• A fundamental pattern of present & planned

– Objectives
– Resource deployment
– Interaction of an organization with markets,
competitors & other environmental factors

• It should specify
– What
– Where
– How
 • Aspiration Of The Organization
Vision • Vimal seeks a dominant position in all
its segments: suiting’s, shirting's, sarees
and dress material

• Overriding purpose in line with

Mission expectations of stake holders
• Vimal wishes to be the market leader in
the Indian textile Market

• Specific statement of goals

Objectives • Vimal seeks to offer the most
contemporary fabrics and design
 • Short terms goals
Goals • Seasonal suitings and shirtings &
varieties of offerings

• Situational analysis & Marketing Audit

• 5 C Analysis Company, Customers,
Marketing Plan Collaborators, Competition, Project
analysis for Vimal

Marketing • Action plan or scheme of execution of

plans : 4 P’s in Marketing JV with Du
Strategy & Pont US
Tactics • Tactics Individual showrooms
• External Approach - Technically used for
competition – Porter’s era(1980)

• Internal(New)approach–Core Competencies
Prahalad and Hamel era(1990)
– Resource profiling
– Source of superior performance
– Deployment of distinctive, hard to imitate or protected
resources

Both these approaches to be put together to

Strategy in general and Marketing in particular
Scope

Goals & Objectives

Resource Deployments

Identification of a sustainable competitive advantage

Synergy
• Major course of action through which an
organization tries to relate itself with
environment, to develop certain advantages and
fulfill it objectives

• A combination of actions aimed to meet a

particular condition, to solve problems, or to
achieve a desirable end

• It may involve a contradictory action (sell and

expand)

• It is forward looking
• Corporate Level : objectives of the firm,
acquisition and allocation of resources,
coordination of strategies of various SBU’s

• Business Level : objectives of SBU’s, allocation

of resources among functional areas. Such
strategies operation within the framework of
the of organization

• Functional Level : it relates to a single

functional operation and the activities
involved therein. Decisions at this level are
tactical
Environmental Factors Corporate Mission
CS

Corporate
Corporate Deployment of
Developmental
Goals & Objectives Resources
Strategy

SBU 1 SBU 2 SBU 3

BS

Business Unit’s Competitive Deployment of Resources across

Objective Strategy product-markets & functions

Marketing Strategy for FS

product market entry X R&D HR Operations
Strategy & Strategy Strategy &
Tactical Marketing Strategy Plans & Plans Plans
for product market entry X
 Dimensions Corporate Business Functional

Type of decision Conceptual Mixed Operational

Impact Critical Major Minor

Risk Involved Very high Medium Low

Profit Potential High Medium Low

Time Horizon Long range Medium range Short range

Flexibility High Medium Low

Adaptability Low Medium High

Organizational
Role of Marketing Formal Name
Level

Provides customer & competitive

Corporate
Corporate perspective for corporate strategic
Marketing
planning

Assist in the development of strategic

Strategic
Business Unit perspective of the business unit to direct
Marketing
its future course

Formulate & implement marketing Marketing

Product / Market
programs Management
• An endeavor by a corporation

• To differentiate itself positively from its

competitors,

• Using its relative corporate strengths

• To better satisfy customer needs

• In a given environmental settings

• A marketing strategy is a plan of action

• To help the marketing function of an

organization reach its goals and objectives

• Based on the rigorous analysis of empirical

data including market needs and trends,
competitor capabilities and offerings, and
the organization's resources and abilities.
• It is not static, but must change, based on
the changing needs and expectations of the
marketplace as well as changes in the
competition's marketing strategy.

• It is not generic, but must take into account

market drivers, the assets and skills of the
organization, any strategic windows in the
marketplace, the nature of one's
competition, and the stage of the market or
industry life cycle.
• A process that can allow an organization

• To concentrate its resources

• On the optimal opportunities

• With the goals of increasing sales & achieving

a sustainable competitive advantage.
 Political /
Legal
Environment

Customer

Economic Technological
Environment MARKETING Environment
STRATEGY

Corporation Competition

Social
Environment
 Importance of
External Market Proactive Knowledge
Information
Orientation Strategies Management
System

On-Line Analysis
Entrepreneurial
& Decision Implementation Global Realties
Thrust
Making

Interdisciplinary Developments:
Longer Time Empirical
Marketing, OB, Finance,
Horizon Research
Accounting, Economics, Strategy
 Situation

External Factors Internal Factors

Consumers Resources

Environment Capabilities

Competitors Skills
 Business
purpose

Environmental Core Strategy Company

analysis Analysis

Market Competitive Competitive

Target Positioning Advantage

Implementation Organization
Control

Marketing Mix
The Business Unit Strategy Planning Process
 Goods

Experiences

Services Events

Places Organizations

Information /
Persons Properties
Ideas
 THE PRODUCT
• Products are almost always combinations of the
tangible and intangible. The entire package is
sometimes referred to as the augmented product.
• The mix of tangibles and intangibles in the
augmented product varies from one product or
service to another.
• Product is a key element in the market offering.
Marketing mix planning begins with formulating an
offering to meet target customers’ needs or wants.
• The customer will judge the offering by three basic
elements : product features and quality, services
mix and quality, and price appropriateness.
 COMPONENTS OF THE MARKET OFFERING
The customer will judge the offering by three basic elements :
product features and quality, services mix and quality, and price
appropriateness.

