MB0030 - P.Srinath - Completely Solved

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MB0030: MarketingManagement[Assignment – SET1 & SET2]

Name : P. SrinathSMDUE ID : 520923307Center : Mehbub College Campus, SecunderabadSubject Code : MB0030Subject : Marketing Management



ASSIGNMENT – MBA – SEM II – Subject Code:MB0030 – SET 1

1. Explain the meaning of marketing and its importance in business? Traditionally, marketing analysis was structured into three areas:

Customer analysis, Company analysis, and Competitor analysis (so-called"3Cs" analysis). More recently, it has become fashionable in some marketingcircles to divide these further into certain five "Cs": Customer analysis,Company analysis, Collaborator analysis, Competitor analysis, and analysis of the industry Context.

Department analysis is to develop a schematic diagram for marketsegmentation, breaking down the market into various constituent groups of customers, which are called customer segments or market segmentations.Marketing managers work to develop detailed profiles of each segment,focusing on any number of variables that may differ among the segments:demographic, psychographic, geographic, behavioural, needs-benefit, andother factors may all be examined. Marketers also attempt to track thesesegments' perceptions of the various products in the market using tools suchas perceptual mapping.

In company analysis, marketers focus on understanding the company'scost structure and cost position relative to competitors, as well as working toidentify a firm's core competencies and other competitively distinct companyresources. Marketing managers may also work with the accountingdepartment to analyze the profits the firm is generating from various productlines and customer accounts. The company may also conduct periodic brandaudits to assess the strength of its brands and sources of brand equity.

The firm's collaborators may also be profiled, which may includevarious suppliers, distributors and other channel partners, joint venturepartners, and others. An analysis of complementary products may also beperformed if such products exist.

Marketing management employs various tools from economics andcompetitive strategy to analyze the industry context in which the firmoperates. These include Porter's five forces, analysis of strategic groups of competitors, value chain analysis and others. Depending on the industry, theregulatory context may also be important to examine in detail.

In Competitor analysis, marketers build detailed profiles of eachcompetitor in the market, focusing especially on their relative competitivestrengths and weaknesses using SWOT analysis. Marketing managers willexamine each competitor's cost structure, sources of profits, resources andcompetencies, competitive positioning and product differentiation, degree of vertical integration, historical responses to industry developments, and otherfactors.

Marketing management often finds it necessary to invest in research tocollect the data required to perform accurate marketing analysis. As such,they often conduct market research (alternately marketing research) toobtain this information. Marketers employ a variety of techniques to conductmarket research, but some of the more common include:• Qualitative marketing research, such as focus groups• Quantitative marketing research, such as statistical surveys

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• Experimental techniques such as test markets• Observational techniques such as ethnographic (on-site) observation

Marketing managers may also design and oversee variousenvironmental scanning and competitive intelligence processes to helpidentify trends and inform the company's marketing analysis.

Though marketing is tied to Sales it continues to be an expenditurethat is hard to link to growth in sales. Given the economic down turn manyworld economies or companies are facing... how would a function likemarketing justify itself as a necessary expenditure so it would not be cut...budget or as a department.

In a downturn, marketing becomes even more important to thecompany's bottom line, making a profit. A marketing plan is key toestablishing the dimensions of your market, where you fit according to yourproduct and identifying where a company should focus its marketing budgetto achieve the best overall results.

In a downturn, marketing helps to identify new markets, target newcustomers and determine the value of the product. If the product that iscurrently in production does not have a substantial customer base of support,if sales are slipping and competition is securing your former market share.Marketing helps to identify the need for a product revitalization orreinvention.

2. Explain the relevance of BCG matrix and GE matrix with examples This model is used to identify company’s SBU’s position in the market.

This model identifies the SBU’s strengths weaknesses, opportunities andthreats on the basis of market growth rate and relative market share.

This model is also known as growth share matrix. The origin of theBoston Matrix lies with the Boston Consulting Group in the early 1970s. It wasdevised as a clear and simple method for helping corporations decide whichparts of their business they should allocate their available cash to. Today, thisis as important as ever because of the limited availability of credit.

However, the Boston Matrix is also a good tool for thinking aboutwhere to apply other finite resources: people, time and equipment. Marketshare is the percentage of the total market that is being serviced by yourcompany, measured either in revenue terms or unit volume terms. Thehigher your market share, the higher proportion of the market you control.

The Boston Matrix assumes that if you enjoy a high market share you willnormally be making money (this assumption is based on the idea that youwill have been in the market long enough to have learned how to beprofitable, and will be enjoying scale economies that give you an advantage).

The question it asks is, "Should you be investing your resources intothat product line just because it is making you money?" The answer is, "notnecessarily." This is where market growth comes into play. Market growth isused as a measure of a market's attractiveness. Markets experiencing highgrowth are ones where the total market is expanding, which should providethe opportunity for businesses to make more money, even if their marketshare remains stable.

