Marketing Strategy

Marketing Strategies
1.BCG Matrix has become integral part of business strategy for investment, Joint venture, franchising and market entry in any part of the world. Apply this concept in any one of the following Indian companies for making strategic decision for survival and growth. i) ii) iii) Videocon International Dabur Ltd. Tata Motors.

ANS: BCGs Portfolio Analysis is based on the premise that majority of the companies carry out multiple business activities in a number of different product-market segments. Together these different businesses form the Business Portfolio which can be characterized by two parameters: 1) companys relative market share for the business, representing the firms competitive positions; and 2) the overall growth rate of that business. The BCG model proposes that for each business activity within the corporate portfolio, a separate strategy must be developed depending on its location in a two-by two portfolio matrix of high and low segments on each of the above mentioned axes. Relative Market Share is stressed on the assumption that the relative competitive position of the company would determine the rate at which the business generates cash. An organization with a higher relative share of the market compared to its competitors will have higher profit margins and therefore higher cash flows. Relative Market Share is defined as the market share of the relevant business divided by the market share of its largest competitor. Thus, if Company X has 10 per cent, Company

Marketing Strategy Y has 20 per cent, and Company Z has 60 per cent share of the market, then Xs Relative Market Share is 1/6m, Ys Relative Market Share is 1/3, and Zs Relative Market Share 60/20 = 3. Company Z has Company Y as its leading competitor, whereas Companies X and Y have Company Z as their lead competitor. The selection of the Rate of Growth of the associated industry is based on the Understanding that an industrial segment with high growth rate would facilitate Expansion of the operations of the participating company.It will also be relatively Easier for the company to increase its market share, and have profitable investment opportunities. High growth rate business provides opportunities to plough back earned cash into the business and further enhance the return on investment. The fast growing business, however, demands more cash to finance its growth. If an industrial sector is not growing, it would be more difficult for the participating Company to have profitable investments in that sector.In a slow growth business, Increase in the market share of a company would generally come from corresponding reduction in the competitors market share. The BCG matrix classifies the business activities along the vertical axis according to the Business Growth Rate (meaning growth of the market for the product), and the Relative Market Share along the horizontal axis. The two axes are divided into Low and High sectors, so that the BCG matrix is divided into four quadrants Implementation and Control Businesses falling into each of these quadrants are classified with broadly different strategic categories, as explained below: Cash Cows The businesses with low growth rate and high market share are classified in this quadrant. High market share leads to high generation of cash and profits. The low rate of growth of the business implies that the cash demand for the business would be low. Thus, Cash Cows normally generate large cash surpluses. Cows can be milked for cash to help to provide cash required for running other diverse operations of the company. Cash Cows provide the financial base for the company. These businesses have superior

Marketing Strategy market position and invariably low costs. But, in terms of their future potential, one must keep in mind that these are mature businesses with low growth rate. Dogs If the business growth rate is low and the companys relative market share is also low, the business is classified as DOG. The low market share normally also means poor profits. As the growth rate is also low, attempts to increase market share would demand prohibitive investments. Thus, the cash required to maintain a competitive position often exceeds the cash generated, and there is a net negative cash flow.

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Under such circumstances, the strategic solution is to either liquidate, or if possible Evaluation of Strategy harvest or divest the DOG business. Question Marks Like Dogs, Question Marks are businesses with low market share but the businesses have a high growth rate. Because of their high growth, the cash requirement is high, but due to their low market share, the cash generated is also low.

Marketing Strategy As the business growth rate is high, one strategic option is to invest more to gain market share, pushing from low share to high. The Question Mark business then moves to a STAR (discussed later) quadrant, and subsequently has the potential to become cash low, when the business growth rate reduces to a lower level. Another strategic option is when the company cannot improve its low competitive position (represented by low market share). The management may then decide to divest the Question Mark business. These businesses are called Question Marks because they raise the question as to whether more money should be invested in them to improve their relative market share and profitability, or they should be divested and dropped from the portfolio. Stars Businesses which have high growth rate and high market share, are called Stars. Such businesses generate as well as use large amounts of cash. The Stars generate high profits and represent the best investment oppotunities for growth. The best strategy regarding Stars is to make the necessary investments and consolidate the companys high relative competitive position. Methodology for Building BCG Matrix The Boston Consulting Group suggests the following step-by-step procedure to develop the business portfolio matrix and identify the appropriate strategies for different businesses. Classify various activities of the company into different business segments or Strategic Business Units (SBUs). For each business segment determine the growth rate of the market. This is later plotted on a linear scale. Compile the assets employed for each business segment and determine the relative size of the business within the company. Estimate the relative market shares for the different business segments. This is generally plotted on a logarithmic scale.

Marketing Strategy Plot the position of each business on a matrix of business growth rate and relative market share. Strategic Implications Most companies will have different segments scattered across the four quadrants of BCG matrix, corresponding to Cash Cow, Dog, Question Mark and Star businesses. The general strategy of a company with diverse portfolio is to maintain its competitive position in the Cash Cows, but avoid over-investing. The surplus cash generated by Cash Cows should be invested first in Star businesses, if they are not self-sufficient, to maintain their relative competitive position. Any surplus cash left with the company may be used for selected Question Mark businesses to gain market share for them. Implementation and Control Those businesses with low market share, and which cannot adequately be funded, may be considered for divestment. The Dogs are generally considered as the weak segments of the company with limited or now new investments allocated to them. The BCG Growth-share matrix links the industry growth characteristic with the companys competitive strength (market share), and develops a visual display of the companys market involvement, thereby indirectly indicating current resource deployment. (The sales to asset ratio is generally stable over time across industries). The underlying logic is that investment is required for growth while maintaining or building market share. But, while doing so, a strong competitive business in an industry with low growth rate will provide surplus cash for deployment elsewhere in the Corporation. Thus, growth uses cash whereas market competitive strength is a potential source of cash. Cash Positions of Various Businesses Type Source Use 1. COW More Less Funds available, so milk and deploy 2. STAR More More Build competitive position and grow 3. DOG Less More Divest and redeploy proceeds

Marketing Strategy 4. QUESTION Less More Funds needed to invest selectively to improve competitive position EXAMPLE: Dabur India Ltd. Dabur India Limited is the fourth largest FMCG Company in India with interests in Health care, Personal care and Food products. Building on a legacy of quality and experience for over 100 years, today Dabur has a turnover of Rs.2396 crore with powerful brands like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola & Real.

Star:

Relative market shareQuestion mark: Dabur health care range is in growth stage. Dabur international range is in infancy stage as their exports are still not much and the revenue from domestic market is far higher than international Dog: Dabur food portfolio consists of packaged fruit juices, cooking pastes, sausages which isnt doing well.

This includes Chyavanprash, Hajmola, Busine ss growth rate Bhringraj hair oil, Pudin Hara G, Active blood purifier,etc Cash cows: Dabur home care product range is in maturity stage which includes odomos,sanifresh,odonil, odopic,etc

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Limitations of BCG Matrix The Growth-share BCG Matrix has certain limitations and weak points which must be kept in mind while using portfolio analysis for developing strategic alternatives. These are now briefly discussed. Predicting Profitability from Growth and Market Share

BCG analysis assumes that profits depend on growth and market share. The attractiveness of an industry may be different from its simple growth rate, and the firms competitive position may not be reflected in its market share. Some other sophisticated approaches have been evolved to overcome such limitations. There have been specific research studies which illustrate that the well-managed Dog businesses can also become good cash generators. These organizations relying on high-quality goods, with medium pricing and judicious expenditure on R& D and marketing, can still provide impressive return on investment of above 20 per cent.

Difficulty in Determining Market Share

There is a heavy dependence on the market share of a business as an indicator of its competitive strength. The calculation of market share is strongly influenced by the way the business activity and the total market are defined. For instance, the market for helicopters may encompass all types of helicopters, or only heavy helicopters or only heavy military helicopters. Furthermore, from geographical point of view the market may be defined on worldwide, national or an even regional bases. In case of complex and interdependent industries, it may also be quite difficult to determine the market share based on the sales turnover of the final product only. Consideration for Experience Curve Synergy Evaluation of Strategy

Marketing Strategy In the BCG approach, businesses in each of the different quadrants are viewed independently for strategic purposes. Thus, Dogs are to be liquidated or divested. But, within the framework of the overall corporation, useful experiences and skills can be acquired by operating low-profit Dog businesses which may help in lowering the costs of Star or Cash Cow businesses. And this may contribute to higher corporate profits. Disregard for Human Aspect

The BCG analysis, while considering different businesses does not take into consideration the human aspects of running an organization. Cash generated within a business unit may come to be symbolically associated with the power of the concerned manager. As such managing a Cash Cow business may be reluctant to part with the surplus cash generated by his unit. Similarly, the workers of a Dog business which has been decided to be divested may react strongly against changes in the ownership. They may deem the divestiture as a threat to their livelihood or security. Thus, BCG analysis could throw up strategic options which may or may not be easy to implement.

