32460066 MB0030 Marketing Management

8/7/2019 32460066 MB0030 Marketing Management

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SET 1

MARKETING MANAGEMENT

Q.1: Explain the meaning of marketing and its importance in business.

Marketing is a set of business activities that facilitate movement of goods

and services from producer to consumer. It is an ongoing process of discovering and

translating consumer needs into products and services, creating demands for them, serving

the customer and his demand through a marketing programme of promotion and distribution

to fulfill the companys marketing goals in a competitive environment.

It is evident that customer, his needs and wants are very important aspects of todays

marketing. Customer focus is the very essence of marketing and his viewpoints should

be taken into account while making marketing decisions.

In this era of rapid changes, it is marketing which keeps the business in close contactwith its economic, political, social and technological environment

and informs it of events and changes that can influence its activities.

The marketer s task lies in satisfying human needs and wants through the

exchange process. It is alleged that marketing creates needs and makes people buy things

they do not actually need. In reality, marketing or marketers do not create needs, but

they create wants. Needs are the basic human requirements of food, clothing shelter water and air. When we desire certain specific objects or items to fulfill these needs, they are

called wants.

Marketing is important not only to the company but to the consumers and

society and to the economy. Consumer stands to benefit from marketing activities. He

has more alternatives to choose from, improved and better quality products are

available and he is able to buy goods at convenient locations. Thanks to much

improved customer service, a consumer is able to complain and expects his complaint to be

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attended in reasonable time. He can now buy with credit or debit card or cash or on

installments.

For the society as a whole, marketing is important because it acts as a change agent m

aking people use latest products and improves the standard of living of the people.

As we know, the main objective of marketing is to produce products and services for

the society as per their needs and tastes, and while doing so it creates demand

for these goods and services, encourages them to use them, thus leading to higher demand

and sales. This higher demand allows the company to achieve economies of scale in both

production and distribution resulting in decrease in production and

distribution costs which can be used to reduce prices to consumers.

For a company in any business, marketing is considered to be the most important acti

vity. It helps an organization to keep abreast of changes taking place in the market

and consumer tastes and preferences through market research. Based on this reliable data,

it responds to these changes by rectifying any drawbacks in its products or changing its

competitive strategy. Thus the companys decision making and

planning are not based on just hunches but on sound market information. The firm thatfollows such practices is sure to prosper under all conditions. Marketing provides an

effective channel of communication to the company with its consumers by way

of advertising and sales promotion. Marketing thus brings revenue and earns goodwill for the

company.

Successful operation of marketing activities creates, maintains and increases the

demand for goods and services in the economy. It results in the increased level of

production. This, in turn, increases the national income, which is beneficial to the economy.

Marketing operations require the services of intermediaries such as wholesalers, retailers,

transporters, and service provides for storage, finance, insurance and advertising. These

services provide employment in large numbers.

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Q.2 : Explain the relevance of BCG matrix and GE matrix with examples

Designing an appropriate business portfolio:

After setting mission and objectives, management will develop its business portfolio.

Business portfolio is the right mix of businesses that company operates and products that

offers to customers. Portfolio analysis is the process by which company analyze its products

and businesses.

Company develops their business portfolio in two steps

(a) Analyze the existing business portfolio and decide which business should

receive more, less or no investment.

(b) Developing the new business portfolio for future to meet growth opportunities

and eliminating the unprofitable portfolios.

Analyzing the existing business portfolio:

The current business portfolio of the company is analyzed by the businesses in which

it operates. To make it clearer, let me take an example of ITC group. The company operates

in FMCG, hotels, paper boards, specialty papers and packaging and agribusiness. These

businesses are independent from each other and have their mission and objectives separately.

These subsidiaries of organizations are called as Strategic business units (SBU)

Strategic business unit :

The unit of the company that has separate mission and objectives and that can be

planned independently from other businesses.

Strategic planning models used in assessing the existing businesses:

(a) BCG matrix (Boston Consultancy Group)

(b) GE matrix (General electric)

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BCG matrix: This model is used to identify companys SBUs position in the market.

This model identifies the SBUs strength, weaknesses, opportunities and threats on the basis

of market growth rate and relative market share. This model is also known as growth share

matrix.

Relative Market Share Axis components :

1. Market growth rate: The rate at which market is growing2. Relative market share: Market share of the SBU divided by the market share of the

largest competitor.

Model components :

Star : This category represents the high market share and high industry growth. SBUs in

this category require large investment to defend their position. SBU will turn as cash cowafter some time.

Cash cows : This category represents the low growth rate and high market share which is

the characteristic of SBU operating in mature industry. Here company needs less investment

to hold their position. Hence it generates more cash or in management terms we say cash cow

can be milked.

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Question Mark : This category represents high market growth and low market share.

SBUs in this category has two options, either to invest heavily and bring them to star

position or divest / liquidate from that position. Market growth rate

Low High :

Dogs : SBUs in this category generates less cash for the company as it operates in low

growth and low market share. Usually companies will not invest in this category and try to

liquidate or divest.

BCG matrix for ITC

1. SBU: FMCG Industry growth rate: 24% (AC Nielson retail audit report 2007)

Company growth rate: 50% (the Hindu business line 19 th January 2008)

Companys market share: 8% (outlook business)

Largest competitor share: HUL: 54% (outlook business)

Relative market share= 0.14

2. SBU: Paper board

Industry growth rate: 7.2% (the Hindu business line 27 th May 2007)

Company growth rate: 11% (the Hindu business line 19 th January 2008)

Companys market share: 55%

Largest competitors share: BILT 35%

ITCs FMCG segment analysis shows that though it is market leader in some categories their

overall relative market share is 0.14. Company is in the high growth low relative market

share area i.e. questioning mark position. ITC should invest heavily to convert its SBU

position into star.

ITCs Paperboard industry is in low growth and high market share category i.e. in cash cow

segment. It should plan for investing the cash generated from this position into other

businesses.

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GE matrix:

1. Management can use the GE business matrix to classify SBUs on the basis of two

factors:-

(a) Market attractiveness: Market size, entry barriers, competitors, technology and

profit margin are some factors used to analyze the market attractiveness.

(b) Business position can be determined on the basis of market share, SBU size,

R&D capabilities and cost controls. Each cell in the model represented by the

particular strategy namely, invest strategy, protect strategy, harvest strategy and divest

strategy.

2. Invest strategy: In this position SBU

(a) Should receive ample resources

(b) Should support by well financed marketing efforts.

3. Protect strategies: SBUs in this position should

(a) Allocate the resources selectively.

(b) Develop strategies which help in maintain its market position.(c) Generate cash needed by other SBUs.

4. Harvest strategy: SBUs should not receive substantial new resources and if required,

sell them.

5. Divest strategy: SBUs which falls into this category should not receive any resources

and sell I or shut it as early as possible.

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Developing the new business portfolios:

After analyzing the existing business of the company, let us discuss companys future

plans i.e. growth or downsizing. Company adopts growth strategies to become more

competitive in the market, Market attractiveness Low Medium High tap new opportunities

and become preferred employer. Downsizing is used when the product or market became

unattractive to it. The Ansoff Product Market Growth Matrix is a marketing tool created by

Igor Ansoff and first published in his article "Strategies for Diversification" in the Harvard

Business Review (1957). The matrix allows marketers to consider ways to grow the business

via existing and/or new products, in existing and/or new markets.

Ansoffs model of product/ market expansion.

1. Market penetration : A strategy used in increasing the sales of companys existing

products without modifying it in the existing market.

