MB0030 Marketing Management

ASSIGNMENTS- MBA Sem-IIMB0030 – MARKETING MANAGEMENT

SMUASSIGNMENT

SEMESTER – 2

MB 0030MARKETING MANAGEMENT

SUBMITTED BY: SIDHARTH RAMTEKE

MBAROLL NO.- 520918813

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SET 1MARKETING MANAGEMENT

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

Ans:- Marketing: Marketing is a set of business activities that facilitate movement of goods and services from producer to consumer. It is an ongoing process of discovering and translating consumer needs into products and services, creating demands for them, serving the customer and his demand through a marketing programme of promotion and distribution to fulfill the company’s marketing goals in a competitive environment.

It is evident that customer, his needs and wants are very important aspects of today’s marketing. Customer focus is the very essence of marketing and his viewpoints should be taken into account while making marketing decisions.

In this era of rapid changes, it is marketing which keeps the business in close

contact with its economic, political, social and technological environment and informs it of events and changes that can influence its activities.

Importance Of Marketing The marketer’s task lies in satisfying human needs and wants through the exchange process. It is alleged that “marketing creates needs” and makes people buy things they do not actually need. In reality, marketing or marketers do not create “needs”, but they create “wants”. Needs are the basic human requirements of food, clothing shelter water and air. When we desire certain specific objects or items to fulfill these needs, they are called wants.

Marketing is important not only to the company but to the consumers and society and to the economy. Consumer stands to benefit from marketing activities. He has more alternatives to choose from, improved and better quality products are available and he is able to buy goods at convenient locations. Thanks to much improved customer service, a consumer is able to complain and expects his complaint to be attended in reasonable time. He can now buy with credit or debit card or cash or on installments.

For the society as a whole, marketing is important because it acts as a change agent making people use latest products and improves the standard of living of the people. As we know, the main objective of marketing is to produce products and services for the society as per their needs and tastes, and while doing so it creates demand for these goods and services, encourages them to use them, thus leading to higher demand

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and sales. This higher demand allows the company to achieve economies of scale in both production and distribution resulting in decrease in production and distribution costs which can be used to reduce prices to consumers.

For a company in any business, marketing is considered to be the most important activity. It helps an organization to keep abreast of changes taking place in the market and consumer tastes and preferences through market research. Based on this reliable data, it responds to these changes by rectifying any drawbacks in its products or changing its competitive strategy. Thus the company’s decision making and planning are not based on just hunches but on sound market information. The firm that follows such practices is sure to prosper under all conditions. Marketing provides an effective channel of communication to the company with its consumers by way of advertising and sales promotion. Marketing thus brings revenue and earns goodwill for the company.

Successful operation of marketing activities creates, maintains and increases the demand for goods and services in the economy. It results in the increased level of production. This, in turn, increases the national income, which is beneficial to the economy. Marketing operations require the services of intermediaries such as wholesalers, retailers, transporters, and service provides for storage, finance, insurance and advertising. These services provide employment in large numbers.

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

Ans:- Designing an appropriate business portfolio: After setting mission and objectives, management will develop its business portfolio. Business portfolio is the right mix of businesses that company operates and products that offers to customers. Portfolio analysis is the process by which company analyze its products and businesses.

Company develops their business portfolio in two steps

(a) Analyze the existing business portfolio and decide which business should receive more, less or no investment.(b) Developing the new business portfolio for future to meet growth opportunities and eliminating the unprofitable portfolios.

Analyzing the existing business portfolio:

The current business portfolio of the company is analyzed by the businesses in which it operates. To make it clearer, let me take an example of ITC group. The company operates in FMCG, hotels, paper boards, specialty papers and packaging and agribusiness. These businesses are independent from each other and have their mission and objectives separately. These subsidiaries of organizations are called as Strategic business units (SBU)

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Strategic business unit: The unit of the company that has separate mission and objectives and that can be planned independently from other businesses.

Strategic planning models used in assessing the existing businesses:

(a) BCG matrix (Boston Consultancy Group)(b) GE matrix (General electric)BCG matrix: This model is used to identify company’s SBU’s position in the market.

This model identifies the SBU’s strength, weaknesses, opportunities and threats on the basis of market growth rate and relative market share. This model is also known as growth share matrix.

Relative Market Share Axis components:

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

Model components:

Star: This category represents the high market share and high industry growth. SBU’s in this category require large investment to defend their position. SBU will turn as cash cow after some time.

Cash cows: This category represents the low growth rate and high market share which is the characteristic of SBU operating in mature industry. Here company needs less investment to hold their position. Hence it generates more cash or in management terms we say cash cow can be milked.

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Question Mark: This category represents high market growth and low market share. SBU’s in this category has two options, either to invest heavily and bring them to star position or divest / liquidate from that position. Market growth rate

Low High:

Dogs: SBU’s in this category generates less cash for the company as it operates in low growth and low market share. Usually companies will not invest in this category and try to liquidate or divest.

BCG matrix for ITC

1. SBU: FMCG Industry growth rate: 24% (AC Nielson retail audit report 2007)Company growth rate: 50% (the Hindu business line 19 th January 2008)Company’s market share: 8% (outlook business)Largest competitor share: HUL: 54% (outlook business)Relative market share= 0.14

2. SBU: Paper boardIndustry growth rate: 7.2% (the Hindu business line 27 th May 2007)Company growth rate: 11% (the Hindu business line 19 th January 2008)Company’s market share: 55%Largest competitors share: BILT 35%

ITC’s FMCG segment analysis shows that though it is market leader in some categories their overall relative market share is 0.14. Company is in the high growth low relative market share area i.e. questioning mark position. ITC should invest heavily to convert its SBU position into star.

ITC’s Paperboard industry is in low growth and high market share category i.e. in cash cow segment. It should plan for investing the cash generated from this position into other businesses.

GE matrix:

1. Management can use the GE business matrix to classify SBU’s on the basis of two factors:-

(a) Market attractiveness: Market size, entry barriers, competitors, technology and profit margin are some factors used to analyze the market attractiveness.

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(b) Business position can be determined on the basis of market share, SBU size, R&D capabilities and cost controls. Each cell in the model represented by the particular strategy namely, invest strategy, protect strategy, harvest strategy and divest strategy.

2. Invest strategy: In this position SBU(a) Should receive ample resources(b) Should support by well financed marketing efforts.

3. Protect strategies: SBU’s in this position should(a) Allocate the resources selectively.(b) Develop strategies which help in maintain its market position.(c) Generate cash needed by other SBU’s.

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

5. Divest strategy: SBUs which falls into this category should not receive any resources and sell I or shut it as early as possible.

Developing the new business portfolios After analyzing the existing business of the company, let us discuss company’s future plans i.e. growth or downsizing. Company adopts growth strategies to become more competitive in the market, Market attractiveness Low Medium High tap new opportunities and become preferred employer. Downsizing is used when the product or market became unattractive to it. The Ansoff Product Market Growth Matrix is a marketing tool created by Igor Ansoff and first published in his article "Strategies for Diversification" in the Harvard Business Review (1957). The matrix allows marketers to consider ways to grow the business via existing and/or new products, in existing and/or new markets.

Ansoffs model of product/ market expansion.

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1. Market penetration: A strategy used in increasing the sales of company’s existing products without modifying it in the existing market.

Characteristics of market penetration.

(a) Serve customer with existing products by opening new stores.(b) Increase the promotion activities to increase the consumption.(c) Improve the service offerings.

