MS 204 Marketing Management

MBA II Semester
Dr. Vibhuti Tripathi

Quota System, production driven market Liberalized Economy Demand driven market; Informed and Demanding Customers Focus on: Value Creation, Relationships, Retention, company and customer interface, integrated marketing programs

Defining Marketing
Term Market originates from Latin Word Marcatus, Physical place where business is conducted Has wider implications Customers Stake Holders Business Partners Competitors William J. stanton: A total system of interacting business activities designed to plan, promote and distribute want-satisfying products and services. American Marketing Association: The performance of business activities that direct the flow of goods and services through producers to consumers or users.

 Philip Kotler: A social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with others. Marketing is a process by which companies create value for customers and build strong Customer Relationships in order to capture value from customers in return.

Marketing:
Attempt is made to convert societal needs into profitable Opportunities. In the process activities involved create time, place and possession utilities. And a Value Proposition

Sales: An activity which involves order taking and delivery of Products. In the process it builds goodwill, generates Demand and does problem solving

Advertising:

Paid form of non personal communication of goods / services

VALUE
A Ratio between what a customer gets and what he gives.
Perceived tangible and intangible benefits offered by the products / services and its cost to the customers.

Customer Value Triad, QSP

Quality (Product, Features, Ingredients, Service Components)

Value Price (Low, Competitive) Service (After Sales, Embedded, Extra Efforts

Customers

Reflects in the perceived tangible and intangible benefits offered by the product and its cost to the customers. Reflects in the cost of the product/ services and the revenue generated in the selling process.

Company

Value = Benefits / Costs

Benefits: Functional + Emotional Costs: Monetary + Time + Energy + Psychic

Raise Benefits at same price Reduce Cost at same benefits Raise benefits reduce costs

Marketing is not only facilitating selling of a product but also creation of demand. Needs: State of felt deprivation. Physical, Social and Individual Needs. Physical: Basic to Survival Social: Desire to Belong Individual: Self Expression Wants: Needs directed towards specific satisfiers.

Shaped by ones cultural influence, individual personality and the society.

Demand: Wants + Purchasing Power.

Maslows Hierarchy of Needs

Self Actualisation Esteem Social

Safety
Physiological

Radial Tyres McDonalds Peter England

Ply Tyres Canteen Local Brand

Companies focus on wants and loose sight of needs and purchasing power

Market Segmentation and Target Market

Marketers can not satisfy everyone in the market. Marketers start by dividing the market. Market Segment: consists of a group of customers who share a similar set of wants. Or fall into similar demographic, psychographic or behavioral patterns. Target Market: Lucrative for conducting business; resources and company objectives.

Marketing Process
1. Analyse and understand Markets and Prospective Customers needs and wants. (Market Segmentation, Target Marketing) 2. Design a customer driven marketing strategy with the goal of acquiring, retaining and growing target customers. (Differentiation and Positioning; Marketing Mix) 3. Create a strategy delivering superior value. 4. Build profitable customer relationships and creating customer delight. 5. Reap the rewards.

 Differentiation: Developing unique differences with the intent to influence demand. Positioning: Tailoring a product's image and presentation to appeal to a selected market segment.

Marketing Mix; includes a combination of tools like; Product, Packaging, Price, Channels of distribution, Advertising, Promotion and Personal selling to pursue the marketing objective of the company and fulfilling needs and wants of the customers.

Tools of Marketing Mix

McCarthy classified the marketing mix tools into four broad categories; 4 Ps of Marketing 1. Product: Variety, Quality, Features, Packaging, Warranty, Guarantee 2. Price: MRP, Discounts, Allowances, Payment Credit Terms 3. Place: Channels, Coverage, Locations, Inventory, Transportation 4. Promotion: Sales Promotion, Advertising, Public Relations Sizes,

Options,

Robert Lauterborn suggested 4 Cs

4 Ps Correspond to the Customers 4 Cs Product Price Place Promotion Customer Solution Customer Cost Convenience Communication

7 Ps of Marketing Mix or Extended Marketing Mix

Coined by Booms and Bitner, more useful for services industry .