Characteristics of market penetration .

(a) Serve customer with existing products by opening new stores.

(b) Increase the promotion activities to increase the consumption.

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(c) Improve the service offerings.

Cafcoffee day a reputed coffee chain in south India, started its operation in brigade

road, Bangalore, in the year 1996. It offers different varieties of the coffee to its existing

customers. Today it is having 100 stores in Bangalore.

2. Market development : In this strategy company identifies the new markets to

sell their existing products.

In case of market development company identifies and develops new markets for its

existing Products Caf coffee day, enthused by the success of offering a world-class coffeeexperience, has opened a Caf in Vienna, Austria and is planning to open other Cafes in the

Middle East, Eastern Europe, Eurasia, Egypt and South East Asia in the coming months.

3. Product development : In this strategy, company identifies new product and

sells them existing markets. Caf coffee day added quick bites and ice-cream in their menu to

cater to the needs of customers.

4. Diversification : A strategy for company growth through starting up or acquiring

businesses outside the companys current products and markets. Caf coffee day started

offering tea and cold drinks in its highway caf retail outlets. These highway caf outlets

offer excellent service to the travelers on the high way.

5. Downsizing : Eliminating the unprofitable products of the company from its product

line. In the year 2000 M.S. Banga then chairman of Hindustan Unilever limited (HUL), used

power branding strategy to improve the sales and productivity. He reduced HULs number of

products from 110 to 35.

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Q.3 : What do you mean by MIS? Explain its benefits, types and components.

MIS is an Information system which helps in providing the management of an

organization with information which is used by management for decision making.

A management information system (MIS) is a subset of the overall internal controls of

a business covering the application of people, documents, technologies, and procedures by

management accountants to solving business problems such as costing a product, service or a

business-wide strategy. Management information systems are distinct from regular

information systems in that they are used to analyze other information systems applied in

operational activities in the organization. Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human

decision making, e.g. Decision Support Systems, Expert systems, and Executive information

systems.

An 'MIS' is a planned system of the collecting, processing, storing and disseminating

data in the form of information needed to carry out the functions of management. According

to Philip Kotler "A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate

information to marketing decision makers."

The terms MIS and information system are often confused. Information systems

include systems that are not intended for decision making. The area of study called MIS is

sometimes referred to, in a restrictive sense, as information technology management. That

area of study should not be confused with computer science. IT service management is a

practitioner-focused discipline. MIS has also some differences with Enterprise Resource

Planning (ERP) as ERP incorporates elements that are not necessarily focused on decision

support.

MIS has a major impact on the functions of any organization. The organization derives

benefits from the systems in the following form:

a) Speedy access to information,

b) Interpretation of data,

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could be used MIS is classified as Banking IS, Insurance IS, Production IS, Data warehouse

IS, Public IS etc. Depending upon the type of management service in processing a data to

generate information, MIS is classified into various processing types like Online

transactions, Batch processing, distributed processing, multiprocessing etc.

A MIS system is a system in which there is a constant need for review of the system.

A mechanism can be built in the system to look into its performance and the outcome of such

performed tasks may be assessed. This may be done periodically at fixed interval of

time. Such mechanisms are categorized under MIS classification of frequency.

Components of MIS:

1. Internal Records System

2. Marketing Intelligence System

3. Marketing Research System

4. Analytical Marketing System

Internal Records System:

This includes information on

(i) Order to payment cycle and

(ii) sales information systems.

Order to payment cycle has a system which records, the timing and size of orders

placed by consumers, the payment cycle followed by consumers and the time taken to fulfill

the orders, in the shortest possible time. Customers place order through sales people

and companies dispatch the goods and receive payments directly or through bank. A proper

record system pertaining to order to payment cycle management helps mangers to

decide on production and dispatch schedule, inventory and accounts receivable

schedule and also logistics and distribution management schedules,

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Sales Information Systems record everything in the sales Department, starting from Sales

Call Reports to prospects history to Sales territory and quota information for better

sales planning and forecasting purpose.

Marketing Intelligence System:

This is a set of procedures and sources used by managers to obtain everyday

information about developments in the marketing environment. This system supplies

happenings data unlike Internal Records System which supplies results data.

Marketing managers collect data from published sources like books, magazines and

journals; by talking to customers, intermediaries and sales personnel. Some companies appoint specialists to gather consumer and competitor

information, who does mystery shopping to monitor the performance of their own

or competitors dealers. Competitor Information can also be obtained by buying their

product, attending their press conferences, trade shows and reading their annual

reports. Companies purchase commercial information from outside suppliers and market

research agencies like IMRB, ORG MARG to obtain competitive data on their

sales, advertising expenditures etc., besides their own.

Marketing Research System:

This is the third component of MIS. Marketing Research

provides information to marketing manager when he/she encounters marketing problems.

This may involve conducting Marketing Research survey by collecting primary data.

These surveys may be conducted by the marketing department itself or a it can hire

services of an external marketing research agency.

Analytical Marketing Systems :

Also known as Marketing Decision Support systems MDSS), this is a co-

ordinate collection of data, systems, tools and techniques with supporting software and

hardware by which an organization gathers and interprets relevant information

from business and environment and turns it into a basis for marketing action. All the data

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which is generated through the other three systems described above are stored in a

data base. The storage and retrieval capability of decision support system

allows the collection and use of a wide variety of data throughout the company.

Senior managers can access the data base and continually and monitor sales, markets,

performance of the sales people and other marketing systems as well.

The quality of the parameters is assured if the following steps are taken:

1. All the input is processed and controlled, as input and process design.

2. All updating and corrections are completed before the data processing begins.

3. Inputs (transactions, documents, fields and records) are subject to validity checks.4. The access to the data files is protected and secured through an authorization

scheme.

5. Intermediate processing checks are introduced to ensure that the complete data is

processed right through, i.e. run to run controls.

6. Due attention is given to the proper file selection in terms of data, periods and so

on.

7. Backup of the data and files are taken to safeguard corruption or loss of data.8. The system audit is conducted from time to time to ensure that the information

system specifications are not violated.

9. The system modifications are approved by following a set procedure which begins

with authorization of a change to its implementation followed by an audit.

10. Systems are developed with a standard specification of design and development.

11. Information system processing is controlled through programme control, process

control and access control.

12. Ensure MIS model confirms consistency to business plan satisfying information

needs to achieve business goals.

The assurance of quality is a continuing function and needs to be evolved over a

period and requires to be monitored properly. It cannot be assessed in physical units of

measure. The user of the information is the best judge of the quality.

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Q.4 : Suppose you need to conduct a small marketing research in your

neighborhood regarding the purchase and use of toothpastes, what will be your approach in

the process?

Collection of information is the first step for a small marketing research. After

collecting the information, consumers arrive at some conclusion about the product. In this

stage, we have to compare different brands on set parameters which we have to think are in

the toothpastes. We have to find out the information about the product, place, price and point

of purchase and have to collects the information from different sources like

1. Personal sources Family, friends and neighbors.2. Commercial sources Advertising, sales people, dealers, packaging and

displays.

3. Public sources Mass media and consumer rating agencies.

4. Experimental Sources Demonstration, examining the product.

The demand for the product in this market is derived i.e. depend upon the final

consumption of the product and service. The purchase centre may include people outside the

organization such as government officials, Consultants, technical advisors and other members

if the marketing channel. Different members of the buying centre have different influences.