Cafécoffee day a reputed coffee chain in south India, started its operation in brigade road, Bangalore, in the year 1996. It offers different varieties of the coffee to its existing customers. Today it is having 100 stores in Bangalore.

2. Market development: In this strategy company identifies the new markets to sell their existing products.

In case of market development company identifies and develops new markets for its existing Products Café coffee day, enthused by the success of offering a world-class coffee experience, has opened a Café in Vienna, Austria and is planning to open other Cafes in the Middle East, Eastern Europe, Eurasia, Egypt and South East Asia in the coming months.

3. Product development: In this strategy, company identifies new product and sells them existing markets. Café coffee day added quick bites and ice-cream in their menu to cater to the needs of customers.

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4. Diversification: A strategy for company growth through starting up or acquiring businesses outside the company’s current products and markets. Café coffee day started offering tea and cold drinks in its highway café retail outlets. These highway café outlets offer excellent service to the travelers on the high way.

5. Downsizing: Eliminating the unprofitable products of the company from its product line. In the year 2000 M.S. Banga then chairman of Hindustan Unilever limited (HUL), used power branding strategy to improve the sales and productivity. He reduced HUL’s number of products from 110 to 35.

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

Ans:- MIS is an Information system which helps in providing the management of an organization with information which is used by management for decision making.

A management information system (MIS) is a subset of the overall internal controls of a business covering the application of people, documents, technologies, and procedures by management accountants to solving business problems such as costing a product, service or a business-wide strategy. Management information systems are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making, e.g. Decision Support Systems, Expert systems, and Executive information systems.

An 'MIS' is a planned system of the collecting, processing, storing and disseminating data in the form of information needed to carry out the functions of management. According to Philip Kotler "A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers."

The terms MIS and information system are often confused. Information systems include systems that are not intended for decision making. The area of study called MIS is sometimes referred to, in a restrictive sense, as information technology management. That area of study should not be confused with computer science. IT service management is a practitioner-focused discipline. MIS has also some differences with Enterprise Resource Planning (ERP) as ERP incorporates elements that are not necessarily focused on decision support.

MIS has a major impact on the functions of any organization. The organization derives benefits from the systems in the following form:

a) Speedy access to information,

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b) Interpretation of data,c) Quick decisions,d) Speedy actions,e) increased productivity and thereby increase in the profitf) Reduced transaction cost.

Benefits of MIS Various benefits of having a MIS and resultant flow of marketing information are given below:

1. It allows marketing managers to carry out their analysis, planning implementation and control responsibilities more effectively. 2. It ensures effective tapping of marketing opportunities and enables the company to develop effective safeguard against emerging marketing threats. 3. It provides marketing intelligence to the firm and helps in early spotting of changing trends. 4. It helps the firm adapt its products and services to the needs and tastes of the customers. 5. By providing quality marketing information to the decision maker, MIS helps in improving the quality of decision making.

Types of MIS MIS is classified into various types. The classification depends on the following aspects:-

a) Functionality b) Utility c) Area of application d) Processing type e) Frequency of usage

Various management activities like the one which deals with scheduling, planning, resource allocation, product design, processes, competitive strategy are the functional classification of MIS.

Some of the processes like artificial intelligence, generating management related information, providing aid in decision making, necessary support systems, executive information system are the utility classification of MIS. Depending upon the area where MIS could be used MIS is classified as Banking IS, Insurance IS, Production IS, Data warehouse IS, Public IS etc. Depending upon the type of management service in processing a data to generate information, MIS is classified into various processing types like – Online transactions, Batch processing, distributed processing, multiprocessing etc.

A MIS system is a system in which there is a constant need for review of the system. A mechanism can be built in the system to look into its performance and the outcome of such

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performed tasks may be assessed. This may be done periodically at fixed interval of time. Such mechanisms are categorized under MIS classification of frequency.

Components of MIS The following diagram shows a typical Marketing Information System with its components:-

1. Internal Records System 2. Marketing Intelligence System 3. Marketing Research System 4. Analytical Marketing System

Internal Records System This includes information on (i) Order to payment cycle and (ii) sales information systems.

Order to payment cycle has a system which records, the timing and size of orders placed by consumers, the payment cycle followed by consumers and the time taken to fulfill the orders, in the shortest possible time. Customers place order through sales people and companies dispatch the goods and receive payments directly or through bank. A proper record system pertaining to order – to – payment cycle management helps mangers to decide on production and dispatch schedule, inventory and accounts receivable schedule and also logistics and distribution management schedules,

Sales Information Systems record everything in the sales Department, starting from Sales Call Reports to prospects history to Sales territory and quota information for better sales planning and forecasting purpose.

Marketing Intelligence System This is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment. This system supplies ‘happenings’ data unlike Internal Records System which supplies ‘results’ data. Marketing managers collect data from published sources like books, magazines and journals; by talking to customers, intermediaries and sales personnel. Some companies appoint specialists to gather consumer and competitor information, who does mystery shopping to monitor the performance of their own or competitor’s dealers. Competitor Information can also be obtained by buying their product, attending their press conferences, trade shows and reading their annual reports. Companies purchase commercial information from outside suppliers and market research agencies like IMRB, ORG – MARG to obtain competitive data on their sales, advertising expenditures etc., besides their own.

Marketing Research System This is the third component of MIS. Marketing Research provides information to marketing manager when he/she encounters marketing

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problems. This may involve conducting Marketing Research survey by collecting primary data. These surveys may be conducted by the marketing department itself or a it can hire services of an external marketing research agency. Analytical Marketing Systems Also known as Marketing Decision Support systems MDSS), this is a coordinate collection of data, systems, tools and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action. All the data which is generated through the other three systems described above are stored in a data base. The storage and retrieval capability of decision support system allows the collection and use of a wide variety of data throughout the company. Senior managers can access the data base and continually and monitor sales, markets, performance of the sales people and other marketing systems as well.

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

1. All the input is processed and controlled, as input and process design.2. All updating and corrections are completed before the data processing begins.3. Inputs (transactions, documents, fields and records) are subject to validity checks.4. The access to the data files is protected and secured through an authorization

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

processed right through, i.e. run to run controls.6. Due attention is given to the proper file selection in terms of data, periods and so

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

system specifications are not violated.9. The system modifications are approved by following a set procedure which begins

with authorization of a change to its implementation followed by an audit.10. Systems are developed with a standard specification of design and development.11. Information system processing is controlled through programme control, process

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

needs to achieve business goals.

The assurance of quality is a continuing function and needs to be evolved over a period and requires to be monitored properly. It cannot be assessed in physical units of measure. The user of the information is the best judge of the quality.

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Q.4:- Suppose you need to conduct a small marketing research in your neighborhood regarding the purchase and use of toothpastes, what will be your approach in the process?

Ans:- Collection of information is the first step for a small marketing research. After collecting the information, consumers arrive at some conclusion about the product. In this stage, we have to compare different brands on set parameters which we have to think are in the toothpastes. We have to find out the information about the product, place, price and point of purchase and have to collects the information from different sources like

1. Personal sources Family, friends and neighbors.

2. Commercial sources Advertising, sales people, dealers, packaging and displays.

3. Public sources Mass media and consumer rating agencies.

4. Experimental Sources Demonstration, examining the product.

The demand for the product in this market is derived i.e. depend upon the final consumption of the product and service. The purchase centre may include people outside the organization such as government officials, Consultants, technical advisors and other members if the marketing channel. Different members of the buying centre have different influences. Member of the buying centre have different personal motivations, perceptions and preferences which in turn are dependent on age, income, education, job, position, personality, attitudes towards risk and culture.

