Marketing management 1st sem mba vtu notes

248
MARKETING MANAGEMENT MARKETING CONCEPT MODULE 1 (3 Hours) Introduction: Nature and scope of Marketing, Evolution, Various Marketing orientations, Marketing Vs Selling concept, Consumer Need, Wants and Demand concepts. DEFNITION “The Marketing concept is a point of view on business. It enumerates that any business is essentially a need satisfying process”. It also enunciates that all the goals of the organization including profit be realized three ‘customer orientation’. Integrated management action and generation of customer satisfaction. CONCEPTS OF MARKETING . THE EXCHANGE CONCEPT RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

description

contains all module notes

Transcript of Marketing management 1st sem mba vtu notes

Page 1: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

MARKETING CONCEPT

MODULE 1 (3 Hours)Introduction: Nature and scope of Marketing, Evolution, Various Marketingorientations, Marketing Vs Selling concept, Consumer Need, Wants andDemand concepts.

DEFNITION

“The Marketing concept is a point of view on business. It enumerates that any business is essentially a need satisfying process”. It also enunciates that all the goals of the organization including profit be realized three ‘customer orientation’. Integrated management action and generation of customer satisfaction.

CONCEPTS OF MARKETING.

THE EXCHANGE CONCEPT

The exchange concept of marketing, as the very name indicates, holds that the exchange of a product between the seller & the buyer is the central idea of marketing. While exchange does form a significant part of marketing as a mere exchange process would amount to a gross undermining of the essence of marketing. A proper scrutiny of the marketing process would readily reveal that marketing is much broader than exchange. Exchange, at best, covers the distribution aspect and the price mechanism involved in marketing. The important aspects of marketing, such as concern for customer, generation of value satisfaction creative selling & integrated action for serving the customer, get completely overshadowed in the exchange concept of marketing.RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 2: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

THE PRODUCTION CONCEPT

It is one of the oldest concepts of business. The production concept holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs, mass-distribution. They assume that consumers are primarily interested in product availability and low prices. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features. It is also used when a company wants to expand the market.

Some service organizations also operate on production concept. Many medical & dental practices are organized on assembly-line principles, as are some government agencies. Although this mgt orientation can handle many cases per hour, it is open to charges of impersonal and poor-quality service.

THE PRODUCT CONCEPT

The product concept is somewhat different from the production concept. Whereas the production concept seeks to win markets & profits via high volume of production and low unit costs, the product concept seeks to achieve the same result via product excellence- improved products, new products and ideally designed & engineered products. It also emphasis on quality assurance. Managers in these organizations focus on making superior products & improving them overtime. They assume that buyers admire well-made products and can evaluate quality & performance. Mgt might commit the Better-mousetrap fallacy, believing that it will lead people to beat a path to its door.Example:- web T V

THE SELLING CONCEPT

The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization’s products. The organization must, therefore, undertake an aggressive selling and promotion effort. This concept assumes that consumers typically show buying inertia or resistance & must be coaxed into buying. It also assumes that the co. has a whole battery of effective selling and promotion tools to stimulate more buying. The selling concept is practiced most aggressively with unsought goods, goods that buyers normally do not think of buying, such as insurance, encyclopedias, and funeral plots. It is also practiced in non-profit area by fund raisers, college admission offices, & political parties.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 3: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

THE MARKETING CONCEPT

This concept emerged in mid-1950 and challenged the preceding concepts. The MARKETING concept was born out of the awareness that marketing starts with determination of consumer wants & ends with the satisfaction of those wants. The concept puts the customer at both the beginning and the end of business. It stipulates that the company should be organized totally around the marketing function, anticipating, stimulating & meeting customer’s requirements.

The concept rests on the realization that a business cannot succeed by supplying products and services that ae not properly designed to serve their needs. Every depart. & every worker and every manager will “THINK CUSTOMER” &”ACT CUSTOMER”. Evidently, the concept represent a radically new approach to business.Marketing concept represents essentially a change in orientation on the part of mgt towards business.

The marketing concept rests on four pillars:1. Target market- EX:TERRA LYCOS2. Customer needs-EX:NOKIA & SONY ERRICSON3. Integrated marketing-4. Profitability-EX:DISNEY, WALL-MART

THE CUSTOMER CONCEPT

The ability of a company to deal with customers one at a time has become practical as a result of advances in factory customization, computers, the internet, & database mktg software. In this concept the companies hope to achieve profitable growth through capturing a larger share of each customer’s expenditures by building high customer loyalty & focusing on customer lifetime value. The required information collection

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 4: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

hardware, and software may exceed payout. It works for best co. that normally collect a great deal of individual customer information, carry a lot of products that can be cross-sold, carry products that need periodic replacement or upgrading, & selling products of high value.

THE SOCIETAL MARKETING CONCEPT

”... make marketing decisions by considering consumer’s wants, the company’s requirements, consumer’s long-run interests and society’s long-run interests.””Principles of Marketing” by Kotler/Armstrong, Prentice Hall

s

Societal marketing blends social, company and customers wants.”

The Societal Marketing Concept. This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original Marketing Concept). Additionally, it holds that this all must be done in a way that preserves or enhances the consumer’s and the society’s well-being. Unfortunately, satisfying customers’ short-term needs may not be compatible with society’s needs. For instance, your customers may prefer large automobiles, disposable diapers, hamburgers, no-deposit bottles, etc. Society is better off if we drive small cars, use cloth diapers, and eat soy burgers. Should a firm worry about its customers’ short-term needs, or consider what is best for society?.

The modern time is the time of information, peoples are more aware of sensitive issues which the earlier generations did not know, like shortage of resources, health issues, environmental deterioration.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 5: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

And the reason of this well learned society is ubiquity of information, through the means of electronic media and print media, and internet now is playing very important part in providing up to date information at the rate of just one click. So this generation have developed the ability to judge any marketing strategy, whether it is correct or not?

The societal marketing concept calls upon marketers to build social & ethical considerations into their mktg practices. They must balance and juggle the often conflicting criteria of company profits, consumer want satisfaction, & public interest.

 This orientation arose as some questioned whether the Marketing Concept is an

appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services. Are companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-run interests of consumers and society?  

The marketing concept possibily sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare.:

EXAMPLE:The fast-food hamburger industry offers tasty but unhealthy food. The hamburgers have a high fat content, and the restaurants promote fries and pies, two products high in starch and fat. The products are wrapped in convenient packaging, which leads to much waste. In satisfying consumer wants, these restaurants may be hurting consumer health and causing environmental problems.

Societal marketing, argues Kotler, P. (1972, p. 837) should generate consumer satisfaction as well as the long term well-being of the consumer, society and their ecology. As Christians this is a definition that fits well within our ethic, and within the Christian mission. So marketing can accept the Church why has the Church not embraced marketing management as the basis of its missionary strategy?

Extending the Principles of MarketingAs noted above, the principles of marketing are being extended to such areas as the marketing of ideas, political marketing, and even marketing the volunteer army.  Whenever there is some type of exchange, it is important to understand marketing.  Politicians, for instance, understand that they must segment voters and select a target market(s).  A good politician does research to learn what voters want (jobs, increase in social security, homeland security, health insurance, strengthening the traditional family, etc.).  Direct mail and Internet marketing with different messages for different groups is one tool being used by shrewd politicians.  One interesting fact that is being studied after the 2004 Presidential election is the fact that 97 out of 100 of the fastest growing counties mainly exurbs voted Republican.  Exurbs are too far from urban areas to be considered suburbs but too large to be considered rural. 

Even libraries have started using marketing.  Libraries are being defined as a place to find

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 6: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

information, not only books. (If they define themselves solely as a place to borrow books they are suffering from marketing myopia.) This is why libraries have numerous computers and wireless networks so that anyone with a laptop can access the Internet. Libraries also have DVDs since they are almost as important as books.  Incidentally, there is a revolution in the area of book publishing, a new kind of book is the eBook.   Libraries are also places where young children whose mothers work can do their homework after school.   Colleges are also using sophisticated marketing tools to attract students.  This is becoming a hot area since colleges find themselves competing for students. Research shows that students choose schools based on reputation, convenience, and course offerings. Hospitals are also becoming marketing-oriented. Patient satisfaction is becoming very important to hospitals.  Customer satisfaction is very important in marketing (indeed, that is what the marketing concept is all about).  Today, hospitals and colleges are learning about the importance of satisfying patients and students, respectively.  Do you think this college has done a good job satisfying you?  

Can marketing help a church expand its membership?  Read "The Soul of the New Exurb" by Jonathan Mahler (New York Times Magazine, March 27, 2005, pp. 30-50) to learn how Pastor Lee McFarland built a mega-church (weekly attendance of 2,000+) in the exurb of Surprise, Arizona; weekly attendance is 5,000.  Before building the church, McFarland did some marketing research and asked only two questions:  "What's your favorite radio station?" "Why do you think people don't go to church?"   What he found was that the people living in Surprise liked rock music; they did not go to church because they did not own fancy clothing, did not like to be asked for money, and felt that the church sermons they heard in the past were not relevant to their lives.  His church has no crosses or other religious icons; no stained glass and it looks like a mall. Krispy Kreme doughnuts are served ($16,000 a year spent on the doughnuts), the dress code is lax, and Pastor McFarland wears a T-shirt and jeans.  Half of each service is devoted to Christian rock. McFarland's "sermons" deal with what he calls "successful principles of living."   People are attracted to the church for various reasons including aerobics classes, child care, counseling, financial planning, etc. Radiant has small groups for all kinds of people:  widows, divorced, etc.  This is known as getting people in through the side door (going to church for Sunday sermon = front door).  Small groups allow people to share their pains and hopes.  Outdoor advertisement for the church:  "Isn't It Time You Laughed Again?" with a picture of happy family.The church has a branch of Celebrate Recovery, a Christian program for recovering addicts that is similar to the 12-step program of Alcoholics Anonymous.  Recovering addicts can feel comfortable talking about their Christian beliefs at the Celebrate Recovery meetings.

CASE STUDYPROBLEM STATEMENT :In order for McDonald’s to reach its goal of "par excellence", it must use the full meaning and definition of marketing. Marketing is giving the target market what they want, when and where they want it, at a price they are willing to pay for it.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 7: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

REFLECTION / OPINIONFor McDonald’s to achieve its "par excellence", they must focus on the fact that there is an ever changing market and that the wants and needs of consumers are constantly changing. Since McDonald’s has been around for forty-one years, it is safe to say that they are the father of the fast food industry and that they have set an example for others to follow.When Ray Kroc bought the first McDonald’s in 1955, he focused on what people wanted. With this focus came the utilization of Mr. Kroc’s theory of QSC ( quality, service, and cleanliness ).QSC successfully got McDonald’s off the ground, but as times changed, the company saw many more market segments and opportunities. In the 1970’s and 1980’s once again McDonald’s lead the way in the fast food industry. The changes we saw included, for example, the fact that women were now a major part of the work force and dual income families were becoming a more common occurrence. McDonald’s became a mastermind of marketing toward specific markets by pioneering ideas such as breakfast menus, healthier choices and alternatives, and "adult" foods. McDonald’s has truly evolved into a world power by paying attention to the needs and wants of the changing market and adjusting to these needs.

LINKING THEORY :Ray Kroc saw early on what needed to be done. He changed what was at one time a product orientation, into a marketing orientation. Back in 1955, this was still a new type of management. From the beginning, Kroc was already in the forefront of marketing.Marketing orientation focuses on the customer and what they want in a product, rather than product orientation which focuses on the product itself. McDonald’s has taken every aspect of marketing orientation and utilized the philosophy to its fullest. McDonald’s has focused in on the customer needs and wants, sometimes even putting the ideas into the consumer’s mind before they even knew what they wanted or expected. McDonald’s could deliver! They have done extensive market analysis and product development based on this analysis. They have packaged their food and priced it exactly to the market segment which they have targeted.Showing McDonald’s innovations in marketing even further, is its early adaptation of societal marketing. Societal marketing takes into account the overall concerns of the target market, the environment, for example. McDonald’s got rid of their one time innovative styrofoam packaging and replaced it with more environmentally sound paper packaging. They stress the fact that they are environmentally aware, by reminding us not to litter, etc., on their various forms of packaging. Another example if societal marketing is the Ronald McDonald House. This is probably McDonald’s largest community service project. It demonstrates the way that McDonald’s is willing to give something back to the very communities that support the company. These examples as well as the various events that McDonald’s promotes, such as the Olympic Games, puts their name worldwide. This makes it difficult for us ever to forget of the existence of McDonald’s.McDonald’s also uses a theory referred to as relationship marketing. Relationship marketing is defined as marketing to protect the customer base. The customer is viewed

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 8: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

as an asset and the company’s marketing goal is to attract, maintain, and enhance customer relationships.There are five main criteria that must be met for a successful relationship marketing strategy and they are as follows :1) There needs to be an ongoing and periodic desire for the product or service by the customer.2) The service customer controls the selection of the service supplier.3) There are alternative suppliers of the service.4) Customer loyalty is weak and switching is common and easy.5) Word of mouth is an especially potent form of communication about the product.All of these criteria are met by the fast food industry, and McDonald’s has generally had a very successful relationship marketing strategy, especially through the implementation of the QSC program.McDonald’s has definitely exceeded the definition of success. How many other businesses can say they have served billions and billions? McDonald’s has done an incredible job taking an intangible product and virtually dissipating any perception of risk associated with service products. Whether someone orders a burger, McNuggets, or a fish fillet, they know that their expectations will be met every time.

SOLUTION :A clear solution for McDonald’s to continue its success is to stay focused. For years, McDonald’s has had the unique ability to adapt to the changing market, and that, along with their QSC program and innovative product development, has kept them on top. As long as McDonald’s seems to make our lives easier, by giving us a consistent, valued product, the company will always be in existence.

Example: 1•Proctor & Gamble Pakistan has introduced the brand of fat free oil to prevent the growing ratio of heart disease. •Various automobile manufacturers are focusing more on producing CNG cars that is not only environmental friendly but it is also very economical. So this trend is getting popular very quickly. One can verify it by observing the increasing number of CNG stations. •There are various companies that are favoring the use of recycled paper to aid more life to trees. But, Pakistan is an under develop country, there are 35% Pakistani’s that are living below the poverty line, Availability of Clean water, High Standard Education, Pollution are the big concerns for Pakistan consumers. •White collar person in Pakistani society can not buy a bottle of mineral water for its supper unless it is in his economical range. •Virtual University could not be successful if it had a same fee criteria as that of others institutions. •People would not use CNG cars if it was expansive.

EXAMPLE-2

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 9: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

PATAGONIA world-class climber yvon chouinard founded Patagonia in 1966 by selling rock climbing hardware from the trunk of his car. By the time the company changed its focus to selling soft goods & apparel in mid-1970, Patagonia was committed to two main goals: providing the highest quality gear for outdoor enthusiasts, & “implement[ing] solutions to the environmental crisis.” The co. gave an earth tax of one percent of sales or ten percent of pre tax profits (whichever is greater) to “activists who take radical and strategic steps to protect habitat, wilderness, & biodiversity.” however, as Patagonia expanded, many aspects of its operations contributed to the environmental pollution the company worked so hard to counter. After an internal study in 1990’s the company sought to use materials & fabrics that would minimize its impact on the environment, such as synchilla fleece made from recycled plastic bottles and the 100 percent organic cotton used in every cotton product. The corporate culture avidly supports activism, as evidenced by a company program through which employees receive pay to work up to two months in an organization. Patagonia sent 70 of its 900 employees abroad on such trips in 1999.

Patagonia is practicing a form of the societal marketing concept called cause-related marketing.

EXAMPLE-3A FAST FOOD restaurant offers tasty but unhealthy food. These foods have fat content & the restaurant promotes fried stuff. These are high in fat. The products are wrapped in convenient packaging. In satisfying consumer wants, these restaurants may be hurting the consumer health.

Companies see cause-related marketing as an opportunity to enhance their corporate reputation, raise brand awareness, customer loyalty, build sales,& increase press coverage. They believe that customers will increasingly look for signs of good corporate citizenship that go beyond supplying rational & emotional benefits.

Concepts for the NinetiesPhilip Kotler

Lean Marketing o Prestige Marketing - More for More o Value marketing - More for the same o Supervalue marketing - More for less

e.g.,Walmart, Dell, LexusConcepts

Customized marketing o Segments o Niche o Customized

e.g., Schwinn Bicycles, Bank Services Concepts

Relationship Marketing

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 10: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

o The product is all you get o We provide a hotline if you want to reach us o We want to create continuous value for you

BENEFITS OF MARKETING CONCEPT

CONCEPT BENEFITS IN THE ORGN:

Concept enables the organization to deep abreast of changes.

Long term success is assured to an enterprise only if it recognizes that the needs of the market are paramount.Concept gives great importance to planning, research and innovation and its decisions are no longer based on lunch, but on reliable data relating to the consumers.

It enables the firm to move more quickly to capitalize on market opportunities

Greater attention is given to the product planning and development to that merchandising can become more effective.

Demand side of the equation of exchange is honoured more and supply is adjusted to changing demand. Hence more emphasis is given to research and innovation.

Marketing system based on the marketing concept assures integrated view of business operations and indicated interdependence of different departments of a business organization.

Interests of the enterprise and society can be harmonized as profit through service is emphasized.

CONCEPT BENEFITS OF CUSTOMER.

Low price, better quality and ready stocks at convenient locations are some of the benefits that accuse to the customers.

He can chose, he can bargain, he can complain and the complaint will be attended to.

He can buy on cash or on credit or on installments. He can even return it material if he is not satisfied with it.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 11: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

CONCEPT BENEFITS TO THE SOCIETY

If a guarantee that only products that are required by the consumers are produced there by it ensures that the country’s economic resources are channelized in the right direction.

If acts as a ‘change agent’ and a value adder is society.It makes economic planning more meaningful and more relevant to the life of the people.It creates good entrepreneurs and managers in the society and also improves the standard of living.DIFFERENCES BETWEEN SELLING & MARKETING

SELLING MARKETING

Selling is sales oriented. Marketing is customer oriented.

Selling starts with seller. Marketing starts with buyer & Focuses on the needs of buyer.

Selling converts product Marketing converts consumer into cash. needs into product.

Selling has a short term Marketing has a long term goals. Goals . & strategies

In selling activity produ- In marketing consumer’s needs, ct is the prime concern. Wants & performance is prime concern.

Selling views business Marketing views business as as goods producing pro- customer satisfying pocess. cess

In selling cost determine- Consumer determines price; es price. Price determines costs.

Selling views customer as Customer is the very purpose Last link in business. Of the business.

Selling focuses on sales Marketing focuses on identify- Volume growth. Ing profit making opportunities.

DISTRIBUTION OF CHANNELS

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 12: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

INTRODUCTION Of the four elements of marketing mix viz., product, price, promotion and distribution, distribution [i.e., the channels of distribution and physical distribution] is the most important element. The success or failure of a firm depends largely upon the efficiency of distribution

CHANNELS OF DISTRIBUTION

MEANING The term ‘channel’ is derived from the French word ‘canal’ meaning artificial water way for transportation or irrigation so, channel of distribution refers to the pathway, path or route taken by goods as they flow or move from the point of production to the point of consumption or use. In the words of Prof. W. Stanton “channel of distribution is the route taken by the goods as they move from the producer to the ultimate consumer or industrial user” According to Philip kotler “every producer seeks to link together the set of marketing intermediaries that best fulfill the firm’s objective. This set of marketing intermediaries is called the marketing channel [also trade channel or channel of distribution]”

ROLES OF CHANNELS OF DISTRIBUTION Distribution channel have a distinctive role in the successful implementation of marketing plans and strategies. These channels perform the following marketing function in the machinery of distribution.

1. The searching out of buyer and seller [contacting]2. Matching goods to the requirements of the market [merchandising]3. Offering products in the form of assortments or packages4. Persuading and influencing the prospective buyer to favour a certain product

and its maker [personal selling / sales promotion]5. Implementing pricing strategies in such a manner that would be acceptable to

the buyers and ensure effective distribution 6. Looking after all physical distribution functions7. Participating actively in the creation and establishment of market for a new

product8. Offering pre and after-sale services to customers 9. Transferring of new technology to the users along with the supply of products

and playing the role of change agents eg. in the agriculture green revolution in our country

10. Providing feedback information, marketing intelligence and sales forecasting services for their regions to their supplier

11. offering credit to retailers and consumer 12. Risk-bearing with reference to stock holding transport

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 13: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

CHANNEL FUNCTION AND FLOWS A marketing channel performs the work of moving goods from producers to consumers. It over comes the time, place, and possession gaps that separate goods and services from those who need or want them. Members of the marketing channel perform a number of key functions.

o They gather information about potential and current customers, competition, and other actors and forces in the marketing environment

o They develop and disseminate persuasive communication to stimulate purchasing

o They reach agreement on price and other terms so that transfer of ownership or possession can be effected

o They place orders with manufactures o They acquire the funds to finance inventories at different levels in the

marketing channelso They assume risks connected with carrying out channel works o They provide for the successive storage and movement of physical

products o They oversee actual transfer of ownership from one organization or

person to another

CONFLICT AND CONTROL IN CHANNELS To manage distribution channels effectively require an understanding of both conflict and control, including technique to

(1) Decrease conflict, or at least its negative effects, and (2) Increase a firm’s control within a channel

Channel conflict exists when one channel member perceives another channel member to be acting in away that prevents the first member from achieving its distribution objectives. Firms in one channel often compete vigourously with firms in other channels; this represents horizontal conflict. Even within the same channel, firms disagree about operating practices and try to gain control over other members’ actions; this illustrates vertical conflict.

HORIZONTAL CONFLICT Horizontal conflict occurs among firms on the same level of distribution. Basically horizontal conflict is a form of business competition. It may occur among:

o Middlemen of the same type: Mary vale hardware (an independent retailer) Versus Fred’s Friendly Hardware (another independent retailer)

o Different types of middlemen on the same level Fred’s Friendly Hardware (an independent retailer) Versus Lowe’s points area (a single department in a store within a giant chain

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 14: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

A primary sources of horizontal conflict is scrambled merchandising, in which middlemen diversify by adding product lines not traditionally carried by their type of business

VERTICAL CONFLICT Vertical conflict typically occurs between producer and wholesaler or between producer and retailer

PRODUCER VERSUS WHOLESALER A producer and a wholesaler may disagree about aspects of their relationship Why do conflicts arise? Basically, manufacturers and wholesalers have differing point of view on the one hand, manufacturers think that wholesalers neither promote products aggressively nor hold sufficient inventories On the other hand, wholesalers believe that producers either expect too much, such as requiring an extensive inventory of the product, or do not understand the wholesaler’s primary obligation to customers. To bypass wholesalers, a producer has two alternatives

o Sell directly to consumer: producers may employ door to door, mail-order, or online selling. They may also establish their own distribution centers in various areas or even their own retail store in major markets

o Sell directly to retailers: under certain market and product condition, selling directly to retailers is feasible and advisable. An ideal retail market for this option consists of retailers that buy large quantities of a limited line of products

To avoid being bypassed in channels, wholesalers need to improve their competition position

o Improve internal performance: many wholesalers have modernized their operations. Functional, single-story warehouse have been built outside congested down town areas and mechanized materials- handling equipment has been installed

o Provide management assistance to customers: wholesalers have realized that improving customers operation benefits all parties. Thus many of them offer programs to assist their customers in areas such as layout, merchandise selection, promotion and inventory control

o Form a voluntary chain: in this form of vertical marketing system a wholesaler contractually agrees to furnish management services and volume buying power to a group of retailers. In turn, the retailers promise to buy all, or almost all, their merchandise from the wholesaler

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 15: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

o Develop middlemen’s brands: some large wholesalers have successfully established their own brands. Super value has developed its Favorite brand for groceries and super chill for soft drinks. A voluntary chain of retailers provides a built in market for the wholesaler’s brands

Producer versus Retailer Conflict between manufacturers and retailers- in fact between any two parties is likely during tough economic times. Conflict is also bound to occur when producers complete with retailers by selling through producers owned stores or over the internet. Producer and retailer may also disagree about terms of sale or conditions of the relationship between the two parties. In recent years large retail chains have demanded not only lower price but also more service from suppliers. Producers sometimes find it costly, if not nearly impossible, to comply with the retailers new policies

Both producers and retailers have methods to gain more control. Manufacturers can

1. Build strong consumer brand loyalty: meeting and surpassing customer’s expectations is a key in creating such loyalty

2. Establish one or more forms of a vertical marketing system: Procter and gamble uses the administered types of VMS whenever possible

3. Refuse to sell to uncooperative retailers: this tactic may not be defensible from a legal stand point

4. Arrange alternative retailers: squeezed by large retail chains, some producers are building their distribution strategy around smaller specialty store

5. Develop store loyalty among consumers: skillful advertising and strong store brands are means of creating loyal customers

6. Improve computerized information system: information is power. Knowing what sells and how fast it sells is useful in negotiating with suppliers

7. form a retailer co-operation : in this type of vertical marketing system, group of relatively small retailers brands together to establish and operate a wholesale warehouse

WHO CONTROLS CHANNELS? Every firm would like to regulate the behavior of the other members in its distribution channel. A company that is able to do this has channel control. Channel power is the ability to influence or determine the behavior of another channel member. There are various sources of power in distribution channel. They include:

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 16: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

o Expertise: for example, possessing vital technical knowledge about the product or valuable information about customers

o Rewards: providing financial benefits to co-operative channel member.

o Sanctions: penalizing un co-operative firms or even removing them from the channel

IMPLEMENTATION OF MARKETING CONCEPT

Marketing implementation is the process that turns marketing strategies and plans into marketing actions in order to accomplish strategic marketing objectives. Implementation involves day to day, month to month activities that effectively put the marketing plan to work.

CUSTOMER ORIENTATION

The concept enable the industrial and business firms to understand the nature and the mission of their business form the point of view of customer.

By storing and analyzing data supplied by customers, gathered from third parties, and collected form previous transactions, a marketer is able to better understand a customer’s needs and preferences.

Marketers have discovered that ensuring relationships are built on trust and mutual commitment, require a lot of time and effort to create and maintain and are not appropriate for every exchange situation.

A typical description of the importance of the consumer as per the marketing concept is seen in the words of Peter F Drucker “ The purpose of any business is to create a customer it is a customer who determines what a business is”.

With the adaptation of the marketing concept the consumer became the focal point of the business

Basically company’s sale each period come from 2 group: new customers and repeat customers. It always costs more to attract new customers than to retain current customers.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 17: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

E.g. Motorcycle Company Harley- Davidson has created a club (the Harley owners group) for bike owners. It offers more than 650000 members insurance, travel planning, roadside emergency service, free safety lessons, etc.

INTEGRATED MANAGEMENT ACTION

Integrated management action simply means that all the different management functions in the business must be tightly integrated with one another, keeping marketing as the pivot.

All the activities should lead to a favorable impact on the consumer and for this to happen, all functional areas of the business have to be properly aligned with marketing.

In organization that do not practice integrated management the different functions/depts. of the organization are preoccupied with the optimization of their specific activities often at the cost of optimization of the overall result.

In organizations that practice integrated management marketing, the management insists on absolute coordination of all company actions keeping marketing customer as the focus.E.g. Sony, Honda.

CONSUMER SATISFACTIONThe marketing concept believes that it is not enough if a firm has customer orientation it is essential that such an orientation lead to consumer satisfaction.

The concept believes that it is not enough if a firm markets its products successfully in the short run. It must keep growing, keeping consumer satisfaction as the foundation of its growth.

The concept effectively contracts the temptations of short sighted management attitudes by its emphasis on consumer satisfaction.E.g. REALISING ORGANISATIONAL GOALS

If a firm has succeeded in generating customer satisfaction, if basically implies that a firm has given a quality product and company has offered competitive price and prompt service.

Only when these factors act and interact, complementary and supporting one another, will a product with all the attendant features necessary to satisfy the consumers emerge.

MARKETING CONCEPT

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 18: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

DEFNITION

“ The Marketing concept is a point of view on business. It enumerates that any business is essentially a need satisfying process”. It also enunciates that all the goals of the organization including profit be realized three ‘customer orientation’. Integrated management action and generation of customer satisfaction.

BENEFITS OF MARKETING CONCEPT

CONCEPT BENEFITS IN THE ORGN:

Concept enables the organization to keep abreast of changes.

Long term success is assured to an enterprise only if it recognizes that the needs of the market are paramount.Concept gives great importance to planning, research and innovation and its decisions are no longer based on lunch, but on reliable data relating to the consumers.

It enables the firm to move more quickly to capitalize on market opportunities

Greater attention is given to the product planning and development to that merchandising can become more effective.

Demand side of the equation of exchange is honored more and supply is adjusted to changing demand. Hence more emphasis is given to research and innovation.

Marketing system based on the marketing concept assures integrated view of business operations and indicated interdependence of different departments of a business organization.

Interests of the enterprise and society can be harmonized as profit through service is emphasized.

CONCEPT BENEFITS OF CUSTOMER.

Low price, better quality and ready stocks at convenient locations are some of the benefits that accuse to the customers.

He can chose, he can bargain, he can complain and the complaint will be attended to.

He can buy on cash or on credit or on installments. He can even return it material if he is not satisfied with it.

CONCEPT BENEFITS TO THE SOCIETY

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 19: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

If a guarantee that only products that are required by the consumers are produced there by it ensures that the country’s economic resources are channelized in the right direction.

If acts as a ‘change agent’ and a value adder is society.

It makes economic planning more meaningful and more relevant to the life of the people.

It creates good entrepreneurs and managers in the society and also improves the standard of living.

IMPORTANCE OF MARKETING:

CREATING UTILITY: A Customer purchases a product because it provides satisfaction. The want satisfying power is called its utility. it comes in many forms. It is through marketing that much of a product’s utility is created. There are different kinds of utilities:-

Form utility:R.M Converted to Finished product. Understand customersRequirements Form utility is primarily associate with production- the physical or chemical changes that make a product more valuable.Eg: Lumber is made into furniture is an example of form utility.

Place Utility Channel Distribution Physical Distribution Customer As per customers Requirement Place utility exists when a product is readily accessible to potential customers. An auction on the net can increase the number of buyers and sellers, but once products are purchased they still have to be delivered quickly and in condition. Physically moving a purchased item to a successful bidder in an essential element of its value.

Time UtilityWarehouse making available goods customer When needed As per customers Requirement

Person Utility:Marketer Established Contact Customer Understand Customers Requirements

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 20: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Exchange UtilitySeller Transfer Goods to Buyer as per Customers Requirement

MARKETING FUNCTIONSThe scope of marketing is very wide. A number of functions are inherent in any marketing on the basis of various utilities like (in II) time and place utility and (III) possession utility.

I FUNCTION 1.Buying FunctionOF EXCHANGE 2.Assembly Function

3.Selling Function.

