determine importance weight of each factor Demographic = 40% Economic = 60% Step 4. BPI of a market = 0.4 X Demographic % + 0.6 X Economic %
431
CATEGORY DEVELOPMENT INDEX

ESTIMATED SALES (BASED ON ACTUAL BPI) SALES
BPI NATIONAL MUMBAI
CDI
100
2,00,000
2,00,000
14
28,000
56,000
200
BANGALORE
14,000
42,000
300
DELHI
10,000
10,000
100
CALCUTTA
2,000
1,000
50
432
BRAND DEVELOPMENT INDEX

SAY FIRM A HAS A MARKET SHARE OF 15% = 30,000 ESTIMATED SALES (BASED ON ACTUAL SALES BPI) 60,000 30,000 8,400
BPI
NATIONAL MUMBAI 100
BDI
-
14
4,200
200
BANGALORE
2,100
4,200
200
DELHI
1,500
2,250
150
CALCUTTA
300
300
100
433
Estimating Future Demand
1) 2)
Time series Econometric Models of forecasting involving 3 stages macroeconomic forecast, industry forecast, company sales forecast. For business buyers-- buyer-intention surveys.
3)
434
All forecasts are based on a) b) c) What people say survey of buyers opinions or those close to them. What people do test market. What people have done analysing records of past buying behaviour or using time-series analysis or statistical demand analysis.
435
Methods
1) Surveys of buyers intentions eg. Consumer durables, industrial products. Buyers should have clear intentions, will be implementing them, willing to disclose.
2)
Composite of sales force opinion need to take with pinch of salt as pessimistic or optimistic. Also tend to be unaware of larger economic developments. May deliberately underestimate, or have no time. To encourage better estimating ,share records of past forecasts with actual sales & also description of company assumptions on business outlook, competitor behaviour & market plans. Benefits are that sales force best single group, greater confidence & incentive to achieve (as self driven) & the grass roots forecast provides detailed estimates broken down by product, territory, customer & sales rep.
Expert Opinion Dealers, Distributors, suppliers, marketing consultants, Trade associations. Group discussion method or pooling of individual estimates or Delphi 436 method.
3)
4) a)
Past-sales analysis Time Series break down past sales into trend, cycle, seasonal & erratic & project into future. Exponential smoothing consists of projecting the next periods sales by combining an average of past sales and the most recent sales, giving more weight to the latter. Statistical demand analysis consists of measuring the impact level of each of a set of causal factors (e.g., income, marketing expenditures, price) on the sales level. Econometric analysis consists of building sets of equations that describe a system, and proceeding to fit the parameters statistically. Market test method- especially desirable in forecasting new product sales or established product sales in new distribution channel or territory.
437
b)
c)
d)
5)

Marketing

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Marketing Orientation

COMPANY ORIENTATION TOWARDS MARKETPLACE

3. SELLING - AGGRESSIVE SELLING & PROMOTION

HOLISTIC MARKETING DIMENSIONS

Product & Services

Holistic Marketing Socially Responsible Marketing

SELLING V/S MARKETING

SELLING STARTING POINT PRODUCT

MARKETING CUSTOMER NEEDS

AGGRESSIVE SELLING & PROMOTION

PROFITS THRU SALES VOLUME

PROFITABILITY THROUGH CUSTOMER SATISFACTION

PILLARS OF MARKETING / CUSTOMER ORIENTATION

1. CLEAR DEFINITION OF TARGET MARKET (DEMOGRAPHICS, PSYCHOGRAPHICS, MEDIAGRAPHICS, GEOGRAPHICS)

4. PROFITABILITY THROUGH CUSTOMER SATISFACTION

THUS CUSTOMER ORIENTATION MEANS

CORE CONCEPTS OF MARKETING

MARKETS-all potential customers

The Four P Components of the Marketing Mix

Place Channels Coverage Assortments Locations Inventory Transport

PRODUCT PRICE PLACE PROMOTION PEOPLE

CHOICE OF MARKETING MIX DEPENDS ON TARGET MARKET & POSITIONING

Expanded Marketing Mix For Product/Service

RESPONSIVE V/S CREATIVE MARKETER

3. UNSTATED NEED - EXPECTATION FROM COMPANY E.g. DEALER SERVICE

CUSTOMER SATISFACTION V/S DELIGHT

Tools to track customer satisfaction

The Customer-Development Process

First-time customers Repeat customers

Clients Inactive of Ex-customers Members

DEFINING CUSTOMER VALUE

CUSTOMER DELIVERED VALUE

CUSTOMER DELIVERED VALUE

DELIVERING CUSTOMER VALUE

1. MICHAEL PORTERS GENERIC VALUE CHAIN

GENERIC VALUE CHAIN

CORE BUSINESS PROCESS

1. NEW PRODUCT REALIZATION PROCESS

MARKET SENSING PROCESS

CUSTOMER VALUE BUILDING APPROACHES - BERRY & PARASHURAMAN

1. ADDING FINANCIAL BENEFITS-FREQUENCY MARKETING PROGRAMS AND CLUBS

CUSTOMER RELATIONSHIP BUILDING

BASIC MARKETING Simply Sell

LEVELS OF RELATIONSHIP MARKETING

Many customers/ distributors Medium number of customers/ distributors

Basic or reactive Reactive

Few customers / distributors

LIFE TIME VALUE OF CUSTOMER

1. Lost customer revenue

1. COST OF AVERAGE SALES CALL (SALARY, COMMISSION, BENEFITS, EXPENSES)

TOTAL COST TOTAL SALES CALLS

2. AVERAGE NUMBER OF SALES CALLS TO CONVERT AVERAGE PROSPECT TO CUSTOMER

TOTAL SALES CALLS TOTAL NO. OF NEW CUSTOMERS

3. COST OF ATTRACTING NEW CUSTOMER = 2 X 1

CUSTOMER / PRODUCT PROFITABILITY ANALYSIS

Sample Marketing Metrics

Sample Customer-Performance Scorecard Measures

Percentage of new customers to average number of customers.

SEE APPENDIX 18 (THE STRATEGIC PLANNING, IMPLEMENTATION, AND CONTROL PROCESS)

Controlling Measuring Results

Implementing Taking corrective action

CORPORATE & DIVISION STRATEGIC PLANNING

DEFINING THE CORPORATE MISSION

DEFINING THE CORPORATE MISSION