Marketing Management

1. Marketing management

2. CONTENT
Sr.no Chapters Pg no.
1. Introduction to marketing management 4-12
2. Marketing environment 13-30
3. Marketing planning & control 31-41
4. MIS & MR 42-58
5. Consumer Behavior 59-72
6. Segmentation & targeting 73-92
2

3. Sr.no Chapters
7. Product & brand management 93-160
8. Marketing distribution channel 161-185
9. Marketing Communication & sales 186-238
promotion
10. Pricing 239-247
3

4. Definition of Marketing
 Marketing is the process of planning and executing the
conception, pricing, promotion and distribution of
ideas, goods and services to create exchanges that
satisfy individual and organizational goals. – American
Marketing Association
 Marketing is the performance of business activities
that direct the flow of goods and services from the
producer to the consumer.
4

5.  What is Marketing Management?
Marketing management is the practical application of
marketing techniques.
 It is the analysis, planning, implementation and
control of programs designed to create, build, and
maintain mutually beneficial exchanges with target
markets.
 The marketing manager has the task of influencing
the level, timing, and composition of demand in way
that will achieve organizational objectives.
5

6. What is a Market?
All businesses operate in “markets”. But what is a market? And how can
it be defined?
Market defined:
 A market is the set of all actual and potential buyers of a product or
service. This definition suggests that a market is the total value and/or
volume of products that satisfy the same customer need. A public place
where goods and services are traded purchased and sold.
 It is important to be careful about how a market is defined. The
following key marketing processes rely on a relevant market definition:
- Measuring market share
- Measuring market size and growth
- Specifying target customers
- Identifying relevant competitors
- Formulating a marketing strategy
6

7. There are five competing concepts under which business and other
organizations can conduct their marketing activity:
 THE PRODUCTION CONCEPT
The customers will favor those products that are widely available and low in
cost. Management in production –oriented organizations concentrates on
achieving high production efficiency and a wide
distribution coverage.
 THE PRODUCT CONCEPT
The customers will favor those products that are widely available and low in
cost that offer the most quality, performance, and features. Management in
product –oriented organizations concentrates on making good products and
improving them over the time.
Marketing Myopia: A short-sighted and inward looking approach to marketing
that focuses on the needs of the company instead of defining the company and
its products in terms of the customers' needs and wants. It results in the failure
to see and adjust to the rapid changes in their markets.
7

8.  3. THE SELLING CONCEPT
The customers, if left alone, will ordinarily not buy enough of
Organization’s products. The organization must therefore undertake an
aggressive selling and promotion effort.
 4. THE MARKETING CONCEPT
The key to achieving organizational goals consists in determining the
needs and wants of the target markets and delivering the desired
satisfactions more effectively and efficiently than competitors.
 5. THE SOCIETAL MARKETING CONCEPT
The organizations’ task is to determine the needs, wants and interests
of the target markets and to deliver the desired satisfactions more
effectively and efficiently than competitors in a way that preserves and
enhances the consumers and the society’s well being.
8

9. 9

10. 7 p’s of marketing
 Product - what you are selling
 Price - how much you are charging for your product
 Promotion - how you tell people about your offer i.e.
your product and price.
 Place - how people can buy your product.
 People
 Process
 Physical Environment
10

13. Marketing Environment
13

14. Marketing Environment
 All the actors and forces influencing the company’s
ability to transact business effectively with it’s target
market.
 Includes:
 Microenvironment - forces close to the company
that affect its ability to serve its customers.
 Macro environment - larger societal forces that
affect the whole microenvironment.
14

15. The Marketing Environment
Demographic
Company
Cultural Economic
Publics Suppliers
Company
Competitors
Customers
Political Natural
Intermediaries
Technological
15

16. The Microenvironment
Company
Publics Forces Affecting a Suppliers
Company’s Ability to
Serve
Customers
Competitors Intermediaries
Customers
16

17. The Company’s Microenvironment
 Company’s Internal Environment- functional areas such as
top management, finance, and manufacturing, etc.
 Suppliers - provide the resources needed to produce goods
and services.
 Marketing Intermediaries - help the company to
promote, sell, and distribute its goods to final buyers.
17

18. The Company’s Microenvironment
 Customers - five types of markets that purchase
a company’s goods and services.
 Competitors - those who serve a target market
with similar products and services.
 Publics - any group that perceives itself having
an interest in a company’s ability to achieve its
objectives.
18

19. Customer Markets
International Consumer
Markets Markets
Company
Government Business
Markets Markets
Reseller
Markets
19

20. The Macroenvironment
Demographic
Cultural Forces that Shape Economic
Opportunities
and Pose Threats
to a Company
Political Natural
Technological
20

21. The Company’s
Macroenvironment
 Demographic - monitors population in terms of
age, sex, race, occupation, location and other
statistics.
 Economic - factors that affect consumer buying
power and
patterns.(income, inflation, recession, interest
rate, exchange rate)
 Natural - natural resources needed as inputs by
marketers or that are affected by marketing
activities.
21

22. Economic Environment
Economic Changes
Development Key in Income
Economic
Concerns for
Marketers
Changes
in Consumer
Spending
Patterns
22

23. Natural
Environment More Government
Intervention
Factors
Affecting
Higher Pollution the Shortages of
Levels Natural Raw Material
Environment
Increased Costs
of Energy
23

24. The Company’s
Macroenvironment
 Technological - forces that create new product
and market opportunities.
 Political - laws, agencies and groups that
influence or limit marketing actions.
 Cultural - forces that affect a society’s basic
values, perceptions, preferences, and behaviors.
24

25. Technological Environment
Rapid Pace of High R & D
Change Budgets
Issues in the Technological
Environment
Focus on Minor Increased
Improvements Regulation
25

26. Political Environment
Increased Changing
Legislation Key Enforcement
Trends in the
Political
Environment
Greater
Concern for
Ethics
26

27. Cultural Environment
Of
Oneself
Of Of
the Universe Views Others
That Express
Of Values Of
Nature Organizations
Of
Society
27

28. Strategic planning
 Strategic planning is an organization's process of defining its strategy, or
direction, and making decisions on allocating its resources to pursue this
strategy.
 In order to determine the direction of the organization, it is necessary to
understand its current position and the possible avenues through which it can
pursue a particular course of action. Generally, strategic planning deals with at
least one of three key questions.
 "What do we do?"
 "For whom do we do it?"
 "How do we excel?"
 It consist of the process of developing strategies to reach a defined objective.
 SP provides direction to a company or give specific direction in such areas
- Financial strategies
- HR/OD strategies
- IT deployments
- Developments projects
- Marketing strategy
28