By contrast, competition in low growth markets is often bitter, andwhile you might have high market share now, what will the situation look like

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in a few months or a few years? This makes low growth markets lessattractive

Axis components:a. Market Growth rate: the rate at which market is growing.b. Relative Market Share: market share of the SBU dived by the market

share of the largest competitor.

Model Components: These groups are explained below:

Dogs: Low Market Share / Low Market Growth. In these areas, SBU’smarket presence is weak, so it's going to take a lot of hard work to getnoticed. Also, you won't enjoy the scale economies of the larger players, soit's going to be difficult to make a profit.

Cash Cows: High Market Share / Low Market Growth Here, SBU’s arewell-established, so it's easy to get attention and exploit new opportunities.However it's only worth expending a certain amount of effort, because the

market isn't growing and your opportunities are limited. here we can say cashcow can be milked.Stars: High Market Share / High Market Growth Here SBU’s are well-

established, and growth is exciting! These are fantastic opportunities, andyou should work hard to realize them.

Question Marks (Problem Child): Low Market Share / High MarketGrowth These are the opportunities no one knows what to do with. Theyaren't generating much revenue right now because you don't have a largemarket share. But, they are in high growth markets so the potential to makemoney is there. Here there are two choices, either to invest heavily to bring itto star position or divest or liquidate from that position. Question Marks mightbecome Stars and eventual Cash Cows, but they could just as easily absorb

effort with little return. These opportunities need serious thought as towhether increased investment is warranted.

Key Points The Boston Matrix is an effective tool for quickly assessing the options

open to you, both on a corporate and personal basis. With its easilyunderstood classification into "Dogs", "Cash Cows", "Question Marks" and"Stars", it helps you quickly and simply screen the opportunities open to you,and helps you think about how you can make the most of them.

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Limitations:As any other marketing theories in the field, the BCG matrix model is

not perfect either. There are according problems of this theory. Somelimitations concerning the particular use of BCG include:

1. Only two dimensions – market share and product or service growthrate, are employed. These are the first limitations.2. How to define market and how to get data about market share arealso problems.3. High market shares don’t always necessarily lead to profit at alltimes. It is not the only success factor.4. Low share or niche businesses can be profitable too, which means inthe real world some Dogs can be more profitable than cash Cows.5. The model cannot reflect the growth rates of the general market andmarket growth is not the only indicator for market attractiveness.6. The model also neglects the effects of synergy between differentbusiness units.

The GE screen matrix is essentially a derivation of the BostonConsulting Group’s Boston growth matrix. It was developed by McKinsey andCo. for General Electric as it had been recognized that the Boston ConsultingGroup matrix was not flexible enough to take broader issues into account TheGE matrix cross-references market attractiveness and business position usingthree criteria for each – high, medium and low. The market attractivenessconsiders variables relating to the market itself, including the rate of marketgrowth, market size, potential barriers to entering the market, the numberand size of competitors, the actual profit margins currently enjoyed, and thetechnological implications of involvement in the market. The businessposition criteria look at the business’s strengths and weaknesses in a varietyof fields. These include its position in relation to its competitors, and thebusiness’s ability to handle product research, development and ultimateproduction. It also considers how well placed the management is to deploythese resources. The matrix differs in its complexity compared with theBoston Consulting Group matrix. Superimposed on the basic diagram are anumber of circles. These circles are of variable size (see Figure 22). The sizeof each represents the size of each market. Within each circle is a clearlydefined segment which represents the business’s market share within thatmarket. The larger the circle, the larger the market, and the larger thesegment, the larger the market share.

3. What to do mean by MIS? Explain its benefits, types andcomponents?

A management information system (MIS) is a system or process thatprovides information needed to manage organizations effectively.Management information systems are regarded to be a subset of the overallinternal controls procedures in a business, which cover the application of people, documents, technologies, and procedures by managementaccountants to solve business problems such as costing a product, service ora business-wide strategy. Management information systems are distinct fromregular information systems in that they are used to analyze other

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information systems applied in operational activities in the organization.Academically, the term is commonly used to refer to the group of informationmanagement methods tied to the automation or support of human decisionmaking, e.g. Decision Support Systems, Expert systems, and Executiveinformation systems.

MIS as System: MIS is a system, which makes available the rightinformation to the right person at the right place, at the right time, in theright form & at the right cost.

At the start, in businesses and other organizations, internal reportingwas made manually and only periodically, as a by-product of the accountingsystem and with some additional statistic(s), and gave limited and delayedinformation on management performance. Previously, data had to beseparated individually by the people as per the requirement and necessity of the organization. Later, data was distinguished from information, and insteadof the collection of mass of data, important, and to the point data that isneeded by the organization was stored.

Early on, business computers were mostly used for relatively simpleoperations such as tracking sales or payroll data, often without much detail.Over time these applications became more complex and began to storeincreasing amounts of information while also interlinking with previouslyseparate information systems. As more and more data was stored and linkedman began to analyze this information into further detail, creating entiremanagement reports from the raw, stored data. The term "MIS" arose todescribe these kinds of applications, which were developed to providemanagers with information about sales, inventories, and other data thatwould help in managing the enterprise. Today, the term is used broadly in anumber of contexts and includes (but is not limited to): decision supportsystems, resource and people management applications, ERP, SCM, CRM,project management and database retrieval application.