Member of the buying centre have different personal motivations, perceptions and

preferences which in turn are dependent on age, income, education, job, position, personality,

attitudes towards risk and culture.

For the market research, the following are the bases for positioning strategies that are

available are:-

1. Attribute positioning A company positions itself on an attribute such

as size or number of years in existence.

2. Benefit positioning The product is positioned as the leader in a

certain benefit.

3. Application positioning Positioning the product as best for some use andapplication.

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Q.5 : Explain the consumer buying decision process with respect to new products. Give

examples.

Consumer buying decision process :

After discussing the factors that influence the buying behavior,

now, we will discuss the consumer decision making process. Consumer passes through

five different stages while purchasing the product.

1. Need recognition : Customer posses two type of stimuli at this juncture. One

is driven by the internal stimuli and another is external stimuli. The examples of

internal stimuli are customers desire, attitude or perception and external stimuli are

advertising etc.. From both stimuli customer

understand the need for the product. Here marketer should understand what customers needs

have that drew customers towards the product and should highlight

those in the communication strategy.

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2. Information search : In this stage customer wants to find out the information about

the product, place, price and point of purchase. Customer collects the information from

different sources like

(a) Personal sources: Family, friends and neighbors

(b) Commercial sources: Advertising, sales people, dealers, packaging and

displays.

(c) Public sources: mass media and consumer rating agencies.

(d) Experiential sources: Demonstration, examining the product.

In this stage marketer should give detailed information about the product. The communication should highlight the attributes and advantages of the product in this stage so that he

created the positive image about the product.

3. Evaluation of alternatives : After collecting the information, consumers arrive

at some conclusion about the product. In this stage he will compare different brands

on set parameters which he or she thinks required in the product. The evaluation

process varies from person to person. In general Indian consumer evaluate on the following parameters:

(a) Price

(b) Features

(c) Availability

(d) Quality

(e) Durability

At this stage marketer should provide comparative advertisements to evaluate the diff

erent brands. The advertisement should be different for different segments and highlight the a

ttribute according to the segment.

4. Purchase decision : In this stage consumer buy the most preferred brand. In India

affordability plays an important role at this stage. Organizations bring many varieties of the

products to cater to the needs of customers.

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5. Post purchase behavior : After purchasing the product the consumer will

experience some level of satisfaction and dissatisfaction. The consumer will also engage

in post purchase actions and product uses of interest to the marketer. The marketers job does

not end when the product is bought but continues into the post purchase period. Customer

would like to see the performance of the product as he perceived before purchase. If the

performance of the product is not as he expected then he develops dissatisfactions.

Marketer should keep an eye on how consumer uses and disposes the product. In

some durable goods Indian consumer want resale value also. Many automobile brands that no

table to get resale value lost their market positions.

Buyer decision process for new products :

The buyers decision for existing products andnew

products varies. You already seen in the existing product buying decision process

consumers have the option to search for the information and evaluate them. In the

new product such options dont exist. Therefore we should understand how consumer

comes to know about the product. Kotler defined this process as adoption process.According to Philip Kotler Adoption is The mental process through which an individual

passes from first hearing about an innovation to final adoption

Adoption process

1. Awareness : the consumer became aware of the product but lacks information

about it.

2. Interest : As know previous information available consumer shows interest

to get the information about the product.

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3. Evaluation : After receiving the information consumer analyzes the benefits of new

products over any existing products or substitutes and decides whether to buy or not.

4. Trial : The consumer tries the new product on a small scale to improve his or her

estimate of its value.

5. Adoption : In this stage consumer decides to make full and regular use of the

product.

Adoption rate :

The adoption of new product varies from individual to individual.

1. 2.5% of the consumers adopt any new product that enters to the market. These

consumers are status conscious people. Marketer should highlight how the new product

will bring the esteem to the consumer.

2. 13.5% of the customers fall into the early adopter categories. In this categories

customer observed the advantage of the new product and the moment the price of the product

falls into the affordable category they buy the product.

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3. The next group is the biggest one in the adoption process. These group customers are

attracted towards the benefits of the product. They make sure that there are no

technical or general problems associated with the product. This group contains 34% of the

total customers.

4. This group consist 34% of customers. The group looks for the quality product at the

affordable prices.

5. The final group is called as laggards. These are traditional and price conscious

people. They often take lot of time to adoption of the product.

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Q.6 : Explain the different consumer behaviour models.

Buyer behavior models :

The influence of social sciences on buyer behavior has prompted marketing experts

to propound certain models for explaining buyer behavior. Broadly, they include the

economic model, the learning model, the psychoanalytical

model and the sociological model.

1. The Economic Model : According to the economic model of buyer behavior,

the buyer is a rational man and his buying decisions are totally governed by the concept of utility. If he has a certain amount of purchasing power, a set of needs to be met and a set

of products to choose from, he will allocate the amount over the set of products in a

very rational manner with the intention of maximizing the utility or benefits.

2. The Learning Model : According to the learning model which takes its cue from

the Pavlovian stimulus response theory, buyer behavior can be influenced by manipulating

the drives, stimuli and responses of the buyer. The model rests on mans ability atlearning, forgetting and discriminating. The stimulus response learning theory states that

there develops a bond between behavior producing stimulus and a behavior response

(S. R. Bond) on account of the conditioning of behavior and formation of habits. This theory

may be traced to Pavlov and his experiments on salivating dogs. Pavlovs experiments

brought out associations by conditioning.

In his well known research with dogs, a bell was rung every time food was served

to a dog. Eventually, the dog started salivating each time upon hearing the bell though no

food was served. The dogs behavior is conditioned; it is related to behaviorproducing

stimulus (bell ringing) and behavior response (salivation). The S.R. bond so established

causes a set pattern of behavior learnt by the object dog. In terms of consumer behavior, an

advertisement would be a stimulus whereas purchase would be a response.

Learning Process : According to the stimulusresponse theory, learning is dependent on

drive, cue (stimulus), response and reinforcement.

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Drive : Drive may be defined as any strong stimulus that impels action. It arouses an

individual and keeps him prepared to respond. The drives may be classified as

primary drives and secondary drives. Primary drives are based upon innate

physiological needs such as thirst, hunger, pain avoidance, and sex. The secondary

drives are based upon learning. They are not innate and are

derived from the primary drives. These include the desire for money, fear, pride, rivalry, etc.

Cue : Cue or stimulus may be defined as any object in the environment perceived by the

individual. The aim of the marketing man is to find out or create the cue of sufficient importa

nce that it becomes the drive stimulus or elicits other responses appropriate to his objective.

Here, the objective is to find out those conditions under which a stimulus will enhance thechances of eliciting a particular kind of response.

Response : Response is an answer to a given drive or cue. When a man feels thirsty, he

attempts to get water at any cost. Here attempt to get water is a response to the

primary drive of thirst. Response also includes attitudes, familiarity, perception and

other complex phenomena. Responses may be generalized or discriminatory. Generalized

response refers to a uniform response to similar though not identical stimuli.Discriminatory response refers to the selective response to similar stimuli.

Undifferentiated products such as cigarettes and detergents normally elicit generalized

consumer responses but by huge advertising outlays companies try to induce

consumers to perceive differences in brands and to make discriminatory responses.