29. Why strategic plan fail
 Failure to define end states (objectives) correctly.
 Incompletes SWOT analysis with respect to the
desired end state(s).
 Lack of creativity in identifying possible strategies
29

30. Limitations of strategic planning
 Commitment
 Control
 PR
 Objectivity
 Politics
30

31. Marketing planning & control
31

32.  Process of marketing planning
- Business mission
- Purpose
- Strategy
- Standards & behaviors
- Company values
- Marketing audit
- SWOT Analysis
32

33. Marketing process
 Marketing objectives
Strategic options for increasing sales volume
- Market penetration
- Market expansion
- Product development
- Market development
- Entry into new markets
Strategic options for improving profitability
- Reduce costs
- Rationalize operations: segment rationalization, product
line pruning, distribution rationalization
- Increasing prices
33

34. Ansoff matrix
34

35.  Core strategy: how business objectives can be
established
- Target markets
- Competitor targets
- Competitive advantage
- Tests of an effective core strategy
Marketing mix decisions
35

36. Implementation & control
 Developing strategies:
• Market expansion
• Winning market share
Frontal attack: Challengers attacks the main market of the
market leader by launching a product with a similar or
superior marketing mix.
Flanking attack: Attack the enemy at its weak points or blind
spots i.e. its flanks
 Ideal for challenger who does not have sufficient resources
36

37. Encirclement attack: Attack the enemy at many fronts at the
same time
 Ideal for challenger having superior resources
 e.g. Seiko attacked on fashion, features, user preferences
and anything that might interest the consumer
Bypass attack: By diversifying into unrelated products or
markets neglected by the leader
 Could overtake the leader by using new technologies
Guerilla attack: unpredictable price discounts, sales
promotions or heavy advertising
37

38. 38

39.  Merger & acquisitions
 Forming strategic alliance
Hold objective:
- Strategic focus
• Monitoring the competition
• Confronting the competition
1. Position defense:
- Not easily copied
- Brand & reputation provides strong defense
- Mercedes was using a position defense strategy until Toyota
launched a frontal attack with its Lexus.
- coco-cola being a leader protected its position by entering in
TEA, coffee.
39

40. 2. Flanking defense:
- You strengthen your flank.
- In business terms, this involves the introduction of new
products, product lines, or brands, the defensive re-
positioning of existing products, or additional
promotional activity in a market niche. It requires
market segmentation and/or product differentiation.
- You protect against potential loss of market share in a
segment by strengthening your competitive position
there.
40

41. 3. Preemptive defense
Attack first
Counter offensive defense
Encircle the attacker: defender launches a brand to compete directly
against the attacker’s brand.
Mobile defense:
- This involves constantly shifting resources and developing new
strategies and tactics.
- A mobile defense is intended to create a moving target that is hard
to successfully attack.
- In business this would entail introducing new
products, introducing replacement products, modifying existing
products, changing market segments, changing target
markets, repositioning products, or changing promotional focus.
- This defense requires a very flexible organization with strong
marketing, entrepreneurial, product development, and marketing
research skills.
Strategic withdrawal
41

42. Consumer Behavior
42

43. Consumer Behavior
 Consumer behavior is the study of when, why, how, and where
people do or do not buy product.
 Consumer behavior involves the psychological processes that
consumers go through in recognizing needs,
- finding ways to solve these needs, making purchase decisions (e.g.,
whether or not to purchase a product and, if so, which brand and
where),
- interpret information, make plans, and implement these plans (e.g.,
by engaging in comparison shopping or actually purchasing a
product).
43

45.  The buyer
- Initiator
- Influencer
- Payer
- Decider
- Buyer
- User
45

46. Buyer characteristics
 Age & life cycle
 Occupation
 Economic situation
 Habit
 Lifestyle
 Personality & self-concept
 Psychological factors
46

47. Consumer decision Process
47

49. 1. Recognition of the need e.g. a new PC
2. Choice of involvement level (time and effort justified)
3. Identification of alternatives e.g. Dell, HP
4. Evaluation of alternatives i.e. price, customer service,
software support, printer/scanner package
5. Decision - choice made
6. Action e.g. buy Acer model from croma
7. Post-purchase behaviour i.e. use, breakdowns, etc
49

50. Buying situation
 Extended problem solving
- Spend huge amount of time & effort, information
search, close examination of alternatives, high
involvement,
 Limited problem solving: price, low involvement.
 Habitual problem solving
50

51. Determinants of consumer
behavior
 Internal factor
1. Perception
- Selective attention
- Selective distortion
- Selective retention
2. Learning
1. Classical conditioning
2. Operant conditioning: reinforcement
3. Cognitive learning: without reinforcement (involves
communication of benefits)
4. Modeling / vicarious learning
- Learning from others (involves copying others)
51

52. 3. Motivation
4. Belief & attitude
5. Lifestyle
6. Life cycle
52

53.  External factor
1. Culture
2. Social class
3. Reference group
53

54. Emotional engagement with customer
 Show the care
- Emphasis on retaining customer not acquiring
customer
 Treat customer with dignity
 Show that company trusts its customers.
54

55. Customer relationship management
 Implemented strategy for managing a company’s
interactions with customers, clients and sales
prospects
 The overall goals are to find, attract, and win new
clients, nurture and retain those the company already
has, entice former clients back into the fold, and
reduce the costs of marketing and client service.
 Customer relationship management describes a
company-wide business strategy including customer-
interface departments as well as other departments.
55

57. Relationship marketing
Definition
 Marketing activities that are aimed at developing and
managing trusting and long-term relationships with
larger customers.
 In relationship marketing, customer profile, buying
patterns, and history of contacts are maintained in a
sales database, and an account executive is assigned to
one or more major customers to fulfill their needs and
maintain the relationship.
57

58.  Four important steps in implementing one-to-one
marketing
- Identifying the customers
- Differentiating the customers
- Interacting the customers
- Customizing the company’s behaviour
58

59. Management Information System
&
Marketing Research
59

60. MIS
 A management information system (MIS) is a system or
process that provides information needed to manage
organizations effectively.
 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.
 It is the data bank useful to marketing executives
60

61.  Comprise of 4 elements
- Internal continuous data
- Internal ad-hoc data
- Environmental scanning
- MR
61

62. Features
 Continuously operated process
 Operates with speed & accuracy
 Needs co-operation of departments & executives
 Facilitates prompt & correct decision-making
 Future oriented
62

63. Functions
 Assembling information
 Processing of information
 Analyzing the data collected
 Storing of data collected
 Evaluating
 Disseminating
 Updating
63

