INTERNATIONAL SCHOOL OF BUSINESS AND TECHNOLOGY

COURSE WORK

MARKETING MANAGEMENT

SUBJECT CODE: MB0030

NAME : TWAHIRWA TADEO

ROLL NO: 540811570

COURSE : MBA

SEMESTER: 2

SIKKIM MANIPAL UNIVERSITY (INDIA)

UGANDA LEARNING CENTER1. Analyze the existing business portfolio of any one company using BCG matrix,

GE matrix, and Ansoff model.

ANS:

BCG Growth Share Matrix

Developed by the Boston Consulting Group (BCG), the BCG Growth Share Matrix is a

popular approach to product portfolio planning. The matrix is defined by two factors:

relative market share (the company's market share relative to the competition) and market

growth. To use the matrix, place each individual product in your company's portfolio into

one of the four quadrants and then do the same for your competitors' products. The result

has implications for brand positioning and market share.

BCG Growth Share Matrix.

The matrix has four distinct quadrants:

Stars. A star is a product in a high growth market that controls a sizeable share of

that market. Stars tend to generate strong revenues. Over time, as growth slows, stars

become cash cows if they hold their market share and dogs if they don't.

Cash cows. A cash cow commands a large share of a slow growth market. The

more the company invests in cash cows, the greater the return. Cash cows tend to pay

the dividends, the interest on debt and cover the corporate overhead.

Dogs. A dog has a low share of a slow growth market. Dogs often report a profit

even though they are net cash users. They are essentially cash traps.

Question marks (sometimes called wildcats). A question mark is a product with

a low share of a high growth market. Their cash needs are great because of their

growth, but generate little in return because their market share is low. Question marks

are difficult to turn into stars because the cost of acquiring market share compounds

the cash needs. They may be big winners if backed to the limit, but most often, they

fail to develop a leading market position before growth slows and become dogs.

The purpose of this tool is to help you balance your product portfolio. Ideally, you would

eliminate any dogs, while keeping the others in a kind of dynamic equilibrium. The cash

generated by cash cows can then be used to turn question marks into stars, which, in turn,

may become cash cows. As noted above, many of the question marks will become dogs,

which mean you'll need to compensate for these failures by improving margins on the

stars and cash cows.

GE/McKinsey Matrix

Industry attractiveness and SBU strength are calculated by first identifying the criteria for

each, determining the value of each parameter in the criteria, and multiplying that value

by a weighting factor. The result is a quantitative measure of industry attractiveness and

the SBU’s relative performance in that industry. The industry attractiveness index is

made up of such factors as market size, market growth, industry profit margin, amount of

competition, the degree of seasonal and cyclical fluctuations in demand, and industry cost

structure. The industry attractiveness index consists of factors like relative market share,

price, competitiveness, product quality, customer and market knowledge, sales

effectiveness, and geographic advantages.

Each SBU can be portrayed as a circle plotted on the matrix, with the information

conveyed as follows:

Market size is represented by the size of the circle.

Market share is shown by using the circle as a pie chart.

The expected future position of the circles is indicated by an arrow.

The sample diagram shows the relative position of an SBU with a market share of 65%.

The arrow in the upward right position indicates that the SBU is expected to lose strength

relative to competitors, and that the business unit is in an industry that is projected to

become increasingly less attractive. The tip of the arrow indicates the future position of

the center point of the circle.

Both axes are divided into three segments, yielding nine cells. The nine cells are grouped

into three zones:

The Green Zone consists of the three cells in the upper left corner. If the SBU

falls in this zone, it’s in a favorable position with relatively attractive growth

opportunities. This position indicates a "green light" to invest and grow this SBU.

The Yellow Zone consists of the three diagonal cells from the lower left to the

upper right. A position in the yellow zone is viewed as having medium

attractiveness. Management must therefore exercise caution when making

additional investments in this SBU. The suggested strategy is to protect or

allocate resources on a selective basis rather than growing or reducing share.

The Red Zone consists of the three cells in the lower right corner. A harvest

strategy should be used in the two cells just below the three-cell diagonal. These

SBUs shouldn’t receive substantial new resources. The SBUs in the lower right

cell shouldn’t receive any resources and should probably be divested or

eliminated from a firm’s portfolio.

There are strategy variations within these three groups. For example, within the Red

Zone, a firm would be inclined to quickly divest itself of a weak business in an

unattractive industry, whereas it might perform a phased harvest of an average SBU in

the same industry.