Marketing Strategy 2. Explain with examples: 1. Generic strategy 2. Cost Leadership 3. Segmentation 4. Differentiation 5. Positioning 6. PLC and Strategic decision 7. Niche market strategy 8. Follower strategy 9. Leader strategy 10. Challenger strategy 11. Brand equity i) GENERIC STRATEGY: ANS: The root of generic strategy is POSITIONING. POSITIONING can be defined as an objective measurement of perceptions that buyers are likely to hold about a product with reference to other similar alternative market offerings & it determines whether a firms profitability is above or below average. It also helps to generate ROI> average returns of industry even in bad times. Positioning gives firm a COMPETITIVE ADVANTAGE in terms of PRICE and PRODUCT QUALITY. Firms deliver competitive advantage by being in

Very broad market

very narrow market

Cost

Differentiator

Focus Leader

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Competitive Advantage Broad segment Competitive Scope Narrow Segment Cost Leadership Cost Focus Differentiated Leadership Differentiated focus

NICHE Niche is an USP which carves out a key result area imparting success to business 1. COST LEADERSHIP: A firm is a low cost producer. Characteristics of cost leader: 1. EOS (scale) + EOS(scope) Economies of scale can be achieved when production cost decreases as volume of production increases. 1. Appropriate technology Cycle time is low Accuracy is great Scraps and wastages are low Precision is high

2. Assess ability to raw material 3. Effective production system

Marketing Strategy 4. Effective process control 5. Cost leader should have Parity in price Proximity in value

6. Cost leadership should not be at the cost of quality. EXAMPLES: 1. Parle gluco Biscuit 2. Nirma 3. Maruti 4. Carrier air conditioners 2. DIFFERENTIATOR: A firm adopting differentiator strategy maintains its uniqueness in the features offered which the buyers assumes to have specific and special value and do not mind to pay premium. Product differentiation It is a process of generating uniqueness in features by providing special and specific values customer don not mind to pay a premium price. Differentiation could be product specific, distribution, durability, after sale service, spare parts or may be any other marketing parameter. A differentiated product must have parity in areas other than differentiation and proximity in value, benefits desired by customers. A firm can sustain differentiation and have competitive edge if premium price exceeds the extra cost incurred in being unique. EXAMPLES:

Marketing Strategy 1. Park Avenue 2. Pepsodent Germicheck 3. Oxyrich 4. Savlon antiseptic

3. FOCUS It evolves deliberately limiting potential sales volume by adopting concentrated segmentation approach through which firms select some target market segment o achieve competitive advantage although it may not posses same advantage in entire market. - Niches can be low cost focus - Cost focus exploits the differentiation in the cost in some segment and differentiator focus exploits the special needs of customer in same segment. - thus, a focused strategy takes advantage of sub-optimization by broadly targeted competitors who may underperforming in meeting the need of particular segments or may be over performing in maintaining their shares and sales in other segments at higher costs. Cost focus EXAMPLES: 1. Sterling properties 2. Wada pao 3. Chamak

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Differentiated focus EXAMPLES: 1. Irani Chai 2. Toyota Lexus 3. Club Mahindra

4. STUCK IN THE MIDDLE A firm that engages in each of the generic strategy but fails to achieve any one of them is stuck in the middle and in the long run will be a below average performer.

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ii) COST LEADERSHIP

The business works hard to achieve the lowest production and distribution cost so that it can priced lower than its competitors and win a large market share. Firms pursuing this strategy must be good at purchasing, engineering, manufacturing and physical distribution. They need less skill in marketing. the problem with this strategy is that other firms will usually compete with still lower costs and hurt he firm that rested its whole future on cost. EXAMPLE: In online travel industry, LOWESTFARE, is pursuing low cost strategy

iii) SEGMENTATION
a marketer can rarely satisfy everyone in a market. Therefore he divides the market into segments. They identify and profile distinct group of buyers who might prefer or require varying products and services mixes by examining demographic, psychographic and behavioral differences among buyers. Segmenting consumer markets 1. Geographic- Region, city 2. Demographic- Age, family size, gender, income, occupation, education, etc 3. Psychographic- lifestyle, personality 4. Behavioral- user status, occasions, usage rate, loyalty status, etc

Segmenting business markets 1. Demographic- industry, company size, location 2. Operating variables- technology, power structure, purchasing criteria 3. Situational factors- urgency, specific applications, size of order

Marketing Strategy 4. Personal characteristics- buyer, attitude, loyalty EXAMPLES 1. Arvind EYE care system, a group of institutions offering world class eye care to poor strata of the society 2. DELL- t is divided into two direct sales divisions: one sell to consumers and small businesses; another manages the companys corporate accounts

iv) Differentiation
The business concentrates on achieving superior performance in an important customer benefit area valued by a large part of the market. The firms cultivate those strengths that will contribute t their intended differentiation. This, the firm seeking quality leadership for example, must make products with the best components pt them together expertly, inspect them carefully and effectively communicate their quality. EXAMPLES: 1. Travelocity is performing a differentiation strategy by offering the most comprehensive range of services to the travelers. v) POSITOING Positioning is an act of designing the companys offering and image to occupy a distinct place in the mind of the target market to maximize the potential benefit to the firm. EXAMPLES: 1. MOOV-it was launched as a balm for relieving joint pains in older people but subsequently it was repositioned as backache specialist

Marketing Strategy Points-of-difference: these are the attributes or benefits consumers strongly associate with the brand, positively evaluated, and believed that they could not find the same extent with a competitive brand EXAMPLES: 1. FedEx- guaranteed overnight delivery 2. Nike- performance 3. Lexus- quality Points-of-parity: these are the associations that are not necessarily unique to the brand but may in fact be shared with others. These are viewed as essentials for a legitimate and credible product offering. EXAMPLES: 1. Dettol and Savlon 2. Prudent mint mouthwash and Listerine with a strong medical taste.

vi) PLC AND STRTEGIC DECISION

Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline). In theory it's the same for a product. After a period of development it is introduced or launched into the market; it gains more and more customers as it grows; eventually the market stabilizes and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn. To say that a product has a life is to asset 4 things:

Marketing Strategy Product have a limited life Product sales pass through distinct phases, each posing different challenges, opportunities and problems to the seller Products rise and fall at the different stages of PLC Products require different marketing, financial, manufacturing, purchansing in each life cycle stage.

1. Introduction- a period of slow sales growth. profits are non-existent because of heave expenses on product launch. cost high sales volume low no/little competition competitive manufacturers watch for

acceptance/segment growth losses demand has to be created

Marketing Strategy customers have to be prompted to try the product

2. Growth- a period of rapid market acceptance and substantial profit improvement costs reduced due to economies of scale and sales volume increases significantly profitability public awareness competition begins to increase with a few new players in establishing market prices to maximize market share

3. Maturity- a slowdown in sales because the product have achieved acceptance by most of the buyers. Profits stabilize or decline because of increase competition. Costs are very low as you are well established in market & no need for publicity. sales volume peaks increase in competitive offerings prices tend to drop due to the proliferation of competing products brand differentiation, feature diversification, as each player seeks to differentiate from competition with "how much product" is offered Industrial profits go down

4. Decline- sales show a downward drift and profits erode. costs become counter-optimal sales volume decline or stabilize prices, profitability diminish

Marketing Strategy profit becomes more a challenge of production/distribution efficiency than increased sales However, most products fail in the introduction phase. Others have very cyclical maturity phases where declines see the product promoted to regain customers.

Strategies for the differing stages of the Product Life Cycle Introduction The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution. Growth Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilize.

Maturity Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilize. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and uses a greater variety of media. Decline At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many

Marketing Strategy more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.

Problems with Product Life Cycle In reality very few products follow such a prescriptive cycle. The length of each stage varies enormously. The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in.

vii) NICHE MARKET STRATEGY

A niche is a narrowly defined customer group seeking a distinctive mix of benefits. Marketers usually identify niches by dividing segments into sub segments. An attractive niche is characterized as follows: The customers have distinct set of needs They will pay a premium to a firm that best satisfies their needs. The niche gains certain economies through specialization and the niche has size, profit and growth potential. Segments are fairly small and normally attract only one or two competitors.

EXAMPLES: 1. Crack, an ointment from Paras pharmaceuticals it is targeted to women for prevention and treatment of cracked heels 2. Ezee, a liquid detergent from Godrej is a fabric washing product for woolen cloths

Marketing Strategy 3. Himalaya, ayurvedic medicines

viii) FOLLOWER STRATEGY

The follower can achieve high profits as it did not bear any of the innovation expenses. Patterns of conscious parallelism are common in capital intensive, homogeneous product industries such as steel, fertilizers. The opportunities for product differentiation, image differentiation are low; service quality is often comparable and price sensitivity runs high. Four broad strategies are identified: 1. Counterfeiter- the counterfeiter duplicates the leaders products and packaging and sells it on the black market or through disreputable dealers. EXAMPLE: a. many music record companies

b. Apple computer and Rolex have been plagued with counterfeiter problem 2. Imitator- the imitator something from the leader but maintains differentiation in terms of packaging, advertising, pricing or location. 3. Cloner- the cloner emulates the leaders products, name and packaging with slight variations. 4. Adapter- the adapter takes the leaders products and improves them.

ix) LEADER STARGEGY

The leader should adopt the following strategies to maintain its share and sales. a. Expanding the total market:

Marketing Strategy The dominant firm must gain new users, new uses and usage of its products. b. Defending the market share The leader leads by developing new products and customer services , distribution effectiveness and cost cutting. b.1) position defense: building superior brand power and making the brand almost impregnable. b.2) flank defense: serve as an invasion base for counterattack b.3) preemptive defense: attack before your enemy attacks b.4) counteroffensive defense: can meet the attacker frontally or hits his flank or launch a pincer movement. b.5) mobile defense: the leader stretches its domain over new territories that can serve as future centers for defense and offense through market broadening. c. Expanding market share Market leader can improve their profitability by increasing market share.

x) CHALLENGER STARTEGY
Examples: LG, Google 1. It can attack the market leader. 2. It can attack he firms of its own size that are underfinanced. 3. It can attack small , local firms Strategies: 1. Frontal attack: attacker matches its opponents products, advertising, price and distribution.

Marketing Strategy 2. Flank attack: it can geographic or segmental. 3. Encirclement attack: attempt to capture a wide slice of the enemys territory through blitz 4. Bypass attack: bypassing the enemy and attacking easier markets to broaden ones resources base 5. Guerrilla warfare: waging small, intermittent attacks to harass and demoralize the opponent and eventually secure permanent footholds.

xi) BRAND EQUITY

It is a set of assets (and liabilities) linked to a brands name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firms customers. Brand Equity is an Asset in terms of: a). Brand name awareness b). Perceived quality c). Brand loyalty d). Brand associations The management of brand equity involves investment to create and enhance these assets. Each brand equity asset creates value. In order to manage brand equity and brand building activities effectively, it is important to be sensitive to the ways in which strong brands create value a. Brand awareness It refers to the strength of a brands presence in the mind of the consumer.

Marketing Strategy Brand Awareness is measured according to the different ways in which consumers remember a brand, ranging from recognition, recall, dominant recall, familiarity, to perceived quality. The strongest brands are managed not for general awareness but strategic awareness.

b.