3 Additional Tools: 5. People: All people directly involved in the consumption of services. Consultant, Employees, Management and Customers. 6. Process: Procedures, Mechanisms and Flow of services are rendered and consumed. 7. Physical Evidence: Communication, Performance existing customers, ambience Activities by which

and Experience of

Scope and Functions of Marketing

Functions of Research:

Marketing Research
Product Planning and Development Functions of Exchange: Buying and Assembling Selling

Functions of Physical Treatment:

Standardization, Branding Packaging

Storage and Transportation

Functions of Facilitating : Salesmanship Advertising Pricing Financing

Insurance

Company Orientations and Philosophy towards market place

Production Concept: Prevailed during Industrial Revolution
Assumptions: Consumers will prefer products that are widely available and Inexpensive. and Consumers are primarily interested in product availability and low prices.

Product Concept:
Assumption: Consumers will favour those products that offer the most quality, performance or innovative features .

Selling Concept: Companies not only produce the product but also try to convince customers to buy them.

Assumptions: If consumers are left alone they will ordinarily not buy enough of Organization's products. and Consumer typically show buying dis-interest or resistance and must be coaxed into buying.

Marketing Concept: Matching a companys capabilities with customers wants. Make and-sell to Sense-and-respond Assumption: Key to achieve its organisational goals consists of a company being more effective than competitors.

Customer is the King. You are the Boss. Putting people first.

Marketing Concept Involves: Customer Orientation. Integration and unification of company operations. Focus:

contd.

Customer is important.
Profit goals will be reached through satisfied customers.

Holistic Marketing Concept: Organizations keep in mind all the aspects of: - Relationship Marketing: Building mutually satisfying long-term relationships. - Integrated Marketing: all departments work together to serve the customers interest - Internal Marketing: recruiting, motivating and retaining staff who want to serve customers well. - Social Responsibility: focus on delivering desired satisfaction effectively and efficiently that competitors, at same time and societys well being.

preserving consumers

Analysing Marketing Environment:

Marketing Environment

External

Internal

- Company Image - Location

Macro Economic Conditions Political and Legal Demographic Competition Technology Micro - Customers - R&D Capability -Financial Capability

- Intermediaries -Human Resource - Suppliers -Production Facilities

Economic Conditions: Business Cycle Purchasing Power of Customers Inflation Interest Rates

Business Cycle

Recession

Recovery Prosperity
Depression

Competitive Environment:

Identify Competitive Advantage

1. What is the basis of present advantage? 2. Can these advantages be sustained?

Bargaining Power of Suppliers

Threat of New Entrants

Competitive Environment

Threat of Substitute

Bargaining Power of Buyers

Technology: Technological breakthroughs can affect markets:

By starting new industries;

By radically altering or virtually eliminating existing industries; By stimulating markets and industries not related to new technology;

Accelerating pace of technological changes

Legal and Governmental Factors: Political Leadership Stability of Government

Rules and Regulations

Monetary and Fiscal Policies Patents, IPR, MRTP

Analysing External Micro- Environment:

Customers: - Needs - Purchasing power - Buying Behaviour Suppliers: - Raw Materials / Finished Goods - Cooperative Relationships Intermediaries: - Value Creation; facilitating organisations - Channels of distribution

Analysing Internal Environment: Company Image;

Location;
Production Facility; R & D Capability; Financial Resource; Human Resource;

Demographic and Socio-Cultural Factors: Age Structure (composition of population Age-wise) Gender Distribution Life Expectancy Population Density Household Size (Family Size) Marital Status Income and wealth distribution Employment Education Occupation Value System Consumption Patterns and attitudes

 Changing Gender Roles: Related to family Jobs Recreation Buying Behaviour A Premium on Time: Paucity of time Attitude towards gaining more free time Convenience Physical Fitness and Health; Geographical Shift in Population; Strategies: Product Development Distribution Arrangements Pricing Policies Promotion

Analysing Consumer Markets and Buying Behaviour

 Every Marketing Activity starts and ends with consumers. Marketers Identify decision makers. It is important to know : who are the people that consume the product

play a role in buying decisions

why they take certain decisions when they buy where they buy

Needs/ Wants

Beliefs

Customers Disposition to Buy

Buying Without Wanting

Buying Without Deciding

Deciding Before Buying

Influencers on Consumers Buying Behaviour:

1. Cultural Factors; Culture, Sub-culture, Social Class

Culture: Peoples shared customs, beliefs, values that are generated from generation to generation.
Sub-culture: smaller groups within cultural framework with common life experiences and situations. Social Class: relatively homogeneous and enduring divisions in a society.

