Marketing management-II

suppliers
INTERNAL EXTERNAL
OPERATIONS PRODUCTS & SERVICES
SERVICES

orders
fees
Ad. Agencies,
production programs Sales promo
shipments
firms
revenues
Marketing reports
finance expenses manager
Market research
ideas
advertising
products
R&D

promotions
Products &
services
dealer
Orders
payments
customer information
 MARKETING MANAGEMENT PROCESS

Adopt a
philosophy

Customer Competitor
analysis analysis

Estimate mkt. Develop a strategy

potential Segmentation
Positioning Consider
Global factors
Consider societal
concerns

Design marketing
mix

Forecast Obtain feedback

Plan & implement
sales Mktg.programs
Developing new market offering
• Conventional Bases for segmentation :
*demographics :age, gender, income
*geographic: North, South, urban, rural
*socio-cultural: religion, language,
tradition
*psychographic: Life style-(activities,
interests, opinions) .Buying behaviour –
usage status, benefits sought, purchase
occasion.
 New & emerging segments
• Multilevel segmentation.
• Value orientation segmentation
“segmentation now has to be sharp,
focussed and different”
• Amul, Colgate, Fair and Lovely vs Fair and
Handsome, Chavanprash sugar free,
• MRF tubeless, radial,
• Maggi –wheat, rice, multigrain etc.
 Competitive Advantage
• “ a position of advantage/superiority in any
of the functions or activities performed by an
organisation”
• Caterpillar- after sales service
• Intel-product designing
• Ikea-
• Hero motorcycles
• Sony- globally standardised components
• Toyota- flexible production systems
 Competitive Advantage
• CA is manifested in the form of either:
(a) Cost advantage
(b) Differentiation advantage
• Sources of CA are :
• Marketing, Manufacturing, Finance, HR,
Corporate
• CA helps a firm to deliver superior value to the
customer.
• This superior value delivery is possible the firm
has to have a superior strength.
 Competitive advantage
• HUL – distribution
• Infosys –technically competent manpower
• ITC – diversified businesses
• Intel – designing
• Core parentals – production process
• Apple –technology
• Nirma – price
 Competitive advantage
• Core competency is a special technical and
manufacturing expertise .
• Core competency has three characteristics.
1. It is a source of competitive advantage
which makes a significant contribution to
perceived customer benefits.
2. It has application in a wide variety of
markets
3. It is difficult for competitors to imitate.
 Core competencies
• Hero Honda-production costs control
• Dupont –chemical technology
• Honda – ic engine manufacturing
• 3M – surface coating and adhesive
technology
• Nike – shoe design and merchandising
 Competitive advantage
• Competitive advantage ultimately comes
from how well an enterprise has fitted its
core competencies and distinctive
capabilities into a tightly interlocking
activities that competitors cannot easily
imitate.
• Southwest airlines, Dell, IKEA.
 Competitor analysis
• Conventionally a competitor was
perceived as someone who threatened a
firms position or market share in a market.
• Michael Porter first developed the idea of
defining a competitor as someone who
impacted a firms profits.
• Five forces :
 Competitor analysis
• Brand : companies offering similar products
and services to the same customers at
similar prices (Safari, Scorpio , Qualis )
• Industry : All companies making the same
products or class of products (Bajaj Auto ,
Hero Honda )
• Form : companies that try to satisfy the same
customer need thru their products.(Air
Deccan,Indian Railways.Tata,Bajaj Auto)
• Generic :All companies that compete for the
consumer’s Rupee.(LG , Cox and Kings )
 Competitor analysis
• To prepare an effective marketing
strategy, a company must study
competitors – present and potential.
• A company’s closest competitor are those
seeking to satisfy the same customers and
needs and making similar offers
 Competitor identification
• Starts with identifying current and potential
competitors.
• Two approaches of identifying current
competitors: First way is the customer’s
perspective, since the customer makes the
choice among the competitors. (colgate –
pepsodent – babool – anchor- meswak)
(surf – tide – ariel) .( Nirma – wheel – rin)
 Competitor analysis
• 2nd approach attempts to place competitors in
strategic groups on the basis of their competitive
strategies.
• Strategic groups are those that follow similar
strategies such as same distribution channels,
similar communication strategies, same
price/quality position.
• Have similar characteristics ( e.g size,
aggressiveness)
• Have similar competencies ( national or global
presence, R&D
 Competitor analysis
• The Strategic grouping of a large number
of competitors helps in making the
analysis compact, feasible and more
useable
 Competitor analysis
• What does a company need to know
about its competitors?
• Their objectives, strategies, strengths and
weaknesses and response patterns.
• Questions about each competitor that
needs to be answered:
On OBJECTIVES: Is the competitor
pursuing market share growth? Current
profitability? Technological leadership?
 Competitor analysis
• ON STRATEGIES: how is the competitor trying
to win: lower prices? higher quality? Better
service? Lower costs?
• ON STRENGTHS and WEAKNESSES: which
are the strengths relative to us? Which are the
weaknesses that we can exploit?
• On RESPONSE PATTERNS: how will the
competitor response if we raise our prices?