Reinforcement : Reinforcement or reward means reduction in drive and stimulus. It has

been defined as environmental events exhibiting the property of increasing the

probability of occurrence of responses they accompany. Thus, when consumption of a

product or a brand of product leads to satisfaction of the initiating need (drive/stimulus)

there is reinforcement. If at some later date the same needs are aroused, the

individual will tend to repeat the process of selecting and getting the same product or brand

of product. Each succeeding time that product or brand brings satisfaction, further

reinforcement takes place, thus, further increasing the possibility that in future also, the same

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product or brand will be bought. This type of behavioral change, increasing possibility that an

act will be repeated, is called learning; reinforcement increases the rapidity and vigor of

learning.

3. The Psychoanalytical Model : The psychoanalytical model draws from

Freudian Psychology. According to this model, the individual consumer has a complex set of

deepseated motives which drive him towards certain buying decisions. The buyer has a

private world with all his hidden fears, suppressed desires and totally subjective longings. His

buying action can be influenced by appealing to these desires and longings. The

psychoanalytical theory is attributed to the work of eminent psychologist Sigmund

Freud. Freud introduced personality as a motivating force in human behavior. Accordingto this theory, the mental framework of a human being is composed of three elements,

namely:

(a) The id or the instinctive, pleasureseeking element. It is the reservoir of the

instinctive impulses that a man is born with and whose processes are entirely

subconscious. It includes the aggressive, destructive and sexual impulses of man.

(b) The superego or the internal filter that presents to the individual the behavioral

expectations of society. It develops out of the id, dominates the ego and

represents the inhibitions of instinct which is characteristic of man. It represents

the moral and ethical elements, the conscience.

(c) The ego or the control device that maintains a balance between the id and the

superego. It is the most superficial portion of the id. It is modified by the influence of

the outside world. Its processes are entirely conscious because it is concerned with the

perception of the outside world. The basic theme of the theory is the belief that a pers

on is unable to satisfy all his needs within the bounds of society. Consequently,

such unsatisfied needs create tension within an individual which have to be

repressed. Such repressed tension is always said to exist in the subconscious

and continues to influence consumer behavior.

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(d) The Sociological Model : According to the sociological model, the individual

buyer is influenced by society or intimate groups as well as social classes. His

buying decisions are not totally governed by utility; he has a desire to emulate,

follow and fit in with his immediate environment.

(e) The Nicosia Model : In recent years, some efforts have been made by

marketing scholars to build buyer behavior models totally from the marketing mans

standpoint. The Nicosia model and the Howard and Sheth model are two important

models in this category. Both of them belong to the category called the systems

model, where the human being is analyzed as a system with stimuli as the input

to the system and behavior as the output of the system. Francesco Nicosia, an expertin consumer motivation and behavior put forward his model of buyer behavior in

1966.

The model tries to establish the linkages between a firm and its consumer how the

activities of the firm influence the consumer and result in his decision to buy. The

messages from the firm first influence the predisposition of the consumer towards the

product. Depending on the situation, he develops a certain attitude towards the

product. It may lead to a search for the product or an evaluation of the product. If these steps have a positive impact on him, it may result in a decision to buy. This is

the sum and substance of the activity explanations in the Nicosia Model.

The Nicosia Model groups these activities into four basic fields. Field one has two

subfields the firms attributes and the consumers attributes. An advertising message

from the firm reaches the consumers attributes. Depending on the way the message is

received by the consumer, a certain attribute may develop, and this becomes the input

for Field Two. Field Two is the area of search and evaluation of the advertised

product and other alternatives. If this process results in a motivation to buy, it

becomes the input for Field Three. Field Three consists of the act

of purchase. And Field Four consists of the use of the purchased item.

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SET 2

MARKETING MANAGEMENT

Q.1 : a. Give a short note on bases of Segmentation.

b. Analyze the pricing methods with relevant examples

Bases for Segmenting Consumer Markets

1. Geographic segmentation : Dividing the market into different geographical

units such as nations, states, regions, cities or neighborhoods. The company can

operate in one or a few Geographic areas or operate in all but pay attention to local

variations. For example, Bennett, Coleman and co Ltd divided markets according to

geographical units for their tabloids. In Bangalore the tabloid is known as Bangalore Mirror

where as it is Mumbai Mirror in Mumbai.

2. Demographic Segmentation : In demographic segmentation the market is divided into

groups on the basis of variable such as age, family size, family lifecycle, gender,

income, occupation, education, religion, race, generation, nationality and social class.

Demographic variables are the most popular bases for distinguishing customer groups. One

reason is that consumers wants, preferences and usage rates are often associated with

demographic variables. Demographic variables are easy to measure. Even when the

target market is described in nondemographic terms, the link back to demographic

characteristics is needed in order to estimate the size of the target market and the media that

should be used to reach it efficiently. Some of the demographic variables used are :

(a) Age and LifeCycle Stage: Consumers wants and abilities change with age.

On the basis of age, a market can be divided into four parts viz., children,

young, adults and old. For consumers of different age groups, different types

of products are produced. For instance, different types of readymade

garments are produced for consumers of different age groups. A successfulmarketing manager should understand the age group for which the

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product would be most suited and determine his marketing policy, pricing

policy, advertising policy etc., accordingly.

For example, HUL launched pepsodent kids for small children.

(b) Gender: Gender segmentation has long been applied in clothing, hairstyling,

cosmetics and magazines. For example, Emami segmented its personal care

business on the basis of gender. For women, it is having Emami naturally fair,

and for men it is fair and handsome.

(c) Income: Income segmentation is a longstanding practice in such product

and service categories as automobiles, clothing, cosmetics and travel. However,income does not always predict the best customers for a given product.

For example, Baja Auto limited, a leading automobile company, different bikes for

different commuters. For entry level (less than Rs35000) it is Bajaj CT 100, for mid s

egment (greater than Rs35000 but less than Rs60000) it is pulsar and for the upper

segment greater than Rs 60000 Avenger and Eliminator is positioned.

3. Psychographic Segmentation : In Psychographic segmentation, buyers areclassified into different groups on the basis of lifestyle or personality and values.

People within the same demographic group can exhibit very different psychographic

profiles.

(a) Lifestyle : People exhibit different lifestyles and goods they consume

express their lifestyles. Many companies seek opportunities in lifestyle

segmentation. But lifestyle segmentation does not always work.

(b) Personali Marketers have used personality variables to segment the

markets. They endow their products with brand personality that corresponds to

consumer personalities.

(c) Social Class : It has a strong influence on preference in cars, clothing,

home furnishings, leisure activities, reading habits etc. Many companies design

products and services for specific social classes.

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4. Behavioral Segmentation or Consumer Response Segmentation : In behavioral

segmentation, buyers are divided into groups on the basis of their knowledge or attitude

towards the use of, or response to a product. Some marketers believe that behavioral variable

s are the best starting points for constructing market segments.

(a) Occasions : According to the occasions, buyers develop a need, purchase a

product or use a product. It can help firms expand product usage. A company can

consider critical life events to see whether they are accompanied by certain needs. For

example, Tanishq a TATA enterprise offers schemes and promotions for Akshaya

Thrutiya ( auspicious day to purchase jewellary)

(b) Benefits: Buyers can be classified according to the benefits they seek.

For example, Peter England, a madhura garment brand positioned its wrinkle free

trousers on the basis of benefits.

c) User Status: Markets can be segmented into nonusers, potential users, first

time users and regular users of a product. Each market segment requires a

different marketing strategy. The companys market position will also influence

its focus. Market leaders will focus on attracting potential users, whereassmaller firms will try to attract current users away from the market leader. For

example, Kishkinda resort near Hampi classifies its customers according to

this characteristic. Resort believes that locals falls into on user category, affluent

class who comes to Hampi as potential users, foreigners as first time users rich people

near Hampi who frequently come there as regular users.