Perceived quality

It is a brand association which is a brand asset for the following reasons: Among all brand associations, only perceived quality has been shown to drive financial performance. Perceived quality is often a major strategic thrust of a business. It is linked to and often drives other aspects of how a brand is perceived.

c. Brand loyalty It is a key consideration when placing a value on a brand that is to be bought or sold, because a highly loyal customer base can generate predictable sales. Also the impact of brand loyalty on marketing costs is substantial. It is simply to retain customers than to attract new ones. d. Brand Associations It can be achieved by Being different Slogans. Jingles Symbol exposure

Marketing Strategy Event sponsorship Brand extension Repetition

3. The five force model combined with value chain will help achieve better performance in todays competitive world. Discuss how performance can be improved by adopting both concepts?

Ans: The Five Forces model of Porter is an Outside-in business unit strategy tool that is used to make an analysis of the attractiveness (value) of an industry structure. The Competitive Forces analysis is made by the identification of 5 fundamental competitive forces: 1. Entry of competitors. How easy or difficult is it for new entrants to start competing, which barriers do exist. 2. Threat of substitutes. How easy can a product or service be substituted,

especially made cheaper. 3. Bargaining power of buyers. How strong is the position of buyers. Can

they work together in ordering large volumes. 4. Bargaining power of suppliers. How strong is the position of sellers. Do

many potential suppliers exist or only few potential suppliers, monopoly? 5. Rivalry among the existing players. Does a strong competition between

the existing players exist? Is one player very dominant or are all equal in strength and size.

Marketing Strategy Sometimes a sixth competitive force is added: 6. Government.

Porter's Competitive Forces model is probably one of the most often used business strategy tools. It has proven its usefulness on numerous occasions. Porter's model is particularly strong in thinking Outside-in.

Threat of new entrants depends on:

Economies of scale. Capital / investment requirements. Customer switching costs.

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Access to industry distribution channels. Access to technology. Brand loyalty. Are customers loyal? The likelihood of retaliation from existing industry players. Government regulations. Can new entrants get subsidies?

Threat of substitutes depends on:

Quality. Is a substitute better? Buyers' willingness to substitute. The relative price and performance of substitutes. The costs of switching to substitutes. Is it easy to change to another

product? Bargaining power of suppliers depends on:

Concentration of suppliers. Are there many buyers and few dominant

suppliers?

Branding. Is the brand of the supplier strong? Profitability of suppliers. Are suppliers forced to raise prices? Suppliers threaten to integrate forward into the industry (for example:

brand manufacturers threatening to set up their own retail outlets).

Buyers do not threaten to integrate backwards into supply. Role of quality and service. The industry is not a key customer group to the suppliers. Switching costs. Is it easy for suppliers to find new customers?

Bargaining Power of Buyers depends on:

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Concentration of buyers. Are there a few dominant buyers and many

sellers in the industry?

Differentiation. Are products standardized? Profitability of buyers. Are buyers forced to be tough? Role of quality and service. Threat of backward and forward integration into the industry. Switching costs. Is it easy for buyers to switch their supplier?

Intensity of Rivalry depends on:

The structure of competition. Rivalry will be more intense if there are lots

of small or equally sized competitors; rivalry will be less if an industry has a clear market leader.

The structure of industry costs. Industries with high fixed costs encourage

competitors to manufacture at full capacity by cutting prices if needed.

Degree of product differentiation. Industries where products are

commodities (e.g. steel, coal) typically have greater rivalry.

Switching costs. Rivalry is reduced when buyers have high switching

costs.

Strategic objectives. If competitors pursue aggressive growth strategies,

rivalry will be more intense. If competitors are merely "milking" profits in a mature industry, the degree of rivalry is typically low.

Exit barriers. When barriers to leaving an industry are high, competitors

tend to exhibit greater rivalry. Strengths of the Five Competitive Forces Model: Benefits

The model is a strong tool for competitive analysis at industry level.

Compare: PEST Analysis

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It provides useful input for performing a SWOT Analysis.

Limitation of Porter's Five Forces model

Care should be taken when using this model for the following: do not

underestimate or underemphasize the importance of the (existing) strengths of the organization (Inside-out strategy).

The model was designed for analyzing individual business strategies. It

does not cope with synergies and interdependencies within the portfolio of large corporations.

From a more theoretical perspective, the model does not address the

possibility that an industry could be attractive because certain companies are in it.

Some people claim that environments which are characterized by rapid,

systemic and radical change require more flexible, dynamic or emergent approaches to strategy formulation. See: Disruptive Innovation

Sometimes it may be possible to create completely new markets instead of

selecting from existing ones

VALUE CHAIN
Tool for identifying ways in which value could be created/enhanced by a firm Used for competitor analysis - to analyze competitive position within the industry ( compare value chain - own vs. Competitors)

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1. 2.

Support activities: Firm Infrastructure - General management, accounting, planning HRM - recruiting, training, development Technology development - R&D, Product & process improvement Procurement - Purchasing of raw materials, machines, supplies 4 support activities occur through all primary activities Primary activities: Inbound logistics - raw material handling & warehousing Operations - Machining, assembling, testing Outbound logistics - Warehousing & distribution of finished product Marketing & Sales - Advertising, promotion, pricing, channel relations Services - Installation, repair, parts finance, strategic

3. VALUE CREATION - FUNCTION Performance of each department

Marketing Strategy Coordination of activities within a department

4. BUSINESS PROCESS Value creating & value delivering process Locate activities which would add value Customers patronage - organizations - highest Examine cost & performance Value chain - own vs. competitors delivered value

Marketing Strategy 4. Explain the concept of STPD (Segmentation, Targeting, Positioning and Differentiation) for marketing in Indian business environment taking examples of : a) LG LCD TV b) Sony MP3 Analyze all the four concepts. The process of grouping a market (i.e. customers) into smaller subgroups.This is derived from the recognition that the total market is often made up of submarkets (called 'segments'). These segments are homogeneous within (i.e. people in the segment are similar to each other in their buying behavior or parts thereof). Because of this intragroup similarity, they are likely to respond somewhat similarly to a given marketing strategy. Product differentiation (also known simply as "differentiation") is the process of distinguishing the differences of a product or offering from others, to make it more attractive to a particular target market. This involves differentiating it from competitors' products as well as one's own product offerings. Differentiation is a source of competitive advantage. Although research in a niche market may result in changing your product in order to improve differentiation, the changes themselves are not differentiation. Marketing or product differentiation is the process of describing the differences between products or services, or the resulting list of differences. This is done in order to demonstrate the unique aspects of your product and create a sense of value. Marketing textbooks are firm on the point that any differentiation must be valued by buyers. The term unique selling proposition refers to advertising to communicate a product's differentiation. In economics, successful product differentiation leads to monopolistic competition and is inconsistent with the conditions for perfect competition, which include the requirement that the products of competing firms should be perfect substitutes.

Marketing Strategy The brand differences are usually minor; they can be merely a difference in packaging or an advertising theme. The physical product need not change, but it could. Differentiation is due to buyers perceiving a difference; hence causes of differentiation may be functional aspects of the product or service, how it is distributed and marketed, or who buys it. The major sources of product differentiation are as follows. Differences in quality which are usually accompanied by differences in price Differences in functional features or design Ignorance of buyers regarding the essential characteristics and qualities of goods they are purchasing Sales promotion activities of sellers and, in particular, advertising Differences in availability (e.g. timing and location). The objective of differentiation is to develop a position that potential customers see as unique. Differentiation primarily impacts performance through reducing directness of competition: As the product becomes more different, categorization becomes more difficult and hence draws fewer comparisons with its competition. A successful product differentiation strategy will move your product from competing based primarily on price to competing on non-price factors (such as product characteristics, distribution strategy, or promotional variables). Most people would say that the implication of differentiation is the possibility of charging a price premium; however, this is a gross simplification. If customers value the firm's offer, they will be less sensitive to aspects of competing offers; price may not be one of these aspects. Differentiation makes customers in a given segment have a lower sensitivity to other features (non-price) of the product.

Marketing Strategy 5. Explain the concept of Value Chain in different stages of PLC with example. How can value chain be inter-linked with SCM and CRM? ANS: Value Chain is a basic discrete building block of competitive advantage in a firm operating in competitive scenarios. The value chain for the Industry could include:

Competitive advantage of firm cannot be looking at a firm in isolation; since it performs many discrete activities like designing, producing, marketing and supporting its products. Each of these activities can contribute to a firms relative cost and create basis for differentiation. A company may have a cost advantage due to low cost distribution. Superior sales force utilization and Value Engineered Superior Product Design. Different stages of PLC: 1. Infancy: The main idea in this stage is to develop the product such that it results in generation of higher sales.A constant emphasis on to promote the product, sell and to simply exploit the ID customers. Thus in the first part of the PLC, Marketing & Sales becomes more important than anything else. No errors and the company should do things right on the first time. This implies that the task is to create the market for your product and also make the product available to the customers. This means concentrate on the exclusive distribution of the products.