For the market research. The following are the bases for positioning strategies that are available are:-

1. Attribute positioning A company positions itself on an attribute such as size or number of years in existence.2. Benefit positioning The product is positioned as the leader in a certain benefit.3. Application positioning Positioning the product as best for some use and application.4. User positioning Positioning the product as best for some user group.5. Competitor positioning The product claims to be better in some way than a named competitor.

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6. Product category positioning The product is positioned as the leader in certain product category.7. Quality or Price positioning The product is positioned as offering the best value.

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

Ans:- Consumer buying decision process After discussing the factors those influence the buying behavior, now, we will discuss the consumer decision making process. Consumer passes through five different stages while purchasing the product.

1. Need recognition: Customer posses two type of stimuli’ at this juncture. One is driven by the internal stimuli and another is external stimuli. The examples of internal stimuli are customer’s desire, attitude or perception and external stimuli are advertising etc.. From both stimuli customer understand the need for the product. Here marketer should understand what customers needs have that drew customers towards the product and should highlight those in the communication strategy.

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2. Information search: In this stage customer wants to find out the information about the product, place, price and point of purchase. Customer collects the information from different sources like

(a) Personal sources: Family, friends and neighbors (b) Commercial sources: Advertising, sales people, dealers, packaging and displays. (c) Public sources: mass media and consumer rating agencies.(d) Experiential sources: Demonstration, examining the product.

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

3. Evaluation of alternatives: After collecting the information, consumers arrive at some conclusion about the product. In this stage he will compare different brands on set parameters which he or she thinks required in the product. The evaluation process varies from person to person. In general Indian consumer evaluate on the following parameters:

(a) Price (b) Features (c) Availability (d) Quality (e) Durability

At this stage marketer should provide comparative advertisements to evaluate the different brands. The advertisement should be different for different segments and highlight the attribute according to the segment.

4. Purchase decision: In this stage consumer buy the most preferred brand. In India affordability plays an important role at this stage. Organizations’ bring many varieties of the products to cater to the needs of customers.

5. Post purchase behavior: After purchasing the product the consumer will experience some level of satisfaction and dissatisfaction. The consumer will also engage in post purchase actions and product uses of interest to the marketer. The marketer’s job does not end when the product is bought but continues into the post purchase period. Customer would like to see the performance of the product as he perceived before purchase. If the performance of the product is not as he expected then he develops dissatisfactions. Marketer should keep an eye on how consumer uses and disposes the product. In some durable goods Indian consumer want resale value also. Many automobile brands that notable to get resale value lost their market positions.

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Buyer decision process for new products : The buyer’s decision for existing products and new products varies. You already seen in the existing product buying decision process consumers have the option to search for the information and evaluate them. In the new product such options don’t exist. Therefore we should understand how consumer comes to know about the product. Kotler defined this process as adoption process. According to Philip Kotler Adoption is ‘The mental process through which an individual passes from first hearing about an innovation to final adoption’

Adoption process

1. Awareness: the consumer became aware of the product but lacks information about it. 2. Interest: As know previous information available consumer shows interest to get the information about the product. 3. Evaluation: After receiving the information consumer analyzes the benefits of new products over any existing products or substitutes and decides whether to buy or not.

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

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

Adoption rate :

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The adoption of new product varies from individual to individual. 1. 2.5% of the consumers adopt any new product that enters to the market. These consumers are status conscious people. Marketer should highlight how the new product will bring the esteem to the consumer.

2. 13.5% of the customers fall into the early adopter categories. In this categories customer observed the advantage of the new product and the moment the price of the product falls into the affordable category they buy the product.

3. The next group is the biggest one in the adoption process. These group customers are attracted towards the benefits of the product. They make sure that there are no technical or general problems associated with the product. This group contains 34% of the total customers.

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

5. The final group is called as laggards. These are traditional and price conscious people. They often take lot of time to adoption of the product.

Q.6:- Explain the different consumer behaviour models.

Ans:- Buyer behavior models : The influence of social sciences on buyer behavior has prompted marketing experts to propound certain models for explaining buyer behavior. Broadly, they include the economic model, the learning model, the psychoanalytical model and the sociological model.

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1. The Economic Model: According to the economic model of buyer behavior, the buyer is a rational man and his buying decisions are totally governed by the concept of utility. If he has a certain amount of purchasing power, a set of needs to be met and a set of products to choose from, he will allocate the amount over the set of products in a very rational manner with the intention of maximizing the utility or benefits. 2. The Learning Model: According to the learning model which takes its cue from the Pavlovian stimulus response theory, buyer behavior can be influenced by manipulating the drives, stimuli and responses of the buyer. The model rests on man’s ability at learning, forgetting and discriminating. The stimulus response learning theory states that there develops a bond between behavior producing stimulus and a behavior response (S. R. Bond) on account of the conditioning of behavior and formation of habits. This theory may be traced to Pavlov and his experiments on salivating dogs. Pavlov’s experiments brought out associations by conditioning.

In his well known research with dogs, a bell was rung every time food was served to a dog. Eventually, the dog started salivating each time upon hearing the bell though no food was served. The dog’s behavior is conditioned; it is related to behaviorproducing stimulus (bell ringing) and behavior response (salivation). The S.R. bond so established causes a set pattern of behavior learnt by the object – dog. In terms of consumer behavior, an advertisement would be a stimulus whereas purchase would be a response.

Learning Process: According to the stimulusresponse theory, learning is dependent on drive, cue (stimulus), response and reinforcement.

Drive: Drive may be defined as any strong stimulus that impels action. It arouses an individual and keeps him prepared to respond. The drives may be classified as primary drives and secondary drives. Primary drives are based upon innate physiological needs such as thirst, hunger, pain avoidance, and sex. The secondary drives are based upon learning. They are not innate and are derived from the primary drives. These include the desire for money, fear, pride, rivalry, etc. Cue: Cue or stimulus may be defined as any object in the environment perceived by the individual. The aim of the marketing man is to find out or create the cue of sufficient importance that it becomes the drive stimulus or elicits other responses appropriate to his objective. Here, the objective is to find out those conditions under which a stimulus will enhance the chances of eliciting a particular kind of response. Response: Response is an answer to a given drive or cue. When a man feels thirsty, he attempts to get water at any cost. Here attempt to get water is a response to the primary drive of thirst. “Response also includes attitudes, familiarity, perception and other complex phenomena.” Responses may be generalized or discriminatory. Generalized

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response refers to a uniform response to similar though not identical stimuli. Discriminatory response refers to the selective response to similar stimuli. Undifferentiated products such as cigarettes and detergents normally elicit generalized consumer responses but by huge advertising outlays companies try to induce consumers to perceive differences in brands and to make discriminatory responses. Reinforcement: Reinforcement or reward means reduction in drive and stimulus. It has been defined as “environmental events exhibiting the property of increasing the probability of occurrence of responses they accompany.” Thus, when consumption of a product or a brand of product leads to satisfaction of the initiating need (drive/stimulus) there is reinforcement. If at some later date the same needs are aroused, the individual will tend to repeat the process of selecting and getting the same product or brand of product. Each succeeding time that product or brand brings satisfaction, further reinforcement takes place, thus, further increasing the possibility that in future also, the same product or brand will be bought. This type of behavioral change, increasing possibility that an act will be repeated, is called learning; reinforcement increases the rapidity and vigor of learning. 3. The Psychoanalytical Model: The psychoanalytical model draws from Freudian Psychology. According to this model, the individual consumer has a complex set of deepseated motives which drive him towards certain buying decisions. The buyer has a private world with all his hidden fears, suppressed desires and totally subjective longings. His buying action can be influenced by appealing to these desires and longings. The psychoanalytical theory is attributed to the work of eminent psychologist Sigmund Freud. Freud introduced personality as a motivating force in human behavior. According to this theory, the mental framework of a human being is composed of three elements, namely:

(a) The id or the instinctive, pleasureseeking element. It is the reservoir of the instinctive impulses that a man is born with and whose processes are entirely subconscious. It includes the aggressive, destructive and sexual impulses of man.