II FUNCTION OF 1.TransporationPHYSICAL 2.Inventory ManagementDISTRIBUTION 3.Ware Housing

4.Material Handling

III FUNCTION 1.FinancingOF FACILITIES 2.Risk Taking

3.Standardization 4.After Sales Service

(I) FUNCTIONS OF EXCHANGE

a) BUYING FUNCTION :A Manufacturer is required to buy raw material for production purposes similarly a wholesaler has to buy good from manufacturer for selling it to retailer. A retailer sell the goods to the customers. The function to buying has to be done at various levels. Buying involves transfer of ownership form seller to buyer.

b) ASSEMBLY FUNCTION :Goods purchased form various sources and assembled at one place to suit the requirement of the buyer.

c) Selling Function :Selling function involves sales of goods from seller to buyer. Selling function is very important to all organizations due to the fact the selling has to be done against severe competition.

II FUNCTION OF PHYSICAL DISTRIBUTION:

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 21: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

a. TRANSPORATION: This include mode of transport selection of transporter or carrier freight consideration like freight paid or to pay routing, scheduling, processing claim in case of transit damage etc.,

b. INVENTROY MANAGEMENT : This includes:

1. Short term fore casting 2. Product size and location of warehouse 3. Just in time4. Push or pull strategy adoption.5.

c. WARE HOUSING :The following functions are included:

1. Space requirement2. Suitability of location3. Layout design4. Physical arrangement

d. MATERIAL HANDING: This includes:

1. Equipment Selection2. Equipment Replacement3. Storage methods4. Receipts and issue (F I F I or L I F O )

III FUNCTIONS OF FACILITIES:

a. FINANCING :This means extending credit facilities during selling. It an organization has to do this. It must have adequate working capital. Marketer has to plan.

a. Short term financeb. Long term finance

This financier’s are provided by a. Banks like nationalized or b. Financial institutions like ICICI, IDBIc. Credit societies d. Government agencies like KIDB, KSFC etc.,

b. RISK TAKING

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 22: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

There are innumerable risk. Which a marketer has to bear while marketing a product. Risk arises due to unforeseen circumstances. Risks can be insured also.Eg. Risks due to fire and accidents.

But some risks cannot be insured. Eg. Changes due to Govt. policies, risks due to increased Competition, technological risks and business cycle risks.

c. STANDARDIZATION: Buyers refer standardized goods. This will prevent the buyer form wasting his time in inspecting or examining the goods. Standardization and growing is a part of marketing function. Standardization is a process of setting up standards to manufacture products which confirms to a set of Specifications. Standardization, Size, shape, dimension colour etc.,

Grading is also a part of standardization. It is a process of sorting our goods into a number of graded, according to some characteristics such as quality and size grading is usually necessary for those products over which the producer cannot exercise any control in terms of physical properties.

Example: Food Grains, Fruits etc.,

d. AFTER SALES SERVICEThis is very important in case of industrial products whether final product or an intermediate. Hence, arrangement of after sales service has become an increasingly important function. Therefore, marketer has to plan for after sales service. Eg. Repairs, replacement, maintenance, etc.

OTHER FUNCTIONS OF MARKETING

In addition to the above, marketing has several other functions as follows:

1. Product planning and development2. Packaging3. Pricing 4. Market Research.5. Promotion etc.,

1.Product Planning:

A Product planning is something which is a business offers to customers. Hence product planning, product improvement, product development, product diversification are all parts of product management, profitability depends on product mix planning. Product

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 23: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

planning involves adding dropping a modifying a product. Sometimes product line planning may have to be undertaken by marketer. 2. PACKAGING:

Provides protection and improves aesthetic appeal. This enable the marketer to sell more. The two important aspects of packaging are:

a. Labeling b. Branding

3. PRICING:

Pricing is nothing but the value of the product in terms of money. It is the amount paid by the buyer to the seller. Profitability is decided by the price. Marketer need to formulated pricing strategies.

4. MARKET RESEARCH :

Market research involves systematic gathering recording and analyzing of data about relating to the marketing of goods and services.

However different authors describe marketing function in different ways. Above we have mentioned one of those methods. Another way of classification of marketing function is as follows Mc.Garrv.

Classified marketing function in to 6 categories.a. Contractual: Buyers Sellers are brought together for marketing transaction.b. Merchandizing: This is concerned with making products acceptable to the market.c. Pricing :d. Propaganda: Buyers are informed about the activities of organizations.e. Physical distribution: Consisting of transportation storage etc.,f. Termination: This is the end of marketing activity.

MARKETING MANAGEMENT

INTRODUCTION : The word “MARKETING” is originated from the Latin noun “MORCATUS”, which means “A place where business is conducted”. It is a place where buyers and sellers meet, and exchange goods and services for money.

Evolution of Marketing:

The stage of Barter:

Agriculturists and craftsmen were the main producers of this era.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 24: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

After meeting his own requirements the sulphur were disposed in their immediate neighbors.

There was no elaborate distribution system as the habits and needs of the people and the prevailing technology did not demand such a system.

Marketing under those conditions meant a task of producing the basic necessities of life and exchanging them with known consumer groups in the immediate neighborhood. This represented the stage of barter in the evolution of marketing.

The stage of Money Economy:

In this next stage of evolution money came into picture. The change was limited to the replacement of the barter system by the money

system with the result that pricing became the chief mechanism of marketing.

The stage of Industrial Competition:

Far reaching changes took place in this stage. This stage introduced new products, new systems of manufacture, new modes of

transportation and methods of communication. This stage brought about changes in the physical and economic environment of

man. Mass production became the order of the day and variety of low-priced goods

became available in abundance. The industrial revolution also generated the income revolution that sustained the

mass production and mass distribution unleashed by the industrial revolution.

The Stage of Competition:

The ever increasing number and size of the producing firms generated the phenomenon of competition, which was not known in the agriculture and handicrafts economy or in the early stage of Industrial Evolution.

The main task of the industrial firms was disposal or distribution of whatever they produced. In the subsequent stage, meeting competition became the chief issue.

The situation demanded a conscious effort to face the competitors and the firms had to ensure that their products were accepted in preference to those of their competitors.

The Emergence of Marketing:

After the Second World War there war there was a substantial increase in population.

New industrial concerns sprang up rapidly and a great variety of new products and services strengthened the consumer market.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 25: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Consumer had abundant choices and consumer began to occupy a place of unique importance.

The businessmen who got consumers who are well educated and endowed with a good discretionary income realized that it was not enough if they made a onetime sale of their products to the consumers.

They had to make available their products at a price that was advantageous to the consumer. They also had to ensure that complaint from the consumer about the product was attended to promptly and if required after sales servicing had to be provided and that led to the emergence of marketing.

MARKETING MIX

In marketing Planning we use marketing information to assess the situation. We have to select specific marketing targets in the form of market segments. For each segment or sub division of the market we have formulate a combination of a number of devices or types of marketing activities that are integrated into single marketing programme to reach a particular target or market segment. The combination of these marketing methods or devices is known as the marketing mix.

A successful marketing strategy must have a marketing mix as well as a target market for whom the marketing mix is prepared. The elements or variables that make up a marketing mix are only four:

1. Decisions on product or service.2. Decisions on price.3. Decisions on promotion.4. Decisions on distribution.

These four Ingredients are closely interrelated.

In the simplest manner, the basic marketing mix is the blending of four inputs or sub mixes which form the core of the marketing system.

1. Product Mix2. Price Mix3. Distribution Mix4. Promotion Mix.

The outputs are optimum productivity and satisfaction.

PRODUCT MIX PRICE MIX1. BRAND 1. PRICING STRATEGY

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 26: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

2. COLOUR3. STYLE4. DESIGN5. PRODUCT LINE6. PACKAGE7. WARRANTY8. SERVICE

2. PRICING POLICY 3. BASIC PRICE4. TERMS OF CREDIT5. DICOUNTS6. ALLOWANCES

MARKETING STRATEGYMARKETING MIXFOCUSSED ONTRAGET MARKET

PROMOTION MIX PLACE MIX1. PERSONAL SELLING 2. ADVERTISING3. PUBLICITY4. SALES PROMOTION a) DELERS AIDS b)CONSUMBER AIDS

DISTRIBUTION CHANNELS1. WHOLESALERS2. RETAILERS3. MERCANTILE AGENTS

PHYSICAL DISTRIBUTION 1. TRANSPORT2. WARE HOUSING3. INVENTORY

MARKETING MIX STRATEGY

PROMOTION MIX

SALES PROMOTION

OFFERING MIX ADVERTISING

PRODUCTS DISTRIBUTIONTARGETSERVICES SALES FORCE CHANNELS

CONSUMERSPRICES

PUBLIC RELATIONS

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 27: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

DIRECT MAILTELE MARKETINGAND INTERNET

The above figure shows the company preparing an offering mix of Products, Services, Prices and utilizing a Promotion Mix of Sales Promotion, Advertising, Sales Force, Public Relations, Direct Mail, Tele Marketing and Internet to teach the trade channels and the target customers.

Robert Louterborn suggested that the sellers four Ps correspond to the customers four Cs

FOUR Ps FOUR Cs

Product Customer SolutionPrice Customer CostPlace ConveniencePromotion Communication.

PRODUCT MIX

A Product Mix (also called Product Assortment) is the set of all products and items that a particular seller offers for sales.

The word “Product Mix” is used to describe the assortment of different product types that a company produces and markets. The Product line is the number of brands or related Products in each Products type.

Example: Have four major Product Lines: Detergents, Toothpaste’s, Soaps. For each line there are a number of brands and the number of different brands represents the length of Product Line and the numbers of different lines represents the width of the Product Mix.

HINDUSTAN LEVER LTD., has a Product Line consisting of Soaps, Detergents, Cosmetics etc.,

PHILIPS has a wide range in audio systems and home appliances.

BRANDS : brand is a name, term, sign, symbol or design or a combination of Thom, intended to identity the goods or services of one seller or group of sellers and to differentiate Thom form those of competitors.

PACKAGE :

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 28: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Includes the activities of designing and producing the container for a product. The container is called the package and it might include up to three levels of material, Old Spice after shave lotion is in a bottle that is in a cardboard box that is in a corrugated box (shipping Package) containing six dozen of Old Spice.

Example : MAURTHI UDYOG LTD – MARUTHI 1000MARUTHI UDYOG LTD., has a product Maruthi 1000 designed to have the following attributes.

Superior Road Grip Added Safety Luxurious Interiors Eco Friendly

PRICE MIX :

Price is an important consideration in buying decisions price also denotes Quality in the consumer’s mind – a Psychological factor. For same products, when many identical brands are competing with each other for consumer preference, the price may be important influencing factor price is the basic vehicle for telling the consumer about the value and associated conditions of a particular product.

Price is an important element of marketing mix. It may be defined as the value of product attributes expressed in monetary terms, which a consumer pays or expected to pay in exchange. Pricing is a marketing function, pricing influences the profit level, the operational level etc., the following factors determine the price of a product.

Pricing Objectives Demand for a Product or Services Competition Profitability Distribution channels

Example: 1. Price of “PEUGEOT 309” The Premier Peugeot Limited plans to use the market based pricing where it well exploit the market fully aiming at charging a price that will be close to Maruthi’s 1000, which is priced at Rs: 4 lakhs approximately. The company plans to attack the market of Maruthi’s 1000 by an after of a better product for a little more.

2. Price of “ACCENT” The Hyundai Motor Company plans to follow the market penetration pricing, initially pricing the car at lower or same price to attract a larger number of customer, preferably permanent ones. It plans to offer of something more for the same price.

Price of “ACCENT” Rs: 5 lakhs.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 29: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

PLACE MIX :

The marketer has the responsibility of making his product available near the place of consumption so that the consumers can easily buy it. If the brand preferred by the consumer is not easily available at the convenient lactation, he may buy some other brand. Thus a marketer has to ensure that his product is available to the target consumers whatever required. There are two major areas in place mix:

1. Marketing channels 2. Physical distribution

It is true that channel decisions affect other marketing mix elements, and involve a relatively long-term commitment of resources. It may take a marketer year to build up relations with the intermediaries and sometimes these are contractual. As we know, intermediaries are independent organizations and therefore, their needs must be taken into account while evaluating carious channel alternatives. In fact, the success of a company’s marketing effort depends to a larger extent on the soundness of its distribution network, physical distribution involves transportation, warehousing, material handling and bulk packaging among others, same of theses activities will also be performed between the various links in the channel in order to get the optimum results. For many years, physical distribution was a neglected area of marketing management, but now companies have become generally conscious of its importance in the overall marketing strategy.

Example : HM-MITSUBISHI CARS IN INDIA.

The company plans to use both one X zero level of channels of distribution. The company launched: LANCER” in the four metropolitan cities, viz., Delhi, Mumbai, Calcutta and Chennai besides Cochin also.

The total number of dealers appointed in India is 135. The dealer will be provided training and help under the corporate identity programme.

The present widespread dealer network of the Hindustan Motors will handle sales, services, and spare parts activities.

The dealer and engineers will be trained under the company in house programmers in India as well as abroad.

PROMOTIONAL MIX :

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 30: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Marketing promotion is a management process through which an organization develops, presents and evaluates a series of messages to an identified audience so, effective promotion depends on :

The nature of communication The target audience The environment in which it is received The medium used to transmit the message.

Example :1. “OPELASTRA” Car in India. The tools and media used.The company will use various strategic tools and media to tap the potential customers and keep the current ones.

Advertising in print media (newspapers, Magazines and dailies), using tele media like Television, Videotapes and also through outdoor advertising are a few of the tools used by the company besides other like exhibits and fairs, demonstration etc.,

The company has a database of 20,000 likely buyers to whom direct mailers have been sent.

The company has also conducted “Car Clinics” for over two months to gauge the customers response in an effort to balance quality and price.

Example :2. Hyundai Motor Company Car in India. The tools and media used.

The company uses massive communication using tools and media like print, T.V. , Outdoor advertising, Exhibition and fairs, Video tapes etc.,

The global theme used is “Commitment of customer satisfaction”

The Company however may not use newspaper as on advertising media on large scale, except where it is the most popular print media and only way to reach the customer.

PRODUCT MIX:

Product is the thing possessing utility. It has four components:1. Product range 2. Service after Sale 3.Brand 4.Package.

The product management evolves product mix in consultation with marketing manager.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 31: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

PRICE MIX:

Price is the valuation placed upon the product by the offerer. It has to cover pricing, discounting, allowances and terms of credit. It deals with price competition.

PLACE MIX :

Distribution is the delivery of the product and right to consume it. It includes channels of distribution, transportation, warehousing and inventory control.

PROMOTION MIX :

Promotion is the persuasive communication about the product by the offerer to the prospect. It covers advertising, personal selling, sales promotion, publicity, public relations, exhibition etc.,

INTEGRATED MARKETING:

When all the company’s departments work together to serve the customer’s interests the result is integrated marketing.

Integrated marketing takes places on two levels.

First, the various marketing functions- sales force, advertising, customer service, product management, marketing research – must work together too often the sales force thinks product managers set prices or ` sale quotas :too high”, or the advertising campaigns. All these marketing functions must be coordinated form the customer’s print of view.

Second: marketing must be embraced by the other departments; they must also “think customer” marketing is far too important to be left only to the marketing department. Marketing is not a department so much as a company wide orientation. Xerox goes so far as to include in every job description an explanation know that customer attitudes are affected by Xerox billing accuracy and promptness in returning calls.

The various marketing functions like sales, advertising, customer service, market research must work together. Secondly other departments like manufacturing, engineering, all departments must work together. Sometimes engineer complains that sales/marketing people are “always protecting the customer and not thinking of company’s interest”, he went on to blast customer for asking for too much”, this feeling should be removed, if we have to practice integrated marketing. In fact today’s marketing concepts shown in the diagram.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 32: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

CUSTOMERSFORNT LINE PEOPLEMIDDLE MANAGEMENT Modern Customer TOP AMANGEMENT oriented organization chart.

At the top are customer, next in level are the frontline people who meet and satisfy the customer. Under them are the middle managers, whose job is to support the front line people to serve to customers.

NEEDS

Needs are basic satisfaction of human beings. Food , clothing, shelter etc are the basic needs of human needs

MEANING OF MARKET

“ A market is a physical place where buyer and sellers gathered to exchange goods”

Economists describe a market as “ a collection of buyers and sellers who transact over a particular product or product class”.

Business people often use the term market to cover “ Various Groupings of customers”

MEANING OF MARKETING

“ Marketing is a social and managerial process by which individuals and groups attain what they need and want through creating, offering and exchanging products of value with others”

“A System of interacting business activities designed to plan, price, promote and distribute want, satisfying products and services to present and potential customers”.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 33: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

“Marketing is the performance of business activities that directs the flow of goods and services form the producer to the consumer”.

“Marketing is designed to bring about desired exchange with target audiences for purpose of mutual gain”.

MODERN DEFINITION OF MARKETING

A total system of business, an ongoing process of (1) Discovering and transacting consumer needs and desires into products and services (through planning and producing the planned demand)2. Creating demand for these products (through promotion and pricing)3. Serving the consumer demand through planned physical distribution (with the help of marketing channels and then4. Expanding the market even in the face of keen competition”.

DEFINITION FOR MARKETING MANAGEMENT

“Marketing management is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, services to create exchanges that satisfy individual and organizational goals”.

THE SCOPE OF MARKETING

Marketing is typically seen as the flash of creating promoting, and delivering goods and services to consumers and businesses. In fact marketing people are involved in marketing types of entities goods services, experiences, event, person, places. Properties, organization information and ideas.

1. Goods : physical goods constitute the bulk of most countries production and marketing effort in developing nations, goods- particularly food, commodities clothing and housing are the mainstay of the economy.

2. Services: At economies advance a growing proportion of their activities are focused on production of services. The US economy today consists of a 10-30 services to good mix. Service include the work of airlines, hotels can rental firms, barbers and beauticians, maintenance and repair people, dog kennels and dog therapists, as well as professionals working with in or for companies, such as accounts lawyers, engineers, doctors, software programmers and management consultants.

3. Experiences: by orchestrating several services and goods, one can create, stage, and market experiences. There is a market for different experiences, such as spending a week at a base ball camp playing with some retired baseball greats, playing to conduct the Chicago symphony orchestra for five minutes, or climbing mount Everest.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 34: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

4. Events: Marketers promote time – based events such as the Olympics, company anniversaries, major trade shows, sports events, and artistic performances, there is a whole profession of meetings planners who work out the details of an event and stage it to come off perfectly.

5. Persons: Celebrity marketing has become a major business. Years ago some one seeking same would hire a press agent to plant stories in newspapers and magazines. Today artists, musicians, CEO’s, physicians high profile lawyers and financiers, and other professionals are drawing help from celebrity marketers.

6. Places : cities, states, regions, whole nations compete actively to attract tourists, factories, lump any head quarters and new residents. Ireland has performed as an outstanding place marketer, having attracted more than 500 companies to locate their plants in Ireland.

7. Properties : Properties are intangible rights of ownership of either real property or financial property. Properties are brought and sold, and this occasions a marketing effort.

8. Organizations: Organizations actively work to build a strong, favorable image in the mind of their publics. We see corporate identity ads by companies seeking more public recognition. Philips puts out ads with the tag line “let’s make things better”. Universities, museum and performing arts organization all lays plans to boost their public image to compete more successfully for audiences and funds.

9. Information: Information can be produced and marketed as a product. This is essentially what schools and universities produce and distribute at a price to parents, students, and communities. Encyclopedias and most notification books, market information. We buy CDs and visit the internet for information.

10. Ideas: Every marketing offering includes a basic idea at its core. marketers search hard for the core need they are trying to satisfy. A church example, must decide whether to market itself as a place of worship or a community center.

NEEDS, WANTS, & DEMAND

NEEDS: NEED is a state of felt deprivation of some basic satisfaction. People require food, clothing, shelter, safety belonging, esteem and a few other things to survival. These NEEDS are not created by their society or by marketers.

WANTS: WANTS are desires for specific satisfiers of these deeper needs.For example: if a person needs a vehical to travel to his office he can go for two wheelers, but if he specifically buys a car or a FOUR WHEELER that becomes a want.

DEMAND: DEMANDS are wants for specific products that are backed up by an ability & willingness to by them.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 35: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

For example: .

PUSH AND PULL STRATEGY: (Kotler)

In managing its intermediaries, the firm must decide how much effort to devote to push versus pull marketing. A Push strategy involves that manufacturer using its sales force and trade promotion money to induce intermediaries to carry, promote and sell the product to end users. Push strategy is appropriate where there is low brand loyalty in a category, brand choice is made in the store, the product is an impulse item, and product benefits are well understood.

A pull strategy involves the manufacturer using advertising and promotion to induce consumers to ask intermediaries for the product, thus inducing the intermediaries to order it. Pull strategy is appropriate when there is high brand loyalty and high involvement in the category, when people perceive differences between brands, and when people choose the brand before they go to the store. Companies in the same industry may differ in their emphasis on push or pull.

Designing a channel system involves four steps:1. analyzing customer needs,2. establishing channel objectives3. identifying major channel alternatives, and4. Evaluating major channel alternatives.

Promot ion- push and pul l s trateg ies"Push or Pull"?Marketing theory distinguishes between two main kinds of promotional strategy - "push" and "pull".

PUSH:A “push” promotional strategy makes use of a company's sales force and trade promotion activities to create consumer demand for a product. The producer promotes the product to wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers.A good example of "push" selling is mobile phones, where the major handset manufacturers such as Nokia promote their products via retailers such as Carphone Warehouse. Personal selling and trade promotions are often the most effective promotional tools for companies such as Nokia - for example offering subsidies on the handsets to encourage retailers to sell higher volumes. A "push" strategy tries to sell directly to the consumer, bypassing other distribution channels (e.g. selling insurance or holidays directly). With this type of strategy, consumer promotions and advertising are the most likely promotional tools.PULL:

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 36: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

A “pull” selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product. If the strategy is successful, consumers will ask their retailers for the product, the retailers will ask the wholesalers, and the wholesalers will ask the producers.A good example of a pull is the heavy advertising and promotion of children's’ toys – mainly on television. Consider the recent BBC promotional campaign for its new pre-school programme – the Fimbles. Aimed at two to four-year-olds, 130 episodes of Fimbles have been made and are featured everyday on digital children's channel CBeebies and BBC2.As part of the promotional campaign, the BBC has agreed a deal with toy maker Fisher-Price to market products based on the show, which it hopes will emulate the popularity of the Tweenies. Under the terms of the deal, Fisher-Price will develop, manufacture and distribute a range of Fimbles products including soft, plastic and electronic learning toys for the UK and Ireland. In 2001, BBC Worldwide (the commercial division of the BBC) achieved sales of £90m from its children's brands and properties last year. The demand created from broadcasting of the Fimbles and a major advertising campaign is likely to “pull” demand from children and encourage retailers to stock Fimbles toys in the stores for Christmas 2002.PromotionTo sell an offering you must effectively promote and advertise it. There are two basic promotion strategies, PUSH and PULL.

The PUSH STRATEGY maximizes the use of all available channels of distribution to "push" the offering into the marketplace. This usually requires generous discounts to achieve the objective of giving the channels incentive to promote the offering, thus minimizing your need for advertising.

The PULL STRATEGY requires direct interface with the end user of the offering. Use of channels of distribution is minimized during the first stages of promotion and a major commitment to advertising is required. The objective is to "pull" the prospects into the various channel outlets creating a demand the channels cannot ignore.

Using Push-Pull Strategy In Public RelationsPush-Pull Strategy is not a new concept; it's been around for a while. Its two components - Push Strategy and Pull Strategy - can be utilized either exclusively or in combination, and it is probably more useful to discuss each separately, because Push-Pull simply is the combination of the two. Although often thought of as marketing tools, Both push and pull principles fit very well into the public relations model and are used in strategic campaigns to determine the efficacy of persuasive methods. One of the earliest definitions of public relations I learned was, "Public relations is doing good things and talking about it." You could say that Pull Strategy has "doing good things" at its heart, and that Pull Strategy is more concerned with the "talking about it" element. PULL STRATEGY involves talking directly to your primary audience with the express purpose of persuading them to take a specific action favorable to your organization. It depends on your organization's ability to "pull" the target audience into the fold, and is most powerful when you have developed a solid reputation as a leader in the field.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 37: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

In other words, an organization's strength and exemplary actions are used to attract supporters. Consistent, exemplary action leads to people trusting your organization. This earned trust boosts your credibility, and when people can believe you, this in turn solidifies your company's reputation in society. And, it is this reputation that serves as your operational foundation and determines the image that people have of you. I call this the Action-Image Continuum. All of this smoothes the way for acceptance of your message and your calls for support. In short, exemplary action pulls your potential supporters toward you and makes it easier to persuade them to take action on your behalf. A good example would be a member of your organization personally taking a potential member by the hand and walking him or her through the recruitment process. PUSH STRATEGY uses the benefiting organization's communications channels and influencing audiences to convince potential supporters that it's in their best interest to join your organization or support its causes. You generally will be communicating with a large group of potential supporters, and will choose from a gamut of communications tools in Push Strategy. It's everything from brochures to direct mail, from newsletters to phone calls, from speeches to exhibits, from email to websites. Basically, the purpose of push is to get the word out about your organization or cause. However, you must give something of value to the audience - something that will push them, that will nudge them toward you, that will position them to be enlightened by your organization's good name and image, that will break through the inertia and get them to do something on your behalf. That something of value could be entertainment, knowledge, expertise, "how to" or "did you know" tips, perhaps even samples. PUSH-PULL STRATEGY is a combination of the two strategies - planning and timing your "pull" initiatives with your "push" initiatives. You use persuasive methods directly with your primary audience (pull), while at the same time, you utilize existing or new targeted communications tools (push). A good example of "push-pull" would be a college-level pre-professional organization whose members are often "lost in the cracks" before they join the sponsoring professional association. The pre-professional organization can "talk up" and "push" professional membership until their faces turn blue, but once their members leave the fold (graduate), it then becomes the responsibility of the sponsoring association to latch on to them and "pull" them into the professional group.

Question: What are marketers talking about when they say Push vs. Pull?

Answer: "Push" tactics are typically promotions directed at re-sellers or other members of the distribution channel. Again, there are different types, including training programs, trade allowances, cooperative advertising, and the provision of point-of-purchase displays. These are intended to provide incentives to the channel to "push" a firm’s product toward the customer.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 38: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

A "Pull" strategy is usually advertising directed at the end consumer. It works to increase end demand, thus "pulling" a product through the distribution channel.

Push-Pull strategy.

The business terms push and pull originated in the marketing and advertising world, but are also applicable in the world of electronic content and supply chain management. The push/pull relationship is that between a product or piece of information and who is moving it. A customer "pulls" things towards themselves, while a producer "pushes" things toward customers.ContentIn a "push" system the consumer does not request the product to be developed; it is "pushed at" the end-user by promotion. An example of this is a perfume product. Women do not request to smell a fragrance they never smelled before; it is simply "pushed" at them, through the right advertisement.In a "pull" system the consumer requests the product and "pulls" it through the delivery channel. An example of this is the car manufacturing company Toyota. Toyota only produces cars when they have been ordered by the customers.Supply chainsWith a push-based supply chain, products are pushed through the channel, from the production side up to the retailer. The manufacturer sets production at a level in accord with historical ordering patterns from retailers. It takes longer for a push-based supply chain to changes in demand, which can result in overstocking or bottlenecks and delays (the bullwhip effect), unacceptable service levels and product obsolescence.In a pull-based supply chain, production and distribution are demand driven so that they are coordinated with actual customer orders, rather than forecasted demand.A supply chain is almost always a combination of both push and pull, where the interface between the push-based stages and the pull-based stages is known as the push-pull boundary. An example of this would be Dell's build to order supply chain. Inventory levels of individual components are determined by forecasting general demand, but final assembly is in response to a specific customer request. The push-pull boundary would then be at the beginning of the assembly line. At this point on the supply chain timeline, it is typically coordinated through a buffer inventory.

Push Then Pull Marketing Marketing is like rowing. You pull hard on the oars to go forward, then lift them out of the water and push them back to finish the stroke and get ready for the next pull. Once you've got the sequence of the stroke right, you and your boat slip forward through the water and build speed and momentum. If you push when you should be pulling, the boat goes backwards, or, even worse, you lose your balance and fall into the bottom of the boat. One of the biggest mistakes people make in marketing their services is to simply PUSH information about their services and themselves out to prospects and hope that this will

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 39: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

result in attracting prospects. Unless you are already a household name and in such demand that your phone is ringing off the hook, this approach rarely attracts the numbers of new clients you want. The result is that most marketing falls into the bottom of the boat instead of propelling your business forward. An alternative to the typical push and hope approach to marketing is to PULL prospects in and then in the context of a growing relationship, PUSH useful information out to them. If you want prospects to remember your firm when they have a need for your services, start by attracting their interest. Generate interest by focusing on what your potential clients want and the problems they need solved. Use this client centered marketing strategy to pull prospects in so you can push your expertise out to them. Give them ideas they can apply instead of information about credentials, or past clients. Like rowing your boat, you won't move very far unless you repeat the sequence again and again. Are you pulling prospects in or just pushing your information out? Review your marketing materials to see if you have the sequence right. Take a look at your web site, brochures, newsletters, correspondence and proposals. PULL TACTICS - 'Client' CenteredDo your marketing materials1. Begin with a clear identification of the niche market(s) you work with?2. Lead with client problems and concerns? 3. Use the two elements above to create a picture that your target market can identify

with?4. Provide useful ideas that your target market can use and that demonstrates your

expertise?PUSH TACTICS - 'You' CenteredDo your marketing materials1. Focus on you, your services and staff? 2. Focus on glowing testimonials and your client list?Which works best? Both. The challenge is getting the emphasis and order right. The pull then push marketing sequence that works to move your business forward involves the following: 1. Create resources that pull prospects to you and your firm 2. Get prospects to give you their contact information (Most firms let over 99% of

the people who see their information go away and never follow up) 3. Push useful information out to self-selected prospects on a regular basis.

(Remember the majority of buyers won't make a purchase until they've had a minimum of 5-6 contacts with your firm.)

When your prospects have a compelling need, they will turn to the firm that they've had regular communication with, know and trust. At some point prospects will want more details about your services, credentials and testimonials. But this is often the last information you need to provide. Use the pull then push strategy to get your marketing moving. You'll be amazed as you watch both your prospect and client lists grow and your business gains momentum.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 40: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

SERVICE MARKETING:

Definition:

Services are defined as identifiable, intangible, activities that are the main object of a designed to provide want-satisfaction to customers.

For marketing purposes, services are separated into two categories:

Services that are main purpose or object of transaction. Eg: You rent a car from enterprise. The company makes a car available (A tangible good). But what you are purchasing is accessibility to transportation. Because you are buying the use of the car, not the car itself, this is a service transaction.

Service that support or facilitate the sale of good or any other service. Eg: When you rent a car from enterprise, you can also obtain collision insurance, the use of a cellular phone, and an electronic navigational device. These are called supplementary or support services because you obtain them only in conjunction with renting a car.