Marketing Strategy The marketing & sales acts as a cost saver for the coming stage of PLC because the company is spending today for tomorrow. This will further result in no additional spending in the next stages of PLC. Example: Binacas came up with an Angular Toothbrush which was not offered by any of the competitors. However there was a confusion of the communication aspect and they over promised and under delivered. At this time, Promise launched the angular toothbrush in all the three types i.e. soft, medium & hard and worked well on the distribution, thus making all the three available to all the customers. 2. Growth: The customers who tried our product in the infancy stage have a high probability to repeat the purchase in the growth stage. Moreover, there are many new trials as well. Thus the sales increase to a great extent. In this stage, inbound logistics plays a vital role. If inbound logistics is done in an efficient manner, it would act as a cost saver. It is in this stage of the PLC that one must develop strong relationship with the suppliers. 3. Maturity: In this stage of Maturity, it of paramount importance to make the product available for Sale to the customers thus making operational efficiency & productivity very important 4. Decline: While moving on from one stage to another, the company should not forget to take care of the activities done in the previous stage. Thus, keep doing the activities and work on the strategies rightly. Entry point of Value Chain is Inbound Logistics, today very well known as, Supply Chain Management, and SCM. The concept has been extended beyond individual organizations. It can apply to whole supply chains and distribution networks. The delivery of a mix of products and services to the end customer will mobilize different economic factors, each managing its own value chain. The industry wide synchronized interactions of those local value chains

Marketing Strategy create an extended value chain, sometimes global in extent. Porter terms this larger interconnected system of value chains the "value system." A value system includes the value chains of a firm's supplier (and their suppliers all the way back), the firm itself, the firm distribution channels, and the firm's buyers (and presumably extended to the buyers of their products, and so on). Capturing the value generated along the chain is the new approach taken by many management strategists. For example, a manufacturer might require its parts suppliers to be located nearby its assembly plant to minimize the cost of transportation. By exploiting the upstream and downstream information flowing along the value chain, the firms may try to bypass the intermediaries creating new business models, or in other ways create improvements in its value system. Supply chain management is a cross-functional approach to manage the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and then the movement of finished goods out of the organization toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they have reduced their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and improving inventory velocity. Strategic

Strategic network optimization, including the number, location, and size of warehouses, distribution centres and facilities.

Marketing Strategy Strategic partnership with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics. Product design coordination, so that new and existing products can be optimally integrated into the supply chain, load management Information Technology infrastructure, to support supply chain operations. Where-to-make and what-to-make-or-buy decisions Aligning overall organizational strategy with supply strategy.

Tactical Sourcing contracts and other purchasing decisions. Production decisions, including contracting, scheduling, and planning process definition. Inventory decisions, including quantity, location, and quality of inventory. Transportation strategy, including frequency, routes, and contracting. Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. Milestone payments Focus on customer demand.

Operational Daily production and distribution planning, including all nodes in the supply chain. Production scheduling for each manufacturing facility in the supply chain (minute by minute). Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers. Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. Inbound operations, including transportation from suppliers and receiving inventory.

Marketing Strategy Production operations, including the consumption of materials and flow of finished goods. Outbound operations, including all fulfillment activities and transportation to customers. Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers Customer relationship management (CRM) is a term applied to processes implemented by a company to handle its contact with its customers. CRM software is used to support these processes, storing information on current and prospective customers. Information in the system can be accessed and entered by employees in different departments, such as sales, marketing, customer service, training, professional development, performance management, human resource development, and compensation. Details on any customer contacts can also be stored in the system. The rationale behind this approach is to improve services provided directly to customers and to use the information in the system for targeted marketing and sales purposes. While the term is generally used to refer to a software-based approach to handling customer relationships, most CRM software vendors stress that a successful CRM strategy requires a holistic approach. CRM initiatives often fail because implementation was limited to software installation without providing the appropriate motivations for employees to learn, provide input, and take full advantage of the information systems. Analytical CRM analyzes customer data for a variety of purposes: Designing and executing targeted marketing campaigns Designing and executing campaigns, e.g. customer acquisition, cross-selling, upselling Analysing customer behavior in order to make decisions relating to products and services (e.g. pricing, product development) Management information system (e.g. financial forecasting and customer profitability analysis) Analytical CRM generally makes heavy use of data mining.

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6. Pricing is a key issue in competitive markets. Discuss this statement in the context of factors affecting pricing decisions. What pricing objectives are open to Kingfisher Airlines? Suggest pricing strategy. ANS: Factors affecting Pricing strategies: 1. Pricing objectives Pricing Objectives: 1) Profit oriented objectives (ROI) 2) Volume oriented objectives (Market share) 3) Competition orientation Potential Pricing Objectives: 2. Maximum long-run profits
3. Maximize short run profits

4. Growth 5. Stabilize market 6. Desensitize customers to price 7. Maintain price-leadership arrangement 8. Discourage new entrants 9. Speedy exit of marginal firms 10. Maintain loyalty 11. Building brand and company image. Example: Apple Computers pricing objectives 1) To make the product affordable and give value for money to college students. 2) To get certain target market segments of IBM PC. (Switch from IBM to Apple ) 3) To encourage retailers to store and make strong efforts to sell Apple Computers. to achieve all in 18 months.

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2. Cost- impact on Pricing : Major cost components are : - Fixed cost - Variable cost It leads to three possibilities. Ratio between Fixed and Variable cost Economies of Scale Firms cost structure vis--vis competitors cost structure.

If the fixed cost is high then increased sales volumes are required. In that case charge high price initially and once Break even is achieved lower the price. EXAMPLE: Airlines have 65% cost fixed. Sale at high price till break-even is achieved, then reduce the price. If variable cost is high then, do marginal change (lower) the price it will add to earnings (High turnover). Economies of Scale: We can afford to sell at lower price and gain higher market share. Cost Structure vis--vis competitors: If cost structure is lower-one can offer competitive price to gain market share. Manage cost structure at low level. Company needs to have following information about competitors : 1. Published competitive price lists and advertising. 2. Competitive reaction to price moves in the past.
3. Timing of competitors price changes and initiating factors. 4. Information on competitors special companies.

5. Competitive product line comparison. 6. Assumptions about competitors pricing / marketing objectives. 7. Financial reports of competitors.

Marketing Strategy 8. Estimates of competitors. Cost- Fixed and Variable. 9. Expected pricing retaliation. 3. Competition: Monopoly No issues Oligopoly - Follow the leaders style of leading firm adopts cost plus method. Product differentiation is practiced. Competitive industry Takes into consideration 1) Capital intensiveness 2) Technology know-how 3) Break even and economies of scale 4) Marketing experience.

4. Demand: Demand is based on following considerations: 1) Ability of customers to buy 2) Willingness to buy 3) Necessity of customer to buy the product. 4) Benefits that product provides. 5) Price of substitute products. 6) Potential market for the products. 7) Customer behavior in general. 8) Segments in the market. Price inelasticity of demand Law of Demand Survey of 30 items has shown that when price increased by 10% sales decreased by 25% and 5% increase led to 13% decrease. When price lowered by 5% sales increased by 12% and lowered by 10%, Sales increased by 26%.

Marketing Strategy Price = Material + Labour + Overhead + Other expenses + Cost of emotional benefits + Margin Kingfisher Airline: Pricing Strategy New low cost carriers (LCCs) like SpiceJet and GoAir entered the market after KINGFISHER AIRLINES's launch and they started an all-out price war by slashing down on fares. For instance, in December 2005, GoAir started offering 10,000 free air tickets on four new routes (Hyderabad, Chennai, Jaipur, and Bangalore). Established players like Jet Airways (India) Ltd., (Jet Airways) too looked to consolidate their market positions. In January 2006, Jet Airways announced that it would acquire Air Sahara (Sahara) for US$ 500 million. This acquisition would make Jet Airways India's largest airline with an almost 45% market share. Jet Airways was also expected to gain control of Sahara's 22 parking bays spread across many domestic airports. In February 2006, the Jet-Sahara combine brought down their air fares to compete against KINGFISHER AIRLINES, and LCCs like Air Deccan and SpiceJet. Recently Kingfisher & Jet Airways made an alliance to mainly cut cost. The Low Cost Carriers faced a bloodbath while seeking to convert the railway passenger into airline passenger. Kingfisher Airline is positioned extremely differently. Kingfisher Airline targeted the growing middle class segment that was net savvy, young and upwardly mobile, with a propensity to spend. Kingfisher falls into a good service and low cost airlines. Thus the basic pricing strategy followed by Kingfisher Airlines is Penetration Pricing by offering a good service to the middle class segment at a reasonable cost.

Marketing Strategy As per the pricing policy of Kingfisher Airlines, it would not be positioned as a low cost carrier as passengers would attribute the features of low cost carriers like low quality of service, delayed flight timings, etc., to Kingfisher Airline as well. Hence, the airline was called a budget airline and not a Low Cost Carrier. Fares were above those of LCCs but lower than the economy class fares of Jet, Sahara, and Indigo Airline. Kingfisher Airline also allowed multiple fare options and auctioning of tickets on all traffic routes... Kingfisher Airline has a single class which combines the experience of business class with economy. Having a single class freed up more space and legroom for passengers when compared to normal economy class seats. KINGFISHER AIRLINES was also the only airline in India to address its passengers as 'guests'.

Marketing Strategy 7. Using Porters Generic strategies model analyze options open to various players in two wheelers industry? As Porter's 5 Forces analysis deals with factors outside an industry that influence the nature of competition within it, the forces inside the industry (microenvironment) that influence the way in which firms compete, and so the industrys likely profitability is conducted in Porters five forces model. A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace. Main Aspects of Porters Five Forces Analysis The competitive forces model identified five forces which would impact on an organizations behavior in a competitive market. These include the following: The rivalry between existing sellers in the market. The power exerted by the customers in the market. The impact of the suppliers on the sellers. The potential threat of new sellers entering the market. The threat of substitute products becoming available in the market. Understanding the nature of each of these forces gives organizations the necessary insights to enable them to formulate the appropriate strategies to be successful in their market Force 1: The Degree of Rivalry The intensity of rivalry, which is the most obvious of the five forces in an industry, helps determine the extent to which the value created by an industry will be dissipated through head-to-head competition.

Marketing Strategy Competitors in the two wheeler industry: After facing its worst recession during the early 1990s, the two-wheeler industry bounced back with a 25% increase in volume sales in February 1995. The scooters are considered as family vehicles. There are many two-wheeler manufacturers in India. Major players in the 2-wheeler industry are Hero Honda Motors Ltd (HHML), Bajaj Auto Ltd (Bajaj Auto) and TVS Motor Company Ltd (TVS). The other key players in the two-wheeler industry are Kinetic Motor Company Ltd (KMCL), Kinetic Engineering Ltd (KEL), LML Ltd (LML), Yamaha Motors India Ltd (Yamaha), Majestic Auto Ltd (Majestic Auto), Royal Enfield Ltd (REL) and Honda Motorcycle & Scooter India (P) Ltd (HMSI). Force 2: The Threat of Entry Both potential and existing competitors influence average industry profitability. The threat of new entrants is usually based on the market entry barriers. The entry barriers are high in two wheeler industry. Economies of scale: here in this two wheeler industry economies of scale is required to cater to vast target group and to be cost effective at the same time. So the new entrant needs to produce in huge quantities which wont be possible at the initial stage for a small players, the entrant needs to have deep pockets to absorb the initial losses. Cost of entry: The initial investment in machinery, fixed equipment and working capital would be tremendously high. Distribution channels: The entrant needs to have a good distribution network to reach the target group but it happens many a times that the distribution channel members do not entertain new players. It also happens that the players may find the distribution member is too expensive. The new entrant needs to have good contacts and relationships with the industry people before entering.

