Format:

Questions: Italic - Calibri -12

Answers: Calibri 11 (No bold)
1. Explain waterfall model.
2. What would the company have to do to maintain the market
share of the new product?
3. Explain product mix with an example of HUL, Pepsi, etc.
4. When and how a company makes a decision regarding a line
extension or line pruning?
5. What is social marketing?
6. What is social media marketing?
7. Explain mobile marketing.
8. What is marketing mix?
The marketing mix is a business tool used in marketing and by marketers.
The marketing mix is often crucial when determining a product or brand's offer, and
is often associated with the four P's: price, product, promotion, and place.
The evidence which shows that a service was performed, such as the delivery
Physical

packaging for the item delivered by a delivery service, or a scar left by a surgeon. This

evidence

reminds or reassures the consumer that the service took place, positively or
negatively.

People

Process

The employees that execute the service, chiefly concerning the manner and skill in
which they do so.

The processes and systems within the organization that affect the execution of its
service, such as job queuing or query handling.

9. Take a new product of your choice and strategize the 4ps for it.
10. Explain product life cycle.
11. Product v/s Service
12. Product Management v/s Brand Management
13. What is a brand?

a) A brand is a product, service, or concept that is publicly distinguished from

other products, services, or concepts so that it can be easily communicated and
usually marketed. A brand name is the name of the distinctive product, service,
or concept. Branding is the process of creating and disseminating the brand
name. Branding can be applied to the entire corporate identity as well as to
individual product and service names.
b) Unique design, sign, symbol, words, or a combination of these, employed in
creating an image that identifies a product and differentiates it from its
competitors. Over time, this image becomes associated with a level of
credibility, quality, and satisfaction in the consumer's mind. Thus brands help
harried consumers in crowded and complex marketplace, by standing for certain
benefits and value. Legal name for a brand is trademark and, when it identifies
or represents a firm, it is called a brand name. See also corporate identity.

14.

What is brand equity?

The value premium that a company realizes from a product with a

recognizable name as compared to its generic equivalent. Companies can
create brand equity for their products by making them memorable, easily
recognizable and superior in quality and reliability.
If consumers are willing to pay more for a generic product than for a branded
one, however, the brand is said to have negative brand equity.
The additional money that consumers are willing to spend to buy Coca Cola
rather than the store brand of soda is an example of brand equity
15. How do you measure brand equity?
Brand Equity Index (Moran)
Marketing executive Bill Moran has derived an index of brand equity as
the product of three factors:
Effective Market Share is a weighted average. It represents the sum of a
brand's market shares in all segments in which it competes, weighted by
each segment's proportion of that brand's total sales.
Relative Price is a ratio. It represents the price of goods sold under a given
brand, divided by the average price of comparable goods in the market.
Durability is a measure of customer retention or loyalty. It represents the
percentage of a brand's customers who will continue to buy goods under
that brand in the following year.

16. Which companies do it? What is the brand equity of TCS?

TCS 5 billion brand 4th largest
1st IBM-37 billion
The Tata Group has retained its place as the country's most valuable
brand at USD 21 billion, while the total worth of top-100 Indian brands
now stands at USD 92.6 billion, says
a Nielsen study 2014.
The brand value of Tata Group has risen by USD 3 billion in the past one
year, primarily led by its international diversification strategy and the
flagship firm TCS, as per consulting firm Brand Finance India's annual
study.
17. What is a strategy?
Michael Porter, a strategy expert and professor at Harvard Business
School, emphasizes the need for strategy to define and communicate an
organization's unique position, and says that it should determine how
organizational resources, skills, and competencies should be combined to
create competitive advantage.
Long term plan to communicate an organization's unique position and its
competencies to create competitive advantage.
18. What are the types of strategy?
http://www.smartdraw.com/articles/blog/three-kinds-of-businessstrategy.htm
There are at least three basic kinds of strategy with which people must concern themselves
in the world of business: (1) just plain strategy or strategy in general, (2) corporate strategy,
and (3) competitive strategy.

Some Fundamental Questions

Regardless of the definition of strategy, or the many factors affecting the choice of corporate or competitive strategy, there
are some fundamental questions to be asked and answered. These include the following:

Related to Mission & Vision

Who are we?

What do we do?

Why are we here?

What kind of company are we?

What kind of company do we want to become?

What kind of company must we become?

Related to Strategy in General

What is our objective? What are the ends we seek?

What is our current strategy, implicit or explicit?

What courses of action might lead to the ends we seek?

What are the means at our disposal?

How are our actions restrained and constrained by the means at our disposal?

What risks are involved and which ones are serious enough that we should plan for them?

Related to Corporate Strategy

What is the current strategy, implicit or explicit?

What assumptions have to hold for the current strategy to be viable?

What is happening in the larger, social, political, technical and financial environments?

What are our growth, size, and profitability goals?

In which markets will we compete?

In which businesses?

In which geographic areas?

Related to Competitive Strategy

What is the current strategy, implicit or explicit?

What assumptions have to hold for the current strategy to be viable?

What is happening in the industry, with our competitors, and in general?

What are our growth, size, and profitability goals?

What products and services will we offer?

To what customers or users?

How will the selling/buying decisions be made?

How will we distribute our products and services?

What technologies will we employ?

What capabilities and capacities will we require?

Which ones are core?

What will we make, what will we buy, and what will we acquire through alliance?

What are our options?

On what basis will we compete?

Summary
The preceding discussion asserts that strategy in general is concerned with how particular objectives are achieved, with
courses of action. Corporate strategy is concerned with choices and commitments regarding markets, business and the
very nature of the company itself. Competitive strategy is concerned with competitors and the basis of competition.

19. What is marketing? How is it different from Sales?

According to Kotler
Marketing is a terribly misunderstood subject in business circles and in
the publics mind. Companies think that marketing exists to support
manufacturing, to get rid of the companys products. The truth is the
reverse, that manufacturing exists to support marketing. The company
can always outsource its manufacturing. What makes a company is its
marketing offerings and ideas. Manufacturing, purchasing, R&D, finance
and the other company functions exist to support the companys work in
the customer marketplace.
Marketing is too often confused with selling. Selling is only the tip of the
marketing iceberg. What is unseen is the extensive market investigation,
the research and development of appropriate products, the challenge of
pricing them right, of opening up distribution, and of letting the market
know about the product. Thus, Marketing is a far more comprehensive
process than selling.
Marketing and selling are almost opposites. Hard sell marketing is a
contradiction. Long ago I said: Marketing is not the art of finding clever
ways to dispose of what you make. Marketing is the art of creating

genuine customer value. It is the art of helping your customers become

better off. The marketer's watchwords are quality, service, and value.
Selling starts only when you have a product. Marketing starts
before there is a product.
Marketing is the homework the company does to figure out what people
need and what the company should make. Marketing determines how to
launch, price, distribute and promote the product/service offering in the
marketplace. Marketing then monitors the results and improves the
offering over time. Marketing also decides when to end the offering.
All said, marketing is not a short-term selling effort but a long-term
investment effort. When marketing is done well, it occurs before the
company makes any product or enters any market; and it continues long
after the sale.
Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target
market at a profit. Marketing identifies unfulfilled needs and desires

20.

What is Market Capitalization?