Value based pricing

Attractiveness of the
market offering

Product features Services mix and

and quality quality
Anatomy of Product
 PRODUCT LEVELS

• In planning its market offering, the marketer

needs to think through five levels of the
product

• Each level adds more customer value, and the

five constitute a customer value hierarchy
 5 LEVELS OF THE PRODUCT
• Core Product / Core Benefit : The fundamental
service or benefit that the customer is really
buying

• Basic Product : At the same level, the marketer

has to turn the core benefit into a basic product

• Expected Product : A set of attributes and

conditions buyers normally expect when they
purchase this product
 5 LEVELS OF THE PRODUCT
• Augmented Product : The marketer prepares an
augmented product that exceeds customer expectations

• Today’s competition essentially takes place at the

product-augmentation level. ( In less developed
countries, competition takes place mostly at the
expected product level)

• According to Levitt : The new competition is not between

what companies produce in their factories, but between
what they add to their factory output in the form of
packaging, services, advertising, customer advice,
financing, delivery arrangements, warehousing, and
other things that people value
 5 LEVELS OF THE PRODUCT
Some things about product-augmentation strategy :
1. Each augmentation adds cost. The marketer has to
ask whether customers will pay enough to cover
the extra cost.
2. Augmented benefits soon become expected
benefits. For gaining competitive advantage one
will have to search for still other features and
benefits.
3. As companies raise the price of their augmented
product, some competitors can offer a “ Stripped-
down ” version at a much lower price. Thus
alongside the growth of fine products we see the
emergence of lower-cost products for the clients
who simply want the basic product.
 5 LEVELS OF THE PRODUCT
• Potential Product : encompasses all the possible
augmentations and transformations the product might
undergo in the future. Companies search for new ways
to satisfy customers and distinguish their offer

• ( Successful Companies add benefits to their offering

that not only satisfy customers but also surprise and
delight them. ) “ The best way to hold customers is to
constantly figure out how to give them more for less. ”
 The Product & Product Mix

Product • Nondurable
– Tangible
Classifications – Rapidly consumed
– Example: Milk
• Durability and • Durable
tangibility – Tangible
– Lasts a long time
– Example: Oven
• Services
– Intangible
– Example: Tax preparation
 The Product & Product Mix
Product • Classified by shopping
Classifications habits:
– Convenience goods
• Consumer goods – Shopping goods
– Specialty goods
– Unsought goods
 What is FMCG???
CHARACTERISTICS CONVENIENCE SHOPPING SPECIALITY

Clothing and fashion

Example Grocery Items Fancy and electronic goods
items

Spend efforts to choose Make long deliberations

Major motive Easy availability the item of personal before making the final
taste selection of brand

Knowledge prior to
High Medium Low
purchase

Efforts spend to acquire

Minimal Moderate As much as necessary
the product

Frequency of purchase Regular seasonal/occasional Varies

Willingness to accept
High Moderate None
substitutes
Compare options to
Intensive consultation
Buyer behavior Low information search acquire best within
before purchase
budget
 FMCG - Consumer Perspective
Frequent
purchase Low price Brown goods

Low White goods

involvement

FMCG – Marketer’s Perspective

Extensive Distribution
High Volumes networks

Low margins High stock turnover

 The Product & Product Mix
Product • Materials and parts
– Farm products
Classifications – Natural products
– Component materials
• Industrial goods – Component parts
• Capital items
– Installations
– Equipment
• Supplies and business
services
– Maintenance and repair
– Advisory services
PRODUCT STRATEGY Calls for coordinated decisions
on :

Product Product
Mix Line

Individual Service
Product Product
PRODUCT MIX
• A product mix (also called product assortment) is
the set of all products and items that a particular
seller offers for sale

• A total group of products that an organization

markets
PRODUCT MIX DIMENSIONS
 PRODUCT MIX : WIDTH & LENGTH
WIDTH : Number Of Product Lines
The width of company’s (say HUL) product mix refers to how many
different product lines the company carries, such as bathing soap,
detergents, shampoos, toothpaste, food products.

LENGTH : Total Number Of Items In Mix

The length of a company’s product mix refers to the total number of items
in its product mix. Thus in each of the product line HUL has a number of
product items. Eg., in the product line of bathing soaps, HUL has several
product items like Lux, Liril, Lifebuoy, Pears.
 PRODUCT MIX : DEPTH & CONSISTENCY
DEPTH : Number Of Product Variants
The depth of a company’s product mix refers to how many variants are
offered of each product in the line. Thus if close up toothpaste comes in
three formulations and in three sizes, Close up has a depth of nine (3x3). The
average depth of HUL product mix can be calculated by averaging the number
of variants within the brand groups.

CONSISTENCY : Degree to which Product Lines are Related

The Consistency of the product mix refers to how closely related the various
product lines are in end-use, production requirements, distribution channels,
or some other way. HUL’s product lines are consistent so far as they are
consumer goods that go through the same distribution channels.
 DIMENSIONS OF PRODUCT MIX
These four dimensions of the product mix provide the handles
for defining the company’s product strategy. The company can
expand its business in four ways.
1. The Co. can add new product lines, thus widening its
product mix.

2. The Co. can lengthen each product line.

3. The Co. can add more product variants to each product

and deepen its product mix.

4. The Co. can pursue more product-line consistency or less,

depending upon whether it wants to acquire a strong
reputation in a single field or participate in several fields.
 PRODUCT LINE
• A product line is a group of products that are closely
related, because they perform a similar function, are sold
to the same customer groups, are marketed through the
same channels or fall within the given price ranges.

• The product mix may be composed of several product

lines.

• Product line managers need to know the sales and profits

of each item in their line in order to determine which items
to build, maintain, harvest,, or divest. They also need to
understand each product’s market profile, i.e. how their
product line is positioned against competitors’ product
lines (The Product Map).
 PRODUCT PORTFOLIO MANAGEMENT
Product Line Stretching : New Price & New Segment
. Downward Line Stretching
. Upward Line Stretching
. Two Way and dimensional Stretching

High NEW
PRESENT NEW PRODUCT
PRODUCT PRODUCT
PRESENT
Price PRODUCT

NEW PRESENT NEW

PRODUCT PRODUCT PRODUCT
Low
Low High
Quality
(Downward) (Upward) (Two Way)
 Examples
Stretch down Stretch up
1. HUL – Surf to Sunlight to 1. GE – Hummer
wheel 2. Titan – Raga
2. Parker pens from Rs.500/- 3. Ponds
to 100/- range 4. Philips powerhouse
3. Prestige cookers – prestige 5. Philips power play
premium to popular
6. Dalda
4. Ariel oxy blue to super
soakers to bars
5. Nokia
6. Tata Nano
PRODUCT PORTFOLIO MANAGEMENT