Lower our prices? Increase our sales force size?
 Brands and brand building
• Branding is an important aspect of business
strategy
• Branding is not merely advertising nor is it about
managing the product image
• Branding is central to creating customer value,
not just images.
• Anew product launched by a new company has
a product name, a logo or even a trademark,
and maybe even unique features yet it is not a
brand
 Brands and branding
• Names and logos and designs are the material
markers but because the product has no history
these markers are “empty”. They are devoid of
meaning.
• Look at famous brands, they have markers too:
a name (McDonalds, IBM), a logo ( the Nike
“swoosh”), a distinctive product feature (Harley’s
engine sound). These markers have been filled
with customer experiences, conversations with
friends and colleagues and over years ideas
about the product accumulate.
• A brand culture is formed
 BRAND BUILDING
• Role of Brands:
• identify the source or maker of a product.
• Simplifies decision making and product handling
or tracing.
• Offers legal protection for unique features or
aspects of the product.
• Signals a certain level of quality
• Is a means of competitive advantage
 Scope of branding
• Branding is all about creating differences
between products.
• Branding creates mental structures that
help consumers organize their knowledge
about products and services
• For successful branding consumers must
be convinced there are meaningful
differences among brands
 Scope of branding
• Branding can apply to physical goods (Lux
soap, Tata Nano, Splendour) services (ICICI
bank, Jet airways) retail
stores(Bigbazar,Pantaloon,Westside,
Shoppers’stop)persons (AamirKhan,Sachin)
places (Goa,Mahableshwar) an organization
(UNICEF, CRY) ideas (polio eradication, family
planning, RTI) commodities (Ashirwad )
The 12 Rules for creating
a successful brand
experience
 The first rule
• Recognize that any interaction with the
consumer is an interaction with the brand
– However direct or indirect the interaction
 The second rule
• Recognize that any communication of any
kind to the customer is marketing and
brand communication
– E.g., the Montblanc rejection mail
– The call from the lady at the call centre asking
you about the unpaid credit card bill
 The third rule
• “Respect the context, but deliver the core”…
Geoffrey Moore
Core Context
Burgers Bun
Actors Stage
Ideas PowerPoint
Gift Wrapping
• Core & context interact to create the brand experience
• Core is actually context in another location…
 The fourth rule
• Seek out & build close, durable external
partnerships to feed & grow the brand
experience
– Coca-Cola & FIFA, Nikon & National Geographic
– Think long term, think shared customer base
– Look for partners who mirror your philosophy: show
evidence of long-termism
• Pay attention to the match between your brand
values and personality and those of your
partner/s
 The fifth rule
• Identify all possible points of interaction,
and all possible channels of customer
interaction.
• And plan for all such interactions.
 The sixth rule
• Plan for consistency and complementarity
of experiences across all the various
points of interaction
 The seventh rule
• Codify and document all the customer
interaction, processes and solutions that you
desire to be followed
• Also codify and document those that you don’t
wish to deliver
 The eighth rule
• All members in the value delivery chain are
responsible for the brand experience – all are
ambassadors
• Hence, training and retraining is imperative
– Create usable and easily digestible training modules
– Train all relevant staff in detailed processes and
experience delivery interactions
• Also, empower and refresh
 The ninth rule
• Co-opt the consumer in creating
opportunities for brand experience: UGs,
Clubs
– Build the legend by building a campfire:
“Legends are created at campfires.”
– Customer intimacy is every marketer’s dream
 The tenth rule
• Document the brand values and
expressions thereof.
 The eleventh rule
• Record brand experience history & learn
from it to evolve brand personality &
values
– All great brands have a history department:
Sunlight, Coke, IBM, Marlboro
– An opportunity to document customer
response and learn from it
 The twelfth rule
• Communicate brand successes to all
constituents
– Reinforce their alignment with brand strategy,
their commitment to delivering the brand
experience
– Don’t gloss over but have an explanation for
any failures
 The thirteenth rule
• Remember – God is in the details (Ludwig
Mies van der Rohe)
 Experiencing the brand
• Brand is about relationships
• Hence, one can experience the brand outside
the product context; indeed without even a sale
• A “Just do it” exhortation to your child is part of
the Nike experience!
• In the age of too many choices, saliency is key –
and so are all possible interactions with the
brand – in order to retain the brand in the
evoked set
 Experiencing the brand
• In many products, the brand experience has little to do with
the product
– Retail financial products
– Consultancy
– Banking
• In many products, the brand experience can affect brand
perception more strongly than product performance
– Retail
– Durables
– Office automation
– computers
 The Brand Experience
Wheel
Product
Product
Product&
Product& Contests
Contests&&
performance
performance
presentations
presentations promos
promos
Visual Help
Visual Helpdesks
desks
merchandising
merchandising