2. Social Factors; Reference Groups, Family, Roles and \ Status. Reference Groups: Small Social Groups to which an individual belongs or aspires to belong. Membership Groups; Primary and Secondary Aspirational Groups Dissociative Groups Opinion Leaders;

Family : Persons related by blood, marriage or adoption who reside together. Family is a major influencer on buying behaviour. Consumption Roles: Influencers; Deciders; Buyers; Users; Maintainers; Involvement and roles vary by products.

Stages in Family Life cycle:

1. Bachelor Stage
2. Newly Married Couples 3. Full Nest I (Young, married, with child) 4. Full Nest II (Older, married, with children 5. Full Nest III (Older, married, with dependent children) 6. Empty Nest I (Older, married, with no children living with them) 7. Solitary Survivor

At each stage of Family Life Cycle a person behaves differently; consumption patterns are
also shaped up accordingly.

Roles and Status: A person enters and exists different roles and status throughout the life.

3. Personal Factors: Age and Life Cycle Stage, Occupation, Economic Situation, Lifestyle, Personality. Age and Life Cycle Stage: Preferences to purchase goods and Render services vary over the life time. Occupation: Occupation influences consumption patterns. Economic Situation: Product Choice is greatly affected by economic circumstances like: Spendable income (stability, time duration, level), savings, credit availability Personal Income Family Income Consumer Credit

Lifestyle: a persons pattern of living in the world reflected in activities, interests, opinions. Personality: individuals distinguishing psychological Characteristics; self confidence, dominance, sociability, adaptability. Brand Personality:

4. Psychological factors: Motivation, Perception, Learning and Beliefs and Attitude. Motivation: is a drive, which propels a person towards achieving his goals. A need becomes a motive when sufficiently backed with intensity

Why do People Shop?

Freuds Theory: Psychological forces shaping up peoples behavior are largely unconscious and that a person can not fully understand his or her own motivation. Some consumers resist prune (dried plum) because prunes are wrinkled looking and remind of old age. Maslows Theory: People satisfy their most important needs first. The needs are placed in a hierarchical order.

Herzbergs Two Factor Theory: Satisfiers and Dissatisfiers.

The absence of dissatisfiers is not enough for a person to be motivated to purchase there must be presence of satisfiers to motivate a purchase. A marketer should avoid the presence of dissatisfiers and absence of satisfiers. Presence of a good packaging style would not act as satisfier or the motivation for purchase. At the same a shabby packaging may lead to dissatisfaction. Quality or the utility could be a satisfier

Perception: is the process by which an individual selects, organizes and interprets information inputs to create a meaningful picture. Perceptions can vary widely among individuals exposed to same situation,

Three perceptual processes;

1. Selective Exposure-select inputs to be exposed to our awareness. 2. Selective Distortion-Changing/twisting current received information, inconsistent with beliefs. 3. Selective Attention4. Selective Retention-Remember inputs that support beliefs, forgets those that don't.

Learning: involves changes in an individuals behavior arising from experience. Learning is a continuous process, Consumers can be made to learn the desired behaviour.

Beliefs and Attitudes: are developed by doing and learning. Marketers are interested in understanding beliefs that consumers have the product, and try to change negative beliefs.

Buying Decision Process

 When making a decision to buy a product from many competing products/brands, a consumer unknowingly passes through a few stages of the decision process. The consumer does not pass through all the stages before purchasing a product. Need Arousal is the first stage of a buying decision process. The need for a given product is activated by internal and external stimuli.

Need/Want Recognition Deciding there is, in fact, a need or a want to be filled.

Stimuli: Internal
External

Information Search Trying to determine what's available.

Personal, Commercial, Experimental

Evaluation Eliminating products/services/companies and deciding who's best.