NATURE AND IMPORTANCE OF SERVICES:

Services are the major source of employment more than 80% of the non-farm labor force is employed in service industries. The industries in which job growth will be the fastest are data and information and management, institutional and in home health care education and financial services.

The services account for over one half of consumer expenditures is impressive, but is still grossly understates the economic importance of services. And hence spending for business services. And hence spending for business services will continue to grow.

As commerce has become increasingly complex and competitive , managers have found that calling on specialized service providers is effective and efficient. This is resulting in many tasks formerly performed by regular employees, from research and training to advertising and distribution are increasingly being “Outsourced” to “specialists”.

SCOPE OF SERVICES

Scope of services can be recognized both for Profit and non business services organizations for profit services firms sell to consumers or other business with profitable operations as a primary goal. This category is classified by industry:

_ Housing & other structures: Rental of offices, warehouses, hotels, motels, apartments, houses & firms

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 41: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

_ Household operations: House maintenance & repairs, security, landscaping & household cleaning

_ Recreation & Entertainment: Theatres, Spectator sports, amusement parks, participating sports, restaurant meals & resorts.

_ Personal care: Laundry, dry cleaning, spas

_ Medical & Health care: Physical & Mental medicinal services, dental, nursing, Physiotherapy

_ Private Education: Vocational schools, nursery schools, continuing education programs

_ Professional business services: Legal, accounting, advertising, marketing research, public relations & Management consulting

_ Financial services: Personal & business insurance, banking, credit & loans service, Brokerage service & investment councelling.

Non business service organizations are of two types. One type is ‘not for profit’ Service organization which have a profit goal because growth & continued existencedepend on generating revenue in excess. However PROFIT is secondary to the N-F-P’s primary objective. In many cases N-F-P’s operate in a fashion very similar to for-profitbusinesses eg.

_ Educational: Private grade schools, High schools, Colleges & Universities

_ Healthcare: Hospitals, Nursing homes, Health research organizations

_ Professional & Trade: Labor unions, Certificate groups, professional associations, trade associations & lobbying groups

_ Social concerns: Organizations dealing with family planning, civil rights, termination of smoking, environmental concerns.

The second type of non-business organization is a non-profit organization which provides services but does not have a profit or surplus objective, eg.Federal, State & Local Govt. agencies. The provide services, often charging for them & may even operate in competition with for-profit businesses, eg.U.S. National part service competes with private forms of outdoor recreation.

CHARACTERISTICS OF SERVICES

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 42: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

There are 4 characteristics that differentiate services from goods. They are:

- Intangibility- Inseparability- Heteroginity- Perishability

INTANGIBILITY

As services are intangible, it is impossible for prospective customers to sample- feel, see, hear, taste or smell i.e a service before the buy it. Four promotional strategies that may be used to suggest service benefits & reduce the effort of intangibility are:

- Visualization eg. Carnival cruise lines depicts benefits of cruises

- Associationeg. Connecting service with tangible goods. Prudential Insurance suggests stability & security with its rock of Gibralter. Merrill Lynch

- Physical representationEg. American Express uses colour – gold or platinum for the credit card services to symbolize wealth & prestige.

Documentation

There are 2 forms of documentation:

i) Past performanceeg. A hospital can document its past performance by pointing out in its ads how many babies have been born & cared for in its obstetrics department.

ii) Future capability eg. A hospital chooses to stress its capability by highlighting the specialized equipment it has if an emergency arise during the delivery of a baby.

Websites are a vulnerable tool in reducing the intangibility of a service. They make it possible for marketers to present extensive information, use animation & sound & answer a site visitors specific questions via e-mail.Eg. Royal Carribbean Cruise line. Inseparability

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 43: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Services cannot be separated from the seller of the service. Many services are created , dispensed and consumed simultaneously .

Eg: Dentists create and dispense almost all their services at the same time and they require the presence of the consumer for the services.

Service Inseparability means that service providers are involved concurrently in the production and marketing efforts.

Eg: One physician can treat only so many medical patients in a day. From a marketing standpoint inseparability limits distribution. It frequently means

that direct sale is the only possible channel of distribution and an individual seller’s services can be sold only when direct contact is possible.

An exception in this feature is some services are sold by a person wois representing the creator-seller.

Eg: Travel agent , insurance broker etc.

HETEROGENITY

It is difficult if not impossible for a service firm , or even an individual seller of services to standardize output. Each unit of the service is some what different from every other unit of the same service because of an factor in production and delivery.

Eg : Delta airlines does not give same quality of service on each flight, or even to each passenger on the same flight.

PERISHABILITY

As a market commodity a service has a high degree of perishability. Time element assumes unique importance. If a service is not used today it is lost for ever. It cannot be stored. It cannot be carried forward. Utilized services are economic losses .

Eg: A building unoccupied , a person unemployed , credit not utilized , empty rooms in a 5 star hotel represents perishable nature of services.

DIFFERENCES BETWEEN SELLING & MARKETING

SELLING MARKETING

Selling is sales oriented. Marketing is customer oriented.

Selling starts with seller. Marketing starts with buyer & Focuses on the needs of buyer.

Selling converts product Marketing converts consumer into cash. needs into product.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 44: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Selling has a short term Marketing has a long term goals. Goals . & strategies

In selling activity produ- In marketing consumer’s needs, ct is the prime concern. Wants & performance is prime concern.

Selling views business Marketing views business as as goods producing pro- customer satisfying pocess.cess

In selling cost determine- Consumer determines price;es price. Price determines costs.

Selling views customer as Customer is the very purpose Last link in business. Of the business.

Selling focuses on sales Marketing focuses on identify- Volume growth. Ing profit making opportunit- ies.

CONCEPTS OF MARKETING.

THE EXCHANGE CONCEPTRAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 45: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

The exchange concept of marketing, as the very name indicates ,holds that the exchange of a product between the seller & the buyer is the central idea of marketing. While exchange does form a significant part of marketing as a mere exchange process would amount to a gross undermining of the essence of marketing. A proper scrutiny of the marketing process would readily reveal that marketing is much broader than exchange. Exchange, at best, covers the distribution aspect and the price mechanism involved in marketing. The important aspects of marketing, such as concern for customer, generation of value satisfaction creative selling & integrated action for serving the customer, get completely overshadowed in the exchange concept of marketing.

THE PRODUCTION CONCEPT

It is one of the oldest concepts of business. The production concept holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs, mass-distribution. They assume that consumers are primarily interested in product availability and low prices. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features. It is also used when a company wants to expand the market.

Some service organizations also operate on production concept. Many medical & dental practices are organized on assembly-line principles, as are some government agencies. Although this mgt orientation can handle many cases per hour, it is open to charges of impersonal and poor-quality service.

THE PRODUCT CONCEPT

The product concept is somewhat different from the production concept. Whereas the production concept seeks to win markets & profits via high volume of production and low unit costs, the product concept seeks to achieve the same result via product excellence- improved products, new products and ideally designed & engineered products. It also emphasis on quality assurance. Managers in these organizations focus on making superior products & improving them overtime. They assume that buyers admire well-made products and can evaluate quality & performance. Mgt might commit the Better-mousetrap fallacy, believing that it will lead people to beat a path to its door.Example:- web T V

THE SELLING CONCEPT

The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization’s products. The organization must, therefore, undertake an aggressive selling and promotion effort. This concept assumes that consumers

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 46: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

typicallyshow buying inertia or resistance & must be coaxed into buying. It also assumes that the co. has a whole battery of effective selling and promotion tools to stimulate more buying. The selling concept is practiced most aggressively with unsought goods, goods that buyers normally do not think of buying, such as insurance, encyclopedias, and funeral plots. It is also practiced in non-profit area by fund raisers, college admission offices, & political parties.

THE MARKETING CONCEPT

This concept emerged in mid-1950’s and challenged the preceding concepts. The MARKETING concept was born out of the awareness that marketing starts with determination of consumer wants & ends with the satisfaction of those wants. The concept puts the customer at both the beginning and the end of business. It stipulates that the company should be organized totally around the marketing function, anticipating, stimulating & meeting customer’s requirements.

The concept rests on the realization that a business cannot succeed by supplying products and services that ae not properly designed to serve their needs. Every depart. & every worker and every manager will “THINK CUSTOMER” &”ACT CUSTOMER”. Evidently, the concept represent a radically new approach to business.Marketing concept represents essentially a change in orientation on the part of mgt towards business.

The marketing concept rests on four pillars:1. Target market- EX:TERRA LYCOS2. Customer needs-EX:NOKIA & SONY ERRICSON3. Integrated marketing-4. Profitability-EX:DISNEY, WALL-MART

THE CUSTOMER CONCEPT

The ability of a company to deal with customers one at a time has become practical as a result of advances in factory customization, computers, the internet, & database mktg software. In this concept the companies hope to achieve profitable growth through capturing a larger share of each customer’s expenditures by building high customer loyalty & focusing on customer lifetime value. The required information collection hardware, and software may exceed payout. It works for best co. that normally collect a great deal of individual customer information, carry a lot of products that can be cross-sold, carry products that need periodic replacement or upgrading, & selling products of high value.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 47: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

THE SOCIETAL MARKETING CONCEPT

It holds that the organization’s task is to determine the needs , wants, & interests of target markets & deliver the desired satisfaction more effectively & efficiently than competitors in a way that preserves or enhances the consumer’s & society’s well-being.

The societal marketing concept calls upon marketers to build social & ethical considerations into their mktg practices. They must balance and juggle the often conflicting criteria of company profits, consumer want satisfaction, & public interest.EX: PATAGONIA, BEN &JERRY’S

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 48: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

MODULE 2 (2 Hours)Understanding the market environment: Assess the impact of micro andmacro environment.Services: Importance, distinctive characteristics of services, service mix(2 Hours)

Marketing Environment

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

MARKETING ENVIRONMENT

MICRO ENVIRONMENT MACRO ENVIRONMENT

SUPPLIERS

MARKET INTERMEDIARIES

MARKET/DEMAND

THE CONSUMER

INDUSTRY AND COMPETITION

GOVERNMENT POLICIES

DEMOGRAPHIC

SOCIO-CULTURAL

ECONOMIC

POLITICAL

NATURAL

TECHNOLOGY

LEGAL

Page 49: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Examination of competitive marketing forces

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Life style

Marketing activities

Bargaining power of suppliers

Industry competitors

Revelry among existing firms

Bargaining power of

buyer

Potential entrants

Threat from new customers

Customer behavior

Customer

Impact on firms marketing decision

Substitutes

Page 50: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

WHY ANALYSE THE MARKETING ENVIRONMENT?

Knowledge of Marketing Environment is Central to Marketing Management.

Marketing management rests squarely on the knowledge of the marketing environment. Environment plays a crucial role in marketing and that securing the right fit between the environment and the firm, using the marketing mix as the tool, is the crux of marketing. The firm has to know where the environment is heading, what trends are emerging therein and what should be its response to the environmental changes. Only by analyzing the environment, can the firm grapple with these issues.

Strategic Response to Environment is Possible only with Proper Environment Analysis

Facilitating the corporation’s strategic response to the changes taking place in environmental factors is the ultimate purpose of environment analysis. The firm has to come up with alternative programmes and strategies in line with environmental realities. This is possible only with proper environment analysis. It helps strategic response by highlighting opportunities, the pursuit of which will help the firm attain its objectives. It helps assess the attractiveness and probability position of these opportunities, and helps prepare a shortlist of those which are relevant to the firm and which can be pursued by it.

Purpose of Marketing Environment Analysis

To know where the environment is heading; to observe and size up the relevant events and trends in the environment.

To discern which events and trends are favorable from the standpoint of the firm, and which are unfavorable; to figure out the opportunities and threats hidden in the environmental events and trends.

To project how the environment – each factor of the environment – will be at a future point of time.

To assess the scope of various opportunities and shortlist those that can favorably impact the business.

To help secure the right fit between the environment and the business unit, which is the crux of marketing; to help the business unit respond with matching product-market strategies; to facilitate formulation of a marketing strategy in the right

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 51: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

way-in line with the trends in the in the environment and the opportunities emerging therein.

Spotting the Opportunities and Threats

Spotting the opportunities and threats is the central purpose here. It is in the environment that the firm finds its opportunities; it is in the environment that it finds the threats it has to encounter; and it is by tapping the opportunities present and countering the threats embedded therein that the firm achieves its growth objective. The starting point is thus to spot the opportunities and threats.

The Task Involved in Marketing Environment Analysis

Marketing environment analysis is the process of gathering, filtering and analysing information relating to the marketing environment. Involved in the process are the tasks of monitoring the changes taking place in the environment and forecasting the future position in respect of each of the factors. The analysis spots the opportunities and threats in the environment, and pinpoints the ones that are specifically relevant to the firm.

The purpose and significance of a marketing environment analysis will become more clear when we go through the chapters on Strategic Planning and Marketing Planning.

COMPONENTS OF A MODERN MARKETING INFORMATION SYSTEM

The major responsibility for identifying significant market place changes falls to the company’s marketers. They must be the trend trackers and opportunity seekers. Marketers have disciplined methods for collecting information and they spend more time interacting with customers and observing competition.

Marketers also have extensive information about low consumption patterns vary across countries. The companies with superior information enjoy a competitive advantage develop better opportunities and execution.

Scanning The Marketing Environment

Change in macro environment is the primary basis for market opportunity the company must start its search for opportunities and threats with the firm macro environment. The macro environment consists of all the factors that affect the company operations and performance. Companies need to understand the trends and mega trends characterizing the current macro environment. This is critical to identify and responds to unmet needs and trends in the market place.

Many businesses operate in environment where important forces change. Environment scanning is the process of acquiring the necessary information about these changes to

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 52: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

allow marketers to identify and interpret trends. These are five environmental forces that business must monitor, they are social, economic technological, competitive and regulatory. By identifying these trends that are related to each of these forces business can develop and maintain the successful marketing programs. Several trends that most business can develop and maintain the growth diversity of the US population. The increasing use of wireless technology and new legislation used in related to intellectual property and privacy.

It is realized now by all the marketers that environment provides opportunities and threats. The company should be able to identify the significant changes in the macro environment. Modern marketers believe that environmental scanning would provide a continuous link between he company and consumers. A marketer has to design his marketing strategy based on current marketing environment. Ex:- auto sector, telecom sector information technology sector any change in the environment in likely to affect the business.

Television giants like Weston, Nalco, and Bush lost their market to Samsung, Sansui, videocon etc…..

Hindustan motors and premier automobiles lost their prominent position in the Indian market to maruthi udyog’s during 80s.

INTERNAL RECORDS AND MARKETING INTELLIGENCE

By analyzing the information got by the internal reports on orders, sales, prices, costs, inventory levels, receivables, payables and so on the marketing managers can sport important opportunities and problems. The order-to-payment cycle-orders are sent by sales representatives, dealers and customers to the firm.

The sales department prepares invoices and transmits copies to various departments. The shipped items are accompanied by shipping and billing documents that are sent to various others departments. Internet and extranet improve the speed, accuracy and efficiency of the order-to-payment cycle. Customers favour firms that can timely deliver items. The sales representatives and customers fax or e-mail their orders. The computerized warehouses quickly fill these orders. The billing department sends out invoices as quick as possible.

Sales information systems : - The managing of inventory is very important in this system. The marketing managers need timely and accurate reports on current sales. Interpretation of the data by company should be carefully done to prevent wrong signaling. Technological gadgets are revolutionizing the sales information systems and allowing representatives to have up-to-the second information.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 53: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Databases, Data mining and Data Warehousing – The organising of information in databases like customer databases, product databases, sales person databases are combined from different databases. This helps in scoring customers according to purchase frequency and monitory value.

These data are then warehoused by the companies and make them easily accessible to decision makers.

Data mining is done by skilled analysts in sophisticated statistical methods that garner fresh insights into neglected segments.

THE MARKETING INTELLIGENCE SYSTEMWhen the internal records supply results data, the marketing intelligence system supplies happenings data. It is a set of procedures and sources managers use to obtain everyday information about developments in marketing environment. This is done by reading books, newspapers, trade publications, talking to customers, suppliers and distributors. The quality of marketing intelligence can be improved by the following steps.

Company can train and motivate sales force to spot and report new developments.

Company can motivate distributors, retailers and other intermediaries to ass along important intelligence.

A company can network externally.

A company can set up a customer advisory panel.

A company can take advantage of the government data resources.

A company can purchase information from outside supplies.

A company can use online customer feedback systems to collect competitive intelligence.

There are companies that circulate the marketing intelligence. The staff scans the internet and major publications, abstract relevant news and disseminates a news bulletin to marketing managers. If collects and files relevant news and disseminates the information and assists managers in evaluating new information.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 54: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

ENVIRONMENTAL FACTORS SPECIFIC TO THE BUSINESS CONCERNED/MICRO ENVIRONMENT

This implies the factors and forces in the immediate environment, which influence the company’s ability to serve its market. These forces are related to a specific enterprise to form part of its total marketing system.

Suppliers Suppliers are either individuals or business houses. They combined together provide resources that are needed by the company. Now the company necessarily should go for the developing specifications, searching the potential suppliers, identifying and analyzing the suppliers who offer best mix of quality, delivery, reliability, credit, warranties and obviously low cost. The developments in the supplier’s environment have a substantial impact on the marketing operations of the company since supply planning has become more important and scientific in recent years. To the extend the companies can lower thrir supply costs and increase their product quality, they in natural course can gain a competitive advantage in the market. Price trend need constant check and careful scrubbing shortages have to be fully monitored and plans should have to be made to avoid the grip of supply shortages on marketing sfforts regarding advertising, marketing, research, sales, training and marketing consultancy the marketing marketing managers are sole decisions makers.

Market intermediaries

Market intermediaries are either business houses or individuals who come to aid of the company in promoting, selling and disturbing the goods to the ultimate consumers. They are middlemen , distributing agencies, market service agency and financial institutions.

Middlemen come into being help overcome the discrepancies in the quantities, place time, assortment and possession that would other wise exist in a given condition.

It is a advantageous and sufficient to work through the established marketing channels instead of creating one and thus gains for experiment.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 55: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Of course, it is not easy to select and work with middleman but the marketing managers must ensure an effective management and satisfaction of marketing channels to enlist their long lasting support on patter terms.

The marketing managers have to decide the most cost effective modes of transportation while balancing the considerations of the cost, delivery, speed and safety.

Market/Demand

Market/demand is the first in this category. The aspects to be studied here include:

a. Nature of the demand

b. Size of the demand, present and potential

c. Changes taking place in demand

d. Invasion of substitute products

e. Changes taking place in consumption pattern/buying habits

The Consumer Consumer tastes and preferences keep fluctuating:

Factors to be monitored:

According to the firm, what is the basic need the product serves?

According to the consumer, what is the need it serves?

What constitutes customer value in the business as per their Perception?

What benefits do the consumers look for in the product?

Of the many benefits they look for , what are their Preferences/priorities/rankings?

Who are the consumers (number, location, etc.)?

Purchasing power of the consumers.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 56: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Buying behaviour; buying motives; buying habits.

Brand loyalty

Personality traits/attitudes.

Industry and competition: Industry and competition constitutes the other major component of the environment that is specific to a firm. Knowledge about industry and competition is a fundamental requirement for developing marketing strategy.

Government policies:

Governments are often large purchasers of goods and services.

Governments subsidise select firms and industries.

Governments protect home producers against foreign Competition.

Governments ban fresh entry in select industries.

Governments off and on ban certain technologies and products.

MEGA / MACRO ENVIRONMENT FACTORS

Demographic environment Since business depends on people, it is obvious that demographics is a major element to be studied in environment analysis. As a matter of fact, several factors reacting to population, such as size, growth rate, age distribution, religious composition and literacy levels, need to be studied. Aspects such as composition of workforce, household patterns, regional characteristics, population shifts, etc., also need to be studied, as they all are part of the demographic environment.

Socio-cultural environment

Socio-cultural environment is another important component of the mega environment. Culture, traditions, beliefs, values and lifestyles of the people in a given

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 57: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

society constitute the socio- cultural environment. These elements decide to a large extent, what the people will consume and how they will buy.

Culture: Culture is the combined result of factors like religion, language, education and upbringing. In any society, some cultural values are deep-rooted; they do not change easily and are termed core cultural values. There are also values and practices, which constitute secondary cultural values; they are more amenable to change and can be moulded and manipulated relatively more easily. Meaningful information on the consumption habits, lifestyles and buying behaviour of the people can be obtained through a survey of the socio-cultural environment. Cultural shifts carry with them marketing opportunities as well as the threats. That is why, close monitoring of the cultural environment becomes important.

Social class: Social class is one important concept in socio-cultural environment. Any society is composed of different social classes. A social class is determined by income, occupation, location of residence, etc., of its members. Each class has its own standards with respect to lifestyle, behaviour, etc., they are known as the class values or class norms.

Economic environment

Economic environment is a vital component of mega environment. The factors to be considered under economic environment are listed below:

General economic conditions. Economic conditions of different segments of the population; their disposable

income, purchasing power, etc. Rate of growth of the economy, rate of growth of each sector of the economy.

Agriculture

Industry

Consumer goods

Capital goods

Services

Infrastructure

Imports Exports

Income, prices, and consumption expenditure (size and patterns). Credit availability and interest rates.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 58: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Savings rate/capital formation. Inflation rate. Behaviour of capital markets. Foreign exchange reserves. Exchange rates. Tax rates. Prices of important materials. Energy scene (cost, availability, etc.). Labour scene (cost, skill availability, etc.).

Changing position of women: The changing position of women in the society is a case in point. In India, the position of women, especially in the growing middle – class segment of the population, is indeed changing fast. From the role of a simple housewife, she is now being transformed into an educated employed member, sharing the responsibilities of the home with the man.

In an environmental survey, therefore, one actually looks for such shifts taking place, since they can end up as opportunities or threats for the firm.

Some facts on the economic environment of India: If we continue with the example of India. The Indian economy has been witnessing good growth in recent years, 6 percent plus on an average. The year 19998-99 saw the growth rate accelerating to 6.8 percent from 5 percent in 1997-98.it grew by approximately 6 percent in 1999-2000.India’s per capita income, however to be low. Industrial growth was 6.2 per cent in 1999-2000.

Political environment

Political environment too is a major component of the mega environment for an industrial/business firm. In fact, economic environment is often a by-product of the political environment, since economic and industrial policies followed by a nation greatly depend on its political environment. Moreover, developments on the political front keep affecting the economy all the time; industrial growth depends to a great extent on the political environment; legislations regulating business are also often a product of the political configuration. Natural resources: Business firms depend on natural resources. The extent to which the country/region under reference is endowed with these resources has an impact on the functioning of the firm. A raw material is one major part of these resources and firms are concerned with their availability.

Ecology: Firms are also concerned with ecology. In modern times, all societies are very much concerned about ecology, especially about issues like environmental pollution, protection of wild life and ocean wealth.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 59: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Climate: climate is another aspect of the natural environment that is of interest to a business firm. Firms with products whose demand depends on climate, and firms depending on climate – dependent raw materials will be particularly concerned with this factor. These firms have to study the climate in-depth and decide their production locations and marketing territories appropriately.

Technology Environment

Options available in technology: The firm has to analyse carefully the overall technology environment and the technology options available in the given industry. The level of technology prevailing generally in the country is also a concern for the firm.

Government’s approach in respect of technology: Regulations by the government in matters relating to technology often restrict the freedom of operation of business firms. There may be areas where the governments may support the use of modern technology; there may be areas where they may ban technologies that are potentially unsafe.

Technology selection: it is possible that several levels of technologies are floating at the same time in an industry. Firms have to scan the technology environment and select technologies that will be appropriate for the firm and the given product – market situation. They have to forecast technological trends, assess current and emerging technologies, and develop the inputs for right technology choice.

Examples of technological changes:

Fax machines revolutionsing inter-communications.

Use of computers in data processing.

Shopping by television: teleshopping.

TV commercials telephone interviews super market scanners

Increasing consumer information.

Legal Environment/Business Legislation

Business legislation can be classified into the following broad categories, based on the area covered by them.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 60: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Corporate affairs

Consumer protection

Employee protection

Sectoral protection Corporate protection(protecting companies from each other ,preventing unfair

competition) Protection of society as a whole against unbridled business behaviour Regulations on products, prices and distribution

Globalization, Advances in Technology and Deregulation

We can say with some confidence that “the marketplace isn’t what it used to be.” It is radically different as a result of major, sometimes interlinking societal forces that have created new behaviors, new opportunities, and new challenges:

Changing Technology: The digital revolution has created an Information Age. The Industrial Age was characterized by mass production and mass consumption, stores stuffed with inventory, ads everywhere, and rampant discounting. The Information age promises to lead to more accurate levels of production, more targeted communications, and more relevant pricing. Moreover, much of today’s business is carried on over electronic networks: intranet, extranets, and the internet.

Globalization: Technological advances in transportation, shipping, and communication have made it easier for companies to market in other countries and easier for consumers to buy products and services from marketers in other countries.

Deregulation: Many countries have deregulated industries to create greater competition and growth opportunities. In the United States, long-distance telephone companies can now complete in local markets and local phone companies can now offer long distance. Similarly, electrical can now enter other local markets.

Transaction Marketing And Relationship Marketing

The destination between transaction marketing and relation ship marketing is as follows.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 61: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

The forces are not on just getting the customer but to retain the customer.

Transaction Marketing Relationship Marketing

Forces is on single salesShort time focusModerate customer contactLittle or no commitment to customerQuality concern lies only with production people

Orientation is on product benefitLong time focusHigh customer contactHigh customer commitmentQuality concern of all

To get the best benefit from relationship marketing there should focus should be:

Build downstream relationship with customer by delivering value

Build upstream relationship through supply chain

Focus the organization and work towards brand loyalty

MARKETING RESEARCH

Introduction

To undertake marketing effectively, business need information. Information about customer wants, market demand, competitors, distribution channel etc.

Marketers often complain that they marketing information of the right kind, or have too much of the wrong kind. The solution is an effective marketing information system.The information needed by marketing managers comes from three main sources:

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 62: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

1. Internal company information: E.g. sales, orders, customer profits, stocks, customer service reports etc.

2. Marketing intelligence: This can be information gathered from many sources, including suppliers, customers, distributors, marketing intelligence is a catch-all term to include all the every day information about developments in the market that helps a business prepare and adjust its marketing plans.

3. Marketing research: Management cannot always wait for information to arrive in bits and pieces from internal sources. Also, sources of most intelligence cannot always be relied upon to provide relevant or up-to-date information.

Marketing research consists of all the activities that enable an organization to obtain the information it needs to make decisions about its environment, marketing mix, and present or potential customers. More specifically, marketing research is the development, interpretation, and communication of decision oriented information to be used in all phases of the marketing process. This definition has two important implications:

Research plays a role in all three phases of the management process in marketing planning, implementation and evaluation.It recognizes the researcher’s responsibility to develop information, which includes defining problems, gathering and analysing data, interpreting results, and presenting the information in such a way that it is useful to managers.RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

INTERNAL COMPANY

INFORMATION

CUSTOMER PROFILES&SEVICE REPORTS, STOCKS

MARKETING INTELIGENCE

MARKETING RESEARCH

INFORMATION SOURCESS

Page 63: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Importance of marketing research

Marketing research (MR) too plays an equally important role in marketing management. Interestingly, while marketing research uses marketing information as its input, It simultaneously generates more of it as its output. It aids decisions on each element of the marketing mix product, distribution, promotion, and pricing.

Let us see the benefits that flow to the firm from marketing research in greater detail, by taking thru areas of marketing research-research on consumers, research on product and research on distribution.

Helps pick and choose customers, and make focused offers:

Marketer’s especially business to business marketers and service marketers like hotels, banks and airlines normally try to know their customers individually. They develop a list of their prospects/customers and gather all essential details about them their profits, lifestyle, requirements and buying habits. They call this a “customer database”. We saw the basics of customer database in this topic. Below example shows how the “Hyatt Regency Hotel” reaches out to its patrons on an individual basic, using a customer database.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

HELP PICK AND CHOOSE CUSTOMER AND MAKE FOCUSED OFFERS

IMPORTANCE OF MARKETING RESEARCH

HELPS KNOW WHICH PRODUCTS MOVE IN THE MARKET AND WHY

HELPS NEW ENTRANTS PLAN THEIR CHANNELS BY STUDYING EXISTING ONES

Page 64: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

“With customer database Hyatt Regency Reaches out to specific categories of patrons”.

World over, the hotel industry is a large uses of database marketing. In India too, some large hotels have been using this techniques. The Hyatt regency hotel in Delhi is one example Through its customer database, the Hyatt has been able to reach specific

categories of people such as administration executives and travel manager of large organizations, who normally play a key role in hotel reservations.

The Hyatt customer database contains lists of patrons classified suitably.

Helps know which products move in the market and why:

The year 2001 was a year of very poor growth for the FMCG sector in India.Example:

Data from MR agency org-MARG has revealed that in 2000-01, through the FMCG sector as a whole stagnated, with a nominal growth of 1.5%, a number of FMCG products/branch achieved a double digit growth rate.

To be precise 27 of the 87 FMCG product categories that org-marg trots witnessed double digit growth during the 12 months ending September 2001.

The test questions are: Can you add value to products? Can you cater to the latest demands/preferences of consumers? Can you help consumers to upgrade habits?

Helps new entrants plan their channel by studying existing users:

Often new entrants into an industry/market conduct some research on existing distribution channels for the product and gain useful insights on the channel practices existing in the industry.

Example: Before entering into the Indian passenger car market, Toyota conducted a study on the dealer networks of the various passenger car manufacturers operating already in the Indian market. The findings from the study were very useful to Toyota in planning its marketing. The main finding was that dealer network is a key success factor for any car venture.

The marketing research system:

Marketing managers often commission formal marketing studies of specific problems and opportunities. They may request a market survey, a product-performance test, a sales forecast by region or an advertising evaluation.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 65: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

The marketing research can be defined a s the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.

Example:FUJI PHOTO FILM:- at eh highest level, Fuji relies on data from market research syndicate NDP group to study the market for products ranging from digital cameras to ink jet photo paper. Fuji also does custom research with a variety of research partners, and it conducts internal research for projects requiring quick information such as changes to package design. Regardless of how the marketing research data are collected it is a top priority for Fuji, which has had to adapt its film and digital imaging products to a rapidly changing market place. “if you don’t have market research to help you figure out what is changing and what the future, will be you will be left behind” says Fuji’s director of category management and trade marketing.

The marketing research process:

Effective marketing research involves the six steps shown in figure below. We will illustrate these steps with the following situations:-American airlines (AA) are constantly looking for new ways to serve its passengers it was one of the first companies to install phone handsets. Now it is reviewing many new ideas, especially to cater to its first class passengers on very long flights, many of whom are business people whose high priced tickets pay most of the freight.Among these ideas are:

1. To supply an internet connection with limited access to web pages and email messaging.

2. To offer 24 channels of satellite cable T.V3. To offer a 50-cd audio system.

So in order to develop a marketing research process on this example.