(b) The superego or the internal filter that presents to the individual the behavioral expectations of society. It develops out of the id, dominates the ego and represents the inhibitions of instinct which is characteristic of man. It represents the moral and ethical elements, the conscience.

(c) The ego or the control device that maintains a balance between the id and the superego. It is the most superficial portion of the id. It is modified by the influence of the outside world. Its processes are entirely conscious because it is concerned with the perception of the outside world. The basic theme of the theory is the belief that a person is unable to satisfy all his needs within the bounds of society. Consequently,

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such unsatisfied needs create tension within an individual which have to be repressed. Such repressed tension is always said to exist in the subconscious and continues to influence consumer behavior.

(d) The Sociological Model: According to the sociological model, the individual buyer is influenced by society or intimate groups as well as social classes. His buying decisions are not totally governed by utility; he has a desire to emulate, follow and fit in with his immediate environment.

(e) The Nicosia Model: In recent years, some efforts have been made by marketing scholars to build buyer behavior models totally from the marketing man’s standpoint. The Nicosia model and the Howard and Sheth model are two important models in this category. Both of them belong to the category called the systems model, where the human being is analyzed as a system with stimuli as the input to the system and behavior as the output of the system. Francesco Nicosia, an expert in consumer motivation and behavior put forward his model of buyer behavior in 1966. The model tries to establish the linkages between a firm and its consumer – how the activities of the firm influence the consumer and result in his decision to buy. The messages from the firm first influence the predisposition of the consumer towards the product. Depending on the situation, he develops a certain attitude towards the product. It may lead to a search for the product or an evaluation of the product. If these steps have a positive impact on him, it may result in a decision to buy. This is the sum and substance of the ‘activity explanations’ in the Nicosia Model. The Nicosia Model groups these activities into four basic fields. Field one has two subfields the firm’s attributes and the consumer’s attributes. An advertising message from the firm reaches the consumer’s attributes. Depending on the way the message is received by the consumer, a certain attribute may develop, and this becomes the input for Field Two. Field Two is the area of search and evaluation of the advertised product and other alternatives. If this process results in a motivation to buy, it becomes the input for Field Three. Field Three consists of the act of purchase. And Field Four consists of the use of the purchased item.

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SET 2

MARKETING MANAGEMENT

Q.1:- a. Give a short note on bases of Segmentation. b. Analyze the pricing methods with relevant examples

Ans:- Bases for Segmenting Consumer Markets

1. Geographic segmentation: Dividing the market into different geographical units such as nations, states, regions, cities or neighborhoods. The company can operate in one or a few Geographic areas or operate in all but pay attention to local variations. For example, Bennett, Coleman and co Ltd divided markets according to geographical units for their tabloids. In Bangalore the tabloid is known as Bangalore Mirror where as it is Mumbai Mirror in Mumbai.

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2. Demographic Segmentation: In demographic segmentation the market is divided into groups on the basis of variable such as age, family size, family lifecycle, gender, income, occupation, education, religion, race, generation, nationality and social class. Demographic variables are the most popular bases for distinguishing customer groups. One reason is that consumers’ wants, preferences and usage rates are often associated with demographic variables. Demographic variables are easy to measure. Even when the target market is described in nondemographic terms, the link back to demographic characteristics is needed in order to estimate the size of the target market and the media that should be used to reach it efficiently. Some of the demographic variables used are :

(a) Age and LifeCycle Stage: Consumers’ wants and abilities change with age. On the basis of age, a market can be divided into four parts viz., children, young, adults and old. For consumers of different age groups, different types of products are produced. For instance, different types of readymade garments are produced for consumers of different age groups. A successful marketing manager should understand the age group for which the product would be most suited and determine his marketing policy, pricing policy, advertising policy etc., accordingly. For example, HUL launched ‘pepsodent kids’ for small children.

(b) Gender: Gender segmentation has long been applied in clothing, hairstyling, cosmetics and magazines. For example, Emami segmented its personal care business on the basis of gender. For women, it is having Emami naturally fair, and for men it is fair and handsome.

(c) Income: Income segmentation is a longstanding practice in such product and service categories as automobiles, clothing, cosmetics and travel. However, income does not always predict the best customers for a given product. For example, Baja Auto limited, a leading automobile company, different bikes for different commuters. For entry level (less than Rs35000) it is Bajaj CT 100, for mid segment (greater than Rs35000 but less than Rs60000) it is pulsar and for the upper segment greater than Rs 60000 Avenger and Eliminator is positioned.

3. Psychographic Segmentation: In Psychographic segmentation, buyers are classified into different groups on the basis of lifestyle or personality and values. People within the same demographic group can exhibit very different psychographic profiles.

(a) Lifestyle: People exhibit different lifestyles and goods they consume express their lifestyles. Many companies seek opportunities in lifestyle segmentation. But lifestyle segmentation does not always work.

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(b) Personali Marketers have used personality variables to segment the markets. They endow their products with brand personality that corresponds to consumer personalities. (c) Social Class: It has a strong influence on preference in cars, clothing, home furnishings, leisure activities, reading habits etc. Many companies design products and services for specific social classes.

4. Behavioral Segmentation or Consumer Response Segmentation: In behavioral segmentation, buyers are divided into groups on the basis of their knowledge or attitude towards the use of, or response to a product. Some marketers believe that behavioral variables are the best starting points for constructing market segments.

(a) Occasions: According to the occasions, buyers develop a need, purchase a product or use a product. It can help firms expand product usage. A company can consider critical life events to see whether they are accompanied by certain needs. For example, Tanishq a TATA enterprise offers schemes and promotions for Akshaya Thrutiya ( auspicious day to purchase jewellary) (b) Benefits: Buyers can be classified according to the benefits they seek. For example, Peter England, a madhura garment brand positioned its wrinkle free trousers on the basis of benefits. c) User Status: Markets can be segmented into nonusers, potential users, first time users and regular users of a product. Each market segment requires a different marketing strategy. The company’s market position will also influence its focus. Market leaders will focus on attracting potential users, whereas smaller firms will try to attract current users away from the market leader. For example, Kishkinda resort near Hampi classifies its customers according to this characteristic. Resort believes that locals falls into on user category, affluent class who comes to Hampi as potential users, foreigners as first time users rich people near Hampi who frequently come there as regular users.

(d) Usage Rate: Markets can be segmented into light, medium and heavy product users. Heavy users are often a small percentage of the market but account for a high percentage of total consumption. Marketers prefer to attract one heavy user rather than several light users and they vary their promotional efforts accordingly.