While the GE/McKinsey Matrix represents an improvement over the relatively simplistic

BCG Growth-Share Matrix, it still encompasses a limited view of the competitive

landscape. The matrix doesn’t take into account interactions among SBUs or the core

competencies that lead to value creation. For these and other reasons, some believe the

matrix is better suited for providing an overview of the current market rather than serving

as a resource allocation tool.

Ansoff Growth Strategy Matrix

The matrix presents four main strategic choices, ranging from an incremental strategy in

which current products are sold to existing customers to a revolutionary strategy in which

new products are sold to new customers.

Market penetration. In this quadrant, the company markets existing products to

existing customers. The products remain unchanged and no new customer segments

are pursued; instead, the company repositions the brand, launches new promotions or

otherwise tries to gain market share and accordingly, increase revenue.

Market development. Here, the company markets existing products to one or

more new customer segments. These customers could represent untapped verticals,

virgin geographies or other new opportunities.

Product development. This quadrant involves marketing new products to existing

customers. The company grows by innovating, gradually replacing old products with

new ones.

Diversification. This quadrant entails the greatest risk; here, the company markets

new products to new customers. There are two types of diversification: related and

unrelated. In related diversification, the company enters a related market or industry. In

unrelated diversification, the company enters a market or industry in which it has no

relevant experience.

These quadrants represent varying degrees of risk. Assuming that the more a business

knows about its market, the more likely it will be to succeed; the market penetration

strategy entails the least risk, while the diversification strategy entails the most.

QN.2. Discuss the Macro environment of a pharmaceutical company

ANS:

There are many factors in the macro-environment that will effect the decisions of the

managers of any pharmaceutical company. Tax changes, new laws, trade barriers,

demographic change and government policy changes are all examples of macro change.

To help analyze these factors, managers can categorize them using the criteria below;

Political environment. This refers to government policies such as the degree of

intervention in the economy. What services does a government give priority? To what

extent does it believe in subsidizing firms in general and the pharmaceutical industry in

particular? What are its priorities in terms of business support? Political decisions can

impact on many vital areas for business such as the education of the workforce, the health

of the nation and the quality of the infrastructure of the economy such as the hospitals

and access routes.

Economic environment. This includes interest rates, taxation changes, economic growth,

inflation and exchange rates. Economic changes have a major impact on a firm's

behavior. For example: higher interest rates may deter investment because it costs more

to borrow, a strong currency may make exporting more difficult because it may raise the

price in terms of foreign currency, inflation may provoke higher wage demands from

employees and raise costs, higher national income growth may boost demand for the

health industry's products.

Social and cultural environment. Changes in social trends can impact on the demand for a

firm's products and the availability and willingness of individuals to work. In the

developed world, for example, the population has been ageing. This has increased the

costs for firms who are committed to pension payments for their employees because their

staff are living longer. It also means some firms such have started to recruit older

employees to tap into this growing labor pool. The ageing population also has impact on

demand: for example, demand for medicines increases.

Technological environment: new technologies create new products and new processes.

This will influence the kind of technology to be employed by companies in this industry.

This may make the industry over rely on automated systems for production. Technology

can reduce costs, improve quality and lead to innovation. These developments can benefit

consumers as well as the organizations providing the products.

Natural environment: environmental factors include the weather and climate change.

Changes in temperature can impact on many industries including health and insurance.

With major climate changes occurring due to global warming and with greater

environmental awareness this external factor is becoming a significant issue for firms to

consider. The growing desire to protect the environment may have an impact on the

pharmaceutical industry, for example, more taxes may be imposed and this general move

towards more environmentally friendly production processes will affect demand patterns

and business opportunities.

Legal factors: these are related to the legal environment in which firms operate. Legal

changes can affect a firm's costs (e.g. if new systems and procedures have to be

developed) and demand (e.g. if the law affects the likelihood of customers buying the

good or using the service). Different categories of law include; consumer laws; these are

designed to protect customers against unfair practices such as misleading descriptions of

the product, competition laws; these are aimed at protecting small firms against bullying

by larger firms and ensuring customers are not exploited by firms with monopoly power,

employment laws; these cover areas such as redundancy, dismissal, working hours and

minimum wages. They aim to protect employees against the abuse of power by

managers, health and safety legislation; these laws are aimed at ensuring the workplace is

as safe as is reasonably practical. They cover issues such as training, reporting accidents

and the appropriate provision of safety equipment.