64. Marketing Research
 Research means detailed, systematic & comprehensive
study of problem
 Marketing research is the systematic
gathering, recording, and analysis of data about issues
relating to marketing products and services
 Task of marketing research is to provide management
with relevant, accurate, reliable, valid, and current
information
 Accurate decision making
64

65. Types of MR
 Ad-hoc research
 Continuous research interview
- Consumer panels
- Retail audit
- Television viewership panel
65

66. Process
 Initial contact
 Research brief
 Research proposal
 Types of research method
 Designing sample design
 Data collection
 Pilot stage
 Data Preparation and Analysis
 Report Preparation and Presentation
66

67. Research proposal
 Defines what marketing agencies promises to do for its
client & how much it will cost.
 Should be written to avoid misunderstanding
 Includes survey method, type of sample, sample
size, collection & analysis of data, when reports will be
produced & how much the research will cost.
 Agency clearly states what is going to do & why, who is
going to do & when
 Doubt should be clarified
67

68.  Types of research method
- Exploratory research: secondary research, qualitative
research(focus groups, depth interview, consultation
with experts, observation
- Descriptive research: describe customers belief,
attitudes, recall of advertisements & knowledge about
its content
- Experimental research
68

69.  Designing sample design
- Sampling process
- Sample size
- Sample selection
- Probability sampling
1.Simple random sampling
2.Stratified
3.Cluster
- Non probability sampling
1.Convenience sampling
2.Judgement sampling
3.Quota sampling
69

70. Data collection
 Survey method
- Face to face interview
- Telephone interview
- Mail surveys
 Questionnaire design
- Types of questions
- Ordering of topics
- Taking care of wording in questions
- Layout
- Scaling
70

71.  Pilot stage
 Data Preparation and Analysis
 Report Preparation/writing and Presentation.
71

72. 72

73. Segmentation
&
Targeting
73

74. STP
 Segmentation: dividing market into distinct group of buyers
- Customer in one group should:
Buy the product for the same purpose
Buy & use the product in the same way.
Purpose:
1. Target market selection
2. Tailored marketing mix
3. Differentiation
 Targeting: evaluating various segments & selecting how many &
which one to target.
 Positioning :it is the act of finding a place in the minds of the
consumers & locating the brand therein
74

75. S-T-P
75

76. Segmenting
 Breaking down a diverse market of people into
smaller, homogeneous groups
 Segments should be measurable, sizeable, and
reachable
 After segmenting → target a specific segment (focus
your campaign on that group) → positioning
76

77. 77

78. 78

79. 79

80. Example:
Titan Watches
 Arrives in three broad Segments
 The Rich
 The Middle
 The Lower
Titan Brings out a Wide Range of Offer to Serve the Different Value
Segments
For the Gold lovers:
 Titan offered to this segment an all gold watch- the Aurum and Royal
lines.
For the More than One Segments:
 Titan made those who wanted more than one watches into a separate
segment ad tempted them by offering a wide range of models. It offered
them matched one’s dress and occasions.
For the youth /the outdoor lovers:
 Titan viewed them as a lifestyle segment and offered them the fast
track.
80

81. For Designer Segment:
 Titan also adopted the designer segment and offered them all designer
and hand assembled watches, the Euro collection, designed by
European designers.
For the Children
 Titan adopted children – those between 6 to 14 years as o separate
segment ( Dash for Kids)
 For Women Seeking Fashion within the Middle-income Group:
 Titan offered the Raga Range for this segment which was meant
exclusively for women.
81

82. Factors influencing MS
 Better marketing performance
 Better services to consumers
 Appropriate price fixation
 Designing the products
 Helps Identify Less Satisfied Segments and
Concentrate on Them
82

83. Basis for segmenting consumer markets
Geographical: Nations, states, regions or cities
E.g.: Southern are found of coffee and north Indians like Tea, . People
down south use talc excessively
Demographic: Age, gender, family size and life cycle, or income
Age: It is essentially a case of age based segmentation of a market.
Example:
 Amul has segmented his product in different age group
 For kids: Amul kool, chocolate milk, Nutramul energy drink.
 For Youth: Amul cool kafe.
 For women’s and older people: Amul calci+, Amul Shakti energy drink
83

84. Gender:
Example: Adidas targets women in India
 German shoe maker Adidas is trying to develop the women segment in
India for its products.
 Emami segmented its product in gender
 Women’s: Naturally fair
 Men: Fair and handsome
84

85. Psychographic: Social class, lifestyle or personality
Example: Café Coffee Day
They choose lifestyle oriented, urban consumers as target with youth.
Behavioral:
 Benefit sought: - Quality / economy / service / look etc of the product.
 Example: Nestle has found a separate segment atta noodles as distinct from the
maida noodles.
 Usage rate: - Heavy user / moderate user / light user of a product.
 User status: - Regular / potential / first time user / irregular /occasional.
 Loyalty to brand: - Hard core loyal / split loyal / shifting / switches.
 Occasion: - Holidays and occasion stimulate customer to purchase products.
 Attitude toward offering: - Enthusiastic / positive attitude / negative attitude /
indifferent / hostile.
 Example: Shampoos, soap and all FMCG products buying behavior
segmentation is used.
85

86. Segmenting organisational market:
 Macro segmentation
- Organisational size
- Industry
- Geographical segmentation
 Micro segmentation
- Choice criteria
- Decision making unit structure(DMU)
- Decision making process
- Buy class
- Purchasing organisation
86

87. Evaluating MS
 Segment size
 Price sensitivity
 Nature of competition
 New entrant
 Competitive differentiation
 Political issues
 Environmental issues
87

88. Targeting.
What is target?. This is the real goal/objective in market
that marketer want to reach.
What percent of the population uses the product at all?
What percent uses your brand?
How does that compare to competing brands?
Which media reach the users of this category?
88

89. Targeting
o Evaluation:
- Profitability of the segment
- Attractiveness
- Growth rate
- Company objective
- Limitations
o Selection: rating the alternatives
89

90. Market Targeting
Organization
Differentiated Marketing
The organization pursues
several different market
segments simultaneously
Market
4-90

91. Market Targeting
Organization
Concentrated Marketing
The organization focuses
on a single market
segment
Market
4-91

92.  Undifferentiated market-Mass marketing
- One Product – One Market – One Marketing (Plan or
Program).
92

93. Product & brand management
93

94. Product & brand management
Marketing Tools Marketing Challenge
Product Acceptability
Price Affordability
Place Availability
Promotion Awareness
94