Price determination is very important aspect of strategic planning. Marketers fix the price of the product on the basis of cost, demand or competition. Dell, which allows customers to customize the product adopted flexible pricing methods. In contrast, Indian oil companies’ product prices are fixed by the government where company does not have any control. Retailer like big bazaar Fair price and Subhiksha targeted price

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conscious consumer. Manufacturers and service providers all over the world outsourced some of their functions to developing countries to get cost advantage which help them in reducing their final price. Internet has become alternative tool for shopping to the consumer. It offers wide range of products and lesser price.

Pricing method which affect price decision

1. Marketing objectives: There are four major objectives on which prices are determined. They are survival, current profit maximization, Market share leadership and product – Quality leadership. Survival strategy adopted when company is facing stiff competition from the competitors and it wants quick reaction and recovery. Current profit maximization strategy is used to defend the market position. To explain, assume a company is operating in the lubricants business. Its sales and market share are very high. It always tries to hold their current position. To do this it increases the price of the product. The next objective is market share leadership. Here, company strives to achieve the leadership position in the market. It reduces the price of the product so that more number of customers buys the product. Through volume generation company gets the market leadership position. Product quality leadership objective is used when company decides to come with high quality product and premium price. The intention of the company is to cater to the needs of the niche segment. 2. Costs: The cost of marketing and promoting the product will have direct impact on the price. For example, Airline fuel cost went up recently. All airline companies increased the price of the ticket. Company will be incurring fixed cost (plant, Machinery etc...) as well as variable cost (Raw material, labor etc…) The fixed cost will go down if the number of products produced increases. The variable cost of the product decreases if the product is produced up to optimal level and then once again it goes up. Hence the total cost (fixed cost plus variable cost) vary according to both fixed cost and variable cost. Marketer is interested in knowing the break even analysis when he introduces the product in the market. The break even point for a product is the point where total revenue received equals the total costs associated with the sale of the product (TR=TC). A break even point is typically calculated for businesses to determine whether it would be profitable to sell a proposed product, as opposed to attempting to modify an existing product instead so it can be made lucrative. BreakEven Analysis can also be used to analyze the potential profitability of an expenditure in a salesbased business.

3. 4Ps of marketing: The price of the product is determined by the other marketing mix elements also. Product influences the price level i.e. if the product quality is very high company would like to price it high and vice versa. The new product requires aggressive promotion and results in higher promotion cost and higher price. Supply chain management also plays an important role in the price determination. If the organization able to integrate their supply chain well then it will be having distribution advantage than others. Let me explain these concepts with examples. Nokia when it introduced

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1100 handset in Indian market priced at Rs 5200. It did so to get back its R&D and promotion cost. When the sales picked up, the price of the product has come down to Rs3800. Cavin care introduced sachets and priced at 50 paisa. HUL was forced to come out with sachets at the same price.

4. Nature of the market and demand: The price determination depends on the nature of the market also. The nature of the market is classified into following categories.

(a) Perfect competition (b) Monopolistic competition (c) Oligopolistic competition (d) Monopoly

5. Competition: Price is also determined by how intense the competition is in the industry. Cellular industry and airline industry in India are involved in such type of price wars. The price war between Hutch (Now Vodafone) and Airtel is exemplary. Air Deccan which started no frill airline made other airliners like go air, spice jet and paramount to reduce the price of their airlines.

6. Environmental factors. These external factors are very crucial for the company’s price decisions. We discussed the impact of Macro and micro environment on the company’s strategies. For example, in the union budget tax on cigarette is increased. Hence company that manufactures cigarette should increase the price. The increase in the price is determined by the government environment which is external to the company.

Q.2:- Explain the benefits and demerits of the different types of advertising media.How will a marketer decide on the suitable media for his/her products?

Ans:- Advertising Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. For example: Print ads, radio, television, billboard, brochures and, signs, in store displays, posters, motion pictures, and banner ads.

It has been universally accepted that advertising is an important tool of marketing of the products. The expenditure on advertising is regarded as a profitable investment. The main benefits claimed of advertising are as follows:-

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

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

3. Increase in employment Advertising increases the sales volume of goods and provides employment to a large number of workers.

4. Change in the living habits An effective advertisement brings about a rapid change in the habits and attitudes of people.

5. Elimination of middleman Advertising awakens interest and provides utility of goods far and wide in the country.

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

7. Virtues of thrift It has a great educative value. It teaches the people the benefits of thrift and their responsibility to their dependents.

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

Some other benefits are: Sales of entire line of product Increasing the sales of entire industry Advantages to consumers Encourages competition Social benefits.

Demerits of Advertising

Various objections against it may be listed as follows:

1. Economic Objections

(a) Advertising is not productive. It is true that it does not produce any tangible goods. It is said to involve wasteful expenditure.

(b) It forces people to desire and buy goods, which, in fact, are not within their means.

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(c) It increases the cost of goods. Advertising charges are included in the price, which the consumer has to pay.

(d) Advertising results in monopoly. The consumer becomes a slave to a particular brand.

2. Social Objections

(a) Most of the advertisements contain tall claims and the consumers do not enjoy the benefits advertisement in full. They are shortlived only.

(b) The press is influenced by the advertisers because they provide major revenue for the existence of newspapers.

3. Ethical Objections

(a) Advertising appeals make people to use such articles, which may affect their health. For example alcoholic drinks and cigarettes.

(b) People with less purchasing power cannot afford to buy articles even though advertisements create a strong need in them. Thus a section of society remains discontented. Whatever may be said against advertising, it is increasingly used almost in every branch of business to promote sales. It is not merely a means of sales promotion but today it has become a science equivalent to any other social science.

Other disadvantages of Advertisement These are the disadvantages of advertising: 1. Increases the cost: It increases the cost of goods. The cost of the advertisement is included in the price and is ultimately borne by the customers.

2. Misleads the public: It misleads the public by giving false statements about the product. (It may be true in some cases but majority of advertisers know the value of honest statements.)

3. Creates a dissatisfaction: It creates tastes and desires for some people whose income may not allow them to buy. Such people feel dissatisfied.

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4. Creates a monopoly: It increases monopolistic trend. Due to advertisement some manufacturers create monopoly in industry and thus reduce healthy competition. It becomes difficult for new firms to enter the field.

5. Creates the confusion: It creates the possibility of wrong purchases. Being impressed by the advertisement, in some cases, a person is not able to purchase the commodity, which he actually wants to purchase.

6. Encourages luxury: This encourages luxury. Mostly the commodities related to comforts and luxuries are advertised, for example, cigarettes, cosmetic goods and etc. due to advertisement of cigarettes several persons start smoking cigarettes, which becomes habit.

7. Reduces cleanliness: It reduces cleanliness. Large number of posters and writings on the walls are used for advertisement. This makes the roads and the walls of the houses look dirty. Thus, it reduces the natural beauty.

8. Causes wastage: It is a cause of wastage of natural resources. As a results of advertisement, style and fashion change quickly. It makes the goods out of fashion. Marketer The marketer divides the market into homogeneous sub markets by understanding the needs, perceptions and expectations of the consumers. On the basis of segmentation, the company will prepare and follow different marketing programs for different segments to ensure better customer relationship. Marketer divides the market into distinct groups of buyers who have similar preferences. These groups are called segments with their own specific demographic, psychographic and behavioral characteristics. The marketer decides as to which of these segment or segments offer highestopportunity for his company. For each of these target markets, the firm develops a product / service suited to their needs. TATA group has recently designed an economy car called ‘NANO’ is priced around Rs.1 Lakh. The target market for this car is all aspirants who dream of owning a car but cannot afford cars which are now available for minimum Rs.2.5 Lakh. A Target Market is the group of people at whom a marketer targets his marketing efforts to sell his goods and services.