An 'MIS' is a planned system of the collecting, processing, storing anddisseminating data in the form of information needed to carry out thefunctions of management. In a way it is a documented report of the activitiesthat were planned and executed. According to Philip Kotler "A marketinginformation system consists of people, equipment, and procedures to gather,sort, analyze, evaluate, and distribute needed, timely, and accurateinformation to marketing decision makers."

The terms MIS and information system are often confused. Informationsystems include systems that are not intended for decision making. The areaof study called MIS is sometimes referred to, in a restrictive sense, asinformation technology management. That area of study should not beconfused with computer science. IT service management is a practitioner-focused discipline. MIS has also some differences with Enterprise ResourcePlanning (ERP) as ERP incorporates elements that are not necessarily focusedon decision support.Any successful MIS must support a business’s Five Year Plan or its equivalent.It must provide for reports based up performance analysis in areas critical tothat plan, with feedback loops that allow for titivation of every aspect of thebusiness, including recruitment and training regimens. In effect, MIS must notonly indicate how things are going, but why they are not going as well asplanned where that is the case. These reports would include performance

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relative to cost centers and projects that drive profit or loss, and do so insuch a way that indentifies individual accountability, and in virtual real-time.

Benefits1. Improves personal efficiency2. Expedites problem solving(speed up the progress of problems solving in an

organization)3. Facilitates interpersonal communication4. Promotes learning or training5. Increases organizational control6. Generates new evidence in support of a decision7. Creates a competitive advantage over competition8. Encourages exploration and discovery on the part of the decision maker9. Reveals new approaches to thinking about the problem space10.Helps automate the Managerial processes.

Decision Support Systems (DSS) are a specific class of computerizedinformation systems that supports business and organizational decision-making activities

Definition: Management Information Systems (MIS) is the term given to thediscipline focused on the integration of computer systems with the aims andobjectives on an organisation. It does the following functions:

• Sub serves managerial function• Collects stores , evaluates information systematically and routinely• Supports planning and control decisions• Includes files , hardware , software , software and operations research

models•

It Facilitates planning• In Minimizes information overload• MIS Encourages Decentralization• It brings Co ordination• It makes control easier• MIS assembles, process , stores , Retrieves , evaluates and

Disseminates the information

TypesManagement information systems are those systems that allow

managers to make decisions for the successful operation of businesses.Management information systems consist of computer resources, people, andprocedures used in the modern business enterprise. The term MIS stands formanagement information systems. MIS also refers to the organization thatdevelops and maintains most or all of the computer systems in the enterpriseso that managers can make decisions. The goal of the MIS organization is todeliver information systems to the various levels of corporate managers. MISprofessionals create and support the computer system throughout thecompany. Trained and educated to work with corporate computer systems,

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these professionals are responsible in some way for nearly all of thecomputers, from the largest mainframe to the desktop and portable PCs.

Management information systems can be used as a support tomanagers to provide a competitive advantage. The system must support thegoals of the organization. Most organizations are structured along functionallines, and the typical systems are identified as follows:

Accounting management information systems: All accountingreports are shared by all levels of accounting managers.

Financial management information systems: The financialmanagement information system provides financial information to allfinancial managers within an organization including the chief financial officer.

The chief financial officer analyzes historical and current financial activity,projects future financial needs, and monitors and controls the use of fundsover time using the information developed by the MIS department.

Manufacturing management information systems: More than anyfunctional area, operations have been impacted by great advances intechnology. As a result, manufacturing operations have changed. Forinstance, inventories are provided just in time so that great amounts of money are not spent for warehousing huge inventories. In some instances,raw materials are even processed on railroad cars waiting to be sent directlyto the factory. Thus there is no need for warehousing.

Marketing management information systems: A marketingmanagement information system supports managerial activity in the area of product development, distribution, pricing decisions, promotionaleffectiveness, and sales forecasting. More than any other functional area,marketing systems rely on external sources of data. These sources includecompetition and customers, for example.

Human resources management information systems: Human resourcesmanagement information systems are concerned with activities related toworkers, managers, and other individuals employed by the organization.Because the personnel function relates to all other areas in business, thehuman resources management information system plays a valuable role inensuring organizational success. Activities performed by the humanresources management information systems include, work-force analysis andplanning, hiring, training, and job assignments.Components of MIS:-1) Marketing Research System (MRS)2) Marketing Intelligence System (MIS)3) Internal Record System (IRS)4) Decision Support System (DSS)

4. Suppose you need to conduct a small marketing research in yourneighborhood regarding the purchase and use of toothpastes, whatwill be your approach in the process?

The approach which I will use for this type of marketing research will be Faceto Face or Direct Interview and also I will use Questionnaire Method;-

• I will visit all the families in the neighborhood and find out the brandname of the toothpaste.