New Product
development & Product Line
product Filling
Platform

Product Line Product Line

Pruning Modernization

Product Line
Featuring
 Product Line Filling
Adding more items within the present product range. Product
line may be lengthened by adding products /items within lines
present range. This is called line filling
Reasons could be:
• Reaching for incremental profits.
• Satisfy dealers/distribution who complains of lost sales due to
missing
• products.
• Utilization of excess capacity.
• Keep out competition/ increased competitiveness.
• To be leading full line company
• Trying to plug holes in the positioning map
• Each item should posses a just notable difference.
• Normally customers are more attentive to relative differences
rather than absolute difference.
Product Line Modernisation
Product line modernisation refers to:
• Change in product with technology
• Change in looks/ style of product
• Example: Intel: Continuously change PC chips,
Maruti: Change in style of 800 cc car, Hero Honda:
Splendor to Splendor + etc.
– In Line Modernisation: new products are launched and
old are discontinued
– In Line Enlargement: new products are in market along
with old products.
• Timing of line modernisation is important
– If it is too soon : Current product line may get damaged
– If it is too late : Competition may have already reached.
 Product Line Featuring
Product line manager may select one/few items in
the line to feature i.e. to be considered as Traffic
Builders/ Flagship products.
This could be done:
• By a premium marketer with a low price but
quality product, e.g. Mercedes Benz economy at
Rs. 18 Lakhs
• By a mass marketer to lend prestige to product
line, e.g. Bajaj Eliminator.
 Product Line Pruning
• Product line pruning may also be defined as a
method of shortening the product line by
dropping a few items from the present product
range
• Product line needs to be reviewed periodically
for pruning/ dropping markets
• Pruning could be due to:
– Dead products that depress profits
– Company being short production capacity in this
case, company should concentrate on higher margin
products.
INDIVIDUAL PRODUCT DECISIONS

Product Attribute
Decisions

Packaging
Brand
and
Decisions
Labeling

Brand Positioning
 BRAND
• American Management Association defines brand as “ A
brand is a name/term/sign/symbol/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 competitors”

• The brand is not a product but it gives the product

meaning and defines its identity in both time and space.

• Brands are a direct consequence of the strategy of market

segmentation and product differentiation

• Essentially, Brand identifies seller/maker

 BRAND
• Companies want to stamp their mark on different
sectors and set their imprint on their products

• It can be a name/ trademark/logo/symbol

• As per law, seller is granted exclusive rights to the

use of the brand name in perpetuity i.e. there is no
expiry date

• A brand is essentially a seller’s promise to

consistently deliver what it stands for to the buyer.
This is to meaning to consumers
 BRAND : MEANING AT 6 LEVELS
A Brand may convey up to 6 levels of meaning:
• Attribute : A brand first brings to mind certain attribute/features. E.g. Mercedes:
Expensive, Well Engineered, High Prestige, High Resale Value,
Durable/Fast/Safe. The company may use one/more of these attributes to
advertise the car. E.g. “Engineered like no other car in the world”.

• Benefits : Customer don’t buy attributes, they buy benefits. Attributes need to
be translated into final/emotional benefits. E.g. Expensive: Mercedes helps me
feel important/admired.

• Values : Brand makes a statement about producer’s values. E.g. Mercedes: High
Performance /safety/ prestige. Brand marketer needs to identify customer
groups who are seeking these values.
 BRAND : MEANING AT 6 LEVELS
• Culture : Brand may represent certain culture. E.g. Mercedes:
German efficiency/precision.

• Personality : Brand may project certain personality. If brand was

an animal what animal comes or what object? or which
personality? E.g. Mercedes: No Nonsense Boss, King of the
Jungle (lion), Place

• User : Brand suggests kind of consumer who buys/uses product.

Users are those who respect/conform to product’s values/
culture /personality. E.g. Mercedes: Chief Executives.
 BRAND NAME DECISION
• It should suggest something about the product’s
benefits / qualities
• It should be easy to pronounce, recognize and
remember
• It should be distinctive
• It should not carry poor meanings in other countries
and languages
 BRAND POWER
Brands vary in the amount of power/value they have in the
market place
• Some brand may be unknown to most buyers in the
market place
• Some brands may have fairly high degree of brand
awareness measured by brand recall/ brand recognition
• Few brands have high degree of brand acceptability i.e.
most customer could not resist buying them
• Some brands enjoy a high degree of brands preference i.e.
they are selected over others
• Few brands command brand loyalty i.e. if the brand is not
available at one store they would go to another store for
it, without buying a substitute product
 BRAND EQUITY
• Brand equity is a set of assets and liabilities
linked to a brand’s name and symbol that add to
or subtract from the value provided by a
producer or service to a firm and / or that firm’s
customers.

• Brand equity generates value to the customer

that can emerge either as a price premium or
enhanced brand loyalty.
 BRAND EQUITY
Brand equity is related to:
• Degree of Brand recall /recognition.
• Perceived brand quality.
• Strong mental/ emotional association.
• Strong channel relationship.
• Percentage(%) of customer who are:
– Satisfied with brand (Brand acceptance).
– Value the brand (Brand preference).
– Denoted to the Brand (Brand loyalty).
 HIGH BRAND EQUITY PROVIDES:
• Reduced market costs due to high customer
awareness & loyalty.
• More trade coverage with distributors/ retailers.
• Company may be able to charge a premium to
customer.
• Brand extension may help increase profits by
passing credibility of brand to other products.
• May help defend against price competition
BRAND EQUITY

( Powerful brands have high brand equity, higher brand loyalty.)