The total dollar market value of all of a company's outstanding shares. Market
capitalization is calculated by multiplying a company's shares outstanding by the
current market price of one share.
If a company has 35 million shares outstanding, each with a market value of $100,
the company's market capitalization is $3.5 billion (35,000,000 x $100 per share).
Tata Consultancy Services (TCS) crossed the Rs 5 lakh crore mark in market
capitalization

21. What is the importance of a positioning statement? How do

you write a positioning statement? Give any 2 examples.
Positioning is defined as the act of designing the companys offering and
image to occupy a distinctive place in the target markets mind.
For Example What brand occurs in your mind when I say walkman? I guess
Sony. Similarly what do you think of when I say photocopies? I think Xerox or
Cannon. Thus these brands have positioned themselves in the mind of their
customer such that whenever the generic product is mentioned immediately
these brands come into our mind. Now if I ask most innovative company I
guess you will name APPLE : I agree with you

A positioning statement is an expression of how a given product, service or

brand fills a particular consumer need in a way that its competitors don't.
Positioning is the process of identifying an appropriate market niche for a
product (or service or brand) and getting it established in that area.
22. What do you understand by POD (Points of Differentiation) and
POP (Points of parity)?
23. Explain different pricing strategies.
Pricing is one of the four elements of the marketing mix, along with product,
place and promotion. Pricing strategy is important for companies who wish to
achieve success by finding the price point where they can maximize sales
and profits. Companies may use a variety of pricing strategies, depending on
their own unique marketing goals and objectives.
Premium Pricing
Premium pricing strategy establishes a price higher than the competitors. It's
a strategy that can be effectively used when there is something unique
about the product or when the product is first to market and the business
has a distinct competitive advantage. Premium pricing can be a good
strategy for companies entering the market with a new market and hoping to
maximize revenue during the early stages of the product life cycle.
Penetration Pricing
A penetration pricing strategy is designed to capture market share by
entering the market with a low price relative to the competition to attract
buyers. The idea is that the business will be able to raise awareness and get
people to try the product. Even though penetration pricing may initially
create a loss for the company, the hope is that it will help to generate wordof-mouth and create awareness amid a crowded market category.
Economy Pricing
Economy pricing is a familiar pricing strategy for organizations that include
Wal-Mart, whose brand is based on this strategy. Aldi, a food store, is another
example of economy pricing strategy. Companies take a very basic, low-cost
approach to marketing--nothing fancy, just the bare minimum to keep prices
low and attract a specific segment of the market that is very price sensitive.
Price Skimming

Businesses that have a significant competitive advantage can enter the

market with a price skimming strategy designed to gain maximum revenue
advantage before other competitors begin offering similar products or
product alternatives.

Psychological Pricing
Psychological pricing strategy is commonly used by marketers in the prices
they establish for their products. For instance, $99 is psychologically "less" in
the minds of consumers than $100. It's a minor distinction that can make a
big difference.
24.

What is a push and pull strategy.

Push Marketing
Push marketing is a promotional strategy where businesses attempt to take their products to
the customers. The term push stems from the idea that marketers are attempting to push
their products at consumers. Common sales tactics include trying to sell merchandise
directly to customers via company showrooms and negotiating with retailers to sell their
products for them, or set up point-of-sale displays. Often, these retailers will receive special
sales incentives in exchange for this increased visibility.

Example of Push Marketing

One common example of push marketing can be seen in department stores that sell
fragrance lines. The manufacturing brand of the fragrance will often offer sales incentives to
the department stores for pushing its products onto customers. This tactic can be especially
beneficial for new brands that aren't well-established or for new lines within a given brand
that need additional promotion. After all, for many consumers, being introduced to the
fragrance at the store is their first experience with the product, and they wouldn't know to
ask for it if they didn't know it existed.

Pull Marketing
Pull marketing, on the other hand, takes the opposite approach. The goal of pull marketing is
to get the customers to come to you, hence the term pull, where marketers are attempting
to pull customers in. Common sales tactics used for pull marketing include mass media
promotions, word-of-mouth referrals and advertised sales promotions. From a business
perspective, pull marketing attempts to create brand loyalty and keep customers coming
back, whereas push marketing is more concerned with short-term sales.

Example of Pull Marketing

You can often recognize pull marketing campaigns by the amount of advertising that's being
used. Pull marketing requires lots of advertising dollars to be spent on making brand and
products a household name. One example includes the marketing of children's toys. In the
first stage, the company advertises the product. Next, the children and parents see the
advertisement and want to purchase the toy. As demand increases, retailers begin
scrambling trying to stock the product in their stores. All the while, the company has
successfully pulled customers to them.

25.

What is bucket pricing?

Pricing strategy followed by airline industry. Booking tickets as early as

possible give customers a seat at low bucket price. As some seats are filled
then airline airline starts charging premium price ie high bucket price to
customers up to certain level. A day before travelling charges are very high.
Each sets of tickets fall in different buckets egFirst 10 tickets- 1000
Next 20 ticktes-2000
Next 30 tickets-4000
So on.
26. What is a pricing tripod? (Cost based, Value based /&
Competitor based)
The foundations underlying pricing strategy can be described as a tripod,
with costs to the provider, competitors pricing, and value to the customer as
the three legs. In many service industries, pricing used to be viewed from a
finance and accounting standpoint; therefore, cost-plus pricing often was
used. Today however, most services have a good understanding of valuebased and competitive pricing. In the pricing tripod, the costs a firm needs
to recover usually sets a minimum price for a specific service offering, and
the customers perceived value of the offering sets a maximum, or ceiling.
Cost-Based Pricing
Pricing typically is more complex in services than in manufacturing. Because
theres no ownership of services, its usually harder to determine the
financial costs of creating a process or intangible real-time performance for a
customer than it is to identify the labor, materials, ma-chine time, storage,
and shipping costs associated with producing and distributing a physical
good. In addition, because of the labor and infrastructure needed to create

performances, many service organizations have a much higher ratio of fixed

costs to variable costs than is typical in manufacturing firm. Service
businesses with high fixed costs include those with ex- pensive physical
facilities (such as hospitals or colleges), or a fleet of vehicles (such as airlines
or trucking companies), or a network (such as railroads or
telecommunications and gas pipeline companies).
Value-Based Pricing
Another leg of the pricing tripod is value to the customer. No customer will
pay more for a service than he or she thinks it is worth. So, marketers need
to understand how customers perceive service value in order to set an
appropriate price.
UNDERSTANDING NET VALUE. When customers purchase a service, they are
weighing the perceived benefits of the service against the perceived costs
they will incur. Companies sometimes create several tiers of service,
recognizing the different tradeoffs that customers are willing to make
between these various costs.

Value is low price.

Value is whatever I want in a product.

Value is the quality I get for the price I pay.

Value is what I get for what I give.8

If the perceived costs of a service are greater than the perceived benefit
then the service in question will possess negative net value, and the
consumer will not buy. You can think of calculations customers make in their
minds as similar to weighing materials on a pair of old-fashioned scales, with
product benefit in one tray and the costs associated with obtaining those
benefit in the other tray. When customers evaluate competing services, they
are basically comparing the relative net values .A marketer can increase the
value of a service by adding benefit to the core product and by improving
supplementary services.
Competition-based Pricing
The last leg of the pricing tripod is competition. Firms with relatively
undifferentiated services need to monitor what competitors are charging and

should to try to price accordingly. When customers see little or no difference

between competing offerings, they may just choose what they perceive to be
the cheapest. In such a situation, the firm with the lowest cost per unit of
service enjoys an enviable market advantage and often assumes price
leadership. Here, one firm acts as the price leader, with others taking their
cue from this company. You can sometimes see this phenomenon at the local
level when several gas stations compete within a short distance of one
another. As soon as one station raises or lowers its prices, the others follow
suit.
Price competition intensifies with (1) an increasing number of competitors,
(2) an in- creasing number of substituting offers, (3) a wider distribution of
competitor and/or substitution offers, and (4) an increasing surplus capacity
in the industry

27.