(d) Usage Rate: Markets can be segmented into light, medium and heavy

product users. Heavy users are often a small percentage of the market but

account for a high percentage of total consumption. Marketers prefer to

attract one heavy user rather than several light users and they vary their promotional

efforts accordingly.

Price determination is very important aspect of strategic planning. Marketers

fix the price of the product on the basis of cost, demand or competition.

Dell, which allows customers to customize the product adopted flexible pricing methods. In c

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ontrast, Indian oil companies product prices are fixed by the government where company do

es not have any control. Retailer like big bazaar Fair price and Subhiksha targeted price

conscious consumer. Manufacturers and service providers all over

the world outsourced some of their functions to developing countries to get cost advantage w

hich help them in reducing their final price. Internet has become alternative tool for shopping

to the consumer. It offers wide range of products and lesser price.

Pricing method which affect price decision

1. Marketing objectives : There are four major objectives on which prices are

determined. They are survival, current profit maximization, Market share leadership and product Quality leadership. Survival strategy adopted when company is facing stiff

competition from the competitors and it wants quick reaction and recovery. Current

profit maximization strategy is used to defend the market position. To explain, assume

a company is operating in the lubricants business. Its sales and market share are very high. It

always tries to hold their current position. To do this it increases the price of the product. The

next objective is market share leadership. Here, company strives to achieve

the leadership position in the market. It reduces the price of the product so that morenumber of customers buys the product. Through volume generation company gets the

market leadership position. Product quality leadership objective is used when company

decides to come with high quality product and premium price. The intention

of the company is to cater to the needs of the niche segment.

2. Costs : The cost of marketing and promoting the product will have direct impact on

the price. For example, Airline fuel cost went up recently. All airline companies

increased the price of the ticket. Company will be incurring fixed cost

(plant, Machinery etc...) as well as variable cost (Raw material, labor etc) The fixed cost w

ill go down if the number of products produced increases. The variable cost of the product de

creases if the product is produced up to optimal level and then once again it goes up. Hence

the total cost (fixed cost plus variable cost) vary according to both fixed cost and variable

cost. Marketer is interested in knowing the break even analysis when he introduces

the product in the market. The break even point for a product is the point where total revenue

received equals the total costs associated with the sale of the product (TR=TC). A break even

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cigarette is increased. Hence company that manufactures cigarette should increase the

price. The increase in the price is determined by the

government environment which is external to the company.

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Q.2 : Explain the benefits and demerits of the different types of advertising media.

How will a marketer decide on the suitable media for his/her products?

Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or

services by an identified sponsor. For example: Print ads, radio, television, billboard,

brochures and, signs, in store displays, posters, motion pictures, and banner ads.

It has been universally accepted that advertising is an important tool of marketing of

the products. The expenditure on advertising is regarded as a profitable investment.

The main benefits claimed of advertising are as follows:

1. 3 R's of advertising . These are retaining the loyal customer, reducing lost customers

and recruiting new customers.

2. Reduction in per unit cost Advertising enables a businessman to increase the sales

of the product.

3. Increase in employment Advertising increases the sales volume of goods and

provides employment to a large number of workers.

4. Change in the living habits An effective advertisement brings about a rapid change

in the habits and attitudes of people.

5. Elimination of middleman Advertising awakens interest and provides utility of

goods far and wide in the country.

6. Acceptance of new products It introduces new products to the customers.

7. Virtues of thrift It has a great educative value. It teaches the people the benefits of

thrift and their responsibility to their dependents.

8. Institutional management Advertising helps in building up a favourable image of

the country.

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in every branch of business to promote sales. It is not merely a means of sales

promotion but today it has become a science equivalent to any other social science.

Other disadvantages of Advertisement:

1. Increases the cost : It increases the cost of goods. The cost of the advertisement is

included in the price and is ultimately borne by the customers.

2. Misleads the public : It misleads the public by giving false statements about the

product. (It may be true in some cases but majority of advertisers know the value of honest

statements.)

3. Creates dissatisfaction : It creates tastes and desires for some people whose income

may not allow them to buy. Such people feel dissatisfied.

4. Creates a monopoly : It increases monopolistic trend. Due to advertisement some

manufacturers create monopoly in industry and thus reduce healthy competition. It becomes

difficult for new firms to enter the field.

5. Creates the confusion : It creates the possibility of wrong purchases. Being impressed

by the advertisement, in some cases, a person is not able to purchase the commodity, which

he actually wants to purchase.

6. Encourages luxury : This encourages luxury. Mostly the commodities related to

comforts and luxuries are advertised, for example, cigarettes, cosmetic goods and etc. due to

advertisement of cigarettes several persons start smoking cigarettes, which becomes habit.

7. Reduces cleanliness : It reduces cleanliness. Large number of posters and writings on

the walls are used for advertisement. This makes the roads and the walls of the houses look

dirty. Thus, it reduces the natural beauty.

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8. Causes wastage : It is a cause of wastage of natural resources. As a results of

advertisement, style and fashion change quickly. It makes the goods out of fashion.

Marketer:

The marketer divides the market into homogeneous sub markets by understanding the

needs, perceptions and expectations of the consumers. On the basis of segmentation,

the company will prepare and follow different marketing programs for different

segments to ensure better customer relationship. Marketer divides the market into distinct

groups of buyers who have similar preferences. These groups are called segments with

their own specific demographic, psychographic and behavioralcharacteristics. The marketer decides as to which of these segment or segments offer highest

opportunity for his company. For each of these target markets, the firm develops a product /

service suited to their needs. TATA group has recently designed an economy car called NA

NO is priced around Rs.1 Lakh. The target market for this car is all aspirants who dream

of owning a car but cannot afford cars which are now available for minimum Rs.2.5

Lakh. A Target Market is the group of people at whom a marketer targets his

marketing efforts to sell his goods and services.

Marketers must examine the changing needs of the customer. This process provides

opportunity to examine whether customers are satisfied with the existing products or not. If

they are not satisfied what are the features they are looking at. It also helps to test the

innovative concepts that company has, commercially viable or not. For example, Titan,

wrist watch manufacturer from Tata group should analyze whether customer

are satisfied with the time accuracy in the watch. It should also analyze what are the

other features customer is looking in the watch. It may be style, calculator,

voice recorder, jewels studded or pulse monitor. In this case, time accuracy

became existing want and other features become future wants.

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Decisions involved on the suitable media in setting up a channel:

Marketer should consider various factors before deciding the particular type of channel.

It may be company or competitive factors. The type of goods to be transported and

stored will decide the length and intensity of channel. To decide on the particular

channel, marketer will take following decisions.

1. Understanding the customer profile:

Purchasing habits differs from individual to individual. Individuals who face

shortage of time would like to purchase on the net (direct channel) and whohave abundance of time would like to experience the shopping.

Some of them would like to have variety of goods while others want unique or

specialized products. Hence marketer should understand who are his customers?

How do they purchase? For example, customer dont like to travel half a kilometer

to purchase a shampoo sachet but he dont mind travelling two kilo meters while purchasing

durable goods.

2. Determine the objectives on which channel to be developed:

(a) Reach : Company would like to make the goods available in most of the retail

outlets. It will adopt intensive distribution channel.

(b) Profitability : Company wants to reduce the cost in the channels and enhance

their profitability. It will restructure the channel to optimum level so that it can reduce

the cost and increase the profit.