PERCIEVED QUALITY
1. Perceived quality can be defined as the customer's
perception of the overall quality or superiority of a
product or service with respect to its intended
purpose, relative to alternatives

2. Perceived quality cannot necessarily be objectively

determined, in part because it is a perception and also
because judgments about what is important to
customers are involved

3. Perceived quality is an intangible, overall feeling about

a brand. How-ever, it usually will be based on
underlying dimensions which include characteristics of
the products to which the brand is attached such as
reliability and performance
BRAND AWARENESS
1. Awareness provides the brand with a sense of
familiarity, and people like the familiar.

2. Name awareness can be a signal of presence,

commitment, and substance. The logic is that
if a name is recognized, there must be a
reason.

3. The salience of a brand will determine if it is

recalled at a key time in the purchasing
process.
 BRAND IDENTITY AND ASSOCIATION
1. A brand identity or association is anything that
is directly or indirectly linked in memory to a
brand. The most common association is that
of product attributes or customer benefits.

2. A brand’s associations are assets that can

differentiate, provide reasons to buy, instill
confidence and trust, affect feelings towards a
product and the use experience, and provide
the basis for brand extension.
 BRAND LOYALTY
1. Brand loyalty reduces the marketing costs of doing
business, since existing customers are relatively easier to
hold.

2. Brand loyalty represents a substantial barrier to

competitors. Excessive resources are required when
entering a market in which existing customers must be
enticed away from an established brand that they are loyal
to.

3. Brand loyalty provides trade leverage.

4. A relatively large, satisfied customer base provides an

image of a brand as an accepted, successful, and enduring
product.

5. Brand loyalty provides the time to respond to competitive

moves.
 BRAND BUILDING
“The art of marketing is the art of brand building.
When something is not a brand, it will probably
viewed as a commodity. Then price is what counts.
When price is the only thing that counts, the only
winner is the low-cost producer.” ( Philip Kotler )

Enhancing a brand's equity directly through

advertising campaigns and indirectly through
promotions such as cause championing or event
sponsorship.
 BRAND BUILDING : TOOLS

Founder’s
personality
Public Facilities
Social Causes

Sponsorship
of games and
events
Advertising
 BRAND STRATEGY DECISIONS

Existing New

Existing LINE EXTENSION BRAND EXTENSION

New MULTI BRANDS NEW BRAND NAMES

 LINE EXTENSION
• Line extension occurs when a company introduces
additional items in the same product category under the
same brand name, usually with new flavors, forms, colors,
added ingredients, package sizes and so on

• Line extensions generally have a higher chance of survival

than new products

• Line extension may be:

– Innovative (Ice cream flavors, Lux chocolate)
– Me too (To increase competitiveness)
– Filling-in (Change in package size: Surf in sachets)

• On the down side extensions may lead to the brand name

losing its specific meanings; Ries and Trout call this “ Line
Extension Trap”
BRAND EXTENSION
• Brand Extension occurs when a company decides to use an
existing brand name to launch a product in the new
category.
• Brand Extension offers a number of advantages.
– Instant recognition and earlier acceptance
– Saves considerable advertisement costs
– Same brand name is extended to new product category.
• Compatibility of brand to new product category should be
checked.
• Brand should not get diluted as a result of the extension.
Brand dilution may occur if a brand (in consumer’s mind) is
no longer associated with a specific product/ group of
products
• Example: Tata’s came up with a new brand name TITAN for
watches Tanishq for jewellery because they didn’t want the
name of TATA to get diluted.
 MULTI BRAND
• A company will often introduce additional
brands in the same product category

• One of the motives for multi branding is to

establish different features and/or appeal to
different buying motives

• It also enables the company to lock up more

distributor shelf space and protest its major
brand by setting up flanker brands
 NEW BRAND
• When a company launches products in a
new category, it may find that none of its
current brand names are appropriate

• When the present brand image is not likely

to help the new product, companies are
better off creating new brand names
 CO-BRAND [DUAL BRANDING]
• Co-branding occurs when two different companies
pair their respective brands in a collaborative
marketing effort

• Each brand sponsor expects that other brand

name will strengthen brand preference or
purchase intention

• Co-branding could be:

– Components co-branding : E.g. Zenith/Compaq PC with Intel
Inside
– Joint venture co-branding : E.g. Mahindra British Telecom
– Multiple branding : E.g. Mobile Communication.
 PRODUCT LIFE CYCLE

• The Product Life Cycle ( PLC ) is an

important concept in marketing that
provides insights into a product’s
competitive dynamics

• To fully understand the concepts of PLC,

one should first understand its parent
concept, the demand and technology life
cycles
 DEMAND / TECHNOLOGY LIFE CYCLE
• Marketing thinking should not begin with a
product or even a product class, but rather with a
need
• The product exists as one solution among many to
meet a need
• A need is satisfied by some technology
• Each new technology normally satisfies the need in
a superior way and it shows a demand-technology
life cycle
• The PLC portrays distinct stages in the sales history
of a product
STAGES IN THE PRODUCT LIFE CYCLE
 PRODUCT LIFE CYCLE : SOME CRITICAL POINTS
• By identifying the stage that a product is in, or may be
headed toward, companies can formulate better
marketing plans

• Products require different marketing, financial,

manufacturing, purchasing and personnel strategies in
each stage of their life cycle

• Marketers must pursue appropriate marketing strategies

in each stage of PLC

• Today, in order to succeed, it is absolutely essential to

constantly improve products to increase the value
offered to customers, ( V = B/P )
PRODUCT LIFE CYCLE : SOME CRITICAL POINTS
• The success of competitors is based on creating
value for the customer by differentiating their
product, (Competitive Differential ).