The following steps are been implemented and they are as follows:

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 66: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Meaning of marketing information:

In the words of Tousley, Clark and Clark, “marketing information includes all facts, estimates, opinions and other information used in the making of decision affecting the marketing of goods and services”

Marketing information covers information on the following:a) What product is wanted by the consumers, i.e. what should be the type, quality,

size, shape, colour etc of the product?b) At what time do they want it? I.e. whether the consumers want it throughout the

year or only during a particular season.c) In what quantity is the product wanted? i.e. what is the size of the market for the

product.d) How should the product be made available to the consumers? i.e. what should be

the channel of distribution for the product?e) At what price should the product be sold?

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

DEVELOP THE RESEARCH PLAN

DEFINE THE PROBLEM AND RESEARCH OBJECTIVES

COLLECT THE INFORMATION

PRESENT THE INFORMATION

ANALYZE THE INFORMATION

MAKE THE DECISION

Page 67: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

f) Whether there is any competition already in the market?g) How many new customers can be attracted to purchase the product and how?

Importance of marketing information:

“Marketing information acts as the eyes and ears of an organization.” The importance of marketing information to marketing can be compared with the importance of military intelligence to the defense of a country.

Its importance arises from the following factors or reasons:1) Under the present system of mass production in anticipation of demand, the

production of the right type of goods in the right quantity is possible only when the producer knows the exact requirement of the customers.

2) In the modern marketing system, there is a long chain of intermediaries between the primary producer and the final consumer.

3) The demand of the customers, their tastes, preferences, fashions etc are ever changing. So to know the changes in the tastes and preferences of the consumers, marketing information is important.

4) Marketing information creates confidence in the minds of the producers to meet any challenging situation or condition in the market.

5) Marketing information contributes to the efficiency of marketing by reducing waste and minimizing the costs involved in marketing.

6) It helps the producer to asses the strength and weakness of the competition and make suitable changes in his marketing techniques to force the competition.

7) By minimizing marketing risks, marketing information makes market financing easier.

8) By increasing the efficiency of marketing activities, marketing information contributes to the success of not only the individual business, but also helps the community as a whole.

9) Marketing information is of at most importance in the distribution of goods.

Meaning of marketing information system:

In the words of Samuel V Smith, “a marketing information system is an interacting, continuing, future oriented structure of people, equipment and procedures designed to generate and process an information flow to aid managerial decision making in a company’s marketing program”

According to Philip Kotler, “marketing information system is a structured, interacting, complex of persons, machines, and procedures designed to generate an orderly flow of information collected from both intra and extra firm sources for the use as the basic for decision making in specified responsibility areas of marketing management”As the computers became common business tools in the early 1960’s firms were able to collect, store and manipulate larger amounts of data to aid marketing decision makers. Out of this capability developed the “marketing information system (MKIS) an on going,

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 68: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

organized procedure to generate, analyze, disseminate, store, and retrieve information for use in making marketing decision.

The ideal MKIS Includes real time data Generates regular reports and recurring studies as needed. Analyses data using statistical analysis and mathematical models that represent

the real world. Integrates old and new data to provide information updates and identify trends.

Designing a marketing information system:

To build an effective MKIS marketing manager must identify the information that will help them make better decision. Working with researchers and system analysts, managers then determine whether the data needed are available within the organization or must be procured, how the data should be organized, the form in which the data should be reported and the schedule according to which the data will be delivered.A well designed MKIS can provide a continuous flow of this type of information for decision making.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

MARKETING MANAGER

MKISSYSTEM AND

PROCEDURES FOR DATA:COLLECTIONANALYZINGSTORAGERDISSEMINATON

REQUESTS FOR INFORMATION

REGULAR AND CUSTOISED REPORTS

Page 69: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

An MKIS is of obvious value in a large company, where information is likely to get lost or distorted as it becomes widely dispersed.

How well can MKIS functions depend on three factors:

The nature and quality of the data available. The ways in which the data are processed and presented to provide usable

information. The ability of the operators of the MKIS and the managers who use the output to

work together.

THE SCOPE AND OBJECTIVES OF MARKETING RESEARCH:-

1) Marketing research is used in the formulation of all marketing plans, policies, programs and procedures.2) It is employed for control and evolution of these plans, policies, etc…When they are brought in to the practice.3) It is used in reducing and minimizing all marketing costs, particularly selling, advertising, promotion and distribution costs.4) Marketing problems demanding best solution through marketing research can be classified under three heads:

a) problems relating to the product it self; product includes branding, packaging and labeling and services.

b) Problems relating to consumer markets.c) Problems relating to each phase of the entire marketing process

5) Programmes of marketing research incidentally provide insurance cover for the survival and growth of the business in a dynamic economy.6) Marketing management through marketing research can bring about the sale of right product (brand and package) through right channels to right customers at right places and at right prices by evolving right plans, policies and programs with the help of right personnel.7) The main objective of marketing research is to enable manufactures to make goods acceptable and saleable and to see that they reach the market more easily, quickly, cheaply and profitably without sacrificing consumer interest.

Scope of marketing research: Diagnosing the current situation or problem based on detailed information. Clearly identifying competitive strengths and weakness. Constantly analyzing what happened in the market place. Planning to watch company’s strengths with market opportunities by outlining

objectives for product and market development and dividing strategies and tactics to achieve them.

Watching out continuously for threads to the achievement of those plans Monitoring the progress of strategy implementation.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 70: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

MODULE 4 (7 Hours)Product decisions: Concept, product hierarchy, diffusion process, Newproduct development, Product Life cycle, Product mix strategies. Concept ofBranding, Brand perception, Brand equity,Packaging / Labeling: Packaging as a marketing tool, requirement of goodpackaging, Role of labeling in packaging (2 Hours)

4- PRODUCT PLANNING AND DEVELOPMENT

The Meaning Of Product

The product is a set of basic attributes assembled in an identifiable form or the product is a bundle of all kinds of satisfaction of both material and non-material kinds ranging from economic utilities to satisfaction of a social-psycho-logical nature or A product is a set of tangible and intangible attributes.

A product supplies two kinds of utility:-1) Economic utility2) Supplementary utility in the form of social psychological

benefits.

We treat each brand as a separate product. For example the two internet service providers. America online and MSN are different products, the brand name suggests a product difference to the consumer and this brings the concept of want salts faction in to the definition.

PRODUCT CONCEPT

The product is the most tangible and important single component of the marketing programme. The product policy and strategy is the cornerstone of a marketing mix. Good products are key to market success. Product decision are taken first by the marketers and these decisions are central to all other marketing decisions such as price, promotion and distribution. Product is the vehicle by which a company provides consumer satisfactions. It is the engine that pull the rest of the marketing programme.

The product concept has 3 dimensions:-

1) Managerial Dimension :- It covers the core specifications or physical attributes, related services, brand, package, product life cycle, and product planning and development. The product offering must balance with consumer citizen needs and desires. Product planning and development can assure normal rate of return on investment and continuous growth of the enterprise.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 71: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

2) Consumer Dimension To the consumer a product is actually a group of symbols or meanings. People buy this not only for what they can do, but also for what they mean. Each symbol communicates certain information. Product represents both utility and non-utility aspects i.e., tangible and intangible things. A relevant product is one that is perceived by the consumer as per intentions of the marketer. Consumer accepts product as bundle of satisfaction rather than as physical things.

3) Social Dimension:- To the society salutary and desirable products are always welcome as they fulfill the expectations of social welfare and social interest. Salutary product yield long-run advantages but may not have immediate appeal. Desirable products offer both benefits immediate satisfaction and long-run consumer welfare. Society dislikes the products which only give immediate satisfaction but which sacrifice social interests in long-run-marketers have to fulfill the following social responsibilities while offering the products to consumer.

1.     Conversation & best use of natural resources, 2. Safety to users, 3. long-run satisfaction of consumers. 4. Quality of life concern for better environment 5. Fulfillment of Govt. regulations relating to composition, packaging, labeling, promotion & pricing of many products 6. Ecomarked products would be environment friendly.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 72: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

PRODUCT MIX STRAGETIES

The product mix refers to the total number of product lines carried by a firm. Where each line reflects one type of product. The product mix is composed of several products lines. A group of closely related products constitutes a product line.

PRODUCT MIX STRATERYFor example: Kodak’s product mix consists of two strong lines information and

image products. NEL’s basic product mix consists of communication and computer products.

A company’s product mix will have a certain width, length, depth and consistence.

The width product mix refers to how many different product lines The company carriesThe length product mix refers to the total number of items in its product mix

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

1. BASIC PROPERTIES INDICATING WHAT THE PRODUCT IS, SERVICE, AN IDEA.

2. SERVICES OFFERED.3. PACKAGE4. BRAND5. PRODUCT LIFE

CYCLE6. PRODUCT PLANNING

AND DEVELOPMENT7. PRODUCT MIX

1. SAFETY TO USERS2. CLAIM ON THE USE OF RESOURCES3. RELAIABLE PRODUCT INFORMATION4. IMPACT ON ENVIRONMENT

(freedom from pollution)5. LONG-RUN SOCIAL BENEFITS

1. A GROUP OF SYMBOLS

2. EACH SYMBOL COMMUNICATES INFORMATION

3. PERCEPTION OF CAUSES AND MEANING GIVEN TO THOSE CAUSES

4. FAVORABLE PERCEPTION LEADS TO PURCHASE OF THE PRODUCT

5. RELEVENT PRODUCT GIVES MATERIAL SATISFACTION, PSYCHO-SOCIAL SATISFACTION

Managerial View Point

Consumer View Point

PRODUCT CONCEPT

1. MANAGER

SOCIETAL VIEW POINT

1. PRODUCT WANT SATISFYING PRODUCTS

2. SOCIALLY RESPONSIBLE PRODUCT INNOVATION

Page 73: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

The depth product mix refers to how many variants are offered to each product in the line.

The consistency of the product mix refers to how closely related the various line are in end use.

Production requirements, distribution channels, or some other way.

These four dimension of the product mix provides the handles for defining the company’s product strategy.

Product – mix planning is largely the responsibility of the company’s strategic planners. They must assess, with information supplied by the company marketers, which product lines to grow, maintain, harvest and divest.

PRODUCT HIERARCHY

Product hierarchies stitch from basic needs to particular items that satisfy these needs. There are 7 levels.

1. Need family: The core need that underlies the product family

2. Product family :All the product classes that can satisfy a core    need with reasonable effectiveness.

3. Product class :A group of products within the product family               recognized as having a certain functional      coherence

4. Product line : A group of products within a product class that are closely related because they function in a similar manner or are sold to the same customer groups or are marketed through the  same types of outlets or fall within given price ranges.

5. Product type :Those items within a product line that share one of several possible forms of the products.

6. Brand :The name associated with one or more items in the product line that is used to identify the source or character of the item.

7. Item :A distinct unit within a brand or product line that is distinguishable by size, price, appearance, or some other attribute.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 74: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Levels Of Product Their are 5 levels of product, they are 1) Core-benefit:- The fundamental service or benefit that the customer is

really buying. 2) Generic Product:- It is the basic version of a product. 3) Expected Product:- It is the set of attributes and condition that buyers

normally expect and agreed to where they purchase this product. 4) Augmented Product:- Additional services and benefits that distinguish

the companies offer from competitors offer. 5) Potential Product:- Some of the most successful companies add benefits

to their offer that not only satisfy a customer but also delight the customer.

Product Mix Strategy 1) Expansion of product mix In this , the company enters with a new product in the product line. For example the post office serving banking facilities at home. 2) Contraction of product mix In this, the company deletes some product in product line which are not profitable. For example : Tata cosmetics, HMT – bulbs, tractor 3) Alteration of product mix In this the products are altered in its design, its usage(whether product can work for more usage) and its operations( to get new customer's). For example: Food processor, Thomson TV which can be used as computer monitor. 4) Trading up and Trading down In this they Introduce the costlier product in to the product line and introducing the cheaper product. 5) Product differentiation and market segmentation Physical products vary in their POTENTIAL for their Differentiation. At one extreme we find products that allow little variation: chicken, steel, aspirin. At the other extreme are products capable of high differentiation, such as Automobiles, buildings, & furniture.

It involves viewing the market as different demand curve, providing different . products to different segmented groups RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 75: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

BRANDING

Branding strategy indicates how firm choose to use branding as an integral part of its overall marketing strategy. Branding is the best means to capture and retain the customer demand in a competitive market.

A brand is a name, term, sign, symbol or design or a combination of them. Intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. A brand is a signature ion a constantly renewed, creative process. A product is what the company makes. Branding is the practice of giving a specified name to a product or group of products from one seller.

TYPES OF BRANDS1. Individual brand name Each product has a special and unique brand name, such as surf, aspro etc. The manufacturer has to promote each individual brand in the market separately.

2. Family brand nameThis method of branding assumes that end uses of all products under a family brand are similar and the products are not dissimilar. Family brand name enables creation of strong shelf display.

3. Umbrella BrandWe may have for all products the name of the company or the manufacturer. When a group of products are given the same brand name, it becomes a case of umbrella brand.

4. Combination DeviceEach product has an individual name but it also has the umbrella band to indicate the business house producing the product.

5. Private or middle mans brands:Sometimes, some manufacturers leave their products for branding by the distributors/retail chains as per the letters choice. Such brands are called middle man’s brand.

PACKAGING: Packaging may be defined as the general group of activities in the planning of a product. These activities concentrate on formulating a design of the package and producing an appropriate and attractive container or wrapper for a product of packaging is the activities of designing and producing the container or wrapper for a product. The container or wrapper is called the package. The packaging concept defines what the package should basically be or do for the particular product. Package design itself can act as a registered brand. But packing is merely a physical action and provides a handling convenience. Packaging must also convey a required product image. Packaging is a market necessity. The public does not want just the product. They want explanation, assurance, encouragement. Confident and praise. Packaging also needs to harmonize with consumer usage. Package is an invaluable aid to delusion making by the customers the package is important information we to many buyers.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 76: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Packaging completes the sales cycle triggered by advertising, and secures a meaningful market share. Marketing management prefers a package with is attractive, simple to produce easy to store, easy to handle, convenient for display and involves minimum marketing cost. Packaging decorates and beautifies the product so as to lead the consumer impulsive buying. Packaging itself is a device of sales promotion.

LABELLINGThe label may be a simple tag attached to the product or an elaborately designed

graphic that is part of the package. Packaging, branding and labeling go together and constitute an integral part of product. It gives verbal ingormn about the product and the seller.

Labeling has social significance consumer criticion centers round charge of false. Misleading and defective packaging and labeling. Labels give helpful information on the following.

1. Brand name, 2. Name & address of producer 3. Weight, measure, count, 4. Ingredients by percentages where possible 5. Directions for the proper use of the product. 6. Cautionary measures concerning the product & it use, 7. Special care of the product. 8. Recipes on food products 9. Nutritional guidelines, 10. Date of packing & date of expiry. 11. Retail price & 12. Unit for comparison. Consumer want grade labeling to be made compulsory. The label should also help in unit-price comparison.

Labelling system must enable consumers to determine quality and compare products. Misleading labels will invite prospective & penalty.

On the whole, consumers welcome informative labels.

NEW PRODUCT DEVELOPMENT

SIGNIFICANCE OF NEW PRODUCTSNew product development is a major component of the firms product policy. It is

not enough if existing product lines are appraised properly. Products are positioned effectively and brand decisions are taken wisely. For higher levels of growth, a firm has to look beyond its existing products.

MAKING NEW PROFITSNew products become necessary from the profit angle too. Products that are

already established often have their limitations in enhancing the profit level of the firm. It thus becomes essential for business firms to bring in new products to replace old, declining and losing products. New products become part and parcel of the growth requirements of the firm and in many cases, new profits come only through new products.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 77: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

New products offer new avenues of growth and thus secure the viability and sustainability of the firm. The risk gets spread over a large number of products. Old ones and new ones.

CLASSIFICATION OF NEW PRODUCTS: New products can be broadly classified into two groups:

i) New products arising out of technological innovations.ii) New products arising out of marketing oriented modifications.

The first group includes intrinsically new products having a new functional utility. The second group includes products that come out of marketing oriented innovations on existing products. These are essentially new versions of existing products; the newness may be due to some modification in the ingredients used, kor some changes in design, the addition of a new feature, a change of package etc., The newness may also be due to repositioning of the existing product, or finding new use for the existing product, or offering the existing product with new sales appeal to a new market segment.

IMPORTANCE OF PRODUCT INNOVATIONA business exists to satisfy customers while making a profit. Fundamentally, a

company fulfills this dual purpose through its products. New product planning & development are vital to an organization success. This is particularly true now, given (1) Rapid technological changes, which can make existing products absolute and;

(ii) The practice of many competitors to copy a successful product, which can neutralize an innovative products advantage. Thus as emphasized by a top executive at Pillsbury. “In the end, the company with the most new products wins”. Of course, these new products must be satisfying to customers and profitable for the firm.

PRODUCT PLANNING AND DEVELOPMENT PROCESS

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

GENERATION OFNEW PRODUCT

IDEAS

SCREENING OFNEW IDEAS

CONCEPT DEVELOPMENT & TESTING

BUSINESSANALYSIS

PRODUCTDEVELOPMENTPROGRAMME

TESTMARKETING

COMMERCIALISATION &

EVALUATION

Page 78: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

STAGES IN NEW PRODUCT DEVELOPMENT

New product development in respect of intrinsically new products goes through seven important stages as shown above:-

GENERATION OF NEW PRODUCT IDEA:- New product development starts with an idea. A system must be designed for stimulating new ideas within an organization and then reviewing them promptly. In one study 80% of companies pointed to customers as their best source for new product ideas. A growing number of manufacturers are encouraging in some cases, requiring suppliers to propose innovations. And franchise systems frequently turn their owner managers ideas into highly successful products. Such as the egg Mcmuffin sandwich at McDonald’s and annual club memberships at Moto photo film processing shops.

We visualize the detailed features of a model product. Ideas may be contributed by scientists, professional designers, rivals customers, sales force, top management, dealers etc., We may need sixty new ideas to get one commercially viable product.

Consumer’s problems are the most fertile ground for the generation of new product ideas. This is equally true for both industrial and consumer products. In a variety of products, ranging from shampoos to computers, customers generate clues leading to new product ideas.

IDEA SCREENING:- We have to evaluate all ideas and inventions. Poor or bad ideas are dropped and through the process of elimination only most promising and profitable ideas are picked up for further detailed investigation and research.

In this stage, the various new product ideas are put under rigorous screening by evaluation committees.Answers are sought to questions like:

Is there a felt need for the new product? Is it an improvement over the existing product? It is close to our current lines of business? or does it take us to a totally new line

of business? Can the existing production and marketing organizations handle the product? Or

does it need extra expertise in production and marketing front?

The more attractive looking ideas pass on to the concept testing stage.

4) CONCEPT DEVELOPMENT AND TESTING:

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 79: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

All ideas that survive the process of screening (preliminary investigation) will be studied in details. They will be developed into mature product concepts. We will have precise description for the ideas and features of the proposed. At this stage we can incorporate consumer meaning into our product ideas. Concept testing helps the company to choose the best among the alternative product concepts. Consumers are called upon to offer their comments on the precise written description of the product concept viz., the attributes and expected benefits.

After the new product idea passes the screening stage, it is subjected to ‘concept testing’ ‘concept testing’ is different from market test/test marketing, which takes place at a later stage. What is tested at this stage is the “product concept” itself- whether the prospective consumers understand the product idea, whether they are receptive towards the idea, whether they actually need such a product and whether they will try out such a product it it is made available to them. In fact, in addition to the specific advantage of getting the consumer’s response to the product idea, this exercise incidentally helps the company testing is of special importance when a totally new product-in contrast to a ‘me too’ product – is being planned for introduction.

4. BUSINESS ANALYSIS : Business analysis is the next stage. This stage is of special importance in the new product development process, because several vital decisions regarding the project are taken based on the analysis done at this stage. This stage will decide whether from the financial and marketing point of view, the project is worth proceeding with. Investment analysis and profitability analaysis of the project under different assumptions are made at this stage. The project’s over all impact on the corporation’s financial position with and without the new product are estimated and compared.

Business analysis is a combination of Marketing research, cost benefit analysis and assessment of competition. We have demand analysis, lost analysis and profitability analysis. Business analysis will prove the economic prospects of the new product concept. It will also prove roundness and viability of the selected product concept from business view point. Now we can proceed to concentrate on product development concentrate on product development programme, the proposed product must offer a realistic profit objective.

5. PRODUCT DEVELOPMENT PROGRAMME :-

We have three steps in this stage, when a paper idea is duly converted into a physical product. (a) prototype development giving visual image of the product, (b) consumer testing of the model or prototype and (c) branding, packaging and labeling, consumer testing of the model products will provide the Ground for final selection of the most promising model for mass production and mass distribution.

6. TEST MARKETING:-

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 80: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

In test marketing, the new product, with the support of the chosen Marketing mix, is actually lauched and marketed in a few select ‘test’ cities / towns / other territories. The selected ‘test markets’ will be representative of the final market.

Test marketing needs careful handling care is required in the first place in selecting the ‘test markets’ case is also required in monitoring the marketing is also a time consuming process; it has to be carried out for a fairly long duration in order to obtain reliable indications. It is possible for competitors k to manipulate the test marketing process and make the results unreliable.

In India, many companies are now resorting to test marketing before commercialization of new products. For example when HLL lauched organics, the shampoo with glucasil, it did some test marketing, as a post of which, it sampled around 30 million sachets in selected markets territory both urban /semi-urban.

7. COMMERCIALIZATION: At this stage the company takes the decision to go in for large – scale manufacturing and marketing of the product. It yets to this stage only when all the previous steps provide favourable signals. At this stage, the company fully commits itself to commercialize the new product with the required investments in manufacturing and marketing. Now, the straligies discussed in this is on marketing statesy over the product.

PRODUCT LIFE CYCLEA Product passes through certain distinct stages during its life, and this is called the product Life Cycle. The utility of the PLC concept lies in the fact that each stage in the cycle is characterized by a Typical Mkt behavior and consequently, each stage lends itself to the application of certain specific Marketing strategy. Understanding the PLC concept and Managing it effectively can help in prolonging the profitable phases of a product’s lifespan.

Stages in Product Life Cycle :

Introduction Growth Maturity Decline

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

SALE

Sales

Page 81: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

There are four stages in PLC : 1) Introduction stage 2) Growth stage 3) Maturity stage4) Decline stage

1) INTRODUCTION STAGE:-

During this stage, the product is in its introductory stage. At this stage, there may not be a ready market for the product. Sales are low; The product undergoes Teething troubles; profits seem a remote possibility; demand has to be created & developed; & customers have to be promoted to try out the product. Obviously, this stage poses several problems for the marketer. The complexity of the problems and the duration of the stage depend upon the nature of the product, its price, its technological newness and the consumer’s view of the product.

One of the crucial decisions to be taken in this stage is the pricing strategy to be adopted. Discussing the strategy options in respect of the new product, no past data or comparisons are available and the firm normally opts for one of the following strategies:

i) Market Skimming ii) Market penetration. The market skimming strategy involves high prices, taking advantage of early entry and the relative novelty of the product in the market introduction state. ii) Penetration pricing involves low prices, with a view to having a good Market coverage & eventually a mass Market for the product. It also aims at keeping the competition out.

Another crucial are demanding attention at this stage is Mkt development & promotion. As mentioned earlier, this is the stage when demand has to be created and developed. The firm has to invest heavily in promotion & wait for the reward.

2) GROWTH STAGE:- In this stage, customers have become aware of the product and its benefits, and

usage is growing. It is now in the interest of the innovating firm to achieve repaid market access and penetration to se itself apart from the competition. Therefore firms wish to

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

TIMELoss /

Page 82: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

accomplish maximum sales acceleration and constant incremental improvements afterward. During this stage, supplies often have to increase plant capacity and run promotional campaigns to consolidate and extend their share of the new market. These actions require and extend their share of the new market. These actions requires substantial investments, which usually absorb most profit. As a result, this part of the life cycle may demand further net investment. Because of the increasing volume, prices usually drop. Attracted by the growth in the Mkt, further competitions may enter, but direct price competition tends not to be a major favour. This growth in sales, of customers and of supplies can be explosive. The emphasis on promotion of the brand at this stage way well be to establish consumer attitude toward the product. Marketing and distribution efficiency become decisive favour at this stage.

3) MATURITY STAGE :-No product or market can grow forever, eventually all the significant uses will

have been developed . The sales curve will flatten, and the market or product will have reached a maturity. In the Mkt Maturity stage, demand tends to reach a saturation point. And, there is enough supply from several competing sources. Dealers may dictate Terms to the various competing firms. Price competition becomes intense and the pioneer tries to distinguish his brand by substantial product differentiation and exploits the brand loyalty he has built up. The pioneer feels compelled to communicate directly with the consumers, since by now, dealers, have become multi-brand dealers. The pioneer may try out product and packaging modifications & promotional deals & make special offers to new Mkt Segments so that his sales volume do not shrink. Long term & short – term marketing plans are implemented to profitably prolong the maturity stage, because the pioneer may try out product & packaging modifications & promotional deals & make special offers to new Mkt segments so that his sales volume do not shirnk. Long-term and short –term marketing stage, because the pioneer knows that if this is not prolonged, it could be easily lead in to the stage of Mkt delaine. Relatively low prices, increased Marketing costs, keener competition and lesser profits characterize this stage.

4. DECLINE STAGE:- In the dealine stage, sales being to fall. The demand for the product shrinks,

probably due to new & functionally advanced products becoming available in the Mkt. Or the Mkt becoming apathetic to the product. In any case, prices & margins get depressed; total sales and profit diminish. Some firms at this stage may try to link up the sale of these producer with some other premium products they have developed and thus try to stretch the life for the dealing product. Firms do perceive at this stage the impending totally dealing product. Firms do perceive at this stage the impending total dealine and prepare for the gradual phasing out of the product. Successful firms quite often keep new producer ready in queue to fill the vaccum created by the dealine of existing products.

CONCEPTS OF PLC HELPS MARKETING STRATEGY FORMULATION :

1. Facilitates pre-planning the product launch.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 83: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

2. Facilitates prolonging the profitable phase.3. Facilitates investment decisions on products. 4. Facilitates choice of appropriate entry strategy5. Facilitates choice of the right time to exist. 6. Provides useful clues for managing customs.

1. FACILITATES PRE-PLANNING THE PRODUCT LAUNCH : Many firms are seen to slip in Pre-planning new product launch. As a results, they the bitter experience of suddenly entering the Mkt with a new product & struggling with if, not knowing how to handle the problems peculiar to that stage. Wish the help of the PLC concept, it is possible to foresee and predict the profile of the proposed product’s life, The event that are likely to take place in the Mkt & the issues on pricing, channel & promotion that are likely to come up.

2. FACILITATES PROLONGING THE PROFITABLE PHASE :- The PLC concept can also be of help to the marketing man in prolonging the profitable life phase of a produce. Some products get in Troubles in their maturity stage. Powerful relation from competitors may threaten the product with a no-ware-growth & no-more maturity situation and push them in to dealing.

The following are the strategic routes available to a firm for extending the profitable stage of the life cycle of a product:

Finding out new users for the product. Finding out new user for the product. Popularizing more frequent use of the product. Making the product more distinctive to the consumers.

3. FACILITATES INVESTMENT DECISIONS ON       PRODUCTS:-

In a corporation’s long-term planning too, the PLC can be of help. In modern days, produce part folio planning is becoming a crucial subject. PLIC is a tool and I has can investment decisions on products, the firm can assign investment to the right producer & avoid committing heavy resources on wrong produces.

4. FACILITATES CHOICE OF APPROPRIATE   ENTRY STRATEGY :

As a new product Travels through in life, dift firms join the Mkt with their respective versions at diff stages. Some join in the early stager, others Join Midway and yet others join still later. Four distinct entry pastures are possible for a firm seeking entry into the Mkt:

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 84: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

As an ‘innovator’ at the introduction stage in the PLC as the product.

As an ‘early follower’ in the early growth stage. As an ‘segment’ in the late growth stage As a ‘me-too’ in the maturity stage.

5. FACILITATES CHOICE THE RIGHT TIME TO   EXIT : The PLC concept can even help in deciding the right time to exit from a Mkt & minimize the damage and costs of exit.

6. PROVIDES USEFUL CLUES FOR MANAGING CUSTOMERS :

Customer experience with the company changes as the product passes through its PLC. As such, the PLC concept can be a useful tool in Managing customer. As a product mover through the various phases of its life cycle, the consumer also moves on the path o his experience in respect of the product. Though this change is reflected in the product. Though this change is reflected in the shifts in the demand for the product through the PLC stager. The marketing man will gain a great deal if he knows what actually happens to the consumer during this process. The change in the experience level of the consumer has some implication for the ‘Co-consumer relationship and consequently knowledge of this change will help effective of customers.

MODULE-5PRICING DECISIONS

MODULE 5 (4 Hours)Pricing decisions: Pricing concepts for establishing value, Impact of Five“C”s on pricing, Pricing strategies-Value based, Cost based, Market based,Competitor based, New product pricing,

Pricing

“Meaning of price is the amount of money and or other items with utility needed to acquire a product. Recall that utility in an attribute with the potential to satisfy wants”

MICAL J ETZEL,

WILLIAM J STAMTON,

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 85: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

BRUCE J WACKER

Price is probably the single most important decision in marketing in price. This is partly because price is generally believed to have an important or impact on sales volumes. If the price is too high and the market is competitive, sales may be correspondingly reduced. Indeed many economists would see price as the main determinants of sales volume. On the other hand, many of the more sophisticated marketers have found ways to reduce the impact of price and sometimes have managed to increase sales by raising the price.

Pricing is undoubtedly a vital decision area in marketing. Price is the only element in the marketing mix of a firm that generates revenue. This helps to determine the profitability of the business.

Importance of pricing

Price is significant in our economy in the consumers mind, and in an individual firm. Price is the only element in the marketing mix of a firm that generates revenue. All else generate the cost. Price and sales volume together decide the revenue of any business. As sales volume itself is dependent to a considerable extent on price, the latter becomes key to the revenue of the business.Price is also the most important determinant of the profitability of the business. The importance of pricing as follows in those fields.

In the economy

A products price influences wages, rent, interest and profits, price is a basic regulator of the economic system because it influences the allocation of the factors of production. Labour, land and capital.High wages attract labour, high interest rates attract capital and so on. As an allocator of resources, price determines what will be produced (supply) and who will get the goods and services produced. (Demanded).Criticism of the American system of reasonably free enterprise and in turn, public demand for added restraints on the system often triggered by negative reactions to prices or pricing policies.To reduce the risk of government intervention, business needs to establish prices in a manner and at a level that consumers and government officials consider socially responsible.

In the customers mind

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 86: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Some prospective customers are interested primarily in low prices, where as another segment is more concerned with other factors, such as service, quality, value and brand image. Its safe to say that few, if any customers are attentive to price alone or use entirely oblivious to price.