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Force 3: The Threat of Substitutes The threat that substitute products pose to an industry's profitability depends on the relative price-to-performance ratios of the different types of products or services to which customers can turn to satisfy the same basic need. The threat of substitution is also affected by switching costs that is, the costs in areas such as retraining, retooling and redesigning that are incurred when a customer switches to a different type of product or service. It also involves: Two wheelers can have cost effective substitutes like bus, local trains etc. Two wheelers can be substituted by comfort and luxurious cars.

Force 4: Buyer Power Buyer power is one of the two horizontal forces that influence the appropriation of the value created by an industry . The most important determinants of buyer power are the size and the concentration of customers. Other factors are the extent to which the buyers are informed and the concentration or differentiation of the competitors. Since the number of players and models available in the market is very high, therefore the option available to the customer is also high, so the bargaining power of the customer is high. So the entrant has to be careful while making the offering, because it should appeal to the needs of the customers or else customer wont revert to the offering and it could be a big failure, the options available to the customers are many. Force 5: Supplier Power Supplier power is a mirror image of the buyer power. As a result, the analysis of supplier power typically focuses first on the relative size and concentration of suppliers relative to

Marketing Strategy industry participants and second on the degree of differentiation in the inputs supplied. The ability to charge customers different prices in line with differences in the value created for each of those buyers usually indicates that the market is characterized by high supplier power and at the same time by low buyer power. Bargaining power of suppliers exists in the following situations: The switching costs are high. Switching from one supplier to another is easy hence the bargaining power of supplier is less. High power of brands. If the entrant has already existing good brand image then the supplier is not much.

Marketing Strategy 8. Describe the process of developing an advertising strategy for a new brand of Mobile phone and discuss the importance of creating the advertising message that has linkages with marking goals and consumers readiness to accept the product with some examples.

Advertising is a way to get your message to your desired audience. But in order to do that, you must first have a plan. This plan has many facets, including your marketing goal, advertising strategies creative and media, implementation, evaluation, and budget. Marketing goal: - Indias subscriber base is around 200mn.we are aiming at around 35 mn in the 1st year and 55 in the second year. Building advertising strategy The first four questions to ask are: Who are you trying to reach? What do you want to say to them? How, when and where are you going to reach them? Why have you chosen the steps you have selected?

Who are you trying to reach? Determine your target market. In order to determine your target market segmentation and targeting is done. Location Our target group will be primarily from urban environment. All the metropolitan, tier I and tier II cities will be targeted. Age No specific age bar because our mobile phone would be for all age groups. But our advertising would be made with the youths on the target. Income consumer must make Rs.3 lacs p.a.

Marketing Strategy What do you want to say? After narrowing target audience, begin the process of deciding what it is you want the consumer to know or think about you. This is called the creative process or strategy. Basically at this stage positioning is done. A mobile phone that has All the desired features (e.g. SMS, MMS, Bluetooth etc). a status symbol value/quality proposition Comparatively reasonable.

Developing Your Creative Strategy In its simplest form, your creative strategy needs three things: Ads will target people of all age groups from 15 to 55, and persuade them that this cell phone is a complete package providing all the features with style and elegance at affordable prices. Where, How and when to you reach the target audience? Since our target audience is located in urban areas we should use advertising media that would reach our target audience through

Newspaper Handouts or Flyers Radio Magazines TV Outdoor, such as billboards Special promotions or packages Partnering with any service provider(like nokia and reliance)

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Internet Marketing

Television Television is a powerful medium because it communicates with both sight and sound. We would place your advertisement spots on the most viewed channels like Star TV, Zee TV, Colors and MTV.ad spend on the televison media will be around 10 crores. The duration of the ad will be around 60 secs at the prime time from 8p.m. to 10p.m. Radio For radio advertising, we would go for radio 93.5 fm . the slots for it will be of 45 secs and the frequency will be around 4 in a week and the timing will be from 6p.m. to 8 p.m.the budget would be approximately 4 crores. Magazine The magazines would be CHIP and think digit. Newspaper: Newspapers are an important local medium with excellent reach potential. Because of the daily publication of most papers, we place an ad in the DNA, Hindustan times on the day before the launch. The budget would be approximately around 6 crores. Outdoor The most cost-effective advertising vehicle is outdoor . The visibility of this medium is good reinforcement for products, and it is a flexible alternative. Outdoor media vehicle selected are billboards, bus queue shelters and pole kiosks and in ambient media mall murals will be used. The display duration will be around one month will a budget of 1.24 crores.

How to time the advertising?

Marketing Strategy Pulsing schedule - Advertising of a product runs throughout the year, when demand and seasonal factors are unimportant. Who purchases the media, creates the ad, and produces the ad? The responsibility for actually carrying out the advertising program can be handled in one of four ways: TYPE OF AGENCY Full-service agency SERVICES PROVIDED

Research, selects and purchases media, develops copy and produces artwork.

What will this cost? Your budget will determine when and where you can advertise. There are four basic ways to determine what your budget should be. And dont forget, your budget doesnt just include media costs, but production costs as well. Task Objective Method - how much to spend to reach your objective. To reach aprrox 35 mn subscribers an advertising budget of around 24 crores would be required.

9. Strategic options open to a company is largely dependent on their competitive position and stages at which they are. Discuss this statement in relation to

Marketing Strategy strategies of market leaders, market challengers, followers and nichers in soap industry. Lets begin by understanding what competitive position is: Positioning is an objective measurement of perception (subjective), that buyers are likely to hold about the product with respect to other similar alternative market offering and it determines whether the firms profitability is above or below the industry average. Competitor These frameworks focus on competitor factors to derive strategy. Thus, the following model as developed by Michael Porter is apt here Porter's Generic Strategies Choosing Your Route to Competitive Advantage They can be applied to products or services in all industries, and to organizations of all sizes. They were first set out by Michael Porter in 1985 in his book Competitive Advantage: Creating and Sustaining Superior Performance. Porter called the generic strategies "Cost Leadership" (no frills), "Differentiation" (creating uniquely desirable products and services) and "Focus" (offering a specialized service in a niche market). He then subdivided the Focus strategy into two parts: "Cost Focus" and "Differentiation Focus". These are shown in Figure 1 below. Frameworks:

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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.

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 The Differentiation Strategy Differentiation involves making your products or services different from and more attractive those of your competitors. To make a success of a generic Differentiation strategy, organizations need:

Good research, development and innovation. The ability to deliver high-quality products or services.

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Effective sales and marketing, so that the market understands the benefits offered by the differentiated offerings.

The Focus Strategy Companies that use Focus strategies well concentrate on particular niche markets and, by understanding the dynamics of that market and the unique needs of customers in it, develop uniquely low cost or well-specified products for the market. 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 So, from here we can move on to the application of this strategy to the market leaders, market challengers, followers and nichers in soap industry Kotler classifies firms by the role they play in the target market: leader, challenger, follower, or nicher. Market Leader Strategies: The market leader generally leads the other firms in price changes, new-product introductions, distribution coverage, and promotional intensity. The market leader must maintain a constant vigilance as other firms keep challenging its strength or trying to take advantage of its weaknesses. To remain number one, dominant firms must find ways (1) to expand total market demand, (2) to protect its current market share through good defensive and offense actions, and/or (3) try to increase its market share further, even if market size remains constant Example: LUX PLC Stage: Maturity Market Challenger Strategies: Challengers can attack the leader and other competitors in an aggressive bid for further market share. The strategic objective of most challengers is to increase their market shares. An aggressor can choose to attack the market leader, to

Marketing Strategy attack firms of its own size that are not doing the job or are under-financed, or attack small local and regional firms that are not doing the job or are under-financed. The attack strategies include frontal attack, flank attack, encirclement attack, bypass attack, and guerilla attack. Example: Nirma PLC Stage: Decline Market Follower Strategies: Followers tend not to want to steal others customers, but instead they present similar offers to buyers, usually by copying the leader. Follower market shares show a high stability. Each follower tries to bring distinctive advantages to its target market. The follower is a major target of attack by challengers. Therefore the follower must keep its manufacturing costs low and its product quality and service high. Following does not mean the firm is passive or a carbon copy of the leader. The specific strategies are: the cloner, which lives parasitically off the leader; the imitator, which copies some things from the leader but maintains differentiation in terms of packaging advertising, pricing, etc; and the adapter, which takes the leaders products and adapts and often improves them. Example: Breeze, Lifebuoy Skinguard PLC Stage: Growth Market Nicher Strategies: An alternative to being a follower in a large market is to be a leader in a small market or niche. Smaller firms normally avoid competing with larger firms by targeting small markets of little or no interest to the larger firms. Firms with low shares of the total market can be highly profitable through small niching. The nicher ends up knowing the target customer group so well that it can meet their needs better than other firms casually selling to this niche could. The nicher receives high margins in contrast to the high volume of the mass marketer. The key idea is specialization. Nichers need to create niches, expand niches, and protect niches. Example: Dove PLC Stage: Between Maturity and Decline.