(c) Differentiation : Company positions their products differently. When most of

the industry players follow conventional system, company goes with new format

of channels. For example, all computer manufacturers were adopting dealer

retailer channel to sell their products but Dell started selling its

product on the internet.

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3. Identify type of channel members :

Once the objectives are set on the basis of companys

policies, it will analyze which type of the channel best suits. Merchants, agents

and resellers are some intermediaries involved in the distribution. Merchants are those

who buy the product, take title and resell the merchandise. Agents will find the customers,

negotiate with them but do not take the title of the product. Facilitators are the people

who aid the distribution but do not negotiate or take the title of the product.

4. Determining intensity of distribution :

Intensity of distribution means how many middlemen will be

used at the wholesale and retail levels in a particularterritory. If the numbers of intermediaries

are excess then the cost of the channel will increase vice versa if the number of intermediaries

are less then company will not be able to meet all targetcustomers. Therefore company shoul

d adopt optimum number of intermediaries. On the basis of how many intermediaries

required, company can adopt any one of the following strategies:

(a) Intensive distribution : A strategy in which company stocks goods in

more number of outlets. The intention is to make the goods available near to the

customer. For example, you can find ParleG glucose biscuits available in almost all

the retail outlets in rural and urban areas.

(b) Selective distribution : A strategy in which company stocks goods

in limited number of retail outlets. For example, televisions are sold only in selected

retail outlets. TVs cannot be sold like toothpaste. Onida TVs are available in

electronic retail shops like Viveks, Girias, Next, Ezone etc

(c) Exclusive distribution : In this type of channel format marketer

gives only a limited number of dealers the excusive right to distribute its products

in their territories. For example, a Kaya skin care solution of Marico was marketed

through exclusive distribution.

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5. Assigning the responsibilities to channel members:

Company should define the territory

in which channel member should operate, at what price he should sell, services he should

perform, and how he should sell.

6. Selecting the criteria to evaluate the channel member:

A company may have different types of channel alternatives. It would like to choose

any one of the alternatives, which meets

its objectives. Channels can be evaluated in the design phase by the method called SCPCA.

(a) Sales(S) The ability of each channel member to generate the sales for

company in a given period.

(b) Cost(C) how much cost each channel alternatives incur? Which

one of the alternative provides the optimum solution?

(c) Profitability (P) various channel alternatives available to the company

and their profitability shall be compared. Company with better profitability shall beselected.

(d) Control (C) Every company would like to have better control over its

channel members. Alternative channels can be evaluated on the basis of how

much control each channel member desires? And how much control the company is

willing to provide?

(e) Adaptability (A) Marketing is dynamic world. Competition exerts

pressure on companies to relook at their practices and supply chain continuously.

The channel alternatives should be flexible enough to meet the changing

requirements. Whichever channel alternative meets such objectives shall be

selected.

Example: Radio

Benefits:

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1. A universal medium. Can be enjoyed at home, at work, and while driving. Most

people listen to the radio at one time or another during the day.

2. Permits you to target your advertising dollars to the market most likely to respond to

your offer.

3. Permits you to create a personality for your business using only sounds and voices.

4. Free creative help is ususally available.

5. Rates can generally be negotiated.

6. Least inflated medium. During the past ten years, radio rates have gone up less than

other media.

Demerits:

1. Because radio listeners are spread over many stations, to totally saturate your market

you have to advertise simultaneously on many stations.

2. Listeners cannot refer back to your ads to go over important points.

3. Ads are an interruption to the entertainment. Because of this, radio ads must be

repeated to break through the listener's "tune out" factor.

4. Radio is a background medium. Most listeners are doing something else whilelistening, which means your ad has to work hard to be listened to and understood.

5. Advertising costs are based on ratings which are approximations based on diaries kept

in a relatively small fraction of a region's homes.

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Q.3 : Write a note on new product development and product mix.

Product :

A good, service, person, place, events or organizations offered to consumers to

satisfy his need or want. A product may be person also. Here marketer tries to buy

and sell the celebrities or sports persons of a league or club etc For, example, Board of

cricket control in India (BCCI) asks its Indian premier league (IPL) teams to buy Iconic playe

rs and foreign players for certain price.

Product development :

New products are essential for existing firms to keep the momentum

and for new firms they provide the differentiation. New product doesnt mean that

absolutely new to the world. It may be modification, or offered in the new market,

or differentiate from existing products. Therefore it is necessary

to understand what are new products? New Products are:

1. They are really innovative: Googles Orkut a networking site which

revolutionized social networking. In this site people can meet like minded people; they can

form their own groups and many more.

2. They are very different from the others: Haier launches pathbreaking 4Door

Refrigerators First time in India.

3. They are imitative; these products are not new to the market but new to the

company. For example, cavin Kare launched ruche pickles. This product is new to

cavin kare but not to the market. New product development process:

Stage 1 : Idea generation: new product idea can be generated either from the

internal sources or external sources. The internal sources include employees of the

organization and data collected from the market. The external source includes customers,

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competitors and supply chain members. For example, Ingersoll rand welcomes new ideas

from the General public

Stage 2 : Idea screening: Organization may have various ideas but it should find out

which of these ideas can be translated into concepts. In an interview to Times of India,

Mr. Ratan Tata, chairman TATA group discussed how his idea saw many changes

from the basic version. He told that he wanted to develop car with scooter engine,

plastic doors etc... But when he unveiled the car so many change were there in the product. T

his shows that initial idea will be changed on the basis of market requirements.

Stage 3 : Concept development: Concepts used for Tata Nano car are

Concept 1: lowend 'rural car,' probably without doors or windows and with plastic curtains

that rolled down, a fourwheel version of the autorickshaw

Concept 2: a car made by engineering plastics and new materials, and using new

technology like aerospace adhesives instead of welding.

Concept 3: Indigenous, inhouse car which meets all the environment standards

Stage 4 : Concept testing: at this stage concept was tested with the group of target

customers.

Stage 5 : Marketing strategy development: The marketing strategy development

involves three parts. The first part focuses on target market, sales, market share and profit

goals. TATAs initial business plan consisted sales of 2 Lakh cars per annum. The second

part involves product rice, distribution and marketing budget strategies. TATAs fixed Rs 1

Lakh as the car price, and finding self employed person who works like agent to distribute the

cars. The final part contains marketing mix strategy and profit goals.

Stage 6 : Business analysis: It is the analysis of sales, costs and profit estimated for

a new product to find out whether these align with company mission and objectives.

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Product mix :

The number of product line and items offered by marketer to the consumer

A companys product mix has four different dimensions. They are product mix width,

product mix length, and product mix depth and product mix consistency.

Product mix width : The total number of product line that company offers to the

consumers. For example, Jyothy laboratories product mix has six lines. Hence width is 6

Product mix length : The total number of items that company carries within its product line.

For example, Jyothy laboratories fabric care division has three items

Product line depth : The number of versions offered of each product in the line. For

example, Jyothy laboratories Jeeva Natural is offered in three versions i.e. Coconut

Milk with Milk Protein, Coconut Milk with Jasmine and Coconut Milk with Kasturi Manjal,

and is presented in 75gm packs.

Product mix consistency : If companys product lines usage, production andmarketing are related then product mix is consistent else it is unrelated. Incase of Jyothy

laboratories, all six product lines are FMCGs. Hence it is having consistent product mix. But

ITC Companys cigarette and cloth product line are totally unrelated.