B2B v/s B2C

While there are many similarities between B2C and B2B marketing in
general, there are some key differences, especially on social media.
1. Marketers can use industry jargon to excellent effect on B2B platforms,
but on B2C, the voice must be at least relatable to the majority of consumers
meaning fewer buzzwords and (usually) simpler language.
2. Drivers matter. The B2B audience is seeking efficiency and expertise,
while the consumer audience is more likely to be seeking deals and
entertainment. Accordingly, the B2B purchase process tends to be rationally
and logically driven, while consumer choices are typically emotionally
triggered (whether by hunger, desire, status or cost).
3. B2B clientele want to be educated and provided with expertise. They often
want to look like the workplace rock stars or heroes thanks to their excellent
decisions. B2C customers just want to enjoy themselves, be happy with their
purchase and have it adequately fulfill the needs mentioned in No. 2.
4. Highly detailed content is required for B2B marketing. Its an audience
that expects to be catered to by a sales and marketing team. On the other
hand, B2C social media activities simply need to meet the basic needs of
being useful, humorous and shareable, which admittedly, can be just as
complicated.

5. Lengthy content tends to work for B2B since a brand or business has to
prove its expertise and give its target audience a reason to buy in.
Consumers tend to prefer something short and snappy, especially for lowerpriced B2C products.
6. A B2C consumer following your brand isnt necessarily looking to build a
close relationship with it. Inversely, the B2B crowd wants information and the
ability to build a close relationship with brands.
7. B2B marketers have a much longer chain of command to deal with since
procurement, accounting and their superiors often need to approve
purchases. On the other hand, an individual typically makes their own
speedy B2C purchase choices possibly with the slight influence of others
via recommendations or suggestions.
8. The B2B buying cycle is often much longer than the B2C decision process.
Therefore, it requires much more nurturing and close attention. B2C buys
tend to satisfy immediate needs, while B2B decisions are meant to complete
long-term goals.
9. A contract for a B2B purchase tends to last months or even years, making
it a much more significant decision. On the contrary, the total B2C cycle can
be as short as a few minutes depending on the product.
10. The two types of marketers have distinctive problems. Often, the largest
problem that B2B marketers have is a lack of content and time to create it.
This differs from B2C marketers who would rather have a bigger advertising
budget and other ways to spread the word about their products. Naturally,
this has a significant effect on tactical executions.
28.
29.

What is brand recall? How is it measured?

A qualitative measure of how well a brand name is connected with a product

type or class of products by consumers.
Brand recognition means the customer is shown the brand and is asked to
recognize provided he is already aware or has a prior exposure to that particular
brand whereas Brand recall refers to giving a product category to the customer and
asking him to recall the brand name for that particular product category...example:
Showing the logo of pepsi to customer and asking to recognize is brand recognition
and giving the category of soft drinks and asking him to recall the brands is brand
recall.

30. What are your favorite concepts in marketing? ( STPD and

SWOT)
31. What are segmentation, its classification and examples to
support them? (I read Kotler so most of the answers and
examples were from the book only)
32. Situational Question: - If one wants to come in Soap domain
how one must segment the market? Same for mobile industry
too?
33. Company life cycle of Nokia. (From competitive dynamics
chapter in Kotler one will find all the types of PLC).
34. What is cross selling, up-selling and down selling?
Although companies often look for ways to sell pricier goods, offering the customer low-end products and services can be more
profitable and the best way to build a customer base. However, you also have to cater your sales strategy to your industry.
Sometimes, anything less than high-cost products can hurt your business.

Identification
Up-selling is a marketing technique where you try to convince a customer to purchase a more expensive product.
For example, if a customer looks to purchase an entry-level laptop computer, you could attempt an up-sell by
informing him of the upgrades of a mid-range or premium laptop. A down-sell involves a reversal of the up-sell. If a
customer does not want the product you want to sell, you suggest a cheaper alternative. For instance, when a
customer cannot afford a laptop, you might suggest an older model desktop that costs less.

Benefits
Although your higher-priced items may have a larger profit margin, down-selling can be just as or more important to
your company. Entry-level products can help you build brand loyalty when a customer cannot afford premium
products at the moment. For example, one boutique that sells purses found that sales were dropping because
customers could not afford the item. Instead of slashing prices and potentially diluting the market with their
product, the boutique designed a cellphone holder with a similar design as their purses but at a fraction of the price
of their handbags.

Cross-Selling
Related to up-selling and down-selling is "cross-selling." Using the cross-selling
technique, you offer related products and services to the initial purchase.
Warranties are a common cross-selling technique. If someone buys a computer for
$300, for example, you might offer a warranty to replace the computer in case it
breaks for $100. Cross-selling also builds brand loyalty.

Cross-selling
For a given product or combination of products, you can specify that additional products are to
be suggested for purchase.

Example
If a business partner orders a PC, you can cross-sell by suggesting that they also
buy a printer or a particular software package.
Up-selling
You can define other products that should be proposed if you sell a specific product.
Example
If a business partner orders a fax machine, you up-sell by proposing a more
expensive, better-equipped version.
Down-selling
Under certain circumstances, you may want to suggest a cheaper product as an alternative
(down-selling).
Example
A telesales agent is able to view both more expensive (up-selling) and cheaper
(down-selling) alternatives (depending on Customizing settings). As a rule, the
agent will generally try to promote up-selling products to the customer, but to
prevent a no-sale he or she may also be forced to propose down-selling alternatives
instead. If you create up-selling and down-selling rules that are target-groupspecific, you can control for which business partners you generally want to perform
up-selling, and for which down-selling.

35. What are the different types of advertisement? (All concepts

were asked like AIDA, Hierarchy of effects model, tools of
marketing mix and 5Ms)
AIDA
-- is an acronym used in marketing and advertising that describes a common list of events that may occur when a
consumer engages with an advertisement.

A attention (Awareness): attract the attention of the customer.

I interest: raise customer interest by focusing on and demonstrating advantages and benefits (instead of
focusing on features, as in traditional advertising).

D desire: convince customers that they want and desire the product or service and that it will satisfy their
needs.

A action: lead customers towards taking action and/or purchasing.