Purchase Actually buying your product/service

Post Purchase Behaviour Re-evaluate: Cognitive Dissonance

Steps Between Evaluation and Purchase Decision

Evaluation of Alternatives

Purchase Intention

Attitudes of Others

Unanticipated situational Factors

1. Intensity of Others Attitudes 2. Motivation to comply

Evaluation of Alternatives

Purchase sub-decisions: Brand Decision Vendor Decision Quantity Decision Timing Decision Payment Methods

Types of Buying Behaviours Consumers would demonstrate different buying behaviour based on; Involvement Nature of Products Toothpaste / Brush / Soap etc. Car / Bike Apparels Complex and expensive purchases are likely to involve more buyer deliberation and more participants.

Different types of Buyers.

Ones who know exactly what they want. Visitors who some what know what they want. The window shoppers, Non-Prospects

Types of Buying Behaviours

High Involvement

Low Involvement

Significant Differences Between Brands

Complex Buying Variety Seeking Behaviour Buying Behaviour

Dissonance Reducing Buying Behaviour

Few Differences Between Brands

Habitual Buying Behaviour

Complex Buying Behaviour: Highly self expressive products, Learning Process, infrequent purchases
Dissonance Reducing Buying Behaviour: anxiety or conflict of pre or post purchase decision.

Habitual Buying Behaviour: frequently purchased, Brand familiarity, no strong attitude towards a brand.
Variety Seeking Buying Behaviour: frequent brand switching, breaking the monotony.

Factors Likely to Increase Pre-Purchase Search

Product Factors: Long inter-purchase time Frequent changes in product styling Frequent price changes Volume Purchase High Price Many Alternatives Much Variation in features Situational Factors: First Time Purchase No Past Experience Unsatisfactory past experience Purchase for gift Product is socially visible Many sources of conflicting information

INPUT

Firms Marketing Efforts 1. Product 2. Promotion 3. Price 4. Channels of Distribution

Socio Cultural Environment 1. Family 2. Informal Sources 3. Non Commercial Sources 4. Social Class, Culture

P R O C E S S

Need Recognition Pre Purchase Search Evaluation of Alternatives

Psychological Field Motivation Perception Learning, Personality

Experiences

Purchase
Trial Repeat Purchase
OUTPUT Post Purchase Evaluation

New Product Adoption Process

Awareness

Categories of Adopters 1. Innovators

Interest

2. Early Adopters 3. Early Majority 4. Late Majority

Evaluation

Trial

5. Laggards

Adoption

Market Segmentation A company can not serve all customers in a category. Customers differ widely in terms of Perception Values Preferences Buying habits Potential Market;

A company has different alternatives to cater; according to their products or objectives.

Mass Marketing; A company appeals to a broad range of consumers through a single basic marketing program.

Companies consider large potential markets. Assumptions; 1. People have similar characteristics and wants for a product category. 2. One Marketing Mix Strategy will satisfy them. 3. People do have different characteristics and wants but it is not worth to develop separate marketing mix.

 The elements of the marketing mix do not change for different consumers, all elements are developed for all consumers.

Major objective is to maximize sales

Single Marketing Mix Strategy consists of:

1 Pricing strategy 1 Promotional program aimed at everybody 1 Type of product with little/no variation 1 Distribution system aimed at entire market
Maruti 800 in 1980s, News Papers etc.

 Pure Mass Marketing approach is dying rapidly because ; Intense Competition Much Aware Customer Technological Up-gradations Process Information Companies are turning to micro marketing by adopting different approaches based on Segmentation, Target Identification and Positioning. Market Segmentation: Process of identifying smaller groups of people that exist within a larger market. Market Segment : consists of a group of customers who share a similar set of wants, tastes and preferences. Homogeneity (A marketer does not create segment.)

 Effective Segments are; Measurable; Accessible;

Substantial;
Actionable; Differentiable;

The purpose is to design a Marketing Mix that more precisely matches the needs of individuals in a selected market segment.

Approaches to build Market Segment: Homogeneous Demand- uniform, everyone demands the product for the same reason Diffused Demand- Product differentiation more costly and more difficult to communicate. Cosmetic market, need to offer hundreds of shades of lipstick. Firms try to modify consumer demand to develop clusters of at least a moderate size. Clustered Demand- consumer demand classified in 2 or more identifiable clusters. Automobiles: luxury, Sporty, Spacious

Process of Market Segmentation

Analyse the needs of customers Analyse the characteristics of consumers Dis-integrate the viable, profitable, lucrative segments Formulate different market mix for different segments Feedback of various segments Select the higher potential segments

Market Segmentation Strategies Concentration Strategy:

A single market segment with one Marketing Mix.