One study identified four distinct segments of shoppers brand loyal’s (relatively uninterested in price), system beaters (prefer certain brands to buy but try to buy them at reduced price), deal shoppers (driven by low price) and uninvolved, (seemingly not motivated by either brand preference or low prices).

Price is also important as a component of value, to recent years customers, both in consumer and business market, have come to expect and have sought better value in the goods and service they purchase, value in the ratio of perceived benefits to price and any other incurred costs. Example of other incurred costs for consumers include time associated with shopping for the product, gasoline used traveling to the place of purchase.

And perhaps aggravation assembly the product, online shopping can reduce some of these other costs, such the effort of traveling from one store to another however it may amplify some costs, such as the perceive risk of buying a product without seeing it in person.

When we say a product has ample value, we don’t necessarily mean it is inexpensive or has a very low price, rather, good value indicates that a particular product has the kinds and amounts of potential benefits such as quality, image purchase convenience consumers expect at a particular price level.

In the individual firm

A products price is a major determinant of the market demand for it. Through prices, money comes into an organization. Thus price affects a firm’s competitive position, revenues and net profit.

According to Mckinsey consultant “pricing is extremely important because small changes in price can translate into huge improvements in profitability”. In fact in a study of 1000 companies the Mckinsey firm found that a 1% increase in price would improve profits by 7% assuming no change in sales volume.

Pricing objectives

Profit Oriented Goals:-

Profit goals may be set for short or long term .A company select me of two profit oriented goals for its pricing policy.

(a) ACHIEVE A TARGET RETURN:

A firm may price its product to achieve a target return a specified percentage return on its

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 87: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

sales or on its investments .Many retailers and wholesalers use a target return on sales as a pricing objectives for short periods such as a year or a fashion season. they add an amount to the cost of the product ,called a markup to cover anticipated operating expense and provide a desired profit for the period.

Achieving a target return on investment is measured in relation to a firms networth (its assets minus its liabilities). This pricing goal is often selected by the leading firm in an industry .Target return pricing is used by industry leaders. Because they can set their pricing goal more independently of competition than smaller firms in the industry.

(b)MAXIMISE PROFIT:-

The pricing objectives of making as much money as possible is probably followed more than any other goal. the trouble with this goal is that to some people ,profit maximization has an ugly cannotation ,suggesting profiteering high prices and monopoly where prices are unduly high and entry into the field is severely limited ,public criticism can be expected .If market conditions and public operations do not bring about reasonable prices government may intervene.

In both economic theory and business practice ,however ,these is nothing wrong with profit maximization .Theoreotically , if profits become high in an industry because supply is short in relation to demand new capital will be attracted to increase production capacity .This will increase supply and eventually reduce profits .In the market place it is difficult to find many situations where profitering has existed over an extended period of time.

Substitute products are available .Purchase are postponable and competition can increase to keep prices at a reasonable level.

A profit maximization goal is likely to be for more beneficial to a company if it is pursued over the long terms .To do this ,however ,firms may have to accept modest profits or even losses over the short term.

For example :- a company a new geographical market or introducing a new product frequently does best by initially setting low prices to build a large clientele repeat the firm to maximize its profits over the long term .

The goal should be to maximize profits on total output rather than on each single product . In fact, a company may maximize total profit by setting law relatively unprofitable prices on some products in order to stimulate sales of others.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 88: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

SALES ORIENTED GOALS:-

In some companies , management ‘s pricing is focused on sales volume or the pricing goal may be to increase sales volume or to maintain or increase the firms market share.

(a) INCREASE SALES /VOLUME:-

This pricing goal of increasing sales volume is typically adopted to a achieve rapid growth or to discourage other firms from entering a market .The goal is usually stated as percentage increase in sales volume over some period ,say, one year or three years.

Management may seek higher sales revenues by discounting or by some other aggressive pricing strategy occasionally companies are willing to incur a loss in the short run to expand sales volume or meet sales objectives. clothing stores run end of season sales and to dealers after rebates and below – market loan rates new cars many vacation slots .such as golf courses and resorts reduce prices during off –season to increase sales volume.

MAINTAIN /INCREASE MARKET SHARE:-

In some companies ,both large and small the pricing objectives is to maintain or increase market share.

Why is market share protected or purchased so vigorously ? In growing fields, such as computers and other technology based products ,companies want large share in order to gain added out with vendors drive down production costs and for project a dominant appearance to consumers .In order to gain a foothold in the market place, may electronic commerce firms emphasized market share or sales volume over profits at least in the short run perhaps that’s one reason why so many of these dot-com went out of business.

Most of the industries today are not growing much if at all and haze excess production capacity .many firms need added sales to utilize their production capacity more fully and in turn , gain economics of scale and better profits ,because the size of the pie is not growing is most cases ,business that need added volume have to grab a bigger slice of the pie-that is greater market share.

Pricing Strategies: A Best Practices OverviewFew would argue that the Internet and other sophisticated technologies have radically changed the business environment, often in ways we can't even detect yet. And prices and margins in virtually every industry are facing downward pressures like never before. But what does the future of pricing strategy look like? That depends on who you ask.

We turned to three experts on pricing issues -- TEC speakers R. Sam Bowers and Douglas Gilliss and former TEC speaker Eric Mitchell -- to get their take on this issue. Interestingly, while they tend to agree on the symptoms of the problem and the overall

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 89: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

diagnosis, they do not agree on the cure. All three acknowledge that new technology, unlimited access to information and increasing global competition are conspiring to "commoditize" entire industries and force prices into a seemingly endless downward spiral. Their opinions diverge, however, when it comes to the response they believe CEOs and companies should take to counter those relentless market forces.

When faced with constant demands from customers to lower prices, Mitchell and Gilliss support a value-added approach. In essence, they feel that companies can overcome commodity pressures and maintain high margins by finding narrower market niches to compete in and then focusing on adding value to the customer in order to differentiate themselves from the competition. When customers understand the difference you bring to the table, they willingly pay a higher price.

Not so, counters Bowers. He believes that the value-added mindset is a relic of the old economy, that in the new economy the process of commoditization is inevitable and unstoppable. By fighting it, you only make matters worse by raising your costs higher, which makes it impossible for you to lower price and still make money. In a world where customers have many vendors they consider to be equals, says Bowers, the only way to make money is by continually lowering your cost structure so that you can compete on price. Companies that continue to employ a value-added approach will soon cost themselves right out of business.Which strategy is right for your business? Only you can decide. However, whether you adopt a value-added or low-cost approach, a well thought-out strategy will generate far better results than a knee-jerk response to competitive pressures or changing conditions in the marketplace.

SPECIAL PRICING STRATEGIES AND SITUATION

to be effective in setting initial prices, evaluating existing prices, and adjusting them as necessary, a firm needs to be aware of a variety of special pricing strategies and situations.

one price and flexible price strategies

early in its pricing deliberations, management should decide whether to adopt a one price or flexible price strategy. under a one price strategy, a seller charges the same price to all similar customers who buy identical quantities of a product. under a flexible price strategy, also called a variable price strategy, similar customer may pay different prices. when buying identical quantities of a product, this practice is normally legal.

most organizations follow a one price strategy, this strategy shifts the focus from price to other factors, such as product quality. a one price strategy can build customers confidence in a seller, whether at the manufacturing, wholesaling or retailing level-because the buyer does not have to worry that the other customer paid lower prices. thus, with a one price

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 90: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

strategy, weak bargainers need not think they are at a disadvantage.

several airlines, continental and US airways for eg, have used aggressive flexible pricing to enter new markets and to increase their market shares on existing roots ( however this strategy hasent produced consistent profit for either enterprises). their new business comes from two sources. passengers now fly on other airlines and passengers would not fly at higher price. especially in the second group demand for air travel is highly elastice. the trick is to keep apart the segment of pleasure, travellers(in which demand tends to be elastic) and the segment of business travellers (in which demand is typically inelastic). airlines seperates these segments by placing restriction on lower price tickets requiring advance purchase and a saturday night stay in the destination city for example. flexible pricing is also used in many other fields.

price liningprice lining involves selecting a limited number of prices at which a business will sell related products. it is used extensively by retailer of apparel. the athletic store, for instance, sells several styles of shoes at $39.88 a pair, another group at $59.95 and a third assortment at $79.99.for the customers, the main benefit of price lining is that it simplifies buying decisions. for the retailers, price lining helps in planning purchases. the buyer for the athletic store can go to market. looking for shoes that can be sold at one of its three prie points.

odd pricingodd pricing, another psychological strategy, is comonly used in retailing. odd pricing sets prices at uneven (or odd) amounts, such as 49 cents or $19.95, rather than at even amounts. odd pricing is often avoided in prestige stores or on higher-priced items. expensive men's suits, for example, are purchased at $750, not $749.95.

Leader pricing and unfair practices acts. Many firms primarily retailers temporarily cut prices on a few items to attract the customers. This strategy is called leaders pricing. The items on which prices are cut are termed leaders; if the leader is priced below the stores cost, it’s a loss leader.

Leader should be well - known, heavily advertised products that are purchased frequently. For example, for a while, Amazon.com cut the base price of currently popular books of 50%. As stated in one article, “Amazon may be able to treat best - selling books as loss leaders that attract customers into its online stores where they can be tempted by other merchandise that isn’t priced so cheaply”. But to improve profit margins, Amazon and other book sellers eventually scaled back the discount on the best sellers. Unfair trade practices act sometimes called unfair sales act to regulate leader price. Typically these laws prohibit retailer or whole seller from selling an item below invoice cost plus some stipulated amount varying from state to state.

According to this law reduce retailer’s freedom to set prices going a step further, the purpose of a business isto make a project on the total enterprice, not necessarily on

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 91: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

each transaction. Thus unfair practises acts limit retailor ability to determine how best to generate profits. Also, the minimum prices stipulated by these laws may result in higher prices which hurts consumers pocket books. In some states those laws have been declared unconstitutional.

High – low pricing and everyday low pricing. Many retailer specially super markets and department stores that wants to engage in price competition rely on high low pricing. This strategy entails between regular and sale prices. On the most visible products offered by a retail firm. Frequent price reductions are combined with aggressive promotion to convey an image of very low price. By starting with relatively high prices, retailers can boost their projects through sales to the segment of shoppers that really wants the product and is not very price sensitive. Then prices can be cut by various amounts from the basis of quantities of remaining inventory for various products. Practices of high - low pricing is common; in fact, according to one study, over 60 % of transactions in department stores involved “bale”(i.e; lower than original) prices.

given the need to change prices frequently, high low pricing can be costly. It also may cause some consumers to not purchase at regular prices, but always wait for reduced prices. Further the concern is that most transactions are made at decreased prices, which means that the so called low prices are normal rather than real bargains.

For a retailer that intends to compete on the basis of price, the alternative to high-

low pricing is every day low pricing. Basically, everyday low pricing involves consistently low prices and few if any temporary price reduction. This strategy is featured by some large discounters, such as wal-mart and family dollar, warehouse clubs.

Their are several reasons for EDLP. Retailers expect that it will improve their profit margins because. The average sales price will be higher than would be the case with high-low pricing. Further, retailers can point to their use of ELDP. When negotiating lower purchase prices from suppliers and operating expenses should be licensed, with profit boosted. Because of lower level of advertising.Which is better EDLP or high –low pricing? A controlled expected compared the effects of the two pricing strategies on 26 product categories in a chain of 86 grocery stores . EDLP increased sales where as high – low pricing resulted in slightly lower volume .Most important profits fell 18% with EDLP but jumped almost with high-low pricing unaware of or ignoring this research , numerous firms rely on everyday low pricing. RESALE PRICE MAINTENANCE . Some manufacturers want to control the prices at which middlemen resell their products ; this is termed as resale price maintenance .manufacturer seeks to do this to protect the brands image.Publicity ,they state that their control of prices . and avoidance of discounted prices

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 92: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

provides middlemen with ample profit margins . In turns consumers should be able to expect sales help and other services when they buy the manufacturers products from middleman , critics , however , clam that control over prices leads to inflated prices and examine profit .

One way in which producers can gain a bit of control and perhaps provide guidance to retailers is with a suggested list price . This price is set by a manufacturers at a level that provides retailers with their normal markups .To illustrate a producers sells to, say a hardware store a certain product for $9.95 , which would furnish the store with its normal markup of 40% of selling price .This is only a suggested retail price, retailer have the right to sell the product for less or more than the suggested price.

Other manufacturers try even harder to control their products retail prices. A manufactures may even threaten to stop shipment of products to retailers that prices products substantially below suggested list prices.

Is it legal to act aggressively in order to control retail prices?

The price controls were prohibited by the federal consumer Goods Pricing Act of 1975.According to this law , a producer no longer can set resale and impose them on resellers.

pricing strategies - penetration pricingPenetration pricing involves the setting of lower, rather than higher prices in order to achieve a large, if not dominant market share.

This strategy is most often used businesses wishing to enter a new market or build on a relatively small market share.

This will only be possible where demand for the product is believed to be highly elastic, i.e. demand is price-sensitive and either new buyers will be attracted, or existing buyers will buy more of the product as a result of a low price.

A successful penetration pricing strategy may lead to large sales volumes/market shares and therefore lower costs per unit. The effects of economies of both scale and experience lead to lower production costs, which justify the use of penetration pricing strategies to gain market share. Penetration strategies are often used by businesses that need to use up spare resources (e.g. factory capacity).

A penetration pricing strategy may also promote complimentary and captive products. The main product may be priced with a low mark-up to attract sales (it may even be a loss-leader). Customers are then sold accessories (which often only fit the manufacturer’s main product) which are sold at higher mark-ups.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 93: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Before implementing a penetration pricing strategy, a supplier must be certain that it has the production and distribution capabilities to meet the anticipated increase in demand.The most obvious potential disadvantage of implementing a penetration pricing strategy is the likelihood of competing suppliers following suit by reducing their prices also, thus nullifying any advantage of the reduced price (if prices are sufficiently differentiated the impact of this disadvantage may be diminished).

A second potential disadvantage is the impact of the reduced price on the image of the offering, particularly where buyers associate price with quality.

pricing strategies - skimmingThe practice of ‘price skimming’ involves charging a relatively high price for a short time where a new, innovative, or much-improved product is launched onto a market.The objective with skimming is to “skim” off customers who are willing to pay more to have the product sooner; prices are lowered later when demand from the “early adopters” falls.

The success of a price-skimming strategy is largely dependent on the inelasticity of demand for the product either by the market as a whole, or by certain market segments. High prices can be enjoyed in the short term where demand is relatively inelastic. In the short term the supplier benefits from ‘monopoly profits’, but as profitability increases, competing suppliers are likely to be attracted to the market (depending on the barriers to entry in the market) and the price will fall as competition increases. The main objective of employing a price-skimming strategy is, therefore, to benefit from high short-term profits (due to the newness of the product) and from effective market segmentation. There are several advantages of price skimming• Where a highly innovative product is launched, research and development costs are likely to be high, as are the costs of introducing the product to the market via promotion, advertising etc. In such cases, the practice of price-skimming allows for some return on the set-up costs• By charging high prices initially, a company can build a high-quality image for its product. Charging initial high prices allows the firm the luxury of reducing them when the threat of competition arrives. By contrast, a lower initial price would be difficult to increase without risking the loss of sales volume• Skimming can be an effective strategy in segmenting the market. A firm can divide the market into a number of segments and reduce the price at different stages in each, thus acquiring maximum profit from each segment• Where a product is distributed via dealers, the practice of price-skimming is very popular, since high prices for the supplier are translated into high mark-ups for the dealer• For ‘conspicuous’ or ‘prestige goods’, the practice of price skimming can be particularly successful, since the buyer tends to be more ‘prestige’ conscious than price conscious. Similarly, where the quality differences between competing brands is perceived to be large, or for offerings where such differences are not easily judged, the

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 94: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

skimming strategy can work well. An example of the latter would be for the manufacturers of ‘designer-label’ clothing.

Reactive and Proactive Changes:-

After as initial prices is set a number of situations may prompt a firm to change its price. As costs increase , for instance, management may decide that raising price is preferable to maintaining price and either cutting quality or prompting the product aggressively .

Accordingly to a pricing consultant ,its wise to raise price gradually and with little tem fare. Temporary price cuts may be used to sell excess inventory or to introduce a new product .Also if a company market share is deciding because a strong competition its executive may react initially by reducing price. Decreasing price makes then most sense when enough new customers are attracted to offset .The smaller profit margin per sale. nevertheless , for many products a better long-term alternative to a price reduction is improving the overall marketing program .

Any firm can safely assume that its competitors will change their price-soon or later. Consequently ,every firm should have guidelines on how it will react .If a competitors looses price, a short delay in reacting probably will not be perilous however if a competing firm reduces price, a prompt response normally is required to avoid losing customer.

FLAT-RATE PRICING:A variation of the one-price strategy, received from attention

lately. under such an arrangement , a purchaser pays a stipulated single price and then can consume a little or as much of the product desired. An example of highly successful flat-rate pricing is the single admission feet charged by the Walt Disney co. at its amusement parks. Some years ago, America online switched to a flat rate of $19.95 per month for unlimited time online. Flat - rate pricing should be used only for products with a low managerial cost and as one writer states “for which there is limit to demand.

SINGLE-PRICE STRATEGY:Is an extreme variation of the one-price strategy. Not only one all

customers charged the same price, but al items sold by the firm carry a single price. This approach, which originated many decades ago, involves offering frugal shoppers a variety of merchandise ranging from grocery items to cosmetics at a single price.

Price war:-A price was may begin when one firm decreases its price in an effort to increase its sales volume and or market share. The battle is on if other firms retaliate ,reducing price on their competing producers .Additional price decrease by the original price cutter and or its competitors .

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 95: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Status Quo goals

Two closely related goals stabilizing price and meeting competition are the least aggressive of all pricing goals. They are intended simply to maintain the firms current situation that is the status quo with either of these goals, a firm seeks to avoid price competition.

Price stabilization often is the goal in industries whereThe product is highly standardizedOne large firm such as Phelps dodges in the copper industry. Historically acted as a leader in setting their prices. Smaller firms in these industries tend to follow the leader when setting their prices.

What is the reason for such pricing behaviour?

A price cut by anyone firm is likely to be matched by all other firms in order to remain competitive, therefore no individual firm gains but all may be suffer smaller profit, a price boost is unlikely to be matched, but price boosting firm faces a differential disadvantage, because other elements of a standardized product such as gasoline as perceived to be fairly similar. Even in industries where there are no price leaders, countless firms deliberately price their products so meet the prevailing market price.

FACTORS INFLUENCING PRICING

INTERNAL FACTORS

# corporate and marketing objectives of the firm.# the image sought by the firm through pricing.# the characteristics of the product# the price elasticity of demand of the product# the stage of the product in its life cycle# use pattern and turn around rae of the product# costs of manufacturing and marketing# extent of distinctiveness of the product and extent of differentiation practised.# other elements of the marketing mix of the firm and their interaction with pricing.# composition of the product line of the firm.

EXTERNAL FACTORS

# Market characteristics (these are related to demand , customer and competition)# Buyer behaviour with respect to the product .# Bargaining power of major customer.# Bargaining power of major suppliers.# Competitors pricing policy.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 96: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

# Government controls or regulation and pricing# Other relevant legal aspects.# Societal or social consideration# Understanding reached, if any with price

PRICING OBJECTIVES

profit is one of the major objectives of the pricing firms usually adopt profit optimisation rather than profit maximisation of the objectives as they consider optimum profit over along period to be a sounder objectives than maximum profits in the short term obviously. Optimum is a relative term here and its definition with vary from firm to firm. The firm must evolve a clear idea of the optimum from its perception of business realities and the objectives and standards it has set for itself.

Every marketing activity include pricing should be directed towards a goal. The management should describe on its pricing objective before determining the price itself.

OBJECTIVES FIRM SEEK IN PRICING

* Profit maximisation in the short term.* Profit optimisation in the long term* A minimum returns on investment.* A minimum returns on sales turnover*Achieving a particular sales volume*Achieving a particular market share* Deeper penetration of the market* Entering new market.* Target profit on the entire product line, irrespective of profit less in individual products.* Keeping competition out or keeping it under check.*Keeping parity with competition.*Stability prices and margins in the market.*Providing the commodities at prices affordable by weaker sections.* Providing the commodities or services at prices that well stimulate economic development.

MODULE 6 (6 Hours)Distribution decisions: Meaning, Purpose, Channel alternatives available tothe marketing manager, Factors affecting channel choice, Channel design andChannel Management decision, Channel conflict, Distribution system,Multilevel Marketing (Network Marketing)

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 97: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

CHANNELS OF DISTRIBUTION

INTRODUCTION

Of the four elements of marketing mix viz., product, price, promotion and distribution, distribution [i.e., the channels of distribution and physical distribution] is the most important element. The success or failure of a firm depends largely upon the efficiency of distribution CHANNELS OF DISTRIBUTION

MEANING The term ‘channel’ is derived from the French word ‘canal’ meaning artificial water way for transportation or irrigation so, channel of distribution refers to the pathway, path or route taken by goods as they flow or move from the point of production to the point of consumption or use. In the words of Prof. W. Stanton “channel of distribution is the route taken by the goods as they move from the producer to the ultimate consumer or industrial user” According to Philip kotler “every producer seeks to link together the set of marketing intermediaries that best fulfill the firm’s objective. This set of marketing intermediaries is called the marketing channel [also trade channel or channel of distribution]”

ROLES OF CHANNELS OF DISTRIBUTION Distribution channel have a distinctive role in the successful implementation of marketing plans and strategies. These channels perform the following marketing function in the machinery of distribution.

13. The searching out of buyer and seller [contacting]14. Matching goods to the requirements of the market [merchandising]15. Offering products in the form of assortments or packages16. Persuading and influencing the prospective buyer to favour a certain product

and its maker [personal selling / sales promotion]17. Implementing pricing strategies in such a manner that would be acceptable to

the buyers and ensure effective distribution 18. Looking after all physical distribution functions19. Participating actively in the creation and establishment of market for a new

product20. Offering pre and after-sale services to customers 21. Transferring of new technology to the users along with the supply of products

and playing the role of change agents eg. in the agriculture green revolution in our country

22. Providing feed back information, marketing intelligence and sales forecasting services for their regions to their supplier

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 98: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

23. offering credit to retailers and consumer 24. Risk-bearing with reference to stock holding transport

CHANNEL FUNCTION AND FLOWS A marketing channel performs the work of moving goods from producers to consumers. It over comes the time, place, and possession gaps that separate goods and services from those who need or want them. Members of the marketing channel perform a number of key functions.

o They gather information about potential and current customers, competition, and other actors and forces in the marketing environment

o They develop and disseminate persuasive communication to stimulate purchasing

o They reach agreement on price and other terms so that transfer of ownership or possession can be effected

o They place orders with manufactures o They acquire the funds to finance inventories at different levels in the

marketing channelso They assume risks connected with carrying out channel works o They provide for the successive storage and movement of physical

products o They oversee actual transfer of ownership from one organisation or

person to another

SELECTING THE TYPE OF THE CHANNEL

Firms may rely on existing channels, or they may devise new channels to better serve current customers and to reach new prospects. Most distribution channels include middlemen, but some do not. A channel consisting only of producer and final customer, with no middlemen providing assistance is called direct distribution. A channel of producer, final customer and at least one level of middlemen represents indirect distribution.

All marketing intermediaries do not operate at the same tier, they operate at different tiers. Each distinctive tier of intermediaries is referred to as “LEVEL” in the channel and each link is referred to as a “CHANNEL MEMBER. The number of “LEVELS” determines the “length of the channel”; the more the levels, the longer is the channel. The number of “MEMBERS” does not determine the “LENGTH” of the channel.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 99: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Producers vary in their ability to attract qualified intermediaries. Toyota was able to attract new dealers for its NEW LEXUS. When producers find it easy or difficult to recruit intermediaries, they should at least determine what characteristics distinguish the better intermediaries. They will want to evaluate number of years in the business, other lines carried, growth and profit record. If the intermediaries are sales agents, producers will want to evaluate the number and character of other lines carried and the size and quality of sales force. If the intermediaries are department stores that want exclusive distribution, the producer will want to evaluate locations, future growth potential and type of clientele.

CHANNEL CHOICE:-

Marketing channel decisions considerably influence all other marketing decisions such as pricing and promotion. Channel decisions also require special special attention as these involve long term commitments to the other firms with whom marketers enters into a contract. A distribution system is a key external resource equally important with the key internal resources. The most fundamental factor for channel choice and channel management is economic criteria i.e. cost and profit criteria. Channel decisions are not made entirely on the basis of rational economic analysis. We have to consider a number of factors such as the nature of the product, market trends, completion outlook, pricing policies, typical consumer needs and needs of the manufacturer.

The other factors are:-

PRODUCT – For perishable goods speedy movement needs shorter channel or route of distribution. For durable and standardized goods longer and diversified channel may be necessary.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 100: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

MARKET – Consumer market, retailer is essential. If the market size is large we have many channels. For highly concentrated markets, direct selling is enough. Size and average frequency of customer’s orders also influence the channel decision. Wholesaler and retailer are required in the sale of food products.

MIDDLEMEN – Can provide wanted marketing services will be given first preference. They must accept marketing policies and programmes of the manufacturers and actively help in their implementation.

COMPANY – The company’s size determines the size determines the size of the

Market, size of its larger accounts and its ability to get middlemen’s co-operation. A big firm may have shorter channel. The company’s product mix influences the pattern of channels.

MARKETING ENVIRONMENT – This influences channel decision. During recession and depression, shorter and cheaper channel is always preferable. Technological inventions also have an impact on distribution.

COMPETITORS – Marketers closely watch the channels used by rivals. Many a time, similar channels mat be desirable to bring about distribution of products.

CHANNEL DECISION:-

The first problem of channel design is whether you want direct sale to consumer or indirect sale i.e. sale through middlemen. Under the direct sale the channel problems in company operations as most of the system’s components are parts of the company organization. The company must choose whether to attempt exclusive distribution or combination of all the three. The decision is made after a careful analysis of product, consumers, dealers, company objectives and policies and the conflict within the channels and other relevant factors. The company must resolve channels and bring the product profitability to the market.

THE 3 MAIN CHARACTERISTICS INVOLVED IN SELECTION OF CHANNEL ARE AS FOLLOWS:

PRODUCT CHARACTERISTICS

CONSUMER CHARACTERISTICS

MIDDLEMEN CHARACTERISTICS

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 101: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

PRODUCT CHARACTERISTICS:

It refers to the various characteristics of a product such as its class whether consumer product or industrial product. Its bulk and size, its uses, its price, the rapidity of fashion change, the frequency of its purchase, the sales and after sales services required by the product. The product characteristics have a considerable influence on the selection of the channel distribution.

CUSTOMER CHARACTERISTICS:

It refers to the number of potential buyer, their geographical dispersion, their frequency and regularity of purchases, buying motives. The customer characteristics influence the selection of channels of distribution.

MIDDLEMEN CHARACTERIST ICS:

It refers to the number of the middlemen available for distributing the products, their willingness to undertake the work of distribution, their location, their size and financial strengths, their products lives, their sales potentiality, their behavior etc. The middlemen characteristics also exert considerable influence on the selection of the channels of distribution.

FACTORS AFFECTING THR CHOICE OF CHANNLES ARE AS FOLLOWS

It is a firm and its customer oriented and it should be proper.

1. Market considerations:

a. Type of the marketb. Number of potential customersc. Geographic concentration of the marketd. Order size.

2. Product considerations

a. Unit value

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 102: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

b. Perish abilityc. Technical nature

3. Middlemen considerations

a. Services provided by middlemenb. Availability of desired middlemenc. Producer’s and middlemen’s policies

4. Company considerations

a. Desire for channel controlb. Service provided by sellerc. Financial resources.

DESIGNING DISTRIBUTION CHANNELS:- A company wants a distribution channel that not only meets customers need but also provides a differential advantage. To design channels that satisfy customer and outdo competition an organized approach is required. We suggest a sequence of four decisions.

- specify theories of distribution.- select the type of channel.- determine intensity of distribution- choose specific channel members.

DESIGNING A CHANNEL SYSTEM:- We have seen that a firm can take its product to the user in more ways than one. It can use different types of intermediaries; it can also structure its channel in different ways. FOR EXAMPLE, it can have a single tier or a two tier or a three tier channel structure.

1. FORMULATING THE CHANNEL OBJECTIVES : Formulation of channel objectives is the first step in designing a channel system. The objective clarifies what is sought to be achieved by having the channels. All firms seek to realize certain common objectives by having the channels.

a. CHANNEL OBJECTIVES WILL DECIDE CHANNEL DESIGN:- Channel objectives will determine the channel design the firm should adopt, when Hindustan lever lays down the objectives that life boy should be available in more than 80% of the villages of India, its channel design takes shape in line with this objective.

b. CHANNEL OBJECTIVES DIFFER FROM FIRM TO FIRM;

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 103: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

CONSEQUENTLY, THEIR CHANNEL DESIGN DIFFERS:- We see that often channel design of firms differ from one another. Even within a given industry, different firms have different channel designs. This is so because their channel objectives differ. Even in respect of those objectives, which are by and large common for all firms, we can see variations, in emphasis from firms to firm.

2. IDENTIFYING CHANNEL FUNCTIONS :- Identification of the function to be performed by the channel is the next in designing the channel system we have already discussed the channel system. We have already discussed the channel functions in detail. Suffice to add here that channel design depends on the functions expected of the channel and the channel function must be identified in the specific context of the firm in order to get practical direction in designing the channel system.

a. LINKING CHANNEL DESIGN TO PRODUCT CHARACTERISTICS: Different products require different channel systems. The firm should analyze the characteristics of the product and choose the channel system that matches the product best

b. INDUSTRIAL AND CONSUMER PRODUCTS NEED DIFFRENT CHANNEL:

Industrial and consumer products usually need different channels as they differ from each other in several vital respects.

c. ONLY SOME INDUSTRIAL PRODUCTS ARE AMENABLE FOR SELLING THROUGH CHANNELS:

First of all, among industrial products, only some are amenable for selling through channels. The firm should check whether its items are appropriate for selling through channels/distribution.

d. EVEN WITHIN CONSUMER PRODUCTS, CHANNEL REQUIREMENTS OF DIFFERENT PRODUCTS MAY VARY: Even within consumer products, different products may need different channels. In the chapter on buyer behavior we came across three distinct categories products within consumer goods –viz (1) convenience goods (2) shopping goods and (3) specialist goods .we have seen that different categories of goods require different channel systems, since buying behavior and buying habits differ ,depending on the category e. PRODUCT INTERVIEWS TYPE AND NUMBER OF CHANNEL MEMBER AS WELL Product characteristics influence not merely the channel design to be opted

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 104: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

for; they often influence even the type and number of Intermediaries needed.

f. EVALUATION OF THE DISTRIBUTION ENVIRONMENT:- While selecting the channel design, the firm should also take into account the distribution environment obtaining in the country/territory. It should evaluate the vital features of the distribution environment and ensure that the proposed channel design is compatible with them.