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• I will write that roughly how many tubes they need every week ormonth.

• Whether the toothpaste they are using has proved beneficial andwhether they would be willing to shift to another brand if provedmore beneficial.

• How much they spend on toothpaste every week/month. I think Iwould do just this much which would be enough.

I will offer to supply the toothpastes to them atcompetitive rates which most of the persons would readily accept.

5. Explain the consumer buying decision process with respect to newproduct. Give example?

Research suggests that customers go through a five-stage decision-making process in any purchase. This is summarised in the diagram below:

This model is important for anyone making marketing decisions. Itforces the marketer to consider the whole buying process rather than just thepurchase decision (when it may be too late for a business to influence thechoice!)

The model implies that customers pass through all stages in everypurchase. However, in more routine purchases, customers often skip orreverse some of the stages.

For example, a student buying a favourite hamburger would recognisethe need (hunger) and go right to the purchase decision, skipping informationsearch and evaluation.

However, the model is very useful when it comes to understanding anypurchase that requires some thought and deliberation.

The buying process starts with need recognition. At this stage, thebuyer recognises a problem or need (e.g. I am hungry, we need a new sofa, Ihave a headache) or responds to a marketing stimulus (e.g. you passStarbucks and are attracted by the aroma of coffee and chocolate muffins).

An “aroused” customer then needs to decide how much information (if any) is required. If the need is strong and there is a product or service that

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meets the need close to hand, then a purchase decision is likely to be madethere and then. If not, then the process of information search begins.A customer can obtain information from several sources:

• Personal sources: family, friends, neighbours etc• Commercial sources: advertising; salespeople; retailers; dealers;

packaging; point-of-sale displays• Public sources: newspapers, radio, television, consumer organisations;

specialist magazines• Experiential sources: handling, examining, using the product

The usefulness and influence of these sources of information will vary byproduct and by customer. Research suggests that customers value andrespect personal sources more than commercial sources (the influence of “word of mouth”). The challenge for the marketing team is to identify whichinformation sources are most influential in their target markets.In the evaluation stage, the customer must choose between the alternativebrands, products and services.

How does the customer use the information obtained?An important determinant of the extent of evaluation is whether thecustomer feels “involved” in the product. By involvement, we mean thedegree of perceived relevance and personal importance that accompaniesthe choice.

Where a purchase is “highly involving”, the customer is likely to carryout extensive evaluation.

High-involvement purchases include those involving high expenditureor personal risk – for example buying a house, a car or making investments.

Low involvement purchases (e.g. buying a soft drink, choosing somebreakfast cereals in the supermarket) have very simple evaluation processes.Why should a marketer need to understand the customer evaluation

process? The answer lies in the kind of information that the marketing team needs toprovide customers in different buying situations.In high-involvement decisions, the marketer needs to provide a good deal of information about the positive consequences of buying. The sales force mayneed to stress the important attributes of the product, the advantagescompared with the competition; and maybe even encourage “trial” or“sampling” of the product in the hope of securing the sale.Post-purchase evaluation - Cognitive Dissonance

The final stage is the post-purchase evaluation of the decision. It iscommon for customers to experience concerns after making a purchasedecision. This arises from a concept that is known as “cognitive dissonance”.

The customer, having bought a product, may feel that an alternative wouldhave been preferable. In these circumstances that customer will notrepurchase immediately, but is likely to switch brands next time.

To manage the post-purchase stage, it is the job of the marketing teamto persuade the potential customer that the product will satisfy his or herneeds. Then after having made a purchase, the customer should beencouraged that he or she has made the right decision.

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6. Explain the different consumer behaviour models?ENVIRONMENTALFACTORS

BUYER'S BLACK BOX

BUYER'SRESPONSE

MarketingStimuli

Environmental Stimuli

BuyerCharacterist

ics

DecisionProcess

ProductPricePlacePromotion

Economic TechnologicalPoliticalCulturalDemographicNatural

AttitudesMotivationPerceptionsPersonalityLifestyleKnowledge

ProblemrecognitionInformation searchAlternativeevaluationPurchasedecisionPost-purchasebehaviour

Product choiceBrand choiceDealer choicePurchase timingPurchase amount

The black box model shows the interaction of stimuli, consumercharacteristics, and decision process and consumer responses. It can bedistinguished between interpersonal stimuli (between people) orintrapersonal stimuli (within people). The black box model is related to theblack box theory of behaviourism, where the focus is not set on the processesinside a consumer, but the relation between the stimuli and the response of the consumer. The marketing stimuli are planned and processed by thecompanies, whereas the environmental stimulus is given by social factors,based on the economical, political and cultural circumstances of a society.

The buyer’s black box contains the buyer characteristics and the decisionprocess, which determines the buyer’s response.