Marketers must examine the changing needs of the customer. This process provides opportunity to examine whether customers are satisfied with the existing products or not. If they are not satisfied what are the features they are looking at. It also helps to test the innovative concepts that company has, commercially viable or not. For example, Titan, wrist watch manufacturer from Tata group should analyze whether customer are satisfied with the time accuracy in the watch. It should also analyze what are the other features customer is looking in the watch. It may be style, calculator,

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voice recorder, jewels studded or pulse monitor. In this case, time accuracy became existing want and other features become future wants.

Decisions involved on the suitable media in setting up a channel Marketer should consider various factors before deciding the particular type of channel. It may be company or competitive factors. The type of goods to be transported and stored will decide the length and intensity of channel. To decide on the particular channel, marketer will take following decisions. 1. Understanding the customer profile: Purchasing habits differs from individual to individual. Individuals who face shortage of time would like to purchase on the net (direct channel) and who have abundance of time would like to experience the shopping. Some of them would like to have variety of goods while others want unique or specialized products. Hence marketer should understand who are his customers? How do they purchase? For example, customer don’t like to travel half a kilometer to purchase a shampoo sachet but he don’t mind travelling two kilo meters while purchasing durable goods.

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

(a) Reach: Company would like to make the goods available in most of the retail outlets. It will adopt intensive distribution channel. (b) Profitability: Company wants to reduce the cost in the channels and enhance their profitability. It will restructure the channel to optimum level so that it can reduce the cost and increase the profit. (c) Differentiation: Company positions their products differently. When most of the industry players follow conventional system, company goes with new format of channels. For example, all computer manufacturers were adopting dealer retailer channel to sell their products but Dell started selling its product on the internet.

3. Identify type of channel members: Once the objectives are set on the basis of company’s policies, it will analyze which type of the channel best suits. Merchants, agents and resellers are some intermediaries involved in the distribution. Merchants are those who buy the product, take title and resell the merchandise. Agents will find the customers, negotiate with them but do not take the title of the product. Facilitators are the people who aid the distribution but do not negotiate or take the title of the product.

4. Determining intensity of distribution: Intensity of distribution means how many middlemen will be used at the wholesale and retail levels in a particular territory. If the numbers of intermediaries are excess then the cost of the channel will increase vice

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versa if the number of intermediaries are less then company will not be able to meet all target customers. Therefore company should adopt optimum number of intermediaries. On the basis of how many intermediaries required, company can adopt any one of the following strategies.

(a) Intensive distribution: A strategy in which company stocks goods in more number of outlets. The intention is to make the goods available near to the customer. For example, you can find ParleG glucose biscuits available in almost all the retail outlets in rural and urban areas. (b) Selective distribution: A strategy in which company stocks goods in limited number of retail outlets. For example, televisions are sold only in selected retail outlets. TVs cannot be sold like toothpaste. Onida TVs are available in electronic retail shops like Viveks, Girias, Next, Ezone etc… (c) Exclusive distribution: In this type of channel format marketer gives only a limited number of dealers the excusive right to distribute its products in their territories. For example, a Kaya skin care solution of Marico was marketed through exclusive distribution.

5. Assigning the responsibilities to channel members. Company should define the territory in which channel member should operate, at what price he should sell, services he should perform, and how he should sell.

6. Selecting the criteria to evaluate the channel member: company may have different types of channel alternatives. It would like to choose any one of the alternatives, which meets its objectives. Channels can be evaluated in the design phase by the method called SCPCA.

(a) Sales(S) The ability of each channel member to generate the sales for company in a given period. (b) Cost(C) how much cost each channel alternatives incur? Which one of the alternative provides the optimum solution? (c) Profitability (P) various channel alternatives available to the company and their profitability shall be compared. Company with better profitability shall be selected. (d) Control (C) Every company would like to have better control over its channel members. Alternative channels can be evaluated on the basis of how much control each channel member desires? And how much control the company is willing to provide? (e) Adaptability (A) Marketing is dynamic world. Competition exerts pressure on companies to relook at their practices and supply chain continuously. The channel alternatives should be flexible enough to meet the changing

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requirements. Whichever channel alternative meets such objectives shall be selected.

Example: Radio

Benefits

1. A universal medium. Can be enjoyed at home, at work, and while driving. Most people listen to the radio at one time or another during the day. 2. Permits you to target your advertising dollars to the market most likely to respond to your offer. 3. Permits you to create a personality for your business using only sounds and voices. 4. Free creative help is ususally available. 5. Rates can generally be negotiated. 6. Least inflated medium. During the past ten years, radio rates have gone up less than other media.

Demerits

1. Because radio listeners are spread over many stations, to totally saturate your market you have to advertise simultaneously on many stations. 2. Listeners cannot refer back to your ads to go over important points. 3. Ads are an interruption to the entertainment. Because of this, radio ads must be repeated to break through the listener's "tune out" factor. 4. Radio is a background medium. Most listeners are doing something else while listening, which means your ad has to work hard to be listened to and understood. 5. Advertising costs are based on ratings which are approximations based on diaries kept in a relatively small fraction of a region's homes.

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

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Ans:- Product: A good, service, person, place, events or organizations offered to consumers to satisfy his need or want. A product may be person also. Here marketer tries to buy and sell the celebrities or sports persons of a league or club etc… For, example, Board of cricket control in India (BCCI) asks its Indian premier league (IPL) teams to buy Iconic players and foreign players for certain price.

Product development New products are essential for existing firms to keep the momentum and for new firms they provide the differentiation. New product doesn’t mean that absolutely new to the world. It may be modification, or offered in the new market, or differentiate from existing products. Therefore it is necessary to understand what are new products? New Products are:-

1. They are really innovative: Google’s Orkut a networking site which revolutionized social networking. In this site people can meet like minded people; they can form their own groups and many more.

2. They are very different from the others: Haier launches pathbreaking 4Door Refrigerators First time in India. 3. They are imitative; these products are not new to the market but new to the company. For example, cavin Kare launched ruche pickles. This product is new to cavin kare but not to the market. New product development process:

Stage 1: Idea generation: new product idea can be generated either from the internal sources or external sources. The internal sources include employees of the organization and data collected from the market. The external source includes customers, competitors and supply chain members. For example, Ingersoll rand welcomes new ideas from the General public

Stage 2: Idea screening: Organization may have various ideas but it should find out which of these ideas can be translated into concepts. In an interview to Times of India, Mr. Ratan Tata, chairman TATA group discussed how his idea saw many changes from the basic version. He told that he wanted to develop car with scooter engine, plastic doors etc... But when he unveiled the car so many change were there in the product. This shows that initial idea will be changed on the basis of market requirements.

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

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Concept 1: lowend 'rural car,' probably without doors or windows and with plastic curtains that rolled down, a fourwheel version of the autorickshaw Concept 2: a car made by engineering plastics and new materials, and using new technology like aerospace adhesives instead of welding. Concept 3: Indigenous, inhouse car which meets all the environment standards

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

Stage 5: Marketing strategy development: The marketing strategy development involves three parts. The first part focuses on target market, sales, market share and profit goals. TATA’s initial business plan consisted sales of 2 Lakh cars per annum. The second part involves product rice, distribution and marketing budget strategies. TATA’s fixed Rs 1 Lakh as the car price, and finding self employed person who works like agent to distribute the cars. The final part contains marketing mix strategy and profit goals.