Member
Member
Signage
Signage The Brand services
services

Loyalty
Retail
Retailpoints
points Program

Events &
Sponsorships
Sponsorships contacts
After
After
marketing
marketing
Partnerships Advertising
 Intersecting your customer
• Consumer pathways
Wake up

Gym
Breakfast Drive to Client
Drive meeting lunch
to Switch on PC
work Agency
Check Tea meeting
Chat
email Break with son
Drive
home Watch TV
And
Go so to
shopping bed
 For a bank
TV news ATM Screen Cheque Debit/credit Direct mailer
saver credit via card
SMS

Wake up

Gym
Breakfast Client
Drive to
Drive lunch
meeting
to Switch on PC
work Agency
Tea meeting
Check Chat with
Break
email son
Drive
home Watch TV
And
Go so to
shopping bed
FM, Signage eNewsletter FM, Signage TV news
 For a soft drink
TV ad Dispenser Bottle on FM, POS on Direct mailer
table Signage table re event

Wake up

Gym
Breakfast Client
Drive to
Drive lunch
meeting
to Switch on PC
work Agency
Tea meeting
Check Chat with
Break
email son
Drive
home Watch TV

Dispenser And
Go so to
shopping bed
FM, Signage eNewsletter FM, Signage TV ad
 The Pepsi Experience - 1
• Sensory experiences --- bubbles, the ice cold liquid,
the slightly bitter-sweet-acidic taste, the feel of the cold
can against your hand and skin,the “fssssss sound”
when the can opens or the pop of the bottle
• Music property – the all enveloping music, the star
appeal, the concert rush, the slightly illicit but always
safe “atmosphere”
• Movie placements – beyond advertising, a part of the
total entertainment experience.
• Beautiful people – Tyra Banks, Cindy Crawford,
Naomi Campbell, Claudia Schiffer
 The Pepsi Experience - 2
• Sports - always the star first then the game. The rush
of One day cricket, In rest of the world Star Soccer
players. The fan connection, the internal experience of
fantasy.
• Humour – experience a laugh. Always with a twist
always producing a laugh. The experience of the
humorous side of life
• The Larger than Life experiences – always
surprising, the BIG unexpected thing: Jackson and the
Thriller Concert, (helicopter, hair burning etc), Nothing
Official About It – Hijacking the World Cup, The Pepsi
Challenge(way out innovation 25 years ago)
 Services marketing
• Internal customer focus is as important as
external customer orientation
• Moments of truth
• Virtually all services require supporting
goods. (car repair service) (airline service)
(purchase of shirt)
• Helpful to think of every product as a mix
of goods and services
 Services marketing
• From a strategic marketing perspective it is
useful to separate services into two categories.
1. Services that are the main purpose or object of
transaction. (in a car rental business the
customer buys transportation services which is
the main purpose of the transaction)
2. Services that support or facilitate the sale of a
good or another service( accident insurance,
use of a cell phone.. for the customer seeking
car rental )
 Services marketing
• Characteristics of services
1. intangibility: impossible to sample, feel,
see, hear, taste, or smell a service
before it is bought.
• Strategies that could be used to reduce
the effect of intangibility are:
• ( visualisation: visuals, pictures)
• (association: connecting the service with
a person, object, place, )
 Services marketing
• (physical representation: use of colours-credit
cards, hands protecting a flame-LIC)
• (documentation: past performance and future
capability)
2. Inseparability: creator and seller cannot be
separated; many services are created,
dispensed and consumed simultaneously.
( dentist, fast food ).This limits distribution,
hence direct selling is the only channel of
distribution.
 Services marketing
3.Hetrogeneity- the variation in consistency from one
service transaction to another.
Almost makes it impossible for a service operation
to be 100% perfect quality on an ongoing basis.
Consistency varies from firm to firm; individual to
individual delivering the service and even varies
when interacting with the same service provider on
a daily basis
 Services marketing
• Possible solutions to heterogeneity :
* customization-however all customers do not
prefer customized service if issues such as cost,
speed or consistency are issues of concern.
* Standardization- possible with intensive training
but not always guaranteed. However,it can
reduce prices, increase speed and yet some
consumers may perceive it as unfriendly
 Services marketing
4.Perishability – services cannot be
inventoried. Unused capacity cannot be
reserved.
• Without the benefit of inventory matching
demand supply is the biggest challenge
for a services firm.
• Solution lies in managing demand and or
managing supply.
 Services marketing
• Strategies for managing demand –
*Creative pricing
*reservation system
*complementary services
*developing non peak demand
 Services marketing
• Strategies for managing supplies-
*use of part time employees
*capacity sharing
*utilization of Third Parties
*enhance customer participation.
Tasks in services marketing
Understanding the nature of service