3. Explain the components of MIS.

ANS:

A marketing information system is a set of procedures established to collect, analyze and

distribute accurate, prompt and appropriate information to different levels of marketing

decision makers. It is a planned system developed to facilitate smooth and continuous

flow of information, provides pertinent and right information at the right time to the right

person. A typical marketing information system consists of the following components;

An internal records system is one of the major components. This consist information on

the; order to payment cycle and the sales information system.

The order to payment cycle, records the timing and size of orders placed by consumers,

the payment cycle followed by consumers and the time taken to fulfill the orders.

Customers place orders through sales agents and companies dispatch the goods and

receive payments directly or through the bank.

A sales information system on the other hand records everything in the sales department,

starting from sales call reports to prospects history to sales territory and quota

information for better sales planning and forecasting purpose.

Marketing intelligence system is the other component of marketing information system.

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

information about developments in the marketing environment. This system supplies

happenings data unlike internal records system which supplies results data. Marketing

managers collect data from published sources like books, magazines and journals, by

talking to customers, intermediaries and sales personnel. Some companies appoint

specialists to gather consumer and competitor information, who does mystery shopping

to monitor the performance of their own or competitor’s dealers.

Another component of MIS is marketing research system.

This provides the manager with information pertaining to the market whenever need

arises. This involves making marketing research survey by collecting primary data about

the market situation. This research may be conducted by the marketing department it self

or may be out sourced to any marketing research agency.

The other component is the analytical marketing systems. This is a coordinated

collection of data, systems, tools and techniques with supporting soft ware and hard ware

by which an organization gathers and interprets relevant information from business and

environment and turns it into a basis for marketing action. All the data which is

generated through the other three systems described above are stored in a data base. The

storage and retrieval capability of decision support system allows the collection and use

of a wide variety of data throughout the company. Senior managers can access the data

base and continually and monitor sales, markets, performance of the sales people and

other marketing systems as well.

4. Explain the Henry Assael model of buying decision behavior.

ANS:

Henry Assael has come up with an explanation to analyze why consumers buy the goods

they buy. He explained the relationship between the level of involvement by the

consumers in the purchase of goods and services and the level at which different goods or

services differ from one another. He therefore came up with four different buying

behaviors out of this comparison as explained below;

High involvement Low involvement

Significant difference

between brands

Complex buying behavior Variety seeking buying

behavior

Few differences between

brands

Dissonance reducing buying

behavior

Habitual buying behavior

Complex buying behavior. Here customers are highly involved in the purchase of the

product or service. The process is complex as the difference between brands is very high.

Here the customer wants to know every detail of the product he is to purchase and also

know what the difference means in terms of satisfaction. For example, when buying a

specific brand of a DVD, he will compare all the functions and would want to know what

the difference means. Therefore, the marketer has the obligation to clarify all the details

to a customer with such buying behavior.

Dissonance reducing buying behavior is the other. This behavior is exhibited when there

is high involvement by the customer in purchasing goods where a few differences exist.

For example, a customer who wants to buy CTV will not find many differences between

the brands but the price of the product and its technicality makes a customer involve

more. The customer here will show post purchase dissonance which may be difficult for

the marketer control.

Variety – seeking buying behavior also arises. In this behavior, the customer will not

involve more while purchasing, but goods significantly differ. For example a customer

buying juice products, there are many varieties in the market available, like; sun sip,

quencher, qungwa. The customer who purchased quencher at one time may try sun sip

another time just to explore. The marketer is therefore advised to encourage the customer

buy repeatedly in case of a market leader, make the product visible, and where the

product is new, encourage customers through promotions.

Assael also identifies the habitual buying behavior. Under this behavior, the customer has

a low involvement between the brands and few differences between the brands exist

which leads to a habitual buying behavior. For example mineral water companies, a few

differences exist between the products and there fore the customer does not search

information to purchase a particular brand. Here marketers are expected to use price and

sales promotions to stimulate product trial, use more visual aspects of advertisement, and

use classical conditioning theory to create advertisements.

The above four aspects cover the different buying behaviors as espoused by Henry

Assael, as well as what the marketer is expected to do if any of these behaviors is

observed in a prospective customer.

5. Discuss the segmentation strategy of a cement company.

ANS:

Market segmentation is widely defined as a process of dividing a potential market into

distinct sub-markets of consumers with common need and characteristics. It is a complex

process consisting of two main phases: identification of broad, large markets,

segmentation of these markets in order to select the most appropriate target markets and

develop Marketing mixes accordingly. In developing a market segmentation strategy of a

cement industry, the following 7 steps will be considered;

Identify and name the broad market-which for this case will be the construction industry.