Segment A Marketing Mix

Segment B Segment C

Segment D

Multi-segment strategy 2 or more segments are sought with a Marketing Mix for each segment, different marketing plan for each segment.

Marketing Mix

Segment A

Marketing Mix

Segment B

Segment C

Marketing Mix

Segment D

Bases for segmenting Markets. Two Broader groups of variables used by companies. Consumer Characteristics: Geographic, Demographic and Psychographic.

Different attitudes of professionals and workers for a product.

Looking at customer responses to benefits, use occasion or brands. May examine whether people who want quality in buying a product differ in their geographic, demographic and psychographic makeup.

Major Segmentation Variables Geographic: Companies can operate in one or few geographic areas, or operate in all areas with separate Marketing Mix Regionally. Cities, Regions Retailers, Fast Food Chains, Tyres Demographic: most popular basis. Easier to measure. Age, Gender, Income, Family Size, Education, Occupation etc. Psychographic: refers to as lifestyle analysis.

 Behavioural: buyers are divided on the basis of their

knowledge attitude use response to a product.

Occasions: Life events, transitions, festivals Benefits: people vary in the benefits they seek from the same product User Status: non users, ex-users, potential users, first time Users

Usage Rate: light, medium and heavy usage.

Loyalty Status: Hard core, split, shifting, switchers.

Attractiveness of a Market Segment

Size of the segment

Growth Rate of the segment Competition in the segment

Brand Loyalty of existing customers

Required market share to break even Whether the company can offer superior value to the customers

Impact of catering to the specific segment on companies image

Access to distribution channels

Identifying Target Markets. A company can adopt alternative Targeting Strategies.

Alternative Strategies

Broad Coverage Differentiated Marketing Undifferentiated Marketing

Narrow Coverage

Micro Marketing

Single Segment Concentration / Concentrated Strategy:

Selecting a single segment and one marketing mix. Choice of Smaller companies with limited resources.

M1 P1

M2

M3

M4

P2

P3

Selective Specialisation Strategy / Differentiated Strategy: Multiple segments catered. Different Marketing Mix to different segments. Product itself may or may not be different.

Some of the Marketing Mix Tools may vary.

M1 P1

M2

M3

M4

P2

P3

Product Specialisation: Company Specialising in a single product. Company builds up strong reputation.

M1 P1

M2

M3

M4

P2

P3

Market Specialisation: Serving many needs of particular segment groups.

M1 P1

M2

M3

M4

P2

P3

Full Market Coverage: A company attempts to serve the entire market, Single undifferentiated marketing strategy, or Separate marketing mix for each segment.

M1 P1

M2

M3

M4

P2

P3

Playing the Ponies, The Strategist, Business Standard, Tuesday, 8 January 2008 Survey conducted to assess the launch of a Brand and Rebranding strategies. Parameters used Visibility Media Pressure Sales/ Market Share Likeability of advertisements Parent Company Promotional Activities POP Displays Performance of Similar Brands Word of Mouth Consumer insight-based strategy

 Three most successful brands; BINGO, VODAFONE, AXIS BANK

ITC Foods Looked for opportunity in packaged snacks category

16% Market share across the country

Leveraging Synergies Distribution Network Sourcing From Farmers High Decibel Advertisement

 Market Survey to find out the snacking habits of Indian Consumers They were looking for excitement in snacks. Product Development; Chefs in ITC hotel were given the task Varied Falvours with twists; Chatkila Nimbu Achar, Bindas Masti Chaas,

Target Group; Youngsters in 16-30 age groups

They are more experimental Advertising Targeted at youth, based on disconnected humour

 ITC dominated media of every kind, with good creative along with good product. web site: www.bingeonbingo.com with offers, games, downloads and mobile games.

On television 10 to 15 spots per channel per day, 20 spots on radio channels, 1000 outdoor hoardings.
Huge brand recall would ensure repeat purchase.

4 lakh large racks to display the brand at all points of sale.

Positioning

 Positioning: is the act of designing the companys offering and image to occupy a distinctive place in the mind of the target market. End result of positioning is the successful creation of a customer Value Proposition. Product Positioning Vs. Brand Positioning.

Steps Involved in Positioning Task ?