The black box model considers the buyers response as a result of aconscious, rational decision process, in which it is assumed that the buyerhas recognized the problem. However, in reality many decisions are notmade in awareness of a determined problem by the consumer.Information search

Once the consumer has recognized a problem, they search forinformation on products and services that can solve that problem. Belch andBelch (2007) explain that consumers undertake both an internal (memory)

and an external search.Sources of information include:• Personal sources• Commercial sources• Public sources• Personal experience

The relevant internal psychological process that is associated withinformation search is perception. Perception is defined as 'the process by

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which an individual receives, selects, organises, and interprets information tocreate a meaningful picture of the world'

The selective perception processStage Description• Selective exposure consumers select which promotional messagesthey will expose themselves to.• Selective attention consumers select which promotional messagesthey will pay attention to• Selective comprehension consumer interpret messages in line withtheir beliefs, attitudes, motives and experiences• Selective retention consumers remember messages that are moremeaningful or important to them

The implications of this process help develop an effective promotionalstrategy, and select which sources of information are more effective for thebrand.CV

Information evaluationAt this time the consumer compares the brands and products that arein their evoked set. How can the marketing organization increase thelikelihood that their brand is part of the consumer's evoked (consideration)set? Consumers evaluate alternatives in terms of the functional andpsychological benefits that they offer. The marketing organization needs tounderstand what benefits consumers are seeking and therefore whichattributes are most important in terms of making a decision.Purchase decision

Once the alternatives have been evaluated, the consumer is ready tomake a purchase decision. Sometimes purchase intention does not result inan actual purchase. The marketing organization must facilitate the consumer

to act on their purchase intention. The organisation can use variety of techniques to achieve this. The provision of credit or payment terms mayencourage purchase, or a sales promotion such as the opportunity to receivea premium or enter a competition may provide an incentive to buy now. Therelevant internal psychological process that is associated with purchasedecision is integration. Once the integration is achieved, the organisation caninfluence the purchase decisions much more easily.Post purchase evaluation

It is common for customers to experience concerns after making apurchase decision. This arises from a concept that is known as “cognitivedissonance”. The customer, having bought a product, may feel that analternative would have been preferable. In these circumstances that

customer will not repurchase immediately, but is likely to switch brands nexttime. To manage the post-purchase stage, it is the job of the marketing team

to persuade the potential customer that the product will satisfy his or herneeds. Then after having made a purchase, the customer should beencouraged that he or she has made the right decision. It is not affected byadvertisement.Internal influences

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Consumer behaviour is influenced by: demographics, psychographics(lifestyle), personality, motivation, knowledge, attitudes, beliefs, and feelings.Consumer behaviour concern with consumer need consumer actions in thedirection of satisfying needs leads to his behaviour of every individual dependon thinkingExternal influences

Consumer behaviour is influenced by: culture, sub-culture, locality,royalty, ethnicity, family, social class, reference groups, lifestyle, and marketmix factors.

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ASSIGNMENT – MBA – SEM II – Subject Code:MB0030 – SET 2

1. A. Give a short note on bases of Segmentation?B. Analyse the pricing methods with relevant examples.

Bases of Segmentation The process of dividing the market according to similarities that exist

among the various subgroups within the market is called segmentation. Thesimilarities may be common characteristics or common needs and desires.Market segmentation comes about as a result of the observation that allpotential users of a product are not alike, and that the same general appealwill not interest all prospects. Therefore, it becomes essential to developdifferent marketing tactics based on the differences among potential users inorder to effectively cover the entire market for a particular product. There arefour basic market segmentation strategies: behaviour segmentation,demographic segmentation, geographic segmentation, and physiographicsegmentation.Pricing methods

The main methods used are:• Return-on-investment pricing• Cashflow pricing (payback)• Competitor pricing• Price slot pricing

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The targets under each method will depend on whether theorganization aims to make a quick profit or is aiming to build up a market or

brand. Many publishers will not invest in new titles, which do not make a fastprofit on the first printing. Organizations with, or with access to, large cashresources, can develop titles and lists for longer term potential. In youngeconomies most publishers producing textbooks for the Ministry of Educationor local parents will expect to recover all new title costs in the first printingeven under competitive tendering processes.

2. Explain the benefits and demerits of the different types of advertising media. How will a marketer decided on the suitablemedia for his/her products?NewspapersBenefits

•

Your ad has size and share, and can be as large as necessary tocommunicate as much of a story as you care to tell.• The distribution of your message can be limited to yourgeographic area.• Split-run tests are available to test your copy and your offer.• Free help is usually available to create and produce your ad.• Fast closings. The ad you decide to run today can be in yourcustomer's hands two days from now.

Demerits

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Method

Explanation

Return onInvestment pricing1

The investment in publishing terms is defined as the firstedition costs up to printing stage (and perhaps includingpromotional expenditure. The profit is the differencebetween revenues from sales less printing, distribution androyalty costs. This method is not widely used in bookpublishing as the “investment” per title is low

Return onInvestment pricing2

The cash flows are calculated for all costs and revenuesdirectly associated with the title as above. The Internal Rateof Return (IRR) or Net Present Value (NPV) is then calculated.