Understanding the customer and his expectations

Of the service

Giving a shape to the service

(developing the service product)

Organizing delivery systems/channels

Tasks in marketing services
pricing

promotion

Harnessing the extended marketing

Mix 7Ps vs 4Ps
Tasks in marketing services

Achieving differentiation

Measuring service quality

Monitoring customer satisfaction

 Global market offering
• Scope:
• Necessity of global marketing
• Pros and cons of marketing on a global
basis.
• How to decide on going global
• Which markets to enter
• Mode of entry
 Global market offering
• Companies cannot simply sty domestic
and expect to maintain their markets. This
because of:
• Political changes- Berlin wall, former
Soviet union, European Union
• Economic changes- WTO replaced
GATT, North American Free Trade Area
(NAFTA) was declared by the US in 1993
 Global market offering
• Technological changes- satellite
communication, electronic mail and
cellular phones, Information technology.
• As a result of these changes business
enterprises need to have an appropriate
orientation for the world market. the
following orientation framework is
important to understand:
 Global market offering

Ethnocentric Orientation- the firm looks for

foreign markets to sell its current domestic
products, or at best its surpluses.
There is no significant product adaptation
for foreign markets.
This orientation leads to exporting the
product.
An ethnocentric firm looks for support from
the home country government.
 Global market offering
• Polycentric Orientation- Such a firms
reference point is still the domestic
market, but looks to export to several
markets and not just a single market.
Exporting is a more serious business in a
Polycentric firm than an Ethnocentric firm.
A polycentric firm may expand its capacity
to serve foreign markets, manufacturing
however is still done in the home country.
 Global market offering
• Regiocentricism Orientation- when a firm is
focused on a specific region. ( Asia specific,
North America or Europe)
• As a result of this orientation the firm reaches
these markets, understands the customers and
competition in the region and evolves strategies.
• Common strategies for entry are Joint ventures
or subsidiary operations. Often such an
orientation involves homogenization of the
product
 Global market offering
• Geocentric Orientation- firms who consider the
world as their home market.
Such firms evolve strategies to globally
maximise their resources. They pursue global
market leadership.
Their market entry strategies are many and
varied: exports, joint ventures, overseas
subsidiaries, strategic alliances, acquisitions,
mergers, brand franchising, manufacturing in low
cost centres, etc.
These are global firms.
 Global market offering
• Approaches o going global:
1. Define international marketing objectives
and policies
2. Enter a few countries or many.
3. Evaluate countries on the basis of:
(i) market attractiveness
(ii) Risks
(iii) competitive advantage
 Global market offering
• Reasons for going global:
1. Higher profits than domestic markets
2. Achieve economies of scale
3. Reduce dependence on one market.
4. Attack global competitors in their
domestic market
5. Customers are going abroad
 Global market offering
• Risks of going abroad:
1. Inability to understand foreign preferences
2. Failure to understand business culture
3. Underestimate foreign regulations
4. Lack of managers with international
experience.
5. Change of laws, devaluation of currency
6. Political revolution
 Global market offering
• Methods of entering global markets:
1. Waterfall approach- gradual
2. Sprinkler approach – simultaneous
3. Developed or developing markets
 What is price ?
• the amount of money exchanged by a
customer for a product or service.