95. 95

96.  FMCGs:
• Foods, beverages, cosmetics, footwear etc.
- Major players: HLL, Dabur, Marico, colgate-Palmolive, Nirma &
Godrej.
 Consumer durables:
• Home appliances, automobiles, watches, furniture etc.
- Major players: Usha, Bajaj, philips, titan, godrej, videocon, onida
etc.
 Agricultural goods:
• seeds., fertilizers, pesticides, tractors, animal feed, poultry & fishery
equipments
- Major players: DCM shriram, mahindra & mahindra, eicher &
escorts
 Services:
• Telecomm, transport, healthcare, banking, ins, education, mobile
services
- LIC, SBI, BSNL, ITC’s etc.
96

98. PLC
98

99. Stage Characteristics
1.costs are very high
2.slow sales volumes to start
3.little or no competition
1. Market introduction stage
4.demand has to be created
5.customers have to be prompted to try the product
6.makes no money at this stage
1.sales volume increases significantly
2.profitability begins to rise
3.public awareness increases
2. Growth stage
4.competition begins to increase with a few new players in establishing
market
5.increased competition leads to price decreases
1.costs are lowered as a result of production volumes increasing
2.sales volume peaks and market saturation is reached
3.increase in competitors entering the market
3. Maturity stage 4.prices tend to drop due to the proliferation of competing products
5.brand differentiation and feature diversification is emphasized to
maintain or increase market share
6.Industrial profits go down
1.costs become counter-optimal
2.sales volume decline
4. Saturation and decline stage 3.prices, profitability diminish
4.profit becomes more a challenge of production/distribution efficiency
than increased sales
99

101. Classification of products
 Business product & consumer product
 Types of consumer product
Convenience product
- Frequently purchased
- Less planning
- Without comparison
- Low price
- Eg- milk, sweet, emergency products, toothpaste.
101

102.  Shopping product
- Comparision of products
- Less frequently purchased
- Purchase requires intensive research
- Complex & time consuming
- Consideration of price & quality
- Eg: Appliances & clothing
- Goods are expensive
 Specialty product
 Unsought product
 Technology product
 Commodity product
 Customized product
102

103. Product mix
 Product mix
 Product item
 Product line
 Depth of the product line
103

104. 104

105. 105

106. 106

107. The width of the HUL Product mix:
 The width of the product mix refers to the number of
different product line the company carries
E.g:
 Personal wash
Laundry
Skin care
Oral care
Deodorants
Colour cosmetics
Ayurvedic personal and health care
107

108.  Shampoo
Tea
Coffee
Foods
Ice cream
Width = 12
108

109. The lenght of the HUL Product mix:
 The Length of the product mix refers to the total number of
items in the product mix.
E.g:
 Personal wash:
Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears, Rexona
Laundry: Surf excel, Rin, Wheel
Skin care: Fair & Lovely, Ponds, Vaseline, Aviance
Oral care: Pepsodent, Close up
Deodorants: Axe, Rexona
Colour cosmetics: Lakme
Ayurvedic personal and health care: Ayush
109

110.  Shampoo: Sunsilk, Clinic
Tea: Broke bond, Lipton.
Coffee: Bru
Foods: Kissan, Annapurna, Knorr
Ice cream: Kwality walls
Width = 30
110

111. The Depth of the HUL Product mix:
 The depth of the product mix refers to the number of variants of each
product offered in the line
E.g: If close up toothpaste comes in three formulation and in three
sizes, close up has a depth of 9 (3*3)
111

112. Product mix modifications
 Product mix expansion
 Line extention
 Mix extention
 Trading up
 Trading down
 Product mix contraction
 Repositioning
 Product modification
 Planned obsolescence
112

113. Positioning
 Communicating the differential advantage to customers
 Identifying the differences of the offer with the competitors
offer
 Selecting the differences that have greater competitive
advantage:
- Attractiveness
- Distinctiveness
- Affordability
 Communicating such advantages effectively to the target
audience.
113

114.  By attributes
 By benefits
 By price/quality
 By usage or application
 By competitors
Eg:
- Dove soap- high moisturizer content
- Surf-quality & nirma- economy
- Maruti car- fuel efficiency
- Lux soap – beauty soap
114

116.  Successful positioning
- Clarity
- Consistency
- Credibility
- Competitiveness
116

117. Differentiation
 Product differentiation
 Promotional differentiation
 Distribution differentiation
 Price differentiation
 Differentiation in consumption
117

118. New product development
118

119.  Innovations
- Discontinuous innovation
- Continuous innovation
- Dynamically continuous
119

120. NPD process
 Idea Generation is often called the "fuzzy front end" of the NPD
process
 Ideas for new products can be obtained from basic research using a
SWOT analysis (Strengths, Weaknesses, Opportunities & Threats),
Market and consumer trends, company's R&D department,
competitors, focus groups, employees, salespeople, trade shows,
(searching for user patterns and habits) may also be used to get an
insight into new product lines or product features.
 Lots of ideas are being generated about the new.
 Brainstorming technique is used.
120

121.  Idea Screening The object is to eliminate unsound concepts prior to
devoting resources to them.
 The screeners should ask several questions:
 Will the customer in the target market benefit from the product?
 What is the current or expected competitive pressure for the
product idea?
 What are the industry sales and market trends the product idea is
based on?
 Is it technically feasible to manufacture the product?
 Will the product be profitable when manufactured and delivered to
the customer at the target price?
121

122.  Concept Development and Testing Develop the
marketing and engineering details
 Testing the Concept by asking a sample of prospective
customers what they think of the idea.
122

123. Business Analysis
 Estimate demand
 Estimate likely selling price based upon competition
and customer feedback
 Estimate sales volume based upon size of market
 Estimate profitability and break-even point
123

124.  Actual development
 Test marketing
 Commercialization
124

125. Adoption process
 Innovators
 Early adopters
 Early majorities
 Late majorities
 Laggards
125

126. Adopter category Definition
Innovators are the first individuals to adopt an innovation.
Innovators are willing to take risks, youngest in age, have the highest
social class, have great financial lucidity, very social and have closest
Innovators
contact to scientific sources and interaction with other innovators.
Risk tolerance has them adopting technologies which may ultimately
fail. Financial resources help absorb these failures
This is the second fastest category of individuals who adopt an
innovation.
These individuals have the highest degree of opinion leadership
among the other adopter categories.
Early adopters are typically younger in age, have a higher social status,
Early Adopters
have more financial lucidity, advanced education, and are more
socially forward than late adopters. More discrete in adoption choices
than innovators.
Realize judicious choice of adoption will help them maintain central
communication position
126