4 Asof Marketing:

Acceptability
Affordability
Availability
Awareness
Marketing Mix and the Five Ms of Marketing
Written by Clayton Reeves for Gaebler Ventures
When you produce a marketing strategy, there is a mix that must be created. This
involves the five Ms of marketing and how they convince buyers to purchase your
items.
Marketing has many different interactive parts.
(article continues below)
Among them is the communication aspect.
The five Ms of advertising provide a framework by which you can create an
advertising platform.
First, the firm must decide what the purpose of the advertisements will be. This is
called the mission. Monetary constraints usually determine how large any project
can be. This is the money aspect of the advertising project. Message is the creative
aspect of the advertising strategy. Next, the media by which the message will be
delivered must be determined. Finally, measuring the project is important to
determine how effective the advertisements actually were. This can sometimes be
the most difficult part of the plan, since measuring changes in customer opinion can
be time consuming and costly.
In this article, we take a deeper look at the five Ms of marketing.
Mission

There are several ways that a company can determine what the mission of an
advertising strategy should be. Quantitative measures such as increasing the
awareness of the brand among a certain segment by a certain percentage can be
chosen. For example, increasing the awareness among financial executives of a
certain audit control offered by your company by 20% could be a mission. This
could be measured before and after using a survey or some other form of primary
research.
Money
Budget constraints are everywhere in business, and nowhere are they more evident
than in small businesses. Advertising and marketing can sometimes be ignored
because they do not offer immediate results. However, in every business
environment, some resources must be allocated to building a brand and image.
Without this, the company will not continue to grow. Even during recessions,
marketing must be a priority to avoid losing market share. Having a suitable budget
is an important part of the process.
Message
Advertising is a creative process. There are slogans, themes and gimmicks that try
to lure the customer in. The message of an advertisement is this creative aspect.
Any manner of theme can be implemented as long as it is in line with what the
company stands for.
Media
This aspect of the program refers to the media that will be used to communicate the
message. This can include television, radio, mail, telephone and in person contact.
Most media has metrics to measure their efficiency and costs associated with those
metrics. Choosing the right media can make or break an advertising program.
Measurement
Finally, the firm must measure the effects of the program on their intended
audience. This can be done by measuring sales or trying to gauge interest through
research. It is often very difficult to measure how much the advertisements actually
impacted customer interest and how much other external factors played a part.
When he's not playing racquetball or studying for a class, Clayton Reeves enjoys
writing articles about entrepreneurship. He is currently an MBA student at the
University of Missouri with a concentration in Economics and Finance.

36. Situational Question: - What kind of advertisement one should

do when new brand is introducing new product and existing
brand introducing new product?
37.

Sales Promotion

38.

Consumer Behavior

39.

Market research

40. What PODs (points-of difference) should Whatsapp / Amazon

develop to combat competition and protect market share?
Explain why?
41. What is IT Service? What is Business Solution? What is the
difference between the two?
42. Can you state an instance where your ego has come in way of
you playing a team role?
43. So that means you have no ego? So what about self-respect?
Do you not have that too?
44. If you face such a scenario where in the team you are a part of
has to do something that is completely against your values and
will crush your self-respect, what will you do?
45. Would you let your team members go ahead with it and keep
yourself out of it, to keep-safe your self-respect or would you not
mind losing your self-respect?
46. Explain law of diffusion. .
Rogers proposes that four main elements influence the spread of a new idea: the innovation itself, communication
channels, time, and a social system. This process relies heavily on human capital. The innovation must be widely
adopted in order to self-sustain. Within the rate of adoption, there is a point at which an innovation reaches critical
mass. The categories of adopters are: innovators, early adopters, early majority, late majority, and laggards.
[2]
Diffusion manifests itself in different ways in various cultures and fields and is highly subject to the type of adopters
and innovation-decision process.

47. Explain different types of Consumer Attitudes?

(Cognitive/affective/ behavioral)
Cognitive: This represents our thoughts, beliefs and ideas about something.
Typically these come to light in generalities or stereotypes, such as 'all teenagers
are lazy,' or 'all babies are cute.'
Affective: This component deals with feelings or emotions that are brought to
the surface about something, such as fear or hate. Using our above example,
someone might have the attitude that they hate teenagers because they are
lazy or that they love all babies because they are cute.
Conative or Behavioral: This can also be called the behavioral component and
centers on individuals acting a certain way towards something, such as 'we
better keep those lazy teenagers out of the library,' or 'I cannot wait to kiss that
baby.'

48.

Explain Maslows hierarchy?

49.
50.
51.

Father of marketing. (Peter Drucker)

Father of rural marketing. (Pradeep Kashyab)
IMC& types?

Integrated marketing communication refers to integrating all the methods of brand promotion to promote a particular product or
service among target customers. In integrated marketing communication, all aspects of marketing communication work together for
increased sales and maximum cost effectiveness.
It is essential for organizations to promote their brands well among the end-users not only to outshine competitors but also survive in the
long run. Brand promotion increases awareness of products and services and eventually increases their sales, yielding high profits and
revenue for the organization.
To understand integrated marketing communication, let us first understand what does brand communication mean?
Brand communication is an initiative taken by organizations to make their products and services popular among the end-users.
Brand communication goes a long way in promoting products and services among target consumers. The process involves identifying
individuals who are best suited to the purchase of products or services (also called target consumers) and promoting the brand among them
through any one of the following means:

Advertising

Sales Promotion

Public Relation

Direct Marketing

Personal Selling

Social media, and so on

52.

What is Marketing Plan?

53.
1.
2.
3.
4.

What is positioning?

There are four elements or components of a positioning statement:

Target Audience- the attitudinal and demographic description of the core prospect to whom the brand is intended to appeal;
the group of customers that most closely represents the brands most fervent users.
Frame of Reference- the category in which the brand competes; the context that gives the brand relevance to the customer.
Benefit/Point of Difference- the most compelling and motivating benefit that the brand can own in the hearts and minds of its
target audience relative to the competition.
Reason to Believe- the most convincing proof that the brand delivers what it promises.
Template for a Positioning Statement:
For (target audience), (brand name) is the (frame of reference) that delivers (benefit/point of difference) because only (brand name) is reason
to believe).

54.

Rule of 3 and their Strategies?

The rule of three in Business and Economics is a rule of thumb suggesting that there are always three major
competitors in any free market within any one industry.
Leader , challenger and follower.

55.

Pricing Strategies?

Pricing is one of the four elements of the marketing mix, along with product, place and promotion. Pricing strategy
is important for companies who wish to achieve success by finding the price point where they can maximize sales
and profits. Companies may use a variety of pricing strategies, depending on their own unique marketing goals and
objectives.
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Premium Pricing
Premium pricing strategy establishes a price higher than the competitors. It's a strategy that can be effectively
used when there is something unique about the product or when the product is first to market and the business has
a distinct competitive advantage. Premium pricing can be a good strategy for companies entering the market with a
new market and hoping to maximize revenue during the early stages of the product life cycle.

Penetration Pricing
A penetration pricing strategy is designed to capture market share by entering the market with a low price relative
to the competition to attract buyers. The idea is that the business will be able to raise awareness and get people to
try the product. Even though penetration pricing may initially create a loss for the company, the hope is that it will
help to generate word-of-mouth and create awareness amid a crowded market category.
Related Reading: Pricing Vs. Nonpricing Strategies

Economy Pricing
Economy pricing is a familiar pricing strategy for organizations that include Wal-Mart, whose brand is based on this
strategy. Aldi, a food store, is another example of economy pricing strategy. Companies take a very basic, low-cost

approach to marketing--nothing fancy, just the bare minimum to keep prices low and attract a specific segment of
the market that is very price sensitive.

Price Skimming
Businesses that have a significant competitive advantage can enter the market with a price skimming strategy
designed to gain maximum revenue advantage before other competitors begin offering similar products or product
alternatives.

Psychological Pricing
Psychological pricing strategy is commonly used by marketers in the prices they establish for their products. For
instance, $99 is psychologically "less" in the minds of consumers than $100. It's a minor distinction that can make a
big difference.

56.

Cause- Related marketing?

Cause Related Marketing is a commercial activity by which businesses and charities (or causes) form a
partnership with each other to market an image, product or service for mutual benefit. It is a marketing
tool used to help address the social issues of the day, through providing resources and funding, whilst at
the same time addressing important business objectives.