• To the seller price is revenue, the primary

source of profits.

• The price paid is based on the satisfaction consumers

expect to receive from a product and not necessarily the
satisfaction they actually receive.
 Pricing
• Price also termed: fees, fares, rent, duty,
interest, toll, minimum balance, premium.

• Pricing is almost always a top management

decision
• Often in large corporations Product managers
work on pricing and seek approval of top
management for implementation
 Pricing
• Pricing decisions are always team
decisions involving marketing , sales ,
Operations, finance, etc.
• Each function brings in largely cost inputs
such as material cost, machine cost,labour
cost, finance cost etc.
• Marketing and sales bring in competitor
and customer perspectives.
 Pricing
• The competitor inputs cover a wide range
of factors concerning industry, technology,
global scenario.
• The customer inputs cover essentially
economics and behavioral issues.

• Buyers respond to price differences rather

than to specific prices
 Pricing
• Strategic pricing involves balancing good value
to the customer with the 0rganizations’ need to
cover costs and earn profits.
• SOME FLAWED PARADIGMS:
• The cost plus delusion: historically the most
common pricing procedure; carries an aura of
financial prudence. Theoretically it is a simple
guide to profitability, but in practice it is a
blueprint for mediocre financial performance.
“Pricing affects sales volume and volume
affects cost.”
 Pricing
• Flawed Paradigms continued……
• Customer driven pricing
Never sell on low prices, sell on value.
Low pricing is never a substitute for adequate
marketing and sales effort.
• Competition driven pricing
Although price cutting is the quickest way to
achieving sales objectives, it is usually a poor
decision financially
 Pricing
• Financial techniques for ‘cost driven’ pricing
and financial analysis for ‘profit driven’ pricing
does not by itself determine a price. It only
specifies the conditions under which a price
change will be profitable.
• The short comings of this approach therefore,
forces managers to integrate customer and
competitor analysis into pricing decisions.
 Four basic rules of pricing
• Know your costs
• Know your demand : what factors influence
demand; understand the role of price in the
buyer’s decision; know how buyers use the
product;
• Know your competitors.
• Know your objectives
 Pricing rules
• Other factors besides demand and costs
that influence price decisions are:
• Stages in the PLC
• Competition
• Distribution strategy- (impact of internet)
• Promotion strategy
• Govt. regulations
 3.CHOSE A STRATEGY-to
determine a base price
• HIGH PRICE STRATEGY(SKIMMING)

• LOW PRICESTRATEGY (PENETRATION)

• GOING RATE PRICING (STATUS QUO)

 Price skimming
• Sometimes called “market-plus” approach to
pricing .”Skimming the cream off the top”
• Skimming enables an organisation to recover
its product development costs quickly.
• The price determined is a high price
• A full cost pricing approach is used as
against an incremental cost approach
 Price skimming
• Suitable under following conditions:
• The product has unique and distinctive
features desired by the consumers.
• Demand is fairly inelastic. Lower prices
are unlikely to produce greater total
revenue.
• Product is protected through one or more
entry barriers. (patent)
 Skimming strategy
• Suitable when….
• Product is perceived to enhance buyer’s
status
• Product is perceived as a technological
breakthrough.
• Competition is non existent or even when
threat of potential competition is high.
 Penetration strategy
• Objective is to get a foot hold in a highly
competitive market.
• The price determined is lower than competition
and low from the customer’s perspective.
Most suitable when:
• Market size is large and is growing.
• Used as an entry strategy
• There is intensive competition
 Penetration pricing
• Penetration pricing is not necessarily cheap,
but they are low relative to perceived value.
( Indigo Manza, Hyundai Elantra, Skoda
Laura, Toyota Lexus)
• Exclusive or prestige products often do not
have buyers at low prices.
• When price is a trivial expenditure penetration
pricing attracts few buyers. (chewing gum)
 Pricing Tactics
• Single –price tactic: offers all goods and
services at the same price. Removes price
comparisons from the buyer’s decision
making process.