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10. Quality of product is determined by the customers in the market and in the factory. Discuss this statement in relation to product strategies with reference to product features and quality. ANS:

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Product Strategies: 1) Product Positioning Strategy

Positioning tells what the product stands for, what it is and how customers should evaluate it. Therefore the product should be placed - In right segment - To receive favorable reception - The product should be designed to match the segment. - Right communication should be planned. Process of Positioning: Example: 1) Beer: Light, strong, bitter, mild. Kingfisher v/s Haywards

Marketing Strategy 2) Vicks Vapourub v/s Tiger Balm 3) Calcium Sandoz for women & children. 2) Product Re-positioning Strategy Reasons for Repositioning : a. A mistake is made in original positioning. Example: Kinetic Scooter, Vicks Vaporub, Maggi Noodles. b. New and attractive segments : Example: 1. Shampoo Sachets 2. FMCG products for rural markets 3. Babool Toothpaste

c. Changing Customers Preferences : Examples: 1) Cadbury Chocolates 2) Hair oil brands 3) Two wheelers for rural segments 4) Atlas Cycles. d. To compete with new entrants. Examples: 1) Coca Cola Tanda Matlab Sir utake piyo Safe drinks

Marketing Strategy Purpose is to increase Market share and profitability.

3) Product-Overlap Strategy

Product overlap strategy refers to a situation where a company decides to compete against its own brand. This happens in India in the product range where clear segmentation of market is not possible. Examples: 1. Detergent soaps and powders. 2. Bath soap 3. Luggage / Bag markets. Companies try to do: Upward stretch Downward stretch Both way stretch Examples: a. Contract Mfg. Emcure b. Own brands Contract Mfg. Blue Cross c. Godrej Soap Contract Mfg. and Own brands d. Peter England Shirts 4) Product-Scope Strategy

a) Single product b) Multiple product c) System product

Marketing Strategy 1) Single Product: One Brand Company selling to various segments. Examples: Medical insurance, Pan Parag, Vitamin-C. 2) Multi-Brand Strategy: Offering two or more products Examples: i. ii. iii. Proctor & Gamble Food line companies Pizzas, Cheese etc. Amul Dairy products

It helps to grow faster and better and risk is evenly divided. 3) Systems of Product: Offering a system of products relates to providing a product mix that is having very close consistency with each other. Examples: i. ii. iii. iv. v. Oral cavity products Oncology products Range of cardiac product Range of car accessories. IBM Softwares, Hardwares, Maintenance.

5) Product-Design Strategy a. Standard products b. Customized products c. Standard product with modification

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Standard Product: 1) Leads to similar experience to all customers. 2) Better cost benefits. [ECS and Learning curve] 3) Standard distribution channels can be used. Example: Coca Cola Lux Lifeboy Customized Product: 1) Products made to order. Example: Dell Computers 2) Can charge premium for customization. 3) Suitable for small companies. Example: Dell Computers, GE, Military division. Standard products with modification: 1) Compromise between above two. 2) Core product is standardized. 3) Features are customized. Example: Car Power breaks, Air conditioning, Color, Tape, CD Player etc 6) Product-Elimination Strategy

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Reasons for elimination strategy 1) Low profitability 2) Stagnant sales volume 3) Risk of technology obsolescence. 4) Entry into declining phase. 5) Poor profit with business strengths.

Options available are: 1) Harvesting e.g. Empress Mill, Nagpur. 2) Line simplification e.g. HLL, Noga, GRL. 3) Total Line Divestment e.g. Tata- Radio business, textile business, electricity, cosmetics.

7) New Product Strategy

1) Product Modification / Improvement 2) Product Imitation 3) Product Innovation Product Modification / Improvement: To introduce a new version of improved versions of product are achieved by adding new features to products. Examples: TV, Refrigerators, Washing Machines, PCs etc Product Imitation:

Marketing Strategy Me too products Indian pharma industry Indian chemical industry

Product Innovation: New innovation, replacing the old way of need satisfaction. Examples: Baggi Car Tape VCR VCD DVD Fountain pen Ball pen etc. US & Germans are the leading country in this business. 8) Value-Marketing Strategy a. Quality Strategy b. Customer Service Strategy c. Time Based Strategy Today customers are demanding combination of product Quality, good service and timely delivery in right amount. Quality Strategy: Quality is defined by customer and not by in-house quality control department / internal evaluations. Ultimate objective of quality should be to delight the customers in every possible way i.e. Service, Support beyond his / her experience. Catching up Filling the gap E.g. Washing Machines Pulling ahead Giving more than competitors. E.g. TV Models, Microwaves. Leapfrogging Coming from behind and going ahead. E.g. Videocon, Japanese cars.

Marketing Strategy Time Based Strategy : Response Time Delivery Time E.g. MTNL, Dominos Pizza, MSEB, BSES etc. Six Sigma Administrative approval area Team work Speed, Courtesies way, Empathy.

11 Basically all products are the same; it is marketing strategy that leads to differentiation among the products. Explain with suitable examples.

MARKETING STRATEGY
A marketing strategy is a process that allows an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable

Marketing Strategy competitive advantage. A marketing strategy should be centered around the key concept that customer satisfaction is the main goal.

PRODUCT DIFFERENTIATION
Product differentiation (differentiation) is the process of distinguishing the differences of a product or offering from others, to make it more attractive to a particular target market. This involves differentiating it from competitors' products as well as one's own product offerings. Differentiation is a source of competitive advantage

Marketing or product differentiation is the process of describing the differences between products or services, or the resulting list of differences in order to demonstrate the unique aspects of your product and create a sense of value for the customer so as to make it more attractive to the target market. The objective of a marketing strategy is to develop a position that potential customers will see as unique. If your target market sees your product as different from the competitors', you will have more flexibility in developing your marketing mix. Successful product differentiation creates a competitive advantage for the seller, as customers view these products as unique or superior A successful product differentiation strategy will move your product from competing based primarily on price to competing on non-price factors (such as product characteristics, distribution strategy, or promotional variables). In marketing, positioning is the technique by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization Successful companies dont market products, they market offerings.

Marketing Strategy An offering encompasses the benefits or satisfaction provided to your target markets, tangible and intangible. To successfully market your product, you must understand its benefits from the buyers perspective. This approach allows you to think beyond the tangible product entity and consider what the consumer is actually buying and their reasoning behind that purchase. Your offering includes a tangible product or service, plus any related services, such as installation, warranties, guarantees, and packaging. It also includes intangible benefits, from peace of mind, to validating an identity, to showing off to the neighbors. Focusing on the offering,rather than on the actual product or service itself, can be valuable for analyzing consumers alternatives, to better identify unmet needs and wants of your target markets, and to enhance development of new products or services. In a larger sense, an organizations offerings are a part of who they are as a business. Your marketing strategy should address what types of customers you seek, what the buyers need, and how your offerings meet their needs. It should also describe how your offering is communicated and what value it holds for the consumer.

While a company can create many differences, each difference created has a cost as well as consumer benefit. A difference is worth establishing when the benefit exceeds the cost. More generally, a difference is worth establishing to the extent that it satisfies the following criteria.

Important: the difference delivers a highly valued benefit to a sufficient number of buyers. Distinctive: the difference either isn't offered by others or is offered in a more distinctive way by the company.

Marketing Strategy Superior: The difference is superior to the ways obtaining the same benefit. Communicable: The difference is communicable and visible to the buyers. Preemptive: The difference cannot be easily copied by competitors. Affordable: The buyer can afford to pay the higher price Profitable: The Company will make profit by introducing the difference.

POSITIONING
Positioning is the result of differentiation decisions. It is the act of designing the company's offering and identity (that will create a planned image) so that they occupy a meaningful and distinct competitive position in the target customer's minds. The end result of positioning is the creation of a market-focused value proposition, a simple clear statement of why the target market should buy the product. Example: 1) Volvo (station wagon) Target customer-Safety conscious upscale families Benefit - Durability and Safety, Price - 20% premium, Value proposition - The safest, most durable wagon in which your family can ride. 2) Dominos Pizza Promise to deliver the Pizza anywhere within 30 min

Marketing Strategy 3) McDonalds Zero Defect Quality, Standardization

12. Explain the relationship between industry attractiveness and competitive strength quoting an Indian example.

GE / McKinsey Matrix In consulting engagements with General Electric in the 1970's, McKinsey & Company developed a nine-cell portfolio matrix as a tool for screening GE's large portfolio of

Marketing Strategy strategic business units (SBU). This business screen became known as the GE/McKinsey Matrix and is shown below: GE / McKinsey Matrix Business Unit Strength High Medium Low High

Medium

Low The GE / McKinsey matrix is similar to the BCG growth-share matrix in that it maps strategic business units on a grid of the industry and the SBU's position in the industry. The GE matrix however, attempts to improve upon the BCG matrix in the following two ways:

The GE matrix generalizes the axes as "Industry Attractiveness" and "Business Unit Strength" whereas the BCG matrix uses the market growth rate as a proxy for industry attractiveness and relative market share as a proxy for the strength of the business unit.

The GE matrix has nine cells vs. four cells in the BCG matrix.

Industry attractiveness and business unit strength are calculated by first identifying criteria for each, determining the value of each parameter in the criteria, and multiplying that value by a weighting factor. The result is a quantitative measure of industry attractiveness and the business unit's relative performance in that industry. Factors that Affect Market Attractiveness

Marketing Strategy Whilst any assessment of market attractiveness is necessarily subjective, there are several factors which can help determine attractiveness. These are listed below: - Market Size - Market growth - Market profitability - Pricing trends - Competitive intensity / rivalry - Overall risk of returns in the industry - Opportunity to differentiate products and services - Segmentation - Distribution structure (e.g. retail, direct, wholesale Factors that Affect Competitive Strength - Strength of assets and competencies - Relative brand strength - Market share - Customer loyalty - Relative cost position (cost structure compared with competitors) - Distribution strength - Record of technological or other innovation - Access to financial and other investment resources

Business Unit Strength The horizontal axis of the GE / McKinsey matrix is the strength of the business unit. Some factors that can be used to determine business unit strength include:

Market share Growth in market share

Marketing Strategy

Brand equity Distribution channel access Production capacity Profit margins relative to competitors

The business unit strength index can be calculated by multiplying the estimated value of each factor by the factor's weighting, as done for industry attractiveness.

Plotting the Information Each business unit can be portrayed as a circle plotted on the matrix, with the information conveyed as follows:

Market size is represented by the size of the circle. Market share is shown by using the circle as a pie chart. The expected future position of the circle is portrayed by means of an arrow.