127. Individuals in this category adopt an innovation after a varying
degree of time.
This time of adoption is significantly longer than the innovators
Early Majority and early adopters.
Early Majority tend to be slower in the adoption process, have
above average social status, contact with early adopters, and
seldom hold positions of opinion leadership in a system
Individuals in this category will adopt an innovation after the
average member of the society.
These individuals approach an innovation with a high degree of
skepticism and after the majority of society has adopted the
Late Majority innovation.
Late Majority are typically skeptical about an innovation, have
below average social status, very little financial lucidity, in
contact with others in late majority and early majority, very little
opinion leadership.
127

128. Individuals in this category are the last to adopt an innovation.
Unlike some of the previous categories, individuals in this
Laggards category show little to no opinion leadership.
Be oldest of all other adopters, in contact with only family and
close friends, very little to no opinion leadership.
128

129. Boston consulting group
129

130.  The BCG matrix method is based on the product life cycle theory that
can be used to determine what priorities should be given in the
product portfolio of a business unit.
 To ensure long-term value creation, a company should have a portfolio
of products that contains both high-growth products in need of cash
inputs and low-growth products that generate a lot of cash.
 It has 2 dimensions: market share and market growth. The basic
idea behind it is that the bigger the market share a product has or the
faster the product's market grows the better it is for the company.
130

131. WHY BCG MATRIX ?
To assess :
 Profiles of products/businesses
 The cash demands of products
 The development cycles of products
 Resource allocation and divestment decisions
131

132. QUESTION MARKS
High growth , Low market share
 Most businesses start of as question marks.
 They will absorb great amounts of cash if the market share
remains unchanged, (low).
 Why question marks?
 Question marks have potential to become star and eventually
cash cow but can also become a dog.
 Investments should be high for question marks.
 have the worst cash characteristics of all, because high demands
and low returns due to low market share
 if nothing is done to change the market share, question marks
will simply absorb great amounts of cash and later, as the growth
stops, a dog.
 either invest heavily or sell off or invest nothing and generate
whatever cash it can. Increase market share or deliver cash.
132

133. STARS
High growth, High market share
 Stars are leaders in business.
 They also require heavy investment, to maintain its
large market share.
 It leads to large amount of cash consumption and cash
generation.
 Attempts should be made to hold the market share
otherwise the star will become a CASH COW.
 use large amounts of cash and are leaders in the
business so they should also generate large amounts of
cash.
133

134. CASH COWS
Low growth , High market share
 They are foundation of the company and often the stars of
yesterday.
 They generate more cash than required.
 They extract the profits by investing as little cash as
possible
 They are located in an industry that is mature, not
growing or declining.
 profits and cash generation should be high , and because
of the low growth, investments needed should be low.
Keep profits high
 Foundation of a company
134

135. DOGS
Low growth, Low market share
 Dogs are the cash traps.
 Dogs do not have potential to bring in much cash.
 Number of dogs in the company should be
minimized.
 Business is situated at a declining stage.
 Avoid and minimize the number of dogs in a
company.
135

136. BCG MATRIX WITH CASH FLOW
136

137. BENEFITS
 BCG MATRIX is simple and easy to understand.
 It helps you to quickly and simply screen the
opportunities open to you, and helps you think about
how you can make the most of them.
 It is used to identify how corporate cash resources can
best be used to maximize a company’s future growth
and profitability.
137

139.  The GE / McKinsey matrix is similar to the BCG growth-
share matrix in that it maps strategic business units on a
grid of the industry and the SBU's position in the industry.
The GE matrix however, attempts to improve upon the BCG
matrix in the following two ways:
 The GE matrix generalizes the axes as "Industry
Attractiveness" and "Business Unit Strength" whereas the
BCG matrix uses the market growth rate as a proxy for
industry attractiveness and relative market share as a proxy
for the strength of the business unit.
 The GE matrix has nine cells vs. four cells in the BCG
matrix.
139

140. 140

141. Product strategies for growth
Ansoff matrix
141

142. Packing
Packaging can be described as a coordinated system of
preparing goods for transport, warehousing, logistics,
sale, and end use.
1. Protecting products: protect from breakage,
evaporation, spillage, spoilage, light, heat, cold etc.
2. Promoting products
3. Facilitating storage, use & convenience:
- Wholesaler prefers packages that are easy to ship, store
& stock on shelves.
1. Facilitating recycling & reducing environmental
damage.
142

143.  Small packs: shampoos, soap, eatables
 Combi- packs: johnson & johnson, shampoo
 See-through packs & sachets
 Primary package: to hold products e.g:bottles
 Sec pckge:to hold primary pckge eg:cardboard box
 Shipping pckge: eg: corrugated box
143

144. Labelling
The objective of labeling is to guarantee that consumers
have access to complete information on the content
and composition of products, in order to protect their
health and their interests.
Also, for buyers understanding about nature of the
product its distinctive features, its composition &
performance.
 Brand label
 Descriptive label
 Grade label
144

145. 145

146. Branding
 Brand as a "name, term, sign, symbol or design, or a
combination of them intended to identify the goods and
services of one seller or group of sellers and to differentiate
them from those of other sellers.
 Strength of brand is directly proportional to to the
expectation of the customer about it.
Good brand should be:
- Distinctive
- Easy to pronounce
- Easy to recognize & remember
146

147. What a good brand does?
 Strengthens employees loyalty
 Attracts clients/customers
 Keeps current relationships strong
 Builds confidence
 Builds feelings of security and trust
 Creates a memorable, positive experience
147

149. Brand attributes
 Brand Attributes portray a company’s brand
characteristics.
 Brand attributes are a bundle of features that highlight
the physical and personality aspects of the brand.
 Brand attributes help in creating brand identity.
 Brand provide benefits that customer desire.
149

150.  Relevancy
 Consistency
 Proper positioning
 Sustainable
 Uniqueness
 Appealing
150

151.  Types of brands
- Manufacturer brands
- Own label/distributor/store brands
151

152.  Brand building
- Quality
- Positioning
- Repositioning: occurs when a brand tries to change its
market position to reflect a change in consumer’s
tastes, often required when a brand has become tired
- Well balanced communication: All elements of the
promotional mix need to be used to develop and sustain
customer perceptions
- Being first
- Long term perspective
- Internal marketing
152

153. Brand name strategies
 Choosing a brand name:
- Should evoke positive associations
- Easy to pronounce & remember
- Suggest product benefit, be distinctive
- Name should be chosen with lot of foresight
- Should have definate plans while name associating with
product.
 Family brand name:
- Goodwill-benefits to all brands
- Advertisement of one brand helps promotion ofall brands
 Individual brand name
 Combination of brand name
153