57.

Surrogate advertising/marketing?

Surrogate Advertising is a form of advertising which is used to promote banned products

like cigarettes and alcohol, in the disguise of another product. This type of advertising uses a product of a fairly close
category, as: club soda, mineral water in case of alcohol, or products of a completely different category, for
example music CD's or playing cardsto hammer the brand name into the heads of consumers. The banned product
(alcohol or cigarettes) may not be projected directly to consumers but rather masked under another product under the
same brand name, so that whenever there is mention of that brand, people start associating it with its main product
(the alcohol or cigarette). In Indiathere is a large number of companies doing surrogate advertising,
from Bacardi Blast music CD's, Bagpiper Club Soda to Officers Choice playing cards.The masking product i.e. the
music CD's, or mineral water might not even be marketed in real, it is just a strategy used to generate top of the
mind recall.

58.

Integrated & Interactive Marketing?

What is integrated marketing?

Integrated marketing is the act of incorporating your marketing messages throughout all of your marketing vehicles for the company
or a specific product or service line so that the message is clear and consistent. For example, a tool manufacturer may want to use
specific marketing messages, tactics and vehicles for the purposes of promoting its corporate identity whereas it may use different
messages, tactics and vehicles for promoting specific tools. The tool manufacturer will want to ensure that the messaging designed
for a specific tool line is consistent across the different vehicles such as trade shows, product information, commercials and even
customer support.
What is interactive marketing?
Interactive marketing is when the marketing messages and campaigns allow recipients to be actively involved in the campaign and
possibly even, the results. Given todays markets and digitally engaged consumers, interactive marketing is something as consumers
we do without even thinking about it. For example, if you have a smart phone, you may have scanned a QR Code (Quick Response
Code) off the side of a bus, in the airport or even off the back of a business card. Scanning the code allows you to be immediately
interactive with the companys marketing and gives the company real-time feed back about you the consumer.
One of the biggest benefits of interactive marketing for companies is the collection of data. Data collection and analysis helps
companies, schools and governments, learn more about their customers, students and constituents. One of the biggest benefits of
interactive marketing for users is the immediate access to information, knowledge and services.

59.
Inbound/Outbound, Reverse, relationship, Permission,
Affiliate, Guerrilla, Umbrella, Ambush, Online/Offline Marketing?
60.

Horizontal/ Vertical Integration?

In microeconomics and management, vertical integration is where the supply chain of a company is owned by that
company. Usually each member of the supply chain produces a different product or (market-specific) service, and the
products combine to satisfy a common need. It is contrasted with horizontal integration. Vertical integration has also
described management styles that bring large portions of the supply chain not only under a common ownership, but
also into one corporation (as in the 1920s when theFord River Rouge Complex began making much of its own steel
rather than buying it from suppliers).
Vertical integration is one method of avoiding the hold-up problem. A monopoly produced through vertical integration
is called avertical monopoly.

Three types[edit]
Vertical integration is the degree to which a firm owns its upstream suppliers and its downstream buyers. Contrary
to horizontal integration, which is a consolidation of many firms that handle the same part of the production process,
vertical integration is typified by one firm engaged in different parts of production (e.g., growing raw materials,
manufacturing, transporting, marketing, and/or retailing).
There are three varieties: backward (upstream) vertical integration, forward (downstream) vertical integration, and
balanced (both upstream and downstream) vertical integration.

A company exhibits backward vertical integration when it controls subsidiaries that produce some of the
inputs used in the production of its products. For example, an automobile company may own a tire company,
a glass company, and a metal company. Control of these three subsidiaries is intended to create a stable supply

of inputs and ensure a consistent quality in their final product. It was the main business approach of Ford and
other car companies in the 1920s, who sought to minimize costs by integrating the production of cars and car
parts as exemplified in the Ford River Rouge Complex.

A company tends toward forward vertical integration when it controls distribution centers and retailers
where its products are sold.

Examples[edit]
One of the earliest, largest and most famous examples of vertical integration was the Carnegie Steel company. The
company controlled not only the mills where the steel was made, but also the mines where the iron ore was
extracted, the coal mines that supplied the coal, the ships that transported the iron ore and the railroads that
transported the coal to the factory, the coke ovens where the coal was cooked, etc. The company also focused
heavily on developing talent internally from the bottom up, rather than importing it from other companies.[2] Later on,
Carnegie even established an institute of higher learning to teach the steel processes to the next generation.

Oil industry[edit]
Oil companies, both multinational (such as ExxonMobil, Royal Dutch Shell, ConocoPhillips or BP) and national
(e.g. Petronas) often adopt a vertically integrated structure. This means that they are active along the entire supply
chain from locating deposits, drilling and extracting crude oil, transporting it around the world, refining it into
petroleum products such as petrol/gasoline, to distributing the fuel to company-owned retail stations, for sale to
consumers.
In business, horizontal integration is a strategy where a company creates or acquires production units for outputs
which are alike - either complementary or competitive. One example would be when a company acquires competitors
in the same industry doing the same stage of production for the creation of a monopoly.[1] Another example is the
management of a group of products which are alike, yet at different price points, complexities, and qualities. This
strategy may reduce competition and increase market share by using economies of scale. For example, a car
manufacturer acquiring its competitor who does exactly the same thing.
Horizontal integration is the opposite to vertical integration, where companies integrate multiple stages of
production of a small number of production units.

61.

Organic/ Inorganic Growth strategies?

62.
63.
64.
65.
66.

Blue Ocean Strategy?

Types of sales?
Sales process- 7 steps or Stages is Selling
ATL, BTL activities?
What is Demarketing?

Efforts aimed at discouraging (not destroying) the demandfor a product which (1) a firm
cannot supply in large-enough quantities, or (2) does not want to supply in a certain region where
the high costs of distribution orpromotion allow only a too little profit
margin. Commondemarketing strategies include higher prices, scaled-downadvertising, and product
redesign.

67.

7 S?

The McKinsey 7S Framework is a management model developed by well-known business consultants Robert H.
Waterman, Jr. and Tom Peters (who also developed the MBWA-- "Management By Walking Around" motif, and
authored In Search of Excellence) in the 1980s. This was a strategic vision for groups, to
include businesses,business units, and teams. The 7S are structure, strategy, systems, skills, style, staff and shared
values.
The model is most often used as an organizational analysis tool to assess and monitor changes in the internal
situation of an organization.

The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned
and mutually reinforcing. So, the model can be used to help identify what needs to be realigned to improve
performance, or to maintain alignment (and performance) during other types of change.
Whatever the type of change restructuring, new processes, organizational merger, new systems, change of
leadership, and so on the model can be used to understand how the organizational elements are interrelated, and
so ensure that the wider impact of changes made in one area is taken into consideration.

68.

7 C?

here are 7 Cs of effective communication which are applicable to both written as well as oral communication. These are as follows:
1.

Completeness - The communication must be complete. It should convey all facts required by the audience. The sender of the
message must take into consideration the receivers mind set and convey the message accordingly. A complete communication
has following features:

Complete communication develops and enhances reputation of an organization.

Moreover, they are cost saving as no crucial information is missing and no additional cost is incurred in conveying extra
message if the communication is complete.

A complete communication always gives additional information wherever required. It leaves no questions in the mind of
receiver.

Complete communication helps in better decision-making by the audience/readers/receivers of message as they get all
desired and crucial information.

2.

3.

4.

5.

6.

It persuades the audience.