Stage 6: Business analysis: It is the analysis of sales, costs and profit estimated for a new product to find out whether these align with company mission and objectives.

Product mix : The number of product line and items offered by marketer to the consumer A company’s product mix has four different dimensions. They are product mix width, product mix length, and product mix depth and product mix consistency.

Product mix width: The total number of product line that company offers to the consumers. For example, Jyothy laboratories product mix has six lines. Hence width is 6

Product mix length: The total number of items that company carries within its product line. For example, Jyothy laboratories fabric care division has three items

Product line depth: The number of versions offered of each product in the line. For example, Jyothy laboratories’ Jeeva Natural is offered in three versions i.e. Coconut Milk with Milk Protein, Coconut Milk with Jasmine and Coconut Milk with Kasturi Manjal, and is presented in 75gm packs.

Product mix consistency: If company’s product lines usage, production and marketing are related then product mix is consistent else it is unrelated. Incase of Jyothy laboratories, all six product lines are FMCGs. Hence it is having consistent product mix. But ITC Company’s cigarette and cloth product line are totally unrelated.

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Q.4:- Select any brand of toilet soap and evaluate its positioning strengths or weaknesses in terms of attributes, benefits, values, brand name and brand equity. Also, examine how competitive brands influence the marketing strategies of the selected soap.

Ans:- LUX Lux soap was first launched in 1916 as laundry soap targeted specifically at 'delicates'. Lever Brothers encouraged women to home launder their clothes without fear of satins and silks being turned yellow by harsh lyes that were often used in soaps at the time. The flake-type soap allowed the manufacturer some leeway from lye because it did not need to be shaped into traditional cake-shaped loaves as other soaps were. The result was a gentler soap that dissolved more readily and was advertised as suitable for home laundry use. Lux toilet soap was introduced in 1925 as bathroom soap. The name 'Lux' was chosen as a play on the word "luxury." Lux has been marketed in several forms, including bar and flake and liquid (hand wash, shower gel and cream bath soap). Lux in step with the changing trends and evolving beauty needs of the consumers, offers an exciting range of soaps and Body Washes with unique elements to make bathing time more pleasurable. One can choose from a range of skincare benefits like firming, fairness and moisturising. Lux stands for the promise of beauty and glamour as one of India's most trusted personal care brands. Since its launch in India in the year 1929, Lux has offered a range of soaps in different colours and world class fragrances. Lux is a beauty soap of film stars. Lux recognized the need for a compelling message about beauty that would resonate with women of today. From the 1930s right through to the 1970s, Lux soap colours and packaging were altered several times to reflect fashion trends. In 1958 five colours made up the range: pink, white, blue, green and yellow.

People enjoyed matching their soap with their bathroom colours. In the early 1990s, Lux responded to the growing trend away from traditional soap bars by launching its own range of shower gels, liquid soaps and moisturizing bars. Lux beauty facial wash, Lux beauty bath and Lux beauty shower were launched in 1992.

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

Study of LUX with respect to 4 P’s

1. Product A product is anything that can be offered to a market to satisfy a need or want. Products that are marketed include physical goods, services, experiences, events, persons, places, properties, organizations, information and ideas.

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Product Classification

1. LUX is a Tangible, Non Durable Good on the basis of this classification.2. LUX and other soaps fall into the category of Convenience Good

Sales Promotion Sales promotion, a key ingredient in marketing campaigns, consists of a collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade.

Whereas advertising offers a reason to buy, sales promotion offers an incentive to buy. Sales promotion includes tools forProminent Sales Promotion Schemes Used By LUX1. Lux presented 30 gm gold each to the first three winners of the Lux Gold Star offer from Delhi. According to the promotional offer that Lux unveiled in October 2000, a consumer finding a 22-carat gold coin in his or her soap bar got an opportunity to win an additional 30 gm gold. The first 10 callers every week got a 30 gm gold each. The offer could be availed only on 100 gm and 150 gm packs of Lux soap. · Lux celebrated 75 years of stardom with the Har Star Lucky Star activity. All wrappers of Lux had a star printed inside them. If the consumer found written inside the star, any number from “1” to “5”, she would get an equivalent discount (in rupees) on her purchase from her shopkeeper. If the consumer found “75 years” written inside the star, she will get a 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 gmsHowever, recently HUL has been forced to hike its price by one rupee, to Rs17 (for 100 gm), giving in to the pressures of inflation. This paves the way for competing soap makers like Godrej Consumer Products (GCPL) to take price increases. Lux has versions in all the three price segments:Recent pricing of Lux (100 g) Lux Crystal Shine Rs 17 Lux Festive Glow Rs 15 Mini Lux Rs 5

STRENGTHS OF LUX

1. Strong Market Research (door to door sampling is done once a year in Urban 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 HLL 4. Strong brand image

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5. 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 body wash) and innovative promotions (22 carat gold coin promotion – ‘Chance Hai’)7. Perceived to have high value for money (strong brand promotion but relatively lower price which is a winning combination in the popular segment)8. Though it is in popular segment, it is having mass appeal/market presence across all segments (15% of the soap market captured by Lux (sales / volume)9. Unique advantage of having access to resources and assets of HLL

WEAKNESSES1. Lux is mainly positioned as beauty soap targeted towards women, hence it lacks 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 in the market4. Certain advertisements like the recent one with Shah Rukh Khan resulted in controversial interpretations of the message of the advertisement and lead 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.

Q.5:- As a salesperson in a fast moving consumer goods company, what kind of training and development methods do you feel are required? How important is training for sales force and how can it be evaluated?

Ans:- Training is a continuation of selection. Having selected the salesmen, there are two options. They can be sent to the field directly with samples, order books etc., (born salesman) and/or they can be sent for training programme. Some people think that salesmanship is born in man, but there are only born salesmen, like born doctors, lawyer, engineers, teachers etc. However all these people need training to call them qualified, and so also is the case with salesman. A man may have interest in the profession. The interest can be fully developed, through proper training. One attains perfection,self development etc., through training. Training means it is the process of perfecting the salesmen for their work. Training programme are organized procedure or methods through which knowledge as well as skill, for a definite purpose, is acquired. By training, one can increase knowledge in a particular field. The salesmanship is not born but can be made effective through training.

Training Methods : For imparting training to the salesman, different methods are being used. Broadly, these methods may be divided into two:

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1. Group Training:

(a) Lecture Method: An expert or a lecturer speaks to traineesalesmen about the various aspects of selling. It consists of oral talk in a classroom. This system is widely used. The trainees listen to the lectures. The instructor invites questions and answers from them. To make the lecture more interesting, visual aids, demonstration, suitable examples may be added. This system is more economical, and is the easiest and quickest in imparting theoretical training to a group of salesman. But it is difficult to evaluate the effectiveness of lecture method. This method can be used more effectively in continuing sales training programme to provide new information or changes in the policies of the firm. This may include seminars, demonstration etc., by expert salesmen.

(b) AudioVisual Method: In order to supplement the lecturing (telling) method, training programs include the use of visual aids, such as films, slides, posters etc., and are capable of making, them more interesting.