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Q.4 : Select any brand of toilet soap and evaluate its positioning strengths or

weaknesses in terms of attributes, benefits, values, brand name and brand equity. Also,

examine how competitive brands influence the marketing strategies of the selected

soap.

Toilet Soap:

Lux soap was first launched in 1916 as laundry soap targeted specifically at

'delicates'. Lever Brothers encouraged women to home launder their clothes without fear of

satins and silks being turned yellow by harsh lyes that were often used in soaps at the time.

The flake-type soap allowed the manufacturer some leeway from lye because it did not need

to be shaped into traditional cake-shaped loaves as other soaps were. The result was a gentler soap that dissolved more readily and was advertised as suitable for home laundry use. Lux

toilet soap was introduced in 1925 as bathroom soap. The name 'Lux' was chosen as a play on

the word "luxury." Lux has been marketed in several forms, including bar and flake and

liquid (hand wash, shower gel and cream bath soap). Lux in step with the changing trends and

evolving beauty needs of the consumers, offers an exciting range of soaps and Body Washes

with unique elements to make bathing time more pleasurable. One can choose from a range

of skincare benefits like firming, fairness and moisturising. Lux stands for the promise of beauty and glamour as one of India's most trusted personal care brands. Since its launch in

India in the year 1929, Lux has offered a range of soaps in different colours and world class

fragrances. Lux is a beauty soap of film stars. Lux recognized the need for a compelling

message about beauty that would resonate with women of today. From the 1930s right

through to the 1970s, Lux soap colours and packaging were altered several times to reflect

fashion trends. In 1958 five colours made up the range: pink, white, blue, green and yellow.

People enjoyed matching their soap with their bathroom colours. In the early 1990s,

Lux responded to the growing trend away from traditional soap bars by launching its own

range of shower gels, liquid soaps and moisturizing bars. Lux beauty facial wash, Lux beauty

bath and Lux beauty shower were launched in 1992.

In 2004, the entire Lux range was re-launched in the UK to include five shower gels,

three bath products and two new soap bars. 2005 saw the launch of three exciting new

variants with dreamy names such as Wine & Roses bath cream, Glowing Touch and

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Sparkling Morning shower gels. Lux has recently launched its two fruit extract variants

New Lux Strawberry & Cream and Lux Peach & Cream contain a blend of succulent fruits &

luscious Chantilly cream. The most recent addition in the brand is Lux Crystal Shine.

Study of LUX with respect to 4 Ps

1. Product A product is anything that can be offered to a market to satisfy a need

or want. Products that are marketed include physical goods, services, experiences, events,

persons, places, properties, organizations, information and ideas.

Product Classification

1. LUX is a Tangible, Non Durable Good on the basis of this classification.

2. LUX and other soaps fall into the category of Convenience Good

Sales Promotion

Sales promotion, a key ingredient in marketing campaigns, consists of a collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of

particular products or services by consumers or the trade.

Whereas advertising offers a reason to buy, sales promotion offers an incentive to

buy. Sales promotion includes tools for

Prominent Sales Promotion Schemes Used By LUX

1. Lux presented 30 gm gold each to the first three winners of the Lux Gold Star offer

from Delhi. According to the promotional offer that Lux unveiled in October 2000, a

consumer finding a 22-carat gold coin in his or her soap bar got an opportunity to win an

additional 30 gm gold. The first 10 callers every week got a 30 gm gold each. The offer could

be availed only on 100 gm and 150 gm packs of Lux soap. Lux celebrated 75 years of

stardom with the Har Star Lucky Star activity. All wrappers of Lux had a star printed inside

them. If the consumer found written inside the star, any number from 1 to 5, she would

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get an equivalent discount (in rupees) on her purchase from her shopkeeper. If the consumer

found 75 years written inside the star, she will get a years supply of Lux free.

Price segments of toilet soaps

Segment Price/weight

Premium > Rs. 15 / 75 gms

Popular Rs. 8-15/75 gms

Economy < Rs. 8 /75 gms

However, recently HUL has been forced to hike its price by one rupee, to Rs17 (for 100 gm),

giving in to the pressures of inflation. This paves the way for competing soap makers like

Godrej Consumer Products (GCPL) to take price increases. Lux has versions in all the three price segments:

Recent pricing of Lux (100 g) Lux Crystal Shine Rs 17 Lux Festive Glow Rs 15 Mini Lux

Rs 5

STRENGTHS OF LUX

1. Strong Market Research (door to door sampling is done once a year in Urban andRural areas)

2. Many variants (Almond Oil, Orchid Extracts, Milk Cream, Fruit Extracts, Saffron,

Sandalwood Oil, and Honey to name a few)

3. Strong sales and distribution network backed by HLL

4. Strong brand image

5. Positioning focuses on the attractive beauty segment

6. Dynamically continuous innovation of the product and brand rejuvenation new

variants (Aromatic Glow and Chocolate Seduction and Lux White Spa body wash) and

innovative promotions (22 carat gold coin promotion Chance Hai)

7. Perceived to have high value for money (strong brand promotion but relatively lower

price which is a winning combination in the popular segment)

8. Though it is in popular segment, it is having mass appeal/market presence across all

segments (15% of the soap market captured by Lux (sales / volume)

9. Unique advantage of having access to resources and assets of HLL

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Q.5 : As a salesperson in a fast moving consumer goods company, what kind of

training and development methods do you feel are required? How important is training

for sales force and how can it be evaluated?

Training:

Training is a continuation of selection. Having selected the salesmen, there are two

options. They can be sent to the field directly with samples, order books etc., (born salesman)

and/or they can be sent for training programme. Some people think that salesmanship is born

in man, but there are only born salesmen, like born doctors, lawyer, engineers, teachers etc.

However all these people need training to call them qualified, and so also is the case withsalesman. A man may have interest in the profession. The interest can be fully developed,

through proper training. One attains perfection,self development etc., through training.

Training means it is the process of perfecting the salesmen for their work. Training

programme are organized procedure or methods through which knowledge as well as skill,

for a definite purpose, is acquired. By training, one can increase knowledge in a

particular field. The salesmanship is not born but can be made effective through training.

Training Methods :

For imparting training to the salesman, different methods are being used. Broadly,

these methods may be divided into two:

1. Group Training :

(a) Lecture Method : An expert or a lecturer speaks to traineesalesmen

about the various aspects of selling. It consists of oral talk in a classroom.

This system is widely used. The trainees listen to the lectures. The instructor

invites questions and answers from them. To make the lecture more

interesting, visual aids, demonstration, suitable examples may be added. This

system is more economical, and is the easiest and quickest in

imparting theoretical training to a group of salesman. But it is difficult

to evaluate the effectiveness of lecture method. This method can be used more

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effectively in continuing sales training programme to provide new information or

changes in the policies of the firm. This may include seminars, demonstration etc., by

expert salesmen.

(b) AudioVisual Method : In order to supplement the lecturing (telling)

method, training programs include the use of visual aids, such as films, slides, posters

etc., and are capable of making, them more interesting.

(c) Discussion Method : This is a good method. Here an actual case or

an imaginary case is given as a problem to be solved, to the different groups. The case

or the problem may be typed or printed. Each group is asked to understand the problem and draw a conclusion. After this, the different conclusions or suggestions

are analyzed collectively, under the leadership of the instructor, in drawing

generalizations from each case or problem. This type of training enables the

salesmen in correcting their own views. It is suitable for a small group. It is slow and

costly.