154. Brand equity
 The value & power of the brand that determnies its worth
 Brand loyalty + brand image
 Eg: wills, HH, LG, Bata, Bisleri, xerox, dabur, Amul, godrej.
 Elements comprises of:
- Awareness
- Brand associations: anything that connected to the
customers memory about the brand is an association.
- Percieved quality
- Brand loyalty
- Other proprietary brand assets
154

155. Advantages
 Consumer purchase branded products with
confidence
 Develop loyalty
 Enjoy pride of using special brand
 Willing to accept new product of the same brand.
155

156.  Leveraging brand equity
Brand extension: introduce new product in same
product line with that popular brand.
- Eg: Nirma washing powder-nirma soap, dettol
antiseptic-soap
Line extension: surf ultra, surf excel, surf excelmatic.
- Colgate dental cream-colgate gel, colgate calcigaurd,
colgate total, colgate sentitive, colgate herbal & cogate
cibaca colgate.
Brand stretching/vertical extensions
156

157.  Lookalikes
 Spell-alikes
 Duplicates
157

158. Original Product Fake Product
Dairy Milk
Kit Kat
Coffee Bite
Mango Bite
Polo
Vicks
Daily Milk
Kir Kat
Coffee Toffee
Mango ripe and mango bits
Rolo
Vibex
158

159. 159

160. 160

161. 161

162.  It is the delivery of goods at the right time & at the
right place to the consumers
 The means by which products and services get from
producer to consumer and where they can be accessed
by the consumer
 The more places to buy the product and the easier it is
made to buy it, the better for the business (and the
consumer?)
 Channel selected should be convenient, economical &
suitable for the distribution of specific product.
162

163.  Includes:
- Types of intermediaries available
- Transportation, inventory & warehousing
- Physical distribution
- Dealer relationship
- Marketing channel
163

165. Direct Distribution Indirect Distribution
Manufacturer
Manufacturer
Retailer
Consumer
Consumer
165

166. TYPES OF MARKETING CHANNELS
166

167. Functions of channel intermediaries
 Reconciling the needs of producers & consumers
 Improve efficiency by reducing the number of
transactions & creating bulk for transportation.
 Improved accessibility
 Providing specialist services
167

168. Channel design
1. Channel selection:
- Marketing factors
- Manufacturer factors
- Product factors
- Competitive factors
2. Distribution intensity
- Intensive distribution
- Selective distribution
- Exclusive distribution
168

169.  Channel integration
- Conventional marketing channel
- Franchising
- Channel ownership
169

170.  Hybrid distribution system
In cases where a marketer utilizes more than one distribution
design the marketer is following a multi-channel or hybrid
distribution system.
 As we discussed, Starbucks follows this approach as their
distribution design includes using a direct retail system by selling in
company-owned stores, a direct marketing system by selling via
direct mail, and a single-party selling system by selling through
grocery stores (they also use other distribution systems).
The multi-channel approach expands distribution and allows the
marketer to reach a wider market, however, as we discussed under
Channel Relationships, the marketer must be careful with this
approach due to the potential for channel conflict.
170

171. Channel management
 Selection
- Identifying sources
 Developing selection criteria
- Motivation(understanding the needs)
- Training(knowledge about product)
- Evaluation
- Managing conflict
Sources of channel conflict
- Differences in goals
- Differences in desired product lines
- Multiple distribution channels
- Inadequacies in performances of channel members &
manufacturer
171

172.  Avoiding & resolving conflict
- Developing a partnership approach
- Training in conflict handling
- Improved performance
- Channel ownership
172

173. Selecting channel members
 Which characteristics are important?
 Years in business
 Lines carried
 Growth and profit record
 Cooperativeness and reputation
 Type of customer
 Location
173

174. Elements of the physical distribution system
 Order processing
 Customer service
 Inventory control
 Warehousing
 Transportation mode
 Material handling
174

175.  Transportation problem
 Warehousing problems
 Communication problems
 Higher cost & administrative problems
 Greater dependence on dealers
 Non – availability of dealers
 Poor viability of retail outlet
 Inadequate bank facilities
 Inadequate credit facilities from banks
175

176. Retailing
176

177. Retailing
 Retail consists of the sale of physical goods or
merchandise from a fixed location, such as a
department store, boutique or kiosk, or by mall, in
small or individual lots for direct consumption by the
purchaser.
 Retailing may include subordinated services, such as
delivery
 In commerce, a "retailer" buys goods or products in
large quantities from manufacturers or importers,
either directly or through a wholesaler and then sells
smaller quantities to the end-user
177

178. Type of retail formats
 Department stores
 Hypermarkets
 Convenience stores
 Shopping malls
 Plus size stores
 Discount stores
 Full-line discounters/mass merchandisers
 Specialty stores/ category killers
178

179. Theories of retailing
 The wheel of retailing
 Retail accordion
 Retail life cycle
179

180. Retail marketing strategies
 Retail positioning
 Store location
 Product assortment & services
 Price
 Promotion
 Store atmosphere
180

181. Forms of Non-store Retailing
High
Direct
selling
Tele-
marketing
Active customer
On-line
retailing
involvement
Television
home
shopping
Direct mail
and
catalogs
Automatic
vending
Low
Low Active retailer involvement High
181

182. Key to Retail Positioning
For a store to be successfully positioned, it must
have an identity which has some advantages over
competitors, and at the same time are recognized
and valued by consumers.
182

183. The Retailing Mix
The retailing mix includes:
1. Goods and services
2. Physical distribution
3. Communications tactics chosen by a store.
183

184. The Retailing Mix
Store location
Distribution centers
Warehousing
Transportation
Handling goods
Packing
Variety and
assortment
Sales assistance
Personal selling Consumers Customer services
Advertising Pricing
Credit
Window displays Guarantees and
Internal displays exchanges
Public relations Alterations and
Store layout adjustments
Catalogs Store image and
atmosphere
Telephone sales Parking
Delivery
184

185. Wholesaling
 Bulk-breaking functions
 Bulk accumulating function
 Selling function
 Assorting function
 Buying function
 Service function
 Credit function
 Risk taking function
185

186. Marketing communication & SP
186

187. Communication process
187

188. Communication
 source is the marketer or public policy maker
 receiver is the consumer
 message is the content
 medium is the channel used to convey the content
 consumers talk too: feedback
 noise disrupts the communication
188