3. EVALUATION OF COMPETITORS CHANNEL DESIGN:- The firm should also study the competitors channel patterns before deciding its channel design. While the firm may not necessarily follow the competitors in channel design, it should analyze the plus and minus of the channel pattern adopted by each of its major competitors.

4. MATCHING THE CHANNEL DESIGN TO COMPANY RESOURCES:- Choice of channel is also governed by the resources available with the organization.

a. FIRMS WITH LIMITED RESOURCES SETTLE FOR CONVENTIONAL CHANNEL:-

Firms with limited resources and small volume of business will normally find it difficult and uneconomical to opt for own channels. For such firms, establishing branch showrooms/depots/ retail outlet of their own will result in a high cost unit of distribution, which they cannot afford.

b. FIRMS WITH LARGER RESOURCES HAVE ORE OPTIONS:- Firms with larger resources and larger marketing operations can go in for varied distribution channels. Intact, in INDIA, in several businesses, firms which are strong in resources, usually operate two parallel channels, one reaching out to the customer through company depots and showrooms, and the through conventional intermediaries.

5. EVALUATING THE ALTERNATIVE AND SELECTING THE BEST:-

The firm must evaluate these alternative designs and choose the best among them. Actually, two distinct evaluations.

a. ECONOMIC EVALUATION; BALANCING COST, EFFICIENCY AND RISK:- Cost and efficiency are the two main parameters in economic evaluation. Often though not necessarily, the two are directly proportional.

b. CONCEPT EVALUATION; FLEXIBILITY AND

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 105: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

CONTROLABILITY:- Conceptual evaluation is also equally important. It has to be used for assessing the flexibility and controllability of the alternative. It is possible that economic evaluation points to one particular alternative as superior, while conceptual evaluation gives it a low rating.

c. SOME VITAL ASPECTS IN FINALISING THE CHANNELS:- The job is not over with the selection of the basic channel design. Within a given design; different arrangements are possible. It means that further decisions are needed. The important aspects to be decided are:

- channel intensity - Number of tiers - The appropriate variant within the design

d. CHOOSING THE CHANNEL INTENSITY:- While two firms may go for the same channel design, they may need different intensities. It depends on the position of the firm- its objectives and strategies, its sales, profits, and market coverage, present and projected, and its resources.

e. CHOOSING THE NUMBER OF TIERS CORRECTLY:- The second decision concerns the number of tiers. How many tiers should the channel have this issue is related in a way to channel intensity. in a majority of cases, the choice will be between single tiers and two tiers, while in a few cases, firms may find it necessary to going for a three tier channel. When a firm opts for a sole selling agency or marketer the latter will have their own channel arrangement and the tiers that operate under them automatically become a part of the firm’s channel.

f. COMPARITIVE MERITS OF SINGLE TIERS AND TWO TIERS CHANNEL:- The single tier pattern provides better motivation to each member in the channel, as in such a pattern, the rate discount is available in full measure to the retailer. The pattern also brings in savings to the firm by the avoidance of multiple transports and handling the firm can also service all the outlets directly in this pattern. The two tier pattern helps quicker outflow of stocks and more intensive coverage of the market. But, it results in lower profits to retailer as the available trade margin has to be shared between two tiers. it also weakens the principles control over the outflow compared to single tier pattern.

g. SELECTING APPROPRIATE VARIATE WITHIN A GIVEN DESIGN:- Usually, within a given channel design different variants can be

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 106: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

thought of. For example, firm A and firm B may opt for the same channel design consisting of conventional wholesalers and retailers. Still their approaches within the model can vary from one another. Firm A may opt for a wholesaler-weighted system, while firm B for a retailer weighted system.

h. AN EYE ON THE FUTURE IS ESSENTIAL:- Once a channel structure is created and channel members are put in place and channel compensations are streamlined, it will be difficult for the firm to exit from that structure and put a alternative in its place.

i. ONE UNIFIED SYSTEM:- The firm has to handle wholesaling, retailing and other forms of selling as one unified system and not as separate entities. The linkage among them in the tears of functions, costs and efficiency being quite strong, looking at them as independent entities will lead to sub-optimization of the channel management task as a whole.

j. BUILDING CHANNEL SYSTEM BY BOTTOM UP METHOD: The purpose of having marketing channels is to serve channel customer needs effectively. This means that the prime task in channel design is to determine the type of retailers who are best suited to serve customer needs in the specific context and develop the distribution

DIRECT MARKETING

While discussing non-store retailing methods in the chapter on contemporary channel scenario in India, we had mentioned that we shall be discussing direct marketing in a separate chapter as they differ from non-store retailing.

A) Nature and scope of direct marketing:-

Let us first find answers to the following basic questions:What does direct marketing mean?How does it differ from conventional mass marketing?How does it differ from non-store retailing? What are the features of that distinguish it clearly?And, why should it be treated as a distinct/special form of marketing?

B) Difference between direct marketing and conventional marketing:

To put in a nutshell, direct marketing CDM is the process by which a firm approaches its customers on one-to-one basis and markets its products

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 107: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

directly to them. In conventional marketing, a firm approaches the customers on a mass basis and sells to them indirectly.

Let us examine this difference in detail.

Conventional marketing is mass marketing: DM is demassified marketing .

Direct marketing is demassified marketing; it deals with customers on a one-to-one basis. In conventional marketing the marketer sells to a multitude of customers treating them as a mass; he uses mass production, mass communication and mass distribution devices. While mass marketing targets the average customers of the chosen segments and develops its offer for the average customer, DM targets the individual customers and develops its offer for him

DM Deals Customers Directly; Conventional Marketing Deals Them Indirectly:-

In direct marketing, the marketer sells to the customers directly; he reaches out to them directly, communicates with them directly and also delivers the product to them directly. The Marketer knows his customer and has on his hands a specific profile of each individual customer.

DM is Interactive Marketing; Conventional Marketing is a One-Way Activity:-

Thirdly, whereas conventional mass marketing is a one-way activity to large extent, direct marketing is interactive to a large extent. For example, while mass marketing has to remain content with one-way message flowing from to the firm to the market, direct marketing enjoys the advantages of two-way communication, between the firm and every one of the customers

DM does not Involve Marketing channels/stores; Conventional Marketing Relies Heavily on it;-

In conventional mass marketing activity normally takes place through marketing channels/intermediaries/stores. In the marketing, it takes place without such channels/stores.

DM does not Involve Advertising/Mass Promotion; Conventional Marketing Relies Heavily on it:-

Absences of advertising /mass promotion are other major distinguishing features of DM. While conventional mass

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 108: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Marketing heavily relies on promotion on a mass basis for generating demand, DM believes in promotion on one-to-one basis.

[c] Difference between DM and non store retailing:- Now, let us turn to the difference between direct marketing and non-store retailing.

DM and Non-Store retailing are not synonymous; DM is a Marketing, Method; Non-store retailing is just a retailing Method:- Just because DM does not involve marketing channels/stores, one should not assume that DM and non-store retailing are synonymous with one another. Absence of a store in the retailing process is only one of the features of DM. The point is that there are other parameters defining DM and these are absent in non-store retailing.

DM Compresses the steps in the Marketing Process:-

Direct Marketing tackles all the component tasks of marketing, such as customer identification /demand generation, product adaptation, packaging modification, distribution, price negotiation, marketing communication, and sales promotion in an integrated and compressed manner. It eliminated all intermediaries and handles the consumer directly and in one action. It also reaches the product to the customer directly.

[D] DM Scores over mass marketing on many courts:- DM scores over mass marketing significance as it confess many unique benefits.

Delivers Near-Perfect Solutions to Customers Problems :-

Direct marketing facilities delivering near-Perfect solutions to customer’s problems. As the marketer is able to contact the customer individually, he can know exactly what the customer wants and make it available to him. With such two-way information, the marketer is able to five-tune his offer and match it with the customer’s requirements. DM is intact, information-led marketing with the back-up of information; it offers better solutions to customer’s problems.

Provides for Customization: In mass marketing, the products on offer are all mass-produced and there is very little customization. Also, with wells marketing, which is one major from of direct marketing, the offers can be completely customized.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 109: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Levi Strauss can be cited as an example. To ensure quality and reduce errors, Levi Strauss makes each of jeans from start to finish by a single group of workers. The case of Dell Computers explained in the following chapter is another good example.

Helps Achieve Excellence in Product and services:-

Direct marketing is better placed for offering products and services of excellence. Several marketing scholars and practitioners are of the views that mass marketing has so conditioned the consumers as to be satisfied with unsatisfactory products and has restricted even their expectations. Direct marketing is a welcome way-out in the respect.

Facilities sharper segmentation and Targeting:-

Direct marketing also supports accurate segmentation and targeting of the market, which inform facilitates formulation of more fine-tuned marketing strategies.

Facilitates Relations Building:

Direct marketing scores over mass marketing convincingly when it comes to building customer relations. The concept of relationship marketing has been gaining ground in recent times. As the market place gets more competitive, product clutter more prominent and consumer more discerning, it is only through devices likes relationships marketing that the marketer can acquire a competitive advantage.

Cost-Effective:-

Direct marketing is also more cost-effective. This is largely because it eliminates channel costs and advertising costs, the two dominant elements of costs in conventional marketing.

Eliminates channel costs :-

In many cases, channel costs/retail margins now amount to 50% and more of total marketing costs. As a result conventional mass marketing is becoming a costly method of selling products. It also saves costs of credit to wholesalers and retailers. As the products are sold by passing the conventional ware-house-depot-distributor-retailer rigmarole, the hassles are also less.

Eliminates advertising costs and communicates more effectively :- DM also saves advertising costs, which may account for up to 30% of total marketing costs. It also ensures more effective communication compared to mass

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 110: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

advertising routes. Advertising addresses consumers and mares and does not demand immediate attention. DM is better focused and also demands immediate attention. Developments in IT have also lowered the overall cost- per-contact. DM has thus become more attractive now from the cost angle.

Benefits the consumers too:- Besides conferring so many benefits on the marketer, direct marketing brings substantial benefits to the consumers too. It enables consumers to shop at their homes. It saves their time and they see it as convenient and hassles-free.

In short, DM is a potent technique of marketing and over the years, its scope popularity has been increasing and costs falling

(E) Requisites for success of DM:- Direct marketing is sometimes mistaken as a job of just maintaining a list of names and addresses, and sending occasional letters to those in the list, in reality, direct marketing is an intricate task, involving many steps. And there are several requisites for its success.

Comprehensive, Reliable and updated database To begin with, a comprehensive, reliable and update database of

consumers is essential for the success of a direct marketing program. Analysis has shown that lack of proper database is the primary database for several direct marketing programmes ending up as mail programmes.

Careful and close targeting of markets/prospects:- Close targeting is an equally important requisite. DM’s potential is not realized,

when it is not targeted closely. In fact, the ultimate aim in direct marketing is to target the customers on an individual basis.

Service guarantee and product warranty:- Direct marketing proves particularly effective when it is backed by service

guarantee. Like- wise, a good warranty too improves its effectiveness. Consumer should feel free to return the product if it falls short of their expectations.

Backroom logistics:- The backroom logistics should be perfect. For example, once the response start

flowing in, there must be a mechanism for attending to them promptly. Also, there should be, also a systematic follow-up. Reminded mailers should also go out promptly wherever applicable. Fast delivery of the product is the most vital part of backroom logistics.

An eye for details:-

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 111: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

An eye for details is essential here. For example, case should be taken in designing the mailer. The outside envelope, the sale letter, the reply form and the reply envelope all must be developed carefully. Also, the response to enquiries should be swift.

Sustained effort:- Finally, it must be said that to derive full benefit out of direct marketing, it must

be adopted as on integral part of the marketing Endeavour, direct marketing is not so effective when it is carried out as a one-shot effort.

(F)Forms of direct marketing:- Direct marketing has several forms. The major ones are listed. DM has so many

forms essentially because it incorporates a variety of media. Catalogue marketer use the catalogue as the tool. All these marketing methods basically do the same thing, they gather customer names and sell their products direct to them.

The newer tools actually permit more effective and more sophisticated direct marketing.

Mail order, marketing/catalogue marketing:-

Mail order marketing (MOM) catalogue marketing, also known as mail order business (MOB), is one of the well-established methods of direct marketing. Since many mail order marketers. Since many mail order marketers use catalogue for communication with the consumer, this form of marketing is often referred to as catalogue marketing.

Otto Burlington:- Burlington’s is an established MOB. Burlington’s markets a wide range of

products through this method. It is now expanding its business and is also planning a video catalogue. Made of payment can be VPP, demand draft, cheque, money orders or credit card.

First mail order company:- First Mail Order Company has been focusing on customers in the smaller cities,

people who have the money but do not have the access to products.

Anjali textiles:-

Mail order marketing is resorted to even in products like textiles, anjali mills, Bangalore, for example, has been marketing a substantial part of its sarees through mail order. The sales take place as per mail orders placed by the customers.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 112: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Other example:-

Mother care, India, another MOB, has set its target on mothers who buy items meant for kids. Jewelers, Surat diamond is also doing same MOB.

Direct mail marketing:-

Direct mail marketing (DMM) is similar to MOM. Usually, when a trading house markets various products by mail order, we refers to it as MOM or MOB and when a manufactures markets his products by the same method, we refer to it as DMM.

HLL using DM for Denim aftershave:-

HLL had relied on direct mail to a sizeable extent in marketing its aftershave brand, denim. The target was the members of elite clubs in the metros. Each prospect was mailed a three- color brouch are with a scratch n ‘sniff coating as a sample.

Campaigns by datamatics direct:-

We had mentioned earlier that datamatics direct is one of the leading independent direct marketing outfits in India. It relies heavily on direct mail

Datamatics campaign for ANZ bank:-

To cite one example, datamatic direct did a direct mail campaign for ANZ bank’s loan on equity shares. Business reply cards formed part of the mail to elicit orders from customers.

Datamatic campaign for LUX soap:-

In another direct mail campaign, datamatics focused on HLL’s LUX soap. The direct mail communication stated that mail orders received through the enclosed business reply card would receive prompt attention and the item on order would be delivered at the doorsteps of the customers and cash could be paid on delivery.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 113: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

MIDDLE MEN

LEVELS OF DISTRIBUSTION

1. MANUFACTURE CUSTOMER

2 MANUFACTURE WHOLESALER RETAILER CONSUMER

3 MANUFACTURE AGENT WHOLESALER RETAILER CONSUMER

4 MANUFACTURE AGENT RETAILER CONSUMER

Middle men or intermediaries are individuals or independent business concerns that start between the manufacturers or producers and the final consumers or industrial users and sender services in connection with the purchase and sale of goods as they move from the manufacturers or producers to the final consumers or industrial users.

Role or functions of the middlemen in the distribution of goods:Middlemen perform a number of functions in the marketing of goods.

1. The main function of middlemen is to provide the connecting link between the manufacturers or producers and the final consumers or industrial uses.

2. They perform the functions of concentration, equalization, and dispersion of goods efficiently.

3. They add place, time and possession utilities to goods.4. They reduce the marketing activities to an optimum number. This results in a

number of economies in marketing.5. As they are specialists in their respective sub-functions of marketing, they are

able to perform the marketing functions efficiently and economically.6. They undertake the functions of storage and transportation of goods on behalf of

the producer sellers and the buyers.7. They provide valuable marketing information to the producer-sellers and the

buyers8. They assume marketing risks also9. They provide financial assistance to the suppliers as well as the customers.10. They conduct marketing of goods efficiently and economically on behalf of

numerous small producers who do not have enough financial resources and sales force to undertake direct selling to the final consumers

TYPES OF MIDDLEMEN:Middlemen may be broadly classified into two types. They are

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 114: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

1. Agent middlemen, functional middlemen or mercantile agents2. Merchant middlemen

Agent middlemen or functional middlemen are those middlemen who perform various marketing functions without taking title to goods.Merchant middlemen are those middlemen who perform various marketing functions and also acquire and transfer title to goods.

MEANING OF AGENT MIDDLEMEN:Agent middlemen are independent business concerns who actively assist in the

transfer of title to goods from the sellers to the buyers without acquiring the ownership of those goods or title to those goods. They just act as agents and assist in the purchase or sale of goods on behalf of others for a certain percentage or fixed amount of commission.

CHARACTERISTICS OF AGENT MIDDLEMEN:1. Agent middlemen may come either between the manufacturers and the

wholesalers or between the manufacturers and the retailers or between the manufacturer and the consumers.

2. They may work either for the sellers or for the buyers or for both.3. They may work either for the sellers or for the buyers or for both.4. As they do not take up the ownership of goods, they do not bear the ordinary risks

of marketing.5. They work on commission basis.

TYPES OF AGENT MIDDLEMEN:1. Brokers.2. Commission Agents.3. Manufacturer’s agents.4. Selling agents.

Brokers: A broker is a agent middlemen engaged in the negotiation of a contract of sale or purchase for a seller or buyer. His main duty is to being the seller and the buyer together and negotiates the terms of the transaction and leaves the acceptance of the terms of the transaction to the parties concerned. He does not take possession of the goods. Usually, a broker works for the seller but he is free to work even for the buyer.

Commission Agents: A commission agent is an agent middleman who sells or buys goods for his principle for a commission. He can sell or buy goods in his own name. He takes possession of the goods, which he handles. A commission agent has more powers than a broker.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 115: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Manufacturers Agents: A manufacturer’s agent is an independent person or business concern employed by a manufacturer to sell a part of his products in a specified area.

A manufacturer agent sells goods on behalf of a manufacturer in a limited area at the manufacturer. But he has continuous relations with his principle. Manufacturers’ agents are very useful to the manufacturers.

Selling Agents: A selling agent is an agent middleman who is employed by a manufacturer for the sale of his entire output in the entire market for a certain commission. He has discretion to determine the prices and the terms and conditions of sale without consulting his principal.

WHOLESALERS

Wholesalers are individuals or business firms who will sell products to be used primarily for resale or for industrial use. The wholesaler is a bulk purchaser with the object of resale to retailers or other traders after breaking down his “Bulk” in smaller quantities.

CHARACTERISTICS:The main characteristics of a wholesaler are:

1. He is a merchant middleman.2. He is a middleman or intermediary between the manufacturers or producers and

the retailers.3. A true wholesaler acts neither as a manufacturer nor as a retailer, but merely acts

as an intermediary between the manufacturers and retailers.4. He generally deals in one or a few classes of goods related to one another.5. As he specializes in one or a few classes of goods. He is considered to be an

expert in the class or classes of goods in which he deals.

TYPES:On the basis of their function, wholesaler be divided into three categories. There

are:

1. Manufacturer wholesaler: A manufacturer wholesaler is one who combines manufacturing activities along with the wholesale business. He may sell not only his own goods (i.e., the goods manufactured by his). But also the goods to other manufactures (i.e., the goods of other manufactures bought by him in bulk for the purpose of resale)

2. Retailer wholesaler: A retailer wholesaler is one who combines his wholesale business with retail business. He buys goods in large quantities from the manufactures and sells them not to the retailers, but to the ultimate consumers directly through his own shops.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 116: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

3. Wholesalers Proper or Merchant Wholesalers: Is one who concentrates only on the wholesaling business (i.e., buys goods in large quantities from the manufactures and resells them is small quantities to the retailers)

The wholesalers may be sub – divided into two categories. They are:i. Service wholesalers: Service wholesalers are those wholesalers who

perform all the marketing functions and render to the manufactures and retailers all the services expected of them.

ii. Limited Function Wholesalers: Limited function wholesalers are those wholesalers who perform only a few of the marketing functions of the wholesalers.

The service wholesalers may be further subdivided into different categories either: a) On the basis of the degree of specialization,

b) On the basis of the territory covered by them.

FUNCTIONS:A wholesaler performs a number of functions. His main functions are:

1. Linking: A wholesaler links the manufacturers with the retailers. In other words, the goods produced by the producers are distributed to the retailers through the wholesaler.

2. Assembling: The wholesaler purchases goods from numerous manufactures or producers spread out in different parts of the country and assemble them at one place.

3. Storing: The wholesaler’s stores the goods purchased by him from the numerous producers in his warehouse, and dispatches to the retailers on demand.

4. Grading: The wholesaler sorts out the goods in his warehouse into different grades on the basis of their quality, size, shape etc., and there by increase the utility of the goods.

5. Packing and labeling: The wholesaler splits the large packages purchased by him from the manufactures into small lots, packs them, relabels them and keeps them ready for dispatch in convenient quantities.

6. Transporting: The wholesaler arranges for the transportation of goods from the manufactures to his warehouse. He also arranges for the transportation of goods from his warehouse to the retailers.

7. Risk – bearing: By owning and holding goods under his custody, the wholesaler assumes the risks arising out of fall in price, change in demand, damage, deterioration of quality, theft, fire etc.,

8. Financing: The wholesaler, often, grants credit facilities to the retailers. He provides credit even to small manufacturers.

9. Dispersing: The wholesaler disperses or sells the goods to the retailers in time in the quantities required by the retailers.

10. Informing: The wholesaler collects information about the tastes and needs of the consumers through the retailers and passes it on to the manufacturers.

11. Pricing: The prices fixed by the wholesaler have a bearing on the resale prices of the retailers.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 117: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

12. Equalizing Prices: By adjusting the supply of stocks according to the demand, the wholesaler helps in the equalization of prices between places and between times.

SERVICES OF THE WHOLESALER TO MANUFACTURERS AND RETAILERS:The Wholesaler renders many useful services to the manufacturers as well As to

the retailers. They are:

Wholesaler’s services to the Manufacturers:The wholesaler renders many useful services to the manufacturers as well as to

retailers. They are:1. The wholesaler collects small orders from the retailers and places a bulk order

with the manufacturer.2. The wholesaler provides the manufacturer with a ready market and thereby,

enables the manufacturer to concentrate on his production without bothering about distribution.

3. As the wholesaler undertakes to hold large stocks of goods, he relieves the manufacturer of the trouble, expense and risk of holding large stocks of goods.

4. By placing bulk orders with the manufacturers, the wholesaler enables the manufacturer to carry on his production on a large scale and enjoy the benefits of large-scale production.

5. By undertaking advertising and sales promotion on behalf of the manufacturer, the wholesaler reduces the advertising and selling expenses of the manufacturer.

6. By taking the goods from the manufacturer then and there, the wholesaler helps the manufacturer to keep his capital circulating.

7. The wholesaler collects information regarding the tastes and fashions of the consumers through the retailers and passes it on to the manufacturers.

8. Sometimes, the wholesaler collects raw materials from small and scattered producers and sells them in bulk to the manufacturers.

Wholesaler v/s Retail trade:

Wholesale operates on a large - scale in the central market and act as the first outlet in distribution. Retailers operate on a small - scale and in the local markets, selling directly to the consumers a wide variety of goods to satisfy numerous and changing wants of customers.

Wholesale business needs large capital, wholesale prices and margins are relatively lower, and the business can be carried on with or without a showroom. Retail business requires limited capital, the prices and margins are relatively higher and the business requires a shop with or without display.

ORGANISATION OF WHOLESALE BUSINESS OR WHOLESALERS ORGANISATION:

A wholesaler is required to hold huge stocks. Further, he has to grant credit to the retailers as well as the manufacturers. Therefore, wholesale business is generally,

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 118: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

organized on a large scale as a joint stock company or as a partnership firm. As a wholesale business is large in size. Its organization is divided into sections and departments. Generally, its organization is divided into two sections. They are:

1. Administrative Section: It is concerned with finance, accounts, correspondence, records and filing and general administration. It is sub - divided into

i. Finance and accounts department.ii. Correspondence Departmentiii. Records and filing Department

i. Finance and Accounts Department : This department is concerned with the receipt and payment of cash, and is responsible for maintaining the accounts of the whole organization. Accounts relating to purchases and sales, receipts and payments of money, debtors and creditors, etc., are maintained by this department. It is also responsible for the preparation of the financial budget of the whole organization. This department is in charge of the chief Accountant.

ii. Correspondence Department : This department looks after the correspondence of the whole concern. The receipt of letters and the writing of suitable replies to the letters received are the main functions of this department.

iii. Records and filing departments : This department preserves the letters and other records of the concern for future ready reference by adopting suitable method of filing and indexing. This department also is in the charge of the secretary.

2. Executive section : The executive section is concerned with buying, selling, credit, advertising, warehousing and dispatching. It is sub-divided into:

i. Buying Department : This department is responsible for making purchases for the whole concern. The department for ascertaining the types of goods demanded by the public. This department is in the charge of the purchase manager.

ii. Selling Department : This department is responsible for the selling of the products of the concern. This department is in the charge of the sales manager.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 119: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

iii. Credit Department : This department is concerned with the sanctioning of credit to approved customers and collection of debts. It is in the charge of the credit managers

.iv. Publicity and Advertising Department : This department is

responsible for advertising the products of the concern. It is in the charge of the publicity manager.

v. Warehousing Department : This department is concerned with the proper storage and warehousing of goods of the concern. It is in the charge of the ware house keeper or store keeper.

vi. Dispatch department : This department is concerned with the dispatch of goods to the retailers according to their instructions. It also arranges for the transport of goods to the retailers. This department is in the charge of the warehouse keeper or storekeeper.

RETAILERS

Retailing is a trading activity directly related to the sale of goods or services to the ultimate customer or consumer for personal, non-business use. A retailer is the last middleman in the machinery of distribution and he is responsible to satisfy recurrent wants of consumers.

Retail selling is a trade of varied goods in small quantities to the final consumer.There are 3 distinguishing features of retail trade. The retailer deals in small quantities and his business is usually local in character. Secondly retail trade always shows tendency towards variety as it has to satisfy innumerable wants of consumers. Thirdly, a retailer, by operating near about the residential areas of consumer, sells his wares directly to consumers. Manufactured goods are worthless until they pass Acid test of retail distribution. The retailer alone can offer safe and reliable goods to customers.

RETAILER(Middlemen in distribution)

Buying for consumers Selling for products

1. Anticipating wants 1. Expert seller2. Breaking of bulk 2. Advertiser of goods3. Transport and warehousing 3. Bulk Breaking.4. Financing 4. Marketing5. Product guarantees 5. Storage.6. Repairs & Installation. 6. Feedback source of

Consumer needs reaction.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 120: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

NATURE AND SCOPE OF RETAILING

We have seen that providing place, time, form and possession utilities to consumers is the essence of distribution management. Retailing takes care of a major part of this task.

FUNCTIONS OF ALL KINDS OF RETAILERS;1. A Retailer aims at giving maximum local convenience to consumers.2. Consumer need not store the commodity beyond thin normal requirements. Any

article in any quantity is always available on demand at the retailers shop.3. A retailer usually maintains which variety of stocks, consumers are provided

variety of choice and hence selection becomes easier for them.4. Though personal salesmanship, window display and demonstration a retailer

attracts customers to new goods and supplies information about the arrival of new goods.

5. A retailer sells not merely the goods but service to the customers.6. Retailer’s acts as the last outlet for distribution of goods within the country. A

retailer is the connecting link between the wholesaler and the consumer.7. Retailers are absolutely essential in meeting daily demands of consumers for fresh

food sniffs, vegetables, fruits, and milk, numerous daily works.8. Personal services offered by retailer to their regular customers assure individual

satisfaction. Retailers help customers in making wise selection of goods.9. Specialized retailers offer durable and costly consumer goods on installment sale

basis. Even ordinary retailers give credit to their customers.10. Retailers have personal contacts with the consumers and users of their products.

CHARACTERISTICS OF ITINERANT RETAILERS:1. They hold limited stocks2. As their stocks are limited, they can dispose of their stocks in a day or two3. They generally sell goods of low quality, and so their goods are low priced.4. Their prices are not fixed but are subject to bargaining.5. They usually sell goods of household consumpti8on like vegetables, eggs,

stationeries etc.6. They are not particular about building up their reputation or goodwill, as they go

on changing their place of business.7. Their business needs very low capital investment. 8. As they exhaust or dispose of their stocks in a day or two, generally they do not

suffer from fluctuations of prices.9. They provide maximum conveniences to the consumers, as they bring the goods

to the very door steps of the consumers.

PERQUISITES OF RETAIL TRADE:

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 121: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

1. Strategic Planning: Retailer must also have the planning of sound strategies. Product assortment, price strategies and promotional methods need special attention.

2. Physical Facilities: It is said that there are 3 keys to retail success. Location, location and location. The ultimate success of the retail store is governed by favorable location.

3. Price: Appropriate price strategy can have the greatest market appeal particularly in inflation. Low price with reasonable quality and due service can work wonders in retailers.

4. Promotion: Unique advantages of promotional campaigns explain considerable success in retailing.

5. Buying: A retailer can acquire highly desirable product assortment, indicating good values to his customers, through shrewd buying practices and sound decision making ability. He should act as a expert buying agent on behalf of his customer.

6. Service: Retailers give non-price competition essentially through personalized services. Prompt and courteous service, quality assurance, sale on approval. Many back guarantee, service often sale, free home delivery, grant of credit securing goods to satisfy individual taste and liking, offer of expert advice to customers and comfort and convince in the store all these are welcome by customers and their patronage goes to such retailers.

7. Efficient management: Better planning, organization and control can offer efficient retail options. Proper selection, training, remuneration and motivation of sales force will also assure higher efficiency.

LARGE SCALE RETAIL ORGANISATIONS:The large-scale organizations owned by partnerships and companies are:

1. Super markets/Bazaars.2. Combination Stores.3. Departmental stores.4. Chain/Multiple shops.5. Hyper markets.6. Discount stores.7. Retail catalogue showrooms.8. Manufacturers showrooms9. Factory outlets or off Price retailers10. Shopping centers in (Suburban areas)

ADVANTAGES OF LARGE SCALE RETAILING:1. Benefits of bulk purchases2. Superior management personnel and specialized management practices in the

forms of better planning, organization and control and consequent benefits of specialization at all levels.

3. Benefit of mechanization and automation in retailing operations.4. Financial Strength due to adequate capital resources

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 122: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

5. Effective use of advertising and salesmanship techniques6. Full scope for experimentation, innovation and marketing research.7. Development and promotion of their own brands.8. Maximum risk bearing capacity

CONFLICT AND CONTROL IN CHANNELS

To manage distribution channels effectively require an understanding of both conflict and control, including technique to

(3) Decrease conflict, or at least its negative effects, and (4) Increase a firm’s control within a channel

Channel conflict exists when one channel member perceives another channel member to be acting in away that prevents the first member from achieving its distribution objectives. Firms in one channel often compete vigourously with firms in other channels; this represents horizontal conflict. Even within the same channel, firms disagree about operating practices and try to gain control over other members’ actions; this illustrates vertical conflict.