Steps Involved in Positioning Task: 1. Identifying Competitive advantage 2. Choosing right competitive advantage 3. Selecting an overall Positioning Strategy

4. Developing a positioning statement

5. Communicating and delivering chosen positioning.

1. Identifying Competitive Advantage a. Product; Features; Performance; Durability; Reliability; Reparability; Style; Design; Quality b. Service; Delivery; After Sales Services; Customer Care; Installation; c. People; Competence; Courtesy; Credibility; Responsiveness; Communication. d. Image;

e. Channels; coverage, expertise, performance

2. Choosing right competitive advantage How many differences to choose? USP Unique Selling Proposition More differentiators; useful in intense competition

Which differences to promote? Criteria to select differences; 1. Importance 2. Distinctive 3. Superior 4. Communicable 5. Preemptive 6. Affordable 7. Profitable

3. Selecting an overall strategy

More

Same

Less

More

Same

Loosing Proposition

Marginal Proposition

Benefits

Less

Loosing Proposition

Loosing Proposition

Price

4. Developing a Positioning Statement Reflected in;

Need Recognition: Target Segment: Solution: Concept: Differentiation:

5. Communicating and delivering the chosen position

More Same Less

More

QUALITY

COMPETITIVE

VALUE

Same

Less

 Attribute Positioning : features Benefit Positioning: benefits Competitor Positioning: better than competitor Product Category Positioning: leader in certain product category Quality and Price Positioning: emphasizing quality or price Beliefs / Value Positioning:

 Single Benefit Positioning: rare to find in intense competition

Double Benefit Positioning: more distinctive

Triple Benefits Positioning: challenging to communicate and convince; COUNTER SEGMENTED

Why Repositioning ?

1. Under Positioning: Vague idea about the brand. Pepsi in Vanilla Flavour 2. Over Positioning: Narrow image of the brand. Tanishque 3. Confused Positioning: Confused image in the mind of customers. Maruti Versa and Maruti Omni VAN 4. Doubtful Positioning: hard to believe the brand claims.

Product

Product
A product is anything that might satisfy a want or need, whether it is a

Goods

Service

Event

Person

Business or Organization

Combination

Experience

The Good/Service Continuum

Pure Tangible Goods

Tangible Goods with accompanying Service

Services with accompanying Minor Goods

Pure Services

Soap

Automobile With Repair Services

Airline Trip With Accompanying Snacks

Financial Consultant

Experience, a new dimension added to product and services

Levels of Goods and Services

Convenience Products
Bought Frequently Low Priced Many Purchase Locations Includes: Staple goods Impulse Goods Emergency Goods

Shopping Products
Bought Less Frequently Information Search Fewer Purchase Locations Compare for Suitability Quality Price and Style

Specialty Products
Special Purchase Efforts Unique Characteristics

Brand Identification
Few Purchase Locations

Unsought Products
New Innovations Products consumers dont want to think about

Require much advertising and personal selling.

Industrial Products
Materials and Parts:

Raw Material Manufacture Material Parts

Supplies and services: Installations Operating Supplies Repair and maintenance items

Organizations, Places and Ideas

Space Selling Event Marketing

Social Advertising
Concept Selling Destination Selling

Product Life Cycles and the Boston Matrix

Product Life Cycles and the Boston Matrix

Product Life Cycle shows the stages that products go through from development to withdrawal from the market Product Portfolio the range of products a company has in development or available for consumers at any one time

Managing product portfolio is important for cash flow

 Product Life Cycle (PLC):

Each product may have a different life cycle PLC determines revenue earned

Contributes to strategic marketing planning

May help the firm to identify when a product needs support, redesign, reinvigorating, withdrawal, etc.

May help in new product development planning

May help in forecasting and managing cash flow

 The Stages of the Product Life Cycle:

Development Introduction/Launch Growth Maturity Saturation Decline Withdrawal

 The Development Stage:

Initial Ideas possibly large number May come from any of the following
Market research identifies gaps in the market Monitoring competitors Planned research and development (R&D) Luck or intuition stumble across ideas? Creative thinking inventions, hunches? Futures thinking what will people be using/wanting/needing 5,10,20 years hence?