The following is an example of such a representation:

The shading of the above circle indicates a 38% market share for the strategic business unit. The arrow in the upward left direction indicates that the business unit is projected to gain strength relative to competitors, and that the business unit is in an industry that is projected to become more attractive. The tip of the arrow indicates the future position of the center point of the circle.

Strategic Implications

Marketing Strategy Resource allocation recommendations can be made to grow, hold, or harvest a strategic business unit based on its position on the matrix as follows:

Grow strong business units in attractive industries, average business units in attractive industries, and strong business units in average industries. Hold average businesses in average industries, strong businesses in weak industries, and weak business in attractive industies. Harvest weak business units in unattractive industries, average business units in unattractive industries, and weak business units in average industries.

There are strategy variations within these three groups. For example, within the harvest group the firm would be inclined to quickly divest itself of a weak business in an unattractive industry, whereas it might perform a phased harvest of an average business unit in the same industry. While the GE business screen represents an improvement over the more simple BCG growth-share matrix, it still presents a somewhat limited view by not considering interactions among the business units and by neglecting to address the core competencies leading to value creation. Rather than serving as the primary tool for resource allocation, portfolio matrices are better suited to displaying a quick synopsis of the strategic business units.

The Five Forces model of Porter Porters fives forces model is an excellent model to use to make an analysis of the attractiveness (value) of an industry structure. So for example, if we were entering the PC industry, we would use Porters model to help us find out about: 1) Competitive Rivalry 2) Power of suppliers 3) Power of buyers

Marketing Strategy 4) Threats of substitutes 5) Threat of new entrants. Sometimes, a sixth force is added i.e. Government. The above five main factors are key factors that influence industry performance, hence it is common sense and practical to find out about these factors before you enter the industry. These factors are discussed below in detail:

Competitive Rivalry A starting point to analyzing the industry is to look at competitive rivalry. If entry to an industry is easy then competitive rivalry will likely to be high. If it is easy for customers to move to substitute products for example from coke to water then again rivalry will be high. Generally competitive rivalry will be high if: Degree of product differentiation: If there is little differentiation between the products sold between customers, the rivalry will be high. Switching Costs: Rivalry is reduced if buyers have high switching costs. Structure of competition: If competitors are approximately the same size of each other the rivalry will be greater. Strategic Objectives: If competitors pursue aggressive growth strategies, rivalry will be more intense. If competitors are merely milking profits in a mature industry, the degree of rivalry is typically low. Exit barriers: It is costly to leave the industry hence they fight to just stay in. Power of suppliers

Marketing Strategy Suppliers are also essential for the success of an organization. Raw materials are needed to complete the finish product of the organization. Suppliers do have power. Bargaining power of suppliers comes from: If they are the only supplier or one of few suppliers who supply that particular raw material. If it costly for the organization to move from one supplier to another (known also as switching cost) If the brand of the supplier is very strong Suppliers threaten to integrate forward into the industry (for eg. Brand manufacturers threatening to set up their own retail outlets) Buyers do not threaten to integrate backward into supply The industry is not a key customer group to the suppliers Role of quality and service If there is no other substitute for their product.

Power of buyers Buyers or customers can exert influence and control over an industry in certain circumstances. This happens when: There is little differentiation over the product and substitutes can be found easily. Customers are sensitive to price. Switching to another product is not costly. There are few dominant buyers and many sellers in the industry.

Marketing Strategy Threat of substitutes Are there alternative products that customers can purchase over your product that offer the same benefit for the same or less price? The threat of substitute is high when: Price of that substitute product falls. Performance of that substitute becomes better. It is easy for consumers to switch from one substitute product to another. Buyers are willing to substitute.

Threat of new entrant The threat of a new organization entering the industry is high when it is easy for an organization to enter the industry i.e. entry barriers are low. Threat of new entrants depends on: Economies of scale Capital/ Investment requirements Customer switching costs Access to industry distribution channels Access to technology Brand loyalty The likelihood of retaliation from existing industry players Government regulations

Marketing Strategy An organization will look at how loyal customers are to existing products, how quickly they can achieve economy of scales, would they have access to suppliers, would government legislation prevent them or encourage them to enter the industry.

Both these models help us to understand the relationship between industry attractiveness and competitive strength EXAMPLES PVC insulation Tapes PORTERS FIVE FORCES ANALYSIS

Marketing Strategy THREAT OF INTENSE SEGMENT RIVALRY The adhesive tape industry consists of the major players Pidilite (acquired Bhor Industries), Morgan, Sanghi, Paramount, Chetna Polypack, Fourpillar Corporation, Asia Chemicals and Tesa. The product types are used for packaging, insulation, mounting, protection, medical, stationery or cellotapes). All-India market size is Rs. 600 Crores and is growing at 10% p.a. Insulation tapes have a market size of Rs. 40 Crores (approx.). These are made of PVC, Polyester, Teflon, Kapton etc. The major brands in the PVC insulation tapes segment are Magic, Miracle, Steelgrip, Anchor, Wonder and Deer. Including the unorganized sector, there are around 200 players in the market (even though most are regional). The industry is experiencing decreased margins on production and faces the threat of cheap imports (especially from China). Price warring occurs in the segment among the organized sector, though fluctuations are infrequent as most large players stick to their respective price bands to maintain premium imagery. Advertising battles are not a current phenomenon, though are liable to play a major part in the future. As of now, only Miracle and Steelgrip brands have launched advertisements, both within the last to years.

THREAT OF NEW ENTRANTS Entry and exit barriers do exist, but essentially curtail the larger players . Among the smaller players, firms frequently enter and leave the market and thus returns are stable and low. A multi-brand market exists, with distinct rungs differentiable by price and quality. On the whole, the market exhibits the qualities of an oligopoly. There are a large number of buyers and sellers with distinct market leaders. Most retailers stock select multiple brands but tend to push specific preferred brands (based usually on their margins on different brands).

Marketing Strategy Future entry barriers could be patents and licensing requirements. However, the lack of legal implementation (given the large number of unorganised players) negates this. Mobility barriers exist only in terms of distribution chain setup and building relationships with the retailers.

THREAT OF SUBSTITUTE PRODUCT There is no distinct brand preference. The brand is rarely demanded at time of purchase, as the consumer typically asks for PVC tape or electric tape. The threat of substitutability exists in the generic category from packaging and cellotapes for household use. However, as final household consumption is minimal and most use is by electricians and auto-mechanics, this may be ignored. Within the specific segment, industrial buying takes place on established quality parameters and supplier relationships, thus substitutability by lower rung players is not a threat, the corporates being brand and quality conscious. With non-industrial buyers, prices need to be monitored closely, as due to largely undifferentiated brands and non-existence of brand loyalty, quality tapes may be substituted by local tapes. The threats are of advanced technology which may sway the market, given that prices do not increase significantly, as the consumer is price-sensitive to an extent.

THREAT OF BUYERS GROWING BARGAINING POWER The main differentiator in the PVC electrical insulation tapes market is the buyers and their consumption patterns. Thus, it is imperative that a comprehensive analysis be done of the consumer. Buyers may be divided into the various segments based on their use. PVC insulation tape is essentially used in the following o

Sectors : Electrical, Telecom, Automobile, Defence services, State Electricity boards, State Transports Electrical wiring :

Marketing Strategy
o

Protecting electrical conductors from corrosion Electrical wire insulation

Edge protection, Handle wrapping, Pipe joining

Industrial purchase follows the B to B model, is taken on a case-by-case basis, and is restricted to the few organised players in the market. The product is used as a part of the manufacturing process of industrial buyers. However, as it does not form a large portion of input cost, buying usually follows a straight rebuy pattern and is based on salesperson-customer relationships as it is a routine product (standardised, with low value and cost and little risk). The end user is rarely the decider or even the influencer in this case, and the purchase department acts as the key-point of contact which is wooed by the salespeople.
o

With respect to non-industrial buyers, which are the prime focus of competition, the product may be sold to the retailers and then onward through seller-push or to the end consumer (the electricians, auto mechanics etc.) in an attempt to generate demand pull.

THREAT OF SUPPLIERS GROWING BARGAINING POWER The raw materials require in the manufacturing process are PVC Films, Synthetic Rubber, Antioxidants, Plastic Resins, Paper Core, Primers, Master Batches etc. Suppliers bargaining power does not form a significant threat as suppliers are not in a position to leverage their status and raise prices or reduce quantity supplied. Supply of the inputs is essentially in the open market and specific parameters for supply to this industry are negligible, thus reducing supplier differentiation and negotiating power. Moreover, the suppliers are not of a colluding nature, and the cost of switching suppliers is not significantly high.

Marketing Strategy The players in the industry retain the option of multiple supply sources and thus organisation and concentration on the part of certain suppliers does not affect the market price. Long-term relationships also ensure that frequent variations do not take place and affect the input costs. Example 2 Structure of Industry Background The origin of the Indian Tyre Industry dates back to 1926 when Dunlop Rubber Limited set up the first tyre company in West Bengal. MRF followed suit in 1946. Since then, the Indian tyre industry has grown rapidly. Transportation industry and tyre industry go hand in hand as the two are interdependent. Transportation industry has experienced 10% growth rate year after year with an absolute level of 870 billion ton freight. With an extensive road network of 3.2 million km, road accounts for over 85% of all freight movement in India. Market Characteristics Demand The demand for tyres can be classified in terms of: Type: Bus and Truck; Scooter; Motorcycle; Passenger Car; Tractor Market: OEM; Replacement; Export

Marketing Strategy Environment Analysis - Porter's Model

Entry Barriers: High the entry barriers are high for the tyre industry. It is a highly capital intensive industry. A plant with an annual capacity of 1.5 million cross-ply tyres costs between Rs. 4,000 and Rs. 5,000 million. A similar plant producing radial tyres costs Rs. 8,000 million.

Bargaining Buyers:

Power

of

the High

The OEMs have total control

Bargaining Power of the Suppliers: High

over prices. In fact, the OEMs faced with declining profitability have also reduced the number of component suppliers to make the supply chain more efficient.