Conciseness - Conciseness means wordiness, i.e, communicating what you want to convey in least possible words without
forgoing the other Cs of communication. Conciseness is a necessity for effective communication. Concise communication has
following features:

It is both time-saving as well as cost-saving.

It underlines and highlights the main message as it avoids using excessive and needless words.

Concise communication provides short and essential message in limited words to the audience.

Concise message is more appealing and comprehensible to the audience.

Concise message is non-repetitive in nature.

Consideration - Consideration implies stepping into the shoes of others. Effective communication must take the audience into
consideration, i.e, the audiences view points, background, mind-set, education level, etc. Make an attempt to envisage your
audience, their requirements, emotions as well as problems. Ensure that the self-respect of the audience is maintained and their
emotions are not at harm. Modify your words in message to suit the audiences needs while making your message complete.
Features of considerate communication are as follows:

Emphasize on you approach.

Empathize with the audience and exhibit interest in the audience. This will stimulate a positive reaction from the
audience.

Show optimism towards your audience. Emphasize on what is possible rather than what is impossible. Lay stress on
positive words such as jovial, committed, thanks, warm, healthy, help, etc.

Clarity - Clarity implies emphasizing on a specific message or goal at a time, rather than trying to achieve too much at once.
Clarity in communication has following features:

It makes understanding easier.

Complete clarity of thoughts and ideas enhances the meaning of message.

Clear message makes use of exact, appropriate and concrete words.

Concreteness - Concrete communication implies being particular and clear rather than fuzzy and general. Concreteness
strengthens the confidence. Concrete message has following features:

It is supported with specific facts and figures.

It makes use of words that are clear and that build the reputation.

Concrete messages are not misinterpreted.

Courtesy - Courtesy in message implies the message should show the senders expression as well as should respect the
receiver. The sender of the message should be sincerely polite, judicious, reflective and enthusiastic. Courteous message has
following features:

Courtesy implies taking into consideration both viewpoints as well as feelings of the receiver of the message.

Courteous message is positive and focused at the audience.

7.

It makes use of terms showing respect for the receiver of message.

It is not at all biased.

Correctness - Correctness in communication implies that there are no grammatical errors in communication. Correct
communication has following features:

The message is exact, correct and well-timed.

If the communication is correct, it boosts up the confidence level.

Correct message has greater impact on the audience/ readers.

It checks for the precision and accurateness of facts and figures used in the message.

It makes use of appropriate and correct language in the message.

Awareness of these 7 Cs of communication makes you an effective communicator.

69.
70.

Difference between Direct marketing & Sales Promotion?

Stages of Buying Decision Process?

71. Explain - Pure monopoly, Oligopoly, Monopolistic competition,

Pure Competition?

72. What are the advantages/disadvantages of celebrity

endorsement? How would you choose any celebrity for the
company? (Asked in Asian Paints)

73. Explain BCG matrix in brief. Draw a BCG matrix for any
category of your choice. Justify the placement of each unit in the
matrix. Or
What is the significance of each quadrant of BCG and what
decisions have to be taken with respect to each quadrant? Or
For a company, how many stars, dogs, cash cows and question
marks are preferred? Or
When a product is launched, in which quadrant of the BCG will it
fall in? [My answer was that it depends on the industry growth
rate] Or
Give us examples of both cases, new product in high growth rate
industry and new product in low growth rate industry, which
quadrants would the new product fall in? Or
[I gave the example of Whatsapp- new product in high growth
market, qualifies as a Star. Following questions i.e. 11 to 14
were based on this example. My answer to each question led to
the next question] Or
So if the new product is a Star today, what would it become
after some time? Or
In the BCG, how will you maintain your Cash Cows as Cash
Cows? Or
How will you maintain or further increase market share? There is
no condition where there would be no competition. How can you
protect yourself from competition? Or
Can a Dog ever be converted into a Question Mark or Cash
Cow? If yes, how? Cite example(s). [Given that industry growth
rate picks up] Or
Your answer seems hypothetical. It may work. But what do you
really feel? Can a Dog be really converted into a Cash Cow or
Question Mark ever?

Definition
1.

BCG matrix (or growth-share matrix) is a corporate planning tool, which is used to portray firms
brand portfolio or SBUs on a quadrant along relative market share axis (horizontal axis) and speed of
market growth (vertical axis) axis.

2.

Growth-share matrix is a business tool, which uses relative market share and industry growth
rate factors to evaluate the potential of business brand portfolio and suggest further investment
strategies.

Understanding the tool

BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic position of the
business brand portfolio and its potential. It classifies business portfolio into four categories based on
industry attractiveness (growth rate of that industry) and competitive position (relative market share).
These two dimensions reveal likely profitability of the business portfolio in terms of cash needed to
support that unit and cash generated by it. The general purpose of the analysis is to help understand,
which brands the firmshould invest in and which ones should be divested.

Relative market share. One of the dimensions used to evaluate business portfolio is relative market
share. Higher corporates market share results in higher cash returns. This is because a firm that
produces more, benefits from higher economies of scale and experience curve, which results in higher
profits. Nonetheless, it is worth to note that some firms may experience the same benefits with lower
production outputs and lower market share.
Market growth rate. High market growth rate means higher earnings and sometimes profits but it also
consumes lots of cash, which is used as investment to stimulate further growth. Therefore, business units
that operate in rapid growth industries are cash users and are worth investing in only when they are
expected to grow or maintain market share in the future.

There are four quadrants into which firms brands are classified:
Dogs. Dogs hold low market share compared to competitors and operate in a slowly growing market. In
general, they are not worth investing in because they generate low or negative cash returns. But this is
not always the truth. Some dogs may be profitable for long period of time, they may provide synergies for
other brands or SBUs or simple act as a defense to counter competitors moves. Therefore, it is always
important to perform deeper analysis of each brand or SBU to make sure they are not worth investing in
or have to be divested.
Strategic choices: Retrenchment, divestiture, liquidation
Cash cows. Cash cows are the most profitable brands and should be milked to provide as much cash
as possible. The cash gained from cows should be invested into stars to support their further growth.
According to growth-share matrix, corporates should not invest into cash cows to induce growth but only
to support them so they can maintain their current market share. Again, this is not always the truth. Cash
cows are usually large corporations or SBUs that are capable of innovating new products or processes,
which may become new stars. If there would be no support for cash cows, they would not be capable of
such innovations.
Strategic choices: Product development, diversification, divestiture, retrenchment
Stars. Stars operate in high growth industries and maintain high market share. Stars are both cash
generators and cash users. They are the primary units in which the company should invest its money,
because stars are expected to become cash cows and generate positive cash flows. Yet, not all stars
become cash flows. This is especially true in rapidly changing industries, where new innovative products
can soon be outcompeted by new technological advancements, so a star instead of becoming a cash
cow, becomes a dog.
Strategic choices: Vertical integration, horizontal integration, market penetration, market development,
product development
Question marks. Question marks are the brands that require much closer consideration. They hold low
market share in fast growing markets consuming large amount of cash and incurring losses. It has
potential to gain market share and become a star, which would later become cash cow. Question marks
do not always succeed and even after large amount of investments they struggle to gain market share
and eventually become dogs. Therefore, they require very close consideration to decide if they are worth
investing in or not.
Strategic choices: Market penetration, market development, product development, divestiture

BCG matrix quadrants are simplified versions of the reality and cannot be applied blindly. They can help
as general investment guidelines but should not change strategic thinking. Business should rely on
management judgement, business unit strengths and weaknesses and external environment factors to

make more reasonable investment decisions.