• Reasons for change in behavior of PLC :

– Changes in the consumer needs and preferences
– Advancing Technology
– Competition, Government Policies etc.
– Changes in number of potential buyers
 INTRODUCTION STAGE : MARKETING STRATEGIES
Promotion

HIGH LOW

HIGH Rapid Skimming Strategy Slow Skimming Strategy

Price

LOW Rapid Penetration Strategy Slow Penetration Strategy

 GWOWTH STAGE : MARKETING STRATEGIES
• It improves product quality and adds new product features
and improved styling

• It adds new models and flanker products (i.e., products of

different sizes, flavors, and so forth that protect the main
product )

• It enters new market segments

• It increases its distribution coverage and enters new

distribution channels

• It lowers prices to attract the next layer of price-sensitive

buyers

• It shifts from product-awareness advertising to product-

preference advertising
 MATURITY STAGE : MARKETING STRATEGIES
• Sales are increasing but at a decreasing rate

• Profits are beginning to decline

• Price competition increases

• The manufacturer assume a greater share of the total promotional

effort in the fight to retain dealers and shelf space in their stores

• To understand better, Maturity Stage can be divided into three stages

:
– Growth Maturity : When the rate of sales growth starts to decline
because of distribution saturation.
– Stable Maturity : When the rate of sales growth starts declining due to
market saturation.
– Decaying Maturity : The sales level starts to decline as some of the
customers move towards other competitive and substitute products.
MATURITY STAGE : MARKETING STRATEGIES
 MATURITY STAGE : MARKETING STRATEGIES
Market Modification Marketing Mix Modification

• Expand number of users :

• Prices
– Convert non-users
• Distribution
– Enter new market
segments • Advertising
– Win competitors’ • Sales Promotion
customers • Personal Selling
• Services
• Increase annual usage :
– More frequent use
– More usage per occasion
– New and more varied
uses
 MATURITY STAGE : MARKETING STRATEGIES
Product Modification

• A strategy of quality improvement aims at increasing the

product’s functional performance - its durability, reliability,
speed, taste

• A strategy of feature improvement aims at adding new features (

for example - size, weight, materials, additives, accessories ) that
expand the product’s versatility, safety, or convenience

• A strategy of style improvement aims at increasing the

product’s aesthetic appeal. The periodic introduction of new
car models amounts to style competition rather than quality or
feature competition
 DECLINE STAGE : MARKETING STRATEGIES
Identifying the Weak Products : To do this, many companies
appoint a product-review committee with representatives from
marketing, R&D, manufacturing and finance. The product review
committee makes a recommendation for each dubious product--
leave it alone, modify its marketing strategy, or drop it.

Determining Marketing Strategies : ( Drop Strategy )

• When a company decides to drop a product, it faces further
decisions. If the product has strong distribution and residual
goodwill, the company can probably sell it to another firm
• - If the company can’t find any buyers, it must decide whether
to liquidate the brand quickly or slowly. It must also decide on
how much parts inventory and service to maintain for past
customers
 DECLINE STAGE : MARKETING STRATEGIES
Determining Marketing Strategies : ( Go Strategy )
• Continuation Strategy :
– Increasing the firm’s investment ( to dominate the market or
strengthen the competitive position )
– Maintaining the firm’s investment level until the
uncertainties about the industry are resolved

• Concentration Strategy :
– Decreasing the firm’s investment level selectively, by
dropping unprofitable customer groups, while
simultaneously strengthening the firm’s investment in
lucrative niches

• Harvesting Strategy :
– Divesting the business quickly by disposing of its assets as
advantageously as possible
 EXTENDING THE PRODUCT LIFE CYCLE

When the sales of a product starts declining marketers

may choose suitable strategy for further growth of product
business/enterprise
NEW PRODUCT DEVELOPMENT PROCESS
Idea Generation

Screening

Concept Development and Testing

Marketing Strategy

Business Analysis

Product Development

Market Testing

Commercialization
 THE CONSUMER ADOPTIONPROCESS
(STAGES IN THE ADOPTION PROCESS)
• Awareness : The consumer becomes aware of the
innovation but lacks information about it

• Interest : The consumer is stimulated to seek information

about the innovation

• Evaluation : The consumer considers whether to try the

innovation

• Trial : The consumer tries the innovation to improve his or

her estimate of its value

• Adoption : The consumer decides to make full and regular

use of the innovation
ADOPTER CATEGORIZATION ON THE BASIS OF RELATIVE
TIME OF ADOPTION OF INNOVATIONS

Early
majority
FACTORS INFLUENCING ADOPTION RATE

Relative advantage

Compatibility

Complexity

Divisibility

Communicability
Price is all around us. It is denoted with various names:
• Paying Rent for Apartment
• Tuition Fees for Education
• Consultation Fees to Dentist or Physician
• Paying Fare to Airline, Railways, Taxi and Bus
• Local Utilities call their price as Rate
• Local Bank charges Interest for the Loan taken
• Paying Toll Tax while driving on the Bridge
• Insurance Company charges Premium
• Guest lecturer is paid an Honorarium
• Government official takes a Bribe to pass a file
• Lawyer asks for a Retainer
• Employees are paid Salary
• Salesman gets Commission
• Worker is paid Wages etc… etc…. etc…..
 Price
• This is the only element in the marketing mix
that brings in the revenues
• All the rest are costs
• Price communicates the value positioning of the
product
 Internal Factors External Factors
Market Characteristics(Demand, Customer,
Corporate and marketing objectives of the firm
Competition)

The image sort by the firm through pricing Buyer Behavior with respect to the product

The characteristic of product Bargaining power of major customers

Price elasticity of demand of Product Bargaining power of major suppliers

The Stage of the product and product life cycle Competitor's pricing policy

Use pattern and turnaround rate of the product Government controls/regulation on pricing

Cost of manufacturing and marketing Societal considerations

Extent of Differentiation and distinctiveness Price cartels

Other Marketing Mix elements

Composition of the product line of the firm

The degree to which the price of a product affects consumers
purchasing behaviors
In economics, price sensitivity is commonly measured using the
price elasticity of demand

Major Influencers are:

• Shared cost
• Sunk investment
• Price – quality
• Inventory effect
• Unique value effect
• Substitute awareness
• Difficult comparison
• End benefit
• Total expenditure
• A measure of the relationship between a change in
the quantity demanded of a particular good and a
change in its price