HORIZONTAL CONFLICT

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 123: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Horizontal conflict occurs among firms on the same level of distribution. Basically horizontal conflict is a form of business competition. It may occur among:

o Middlemen of the same type: Mary vale hardware (an independent retailer) Versus Fred’s Friendly Hardware (another independent retailer)

o Different types of middlemen on the same level Fred’s Friendly Hardware (an independent retailer) Versus Lowe’s points area (a single department in a store within a giant chain A primary sources of horizontal conflict is scrambled merchandising, in which middlemen diversify by adding product lines not traditionally carried by their type of business

VERTICAL CONFLICT Vertical conflict typically occurs between producer and wholesaler or between producer and retailer

PRODUCER VERSUS WHOLESALER A producer and a wholesaler may disagree about aspects of their relationship Why do conflicts arise? Basically, manufacturers and wholesalers have differing point of view on the one hand, manufacturers think that wholesalers neither promote products aggressively nor hold sufficient inventories On the other hand, wholesalers believe that producers either expect too much, such as requiring an extensive inventory of the product, or do not understand the wholesaler’s primary obligation to customers. To bypass wholesalers, a producer has two alternatives

o Sell directly to consumer: producers may employ door to door, mail-order, or online selling. They may also establish their own distribution centers in various areas or even their own retail store in major markets

o Sell directly to retailers: under certain market and product condition, selling directly to retailers is feasible and advisable. An ideal retail market for this option consists of retailers that buy large quantities of a limited line of products

To avoid being bypassed in channels, wholesalers need to improve their competition position

o Improve internal performance: many wholesalers have modernized their operations. Functional, single-story warehouse have been built outside congested down town areas and mechanized materials- handling equipment has been installed

o Provide management assistance to customers: wholesalers have realized that improving customers operation benefits all parties. Thus

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 124: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

many of them offer programs to assist their customers in areas such as layout, merchandise selection, promotion and inventory control

o Form a voluntary chain: in this from of vertical marketing system a wholesaler contractually agrees to furnish management services and volume buying power to a group of retailers. In turn, the retailers promise to buy all, or almost all, their merchandise from the wholesaler

o Develop middlemen’s brands: some large wholesalers have successfully established their own brands. Super value has developed its Favorite brand for groceries and super chill for soft drinks. A voluntary chain of retailers provides a built in market for the wholesaler’s brands

Producer versus Retailer Conflict between manufacturers and retailers- in fact between any two parties is likely during tough economic times. Conflict is also bound to occur when producers complete with retailers by selling through producers owned stores or over the internet. Producer and retailer may also disagree about terms of sale or conditions of the relationship between the two parties. In recent years large retail chains have demanded not only lower price but also more service from suppliers. Producers sometimes find it costly, if not nearly impossible, to comply with the retailers new policies

Both producers and retailers have methods to gain more control. Manufacturers can

8. Build strong consumer brand loyalty: meeting and surpassing customer’s expectations is a key in creating such loyalty

9. Establish one or more forms of a vertical marketing system: Procter and gamble uses the administered types of VMS whenever possible

10. Refuse to sell to uncooperative retailers: this tactic may not be defensible from a legal stand point

11. Arrange alternative retailers: squeezed by large retail chains, some producers are building their distribution strategy around smaller specialty store

12. Develop store loyalty among consumers: skillful advertising and strong store brands are means of creating loyal customers

13. Improve computerized information system: information is power. Knowing what sells and how fast it sells is useful in negotiating with suppliers

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 125: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

14. form a retailer co-operation : in this type of vertical marketing system, group of relatively small retailers brands together to establish and operate a wholesale warehouse

WHO CONTROLS CHANNELS Every firm would like to regulate the behavior of the other members in its distribution channel. A company that is able to do this has channel control. Channel power is the ability to influence or determine the behaviour of another channel member.

There are various sources of power in distribution channel. They include:

o Expertise: for example, possessing vital technical knowledge about the product or valuable information about customers

o Rewards: providing financial benefits to co-operative channel member.

o Sanctions: penalizing unco-operative firms or even removing them from the channel

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 126: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

PHYSICAL DISTRIBUTION Types of Distrbution Function Marketing represents two different but closely interrelated distribution functions. -> Demand-oriented function -> Supply-oriented function Demand-Oriented Function These are concerned with the search for and simulation of consumer demand. The channels of distribution viz., wholesellers, retailers and all type of marchant agent perform these demand orianted function. Supply-Oriented Function These are concerned with physical product flow these activities revolve around the notion of movement and they

represent physical distribution as a planned movement (physical flow) of production from the supplier to the firm and from the firm to the dealers or resellers economically quickly and efficiently.

Distribution cover two problems are:

Channel mangement representing demand -oriented marketing operation.

Physical distribution management representing supply-oriented marketing operation. i.e all activities involved in physically moving and storing product in process of marketing. In marketing pavlance it is called logistics. Physical Distribution The marketing process is not complete . Simply by creating superb product and creatinga customer by aggressive salesmanship. Delivering the product to the customer at the right time and place is an equally importent function in marketing.In the process of marketing this vital function is called physical distribution. Physical distribution involves of physical flow of 1 Raw Material 2.Finished Products. Components of Physical distribution The foolowing qre the components of physical distributoion system: Distribution Planning & Accounting In bound transport

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 127: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

MODULE 7 (8 Hours)Marketing communication: Concept of communication mix, communication objectives, steps in developing effective communication, stages in designing message, Advertising: Message content, Structure, Source, Advertising Budget, Measuring effectiveness of Ad. Hierarchy of effects in advertising Promotion: Promotion mix, kinds of promotion, Tools and Techniques of sales promotion, Push-pull strategies of promotion.Personal selling: Concept, Features, Functions, Steps involved in Personal SellingPublicity / public relation: Meaning, Objective, Merits/Demerits. Direct Marketing: Meaning, Features, Functions, Merits/Demerits, Role of media in DM Basic concepts of e-commerce, e-business, e-marketing, m-Commerce, marketing.

PROMOTION

Introduction:

Promotion is a form of communication with an additional element of persuasion to accept ideas, products, and services and hence persuasive communication becomes the heart of promotion, the third element of marketing mix. In essence, promotion is the spark plug of our marketing mix and an important marketing strategy. People must know that right product at the right place is available at the right price. It is said that in a competitive market without promotion nothing can be sold.

In marketing effective communication is absolutely necessary even though you have a superb product, best package and also you offer a fair price.

PROMOTION: It is the process of marketing communication to inform, persuade, remind and influence consumer or users in favor of your product or service. Promotion has three specific purposes. It communicates marketing information to customers, users and resellers’ .Promotion persuades and convinces the buyer and influences his or her behavior to take the desired action.

It is defined as the coordinated self initiated efforts to establish channels of information and persuasion to facilitate or foster the sale of goods or services, or the acceptance of ideas or points of view. “It is a form of non price competition”.

Integrated marketing communication

Introduction:

Marketers have a variety of promotional tools at there disposals. So make effective use of them, a companies personal selling, advertising and often promotional activities should form a co-ordinates promotional program within its total marketing plan. However these activities are fragmented in many firms within potentially damaging consequences. For ex: advertising

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 128: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

directions and sales force managers may come into conflict over resources, or the sales forces may not be adequately informed about the defects of a particular sales promotion effort. These would not happen if the elements comprising promotion were part of an integrated manufacturing communication (IMC) effort, a strategic business process used to plan, develop, execute, and evaluate co-ordinates communication with and organization public.

IMC begins with a strategic planning effort designed to co-ordinate promotion with product planning, pricing and distribution the other marketing mix elements. Promotion is influenced for instances by how distinctive a product is and whether its planed price is above or below competition.

IMC Elements:

Organizations that have adopted an IMC philosophy tend to share several characteristics, notably:1) An awareness of the target of the audiences information sources as well as there media habits and preferences.2) An understanding of what the audience knows and believes that relates to the desired response.3) The use of a mix of promotional tools, each with specific objectives but all linked to a common over all goal.4) A carefully timed, continuous flow of information adopted to the audience information needs.

PROMOTION AND MARKETING:

From a marketing perspective promotion is intended to further the objectives of an organization.. It makes use of various tools to perform three essential promotional roles- informing, persuading and reminding target audiences. The relative importance of these roles depends on the circumstances faced by the firm.

The most useful product will be a failure of no one knows it exists, so the first task of promotion is to inform. Beyond simply being aware of a product or brand, customers must understand what benefits it provides, how it works, and how to get it. These are just a few examples of information provides channel members and consumers. In electronic appliance industry for example, Palm uses advertising to educate the market about the operation and features of each new generation of handhelds. In another instance, when a small Canadian firm was facing with consumers who could not understand its toy called X-zylo, a gyroscopic cylinder that can be thrown 100 yards, the inventor informed the retailers and consumers about it with demonstrations at fairs, in company parking lots and on school playing fields.

Another purpose of promotion is persuasion. Intense competition among firms puts tremendous pressure on the promotional programs of sellers. In an economy with an abundant supply of products, consumers have many alternatives of satisfying even basic physiological needs. As a result, persuasive promotion is essential. Campbell Soup Co. has been marketing

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 129: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

condensed soup for over 100 years, and accounts for 80% of all soup sales in US. It is one of the most recognized brands and packages in the country. Studies show that virtually every household has some Campbell’s Soup in the pantry. Yet the firm spends over $100 million a year advertising soup. Partly, because it regularly introduces new flavors but more important, because its primary products are condensed soups that require some minimal preparation and as one industry analyst quipped, “If your under 70 years old you buy ready-to-serve soup”. Thus Campbell’s faced with intense competition from alternative easier-to-prepare foods, uses promotion to persuade soup buyers.

Consumers also must be reminded about a product’s availability and its potential to satisfy. Sellers bombard the market place with thousands of messages every day in hopes of attracting new consumers and establishing markets for new products. Given the intense competition Promotion as an personal and impersonal effort by a seller or the seller’s representative to inform persuade or remind a target audience.

PROMOTION METHOD:-Promotion to whomever it is directed is an attempt to influence. There are

four form of promotion:-

(I) Personal Selling(ii) Sales Management(iii) Sales Promotion(iv) Publicity and Public Relation

(i) Personal Selling :- It is a direct presentation of a product to a prospective customer by a representative of the organization selling it. Its takes place face to face or over the telephone, and it may be directed to a business person or a final consumer.(i) It enhances customer’s confidence in the seller.(ii) It promotes long term business relation through personal intimacy.(iii) It provides a human touch to business transaction.(iv) It helps facilitates the seller to understand each customer’s needs and preferences more clearly. (v) It helps to satisfy a customer by modifying the product as per the customer choice and preferences.(vi) Personal selling followed by personal service helps to build long term relation between the business and the customer.(vii) It helps keep up with the competition in the market, based on product’s customization as per customer’s preferences.(viii) It is a powerful and effective tools in convincing the customers about the product.(ix) Through personal selling the time log between introducing a product ct through the media and actually selling it, is reduced.(x) It provides prospective customers with a better understanding of product and an interactive opportunity to relays with the sales personal.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 130: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

MAJOR STEPS IN EFFECTIVE SELLING

Most training program view the selling process as consisting of several steps that the sales person must master. These steps focus on the goal of getting new customers and obtaining orders from them. However most sales people spend much of their time maintaining existing accounts and building long term customer relationships.

Prospecting and Qualifying :-The first step in selling process is prospecting identifying qualifies potential customers. The sales person must often approach many prospects to get just a few sales. Although the companies supplies some leads, sales people used skill in finding their own. They can ask current customers for the names of prospects. They can join organizations to which prospects belong or can engage in speaking and writing activities that will draw attention. They can search for names in news papers or directories and use the telephone and male to track down leads. Sales people use to know how to qualify leads that is how to identify the good ones and screen out the poor ones. Prospects

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

PREAPPROACH APPROACH

PRESENTATION

AND DOCUMENTATION

HANDLING OBJECTION

FOLLOW-UP CLOSING

PROSPECTING AND QUALIFYING

Page 131: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

can be qualified by looking at their financial ability, volume of business special needs, location and possibilities for growth.

Pre-approach :-Before calling on a prospect the sales person should learn as much as possible about the organization (what is needs, who is involved in buying) and its buyers(their characteristics and buying styles). This step is known as the pre approach.The sales person should all objectives, which may be to qualify the prospects, to gather information, or to make immediate sales. Another task is to divide on the best approach, which might be a personal visit, a phone call or a letter. The best timing should be considered carefully because many prospects are busiest at certain times. Finally, the sales person should give thought to an overall sales strategy for the account.

Approach :-During the approach step, the sales person should know how to meet and greet the buyer and to get the relationship off to a good start. This involves the sales person appearance, opening lines and follow up remarks. The opening line should be positive. The opening might be followed by some key questions to learn more about the customers needs or by showing a display or sample to attract the buyer’s attention and curiosity.

Presentation and Demonstration :-During the presentation step of selling process, the sales person tells the product “ story” to the buyer, showing how the product will make or save money. The sales person describes the product features and concentrates on presenting customers benefits. Using a need satisfaction approach, the sales person starts with a search for the customers need by getting the customers to do most of the talking.Sales presentation can be improved with demonstrations aids, such as booklets, flipcharts, slides, video tapes, video disks and product samples if buyers can see or handle the product, they will better remember its features and benefits.

Handling Objections :-Customer always have objections during the presentation or when asked to place an order. The problem can be either logical or physiological and objections are often unspoken. In handling objections, the sales person should use a positive approach, sick out hidden objection, asked the buyer to clarify any objections, take objections as opportunity to provide more information and turn the objection into reason for buying. Every sales person need training and skills of handling objections.

Closing :-After handling the prospects objections, the sales person now tries to close the sell. Some sales people do not get around to closing or do not handle it well. They may lack confidence, fail guilty about asking for the order, or fail to recognize the rig ht movement to close the sell. Sales people should know

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 132: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

how to recognize closing signals from the buyer, including physical actions, comments and questions.

Follow Up :-The last step in the selling process “follow up” is essential to store customer satisfaction and repeat business. Right after closing, the sales person should complete any details on delivery time, purchase terms, and other matters. The sales person then should schedule a follow up call when the initial order is received to make sure there is proper installation, instruction and servicing.

Sales force management is defined as the analysis, planning, implementation, and control of sales force activities. Effective management of the sales force is needed to implement the company’s chosen sales force design and achieve its sales objectives. Sales force management covers the steps in recruiting and selecting, training, supervising, motivating, and evaluating representatives

oRecruiting and selecting sales representatives

At the heart of a successful sales force is the selection of effective representatives. One survey revealed that the top 27 percent of the sales force brought in over 52 percent of the sales. Beyond differences in productivity is the great waste in hiring the wrong people. The average annual turnover rate for all industries is almost 20 percent.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Managing the Sales Force

Recruiting, selecting

Training

Supervising

Motivating

Evaluating

Page 133: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

After management develops suitable selection criteria, the next step is to recruit applicants by various means, including soliciting names from current sales reps, using employment agencies, placing print and on-line job ads, and contacting graduating college students. Selection procedures can vary from an informal interview to prolonged testing and interviewing. Although test scores are only one information element in a set that includes personal characteristics, references, past employment history, and interviewer reactions,

Training Sales Representatives Today’s customers expect salespeople to have deep product knowledge, offer ideas to improve customer operations, and be efficient and reliable. These demands haverequired companies to make a much higher investment in training their sales reps.Companies use training to help sales reps: (1) Know and identify with the company;(2) learn about the company’s products;(3) Know customers’ and competitors, characteristics; (4) Make effective sales presentations; and (5) understand sales procedures and responsibilities. Training time varies with the complexity of the selling task and the type of person recruited into the sales organization. Training often involves a variety of methods, including role playing, audio- and videotapes, CD-ROMs, and Web-based distance learning.

Supervising Sales Representatives New sales representatives need more than a territory, a compensation package, andtraining—they also need proper supervision. Reps paid mostly on commission generally receive less supervision, while those who are salaried and must cover definite accounts are likely to receive substantial supervision. In the course of supervising sales reps, successful companies set norms for calls on customers and prospects, and they help reps make the most efficient use of sales time.

Motivating Sales Representatives Some ambitious sales representatives are self-starters who will put forth their best effort without any special coaching. The majority of reps, however, require more encouragement and special incentives. This is especially true of field selling, which can be frustrating because reps usually work alone, keep irregular hours, are often away from home, frequently lack the authority to do what is necessary to win anaccount, and sometimes lose large orders they have worked hard to obtain. Most people, more over, require incentives, such as financial gain or social recognition, to operate at full capacity.

Sales Quotas

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 134: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Many companies set sales quotas prescribing what reps should sell during the year. Quotas can be set on dollar sales, unit volume, margin, selling effort or activity, and product type. After setting quotas, management often ties salesperson compensation to degree of quota fulfillment. Sales quotas are developed from the annual marketing plan..

Supplementary MotivatorsCompanies use additional motivators to stimulate sales force effort. One motivator is the periodic sales meeting, a social occasion that also serves as an important tool for education, communication, and motivation. Many companies sponsor sales contests to spur the sales force to a special selling effort above what is normally expected.

Evaluating Sales Representatives

Sources of InformationManagement can obtain information about reps in several ways, including salesreports, personal observation, customer letters and complaints, customer surveys, and conversations with other sales representatives. These reports provide raw data from which sales managers can extract key indicators of sales performance:

(1) Average number of sales calls per rep per day, (2) Average sales call time per contact, (3) Average revenue per sales call, (4) Average cost per sales call, (5) Entertainment cost per sales call,(6) Percentage of orders per hundred sales calls, (7) Number of new customers per period,(8) Number of lost customers per period, and (9) Sales force cost as a percentage of total sales.

Sales Management:-

It is defined as – “The overall management of sales and it refers to only a special application of the process of management as a whole”.

Marketing stresses the importance of satisfying customer’s needs and wants through process of exchange. Marketing occurs virtually in every aspect of life. Sales management plays an important role in marketing, especially for firms business to – business market. Personal selling is the most frequently used promotion technique in business markets and management of the sales force is an important quality component of any selling effort.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 135: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

RELATIONSHIP OF SALES STRATEGY TO MARKETING AND CORPORATE PLANS

Advertising :

It is non personal communication paid for by a clearly identified sponsor promotion ideas, organization or product. The term advertising originates from the Latin ‘advert’ that means to turn sound. Advertising thus denotes the means employed to draw attention to any object or purpose. In the marketing context, advertising has been defined as ‘any paid form of presentation and promotion of ideas, goods or services by an identified sponsor. Through an advertisement, the advertiser intends to spread his ideas about his product offering among his customer and prospects.

Then they can make five critical decisions, known as the five Ms:

Mission: What are the advertising objectives?

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

TACTICS

STARTEGY IS TO PENETRATE MARKET

STRATEGY IS SELECTED PROFIT TO SELECTED CUSTOMER

STARTEGY

OBJECTIVE IS TO INCREASE PROFIT

OBJECTIVE IS TO INCREASE MARKET SHARE

MARKETING

CORPORATE

TACTIC TO PENETRATE TO GROUP OF STORE MANAGERS

OBJECTIVE IS TO INCREASE SHARE

SELLING

Page 136: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Money: How much can be spent?Message: What message should be sent?Media: What media should be used?Measurement: How should the results be evaluated? FEATURES

1. It is a unique means of non-personal or mass communication announcing the sales of goods or services. It can help to introduce a new product quickly.

2. The advertising is non-personal salesmanship performing similar functions like personal salesmanship. It is a silent but forceful salesmanship. It helps to presale a product.

3. It is an openly sponsored sales message regarding any product or service, i.e. the sponsor can be identified.

4. It is a paid communication- part for by the sponsor (advertisers) to the media owner (seller of advertising space or time)

5. advertising message can be addressed to numerous persons at a time – they may be readers, listeners, viewers collectively called audience of advertisement.

FACTORS INFLUENCING THE MEDIA SELECTION IN ADVERTISEMENT

The factors influencing the media selection in advertisement are:

1. Objectives of an ad. The purpose of a particular ad and the goals of the entire campaign influence which media to use. If an advertiser has a short lead time, local news paper or radio may be the medium to use.

2. Audience coverage . The audience reached by the medium should match the geographic area in which the product is distributed. Furthermore, the selected medium should reach the desired types of prospects with a minimum of wasted coverage-that is, reach people who are not prospects for the product. Many media, even national and other large-market media can be targeted at small, specialized market segments.

3. Requirement of the message: The medium should fit the message. For e.g., magazines provide high-visual reproduction that attract attention along with printed messages that can be carefully read and evaluated. As a result, they are well suited to business-to-business advertising.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 137: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

4. Time and location of the buying decision: If the objective is to stimulate a purchase, the medium should reach prospective customer when and where they are about to make their buying decisions.

5. Media cost: The cost of each medium should be considered in relation to the amount of funds available to pay for it and its reach or circulation.

THE RECENT TRENDS IN ADVERTISING MEDIA ARE:

Medias Advantages disadvantages:

Newspapers Flexibility; timeliness good localmarket coverage; broad acceptance;high believability

Short life; poor reproduction quality;small “pass-along” audience

TelevisionCombines sight, sound, and motion;appealing to the senses; highattention; high reach

High absolute cost; high clutter;fleeting exposure; less audienceselectivity

Direct mail Audience selectivity; flexibility; no adcompetition within the samemedium; personalization

Relatively high cost;” junk mail”image

RadioMass use; high geographic anddemographic selectivity; low cost

Audio presentation only; lowerattention than television;no standardized rate structures;fleeting exposure

Outdoor Flexibility; high repeat exposure; lowcost; low competition

Limited audience selectivity; creativelimitations

Yellow Pages

Excellent local coverage; highbelievability; wide reach; low cost

High competition; long ad purchaselead time; creative limitations

Newsletters Very high selectivity; full control;interactive opportunities; relativelow costs

Costs could run away

Brochures Flexibility; full control; can Overproduction could lead to

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 138: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

dramatizemessages

runaway costs

Telephone Many users; opportunity to give apersonal touch

Relative high cost unless volunteersare used

Internet High selectivity; interactivepossibilities; relatively low cost

Relatively new media with a lownumber of users in some countries

Sales Promotions:

It is sponsor- funded, demand stimulating activity designed to supplement advertising and facilitated personal selling it frequently consist of a temporary incentive to increase a sale or purchase. Many sales promotions are directed at consumers the premium occurred by fast-food outlets in conjunction with popular movies are examples.

It is an important instrument in marketing the lubricate the market efforts. Sales promotion is a bridge or a connecting link covering the gap between advertising and personal salesmanship, the two wings of promotion.

The Objectives of Sales Promotion are:

1) To gain the additional market share or additional revenue.2) To expand the target market.3) To develop favorable consumer experience with the product.4) To add extra value to the product and develop brand fancies.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 139: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Publicity and Public Relation:

Public relations encompasses a vide verity of communication efforts to contribute to generally favorable attitudes and opinions toward an organization and it’s products. Unlike most advertising and personal selling, it does not include a specific sales message. The targets may be customers, stock holders, an government agency or a special interest group. PR can take many farms including newsletters, annual reports, lobbying and support of charitable civic events.

Publicity is a special form of public relation that involves news stories about an organization or its products. Like advertising it consists of an impersonal message that reaches a mass audience through the media. But several futures distinguish publicity from advertising. It is not paid for, the organization that is the subject of the publicity as little or no cover over it, and if appears as news and therefore has greater credibility Than advertising. Organization activity seek good publicity and frequently provide the material for it in the form of news releases, press conference and photographs. When a picture of company’s CEO appears on the cover of a business publication and is accompanied by a flattering article in the magazine, it is often attributable to the efforts of the firms public relations department. There also is of causes bad publicity which organization try to avoid or deflect.

PUBLICITY IS A MORE POWERFUL TOOL THAN ADVERTISING AND SALES PROMOTION

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Sales Promotion Tactics

Consumer-directedSamplesCouponsCash refund offersPrice offsPremiumsPrizesPatronage rewardsFree trialsTie-in promotions

Trade-directedPrice offsAllowancesFree goodsSales contestsSpiffsTrade showsSpecialty advertising

Page 140: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. Developing an advertising programinvolves setting objectives, setting a budget, choosing the advertising message, determining how the message will be generated, evaluating and selecting messages, executing the message, developing media strategies by establishing the ad’s desired reach, frequency, and impact and then choosing the media that will deliver the desired results and evaluating the communication and sales effects of the advertising. Sales promotion consists of a diverse collection of incentive tools, mostly short term that are designed to stimulate trial or quicker or greater purchase of particulargoods or services by consumers or the trade. Sales promotion includes tools for consumer promotion, trade promotion, and business- and sales force promotion. In using sales promotion, as in using advertising, a company must set its objectives, select the tools, develop the program, pretest the program, implement and control it, and evaluatethe results. Although the use of sales promotion is growing—and the technique tends to increase sales and market share in the short run—it is not generally considered a long-term brand-building technique. A public is any group that has an actual or potential interest in or impact on a company’s ability to achieve its objectives. Public relations (PR) involves a variety of programs designed to promote or protect a company’s image or its individual products.Marketing public relations (MPR) is often used to support corporate or product promotion and image-building. MPR can affect public awareness at a fraction of the cost of advertising, and is often much more credible. The main tools of PR are publications, events, news, speeches, public-service activities, and identity media.In considering when and how to use MPR, management must establish the marketing objectives, choose the PR messages and vehicles, implement the plan carefully, and evaluate the results. Results are usually evaluated in terms of number of exposures and cost savings; awareness, comprehension, or attitude changes; and sales-and-profit contribution.

Customer Relationship ManagementCustomer relationship management is an ongoing interaction between buyer and the sender in which the seller continuously improves its understanding of the buyers need and the buyer become increasing loyal to the seller because its needs are being so well satisfied.

Customer relationship management encompasses the capabilities, methodologies and technologies that support an enterprise in managing customer relationships.

The general purpose of Customer relationship management is to enable organizations to better manage their customer through the introduction of reliable systems, proceeds and procedures

FORMING STRONG CUSTOMER BRAND

Companies that want to form strong customer brand need to attend to the following basics:- Get cross-departmental participation in planning and managing the customer satisfaction and relation process.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 141: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Integrate the voice of the customer in all big decision. Create superior product, service, and experience for the target market. Organize and make accessible a database of information on individual customer needs, preference, contract, purchase frequency and satisfaction Make it easy for customers to reach appropriate company. Personal and express their needs, perceptions and complains Run award programs recognizing outstanding employees.However there are three main basic tools to forming customers bonds(i) Adding Financial Benefits.(ii) Adding Social Benefits.(iii) Adding Structural Ties.

(i) Adding Financial Benefits :- in the financial benefits that company can offer two programs

(a) Frequency Programs(b) Club Marketing Programs

(a) Frequency Programs:- Frequency programs are design to provide rewards to customers who buy frequently and substantial amounts. Frequency market is an acknowledgement of the fact that 20% of the companies customers might accounts for 80% of its business.

Typically, the first company to introduce an frequency program gains the most benefit specially if competitors are slow to respond. After competitors respond frequency programs can become a financial burden to all the offering companies but some companies are more efficient or creating in managing.

(b) Club Marketing Programs:- Many companies have created club marketing program(CMP) to bond customers closer to the company. Club membership can be open to everyone, who purchases a product or service or it can be limited to an affinity group of those willing to pay a small fees.

Although open club are good for building a database or snagging customers from competitors, limited membership club are more powerful long term loyalty builders.

These clubs attracts and keep those customers who are responsible for the largest portion of business.

(ii) Adding Social Benefits :- Company personal work on increasing social want with customers by individualizing and personalizing the customer relationship.

In essence, thoughtful companies turn their customer into clients. Hence they draw some distinction.

Customers may be nameless to the institutions: clients can’t be nameless. Customers are served as part of the mass or as a part of larger segments: clients are served on an individual basic.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 142: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Customers are served by anyone who happens to be available: clients are served by the professional assign to them.

(iii) Adding Structural Ties :-The company may supply customers with special equipment or computer linkagers that helps to customers manage orders, payroll and inventory

Hence there are some sequential for collecting structural ties with the customer. The marketer aims should be to increase the consumers proclivity to repurchase the companies brand, his suggestion as follows:

Create long-Term Contract:- A news paper subscription replace the need to buy a news paper each day. A 20 year mortgage replaces the need to re-borrow the money each year.

Charge a lower Price to Consumers who buy larger supplier :- Offer lower prices to people who agreed to be supplied regularly with a certain brand of tooth paste, detergent or beer.

Turn the product into a long-term service :- Some of the examples clears the point, Daimler-Chrysler is considering selling miles of reliable transportation instead of car, with the consumer able to order different car at different time, such as a station wagon for shopping and convertible for the weekend

AIM OF CUSTOMER RELATIONSHIP MANAGEMENTC.R.M is to produce high customer equity customer equity is the total of the discounted lifetime values of all of the firm’s customer clearly, the more loyal the customer, the higher the customer equity.

RUST, ZEITHANAL, AND LEMON DISTINGUISH THREE DRIVERY OF CUSTOMERS EUITY :-

1. Value Equity2. Brand Equity3. Relationship Equity

1. Value Equity :- Value equity the customer objective assessment of the utility of an offering based on perception of its benefits relative to its cast, the cabdriver of value equity are quality price and convenience.Each industry has to define the specific factors underlying each sub driver in order to find program to improve value equity.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 143: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

For Example:- An airlines passenger might define quality as seat width. A hotel guest might define quality as room size.Value equity makes the biggest contribution to customer equity when product are differentiated and when they are more complex and need to be evaluated.

2. Brand Equity :- Brand equity is the customer subjective and intangible assessment of the brand, above and beyond its objectively perceived value the sub drivers of brand equity are customer brand awareness, customer attitude towards the brand and customer perception of brand ethic, brand equity is more important than the other driver of customer equity where product are less differentiated and have more emotional impact. 3. Relationship Equity:- Relationship Equity is the customer tendency to stick with the brand, above and beyond include loyalty program, special recognition and treatment program, community building program.Relationship equity is especially important where personal relationship count for a lot and where customer tend to continue with suppliers out of habit or inertia.

STEPS OF ATTRACTING AND KEEPING CUSTOMERS

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

PATRNERS

ADVOCATE

MEMBERS

CLIENTS

REPEATCUSTOMERS

FIRST TIME CUSTOMER

PROSPECT

SUSPECT

DISQUALIFIED PROSPECT

INTERACTIVE OR EX-CUSTOMER

Page 144: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

The starting point is everyone who might conceivably buy the product or service. From these co-determine the most likely prospect, which it hopes to convert into first time customers and then into repeat customers, and clients people whom the company boy very specially and knowledgeable. Then next changes is to turn clients into member by starting a membership programs that offers benefits to customers who join, and then into advocates, customers who enthusiastically recommend the company and its product and service to others. The ultimate challenge to turn advocate into partners. Some customers inevitably became inactive or drop out. The challenge is to reactivated dissatisfied customers through win back strategy. It is often earlier to re-attract ex-customers than to find new ones.

HOW MUCH SHOULD A COMPANY INVERST IN BUILDING LOYALTY SO THAT THE COST DO NOT EXCEED THE GAINS !

The level of investment vary with the level of customer as prospect to customers and last as partner hence they are:-

BASIC MARKETING

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 145: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

REACTIVE MARKETING ACCOUNTABLE MARKETING PROACTIVE MARKETING PARTNERSHIP MARKETING

Basic Marketing:- The sales person simply seller the product.