This method is becoming more widely used in the mediaindustries as computer spreadsheets facilitate thecalculation.

Cash flowPricing

This is a simplified version of Return on Investment Pricing. The Payback rather than the Net Present Value is calculated.Both methods can be combined usefully

Competitor pricing

This is a pricing policy rather than method of calculation. Thepublisher will estimate the cost of developing a book that willsell successfully against books from competitors. The sellingprice may be different to those of competitors’ products if the publisher decides to compete by offering a differenttreatment, design approach, selling price, and pagination.

Price Slotpricing

Where market search proves the need for price slots, ormajor customers demand, publishers will “work backwards”to produce books that will sell at the agreed slots



• Clutter. Your ad has to compete for attention against large adsrun by supermarkets and department stores.• Poor photo reproduction limits creativity.• A price-oriented medium. Most ads are for sales.• Short shelf life. The day after a newspaper appears its history.• Waste circulation. You're paying to send your message to a lotof people who will probably never be in the market to buy from you.• A highly visible medium. Your competitors can quickly react toyour prices.

MagazinesBenefits

• High reader involvement means more attention will be paid toyour advertisement.• Less waste circulation. You can place your ads in magazinesread primarily by buyers of your product or service.• The smaller the page (generally eight and half by eleven inches)permits even small ads to stand out.

DemeritsLong lead times (generally 90 days) mean you have to make plans along time in advance.• The cost for space is higher in addition to higher creative costs.

Yellow PagesBenefits

• Everyone uses the yellow pages.• Ads are reasonably inexpensive.• You can easily track your responses.

Demerits• All of your competitors are listed so you run the ad as adefensive measure.• Ads are not very creative since they follow certain formats.

RadioBenefits

• A universal medium. Can be enjoyed at home, at work, andwhile driving. Most people listen to the radio at one time or anotherduring the day.• Permits you to target your advertising dollars to the market

most likely to respond to your offer.• Permits you to create a personality for your business using onlysounds and voices.• Free creative help is ususally available.• Rates can generally be negotiated.• Least inflated medium. During the past ten years, radio rateshave gone up less than other media.

Demerits

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• Because radio listeners are spread over many stations, to totallysaturate your market you have to advertise simultaneously on manystations.• Listeners cannot refer back to your ads to go over importantpoints.• Ads are an interruption to the entertainment. Because of this,radio ads must be repeated to break through the listener's "tune out"factor.• Radio is a background medium. Most listeners are doingsomething else while listening, which means your ad has to work hardto be listened to and understood.• Advertising costs are based on ratings which are approximationsbased on diaries kept in a relatively small fraction of a region's homes.

TelevisionBenefits

• Permits you to reach great numbers of people on a national orregional level.• Independent stations and cable offer new opportunities topinpoint local audiences.• Very much an image-building medium.

Demerits• Ads on network affiliates are concentrated in local newsbroadcasts and on station breaks.• Creative and production costs can quickly mount up.• Lead time can result in items being sold out before ad runs.• Most ads are ten or thirty seconds long, which limits the amountof information you can communicate.

Direct MailBenefits

• Your advertising message is targeted to those most likely to buyyour product or service.• Your message can be as long as necessary to fully tell yourstory.• You have total control over all elements of creation andproduction.• A "silent" medium. Your message is hidden from yourcompetitors until it's too late for them to react.

Demerits• Long lead times required for creative printing and mailing.•

Requires coordinating the services of many people: artists,photographers, printers, etc.• Each year over 20% of the population moves, meaning you must work

hard to keep your mail list up to date.• Likewise, a certain percentage of the names on a purchased mailing

list is likely to be no longer useful.

TelemarketingBenefits

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• You can easily answer questions about your product/service.• It's easy to prospect and find the right person to talk to.• Cost effective compared to direct sales.• Highly measurable results.• You can get a lot of information if your script is properly structured.

Demerits• Many business use telemarketing.• Professionals should draft the script and perform the telemarketing in

order for it to be effective.• Can be extremely expensive.• Most appropriate for high-ticket retail items or professional services.

3. Write a note on new product development and product mix.New product development : New product development NPD is a

process which is designed to develop, test and consider the viability of product which are new to the market in order to ensure the growth orsurvival of the organisation.

New Product Development Process:• Idea Generation and Screening• Concept Development and Testing• Marketing Strategy• Business Analysis• Product Development• Test Marketing• Commercialization

Product Mix : Product mix is a combination of products manufacturedor traded by the same business house to reinforce their presence in themarket, increase market share and increase the turnover for moreprofitability. Normally the product mix is within the synergy of other productsfor a medium size organization. However large groups of Industries may havediversified products within core competency. Larsen & Toubro Ltd, Godrej,Reliance in India are some of the examples.