• Price bundling : Two or more products in a

single package for a special price. (PC
with maintenance contract) (hotel
packages)
 Pricing tactics
• Two part pricing: involves establishing
two separate charges to consume a single
good or service. ( club membership)
(mobile hand set + service)
 Pricing tactics
• Predatory pricing: practice of charging a very
low price for a product with the intent of driving
competitors out of business. Once the
competitor is out price is raised.
• Geographic pricing:
• FOB Origin pricing
• Uniform delivered pricing
Distribution
 Distribution
• Marketing channel management
+
• Logistics Management
 Definitions
• “ A set of people and firms involved in the
transfer of title to a product as it moves from
producer to ultimate consumer or business
user.” Stanton.
• “set of inter dependant organizations involved in
the process of making a product or service
available for consumption or use.” Stern, Ansary,
et al
 Prominent channel systems
• Organizations use a variety of channel
partners depending on the nature of the
business and the customer service they desire
to achieve.
• These partners can be grouped into three
channel systems.
1. Vertical marketing systems
2. Horizontal marketing systems
3. Multi channel marketing systems
 Channel systems
• Vertical Marketing Systems : comprises
the manufacturer, wholesaler, retailer
acting as a unified system. The principal
channel member has substantial control
over the other members.
• Corporate VMS :combines stages of
production and distribution under single
ownership.
 Corporate VMS
• Reliance Fresh retails Reliance milk. Bata
shoes are retailed thru Bata stores.

• Administered VMS: Manufacturers of

dominant brands are able to demand and
influence high levels of co operation from
channels. (Kodak, P&G, Gillette.
 Contractual VMS
• Independent firms at different levels of
manufacturing and distribution integrate
on a contractual basis.(Value adding
Partnerships.)
• Whole seller sponsored
• Retailer cooperatives
• Franchise organizations
 Horizontal marketing systems
• Two or more unrelated companies put
together resources to exploit an emerging
market opportunity.( SBI and Indian Post,
Maruti and Country wide finance.)
 Channel design
• Factors to be considered:
• Product mix and nature of products
• Marketing mix elements
• Width and depth of coverage planned
• Long term commitments to channel partners
• Level of customer service planned
• Affordability
• Control requirements.
 Channel design
• Questions that need to be addressed:
• What activities are the channel members
required to perform?
• Which activity is to be performed by which
channel partner?
• Number of channel members required?
 Stages in channel panning

Segmenta
positioning Focus development
tion
 Channel Design Factors
• Product mix, and nature of product
• Marketing mix elements
• Extent of market coverage
• Service levels planned
• Cost constraints / affordability
• Control of channel functions
 Channel Design
The decision includes :
• Number of channels to employ.
• Number of levels to be included.
• Type of intermediaries to employ
 Developing channel design
• The design should ensure that the product
reaches the right segment and also
reflects the product’s positioning.

Newport
Arrow, Lee, Flying Machine Ruf & Tuf
Channel for Arrow
ARVIND MILLS

CENTRAL WAREHOUSE

FRANCHISE
 Channel for Ruf & Tuf
• ARVIND MILLS

CENTRAL WAREHOUSE

DISTRIBUTORS

SUB
DISTRIBUTORS

WHOLE SELLERS

RETAILERS
 Conceptual Framework
• The framework takes a bottom up
approach starting from the consumer.
• Buyer needs
• Retailers requirements
• Distribution needs
• Legal requirements
 Channel conflict
• A situation of discord or disagreement
between channel members from the
same channel system.
• STAGES OF CONFLICT:
1. Latent
2. Perceived
3. Felt
4. manifest
 Conflict…
• Channel conflict is a situation in which one
channel member perceives another channel
member(s) to be engaged in behaviour that
prevents it from achieving its goals.
• The amount of conflict is, to a large extent, a
function of goal incompatibility, domain
dissension and differing perceptions of reality.
 Channel conflicts
• Vertical channel conflicts
• Horizontal channel conflicts
• Multi channel conflicts
• Channel expansion conflicts
• Goal differences
• Demarcation of Territories & Roles
 Channel power
• Channel members are not naturally
inclined towards coordinated behaviour.
• This causes sub optimal channel
performance.
• Channel power is a method of inducing
coordinated behaviour.
• The channel members resources are their
bases of power.
 Reward power

• Granting bigger margins.