Reactive Marketing:- The sales person tells the product and encourage the customer to call if the question, comments and complaints.

Accountable Marketing:- The sales person called the customer to check whether the product is making expectation. The sales person also as/is the customer for any product or service improvement, suggestions, and any specific disappointments.

Proactive marketing:- The co-works continuous with its large customers to help improve there performance.

Partnership marketing:- The co-works continuous with its large customers to help improve there performance.

Most Co. practice only basic marketing when there markets contain many customers and there unit profit margin are small. In the market with few customers and high profit margins, most sellers will move towards partnership marketing.

RELATIONSHIP MARKETING

What is relationship marketing ?Is the process of creating, maintaining and enhancing strong, value laden relationship with

customers and stake holders.Relationship marketing is an integrated effort to identified, maintain and build a network

with individuals customers and to continuously strengthen the network for the benefit of both the sides, through interactive, individualized and value added contracts over a long period of time.

THE RELATIONSHIP MARKETING FOCUSES ON

(i) integrating customers service and quality with a market orientation.(ii) Focus on getting and keeping customers(iii) Focus on total relationship between first and its customers, suppliers and key markets on an on going basic.

A relationship marketing is a major challenge for high performance companies is that of building and maintaining viable business in a rapidly chaining market place. They must recognize the core elements of the business and how to maintain a viable fit between there stake holders, processes.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 146: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

To create customer satisfaction, companies, and must manage there value chain as well as the whole value delivery system in a customer centered way. The company’s goal is not only to get customer, but even more importantly to retain customers. The relationship marketing is concerned with working, developing, and enhancing relationship with the relationship market within the organization and building substantial external relationship with the supplier referred source, influence markets and recruitments market.

CUSTOMER RELATIONSHIP MARKETINGCustomer relationship marketing provides the key to retaining customers and evolve

providing financial and social benefits as well as structural ties to the customers.Companies must decide how much relationship marketing to invest in different market

segments and individual customers, from such levels as basic, reactive, accountable, proactive, and full partnership. Much depends on estimating customer life time value against the cost stream required to attract and retain these customers.

MODULE 8 (6 Hours)

Marketing Planning: Meaning, Concepts of Marketing plan, Steps involved in planning.Marketing Organisation: Evolution of Modern Marketing department,Factors influencing the size of the marketing organisation, various types ofmarketing structures/organisation

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 147: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Marketing Audit: Meaning, Features of marketing audit, variouscomponents of marketing audit.

Concept Of Marketing Planning.

The exact length and layout will vary from company to company; a marketing plan usually contains the sections. Smaller business may create shorter less formal marketing plans, where as corporate frequently require highly structure marketing plans. To guide implantation effectively, every part of the plan must be described in considerable detail. Sometime a company will post its marketing plan on an internal website, which allows managers and employees in different location to consult specific sections and collaborate on additions.

1. Executive summary.This section summarizes the main goals recommendations and points as an overviewfor senior manager who must read and approve the marketing plan.

2. current marketing situation.marketing managers discuss the overall market identity the market segments they will target and provide information about the company current situation.

Market description.By description the targeted segments in detail marketers provide contest for the marketing strategies and detailed action programs discussed later in the plan.

Product review.The product review should summarize the main features for all of the company products. the information may be organized by product line by type of customer by market by order of product introduction.

Competitive review.Markets list the most important channels provide an overview of each channel arrangement and mention any new developments or trends.

3. Strengths weaknesses opportunities and threat analysis.Strengths: strengths are internal capabilities that can help the company reach its objectives.

Weakness. Weaknesses are internal elements that may interfere with the company’s ability achieve its objectives.

Opportunities. Opportunities are external elements that the elements that he company may be able to exploit to its advantages.

Threats. Threats are current or emerging external element that may possibly challenge the company’s performance

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 148: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

4. Objectives and Issues :-

The company’s objectives should be defined in specific terms so management an measure progress and if needed, take corrective action to stay on track. This section describes any major issues that might affect the company’s marketing strategies and implementation.

5. Marketing strategy :- It is based on a positioning of product differentiation.

6. Action programs . Action programs should be coordinated with the resources and activities of other department including production finance, purchasing etc.

7. Budgets :- Budget serve two main purposes :- To project profitiability and to help managers plan for expenditures, scheduling and operations related to each programe.

7. Controls :-

Control help management measures results alter the plan is implemented and identify any problem or performance variations that need corrective action. WHAT IS SCOPE OF STRATEGIC MARKETING PLANNING?

To transform marketing strategy into marketing programs, marketing mangers must make basic decision on marketing expenditure, marketing mix and marketing alloction.

1. Positioning :-

A positioning built on meaningful differences, supported by appropriate strategy and implementation, can help the company build competitive advantage.

2. Product strategy :- Summarize the broad logic that will guide decisions made about the marketing mix in the period covered by the plan.

3. Pricing strategy :- Attracting desirable channel partners and taking market share.

4. Distribution strategy :- Channel strategy is to use selective distribution through well-known stores and online retailers.

5. Marketing communication strategy :-

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 149: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

By integrating all messages in all media, we will enforce the brand name and the main points of product differentiation, especially our exclusive voice- recognition features.

6. Marketing Research :- To support development, implementation and evaluation of strategies and action programs,

7. Marketing organization :-

The marketing department may be organized by function, as in this sample, by geography, by product by customer.

What is a marketing audit?

A marketing audit helps a business identify its most urgent marketing communications challenge. It can be a time consuming operation but the information gained can be invaluable to your business.

A strong marketing process is central to the success of your enterprise. A marketing audit will help you to identify the greatest untapped opportunities available to you.

Utilizing the practical experience that One Vision has developed through working with clients across a whole range of industries, One Vision is developing a new toolkit to enable you to self audit your marketing process.

The Marketing Audit will be a workbook system that will enable you to audit your marketing without the need for additional training or additional consultancy support.

If you would like to be alerted when the Marketing Audit is published, please register your details below. This does not place you under any obligation to purchase, and we will simply email you to advise when the Marketing Audit is available.

The Marketing Audit is just one in a range of practical tool kits designed to enable you to leverage the maximum value from your business.

It begins with a short review of the business' marketing, creative, and media platforms. Marketing solutions companies such as One Vision Ltd can help with recommendations, which can then be undertaken to improve current strategies or introduce more effective activities.

A typical marketing audit includes the following steps:

STEP ONE: Identify your areas of need.

The following items are important needs for my business RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 150: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Research

Determine which vertical industries or narrow target markets to pursue. Learn more about the customer's needs. Learn more about the customer's perceptions of my product/service: how is my

product/service positioned in the customer's mind? Learn more about what motivates the customer to purchase my product/service

and/or my competitor's product/service. Research internal attitudes towards products and service vs. the market's

perception. Conduct internal and/or external research using the Internet.

Marketing

Create a marketing plan. Create a media schedule. How to promote our product/service using free or paid seminars. Determine how to market our product/service or business at trade shows. Train

staff with an in-house seminar on:........................ Learn strategies for marketing our product/service during a recession.

Advertising

Develop a new creative platform for our corporate image or advertising campaign. Improve overall effectiveness and persuasiveness of print ads. Determine how to effectively promote product/service on a limited advertising

budget. Generate more inquiries from our print advertising.

Design

Create a new corporate image. Produce effective sales brochures, catalogues and other marketing literature. Design, write and produce a company newsletter. Create an effective company brochure or capability report. Produce and use a video or audio tape to promote our product/service. Write and publish a book, booklet, or special tape to promote our product/service.

Public Relations

Publish more press releases. Get articles by company personnel written and published in industry trade

journals. Determine how to get good case histories and user stories written and published.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 151: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Direct/Database Marketing

Plan and implement a direct mail campaign or program. Increase direct mail response rates. Generate more qualified leads. Follow-up Determine how to make all our marketing communications more responsive and

accountable. Develop strategies for responding to and following up on inquiries. Create effective inquiry fulfillment packages.

New Media

Create a multi-media presentation. Marketing through the Internet.

 

STEP TWO: Provide a rough estimate of your budget for marketing, creative and media.

Have the following items (either previous or current) ready for review:

Marketing and advertising budget Advertising ratios (advertising expenses as a percentage of revenue)

Strategic plans Research reports Trade information Trade associations Staff experience Corporate philosophy and mission statement Advertising and promotions used in the past Use of colors

Category sale:

By total category for the last three to five years. By month January to December for each year. By weekly total for each year.

Advertising and promotional expenditures:

By total category for the last three to five years. By month January to December for each year. By yearly total to date.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 152: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Average sales:

By month, for as many months as possible.

Promotions

Samples of all past promotions and advertising (last two years minimum). Amount, quantities and timing of co-op programs.

Competition

List your top competitors. List your second and third-ranked competitors. Samples of past competitors' promotions.

Other

Other economic, environmental or trend issues that may affect your business. Which promotional mediums have given you the best returns? Reasonable and probable growth for this year and the next four years (i.e. as a

percentage increase/decrease from the previous year). The issues or tasks you do now that you wish to outsource to an agency like One

Vision Ltd. Future plans and goals for expansion, revenue growth, and timing for these goals.

ONE VISION TIP:Help Yourself Become a Better Marketeer

Marketing intelligence alerts you to competitive developments, helps you identify key issues faster, and reveals internal weaknesses.

You can gain valuable insights into marketing by:

Reading unsolicited letters from customers to gauge their real likes and dislikes. Reading newspapers, trade journals, financial and economic reports (of yours and

related industries). Asking receptionists, sales reps and other staff what they know. Putting together a marketing intelligence file, filling it with articles, and using it

for future reference in business plans. Spending a few hours tracking down free sources of information from

governments, associations, universities, libraries and databases and the Internet. Visiting competitors' outlets. Read their promotional and corporate material to

find out what key messages they are giving customers and why. Investigating your own business practices by interviewing your current staff,

reviewing your past financial statements and performing a marketing audit.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 153: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

TO SUM UP: A marketing audit reviews your marketing, creative and media efforts, puts them in perspective with your current target market and shows opportunities to realign your strategies so you can get more effective results from your marketing dollars.

What are the Elements of a Systematic Marketing Audit?

Part One: The Marketing Environment Review

A. Markets

What are your organization’s major markets and public? What are the major market segments in each market? What are the present and expected future size and characteristics of each market

or market segment?

B. Customers

How do customers and the public rate your company in relation to its competition?

How do different classes of customers make their purchase decisions? Influences? What are the evolving needs and satisfaction levels of customers?

C. Competitors

Who are your organization’s major competitors? Who are the second and third-ranked competitors? What trends can be foreseen in competition?

D. Macro-environment

GENERAL: What are the main developments with respect to demographics, economy, technology, government and culture that will affect your organization’s situation?

SPECIFIC: Economic-Demographic

What does your company expect in the way of inflation, material shortages, unemployment and credit availability in the short and long run?

What effect will forecasted trends in the size, age distribution, and regional distribution of population have on your business?

Technology

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 154: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

What major changes are occurring in product/process technology that will affect you? How?

What are the major generic substitutes that might replace this product?

Political-Legal

What laws are being proposed that may affect marketing strategy? What National, provincial and local agency actions should be watched?

Social-Cultural

What attitude does the public have about businesses like yours and products such as the ones your company makes?

What changes are occurring in consumer lifestyles and values that affect your company's target markets and marketing methods?  

Part Two: The Marketing System Review

Objectives

What are your organization’s overall long-term and short-term objectives? What are your marketing objectives?

Are these objectives stated in a clear order of priority and in a form that allows planning and measurement of achievement?

Are the marketing objectives reasonable for your organization, given its competitive position, resources and opportunities?

Program/Strategy

What is your organization’s core strategy for achieving its objectives? Is it likely to succeed? Is your organization allocating enough (or too many) resources to accomplish the

marketing tasks? Are your marketing resources allocated to various markets, territories and

products of your organization in the best way possible? Are your marketing resources allocated to the major elements of the marketing

mix (i.e. product quality, personal selling/contact, promotion and distribution) in the best way possible?

Implementation

Does your organization develop an annual marketing plan? Is it effective? Does your organization implement control procedures (monthly, quarterly, and

yearly) to ensure your annual objectives are being achieved?

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 155: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Does your organisation carry out periodic studies to determine the contribution and effectiveness of various marketing activities?

Does your organisation have an adequate marketing information system to service the needs of managers for planning and controlling operations in various markets?

Organisation

Does your organisation have a high-level marketing officer to analyse, plan and implement the marketing work of your organisation?

Are others directly involved in marketing activity? Does your staff need more training, incentives, supervision or evaluation? Are the marketing responsibilities structured to serve the needs of different

marketing activities, products, markets and territories in the best way possible? Does staff understand and practice the marketing concept?

 

Part Three: Detailed Marketing Activity Review

Products

What are your main products? What are the generic products? Should any products be phased out? Should any products be added to the line? What is the general state of health of each product and the product mix as a

whole? Does the product line meet the demands of the market?

Prices

To what extent are prices set on cost, demand, and/or competitive criteria? What would be the likely response of demand to higher or lower prices? Does your organisation use temporary price promotions and, if so, how effective

are they?

Distribution

Are there alternative methods of distributing your product that would result in more service or less cost?

Does your organisation give adequate service, along with the product, to customers?

What are the main trade channels bringing products to customers? What are the efficiency levels and growth potentials of the different trade

channels?

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 156: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Personal Selling

Is your sales force large enough? Is it organised along the best lines of specialisation (territory, market, product)?

Does the sales force show high morale, ability, and effectiveness? Are they sufficiently trained? Do they have enough incentives? Are the procedures adequate for setting quotas and evaluating performance?

Advertising

Does your organisation clearly state its advertising objectives? Does your advertising get its messages across? Are the themes, graphics and copy effective? Are the chosen media adequate?

Publicity

Does your organisation have a carefully formulated program of publicity?

Sales Promotion

Does your organisation use sales promotions and, if so, are they well conceived?

Marketing Audit.

How to conduct a marketing audit?

The marketing audit is a fundamental part of the marketing planning process. It is conducted not only at the beginning of the process, but also at a series of points during the implementation of the plan. The marketing audit considers both internal and external influences on marketing planning, as well as a review of the plan itself.

There are a number of tools and audits that can be used, for example SWOT analysis for the internal environment, as well as the external environment. Other examples include PEST and Five Forces Analyses, which focus solely on the external environment.

In many ways the marketing audit clarifies opportunities and threats, and allows the marketing manager to make alterations to the plan if necessary.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 157: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

This lesson considers the basics of the marketing audit, and introduces a marketing audit checklist. The checklist is designed to answer the question, what is the current marketing situation? Lets consider the marketing audit under three key headings:

The Internal Marketing Environment. The External Marketing Environment. A Review of Our Current Marketing Plan.

1.The Internal Marketing Environment.

What resources do we have at hand? (i.e. The FIVE 'M's):

MEN (Labor/Labour). MONEY (Finances). MACHINERY (Equipment). MINUTES (Time). MATERIALS (Factors of Production).

How is our marketing team organised? How efficient is our marketing team? How effective is our marketing team? How does our marketing team interface with other organisations and internal

functions? How effective are we at Customer Relationship Management (CRM)? What is the state of our marketing planning process? Is our marketing planning information current and accurate? What is the current state of New Product Development? (Product) How profitable is our product portfolio? (Product) Are we pricing in the right way? (Price) How effective and efficient is distribution? (Place) Are we getting our marketing communications right? (Promotion) Do we have the right people facing our customers? (People) How effective are our customer facing processes? (Process) What is the state of our business's physical evidence? (Physical Evidence)

2. The External Marketing Environment.

As a market orientated organisation, we must start by asking - What is the nature of our 'customer?' Such as:

Their needs and how we satisfy them. Their buyer decision process and consumer behaviour. Their perception of our brand, and loyalty to it. The nature of segmentation, targeting and positioning in our markets. What customers 'value' and how we provide that 'value?.'

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 158: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

What is the nature of competition in our target markets?

Our competitors' level of profitability. Their number/concentration. The relative strengths and weaknesses of competition. The marketing plans and strategies of our competition.

What is the cultural nature of the environment(s)?

Beliefs and religions. The standards and average levels of education. The evolving lifestyles of our target consumers. The nature of consumerism in our target markets.

What is the demography of our consumers? Such as average age, levels of population, gender make up, and so on. How does technology play a part?

The level of adoption of mobile and Internet technologies. The way in which goods are manufactured. Information systems. Marketing communications uses of technology and media.

What is the economic condition of our markets?

Levels of average disposable income. Taxation policy in the target market. Economic indicators such as inflation levels, interest rates, exchange rates and

unemployment.

Is the political and legal landscape changing in any way?

Laws, for example, copyright and patents. Levels of regulation such as quotas or tariffs. Labour/labor laws such as minimum wage legislation.

3. A Review of Our Current Marketing Plan

What are our current objectives for marketing? What are our current marketing strategies? How do we apply the marketing mix? (Including factors covered above in (a)) Is the marketing process being controlled effectively? Are we achieving our marketing budget? Are we realising our SMART objectives? Are our marketing team implementing the marketing plan effectively?

Levels of staffing.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 159: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Staff training and development. Experience and learning.

Leaders are proactive. They make change happen instead of reacting to change. The future requires corporate leadership with the skills to integrate many unexpected and seemingly diverse events into its planning. Every organization must plan for change in order to reach its ultimate goal. Effective planning helps an organization adapt to change by identifying opportunities and avoiding problems. It sets the direction for the other functions of management and for teamwork. Planning improves decision-making. All levels of management engage in planning.

What is Strategic Planning?

Strategic planning produces fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it. It requires broad-scale information gathering, an exploration of alternatives, and an emphasis on the future implications of present decisions. Top level managers engage chiefly in strategic planning or long range planning. They answer such questions as "What is the purpose of this organization?" "What does this organization have to do in the future to remain competitive?" Top level managers clarify the mission of the organization and set its goals. The output needed by top management for long range planning is summary reports about finances, operations, and the external environment.

Strategic planning is the process of developing and analyzing the organization's mission, overall goals, general strategies, and allocating resources. A strategy is a course of action created to achieve a long-term goal. The time length for strategies is arbitrary, but is probably two, three, or perhaps as many as five years. It is generally determined by how far in the future the organization is committing its resources. Goals focus on desired changes. They are the ends that the organization strives to attain. Traditionally strategic planning has been done annually. However, many companies are doing away with annual business plans altogether and moving to a system of continuous planning, to permit quicker response to changing conditions. Thus, the strategic plan involves adapting the organization to take advantage of opportunities in its constantly changing environment.

Chunka Mui and Larry Downes in Unleashing the Killer App: Digital Strategies for Market Dominance (Harvard Business School Press, 1998) suggest that strategic planning will be replaced by "digital strategy." They make the argument that business change originates with technology -- particularly with new computer-based products and services that transform industries, the way American Airlines' SABRE system transformed travel. Top management must formulate digital strategies (software and digitally delivered services) that not only support business but also actually dictate how business is done.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 160: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

The planning process is rational and amenable to the scientific approach to problem solving. It consists of a logical and orderly series of steps. Strategic planning sets the stage for the rest of the organization's planning. The tasks of the strategic planning process include:

WHAT ARE THE STEPS FOR STRATEGIC PLANNING?

*Define the mission. *Conduct a situation or SWOT analysis by assessing strengths and weaknesses and identifying opportunities and threats. *Set goals and objectives. *Develop related strategies (tactical and operational). *Monitor the plan.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 161: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 162: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Define the mission. A mission is the purpose of the organization. It is why the organization exists. Thus, planning begins with clearly defining the mission of the organization. The mission statement is broad, yet clear and concise, summarizing what the organization does. It directs the organization, as well as all of its major functions and operations, to its best opportunities. Then, it leads to supporting tactical and operational plans, which, in turn leads to supporting objectives. A mission statement should be short - no more than a single sentence. It should be easily understood and every employee should be able to recite it from memory. An explicit mission guides employees to work independently and yet collectively toward the realization of the organization's potential. The mission statement may be accompanied by an overarching statement of philosophy or strategic purpose intended to convey a vision for the future and an awareness of challenges from a top-level perspective

WHAT IS SWOT ANALYSIS?

Conduct a situation or SWOT analysis by assessing strengths and weaknesses and identifying opportunities and threats. A situation or SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is critical to the creation of any strategic plan. The SWOT analysis begins with a scan of the external environment. Organizations must examine their situation in order to seek opportunities and monitor threats. Sources of information include customers (internal and external), suppliers, governments (local, state, federal, international), professional or trade associations (conventions and exhibitions), journals and reports (scientific, professional, and trade).

SWOT is the assumptions and facts on which a plan will be based. Analyzing strengths and weaknesses comprises the internal assessment of the organization. Assess the strengths of the organization. What makes the organization distinctive? (How efficient is our manufacturing? How skilled is our workforce? What is our market share? What financing is available? Do we have a superior reputation?) Assess the weaknesses of the organization. What are the vulnerable areas of the organization that could be exploited? (Are our facilities outdated? Is research and development adequate? Are our technologies obsolete?) What does the competition do well?

Analyzing opportunities and threats comprises the external assessment of the environment. Identify opportunities. In which areas is the competition not meeting customer needs? (What are the possible new markets? What is the strength of the economy? Are our rivals weak? What are the emerging technologies? Is there a possibility of growth of existing market?) Identify threats. In which areas does the competition meet customer needs more effectively? (Are there new competitors? Is there a shortage of resources? Are market tastes changing? What are the new regulations? What substitute products exist?) The best strategy is one that fits the organization's strengths to opportunities in the environment.

The SWOT analysis is used as a baseline for future improvement, as well as gap analysis. Comparing the organization to external benchmarks (the best practices) is used to assess

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 163: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

current capabilities. Benchmarking systematically compares performance measures such as efficiency, effectiveness, or outcomes of an organization against similar measures from other internal or external organizations. This analysis helps uncover best practices that can be adopted for improvement. (See Camp, R. C. Benchmarking: The search for industry best practices that lead to superior performance. Norcross, GA: Industrial Engineering and Management Press, 1993.) Benchmarking with other organizations can help identify a gap. Gap analysis identifies the progress required to move the organization from its current capabilities to its desired future state. In this way, the organization can adapt to the best practices to improve organizational performance.

Set goals and objectives. Strategic goals and objectives are developed to bridge the gap between current capability and the mission. They are aligned with the mission and form the basis for the action plans. Objectives are sometimes referred to as performance goals. Generally, organizations have long-term objectives for such factors as return on investment, earnings per share, or size. Furthermore, they set minimum acceptable standards or common-sense minimums. In addition, certain limitations, either explicit or implicit, such as "must provide jobs for existing employees" may exist. Objectives elaborate on the mission statement and constitute a specific set of policy, programmatic, or management objectives for the programs and operations covered in the strategic plan. They are expressed in a manner that allows a future assessment of whether an objective has been achieved.

Develop related strategies (tactical and operational). Tactical plans are based on the organization's strategic plan. In turn, operational plans are based on the organization's tactical plans. These are specific plans that are needed for each task or supportive activity comprising the whole. Strategic, tactical, and operational planning must be accompanied by controls. Monitoring progress or providing for follow-up is intended to assure that plans are carried out properly and on time. Adjustments may need to be made to accommodate changes in the external and/or internal environment of the organization. A competitive advantage can be gained by adapting to the challenges.

What is Tactical Plans?

Top level managers set very general, long-term goals that require more than one year to achieve. Examples of long-term goals include long-term growth, improved customer service, and increased profitability. Middle managers interpret these goals and develop tactical plans for their departments that can be accomplished within one year or less. In order to develop tactical plans, middle management needs detail reports (financial, operational, market, external environment). Tactical plans have shorter time frames and narrower scopes than strategic plans. Tactical planning provides the specific ideas for implementing the strategic plan. It is the process of making detailed decisions about what to do, who will do it, and how to do it.

Introduction

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 164: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Tactical planning deals primarily with the implementation phase of the planning process

Tactical planning turns strategy into reality Tactical planning usually has a 1-2 year time horizon Tactical planning is usually tightly integrated with the annual budget process

Elements of tactical planning

Project plans and RFCs Project budgets Project reviews Monthly reports Annual reports

Project plans

Project planning requires consideration of many issueso Existing environmento User needso Available expertiseo Alternative solutionso Budget and time constraintso Support issues

Project teams are generally assembled to address these issues

Project teams and RFC's

RFC: Request for Comments The RFC serves two primary functions

o It provides a framework to direct activities of the project teamo It acts as a vehicle for gathering input and providing information to

stakeholders outside the project team Development of an RFC will likely require research and consultation with

vendors (including possibly a formal request for information)

The RFC may result in consensus decisions but it does not guarantee that outcome if the alternative implementation options are many and the preferable solution not so obvious

Serves as a resource for an RFP

Structure of an RFC

Executive summary Statement of overall goal

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 165: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

Summary of existing environment Outline of technical issues, possibly including a technology primer Evaluation of tactical alternatives Evaluation of existing vendor offerings If possible (i.e., a reasonable consensus exists within the project team) a proposed

course of action, including timeframe and budget

Implementation Plan

The RFC may serve as a framework for an implementation plan More detailed implementation planning is often required Use of project management software is desireable Use of regularized reporting via electronic and face-to-face meetings is usually

required For information updates, electronic updates are most efficient; when issues need

to be resolved, a meeting is usually more effective

Annual Reports

An annual report plays an important role in tactical planning Provides a summary of the mission and goals of the organization Reviews accomplishments based on project goals outlined in previous year's

report Proposes changes in project direction or organization Outlines project goals for the coming year Should be keyed into the annual capital and operating budget plans

Monthly reports

Help project managers to organize tasks and monitor progress Should be part of the normal work process and not busy work Each project should be given a project number Monthly summary should include overview of work accomplished in previous

month Monthly summary should note any slippage in implementation target date Monthly summary should note any outstanding issues that require management

attention

 What are Operational Plans?

Supervisors implement operational plans that are short-term and deal with the day-to-day work of their team. Short-term goals are aligned with the long-term goals and can be achieved within one year. Supervisors set standards, form schedules, secure resources, and report progress. They need very detailed reports about operations, personnel, materials, and equipment. The supervisor interprets higher management plans as they

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 166: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

apply to his or her unit. Thus, operational plans support tactical plans. They are the supervisor's tools for executing daily, weekly, and monthly activities. An example is a budget, which is a plan that shows how money will be spent over a certain period of time. Other examples of planning by supervisors include scheduling the work of employees and identifying needs for staff and resources to meet future changes. Resources include employees, information, capital, facilities, machinery, equipment, supplies, and finances.

Operational plans include policies, procedures, methods, and rules. The terms themselves imply different degrees of scope. A policy is a general statement designed to guide employees' actions in recurring situations. It establishes broad limits, provides direction, but permits some initiative and discretion on the part of the supervisor. Thus, policies are guidelines. A procedure is a sequence of steps or operations describing how to carry out an activity and usually involves a group. It is more specific than a policy and establishes a customary way of handling a recurring activity. Thus, less discretion on the part of the supervisor is permissible in its application. An example of a procedure is the sequence of steps in routing of parts. A method sets up the manner and sequence of accomplishing a recurring, individual task. Almost no discretion is allowed. An example of a method is the steps in cashing a check. A rule is an established guide for conduct. Rules include definite things to do and not to do. There are no exceptions to the rules. An example of a rule is "No Smoking."

Monitor the plan. A systematic method of monitoring the environment must be adopted to continuously improve the strategic planning process. To develop an environmental monitoring procedure, short-term standards for key variables that will tend to validate the long-range estimates must be established. Although favorable long-range values have been estimated, short-term guidelines are needed to indicate if the plan is unfolding as hoped. Next, criteria must be set up to decide when the strategy must be changed. Feedback is encouraged and incorporated to determine if goals and objectives are feasible. This review is used for the next planning cycle and review.  

Introduction

Deals with the day-to-day and week-to-week work routine Focus is on routine operational tasks and long-term projects Primary goal is to communicate In many organizations, people are asked to do both Weekly meetings are often used to coordinate efforts and review progress Weekly or monthly summaries are often used to inform others

Structure

The structure of operational planning is closely related to organizational structure

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 167: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

In a traditional hierarchical organization (i.e., UNIX team, network engineering team), team leaders usually assemble with a senior manager on a regular basis to share information

Additional periodic meetings are often required to coordinate efforts with other units (i.e., the systems group should meet with the user services group on a regular basis)

In a process-oriented organization, teams are more ad-hoc in nature, so a mechanism must be put in place to insure communication

Electronic versus face-to-face "meetings"

Both means of communication should be used Sometimes, there is no substitute for face-to-face interaction The worst face-to-face meetings are those where everyone simply makes

announcements and disseminates information (that can be accomplished more effectively electronically)

Periodic summaries should be distributed outside the team

Discuss Annual marketing Plan.

Annual marketing plan is a short term marketing plan, covering one year. A separate annual plan is prepared for each product plan is prepared for each product line, major product, brand or market.Each marketing plan incorporates strategies and tactics relating to the market mix for a particular plan deals with tactical details which are ignores in strategic marketing plan. It gives complete guidance to all marketing executives in each step of marketing operations. Thus it itself acts as a ready reckoner to the marketing personnel.Overall corporate mission, corporate objectives and corporate strategies are determined by the top corporate management, under comprehensive business planning. Each strategic business unit management will be responsible for determining the unit objectives, strategies tuned with the corporate mission and strategies. Under each SBU we will have functional plans for each functional area. Marketing department will have its own marketing objectives, strategies and marketing programmes, of course, turned with general and SBU objectives and strategies.Marketing program will cover strategies relating to relating to all components of marketing mix (4 ‘P’s).

What Are The Major steps in marketing planning?

1. Study of internal environment through marketing information and research facilities.

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 168: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

2. Study of internal environment through sales audit and cost analysis.3. Determination of overall mission and goals.4. Assessing marketing opportunities.5. Determination of company objectives.6. Laying sown company strategies.7. Fixing specific marketing strategies.8. Developing marketing strategies in each area of marketing mix.9. Integrating marketing mix and providing time bound.

10 mplementing marketing plans and marketing control.

Checklist of Annual Marketing Plan:-1. Situation analysis on market demand, market environment and market

performance, sales forecast.2. Determination of marketing goals on assessment of marketing opportunities.3. Review of marketing goals on assessment of marketing opportunities.4. Developing integrated marketing mix for each marketing segment.5. Plans of action with schedules, assignment of responsibility and grant of

authority. Thus, marketing.6. Marketing tactics, e.g., discounts allowances, prices, gifts and any other support

during the year to manoeuvre the market.7. Continuous monitoring of performance, comparison of actual results with the set

standards, and removal of deficiencies. The marketing objectives are the standards for comparison. Aggressive marketing leadership plus effective marketing control assure marketing success even against intense competition.

 

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.

Page 169: Marketing management 1st sem mba vtu notes

MARKETING MANAGEMENT

RAGHAVENDRA.K.AAsst. ProfessorSJBIT, Bangalore.