(c) Discussion Method: This is a good method. Here an actual case or an imaginary case is given as a problem to be solved, to the different groups. The case or the problem may be typed or printed. Each group is asked to understand the problem and draw a conclusion. After this, the different conclusions or suggestions are analyzed collectively, under the leadership of the instructor, in drawing generalizations from each case or problem. This type of training enables the salesmen in correcting their own views. It is suitable for a small group. It is slow and costly.

(d) Conference Method: Sales conferences and sales meeting are a kind of ‘get together’ of all the concerned staff, weekly, fortnightly or monthly. The thoughts of various persons are pooled in the conference. Meetings or conferences have motivating effects as the participants are given chances for creative thinking and to express their views. To make the conference more interesting, dramas, demonstrations etc., are included. Topics like, sales policies, facing competition, publicity ideas, dealings with complaints etc., are dealt with. And these will facilitate the participants in broadening their outlook and ideas. But this type of meetings or conferences is not suitable for new recruits. (e) Role Playing Method: Role playing is a newly developed method. The sales trainees are made to act out roles in contrived problems. The trainer

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explains the situation of the problem and assigns the role of salesman and customers of different characters to the sales trainees. Each one has to act the assigned role. The trainer watches the role played by each and discusses their weaknesses and strong points. A few may be selected to act the play, while others may watch it. Thus, the salesman have chance to see and understand the ideas in different situations. It is not suitable for new recruits.

(f) Panel Method: Members in the panel group may be permanent. The members, who are experts in the panel, discuss the problems, and solutions are passed to the salestrainee groups, who may have further discussion. This system is ineffective.

(g) Round Table method: It is similar to the discussion method. It consists of few members. The salesmen sit around a table along with a good discussion leader. They deal with the problems of actual cases. Every participant takes part freely in discussing the problems and solutions. Exchanges of new ideas take place advantageously.

(h) Brain Storming Method:Under this method, more or less, similar to round table conference, persons sit around the table. The leader presents the problems for discussion. The sales trainees have to understand the problems and find the solutions. The solutions are analyzed by the leader or tested by the panel of experts. This method practically fetches no value.

2. Individual Training:(a) Onthejob Training: Under this method, a new salesman is placed under an experienced or senior salesman who trains him. First the coach explains the sales techniques under different situations. He also takes the trainee along with him on his rounds and gives him chances to observe the dealings with the customers. Doubts of the trainee are also clarified. Then the coach along with the trainee calls on customers; the sales trainee is allowed to deal with the customer and the coach observes the performance. If any weak point or short-coming is found in the sales trainee, they discuss how to overcome them. After some time, the sales trainee becomes a trained and independent salesman. This system is good for traveling salesman.

(b) Sales Manual: It is a complied textbook. It contains details of the firm and products, job description, sales policies, opinions or reports required for reference purposes etc. Generally, it contains many problems with suggestive solutions. A copy of the book is given to a salesman to go through it and understand the ideas. It works as a readyreckoner.

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(c) Initial or Breakin Training: New recruits are given an orientation training so as to know about the company and its products. He may be allowed to work for some time in the firm itself to gain sufficient information about the products. After that he is sent to work in his field.

Importance of Training to sales persons

1) A trained salesman always wins customers by systematic approach. 2) Salesman acquires better understanding of the firm, as to its past history, policies and procedures and this helps the salesman for effective dealings. 3) A trained salesman takes less time in concluding a saleearly selling maturity. 4) A trained salesman brings increased volume of sales, in turn, more profit to the firm and himself. 5) A trained salesman is able to meet consumer’s demand and help in solving problems. 6) Increased volume of sales facilitates reduction in cost of production i.e., sales rise faster than expected. The cost per unit of order or per prospect can be minimized. 7) A better relation is created among the customers through reducing customer’s complaint, increasing brand loyalty etc. Customer’s satisfaction is gained. 8) The ability of the salesman is increased by expert knowledge. 9) Controlling of salesman becomes easy.10) Training facilitates better demonstrations, selling the products which have high profit margin, better methods of canvassing etc. Sales training helps to increase the sales volume. Supervision cost is reduced as trained salesman needs less supervision.

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

Ans:- International marketing is defined as “The performance of business activities 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 a profit”. A company that wants to sell their product in other than domestic market should understand the environmental factors, consumer behavior, market forces and other characters relevant to the international market.

The marketing concept is the idea that a firm should seek to evaluate market opportunities before production, assess potential demand for good, determine the product characteristics desired by the consumers, predict the prices consumers are willing to pay and then supply goods corresponding to the needs and wants of target markets. Adherence to marketing concept means the firm conceives and develops products to satisfy consumer wants. For international marketing this means the integration of the international side of the company’s business with all aspects of its operations and the willingness to create new

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products and adapt existing products to satisfy the needs of world markets. Products may have to be adapted to suit the tastes, needs and other characteristics of consumers in specific regions, rather than it being assumed that an item which sells well in one country will be equally successful elsewhere.

International Market Entry Strategies Organizations that plans to go for international marketing should answer some basic questions like

a. In how many countries the company would like to operate? b. What are the types of countries it plans to enter?

To answer the above questions companies evaluate each country against the market size, market growth, and cost of doing business, competitive advantage and risk level.

Once the market is found to be attractive companies should decide how to enter this market. Companies can enter international market from any one of the following strategies. They are:-

a. Exporting b. Licensing c. Contract manufacturing d. Management contract e. Joint ownership f. Direct investment

Exporting is the techniques of selling the goods produced in the domestic country in a foreign country with some modifications. For example, Gokaldas textiles export the cloths to different countries from India. Exporting may be indirect or direct. In case of indirect exporting, company works with independent international marketing intermediaries. This is cost effective and less risky too. Direct exporting is the techniques in which organization exports the goods on its own by taking all the risks. Maruti udyog limited India’s leading car manufacturer exports its cars on its own.

Company can also set up overseas branches to sell their products. Adani exports another leading exporter from India has international office in the Singapore.

Licensing: According to Philip Kotler licensing is a method of entering a foreign market in which the company enters into an agreement with a license in the foreign market, offering the right to use a manufacturing process, trademark, patent, or other item of value for a fee or royalty’. For example, torrent pharmaceuticals has license to sell the cardiovascular drugs of Chinese manufacturer Tasly. Licensing may cause some problems to the parent company. Licensee may violate the agreement and can use the technology of the parent company.

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Contract manufacturing: Company enters the international market with a tie up between manufacturer to produce the product or the service. For example, Gigabyte technology has contract manufacturing agreement with D link India to produce and sell their mother boards. Another significant manufacturer is TVS electronics; it produces key boards in its own name as well as for other companies too.

Management contracting: In this type a company enters the international market by providing the know how of the product to the domestic manufacturer. The capital, marketing and other activities are carried out by the local manufacturer hence it is less risky too.

Joint ownership: A form of joint venture in which an international company invest equally with a domestic manufacturer. Therefore it also has equal right in the controlling operations. For example, Barbara a lingerie manufacturer has joint venture with Gokaldas images in India.

Direct Investment: In this method of international market entry Company invest in manufacturing or assembling. The company may enjoy the low cost advantages of that country. Many manufacturing firms invested directly in the Chinese market to get its low cost advantage. Some governments provide incentives and tax benefits to the company which manufactures the product in their country. There is government restriction in some countries to opt only for direct investment as it produces the jobs to the local people. This mode also depends on the country attractiveness. It may become risky if the market matures or unstable government exists.

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Date post:	18-Nov-2014
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MB0030 Marketing Management

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