Advantages and disadvantages

Benefits of the matrix:

Easy to perform;

Helps to understand the strategic positions of business portfolio;

Its a good starting point for further more thorough analysis.

Growth-share analysis has been heavily criticized for its oversimplification and lack of useful application.
Following are the main limitations of the analysis:

Business can only be classified to four quadrants. It can be confusing to classify an SBU that falls
right in the middle.

It does not define what market is. Businesses can be classified as cash cows, while they are
actually dogs, or vice versa.

Does not include other external factors that may change the situation completely.

Market share and industry growth are not the only factors of profitability. Besides, high market
share does not necessarily mean high profits.

It denies that synergies between different units exist. Dogs can be as important as cash cows to
businesses if it helps to achieve competitive advantage for the rest of the company.

Using the tool

Although BCG analysis has lost its importance due to many limitations, it can still be a useful tool if
performed by following these steps:

Step 1. Choose the unit

Step 2. Define the market

Step 3. Calculate relative market share

Step 4. Find out market growth rate

Step 5. Draw the circles on a matrix

Step 1. Choose the unit. BCG matrix can be used to analyze SBUs, separate brands, products or a firm
as a unit itself. Which unit will be chosen will have an impact on the whole analysis. Therefore, it is
essential to define the unit for which youll do the analysis.
Step 2. Define the market. Defining the market is one of the most important things to do in this analysis.
This is because incorrectly defined market may lead to poor classification. For example, if we would do
the analysis for the Daimlers Mercedes-Benz car brand in the passenger vehicle market it would end up
as a dog (it holds less than 20% relative market share), but it would be a cash cow in the luxury car
market. It is important to clearly define the market to better understand firms portfolio position.
Step 3. Calculate relative market share. Relative market share can be calculated in terms of revenues
or market share. It is calculated by dividing your own brands market share (revenues) by the market
share (or revenues) of your largest competitor in that industry. For example, if your competitors market
share in refrigerators industry was 25% and your firms brand market share was 10% in the same year,
your relative market share would be only 0.4. Relative market share is given on x-axis. Its top left corner
is set at 1, midpoint at 0.5 and top right corner at 0 (see the example below for this).

Step 4. Find out market growth rate. The industry growth rate can be found in industry reports, which
are usually available online for free. It can also be calculated by looking at average revenue growth of the
leading industry firms. Market growth rate is measured in percentage terms. The midpoint of the y-axis is
usually set at 10% growth rate, but this can vary. Some industries grow for years but at average rate of 1
or 2% per year. Therefore, when doing the analysis you should find out what growth rate is seen as
significant (midpoint) to separate cash cows from stars and question marks from dogs.
Step 5. Draw the circles on a matrix. After calculating all the measures, you should be able to plot your
brands on the matrix. You should do this by drawing a circle for each brand. The size of the circle should
correspond to the proportion of business revenue generated by that brand.

Examples

Corporate A BCG matrix

Brand Revenues

% of corporate

Largest rivals

Your brands

Relative

Market

revenues

market share

market share

market share

growth rate

"1"

$500,000 54%

25%

25%

3%

"2"

$350,000 38%

30%

5%

0.17

12%

"3"

$50,000

6%

45%

30%

0.67

13%

"4"

$20,000

2%

10%

1%

0.1

15%

This example was created to show how to deal with a relative market share higher than 100% and with
negative market growth.

Corporate B BCG matrix

Brand Revenues

% of corporate

Largest rivals

Your brands

Relative

Market

revenues

market share

market share

market share

growth rate

"1"

$500,000 55%

15%

60%

3%

"2"

$350,000 31%

30%

5%

0.17

-15%

"3"

$50,000

10%

45%

30%

0.67

-4%

"4"

$20,000

4%

10%

1%

0.1

8%

74. Strategic ToolsValue Chain, Porters Generic Strategies,

Porters 5 forces, PESTEL, SWOT, STPD, Ansoff , GE Matrix,
Marketing MIX, PLC
POLITICAL
ECONOMIC
SOCIAL
TECHNOLOGICAL
ENVIRONMENTAL
LEGAL

VALUE CHAIN ANALYSIS:

1.

Value chain analysis (VCA) is a process where a firm identifies its primary and support activities
that add value to its final product and then analyze these activities to reduce costs or increase
differentiation.

2.

Value chain represents the internal activities a firm engages in when transforming inputs into
outputs.

Understanding the tool

VCA is a strategy tool used to analyze internal firm activities. Its goal is to recognize, which activities are
the most valuable (i.e. are the source of cost or differentiation advantage) to the firm and which ones
could be improved to provide competitive advantage. In other words, by looking into internal activities, the
analysis reveals where a firms competitive advantages or disadvantages are. The firm that competes
through differentiation advantage will try to perform its activities better than competitors would do. If it
competes through cost advantage, it will try to perform internal activities at lower costs than competitors
would do. When a company is capable of producing goods at lower costs than the market price or to
provide superior products, it earns profits.
M. Porter introduced the generic value chain model in 1985. Value chain represents all the internal
activities a firm engages in to produce goods and services. VC is formed of primary activities that add
value to the final product directly and support activities that add value indirectly. Below you can see the
Porters VC model.

Primary Activities

Support Activities

Although, primary activities add value directly to the production process, they are not necessarily more
important than support activities. Nowadays, competitive advantage mainly derives from technological
improvements or innovations in business models or processes. Therefore, such support activities as
information systems, R&D or general management are usually the most important source of
differentiation advantage. On the other hand, primary activities are usually the source of cost advantage,
where costs can be easily identified for each activity and properly managed.

Firms VC is a part of a larger industry VC. The more activities a company undertakes compared to
industry VC, the more vertically integrated it is. Below you can find an industry value chain and its relation
to a firm level VC.

Using the tool

There are two different approaches on how to perform the analysis, which depend on what type
ofcompetitive advantage a company wants to create (cost or differentiation advantage). The table below
lists all the steps needed to achieve cost or differentiation advantage using VCA.

Cost advantage

Differentiation
advantage

This approach is used when organizations try to compete on costs and want to

The firms that

understand the sources of their cost advantage or disadvantage and what factors
drive those costs.

strive to create
superior products
or services use
differentiation
advantage
approach.

Step 1. Identify the firms primary and support activities.

Step 2. Establish the relative importance of each activity in the total cost of
the product.
Step 3. Identify cost drivers for each activity.
Step 4. Identify links between activities.
Step 5. Identify opportunities for reducing costs.

Step
1. Identify the
customers
value-creating
activities.
Step
2. Evaluate the
differentiation
strategies for
improving
customer value.
Step
3. Identify the
best sustainable
differentiation.