• This determines the changes in demand with unit

change in price

• If there is little or no change in demand, it is said to

be Price Inelastic

• If there is significant change in demand, then it is

said to be Price Elastic
.
• There are few or no substitutes

• Buyers readily do not notice the higher price

• Buyers are slow to change their buying habits

• Buyers think that the higher prices are justified

• Skimming : The organisation sets an initial high
price and then slowly lowers the price to make the
product available to a wider market. The objective
is to skim profits of the market layer by layer

• Penetration : Here the organisation sets a low price

to increase sales and market share. Once market
share has been captured the firm may well then
increase their price

• Differential : It is the strategy of selling the same

product to different customers at different prices
• Geographical Pricing : Geographical pricing, in
marketing, is the practice of modifying a basic list
price based on the geographical location of the
buyer. It is intended to reflect the costs of shipping
to different locations

• Product Line Pricing : Pricing different products

within the same product range at different price
points

• Promotional Pricing : The act of offering a lower

price temporarily in order to enhance the
effectiveness of product sales efforts to cost
sensitive consumers
• Markup Pricing / Cost Plus Pricing : Cost + mark-up
= selling price

• Target Return Pricing : Selling price of a product is

calculated to produce a particular rate of return on
investment for a specific volume of production

• Perceived Value Pricing : The valuation of good

or service according to how much consumers are
willing to pay for it

• Value Pricing : Pricing a product based on the value

the product has for the customer
• Going Rate Pricing : Setting a price for a product
or service using the prevailing market price as a
basis

• Sealed Bid Pricing : Pricing to bid for jobs. The firm

bases its price on how competitors will price

• Group Pricing : charging different prices to different

classes, or groups, of customers

• Gain & Risk Share Pricing

Psychological Pricing : It is used to lessen the impact of the actual pricing in
the consumers mind. It is used as a surrogate to indicate the product quality or
esteem

• Odd Pricing : It is the most commonly used pricing technique in the world,
it was understood by all ancient civilizations. Why? Because it’s simple
mind illusion. For example: a price of Rs. 4.99 is used instead of a rounded
price of Rs. 5. This creates a powerful difference between its real value and
its perceived value and therefore boosts up sales

• Prestige Pricing : It is the opposite version of odd pricing, as the aim of this
strategy is to price its products at a rounded number point say Rs. 100
instead of making it look cheap at Rs. 99.99. By doing so not only
contributes to maintaining brand reputation but in fact, encourages more
purchases. Why? Because it shows prestige!
• BOGOF : It is abbreviated for “Buy One, Get One Free”, you have probably
experienced this before. Again, it is one of the most widely used pricing
tactics in the world. Having said that “buy 1, get 1 free” isn’t that really just
a 50% off discount behind simple Maths trickery? Or is it?

• Comparative Pricing : This pricing strategy that gives you a deal of two
offers at the same time while they are similar but the marketing strategist
is deliberately making one offer more attractive – due to the effect of the
existence of the other offer. Complicated but until you see the simple
explanation on the page

• Product Bundle Pricing : The marketing ploy that involves packaging several
items together rather than one and giving the consumers a discounted
price – this way the seller earns more profits with more items while the
customer gets a nice deal
• Product Line Pricing : Pricing the whole product line, instead of a
single product in that category. Categorization is done on the basis of
price. E.g. different packages of High, Medium & Low Recharge
Packs)

• Optional Feature Pricing : Offer optional features & services along

with the main product. Helps in raising suggested selling price. In
other words, pricing the accessory with the main product

• Captive Product Pricing : Some products require the use of

supplementary or captive product. Seller can earn more margins on
captive product than that on main products. E.g. more profits on
Hello Tunes, 3G, Downloads etc. rather than basic Talktime
• Two Part Pricing : Pricing on the basis of Fixed Price + Variable Usage
Price. Fixed price should be low enough to induce purchase of
services or products. E.g. Monthly fixed rental plan + extra outgoing
/ incoming charges in mobile services

• By-Product Pricing : Pricing the By-products at a lower value to get

rid of them, which will also help in overall cost reduction process.
E.g. wood chips sold by furniture manufacturer

• Product Bundling Pricing : Combining several products & offering

the bundle at a reduced price
– Mixed Bundling : Occurs when seller offers multiple products in a single
bundle. E.g. Airtel connection + Nokia Handset etc.
– Pure Bundling : Occurs when a firm offers only their products in a bundle. E.g.
Buy 1 Get 1 Free etc.
• Market must be segment able

• The lower price segment should not be able to resell

the product to the higher price segment

• The competitors must not be able to undersell the firm

in the higher price segment

• Should not breed customer resentment and ill will

• Price discrimination should not be illegal

• Excess plant capacity
• Competition
• Aggressive pricing

• When demand exceeds supply

• When costs go up
• Government Policies
• Reduce/remove discounts and rebates
• Maintain price

• Maintain price and add value

• Reduce price

• Increase price and quality

• Launch a low price fighter

ROLE OF INTERMEDIARIES

INFORMATION

PRICE
TITLE
STABILITY

FINANCING PROMOTION
 CONTEMPORARY ROLE OF
INTERMEDIARIES
• Link benefits to produce a superior customer experience
in the new “market spaces”

• Access and get to customers the full range of products

and services they need for this experience

• Get rid of non value activities, waste and duplications

• Personalize offerings to suit unique individual needs

• Involve and integrate relevant players and expand the

electronic network so as to deliver total customer
experience
FUNCTIONS PERFORMED BY INTERMEDIARIES
 MARKETING CHANNEL
Marketing channel, distribution channel is a network
of organizations that create time, place, and
possession utilities for consumers

• Channel Length : Number of individual entities

comprising the channel of distribution between the
producer and the consumer

• Channel Width : Number of different entities

available for providing the same distribution
function (as a distributor, wholesaler, or retailer) at
different stages in a distribution channel
MARKETING CHANNEL
MARKETING FLOWS IN MARKETING CHANNELS
 MARKETING FLOWS IN MARKETING CHANNELS
• Physical / Product Flow : Refers to actual physical movement of
product from the manufacturer, through all if the parties take physical
possession of the product, from its point of production to final
consumer

• Ownership / Title Flow : Show the movement of title to the product as

it is passed along from the manufacturer to the final consumers.