Inter Firm Rivalry: Low

The tyre industry consumes nearly 50% of the natural rubber produced in the country. The price of natural rubber is controlled by Rubber Control Board and the domestic prices of natural rubber have registered a significant increase in recent times.

The tyre industry in India is fairly concentrated, with the top eight companies accounting for more than 80% of the total production of tyres.

Threat of Substitutes: Low but Increasing During the FY2002, over 1,10,000 passenger car tyres were imported. This constitutes over 2% of total radial passenger car tyre production in the country. However, with the reduction of peak custom duty, the import of tyres is likely to increase.

13.

Suggest

the

distribution

strategy

for marketing following products in urban and rural markets of India. iv) v) vi) vii) viii) Bath soap for human beings Bath soap for dogs / pets Toothpaste Washing machine Mobile phone (Handset)

Marketing Strategy DISTRIBUTION - CHANNEL STRATEGY Distribution Intensity There are three broad options - intensive, selective and exclusive distribution: Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g. cigarettes, beer). Intensive distribution is usually required where customers have a range of acceptable brands to chose from. In other words, if one brand is not available, a customer will simply choose another. Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g. training) on them. Selective distribution works best when consumers are prepared to "shop around" in other words - they have a preference for a particular brand or price and will search out the outlets that supply. Exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area.

Distribution strategy for Bath soap for human beings Urban and Rural:
Eg: HLL - Toilet Soaps As the marketing channels of the company are already established I would try to increase the penetration in the rural sector to the extreme remote areas which are not touched till now. I would try to reduce the delivery time of the products by choosing and increasing the strategic locations of warehouses. I would also track the distribution path of the wholesalers in small cities through marketing team and would establish a platform or

Marketing Strategy team at a zonal level for all the wholesalers and would try to take their feedback on the market developments. These kinds of congregations could also increase the brand loyalty in the wholesalers and they would be motivated to push HLL products.

Distribution strategy for Bath soap for dogs and pets Urban and Rural:
The strategy would be to develop the marketing channels as strong and penetrated as that of HLL. The national coverage would be dealt with by increasing the company's warehouses and creating C&F agents in the smaller cities. Rural penetration on the lines of competitor would be better strategy. Emphasis would also be on increasing wholesale dealer in small towns and tehsils who can cover the nearby villages. In this context my strategy would be to provide the wholesalers a scheme for buy delivery vans by funding 50% of the price of delivery vans and rest to be paid by wholesalers in installments. The number of distribution van would again depend upon the distribution path covered by each individual wholesaler, the number of villages nearby a small town and certain demographic factors.

Distribution strategy for Toothpaste Urban and Rural:

Rural: I would try to increase product penetration to rural population as by 2006-07 the rural population who is rich and consuming class would be 209Mn which is not much lesser than urban rich and consuming population of 253Mn people. I would try to increase the wholesalers to smaller towns and would track the distribution path so that they are covering all the village areas around the towns.

Marketing Strategy Urban: Toothpaste is a FMCG item and has almost 100% demands in the urban areas and hence the distribution strategy to be adopted here would be the one of exclusive distribution as we want to cover the maximum possible portion of India.

Distribution strategy for Washing Machine Urban and Rural:

The type of distribution system would be largely related to the marketing strategy of the company. Looking at the company as a general manufacturer of consumer goods the most likely system would be one of "selective distribution." In selective distribution the company would target their products to specific outlets where their products would best fit. Other types of distribution would be "intensive distribution" where the company would try to sell their products to as many different outlets as possible and "exclusive distribution" whereby the company would look to a very limited number of outlets that would most likely specialize in a specific niche. "Selective distribution" falls in between these two types.

Distribution strategy for Mobile Phones Urban and Rural:

In the urban areas prominently we would use exclusive distribution strategy. The goods would be made available to the entire India through use of all the channels as explained earlier. The rural areas again we would be using our own agents to sell and also the handsets would be made available in the haats and the melas in the rural areas as that is where the major buying of the products by the customers takes place.

Marketing Strategy Hence our main strategy would be to use: Extensive distribution: For cheap handsets in urban and rural areas Intensive: For the average and little more expensive ones Exclusive: For the most premium ones that wouldnt be afforded by all

14. Product Mix strategies are essential for a multi-product company. If so, apply the concept of product mix strategies to enhance the competitive advantage of P&G? Product Mix The product mix is the set of all products offered for sale by a company. A product mix has two dimensions: Breadth - the number of product lines carried.

Marketing Strategy Depth - the variety of sizes, colours, and models offered within each product line. Major product-mix strategies: Positioning, expansion, alteration, contraction, trading up and trading down

Product Mix Strategies Positioning the Product In Relation to a Competitor In Relation to a Product Class or Attribute In Relation to a Target Market By Price and Quality Product-Mix Expansion Line Extension Mix Extension

Expanding the Product Mix Mix-extension strategies include: Same brand, related product (Tim Horton coffeemaker) Same brand, unrelated product (Swiss Army watch) Different brand, unrelated product (Pepsi & KFC) Different brand, related product (P&G adds Luvs diapers; already makes Pampers)

Trading Up and Trading Down

Marketing Strategy

Trading up: Adding a higher-priced product to a line to attract a higher-income market and improve the sales of existing lower-priced products. Trading down: Adding a lower-priced item to a line of prestige products to encourage purchases from people who cannot afford the higher-priced product, but want the status Other Product Mix Strategies Alteration of Existing Products: Improve an established product with new design, new package, new uses. Product-Mix Contraction: Eliminate an entire line or reduce assortment within it. Pruning to reduce similar brands. Dump unprofitable or indistinct brands.

P&G Product Mix Width and Depth

Marketing Strategy

P&G has an array of detergent brands under its patronage, but all have different brands like Crest, Tide, Duncan, Hines, Charmin, and Ariel etc. Even while the market of Ariel fell, the sales of Tide had compensated the net sales of P&G in the detergent segment. Despite the disadvantages & disregarding the cannibalization of brands, this works as an advantage to the parent company. A strategic decision to face external competition does not eat up the company's overall market share.

Procter & Gamble's Head & shoulders is considered among the top brands in Indian AntiDandruff Shampoos, H & S differentiates itself from its close competitor Clinic All Clear Anti-Dandruff Shampoo in the sense that it is available in different varieties like Menthol, Lemon & Strawberry as well as having a ZPTO factor in it which makes a USP of H & S and positioning it as one of the best brands in the Anti Dandruff Shampoo market. All these factors act as a competitive advantage for Proctor & Gamble.

15. Compare and contrast between Competitive Advantage and Competitive Strategy? How one can achieve Sustainable competitive advantage? Taking a

Marketing Strategy company of your choice in automobile industry, illustrate how this company can develop competitive advantage?

COMPETITIVE ADVANTAGE
Competitive advantage is a position a firm occupies against its competitors. The competitive advantage model of Porter learns that competitive strategy is about taking offensive or defensive action to create a defendable position in an industry, in order to cope successfully with competitive forces and generate superior return on investment. According to Porter the basis of above average performance within an industry is sustainable competitive advantage. There are two types of CA Cost leadership Differentiation Cost advantage occurs when a firm delivers the same services as its competitors but at a lower cost. Differentiation advantage occurs when a firm delivers greater services for the same price of its competitors. They are collectively known as positional advantages because they denote the firm's position in its industry as a leader in either superior services or cost. The primary factors of competitive advantage are innovation, reputation and relationships

COMPETITIVE STRATEGY
A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. There are two basic types of competitive advantage a firm can possess: low cost or differentiation. The

Marketing Strategy two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus. The focus strategy has two variants, cost focus and differentiation focus.

1. Cost Leadership In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average. 2. Differentiation In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price.

Marketing Strategy 3. Focus The generic strategy of focus rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others. The focus strategy has two variants. (a) In cost focus a firm seeks a cost advantage in its target segment, while in (b) Differentiation focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences between a focuser's target segment and other segments in the industry. The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. Cost focus exploits differences in cost behaviour in some segments, while differentiation focus exploits the special needs of buyers in certain segments.

SUSTAINABLE COMPETITIVE ADVANTAGE

A firm possesses a sustainable competitive advantage when its value-creating processes and position have not been able to be duplicated or imitated by other firms. Sustainable competitive advantage results, according to the Resource-based View theory, in the creation of above-normal (or supernormal) rents in the long run. Sustainable competitive advantage allows the maintenance and improvement of the enterprise's competitive position in the market. The goal of much of business strategy is to achieve a sustainable competitive advantage. It is an advantage that enables business to survive against its competition over a long period of time.

Marketing Strategy EXAMPLE: Tata Motors Limited is a multinational corporation headquartered in Mumbai, India. It is India's largest passenger automobile and commercial vehicle manufacturing company. It is part of the Tata Group, and one of the world's largest manufacturers of commercial vehicles. The OICA ranked it as the world's 20th largest automaker, based on figures for 2006 Tata Motors have some distinct advantages in comparison to other multi-national competitors. There is definite cost advantage as labor cost is 8-9 percent of sales as against 30-35 percent of sales in developed economies. Tata motors have extensive backward and forward linkages and it is strongly interwoven with machine tools and metals sectors. Tata Group's strong expertise in the IT based engineering solution for products and process integration has helped Tata Motors. India has a large auto component industry noted for its world class capabilities. There is huge demand in domestic markets due to infrastructure developments and Tata Motors is able to leverage its knowledge of Indian market. There are favorable Government polices and regulations to boost the auto industry. In India, it has focused on providing economical transport solutions in consonance with its values of safety, quality, and environmental care. Its competitive advantage is its high technology which makes the vehicle a very comfortable option to travel through. Tata's trucks have long been reputed for their unmatched performance, build, and technological advancements that are the flag bearers in their production activities in India. It is still operating in the niche market of high end buses Tata Motors would become the cost leaders soon after the launch of Tata Nano. So much so that it was already made its competitors struggle on deciding how to beat them with their one lakh wonder. The demand of Nano would be immense due to the wide spread middle income population in India. Tata Motors have also received huge demand from the international market as well.