• Allocate special allowances. (over riding
commissions)
• Assign exclusive territories
• Best Distributor awards.
 Coercive power
• It is the “flip side” of Reward power.
Recommended as a last recourse

• ‘Illegal coercion”
• Withholding incentive payment .
• Pressurising on payment terms.
• Clubbing supplies
 Expert power
• Expert knowledge of the trade which can
be beneficial to other members of the
channel.
• (imports, global trends, legal and
technology issues etc.)
(technical sales support)
 Referent power
• Mercedes dealership vs Hyundai

• Trust is a major prerequisite for building

referent Power
(HP is open, honest, trustworthy group to do
business with)
 Legitimate power
• Emanates from contracts or agreements
usually in writing
• Acceptance of standardised, time honoured
and proven practices that influence policies
• Legitimate power stems from the values,
processes, systems, internalised by a channel
member
 MARKETING PLAN
• Evolves from the Co.’s mission
statement which defines the
businesses the Company wishes to
pursue and the customers to be
targeted
• Is prepared annually
• Includes historical data and
recommendations on how to improve
performance
 Marketing plan

• Combines a set of marketing strategies

with a time table for action so that
specific goals can be achieved.
• Includes…
1.SITUATION ANALYSIS:
• Company situation covering:current
sales, growth trends, net income, market
share, strengths and weaknesses.
 MARKETING PLAN
• 2. ENVIRONMENT: Competitive plans,
opportunities, threats, laws, regulations.
External environmental factors, shifting
demands, technological changes,
availability of labour or raw material.
Competitive strategies, prices, domestic
and foreign rivals
 MARKETING PLANS
3. TARGET MARKETS: Definition of
markets in terms of demographics,
geographics and life styles- must
mention market size of each intended
market segment and its respective
growth estimates, specific product or
service features sought by the
segment.
 Marketing plan
4.OBJECTIVES: Where the company
intends its products or business to go
in the future.( 20% sales growth, 15%
pre tax profits, 2% increase in market
share) must also specify how the data
needed to measure the achievement of
objectives will be collected and
analyzed.
 MARKETING PLAN
5.STRATEGY: States how the
organisation will achieve its objectives.
An effective strategy informs
management what path to follow for the
key marketing mix elements. (for
example sustainable competitive
advantage can be built through brand
identification, product differentiation or
low costs. Brand can be strengthened
by increased ad spend etc.
 MARKETING PLAN
6.ACTION PLANS :next step in the
marketing plan is to translate strategy
statements into specific actions and
tactics. It sets timetable showing start
dates and end dates and other
milestones, it assigns responsibility, it
also firms up plan review frequency
and dates.
 Marketing plan
7.CONTINGENCY PLANS: Needed
because unforeseen real world events
often interfere with the best market plans.
This section answers the question “what if”
and tries to answer them
 Customer analysis
• The purpose of an enterprise is to create a
customer – Theodore Levitt.

• The most important ingredient in the

success of any organisation is a satisfied
customer,
 Customer analysis
• Who are my customers?
• Consumer customer: the focus is
Transaction marketing.
• Business customer : the focus is
Interaction marketing.
• Nonprofit customer.
• Government
 Customer analysis
• When do customers buy ?
• Adapting to customer buying patterns (24x7,toll
free, happy hours)
• Time
• Occasion
• Event
• Age
• Planned
• Impulsive
 Customer analysis
• What do customers want?

• Product characteristics? Price? Delivery

times? Service? Prestige? Fame?
( the 3M experience)
 Customer analysis
• How do customers buy?
• The decision process:
Recognition Evaluation purchase
Search for
Of problem alternatives Of alternati
Or need -ves

Influencing factors

depleted inventory Past experience Friends Store location

Advertising Catalog Personality Skill of salesmen
Promotion Internet Lifestyle Credit facility
Store display
Customer analysis: business buyer
Buying Motives Buying Center
Organisational User
Personal Influencer
Decider
Buyer

Business buying Decision Buying

Types of
Proces Practices
Decision:
Need recognition-Identification
Of alternatives-Evaluation Direct,
New task
Of alternatives-Purchase Frequency
Straight re-
-Post purchase behaviour Order size
Buy,
Negotiation
Modified
Reciprocity,
rebuy
Leasing

Buyer-seller relatons
Supply chain
Loyalty