Cost advantage
To gain cost advantage a firm has to go through 5 analysis steps:
Step 1. Identify the firms primary and support activities. All the activities (form receiving and storing
materials to marketing, selling and after sales support) that are undertaken to produce goods or services
have to be clearly identified and separated from each other. This requires an adequate knowledge of

companys operations because value chain activities are not organized in the same way as the company
itself. The managers who identify value chain activities have to look into how work is done to deliver
customer value.
Step 2. Establish the relative importance of each activity in the total cost of the product. The total
costs of producing a product or service must be broken down and assigned to each activity. Activity based
costing is used to calculate costs for each process. Activities that are the major sources of cost or done
inefficiently (when benchmarked against competitors) must be addressed first.
Step 3. Identify cost drivers for each activity. Only by understanding what factors drive the costs,
managers can focus on improving them. Costs for labor-intensive activities will be driven by work hours,
work speed, wage rate, etc. Different activities will have different cost drivers.
Step 4. Identify links between activities. Reduction of costs in one activity may lead to further cost
reductions in subsequent activities. For example, fewer components in the product design may lead to
less faulty parts and lower service costs. Therefore identifying the links between activities will lead to
better understanding how cost improvements would affect he whole value chain. Sometimes, cost
reductions in one activity lead to higher costs for other activities.
Step 5. Identify opportunities for reducing costs. When the company knows its inefficient activities
and cost drivers, it can plan on how to improve them. Too high wage rates can be dealt with by increasing
production speed, outsourcing jobs to low wage countries or installing more automated processes.

Differentiation advantage
VCA is done differently when a firm competes on differentiation rather than costs. This is because the
source of differentiation advantage comes from creating superior products, adding more features and
satisfying varying customer needs, which results in higher cost structure.
Step 1. Identify the customers value-creating activities. After identifying all value chain activities,
managers have to focus on those activities that contribute the most to creating customer value. For
example, Apple products success mainly comes not from great product features (other companies have
high-quality offerings too) but from successful marketing activities.
Step 2. Evaluate the differentiation strategies for improving customer value. Managers can use the
following strategies to increase product differentiation and customer value:

Add more product features;

Focus on customer service and responsiveness;

Increase customization;

Offer complementary products.

Step 3. Identify the best sustainable differentiation. Usually, superior differentiation and customer
value will be the result of many interrelated activities and strategies used. The best combination of them
should be used to pursue sustainable differentiation advantage.

Example
This example is partially adopted from R. M. Grants book Contemporary Strategy Analysis p.241. It
illustrates the basic VCA for an automobile manufacturing company that competes on cost advantage.
This analysis doesnt include support activities that are essential to any firms value chain, thus the
analysis itself is not complete.

Ste
p1

Ste
p2

$164 M
less important

$410 M
very important

Numbe
r and

Ste
p3

Order
size

frequency of
new models
Sales
per model

$524 M
$10 M
very important not important

Scale
of plants

Averag
e value of
purchases per
supplier

Capa
city utilization
Locati
on of plants

$384 M
important

Level of
quality targets
Freque

Size
of advertising
budget

Ste
p4

Number
of dealers
Sales

Stren per dealer

ncy of defects

gth of existing
reputation

Locatio
n of suppliers

$230 M
less important

Volume

Frequen
cy of defects

Sales requiring repair

recalls

1. High-quality assembling process reduces defects and costs in quality control and dealer support
activities.
2. Locating plants near the cluster of suppliers or dealers reduces purchasing and distribution costs.
3. Fewer model designs reduce assembling costs.

4. Higher order sizes increase warehousing costs.

1. Create just one model design for different regions to cut costs in designing and engineering, to
Ste
p5

increase order sizes of the same materials, to simplify assembling and quality control processes and
to lower marketing costs.
2. Manufacture components inside the company to eliminate transaction costs of buying them in the
market and to optimize plant utilization. This would also lead to greater economies of scale.

ANSOFF MATRIX

Market penetration[edit]
In market penetration strategy, the organization tries to grow using its existing offerings (products and services) in
existing markets. In other words, it tries to increase its market share in current market scenario.

Market development[edit]
In market development strategy, a firm tries to expand into new markets (geographies, countries etc.) using its
existing offerings.

Product development[edit]
In product development strategy, a company tries to create new products and services targeted at its existing
markets to achieve growth

Diversification[edit]
In diversification an organization tries to grow their introducing new offerings in new markets. It is the most risky
strategy since both product and market development is required.

PORTERS 5 FORCES

Tip:
The terms "Cost Focus" and "Differentiation Focus" can be a little confusing, as they could be interpreted as meaning
"a focus on cost" or "a focus on differentiation." Remember that Cost Focus means emphasizing cost-minimization within a
focused market, and Differentiation Focus means pursuing strategic differentiation within a focused market.

The Cost Leadership Strategy

Porter's generic strategies are ways of gaining competitive advantage in other words, developing the "edge" that gets you the sale and
takes it away from your competitors. There are two main ways of achieving this within a Cost Leadership strategy:

Increasing profits by reducing costs, while charging industry-average prices.

Increasing market share through charging lower prices, while still making a reasonable profit on each sale
because you've reduced costs.
Tip:
Remember that Cost Leadership is about minimizing the cost to the organization of delivering products and services. The
cost or price paid by the customer is a separate issue!
The Cost Leadership strategy is exactly that it involves being the leader in terms of cost in your industry or market. Simply being amongst
the lowest-cost producers is not good enough, as you leave yourself wide open to attack by other low-cost producers who may undercut your
prices and therefore block your attempts to increase market share.
You therefore need to be confident that you can achieve and maintain the number one position before choosing the Cost Leadership route.
Companies that are successful in achieving Cost Leadership usually have:

Access to the capital needed to invest in technology that will bring costs down.

Very efficient logistics.

A low-cost base (labor, materials, facilities), and a way of sustainably cutting costs below those of other
competitors.
The greatest risk in pursuing a Cost Leadership strategy is that these sources of cost reduction are not unique to you, and that other
competitors copy your cost reduction strategies. This is why it's important to continuously find ways of reducing every cost. One successful
way of doing this is by adopting the Japanese Kaizen philosophy of "continuous improvement."

The Differentiation Strategy

Differentiation involves making your products or services different from and more attractive those of your competitors. How you do this
depends on the exact nature of your industry and of the products and services themselves, but will typically involve features, functionality,
durability, support and also brand image that your customers value.
To make a success of a Differentiation strategy, organizations need:

Good research, development and innovation.

The ability to deliver high-quality products or services.

Effective sales and marketing, so that the market understands the benefits offered by the differentiated
offerings.
Large organizations pursuing a differentiation strategy need to stay agile with their new product development processes. Otherwise, they risk
attack on several fronts by competitors pursuing Focus Differentiation strategies in different market segments.

The Focus Strategy

Companies that use Focus strategies concentrate on particular niche markets and, by understanding the dynamics of that market and the
unique needs of customers within it, develop uniquely low-cost or well-specified products for the market. Because they serve customers in
their market uniquely well, they tend to build strong brand loyalty amongst their customers. This makes their particular market segment less
attractive to competitors.
As with broad market strategies, it is still essential to decide whether you will pursue Cost Leadership or Differentiation once you have
selected a Focus strategy as your main approach: Focus is not normally enough on its own.
But whether you use Cost Focus or Differentiation Focus, the key to making a success of a generic Focus strategy is to ensure that you are
adding something extra as a result of serving only that market niche. It's simply not enough to focus on only one market segment because
your organization is too small to serve a broader market (if you do, you risk competing against better-resourced broad market companies'
offerings.)
The "something extra" that you add can contribute to reducing costs (perhaps through your knowledge of specialist suppliers) or to
increasing differentiation (though your deep understanding of customers' needs).
Tip:
Generic strategies apply to not-for-profit organizations too.
A not-for-profit can use a Cost Leadership strategy to minimize the cost of getting donations and achieving more for their
income, while one with pursing a Differentiation strategy will be committed to the very best outcomes, even if the volume
of work they do as a result is lower.
Local charities are great examples of organizations using Focus strategies to get donations and contribute to their
communities.