 Product Development: Stages

New ideas/possible inventions Market analysis is it wanted? Can it be produced at a profit? Who is it likely to be aimed at? Product Development and refinement Test Marketing possibly local/regional

Analysis of test marketing results and amendment of product/production process

Preparations for launch publicity, marketing campaign

 Introduction/Launch:
Advertising and promotion campaigns

Target campaign at specific audience?

Monitor initial sales Maximise publicity High cost/low sales Length of time type of product

 Growth:
Increased consumer awareness Sales rise Revenues increase Costs - fixed costs/variable costs, profits may be made Monitor market competitors reaction?

Product Life Cycles and the Boston Matrix

Maturity:
Sales reach peak Cost of supporting the product declines Ratio of revenue to cost high Sales growth likely to be low Market share may be high Competition likely to be greater Price elasticity of demand? Monitor market changes/amendments/new strategies?

 Saturation:
New entrants likely to mean market is flooded Necessity to develop new strategies becomes more pressing: Searching out new markets:
Linking to changing fashions Seeking new or exploiting market segments Linking to joint ventures media/music, etc.

Developing new uses Focus on adapting the product

Re-packaging or format
Improving the standard or quality Developing the product range

 Decline and Withdrawal:

Product outlives/outgrows its usefulness/value Fashions change Technology changes Sales decline Cost of supporting starts to rise too far

Decision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again

Product Life Cycles

Sales
Development Introduction Growth Maturity Saturation Decline

Time

Product Life Cycles

Sales

Effects of Extension Strategies

Time

PLC and Profits

Sales/Profits

PLC
Profits Losses Break Even Time

The Boston Matrix

The Boston Matrix:
A means of analysing the product portfolio and informing decision making about possible marketing strategies Developed by the Boston Consulting Group a business strategy and marketing consultancy in 1968 Links growth rate, market share and cash flow

The Boston Matrix

Classifies Products into four simple categories: Stars products in markets experiencing high growth rates with a high or increasing share of the market - Potential for high revenue growth

The Boston Matrix

Cash Cows:
High market share Low growth markets maturity stage of PLC Low cost support High cash revenue positive cash flows

The Boston Matrix

Dogs:
Products in a low growth market Have low or declining market share (decline stage of PLC) Associated with negative cash flow May require large sums of money to support

The Boston Matrix

Question Mark: - Products having a low market share in a high growth market - Need large amount of money to develop them - May produce negative cash flow - Potential for the future?

Market Growth High

The Boston Matrix

Stars

Question Mark

?
Dogs Cash Cows

Low

Market Share High

The Boston Matrix

Implications: Dogs:
Are they worth persevering ? How much are they costing? Could they be revived in some way? How much would it cost to continue to support such products? How much would it cost to remove from the market?
Market Growth

Market Share Question Mark Dogs Stars Cash Cows

The Boston Matrix

Implications: Question Mark:
What are the chances of these products securing a hold in the market? How much will it cost to promote them to a stronger position? Market Share Is it worth it? Question Stars
Market Growth

Mark

Dogs

Cash Cows

The Boston Matrix

Implications: Stars:
Huge potential May have been expensive to develop Worth spending money to promote Consider the extent of their product life cycle in Market Share decision making
Market Growth Question Mark Dogs Stars Cash Cows

The Boston Matrix

Implications: Cash Cows:
Cheap to promote Generate large amounts of cash use for further R&D? Costs of developing and promoting have largely gone Need to monitor their performance the long term? At the maturity stage of the PLC?
Market Growth

Market Share Question Mark Dogs Stars Cash Cows

The Product Life Cycle and the Boston Matrix

Sales (1) (2) (3) The product portfolio four products in the portfolio

C
Time

Developing and Marketing a Product

Important Considerations Product Attributes:

Branding:
Packaging and Labeling: Product Support Services:

Developing a Product or Service Involves Defining The benefits it will offer:

Product Quality

Ability to perform its core functions; levels & consistency

Product Features

Differentiates the product from Competitors

Product Style & Design

Process of designing products style & design

Product Support Services 1. After Sales Services 2. Distribution

3. Customer Care
Marketer must periodically asses the; The value of current services to obtain new ideas The cost of providing the services

Customer Delight and Company Profits

Branding ???