• Negotiation / Payment Flow : Represents the interplay of the buying

& selling functions associated with the transfer of title

• Information Flow : All parties participate in the exchange of

information, & the flow can be either up or down

• Promotion Flow : Refers to the flow of persuasive communication in

the form of advertising, personal selling, sales promotion & publicity
MARKETING FLOWS IN MARKETING CHANNELS
TYPES OF MIDDLEMEN
 TYPES OF MIDDLEMEN
• Merchants : Consist of Wholesalers & Retailers who actually purchase
the product & resell it. Wholesalers buy in large lots & sell in smaller
quantities to Retailers who in turn sell individual units to the consumers.
Wholesalers & Retailers assume the risk of ownership in return for a
profit markup when selling the merchandise to others

• Agents : Middlemen such as brokers, product representatives, & sales

representatives who seek others to purchase merchandise. They do not
actually purchase any merchandise & are compensated on the basis of
percentage of sales and/or salary depending on whether they are
independent business people or employees of companies wishing to sell
products

• Facilitators : Intermediaries who directly assist in distribution function

without taking title to the goods. They consist of range of organizations,
including advertising agencies, financial lending organizations, shipping
companies & storage warehouses
FACTORS DETERMINING
LENGTH OF A CHANNEL
 FACTORS DETERMINING
LENGTH OF A CHANNEL
• Order Lot Size : Different customers have different purchasing needs.
Commercial customers normally purchase larger lot sizes then do the
household customers. Channel modifications have to be made to meet this
different needs

• Market Size / Turnaround Times : Some industries, such as, fast foods, use
rapid turnaround times as an inherent part of the business, while other
businesses may have longer turnaround times. Industries having customers
needing rapid turnaround times require more direct channels of distribution
than those with slower turnaround times

• Product Assortment : Industries, particularly retail, offering large product

assortments have a need for deeper channels of distribution in order to
provide product variety

• Service Requirements : High levels of services, including repair, delivery,

installation & others require more intensive channel utilization
FACTORS INFLUENCING DISTRIBUTION
DECISIONS
MARKET / CONSUMER CHARACTERISTICS
• Consumer Buying Habits : If the consumer expects credit facilities or desires
personal services of the salesman or desires to make all purchases at one
place, the channel of distribution may be short or long depending on the
capacity of the company for providing these facilities. If the manufacturer can
afford those facilities, the channel will be shorter, otherwise longer.

• Location of the Market : When the customers are spread over a wide
geographical area, the long channel of distribution is most suitable. On the
contrary, if the customers are concentrated and localized, direct selling would
be beneficial.

• Number of Customers : If the number of customers is quite large, the channel

of distribution may be indirect and long, such as wholesalers, retailers, etc.
On the contrary, if the number of customers is small or limited, direct selling
may be beneficial.

• Size of Orders : Where customers purchase the product in large quantities,

direct selling may be preferred. On the contrary, where customers purchase
the product in small quantities frequently and regularly, such as cigarettes,
matches, etc., long (wholesalers, retailers, etc.) of distribution may be
preferred.
COMPANY OBJECTIVES & GOALS
• Financial Strength : A company which is financially sound may engage
itself in direct setting. On the contrary, a company which is financially
weak has to depend on intermediaries and, therefore, has to select
indirect channel of distribution, such as Wholesalers, retailers, with
strong financial background

• Marketing Policies : The Policies relevant to channel decision may relate

to delivery, advertising, after-sale service and pricing, etc. For e.g., a
company which likes to have a policy of speedy delivery of goods to
ultimate consumers may prefer direct selling and thus avoid
intermediaries and will adopt a speedy transportation system

• Size of the Company : A large-sized company handling a wide range of

products would prefer to have a direct channel for selling its products.
On the contrary, a small-sized company would prefer indirect selling by
appointing wholesalers, retailers etc.
COMPANY OBJECTIVES & GOALS
• Past Channel Experience : Past Channel experience of the company also
influences the choice of selection of channel distribution. For instance, an
old and established company with its past good experience of working with
certain kinds of intermediaries will like to opt for the same channel.
However, different will be the case in reverse situation

• Product Mix : The wider is the company’s product mix, the greater will be
its strength to deal with its customers directly. Similarly, consistency in the
company’s product mix ensures greater homogeneity or uniformity and
similarity in its marketing channels

• Reputation : It is said that reputation travels faster than the man. It is true
in the case of companies also who wish to select channel of distribution. In
case of companies with outstanding reputation, like Tata Steel, Bajaj
Scooters, Hindustan Levers etc., indirect channel of distribution
(wholesalers, retailers, etc.) is more desirable & profitable
PRODUCT CHARACTERISTICS
• Industrial/Consumer Product : When the product being manufactured and sold is
industrial in nature, direct channel of distribution is useful because of the relatively
small number of customers, need for personal attention, salesman’s technical
qualifications and after-sale servicing etc. However, in case of a consumer product
indirect channel of distribution, such as wholesalers, retailers, is most suitable

• Perishability : Perishable goods, such as, vegetables, milk, butter, bakery products,
fruits, sea foods etc. require direct selling as they must reach the consumers as easily
as possible after production because of the dangers associated with delays in repeated
handling

• Unit Value : When the unit value of a product is high, it is usually economical to
choose direct channel of distribution such as company’s own sales force than
middlemen. On the contrary, if the unit value is low and the amount involved in each
transaction is generally small, it is desirable to choose indirect channel of distribution,
i.e. through middlemen

• Style Obsolescence : When there is high degree of sty obsolescence in products like
fashion garments, it is desirable to sell direct to retailers who specialize in fashion
goods