One of the realities of business is that most firms deal with multi-products .This helps a firm diffuse its risk across different product groups/Alsoit enables the firm to appeal to a much larger group of customers or todifferent needs of the same customer group .So when Videocon chose todiversify into other consumer durables like music systems, washing machinesand refrigerators, it sought to satisfy the needs of the middle and uppermiddle income group of consumers.

Likewise, Bajaj Electricals a household name in India has almost ninetyproducts in i8ts portfolio ranging from low value items like bulbs to highpriced consumer durables like mixers and luminaires and lighting projects.The number of products carried by a firm at a given point of time is called itsproduct mix. This product mix contains product lines and product items .Inother words it’s a composite of products offered for sale by a firm.

4. Select any brand of toilet soap and evaluate its positioningstrengths or weaknesses in terms of attributes, benefits, values,

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brand name and brand equity. Also, examine how competitivebrands influence the marketing strategies of the selected soap?

LUX Soap: Lux soap was first launched in 1916 as laundry soaptargeted specifically at 'delicates'. Lever Brothers encouraged women tohome launder their clothes without fear of satins and silks being turnedyellow by harsh lyes that were often used in soaps at the time. The flake-typesoap allowed the manufacturer some leeway from lye because it did not needto be shaped into traditional cake-shaped loaves as other soaps were. Theresult was a gentler soap that dissolved more readily and was advertised assuitable for home laundry use. Lux toilet soap was introduced in 1925 asbathroom soap. The name 'Lux' was chosen as a play on the word "luxury."Lux has been marketed in several forms, including bar and flake and liquid(hand wash, shower gel and cream bath soap). Lux in step with the changingtrends and evolving beauty needs of the consumers, offers an exciting rangeof soaps and Body Washes with unique elements to make bathing time morepleasurable. One can choose from a range of skincare benefits like firming,fairness and moisturizing. Lux stands for the promise of beauty and glamouras one of India's most trusted personal care brands. Since its launch in Indiain the year 1929, Lux has offered a range of soaps in different colors andworld class fragrances. Lux is a beauty soap of film stars. Lux recognized theneed for a compelling message about beauty that would resonate withwomen of today. From the 1930s right through to the 1970s, Lux soap colorsand packaging were altered several times to reflect fashion trends. In 1958five colors made up the range: pink, white, blue, green and yellow. Peopleenjoyed matching their soap with their bathroom colors. In the early 1990s,Lux responded to the growing trend away from traditional soap bars bylaunching its own range of shower gels, liquid soaps and moisturizing bars.Lux beauty facial wash, Lux beauty bath and Lux beauty shower werelaunched in 1992.

In 2004, the entire Lux range was re-launched in the UK to include fiveshower gels, three bath products and two new soap bars. 2005 saw thelaunch of three exciting new variants with dreamy names such as “Wine &Roses” bath cream, “Glowing Touch” and “Sparkling Morning” shower gels.Lux has recently launched its two fruit extract variants – New Lux Strawberry& Cream and Lux Peach & Cream contain a blend of succulent fruits &luscious Chantilly cream. The most recent addition in the brand is Lux CrystalShine.

Study of LUX with respect to 4 P’sa. Product

A product is anything that can be offered to a market to satisfy a needor want. Products that are marketed include physical goods, services,experiences, events, persons, places, properties, organizations, informationand ideas.

Product Classification• LUX is a Tangible, Non Durable Good on the basis of this classification.• LUX and other soaps fall into the category of Convenience Good

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Sales PromotionSales promotion, a key ingredient in marketing campaigns, consists of

a collection of incentive tools, mostly short term, designed to stimulatequicker or greater purchase of particular products or services by consumersor the trade. Whereas advertising offers a reason to buy, sales promotionoffers an incentive to buy.

Sales promotion includes tools for Prominent Sales PromotionSchemes Used By LUX

Lux presented 30 gm gold each to the first three winners of the LuxGold Star offer from Delhi. According to the promotional offer that Luxunveiled in October 2000, a consumer finding a 22-carat gold coin in his orher soap bar got an opportunity to win an additional 30 gm gold. The first 10callers every week got a 30 gm gold each. The offer could be availed only on100 gm and 150 gm packs of Lux soap. · Lux celebrated 75 years of stardomwith the Har Star Lucky Star activity. All wrappers of Lux had a star printedinside them. If the consumer found written inside the star, any number from“1” to “5”, she would get an equivalent discount (in rupees) on her purchasefrom her shopkeeper. If the consumer found “75 years” written inside thestar, she will get a year’s supply of Lux free.

Price segments of toilet soapsSegment Price/weightPremium > Rs. 15 / 75 gmsPopular Rs. 8-15/75 gmsEconomy < Rs. 8 /75 gms

However, recently HUL has been forced to hike its price by one rupee,to Rs17 (for 100 gm), giving in to the pressures of inflation. This paves theway for competing soap makers like Godrej Consumer Products (GCPL) totake price increases.