Branding Strategy: Building Strong Brands

Brand: a name, term, sign, symbol or design OR a combination of all these. Intended to identify the goods or services of seller. Differentiate from competitors. Legal Protection for product

Classification of Brands

Individual Brands:

Separate brand names are used For different items by a single company Attract various segments. These brands have distinct images and appeals and marketed differently One brand name is used for two or more individual products. Family branding is more effective for specialised companies Positive fall out on other products. Buyers refer the type of product they want by producers brand name. Dangerous for the company. Retailers are creating their own brands.

Family / Blanket Brands :

Generic Brands :

Private Labels:

INDIVIDUAL BRANDS Hindustan Unilever Limited Home and Personal Care Category: Lux Surf Excel Fair & Lovely Wheel Ponds Vaseline Dove Rin Liril

Sunsilk
Pepsodent Axe Lakme Ayush

Clinic
Closeup Rexona

FAMILY / BLANKET BRANDS Dabur India Limited : Quality Ayurvedic and nature-based Health care, Personal Care, Food Products

Health Care: Chyawanprash, Glucose D, Hajmola, Pudin hara, Dabur Lal Tail, Shankh Pushpi etc.
Personal Care: Amla Hair Oil, Vatika hair oil, Vatika Face Pack, Dabur Lal Toothpaste and Dant Manjan, Babool, Meswak. Food Products: Real Juices, Coolers, Homemade

GENERIC BRANDS DALDA, SURF, NIRMA, XEROX

PRIVATE LABELS

KORYA, Tasty Treat, Star and Sitara : BIG BAZAR Life, Kashish and Vittorio Fratini : SHOPPERS STOP

Brand Equity ???

Brand Equity
In a market where products are similar, branding can have a large effect on the price that customers will pay.

Brands add value to a basic product or service.

Brand equity is an intangible asset that depends on associations made by the consumer. Negative Brand Equity:

Implications:

Financial - One way to measure brand equity is to determine the price premium that a brand commands over a competitor.
Facilitates a more predictable income stream. Increases cash flow by increasing market share, reducing promotional costs, and allowing premium pricing.

Brand extensions - A successful brand can be used as a platform to launch related products. Leveraging of existing brand awareness

 Consumer-based - A strong brand increases the consumer attitude toward the product associated with the brand. Brand equity is an asset that can be sold or leased.

Brand Development Four Options for developing a brand.

Existing New

Brand

Existing

Line Extension Multi Brands

Brand Extension New Brands

Brand

New

Product Categories

Line Extension: introducing additional items in a given product category under same brand name. 1. Low cost, low risk 2. Consumers desire for variety

3. use excess capacity

4. command more shelf space

Brand Extension: using successful brand name to introduce new or modified products in a new category.
1. Instant Recognition

2. Saves costs

Multi Brands: introducing new brands or additional brands in the same category. 1. Catering to different segments and motives 2. Each brand may obtain only a small market share none may be very profitable

3. Resources are spread up

New Brands: Company may create a new brand in a new product category.

Product Line Decisions: The group of related company products that are similar in their target markets, pricing, and distribution channels

Decisions Involve:
Product Line Length: Line Stretching: going beyond current range Downward or upward Stretching can be done. Product Line Filling: adding more items within present range

Product Mix Dimensions: Product Mix Width: Number of different product lines a company offers. Product Mix Length: Total number of items a company carries within its product line.

Product Mix Depth: Number of versions offered in each product in line.

Product Mix Decisions

Managing the Brand 1. Brands Positioning must be continuously communicated. 2. Developing Brand Experience (Managing the touch points)

3. Building a Brand asset Management Team

4. Re-orientation towards customer centric approach 5. Encouraging Intermediaries in Brand Building 6. Periodical Audit of Brands Strengths and Weaknesses 7. Re-branding if necessary

Packaging: involves designing and producing container or wrapper for a product. Functions: Contain Safety .

Primary Container

Secondary Container

Shipping Package

Main purposes to packaging:

Utilitarian Implement Strategy

To Increase Profit

Packaging is an important tool in Marketing Mix

Steps in Developing a good package: Packaging Concept Develop specific elements of package Elements must support products position and marketing strategy.

Labels ???

Labeling : Printed information appearing on or with the package Performs certain functions: Identifies product or brand Describes several things about the product Promotes the product through attractive graphics

Product Support Services ???