• Weight and Technicality : When the products are bulky, large in size & technically
complicated, it is useful to choose direct channel of distribution
PRODUCT CHARACTERISTICS
• Standardized Products : When the products are standardized, each unit is similar in
shape, size, weight, color and quality etc. it is useful to choose indirect channel of
distribution. On the contrary, if the product is not standardized and is produced on
order, it is desirable to have direct channel of distribution

• Purchase Frequency : Products that are frequently purchased need direct channel of
distribution so as to reduce the cost and burden of distribution of such products

• Newness and Market Acceptance : For new products with high degree of market
acceptance, usually there is need for an aggressive selling effort. Hence indirect
channels may be used by appointing wholesalers and retailers as sole agents. This may
ensure channel loyalty and aggressive selling by intermediaries

• Seasonally : When the product is subject to seasonal variations, such as woolen

textiles in India, it is desirable to appoint sole selling agents who undertake the sale of
production by booking orders from retailers and direct mills to dispatch goods as soon
as they are ready for sale as per the order

• Product Breadth : When the company is manufacturing a large number of product

items, it has greater ability to deal directly with customers because the breadth of the
product line enhances its ability to clinch the sale.
MIDDLEMEN CHARACTERISTICS
• Sales Volume Potential : In selecting channel of distribution, the company should
consider the capability of the middlemen to ensure a targeted sales volume. The sales
volume potential of the channel may be estimated through market surveys

• Availability of Middlemen : The company should make efforts to select aggressively

oriented middlemen. In case they are not available, it is desirable to wait for some
time and then to pick up. In such cases, the company should manage its own channel
so long the right types of middlemen are not available

• Middlemen’s Attitude : If the company follows the resale price maintenance policy,
the choice is limited. On the contrary, if the company allows the middlemen to adopt
their own price policy, the choice is quite wide. Quite a large number of middlemen
would be interested in selling company’s products

• Services Provided by Middlemen : If the nature of product requires after-sale services,

repair services, etc., such as automobiles, cars, scooters etc., only those middlemen
should be appointed who can provide such services, otherwise the company will
adopt direct selling channel

• Cost of Channel : Direct selling generally is costlier and thus distribution arranged
through middlemen is more economical
ENVIRONMENTAL CHARACTERISTICS
• Economic Conditions : When economic conditions are bright such as inflation, it is desirable to opt
for indirect channel of distribution because there is an all-round mood of expectancy, market
tendencies are bullish and favorable. On the contrary, if the market is depressed (such as deflation),
shorter channel may be preferred

• Legal Restrictions : The legislative and other restrictions imposed by the state are extremely
formidable and give final shape to the channel choice. For example, in India M.R.TP. Act, 1969
prevents channel arrangements that tend to substantially lessen competition, create monopoly and
are otherwise prejudicial to public interest. With these objectives at the backdrop, it prevents
exclusive distributorship, territorial restrictions, resale price maintenance etc.

• Competitors’ Channel : This also influences the channel choice decision. Mostly, in practice, similar
types of channels of distribution used by the competitors are preferred

• Fiscal Structure : Fiscal structure of a country also influences the channel choice decision. For
example, in India, State Sales Tax rates vary from state to state and form a significant part of the
ultimate price payable by a consumer. As a result, it becomes an important factor in evolving channel
arrangements. Differences in the sales tax rates in two different states would not only bring about
difference in the price payable by a consumer but also in the distribution channel selected. Hence
the company should appoint the channel in that stale where the sales tax rates are quite low, such as
in Delhi, and that would give price advantage to the buyers of those states where the sales tax rates
are high.
MAJOR DISTRIBUTION ALTERNATIVES
INTENSIVE DISTRIBUTION
• This alternative involves all the possible outlets
that can be used to distribute the product

• Particularly useful in products like soft drinks

where distribution is a key success factor

• It is usually required where customers have a

range of acceptable brands to choose from
SELECTIVE DISTRIBUTION
• This alternative is the middle path approach to distribution

• Here, the firm selects some outlets to distribute its products

• It helps focus the selling effort of the manufacturing firms on a few

outlets rather than dissipating it over countless marginal ones

• Also enables the firm to establish good working relationship with the
channel members

• It can help the manufacturer gain optimum market coverage and more
control but at a lesser cost than intensive distribution

• Both the existing and new firms are known to use this alternative
EXCLUSIVE DISTRIBUTION
• When the firm distributes its brand through just one or two major outlets in
the market who exclusively deal in it and not competing brands, we say that
the firm is using an exclusive distribution strategy

• This is a common form of distribution in products and brands that seek high
prestigious image

• Typical examples are of designer wares, major domestic appliances and even
automobiles

• By granting exclusive distribution rights, the manufacturer hopes to have

control over the intermediaries price, promotion, credit inventory and service
policies

• The firm also hopes to get the benefit of aggressive selling by such outlets
 MARKETING CHANNELS ACROSS PLC
• Introduction
– Specialist channels like boutiques in fashion

• Growth
– Dedicated stores : Computer Shops , Shopper’s Stop

• Maturity
– Departmental stores like Akbarallys

• Decline
– Discount stores
 EVOLVING MARKETING CHANNEL ALTERNATIVES
Vertical Marketing System : VMS is planned
channel system designed to improve distribution
efficiency and cost effectiveness by integrating
various functions throughout the distribution
chain
– Forward integration
– Backward integration

• 3 Types of VMS
1. Corporate VMS
2. Administered VMS
3. Contractual VMS
 TYPES OF VMS
• Administered Marketing System : VMS that achieves
channel coordination when a dominant channel member
exercises its power – HUL, P&G, ITC, Maruti

• Corporate Marketing System : VMS in which a single owner

operates at each stage in its marketing channel – Vimal, Titan,
Bata

• Contractual Marketing System : VMS that coordinates

channel activities through formal agreements among channel
members. Independent business at different levels and end
up in contracts like:
– Wholesaler-Sponsored Voluntary Chains
– Retail Cooperatives
– Franchises
– Pepsi, Coke etc.