(d) Conference Method : Sales conferences and sales meeting are a kindof get together of all the concerned staff, weekly, fortnightly or monthly. The

thoughts of various persons are pooled in the conference. Meetings or conferences

have motivating effects as the participants are given chances for creative

thinking and to express their views. To make the conference more interesting,

dramas, demonstrations etc., are included. Topics like, sales policies,

facing competition, publicity ideas, dealings with complaints etc., are dealt with. And

these will facilitate the participants in broadening their outlook and ideas. But this typ

e of meetings or conferences is not suitable for new recruits.

(e) Role Playing Method : Role playing is a newly developed method.

The sales trainees are made to act out roles in contrived problems. The trainer

explains the situation of the problem and assigns the role of salesman and

customers of different characters to the sales trainees. Each one has to act the

assigned role. The trainer watches the role played by each and discusses their

weaknesses and strong points. A few may be selected to act the play, while others

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may watch it. Thus, the salesman have chance to see and understand the

ideas in different situations. It is not suitable for new recruits.

(f) Panel Method : Members in the panel group may be permanent. The

members, who are experts in the panel, discuss the problems, and solutions

are passed to the salestrainee groups, who may have further discussion. This

system is ineffective.

(g) Round Table method : It is similar to the discussion method. It consists

of few members. The salesmen sit around a table along with a good discussion

leader. They deal with the problems of actual cases. Every participant takes partfreely in discussing the problems and solutions. Exchanges of new ideas

take place advantageously.

(h) Brain Storming Method :Under this method, more or less, similar to round table

conference, persons sit around the table. The leader presents the problems for

discussion. The sales trainees have to understand the problems and find the solutions. The

solutions are analyzed by the leader or tested by the panel of experts. This method practicallyfetches no value.

2. Individual Training :

(a) Onthejob Training : Under this method, a new salesman is placed under an

experienced or senior salesman who trains him. First the coach explains the sales

techniques under different situations. He also takes the trainee along with him

on his rounds and gives him chances to observe the dealings with the

customers. Doubts of the trainee are also clarified. Then the coach along

with the trainee calls on customers; the sales trainee is allowed to deal with

the customer and the coach observes the performance. If any weak point or short-

coming is found in the sales trainee, they discuss how to overcome them. After

some time, the sales trainee becomes a trained and independent salesman.

This system is good for traveling salesman.

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(b) Sales Manual : It is a complied textbook. It contains details of

the firm and products, job description, sales policies, opinions or reports required

for reference purposes etc. Generally, it contains many problems with suggestive

solutions. A copy of the book is given to a salesman to go through it and understand

the ideas. It works as a readyreckoner.

(c) Initial or Breakin Training : New recruits are given an orientation

training so as to know about the company and its products. He may be allowed to

work for some time in the firm itself to gain sufficient information about the products.

After that he is sent to work in his field.

Importance of Training to sales persons

1) A trained salesman always wins customers by systematic approach.

2) Salesman acquires better understanding of the firm, as to its past history,

policies and procedures and this helps the salesman for effective dealings.

3) A trained salesman takes less time in concluding a saleearly selling maturity.

4) A trained salesman brings increased volume of sales, in turn, more profit to thefirm and himself.

5) A trained salesman is able to meet consumers demand and help in solving problems.

6) Increased volume of sales facilitates reduction in cost of production i.e., sales

rise faster than expected. The cost per unit of order or per prospect can be minimized.

7) A better relation is created among the customers through reducing customers

complaint, increasing brand loyalty etc. Customers satisfaction is gained.

8) The ability of the salesman is increased by expert knowledge.

9) Controlling of salesman becomes easy.

10) Training facilitates better demonstrations, selling the products which have high

profit margin, better methods of canvassing etc. Sales training helps to increase the

sales volume. Supervision cost is reduced as trained salesman needs less supervision.

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Q.6 : What is International Marketing? What are the various strategies to enter

International markets? Explain.

International Marketing:

International marketing is defined as The performance of business activities

designed to plan, price, promote and direct the companys flow of goods and services to

consumers or users in more than one nation for a profit. A company that wants to sell

their product in other than domestic market should understand the environmental

factors, consumer behavior, market forces and other characters relevant to

the international market.

The marketing concept is the idea that a firm should seek to evaluate market opportun

ities before production, assess potential demand for good, determine the product characteristi

cs desired by the consumers, predict the prices consumers are willing to pay and then supply

goods corresponding to the needs and wants of target markets. Adherence to marketing conce

pt means the firm conceives and develops products to satisfy consumer wants. For

international marketing this means the integration of the international side of thecompanys business with all aspects of its operations and the willingness to create new

products and adapt existing products to satisfy the needs of world markets. Products

may have to be adapted to suit the tastes, needs and other characteristics

of consumers in specific regions, rather than it being assumed that an item which

sells well in one country will be equally successful elsewhere.

International Market Entry Strategies:

Organizations that plans to go for international marketing

should answer some basic questions like:

a. In how many countries the company would like to operate?

b. What are the types of countries it plans to enter?

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To answer the above questions companies evaluate each country against the market

size, market growth, and cost of doing business, competitive advantage and risk level.

Once the market is found to be attractive companies should decide how to

enter this market. Companies can enter international market from any one of the following

strategies. They are:-

a. Exporting

b. Licensing

c. Contract manufacturing

d. Management contract

e. Joint ownershipf. Direct investment

a. Exporting:

Exporting is the techniques of selling the goods produced in the domestic country in

a foreign country with some modifications. For example, Gokaldas textiles export the

cloths to different countries from India. Exporting may be indirect or direct. In case

of indirect exporting, company works with independent international marketingintermediaries. This is cost effective and less risky too. Direct exporting is the techniques in

which organization exports the goods on its own by taking all the risks. Maruti udyog

limited Indias leading car manufacturer exports its cars on its

own. Company can also set up overseas branches to sell their products. Adani exports another

leading exporter from India has international office in the Singapore.

b. Licensing :

According to Philip Kotler licensing is a method of entering a foreign market in

which the company enters into an agreement with a license in the foreign market, offering

the right to use a manufacturing process, trademark, patent, or other item of value for a fee or

royalty. For example, torrent pharmaceuticals has license to sell the cardiovascular drugs of

Chinese manufacturer Tasly. Licensing may cause some problems to the parent company. Lic

ensee may violate the agreement and can use the technology of the parent company.

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c. Contract manufacturing :

Company enters the international market with a tie up between manufacturer to produce the

product or the service. For example, Gigabyte technology has contract manufacturing

agreement with D link India to produce and sell their mother boards.

Another significant manufacturer is TVS electronics; it produces key boards in

its own name as well as for other companies too.

d. Management contracting :

In this type a company enters the international market by providing the

know how of the product to the domestic manufacturer. The capital, marketing

and other activities are carried out by the local manufacturer hence it is less risky too.

e. Joint ownership :

A form of joint venture in which an international company invest equally with a

domestic manufacturer. Therefore it also has equal right in the controlling

operations. For example, Barbara a lingerie manufacturer has joint venture with Gokaldas im

ages in India.

f. Direct Investment :

In this method of international market entry Company invest in manufacturing or assembling.

The company may enjoy the low cost advantages of that country. Many manufacturing firms

invested directly in the Chinese market to get its low cost advantage. Some

governments provide incentives and tax benefits to the company which

manufactures the product in their country. There is government restriction in some countries t

o opt only for direct investment as it produces the jobs to the local people. This mode also de

pends on the country attractiveness. It may become risky if the market matures or unstable go

vernment exists.

32460066 MB0030 Marketing Management

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