189. Purposes of Marketing Communications
 It not only informs, but is also used to differentiate the
seller’s products/services
 To have desired response from the target audience.
 the marketing communications strategy of a firm must be
coordinated and linked with concepts such as target
segments, positioning, differentiation, and image requires a
closely coordinated approach
 Informs, persuades and reminds
 Is part of the marketing mix
 Includes all the means by which a company communicates
directly with potential customers.
 Attempts to influence feelings, beliefs, or behaviour
18 - 189

190. Integrated marketing
communications
 Advertising
 television, radio, magazines, newspapers, place-based
 Direct response
 mail, telemarketing, catalogs, direct selling, home
shopping, on-line
 Publicity
 television, magazine, newspapers
 Personal selling
190

191. Marketing Communication Methods
 Personal selling: The direct presentation of a
product to a prospective customer by a
representative of the selling organization.
 Advertising: A paid, impersonal mass
communication with a clearly-identified
sponsor.
 Sales promotion: Demand-stimulating activity
designed to supplement advertising and
facilitate personal selling.
18 - 191

192. More Methods
 Public relations: A planned communication
effort by an organization to contribute to
generally favourable attitudes and opinions
toward an organization and its products.
 Publicity: A special form of public relations
that involves news stories about an
organization or its products.
18 - 192

193. Advertising
Public
Relations
Promotional Mix Sales
Promotion
Personal
Selling
Direct
Mail
Internet/
E-commerce
193

194.  Strategies to make the consumer aware of the existence of a
product or service
NOT just advertising
Media mix
 Newspaper & magazines
 TV
 Cinema
 Radio
 POPs
 Outdoors
 Harikatha
 Grp meetings
 Audio visual vans
194

195.  Puppetry
 Folk theatre
 Demo
 Stalls & melas
 Wall paintings
 Use of logos & symbols
 Focus on reference grp
 Use of IT
195

196. Sponsorship
 Objectives
- Gaining publicity
- Fostering favorable brand & company associations
- Improving community relations
- Creating promotional expenditure
 Selection
- What the company wants to achieve from the sponsorship deal
- Personality of the event should match the desired brand image
- Target market
- Risk
 Evaluation
196

197.  Exhibition
- Objectives
1. An opportunity to reach an audience
2. Create awareness & develop relationship
3. Provides product demonstrations
4. Determine & stimulate needs of customers
5. Gathers competitive intelligence
6. Introduce a new product
7. Recruit dealers & distributors
8. Improve company image
9. Deal with service & other customer problems
10. Make a sale
197

198. Word of mouth
 Word of mouth, or viva voce, is the passing of
information from person to person by oral
communication.
 Storytelling is the oldest form of word-of-mouth
communication where one person tells others of
something, whether a real event or something made
up
198

199. Advertising
Advertising is paid non personal communication from
an identified sponsor using mass media to persuade or
influence an audience.
 Setting Advertising Objectives
 Setting the Advertising Budget
 Developing Advertising Strategy
 Creating the Advertising Message
 Selecting Advertising Media
 Evaluating Advertising Effectiveness and Return on
Advertising Investment
199

200. Advertising
Setting Advertising Objectives
An advertising objective is a specific
communication task to be accomplished with
a specific target audience during a specific
time

201. Advertising
Setting Advertising Objectives
Informative advertising is used when introducing a
new product category; the objective is to build
primary demand
Comparative advertising directly or indirectly compares
the brand with one or more other brands
Reminder advertising is important with mature
products to help maintain customer relationships and
keep customers thinking about the product
Reinforcement advertising: to assure current purchaser
that their choice is right

202. Define advertising objectives
 Position the offering
- Product characteristics & customer benefits
- Price-quality
- Product use
- Product class
- Competition
 Create awareness
 Stimulate trial
 Remind & reinforce
 Provide support for sales force
 Correcting misconceptions
202

203. Advertising
Setting the Advertising Budget
Product life-cycle stage
 New products require larger budgets
 Mature brands require lower budgets
Market share
 Building or taking market share requires
larger budgets
 Markets with heavy competition or high
advertising clutter require larger budgets
 Undifferentiated brands require larger
budgets

204.  Establish the advertising spend
- %age of sales method: Advtg budget is specified %age of current
/expectd sales revenue.
- Affordability method
- Matching competition
- Objective & task method
 Message decisions:
- Print ad
- TV commercials
204

205. Advertising
Developing Advertising Strategy
Advertising strategy is the strategy by which the
company accomplishes its advertising objectives
and consists of:
 Creating advertising messages
 Selecting advertising media

206. Advertising
Creating the Advertising Message
Advertisements need to break through the clutter:
 Gain attention
 Communicate well
Advertisements need to be better planned, more
imaginative, more entertaining, and more
rewarding to consumers

207. Advertising
Creating the Advertising Message
Message strategy
Creative concept
Message execution

208. Advertising
Creating the Advertising Message
Message strategy is the general message that will be
communicated to consumers
 Identifies consumer benefits
Creative concept is the idea that will bring the message
strategy to life and guide specific appeals to be used
in an advertising campaign
Characteristics of the appeals include:
 Meaningful
 Believable
 Distinctive

209. Advertising
Creating the Advertising Message
 Message execution is when the advertiser turns the
big idea into an actual ad execution that will
capture the target market’s attention and interest.
 The creative team must find the best
approach, style, tone, words, and format for
executing the message.

210. Advertising format:
 Humorous ad
 Slice of life
 Testimonial ad
 Ad that compare
 Providing solutions
 Reason to buy product
 Emotions
 Testimonial with celebrities
 Cartoons
 Musicals

211. Advertising
Creating the Advertising Message
Execution Styles
Slice of life Lifestyle Fantasy
Mood or Personality
Musical
image symbol
Testimonial
Technical Scientific
or
expertise evidence
endorsement

212. Advertising
Creating the Advertising Message
Message execution also includes:
 Tone
 Positive or negative
 Attention-getting words
 Format
 Illustration
 Headline
 Copy

213. Advertising
Selecting Advertising Media
Major steps include:
 Deciding on reach—frequency—impact
 Selecting media vehicles
 Deciding on media timing

214. Advertising
Selecting Advertising Media
Reach is a measure of the percentage of people in
the target market who are exposed to the ad
campaign during a given period of time
Frequency is a measure of how many times the
average person in the target market is exposed
to the message
Impact is the qualitative value of a message
exposure through a given medium

215. Advertising
Selecting Advertising Media
Selecting media vehicles involves decisions
presenting the media effectively and efficiently to
the target customer and must consider the
message’s:
 Impact
 Effectiveness
 Cost

216. Advertising
Evaluating Advertising Effectiveness and Return on
Advertising Investment
Reach
Frequency
Impact
Communication effects indicate whether the ad
and media are communicating the ad message
well and should be tested before or after the ad
runs
Sales and profit effects compare past sales and
profits with past expenditures or through
experiments