If your company is already on a market, this can be a starting point; more options are

available for a new business but resources would normally be a little limited. The biggest

challenge is to find the right balance for your business: use your experience, knowledge

and common sense to estimate if the market you have just identified earlier is not too

narrow or too broad compared to the production capacity of the company.

Identify and make an inventory of potential customers' needs. This step pushes the

creativity challenge even farther, since it can be compared to a brainstorming session.

What you have to figure out is what needs the consumers from the broad market

identified earlier might have. The more possible needs you can come up with, the better.

Got your self stuck in this stage of segmentation? Try to put yourself into the shoes of

your potential customers: why would they buy your product, what could possibly trigger

a buying decision? Answering these questions can help you list most needs of potential

customers on a given product market.

Formulate narrower markets. McCarthy and Perreault suggest forming sub-markets

around what you would call your "typical customer", then aggregate similar people into

this segment, on the condition to be able to satisfy their needs using the same Marketing

mix. Under this step, you may formulate outlets and sub dealers who eventually may help

in the distribution chain. Start building a column with dimensions of the major need you

try to cover: this will make it easier for you to decide if a given person should be included

in the first segment or you should form a new segment. Also create a list of people-

related features, demographics included, for each narrow market you form – a further

step will ask you to name them. There is no exact formula on how to form narrow

markets: use your best judgment and experience. Do not avoid asking opinions even from

non-Marketing professionals, as different people can have different opinions and you can

usually count on at least those items most people agree on.

Identify the determining dimensions. Carefully review the list resulting form the previous

step. You should have by now a list of need dimensions for each market segment: try to

identify those that carry a determining power. Reviewing the needs and attitudes of those

you included within each market segment can help you figure out the determining

dimensions.

Name possible segment markets. You have identified the determining dimensions of your

market segments, now review them one by one and give them an appropriate name. A

good way of naming these markets is to rely on the most important determining

dimension.

Evaluate the behavior of market segments. Once you are done naming each market

segment, allow time to consider what other aspects you know about them. It is important

for a marketer to understand market behavior and what triggers it. You might notice that,

while most segments have similar needs, they're still different needs: understanding the

difference and acting upon it is the key to achieve success using competitive offerings.

Estimate the size of each market segment. Each segment identified, named and studied

during the previous stages should finally be given an estimate size, even if, for lack of

data, it is only a rough estimate. Estimates of market segments will come in handy later,

by offering a support for sales forecasts and help plan the Marketing mix: the more data

we can gather at this moment, the easier further planning and strategy will be.

These are the steps to segment a market, briefly presented. If performed correctly and

thoroughly, you should now be able to have a glimpse of how to build Marketing mixes

for each market segment.

6. a) Do you think ticket based pricing will provide continuous revenue to Infosys in

the long term? Comment

ANS:

I think ticket pricing will not provide continuous revenue to Infosys in the long run.

This is mainly because software applications become stable after some time. Therefore,

this would mean that the company will lose most revenues as the applications continue to

stabilize.

For business continuity, I think it is better for Infosys to adopt the ticket pricing as a

penetrating strategy to attract customers. But as it stabilizes, it would be much better to

adopt fixed pricing in order to ensure continuous earnings in the long run.

6.b). Compare three pricing strategies discussed here and choose any one as your

choice.

ANS:

Ticket – based pricing is more flexible and cost friendly to the customer. This is based on

the fact that the customer only pays for what he wants and when he wants it. This is a

very attractive pricing strategy for new entrants especially in a competitive industry.

Fixed pricing is also particularly important for companies especially if they have a high

market penetration. This helps a company to ensure steady inflow of funds as the

company will receive maintenance fee even where there has been no work done.

However, a few companies will accept dealing with a company that deals with this

pricing strategy especially as the struggle to cut costs.

Time and material – based pricing is based on the number of man hours spent on the

project. This may also be a cost effective strategy as the price is based on the cost

incurred in terms of resources and man power.

After closely looking at the three pricing strategies, I would opt for the time and material

– based pricing. This is because it focuses more on the cost incurred other than the

demand which will ultimately lead to better calculation of profits. It is also fairer to the

buyer and the seller. Where all the companies in the industry use similar pricing strategy,

it may lead to price stability.