Lux has versions in all the three price segments:Recent pricing of Lux (100 g)Lux Crystal Shine Rs.17Lux Festive Glow Rs.15Mini Lux Rs 5

STRENGTHS OF LUX

1. Strong Market Research (door to door sampling is done once a year inUrban and Rural areas)2. Many variants (Almond Oil, Orchid Extracts, Milk Cream, Fruit Extracts,

Saffron, Sandalwood Oil, and Honey to name a few)3. Strong sales and distribution network backed by HLL4. Strong brand image5. Positioning focuses on the attractive beauty segment6. Dynamically continuous innovation of the product and brand rejuvenation –

new variants (Aromatic Glow and Chocolate Seduction and Lux White Spa

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body wash) and innovative promotions (22 carat gold coin promotion –‘Chance Hai’)

7. Perceived to have high value for money (strong brand promotion butrelatively lower price which is a winning combination in the popularsegment)

8. Though it is in popular segment, it is having mass appeal/market presenceacross all segments (15% of the soap market captured by Lux (sales /volume)

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

WEAKNESSES1. Lux is mainly positioned as beauty soap targeted towards women, hence itlacks unisex appeal2. Usage rate/ wear rate is high and is generally mushy and soggy3. Some variants like the sunscreen, International variant did not do well inthe market4. Certain advertisements like the recent one with Shah Rukh Khan resulted

in controversial interpretations of the message of the advertisement andlead to some loss of focus (of message of the advertisements)

5. Stock out problems - replenishment time is high in semi-urban/rural areas6. Earlier positioning as the “soap of the stars” has somewhat alienated the

brand from a portion of the consumers especially in rural areas.

5. As a salesperson in a fast moving consumer goods company, Whatkind of training and development methods do you feel are required?How important is training for sales force and how can it beevaluated?

Customers — informed, professional salespeople continuously prepareto meet the service and product needs of customers. Training salespeoplegives customers the assurance that you value and respect their time.Knowledgeable, educated sales people add value. Customers trust and viewthem as business partners. Customers feel their needs come first whentrained salespeople work with them.

Company — Retention and morale is higher in companies that invest inthe development of all employees. Price seldom becomes an issue for thetrained sales professional. Therefore profit margins improve andpredictability of earnings leads to job stability.

The trained sales force produces more with confidence. In addition,they’re aware of trends in the market, technology, industry and environment.

This knowledge enhances their ability to sell and the reputation of yourcompany.

Training programs should address knowledge, competencies, ability,capability and skills.

The factors affecting the development of a sales team include:

External: Market and industry trends, customers, economy, governmentregulation, society, competition, and personal bias.

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Internal : Company strategy, culture of the sales team, product lines and lifecycle, customer service support, etc.

6. What is International Marketing? What are the various strategies toenter international market? Explain?

International Marketing is defined as “The performance of businessactivities designed to plan, price, promote and direct the company’s flow of goods and services to consumers or users in more than one nation for aprofit”. A company that wants to sell their product in other than domesticmarket should understand the environmental factor, consumer behaviours,market forces and other character relevant to the international market. Afterunderstanding the definition, several questions may arise in your mind likewhy marketer should go to the international market?

International Market Entry StrategiesOrganization that plan to go for international marketing should answer some

basic question like:

• In how many countries would the company like to operate• What are the types of countries it plans to enter? To answer theabove question companies evaluate each country against the marketsize, market growth and, cost of doing business, competitiveadvantage and risk level.

Once the market is found to be attractive companies should decidehow to enter this market. Companies can enter the international market fromany one of the following strategies they are

Exporting : Exporting is the technique of selling the goods produced inthe domestic country in a follow country with some modifications for exampleGokaldas textiles export the cloth to different countries from India. Exportingmay be indirect or direct. In case of indirect exporting, companies works withindependent international market intermediaries.

Licensing : According to Philip Kotlor, licensing is a method of enteringa follow market in which the company enters into an agreement with alicense in the follow market, offering the right to use of manufacturing,process the trade market, patent, or other items of value for a fee or royalty.

Contract Manufacturing : Company enters the international marketwith a tie up between manufacturer to produce the product or the services.For example, Gigabyte technology had target manufacturing agreement withD-Link India to produce and sell their mother boards.

Market Contracting : In this type a company enters the internationalmarket by providing the no how of the product to the domestic manufacturer. The capital, marketing and other activities are carried out by the localmanufacturer hence its less risk too.

Joint Ownership: A form of joint venture in which an internationalcompany invest equally with a domestic manufacturer therefore it also hasequal right in the controlling operations. For example, Barbara a lingeriesmanufacturer has joint venture with Gokaldas Images in India.

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Direct investment : In this method of international market entry,company invests in manufacturing or assembling. The company may enjoythe low cost advantage of that country. Many manufacturing forms investeddirectly in the Chinese market to get its low cost advantage. Somegovernments provide incentives and companies benefits to the companywhich manufacturers the product in their country. There is governmentrestriction in some countries to opt for direct investment, is it produce the

jobs to the local people. This made also debts on the country attractiveness.It may become risk if the market mature or unstable government exists.

MB0030 - P.Srinath - Completely Solved

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