217. Advertising
Other Advertising Considerations
 Organizing for advertising
 Agency versus in-house
 The advertising agency
 Advertisers hire independent agencies to plan and
implement part or all of their advertising efforts.
 This working is known as agency -client
partnership

218. Advertiser uses agency because :
 It believes that the agency will be more efficient
 Strategic and creative expertise
 Media knowledge
Large advertisers participate in the advertising process
either through their advertising departments or through
their in house agencies
218

219. Advertising
Organization
• Internal advertising department
In house agency
Research /planning
Creative development
Media
Production
219

220. Advertising
Organization Advertising department
External agencies
Full service agency
Media specialist
Vendors
220

221.  Agency selection procedure
 Agency payment system
221

222. Public Relations
Public relations department functions include:
 Press relations or press agency
 Product publicity
 Public affairs
 Lobbying
 Corporate advertising
 Publications
 Investor relations
 Charitable donations

223. Public Relations
Press relations or press agency involves the
creation and placing of newsworthy
information to attract attention to a
person, product, or service
Product publicity involves publicizing specific
products
Public affairs involves building and maintaining
national or local community relations

224. Public Relations
Lobbying involves building and maintaining
relations with legislators and government
officials to influence legislation and regulation
Investor relations involves maintaining
relationships with shareholders and others in
the financial community
Development involves public relations with
donors or members of nonprofit organizations
to gain financial or volunteer support

225. Public Relations
The Role and Impact of Public Relations
 Lower cost than advertising
 Stronger impact on public awareness than
advertising

226. Functions of PR
 Facilitates company’s overall operations
 Aids promotion
 Helps in tackling social & environmental issues
 Ensures that customers are treated well
 Helps in attracting & retaining talented employees
 Stakeholders give it benefit of doubt
 Develops reputation as a goos suppliers & customer

227.  Publicity is the deliberate attempt to manage the public's perception
of a subject. The subjects of publicity include people (for
example, politicians and performing artists), goods and
services, organizations of all kinds, and works of art or entertainment.
 Characteristics:
- No media cost
- Loss of control of publication
- Loss of control of content
- Loss of control of timing

228. Sales promotions
 Consumer promotions
- Money off
- Bonus pack
- Premiums
Free in /on pack gifts
Free in the mail offers
- Free samples
- Coupons
- Draws
 Trade promotions
- Price discounts
- Free goods
- Competition
- Allowances

229.  Objectives
- Fast sales boost
- Encourage trial
- Encourage repeat purchase
- Gain distribution

230. The sales management process
231
Slide 20-38

231. Sales force management
 Personal selling
 Types of PS:
- Order taker(inside, delivery, outside)
- Order getter
New business sales people
Organisational sales people(selling jobs)
Consumer sales people( cars, insurance)
Technical support sales people
Merchandisers(advice on displays, implement SP etc)

232. Functions
 Prospecting
- Existing customers
- Trade directories
- Enquiry
- The press
- Cold calling
 Maintaining customer records & feedback
 Providing service
 Handling complaints
 Relationship management
233

233. Selling process
 Prospecting & qualifying
 Pre approach
 Presentation and demonstration
 Overcoming objections
 Closing
 Follow-up & maintenance
234

234.  Formulation of sales strategy
- Call rates
- Percentage of calls on existing & potential accounts
- Discount policy
- Improving customer relationship
235

235.  3 major factor of salesman
- Personality
- Product knowledge
- Psychology of people
236

237. Personal selling
 Consumers mind go through following phases:
AIDAS model
 Designing sales force
- Setting sales goals
- Sales strategy
- Sales force composition
- Sales force size
- Compensation / rewards:(salary, commission, salary
+commission)
238

238.  Managing sales force
- Recruitment of sales staff:
• Preparation of JD
• Identification of sources of requirement & methods of
communication
• Design of application form
• Interview
• Supplementary selection aids
- Training the sales staff
- Directing the operation of the sales staff
- Motivating
- Evaluation
239

240. Objectives
 Profit maximization
 Target return on investment
 Market share
 Sales maximization
241

241. Factors affecting pricing decisions
 Price-quality relationship: price strongly influence quality
perception
 Product line pricing: launch cut-price fighter brand
 Explicability: justify the price they are charging
 Competition:
- First level : offer technically similar products
- Second level: dissimilar product serving same problem in
same way
- Third level: product serving problem in dissimilar way.
 Negotiating margins: customer expects price reductions
 Earning very high profits
 Charging very low prices
242

242. Pricing methods
Cost-oriented pricing:
 Cost-plus pricing is the simplest pricing method. The firm
calculates the cost of producing the product and adds on a
percentage (profit) to that price to give the selling price.
 This method although simple has two flaws; it takes no account
of demand and there is no way of determining if potential
customers will purchase the product at the calculated price.
 This appears in two forms, Full cost pricing which takes into
consideration both variable and fixed costs and adds a %
markup. The other is Direct cost pricing which is variable costs
plus a % markup, the latter is only used in periods of high
competition as this method usually leads to a loss in the long
run.
- Target return
243

243.  Marketing oriented pricing
- Pricing new product (skimming & penetration
strategies):
- Pricing existing products
• Build objective- the company wants to build market
share
• Hold objective- the company wants to maintain MS
• Harvest-focused on increasing revenue
244

244.  Competitor oriented pricing
- Going rate
 Going with same competitors pricing
- Competitive bidding
 Value to the customer
- Buy response method
- Trade off analysis
- Experimentation
245

245. Pricing strategies
Initiating price changes
 Circumstances under which price can be raised
- When customers are giving good value
- When company’s offer attractive
 Circumstances under which price may be cut
- Reduce price to increase volume
 Proactive price cut
- To Preempt competitive entry into a market.
246

246.  Reacting to competitors price changes
When to follow a competitor’s price moves
• Rising cost level, industry excess demand, when customer are relatively price
sensitive,
When to ignore to a competitors price move
• When costs are stable, when customer are price sensitive price rise can go
unchallenged
 Price wars:
Price war is a term used in economic sector to indicate a state of intense
competitive rivalry accompanied by a multi-lateral series of price reduction.
One competitor will lower its price, then others will lower their prices to match. If
one of them reduces their price again, a new round of reductions starts.
In the short term, price wars are good for consumers, who can take advantage of
lower prices. Often they are not good for the companies involved. The lower
prices reduce profit margins and can threaten their survival.
 Pricing cues:
Sale sign announces the discount to the customer
9 at the end denotes to bargain
Customer do not remember prices. 247

247. 248